Document:

FORM OF NOTE

     

    Exhibit
      10.02

    
 

    FORM
      OF NOTE

     

    12%
      CONVERTIBLE NOTE DUE NOVEMBER 2007

     

    
      	
              No.
                [_____]

            	
              ______________,
                2006

            

    

    

    
      	
              $[________]

            	 

    

    FOR
      VALUE
      RECEIVED, the undersigned, Forster Drilling Corporation, Inc. (the “Company”), a
      corporation organized and existing under the laws of the State of Nevada, hereby
      promises to pay _________________________________, or registered assigns, the
      principal sum of [_______________________________] DOLLARS on November 1, 2007
      with interest (computed on the basis of a 360-day year of twelve 30-day months)
      on the unpaid balance thereof at the rate of 12% per annum from the date hereof.
      This Note is one of a series of 12% Convertible Notes due November 1, 2007
      (the
“Notes”) issued pursuant to the Securities Purchase Agreement, dated as of
      October 31, 2006 (as from time to time amended, the “Purchase Agreement”), among
      the Company and the Purchasers named therein and is entitled to the benefits
      thereof. This Note is subject to the terms and conditions of the Purchase
      Agreement and in the case of a perceived conflict between this Note and the
      Purchase Agreement, the provision of the Purchase Agreement shall govern.
      Capitalized terms used herein without definition have the meanings assigned
      thereto in the Purchase Agreement.

     

    The
      Company shall make quarterly interest payments hereunder on each the first
      Business Day of February, April, July and November, commencing February 1,
      2007,
      in the amounts of the accrued but unpaid interest. The quarterly payments may
      be
      made in Common Stock at the request of the Holder.

     

    Payments
      of principal and interest on this Note are to be made in lawful money of the
      United States of America as specified in the Purchase Agreement or at such
      other
      place as the Company shall have designated by written notice to the Holder
      of
      this Note as provided in the Purchase Agreement.

     

    Each
      Holder of this Note will be deemed, by its acceptance hereof to have made the
      representations set forth in Article 4 of the Purchase Agreement.

     

    Upon
      surrender of this Note for registration of transfer, duly endorsed, or
      accompanied by a written instrument of transfer duly executed, by the registered
      Holder hereof or such holder’s attorney duly authorized in writing, a new Note
      for a like principal amount will be issued to, and registered in the name of,
      the transferee. Prior to due presentment for registration of transfer, the
      Company and any paying agent or registrar for the Notes may treat the person
      in
      whose name this Note is registered as the owner hereof for the purpose of
      receiving payment and for all other purposes, and the Company and any paying
      agent or registrar for the Notes will not be affected by any notice to the
      contrary.

     

    This
      Note
      is also subject to optional prepayment, in whole or from time to time in part,
      at any time during the term of the Note.

     

    This
      Note
      is convertible into Common Stock of the Company at the times and on the terms
      specified in the Purchase Agreement.

     

     

    At
      the
      option of the Holders of not less than 50% of the aggregate principal amount
      of
      the Notes then outstanding, and subject to Company’s right to cure set forth
      below, the entire principal balance and accrued interest owing shall become
      due
      and payable by written notice, on the occurrence at any time of any of the
      following events:

     

     

    
      	(a)  	
              Default
                shall be made in the payment of principal of the Note when and as
                the same
                shall become due and payable, either at maturity or by acceleration
                or
                otherwise;

            

    

     

     

    
      	(b)  	
              Default
                shall be made in the payment of interest on the Notes when the same
                becomes due and payable and the default continues of a period of
                5
                days;

            

    

     

     

    
      	(c)  	
              Default
                shall be made in the due performance or observance of any other covenant,
                agreement or provision herein to be performed or observed by the
                Company
                or a material breach shall exist in any representation or warranty
                contained herein or in the Purchase Agreement, and notice thereof
                to the
                Company from any Holder or Holders of Notes aggregating not less
                than 10%
                of the aggregate principal amount of the Notes then outstanding;
                provided,
                however, that if any such default or material breach shall be such
                that it
                cannot be cured or corrected within such 30-day period, such period
                shall
                be extended for such additional period of time as shall be necessary
                to
                effect such cure or correction if curative or corrective action is
                instituted within said 30-day period and thereafter diligently
                pursued;

            

    

     

     

