EXHIBIT 10.1
COMBINED AMENDMENT TO LEASE ACQUISITION AND DEVELOPMENT
AGREEMENTS AND TO PARTICIPATION AGREEMENT
COMBINED AMENDMENT TO LEASE ACQUISITION AND DEVELOPMENT
AGREEMENTS AND TO PARTICIPATION AGREEMENT
THIS COMBINED AMENDMENT TO LEASE ACQUISITION AND DEVELOPEMENT
AGREEMENTS AND TO PARTICIPATION AGREEMENT (the "Agreement') is entered into as
of the 12th day of March, 2007 (the "Effective Date"), by and between Exxel
Energy Corp., whose address is 000 Xxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx, X0X 0X0 ("Exxel"), Dolphin Energy Corporation, a Nevada
corporation, whose address is 0000 00xx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx
00000 ("Dolphin"), Apollo Energy LLC, a Colorado limited liability company
("Apollo"), whose address is 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx
00000, ATEC Energy Ventures, LLC, a Texas limited liability company ("ATEC"),
whose address is 000 Xxxxx Xxxx Xxxxx, Xxxxxxx, Xxxxx 00000, and the "Apollo
Nominees," as defined in the Exxel/Apollo Agreement described below (Apollo,
ATEC and the Apollo Nominees are collectively referred to herein as "Apollo").
WHEREAS, Exxel and Apollo are parties to that certain Lease Acquisition
and Development Agreement, dated February 23, 2005, as amended through the date
hereof (the "Exxel/Apollo Agreement"), and Dolphin and Apollo are parties to
that certain Lease Acquisition and Development Agreement, dated February 22,
2005, as amended through the date hereof (the "Dolphin/Apollo Agreement") (the
Exxel/Apollo Agreement and the, Dolphin/Apollo Agreement are collectively
referred to herein as the "Apollo Agreements'"), and Exxel and Dolphin are
parties to that certain Participation Agreement, dated February' 23, 2005, as
amended through the date hereof (the "Participation Agreement"), each related to
the purchase, sale and development of certain interests in oil and gas
properties in the Piceance Basin, Colorado; and
WHEREAS, Exxel and Dolphin desire to acquire a portion of Apollo's
Backin working interest ("Backin WI"), as defined in Section 3.3 of each of the
Apollo Agreements, which vests at Project Payout with respect to Acquired
Interests in the Area of Mutual Interest that does not include the Expansion
Area ("the Original AMI"); and
WHEREAS, in conjunction with the purchase and sale of a portion of said
Backin WI, the parties wish to resolve certain issues arising under Section.5.1
of each of the Apollo Agreements, and to amend the Apollo Agreements and the
Participation Agreement in certain respects;
NOW, THEREFORE, in consideration of the premises, and the mutual
covenants and agreements contained herein, the parties agree as follows:
1. DEFINED TERMS. Terms defined in the Apollo Agreements shall have the
same meanings when used herein.
2. EXXEL PAYMENT. Exxel agrees to pay Apollo Seven Hundred Seventy-Five
Thousand Dollars ($775,000) as follows:
(a) Seven Hundred Thousand Dollars ($700,000) shall be paid
by Exxel to Apollo on or before March 14, 2007; and
(b) Seventy-Five Thousand Dollars ($75,000) shall be paid by
Exxel to Apollo in four equal installments of Eighteen
Thousand Seven Hundred-Fifty Dollars ($18,750), on or before
April 2, 2007, May 1, 2007, June 1, 2007, and July 2, 2007.
Payment of said sum of $775,000 pursuant to this Section 2 will be referred to
as the "Exxel Payment."
3. DOLPHIN PAYMENT. Dolphin agrees to pay Apollo Three Hundred
Twenty-Five Thousand Dollars ($325,000) in four equal installments of Eighty One
Thousand Two Hundred-Fifty Dollars ($81,250) on or before April 2, 2007, May 1,
2007, June 1, 2007, and July 2, 2007.
Payment of said sum of $325,000 pursuant to this Section 3 will be
referred to as the "Dolphin Payment." If Dolphin fails to pay $81,250 to Apollo
on or before April 2, 2007, as required herein, then the entire Dolphin Payment
shall be paid on May 1, 2007.
4. WIRE TRANSFER; NOTIFICATION OF NONPAYMENT. The payments required to
be made by Exxel pursuant to Section 2 and by Dolphin pursuant to Section 3
shall be made by wire transfer on or before the close of banking business hours,
on the respective payment dates, to such account or accounts that Apollo may
designate in a written notice delivered to Exxel and Dolphin not less than two
(2) business days prior to such payment dates. Should either Exxel or Dolphin
fail to make a timely and full payment required to be made by Section 2 or
Section 3, respectively, Apollo shall immediately notify the other party of such
failure.
5. BACKIN WI IN ORIGINAL AMI.
(a) Effective upon completion of the Exxel Payment, Exxel's
working interest at Project Payout in the Acquired Interests in the Original AMI
shall be increased by an undivided 1.875%, with a corresponding reduction in
Apollo's Backin WI.
(b) Effective upon completion of the Dolphin Payment,
Dolphin's working interest at Project Payout in the Acquired Interests in the
Original AMI shall be increased by an undivided 0.625%, with a corresponding
reduction in Apollo's Backin WI
(c) The acquisition of, and increase in, said working
interests of either Exxel or Dolphin shall not be contingent or dependent upon
the satisfaction of the payment obligation imposed upon the other under Sections
2 and 3 above.
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(d) After Sections 5(a) and 5(b) above have both been
effectuated, Apollo's working interest at Project Payout shall equal 10% of
8/8ths in all Acquired Interests in the Original AMI, whether acquired prior to
or after the Effective Date, and 12.5% of 8/8ths under the Expansion Area.
6. RELEASES.
(a) Effective the Effective Date, Section 5.1 of each of the
Apollo Agreements is hereby terminated and is of no further force and effect.
(b) Effective the Effective Date, Apollo, for itself and its
members, managers, partners, successors and assigns (collectively, the "Apollo
Group"), does hereby forever release, acquit, waive and fully discharge Exxel,
its parents, subsidiaries and affiliates, and its respective directors,
officers, employees, successors and assigns (collectively, the "Exxel Group"),
from and against any and all claims, covenants, warranties, damages, costs,
expenses and causes of action of whatsoever kind, arising out of or related to
the well commitment requirements of Section 5.1 of the Exxel/Apollo Agreement.
This release covers and applies to future, as well as past, acts, omissions and
obligations, but does not limit or affect Apollo's rights against Exxel
hereunder.
(c) Effective the Effective Date, Apollo, for itself and the
Apollo Group, does hereby forever release, acquit, waive and fully discharge
Dolphin, its parents, subsidiaries and affiliates, and its respective directors,
officers, employees, successors and assigns (collectively, the "Dolphin Group"),
from and against any and all claims, covenants, warranties, damages, costs,
expenses and causes of action of whatsoever kind, arising out of or related to
the well commitment requirements of Section 5.1 of the Dolphin/Apollo Agreement.
This release covers and applies to future, as well as past, acts, omissions and
obligations, but does not limit or affect Apollo's rights against Dolphin
hereunder.
(d) Effective the Effective Date, Exxel, for itself and the
Exxel Group, does hereby forever release, acquit, waive and fully discharge
Apollo and the Apollo Group, from and against any and all claims, covenants,
warranties, damages, costs, expenses and causes of action of whatsoever kind,
arising out of or related to the well commitment requirements of Section 5.1 of
the Exxel/Apollo Agreement. This release covers and applies to future, as well
as past, acts, omissions and obligations, but does not limit or affect Exxel's
rights against Apollo hereunder.
(e) Effective the Effective Date, Dolphin, for itself and the
Dolphin Group, does hereby forever release, acquit, waive and fully discharge
Apollo and the Apollo Group, from and against any and all claims, covenants,
warranties, damages, costs, expenses and causes of action of whatsoever kind,
arising out of or related to the well commitment requirements of Section 5.1 of
the Dolphin/Apollo Agreement. This release covers and applies to future, as well
as past, acts, omissions and obligations, but does not limit or affect Dolphin's
rights against Apollo hereunder.
