Exhibit 10.5AGREEMENT     This AGREEMENT is made and entered into this 27th day of June, 1995, to be effective as ofthe 1st day of January, 1994, hereinafter referred to as “EFFECTIVE DATE”, by and between:JOSEPH A. REEVES, JR., hereinafter referred to as “EMPLOYEE", with anaddress at 309 Gentilly Place, Houston, Texas 77024; andTEXAS MERIDIAN RESOURCES CORPORATION and its AFFILIATES, as such term is definedbelow within Paragraph J. of Article VIII., hereinafter collectively referred to as“TMRC”, with an address at 15995 N. Barkers Landing, Suite 300, Houston, Texas77079.WITNESSETH THAT:WHEREAS, (a) TMRC is engaged in the business of acquiring, exploring, developing, operating,producing and owning oil and gas properties;  (b) the maintenance on its staff of qualified and experienced employees isnecessary for success in the business of TMRC;  (c) EMPLOYEE has been engaged as an employee of TMRC since the 1st day of November,1985, with various responsibilities associated with TMRC’s oil and gas properties; andTMRC desires to provide EMPLOYEE with an incentive to remain in the employ of TMRC andto provide to EMPLOYEE an opportunity to share in the results of EMPLOYEE’S endeavorson behalf of TMRC in the form of an overriding royalty interest subject to certaindeductions and hereinafter referred to as a “NET PROFITS INTEREST” (“NPI”), for theconsideration hereinafter stated:**NOW, THEREFORE, in consideration of the mutual promises expressed herein, the adequacy of whichare hereby acknowledged and agreed to by EMPLOYEE and TMRC, EMPLOYEE and TMRC have COVENANTED andAGREED and by these presents do COVENANT and AGREE as follows:**
 

 
**I.****PROPERTIES**A. TMRC is presently conducting geological, geophysical, land, drilling, production and marketingoperations in the pursuit of identifying and producing oil and gas hydrocarbons on propertieslocated in various geographic areas primarily within the United States of America, both onshore andoffshore. During the time period of EMPLOYEE’S employment with TMRC, EMPLOYEE will be performingcertain job functions, duties and responsibilities relative to EMPLOYEE’S personal expertise in thereview, evaluation, acquisition, maintenance, production and/or rationalization of certain oil andgas prospects and properties identified by TMRC (in accordance with the procedures set forth below)as acceptable opportunities. Such oil and gas prospects and properties are hereinafter referred tocollectively as the “PROPERTIES” and singularly as “PROPERTY” and, for purposes of this AGREEMENT,shall be determined and identified as follows:     (1) From time to time during the term of this AGREEMENT, the Vice President of Landof TMRC shall notify both the Chief Executive Officer and the President of TMRC in writingof each geographic area with respect to which TMRC has, at any time during EMPLOYEE’Semployment with TMRC, both:     (a) expended at least $100,000.00 in identifying or acquiring geological orgeophysical, land and/or engineering data, including, but not limited to: 2-Dor 3-D seismic data purchased, licensed, or directly acquired; seismic permits;surface and/or leasehold options or interests; and/or well logs and well data related to such
 

 
geographic area; and     (b) acquired one or more PROPERTY INTERESTS. A “PROPERTY INTEREST” shall bedefined as (i) any oil, gas or mineral lease or leasehold interest therein oroption to acquire an oil, gas or mineral lease or leasehold interest therein, (ii)any mineral fee interest, or (iii) any contractual right to acquire any oil, gas ormineral leasehold interest or mineral fee interest, by purchase or exchange or bycommitment to drill or complete, or participate in the drilling or completion of,any oil or gas well or wells located thereon, pursuant to farmin or farmoutagreement, exploration agreement, participation agreement, purchase agreement orother agreement.     (2) Such geographic area shall become a PROPERTY for purposes of this AGREEMENTeffective as of the date of delivery of such notice by the Vice President of Land of TMRCunless both the Chief Executive Officer and the President of TMRC notify the Vice Presidentof Land of TMRC in writing, within thirty (30) days following delivery of such notice fromthe Vice President of Land, that such geographic area shall not be deemed a PROPERTY forthe purposes of this AGREEMENT. A schedule of the geographic areas that presentlyconstitute PROPERTIES for purposes of this AGREEMENT is attached hereto as Exhibit“A11 together with separate plats for each such PROPERTY attached consecutivelyas Exhibits “A-l”, “A-2”, “A-3”, et seq., with the number of the Exhibit corresponding tothe number assigned to the PROPERTY on Exhibit “A” hereto and outlining the geographicboundaries defined for each PROPERTY. Said Exhibits shall be updated with additionalPROPERTIES and plats, or
 

