Document:

Exhibit 4.2

 

THIRD AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION OF

RIGHTNOW TECHNOLOGIES, INC.

 

The undersigned, Greg R. Gianforte and Susan J. Carstensen, hereby
certify that:

 

FIRST:                                                         They
are the duly elected and acting Chief Executive Officer and Assistant
Secretary, respectively, of RightNow Technologies, Inc., a Delaware corporation
(the “Corporation”).

 

SECOND:                                         The
Certificate of Incorporation of the Corporation was originally filed in the
Office of the Secretary of the State of Delaware on July 12, 2000.

 

THIRD:                                                      The
Amended and Restated Certificate of Incorporation of the Corporation was filed
in the Office of the Secretary of the State of Delaware on December 13, 2000
and was amended by Certificates of Amendment filed on April 30, 2001, October
23, 2001, November 30, 2001, January 23, 2003 and June 17, 2004.  The Second Amended and Restated Certificate
of Incorporation of the Corporation was filed in the Office of the Secretary of
the State of Delaware on July 14, 2004.

 

FOURTH:                                          The Second
Amended and Restated Certificate of Incorporation of the Corporation is hereby
amended and restated to read in its entirety as follows:

ARTICLE I

 

The name of the Corporation is RightNow Technologies, Inc. (the
“Corporation”).

 

ARTICLE II

 

The address of the Corporation’s registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801.  The name of its
registered agent at such address is The Corporation Trust Company.

 

ARTICLE III

 

The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may now or hereafter be organized under the
Delaware General Corporation Law (“DGCL”), as amended from time to time.

 

ARTICLE IV

The total number of shares of capital stock the Corporation is
authorized to issue is 165,000,000 shares, consisting of 150,000,000 shares of
common stock, par value $0.001 per share (the “Common Stock”), and 15,000,000
shares of preferred stock, par value $0.001 per share (“Preferred Stock”).

 

 

A.                                   The
holders of shares of the Common Stock shall be entitled to vote on all matters
to be voted on by the stockholders of the Corporation and shall be entitled to
one vote for each share thereof held of record.

 

B.                                     The
Preferred Stock may be issued from time to time by the board of directors as
shares of one or more series, without further stockholder approval.  Subject to the provisions hereof and the
limitations prescribed by law, the board of directors is expressly authorized,
by adopting resolutions providing for the issuance of shares of any particular
series and, if and to the extent from time to time required by law, by filing
with the Delaware Secretary of State a certificate setting forth the
resolutions so adopted pursuant to the DGCL, to establish the number of shares
to be included in each such series and to fix the designation and relative
powers, including voting powers, preferences, rights, qualifications and
limitations and restrictions thereof, relating to the shares of each such
series.  The rights, privileges,
preferences and restrictions of any such additional series may be subordinated
to, pari passu with (including, without limitation, inclusion in provisions
with respect to liquidation and acquisition preferences, redemption and/or
approval of matters by vote), or senior to any of those of any present or
future class or series of Preferred Stock or Common Stock.  The board of directors is also authorized to
increase or decrease the number of shares of any series prior or subsequent to
the issue of that series, but not below the number of shares of such series
then outstanding.  In case the number of
shares of any series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.

 

The authority of the board of directors with respect to each series
shall include, but not be limited to, determination of the following:

 

(i)                                     the
distinctive serial designation of such series and the number of shares
constituting such series;

 

(ii)                                  the
annual dividend rate on shares of such series, if any, whether dividends shall
be cumulative and, if so, from which date or dates;

 

(iii)                               whether
the shares of such series shall be redeemable and, if so, the terms and
conditions of such redemption, including the date or dates upon and after which
such shares shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at different
redemption dates;

 

(iv)                              the
obligation, if any, of the Corporation to retire shares of such series pursuant
to a sinking fund;

 

(v)                                 whether
shares of such series shall be convertible into, or exchangeable for, shares of
stock of any other class or classes and, if so, the terms and conditions of
such conversion or exchange, including the price or prices or the rate or rates
of conversion or exchange and the terms of adjustment, if any;

 

(vi)                              whether
the shares of such series shall have voting rights, in addition to any voting
rights provided by law, and, if so, the terms of such voting rights;

 

2

 

(vii)                           the
rights of the shares of such series in the event of voluntary or involuntary
liquidation, dissolution or winding-up of the Corporation; and

 

(viii)                        any
other relative rights, powers, preferences, qualifications, limitations or
restrictions thereof relating to such series.

