TRANSITION SERVICES AGREEMENT

This TRANSITION SERVICES AGREEMENT (this “Agreement”), is dated as of December
4th, 2006 (the “Effective Date”), and is between Westland Development Co., Inc.,
a New Mexico corporation (“Westland”), and Atrisco Oil & Gas LLC, a New Mexico
limited liability company (“Atrisco”).
 
WHEREAS, Atrisco has requested, and Westland has agreed to provide, certain
services to Atrisco pursuant to the terms and conditions of this Agreement; and
 
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the parties hereby
agree as follows:
 
1.  Services and Fees.
 
(a)  Services. The services to be rendered by Westland under this Agreement are
set forth on Exhibit A attached hereto and made a part hereof (hereinafter,
collectively referred to as the "Services").
 
(b)  Fees. In consideration of providing the Services, Atrisco shall pay to
Westland the fees set forth on Exhibit A attached hereto (the “Fees”), which
Fees will approximate the fully-allocated cost to Westland, without markup or
profit, of providing the Services. Within ten business days following the end of
each calendar month, Westland shall send Atrisco an invoice detailing the
aggregate amount of Fees incurred during the immediately preceding month, which
invoice shall be paid by Atrisco to Westland within 30 days following receipt
thereof. Notwithstanding the foregoing, Atrisco shall not be required to pay the
first $200,000 in Fees incurred during each one-year period commencing on the
Effective Date and the first and second anniversary thereof.
 
2.   Term. Westland shall provide each of the Services for a period commencing
on the Effective Date and ending on the third anniversary thereof (the “Service
Term”), subject to the right of Atrisco to terminate any Service on 30 days’
prior written notice to Westland. All terms of this Agreement shall remain in
effect until no Services are being provided hereunder (the “Services Term”). In
the event Atrisco shall fail to pay any amount due to Westland within 60 days of
the date due, Westland shall have the right, upon five business days’ prior
written notice to Atrisco, to terminate this Agreement; provided, however, that
prior to such termination, Atrisco shall have the opportunity, within such five
business day period, to avoid such termination by paying the amount due.
 
3.   Manner of Providing Services; Cooperation. Westland shall use all
reasonable efforts to provide the Services specified under this Agreement with
the same degree of care, skill, and prudence customarily exercised for its own
operations. Atrisco agrees to cooperate with Westland in Westland’s provision of
the Services hereunder, and each party agrees to use reasonable efforts in good
faith to cooperate with the other party in all matters relating to the provision
and receipt of such Services.
 
4.  Confidentiality. Each party agrees that it, its affiliates and their
respective employees, agents and representatives shall keep confidential all
data and information of the other party or its representatives obtained thereby
in connection with this Agreement in the same manner that such party keeps its
own such data and information confidential, except for information that was or
becomes generally available in the public domain through sources other than the
disclosing party and except as disclosure thereof may be required by applicable
law as reasonably determined by legal counsel to such party, provided, that the
receiving party gives the disclosing party prompt written notice of such
requirement prior to such disclosure and assistance in obtaining an order to
protect such information from public disclosure. The terms of this Section 4
shall survive indefinitely.
 
5.  Non-Solicitation and Non-Hiring of Employees. During the Service Term and
for a period of two years thereafter, neither party will, directly or
indirectly, solicit for employment, hire or otherwise retain any employee,
consultant or independent contractor of the other party without the prior
written consent of the other party.
 
6.  Liability of Westland; Indemnification.

 

(a) Notwithstanding anything to the contrary contained herein, neither Westland
nor any of its affiliates nor any of their respective directors, officers,
employees, or representatives will be liable to Atrisco or any of its affiliates
for any losses or damages suffered in respect of any services, facilities or
employees provided or omitted to be provided pursuant to this Agreement other
than by reason of any such person’s gross negligence or willful misconduct in
the provision of any service pursuant to this Agreement or willful failure to
furnish any service required to be provided pursuant to this Agreement.
 
(b)  Atrisco shall indemnify and hold harmless Westland and its affiliates, and
their respective officers, directors, shareholders, members, employees,
independent contractors, personal representatives, heirs, attorneys, agents and
assigns (collectively, “Westland Indemnified Parties”) from and against any and
all claims, damages, losses, liabilities, fines, penalties, judgments or amounts
paid in settlement (or actions, suits or proceedings, or investigations in
respect thereof) and expenses (including, without limitation, reasonable
attorneys fees) (collectively, “Losses”) that any Westland Indemnified Party may
incur as a result of any claim that arises out of or relates to this Agreement
or the performance by Westland of its obligations under this Agreement;
provided, however, that the foregoing indemnification shall not apply to Losses
attributable to a Westland Indemnified Party’s gross negligence or willful
misconduct. The indemnity agreement contained in this Section 6 shall survive
the termination of this Agreement, and assignment of any rights hereunder.
 
7.  Limitation of Liability. In no event will Westland or its affiliates be
liable for any punitive, special or incidental damages, losses or expenses
arising in connection with this agreement, or in connection with any failure of
performance, error, omission, interruption, defect, delay in operation or
transmission, computer virus or line or system failure, even if such person or
its representatives are advised of the possibility of such damages, losses or
expenses.
 