    
      	(d)  	
              a
                default under any bonds, debentures, notes or other evidences of
                indebtedness for money borrowed of the Company or the Subsidiary
                or under
                any mortgages, indentures, instruments or other agreements under
                which
                there may be issued or by which there may be secured or evidenced
                any
                indebtedness for money borrowed by the Company or the Subsidiary,
                whether
                such indebtedness now exists or shall hereafter be created, which
                indebtedness, individually or in the aggregate, has a principal amount
                outstanding in excess of $1,000,000;

            

    

     

     

    
      	(e)  	
              judgment
                or judgments for the payment of money in an amount, individually
                or in the
                aggregate, of at least $1,000,000 shall be rendered against the Company
                and shall remain unsatisfied and unstayed for a period of twenty
                (20)
                days; 

            

    

     

    
      	(f)  	
              the
                Company or the Subsidiary pursuant to or within the meaning of any
                Bankruptcy Law:

            

    

    

              1.  commences
      a voluntary case, 

     

    2.  consents
      to the entry of an order for relief against it in an involuntary
      case,

     

     

    3.  consents
      to the appointment of a Custodian of it or for all or substantially all of
      its
      property, or

     

    4.  makes
      a
      general assignment for the benefit of its creditors; or

    

    
      	(g)  	
              court
                of competent jurisdiction enters an order or decree under any Bankruptcy
                Law that:

            

    

    

    1.  is
      for
      relief against the Company or the Subsidiary in an involuntary
      case,

     

    2.  appoints
      a Custodian of the Company or the Subsidiary or for all or substantially all
      of
      the property of any of them, or

     

    3.  orders
      the winding up or liquidation of the Company or the Subsidiary,

     

    and
      the
      order or decree remains unstayed and in effect for 60 days.

     

    The
      term
“Bankruptcy
      Law”
means
      title 11, U.S. Code or any similar Federal or State law for the relief of
      debtors and the term “Custodian”
means
      any receiver, agent, assignee, liquidator or other similar official under any
      Bankruptcy Law.

     

     

    Upon
      notice of default as provided for herein, subject to the Company’s right to cure
      set forth herein, principal and interest shall be due and payable without
      presentment, protest, or further demand or notice of any kind, all of which
      are
      hereby expressly waived. 

     

     

    No
      right
      or remedy herein is intended to be exclusive of any other right or remedy,
      and
      every right and remedy shall, to the extent permitted by law, be cumulative
      and
      in addition to every other right and remedy given hereunder or now or hereafter
      existing at law or in equity or otherwise. The assertion or employment of any
      right or remedy hereunder, or otherwise, shall not prevent the concurrent
      assertion or employment of any other appropriate right or remedy.

     

     

    No
      delay
      or omission to exercise any right or remedy accruing upon any event of default
      shall impair any such right or remedy or constitute a waiver of any such event
      of default or acquiescence therein. 

     

     

    If
      this
      Note is given to an attorney for collection, or if suit is brought for
      collection, or if it is collected through bankruptcy, or other judicial
      proceedings, then the Company shall pay Holder all costs of collection,
      including reasonable attorneys’ fees and court costs, in addition to other
      amounts due.

     

     

    If
      any
      principal, interest (including any overdue interest) or other amount due
      hereunder is not paid when due and within the applicable grace period provided
      therefor, then the Company shall pay interest at the Default Rate on the
      outstanding principal balance of this Note, from the due date of such payment
      (without regard to any applicable grace period) until the date such payment
      is
      made. In addition, if any principal, interest (including any overdue interest)
      or other amount due hereunder is not paid when due and within the applicable
      grace period provided therefor, then the Company shall pay a late charge equal
      to two percent (2.0%) of the amount of such payment not paid when due, which
      late charge shall be due and payable on the first Business Day after such
      payment was not paid when due. For purposes of the foregoing, “Default
      Rate”
means
      fifteen percent (15.0%).

     

     

    Interest
      on the debt evidenced by this Note shall not exceed the maximum amount of
      non-usurious interest that may be contracted for, taken, reserved, charged,
      or
      received under law; any interest in excess of that maximum amount shall be
      credited on the principal of the debt or, if that has been paid, refunded.
      On
      any acceleration or required or permitted prepayment, any such excess shall
      be
      canceled automatically as of the acceleration or prepayment or, if already
      paid,
      credited on the principal of the debt, or if the principal of the debt has
      been
      paid, refunded. This provision overrides other provisions in this and all other
      instruments concerning the debt.

