AGREEMENT
---------
The Parties to this Agreement are Petrosearch Energy Corporation,
Petrosearch Operating Company, L.L.C., Buena Vista Petrosearch, L.L.C., Pursuit
Petrosearch, L.L.C., Rocky Mountain Petrosearch, L.L.C., Big Sky Petrosearch,
L.L.C., Great Buffalo Petrosearch, L.L.C., Rock Energy Partners Operating, L.P.
and Rock Energy Partners, L.P.
ARTICLE I
DEFINITIONS
-----------
The following terms, as used in this Agreement, shall have the meanings
indicated below unless the context otherwise requires:
1.01 "Agreement" shall mean this Agreement.
---------
1.02 "Amended ROFR" shall mean the Amended Right of First Refusal
-------------
Agreement in the form attached as Exhibit A.
1.03 "AMI" means area of mutual interest.
---
1.04 "Approved Operating Agreement" shall mean an operating agreement
------------------------------
and accounting procedures in the form of Exhibit B attached hereto.
1.05 "Buena Vista AMI" shall mean the area described in Exhibit C
-----------------
attached hereto.
1.06 "Buena Vista Assignment" shall mean an assignment by Rock in favor
----------------------
of BVPS in the form of Exhibit D attached hereto.
1.07 "Buena Vista Leases" means the oil, gas and mineral Leases,
--------------------
including any extensions or amendments, described on Exhibit E attached hereto.
1.08 "Buena Vista Operating Agreement" means an operating agreement in
--------------------------------
the form of the Approved Operating Agreement with respect to the Buena Vista
AMI.
1.09 "Buena Vista Petrosearch Regulations Amendment" shall mean the
-------------------------------------------------
Amendment to Regulations of Buena Vista Petrosearch attached hereto as Exhibit
F.
1.10 "Buena Vista Stage 1 Payout" shall have the meaning as defined in
---------------------------
both the PEC Production Payment and Rock Production Payment.
1
1.11 "Buena Vista Stage 2 Payout" shall have the meaning as defined in
---------------------------
both the PEC Production Payment and Rock Production Payment.
1.12 "BVPS" shall mean Buena Vista Petrosearch, L.L.C.
----
1.13 "Business Day" shall mean a day other than a Saturday, a Sunday or
------------
any United States Federal holiday.
1.14 "Claims" mean any and all losses, liabilities, damages, punitive
------
damages, obligations, expenses, fines, penalties, costs, claims, causes of
action and judgments for: (i) breaches of contract; (ii) loss or damage to
property, injury to or death of persons, and other tortuous injury, and (iii)
violations of applicable laws, rules, regulations, orders or any other legal
right or duty actionable at law or in equity. The term "Claims" also includes
reasonable attorneys' fees, court costs, and other reasonable costs of
litigation resulting from the defense of any claim or cause of action within the
scope of the indemnities in this Agreement.
1.15 "Closing Date" shall mean December 30, 2005 or such other date as
-------------
agreed upon by Rock and the Petrosearch Parties.
1.16 "Contract Area" means the area covered by an operating agreement
--------------
as defined in a particular operating agreement.
1.17 "Development Costs" means (i) capital expenditures incurred in
------------------
connection with the drilling, fracing, completing and equipping of new xxxxx,
(ii) capital expenditures incurred in laying pipelines including obtaining
rights of way, construction and testing of the pipelines, (iii) capital
expenditures incurred with respect to deepening, plugging back, reworking,
completing, refracing, recompleting and equipping existing xxxxx, (iv) capital
expenditures incurred in connection with the actual or attempted acquisition of
oil and gas leases or oil and gas interests, (v) capital expenditures incurred
in connection with geophysical operations; and (vi) other capital expenditures.
1.18 "Front End Expense Audit" means the completed audit of all
--------------------------
leasehold and other front end costs billed to Rock by PEC.
1.19 "Xxxxxxx XXX" means the area described in Exhibit H attached
------------
hereto, excluding any leases which a party does not elect to acquire pursuant to
Article VIII.
1.20 "Xxxxxxx Contract Operator Agreement" means the agreement in the
-------------------------------------
form of Exhibit G attached hereto.
1.21 "Xxxxxxx Operating Agreement" means the operating agreement in the
---------------------------
form attached hereto as Exhibit I.
1.22 "Xxxxxxx North Leases" means the oil, gas and mineral leases,
----------------------
including any extension thereto, described on Exhibit J attached hereto.
2
1.23 "Xxxxxxx North Operating Agreement" shall mean an operating
------------------------------------
agreement and accounting procedures with respect to the Xxxxxxx North Leases.
1.24 "Garwood South Leases" means the oil, gas and mineral leases,
----------------------
including any extension thereto, described on Exhibit K attached hereto.
1.25 "Net Profits" shall be computed in accordance with and have the
------------
meaning set forth in the PEC Production Payment and the Rock Production Payment.
1.26 "Net Profits Account" shall have the meaning set forth in the PEC
--------------------
Production Payment and Rock Production Payment.
1.27 "Operations Expense Audit" mean an audit to be performed by Rock
--------------------------
of all drilling, completion, operating expenses, and other expenses not covered
by the Front End Expense Audit that have been paid by Rock in connection with
the ROFR and/or with the xxxxx drilled since execution of the ROFR in which Rock
participated by paying all, or a portion of, costs.
1.28 "Parties" shall mean the parties to this Agreement unless the
-------
context requires otherwise.
1.29 "Payout" shall mean with respect to a particular property, the
------
point in time in which Gross Proceeds equals Debits (as those terms are defined
in the Payout Computation Procedure).
1.30 "Payout Computation Procedure" shall mean the procedure attached
------------------------------
as Exhibit L.
1.31 "POC" shall mean Petrosearch Operating Company, L.L.C.
---
1.32 "PEC" shall mean Petrosearch Energy Corporation.
---
1.33 "PEC Production Payment" shall mean a production payment
------------------------
assignment from BVPS to PEC in the form of Exhibit M attached hereto.
1.34 "PEC Review" shall have the meaning described in Section 10.04.
-----------
1.35 "Petrosearch Parties" shall mean POC, PEC, Big Sky Petrosearch,
--------------------
L.L.C., Great Buffalo Petrosearch, L.L.C., BVPS, Pursuit Petrosearch, L.L.C.,
and Rocky Mountain Petrosearch, L.L.C.
1.36 "Xxxxxxxx-Xxxxxxx Account Payable" means $$1,100,655.88 owed by
----------------------------------
Rock to PEC through September 30, 2005.
