EXHIBIT 10.34
 
CONTRACT OPERATING SERVICES AGREEMENT

THIS CONTRACT OPERATING SERVICES AGREEMENT (this “Agreement”) made and entered
into this 15th day of February, 2012, is by and between South Texas Reservoir
Alliance LLC, a Delaware limited liability company (hereinafter “Contractor” or
“STXRA”), and Condor Energy Technology LLC, a Nevada limited liability company
(hereinafter “Owner” or “Condor”). Owner and Contractor may be referred to
herein together, as the “Parties” and individually, as a “Party.”

WITNESSETH:

WHEREAS, Owner and Contractor are parties to a Strategic Cooperation Agreement,
dated on or about the date hereof (the “SCA”), pursuant to which the Parties
have agreed to enter into this Agreement and a Consulting Agreement (the
“Consulting Agreement”), attached as Exhibits A and B to the SCA, respectively;

WHEREAS, Owner owns undivided working interests in the oil and gas leases (the
“Leases”) described in the Subject JOAs (as defined below) as same may be
amended from time to time (the land described in each Subject JOA is referred to
herein as the “Contract Area”);

WHEREAS, Owner is the named Operator under certain operating agreements (the
“Operator JOAs”) covering certain Leases more particularly described on Part A
of Exhibit A (the “Operator Leases”), and is a Non-Operator under certain
operating agreements (the “Non-Operator JOAs”) covering certain Leases more
particularly described on Part B of Exhibit A (the “Non-Operator Leases”), as
same may be amended from time to time (the Operator JOAs and the Non-Operator
JOAs are, together, the “Subject JOAs”);

WHEREAS, there are wells capable of producing oil and/or gas located on the
lands covered by the Operator Leases more particularly described on Part A of
Exhibit B (the “Operator Wells”), and there are wells capable of producing oil
and/or gas located on the lands covered by the Non-Operator Leases more
particularly described on Part B of Exhibit B (the “Non-Operator Wells”), and,
from time to time, additional wells may be drilled on the lands covered by the
Leases (the “Additional Wells;” the Operator Wells, the Non-Operator Wells and
the Additional Wells are, collectively, the “Wells”);

WHEREAS, Owner desires to retain the services of Contractor, as described more
thoroughly herein, to act as a contract operator of the Operator Leases and the
Operator Wells and as an advisor providing operational guidance to Owner with
respect to the Non-Operator Leases and Non-Operator Wells (collectively, the
“Services”); and

WHEREAS, Contractor has the capability to and desires to render the Services on
behalf of Owner.

NOW, THEREFORE, based upon the mutual covenants and consideration contained
herein, the receipt and sufficiency of which are hereby acknowledged, Contractor
and Owner agree as follows:
 
 
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ARTICLE I
 
DESIGNATION AND RESPONSIBILITIES OF CONTRACTOR
 
1.1 Standard of Performance; Warranties.
 
(a) Upon the request of Owner, subject to the terms of this Agreement,
Contractor shall conduct and direct all operations on the Operator Leases as
permitted and required by, and within the limits of, this Agreement, the
Operator JOAs, and all applicable laws, rules, orders and regulations
(collectively, “Laws”) of any governmental authority having jurisdiction over
any Contract Area or Well that are now or may become applicable to the
operations contemplated by this Agreement, to the extent and as fully as though
Contractor itself was designated as Operator under the Operator JOAs. Owner
agrees to provide Contractor with authorizations necessary for the proper
performance of the Services. Contractor shall use all possible care and
diligence to ensure that the Services are performed:
 
(1) reasonably and prudently;
 
(2) with due diligence and dispatch in accordance with the standards for the
Operator under the Operator JOAs and generally accepted oil field practice;
 
(3) in a skillful and workmanlike manner;
 
(4) by the proper number of experienced, skilled, and/or licensed personnel,
qualified by education and experience to perform their assigned tasks;
 
(5) within the period of time described in such Owner’s request, or if not
specifically described, within a reasonable time under the circumstances; and
 
(6) in full compliance with all Laws.
 
(b) Contractor shall perform all work and labor appropriate or necessary for
setting, installing, handling, caring for, and maintaining all materials,
equipment, and supplies furnished by Owner in connection with the
Services.  Contractor shall furnish equipment, materials, appliances, or
supplies of whatever kind and nature necessary and proper for the performance of
the Services and to provide for the protection of all property and personnel
from defective or non-conforming materials furnished by Contractor. In no event
is Contractor responsible for equipment, materials, appliances, or supplies of
whatever kind and nature necessary and proper for the performance of the
Services provided by a third party.  Contractor shall be responsible for
informing Owner and working with Owner to rectify any problems with third party
equipment, materials, appliances, or supplies of whatever kind and nature
necessary and proper for the performance of Services.
 
 
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(c) Contractor warrants that any of the Services performed by Contractor or its
subcontractors shall be performed in full compliance with the terms hereof.
Contractor shall promptly re-perform any of the Services not performed in
compliance with the terms hereof at Contractor’s sole expense and to the
reasonable satisfaction of Owner, or at Owner’s option, promptly refund to Owner
that portion of the consideration that is attributable to such non-compliant
performance. The warranty period for performance of any of the Services shall be
for a minimum of twelve (12) months or such longer period as may be agreed by
the Parties, beginning on either the date that Owner gives acceptance of the
Services performed or first uses the items related to the Services performed.
 
1.2  Services Generally for Operator Wells.  Subject to the terms of this
Agreement and the Operator JOAs covering the Operator Leases, Contractor shall
manage, develop, operate and supervise all Contract Areas covered by the
Operator Leases. Pursuant to such obligations and as requested by
Owner,  Contractor shall:
 
(a) cause all Operator Wells to be pumped and shall supervise Owner’s or
contract pumpers, whose services will include, without limitation, gauging
tanks, recording well pressure, preparing gauge reports, treating oil, making
minor repairs, and reporting unusual or abnormal occurrences.  Contractor shall
advise all pumpers that pumpers do not have authority to incur or approve third
party costs, except with the prior written consent of Contractor and Contractor
shall use reasonable efforts to ensure that pumpers comply with this limitation;
 
(b) monitor and review Operator Well performance and prepare and deliver to
Owner weekly reports on production from such Wells and monthly reports on
performance of such Wells, each in a standard form satisfactory to Owner on a
per Well basis for each of the applicable Operator JOAs.  Contractor shall also
note, evaluate and report any abnormal changes in production. Appropriate
representatives from Contractor and Owner shall meet, via phone conference or in
person, not less than weekly. Each Party shall supply personnel at such Party’s
cost under this Agreement for the purpose of attending these meetings;
 
(c) prepare and furnish to any duly constituted authority having jurisdiction
over the Operator Leases or the Operator Wells any and all reports, statements
and information that may be required, which shall include, but are not limited
to, with respect to the Operator Wells:
 
(1) all filings for both active and inactive Operator Wells with the appropriate
regulatory body having jurisdiction of said Operator Wells;
 
(2) supervision of all administrative work required with respect to said
regulatory filings; and
 
(3) advising Owner of the actions required for Owner to comply with all Laws
applicable to said Operator Wells.
 
