Exhibit 10.3
EXTENSION OPTION
AGREEMENT
This Extension Option Agreement, dated
effective as of April 14, 2008, is between Rock Energy
Resources, Inc. f/k/a Hanover Gold Company, Inc., Santa
Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties, LLC,
Phoenix Energy, LLC, and Orcutt Properties, LLC
(“Agreement”).
R E C
I T A L S:
WHEREAS, Rock
Energy Partners, LP, Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW
Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt
Properties, LLC. entered into the Base Agreement, dated as of
December 1, 2007 (which was subsequently amended by the
Amendment to Base Agreement dated February 15, 2008 executed
by Rock Energy Resources, Inc. f/k/a Hanover Gold
Company, Inc., Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW
Casmalia Properties, LLC, Phoenix Energy, LLC and Orcutt
Properties, LLC and Second Amendment to Base Agreement dated as of
March 25, 2008 executed by Rock Energy Resources, Inc.
f/k/a Hanover Gold Company, Inc., Santa Maria Pacific, LLC,
Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC
and Orcutt Properties, LLC) (“Base Agreement”);
WHEREAS, the Base
Agreement provided for entry into the Development/Earn-in Agreement
between Rock Energy Partners, LP, Santa Maria Pacific, LLC,
Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC,
and Orcutt Properties, LLC, dated as of December 14, 2007
(which was subsequently amended by the Amended Development
Agreement dated February 15, 2008 between Rock Energy
Resources, Inc. f/k/a Hanover Gold Company, Inc., Santa
Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties, LLC,
Phoenix Energy, LLC and Orcutt Properties, LLC and the Second
Amended Development Agreement dated as of March 25, 2008
between Rock Energy Resources, Inc. f/k/a Hanover Gold
Company, Inc., Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW
Casmalia Properties, LLC, Phoenix Energy, LLC, and Orcutt
Properties, LLC) (“Development Agreement”);
WHEREAS, RER has
requested that the SMP Parties extend the Option IV Exercise Period
set forth in the Development Agreement; and
WHEREAS, the
Parties desire to further amend the Development Agreement as set
forth herein.
NOW, THEREFORE, in
good and valuable consideration, the parties agree as follows:
ARTICLE I
DEFINITIONS
The
definitions of the terms contained in the Development Agreement are
incorporated herein. The following additional terms as used
in this Agreement shall have the meanings indicated below unless
the context otherwise requires:
1.1
“ Default ” shall mean the occurrence of any
conditions, events or acts which would constitute an Event of
Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
1.2
“ Development Agreement ” shall mean the
Development/Earn-In Agreement between Rock Energy Partners, LP,
Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW Casmalia Properties,
LLC, Phoenix Energy, LLC, and Orcutt Properties, LLC., dated as of
December 14, 2007, together with all exhibits and schedules
attached thereto and referenced therein and any and all properly
executed amendments thereto that expressly provide that they are to
supplement, amend or revise the Development Agreement (including
the Amended Development Agreement dated February 15, 2008
between Rock Energy Resources, Inc. f/k/a Hanover Gold
Company, Inc., Santa Maria Pacific, LLC, Gitte-Ten, LLC, NW
Casmalia Properties, LLC, Phoenix Energy, LLC and Orcutt
Properties, LLC and the Second Amended Development Agreement, dated
as of March 25, 2008, between Rock Energy Resources, Inc.
f/k/a Hanover Gold Company, Inc., Santa Maria Pacific, LLC,
Gitte-Ten, LLC, NW Casmalia Properties, LLC, Phoenix Energy, LLC,
and Orcutt Properties, LLC).
1.3
“ Extension Options ” shall mean Extension
Option One, Extension Option Two, Extension Option Three, Extension
Option Four and/or Extension Option Five.
1.4
“ Extension Option One ” shall mean the option
granted pursuant to Article III of this Agreement which is
subject to the terms and conditions of this Agreement.
1.5
“ Extension Option Payments ” shall mean the
option payments to be made by RER pursuant Articles III, IV, V, VI
and VII to exercise Extension Option One, Extension Option Two,
Extension Option Three, Extension Option Four and Extension Option
Five.
1.6
“ Extension Option Two ” shall mean the option
granted pursuant to Article IV of this Agreement which is
subject to the terms and conditions of this Agreement.
1.7
“ Extension Option Three ” shall mean shall mean
the option granted pursuant to Article V of this Agreement
which is subject to the terms and conditions of this Agreement.
1.8
“ Extension Option Four ” shall mean shall mean
the option granted pursuant to Article VI of this Agreement
which is subject to the terms and conditions of this Agreement.
1.9
“ Extension Option Five ” shall mean shall mean
the option granted pursuant to Article VII of this Agreement
which is subject to the terms and conditions of this Agreement.
2
1.10
“ Event of Default ” shall mean the occurrence
of any conditions, events or acts described in
Section 9.1.
1.11
“ RER Reaffirmation and Release ” shall mean the
instrument in the form of Exhibit A.
1.12
“ SMP Parties Reaffirmation and Release ” shall
mean the instrument in the form of Exhibit B.
Any terms defined in
other provisions of this Agreement shall have the meanings set out
therein unless the context requires otherwise.
ARTICLE II
Option
Price
2.1
Contemporaneously with the execution of this Agreement, as the
purchase price for the Extension Option, RER has delivered to SMP,
as agent for itself and the remaining SMP Parties, RER’s
check in the amount of ONE HUNDRED AND NO/100 Dollars (U.S.
$100.00) (the “Independent Consideration”), which is in
addition to and independent of any other consideration provided
hereunder. The Independent Consideration is non-refundable
and shall be retained by Seller under all circumstances.
2.2
The SMP Parties acknowledge the receipt of the Independent
Consideration and acknowledge the sufficiency of the Independent
Consideration as the purchase price for Extension Option and to
solely support this Agreement.
ARTICLE III
Extension Option
One
3.1
Grant of Option . Subject to the strict adherence to
the terms and conditions contained in this Agreement, the SMP
Parties hereby grant to RER the option to extend the Option IV
Exercise Period until the earlier of (i) 3:00 p.m.
Pacific Standard Time on April 30, 2008, or
(ii) occurrence of an Event of Default.
3.2
Notice of Intent to Exercise . RER must deliver to the
SMP Parties written notice by RER of its intent to exercise
Extension Option One. The notice must be signed by RER and
delivered to the SMP Parties.
3.3
Exercise of O
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