form8-k.htm

0001264931-08-000485.txt : 20081021 0001264931-08-000485.hdr.sgml : 20081021 20081021162555 ACCESSION NUMBER: 0001264931-08-000485 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20081020 ITEM INFORMATION: Entry into a Material Definitive Agreement FILED AS OF DATE: 20081021 DATE AS OF CHANGE: 20081021 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX ENERGY RESOURCE CORP CENTRAL INDEX KEY: 0001373683 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310] IRS NUMBER: 205408832 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-52843 FILM NUMBER: 081133621 BUSINESS ADDRESS: STREET 1: 1001 BAYHILL DRIVE STREET 2: 2ND FLOOR, SUITE 200 CITY: SAN BRUNCO STATE: CA ZIP: 94066 BUSINESS PHONE: 650-616-4123 MAIL ADDRESS: STREET 1: 1001 BAYHILL DRIVE STREET 2: 2ND FLOOR, SUITE 200 CITY: SAN BRUNCO STATE: CA ZIP: 94066 FORMER COMPANY: FORMER CONFORMED NAME: EXOTACAR, INC. DATE OF NAME CHANGE: 20060823 8-K 1 form8-k.htm PHOENIX 8-K 10.20.08 form8-k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 13, 2008

Phoenix Energy Resource Corporation

(Exact Name of Registrant as Specified in Charter)

Nevada

(State or Other Jurisdiction of Incorporation)

333-137293

(Commission File Number)

20-5408832

(I.R.S. Employer Identification No.)

1001 Bayhill Drive

2nd Floor – Suite 200

San Bruno, CA 94066

(Address of Principal Executive Offices) (Zip Code)

(650) 616-4123

(Registrant's Telephone Number, Including Area Code)

Copies to:

JPF Securities Law, LLC

19720 Jetton Road

3rd Floor

Cornelius, NC 28031

(704) 897-8334 Tel

(888) 608-5705 Fax

This Current Report on Form 8-K is filed by Phoenix Energy Resource Corporation, a Nevada corporation (“Registrant”), in connection with the items described below.

ITEM 1.01 Entry Into A Material Definitive Agreement

Beginning in September of 2008 the Registrant initiated several talks to enter into certain contracts for the assignment and lease of oil and gas properties in Kentucky. In addition the Registrant has been negotiating an operating agreement for the exploitation of certain oil and gas properties. As of October 13, 2008 we completed our negotiation and entered into the agreements described below.

On September 24, 2008, the Registrant entered into an Assignment of Overriding Royalty Interest (the “Royalty Assignment Cornell”), by and among Mark A. Cornell, for and in consideration of the sum of Ten Dollars ($10.00). Under Royalty Assignment Cornell, the Registrant agreed to grant, sell, transfer, and assign unto Mark A. Cornell, his heirs and assigns a five (5%) percent overriding royalty interest in and to an oil and gas lease and oil and gas wells, including renewals, extensions and amendments. Exhibit 10.1 is a copy of the agreement.

On October 13, 2008, the Registrant entered into an Assignment of Oil & Gas Lease (the “Lease Assignment Cornell”), by and among Mark A. Cornell and Barbara Cornell, husband and wife, (the “Assignors”), for and in consideration of the sum of Ten Dollars ($10.00). Under Lease Assignment Cornell, the Assignors agreed to grant all of their right, title, and interest in certain oil and gas leases and the oil and gas wells, including any renewals, extensions and amendments thereof. Exhibit 10.2 is a copy of the agreement.

On September 24, 2008, the Registrant entered into an Assignment of Overriding Royalty Interest (the “Royalty Assignment Robbins”), by and among John W. Robbins Revocable Trust of 2008, John W. Robbins, Trustee, for and in consideration of the sum of Ten Dollars ($10.00). Under Royalty Assignment Robbins, the Registrant agreed to grant, sell, transfer, and assign unto John W. Robbins Revocable Trust of 2008, his heirs and assigns a five (5%) percent overriding royalty interest in and to an oil and gas lease and oil and gas wells, including renewals, extensions and amendments thereof. Exhibit 10.3 and is a copy of the agreement.