 
with revised plats, by TMRC as such additional PROPERTIES are determined andidentified in accordance with this AGREEMENT, and will be updated specifically upontermination of EMPLOYEE’S employment with TMRC and/or termination of this AGREEMENT for anyreason. During, and only during, the time period of EMPLOYEE’S employment with TMRC, asconsideration for the benefits set forth herein, EMPLOYEE will use EMPLOYEE’S best effortsand endeavors to perform EMPLOYEE’S regular job duties as to all the PROPERTIES.     B. TMRC shall have the exclusive and continuing option during and throughout the term of thisAGREEMENT, and for the period thereafter during which EMPLOYEE’S NPI shall continue, pursuant toParagraph A. of Article VIII. hereof, as to each and every specific PROPERTY, to acquire oil, gasand mineral leases, royalties, fee minerals, fee surface, pipelines or other production-relatedfacilities, and other similar interests in, under, or associated with lands comprising thePROPERTIES and situated within the geographic boundaries of the PROPERTIES, said interestshereinafter referred to as “MINERAL INTERESTS” when such interests include mineral ownershiprights, whether fee, servitude or leasehold. During the term of such exclusive option, EMPLOYEEagrees that he shall not directly or indirectly, by, through or on behalf of himself or others,acquire any MINERAL INTERESTS in any of the PROPERTIES.**II.****COSTS AND EXPENSES**     The MINERAL INTERESTS to be acquired within a particular PROPERTY, the terms and provisionsthereof, and the consideration to be paid therefor, shall be within the sole discretion of TMRC.Except as expressly provided in Article IV. below, all of the costs and expenses
 

 
incurred in: (1) the acquisition and maintenance of MINERAL INTERESTS relative to thePROPERTIES; (2) the geologic, geophysical and engineering evaluation of the PROPERTIES; and (3) thepreparation for, actual drilling and development of, and sale of oil, gas and other minerals (orcomponents and by-products thereof extracted by processing, treating or other similar procedures)produced from or allocated to the PROPERTIES (including, but not limited to: option payments;bonuses; delay rentals; damages; purchase payments; construction costs; brokers’ fees; landmen’sfees; costs of abstracts; costs of surveys; title examinations, including the curing of title; theacquisition, purchase or license of geologic or geophysical data; geological, geophysical andengineering consulting fees; 2-D seismic surveys; 3-D seismic surveys; the drilling, testing andcompletion costs of wells; plant or lease fuel; and the marketing, processing, treating andtransportation of oil, gas and other minerals (or components and by-products thereof extracted byprocessing, treating or other similar procedures) to the point of sale to a third party other thanan AFFILIATE of TMRC, hereinafter referred to as the “SALES POINT”) shall be the responsibility ofand borne and paid for by TMRC.**III.****ASSIGNMENT TO EMPLOYEE**     A. To the extent that TMRC has acquired, acquires, or there are acquired for the account ofTMRC, MINERAL INTERESTS in PROPERTIES, TMRC has GRANTED, SOLD, TRANSFERRED, ASSIGNED and CONVEYEDand by these presents does GRANT, SELL, TRANSFER, ASSIGN and CONVEY unto EMPLOYEE, as an overridingroyalty interest, subject to certain deductions and calculated on the proceeds received from thesale of the hereinafter described minerals, such overriding royalty interest hereinafter referredto as a
 

