Exhibit 10.3

February 28, 2019

 

Oleg Tolmachev

113 Forbes Field Circle Boalsburg, PA 16827

 

HAND DELIVERED

 

Re: Retention Bonus

Dear Oleg:

 

 

As you know, earlier today, Montage Resources Corporation (formerly known as
Eclipse Resources Corporation) (“Montage” or the “Company”) and Blue Ridge
Mountain Resources, Inc. (“BRMR”) completed the merger of a wholly owned
subsidiary of Montage with and into BRMR, with BRMR surviving as a wholly owned
subsidiary of Montage (the “Merger”). The Company considers your continued
service and dedication to be an important part of its continuing operations. In
order to induce you to remain employed for a certain period of time following
the Merger, we are pleased to offer you a retention bonus arrangement pursuant
to the terms and conditions outlined in this letter agreement (this “Retention
Agreement”).

 

This Retention Agreement shall become effective on the date set forth above (the
“Effective Date”), and shall continue in effect for two (2) years immediately
following the Effective Date (the “Retention Period”). The expiration of the
Retention Period shall not relieve either you or the Company of any obligations
which accrued prior to such expiration, including, without limitation, any
repayment obligations pursuant to the terms below. In addition to this Retention
Agreement, it is anticipated that, following the Merger, you and Montage will
enter into a new employment agreement which shall replace and supersede your
existing Amended and Restated Executive Employment Agreement dated January 1,
2017 with the Company (the existing agreement referred to herein as the
“Employment Agreement”).

 

Subject to the conditions set forth herein, the Company shall provide you a
bonus totaling $1,339,770.38 (the “Retention Bonus”), payable as follows: (1)
thirty percent (30%) of the Retention Bonus shall be paid to you as a lump sum
cash payment, subject to applicable taxes and withholdings (the “Cash Portion”)
and (2) seventy percent (70%) of the Retention Bonus shall be provided to you in
the form of an award of restricted common stock of Montage under the Company’s
2014 Long-Term Incentive Plan (as amended, the “LTIP”), valued at the closing
price of Montage’s common stock on the New York Stock Exchange on the Effective
Date, adjusted proportionately to reflect the 15-to-1 reverse stock split of the
Company’s common stock that was effected in connection with the completion of
the Merger (the “Equity Portion”).

 

 

 

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In order to be eligible for the Retention Bonus, in association with the
Company’s relocation of its headquarters to Irving, Texas, you agree to relocate
your principal place of employment to Irving (including moving your personal
residence consistent with the terms of the Montage Resources Merger Relocation
Policy, attached as “Exhibit A” to this Retention Agreement (the “Relocation
Policy”)) on a timeline acceptable to the Company. You will be entitled to the
relocation benefits set forth in, and agree to abide by the terms of, the
Relocation Policy. The Relocation Policy is subject to review and modification
by the Board of Directors of Montage. You agree that, in exchange for the
promises set forth in this Retention Agreement, you waive any right, pursuant to
your Employment Agreement, to resign your employment with the Company for Good
Reason (as defined in the Employment Agreement) and receive any benefits set
forth in Section 5(c) of the Employment Agreement due to the relocation of your
principal office as required by this Retention Agreement. Furthermore, in order
to receive the Retention Bonus you must timely sign (and not revoke) the general
release agreement attached as “Exhibit B” to this Retention Agreement (the
“Release”). Provided that you timely return an executed Release, the Company
shall provide you the Cash Portion of the Retention Bonus within thirty (30)
days after the Release becomes effective, as set forth in the Release.

With respect to the Equity Portion, twenty-five percent (25%) of the shares of
restricted common stock constituting the Equity Portion will vest, and become
free of applicable restrictions on transfer and other restrictions set forth in
the award agreement referenced below, on each of the dates that are six months,
twelve months, eighteen months and twenty-four months after the Effective Date
(each, a “Vesting Date”), provided that you continue to be employed by Montage
on the applicable Vesting Date. Provided that you timely return an executed
Release, the Company shall deliver to you a restricted stock award agreement
within sixty (60) days after the Release becomes effective, as set forth in the
Release. The restricted stock award agreement will memorialize the vesting and
restrictions and contain such other terms as provided therein in accordance with
the LTIP.

