BUSINESS OPPORTUNITY AGREEMENT
THIS
BUSINESS OPPORTUNITY AGREEMENT (this “Agreement”)
is
entered into as of this 16th
day of
January, 2007, by and between Calibre Energy Inc., a Nevada corporation
(“Calibre”),
and
Standard Drilling Inc., a Nevada corporation (“Standard”
and,
together with Calibre, the “Parties”).
R
E C I T A L S
WHEREAS,
Calibre is primarily involved in the exploration and production business, and
Standard is primarily involved in the energy drilling business; and
WHEREAS,
Standard from time to time receives or otherwise has the opportunity to pursue
opportunities in the exploration and production business; and
WHEREAS,
Calibre from time to time receives or otherwise has the opportunity to pursue
opportunities in the energy drilling business; and
WHEREAS,
the Parties have officers and directors in common; and
WHEREAS,
the Parties desire to clarify their separate interests in order, among other
considerations, to permit their officers and directors in common to manage
their
respective businesses without concern that such interests overlap;
and
WHEREAS,
Standard has entered into that certain transaction described on Exhibit A (the
“Excepted
Transactions”),
pursuant to an opportunity presented to officers of Standard who have no
relationship with Calibre; and
WHEREAS,
the Parties desire to clarify their interests in business opportunities, all
as
set forth below;
A
G R E E M E N T S
NOW,
THEREFORE, in consideration of the premises, covenants, conditions and
agreements contained herein, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
I.
Scope of Business
Calibre’s
scope of business consists of the pursuit of business opportunities in the
E&P Business. “E&P
Business”
means
the oil and gas exploration, exploitation, development and production business
and includes without limitation (a) the ownership of oil and gas property
interests (including working interests, mineral fee interests and royalty and
overriding royalty interests), (b) the ownership and operation of real and
personal property used or useful in connection with exploration for
Hydrocarbons, development of Hydrocarbon reserves upon discovery thereof and
production of Hydrocarbons from xxxxx located on oil and gas properties and
(c)
debt of or equity interests in corporations, partnerships or other entities
engaged in the exploration for Hydrocarbons, the development of Hydrocarbon
reserves and the production and sale of Hydrocarbons from xxxxx located on
oil
and gas properties in which the entity conducting the E&P Business owns an
interest; but such term does not include the oilfield services business,
including the oilfield drilling business. “Hydrocarbons”
means
oil, gas or other liquid or gaseous hydrocarbons or other minerals produced
from
oil and gas xxxxx.
Standard’s
scope of business consists of the pursuit of business opportunities in the
oilfield services business, including the oilfield drilling business, together
with the pursuit of the Excepted Transactions.
II.
Renunciation of Interests
Calibre
hereby renounces any interest or expectancy in any business opportunity in
the
oilfield services business, including the oilfield drilling business, and in
the
Excepted Transactions. In furtherance thereof, Calibre agrees not to acquire,
invest in or operate any oilfield services business, including any oilfield
drilling business, and to use its reasonable commercial efforts to advise
Standard of such business opportunities presented to Calibre.
Standard
hereby renounces any interest or expectancy in the E&P Business (other than
the Excepted Transactions). In furtherance thereof, Standard agrees not to
acquire, invest in or operate any E&P Business, other than the Excepted
Transactions, and to use its reasonable commercial efforts to advise Calibre
of
such business opportunities presented to Standard.
III.
Term
This
Agreement shall commence as of the date hereof and continue for a term (the
“Term”)
expiring on December 31, 2009, unless earlier terminated pursuant to this
Section III. Either Party may terminate this Agreement upon thirty days (30)
written notice, if there is a Change of Control (as hereafter defined) with
respect to such Party. For purposes of this Agreement, a “Change of Control”
shall be deemed to have taken place upon the earliest occurrence of any of
the
following: (i) more than 50% of the outstanding voting securities of a Party
are
Beneficially Owned (as defined in Rule 13d-3 under the Securities Exchange
Act
of 1934, as amended) by any person or entity other than Calibre or Standard
or
their respective subsidiaries or affiliates (including any officer or director
of Calibre or Standard or any person or entity affiliated with any such officer
or director) (a “Non-Affiliate”),
(ii)
a Party is merged or consolidated with a Non-Affiliate and, as a result of
such
merger or consolidation, less than 50% of the outstanding voting securities
of
the surviving or resulting corporation or entity is Beneficially Owned in the
aggregate by the persons or entities who were shareholders/equity owners of
such
Party immediately prior to such merger or consolidation; or (iii) a Party sells
or otherwise transfers all or substantially all of its assets to a
Non-Affiliate.
