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EXHIBIT 10.6
JOINT VENTURE AGREEMENT
ARKOMA BASIN JOINT VENTURE 1989
THIS JOINT VENTURE AGREEMENT dated as of March 1, 1989 is made by and
among Toreador Royalty Corporation, a Delaware corporation (herein called the
"MANAGER"), and The Grayrock Corporation, Xxx Xxxxxx Oil Company, Xxxxx X.
Xxxxxxx, Xxxxxx X. Xxxxxx, X. Xxxxx Price and Xxxxxxx Xxxxxxxxx, which parties
are herein, together with the Manager, collectively called the "PARTICIPANTS"
and individually called a "PARTICIPANT."
W I T N E S S E T H:
WHEREAS, the Participants desire to acquire interests in oil and gas
prospects within the Arkoma Basin as outlined in Exhibit A hereto for the
resale or exploration and development thereof;
NOW, THEREFORE, in consideration of the premises and in consideration
of the mutual covenants and agreements contained herein, the Participants do
hereby agree as follows:
ARTICLE I
FORMATION OF JOINT VENTURE
SECTION 1.1 FORMATION. Subject to the provisions of this Agreement,
the Participants do hereby form a joint venture (herein called the "VENTURE"),
which shall be considered and construed as a partnership under the Texas
Uniform Partnership Act (Article 0000x, Xxxxxx'x Xxxxx Civil Statutes).
SECTION 1.2 NAME. The name of the Venture shall be Arkoma Basin Joint
Venture 1989. Subject to all applicable laws, the business of the Venture may
be conducted under such other name or names as the Manager shall determine to
be necessary or desirable. The Manager shall cause to be filed on behalf of the
Venture such partnership or assumed or fictitious name certificate or
certificates or similar instruments as may from time to time be required by
applicable law.
SECTION 1.3 BUSINESS. The business of the Venture shall be to generate
and acquire oil and gas Leases, to conduct geological and geophysical
activities with regard thereto, to market and sell the Venture's interest in
such oil and gas Leases, and to engage in such other incidental activities to
any of the foregoing purposes as the Manager may determine to be necessary or
desirable. It is the interest of the Participants to assemble leasehold
interests in Prospects for sale to third party industry participants for cash,
carried or back-in interests, royalties or other interests or some combination
thereof.
SECTION 1.4 P1ACE OF BUSINESS AND ADDRESS. The location of the
principal place of business of the Venture shall be 000 X. Xx. Xxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000. The Manager at any time and from time to time, may
change the location of the Venture's principal place of business and may
establish such additional place or places of business of the Venture as the
Manager shall determine to be necessary or desirable.
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SECTION 1.5 TERM. The Venture shall commence upon the date hereof and
shall continue until terminated in accordance with Article VIII.
SECTION 1.6 TITLE TO VENTURE PROPERTY. All property owned by the
Venture, whether real or personal, tangible or intangible, shall be deemed to
be owned by the Venture as an entity, and no Participant, individually, shall
have any ownership of such property. The Venture may hold any of its assets in
its own name or in the name of the Manager.
ARTICLE II
DEFINITIONS AND REFERENCES
SECTION 2.1 DEFINED TERMS. When used in this Agreement and unless the
context otherwise requires, the following terms shall have the respective
meanings set forth below:
"AGREEMENT" shall mean this instrument, as originally executed. or, if
amended pursuant to the provisions of Section 3.5 or 10.2, as so amended.
"AMI BASIN" shall have the meaning assigned to it in the Arkoma Letter
Agreement.
"ARKOMA LETTER AGREEMENT" shall mean that letter agreement dated as of
March 1, l989, by and among Toreador Royalty Corporation and X.X. Xxxxxxxx and
Bandera Petroleum, Inc., a copy of which is attached hereto as Exhibit B.
"CAPITAL CONTRIBUTION" shall mean for any Participant the aggregate of
the dollar amounts of cash contributed to the capital of the Venture by that
Participant.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and any successor statute or statutes.
"LEASE" shall mean a lease, mineral interest, royalty or overriding
royalty, fee right, license, concession or other right covering oil, gas and
related hydrocarbons (or a contractual right to acquire such an interest) or an
undivided interest therein or portion thereof, together, with all appurtenances
easements, permits, licenses, servitudes and rights-of-way situated upon or
used or held for future use in connection with such an interest or the
exploration, development or operation thereof.
"LEASE ACQUISITION COSTS" shall mean (a) the price paid or
contractually agreed to be paid for a Lease to the lessor, assignor or grantor
of such Lease, including consideration paid to an assignor, lease bonuses,
advance rentals and other acquisition costs, (b) costs and expenses paid to
third parties in connection therewith, including title opinions. insurance and
examination costs and attorney's fees and (c) broker commissions, filing fees,
recording costs. transfer and sales taxes. and other similar costs incurred by
the Venture with respect to such Lease in connection with its acquisition.
"MANAGEMENT FEE" shall have the meaning assigned to it in Section 5.6
hereof.
"MANAGER". shall mean Toreador Royalty Corporation, a Delaware
corporation, in its capacity as managing Participant of the Venture.
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"ORGANIZATION COSTS" shall mean all legal, blue sky, accounting,
travel, filing, recording and other costs and expenses incurred in connection
with the formation of the Venture and the negotiation, preparation and execution
of all documentation in connection therewith.
"PARTICIPANTS" shall have the meaning assigned to it in the preamble to
this Agreement.
"PROSPECT" shall mean an area with structural or stratigraphic
conditions making it susceptible to the accumulation of oil or gas, in which
the Venture owns one or more Leases. which area shall have been designated in
writing by the Manager to all depths on the basis of geological and geophysical
data then available to the Manager and with a reasonable anticipation that such
area shall contain each entire reservoir in which the Venture acquires an
interest by virtue of the ownership of one or more Leases covering such
reservoir.
"PROSPECT AMI" shall have the meaning assigned to it in Paragraph 3 of
the Arkoma Letter Agreement.
"PROSPECT GENERATION COSTS" shall mean all geological, geophysical,
seismic, engineering, travel, reproduction and similar costs paid by the Venture
to define a Prospect.
"SHARING PERCENTAGE" shall mean with respect to each Participant, that
percentage set forth opposite such Participant's name in Exhibit C hereto.
ARTICLE III
CAPITALIZATION
SECTION 3.1 INITIAL CAPITAL CONTRIBUTIONS OF PARTICIPANTS. The Venture
shall attempt to generate and acquire Leases on four Prospects pursuant to the
Arkoma Letter Agreement. The Manager has established an initial budget based
upon four anticipated Prospects equal to $600,000 to be allocated as follows:
(a) Prospect Generation Costs $ 50,000
(b) Lease Acquisition Costs 490,000
(c) Management Fee (first year) 36,000
(d) Organization Costs and Other Costs 24,000
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Total $ 600,000
Each Participant agrees to contribute in cash concurrently with his execution
and delivery of this Agreement, 20% of $600,000 ($120,000) times his Sharing
Percentage. Each Participant agrees to pay his Sharing Percentage of the
remaining $480,000 on a monthly basis as requested by the Manager based upon
estimated expenditures to be incurred in the following month.
