OIL AND GAS PROPERTY PARTICIPATION AND RIGHTS AGREEMENT
EGPI Fircreek, Inc. on behalf of itself
and all of its wholly owned subsidiaries (“EGPI”) and Dutchess Private Equities
Fund, Ltd. (“Dutchess”) on the other, hereby enter into this agreement
concerning their rights and participation in certain oil and gas property
interests.
WHEREAS,
EGPI held certain rights pursuant to the Participation Agreement dated January
3, 2007 between Success Oil Co. (“Success Oil”) and EGPI’s wholly owned
subsidiary, Firecreek Petroleum Inc, a copy of which is attached hereto (the
“Participation Agreement”);
WHEREAS, by virtue of a valid
assignment of EGPI’s rights in the Participation Agreement to Dutchess, Dutchess
or its assignee holds all of the rights under the Participation Agreement,
including certain rights of first refusal to participate in the development of
additional xxxxx on property described as the “X.X. Xxxx 18-1” under Section
VIII of that Participation Agreement;
WHEREAS,
should Dutchess or its assignee decline to exercise any right of first refusal
under Section VIII of the Participation Agreement, Dutchess will provide an
opportunity for EGPI to elect to exercise such right as Dutchess’ assignee;
and
WHEREAS,
the Parties further wish to grant to each party the right to partner with the
other party in the development of any additional well(s) under section VIII of
the Participation Agreement, with each partner sharing an interest equivalent to
its proportionate funding of such project(s); and
NOW THEREFORE, in consideration of the
mutual promises herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, EGPI and Dutchess agree as
follows:
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1.
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Notice to
EGPI. Within ten (10) days of the receipt by Dutchess of
any notice pursuant to Section VIII of the Participation Agreement
concerning Success Oil’s anticipated drilling of additional xxxxx,
Dutchess or its assignee shall send to EGPI, via US Registered Mail return
receipt requested or Federal Express, a notice indicating (a) the terms of
the additional development; (b) the date on which the notice was sent and
the date by which Dutchess must act; and (c) whether Dutchess intends to
elect or decline to exercise its right of first refusal to develop such
additional well(s).
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2.
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Assignment of Right of Refusal
to EGPI. Should Dutchess or its assignee decline to
exercise its right of first refusal to participate in any particular
additional development identified in the notice pursuant to paragraph 1
above, Dutchess shall grant EGPI the option of participating in such
additional development as assignee of any of Dutchess’s rights so
assignable, with respect to that development. If EGPI elects to
accept the assignment of Dutchess’ rights to develop such additional
well(s), EGPI or its assignee shall, within an amount of days of the
mailing of the notice by Dutchess identified in Paragraph 1 not to exceed
the time defined in the Participation Agreement, send to Dutchess by
facsimile, U.S. registered Mail return receipt requested, or Federal
Express, a notice of its intent to exercise such rights. If either party
has no interest or reasonable expectation of funding capacity they shall
notify the other party within 10 days releasing the other to proceed
without delay.
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3.
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Mutual Rights of
Participation. On the terms set forth below, EGPI grants to
Dutchess or its assignee, and Dutchess grants to EGPI or its assignee, the
right to participate in any additional development undertaken pursuant to
Section VIII of the Participation Agreement and Paragraph 2
above.
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a.
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Right to
participate. Upon notice by Dutchess or its assignee of
its intent to develop any additional well(s) pursuant to Section VIII of
the Participation Agreement, EGPI or its assignee may elect to participate
in such development. Upon notice by EGPI or its assignee of its
intent to accept the assignment of any right of refusal from Dutchess,
pursuant to Paragraph 2 herein, Dutchess or its assignee may elect to
participate in such additional
development.
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b.
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Notice of
participation. A party electing to participate in any
additional development pursuant to this section shall provide notice to
the developing party of its intent to participate within the time frame
listed in Paragraph 2 above regarding the receipt of notice of the other
party’s election to develop the additional well(s). The notice
shall indicate the amount of funding the participating party intends to
provide for the additional development and shall provide sufficient
evidence of the participating party’s financial ability to provide the
stated funding contribution.
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c.
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Proportionate
participation interest. In any development undertaken
pursuant to this paragraph 3, the interests in such development shall be
allocated in proportion to each participating entity’s funding
contribution. If the combined funding that each participating
entity is willing and able to provide for a project exceeds 100% of the
project cost as determined in accordance with the terms of the
Participation Agreement, then the funding and interests shall be allocated
in proportion to the amount each participating entity is willing and able
to fund.
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Example: If EGPI is able to
fund 80% of the cost of a particular additional development, and Dutchess is
able to fund 40% of such development, EGPI shall retain a 66.66% interest and
Dutchess shall retain a 33.33% in the project. If both EGPI and
Dutchess are able to fund 80% of a particular project, each shall retain a 50%
interest.
IN WITNESS WHEREOF, the
Parties have caused this Agreement to be executed on the date set forth
below:
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DUTCHESS
PRIVATE EQUITIES
FUND,
LTD.
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EGPI
FIRECREEK, INC. itself and
on
behalf of all of its subsidiaries
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By:
Xxxxxxx X. Xxxxxxxx
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By:
Xxxxxx X. Xxxxxxxxx
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Its: Managing
Partner
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Its:
Chairman and CEO
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Date:
December 3, 2008
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Date:
December 3, 2008
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