IV.
Miscellaneous
No
Relationship. No
relationship of partnership or principal and agent shall exist or arise among
the Parties hereto because of the execution of this agreement or the joint
acquisition by them of properties and interests pursuant to this Agreement.
No
Party hereto shall have any right, power or authority to contract on behalf
of
any other Party hereto or to commit any party hereto to any obligation,
liability or undertaking, except to the extent the Party to be obligated has
expressly consented thereto (i) at a Prospect Meeting, or (ii) by instrument
in
writing.
Limitation
on Assignment. Without
the prior written consent of the other Party, the rights and privileges of
this
Agreement may not be sold or otherwise transferred by any Party (other than
any
transfer to an affiliate of such Party), provided that no such assignment shall
relieve any Party of its duties and obligations arising hereunder.
Entire
Agreement; Amendments.
This
Agreement and each Operating Agreement entered into by the Parties pursuant
to
Paragraph III above constitutes the entire understanding between the parties
with respect to the subject matter hereof, and supersede all other agreements
written or oral between the Parties with respect to such subject matter. This
Agreement may not be changed, modified or amended except by a written agreement
between the Parties.
Governing
Law. The
rights and obligations of the Partners with respect to this Agreement, and
any
arbitration proceeding pursuant hereto, shall be governed by the laws of the
State of Texas.
Arbitration.
Any
disputes arising out of or related to this Agreement shall be resolved through
binding arbitration in accordance with the rules for commercial arbitration
disputes for the American Arbitration Association for binding arbitration and
such arbitration shall be conducted in Houston, Texas. Each of the Parties
agrees that arbitration under this Section IX is the exclusive method for
resolving any claim hereunder and that it will not commence an action or
proceeding based on a claim hereunder, except to enforce the arbitrators’
decisions as provided in this Section IX, or to compel any other Party to
participate in arbitration under this Section IX. If any claim has not been
resolved by mutual agreement on or before the 15th
day
following the first notice of the claim to or from a disputing party, then
the
arbitration may be initiated by one party by providing to the other party a
written notice of arbitration specifying the claim or claims to be arbitrated.
The arbitration panel (the “Panel”)
shall
consist of three arbitrators who are qualified to hear the type of claim at
issue. They may be selected by agreement of the Parties within thirty days
of
the notice initiating the arbitration procedure, or from the date of any order
compelling such arbitration to proceed. The final hearing shall be conducted
within 60 days of the selection of the entire Panel. If the Parties fail to
agree upon the designation of any or all the Panel, then the Parties shall
request the assistance of the AAA. The Panel shall make all of its decisions
by
majority vote. The decision of the Panel will be binding and non-appealable,
except as permitted under the Federal Arbitration Act. Only actual damages
may
be awarded. It is expressly agreed that the Panel shall have no authority to
award treble, exemplary or punitive damages of any type under any circumstances
regardless of whether such damages may be available under the applicable
law.
Notice.
All
notices authorized or required to be given pursuant to this Agreement shall
be
in writing and may be delivered by hand, mailed by first class airmail, sent
by
telecommunication, or overnight delivery to the address set forth in this
Agreement. The notice shall be deemed to have been given and received if
delivered in person or by electronic message, on the day on which it was
delivered, excluding Saturdays, Sundays and statutory holidays; or if mailed,
on
the day received, or if sent by telecommunication, on the first business day
following the day it was dispatched. A Party may change its address for the
receipt of notices at any time by giving written notice thereof to the other
Party.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
Calibre
Energy Inc., a Nevada corporation
By:
Name: O.
Xxxxxx
Xxxxxxxxxx, III
Title: VP
&
CFO
Address
for Notice:
0000
X
Xxxxxx, X.X.
Xxxxx
0000
Xxxxxxxxxx,
X.X. 00000
Facsimile
No.: (000) 000-0000
Attn:
O.
Xxxxxx Xxxxxxxxxx, CFO
Standard
Drilling Inc., a Nevada corporation
By:
Name: Xxxxxx
X.
Xxxxxxx
Title: SVP
&
General Counsel
Address
for Notice:
0000
Xxxxx Xxxxxxx
Xxxxx
000
Xxxxxxx,
XX 00000
Facsimile
No.: (000) 000-0000
Attn:
Xxxxxx X. Xxxxxxx, SVP & General Counsel
Exhibit
A
Excepted
Transactions
Burnet
Oil Company DeCleva Prospect
Xxxxxxx
Prospect
Norton
Unit Prospect
Arkansas
Leases in Arkoma Basin