     

     

    Notwithstanding
      the foregoing, the Company covenants (to the extent that it may lawfully do
      so)
      that it will not at any time insist upon, or plead, or in any manner whatsoever
      claim or take the benefit or advantage of, any usury, stay or extension law
      wherever enacted, now or at any time hereafter in force, which may affect the
      covenants or the performance of this Agreement; and the Company (to the extent
      that it may lawfully do so) hereby expressly waives all benefit or advantage
      of
      any such law, and covenants that it will not hinder, delay or impede the
      execution of any power, but will suffer and permit the execution of every such
      power as though no such law had been enacted.

     

    This
      Note
      shall be construed and enforced in accordance with, and the rights of the
      parties shall be governed by, the law of the State of Texas excluding
      choice-of-law principles of the law of such State that would require the
      application of the laws of a jurisdiction other than such State.

     

      IN
      WITNESS WHEREOF, the undersigned has executed this Note on and as of the date
      first above written.

     

     

    FORSTER
      DRILLING CORPORATION

     

    

    By:     

    Name:     

    Title:FORM OF REGISTRATION RIGHTS AGREEMENT

    

      Exhibit
        10.03

      

      REGISTRATION
        RIGHTS AGREEMENT

      

      This
        Registration Rights Agreement dated as of the date set forth on the signature
        page (“Agreement”) is by and between Forster Drilling Corporation (the
“Company”), and the signatory on the signature page (the
“Holders”).

      

      WHEREAS,
        the Holder has issued certain 12% Convertible Notes, convertible into shares
        of
        the Company's common stock, par value $0.002 per share (the “ Conversion
        Shares”), pursuant to that certain Securities Purchase Agreement, dated of even
        date herewith (“Purchase Agreement”); and

      

      WHEREAS,
        the Company desires to grant to the Holder certain registration rights in
        respect of the Conversion Shares. 

      

      NOW,
        THEREFORE, in consideration of the premises and the mutual covenants contained
        herein, and other good and valuable consideration, the receipt and sufficiency
        of which is hereby acknowledged, the parties hereto agree as follows:

      

      ARTICLE
        ONE

      Registration
        Rights Agreement

      

      SECTION
        1.1 Registration
        Rights Available.
        The
        Company agrees to provide Holder with respect to the Conversion Shares and
        any
        other securities issued or issuable at any time or from time to time in respect
        of the Conversion Shares upon a stock split, stock dividend, recapitalization
        or
        other similar event involving the Company (collectively, the “Securities”)
        unlimited rights to “piggyback” on a public offering of Company securities,
        subject to the provisions of this Agreement (the unlimited piggyback
        registration rights hereunder being “Registration Right”).

      

      SECTION
        1.2 Piggyback
        Registration.
        With
        respect to Holder’s right to piggyback on a public offering of the Company
        securities pursuant to Section 1.1, the parties agree as follows:

      

      (a)
        Pursuant to Section 1.1, the Company will (i) promptly give to Holder written
        notice 15 days prior to the filing of any registration relating to a public
        offering of the Company securities; and (ii) include in such registration
        (and
        related qualification under blue sky laws or other compliance), and in the
        underwriting involved therein, all the Securities specified in Holder’s written
        request or requests, mailed in accordance with Section 3.8.

      

      (b)
        The
        right of Holder’s to participate in registration pursuant to Section 1.1 shall
        be conditioned upon Holder’s participation in such offering, if such offering is
        a best efforts or firm commitment offering, and the inclusion of the Securities
        in the underwriting shall be limited to the extent provided herein.
        Notwithstanding any other provision of this Agreement, if the managing
        underwriter determines that marketing factors require a limitation of the
        number
        of shares to be underwritten, the managing underwriter may limit some or
        all of
        the Securities that may be included in the registration and underwriting
        as
        follows: the number of Securities that may be included in the registration
        and
        underwriting by Holder shall be determined by multiplying the number of shares
        of Securities of all selling shareholders of the Company which the managing
        underwriter is willing to include in such registration and underwriting,
        times a
        fraction, the numerator of which is the number of Securities requested to
        be
        included in such registration and underwriting by Holder, and the denominator
        of
        which is the total number of Securities which all selling shareholders of
        the
        Company have requested to have included in such registration and underwriting.
        To facilitate the allocation of shares in accordance with the above provisions,
        the Company may round the number of shares allocable to any such person to
        the
        nearest 100 shares. If Holder disapproves of the terms of any such underwriting,
        it may elect to withdraw therefrom by written notice to the Company and the
        managing underwriter, delivered not less than seven days before the effective
        date. Any securities excluded or withdrawn from such underwriting shall be
        withdrawn from such registration, and shall not be transferred in a public
        distribution prior to 120 days after the effective date of the registration
        statement relating thereto, or such other shorter period of, time as the
        underwriters may require.

