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Home My WebLink AboutContract 28577FICHIEIx "H' ROAD REPAIR AGREEMENT BETWEEN THE CITY OF FORT WORTH AND FQUR SEVEN OPERATING CO., LTD. cliY sE�R��l( � �� CONTRAC�' � � This Road Repair Agreement, (Agreement}, is made and entered infio on this the 21 st daq of April, 2003, by and between the City af Fort Warth, Texas ("City"), a home rule municipal corporation af the State of Texas, located wi�hin Tarrant and Dentor� Counties, T�xas {Hereinafter re%rred to as the "City") and Four �evens Operating Ca., Ltd ("Operator") for tihe repa�r of certai:n streets and/or roadways within the City ofFort Worth, Texas as more fully described herein. WI�REAS, Operatar i� in the business of drilling gas we11s a,nd, in connection therewith, shall be engagad in drilling and production ac�ivities on property known generally as the Fossil Hill Lease, which abuts, is adjacent to, andlor is accessed by raadways wi�hin the City of Fort Worth; and WHEREAS, use o� the roadways bq the �perator for the purpose of performing the activities described hereinaba�e may cau�e darnage to the roadvvaps; and WHEREAS, th� Cit� and Operatar, for the mutual consideration hereinafter stated, desire ta enter into tltis Agreemen� for Operator to repair saic� roadways for the duration of the term of this Agreernent in consideration of Operator's use of said roadways for �he purpose of the activities describ�d hereinabove; IT IS NOW THEREFORE AGREED THAT: ARTICLE 1. �P� oB�zGaTzoN 1. Operatc�r shali repair damages caused by Operator ar its contractors, subcantractors, employees, and agents, �cluding ordinary wear and tear, if any, to roadways that abut t�e above- described property being used by Operator for �he drilling and production of gas wel�s pursuant to a Gas Well Permit issued to Operatar, The repair obiigation shall continue even if the Gas Well Permit is amended �a a11ow for the drilling of a.dditional gas we11s. Thi� obligation shall continue during the term of this Agreement, and Operator sha.11, prior to the termination oi this Agreement, as provided herein, repair such damages to such roadways, excluding ardinary wear and tear, if any, to the condition in which such roadways existed prior t� the execution of this Agreement. Operator shall make a videatape of such roadways prior tn the start of Operator drilling and operation of its gas wells and shall provide a copy o� the videatape to the Director of Transpartation and Public Works. Operator sha11 notify the Director of Transportation and Public Works when drilling or fracing operations are cornplete sa that the Director of Transportation and Public Works aan determine if repairs are required. 2. In connection with its obligation to repair said roadways, Qp�rxt� �b�� •{�� materials of the same or better quality than those uti�ized to surface and/or rep.aar �-,�� -am� �� prior to execution af this Agreement and in accflrdance with the current standards s�pe��iea�rn��-�' �-- � - � - --- the Citq. Deviation fram �he ma.terials described herein shall nat be permitted withaut the prior written consent of the Dir�c�ar of Transporta�ian and Public Works. Repairs shall be completed in accordance with standaxd engineering practices acceptahle to the City, 3. �perator shall repair the damage to the roadwaya at i�s sQle cost and expense. 4. During the term of this Agreement, Operator shall periodically inspect the roadways during drilling, fracture stimulation or rewo:rlcing of the gas weli to determine whether o:r not any damage has occurred as a result of Operator's activities. Immediately upon discovering the existence of any such damage to the roadways, Operator shall undertake to repair and/or remedy same. Upon discpvery of damage by the Operator, the Operator will have 48 hours ta cantact the Director of Transp�rtatian and Public Warks to work out a schedule of repairs. Repairs shall take place within 30 days or immediately if the damage aff�cts the immediate heal�h and safety of