 
“NET PROFITS INTEREST” (“NPI”), two percent (2.00%) of one hundred percent (100.0%) of theoil, gas and minerals (or components and by-products thereof extracted by processing, treating orother similar procedures) in and under and that may be produced, saved and sold from PROPERTIES orfrom lands pooled therewith, under and by virtue of MINERAL INTERESTS, or any renewals orextensions thereof, free and clear of all of the costs and expenses of exploration, development,operation, production, marketing, processing, treating, and transportation to the SALES POINT,except for those costs and expenses specifically defined below in Article IV.A.2. hereof asCHARGEABLE EXPENDITURES.     B. For purposes of this AGREEMENT, take-or-pay payments, buy out/buy down payments, lawsuitsettlement payments and any and all other income, hereinafter referred to collectively as MINERALINCOME, received as a result of or in relation to negotiations or contracts for the sale of oil,gas and other minerals (or by-products thereof extracted by processing, treating or other similarprocedures) that may be produced and saved from PROPERTIES or from lands pooled therewith, underand by virtue of MINERAL INTERESTS, shall be treated as proceeds from the production and sale ofoil, gas and other minerals (or by-products thereof extracted by processing, treating or othersimilar procedures), in that EMPLOYEE shall be entitled to receive the same percentage of NPI insuch MINERAL INCOME as set forth above in Paragraph A. of this Article III., subject to deductionof a proportionate share of legal and/or professional consulting fees incurred by TMRC inconnection with any settlement or claim brought to enforce TMRC’S rights to such MINERAL INCOME.     C. With respect to any NPI due EMPLOYEE under Paragraph A. of this Article III., if theMINERAL INTEREST acquired by TMRC in any PROPERTY (prior to any assignments of
 

 
working interest from TMRC to other industry participants) is less than one hundred percent(100.0%) of the working interest under a relevant oil and gas lease, or such oil and gas lease orfee acquisition covers less than one hundred percent (100.0%) of the mineral fee estate, the NPIherein assigned and conveyed to EMPLOYEE shall be proportionately reduced to the proportion thereofwhich the working interest acquired bears to the entire working interest, or which the mineral feeestate covered by such MINERAL INTEREST bears to the entire mineral fee estate.     D. It is expressly agreed that TMRC, its successors and assigns, shall have the right to poolor unitize all or any portion or portions of the lands and interests affected by the MINERALINTERESTS, including the NPI herein conveyed, and to alter or terminate any pooling or unitizationagreement, without the joinder or consent of EMPLOYEE, his successors or assigns. In the event ofproduction from any such pooled unit or from any unit created by a regulatory body havingjurisdiction, the NPI herein conveyed shall be computed on the proportionate part of the productionfrom such pooled unit that is allocated to the MINERAL INTERESTS subject to said NPI, and unlessotherwise allocated by order of a regulatory body, the amount of such production to be so allocatedfrom each such unit shall be that proportion of such total production that the surface area of theMINERAL INTERESTS affected thereby and included within such unit bears to the total surface area ofall lands within such unit.     E. TMRC does hereby grant warranties of title and indemnifications as set forth in the form ofAssignment attached hereto as Exhibit “B”, hereinafter referred to as the “ASSIGNMENT”. TMRC herebygrants and transfers to EMPLOYEE and his successors and assigns, to the extent so transferable, thebenefit of and the rights to enforce the covenants and warranties, if any, which TMRC may beentitled to enforce against TMRC’S predecessors in title, with full rights
 

