Preview
‘To: Nora Lee Notzon[nnotzon@notzonadvisors.com]
Fro nn Hart/(O-EXCHANGELABS'OU-EXCHANGE ADMINISTRATIVE GROUP (FYDIBOHF23SPDLTYCN-RECIPIENTS! '=2198393980D84E72BCCIEFB8D1F9ICI66-GHART]
Sent: Wed 2/21/2018 6:52:14 PM Coordinated Universal Time
Subjes 1: Agreements
Attachment: Purchase And Mutual Release Agreement NA.pdf
Attachment: Change of Control Participation Agreement pdf
Nora Lee,
As | have been predicting, our private equity sponsor (and their lawyers) are increasingly weighing in on details of documents, as we draw nearerto closing
on the Amplify funding and purchase.
As you recall, our January 22 letter agreement was very hastily done. While it suited its purpose at that moment, we need to clean up some of the details. The
two attached documents are designed to properly document our “deal”.
The main aspect of our agreement was to compensate you for future distributions beyond the $50,000 threshold. Intrepid did nat want to be obligated, nor
did my partners in the management company.
Ihave therefore obligated myselfto an agreed methodology , that gets you compensated, and pleases the company's lawyers.
Keep in mind, that no distribution in a private equity backed company ever happens unless the company is sold, hence the “change of control” trigger.
I will appreciate your rapid response.
Please call me if you have any questions
or concerns whatsoever. | seek to be as fair as possible to your role in the Talco situation. It wasn’t your fault that it
did not work out as planned,
Sincerely,
Glenn
Rio Grande MSJ
EX 21
2022-23621
Confidential RIO GRANDE 00001300
PUR E IAL RE) IE AGREEME!)
This Purchase and Mutual Release Agreement (the “Agreement”) is executed as of
January 22, 2018 (the “Effective Date”), by and between Rio Grande E&P Management, LLC, a
Texas limited liability company (“RGM”), Rio Grande E&P, LLC, a Texas limited liability
company (the “RGEP”), Notzon Advisors Limited, a United Kingdom limited partnership (the
“Advisor”), and Nora Lee Notzon, individually (“Notzon”). RGM and RGEP may be referred to
herein collectively as the “Rio Grande Parties” or singularly as the “Rio Grande Party”. Advisor
and Notzon may be referred to collectively as the “Advisor Parties” or singularly as the “Advisor
Party”. The Rio Grande Parties and the Advisor Parties are sometimes hereinafter collectively
referred to as the “Parties” or singularly as a “Party.”
WITNESSETH:
22222
WHEREAS, as of even date herewith, the Rio Grande Parties and Talco Partners II, LLC, a
Texas limited liability company (“Talco”) entered into a certain Purchase and Mutual Release
Agreement (the “Talco Agreement”) for the purchase by RGM of fifty percent (50%) of the total
membership interests of RGEP; and
WHEREAS, immediately prior to such Talco Agreement being consummated, Talco
transferred by letter dated as of the Effective Date five percent (5%) of the total membership interests
of RGEP (the “Transferred Interests”) to Advisor, which Transferred Interests are worth $50,000;
and
WHEREAS, said transfer from Taico to Advisor is not legally permitted under RGEP’s
existing “Company Agreement of Rio Grande E&P, LLC” dated as of October 13, 2017 (the
“Company Agreement”) without a waiver of right of first refusal by the Rio Grande Parties to such
transfer; and
WHEREAS, by their execution hereof, the Rio Grande Parties are willing to waive their right
of first refusal to allow Advisor to acquire the Transferred Interests, and allow Advisor to be the
owner of the Transferred Interests subject to the terms and conditions contained herein; and
WHEREAS, Advisor and RGEP have entered into an engagement {etter dated August 8,
2017 (“Engagement Letter”) and that certain side letter to the Engagement Letter dated October 20,
2017 (collectively, together with the Engagement Letter and all other agreements entered into by
and between Advisor Parties and Rio Grande Parties) (the “Consulting Agreements”); and
WHEREAS, as of the Effective Date, RGEP has made payment to Advisor of the amount of
Fifty Thousand Dollars ($50,000) for and in consideration of the sale and transfer of the Transferred
Interests from Advisor to RGM; and
Rio Grande E&P\Purchase and MR Agreement 180213v3
Confidential RIO GRANDE 00001301
WHEREAS, the Parties executed that certain letter agreement dated January 22, 2018 (the
“ ment”); and
‘Letter A:Agreement
Letter
WHEREAS, other than the Consulting Agreements which shall remain in full force and
effect in accordance with their terms, the Parties desire to release each other from claims, liabilities
and damages arising out of any and all business transactions and legal agreements among the Parties
arising on or prior to the Effective Date including but not limited to the Letter Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants, agreements,
representations and obligations set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the
Parties hereby agree as follows:
1 Representations and Warranties of Advisor Parties. Advisor Parties, jointly and
severally, represent and warrant that:
@ Advisor Parties own the Transferred Interests which constitute five percent
(5%) of the total issued and outstanding membership interests of RGEP.
(b) Advisor Parties have full power and authority to make the representations,
warranties, covenants and agreements contained herein and to execute and
consummate the transactions contemplated by this Agreement.
© With the payment of $50,000 which Advisor acknowledges has been
received from RGEP, neither Advisor Parties nor any of their affiliates are
owed any money by the Rio Grande Parties from the Consulting Agreements
or otherwise as of the date hereof, including but not limited to assisting
RGEP in raising funds from Talco, or under any other agreement with the
Rio Grande Parties.
@ Neither Advisor Parties nor any of their affiliates have allowed any liens or
encumbrances to exist on the Transferred Interests and own good,
indefeasible and marketable title to the Transferred Interests, free and clear
of any and all restrictions or conditions to transfer or assignment, or
mortgages, liens, pledges, charges, encumbrances, equities, claims,
covenants, conditions, restrictions, options or agreements, other than
restrictions imposed under RGEP Agreement and applicable federal and
state securities laws.
©) There are no actions, suits or proceedings pending or to the best of Advisor
Parties’ knowledge, threatened against or affecting the Transferred Interests
or the consummation of the transactions contemplated by this Agreement, at
law or in equity or before or by any governmental authority or instrumentality
or before any arbitrator of any kind relating to the Transferred Interests and,
2
Confidential RIO GRANDE 00001302
to the best of Advisor Parties’ knowledge, there is no valid basis for any such
action, proceeding or investigation.
@ Other than the consent of the Board of Managers of RGEP and Rio Grande
Parties, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority, or any other
person or entity, is required to be made or obtained by Advisor Parties in
mnection with the execution, delivery and performance of this Agreement,
and the consummation of the transactions contemplated hereby.
(g) Advisor Parties: (i) have received all the information that they consider
necessary or appropriate in order to make an informed decision whether to
acquire the Transferred Interests from Talco; (ii) sell the Transferred Interests
to RGM; (iii) have had an opportunity to ask questions of and receive answers
from the Rio Grande Parties regarding the terms and conditions for the
acquisition and the subsequent sale of the Transferred Interests and the
business, properties, prospects and financial condition of RGEP and to obtain
additional information necessary to verify the accuracy of any information
furnished to it or to which it had access, (iv) are experienced in evaluating
purchases and sales of securities of companies in similar stages of
development to that of RGEP, and (v) have such knowledge and experience
in financial and business matters so as to be capable of evaluating the merits
and risks of the acquisition of the Transferred Interests from Talco and
subsequent sale of the Transferred Interests to RGM.
