EXHIBIT 10.01
TERMINATION AND SETTLEMENT AGREEMENT
This Termination and Settlement Agreement (the "Termination Agreement")
dated as of December 23, 2004 is entered into by and among Gasco Energy, Inc. a
Nevada corporation ("Company"), Marc A. Bruner an individual residing in
Metzerlen, Switzerland ("Bruner"), and Mark A. Erickson an individual residing
in Highlands Ranch, Colorado ("Erickson" and together with Bruner, collectively,
"Agents" or individually an "Agent"). Company and Agents are each referred to
herein individually as a "Party" and, collectively, as the "Parties".
INTRODUCTION
A. Company, Agents and others entered into that certain Trust
Termination and Distribution Agreement dated as of December 31, 2002 (as
amended, supplemented or otherwise modified from time to time, the "Distribution
Agreement") which terminated the Pannonian Employee Royalty Trust Agreement
dated as of March 30, 2001 ("Trust Agreement") and provided for the distribution
to Participants (as defined in the Trust Agreement) of the Trust Estate (as
defined in the Trust Agreement) in accordance with terms thereof;
B. The Company and the Agents want to modify the terms of the
Distribution Agreement and terminate any further rights that Agents may have to
receive any of the Trust Estate or any other properties including any overriding
royalty interest or other mineral interest pursuant to the Distribution
Agreement and have Agents reconvey any overriding royalty interests that they
may have received to date in accordance with the terms of the Distribution
Agreement located in the state of Utah for the consideration set forth herein.
THEREFORE, for and in consideration of the mutual benefits hereunder,
the Parties hereby agree as follows:
Section 1. Definitions. The following terms shall have the
meanings set forth below:
"Change of Control" means any of the following events:
(i) any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
or any current owner of shares of common stock of the Company,
directly or indirectly, of shares of common stock of the Company
representing 50% or more of the voting power of the Company's then
outstanding common stock;
(ii) the consummation of a merger or consolidation of the
Company with any other corporation or entity, other than a merger or
consolidation that results in the shares of common stock of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
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securities of the surviving entity) at least 51% of the combined
voting power of the voting securities of the Company (or such
surviving entity or parent entity, as the case may be) outstanding
immediately after such merger or consolidation;
(iii) the stockholders of the Company approve a plan of
complete liquidation of the Company; or
(iv) the sale or disposition by the Company of all or
substantially all of the assets of the Company.
"Triggering Event" means the occurrence of any of the following events:
(i) a Change of Control shall occur;
(ii) the sale or conveyance by the Company, other than to an
affiliate, of all or substantially all of its interest in any property
listed on Schedule 1 (provided however, (A) neither the expiration or
termination of any lease nor the farmout of any such lease shall be
construed as a sale or conveyance of such lease and (B) a mortgage,
security interest or collateral assignment for the purpose of providing
security for the benefit of a creditor will not be deemed a sale or
conveyance of any lease);
(iii) with respect to Erickson only, upon the termination of
the Gasco Energy, Inc. Employment Agreement between Mark A. Erickson
and Gasco Energy, Inc. dated as of February 14, 2003; or
(iv) with respect to Bruner only, upon the termination of the
Gasco Energy, Inc. Strategic Consulting Agreement between Marc A.
Bruner and Gasco Energy, Inc. dated as of February 14, 2003.
Section 2. Termination. The Parties hereby agree that Agents shall have
no further rights to any assignment, distribution or conveyance of any property
or other interests pursuant to the Distribution Agreement including, any
distributions that may be required pursuant to Section 4 of the Distribution
Agreement, any such rights to any assignment, distribution or conveyance are
herby terminated and shall no longer have any force or effect and Company shall
have no obligation to make any such assignment, distribution or conveyance under
the Distribution Agreement to the Agents or their successors and assigns.