 
of substitution and subrogation thereto. Subsequent to the effective date hereof, TMRChereby expressly agrees to protect, defend, indemnify and hold harmless EMPLOYEE, his legalrepresentatives, successors and assigns, from and against any and all liabilities, damages, claims,demands, liens (including discharge of all liens), suits, causes of action, and any liability ofwhatsoever kind, character or nature arising out of, incident to or in connection with TMRC’Soperations on the PROPERTIES or on lands pooled therewith, or TMRC’S failure to properly plug andabandon any wells or to restore the lands to as near their prior condition as is reasonablypractical. In the event of title failure as to any MINERAL INTERESTS hereunder, EMPLOYEE shall notbe responsible for reimbursement of any funds received by him pursuant to this AGREEMENT prior tonotification by TMRC of such defect, and TMRC shall be responsible for reimbursement to anyappropriate parties on behalf of EMPLOYEE as to any such overpayment or improper payment.     F. Within ten (10) days following the earlier of: (1) receipt by TMRC of a written request byEMPLOYEE; or (2) the date of actual spudding of a well on a particular PROPERTY, or on lands pooledtherewith, in which TMRC (or its successors) holds a MINERAL INTEREST, TMRC shall assign andtransfer unto EMPLOYEE, in the form of the ASSIGNMENT, the NPI set forth above in Paragraphs A. andB. of this Article III. as to the MINERAL INTERESTS then held by TMRC in the particular PROPERTY orPROPERTIES. In the event TMRC does not then hold record title to any or all of said MINERALINTERESTS, TMRC shall subsequently, upon its receipt of such record title, assign and transfer toEMPLOYEE the NPI set forth above in the form of the ASSIGNMENT. TMRC shall cause any suchASSIGNMENT to be recorded in the appropriate records of the applicable counties
 

 
and/or parishes and shall provide EMPLOYEE with a certified or true and correct copy of anysuch recorded ASSIGNMENT. Each separate ASSIGNMENT shall be effective as of the date TMRC acquiredits interest, whether actual or beneficial, in such PROPERTIES or the MINERAL INTERESTS in thePROPERTIES, or lands pooled therewith.**IV.****NET PROFITS**     A. 1. As to the production and sale of oil, gas and minerals (or components and by-productsthereof extracted by treating, processing or other similar procedures) from each separate welllocated on a PROPERTY or on lands pooled therewith, the term “NET PROFITS” shall, for purposes ofthis AGREEMENT, be defined as the amount by which the proceeds from the overriding royaltyinterest set forth above in Paragraph A. of Article III. derived from each separate well locatedon a PROPERTY or on lands pooled therewith, on a well-by-well basis, before deducting anyCHARGEABLE EXPENDITURES, exceeds the sum of all appropriate CHARGEABLE EXPENDITURES as such termis defined hereinbelow.     A.2. As to the production and sale of oil, gas and minerals (or components and by-productsthereof extracted by treating, processing or other similar procedures) from each separate welllocated on a PROPERTY or on lands pooled therewith, the term “CHARGEABLE EXPENDITURES” shall, forpurposes of this AGREEMENT, be defined as the same percentage as is the overriding royaltyinterest granted pursuant to this AGREEMENT multiplied by the total sum of the following expensesassociated, directly or indirectly, with the MINERAL INTERESTS and incurred by TMRC and itsINTERNAL WORKING INTEREST PARTNERS (hereinafter defined) relative to each separate well, on awell-by-well basis, and in which
 