      

      

      
        
          1

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      SECTION
        1.3 Registration
        Procedure.
        With
        respect to the Registration Right, the following provisions shall
        apply:

      

      (a)
        Holder shall be obligated to furnish to the Company and the underwriters
        (if
        any) such information regarding the Securities and the proposed manner of
        distribution of the Securities as the Company and the underwriters (if any)
        may
        request in writing and as shall be required in connection with any registration,
        qualification or compliance referred to herein and shall otherwise cooperate
        with the Company and the underwriters (if any) in connection with such
        registration, qualification or compliance. 

      

      (b)
        With
        a view to making available the benefits of certain rules and regulations
        of the
        Commission which may at any time permit the sale of the Restricted Securities
        (used herein as defined in Rule 144 under the Securities Act of 1933, as
        amended) to the public without registration, the Company agrees to use its
        best
        lawful efforts to: 

      

      (i)
        Make
        and keep public information available, as those terms are understood and
        defined
        in Rule 144 under the Securities Act, at all times during which the Company
        is
        subject to the reporting requirements of the Securities Exchange Act of 1934,
        as
        amended (the “Exchange Act”); and

      

      (ii)
        File
        with the SEC in a timely manner all reports and other documents required
        of the
        Company under the Securities Act and the Exchange Act (at all times during
        which
        the Company is subject to such reporting requirements).

      

      (c)
        The
        Company agrees that it will furnish to Holder such number of prospectuses,
        offering circulars or other documents incident to any registration,
        qualification or compliance referred to herein as provided or, if not otherwise
        provided, as the Holder from time to time may reasonably request. 

      

      (d)
        All
        expenses (except for the costs of any underwriting and selling discounts
        and
        commissions and legal fees for Holder’s attorneys) of any registrations
        permitted pursuant to this Agreement and of all other offerings by the Company
        (including, but not limited to, the expenses of any qualifications under
        the
        blue-sky or other state securities laws and compliance with governmental
        requirements of preparing and filing any post-effective amendments required
        for
        the lawful distribution of the Securities to the public in connection with
        such
        registration, of supplying prospectuses, offering circulars or other documents)
        will be paid by the Company.

      

      (e)
        The
        Registration Rights of this Agreement, subject to the terms and conditions
        hereof, shall be available to any subsequent holder of the Securities owned
        by
        Holder. Each subsequent holder entitled to the Registration Rights under
        this
        Agreement shall be bound by the terms and subject to the obligations of this
        Agreement as though it were an original signatory hereto.

      

      SECTION
        1.3. OBLIGATIONS
        OF THE COMPANY.
        In
        connection with the Company's registration obligations hereunder, the Company
        shall, as expeditiously as practicable: 

      

      (a)
         (i)
        furnish to each Holder copies of all documents filed with the United States
        Securities and Exchange Commission (“SEC”) prior to there being filed with the
        SEC, (ii) use commercially reasonable best efforts to cause its officers
        and
        directors, counsel and certified public accountants to respond to such inquiries
        as shall be necessary, in the reasonable opinion of such Holder, to conduct
        a
        reasonable investigation within the meaning of the Securities Act, and (iii)
        notify the Holders of any stop order issued or threatened by the SEC and
        use
        best efforts to prevent the entry of such stop order or to remove it if entered.
        

      

      (b) (i)
        prepare and file with the SEC (electronically on EDGAR) such amendments and
        supplements, including post-effective amendments, to each registration statement
        filed pursuant to the this Agreement (the “Registration Statement”) and the
        prospectus used in connection therewith (the “Prospectus”) as may be necessary
        to comply with the Securities Act and to keep the Registration Statement
        continuously effective as required herein, and prepare and file with the
        SEC
        such additional Registration Statements as necessary to register for resale
        under the Securities Act all of the shares registered (including naming any
        permitted transferees of shares registered as selling stockholders in such
        Registration Statement); (ii) cause any related Prospectus to be amended
        or
        supplemented by any required Prospectus supplement, and as so supplemented
        or
        amended to be filed pursuant to Rule 424; (iii) respond as promptly as possible
        to any comments received from the SEC with respect to each Registration
        Statement or any amendment thereto and as promptly as possible provide the
        Holders true and complete copies of all correspondence from and to the SEC
        relating to the Registration Statement (other than correspondence containing
        material nonpublic information); and (iv) comply with the provisions of the
        Securities Act and the Exchange Act with respect to the disposition of all
        registered shares covered by such Registration Statement as so amended or
        in
        such Prospectus as so supplemented. 