As you vest, the fair market value of Montage common stock which becomes
unrestricted will be taxable ordinary income and subject to tax withholding;
provided, however, that if you timely make and file an election under Section
83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), within
thirty (30) days of the grant date of the Equity Portion, then one hundred
percent (100%) of the grant date fair market value of the Montage common stock
will be taxable ordinary income and subject to tax withholding. In either case,
any subsequent gain or loss recognized by you upon disposition of the Montage
common stock will be capital gain or loss. You are strongly advised to consult
with your professional tax advisor regarding the tax consequences of the Equity
Portion and the advisability of making an election under Section 83(b).

In the event that either (1) you resign from employment with the Company, for
any reason, prior to the last day of the Retention Period or (2) the Company
terminates your employment with the Company with Cause (as defined in the
Employment Agreement, or any superseding employment agreement) prior to the last
day of the Retention Period, you agree to repay to the Company the Cash Portion
in a pro-rata amount reflecting the number of days you were employed by the
Company during the Retention Period (i.e., [unemployed days remaining in
Retention Period/730] x Cash Portion = repayment amount owed). You agree to
repay any such amount owed within thirty (30) days after your last day of
employment with the Company.

This Retention Agreement is intended to comply with, or be exempt from, Section
409A of the Code (“Section 409A”) and shall be construed and administered in
accordance with Section 409A. This Retention Agreement does not create a
contract of employment between you and the Company for any specific term.

 

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This Retention Agreement contains all of the understandings and representations
relating to the Retention Bonus and supersedes all prior and contemporaneous
understandings, discussions, agreements, representations and warranties, both
written and oral, with respect to any retention bonus. This Retention Agreement
may not be amended or modified unless in writing signed by both you and an
authorized representative of the Company. This Retention Agreement shall be
construed in accordance with the laws of Texas without regard to
conflicts-of-law principles. Venue shall lie in the courts of competent
jurisdiction in Texas.

 

The invalidity or unenforceability of any provision of this Retention Agreement
shall not affect the validity or enforceability of any other provision of this
Retention Agreement, which shall remain in full force and effect. This Retention
Agreement may be executed in multiple counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the
same instrument.

 

We look forward to your continued employment with the Company following the
Merger.

 

[Signature Page Follows]

 

-3-

 

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Very truly yours,

 

 

 

MONTAGE RESOURCES CORPORATION

 

 

By:

 

/s/ John K. Reinhart

Name:

 

John K. Reinhart

Title:

 

President and Chief Executive Officer

 

 

 

 

Agreed to and accepted as of the date first written above:

 

 

 

 

Oleg Tolmachev

 

 

 

 

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Exhibit A

 

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MERGER RELOCATION POLICY

 

 

Purpose and Eligibility

 

To establish a policy for providing relocation assistance to Eclipse Resources
Employees (as defined below) who, at the request of Montage Resources
Corporation (the “Company”), are permanently transferred from one Company work
location to another in connection with the Merger (as defined below).

 

The term “Eclipse Resources Employees” means employees of Eclipse Resources
Corporation or its subsidiaries who were such employees immediately prior to the
consummation of the Merger.

 

The term “Merger” means the merger between Blue Ridge Mountain Resources, Inc.
and a subsidiary of Eclipse Resources Corporation contemplated by the Agreement
and Plan of Merger dated August 25, 2018 among Eclipse Resources Corporation,
such subsidiary and Blue Ridge Mountain Resources, Inc.

 

The term “Eligible Employees” means Eclipse Resources Employees who (i) are
requested by the Company in an offer letter to such employee to permanently
transfer his or her place of employment from one Company work location to
another in connection with the Merger and (ii) sign such offer letter accepting
such transfer.

 

This policy does not apply to new Company hires. Relocation benefits are
provided to new Company hires only to the extent set forth in the terms and
conditions outlined in their Company employment offer letter.