SECTION 3.2 COST OVERRUNS. Subject to the terms of this Agreement, each
Participant shall be obligated to contribute its Sharing Percentage of actual
costs and expenses of Venture operations to the extent retained revenues or
other venture funds are not available for the payment thereof. The Manager will
use its best efforts to conduct Venture operations within budgeted amounts;
however, the budgeted amounts
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set forth in Section 3.1 shall not be a limitation on the obligations of the
Participants to pay the actual costs and expenses of operations.
SECTION 3.3 NONPAYMENT OF CAPITAL CONTRIBUTIONS.
(a) The Venture shall have the right to pursue any remedy
existing at law or in equity for the collection of the unpaid amount
of the Capital Contributions agreed to be made as provided in Sections
3.1 and 3.2., interest accrued thereon and other damages and collection
costs incurred by the Venture on account of the Participant's failure
to pay. All late payments shall bear interest at the lesser of (i) 2%
above the prime rate of interest as announced from time to time by
NCNB Texas National Bank in Dallas, Texas, or (ii) the maximum rate of
interest permissible under applicable law.
(b) In addition to the remedies discussed in subsection (a)
above, the Manager shall have the right, but not the obligation. to
advance its own funds to pay the Capital Contribution of a defaulting
Participant described in subsection (a) above and may xxxx such
Participant for the amount of such advance plus interest as described
in subsection (a) above or may withhold from distributions which such
Participant would otherwise receive an amount equal to such advance
plus interest.
(c) In addition to the remedies sat forth in subsections (a)
and (b) above, the Venture shall have the right to acquire the
defaulting Participant's interest in the Venture and shall have the
right to sell such interest proportionately to the other Participants
or to third parties at public or private sale. for such price and on
such terms and conditions as the Manager may deem appropriate. Each
Participant hereby grants to the Ventura a lien upon and security
interest in his interest in the Venture, and hereby authorizes the
Venture upon the failure of such Participant to pay any of his Capital
Contributions when due to foreclose on such lien or security interest
in any manner provided for by the laws of the State of Texas. Each
Participant by his execution of this Agreement hereof irrevocably
constitutes and appoints the Manager and its authorized agents and
successors, each with full power of substitution, the agent and
attorney-in-fact of such Participant to sign, execute and deliver on
behalf of such Participant all financing statements, UCC filings and
other documents as shall be necessary or desirable to create and
perfect the security interest and lien granted herein. The power of
attorney granted herein shall survive the assignment or transfer by a
Participant of his interest herein and. being coupled with an interest,
shall survive the death, incompetency, incapacity, dissolution or
termination of such Participant. The proceeds of any public or private
sale by the Venture of the Venture interest of a defaulting Participant
shall be applied as follows: (i) first, to the costs and expense,
including without limitation all attorneys' fees incurred by the
Venture in foreclosing such lien or security interest, making such sale
and collecting such proceeds; (ii) second, to the Venture in the amount
of the Capital Contribution which the defaulting Participant failed to
pay, and (iii) third, to the defaulting Participant. The defaulting
Participant shall be fully liable to the Venture for any deficiency
remaining after such sale. A purchaser of all or a part of the
Venture's interest of a defaulting Participant shall be admitted to the
Venture as a substituted Participant and shall have the Sharing
Percentage of the defaulting Participant, or a proportionate share
thereof if such interest is acquired by more than one party.
(d) In addition the remedies set forth in subsections (a)
through (c) above, the Manager shall have the right, but not the
obligation, to offer to the remaining Participants the right to pay
their pro rata portion of the unpaid Capital Contributions of the
defaulting Participant and to have their Sharing Percentages adjusted
based on the percentage relationship that each Participant's
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aggregate Capital Contributions bear to the aggregate Capital
Contributions made to the Venture by all Participants.
SECTION 3.4 RETURN OF CONTRIBUTIONS. No interest shall accrue on any
contributions to the capital of the Venture, and no Participant shall have the
right to withdraw or be repaid any capital contributed by such Participant
except as otherwise specifically provided in this Agreement.
SECTION 3.5 ADDITIONAL PROSPECTS. The Manager, with the Agreement of
all Participants, may elect to participate in the acquisition, exploration,
development and/or sales of Prospects in addition to the first four Prospects in
which the Venture will participate hereunder. In such event, the Manager will
present detailed information regarding such properties and the estimated costs
associated therewith. In the event one or more Participants do not agree to
participate in such additional Prospects, the Manager and the other Participants
may elect to so participate and a separate accounting unit and capital accounts
for the Participants will be established with respect to such Prospect, and the
non-participating Participant(s) shall have no rights or interests in such
Prospect. The Participants hereby agree to amend this Agreement to the extent
necessary to establish separate accounting units and capital accounts when and
as required to effectuate the purposes of this Section 3.5.
ARTICLE IV
ALLOCATIONS AND DISTRIBUTIONS
SECTION 4.1 ALLOCATION OR COSTS AND REVENUES AND INCOME TAX
ALLOCATIONS. All Costs and revenues, and all items of income, gain, loss
deduction and credit for federal, state and local income tax purposes, shall be
allocated to the Participants in accordance with their respective Sharing
Percentages.
SECTION 4.2 DISTRIBUTIONS. At least quarterly, all cash fund: of the
Venture which the Manager reasonably determines are not needed for the payment
of existing or anticipated Venture obligations and expenditures shall be
distributed to the Participants. In addition, the Manager will distribute all
cash and other sales proceeds to the Participants as soon as practicable
following the sale of a Venture Prospect or leasehold interest therein. All
revenues of the Venture to be distributed to the Participants shall be
distributed to the Participants in the same respective percentages as such
revenue is allocated to the Participants pursuant to Section 4.1 (after
deducting therefrom the costs and expenses charged to the Participants pursuant
to Sections 4.1).
SECTION 4.3 LIABILITY OF THE PARTICIPANTS. Each Participant hereby
acknowledges that as to all third parties dealing with the Venture, all
Participants are jointly and severally liable for all costs, expenses and
obligations of the Venture. However, as among themselves, the Participants
hereby agree that each shall be individually and solely responsible only for
his share of the costs, expenses and obligations of the Venture as determined
under this Agreement. Pursuant thereto, each Participant hereby further agrees
to indemnify the other Participants from paying more than their respective,
shares of the costs, expenses and obligations of the Venture as determined in
accordance with Article XV.