      

      
        
          2

        

        
          
          

          
            

          

        

        
          
          

        

      

      (c) Notify
        the Holders as promptly as possible:

      

      (i)
        when
        the SEC notifies the Company whether there will be a “review” of a Registration
        Statement and whenever the SEC comments in writing on such Registration
        Statement; and (ii) when a Registration Statement, or any post-effective
        amendment or supplement thereto, has become effective, and after the
        effectiveness thereof: (A) of any request by the SEC or any other federal
        or
        state governmental authority for amendments or supplements to the Registration
        Statement or Prospectus or for additional information; (B) of the issuance
        by
        the SEC or any state securities commission of any stop order suspending the
        effectiveness of the Registration Statement covering any or all of the shares
        registered or the initiation of any proceedings for that purpose; (C ) of
        a
        pending proceeding against the Company under Section 8A of the Securities
        Act in
        connection with the offering of the shares registered; and (D) of the receipt
        by
        the Company of any notification with respect to the suspension of the
        qualification or exemption from qualification of any of the shares registered
        for sale in any jurisdiction, or the initiation or threatening of any proceeding
        for such purpose. If any of the events described in Section 1.3 (c)(ii)(A),
        1.3
        (c)(ii)(B), and 1.3 (c)(ii)(C) occur, the Company shall use best efforts
        to
        respond to and correct the event. 

      

      (d) Notify
        the Holders and their counsel as promptly as possible of the happening of
        any
        event as a result of which the Prospectus included in or relating to a
        Registration Statement contains an untrue statement of a material fact or
        omits
        any fact necessary to make the statements therein not misleading; and,
        thereafter, the Company will as promptly as possible prepare (and, when
        completed, give notice to each Holder) a supplement or amendment to such
        Prospectus so that, as thereafter delivered to the purchasers of such shares
        registered, such Prospectus will not contain an untrue statement of a material
        fact or omit to state any fact necessary to make the statements therein not
        misleading; provided that upon such notification by the Company, the Holders
        will not offer or sell the shares registered pursuant to such Prospectus
        until
        the Company has notified the Holders that it has prepared a supplement or
        amendment to such Prospectus and delivered copies of such supplement or
        amendment to the Holders (it being understood and agreed by the Company that
        the
        foregoing proviso shall in no way diminish or otherwise impair the Company's
        obligation to as promptly as possible prepare a Prospectus amendment or
        supplement as above provided in this Section 1.3 (d). 

      

      (e) Upon
        the
        occurrence of any event described in Section 1.3 (d) hereof, as promptly
        as
        possible, prepare a supplement or amendment, including a post-effective
        amendment, to the Registration Statement or a supplement to the related
        Prospectus or any document incorporated or deemed to be incorporated therein
        by
        reference, and file any other required document so that, as thereafter
        delivered, neither the Registration Statement nor such Prospectus will contain
        an untrue statement of a material fact or omit to state a material fact required
        to be stated therein or necessary to make the statements therein, in light
        of
        the circumstances under which they are made, not misleading. 

      

      (f) Use
        best
        efforts to avoid the issuance of or, if issued, obtain the withdrawal of,
        (i)
        any order suspending the effectiveness of any Registration Statement or (ii)
        any
        suspension of the qualification (or exemption from qualification) of any
        of the
        shares registered for sale in any jurisdiction. 

      

      (g) Furnish
        to the Holders, without charge, at least one conformed copy of each Registration
        Statement and each amendment thereto, and all exhibits to the extent requested
        by such Holder as promptly as possible after the filing of such documents
        with
        the SEC. 

      

      (h) As
        promptly as possible furnish to each selling Holder, without charge, such
        number
        of copies of a Prospectus, including a preliminary Prospectus, in conformity
        with the requirements of the Securities Act, and such other documents
        (including, without limitation, Prospectus amendments and supplements) as
        each
        such selling Holder may reasonably request in order to facilitate the
        disposition of the registered shares covered by such Prospectus and any
        amendment or supplement thereto. The Company hereby consents to the use of
        such
        Prospectus and each amendment or supplement thereto by each of the selling
        Holders in connection with the offering and sale of the shares registered
        covered by such Prospectus and any amendment or supplement thereto to the
        extent
        permitted by federal and state securities laws and regulations. 