 

Relocation Coordination

 

To help ensure a seamless relocation process for Eligible Employees and their
immediate family members (spouse/partner and dependent household members), the
Company has secured Signature Relocation to coordinate all aspects of such
employees’ transfer to the new work location. Signature Relocation will guide
such employees through the moving process, assisting with real estate agents,
moving companies, mortgage brokers, temporary housing and payment/reimbursement
for the approved benefits outlined in this policy. For additional information
regarding Signature Relocation, as well as the Dallas/Fort Worth area, Eligible
Employees can access Signature Relocation’s customized website at
http://www.signaturerelo.com/montage-resources/.

 

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Approved Relocation Expenses and Limitations

 

Relocation assistance shall be provided to Eligible Employees in accordance with
the following:

 

 

1.

Moving of Household Goods (*taxable): Normal family household goods and
furnishings moved to the Eligible Employee’s new living location via Company
partner moving company, with full replacement insurance coverage, and
storage‐in‐transit for up to 30 days. Maximum payment by the Company of $20,000,
with any exceptions requiring the written approval of an Executive Vice
President of the Company.

 

 

2.

Auto Shipment (*taxable): When relocation distance exceeds 500 miles, one (1)
family automobile may be shipped to the Eligible Employee’s new living location
via Company partner moving company. Maximum payment by the Company of $1,200.

 

 

3.

Home Sale Assistance (*taxable): Reimbursement of standard realtor commissions
associated with the sale of the Eligible Employee’s current residence up to 6%.
Maximum reimbursement by the Company of $25,000, with any exceptions requiring
the written approval of an Executive Vice President of the Company.

 

 

4.

Temporary Living Expenses (*taxable): The Company will reimburse the reasonable
costs to temporarily house the Eligible Employee and his or her immediate family
(lodging and associated utilities only) for a period of up to ninety (90) days.
Meals are excluded from temporary living expense reimbursement eligibility.
Maximum reimbursement by the Company of $10,000, with any exceptions requiring
the written approval of an Executive Vice President of the Company.

 

 

5.

Area Visit/House Hunting Trips (*taxable): The Eligible Employee will have the
opportunity to make new work location and local area visits, as well as house
hunting trips. The Company will reimburse the reasonable costs of
transportation, lodging and meals for the Eligible Employee and his or her
immediate family for such visits and trips, up to a cumulative maximum of
$2,500.

 

 

6.

Lease Buyout Reimbursement (*taxable): The Company will provide reimbursement
for any fees or penalties incurred by the Eligible Employee under his or her
primary housing lease agreement as a result of the early termination or breakage
of the lease agreement. Maximum reimbursement by the Company of $8,000, with any
exceptions requiring the written approval of an Executive Vice President of the
Company.

 

 

7.

Final Move Trip (*taxable): Reimbursement of actual and reasonable en‐route
travel expenses incurred by the Eligible Employee and his or her immediate
family for their final move trip to the new work location. Allowable expenses
include transportation/airfare, mileage, overnight lodging and meals. Maximum
reimbursement by the Company of

$2,500.

-7-

 

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8.

Miscellaneous Allowance (*taxable): Payment will be made to the Eligible
Employee for miscellaneous expenses incurred by the Eligible Employee in
connection with his or her relocation upon receipt by the Company of
confirmation of the Eligible Employee’s final contract for his or her new
permanent living location. Allowance amount of $4,000.

 

 

9.

Expense Reimbursement/Documentation: Reimbursable expenses will only be
reimbursed to the extent evidenced by valid written records/receipts submitted
in accordance with this policy. The Eligible Employee is responsible for (i)
maintaining records/receipts for all temporary living, area visit, house hunting
trip and other expenses incurred and (ii) submitting expenses for reimbursement
and/or requests for payment through the Company’s approved relocation partner,
Signature Relocation. For Signature Relocation’s reimbursement/payment
procedures, please visit http://www.signaturerelo.com/montage-resources/. All
personal expenses and/or requests for payment must be submitted via Signature
Relocation for tracking, taxation and reimbursement/payment purposes. Eligible
Employees shall not submit any relocation expenses via the Company expense
report process. An Eligible Employee shall be responsible for all expenses
incurred by him or her in excess of the maximum amounts specified above or not
otherwise approved as provided above, and the Company may, to the extent
permitted by law, deduct any such excess or unapproved amounts incurred by the
Company from the Eligible Employee’s compensation. Expenses incurred after
termination of employment will not be reimbursed or paid under this policy.

 

 

10.

Company Credit Cards: Eligible Employees shall not use Company credit cards for
personal relocation expenses.

 

Taxes

 

The Company will gross up an Eligible Employee’s wages in an amount reasonably
determined by the Company to provide tax assistance for all taxable relocation
expenses and payments reimbursed or made, as outlined in this policy. Any
gross‐up payments to the Eligible Employee to cover applicable taxes will be
processed and made by Signature Relocation. When tax assistance is provided,
these additional wages will be included on the Eligible Employee’s W‐2 for the
applicable calendar year. Such tax assistance will be determined and calculated
by the Company in its reasonable discretion and made at such time or times, and
in as uniform a manner, as the Company reasonably determines. Unless otherwise
determined by the Company, tax gross‐up payments will only be made to Eligible
Employees who continue to be employed by the Company (or applicable subsidiary)
at the time of the gross‐up payment.

 

-8-

 

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Completion of Relocation

 

Eligible Employees must complete their relocation to their new living location
within six (6) months of their designated work transfer date. All relocation
expenses and/or requests for payment must be submitted within this time frame
for reimbursement/payment. Any expenses submitted for reimbursement or requests
for payment made after this six (6) month period will be subject to approval by
the Company’s Chief Financial Officer in his sole discretion.

 

Repayment

 

If an Eligible Employee voluntarily leaves the employment of the Company (or
applicable subsidiary), or is terminated by the Company (or applicable
subsidiary) for cause, prior to, on or within 12 months after his or her
designated work transfer date, the former Eligible Employee shall repay to the
Company upon demand 100% of the total amounts paid or reimbursed by the Company
to or on behalf of the Eligible Employee under this policy. If an Eligible
Employee voluntarily leaves the employment of the Company (or applicable
subsidiary), or is terminated by the Company (or applicable subsidiary) for
cause, between 12 and 24 months after his or her designated work transfer date,
the former Eligible Employee shall repay to the Company upon demand 50% of the
total amounts paid or reimbursed by the Company to or on behalf of the Eligible
Employee under this policy. The Company may, to the extent permitted by law,
deduct all or any portion of such amounts owed to the Company from any
compensation owed to the former Eligible Employee, but any such deduction shall
not relieve the former Eligible Employee from his or her responsibility for any
unpaid amounts owed to the Company.

 

In no event shall an Eligible Employee be entitled to any reimbursement or
payment under this policy following his or her voluntary termination of
employment or termination of employment for cause.

 

Policy Interpretation and Modifications

 

The Company has the sole right to modify, amend or discontinue this policy at
any time. Any and all interpretations of this policy shall be made by the
Company’s President and Chief Executive Officer in his reasonable discretion,
and such interpretations shall be binding on all Eligible Employees. This policy
does not constitute and shall not be construed as an employment contract and
does not constitute a guarantee of employment for any specified or minimum
period of time.

 

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Exhibit B

 

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RELEASE AGREEMENT

 

This confidential Release Agreement (this “Agreement”) is entered into between
Montage Resources Corporation (the “Company”) and Oleg Tolmachev (“Executive”).
The Company and Executive are referred to in this Agreement as the “Parties”. In
consideration of the promises and mutual covenants set forth in this Agreement,
and for other good and valuable consideration, the sufficiency of which is
hereby acknowledged, Executive and the Company agree as follows:

1.Retention Agreement. The Company and Executive entered into a Retention Bonus
letter agreement effective                                 , 2019 (the
“Retention Agreement”). In consideration for the release and waiver of any and
all claims described in this Agreement the Company shall provide Executive the
Retention Bonus (as defined in the Retention Agreement), pursuant to the terms
of the Retention Agreement. Executive acknowledges the Company is under no
obligation to provide the Retention Bonus absent Executive’s agreement to, and
compliance with, the terms of this Agreement.

2.Release and Waiver by Executive. For and in consideration of the Retention
Bonus, Executive KNOWINGLY AND VOLUNTARILY RELEASES, ACQUITS AND FOREVER
DISCHARGES the Company and each of its past, present, and future subsidiaries,
related and/or affiliated entities, including, without limitation Blue Ridge
Mountain Resources, Inc. and Montage Resources Corporation, their present and
former officers, directors, executives, stockholders, agents, attorneys,
employees and employee benefit plans (and the fiduciaries thereof), and the
successors, predecessors and assigns of each of the foregoing (collectively, the
“Released Parties”) from any and all claims and/or causes of action of whatever
kind or character, that have accrued or may accrue, whether known or unknown,
and that are based on facts occurring at or prior to the time Executive signs
this Agreement, including, but not limited to: (a) any and all claims pursuant
to the labor and employment codes and statutes of the state of Texas; Title VII
of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.; the
Civil Rights Act of 1991, as amended, 42 U.S.C. § 1981a; the Equal Pay Act of
1963; the Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et
seq.; the Employee Retirement Income Security Act of 1974; the Age
Discrimination in Employment Act of 1967, as amended by the Older Workers
Benefit Protection Act; the Fair Labor Standards Act; the Worker Adjustment
Retraining and Notification Act; the Family Medical and Leave Act, as amended,
29 U.S.C. § 2601, et seq.; the Fair Credit Reporting Act, COBRA, and all other
applicable federal, state or local laws, ordinances or regulations; (b) all
tort, contract, and/or common law claims, including, but not limited to,
defamation, intentional or negligent infliction of emotional distress, fraud,
misrepresentation, wrongful termination, wrongful discharge in violation of
public policy, and breach of the duty of good faith and fair dealing; and (c)
all claims arising out of or relating in any way to Executive’s employment with
the Company or any Released Party. Notwithstanding the foregoing, this Agreement
will not apply to and expressly excludes: (a) vested benefits under any plan
maintained by the Company or any Released Party that provides for deferred
compensation, equity compensation or pension or retirement benefits; (b) any
claim that cannot by law be waived or released by private agreement; (c) claims
based on facts occurring after the date of this Agreement; (d) payments and
benefits to be made under the Retention Agreement and the Employment Agreement
(as defined in the Retention Agreement); (e) claims under any directors and
officers insurance policies; and (f) rights to  indemnification  Executive  may
have under the  by-laws or certificate of incorporation of the Company or any
Released Party, any applicable indemnification agreements with the Company and
or any Released Party or applicable law.

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3.Communication with Government Agencies. Nothing in this Agreement prevents
Executive from exercising any rights that cannot be lawfully waived or
restricted. Nothing in this Agreement limits Executive’s ability to file a
charge or complaint with or communicate with any federal, state or local
governmental agency or commission (“Government Agencies”). Further, this
Agreement does not limit Executive’s ability to participate in any investigation
or proceeding that may be conducted by any Government Agency, including
providing documents or other information, without notice to the Company. This
Agreement does not limit Executive’s right to receive an award from a Government
Agency for information provided to any Government Agencies. Executive agrees
that Executive has waived any right—where such right can be waived—to recover
monetary damages or other personal relief from the Released Parties in any
action filed by Executive or by anyone else on Executive’s behalf.

4.Non-Admission. Neither the payment of any sum of money nor the execution or
delivery of this Agreement shall constitute or be construed as an admission,
express or implied, by the Released Parties of liability or that the Released
Parties acted wrongfully with respect to Executive. The Released Parties
specifically deny and disclaim any such liability or wrongful acts. Nothing
contained in this Agreement shall acknowledge or imply that the Released Parties
have violated any federal, state, or local laws or regulations.

5.Twenty-One (21) Days to Consider Agreement. The Company hereby advises
Executive to consult with an attorney of Executive’s choice regarding this
Agreement. The Company also advises Executive that he has twenty-one (21)
calendar days from the date Executive receives this Agreement within which to
consider whether to accept the Retention Bonus and sign this Agreement.
Executive may voluntarily choose to sign this Agreement earlier, but is not
required to do so. Executive does not become entitled to receive the Retention
Bonus unless Executive timely signs and returns this Agreement to Paul Johnston,
Executive Vice President and General Counsel, Montage Resources Corporation, 122
W. John Carpenter Freeway, Suite 300, Irving, Texas 75039,
pjohnston@brmresources.com. Executive acknowledges, represents and agrees that:
(i) Executive has carefully read and fully understands all of the provisions of
this Agreement; and (ii) Executive accepts the terms of this Agreement as fair
and equitable under all the circumstances and acknowledges that Executive has
entered into this Agreement knowingly, voluntarily, and without threat or
duress.

6.Revocation Period and Effective Date. Executive has the right to revoke this
Agreement within seven (7) days after Executive signs it. In order to revoke
this Agreement, Executive’s notice of revocation must be in writing and
delivered to Paul Johnston, Executive Vice President and General Counsel,
Montage Resources Corporation, 122 W. John Carpenter Freeway, Suite 300, Irving,
Texas 75039, pjohnston@brmresources.com, no later than the seventh (7th)
calendar day after Executive signed this Agreement. This Agreement shall become
effective on the eighth (8th) day after Executive signs it. If Executive timely
revokes this Agreement, it will not become effective, and Executive will not
receive the Retention Bonus.

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7.No Assignment of Claims. Executive represents and warrants that Executive has
not filed or initiated any lawsuits based on claims released in this Agreement.
Executive represents and warrants that Executive has not assigned to any third
party any claim involving the Released Parties or authorized any third party to
assert on Executive’s behalf any claim against the Released Parties. If a third
party asserts a claim against the Released Parties on Executive’s behalf or
includes Executive as a class member in any class action involving any claim,
Executive agrees to not accept any benefits or damages relating to or arising
out of such claim. Executive represents and warrants that Executive has full
authority to enter into this Agreement.

8.Choice of Law and Venue. This Agreement shall be construed and enforced
exclusively pursuant to the laws of the State of Texas applicable to contracts
to be performed wholly within the State. The Parties also agree that the venue
of any action to enforce the provisions of this Agreement, or any document
executed in connection with this Agreement, shall be in Dallas, Texas. The
Parties agree they will not contest the choice of law and venue provisions in
this Paragraph.

9.Entire Agreement. Excepting only the Retention Agreement and the Employment
Agreement, the terms described in this Agreement constitute the entire agreement
between the Parties regarding the subject matter in this Agreement and may not
be altered or modified other than in a writing signed by each of the Parties to
this Agreement. Executive agrees that no promise, inducement or agreement not
expressed in this Agreement has been made to Executive in connection with this
Agreement. The Parties acknowledge and agree that this Agreement supersedes all
prior arrangements, communications, commitments or obligations between Executive
and the Company, except as otherwise referenced in this Agreement.

10.Severability. The Parties acknowledge and understand that, if any term of
this Agreement shall be determined by a court to be illegal, invalid,
unconscionable or unenforceable, the remaining provisions will remain effective
and legally binding, and the illegal, invalid, unconscionable or unenforceable
term will be deemed not to be a part of this Agreement.

11.Binding Effect. This Agreement and the terms, covenants, conditions,
provisions, obligations, undertakings, rights and benefits of this Agreement
shall be binding upon, and shall inure to the benefit of, the Parties and their
respective heirs, executors, administrators, representatives, officers,
directors, shareholders, predecessors, successors, parents, subsidiaries,
affiliated entities, agents, attorneys, servants, employees, principals,
partners, whether limited or general, and assigns, if any. The Parties each
represent and warrant that each of the Parties to this Agreement has the
authority to act on their respective behalf and to enter into this Agreement
with the other Party.

12.No Waiver. No failure by either Party at any time to give notice of any
breach by the other Party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of any provision or
condition of this Agreement. Any waiver of any part of this Agreement will be
effective only in a written agreement signed by each of the Parties to this
Agreement.

13.Attorneys’ Fees and Costs. This Agreement is intended to settle and release
any and all claims that Executive may have against the Released Parties for
attorneys’ fees and/or costs.

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IN WITNESS WHEREOF, the Parties represent to each other that they have reviewed
and fully discussed this Agreement with counsel, and have satisfied themselves
that they fully understand the terms of this Agreement and make this Agreement
after such consultation.

 

 

OLEG TOLMACHEV

 

 

 

 

 

 

Date:                                                            

 

 

 

 

MONTAGE RESOURCES CORPORATION

 

 

By:

 

 

Name:

 

Paul Johnston

Title:

 

Executive Vice President and General Counsel

 

 

 

 

Date:                                                            

-14-