SECTION 4.4 DEFERRED PROSPECT GENERATION COSTS. Pursuant to the Arkoma
Letter Agreement, X. X. Xxxxxxxx and Bandera Petroleum, Inc. ("WB") are entitled
to certain overriding royalties, carried or earned interests and net profits, an
a prospect-by-prospect basis, on any Prospect generated by WB. The Arkoma Letter
Agreement is attached as Exhibit B hereto and is made a part of this Agreement.
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SECTION 4.5 CONFLICT OF INTEREST. Subject to the provisions of Section
5.10, no Participant is required to account for or pay over to the Venture or
any Participant any benefit or profit derived by such Participant from any
business of the same nature as or competing with that of the Venture and the
Participants hereby consent to the carrying on of any such business by any
Participant
ARTICLE V
MANAGEMENT
SECTION 5.1 MANAGER. The Participants hereby designate Toreador
Royalty Corporation as the Manager of the Venture to serve in that capacity
until such time as the Participants designate a new Manager by vote of a
majority in interest. The Partners hereby delegate to the Manager
responsibility for the day-to-day management and ministerial acts of the
Venture. The Manager shall devote such attention to the affairs of the Venture
as may reasonably be necessary.
SECTION 5.2 POWER AND AUTHORITY OF MANAGER. Except as specifically
provided in Section 5.3 and elsewhere in this Agreement. the Manager shall have
the power and authority on behalf of the Venture to manage, control, administer
and operate the business. affairs and properties of the Venture and to do or
cause to be done any and all acts deemed by the Manager to be necessary or
appropriate thereto, and the scope of such power and authority shall encompass
all matters in any way connected with such business or incident thereto,
including but not limited to, the power and authority;
(a) to acquire Leases, to market and sell assembled leasehold
positions to third parties, to package materials pertinent to such
effort and otherwise act for, in the name of and on behalf of the
Venture with respect to such Lease in accordance with the terms of
this Agreement;
(b) to purchase or otherwise acquire, hold, exchange, lease,
improve, operate, or let any interest(s) in other related real or
personal property of any kind, character and description;
(c) to enter into and execute all contracts and other
agreements and any and all other instruments or documents considered
by the Manager to be necessary or appropriate to carry on and conduct
the business of the Partnership, for such consideration and on such
terms as the Manager in its sole discretion may determine;
(d) to employ on behalf of the Venture, agents, employees,
accountants, lawyers, brokers, consultants and all other
professionals, clerical help and such other assistance and services as
the Manager may deem proper and to pay thereof or such remuneration as
the Manager may determine to be reasonable and appropriate;
(e) subject to obtaining the consent of a majority in
interest of the Participants pursuant to Section 5.3. to borrow monies
for the business of the Venture and from time to time to draw, make,
execute and issue promissory notes or other negotiable or
non-negotiable instruments and evidences of indebtedness; to secure
the payment of the sums so borrowed and to mortgage, pledge, or assign
in trust all or any part of the property of the Venture; to assign any
monies owing or to be owing to the Venture; and to engage in any other
means of financing;
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(f) to enter to any agreements for sharing of profits, joint
venture or partnerships with any person, firm, corporation, government
or agency thereof engaged in any business or transaction which the
Venture is authorized to engage in, or in any business or transaction
capable of being conducted so as to directly or indirectly benefit the
Venture;
(g) to sell, assign, convey or otherwise dispose of, for such
consideration and upon such terms and conditions as the Manager may
determine, all or any part of the Venture's assets, any interest
therein, or any interest payable therefrom, and in connection
therewith to execute and deliver such deeds, assignments and
conveyances containing such warranties as the Manager shall determine;
(h) to purchase, lease, rent or otherwise acquire or obtain
the use of all kinds and types of real or personal property which may
in any way be deemed necessary, convenient or advisable in connection
with carrying on the business of the Venture or for the enhancement of
Venture assets and to incur expenses for travel, telephone, telegraph,
insurance for such other things, whether similar or dissimilar as may
be deemed or necessary or appropriate to carry on and perform the
business of the Venture;
(i) to make and enter into such agreements and contracts with
such parties and to give such receipts, releases and discharges with
respect to any and all of the foregoing and any matters incident
thereto as the Manager may deem advisable or appropriate;
(j) subject to obtaining the consent of a majority in
interest of the Participants pursuant to Section 5.3, to guarantee the
payment of money or the performance of any contract or obligation by
any person, firm or corporation;
(k) to xxx and be sued, complain and defend in the name and on
behalf of the Venture;
(l) to quitclaim, surrender, release or abandon any Venture
property with or without consideration therefor;
(m) to make such classifications, determinations and
allocations as the Manager may deem advisable, having due regard for
any relevant generally accepted accounting principles; and
(n) to take such other action, execute and deliver such other
document: and perform such other acts as may be deemed by the Manager
to be appropriate to carry out the business end affairs of the
Venture.
In accomplishing all of the foregoing, the Manager may, in its discretion, use
its own personnel, properties and equipment or those of any of its affiliates
or the manager may hire or rent that of third parties.
SECTION 5.3 RESTRICTIONS ON MANAGER'S POWER AND AUTHORITY. The consent
of a majority in interest of the Participants (other than the Manager) shall be
required to take any actions authorized in Section 5.2(e) and (j). No
Participant shall have the power or authority to do or perform many of the
following acts without having previously obtained the prior consent of the
other Participants:
(a) to bind or obligate the Venture with respect to any matter
outside the scope of the Venture business;
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(b) to use the Venture name, credit or property for other than
Venture purposes; or
(c) to take any action with respect to the asset or property
of the Venture which does not primarily benefit the Venture,
including, among other things, utilization of funds of the Venture as
compensating balances for its own benefit.
SECTION 5.4 LIABILITY AND INDEMNIFICATION OF THE MANAGER. The Manager
and its officers, directors. employees and agents: (collectively referred to in
this Section 5.4 as "THE MANAGER") shall not be liable, responsible or
accountable in damages or otherwise to the Venture or the other Participants
for, and the Venture shall indemnify and save harmless the Manager from any
loss or damage incurred by reason of. any act or omission performed or omitted
by it in good faith on behalf of the Venture and in a manner reasonably
believed by it to be within the scope of the authority granted to it by this
Agreement and in the best interests of the Venture irrespective of whether such
loss or damage results from the ordinary sole, concurrent or comparative
negligence of the Manager. provided that the Manager was not guilty of gross
negligence or willful misconduct with respect to such acts or omissions. Any
act or omission performed or omitted by the Manager on advice of legal counsel
or an independent consultant or with the consent or approval of the other
Participants shall be conclusively deem to have been performed or omitted in
good faith.
SECTION 5.5 REIMBURSEMENT OF MANAGER. All direct costs and expenses
incurred by the Manager in managing and conducting the business and affairs of
the Venture, including expenses incurred in providing or obtaining such
professional. technical. administrative and other services and advice as the
Manager may deem necessary or desirable, shall be paid or reimbursed by the
Venture as a Venture expense.
