LETTER AGREEMENT DATED OCTOBER 9, 2008 BY AND BETWEEN STANDARD DRILLING, INC., PBT CAPITAL PARTNERS, LLC AND PRENTIS B. TOMLINSON, JR. PBT Capital Partners, LLC Washington, DC 20006 October 9, 1008
EXHIBIT
10.4
LETTER AGREEMENT
DATED OCTOBER 9, 2008
BY
AND BETWEEN STANDARD DRILLING, INC.,
PBT
CAPITAL PARTNERS, LLC AND XXXXXXX X. XXXXXXXXX, XX.
PBT
Capital Partners, LLC
0000 X
Xxxxxx, XX, Xxxxx 0000
Xxxxxxxxxx,
XX 00000
October
9, 1008
Attention: Xx.
Xxxxx Xxxxxx
0000
Xxxxxxx Xxx
Xxxxxx
Xxxxx, XX 00000
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Re:
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That
certain Asset Purchase Agreement dated September 24, 2007 between PBT
Capital Partners, LLC, and Standard Drilling, Inc. (the
“Agreement”)
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Gentlemen:
This
letter agreement is by and among PBT Capital Partners, LLC, (“Buyer”), Xxxxxxx.
X. Xxxxxxxxx, Xx. and Standard Drilling, Inc. (“Seller”). Buyer and
Seller have agreed as follows:
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1.
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Upon
Closing, Buyer will place $233,425 in an escrow account pursuant to terms
and conditions, and with an escrow agent, mutually and reasonably
acceptable to Buyer and Seller, which terms and conditions shall be
generally as follows:
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(a)
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The
escrowed funds shall be applied to the payment of any failure to drill
penalties which were accrued as of the date of the Agreement pursuant to
the Xxxxxxx Lease referenced in Section 2.4 of the Agreement, if (and only
if) and to the extent a valid claim therefor is made against the Seller by
Xxxx X. Xxxxxxx and/or wife, Xxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx,
Trustee (collectively, the “Xxxxxxx”), prior to the expiration of the
Escrow Term.
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(b)
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The
“Escrow Term” shall begin on the date of the establishment of the escrow
account and shall expire immediately upon the first of the following to
occur:
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(i)
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Eighteen
months after the date of this Agreement, or
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(ii)
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The
direct or indirect disclosure by Seller, its affiliates, or any of their
respective representatives, employees, officers or directors, of the
existence of the escrow arrangement contemplated herein, or any of its
terms, either:
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(1)
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to
the public, whether pursuant to governmental filings or otherwise,
or
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(2)
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to
any of the Xxxxxxx.
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(c)
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Upon
the expiration of the Escrow Term pursuant to Section 1(b)(i), the amounts
held in the escrow account which are not subject to a valid claim
submitted by the Xxxxxxx shall be paid to PBT. Upon the
expiration of the Escrow Term pursuant to Section 1(b)(ii), the amounts
held in the escrow account shall be paid to PBT whether or not subject to
a valid claim submitted by the
Xxxxxxx.
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2.
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Buyer
hereby represents that any and all liability, contingent or otherwise, of
the Seller for failure to drill penalties pursuant to the Norton Prospect
Leases referenced in Section 1.2(c) of the Agreement has been extinguished
and/or released. Upon the execution and delivery of this
letter, Buyer shall deliver to Seller copies of documents evidencing such
release.
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3.
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In
consideration for the foregoing, Seller shall and does hereby cancel and
extinguish the liability of Buyer and Xxxxxxx Xxxxxxxxx pursuant to that
certain promissory note payable by Buyer to the order of Seller in the
original principal amount of $600,000.00 which is referenced in Section
1.3 of the Agreement (the “Note”). Seller shall return to Buyer
the original Note, marked
“Cancelled.”
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4.