(d) dispose of all salt water and other waste materials produced or generated by
operations on any Contract Area covered by an Operator Lease pursuant to all
applicable Laws;
 
(e) use its best efforts to establish and maintain complete and accurate well
files containing, without limitation, information on operations performed in
connection with each Operator Well. The Parties shall agree to a standard format
within thirty (30) days of execution of this Agreement;
 
 
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(f) supervise and direct all field personnel;
 
(g) review and approve all invoices and charges for all expenses incurred and
credits received by any party providing services, materials, equipment and
supplies to any Contract Area covered by an Operator Lease and submit same to
Owner for payment;
 
(h) provide assistance, as reasonably requested by Owner, in familiarizing
Owner’s personnel (including contract personnel) with the operation of any
Contract Area covered by an Operator Lease, including working side-by-side with
Owner’s personnel as reasonable;
 
(i) assist when capable (from an operational perspective) in the maintenance of
well files, and supply Owner relevant materials received by Contractor to permit
maintenance of Owner’s Lease and land records;
 
(j) provide emergency response assistance with respect to any accident, spill,
upset or similar occurrence requiring immediate action to protect the health,
safety and mechanical and environmental integrity of any Contract Area covered
by an Operator Lease and equipment located thereon;
 
(k) provide reasonable assistance as requested by Owner to market production,
including, without limitation, monthly nominations and management of production
and transportation imbalances;
 
(l) provide Owner, at Contractor’s expense, an online system to permit Owner and
Contractor to share files and information with respect to operations, which
shall include access to periodically archived items reasonably expected of a
competent operator, such as production history, regulatory filings, status of
any authorizations for expenditure (“AFEs”) and the like; and
 
(m) as requested by Owner, respond to requests for information by other working
interest owners in any Contract Area covered by an Operator Lease and manage
relations with such working interest owners.
 
1.3  Operations on Operator Wells.  Upon Owner’s request, Contractor shall
perform the following services in connection with completing, working-over, or
drilling any Operator Well, or reworking, deepening, or plugging back any dry
hole located on lands covered by any Operator Lease:
 
(a) supervise all routine well service operations and repair and maintenance
operations, including onsite supervision of the installation or removal of well
equipment, pumping of any treating fluid or substance into a Well, and other
onsite operations performed under contract by a third party or with leased
equipment;
 
 
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(b) supervise all completion operations, workover operations, recompletion
operations, and any type of remedial operation, whether or not it would
ordinarily be considered a normal well-service operation, including, without
limitation, contracting with supervisory personnel for onsite supervision as
required and maintaining day-to-day supervision of such personnel;
 
(c) prepare operating and drilling procedures;
 
(d) prepare operating cost estimates and AFEs for Owner’s approval, and, upon
receipt of Owner’s written approval, distribute AFEs to other working interest
owners and manage approval process for all AFEs;
 
(e) obtain all necessary drilling permits and file all reports required under
applicable Laws, or as reasonably requested by Owner, prior to, during or after
completion of operations;
 
(f) supervise drilling supervisors through daily monitoring of drilling,
deepening, recompletion or other critical operations;
 
(g) perform any work within Contractor’s expertise as requested by Owner;
 
(h) prepare AFEs and procedures and supervise, through daily monitoring of field
personnel, all plugging and abandonment operations for any Operator Well in
compliance with applicable Laws; and
 
(i) notwithstanding the foregoing, Contractor shall not initiate any operations,
including, without limitation, remedial work, repairs or replacement of
equipment, with an estimated total cost exceeding $10,000 without the prior
written approval of Owner, except in connection with response to an emergency as
provided in Section 1.2(j) of this Agreement.
 
1.4  Third Party Contracts.  Unless otherwise agreed by Contractor, all
contracts with third parties shall be in the name of Owner under master service
contracts in form approved by Owner in its sole discretion. Except as otherwise
provided herein, Contractor shall have no liability with respect to third-party
contracts; provided, however, Contractor shall not initiate any contract with
third parties for remedial work, repairs, replacement of equipment, etc. with an
estimated total cost exceeding $10,000. Notwithstanding anything to the
contrary, Contractor its employees, agents, representatives and subcontractors
shall not bind Owner to any third party without Owner’s express prior written
consent.
 
1.5  Selection and Supervision of Personnel.  All personnel involved in
day-to-day lease operations shall be under the operational guidance of
Contractor. Contractor shall recommend to Owner the selection, hiring, dismissal
and work schedule of contractors employed by Owner.
 
 
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1.6  Operations on Non-Operator Wells.  Contractor shall monitor operations on
all Non-Operator Wells to ensure that such operations are being conducted in
accordance with the terms of the applicable Non-Operator JOA and all applicable
Laws and keep Owner apprised of the status of performance and operations with
respect to such Non-Operator Wells. Pursuant to such obligations, as requested
by Owner, Contractor shall:
 
(a) monitor and review Non-Operator Well performance and prepare and deliver to
Owner monthly reports on production from and on performance of the Non-Operator
Wells, each in a standard form satisfactory to Owner on a per Well basis for
each of the applicable Non-Operator JOAs. Contractor shall also note, evaluate
and report any abnormal changes in production or performance;
 
(b) review and approve all joint interest billings (“JIBs”) rendered with
respect to each Non-Operator Well and make recommendations to Owner concerning
objections to charges shown on such JIBs;
 
(c) use its best efforts to establish and maintain complete and accurate well
files containing information on operations performed in connection with each
Non-Operator Well; and
 
(d) review and make recommendations to Owner regarding participation in proposed
operations on such Non-Operator Wells and the AFEs for such operations, or make
recommendations on proposals for operations on such Non-Operator Wells and the
AFE for such operations.
 
1.7  Divestiture Services.  Upon written request by Owner and subject to the
obligations set forth in Article XI, Contractor shall assist Owner in any
efforts to market its interest in any Contract Area, including making its
records and knowledgeable personnel available to accompany potential buyers and
respond to questions as such potential buyers inspect and tour the subject
properties. Any additional services to be provided by Contractor with respect to
buying or selling properties in any Contract Area shall be the subject of a
separate written agreement between Contractor and Owner. Owner shall have no
duty or obligation to engage Contractor for any additional services in
connection with a sale of properties within any Contract Area unless and until
such separate written agreement is executed between the Parties.
 
1.8  Owner Access.  Owner shall have access at all reasonable times to: (a) the
lands covered by the Leases; (b) the Wells; (c) all information pertaining to
the Wells, including, without limitation, the production secured and the oil or
gas marketed; and (d) the books, records and vouchers relating to the operation
of the Leases. Contractor shall furnish Owner with weekly gauge and run tickets.
Notwithstanding anything to the contrary herein, all information referenced in
this Section 1.8 shall be the property of Owner.
 
1.9  Owner Audit Rights. At all reasonable times and upon prior written notice,
Contractor shall permit employees and agents of Owner access to its offices and
work locations to examine, reproduce and retain copies of such documentation and
data, as necessary for Owner to verify and monitor: (a) the accuracy and
propriety of fees for the Services and reimbursable expenses pursuant to this
Agreement; and (b) Contractor’s compliance with the terms of this Agreement and
all applicable Laws; and to interview Contractor’s personnel in connection
therewith. Where the Services hereunder are billed under fixed rates, Owner’s
auditors shall have sufficient access to such rates to satisfy themselves that
the Services have not also been separately billed on some other basis (e.g., a
reimbursable basis). The provisions of this Section 1.9 shall be applicable
during the term of this Agreement and for a period of one (1) year thereafter.
Any costs associated with Owner’s audit requirements or procedures shall be
solely for Owner’s account. If errors or deficiencies are identified by an audit
or otherwise, both Parties shall take prompt corrective action.
 
 
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1.10  Owner Inspection Rights. Owner may make inspection of any of the Services
or performance thereof at any time as is necessary to assure compliance by
Contractor with its obligations hereunder, but failure to inspect or to discover
or reject defective performance of any of the Services shall not imply
acceptance thereof or waiver of any rights hereunder. If Owner’s inspectors
discover any defects with regard to performance of any of the Services,
Contractor shall work with owner to identify if a third party warranty applies
and rectify the defect.  Contractor shall bear no expense of dismantling,
repairing and replacing that portion of the Services affected by such defect and
restoring such of the Services to its proper condition.
 
