**Exhibit 10.1**

 

**FARMOUT AGREEMENT**

 

THISAGREEMENT (this “Agreement”) is made, entered into and effective this 23th dayof July 2010 by and between, **BLACK RAVEN ENERGY, INC.**,a Nevada corporation (“FARMOR**”**), and **ATLAS RESOURCES, LLC**, a Pennsylvania limited liability company(“FARMEE”).

 

**RECITALS**

 

**A.**                                    FARMEE plans to engage indrilling for hydrocarbons in the area of mutual interest in Phillips andSedgwick Counties, Colorado, and Perkins, Chase and Dundy Counties Nebraska, asfurther described in Schedule A  (the“AMI”).

 

**B**.                                    FARMOR owns theworking interest and the net revenue interest in certain hydrocarbon interestslisted on Schedule B, as the same may be amended from time to time toreflect FARMOR’s acquisition of other such interests in the AMI (the “Leases”).  The Leases include Drilling Units (as definedbelow) for six (6) wells (the “Initial Wells”) identified on ScheduleB-1 (the “Initial Drilling Units”) as to which FARMOR has not commenceddrilling. FARMOR may in the future acquire additional working interests and netrevenue interests in hydrocarbon interests in the AMI. For avoidance of doubt,the Leases do not include the wells in the AMI that were in production byFARMOR or had already been drilled and cased before the date of this Agreement.

 

NOW,THEREFORE, for good and valuable consideration, the receipt and sufficiency ofwhich is hereby acknowledged, and intending to be bound hereby, the partieshereby agree as follows:

 

**I.****                                        ****DEFINITIONS**

 

Termsused but not otherwise defined herein shall have the following meanings:

 

“AFE”means an Authority for Expenditure for a Well.

 

“Affiliate”means, with respect to any person or entity, any other person or entity thatdirectly or indirectly (through one or more intermediaries or otherwise)controls, is controlled by, or is under common control with the first person orentity; provided however, that West Coast Opportunity Fund, LLC and West CoastAsset Management, Inc. will not be considered an “Affiliate” of FARMOR andthe Partnerships will not be considered an “Affiliate” of FARMEE.

 

“DrillingUnit” means 40 acres of a Lease around a wellbore, planned or actual, from thesurface to the center of the earth or such depths as to which FARMOR has aninterest.

 

----

 

“EarningWell” means a Well which FARMEE has determined to be capable of producinghydrocarbons in commercial quantities.

 

“ForceMajeure Event” means an event beyond a party’s reasonable control that preventssuch party from performing its obligations hereunder, including naturaldisasters, unavailability of materials, conditions arising out of orattributable to war, rebellion or acts of terrorism, epidemics, strikes, labordisturbances and lockouts (other than strikes and labor disturbances thatresult from violation of agreements with employees, or lockouts that are inviolation of such agreements, by the party claiming such Force Majeure Event,or its Affiliates).

 

“InitialProjects” means the 3D Seismic Shoots, Railroad Crossing, Sales Meter Upgrade,Change Out Compressors and Upgrade Dehydrator at Facility as defined in theinitial Work Plan (as defined below).

 

“Well”means a well drilled for FARMEE’s account pursuant to this Agreement.

 

**II.****                                    ****REPRESENTATIONS**

 

**A.****                                   ****FARMOR’S Representations and Warranties**

 

FARMORmakes the following representations, warranties and covenants to FARMEE:

 

1.                                       FARMOR is thepresent owner of the acreage, working interest and net revenue interestattributed to each Lease on Schedule B, and warrants its title theretoagainst anyone claiming by, from, through or under FARMOR. Such Leases are infull force and effect in accordance with their terms; there are no defaults bylessee thereunder; except as set forth on Schedule B, the lessee has noobligation under any such Lease to drill any well for the production of anyhydrocarbons; all amendments to each such Lease are identified in Schedule B;and all consents required under such Leases to permit FARMEE to exercise itsrights, contemplated hereby, have been or will be obtained prior to theassignment thereof to FARMEE, including consents to the assignment of suchLeases.  At the time of assignmentpursuant to Article IV, the Leases will be free and clear of any and allencumbrances, liens and other interests. Upon request, FARMOR shall furnishFARMEE copies of all lease and title and other data in FARMOR’s files or itsAffiliates’ files concerning the Leases and the AMI.

 

2.                                       FARMOR hasobtained all governmental and other approvals and permits to drill, completeand operate the Initial Wells within the Initial Drilling Units and all surfaceuse rights necessary or 

 

2

----

 

appropriateto drill, complete, produce and operate the Initial Wells. FARMOR shall use itsreasonable best efforts to obtain all governmental and other approvals and permitsto drill, complete and operate Wells within the Drilling Units and all surfaceuse rights necessary or appropriate to drill, complete, produce and operate thesuch Wells.  FARMOR has the exclusiveright to drill, complete, produce and operate hydrocarbon wells on the propertycovered by each Lease, and FARMOR agrees not to grant, assign or otherwisetransfer to any person, corporation or other entity, except to FARMEE or asotherwise provided herein, the right to explore for or produce hydrocarbons fromany properties covered by any Lease.

 

3.                                       There are noclaims, demands, actions, suits, governmental inquiries, or proceedings pendingor to FARMOR’s knowledge threatened against FARMOR which would have an adverseeffect upon the consummation of the transactions contemplated by thisAgreement.

 

4.                                       FARMOR and itsAffiliates are not party to any marketing, financial or physical hedge, forwardsale or similar agreement affecting production from the Leases.    Except as set forth on Schedule C,FARMOR and its Affiliates are not party or subject to any joint operatingagreement or other agreement affecting the Leases.  Except as permitted herein, FARMOR shall notenter into any such agreement during the term of this Agreement affecting theLeases or production therefrom without the consent of FARMEE, such consent notto be unreasonably withheld.

 

5.                                       FARMOR shallfrom time to time, but not more frequently than once every six (6) months,provide to FARMEE a revised Schedule B reflecting all Leases acquiredafter the date hereof.

 

6.                                       Prior to thecommencement of drilling on any Drilling Unit subject to assignment hereunder,FARMOR shall provide FARMEE with a drilling title opinion (prepared by anattorney reasonably satisfactory to FARMEE) regarding the relevant DrillingUnit demonstrating that such Drilling Unit is free and clear of all liens andencumbrances of whatsoever kind and character.

 

7.                                       FARMOR hasprovided FARMEE with a copy of the written consent of the holder of the Amendedand Restated Senior Secured Debenture dated as of February 2, 2009 to WestCoast Opportunity Fund, LLC (as amended through the date hereof) to thetransactions contemplated by this Agreement.

 

3

----

 

**B.****                                   ****FARMEE’S Representations and Warranties**

 

FARMEE represents andwarrants to FARMOR that there are no claims, demands, actions, suits,governmental inquiries, or proceedings pending or to FARMEE’s knowledgethreatened against FARMEE which would have an adverse effect upon theconsummation of the transactions contemplated by this Agreement.