1.37 "Xxxxxxxx-Xxxxxxx Historic Costs" means $7,811,009.80 which
---------------------------------
represents all the costs incurred in connection with the Buena Vista project and
the Xxxxxxxx-Xxxxxxx Well through September 30, 2005.
3
1.38 "Xxxxxxxx-Xxxxxxx Well" shall mean the well described in Exhibit N
---------------------
attached hereto.
1.39 "Pintail Flats Well" shall mean the well described in Exhibit O
--------------------
attached hereto.
1.40 "Pintail Well" shall mean the well described in Exhibit P attached
------------
hereto.
1.41 "Proposed 0000 Xxxxxxx Xxxxx Xxxx" shall mean a well to be drilled
--------------------------------
to test the Lower Xxxxxx formation at a depth not greater than 17,000feet at a
location on Tract 46 to be jointly selected by PEC and Rock.
1.42 "Proposed Xxxxxxx #2 2006 Recompletion" shall mean operations in
---------------------------------------
Xxxxxxx South on the Xxxxxxx #2 well to (i) determine whether a recompletion is
economically warranted, and (ii) recomplete the Xxxxxxx #2 well in the event
that the results of operations demonstrate that attempting to do so is
economically warranted.
1.43 "Qualified Project" means a project in which PEC committed to
------------------
participate for not less than ten percent (10%) of the interest available to
PEC.
1.44 "Rock" shall mean Rock Energy Partners Operating, L.P. and Rock
----
Energy Partners, L.P.
1.45 "Rock Deed of Trust" shall mean the deed of trust in the form of
--------------------
Exhibit Q attached hereto.
1.46 "Rock Production Payment" shall mean a production payment assigned
-----------------------
from BVPS to Rock in the form of Exhibit R attached hereto.
1.47 "Rock Promissory Note" shall mean a promissory note in the amount
---------------------
of Seven Hundred Ninety One Eight Sixty Nine and 41/100 Dollars $791,869.41)
which is equal to the Xxxxxxxx-Xxxxxxx Account Payable less the sum of (i) that
portion of the Front End Expense Audit credits as set forth in Section 10.01 and
(ii) the consideration paid for the bonds assigned pursuant to 2.02(a)10 hereto
executed by Rock in favor of PEC in the form of Exhibit S attached hereto,
provided that the beginning balance may be adjusted based upon Section 8.01(b)
and/or 8.01(c) and/or the PEC Review.
1.48 "ROFR" means the Right of First Refusal Agreement, as amended,
----
between Xxxxx Xxxxx or assigns and PEC.
1.49 "Tract 46" means 438.16 acres of land, more or less, out of the
---------
I.&G.N.R.R. Co. Survey Xx. 00, Xxxxxxxx 000, Xxxxxxxx Xxxxxx, Xxxxx and being
the same land described in Correction Deed from H. Xxxxxx Xxxxxxx et al. to
Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx dated September 20, 1967, recorded in
Volume 263, Page707 of the Colorado County Deed Records.
4
ARTICLE II
CLOSING
-------
2.01 Closing. The Closing shall be held on the Closing Date, after all
-------
the conditions to Closing described in Article III of this Agreement have been
satisfied or waived (the "Closing Date"). The Closing shall be held at the
offices of Rock, 00000 Xxxxxxxx Xxx., Xxxxx 0000, Xxxxxxx, Xxxxx 00000 or
otherwise as agreed by PEC and Rock.
2.02 Delivery at Closing. At the Closing, the following events shall
---------------------
occur, and each event shall be deemed to occur simultaneously with each other
event:
a. Delivery by Rock to the Applicable Petrosearch Parties at
------------------------------------------------------------
Closing.
--------
1. The duly executed original of the Buena Vista
Assignment.
2. The duly executed original of the Amended BVPS
Regulations.
3. The duly executed original of the Rock Promissory Note.
4. The duly executed original of the Rock Deed of Trust.
5. The duly executed original of the Buena Vista Operating
Agreement.
6. The duly executed original of the Xxxxxxx Operating
Agreement.
7. The duly executed original of the Xxxxxxx North
Operating Agreement.
8. The duly executed original of the Xxxxxxx Contract
Operator Agreement.
9. The duly executed original of the Amended ROFR.
10. An assignment in a mutually acceptable form of Rock's
interest in a $30,000 Mississippi bond, a $50,000
Montana bond (less outstanding bills of approximately
$15,402.66) and 50% of a $50,000 Colorado County Road
bond. A total of $89,597.66 shall be credited against
the original principal amount of the Rock Promissory
Note in consideration for the assignment.
5
b. Delivery by the Applicable Petrosearch Parties to Rock at
------------------------------------------------------------
Closing.
-------
1. The duly executed Certificate representing the
membership interest in BVPS.
2. The duly executed BVPS Regulations Amendment.
3. The duly executed Buena Vista Operating Agreement.
4. The duly executed original of the Xxxxxxx Operating
Agreement.
5. The duly executed original of the Xxxxxxx North
Operating Agreement.
6. The duly executed original of the Xxxxxxx Contract
Operator Agreement.
7. The duly executed original of the Rock Production
Payment
8. The duly executed original of the Amended ROFR.
c. Delivery by BVPS to PEC at Closing.
----------------------------------------
1. The duly executed PEC Production Payment.
ARTICLE III
CONDITIONS
----------
3.01 Conditions to Obligations of Rock.
-------------------------------------
a. Representations and Warranties. The representation and
warranties of the each of the Petrosearch Parties contained in this
Agreement shall be true and correct in all material respects on and as of
the Closing Date, with the same effect as though such representations and
warranties had been made on and as of such date.
b. Performance of Covenants. Each Petrosearch Party shall have
--------------------------
performed and complied with all covenants, agreements and obligations
contained in this Agreement required to be performed or complied with by
them prior to or as of the Closing Date.
c. BVPS Due Diligence. BVPS shall have provided to Rock for
--------------------
review all BVPS (i) formation, organization documents, Regulations and
minutes of all BVPS member meetings, (ii) all contracts to which it is a
party, (iii) all financial records and financial statements and tax
returns, (iv) all other information reasonably necessary for Rock to
evaluate the financial condition of BVPS.
6
3.02 Conditions to Obligations of Petrosearch Parties.
-----------------------------------------------------
a. Representations and Warranties. The representation and
--------------------------------
warranties of the Rock contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date, with the
same effect as though such representations and warranties had been made on
and as of such date.
b. Performance of Covenants. Rock shall have performed and
--------------------------
complied with all covenants, agreements and obligations contained in this
Agreement required to be performed or complied with by it prior to or as of
the Closing Date.
