Document:

Exhibit 10.67

 

SECOND AMENDED AND RESTATED

AGREEMENT FOR ADMINISTRATIVE SERVICES

 

This
SECOND AMENDED AND RESTATED AGREEMENT FOR ADMINISTRATIVE SERVICES (the
“Agreement”), dated as of January 1, 2009 (the “Effective Date”), by and
among RESACA EXPLOITATION, INC, a Texas corporation (“Company,” formerly known
as RESACA EXPLOITATION, LP, a Delaware limited partnership); TORCH ENERGY
ADVISORS INCORPORATED, a Delaware corporation (“Contractor”); and TORCH ENERGY
SERVICES, INC., a Texas Corporation (“TES”). Company and Contractor shall be
referred to herein individually as a “Party” and collectively as the “Parties.”
TES joins in this Agreement solely for the purposes of Section 7.14.

 

RECITALS:

 

A.             Company is owner of certain oil and gas and
oil, gas and mineral leases (the ‘Leases”) and wells (“Wells”) existing or to
be drilled on lands covered by the Leases in (a) the Cooper Jal Unit,
located in Lea County, New Mexico; (b) the Penwell Complex, located in
Ector and Crane Counties, Texas; (c) the Kermit Complex, located in
Winkler County, Texas; and (d) additional Wells located in Lea and Eddy
Counties, New Mexico and in Crane, Ector, Pecos, Howard, Mitchell, and Winkler
Counties, Texas, plus any additional leases, wells or other properties acquired
by Company after the Effective Date (collectively, the “Properties”);

 

B.              Company determined that it would be
beneficial to retain Contractor to provide administrative services to Company
on a contract basis;

 

C.              Company
and TES are parties to that certain Agreement for Operational, Accounting & Financial
Services, effective as of May 1, 2006 as amended and restated by that certain
Amended and Restated Agreement for Operational, Accounting and Financial
Services dated as of July 11, 2008, (the “Original Agreement”) pursuant to
which TES provides operational, accounting and financial services to Company
for the Wells and Properties;

 

D.              Company and Contractor are parties to that
certain Co-Employer Agreement, dated as of July 11, 2008, as amended and
restated by that certain Amended and Restated Co-Employer Agreement, dated of
even date herewith, (the “Co-Employer Agreement”) pursuant to which Company and
Contractor share a co-employer relationship with respect to certain employees
and wherein Company and Contractor each agree to assume certain federal, state,
statutory, common law, and regulatory employer responsibilities and liabilities
as co-employers concerning certain of their employees (such employees who are
co-employed by Company and Contractor pursuant to the terms of the Co-Employer
Agreement are referred to herein collectively as the “Employees” and each is an
“Employee”);

 

E.              Company, TES and Contractor desire to amend
and restate the Original Agreement so that Contractor, rather than TES, can
perform the Services (as defined below) and for the Parties to memorialize in
writing their agreements with respect to the administrative and accounting
operation of and accounting for the Wells, including enhancement of production
from the Properties;

 

 

AGREEMENT

 

NOW,
THEREFORE, for and in consideration of the premises and the mutual promises and
agreements herein contained, the receipt and sufficiency of which consideration
is hereby acknowledged Company, Contractor and TES hereby agree as follows:

 

ARTICLE 1.

DELEGATION TO CONTRACTOR

 

Section 1.01   Delegation
of Duties. Company hereby
delegates its duties to perform the services set forth on the attached Exhibit A (collectively, the “Services”) to
Contractor, and Contractor hereby agrees to undertake, perform and discharge
such duties on behalf of Company. All such Services shall be conducted in a
good and workmanlike manner as would a reasonably prudent service provider with
respect to the administration of oil and gas properties. The operational
consulting services described in Exhibit A as well as the performance of
other administrative services reasonably requested by Company but not described
in Exhibit A shall be performed at the discretion of Contractor.

 

Section 1.02   Employees. The Parties agree that the employees
performing the Services hereunder shall be the Employees and the selection of
the Employees, their hours of labor, and their compensation for Services
performed shall be determined by Contractor and Company. Notwithstanding the
foregoing, employees of a subcontractor of Contractor may perform the Services
as well, and such subcontractor shall be responsible for all employee benefits
(including, without limitation, compensation) for such employees.

 

Section 1.03   Compensation
of Contractor. Contractor
shall be compensated at the rates set forth in Exhibit B attached hereto. Invoicing and payment shall
occur in conformance with the provisions of Exhibit B. Any dispute related to compensation of
Contractor, invoicing, or payment will be governed by principles established
and published by the Council of Petroleum Accounting Societies (COPAS) in the
COPAS 2005 Accounting Procedure.

 

Section 1.04   Third
Party Invoices. Contractor
shall receive third party invoices with respect to the Services. Contractor
will review and approve such invoices. Company will then pay or cause to be
paid such invoices promptly. At no time shall Contractor be responsible for
payment of third party invoices.

 

Section 1.05   Status
of Contractor. Contractor
shall be an independent contractor with respect to the performance of its
obligations hereunder and shall have complete right and authority to control
and direct the Services provided hereunder. Notwithstanding the foregoing, the
Parties agree that nothing herein shall amend, modify or terminate their
respective obligations under the Co-Employer Agreement.

 

Section 1.06   Insurance. Contractor shall obtain and maintain in
force insurance in the minimum amounts as follows:

 

 

(a)               Commercial General Liability Insurance with a
minimum combined single limit of $1 million per occurrence and minimum general
aggregate limit of $2 million;

 

(b)              Worker’s Compensation Insurance or any
alternative plan or coverage as permitted or required by applicable law and
employer’s liability insurance with a minimum occurrence limit of $1,000,000;

 

(c)               Automobile Liability Insurance covering use
of all owned, non-owned and hired automobiles with a minimum combined single
limit of $1 million per occurrence for bodily injury and property damage
liability; and

 

(d)              Excess Liability Insurance of at least
$5,000,000 per occurrence, excess of (a) and (c) above.

 

Company
will maintain insurance coverage with respect to its obligations hereunder of
the same kind and in the same amounts as required of Contractor under Section 1.06(a),
(c) and (d) of this Agreement. Notwithstanding anything in this Section 1.06,
the Parties do not intend to limit either Party’s liabilities hereunder to the
insurance coverage required herein unless it is judicially determined that such
limits apply. Company will be added as an additional insured on all of the
policies except those listed in Section 1.06(b) and will be provided
a certificate of insurance on all insurance detailed above. Cancellation or
decrease in coverage by either Party shall require thirty (30) days advance
written notice to the other Party. Unless Contractor is entitled to
indemnification under Article 5 below, Contractor agrees that its policies
will be primary without right of contribution from Company or its insurance
policies. Contractor (together with its insurers) further agrees to waive its
right of subrogation against Company. Company (together with it insurers)
further agrees to waive rights of subrogation against Contractor.

 

ARTICLE 2.

PERFORMANCE OF SERVICES

 

Section 2.01   Day-to-Day
Performance. Contractor shall be entitled to use its reasonable discretion
in making day-to-day decisions incident to the normal performance of the
Services. It is the intent of the Parties that, during the term of this
Agreement, Contractor shall perform the Services with respect to all of the
Properties for so long as they may be owned by Company. Contractor shall
conduct all Services in a good and workmanlike manner as would a reasonably
prudent service provider with respect to the administration of oil and gas
properties and in accordance with all applicable laws, rules, regulations,
lease provisions and other contractual obligations.

 

Section 2.02   Access
to Properties and Information. Company shall have access at all times to
any information pertaining to the development or administration of the Wells
and Properties, including Contractor’s books and records relating thereto.
Contractor, upon request, shall furnish to Company copies of all forms or
reports filed with governmental agencies.

 

Section 2.03   Compliance
with Laws and Regulations.
In discharging Company’s duties hereunder, Contractor shall comply with all
rules, regulations, and orders of any duly constituted

 

 

regulatory agency of the state in which the Properties are located, and
all other applicable federal, state and local laws, ordinances, rules,
regulations, and orders. Company hereby authorizes Contractor to prepare and
file such instruments, documents, or forms with such regulatory agencies as may
be required by said laws, rules, regulations, and orders. If Contractor becomes
aware of an alleged violation for which Company might be subject to penalty
(other than any penalty arising out of any agreement not made known in writing
to Contractor to which Company may be a party), Contractor shall promptly
notify Company of such violation to allow actions to be taken to remedy the
violation, and Contractor shall transmit promptly to Company a copy of any
citation or other communication received by Contractor setting forth any such
alleged violation.

