EXHIBIT 10.65
JOINT DEVELOPMENT AGREEMENT
This Joint Development Agreement (the "Agreement") is entered into
effective as of February 10, 1999, by and between BRIGHAM OIL & GAS, L.P.
("Brigham") and ASPECT RESOURCES LLC ("Aspect") (Brigham and Aspect being
sometimes referred to herein individually as a "Party" and collectively as the
"Parties").
I.
FUNDING LEASE, MINERAL AND ROYALTY ACQUISITIONS
Concurrent with its execution of this Agreement Aspect shall forward to
Brigham two hundred thousand dollars (the "Initial Deposit") to be utilized by
Brigham after the effective date of this Agreement exclusively for the purpose
of acquiring interests in oil and gas leases ("Leasehold Interests") and/or
mineral or royalty interests (collectively referred to as "Royalty Interests")
within the lands which are described in Exhibit A which is attached hereto and
incorporated herein for all purposes (the "Subject Lands") within two years from
the date hereof (the "AMI Term") within the limitations contained below.
In the event that it appears to Brigham that it will spend more than the
Initial Deposit in acquiring Leasehold Interests and/or Royalty Interests within
the Subject Lands during the AMI Term, Brigham shall provide Aspect with copies
of the instruments evidencing the Leasehold Interests and Royalty Interests
acquired to date (the "Acquired Interests"), lease purchase reports related to
the Acquired Interests, and seismic interpretations covering the lands that are
the subject of the Leasehold Interests and/or Royalty Interests acquired to date
("Back-Up Materials"). In the event that Aspect desires to review materials in
addition to the Back-Up Materials, Aspect shall have the right to come into
Brigham's offices at reasonable times prior to the expiration of the Election
Period (as defined below) in order to view a reasonable amount of additional
information and data with respect to the Prospect Areas within which the
Acquired Interests are located, subject to any third-party limitations which are
placed upon such materials. Within three business days of Aspect's receipt of
the Back-Up Materials (the "Election Period") Aspect shall have the election to
either: (i) fund an additional two hundred thousand dollars (a "Subsequent
Deposit") to be utilized by Brigham in acquiring Leasehold Interests and/or
Royalty Interests within the Subject Lands ("Full Continuation"), (ii) fund an
additional two hundred thousand dollars that may only be utilized by Brigham in
acquiring Leasehold Interests and/or Royalty Interests within Prospect Areas
("Active Prospect Areas") within which Aspect has already funded the acquisition
of Acquired Interests ("Partial Termination"), or (iii) completely terminate its
obligation to fund the acquisition of additional Leasehold Interests and Royalty
Interests beyond the Subsequent Deposit previously made by Aspect ("Full
Termination"). In order to elect to fund an additional Subsequent Deposit of two
hundred thousand dollars under Full Continuation or Partial Termination, Aspect
must notify Brigham of such election in writing and tender to Brigham in readily
available funds the Subsequent Deposit prior to the expiration of the Election
Period. In the event of Full Termination, this Agreement shall terminate as to
any Leasehold Interests and Royalty Interests which are acquired after the funds
from the Initial Deposit have been exhausted by Brigham, whichever is the
earlier to occur. In the event of Partial Termination this Agreement shall
terminate as to any Leasehold Interests and Royalty Interests which are acquired
after the funds from the Initial Deposit have been exhausted by Brigham, except
as to Leasehold Interests and Royalty Interests that cover lands that are
located within Active Prospect Areas. In the event of Full Termination any
outstanding assignments which are due shall be completed and any activities for
the acquisition of Acquired Interests on Aspect's behalf shall cease.
In the event that Aspect has elected Full Continuation as provided
above and it subsequently appears to Brigham that it will spend more than the
last Subsequent Deposit which has been made by Aspect in acquiring Leasehold
Interests and/or Royalty Interests within the Subject Lands during the AMI Term,
Brigham shall again provide Aspect with copies of the Back-Up Materials related
to the Acquired Interests obtained with such Subsequent Deposit and Aspect shall
have the same elections provided for in the previous paragraph to make another
Subsequent Deposit of two hundred thousand dollars under the same terms and
conditions which are set forth above. Similarly, during the AMI Term Aspect
shall continue to have the same elections as to continued participation as the
immediately preceding Subsequent Deposit runs out until such time as Aspect
elects either Partial Termination or Full Termination.