 
EMPLOYEE holds an NPI hereunder:(i) the severance, production, excise, ad valorem, windfall profits and other taxes on ormeasured by production attributable to said MINERAL INTERESTS; (ii) the cost of operatingand maintaining the applicable well (normal lease operating expenses), exclusive ofDrilling Well Overhead Rates as provided for in any applicable Joint Operating Agreement,and exclusive of any costs and expenses associated with establishment or enhancement ofproduction including but not limited to the costs of drilling, workovers (other than normallease operating expenses associated therewith), re-drills, deepening, sidetracking,plugging back, purchasing and setting surface equipment, and/or the construction ofpipeline or plant facilities; plus (iii) the fees or other consideration paid by TMRC to any third party other than anAFFILIATE of TMRC for services in connection with marketing production of oil and/orgas from or attributable to such MINERAL INTERESTS.For purposes of this AGREEMENT, the term “INTERNAL WORKING INTEREST PARTNERS” shall be defined asany and all parties who hold a cost sharing ownership interest, either actual or beneficial, on acash basis, by virtue of agreements between TMRC and any such party or parties, in and to anyMINERAL INTERESTS as such are defined hereunder provided such MINERAL INTERESTS are acquired by orthrough TMRC. Any CHARGEABLE EXPENDITURES set forth above as (ii) shall not exceed the lowestamounts set forth in any applicable Joint Operating Agreement for each such well governing theoperations of TMRC as to such well. Insofar as this AGREEMENT is concerned, TMRC shall be deemedthe “Operator” and EMPLOYEE the “Non-Operator” as those terms are used in any said Joint Operating
 

 
Agreement.     B. The NET PROFITS payment or distribution shall be paid to EMPLOYEE, as to oil, gas, or otherminerals (or components and by-products thereof extracted by treating, processing or other similarprocedures), not later than thirty (30) days following the end of the month in which TMRC receivesactual payment therefor from the purchaser or from the Operator of the PROPERTY from which suchproduct is produced. Any NET PROFITS payment or distribution shall be accompanied by a statementsetting forth sufficient details of the NET PROFITS calculations as to each separate well, and asto each separate PROPERTY generating MINERAL INCOME, for which payment is made.     C. It is expressly stated and agreed herein that CHARGEABLE EXPENDITURES do not include any ofthe following: (i) any and all LEASE burdens including but not limited to landowner royalties,overriding royalties, net profits interest payments, production payments, financingarrangements and other similar interests which may burden any of the PROPERTIES orMINERAL INTERESTS in the PROPERTIES as a result of agreements between TMRC and anythird parties; and  (ii) capital expenditures associated with wells, production and marketingfacilities, including but not limited to the costs of drilling, workovers (other thannormal lease operating expenses associated therewith), re-drills, deepening,sidetracking, plugging back, purchasing and setting surface equipment, and/or theconstruction of pipeline or plant facilities.  D. As to the production and sale of oil, gas and minerals (or components andbi-products
 

 
   thereof) from each separate well located on a PROPERTY or on lands pooled herewith,if CHARGEABLE EXPENDITURES in any calendar month exceed the proceeds in the samemonth for a particular well resulting in a net loss, such net loss shall be carriedforward and applied against the NET PROFITS of the succeeding month, or months, forthat particular well. It is expressly provided and agreed herein that all NETPROFITS as to wells shall be calculated solely on a well- by-well basis. A net lossas to any individual well may not be carried forward or applied against the NETPROFITS of any other individual well, regardless of whether or not there aremultiple wells located within the same PROPERTY, or on lands pooled therewith. E. It is intended that the NPI shall be borne solely by TMRC; however, in theevent TMRC negotiates agreements with other industry participants in which all or someportion of the NPI is to burden the working interest of such other industryparticipants, any assignments or deeds, in whole or in part, of the PROPERTIES or ofthe MINERAL INTERESTS in the PROPERTIES (or portions thereof) from TMRC into such otherindustry participants shall be made expressly subject to this AGREEMENT. Except asotherwise provided below, no assignment of the PROPERTIES or of the MINERAL INTERESTSin the PROPERTIES out of TMRC shall reduce the amount of NPI held and retained byEMPLOYEE.              The NPI of EMPLOYEE shall be subject to the terms, conditions and provisions of any JointOperating Agreement at any time heretofore or hereafter entered into by TMRC with any third partiescovering any MINERAL INTERESTS affected by the NPI, including by way
 

