Document:

Exhibit 10.2

 

FOURTEENTH AMENDMENT AND WAIVER TO

MASTER TRANSACTION AGREEMENT

 

This
Fourteenth Amendment and Waiver to the Master Transaction Agreement (this “Amendment”), dated as of August 14, 2009
(the “Amendment Date”), by and among
MXEnergy Inc., a Delaware corporation (the “Counterparty”),
MXEnergy Holdings Inc. (the “Parent”)
and certain Subsidiaries thereof, as guarantors (collectively, the “Guarantors”), and Société Générale, as hedge
provider (the “Hedge Provider”).

 

PRELIMINARY STATEMENTS

 

A.            Reference
is made to each of (i) the Master Transaction Agreement, dated as of August 1,
2006, as amended by (A) the First Amendment to Master Transaction
Agreement dated as of April 6, 2007, (B) the Second Amendment to
Master Transaction Agreement dated as of December 17, 2007, (C) the
Third Amendment to Master Transaction Agreement dated as of May 12, 2008, (D) the
Fourth Amendment to Master Transaction Agreement dated as of July 31,
2008, (E) the Fifth Amendment to Master Transaction Agreement dated as of September 30,
2008, (F) the Sixth Amendment to Master Transaction Agreement dated as of November 4,
2008, (G) the Seventh Amendment to Master Transaction Agreement dated as
of November 7, 2008, (H) the Eighth Amendment to Master Transaction
Agreement dated as of November 17, 2008, (I) the Ninth Amendment to
Master Transaction Agreement dated as of March 16, 2009, (J) the
Tenth Amendment to the Master Transaction Agreement dated as of May 15,
2009, (K) the Eleventh Amendment to the Master Transaction Agreement dated
as of May 29, 2009, (L) the Twelfth Amendment to the Master
Transaction Agreement dated as of June 8, 2009,(M) the Thirteenth
Amendment to the Master Transaction Agreement dated as of July 31, 2009
and (N) this Amendment (the original Master Transaction Agreement, as
amended through this Amendment, being herein referred to as the “Master Transaction Agreement”), among the
Counterparty, the Guarantors and the Hedge Provider, (ii) the ISDA Master
Agreement (as defined in the Master Transaction Agreement and amended to date,
including by the Eighth Amendment to the Schedule to the ISDA Master Agreement
dated as of the date hereof), (iii) the Credit Agreement (as defined in
the Master Transaction Agreement and amended to date), and (iv) the
Intercreditor Agreement (as defined in the Master Transaction Agreement and
amended to date);

 

B.            The
Counterparty and the Guarantors have requested that the Hedge Provider amend
the Master Transaction Agreement;

 

C.            The
Lenders under the Credit Agreement have entered into the Seventh Amendment and
Waiver to the Credit Agreement (the “Credit Agreement Seventh Amendment”)
as of the date hereof, attached hereto as Exhibit A;

 

D.            The
Counterparty has advised the Hedge Provider that certain Trigger Events (as
defined in the Credit Agreement) have occurred in relation to the August 7
Milestone Requirements (as defined in the Credit Agreement Seventh Amendment,
the “August 7 Milestone Requirements”) which, if not waived by the
Lenders thereunder, would constitute 

 

 

Events of Default under the Credit Agreement (the “Credit
Agreement Seventh Amendment Default”);

 

E.             The
Lenders under the Credit Agreement have agreed to waive the Credit Agreement
Seventh Amendment Default pursuant to, and only to the extent set forth in, the
Credit Agreement Seventh Amendment;

 

F.             The
August 7 Milestone Requirements each constitute additional Milestones
under the Master Transaction Agreement;

 

G.            The
Counterparty has advised the Hedge Provider that certain Specified Events have
occurred in relation to the August 7 Milestone Requirements which, if not
waived by the Hedge Provider, would each constitute a Specified Event under the
Master Transaction Agreement (collectively, the “Fourteenth Amendment
Defaults”);

 

H.            The
Hedge Provider is willing to waive the Fourteenth Amendment Defaults on the
terms and conditions set forth herein;

 

I.              The
Hedge Provider is willing to amend the Master Transaction Agreement on the
terms and conditions set forth herein; and

 

J.             The
Hedge Provider and the Counterparty have agreed to certain other matters
relating to the foregoing as set forth herein.