 

Section 2.04   Power of Attorney. Company hereby
authorizes and appoints Contractor as its duly authorized attorney-in-fact,
with full power of substitution in the premises, to file instruments,
documents, and forms with all applicable regulatory agencies on behalf of
Company to the extent requested by Company. This power and appointment shall
continue in force and effect until revoked by Company in writing. Company
further authorizes and appoints Contractor as its duly authorized
attorney-in-fact, with full power of substitution in the premises, to deliver
or furnish to the purchasers of oil, gas or other hydrocarbons produced from
the Properties any and all instruments, documents, or other information which
they may reasonably require in connection with their purchase thereof. This
power and appointment shall continue in force and effect until revoked by
Company in writing.

 

ARTICLE 3.

EXPENDITURES

 

Section 3.01   Limitation of Expenditures. Contractor
shall not undertake any single project hereunder reasonably estimated to
require an expenditure in excess of $50,000 net to the interest of Company
without Company’s prior approval, except expenditures in an emergency requiring
immediate action to protect persons or property from immediate injury or
damage. In the event of an emergency requiring an expenditure in excess of such
limitation, Contractor shall provide Company notice thereof as soon as
reasonably practical but in any event within forty-eight (48) hours of such occurrence.

 

ARTICLE 4.

TERM

 

Section 4.01   Term. Except as provided in Section 4.02,
this Agreement shall remain in effect from the Effective Date until this
Agreement is terminated in accordance with Section 4.02 below (the
“Term”).

 

Section 4.02   Termination. This Agreement may be
terminated by any of the following means:

 

(a)           the
written agreement of the Parties;

 

(b)           ninety
(90) days prior written notice by one Party to the other Party at any time
after the Effective Date;

 

 

(c)           either
Party may terminate this Agreement if the other Party breaches any of its
material obligations to the other Party under this Agreement, and the other
Party has failed to correct and remedy the causes and consequences of such
breach to the reasonable satisfaction of the terminating Party within sixty
(60) days in the case of a breach not involving the payment of money and thirty
(30) days in the case of a failure to make a required payment after written
notice from the terminating Party detailing said breach;

 

(d)           either
Party may terminate this Agreement if there is instituted by or against the
other Party any proceedings under any bankruptcy law, or under any other law
for the relief of debtors now or hereafter existing, or a receiver is appointed
for all or substantially all of the assets of the other Party;

 

(e)           either
Party may terminate this Agreement if the other Party shall (i) become
insolvent, (ii) generally fail to, or admit in writing its inability to,
pay debts as they become due, (iii) make a general assignment for the
benefit of creditors, or (iv) apply for, consent to or acquiesce in the
appointment of a trustee, receiver or other custodian; or

 

(f)            either
Party may terminate this Agreement if a substantial portion of the assets or
properties of the other Party shall be seized or taken by order of a
governmental or judicial authority, if any order of attachment, garnishment, or
any other writ shall be issued against the other Party or any of its assets, or
if any other lawful creditor’s remedy shall be asserted or exercised with
respect thereof.

 

If a Party wishes to exercise its right to terminate this Agreement
under any of paragraphs (d) through (f) of this Section 4.02, it must
give the other Party prior written notice to terminate this Agreement and termination
is effective upon the delivery of such notice.

 

Section 4.03   Effects of Termination. The termination
of this Agreement in accordance with the provisions of this Article 4
shall have the following effects:

 

(a)           Except
for the mutual indemnities, covenants, obligations or other provisions contained
in this Section 4.03, Articles 5 and 6 and Section 7.11 herein, the
Parties’ obligations hereunder are limited to the Term of this Agreement.

 

(b)           Company
shall pay to Contractor the amount of any and all costs and expenses accrued to
the date of such termination which are payable by Company to Contractor in
accordance with the provisions hereof.

 

(c)           Upon
termination of this Agreement, Contractor shall (at Company’s cost only in the
event this Agreement is terminated pursuant to Section 4.02(c) if
such termination is because of a breach by Company, or Sections 4.02(d), (e),
or (f)) if Company is the “other Party” as described in such Sections 4.02(d), (e) or
(f) promptly deliver to Company possession of all assets, books and records of

 

 

Company
in Contractor’s possession and shall provide the Company with copies of all
books and records relating to the business of Company in Contractor’s
possession (including electronic copies in the format requested by Company and
reasonably within Contractor’s capability) and cooperate in the smooth
transition of the Services provided to the Company to a replacement service
provider or Company employee. If Company is responsible for the cost of said
delivery, as provided in the preceding sentence, personnel costs of Contractor
associated with such activities, if applicable, shall be billed at Contractor’s
labor rates as defined in Exhibit C.

 

(d)           Upon termination of this Agreement (i) by
Company pursuant to Section 4.02(b) or (ii) by Contractor
pursuant to Section 4.02(c) because of a breach by Company or
Sections 4.02(d), (e), or (f) if Company is the “other Party” as described
in such Sections 4.02(d), (e) or (f), Company shall:

 

(i)            on the effective date of such termination
make an offer to employ and hire, on substantially the same terms and for the
same position as currently occupied, all Employees who have spent greater than
50% of their time during the previous six (6) months on Company business
activities and work (collectively, the “Transition Employees”) or not later
than thirty (30) days following the effective date of such termination pay in
cash severance to each Transition Employee, who is not hired by Company and who
does not continue as an employee of Contractor or its affiliates following the
effective date of termination, equal to one (1) week of such Transition
Employee’s salary (excluding any bonus or incentive compensation) for every
year such Transition Employee was employed by Contractor (including the term
such Transition Employee was co-employed by Contractor and Company pursuant to
the Co-Employer Agreement);

 

(ii)           as soon as practicable following the
effective date of such termination and provided that the applicable lessor
allows and agrees with the same, assume any furniture leases, truck leases,
computer leases or other personal property leases of Contractor procured solely
for the provision of the Services hereunder; and

 

(iii)           during the remainder of the term of
Contractor’s lease for its facilities located in Houston, Texas, pay Contractor
a monthly amount, as determined by Contractor, equal to Company’s portion of
the overhead expenses for the Houston, Texas facilities, pro-rated based upon
Company’s past or current usage of the Houston, Texas facilities. Invoicing and
payment of such amount shall occur in conformance with the provisions of Exhibit B.

 

If this Agreement is terminated by the parties pursuant to Section
4.02(a), the parties shall at the 

 

 

time
of termination agree upon the obligations of Company following such termination
with respect to the matters addressed in Section 4.03(d)(i), (ii) and
(iii) above. If agreement cannot be reached at such time, then the parties
agree that Company’s obligations shall be as set forth in Section 4.03(d)(i),
(ii) and (iii) above.

 

Section 4.04   Proprietary
Data. No Party shall have a
right to any proprietary data, software or information of the other Parties,
except during the Term of this Agreement as provided herein.

 

ARTICLE 5.

INDEMNITIES

 

Section 5.01   Indemnification by Contractor. Contractor shall indemnify, defend and hold
harmless Company and its Affiliates (as defined below) and their respective
officers, directors, partners, managers, members, employees and agents, from
any and all actual claims, demands, causes of action, suits, proceedings
(formal or informal), losses, damages, fines, penalties, liabilities, costs and
expenses of any nature, including attorneys fees and court costs (collectively,
“Costs”), sustained or incurred by or asserted against Company and/or its
Affiliates and/or their respective officers, directors, partners, managers,
members, employees and/or agents, by any individual, person, firm, corporation,
governmental authority, partnership, or other entity (a “Person”) by reason of
or arising out of: (i) any breach of this Agreement by Contractor; (ii) any
act or inaction of Contractor and/or its Affiliates and/or any of their
respective officers, directors, partners, managers, members, employees, agents
and/or contractors while engaged in the business activities and work of
Contractor and/or its Affiliates (other than the provision of Services
hereunder); or (iii) any act of fraud, willful misconduct or gross
negligence of Contractor and/or its Affiliates and/or any of their respective
officers, directors, partners, managers, members, employees, agents and/or
contractors. Company shall promptly give written notice to Contractor when a
claim is made against Company or its Affiliates and/or their respective
officers, directors, partners, managers, members, employees or agents for which
indemnity may be owed to Company by Contractor pursuant to this Section 5.01.
Contractor shall participate at its own expense in defense of such claims but
Company shall each have the right to employ its own separate counsel. Company
shall assist Contractor in the defense of any claim for which Contractor may
owe indemnification hereunder and is undertaking to provide a defense, by
making available to Contractor such records and personnel of Company as may be
reasonably requested in the defense of such claim.