1.11  Prohibited Actions.  Unless otherwise authorized by this Agreement,
Contractor its employees, agents, representatives and subcontractors shall not
do, perform or authorize any of the following without the prior written consent
of Owner:
 
(a) incur any liabilities in the name or on behalf of Owner, or borrow money or
incur any indebtedness in the name or on behalf of Owner other than in the
ordinary course of business and as provided in the Subject JOAs;
 
(b) sell, assign, surrender or relinquish, farmout, encumber, hypothecate,
mortgage, burden, or otherwise alter, or impair Owner’s title in, to or under,
or that may be derived from, the Leases except: (i) title to equipment that must
be replaced in the ordinary course of business; and (ii) title to equipment that
is obsolete and that can be sold where the value of such equipment does not
exceed $10,000 per item;
 
(c) make any payments, applications or disbursements of Owner’s funds as
provided in the Subject JOAs in an amount greater than $10,000, in any single
instance, except as pursuant to an approved operation under the Subject JOAs;
 
(d) commit hydrocarbons attributable to the Leases to a hydrocarbon sales
contract with a term longer than ninety (90) days;
 
(e) receive for or on behalf of Owner any of the proceeds of production
attributable to the Leases; Owner is responsible for all accounting and
distribution per the JOA;
 
(f) do any act in contravention of this Agreement, the Subject JOAs or any
applicable Law;
 
 
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(g) acquire any interest in the Leases or in any Contract Area; or
 
(h) bind Owner to any third party.
 
1.12  Property Protection.  Contractor shall use all reasonable efforts to
perform the Services in a manner that shall cause the minimum of inconvenience
to and shall avoid damaging interests and property of landowners and tenants
wherever involved. To the extent Contractor damages any such property,
Contractor shall restore it to the condition it was in immediately prior to
causing such damage. Contractor shall assume all responsibility and risk during
the performance of the Services in locating, crossing, and avoiding contact with
utility lines, pipeline, pole lines, sewers, water lines, cables, or other land
facilities and shall promptly repair any damage to such facilities that occurs
as a result of an act or omission of Contractor.
 
1.13  Taxes and Liens.  Contractor hereby agrees to pay and discharge all valid
taxes, lienable Claims (as defined in Section 13.2 below), charges and other
impositions imposed by any Law on Contractor, arising out of, in connection with
or resulting from performance of the ServiES TO INDEMNIFY, RELEASE, DEFEND AND
HOLD OWNER HARMLESS AGAINST ANY LIABILITY FOR SAME. [THIS Owner shall have the
right to withhold payment without interest and request Contractor to furnish
proof satisfactory to Owner that all Claims for labor and materials are
satisfied and discharged. Any amounts due Contractor hereunder shall be paid by
Owner to Contractor, subject, however, to Owner’s right to deduct money due to
Owner and to the right of Owner to withhold payments in accordance with the
requirements of any applicable Law with respect to taxes and liens for labor or
material.
 
1.14  Debris and Wreck Removal.  Contractor shall promptly remove all debris or
wreckage of the property of Contractor or is subcontractors to the extent
requested by Owner, required by any applicable Laws or to the extent the debris
or wreckage interferes with Owner’s operations. CONTRACTOR AGREES TO BE
RESPONSIBLE FOR AND ASSUME ALL LIABILITY FOR AND HEREBY AGREES TO DEFEND,
RELEASE, INDEMNIFY AND HOLD HARMLESS OWNER FOR THE COSTS OF REMOVAL OF SUCH
PROPERTY AND FROM AND AGAINST ANY AND ALL CLAIMS (AS DEFINED IN SECTION 13.2
BELOW) ARISING OUT OF OR RESULTING FROM CONTRACTORS’ OR OWNER’S OBLIGATION TO
REMOVE SAID DEBRIS OR WRECKAGE.
 
ARTICLE II
COMPENSATION OF CONTRACTOR
 
2.1  During the term of this Agreement, Contractor shall be compensated as
provided in Exhibit C.
 
2.2  The compensation provided in Section 2.1 shall not include any direct costs
or third-party costs that are proper charges to Contractor’s account that are
incurred by Contractor in connection with the Services. Owner shall reimburse
Contractor for any third-party charges incurred by Contractor in accordance with
this Agreement within thirty (30) business days of delivery of invoice.
 
 
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ARTICLE III
RESPONSIBILITIES OF OWNER

3.1  Operator of Record.  Owner shall be the Operator of record with respect to
the Operator Leases and under each of the applicable Operator JOAs.
 
3.2  Authority.  Owner shall be duly authorized to act as Operator under all
applicable Laws, which are now or may become applicable to the operations
contemplated by this Agreement.
 
3.3  Payment and Responsibility.  Owner shall be fully responsible for the
timely payment of, and shall timely pay, all sums due for actions taken or
authorized on behalf of Owner by Contractor pursuant to this Agreement and the
Subject JOAs. Notwithstanding anything in this Agreement to the contrary,
Contractor shall not be required to begin any operation unless and until
Contractor’s invoices to Owner have been paid in full, in immediately available
funds. If Owner approves Services under this Agreement with respect to
Non-Operator JOAs, Contractor may invoice Owner, in advance, for the costs of
such Services to be incurred within thirty (30) days after Owner’s approval of
such Services.
 
3.4  Accounting Books and Records.  Subject to the terms of this Agreement,
Contractor is not responsible for maintaining books and records with respect to
the costs incurred in connection with the operation of any Contract Area, but
only for approval of invoices received in connection with such operations as
provided in Section 1.2(g).  At all reasonable times and upon thirty (30) days
prior written notice, Owner shall give Contractor access to Lease Operating
Statements (LOS) and Lease Operating Expense (LOE) statements and supporting
data used to calculate Contractor’s compensation. These requests will be honored
for a period of one (1) year after the expiration of this Agreement.
 
ARTICLE IV
HEALTH AND SAFETY OBLIGATIONS
 
BY EXECUTING THIS AGREEMENT, CONTRACTOR REPRESENTS AND WARRANTS THAT IT IS
QUALIFIED TO DO BUSINESS IN EACH OF THE JURISDICTIONS WITHIN ANY CONTRACT AREA.
CONTRACTOR FURTHER REPRESENTS AND WARRANTS THAT ITS EMPLOYEES ARE QUALIFIED AND
COMPETENT AND THAT CONTRACTOR IS, AND WILL BE THROUGHOUT THE DURATION OF THIS
AGREEMENT, TRAINED TO MEET AND COMPLY WITH THE STANDARDS OF A REASONABLY PRUDENT
OPERATOR IN ALL MATTERS RELATED TO HEALTH, SAFETY AND WORK ENVIRONMENT, AND THAT
IT MEETS ALL REQUIREMENTS IMPOSED BY U.S. DEPARTMENT OF LABOR, OCCUPATIONAL
SAFETY & HEALTH ADMINISTRATION AND REQUIREMENTS UNDER ALL APPLICABLE LAWS, AND
THAT IT ADMINISTERS ALL MANDATED EMPLOYEE DRUG TESTING. SUBJECT TO THE STANDARDS
OF A REASONABLY PRUDENT OPERATOR, CONTRACTOR SHALL ADOPT ANY AND ALL METHODS,
PROCEDURES AND PRECAUTIONS AS ARE NECESSARY TO COMPLY WITH THE PROVISIONS IN
THIS ARTICLE IV.
 
 
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ARTICLE V
INDEPENDENT CONTRACTOR
 
Contractor undertakes the performance of the Services as an independent
contractor, and neither Contractor nor any of its employees, contractors,
vendors or agents will be deemed to be an employee, servant, agent or partner
of, or joint venturer with, Owner. Owner shall have no direction or control of
Contractor, or its employees and agents, except in the results to be obtained.
Owner shall not, in any respect, be responsible for the hiring, employment or
working conditions of the persons employed or retained by Contractor in
connection with the performance of Contractor’s obligations under the terms of
this Agreement. Contractor agrees that it shall be responsible for the payment
of all compensation benefits paid to or for the benefit of its employees and
that it shall have no right of reimbursement, contribution or indemnity from the
Operator for any compensation or benefits paid by Contractor to its employees.
 