SECTION 5.6 MANAGEMENT FEE. For and in consideration of the Manager's
services in such capacity, the Participants shall pay to Manager a monthly fee
of $3,000. which will be in addition to any reimbursement of direct expenses to
Manager pursuant to Section 5.5.
SECTION 5.7 TAX ELECTIONS. The Manager shall make the following
elections on behalf of the Venture;
(a) to elect a calendar year as the Venture's fiscal year;
(b) to elect the accrual method of accounting;
(c) to elect, in accordance with Section 754 of the Internal
Revenue Code, and applicable regulations and comparable state law
provisions. to adjust the basis of Venture property in the case of
distribution of property or transfer of a Venture interest. if in the
discretion of the Manager, such action is deemed advisable; and
(d) to elect with respect to such other federal, state and
local tax matters as the Manager shall deem advantageous to the
Venture.
SECTION 5.8 RIGHTS OF PARTICIPANTS. In addition to the other rights
specifically set forth herein. each Participant shall have the right to:
(a) have the Venture books kept at the principal place of
business of the Venture and at all reasonable times to inspect and
copy any of them; and
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(b) have on demand true and full information of all things
affecting the Venture and a formal account of Venture affairs whenever
circumstances render it just and reasonable.
SECTION 5.9 TAX MATTERS PARTNER. The Manager shall be designated the
Tax Matters Partner (in this Section 5.9 called the "TMP") as defined in
Section 6231(a)(7) of the Internal Revenue Code with respect to operations
conducted by the Participants pursuant to this Agreement until such time as the
Participants have elected a new TMP. The TMP is authorized to take such actions
and to execute and file all statements and forms on behalf of the Venture which
may be permitted or required by applicable provisions of the Internal Revenue
Code or Treasury Regulations issued thereunder, and the Participants will take
all other action that may be necessary or appropriate to effect the designation
of the Manager as the TMP. In the event of an audit of the Venture's income tax
returns by the Internal Revenue Service, the TMP may, at the expense of the
Venture, retain accountants and other professionals to participate in the
audit. All expenses incurred by the TMP in its capacity as such shall be
expenses of the Venture and shall be paid or reimbursed to the TMP from Venture
funds.
SECTION 5.10 ADDITIONAL ACQUISITIONS WITHIN PROSPECT AMI'S. If any
Participant shall acquire an additional lease within a Prospect API for its own
account during the term of this Agreement, such Participant must offer the
Venture the right to acquire such Lease at the cost to such Participant for the
Lease. In such event, the Manager will present such Lease to the Participants
for acquisition in the same manner provided for the acquisition of additional
Prospects set forth in Section 3.5. In addition, any such Lease acquisition by
a Participant shall be subject to the provisions of Paragraph 3 of the Arkoma
Letter Agreement.
ARTICLE VI
BOOKS, RECORDS, BANK ACCOUNTS AND REPORTS
SECTION 6.1 BOOKS AND RECORDS. The Manager shall keep, or cause to be
kept, just and true books of account with respect to the operation of the
Venture. Such books shall be maintained at the principal place of business of
the Venture and shall be kept on the accrual method of accounting, or on such
other method of accounting as the Manager shall determine. The fiscal year of
the Partnership shall be the calendar year and the Manager shall keep the books
of the Partnership on such basis.
SECTION 6.2 BANK ACCOUNTS. The Manager shall cause one or more
accounts to be maintained in a bank (or banks) which is a member of the Federal
Deposit Insurance Corporation which accounts shall be used for the payment of
the expenditures incurred by the Participants. in connection with the business
of the Venture and in which shall be deposited any and all receipts of the
Venture. All such amounts shall be and remain the property of the Venture and
shall be received. held and dispersed by the Manager for the purposes specified
in this Agreement. There shall not be deposited in any of said accounts any
funds other than funds belonging to the Venture, and no other funds shall in
any way be commingled with such funds.
SECTION 6.3 REPORTS. The Manager shall report in writing and in
reasonable detail to the Participants on the affairs of the Venture as often as
is reasonably required to keep the Participants informed as to the affairs of
the Venture, or whenever the Participants reasonably request the Manager to do
so.
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ARTICLE VII
ASSIGNMENT OF INTEREST AND SUBSTITUTION
SECTION 7.1 ASSIGNMENT OF VENTURE INTERESTS. The interest of a
Participant in the Venture may not he sold, assigned, transferred,
hypothecated, mortgaged, pledged or otherwise disposed of without the written
approval of the Manager. This provision shall not affect the right of a
Participant to assign, transfer or otherwise deal with property interests
distributed to such Participant by the Venture and held outside this Agreement.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND TERMINATION
SECTION 8.1 DISSOLUTION. The Venture shall be dissolved upon the
occurrence of any of the following:
(a) The occurrence of March 1, 2000.
(b) The written consent of the Manager and a majority in
interest of the other Participants at any time.
(c) The dissolution, termination, bankruptcy or insolvency of
any Participant or the occurrence of any other event which would
permit a trustee or receiver to acquire control of the property or
affairs of such Participant.
(d) The adjudication of bankruptcy or insolvency of the
Venture or the assignment by the Venture for the benefit of creditors.
(e) The occurrence of any event which, under the laws of the
State of Texas, causes the dissolution of a general partnership.
Notwithstanding the provisions of Section 8.1(e), neither the death,
adjudication of incompetence or insanity nor the legal disability of a
Participant shall cause a dissolution of the Venture. Further, notwithstanding
the provisions of Section 8.1(a)-(e), upon the dissolution of the Venture by
the dissolution, termination, bankruptcy, insolvency or withdrawal of a
Participant, the remaining Participants will have the right to reconstitute the
Venture by mutual consent. Upon the death, insanity or legal disability of a
Participant and upon the occurrence of any event set forth in the immediately
preceding sentence, if the Venture is reconstituted, the estate, personal
representative, guardian or other successor in interest of such Participant or
such Participants, as the case may be, (i) will continue to be liable for all
of the debts and obligations of such Participant pursuant to this Agreement,
(ii) may transfer the Venture interest of such Participant only pursuant to the
provisions of Article VII hereof and (iii) will not have any right to withdraw
the Capital Contribution of such Participant except as expressly set forth in
Section 8.2 of this Agreement. Upon the occurrence of the event of dissolution
under Section 8.1(a), the Venture may be continued and no termination shall
occur if all Participants consent to continuation of the Venture for an
additional designated period of time.