 

“Affiliates” means, with respect to a specified Person, another Person,
controlling, controlled by, or under common control with, the specified Person.
Company and Contractor are not “Affiliates” for purposes of this Agreement.

 

Section 5.02   Indemnification by Company. Company shall indemnify, defend and hold harmless
Contractor and its Affiliates and their respective officers, directors,
partners, managers, members, employees and agents, from any and all Costs
sustained or incurred by or asserted against Contractor and/or its Affiliates,
and/or their respective officers, directors, partners, managers, members,
employees and/or agents, by any Person by reason

 

 

of or arising out of: (i) any breach of this Agreement
by Company; (ii) any act of fraud, willful misconduct or gross negligence
of Company and/or its Affiliates and/or any of their respective officers,
directors, partners, managers, members, employees, agents and/or contractors (other
than Contractor, and its Affiliates and its respective contractors); (iii) personal
injury to or illness or death of any Person caused by Company or Company’s
contractors (excluding Contractor and its Affiliates and its respective
contractors), which injury, illness or death arises out of or is incident to
Company’s performance of its obligations under this Agreement; or (iv) Contractor’s
performance of Services, including but not limited to the performance of the
Services by the Employees, except to the extent Contractor is required to
indemnify Company under Section 5.01 above or said Costs relate to
Contractor’s breach of this Agreement. Contractor shall promptly give written
notice to Company when a claim is made against Contractor and/or its Affiliates
and/or their respective officers, directors, partners, managers, members,
employees and/or agents for which indemnity may be owed to Contractor by
Company pursuant to this Section 5.02. Company shall at its own expense
participate in defense of such claims, but Contractor shall have the right to
employ its own separate counsel. Contractor shall assist Company in the defense
of any claim for which Company owes indemnification hereunder and is
undertaking to provide a defense, by making available to Company such records
and personnel of Contractor as may be reasonably requested for the defense of
such claim.

 

Section 5.03   Non-Assumption
of Liabilities. Contractor
shall not, by entering into this Agreement, assume or become liable to third
parties for any of the obligations, debts or other liabilities of Company.

 

Section 5.04   EXPRESS NEGLIGENCE. THE INDEMNIFICATION,
RELEASE AND ASSUMPTION PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL BE
APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION
AROSE SOLELY OR IN PART FROM THE ACTIVE, PASSIVE OR CONCURRENT NEGLIGENCE,
STRICT LIABILITY OR OTHER FAULT OF ANY INDEMNIFIED PARTY. THE PARTIES
ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND
IS CONSPICUOUS.

 

Section 5.05   Limitations
on Liability.
Notwithstanding any other provision of this Agreement:

 

(a)           Contractor’s total liability for Contractor’s
obligations under the Agreement excluding obligations under Section 5.01 (iii) but
including, without limitation, obligations under Section 5.01(i) and
5.01(ii) shall be limited to, on an annual basis, $200,000.00.

 

(b)           In the event a claim is made under the
insurance Contractor is required to provide pursuant to Section 1.06,
Company shall reimburse Contractor for any applicable deductible actually paid
by Contractor if the injury underlying such claim was caused by the failure of
equipment associated with the Properties.

 

 

(c)           In the event an indemnification claim is made
under Sections 5.01 or 5.02, the claim results from the actions or inactions of
an Employee and it cannot
be determined whether such Employee’s actions or inactions giving rise to the
claim were in the course of working solely on Contractor business activities or work (excluding the provision of
Services hereunder) or Company business activities or work, then Contractor and
Company agree to apportion all Costs in accordance with the time such Employee
spent on Contractor and Company business activities and work in the twelve (12)
months preceding the date of the event triggering the claim for
indemnification. For example, if the Employee spent 60% of his time on Company
business activities and work, including but not limited to the provision of
Services to Company hereunder on behalf of Contractor which shall be considered
Company business activities and work, and 40% of his time on Contractor
business activities and work unrelated to the provision of Services under this
Agreement in the twelve (12) months preceding the date of the event triggering
the claim for indemnification, Company and Contractor will split all Costs due
any indemnified party for such claim, 60% paid by Company and 40% paid by
Contractor. Contractor’s customary Employee time records shall determine the
time an Employee spends on Company and Contractor business activities and work.

 

Section 5.06   Further
Limitation on Liability Under Operating Agreements. Certain Services performed by Contractor, on
behalf of Company, may constitute performance of obligations by Company as operator
under joint operating agreements. Notwithstanding anything herein to the
contrary, in the event Contractor breaches this Agreement with respect to the
performance of such operator responsibilities, Contractor shall only have
liability hereunder if under any applicable joint operating agreement Company
would have liability to a non-operator. In the event that the Properties are
not actually governed by a joint operating agreement, the most recent AAPL Form 610
1982 Model Form Operating Agreement shall be deemed the applicable
document for determining whether or not Company would have liability to its
non-operators.

 

ARTICLE 6.

ACCESS TO BOOKS AND RECORDS; CONFIDENTIALITY;  

SOLICITATION OF EMPLOYEES

 

Section 6.01   Access
to Books and Records.
Contractor and its duly authorized representatives shall have complete and
reasonable access to Company’s employees, offices, facilities and records
wherever located, in order to discharge Contractor’s responsibilities
hereunder. All records and materials furnished to Contractor by Company in
performance of this Agreement shall at all times remain the property of
Company, as appropriate. All books and records regarding the Properties and
Wells shall, unless Company directs Contractor to deliver them to Company or another
Person, be held by Contractor, as custodian for Company, in a commercially
prudent and reasonable manner.

 

Section 6.02   Confidentiality. During the term of this Agreement and for
two (2) years thereafter, each Party shall keep confidential all non-public
information concerning the other Party or its Affiliates acquired during the
term of this Agreement. For the purpose of this Section 6.02,

 

 

confidential
information is all information, including without limitation, information
relating to financial statements, estimates of hydrocarbon reserves, geological
information, asset listings, procurement of raw materials, production costs,
production capabilities, general and administrative costs, raw material
requirements, production specifications, product processing information and
technology, packaging, sales or marketing information and all other related
information provided by the Party making the information available (“Disclosing
Party”) to the Party receiving the information (the “Recipient”), other than
information which:

 

(a)           was already known by the Recipient prior to
disclosure;

 

(b)           was publicly available to the Recipient at
the time of disclosure or subsequently becomes publicly available other than
through the act or omission of Recipient;

 

(c)           is required to be disclosed under applicable
law or by a governmental order, decree, regulation or rule (provided that
Recipient shall give written notice to the Disclosing Party prior to such
disclosure); or

 

(d)           is, subsequent to disclosure, rightfully acquired
from a source other than Disclosing Party provided that such source is not to
the knowledge of the Recipient bound by a confidentiality agreement with or
other obligation of secrecy to the Disclosing Party or another party.

 

In
the event the Recipient or its representatives are required by any court or
legislative or administrative body (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose any confidential information, the Recipient shall
provide the Disclosing Party with prompt notice of each such requirement in
order to afford the Disclosing Party opportunity to seek an appropriate
protective order. Further, if in the absence of a protective order, Recipient
or any of Recipient’s representatives is, in the opinion of its counsel,
compelled to disclose confidential information, the Recipient or the
Recipient’s representatives, as applicable, may disclose only the requested
confidential information in response to such process without liability
hereunder.

 

At
expiration or earlier termination of this Agreement, the Recipient shall return
all confidential materials, including, without limitation, all originals,
copies, reproductions and summaries of confidential information and destroy all
copies of confidential information in its possession, power or control, which
are present on magnetic media, optical disk, volatile memory or other storage
device, in a manner that assures the confidential information is rendered
unrecoverable.

 

Section 6.03   Rights,
Restrictions and Obligations of the Receiving Party. During the term of
this Agreement, the Recipient may disclose such confidential information only
to its employees, officers and directors and Affiliates and potential and
actual lenders and financial partners and advisors (each a “Disclosee”) who
have a need to know such information exclusively for the purpose of executing
its obligations or exercising its rights under this Agreement or otherwise
dealing with the Properties and Wells and issues relating to the foregoing;
provided that the Disclosing Party may, on a case by case basis, require that
the Recipient obtain its written consent prior to disclosure of certain
categories of confidential information to such Persons.

 

 

The
Recipient shall inform Disclosee of the confidential nature of the information
and be responsible for a breach by the Disclosee of the confidentiality
provisions hereof.

