EXHIBIT
10.4
LETTER
AGREEMENT DATED
OCTOBER 9, 2008
BY AND BETWEEN STANDARD DRILLING,
INC.,
PBT CAPITAL PARTNERS, LLC AND
PRENTIS B. TOMLINSON, JR.
PBT Capital Partners,
LLC
1667 K Street, NW, Suite
1230
Washington,
DC 20006
October 9, 1008
Attention: Mr. David
Rector
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That certain
Asset Purchase Agreement dated September 24, 2007 between PBT
Capital Partners, LLC, and Standard Drilling, Inc. (the
“Agreement”)
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This letter agreement is by and among PBT
Capital Partners, LLC, (“Buyer”), Prentis. B.
Tomlinson, Jr. and Standard Drilling, Inc.
(“Seller”). Buyer and Seller have agreed as
follows:
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Upon Closing,
Buyer will place $233,425 in an escrow account pursuant to terms
and conditions, and with an escrow agent, mutually and reasonably
acceptable to Buyer and Seller, which terms and conditions shall be
generally as follows:
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The escrowed
funds shall be applied to the payment of any failure to drill
penalties which were accrued as of the date of the Agreement
pursuant to the Daniels Lease referenced in Section 2.4 of the
Agreement, if (and only if) and to the extent a valid claim
therefor is made against the Seller by Paul R. Daniels and/or wife,
Marcia B. Daniels and Marcia B. Daniels, Trustee (collectively, the
“Daniels”), prior to the expiration of the Escrow
Term.
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The
“Escrow Term” shall begin on the date of the
establishment of the escrow account and shall expire immediately
upon the first of the following to occur:
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Eighteen months
after the date of this Agreement, or
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The direct or
indirect disclosure by Seller, its affiliates, or any of their
respective representatives, employees, officers or directors, of
the existence of the escrow arrangement contemplated herein, or any
of its terms, either:
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to the public,
whether pursuant to governmental filings or otherwise,
or
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Upon the
expiration of the Escrow Term pursuant to Section 1(b)(i), the
amounts held in the escrow account which are not subject to a valid
claim submitted by the Daniels shall be paid to
PBT. Upon the expiration of the Escrow Term pursuant to
Section 1(b)(ii), the amounts held in the escrow account shall be
paid to PBT whether or not subject to a valid claim submitted by
the Daniels.
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Buyer hereby
represents that any and all liability, contingent or otherwise, of
the Seller for failure to drill penalties pursuant to the Norton
Prospect Leases referenced in Section 1.2(c) of the Agreement has
been extinguished and/or released. Upon the execution
and delivery of this letter, Buyer shall deliver to Seller copies
of documents evidencing such release.
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In
consideration for the foregoing, Seller shall and does hereby
cancel and extinguish the liability of Buyer and Prentis Tomlinson
pursuant to that certain promissory note payable by Buyer to the
order of Seller in the original principal amount of $600,000.00
which is referenced in Section 1.3 of the Agreement (the
“Note”). Seller shall return to Buyer the
original
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