Section 3. Reconveyance. Agents hereby GRANT, BARGAIN, SELL, ASSIGN,
AND TRANSFER all of their rights, titles and interests in any working, royalty,
fee, overriding royalty, mineral or other interests or other properties and
rights (including any legal, beneficial or record title interest) that they may
have received or been entitled to receive pursuant to the Distribution Agreement
with respect to any such interests, properties or rights located in the states
of Utah or Wyoming ("Distributed Property") to Company. The Agents and the
Company agree to execute and delivery such additional documents and instruments
and do such other acts as may reasonably be required to effectuate the
reconveyance and assignment set forth in this Section 2.
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Section 4. Special Warranty. Each Agent hereby represents and warrants
that such Agent has not sold, assigned, conveyed, transferred or otherwise
distributed or encumbered in any way any of the Distributed Property and shall
WARRANT AND FOREVER DEFEND all and singular the title to the Distributed
Property unto the Company, its successors and assigns against every person
whomsoever lawfully claiming or to claim the same or any part thereof by,
through, or under such Agent but not otherwise.
Section 5. Override Conveyance. Company hereby agrees that, upon a
Triggering Event, Company will grant an overriding royalty interest ("Override")
pursuant to a Conveyance of Overriding Royalty Interest in the form attached
hereto as Exhibit A out of the properties and out of only such properties as set
forth on the attached Schedule 1, with an overriding royalty percentage interest
as indicated on Schedule 1 with respect to such property in which the override
is being granted to each of the Agents (subject to any recoupment or
reimbursement obligations pursuant to any non-consent or non-participation by
Company in any operations on the properties set forth on Schedule 1) and with an
effective date as of the first day of the month in which the Triggering Event
occurred. Notwithstanding the preceding, (i) in the event that the Triggering
Event that is giving rise to the grant of the Override is the event described in
sub-section (ii) of the definition of Triggering Event, in such instance, the
Override will be granted only with respect to the property that is actually
being sold or conveyed and not out of all of the properties set forth in
Schedule 1 and (ii) in the event that the Triggering Event that is giving rise
to the grant of the Override is the event described in sub-section (iii) or (iv)
of the definition of Triggering Event, in such instance, the Override will be
granted only to the Agent for which the Triggering Event has actually occurred.
Section 6. Entirety. This Termination Agreement contains the entire
understanding between the Parties and the terms and conditions of this Agreement
supersede and replace any other agreements or understandings among the Parties
including, the Distribution Agreement, with respect to such transactions,
whether oral or written.
Section 7. Notices. All notices, requests, demands and other
communications made pursuant to this Termination Agreement shall be in writing
and mailed or delivered to the applicable party at its address indicated as a
part of such party's signature block or as to each Party, at such other address
as shall be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section 8. All such notices,
requests, demands and other communications shall be delivered either through the
United States Postal System, by a recognized national courier, or personally
delivered.
Section 8. Further Assurances. Each Agent and the Company agrees to and
shall execute and deliver or shall cause to be executed and delivered to the
requesting party such other documents and instruments and take such other
actions as such requesting party may from time to time deem necessary or
appropriate to carry out the terms of this Agreement.
Section 9. Severability. Any provision of this Termination Agreement,
which is prohibited or unenforceable in any jurisdiction, shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portion of such provision or
the other provisions of this Agreement
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Section 10. Governing Law. This Termination Agreement shall be governed
by and construed in accordance with the laws of the State of Colorado.
Section 11. Counterparts. This Termination Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but
together all such counterparts shall be considered but one and the same
instrument.
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IN WITNESS WHEREOF, the Parties have executed this Termination
Agreement as of the date first written above.
COMPANY:
GASCO ENERGY, INC.
By: /s/ W. King Grant
Name: W. King Grant
Title: Executive Vice President -
Chief Financial Officer
Address for Notice:
AGENTS:
/s/ Marc A. Bruner
Marc A. Bruner
Address for Notice:
/s/ Mark A. Erickson
Mark A. Erickson
Address for Notice:
1135 E. Kistler Court
Highlands Ranch, CO 80126
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