 
of illustration and not by limitation, any provision requiring forfeiture of interest fornonparticipation, recoupment of multiple recovery costs, and the like, to the extent that TMRCwould forfeit all or some portion of its MINERAL INTEREST for nonparticipation either forever oruntil recoupment of drilling and/or operating costs by the third parties electing to participate,or such other like reason; and in the event any such provisions come into effect, EMPLOYEE’S NPI insuch MINERAL INTEREST shall be suspended until such time, if ever, as such multiple recovery ofcosts by the participating leasehold owners has been recovered or such other cause for suspensionis removed and such MINERAL INTEREST of TMRC is reinstated, at which time EMPLOYEE’S NPI shall beso reinstated. Notwithstanding the foregoing, in connection with entering into any agreements withthird parties containing any such provisions requiring forfeiture of interest for nonparticipation,recoupment of multiple recovery costs or the like, TMRC shall endeavor to cause such third partiesthereto to agree severally to bear and pay the NPI of EMPLOYEE with respect to TMRC’S MINERALINTEREST affected by such agreement, to the extent such proceeds are relinquished to such thirdparties under the terms of such agreement.     The NPI of EMPLOYEE shall be subject to the terms, conditions and provisions of any farmoutor other agreements under which TMRC acquires or may acquire its MINERAL INTEREST in a PROPERTY,including by way of illustration and not by way of limitation, any provision of an applicablefarmout agreement requiring reduction of TMRC’S interest in any oil, gas or mineral lease afterpayout of an earning well or wells thereunder. In the event any such provisions come into effect,EMPLOYEE’S NPI in such MINERAL INTEREST shall be proportionately reduced at the time of suchpayout under any such farmout agreement and shall
 

 
be applicable only to the interest then held by TMRC.               All NPIs assigned by TMRC to EMPLOYEE shall be subject to the terms, conditions andprovisions of the leases, any assignments and/or subleases theretofore made or agreed to be madeby TMRC, and any amendments or modifications of the leases, theretofore or thereafter made, andEMPLOYEE agrees that any such amendments or modifications may be made without the consent orjoinder of EMPLOYEE.     F. In the event TMRC, after completion of its geologic evaluation of a PROPERTY, determinesfor any reason, and in TMRC’S sole discretion, mat it is not willing to join in the drilling of awell on such PROPERTY, but if it is able to secure the drilling of the PROPERTY by a sale to athird party other than an AFFILIATE of TMRC, or its successors, through farmout or otherwise, andif TMRC first secures the prior written approval of EMPLOYEE, such approval not to be unreasonablywithheld, EMPLOYEE’S NPI set forth above shall be reduced appropriately pursuant to such approvaland agreement. Any assignments or deeds, in whole or in part, made pursuant to any such sale shallreflect and be made expressly subject to such approval and agreement.     G. In the event TMRC reaches agreeable terms for the outright sale to a third party purchaserof all of its interest in all or any portion of any PROPERTY after production has been establishedon such PROPERTY, TMRC will notify EMPLOYEE within five (5) business days of execution of theletter of intent by both TMRC and such purchaser by providing EMPLOYEE with a copy of such letterof intent. Any such sale shall fully recognize and bear the NPI assigned hereunder and be madeexpressly subject to this AGREEMENT unless EMPLOYEE simultaneously negotiates the sale of his NPIto such purchaser.
 

 
**V.****NO OBLIGATION**     Nothing contained herein shall be deemed or construed to require or obligate TMRC to acquireany PROPERTY or MINERAL INTEREST or to conduct any drilling or completion operations thereon,except that TMRC agrees to exercise reasonable diligence to protect against the inequitabledrainage of oil, gas or other minerals from such PROPERTY or MINERAL INTEREST. During the term ofthis AGREEMENT, the acquisition of interests in, and operations on, any PROPERTIES or MINERALINTERESTS in PROPERTIES by TMRC, and the extent and duration thereof, as well as the perpetuationby TMRC of any PROPERTY or MINERAL INTERESTS in PROPERTIES by operations, payments, or otherwise,shall be within the sole judgment and discretion of TMRC, and TMRC shall have the right at anytime to surrender, abandon or otherwise terminate, in whole or in part, any oil, gas and minerallease or option to acquire a lease comprising a MINERAL INTEREST, without liability to EMPLOYEE.**VI.****STANDARD**     TMRC agrees to use reasonable diligence in marketing the oil, gas and other minerals producedfrom PROPERTIES, or lands pooled therewith, under and by virtue of MINERAL INTERESTS.**VII.****TREATMENT OF NET PROFITS INTEREST**     A. The EMPLOYEE shall be fully and completely responsible for all federal and/or state
 

 
income taxes attributable to the NPI.     B. All sums payable to EMPLOYEE attributable to any NPI shall be free and clear of the debtsand contracts of TMRC and of all liabilities for levies and attachments and proceedings of everykind and character, in law or equity.     C. EMPLOYEE may dispose of, pledge, mortgage, assign and convey all or any part of the NPIregardless of whether EMPLOYEE is, or is not, an employee of TMRC. Any disposal, assignment orconveyance of all or any part of the NPI shall be made expressly subject to all of the terms,conditions and provisions of this AGREEMENT. Any transfer, assignment or conveyance of an interestin the NPI conveyed by EMPLOYEE herein shall be effective as to TMRC only at 7:00 a.m. on the firstday of the next succeeding calendar month following the receipt by TMRC or its successors orassigns of a certified copy of the recorded instrument or judgment evidencing such transfer,assignment or conveyance. TMRC and its successors and assigns are relieved of any responsibilityfor determining when any interest of EMPLOYEE in the NPI shall increase, diminish or beextinguished or revert to any other individual, partnership, corporation, trust, unincorporatedassociation, or other entity or association, hereinafter referred to as “PERSON”, until TMRC or itssuccessors or assigns are furnished evidence thereof in accordance with the foregoing provisions ofthis Paragraph, and EMPLOYEE and his heirs and assigns agree to hold TMRC and its successors andassigns harmless from all loss or expense that may result from any incorrect payment in the absenceof compliance with the aforesaid provisions.**VIII.****MISCELLANEOUS**     A. This AGREEMENT shall be for a term commencing on the EFFECTIVE DATE
 

 
and terminating on the earlier of (i) fifty (50) years following the date hereof or (ii) thedate upon which the EMPLOYEE ceases to be an employee of TMRC. At the end of such term, the NPIof EMPLOYEE and the terms and provisions of this AGREEMENT shall survive and continue only withrespect to each of the oil and gas prospects and properties then constituting PROPERTIES under thisAGREEMENT; provided, however, the NPI of EMPLOYEE and the terms and provisions of this AGREEMENTshall terminate with respect to each such PROPERTY upon the expiration of the first continuousthree-year period during which TMRC neither owns nor acquires any MINERAL INTEREST in suchPROPERTY. Until the expiration of such first three-year continuous period, EMPLOYEE shall beentitled to receive the NPI set forth above in Paragraphs A. and B. of Article in. in any and allMINERAL INTERESTS acquired by TMRC in such PROPERTY, whether or not such MINERAL INTEREST isacquired subsequent to the termination of EMPLOYEE’S employment with TMRC .     B. This AGREEMENT and all disputes arising hereunder shall be interpreted, construed andresolved according to the laws of the State of Texas, except that any dispute arising under thisAGREEMENT over the right or title to a MINERAL INTEREST or PROPERTY or to an NPI therein shall begoverned by and resolved according to the substantive laws of the state in which the MINERALINTEREST or PROPERTY is situated exclusive of said state’s conflict of laws principle.     C. EMPLOYEE, and any representative or representatives authorized by EMPLOYEE, shall have theright during TMRC’S regular business hours and upon reasonable advance written notice by EMPLOYEE,to audit the accounts and records of TMRC relative to this AGREEMENT for any period within four (4)years prior to the date such audit actually commences. TMRC agrees to make adjustments to itsrecords and accounts to correct and clarify deficiencies revealed by any
 

