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EXHIBIT 10.1
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ACQUISITION AND CONSULTING AGREEMENT
Between
MAB Resources LLC
and
PetroHunter Energy Corporation
Effective January 1, 2007
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TABLE OF CONTENTS
PAGE
1.
DEFINITIONS................................................................1
1.1
DEFINITIONS..................................................1
2. TERM AND EFFECT OF PRIOR
AGREEMENT.........................................2
2.1
TERM.........................................................2
2.2 PRIOR
AGREEMENT..............................................2
3. PURCHASE AND
SALE..........................................................2
3.1 ASSIGNMENT OF OIL AND GAS
PROPERTIES.........................2
3.2 MAB RESERVATION OF OVERRIDING ROYALTY
INTEREST...............3
3.3 PETROHUNTER
SHARES...........................................3
3.4 CONSIDERATION BY
MAB.........................................3
3.5 INDEPENDENT
EVALUATION.......................................4
4.
ACCOUNTING............................................................4
4.1 OWNERSHIP OF
PRODUCTION......................................4
4.2
ACCOUNTING...................................................4
4.3 PRORATION OF
TAXES...........................................4
4.4
LETTERS-IN-LIEU..............................................4
4.5
PREPAIDS.....................................................4
4.6
AUDITS.......................................................4
5. CONSULTING
SERVICES...................................................5
5.1 REVIEW AND ACQUISITION OF FUTURE
PROPERTIES..................5
5.2 MONTHLY
FEE..................................................5
6. CLOSING
CONDITIONS.........................................................6
6.1 MAB'S CLOSING
CONDITIONS.....................................6
6.2 PETROHUNTER'S CLOSING
CONDITIONS.............................6
7. REPRESENTATIONS AND
WARRANTIES........................................7
7.1 EACH
PARTY...................................................7
8. CONDITIONS AND
BREACH.................................................7
8.1
CONDITIONS...................................................7
8.2
BREACH.......................................................7
9.
INDEMNIFICATION.......................................................7
9.1 INDEMNIFICATION OF
MAB.......................................7
10.
MISCELLANEOUS.........................................................8
10.1 AUDIT
RIGHTS.................................................8
10.2 PRESS RELEASES;
CONFIDENTIALITY..............................8
10.3 CONSTRUCTION OF
AGREEMENT....................................8
10.4
ASSIGNABILITY................................................8
10.5 SUCCESSORS AND
ASSIGNS.......................................8
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10.6
COUNTERPARTS.................................................9
10.7 WORDS AND
GENDER.............................................9
10.8 PARTIAL
INVALIDITY...........................................9
10.9 INCORPORATION BY
REFERENCE...................................9
10.10
NOTICES......................................................9
10.11 GOVERNING
LAW................................................9
10.12 ENTIRE
AGREEMENT............................................10
10.13 NO THIRD PARTY
BENEFICIARIES................................10
10.14 NO
RECORDING................................................10
10.15 NECESSARY
DOCUMENTS.........................................10
SCHEDULES
1. Issuance of Escrow Shares to MAB
2. Determination of Proved Reserves Thresholds
EXHIBITS
A Form of Assignment of Oil and Gas Leases (Non-Producing
Properties)
B Form of Assignment and Bill of Sale (Producing Properties)
C Transfer of Sweetpea Shares
D Form of Assignment of Overriding Royalty Interest
E Schedule of Properties
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ACQUISITION AND CONSULTING AGREEMENT
THIS ACQUISITION AND CONSULTING AGREEMENT (the "Agreement") is
effective January 1, 2007 (the "Effective Date") by and between MAB
Resources
LLC, a Delaware limited liability company ("MAB"), and PetroHunter
Energy
Corporation, a Maryland corporation ("PetroHunter"). MAB and
PetroHunter may be
collectively referred to herein as the "Parties."
RECITALS
WHEREAS, MAB entered into various third-party agreements whereby
it
acquired interests in certain oil and gas properties as set forth
in Exhibit E
attached hereto and incorporated herein (the "Properties"), and
assumed certain
obligations with respect thereto pursuant to the agreements (the
"Underlying
Agreements");
WHEREAS, the Parties entered into that certain Management and
Development Agreement, as amended and restated, dated effective
July 1, 2005
(the "Management Agreement") governing the terms of their
relationship with
respect to the Properties and future acquisition of additional
properties by MAB
for the benefit of PetroHunter;
WHEREAS, pursuant to various individual agreements (the
"MAB/PetroHunter Agreements") and pursuant to the Management
Agreement, MAB
assigned to PetroHunter an undivided fifty-percent (50%) working
interest in the
Properties (whether by way of a conveyance of leases or shares of
stock) and
PetroHunter undertook certain obligations to MAB, and assumed MAB's
obligations
with respect to the third parties to the Underlying Agreements,
insofar as
PetroHunter's undivided interest therein;
WHEREAS, the Parties seek to materially revise their relationship,
and
MAB desires to sell and fully relinquish its undivided
fifty-percent (50%)
working interest in the Properties to PetroHunter, and PetroHunter
desires to
acquire said interest in consideration for shares of PetroHunter
and other
consideration to be paid to MAB;
NOW, THEREFORE, based on the above premises and in consideration of
the
covenants and agreements contained herein, the receipt and
sufficiency of which
are hereby acknowledged, the Parties agree as follows:
1. DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, capitalized
terms
shall have the meanings set forth herein.