SECTION 8.2 LIQUIDATION AND TERMINATION. Upon dissolution of the
Venture, the Manager shall act as liquidator or may appoint in writing one or
more liquidators who shall have full authority to wind up
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the affairs of the Venture and make final distribution as provided herein;
provided, however, that if one of the events specified in Section 8.1(c) has
occurred with respect to the Manager, the liquidator shall be selected by the
Participants with respect to which such event has not occurred. The liquidator
shall proceed diligently to wind up the affairs of the Venture and make final
distribution as provided herein. Until final distribution. the liquidator shall
continue to operate the Venture business with all of the power and authority of
the Manager. The steps to be accomplished by the liquidator are as follows:
(a) As promptly as possible after dissolution, the liquidator
shall cause a proper accounting to be made of the Venture's assets,
liabilities and operations through the last day of the month in which
the dissolution occurs.
(b) The liquidator shall pay all of the debts and liabilities
of the Venture (including all expenses incurred in liquidation) or
otherwise make adequate provision therefor (including. but not limited
to the establishment of a cash escrow fund for contingent liabilities
in such amount and for such term as the liquidator may determine). To
the extent cash required for this purpose is not otherwise available,
the liquidator may sell assets of the Venture for cash.
(c) After making payment or provision for all debts and
liabilities of the Venture, the liquidator shall distribute (in
accordance with the provisions of this subsection (c) and subsection
(d)) to the Participants the remaining cash and property in accordance
with their Sharing Percentages. The liquidator, at its option. may sell
Venture properties at the best cash price available therefor and the
cash therefrom shall be distributed to the Participants in accordance
with the provisions of this subsection (c).
(d) At the option of the liquidator, all or any part of the
Venture properties may be distributed in kind to the Participants. In
such event, the properties of the Venture shall be conveyed and
assigned to the Participants in a manner so that they shall be
entitled to receive from the interests so conveyed and assigned to
them income on the same basis as specified in Section 4.1. The
interests in Venture properties distributed to the Participants may be
subject to such liens, encumbrances and restrictions as affect the
properties on the date of such distribution.
The liquidator shall comply with any requirements of the Texas Uniform
Partnership Act and all other applicable laws pertaining to the winding up of
the affairs of the Venture and the final distribution of its assets. The
distribution of cash to the Participants in accordance with the provisions of
this Section 8.2 shall constitute a complete return to the Participants of
their respective interests in the Venture and all Venture property.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
SECTION 9.1 REPRESENTATIONS AND WARRANTIES OF THE PARTICIPANTS. Each
Participant hereby represents and warrants to and agrees with the Venture and
the other Participants as follows:
(a) He has the right, power and authority to enter into this
Agreement, to become a Participant, and to perform his obligations
hereunder and this Agreement is a legal and binding obligation of such
Participant.
11
12
(b) He has adequate means of providing for his current needs
and possible personal contingencies, and he has no need now, and
anticipates no need in the foreseeable future to sell his interest in
the Venture. He is able to bear the economic risks of this investment
and consequently, without limiting the generality of the foregoing, he
is able to hold his interest in the Venture for an indefinite period
of time and has a sufficient net worth to sustain a loss of his entire
investment in the event such loss should occur.
(c) (i) He either (A) is a natural person with an individual
net worth, or joint net worth with his spouse, at the time of his
purchase in excess of$1,000,000, (B) is a natural person with
individual income in excess of $200,000 in each of the two most recent
years and reasonably expects an income in excess of $200,000 in the
current year, or (C) is an entity composed solely of persons meeting
the requirements of one or more of the above subcategories (A) or (B);
or (ii) He has such knowledge and experience in financial. tax and
business matters to be capable of evaluating the merits and risks of
an investment in the Venture.
(d) He recognizes that his investment in the Venture involves
a high degree of risk which may result in the loss of the total amount
of his investment.
(e) He is acquiring his interest in the Venture for his own
account (as principal) or the for account of his spouse (either in a
joint tenancy, tenancy by the entirety or tenancy in common) for
investment and not with a view to the distribution or resale thereof.
(f) He has not offered or sold any portion of his interest in
the Venture and has no present intention of dividing his interest
therein with others or of reselling or otherwise disposing of any
portion of his interest in the Venture, either currently or after the
passage of a fixed or determinable period of time or upon the
occurrence or nonoccurrence of any predetermined event or
circumstance.
(g) He is aware that he must bear the economic risk of his
investment in the Venture for an indefinite period of time because (i)
interests in the Venture have not been registered under federal or
state securities laws, and therefore cannot be sold unless they are
subsequently registered under the Securities Act of l933 and any
applicable state securities laws or unless an exemption from such
registration is available and. further, that only the Venture can take
action to register interests in the Venture and the Venture is under
no obligation and does not propose to attempt to do so, and (ii) the
Agreement provides that a Participant may assign his interest in the
Venture only upon the satisfaction of certain conditions. He also
recognizes that no federal or state agency has passed upon the
interests in the Venture or made any finding or determination as to
the fairness of an investment in the Venture.
(h) The foregoing representations, warranties and agreements
shall remain true and accurate during the terms of the Venture, and he
will neither take action or permit action to be taken which would
cause any of them to become untrue or inaccurate.
12
13
ARTICLE X
MISCELLANEOUS
SECTION 10.1 NOTICES. All notices, elections, demands or other
communications required or permitted to be made or given pursuant to this
Agreement shall be in writing and shall be considered as properly given or made
if give by (a) personal delivery or (b) expedited delivery service with proof
of delivery, or (c) United States mail, postage prepaid. registered or
certified mail, return receipt requested. or (d) prepaid telegram or telex
(provided that such telegram or telex is confirmed by expedited delivery
service or by mail in the manner previously described, sent to the intended
addressee at the address set forth opposite the signature of such Partner, and
shall be deemed to have been given either at the time of personal delivery, or,
in the case of delivery service or mail, as of the date of delivery at the
address and in the manner provided herein.
SECTION 10.2 AMENDMENT. Except to the extent necessary to effect the
provisions of Section 3.5, this Agreement may be changed, modified or amended
only by an instrument in writing duly executed by all Participants.
SECTION 10.3 PARTITION. Each of the Participants hereby irrevocably
waives for the term of the Venture any rights that such Participant may have to
maintain any action for partition with respect to Venture property.
SECTION 10.4 ENTIRE AGREEMENT. This Agreement constitutes the full and
complete agreement of the parties hereto with respect to the subject matter
hereof.
SECTION 10.5 NO WAIVER. The failure of any Participant to insist upon
strict performance of a covenant hereunder or of any obligation hereunder,
irrespective of the length of time for which such failure continues, shall not
he a waiver of such Participants' right to demand strict compliance in the
future.
No consent or waiver, express or implied, to or of any breach or default in the
performance of any obligation hereunder shall constitute a consent or waiver to
or of any other breech or default in the performance of the same or any
obligation hereunder. -
SECTION 10.6 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED,
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
SECTION 10.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, their respective heirs,
legal representatives, successors and assigns, provided, however, that no
Participant may sell, assign, transfer or otherwise dispose of all or any part
of his rights or interest in the Venture or under this Agreement except as
provided in Article VII.
