Exhibit 10.1


 


FARMOUT AGREEMENT


 


THIS
AGREEMENT (this “Agreement”) is made, entered into and effective this 23th day
of 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 in
drilling for hydrocarbons in the area of mutual interest in Phillips and
Sedgwick Counties, Colorado, and Perkins, Chase and Dundy Counties Nebraska, as
further described in Schedule A  (the
“AMI”).


 


B.                                    FARMOR owns the
working interest and the net revenue interest in certain hydrocarbon interests
listed on Schedule B, as the same may be amended from time to time to
reflect FARMOR’s acquisition of other such interests in the AMI (the “Leases”).  The Leases include Drilling Units (as defined
below) for six (6) wells (the “Initial Wells”) identified on Schedule
B-1 (the “Initial Drilling Units”) as to which FARMOR has not commenced
drilling. FARMOR may in the future acquire additional working interests and net
revenue 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 by
FARMOR or had already been drilled and cased before the date of this Agreement.


 


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


 


I.                                         DEFINITIONS


 


Terms
used 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 that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by, or is under common control with the first person or
entity; provided however, that West Coast Opportunity Fund, LLC and West Coast
Asset Management, Inc. will not be considered an “Affiliate” of FARMOR and
the Partnerships will not be considered an “Affiliate” of FARMEE.


 


“Drilling
Unit” means 40 acres of a Lease around a wellbore, planned or actual, from the
surface to the center of the earth or such depths as to which FARMOR has an
interest.


 

















 


“Earning
Well” means a Well which FARMEE has determined to be capable of producing
hydrocarbons in commercial quantities.


 


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


 


“Initial
Projects” means the 3D Seismic Shoots, Railroad Crossing, Sales Meter Upgrade,
Change Out Compressors and Upgrade Dehydrator at Facility as defined in the
initial 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


 


FARMOR
makes the following representations, warranties and covenants to FARMEE:


 


1.                                       FARMOR is the
present owner of the acreage, working interest and net revenue interest
attributed to each Lease on Schedule B, and warrants its title thereto
against anyone claiming by, from, through or under FARMOR. Such Leases are in
full force and effect in accordance with their terms; there are no defaults by
lessee thereunder; except as set forth on Schedule B, the lessee has no
obligation under any such Lease to drill any well for the production of any
hydrocarbons; all amendments to each such Lease are identified in Schedule B;
and all consents required under such Leases to permit FARMEE to exercise its
rights, contemplated hereby, have been or will be obtained prior to the
assignment thereof to FARMEE, including consents to the assignment of such
Leases.  At the time of assignment
pursuant to Article IV, the Leases will be free and clear of any and all
encumbrances, liens and other interests. Upon request, FARMOR shall furnish
FARMEE copies of all lease and title and other data in FARMOR’s files or its
Affiliates’ files concerning the Leases and the AMI.


 


2.                                       FARMOR has
obtained all governmental and other approvals and permits to drill, complete
and operate the Initial Wells within the Initial Drilling Units and all surface
use rights necessary or 


 


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appropriate
to drill, complete, produce and operate the Initial Wells. FARMOR shall use its
reasonable best efforts to obtain all governmental and other approvals and permits
to drill, complete and operate Wells within the Drilling Units and all surface
use rights necessary or appropriate to drill, complete, produce and operate the
such Wells.  FARMOR has the exclusive
right to drill, complete, produce and operate hydrocarbon wells on the property
covered by each Lease, and FARMOR agrees not to grant, assign or otherwise
transfer to any person, corporation or other entity, except to FARMEE or as
otherwise provided herein, the right to explore for or produce hydrocarbons from
any properties covered by any Lease.


 


3.                                       There are no
claims, demands, actions, suits, governmental inquiries, or proceedings pending
or to FARMOR’s knowledge threatened against FARMOR which would have an adverse
effect upon the consummation of the transactions contemplated by this
Agreement.


 


4.                                       FARMOR and its
Affiliates are not party to any marketing, financial or physical hedge, forward
sale 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 operating
agreement or other agreement affecting the Leases.  Except as permitted herein, FARMOR shall not
enter into any such agreement during the term of this Agreement affecting the
Leases or production therefrom without the consent of FARMEE, such consent not
to be unreasonably withheld.