"ACCOUNTING" shall have the meaning set forth in Section 4.2.
"CLOSING DATE" shall mean a date mutually agreeable to the
Parties
within thirty (30) days after the Effective Date.
"ESCROW AGENT" shall mean Wells Fargo Bank in Denver, Colorado.
"ESCROW SHARES" shall have the meaning set forth in Section
3.3.
"FUTURE PROPERTIES" shall have the meaning set forth in Section
5.1.
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"HYDROCARBONS" means any oil or gas in, under, and that may be
produced
from lands covered by the Properties, including without limitation
crude oil,
condensate, natural gas liquids, natural gas, and coalbed
methane.
"MAB/PETROHUNTER AGREEMENTS" has the meaning set forth in the
Preamble.
"MAB/PETROHUNTER ASSIGNMENT" shall have the meaning as set forth
in
Section 3.1.
"MANAGEMENT AGREEMENT" shall mean that certain Management and
Development Agreement between MAB and PetroHunter, as amended and
restated,
dated effective July 1, 2005.
"NET PROCEEDS" shall have the meaning set forth in Section 4.1.
"PROPERTIES" shall mean the properties described on Exhibit E,
attached
hereto, Future Properties, together with all substitute leases,
licenses,
permits, and all subsequently acquired or derivative rights in
related
production and leases, production licenses, and agreements related
to such
leases, licenses and permits
"PROVED RESERVES" means the amount of PetroHunter's proved oil and
gas
reserves attributable to the Properties, calculated pursuant to
industry
standards, generally accepted accounting principles, and in
accordance with Rule
4-10 of Regulation S-X, with conversion of any proved non-gas
reserves to proved
gas reserves based upon British Thermal Unit equivalents.
"PROVED RESERVES THRESHOLDS" shall mean, and shall be determined
and
calculated in accordance with, the provisions of Schedule 2.
"RESERVED ORRI" shall have the meaning set forth in Section
3.2.
"SERVICES" shall mean the services provided pursuant to Section
5.
"SWEETPEA" shall mean Sweetpea Petroleum Pty Ltd.
"SWEETPEA SHARES" shall have the meaning set forth in Section
3.1.
2. TERM AND EFFECT OF PRIOR AGREEMENT
2.1 TERM. This Agreement shall be effective from the Effective Date
and
shall continue for a period of five (5) years thereafter (the
"Term"). At the
end of the 5-year period, the Parties may renegotiate and extend
all or any
portion of the Agreement in a mutually agreeable written
agreement.
2.2 PRIOR AGREEMENT. This Agreement replaces the Management
Agreement
and all MAB/PetroHunter Agreements in their entirety, provided
however, the
Parties shall perform any obligations which accrued under such
agreements prior
to the Effective Date, including without limitation PetroHunter's
obligation to
pay any and all amounts which accrued to MAB's benefit under the
Management
Agreement which remain unpaid.
3. PURCHASE AND SALE
3.1 ASSIGNMENT OF OIL AND GAS PROPERTIES. On or before the
Closing
Date, MAB shall:
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(a) assign and transfer to PetroHunter in one or more
assignments and, PetroHunter shall accept and assume, all of MAB's
working
interest and other interests and obligations related to the
Properties, and
(b) sell and assign to PetroHunter all of MAB's shares of
Sweetpea Petroleum Pty Ltd. (the "Sweetpea Shares").
(collectively, the "MAB Working Interest") with an effective date
of said
assignments being January 1, 2007, in accordance with the terms
herein and
substantially in the form of assignments set forth in Exhibits A,
B, and C
(collectively, the "MAB/PetroHunter Assignment"). PetroHunter shall
fully assume
all of MAB's obligations to the third parties under the Underlying
Agreements.
Revenues and expenses attributable to the Properties shall be
allocated as of
the Effective Date, as further set forth in Section 4, below.
