AGREEMENT
This Agreement is entered into this __ day of March, 1998, between
PENNACO ENERGY. INC., whose address is 3651 Lydell Road, Suite A, Las Vegas,
Nevada 89103 (hereinafter referred to as "Pennaco"), and HIGH PLAINS
ASSOCIATES, INC., whose address is 1557 Ogden Street, Suite 300, Denver,
Colorado 80218 (hereinafter referred to as "High Plains").
RECITALS
1. Pennaco and High Plains entered into a Mineral Lease Purchase Agreement
dated February 23, 1998 (hereinafter referred to as "Mineral Lease Purchase
Agreement").
2. Louis A. Oswald, III, and Crystal H. Oswald (collectively, the "Oswalds")
and High Plains entered into an Agreement with Randall Taylor, d/b/a Taylor
Oil Properties dated January 23, 1998 (hereinafter referred to a the
"Taylor Agreement."). The Taylor Agreement is attached as Exhibit "A" to
Attachment I hereto.
3. Under the provisions of the Taylor Agreement, High Plains has an option
to acquire oil and gas leases in the North Powder Prospect, Sheridan
County, Wyoming, and Powder River County, Montana, pursuant to the terms
and provisions of the Taylor Agreement.
4. Pursuant to the terms of the Mineral Lease Purchase Agreement, Pennaco
desires to take an assignment of High Plains' option rights under the
Taylor Agreement, exercise the option, close the transaction, and receive
an assignment of the oil and gas leases which are subject to Taylor
Agreement.
Now, therefore, for an in consideration of this agreement, and the covenants
and provisions herein contained, Pennaco and High Plains agree as follows:
1. ASSIGNMENT OF OPTION. Oswalds and High Plains shall execute and
deliver to Pennaco the Assignment of Option and Exercise of Option attached
hereto as Attachment I. Pennaco shall execute that portion of this document
which exercises the option to purchase the leases subject to the Taylor
Agreement.
2. EXERCISE OF OPTION. On or before the option deadline 10:00 a.m. on
March 7, 1998, High Plains shall provide Taylor with a copy of the fully
executed copy of Attachment I. Pennaco agrees and understands that upon
delivering such document to Taylor, that Pennaco shall be contractually
obligated to close the purchase transaction contemplated by the Taylor
Agreement on the closing date of May 20, 1998, but subject to the terms and
provisions of the Taylor Agreement.
3. ASSUMPTION OF LIABILITY; INDEMNITY. Pennaco herewith assumes any and
all of the liabilities of High Plains and/or the Oswalds, and their
respective successors and assigns, under the Taylor Agreement. Pennaco
herewith agrees to indemnify and hold High Plains and the Oswalds harmless
from any costs, claims or liabilities arising under or related to the Taylor
Agreement,
including any and all claims arising out of any alleged, asserted, or proven
breaches thereof by Pennaco, specifically including by way of example any
claims or damages relating to failure to close or failure to pay the full
consideration required for the assets. The foregoing assumption and indemnity
shall extend to court costs and reasonable attorneys' fees, and shall be
liberally construed so that the entirety of any legal risk associated with or
arising out of the buyers nonperformance under the Taylor Agreement is borne
solely by Pennaco.
4. ASSIGNMENTS. As contemplated by Attachment I, High Plains shall
continue to assist in closing the transaction with Taylor on behalf of
Pennaco, by providing land and/or title review due diligence services to
Pennaco at its normal billing rate. To the extent that Taylor allows, High
Plains shall assist in the preparation of assignment documents for closing
with Taylor. Assignments shall be made into the name of High Plains. Closing
funds shall be provided by Pennaco and paid directly to Taylor. The closing
settlement statement shall be approved by Pennaco. Upon taking possession of
the assignments at closing with Taylor and payment to High Plains of it out
of-pocket expenses and third party or contract fees and expenses at its
standard rates, High Plains shall assign, using appropriate state or federal
assignment forms, all of its right, title, and interest in and to the leases
acquired from Taylor pursuant to the Taylor Agreement, reserving in said
assignment, unto High Plains an overriding royalty interest as set forth in
Paragraph V.I. of the Mineral Lease Purchase Agreement.
5. EFFECT OF THIS AGREEMENT. The foregoing represents the entire
agreement of the parties as to Pennaco's participation in the acquisition of
the leases subject to the Taylor Agreement through High Plains. Except as
specifically modified herein, the Mineral Lease and Purchase Agreement shall
apply to the Taylor leases and the Taylor Agreement; provided, however the
provisions of Paragraphs VII.3 and VII.5 to the Mineral Lease Purchase
Agreement shall not apply to the transaction contemplated hereby. The sole
consideration to be paid to High Plains for the assignment of its rights
under the Taylor Agreement shall be overriding royalty interest which is
reserved to High Plains under paragraph 4, above, and the retention of High
Plains to provide land, title and due diligence services in connection with
this transaction.
DATED the date first above written.
HIGH PLAINS ASSOCIATES, INC.
By: /s/ Louis A. Oswald, III
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LOUIS A. OSWALD, III, as President
PENNACO ENERGY, INC.
By: /s/ [ILLEGIBLE]
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Its: Sr. Vice President
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