 

**C.****                                   ****MutualRepresentations and Warranties**

 

Each of FARMOR and FARMEEmakes the following representations and warranties to the other:

 

1.                                       It is dulyorganized and validly existing under the laws of the jurisdiction where it isorganized.  To the extent required, eachparty is qualified to conduct business in the jurisdiction as necessary toperform this Agreement. It has all requisite corporate or limited liabilitycompany power and authority to enter into this Agreement, to perform itsobligations hereunder, and to consummate the transactions contemplatedhereby.  This Agreement has been dulyexecuted and delivered by it and constitutes its legal, valid and bindingobligation, enforceable against it in accordance with its terms.

 

2.                                       The execution,delivery, and performance of this Agreement by it, the consummation of thetransactions contemplated hereby, and the compliance with the provisions hereofwill not:

 

a.                                       violate anyapplicable laws or regulations, judgment, decree or award;

 

b.             contravene itsorganizational documents; or

 

c.                                       result in aviolation of a term or provision, or constitute a default or accelerate theperformance of an obligation under any contract or agreement to which it is aparty.

 

**D.****                                   ****Timingof Representations and Warranties**

 

Therepresentations, warranties and covenants made by the parties in this Article IIshall be deemed given as of the date hereof and as of the date of eachassignment under Article IV.

 

4

----

 

**III.****          ****WELLS**

 

**A.****           ****DevelopmentObligations**

 

FARMEE shall be obligated todrill and complete or drill, plug and abandon Initial Wells in the InitialDrilling Units and complete the Initial Projects.

 

**B.****                                   ****DevelopmentRights**

 

Subject to Article V,C, 1 and 3, FARMEE shall have the exclusive right, but not an obligation, todrill Wells on the Leases in accordance with the Work Plans approved by FARMEE.

 

**C.****           ****Well-SiteFee**

 

FARMEE shall pay FARMOR awell-site fee in the amount of Sixty Thousand Dollars ($60,000) (the “Well-SiteFee”) for each Well drilled on the Leases, including the Initial DrillingUnits. Upon FARMEE’s approval of an AFE for a Well as provided in Article V,B, 1, FARMEE shall pay the Well-Site Fee with respect to the Well to FARMOR,and FARMOR shall simultaneously deliver to FARMEE an executed assignment inrecordable form for the Drilling Unit on which such Well will be located inaccordance with Article IV, B.

 

**D.****           ****Ingress andEgress**

 

FARMORhereby grants FARMEE such rights of ingress and egress from and to the Leasesand any other property of FARMOR within the AMI as are necessary for andincidental to the rights and obligations under this Agreement.

 

**IV.****                               ****ASSIGNMENT**

 

**A.****                                   ****Assignment Upon Execution of this Agreement**

 

1.                                       Upon the execution of this Agreement, FARMOR shall execute anddeliver to FARMEE an assignment of all of FARMOR’s right, title and interest inthe Lease(s) covering the Initial Drilling Units, but insofar as, and onlyinsofar as, the Lease(s) covers the lands comprising the Initial DrillingUnits and all depths covered by such Lease(s) in respect of such lands,together with FARMOR’s right, title and interest in all permits, licenses,franchises, easements, servitudes and rights-of-way, and other instruments,contracts and agreements, of every character to the extent they cover or affectsuch assigned lands and depths. Such assignment shall be in the form of theassignment attached hereto as Schedule D.  If FARMEE does not complete any of theInitial Wells as Earning Wells, FARMEE may quitclaim and release to FARMOR the 

 

5

----

 

applicableInitial Drilling Unit, without additional consideration or warranty of title,and shall receive credit therefor as set forth in Article V, C, 5.

 

2.                                       Inconsideration of FARMOR’s agreements hereunder, upon the execution of this Agreement, FARMEE shall pay FARMOR cashin the amount of One Million Dollars ($1,000,000).

 

3.                                       Upon theexecution of this Agreement, FARMOR and FARMEE shall enter into an agreementwith respect to FARMEE’s use of FARMOR’s midstream facilities (the “GatheringAgreement”) in the form attached hereto as Schedule E.

 

**B.****                                   ****Assignment Upon Delivery of AFE**

 

Except as provided in Article IV, A, upon receipt by FARMOR of (i) theWell-Site Fee for such Well from FARMEE and (ii) an AFE approved by FARMEEas described in Article V, B, 1, FARMOR shall execute and deliver toFARMEE an assignment of all of FARMOR’s right, title and interest in the Lease(s) coveringthe Drilling Unit established for such Well, but insofar as, and only insofaras, the Lease(s) covers the lands comprising the relevant Drilling Unitand all depths covered by such Lease(s) in respect of such lands, togetherwith FARMOR’s right, title and interest in all permits, licenses, franchises,easements, servitudes and rights-of-way, and other instruments, contracts andagreements, of every character to the extent they cover or affect such assignedlands and depths.  The assignment willnot release FARMOR from any obligation that should have been performed by it orany liability that may have accrued to it prior to that assignment.  Such assignment shall be in the form of theassignment attached hereto as Schedule D.  If FARMEE does not complete any such Wells asEarning Wells, FARMEE may quitclaim and release to FARMOR the applicableDrilling Unit, without additional consideration or warranty of title, and shallreceive credit therefor as set forth in Article V, C, 5.

 

**C.****           ****LeaseAdministration**

 

At all times during the termof this Agreement, FARMOR shall be solely responsible for lease administrationof the Leases, including, without limitation, payment of all delay rentals,minimum royalties, shut-in royalties and other amounts required to be paidunder the Leases and to keep them in full force and effect, and, within twenty(20) days after the end of each month, FARMOR shall provide evidence of suchpayment in such detail as FARMEE may reasonably request and shall provide alist of Leases subject to expiration within the next sixty (60) days.  FARMOR shall not be entitled to recoup suchdelay rentals, minimum royalties 

 

6

----

 

and/or other amounts as maybe provided in any Lease.  Additionally,FARMOR shall comply with all other provisions of the Leases and shall use itsreasonable and economic best efforts to otherwise keep them in full force andeffect, with respect to the property.  Promptly after receipt of any notice, or any document or other writing,from any lessor of a Lease, any governmental or regulatory authority or agencyor any other person, corporation or authority relating to any such Lease orWell or any activities conducted on the property subject to the Leases orrelating to any other matter concerning the drilling, completion or operationof one or more Wells, or the transportation, compression, processing, marketingor sale of hydrocarbons produced therefrom that may reasonably be expected toadversely affect the Lease or Well, FARMOR shall provide the FARMEE with such notice,or document or other writing.

 

FARMOR shall not agree to any amendment or other modification of anyLease without the prior written consent of FARMEE, such consent not to beunreasonably withheld.