(h) This Agreement has been duly executed and delivered by Advisor Parties and
is a valid and binding obligation, enforceable against them in accordance with
its terms.
@ As of the execution of this Agreement, the Parties have no other agreements
between them other than the Consulting Agreements.
2. Representations and Warranties of Rio Grande Parties. The Rio Grande Parties,
severally as to itself but not jointly and severally as to the other Rio Grande Party, represent and
warrant that:
(a) As a result of the waivers of right of first refusal by the Rio Grande Parties as
stated in Section 2(c) of this Agreement, and assuming Talco had good,
indefeasible and marketable title to the Transferred Interests prior to their
transfer to Advisor, Advisor will receive good, indefeasible and marketable
title to the Transferred Interests from Talco, free and clear of any and all
restrictions or conditions to transfer or assignment, or mortgages, liens,
pledges, charges, encumbrances, equities, claims, covenants, conditions,
Confidential RIO GRANDE 00001303
restrictions, options or agreements, other than restrictions imposed under the
Company Agreement and applicable federal and state securities laws.
(b) Rio Grande Parties have full power and authority to make the representations,
warranties, covenants and agreements contained herein and to execute and
consummate the transactions contemplated by this Agreement.
© Each Rio Grande Party has waived any right of first refusal that it otherwise
might have pursuant to Section 8.2 of RGEP Agreement to permit the transfer
from Talco to Advisor of the Transferred Interests.
@ Other than the consent of the Board of Managers of the Rio Grande Parties,
no consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority, or any other person or entity,
is required to be made or obtained by Rio Grande Parties in connection with
the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby.
©) There are no actions, suits or proceedings pending, or to the best of the Rio
Grande Parties’ knowledge, threatened against or affecting the Transferred
Interests or the consummation of the transactions contemplated by this
Agreement, at law or in equity or before or by any governmental authority or
instrumentality or before any arbitrator of any kind relating to the Transferred
Interests and, to the best of Rio Grande Parties’ knowledge, there is no valid
basis for any such action, proceeding or investigation.
@ This Agreement has been duly executed and delivered by Rio Grande Parties
and is a valid and binding obligation, enforceable against it in accordance with
its terms.
(g) As of the execution of this Agreement, the Parties have no other agreements
between them other than the Consulting Agreements.
3 Resignation. In connection with the sale of the Transferred Interests, Notzon has
resigned from the Board of Managers of RGEP effective as of the Effective Date.
4. Mutual Release.
(a) For and in consideration of the mutual promises and covenants contained herein,
each Advisor Party, jointly and severally, on behalf of themselves and their
affiliates, subsidiaries and each of their members, managers, directors,
shareholders, representatives, agents, successors and assigns (collectively,
“Advisor Released Parties”), release and forever discharge the Rio Grande
Parties and each of their respective affiliates, subsidiaries and each of their
4
Confidential RIO GRANDE 00001304
members, managers, directors, shareholders, representatives, agents, successors
and assigns (collectively, the “Rio Grande Released Parties”) from any and all
claims, demands, proceedings, causes of action, court and administrative orders,
obligations, contracts, agreements, debts and liabilities, both at law and in equity,
which any of the Advisor Released Parties now has or has ever had against the
Rio Grande Released Parties on account of, arising out of or related to Advisor’s
acquisition and subsequent sale of the Transferred Interests, the Consulting
Agreements and RGEP’s operation of its business and its business relationship
with Advisor Released Parties; provided, however, the obligations of the Rio
Grande Released Parties under this Agreement and any future obligations of any
of the Rio Grande Released Parties under the Consulting Agreements are not
being released.
(b) Each of the Rio Grande Parties, for and on behalf of themselves and the other Rio
Grande Released Parties, release and forever discharge the Advisor Released
Parties from any and all claims, demands, proceedings, causes of action, court
and administrative orders, obligations, contracts, agreements, debts and
liabilities, both at law and in equity, which any of the Rio Grande Released
Parties now has or has ever had against the Advisor Released Parties on account
of, arising out of or related to Advisor’s acquisition and subsequent sale of the
Transferred Interests, the Consulting Agreements and the Advisor Parties
assisting in funding RGEP’s business and Advisor Released Parties business
relationship with the Rio Grande Released Parties; provided, however, the
obligations of the Advisor Released Parties under this Agreement and any future
obligations of the Advisor Released Parties under the Consulting Agreements are
not being released. For the avoidance of doubt, Advisor Released Parties release
any and all claims that they might otherwise have against any of the Rio Grande
Released Parties from assisting RGEP in raising funds from Talco.
(c) Notwithstanding the foregoing, none of the contracts, rights, obligations,
covenants and liabilities of the Parties as contained in this Agreement shall be
teleased.
5 Consulting Agreements. The Parties acknowledge and agree that the Consulting
Agreements shall remain in full force and effect.
6. No Conveyance. By their execution hereof, the Parties represent, covenant and
warrant that no claims released herein, if any such claims exist, have previously been conveyed,
assigned, or in any manner transferred, in whole or in part, to any third party. The Parties expressly
represent, covenant and warrant that they have full authority to release any and ail of the claims
released herein.
7. Purchase of Transferred Interests. By its payment of $50,000 to Advisor, Advisor
hereby sells and RGM hereby purchases all of the Transferred Interests effective as of the Effective
5
Confidential RIO GRANDE 00001305
Date and this Agreement shall constitute a legal, valid and binding obligation of RGM and Advisor
with respect thereto.
8 Accounting and Tax Treatment. The Parties hereby agree that, for all tax and
accounting purposes, the Effective Date of this transaction shall be deemed to be the date that
Advisor acquired the Transferred Interests and simultaneously sold the Transferred Interests to
RGM. Accordingly, from a tax and accounting standpoint, Advisor shall be treated as if it never
owned any Transferred Interests and it shall not receive a K-1 statement from RGEP.
9 Successors and Assigns. This Agreement and the rights and obligations hereunder
shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
10. Severability. All warranties, covenants, agreements and releases contained herein
shall survive this Agreement. If, after the execution of this Agreement, any part, term or provision
of this Agreement is found to be invalid, illegal, unenforceable or in conflict with any valid
controlling law, such part, term or provision shall be fully severable. In lieu thereof, the Parties shall
add a legal, valid and enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
11. Captions. The captions used in this Agreement have been inserted only for reference
purposes. The captions and order of such captions shall not be deemed to govern, limit, modify or
in any manner affect the scope, meaning or intent of any of the provisions and/or terms of this
Agreement, nor shall any captions be given any legal effect.
12. Notices. All notices, consents, demands or other communications required or
permitted to be given pursuant to this Agreement shall be deemed sufficiently given when delivered
personally during business hours to the appropriate location described below, telefaxed to the
numbers provided below, or three (3) business days after the posting thereof by United States first
class, registered or certified mail, return receipt requested, with postage prepaid and addressed as
follows:
Ifto RGM:
Mr. Glenn D. Hart
Rio Grande E&P Management, LLC
10000 Memorial Drive, Suite 500
Houston, Texas 77024
If to RGEP:
Mr. Glenn D. Hart
Rio Grande E&P, LLC
10000 Memorial Drive, Suite 500
Confidential RIO GRANDE 00001306
Houston, Texas 77024
Ifto Advisor:
Notzon Advisors Limited
Attention: Nora Lee Notzon, Managing Director
4 Lower Sloane Street
London, SW1W 8BJ
United Kingdom
If to Notzon:
Nora Lee Notzon
4 Lower Sloane Street
London, SW1W 8BJ
United Kingdom
Any Party may change its address for notice or other communications at any time by furnishing
notice to the other Party in the manner described above.