ARTICLE VI
INSURANCE
 
Owner and Contractor shall each maintain insurance of the type, in the amounts
and with the limits set forth on Exhibit D, unless additional insurance coverage
or higher insurance limits are required of Owner under the terms of any Subject
JOA, in which case Owner shall obtain such insurance coverage as required under
such Subject JOA. Each Party shall be named as an additional insured under each
of the other Party’s policies for the duration thereof and each of such policies
shall contain a waiver of subrogation. Contractor’s policies shall be carried
with insurance companies reasonably satisfactory to Owner and contain
endorsements stating that the insurer will give thirty (30) days written notice
to Owner of non-renewal, cancellation, substantial amendment or alteration of
such coverage. When requested by Owner, Contractor shall promptly provide Owner
with insurance certificate(s) to evidence procurement of the insurance required
herein and such certificate(s) shall contain reference to the endorsements
required herein. Contractor shall require all subcontractors to obtain, maintain
and keep in force during the time in which such subcontractors are engaged in
performing any of the Services hereunder, adequate insurance coverage and
provide Owner with acceptable evidence of such coverage upon Owner’s request.
All policies of any subcontractor shall be endorsed to provide a waiver of
subrogation. Any deficiencies in coverage with respect to Contractor or any
subcontractor shall be the responsibility of Contractor. Contractor shall be
solely responsible for all deductible amounts, premiums, franchise amounts and
other charges due with respect to Contractor’s required insurance herein.
Failure on the part of Contractor or any of Contractor’s subcontractors to
procure or maintain the required insurance shall constitute a material breach of
this Agreement upon which Owner may terminate this Agreement.
 
ARTICLE VII
FORCE MAJEURE
 
Neither Owner nor Contractor shall be liable to the other for any delay due,
occasioned or caused as a result of any applicable Law or by causes beyond the
control of a Party to overcome by the exercise of due diligence (“Force
Majeure”). If Contractor is delayed or prevented from performing for any such
cause, it shall do all things reasonably possible to remove such cause and shall
resume performance hereunder as soon as such cause is removed. If, in Owner’s
sole opinion, the Force Majeure causes substantial suspension of performance of
the Services, Owner may terminate this Agreement and all Services without
further obligation, except payment for any of the Services already performed. If
performance of any of the Services is suspended due to a labor dispute by
Contractor or its subcontractors with its or their employees, no payment shall
be due to Contractor of the period during which performance of any of the
Services is suspended.
 
 
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ARTICLE VIII
BINDING EFFECT OF AGREEMENT
 
This Agreement shall be binding upon the Parties and their respective successors
and permitted assigns. Notwithstanding anything to the contrary, this Agreement
and the duties and obligations hereunder are not assignable by Contractor
without the prior written consent of Owner. Any assignment in contravention of
this Article VIII shall be void.
 
ARTICLE IX
AMENDMENT, TERMINATION AND TURNOVER DATE
 
9.1  The Parties contemplate that over time, in Owner’s sole discretion, Owner
shall take over operations from Contractor in specific Contract Areas under the
Operator JOAs, and that Contractor will continue to provide the Services for the
remaining Contract Areas. As Owner takes over operations from Contractor,
Exhibits A and B shall be amended accordingly.
 
9.2  On or after ninety (90) days from the date of this Agreement, either Party
shall have the right to terminate this Agreement without cause by providing the
other Party with sixty (60) days prior written notice, which period may be
shortened by mutual agreement of the Parties.  In the event of a material breach
of this Agreement by either Party, including the failure of a Party to perform
any operation or action proposed hereunder that the other Party believes is
necessary to comply with applicable Laws relating to safety or the environment,
the other Party may terminate this Agreement by providing the breaching Party
with two (2) days prior written notice. In the event of termination by Owner,
Owner shall pay Contractor, in full, all amounts due Contractor through the
termination date. Upon termination of this Agreement or partial termination as
to any Contract Area, Contractor will cooperate with Owner for an orderly
transition of operations and will turn over all books and records regarding the
subject Contract Area upon request. Owner shall compensate Contractor for
post-termination services requested by Owner and provided in connection with the
transition at Contractor’s standard day rate as set forth on Exhibit C.
 
9.3  Upon termination of this Agreement, the Parties shall not be relieved of
any liabilities arising from or incident to any of the Services rendered prior
to the termination or the Services then underway and completed after
termination. Neither Party shall be liable to the other Party for any cost or
loss in connection with such termination, including but not limited to loss of
anticipatory profits. Upon termination of this Agreement, Contractor shall
immediately remove all of its and its subcontractors’ equipment and materials
from Owner’s premises, including all Contract Areas, that are not necessary for
the completion of or the provision of any of the Services then underway and,
notwithstanding anything herein to the contrary, sixty (60) days after receipt
by Contractor of notice of the termination of this Agreement from Owner, Owner
shall bear no responsibility for the equipment or materials of Contractor that
remain on Owner’s premises, including all Contract Areas, but which are not
necessary for the completion or the provision of any of the Services then
underway. CONTRACTOR HEREBY AGREES TO BE RESPONSIBLE FOR AND ASSUME ALL
LIABILITY FOR AND HEREBY AGREES TO INDEMNIFY, DEFEND, RELEASE AND  HOLD HARMLESS
OWNER FOR THE COSTS OF REMOVAL OF ANY SUCH PROPERTY AND FROM AND AGAINST ANY AND
ALL CLAIMS (AS DEFINED IN SECTION 13.2 BELOW) ARISING OUT OF OR RESULTING FROM
CONTRACTOR’S OBLIGATION TO REMOVE SUCH PROPERTY FROM SUCH PREMISES. Nothing
herein shall limit Owner’s right to terminate this Agreement for default by
Contractor.
 
 
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9.4  Either Party may, by delivering written notice to the other Party,
terminate this Agreement as of the date specified in such notice if the other
Party: (a) fails to pay, or admits in writing its inability to pay, its debts as
they become due; (b) commences any insolvency proceeding with respect to itself;
(c) takes any action to effectuate or authorize either (a) or (b); (d) becomes
the subject of any involuntary insolvency proceeding, or has any writ, judgment,
warrant of attachment, execution or similar process issued or levied against all
or a substantial part of its properties, and any such proceeding or petition is
not dismissed, or such writ judgment, warrant of attachment, execution or
similar process is not released, vacated or fully bonded within sixty (60) days
after commencement, filing or levy; (e) admits the material allegation of a
petition against it in any insolvency proceeding, or an order for relief is
issued against it in any insolvency proceeding; or (f) consents to the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefore), for itself or a substantial
portion of its property or business. A termination under this Section shall be
deemed a termination for cause.
 
9.5  If this Agreement is terminated pursuant to this Article IX, Articles V,
VII, IX, X, XI, XIII and XIV shall remain in full force and effect in accordance
with their respective terms.
 
ARTICLE X
NOTICES
 
All notices required or permitted under this Agreement shall be in writing and
addressed as set forth below. Any notice hereunder shall be deemed to have been
duly made and the receiving Party charged with notice: (a) if personally
delivered, when received; (b) if sent by facsimile or electronic mail
transmission, upon acknowledgment of receipt; (c) if mailed, five (5) Business
Days after mailing, certified mail, return receipt requested; or (d) two (2)
days after delivery to Fedex or other reputable overnight courier. All notices
shall be addressed as follows:
 
Owner:
 
Contractor:
 
Condor Energy Technology LLC
 
South Texas Reservoir Alliance LLC
 
PO Box 3540
 
1416-B Campbell Rd, Suite 204
 
Silver Springs, Nevada 89429
 
Houston, TX 77055
 
Attention: Frank C. Ingriselli, President
 
Attention: Sean Fitzgerald
 
With a copy to: General Counsel
     
Telephone:  (925) 984-2845
 
Telephone: 281-716-5730
 
Fax:    (925) 403-0703
 
Fax: 281-815-2882
 
Email: cmoore@pacificenergydevelopment.com
 
Email: Sean.Fitzgerald@stxra.com
              ingriselli@pacificenergydevelopment.com      

 
 
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Overnight Address of Owner:
 
Condor Energy Technology LLC
4590 Deodar
Silver Springs, NV 89429
 
Any Party may, by written notice so delivered to the other Party, change the
address or individual to which delivery shall thereafter be made. For purposes
of this Agreement, the term “Business Day” means a day other than a Saturday,
Sunday or legal holiday for commercial banks under the laws of the State of
Texas or the laws of the United States of America.
 