 

**D.****           ****OverridingRoyalty Interest**

 

1.                                       FARMOR shallreserve unto itself, its successors and assigns an overriding royalty intereston all of the hydrocarbons produced and sold that is attributable to theassigned Leases equal to an undivided six percent of eight eighths (6% of8/8ths); provided, that such overriding royalty interest shall beproportionately reduced to the extent the leasehold interest under the Leasecovers less than a one hundred percent (100%) mineral leasehold interest in thelands covered thereby, and provided, further, that (unless otherwise agreed inwriting by FARMEE) such overriding royalty interest shall be reduced so thatFARMEE’s net revenue interest in the Lease shall never be less than eightypercent of eight eighths (80% of 8/8ths), taking into account the existingburdens along with such overriding royalty interest. Such overriding royaltyinterest shall be free and clear of all costs and expenses of drilling andcompletion, but shall be burdened by FARMOR’s pro-rata share of(a) reasonable volume deductions for line loss and fuel usage,(b) post-production charges incurred by FARMEE for processing, gathering,transportation, marketing, dehydration, compression, and any other charges(which may include charges payable to Affiliates of FARMEE) required to deliverthe hydrocarbons for sale, and (c) ad valorem, severance and other similartaxes.  FARMEE shall use its reasonablebest efforts to pay to FARMOR from funds received from the sale or otherdisposition of hydrocarbons produced from the Wells such overriding royaltyinterest within forty five (45) days after receipt 

 

7

----

 

ofsuch funds, but in any case shall pay FARMOR within sixty (60) days afterreceipt of such funds.

 

2.                                       Unless FARMORshall elect to take the overriding royalty interest in kind or otherwisearranges for the sale of the related hydrocarbons, FARMEE shall have exclusivecharge and control of the marketing of all hydrocarbons, shall market FARMOR’sinterest proportionately and shall collect and receive the proceeds of the saleof all such production. FARMEE shall advise FARMOR of the terms and conditionsof the marketing contracts to sell hydrocarbons from the overriding royaltyinterest. Notwithstanding the foregoing sentence, FARMOR shall have the rightto take the overriding royalty interest in kind and, subject to any existingproduction sales contracts and upon at least thirty (30) days’ written noticefrom FARMOR, FARMEE shall deliver the hydrocarbons to FARMOR at the tanks orpipeline inlet, as the case may be, where FARMEE delivers the hydrocarbons tothe purchaser thereof; provided, however, that that if FARMOR exercises itsright and privilege to take in kind, such exercise shall be for one hundredpercent (100%) of its overriding royalty share of the production and FARMORshall use its best efforts to actually take in kind one hundred percent (100%)of such overriding royalty, and provided further, that FARMOR shall beresponsible for the payment of all costs and expenses incurred by FARMOR,FARMEE or otherwise in connection with FARMOR’s receipt in kind and failure, ifany, to take in kind one hundred percent (100%) of such overriding royalty.

 

**E.****                                     ****Recording of Assignment**

 

Upondelivery of the assignments, FARMEE agrees to file said instruments of recordin the appropriate county offices and to furnish FARMOR with a copy of therecorded and/or approved instruments.

 

**F.****                                     ****Assignment by FARMEE**

 

FARMORacknowledges and agrees that FARMEE intends to, and hereby permits FARMEE to,assign the Leases or portions thereof assigned to it hereunder to investmentpartnerships sponsored by FARMEE and its Affiliates (the “Partnerships”) or toany of its Affiliates, provided that such assignment shall not relieve FARMEEof its obligations under this Agreement.

 

8

----

 

**V.****           ****DEVELOPMENT OPERATIONS**

 

**A.****           ****Designationand Responsibilities**

 

1.                                       FARMEE shallregister as the “Operator” of record with respect to the Drilling Unitoperations with the appropriate governing regulatory agency or authority, andshall comply with all rules and regulations established by such governingagency or authority to maintain itself in good standing.  Subject to clause 3 of this Article V, Aand the provisions of the applicable Operating Contract (as defined below),FARMEE hereby designates FARMOR to conduct, as subcontractor for FARMEE, alldrilling, completing, producing and superintendant/maintenance operations forall Wells and the Initial Projects in accordance with the Work Plan.  FARMOR and FARMEE shall enter into anoperating contract, in substantially the same form as Schedule F (an “OperatingContract”), with respect to each project, comprising such number of Wells asthey shall agree.

 

FARMOR shall conduct itsactivities hereunder as a reasonably prudent contractor, in a good andworkmanlike manner, with due diligence and dispatch, in accordance with goodoilfield practice, and in compliance with applicable laws and regulations.

 

2.                                       FARMEE shallhave access to the Wells and to any information in the possession of FARMORpertaining to the Wells, and shall be entitled to inspect and observeoperations of every kind and character upon the property covered by any Lease.Upon reasonable notice to FARMOR and during normal business hours, FARMEE shallalso have access to, and be entitled to receive copies of, the records andother documents on file at FARMOR’s or any of its Affiliates’ office relatingto the drilling, completion and operation of the Wells, including all well logsand production records. In addition, during the drilling and completion of aWell, such number (as FARMEE or its designated agent may reasonably request) ofcopies of drilling reports, logs, completion reports and other data produced inconnection with such activities shall, upon request, be made available andprovided to FARMEE or such agent, as they are produced or promptly thereafter.

 

3.                                       In the event ofa Service Event of Default, as defined below, FARMEE shall have the right toterminate FARMOR’s duties, obligations and rights to perform the servicesprovided under this Article V and the Operating Contracts (collectively, “FARMOR’sServices”), and FARMEE, or its designee, shall have the right to perform suchservices as are consistent with its desired or required activities provided forhereunder, in accordance with the following terms:

 

9

----

 

Anyof the following shall be an event of default (a “Services Event of Default”)by FARMOR: (i) FARMOR commits gross negligence or willful misconduct inconnection with any of FARMOR’s Services, or (ii) in respect of FARMOR’sServices, FARMOR is in breach of, or fails to meet, the standards of operationset out in this Agreement or any Operating Contract in any material respect, orFARMOR fails or is unable to perform its obligations under this Agreement or any Operating Contract in any material respect, and, in any such case,FARMOR fails to cure any such breach, failure or inability within thirty (30)days after written notice thereof is given by FARMEE to FARMOR, or (iii) (x) if,at any time on or prior to the second anniversary of this Agreement, either TomRiley or Bill Hayworth ceases to be employed by FARMOR in the same positionheld by him as of the date of this Agreement, with the same duties and responsibilitiesas of the date of this Agreement, or (y) if, at any time after the secondanniversary of this Agreement, both Tom Riley and Bill Hayworth cease to beemployed by FARMOR in the same positions held by them, respectively, as of thedate of this Agreement, with the same respective duties and responsibilities asof the date of this Agreement, or (iv) if FARMOR breaches any financialcovenant under any financing agreement or arrangement to which it or any of itsAffiliates is a party, and such breach is not cured within sixty (60) daysafter the occurrence thereof and notice from the lender (if required by thefinancing agreement or arrangement), or if the lender or other party under anysuch agreement or arrangement accelerates the maturity date of any suchfinancing as a result of such breach or other default by FARMOR thereunder.