 

Section 6.04   Audit
Rights. Contractor shall
maintain records and supporting documentation of all financial and
non-financial transactions under this Agreement, sufficient to reasonably
permit an audit thereof in accordance with this Section 6.04 during the
Term hereof and for six (6) months thereafter. Contractor shall provide
access at reasonable times agreed by the Parties to all such records and
supporting documentation relating to the Services to Company for its auditors
or regulators to examine Contractor’s charges and performance of the Services
under this Agreement and to perform audits and inspections of Company and its
business and for Company’s external auditors, who have signed confidentiality
agreements reasonably satisfactory to Contractor, to the systems that process,
store, support and transmit Company’s data in order that such auditors can
verify the integrity of Company’s business records and data. Contractor shall
provide reasonable cooperation to such auditors, inspectors, regulators and
representatives during the Term hereof and for six (6) months thereafter.

 

ARTICLE 7.

MISCELLANEOUS

 

Section 7.01   Claims
and Lawsuits. Contractor
shall promptly notify Company of any claims received by Contractor regarding
the Properties or the Wells. Without the approval of Company, Contractor shall
not settle any claims against Company regarding the Properties or the Wells.

 

Section 7.02   Notices. All notices authorized or required to be
given hereunder, unless otherwise specifically provided, shall be given in
writing by personal delivery or by posting same in the United State mail,
postage prepaid, certified mail, return receipt requested, addressed to the
Party to whom directed at the following addresses:

 

If
to Company:

 

Resaca
Exploitation, Inc. 

1331
Lamar, Suite 1450 

Houston,
Texas 77010

Attention:
Dennis Hammond

 

If
to Contractor:

 

Torch
Energy Advisors Incorporated 

1331
Lamar, Suite 1450

Houston,
Texas 77010

Attention:
Mary Lou Fry

 

Torch
Energy Advisors Incorporated 

1331
Lamar, Suite 1450

Houston,
Texas 77010

Attention:
Chris B. Work

 

 

or to such other address and to the attention of such other person or
officer as either Party may designate by written notice pursuant to this Section 7.02.

 

Section 7.03   Other Activities. Company acknowledges
that Contractor and its Affiliates own, manage and/or operate assets that compete
directly with the business of Company and may own, manage and/or operate
additional businesses and assets in the future that may compete with the
business of Company and Company agrees that Contractor shall have no liability
or accountability to Company for any such competing activities or interests or
any profits or value generated therefrom.

 

Section 7.04   Force Majeure. If either Party is
rendered unable, wholly or in part, by Force Majeure to carry out its
obligations under this Agreement, other than to make payments hereunder, it is
agreed that upon such Party giving notice and reasonably full particulars of
such Force Majeure in writing or by facsimile to the other Party as soon as
possible after the occurrence of the cause relied on, then 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, as far as possible, be remedied
with all reasonable dispatch. The term “Force Majeure” as used herein shall
mean acts of God, strikes, lockouts or other industrial disturbances, acts of
the public enemy, wars, blockades, insurrections, riots, epidemics, landslides,
lightning, earthquakes, fires, storms, hurricanes, floods, high-water washouts,
arrest and restrains of governments and people, civil disturbances, explosions,
enactment of statues, laws or regulations, acts of governmental bodies (other
than changes in tax laws) and any other cause or causes, whether of the kind
herein enumerated or otherwise, not reasonably within the control of the Party
claiming suspension and which by the exercise of reasonable diligence, such
Party is unable to prevent or overcome. Either Party affected by a condition
described in this Section 7.04 shall promptly notify the other Party of
the existence and anticipated duration of such condition and any action taken
to minimize the effect of such condition.

 

Section 7.05   Consequential, etc. Damages. Neither
Party shall be liable hereunder for any exemplary, punitive, special, indirect,
consequential, remote or speculative damages relating to any breach of this
Agreement.

 

Section 7.06   Assignability. Contractor shall have no
right or authority to assign this Agreement or any of its right hereunder to
any other party without the prior written consent of Company, and any such
assignment without such consent shall be null and void and of no force and
effect. Company may assign this Agreement and its rights hereunder without the
prior consent of Contractor.

 

Section 7.07   No Third Parties Benefited. This
Agreement is entered into solely for the benefit of the Parties. Except as
provided in Article 5, this Agreement is not intended to benefit, and
shall not benefit, any third Person, and no such third Person shall have any
right, claim or cause of action as a result of this Agreement.

 

Section 7.08   Law.
This Agreement shall be construed under and in accordance with the

 

 

laws of the State of Texas, but without reference to the conflicts of
laws provisions thereof.

 

Section 7.09   Entire Agreement. This Agreement
supersedes any prior understandings or written or oral agreements between the
Parties regarding the subject matter hereof and embodies the entire agreement
of the Parties with respect thereto. No amendment or modification of this
Agreement shall be binding upon either Party hereto unless same is set forth in
a writing executed by both Parties. In the event of a conflict between the
provisions of this Agreement and the provisions of any operating agreement to
which the Properties are subject, as between Company and Contractor the
provisions of this Agreement shall control.

 

Section 7.10   Periodic Meetings. At Company’s
request, Contractor will meet with the executive officers of Company to discuss
any questions the executive officers of Company might have regarding the
performance of the Services and the costs and expenses relative thereto.
Contractor and Company agree to negotiate diligently and in good faith to resolve
any issues presented at the periodic meetings.

 

Section 7.11   Publicity. Contractor may include
Company’s name and a factual description of the work performed under this
Agreement in its list of references and in citing its experience to third
parties upon prior written notice of Company; provided, that inclusion in such
list shall be in form and substance satisfactory to Company.

 

Section 7.12   Conflicts. In the event of a conflict
between the terms of this Agreement and any Exhibits attached hereto, the terms
of the Agreement shall control.

 

Section 7.13 Taxes Included. Payment of federal, state,
local, foreign, and other taxes based on the Services shall be the
responsibility of Contractor; provided, however, that the Company will
reimburse Contractor for any federal, state, local or foreign excise, sales,
use business privilege, gross receipts, value-added, single business, or other
similar tax (excluding federal, state or local taxes based on income or profits
of Contractor, or any franchise taxes assessed against Contractor) based on the
Services, except to the extent that it results from action of Contractor not
taken in good faith. In complying with applicable law, each Party shall
reasonably cooperate with the other in minimizing any applicable tax and, in
connection therewith, Company shall provide Contractor any resale certificates,
information regarding out-of-state use of materials, services or sales, or
other exemption certificates or information reasonably requested by Contractor.

 

Section 7.14   Amendment and Restatement of Original
Agreement. Company, Contractor and TES agree that the Original Agreement is
hereby amended and restated in its entirety and upon execution of this
Agreement, effective as of the Effective Date, (i) the Original Agreement
shall be of no further force and effect, and (ii) all rights and
obligations Company and TES may have had under the Original Agreement shall be
superseded by this Agreement.

 

 

[Signature page follows]

 

 

EXECUTED
as of the date first above written.

 

 

	
   

  	
   

  	
  Company:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RESACA EXPLOITATION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Dennis
  Hammond

  
	
   

  	
   

  	
   

  	
  Dennis
  Hammond

  
	
   

  	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Contractor:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TORCH ENERGY ADVISORS INCORPORATED 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Chris
  B. Work

  
	
   

  	
   

  	
   

  	
  Chris
  B. Work

  
	
   

  	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TORCH ENERGY SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mary
  Lou Fry

  
	
   

  	
   

  	
   

  	
  Mary
  Lou Fry

  
	
   

  	
   

  	
   

  	
  Vice
  President

  

 

 

Signature Page

 

 

EXHIBIT A

TO

SECOND AMENDED AND
RESTATED AGREEMENT FOR ADMINISTRATIVE SERVICES

 

SERVICES

 

The following shall constitute the Services under the Agreement to
which this Exhibit A is
attached:

 

A.            Operations
Accounting

 

1.             Maintain
general accounting records relating the operation of the Properties in
accordance with generally accepted accounting principles.

2.             Ensuring
the accuracy and completeness of costs and expenses invoiced by third parties
providing services in connection with the operation of the Properties.

3.             Paying
and discharging costs and expenses incurred in operation of the Properties.

4.             Maintaining
and preserving materials and supplies and keeping inventory of same.

 

B.            Marketing production
from the Properties

 

1.             Negotiating,
executing and the administration of production sales, processing,
transportation, and similar contracts.