ARTICLE XI
CONFIDENTIAL INFORMATION, NO COMPETITION/SOLICITATION/INTERFERENCE
AND OWNERSHIP OF DOCUMENTS
 
 
11.1  From and after the date of this Agreement, and for a period of two (2)
years after the termination of this Agreement, Contractor shall treat all
information exchanged and relating to the Services or any other transaction
contemplated hereby as confidential (the “Confidential Information”). Contractor
shall take reasonable precautions as may be necessary to prevent the disclosure
of any portion of the Confidential Information to any third party. Without the
prior written consent of Owner, Contractor shall not disclose any of the
Confidential Information, except to any of the following (on a confidential
basis): (a) members, partners, managers, officers, directors, employees,
attorneys, accountants and engineers of Contractor, and other agents or
consultants engaged by Contractor; or (b) any parties to which Contractor is
required to disclose such information by law or by the rules of any recognized
stock exchange on which the securities of Contractor are traded. Contractor
shall be responsible for any breach hereof committed by its employees, agents,
representatives and subcontractors. The Parties acknowledge that the breach of
the terms of this provision may cause irreparable harm for which monetary
damages would be inadequate and difficult to ascertain. Therefore, the Parties
hereby agree that, in the event of a breach or threatened breach hereof, Owner
may seek an injunction, restraining order, specific performance, and such other
remedies and relief, in law or at equity, or any combination thereof, which
Owner may deem in its sole discretion as necessary or advisable. The filing of
any particular cause of action hereunder shall not be deemed an election of
remedies.
 
11.2  For purposes of this Agreement, “Confidential Information” does not
include information that: (a) is already in possession of the public or becomes
available to the public other than through the breach of this Agreement by
Contractor or any other Person (defined in Section 11.3) to whom Confidential
Information is distributed pursuant to this Agreement; or (b) is required to be
disclosed under applicable Laws, stock exchange regulations or court order,
provided that Contractor shall make all reasonable efforts to deliver prompt
written notice to Owner prior to such disclosure.
 
 
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11.3  Neither Contractor nor any of Contractor’s officers, managers, employees,
professional or technical staff, representatives, agents, Affiliates, or any of
such Affiliate’s employees, shall invest in, accept employment from, serve as a
consultant to, or accept compensation from, any Person engaged in any business
or activity of leasing, acquiring, exploring, developing, producing, operating
or marketing oil and gas interests within any of the Contract Areas during the
term of this Agreement and for a period of two (2) years thereafter. During such
period, Contractor agrees not to directly or indirectly cause or attempt to
cause any employee, agent or contractor of Owner or any Affiliate of Owner to
terminate his or her employment, agency or contractor relationship with Owner or
any Affiliate of Owner; or interfere or attempt to interfere with: (a) the
relationship between Owner and any of Owner’s Affiliates, employees, agents,
contractors or any third party (except in accordance with the terms of this
Agreement); or (b) any transaction, agreement, prospective agreement, business
opportunity or business relationship in which Owner or any Affiliate of Owner
was involved during the term of this Agreement (except in accordance with the
terms of this Agreement). For purposes of this Agreement, “Affiliate” means,
with respect to any Person, a Person that directly or indirectly controls, is
controlled by or is under common control with such Person, with control in such
context meaning the ability to direct the management or policies of a Person
through ownership of voting shares or other securities, pursuant to a written
agreement, or otherwise, and “Person” means any individual, partnership, limited
liability company, firm, corporation, association, trust, unincorporated
organization, governmental authority or other entity.
 
11.4  The Parties acknowledge that the breach of the obligations contained in
this Article XI may cause Owner serious economic harm and that the remedies
available to Owner by law may be inadequate. Therefore, upon any breach by
Contractor of Contractor’s obligations under this Article XI, Owner shall be
entitled to seek immediate injunctive relief and/or specific performance, in
addition to any other appropriate forms of equitable or legal relief, including
but not limited to, monetary damages and reasonable attorney’s fees.
 
11.5  Owner and Contractor hereby agree that all tracings, designs, drawings,
field notes, requisitions, purchase orders, specifications, computer programs
(data files and other software in whatever form), and other documents or records
developed in connection with this Agreement or otherwise shall be the sole
property of Owner.
 
ARTICLE XII
AMENDMENTS TO THE AGREEMENT
AND GOVERNING LAWS
 
THIS AGREEMENT MAY NOT BE ALTERED, OR AMENDED, NOR ANY RIGHTS HEREUNDER WAIVED,
EXCEPT BY AN INSTRUMENT IN WRITING EXECUTED BY THE PARTY TO BE CHARGED WITH SUCH
AMENDMENT OR WAIVER. IN THE EVENT ANY PROVISION OF THIS AGREEMENT IS HELD
INVALID BY ANY COURT OF COMPETENT JURISDICTION, THE SAME SHALL IN NO MANNER
AFFECT THE VALIDITY OF ANY OF THE OTHER PROVISIONS OF THIS AGREEMENT, AND THE
PARTIES SHALL ENDEAVOR TO REPLACE THE INVALID PROVISIONS WITH PROVISIONS THAT
CORRESPOND TO THE ORIGINAL ECONOMIC AND GENERAL INTENTION OF THE PARTIES, IT
BEING THE INTENTION OF THE PARTIES THAT EACH PROVISION HEREOF IS BEING
STIPULATED SEPARATELY. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
 
 
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ARTICLE XIII
INDEMNIFICATION
 
13.1         CONTRACTOR SHALL GENERALLY HAVE THE PROTECTIONS, BENEFITS, AND
INDEMNIFICATIONS OF OWNER UNDER THE TERMS OF THE OPERATOR JOAS JUST AS IF
CONTRACTOR WERE THE DESIGNATED OPERATOR UNDER THE OPERATOR JOAS, AND TO THE
FULLEST EXTENT POSSIBLE, OWNER HEREBY ASSIGNS AND TRANSFERS ALL OF SUCH
PROTECTIONS, BENEFITS AND INDEMNIFICATIONS TO CONTRACTOR DURING THE TERM OF THIS
AGREEMENT; PROVIDED, HOWEVER, THAT SUCH ASSIGNMENT SHALL NOT ENTITLE CONTRACTOR
(a) TO CLAIM OR ASSERT ANY LIENS OR SECURITY INTERESTS THAT WOULD BE GRANTED TO
THE OPERATOR UNDER ANY OF THE OPERATOR JOAS, OR (b) TO SETTLE ANY CLAIMS (AS
DEFINED IN SECTION 13.2 BELOW) OR LAWSUITS PERTAINING TO ANY CONTRACT AREA.
 
13.2         BODILY INJURY, DEATH AND DAMAGE TO PROPERTY OF CONTRACTOR’S
EMPLOYEES, AGENTS, REPRESENTATIVES AND SUBCONTRACTORS:
 