 

AGREEMENT

 

NOW
THEREFORE, in consideration of the premises and the covenants and agreements
contained herein, the parties hereto hereby agree as follows:

 

Section 1.               Definitions.  Unless otherwise specifically provided
herein, capitalized terms used but not defined herein shall have the meanings
specified in the Master Transaction Agreement.

 

Section 2.               Amendments
to Master Transaction Agreement.  The
Master Transaction Agreement is hereby amended as set forth below, which
amendments shall be effective as of the date on which the requirements set
forth in Section 4 of this Amendment are satisfied (the “Amendment Effective Date”):

 

(a)           Section 1.01
of the Master Transaction Agreement is hereby amended to add, amend or restate,
as applicable, the following definitions in their entirety:

 

“Commitment Termination Date” means August 18, 2009
provided that the Commitment Termination Date shall be further extended to August 31,
2009 if both (a) the conditions for the extension of the Maturity Date of
the Credit Agreement set forth in the Credit Agreement Seventh Amendment,
requiring an extension of the Maturity Date (as defined in the Credit
Agreement) to August 31, 2009, are satisfied or waived, and the Hedge
Provider has received written 

 

 

evidence that the Maturity Date under the Credit Agreement has been so
extended and (b) the Counterparty has delivered to the Hedge Provider no
later than August 14, 2009, a fully executed copy of a letter, described
in the definition of “Maturity Date” in the Credit Agreement Seventh Amendment,
which sets forth the proposed commodity supply and financing arrangements
between Counterparty and Sempra Energy Trading LLC and the contemporaneous liquidation/novation
of Counterparty’s current swap positions and which is in form and substance
satisfactory to the Hedge Provider in its sole discretion.

 

“Credit Agreement Seventh Amendment” means the Seventh
Amendment, and Waiver to the Credit Agreement dated as of August 14, 2009.

 

“Fourteenth Amendment” means the Fourteenth Amendment to the
Master Transaction Agreement dated as of August 14, 2009.

 

Section 3.               Waiver.

 

(a)           With
respect to the August 7 Milestone Requirements and the resulting Seventh
Amendment Default that have each been waived in writing by the Lenders under
the Credit Agreement pursuant to the Credit Agreement Seventh Amendment, but
only to the extent so waived thereunder and only for so long as such waivers
are in effect and the effectiveness of such waivers are not challenged or
contested by any of the Lenders and are not thereafter rescinded, the Hedge
Provider hereby waives any Specified Events that result from the failure of the
Counterparty to comply with the August 7 Milestone Requirements.

 

(b)           The
waiver expressed in Section 3(a) above shall relate back to, and be
effective as of, the date of the occurrence of any Specified Event so waived.

 

(c)           Except
as expressly provided in Section 3(a) above, all of the terms and
provisions of the Master Transaction Agreement and all Transaction Documents
are and shall remain in full force and effect. Section 3(a) shall not
be construed (i) as a waiver or amendment of any provision of the Master
Transaction Agreement (including the occurrence of any Specified Event and the
effect of such occurrence other than under the conditions expressly set forth
in Section 3(a)) or the Transaction Documents, (ii) for any purpose
except as expressly set forth herein or (iii) as a consent to any
further or future action on the part of Counterparty.

 

Section 4.               Conditions
to Effectiveness.  This Amendment
shall be effective on the date on which the Hedge Provider shall have received
each of the following, in form and substance satisfactory to the Hedge
Provider:

 

(a)           written
evidence in form and substance satisfactory to the Hedge Provider that any and
all third party consents or waivers required in connection with this Amendment
have been obtained;

 

(b)           counterparts
of this Amendment, duly executed and delivered by the Counterparty and the
Guarantors;

 

 

(c)           the
eighth amendment to the Schedule to the ISDA Master Agreement has been executed
and delivered by the Hedge Provider and the Counterparty;

 

(d)           written
evidence of corporate authority satisfactory to the Hedge Provider, which may
include an opinion of outside counsel, regarding the authority of Counterparty
and all Guarantors to execute and deliver this Amendment and to fulfill their
respective obligations hereunder; and

 

(e)           written
evidence in form and substance satisfactory to the Hedge Provider that the
Credit Agreement Seventh Amendment has been fully executed in form and
substance acceptable to the Hedge Provider in its sole discretion and delivered
by each party thereto, and certification by the Counterparty to the Hedge
Provider that no fees are due or payable to the Lenders or the Agent in
consideration for the Credit Agreement Seventh Amendment.