 

Ifa Services Event of Default occurs, FARMEE shall have the right to terminateFARMOR’s Services under this Agreement and terminate any or all of theOperating Contracts effective on the date which is ninety (90) days followingthe giving of written notice thereof by FARMEE to FARMOR, unless FARMEE selectsa successor to perform FARMOR’s Services and such successor assumes FARMOR’sServices at an earlier date, then FARMOR’s termination or removal with respectto FARMOR’s Services shall be effective on such earlier date. Upon thetermination of FARMOR’s Services, FARMOR shall submit to FARMEE a finalaccounting of its operations hereunder and transfer all the records, reports, books,data and other material(s) related to the performance of FARMOR’s Servicesthat are in the possession of FARMOR and its Affiliates as promptly aspossible.  All special tools, supplies,spare parts, equipment, consumables, and any other items furnished ormaintained under this Agreement (the costs of which have been reimbursed byFARMEE to FARMOR) shall

 

10

----

 

remainthe property of FARMEE without additional charge.  To the extent permitted by the relevant thirdparties, FARMOR shall assign to FARMEE, and FARMEE shall assume and becomeliable for, any contracts or obligations (including subcontracts) that FARMORmay have undertaken with third parties that are not Affiliates of FARMOR inconnection with FARMOR’s Services and in accordance with this Agreement, andFARMOR shall execute all documents and take all other reasonable steps requiredby FARMEE which may be required to assign to and vest in FARMEE all rights,benefits, interests and title in connection with such contracts orobligations.  Effective as of thetermination of FARMOR’s Services, FARMOR shall terminate any contracts orobligations (including subcontracts) that FARMOR may have undertaken withAffiliates of FARMOR in connection with FARMOR’s Services.  FARMOR will cooperate with FARMEE and anysuccessor contractor to cause an orderly transition of operations to thesuccessor contractor.

 

**B.****           ****Developmentand Operating Costs**

 

1.                                       At leastforty-five (45) days, but not more than sixty (60) days, prior to the spud dateof a Well, FARMOR shall provide FARMEE an AFE therefor.  Each AFE shall include all costs necessary todrill and complete the applicable Well (including a line item for overhead ofnot more than $15,000 for each of the first 220 Wells and $10,000 per Wellthereafter) and shall be prepared in accordance with the charging proceduresprovided for in the applicable Operating Contract.  FARMEE shall approve or reject an AFE withinfifteen (15) days of its receipt.  TheAFEs for the Initial Drilling Units and the Initial Projects are attached as ScheduleG.  FARMEE shall pay its pro ratashare, under the relevant Lease and related documents, of the costs set forthin each approved AFE as provided in the applicable Operating Agreement.

 

2.                                       FARMOR shall beentitled to receive payment from FARMEE for direct costs incurred by the FARMORfor the services of FARMOR pursuant to the applicable Operating Contract.  Such charges shall be invoiced on a monthlybasis, and FARMEE shall make such payments as are consistent with thisAgreement within thirty (30) days after receipt of such invoice.

 

3.                                       If FARMEE failsto timely make payments under this Article V, B or Article IV, D, andsuch failure shall remain uncured for thirty (30) days, FARMEE shall beobligated to pay FARMOR interest on such amount equal to the greater of twelvepercent (12%) per annum or the prime interest rate as published in the WallStreet 

 

11

----

 

Journal.

 

**C.****           ****WorkPlan**

 

1.                                       No later than January 15and July 15 of each year, beginning January 15, 2011, FARMEE shallprovide FARMOR with written notice setting forth the number of wells it proposesto drill for the following six-month period beginning May 1 and November 1,respectively (a “Drill Proposal”).  If aDrill Proposal proposes less than sixty (60) Wells, FARMOR shall have the rightto drill for its own account, during the relevant period, that number of wellsequal to the difference between sixty (60) wells and the number of Wells setforth in the Drill Proposal  FARMOR mayengage third parties in development operations, farmout arrangements or othersimilar activities with respect to any such well.

 

2.                                       No later than February 15and August 15 of each year, FARMOR shall provide FARMEE a developmentplan, in a form substantially similar to Schedule H, for the followingsix-month period beginning May 1 and November 1, respectively, forthe number of Wells set forth in the Drill Proposal (a “Work Plan”), whichshall include the following:

 

a.                                       well names,locations and target formations

 

b.                                      permit numbers,if available

 

c.                                       proposed spuddates, frac dates and turn into line dates

 

Inaddition, FARMOR shall provide FARMEE a proposed monthly budget, includingestimated production from Wells, and a form of AFE expected for the Work Plan,in substantially the same forms as Schedule I.  The initial Work Plan covering the periodfrom the date hereof through April 30, 2011 is attached as Schedule J.

 

3.                                       Within fifteen(15) days of receipt of the Work Plan, FARMEE shall approve or request changesthereto.  Within fifteen (15) days ofreceipt of written notice of FARMEE’s requested changes, if any, FARMOR shallprovide FARMEE with a revised Work Plan.   In the event the parties do not agree on all the terms of the revisedWork Plan, the last version proposed by FARMEE, with such changes thereinapproved by FARMEE, shall govern and be carried out by FARMOR.  In the event FARMEE determines not to drillat least sixty (60) Wells in the course of any six-month period, FARMEE shallprovide FARMOR with written notice at least 

 

12

----

 

fortyfive (45) days prior to the date indicated in the Work Plan for thecommencement of drilling on the affected Well(s) and FARMOR shall have theright to drill for its own account, during the relevant period, that number ofwells equal to the difference between sixty (60) wells and the number of Wellsto be drilled for FARMEE. FARMOR may engage third parties in developmentoperations, farmout arrangements or other similar activities with respect toany such well.

 

4.                                       No later thanthe fifteenth (15th) day of eachmonth, FARMOR shall provide FARMEE with a report for the previous month’sdevelopment operations, which shall include a reconciliation of spud dates,frac dates, turn into line dates, budget and production to the relevant WorkPlan.