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, CONTRACTOR AGREES TO BE
RESPONSIBLE AND ASSUME ALL LIABILITY FOR, AND HEREBY AGREES TO DEFEND, RELEASE,
INDEMNIFY AND HOLD HARMLESS OWNER, ITS PARENT, OFFICERS, DIRECTORS, EMPLOYEES,
JOINT OWNERS, AFFILIATES AND OTHER CONTRACTORS (OTHER THAN CONTRACTOR) (THE
“OWNER INDEMNIFIED PARTIES”) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS,
COMPLAINTS, CAUSES OF ACTION, SUITS, ACTIONS, APPEALS, ACCOUNTS, DEBTS, DAMAGES,
AWARDS, PENALTIES, FINES, JUDGMENTS, RECOVERIES, SETTLEMENTS, DUTIES,
OBLIGATIONS, LIABILITIES, LOSSES, INDEMNITIES, COSTS AND EXPENSES (INCLUDING,
WITHOUT LIMITATION, COURT COSTS, EXPERT WITNESS FEES AND REASONABLE ATTORNEY’S
FEES) OF EVERY KIND AND CHARACTER WITHOUT LIMIT (COLLECTIVELY, “CLAIMS”) ARISING
IN CONNECTION WITH: (a) BODILY INJURY TO AND/OR DEATH OF CONTRACTOR’S EMPLOYEES,
AGENTS, REPRESENTATIVES, SUBCONTRACTORS AND SUBCONTRACTOR’S EMPLOYEES, AND
CONTRACTOR’S INVITEES; AND (b) DAMAGE TO PROPERTY OF CONTRACTOR, CONTRACTOR’S
EMPLOYEES, AGENTS, REPRESENTATIVES, SUBCONTRACTORS AND SUBCONTRACTOR’S
EMPLOYEES, AND CONTRACTOR’S INVITEES; ARISING OUT OF OR RESULTING FROM THE
PERFORMANCE OF THIS AGREEMENT, EVEN THOUGH GROUNDLESS, FALSE OR FRAUDULENT;
PROVIDED, HOWEVER, THAT SUCH CLAIM WAS NOT CAUSED BY OR A RESULT OF THE SOLE OR
CONCURRENT NEGLIGENCE OF ANY SUCH OWNER INDEMNIFIED PARTY. CONTRACTOR’S DEFENSE,
RELEASE, AND INDEMNITY OBLIGATIONS UNDER THIS SECTION SHALL BE PRIMARY AND
WITHOUT REGARD TO AND WITHOUT ANY RIGHT TO CONTRIBUTION FROM ANY INSURANCE
MAINTAINED OR MADE AVAILABLE TO OWNER. IF IT IS JUDICIALLY DETERMINED THAT THE
MONETARY LIMITS OF INSURANCE REQUIRED UNDER ARTICLE VI INCLUSIVE, OR OF THE
DEFENSE AND/OR INDEMNITY OBLIGATIONS VOLUNTARILY ASSUMED UNDER THIS SECTION
(WHICH CONTRACTOR AND OWNER HEREBY AGREE WILL BE SUPPORTED EITHER BY AVAILABLE
LIABILITY INSURANCE, UNDER WHICH THE INSURER HAS NO RIGHT OF SUBROGATION AGAINST
OWNER OR CONTRACTOR, OR VOLUNTARILY SELF-INSURED, IN PART OR WHOLE) EXCEED THE
MAXIMUM LIMITS PERMITTED UNDER APPLICABLE LAWS, IT IS AGREED THAT SAID INSURANCE
REQUIREMENTS AND/OR DEFENSE AND/OR INDEMNITY OBLIGATIONS SHALL AUTOMATICALLY BE
AMENDED TO CONFORM TO THE MAXIMUM MONETARY LIMITS PERMITTED UNDER SUCH LAW.
 
 
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13.3         BODILY INJURY, DEATH AND DAMAGE TO PROPERTY OF OWNER’S EMPLOYEES,
AGENTS, REPRESENTATIVES AND SUBCONTRACTORS:
 
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, OWNER AGREES TO BE RESPONSIBLE
AND ASSUME ALL LIABILITY FOR, AND HEREBY AGREES TO DEFEND, RELEASE, INDEMNIFY
AND HOLD HARMLESS CONTRACTOR, ITS PARENT, OFFICERS, MANAGERS, EMPLOYEES AND
MEMBERS (THE “CONTRACTOR INDEMNIFIED PARTIES”) FROM AND AGAINST ANY AND ALL
CLAIMS ARISING IN CONNECTION WITH: (a) BODILY INJURY TO AND/OR DEATH OF OWNER’S
EMPLOYEES, AGENTS, REPRESENTATIVES, SUBCONTRACTORS AND SUBCONTRACTOR’S
EMPLOYEES, AND OWNER’S INVITEES (EXCLUDING CONTRACTOR, CONTRACTOR’S EMPLOYEES,
AGENTS, REPRESENTATIVES, SUBCONTRACTORS AND SUBCONTRACTOR’S EMPLOYEES, AND
CONTRACTOR’S INVITEES); AND (b) DAMAGE TO PROPERTY OF OWNER’S EMPLOYEES, AGENTS,
REPRESENTATIVES, SUBCONTRACTORS AND SUBCONTRACTOR’S EMPLOYEES, AND CONTRACTOR’S
INVITEES (EXCLUDING CONTRACTOR, CONTRACTOR’S EMPLOYEES, AGENTS, REPRESENTATIVES,
SUBCONTRACTORS AND SUBCONTRACTOR’S EMPLOYEES, AND CONTRACTOR’S INVITEES);
ARISING OUT OF OR RESULTING FROM THE PERFORMANCE OF THIS AGREEMENT, EVEN THOUGH
GROUNDLESS, FALSE OR FRAUDULENT; PROVIDED, HOWEVER, THAT SUCH CLAIM WAS NOT
CAUSED BY OR A RESULT OF THE SOLE OR CONCURRENT NEGLIGENCE OF ANY SUCH
CONTRACTOR INDEMNIFIED PARTY. OWNER’S DEFENSE, RELEASE, AND INDEMNITY
OBLIGATIONS UNDER THIS SECTION SHALL BE PRIMARY AND WITHOUT REGARD TO AND
WITHOUT ANY RIGHT TO CONTRIBUTION FROM ANY INSURANCE MAINTAINED OR MADE
AVAILABLE TO CONTRACTOR. IF IT IS JUDICIALLY DETERMINED THAT THE MONETARY LIMITS
OF INSURANCE REQUIRED UNDER ARTICLE VI INCLUSIVE, OR OF THE DEFENSE AND/OR
INDEMNITY OBLIGATIONS VOLUNTARILY ASSUMED UNDER THIS SECTION (WHICH CONTRACTOR
AND OWNER HEREBY AGREE WILL BE SUPPORTED EITHER BY AVAILABLE LIABILITY
INSURANCE, UNDER WHICH THE INSURER HAS NO RIGHT OF SUBROGATION AGAINST OWNER OR
CONTRACTOR, OR VOLUNTARILY SELF-INSURED, IN PART OR WHOLE) EXCEED THE MAXIMUM
LIMITS PERMITTED UNDER APPLICABLE LAWS, IT IS AGREED THAT SAID INSURANCE
REQUIREMENTS AND/OR DEFENSE AND/OR INDEMNITY OBLIGATIONS SHALL AUTOMATICALLY BE
AMENDED TO CONFORM TO THE MAXIMUM MONETARY LIMITS PERMITTED UNDER SUCH LAW.
 
 
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13.4         THIRD PARTY CLAIMS:
 
FOR CLAIMS BROUGHT BY OR ON BEHALF OF ANYONE OTHER THAN THOSE CLAIMANTS LISTED
IN SECTIONS 13.2 AND 13.3 ABOVE, THE PARTIES’ RESPECTIVE INDEMNITY OBLIGATIONS
SHALL BE AS SET FORTH IN THIS SECTION 13.4.
 
(a) Contractor’s Negligence:  CONTRACTOR AGREES TO PROTECT, DEFEND, INDEMNIFY,
RELEASE AND HOLD THE OWNER INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST ANY AND
ALL CLAIMS, IN FAVOR OF ANY PERSON OR PARTY, FOR INJURY TO OR ILLNESS OR DEATH
OF ANY PERSON, OTHER THAN AS PROVIDED IN SECTIONS 13.2 AND 13.3 ABOVE, OR DAMAGE
TO OR LOSS OF PROPERTY OF ANY SUCH PERSON, AND WHICH SUCH INJURY, ILLNESS, DEATH
OR PROPERTY DAMAGE ARISES OUT OF OR IS INCIDENT TO THE PERFORMANCE OF ANY OF THE
SERVICES TO THE EXTENT, AND IN THE PROPORTION THAT, SUCH INJURY, ILLNESS, DEATH
OR PROPERTY DAMAGE IS CAUSED OTHER THAN BY THE NEGLIGENCE OF OWNER, ITS
EMPLOYEES, AGENTS OR OTHER CONTRACTORS THAT ARE DIRECTLY RESPONSIBLE TO OWNER.
 
