AGREEMENT
EXHIBIT
10.9
WHEREAS,
Oil For America (OFA) has obtained the right to drill a twin to the Evaline
1-18
Well from the present lease holder and operator Helis Oil & Gas, LLC
(Helis), at such location as OFA has determined to be the best location to
produce oil from the Lodgepole Reef, and
WHEREAS,
OFA has obtained the right under an Operating Agreement to drill two additional
Lodgepole Reefs identified by OFA on the leases owned by Helis (the “Leases”),
which rights are documented in the attached Agreement between OFA and Helis;
and
WHEREAS,
OFA has obtained the agreement of Coastal Petroleum Company (Coastal) to act
as
operator of the project until the twin to the Evaline 1-18 well is producing;
and
WHEREAS,
each of the undersigned persons (“Participants”) desire to participate in the
costs of drilling this twin well and the operations thereof, and to have their
pro-rata share of the opportunity to participate in the xxxxx to test the two
additional Lodgepole Reefs on the Leases;
NOW
THEREFORE, the undersigned parties agree upon the following terms which shall
govern their rights and responsibilities:
1.
The expected cost of the twin well to the Evaline 1-18 is $600,000 to drill,
complete and connect the production to the existing surface facilities at the
well (the “Anticipated Cost(s)”). The Anticipated Cost is divided into six parts
(the “Participating Interests”) and each Participant shall pay to Coastal their
pro-rata share of this cost at the time of signing this Agreement. Coastal
shall
act as operator of the program. (Coastal itself is purchasing a 1/6
Participant’s Interest.)
2.
In the event actual costs exceed the Anticipated Costs (“Additional Costs”),
each Participant shall be obligated to pay their pro-rata share of the
Additional Costs within ten (10) days of the notice from Coastal requesting
such
payment. The Participating Interest of any person who fails to pay such cost
when due shall be divided equally amongst the remaining Participants who agree
to pay such pro-rata share not paid timely by a Participant. Any funds remaining
after completion of the well will be returned pro rata to the Participants.
A
person may purchase more than one Participant Interest.
3.
Coastal shall drill, complete and tie the production into the current facilities
as soon as reasonably possible pursuant to the Operating Agreement with Helis
and this Agreement. At the time satisfactory production is achieved, Coastal
shall assign its responsibilities as operator of the well to Helis.
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4.
At the time the required production is established (more than 100 barrels
per
day), Helis shall assign a 60% working interest in the lease to Oil For America.
Oil For America shall assign the 60% interest to Coastal, which shall act
as
operator of the 60% interest for the benefit of the Participating Interests,
Xxxx Xxxxxx, OFA and itself as operator. Coastal shall forward the shares
of
revenues less costs in the following manner:
Before
Payout of the Well:
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(i)
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A
9% working interest (out of the 60% working interest owned by OFA)
to each
Participant
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(ii)
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A
5% working interest (out of the 60% working interest) to Coastal
as
operator.
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(iii)
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A
1% working interest (out of the 60% working interest) to Xxxx
Xxxxxx
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After
Payout of the Well:
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(i)
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A
6.75% working interest (out of the 60% working interest) to each
Participant
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(ii)
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A
13.5% working interest (out of the 60% working interest) to
OFA
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(iii)
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A
5% working interest (out of the 60%) to Coastal as
operator
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5.
Xxxx Xxxxxx may reassign his interest at any time after proper notice to
Coastal; such interest to be assigned pro-rata to the benefit of the parties
pursuant to the above ratios of working interests, excluding his
interest.
6.
OFA may assign its interest to its individual partners and/or their
assigns.
7.
OFA shall confidentially identify to Coastal and the Participants each of the
other two Lodgepole Prospects on the leases. Coastal shall prepare a drilling
and completion plan along with an Authorization For Expenditure (“AFE”) and give
at least 30 days notice to each Participant of its intention to commence
operations. Coastal, along with OFA, shall endeavor to obtain the agreement
of
Helis to reduce its working interest for the new xxxxx prior to the preparation
of the AFE. Any reduction shall be apportioned among the parties pro rata.