SECTION 10.8 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be an original and all of which shall
constitute but one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the 17th day of March, 1989 but effective as of the day and year first above
written.
ADDRESS: PARTICIPANTS:
000 X. Xx. Xxxx, Xxxxx 000 Xxxxxxxx Xxxxxxx Corporation
Xxxxxx, Xxxxx 00000
13
14
By: /s/ XXXXX X. XXX
------------------------------
Name: Xxxxx X. Xxx
Title: Chairman
3000 San Jacinto Tower The Grayrock Corporation
Xxxxxx, Xxxxx 00000
By: /s/ XXXXX X. XXXXXX
------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
1116 One Energy Square Xxx Xxxxxx Oil Company
Xxxxxx, Xxxxx 00000
By: /s/ XXXXXXX X. XXXXXX
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Partner
Xxxxxxx Xxxxx, Xxxxx 0000 /S/ XXXXX X. XXXXXXX
Lock Box #1 ---------------------------------------
Xxxxxx, Xxxxx 00000 Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxx Xxxx Xxxxxxxx Energy Group
Xxxxxxxxx, Xxxxxxxx 00000 /s/ XXXXXX X. XXXXXX
---------------------------------------
Xxxxxx X. Xxxxxx
X.X. Xxx 000 /s/ D. MILES PRICE
Xxxx Xxxxxx, Xxx Xxxx 00000 ---------------------------------------
D. Miles Price
000 Xxxxxxxx Xxxxx, Xxxxx 0000 /s/ XXXXXXX XXXXXXXXX
Xxxxxx, Xxxxx 00000 ---------------------------------------
Xxxxxxx Xxxxxxxxx
14
15
EXHIBIT "B"
Toreador Royalty Corporation
000 X. Xx. Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
(000) 000-0000
March 1, 1989
Xx. X. X. Xxxxxxxx
Bandera Petroleum, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx
Xxxxx, Xxxxxxxx 00000
Re: Exploration Program/Arkoma Basin
Dear Xx. Xxxxxxxx:
This agreement (hereinafter, the "AGREEMENT") is entered into as of
the first day of March, 1989, by and among Toreador Royalty Corporation, a
Delaware corporation ('TOREADOR"), and X. X. Xxxxxxxx, an Oklahoma resident,
and Bandera Petroleum, Inc., an Oklahoma Corporation (hereinafter "W-B"). This
Agreement sets forth the terms and conditions pursuant to which Toreador and
W-B will participate in the business of an exploration program for the assembly
of oil and gas prospects in the Arkoma Basin, Arkansas.
1. The purpose of this Agreement is to provide for the generation and
acquisition of oil and gas prospects and leases for the drilling, development
and production thereon in the Area of Mutual Interest designated in Exhibit "A"
attached hereto and made a part hereof (the "AMI BASIN") from the date hereof
until March 1, 1991 (the "ACQUISITION TERM").
2. This Agreement is not intended and shall not be construed to create
a joint venture, a mining or other Partnership (general, limited or otherwise)
under state law or for tax purposes, or an association, any sort of trust or
other fiduciary relationship or otherwise render the parties hereto liable as
partners. Each party agrees to join in the execution of any documents and
elections as may be required to effectuate the purpose of this Paragraph 2.
3. W - B will generate a minimum of four (4) prospects as soon as
practical. Toreador will have the right but not the obligation to assemble
leases within these prospects with the intent of marketing said prospects for
sale or farm-out or for its own drilling and exploration. Should W - B generate
more than four prospects, Toreador will have the right or first refusal under
the same term as set forth in Paragraphs 5 and 8 below on each additional
prospect generated by W - B within the AMI during the Acquisition Term.
Toreador must accept or reject such prospect within ten (10) business days of
receipt of written notice thereof. When a prospect is accepted by Toreador, the
parties hereto shall mutually agree upon a prospect area of mutual interest (a
"PROSPECT AMI"), which Prospect AMI shall remain in effect for a five year
period, commencing with the date of acquisition of any leases therein by either
of the parties hereto. If either party shall acquire an additional lease within
a Prospect AMI during the term thereof, such lease shall become subject to the
terms of this Agreement at the election of the other party (the "NON-ACQUIRING
PARTY")
16
within fifteen (15) days following receipt of written notice of such
acquisition by the non-acquiring party. Failure to respond within fifteen (15)
days of notice shall be deemed to be a rejection of such lease.
4. Toreador intends to assemble leasehold interests acquired pursuant
hereto and market such prospects to prospective purchaser candidates or
farmers. It is also the intent of Toreador to seek additional investor partners
to share the cost of assembly of such geophysical data end leasehold positions.
Such investor partners shall be bound by the terms of this Agreement.
(Toreador, together with its investor partners shall be referred to herein as
the "FUND".) Toreador will direct all leasehold acquisition activities, all
marketing efforts and will determine all terms and conditions of any sale.
5. For and in consideration of generation of these prospects, W - B
will be entitled to receive 30% of the net profit (as defined below) earned by
the Fund for any sale of a prospect and/or leasehold position generated pursuant
to this Agreement on a prospect by prospect basis. In addition, W - B will
receive 50% of any overriding royalty retained by the Fund in any sale of such
leases or farm-out of same, and 30% of any carried interest or reversionary
interest of the Fund which occurs after payout of any such prospect which is
sold or farmed out to a third party. These percentages are to be proportionately
reduced as to the interest in the leases owned by the Fund. Any compensation to
be paid to W - B hereunder shall accrue and be payable upon the earlier to occur
of (a) the sale by the Fund of 100% or the interests held by it in such prospect
or (b) a partial sale of the interests held by the Fund in such prospect and an
election by the fund (or its Participants) to participate in the drilling of an
initial well on the remaining interest held in such prospect. For purposes of
this Paragraph, "net profit" is defined as the difference between (i) the net
sales price obtained by the Fund (computed on 100% of its interest in such
prospect) and (ii) all leasehold acquisition, brokerage, and geophysical costs,
all expenses incurred by the Fund to assemble and market these prospects,
including Toreador's management fee (not to exceed $36,000 per annum) printing,
drafting, postage, travel and all other reasonable costs payable to third
parties (including without limitation, all costs paid or reimbursed to W - B
pursuant to Paragraph 6 hereof).
6. In consideration of Toreador's investment, supervision, marketing
and sales of prospects generated pursuant to this Agreement, W - B agrees to
contribute on a continuing basis within the AMI its technical expertise in the
preparation and presentation of these prospects both to prospective investor
partners as well as purchaser candidates. Such items and services to be
provided by W - B include, without limitation, the following:
a. preparation of geologic and geophysical maps and presentation
materials;
b. review and acquisition of seismic data;
c. marketing of the prospects to purchaser candidates with
Toreador, at its request; and
d. necessary travel to meet with prospective purchaser
candidates.