 


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


 


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


 


7.                                       FARMOR has
provided FARMEE with a copy of the written consent of the holder of the Amended
and Restated Senior Secured Debenture dated as of February 2, 2009 to West
Coast Opportunity Fund, LLC (as amended through the date hereof) to the
transactions contemplated by this Agreement.


 


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B.                                    FARMEE’S Representations and Warranties


 


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


 


C.                                    Mutual
Representations and Warranties


 


Each of FARMOR and FARMEE
makes the following representations and warranties to the other:


 


1.                                       It is duly
organized and validly existing under the laws of the jurisdiction where it is
organized.  To the extent required, each
party is qualified to conduct business in the jurisdiction as necessary to
perform this Agreement. It has all requisite corporate or limited liability
company power and authority to enter into this Agreement, to perform its
obligations hereunder, and to consummate the transactions contemplated
hereby.  This Agreement has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.


 


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


 


a.                                       violate any
applicable laws or regulations, judgment, decree or award;


 


b.             contravene its
organizational documents; or


 


c.                                       result in a
violation of a term or provision, or constitute a default or accelerate the
performance of an obligation under any contract or agreement to which it is a
party.


 


D.                                    Timing
of Representations and Warranties


 


The
representations, warranties and covenants made by the parties in this Article II
shall be deemed given as of the date hereof and as of the date of each
assignment under Article IV.


 


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III.           WELLS


 


A.            Development
Obligations


 


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


 


B.                                    Development
Rights


 


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


 


C.            Well-Site
Fee


 


FARMEE shall pay FARMOR a
well-site fee in the amount of Sixty Thousand Dollars ($60,000) (the “Well-Site
Fee”) for each Well drilled on the Leases, including the Initial Drilling
Units. 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 in
recordable form for the Drilling Unit on which such Well will be located in
accordance with Article IV, B.


 


D.            Ingress and
Egress


 


FARMOR
hereby grants FARMEE such rights of ingress and egress from and to the Leases
and any other property of FARMOR within the AMI as are necessary for and
incidental 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 and
deliver to FARMEE an assignment of all of FARMOR’s right, title and interest in
the Lease(s) covering the Initial Drilling Units, but insofar as, and only
insofar as, the Lease(s) covers the lands comprising the Initial Drilling
Units 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 affect
such assigned lands and depths. Such assignment shall be in the form of the
assignment attached hereto as Schedule D.  If FARMEE does not complete any of the
Initial Wells as Earning Wells, FARMEE may quitclaim and release to FARMOR the 


 


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


 


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


 


3.                                       Upon the
execution of this Agreement, FARMOR and FARMEE shall enter into an agreement
with respect to FARMEE’s use of FARMOR’s midstream facilities (the “Gathering
Agreement”) 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) the
Well-Site Fee for such Well from FARMEE and (ii) an AFE approved by FARMEE
as described in Article V, B, 1, FARMOR shall execute and deliver to
FARMEE an assignment of all of FARMOR’s right, title and interest in the Lease(s) covering
the Drilling Unit established for such Well, but insofar as, and only insofar
as, the Lease(s) covers the lands comprising the relevant Drilling Unit
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 affect such assigned
lands and depths.  The assignment will
not release FARMOR from any obligation that should have been performed by it or
any liability that may have accrued to it prior to that assignment.  Such assignment shall be in the form of the
assignment attached hereto as Schedule D.  If FARMEE does not complete any such Wells as
Earning Wells, FARMEE may quitclaim and release to FARMOR the applicable
Drilling Unit, without additional consideration or warranty of title, and shall
receive credit therefor as set forth in Article V, C, 5.


 


C.            Lease
Administration


 


At all times during the term
of this Agreement, FARMOR shall be solely responsible for lease administration
of the Leases, including, without limitation, payment of all delay rentals,
minimum royalties, shut-in royalties and other amounts required to be paid
under 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 such
payment in such detail as FARMEE may reasonably request and shall provide a
list of Leases subject to expiration within the next sixty (60) days.  FARMOR shall not be entitled to recoup such
delay rentals, minimum royalties 


 


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and/or other amounts as may
be provided in any Lease.  Additionally,
FARMOR shall comply with all other provisions of the Leases and shall use its
reasonable and economic best efforts to otherwise keep them in full force and
effect, 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 agency
or any other person, corporation or authority relating to any such Lease or
Well or any activities conducted on the property subject to the Leases or
relating to any other matter concerning the drilling, completion or operation
of one or more Wells, or the transportation, compression, processing, marketing
or sale of hydrocarbons produced therefrom that may reasonably be expected to
adversely 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 any
Lease without the prior written consent of FARMEE, such consent not to be
unreasonably withheld.


 


D.            Overriding
Royalty Interest


 


1.                                       FARMOR shall
reserve unto itself, its successors and assigns an overriding royalty interest
on all of the hydrocarbons produced and sold that is attributable to the
assigned Leases equal to an undivided six percent of eight eighths (6% of
8/8ths); provided, that such overriding royalty interest shall be
proportionately reduced to the extent the leasehold interest under the Lease
covers less than a one hundred percent (100%) mineral leasehold interest in the
lands covered thereby, and provided, further, that (unless otherwise agreed in
writing by FARMEE) such overriding royalty interest shall be reduced so that
FARMEE’s net revenue interest in the Lease shall never be less than eighty
percent of eight eighths (80% of 8/8ths), taking into account the existing
burdens along with such overriding royalty interest. Such overriding royalty
interest shall be free and clear of all costs and expenses of drilling and
completion, 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 deliver
the hydrocarbons for sale, and (c) ad valorem, severance and other similar
taxes.  FARMEE shall use its reasonable
best efforts to pay to FARMOR from funds received from the sale or other
disposition of hydrocarbons produced from the Wells such overriding royalty
interest within forty five (45) days after receipt 


 


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


 


2.                                       Unless FARMOR
shall elect to take the overriding royalty interest in kind or otherwise
arranges for the sale of the related hydrocarbons, FARMEE shall have exclusive
charge and control of the marketing of all hydrocarbons, shall market FARMOR’s
interest proportionately and shall collect and receive the proceeds of the sale
of all such production. FARMEE shall advise FARMOR of the terms and conditions
of the marketing contracts to sell hydrocarbons from the overriding royalty
interest. Notwithstanding the foregoing sentence, FARMOR shall have the right
to take the overriding royalty interest in kind and, subject to any existing
production sales contracts and upon at least thirty (30) days’ written notice
from FARMOR, FARMEE shall deliver the hydrocarbons to FARMOR at the tanks or
pipeline inlet, as the case may be, where FARMEE delivers the hydrocarbons to
the purchaser thereof; provided, however, that that if FARMOR exercises its
right and privilege to take in kind, such exercise shall be for one hundred
percent (100%) of its overriding royalty share of the production and FARMOR
shall use its best efforts to actually take in kind one hundred percent (100%)
of such overriding royalty, and provided further, that FARMOR shall be
responsible for the payment of all costs and expenses incurred by FARMOR,
FARMEE or otherwise in connection with FARMOR’s receipt in kind and failure, if
any, to take in kind one hundred percent (100%) of such overriding royalty.


 


E.                                      Recording of Assignment


 


Upon
delivery of the assignments, FARMEE agrees to file said instruments of record
in the appropriate county offices and to furnish FARMOR with a copy of the
recorded and/or approved instruments.


 


F.                                      Assignment by FARMEE


 


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


 


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V.            DEVELOPMENT OPERATIONS


 


A.            Designation
and Responsibilities


 


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


 


FARMOR shall conduct its
activities hereunder as a reasonably prudent contractor, in a good and
workmanlike manner, with due diligence and dispatch, in accordance with good
oilfield practice, and in compliance with applicable laws and regulations.


 


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


 


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


 


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Any
of the following shall be an event of default (a “Services Event of Default”)
by FARMOR: (i) FARMOR commits gross negligence or willful misconduct in
connection with any of FARMOR’s Services, or (ii) in respect of FARMOR’s
Services, FARMOR is in breach of, or fails to meet, the standards of operation
set out in this Agreement or any Operating Contract in any material respect, or
FARMOR 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 Tom
Riley or Bill Hayworth ceases to be employed by FARMOR in the same position
held by him as of the date of this Agreement, with the same duties and responsibilities
as of the date of this Agreement, or (y) if, at any time after the second
anniversary of this Agreement, both Tom Riley and Bill Hayworth cease to be
employed by FARMOR in the same positions held by them, respectively, as of the
date of this Agreement, with the same respective duties and responsibilities as
of the date of this Agreement, or (iv) if FARMOR breaches any financial
covenant under any financing agreement or arrangement to which it or any of its
Affiliates is a party, and such breach is not cured within sixty (60) days
after the occurrence thereof and notice from the lender (if required by the
financing agreement or arrangement), or if the lender or other party under any
such agreement or arrangement accelerates the maturity date of any such
financing as a result of such breach or other default by FARMOR thereunder.