On October 1, 2008, the Registrant entered into an Assignment of Oil & Gas Lease (the “Assignment Robbins/Cornell”), by and among John W. Robbins (the “Assignor”), and Mark A. Cornell and Barbara Cornell, husband and wife (the “Assignors”), for and in consideration of the sum if Ten Dollars ($10.00). Under Assignment Robbins/Cornell, the Assignor and Assignors agreed to grant all of their right, title, and interest in certain oil and gas leases and oil and gas wells, including any renewals, extensions and amendments thereof. Exhibit 10.4 is a copy of the agreement.

On September 24, 2008, the Registrant entered into an Operating Agreement (the “Agreement”), by and among Jmack Energy, LLC, a Kentucky limited liability company, (the “Operator”). Under the Agreement, the Registrant retains the Operator as an independent contractor for the drilling management and operation of the wells and leases setout in Exhibit 10.5. In exchange for the services to be rendered, the Registrant shall pay the Operator as compensation an amount equal to a five (5%) percent overriding loyalty interest of all oil and/or gas produced from the aforementioned leases (the “Compensation”) held by the Registrant.

Pursuant to the terms of the Agreement,

(1)	The Compensation is payable within ten (10) days of the Registrant’s receipt of the sale proceeds received from the oil and/or gas purchaser.

(2)	The Registrant shall determine, with the input from the Operator, the depth said wells shall be drilled and the cost of said drilling before the Operator commences any drilling.

(3)	If the Registrant determines that any given well is capable of commercial oil and/or gas production, then the Operator shall commence completion and put such well on production within thirty (30) days of drilling as weather permits.

(4)	The Operator shall oversee the drilling of any well and their completion as well as the maintenance and operation of the well covered by the Agreement on a daily basis.

(5)

The Agreement will begin this year and expire if the wells set forth in Exhibit 10.5 prove to not be commercially productive or if the Operator fails to perform or observe any term, covenant, condition, or agreement required to be performed or observed by the Operator under the Agreement. Furthermore, the Agreement shall terminate if the Operator becomes insolvent or becomes unable to pay its debts.

ITEM 9.01 Financial Statements and Exhibits

Exhibit Number Description

10.1 Assignment of Overriding Royalty Interest

10.2 Assignment Oil & Gas Lease

10.3 Assignment of Overriding Royalty Interest

10.4 Assignment Oil & Gas Lease

10.5 Operating Agreement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	PHOENIX ENERGY RESOURCE CORPORATION

Date: October 20, 2008	By:	/s/ Rene Ronald Soullier
		Rene Ronald Soullier President

EX-10.1 2 ex10_1.htm EXHIBIT 10.1 ex10_1.htm

ASSIGNMENT OF OVERRIDING ROYALTY INTEREST

This Assignment of Overriding Royalty Interest is made and entered into this day of September, 2008, by and between PHOENIX ENERGY RESOURCE

COPORATION, a Nevada Corporation, whose address is 1001 Bayhill Drive, 2nd Floor, Suite 200, San Bruno, CA 94066, (hereinafter referred to as "Assignor") and MARK A. CORNELL, a married person, 706 Mount Olivet Road, Bowling Green, KY 42101, (hereinafter referred to as "Assignee").

WITNESSETH, NOWTHEREFORE, for and in consideration of the sum of TEN DOLLARS ($10.00) cash in hand paid, the receipt of which is hereby acknowledged and other good and valuable consideration, Phoenix Energy Resource Corporation and Assignors, do hereby grant, sale, transfer, and assign unto, Mark A. Cornell, Assignee, his heirs and assigns, a five (5%) percent overriding royalty interest in and to the following described oil and gas lease and the oil and gas wells, including any renewals, extensions and amendments thereof, as more particularly described as follows: SEE ATTACHED EXHIBIT A

This assignment of a five (5%) percent overriding royally interest is made subject to the terms and conditions of the aforementioned leases and the Assignor covenants to the Assignee, his heirs and assigns, that it is the lawful owner of the leases and/or assignments, and the rights and interests there under, and that it has good right and authority to sale, convey and assign the same.