Each
Participant shall have 21 days to pay their share of the AFE to Coastal in
order
to participate in the program. In the event one or more Participants decline
to
participate in the new program such share will be offered on a
first-come-first-served basis to the remaining participants. In the event none
of the Participants acquires the declined share it will be offered to other
persons who have indicated an interest in acquiring a Participating Interest,
including OFA or its individual partners. Neither Coastal nor any of the
Participants shall be entitled under this Agreement to any further prospects
from OFA in this area, unless acquired under the terms of another agreement
with
OFA.
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8.
Neither Coastal nor any Participant shall have any right to OFA's proprietary
AI, AII, AIII or AIV Technology, any of OFA’s maps, photos or data, which are
the exclusive property of OFA. Neither Coastal nor any of the Participants
will
disclose any of such information revealed to them by OFA.
9.
All notices and other communications given or made pursuant to this Agreement
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed electronic
mail
or facsimile if sent during normal business hours of the recipient, and if
not
so confirmed, then on the next business day, (c) five (5) days after having
been
sent by registered or certified mail, return receipt requested, postage prepaid,
or (d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the respective parties at their address as
set
forth on the signature page, or to such e-mail address, facsimile number or
address as subsequently modified by written notice given in accordance with
this
Section.
10.
If any action at law or in equity (including arbitration) is necessary to
enforce or interpret the terms of any of this Agreement, the prevailing party
shall be entitled to reasonable attorney’s fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
11.
Amendments
and Waivers
. Any
term of this Agreement may be amended, terminated or waived only with the
written consent of each of the Parties hereto.
12.
Severability
. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision. No delay or omission
to
exercise any right, power or remedy accruing to any party under this Agreement,
upon any breach or default of any other party under this Agreement, shall impair
any such right, power or remedy of such non-breaching or non-defaulting party
nor shall it be construed to be a waiver of any such breach or default, or
an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.
Any
waiver, permit, consent or approval of any kind or character on the part of
any
party of any breach or default under this Agreement, or any waiver on the part
of any party of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in
such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.
13.
This Agreement (including the Exhibits hereto), constitute the full and
entire understanding and agreement between the parties with respect to the
subject matter hereof, and any other written or oral agreement relating to
the
subject matter hereof existing between the parties are expressly
canceled.
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14.
The parties agree that any unresolved controversy or claim arising out of
or relating to this Agreement, except as: (i) otherwise provided in this
Agreement, or (ii) any such controversies or claims arising out of either
party’s intellectual property rights for which a provisional remedy or equitable
relief is sought, shall be submitted to arbitration by one arbitrator mutually
agreed upon by the parties, and if no agreement can be reached within thirty
(30) days after names of potential arbitrators have been proposed by the
American Arbitration Association (the “ AAA
”),
then
by one arbitrator having reasonable experience in oil and gas transactions
of
the type provided for in this Agreement and who is chosen by the AAA. The
arbitration shall take place in Tallahassee, Florida, in accordance with the
AAA
rules then in effect, and judgment upon any award rendered in such arbitration
will be binding and may be entered in any court having jurisdiction thereof.
There shall be limited discovery prior to the arbitration hearing as follows:
(a) exchange of witness lists and copies of documentary evidence and documents
relating to or arising out of the issues to be arbitrated; (b) depositions
of all party witnesses; and (c) such other depositions as may be allowed by
the
arbitrators upon a showing of good cause. Depositions shall be conducted in
accordance with the Florida Code of Civil Procedure, the arbitrator shall be
required to provide in writing to the parties the basis for the award or order
of such arbitrator, and a court reporter shall record all hearings, with such
record constituting the official transcript of such proceedings. The prevailing
party shall be entitled to reasonable attorney’s fees, costs, and necessary
disbursements in addition to any other relief to which such party may be
entitled. Each of the parties to this Agreement consents to personal
jurisdiction for any equitable action sought in the U.S. District Court for
the
Northern District of Florida or any court of the State of Florida having subject
matter jurisdiction.
15.
The date of this contract is August 10, 2006.
16.
This Agreement may be signed in counterparts.
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Coastal
Petroleum Company:
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Participant
1:
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Oil
For America:
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Participant
2:
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Participant
3:
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Participant
4:
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Participant
5:
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Participant
6:
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