2.             Making
nominations, and otherwise performing under such contracts.

3.             Accounting
for production sold and proceeds received under such contracts.

 

C.            Administration
of all land matters relating to the Properties

 

1.             Maintenance
and preservation of Company’s interests in the Properties.

2.             Resolving
any defects in title to the Properties.

3.             Ensuring
that all lease bonuses, royalties, and similar payments are timely paid.

4.             Managing
land matters in connection with drilling and reworking operations.

5.             Providing
land-related support to any disposition of all or a portion of the Property.

 

D.            Vehicle Use. Company
shall continue to utilize vehicles owned by TES, as has been the cease under
the Original Agreement, and Contractor shall bill Company for the use of such
vehicles as described in Exhibit B. As TES vehicles are retired, it is
contemplated that Company shall procure new vehicles directly until the fleet
of TES vehicles dedicated to Company is fully replaced.

 

E.             Operational
Consulting. From time to time, Company may request that certain Contractor personnel
assist in (1) the day to day supervision of the operations of the
Properties, (2) the strategic planning of oil and gas operations, (3) the
evaluation of new opportunities from an operational perspective, (4) the
supervision of regulatory reporting and (5) other services which are
operational in nature. Contractor agrees to provide such operational consulting
services at its discretion.

 

 

F.             Making
such arrangements with and employing such accountants, attorneys, banks,
transfer agents, custodians, underwriters, engineers, technical consultants,
insurance companies and other persons as may from time to time be requested by
Company or may reasonably be necessary to manage Company’s business;

 

G.            Maintaining
in good order the books and accounts, ledgers and records of Company and
performing all day-to-day accounting functions of Company, including, without
limitation, matters related to paying and receiving, billing, reserve
estimates, contract coordination and administration and tax return preparation.
Without limiting the generality of the foregoing, Contractor shall prepare, or
assist in the preparation of, all requisite accounting reports and interim
financial statements of Company, including balance sheets, statements of
operations, changes in capital and cash flow and shall assist Company, in
selecting an independent public accounting firm for the purpose of conducting
annual financial audit reviews of Company and shall aid in coordinating such
audits;

 

H.            Assisting
in determining Company’s long and short-term capital requirements, in
determining the best method of fulfilling Company’s capital requirements, in
locating sources of equity and long and short-term debt financing, in preparing
formal presentations to potential investors and lenders, in negotiating the
terms and conditions of such financing and in consummating such financing;

 

I.              Providing
Company, at its request, with relevant information for assessing the value of,
or making decisions with respect to the acquisition, funding, management or
disposition of, existing or future assets or investments of Company;

 

J.             Advising
Company of any potential investments coming to its attention which Contractor
believes Company may be interested in and which are within the scope of
Company’s business;

 

K.            Providing
information required for any litigation support;

 

L.             Execution
of commodity hedging activity on behalf of, and at the direction of the
Company.

 

 

EXHIBIT B

TO

SECOND
AMENDED AND RESTATED AGREEMENT FOR ADMINISTRATIVE SERVICES

 

ACCOUNTING PROCEDURE

COMPENSATION SCHEDULE

 

I.         GENERAL PROVISIONS

 

1.             Definitions

 

A.            “Account” shall mean an account showing the
charges paid and credits received in the conduct of the Services and which are
to be shared by Company.

 

B.            “Personal Expenses” shall mean travel and
other reasonable reimbursable expenses of the Employees.

 

C.            “Property” shall mean the Properties as such
term is defined in the agreement to which this Accounting Procedure is
attached.

 

2.             Statement
and Billings

 

Contractor
shall bill Company on or before the last day of each month for Account charges
incurred in the preceding month. Such bills will be accompanied by statements
which identify all charges and credits, summarized by appropriate
classifications of expense.

 

3.             Advances
and Payments by Company

 

Unless
otherwise provided for in this Agreement, Contractor may require Company to
advance estimated cash outlays for the succeeding month’s Services within
fifteen (15) days after receipt of the billing or by the first day of the month
for which the advance is required whichever is later. Contractor shall adjust
each monthly billing to reflect advances received from Company.

 

A.            Company shall pay all bills within fifteen
(15) days after receipt. If payment is not made within such time, the unpaid
balance shall bear interest monthly at the prime rate in effect at Amegy Bank
on the first day of the month in which delinquency occurs plus 2%, or the
maximum contract rate permitted by the applicable usury laws in the state of
Texas, whichever is the lesser, plus attorney’s fees, court costs, and other
costs in connection with the collection of unpaid amounts

 

 

4.             Adjustments

 

Payment
of any such bills shall not prejudice the right of Company to protest or
question the correctness thereof; provided, however, all bills and statements
rendered to Company by Contractor during any calendar year shall conclusively
be presumed to be true and correct after twenty-four (24) months following the
end of any such calendar year, unless within the said twenty-four (24) month
period a Company takes written exception thereto and makes claim on Contractor
for adjustment. No adjustment favorable to Contractor shall be made unless it
is made within the same prescribed period.

 

5.             Audits

 

A.            Company, upon notice in writing to
Contractor, shall have the right to audit Contractor’s accounts and records
relating to the Account for any calendar year within the twenty-four (24) month
period following the end of such calendar year; provided, however, the making of
an audit shall not extend the time for the taking of written exception to and
the adjustments of accounts as provided for in Paragraph 4 of this Section I. Contractor
shall bear no portion of Company’s audit cost incurred under this paragraph
unless agreed to by Contractor.

 

B.            Contractor shall reply in writing to an audit
report within 180 days after receipt of such report.

 

6.             Approval by Company

 

Where
an approval or other agreement of Company is expressly required under other
sections of this Accounting Procedure, Contractor shall notify Company of
Contractor’s proposal, and the agreement or approval of Company shall be
controlling.

 

II.      DIRECT CHARGES

 

Contractor
shall charge the Account with the following items:

 

1.             Houston Office Overhead

 

Company
will pay Contractor a monthly overhead fee in the initial amount of $22,000 as compensation for the use of
Contractor’s Houston office space by employees of Company. Such amount may be
adjusted by mutual agreement between Contractor and the Company on a quarterly
basis.

 

2.             Vehicle Use

 

Contractor
shall charge Company for the use of TES-owned vehicles in Company operations.
Rates charged by Contractor to Company for vehicle use shall equal rates
published by the Petroleum Motor Transport Association.

 

 

3.             Charges
for Contractor Services

 

Contractor will provide the Services on a time and materials basis for
hours worked and materials used by Contractor. The rates for hours worked by
Contractor personnel shall be computed using the Labor Rates listed in Exhibit C
attached hereto. Said Labor Rates shall be adjusted as of the first day of January each
year following the Effective Date of the Agreement to which this Accounting
Procedure is attached. Contractor shall notify Company by October 1st of each year of any adjustment to Labor Rates
which would take effect the following January 1st. If, after notification of the proposed
new Labor Rates, the Company chooses to terminate this Agreement in accordance
with Article 4, the Labor Rates applicable to the period after
notification of termination and until the termination of the Agreement shall be
those applicable prior to the effective date of the proposed new Labor Rates.

 

In addition, Contractor may adjust said Labor Rates during a calendar
year to reflect (a) increases in compensation rates to Contractor
personnel and/or (b) bonus compensation paid to Contractor personnel
during a calendar year.

 

Except as set forth below, all out of pocket expenses incurred by
Contractor personnel (internal and external) in providing the Administrative
Services shall be borne by Company, including travel, food, lodging,
entertainment, postage, courier and similar expenses, as well as out of the
ordinary business supplies. Contractor shall charge the Account for third party
vendor and contractor fees or expenses incurred by Contractor.

 

4.             Business
Development Cost Sharing

 

Contractor, Company and TES recognize that, in the normal course of
business, Contractor and Company will expend funds on corporate entertainment
and events as a component of both Contractor’s and Company’s business
development efforts. Company agrees to pay its pro rata share, as mutually
agreed upon by both Contractor and Company, of the costs of such business
development activities to the extent Contractor underwrites such activity and
both Company and Contractor benefit from such activity.