      

      
        
          3

        

        
          
          

          
            

          

        

        
          
          

        

      

      (i) Use
        best
        efforts to register and qualify (or obtain an exemption from such registration
        and qualification) the shares registered under such other securities or blue
        sky
        laws of the states of residence of each Holder and such other jurisdictions
        as
        each Holder shall reasonably request, to keep such registration or qualification
        (or exemption therefrom) effective during the periods each Registration
        Statement is effective, and do any and all other acts or things which may
        be
        reasonably necessary or advisable to enable each Holder to consummate the
        public
        sale or other disposition of registered shares in such jurisdiction, provided
        that the Company shall not be required in connection therewith or as a condition
        thereto to qualify to do business or to file a general consent to service
        of
        process in any such states or jurisdictions where it is not then qualified
        or
        subject to process. 

      

      (j) Cooperate
        with the Holders to facilitate the timely preparation and delivery of
        certificates representing the shares registered to be delivered to a transferee
        pursuant to a Registration Statement, which certificates shall be free, to
        the
        extent permitted by the Securities Purchase Agreement and applicable law,
        of all
        restrictive legends, and to enable such registered shares to be in such
        denominations and registered in such names as such Holders may request.

      

      (k) Cooperate
        with any reasonable due diligence investigation undertaken by the Holders,
        any
        managing underwriter participating in any disposition pursuant to a Registration
        Statement, Holders' Counsel and any attorney, accountant or other agent retained
        by Holders or any managing underwriter, in connection with the sale of the
        shares registered, including, without limitation, making available any documents
        and information; provided, however, that the Company will not deliver or
        make
        available to any Holder material, nonpublic information unless such Holder
        specifically requests and consents in advance in writing to receive such
        material, nonpublic information and, if requested by the Company, such Holder
        agrees in writing to treat such information as confidential.

      

      (l) At
        the
        request of an affiliate, the Company shall amend any Registration Statement
        to
        include such affiliate as a selling stockholder in such Registration Statement.
        

      

      (m) Comply
        with all applicable rules and regulations of the SEC in all material respects.
        

      

      

      ARTICLE
        TWO

      Indemnification

      

      SECTION
        2.1 Indemnification
        by the Company.
        In the
        event of any registration of the Securities of the Company under the Securities
        Act, the Company agrees to indemnity and hold harmless Holder and each other
        person who participates as an underwriter in the offering or sale of such
        securities against any and all claims, demands, losses, costs, expenses,
        obligations, liabilities, joint or several, damages, recoveries and
        deficiencies, including interest, penalties and attorneys' fees (collectively,
        “Claims”), to which Holders or underwriter may become subject under the
        Securities Act or otherwise, insofar as such Claims (or actions or proceedings,
        whether commenced or threatened, in respect thereof) arise out of or are
        based
        on any untrue statement or alleged untrue statement of any material fact
        contained in any registration statement under which Holder’s Securities were
        registered under-the Securities Act, any preliminary prospectus, final
        prospectus or summary prospectus contained therein, or any amendment or
        supplement thereto, or any omission or alleged omission to state therein
        a
        material fact required to be stated therein or necessary to make the statements
        therein not misleading, and the Company will reimburse Holder and each such
        underwriter for any legal or any other expenses reasonably incurred by them
        in
        connection with investigating or defending any such Claim (or action or
        proceeding in respect thereof); provided that the Company shall not be liable
        in
        any such case to the extent that any such Claim (or action or proceeding
        in
        respect thereof) or expense arises out of or is based on an untrue statement
        or
        alleged untrue statement or omission or alleged omission made in such
        registration statement, any such preliminary prospectus, final prospectus,
        summary prospectus, amendment or supplement in reliance on and in conformity
        with written information furnished to the Company through an instrument duly
        executed by Holder specifically stating that it is for use in the preparation
        thereof. Such indemnity shall remain in full force and effect regardless
        of any
        investigation made by or on behalf of Holder or any such underwriter and
        shall
        survive the transfer of the Securities by Holder.