ARTICLE IV
BUENA VISTA PETROSEARCH
-----------------------
4.01 Amendment to BVPS Articles of Organization. As of the Closing
----------------------------------------------
Date, BVPS shall have amended its Articles of Organization by adoption of the
BVPS Articles of Organization Amendment.
4.02 Amendment to BVPS Regulations. As of the Closing Date, BVPS shall
-----------------------------
have amended its Regulations by adoption of the BVPS Regulations Amendment.
4.03 Treatment of PEC Commitment. The funds paid by PEC pursuant to
------------------------------
Section 5.05 shall not be treated as a (i) loan to BVPS, or (ii) capital
contribution to BVPS. The sole (a) consideration and (b) source for recoupment
of such funds is the PEC Production Payment.
4.04 Non-Dilution. In no event shall Rock's membership interest
------------
percentage be reduced without its written consent, unless it has exercised its
conversion right as provided in Article VII.
7
ARTICLE V
BUENA VISTA AMI LEASES
----------------------
5.01 Leases acquired as of the Closing Date within the Buena Vista AMI.
-----------------------------------------------------------------
At the Closing, the Parties shall assign to BVPS any interest in any lease
within the Buena Vista AMI they own as of the Closing Date.
5.02 Leases acquired after the Closing Date within the Buena Vista AMI.
-----------------------------------------------------------------
If any Petrosearch Party acquires an interest, or right to acquire an interest,
in all or any portion of the Buena Vista AMI ("Subject Interest") at any time or
times within five (5) years of the Closing Date, then within ten (10) days after
any such acquisition, the Petrosearch Party shall offer to Rock fifty percent
(50%) of the Subject Interest. Such offer shall be made by written notice and
shall include a description of the substantive terms of the acquisition such as,
without limitation, spud deadline, contract depth, override reservations and
earning provision if the acquisition is by farmout. If the offer is not
accepted in writing with ten (10) Business Days of receipt of the written
notice, then the Subject Interest shall be excluded from the Buena Vista AMI and
Rock will have no rights therein. If Rock acquires an interest, or right to
acquire an interest, in all or any portion of the Subject Interest at any time
or times within five (5) years of the Closing Date, then within ten (10) days
after any such acquisition, Rock shall offer to the Petrosearch Parties fifty
percent (50%) of the Subject Interest. Such offer shall be made by written
notice and shall include a description of the substantive terms of the
acquisition such as, without limitation, spud deadline, contract depth, override
reservations and earning provision if the acquisition is by farmout. If the
offer is not accepted in writing within ten (10) Business Days of receipt of the
written notice, then the Subject Interest shall be excluded from the Buena Vista
AMI and the Petrosearch Parties will have no rights therein.
8
5.03 Marketing and Financing. Rock shall have the right, but not an
-------------------------
obligation, to submit proposals to BVPS to farmin, purchase or finance the
development all or a portion of the Buena Vista Leases. BVPS shall in no event
enter into an agreement with a third party to farmout, sell or finance the
development of the Buena Vista Leases or terms less favorable than those which
have been proposed by Rock, provided, however, BVPS may consider other factors
in determine relative desirability of competing offers including, but not
necessarily limited to, cash payments to BVPS, the total dollars offered for
drilling and completion, the number of xxxxx that can be drilled, whether the
offer is irrevocable, the time required to obtain funding, verifiability of the
offeror's wherewithal to provide funding, the amount of interest to be retained
in the project by BVPS, conditions attendant to the offer, and other similar
factors that might affect the present value of the project and the risk in
realizing the maximum present value for the project.
5.04 Partial Release Obligation with Respect to the PEC Production
------------------------------------------------------------------
Payment and Rock Production Payment. BVPS shall be entitled to release of a
---------------------------------------
portion of the Buena Vista Leases from the PEC Production Payment and the Rock
Production Payment subject to and in accordance with the following provisions:
a. The instruments or documents evidencing such partial release
shall be in a form reasonably satisfactory to PEC and Rock.
b. Such documentation and information relating to the transaction
giving rise to the requested release which is reasonably requested by PEC
and Rock is timely provided.
c. The PEC Production Payment and the Rock Production Payment must
attach to the interests created and proceeds of any sales.
5.05 Expenses Post September 30, 2005. In exchange for the PEC
------------------------------------
Production Payment, PEC assumes sole responsibility for payment of any expenses
associated with the
9
Buena Vista Leases which are attributable to post September 30, 2005 (i)
operations, including (a) operations performed with respect to the
Xxxxxxxx-Xxxxxxx Well, and (b) operations performed after the Closing Date, and
(ii) lease acquisition and lease preservation within the Buena Vista AMI. BVPS
shall not be liable for any expenses incurred with respect to the Buena Vista
Leases or the Xxxxxxxx-Xxxxxxx Well that are in excess of the Net Profits
Account which are expenses attributable to post-September 30, 2005 operations.
PEC covenants that it will pay all liabilities of BVPS when they come due. In
no event shall PEC propose an operation or lease acquisition/preservation
expense to BVPS and nonetheless cause BVPS not to approve such operation or
expense.
ARTICLE VI
BUENA VISTA AMI OPERATIONS
--------------------------
6.01 Operating Agreement. As of the Closing Date, the Operating
--------------------
Agreement dated June 21, 2004 is hereby terminated. All operations subsequent
to the Closing Date on the Xxxxxxxx-Xxxxxxx well shall be governed by and
conducted in accordance with the Xxxxxxxx-Xxxxxxx Operating Agreement. As
between the Parties hereto, all operations performed within the Buena Vista AMI
shall from the Closing Date be governed by and conducted in accordance with the
Buena Vista Operating Agreement.
6.02 Pipeline and Transportation Charges. Rock and BVPS will enter
--------------------------------------
into a pipeline transportation agreement pursuant to which natural gas
production by BVPS shall be transported through the Rock existing pipeline at
the rate of ten cents ($.10) per Mcf through December 31, 2006 and five cents
($.05) per Mcf thereafter.