 

 

EXHIBIT C 

TO

SECOND AMENDED AND RESTATED AGREEMENT FOR ADMINISTRATIVE SERVICES

 

LABOR RATES

 

	
  POSITION

  	
   

  	
  HOURLY
  BILLING RATE

  	
   

  
	
  Special Executive Advisor

  	
   

  	
  $

  	
  220

  	
   

  
	
  Chief Executive Officer

  	
   

  	
  $

  	
  190

  	
   

  
	
  VP Operations

  	
   

  	
  $

  	
  165

  	
   

  
	
  Chief Financial Officer

  	
   

  	
  $

  	
  165

  	
   

  
	
  General Counsel

  	
   

  	
  $

  	
  170

  	
   

  
	
  Staff Attorney

  	
   

  	
  $

  	
  85

  	
   

  
	
  Marketing Manager

  	
   

  	
  $

  	
  135

  	
   

  
	
  Operations Manager

  	
   

  	
  $

  	
  145

  	
   

  
	
  Marketing Representative

  	
   

  	
  $

  	
  80

  	
   

  
	
  Controller

  	
   

  	
  $

  	
  115

  	
   

  
	
  Accountant

  	
   

  	
  $

  	
  90

  	
   

  
	
  Accounting Support

  	
   

  	
  $

  	
  60

  	
   

  
	
  Administrative Support

  	
   

  	
  $

  	
  50

  	
   

  
	
  Treasurer/HR

  	
   

  	
  $

  	
  145

  	
   

  
	
  Land

  	
   

  	
  $

  	
  120

  	
   

  
	
  Corporate Development

  	
   

  	
  $

  	
  105

  	
   

  

 

*Other
services as needed will be billed at actual gross payroll rate increased by a
55% overhead burden

 

The
Hourly Billing Rates shown in the foregoing provision shall be adjusted as
provided in Exhibit B.Exhibit 10.68

 

DIRECTOR APPOINTMENT AGREEMENT

 

This Director Appointment Agreement (this “Agreement”) is
entered into this 14th day of July, 2008, (“Commencement Date”) between Resaca
Exploitation, Inc., a Texas corporation (the “Company”), and James
Perry Bryan, Jr., who has agreed to serve as a director of the Company (“Director”)
upon its admission to trading on the Alternative Investment Market of The
London Stock Exchange plc. (“AIM”).

 

WHEREAS, the Company desires that Director serve or continue to serve
as a director effective upon the admission to trading on AIM, and in order to
induce Director to so serve or continue to serve, the Company desires and
intends hereby to set forth the terms of such appointment, including the
applicable provisions of the Texas Business Organizations Code (the “Code”);

 

For and in consideration of the premises and the covenants contained
herein, the Company and Director do hereby agree as follows:

 

1.                 APPOINTMENT AND
DUTIES.

 

The Company appoints the
Director, and the Director agrees to serve the Company as a Non-Executive
Director of the Company.  This
appointment is subject to and conditional upon admission of shares in the
Company to trading on the AIM of the London Stock Exchange (the  “Condition
Precedent”).  If the Condition Precedent
has not been satisfied on or before July 31, 2008 this Agreement shall be
of no effect whatsoever.

 

Where the Condition Precedent is satisfied in accordance
with above, the appointment under this Agreement shall be deemed to have
commenced on the Commencement Date and, subject to Section 8, shall continue
unless or until terminated on the expiry of not less than 3 months’ notice in
writing given by either party expiring.

 

The
Director shall carry out such duties as are consistent with his position as an
officer of a company including attendance at Board meetings and other meetings
of the directors and meetings of such committees of the Board as may from time
to time be required.  The role to be
performed by the Director is an important position, and the Company’s
expectation is that the Director will attend all of the meetings referred to
above unless he is too ill to attend, or his absence has otherwise been
excused.

 

The Director shall faithfully and
diligently serve the Company as a director and shall act at all times in the
best interests of the Company.  The
Director shall be expected to bring an objectivity and independence of view to
the Board discussions, and to help the Board to provide the Company with
effective leadership, as well as ensuring the continuing effectiveness of the
management team and the high standards of financial probity and corporate
governance.

 

By accepting this appointment, the Director confirms that he is able to
allocate sufficient time to meet the expectations of his role.  He will communicate to the Board any conflict
of interest arising out of his position as a non-executive director and he agrees to notify the Board before
accepting any external commitment that might affect the time he is able to
devote to his 

 

 

role as a non-executive director of the
Company or which is or might be in competition with the interests of the
Company.

 

2                   CONFIDENTIALITY
AND FIDUCIARY DUTIES

 

The Director shall comply with (a) every rule of
law; (b) every regulation of The Stock Exchange including its Model Code; (c) every
rule or regulation of any competent regulatory authority; and (d) every
regulation of the Company; for the time being in force in relation to dealings
in shares or other securities of the Company or any other member of the Group.

 

The
Director shall not, whether during or after the termination of the appointment,
except in the proper course of his duties or as required by law, use or divulge
to any person, firm or company and shall use his best endeavours to prevent the
use or disclosure of, any trade or business secrets or any information
concerning the business or finances of the Company or the Group or of any
dealings, transactions or affairs of the Company or the Group or of any client,
customer or suppliers of the Company or Group which has or may come to his
knowledge in the course of the Appointment.

 

All
notes, memoranda, records, tapes, discs, writings and designs of any Group
Company or made or received by the Director relating to the business of any Group
Company (except for the Director’s own copies of Board agendas, papers and
minutes) shall be and remain the property of the relevant Group Company and
shall be handed over by the Director to the Company from time to time on
demand, and in any event, upon termination of the Agreement.

 

3.                  FEE

 

The
Director shall receive during the continuance of the appointment director’s
fees at the rate of $50,000 per annum (or such higher rate as may from time to
time be agreed in writing) such fees to be paid subject to the deduction of tax
and social security contributions (if applicable) quarterly in arrears on the
last working day of each calendar quarter upon receipt of an appropriate
invoice.

 

The
Director shall not, for the avoidance of doubt be entitled to participate in
any Group pension, bonus or share schemes or other benefit in kind arrangement
of the Group and nor shall he be entitled to any compensation for loss of
office.

 

4.                  INTELLECTUAL
PROPERTY RIGHTS

 

All
intellectual and industrial property rights and all other rights whatsoever in
any information, concepts, ideas, inventions, improvements, designs, drawings,
lay-outs, formats, texts, papers, documents, catalogues, photographs, other
printed or written matter and know-how arising out of the Appointment whether
patentable or not which may be conceived, prepared, developed or reduced into
practice by the Director in the course of carrying out the appointment (the “Commissioned Works”) shall be the sole and exclusive
property of the Company.  In particular
but without limitation the Director hereby assigns to the Company absolutely
and free from all encumbrances all existing and future copyright or similar
rights worldwide in or 

 

2

 

connected
with the Commissioned Works.  The
Director will not use the Commissioned Works for its own purposes nor disclose
it to or use it for any third party without the prior written approval of the
Company.

 

The
Director shall safeguard the Company’s rights in the Commissioned Works and
shall at the Company’s request assist the Company in establishing and
protecting such rights including if necessary executing documents and legal
instruments and doing any other things which the Company deems reasonably
necessary for the purpose of establishing and protecting such rights.

 

Termination
of this Agreement shall not affect the continuing enforceability of this Section 4.

 

5.                 INDEMNIFICATION.

 

The Company shall indemnify Director to the fullest extent permitted by
Texas law or other applicable law, as in effect from time to time, when he is
named or is threatened to be made a named defendant or respondent in a
proceeding because Director is or was a director, an officer, an employee or an
agent of the Company. Without limiting the scope of the indemnification
provided for in the preceding sentence, the Company shall indemnify Director
only if it is determined that Director:

 

(a) conducted himself in good faith;

 

(b) reasonably believed:

 

(i) in the case of conduct in his official capacity as a director,
officer, employee or agent of the Company, that his conduct was in the Company’s
best interests; and

 

(ii) in all other cases, that his conduct was at least not opposed
to the Company’s best interests; and

 

(c) in the case of any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful.

 

The termination of a proceeding by judgment, order, settlement or
conviction, or on a plea of nolo contendere
or its equivalent is not of itself determinative that Director did not meet the
requirements set forth in this Section 5.

 

5.1.              LIMITATION ON
INDEMNIFICATION.

 

Except to the extent permitted by Section 5.2 below, Director
shall not be indemnified under Section 5 above in respect of a proceeding:

 

(a) in which Director is found liable for willful or intentional
misconduct in the performance of his duties to the Company; or

 

3

 

(b) in which Director is found liable to the Company.

 

For the purposes hereof, Director shall be deemed to have been found
liable in respect of any claim, issue or matter only after the Director shall
have been so adjudged by a court of competent jurisdiction after exhaustion of
all appeals therefrom.