      

      
        
          4

        

        
          
          

          
            

          

        

        
          
          

        

      

      SECTION
        2.2 Indemnification
        by Holder.
        The
        Company may require, as a condition to including the Securities in any
        registration statement filed pursuant to this Agreement, that the Company
        shall
        have received an undertaking satisfactory to it from Holder, to indemnify
        and
        hold harmless (in the same manner and to the same extent as set forth in
        Section
        2.1) the Company, each director of the Company, each officer of the Company
        and
        each other person, if any, who controls the Company, within the meaning of
        the
        Securities Act, with respect to any statement or alleged statement in or
        omission or alleged omission from such registration statement, any preliminary
        prospectus contained therein, or any amendment or supplement thereto, if
        such
        statement or alleged statement or omission or alleged omission was made in
        reliance on and in conformity with written information furnished to the Company
        through an instrument duly executed by Holder specifically stating that it
        is
        for use in the preparation of such registration statement, preliminary
        prospectus, final prospectus, summary prospectus, amendment or supplement.
        Notwithstanding the foregoing, the maximum liability hereunder which any
        holder
        shall be required to suffer shall be limited to the net proceeds to such
        Holder
        from the Conversion Shares sold by such Holder in the offering. Such indemnity
        shall remain in full force and effect, regardless of any investigation made
        by
        or on behalf of the Company or any such director, officer or controlling
        person
        and shall survive the transfer of the Securities by Holder.

      

      SECTION
        2.3 Notices
        of Claims, etc.
        Promptly after receipt by an indemnified party of notice of the commencement
        of
        any action or proceeding involving a Claim referred to in this Article Two,
        such
        indemnified party will, if a claim in respect thereof is to be made against
        an
        indemnifying party, give written notice to the latter of the commencement
        of
        such action, provided that the failure of any indemnified party to
        give
        notice as provided herein shall not relieve the indemnifying party of its
        obligations under this Article Two, except to the extent that the indemnifying
        party is actually prejudiced by such failure to give notice. In case any
        such
        action is brought against an indemnifying party, unless in such indemnified
        party reasonable judgment a conflict of interest between such indemnified
        and
        indemnifying parties may exist in respect of such Claim, the indemnifying
        party
        shall be entitled to participate in and to assume the defense thereof, jointly
        with any other indemnifying party similarly notified to the extent that it
        may
        wish, with counsel reasonably satisfactory to such indemnified
        party, and
        after
        notice from the indemnifying party to such indemnified party of its election
        so
        to assume the defense thereof, the indemnifying party shall not be liable
        to
        such indemnified party for any legal or other expenses subsequently incurred
        by
        the latter in connection with the defense thereof other than reasonable costs
        of
        investigation. No indemnifying party shall, without the consent of the
        indemnified party, consent to entry of any judgment or enter into any settlement
        that does not include as an unconditional term thereof the giving by the
        claimant or plaintiff to such indemnified party of a release from all liability
        in respect of such Claim.

      

      SECTION
        2.4 Indemnification
        Payments.
        The
        indemnification required by this Article shall be made by periodic payments
        of
        the amount thereof during the course of the investigation or defense, as
        and
        when bills are received or expense, loss, damage or liability is incurred.
        The
        indemnity and contribution agreements contained in this Article 2 are in
        addition to any other remedy that any indemnified party may have against
        any
        indemnifying party.

      

      SECTION
        2.5 If
        any
        indemnified party shall have reasonably concluded that there may be one or
        more
        legal defenses available to such indemnified party which are different from
        or
        additional to those available to the indemnifying party, or that such claim
        or
        litigation involves or could have an effect upon matters beyond the scope
        of the
        indemnity agreement provided in this Article 2, the indemnifying party shall
        not
        have the right to assume the defense of such action on behalf of such
        indemnified party, and such indemnifying party shall reimburse such indemnified
        party and any person controlling such indemnified party for the fees and
        expenses of counsel retained by the indemnified party which are reasonably
        related to the matters covered by the indemnity agreement provided in this
        Article 2. Subject to the foregoing, an indemnified party shall have the
        right
        to employ separate counsel in any such action and to participate in the defense
        thereof but the fees and expenses of such counsel shall not be at the expense
        of
        the Company. 

      

      

      
        
          5

        

        
          
          

          
            

          

        

        
          
          

        

      