 

Section 5.               Representations
and Warranties.  Each Transaction
Party hereby jointly and severally represents and warrants to the Hedge
Provider that, as of the Amendment Date and as of the Amendment Effective Date:

 

(a)           all
representations and warranties of such Transaction Party contained in the
Master Transaction Agreement and any other Transaction Document are true and
correct in all material respects with the same effect as if such
representations and warranties had been made on the Amendment Date (it being
understood and agreed that any representation which by its terms is made as of
a specified date shall be required to be true and correct only as of such
specified date);

 

(b)           except
as expressed herein and after giving effect to the waiver set forth herein, no
Specified Event, and no Event of Default or Termination Event on the part of
any Transaction Party, has occurred and is continuing;

 

(c)           the
Counterparty has delivered a copy of this Amendment in its final form to the
Administrative Agent and the Lenders under the Credit Agreement prior to the
time that the Administrative Agent and the Lenders under the Credit Agreement
have executed and delivered the Credit Agreement Seventh Amendment;

 

(d)           no
authorization, approval, consent, waiver or other action by, and no notice to
or filing with, any Governmental Authority or any other Person is required for
the due execution, delivery and performance by any Transaction Party of this
Amendment;

 

(e)           this
Amendment has been duly authorized by all necessary corporate or other
organizational action of each Transaction Party and has been duly executed and
delivered by each Transaction Party; and

 

(f)            this
Amendment and the Master Transaction Agreement (as amended by this Amendment)
constitutes a legal, valid and binding obligation of each Transaction Party,
enforceable against each Transaction Party in accordance with its terms.

 

 

Section 6.               Release.  As a material part of the consideration for
the Hedge Provider to enter into this Amendment, each Transaction Party, on
behalf of itself and its officers, directors, equity holders, Affiliates,
successors and assigns, hereby releases and forever discharges the Hedge
Provider and their respective predecessors, officers, managers, directors,
shareholders, employees, agents, attorneys, representatives, subsidiaries, and
Affiliates (each a “Hedge Party”) from
any and all claims, expenses, costs, causes of actions or other losses or
liabilities of any nature whatsoever existing on the Amendment Date, including,
without limitation, all claims, expenses, costs, causes of actions or other
losses or liabilities for or in respect of contribution and indemnity, whether
arising at law or in equity, whether liability be direct or indirect,
liquidated or unliquidated, whether absolute or contingent, foreseen or
unforeseen, and whether or not heretofore asserted, which any Transaction Party
may have or claim to have against any Hedge Party under, arising out of, in
connection with, or in any way related to, this Amendment or any Transaction
Documents.  For the avoidance of doubt,
the provisions of this clause shall survive any termination of the Master
Transaction Agreement, as amended hereby.

 

Section 7.               Consent
of Guarantors; Confirmation of Guarantees and Transaction Documents.  Each Guarantor hereby consents to the
execution, delivery and performance of this Amendment and hereby confirms and
agrees that, notwithstanding the effectiveness of this Amendment, the Guarantee
contained in Article VIII of the Master Transaction Agreement and the
terms and provisions of each other Transaction Document are, and each of the
same shall continue to be, in full force and effect and arc hereby ratified and
confirmed in all respects.

 

Section 8.               Governing
Law.  This Amendment shall be
governed by, and construed and enforced in accordance with, the internal laws
of the State of New York without regard to conflict of laws principles.

 

Section 9.               Entire
Agreement Transaction Document. 
Except to the extent specifically modified and amended by this
Amendment, the Master Transaction Agreement shall remain in full force and
effect and is hereby ratified and confirmed. 
This Amendment, the Master Transaction Agreement and the other
Transaction Documents constitute the entire agreement and understanding among
the parties and supersede all prior agreements and understandings, whether
written or oral, among the parties hereto concerning the transactions provided
herein and therein.  This Amendment is
and shall be deemed to be a Transaction Document in all respects and for all
purposes.

 

Section 10.             Execution
in Counterparts.  This Amendment may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.  Delivery of an executed
counterpart of a signature page to this Amendment by facsimile shall be as
effective as delivery of a manually executed counterpart of this Amendment.

 

 

Section 11.             Headings.  The headings set forth in this Amendment are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.

 

Section 12.             Severability.  In case any provision in or obligation under
this Amendment shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.

 

Section 13.             Legal
Fees; No Novation Fees.  In addition
to the other payments provided for herein, Counterparty and the Guarantors
shall pay promptly upon request by the Hedge Provider all legal fees incurred
by the Hedge Provider in connection with this Amendment.  The Hedge Provider agrees that, except as
otherwise set forth herein, no additional fees shall be due from the
Counterparty or the Guarantors in respect of the novation of the Hedging
Facility or any similar transaction related to Hedging Facility entered into by
the Counterparty in furtherance of the requirements of the Milestones set forth
herein, other than amounts representing costs and expenses actually and
reasonably incurred by the Hedge Provider and its outside counsel in connection
therewith and any amount payable in respect of the value of the Hedging
Facility.

 

Section 14.             No
Novation.  The parties intend that
the execution and delivery of this Amendment shall not constitute a novation of
either Master Transaction Agreement or any Hedging Transactions thereunder.

 

[Remainder of page intentionally
left blank]

 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Amendment to be duly executed and delivered by
their respective duly authorized officers as of the Amendment Date.

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  MXENERGY INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JEFFREY MAYER

  
	
   

  	
  Name:

  	
  Jeffrey Mayer

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  MXENERGY ELECTRIC INC.

  
	
   

  	
  MXENERGY HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
  ONLINE CHOICE INC.

  
	
   

  	
  MXENERGY GAS CAPITAL
  HOLDINGS CORP.

  
	
   

  	
  MXENERGY ELECTRIC
  CAPITAL HOLDINGS CORP.

  
	
   

  	
  MXENERGY GAS CAPITAL
  CORP.

  
	
   

  	
  MXENERGY ELECTRIC
  CAPITAL CORP.

  
	
   

  	
  MXENERGY CAPITAL
  HOLDINGS CORP.

  
	
   

  	
  INFOMETER.COM INC.

  
	
   

  	
  MXENERGY SERVICES INC

  
	
   

  	
  MXENERGY CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JEFFREY MAYER

  
	
   

  	
  Name:

  	
  Jeffrey Mayer

  
	
   

  	
  Title:

  	
  President

  

 

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  SOCIÉTÉ GÉNÉRALE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ FABRICE MATIVAT

  
	
   

  	
  Name:

  	
  Fabrice Mativat

  
	
   

  	
  Title:

  	
  Managing Director

  

 

 

EXHIBIT A

 

[Refer to Exhibit 10.1 of this Form 8-K]ex101.htm

    FARMOUT
AGREEMENT

    King
City Oil Field

    King
City Prospect

    Monterey
County, California

    

    

    THIS FARMOUT AGREEMENT (“Agreement”) is
made effective the 25th day of May, 2009 between Sunset Exploration,
Inc.  (hereinafter referred to as “Sunset”) and Delta Oil & Gas,
Inc. (hereinafter referred to as “Delta”).

    

    WHEREAS, Sunset represents, but does
not warrant that it owns oil and gas leasehold interests (“AMI Leases”) in and
to certain lands located in Monterey County, California, which leases and lands
are more particularly described on the attached Exhibit “A” which is
incorporated herein by this reference and which lands shall constitute an Area
of Mutual Interest (“AMI”).

    

    WHEREAS, Delta desires the right to
earn from Sunset an assignment of Sunset’s interest in the AMI, and Sunset is
willing to grant such right as provided herein.

    

    NOW, THEREFORE, for and in
consideration of the mutual promises and covenants contained herein, to be kept
and performed by the parties hereto, and other valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto do
hereby agree as follows:

    

    
      1.           
 TEST
WELL

    

    

    On or before March 31, 2010, Sunset
shall commence the drilling of the initial test well at a location to be chosen
by Sunset within the AMI (“King City #1” or “Test Well”) to a depth of 3,500’
TVD or deep enough to adequately test all Monterey seismic anomalies. The “Test
Well” shall be drilled to effectively intersect all potential productive
sands.  Failure to commence drilling of the Test Well prior to March
31, 2010 shall terminate this Agreement and all payments made to Sunset for
drilling shall be returned to Delta.  The payment under paragraph 2.a.
shall be non-refundable.

    

    
      2.           
COSTS

    

    

    a.           Delta
shall pay its 50% pro rata share of TWO HUNDRED THOUSAND DOLLARS ($200,000.00
US) simultaneous with the execution of this Agreement which shall represent
costs associated with all costs and expenses required to prepare, permit and
process lands for running a gravity survey and for running a two dimensional
seismic program for evaluation of lands within this Agreement.

    

    b.           Delta
shall pay its 66.67% pro rata share of 100% of all costs associated with
permitting, drilling, logging and if necessary, plugging the Test Well. If the
Test Well is deemed by the parties hereto to be commercial and capable of
producing hydrocarbons in paying quantities, thereafter, if Delta elects to
participate in a completion attempt Delta shall pay its working interest pro
rata share (as hereinafter defined) of all costs associated with completion of
the Test Well including, without limitation, running casing, testing and
installation of production facilities.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    c.           An
Authorization for Expenditure (“AFE”) for the Test Well shall be forwarded to
Delta prior to commencement of drilling operations. This AFE shall represent the
estimated cost of drilling and completing the Test Well and Sunset shall have
the right from time to time to demand and receive from Delta payment in advance
of its respective share of the AFE. Delta shall pay the full amount of the
payment so invoiced prior to commencement of drilling operations and within 15
working days of receipt of the AFE for completion, testing and installation of
all equipment necessary for commencement of sales for the Test Well. In the
event Delta fails or refuses to make any such advance payments then Delta shall
forfeit all of its right, title and interest to earn an interest in the AMI as
well as any advanced monies under this Agreement, and this Agreement shall be
deemed terminated.

    

    
      3.           
EARNING

    

    

    Once the Test Well is drilled to total
depth, logged, and deemed by Sunset to be capable of producing hydrocarbons in
paying quantities, Delta shall own and be entitled to its pro rata share of 40%
of 8/8ths working interest in and to the AMI Leases (“pro rata share”). Said
working interest of leases shall be delivered to Delta at no less than 80% of
8/8ths net revenue interest in the Test Well. If the Test Well is a dry hole,
Delta shall retain the right to its interest hereunder and said well shall be
plugged and abandoned and the site returned to its native condition, or as near
as is reasonably possible.  Delta’s 40% working interest shall be
applicable in all subsequent operations within the AMI.

    

    
      4.           
CASING
POINT

    

    

    Casing point shall occur when the Test
Well has reached total depth, logged and deemed by Sunset to be a well capable
of producing oil, and or gas in commercial quantities. In the event the Test
Well is not capable of producing oil and or gas then Delta shall pay its 66.67%
pro rata share of 100% of all costs associated with proper abandonment of the
Test Well and restoration of any disturbed area or areas.

    

    
      5.            
WELL GEOLOGIC AND
GEOPHYSICAL DATA

    

    

    Delta will be provided with all seismic
and exploration data, drilling reports, including logs pertaining to the Test
Well and will have full access during drilling and/or completion, provided it is
not then in default of any of the terms or provisions of this
Agreement.

    

    
      6.            
OPERATING
AGREEMENT

    

    

    All operations within the AMI will be
conducted in accordance with the terms and provisions of the 1989 Form 610 AAPL
Joint Operating Agreement, including 1984 COPAS Accounting Procedures, a copy of
which is attached hereto as Exhibit “B”. Said Operating Agreement designates
Sunset Exploration, Inc. as “Operator”.

     

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    

    Any leases acquired by any party within
the AMI within three (3) years of the date of this Agreement shall be subject to
the Operating Agreement and shall be owned by the parties in accordance with
their working interest pro rata shares regardless of record ownership of such
leases.

    

    
      7.           
SHUT-IN
GAS PAYMENTS

    

    

    In the event the Test Well is completed
as a well capable of gas production in paying quantities but is shut-in because
of a lack of a pipeline connection or market for such gas or oil (hereinafter
referred to as “shut-in gas/oil well”), Sunset shall immediately notify Delta of
such fact and Sunset shall, as Operator,  pay all shut-in gas payments
necessary to maintain the affected lease(s) in full force and effect subject to
reimbursement by Delta of its working interest pro rata share of such
payments.

    

    
      8.           
COMPLIANCE
WITH LAWS, RULES AND REGULATIONS

    

    

    Sunset shall comply with all rules and
regulations required as operator and shall also require that all of their
operators, contractor and subcontractors comply with any and all applicable laws
and regulations, federal, state and local, and with the requirements of each
regulatory body or official asserting jurisdiction over operations
hereunder.

    

    
      9.            
SUCCESSORS IN
INTEREST

    

    

    This Agreement and its terms are
personal in nature and the underlying leaseholds shall not be assigned and/or
sold without the prior written consent of the parties hereto, such consent shall
not be unreasonably withheld.

    

    
      10.         
CONFLICT

    

    

    In the event of a conflict between the
terms of the Operating Agreement provided for above and this Agreement, this
Agreement shall control. This Agreement shall supersede any prior correspondence
or oral communication between the parties regarding terms of this Agreement.
This Agreement may only be amended in writing.