13. Entire Understanding This Agreement and the documents referenced herein
contain the entire understanding between the Parties and supersede any and all other agreements,
understandings and representations between the Parties except as otherwise specifically provided.
14. Waiver/ Modification/Amendments. The waiver of a breach hereunder may be
effected only by a writing by the waiving Party and shall not constitute, or be held to be, a waiver of
any other or subsequent breach, or to affect in any way the effectiveness of such provision. Failure
by any Party hereto to at any time require strict performance by any other party of any provisions of
this Agreement shall not waive, affect or diminish any right thereafter to demand strict compliance
and performance therewith. Any modification or amendment of this Agreement shall be effective
only if made in writing and signed by all Parties hereto.
15. Confidentiality. Each Party acknowledges and agrees that the financial details of
this Agreement are confidential and that no Party will disclose same to non-parties under any
circumstances whether by press release or in any other manner without the prior written consent of
the other Parties hereto. Notwithstanding the foregoing, in the event a Party based on reasonable
legal advice believes that it is compelled as a matter of law to make any such prohibited disclosure,
such Party shall first provide written notice to the other Parties and cooperate with such other Parties
should such other Parties, at their sole cost and expense, wish to attempt to enjoin any such
disclosure.
16. Jurisdiction/Venue. The laws of the State of Texas shall govern the execution,
effect, application, interpretation, validity, performance and enforcement of this Agreement and the
tights, duties and privileges of the respective Parties hereto. All litigation between the Parties with
7
Confidential RIO GRANDE 00001307
respect to this Agreement or the matters described herein shall be conducted in the federal or state
courts located in Houston, Harris County, Texas.
17. Counterparts. This Agreement may be executed in one or more counterparts, each
of which when executed and delivered shall be an original and all of which when executed shall
constitute one and the same instrument and agreement.
18. Drafting. Each Party hereto acknowledges that each Party was actively involved in
the negotiation and drafting of this Agreement and that no law or rule of construction shall be raised
or used in which the provisions of this Agreement shall be construed in favor of or against either
Party hereto because one is deemed to be the author thereto.
19, Counsel. Each Party hereto warrants and represents to the other Parties, that before
executing this Agreement, he, she and it had fully informed itselfof the terms, contents, and conditions
of this Agreement and each had relied solely and completely upon his, hers and its own judgment and
that each has had the opportunity to seek and receive the advice of his, her and its legal counsel before
entering into this Agreement. Each of the undersigned has carefully read and understands the effect of
this Agreement and has had the assistance of independent counsel in reviewing, discussion, and
considering all its terms.
SIGNATURE PAGE FOLLOWS
Confidential RIO GRANDE 00001308
IN WITNESS WHEREOF, the undersigned have fully read the above, fully understand the
contents and/or provisions thereof and hereunto set their hands as of the date and year first above
written.
RGM:
RIO GRANDE E&P MANAGEMENT, LLC
By:
Glenn D. Hart, President
RGEP:
RIO GRANDE E&P, LLC
Bi
Gem D. Hart, President
ADVISOR:
NOTZON ADVISORS LIMITED
By:
Nora Lee Notzon, Managing Director
NOTZON:
By:
Nora Lee Notzon, Individually
Confidential RIO GRANDE 00001309
HANGE OF CONTROL PARTICIPATION AGREEMENT
THIS CHANGE OF CONTROL PARTICIPATION AGREEMENT (the “Agreement”),
is entered is effective as of January 22, 2018 (the “Effective Date”), by and among GLENN D
HART (“Hart”), NOTZON ADVISORS LIMITED, a United Kingdom limited partnership
(“Advisor”) and NORA LEE NOTZON, individually (“Notzon”). Advisor and Notzon may be
referred to collectively as the “Advisor Parties” or singularly as the “Advisor Party”. Hart and
the Advisor Parties are sometimes hereinafter collectively referred to as the “Parties” or
singularly as a “Party’
WITNESSETH:
Reese ist
WHEREAS, effective as of the Effective Date, the Advisor Parties entered into a certain
Purchase and Mutual Release Agreement with Rio Grande E&P Management, LLC, a Texas
limited liability company (“RGM”) and Rio Grande E&P, LLC, a Texas limited liability
company (“RGEP”, and together with RGM, the “Rio Grande Parties”) (the “Purchase
Agreement”);
WHEREAS, pursuant to the terms of the Purchase Agreement, Advisor was paid the
amount of Fifty Thousand and no/100 Dollars ($50,000.00); and
WHEREAS, Hart is one of the owners of RGM; and
WHEREAS, RGM is the sole owner of RGEP; and
WHEREAS, the Parties desire to provide that Hart shall pay Advisor certain amounts in
the event a “Change of Control Transaction”, as such term is hereinafter defined, occurs; and
WHEREAS, Hart is willing to personally be liable for any such payment
NOW, THEREFORE, in consideration of the premises and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledge, the Parties agree as
follows:
1 Defined Terms.
“Change of Control.” The term “Change of Control” shall mean any of the
following events: (i) any person or persons acting together (other than those persons
in control of RGEP as of the date hereof, or an entity owned directly or indirectly by
the Members of RGEP (the “Members”) in substantially the same proportions as
their ownership of units of RGEP) becomes the beneficial owner, directly or
indirectly, of securities of RGEP representing more than fifty percent (50%) of the
combined voting power of RGEP then outstanding securities in any one transaction;
or (ii) the consummation of one or more of the following which has been approved
by the Members: (A) a plan of complete liquidation of RGEP, (B) an agreement for
Rio Grande E&P Mgmt/Notzon/COC Participation Agmt 180217
Page 1 of 8
Confidential RIO GRANDE 00001310
the sale or disposition of all or substantially all of RGEP’s assets other than to a
person controlled by RGEP or by the Members, or (C) a merger (other than a merger
for purposes of redomiciling RGEP), consolidation, or reorganization of RGEP with
or involving any other entity, other than a merger, consolidation, or reorganization
that would result in the voting securities of RGEP outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty percent (50%) of
the combined voting power of the securities of RGEP (or such surviving entity)
outstanding immediately after such merger, consolidation, or reorganization.
“Change of Control Transaction.” The term “Change of Control Transaction”
shall mean any transaction in which a Change of Control occurs and with a
corresponding Net Equity Value of at least $1,000,000.