individuals. ARTICLE 2. TERM OF AGREEMENT This Agreemen.t shall commence upon the date indicated above and shall continue in full forc� a.nd effect until Operator has completed and/or permanently discontinued th� activities upon the roadways, as described hereinabove. ARTICLE 3. INSURANCE AND INDENINITY The �perator shall provide ar cause ta be provided the insurance described below for each well unless a Gas Well Permit has been is�ued wherein such insurance has been provided for the issuance of the Gas Well Permit under the terms and conditions described in the Fort Worth "Gas Drilling and Production" Ordinance and such insurance to cantinue until the well is abandon�d and the site r�stored. In addition to the bond or letter of credit required pursuant to this Agreement and th� Fort Worth "Gas Drilling and Production" ordinance, the Operator shail c�,rry a policy or policies of in�urance issu�d by an insurance company or companies autharized to do business in Texas. In the event such insurance policy or palicies are cancelled, the Gas Well Permit shall be suspended on such date of cancellation and the Qperator's right to operate under such Gas W�11 Permit shall immediately cease until the Operator files additional insurance as provided herein. General Requirements applicable to all policies. a. The City, its officials, employees, agents and officers shall be endorsed as an "Additional Insured" to all policies except Emplo�ers Liability coverage under the Operatar's Workers Compensatian policy. b. All policzes shall be written on an occurrence basis except for Enyimx�_n_ent�L Pollutian Liability {Seepage and Pollution coverage) and Exce s�� ,��brx��' Liability, which may be on a claims-made basis. � ° v4l � ° �^x � ��, ��, - _� Page 2 � __. �--�---- c. All policies shall be written by an insurer with an A-: VIII or bet�er rating bq t�e most current version af the A. M. Best Key Rat'rng Guide or with such other financially sound insurance carriers acceptable to the City. d. Deductibles shall be listed on the Certificate of Insurance and sl�all be on a"per occurrence" basis unless otherwise stipulated herein. e. Certificates af Insurance shali be deliver�d to the City of Fort Worth, De�elopment Department, 1000 Throckmorton Str�et, Fort �worth, Texas 761Q2, evid�ncing aIl the required coverages, including endorsements, prior to th.e issuance of a Gas Well Pernut. f. All palicies sY�all be endorsed with a waiver of subrogation providing rights oi recovery in favor of the City. g. Any failure on part af the City to request required iu�surance documentation shall not constitute a waiver of the insurance requirement specified herein. h. Each policy shall be endorsed io provide the City a minimum thirty-day notice of cancellation, non-renewal, andlor material change in paliey terms or coverage. A ten days notice shall be acceptable in the event of nan-payment of premium. i. During ihe term of the Gas Well Permit, the Operator shali r�port, in a timely manner, to the Gas Tnspector any known loss occurrence wh�ch aould give rise ta a liabiIity claim or lawsuit or which could result in a praperty �oss. j. Upon request, certified copies nf all insurance policies sha11 be furnished to the City. 2. Standard Commercial General Liability Policy. This coverage must include premises, operations, blowout or explosion, products, campleted aperations, sudden and accidental pollution, blanket contractual liability, underground resources damage, broad form property damage, independ�nt contractors pratective liability and persanal injury. This coverage shall be a minimum Combined Single Limit of $1,000,000 per occurrence for Bodily Injury and Praperty Damage. E�cess or Umbrella Liability $ 5,40Q,Q00 Excess, if the Operator has a stand-alone Environmental Pollution Liability {EPL} policy. $10,000,000 Excess, iiti�e Operator does not ha.ve a stand-alone EPL policy, Coverage rnust include an endarsement for sudden or accidental pollution. If Seepage and Pollution coverage is written on a"clairns made" basis, the Operator must maintain continuous coverage and purchase Extended Coverage Period Insurance when necessary. 