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: ------------------- 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 ----------- 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; ------------------------------------------------------------------- Drilling of Obligation Xxxxx ---------------------------- 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 -------------- 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 ------------------------------------------------------------------------ 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 ----------------------- 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 ----------------------- 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 ----------- 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 ------------------ 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 ------------------ 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