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If
any matter relating to the subject matter of this letter agreement is
subject to dispute by either Seller or Buyer, the matter shall be referred
either by the Seller or the buyer (in either case, the “Claimant”) to
arbitration by one arbitrator pursuant to the Rules of Commercial
Arbitration (the “Rules”). The Claimant shall file a request
for arbitration with the American Arbitration Association (“AAA”) and
notify the other party (the “Respondent”) in writing of the nature of the
dispute. The arbitrator shall be appointed by the AAA in
accordance with the Rules. Following the selection of the
arbitrator as set forth above, the arbitration shall be conducted promptly
and expeditiously so as to enable the arbitrator to render a decision
within 30 days. Subject to the foregoing and except to the
extent the parties shall agree to the contrary, the arbitrator xxxxxx the
dispute shall apply and follow the Federal Rules of Civil Procedure and
the Federal rules of Evidence.
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The Buyer
and Seller agree to waive any of the Rules, and also any Federal Rules of Civil
Procedure and the Federal Rules of Evidence, to the extent necessary to enable
the arbitrator to render a decision within 30 days of this
appointment. The Buyer and Seller agree that the need for prompt
resolution of any dispute is paramount and outweighs any possible detriment that
may result from expedited discovery procedures or otherwise from expedited
proceedings. If there is any conflict between the Rules and this
Section 4, this Section 4 shall govern. The arbitration shall be held
in Houston, Texas. The parties acknowledge that the arbitrator shall
have the authority to grant equitable remedies, if appropriate.
Arbitration
under this Section 4 shall be the exclusive means for a party to seek resolution
of any dispute arising out of, or any breach or alleged breach of, this letter
agreement, except that any party may bring an action before a competent court
for the adoption of provisional or protective measures or equitable
relief. The award of the arbitrator shall be final and binding on the
parties. Each of the claimant and the Respondent shall bear (i) in
equal proportions to the cost and expenses of the arbitration proceeding
assessed by the AAA, and (ii) their respective expenses in prosecuting or
defending the arbitration.
Judgment
on the arbitral award rendered may be entered in any court having jurisdiction
or application may be made to such for a judicial acceptance of the award and an
order of enforcement, as the case may. The parties acknowledge and
agree that any party may seek before any court of competent jurisdiction,
provisional, protective or equitable relief.
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5.
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Buyer
shall pay on behalf of Standard Drilling, Inc. the property tax lien
000-0000-00000 due to Xxxxxxx County in the amount of $185,574.39 and
shall furnish to the Seller at closing a duly executed copy of the release
of lien.
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6.
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If
(and only if) and to the extent a valid claim is made against the Seller
by Xxxxxxx as referenced in Paragraph 1 above then Xxxxxxx X. Xxxxxxxxx,
Xx. shall immediately pay on behalf of Standard Drilling, Inc. the sum of
$223,425.61.
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7.
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Further
the Buyer hereby represents that any and all liabilities, contingent or
otherwise, of the Seller in respect of employees listed in Sections 1.2(e)
through 1.2(g) of the Agreement has been extinguished and/or
released. Upon execution and delivery of this letter, Buyer
shall deliver to the Seller copies of documents evidencing such
extinguishment or release.
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8.
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Buyer
agrees to promptly pay IHS Energy in the amount of $4,378.57 for services
rendered prior to closing date of the Agreement. Buyer further
represents and warrants that it is and will be fully responsible for any
and all liabilities, contingent or otherwise, of the Seller referred to in
section 1.2 of the Agreement and shall promptly pay or settle such
liabilities.
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9.
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The
final execution, fulfillment and delivery of all terms and conditions as
outlined in this letter agreement are to be completed no later than
Friday, December 31, 2008.
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If the foregoing sets forth the terms
of our binding agreement, please execute this letter where indicated
below.
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Sincerely,
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PBT
Capital Partners, LLC
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By: /s/
Xxxxxxx X. Xxxxxxxxx,
Xx.
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Print
Name: Xxxxxxx X. Xxxxxxxxx,
Xx.
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Title: President
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Xxxxxxx
X. Xxxxxxxxx, Xx.
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By: /s/
Xxxxxxx X. Xxxxxxxxx,
Xx.
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Print
Name: Xxxxxxx X. Xxxxxxxxx,
Xx.
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ACCEPTED
AND AGREED TO:
By: /s/ Xxxxx X.
Xxxxxx
Print
Name: Xxxxx
X.
Xxxxxx
Title: President/CEO