4. Workers Compensation and Employers Liability Insur�nce a. Workers Cornpensatian benefits shall b� Texa.s Statutory Limits, b. Employers Liability shall be a minimum of $SOO,OOa per accident. c. Such coverage shall include a waiver of subragation in favor of the City and provide coverage in accordance with applicable Stat� and Federal laws. Automobile Lia6ility Insurance _ _ _, a. Cambined Single Limit af $1,004,000 per occurrence for Bodily Inju�y ,a�d l��c�p�� Damage. � b. Coverage must include all owned, hired and not-owned a�utamobiles. �'J�V � �'��`�� :'`�� Page 3 . -_ --- - - `.y 6, Certificates of Insurance a. The company must be admitted or approved ta do business in the State af Texas, unless the coverage is written by a Surplus Lines insurer. b. The insurance s�t forth by th� insurance company must be underwritten on forms that have been approved by the Texa� �tate Board af In,surance or ISO, or an equivalent policy £ornn acceptable to the City. c. Sets farth all endorsements and insurance caverage according to requir�ments and instructians contained herein. d. Shall speciiically set forth the notice oi cancellation, iermination, or change in coverage provisions to the City. All policies shall be endorsed to read "THIS POLICY WII.L NOT BE CANCELLED OR NON-RENEWED WITHOUT 34 DAYS ADVANCED WRTTTEN NDTICE TO THE OWNER AND THE CITY EXCEPT WI�N THIS POLICY IS BEING CANCELLED FOR NONPAYMENT OF PRENIIUM, IN WHICH CASE I O DAYS ADVANCE WRITTEN NOTICE �S REQUIltED". e. Original endorsements affecting coverage required by this section shall be fixrnished wrth the certi£'icates o£ insurance. 7. The cancellation of any insurance for the sole purpose of the repair of roadways will not release the obligation of the Opera�or to meet all requirements of insurance and bonding under the Fart Worth "Gas Drilling and Production" Ordinance. S. Operator shall and hereby does indemnify, defend and save harmless the City, its o£f.icers, agents and employees from all suits, actions or claims of any character, name and description hrought fbr or an account of any injuries or damages received as sustained by any person, persons or property on account oi the operations oi the Operatar, his agents, employees, contractors or subcontractars; or on account of any negligent act af fault of the Operator, his agenis, employees, contractors or subcantractors in cor�nection wrth the obligations under this Road Repair Agreement; and shall pay any judgment, wifh casts, which may be obtained against the City grawing out of such injury or dama,ge. ARTICLE 4. PERFORMANCE BONDS 1. Operator shall pra�id� a performance bond, unless a performance bond has been provided for the issuance of a Gas Well Permit unde3r the terms and conditions described in Fart Worth "Gas Drilling and Praductian" ordinance, in an amount not less th�n the amount necessary �o repair the roadways, as determined by the City Director of Transportation and Public Works. 2. Priar to the beginning any activity pursuant to the issuance of a Gas Well Permit, unless a performance bond has been pravided for the issuance of a Ga� Well Permit under the terms and conditions described in the Fort Worth "Gas Drilling and Productivn" �d3_n� _ Operator shall provide the Gas Ir�spector w;th a security instrument in the form a£:,a '�jpr�c� !a.r ;�� irrevocable letter of credit as follows: Page 4 �y� � N�SL�N�is"l�nf�:u �� i�, ��. i a. Bond. A bond shall be ex�cuted by a reliable banding or insurance institution authorized to da business in Texas, acceptable to the City. The bond shall become effective on ar befare the date the Gas Well Permit is issued a:nd shall remain in force and effect for at least a period of six (6) months after the expiration of the Gas Well Permit term or u�ntil the well is plugged and abandoned and the site is restored, whichever occurs frst, The Operatar shall be listed as principal