3.2 MAB RESERVATION OF OVERRIDING ROYALTY INTEREST. MAB hereby
relinquishes in its entirety the overriding royalty reserved by MAB
under the
Management Agreement, which shall be replaced with the following
overriding
royalty. All of the Properties shall be subject to MAB's overriding
royalty
interest in the amount of ten percent (10%) (proportionately
reduced, based on
PetroHunter's net revenue interest in each lease, license or
permit) of the
proceeds of all sales of Hydrocarbons on the Properties or on lands
pooled or
unitized therewith (the "Reserved ORRI"). The Reserved ORRI shall
be calculated
based on the wellhead value of the product, and therefore shall be
subject to
paying or netting back to the wellhead (from the downstream sales
price, if
product is not sold at the wellhead) MAB's proportionate share
of
post-production costs, including gathering, transportation,
processing costs
and/or fees. The Reserved ORRI shall be conveyed to MAB in a form
similar to the
Assignment of Overriding Royalty, attached as Exhibit D, and shall
continue in
effect as long as oil and gas is produced from the Properties.
Provided,
however, on an ongoing basis for a period of three years from the
Effective
Date, one half of the Reserved ORRI shall be loaned to PetroHunter,
without
interest (the "MAB Loan"). PetroHunter shall maintain an account
(the "MAB Loan
Account") on a monthly basis, which reflects and tracks said loan
amount, as it
increases during said three-year period, and shall provide
statements to MAB no
less frequently than annually. The entire principal of the MAB Loan
shall be
repaid to MAB on or about January 31, 2010.
3.3 PETROHUNTER SHARES. In addition to being subject to the
Reserved
ORRI, PetroHunter shall deliver to MAB the following shares as
further
consideration for MAB's assignment and relinquishment of the MAB
Working
Interest: (a) Within thirty days after Closing, PetroHunter shall
issue to MAB
fifty million (50,000,000) shares of its common stock; and (b)
Within thirty
days after Closing PetroHunter shall deliver to the Escrow Agent,
pursuant to a
mutually acceptable escrow agreement, an additional fifty million
(50,000,000)
shares of its common stock (the "Escrow Shares"), which shall be
issued to MAB
in accordance with Schedule 1, attached hereto, and pursuant to the
calculation
of the Proved Reserves Thresholds, as set forth in Schedule 2,
attached hereto.
If PetroHunter does not achieve one trillion cubic feet of Proved
Reserves
within five years from the Effective Date, MAB will retain the
shares earned up
to that time, and the balance, if any, will be forfeited by MAB and
released to
PetroHunter by the Escrow Agent. MAB shall have the voting rights
attributable
to the Escrow Shares, commencing at the point in time when
PetroHunter has
achieved the applicable Proved Reserves Threshold, regardless of
whether such
shares have actually been delivered or issued to MAB.
3.4 CONSIDERATION BY MAB. In addition to the conveyance of the
MAB
Working Interests, as further consideration for the Reserved ORRI,
the Monthly
Payment, the issuance of PetroHunter shares, and the assumption of
MAB's
obligations under the Underlying Agreements
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by PetroHunter, MAB hereby relinquishes its right to the Carried
Interest and
Capital Costs Advance, as defined in the Management Agreement, any
overriding
royalty interest in addition to the Reserved ORRI and any right to
serve as
operator of the Properties (collectively the "Relinquishment") and
shall provide
the Consulting Services described in Section 5, below.
3.5 INDEPENDENT EVALUATION. MAB hereby acknowledges that
Gustavson
Associates LLC has been retained by PetroHunter to conduct an
independent
analysis and evaluation of the reasonable value of the MAB Working
Interest, the
Reserved ORRI, the Consulting Services, and all other consideration
to be
exchanged by the Parties under this Agreement. MAB further
acknowledges that
this Agreement is contingent upon such evaluation concluding, and
PetroHunter's
board of directors agreeing, that the consideration represents a
fair and
reasonable market value for PetroHunter.
4. ACCOUNTING
4.1 OWNERSHIP OF PRODUCTION. MAB shall be entitled to receive
its
proportionate share of proceeds, less expenses, from all production
and products
attributable to the Properties prior to the Effective Date (the
"Net Proceeds").
All Net Proceeds after the Effective Date shall be for the account
of
PetroHunter.
4.2 ACCOUNTING. No later than sixty (60) days following the
Closing,
PetroHunter shall prepare and deliver to MAB a detailed accounting
of the Net
Proceeds (the "Accounting"). MAB shall have ten (10) days to review
the
Accounting. If MAB has no objections or does not object within said
ten day
period, the Accounting shall be deemed final. If MAB objects to the
Accounting,
the Parties shall use good faith efforts to resolve their
differences with ten
(10) days. PetroHunter shall remit the Net Proceeds to MAB no later
than
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