 


If
a Services Event of Default occurs, FARMEE shall have the right to terminate
FARMOR’s Services under this Agreement and terminate any or all of the
Operating Contracts effective on the date which is ninety (90) days following
the giving of written notice thereof by FARMEE to FARMOR, unless FARMEE selects
a successor to perform FARMOR’s Services and such successor assumes FARMOR’s
Services at an earlier date, then FARMOR’s termination or removal with respect
to FARMOR’s Services shall be effective on such earlier date. Upon the
termination of FARMOR’s Services, FARMOR shall submit to FARMEE a final
accounting of its operations hereunder and transfer all the records, reports, books,
data and other material(s) related to the performance of FARMOR’s Services
that are in the possession of FARMOR and its Affiliates as promptly as
possible.  All special tools, supplies,
spare parts, equipment, consumables, and any other items furnished or
maintained under this Agreement (the costs of which have been reimbursed by
FARMEE to FARMOR) shall


 


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


 


B.            Development
and Operating Costs


 


1.                                       At least
forty-five (45) days, but not more than sixty (60) days, prior to the spud date
of a Well, FARMOR shall provide FARMEE an AFE therefor.  Each AFE shall include all costs necessary to
drill and complete the applicable Well (including a line item for overhead of
not more than $15,000 for each of the first 220 Wells and $10,000 per Well
thereafter) and shall be prepared in accordance with the charging procedures
provided for in the applicable Operating Contract.  FARMEE shall approve or reject an AFE within
fifteen (15) days of its receipt.  The
AFEs for the Initial Drilling Units and the Initial Projects are attached as Schedule
G.  FARMEE shall pay its pro rata
share, under the relevant Lease and related documents, of the costs set forth
in each approved AFE as provided in the applicable Operating Agreement.


 


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


 


3.                                       If FARMEE fails
to timely make payments under this Article V, B or Article IV, D, and
such failure shall remain uncured for thirty (30) days, FARMEE shall be
obligated to pay FARMOR interest on such amount equal to the greater of twelve
percent (12%) per annum or the prime interest rate as published in the Wall
Street 


 


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Journal.


 


C.            Work
Plan


 


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


 


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


 


a.                                       well names,
locations and target formations


 


b.                                      permit numbers,
if available


 


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


 


In
addition, FARMOR shall provide FARMEE a proposed monthly budget, including
estimated 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 period
from 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 changes
thereto.  Within fifteen (15) days of
receipt of written notice of FARMEE’s requested changes, if any, FARMOR shall
provide FARMEE with a revised Work Plan.   
In the event the parties do not agree on all the terms of the revised
Work Plan, the last version proposed by FARMEE, with such changes therein
approved by FARMEE, shall govern and be carried out by FARMOR.  In the event FARMEE determines not to drill
at least sixty (60) Wells in the course of any six-month period, FARMEE shall
provide FARMOR with written notice at least 


 


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forty
five (45) days prior to the date indicated in the Work Plan for the
commencement of drilling on the affected Well(s) and FARMOR shall have the
right to drill for its own account, during the relevant period, that number of
wells equal to the difference between sixty (60) wells and the number of Wells
to be drilled for FARMEE. FARMOR may engage third parties in development
operations, farmout arrangements or other similar activities with respect to
any such well.


 


4.                                       No later than
the fifteenth (15th) day of each
month, FARMOR shall provide FARMEE with a report for the previous month’s
development operations, which shall include a reconciliation of spud dates,
frac dates, turn into line dates, budget and production to the relevant Work
Plan.


 


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


 


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


 


(x)            FARMOR may elect to
participate in such Deep Well Drilling Unit, pro-rata, based on the amount of
acreage contributed to the Deep Well Drilling Unit by FARMOR, and if FARMOR so
elects, then:


 


(A)          FARMOR shall subject such
acreage to a “joint operation” consistent with Article VI of the AAPL
Model Form Joint Operating Agreement and shall pay its pro-rata share of
costs; and


 


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


 


OR,


 


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


 


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(A)          FARMOR shall
assign to FARMEE all of its working interest and other rights to such
additional acreage, together with all depths, as is needed to complete the Deep
Well Drilling Unit;


 


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


 


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


 


(D)          FARMOR shall receive an
overriding royalty interest in all hydrocarbons produced and sold that are
attributable to the Deep Well Drilling Unit equal to the amount obtained when
multiplying its pro-rata share of such additional acreage contributed by it to
such drilling unit times 6%, but subject to the same reductions and burdens set
forth in Article IV, D, 1 for the overriding royalty interest described
therein.


 


b.                                      If FARMOR is
entitled 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 FARMOR
requires some of the acreage previously assigned to FARMEE pursuant to the
terms of this Agreement, and FARMEE has determined in its sole discretion that
it does not wish to develop, for its own account, the portion of the acreage
required by FARMOR, then:


 


(x)            FARMEE may
elect to participate in such Deep Well Drilling Unit, pro-rata, based on amount
of acreage contributed to the Deep Well Drilling Unit by FARMEE, and if FARMEE
so elects, then:


 


(A)          FARMEE shall
subject such acreage to a “joint operation” consistent with Article VI of
the AAPL Model Form Joint


 


14

















 


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


 


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


 


OR,


 


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


 


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


 


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


 


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


 


(D)                                   FARMEE shall receive an
overriding royalty interest in all hydrocarbons produced and sold that are
attributable to the Deep Well Drilling Unit equal to the amount obtained when
multiplying its pro-rata share of such additional acreage contributed by it to
such drilling unit times 6%, but subject to the same reductions and burdens set
forth in Article IV, D, 1 for the overriding royalty interest described
therein;


 


provided
however, 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 in
the aggregate the number of wells it is permitted to drill for its own account
pursuant to Article V, C, 3.


 


15

















 


D.            AMI


 


1.                                       All Leases held
by FARMOR as of the date hereof, and all Leases acquired by FARMOR after the
date hereof on acreage within the AMI that is undeveloped as of the date of
acquisition by FARMOR, shall be included in the AMI.  The AMI shall remain in effect for a period
commencing on the date hereof and continuing until the termination of this
Agreement.  Except as specifically
permitted herein, FARMOR shall not engage in development operations, farmout
arrangements or other similar activities for the account of any person other
than FARMEE within the AMI.


 


2.                                       In the event
FARMEE identifies a prospective leasehold interest within the AMI, it shall
promptly 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 period
set forth in such notice.  If FARMOR
acquires the leasehold interest, it will be subject to the provisions of this
Agreement.  If FARMOR does not elect to
acquire the leasehold interest, FARMEE may acquire it for its own account and
it shall not be subject to the provisions of this Agreement.


 


3.                                       Notwithstanding
the 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) directly
or indirectly as a result of a consolidation, amalgamation, merger or other
business combination, or through the acquisition of stock or equity interests
or (ii) by acquiring all or substantially all of the assets of a third
party unaffiliated with FARMOR or FARMEE, as the case may be, and any of their
respective Affiliates or (B) FARMOR or FARMEE is acquired by an
unaffiliated third party (“Acquirer”) in a transaction similar to those
described in clause (A) and the Acquirer held acreage in the AMI prior to
such transaction (each of the transactions described in clauses (A) and
(B), an “Business Transaction”), then such acreage acquired in a Business
Transaction described in clause (A), and the acreage held by the Acquirer prior
to a Business Transaction described in clause (B), shall not be deemed included
in the AMI and not subject to the terms hereof.


 


E.             3-D
SEISMIC


 


Prior
to conducting a 3-D seismic acquisition in the AMI, FARMOR shall submit to
FARMEE in writing a plan and budget for such 3-D seismic acquisition (a “3-D
Seismic 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 or
rejection of such 3-D Seismic Plan.  If
FARMEE approves the 3-D Seismic Plan, FARMEE shall make the 3-D seismic
acquisition 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 costs
thereof.  In the event FARMEE rejects a
3-D Seismic Plan and subsequently desires to drill Well(s) on any acreage
covered in the 3-D Seismic Plan, FARMEE shall reimburse FARMOR for the costs of
the 3-D seismic acquisition pro rata, based on the number of well locations
identified in the 3-D seismic, for each Well FARMEE desires to drill, plus
interest, accruing from the date of FARMOR’s payment for the 3-D seismic, at
the rate of ten percent (10%) per annum, compounded.  The parties shall use their best efforts to
share 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 to
create, a relationship of partnership or an association for profit between or
among the parties hereto. If, for Federal income tax purposes, this Agreement
and the operations hereunder are regarded as a partnership, each party hereby
affected elects to be excluded from the application of all of the provisions of
Subchapter K, Chapter 1, Subtitle A, of the Internal Revenue Code of 1986 as
permitted and authorized by Section 761 of the Code and the regulations
promulgated thereunder. If any present or future income tax laws of the state
or states in which any of the Leases is located or any future income tax laws
of the United States contain provisions similar to those in Subchapter K,
Chapter 1, Subtitle A, of the Internal Revenue Code of 1986 under which an
election similar to that provided by Section 761 of the Code is permitted,
each party hereby affected shall make such election as may be permitted or
required by such laws.


 


B.                                    Insurance


 


For
as long as this Agreement is in effect, FARMOR shall maintain in effect at its
sole cost and expense the following minimum types and amounts (whether primary
or a combination of primary and excess, as applicable) of insurance coverage
with insurance companies reasonably satisfactory to FARMEE:


 


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


 


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


 


17

















 


Million
Dollars ($1,000,000) per accident.


 


3.                                       Commercial
General Liability Insurance, including contractual liability insuring the
indemnity agreement, if any, set forth in this Agreement, with limits of not
less than One Million ($1,000,000) applicable to bodily injury, sickness or
death and property damage in any one occurrence, and Two Million Dollars
($2,000,000) in the aggregate.


 


4.                                       Business
Automobile Liability Insurance, covering owned, non-owned, hired and all
vehicles 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 with
respect to the coverages described in Article VI, B, 1 and 2, all policies
shall be endorsed to provide that FARMEE is an additional insured under such
policy and that underwriters and insurance companies of FARMOR shall not have
any 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’s
satisfaction that the required insurance coverages are in full force and
effect.


 


7.                                       To the extent
reasonably practical, FARMOR shall require (a) all contractors and
sub-contractors to obtain and keep in force similar insurance coverage and,
upon request, furnish FARMEE acceptable evidence of such insurance and (b) all
policies of FARMOR’s contractors and sub-contractors shall be endorsed to
provide 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 INSURANCE
REQUIRED OF FARMOR HEREUNDER.


 


9.                                       Any coverage
provided FARMEE by FARMOR’s insurance under this Agreement is primary insurance
and shall not be considered contributory insurance with any insurance policies
of FARMEE.


 


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


 


18

















 


shall
be chargeable to FARMEE.


 


FARMEE
shall maintain, at its sole cost and expense, insurance coverage for its own
Wells, including, but not limited to property and general liability insurance.


 


C.                                    Compliance with Laws and Lease Obligations


 


FARMOR
agrees that it will conduct all of its operations in material compliance with
all the terms, provisions, and covenants, express or implied, of the Lease(s) upon
which any Well is located, and in material compliance with all applicable
Local, State and Federal laws, rules, regulations, and orders.  At any time after the date hereof, FARMOR
agrees to perform any remedial activities necessary or proper to restore the
surface or subsurface of the Leases or to assume and bear any monetary
responsibility for any surface or subsurface (including groundwater) damages in
lieu of or in addition to any such remedial activities which may be required by
any Lease or other contract pertinent hereto, or as may be required by any
applicable law or regulation of any Federal, State or local governmental body
so as to place the Leases in a condition as near as practicable to its
condition as of the date hereof or, with respect to Leases acquired by FARMOR
after the date hereof, the date of acquisition; provided, however, FARMOR shall
not be obligated by the terms of this Agreement to perform remedial activities
except 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


 


FARMOR
agrees that it will keep the Leases that are subject to an assignment hereunder
free 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 FROM
ALL CLAIMS, DEMANDS, LOSSES, DAMAGES, AND LIABILITY ARISING OUT OF OR RESULTING
FROM ANY SUCH LIENS AND ENCUMBRANCES.


 


E.                                      Claims and Lawsuits


 


FARMOR  AGREES TO
INDEMNIFY, 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, OWNERSHIP
OF THE LEASES NOT ASSIGNED TO FARMEE HEREUNDER AND THE DEEP WELLS FARMOR DRILLS
FOR ITS OWN ACCOUNT, OR (iii) FARMOR’S FAILURE TO PERFORM HEREUNDER.


 


FARMEE  AGREES TO
INDEMNIFY, 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 THE
OPERATING AGREEMENTS) AND THE DEEP WELLS FARMEE DRILLS FOR ITS OWN ACCOUNT, OR (ii) FARMEE’S
FAILURE TO PERFORM HEREUNDER.


 


F.                                      Notices


 


All
notices authorized or required hereunder, unless otherwise specifically
provided, shall be given in writing by mail, postage or charges prepaid, or by
telecopy or electronic mail and confirmed in writing and addressed to the party
to whom the notice is given at the address listed below.


 


If to FARMOR:                     Black Raven
Energy, 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:  Jeffrey
C. Simmons


1550
Coraopolis Heights Road


Moon
Township, PA  15108


Telephone:  (412) 262-2830


Fax:  (412) 262-2820


Email:
jsimmons@atlasenergy.com


 


G.            Modifications


 


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


 


20
















 


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


 


H.                                    Governing Law


 


This
Agreement and any arbitration or dispute resolution conducted pursuant hereto
shall be construed in accordance with, and governed by, the laws of the State
of New York.  Notwithstanding the
foregoing, the Law of the state in which any real property interest covered or
created by or granted under this Agreement is located shall govern the
following: (i) whether this Agreement creates an interest in real property
for security purposes or otherwise; (ii) the nature and attributes of any
interest in real property that is covered or created by or granted under this
Agreement; and (iii) the manner and effect of recording or failing to
record memoranda of this Agreement or evidence of any action or transaction
that occurs under this Agreement and that results in the creation or transfer
of any interest in real property.


 


I.              Counterparts


 


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


 


J.             Memorandum


 


FARMOR
agrees that FARMEE may file in local land records relevant to the Leases and
the AMI memoranda of this Agreement.  At
the request of FARMEE, FARMOR shall execute
and deliver each memoranda and such further documents and instruments and shall
take such other actions as may be reasonably required or appropriate in respect
of the foregoing.


 


K.            Term


 


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


 


21

















 


provisions
of 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 may
terminate this Agreement upon thirty (30) days’ prior written notice to FARMOR
upon (i) material breach of any representation or warranty by FARMOR set
forth herein, (ii) gross negligence or willful misconduct of FARMOR in the
performance of its obligations hereunder, or (iii) material default by
FARMOR in the performance or observation of any covenant or obligation
hereunder which default remains uncured for a period of thirty (30) days after
written notice thereof is given to FARMOR by FARMEE.


 


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


 


a.                                       Material default by FARMEE in the
performance or observation of any covenant or obligation hereunder which
default remains uncured for a period of thirty (30) days after written notice
thereof is given to FARMEE by FARMOR;


 


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


 


c.                                       Failure (other than by reason of FARMOR’s
failure to perform a Work Plan) by FARMEE to drill at least the cumulative
number of Wells set forth below by the date set forth opposite such cumulative
number 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 by
FARMEE 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 FARMOR
terminates 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 period
as FARMEE selects a successor provider and such provider assumes provision of
FARMOR’s Services.


 


L.            Dispute Resolution


 


All
controversies, disputes or claims between FARMOR and FARMEE and their
subsidiaries, Affiliates, shareholders, officers, directors, agents and
employees relating to this Agreement or the transactions contemplated hereby
(each, a “Dispute”) shall be submitted to Judicial Arbitration and Mediation
Services (“JAMS”) for mediation. The parties will cooperate with JAMS and with
one another in selecting a mediator from JAMS panel of neutrals, and in
promptly scheduling the mediation proceedings. The parties covenant that they
will participate in the mediation in good faith, and that they will share
equally in its costs. All offers, promises, conduct and statements, whether
oral 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 JAMS
employee, are confidential, privileged and inadmissible for any purpose,
including impeachment, in any arbitration or other proceeding involving the
parties, provided that evidence that is otherwise admissible or discoverable
shall not be rendered inadmissible or non-discoverable as a result of its use
in the mediation. If the dispute is not resolved within thirty (30) days from
the date of the submission of the dispute to mediation (or such later date as
the parties may mutually agree in writing), the administration of the
arbitration shall proceed forthwith. The mediation may continue, if the parties
so agree, after the appointment of the arbitrators. Unless otherwise agreed by
the parties, the mediator shall be disqualified from serving as arbitrator in
the case. The pendency of a mediation shall not preclude a party from seeking
provisional remedies in aid of the arbitration from a court of appropriate
jurisdiction, and the parties agree not to defend against any application for provisional
relief on the ground that a mediation is pending.


 


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


 


23

















 


competent
jurisdiction.  Each party waives the right to contest the validity or
enforceability of such award, except as allowed under the Federal Arbitration
Act.  The parties to the arbitration shall equally share the costs of the
arbitration proceeding; provided that each party shall bear its own attorneys’
fees and other professional fees; and provided further that, if the arbitrator
shall determine that a party’s position in arbitration is frivolous, that party
shall bear all costs of the arbitration proceeding, including the other party’s
attorneys’ fees.


 


M.           Acknowledgement


 


Each
provision of this Agreement shall be construed as though both parties
participated equally in the drafting of the same.  Consequently, the parties acknowledge and
agree that any rule of construction that a document is to be construed
against the drafting party shall not be applicable to this Agreement. EACH OF THE PARTIES HERETO SPECIFICALLY ACKNOWLEDGES
AND AGREES (A) THAT IT HAS THE DUTY TO READ THIS AGREEMENT AND THAT IT IS
CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS HEREOF, (B) THAT IT HAS IN
FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND
KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT, (C) THAT
IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT PROVIDE FOR THE
ASSUMPTION BY ONE PARTY OF, AND/OR RELEASE OF THE OTHER PARTY FROM, CERTAIN
LIABILITIES ATTRIBUTABLE TO THIS TRANSACTION OR THE PREMISES COVERED HEREBY
THAT SUCH PARTY WOULD OTHERWISE BE RESPONSIBLE FOR UNDER THE LAW. EACH PARTY
HERETO FURTHER AGREES THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY
OF ANY OF SUCH PROVISIONS OF THIS AGREEMENT ON THE BASIS THAT THE PARTY HAD NO
NOTICE OR KNOWLEDGE OF SUCH PROVISIONS OR THAT SUCH PROVISIONS ARE NOT “CONSPICUOUS”.


 


N.            Integral Part/Direct
Relationship of Ancillary Agreements


 


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


 


24

















 


O.                                   Force Majeure


 


If
by reason of a Force Majeure Event either party is rendered unable, wholly or
in part, to carry out its obligations under this Agreement, and if such party
gives notice and the details of such Force Majeure in writing or by facsimile
to the other party within a reasonable time after the occurrence of the cause
relied on, the party giving such notice, so far as and to the extent that its
performance is affected by such Force Majeure Event and during the continuance
of its inability to perform as a result of such Force Majeure Event, shall not
be liable hereunder, including with respect to the obligations set forth in Article VI,
K; provided, however, that the party claiming such Force Majeure Event shall
cause such Force Majeure Event to be remedied with all reasonable dispatch.


 


P.            Confidentiality


 


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


 


25

















 


in
which the disclosing party takes reasonable steps to maintain the
confidentiality of the Information.


 


Q.            Publicity


 


Neither
FARMOR nor FARMEE, nor any of their respective Affiliates (which, for the
purposes of this provision, shall include West Coast Opportunity Fund, LLC and
West Coast Management, Inc., in the case of FARMOR) shall issue any press
release or similar public announcement pertaining to this Agreement or the
transactions contemplated hereby without the consulting with the other party
prior to making any such issuance.


 


 


[Remainder of page intentionally left blank; signatures appear on
following page]


 


26

















 


IN
WITNESS WHEREOF, and intending to be legally bound, the parties have caused
this Agreement to be executed by their duly authorized representatives as of
the 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