Document:

<PAGE>

                                                                    EXHIBIT 10.3

                  TRUST TERMINATION AND DISTRIBUTION AGREEMENT

         This Trust Termination and Distribution Agreement (this "Agreement") is
entered into as this 31st day of December 2002, among the Participants in that
certain Pannonian Employee Royalty Trust (the "Trust"), Gasco Energy, Inc.
("Gasco"), sole shareholder of Pannonian Energy Inc. ("Pannonian"), and James H.
Porter, Trustee.

                                 R E C I T A L S

         WHEREAS, as of March 30, 2001, pursuant to the provisions of The
Pannonian Employee Royalty Trust Agreement (the "Trust Agreement") and the
related Pannonian Employee Royalty Plan (the "Plan"), Pannonian, as grantor and
settlor, purported to form a grantor-trust for the use and benefit of certain
individuals who founded Pannonian and certain Pannonian employees;

         WHEREAS, Participants, Gasco, Pannonian and Trustee desire to terminate
the Trust and distribute the Trust Estate; and

         WHEREAS, Participants desire to amend and fully supersede the Trust
Agreement and in that regard release and waive any rights or claims each of them
may possess on account of the amendments and other modifications of the Trust
Agreement contained in the Agreement and to provide that in all events and
circumstances this Agreement shall control.

         NOW, THEREFORE, Participants, Gasco, Pannonian and Trustee covenant and
agree as follows:

         1. RECITALS. The foregoing Recitals are hereby made a part of and
included in this Agreement.

         2. DEFINED TERMS. Unless defined herein, capitalized terms shall have
the meanings ascribed to them in the Trust Agreement or the Plan.

         3. EFFECTIVE DATE. Pursuant to the provisions of this Agreement, and
except as provided herein, Participants and Trustee (a) terminate the Trust; (b)
agree that the identity and classification of the Participants; and (c) agree
that the inventory of property of the Trust shall be fixed according to the
attached Exhibit "A" captioned "Royalty Calculation Summary Final Settlement
Terms" dated 31 December 2002, and incorporated herein by this reference ("Final
Settlement Terms").

         4. DISTRIBUTION OF TRUST ESTATE. With regard to the distribution of the
Trust Estate, reference is made to the attached Final Settlement Terms. Further,
any distribution of the Trust Estate shall be subject to the following
provisions:

         (a) PARTICIPANTS. Each of the individuals identified in the Final
         Settlement Terms as a Founding Director or employee of Pannonian is a
         Participant eligible to receive the corresponding distribution amount
         appearing opposite the name of such Participant. The parties
         acknowledge that although the Trust Agreement creates the
         classification of Participants referred to as "Founding Director or
         Fixed Participants," there are no Fixed Participants.

         (b) DISTRIBUTION IN-KIND. Notwithstanding any provisions to the
         contrary appearing in the Trust Agreement or the Plan, each Participant
         agrees to receive such Participant's distribution amount in the form
         and substance of an in-kind transfer, assignment and conveyance from
         the Trustee of an undivided percentage interest in the Trust Estate.

<PAGE>

         (c) POST-EFFECTIVE DATE DISTRIBUTIONS. The Participants acknowledge
         that on account of the nature of the property of the Trust Estate,
         there may be conveyances occurring after the Effective Date and, in
         such event, such distributions shall be made in accordance with the
         provisions of the Final Settlement Terms and this Agreement.

         5. TERMINATION AND DISTRIBUTION EXPENSES. Notwithstanding anything to
the contrary appearing in the Trust Agreement or the Plan, all costs, fees and
expenses in any way related to the administration of the Trust, termination of
the Trust and distribution of the Trust Estate including, but not limited to,
attorneys' fees, trustee's fees, documentation preparation fees, landman
services, accounting services, etc., shall be for the account of Gasco, and not
for time account of the Participant, the Trust or the Trustee.

         6. RESERVATION OF PARTICIPANT'S RIGHTS; RELEASE AND WAIVER.
Notwithstanding the following sentence of this Paragraph #6, each of the
Participants reserves all rights and remedies available to such Participants
under this Agreement including, but not limited to, the provisions of the
paragraph of this Agreement captioned "Participant Protection." In further
consideration of the covenants, agreements and other undertakings set forth
herein, and to induce Trustee to distribute the property of the Trust Estate,
upon receipt of Participant's respective distribution amount, each of the
Participants, for themselves and their respective heirs, successors and assigns,
releases and waives any claims that any of them may have against each other, the
Gasco, Pannonian and Trustee on account of or in any way related to the Trust
Agreement, the Plan, or the Trust.

         7. PARTICIPANT PROTECTION. As an inducement to each Participant to
enter into this Agreement, Gasco, its successors and assigns shall save,
indemnify and hold each of the Participants, and their respective heirs,
successors amid assigns harmless from any and all obligations, losses,
penalties, actions, damages, liabilities, claims, suits, costs and expenses, of
whatsoever kind and nature, imposed on, incurred by or asserted against such
Participant in any way arising out of or relating to the termination of the
Trust or the distribution of the Trust Estate to such Participant or on account
of Gasco's, Pannonian's or the Trustee's actual or alleged failure to perform
the obligations or observe the terms, conditions and other provisions of the
Trust Agreement, this Agreement; provided, however, the foregoing shall not
apply in the event of gross negligence or willful misconduct on the part of such
Participant, their respective heirs, successor and assigns. The obligations
contained in this paragraph shall continue in full force and effect
notwithstanding the expiration or other termination of this Agreement.

         8. TRUSTEE PROTECTION. As an inducement to Trustee to carry out and
complete the actions contemplated by or incidental to this Agreement, Gasco, its
successors and assigns shall save, indemnify and hold Trustee his heirs,
successors and assigns harmless from any and all obligations, losses, penalties,
actions, damages, liabilities, claims, suits, costs and expenses, of whatsoever
kind and nature, imposed on, incurred by or asserted against such Trustee in any
way arising out of or relating to the administration of the Trust, the
termination of the Trust or the distribution of the Trust Estate or on account
of Gasco's, Pannonian's or Trustee's failure to perform the obligations or
observe the terms, conditions and other provisions of this Agreement; provided,
however, the foregoing shall not apply in the event of gross negligence or
willful misconduct on the Trustee. The obligations contained in this paragraph
shall continue in full force and effect notwithstanding the expiration or other
termination of this Agreement.

         9. PARTICIPANT COOPERATION. Each Participant will cooperate with
reasonable requests of Trustee, Pannonian or Gasco in furnishing any documents,
statements, certificates necessary to evidence the termination of the Trust,
distribution of the Trust Estate and/or receipt of property pursuant to the
provisions of the Final Settlement Terms and this Agreement.

                                       2
<PAGE>

         10. TRUSTEE RESIGNATION; SUCCESSOR TRUSTEE. Unless otherwise agreed,
upon receipt by each of the Participant of the interest provided in the Final
Settlement Terms, or as of December 31, 2002, whichever occurs first, Trustee
will resign. In the event that after such resignation and in connection with
winding up the affairs of the Trust or making subsequent distributions of
property of the Trust, any officer of Pannonian or Gasco may act as a successor
trustee amid in such capacity execute and deliver any conveyancing instrument,
other certificate, statement or other similar document including, but not
limited to, any tax return as necessary and appropriate to effectuate the intent
and purposes of this Agreement.

         11. CONFLICTS. To the extent of any conflict between the provisions of
this Agreement and the provisions of the Trust Agreement and the Plan, the
provisions of this Agreement shall fully supersede the provisions of the Trust
Agreement amid Plan, and the provisions of this Agreement shall control.

         12. AMENDMENTS, MODIFICATIONS. No amendment or other modification or
waiver of any provision of this Agreement, nor consent to any deviation by
Gasco, Pannonian or Trustee from the provisions of this Agreement, shall be
effective unless such amendment or other modification shall be in writing and
approved in writing by the Trustee and by seventy-five percent (75%) of the
Participants (and without regard to whether such Participant is classified as a
Founding Participant, Fixed Participant or Annual Participant). No Participant's
interest shall be reduced or changed from the amount identified on the Final
Settlement Terms without such Participant's express prior written consent.

         13. FURTHER ASSURANCES. Each Participant, Gasco, Pannonian and the
Trustee agrees to and shall execute and deliver or shall cause to be executed
and delivered to the requesting party such other documents and instruments and
take such other actions as such requesting party may from time to time deem
necessary or appropriate to carry out the terms of this Agreement.

         14. SEVERABILITY. Any provision of this Agreement, which is prohibited
or unenforceable in any jurisdiction, shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement.

         15. GOVERNING LAW. THIS AGREEMENT INCLUDING THE FINAL SETTLEMENT TERMS
AND ANY RELATED STATEMENTS AND CERTIFICATES SHALL BE GOVERNED BY, CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF STATE OF COLORADO.

         16. MULTIPLE COUNTERPARTS. This document may be executed in multiple
counterparts, each of which constitute an original, but all of which taken
together shall constitute but one in the same document.

         17. COUNTERPART FACSIMILE EXECUTION. For purposes of this Agreement, a
document (or signature page thereto) signed and transmitted by facsimile machine
or Telecopier is to be treated as an original document. The signature of any
party thereon, for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to have the same
binding effect as an original signature on an original document. At the request
of any party, any facsimile or telecopy document is to be re-executed in
original form by the parties who executed the facsimile or telecopy document. No
party may raise the use of a facsimile machine or Telecopier or the fact that
any signature was transmitted through the use of a facsimile or Telecopier
machine as a defense to the enforcement of this Agreement or any amendment or
other document executed in compliance with this Paragraph.

         18. NOTICE. All notices, requests, demands and other communications
provided for in this Agreement shall be in writing and mailed or delivered to
the applicable party at its address indicated as a

                                       3
<PAGE>

part of such party's signature block or, as to each party, at such other address
as shall be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Paragraph. All such notices,
requests, demands and other communications shall (i) when mailed, properly
addressed and postage prepaid, be deemed given and effective three (3) business
days after such communication was deposited in the United States Postal System
sent by certified mail, return receipt requested; (ii) when sent by means of a
courier, be deemed given and effective upon delivery to a nationally recognized
overnight courier, properly addressed, charges prepaid; or (iii) be deemed given
and effective when delivered, if personally delivered.

         19. HEADINGS, CAPTIONS. The parties agree that paragraph and other
headings or captions are inserted only for ease of reference, shall not be
construed as part of this Agreement, and shall have no effect upon the
construction or interpretation of any part hereof.

         20. BINDING AGREEMENT. It is understood amid agreed that this Agreement
shall be binding upon and shall inure to the benefit of the Participants, Gasco,
Pannonian and the Trustee, and the respective heirs, successors and assigns of
each of them.

         21. FULL UNDERSTANDING; NO SIDE AGREEMENTS. Each Participant has read
amid fully understood the foregoing provisions of this Agreement and
acknowledges that this Agreement is executed and delivered solely on the basis
of the terms herein and not on the basis of any other representations or
warranties, side agreement or similar arrangement amid that Participant has
freely and voluntarily executed this Agreement.

         22. ARBITRATION. Any controversy, claim or dispute arising out of,
connected with, in any way concerning or relating to this Agreement, the Trust
Agreement, the Trust and/or the Plan, or the rights amid obligations of the
parties shall, upon the request of any party, be settled by arbitration in
accordance with the commercial arbitration rules then obtaining of the American
Arbitration Association (or any other form of arbitration acceptable to the
parties). Such arbitration shall be held in Denver, Colorado. Each party shall
bear the costs and expenses incurred by it in conducting the arbitration and
shall pay its proportionate share of the cost of any arbitrator jointly selected
by the parties (or their respective arbitrators). The decision made pursuant to
such arbitration shall be binding and conclusive on all parties involved; and
any judgment upon such decision may be entered in the court of any forum, state
or federal, having jurisdiction.

         23. HERINGER INTERESTS. On account of extraordinary services performed
by Kevin Heringer in connection with the procurement of, and negotiation of
favorable terms with regard to, certain agreements and leases acquired by
Pannonian, Pannonian has reserved and has transferred and assigned or will
transfer and assign to Kevin Heringer and/or entities affiliated with Kevin
Heringer (Kevin Heringer and such entities collectively referred to as
"Heringer") certain overriding royalty interests (the "Heringer Interests"), all
as more particularly delineated in the Final Settlement Terms. Accordingly, each
of the Participants acknowledges and agrees that the Heringer Interests will be
deducted before any overriding royalty is allocated to any of the Participants.

         24. GASCO/PANNONIAN CONTINUING OBLIGATIONS. With regard to any
overriding royalty interests arising from the production of oil and gas on the
acreage described or referred to in the Schedule of Leases and Contracts
identified in Schedule 2 to Exhibit "A," which is attached hereto and
incorporated herein by this reference, Gasco amid Pannonian are instructed and
directed to transfer and assign such royalty interests directly to the
individuals listed in the Final Settlement Terms (or the designee of such
individual) in the corresponding percentage interests appearing opposite the
name of such individual.

                                       4
<PAGE>

         25. PARTICIPANT'S CONTINUING RIGHTS AND INTEREST. With regard to any
overriding royalty interests arising from the production of oil and gas on tile
acreage described or referred to in the Schedule of Leases and Contracts
identified in Schedule 2 to Exhibit "A," which is attached hereto and
incorporated herein by this reference, any Participant shall be entitled to
enforce directly against Gasco and Pannonian any failure to timely carry out and
perform the instruction and directions with regard to any such transfer and
assignment of such royalty interests as described in the Section of the
Agreement captioned "Gasco/Pannonian Continuing Obligations" or elsewhere in
this Agreement. Such Participant, its personal representatives, heirs,
successors shall be entitled to recover reasonable attorney's incurred in
connection with the enforcement of such rights amid recovery of amounts owed to
such Participant.

         26. BINDING AGREEMENT; LEGAL ACTION. In the event that this Agreement
is not executed by all of the identified parties by DECEMBER 31, 2002, at the
option of Gasco, this Agreement shall be (a) binding and enforceable by and
among those participants that have executed this Agreement if at least ninety
percent (90%) of the Fixed Participants and at least seventy-five (75%) of the
Annual Participants have executed this Agreement; or (b) null and void and of no
further force and effect. In the event that this Agreement is determined to be
null and void (either on account of an insufficient number of Participants
executing this Agreement or at the election of Gasco) then, at the expense of
Gasco, either Gasco or the Trustee shall be authorized to proceed by appropriate
legal proceedings to seek, among other appropriate relief, an adjudication
ordering and decreeing that the Trust Agreement be terminated and a declaration
regarding the distribution of the Trust Estate, the eligible distributees and
the amount of property to be distributed to each such distributee.

                   [BALANCE OF PAGE LEFT INTENTIONALLY BLANK]

                                       5

<PAGE>

         IN WITNESS WHEREOF, this Agreement is executed and effective as of the
date first above written or, as applicable, effective as of the Effective Date.

Signed /s/ Marc A. Bruner
      --------------------------------------
         Marc A. Bruner
         Blauenweg 29
         4116 Metzerlen
         Switzerland

Signed /s/ Mark A. Erickson
      --------------------------------------
         Mark A. Erickson
         1135 East Kistler Ct.
         Highlands Ranch, CO 80126

Signed /s/ Howard O. Sharpe
      --------------------------------------
         Howard O. Sharpe
         9357 South Prairie View Dr.
         Highlands Ranch, CO 80126

Signed /s/ Thomas G. Fails
      --------------------------------------
         Thomas G. Fails
         965 South Monroe St.
         Denver, CO 80209

Signed /s/ Dawne F. Meyer
      --------------------------------------
         Dawne F. Meyer
         3941 Mount Olympus Way
         Salt Lake City, UT 84124

Signed /s/ Mr. Paul Hayes
      --------------------------------------
         Mr. Paul Hayes
         209 Middle Ridge Road
         P.O. Box 410
         Stratton Mountain, VT 05155

Signed /s/ Robin Dean
      --------------------------------------
         Robin Dean
         401 Leyden St.
         Denver, CO 80220

                                       6
<PAGE>

PANNONIAN ENERGY INC.

By:  /s/ Michael Decker
   -----------------------------------------
         Michael Decker
         Executive V.P. & COO

Address: 14 Inverness Drive East Suite H-234
         Englewood, Colorado 80111

GASCO ENERGY, INC.

By:  /s/ King Grant
   -----------------------------------------
         King Grant, CFO

Address: 14 Inverness Drive East Suite H-234
         Englewood, Colorado 80111

JAMES H. PORTER, TRUSTEE
PANNONIAN EMPLOYEE ROYALTY TRUST

     /s/ James H. Porter
--------------------------------------------
         James H. Porter, Trustee

Address: 4076 N. Lazy K Drive
         Castle Rock, Colorado 80104

                                       7
<PAGE>

                                    EXHIBIT A
                           ROYALTY CALCULATION SUMMARY
                             Final Settlement Terms
                                31 December 2002
                       Attached to and made a part of the
                              Trust Termination and
                             Distribution Agreement

Unless defined herein, capitalized terms shall have the meaning given them in
the Trust Termination and Distribution Agreement, dated as of December 31, 2002
(the "Agreement").

All overriding royalty interests owned of record by the Pannonian Employee
Royalty Trust (defined herein and in the Agreement as the "Trust") or to which
the Trust is entitled as a result of agreements in force, identified in the
attached Schedule 2, at the date hereof shall be divided and assigned to the
persons and in the amounts shown in Tables 1 through 5, below.

Generally, the Founding Participants (indicated by an asterisk (*) receive 33%
of each such overriding royalty. In Utah, however, Kevin Heringer, who is not a
Participant under the Trust, receives 25% of the total overriding royalty
reserved by Pannonian on any lease earned from Shenandoah and Pendragon and
12.5% of any overriding royalty reserved by Pannonian on the specific leases
identified in the attached Schedule 1. The Heringer Interests are deducted
before any overriding royalty is allocated to any other person, including the
Founding Directors.

After the percentage share of the Heringer Interests of each overriding royalty
has been deducted, the remainder of each overriding royalty is allocated among
the Founding Participants and the Annual Participants identified below, that is,
Marc Bruner, Mark Erickson, Howard Sharpe and Robin Dean, generally in
proportion to their compensation during July 2002. Specifically, the concerned
overriding royalties will be assigned and distributed in accordance with the
following five tables:

TABLE 1:
OKLAHOMA OVERRIDING ROYALTIES

<Table>
<Caption>
                                   FOUNDING
                                 PARTICIPANTS        COMPENSATION
PARTICIPANTS                        SHARE               SHARE        TOTAL SHARE
<S>                              <C>                 <C>             <C>
Marc Bruner*                       05.5000%            10.8958%        16.3981%
Mark Erickson*                     05.5000%            11.1409%        16.6410%
Howard Sharpe*                     05.5000%            05.7203%        11.2203%
Tom Fails*                         05.5000%            00.0000%        05.5000%
Dawne Meyer*                       05.5000%            00.0000%        05.5000%
Paul Hayes*                        05.5000%            00.0000%        05.5000%
Robin Dean                         00.0000%            04.6789%        04.6789%
</Table>

                                       1

<PAGE>

TABLE 2:
UTAH OVERRIDING ROYALTIES, EXCEPT THE OVERRIDING ROYALTIES SPECIFICALLY
SUBJECT TO TABLES 3 AND 4

<Table>
<Caption>
                                   FOUNDING
                                 PARTICIPANTS        COMPENSATION
PARTICIPANTS                        SHARE               SHARE        TOTAL SHARE
<S>                              <C>                 <C>             <C>
Marc Bruner*                       05.5000%            10.8958%        16.3981%
Mark Erickson*                     05.5000%            11.1409%        16.6410%
Howard Sharpe*                     05.5000%            05.7203%        11.2203%
Tom Fails*                         05.5000%            00.0000%        05.5000%
Dawne Meyer*                       05.5000%            00.0000%        05.5000%
Paul Hayes*                        05.5000%            00.0000%        05.5000%
Robin Dean                         00.0000%            04.6789%        04.6789%
</Table>

TABLE 3:
OVERRIDING ROYALTIES ON SHENANDOAH/PENDRAGON LEASES THAT HAVE BEEN ASSIGNED TO
PANNONIAN ENERGY INC. AT THE DATE HEREOF AND ON LEASES TO BE EARNED OR ASSIGNED
UNDER THE SHENANDOAH/PENDRAGON AGREEMENT DATED SEPTEMBER 12, 2000

HERINGER INTEREST                                                       25%

<Table>
<Caption>
                                   FOUNDING
                                 PARTICIPANTS        COMPENSATION
PARTICIPANTS                        SHARE               SHARE        TOTAL SHARE
<S>                              <C>                 <C>             <C>
Marc Bruner*                       04.1250%            08.1719%        12.2969%
Mark Erickson*                     04.1250%            08.3557%        12.4807%
Howard Sharpe*                     04.1250%            04.2902%        08.4152%
Tom Fails*                         04.1250%            00.0000%        04.1250%
Dawne Meyers*                      04.1250%            00.0000%        04.1250%
Paul Hayes*                        04.1250%            00.0000%        04.1250%
Robin Dean                         00.0000%            03.5092%        03.5092%
</Table>

TABLE 4:
OVERRIDING ROYALTIES ON LEASES SPECIFICALLY IDENTIFIED IN SCHEDULE 1 TO
THIS EXHIBIT "A"

HERINGER INTEREST                                                       12.5%

<Table>
<Caption>
                                   FOUNDING
                                 PARTICIPANTS        COMPENSATION
PARTICIPANTS                        SHARE               SHARE        TOTAL SHARE
<S>                              <C>                 <C>             <C>
Marc Bruner*                       04.8125%            09.5338%        14.3463%
Mark Erickson*                     04.8125%            09.7483%        14.5608%
Howard Sharpe*                     04.8125%            05.0052%        09.8177%
Tom Fails*                         04.8125%            00.0000%        04.8125%
Dawne Meycr*                       04.8125%            00.0000%        04.8125%
Paul Hayes*                        04.8125%            00.0000%        04.8125%
Robin Dean                         00.0000%            04.0941%        04.0941%
</Table>

                                       2
<PAGE>

TABLE 5
WYOMING OVERRIDING ROYALTIES

<Table>
<Caption>
                                   FOUNDING
                                 PARTICIPANTS        COMPENSATION
PARTICIPANTS                        SHARE               SHARE        TOTAL SHARE
<S>                              <C>                 <C>             <C>
Marc Bruner*                       05.5000%            10.8958%        16.3981%
Mark Erickson*                     05.5000%            11.1409%        16.6410%
Howard Sharpe*                     05.5000%            05.7203%        11.2203%
Tom Fails*                         05.5000%            00.0000%        05.5000%
Dawne Meyer*                       05.5000%            00.0000%        05.5000%
Paul Hayes*                        05.5000%            00.0000%        05.5000%
Robin Dean                         00.0000%            04.6789%        04.6789%
</Table>

                                       3

<PAGE>

                                   SCHEDULE 1
                                 TO EXHIBIT "A"

         Attached to and made a part of the Pannonian Royalty Trust Final
Settlement Terms.

<Table>
<Caption>
LEASES
                    DESCRIPTION                       EXPIRATION    ACRES
                                                      DATE
<S>                 <C>                               <C>           <C>
USA-UTU 76818       T9S-R18E                          1/1/08        320.00
                    --------
                    Sec 33:  S/2

USA-UTU 76489       T9S-RI9E                          6/30/07       1,136.80 Sec
                    --------
                    Sec 27: Lots 10-14, SW, S2SE
                    31: ALL
                    Sec 33: Lots 5,6,13,14
                    Sec 35: NENE

* State ML-48266    T9S-R19E                          6/15/09       640.00
                    --------
                    Sec 16: ALL

* USA-UTU 78433     T9S-R19E                          6/30/09       996.37
                    Sec 21: N2,N2S2
                    Sec 22: N2, N2SW, NWSE, Lot 2

USA-UTU 76490       T10S-R19E                         6/30/07       1005.02
                    ---------
                    Sec 4: Lots 1,2
                    Sec 5: Lots 1-8
                    Sec 6: Lots 1-4, NW, N2SW
                    Sec 7: Lots l-4
                    Sec 8: Lots 1-4, N2NE
                    Sec 9: Lots 1-4

USA-UTU 76033       T9S-R19E                          12/31/06      600.00
                    --------
                    Sec 19:  N2, SW,
                    N2SE, SWSE

USA-UTU 76034       T9S-R19E                          12/31/06      280.00
                    --------
                    Sec 29: SWNE, E2NW, SE

USA-UTU 76262       T9S-R1 9E                         3/31/07       900.18
                    ---------
                    Sec 21: LOTS 1,2, S2SW
                    Sec 22: SWSW
                    Sec 28: LOTS 5-14, NESE
                    Sec 29: N2N3, SENE, W2NW, SW
</Table>

                                       4

<PAGE>

                                   SCHEDULE 2
                                 TO EXHIBIT "A"

                               EXISTING AGREEMENTS

         Attached to and made a part of the Pannonian Royalty Trust Final
Settlement Terms.

         1. The Purchase and Sale Agreement between Gilman A. Hill and Pannonian
Energy dated 26 January 2001.

         2. The Acquisition Agreement between Phillips Petroleum Company and
Pannonian Energy Inc., dated 18 December, 2000 (as supplemented).

         3. Farmout Agreement by and between Phillips Petroleum Company and
Gasco Energy Inc. dated 24 July 2002 but effective 23 January 2002.

         4. Farmout Agreement by and between Phillips Petroleum Company and
Gasco Energy Inc. entered into and effective 1 September 2002.

         5. The Exploration and Development Agreement by and between the State
of Utah and Pannonian Energy Inc., signed by the State of Utah on 17 April,
2001. (Gate Canyon).

         6. The ElPaso Farmout agreement by and between Pannonian Energy Inc.
and ElPaso Production Oil and Gas Co. et al, dated 1 August 2002.

         7. The Agreement by and between Sapient Energy Corp. and Pannonian
Energy Inc. dated 2 April 2001.

         8. The Agreement and Plan of Merger made and entered into the 29th day
of June, 2001 by and among Gasco Energy, Inc. and LTM Energy Corporation and all
shareholders of LTM Energy Corporation.

                                       5exv10w56

 

EXHIBIT 10.56

CHOLESTECH CORPORATION

SEVERANCE AGREEMENT

     This SEVERANCE AGREEMENT (this “Agreement”) is made as of October 12,
2004, by and between Cholestech Corporation (the “Company”) and John F. Glenn
(the “Executive”).

     WHEREAS, the Executive is employed by the Company as the Company’s Chief
Financial Officer; and

     WHEREAS, the Company wishes to provide, the Executive is willing to
accept, certain benefits and compensation in the event of the termination of
Executive’s employment under the terms and conditions set forth in this
Agreement.

     NOW THEREFORE in consideration of the promises and mutual covenants
contained herein, and other good and valuable consideration, the parties agree
as follows:

     1. At-Will Employment. The Company and the Executive acknowledge that the
Executive’s employment is and shall continue to be at-will, as defined under
applicable law. If the Executive’s employment terminates for any reason, the
Executive shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the Company’s then existing employee benefit plans or
policies at the time of termination.

     2. Severance Benefits.

          (a) Option Acceleration. If the Company terminates the Executive’s
employment, for any or no reason, then any unvested and outstanding stock
options granted to the Executive by the Company shall accelerate as to that
number of shares which would have become vested and exercisable had the
Executive remained employed with the Company until the date that is 12 months
after the date of such termination. Such accelerated shares shall continue to
be subject to the terms and conditions of the Company’s stock option plans and
the applicable option agreements between the Executive and the Company. The
Executive agrees and acknowledges that the remaining unvested shares of the
Company subject to his stock options, excluding the accelerated shares
referenced above, shall terminate immediately as of the date of such
termination.

          (b) “Severance Payment. If the Company terminates the Executive’s
employment, for any or no reason, then the Executive shall be entitled to
receive a severance payment in an amount equal to 12 months of the Executive’s
base salary as in effect immediately prior to such termination. Such severance
payment shall be in lieu of any other severance payment to which the Executive
shall be entitled pursuant to any employment agreement, offer letter or the
Company’s then existing severance plans and policies; provided, however, that
the Executive shall be entitled to the severance payment provided for in
Section 4(b)(i) of the Change of Control Severance Agreement between the
Executive and the Company (the “Change of Control Agreement”) in lieu of the
severance payment provided for under this Agreement if the Executive’s
employment with the Company terminates as a result of an Involuntary Termination (as such term
is defined in the Change

 

 

of Control Agreement) at any time within 12 months
after a Change of Control (as such term is defined in the Change of Control
Agreement). Such severance payment shall be payable over a period of 12 months
commencing on the date of such termination in accordance with the Company’s
normal payment practices. In addition, during the 12 month period commencing
on the date of such termination, the Company shall continue to make available
to the Executive and the Executive’s spouse and dependents covered under any
group health plans or life insurance plans of the Company on the date of such
termination of employment, all group health, life and other similar insurance
plans in which the Executive or such covered dependents participate on the date
of the Executive’s termination; provided, however, that (i) the Executive
constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of the
Internal Revenue Code of 1986, as amended; and (ii) the Executive elects
continuation coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), within the time period
prescribed pursuant to COBRA.”

     3. Mitigation. The Executive shall not be required to mitigate the amount
of any payment contemplated by this Agreement, nor shall any such payment be
reduced by any earnings that the Executive may receive from any other source.
However, the Executive shall not be entitled to receive the health coverage and
benefits contemplated by this Agreement in the event that the Executive
receives similar health coverage and benefits as a result of new employment
during the 12 month period commencing on the date of the Executive’s
termination.

     4. Execution of Release Agreement upon Termination. As a condition of
entering into this Agreement and receiving the benefits under Section 2, the
Executive agrees to execute and not revoke a release of claims agreement
substantially in the form attached hereto as Exhibit A upon the termination of
his employment with the Company.

     5. Non-Disparagement. The Executive agrees to refrain from any
defamation, libel or slander of the Company and its respective officers,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, predecessor and successor corporations and assigns or
tortious interference with the contracts and relationships of the Company and
its respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations and assigns.

     6. Successors.

          (a) Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) to all or substantially all of the Company’s business and/or assets
shall assume the Company’s obligations under this Agreement and agree expressly
to perform the Company’s obligations under this Agreement in the same manner
and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s
business and/or assets which executes and delivers the assumption agreement
described in this subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.

          (b) Executive’s Successors. Without the written consent of the Company,
the Executive shall not assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms
of this Agreement and all

-2-

 

rights of the Executive hereunder shall inure to the
benefit of, and be enforceable by, the Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

     7. Arbitration.

          (a) Except as provided in Section 7(d) below, any dispute or controversy
arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach, or termination
thereof, shall be settled by binding arbitration to be held in Palo Alto,
California, in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association (the
“Rules”). The arbitrator may grant injunctions or other relief in such dispute
or controversy. The decision of the arbitrator shall be final, conclusive and
binding on the parties to the arbitration. Judgment may be entered on the
arbitrator’s decision in any court having jurisdiction.

          (b) The arbitrator(s) shall apply California law to the merits of any
dispute or claim, without reference to conflicts of law rules. The arbitration
proceedings shall be governed by federal arbitration law and by the Rules,
without reference to state arbitration law. The Executive hereby consents to
the personal jurisdiction of the state and federal courts located in California
for any action or proceeding arising from or relating to this Agreement or
relating to any arbitration in which the parties are participants.

          (c) The Executive understands that nothing in this Section modifies the
Executive’s at-will employment status. Either the Executive or the Company can
terminate the employment relationship at any time, with or without cause.

          (d) THE EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. THE EXECUTIVE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT
OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION,
VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING
ARBITRATION TO THE EXTENT PERMITTED BY LAW, AND THAT THIS ARBITRATION CLAUSE
CONSTITUTES A WAIVER OF THE EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO
THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE
RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:

               (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT; BREACH OF
CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND
FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF
EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION; NEGLIGENT OR
INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND
DEFAMATION.

               (ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR MUNICIPAL
STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF

-3-

 

THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF
1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS
ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION
201, et seq;

               (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS
RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

     8. Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the internal substantive
laws, but not the conflicts of law rules, of the State of California.

     9. Severability. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

     10. Waiver. No provision of this Agreement may be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Executive and by an authorized officer of the Company (other
than the Executive). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of
the same condition or provision at another time.

     11. Integration. This Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersede
all prior or contemporaneous agreements, whether written or oral, with respect
to this Agreement, including the Executive’s offer letter from the Company
dated August 6, 1999.

     12. Employment Taxes. All payments made pursuant to this Agreement shall
be subject to withholding of applicable income and employment taxes.

     13. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute
one and the same instrument.

-4-

 

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the date set
forth above.

	 	 	 	 	 
	COMPANY:	 	CHOLESTECH CORPORATION
	 
	 	 	 	 
	 
	 	 	 	 
	

	 	By:
	 	/s/ Warren E. Pinckert II
	

	 	 	 	
 
	

	 	 	 	Warren E. Pinckert II
	

	 	 	 	President and Chief Executive Officer
	 
	 	 	 	 
	 
	 	 	 	 
	EXECUTIVE:	 	/s/ John F. Glenn
	 	 	
 
	 	 	John F. Glenn

-5-

 

EXHIBIT A

FORM RELEASE OF CLAIMS AGREEMENT

     This Release of Claims Agreement (this “Agreement”) is made and entered
into by and between Cholestech Corporation (the “Company”) and John F. Glenn
(the “Executive”).

WHEREAS, the Executive was employed by the Company; and

     WHEREAS, the Company (or the Company’s predecessor) and the Executive have
entered into a Severance Agreement effective as of October 12, 2004 (the
“Severance Agreement”).

     NOW THEREFORE, in consideration of the mutual promises made herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Executive (collectively referred to as
the “Parties”) desiring to be legally bound do hereby agree as follows:

     1. Termination. The Executive’s employment with the Company terminated on
   , 20   .

     2. Consideration. Subject to and in consideration of the Executive’s
release of claims as provided herein, the Company has agreed to pay the
Executive certain benefits and the Executive has agreed to provide certain
benefits to the Company, both as set forth in the Severance Agreement.

     3. Payment of Salary. The Executive acknowledges and represents that the
Company has paid all salary, wages, bonuses, accrued vacation, commissions and
any and all other benefits due to the Executive.

     4. Release of Claims. The Executive agrees that the foregoing
consideration represents settlement in full of all outstanding obligations owed
to the Executive by the Company. The Executive, on his own behalf and his
respective heirs, family members, executors and assigns, hereby fully and
forever releases the Company and its past, present and future officers, agents,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, parents, predecessor and successor corporations, and
assigns, from, and agrees not to sue or otherwise institute or cause to be
instituted any legal or administrative proceedings concerning any claim, duty,
obligation or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that he may possess
arising from any omissions, acts or facts that have occurred up until and
including the Effective Date (as defined below) of this Agreement including,
without limitation:

          (a) any and all claims relating to or arising from the Executive’s
employment relationship with the Company and the termination of that
relationship;

          (b) any and all claims relating to, or arising from, the Executive’s right
to purchase, or actual purchase of shares of stock of the Company, including,
without limitation, any claims for fraud, misrepresentation, breach of
fiduciary duty, breach of duty under applicable state corporate law and
securities fraud under any state or federal law;

 

 

          (c) any and all claims for wrongful discharge of employment, termination
in violation of public policy, discrimination, breach of contract (both express
and implied), breach of a covenant of good faith and fair dealing (both express
and implied), promissory estoppel, negligent or intentional infliction of
emotional distress, negligent or intentional misrepresentation, negligent or
intentional interference with contract or prospective economic advantage,
unfair business practices, defamation, libel, slander, negligence, personal
injury, assault, battery, invasion of privacy, false imprisonment and
conversion;

          (d) any and all claims for violation of any federal, state or municipal
statute, including, but not limited to, Title VII of the Civil Rights Act of
1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of
1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards
Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment
and Retraining Notification Act, the California Fair Employment and Housing
Act, and Labor Code Section 201, et seq. and Section 970, et seq. and all
amendments to each such Act as well as the regulations issued thereunder;

          (e) any and all claims for violation of the federal or any state
constitution;

          (f) any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and

          (g) any and all claims for attorneys’ fees and costs.

     The Executive agrees that the release set forth in this Section 4 shall be
and remain in effect in all respects as a complete general release as to the
matters released. This release does not extend to any obligations incurred
under this Agreement.

     5. Acknowledgment of Waiver of Claims under ADEA. The Executive
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and
release is knowing and voluntary. The Executive and the Company agree that
this waiver and release does not apply to any rights or claims that may arise
under the ADEA after the Effective Date of this Agreement. The Executive
acknowledges that the consideration given for this waiver and release agreement
is in addition to anything of value to which the Executive was already
entitled. The Executive further acknowledges that he has been advised by this
writing that (a) he should consult with an attorney prior to executing this
Agreement; (b) he has at least twenty-one (21) days within which to consider
this Agreement; (c) he has seven (7) days following the execution of this
Agreement by the Parties to revoke the Agreement; and (d) this Agreement shall
not be effective until the revocation period has expired. Any revocation
should be in writing and delivered to the Company by the close of business on
the seventh (7th) day from the date that the Executive signs this Agreement.

     6. Civil Code Section 1542. The Executive represents that he is not aware
of any claims against the Company other than the claims that are released by
this Agreement. The Executive acknowledges that he has been advised by legal
counsel and is familiar with the provisions of California Civil Code Section
1542, which provides as follows:

A-2

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.

     The Executive, being aware of said code section, agrees to expressly waive
any rights he may have thereunder, as well as under any other statute or common
law principles of similar effect.

     7. No Pending or Future Lawsuits. The Executive represents that he has no
lawsuits, claims or actions pending in his name, or on behalf of any other
person or entity, against the Company or any other person or entity referred to
herein. The Executive also represents that he does not intend to bring any
claims on his own behalf or on behalf of any other person or entity against the
Company or any other person or entity referred to herein.

     8. Confidentiality. The Executive agrees to use his best efforts to
maintain in confidence the existence of this Agreement, the contents and terms
of this Agreement, and the consideration for this Agreement (hereinafter
collectively referred to as “Release Information”). The Executive agrees to
take every reasonable precaution to prevent disclosure of any Release
Information to third parties and agrees that there will be no publicity,
directly or indirectly, concerning any Release Information. The Executive
agrees to take every precaution to disclose Release Information only to those
attorneys, accountants, governmental entities and family members who have a
reasonable need to know of such Release Information.

     9. No Cooperation. The Executive agrees he will not act in any manner
that might damage the business of the Company. The Executive agrees that he
will not counsel or assist any attorneys or their clients in the presentation
or prosecution of any disputes, differences, grievances, claims, charges or
complaints by any third party against the Company and/or any officer, director,
employee, agent, representative, shareholder or attorney of the Company, unless
under a subpoena or other court order to do so.

     10. Costs. The Parties shall each bear their own costs, expert fees,
attorneys’ fees and other fees incurred in connection with this Agreement.

     11. Authority. The Company represents and warrants that the undersigned
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.
The Executive represents and warrants that he has the capacity to act on his
own behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement.

     12. No Representations. The Executive represents that he has had the
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Neither party has
relied upon any representations or statements made by the other party hereto
which are not specifically set forth in this Agreement.

A-3

 

     13. Severability. In the event that any provision hereof becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision.

     14. Entire Agreement. This Agreement and the Severance Agreement and the
agreements and plans referenced therein represent the entire agreement and
understanding between the Company and the Executive concerning the Executive’s
separation from the Company, and supersede and replace any and all prior
agreements and understandings concerning the Executive’s relationship with the
Company and his compensation by the Company. This Agreement may only be
amended in writing signed by the Executive and an executive officer of the
Company.

     15. Governing Law. This Agreement shall be governed by the internal
substantive laws, but not the choice of law rules, of the State of California.

     16. Effective Date. This Agreement is effective eight (8) days after it
has been signed by the Parties (the “Effective Date”).

     17. Counterparts. This Agreement may be executed in counterparts, and
each counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

     18. Voluntary Execution of Agreement. This Agreement is executed
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

          (a) They have read this Agreement;

          (b) They have been represented in the preparation, negotiation and
execution of this Agreement by legal counsel of their own choice or that they
have voluntarily declined to seek such counsel;

          (c) They understand the terms and consequences of this Agreement and of
the releases it contains; and

          (d) They are fully aware of the legal and binding effect of this
Agreement.

A-4

 

     IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.

	 	 	 	 	 
	 	 	CHOLESTECH CORPORATION
	 
	 	 	 	 
	 
	 	 	 	 
	

	 	By:
	 	 
	

	 	 	 	
 
	

	 	Title:
	 	 
	

	 	 	 	
 
	

	 	Date:
	 	 
	

	 	 	 	
 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	EXECUTIVE
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	
 
	 	 	John F. Glenn
	 
	 	 	 	 
	

	 	Date:
	 	 
	

	 	 	 	
 

A-5

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