6.03 Expiring Leases. The operator shall notify the non-operator as to
---------------
when any lease will expire within ninety (90) days absent certain operations
which are not expected to be
10
performed. If the operator notifies the non-operator in writing, no less than
30 days prior to lease expiration, that it intends to renew or extend the lease
or release the property covered by such lease and BVPS agrees with the decision,
then the lease renewal or extension shall be for the joint account. If the
operator notifies the non-operator in writing, no less than 30 days prior to
lease expiration, that it DOES NOT intend to renew or extend the lease or
release the property covered by such lease, then the individual members of BVPS
or the non-operators if the conversion set forth in Article VII has occurred
shall be entitled to release the property covered by such lease for its/their
own account and at its/their sole expense, subject to the requirements and
rights set forth in Section 5.02. In other words, if BVPS elects to NOT renew
or extend the lease or release the property covered by such lease, and either
Rock or PEC acquire the lease, the acquirer must offer the acquired interest to
the other party in accordance with Section 5.02.
ARTICLE VII
BUENA VISTA CONVERSION RIGHTS
-----------------------------
7.01 At such time as Buena Vista Stage 2 Payout is achieved, the
following shall occur, unless Rock in advance executes and delivers to BVPS a
release of its conversion and reversionary interest rights, (i) the reversionary
interest provided for in the Buena Vista Assignment shall take effect, (ii) BVPS
shall assign Rock forty percent (40%) of BVPS' interest in the leases within the
Buena Vista AMI not covered by the Buena Vista Assignment. In the event that
Rock delivers a release of its right to an assignment pursuant to this section,
then the reversionary interest reserved in the Buena Vista Assignment shall be
cancelled and released. In the event that Rock does not timely elect to release
its right to an assignment and the reversionary interest, then from the Buena
Vista Stage 2 Payout forward, Rock's membership
11
interest in the BVPS shall not be entitled to the economic benefit of the Buena
Vista Leases or be penalized by the expenses of the Buena Vista Leases.
ARTICLE VIII
XXXXXXX XXX LEASES
------------------
8.01 Leases acquired as of the Closing Date within the Xxxxxxx XXX
-------------------------------------------------------------
other than the Xxxxxxx North Leases and Xxxxxxx South Leases.
------------------------------------------------------------
a. Prior to the Closing Date, the Parties shall provide to each
other (i) a description of any lease within the Xxxxxxx XXX which they own
an interest in and is not either a Garwood South Lease or a Xxxxxxx North
Lease, and (ii) the acquisition cost for each such lease, together with
supporting documentation.
b. PEC may, at its option, elect to acquire twenty percent (20%)
of Rock's interest in the leases that Rock owns as of the Closing Date
within the Xxxxxxx XXX other than the Xxxxxxx North Leases and the Xxxxxxx
South Leases. The election must be made on the later of (i) thirty (30)
days after the Closing Date, and (ii) thirty (30) days after receipt by PEC
of the information required pursuant to Section 8.01(a) with respect to the
leases. If the election is not timely made, all rights of PEC with respect
to such leases are terminated. The purchase price for the twenty percent
(20%) interest in each lease that PEC elects to acquire is the sum equal to
twenty percent (20%) of Rock's acquisition costs with respect to such
lease. The purchase price shall be paid by reduction of the original
principal amount of the Rock Promissory Note.
c. Rock may, at its option, elect to acquire eighty percent (80%)
of PEC's interest in the leases that PEC owns as of the Closing Date within
the Xxxxxxx XXX other than the Xxxxxxx North Leases and the Xxxxxxx South
Leases. The election must be made on the later of (i) three (3) Business
Days prior to the Closing Date, and (ii) three (3) Business Days after
receipt by Rock of the information required pursuant to Section 8.01(a)
with respect to the leases. If the election is not timely made, all rights
of Rock with respect to such leases are terminated. The purchase price for
the eighty percent (80%) interest in each lease that Rock elects to acquire
is the sum equal to eighty percent (80%) of PEC's acquisition costs with
respect to such lease. The purchase price shall be funded by increasing the
original principal amount of the Rock Promissory Note.
8.02 Leases acquired after the Closing Date within the Xxxxxxx XXX
------------------------------------------------------------------
other than the Xxxxxxx North Leases and Xxxxxxx South Leases. If any party
-----------------------------------------------------------------
("Acquiring Party") acquires an interest, or right to acquire an interest, in
all or any portion of the Xxxxxxx XXX ("Subject Interest") at any time or times
within five (5) years of the Closing Date, then within ten (10) days
12
after any such acquisition, the Acquiring Party shall offer to the other party
hereto (individually, the "Non-Acquiring Party") the same proportionate working
interest provided for in Section 8.01. Such offer shall be made by written
notice and shall include a description of the substantive terms of the
acquisition such as, without limitation, spud deadline, contract depth, override
reservations and earning provision if the acquisition is by farmout. If the
offer is not accepted in writing with ten (10) Business Days of receipt of the
written notice, then the Subject Interest shall be excluded from the Xxxxxxx XXX
and the Non-Acquiring Party will have no rights with respect thereto.
8.03 Xxxxxxx South Leases. When and if Payout is reached with respect
---------------------
to a well drilled on the Xxxxxxx South Leases, then Rock shall assign to PEC
Twenty-One point Five Percent (21.5%) of Rock's working interest in the subject
well. Payout shall be computed on a well-by-well basis. The Parties stipulate
subject to the agreed to results of the Operations Expense Audit and the PEC
Review that as of October 1, 2005, the Payout account deficit for the Xxxxxxx
South Leases is $200,753.56. The amount of the Payout account deficit shall be
adjusted in accordance with the agreed to audit adjustment and Section 10.02.
8.04 Xxxxxxx North Leases. When and if Payout is reached with respect
---------------------
to a well drilled on the Xxxxxxx North Leases, then Rock shall assign to PEC
Thirty-Three point Thirty-Three Percent (33.33%) of Rock's working interest in
the subject well to PEC. Payout shall be computed on a well-by-well basis. The
Parties stipulate subject to the agreed to results of the Operations Expense
Audit and the PEC Review that as of October 1, 2005 (i) the Payout account
deficit for the Pintail Well is $708,392.83, (ii) the Payout account deficient
for the Pintail Flats Well is $6,600,163.03, and (iii) the Payout account
deficient for Tract 46 (438.16 acres tract) is
13
$282,532.11. The amount of the applicable Payout account deficits shall be
adjusted in accordance with the agreed to audit adjustment and Section 10.02.
8.05 Acquisition Right. If either Party receives an offer that it
------------------
wishes to accept, then it shall cause the same proportionate terms to be offered
to the other Party after taking into account the amount remaining to be
recovered to reach Payout. If an offeror wishes to buy only a portion of a well
or project, then the Party that wishes to sell shall give the non-receiving
party an opportunity to participate in the sale proportionate to ownership
between the Parties after taking into account the amount remaining to be
recovered to reach Payout.
ARTICLE IX
XXXXXXX XXX OPERATIONS
----------------------
9.01 Operator. Rock shall be the operator with respect to all xxxxx
--------
drilled or to be drilled within the Xxxxxxx XXX, except for any well drilled or
to be drilled on the Xxxxxxx North Leases. PEC shall be the operator with
respect to any well to be drilled in the Xxxxxxx North Leases.
9.02 Contract Operator. POC and Rock shall enter into the Garwood
------------------
Contract Operator Agreement with respect to xxxxx drilled or to be drilled
within the Xxxxxxx XXX (other than the Xxxxxxx North Leases). Pursuant to the
Xxxxxxx Contract Operator Agreement, POC shall serve as contract operator on
xxxxx drilled or to be drilled within the Xxxxxxx XXX (excluding Xxxxxxx North)
for the period and the terms set forth in the Garwood Contract Operator
Agreement.
9.03 Operating Agreement. As between the Parties hereto, as of the
--------------------
Closing Date, any pre-existing operating agreement with respect to the Xxxxxxx
North Leases or Garwood South Leases is terminated. As between the Parties
hereto, all operations within the Xxxxxxx XXX
14
(except operations in Xxxxxxx North) shall be governed by and conducted in
accordance with the Garwood Operating Agreement. All operations in Xxxxxxx North
shall be governed and conducted in accordance with Xxxxxxx North Operating
Agreement.
9.04 Rock Expenditure Commitment. During 2006, Rock shall spend or
-----------------------------
cause to be expended, net to its interests, Development Costs of at least
$8,000,000 in connection with operations as to the Xxxxxxx North Leases and
Xxxxxxx South Leases as set forth in the development plan (see Section 9.05);
however, Rock shall be under no obligation to approve any operation which it
believes will result in Development Costs, net to its interests, for the Xxxxxxx
North Leases and the Xxxxxxx South Leases exceeding $8,800,000. The Parties
agree that no operation in the Xxxxxxx XXX shall be overlapped in order that
Rock may closely monitor its total expenditures relative to its $8,800,000
commitment cap for 2006.
9.05 Development Plan. Subject to Section 9.04, Rock, PEC and POC
-----------------
agree to use reasonable good faith efforts to cause (i) operations on the
Proposed 0000 Xxxxxxx Xxxxx Xxxx to commence by July 1, 2006 and (ii) the
Proposed Xxxxxxx #2 2006 Recompletion during calendar year 2006. The Parties
shall agree on the order of the operations. It is the desire of Rock and PEC to
have both operations performed in 2006. Nonetheless, the second of the two
operations shall not be performed in 2006 without Rock's consent if, (i) the
costs actually incurred with respect to the first of the two operations,
together with (ii) the reasonably anticipated costs for performance of the
second operation (with a reasonable allowance for contingencies) are projected
to exceed $8,800,000. In the event that PEC funds the excess over $8,800,000 at
Rock's request, then PEC would be entitled to recover from the well upon which
the second operation was performed a sum equal to four hundred percent (400%) of
the amount
15
in excess of $8,800,000 of which it funded. Changes to the development plan may
be made by agreement of Rock and PEC.
9.06 Expiring Leases. The operator shall notify the non-operator as to
---------------
when any lease will expire within ninety (90) days absent certain operations
which are not expected to be performed. If the operator notifies the
non-operator in writing, no less than 30 days prior to lease expiration, that it
intends to renew or extend the lease or release the property covered by such
lease, then the lease renewal shall be treated as set forth in Section 8.02. If
the operator notifies the non-operator in writing, no less than 30 days prior to
lease expiration, that it DOES NOT intend to renew or extend the lease or
release the property covered by such lease, then the non-operator shall be
entitled to release the property covered by such lease for its own account and
at its sole expense and such lease shall not be treated as within the area of
mutual interest.
ARTICLE X
AUDIT
-----
10.01 Front End Expense Audit. In settlement of the issues raised in
-------------------------
the Front End Expense Audit, on the Closing Date, PEC shall issue credits to
Rock against the outstanding balance alleged to be due and owing by Rock in the
amount of Two Hundred Sixty-Four Thousand Two Hundred Forty-Seven and 00/100
Dollars ($264,247.00) which includes Thirty Five Thousand Four Hundred Twenty
Five and 61/100 Dollars ($35,425.61) that shall be credited against unpaid Big
Sky invoices and Two Hundred Twenty-Eight Eight Hundred Twenty One and 39/100
Dollars ($228,821.39) that shall be applied to the Xxxxxxxx-Xxxxxxx Account
Payable. After application of the Front End Expense Audit credits and assignment
of the bonds as set forth in Section 2.02(a)10, the Rock Promissory Note,
subject to adjustment pursuant to Sections 8.01(b) and 8.01(c) and/or based on
the results of the Operations Expense
16
Audit or the PEC Review, shall represent the total amount due to PEC from Rock
as of October 1, 2005.
10.02 Operations Expense Audit. The audit shall be conducted in
--------------------------
accordance with XXXXX Bulletin #3, "Joint Interest Audit in the Petroleum
Industry: Guide to Protocol and Procedures. A written reply to the initial
audit report is required from PEC and POC within thirty (30) days after receipt
of such report. The Operations Expense Audit will be started in January 2006
and conducted without interruption until completed The dollar amount of all
audit exceptions determined to be valid will be applied against the balance owed
on the Rock Promissory Note, if any, or if the Rock Promissory Note has been
paid, then the amounts shall be paid in cash to Rock. The Parties agree that
the Stage 2 Payout in the Rock Production Payment and the PEC Production Payment
shall be adjusted in accordance with any agreed audit adjustments.
10.03 Audits Under Approved Operating Agreement, Buena Vista Operating
-----------------------------------------------------------------
Agreement, Xxxxxxx Operating Agreement and Xxxxxxx North Operating Agreement.
-------------------------------------------------------------------------------
Any audit under the Approved Operating Agreement, Buena Vista Operating
Agreement, Garwood Operating Agreement and Xxxxxxx North Operating Agreement
shall be conducted in accordance with XXXXX Bulletin #3 Joint Interest Audit on
Petroleum Industry: Guide to Protocol and Procedures.
10.04 Review of Charges Incurred Directly by Rock. During the period
---------------------------------------------
of time that the Operations Expense Audit is ongoing, Rock shall have the
obligation to provide for review by PEC supporting documentation for charges
incurred directly by Rock in the Xxxxxxx XXX that have been included in
determination of Payout account deficits as set forth in Sections 8.03 and 8.04.
If Rock cannot provide evidence that a particular charge was incurred and paid
by Rock
17
and that the particular charge was attributable to the Xxxxxxx XXX, then the
particular charge for which no evidence is provided shall be deducted and the
Payout account deficits adjusted accordingly.
ARTICLE XI
RIGHT OF FIRST REFUSAL
----------------------
11.01 As of the Closing Date, the ROFR shall be terminated and the
Amended ROFR shall be in force and effect.
ARTICLE XII
RELEASES
--------
12.01 Release by Rock to Petrosearch Parties. Effective as of the
-------------------------------------------
Closing Date, Rock hereby presently, generally, fully, finally and forever
releases, acquits and discharges the Petrosearch Parties, together with their
assigns, officers, directors, shareholders, representatives, agents and
attorneys, from any and all Claims, known or unknown, mature or inchoate, which
have accrued or which may accrue in the future (but which arose out of events
which occurred prior to the date of this Agreement), whether or not now known or
asserted. IT IS EXPRESSLY AGREED THAT THE CLAIMS RELEASED HEREBY EXCLUDE THOSE
ARISING FROM OR IN ANY MANNER ATTRIBUTABLE TO (I) THE AUDIT EXCEPTION RIGHTS AND
OBLIGATIONS UNDER THIS AGREEMENT AND THE INSTRUMENTS EXECUTED IN CONNECTION
THEREWITH, AND (II) REPRESENTATIONS OR WARRANTIES MADE WITH RESPECT TO TITLE TO
PROPERTY.
12.02 Release by Petrosearch Parties to Rock. Effective as of the
-------------------------------------------
Closing Date, the Petrosearch Parties hereby presently, generally, fully,
finally and forever release, acquit and discharge Rock, together with its
assigns, partners, affiliates, officers, directors, shareholders,
18
representatives, agents and attorneys, from any and all Claims, known or
unknown, mature or inchoate, which have accrued or which may accrue in the
future (but which arose out of events which occurred prior to the date of this
Agreement), whether or not now known or asserted. IT IS EXPRESSLY AGREED THAT
THE CLAIMS RELEASED HEREBY EXCLUDE THOSE ARISING FROM OR IN ANY MANNER
ATTRIBUTABLE TO THE ROCK PROMISSORY NOTE AND OBLIGATIONS UNDER THIS AGREEMENT
AND THE INSTRUMENTS EXECUTED IN CONNECTION THEREWITH.
12.03 Release by Petrosearch Parties (excluding BVPS) to BVPS.
--------------------------------------------------------------
Effective as of the Closing Date, the Petrosearch Parties hereby presently,
generally, fully, finally and forever release, acquit and discharge BVPS,
together with its assigns, officers, directors, shareholders, representatives,
agents and attorneys, from any and all Claims, known or unknown, mature or
inchoate, which have accrued or which may accrue in the future (but which arose
out of events which occurred prior to the date of this Agreement), whether or
not now known or asserted. IT IS EXPRESSLY AGREED THAT THE CLAIMS RELEASED
HEREBY EXCLUDE THOSE ARISING FROM OR IN ANY MANNER ATTRIBUTABLE TO THE
OBLIGATIONS UNDER THIS AGREEMENT AND THE INSTRUMENTS EXECUTED IN CONNECTION
THEREWITH.
19
ARTICLE XIII
INDEMNITY
---------
13.01 PEC. Rock shall indemnify, defend and hold PEC harmless from and
---
against any and all Claims caused by, resulting from or incidental to operations
performed by Rock, as agent for POC, prior to the Closing Date.
13.02 Rock. PEC shall indemnify, defend and hold Rock harmless from
----
and against any and all Claims caused by, resulting from or incidental to the
ROFR, operations performed by any Petrosearch Party prior to the Closing Date
(including, but not limited to Xxxxxxxx-Xxxxxxx Well operations), the case
styled Pursuit Exploration Company, L.P., et al. v. Petrosearch Operating
Company, L.L.C., et al., under Case No. 21403 pending in the 25th Judicial
District Court of Colorado County, Texas, and obligations assumed pursuant to
Section5.05.
13.03 BVPS. PEC shall indemnify, defend and hold BVPS harmless from
----
and against any and all Claims caused by, resulting from or incidental to the
ROFR, operations performed by any Petrosearch Party prior to the Closing Date
(including, but not limited to Xxxxxxxx-Xxxxxxx Well operations), the case
styled Pursuit Exploration Company, L.P., et al. v. Petrosearch Operating
Company, L.L.C., et al., under Case No. 21403 pending in the 25th Judicial
District Court of Colorado County, Texas, and obligations assumed pursuant to
Section5.05.
13.04 Defense. The indemnifying party shall be obligated to defend at
-------
the indemnifying party's sole expenses any litigation or other administrative or
adversarial proceeding against the indemnified party relating to any Claim for
which the indemnifying party has agreed to indemnify and hold the indemnified
party harmless under this Agreement. However, the indemnified party shall have
the right to participate with indemnifying party in the defense of any such
Claim at its own expense.
20
ARTICLE XIV
REPRESENTATIONS
---------------
14.01 Representations by Rock to the Petrosearch Parties.
--------------------------------------------------------
a Existence and Power. Rock has been duly formed and is validly
---------------------
existing as a limited partnership under the laws of the State of Texas,
with full power and authority to enter into this Agreement, to consummate
the transactions contemplated hereby and to carry out the terms of this
Agreement.
b. Review and Approval. Rock represents that its representative
---------------------
has reviewed this Agreement together with all exhibits and it (i)
understands fully the terms of this Agreement and the consequences of the
issuance thereof, (ii) has been afforded an opportunity to have this
Agreement reviewed by legal counsel, and (iii) has entered into this
Agreement of its own free will and accord and without threat or duress.
c. Authority. Rock represents that the undersigned representative
---------
is fully authorized to execute this Agreement or any other instrument
required hereunder on its behalf.
d. Disclaimer. Rock represents, warrants and agrees that in
-----------
executing and entering into this Agreement, it is not relying and has not
relied upon any representation, promise or statement made by anyone which
is not recited, contained or embodied in this Agreement. Rock understands
and expressly assumes the risk that any fact not recited, contained or
embodied herein or therein may turn out hereafter to be other than,
different from, or contrary to the facts now known to it or believed by it
to be true.
e. Complete Agreement. The written terms of this Agreement
--------------------
reflect the full and complete terms of the agreement and understanding
between Rock and the Petrosearch Parties. There are no oral terms or
representations, other than those stated in this Agreement in writing, and
no party has relied upon any verbal representations from the party or its
counsel.
f. Validity of Obligation. This Agreement and all other
------------------------
transaction documents Rock is to execute and deliver on or before the
Closing Date (i) have been duly executed by its authorized representative,
(ii) constitute its valid and legally binding obligations, and (iii) are
enforceable against Rock in accordance with their respective terms.
g. No Violation of Contractual Restrictions. Rock's execution,
-------------------------------------------
delivery and performance of this Agreement does not conflict with or
violate any agreement or instrument to which it is a party or by which it
is bound.
21
14.02 Representations by the Petrosearch Parties to Rock. Each
--------------------------------------------------------
Petrosearch Party represents and warrants to Rock that the following statements
are true and accurate as to itself as of the date of execution of this Agreement
and the Closing Date.
a Existence and Power. The Petrosearch Parties have been duly
---------------------
formed and are validly existing as corporations and/or limited liability
companies under the laws of the applicable state of incorporation and/or
formation, with full power and authority to enter into this Agreement, to
consummate the transactions contemplated hereby and to carry out the terms
of this Agreement.
b. Review and Approval. The Petrosearch Parties represent that
---------------------
their representatives have reviewed this Agreement together with all
exhibits and they (i) understand fully the terms of this Agreement and the
consequences of the issuance thereof, (ii) have been afforded an
opportunity to have this Agreement reviewed by legal counsel, and (iii)
have entered into this Agreement of their own free will and accord and
without threat or duress.
c. Authority. The Petrosearch Parties represent that the
---------
undersigned representatives are fully authorized to execute this Agreement
or any other instrument required hereunder on their behalf.
d. Disclaimer. The Petrosearch Parties represent, warrant and
-----------
agree that in executing and entering into this Agreement, they are not
relying and have not relied upon any representation, promise or statement
made by anyone which is not recited, contained or embodied in this
Agreement. The Petrosearch Parties understand and expressly assume the risk
that any fact not recited, contained or embodied herein or therein may turn
out hereafter to be other than, different from, or contrary to the facts
now known to them or believed by them to be true.
e. Complete Agreement. The written terms of this Agreement
--------------------
reflect the full and complete terms of the agreement and understanding
between the Petrosearch Parties and Rock. There are no oral terms or
representations, other than those stated in this Agreement in writing, and
no party has relied upon any verbal representations from the party or its
counsel.
f. Validity of Obligation. This Agreement and all other
------------------------
transaction documents the Petrosearch Parties are to execute and deliver on
or before the Closing Date (i) have been duly executed by their authorized
representatives, (ii) constitute their valid and legally binding
obligations, and (iii) are enforceable against the Petrosearch Parties in
accordance with their respective terms.
g. No Violation of Contractual Restrictions. The Petrosearch
--------------------------------------------
Parties' execution, delivery and performance of this Agreement do not
conflict with or violate any agreement or instrument to which they are a
party or by which they are bound.
22
h. BVPS Membership Interest. (i) PEC owns 100% of the membership
-------------------------
interest in BVPS, (ii) no person or entity (other than PEC) has any right
to a membership interest in BVPS other than as disclosed in Exhibit T,
(iii) upon consummation of the transactions contemplated by this Agreement,
Rock will own 50% of the membership interest in BVPS free and clear of all
encumbrances, and (iv) the Articles of Incorporation of BVPS and the
Regulations of BVPS have not been amended except as disclosed in Exhibit U.
i. BVPS Financial Information. (i) The financial information
----------------------------
provided to Rock with respect to BVPS, including its assets and liabilities
is accurate in all material respects, (ii) all liabilities including
contingent liabilities of BVPS as of the Closing Date are listed on Exhibit
V, (iii) all contracts to which BVPS is a party are listed on Exhibit W,
(iv) no asset of BVPS is encumbered by any lien except as disclosed in
Exhibit X, and (v) BVPS is not a party to any legal proceeding and to the
best of their knowledge no legal proceeding is threatened against BVPS.
j. All representations and warranties express or implied with
respect to title to property are ratified and affirmed.
ARTICLE XV
ARBITRATION
-----------
15.01 Any controversy or claim arising out of or relating to this
Agreement or any related agreement shall be settled by arbitration to be
conducted in Xxxxxx County, Texas in accordance with the following provisions:
(a) Disputes Covered. The agreement of the Parties to arbitrate
-----------------
covers all disputes of every kind relating to or arising out of this
Agreement, any related agreement or any of the contemplated transactions.
Disputes include actions for breach of contract with respect to this
Agreement or the related agreements, as well as any claim based upon tort
or any other causes of action relating to the contemplated transactions,
such as claims based upon an allegation of fraud or misrepresentation and
claims based upon a federal or state statute. In addition, the arbitrators
selected according to procedures set forth below shall determine the
arbitrability of any matter brought to them, and their decision shall be
final and binding on the Parties.
(b) Law. The governing law for the arbitration shall be the law
---
of the State of Texas, without reference to its conflicts of laws
provisions.
(c) Selection. There shall be three arbitrators, unless the
---------
Parties are able to agree on a single arbitrator. In the absence of such
agreement within ten (10) days after the initiation of an arbitration
proceeding. The Petrosearch Parties shall select one
23
arbitration and Rock shall select one arbitrator, and those two
arbitrations shall then select, within ten (10) days, a third arbitrator.
If those two arbitrators are unable to select a third arbitration within
such ten 910) day period, a third arbitrator shall be appointed by the
commercial panel of the American Arbitration Association. The decision in
writing of at least two of the three arbitrators shall be final and binding
upon the Parties.
(d) Administration. The arbitration shall be administered by the
--------------
American Arbitration Association.
(e) Rules. The rules of arbitration shall be the Commercial
-----
Arbitration Rules of the American Arbitration Association, as modified by
any other instructions that the Parties may agree upon at the time, except
that each party shall have the right to conduct discovery in any manner and
to the extent authorized by the Federal Rules of Civil Procedure as
interpreted by the federal courts. If there is any conflict between those
Rules and the provisions of this section, the provisions of this section
shall prevail.
(f) Substantive Law. The arbitrators shall be bound by and shall
----------------
strictly enforce the terms of this Agreement and may not limit, expand or
otherwise modify its terms. The arbitrators shall make a good faith effort
to apply substantive applicable law, but an arbitration decision shall not
be subject to review because of errors of law. The arbitrators shall be
bound to honor claims of privilege or work-product doctrine recognized at
law, but the arbitrators shall have the discretion to determine whether any
such claim of privilege or work product doctrine applies.
(g) Decision. The arbitrators' decision shall provide a reasoned
--------
basis for the resolution of each dispute for any award. The arbitrators
shall not have power to award damages in connection with any dispute in
excess of actual compensatory damages and shall not multiply actual damages
or xxxx consequential or punitive damages.
(h) Expenses. Each party shall bear its own fees and expenses
--------
with respect to the arbitration and any proceeding related thereto and the
Parties shall share equally the fees and expenses of the American
Arbitration Association and the arbitrators.
(i) Remedies; Award. The arbitrators shall have power and
----------------
authority to award any remedy or judgment that could be awarded by a court
of law in Xxxxxx County, Texas. The award rendered by arbitration shall be
final and binding upon the Parties, and judgment upon the award may be
entered in any court of competent jurisdiction in the United States.
ARTICLE XVI
MISCELLANEOUS
-------------
16.01 Further Assurances. The Petrosearch Parties and Rock, as
-------------------
applicable, shall promptly cure any defects in the execution and delivery of
this Agreement, any exhibit to this
24
Agreement and all other documents contemplated by this Agreement and shall
promptly execute and deliver upon request all such other and further assurances,
documents, agreements and instruments in compliance with or accomplishment of
the covenants and agreements in this Agreement, or obtain any consents, all as
may be necessary or appropriate in connection therewith.
16.02 Confidentiality Regarding Terms of this Agreement. The terms of
--------------------------------------------------
this Agreement and any and all negotiations and correspondence in connection
with this Agreement shall remain in all respects confidential hereafter, except
as to the fact of settlement and except as disclosure may be required by
applicable law or authority. Each party hereto agrees to utilize its reasonable
best efforts to cause such confidentiality to be maintained except as may be
required by applicable law or authority.
16.03 Governing Law. This Agreement and all instruments executed in
--------------
accordance with it shall be governed by and interpreted in accordance with the
laws of the state of Texas and the Federal laws of the United States applicable
thereto, without regard to conflict-of-law rules that would direct application
of the laws of another jurisdiction, except to the extent that it is mandatory
that the law of some other jurisdiction, wherein the assets are located, shall
apply.
16.04 Entire Agreement; Amendments. This Agreement, including all
------------------------------
exhibits attached hereto and made a part hereof constitute the entire agreement
between the Parties with respect to the transactions contemplated hereby and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties with respect to such transactions. No
amendment of this Agreement shall be binding unless executed in writing by all
Parties.
25
16.05 Waiver. No waiver by a party of any of the provisions of this
------
Agreement (a) shall be binding unless executed in writing by such party, (b)
shall be deemed or shall constitute a waiver by such party of any other
provision hereof (whether or not similar), and (c) shall not constitute a
continuing waiver by such party.
16.06 Notices. Any notice, request, consent, approval, waiver or other
-------
communication provided or permitted to be given under this Agreement shall be in
writing and shall be delivered in person or sent by U.S. mail, overnight courier
or fax to the appropriate addresses set forth below. Any such communication
shall be effective upon actual receipt; provided, however, that in the case of
delivery by fax after the normal business hours of the recipient, such
communication shall be effective on the next business day following the
transmission of such fax. For purposes of notice, the addresses of the Parties
shall be as follows:
If to PEC:
Petrosearch Energy Corporation
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx, President
Fax: (000) 000-0000
If to POC:
Petrosearch Operating Company, L.L.C.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx, Manager
Fax: (000) 000-0000
If to BVPS:
Buena Vista Petrosearch, L.L.C.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx, Manager
Fax: (000) 000-0000
26
If to Pursuit Petrosearch, L.L.C.:
Pursuit Petrosearch, L.L.C.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx, Manager
Fax: (000) 000-0000
If to Rocky Mountain Petrosearch, L.L.C.:
Rocky Mountain Petrosearch, L.L.C.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx, Manager
Fax: (000) 000-0000
If to Big Sky Petrosearch, L.L.C.:
Big Sky Petrosearch, L.L.C.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx, Manager
Fax: (000) 000-0000
If to Great Buffalo Petrosearch, L.L.C.:
Great Buffalo Petrosearch, L.L.C.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxx, Manager
Fax: (000) 000-0000
If to Rock:
Rock Energy Partners Operating, L.P.
00000 Xxxxxxxx Xxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx
Fax: (000) 000-0000
27
with a copy to:
Snow Xxxxx Xxxxxx LLP
0000 Xxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxx
Fax No.: (000) 000-0000
Each party shall have the right, upon giving ten (10) days' prior notice to the
other party in the manner provided in this section, to change its address for
purposes of notice.
16.07 Expenses. The Parties, jointly and severally, shall be solely
--------
responsible for all costs and expenses incurred by them in connection with the
transactions contemplated hereby.
16.08 Severability. If any term or other provision of this Agreement
------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any adverse manner with
respect to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the Parties as closely as possible. The obligations of the Parties hereunder
are severable and not joint.
16.09 Counterparts. This Agreement may be executed in counterparts
------------
(including faxed counterparts). Each such counterpart shall be deemed an
original, but all such counterparts together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the ______
day of _____________________, 2006.
28
PETROSEARCH ENERGY CORPORATION
By:
----------------------------------------------
Xxxxxxx X. Xxxx, President
PETROSEARCH OPERATING COMPANY, L.L.C.
By:
----------------------------------------------
Xxxxxxx X. Xxxx, Manager
BUENA VISTA PETROSEARCH, L.L.C.
By:
----------------------------------------------
Xxxxxxx X. Xxxx, Manager
PURSUIT PETROSEARCH, L.L.C.
By:
----------------------------------------------
Xxxxxxx X. Xxxx, Manager
ROCKY MOUNTAIN PETROSEARCH, L.L.C.
By:
----------------------------------------------
Xxxxxxx X. Xxxx, Manager
29
BIG SKY PETROSEARCH, L.L.C.
By:
----------------------------------------------
Xxxxxxx X. Xxxx, Manager
GREAT BUFFALO PETROSEARCH, L.L.C.
By:
----------------------------------------------
Xxxxxxx X. Xxxx, Manager
ROCK ENERGY PARTNERS OPERATING, L.P.
By:
----------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
30