 

ARTICLE V

 

The number of directors to constitute the whole board of directors
shall be such number (not less than three nor more than nine) as shall be fixed
from time to time by resolution of the board of directors adopted by such vote
as may be required in the bylaws.  The
board of directors shall be divided into three classes as nearly equal in
number as may be feasible, hereby designated as Class I, Class II and Class
III, with the term of office of one class expiring each year.  For the purposes hereof, the initial Class
I, Class II and Class III directors shall be those directors so designated and
elected and who are holding such offices as of the date this Third Amended and
Restated Certificate of Incorporation is duly filed with the Secretary of State
of the State of Delaware.  At the annual
meeting of stockholders in 2005, the term of office of the Class II directors
shall expire and Class II directors shall be elected for a full term of three
years.  At the annual meeting of
stockholders in 2006, the term of office of the Class III directors shall
expire and Class III directors shall be elected for a full term of three
years.  At the annual meeting of
stockholders in 2007, the term of office of the Class I directors shall expire
and Class I directors shall be elected for a full term of three years.  At each succeeding annual meeting of
stockholders, successors to the directors whose terms shall then expire shall
be elected to hold office for terms expiring at the third succeeding annual
meeting of stockholders.  In case of any
vacancies, by reason of an increase in the number of directors or otherwise,
subject to the rights of the holders of any series of Preferred Stock then
outstanding, each additional director may be elected by a majority of the
directors then in office, even though less than a quorum of the board of directors,
to serve until the end of the term he or she is elected to fill and until his
or her successor shall have been elected and qualified in the class to which
such director is assigned and for the term or remainder of the term of such
class.  Directors shall continue in
office until others are elected and qualified in their stead.  When the number of directors is changed,
each director then serving as such shall nevertheless continue as a director of
the class of which he or she is a member until the expiration of his or her
current term and any newly created directorships or any decrease in
directorships shall be so assigned among the classes by a majority of the
directors then in office, though less than a quorum, as to make all classes as
nearly equal in number as may be feasible. 
No decrease in the number of directors shall shorten the term of any
incumbent director.

 

Election of directors at all meetings of the stockholders at which
directors are to be elected shall be by written ballot, and, except with
respect to the right of the holders of any series of Preferred Stock then
outstanding to elect additional directors under specified circumstances, a
plurality of the votes cast thereat shall elect directors.

 

3

 

ARTICLE VI

 

All actions required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing of such stockholders.

 

ARTICLE VII

 

In furtherance and not in limitation of the power conferred upon the
board of directors by law, the board of directors shall have power to adopt,
amend, alter and repeal from time to time the bylaws of the Corporation by majority
vote of all directors except that any provision of the bylaws requiring, for
board action, a vote of greater than a majority of the board shall not be
amended, altered or repealed except by such supermajority vote.

 

ARTICLE VIII

 

The Corporation reserves the right to amend this Third Amended and
Restated Certificate of Incorporation in any manner provided herein or
permitted by the DGCL, and all rights and powers, if any, conferred herein on
stockholders, directors and officers are subject to the reserved power.  Notwithstanding the foregoing, without the
affirmative vote of the holders of record of 66 2/3% of all of the shares of
the Common Stock outstanding, the Corporation shall not alter, amend or repeal
Article V, VI or VIII of this Certificate of Incorporation or the provisions of
Article IV providing for undesignated Preferred Stock.

 

ARTICLE IX

 

A director of the Corporation shall not be liable to the Corporation or
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of director’s duty of loyalty
to the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of the law,
(iii) under Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit. 
If the DGCL is amended hereafter to further eliminate or limit the
liability of a director of a corporation, then a director of the Corporation,
in addition to the circumstances set forth herein, shall have no liability as a
director (or such liability shall be limited) to the fullest extent permitted
by the DGCL as so amended.

 

To the fullest extent permitted by law, the Corporation may indemnify
(and advance expenses to) any person made or threatened to be made a party to
an action or proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he or she, or his or her testator or
intestate, is or was a director, officer, employee or agent of the Corporation
or any predecessor of the Corporation or serves or served at any other
corporation, partnership, joint venture, trust, or other enterprise as a
director, officer, employee or agent at the request of the Corporation or any
predecessor to the Corporation.

 

No repeal or modification of the foregoing provisions of this Article
IX nor, to the fullest extent permitted by law, any modification of law, shall
adversely affect any right or protection of a director of the Corporation
existing at the time of such repeal or modification.

 

4

 

FIFTH:                                                          This
Third Amended and Restated Certificate of Incorporation has been duly approved
by the Board of Directors of the Corporation in accordance with the provisions
of Sections 242 and 245 of the General Corporation Law of the State of
Delaware.

 

SIXTH:                                                       This
Third Amended and Restated Certificate of Incorporation has been duly approved,
in accordance with Sections 228, 242 and 245 of the General Corporation Law of
the State of Delaware, by the written consent of the holders of 66 2/3% of the
shares of outstanding Common Stock and the holders of a majority of the shares
of outstanding stock of each class of stock entitled to vote thereon as a class
and the holders of a majority of the shares of outstanding stock of each series
of Preferred Stock, and written notice of such action will be given to the
holders of such shares who did not so consent, in each case in accordance with
Section 228 of the General Corporation Law of the State of Delaware.

 

IN WITNESS WHEREOF,
RightNow Technologies, Inc. has caused this Third Amended and Restated
Certificate of Incorporation to be signed by its Chief Executive Officer and
Assistant Secretary on this 10th day of August, 2004.

 

 

	
   

  	
  RIGHTNOW TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ GREG R. GIANFORTE

  	
   

  
	
   

  	
   

  
	
   

  	
               Greg
  R. Gianforte,

  
	
   

  	
               Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ SUSAN J. CARSTENSEN

  	
   

  
	
   

  	
   

  
	
   

  	
               Susan
  J. Carstensen,

  
	
   

  	
               Assistant
  Secretary

  

 

5Exhibit 10.3

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND
ASSUMPTION AGREEMENT (this “Agreement”) is entered into effective as of
June 15, 2004 (“Effective Date”) by and between Reef Global Energy
I, L.P., a Nevada limited partnership (“Transferor”) and Reef Global
Energy III, L.P., a Nevada limited partnership (“Transferee”).

 

Preliminary Statements

 

WHEREAS, Transferor and
Transferee are both participants in the Reef Global Energy Ventures Program;

 

WHEREAS, on March 1,
2004, Transferor entered into an agreement with Challenger Minerals, Inc.,
Maritech Resources, Inc., Palace Exploration Company, Palace Operating Company
and Howard Energy Co., Inc. (the “Exploration Companies”) to participate
in the drilling of an oil and gas well known as the “Mobile Block 961” (the “Mobile
961 Participation Agreement”), a copy of which is set forth on Exhibit 1;

 

WHEREAS, following
Transferor’s execution of the Mobile 961 Participation Agreement, it was
recognized that Transferee was the proper party to such agreement, and that
Reef Partners LLC, the managing member of both Transferor and Transferee,
executed the Mobile 961 Participation Agreement on behalf of Transferor rather
than Transferee in error;

 

WHEREAS, the purpose of
this Agreement is to correct such error to recognize the actual intent of Reef
Partners LLC on behalf of both parties; and

 

WHEREAS, in consideration
of Transferor’s assignment and transfer of the Mobile 961 Participation
Agreement, Transferee has agreed to assume certain liabilities and obligations
of Transferor arising under the Mobile 961 Participation Agreement.

 

Agreement

 

For good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties to this Agreement, intending to be legally bound, agree as follows:

 

1.                                      Assignment.  In exchange for the assumption of the
Assumed Obligations (as defined in Section 2 below), Transferor hereby
conveys, transfers and assigns to Transferee, its successor and assigns,
forever, all of Transferor’s rights, title, privileges and interest in and to
the Mobile 961 Prospect arising under the Mobile 961 Participation Agreement.

 

2.                                      Assumption
of Obligations and Liabilities by Transferee.  In connection with the transfer to Transferee of all of
Transferor’s rights, title, privileges and interest in and to the Mobile 961
Prospect arising under the Mobile 961 Participation Agreement, Transferor
hereby assigns to Transferee and Transferee hereby assumes all of Transferor’s
obligations and liabilities arising under Mobile 961 Participation Agreement
(collectively, the “Assumed Obligations”).

 

3.                                      Further
Assurances.  Transferor and
Transferee, for themselves and their respective successors and assigns,
covenant and agree that they will execute and deliver such additional agreements,
instruments or documents such as deeds, bills of sale, assignments, UCC
financing statements, transfers and conveyances, powers of attorney,
assurances, consents or assumptions, and will take such further actions, as are
necessary to transfer and assign more fully the Mobile 961 Participation
Agreement and to assume more fully the Assumed Obligations.

 

 

4.                                      Governing
Law. This Agreement shall be construed in accordance with and all disputes
hereunder shall be governed by the laws of the State of Nevada, excluding its
conflict of law rules.

 

5.                                      Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original for all purposes
and all of which together shall constitute one and the same instrument.

 

* * * * *

 

The parties to this
Agreement have executed and delivered this Agreement as of the Effective Date.

 

	
  TRANSFEROR:

  	
   

  	
  TRANSFEREE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  REEF GLOBAL ENERGY I,
  L.P.

  	
  REEF GLOBAL ENERGY II,
  L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:  Reef Partners, LLC

  	
  By:  Reef Partners, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ MICHAEL J. MAUCELI

  	
   

  	
  By:

  	
  /s/ MICHAEL J. MAUCELI

  	
   

  
	
  Name:

  	
  Michael J. Mauceli

  	
  Name:

  	
  Michael J. Mauceli

  
	
  Title:

  	
  Manager

  	
  Title:

  	
  Manager

  
								

 

2

 

EXHIBIT 1

 

Mobile
961 Participation Agreement

 

(See Attached)

 

 

[Challenger Minerals Inc. Letterhead]

 

March 1, 2004

 

	
  Maritech Resources, Inc.

  	
  Reef Global Energy I, L. P.

  
	
  Attn:  Mr. Dave Dubiel

  	
  Attn:  Mr. Walt Dunagin

  
	
  25025 1-45 North, 6th
  Floor

  	
  1901 N. Central
  Expressway, Suite 300

  
	
  The Woodlands, TX  77380

  	
  Richardson, TX  75080

  
	
   

  	
   

  
	
  Palace Exploration Company and

  	
  Howard Energy Co., Inc.

  
	
  Palace Operating Company

  	
  Attn:  Mr. Linda Marshall

  
	
  Attn:  Mr. Bob Zinke

  	
  13561 West Bay Shore
  Dr., Ste. 3000

  
	
  1202 East 33rd St.

  	
  Traverse City, MI  49684

  
	
  Tulsa, OK 74105-2048

  	
   

  
	
   

  	
  Re:

  	
  Participation
  Agreement and

  Operating Agreement

  
	
   

  	
   

  	
  Mobile 961 (OCS-G 5761) Prospect

  
	
   

  	
   

  	
  Offshore, Alabama

  

 

Gentlemen:

 

This Participation
Agreement is made and entered into effective March 1, 2004, by and between
Challenger Minerals Inc. (“CMI”), Reef Global Energy I, L. P. (“Reef”), Palace
Exploration Company (“Palace”), Howard Energy Co., Inc. (“Howard”)
(collectively the “Participants” and individually as a “Participant”), and
Maritech Resources, Inc. (“Maritech”) and Palace Operating Company (“Operator”)
.. The Participants and Maritech are sometimes collectively referred to as the
“Parties” or individually as a “Party”. This Participation Agreement sets forth
the terms and conditions whereby Participants may earn, and Maritech shall
assign, 100% of 6/6ths operating rights interest in a portion of
Mobile Block 961 (OCS-G 05761) as more particularly described in Exhibit “A”,
attached hereto and made a part hereof (the “Lease”).  In consideration of the mutual covenants and benefits to be
derived here from, the Parties hereto agree as follows:

 

1.                                      Test
Well Election:  Participants
shall have the exclusive right until July 1, 2004 to elect to drill the
initial test well (the “Test Well”) on the Lease in accordance with this
Agreement.  On or before July 1,
2004, Participants shall give written notice to Maritech whether or not
Participants, or any of them, elect to drill said Test Well.  Failure to timely deliver such written
notice to Maritech shall be deemed an election, by each party so failing, to
not participate in drilling the Test Well. 
Maritech shall have the right to approve any party serving as operator
of the Test Well, which approval shall not be unreasonably withheld.  Maritech represents by, through and under
itself, but not otherwise, that it owns 100% of 6/6ths operating
rights interest in the Lease and that there are no title, liens, mortgages,
environmental or access impediments encumbering or restricting the operations
proposed or contemplated herein.  This
Agreement is

 

 

subject to Participants
obtaining all necessary permits and authorizations for drilling and their
review and approval of the terms and conditions of the Lease and all agreements
and other requirements affecting the Prospect and title thereto.  The only penalty or liability to
Participants for their failure to drill the Test Well shall be the loss of
rights to earn any interest hereunder.

 

2.                                      Test
Well:  Operations for drilling
the Test Well shall, subject to such reasonable extensions of time as may be
necessary and/or convenient to obtain all necessary permits and authorizations
to drill the said Well, commence within ninety (90) days after the written
notice required under Paragraph 1 above has been given that all Participants
have made elections whether or not to participate in drilling such Well, but in
no event later than August 1, 2004. 
Said Test Well shall be drilled from and to mutually acceptable
locations to a depth of 1,700’ TVD/MD or a depth sufficient to test the
stratigraphic equivalent of the sand seen at 1,622’ MD on the 5” electric log
in the Unocal – Mobile 1005 #1 Well, whichever is the lesser depth (“Objective
Depth”).  Participants shall pay 100% of
the expenses of drilling the Test Well to Casing Point and, if productive, 100%
of the expenses to complete same through the tanks, including the wellhead,
platform, facilities and pipelines associated therewith, or plugging and
abandonment, if unsuccessful, in the proportions: Challenger 5.0%, Palace
62.5%, Reef 12.5% and Howard 20.0%. 
“Casing Point” as used in this Agreement is defined as being that point
in time when any well subject hereto has been drilled to its proposed depth, or
mutually agreed to lesser depth, and all tests included in the approved
Authority of Expenditure (“AFE”), have been performed unless waived by mutual
agreement of the Parties and a recommendation is made by Operator to: (i) set
casing and complete the well, (ii) plug and abandon the well or (iii) conduct
other operations.  If actual drilling of
the Test Well is not commenced by August 31, 2004, Participants and/or
Maritech shall have the right and option to terminate the agreement to drill
same without any penalty or liability whatsoever other than failure to earn an
interest hereunder.

 

3.                                      Cash
Consideration:  Within five (5)
days after commencement of actual drilling of the Test Well, Operator shall pay
to Maritech the sum of $50,000.00, and the Participants shall promptly
reimburse Operator for such amount in the proportions: Challenger $2,500.00,
Palace $31,250.00, Reef $6,250.00 and Howard $10,000.00, for all leasehold,
geological, geophysical and other costs attributable to the subject Prospect.

 

4.                                      Assignment
of Operating Rights Earned:  A
dry hole earns no interest in the Lease. 
However, if the Test Well is completed for production and meets the MMS
qualifications as a producible well under 30 CFR §250.116, Participants shall
earn, and Maritech shall assign to Participants, 100% of 6/6ths of
the operating rights interest, in proportion to their participation in drilling
the Test Well, subject to presently existing royalties and overriding royalties
and reserving unto Maritech a 4.0% of 6/6ths overriding royalty
interest, thus delivering the Lease to Participants with a 76.333% of 6/6ths
net revenue interest.  It is understood
that the total of all royalties, overriding royalties and other burdens on
production from the Lease, including the overriding royalty interest to be
reserved by Maritech shall not exceed 23.667% of 6/6ths of
production.  Maritech shall assign the
earned interest on the form of assignment attached hereto as Exhibit “B”
and made a part hereof, warranting title by, through and under Maritech, but
not otherwise.  Said assignment shall
specifically exclude all rights, title, interests and liability associated with
any presently existing platform(s), pipeline(s), wellbore(s), and other
personal

 

2

 

property associated with
the Lease, it being understood and agreed that Participants shall only be
responsible for plugging and abandonment of the wellbore of the Test Well and
shall bear no plugging, abandonment or decommissioning expense related to any
well, facilities or pipelines which are not drilled or installed by
Participants.

 

5.                                      Conversion
Election:  Operator shall give written notice to Maritech upon Payout of the
Test Well and Maritech shall have the right, to either (a) escalate its above
reserved 4.0% of 6/6ths overriding royalty to a 5% of 6/6ths
overriding royalty interest foregoing the right to acquire an operating rights
interest in the Lease or (b) convert all of its 4.0% of 6/6ths
overriding royalty to a 20% of 6/6ths operating rights interest in
the Lease, Test Well, platform, any facilities and pipelines, thereby extinguishing the overriding
royalty interest.  Said option
will be on a well by well basis. Within thirty (30) days after being notified
by Operator that the Test Well has reached Payout, Maritech shall give written
notice of its election to Operator.  The
failure of Maritech to timely notify Operator of its election shall be deemed
Maritech’s decision to escalate its 4.0% of 6/6ths overriding
royalty to a 5% of 6/6ths overriding royalty interest.  In the event Maritech elects to convert its
overriding royalty to a working interest, Participants shall promptly assign
such interest to Maritech.  Payout is defined as the first day following
the date Participants have recouped out of their shares of production, after
deducting all royalties, overriding royalties, taxes and other burdens on
production,  all costs attributable to
drilling, testing, completing, equipping, platform costs, pipelines, production
facilities and operating the Test Well, plus the amounts paid to Maritech under
Paragraph 3, above.

 

6.                                      Substitute
Test Well:  If, while drilling
any well provided for herein, Operator encounters impenetrable substances or
conditions, including the loss of the hole due to mechanical difficulties,
which in the opinion of a reasonably prudent operator under the same or similar
conditions would render further drilling impractical or hazardous, and such
conditions prevent further drilling of the well,  Participants, or any of them, shall have the right, but not the
obligation, to participate in drilling a “Substitute Well” in order to reach
the objective depth, provided actual drilling of the Substitute Well is
commenced within ninety (90) days after the release of the drilling rig from
the previous well.  Any Substitute Well
shall be drilled pursuant to all the terms and conditions of this Agreement.

 

7.                                      Offshore
Operating Agreement:  On a well
by well basis, all operations conducted pursuant to this Participation
Agreement shall be governed by the terms and provisions of that certain
Offshore Operating Agreement, dated March 1, 2004, attached hereto as Exhibit “C”
and made a part hereof (the “OOA”) naming Palace Operating Company as
Operator.  In the event of a conflict
between this Participation Agreement and said OOA, the terms and conditions of
this Participation Agreement shall prevail, but only to the extent of such
conflict.

 

8.                                      Production
Handling Agreement:  This
Agreement is subject to and conditioned upon Participants obtaining a
Production Handling Agreement from Union Oil Company of California “Unocal” to
process production earned pursuant to this Agreement, on terms and fees yet to
be negotiated.  Such fees shall be in
addition to any direct charges (as defined in the COPAS Accounting Procedure
attached as Exhibit “C” to the OOA) associated with any well drilled on the
Lease in which any of the Participants participate.  Without prejudice to a Party’s rights to market its own
production under the OOA, the Operator shall market each Participant’s share of

 

3

 

production with the Operator’s
own production, and on the same commercial basis, without any marketing fee
payable to Operator.  Operator agrees
not to commit a Participant’s production for any period in excess of thirty
(30) days without the written concurrence of such Participant.  Maritech represents there is no existing
marketing agreement covering future production from the Lease to which it is
bound, and consequently that Participants will not be bound by any such
existing agreement as to its interest to be earned hereunder.

 

9.                                      ADTI
Turnkey Drilling Contract:  This
Participation Agreement is further subject to and conditioned upon Operator
entering into a turnkey drilling contract with ADTI no later than July 1,
2004, to drill the Test Well.  As to
completion operations that may be conducted on the Test Well and as to drilling
and/or completion operations for any subsequent well or wells proposed to be
drilled pursuant hereto, Operator shall timely request ADTI to submit a turnkey
bid for each proposed operation.  In the
event Operator receives any third party bids for operations proposed hereunder,
ADTI shall have the option to (i) meet the lowest competitive turnkey bid and
drill and/or complete any well on a turnkey basis or (ii) match the day work
AFE generated by Operator, plus 15%, to drill or to complete such well on a
turnkey basis.  In no event, however,
shall Operator be obligated to accept any offer or proposal from ADTI to drill
or complete any wells other than the
Test Well.

 

10.                               Subsequent Wells:  Prior to payout of the Test
Well, only a Participant herein shall be entitled to propose the drilling of
any well, or wells, subsequent to the Test Well (“Subsequent Wells”) in
accordance with the terms and conditions of the OOA.  Notwithstanding anything the contrary contained in Paragraph 5
above, in the event a Subsequent Well is proposed to be drilled on the Lease
before Payout, in lieu of any other options contained herein, Maritech shall
have the right to participate as to its 20% working interest in each such Subsequent
Well pursuant to and in accordance with the OOA.

 

11.                               Laws:  THE PROVISIONS OF THIS AGREEMENT AND THE
RELATIONSHIP OF THE PARTIES SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS THAT WOULD REFER THE MATTER TO THE LAWS OF ANOTHER
JUISDICTION.

 

12.                               Miscellaneous:

 

A.                                   All notices, consents, requests,
instructions, approvals and other communications provided for herein shall be
deemed to be validly given, made or served, if in writing, and delivered
personally or sent by courier service, telex, facsimile or certified mail, however,
in no event by e-mail, to the addresses listed below:

 

	
  Maritech Resources, Inc.

  Attn:  Mr. Matt McCarroll

  25025 I-45North, 6th Floor

  The Woodlands, TX  77380

  Telephone: 281-364-4343

  Fax: 281-364-9846

  E-mail: 
  mmcarroll@maritechresources.com

  	
  Howard Energy Co., Inc.

  Attn:  Ms. Linda
  Marshall

  13561 West Bay Shore Dr., Ste. 3000

  Traverse City, MI  49684

  Telephone: (231) 995-7850

  Fax: (231) 941-2166

  E-mail:  lmarshall@howardenergy.com

  

 

4

 

	
  Palace Exploration Company

  	
  Palace Exploration Company

  
	
  and Palace Operating Company

  	
  Palace Operating Company

  
	
  Attn:  Mr. Jay Brown

  	
  Attn:  Mr. William H. Creel, II

  
	
  Granite Park 10, Ste.
  110

  	
  1202 East 33rd St.

  
	
  15115 Park Row

  	
  Tulsa, OK 74105-2048

  
	
  Houston, TX 77084

  	
  Telephone: (918)
  743-5096

  
	
  Telephone: (281)
  829-6336

  	
  Fax: (918) 712-8924

  
	
  Fax: (281) 829-2959

  	
  E-mail:
  bcreel@ztienergy.com

  
	
  E-mail:
  jbrown@ztienergy.com

  	
   

  
	
   

  	
   

  
	
  Reef Global Energy I, L. P.

  	
  Challenger Minerals Inc.

  
	
  Attn:  Mr. Walt Dunagin

  	
  Attn:  Mr. Reagan Newton

  
	
  1901 N. Central
  Expressway, Ste. 300

  	
  15375 Memorial Dr.,
  Suite G-200

  
	
  Richardson, TX  75080

  	
  Houston, TX  77079

  
	
  Telephone: (972)
  437-6792

  	
  Telephone: (281)
  925-7215

  
	
  Fax: (972) 994-0369

  	
  Fax: (281) 925-7281

  
	
  E-mail:
  walt@reefexploration.com

  	
  E-mail:
  reagan.newton@gsfdrill.com

  

 

B.                                     This
Participation Agreement constitutes the entire agreement between the Parties
with respect to the transactions contemplated herein, and supersedes all prior
oral or written agreements, commitments, understanding, or information
otherwise furnished by Maritech to Participants with respect to such
matters.  No amendment shall be binding
unless in writing and signed by representatives of each of the Parties.

 

C.                                     A
term, provision, covenant, representation, warranty, or condition of this
Participation Agreement may be waived only by written instrument executed by
the Party waiving compliance. The failure or delay of any Party in the
enforcement or exercise of the rights granted under this Agreement shall not
constitute a waiver of said rights nor shall it be considered as a basis for
estoppel.

 

D.                                    This
Participation Agreement, together with all of its exhibits, is intended by the
Parties to be a complete and final statement of the agreement of the Parties
with respect to the subject matter hereof, and supersedes any prior oral or
written statements or agreements between the Parties hereto.

 

E.                                      The
terms and provisions hereof shall be binding upon and inure to the benefit of
the Parties hereto and their respective heirs, successors, legal
representatives and assigns, and shall be covenants running with the lands and
Lease.  The Parties hereto agree to
execute such other instruments as may be necessary or convenient to effectively
convey the interest in the Lease, transfer operatorship and all other rights
and obligations as contemplated by this Participation Agreement and/or
otherwise effectuate the terms hereof.

 

F.                                      To
the extent permitted in its licensing agreement, upon ratification of the
Confidentiality Agreement dated May 1, 2002 by and between Maritech and Union
Oil Company of California, Maritech shall allow the Participants continued
access during normal business hours to its geological and 3-D seismic data
covering the Lease and any area contiguous thereto.

 

5

 

G.                                     Notwithstanding
anything herein to the contrary, Participants shall never become liable for any
gas or production imbalances affecting the Lease, except for its proportionate
share of any imbalances that might accrue between Maritech and Participants
with regard to any well(s) drilled pursuant to this Participation Agreement.

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be executed effective as of the date first set forth
above.  This Participation Agreement may
be signed in counterparts and shall be binding upon the Parties and upon their
successors, representatives and assigns. 
If these terms and conditions are acceptable, please indicate your
agreement and acceptance by signing and returning one copy of this
Participation Agreement to Reagan Newton, on or before April 1 2004, or
this offer shall, at CMI’s option, expire and be null and void.

 

Sincerely,

Challenger Minerals Inc.

 

	
  /s/ Charles B. Hauf

  	
   

  	
   

  
	
   

  	
   

  
	
  Charles B. Hauf

  	
   

  
	
  Vice President and
  General Manager

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED:

  	
   

  
	
  Maritech
  Resources, Inc.

  	
  Reef Global Energy I, L. P.

  
	
   

  	
  By: Reef Partners LLC,
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ G.M. McCarroll

  	
   

  	
  By:

  	
  /s/ Michael J. Mauceli

  	
   

  
	
  Name: G. M. McCarroll

  	
  Name: Michael J. Mauceli

  
	
  Title:   President

  	
  Title: Managing Member of Reef Partners LLC

  
	
  Date:  4/2/04

  	
  Date:  6/10/04

  
	
   

  	
   

  
	
  Palace Exploration Company &

  	
   

  
	
  Palace Operating Company

  	
  Howard Energy Co., Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Robert M. Zinke

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
  Title:

  	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  	
  Date: 

  	
   

  	
   

  
																	

 

6

 

Exhibit “A”

 

to Mobile 961
(OCS-G 5761) Participation Agreement, dated March 1, 2004, by and between

Challenger
Minerals Inc., Reef Global Energy I, L. P., 
Palace Exploration Company and Howard Energy Co., Inc., as Participants,
Palace Operating Company, as Operator and Maritech Resources, Inc.

 

Lease:  All operating rights in that certain Oil and
Gas Lease from the United States of America, as Lessor, to Chevron USA Inc. and
Union Oil Company of California, as Lessee, effective as of July 1, 1983,
identified in the office of The Minerals Management Service, Gulf of Mexico OCS
Region, as Oil and Gas Lease of Submerged Lands under the Outer Continental
Shelf Lands Act, Serial No. OCS-G 5761, describing Block 961, Mobile Area, as
shown on OCS Official Protraction Diagram, No NH16-04, covering 5,760.0 acres,
more or less, INSOFAR AND ONLY INSOFAR as said Lease covers operating rights in
the S/2, NE/4, E/2NW/4, NW/4NW/4, S/2SW/4NW/4 and NW/4SW/4NW/4 from the surface
of the earth down to a depth of 100’ below the stratigraphic equivalent of the
base of the Miocene sand seen at 2198’ in the OCS-G 5761 Mobile Block 961 #1
well.

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