    

    
      11.         
FORCE
MAJEURE

    

    

    If Sunset is rendered unable, wholly or
in part, by force majeure to carry out its obligations under this Agreement,
other than the obligation to make money payments, it shall give Delta prompt
written notice of the force majeure with reasonably full particulars concerning
it. Thereupon, so far as Sunset is affected by the force majeure, such
obligations shall be suspended during the continuance of the force majeure and
for such time thereafter as is reasonably required to resume performance of the
obligation following removal of the force majeure situation. The term “force
majeure”, as herein employed, shall mean an act of god, strike, lockout or other
industrial disturbance, act of public enemy, war, blockade, public riot,
lightning, fire, storm, flood, explosion, governmental action, governmental
delay, restraint or inaction, unavailability of equipment or any other cause,
whether of the kind specifically enumerated above or otherwise, which is not
reasonably within the control of Sunset.

     

     

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    

    
      12.          TAX
PARTNERSHIP

    

    

    It is not intended by this Agreement to
create, nor shall this Agreement be construed as creating any relationship
between the parties hereto of employer and employees, or any partnership, or
association or corporation between the parties hereto. The liabilities of the
parties hereto shall be as set forth in this Agreement and Sunset and Delta
shall be responsible only for their share of the costs, expenses, debts or
obligations incurred hereunder as herein provided. The parties hereto agree as
between themselves to elect to be excluded from the application of Subchapter K
of Chapter I of Subtitle A of the United States Internal Revenue Code of 1954,
as amended, and similar provisions of the statutes of any state.

    

    
      13.         
NOTICE

    

    

    Except as otherwise specifically
provided herein, any notice or other communication required hereunder shall be
considered as having been given if delivered personally, or if mailed postage
prepaid or telephone addressed to the following address
respectively:

    

    
      	
              SUNSET
      EXPLORATION, INC.

              10500
      Brentwood Blvd.

              Brentwood,
      CA 94513

              (925)
      634-2148  phone

              (925)
      634-6040  fax

              ATTN:  Robert
      E. Nunn

            	
              DELTA
      OIL & GAS, INC.

              Suite
      604

              700
      West Pender Street

              Vancouver,
      British Columbia

              CANADA

              V6C
      1G8

              (604)
      602-1649  phone

              (604)
      602-1625  fax

              ATTN:  Christopher
      Patton Gay

            

    

     

    
      14.         
OTHER
PROVISIONS

    

    

    Unless otherwise directed Sunset shall
distribute all revenue generated from production within the AMI to Delta and
shall have the right to deduct prior to disbursement of said revenue all costs
associated with lease operating and maintenance, ad valorum taxes, royalties,
expenses or any monies due and outstanding by Delta.

    

    It is understood that from time to time
additional exploration may be necessary to further develop the geologic concept
and additional lands and seismic operations may be required. Sunset shall
provide an Authority for Expenditure to Delta for any such operation 30 days
prior to commencement of said exploration, Delta shall be entitled to its
working interest pro rata share of 8/8ths and
pay its proportionate shall of those exploration costs.

    

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    

    

    
      15.           NON-DISLOSURE

    

    

    All information regarding the Test Well
or any subsequent well(s) shall be held confidential. Delta shall not disclose
any such confidential information to third parties without the prior consent of
Sunset. Sunset is aware that Delta may request certain public informational
disclosures from time to time and Sunset will allow such releases provided that
such disclosures will not detrimentally affect the potential assets attributable
to this Agreement.  This provision shall survive termination of this
Agreement for a period of two (2) years after such termination.

    

    IN WITNESS WHEROF, the parties have
executed or have caused this instrument to be executed by their duly authorized
officers and/or representatives.

    

    

    
      

      
        	
                Sunset:

              	
                Delta:

              
	 
      	 
      
	
                SUNSET
      EXPLORATION, INC.

              	
                 DELTA
      OIL AND GAS, INC.

              
	 
      	 
      
	
                By:
      /s/ Robert E.
      Nunn                                                 
      

              	
                By:
      /s/ Christopher Patton
      Gay                             
      

              
	
                           
       Robert E. Nunn

              	
                           
      Christopher Patton Gay

              
	
                        
          President

              	
                           
      CEO

              

      

      

      

    

    
 

    
      
         

      

      
        - 5
-

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