Document:

Exhibit 10.20

 

GAS PURCHASE AGREEMENT

By And Between

ONEOK Texas Field
Services, L. P.

And

W.O. OPERATING COMPANY, LTD.

Dated JANUARY 1, 2005

 

 

Contract No. 431856

 

 

INDEX

 

	
  I.

  	
   

  	
  BASIS
  OF COMPENSATION

  	
   

  	
  Page 1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  TERM

  	
   

  	
  Page
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  DEDICATION,
  EXCLUSIVITY, INITIAL WELLS, AND SUBSEQUENT WELLS

  	
   

  	
  Page 1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV.

  	
   

  	
  RESERVATIONS
  OF SELLER AND BUYER

  	
   

  	
  Page 2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  V.

  	
   

  	
  QUALITY
  OF DELIVERED GAS

  	
   

  	
  Page 3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VI.

  	
   

  	
  DELIVERY,
  COMPRESSION, PRESSURES, METER FEES, REBUILD AND ALTERATIONS

  	
   

  	
  Page 3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VII.

  	
   

  	
  DELIVERIES

  	
   

  	
  Page 4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  VIII.

  	
   

  	
  PAYMENT,
  ESCALATION OF FEES, EXAMINATION, INDEMNIFICATION, SUSPENSION, AND DEDUCTIONS

  	
   

  	
  Page 4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IX.

  	
   

  	
  WARRANTY,
  TITLE, AND EASEMENTS

  	
   

  	
  Page 5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  X.

  	
   

  	
  INDEMNITY,
  INTERRUPTION, AND FORCE MAJEURE

  	
   

  	
  Page 5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XI.

  	
   

  	
  ROYALTY
  AND TAXES

  	
   

  	
  Page 6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XII.

  	
   

  	
  MEASUREMENT
  OF GAS VOLUME AND TESTING

  	
   

  	
  Page 7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIII.

  	
   

  	
  NOTICES
  AND STATEMENTS

  	
   

  	
  Page 9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XIV.

  	
   

  	
  DEFAULT

  	
   

  	
  Page 10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XV.

  	
   

  	
  DEFINITIONS

  	
   

  	
  Page 11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  XVI.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  Page 13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBIT “A”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBIT “B”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EXHIBIT “C”

  	
   

  	
   

  

 

 

GAS PURCHASE AGREEMENT

 

This
Gas Purchase Agreement (“Agreement”) is made and entered into as of JANUARY 1,
2005, by and between ONEOK Texas Field Services, L. P., hereinafter referred to
as “BUYER,” and W. O. OPERATING COMPANY, LTD., hereinafter, referred to as “SELLER”.

 

W I T N E S S E T H:

 

WHEREAS,
SELLER owns and/or controls, natural; Gas produced from Wells on Lands or Leases
from properties more particularly described in Exhibit “B” attached hereto,
including the right to process and sell such Gas, which shall be delivered to
BUYER; and

 

WHEREAS,
BUYER desires to purchase and SELLER desires to sell said Gas to BUYER; and

 

NOW
THEREFORE, BUYER and SELLER, in consideration of the mutual covenants, promises,
and agreements contained herein and for other good and valuable consideration,
do hereby agree as follows:

 

I.  BASIS OF COMPENSATION

 

1.1           Compensation.  The
basis of compensation is set forth in Exhibit “A”
attached hereto and included herein by this reference.

 

II.  TERM

 

2.1           Term.  This
Agreement shall be effective JANUARY 1, 2005 (“Effective Date”), and shall
continue until JANUARY 31, 2005 (“Primary Term”), and Month to Month
thereafter until terminated, such termination to be effective at the end of
said Primary Term or at any month thereafter by either party giving at least
thirty (30) days prior written notice to the other party or to be effective as
otherwise provided by this Agreement.

 

III.  DEDICATION,
EXCLUSIVITY, INITIAL WELLS, AND SUBSEQUENT WELLS

 

3.1           Dedication.  SELLER
hereby commits and dedicates to the performance of this Agreement and for the
term hereof, all of its owned or controlled interest in Gas produced from all
geological formations under the Lands and Leases and/or Wells described in Exhibit “B”
attached hereto (“Dedicated Wells”), except for the following reservations
which SELLER specifically reserves:

 

3.1.1     To use Gas produced from or under the Lands
or Leases and/or Wells and used by SELLER for the development and operation of
same; including, but not limited to, Gas used by SELLER in Gas lifting and
pressure maintenance operations;

 

3.1.2     To use Gas which may be required to fulfill
SELLER’s obligations to the lessors of said Leases and/or Wells for domestic
fuel; and,

 

3.1.3     To use Gas used as fuel in the operation of
SELLER’s compression, dehydration or treating facilities, if any, installed for
the delivery of Gas hereunder.

 

3.2           Exclusivity. 
Subject to the terms and conditions of this Agreement, SELLER hereby
contracts exclusively with BUYER for the purchase of SELLER’s Gas and the right
to process and extract Plant Products attributable to SELLER’s Gas.  SELLER further agrees to dedicate to BUYER and

 

1

 

to
the terms and conditions of this Agreement any interest in said Leases or Wells
which (i) are acquired by SELLER, or (ii) are owned by SELLER but are
no longer subject to the terms of any third-party agreement, subsequent to the
Effective Date hereof.  Any transfer of
SELLER’s interest in the Leases or Wells dedicated hereunder shall be subject
to BUYER’s rights hereunder, and SELLER shall take action necessary to ensure
that any such transfer is subject
to BUYER’s rights hereunder.  BUYER
reserves the right to reject any such additional dedication hereunder.

 

3.3           Initial Well(s). 
SELLER agrees to proceed with due diligence to install or cause to be
installed, :at its expense, all facilities at and upstream of each
Receipt Point which are necessary to connect all Dedicated Wells completed for
production as of the date of this Agreement to the existing gathering
system.  All such facilities will be
owned and operated by SELLER or its designee at its expense.

 

3.4           Subsequent Wells.  If
the location of any Well (“Subsequent Well”) is within the dedication described
in Exhibit “B” then SELLER shall notify BUYER in writing upon start of the
Subsequent Well’s drilling.  After
completion of the Subsequent Well, SELLER shall, within seven (7) days
from the date of completion of such Subsequent Well, provide BUYER any and all relevant
Well data (including, but not limited to, daily drilling reports, logs,
completion reports, flow test, and gas analysis) (“Well Data”). BUYER shall
have the right, but not the obligation, to connect such Subsequent Well to
BUYER’s system at its expense.  If BUYER
elects not to construct such facilities, or does not initiate right-of-way
acquisition for such facilities within thirty (30) days after BUYER receives
the Well Data, SELLER may construct, at its expense, the facilities necessary
to deliver the Gas from such Subsequent Well to BUYER’s existing system.  If neither party connects such Subsequent
Well, SELLER shall be entitled to a wellbore release from this agreement for
production from the Subsequent Well only.

 

IV.  RESERVATIONS OF SELLER AND
BUYER

 

4.1           SELLER’s Reservations.

 

4.1.1        To operate said Leases and/or Wells free from
control by BUYER in such manner as SELLER, in SELLER’s sole discretion, may
deem advisable, including, without limitation, the right to drill new Wells, to
repair and rework old Wells, and to abandon any Well or surrender any Lease
when no longer deemed to be capable of producing Gas in commercial paying
quantities under normal methods of operation by SELLER.

 

4.1.2        To unitize or pool any of the Leases or
portions thereof with other Leases, in such event SELLER’s interest in the unit
and the unit Gas attributable to SELLER’s interest shall be subject to and
SELLER agrees to take all action necessary to commit such unit Gas attributable
to SELLER’s interest to this Agreement.

 

4.1.3        To retain all liquids and Condensate
separated from the Gas by the use of typical volumetric (non-refrigerated) oil
and Gas separators prior to the delivery of the Gas to BUYER at the Receipt Point(s)
specified herein.

 

4.2           BUYER’s Reservations.

 

4.2.1        Processing Rights. 
SELLER does hereby grant, assign, and convey to BUYER exclusive processing
rights for the recovery of Plant Products for Gas delivered to BUYER for processing
at the Receipt Point(s). SELLER shall not process the Gas or allow the Gas to be
processed prior to receipt by BUYER hereunder for processing.

 

4.2.2        Condensate.  Condensate recovered by BUYER
downstream of the Receipt Point(s) shall belong to BUYER.  Title to the Condensate shall pass to BUYER
upon its recovery by BUYER and shall be free and clear of all liens, claims,
and encumbrances created by,

 

2

 

through or under SELLER.

 

4.2.3        Uneconomic.  At any time during the term of
this Agreement, in the event purchasing of SELLER’s Gas from any Receipt Point becomes uneconomic, as determined
in the sole discretion and
judgment of BUYER, BUYER may (i) suspend receipt of Gas at that Receipt Point, (ii) terminate this
Agreement or (iii) modify Exhibit “B” attached hereto to remove that Receipt Point.  In such event, BUYER shall give SELLER thirty
(30) days written notice that
purchasing of Gas made available by SELLER from a Receipt Point has become economically unfeasible and what
action BUYER shall take. Removal of a Receipt Point constitutes a release of Dedication of the Well(s) behind
that Receipt Point.

 

V.  QUALITY OF DELIVERED GAS

 

5.1           The Gas delivered at the Receipt Point(s)
shall meet the quality specifications defined in Exhibit “C” attached hereto.

 

5.2           BUYER shall have the right to either (i) accept
Gas that does not conform to such specifications and deduct from payment due
SELLER BUYER’s standard fee(s) for treatment as determined from time to time,
or (ii) refuse delivery of the nonconforming Gas.  If BUYER refuses delivery of non-conforming
Gas and SELLER elects not to conform such Gas to the
quality specifications set forth herein, this Agreement may be terminated with
respect to such non-conforming Gas upon thirty (30) days prior notice.

 

5.3           BUYER’s acceptance of Gas that does not
conform to quality specifications set forth herein will not constitute a waiver
of SELLER’s obligation to conform to such specifications in the future, nor a
waiver of BUYER’s right to refuse delivery of such nonconforming Gas at any
time.

 

VI.  DELIVERY, COMPRESSION, PRESSURES,
METER FEES, REBUILD AND ALTERATIONS

 

6.1           Delivery.  Gas
shall be delivered hereunder at the Receipt Point(s) described in Exhibit “B”
attached hereto and shall be at pressures sufficient to enter, but not to
exceed, the maximum allowable pressure for BUYER’s gathering system at the
Receipt Point(s).  SELLER shall provide
equipment required to protect BUYER’s systems from receiving Gas at pressures
that exceed the maximum allowable pressures. 
BUYER will provide SELLER the maximum allowable pressure for specific
Receipt Point(s).

 

6.2           Pressures.  Pressures
calculated for stages of compression shall be volume-weighted pressures at the
Receipt Point(s) for the Month as determined by BUYER.

 

6.3           Meter Fees.  In
the event that the total metered volume from any one (1) receipt Point
falls below an average of ten (10) MCF per day for any month, BUYER shall
charge SELLER a meter Fee for each MCF delivered by or for the account of
SELLER for that month.  The meter fee for
each MCF delivered shall be determined by dividing a sum of Three Hundred
Dollars ($300) by the total metered volume (MCF) for that month.  In the event the total metered volume is zero
(0) the fee shall be Three Hundred Dollars ($300) multiplied by SELLER’s owned
or controlled interest.

 

6.4           Rebuild and Alterations.  BUYER
reserves the right, in its sole discretion, to alter, repair, maintain, expand
or rebuild, without approval of SELLER, any portion of BUYER’s facilities.  SELLER shall make no alterations, additions or
repairs to or on the facilities of BUYER.  SELLER agrees not to connect or cause the
connection of any third-party well to BUYER’s facilities for any purpose
without the express written consent of BUYER, such consent to be in

 

3

 

BUYER’s sole discretion.  If
this condition is breached by SELLER, BUYER shall have the right and option,
notwithstanding any other provision of this Agreement, to terminate this
Agreement immediately and without further obligation to SELLER.

 

VII.  DELIVERIES

 

7.1           Deliveries. 
SELLER shall deliver all available Gas in such uniform hourly flows as
is commercially practicable.  In the
event SELLER anticipates a material increase or decrease in the flow of Gas at
any Receipt Point, SELLER shall provide BUYER with reasonable advance notice of
change.

 

VIII.  PAYMENT,
ESCALATION OF FEES, EXAMINATION, INDEMNIFICATION, SUSPENSION, AND DEDUCTIONS

 

8.1           Payment.  BUYER
shall, on the later of (i) the last day of the month or (ii) within
ten (10) day’s of BUYER’s receipt of any necessary allocation statements,
pay SELLER for the Gas delivered hereunder during the preceding month.  During any period BUYER purchases Gas from
SELLER and other SELLER(s) delivered to any Receipt Point(s), SELLER shall
furnish, or cause to be furnished, to BUYER on or before the fifteenth (15th)
day of each calendar month, any necessary allocation statements containing data
(including, but not limited to, quantity and BTU content) that BUYER may
require to enable BUYER to make payments.  SELLER is to cooperate with other SELLER(s)
delivering Gas at the Receipt Point(s) in order to appoint in writing a
representative who, as their agent, is to furnish an allocation statement.  BUYER is entitled to rely conclusively on such
allocation statement, and has a complete defense to any claim by SELLER for any
sums due for Gas delivered by SELLER at the Receipt Point(s) during any period
by showing that BUYER has made payment to SELLER for its share, as identified
in such allocation statement, of the total quantity of Gas received by BUYER at
the applicable Receipt Point(s) during the period in question (other than for
measurement error as specified in the Article titled MEASUREMENT OF GAS
VOLUME AND TESTING). If any allocation statement is not furnished to BUYER
by the fifteenth (15th)
day of any month, the time that BUYER has to make payment for delivered Gas
(without interest) is to be extended until the payment cycle which next follows
the tenth (10th) day
after BUYER’s receipt of the allocation statement.

 

8.2           Final Payment.  All
payments under this Agreement will be final unless questioned by either party
within two (2) years of the due date of a payment, and during this two (2) year
period either party may audit all records, accounts, books and charts of the
other party, upon reasonable advance notice and during normal office hours, to
verify the accuracy of any statement, charge, computation or demand made.

 

8.3           Escalation of Fixed Fees.  The
fixed fee charges contained herein, unless otherwise noted, shall be escalated
annually beginning on the first (1st) anniversary of the Effective Date of this Agreement based on the GDP
Implicit Price Deflator contained in the Gross Domestic Product, fourth quarter
(final) report, published by the U.S. Department of Commerce,
 Bureau of Economic analysis, “GDP
Deflator” in March of each year for the previous year.  For purposes of escalating the fixed fee
charges herein, the annual rate escalation percentage (“Escalator”) will be determined
by BUYER each April 1 by calculating the percent of increase from the year
preceding said previous year’s GDP Deflator and the previous year’s GDP
Deflator.

 

8.4           Examination of Records.  Each
party to this Agreement shall have the right, at any and all reasonable times
during normal business hours, to examine the books and records of the other

 

4

 

party, to the extent necessary to verify the accuracy of any statement,
charge, computation, or demand made under or pursuant to this Agreement, and
both parties shall keep all such records for at least twenty-four (24) months
after the Receipt of Gas to which such records are applicable.  Such books and records shall be conclusively
presumed to be correct, except as to claims or corrections by the parties made
by written notice to the other within such twenty-four (24) month period.

 

8.5           Indemnification Payment
Suspension.  Each
party agrees to indemnify and hold the other party harmless with respect to all
costs, losses, and damages (including without limitation reasonable attorney’s
fees) arising from or related to the breach of any covenant, representation, or
warranty made to the other party contained in this Agreement.  In the event of any claim arising from or
relating to such a breach, BUYER shall be entitled, at its option, in addition
to any other rights it may have, to suspend payment of sums due SELLER
hereunder until such claim is resolved, and such suspension shall not
constitute a breach of BUYER’s payment obligations under this Agreement.

 

8.6           Deductions.  BUYER
shall also be entitled, at its option, in addition to any other rights it may
have, to deduct from any payment due SELLER under this Agreement any amounts
payable to BUYER from SELLER under this Agreement, any other agreement, or
otherwise, and to apply such amounts deducted to pay such amounts payable to
BUYER, and such deduction and application shall not constitute a breach of
BUYER’s payment obligations under this Agreement.

 

8.7           Reimbursement of State
Severance Taxes.  The payment set forth on Exhibit “A” for
gas purchased by BUYER hereunder shall be deemed to be inclusive of
reimbursement to SELLER for production and severance taxes borne by SELLER.  No additional payment from BUYER to SELLER
hereunder, other than that specified on Exhibit “A”, shall be required to
compensate SELLER for such tax reimbursement.

 

IX.  WARRANTY,
TITLE, AND EASEMENTS

 

9.1           Warranty of Title. 
SELLER warrants that it has the title to the Gas dedicated hereunder and
delivered at the Receipt

Point(s), and said Gas is free from all liens and adverse claims of all kinds,
including the right and authority to sell and to process for the recovery of
Plant Products.  SELLER shall hold BUYER
harmless against adverse claims related thereto.

 

9.2           Title.  Title
shall pass to BUYER at the Receipt Point(s).

 

9.3           Easements.  To
the extent SELLER has the right to do so, SELLER hereby permits BUYER the rights
of ingress and egress on the Leases to construct, install, operate, repair,
inspect and maintain BUYER’s facilities necessary to receive Gas from SELLER at
the Receipt Point(s). SELLER hereby assigns and grants to BUYER, to the extent
it has the right to do so, an easement and right-of-way upon all lands covered
by the Leases for the purposes above. 
Any property of BUYER placed in or upon any of those lands shall remain
the personal property of BUYER, and may be disconnected and removed at any
time.  SELLER shall, at its expense,
maintain and provide all such easements, rights-of-way, lease roads and other
facilities upon such Leases as may reasonably be deemed necessary by BUYER for
its performance of this Agreement.  SELLER
further agrees to indemnify BUYER from any adverse claims related thereto.

 

X.  INDEMNITY, INTERRUPTION, AND FORCE MAJEURE

 

10.1         Indemnity.  In
addition to the indemnities contained herein, BUYER shall indemnify and hold
SELLER harmless against any claims for damages arising out of the operations
conducted

 

5

 

hereunder by BUYER. Likewise, SELLER shall indemnify
and hold BUYER harmless against any claims for damages arising out of SELLER’s
operations hereunder.  The obligations of
the parties under this Agreement are obligations of the parties only and no
recourse or remedy shall be available against any officer, director, or
employee representative of a party or against any affiliate of a party.

 

10.2         Interruption.  It is
understood and agreed that either party hereto may, without liability to the other
party, interrupt the operations of its facilities for the purpose of making
necessary alterations, maintenance, or repairs thereto, but that such
interruption shall be for only such time as may be commercially reasonable to
perform such operations.  Delivery and/or
receipt of Gas pursuant to this Agreement may be suspended for such period of
interruption.

 

10.3         Force Majeure.  If
SELLER or BUYER is rendered unable, wholly or in part, by reason of force majeure,
from carrying out its obligations under this Agreement (other than the
obligation to make payment of amounts due hereunder), then upon said party’s
giving prompt written notice of such force majeure to the other party, the
obligations of the party giving such notice, so far as they are affected by
such force majeure, shall be suspended during the continuance of any inability
so caused, but for no longer period, and such cause shall be remedied with all commercially
reasonable dispatch.  The term “force
majeure,” as used herein, shall include acts of God; acts of federal, state, or
local government or any agencies thereof; compliance with rules, regulations,
permits or orders of any governmental authority or any office, department,
agency, or instrumentality thereof; strikes, lockouts, or other industrial
disturbances; acts of the public enemy, wars, blockages, insurrections, riots,
and epidemics; landslides, lightning, earthquakes, fires, storms, floods, and
washouts; arrests and restraint of people; civil disturbances; explosions, leakage,
breakage, or accident to equipment or pipes; freezing of Wells or pipes;
weather-related shutdowns; inability to secure rights-of-way; inability to
timely obtain equipment, supplies, materials, permits, labor; failures or delays
in transportation; receipt of non-specification or non- merchantable Gas; and
any other causes, whether of the kind herein enumerated or otherwise, not within
the reasonable control of the party claiming suspension, which, by the exercise
of due diligence, such party shall not have been able to avoid.  The settlement of strikes or lockouts shall be
entirely within the discretion of the party having the difficulty.  The requirement that any force majeure shall
be remedied with all commercially reasonable dispatch shall not require the settlement
of strikes or lockouts by acceding to the demands of the opposing party, when
such is deemed inadvisable by the party involved.

 

XI.  ROYALTY AND TAXES

 

11.1         Royalty. 
SELLER shall account for and pay all royalties, overrides, and other
sums due by SELLER to the owners of the mineral, royalty, and other interests
in the Gas, and SELLER shall indemnify and save BUYER harmless against all
loss, damage, and expense of every character on account of adverse claims to all
such Gas, Residue Gas, and Plant Products or royalties, taxes, payments, or
other charges due thereon.  Should BUYER
be obligated by law or regulation to make payment for any royalties or
overrides due to be paid by SELLER, BUYER shall deduct such payments from any
amounts due by BUYER to SELLER.  Should
such payments be in excess of amounts due by BUYER to SELLER, SELLER shall
promptly reimburse BUYER for the amount of royalties or overrides so paid
within ten (10) days of receipt of such statement

 

11.2         Taxes. 
SELLER shall pay any sales, transaction, occupation, service,
production, severance, gathering, transmission, or excise taxes, assessments,
or fees levied, assessed, or fixed, whether by the United States, the state, or
other governmental agency, in respect of or applicable to the

 

6

 

Gas delivered hereunder.  Any
taxes and statutory charges levied or assessed against SELLER’s properties,
facilities, or operations shall be borne by SELLER.  BUYER shall bear all taxes levied against its
properties or facilities. Should BUYER be obligated by law or regulation to
make payment for any taxes due to be paid by SELLER, BUYER shall deduct such
payments from any amounts due by BUYER to SELLER.

 

11.3         Production Taxes.  Notwithstanding
the provisions of Section 11.2, above, as an accommodation to SELLER,
BUYER shall remit on behalf of SELLER any state production taxes in respect of
or applicable to the Gas delivered hereunder.  BUYER shall deduct such state production taxes
remitted on behalf of SELLER from any amounts due by BUYER to SELLER. Should
such state production taxes remitted on behalf of SELLER be in excess of
amounts due by BUYER to SELLER, SELLER shall promptly reimburse BUYER for the
amount of such production taxes so remitted within ten (10) days of
receipt of such statement. It is recognized that the remittance of state
production taxes by BUYER on behalf of SELLER is a voluntary accommodation by
BUYER to SELLER and not an obligation of BUYER hereunder.  BUYER may, in its sole discretion, cease
remitting state production taxes on behalf of SELLER at any time upon thirty
(30) days’ written notice to SELLER.

 

XII.  MEASUREMENT
OF GAS VOLUME AND TESTING

 

12.1         Calibration.  BUYER
shall keep its measurement equipment accurately calibrated and in repair, making
tests at reasonable intervals of no less than once (1) every year.  BUYER agrees to give SELLER reasonable notice
of such tests of the measuring equipment so that, if SELLER desires, it may
have its representative present.  In the
event the meters are found to be inaccurate, such meters will be adjusted to
register accurately.

 

12.2         Accuracy.  Each
party shall have the right to challenge the accuracy of any related equipment and,
when challenged, the equipment shall be tested, calibrated and repaired by
BUYER; the cost of any such special test shall be borne by BUYER if the
percentage of inaccuracy is found to be more than two percent (2%), but if the
percentage of inaccuracy is found to be two percent (2%) or less, the cost of
such special test shall be borne by SELLER. 
If, upon any test, the percentage of inaccuracy of the measuring
equipment is found to be in excess of two percent (2%), registrations thereof
and any payment based upon such registration shall be corrected for a period
extending back to the time (not to exceed one (1) year) when such
inaccuracy began, if such time is ascertainable, and if not ascertainable, then
back one-half (1/2) of the time elapsed since the last date of calibration not exceeding,
however, forty-five (45) days.

 

12.3         Repairs.  If,
for any reason, the meters are out of service or out of repair so that the
amount of Gas delivered cannot be ascertained or computed from the reading
thereof, the Gas delivered during the period such meters are out of service or
out of repair shall be estimated and agreed upon by the parties hereto upon the
basis of the data available using the first of the following methods that is
feasible:

 

12.3.1      By using the registration of any check meter
or meters if installed and accurately registering, or in the
absence of (12.3.1) then;

 

12.3.2      By correcting the error if the percentage of
error is ascertainable by calibration, special test, or mathematical
calculation, or in the absence of both (12.3.1) and (12.3.2) then;

 

12.3.3      By estimating the quantity of Gas delivered
based on the registration of any meter or meters if installed and accurately
registering, or in the absence of (12.3.1), (12.3.2), and (12.3.3) then;

 

12.3.4      By estimating the quantity of Gas delivered or
redelivered based on deliveries or

 

7

 

redeliveries during preceding periods under similar
conditions when the meter was registering accurately.

 

12.4         Records.  The
records from the measuring equipment shall remain the property of the party owning
such equipment and shall be kept by such party on file for a period of not less
than two (2) years.  At any time
within such period, such party shall, upon request to the other party, submit to
such party records from the measuring equipment, together with calculations therefrom,
for inspection and verification, subject to return within thirty (30) days from
receipt thereof.

 

12.5         Measurement Standards.  The
measuring station or stations provided for hereunder shall be so equipped with
meters, recording gauges, or other types of meter or meters of standard make
and design used in the industry and according to applicable AGA or API
standards, so as to accomplish the measurement of Gas delivered and redelivered
hereunder.  Gas measured hereunder will
have its volume, mass, gravity, composition or energy content determined and computed
in accordance with applicable AGA standards in effect at the date of
installation of the measurement equipment and shall comply with applicable
state and federal regulation.  At BUYER’s
option, BUYER may update the measurement equipment and/or the determination of volume,
mass, gravity, composition or energy content in accordance with subsequent
revisions, supplements, and appendices to said AGA standards.

 

12.6         Pulsation.  The
Parties shall design, install, operate and maintain their respective equipment
in such a manner that pulsation-induced measurement error is minimized.  Pulsation-induced error shall not exceed one
quarter of one percent (0.25%) of square root error (SRE). Either party has the
right to request a test of the orifice meter facility.  If SRE is found to exceed the limit stated above,
the party responsible for the creation of the SRE must have a plan for the
elimination of the SRE within thirty (30) days and equipment installed or
modified to correct SRE in a reasonable amount of time, not to exceed 

six (6) months.  Pulsation errors
determined by the use of a square root error indicator manufactured under a
license for the Southern Gas Association are to be used only for the purpose of
determining SRE and are not to be used for adjusting measured volumes.

 

12.7         Boyle’s Law.  The
measurement hereunder shall be corrected for deviation from Boyle’s Law at the
pressures and temperatures under which Gas is delivered hereunder.

 

12.8         Temperature.  The
temperature of the Gas shall be determined to the nearest one degree Fahrenheit
(1°F) at the points of measurement by the continuous use of recording
thermometers of standard manufacture acceptable to the parties, to be installed
in accordance with the recommendations contained in American Gas Association
Measurement Committee Report Number 3, 7, or 9 as appropriate, and the
arithmetical average of hourly temperatures of the Gas so determined each day
shall be used in computing temperatures of the Gas during each day.

 

12.9         Supercompressibility.  Unless
otherwise allowed by state law, adjustment for the effect of supercompressibility
shall be determined by test or by mutual consent of the parties hereto according
to the provisions contained in American Gas Association Measurement Committee Report
Number 3, 7, 8 or 9 as appropriate, for the average conditions of pressure,
flowing temperature, and specific gravity at which the Gas was measured during
the period under consideration and with the respective proportionate values for
carbon dioxide and nitrogen fractional values and to obtain subsequent values
of these Components as may be required from time to time.

 

12.10       Check Measurement.  At
the Receipt Point(s) SELLER may install check measuring equipment at its own
cost and expense; provided, such equipment shall be so installed as not to interfere
with the operations of the BUYER.  BUYER’s
meter shall be the meter used for all

 

8

 

measurement purposes, BUYER and SELLER, in the presence of each other,
shall have access to the other’s measuring equipment at all reasonable times;
but the reading, calibrating, and adjusting thereof, and the changing of
charts, if any, shall be done only by the owner of the meter or its
representative unless otherwise agreed. Each party shall give notice
sufficiently in advance, and the other parties notified shall have the right to
be present at the time of any installing, reading, cleaning, changing,
repairing, inspecting, testing, calibrating, or adjusting done in connection
with the other’s measuring equipment; provided, however, failure of either party
so notified to witness such an operation after due notification shall not
affect the validity of such operation in any way.

 

12.11       Sampling.  BUYER
shall obtain a sample at least annually of Gas at the Receipt Point(s) by using
methods contained in GPA Standard 2166 / API 14.1, as revised, “Methods for
Obtaining Natural Gas Samples for Analysis by Gas Chromatography.” This sample
may be obtained utilizing a spot sampler, continuous sampler, on-stream
chromatograph or other instruments approved by BUYER.  SELLER may request that additional samples be
taken in order that SELLER may have its own sample tested independently.  Any additional samples requested by SELLER
shall be at SELLER’s sole expense.

 

12.12       Composition, Gross Heating
Value, Specific Gravity.  The composition of the Gas shall be determined
from the sample of the Gas by using GPA Standard 2261, as revised, “Method of Analysis
for Natural Gas and Similar Gaseous Mixtures by Gas Chromatography,” with the exception
of sulfur compounds.  The gallons per MCF
and the Gross Heating Value of the Gas shall be determined by using technically
correct methods contained in GPA Standard 2172, as revised, “Method for
Calculation of Gross Heating Value, Specific Gravity, and Compressibility of
Natural Gas Mixtures from Compositional Analysis”, and the Gross Heating Values
from GPA Standard 2145, as revised from time to time, “Table of Physical
Constants for the Paraffin Hydrocarbons and Other Components of Natural Gas.”  Each composition, Gross Heating Value and
Specific Gravity determination shall be effective until the next determination.
 The Specific Gravity of the Gas shall be
recorded to the nearest one-thousandth (0.001).

 

12.13       Water Content.  Gas
delivered at the Receipt Point(s) shall be considered to be saturated with water
at measurement temperature and pressure, unless Gas has been dehydrated to a
water content of seven (7) lbs/MMCF or less prior to the point of
measurement.  The water content shall be
determined by BUYER using practices contained in GPA 181, GPA 2172, AGA Report No. 3
or other reasonable practices as determined appropriate by BUYER.  Gas with seven (7) lbs/MMCF or less
shall be considered dry, i.e. containing no water.

 

12.14       Assumed Atmospheric
Pressure.  The atmospheric pressure shall be assumed to be the average atmospheric
pressure for the elevation as used by BUYER in that particular geographic area
regardless of the actual atmospheric pressure where Gas is measured.

 

12.15       Sulfur.  The sulfur content shall be determined from
tests taken at the Receipt Point(s) by methods accepted in the industry, such
as GPA Standard 2377, as revised, “Method of Test for Hydrogen Sulfide and
Carbon Dioxide in Natural Gas Using Length of Stain Tubes.” Other sulfur
species can be determined by chromatographic analysis conditional on the parties’
acceptance of the type of analysis to be used and the condition of the sample.

 

12.16       NGL Measurement.  The
Natural Gas Liquids removed by processing will be measured using measurement
equipment and practices accepted in the industry and supported by AGA, API
and/or GPA standards, as applicable.

 

9

 

XIII.  NOTICES AND STATEMENTS

 

13.1         All notices, statements, payments and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been effectively given when delivered by facsimile
or mailed by first class mail, addressed to the parties as follows:

 

	
  NOTICE TYPE

  	
   

  	
  BUYER

  	
   

  	
  SELLER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CONTRACTS

  	
   

  	
  ONEOK
  Texas Field Services, L. P.

  	
   

  	
  W.O.
  OPERATING COMPANY, LTD.

  
	
   

  	
   

  	
  Attn:
  Contract Administration

  	
   

  	
  Attn:

  
	
   

  	
   

  	
  P.
  O. Box 871

  	
   

  	
  PO
  BOX 960,

  
	
   

  	
   

  	
  Tulsa,
  OK 74102-0871

  	
   

  	
  PAMPA,
  TX 79066-0960

  
	
   

  	
   

  	
  Telephone:
  (918) 591-5000

  	
   

  	
  Telephone:
  (806)

  
	
   

  	
   

  	
  Fax:
  (918) 588-7466

  	
   

  	
  Fax:
  (806)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULING

  	
   

  	
  ONEOK
  Texas Field Services, L. P.

  	
   

  	
  W.O.
  OPERATING COMPANY, LTD.

  
	
   

  	
   

  	
  Attn:
  Scheduling

  	
   

  	
  Attn:

  
	
   

  	
   

  	
  P.
  O. Box 871

  	
   

  	
  PO BOX 960,

  
	
   

  	
   

  	
  Tulsa,
  OK 74102-0871

  	
   

  	
  PAMPA, TX 79066-0960

  
	
   

  	
   

  	
  Telephone:
  (918) 591-5000

  	
   

  	
  Telephone:
  (806)

  
	
   

  	
   

  	
  Fax:
  (918) 588-7499

  	
   

  	
  Fax:
  (806)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ACCOUNTING

  	
   

  	
  ONEOK
  Texas Field Services, L. P.

  	
   

  	
  W.O.
  OPERATING COMPANY, LTD.

  
	
   

  	
   

  	
  Attn:
  Plant Accounting

  	
   

  	
  Attn:

  
	
   

  	
   

  	
  P.
  O. Box 871

  	
   

  	
  PO
  BOX 960,

  
	
   

  	
   

  	
  Tulsa,
  OK 74102-0871

  	
   

  	
  PAMPA,
  TX 79066-0960

  
	
   

  	
   

  	
  Telephone:
  (918) 591-5000

  	
   

  	
  Telephone:
  (806)

  
	
   

  	
   

  	
  Fax:
  (918) 732-1325

  	
   

  	
  Fax:
  (806)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PAYMENTS

  	
   

  	
  By Check

  	
   

  	
  By Check

  
	
   

  	
   

  	
  ONEOK
  Texas Field Services, L. P.

  	
   

  	
  W.O. OPERATING COMPANY,
  LTD.

  
	
   

  	
   

  	
  c/o
  OEG A/R Group, 17-1

  	
   

  	
  PO BOX 960,

  
	
   

  	
   

  	
  P.
  O. Box 871

  	
   

  	
  PAMPA, TX 79066-0960

  
	
   

  	
   

  	
  Tulsa,
  OK 74102-0871

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PAYMENTS

  	
   

  	
  By Wire

  	
   

  	
  By Wire

  
	
   

  	
   

  	
  Bank
  One, Oklahoma, NA

  	
   

  	
   

  
	
   

  	
   

  	
  15
  East 5th Street

  	
   

  	
   

  
	
   

  	
   

  	
  Tulsa,
  OK 74103

  	
   

  	
   

  
	
   

  	
   

  	
  ABA#
  103000648

  	
   

  	
   

  
	
   

  	
   

  	
  Bank
  Account #632944542

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TAX
  ID:

  	
   

  	
  17603639265

  	
   

  	
  752675224

  

 

10

 

13.2         Changes.  Notices
of change of address of any of the parties shall be given in writing to the
other in the manner aforesaid and shall be observed in the giving of all future
notices, statements, or other communications required or permitted to be given
hereunder.

 

XIV.  DEFAULT

 

14.1         If either party shall fail to perform any of
the covenants and obligations imposed upon it under and by virtue of this
Agreement (except where such failure shall be excused under any of the provisions
of this Agreement), then in such event the other party may, at its option,
terminate this Agreement by proceeding as follows:

 

14.1.1      The party not in default shall give notice
stating specifically the cause for terminating this Agreement and declaring it
to be the intention of the party giving the notice to terminate same.

 

14.1.2      The party in default shall have sixty (60)
days after the service of the aforesaid notice in which to remedy or remove
cause or causes stated in the notice for terminating this Agreement, and, if
within said period of sixty (60) days, the party in default does so remove or
remedy said cause or causes and fully indemnifies and/or reimburses the party
not in default for any and all damages, losses, and consequences of such
breach, then such notice shall be withdrawn and this Agreement shall continue
in full force and effect.

 

14.1.3      In case the party in default does not so
remedy and remove the cause or causes or does not indemnify and/or reimburse
the party giving the notice for any and all damages, losses, and consequences
of such breach within said period of sixty (60) days, then this Agreement
shall, at the expiration of said sixty (60) day period, terminate, except as to
all accrued obligations not yet discharged; provided, however, that if such
default be remedied but no indemnification therefore has been made due to a
bona fide dispute between the parties as to the amount thereof, then this
Agreement shall not terminate, but the party not in default shall have the
right to seek indemnification in any manner provided by law or by this
Agreement.

 

Any cancellation of this Agreement, pursuant to the provisions of this
Article, shall be without prejudice to the right of the party not in default to
collect any amounts due for breach of this Agreement; provided, however, the
provisions herein for termination of this Agreement shall not apply if the
failure of BUYER involves failure to pay any sum or amount due hereunder, and
BUYER’s refusal to pay is subject to a bona fide dispute, and BUYER pays all
amounts not in dispute; provided further, however, that any termination of this
Agreement for breach shall be carried out by the party not in default
exclusively in accordance with to the provisions set out in this Article.

 

14.2         No waiver of any default under this Agreement
shall constitute a waiver of any other default, whether of like or different
character.

 

XV.  DEFINITIONS

 

15.1         For the purpose of this Agreement, unless the
context clearly indicates otherwise, the following definitions shall be
applicable:

 

15.1.1      BTU shall mean British Thermal
Unit and is equal to 1055.05585262 Joule.

 

15.1.2      Business Day shall mean any day except Saturday, Sunday
or Federal Reserve Bank holidays starting at eight o’clock a.m. Central
Standard Time.

 

11

 

15.1.3      Condensate  shall mean the liquid hydrocarbons that are
recovered from the Gas in typical oil and Gas separators or pipeline drips,
compressor discharge or suction scrubbers, usually from changes in ambient or
ground temperature and/or pressure, but not from processing.

 

15.1.4      Cubic Foot of Gas  for
the purpose of measurement of the Gas delivered hereunder shall mean the amount
of Gas necessary to fill one cubic foot of space at a base pressure of fourteen
and seventy-three hundredths (14.73) pounds per square inch absolute and at a
base temperature of sixty degrees Fahrenheit (60°F) (“Base Conditions”) and
shall be the volume unit of measurement.

 

15.1.5      Day or day  shall mean a twenty-four (24) consecutive
hour period.  For measurement purposes
described herein it will begin with the hour that is the then beginning hour
that is the standard practice of BUYER.

 

15.1.6      Dehydration  shall mean the dehydration process that
removes water and water vapor from the Gas or Natural Gas Liquids such as with
the use of glycol, methanol, molecular sieves, etc.

 

15.1.7      FL&U  shall mean the sum of the MMBTU’s of field
fuel and the MMBTU’s of lost and unaccounted gas, but not including other fuel
retained for services such as compression and dehydration.

 

15.1.8      Gas or gas  shall mean natural gas as produced from Wells
in its natural state that meets the quality specifications of Article V of
this Agreement.

 

15.1.9      GPM  shall mean gallons per MCF.

 

15.1.10    Gross Heating Value of the
Gas  shall mean the BTU content of one Cubic Foot
of Gas at defined conditions which is the number of BTU’s produced by the
complete combustion of such Cubic Foot of Gas, at constant pressure with air of
the same temperature and pressure as the Gas, when the products of combustion
are cooled to the initial temperatures of the Gas and air, and when water is
formed by such combustion is condensed to a liquid state at the initial
temperature of the Gas.

 

15.1.11    Gross Heating Value of the NGL’s shall mean the BTU per gallon, fuel as ideal
gas, as described in the current GPA Standard 2145 with the exception of
hexanes plus, which shall be that recommended in the current GPA Standard 2261,
i.e. 60% hexane, 30% n-heptane and 10% n-octane

 

15.1.12    Lands and Lease(s) shall mean the contractual right to the title
of and to the minerals, including oil and gas, from geological formations on
and below the properties described in Exhibit “B” attached hereto and made
a part hereof and as amended from time to time, including certain surface
rights as necessary to explore, develop, drill and produce said minerals from
such properties or lands.

 

15.1.13    MCF  shall mean one thousand (1,000) Cubic Foot of
Gas.

 

15.1.14    MMBTU shall mean one million (1,000,000) British
Thermal Units.

 

15.1.15    MMCF shall mean one million (1,000,000) Cubic Foot
of Gas.

 

15.1.16    Month  shall mean that period of time beginning on
the first Day of a calendar Month and ending on the first Day of the following
calendar Month, except that the first Month shall commence on the Day of
initial receipt of Gas hereunder and shall end on the first Day of the
following calendar Month.

 

15.1.17    Natural Gas Liquids or NGL’s shall mean those liquid hydrocarbons
extracted from the Gas from Processing. 
The components (“Components”) of the NGL’s are identified as ethane,
propane, iso-butane, normal butane, natural gasolines and

 

12

 

incidental methane and other miscellaneous liquids that
become associated with the NGL’s.

 

15.1.18    NYMEX Gas Close Price shall mean the last NYMEX contract settlement
price for Henry Hub gas that occurs in the Month preceding the applicable Month.

 

15.1.19    Psig shall mean pounds per square inch gauge.

 

15.1.20    Psia shall mean pounds per square inch absolute.

 

15.1.21    Plant(s) shall mean Gas Processing facilities where
Natural Gas Liquids and other Plant Products are separated from the Gas as a
result of Processing.

 

15.1.22    Plant Products shall mean the Natural Gas Liquids and
helium, if any, as extracted from Processing.

 

15.1.23    Processing shall mean the extraction of Natural Gas Liquids
from the Gas through equipment specifically intended to extract Natural Gas
Liquids and/or Plant Products from the Gas such as turboexpander (cryogenic),
refrigeration, refrigerated lean oil absorption, ambient oil absorption, joule
thompson or similar processes.

 

15.1.24    Receipt Point(s) shall
mean the inlet flange of BUYER’s pipeline facilities installed to take
deliveries of Gas from SELLER.

 

15.1.25    Treating shall mean the treating process by which
contaminates are removed from the Gas or Natural Gas Liquids.  These contaminates can be, but not limited
to, hydrogen sulfide, sulfur compounds, carbon dioxide and mercury.

 

15.1.26    Wells shall mean the Well or Wells productive of
Gas from all geological formations which is completed on the Leases described
in Exhibit “B” attached hereto and in which SELLER has an interest, owns
or controls the right to dispose of Gas produced therefrom.

 

15.1.27    Year shall mean any period of twelve (12)
consecutive calendar Months.

 

XVI.  MISCELLANEOUS

 

16.1         Changes.  All
modifications, ratifications, amendments or changes to this Agreement, whether made
simultaneously with or after the execution of this Agreement shall be in
writing, executed by both BUYER and SELLER, and attached hereto.

 

16.2         Regulation.  This
Agreement shall be subject to all valid rules, regulations, interpretations,
and orders of any duly constituted federal or state regulatory body having
jurisdiction hereof.  This Agreement and
the respective rights and obligations of the parties hereto are subject to all existing
and future laws, statutes, rules, regulations, orders or directives promulgated
by any duly constituted state or federal governmental authority, regulatory
body or commission having jurisdiction or control over the parties, their
respective facilities or services contemplated herein.  Should either party be ordered or required to
do any act inconsistent with the provisions of this Agreement, this Agreement
shall be deemed modified to conform to the requirements of such law or
regulation.  If any provision of this
Agreement is held to be illegal, invalid, unenforceable
or have a material and substantial negative impact on the rights, duties or obligations
of either party, then the parties shall meet in good faith to determine if such
negative impact can be eliminated or mitigated. 
If such negative impact cannot be eliminated or mitigated to the
satisfaction of either party, then either party shall have the right to
terminate this Agreement.

 

16.3         Assignment.  BUYER
may assign all or part of its rights under this Agreement, provided that BUYER
shall within ten (10) Days after any such assignment provide to SELLER a
copy of all instruments effecting that assignment.  SELLER may not in any circumstances assign all
or any

 

13

 

part of its rights under this Agreement without the prior written consent
of BUYER.  No claim or demand against
BUYER under this Agreement shall be assigned or transferred by SELLER without
the prior written consent of BUYER.

 

16.4         Entire Agreement.  This
Agreement contains the entire agreement between the parties hereto and there
are no oral promises, agreements, or warranties affecting same.

 

16.5         Headings.  The
topical headings and index used herein are inserted for convenience only and shall
not be construed as having any substantive significance or meaning whatsoever,
or as indicating that all of the provisions of this Agreement relating to any
particular topic are to be found in any particular section.

 

16.6         Interpretations.  The
parties hereto agree and confirm that, in the consideration and interpretation
of this Agreement, same shall be construed under the laws of the State of
Texas, excluding any conflicts of law, rule, principle, or law which might
refer to the laws of another state and this Agreement was prepared by all
parties hereto and not by any party to the exclusion of the other or others.

 

16.7         Independent Contractor.  It is
not the intention of the parties hereto to create, nor is there created hereby,
a partnership, joint venture, or association. 
The status of each party hereunder is solely that of an independent
contractor.

 

16.8         Confidentiality. 
SELLER AGREES THAT THE TERMS AND CONDITIONS OF THIS AGREEMENT WILL BE
HELD CONFIDENTIAL AND SHALL NOT BE DISCLOSED TO OTHER PARTIES WITHOUT CONSENT
OF BUYER UNLESS THAT DISCLOSURE IS REQUIRED BY FEDERAL OR STATE LAW OR
AGENCY.  SELLER SHALL FURNISH BUYER
PROMPT NOTICE IF SUCH DISCLOSURE IS MADE.

 

16.9         Damages.

 

16.9.1  In no event shall either party be liable to the
other for consequential, incidental, special, punitive, indirect damages, lost
profits, or other business interruption damages in connection with the
performance or nonperformance of the parties under this Agreement.

 

16.9.2  THE PARTIES CERTIFY THAT THEY ARE NOT “CONSUMERS”
WITHIN THE MEANING OF THE TEXAS DECEPTIVE TRADE PRACTICES CONSUMER PROTECTION
ACT, SUBCHAPTER E OF CHAPTER 17, SECTIONS 17.41 ET SEQ.  OF THE TEXAS BUSINESS AND COMMERCE CODE, AS AMENDED, (“DTPA”).
THE PARTIES COVENANT, FOR THEMSELVES AND FOR AND ON BEHALF OF ANY SUCCESSOR OR
ASSIGNEE, THAT, IF THE DTPA IS APPLICABLE TO THIS AGREEMENT, (1) THE
PARTIES ARE “BUSINESS CONSUMERS” AS THAT TERM IS DEFINED IN THE DTPA, (2) OTHER
THAN SECTION 17.555 OF THE TEXAS BUSINESS AND COMMERCE CODE, EACH PARTY
HEREBY WAIVES AND RELEASES ALL OF ITS RIGHTS AND REMEDIES THEREUNDER AS
APPLICABLE TO THE OTHER PARTY AND ITS SUCCESSORS AND ASSIGNS, AND (3) EACH PARTY SHALL DEFEND AND INDEMNIFY THE OTHER PARTY FROM AND AGAINST
ANY AND ALL CLAIMS OF OR BY THE INDEMNIFYING PARTY OR ANY OF ITS SUCCESSORS AND
ASSIGNS OR ANY OF ITS OR THEIR AFFILATES OR SUBSIDIARIES BASED IN WHOLE OR IN PART
ON THE DTPA ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

16.10       Replacement.  This
Agreement terminates and supersedes any prior agreements for the sale of gas
between the parties or their predecessors in interest concerning any gas
produced from any sources covered by this Agreement described in Exhibit “B”
hereto as of the Effective Date.

 

14

 

16.11       Purpose of Agreement.  The
parties agree that the Prior Gas Purchase Agreement between SELLER and BUYER
covering the gas produced from those sources covered by this Agreement (the “Prior
Agreement”), was terminated effective December 31, 2004, by BUYER in
accordance with the provisions of the Prior Agreement.  The purpose of this Agreement is to provide a
temporary agreement pertaining to the sale and purchase of gas produced from
the sources covered by this Agreement, to allow the parties time to (i) negotiate,
if possible, a long term agreement for the purchase and sale of said gas; and (ii) negotiate,
if possible, a resolution of the SELLER’s claims asserted against BUYER under
the Prior Agreement in Case No. 32,558 in the 223rd Judicial
District Court of Gray County, Texas (the “Litigation”). Notwithstanding
anything contained in this Agreement to the contrary, it is specifically
understood and agreed between the parties that (i) this Agreement is
different from the Prior Agreement, and nothing contained herein reflects or is
probative of the understandings or intentions of the parties to the Prior
Agreement, or any of the terms contained therein; (ii) nothing contained
in this Agreement shall diminish or otherwise affect SELLER’s claims asserted
in the Litigation, which shall remain valid and subsisting; and (iii) this
Agreement is not relevant to any of the issues asserted in the Litigation for
any purpose.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement in one or more copies
or counterparts, each of which, when executed by BUYER and SELLER, shall
constitute and be an original effective Agreement between BUYER and such
SELLER.

 

	
  “BUYER”

  	
   

  	
  “SELLER”

  
	
  ONEOK
  Texas Field Services, L. P.

  	
   

  	
  W.O.
  OPERATING COMPANY, LTD.

  
	
  a
  limited partnership

  	
   

  	
   

  
	
  By:
  ONEOK Field Services Company

  	
   

  	
   

  
	
  general
  partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Terry K. Spencer

  	
   

  	
   

  	
  By:

  	
  /s/ Miles O’Loughlin

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:
  Terry K. Spencer

  	
   

  	
  Name:

  	
  Miles O’Loughlin

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:
  Vice President

  	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  2/18/05

  	
   

  	
   

  	
  Date:

  	
  Feb. 11, 2005

  	
   

  
										

 

15

 

EXHIBIT “A”

Percent of Proceeds

Allocated Plants

 

This Exhibit “A” is incorporated into
that certain Gas Purchase Agreement dated JANUARY 1, 2005, by and between
ONEOK Texas Field Services, L.P., hereinafter referred to as “BUYER,” and W.O.
OPERATING COMPANY, LTD., hereinafter referred to as “SELLER.”

 

BASIS
OF COMPENSATION shall be the sum of the following:

 

1.             NGL Products Payment.  BUYER
shall pay to SELLER an amount equal to EIGHTY-FIVE percent (85%) of the Net NGL
Proceeds.

2.             Residue Gas Payment.  BUYER
shall pay to SELLER an amount equal EIGHTY-FIVE percent (85%) of the Net
Residue Proceeds.

3.             Compression Fee.  Not
applicable

4.             Gathering Fee.  Not
applicable.

5.             Dehydration Fee.  BUYER
shall not charge a dehydration fee under this Agreement.

6.             Treating Fee.  Not
applicable.

 

DEFINITIONS:

 

SELLER’s
NGL Products shall be
determined by multiplying the total quantity of each NGL Component saved and
sold at the

Plant(s) by a fraction, the numerator of which shall be the theoretical gallons
of such Component contained in SELLER’s Gas delivered at the Receipt Point(s)
and the denominator of which shall be the total theoretical gallons of each
Component contained in all Gas delivered to BUYER’s facilities upstream of the
Plant(s).

 

Net
NGL Proceeds shall be
the sum of each Component of SELLER’s NGL Products multiplied by the Monthly
Average NGL Sales Price of each Component.

 

Monthly
Average NGL Sales Price
shall mean the average net price received by BUYER f.o.b. BUYER’s Plant for the
sale of each NGL Component.

 

Residue
Gas shall mean the
total quantity of MMBTU’s of gas (both processed and unprocessed) sold at the
tailgate of BUYER’s Plant(s).

 

NGL
Shrinkage shall be
the sum of the BTU equivalent (BTU/gal, fuel as ideal gas) of each such NGL
Component as set forth in the GPA Standard 2145, as revised, “Table of Physical
Constants of Paraffin Hydrocarbons and Other Components of Natural Gas with the
exception of hexanes plus, the value of which shall be 117,007 BTU per gallon.

 

Residue
Price shall mean
average net price per MMBTU received by BUYER, f.o.b. BUYER’s Plant for the
sale of Residue Gas.

 

Net
Residue Proceeds
shall be determined by multiplying SELLER’s Residue Gas by the Residue Price.

 

16

 

SELLER’s
Residue Gas shall be
the total MMBTU’s of Residue Gas multiplied by a fraction, the numerator of
which shall be the MMBTU’s contained in SELLER’s Gas at the Receipt Point(s),
less the MMBTU’s of NGL Shrinkage attributable to SELLER’s NGL Products and the
denominator of which shall be the total MMBTU’s of all gas delivered to BUYER
upstream of BUYER’s Plant less NGL Shrinkage attributable to the total quantity
of NGL Components saved and sold from BUYER’s Plant(s).

 

17

 

EXHIBIT “B”

 

This Exhibit “B” is incorporated into
that certain Gas Purchase Agreement dated the 1st day of January, 2005, by and
between ONEOK Texas Field Services, L. P., hereinafter referred to as “BUYER,”
and, W. O. Operating COMPANY, Ltd., hereinafter referred to as “SELLER.”

 

SELLER dedicates to this Gas Purchase Agreement, as amended from time
to time, the Wells and Leases described below:

 

	
  Wells/Lease

  	
   

  	
  Lands/Lease Description

  	
   

  	
  County

  	
   

  	
  State

  	
   

  	
  *WI%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jord

  	
   

  	
  Sec.
  106, Blk. 4, I&GN

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr.
  #40281)

  	
   

  	
  RR
  Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.
  Jordan

  	
   

  	
  SW/4
  of Sec. 114, Blk. 4, I&GN

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr.
  #40481)

  	
   

  	
  RR
  Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jordan
  D, S-West

  	
   

  	
  S/2,
  SW/4 of Sec. 105, Blk. 4,

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr.
  #40491)

  	
   

  	
  I&GN
  RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Block

  	
   

  	
  W/2
  NE/4 of Sec. 112, Blk. 4

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr.
  #41341)

  	
   

  	
  I&GN
  RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Block
  “A”

  	
   

  	
  N/2
  NW/4 SE/4, SE/4 NW/4

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr.
  #41261)

  	
   

  	
  SE/4,
  N/2 NE/4 SE/4,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SE/4
  NE/4 SE/4, NE/4 SW/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SE/4,
  SW/4 SE/4 SE/4 of

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Sec.
  111, Blk. 4, I&GN

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RR
  Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Block
  “B”

  	
   

  	
  E/2
  SE/4 SE/4, NW/4 SE/4

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr.
  #41251)

  	
   

  	
  SE/4,
  SW/4 NE/4 SE/4,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SW/4
  NW/4 SE/4, NW/4 SW/4

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SE/4,
  S/2 SW/4 SE/4 of Sec. 111,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Blk.
  4, I&GN RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Block
  “C”

  	
   

  	
  NE/4
  of Sec. 111, Blk. 4,

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr.
  #41271)

  	
   

  	
  I&GN
  RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cooper
  “A”

  	
   

  	
  NW/4
  SE/4, SW/4 NE/4

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr.
  #41411)

  	
   

  	
  of
  Sec. 4, Blk. 9, I&GN

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RR
  Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cooper
  “B”

  	
   

  	
  NE/4
  NE/4, N/2 SE/4 NE/4

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr.
  #41471)

  	
   

  	
  of
  Sec. 5, Blk. 9, I&GN

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RR
  Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

18

 

	
  Cooper “E”

  	
   

  	
  NW/4 of Sec. 4, Blk. 9

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #41431)

  	
   

  	
  I&GN RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cooper “G”

  	
   

  	
  SE/4 NE/4, NE/4 SE/4

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #41421)

  	
   

  	
  of Sec. 4, Blk. 9,
  I&GN

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RR Co, Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cooper “H”

  	
   

  	
  E/2 NW/4 of Sec. 5, Blk. 9

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #41281)

  	
   

  	
  I&GN RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E. Cooper

  	
   

  	
  SW/4 of Sec. 1, SW/4 of
  Sec. 4,

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  NCT A (Mtr. #41511)

  	
   

  	
  SW/4 of Sec, 5 all in Blk.
  9,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NCT B (Mtr. #40141)

  	
   

  	
  I&GN RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NCT C (Mtr.#41521)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Langdon

  	
   

  	
  N/2 NE/4 of Sec. 125, Blk.
  4,

  	
   

  	
  Hutchinson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #41301)

  	
   

  	
  BS&F Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Newblock

  	
   

  	
  S/2 NE/4 of Sec. 125, Blk.
  4,

  	
   

  	
  Hutchinson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #41301)

  	
   

  	
  BS&F Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Quinn

  	
   

  	
  SW/4 of Sec. 7, Blk. 9,

  	
   

  	
  Hutchinson &Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #41291)

  	
   

  	
  I&GN RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Siebold

  	
   

  	
  E/2 SE/4 of Sec. 125, Blk.
  4,

  	
   

  	
  Hutchinson &
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #41321)

  	
   

  	
  I&GN RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pitcher

  	
   

  	
  NW/4 of Sec. 19, Blk. M-21

  	
   

  	
  Hutchinson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #41351)

  	
   

  	
  TCRR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  McConnell #1 & 3

  	
   

  	
  W/2 of Sec. 65, Blk 4,
  I&GN

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #72521 &

  	
   

  	
  RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  525650)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jordan #22

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #40801)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fee 244

  	
   

  	
  E/2, SW/4 of Sec. 89, N/2
  of

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #248018)

  	
   

  	
  Sec. 90, E/2, SW/4 of Sec.
  91,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  E/2 Sec. 108, All of Sec.
  109, E/2,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SW/4 of Sec. 110, Blk. 4,

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  I&GN RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B. F. Block

  	
   

  	
   

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #41331)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

19

 

	
  Schafer

  	
   

  	
   

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
  (Mtr. #248022)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bryan ABCD

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Mtr. #40216)

  	
   

  	
  Sec. 92, Blk. 4, I&GN

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
   

  	
   

  	
  RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Mtr. #40081)

  	
   

  	
  Sec. 107, Blk, 4, I&GN

  	
   

  	
  Carson

  	
   

  	
  Texas

  	
   

  	
  100.00

  
	
   

  	
   

  	
  RR Co. Survey

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*Includes
owned and/or controlled interest.

 

20

 

EXHIBIT “C”

 

Quality Specifications.  Unless
excepted by specific exemption on Exhibit “B”
attached hereto, Gas from each Receipt Point(s) shall meet the following
quality specifications:

 

Hydrogen Sulfide.  The Gas shall not contain more
than one part per million (1 ppm) of hydrogen sulfide by volume as determined
by a method generally acceptable for use in the gas industry and to the parties
hereto.

 

Total Sulfur.  The Gas shall not contain more
than one quarter (1/4) grain of total sulfur per one hundred (100) Cubic Foot
of Gas as determined by a method generally acceptable for use in the gas industry
and to the parties hereto.

 

Temperature.  The Gas shall not have a temperature of less
than forty degrees Fahrenheit (40°F) nor more than one hundred-twenty degrees
Fahrenheit (120°F).

 

Carbon Dioxide.  The Gas shall not contain in
excess of three-tenths of one percent (0.3%) by volume of carbon dioxide.

 

Nitrogen.  The Gas shall not contain in excess of two
percent (2%) by volume of nitrogen.

 

Oxygen.  The Gas shall not contain in excess of ten
parts per million (10 ppm) by volume of oxygen.

 

Objectionable Liquids, Solids, Contaminants.  The
Gas shall be free of liquids and solids and other potentially harmful
contaminants such as arsenic, mercury, selenium, radon, or antimony, Well treating chemicals, dust, gums, gum-forming
constituents, or other objectionable liquid or solid matter.

 

Hazardous Waste.  The Gas shall be free from all “hazardous
waste” as defined in the Resources Conservation and Recovery Act, 42 USC 6901,
et seq.

 

Water.  The Gas shall not contain free water.  Gas which contains in excess of seven (7) pounds
of water vapor per one million (1,000,000) Cubic Foot shall incur a charge for
dehydration service as shown in Exhibit “A” attached hereto.

 

Mercaptans.  The Gas shall have a mercaptan content not in
excess of one tenth of one part per million (0.1 ppm) by volume.

 

Hydrogen.  The Gas shall contain no carbon monoxide,
halogens, or unsaturated hydrocarbons, and no more than four hundred parts per
million (400 ppm) of hydrogen.

 

Hydrocarbon Constituents.  The Gas shall have not less
than a ninety-five percent (95%) hydrocarbon constituency by volume and shall
have a Heating Value of not less than one thousand (1,000) BTU per Cubic Foot.

 

21EXHIBIT 10.1

 

GENERAL RELEASE & SEPARATION AGREEMENT

 

THIS GENERAL RELEASE &
SEPARATION AGREEMENT (“Agreement”) is made and entered into by and between
SIRVA, Inc., its subsidiaries and their subsidiaries including, but not
limited to, SIRVA Relocation, LLC, Allied Van Lines, Inc. and North
American Van Lines, Inc. (hereafter collectively referred to as “Company”),
and Allen Chan (“Associate”).

 

Recitals

 

WHEREAS, Associate and
Company enter into this Agreement in connection with Associate’s separation
from Company;

 

WHEREAS, Associate and
Company wish to resolve all disputes or potential disputes arising from
Associate’s employment by Company and the termination thereof;

 

NOW, THEREFORE, in
consideration of the matters set forth in the Recitals and the mutual covenants
and promises outlined below, the parties agree as follows:

 

Terms and
Conditions

 

1.                                       Separation.  Associate’s employment shall terminate
effective December 31, 2005 (“Termination Date”).  Associate shall continue to perform on a
substantially full-time basis through the Termination Date his job duties and
such other duties and responsibilities as may be assigned, and shall receive
his current pay and benefits through that date.

 

2.                                       Severance
Pay and Benefits.

 

(a)                                  In
consideration of the execution and non-revocation of this Agreement, Company
shall pay Associate severance pay at his rate of pay as of the Termination
Date, ($252,500 annualized),  less
applicable tax and withholding and Associate’s housing, goods and services,
school and utilities allowances, ($206,000 in aggregate annualized), less
applicable tax and withholding, beginning on the first regular pay period
following the expiration of the revocation period, and continuing for twelve
(12) months or until Associate becomes self-employed or obtains other full-time
employment (the “Severance Period”).

 

(b)                                 Associate’s
health benefits as previously provided to Associate by Company, but excluding
any other perquisites and short and long term disability benefits and life
insurance benefits, shall continue during the Severance Period.

 

(c)                                  Company
shall pay Associate the bonus he would otherwise be entitled to receive under
the terms of the 2005 Management Incentive Plan.  Company shall also pay Associate $126, 250
less applicable taxes and withholding in recognition of his efforts for
assisting in the successful completion of the divestiture of the Company’s
Records Management business in Australia.

 

(d)                                 As
further consideration, Associate shall also be entitled to the use of his
Company automobile and to retain his American Club Membership through the end
of

 

 

the Severance
Period.  At the end of the severance
period, Associate shall have the opportunity to purchase the Company automobile
at the fair market value at that time.

 

(e)                                  Nothing
herein is intended to alter Associate’s rights, if any, under the SIRVA, Inc.
Omnibus Stock Incentive Plan.

 

(f)                                    For
informational purposes only, Associate has, as of December 31, 2005, zero
(0) days of unused Earned Paid
Time Off (“PTO”).

 

3.                                       Tax
Equalization.  Associate will remain
tax equalized to the United States for all assignment related compensation
through December 31, 2006.  
Thereafter, Associate will no longer fall under Company’s Tax
Equalization Program.  Associate will
therefore be responsible for all income and social tax liabilities, regardless
of the jurisdiction, effective January 1, 2007.

 

4.                                       Tax
Return Preparation.  Company will pay
the cost of Associate’s United States and Hong Kong income tax return
preparation by Company’s designated tax provider for the 2006 tax year and
possibly beyond, as discussed below. Associate acknowledges his obligation to
pay to Company his hypothetical federal and social security liabilities for
2005 and beyond, in accordance with Company’s tax equalization policy.  Associate’s continued eligibility for United
States and Hong Kong individual income tax preparation services is determined
by compensation relating to Associate’s foreign assignment included in a Form W-2,
utilization of foreign tax credits that can be claimed on Associate’s United
States income tax return, or subjection to Hong Kong tax in future years.  Company retains the right to recoup any tax
benefits (e.g. foreign tax credits, etc. ) claimed in any year, which relate to
foreign taxes paid by Company. This includes prior years, if amended returns
can be filed to carry back foreign tax credits, or future years, if credits can
be carried forward.

 

5.                                       All
payments made to Associate under this Agreement will be paid by Associate’s
home country and any currency exchange fees and wire transfer fees associated
with such payments will be reimbursed by Company.

 

6.                                       If
Associate had established direct deposit for his payment of wages, then the
severance payments, and any other payments due per this Agreement, will be
directly deposited into the same account and financial institution where
Associate’s previous payment of wages had been directly deposited by Company,
unless Associate provides otherwise below:

 

	
  Name of Institution:

  	
   

  
	
  Account Number:

  	
   

  

 

[NOTE TO ASSOCIATE:  Only
complete the above information if you wish to change the account to
where you want your severance payments directly deposited from where you
currently have your payment of wages directly deposited.]