The Fund will reimburse W - B for all third party costs for preparing sales
packages and travel expenses incurred in marketing the prospects.
7. In the event that Toreador and its investor partners contribute to
the drilling of an exploratory well on a prospect generated pursuant to this
Agreement or cause such a well to be drilled, Toreador, its investor
partners and any third party owners will enter into a mutually agreeable Joint
Operating Agreement with each party contributing its proportionate share of the
costs.
2
17
8. In the event Toreador, the Fund or one or are of its partners
elects to participate in the drilling of all or a portion of its interest in
the initial well on a prospect generated pursuant to this Agreement, then in
lieu of the compensation set forth in Paragraph 5 hereof, the W - B
compensation shall be computed as follows;
a) should there be any third party sales from Toreador or the Fund
within the prospect, W - B shall receive compensation on the same
terms as outlined in Paragraph 5 from the portion sold and from those
parties that elect to drill all or a portion of their interest,
proportionately reduced.
b) should there be any third party sales from Toreador or the Fund
within the prospect, W - B shall receive as consideration 15% of total
prospect acquisition costs including lease bonus, title, travel,
reproduction and geophysical costs related to the acquisition of such
prospect) proportionately reduced. In addition W - B shall be entitled
to receive an overriding royalty interest equal to 50% of the
remainder of twenty percent (20%) minus total leasehold burdens and a
six percent (6%) reversionary interest after payout on the initial
well of the prospect and a 6% working interest in the remaining
acreage held by the Fund in the Prospect AMI, proportionately reduced.
9. This Agreement shall remain in effect until the later of March 1,
1991 or the termination of the last Prospect AMI subject to this Agreement,
unless modified by the written agreement of all parties.
10. This Agreement and the rights and obligations of the parties
hereunder shall be governed and interpreted, construed and enforced in
accordance with the laws of the State of Texas.
11. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, legal representatives,
successors and assigns; provided, however, that no party shall be permitted to
assign its rights or obligations hereunder without the prior written consent of
the other parties.
12. This Agreement may be amended, changed or modified only by an
instrument in writing executed by all parties.
Should the foregoing terms and conditions be acceptable to you, please
execute four originals of this Agreement and return two (2) originals to
Toreador for our records.
Sincerely,
/s/ XXXXX X. XXX
----------------------------------------
Xxxxx X. Xxx
Chairman
Agreed to and Accepted this
7th day of March, 1989
BANDERA PETROLEUM, INC.
By: /s/ X. X. XXXXXXXX
-------------------------------------
Name: X. X. Xxxxxxxx
Title: President
/s/ X. X. XXXXXXXX
----------------------------------------
X.X. Xxxxxxxx, Individually
3
18
AMENDMENT NO. 1 TO JOINT VENTURE AGREEMENT
ARKOMA BASIN JOINT VENTURE 1989
THIS AMENDMENT NO. 1 TO JOINT VENTURE AGREEMENT (this "AMENDMENT")
dated as of March 15, 1989, is made by and among Toreador Royalty Corporation,
a Delaware corporation (the "MANAGER") and The Grayrock Corporation, Xxx Xxxxxx
Oil Company, Xxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, X. Xxxxx Price and Xxxxxxx
Xxxxxxxxx (collectively, together With the Manager, the "PARTICIPANTS").
W I T N E S S E T H :
WHEREAS, a Joint Venture Agreement dated as of March 1, 1989 (the
"VENTURE AGREEMENT"), was made and entered into for the formation of Arkoma
Basin Joint Venture 1989 (the "VENTURE"); and
WHEREAS, the parties hereto desire to amend the Venture Agreement to
reflect certain changes thereto,
NOW, THEREFORE, in consideration of the premises, the mtua1 covenants
and agreements contained herein and in the Venture Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Participants hereby agree to amend the Venture Agreement in
the following particulars:
1. Cost Overruns. Section 3.2 of the Venture Agreement is hereby
amended in its entirety to read as follows:
Section 3.2. Cost Overruns. Subject to the terms of this
Agreement, each Participant shall be obligated to contribute its
Sharing Percentage of actual costs and expenses of Venture operations
to the extent retained revenues or other Venture funds are not
available for the payment thereof. The Manager will use its best
efforts to conduct Venture operations within budgeted mounts; however,
the Participants shall be obligated to pay actual costs and expenses
of Venture operations in excess of budgeted amounts up to, but not in
excess of, 15% of the budgeted amount set forth in Section 3.1.
2. Payment of Capital Contributions. Subsections (a) and (d) of
Section 3.3 of the Venture Agreement are hereby amended to read as follows:
(a) Payments of Capital Contributions agreed to be made
hereunder shall be made by the Participants at such times as requested
by the Manager. Payment of any such Capital Contributions shall be made
by the date set forth in the notice provided by the manager to the
Participants and in the absence of any date specified in the notice,
within 10 days of such notice. The Venture shall have the right to
pursue any remedy existing at law or in equity for the collection of
the unpaid amount of the Capital Contributions agreed to be made as
provided in Sections 3.1 and 3.2 or hereafter agreed to be made as
provided in Section 3.5, interest accrued thereon and other damages and
collection costs incurred by the Venture on account of the
Participant's failure to pay. All late payments shall bear interest at
the lesser of (i) 2% above the prime rate of interest as announced from
time to time by NCNB Texas National Bank in Dallas, Texas, or (ii) the
maximum rate of interest permissible under applicable law.
19
* * *
(d) In addition to the remedies set forth in subsections (a)
through (c) above, the Manager shall have the right to offer to the
remaining Participants the right to pay their pro rata portion of the
unpaid Capital Contributions of the defaulting Participant and to have
their Sharing Percentages adjusted based on the percentage relationship
that each Participant's aggregate Capital Contributions bear to the
aggregate Capital Contributions made to the Venture by all
Participants. The Manager shall have the right to elect any of the
options set forth in subsections (a) through (d) of this Section 3.3,
or any combination thereof, upon the nonpayment of a Capital
Contribution by a Participant, but shall have no obligation to elect to
pursue any particular remedy provided in this Section 3.3. Further, the
Manager shall have no right to separately acquire the interest of the
defaulting Participant except on a pro rata basis in conjunction with
the other Participants as provided in this Section 3.3.
3. Additional Prospects. Section 3.5 of the Venture Agreement is
hereby amended in its entirety to read as follows:
Section 3.5. Additional Prospects. After the expenditure or
commitment for expenditure of the Capital Contributions of the
Participants set forth in Section 3.1 hereof, the Manager, with the
agreement of all Participants, may elect to participate in the
acquisition, exploration, development and/or sales of additional
prospects and the Participants shall make additional Capital
Contributions with respect thereto. In such event, the Manager will
present to the Participants detailed information regarding such
properties and the estimated costs associated therewith. In the event
one or more Participants do not agree to participate in such additional
prospects, the Manager and the Other Participants may elect to so
participate and a separate accounting unit and capital accounts for the
Participants will be established with respect to such prospect, and the
non-participating Participant(s) shall have no rights or interests in
such Prospect. The Participants hereby agree to amend this Agreement to
the extent necessary to establish separate accounting units and capital
accounts when and as required to effectuate the purposes of this
Section 3.5.