“Indebtedness” means (i) all obligations for borrowed money and all obligations
issued in substitution for or exchange of obligations for borrowed money, (ii) all
obligations evidenced by any note, bond, debenture or other debt security, (iii) all
obligations for the deferred purchase price of property or services with respect to which a
Person is liable, contingently or otherwise, as obligor or otherwise, (iv) any commitment
by which a Person assures a creditor against loss (including, without limitation,
contingent reimbursement liability with respect to letters of credit), (v) any indebtedness
guaranteed in any manner by a Person (including, without limitation, guarantees in the
form of an agreement to repurchase or reimburse), (vi) any liabilities under capitalized
leases with respect to which a Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, including, without limitation, any lease termination payments or
charges, (vii) any indebtedness secured by a Lien on a Person’s assets, (viii) any liability
of RGEP under deferred compensation plans, phantom stock plans, bonus plans, or for
severance payments or similar arrangements made payable in whole or in part as a result
of the transactions contemplated herein, (ix) any off-balance sheet financing of RGEP,
(x) the gross amount paid or payable with respect to any employee bonus or retention
arrangement or other compensation payable to any Person as a result of the
announcement or consummation or the transactions contemplated by this Agreement, and
(xiv) any accrued and unpaid interest on, and any prepayment premiums, penalties or
similar contractual charges in respect of, any of the foregoing obligations computed as
though payment is being made in respect thereof on the date of consummation of the
Change of Control.
“Net Equity Value.” The term “Net Equity Value” shall be determined based on
the valuation of RGEP as determined by a third party purchaser effecting a
Change of Control less all Indebtedness, if any.
“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated association, corporation, limited liability company, or other entity or
governmental entity (whether federal, state, county, city or otherwise and including any
instrumentality, division, agency or department thereof).
Page 2 of 8
Confidential RIO GRANDE 00001311
2 Grant of Change of Control Participation. Subject to the terms and conditions
of this Agreement, Hart hereby grants to Advisor the right to receive a Change of Control
Transaction payment in the amounts as set forth on Schedule A attached hereto. The Parties
hereby acknowledge and agree that the right to receive a Change of Control Transaction payment
shall not be deemed ownership of equity in the Rio Grande Parties and that the Rio Grande
Parties shall not have any liability with respect to the obligations of Hart as contained herein. As
a result, the Parties hereby acknowledge that Advisor Parties shall not be allocated any profits or
losses that are incurred by either or both of the Rio Grande Parties, nor shall Advisor Parties be
entitled to receive any dividends or other distributions from any of the Rio Grande Parties.
3 Change of Control Transaction Payment. In the event that a Change of Control
Transaction occurs, then the Net Equity Value shall be determined and the corresponding amount
set forth in the “Total Change of Control Payment Due” column on Schedule A shall be due and
owing by Hart to Advisor within five (5) business days after consummation of the Change of
Control Transaction. The obligations of Hart contained herein shall apply to one Change of
Control Transaction and not as to any future Change of Control Transactions.
4 Confidentiality. The Parties agree that they shall keep the existence of this
Agreement as well as the specific terms and conditions contained herein confidential. This
Agreement cannot be disclosed to any other parties except the professional advisors of each of
said Parties who are advised of the confidential nature thereof. Notwithstanding the foregoing,
in the event a Party based on reasonable legal advice believes that it is compelled as a matter of
law to make any such prohibited disclosure, such Party shall first provide written notice to the
other Parties and cooperate with such other Parties should such other Parties, at their sole cost
and expense, wish to attempt to enjoin any such disclosure.
5 Termination. This Agreement shall terminate upon the earlier to occur of: (i)
the occurrence of a Change of Control Transaction and the payment by Hart to Advisor of all
amounts as required herein, or (ii) the occurrence of a Change of Control which does not
constitute a Change of Control Transaction.
6. No Partnership or Joint Venture. The existence of this Agreement is not
intended to be or to create, and the foregoing shall not be construed to constitute or create, any
partnership, joint venture, or other joint enterprise between the Parties.
7. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such provision or invalidity only, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
8 Parol Evidence. Except with respect to the Purchase Agreement, this Agreement
constitutes the sole and complete agreement between the Parties with respect to the matters
specifically contained herein, and no verbal or other statements, inducements or representations
have been made to or relied upon by either Party, and no modification hereof shall be effective
unless in writing signed and executed in the same manner as this Agreement.
Page 3 of 8
Confidential RIO GRANDE 00001312
9. Successors and Assigns. Advisor Parties shall not subdivide, transfer, or assign
this Agreement in whole or in part. This Agreement and the rights and obligations hereunder
shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors,
administrators, legal representatives, successors and assigns.
1 Severability. All covenants and agreements contained herein shall survive this
Agreement. If, after the execution of this Agreement, any part, term or provision of this
Agreement is found to be invalid, illegal, unenforceable or in conflict with any valid controlling
law, such part, term or provision shall be fully severable. In lieu thereof, the Parties shall add a
legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
2 Captions. The captions used in this Agreement have been inserted only for
reference purposes. The captions and order of such captions shall not be deemed to govern,
limit, modify or in any manner affect the scope, meaning or intent of any of the provisions and/or
terms of this Agreement, nor shall any captions be given any legal effect.
3 Notices. All notices, consents, demands or other communications required or
permitted to be given pursuant to this Agreement shall be deemed sufficiently given when
delivered personally during business hours to the appropriate location described below, telefaxed
to the numbers provided below, or three (3) business days after the posting thereof by United
States first class, registered or certified mail, return receipt requested, with postage prepaid and
addressed as follows:
If to Hart:
Mr. Glenn D. Hart
Personal & Confidential
Rio Grande E&P Management, LLC
aa
10000 Memorial Drive, Suite 79€- sO
Houston, Texas 77024
If to Advisor:
Notzon Advisors Limited
Attention: Nora Lee Notzon, Managing Director
4 Lower Sloane Street
London, SW1W 8BJ
United Kingdom
Page 4 of 8
Confidential RIO GRANDE 00001313
Ifto Notzon:
Nora Lee Notzon
4 Lower Sloane Street
London, SW1W 8BJ
United Kingdom
Any Party may change its address for notice or other communications at any time by furnishing
notice to the other Party in the manner described above.
4. Entire Understanding. This Agreement and the documents referenced herein
contain the entire understanding between the Parties and supersede any and all other agreements,
understandings and representations between the Parties except as otherwise specifically
provided.
5 Waiver/ Modification/Amendments. The waiver of a breach hereunder may be
effected only by a writing by the waiving Party and shall not constitute, or be held to be, a
waiver of any other or subsequent breach, or to affect in any way the effectiveness of such
provision. Failure by any Party hereto to at any time require strict performance by any other
party of any provisions of this Agreement shall not waive, affect or diminish any right thereafter
to demand strict compliance and performance therewith. Any modification or amendment of this
Agreement shall be effective only if made in writing and signed by all Parties hereto.
6 Jurisdiction/Venue. The laws of the State of Texas shall govern the execution,
effect, application, interpretation, validity, performance and enforcement of this Agreement and
the rights, duties and privileges of the respective Parties hereto. All litigation between the
Parties with respect to this Agreement or the matters described herein shall be conducted in the
federal or state courts located in Houston, Harris County, Texas.
7. Counterparts. This Agreement may be executed in one or more counterparts,
each of which when executed and delivered shall be an original and all of which when executed
shall constitute one and the same instrument and agreement.
8 Drafting. Each Party hereto acknowledges that each Party was actively involved
in the negotiation and drafting of this Agreement and that no law or rule of construction shall be
raised or used in which the provisions of this Agreement shall be construed in favor of or against
either Party hereto because one is deemed to be the author thereto.
9. Counsel. Each Party hereto warrants and represents to the other Parties, that before
executing this Agreement, he, she and it had fully informed itself of the terms, contents, and
conditions of this Agreement and each had relied solely and completely upon his, her and its own
judgment and that each has had the opportunity to seek and receive the advice of his, her and its
legal counsel before entering into this Agreement. Each of the undersigned has carefully read and
understands the effect of this Agreement and has had the assistance of independent counsel in
reviewing, discussion, and considering all its terms.