 
such audit, ha addition, TMRC shall retain the required records for such period of timesufficient to allow for the audit of those records by the Internal Revenue Service, as provided bythe Internal Revenue Code of 1986, as amended from time to time, and for such period of timesufficient to allow for the audit of those records by the appropriate state taxing authority asprovided by similar provisions of state tax laws.     D. The article headings used in this AGREEMENT are inserted for convenience only and shall bedisregarded in construing this AGREEMENT.     E. If any portion of this AGREEMENT is rendered invalid by a court of proper jurisdiction, thebalance of this AGREEMENT shall continue in full force and effect.     F. This AGREEMENT and its exhibits, attachments, or related documents andinstruments constitute the sole and entire agreement between EMPLOYEE and TMRC with respect tothe subject matter hereof, shall not be modified or amended except pursuant to a written amendmentexecuted by both EMPLOYEE and TMRC, and shall be binding upon, inure to the benefit of, and extendto their respective heirs, representatives and successors. Both EMPLOYEE and TMRC herebyacknowledge receipt of a true and correct copy of this AGREEMENT.     G. The rights and remedies herein granted are cumulative, and the exercise thereof by EMPLOYEEor TMRC shall be without prejudice to the enforcement of any other rights or remedies authorized bylaw, or by other provisions of this AGREEMENT. The pursuit of any rights or remedies shall notconstitute a waiver of any other amounts due or damages accruing by reason of the violation of theterms, provisions and covenants herein contained.     H. EMPLOYEE and TMRC shall, from time to time, and at all times, and without additionalconsideration therefor, do all such further acts and execute and deliver all further
 

 
instruments and documents as shall be reasonably required in order fully to perform and carryout the terms of this AGREEMENT.     I. To be effective, any notice, request or other communication permitted or required to begiven by either party hereunder shall be given in writing and may be effected by placing the samein the United States mail, certified with return receipt requested, postage prepaid, by delivery bycourier service, by prepaid telegram or by facsimile transmission, and shall be deemed given thedate and hour three (3) days following the date and hour at which the same is deposited with aclerk of the United States Postal Service, or when so delivered by courier service or by prepaidtelegram filed with a telegraph company or on completion and confirmation of a facsimiletransmission, addressed to the respective party to be notified as follows:         (a) If to TMRC: Texas Meridian Resources Corporation15995 N. Barkers Landing, Suite 300Houston, Texas 77079 Attn: VicePresident — Land Telephone: (713)558-8080 Facsimile: (713) 558-5547           (b) If to EMPLOYEE: Joseph A. Reeves, Jr.15995 N. Barkers Landing, Suite 300Houston, Texas 77079 Telephone: (713)558-8080 Facsimile: (713) 558-5595  or to such other address of which notice was given. Either party may change such party’s addressfor notice, or the person to whose attention such notice is to be directed, by giving notice tothe other party in accordance with this Paragraph.     J. Unless the context otherwise requires, the following term, when used in this AGREEMENT,shall have the following meaning:
 

 
     “AFFILIATE” shall mean any PERSON directly or indirectly, through one or more intermediaries,controlling, controlled by or under common control with the PERSON in question. The term “control”,as used in the immediately preceding sentence, means, with respect to a PERSON that is acorporation, the right to the exercise, directly or indirectly, of more than 50% of the votingrights attributable to the shares of the controlled corporation, and with respect to a PERSON thatis not a corporation, the possession, directly or indirectly, of the power to direct or cause thedirection of the management or policies of the controlled PERSON.     K. This AGREEMENT supersedes that certain Agreement dated December 30, 1993, effective as ofthe 1st day of January, 1994, between TMRC and EMPLOYEE. Said prior Agreement is herein expresslyterminated.recited.     IN WITNESS WHEREOF, this AGREEMENT has been executed as of the date above recited.     EMPLOYEE: