Document:

exv10w9

EXHIBIT 10.9

SPECIFIC
TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL

TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL

HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,

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

COOPERATIVE AGREEMENT

          This COOPERATIVE AGREEMENT (“Agreement”) is executed to be effective as of October 22,
2004, at 7:00 a.m. local time in the Greater Aneth Field, San Juan County, Utah (“Effective Time”)
between RESOLUTE NATURAL RESOURCES COMPANY (“Resolute”), a Delaware corporation, and NAVAJO NATION
OIL AND GAS COMPANY (“NNOG”), a Federal corporation.

ARTICLE I.

GENERAL

          1.01 Resolute and NNOG have entered into an Asset Sale Agreement (“ASA”) with
ChevronTexaco (“CVX”) dated October 22, 2004, covering certain assets in the Greater Aneth
Field in San Juan County, Utah, located in part within the exterior boundaries of the Navajo
Nation Reservation.

          1.02 Resolute and NNOG have agreed upon certain cooperative arrangements concerning the
assets to be acquired from CVX (the “Aneth Assets”). The Aneth Assets means (a) each and every
property, interest, right and benefit Resolute and NNOG acquire in the Greater Aneth Area from
CVX or its affiliates whether pursuant to the ASA or any formal or informal amendment or
supplement thereof, understanding in connection therewith or in furtherance of or resulting
from the sale and purchase transaction, (b) the ASA and any amendments or supplements thereof
and the rights and interests of the Buyers thereunder and (c) all liabilities, obligations and
burdens associated with the foregoing.

          1.03 The parties have agreed that Resolute (or one or more of its subsidiaries) will
acquire 75% and NNOG will acquire 25% of the Aneth Assets. Resolute and NNOG’s interests in
the Aneth Assets shall be several, not joint.

ARTICLE II.

PAYMENTS AND OBLIGATIONS IN CONNECTION WITH THE ASA

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

 

 

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

          2.03 NNOG agrees to use its best good faith efforts to obtain the support of the NN for
the closing of the ASA, as well as support for the implementation of the terms and provisions
of this Agreement. In particular, without limitation, NNOG will work with NN to obtain an
expedited approval of the assignment of interests from CVX to Resolute, or its designated
subsidiary, and NNOG, as well as a waiver of the NN preferential right to purchase the Aneth
Assets from CVX.

ARTICLE III.

NNOG OPTIONS

          3.01 Following the closing of the ASA, NNOG shall have options to purchase additional
interests out of Resolute’s interest at the various Payout points and in the percentages set
forth as follows:

     10% interest (or any lesser amount) at 100% of Payout (the “First Option”)

     10% interest (or any lesser amount) at 150% of Payout

     10% interest (or any lesser amount) at 200% of Payout

provided, however, no option will be exercisable prior to the fourth anniversary of the CVX
closing except as set forth below. The interest subject to each of the NNOG options shall be an
undivided, proportionally reduced 10% (or any lesser amount) of the 75% undivided,
proportionately reduced interest that Resolute acquires from CVX in the Aneth Assets.

          3.02 Payout is defined as the point in time when Resolute recovers from the revenue from
the sale of production from the Aneth Assets (including the effects of Resolute’s hedging
activity relative to the Aneth Asset production) net of all royalty and other payments out of
production and net of all NN, state and local taxes, assessments, fees, payments or similar
burdens (other than federal or state income taxes), (i) all of Resolute’s costs directly
associated with the acquisition of the Aneth Assets, and (ii) all of Resolute’s costs
chargeable to the Joint Account under Exhibit D to the Aneth Unit Operating Agreement as in
effect from time to time, but (iii) excluding the $(**) payment by Resolute to NNOG and
excluding interest under financing arrangements. Acquisition costs include, without limitation
legal (including legal costs associated with arranging financing for Resolute or NNOG),
accounting, consulting, title, environmental and other due diligence, engineering, travel and
all similar costs and expenses attributable to the acquisition of the CVX Assets. Revenue and
costs will be adjusted by certain amounts in the event a tax credit transaction occurs as
described below.

          3.03 The price for the purchase of any portion of the Aneth Assets pursuant to the options
granted herein shall be the Fair Market Value of such assets with an Effective Date of the date
that the relevant Payout point occurred. The Fair Market Value of

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assets for purposes of this Agreement shall be determined by the parties in good faith
based on the estimated future cash flows from reserves, the value of other material assets and
relevant market factors excluding the effect of the preferential purchase and consent rights of
the NN. Fair Market Value will be the most probable expected value in a transaction between a
willing seller and a willing buyer. If the parties fail to agree upon Fair Market Value within
30 days after the relevant notice by Resolute, or if either party believes such negotiations
will not lead to such agreement, either party may serve upon the other a notice demanding that
Fair Market Value be promptly determined by arbitration pursuant to Section 10.05 (“Market
Value Notice”).

          3.04 Each option shall be exercisable for a period ending on the later to occur of sixty
(60) days following notice by Resolute of the occurrence of the relevant percentage of Payout
or ten (10) business days following the determination of Fair Market Value. Resolute shall
calculate the status of the Payout account quarterly until such time as a Payout point could
likely occur in a shorter time than three months, after which time Resolute shall calculate the
status of the Payout account on a monthly basis. Resolute shall provide NNOG with the status
of the Payout account promptly following each such determination, providing reasonable
documentation and backup.

          3.05 In order to exercise any option, NNOG must give written notice to Resolute within the
applicable notice period. Once exercised, NNOG shall be obligated to acquire the option
interest under the terms and conditions of Exhibit A and shall pay cash therefor at the
closing. Closing of the purchase of an option interest shall occur at the offices of Resolute
on the first business day following the fourteenth day after the day of exercise. The amount
paid at closing shall be adjusted in accordance with the generally applicable adjustment
provisions of the ASA. If NNOG fails to close the acquisition of an option interest, Resolute
shall be entitled to terminate the right of NNOG to acquire the option interest and, unless
NNOG’s failure to close is for reasons outside of the reasonable control of NNOG, shall be
entitled to any other remedy provided by law or equity.

ARTICLE IV. TERMINATION UPON SALE, FIRST OPTION ACCELERATION,

AND FIRST RIGHT OF NEGOTIATION

          4.01 Except as set forth below, the NNOG options not previously exercised shall terminate
upon the sale by Resolute of the Aneth Assets, notwithstanding that such sale would otherwise
have caused Payout to occur, provided that if the right to exercise the option vests (i.e.,
when the relevant Payout has occurred) prior to such sale the option will not be terminated by
reason of the sale. A “Sale” for the purposes of this Agreement is defined to include a sale
other than to the party’s affiliates of all or substantially all of a party’s Aneth Assets, or
the production or revenue from production from such assets, or a change of control, direct or
indirect, of the Resolute entity holding the assets. A change of control shall be deemed to
occur as a result of any transaction or series of transactions whereby Resolute, its
shareholders and its subsidiaries no longer own or control, directly or indirectly, at least
50% of the voting control of the entity or entities holding the Aneth Assets.

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          4.02 Notwithstanding Section 4.01, the First Option will become exercisable without regard
to the occurrence of Payout for a period of sixty (60) days (or the date that Fair Market Value
is determined, if later) following notice by Resolute of its intent to offer Resolute’s
interest in the Aneth Assets for Sale (as defined). The terms of the option, other than the
exercise thereof, shall be governed by the terms of Article 3, provided that the closing of the
purchase pursuant to the exercise shall occur simultaneously with the Sale giving rise to the
notice. If Resolute fails to consummate a Sale following the notice thereof, however, the
exercise of the option shall be void and the rights of the parties shall be as if no such Sale
notice had been given; provided, however, in such event, unless the failure to consummate the
Sale is due to the breach of a third party to consummate the sale, Resolute shall reimburse
NNOG for NNOG’s reasonable costs and expenses, including without limitation its attorney and
consultant fees, incurred by NNOG in pursuing such option.

          4.03 NNOG shall have a right of first negotiation concerning any proposed Sale of the
Aneth Assets by Resolute. Said right of first negotiation shall be in addition to the rights
that already exist in NN, if any. If Resolute intends to offer its interest in the Aneth
Assets for Sale, and prior to any announcement of such intent to, or negotiations or
discussions with, any third party, Resolute shall accord NNOG an exclusive right of first
negotiation for a period of sixty days (the “Exclusive Negotiation Period”). During such
Exclusive Negotiation Period, Resolute will negotiate in good faith directly and exclusively
with NNOG to arrive at a mutually agreeable Fair Market Value of such assets determined as
provided in Article 3 hereof, and any other mutually agreeable terms and conditions of a sale
of such Assets from Resolute to NNOG. This right of first negotiation is exclusive and personal
to NNOG and may not be assigned or transferred in any way. Such right shall terminate upon a
change in control of NNOG, such change of control defined substantially similarly to the
definition in Article 4.01. Such negotiation shall include only the Aneth Assets, whether
Resolute intends to include other assets as part of the Sale or not. This right of first
negotiation is not intended to be in derogation or substitution for any preference right that
NN may enjoy under Navajo law, or to preclude NNOG from obtaining the Aneth Assets in
cooperation with NN exercising such preference right. Similarly, such right of first
negotiation is not intended to give the NN any right, preference or concession it does not have
under applicable law. At either Resolute’s or NNOG’s election, the parties will engage a
mutually acceptable, nationally recognized energy evaluation firm to provide guidance on the
Fair Market Value of the assets, as determined above. The parties shall share equally the cost
of such firm. No contract of sale shall exist until definitive agreements fully agreeable to
both parties in their sole and absolute discretion as to each and every term including price
are executed.

ARTICLE V.

ASSISTANCE BETWEEN THE PARTIES

          5.01 For so long as Resolute, NNOG and their affiliates hold in the aggregate the largest
amount of working interest in the Aneth Unit, and Resolute’s working interest is greater than
NNOG’s, NNOG shall use its best good faith efforts to cause Resolute to be elected and remain
operator of the Aneth Unit and any non-unit properties within the Aneth Assets.

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          5.02 Resolute and NNOG shall enter into a mutually acceptable joint operating agreement
concerning any properties not subject to a unit operating agreement. NNOG will support Resolute
in attempting to amend the Aneth Unit Operating Agreement to update and improve the form in
order to encourage development in any manner consistent with NNOG’s interest.

          5.03 Resolute will work with NNOG in good faith to guide and assist NNOG in expanding its
oil and gas operating capability. In this regard, Resolute or its affiliates or other persons
on its behalf will share technical and other information with NNOG concerning the Aneth Assets;
provided (i) that Resolute will have the discretion to determine appropriate amounts and types
of data to share, it being understood that such sharing should not impede efficient day-to-day
operations and business nor become an unreasonable burden on NNOG, and (ii) that NNOG has the
legal right to share such data. NNOG ACKNOWLEDGES THAT RESOLUTE MAY NOT SHARE ALL INFORMATION
IT MAY HAVE. NNOG ACKNOWLEDGES THAT ANY SUCH INFORMATION PROVIDED TO NNOG, INCLUDING, WITHOUT
LIMITATION, ANY ASSESSMENTS, ESTIMATES, ANALYSIS, STUDIES, PLANS, MODELS, FORECASTS AND SIMILAR
INFORMATION ARE PROVIDED WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND. RESOLUTE SHALL HAVE NO
LIABILITY OR OBLIGATION TO NNOG CONCERNING THE QUALITY OF SUCH INFORMATION REGARDLESS OF THE
NATURE OF ANY INACCURACY, ERROR, INCOMPLETENESS OR OTHER PROBLEM WITH THE INFORMATION. NNOG
AGREES THAT RESOLUTE SHALL HAVE NO OBLIGATION TO KEEP ANY SUCH INFORMATION CURRENT OR TO
CORRECT OR ADJUST SUCH INFORMATION IF RESOLUTE SHOULD LEARN OF ANY INACCURACY, ERROR
INCOMPLETENESS OR OTHER PROBLEM WITH THE INFORMATION. RELIANCE BY NNOG ON ANY INFORMATION
PROVIDED BY OR ON BEHALF OF RESOLUTE OR ANY OF ITS AFFILIATES, AGENTS, REPRESENTATIVES,
ADVISORS, CONSULTANTS OR ANY OTHER PERSON IS AT NNOG’S SOLE RISK. IF AND TO THE EXTENT NNOG
SHARES ANY SUCH INFORMATION WITH RESOLUTE, RESOLUTE AGREES THAT SUCH INFORMATION SHALL BE
PROVIDED TO RESOLUTE ON THE SAME TERMS THAT RESOLUTE PROVIDES INFORMATION TO NNOG AS SET FORTH
ABOVE.

          5.04 If requested by NNOG, Resolute will use its best good faith reasonable efforts
(without the payment of consideration) to assist NNOG in its arranging acceptable financing for
NNOG’s purchase of its 25% initial interest in the Aneth Assets from CVX. Resolute will also
use its best good faith reasonable efforts to introduce NNOG to financing sources and to share
information with respect to financial structures that may further NNOG’s ability to finance its
acquisitions and operations.

          5.05 To further assist NNOG in its goal of enhancing its operating capability, Resolute
will fund on an ongoing basis two scholarships in petroleum engineering and/or petroleum
geology for qualified Navajo students for such time as Resolute is operating the Aneth Assets.
Scholarships will be granted by representatives of NNOG and Resolute as agreed to among the
parties.

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          5.06 NNOG shall use its best good faith reasonable efforts to help maintain good
relationships among Resolute and its employees, the community and the NN, including areas of
cultural sensitivity. NNOG will advise Resolute of all material information of which it becomes
aware that could impact the efficient operation of the Aneth Assets or community or employee
relations. NNOG shall use its best good faith reasonable efforts to prevent confusion among
Resolute employees or the Aneth communities as to Resolute’s authority and role concerning
operations on the Aneth Assets.

          5.07 NNOG shall use its best good faith reasonable efforts to expand and develop its
operating capabilities and expertise and to enhance its financing sources.

          5.08 NNOG shall use its best good faith reasonable efforts to maintain cooperative efforts
among all parties and agencies concerned with operations concerning the Aneth Assets. NNOG
shall use its best good faith reasonable efforts to obtain the consents and approvals necessary
or convenient for the consummation of the CVX transaction and the efficient execution of future
operations concerning the Aneth Assets, including, without limitation, consents and approvals
of the NN, the Bureau of Land Management (“BLM”), Bureau of Indian Affairs (“BIA”), and all
other authorities having jurisdiction over the Aneth Assets.

          5.09 NNOG will use its best good faith reasonable efforts to cause NN to agree to grant or
renew any rights of way that may be needed or useful for the operation and utilization of the
Aneth Assets.

ARTICLE VI.

TAX MATTERS

          6.01 Except as provided below concerning New Markets Tax Credits (“NMTC”), NNOG will
retain the right to market to third parties or otherwise for its sole benefit any income tax
exemptions, allowances, deductions or credits available to it under applicable law arising from
its operations. The value of any tax benefits of NNOG that the parties may agree to allocate
to Resolute will be treated as revenue to Resolute for purposes of determining Payout.

          6.02 Resolute, as manager of Resolute NAD, LLC, (“RNAD”) is pursuing, at its discretion
and expense, an application for an allocation of NMTC under Section 45 D of the Internal
Revenue Code and the Community Development Financial Institutions Fund program for energy
investments on Native American lands. The allocation of credits will not be earmarked for
projects on Navajo lands. Nevertheless, Resolute will direct investments that produce NMTC if
an allocation is received by RNAD, to the acquisition of and/or operations on the Aneth Assets
if and to the extent such investments can be so directed consistent with law, regulation and
the application documents. It is acknowledged that Resolute, as manager of RNAD will consider
the advice of the Board of Advisors of RNAD in determining the use of NMTC. Subject to the
foregoing, the parties acknowledge that Resolute has ultimate discretion in the pursuit of
NMTC, the use thereof and whether to continue such pursuit.

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          6.03 To enhance the possibility of obtaining an allocation of tax credits, NNOG has agreed
to act as a “controlling entity” with respect to RNAD. NNOG owns a voting membership interest
in RNAD. NNOG has provided the necessary control entity information for the NMTC application,
and shall provide such supplemental information and cooperation as may be reasonably requested
by Resolute to continue pursuing an allocation of NMTC. NNOG shall not be involved in
management of RNAD beyond the extent required by the NMTC program, and NNOG will not assume any
position involving liability. Resolute will be the manager of RNAD unless and until it is
removed as manager in accordance with RNAD’s operating agreement. NNOG may terminate its
involvement in RNAD at any time provided it gives 45 days’ advance notice thereof to Resolute
and provided NNOG conveys its interest in RNAD to Resolute or Resolute’s designee. Resolute
shall defend, indemnify and hold harmless NNOG from any expenses, including reasonable
attorneys’ fees, associated with third party claims for damages resulting from NNOG’s ownership
of a membership interest in RNAD. Resolute shall have the right to control the defense and
settlement of any such claim. If in the opinion of Resolute’s attorney’s or advisors Resolute
reasonably determines NNOG’s ownership of an equity interest in RNAD creates a reasonable risk
of material liability to Resolute or if it reasonably could impair the obtaining of an
allocation of NMTC, upon request of Resolute, NNOG shall convey its interest in RNAD to
Resolute or Resolute’s designee in a manner consistent with the NMTC program.

        .

          6.04 If Resolute allocates NMTC for activities in connection with the Aneth Assets, the
provisions of Exhibit B shall become operative and legally binding as between Resolute and
NNOG. The parties shall then promptly enter into good faith reasonable negotiations with a
view to executing definitive agreements consistent with the provisions of Exhibit B within 30
days following notice by Resolute of such allocation. The parties shall restructure the
transactions described in Exhibit B as necessary or appropriate in order to achieve the
contemplated economic and tax results. In general, if NNOG’s working interests participate in
the tax credit program, the benefits of the tax credits would be shared in proportion to the
working interests of the parties in the Aneth Assets, and Payout would also be credited with
all of such credits received by Resolute. If NNOG’s working interests do not participate in
the tax credit program, all such tax credit benefits would go to Resolute in the first
instance, but Resolute would apply 25% of these benefits to reduce the exercise price of NNOG’s
First Option, and Payout would also be credited with the 75% portion of such credits retained
by Resolute. Resolute and NNOG, as appropriate, would be entitled to recover their respective
out of pocket costs in pursuing such credits prior to determining the proper sharing or
allocation of such tax credits. The foregoing provisions and Exhibit B are intended, and
should be construed, to be complementary and mutually consistent. However, in the event of any
inconsistency between the two with respect to the New Markets Tax Credit program, the terms set
forth in Exhibit B shall control.

ARTICLE VII.

AREAS OF MUTUAL INTEREST

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               7.01 The Greater Aneth Field, consisting of the McElmo Creek, Ratherford and White Mesa
Units, but excluding the Aneth Unit shall constitute an Area of Mutual Interest (the “GREATER
AMI”) between the parties. If either party becomes aware of the opportunity to acquire any
right, title or interest in any oil and gas lease, mineral interest, facility, contract or
other right or interest in or affecting oil and gas, including, without limitation, any right
of way, easement or surface interest used or useful for the production of oil and gas, or any
contractual right to acquire such an interest (an “Oil and Gas Interest”) in the GREATER AMI,
it shall promptly notify the other party and the parties shall negotiate in good faith
exclusively with each other for a period of ninety days in an attempt to agree upon an
arrangement to acquire the Oil and Gas Interest with the expectation that they would share the
acquisition in proportion to their interests in the Aneth Assets. Neither party shall solicit,
entertain, discuss, review, analyze nor respond to any other proposals or requests during the
period of exclusive negotiations. Notwithstanding anything herein to the contrary, if a party
has not breached its obligations under this Section 7.01 and believes in good faith that
further negotiations would not likely result in definitive agreement, such party may give
notice to the other party of such circumstance and the obligations of good faith, exclusive
negotiations shall terminate fifteen (15) days following such notice. This Section 7.01 shall
not prevent a party from taking any action to pursue or capture the acquisition opportunity.

               7.02 The boundaries of the Aneth Unit, as it may be modified, or any successor unit area,
shall also constitute an Area of Mutual Interest (the “ANETH AMI”) between the parties. If
either party acquires an Oil and Gas Interest in the ANETH AMI it shall notify the other party
within 30 days of the acquisition giving full particulars concerning the acquisition, including
the price. The other party shall have 15 days within which to elect to require an assignment
of an interest in the acquired property proportional to its relative working interest in the
Aneth Unit compared to the acquiring party’s working interest in the Aneth Unit. If the
non-acquiring party elects to require such an assignment, it shall pay its proportionate share
of all acquisition costs in exchange for proper assignments at a closing to be held within 30
days following the election.

               7.03 The GREATER AMI and the ANETH AMI shall terminate upon the consummation of a Sale (as
defined in Section 4.01) by Resolute.

ARTICLE VIII.

REPRESENTATIONS AND WARRANTIES OF RESOLUTE

               8.01 Resolute represents and warrants to NNOG as follows:

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

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

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

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

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

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

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

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

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

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

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

    (ii) general principles of equity; and

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

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

ARTICLE IX.

REPRESENTATIONS AND WARRANTIES OF NNOG

          9.01 NNOG represents and warrants to Resolute as follows:

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

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

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

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

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

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

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

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

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

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

    (ii) general principles of equity; and

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

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

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

ARTICLE X.

DISPUTE RESOLUTION; GOVERNING LAW

          10.01 Dispute Resolution – General.

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     (a) Any dispute or difference arising under or out of, in relation to or in any
way connected with (i) this Agreement, the Aneth Unit Agreement or Unit Operating
Agreement (“JOA”), the ASA any contract or other obligation or right acquired from
ChevronTexaco under or on account of the ASA, or any amendment of the foregoing,
(ii) any property, right, interest contract or obligation jointly acquired by the
parties in the Greater AMI or Aneth AMI, or (iii) any operations, transactions,
actions or inactions conducted, arising under or out of, in relation to or in any
way connected with any of the items or matters listed in (i) or (ii) above (whether
contractual, tortious, equitable, statutory or otherwise including, without
limitation, the negotiation, execution, existence, amendment, validity,
enforceability, performance, non-performance, breach, termination, interpretation or
construction thereof), or the commercial or economic relationship of the parties
hereto, and all questions as to whether or how specific disputes are to be resolved
pursuant to this Article (the foregoing referred to individually or collectively as
“Dispute”) shall be resolved in accordance with the procedures of this Article X.
Without limiting the generality of the foregoing, Disputes include disputes over the
existence, validity, interpretation or scope of the agreement under which
arbitration is sought, and who are proper parties to the arbitration. In any
arbitration under this Article, the arbitration panel shall have the power to rule
on its own jurisdiction, including any objection to the initial or continuing
existence, validity or the effectiveness of the arbitration agreement. For the
purposes of challenges to the jurisdiction of the arbitration panel, the arbitration
clause shall be considered as separable from any contract of which it forms a part.

     (b) The procedures specified in this Article will be the sole and exclusive
procedures for the resolution of Disputes; provided however that, prior to the
appointment of the arbitrators, a party may seek a preliminary injunction or other
preliminary judicial relief in U.S. District Court in New Mexico if in the judgment
of that party such action is necessary to avoid irreparable damage or to preserve
the status quo. Despite the initiation of any such judicial proceedings, the parties
will continue to participate in good faith in the procedures specified in this
Article. Each party is required to continue to perform its obligations under this
Agreement pending final resolution of any Dispute. The parties’ commitment to
resolve Disputes pursuant to this Article survives the expiration or termination of
this Agreement. All deadlines specified in this Article may be extended by mutual
written agreement. As between the parties, all applicable statutes of limitation
shall be tolled while the procedures specified in this Article are pending and the
parties will take all actions, if any, required to effectuate such tolling. The
existence of this provision regarding tolling shall not be deemed to imply that the
parties have access to court in lieu of the dispute resolution under this Article.

     (c) Except for Disputes over the determination of Fair Market Value under §3.03
of this Agreement (“Value Disputes”), Disputes will be addressed using a three-step
sequenced process that includes: (1) direct negotiation as described §10.02, (2) a
convening meeting with a mediator as described in §10.03, and (3) submittal to
binding arbitration as described in §10.04. Because

-12-

 

the parties have agreed that Value Disputes must be resolved on an expedited
schedule, Value Disputes will be finally resolved by arbitration in accordance with
the CPR Rules for Non-Administered Arbitration as set forth in §10.05 without formal
or preliminary negotiations or steps.

          10.02 Direct Negotiation. The parties shall attempt in good faith to resolve any Dispute
promptly by negotiation between executives who have authority to settle the controversy and who
are at a higher level of management than the persons with direct responsibility for
administration of the relevant contracts. Either party may give the other party written notice of
any Dispute that has not been resolved in the normal course of business. Within 10 days after
delivery of the notice, the receiving party shall submit to the other a written response. The
notice and response shall include: (a) a statement of that party’s position and a summary of
arguments supporting that position, and (b) the name and title of the executive who will
represent that party and of any other person who will accompany the executive. Within 20 days
after delivery of the initial notice, the executives of both parties shall meet at a mutually
acceptable time and place, and thereafter as often as they reasonably deem necessary, to attempt
to resolve the Dispute. All reasonable requests for information made by one party to the other
will be honored. All negotiations pursuant to this clause are confidential and shall be treated
as compromise and settlement negotiations for purposes of applicable rules of evidence.

          10.03 Convening Meeting. If the Dispute has not been resolved by negotiation as provided
herein within 30 days after delivery of the initial notice of negotiation, or if the parties
failed to meet within 20 days after delivery, the Parties agree to attend and participate in a
convening meeting (“Convening”), facilitated by a knowledgeable mediator, to discuss use of
alternate dispute resolution methods to resolve the Dispute. Either party may demand a Convening
regarding a Dispute by sending written notice to the other party. Within 5 days after the date of
such notice, the receiving party shall submit a written response to the other. For such a
Convening, the Parties agree that they will cooperatively and jointly select the mediator,
schedule a Convening in Santa Fe, New Mexico at a mutually acceptable time, and will equally
share the mediator’s fees. Each Party agrees to attend such a meeting for at least four hours,
but is free to withdraw from the Convening after attending for that time period. The parties
anticipate that such a Convening, among other things, would include discussion of the following:
(a) the mode of proceeding further (for example, mediation, neutral evaluation, mini-trial,
etc.); (b) a procedure and schedule for exchange of documents and other information related to
the Dispute; (c) ground rules and a schedule for conducting the selected mode of proceeding; and,
(d) selection and compensation of the neutral evaluator (if any). Each party is required to
continue to perform its obligations under this Agreement pending final resolution of any Dispute.

          10.04 Arbitration of Disputes Other than Value Disputes.

     (a) If the Dispute has not been amicably resolved within 30 days after the
initial notice for a Convening, or if either party will not participate in
Convening, the Dispute shall be finally resolved by arbitration in accordance with
the CPR Rules for Non-Administered Arbitration then currently in effect (“CPR
Rules”), by three arbitrators of whom each party shall appoint one in accordance

-13-

 

with the ‘screened’ appointment procedure provided in CPR Rule 5.4; provided,
however, that if one party fails to participate in either the negotiation or
mediation as agreed herein, the other party can commence arbitration prior to the
expiration of the time periods set forth above. In the event of any conflict between
the CPR Rules and the arbitration procedures set forth in this Section, the
arbitration procedures set forth in this Section shall govern and control. The
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§1–16, and
judgment upon the award rendered by the arbitrators may be entered as provided in
§10.06.

     (b) In any Dispute submitted to arbitration by NNOG, the arbitration hearing
shall take place in a location selected by Resolute. In any Dispute is submitted to
arbitration by Resolute, the arbitration hearing shall take place in a location
selected by NNOG.

     (c) The Arbitrators shall apply the substantive law of the State of New Mexico
exclusive of its conflict of law rules. The Arbitrators shall have authority to
award any remedy or relief that a court of the State of New Mexico could order or
grant, subject to the limitation that the only form of damages that may be awarded
are compensatory damages based in contract law. Therefore, each party hereby
irrevocably waives any damages (i) in excess of compensatory damages, including a
waiver of any indirect, exemplary, punitive or multiple damages, (ii) for lost
profits or business opportunity, (iii) arising in consumer protection statutes, and
(iv) based in tort rather than contract law.

     (d) The following procedures will guide arbitration conducted under this
Section:

    (i) Pre-hearing conference. The parties and arbitrators will
schedule a comprehensive pre-hearing conference to be completed as
soon as practicable after the selection of arbitrators that is
intended to result in the issuance by the arbitrators of a order
that specifically identifies the issues and claims submitted to
arbitration, and establishes dates for the hearing and actions to be
completed prior to the hearing.

    (ii) Discovery. Consistent with the expedited nature of
arbitration, each party will, upon the written request of the other
party, promptly provide the other with copies of the documents
relevant to the issues raised by any claim, cross claim or counter
claim. Any dispute regarding their production, or the scope thereof,
shall be determined by the chair of the panel, which determination
shall be conclusive. The arbitrators shall permit and facilitate
such additional discovery as they determine is appropriate in the
circumstances, taking into account the needs of the parties and the
desirability of making discovery expeditious and cost-effective.
Such discovery may include pre-hearing depositions, particularly
depositions of witnesses who will not appear personally to testify,

-14-

 

if there is a demonstrated need therefor. The arbitrators may
issue orders to protect the confidentiality of proprietary
information, trade secrets and other sensitive information disclosed
in discovery.

    (iii) Time limitations and management of proceedings. The
arbitration proceedings shall be conducted in an expeditious manner
and, to the extent possible, with the goal of having the final award
rendered within 45 days after the selection of the arbitrators has
been completed. The Arbitrators shall actively manage the
proceedings as they deem best so as to make the proceedings fair,
expeditious, economical, and less burdensome than litigation. The
arbitrators are empowered to impose reasonable time limitations for
each phase of the proceeding including, but not limited to,
limitations on the time allotted to each party for the presentation
of its case and rebuttal.

    (iv) Provisional and equitable remedies. The arbitrators may,
in the course of proceedings, order any provisional remedy or
conservatory measure, including but not limited to attachment,
specific performance, preliminary injunction or the deposit of
specified security, which they consider to be necessary, just and
equitable. The failure of a party to comply with such an interim
order, after due notice and opportunity to cure such noncompliance,
may be treated by the arbitrators as a default and all or some of
the claims or defenses of the defaulting party may be stricken and
partial or final award entered against such party, or the
arbitrators may award such lesser sanctions as they deem
appropriate. A request for interim or provisional relief to a court
under §10.01(b) shall not be deemed incompatible with the agreement
to arbitrate or as a waiver of that agreement.

    (v) Attorney’s fees. The parties agree that the prevailing
party in any Dispute finally resolved by arbitration is entitled to
an award of the reasonable legal fees, costs, expert fees, and
expenses (collectively “Fees”) incurred in the arbitration provided
that such award of Fees may not exceed the amount of the Fees
incurred by the losing party in the arbitration process. The parties
further agree that the award of Fees made in the arbitration may
include both: (a) Fees incurred in the arbitration, and (b) Fees
incurred in any litigation concerning the Dispute (including but not
limited to litigation to compel arbitration or stay court
proceedings).

     (e) Award. The parties intend that the award will be a reasoned
award that will be issued within thirty days after the completion of the taking of

-15-

 

evidence, argument by counsel before the panel, and submission of any
post-hearing filings.

     (f) Consolidation. The parties wish to avoid multiple arbitration cases in
which similar evidence is presented. The parties agree that the following factors
bear upon whether independent arbitration proceedings should be consolidated: the
procedural status of the various proceedings; the effect and cost of conducting
multiple rather than a single arbitral proceedings; whether there are one or more
common questions of law or fact in the multiple proceedings; and whether the
interests of justice, judicial economy and expedition would be served by
consolidation. Therefore, except as provided in §10.05(f), either party may move to
consolidate any arbitration proceeding under this §10.4 with another arbitration or
arbitrations under this Section. The arbitrators in the first initiated arbitration
proceeding shall receive and rule upon motions or requests to consolidate
proceedings, and shall also determine the venue for the consolidated proceeding. The
parties agree to cooperate to the extent possible on any consolidation of
proceedings under this Section with an arbitration proceeding under the ASA where
the factors above support consolidation.

               10.05 Special Arbitration Procedures for Value Disputes.

     (a) Value Disputes shall be finally resolved by arbitration in accordance with
the CPR Rules as modified in this Agreement. The arbitration of Value Disputes shall
be governed by the Federal Arbitration Act, 9 U.S.C. §§1–16, and judgment upon the
award rendered by the arbitrator may be entered as provided in §10.06. The
arbitrator shall apply the substantive law of the State of New Mexico exclusive of
its conflict of law rules.

     (b) Because special expertise is needed to adjudicate a Value Dispute, a
nationally recognized energy valuation firm, acting through one of its principals as
selected by such firm, will serve as the single neutral and impartial arbitrator
(“Value Arbitrator”). Within 5 days of the Market Value Notice served under Section
3.03, the parties will confer and attempt to agree upon one of the following
nationally recognized energy valuation firms to serve as arbitrator: Randall &
Dewey; Petrie Parkman & Company; or Albrecht & Associates. A successor of any such
company that generally has continued the business of the predecessor company shall
be considered the same as the predecessor company. Changes of name of any of the
above companies shall not affect the company’s qualification as an arbitrator.
Value Arbitrators must comply with the CPR Rules, including Rule 7 concerning
arbitrator independence and impartiality. If the parties cannot reach agreement on
the identity of the arbitrator or if any other dispute arises concerning the
selection of the Value Arbitrator, the Value Arbitrator will be promptly selected by
the President of the CPR Institute or his designee (“CPR President”).

-16-

 

     (c) The sole issue submitted to, and to be ruled upon in the award by, the
Value Arbitrator is the determination of Fair Market Value as defined in §3.03.

     (d) Although the Value Arbitrator has expertise to determine Fair Market Value,
the Value Arbitrator may be unfamiliar with the details of arbitration and the CPR
Rules. Therefore, to assist the Value Arbitrator with questions concerning
arbitration process, the CPR President will appoint from the appropriate CPR Panel a
single person who will advise and assist the Value Arbitrator as needed to ensure
that CPR Rules are understood and followed, including those provisions concerning
neutrality and impartiality. (“CPR Advisor”).

     (e) The Value Arbitrator will determine the process to be used in the
arbitration of the Value Dispute so as to render an award that determines the Fair
Market Value within 30 days of selection of identity of the Value Arbitrator. The
fees and expenses of the Value Arbitrator, the CPR Advisor and CPR will be shared
equally by the parties. Each party shall bear its own legal fees incurred in the
Value Dispute.

     (f) Because Value Arbitration arbitrations under this §10.05 require prompt
resolution, no arbitration conducted under this §10.05 will be joined with any other
arbitration.

          10.06 Venue, Jurisdiction, Waiver of Defenses, Governing Law.

     (a) NNOG irrevocably agrees that, to the extent that it has or hereafter may
acquire any right of immunity against Resolute or its successors and assigns,
whether characterized as sovereign immunity or otherwise, from any legal proceedings
to resolve a Dispute, whether in the courts of the United States of America, any
State of the United States of America, or the Navajo Nation, or in an arbitration
proceeding, or elsewhere, including, without limitation, immunity from service of
process, immunity from jurisdiction or judgment of any court or tribunal, immunity
from execution of judgment and immunity of any of its property from attachment prior
to entry of judgment, or from attachment in aid of execution upon a judgment, NNOG
expressly, unconditionally and irrevocably waives any such immunity and consents and
submits to arbitration pursuant to §10.04 or §10.05, as applicable, and further
consents to be sued to the extent and in the manner such suit is authorized by
§10.06(b).

     (b) NNOG hereby expressly, unconditionally and irrevocably waives any immunity
described in §10.06(a) and any right of exhaustion of tribal remedies, with respect
to any suit, action or other proceeding brought in the United States District Court
for the District of New Mexico in connection with any Dispute between NNOG and
Resolute for the limited purpose of (1) compelling arbitration, (2) granting preliminary relief described in §10.01(b)
and/or (3) enforcing an arbitration award, and consents to the jurisdiction of such

-17-

 

federal court for such purposes. NNOG hereby waives and agrees not to assert by way
of motion or as a defense or otherwise in any such suit or proceeding (i) any claim
that it is not subject to the personal jurisdiction of such federal court (provided
process is served pursuant to law), and (ii) that such suit, action or proceeding is
brought in an inconvenient forum or that venue is improper. In the event that the
above-named federal court has determined that it does not have jurisdiction over
such matters brought before it, or at the election of Resolute, NNOG hereby
expressly, unconditionally and irrevocably waives any immunity described in
§10.06(a) with respect to an action or other proceeding in the state courts of the
State of New Mexico for such relief related to arbitration and consents to the
jurisdiction of such court for such purposes.

     (c) Any judgment against NNOG or Resolute resulting from arbitration as
authorized by §10.04 or §10.05, as applicable, may be satisfied out of any of such
party’s assets.

     (d) This Agreement shall be governed by and construed, interpreted and applied
in accordance with the laws of the State of New Mexico, excluding any choice of law
rules or conflicts of law principles which would refer the matter to the laws of
another jurisdiction.

ARTICLE XI.

TERM

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

ARTICLE XII.

MISCELLANEOUS PROVISIONS

          12.01 This Agreement constitutes the entire agreement between the parties regarding the
subject matter hereof and supersedes all warranties and representations made and all previous
agreements, arrangements or understandings between the parties relating to the subject matter
hereof whether oral or in writing made or dated prior to the date of execution and delivery of
this Agreement. Resolute confirms to NNOG that Resolute has not relied on any representations
save those set forth in this Agreement. NNOG confirms to Resolute that NNOG has not relied on
any representations save those set forth in this Agreement. This Agreement may not be
supplemented, altered, amended, modified, or terminated other than by agreement in writing
hereafter executed and delivered by both parties hereto.

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          12.02 Subject to the restrictions on assignment herein contained, the terms and provisions
of this Agreement shall inure to the benefit of and be binding upon Resolute and NNOG and their
respective successors, assigns and legal representatives.

          12.03 Neither Resolute nor NNOG shall assign this Agreement, in whole or in part, save to
an affiliate of such party, without the written consent of the other party, and any purported
assignment in violation hereof shall be null and void. In the event either party consents to a
proposed assignment or in the case of an assignment to a party’s affiliate, such assignee must
agree to be expressly bound hereby and the assigning party shall remain liable for such
assignee’s obligations hereunder.

          12.04 Any notices, communications or documents that either party to this Agreement desire
to deliver or that may be required to be delivered to the other party to this Agreement shall
be sent via telecopy, delivered in person, delivered by recognized courier service (such as
Federal Express) or sent certified mail, postage prepaid, return receipt requested, received
during normal business hours for the receiving party and addressed to the respective parties at
the following address stated for each:

   RESOLUTE:

Resolute Natural Resources Company

1675 Broadway, Suite 1950

Denver, Colorado 80202

Attention: James M. Piccone

President and General Counsel

Fax: 303-534-4600

   NNOG:

Navajo Nation Oil & Gas Company

P.O. Box 4439

Window Rock, Arizona 86515

Attention: Wilson Groen

President and General Manager

Fax: 928-871-4862

Notices or other communications shall be effective upon receipt by the party to be notified,
except that, for purposes hereof, if telecopy or personal delivery is not possible, refusal by
any party to accept correspondence sent by certified mail shall be deemed receipt of such
correspondence. A party may change its address for notices by giving notice to the other in the
manner herein provided. The notice provisions of this Section shall not supercede the notice
provisions of the applicable joint operating agreement for the matters covered thereby.

          12.05 If any term or provision of this Agreement is invalid, illegal or incapable of being
enforced by reason of any rule of law or public policy, all other terms and provisions of this
Agreement shall nevertheless remain in full force and effect so long

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as the economic and legal substance of the transactions contemplated hereby are not
affected in a manner that is materially adverse to either party.

          12.06 Nothing in this Agreement is intended to or shall inure to the benefit of or be
enforceable by any person other than the parties to this Agreement and their successors, legal
representatives and permitted assigns, and nothing in this Agreement shall entitle any other
person to any claim, cause of action, remedy or right of any kind.

          12.07 Titles or headings of Articles of this Agreement are only for the convenience of the
parties shall not limit or be construed to have any effect or meaning with respect to the other
content of such Articles.

          12.08 As used herein, the following terms have the following meaning:

     (a) “affiliate” means, when used with respect to any person, any other person
which directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with such first mentioned person, with the
term “control” (including the terms “controlled by” and “under common control with”)
meaning the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a person, whether through the ownership
of voting stock or any equity interest, by contract or otherwise.

     (b) “governmental approvals” means all consents and approvals of the government
of the Navajo Nation, the State of Utah, the United States or any agency,
department, representative or official thereof with respect to a particular
transaction or action which are required by applicable laws and regulations.

     (c) “person” means an individual, corporation, partnership, limited liability
company, association, government or governmental agency, department or
representative, or any other entity.

          12.09 Unless otherwise herein stated, references herein to a numbered “Section” are to the
section of this Agreement bearing the corresponding number.

          12.10 Resolute and NNOG each declare that they have contributed to the drafting of this
Agreement and have had it reviewed by their counsel before signing it. It is expressly agreed
that this Agreement shall not be construed against either party hereto on the basis of who
drafted this Agreement or who supplied the form of Agreement. Each party agrees that this
Agreement has been purposefully written and correctly reflects that party’s understanding of
the transactions that it contemplates.

          12.11 No waiver by any party of any breach of any provision of this Agreement shall be
binding unless made expressly in writing. Further, any such waiver shall relate only to the
breach to which it expressly relates and shall not apply to any subsequent or other breach.

-20-

 

          12.12 Each party shall maintain in confidence for a period of one year following the
termination of this Agreement the terms of this Agreement and any other non-public agreement
between the parties, any opportunities to acquire interests in the Aneth AMI or the Greater
AMI, and any proprietary technical and financial data of the other party (the foregoing,
“Information”). Such obligation means that a party shall not disclose such Information except
to such party’s representatives or as required by law. Information means all information,
tangible or intangible and in whatever form or medium, disclosed by a party or any of a party’s
affiliates or representatives concerning any asset or any business, business opportunity,
operations, activities, interests or other matters relating to any together with all
information generated by the recipient or by recipient’s affiliates or representatives which
contains, reflects or is derived from the information; specifically including but not limited
to, geological and geophysical data, models, analyses, compilations, estimates of reserves,
notes, summaries, interpretations, data, studies, reports, contractual and financial
information and other data in whatever form or medium maintained, whether oral, written,
documentary, electronic, computer storage or otherwise. “Representatives” means directors,
officers, employees, members, shareholders, lenders, agents, financial advisors and sources,
consultants, contractors, attorneys and accountants of the parties.

A party has no obligations with regard to any Information which, other than by breach of this
Agreement, is: (A) already in or subsequently comes into its possession without restriction on
disclosure or (B) in or subsequently comes into, the public domain through no fault of the
party or any affiliate or representative of the party.

If a party or any representative or affiliate of a party shall be requested or required to
disclose confidential Information by law, order, decree, regulation or rule (including without
limitation, those of any regulatory agency, securities commission or stock exchange) or if any
person seeks to legally compel (by interrogatories, document requests, subpoena or otherwise) a
party or any representative or affiliate of the party to disclose any Information, the party
shall provide the other party prompt written notice so the other party may seek a protective
order or other appropriate remedy (including participation in any proceeding). A party shall
consult with the other party with respect to the timing, manner and content of any such
disclosure and any action the party may wish to take to prevent or limit such disclosure. In
any event, a party shall disclose only that portion of the Information which its counsel
advises the party is legally required to be disclosed.

          12.13 Upon execution by both Resolute and NNOG this Agreement shall become effective as of
the Effective Time. This Agreement may be executed by signing the original or any counterpart
thereof, and, if this Agreement is executed in counterparts, all counterparts taken together
shall have the same effect as if both the parties hereto had signed the same instrument and
shall constitute but one and the same Agreement.

          12.14 Each party shall subordinate its rights and interest under and pursuant to this
Agreement if and to the extent reasonably requested by the other party in order to facilitate
the other party’s financings while preserving each party’s respective rights and interests as
between the parties to this Agreement.

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

	 	 	 	 	 	 	 	 	 	 	 
	   Date:	 	11/30/04 	 	 	 	RESOLUTE NATURAL RESOURCES COMPANY	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Nicholas J. Sutton 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Nicholas J. Sutton 	 	 
	 

	 	 	 	 	 	Title:	 	Chief Executive Officer 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	   Date:	 	November 30, 2004 	 	 	 	NAVAJO NATION OIL AND GAS COMPANY	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Manual Morgan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Manual Morgan 	 	 
	 

	 	 	 	 	 	Title:	 	Chairman 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Wilson Groen 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Wilson Groen 	 	 
	 

	 	 	 	 	 	Title:	 	President 	 	 

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EXHIBIT A

Terms and Conditions of Purchase

NNOG Exercise of Option

The following terms and conditions of purchase and sale shall be binding and enforceable as an
agreement of purchase and sale as a part of the Cooperative Agreement between Resolute Natural
Resources Company (“Resolute”) and Navajo Nation Oil and Gas Company (“NNOG”) dated effective
October 22, 2004 (the “Cooperative Agreement”) upon the proper and timely exercise of any of the
Options of NNOG set forth in Articles III and IV of the Cooperative Agreement. Capitalized terms
used herein and not defined here have the meaning defined in the main body of the Cooperative
Agreement.

	 	 	 
	Assets

	 	As to each Option, an undivided 10% (or
lesser percentage as elected by NNOG in its
notice of exercise) of an undivided and
proportionally reduced 75% of the Aneth
Assets as defined in the Agreement,
	 
	 	 
	Purchase Price

	 	Wire transfer of immediately available US
Dollars in the amount of the Fair Market
Value of the assets subject to the Option
exercise as of the effective date of the
assignment as set forth below, subject to
adjustments as set forth below. NNOG shall
provide to Resolute a fair and reasonable
allocation of value among the separate
leases and other assets at the time of
exercise of the Option.
	 
	 	 
	Effective Date

	 	With respect to the exercise of each
Option, the effective date of the
assignment shall be the date that the
Payout relevant to the Option involved
occurred, provided that for accounting
convenience, such date shall be deemed to
be 12:01 a.m. local time at the location of
the Aneth Assets on the first day of the
month during which such Payout occurred.
	 
	 	 
	Due Diligence and Disclosure

	 	Following notice by Resolute that an option
may be exercised and until the date of such
exercise, Resolute shall provide NNOG
access to all of the Aneth Assets and
pertinent records for the purpose of
allowing NNOG to perform such title,
environmental and other due diligence as
NNOG desires. Resolute shall not

 

 

	 	 	 
	 

	 	intentionally withhold any material
information concerning the condition of or
circumstances concerning the assets
requested by NNOG. NNOG may request that
any adverse condition or circumstance be
taken into account in determining Fair
Market Value, provided, however, that any
such determination shall be made by the
arbitrators if the parties fail to agree on
Fair Market Value.
	 
	 	 
	Purchase Price Adjustments

	 	Same as in the ASA Section 2.4, 2.5 and
12.6 except there shall be no adjustments
for title matters, environmental matters,
casualty losses or other problems and the
final adjustment shall be completed within
90 days following closing.
	 
	 	 
	Closing

	 	The Closing of the purchase and sale with
respect to each exercise of an Option shall
take place on the first business day
following the fourteenth day after the date
the notice of exercise with respect to that
Option is deemed to have been given
pursuant to the Cooperative Agreement. The
Closing with respect to any Option shall
take place at the offices of Resolute in
Denver, Colorado.
	 
	 	 
	Warranties and Representations

	 	The purchase and sale with respect to any
Option shall be made WITHOUT WARRANTY OR
REPRESENTATION OF ANY KIND, EXPRESS OR
IMPLIED, except that Resolute shall warrant
title to the interest transferred as
against all interests arising by, through
or under Resolute, but not otherwise.
	 
	 	 
	Assumption of liabilities

	 	As to each portion of the Aneth Assets
acquired by NNOG pursuant to an exercise of
an Option, NNOG shall assume and defend,
indemnify and hold harmless Resolute and
its affiliates from (i) a proportional
share (proportional to the share of the
Aneth Assets acquired by NNOG pursuant to
the exercise of its Option) of the
obligations, liabilities and indemnities in
favor of ChevronTexaco and its affiliates
under the ASA and (ii) a proportional

 

 

	 	 	 
	 

	 	share
of all other contracts, obligations,
claims, losses, limitations, reservations
and burdens associated with the Aneth
Assets, whether associated with operations
or ownership before on or after the
effective date of the transfer.
	 
	 	 
	Forms of Assignment

	 	General Assignment in the same form as
Exhibit B to the ASA, modified to be
consistent with these and the other
provisions of the Cooperative Agreement.
Resolute shall also provide assignments on
proper Navajo, BIA and BLM forms.
	 
	 	 
	Taxes

	 	Same as Section 5.1 of the ASA.
	 
	 	 
	Preferential Purchase Rights

	 	Same as Section 10.2 of the ASA, modified
to be consistent with the provisions of the
Cooperative Agreement set forth herein.
	 
	 	 
	Dispute Resolution

	 	The provisions of Article X of the
Cooperative Agreement apply to the purchase
and sale obligations and to any assignments
or other documents or instruments delivered
in connection with the exercise of any
Option.
	 
	 	 
	Further Assurances

	 	Before and after Closing each party shall
execute, acknowledge, and deliver all
documents, and take all such acts which
from time to time may be reasonably
requested by the other party in order to
carry out the purposes and intent of these
provisions of the Cooperative Agreement.
	 
	 	 
	Termination

	 	The agreement of purchase and sale arising
through the exercise of an option may be
terminated by (i) Resolute if through no
fault of Resolute NNOG fails to close the
purchase transaction within 5 business days
following the last permitted closing date
pursuant to the provisions above or (ii)
NNOG, if through no fault of NNOG Resolute
fails to close the transaction within 5
business days following the last permitted
closing date pursuant to the provisions
above. Such termination shall not affect
the remedies, if any, otherwise available
to the non-breaching party for any breach
by

 

 

	 	 	 
	 

	 	the other party. The parties
acknowledge the provisions of Section 4.02
making void, under the circumstances
therein provided, the exercise of the
option and the provisions of purchase and
sale arising therefrom.exv10w10

Exhibit 10.10

SPECIFIC
TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL

TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL

HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,

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

FIRST AMENDMENT

of

COOPERATIVE AGREEMENT

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

ARTICLE I.

GENERAL

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

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

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

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

 

 

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

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

ARTICLE II.

PAYMENTS AND OBLIGATIONS

IN CONNECTION WITH THE ACQUISITION

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

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

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

ARTICLE III.

NNOG OPTIONS

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

2

 

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

     3.03

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

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

3

 

ARTICLE IV.

TERMINATION UPON SALE, FIRST OPTION ACCELERATION,

AND FIRST RIGHT OF NEGOTIATION

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

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

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

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

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

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

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

4

 

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

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

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

ARTICLE V.

ASSISTANCE BETWEEN THE PARTIES

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

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

5

 

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

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

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

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

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

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

6

 

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

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

ARTICLE VI.

TAX MATTERS

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

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

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

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

7

 

ARTICLE VII.

AREA OF MUTUAL INTEREST

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

ARTICLE VIII.

REPRESENTATIONS AND WARRANTIES OF RESOLUTE

     8.01 Resolute represents and warrants to NNOG as follows:

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

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

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

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

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

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

8

 

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

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

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

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

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

     (ii) general principles of equity; and

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

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

ARTICLE IX.

REPRESENTATIONS AND WARRANTIES OF NNOG

     9.01 NNOG represents and warrants to Resolute as follows:

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

9

 

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

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

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

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

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

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

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

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

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

10

 

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

     (ii) general principles of equity; and

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

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

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

ARTICLE X.

DISPUTE RESOLUTION; GOVERNING LAW

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

ARTICLE XI.

TERM

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

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

ARTICLE XII.

GENERAL

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

11

 

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

	 	 	 	 	 	 	 	 	 	 	 
	   Date:	 	11/23/05 	 	 	 	RESOLUTE ANETH, LLC	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Nicholas J. Sutton 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Nicholas J. Sutton 	 	 
	 

	 	 	 	 	 	Title:	 	Chief Executive Officer 	 	 

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

	 	 	 	 	 	By:	 	/s/ Manual Morgan 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Manual Morgan 	 	 
	 

	 	 	 	 	 	Title:	 	Chairman 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ Wilson Groen 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Wilson Groen 	 	 
	 

	 	 	 	 	 	Title:	 	Chief Executive Officer 	 	 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}]]