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7. ORIGINAL AMI.
Apollo shall have the nonexclusive right to identify and
acquire additional Acquired Interests in the AMI (including Top Leases acquired
after the Effective Date) on behalf of Exxel and Dolphin and shall proffer any
such Acquired Interests to Exxel and Dolphin. Exxel and Dolphin shall have the
right of first refusal, but no obligation, to purchase said Acquired Interests
(including Top Leases), at the actual cost of acquisition incurred by Apollo.
Specifically, during the remaining term of the AMI, Apollo shall offer any such
Acquired Interests to Exxel and Dolphin, in writing, on or before five (5) days
after Apollo is vested with Defensible Title, together with the information as
set forth below. Exxel and Dolphin shall have a period of ten (10) business days
from their receipt of the Apollo offer of the Acquired Interest(s) to elect to
accept the offer of the Acquired Interest(s), by so notifying Apollo in writing.
If Exxel and Dolphin elect not to accept Apollo's offer, or fail to provide a
written acceptance of the offer of the Acquired Interest(s) within the period
fixed above, then the Acquired Interest(s) shall be owned by Apollo free of (i)
the provisions of the AMI and (ii) any other obligations to either Exxel or
Dolphin under the Apollo Agreements as to such unaccepted Acquired Interests. If
Exxel and Dolphin elect to accept the offer of the Acquired Interest(s), then
within five (5) business days after the Apollo assignment to Exxel and Dolphin
of the Acquired Interest(s), Exxel and Dolphin shall pay Apollo one hundred
percent (100%) of the Acquisition Costs (75% by Exxel and 25% by Dolphin) in
cash, by wire transfer of immediately available funds. The information to be
provided by Apollo to Exxel and Dolphin with each offer of an Acquired Interest
shall include the applicable Lease, or other documents creating or describing
the Acquired Interest, together with all documents and records relied upon by
Apollo in its acquisition of the Acquired Interest(s), and copies of receipts or
checks showing payment of the Acquisition Costs. If Exxel acquires, either
directly or indirectly, any interests within the AMI as that term is defined in
Section 6.1 of the Exxel/Apollo Agreement, then Apollo shall still be entitled
to assignment of all overriding royalty interests and after Project Payout
working interest(s) that Apollo is otherwise entitled to under the Exxel/Apollo
Agreement, subject to the provision of Section 5(a) of this Agreement. Likewise,
if Dolphin acquires, either directly or indirectly, any interests within the AMI
as that term is defined in Section 6 of the Dolphin/Apollo Agreement, then
Apollo shall still be entitled to assignment of all overriding royalty interests
and after Project Payout working interest(s) that Apollo is otherwise entitled
to under the Dolphin/Apollo Agreement, subject to the provisions of Section 5(b)
of this Agreement. The provisions of this Agreement are not intended to alter,
modify or amend Apollo's rights under the Expansion Area.
8. ASSISTANCE IN LAND FUNCTIONS. Apollo agrees to dedicate a portion of
its land staff's time (five (5) days per week of Xxxxxx Xxxxx' time, three (3)
days per week of Xxx Xxxxxxxx'x time, one (1) clerical office staff member at
forty hours (40) per week ) to assist Exxel and Dolphin in the following land
functions:
(a) Acquisition of title for spacing and pooling applications,
lease acquisitions and determination of ownership interests (as more fully
described below),
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assistance in acquiring surface use agreements, rights-of-way and surface
leases, assistance in building abstracts for drilling title opinions and in
preparing division orders, and in such other land related matters that Exxel or
Dolphin may reasonably request. Apollo shall be paid $30,000 per month for these
services ($22,500 per month by Exxel and $7,500 per month by Dolphin) which will
be performed on a month-to-month basis, and shall be subject to termination by
Exxel/Dolphin, or by Apollo, at their sole discretion and without cause, upon
written notification to the other Parties hereto at least ten (10) calendar days
prior to any month-end.
