Document:

exv10w7

 

Exhibit
10.7

SPECIFIC
TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL

TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL

HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,

AND THE REDACTED TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO
ASTERISKS (**).

FIRST AMENDMENT

of

COOPERATIVE AGREEMENT

          This FIRST AMENDMENT of COOPERATIVE AGREEMENT (this “Amendment”) is executed to be
effective as of October 21, 2005 between RESOLUTE ANETH, LLC (“Resolute”), a Delaware limited
liability company, and NAVAJO NATION OIL AND GAS COMPANY, INC. (“NNOG”), a Federal corporation.
Resolute and NNOG are sometimes referred to herein individually as a “Party” or together as the
“Parties.”

ARTICLE I.

GENERAL

     1.01 Resolute Natural Resources Company (“RNRC”), an affiliate of Resolute, and NNOG entered
into that certain Cooperative Agreement dated effective October 22, 2004 (as amended hereby, the
“Agreement”). RNRC has assigned all of its rights and obligations under the Agreement to Resolute.
The Agreement provides for certain cooperative arrangements between NNOG and Resolute concerning
oil and gas ownership and operations of jointly held assets in the Greater Aneth Field in southeast
Utah.

     1.02 This Amendment is entered into in order to (i) state the agreement of the Parties with
respect to the potential joint acquisition of assets in the Greater Aneth Field and Cortez,
Colorado, currently held by ExxonMobil and its affiliates (“Exxon”) and described in a Purchase and
Sale Agreement (the “PSA”) between Exxon and XTO Energy, Inc. (“XTO”) dated effective January 1,
2005 (the “Exxon Assets”), (ii) to amend and supplement the Agreement to apply to the Exxon Assets
and grant certain options to NNOG in regard to such assets and (iii) to amend the Agreement in
certain other respects. Except as amended hereby, the Agreement remains effective in accordance
with its terms.

     1.03 Capitalized terms used herein that are defined in the Agreement are used as so defined.
For convenience of reference, the Articles and Sections of this Amendment are organized to a
certain extent to be parallel to the Articles and Sections of the Agreement. No significance shall
be given to such arrangement and the provisions hereof amend and supplement the Agreement only as
expressly stated herein.

     1.04 The parties intend to acquire the Exxon Assets as successors or designated assignees of
the assets pursuant to the exercise by the Navajo Nation of its preferential purchase right set
forth in 18 N.N.C. § 605 (the “PPR”) or pursuant to a purchase and sale agreement with Exxon. It
is recognized that the PPR right of the Navajo Nation does not apply to all such assets, but it is
expected that the assets would be acquired in their entirety. Reference herein to the Exxon Assets
means such of the Exxon Assets that are acquired by the Navajo Nation or either of the Parties
whether through exercise of the PPR or otherwise. Any agreement between Exxon and the Parties or
the Navajo Nation and the Parties for the acquisition of the assets by the Parties is referred to
as the “Acquisition Agreement.”

 

 

     1.05 Resolute (or one or more of its subsidiaries or affiliates) will acquire 75% and NNOG
will acquire 25% of the Exxon Assets. Resolute and NNOG’s interests in the Exxon Assets shall be
several, not joint. Each Party shall use its best efforts to acquire the financial assets
necessary to acquire its share of such assets at the purchase price provided for in the PSA.

     1.06 The Parties acknowledge that the PSA appears on its face to be a valid and existing
contract between Exxon and XTO. Neither Party shall take any action to cause or encourage either
party to the PSA to breach its obligations thereunder.

ARTICLE II.

PAYMENTS AND OBLIGATIONS

IN CONNECTION WITH THE ACQUISITION

     2.01 Prior to or contemporaneous with the closing of the Acquisition Agreement, Resolute will
pay $(**) to NNOG in consideration for NNOG’s services in connection with the acquisition of
the Exxon Assets. If the value of the Exxon Assets is reduced or diminished on account of title
failures, exercises of preferential purchase rights, exclusions, casualty losses or similar
changes, the $(**) payment will be reduced in proportion to the reduction in value of the
Exxon Assets. If for any reason (i) the closing of the Acquisition Agreement does not occur, or is
determined to be void, rescinded or otherwise not effective, (ii) the assignments of the Exxon
Assets to Resolute and NNOG do not receive the required Navajo Nation approvals or the Navajo
Nation denies such approvals or exercises its right of first refusal, or (iii) at any time NNOG or
the Navajo Nation disclaims the effectiveness of the Agreement including, without limitation, the
waivers and consents in Article X, NNOG shall refund such amount immediately to Resolute.

     2.02 At closing of the Acquisition Agreement, Resolute will pay 75% and NNOG will pay 25% of
the adjusted purchase price for the Exxon Assets as determined under the Acquisition Agreement.
The obligations and liabilities of the parties under the Acquisition Agreement shall be apportioned
severally 75% to Resolute and 25% to NNOG.

     2.03 NNOG agrees to use its best good faith efforts to obtain the support of the Navajo Nation
for the closing of the Acquisition Agreement, as well as support for the implementation of the
terms and provisions of this Amendment. In particular, without limitation, NNOG will work with the
Navajo Nation to obtain an expedited approval of the assignment of interests from Exxon or the
Navajo Nation to Resolute, or its designated subsidiary or affiliate, and NNOG.

ARTICLE III.

NNOG OPTIONS

     3.01 NNOG will have options with respect to the Exxon Assets with terms and conditions
identical to the terms and conditions stated in Agreement Article III except that (i) the
references to the “Aneth Assets” shall mean the Exxon Assets, (ii) the reference to the CVX
Agreement shall mean the Acquisition Agreement, (iii) the reference to the unit operating agreement
in Section 3.02(ii) shall mean the McElmo and Ratherford Unit Operating Agreements, as applicable,
(iv) the reference to the $(**) shall mean the payment of such amount under this Amendment.

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     3.02 The NNOG options with respect to the Exxon Assets shall be independent of the NNOG
options with respect to the Aneth Assets. Payout with respect to the Exxon Assets shall be
determined independently of Payout with respect to the Aneth Assets.

     3.03

     (a) In the event that Resolute makes a partial sale or other conveyance of
interest in the Aneth Assets or the Exxon Assets to a party other than an affiliate
of Resolute, such that a Sale as defined in Section 4.01 of the Agreement (as
revised by Section 4.02 of this Amendment) has not occurred, then NNOG shall have
the option of considering as “revenue from production” for purposes of the
occurrence of Payout with respect to the Aneth Assets or Exxon Assets, as
applicable, (i) the net proceeds (after all costs of the transaction) from
Resolute’s sale or other conveyance of interests in the relevant assets (in which
case NNOG’s options shall terminate as to the assets so sold or conveyed), or (ii)
the continuing revenue from production of the assets so sold or otherwise conveyed,
(in which case NNOG’s option shall continue to burden the assets sold, revenue from
production of such assets shall mean the revenue received by the purchaser or
transferee, and the purchaser or transferee must agree in writing to comply with the
provisions of Articles III and IV of the Agreement and supply the information
required for the determination of Payout). If Resolute intends to undertake a
transaction that would give rise to the foregoing option of NNOG, Resolute shall
give NNOG a minimum of 30 days advance notice of such transaction and NNOG shall
have 30 days from receipt of such notice within which to elect its option by giving
written notice to Resolute of such election. If NNOG fails to make an election
within such time period, then the option set forth in 3.03(a)(i) shall apply. A
partial sale shall not include any transaction which is a bona fide financing
transaction, including but not limited to transactions involving a conveyance that
is limited to a volume of production, an amount of revenue received, net profits or
period of time or similar type of limitation (and the receipt of revenue from such
transaction shall not be deemed to be revenue for purposes of Payout until the
underlying production is produced and delivered into sales, and the price for such
production shall be the consideration received in the financing for such
production).

     (b) In the case of a partial sale covered by 3.03(a) above, if the sale
involves an interest that would leave Resolute with less that the total interest
necessary to honor the NNOG options, the NNOG options shall burden any interest
conveyed to the extent necessary to insure that NNOG’s options are not diminished.
Resolute shall give NNOG 30 days advance notice and either demonstrate that Resolute
will continue a sufficient interest to fully honor the NNOG options, or provide a
written agreement from the transferee of the partial interest acknowledging that
such transferred interest is burdened by the NNOG options and agreeing to fully
comply with the terms of Articles III and IV hereof in the event of the exercise of
the options.

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ARTICLE IV.

TERMINATION UPON SALE, FIRST OPTION ACCELERATION,

AND FIRST RIGHT OF NEGOTIATION

     4.01 The provisions of Agreement Article IV shall apply independently to the NNOG options with
respect to the Exxon Assets, with references to the “Aneth Assets” meaning the Exxon Assets.

     4.02 The following language shall replace in its entirety the second sentence of Agreement
Section 4.01:

     (a) The occurrence of a Sale, as defined below, shall be determined
independently with respect to the Aneth Assets and the Exxon Assets and the
provisions of this Section 4.01 shall be so interpreted. A “Sale” for the purposes
of this Agreement is defined to include a sale other than to the party’s affiliates
of all or substantially all of a Party’s Aneth Assets or Exxon Assets, as
applicable, or the production or revenue from production from such assets, or a
change of control, direct or indirect, of the Resolute entity holding the assets in
question (the “Pertinent Entity”).

     (b) Subject to the exceptions stated below, a change of control with respect to
the Pertinent Entity shall be deemed to occur as a result of any transaction or
series of transactions whereby Resolute and its affiliates no longer own or control,
directly or indirectly, at least 50% of the voting control of the Pertinent Entity
(“Voting Control”). Notwithstanding the foregoing, no change of control shall occur
solely on account of any transaction (which includes a series of transactions) where
the following circumstances exist:

     (i) Immediately following such a transaction a majority of the
members of the senior management of Resolute, as constituted on the
date of this Amendment (which for clarity is Nick Sutton, Jim
Piccone, Ted Gazulis, Dale Cantwell, Janet Pasque, Jim Kincaid, Rick
Betz, Steve Malkewicz and Bret Siepman), but as such group of
members may be amended with the approval of NNOG, continue to have
and to exercise actual field operational control over the pertinent
assets and have no obligation to resign; and

     (ii) NNOG shall have been given at least 30 days’ notice of the
contemplated transaction and all of its materials terms; and either:

     (iii) the Board of Managers of Resolute Holdings, LLC as
constituted immediately prior to such transaction (which includes a
series of transactions) shall constitute at least a majority of the
board of managers or directors of the acquiring entity or entities
that have Voting Control immediately after the transaction occurs;
and such members of the Board of Managers of Resolute

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Holdings, LLC who so serve on the board of managers or
directors of the acquiring entity or entities have no obligation to
resign, abstain or to exercise their authority in favor of any other
person or entity; or

     (iv) the transaction (which includes a series of transactions)
involves a sale or other offering or exchange of securities carrying
Voting Control (“Control Securities”) by Resolute or its affiliates
to one or more purchasers, and immediately after the closing of the
offering of such securities (a) Resolute and its affiliates own or
control at least 30% of the Control Securities and (b) no person,
entity or group owns or controls, or have a right to acquire or
control, a greater percentage of such Control Securities than the
percentage owned or controlled by Resolute and its affiliates, and
(c) Resolute and its affiliates hold the Control Securities without
any contractual or other obligation to exercise their voting rights
in favor of any other person, entity or group that would give such
other person, entity or group effective control of a greater
percentage of Control Securities than Resolute and its affiliates
own or control.

     (v) Resolute acknowledges that the rights of NNOG to exercise
its options and its right of first negotiation under Articles III
and IV, respectively, of the Agreement were and are significant and
material considerations for NNOG’s decision to enter into the
Agreement with Resolute, and that such terms are included in the
Agreement in part to reflect and advance the policies of the Navajo
Nation, NNOG’s sole shareholder. The intent of the Parties in
permitting the above exceptions to the definition of a change of
control is solely to grant Resolute added flexibility for the
capitalization and other financing of its operations. The Parties
do not intend by this Agreement to dilute the value or nature of or
quantum of interests available for acquisition by NNOG under, nor
limit NNOG’s right to exercise, its options under Articles III and
IV of this Agreement or its right of first negotiation under section
4.03 of this Agreement. NNOG has agreed to amend the original
Agreement to permit such transactions as an accommodation to
Resolute. Therefore, the Parties intend that this provision be
strictly construed in favor of NNOG.

ARTICLE V.

ASSISTANCE BETWEEN THE PARTIES

     5.01 Section 5.01 of the Agreement shall be amended and restated in its entirety as follows:

     For so long as Resolute, NNOG and their affiliates hold in the aggregate the
largest amount of working interest in any of the Aneth, McElmo or Ratherford

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Units, and Resolute’s working interest in the unit in question is greater than
NNOG’s, NNOG shall use its best good faith efforts to cause Resolute (or an
affiliate of Resolute) to be elected and remain operator of the unit in question.
For so long as Resolute, NNOG and their affiliates hold in the aggregate the largest
amount of working interest in any non-unit oil and gas property in the Greater Aneth
Field and Resolute’s working interest in the property in question is greater than
NNOG’s, NNOG shall use its best good faith efforts to cause Resolute (or an
affiliate of Resolute) to be elected and remain operator of such property.

     5.02 Acknowledging that certain of the Exxon Assets will have value commensurate with the
purchase price only if significant development activity can take place on those assets, the Parties
each agree to fund their proportionate share of a mutually agreeable development plan involving
8/8ths investment over four years of approximately $150 Million. NNOG shall take the leading role
in gaining all Navajo Nation and Bureau of Indian Affairs approvals needed to execute such plan and
in overcoming any opposition to such development. Any moneys or other consideration that may be
involved in overcoming opposition, gaining surface access, addressing local or political concerns
or otherwise necessary to allow the implementation of the development plan would be paid by the
parties, and the other working interest owners as appropriate, in proportion to their ownership
interests. NNOG’s out-of-pocket expenses for travel and similar items would similarly be shared
proportionately by the Parties or, where appropriate, treated as a direct expense of the working
interest owners under the applicable operating agreement.

     5.03 If requested by NNOG, Resolute will use its best good faith reasonable efforts (without
the payment of consideration) to assist NNOG in its arranging acceptable financing for NNOG’s
purchase of its 25% initial interest in the Exxon Assets.

     5.04 The provisions of Agreement Article V, to the extent reference is made to the Aneth
Assets, shall apply to all assets owned jointly by the Parties in the Greater Aneth Field.

     5.05 The number of scholarships referred to in Agreement Section 5.05 shall be four instead of
two.

     5.06 The parties shall use their best efforts to cause NNOG to become the operator of the
Aneth gas gathering and compression facilities. NNOG shall hold any rights of way or other assets
associated with these facilities as nominee for the joint and pro rata use of the owners of the
Aneth gathering and compression facilities. To the extent Resolute is currently bearing an
economic loss as operator of such facilities, Resolute shall continue to bear such economic loss
until the relevant agreements among the owners can be amended to eliminate such loss. The Parties
shall use their best efforts to cause the owners of the Aneth gathering and compression facilities
to pay all of the costs associated with the ownership and operation of such facilities and to pay
NNOG a reasonable general and administrative fee (currently proposed as $1500 per month) as its
sole compensation for such ownership and operation. It is anticipated that the actual day-to-day
operation and accounting with respect to such facilities shall continue to be handled by a contract
operator and that the fees and costs associated with such contract operations will be paid by the
owners of the facilities. NNOG shall not be a trustee of the assets

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with respect to the owners of the gathering and compression facilities, nor shall it have any
fiduciary obligation to such owners.

     5.07 NNOG has acquired from Western Gas Resources the return processed gas pipeline known as
the Red Pepper Pipeline. NNOG shall hold and operate this line for the joint pro rata use of the
owners of the Aneth gathering and compression facilities. The Parties shall use their best efforts
to cause the owners of the Aneth gathering and compression facilities and the other purchasers of
gas transported through this pipeline to pay, through a transportation fee or otherwise, all of the
costs associated with the ownership and operation of such pipeline so that NNOG bears no economic
loss and receives a reasonable general and administrative fee (currently proposed as $1500 per
month) as its sole compensation for such ownership and operation. It is anticipated that the
actual day-to-day operation with respect to such facilities shall continue to be handled by Western
Gas Resources and that the fees and costs associated with such contract operations will be passed
through to the parties using the gas transported through the pipeline. NNOG shall not be a trustee
of the Red Pepper Pipeline with respect to the owners of the gathering and compression facilities,
nor shall it have any fiduciary obligation to such owners.

ARTICLE VI.

TAX MATTERS

     6.01 With respect to the reference to “Payout” in Agreement Section 6.01, the net cash tax
savings of any tax benefits allocated to Resolute shall be allocated as revenue to the Payout
account with respect to the Aneth Assets or the Exxon Assets to the extent the tax benefits in
question relate to such respective assets, and otherwise shall be allocated equally to each Payout
account.

     6.02 Resolute has again, through Resolute NAD, LLC, submitted an application for an allocation
of New Markets Tax Credits (“NMTC”) under Section 45 D of the Internal Revenue Code and the
Community Development Financial Institutions Fund program for energy investments on Native American
lands. The provisions of Agreement Section 6.02 shall apply to such application. The reverence in
Agreement Section 6.02 to Aneth Assets shall be a reference to all jointly owned properties in the
Aneth, McElmo and Ratherford Units and associated properties

     6.03 NNOG is no longer considered the “controlling entity” with respect to Resolute NAD, LLC
and, therefore, the provisions of Agreement Section 6.03 no longer apply.

     6.04 The structure of a transaction designed to utilize the NMTC has been revised as set forth
in the September 2005 NMTC application of Resolute NAD, LLC. Therefore, the provisions of
Agreement Section 6.04 and Agreement Exhibit B no longer apply. In their place the provisions of
the September 2005 application shall be incorporated by reference as the description of the
intended structure of a transaction involving NMTC.

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ARTICLE VII.

AREA OF MUTUAL INTEREST

     7.01 The Aneth, McElmo and Ratherford Units shall constitute an Area of Mutual Interest in
accordance with the provisions of Agreement Section 7.02, and shall be referred to as the Aneth
AMI. The provisions of Agreement Section 7.01, will apply the remainder of the Greater Aneth
Field, which shall be referred to as the Greater AMI.

ARTICLE VIII.

REPRESENTATIONS AND WARRANTIES OF RESOLUTE

     8.01 Resolute represents and warrants to NNOG as follows:

     (a) Resolute is a limited liability company duly organized, validly existing
and in good standing under the laws of Delaware and has the requisite legal power to
carry on its business as it is now being conducted. Resolute is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction, in which the
character of the property or assets owned, leased or operated by it, or the nature
of the business conducted by it, makes such qualification or licensing necessary and
the failure to so qualify or be licensed would have a material adverse effect on the
transactions or performance contemplated under this Amendment.

     (b) Resolute has all requisite legal power and authority to execute and deliver
this Amendment and to perform its obligations under the Agreement as amended hereby.
The execution, delivery and performance of this Amendment and the transactions
contemplated hereby have been duly and validly authorized by all requisite legal
action on the part of Resolute.

     (c) Neither the execution and delivery of this Amendment nor the consummation
of the transactions and performance of the terms and conditions contemplated hereby
by Resolute will:

     (i) conflict with or result in any breach of any provision of
the governing documents of Resolute; or

     (ii) assuming that all required governmental approvals are
obtained, be rendered void or ineffective by or under the terms,
conditions or provisions of any agreement, instrument or obligation
to which Resolute is a party or is subject or by which any of its
properties or assets are bound.

     (d) Subject to applying for and obtaining all required governmental approvals,
no consent, approval, authorization or permit of, or filing with or notification to,
any person is required for or in connection with the execution and delivery of this
Amendment by Resolute or for or in connection with the consummation of the
transactions and performance of the terms and conditions contemplated hereby by
Resolute.

8

 

     (e) There are no actions, claims, suits, arbitration proceedings, inquiries,
proceedings, investigation or audit by or before any court or arbitration panel or
any governmental authority pending or, to the knowledge of Resolute, threatened
against Resolute that could have a material adverse effect on the transactions or
performance contemplated under this Amendment.

     (f) Resolute has not received any notice of any violation or default or alleged
violation or default (or of any fact or circumstance which with notice or the
passage of time or both would constitute a violation or default) of or under any
applicable governmental law or regulation which would have a material adverse
effect on the transactions or performance contemplated under this Amendment.

     (g) There are no bankruptcy, reorganization, arrangement, liquidation or
similar proceedings pending against, being contemplated by, or, to the knowledge of
Resolute, threatened against Resolute.

     (h) This Amendment constitutes a valid and binding agreement of Resolute
enforceable against it in accordance with its terms, subject to:

     (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general application with
respect to creditors;

     (ii) general principles of equity; and

     (iii) the power of a court to deny enforcement of remedies
generally based on public policy.

     (i) The representations and warranties of Resolute are limited to those set
forth in this Section and those previously given by RNRC in the Agreement, and NNOG
acknowledges that there are no other representations or warranties of Resolute,
either express or implied, any rule of law or legislation to the contrary.

ARTICLE IX.

REPRESENTATIONS AND WARRANTIES OF NNOG

     9.01 NNOG represents and warrants to Resolute as follows:

     (a) NNOG is a corporation organized under Section 17 of the Indian
Reorganization Act, as amended, 25 U.S.C. § 477, validly existing and in good
standing under such Act and has the requisite corporate power to carry on its
business as it is now being conducted. NNOG is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction, in which the character of
the property or assets owned, leased or operated by it, or the nature of the
business conducted by it, makes such qualification or licensing necessary and the
failure to so qualify or be licensed would have a material adverse effect on the
transactions or performance contemplated under this Amendment.

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     (b) NNOG has all requisite corporate power and authority to execute and deliver
this Amendment and to perform its obligations under the Agreement as amended hereby.
The execution, delivery and performance of this Amendment and the transactions
contemplated hereby have been duly and validly authorized by all requisite corporate
action on the part of NNOG.

     (c) Neither the execution and delivery of this Amendment nor the consummation
of the transactions and performance of the terms and conditions contemplated hereby
by NNOG will:

     (i) conflict with or result in any breach of any provision of
the certificate of incorporation or bylaws (or other similar
governing documents) of NNOG; or

     (ii) be rendered void or ineffective by or under the terms,
conditions or provisions of any agreement, instrument or obligation
to which NNOG is a party or is subject or by which any of its
properties or assets are bound.

     (d) Subject to applying for and obtaining all required governmental approvals,
no consent, approval, authorization or permit of, or filing with or notification to,
any person is required for or in connection with the execution and delivery of this
Amendment by NNOG or for or in connection with the consummation of the transactions
and performance of the terms and conditions contemplated hereby by NNOG.

     (e) There are no actions, claims, suits, arbitration proceedings, inquiries,
proceedings, investigation or audit by or before any court or arbitration panel or
any governmental authority pending or, to the knowledge of NNOG, threatened against
NNOG that could have a material adverse effect on the transactions or performance
contemplated under this Amendment.

     (f) NNOG has not received any notice of any violation or default or alleged
violation or default (or of any fact or circumstance which with notice or the
passage of time or both would constitute a violation or default) of or under any
applicable governmental law or regulation which would have a material adverse effect
on the transactions or performance contemplated under this Amendment.

     (g) There are no bankruptcy, reorganization, arrangement, liquidation or
similar proceedings pending against, being contemplated by, or, to the knowledge of
NNOG, threatened against NNOG.

     (h) This Amendment constitutes a valid and binding agreement of NNOG
enforceable against it in accordance with its terms, subject to:

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     (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general application with
respect to creditors;

     (ii) general principles of equity; and

     (iii) the power of a court to deny enforcement of remedies
generally based on public policy.

     (i) NNOG has given all prior notices required under Article XVI of the charter
of NNOG in order to make the provisions of Article X hereof fully effective and
binding on NNOG and the Navajo Nation as of the date of this Amendment. Copies of
all such notices have been provided to Resolute. NNOG has not withdrawn, rescinded
or taken any other action that would affect the validity of such notices and such
provisions. NNOG has received no objection or other indication from any party that
would call into question the efficacy of the notices or the provisions of Article X
hereof.

     (j) The representations and warranties of NNOG are limited to those set forth
in this Section and those previously given in the Agreement, and Resolute
acknowledges that there are no other representations or warranties of NNOG, either
express or implied, any rule of law or legislation to the contrary.

ARTICLE X.

DISPUTE RESOLUTION; GOVERNING LAW

     (a) The provisions of Agreement Article X shall govern all disputes under the
Agreement as amended hereby.

ARTICLE XI.

TERM

     11.01 The provisions of the Agreement as amended hereby creating rights or obligations that
terminate upon the occurrence of certain events shall so terminate. Subject to Section 4.02, the
remaining terms of the Agreement shall terminate with respect to the Aneth Assets or the Exxon
Assets if and when there occurs a Sale of such assets, as defined herein, with respect to either
Resolute or NNOG.

     11.02 If the parties are not successful in acquiring the Exxon Assets within one year from the
effective date of this Amendment, a Party who has used its best good faith efforts to satisfy its
obligations with respect to effecting such acquisition, may terminate any obligation to pursue such
transaction pursuant to this Amendment by giving 30 day prior notice of such termination to the
other Party.

ARTICLE XII.

GENERAL

     12.01 The provisions of Agreement Article XII shall apply to the Agreement as amended hereby
except as provided in the following provision.

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     IN WITNESS WHEREOF, the parties
have caused their duly authorized signatories to execute and
deliver this Amendment on the dates set out opposite their signatures below to be effective as of
the Effective Time.

	 	 	 	 	 	 	 	 	 	 	 
	   Date:	 	11/23/05 	 	 	 	RESOLUTE ANETH, LLC	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Nicholas J. Sutton 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Nicholas J. Sutton 	 	 
	 

	 	 	 	 	 	Title:	 	Chief Executive Officer 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	   Date:	 	12/3/05 	 	 	 	NAVAJO NATION OIL AND GAS COMPANY, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Manual Morgan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Manual Morgan 	 	 
	 

	 	 	 	 	 	Title:	 	Chairman 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Wilson Groen 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Wilson Groen 	 	 
	 

	 	 	 	 	 	Title:	 	Chief Executive Officer 	 	 

12exv10w9

 

Exhibit 10.9

SPECIFIC
TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL

TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL

HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,

AND THE REDACTED TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO
ASTERISKS (**).

CARBON DIOXIDE SALE AND PURCHASE AGREEMENT

THIS CARBON DIOXIDE SALE AND PURCHASE AGREEMENT (“Agreement”) is made and entered into
effective as of the 1st day of July, 2006, by and between ExxonMobil Gas & Power Marketing Company
(a division of Exxon Mobil Corporation), as agent for Mobil Producing Texas & New Mexico, Inc.
(“Seller”), and Resolute Aneth, LLC (“Buyer”).

WHEREAS, Buyer desires to purchase Carbon Dioxide (as defined below) from Seller for use in
enhanced oil recovery projects in southeastern Utah (“Project”); and

WHEREAS, Seller desires to sell Carbon Dioxide to Buyer from Seller’s working interest in the
McElmo Dome Carbon Dioxide field in Colorado;

NOW THEREFORE, for and in consideration of the premises and the mutual benefits and covenants
herein contained, Buyer and Seller agree as follows:

ARTICLE I DEFINITIONS

1.1 Defined Words and Terms. As used in this Agreement, the following words and terms
shall have the meanings indicated:

	(a)	 	“Affiliate” with respect to a Party means any entity that directly or indirectly (through one
or more entities) controls, is controlled by, or is under common control with such Party. For the
purposes of this definition, the term “control” means the right to cast more than 50% of the votes
exercisable at an annual general meeting (or its equivalent) of the entity concerned or, if there
are no such rights, ownership of more than 50% of the equity share capital of or other ownership
interests in such entity, or the right to direct the policies or operations of such entity.
	 
	(b)	 	“Annual Contract Quantity” or “ACQ” means the total sum of all DCQ for a Contract Year.
	 
	(c)	 	“BCF” means one billion Standard Cubic Feet.
	 
	(d)	 	“Contract Year” means each successive twelve (12) month period during the Term, commencing on
the effective date of this Agreement
	 
	(e)	 	“Cortez Pipeline” means the existing pipeline constructed for the transportation of Carbon
Dioxide and extending from McElmo Dome to the Delivery Point.
	 
	(f)	 	“Carbon Dioxide” means a substance primarily composed of molecules
containing one atom of carbon and two atoms of oxygen and secondarily of the other substances
identified in the definition of Quality Specifications.
	 
	(g)	 	“Daily Contract Quantity” or “DCQ” means the volume of Carbon Dioxide specified for each Day
during the Term, and shall be 10,000 MCF per day July 1, 2006 through December 31, 2006, and shall
be 20,000 MCF per day thereafter.
	 
	(h)	 	“Day” means a period beginning at 7:00 a.m. (Central Standard Time) on a calendar
day and ending at 7:00 a.m. (Central Standard Time) on the next succeeding calendar day.

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	(i)	 	“Delivered Price” means the amount per MCF payable by Buyer to Seller for Carbon Dioxide sold
under this Agreement as set forth in Article 4, which price is exclusive of any royalty or tax
reimbursement, if any, paid by Buyer pursuant to Article 7 and 8.
	 
	(j)	 	“Delivery Point(s)” means the flange connection located at the interconnect between the
Hovenweep Compression Facility at the McElmo Dome Unit in Delores and Montezuma Counties Colorado,
and the McElmo Creek CO2 Pipeline and/or Cortez Pipeline.
	 
	(k)	 	“Effective Date” means the date upon which this Agreement came into force, which is the date
specified as such in the preamble of this Agreement.
	 
	(l)	 	“Excess Volume” means volume in excess of Buyer’s nominated volume, as described in Article
3.1.
	 
	(m)	 	“Interest Rate” means the Prime Rate as published in the “Money Rates” column of the Wall
Street Journal.
	 
	(n)	 	“MCF” means one thousand Standard Cubic Feet.
	 
	(o)	 	“Measurement Point” means Seller’s Delivery Point(s) located at the flange connection at the
interconnect between the Hovenweep Compression Facility at the McElmo Dome Unit in Delores and
Montezuma Counties Colorado, and the McElmo Creek CO2 Pipeline and/or Cortez Pipeline.
	 
	(p)	 	“MMCF” means one million Standard Cubic Feet.
	 
	(q)	 	“Month” means a period beginning at 7:00 A.M. (Central Standard Time) on the first day of a
calendar month and ending at 7:00 A.M. (Central Standard Time) on the first day of the next
succeeding calendar month.
	 
	(r)	 	“Monthly Contract Quantity” or “MCQ” means the total sum of all DCQ for
each Month, and shall be the basis for calculating Buyer’s Take or Pay obligation as described in
Article 2.2(c).
	 
	(s)	 	“Parties” means the entities described in the preamble to this Agreement, collectively, and
“Party” means any of them, individually (and in each case their successors and permitted assigns).
	 
	(t)	 	“Performance Assurance Provider” means a person or entity providing performance assurance in
respect of a Party’s obligations under this Agreement in favor of the requiring Party
	 
	(u)	 	“Project” has the meaning ascribed to it in the first “Whereas” clause, above.
	 
	(v)	 	“Psia” means pounds per square inch absolute.
	 
	(w)	 	“Psig” means pounds per square inch gauge.
	 
	(x)	 	“Quality Specifications” means the following specifications for the Carbon Dioxide
delivered hereunder:

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1 Water. Product shall contain no free water and shall not contain more than thirty (30)
pounds of water per 1 MMcf in the vapor phase at 14.65 Psia and 60 degrees Fahrenheit.

2 Total Sulfur. Containing not more than thirty-five (35) parts per million, by weight, of
total sulfur.

3 Purity. Comprised of at least ninety-five percent (95%) by volume of CO2.

4 Nitrogen. Containing not more than four percent (4 %) by volume of nitrogen.

5 Temperature. Product shall not exceed a temperature of one hundred twenty degrees
Fahrenheit (120° F).

6 Hydrogen Sulfide. Product shall not contain more than twenty (20) parts per million, by
weight, of hydrogen sulfide.

7 Oxygen. Product shall not contain more than ten (10) parts per million, by weight, of
oxygen.

	(y)	 	“Standard Cubic Foot” means the amount of Carbon Dioxide which would occupy one cubic foot of
space at a base pressure of 14.73 psia and at a base temperature of 60° Fahrenheit.
	 
	(z)	 	“Term” means the term of this Agreement, as described in Article 6.1.

(aa) “TCQ” or “Total Contract Quantity” means the total sum of all DCQ over the Term of this
Agreement, and shall be capped at a maximum of 27.4 BCF;
provided, however, that the TCQ may be revised upon mutual agreement of the Parties or as otherwise
provided in this Agreement.

(ab) “Controlling Party” means with respect to a Party, any parent company or corporation of such
Party or any of the companies constituting such Party that directly or indirectly owns more than
fifty per cent (50%) of the shares carrying voting rights of such Party.

ARTICLE 2 — COMMITMENT BY SELLER AND BUYER

2.1 Commitment by Seller

Subject to the terms and conditions of this Agreement, Seller agrees that each Day during the Term
it shall sell to Buyer and deliver to the Delivery Point the volume of Carbon Dioxide nominated by
Buyer in accordance with Article 5.1, up to the Daily Contract Quantity. Seller’s total volume
commitment during the Term shall not exceed the Total Contract Quantity.

2.2 Buyer’s Commitment

Subject to the terms and conditions of this Agreement:

	 	(a)	 	except for Carbon Dioxide recycled at the McElmo Creek Field, the Ratherford Field, and the
Aneth Field during the Project(s), each Day during the Term Buyer shall purchase and receive all of
its daily Carbon Dioxide requirements for the Project, up to the DCQ and any Excess Volumes Seller
has agreed to supply, from Seller; and

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	 	(b)	 	each Day during the Term Buyer shall purchase from Seller, and receive at the Delivery
Point, the volume nominated by Buyer in accordance with Article 5.1 and any Excess Volumes
requested by Buyer and agreed to by Seller in accordance with Article 3.1; and
	 
	 	(c)	 	during each Month of the Term, if Buyer does not purchase at least (**) percent ((**)%)
of the MCQ for such Month ((**)% of the MCQ being the “Take or Pay Quantity”), then Buyer shall pay
Seller for the volume difference between the Take or Pay Quantity and the volume actually purchased
(such difference is hereinafter referred to as “Make-Up Volume”) at the price applicable for such
Month. Subject to the terms and conditions herein, Buyer shall have the right to take delivery
of Make-Up Volumes for which it has made payment under this Article 2.2(c), provided that (i) Buyer
has purchased and received 100% of the ACQ for the Contract Year in which such Make-Up Volume was
incurred and (ii) all such Make-Up Volumes are delivered during the Term and (iii) Seller, in its
sole judgment, has sufficient volumes to provide Make-Up Volume to Buyer on the Day(s) on which
Buyer requests delivery. Promptly after written request from Buyer to Seller for delivery of
Make-Up Volumes, Buyer and Seller shall
cooperate and use reasonable commercial efforts to schedule delivery of Make-Up Volumes. Seller
shall never be obligated to provide any volume that exceeds the DCQ for a Day. It is recognized
that Make-Up Volumes result from Buyer’s Take or Pay obligation under this Agreement, and that upon
termination or cancellation of this Agreement for any reason, Seller shall have no obligation to
provide any Make-Up Volume to Buyer.
	 
	 	 	 	The Take or Pay Quantity for each Month shall be reduced proportionally to the extent that (i)
Seller does not deliver amounts nominated by Buyer, up to the DCQ, in such Month for any reason
other than suspension due to Buyer’s default as provided in Articles 5.4 and 5.5; (ii) Seller
delivers Off-Specification Carbon Dioxide that is refused by Buyer as provided in Article 11.3;
(iii) Seller or Buyer has planned maintenance, as described in Article 11.20, that results in a
reduction of the DCQ during such Month and; (iv) either Party’s performance is suspended due to an
event of Force Majeure.

2.3 Other Contracts

Subject to Articles 11.7 and 11.8 (Force Majeure), if Seller is unable to satisfy its daily
delivery obligations under all of Seller’s McElmo Dome Carbon Dioxide sales agreements, including
this Agreement, Seller shall use commercially reasonable efforts to ratably deliver Carbon Dioxide
hereunder on such Day(s), based on the ratio the quantity obligation under this Agreement bears to
the total contracted quantity obligations under all of Seller’s McElmo Dome Carbon Dioxide sales
agreements. Any volumes delivered ratably by Seller pursuant to this Article 2.4 shall be deemed to
satisfy Seller’s obligation to sell Carbon Dioxide to Buyer on such Day(s), and Seller shall have
no liability to Buyer for any undelivered volumes. Buyer’s Take or Pay Quantity shall be reduced
proportionally, and the DCQ for such Day shall be deemed to be the actual quantity delivered by
Seller. Seller agrees to provide notice to Buyer within a reasonable time after Seller has
determined that it will make ratable deliveries as described in this Article 2.4, specifying to the
extent practicable the ratable volume to be delivered to Buyer on the affected 

Day(s).

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ARTICLE 3 — VOLUMES IN EXCESS OF NOMINATIONS

3.1 Volumes in Excess of Nominations

If Buyer determines that it requires more Carbon Dioxide for the Project(s) than Buyer has
nominated for any Day during a Month, Buyer may make a written request to Seller for delivery of
such Excess Volumes, including volumes in excess of the Daily Contract Quantity. Seller shall have
the right, but not the obligation to supply all or any portion of such volumes requested by Buyer,
provided that (i) within (2) business days after such request is made Seller confirms in writing
the amount (if any) of Excess Volume it agrees to deliver and (ii) Seller can make such deliveries
within Buyer’s requested delivery schedule. All Excess Volumes supplied pursuant to this Article 3.1 shall be on an interruptible basis and
volumes actually delivered shall be counted toward the TCQ.

3.2 Other Sources

If (i) Buyer has made a request for Excess Volumes as provided in Article 3.1 and Seller elects not
to supply such Excess Volumes or elects to supply only a portion of such Excess Volumes for a
Day(s), or (ii) Seller notifies Buyer of its intention to make ratable deliveries as described in
Article 2.3 for a Day(s), then Buyer shall be entitled to contract for such additional volumes of
Carbon Dioxide on the Day(s) so affected from other sources as Buyer deems necessary, in Buyer’s
sole discretion.

ARTICLE 4 — PRICE

4.1 Delivered Price

The price to be paid by Buyer for all volumes purchased shall be calculated on a Monthly basis, and
shall be (**)% of the average of West Texas Intermediate Crude (the average of the first posting of
the Month as posted by ExxonMobil, Chevron, and Conoco Phillips) for such Month.

ARTICLE 5 — NOMINATION PROCEDURE AND ACCOUNTING

5.1 Nomination by Buyer

No later than five (5) Days prior to the beginning of each Month, Buyer shall provide Seller with
written notice of Buyer’s nominations for each Day of such Month. Such nomination shall specify
daily deliveries at uniform rates not in excess of the applicable Daily Contract Quantity, unless
otherwise agreed in advance by Seller. If Buyer fails to provide such nomination within the
prescribed period, Buyer’s nomination shall be deemed to be the quantities which were nominated
during the immediately preceding Month. Buyer shall use its best efforts to submit nominations
which accurately reflect Buyer’s anticipated daily requirements.

5

 

	5.2	 	Monthly Statements
	 
	 	 	Seller shall install, operate and maintain, or cause to be installed, operated and maintained,
measurement facilities to be used to measure all volumes delivered and purchased hereunder. No
later than the fifteenth (15th) business day of the Month following the Month of delivery,
Seller shall furnish Buyer a monthly statement specifying the total volume of Carbon Dioxide
delivered and purchased hereunder during the preceding Month and the amount due for such
volume. Business day is defined as not including Saturdays, Sundays, or holidays.
	 
	5.3	 	Auditing
	 
	 	 	Each Party shall have the right during reasonable business hours to examine the books, records,
and measurement documents of the other Party to the extent necessary to verify the accuracy of
any statement, payment, calculation, or determination made pursuant to the provisions of this
Agreement for any calendar year within two (2) calendar years following the end of such
calendar year. If any such examination shall reveal, or if either Party shall discover any
error or inaccuracy in its own or the other Party’s statement, payment, calculation, or
determination, then proper adjustment and correction thereof shall be made as promptly as
practicable thereafter. Each party further agrees to retain the books, records and measurement
documents for the above-stated period of time.
	 
	5.4	 	Payments
	 
	 	 	On or before (i) the twenty-fifth (25th) day of a Month in which the monthly statement is
issued or (ii) ten (10) Days after Buyer’s receipt of such monthly statement, whichever is
later, the Buyer shall pay to Seller the amount due under such monthly statement. Payment shall
be made by wire transfer to the bank accounts as designated by Seller, without any discount
associated with the transfer of moneys and at the expense of the Buyer, except that any
expenses charged by the Seller’s bank with respect to such payments shall be borne by the
Seller.

 Seller’s designation of a bank account shall remain in effect during the Term unless
changed by written notice to Buyer signed by a duly authorized representative of Seller.
	 
	 	 	If the Buyer fails to make payment of any sum due hereunder which is not the subject of a bona
fide dispute, interest thereon shall accrue at an annualized rate equivalent to the Interest
Rate plus three per cent (3%) (compounded monthly) from the date when such payment was due
until payment is made in full.
	 
	 	 	When any amount included within a monthly statement is the subject of a bona fide dispute, the
Buyer shall immediately notify the Seller in writing of the amount in dispute and the reasons
therefor. The undisputed portion shall promptly be paid and after settlement of the dispute any
amount agreed, adjudged or determined to be due shall be included in the next monthly statement
to be rendered hereunder together with interest thereon at an annualized rate equivalent to the
Interest Rate plus one per cent (1%) (compounded monthly) from the date when such payment
would, in the absence of a dispute, have been payable until payment is made. If the dispute
is later determined not to be bona fide, interest shall instead accrue at an

6

 

	 	 	annualized rate equivalent to the Interest Rate plus three per cent (3%) (compounded monthly) from
the date when such payment would, in absence of a dispute, have been
payable.
	 
	 	 	If the Buyer fails to pay any sum due hereunder which is not the subject of a bona fide payment
dispute, the Seller may, immediately on giving notice to the Buyer of its intention to do so,
suspend delivery of Carbon Dioxide hereunder until payment is duly made; provided, however, that a
suspension effected by the Seller in accordance with the provisions of this Article 5.4 shall not,
in any circumstances, relieve the Buyer of its accrued obligations under this Agreement, or entitle
the Buyer to any form of deduction from the Take-or-Pay Quantity as described in Article 2.2.
	 
	 	 	If Buyer fails to pay any sum due hereunder which is not the subject of a bona fide payment
dispute within thirty (30) days after the due date thereof, then the Seller shall have the right,
at the Seller’s sole election, to cancel this Agreement, and such cancellation shall become
effective upon the date specified in such notice. The Seller’s right to cancel this Agreement
shall be conditioned upon the Seller having provided the Buyer a minimum fourteen (14) days
notice, which notice may be sent at any time after the due date; provided, however, that
regardless of the timing of the notice the Seller shall not have the right to cancel this
Agreement any sooner than 31 days after the payment due date. Such cancellation shall be without
prejudice to any other rights and remedies that accrued to each Party prior to cancellation,
including but not limited to the right of a Party to receive payment for all claims which arose or
accrued prior to such cancellation.
	 
	 	 	Payment may be made by Buyer before the Payment Date for either of the following two reasons: (a)
Buyer may pay any invoice prior to the due date in order to avoid incurring additional fees under
an outstanding letter of credit securing the payment of such invoice, or (b) Buyer may pay any
invoice prior to the Payment Date in order to maintain Buyer’s outstanding credit exposure to
Seller below pre-approved credit limits set by Seller so that Buyer may avoid exceeding those
limits and being obligated to provide a letter of credit to Seller pursuant to its contractual
obligations.
	 
	 	 	As a condition of this Agreement, when Buyer is purchasing CO2 pursuant to this Agreement on
secured terms, Buyer shall provide to Seller by noon central time on the Business Day prior to
volume flow during the delivery period, a Letter of Credit from a bank acceptable to ExxonMobil
Gas and Power Marketing Company of sufficient term and amount to guarantee payment by Buyer for
the sale of CO2 to Buyer provided hereinabove, and in a form and amount acceptable to Seller, in
Seller’s sole discretion. If, during the Month CO2 prices payable hereunder either increase or
decrease from the price estimate upon which the initial Letter of Credit, or any subsequent
revision thereof, was based; or the CO2 quantity deliverable hereunder exceeds the quantity
estimate upon which the initial Letter of Credit or any subsequent revision thereof, was based; or
Buyer’s ability to make payment is otherwise adversely affected, then in addition to the rights
and remedies provided to Seller in Article 5.5 Change in Financial Circumstances, Seller shall
have the right to demand that upon Seller’s notification to Buyer, Buyer shall provide a revised
Letter of Credit acceptable to Seller in Seller’s sole discretion. If Seller does not receive such
acceptable revised Letter of Credit within thirty six (36) hours of Seller’s request to Buyer,
Seller shall have the right to suspend deliveries of CO2 hereunder until such time as Seller has
received a Letter of Credit satisfactory to Seller, and/or immediately terminate this Contract
upon written notice to Buyer. The rights and remedies

7

 

	 	 	provided to Seller in the paragraph are not exclusive of, but are in addition to any rights
and remedies provided to Seller in Section 5.5 Change of Financial Circumstances in this
Agreement.
	 
	5.5	 	Change of Financial Circumstances
	 
	 	 	If at any time within the Term there is a change in the financial resources of the Buyer or its
Performance Assurance Provider which gives Seller reasonable grounds for believing that Buyer
has ceased to have the financial resources to meet its obligations contained in this Agreement,
the Seller may give Notice to the Buyer stating its grounds for insecurity with respect to the
Buyer’s performance, and requesting adequate assurances of performance in a form acceptable to
Seller.
	 
	 	 	In the event the Buyer does not provide adequate assurances of performance within three (3)
business days following receipt of Notice, the Seller may suspend or reduce deliveries under
this Agreement with immediate effect until such time as the Buyer provides such adequate
assurance of performance, including financial assurances if reasonably requested by the Seller.
In the event the Buyer is unable or unwilling to provide adequate assurance of performance
satisfactory to the Seller within thirty (30) days of receipt of the Seller’s Notice, the
Seller shall have the right to cancel this Agreement with immediate effect upon providing
notice of such cancellation to Buyer. Such cancellation shall be without prejudice to any other
rights and remedies that accrued to each Party prior to cancellation, including but not limited
to the right of a Party to receive payment for all claims which arose or accrued prior to such
cancellation.
	 
	 	 	Seller shall have the right to terminate this Agreement immediately, by giving written Notice,
in the event Buyer, its Controlling Party, or its Performance Assurance Provider:

	 	1.	 	files a voluntary application in or for liquidation, receivership or bankruptcy;
	 
	 	2.	 	has an involuntary petition in bankruptcy filed against it;
	 
	 	3.	 	is finally and validly declared and adjudged to be liquidated, bankrupt or insolvent;
	 
	 	4.	 	is subject to a resolution passed by its members for the purposes of placing it in
voluntary administration;
	 
	 	5.	 	is subject to an order by any court of competent jurisdiction for its winding up;
	 
	 	6.	 	is the subject of an appointment of a receiver or receiver and manager or like
officer of the whole or any part of its assets;
	 
	 	7.	 	has a secured party take possession of all or substantially all its assets or has
a distress, execution, attachment, sequestration or other legal process levied, enforced
or sued on or against all or substantially all its assets; and such secured party
maintains possession, or any such process is not dismissed, discharged, stayed or
restrained, in each case within fifteen (15) days thereafter;
	 
	 	8.	 	is the subject of an appointment of an administrator, official manager or like
officer in circumstances where Buyer, Buyer’s Controlling Party or Buyer’s Performance
Assurance Provider is or is likely to become insolvent; or
	 
	 	9.	 	enters into a scheme of arrangement with its creditors or any of them, provided
that the foregoing shall not include any voluntary proceeding for the purpose of
amalgamation, reconstruction or reorganization nor taken at the request or to meet the
requirements of the Buyer, Buyer’s Controlling Party’s or Buyer’s Performance Assurance
Provider’s creditors.

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ARTICLE 6 — TERM

	6.1	 	Term
	 
	 	 	This Agreement shall become effective July 1st, 2006 and, subject to termination or
cancellation as otherwise provided herein, shall have a term of 4 years through June 30, 2010,
or until the TCQ has been delivered and purchased, whichever is earlier. If at the end of the
Term of this agreement, Buyer has an accrued take-or-pay liability for volume not taken but
paid for, this agreement shall automatically be extended for another six (6) months. During
that period, Buyer shall have the right to nominate a daily volume from Seller equal to the
accrued liability volume divided by 180. The volume delivered during the six (6) month
extension period will be for the exclusive purpose of taking the accrued liability volume.
However, the daily nominated volume during the extension period shall never be more than 20,000
MCFD.
	 
	6.2	 	Force Majeure Termination
	 
	 	 	If an event of Force Majeure affects deliveries by Seller or receipts by Buyer for a
consecutive period of one hundred twenty (120) Days or more, then, at any time after such
period has elapsed but prior to the time such event has been remedied, the Party not claiming
Force Majeure may terminate this Agreement by giving thirty (30) days written notice to the
other Party.

ARTICLE 7 — ROYALTY

	7.1	 	Payment of Royalty
	 
	 	 	Seller shall pay or cause to be paid all royalties due to royalty owners for the Carbon
Dioxide delivered hereunder.
	 
	7.2	 	Royalty Reimbursement
	 
	 	 	If, due to circumstances not within Seller’s control or pursuant to the terms of a good faith
settlement of a royalty dispute, Seller is required to pay excess royalty (royalty based on a
value higher than the price paid by Buyer for Carbon Dioxide delivered by Seller under this
Agreement) to any royalty owner including the United States of America, the State of Colorado
and any overriding royalty owner, with respect to Carbon Dioxide delivered by Seller under this
Agreement, Buyer shall reimburse Seller fifty percent (50%) of the amount of such excess
royalty. Seller must notify Buyer of a potential claim or bring its claim to Buyer within three
(3) years of the date the Carbon Dioxide delivery in question was made. Seller represents that
as of the date of this Agreement, Seller has not received a royalty assessment requiring the
payment of excess royalty and is not aware of any royalty underpayment claim against it
involving the Carbon Dioxide.
	 
	 	 	For the purposes of this Article 7.2, “excess royalty” as it applies to royalty paid the United
States of America shall be the royalty paid in excess of the royalty calculated pursuant to any
methodology in use by the Minerals Management Service as of the date of this Agreement based on
the statutes, regulations and leases in effect on the date of this Agreement.

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ARTICLE 8 — TAXES

	8.1	 	Payment of Taxes
	 
	 	 	Subject to the reimbursement provisions of Articles 8.2 and 8.3, Seller shall pay or cause to
be paid all taxes and assessments imposed on Seller with respect to the Carbon Dioxide
delivered by Seller under this Agreement prior to its delivery to Buyer at the Delivery Point.
	 
	 	 	Buyer shall pay or cause to be paid all taxes and assessments imposed on Buyer with respect to
the Carbon Dioxide delivered hereunder after its receipt by Buyer at the Delivery Point,
including, but not limited to, sales taxes imposed by the State of Texas and any county,
municipality or other governmental authority located therein. Neither Party shall be
responsible or liable for any taxes nor other statutory charges levied or assessed against any
of the facilities of the other Party used for the purpose of carrying out the provisions of
this Agreement.
	 
	8.2	 	Reimbursement of Sales Taxes
	 
	 	 	Buyer shall reimburse Seller for one hundred percent (100%) of all sales or use taxes paid by
Seller which may be imposed or assessed currently or hereafter with respect to the transaction
between Buyer and Seller which is the subject of this Agreement unless Buyer has previously
furnished Seller with a valid exemption certificate for such taxes.
	 
	8.3	 	Reimbursement of Certain Other Taxes
	 
	 	 	Buyer shall, subject to the conditions hereinafter specified, reimburse Seller for fifty
percent (50%) of any new, increased or additional tax paid by Seller which is attributable to
the deliveries of Carbon Dioxide made by Seller under this Agreement. The term “new, increased
or additional tax” shall mean production and severance taxes, taxes based on extraction of
Carbon Dioxide from the ground, ad valorem taxes calculated on the basis of production or
sales of Carbon Dioxide, taxes based on gathering or transportation occurring up to the
Delivery Point, and any other tax, assessment, or fee of a similar nature or equivalent in
effect levied, assessed, or fixed by governmental authority for which Seller may be liable in
addition to or greater than those in effect on July 1, 2006. For purposes of this Article 8.3,
the term “new, increased or additional tax” shall not include any income, excess profit,
capital stock, or excise tax, any sales or use tax which is covered under Article 8.2, and any
ad valorem or general property tax (to the extent such ad valorem or general property tax may
be assessed on or attributable to the value of surface and subsurface production equipment and
manufacturing and transmission facilities utilized by Seller to deliver Carbon Dioxide
hereunder). Seller must bring its claim for such Tax Reimbursement within one (1) year of the
date of delivery of the Carbon Dioxide at issue.

ARTICLE 9 — PASSAGE OF TITLE, RATE AND PRESSURE

	9.1	 	Passage of Title
	 
	 	 	Title to, risk of loss of or damage to, liability for injury of damage caused by, and
ownership of all Carbon Dioxide delivered hereunder shall pass to and vest in Buyer at the
Delivery Point.

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	9.2	 	Constant Deliveries
	 
	 	 	To the best of their abilities, Seller shall deliver and Buyer shall accept Carbon Dioxide
hereunder at a daily rate which is as reasonably constant as is practicable.
	 
	9.3	 	Delivery Pressure
	 
	 	 	Seller shall cause the delivery of Carbon Dioxide hereunder at the pressure prevailing from
time to time in the Cortez Pipeline, and at a pressure sufficient to enter the McElmo Creek
Pipeline. However, Seller shall not be required to deliver Carbon Dioxide at a pressure
exceeding 1900 psig.

ARTICLE 10 — MEASUREMENT AND COMPUTATION OF VOLUMES

	10.1	 	Measurement Point
	 
	 	 	The Carbon Dioxide delivered hereunder shall be measured and/or allocated at the Delivery Point.
	 
	10.2	 	Procedure
	 
	 	 	Measurement of Carbon Dioxide shall be determined on the basis of pound-mass quantities,
which shall be converted to Standard Cubic Feet quantities. The molecular weight of the
metered stream of Carbon Dioxide, calculated from compositional analyses, shall be the basis
for conversion of pound-mass measurement units to Standard Cubic Feet. The compressibility
factor of the Carbon Dioxide shall be determined in accordance with the Gas Processors
Association Standard 2172, Revision 1986, with any subsequent amendments, revisions and
additions which are mutually acceptable to Seller and Buyer.
	 
	10.3	 	Meter Stations
	 
	 	 	At or near the Measurement Point, Seller or its representative shall ensure that a measuring
station for purposes of determining the volume of Carbon Dioxide purchased and received
hereunder is constructed, installed, operated, and maintained at Seller’s risk, cost and
expense in accurate working order. The station shall be equipped in accordance with the
standards referenced in Article 10.5 and shall initially consist of orifice meters, an on-line
recording thermometer, and a flow computer for real-time calculation of metered flow.
	 
	10.4	 	Atmospheric Pressure
	 
	 	 	The atmospheric pressure at the Delivery Point shall be deemed to be 14.65 psia at sea level
corrected to actual elevation.
	 
	10.5	 	Meter Standards
	 
	 	 	The Carbon Dioxide delivered hereunder shall be measured with orifice meters constructed,
installed, operated, and maintained by Seller or its representative at Seller’s risk, cost and

11

 

	 	 	expense and whose computations of pound-mass are made in accordance with the September 1985
compilation of standards in the American Petroleum Institute, Manual of Petroleum
Measurement Standards, Chapter 14, Section 3 (ANSI/API 2530), with any subsequent
amendments, revisions, and additions which may be mutually acceptable to Seller and Buyer.
	 
	10.6	 	Temperature
	 
	 	 	The temperature of the Carbon Dioxide shall be determined by an on-line recording thermometer
so installed that it will sense the temperature of the Carbon Dioxide flowing through the
meters.
	 
	10.7	 	Meter Tests
	 
	 	 	Seller shall ensure that the measuring equipment is accurate and in repair, and that such
periodic tests as Seller may deem necessary are made, at least once each calendar quarter.
Seller agrees to ensure that Buyer is given reasonable notice of each such test of the
measuring equipment in order that, if Buyer desires, Buyer may have its representative
present to witness such tests. Such representative shall comply with all relevant site access
policies and agreements. If, upon any test, any measuring equipment is found to be
inaccurate, such equipment shall be recalibrated, and, to the extent that it affects the
aggregate measurement accuracy by an amount exceeding two percent (2%), registrations thereof
shall be corrected for a period extending back to the time such inaccuracy occurred, if such
time is ascertainable, and, if not ascertainable, then back one-half of the time elapsed
since the last date of calibration; provided no retroactive correction shall be made for
recorded inaccuracies of less than two percent (2%) in the aggregate. Either party may
request special or additional tests of the measuring equipment at the requesting party’s’
sole expense.
	 
	10.8	 	Meter Out of Service
	 
	 	 	If, for any reason, any meter is out of service or out of repair so that the amount of Carbon
Dioxide delivered cannot be ascertained or computed from the readings thereof or corrected
under Article 10.8, the Carbon Dioxide delivered during the period such meter is out of
service or out of repair shall be estimated and agreed upon by the parties upon the basis of
the best data available, using the first listed of the following methods which is feasible:

	 	(a)	 	by using the registration of any check meter, if installed and accurately registering;
	 
	 	(b)	 	by correcting the error if the percentage of error is ascertainable by calibration,
test, or mathematical calculation;
	 
	 	(c)	 	by using other meters on the McElmo Creek CO2 Pipeline to calculate such an estimate
by use of material balance;
	 
	 	(d)	 	by estimating the quantity delivered on the basis of deliveries during preceding
periods under similar conditions when the meter was registering accurately.

12

 

ARTICLE
11 — MISCELLANEOUS

	11.1	 	Warranty of Title
	 
	 	 	Notwithstanding anything herein to the contrary, at its sole option Seller may from time to
time and at any time deliver to Buyer, in lieu of Carbon Dioxide owned by Seller, Carbon
Dioxide which is attributable to other working interest owners owning Carbon Dioxide which is
produced at McElmo Dome. As between the Parties, any such Carbon Dioxide delivered
to Buyer shall be deemed Carbon Dioxide purchased by Buyer from Seller under this Agreement.
Seller warrants that it has the right to control and to dispose of all Carbon Dioxide delivered
to Buyer under this Agreement and shall indemnify Buyer against all damages, costs, losses and
expenses arising from or out of adverse claims of ownership in or to such Carbon Dioxide and/or
sales proceeds, royalties or charges thereon.
	 
	11.2	 	Disclaimer of Certain Warranties
	 
	 	 	EXCEPT AS EXPRESSLY PROVIDED IN ARTICLE 11.1, SELLER MAKES NO WARRANTIES OF ANY KIND OR
CHARACTER EITHER EXPRESS OR IMPLIED UNDER THIS AGREEMENT. SELLER EXPRESSLY DISCLAIMS ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE EITHER EXPRESS OR IMPLIED WITH
RESPECT TO THE CARBON DIOXIDE DELIVERED HEREUNDER.
	 
	11.3	 	Failure of Carbon Dioxide to Meet Quality Specifications

	 	(a)	 	In the event that either Party becomes aware that Carbon Dioxide actually delivered
or expected to be delivered by Seller to the Delivery Point does not meet Quality
Specifications, such Party shall promptly notify the other Party. Buyer, upon prompt
written notice to Seller, shall have the right to refuse to accept delivery of
off-specification Carbon Dioxide in whole or part and Seller, upon receipt of such
notice, shall reduce or cease deliveries of Carbon Dioxide in accordance with Buyer’s
instructions. Buyer shall also have the right to waive objection to such deliveries and
to continue to accept and receive such Carbon Dioxide. Buyer’s failure to provide the
above described notice to Seller within forty-eight (48) hours of the first delivery of
such off-specification Carbon Dioxide shall be deemed an election by Buyer to waive its
right to refuse or reduce delivery.
	 
	 	(b)	 	If Seller has reduced or ceased deliveries hereunder in response to a notice from
Buyer as Provided in Article 11.3(a), Seller shall have the right to elect, by written
notice to Buyer given within sixty (60) Days after receipt of Buyer’s notice to cease or
reduce deliveries, to cure the cause of such failure, and, if Seller so elects, Seller
shall proceed with all due diligence, to timely effect such cure. If Seller does not so
elect within such period or Seller elects but does not thereafter satisfactorily cure
such failure within thirty (30) Days of delivery to Buyer of notice of its election to
cure, then Buyer, upon written notice to Seller, shall have the right to either (i)
adjust the DCQ downward, or (ii) cancel this Agreement without further liability except
for previously accrued obligations, or (iii) permanently waive the nonconformity to the
quality specifications.
	 
	 	(c)	 	Buyer’s elections under Article 11.3(b) to adjust the DCQ, cancel the Agreement or
waive the nonconformity to the quality specifications shall be Buyer’s sole and exclusive
remedy for failure of the Carbon Dioxide to meet such Quality Specifications and Buyer
waives all other rights or remedies at law or in equity. Seller shall not be liable for
any

13

 

	 	 	 	claim, loss, damages, expense or cost of any nature arising from the delivery of
off-specification Carbon Dioxide accepted by Buyer without timely objection. This
Article 11.4 shall survive termination or cancellation of this Agreement.

	11.4	 	Limitation of Liability and General Indemnities

	 	(a)	 	Except as expressly provided herein and subject to Article 11.4(b), each Party
shall
indemnify, defend and hold the other Party harmless from claims, demands and causes
of action asserted against the other Party by any other persons (including employees
of
either Party) for personal injury, loss of or damages to property, or for alleged
violations
of law resulting directly from:

	 	1.	 	the gross negligence, willful misconduct or negligent acts or
omissions of the indemnifying Party; and
	 
	 	2.	 	any act, omission or accident occurring while title to and risk of
the Carbon Dioxide is vested in the indemnifying Party, except to the extent such
damages, claims, demands, proceedings and causes of action are caused by the
other Party; provided that where personal injury, death or loss of or damage to
property is the result of joint negligence or misconduct of the Parties, the
Parties expressly agree to indemnify each other in the proportion to their
respective share of such joint negligence or misconduct.

	 	(b)	 	Notwithstanding anything to the contrary in this Agreement, any remedies or
damages arising from a breach of this Agreement by either Seller or Buyer shall be
limited to actual direct and foreseeable costs, losses, or damages caused by or
resulting from the breach and incurred by the Party claiming damages. No Party shall be
liable to any other Party for any loss of profit or anticipated profit, business
interruption, loss of revenue, loss of use, loss of contract, loss of good will,
increased cost of working or loss of business opportunity, nor for any indirect loss,
consequential loss, or exemplary damages suffered by a Party or any other person, all or
any part of which arise out of or relate to this Agreement or the performance or breach
of this Agreement, or to any act or omission related to this Agreement, whether in
contract, warranty, tort (including but not limited to Gross Negligence and Willful
Misconduct), strict liability, or any other theory in contract, law, or equity. For the
purposes of this Agreement, “direct costs, losses, or damages” shall not include any
cost, expense, loss, award or damage suffered or incurred by a Party in respect of any
actions, proceedings, claims, or demands made against that Party by any of its customers
or any other Third Party.
	 
	 	(c)	 	If, for reasons other than Force Majuere, Seller fails to deliver the volumes
nominated by Buyer for a period of 30 consecutive Days Buyer shall have the right to
cancel this Agreement by so notifying Seller in writing. Such election to cancel this
Agreement shall be Buyer’s sole and exclusive remedy and Buyer waives all other rights
and remedies at law or equity.

	11.5	 	Choice of Law

14

 

	 	 	This Agreement shall be governed by and construed under the laws of the State of Texas,
excluding any choice of law that would refer a matter to another jurisdiction.
	 
	11.7.	 	Force Majeure
	 
	 	 	Force Majeure means acts of God, strikes, lockouts, or other industrial disturbances, acts of
the public enemy, wars, insurrections, riots, lightning, earthquakes, fires, storms, floods,
sabotage, acts of terrorism, embargoes or other import or export restrictions, civil
disturbances, explosions, breakage or accident to machinery, equipment or lines of pipe,
reservoir failure, the necessity or desirability for making repairs or alterations of or
performing routine maintenance of machinery, any laws, orders, rules, regulations, acts, or
restraints of or delays caused by any government body or authority, civil or military, and any
other cause or causes, whether of the kind herein enumerated or otherwise, not reasonably
within the control of the Party claiming suspension and which by the exercise of due diligence
such Party is unable, wholly or in part, to prevent or overcome. Such term shall likewise
include (a) in those instances where either Party hereto is required to obtain servitudes,
right-of-way grants, permits or licenses to enable such Party to perform hereunder, the
inability of such Party in acquiring, at reasonable cost and after the exercise of reasonable
diligence, such servitudes, right-of-way grants, permits, or licenses, and (b) in those
instances where either Party hereto is required to furnish materials and supplies for the
purpose of constructing or maintaining facilities or is required to secure permits or
permissions from any governmental agency to enable such Party to perform hereunder, the
inability of such Party to acquire, or the delays on the part of such Party in acquiring, at
reasonable cost and after the exercise of reasonable diligence, such materials and supplies,
permits and permissions, or (c) in the event either Party is required to secure permits or
permissions from any governmental agency or is required by any governmental agency to modify
or add facilities, the, cost of such permits, permissions, modifications, or additions render
uneconomic the operation of McElmo Dome, Cortez Pipeline, or the Garza Field and results in
the cessation of such operation.
	 
	11.8.	 	Force Majeure Notification and Affect
	 
	 	 	In the event of any Party being rendered unable, wholly or in part, by Force Majeure to carry
out its obligations under this Agreement, such Party shall give notice and reasonably full
particulars of such Force Majeure in writing or by facsimile to the other Party within a
reasonable time after the occurrence of the Force Majeure event; provided, however, that this
Force Majeure provision shall take effect as of the moment the Force Majeure event occurs.
The obligations of the Party claiming Force Majeure, so far as they are affected by such
Force Majeure, shall be suspended during the continuance of any inability so caused, but for
no longer period, and such cause shall so far as possible be remedied with all reasonable
dispatch; provided any obligation of Buyer to make payments for Carbon Dioxide theretofore
delivered hereunder shall not be suspended. The Term of this Agreement shall not be extended
due to Force Majeure, and the DCQ shall be adjusted proportionally to reflect all volumes
that are not delivered or purchased as a result of Force Majeure.
	 
	 	 	Solely for the purpose of Force Majeure under this Agreement, Seller’s facilities shall be
deemed to consist of McElmo Dome (CO2 production field) and associated production facilities
and the Cortez Pipeline and appurtenant equipment. Buyer’s facilities shall be deemed to
consist of the McElmo Creek Field, the Aneth Field, the Ratherford Field, McElmo Creek Field

15

 

	 	 	CO2 recycle system, the Aneth Field CO2 recycle system, the Ratherford Field CO2 recycle
system, the McElmo Creek CO2 Pipeline, and the Aneth, McElmo Creek, and Ratherford Field
water injection and disposal systems..
	 
	11.9	 	Assignment
	 
	 	 	Except as expressly provided in this Article 11.9, the rights or obligations of a Party
hereunder shall not be transferred or assigned without the prior written consent of the
other Party, which consent shall not be unreasonably withheld. Each Party shall have the
right to assign its rights or obligations hereunder an Affiliate of such party upon notice
to the other, provided that the assigning party shall remain jointly and severally liable
with the assignee for all obligations so assigned. All of the terms and conditions of this
Agreement shall extend to and be binding upon the respective successors and assigns of the
parties hereto.
	 
	11.10	 	Notices
	 
	 	 	All notices, statements, and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given effectively when
deposited in the United States Mail, postage prepaid, sent by mutually acceptable
electronic means, delivered by Western Union telegraph or courier service with charges
prepaid, or transmitted by a facsimile transmission device (telecopier), as the case may
be, and addressed as follows:

	 	 	 
	Buyer:

	 	Seller:
	Resolute Aneth, LLC

	 	ExxonMobil Gas & Power Marketing Company
	320 South Boston Ave., Suite 840

	 	P.O. Box 2180
	Tulsa, OK 74103

	 	Houston, Texas 77002-2180
	Attention: James L. Kincaid, Jr.

	 	Attention: Manager - CO2 Business
	Telephone: 918-388-9444

	 	Telephone: (713) 656-9369
	Telecopier: 918-388-9500

	 	Telecopier: (713) 656-3054

or, to such other address as a Party shall hereafter direct by written notice to the other Party
from time to time. If an emergency affects significantly the ability of a party to perform under
this Agreement, such Party shall notify the other Party by telephone or in person as soon as
possible of the consequences and anticipated duration of such emergency and confirm such
notification in writing as soon thereafter as is practicable.

	11.11	 	Waiver

	 	(a)	 	No waiver by or on behalf of a Party for any breach of a provision of this Agreement or failure
to require performance of any obligation arising under this Agreement shall occur unless expressed
in writing, duly executed and delivered by the waiving Party in accordance with the notice
provisions of this Agreement.

16

 

	 	(b)	 	No waiver by either Party shall operate or be construed as a waiver in respect of
any failure or default not expressly identified by such written waiver, whether of a
similar or different character, and whether occurring before or after that waiver.
	 
	 	(c)	 	No failure to exercise or delay in exercising any right or remedy arising from
this Agreement shall operate or be construed as a waiver of such right or remedy.

	11.12	 	Headings
	 
	 	 	The topical headings and table of contents used herein are inserted for convenience only and
shall not be construed as having any substantive significance or meaning whatsoever or as
indicating that all of the provisions of this Agreement relating to any particular topic or
to be found in any particular section.
	 
	11.13	 	Right of Ingress and Egress
	 
	 	 	Buyer hereby grants unto Seller, to the extent it has a right to do so, full right of
ingress or egress across properties of Buyer (or those of a third party, if applicable) for
purposes of carrying out its obligations under this Agreement.
	 
	11.14	 	Compliance with Laws and Regulations
	 
	 	 	This Agreement shall be subject to all valid and applicable laws, orders, rules, and
regulations of any duly constituted governmental authority or body having jurisdiction
hereof; but nothing contained herein shall be construed as a waiver by either party of any
right to question or contest to final conclusion any such law, order, rule, or regulation in
any forum having jurisdiction in the premises.
	 
	 	 	It is recognized that it may be necessary for Seller and/or Buyer to make certain filings
with federal or state regulatory authorities with respect to the sale and purchase of Carbon
Dioxide hereunder. Each Party hereto agrees to file promptly with the applicable regulatory
authority and to prosecute diligently to final conclusion all such required applications,
notices, or reports. In the performance of this Agreement, the Parties hereto shall not
engage in any conduct or practice which violates any applicable law, order, or regulation
prohibiting discrimination against any person by reason of race, color, religion, national
origin, sex, or age.
	 
	 	 	If this is an Agreement subject to the rules and regulations approved
by the Secretary of Labor under Executive Order 11246, as amended to date, the provisions of
that Executive Order and the implementing rules and regulations of the Secretary of Labor
are by reference hereby incorporated in and made a part of this Agreement.
	 
	 	 	If this is a Agreement subject to the Affirmative Action Regulations with respect to
Disabled or Vietnam Era Veterans, regulations contained in the United States Code of Federal
Regulations (41 CFR §60-741.1 et seq. and 41 CFR §60-250.1 et seq.) are by reference hereby
incorporated in and made a part of this Agreement.
	 
	11.15	 	Business Practices
	 
	 	 	All invoices, financial statements, reports, billings, and other documents which either
Party keeps or provides to the other Party shall be complete and accurate and shall properly
reflect the facts about all activities and transactions to which they relate. Each Party
represents that

17

 

	 	 	the other Party may rely on such documents for all purposes. In the event a Party becomes
aware of any failure to comply with the requirements of this Paragraph, it shall promptly
notify the other Party and correct the failure at no additional cost to the other Party. At
the request of either Party, the other Party shall review with such Party its business
control standards, procedures, and practices, including without limitation, those related to
the placement and administration of purchase orders and subcontracts and those related to the
activities of its employees and agents in their relations with such Party’s employees,
agents, and representatives, and with third parties. However, in no event shall either party
be given access to information that does not relate to the rights of a Party under this
Agreement. If requested by Seller, Buyer shall provide annual, audited financial statements
to Seller.
	 
	 	 	Both Parties shall exercise reasonable care and diligence to prevent any actions or
conditions which could result in a conflict with the other Party’s best interests. This
obligation shall apply to the activities of the employees, and their families, of Seller,
Buyer, vendors, subcontractors and third parties arising under this Agreement and work
performed hereunder. Each Party’s efforts shall include, but not be limited to, establishing
precautions to prevent its employees or agents from making, receiving, providing, or
offering substantial gifts, entertainment, payments, loans, or other considerations for the
purpose of influencing individuals to act contrary to the other Party’s best interest.
	 
	11.16	 	Dispute Resolution
	 
	 	 	Excluding Section 5.5 Change of Financial Circumstances, if a dispute arises out of
or is in any way related to the Agreement, or the breach thereof, and if the dispute cannot
be settled through negotiation, thereafter, any remaining unresolved controversy or claim
arising out of or relating to this Agreement or the breach thereof, shall be settled by
arbitration in accordance with the Commercial Arbitration Association Rules of the American
Arbitration Association, (the “AAA RULES”), and judgment upon the award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction. The arbitration shall be
governed by the Texas General Arbitration Act, V.T.C.A., Civil Practice and Remedies Code §§
171.001 et seq. (the “Texas General Arbitration Act”), and judgment upon the award of the
arbitrator may be entered by any court having jurisdiction thereof. If there is any conflict
between the provisions of this Section 11.16 and the AAA Rules and/or the Texas General
Arbitration Act, the provisions of this Section shall control the rights and obligations of
the Parties.
	 
	 	 	This Arbitration shall take the form of “baseball” arbitration in which Buyer
and Seller shall each simultaneously submit to the arbitration board written proposals to
resolve the dispute. The arbitration board must select either Buyer’s or Seller’s proposal.
	 
	 	 	Either Buyer or Seller may institute arbitration by written request, which request shall
also name one (1) arbitrator. The Party receiving such Notice, shall, by Notice to the other
within thirty (30) Days thereafter, name the second arbitrator, or, failing to do so, the
Party giving Notice of submission shall name the second. Within ten (10) Days following
designation of the second arbitrator, each Party will provide the two arbitrators with a
list of five names for the third arbitrator. If there are three or more common names, each
Party may strike in turn, one common name, until one or two remain. If there are two common
names on the list, the third arbitrator will be determined from between the common names by
coin flip. If there is only one common name, that person shall be the third arbitrator. If
there are no common names on the list, and if neither Party agrees to a name on the other
Party’s list, each Party will choose two names from the other Party’s list and each Party
will choose two names from the Center for

18

 

	 	 	Public Resources National Panel of Arbitrators. The Parties will alternate strikes (with a
coin flip determining which Party has the first strike) until two names remain with the
third arbitrator then determined from those two remaining names by coin flip.
	 
	 	 	The arbitrators selected to act hereunder shall be qualified by education, experience, and
training to decide upon the particular question in dispute, and shall not be an employee or
former employee of either Party or an affiliate of either Party. The arbitrators shall be
bound in their deliberations and decisions by the parameters set forth in this Agreement. The
arbitrators so appointed, after giving the Parties due Notice of hearing and responsible
opportunity to be heard, shall promptly hear and determine the question submitted and shall
render their decisions within one hundred twenty (120) Days after the appointment of the
third arbitrator. The decision of the arbitrators, or of a majority thereof, made in writing,
shall be final and binding upon the Parties hereto as to the questions submitted, and the
Parties will abide by and comply with such decisions. The decision of the Arbitrators shall
not be appealable except for claims of actual fraud. Each Party shall bear the expense of its
arbitrator, and the expenses of the third arbitrator shall be borne equally by Buyer and
Seller. The arbitration shall be held in Houston, Texas. The laws of the State of Texas
including the Rules of Evidence shall be applicable to all submissive and procedural issues.
	 
	11.17	 	Severability Clause
	 
	 	 	If any provision (or part thereof) of this Agreement is or becomes unlawful or void, the
legality, validity, or enforceability of any other part of that provision or any other
provision of this Agreement shall not be affected, but shall continue in force and effect.
The unlawful or void provision shall be deleted from this Agreement by written consent of
the Parties or final court order, but only to the extent of any invalidity so as to preserve
the Agreement to the maximum extent.
	 
	11.18	 	Entire Agreement
	 
	 	 	This Agreement, including its exhibits, contains the entire agreement between the Parties
and supersedes all prior or contemporaneous discussions, negotiations, representations, or
agreements relating to the subject matter herein.
	 
	11.19	 	Confidentiality
	 
	 	 	Except as required by law, regulation or order of governmental authority, Seller and Buyer
shall keep and maintain this Agreement and all the terms and provisions hereof in confidence
for the term of the Agreement and will not transmit, reveal, disclose or otherwise
communicate the substance or any of the terms or provisions of this Agreement to any other
person not an employee, officer, director, attorney, partner, working interest owner, agent
or contractor of Seller or Buyer, provided that Seller may make such disclosures as may be
required in its lease agreements with royalty owners and taxing authorities or any
litigation or arbitration concerning Carbon Dioxide prices. The terms of this Agreement may
be disclosed in any litigation or arbitration involving this Agreement and to the Affiliates
(and their respective agents, employees, officers, directors and attorneys), investors,
auditors, counsel, lenders or potential lenders, and other professional advisors, and agents
or contractors of Seller or Buyer, or potential purchasers of Buyer’s properties in which
Carbon Dioxide is injected; provided that, (i) in any such disclosure other than litigation
involving this Agreement, the

19

 

	 	 	person or party to whom such disclosure is made agrees to be bound by this confidentiality
provision and (ii) the Party making such disclosure shall be responsible for the compliance
of persons to whom such disclosure is made.
	 
	11.20	 	Maintenance
	 
	 	 	Each Party acknowledges that the other Party’s facilities may require periodic planned
maintenance shutdowns. A Party anticipating planned maintenance shall give at least sixty 60
days prior written notice to the other Party. During periods of planned maintenance for
which notice has been properly given, the Parties shall be relieved of all volume delivery
and take obligations that otherwise would accrue during such periods; provided, however,
that each Party shall only be entitled to five (5) Days of such planned maintenance for its
facilities in a Contract Year. The DCQ shall be adjusted to reflect volume reductions
resulting from such planned maintenance. Subject to the foregoing, each Party shall
reasonably cooperate with the other Party to minimize interruptions in volume delivery and
take schedules.
	 
	11.21	 	Drug and Alcohol Policy
	 
	 	 	Each Party agrees that its employees, personnel, and contractors shall not use, be under the
influence of, possess, distribute, or sell alcohol beverages, illicit or unprescribed
controlled drugs, drug paraphernalia, or impairment causing drugs while performing their
respective obligations under this Agreement. Each Party has or will adopt its own policy
(including testing policy) to assure a drug and alcohol free workplace. Each Party will not
use an employee, personnel or contractor to perform the obligations under this Agreement who
either refuses to take, or tests positive in any alcohol or drug test or who refuses to
cooperate with any search. Each Party will comply with applicable laws concerning employee
alcohol and drug use and assure that its contractors agree to do so.
	 
	11.22	 	Survival
	 
	 	 	Except as expressly provided otherwise in this Agreement, termination or cancellation of
this Agreement, regardless of cause, shall be without prejudice to any rights or remedies
that may have accrued to any of the Parties prior to the date thereof. In addition, the
provisions of Articles: 11.4 (Limitation of Liability and General Indemnity), 11.16 (Dispute
Resolution), 11.2 (Warranties), 5.3 (Auditing),, and any other Article, or Exhibit expressed
to survive termination of this Agreement, shall survive the termination of this Agreement.
	 
	11.23	 	Relationship of the Parties
	 
	 	 	Nothing in this Agreement and no action taken by the Parties pursuant to this Agreement shall
constitute, or be deemed to constitute, a partnership, unincorporated association or other
co-operative entity. The obligations and liabilities of the Parties to this Agreement are
several and not joint, nor joint and several.

20

 

	 	 	 	 	 	 	 	 	 
	“SELLER”	 	“BUYER”	 	 
	EXXONMOBIL GAS & POWER MARKETING COMPANY	Resolute Aneth, LLC.	 	 
	(a division of ExxonMobil Corporation)	 	 	 	 	 	 
	As Agent for Mobil Producing
Texas and New Mexico, Inc.	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Richard Guessant
	 	By:
	 	/s/ James L. Kincaid, Jr.	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Richard Guessant
	 	Name:
	 	James L. Kincaid, Jr.	 	 
	Title:

	 	Vice President - Americas
	 	Title:
	 	VP	 	 
	 
	 	 	 	 	 	 	 	 
	DATED this 20th day of July, 2006	 	DATED this 14th day of July, 2006	 	 

 

 

AMENDMENT

To the Carbon Dioxide Sale And Purchase Agreement

Dated July 01, 2006

Between Resolute Aneth, LLC.

And

EXXONMOBIL GAS & POWER MARKETING COMPANY

We hereby amend the agreement to include the following:

	11.24	 	Rights of Exchange.

Buyer may, from time to time, request Seller to exchange volumes of CO2 from a
location downstream of McElmo Dome on the Kinder Morgan Cortez pipeline for volumes
delivered to Buyer’s McElmo Creek Pipeline. In accordance with the nomination
procedures of this agreement, Buyer will nominate volumes to Seller at the downstream
location and Seller will nominate like volumes for the same nomination period to Buyer
delivered into McElmo Creek pipeline. The amount of this request shall not exceed
25,000 Mcf per day. Exchange volumes shall be delivered on an interruptible basis.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	“SELLER”	 	“BUYER”	 	 
	EXXONMOBIL GAS & POWER MARKETING COMPANY	 	Resolute Aneth, LLC.	 	 
	(a division of ExxonMobil Corporation)	 	 	 	 	 	 
	As Agent for Mobil Producing Texas and New Mexico, Inc.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:
	 	/s/ James L. Kincaid, Jr.	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Name:

	 	 	 	Name:
	 	James L. Kincaid, Jr.	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	 	 	Title:
	 	VP	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	DATED this                      day of                    , 2006	 	DATED this 21 day of July 2006	 	 

1

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