 

5.2.              EXTENT OF
INDEMNIFICATION.

 

If Director is entitled to indemnification pursuant to this Agreement,
the Company shall indemnify Director against all judgments, penalties, fines,
settlements and reasonable expenses incurred by Director, including without
limitation all applicable taxes, in connection with the proceeding. However, if
the Director is found liable to the Company, the indemnification (1) shall
be limited to reasonable expenses actually incurred by Director in connection
with the proceeding, and (2) shall not be made in respect of any proceeding
in which Director shall have been found liable for willful or intentional
misconduct in the performance of Director’s duty to the Company. The
reasonableness of the Director’s expenses contemplated in this Section 5.2
shall be determined in the same manner that the determination of
indemnification is made under Section 5.3.

 

5.3.              DETERMINATION
OF INDEMNIFICATION.

 

A determination of whether Director is entitled to indemnification
under Section 5.1 shall be made:

 

(a) by the Board of Directors of the Company by a majority vote of
a quorum consisting of directors who at the time of the vote are not named
defendants or respondents in the proceeding;

 

(b) if such a quorum cannot be obtained, by a majority vote of a
committee of the Board of Directors, designated to act in the matter by a
majority vote of all directors, consisting solely of two or more directors who,
at the time of the vote, are not named defendants or respondents in the
proceeding;

 

(c) by special legal counsel selected by the Board of Directors or
a committee of the Board of Directors by vote as set forth in paragraphs (a) or
(b) of this Section 5.3, or, if such a quorum cannot be obtained and
such a committee cannot be established, by a majority vote of all directors; or

 

(d) by the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the proceeding.

 

The Board of Directors, independent legal counsel or shareholders, as
the case may be, shall make such determination of indemnification under
paragraphs (a) through (d) of this Section 5.3 in accordance
with the following procedure:

 

4

 

(e) Director may submit to the Board of Directors a Request for
Indemnification, substantially in the form of Exhibit A attached
hereto, in which the Director requests indemnification from the Company
pursuant to this Agreement and states that he has met the standard of conduct
required for indemnification under Section 5.

 

(f) The Director’s submission of a Request for Indemnification to
the Board of Directors shall create a rebuttable presumption that the Director
has met the requirements set forth in Section 5 and, therefore, is
entitled to indemnification hereunder. The directors, special legal counsel or
shareholders, as the case may be, shall determine, within 30 days after
submission of the Request for Indemnification, specifically that the Director
is so entitled unless they possess clear and convincing evidence to rebut the
foregoing presumption, which evidence shall be disclosed to the Director with
particularity.

 

5.4.              MANDATORY
INDEMNIFICATION FOR REASONABLE EXPENSES UPON SUCCESSFUL DEFENSE.

 

The Company shall indemnify Director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named
defendant or respondent because he is or was a director, officer, employee or
agent of the Company if he has been wholly successful, on the merits or
otherwise, in the defense of the proceeding. The reasonableness of the Director’s
expenses contemplated in this Section 5.4 shall be determined in any
manner set forth in Section 5.3, except that if the determination that
indemnification is permissible is made by special legal counsel, pursuant to Section 5.3(c),
the determination as to reasonableness of Director’s expenses must be made by a
majority vote of all directors.

 

5.5.              ADVANCEMENT OF
EXPENSES.

 

Expenses incurred by Director who was, is or is threatened to be made a
named defendant or respondent in a proceeding shall be paid or reimbursed by
the Company, in advance of the final disposition of the proceeding, without the
determination specified in Section 5.3 or the determination as to the
reasonableness of such expenses contemplated in Sections 5.2 and 5.4, within
five business days after the Company receives from Director a Statement of
Undertaking, substantially in the form of Exhibit B attached
hereto, in which (i) Director shall state that he believes in good faith
that he has met the standard of conduct necessary for indemnification under Section 5,
and (ii) the Director, or any other person on behalf of Director, shall
undertake to repay the amount paid or reimbursed by the Company if it is
ultimately determined that he has not met those requirements or if it is
ultimately determined that the indemnification of Director against expenses
incurred by him in connection with such proceeding is prohibited by Section 5.2.

 

5.6.              PARTICIPATION
IN OTHER PROCEEDINGS.

 

Notwithstanding any other provision of this Agreement, the Company
shall promptly pay or reimburse expenses incurred by Director in connection
with his appearance as a witness

 

5

 

or other participation in a proceeding at a time when he is not a named
defendant or respondent in the proceeding.

 

5.7.              NON-EXCLUSIVITY.

 

The right to indemnification and advancement of expenses provided by
this Agreement shall not be deemed exclusive of any other rights to which
Director may be entitled under any statute, bylaw, insurance policy, agreement,
vote of shareholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office, and shall continue after Director has ceased to be a director,
officer or employee and shall inure to the benefit of his heirs, executors and
administrators.

 

5.8.              MERGER,
CONSOLIDATION OR CHANGE OF CONTROL.

 

In the event that the Company shall be a constituent corporation in a
consolidation or merger, whether the Company is the resulting or surviving
corporation or is absorbed, or if there is a change of control of the Company,
Director shall stand in the same position under this Agreement with respect to
the resulting, surviving or changed corporation as he would have with respect to
the Company if its separate existence had continued or if there had been no
change in the control of the Company. The obligations of the Company under this
Agreement shall be deemed to be assumed by and shall continue as obligations of
the resulting, surviving or changed corporation, as the case may be.

 

5.9.              CERTAIN
DEFINITIONS

 

For purposes of paragraph 5 of this Agreement, the following
definitions apply herein:

 

(a) “director” means any person who is or was a director of the
Company and any person who, while a director of the Company, is or was serving
at the request of the Company as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise;

 

(b) “expenses” shall include all court costs and attorneys’ fees;

 

(c) “officer” means any person who is or was an officer of the
Company and any person who, while an officer of the Company, is or was serving
at the request of the Company as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise; and

 

(d) “proceeding” means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, 

 

6

 

any appeal in such an action, suit, or proceeding, and any inquiry or
investigation that could lead to such an action, suit, or proceeding.

 

5.10.            DURATION OF
INDEMNITY.

 

This
indemnity in this Section 5 shall continue until and terminate upon the
later of: (a) ten years after the Director has ceased to occupy any of the
positions or have any relationships described in Section 5 of this
Agreement, and (b) the final termination of all pending or threatened
actions, suits, proceedings or investigations to which the Director may be
subject by reason of the fact that he is or was a director, officer, employee
or agent of the Company or is or was serving at the request of the Company as a
director, officer, employee or agent of any other entity, including, but not
limited to, another corporation, partnership, joint venture or trust, or by
reason of any act or omission by him in any such capacity. The indemnification
provided under this Agreement shall continue as to the Director even though he
may have ceased to be a director, officer, employee or agent of the
Company.  This Agreement shall be binding
upon the Company and its successors and assigns and shall inure to the benefit
of the Director and his spouse, successors, assigns, heirs, devisees, executors,
administrators or other legal representatives.

 

6.                 ATTORNEYS’
FEES; PARTIAL INDEMNIFICATION.

 

In the event that Director institutes any legal action to enforce his
rights under, or to recover damages for breach of this Agreement, Director, if
he prevails in whole or in part, shall be entitled to recover from the Company
all attorneys’ fees and disbursements incurred by him.

 

If Director is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of any expenses but not
for the total amount thereof, the Company shall nevertheless indemnify Director
for the portion thereof to which Director is entitled.

 

7.                 INSURANCE AND
OTHER ARRANGEMENTS.

 

(a) The
Company may purchase and maintain insurance on behalf of the Indemitee against
any liability and/or expense asserted against him and/or incurred by or on
behalf of him in connection with his relationship with the Company, whether or
not the Company would have the power to indemnify him against such liability or
advance expenses under the provisions of this Agreement or under the Code as it
may then be in effect.  Except as
expressly provided herein, the purchase and maintenance of such insurance shall
not in any way limit or affect the rights and obligations of the Company and/or
the Director under this Agreement and the execution and delivery of this
Agreement by the Company and the Director shall not in any way be construed to
limit or affect the rights and 

 

7

 

obligations
of the Company and/or of the other party or parties thereto under any such
policy or agreement of insurance.

 

(b) In
the event the Director shall receive payment from any insurance carrier in
respect of indemnified amounts after payments on account of all or part of such
indemnified amounts have been made by the Company pursuant to this Agreement,
the Director shall promptly reimburse the Company for the amount, if any, by
which the sum of such payment by such insurance carrier and/or such plaintiff and
payments by the Company to the Director exceeds such indemnified amounts;
provided, however, that such portions, if any, of such insurance proceeds that
are required to be reimbursed to the insurance carrier under the terms of its
insurance policy, such as co-insurance, retention or deductible amounts, shall
not be deemed to be payments to the Director.