(b) In connection with each Lease acquisition, Apollo shall
provide Exxel and Dolphin with the following documents
(i) Title Report;
(ii) Executed Lease Agreement;
(iii) Assignment Agreement; and
(iv) A Lease Purchase Report, containing information
relating to:
(1) The date of lease execution, primary term,
and date of lease termination;
(2) Any rental payments, conditions, requirements,
deadlines, work obligations or other contingencies
required to maintain the lease;
(3) Any restrictions, encumbrances, reservations,
easements, covenants, compensation obligations or
other contingencies which may prevent or otherwise
relate to the use of the surface for the drilling
of a well or xxxxx;
(4) The net revenue interest and net acreage
conveyed by the lease (including the identification
of other parties holding an interest in the
leasehold);
(5) A description of the royalty clause of the
lease, including percentage and basis for valuation
of production;
(6) The identification of any releases, waivers
or other curative instruments as may be necessary
to assure the grant of leasehold interests to
Exxel and Dolphin (such documents to be prepared,
executed, recorded and copies thereof to be
delivered to each of Exxel and Dolphin),
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(c) Apollo shall provide each of Exxel and Dolphin with a
weekly status report, including the identification of any new leases under
consideration (describing the proposed terms and the timetable for closing) and
a list of any landowner contacts (and applicable contact information) that have
been made during the week via phone, mail or in-person.
(d) Subject to prior approval by Exxel/Dolphin, any additional
in house or field landmen needed to accomplish the above described land
functions will be billed to Exxel and Dolphin at Apollo's cost plus $50 per day
and additional clerical staff will be billed at Apollo's cost plus $8 per hour,
in addition to the $30,000 fee established in Section 8(a) above.
9. AUGUST X. XXXXXX LEASE. Exxel and Dolphin agree to pay Apollo
$57,898.13 ($43,423.60 by Exxel and $14,474.53 by Dolphin) for the August X.
Xxxxxx top lease and Apollo agrees to deliver such lease to Exxel and Dolphin
(75% to Exxel and 25% to Dolphin) upon receipt of such payment.
10. OPERATORSHIP. In the event that Dolphin fails to make the Dolphin
Payment in any respect as provided in Section 3, it shall immediately designate
Exxel as the operator of their jointly-owned properties under the Apollo
Agreements. This contingency shall in no way affect any other rights of Exxel or
Dolphin pursuant to their Joint Operating Agreement, or as provided in the Third
Amendment to Participation Agreement between Dolphin and Exxel, dated September
1, 2005.
11. AMENDED AND RESTATED APOLLO AGREEMENTS. Except as expressly set
forth in this agreement, the Apollo Agreements and the Participation Agreement
shall remain in full force and effect. Following the execution of this Combined
Amendment, the Parties agree to prepare and execute a document that combines all
of the provisions of the Apollo Agreements and the Participation Agreement and
reflects all of the amendments thereto.
12. COUNTERPARTS. This agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to be an original, and
such counterparts shall together constitute one and the same instrument.
13. APPROVALS. This agreement is subject to, and contingent on, all
necessary Board of Director, lender and regulatory approvals required of each of
the parties, including, with respect to Exxel, the TSX Venture Exchange.
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IN WITNESS WHEREOF, the Parties have executed this Combined Amendment
To Lease Acquisition and Development Agreements and to Participation Agreement
as of the Effective Date.
EXXEL ENERGY CORPORATION APOLLO ENERGY, LLC
for itself and for the Apollo Nominees
By: /s/ XXXXX XXXXX By: /s/ XXXXX X. XXXXXX, III
------------------------------- -----------------------------------
Xxxxx Xxxxx, President and CEO Xxxxx X. Xxxxxx, III,
Operations Manager
DOLPHIN ENERGY CORPORATION ATEC ENERGY VENTURES, LLC
By: /s/ XXXX X. XXXXXX By: /s/ XXXXXX X. XXXXXX
------------------------------- -----------------------------------
Xxxx X. Xxxxxx, President Xxxxxx X. Xxxxxx
President and CEO
By: /s/ XXXX X. XXXXXX
-----------------------------------
Xxxx X. Xxxxxx, Vice President
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