Page 5 of 8
Confidential RIO GRANDE 00001314
SIGNATURE PAGE FOLLOWS
Page 6 of 8
Confidential RIO GRANDE 00001315
IN WITNESS WHEREOF, the undersigned have fully read the above, fully understand
the contents and/or provisions thereof and hereunto set their hands as of the date and year first
above written.
HART:
Glenn D. Hart
ADVISOR:
NOTZON ADVISORS LIMITED
By:
Nora Lee Notzon, Managing Director
NOTZON:
Preview
‘To: Nora Lee Notzon[nnotzon@notzonadvisors.com] Fro nn Hart/(O-EXCHANGELABS'OU-EXCHANGE ADMINISTRATIVE GROUP (FYDIBOHF23SPDLTYCN-RECIPIENTS! '=2198393980D84E72BCCIEFB8D1F9ICI66-GHART] Sent: Wed 2/21/2018 6:52:14 PM Coordinated Universal Time Subjes 1: Agreements Attachment: Purchase And Mutual Release Agreement NA.pdf Attachment: Change of Control Participation Agreement pdf Nora Lee, As | have been predicting, our private equity sponsor (and their lawyers) are increasingly weighing in on details of documents, as we draw nearerto closing on the Amplify funding and purchase. As you recall, our January 22 letter agreement was very hastily done. While it suited its purpose at that moment, we need to clean up some of the details. The two attached documents are designed to properly document our “deal”. The main aspect of our agreement was to compensate you for future distributions beyond the $50,000 threshold. Intrepid did nat want to be obligated, nor did my partners in the management company. Ihave therefore obligated myselfto an agreed methodology , that gets you compensated, and pleases the company's lawyers. Keep in mind, that no distribution in a private equity backed company ever happens unless the company is sold, hence the “change of control” trigger. I will appreciate your rapid response. Please call me if you have any questions or concerns whatsoever. | seek to be as fair as possible to your role in the Talco situation. It wasn’t your fault that it did not work out as planned, Sincerely, Glenn Rio Grande MSJ EX 21 2022-23621 Confidential RIO GRANDE 00001300 PUR E IAL RE) IE AGREEME!) This Purchase and Mutual Release Agreement (the “Agreement”) is executed as of January 22, 2018 (the “Effective Date”), by and between Rio Grande E&P Management, LLC, a Texas limited liability company (“RGM”), Rio Grande E&P, LLC, a Texas limited liability company (the “RGEP”), Notzon Advisors Limited, a United Kingdom limited partnership (the “Advisor”), and Nora Lee Notzon, individually (“Notzon”). RGM and RGEP may be referred to herein collectively as the “Rio Grande Parties” or singularly as the “Rio Grande Party”. Advisor and Notzon may be referred to collectively as the “Advisor Parties” or singularly as the “Advisor Party”. The Rio Grande Parties and the Advisor Parties are sometimes hereinafter collectively referred to as the “Parties” or singularly as a “Party.” WITNESSETH: 22222 WHEREAS, as of even date herewith, the Rio Grande Parties and Talco Partners II, LLC, a Texas limited liability company (“Talco”) entered into a certain Purchase and Mutual Release Agreement (the “Talco Agreement”) for the purchase by RGM of fifty percent (50%) of the total membership interests of RGEP; and WHEREAS, immediately prior to such Talco Agreement being consummated, Talco transferred by letter dated as of the Effective Date five percent (5%) of the total membership interests of RGEP (the “Transferred Interests”) to Advisor, which Transferred Interests are worth $50,000; and WHEREAS, said transfer from Taico to Advisor is not legally permitted under RGEP’s existing “Company Agreement of Rio Grande E&P, LLC” dated as of October 13, 2017 (the “Company Agreement”) without a waiver of right of first refusal by the Rio Grande Parties to such transfer; and WHEREAS, by their execution hereof, the Rio Grande Parties are willing to waive their right of first refusal to allow Advisor to acquire the Transferred Interests, and allow Advisor to be the owner of the Transferred Interests subject to the terms and conditions contained herein; and WHEREAS, Advisor and RGEP have entered into an engagement {etter dated August 8, 2017 (“Engagement Letter”) and that certain side letter to the Engagement Letter dated October 20, 2017 (collectively, together with the Engagement Letter and all other agreements entered into by and between Advisor Parties and Rio Grande Parties) (the “Consulting Agreements”); and WHEREAS, as of the Effective Date, RGEP has made payment to Advisor of the amount of Fifty Thousand Dollars ($50,000) for and in consideration of the sale and transfer of the Transferred Interests from Advisor to RGM; and Rio Grande E&P\Purchase and MR Agreement 180213v3 Confidential RIO GRANDE 00001301 WHEREAS, the Parties executed that certain letter agreement dated January 22, 2018 (the “ ment”); and ‘Letter A:Agreement Letter WHEREAS, other than the Consulting Agreements which shall remain in full force and effect in accordance with their terms, the Parties desire to release each other from claims, liabilities and damages arising out of any and all business transactions and legal agreements among the Parties arising on or prior to the Effective Date including but not limited to the Letter Agreement; NOW, THEREFORE, for and in consideration of the mutual covenants, agreements, representations and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties hereby agree as follows: 1 Representations and Warranties of Advisor Parties. Advisor Parties, jointly and severally, represent and warrant that: @ Advisor Parties own the Transferred Interests which constitute five percent (5%) of the total issued and outstanding membership interests of RGEP. (b) Advisor Parties have full power and authority to make the representations, warranties, covenants and agreements contained herein and to execute and consummate the transactions contemplated by this Agreement. © With the payment of $50,000 which Advisor acknowledges has been received from RGEP, neither Advisor Parties nor any of their affiliates are owed any money by the Rio Grande Parties from the Consulting Agreements or otherwise as of the date hereof, including but not limited to assisting RGEP in raising funds from Talco, or under any other agreement with the Rio Grande Parties. @ Neither Advisor Parties nor any of their affiliates have allowed any liens or encumbrances to exist on the Transferred Interests and own good, indefeasible and marketable title to the Transferred Interests, free and clear of any and all restrictions or conditions to transfer or assignment, or mortgages, liens, pledges, charges, encumbrances, equities, claims, covenants, conditions, restrictions, options or agreements, other than restrictions imposed under RGEP Agreement and applicable federal and state securities laws. ©) There are no actions, suits or proceedings pending or to the best of Advisor Parties’ knowledge, threatened against or affecting the Transferred Interests or the consummation of the transactions contemplated by this Agreement, at law or in equity or before or by any governmental authority or instrumentality or before any arbitrator of any kind relating to the Transferred Interests and, 2 Confidential RIO GRANDE 00001302 to the best of Advisor Parties’ knowledge, there is no valid basis for any such action, proceeding or investigation. @ Other than the consent of the Board of Managers of RGEP and Rio Grande Parties, no consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority, or any other person or entity, is required to be made or obtained by Advisor Parties in mnection with the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby. (g) Advisor Parties: (i) have received all the information that they consider necessary or appropriate in order to make an informed decision whether to acquire the Transferred Interests from Talco; (ii) sell the Transferred Interests to RGM; (iii) have had an opportunity to ask questions of and receive answers from the Rio Grande Parties regarding the terms and conditions for the acquisition and the subsequent sale of the Transferred Interests and the business, properties, prospects and financial condition of RGEP and to obtain additional information necessary to verify the accuracy of any information furnished to it or to which it had access, (iv) are experienced in evaluating purchases and sales of securities of companies in similar stages of development to that of RGEP, and (v) have such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of the acquisition of the Transferred Interests from Talco and subsequent sale of the Transferred Interests to RGM. (h) This Agreement has been duly executed and delivered by Advisor Parties and is a valid and binding obligation, enforceable against them in accordance with its terms. @ As of the execution of this Agreement, the Parties have no other agreements between them other than the Consulting Agreements. 