 

(c) In
addition, upon payment of indemnified amounts under this Agreement, the Company
shall be subrogated to the Director’s right against any insurance carrier in
respect of such indemnified amounts and the Director shall execute and deliver
any and all instruments and/or documents and perform any and all other acts or
deeds which the Company deems necessary or advisable to secure such rights.  The Director shall do nothing to prejudice
such rights of recovery or subrogation.

 

8.                  TERMINATION

 

Notwithstanding
the provisions of Section 3, the Company shall, without liability to the
Director, be entitled to terminate this Agreement by summary notice in writing
if the Director shall commit a material breach of his obligations under this
Agreement or if the Director shall be prohibited by law from being or acting as
a director.

 

The
Appointment shall terminate automatically if:

 

(a) the
Director shall not be elected or re-elected as a director upon standing for
election or re-election as a director in accordance with the Company’s Articles
of Association from time to time in force or otherwise cease to be a director
by virtue of a shareholders’ resolution; or

 

(b) the
Director shall resign his directorship (prior to which he shall, wherever
practical, give reasonable notice to the Board).

 

9.                 SEVERABILITY.

 

If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future state or federal laws, or rules and
regulations promulgated thereunder effective during the term hereof, such
provision shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised

 

8

 

a part hereof; and the remaining provisions hereof shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom.

 

10.               CONTRIBUTION.

 

In
the event the indemnity provided for in this Agreement is unavailable to the
Director for any reason whatsoever, the Company, in lieu of indemnifying the
Director, shall contribute to the amount incurred by or on behalf of the
Director, whether for liabilities and/or for expenses in connection with any
action or proceeding, in such proportion as is deemed fair and reasonable by
the Board of Directors of the Company, or by a court, as applicable, in light
of all of the circumstances of such action or proceeding, in order to reflect:

 

(a) the
relative benefits received by the Company and the Director as a result of the
event(s) and/or transaction(s) giving cause to such action or
proceeding; and/or

 

(b) the
relative fault of the Company (and its other executives, employees and/or
agents) and the Director in connection with such event(s) and/or
transaction(s).

 

The
relative fault of the Company (and its other executives, employees and/or
agents), on the one hand, and of the Director, on the other hand, shall be
determined by reference to among other things, the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent the
circumstances resulting in such liabilities and/or expenses.  The Company and the Director agree that it
would not be just and equitable if contribution pursuant to this Section 10
were determined by pro rata allocation or any other method of allocation which
does not take into account the foregoing equitable considerations.

 

The
Director shall not be entitled to contribution from the Company under this Section 10
in the event it is determined by the Authority, or by a court, that the
Director engaged in misconduct which constitutes a Breach of Duty, unless a
court otherwise determines.

 

The Company’s payment of, and the Director’s right to, contribution
under this Section 10 shall be made and determined in accordance with,
pursuant to and in the same manner as, the provisions in Section 5.3
hereof relating to the Company’s payment of, and the Director’s right to,
indemnification under this Agreement.

 

11.               CONTROLLING
LAW.

 

This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas, without regard to the conflicts of laws
provisions thereof.

 

13.               ENTIRE
AGREEMENT; MODIFICATION; SURVIVAL.

 

This Agreement contains the entire agreement of the parties relating to
the subject matter hereof. This Agreement may be modified only by an instrument
in writing signed by both

 

9

 

parties hereto. The provisions of this Agreement shall survive the
termination of Director’s service as a director, officer or employee of the
Company.

 

14.               VOLUNTARY
DISSOLUTION OR BANKRUPTCY.

 

In the event that the Company decides to voluntarily dissolve or to
file a voluntary petition for relief under applicable bankruptcy, moratorium or
similar laws, then not later than ten (10) days prior to such dissolution
or filing, the Company shall deposit in trust, for the exclusive benefit of
Director, a cash amount equal to all amounts previously authorized to be paid
to Director hereunder, such amounts to be used to discharge the Company’s
obligations to Director hereunder. Any amounts in such trust not required for
such purpose shall be returned to the Company. This Section 14 shall not
apply to the dissolution of the Company in connection with a transaction as to
which Section 5.8 hereof applies.

 

15.               AMENDMENTS TO
THE CODE.

 

This Agreement is intended to provide indemnity to Director to the
fullest extent allowed under Texas law. Accordingly, to the extent permitted by
law, if the Code permits greater indemnity than the indemnity set forth herein,
or if any amendment is made to the Code, or any other applicable law, expanding
the indemnity permissible under Texas law, the indemnity obligations contained
herein automatically shall be expanded, without the necessity of action on the
part of any party, to the extent necessary to provide to Director the fullest
indemnity permissible under Texas law.

 

16.               DATA
PROTECTION.

 

The Director hereby agrees and consents to:

 

(a)  the
collection, use and processing by the Company of his personal data (which has
the meaning it bears for the purposes of the United Kingdom Data Protection Act
1998) (“Personal Data”), for all purposes reasonably connected with the
administration of this Appointment;

 

(b)  the Company
transferring his Personal Data to or between any Group Company in any country
for all purposes reasonably connected with the administration of this
Appointment;

 

(c)  the use of
his Personal Data by any Group Company for such purposes; and

 

(d)  the transfer
to and retention of his Personal Data by any third party for such purposes.

 

The Company shall handle all of the Director’s records in accordance
with the Company’s code of good practice, although the Director may not have
rights under data protection law.

 

10

 

17.               SECTION HEADINGS.

 

The headings and titles to the Sections of this Agreement are inserted
for convenience only and shall not be deemed a part hereof or affect the
construction or interpretation of any provision hereof. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identification of the person or persons, firm or
firms, corporation or corporations may require.

 

[Signature Page Follows]

 

11

 

IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first written above.

 

 

	
   

  	
  RESACA
  EXPOITATION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John Lendrum

  
	
   

  	
  Name:

  	
  John
  J. Lendrum, III

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DIRECTOR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  James Perry Bryan, Jr.

  
	
   

  	
  James
  Perry Bryan, Jr.

  

 

 

EXHIBIT A

 

REQUEST FOR INDEMNIFICATION

 

I,
                                                    ,
hereby state as follows:

 

1.             This Request for
Indemnification is submitted to the Board of Directors of RESACA EXPLOITATION,
INC., a Texas corporation (the “Company”), pursuant to that certain
Director Appointment Agreement dated July 14, 2008 (the “Agreement”),
between the Company and me.

 

2.             I am requesting
indemnification from the Company pursuant to the Agreement in connection with
the following proceeding:

 

 

3.                 With respect to my conduct
that is at issue in this proceeding, I have:

 

(a) conducted myself in good faith;

 

(b) reasonably believed: (1) in the case of conduct in my
official capacity as a director, officer or employee of the Company, that my
conduct was in the Company’s best interests; and (2) in all other cases,
that my conduct was at least not opposed to the Company’s best interests; and

 

(c) in the case of any criminal proceeding, had no reasonable
cause to believe my conduct was unlawful.

 

Accordingly, I have met the standard of conduct required for
indemnification under Section 2 of the Agreement.

 

I have executed this Request for Indemnification on this
       day of                 ,
        .

 

 

	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print name

  

 

 

EXHIBIT B

 

STATEMENT OF UNDERTAKING

 

I,
                                        ,
hereby state as follows:

 

1.                 This Statement
of Undertaking is submitted to the Board of Directors of  RESACA EXPLOITATION, INC., a Texas
corporation (the “Company”), pursuant to the Director Appointment
Agreement dated July 14, 2008 (the “Agreement”), between the
Company and me.

 

2.                 I am requesting
from the Company, pursuant to the Agreement, the advancement of expenses that I
have incurred in connection with the following proceeding:

 

 

3.                 I believe in
good faith that I have met the standard of conduct necessary for
indemnification under Section 2 of the Agreement.

 

4.                 I undertake to
repay the amount paid or reimbursed by the Company if it is ultimately
determined that (a) I have not met the standard of conduct necessary for
indemnification under Section 3 of the Agreement, or (b) indemnification
of me against expenses that I have incurred in connection with the proceeding
described by me in Paragraph 2, above, is prohibited by Section 4 of the
Agreement.

 

I have executed this Statement of Undertaking on this
       day of
                    ,
        .

 

 

	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Print name

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