TO HAVE AND TO HOLD unto said Assignee, his heirs and assigns, subject to the terms and conditions of the subject leases and assignments.

IN TESTIMONY WHEREOF, the Assignor, Phoenix Energy Resource Corporation, has executed the foregoing assignment on the day and date first above written. ASSIGNOR: PHOENIX ENERGY RESOURCES CORPORATION

Rene Ronald SouUier, CEO

STATE OF COUNTY OF

SUBSCRIBE, SWORN TO AND ACKNOWLEDGE: Ronald SouUier, CEO of Phoenix Energy Resources Corporate by and on behalf of said corporation, on this the ;2-» le by. Rene 'Corporation, 2008.

NOTARf PUBLIC - STATE AT LARGE My Commission Expires: <h&^- ■?>

PREP.

fley Walto

LANPHEAR^fe WALTON, P.L.L.C. P.O. Box 128

Bowling Green, KY 42102-0128 (270) 843-5500.

EXHIBIT A

Being a five (5%) percent overriding royalty interest in the Oil and Gas Leases assigned to Phoenix Energy Resource Corporation, a Nevada corporation, from Mark A. Cornell and Barbara Cornell, husband and wife, by Assignment dated October 13, 2008 and recorded in Lease Book, Page, in the Allen County Clerk's Office, which leases are more fully described as follows:

An oil and gas lease from Randall Harper and Eugene Harper, to Mark A. Cornell dated February 25,2008 and recorded in Lease Book 50, Page 524, in the Allen County Clerk's Office. (Lessors' source deed is recorded in Deed Book 144, Page 344 containing 4.70 acres, more or less)

An oil and gas lease from Randall Harper and Eugene Harper, to Mark A. Cornell dated September 30,2008 and recorded in Lease Book 50, Page 572, in the Allen County Clerk's Office. (Lessors' source deed is recorded in Deed Book 143, Page 179 containing 72.5 acres, more or less)

An oil and gas lease from Ricky Cornwell, to Mark A. Cornell, a married person, dated April 14,2008 and recorded in Lease Book 50, Page 528, in the Allen County Clerk's Office. (Lessor's source deed is recorded in Deed Book 244, Page 393 containing 20 acres, more or less)

An oil and gas lease from Curtis Martin and Julie Steinheimer, to Mark A. Cornell, dated June 30,2008 and recorded in Lease Book 50, Page 545, in the Allen County Clerk's Office. (Lessors' source deed is recorded in Deed Book 238, Page 539 containing 83 acres, more or less)

An oil and gas lease from Curtis Martin to Mark A. Cornell dated June 30, 2008 and recorded in Lease Book 50, Page 547, in the Allen County Clerk's Office. (Lessor's source deed is recorded in Deed Book 232, Page 347 and Deed containing 45 acres, more or less)

Being a five (5%) percent overriding royalty interest in the Oil and Gas Leases assigned to Phoenix Energy Resource Corporation, a Nevada corporation, from Mark A. Cornell and Barbara Cornell, husband and wife, and John W. Robbins, an unmarried person, by Assignment dated October 1, 2008 and recorded in Lease Book, Page, in the Allen County Clerk's Office, which leases are more fully described as follows:

An oil and gas lease from John Means and Patty Means, husband and wife, to Mark A. Cornell and John W. Robbins, dated April 14,2008 and recorded in Lease Book 50, Page 526, in the Allen County Clerk's Office. (Lessors' source deed is recorded in Deed Book 145, Page 293 containing 130 acres, more or less)

An oil and gas lease from Babs Adams and Julie Steinheimer, to Mark A. Cornell and John W. Robbins, dated April 14,2008 and recorded in Lease Book 50, Page 530, hi the Allen County Clerk's Office. (Lessors' source deed is recorded hi Deed Book 238, Page 539 containing 83 acres, more or less)

An oil and gas lease from Babs Adams to Mark A. Cornell and John W. Robbins dated April 14,2008 and recorded hi Lease Book 50, Page 532, hi the Allen County Clerk's Office. (Lessor's source deed is recorded hi Deed Book 232, Page 347 containing 45 acres, more or less)

EX-10.2 3 ex10_2.htm EXHIBIT 10.2 ex10_2.htm

ASSIGNMENT OF OIL & GAS LEASE

This Assignment of Oil & Gas Lease is made and entered into this 13th day of October, 2008, by and between MARK A. CORNELL and BARBARA CORNELL, husband and wife, 706 Mount Olivet Road, Bowling Green, KY 42101, (hereinafter referred to as "Assignors") and PHOENIX ENERGY RESOURCE COPORATION, a Nevada Corporation, whose address is 1001 Bayhill Drive, 2nd Floor, Suite 200, San Bruno, CA 94066, (hereinafter referred to as "Assignee").

WITNESSETH, NOWTHEREFORE, for and in consideration of the sum of TEN DOLLARS ($10.00) cash in hand paid, the receipt of which is hereby acknowledged and other good and valuable consideration, Mark A. Cornell and Barbara Cornell, husband and wife, Assignors, do hereby grant, sale, transfer, and assign unto Phoenix Energy Resource Corporation, Assignee, its successors and assigns, all of their right, title and interest in and to the following described oil and gas leases and the oil and gas wells, including any renewals, extensions and amendments thereof, as more particularly described as follows:

SEE ATTACHED EXHIBIT A

This assignment is made subject to the terms and conditions of the aforementioned leases and assignment and the Assignors covenant to the Assignee, its successors and assigns, that they are the lawful owners of the leases and/or assignment, and the rights and interests there under, and that they have good right and authority to sale, convey and assign the same.

TO HAVE AND TO HOLD unto said Assignee, its successors and assigns, subject to the terms and conditions of the subject leases and assignment.

IN TESTIMONY WHEREOF, the Assignors, Mark Cornell and Barbara Cornell, husband and wife, have executed the foregoing assignment on the day and date first above written. ASSIGNORS:

Mark A. Cornell Barbara Cornell

COMMONWEALTH OF KENTUCKY )

)

COUNTY OF WARREN)

SUBSCRIBE, SWORN TO AND ACKNOWLEDGED before me by, Mark A. Cornell and Barbara Cornell, husband and wife, on this the 13th day of October, 2008.

NOfARY PUBLIC - STATE AT LARGE My Commission Expires: Q(

LANPHEAR.& WALTON, P.L.L.C. P.O. Box 128

Bowling Green, KY 42102-0128 (270)843-5500 ,

EXHIBIT A

EX-10.3 4 ex10_3.htm EXHIBIT 10.3 ex10_3.htm

ASSIGNMENT OF OIL & GAS LEASE

This Assignment of Oil & Gas Lease is made and entered into this 1st- day ofOctober, 2008, by and between MARK A. CORNELL and BARBARA CORNELL, husband and wife, 706 Mount Olivet Road, Bowling Green, KY 42101, and JOHN W. ROBBINS, an unmarried person, 596 Sand Hill Road, Peterborough, NH 03458 (hereinafter referred to as "Assignors") and PHOENIX ENERGY RESOURCE COPORATION, a Nevada Corporation, whose address is 1001 Bayhill Drive, 2nd Floor, Suite 200, San Bruno, CA 94066, (hereinafter referred to as "Assignee").

WITNESSETH, NOWTHEREFORE, for and in consideration of the sum of TEN DOLLARS ($10.00) cash in hand paid, the receipt of which is hereby acknowledged and other good and valuable consideration, Mark A. Cornell and Barbara Cornell, husband and wife, and John W. Robbins, an unmarried person, Assignors, do hereby grant, sale, transfer, and assign unto Phoenix Energy Resource Corporation, Assignee, its successors and assigns, all of their right, title and interest in and to the following described oil and gas lease and the oil and gas wells, including any renewals, extensions and amendments thereof, as more particularly described as follows:

SEE ATTACHED EXHIBIT A

This assignment is made subject to the terms and conditions of the aforementioned lease and assignment and the Assignors covenant to the Assignee, its successors and assigns, that they are the lawful owners of the lease and/or assignment, and the rights and interests there under, and that they have good right and authority to sale, convey and assign the same.

TO HAVE AND TO HOLD unto said Assignee, its successors and assigns, subject to the terms and conditions of the subject lease and assignment.

IN TESTIMONY WHEREOF, the Assignors, Mark Cornell and Barbara Cornell, husband and wife, and John W. Robbins, an unmarried person, have executed the foregoing assignment on the day and date first above written. ASSIGNORS:

Barbara Cornell

COMMONWEALTH OF KENTUCKY )

)

COUNTY OF WARREN)

SUBSCRIBE, SWORN TO AND ACKNOWLEDGED before me by, Mark A. Cornell and Barbara Cornell, husband and wife, on this the /1 day of October, 2008.

NOTARY PUBLIC - STATE AT LARGE

Mv Commission Expires: QCl

: June 29.20/V; J

STATE OF NEW HAMPSHIRE

COUNTY

SUBSCRIBE, SWORN TO AND ACKNOWLEDGED before me by, John W. Robbins, an unmarried person on this the / day ofOctober, 2008.

- STATE AT LARGE My Commission Expires: ^ -,-J(5~ ~<

D. BaiTfe/walton

LANPHEAR ^WALTON, P.L.L.C.

P.O. Box 128

Bowling Green, KY 42102-0128

(270) 843-5500

DEIDREA.McGRATH-FISCHER

NOTARY PUBLIC My Commission Expires June 25,2013

EXHIBIT A

An oil and gas lease from Babs Adams and Julie Steinheimer, to Mark A. Cornell and John W. Robbins, dated April 14,2008 and recorded in Lease Book 50, Page 530, in the Allen County Clerk's Office. (Lessors' source deed is recorded in Deed Book 238, Page 539 containing 83 acres, more or less)

An oil and gas lease from Babs Adams to Mark A. Cornell and John W. Robbins dated April 14,2008 and recorded in Lease Book 50, Page 532, in the Alien County Clerk's Office. (Lessor's source deed is recorded in Deed Book 232, Page 347 containing 45 acres, more or less)

EX-10.4 5 ex10_4.htm EXHIBIT 10.4 ex10_4.htm

ASSIGNMENT OF OIL & GAS LEASE

WITNESSETH, NOWTHEREFORE, for and in consideration of the sum of TEN DOLLARS ($10.00) cash in hand paid, the receipt of which is hereby acknowledged and other good and valuable consideration, Mark A. Cornell and Barbara Cornell, husband and wife, and John W. Robbins, an unmarried person, Assignors, do hereby grant, sale, transfer, and assign unto Phoenix Energy Resource Corporation, Assignee, its successors and assigns, all of their right, title and interest in and to the following described oil and gas lease and the oil and gas wells, including any renewals, extensions and amendments thereof, as more particularly described as follows:

SEE ATTACHED EXHIBIT A

TO HAVE AND TO HOLD unto said Assignee, its successors and assigns, subject to the terms and conditions of the subject lease and assignment.

Barbara Cornell

COMMONWEALTH OF KENTUCKY )

)

COUNTY OF WARREN)

SUBSCRIBE, SWORN TO AND ACKNOWLEDGED before me by, Mark A. Cornell and Barbara Cornell, husband and wife, on this the /1?^P day of October, 2008.

V \ NOTARY PUBLIC - STATE AT LARGE

Mv Commission Expires: QCl

: June 29.20/V; J

STATE OF NEW HAMPSHIRE COUNTY

SUBSCRIBE, SWORN TO AND ACKNOWLEDGED before me by, John W. Robbins, an unmarried person on this the / day ofOctober, 2008.

- STATE AT LARGE My Commission Expires: ^ -,-J(5~ ~<

D. BaiTfe/walton

LANPHEAR ^WALTON, P.L.L.C.

P.O. Box 128

Bowling Green, KY 42102-0128

(270) 843-5500

DEIDREA.McGRATH-FISCHER

NOTARY PUBLIC My Commission Expires June 25,2013

EXHIBIT A

EX-10.5 6 ex10_5.htm EXHIBIT 10.5 ex10_5.htm

OPERATING AGREEMENT

THIS OPERATING AGREEMENT, made and entered into this dl day of September, 2008, by and between PHOENIX ENERGY RESOURCE COPORATION, a Nevada Corporation, whose address is 1001 Bayhill Drive, 2nd Floor, Suite 200, San Bruno, CA 94066, hereinafter referred to as "Leaseholder," and JMACK ENERGY, LLC, a Kentucky limited liability company whose address is 706 Mount Olivet Road, Bowling Green, KY 42101 hereinafter referred to as "Operator."

RECITALS

A. Leaseholder has a certain interest in leases in Allen County, Kentucky. These leases have been selected because of their potential for production.

B. Leaseholder through application of certain geological data, plans an extensive exploration program for oil and/or gas production on the above- mentioned leases with these wells being the subject of this Operating Agreement.

C. The Operator, by execution of this Agreement, represents and warrants that he has substantial knowledge and experience in the business matters and operations concerning the management and production oil and gas and is capable of independently and competently managing and evaluating the risks and merits of the production of oil and gas.

D. Through continuing research and development of geological data, Leaseholder and representatives will select the most appropriate drilling site taking into consideration the input and knowledge of the Operator.

E. The lease referred to herein are the leases recorded in the Allen County Clerk's office which are fully described in Exhibit "A" attached hereto and incorporated by reference.

NOW THEREFORE, for and in consideration of the mutual promises and benefits to each of the parties, the sufficiency of which is hereby acknowledged and other good and valuable consideration, the parties agree as follows:

ARTICLE I

The Leaseholder does hereby retain the Operator as an independent contractor for the drilling, management and operation of the well(s) located on the leases setout in Exhibit A and currently located in Allen County, Kentucky. In exchange for the services to be rendered by the Operator, the Leaseholder shall pay to Operator as compensation an amount equal to a five (5%) percent overriding royalty interest of all oil and/or gas produced from the above mentioned leases held by Leaseholder. Leaseholder shall pay to the Operator all sums due the Operator from the sale of oil and/or gas within ten (10) days of Leaseholder's receipt of the sale proceeds received from the oil and/or gas purchaser.

ARTICLE n WELL INTERESTS, DEPTH AND COSTS

1. Leaseholder shall determine, with input from the Operator, the depth said well(s) shall be drilled which depth may range from approximately feet to approximately feet, depending on the location of the well(s) and the geological data pertaining thereto. Leaseholder shall exercise its sole judgment and discretion in making such decisions.

2. The Leaseholder and Operator shall estimate and agree on the cost for the drilling and completion of said well(s) before Operator commences any drilling operation. The Leaseholder shall be responsible for paying all costs owed to third party subcontractors, the hiring of which must be pre-approved by the Leaseholder.

ARTICLE in COMPLETION

In the event Leaseholder determines that any given well(s) is capable of commercial production of oil and/or gas, then the Operator shall commence completion and put such well(s) on production within thirty (30) days of drilling as weather permits.

ARTICLE IV OPERATION AND MANAGEMENT

1. Leaseholder hereby appoints and Operator hereby accepts the duties and obligations of Operator. Operator shall have the power and authority to act and function in this management capacity in all respects affecting the production of said well.

2. The Operator shall oversee the drilling of any well(s) and their completion as well as the maintenance and operation of the well(s) covered by this agreement on a daily basis. The Operator shall provide the necessary services and professional oversight for the successful commercial operation of the well(s), including, but not limited to, the pumping and marketing all oil and/or gas produced from the well(s), the performance of all maintenance and upkeep necessary in order to produce the well(s), providing weekly and monthly production reports, providing copies of the oil run tickets by the last day of each month that oil is sold, and overseeing and insuring compliance with all local, stale and federal regulations and the timely filing of documents necessary for permits and bonds with the appropriate governmental entity. Failure of Leaseholder to strictly enforce any of the provisions of this Paragraph shall not constitute a waiver thereof.

3. If the Leaseholder reasonably determines that an enhancement or secondary recovery would be beneficial to any well(s), then Operator agrees to perform and oversee the installation operation and maintenance of this system.

ARTICLE V TERMINATION

1. This Operating Agreement shall remain in full force so long as the weB(s) is being drilled, completed, and as long as the well(s) remains a commercially productive well(s) and the leases or any lease as set out in Exhibit A is in full force and effect.

2. In the event the Leaseholder determines, in its sole discretion, that the well(s) is not commercially productive, then it shall advise the Operator of this decision and this Operating Agreement shall terminate as to that well(s).

3. In the event the well(s) does not prove to be commercially productive, then the Leaseholder may, in its sole discretion, abandon the well(s) and the Operator shall then take all steps necessary to plug this well(s) pursuant to all federal, state and local regulations and to secure the release of all bonds posted in association with the well(s).

4. The Leaseholder shall also have the right to terminate this Operating Agreement if the Operator fails to perform or observe any term, covenant, condition, or agreement required to be performed or observed by Operator under this agreement. Leaseholder shall provide Operator written notice of any breach and default and Operator shall then have ten (10) days to correct the default to the satisfaction of the Leaseholder

5. If Operator : (a) becomes insolvent or becomes unable to pay its debts as they mature, (b) makes an assignment for the benefit of creditors, (c) is the subject of any proceeding instituted by or against it under any bankruptcy or insolvency law alleging that it is insolvent or unable to pay its debts as they mature, (d) commences an action or has commenced against it any action or proceeding seeking any reorganization, merger, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future law, statute, or regulation, or (e) if any trustee, custodian, receiver, or liquidator is appointed voluntarily or
involuntarily for it or any material part of its assets. This agreement shall immediately terminate after Leaseholder provides Operator written notice. Leaseholder shall be entitled to recover its costs, including attorney fees, for any damages it may incur as a result of Operator's breach of this agreement.

ARTICLE VI MISCELLANEOUS.

1. Leaseholder covenants with Operator that it is, or will be, the true and lawful owner of the leases to be drilled under this agreement, and that it has good right and full power to assign and transfer the rights in the well site(s) on such leases and that there has been no default of any covenants, agreements, terms or conditions contained in the leases.

2. The laws of the Commonwealth of Kentucky shall govern the construction of this agreement and the rights, remedies, and duties of the parties hereto. The parties hereto agree that the state courts located in the Commonwealth of Kentucky shall have exclusive jurisdiction with regard to any litigation relating to this Agreement and the parties agree that venue shall be proper in county in which the lease interest lies.

3. Time shall be of the essence in the performance by the Operator of all of Operator's covenants, obligations, and agreements under this agreement.

4. The invalidity or unenforceability of any provision of this agreement shall not affect or impair the validity or enforceability of any other provisions of this agreement.

LEASEHOLDER:

PHOENIX ENERGY RESOURCE COPORATION

Rene Ronald Soullier, CEO

OPERATOR:

JMACK ENERGY, LLC

Mark A. Cornell, Member

STATE COUNTY OF

SUBSCRIBE, SWORN TO AND ACKNOWLEDGED Soullier, CEO of Phoenix Energy Resource Corporation, a Nc behalf of said corporation, on this the ■Z- Y day of Sepi ie by, Rene Ronald •ration, acting by and on

NOTXRJ>UBLIC - - STATE AT LARGE My Commission Expires: r&ee. 37, Zoux

COMMONWEALTH OF KENTUCKY )

)

COUNTY OF WARREN)

SUBSCRIBE, SWORN TO AND ACKNOWLEDGED before me by, Mark A. Cornell, member of JMACK Energy, LLC, a Kentucky limited liability company, acting by and on behalf of said limited liability company on this the 13\-S day of September; 2008.

: - STATE AT LARGE My Commission Expires:

PREPARED BY:

D. Bditey Walton

LANPHEAR 4 WALTON, P.L.L.C.

P.O. Box 128

Bowling Green, KY 42102-0128

(270) 843-5500