8.  Governing Law. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the State of New Mexico (without giving
effect to any conflicts of laws principles thereof or of any other State).
 
9.   Miscellaneous.
 
(a)  This Agreement shall be binding upon and inure to the benefit of each party
hereto, its legal successors and permitted assigns, including, without
limitation, successors by merger or consolidation, provided, that neither party
may assign this Agreement without the consent of the other party.
 
(b)  This Agreement (together with Exhibit A hereto) contains the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof. It may not be amended, modified or supplemented, and none of its
provisions may be waived, except by an agreement in writing signed by the
parties hereto.
 
(c)  If any term, condition or provision of this Agreement shall be declared, to
any extent, invalid or unenforceable, the remainder of the Agreement, other than
the term, condition or provision held invalid or unenforceable, shall not be
affected thereby and shall be considered in full force and effect and shall be
valid and be enforced to the fullest extent permitted by law.
 
(d)  Westland or Atrisco by written notice to the other may (x) extend the time
for performance of any of the obligations or other actions of the other under
this Agreement, (y) waive compliance with any of the covenants of the other
contained in this Agreement, or (z) waive or modify performance of any of the
obligations of the other under this Agreement. Except as provided in the
immediately preceding sentence, no action taken or not taken pursuant to this
Agreement will be deemed to constitute a waiver of any breach of any covenant
contained in this Agreement and will not operate or be construed as a waiver of
any subsequent breach, whether of a similar or dissimilar nature.
 
(e)  The headings set forth in this Agreement are used solely for convenience of
reference and shall not control or affect the meaning or interpretation of any
of the provisions.
 
(f)  This Agreement may be signed in any number of counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
one and the same agreement. The exchange (by facsimile) of facsimile copies of
executed counterparts of this Agreement shall be deemed execution and delivery
thereof.
 
(g)  Each party agrees to execute such agreements and other documents and to
take such further actions as the other party may reasonably request in order to
carry out the provisions of this Agreement in accordance herewith.
 
(h)  The Services provided hereunder shall be rendered by Westland as an
independent contractor. Nothing in this Agreement shall be construed to create
or constitute a partnership or joint venture between the parties, or any other
relationship between the parties not expressly provided for herein. Neither
Westland nor any of its affiliates (i) assumes any obligation or liability of
Atrisco or any other person or entity affiliated with Atrisco or (ii) will have
any authority, or will exercise any control, over any property or assets of
Atrisco.

 

[Signature page follows]

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IN WITNESS WHEREOF, Westland and Atrisco have caused this Services Agreement to
be duly executed by their respective officers, each of whom is duly authorized,
all as of the day and year first above written.
 

 

WESTLAND DEVELOPMENT CO., INC.

 

 

 

 

 

By:

 

 

 

Bruce Cook

 

 

Executive Vice President

 

ATRISCO OIL & GAS LLC

 

 

 

 

 

By:

/s/ Randolph M. Sanchez

 

Name:

Randolph M. Sanchez

 

Title:

Board Member

 

 

 

/s/ Ray Mares Jr., Board member

 

 

 

/s/ Josie G. Castillo

 

 

 

/s/ Barbara Page

 

 

 

/s/ Georgia Baca

 

 

 

/s/ Joe S. Chavez

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Exhibit A

Service

Fees

Estimate Annual Amount
(subject to actual usage)

  

Rent for 1,000 ft2
of Westland’s first floor office
and conference room

 

Actual cost
(not to exceed $14.50 per ft2)

$14,500 per year of the Service Term

Common area maintenance

Actual cost
(not to exceed $1.50 per ft2)

 

$1,500 per year of the Service Term

Real estate taxes

Actual cost
(not to exceed $1.00 per ft2)

 

$1,000 per year of the Service Term

Utilities (water, sewer and electric)

 

Actual cost
(not to exceed $3.00 per ft2) 

$3,000 per year of the Service Term

Wages for one full-time and one part-time employee

  

Actual cost
(not to exceed $30.00 per hour)

$85,000 per year of the Service Term

Benefits for one full-time employee

 

Actual cost

 

$14,000 per year of the Service Term

Office supplies

 

Actual cost

$10,000 per year of the Service Term

Accounting services

 

Actual cost

$30,000 per year of the Service Term

Computer supplies and equipment

 

One time actual cost

$3,000 per year of the Service Term

Quarterly newsletter

 

Actual cost

$10,000 per year of the Service Term

Telephone services

 

Actual cost

$3,000 per year of the Service Term

Postage

 

Actual cost

$10,000 per year of the Service Term

Courier services

 

Actual cost

$3,000 per year of the Service Term

Copier supplies

 

Actual cost

$3,000 per year of the Service Term

Internet website development

One time actual cost
(not to exceed $100 per hour)

 

$3,000 during the entire Service Term

Internet website maintenance

Actual cost
(not to exceed $100 per hour)

$3,000 per year of the Service Term