      SECTION
        2.6 If
        the
        indemnification provided for in this Article 2 from the indemnifying party
        is
        applicable by its terms but unavailable to an indemnified party hereunder
        in
        respect of any losses, claims, damages, liabilities or expenses then the
        indemnifying party, in lieu of indemnifying such indemnified party, shall,
        subject to the maximum aggregate liability of any Holder as set forth in
        Section
        2.2, contribute to the amount paid or payable by such indemnified party as
        a
        result of such losses, claims, damages, liabilities or expenses in such
        proportion as is appropriate to reflect the relative fault of the indemnifying
        party and indemnified party in connection with the actions which resulted
        in
        such losses, claims, damages, liabilities or expenses, as well as any other
        relevant equitable considerations. The relative faults of such indemnifying
        party and indemnified party shall be determined by reference to, among other
        things, whether any action in question, including any untrue or alleged untrue
        statement of a material fact or omission or alleged omission to state a material
        fact, has been made by, or relates to information supplied by, such indemnifying
        party or indemnified party, and the parties' relative intent, knowledge,
        access
        to information and opportunity to correct or prevent such action. The amount
        paid or payable by a party as a result of the losses, claims, damages,
        liabilities and expenses referred to above shall be deemed to include, subject
        to the limitations set forth in Section 2, any legal or other fees, charges
        or
        expenses reasonably incurred by such party in connection with any investigation
        or proceeding. No person guilty of fraudulent misrepresentation (within the
        meaning of Section 11(f) of the Securities Act) shall be entitled to
        contribution from any person. The parties hereto agree that it would not
        be just
        and equitable if contribution pursuant to this Section 2.6 were determined
        by
        pro rata allocation or by any other method of allocation which does not take
        account of the equitable considerations referred to in the immediately preceding
        paragraph. 

      

      ARTICLE
        THREE

      Miscellaneous

      

      SECTION
        3.1 Consent
        to Amendments.
        Except
        as otherwise expressly provided herein, the provisions of this Agreement
        may be
        amended or waived only by the written agreement of the Company and the Majority
        Purchasers (as defined in the Purchase Agreement) and shall be effective
        only to
        the extent specifically set forth in such writing. 

      

      SECTION
        3.2 Term
        of the Agreement.
        This
        Agreement shall terminate with respect to Holder on the earlier to occur
        of (i)
        all of the Securities having been registered as provided in Article One or
        (ii)
        two years after the date hereof. 

      

      SECTION
        3.3 Successors
        and Assigns.
        Except
        as otherwise expressly provided herein, all covenants and agreements contained
        in this Agreement by or on behalf of any of the parties hereto are transferable
        and will bind and inure to the benefit of the respective successors and assigns
        of the parties hereto, but only if so expressed in writing. 

      

      SECTION
        3.4 Severability.
        Whenever possible, each provision of this Agreement will be interpreted in
        such
        a manner as to be effective and valid under applicable law, but if any provision
        of this Agreement is held to be prohibited by or invalid under applicable
        law,
        such provision will be ineffective only to the extent of such prohibition
        or
        invalidity, without invalidating the remainder of this Agreement.

      

      SECTION
        3.5 Delays
        or Omissions.
        No
        failure to exercise or delay in the exercise of any right, power or remedy
        accruing to Holder on any breach or default of the Company under this Agreement
        shall impair any such right, power or remedy nor shall it be construed to
        be a
        waiver of any such breach or default.

      

      SECTION
        3.6 Remedies
        Cumulative.
        All remedies
        under this Agreement, or by law or otherwise afforded to any party hereto
        shall
        be cumulative and not alterative. 

      

      SECTION
        3.7 Descriptive
        Headings.
        The
        descriptive headings of this Agreement are inserted for convenience only
        and do
        not constitute a part of this Agreement. Unless clearly denoted otherwise,
        any
        reference to Articles or Sections contained herein shall be to the Articles
        or
        Sections of this Agreement.

      

      SECTION
        3.8 Notices.
        Any
        notices required or permitted to be sent hereunder shall be delivered pursuant
        to the terms of the Purchase Agreement. 

      

      SECTION
        3.9 Governing
        Law.
        The
        validity, meaning and effect of this Agreement shall be determined in accordance
        with the laws of the State of Texas applicable to contracts made and to be
        performed in that state. 

      

      
        
          6

        

        
          
          

          
            

          

        

        
          
          

        

      

      SECTION
        3.10 Final
        Agreement.
        This
        Agreement, together with those documents expressly referred to herein,
        constitutes the final agreement of the parties concerning the matters referred
        to herein, and supersedes all prior agreements and understandings. 

      

      SECTION
        3.11 Execution
        in Counterparts.
        This
        Agreement may be executed in any number of counterparts, each of which when
        so
        executed and delivered shall be deemed an original, and such counterparts
        together shall constitute one instrument. 

      

      The
        parties hereto have executed this Agreement as of October 31, 2006.

      

      COMPANY:

      

      FORSTER
        DRILLING CORPORATION

       

      

      By:     

      Name:     

      Title:      

       

      HOLDER:

      

      By:     

      Name:     

      Title:      

      
        
          7

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