4. Liability of Participants. Section 4.3 of the Venture Agreement is
hereby amended in its entirety to read as follows:
Section 4.3. Liability of the Participants. Each Participant
hereby acknowledges that as to all third parties dealing with the
Venture, all Participants are jointly and severally liable for all
costs, expenses and obligations of the Venture. However, as among
themselves, the Participants hereby agree that each shall be
individually and solely responsible only for his Sharing Percentage of
the costs, expenses and obligations of the Venture as determined under
this Agreement. Pursuant thereto, each Participant hereby further
agrees to indemnify the other Participants from paying more than their
respective Sharing Percentages of the costs, expenses and obligations
of the Venture in an amount not to exceed his Sharing Percentage of
such costs, expenses and obligations.
5. Reimbursement of Manager. Section 5.5 of the Venture Agreement is
hereby amended in its entirety to read as follows:
Section 5.5. Reimbursement of Manager. All out-of-pocket and third
party costs and expenses incurred by the Manager in managing and
conducting the business and affairs of the Venture, including expenses
incurred in providing or obtaining such professional, technical,
administrative and other services and advice as the Manager may deem
necessary or desirable, shall be paid or reimbursed
2
20
by the Venture as a Venture expense. The Manager shall not be
reimbursed under this Section 5.5 for its overhead and other indirect
costs and expenses.
6. Management Fee. Section 5.6 of the Venture Agreement is hereby
amended in its entirety to read as follows:
Section 5.6. Management Fee. For and in consideration of the
Manager's services in such capacity, the Participants shall pay to the
Manager a monthly fee of $3,000 during the first two years of the
Venture term, or until the earlier termination and liquidation of the
Venture pursuant to the terms of Article VIII hereof. Such management
fee will be in addition to any reimbursement of direct expenses to the
pursuant to Section 5.5.
7. Ratification of Original Agreement. The Venture Agreement, as
amended by this Amendment, is hereby ratified and confirmed in all respects.
8. Counterparts. This Amendment may be executed in several
counterparts, each which shall be an original and all of which shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have executed this Amendment
the day of 17th day of March, 1989, but effective as of March 15, 1989.
PARTICIPANTS:
Toreador Royalty Corporation
By: /s/ XXXXX X. XXX
-----------------------------------
Name: Xxxxx X. Xxx
----------------------------
Title: Chairman
----------------------------
The Grayrock Corporation
By: /s/ XXXXX X. XXXXXX
-----------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title: President
-----------------------------
Xxx Xxxxxx Oil Company
By: /s/ XXXXXXX X. XXXXXX
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
------------------------------
Title: Partner
-----------------------------
3
21
/s/ XXXXX X. XXXXXX
---------------------------------------
Xxxxx X. Xxxxxx
Sterling Energy Corp.
/s/ XXXXXX X. XXXXXX
----------------------------------------
Xxxxxx X. Xxxxxx
/s/ D. MILES PRICE
----------------------------------------
D. Miles Price
/s/ XXXXXXX XXXXXXXXX
----------------------------------------
Xxxxxxx Xxxxxxxxx
4
22
AMENDMENT NO. 2 TO JOINT VENTURE AGREEMENT
ARKOMA BASIN JOINT VENTURE 1989
THIS AMENDMENT NO. 2 TO JOINT VENTURE AGREEMENT (this "AMENDMENT")
dated as of June 28, 1989, is made by and among Toreador Royalty Corporation, a
Delaware corporation (the "MANAGER"), and The Grayrock Corporation, Xxx Xxxxxx
Oil Company, Xxxxx X. Schu1z, Sterling Energy Corporation, D. Miles Price and
Xxxxxxx Xxxxxxxxx (collectively, together with the Manager, the
"PARTICIPANTS").
W I T N E S S T H :
WHEREAS, a Joint Venture Agreement dated as of March 1, 1989 as
subsequently amended by Amendment No. 1 to Joint Venture Agreement dated March
15, 1989 the ("VENTURE AGREEMENT"), was made and entered into for the formation
of Arkoma Basin Joint Venture 1989 (the "VENTURE"); and
WHEREAS, the parties hereto desire to amend the Venture Agreement to
reflect an increase in the budget for the Venture as agreed upon at a meeting
of the Participants held June 28, 1989;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and in the Venture Agreement and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Participants hereby agree to amend the Venture
Agreement in the following particulars:
1. Budget Increase. Section 3.1 of the Venture Agreement is hereby
amended in its entirety to read as follows:
Section 3.1. Initial Capital Contributions of Participants.
The Venture shall attempt to generate and acquire Leases on four
Prospects pursuant to the Arkoma Letter Agreement. The Participants
have agreed upon an initial budget based upon four anticipated
Prospects equal to $800,000 to be allocated as follows:
(a) Prospect Generation Costs $ 40,000
(b) Lease Acquisition Costs (including
brokerage and seismic costs) 700,000
(c) Management Fee (first year) 36,000
(d} Organization Costs and Other Costs 24,000
--------
Total $800,000
Each Participant has received cash calls for his proportionate share of
$600,000. Each Participant agrees to pay his Sharing Percentage of any unpaid
portion of such $600,000 and of the remaining $200,000 as called for from time
to time by the Manager.
2. Ratification of Original Agreement. The Venture Agreement, as
amended by this Amendment, is hereby ratified and confirmed in all respects.
3. Counterparts. This Amendment may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
23
IN WITNESS WHEREOF, the parties hereby have executed this Amendment the
6th day of July, 1989, be effective as of June 28,1989.
PARTICIPANTS:
Toreador Royalty Corporation
By: /s/ XXXXX X. XXX
--------------------------------
Name: Xxxxx X. Xxx
-------------------------
Title: Chairman
-------------------------
The Grayrock Corporation
By: /s/ XXXX X. XXXXXXX
--------------------------------
Name: Xxxx X. Xxxxxxx
-------------------------
Title: Senior V.P.
-------------------------
Xxx Xxxxxx Oil Company
By: /s/ XXXXXXX X. XXXXXX
-------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Partner
/s/ XXXXX X. XXXXXX
-----------------------------------
Xxxxx X. Xxxxxx
Sterling Energy Corporation
By: /s/ XXXXXX X. XXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxx
/s/ D. MILES PRICE
-----------------------------------
D. Miles Price
-----------------------------------
Xxxxxxx Xxxxxxxxx
2