and the instrumenf shall run ta the City, as obligee, and shall be eonditioned that the Operator will comply with the terms and regulations af this Ordinance and th� City. The origina,l band ahall be submitted to the Director of Transportation and PuUlic Works with a capy of the same provided to the City Secretary and the Gas Inspectar. b. Letter of Credii. A letter of credit shall be issued by a reliable bank authorized to do husiness in Te�as and shall become effective on ar befoare the date the Gas Well Permit is issued. The lettar of credit shall remain in force and effect for at least a period of six (b) months after the expiration �f the Gas Well Permit term. The City shall be authorized to draw upon such letter of credit to recover any fines or penalties assessed under this ordinance. Evidenee of the execution of a letter af credit sha11 b�e submitted to the Director of Transportatifln and Public Works submitting an original signed letter of credit from the banking institutian, with a copy of the same provided to the City Secretary and the Ga.s Inspeator. If the Letter of Credit is for a time period less than the life of the welt as requir�d by Qrdinance Num�er 14880, Four Sevens Operaiing Ca., Ltd. agrees to either renew the Letter of Credit or replace the Letter of Credit with a bond in the amount required by the City of Fort Worth Ordinance Number 14880, on or before 45 days prior to ti�e expiration date of the Letter of Credit. If Four Sevens Dperating Co., Ltd. fai1� to deliver ta the City of Fort Worth either the renewal Lett�r of Credit or replacement bond in the appropriate amount on or before 45 days pria:r to the expiration date of the Letter af Credit, the City of Fart Worth may draw the entire face amvunt of th� at�ached L�tter of Credit to be held by the City of Fort Worth as security for Four Sevens Operating Co., Ltd's performance of its abligations under Ordinance Number 14880. a Whenever the Gas Inspector or the Director of Transpartation and Public Works Department finds that a default has accurred in the performance of any requirement or condition imposed by this Agreement, a written notice shall be given to Operator. Such notice shall specify the work to k�e done, the es�imated cost and the period o£ time deemed by the Gas Tnspector or the Director af Transportation and Public vvorks Department to be reasanably necessary for the compl�tion of such work. After receipt of such notice, the Operator shall, within the time therein specified, either cause or require the wazk to be parformed, or faiiing to do so, shall pay over ta the City ot�e hundred twenty-five perc�nt {125%) of the estimated cost of doing ihe work as set £ortt� in the n�tice. d. The City shall be authorized to draw against any �rrevocable letter of credit or bond to recover such amount due from Operatar. Upon receipt of such mor�ies, the City shall proceed by such mode as deemed convenient to cause the r�quired work to be perFor�ned and completed, but no liability shall be incurr�d other than for the expend�� - in hand.. j ' � � ��r� � "i .. �=�yr „y'( f �1' ��f9{ PagG 5 e. In the event Operator does not cause the work to be perFormed and fails or refuses to pay over to the City the estimated cost of the wark ta be done as set forth in the notice, or the issuer of the security instrument refuses to honar any draft by the City against the applicab�e irrevocable letter of credit or bond the Ci�y may proceed �o obtain complia.r�ce and abate the default by way of civil action against Operator, or by criminal action against the Operator, or by both such methods. f. The cancej�ation of any bond or letter of credit for the sole purpose of the repair of roadways wi11 not release the obligation of the Operator to meet aIl requirements of insurance and banding under the Fort Worth "Gaa Drilling and Pxoductian" O:rdinance. Any bond required by the Fort Worth "Gas Drilling and Production" Ordinance shall stay in full force and effect until the terms and conditions set out in the �rdinance are met. 3. If the cost of the completing the repair is an amount of $15,000 or less, as determined by the Director af Transpartatian and Pu�lic Works, cash in th� amount nec�ssary to complete the repairs, as determined by the Director oi Transportation and Public Works, may be deposited with a bank or escrow agent pursuant to an escrow agreement acceptable and approved by the City ensuring completion of the repair. ARTICLE 5 MISCELLANEOUS PROVISIONS 1. Dperator understands and agrees that Operator, its employees, servants, a.gents, and representatives shall at no time represent themsel�es to be employees, servants, agents, and/or representatives of the City. The City shall not have any control over the means or methods by which Op�ratoz shall perform its obligations hereunder. Operatar shall furnish all equipment and materials necessary to perform hereunder and shall at all tirnes be acting as an indepe:nde:nt Operator, 2. By entering into this Agreement, the City does not waive, nar shall it be deemed to vvaive, any immunity ar defense that would athervvise be available to it against claims arising by third parties. 3, This Agreement represents the entire agreement between Operator and City for repair ai roadways and supersedes all prior negotiations, representations, andlor agreements, either written or oral. This Agreement may be amended only by written instnzment signed by � the governing body of the City or those authorized to sign on behalf af the City's governing body, ARTICLE 6. FORCE MA7EURE Events of Farce Majeure shall mean any contingency or cause beyond the reasonable cantrol of a pariy including, without limitation, �cts of God or the public enemy, war, riot, civil commotaon, insurrection, government or de facto gavernment actian (unless ca �;� ��:,r — omissio:ns of the party), fires, explosions, rain or other weather delays, floods, stri�e�y ��w��•:�q or work stoppages. , Page b .�a�. /... _�� w._� �/ A�iy V � R �' ��iL� ARTICLE 7. AS SIGNABILITY/CONSENT Except as atherwise provided her�in, or except as may be hereafter determined by the parties, no party to this Agreement may sell, assign, or transfer its interest in this Agreernent, or ar�y O� 1�5 T1g%it, duties, or obligations hereunder, without the prior written consent af the ather partq. Whenever the consent or the approval of a party is requi�ed herein, such party shall not unreasonably withhold, delay, or deny such consent or approval. Operator may assign this Agreement to any successor entity to whom the applicable Gas Well Permit has been assigned upon vvritten notice to the City of sa.id assignment. ARTICLE S. NOTICE Any notice given by one party to the other in connec�ian with this Agreement shall be in writing a,nd shall be by personal delivezy; sent by regis�ered mail or certified mail; or by United States Mail, return receipt requested, postage prepaid; to: CITY: Office of the City Manager City of Fort Worth, Texas 1000 Throckmorta�. Street Fort Warth, Texas 76142 OPERATOR Four Sevens Operating Co., Ltd. 777 Taylor St., Suite 109Q Fort Worth, Texas '76102 Notice shall be deemed to have been received on the date of receipt as shown on the return receipt or other written evidence of receipt. ARTICLE 9. MOD7FICATION No waiver ar madification of this Agreement or of any covenant, conditian, limitation herein contained shall he valid unless in writing and duly executed by the party to be charged therewith. Na evidence of any waiver or modification shall be offered or received in evidence in any proceeding arising between the parties hereto aut o� or affeeting this Agreement, or the rights or obligations af the parties hereunder, uniess such waiver or modification is in writing, duly executed. The pa.rties further agree that the provisians of this Article wxll not be waived unless as herein set forth. ARTICLE 10. �AVINGS/SEVERABILITY In the event that any one ar more of the provisions hereoi contained in thi�s Agreement shall for any reason be held to be invalid, illegal, or unenfarceable in any respect, s�c�h ira�raJidi�,�, i illegality, or unenfarceability shall not effect the ather provisions, and the Agr�arr�� ;�i�I�� Page '1 � �'�� .