(b) Owner’s Negligence:  OWNER AGREES TO PROTECT, DEFEND, INDEMNIFY, RELEASE AND
HOLD THE CONTRACTOR INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, IN FAVOR OF ANY PERSON OR PARTY, FOR INJURY TO OR ILLNESS OR DEATH OF
ANY PERSON, OTHER THAN AS PROVIDED IN SECTIONS 13.2 AND 13.3 ABOVE, OR DAMAGE TO
OR LOSS OF PROPERTY OF ANY SUCH PERSON, AND WHICH SUCH INJURY, ILLNESS, DEATH OR
PROPERTY DAMAGE ARISES OUT OF OR IS INCIDENT TO THE PERFORMANCE OF ANY OF THE
SERVICES, TO THE EXTENT, AND ONLY TO THE EXTENT, AND ONLY IN THE PROPORTION
THAT, SUCH INJURY, ILLNESS, DEATH OR PROPERTY DAMAGE IS CAUSED BY THE NEGLIGENCE
OF OWNER, ITS EMPLOYEES, AGENTS OR OTHER CONTRACTORS THAT ARE DIRECTLY
RESPONSIBLE TO OWNER.
 
 
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13.5         POLLUTION AND HAZARDOUS MATERIALS AND SUBSTANCES.
 
(a) CONTRACTOR’S RESPONSIBILITIES.  SUBJECT TO THE INDEMNITY OBLIGATIONS
CONTAINED IN SECTIONS 13.2 THROUGH 13.4, AND NOTWITHSTANDING ANYTHING TO THE
CONTRARY HEREIN, CONTRACTOR AGREES TO BE RESPONSIBLE AND ASSUME ALL LIABILITY
FOR AND HEREBY AGREES TO INDEMNIFY, RELEASE, DEFEND AND HOLD HARMLESS THE OWNER
INDEMNIFIED PARTIES AGAINST ALL CLAIMS ARISING IN CONNECTION WITH DAMAGE TO
PROPERTY ARISING OUT OF OR RESULTING FROM POLLUTION OR CONTAMINATION (INCLUDING,
BUT NOT LIMITED TO, CONTROL, REMOVAL, RESTORATION AND CLEANUP OF ALL POLLUTION
OR CONTAMINATION), WHICH ORIGINATES FROM CONTRACTOR’S OR ANY OF CONTRACTOR’S
SUBCONTRACTORS’ PROPERTY, INCLUDING, BUT NOT LIMITED TO, SPILLS OR LEAKS OF
FUEL, LUBRICANTS, MOTOR OILS. PIPE DOPE, PAINTS, SOLVENTS, BALLASTS, BILGE,
GARBAGE, SEWERAGE, REGARDLESS OF FAULT, AND ALTHOUGH THEIR USE OR DISPOSITION
MAY BE AT OWNER’S DIRECTION; PROVIDED, HOWEVER, THAT SUCH CLAIM WAS NOT CAUSED
BY OR A RESULT OF THE SOLE OR CONCURRENT NEGLIGENCE OF ANY SUCH OWNER
INDEMNIFIED PARTY.
 
(b) OWNER’S RESPONSIBILITIES.  SUBJECT TO THE INDEMNITY OBLIGATIONS CONTAINED IN
SECTIONS 13.2 THROUGH 13.4, AND NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,
OWNER AGREES TO BE RESPONSIBLE AND ASSUME ALL LIABILITY FOR AND HEREBY AGREES TO
INDEMNIFY, RELEASE, DEFEND AND HOLD HARMLESS THE CONTRACTOR INDEMNIFIED PARTIES
AGAINST ALL CLAIMS ARISING IN CONNECTION WITH DAMAGE TO PROPERTY ARISING OUT OF
OR RESULTING FROM POLLUTION OR CONTAMINATION (INCLUDING, BUT NOT LIMITED TO,
CONTROL, REMOVAL, RESTORATION AND CLEANUP OF ALL POLLUTION OR CONTAMINATION),
WHICH ORIGINATES FROM OWNER’S PROPERTY WITHIN ANY CONTRACT AREA, INCLUDING, BUT
NOT LIMITED TO, SPILLS OR LEAKS OF FUEL, LUBRICANTS, MOTOR OILS. PIPE DOPE,
PAINTS, SOLVENTS, BALLASTS, BILGE, GARBAGE, SEWERAGE, REGARDLESS OF FAULT;
PROVIDED, HOWEVER, THAT SUCH CLAIM WAS NOT CAUSED BY OR A RESULT OF THE SOLE OR
CONCURRENT NEGLIGENCE OF ANY SUCH CONTRACTOR INDEMNIFIED PARTY.
 
 
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13.6          IT IS THE INTENT OF THE PARTIES HERETO THAT ALL
OBLIGATIONS,  LIABILITIES, AND RISKS ALLOCATED OR ASSUMED BY THE PARTIES UNDER
TERMS OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, SECTIONS 13.2 THROUGH
13.5, BE WITHOUT LIMIT. THE DEFENSE AND INDEMNITY OBLIGATIONS, AND RELEASES AND
ASSUMPTIONS OF LIABILITY AND ALLOCATIONS OF RISKS EXTENDED BY THE PARTIES HERETO
UNDER SECTIONS 13.2 THROUGH 13.5 SHALL INURE TO THE BENEFIT OF THE PARTIES,
THEIR RESPECTIVE PARENTS, HOLDING COMPANIES, SUBSIDIARIES AND AFFILIATES, AND
EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, MEMBERS, MANAGERS, EMPLOYEES,
AGENTS AND SERVANTS. THE TERMS AND PROVISIONS OF SECTIONS 13.2 THROUGH 13.5
SHALL HAVE NO APPLICATION TO CLAIMS OR CAUSES OF ACTION ASSERTED AGAINST OWNER
OR CONTRACTOR BY REASON OF ANY AGREEMENT OF INDEMNITY WITH A PERSON OR ENTITY
NOT A PARTY HERETO. THE DEFENSE AND INDEMNITY OBLIGATIONS IN SECTIONS 13.2
THROUGH 13.5 SHALL BE PRIMARY AND IN NO RESPECT AFFECTED BY ANY AGREEMENTS WITH
ANY PERSON OR ENTITY NOT A PARTY HERETO. THE CONTRACTUAL DEFENSE AND INDEMNITY
REQUIREMENTS SHALL ALSO BE PRIMARY TO ANY INSURANCE ON WHICH OWNER IS NAMED AS
AN ADDITIONAL INSURED, INCLUDING THAT INSURANCE REQUIRED UNDER ARTICLE VI
INCLUSIVE.
 
13.7          IT IS EXPRESSLY AGREED THAT NEITHER OWNER NOR CONTRACTOR SHALL BE
LIABLE TO THE OTHER PARTY’S INDEMNIFIED GROUP FOR, AND THE PARTIES SHALL DEFEND,
INDEMNIFY, RELEASE AND HOLD EACH OTHER HARMLESS FROM AND AGAINST, ANY SPECIAL,
PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES RESULTING FROM OR ARISING
DIRECTLY OR INDIRECTLY, OUT OR OF IN CONNECTION WITH THE SERVICES OR OPERATIONS
HEREUNDER RELATED TO RESERVOIR DAMAGE, LOSS OF RESERVES, OR CRATERING OR BLOWOUT
OF THE BOREHOLE, INCLUDING, WITHOUT LIMITATION, LOSS OF USE, LOSS OF DATA, LOSS
OF ASSETS, LOSS OF PROFIT, LOSS OF BUSINESS, OR BUSINESS INTERRUPTION UNLESS
CAUSED BY OR A RESULT OF THE SOLE OR CONCURRENT NEGLIGENCE OF SUCH INDEMNIFIED
PARTY OR ITS INDEMNIFIED GROUP.
 