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In the event that Aspect has previously elected Partial Termination as
provided above and it appears to Brigham that it will spend more than the last
Subsequent Deposit which has been made by Aspect in acquiring Leasehold
Interests and Royalty Interests within the Active Prospect Areas during the AMI
Term, Brigham shall provide Aspect with copies of the Back-Up Materials related
to the Acquired Interests obtained with such Subsequent Deposit. Within three
business days of Aspects receipt of the Back-Up Materials ("Election Period")
Aspect shall have the election to either: (i) fund an additional two hundred
thousand dollar Subsequent Deposit that may only be utilized by Brigham in
acquiring Leasehold Interests and/or Royalty Interests within the Active
Prospect Areas, or (ii) elect Full Termination and thus completely terminate its
obligation to fund the acquisition of additional Leasehold Interests and Royalty
Interests beyond the last Subsequent Deposit made. During the AMI Term Aspect
shall continue to have the same elections as to the continued funding of
Subsequent Deposits in the amount of two hundred thousand dollars for continued
participation in the Active Prospect Areas as each prior Subsequent Deposit runs
out until such time as Aspect elects Full Termination.
Anything to the contrary contained above notwithstanding, in the event that
prior to the spending or commitment of all of the available funds under the last
Initial Deposit or Subsequent Deposit which is made by Aspect right before
Aspect has elected Full Termination or Partial Termination hereunder, Brigham
has acquired or intends to acquire Leasehold Interests and/or Royalty Interests
from a mineral, leasehold or royalty owner and the total consideration for such
package of Leasehold Interests and/or Royalty Interests shall exceed the amount
of the last made Initial Deposit or Subsequent Deposit, no part of the Leasehold
Interests and/or Royalty Interests that are included in the package owned by
such mineral, leasehold or royalty owner shall be funded through Aspect's
Deposit or be deemed an Acquired Interest for purposes of this Agreement,
without the mutual agreement of both Aspect and Brigham; provided, however, that
in the event that Aspect has only elected Partial Termination and the entire
package of Leasehold Interests and/or Royalty Interests are located within
Active Prospect Areas, such Leasehold Interests and/or Royalty Interests shall
constitute Acquired Interests for purposes of this Agreement.
Anything to the contrary contained herein notwithstanding, the Parties
agree that any interests that are acquired by Brigham (i) as part of the
acquisition of producing properties, (ii) as part of the acquisition of
substantially all of the assets of another company, or (iii) as a result of any
merger or other consolidation of assets with another company shall not
constitute Leasehold Interests, Royalty Interests or Acquired Interests for
purposes of this Agreement. In addition, the Parties agree that the interests to
be acquired pursuant to the terms of a farm-in (or other similar arrangement)
under which interests in oil and/or gas leasehold are not earned by Brigham
unless Brigham commits to drill a well and pay a disproportionate share
(disproportionate to Brigham's final revenue interest in the well) of the
drilling and/or completion costs for such well, shall not constitute Leasehold
Interests or Royalty Interests for purposes of this Agreement. Such excluded
interests shall not be acquired with the funds provided by Aspect hereunder.
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For purposes of this Article I, the Initial Deposit and any Subsequent
Deposit funds are to be utilized to pay (i) for any brokerage costs actually
associated with the Acquired Interests incurred on or after February 1, 1999 to
run title and acquire the Leasehold Interest and/or Royalty Interest, (ii) all
lease bonus payments, royalty or mineral interest acquisition payments to the
mineral or royalty interest owner, (iii) any delay rentals that are paid prior
to the expiration of the Brigham Election Period (as defined in Article III
below) for the subject Leasehold Interest and/or Royalty Interest and (iv) any
other costs or consideration that are directly related to the acquisition of a
Leasehold Interest or Royalty Interest pursuant to the terms hereof. It is
further stated that none of the funds provided by Aspect shall be used to cover
any of Brigham's overhead expenses.
For purposes of this Article I, a Leasehold Interest or Royalty Interest
shall be deemed to have been acquired at such time as the mineral, leasehold or
royalty owner has executed an instrument in a form acceptable to Brigham, has
delivered such instrument to Brigham or to a third party for delivery to Brigham
and such mineral, leasehold or royalty owner has been paid all of the
consideration which is due for such acquisition.
Within 60 days of the earlier to occur of the end of the AMI Term or Full
Termination, Brigham shall reimburse Aspect for any part of the Initial Deposit
or any Subsequent Deposits which were not utilized to obtain Acquired Interests
hereunder.
II.
BRIGHAM PARTIAL PAYBACK ELECTION
At any time prior to the expiration of 6 months following the end of a
calendar quarter that occurred during the AMI Term (the earlier to occur of the
expiration of such 6 month period or such time as Brigham makes the election
under this Article II being herein referred to as the "Brigham Election
Period"), Brigham shall have the election to reimburse Aspect for 75% of all of
the costs which have were funded by Aspect and utilized to acquire the Leasehold
Interests that were acquired by Brigham within such calendar quarter. To
exercise such election Brigham shall tender the reimbursement in readily
available funds to Aspect prior to the expiration of such six month period. The
Parties recognize and acknowledge that Brigham does not have the election to
reimburse Aspect for any of the costs which have been utilized to acquire
Royalty Interests during the AMI Term.
III.
ASSIGNMENT OF INTEREST IN ACQUIRED INTERESTS
Upon obtaining an Acquired Interest Brigham shall promptly assign Aspect an
interest in such Acquired Interest utilizing the form of Assignment which is
attached hereto as Exhibit B. In the event that the Acquired Interest is a
Leasehold Interest, Brigham shall assign an undivided twenty-five percent (25%)
interest in such Acquired Interest to Aspect. In the event that the Acquired
Interest is a Royalty Interest, Brigham shall assign an undivided fifty percent
(50%) interest in such Acquired Interest to Aspect. Immediately following the
expiration of the Brigham Election Period for Acquired Interests obtained during
a calendar quarter hereunder, in the event that Brigham has not elected to
reimburse Aspect for 75% of the costs which were funded by Aspect to acquire the
Leasehold Interests that make up the Acquired Interests obtained during such
calendar quarter as provided in Article II above, Brigham shall assign to Aspect
an additional 25% interest in the Leasehold Interests that were acquired during
such calendar quarter utilizing the form of Assignment which is attached hereto
as Exhibit B. Any assignment shall be conveyed subject only to revenue burdens
as acquired. Brigham will not retain any burden against production on the
interests in the Acquired Interests that are assigned to Aspect.
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IV.
PROSPECT DESIGNATION
The Parties agree that the separate areas described in Exhibit C shall
constitute separate prospect areas (herein defined as "Prospect Area") for
potential future exploration and/or development. In addition, prior to obtaining
an Acquired Interest that covers lands that are not already included within an
existing Prospect Area, Brigham shall designate in writing to Aspect a Prospect
Area which includes within its boundaries at a minimum all of the lands which
are the subject of the Acquired Interest. In addition, the boundaries of each
such designated Prospect Area shall cover at least the geographical extent of
what Brigham reasonably believes could potentially be a continuous oil and/or
gas reservoir that may be proved up as potentially productive with a single
exploratory well.
V.
JOINT OPERATING AGREEMENT
Upon the designation of a Prospect Area as provided in Article IV above,
the Parties' interests in Leasehold Interests that are located within each such
Prospect Area shall be deemed to be governed by a separate Joint Operating
Agreement in the form attached hereto as Exhibit D. Prior to the commencement of
drilling operations by either Party hereto within a Prospect Area, each Party
agrees to execute a Joint Operating Agreement in the form attached hereto as
Exhibit D which shall be completed to describe the Contract Area for such Joint
Operating Agreement as the Prospect Area. Anything to the contrary contained in
the Joint Operating Agreement notwithstanding, prior to the expiration of one
hundred eighty days following Brigham's designation of the subject Prospect
Area, without Brigham's mutual consent, Aspect shall not have the right to
propose the drilling of a well within such Prospect Area unless such well is
necessary to maintain a Leasehold Interest.
VI.
CONFIDENTIALITY AND NON-COMPETE
Without obtaining Brigham's prior written consent to same, for a period of
5 years following the effective date of this Agreement and subject to any
additional restrictions that are imposed by the seismic contractor or other
party licensing the seismic data to Brigham, Aspect shall not disclose any
information related to the seismic data or seismic data interpretations covering
any part of the Subject Lands that Brigham may provide or disclose to Aspect. In
addition, during the AMI Term, Aspect shall not compete with Brigham within the
Subject Lands by acquiring any interest in oil, gas and or other minerals of any
kind (whether leasehold, mineral fee, royalty, overriding royalty or otherwise)
within the Subject Lands, through any related entities, agents or otherwise,
other than the ownership acquired hereunder. Furthermore, for a period of 5
years following the effective date of this Agreement, Aspect shall not compete
with Brigham within any of the Prospect Areas within which Acquired Interests
have been obtained, by acquiring any additional interest in oil, gas and or
other minerals of any kind (whether leasehold, mineral fee, royalty, overriding
royalty or otherwise) within the Subject Lands, through any related entities,
agents or otherwise, other than the ownership acquired hereunder and the rights
related thereto pursuant to the governing Joint Operating Agreement. In the
event that there are any conflicts or inconsistencies between the terms of this
Agreement and the Joint Operating Agreement that governs the Parties' interests
in any Prospect Area, the terms and provisions of this Agreement shall control.
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VII.
DISCLAIMERS RELATED TO SEISMIC DATA AND INTERPRETATIONS
ASPECT UNDERSTANDS AND AGREES THAT BRIGHAM MAKES NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND AS TO THE SEISMIC DATA OR INTERPRETATIONS THAT HAVE BEEN
OR MAY IN THE FUTURE BE PROVIDED TO ASPECT BY BRIGHAM, INCLUDING WITHOUT
LIMITATION, THEIR FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY OR ACCURACY,
AND BRIGHAM HEREBY DISCLAIMS ANY AND ALL SUCH REPRESENTATIONS OR WARRANTIES, AND
ANY USE OF SUCH SEISMIC DATA OR INTERPRETATIONS BY ASPECT, OR ANY ACTION TAKEN
BY ASPECT SHALL BE BASED SOLELY ON THEIR OWN JUDGMENT, AND NEITHER BRIGHAM , OR
ITS SUCCESSORS OR ASSIGNS, SHALL BE LIABLE OR RESPONSIBLE TO ASPECT OR ITS
SUCCESSOR OR ASSIGNS FOR ANY LOSS, COST, DAMAGES, OR EXPENSE WHATSOEVER,
INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCURRED OR SUSTAINED AS A RESULT
OF THE USE OF OR RELIANCE UPON SUCH SEISMIC DATA OR INTERPRETATIONS, REGARDLESS
OF WHETHER OR NOT SUCH LOSS, COST, DAMAGE OR EXPENSE IS FOUND TO RESULT IN WHOLE
OR IN PART FROM THE SOLE OR CONCURRENT NEGLIGENCE OR OTHER FAULT OF BRIGHAM.
VIII.
ASPECT FIRST LOOK
In the event that at any time during the AMI Term and prior to an election
as to Full Termination by Aspect, Brigham desires to sell or assign leasehold or
working interests within the Subject Lands in return for consideration that does
not include the trade or exchange of interests owned by the third party which
are located within the Subject Lands, then in such event, Brigham shall provide
Aspect the first opportunity to review the interests that are proposed to be
sold or assigned and Brigham shall make a good faith effort to negotiate a
mutually agreeable arrangement for the sell or assignment of such interests to
Aspect ("First Look"). However, in the event that Brigham and Aspect do not
reach agreement with respect to the sell or assignment of such interests within
a reasonable amount of time, which amount of time shall in no event exceed
fifteen days, Brigham shall have the right to market, sell and/or assign such
interests to other parties upon any terms Brigham deems acceptable, regardless
of whether or not such terms were offered to Aspect. Anything to the contrary
contained above notwithstanding, in the event that Aspect has elected Partial
Termination, the First Look described above shall only apply to interests that
are located within Active Prospect Areas that are proposed to be sold or
assigned by Brigham. In addition, anything to the contrary contained herein
notwithstanding, Aspect shall not have a First Look with respect to any
interests which are to be sold or assigned by Brigham pursuant to an agreement
with a third party which also provides for such third-party's participation or
ownership in leasehold, projects, prospects and/or wells which are located
outside of the Subject Lands.
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IX.
MISCELLANEOUS
Subject to the terms of any restrictions that may be contained in any
Acquired Interest and the limitations contained below in this paragraph, any
Party may assign, convey or otherwise transfer all or any part of its interest
under the terms of this Agreement. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
their respective assigns of rights hereunder; provided, however, that the
conveyance, assignment or other instrument of transfer vesting such transferee
with all or part of such rights, interests and unaccrued obligations must
expressly provide that the assignment, conveyance or other transfer is made
subject to the terms and conditions contained in this Agreement and in the
absence of such language in the instrument of transfer any such attempted
conveyance, assignment or other transfer shall be void and of no legal force and
effect. In addition, in any such assignment, conveyance or other instrument of
transfer, the transferee shall expressly agree to assume and be responsible for
any liabilities, damages, obligations, covenants and agreements arising from and
after the date of such assignment, conveyance or other transfer, in relation to
or otherwise out of the properties, rights and interests that are the subject of
this Agreement and/or such assignment, conveyance or transfer, and the
transferor shall remain responsible for any of the foregoing arising prior to
the date of such assignment, conveyance or other transfer, and in the absence of
such language in the instrument of transfer, any such attempted transfer shall
be void and of no force and effect. Any subsequent assignment, conveyance or
transfer shall likewise contain express language so allocating responsibility as
between transferor and transferee, and in the absence of such language in the
instrument of transfer, any such attempted transfer shall be void and of no
force and effect.
All notices and other communications required or permitted under this
Agreement shall be in writing, and unless otherwise specifically provided, shall
be delivered personally, or by mail, telecopier or delivery service, to the
addresses set forth opposite the signatures of the Parties below, and shall be
considered delivered upon the date of receipt. Each Party may specify its proper
address or any other post office address within the continental limits of the
United States by giving notice to other Parties, in the manner provided in this
Section, at least ten (10) days prior to the effective date of such change of
address.
This Agreement supersedes any and all prior and existing agreements,
whether oral or in writing, between the Parties hereto with respect to the
subject matter hereof and contains all of the covenants and agreements between
the Parties with respect to the subject matter hereof. Each Party acknowledges
that no Party to this Agreement or anyone on their behalf has made any
representations, inducements, promises or agreements, orally or otherwise,
relating to the subject matter of this Agreement that are not embodied herein.
This Agreement may be executed in multiple counterparts, each of which
shall be binding upon the signing Party or Parties thereto as fully as if all
Parties had executed one instrument, and all of such counterparts shall
constitute one and the same instrument. If counterparts of this Agreement are
executed, the signatures of the Parties, as affixed hereto, may be combined in
and treated and given effect for all purposes as a single instrument. However,
anything to the contrary contained herein notwithstanding, this Agreement shall
not be binding upon any Party hereto unless and until all of the Parties sign a
counterpart thereof.
IN WITNESS WHEREOF this Agreement is executed by the Parties on the dates
set forth opposite their respective signatures below but is effective for all
purposes as of the date first set forth above.
Address: BRIGHAM OIL & GAS, L.P.,
6300 Bridge Point Pkwy by Brigham, Inc.
Bldg. 2, Suite 500 its Managing General Partner
Austin, Texas 78730
Phone (512) 427-3300
Fax (512) 427-3400
Dated:______________________ By: /s/ Ben M. Brigham
---------------------------------
Ben M. Brigham, President
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Address: ASPECT RESOURCES LLC
511 16th Street, Suite 300 by Aspect Management Corporation
Denver, Colorado 80202 its Manager
Phone (303) 573-7011
Fax (303) 573-7340 By: /s/ Alex Campbell
Dated:______________________ Alex Campbell, Vice President
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