��1�, ��W. construed as if such invalid, illegal, or unen£orceable provision had never been contained in tfus Agreernent. ARTICLE 11. GOVERNING LAW �ND VENUE This Agreement shall be construed under and governed by, and in accordance with the laws of the State o£Texas, and venue for a.ny action arising under the terms and conditions o£t�s Agreement shall lie in the state courts located in Tarrant County�, Texas o:r the United States District Court for the Narthern District of Texas, Fort Worth Division. ARTICLE 12. ENTIRE AGREEMENT This Agreement and the exhibits attached thereto, constitute the en�ire agreement amang �he parties hereto with respect to the subject matter herea£, and supersede any prior understandings or written or oral agreements between the parties with respect ta the sub�ect matter of this Agr�ement. No amendment, modification, canceilation or alteraiion of the terms af this Agreement shall be binding on any party hereto unless the same is in writing, dated subsequent io the date hereaf, and is duly authorized and executed by the parties hereto. ARTTCLE 13. WAIVER OF TERMS AND CONDITIONS The £ailure of either party to enforce or insist upon co�pliance with any o� the terms ar conditions of t�is Agreement shall not constitute a general waiver or relinquishment of any such terms Qr conditions, but the same shall be and remain at all times in fiill force and ei�ect. ARTICLE 14. CAPTFONS The captions contained in this Agreement ar� for informational purposes only and shall not in any way affect the substantive terms ar conditions ofthis Agreement. ARTICLE 15. COUNTERPARTS This Agreement may be exacuted in any number of counterparts, each ofwhich shali be deemed an ariginal, and constitute one and the same instrument. IN WITNESS �EOF, the parties do hereby affix their signatures and enter into this Agreement as oithe day of �{ � . 20� . ATTEST: GITY OF FORT WOR�' 1 �;�� --� �. �� ;��; t � Pag� 8 � , � � i�} . �- . .t � _ City cret' ry '`'� By. _ G J�c , City Manager APPROVED AS TO FORM AND LEGALITY: David Yett, City Attorney By: ��/G�i %�G�D�t- STATE QF TEXAS § COUNTY OF TARRANT § � � % �' 1 � _� � � ,. f� + Larry D. $rogdon Explaration Manager Four Sevens Qperating Co., L�d. B�fore me, the undersigned notary pubiic, vn this day personally appeared Gary Jackson, the City Manager of the City of Fort Worth, Texas, knawn ta me to be the person wriose name is subscribed ta the faregoing instrament, and acknowledged to me that he/sh� executed the instrumEnt for the purposes and cansideratian therein express�d. Givez� under my hand and s�al of office this � day of �� , 20` �ti*n:...p�,5 PAiSY CUx ` � �� NpYARY �U�LIC �,� �}P. State of iexas No ary Public �� :.• Comm Exp 12-58-20Dd . „ �„ ...�. „,� . o �,-.. . sTATE oF i P,;.;�,�., COUNTYOF ' � � � Before me, the undersigned authority, a Notary Public in and for the State of Texas, on this day personally appeared �_u,i� �� i t,�. __ c�.= l L�, � , known to me to be the person whose �ame is sub�aribed tv the foregomg instrume , and acknowledged to me that the same was the act of � ' ,,�.r ,�� „ `�e corporaiion} and that he executed the same as the act of said � � � � ,; _ - ' � -,�.�;; ; � ,.,v � � . erp�ration) for the purposes and consideration therein expressed and in the c�iacity t�ein sta� . � Given under my hand and seal of t�ffice is'�,'.. y af 4 1�, _/^�.,1�24�'� BQ�I0�8p�I�� y I �0��4 l��a��r'+` r�+ • � I � � � o� � �� r'' i� � �'".� o � _ �i 1 � � ' - � x _'� _ � � � �':, � Notary Public R ; e g � ■ R � � n �p � � %9� : � a 0 • 0 5► � � '� �'+ �� •�a � �� • �� ,�aoo��•s�� V�U �� d- r�`�.�4�E�� . 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PBHL 13 I concnaxsfs �41.2C� ( �r�T,l 7¢.�e' ��' �B.BS � �z�� 4�]1.�82' a , , �� . �� a o��e. , �BHL 1k ` ° � ix a4. � I eraa d j� KFllHEM it �� I• � pt{ I� �� ILNS NIO XIFE Well 57te 4 �i� � 10!!WP d hLN� �_ 1f I �' o ^�� 33ti.90' , P 1483.02� �� I d a .3z, ��a� �� g � � � � ��a� � � �l . � � � � � � � • - a x� �. � ' � I � . � Z' . . � . . � Slls #3 Slte �I4 i -�� .�� S1T "C'� BiLL ADAMS March 25, Zfl03 President �� ' � � �/ � � Ci�� of Fort Worth 1400 Throclanarton Street Fo�-� Warth, TX 761 Q2 Dear Sir ar Madam: Texas Banlc {"Banlc") hereby establishe� an Irrevocable Letter of Credit ("Credit") in favor of the City of Fort Worth {"Beneficiar�') for a sum not exceeding the aggregate amount of Fifty Thausand Dallars ($SO,OOQ.OQ). These funds shall be made availabl� by Beneficiary's c�rafts drawn on Banit at 300 West 7t�, Street, Fort Worth, TX 7�1Q2 (or such other address that Bank inay provide Beneficiary with written notice of in the �uiure) and accvmpanied by the signed written statements or documents indicated bc;low. Drafts and said signed written state�nents and documents must be presented to Bank during regular business hours, on any Business Day, only in person, by mail, or by express delivery service. `Business Da�' zneans any day on which banks Iocated �n FQrt Worth, Texas, are not �.uthorized or required to close. 1. Draft Terms and Conditiflns. Bank shall honor the drafts submitted by Beneficiary undei the fallowing terms and conditions: (a) presentatian of tbe original Credit (as modi�ed below) to Bank; (b) a signed statement of Beneficiary {vwith szgnature notaf•ized } stating that Four Sevens Operati�g Co., LTD ("Four Se�ens") has failed �o honor their contracuz�al agreement with the City of Fort Worth, Texas with regard to # 2 Fassil Hill Well as required by Qrdinance Number 148$0 or the City of Fart �orth Raad Mainienance Agreement to wl�ich Four Sevans is a Party. Since this Credit rrxay be in effect for a period that is less than the period that the #2 Fassil HiII Well may be in existence, for the purpose af subpart (b) of the foregoing terms aud co�ditions, Beneficiary may draw upon the full ainount o� credit available under thi� Credit if Four Sevens does not ohtain a renewal or extensio� of this Credit ar a replacenr�ent ta this Credit, in each case in an amount not less that $50,000.00, on or before 45 days prior to Expiration Date of this Crecli� (as same rr�ay be extend�d froxn time to time). Pravided that Seneficiary strictly conlplies with aIl terms a.�1d conditions as set forth abave and as otherwise prescril�ed in this Credit, Bank shall not dishonoz a.ny drafts submitted by Be�eficiary unless (i} the draf� is sul�rnitted after tl�� Expiratian Date or (ii) tl�e full amount of Credit available under this Iine has Ueen drawn. t]pon Banlc's honor af sueh drafts and payment to Beneficiary, Banlc, anc� th� fuil (Re�ised 5/2$19$) 30U West 5cventh St. Fort Worth, Texas 76102 (S l7) 85p-U054 Fax {817) 850-005y E-Mail: bill.adams@texasbank.com amount of credit available under this Credit has been drav�n, shall be fully discharged of its obligatians under tlus Credit and shall not thereafter be obligated to make any further payments under this Credit to Beneficiary or any ather person or entity. Beneficiary shall have z�o recourse againsi Bank for any amount paid under �his Credit after Banlc honors any draft ar ather document which complies strictly with this Credit, an.d which on its face appears otherwise in order but which is signed, issued, or presenied by any party or under the name of any party purporting to act fo� Benei'iciary, purporting to claim through Benefzciary, or pasing as Beneficiary. Benefici�.ry shall return to Bank any funds received by Beneficiary in axcess of the Credii's ma�imum drawing amount. 2. Use Restrictions. A11 draf�s must be marked "DRAWN UNDER IRREVOCABLE LETTER OF CRED7T NO. 608 DATED March 2S, 2002." Only Beneficiary may complete a draft and accompanying statements or documents required by this Credi� and make a draw under this Credit. Partial draws are permitted undar this Credit. If partial draws are pernlitted under this Credit, a copy of this Credit must accompany eacln draft with the original Credit accompanying ihe final draft. Sanlc's hanor a�` draf� shall automatically reduce �he amount of credit available unc{er this Credit by the amount vf the draft. 3. Er.piration Date. This Credii shall expire ("E�biration Daie") upon the earlier of 9Q da�rs from date for First Production which dafe wi11 be providad by ihe natural gas purehaser, and all drafts and accompanying statements or documents must be presanted to Bank on or before that date and time; or (h) the day fhat Bank honars a draw under which the full amount of this Credit is drawn. 4. Assignment or Transfer. This Cradit shall be nantransferable, except for: (a) a transfer by direct op�ration af law to the original Beneficiary's administrator, executor, banlcruptcy trustee, receiver, liquidator, successor, ar other representatives at law; and (b) the fi�st immediate transfer by szicll legai representative to a third party after express approval of the applicahle governmental body (judicial, adrr�inistrative, or executive). 5. Timing oiDisl�onor. To the extent not prohibited by law, Bank s�all be eniitled to ho�or or dishonor ar�y draft suhmitted in ca�ection with this Credit withing five (5) calendar days not counfing the day Bank receives the draft. Although Bank shall be entitled to honor a draft subsequent to the Expiration Date, Beneficiary shall not be eniitled to submit a draft ar pravide Bank with any documents in support of a draft after the E�piration Dat�, If Banlc t'ails ta make payment on the appropriate paymenfi date because o� an Act of Gvd or other act bey�ond the control of Bank, the amaunt af th� payment will automaiically be increased by a daily amount of interest equal to the per diem rat� tha� is derived from the Prime Rate set forth in The Wall St�eet Jo�r�nal from time to time, as applicable, far each day that the payment is delayed and Bank's sole abligaf�on and liability shall be io make the payment due toge#her with the additional interest cornputed as provided above. 6. Modification. This Cr�dit sets forth in full the terms ofBank's undertalcing. A modification or waiver of any of Bank's or Beneficiary's obligations or rights under this Credit (Re�ised 5/28/98) Irrevocable Letter of Credit Page 3 must be contained in writing signed by Bank. A vwaiver on one occasion shall not constitute a waiver on any other occasion. 7. Complxance Burden. Under no crrcums#ances shall Bank ha held respansible for any impossibility or oiher difficulty in Beneficiary achieving strict compliance with the requirements of ihis Credit. Beneficiary undexstands and acknowledges that (a) unless and until the present w�ording af this Credit is amended with Banlc's prior written consent, the burden of complying strictly with sucl� wording remains solely upon Beneficiary, and (b) Bank is relying upon ihe lack of such amendment as canstituting B�neficiary's initial and continued approval af such wording. 8. Nan-Severability. If �ny aspect of this Credit is ever declared unenforceable for any reason by any court Qr govermnent body havir�g �urisdiction, Bank's entire engagement under this Credit shall be deemed null and �vaid, and both Bank and Beneficiary shall be restored to th� position each would have occupied with all rights avai�able as though this Credit had never occurt'ed. This non-severability provision shall override all o�her provisions in this Credit, no matter where such provision appears within the Credit's body. 9, Choice of LawlJurisdictio�n. This Credit shall be governec� by the laws of ihe State of Texas io the extent nvi gov�rned by the UniForm Customs and Practice for pocumexltary Crediis (1993 Revision.), Internatianal Chamber of Commerce Publication No. 500, and to the ext�nt such iaws are not inconsistent with the tertns of this Credit. VENT.TE OF ANY LTTIGATYON INV4LVING THIS CREDIT MUST BE MAINTAINED IN A COURT OF COMPETENT JURLSDICTION LOCATED IN Tarrant COUNTY, TEXAS, WHERE THZS CREDIT I5 PERFORMABLE. Sincerely, TE S �� W. H. Adams, President (Revised 5/28/9S)