2. Representations and Warranties of Rio Grande Parties. The Rio Grande Parties, severally as to itself but not jointly and severally as to the other Rio Grande Party, represent and warrant that: (a) As a result of the waivers of right of first refusal by the Rio Grande Parties as stated in Section 2(c) of this Agreement, and assuming Talco had good, indefeasible and marketable title to the Transferred Interests prior to their transfer to Advisor, Advisor will receive good, indefeasible and marketable title to the Transferred Interests from Talco, free and clear of any and all restrictions or conditions to transfer or assignment, or mortgages, liens, pledges, charges, encumbrances, equities, claims, covenants, conditions, Confidential RIO GRANDE 00001303 restrictions, options or agreements, other than restrictions imposed under the Company Agreement and applicable federal and state securities laws. (b) Rio Grande Parties have full power and authority to make the representations, warranties, covenants and agreements contained herein and to execute and consummate the transactions contemplated by this Agreement. © Each Rio Grande Party has waived any right of first refusal that it otherwise might have pursuant to Section 8.2 of RGEP Agreement to permit the transfer from Talco to Advisor of the Transferred Interests. @ Other than the consent of the Board of Managers of the Rio Grande Parties, no consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority, or any other person or entity, is required to be made or obtained by Rio Grande Parties in connection with the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby. ©) There are no actions, suits or proceedings pending, or to the best of the Rio Grande Parties’ knowledge, threatened against or affecting the Transferred Interests or the consummation of the transactions contemplated by this Agreement, at law or in equity or before or by any governmental authority or instrumentality or before any arbitrator of any kind relating to the Transferred Interests and, to the best of Rio Grande Parties’ knowledge, there is no valid basis for any such action, proceeding or investigation. @ This Agreement has been duly executed and delivered by Rio Grande Parties and is a valid and binding obligation, enforceable against it in accordance with its terms. (g) As of the execution of this Agreement, the Parties have no other agreements between them other than the Consulting Agreements. 3 Resignation. In connection with the sale of the Transferred Interests, Notzon has resigned from the Board of Managers of RGEP effective as of the Effective Date. 4. Mutual Release. (a) For and in consideration of the mutual promises and covenants contained herein, each Advisor Party, jointly and severally, on behalf of themselves and their affiliates, subsidiaries and each of their members, managers, directors, shareholders, representatives, agents, successors and assigns (collectively, “Advisor Released Parties”), release and forever discharge the Rio Grande Parties and each of their respective affiliates, subsidiaries and each of their 4 Confidential RIO GRANDE 00001304 members, managers, directors, shareholders, representatives, agents, successors and assigns (collectively, the “Rio Grande Released Parties”) from any and all claims, demands, proceedings, causes of action, court and administrative orders, obligations, contracts, agreements, debts and liabilities, both at law and in equity, which any of the Advisor Released Parties now has or has ever had against the Rio Grande Released Parties on account of, arising out of or related to Advisor’s acquisition and subsequent sale of the Transferred Interests, the Consulting Agreements and RGEP’s operation of its business and its business relationship with Advisor Released Parties; provided, however, the obligations of the Rio Grande Released Parties under this Agreement and any future obligations of any of the Rio Grande Released Parties under the Consulting Agreements are not being released. (b) Each of the Rio Grande Parties, for and on behalf of themselves and the other Rio Grande Released Parties, release and forever discharge the Advisor Released Parties from any and all claims, demands, proceedings, causes of action, court and administrative orders, obligations, contracts, agreements, debts and liabilities, both at law and in equity, which any of the Rio Grande Released Parties now has or has ever had against the Advisor Released Parties on account of, arising out of or related to Advisor’s acquisition and subsequent sale of the Transferred Interests, the Consulting Agreements and the Advisor Parties assisting in funding RGEP’s business and Advisor Released Parties business relationship with the Rio Grande Released Parties; provided, however, the obligations of the Advisor Released Parties under this Agreement and any future obligations of the Advisor Released Parties under the Consulting Agreements are not being released. For the avoidance of doubt, Advisor Released Parties release any and all claims that they might otherwise have against any of the Rio Grande Released Parties from assisting RGEP in raising funds from Talco. (c) Notwithstanding the foregoing, none of the contracts, rights, obligations, covenants and liabilities of the Parties as contained in this Agreement shall be teleased. 5 Consulting Agreements. The Parties acknowledge and agree that the Consulting Agreements shall remain in full force and effect. 6. No Conveyance. By their execution hereof, the Parties represent, covenant and warrant that no claims released herein, if any such claims exist, have previously been conveyed, assigned, or in any manner transferred, in whole or in part, to any third party. The Parties expressly represent, covenant and warrant that they have full authority to release any and ail of the claims released herein. 7. Purchase of Transferred Interests. By its payment of $50,000 to Advisor, Advisor hereby sells and RGM hereby purchases all of the Transferred Interests effective as of the Effective 5 Confidential RIO GRANDE 00001305 Date and this Agreement shall constitute a legal, valid and binding obligation of RGM and Advisor with respect thereto. 8 Accounting and Tax Treatment. The Parties hereby agree that, for all tax and accounting purposes, the Effective Date of this transaction shall be deemed to be the date that Advisor acquired the Transferred Interests and simultaneously sold the Transferred Interests to RGM. Accordingly, from a tax and accounting standpoint, Advisor shall be treated as if it never owned any Transferred Interests and it shall not receive a K-1 statement from RGEP. 9 Successors and Assigns. This Agreement and the rights and obligations hereunder shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors and assigns. 10. Severability. All warranties, covenants, agreements and releases contained herein shall survive this Agreement. If, after the execution of this Agreement, any part, term or provision of this Agreement is found to be invalid, illegal, unenforceable or in conflict with any valid controlling law, such part, term or provision shall be fully severable. In lieu thereof, the Parties shall add a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. 11. Captions. The captions used in this Agreement have been inserted only for reference purposes. The captions and order of such captions shall not be deemed to govern, limit, modify or in any manner affect the scope, meaning or intent of any of the provisions and/or terms of this Agreement, nor shall any captions be given any legal effect. 12. Notices. All notices, consents, demands or other communications required or permitted to be given pursuant to this Agreement shall be deemed sufficiently given when delivered personally during business hours to the appropriate location described below, telefaxed to the numbers provided below, or three (3) business days after the posting thereof by United States first class, registered or certified mail, return receipt requested, with postage prepaid and addressed as follows: Ifto RGM: Mr. Glenn D. Hart Rio Grande E&P Management, LLC 10000 Memorial Drive, Suite 500 Houston, Texas 77024 If to RGEP: Mr. Glenn D. Hart Rio Grande E&P, LLC 10000 Memorial Drive, Suite 500 Confidential RIO GRANDE 00001306 Houston, Texas 77024 Ifto Advisor: Notzon Advisors Limited Attention: Nora Lee Notzon, Managing Director 4 Lower Sloane Street London, SW1W 8BJ United Kingdom If to Notzon: Nora Lee Notzon 4 Lower Sloane Street London, SW1W 8BJ United Kingdom Any Party may change its address for notice or other communications at any time by furnishing notice to the other Party in the manner described above. 