13.8           The Parties each agree to: (a) immediately notify the other of
any accident or incident in which physical injury, property damage or pollution
or contamination occurs; (b) complete a written accident report for each
occurrence; and (c) provide the other Party with a copy of each such accident
report. Each Party agrees to promptly notify the other Party within thirty (30)
days after receipt of any Claim for which it may seek indemnification hereunder.
 
13.9           As a part of the consideration for this Agreement, Contractor
hereby agrees that the provisions of the foregoing Sections 13.2 through 13.8
inclusive shall extend to and be enforceable by and for the benefit of any
non-operating working interest owners, joint venturers or partners for whom
Owner may be performing operations or services.
 
 
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ARTICLE XIV
MISCELLANEOUS
 
14.1  In the event of any disputes related to this Agreement, the prevailing
Party shall recover court costs and reasonable attorney’s fees from the opposing
Party.
 
14.2  The headings of the articles and sections of this Agreement and any
listing of its contents are for guidance and convenience of reference only and
shall not limit or otherwise affect any of the terms or provisions of this
Agreement.
 
14.3  Harris County, Texas shall be the exclusive venue and jurisdiction for any
litigation between the Parties.
 
14.4  EACH PARTY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY
DISCLAIMS, RELEASES AND WAIVES (a) ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON THIS AGREEMENT, OR DIRECTLY OR INDIRECTLY AT
ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED OR ASSOCIATED THEREWITH, BEFORE OR AFTER TERMINATION;
(b) ANY CLAIMS AGAINST THE OTHER PARTY FOR ANY SPECIAL, PUNITIVE, EXEMPLARY,
INDIRECT OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST SALES,
REVENUES, PRODUCTION, PROFITS OR INCOME), EXCEPT WITH RESPECT TO INDEMNIFICATION
OF THIRD PARTY CLAIMS IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS
AGREEMENT.
 
14.5  This Agreement embodies the whole agreement of the Parties. There are no
promises, terms, conditions, or obligations other than those contained herein.
If Contractor provides or renders any of the Services, then in the event of a
conflict between the terms of performance for such of the Services, whether made
orally or in writing, and the terms of this Agreement, the terms of this
Agreement shall prevail. In the event of a conflict between the provisions
hereof and the provisions of any printed or other pre-prepared form of work or
service order, job, or delivery ticket, or other similar form, submitted to
Contractor by Owner in connection with any of the Services performed hereunder,
the provisions of this Agreement shall prevail and be controlling.
 
14.6  All references in this Agreement to Exhibits, Articles, Sections,
subsections and other subdivisions refer to the corresponding Exhibits,
Articles, Sections, subsections and other subdivisions of or to this Agreement
unless expressly provided otherwise. The words “this Agreement,” “herein,”
“hereby,” “hereunder” and “hereof,” and words of similar import, refer to this
Agreement as a whole and not to any particular Article, Section, subsection or
other subdivision unless expressly so limited. The words “this Article,” “this
Section,” and “this subsection,” and words of similar import, refer only to
Article, Section or subsection hereof in which such words occur. The word
“including” (in its various forms) means including without limitation. All
references to “$” or “dollars” shall be deemed references to United States
dollars. Terms used in this Agreement, which are defined elsewhere in this
Agreement, shall have the definitions so provided herein unless expressly
provided otherwise. Each accounting term not defined herein will have the
meaning given to it under United States generally accepted accounting
principles, consistently applied, as interpreted as of the date of this
Agreement. Pronouns in masculine, feminine or neuter genders shall be construed
to state and include any other gender, and words, terms and titles (including
terms defined herein) in the singular form shall be construed to include the
plural and vice versa, unless the context otherwise requires. All exhibits
attached to this Agreement are hereby incorporated by reference herein and made
a part hereof for all purposes as if set forth in their entirety herein.
References to any law or agreement shall mean such law or agreement as it may be
amended from time to time.
 
14.7  Time is of the essence of this Agreement.
 
 
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IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
day and year first above written.
 

  CONTRACTOR:           South Texas Reservoir Alliance LLC          
 
By:
/s/ Sean Fitzgerald       Name: Sean Fitzgerald      Title: Manager             
      OWNER:           Condor Energy Technology LLC             By: /s/ Clark
Moore      Name: Clark Moore      Title: EVP and General Counsel   

 
 
Signature Page - Contract
Operating Services Agreement
 
 

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EXHIBIT A
Leases

[Separately Attached]
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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EXHIBIT B
Wells

[Blank]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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EXHIBIT C
Contractor Compensation

For all hours of Service provided by STXRA hereunder in any calendar month
CONDOR shall pay STXRA on an hourly basis (rounded to the nearest 1/10 hour) per
the schedule set forth below (“Hourly Compensation”), or such per-day rates as
agreed upon in writing by the Parties. The Monthly Retainer (as defined in the
SCA) shall be drawn down according to the Hourly Compensation set forth
below.  STXRA will promptly deliver notice to CONDOR via email in the event
Hourly Compensation in any month during the term of the Agreement exceeds
$10,000. Hourly Compensation charges and authorized business expenses will
continue to be accrued by STXRA throughout the month and will be invoiced at the
beginning of each following month with an itemized billing report. Payment will
be expected within thirty (30) days of receipt. The hourly rate charges for the
STXRA’s employees are as follows:

$250 per hour for principals of STXRA
(As of the date of this Agreement, Michael Rozenfeld, Sean Fitzgerald, and Kris
Johnson)

$150 per hour for managers or engineers
(As of the date of this Agreement, William Sparker and Hakim Benhammou)

$75 per hour for technical analysts / regulatory analysts
(As of the date of this Agreement, Angelina Galvan)

STXRA plans to increase staffing as conditions dictate and will keep CONDOR
informed as to such staffing changes. CONDOR recognizes that STXRA currently
does not have a full-time drilling engineer or geophysicist on staff and may
need to hire contract staff to meet CONDOR’s needs at CONDOR’s expense.

Notwithstanding the foregoing, STXRA’s maximum day rate per STXRA employee shall
not exceed 8x such person’s applicable hourly rate per full day of Services
performed in STXRA offices provided for hereunder.

The maximum day rate for out of office (excluding field or on location) work per
STXRA employee shall not exceed 10x such person’s applicable hourly rate per
full day of Services performed.

The maximum day rate for field or on location work per STXRA employee shall not
exceed 14x such person’s applicable hourly rate per full day of Services
performed.

Travel time will be charged at 50% of the applicable employees’ hourly rate with
the maximum to not exceed the previously mentioned maximum rates.

Notwithstanding the foregoing, in no event is the maximum day rate per STXRA
employee to exceed $2,500 per full day of Services performed.

In exchange for the Monthly Retainer, CONDOR shall receive $11,111.12 worth of
work. The Monthly Retainer will not be deemed to have been depleted until after
$11,111.12 worth of work in a given month has been performed by STXRA on behalf
of CONDOR. All work in excess of $11,111.12 will be billed at the regular rates.
For example, if in a given month the total bill to CONDOR from STXRA is $15,000,
CONDOR will only have to pay $13,888.88, which is the $10,000 retainer for
$11,111.12 worth of work plus an additional $3,888.88 for the additional
$3,888.88 worth of work.
 
 
 

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EXHIBIT D
Insurance
 
Each Party shall be named as an additional insured under each of the other
Party’s policies for the duration of this Agreement and each policy shall
contain a waiver of subrogation. Subject to Article VI, Contractor shall
maintain the following policies of insurance with the corresponding limits:
 
(a)  
Employer’s Liability Insurance in the amount of $1,000,000 per occurrence.

 
(b)  
Comprehensive General Liability Insurance in the amount of $1,000,000 per
occurrence.

 
(c)  
Automobile Liability Insurance, covering all owned and hired automobiles in the
amount of $1,000,000.

 
(d)  
Contractor Pollution Liability Insurance in the amount of 1,000,000 per
occurrence.

 
(e)  
Professional Liability Insurance in the amount of 1,000,000 per occurrence.

 
(f)  
Excess Liability Insurance with a combined single limit of $1,000,000 per
occurrence.

 
 
 
 

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