 

5.                                       The followingshall apply to any Well (a “Deep Well”) planned for drilling in any zone belowthe Niobrara formation within the AMI (a “Deep Zone”):

 

a.                                       If any WorkPlan approved by FARMEE provides for a Deep Well, and FARMEE requiresadditional acreage within the AMI beyond the size of the shallow Well DrillingUnit in order to drill the Deep Well (a “Deep Well Drilling Unit”), then:

 

(x)            FARMOR may elect toparticipate in such Deep Well Drilling Unit, pro-rata, based on the amount ofacreage contributed to the Deep Well Drilling Unit by FARMOR, and if FARMOR soelects, then:

 

(A)          FARMOR shall subject suchacreage to a “joint operation” consistent with Article VI of the AAPLModel Form Joint Operating Agreement and shall pay its pro-rata share ofcosts; and

 

(B)           no Work-Site Fee or sitefees of any kind shall be payable by FARMEE to FARMOR;

 

OR,

 

(y)                                     FARMOR may elect not toparticipate, and if FARMOR so elects, then:

 

13

----

 

(A)          FARMOR shallassign to FARMEE all of its working interest and other rights to suchadditional acreage, together with all depths, as is needed to complete the DeepWell Drilling Unit;

 

(B)           FARMOR shall not be requiredto pay any part of the development cost for such Deep Well;

 

(C)           FARMOR shall receive a sitefee equal to the amount obtained when multiplying its pro-rata share of suchadditional acreage contributed by it to FARMEE by $60,000; and

 

(D)          FARMOR shall receive anoverriding royalty interest in all hydrocarbons produced and sold that areattributable to the Deep Well Drilling Unit equal to the amount obtained whenmultiplying its pro-rata share of such additional acreage contributed by it tosuch drilling unit times 6%, but subject to the same reductions and burdens setforth in Article IV, D, 1 for the overriding royalty interest describedtherein.

 

b.                                      If FARMOR isentitled to drill wells in the AMI for its own account pursuant to Article V,C and desires to drill a Deep Well, and in order to drill such Deep Well FARMORrequires some of the acreage previously assigned to FARMEE pursuant to theterms of this Agreement, and FARMEE has determined in its sole discretion thatit does not wish to develop, for its own account, the portion of the acreagerequired by FARMOR, then:

 

(x)            FARMEE mayelect to participate in such Deep Well Drilling Unit, pro-rata, based on amountof acreage contributed to the Deep Well Drilling Unit by FARMEE, and if FARMEEso elects, then:

 

(A)          FARMEE shallsubject such acreage to a “joint operation” consistent with Article VI ofthe AAPL Model Form Joint

 

14

----

 

Operating Agreement and shall pay its pro-rata share of costs; and

 

(B)           no Work-SiteFee or site fees  of any kind shall bepayable by FARMOR to FARMEE;

 

OR,

 

(y)        FARMEE may elect not to participate, and if FARMEEso elects, then:

 

(A)         FARMEE shall assign to FARMOR all of its workinginterest and other rights to such additional acreage, but only to the extent ofthe Deep Zone, as is needed to complete the Deep Well Drilling Unit;

 

(B)           FARMEE shall not be requiredto pay any part of the development cost for such Deep Well;

 

(C)           FARMEE shall receive a sitefee equal to the amount obtained when multiplying its pro-rata share of suchadditional acreage contributed by it to FARMOR by $60,000; and

 

(D)                                   FARMEE shall receive anoverriding royalty interest in all hydrocarbons produced and sold that areattributable to the Deep Well Drilling Unit equal to the amount obtained whenmultiplying its pro-rata share of such additional acreage contributed by it tosuch drilling unit times 6%, but subject to the same reductions and burdens setforth in Article IV, D, 1 for the overriding royalty interest describedtherein;

 

providedhowever, that the number of wells that FARMOR drills for its own account,including Deep Wells pursuant to this Article V, C, 5, shall not exceed inthe aggregate the number of wells it is permitted to drill for its own accountpursuant to Article V, C, 3.

 

15

----

 

**D.****           ****AMI**

 

1.                                       All Leases heldby FARMOR as of the date hereof, and all Leases acquired by FARMOR after thedate hereof on acreage within the AMI that is undeveloped as of the date ofacquisition by FARMOR, shall be included in the AMI.  The AMI shall remain in effect for a periodcommencing on the date hereof and continuing until the termination of thisAgreement.  Except as specificallypermitted herein, FARMOR shall not engage in development operations, farmoutarrangements or other similar activities for the account of any person otherthan FARMEE within the AMI.

 

2.                                       In the eventFARMEE identifies a prospective leasehold interest within the AMI, it shallpromptly notify FARMOR in writing. FARMOR shall elect whether or not to acquire such leasehold interest,and pay the acquisition and associated costs therefor, within the time periodset forth in such notice.  If FARMORacquires the leasehold interest, it will be subject to the provisions of thisAgreement.  If FARMOR does not elect toacquire the leasehold interest, FARMEE may acquire it for its own account andit shall not be subject to the provisions of this Agreement.

 

3.                                       Notwithstandingthe foregoing, if, after the date hereof, (A) either of FARMOR or FARMEE,or any of their respective Affiliates, acquires any acreage in the AMI (i) directlyor indirectly as a result of a consolidation, amalgamation, merger or otherbusiness combination, or through the acquisition of stock or equity interestsor (ii) by acquiring all or substantially all of the assets of a thirdparty unaffiliated with FARMOR or FARMEE, as the case may be, and any of theirrespective Affiliates or (B) FARMOR or FARMEE is acquired by anunaffiliated third party (“Acquirer”) in a transaction similar to thosedescribed in clause (A) and the Acquirer held acreage in the AMI prior tosuch transaction (each of the transactions described in clauses (A) and(B), an “Business Transaction”), then such acreage acquired in a BusinessTransaction described in clause (A), and the acreage held by the Acquirer priorto a Business Transaction described in clause (B), shall not be deemed includedin the AMI and not subject to the terms hereof.

 

**E.****            ****3-DSEISMIC**

 

Priorto conducting a 3-D seismic acquisition in the AMI, FARMOR shall submit toFARMEE in writing a plan and budget for such 3-D seismic acquisition (a “3-DSeismic Plan”).  Within forty-five (45)days of receipt of a 3-D Seismic Plan, FARMEE shall provide written notice to 

 

16

----

 

FARMOR of its approval orrejection of such 3-D Seismic Plan.  IfFARMEE approves the 3-D Seismic Plan, FARMEE shall make the 3-D seismicacquisition in its name or, if possible without incurring any additional costs,in the joint names of both FARMOR and FARMEE, and FARMEE shall pay the coststhereof.  In the event FARMEE rejects a3-D Seismic Plan and subsequently desires to drill Well(s) on any acreagecovered in the 3-D Seismic Plan, FARMEE shall reimburse FARMOR for the costs ofthe 3-D seismic acquisition pro rata, based on the number of well locationsidentified in the 3-D seismic, for each Well FARMEE desires to drill, plusinterest, accruing from the date of FARMOR’s payment for the 3-D seismic, atthe rate of ten percent (10%) per annum, compounded.  The parties shall use their best efforts toshare the 3-D seismic with each other.

 

**VI.           ADDITIONAL PROVISIONS**

 

**A.****                                   ****Relationship of Parties**

 

This Agreement is not intended to create, and shall not be construed tocreate, a relationship of partnership or an association for profit between oramong the parties hereto. If, for Federal income tax purposes, this Agreementand the operations hereunder are regarded as a partnership, each party herebyaffected elects to be excluded from the application of all of the provisions ofSubchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986 aspermitted and authorized by Section 761 of the Code and the regulationspromulgated thereunder. If any present or future income tax laws of the stateor states in which any of the Leases is located or any future income tax lawsof the United States contain provisions similar to those in Subchapter K,Chapter 1, Subtitle A, of the Internal Revenue Code of 1986 under which anelection similar to that provided by Section 761 of the Code is permitted,each party hereby affected shall make such election as may be permitted orrequired by such laws.

 

**B.****                                   ****Insurance**

 

Foras long as this Agreement is in effect, FARMOR shall maintain in effect at itssole cost and expense the following minimum types and amounts (whether primaryor a combination of primary and excess, as applicable) of insurance coveragewith insurance companies reasonably satisfactory to FARMEE:

 

1.                                       Workers’Compensation insurance including Occupational Disease, that is in compliancewith all Workers’ Compensation laws that apply.

 

2.                                       Employer’sLiability Insurance with a limit of not less than One 

 

17

----

 

MillionDollars ($1,000,000) per accident.

 

3.                                       CommercialGeneral Liability Insurance, including contractual liability insuring theindemnity agreement, if any, set forth in this Agreement, with limits of notless than One Million ($1,000,000) applicable to bodily injury, sickness ordeath and property damage in any one occurrence, and Two Million Dollars($2,000,000) in the aggregate.

 

4.                                       BusinessAutomobile Liability Insurance, covering owned, non-owned, hired and allvehicles used by FARMOR with limits of not less than One Million Dollars($1,000,000) applicable to bodily injury, sickness or death of any one person,and property damage in any one occurrence.

 

5.                                       Other than withrespect to the coverages described in Article VI, B, 1 and 2, all policiesshall be endorsed to provide that FARMEE is an additional insured under suchpolicy and that underwriters and insurance companies of FARMOR shall not haveany right of subrogation against FARMEE or its Affiliates, subsidiaries,agents, employees, officers, directors, invitees, co-owners, lessors, servants,contractors, sub-contractors, insurers, and underwriters.

 

6.                                       Upon request,FARMOR shall furnish Certificates of Insurance to FARMEE, showing to FARMEE’ssatisfaction that the required insurance coverages are in full force andeffect.

 

7.**                                      **To the extentreasonably practical, FARMOR shall require (a) all contractors andsub-contractors to obtain and keep in force similar insurance coverage and,upon request, furnish FARMEE acceptable evidence of such insurance and (b) allpolicies of FARMOR’s contractors and sub-contractors shall be endorsed toprovide a waiver of subrogation as set forth above.

 

8.                                       **THE LIABILITY OF FARMOR UNDER THE PROVISIONS OF THIS AGREEMENT, WHEREBY****FARMOR****AGREES OR UNDERTAKES TO DEFEND, INDEMNIFY,PROTECT AND HOLD FARMEE HARMLESS, SHALL NOT BE LIMITED TO OR BY THE INSURANCEREQUIRED OF FARMOR HEREUNDER.**

 

9.                                       Any coverageprovided FARMEE by FARMOR’s insurance under this Agreement is primary insuranceand shall not be considered contributory insurance with any insurance policiesof FARMEE.

 

10.                                 No portion of FARMOR’s costsof all the foregoing insurances 

 

18

----

 

shallbe chargeable to FARMEE.

 

FARMEEshall maintain, at its sole cost and expense, insurance coverage for its ownWells, including, but not limited to property and general liability insurance.

 

**C.****                                   ****Compliance with Laws and Lease Obligations**

 

FARMORagrees that it will conduct all of its operations in material compliance withall the terms, provisions, and covenants, express or implied, of the Lease(s) uponwhich any Well is located, and in material compliance with all applicableLocal, State and Federal laws, rules, regulations, and orders.  At any time after the date hereof, FARMORagrees to perform any remedial activities necessary or proper to restore thesurface or subsurface of the Leases or to assume and bear any monetaryresponsibility for any surface or subsurface (including groundwater) damages inlieu of or in addition to any such remedial activities which may be required byany Lease or other contract pertinent hereto, or as may be required by anyapplicable law or regulation of any Federal, State or local governmental bodyso as to place the Leases in a condition as near as practicable to itscondition as of the date hereof or, with respect to Leases acquired by FARMORafter the date hereof, the date of acquisition; provided, however, FARMOR shallnot be obligated by the terms of this Agreement to perform remedial activitiesexcept with respect to damages directly caused by its operations, including,but not limited to, production, transportation, drilling, work-over,remediation, hauling and related activities on the Leases.

 

**D.****                                   ****Liens and Encumbrances**

 

FARMORagrees that it will keep the Leases that are subject to an assignment hereunderfree and clear of all liens and encumbrances of whatsoever kind and character,including liens for labor performed and material furnished,**AND AGREES TO INDEMNIFY AND SAVE FARMEE HARMLESS FROMALL CLAIMS, DEMANDS, LOSSES, DAMAGES, AND LIABILITY ARISING OUT OF OR RESULTINGFROM ANY SUCH LIENS AND ENCUMBRANCES.**

 

**E.****                                     ****Claims and Lawsuits**

 

**FARMOR****AGREES TOINDEMNIFY, DEFEND, AND HOLD FARMEE HARMLESS FROM AND AGAINST ALL CLAIMS,DEMANDS, LOSSES, DAMAGES, OR LIABILITY (INCLUDING REASONABLE ATTORNEY’S FEES)ARISING OUT OF OR DIRECTLY RELATED TO (i) ****FARMOR’S****PRIOR OPERATIONS, OCCUPATION, OWNERSHIP OF THE LEASES, (ii) FARMOR’S**

 

19

----

 

**FUTURE****OPERATIONS, OCCUPATION, OWNERSHIPOF THE LEASES NOT ASSIGNED TO FARMEE HEREUNDER AND THE DEEP WELLS FARMOR DRILLSFOR ITS OWN ACCOUNT, OR (iii) FARMOR’S FAILURE TO PERFORM HEREUNDER.**

 

**FARMEE****AGREES TOINDEMNIFY, DEFEND, AND HOLD FARMOR HARMLESS FROM AND AGAINST ALL CLAIMS,DEMANDS, LOSSES, DAMAGES, OR LIABILITY (INCLUDING REASONABLE ATTORNEY’S FEES)ARISING OUT OF OR DIRECTLY RELATED TO (i) FARMEE’****S****OPERATIONS OCCUPATION,OWNERSHIP OF THE LEASES AFTER AND DURING THEIR ASSIGNMENT TO FARMEE HEREUNDER(EXCEPT TO THE EXTENT FARMOR IS REQUIRED TO INDEMNIFY FARMEE PURSUANT TO THEOPERATING AGREEMENTS) AND THE DEEP WELLS FARMEE DRILLS FOR ITS OWN ACCOUNT, OR (ii) FARMEE’SFAILURE TO PERFORM HEREUNDER.**

 

**F.****                                     ****Notices**

 

Allnotices authorized or required hereunder, unless otherwise specificallyprovided, shall be given in writing by mail, postage or charges prepaid, or bytelecopy or electronic mail and confirmed in writing and addressed to the partyto whom the notice is given at the address listed below.

 

If to FARMOR:                     Black RavenEnergy, Inc.

Attn: William F. Hayworth

1125 Seventeenth Street, Suite 2300

Denver, CO 80202

Phone:  (303) 308-1330

Fax: (303) 308-1590

E-mail: bhayworth@blackravenenergy.com

 

If to FARMEE:                      Atlas Resources, LLC

Attn:  JeffreyC. Simmons

1550Coraopolis Heights Road

MoonTownship, PA  15108

Telephone:  (412) 262-2830

Fax:  (412) 262-2820

Email:jsimmons@atlasenergy.com

 

**G.****           ****Modifications**

 

ThisAgreement shall not be modified, altered or waived except by prior writtenconsent of the parties. This Agreement shall be binding upon the successors andpermitted assigns of the parties hereto and shall be deemed

 

20

----

 

acovenant running with the Leases. Neither party may assign its rights or obligations hereunder without theprior consent of the other party, not to be unreasonably withheld, except asprovided herein and except that FARMEE may assign its rights and obligationshereunder to any wholly-owned subsidiary of its parent, Atlas Energy, Inc.;provided, however, that any such assignment shall not relieve FARMEE of itsobligations hereunder.

 

**H.****                                   ****Governing Law**

 

ThisAgreement and any arbitration or dispute resolution conducted pursuant heretoshall be construed in accordance with, and governed by, the laws of the Stateof New York.  Notwithstanding theforegoing, the Law of the state in which any real property interest covered orcreated by or granted under this Agreement is located shall govern thefollowing: (i) whether this Agreement creates an interest in real propertyfor security purposes or otherwise; (ii) the nature and attributes of anyinterest in real property that is covered or created by or granted under thisAgreement; and (iii) the manner and effect of recording or failing torecord memoranda of this Agreement or evidence of any action or transactionthat occurs under this Agreement and that results in the creation or transferof any interest in real property.

 

**I.****             ****Counterparts**

 

This Agreement may be executed in one or morecounterparts and by facsimile or other electronic transmission, which whentaken together shall constitute a single, original document.

 

**J.****            ****Memorandum**

 

FARMORagrees that FARMEE may file in local land records relevant to the Leases andthe AMI memoranda of this Agreement.  Atthe request of FARMEE, FARMOR shall executeand deliver each memoranda and such further documents and instruments and shalltake such other actions as may be reasonably required or appropriate in respectof the foregoing.

 

**K.****           ****Term**

 

1.                                       The term ofthis Agreement shall continue until the tenth (10th) anniversary hereof, unless earlier terminated by (a) mutualwritten agreement of the parties, (b) by either party immediately upon thecommencement of case or proceeding against the other party under anybankruptcy, reorganization, insolvency or similar law of any jurisdiction, (c) byFARMEE pursuant to Article VI, K, 2 below, or (d) by FARMOR pursuantto Article VI, K, 3 below.  The 

 

21

----

 

provisionsof Article VI, D, E, L, N and P and the last sentence of Article VI,K, 3 shall survive termination of this Agreement.

 

2.                                       Subject to Article VI, O, FARMEE mayterminate this Agreement upon thirty (30) days’ prior written notice to FARMORupon (i) material breach of any representation or warranty by FARMOR setforth herein, (ii) gross negligence or willful misconduct of FARMOR in theperformance of its obligations hereunder, or (iii) material default byFARMOR in the performance or observation of any covenant or obligationhereunder which default remains uncured for a period of thirty (30) days afterwritten notice thereof is given to FARMOR by FARMEE.

 

3.                                       Subject to Article VI, O, FARMOR mayterminate this Agreement upon thirty (30) days’ prior written notice to FARMEEupon:

 

a.                                       Material default by FARMEE in theperformance or observation of any covenant or obligation hereunder whichdefault remains uncured for a period of thirty (30) days after written noticethereof is given to FARMEE by FARMOR;

 

b.                                      Failure of FARMEE to make payments inaccordance with Article V, B or any other material payment required byFARMEE under this Agreement for sixty (60) consecutive days; or

 

c.                                       Failure (other than by reason of FARMOR’sfailure to perform a Work Plan) by FARMEE to drill at least the cumulativenumber of Wells set forth below by the date set forth opposite such cumulativenumber of Wells:

 
| **Cumulative No. of Wells** | ** ** | **Date**                 |
|--------------------------------------------|------------|--------------------------|
|                                       |       |                     |
| 120                                        |       | September 30,  2011 |
| 160                                        |       | March 31,  2012     |
| 240                                        |       | March 31,  2013     |
| 320                                        |       | March 31,  2014     |
| 400                                        |       | March 31,  2015     |
| 480                                        |       | March 31,  2016     |
| 540                                        |       | March 31,  2017     |
| 600                                        |       | March 31,  2018     |

 

d.                                      Failure byFARMEE to propose any Wells in the Drill Proposal to be delivered to FARMEE by January 15,2011 in accordance with Article V, D, 1.

 

22

----

 

e.                                       If FARMORterminates this Agreement pursuant to this Article VI, K, 3, FARMOR shall,at FARMEE’s request, continue to provide FARMOR’s Services for up to ninety(90) days after the effective date of the termination, or such shorter periodas FARMEE selects a successor provider and such provider assumes provision ofFARMOR’s Services.

 

**L.****           ****Dispute Resolution**

 

Allcontroversies, disputes or claims between FARMOR and FARMEE and theirsubsidiaries, Affiliates, shareholders, officers, directors, agents andemployees relating to this Agreement or the transactions contemplated hereby(each, a “Dispute”) shall be submitted to Judicial Arbitration and MediationServices (“JAMS”) for mediation. The parties will cooperate with JAMS and withone another in selecting a mediator from JAMS panel of neutrals, and inpromptly scheduling the mediation proceedings. The parties covenant that theywill participate in the mediation in good faith, and that they will shareequally in its costs. All offers, promises, conduct and statements, whetheroral or written, made in the course of the mediation by any of the parties,their agents, employees, experts and attorneys, and by the mediator or any JAMSemployee, are confidential, privileged and inadmissible for any purpose,including impeachment, in any arbitration or other proceeding involving theparties, provided that evidence that is otherwise admissible or discoverableshall not be rendered inadmissible or non-discoverable as a result of its usein the mediation. If the dispute is not resolved within thirty (30) days fromthe date of the submission of the dispute to mediation (or such later date asthe parties may mutually agree in writing), the administration of thearbitration shall proceed forthwith. The mediation may continue, if the partiesso agree, after the appointment of the arbitrators. Unless otherwise agreed bythe parties, the mediator shall be disqualified from serving as arbitrator inthe case. The pendency of a mediation shall not preclude a party from seekingprovisional remedies in aid of the arbitration from a court of appropriatejurisdiction, and the parties agree not to defend against any application for provisionalrelief on the ground that a mediation is pending.

 

Followingthe mandatory mediation procedures all Disputes will be submitted for bindingarbitration to the New York, New York office of JAMS on demand of either party.Unless otherwise agreed between the parties, such arbitration proceedings willbe conducted in New York, New York, and shall be heard by one arbitrator inaccordance with the then current Commercial Arbitration Rules of JAMS, whoshall be required to deliver to the parties a written opinion with respect tohis or her award.  The award of the arbitrator shall be conclusive andbinding on all parties hereto, and judgment upon the award may be entered inany court of 

 

23

----

 

competentjurisdiction.  Each party waives the right to contest the validity orenforceability of such award, except as allowed under the Federal ArbitrationAct.  The parties to the arbitration shall equally share the costs of thearbitration proceeding; provided that each party shall bear its own attorneys’fees and other professional fees; and provided further that, if the arbitratorshall determine that a party’s position in arbitration is frivolous, that partyshall bear all costs of the arbitration proceeding, including the other party’sattorneys’ fees.

 

**M.****          ****Acknowledgement**

 

Eachprovision of this Agreement shall be construed as though both partiesparticipated equally in the drafting of the same.  Consequently, the parties acknowledge andagree that any rule of construction that a document is to be construedagainst the drafting party shall not be applicable to this Agreement. **EACH OF THE PARTIES HERETO SPECIFICALLY ACKNOWLEDGESAND AGREES (A) THAT IT HAS THE DUTY TO READ THIS AGREEMENT AND THAT IT ISCHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS HEREOF, (B) THAT IT HAS INFACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE ANDKNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT, (C) THATIT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT PROVIDE FOR THEASSUMPTION BY ONE PARTY OF, AND/OR RELEASE OF THE OTHER PARTY FROM, CERTAINLIABILITIES ATTRIBUTABLE TO THIS TRANSACTION OR THE PREMISES COVERED HEREBYTHAT SUCH PARTY WOULD OTHERWISE BE RESPONSIBLE FOR UNDER THE LAW. EACH PARTYHERETO FURTHER AGREES THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITYOF ANY OF SUCH PROVISIONS OF THIS AGREEMENT ON THE BASIS THAT THE PARTY HAD NONOTICE OR KNOWLEDGE OF SUCH PROVISIONS OR THAT SUCH PROVISIONS ARE NOT “CONSPICUOUS”.**

 

**N.****           ****Integral Part/DirectRelationship of Ancillary Agreements**

 

FARMORand FARMEE agree that each and every agreement (and any amendment thereto)benefiting FARMEE, including without limitation, the Leases, the GatheringAgreement and the Operating Contracts, ancillary to this Agreement and relatedto the Leases and/or preparation of the hydrocarbons for sale, through andincluding the sale of said hydrocarbons by FARMEE and/or its representativesinto sales line, shall be deemed an integral part of and directly related to thisAgreement.

 

24

----

 

**O.****                                  ****Force Majeure**

 

Ifby reason of a Force Majeure Event either party is rendered unable, wholly orin part, to carry out its obligations under this Agreement, and if such partygives notice and the details of such Force Majeure in writing or by facsimileto the other party within a reasonable time after the occurrence of the causerelied on, the party giving such notice, so far as and to the extent that itsperformance is affected by such Force Majeure Event and during the continuanceof its inability to perform as a result of such Force Majeure Event, shall notbe liable hereunder, including with respect to the obligations set forth in Article VI,K; provided, however, that the party claiming such Force Majeure Event shallcause such Force Majeure Event to be remedied with all reasonable dispatch.

 

**P.****           ****Confidentiality**

 

Certainterms of this Agreement and of the information that the parties have shared orwill share with each other pursuant hereto is confidential or proprietary andhas not been publicly disclosed (the “Information”).  The Information, except as permitted herein,will not be disclosed without the prior written consent of both parties, suchconsent not to be unreasonably withheld. Disclosure of such Information may cause irreparable harm to one or bothparties.  Accordingly, each partyrepresents that it has not, and agrees that it will not, and will inform itsdirectors, officers, agents, advisors and Affiliates not to, disclose to anythird party any Information or confirm any statement made by third partiesregarding Information unless the other party has provided its prior writtenconsent to such disclosure. Notwithstanding anything to the contrary herein, Informationshall not include information that:  (i) isin the public domain; (ii) is previously known or independently developedby a party; or (iii) is acquired by a party from any third party having aright to disclose such information. Notwithstanding anything to the contraryherein each party may disclose Information (x) to the extent suchdisclosure is required, as reasonably determined by the disclosing party, byapplicable federal or state securities law or regulations or by the rules ofany stock exchange upon which shares of the disclosing party or any of itsAffiliates (which, for the purposes of this provision, shall include thePartnerships with respect to FARMEE) are registered or are in the process ofbeing registered, which rules require the disclosure to be made; provided,however, that the disclosing party, in consultation with the other party, shallmake a confidential treatment request to the appropriate regulatory authority;and (y) to its partners, shareholders, investors, lenders, potentialinvestors (including potential investors in the Partnerships), potentiallenders, directors, officers, employees, agents or representatives, includingattorneys, accountants and consultants, in each case under circumstances 

 

25

----

 

inwhich the disclosing party takes reasonable steps to maintain theconfidentiality of the Information.

 

**Q.****           ****Publicity**

 

NeitherFARMOR nor FARMEE, nor any of their respective Affiliates (which, for thepurposes of this provision, shall include West Coast Opportunity Fund, LLC andWest Coast Management, Inc., in the case of FARMOR) shall issue any pressrelease or similar public announcement pertaining to this Agreement or thetransactions contemplated hereby without the consulting with the other partyprior to making any such issuance.

 

 

[Remainder of page intentionally left blank; signatures appear onfollowing page]

 

26

----

 

INWITNESS WHEREOF, and intending to be legally bound, the parties have causedthis Agreement to be executed by their duly authorized representatives as ofthe date first shown above.

 

 
| **FARMOR:**                       |                          |
|-----------------------------------|-------------------------------|
|                              |                          |
| **BLACK RAVEN ENERGY, INC.** |                          |
|                              |                          |
| By:                               | /s/  William F. Hayworth      | _ |
|                              |                          |   |
| Name (printed):                   | William F. Hayworth           |   |
|                              |                          |   |
| Title:                            | President                     |   |
|                              |                          |
| **FARMEE:**                       |                          |
|                              |                          |
| **ATLAS RESOURCES, LLC**          |                          |
| **By:**                           | **AIC, LLC, its sole member** |
| ** **                        | **By:**                       | **Atlas Energy Operating Company, LLC, its sole member** |
| ** **                        | ** **                    | **By:** | **Atlas Energy Resources, LLC, its sole member** |
|                              |                          |
| By:                               | /s/  Daniel Herz              |   |
|                              |                          |   |
| Name (printed):                   | Daniel Herz                   |   |
|                              |                          |   |
| Title:                            | Senior Vice President         |   |
|                                   |                               |  |  |  |  |  |  |

 

27

----