13. Entire Understanding This Agreement and the documents referenced herein contain the entire understanding between the Parties and supersede any and all other agreements, understandings and representations between the Parties except as otherwise specifically provided. 14. Waiver/ Modification/Amendments. The waiver of a breach hereunder may be effected only by a writing by the waiving Party and shall not constitute, or be held to be, a waiver of any other or subsequent breach, or to affect in any way the effectiveness of such provision. Failure by any Party hereto to at any time require strict performance by any other party of any provisions of this Agreement shall not waive, affect or diminish any right thereafter to demand strict compliance and performance therewith. Any modification or amendment of this Agreement shall be effective only if made in writing and signed by all Parties hereto. 15. Confidentiality. Each Party acknowledges and agrees that the financial details of this Agreement are confidential and that no Party will disclose same to non-parties under any circumstances whether by press release or in any other manner without the prior written consent of the other Parties hereto. Notwithstanding the foregoing, in the event a Party based on reasonable legal advice believes that it is compelled as a matter of law to make any such prohibited disclosure, such Party shall first provide written notice to the other Parties and cooperate with such other Parties should such other Parties, at their sole cost and expense, wish to attempt to enjoin any such disclosure. 16. Jurisdiction/Venue. The laws of the State of Texas shall govern the execution, effect, application, interpretation, validity, performance and enforcement of this Agreement and the tights, duties and privileges of the respective Parties hereto. All litigation between the Parties with 7 Confidential RIO GRANDE 00001307 respect to this Agreement or the matters described herein shall be conducted in the federal or state courts located in Houston, Harris County, Texas. 17. Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed and delivered shall be an original and all of which when executed shall constitute one and the same instrument and agreement. 18. Drafting. Each Party hereto acknowledges that each Party was actively involved in the negotiation and drafting of this Agreement and that no law or rule of construction shall be raised or used in which the provisions of this Agreement shall be construed in favor of or against either Party hereto because one is deemed to be the author thereto. 19, Counsel. Each Party hereto warrants and represents to the other Parties, that before executing this Agreement, he, she and it had fully informed itselfof the terms, contents, and conditions of this Agreement and each had relied solely and completely upon his, hers and its own judgment and that each has had the opportunity to seek and receive the advice of his, her and its legal counsel before entering into this Agreement. Each of the undersigned has carefully read and understands the effect of this Agreement and has had the assistance of independent counsel in reviewing, discussion, and considering all its terms. SIGNATURE PAGE FOLLOWS Confidential RIO GRANDE 00001308 IN WITNESS WHEREOF, the undersigned have fully read the above, fully understand the contents and/or provisions thereof and hereunto set their hands as of the date and year first above written. RGM: RIO GRANDE E&P MANAGEMENT, LLC By: Glenn D. Hart, President RGEP: RIO GRANDE E&P, LLC Bi Gem D. Hart, President ADVISOR: NOTZON ADVISORS LIMITED By: Nora Lee Notzon, Managing Director NOTZON: By: Nora Lee Notzon, Individually Confidential RIO GRANDE 00001309 HANGE OF CONTROL PARTICIPATION AGREEMENT THIS CHANGE OF CONTROL PARTICIPATION AGREEMENT (the “Agreement”), is entered is effective as of January 22, 2018 (the “Effective Date”), by and among GLENN D HART (“Hart”), NOTZON ADVISORS LIMITED, a United Kingdom limited partnership (“Advisor”) and NORA LEE NOTZON, individually (“Notzon”). Advisor and Notzon may be referred to collectively as the “Advisor Parties” or singularly as the “Advisor Party”. Hart and the Advisor Parties are sometimes hereinafter collectively referred to as the “Parties” or singularly as a “Party’ WITNESSETH: Reese ist WHEREAS, effective as of the Effective Date, the Advisor Parties entered into a certain Purchase and Mutual Release Agreement with Rio Grande E&P Management, LLC, a Texas limited liability company (“RGM”) and Rio Grande E&P, LLC, a Texas limited liability company (“RGEP”, and together with RGM, the “Rio Grande Parties”) (the “Purchase Agreement”); WHEREAS, pursuant to the terms of the Purchase Agreement, Advisor was paid the amount of Fifty Thousand and no/100 Dollars ($50,000.00); and WHEREAS, Hart is one of the owners of RGM; and WHEREAS, RGM is the sole owner of RGEP; and WHEREAS, the Parties desire to provide that Hart shall pay Advisor certain amounts in the event a “Change of Control Transaction”, as such term is hereinafter defined, occurs; and WHEREAS, Hart is willing to personally be liable for any such payment NOW, THEREFORE, in consideration of the premises and for other valuable consideration, the receipt and adequacy of which are hereby acknowledge, the Parties agree as follows: 1 Defined Terms. “Change of Control.” The term “Change of Control” shall mean any of the following events: (i) any person or persons acting together (other than those persons in control of RGEP as of the date hereof, or an entity owned directly or indirectly by the Members of RGEP (the “Members”) in substantially the same proportions as their ownership of units of RGEP) becomes the beneficial owner, directly or indirectly, of securities of RGEP representing more than fifty percent (50%) of the combined voting power of RGEP then outstanding securities in any one transaction; or (ii) the consummation of one or more of the following which has been approved by the Members: (A) a plan of complete liquidation of RGEP, (B) an agreement for Rio Grande E&P Mgmt/Notzon/COC Participation Agmt 180217 Page 1 of 8 Confidential RIO GRANDE 00001310 the sale or disposition of all or substantially all of RGEP’s assets other than to a person controlled by RGEP or by the Members, or (C) a merger (other than a merger for purposes of redomiciling RGEP), consolidation, or reorganization of RGEP with or involving any other entity, other than a merger, consolidation, or reorganization that would result in the voting securities of RGEP outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the combined voting power of the securities of RGEP (or such surviving entity) outstanding immediately after such merger, consolidation, or reorganization. “Change of Control Transaction.” The term “Change of Control Transaction” shall mean any transaction in which a Change of Control occurs and with a corresponding Net Equity Value of at least $1,000,000. “Indebtedness” means (i) all obligations for borrowed money and all obligations issued in substitution for or exchange of obligations for borrowed money, (ii) all obligations evidenced by any note, bond, debenture or other debt security, (iii) all obligations for the deferred purchase price of property or services with respect to which a Person is liable, contingently or otherwise, as obligor or otherwise, (iv) any commitment by which a Person assures a creditor against loss (including, without limitation, contingent reimbursement liability with respect to letters of credit), (v) any indebtedness guaranteed in any manner by a Person (including, without limitation, guarantees in the form of an agreement to repurchase or reimburse), (vi) any liabilities under capitalized leases with respect to which a Person is liable, contingently or otherwise, as obligor, guarantor or otherwise, including, without limitation, any lease termination payments or charges, (vii) any indebtedness secured by a Lien on a Person’s assets, (viii) any liability of RGEP under deferred compensation plans, phantom stock plans, bonus plans, or for severance payments or similar arrangements made payable in whole or in part as a result of the transactions contemplated herein, (ix) any off-balance sheet financing of RGEP, (x) the gross amount paid or payable with respect to any employee bonus or retention arrangement or other compensation payable to any Person as a result of the announcement or consummation or the transactions contemplated by this Agreement, and (xiv) any accrued and unpaid interest on, and any prepayment premiums, penalties or similar contractual charges in respect of, any of the foregoing obligations computed as though payment is being made in respect