 

7.                                       Associate
acknowledges and agrees that the severance pay and benefits set forth in
Paragraphs Two (2) through Five (5) of this Agreement are the only
severance benefits Associate shall receive by electing to execute this
Agreement.  Associate further
acknowledges and agrees that upon payment of the amounts expressly provided for
in this Agreement, Associate shall have received full payment for all services
rendered on behalf of Company,

 

2

 

including
any amounts Associate would be otherwise entitled to receive from Company under
Company’s Management and/or Performance Incentive Plans, Associate’s employment
offer letter, or any other compensation, incentive or severance pay programs.

 

8.                                       In
consideration of the benefits received by Associate hereunder, Associate hereby
IRREVOCABLY, VOLUNTARILY, UNCONDITIONALLY AND
GENERALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES Company, and
each of Company’s owners, stockholders, predecessors, successors, assigns,
agents, directors, officers, employees, representatives, attorneys, divisions,
subsidiaries, affiliates (and agents, directors, officers, employees,
representatives and attorneys of such divisions, subsidiaries and affiliates),
and all persons acting by, through, under or in concert with any of them
(collectively “Releasees”), or any of them, from any and all charges,
complaints, claims, damages, actions, causes of action, suits, rights, demands,
grievances, costs, losses, debts, and expenses (including attorneys’ fees and
costs incurred), of any nature whatsoever, known or unknown (“Claim” or “Claims”),
which Associate now has, owns, or holds, or claims to have, own, or hold, or
which Associate at any time heretofore had, owned, or held, or claimed to have,
own, or held from the beginning of time to the date of this Agreement.

 

9.                                       By
way of specification and not by way of limitation, Associate specifically
waives, releases and agrees to forego any rights or claims that Associate may
now have, or may have heretofore had, against each or any of the Releasees,
under tort, contract or other common law of the State of Illinois, or other
state, including, but by no means limited to, claims arising out of or alleging
wrongful discharge, breach of contract, retaliatory discharge, breach of
implied covenant of good faith and fair dealing, invasion of privacy,
negligence, misrepresentation, interference with contractual or business
relations, personal injury, slander, libel, intentional infliction of emotional
distress, mental suffering or damage to professional reputation, and including,
but not limited to, any claims under the Age
Discrimination in Employment Act of 1967 (ADEA), the Worker Adjustment &
Retraining Notification Act, the Employee Retirement Income Security Act of
1974, Title VII of the Civil Rights Act of 1964, the Equal Pay Act, 42 U.S.C. Section 1981,
42 U.S.C. Section 1983, 42 U.S.C. Section 1985, the Vocational
Rehabilitation Act of 1977, the Illinois Human Rights Act, the Indiana Civil Rights Law, the Indiana Age Act, the Americans with Disabilities Act, the
Family Medical Leave Act, and under any other laws, ordinances,
executive orders, rules, regulations or administrative or judicial case law
arising under the statutory or common laws of the United States, any state, or
any political subdivision of any state. 
The parties intend that the claims released be construed as broadly as
possible.  The parties also acknowledge
that this Agreement is intended to and will serve as a complete defense to all
released claims.  This is not a waiver or
release of any claims that may arise from acts or omissions occurring after the
date this Agreement is executed.

 

10.                                 It
is understood by Associate that this Agreement is confidential, and its terms
and conditions are not to be revealed to anyone, except where otherwise
required by law, required for legitimate law enforcement or compliance purposes
or where revealed to Associate’s immediate family, legal counsel, and tax
advisor, and, with respect to the release of such information to any of them,
Associate will inform them of this confidentiality provision.

 

3

 

11.                                 Associate
represents and warrants that Associate has not filed any complaints or claims
against Company or Releasees with any local, state, federal or foreign court or
agency and that if any such court or agency assumes jurisdiction on any
complaint or claim against Company or Releasees which arose prior to the
execution of this Agreement, Associate shall immediately request such court or
agency to dismiss the matter and take all such additional steps necessary to
facilitate such dismissal with prejudice.

 

12.                                 Associate
agrees that Associate has had sufficient opportunity to review and consider
this Agreement and to discuss it with anyone Associate desires and that
Associate has carefully read it and fully understands all its provisions.  Associate further represents and agrees that
Associate has not been under any duress, coercion, or undue influence from
Company or any of its representatives either during the communications which
led to this Agreement or at the time of the execution of this Agreement.

 

13.                                 This
Agreement sets forth the entire agreement between the parties and fully
supersedes any and all prior agreements or understandings, written or oral,
between the parties pertaining to the subject matter of this Agreement except
the Confidentiality, Proprietary Rights & Non-Solicitation Agreement
signed by Associate on August 16, 2004. 
Associate specifically acknowledges that this agreement supersedes the
offer letter to Associate dated July 28, 2004. Additionally, Associate
represents and acknowledges that in executing this Agreement Associate does not
rely on, and has not relied on, any representation or statement made by Company
or any of its directors, officers, associates, agents or representatives, or
their attorneys with regard to the subject matter, basis or effect of this
Agreement or otherwise, other than those specifically stated in this written
Agreement.

 

14.                                 Associate
agrees that at no time hereafter will Associate make, issue release, or
authorize any written or oral statements, derogatory or defamatory in nature
about Company, its directors, officers, employees agents or related entities.

 

15.                                 This
Agreement shall be binding upon Associate and upon Associate’s heirs,
administrators, representatives, executors, and successors and shall inure to
the benefit of the Releasees and to their heirs, administrators,
representatives, executors and successors.

 

16.                                 This
Agreement shall be governed by the laws of the State of Illinois.  The parties agree that Illinois shall be the
exclusive venue for any action or proceeding by either party.

 

17.                                 Associate
has represented and hereby reaffirms that Associate has disclosed to Company
any information in Associate’s possession or within Associate’s knowledge
concerning any conduct involving Company, or any of its affiliates, employees,
associates, officers, directors, or agents that Associate has any reason to
believe involves any false claims to the United States or is or may be unlawful
or violates Company policy in any respect.

 

18.                                 As
soon as practicable, but in no event later than one (1) week following the
Termination Date, Associate shall return to Company (i) any and all
business equipment, credit cards and other Company property made available for
his use while an employee of Company and (ii) any files, data, diskettes
or other copies of information (whether in hard copy or in electronic form)
pertaining to Company or any of its subsidiaries or affiliates, or the business
or

 

4

 

operation
thereof.  Notwithstanding the foregoing,
Associate shall be entitled to retain his personal notes, diaries, and
calendars.

 

19.                                 Without
the prior written consent of Company, or except to the extent required by an
order of a court having competent jurisdiction or under subpoena from an
appropriate government agency, Associate shall not disclose any trade secrets,
customer lists, designs, information regarding product development, marketing
plans, sales plans, projected acquisitions or dispositions of properties or
management agreements, management organization information (including data and
other information relating to members of the Board and management), operating policies
or manuals, business plans, purchasing agreements, financial records, or other
financial, commercial, business or technical information relating to Company or
any of its subsidiaries or information designated as confidential or
proprietary that Company or any of its subsidiaries may receive belonging to
suppliers, customers or others who do business with Company or any of its
subsidiaries (collectively, “Confidential Information”) to any third person
unless such Confidential Information has been previously disclosed to the
public by Company or is in the public domain other than by reason of Associate’s
breach of this subparagraph.

 

20.                                 Associate
agrees to provide Company with his full cooperation, as requested by Company
from time to time, subject to reimbursement by Company of reasonable out-of
pocket costs and expenses in accordance with Company’s travel and expense
reimbursement policies regarding any matter including any litigation, claims,
governmental proceeding, investigation or independent review, which relates to
matters with which Associate was involved or which Associate had knowledge
during the term of his employment with Company.

 

21.                                 Knowing
and Voluntary.  Associate
acknowledges that in consideration for his execution of this Agreement, he is
receiving payments and benefits to which he would otherwise not be
entitled.  Associate further acknowledges
that:

 

(a)                                  Associate
agrees that Associate has had sufficient opportunity to review and consider
this Agreement and to discuss it with anyone Associate desires and that
Associate has carefully read it and fully understands all its provisions.  Associate further acknowledges that he has
been advised to have this Agreement reviewed by counsel, and that this
Paragraph Twenty Two (a) (22(a)) constitutes such written advice.  Associate further represents and agrees that
Associate has not been under any duress, coercion, or undue influence from
Company or any of its representatives either during the communications which
led to this Agreement or at the time of the execution of this Agreement; and

 

(b)                                 Associate acknowledges that Company provided Associate
this Agreement on December 31, 2005, and that Company has afforded
Associate the opportunity to take twenty-one (21) days to review this Agreement
and that Company has advised Associate to consult with an attorney prior to
signing this Agreement; and

 

(c)                                  Associate
has the right to revoke this Agreement within seven (7) calendar days
after he signs it by delivering written notice of such revocation to Todd
Schorr, Senior Vice President, Human Resources, within the seven (7) calendar
days in order to

 

5

 

be effective.  Associate understands that the severance
benefits will not commence until after the revocation period has expired.

 

IN WITNESS WHEREOF, the
parties do hereby KNOWINGLY and VOLUNTARILY enter into this General Release &
Separation Agreement.

 

	
  ALLEN CHAN

  	
  SIRVA, INC.

  
	
   

  	
   

  
	
  /s/ Allen Chan

  	
   

  	
  By:

  	
  /s/ Todd W. Schorr

  	
   

  
	
  Associate’s Signature

  	
   

  
	
   

  	
  Its:

  	
   Senior Vice President — H.R.

  	
   

  
	
  January 24, 2006

  	
   

  	
   

  
	
  Date

  	
  February 13, 2006

  	
   

  
	
   

  	
  Date

  

 

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]