thereof on the date of consummation of the Change of Control. “Net Equity Value.” The term “Net Equity Value” shall be determined based on the valuation of RGEP as determined by a third party purchaser effecting a Change of Control less all Indebtedness, if any. “Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, or other entity or governmental entity (whether federal, state, county, city or otherwise and including any instrumentality, division, agency or department thereof). Page 2 of 8 Confidential RIO GRANDE 00001311 2 Grant of Change of Control Participation. Subject to the terms and conditions of this Agreement, Hart hereby grants to Advisor the right to receive a Change of Control Transaction payment in the amounts as set forth on Schedule A attached hereto. The Parties hereby acknowledge and agree that the right to receive a Change of Control Transaction payment shall not be deemed ownership of equity in the Rio Grande Parties and that the Rio Grande Parties shall not have any liability with respect to the obligations of Hart as contained herein. As a result, the Parties hereby acknowledge that Advisor Parties shall not be allocated any profits or losses that are incurred by either or both of the Rio Grande Parties, nor shall Advisor Parties be entitled to receive any dividends or other distributions from any of the Rio Grande Parties. 3 Change of Control Transaction Payment. In the event that a Change of Control Transaction occurs, then the Net Equity Value shall be determined and the corresponding amount set forth in the “Total Change of Control Payment Due” column on Schedule A shall be due and owing by Hart to Advisor within five (5) business days after consummation of the Change of Control Transaction. The obligations of Hart contained herein shall apply to one Change of Control Transaction and not as to any future Change of Control Transactions. 4 Confidentiality. The Parties agree that they shall keep the existence of this Agreement as well as the specific terms and conditions contained herein confidential. This Agreement cannot be disclosed to any other parties except the professional advisors of each of said Parties who are advised of the confidential nature thereof. Notwithstanding the foregoing, in the event a Party based on reasonable legal advice believes that it is compelled as a matter of law to make any such prohibited disclosure, such Party shall first provide written notice to the other Parties and cooperate with such other Parties should such other Parties, at their sole cost and expense, wish to attempt to enjoin any such disclosure. 5 Termination. This Agreement shall terminate upon the earlier to occur of: (i) the occurrence of a Change of Control Transaction and the payment by Hart to Advisor of all amounts as required herein, or (ii) the occurrence of a Change of Control which does not constitute a Change of Control Transaction. 6. No Partnership or Joint Venture. The existence of this Agreement is not intended to be or to create, and the foregoing shall not be construed to constitute or create, any partnership, joint venture, or other joint enterprise between the Parties. 7. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such provision or invalidity only, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 8 Parol Evidence. Except with respect to the Purchase Agreement, this Agreement constitutes the sole and complete agreement between the Parties with respect to the matters specifically contained herein, and no verbal or other statements, inducements or representations have been made to or relied upon by either Party, and no modification hereof shall be effective unless in writing signed and executed in the same manner as this Agreement. Page 3 of 8 Confidential RIO GRANDE 00001312 9. Successors and Assigns. Advisor Parties shall not subdivide, transfer, or assign this Agreement in whole or in part. This Agreement and the rights and obligations hereunder shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, legal representatives, successors and assigns. 1 Severability. All covenants and agreements contained herein shall survive this Agreement. If, after the execution of this Agreement, any part, term or provision of this Agreement is found to be invalid, illegal, unenforceable or in conflict with any valid controlling law, such part, term or provision shall be fully severable. In lieu thereof, the Parties shall add a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. 2 Captions. The captions used in this Agreement have been inserted only for reference purposes. The captions and order of such captions shall not be deemed to govern, limit, modify or in any manner affect the scope, meaning or intent of any of the provisions and/or terms of this Agreement, nor shall any captions be given any legal effect. 3 Notices. All notices, consents, demands or other communications required or permitted to be given pursuant to this Agreement shall be deemed sufficiently given when delivered personally during business hours to the appropriate location described below, telefaxed to the numbers provided below, or three (3) business days after the posting thereof by United States first class, registered or certified mail, return receipt requested, with postage prepaid and addressed as follows: If to Hart: Mr. Glenn D. Hart Personal & Confidential Rio Grande E&P Management, LLC aa 10000 Memorial Drive, Suite 79€- sO Houston, Texas 77024 If to Advisor: Notzon Advisors Limited Attention: Nora Lee Notzon, Managing Director 4 Lower Sloane Street London, SW1W 8BJ United Kingdom Page 4 of 8 Confidential RIO GRANDE 00001313 Ifto Notzon: Nora Lee Notzon 4 Lower Sloane Street London, SW1W 8BJ United Kingdom Any Party may change its address for notice or other communications at any time by furnishing notice to the other Party in the manner described above. 4. Entire Understanding. This Agreement and the documents referenced herein contain the entire understanding between the Parties and supersede any and all other agreements, understandings and representations between the Parties except as otherwise specifically provided. 5 Waiver/ Modification/Amendments. The waiver of a breach hereunder may be effected only by a writing by the waiving Party and shall not constitute, or be held to be, a waiver of any other or subsequent breach, or to affect in any way the effectiveness of such provision. Failure by any Party hereto to at any time require strict performance by any other party of any provisions of this Agreement shall not waive, affect or diminish any right thereafter to demand strict compliance and performance therewith. Any modification or amendment of this Agreement shall be effective only if made in writing and signed by all Parties hereto. 6 Jurisdiction/Venue. The laws of the State of Texas shall govern the execution, effect, application, interpretation, validity, performance and enforcement of this Agreement and the rights, duties and privileges of the respective Parties hereto. All litigation between the Parties with respect to this Agreement or the matters described herein shall be conducted in the federal or state courts located in Houston, Harris County, Texas. 7. Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed and delivered shall be an original and all of which when executed shall constitute one and the same instrument and agreement. 8 Drafting. Each Party hereto acknowledges that each Party was actively involved in the negotiation and drafting of this Agreement and that no law or rule of construction shall be raised or used in which the provisions of this Agreement shall be construed in favor of or against either Party hereto because one is deemed to be the author thereto. 9. Counsel. Each Party hereto warrants and represents to the other Parties, that before executing this Agreement, he, she and it had fully informed itself of the terms, contents, and conditions of this Agreement and each had relied solely and completely upon his, her and its own judgment and that each has had the opportunity to seek and receive the advice of his, her and its legal counsel before entering into this Agreement. Each of the undersigned has carefully read and understands the effect of this Agreement and has had the assistance of independent counsel in reviewing, discussion, and considering all its terms. Page 5 of 8 Confidential RIO GRANDE 00001314 SIGNATURE PAGE FOLLOWS Page 6 of 8 Confidential RIO GRANDE 00001315 IN WITNESS WHEREOF, the undersigned have fully read the above, fully understand the contents and/or provisions thereof and hereunto set their hands as of the date and year first above written. HART: Glenn D. Hart ADVISOR: NOTZON ADVISORS LIMITED By: Nora Lee Notzon, Managing Director NOTZON: