Exhibit 10.2

Execution Version

 

 

Purchase and Sale Agreement

Dated July 27, 2020,

By And Between

Riviera Upstream, LLC and Riviera Operating, LLC

as Seller,

And

NGLF Energy, LLC

as Buyer

 

 

 

 

 

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TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS

1

ARTICLE 2 SALE AND TRANSFER OF ASSETS; CLOSING

20

 

2.01

Assets.20

 

 

2.02

Purchase Price; Deposit.21

 

 

2.03

Closing; Preliminary Settlement Statement.21

 

 

2.04

Closing Obligations.21

 

 

2.05

Allocations and Adjustments.22

 

 

2.06

Assumption.26

 

 

2.07

Allocation of Purchase Price.27

 

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF SELLER

27

 

3.01

Organization and Good Standing.27

 

 

3.02

Authority; No Conflict.27

 

 

3.03

Bankruptcy.28

 

 

3.04

Taxes.29

 

 

3.05

Legal Proceedings.29

 

 

3.06

Brokers.29

 

 

3.07

Compliance with Legal Requirements.29

 

 

3.08

Prepayments.29

 

 

3.09

Imbalances.29

 

 

3.10

Material Contracts.30

 

 

3.11

Consents and Preferential Purchase Rights.30

 

 

3.12

Current Commitments.30

 

 

3.13

Environmental Laws.30

 

 

3.14

Permits.31

 

 

3.15

Wells.31

 

 

3.16

Payout Balances.31

 

 

3.17

Employee Benefits31

 

 

3.18

Royalties; Suspense Funds.32

 

 

3.19

Knowledge Qualifiers for Non-Operated Assets.32

 

 

3.20

Disclosures with Multiple Applicability; Materiality.32

 

 

3.21

Disclosure.32

 

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER

32

 

4.01

Organization and Good Standing.32

 

 

4.02

Authority; No Conflict.32

 

 

4.03

Certain Proceedings.33

 

 

4.04

Knowledgeable Investor.33

 

 

4.05

Qualification.33

 

 

4.06

Brokers.34

 

 

4.07

Financial Ability.34

 

 

4.08

Securities Laws.34

 

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4.09

Due Diligence.34

 

 

4.10

Basis of Buyer’s Decision.34

 

 

4.11

Business Use, Bargaining Position.35

 

 

4.12

Bankruptcy.35

 

ARTICLE 5 COVENANTS OF SELLER

35

 

5.01

Access and Investigation.35

 

 

5.02

Ownership of the Assets.36

 

 

5.03

Insurance.37

 

 

5.04

Consent and Waivers.37

 

 

5.05

Amendment to Schedules.37

 

 

5.06

Change of Operator.38

 

ARTICLE 6 OTHER COVENANTS

38

 

6.01

Notification and Cure.38

 

 

6.02

Satisfaction of Conditions.38

 

 

6.03

Replacement of Insurance, Bonds, Letters of Credit, and Guaranties.38

 

 

6.04

Governmental Reviews.39

 

 

6.05

Plug Back Wells; Plug Back Well Operations.39

 

ARTICLE 7 CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

40

 

7.01

Accuracy of Representations.40

 

 

7.02

Seller’s Performance.40

 

 

7.03

No Proceedings.40

 

 

7.04

No Orders.40

 

 

7.05

Necessary Consents and Approvals.40

 

 

7.06

Closing Deliverables.40

 

 

7.07

Performance Condition.40

 

ARTICLE 8 CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

41

 

8.01

Accuracy of Representations.41

 

 

8.02

Buyer’s Performance.41

 

 

8.03

No Proceedings.41

 

 

8.04

No Orders.41

 

 

8.05

Necessary Consents and Approvals.41

 

 

8.06

Closing Deliverables.41

 

 

8.07

Qualifications.41

 

ARTICLE 9 TERMINATION

42

 

9.01

Termination Events.42

 

 

9.02

Effect of Termination; Distribution of the Deposit Amount.43

 

 

9.03

Return of Records Upon Termination.44

 

ARTICLE 10 INDEMNIFICATION; REMEDIES

45

 

10.01

Survival.45

 

 

10.02

Indemnification and Payment of Damages by Seller.45

 

 

10.03

Indemnification and Payment of Damages by Buyer.46

 

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10.04

Indemnity Net of Insurance.47

 

 

10.05

Limitations on Liability.47

 

 

10.06

Procedure for Indemnification – Third Party Claims.47

 

 

10.07

Procedure for Indemnification – Other Claims.48

 

 

10.08

Indemnification of Group Members.48

 

 

10.09

Extent of Representations and Warranties.48

 

 

10.10

Redhibition Waiver.49

 

 

10.11

UTPCPL Waiver.50

 

 

10.12

Compliance With Express Negligence Test.50

 

 

10.13

Limitations of Liability.50

 

 

10.14

No Duplication.50

 

 

10.15

Disclaimer of Application of Anti-Indemnity Statutes.50

 

 

10.16

Waiver of Right to Rescission.51

 

ARTICLE 11 TITLE MATTERS AND ENVIRONMENTAL MATTERS; PREFERENTIAL PURCHASE
RIGHTS; CONSENTS

51

 

11.01

Title Examination and Access.51

 

 

11.02

Preferential Purchase Rights.51

 

 

11.03

Consents.52

 

 

11.04

Title Defects.52

 

 

11.05

Title Defect Value.52

 

 

11.06

Seller’s Cure or Contest of Title Defects.53

 

 

11.07

Limitations on Adjustments for Title Defects.54

 

 

11.08

Title Benefits.55

 

 

11.09

Buyer’s Environmental Assessment.56

 

 

11.10

Environmental Defect Notice.56

 

 

11.11

Exclusion, Cure or Contest of Environmental Defects.56

 

 

11.12

Limitations.58

 

 

11.13

Exclusive Remedies.58

 

 

11.14

Casualty Loss and Condemnation.59

 

 

11.15

Expert Proceedings.59

 

ARTICLE 12 EMPLOYMENT MATTERS

61

 

12.01

Seller Benefit Plans61

 

 

12.02

Pre-Employee Start Date Claims under Seller Benefit Plans and Vacation
Rollover61

 

 

12.03

Available Employees’ Offers and Post-Employee Start Date Employment and
Benefits61

 

 

12.04

Savings Plans62

 

 

12.05

Post-Employee Start Date Employment Claims62

 

 

12.06

Buyer Welfare Plans62

 

 

12.07

WARN Act.63

 

 

12.08

No Third Party Beneficiary Rights.63

 

ARTICLE 13 GENERAL PROVISIONS

63

 

13.01

Records.63

 

 

13.02

Expenses.64

 

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13.03

Notices.65

 

 

13.04

Governing Law; Jurisdiction; Service of Process; Jury Waiver.66

 

 

13.05

Further Assurances.67

 

 

13.06

Waiver.67

 

 

13.07

Entire Agreement and Modification.67

 

 

13.08

Assignments, Successors, and No Third Party Rights.68

 

 

13.09

Severability.68

 

 

13.10

Article and Section Headings, Construction.68

 

 

13.11

Counterparts.69

 

 

13.12

Press Release.69

 

 

13.13

Confidentiality.69

 

 

13.14

Name Change.69

 

 

13.15

Preparation of Agreement.70

 

 

13.16

Appendices, Exhibits and Schedules.70

 

 

 

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EXHIBITS AND SCHEDULES

Exhibit A

Leases

Exhibit A-1

Fee Minerals

Exhibit A-2

Easements and Surface Interests

Exhibit A-3

Field Offices and Associated Properties

Exhibit A-4

Pipeline and Gathering Systems

Exhibit A-5

Surface Deeds

Exhibit B

Wells

Exhibit C

Personal Property

Exhibit D

Form of Assignment and Bill of Sale

Exhibit E

Excluded Assets

Exhibit F

Vehicles

Exhibit G

Form of Deed

Exhibit H-1

Form of Seller Certificate

Exhibit H-2

Form of Buyer Certificate

Exhibit I

Available Employee Job Titles

 

 

Schedule 1.1(a)

Voluntary Unitization Agreements

Schedule 2.07

Allocation of Purchase Price

Schedule 3.02(b)

No Conflict

Schedule 3.04

Taxes

Schedule 3.05

Assumed and Retained Litigation

Schedule 3.07

Compliance with Legal Requirements

Schedule 3.09

Imbalances

Schedule 3.10

Material Contracts

Schedule 3.11

Consents and Preferential Purchase Rights

Schedule 3.12

Current Commitments

Schedule 3.13

Environmental Laws

Schedule 3.14

Permits

Schedule 3.15

Wells

Schedule 3.16

Payout Balances

Schedule 3.17(a)

Seller Benefit Plans

Schedule 3.18

Royalties; Suspense Funds

Schedule 5.02

Certain Authorized Pre-Closing Actions

Schedule 6.05

Plug Back Wells

Schedule 7.07

Performance Wells

 

 

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PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of July 27, 2020
(the “Execution Date”), by and between Riviera Upstream, LLC, a Delaware limited
liability company (“Riviera Upstream”), and Riviera Operating, LLC, a Delaware
limited liability company (“Riviera Operating” and together with Riviera
Operating the “Seller”), and NGLF Energy, LLC an Oklahoma limited liability
company (“Buyer”).  Seller and Buyer are sometimes hereinafter referred to
individually as a “Party” and collectively as the “Parties.”

RECITAL

Seller desires to sell, and Buyer desires to purchase, all of Seller’s right,
title and interest in and to certain oil and gas properties and related assets
and contracts, effective as of the applicable Effective Time, for the
consideration and on the terms set forth in this Agreement.

AGREEMENT

For and in consideration of the promises contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, agree as follows:

ARTICLE 1
DEFINITIONS

For purposes of this Agreement, in addition to other capitalized terms defined
in this Agreement, the following terms have the meanings specified or referred
to in this Article 1 when capitalized:

“AAA” – the American Arbitration Association.

“Accounting Firm” – as defined in Section 2.05(e).

“AFE” – as defined in Section 3.12.

“Affiliate” – with respect to a Party, any Person directly or indirectly
controlled by, controlling, or under common control with, such Party, including
any subsidiary of such Party and any “affiliate” of such Party within the
meaning of Reg. §240.12b-2 of the Securities Exchange Act of 1934, as
amended.  As used in this definition, “control” means possession, directly or
indirectly, of the power to direct or cause the direction of management,
policies, or action through ownership of voting securities, contract, voting
trust, or membership in management or in the group appointing or electing
management or otherwise through formal or informal arrangements or business
relationships.  The terms “controlled by,” “controlling,” and other derivatives
shall be construed accordingly.

“Aggregate Defect Deductible” – an amount equal to two percent (2%) of the
unadjusted Purchase Price.

“Aggregate Defect Value” – as defined in Section 11.07.

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“Aggregate Environmental Defect Value” – as defined in Section 11.12.

“Aggregate Title Defect Value” – as defined in Section 11.07.

“Agreement” – as defined in the Preamble to this Agreement.

“Allocated Values” – the values assigned among the Wells and the Pipeline as set
forth on Schedule 2.07.

“Applicable Contracts” – all Contracts to which Seller is a party or is bound
that primarily relate to any of the Assets and (in each case) that will be
binding on Buyer after the Closing, including, but not limited
to:  communitization agreements; net profits agreements; production payment
agreements; area of mutual interest agreements; joint venture agreements;
confidentiality agreements; farmin and farmout agreements; bottom hole
agreements; crude oil, condensate, and natural gas purchase and sale, gathering,
transportation, and marketing agreements; hydrocarbon storage agreements;
acreage contribution agreements; operating agreements; balancing agreements;
pooling declarations or agreements; unitization agreements; processing
agreements; saltwater disposal agreements; facilities or equipment leases; and
other similar contracts and agreements, but exclusive of any master service
agreements and Contracts relating to the Excluded Assets.  

“Asset Taxes” – ad valorem, property, excise, severance, production, sales, real
estate, use, personal property and similar Taxes (including any interest, fine,
penalty or additions to tax imposed by Governmental Bodies in connection with
such taxes) based upon the operation or ownership of the Assets, the production
of Hydrocarbons or the receipt of proceeds therefrom, but excluding, for the
avoidance of doubt, income or franchise Taxes based upon, measured by, or
calculated with respect to net income, profits, capital, or similar measures (or
multiple bases, including corporate, franchise, business and occupation,
business license, or similar Taxes, if net income, profits, capital, or a
similar measure is one of the bases on which such Tax is based, measured, or
calculated) and Transfer Taxes.

“Assets” – all of Seller’s right, title, and interest in, to, and under the
following, without duplication, except to the extent constituting Excluded
Assets:

(a)

all of the oil and gas leases and subleases described in Exhibit A, together
with any and all other right, title and interest of Seller in and to the
leasehold estates created thereby and subject to the terms, conditions,
covenants and obligations set forth in such leases or Exhibit A, in each case
except to the extent covering the Excluded Depths (such interest in such leases,
the “Leases”), all related rights and interests in the lands covered by the
Leases and any lands pooled or unitized therewith (such lands, the “Lands”), and
all Royalties applicable to the Leases and the Lands;

(b)any and all oil, gas, water, CO2 and disposal wells located on any of the
Lands (such interest in such wells, including the wells set forth in Exhibit B,
the “Wells”), and all Hydrocarbons produced therefrom or allocated thereto from
and after the Effective Time;

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(c)all fee mineral interests relating to the Lands, except to the extent such
mineral rights cover or relate to the Excluded Depths, including those described
in Exhibit A-1 (such interest, the “Fee Minerals”);

(d)all rights and interests in, under or derived from all unitization and
pooling agreements, declarations and orders in effect with respect to any of the
Leases or Wells and the units created thereby (the “Units”) (the Leases, the
Lands, the Fee Minerals, the Units and the Wells being collectively referred to
hereinafter as the “Properties” or individually as a “Property”), including
those voluntary unitization agreements set forth on Schedule 1.1(a);

(e)to the extent that they may be assigned, transferred or re-issued by Seller
(with consent, if applicable, but without the payment of any fee unless Buyer
agrees in writing to pay such fee), all permits, licenses, allowances, water
rights, registrations, consents, orders, approvals, variances, authorizations,
servitudes, easements, rights-of-way, surface leases, other surface interests
and surface rights to the extent appurtenant to or used primarily in connection
with the ownership, operation, production, gathering, treatment, processing,
storing, sale or disposal of Hydrocarbons or produced water from the Properties
or any of the Assets, including those described on Exhibit A-2;

(f)all equipment, machinery, fixtures and other personal, movable and mixed
property located on any of the Properties or other Assets that is used primarily
in connection therewith, including those items listed in Exhibit C, and
including well equipment, casing, tubing, pumps, motors, machinery, platforms,
rods, tanks, boilers, fixtures, compression equipment, flowlines, pipelines,
gathering systems associated with the Wells, manifolds, processing and
separation facilities, pads, structures, materials, and other items primarily
used in the operation thereof (collectively, the “Personal Property”);

(g)the real property described on Exhibit A-3 and any Personal Property located
thereon (the “Field Offices and Associated Properties”);

(h)all pipelines and gathering systems described on Exhibit A-4 (the
“Pipelines”);

(i)all surface fee interests covered by the deeds described on Exhibit A-5 (the
“Conveyed Surface Fee Interests”);

(j)the vehicles described on Exhibit F, subject to Seller’s right to remove any
vehicles from Exhibit F assigned to Available Employees who are not made an
offer of employment by Buyer in accordance with Section 12.03;

(k)all salt water disposal wells and evaporation pits that are located on the
Lands;

(l)to the extent assignable (with consent, if applicable, but without the
payment of any fee unless Buyer agrees in writing to pay such fee), all
Applicable Contracts and all rights thereunder insofar as and only to the extent
relating to the Assets;

(m)all Imbalances relating to the Assets;

(n)the Suspense Funds not related to the Excluded Assets;

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(o)originals (if available, and otherwise copies) and copies in digital form (if
available) of all of the books, files, records, information and data, whether
written or electronically stored, primarily relating to the Assets in Seller’s
possession, including: (i) land and title records (including prospect files,
maps, lease records, abstracts of title, title opinions and title curative
documents); (ii) Applicable Contract files; (iii) correspondence; (iv)
operations, environmental, production, and accounting records; (v) facility and
well records; and (vi) to the extent assignable (with consent, if applicable,
but without the payment of any fee unless Buyer agrees in writing to pay such
fee), geological and seismic data (excluding interpretive data) (collectively,
“Records”);

(p)all Hydrocarbons produced from or attributable to the Assets from and after
the Effective Time, and all Hydrocarbons that are in storage or existing in
stock tanks, pipelines or plants (including inventory) as of the Effective Time;

(q)all information technology assets, including desktop computers, laptop
computers, servers, networking equipment and any associated peripherals and
other computer hardware, computer software, all radio and telephone equipment,
SCADA and measurement technology, and other production related mobility devices
(such as SCADA controllers), well communication devices, and any other
information technology systems, in each case only to the extent such assets are
(i) used solely in connection with the Properties, (ii) assignable (with
consent, if applicable, but without the payment of any fee unless Buyer agrees
in writing to pay such fee), (iii) located on the Property, and (iv) necessary
for the continued and future operation of the Properties.

To the extent that any of the foregoing are used or relate to both the Assets
(on the one hand) and certain of the Excluded Assets or any Retained Assets (on
the other hand), such as, by way of example but not limitation, ingress and
egress rights and road and pipeline easements, such assets or rights shall be
jointly owned by Seller, as part of the Excluded Assets, and by Buyer, as part
of the Assets.

“Assignment” – the Assignment and Bill of Sale from Seller to Buyer, pertaining
to the Assets (other than the Assets conveyed pursuant to the Deed),
substantially in the form attached to this Agreement as Exhibit D.

“Assumed Liabilities” – as defined in Section 2.06.

“Assumed Litigation” – the litigation set forth in Schedule 3.05 (Part A).

“Available Employee” – certain employees of Seller or its Affiliates identified
in the Employee Letter to whom Buyer may, but shall not be obligated to, make an
offer of employment; provided, however that Seller shall not be required to
identify employees in the Employee Letter beyond the job titles indicated on
Exhibit I.

“Breach” – a “Breach” of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any certificate delivered pursuant to
Section 2.04(a)(iii) or Section 2.04(b)(iii) of this Agreement shall be deemed
to have occurred if there is or has been any inaccuracy in or breach of, or any
failure to perform or comply with, such representation, warranty, covenant,
obligation, or other provision.

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“Business Day” – any day other than a Saturday, Sunday, or any other day on
which commercial banks in the State of Texas are authorized or required by law
or executive order to close.

“Buyer” – as defined in the preamble to this Agreement.

“Buyer’s Closing Documents” – as defined in Section 4.02(a).

“Buyer Group” – Buyer and its Affiliates, and their respective
Representatives.  

“Buyer Savings Plan” – as defined in Section 12.04.

“Casualty Loss” – as defined in Section 11.14.

“Closing” – as defined in Section 2.03.

“Closing Date” – as defined in Section 2.03.

“COBRA” – as defined in Section 12.06.

“Code” – the Internal Revenue Code of 1986, as amended.

“Complete Remediation” – with respect to an Environmental Defect, a remediation
or cure of such Environmental Defect which is substantially completed in
accordance with the Lowest Cost Response.

“Confidentiality Agreement” – that certain confidentiality agreement dated as of
July 2, 2019 between Nadel and Gussman N.V., LLC and Riviera Resources, Inc.

“Consent” – any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization) from any Person that is required to
be obtained in connection with the execution or delivery of this Agreement or
the consummation of the Contemplated Transactions.

“Contemplated Transactions” – all of the transactions contemplated by this
Agreement, including:

(a)the sale of the Assets by Seller to Buyer;

(b)the performance by the Parties of their respective covenants and obligations
under this Agreement; and

(c)Buyer’s acquisition, ownership, operation (where applicable in accordance
with this Agreement) and exercise of control over the Assets.

“Continuing Employees” – each Available Employee who is actively at work as of
the Closing Date or is on a previously scheduled and approved (by Seller or its
Affiliates) short-term disability, long-term disability, workers’ compensation
or other approved leave of absence and

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accepts an offer of employment from Buyer or its Affiliate and, in each
instance, assumes employment with Buyer or its Affiliate as provided in Article
12 of this Agreement.

“Contract” – any written or oral contract, agreement or any other legally
binding arrangement, but excluding, however, any Lease, easement, right-of-way,
permit or other instrument creating or evidencing an interest in the Assets or
any real or immovable property related to or used in connection with the
operations of any Assets.

“Conveyed Surface Fee Interests” – as set forth in the definition of “Assets”.

“Cure” – as defined in Section 11.06.

“Damages” – any and all claims, demands, payments, charges, judgments,
assessments, losses, liabilities, damages, penalties, fines, expenses, costs,
fees, settlements, and deficiencies, including any attorneys’ fees, legal, and
other costs and expenses suffered or incurred therewith.

“De Minimis Environmental Defect Cost” – Twenty-Five Thousand Dollars ($25,000).

“De Minimis Title Defect Cost” – Twenty-Five Thousand Dollars ($25,000).  

“Deed” – the Deed from Seller to Buyer, pertaining to the Conveyed Surface Fee
Interests and the Fee Minerals, substantially in the form attached to this
Agreement as Exhibit G.

“Defect Escrow Account” – the subaccount established as the Defect Escrow
Account pursuant to the Escrow Agreement.

“Defect Notice Date” – as defined in Section 11.04.

“Defensible Title” – title of Seller with respect to (A) the Pipelines that, as
of the Closing Date and subject to Permitted Encumbrances, the entire and
continuous length of the Pipeline necessary for the use and operation of such
Pipeline as currently used and operated, is covered by a valid and enforceable
right of way or other ownership or use rights in favor of Seller and (B) the
Wells or Well Locations that, as of the Closing Date and subject to the
Permitted Encumbrances, is deducible of record or title evidenced by unrecorded
instruments or elections, in each case, made or delivered pursuant to joint
operating agreements, pooling agreements or unitization agreements and:

(a)with respect to (A) the Well Location Formation for the Well Locations and
(B) each currently producing formation for each Well (in each case, subject to
any reservations, limitations or depth restrictions described in Exhibit B or
Schedule 2.07), entitles Seller to receive not less than the Net Revenue
Interest set forth in Schedule 2.07 for such Well Location Formation or
producing formation, and that is not subject to reduction after payout because
of unleased mineral interests for which the BPO and APO interests have not
already been reflected in Schedule 2.07, in each case, except for (i) decreases
in connection with those operations in which Seller or its successors or assigns
may from and after the Effective Time and in accordance with the terms of this
Agreement elect to be a non-consenting co-owner, (ii) decreases resulting from
the establishment or amendment from and after the Effective Time of pools or
units in accordance

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with this Agreement and (iii) decreases required to allow other Working Interest
owners to make up past underproduction or pipelines to make up past under
deliveries;

(b)with respect to (A) the Well Location Formation for the Well Locations and
(B) each currently producing formation for each Well (in each case, subject to
any reservations, limitations or depth restrictions described in Exhibit B or
Schedule 2.07), obligates Seller to bear not more than the Working Interest set
forth in Schedule 2.07) for such Well Location Formation or producing formation,
and that is not subject to reduction after payout because of unleased mineral
interests for which the BPO and APO interests have not already been reflected in
Schedule 2.07, in each case, except for (i) increases resulting from
contribution requirements with respect to defaulting co-owners under applicable
operating agreements or (ii) increases to the extent that such increases are
accompanied by a proportionate increase in Seller’s Net Revenue Interest; and

(c)is free and clear of all Encumbrances.

“Deposit Amount” – Ten percent (10%) of the unadjusted Purchase Price (including
any interest accrued thereon).

“Dispute Notice” – as defined in Section 2.05(e).

“Disputed Environmental Amount” – as defined in Section 11.11(b).

“Disputed Matter” – as defined in Section 11.15(a).

“Disputed Title Amount” – as defined in Section 11.06(b).

“DTPA” – as defined in Section 4.11.

“Effective Time” – (a) April 1, 2020, at 12:01 a.m. local time at the location
of the Assets (other than any Plug Back Wells or Retained Plug Back Wells) and
(b) with respect to any Plug Back Well or Retained Plug Back Well, the first day
of the calendar month immediately following the date the Plug Back Well
Operations are completed for such Plug Back Well or Retained Plug Back Well.  

“Employee Letter” – as defined in Section 12.03.

“Employee Start Date” – the Closing Date.

“Encumbrance” – any charge, equitable interest, privilege, lien, mortgage, deed
of trust, production payment, option, pledge, collateral assignment, security
interest, or other arrangement substantially equivalent thereto.

“Environmental Condition” – a (a) condition or activity with respect to an Asset
that is in violation of any Environmental Law; or (b) a condition in, on, at or
under an Asset which is required to be remediated by Environmental Law. Buyer
and Seller agree that for a condition to be in violation of any statute or
regulation referred to in the preceding sentence, it shall not be necessary that
Seller shall be under notice of violation from a federal or state regulatory
agency.  Notwithstanding the foregoing, Environmental Condition shall not
include any plugging,

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abandonment or decommissioning obligations, any event or condition to the extent
caused by or relating to NORM or asbestos, relating to subsidence monitoring or
remediation, or that is disclosed to Buyer in writing prior to the Execution
Date, or of which Buyer otherwise has Knowledge.  

“Environmental Defect” – an Environmental Condition discovered by Buyer or its
Representatives as a result of any environmental diligence conducted by or on
behalf of Buyer pursuant to this Agreement.

“Environmental Defect Cure Period” – as defined in Section 11.11(a).

“Environmental Defect Notice” – as defined in Section 11.10.

“Environmental Defect Value” – with respect to each Environmental Defect, the
amount of the Lowest Cost Response for such Environmental Defect.

“Environmental Law” – any applicable Legal Requirement in effect as of the
Execution Date relating to pollution or the protection of the environment,
including those Legal Requirements relating to the storage, handling, and use of
Hazardous Materials and those Legal Requirements relating to the generation,
processing, treatment, storage, transportation, disposal or other management
thereof.  The term “Environmental Law” does not include (a) good or desirable
operating practices or standards that may be voluntarily employed or adopted by
other oil and gas well operators or recommended, but not required, by a
Governmental Body or (b) the Occupational Safety and Health Act of 1970, 29
U.S.C. § 651 et seq., as amended, or any other Legal Requirement governing
worker safety or workplace conditions.

“Environmental Liabilities” – all costs, Damages, expenses, liabilities,
obligations, and other responsibilities arising from or under either
Environmental Laws or Third Party claims relating to the environment, and which
relate to the Assets or the ownership or operation of the same.

“ERISA” – the Employee Retirement Security Act of 1974, as amended.

“ERISA Affiliate” – with respect to any entity, any other entity, trade or
business that is a member of a group described in Section 414(b), (c), (m) or
(o) of the Code or Section 4001(b)(1) of ERISA that includes such first entity,
or that is a member of the same “controlled group” as such first entity pursuant
to Section 4001(a)(14) of ERISA.

“Escrow Account” – as defined in Section 2.02.

“Escrow Agent” – JPMorgan Chase Bank, N.A.

“Escrow Agreement” – as defined in Section 2.02.

“Excludable Environmental Defect” – as defined in Section 11.11.

“Excluded Assets” – with respect to Seller, (a) all of Seller’s corporate minute
books, financial records and other business records that relate to Seller’s
business generally (including the ownership of the Assets); (b) except to the
extent related to any Assumed Liabilities, all trade

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credits, all accounts, all receivables of Seller and all other proceeds, income
or revenues of Seller attributable to the Assets and attributable to any period
of time prior to the Effective Time (other than the Suspense Funds and Specified
Receivables); (c) except to the extent related to any Assumed Liabilities all
claims and causes of action of Seller or its Affiliates that are attributable to
periods of time prior to the Effective Time (including claims for adjustments or
refunds); (d) except to the extent related to any Assumed Liabilities subject to
Section 11.14, all rights and interests of Seller (i) under any policy or
agreement of insurance or indemnity, (ii) under any bond, or (iii) to any
insurance or condemnation proceeds or awards arising, in each case, from acts,
omissions or events or damage to or destruction of property; (e) Seller’s rights
with respect to all Hydrocarbons produced and sold from the Assets with respect
to all periods prior to the Effective Time; (f) all claims of Seller or any of
its Affiliates for refunds of, rights to receive funds from any Governmental
Body, or loss carry forwards or credits with respect to (i) Asset Taxes
attributable to any period (or portion thereof) prior to the Effective Time,
(ii) income Taxes paid by Seller or its Affiliates, or (iii) any Taxes
attributable to the Excluded Assets; (g) all information technology assets,
including desktop computers, laptop computers, servers, networking equipment and
any associated peripherals and other computer hardware, computer software, all
radio and telephone equipment, SCADA and measurement technology, and other
production-related mobility devices (such as SCADA controllers), well
communication devices, and any other information technology systems, in each
case only to the extent such assets are not (i) used solely in connection with
the Properties, (ii) assignable (with consent, if applicable, but without the
payment of any fee unless Buyer agrees in writing to pay such fee), (iii)
located on the Property and (iv) necessary for the continued and future
operation of the Properties; (h) all rights, benefits and releases of Seller or
its Affiliates under or with respect to any Contract that are attributable to
periods of time prior to Closing; (i) all of Seller’s proprietary computer
software, patents, trade secrets, copyrights, names, trademarks, logos and other
intellectual property; (j) all documents and instruments of Seller that may be
protected by an attorney-client privilege or any attorney work product doctrine;
(k) all data that cannot be disclosed to Buyer as a result of confidentiality
arrangements under existing written agreements; (l) all audit rights or
obligations of Seller for which Seller bears responsibility arising under any of
the Applicable Contracts or otherwise with respect to any period prior to the
Effective Time or to any of the Excluded Assets, except for any Imbalances
assumed by Buyer; (m) Seller’s interpretations of any geophysical or other
seismic and related technical data and information relating to the Assets
including Seller’s reserve reports; (n) documents prepared or received by Seller
or its Affiliates with respect to (i) lists of prospective purchasers for such
transactions compiled by Seller, (ii) bids submitted by other prospective
purchasers of the Assets, (iii) analyses by Seller or its Affiliates of any bids
submitted by any prospective purchaser, (iv) correspondence between or among
Seller, its Representatives, and any prospective purchaser other than Buyer, and
(v) correspondence between Seller or any of its Representatives with respect to
any of the bids, the prospective purchasers or the transactions contemplated by
this Agreement; (o) except for the Field Offices and Associated Properties, any
offices, office leases and any personal property located in or on such offices
or office leases; (p) other than the Conveyed Surface Fee Interests, any fee
simple surface estate; (q) any fee mineral interests that are not Fee Minerals,
and any right to production revenues associated therewith; (r) a copy of all
Records; (s) any Contracts that constitute master services agreements or similar
contracts; (t) any Hedge Contracts; (u) any debt instruments; (v) any of
Seller’s assets other than the Assets; (w) all Available Employee files and
related records; (x) any leases, wells, or mineral interests to the extent
covering or relating to the Excluded Depths; and (y) any leases, wells, rights
and other assets specifically listed in Exhibit E.

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“Excluded Depths” – all rights title and interest in and to the Vaughn Sand
Formation, defined as that sand initially indicated to be productive of gas
and/or condensate in the Arkansas Louisiana Company’s J.C. Dowling Unit No. 2
Well, Section 30, Township 19 North, Rage 2 West at a depth ranging from 8850
fee to a depth of 8900 feet within the following sections in Lincoln Parish,
Louisiana:  Sections 13, 24, 25, and 36 in Township 19 North, Range 3 West and
Sections 17-20, 29-32 in Township 19 North, Range 2 West.

“Execution Date” – as defined in the preamble to this Agreement.

“Expert” – as defined in Section 11.15(b).

“Expert Decision” – as defined in Section 11.15(d).

“Expert Proceeding Notice” – as defined in Section 11.15(a).

“Fee Minerals” – as set forth in the definition of “Assets”.

“Field Offices and Associated Properties” – as set forth in the definition of
“Assets”.

“Final Amount” – as defined in Section 2.05(e).

“Final Settlement Date” – as defined in Section 2.05(e).

“Final Settlement Statement” – as defined in Section 2.05(e).

“Fundamental Representations” – those representations set forth in Sections
3.01, 3.02, 3.03 and 3.06.

“GAAP” – generally accepted accounting principles in the United States as
interpreted as of the Execution Date.

“Governmental Authorization” – any approval, consent, license, permit,
registration, variance, exemption, waiver, or other authorization issued,
granted, given, or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.

“Governmental Body” – any (a) nation, state, county, parish, city, town,
village, district, or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign, or other government; (c) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); (d)
multi-national organization or body; or (e) body exercising, or entitled to
exercise, any administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.

“Group” – either Buyer Group or Seller Group, as applicable.

“Hazardous Materials” – any (a) chemical, constituent, material, pollutant,
contaminant, substance, or waste that is regulated by any Governmental Body or
may form the basis of liability under any Environmental Law; and (b) petroleum,
Hydrocarbons, or petroleum products.

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“Hedge Contract” – any Contract to which Seller or any of its Affiliates is a
party with respect to any swap, forward, future or derivative transaction or
option or similar agreement, whether exchange traded, “over-the-counter” or
otherwise, involving, or settled by reference to, one or more rates, currencies,
commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or
any similar transaction or any combination of these transactions.

“Hydrocarbons” – oil and gas and other hydrocarbons (including condensate)
produced or processed in association therewith (whether or not such item is in
liquid or gaseous form), or any combination thereof, and any minerals produced
in association therewith.

“Imbalances” – over-production or under-production or over-deliveries or
under-deliveries with respect to Hydrocarbons produced from or allocated to the
Assets, regardless of whether such over-production or under-production or
over-deliveries or under-deliveries arise at the wellhead, pipeline, gathering
system, transportation system, processing plant, or other location, including
any imbalances under gas balancing or similar agreements, imbalances under
production handling agreements, imbalances under processing agreements,
imbalances under the Leases, and imbalances under gathering or transportation
agreements.

“Individual Claim Threshold” – as defined in Section 10.05.

“Instruments of Conveyance” – the Assignment and Deed.  Except for the special
warranty of Defensible Title by, through and under Seller contained therein, the
foregoing Instruments of Conveyance shall be without warranty of title, whether
express, implied, statutory, or otherwise, it being understood that Buyer shall
have the right to conduct pre-Closing title due diligence as described below in
Article 11, and that the rights and remedies set forth in Article 11 shall be
Buyer’s sole rights and remedies with respect to title.

“Knowledge” – an individual will be deemed to have “Knowledge” of a particular
fact or other matter if such individual is actually aware of such fact or other
matter, without any duty of inquiry.  A Seller Party will be deemed to have
“Knowledge” of a particular fact or other matter if any of the following
individuals has Knowledge of such fact or other matter: Seller’s President and
Chief Executive Officer, Executive Vice President and Chief Operating Officer,
Executive Vice President and Chief Financial Officer, or Executive Vice
President, Finance, Administration and Chief Accounting Officer.  Buyer will be
deemed to have “Knowledge” of a particular fact or other matter if any of the
following individuals has Knowledge of such fact or other matter: James F.
Adelson and Shelley Nichols.

“Lands” – as set forth in the definition of “Assets”.

“Leases” – as set forth in the definition of “Assets”.

“Legal Requirement” – any federal, state, local, municipal, foreign,
international, or multinational law, Order, constitution, ordinance, or rule,
including rules of common law, regulation, statute, treaty, or other legally
enforceable directive or requirement.

“Lowest Cost Response” – the response required or allowed under Environmental
Laws in effect on the Execution Date that addresses and resolves in compliance
with Environmental Laws

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(for current and future use in the same manner as currently used) the identified
Environmental Condition in the most cost-effective manner (considered as a
whole) as compared to any other response that is required or allowed under
Environmental Laws or by a Governmental Body. The Lowest Cost Response shall
include taking no action, leaving the condition unaddressed, periodic monitoring
or the recording of notices in lieu of remediation, if such responses are
allowed under Environmental Laws. The Lowest Cost Response shall not include (a)
any costs or expenses relating to the assessment, remediation, removal,
abatement, transportation and disposal of any asbestos, asbestos containing
materials or NORM or relating to any obligations to plug, abandon or
decommission wells associated with the Assets; (b) the costs of Buyer’s or any
of its Affiliate’s employees; (c) expenses for matters that are costs of doing
business (e.g., those costs that would ordinarily be incurred in the day-to-day
operations of the Assets, or in connection with permit renewal/amendment
activities); (d) overhead costs of Buyer or its Affiliates; (e) costs and
expenses that would not have been required under Environmental Laws as they
exist on the Closing Date; and (f) costs or expenses incurred in connection with
remedial or corrective action that is designed to achieve standards that are
more stringent than those required for similar facilities or that fail to
reasonably take advantage of applicable risk reduction or risk assessment
principles allowed under applicable Environmental Laws.

“Material Adverse Effect” – any change, inaccuracy, effect, event, result,
occurrence, condition or fact (for the purposes of this definition, each, an
“event”) (whether foreseeable or not and whether covered by insurance or not)
that has had or would be reasonably likely to have, individually or in the
aggregate with any other event or events, a material adverse effect on the
ownership, operation or financial condition of the Assets, taken as a whole;
provided, however, that the term “Material Adverse Effect” shall not include
material adverse effects resulting from (i) entering into this Agreement or the
announcement of the Contemplated Transactions; (ii) changes in Hydrocarbon
prices; (iii) any action or omission of Seller taken in accordance with the
terms of this Agreement or with the prior consent of Buyer; (iv) any effect
resulting from general changes in industry, economic or political conditions in
the United States or internationally; (v) civil unrest, any outbreak of disease
or hostilities, terrorist activities or war or any similar disorder; (vi) acts
or failures to act of any Governmental Body (including any new regulations
related to the upstream industry), except to the extent arising from Seller’s
action or inaction; (vii) acts of God, including hurricanes and storms; (viii)
any reclassification or recalculation of reserves in the ordinary course of
business; (ix) natural declines in well performance; (x) general changes in
Legal Requirements, in regulatory policies, or in GAAP; (xi) changes in the
stock price of Buyer or Seller; (xii) matters that are cured or no longer exist
by the earlier of Closing and the termination of this Agreement; or (xiii)
matters as to which an adjustment is provided for under Section 2.05(d) or
Seller has indemnified Buyer hereunder.

“Material Contracts” – as defined in Section 3.10.

“Net Revenue Interest” – with respect to any Well or Well Location, the interest
in and to all Hydrocarbons produced, saved and sold from or allocated to such
Well or Well Location (in each case, limited to the applicable currently
producing formation as described in the definition of “Defensible Title” or,
with respect to Well Locations, limited to the Well Location Formation, and
subject to any reservations, limitations or depth restrictions described in
Exhibit B or Schedule 2.07), after satisfaction of all other Royalties.

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“Non-Operated Assets” – Assets operated by any Person other than Seller or its
Affiliates.

“NORM” – naturally occurring radioactive material.

“Order” – any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.

“Original Production Level” – as set forth in the definition of “Sustained
Production Loss”.

“Organizational Documents” – (a) the articles or certificate of incorporation
and the bylaws of a corporation; (b) the articles of organization and
resolutions of a limited liability company; (c) the certificate of limited
partnership and limited partnership agreement of a limited partnership; and
(d) any amendment to any of the foregoing.

“Outside Date” – as defined in Section 9.01(d).

“Party” or “Parties” – as defined in the preamble to this Agreement.

“Performance Well” – the Wells specified on Schedule 7.07.

“Permits” – all environmental and other governmental (whether federal, state,
local or tribal) certificates, consents, permits (including conditional use
permits), licenses, orders, authorizations, franchises and related instruments
or rights solely relating to the ownership, operation or use of the Assets.

“Permitted Encumbrance” – any of the following:

(a)the terms and conditions of all Leases and Applicable Contracts if the net
cumulative effect of such Leases and Applicable Contracts does not (i)
materially interfere with the operation or use of any of the Assets (as
currently operated and used), (ii) operate to reduce the Net Revenue Interest of
Seller with respect to any Well or Well Location to an amount less than the Net
Revenue Interest set forth in Schedule 2.07 for such Well or Well Location,
(iii) obligate Seller to bear a Working Interest with respect to any Well or
Well Location in any amount greater than the Working Interest set forth in
Schedule 2.07 for such Well or Well Location  (unless the Net Revenue Interest
for such Well or Well Location is greater than the Net Revenue Interest set
forth in Schedule 2.07, in the same or greater proportion as any increase in
such Working Interest); provided, however, that any drilling obligations
included in Leases will be considered Permitted Encumbrances so long as Seller
is not in breach of such obligations;

(b)any Preferential Purchase Rights, Consents and similar agreements;

(c)excepting circumstances where such rights have already been triggered prior
to the Effective Time, rights of reassignment arising upon final intention to
abandon or release the Assets;

(d)liens for Taxes not yet due or delinquent or, if delinquent, that are being
contested in good faith by appropriate proceedings by or on behalf of Seller;

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(e)all rights to consent by, required notices to, filings with, or other actions
by Governmental Bodies in connection with the conveyance of the Leases, if the
same are customarily sought and received after the Closing;

(f)Encumbrances or defects that Buyer has waived or is deemed to have waived
pursuant to the terms of this Agreement or Title Defects that were not properly
asserted by Buyer prior to the Defect Notice Date;

(g)all Legal Requirements and all rights reserved to or vested in any
Governmental Body (i) to control or regulate any Asset in any manner; (ii) by
the terms of any right, power, franchise, grant, license or permit, or by any
provision of law, to terminate such right, power, franchise, grant, license or
permit or to purchase, condemn, expropriate or recapture or to designate a
purchaser of any of the Assets; (iii) to use such property in a manner which
does not materially impair the use of such property for the purposes for which
it is currently owned and operated; or (iv) to enforce any obligations or duties
affecting the Assets to any Governmental Body with respect to any right, power,
franchise, grant, license or permit;

(h)rights of a common owner or co-tenant of any interest currently held by
Seller and such common owner or co-tenant as tenants in common or through common
ownership to the extent that the same does not materially impair the use or
operation of the Assets as currently used and operated;

(i)easements, conditions, covenants, restrictions, servitudes, permits,
rights-of-way, surface leases, and other rights in the Assets for the purpose of
operations, facilities, roads, alleys, highways, railways, pipelines,
transmission lines, transportation lines, distribution lines, power lines,
telephone lines, removal of timber, grazing, logging operations, canals,
ditches, reservoirs and other like purposes, or for the joint or common use of
real estate, rights-of-way, facilities and equipment, which, in each case, do
not materially impair the operation or use of the Assets as currently operated
and used;

(j)vendors, carriers, warehousemen’s, repairmen’s, mechanics’, workmen’s,
materialmen’s, construction or other like liens arising by operation of law in
the ordinary course of business or incident to the construction or improvement
of any property in respect of obligations which are not yet due or which are
being contested in good faith by appropriate proceedings by or on behalf of
Seller;

(k)Encumbrances created under Leases or any joint operating agreements
applicable to the Assets or by operation of law in respect of obligations that
are not yet due or that are being contested in good faith by appropriate
proceedings by or on behalf of Seller;

(l)with respect to any interest in the Assets acquired through compulsory
pooling, failure of the records of any Governmental Body to reflect Seller as
the owner of any Assets;

(m)any Encumbrance affecting the Assets that is discharged by Seller or waived
(or deemed to be waived) by Buyer pursuant to the terms of this Agreement at or
prior to Closing;

(n)the Assumed Litigation and the Retained Litigation;

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(o)defects based solely on assertions that Seller’s files lack information
(including title opinions);

(p)lessor’s royalties, overriding royalties, production payments, net profits
interests, reversionary interests, and similar burdens if the net cumulative
effect of such burdens (i) does not materially interfere with the operation or
use of any of the Assets (as currently operated and used), (ii) does not reduce
the Net Revenue Interest of Seller with respect to Well or Well Location to an
amount less than the Net Revenue Interest set forth in Schedule 2.07 for such
Well or Well Location, (iii) does not obligate Seller to bear a Working Interest
in any amount greater than the Working Interest set forth in Schedule 2.07 for
such Well or Well Location (unless the Net Revenue Interest for such Well is
greater than the Net Revenue Interest set forth in Schedule 2.07, in the same or
greater proportion as any increase in such Working Interest);

(q)defects or irregularities of title (i) as to which the relevant statute(s) of
limitations or prescription would bar any attack or claim against Seller’s
title; (ii) arising out of lack of evidence of, or other defects with respect
to, authorization, execution, delivery, acknowledgment, or approval of any
instrument in Seller’s chain of title absent reasonable evidence of an actual
claim of superior title from a Third Party attributable to such matter; (iii)
consisting of the failure to recite marital status or omissions of heirship
proceedings in documents; (iv) resulting from lack of survey, unless a survey is
expressly required by applicable Legal Requirements; (v) resulting from failure
to record releases of liens, production payments, or mortgages that have expired
by their own terms or the enforcement of which are barred by the applicable
statute(s) of limitations or prescription; (vi) arising out of lack of entity
authorization unless Buyer provides affirmative evidence that such entity action
was not authorized and results in another Person’s actual and superior claim of
title; (vii) affecting only the Excluded Depths; (viii) resulting from
unreleased instruments (including leases covering Hydrocarbons), absent specific
evidence that such instruments continue in force and effect and constitute a
superior claim of title with respect to the Wells; (ix) based on a gap in
Seller’s chain of title in the county or parish records to any Well (A) so long
as such gap does not provide a Third Party with a superior claim or (B) unless
Buyer affirmatively shows such gap to exist in such records by an abstract of
title, title opinion or landman’s title chain; or (x) consisting of the lack of
a lease amendment or consent authorizing pooling or unitization absent evidence
that such lack of amendment or consent could reasonably result in another
Person’s superior claim of title with respect to the affected Wells;

(r)Imbalances;

(s)plugging and surface restoration obligations related directly to the Assets,
but only to the extent such obligations do not interfere in any material respect
with the use or operation of any Assets (as currently used or operated);

(t)calls on Hydrocarbon production under existing Contracts set forth on
Schedule 3.10;

(u)any matters referenced or set forth on Exhibit A, Exhibit B, or Schedule
2.07;

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(v)mortgages on the lessor’s interest under a Lease, whether or not subordinate
to such Lease, that have expired on their own terms or the enforcement of which
are barred by applicable statute(s) of limitations or prescription; and

(w)any maintenance of uniform interest provision in an operating agreement if
waived with respect to the Contemplated Transactions by the party or parties
having the right to enforce such provision or if the violation of such provision
would not give rise to the unwinding of the sale of the affected Asset from
Seller to Buyer.

“Person” – any individual, firm, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.

“Personal Property” – as set forth in the definition of “Assets”.

“Phase I Environmental Site Assessment” – a Phase I environmental property
assessment of the Assets that satisfies the basic assessment requirements set
forth under the current ASTM International Standard Practice for Environmental
Site Assessments (Designation E1527-13) or any other visual site assessment or
review of records, reports or documents.

“Plug Back Operations” – as defined in Section 6.05.

“Plug Back Well Cost Cap” – as set forth in the definition of Plug Back Well
Costs.

“Plug Back Well Costs” – all operating expense, capital expenditures and other
Property Costs incurred in connection with the Plug Back Operations (including
for any Retained Plug Back Wells) in an amount up to (but not to exceed)
$250,000 in the aggregate (the “Plug Back Well Cost Cap”).

“Plug Back Wells” – (a) the Wells described on Schedule 6.05 and (b) for each
such Plug Back Well that is a Retained Plug Back Well, all right, title and
interest in and to the Leases, in each case, insofar as and only to the extent
that such leasehold rights are necessary or convenient to own and operate
(including plugging and abandoning) the applicable Well as a reasonable and
prudent operator (including such leasehold rights as are necessary to produce,
save, treat, transport and market Hydrocarbons produced from or attributable to
each such Well from the Excluded Depths).

“Pipeline” as set forth in the definition of Assets.

“Post-Closing Date” – as defined in Section 2.05(e).

“Preferential Purchase Right” – any right or agreement that enables any Person
to purchase or acquire any Asset or any interest therein or portion thereof as a
result of or in connection with the execution or delivery of this Agreement or
the consummation of the Contemplated Transactions.

“Preliminary Amount” – the Purchase Price, adjusted as provided in Section 2.03,
based upon the best information available at the time of Closing.

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“Preliminary Settlement Statement” – as defined in Section 2.03.

“Proceeding” – any proceeding, action, arbitration, audit, hearing,
investigation, request for information, litigation, or suit (whether civil,
criminal, administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any Governmental Body
or arbitrator.

“Property” or “Properties” – as set forth in the definition of “Assets”.

“Property Costs” – all operating expenses (including utilities, payroll, costs
of insurance, rentals, title examination and curative actions, and overhead
costs), capital expenditures (including rentals, options and other lease
maintenance payments, broker fees and other property acquisition costs and costs
of acquiring equipment), and Asset Taxes, respectively, incurred in the ordinary
course of business to the extent (and only to the extent) such amounts are
attributable to the use, operation, and ownership of the Assets, including the
Plug Back Well Costs (subject to the Plug Back Well Cost Cap), but excluding
Damages attributable to (a) personal injury or death, property damage, torts,
breach of contract, or violation of any Legal Requirement, (b) Environmental
Liabilities, (c) obligations with respect to Imbalances, (d) obligations to pay
Royalties or other interest owners revenues or proceeds relating to the Assets
but held in suspense, including Suspense Funds, (e) the Specified Litigation
Costs and (f) claims for indemnification or reimbursement from any Third Party
with respect to costs of the types described in the preceding clauses (a)
through (e), whether such claims are made pursuant to contract or otherwise.

“Purchase Price” – as defined in Section 2.02.

“Records” – as set forth in the definition of “Assets”.

“Representative” – with respect to a particular Person, any director, officer,
manager, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.

“Required Consent” – any Consent with respect to which (a) there is a provision
within the applicable instrument that such Consent may be withheld in the sole
and absolute discretion of the holder, or (b) there is provision within the
applicable instrument expressly stating that an assignment in violation thereof
(i) is void or voidable, (ii) triggers the payment of specified liquidated
damages, or (iii) causes termination of the applicable Assets to be
assigned.  For the avoidance of doubt, “Required Consent” does not include (A)
any Consents and approvals of Governmental Bodies that are customarily obtained
after Closing or (B) any Consent, which, by its terms, cannot be unreasonably
withheld.

“Retained Assets” – (a) the Retained Plug Back Wells (if any) and (b) any other
rights, titles, interests, assets, and properties that are originally included
in the Assets under the terms of this Agreement, but that are subsequently
excluded from the Assets or sale under this Agreement pursuant to the terms of
this Agreement at any time before or after Closing.

“Retained Liabilities” – Damages, liabilities and obligations arising out of or
related to (a) the disposal or transportation prior to Closing of any Hazardous
Materials generated or used by Seller and taken from the Assets to any location
that is not an Asset; (b) personal injury (including

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death) claims attributable to Seller’s or its Affiliate’s ownership or operation
of the Assets prior to Closing; (c) except for (i) the Suspense Funds and (ii)
any Imbalances for which the Purchase Price is adjusted downward pursuant to
Section 2.05(d)(ii)(G), failure to properly and timely pay, in accordance with
the terms of any Lease, Contract or applicable Legal Requirement, all Royalties
and any other Working Interest amounts with respect to the Assets that are due
by Seller or any of its Affiliates and attributable to Seller’s ownership or
operation of the Assets prior to the Effective Time; (d) any fine, penalty or
criminal sanction imposed by or assessed by any Governmental Body against the
Seller attributable to the ownership or operation of the Assets prior to the
Effective Time; (e) any claim made by an employee of Seller or any Affiliate of
Seller directly relating to such employment; (f) the Retained Litigation; and
(g) Seller’s gross negligence or willful misconduct in the use, maintenance,
ownership or operation of the Assets, prior to and including the Closing and in
the performance of the Plug Back Operations to the extent not otherwise
described above; provided that, (i) from and after the date that is twenty-four
(24) months following the Closing Date, all Damages, liabilities and obligations
arising out of clauses (a), (b) and (g) shall no longer be Retained Liabilities
and shall be deemed Assumed Liabilities and (ii) from and after the date that is
thirty-six (36) months following the Closing Date, all Damages, liabilities and
obligations arising out of clause (c) shall no longer be Retained Liabilities
and shall be deemed Assumed Liabilities.

“Retained Litigation” – the litigation set forth in Schedule 3.05 (Part B).

“Retained Plug Back Well Notice” – as defined in Section 6.05.

“Retained Plug Back Wells” – as defined in Section 6.05.

“Royalties” – royalties, overriding royalties, production payments, carried
interests, net profits interests, reversionary interests, back-in interests and
other burdens upon, measured by or payable out of production.

“Seller” – as defined in the preamble to this Agreement.

“Seller Benefit Plans” – as defined in Section 3.17(a).

“Seller Closing Documents” – as defined in Section 3.02(a).

“Seller Group” – Seller and its Affiliates, and their respective
Representatives.

“Seller Party” – each of Rivera Upstream and Rivera Operating individually.

“Specified Litigation Costs” – any and all costs incurred by Sellers to Third
Parties prior to Closing in order to address matters identified by the landowner
related to the Assumed Litigation described on Schedule 3.05 (Part A) as the
“Claim of Roebuck” prior to the Execution Date.

“Specified Receivables” – accounts receivable owed to Seller as operator of any
Wells to satisfy previous overpayments by Seller to Third Parties, and the right
to recoup same out of proceeds of production in respect of such Wells for
periods prior to the Effective Time.

“Straddle Period” – any tax period beginning before and ending after the
Effective Time.

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“Suspense Funds” – proceeds of production and associated penalties and interest
in respect of any of the Wells that are payable to any Third Party and are being
held in suspense by Seller as the operator of such Wells.

“Sustained Production Loss” – means that the trailing seven (7) day average of
gaseous Hydrocarbon production (Mcf/day) from a Performance Well has been
reduced to less than 75% of the estimated production level (Mcf/day) for such
Performance Well (the “Original Production Level”), as set forth on Schedule
7.07.

“Target Closing Date” – as defined in Section 2.03.

“Tax” or “Taxes” – (a) any and all federal, state, provincial, local, foreign
and other taxes, levies, fees, imposts, duties, assessments, unclaimed property
and escheat obligations and other governmental charges imposed by any
Governmental Body, including income, profits, franchise, alternative or add-on
minimum, gross receipts, environmental (including taxes under Section 59A of the
Code), registration, withholding, employment, social security (or similar),
disability, occupation, ad valorem, property, value added, capital gains, sales,
goods and services, use, real or personal property, capital stock, license,
branch, payroll, estimated, unemployment, severance, compensation, utility,
stamp, premium, windfall profits, transfer, gains, production and excise taxes,
and customs duties, together with any interest, penalties, fines or additions
thereto and (b) any successor or transferee liability in respect of any items
described in clause (a) above.

“Tax Allocation” – as defined in Section 2.07.

“Tax Returns” – any and all reports, returns, declarations, claims for refund,
elections, disclosures, estimates, information reports or returns or statements
supplied or required to be supplied to a Governmental Body in connection with
Taxes, including any schedule or attachment thereto or amendment thereof.  

“Third Party” – any Person other than a Party or an Affiliate of a Party.

“Threatened” – a claim, Proceeding, dispute, action, or other matter will be
deemed to have been “Threatened” if any demand or statement has been made in
writing to a Party or any of its officers, directors, or employees that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.

“Title Benefit” – as defined in Section 11.08.

“Title Benefit Notice” – as defined in Section 11.08.

“Title Benefit Properties” – as defined in Section 11.08.

“Title Benefit Value” – as defined in Section 11.08.

“Title Defect” – any Encumbrance, defect or other matter that causes Seller not
to have Defensible Title in and to the Wells, Well Locations, and the Pipeline,
without duplication; provided that the following shall not be considered Title
Defects:

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(a)defects based upon the failure to record any federal or state Leases or any
assignments of interests in such Leases in any applicable public records;

(b)any Encumbrance or loss of title resulting from Seller’s conduct of business,
unless such conduct is in violation of the provisions of this Agreement;

(c)defects arising from any change in applicable Legal Requirement after the
Execution Date;

(d)defects arising from any prior oil and gas lease taken more than fifteen (15)
years prior to the Effective Time relating to the lands covered by a Lease not
being surrendered of record, unless Buyer provides affirmative evidence that a
Third Party is conducting operations on, or asserting ownership of, the Assets,
sufficient proof of which shall include written communication by a party with
record title to such prior lease asserting the validity of the lease;

(e)defects that affect only which non-Seller Person has the right to receive
royalty payments rather than the amount or the proper payment of such royalty
payment;

(f)defects arising from a mortgage encumbering the oil, gas or mineral estate of
any lessor unless a complaint of foreclosure has been duly filed or any similar
action taken by the mortgagee thereunder and in such case such mortgage has not
been subordinated to the Lease applicable to such Asset;

(g)defects based solely upon the title of record being held in the name of Linn
Energy Holdings, LLC, Linn Operating, Inc. or Linn Operating, LLC, if Seller
provides certified copies of name changes or certificates of conversion, as
appropriate, showing actual ownership in Sellers; and

(h)defects or irregularities that would customarily be waived by a reasonably
prudent owner or operator of oil and gas properties in the same geographic area
where the Assets are located.

“Title Defect Cure Period” – as defined in Section 11.06(a).

“Title Defect Notice” – as defined in Section 11.04.

“Title Defect Property” – as defined in Section 11.04.

“Title Defect Value” – as defined in Section 11.04.

“Transfer Tax” – all transfer, documentary, sales, use, stamp, registration and
similar Taxes (but excluding income Taxes) and fees arising out of, or in
connection with, the transfer of the Assets.

“Units” – as set forth in the definition of “Assets”.

“Vacation Rollover” – as defined in Section 12.02(b).

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“Well Locations” – the locations of two future wells within area unitized as the
LCV RA SUM Unit created pursuant to the Office of Conservation Order No. 164-Z,
effective February 12, 1997 and redefined in Order No. 164-Z-18, but limited to
the unitized formation described in such orders.

“Well Location Formation” – the unitized formation of the LCV RA SUM Unit
created pursuant to the Office of Conservation Order No. 164-Z, effective
February 12, 1997 and redefined in Order No. 164-Z-18.

“Wells” – as set forth in the definition of “Assets”.

“Working Interest” – with respect to any Well or Well Location, the interest in
and to such Well or Well Location that is burdened with the obligation to bear
and pay costs and expenses of maintenance, development and operations on or in
connection with such Well or Well Location (in each case, limited to the
applicable currently producing formation as described in the definition of
“Defensible Title”, or with respect to Well Locations, limited to the Well
Location Formation, and subject to any reservations, limitations or depth
restrictions described in Exhibit B or Schedule 2.07), but without regard to the
effect of any Royalties or other burdens.  

ARTICLE 2
SALE AND TRANSFER OF ASSETS; CLOSING

2.01Assets.  

Subject to the terms and conditions of this Agreement, at Closing, Seller shall
sell and transfer (or shall cause to be sold and transferred) the Assets to
Buyer, and Buyer shall purchase, pay for, and accept the Assets from Seller.

2.02Purchase Price; Deposit.  

Subject to any adjustments that may be made under Section 2.05, the purchase
price for the Assets will be Twenty-Six Million Five Hundred Twenty-Five
Thousand Dollars ($26,525,000.00) (the “Purchase Price”).  Within one (1)
Business Day after the execution of this Agreement, Buyer shall deposit by wire
transfer in same day funds into an escrow account (the “Escrow Account”)
established pursuant to the terms of a mutually agreeable Escrow Agreement (the
“Escrow Agreement”) an amount equal to the Deposit Amount.  The Deposit Amount
shall be held by the Escrow Agent, and if the Closing timely occurs, on or
before the Closing Date, the Parties shall execute and deliver to the Escrow
Agent a joint instruction letter directing the Escrow Agent to release the
Deposit Amount to Seller at Closing, which Deposit Amount shall be applied as a
credit toward the Preliminary Amount payable at Closing as provided in Section
2.05(a).  If this Agreement is terminated prior to Closing in accordance with
Section 9.01, then the provisions of Section 9.02 shall apply and the
distribution of the Deposit Amount shall be governed in accordance therewith.

2.03Closing; Preliminary Settlement Statement.  

The closing with respect to the Assets (the “Closing”) shall take place at the
offices of Seller at 717 Texas Avenue, Suite 2000, Houston, Texas 77002 on or
before September 1, 2020 (the “Target Closing Date”), or if all conditions to
Closing under Article 7 and Article 8 have not yet been satisfied or waived,
within ten (10) Business Days after such conditions have been satisfied or
waived, subject to the provisions of Article 9 (the “Closing Date”); provided
that the Target Closing Date shall be extended (day for day) for the total
number of days that the Defect Notice Date is extended

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pursuant to the last sentence of Section 11.04.  Subject to the provisions of
Articles 7, 8, and 9, failure to consummate the purchase and sale provided for
in this Agreement on the date and time and at the place determined pursuant to
this Section 2.03 shall not result in the termination of this Agreement and
shall not relieve either Party of any obligation under this Agreement.  Not
later than five (5) Business Days prior to the Closing Date, Seller will deliver
to Buyer a statement prepared by Seller in good faith setting forth in
reasonable detail Seller’s reasonable determination of the Preliminary Amount
based upon the best information available at that time (the “Preliminary
Settlement Statement”).  As part of the Preliminary Settlement Statement, Buyer
shall provide to Seller such data as is reasonably necessary to support any
estimated allocation, for purposes of establishing the Preliminary
Amount.  Within two (2) Business Days after its receipt of the Preliminary
Settlement Statement, Buyer may submit to Seller in writing any objections or
proposed changes thereto and Seller shall consider all such objections and
proposed changes in good faith.  The estimate agreed to by Seller and Buyer or,
absent such agreement, set forth in the Preliminary Settlement Statement
delivered by Seller in accordance with this Section 2.03, will be the amount to
be paid by Buyer to Seller at Closing, subject to the final reconciliation or
agreement in accordance with Section 2.05(e).

2.04Closing Obligations.  

 

(a)

At Closing, each Seller Party shall deliver (and execute and acknowledge, as
appropriate), or cause to be delivered (and executed and acknowledged, as
appropriate), to Buyer:

 

(i)

the Instruments of Conveyance in the appropriate number for recording in the
real property records where the Assets are located;

 

(ii)

possession of the Assets (other than any Retained Plug Back Well) (except the
Suspense Funds, which shall be conveyed to Buyer by way of one or more
adjustments to the Purchase Price as provided in Section 2.05(d)(ii)(E));

 

(iii)

a certificate, in substantially the form set forth in Exhibit H-1 executed by an
officer of such Seller Party, certifying on behalf of such Seller Party that the
conditions to Closing set forth in Sections 7.01 and 7.02 have been fulfilled;

 

(iv)

a Treasury Regulation Section 1.1445-2(b)(2) statement, certifying that such
Seller Party (or its regarded owner, if such Seller Party is an entity
disregarded as separate from its owner) is not a “foreign person” within the
meaning of the Code;

 

(v)

an executed counterpart of the Preliminary Settlement Statement;

 

(vi)

a recordable release in a form reasonably acceptable to Buyer of any trust,
mortgages, financing statements, fixture filings and security agreements, in
each case, securing indebtedness for borrowed money made by such Seller Party or
its Affiliates affecting the Assets;

 

(vii)

for each Well operated by Seller or its Affiliate on the Closing Date (other
than any Retained Plug Back Well), such regulatory documentation on forms
prepared by Buyer as is necessary to designate Buyer as operator of such Wells;
and

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(viii)

such documents as Buyer or counsel for Buyer may reasonably request, including
letters-in-lieu of transfer order to purchasers of production from the Wells
(which shall be prepared and provided by Buyer and reasonably satisfactory to
Seller).

(b)

At Closing, Buyer shall deliver (and execute and acknowledge, as appropriate) to
Seller:

 

(i)

the Preliminary Amount, less the Deposit Amount, by wire transfer to the
accounts specified by Seller in written notices given by Seller to Buyer at
least two (2) Business Days prior to the Closing Date;

 

(ii)

the Instruments of Conveyance in the appropriate number for recording in the
real property records where the Assets are located;

 

(iii)

a certificate, in substantially the form set forth in Exhibit H-2 executed by an
officer of Buyer, certifying on behalf of Buyer that the conditions to Closing
set forth in Sections 8.01 and 8.02 have been fulfilled;

 

(iv)

an executed counterpart of the Preliminary Settlement Statement;

 

(v)

evidence of replacement bonds, guarantees, and other sureties pursuant to
Section 6.03(a) and evidence of such other authorizations and qualifications as
may be necessary for Buyer to own the Assets; and

 

(vi)

such other documents as Seller or counsel for Seller may reasonably request,
including letters-in-lieu of transfer order to purchasers of production from the
Wells (which shall be prepared and provided by Buyer and reasonably satisfactory
to Seller).     

2.05Allocations and Adjustments.  

If the Closing occurs:

(a)

Buyer shall be entitled to all production and products from or attributable to
the Assets from and after the Effective Time and the proceeds thereof, and to
all other income, proceeds, receipts, and credits earned with respect to the
Assets (including those identified on Exhibit A-4) on or after the Effective
Time, and shall be responsible for (and entitled to any refunds with respect to)
(i) all Property Costs (other than the Plug Back Well Costs, which are addressed
in clause (ii)) attributable to the Assets and incurred from and after the
Effective Time and (ii) all Plug Back Well Costs (including for the Retained
Plug Back Wells) in an amount up to (but not to exceed) the Plug Back Well Cost
Cap.  Seller shall be entitled to all production and products from or
attributable to the Assets prior to the Effective Time and the proceeds thereof,
and shall be responsible for (and entitled to any refunds with respect to) (A)
all Property Costs attributable to the Assets and incurred prior to the
Effective Time, other than any Plug Back Well Costs (including for the Retained
Plug Back Wells) in an amount up to (but not to exceed) the Plug Back Well Cost
Cap, (B) any Plug Back Well Costs in excess of the Plug Back Well Cost Cap and
(C) the Specified Litigation Costs.  “Earned” and “incurred,” as used in this
Agreement, shall be interpreted in accordance with generally accepted accounting
principles and Council of Petroleum Accountants Society (COPAS) standards.

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(b)

Without limiting the allocation of costs and receipts set forth in Section
2.05(a), Seller shall be entitled to deduct and retain as overhead charges for
the Assets operated by Seller or its Affiliate an amount equal to $20,000 per
month (prorated for partial months) for the time period between the Effective
Time and the Closing Date. The charges and deductions under this Section 2.05(b)
shall accrue from the Effective Time through the month in which transfer of
operations occurs; provided however, that the overhead charges for the month in
which transfer of operations occurs shall be prorated based upon the number of
days in such month that Seller or its Affiliate operated such Wells (and for the
number of days that the Well was in drilling or completion, or was in
production, as applicable).  

(c)

For purposes of allocating revenues, production, proceeds, income, accounts
receivable, and products under this Section 2.05, (A) liquid Hydrocarbons
produced into storage facilities will be deemed to be “from or attributable to”
the Wells when they pass through the pipeline connecting into the storage
facilities into which they are run; provided, however, that liquid Hydrocarbon
volumes in storage tanks shall be limited to include only those volumes above
the load line in such storage tanks, and (B) gaseous Hydrocarbons and liquid
Hydrocarbons produced into pipelines will be deemed to be “from or attributable
to” the Wells when they pass through the receipt point sales meters on the
pipelines through which they are transported.  In order to accomplish the
foregoing allocation of production, the Parties shall rely upon the gauging,
metering, and strapping procedures which were conducted by Seller on or about
the Effective Time and, unless demonstrated to be inaccurate, shall utilize
reasonable interpolating procedures to arrive at an allocation of production
when exact gauging, metering, and strapping data is not available on hand as of
the Effective Time. Asset Taxes shall be prorated in accordance with Section
13.02(b).

(d)

The Purchase Price shall be, without duplication,

 

(i)

increased by the following amounts:

 

(A)

the aggregate amount of (i) proceeds received by Buyer from the sale of
Hydrocarbons produced from and attributable to the Assets during any period
prior to the Effective Time to which Seller is entitled under Section 2.05(a)
(net of any (x) Royalties and (y) gathering, processing, transportation and
other midstream costs) and (ii) other proceeds received with respect to the
Assets for which Seller would otherwise be entitled under Section 2.05(a);

 

(B)

the amount of all Asset Taxes allocable to Buyer pursuant to Section 13.02(b)
but paid or economically borne by Seller;

 

(C)

the aggregate amount of all non-reimbursed Property Costs (other than Asset
Taxes) that have been paid by Seller (1) that are attributable to the ownership
of the Assets after the Effective Time (including prepayments with respect to
any period after the Effective Time) or (2) that are Plug Back Well Costs (but
excluding the amount of any Plug Back Well Costs in excess of the Plug Back Well
Cost Cap that are allocated to Seller pursuant to Section 2.05(a));

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(D)

the amount of any other upward adjustment specifically provided for in this
Agreement or mutually agreed upon by the Parties;

 

(E)

to the extent that proceeds for such volumes have not been received by Seller,
an amount equal to the value of all Hydrocarbons attributable to the Assets in
storage or existing in stock tanks, pipelines or plants (including inventory) as
of the Effective Time;

 

(F)

the amount of the Specified Receivables, up to a maximum of $50,000;

 

(G)

if applicable, the amount, if any, of Imbalances in favor of Seller, multiplied
by $2.00 per Mcf, or, to the extent that the applicable Contracts provide for
cash balancing, the actual cash balance amount determined to be due to Seller as
of the Effective Time; and

 

(ii)

decreased by the following amounts:

 

(A)

the aggregate amount of (i) proceeds received by Seller from the sale of
Hydrocarbons produced from and attributable to the Assets from and after the
Effective Time to which Buyer is entitled under Section 2.05(a) (net of any (x)
Royalties and (y) gathering, processing, transportation and other midstream
costs) and (ii) other proceeds received by Seller with respect to the Assets for
which Buyer would otherwise be entitled under Section 2.05(a);

 

(B)

the amount of all Asset Taxes allocable to Seller pursuant to Section 13.02(b)
but paid or economically borne by Buyer;

 

(C)

the aggregate amount of all downward adjustments pursuant to Article 11;

 

(D)

the aggregate amount of all non-reimbursed Property Costs (other than Asset
Taxes) that are (1) attributable to the ownership of the Assets prior to the
Effective Time (excluding prepayments with respect to any period after the
Effective Time) other than Plug Back Well Costs that are allocated to Buyer
pursuant to Section 2.05(a) or (2) that are Plug Back Well Costs in excess of
the Plug Back Well Costs Cap and, in each case, paid by Buyer;

 

(E)

the amount of the Suspense Funds;

 

(F)

the amount of any other downward adjustment specifically provided for in this
Agreement or mutually agreed upon by the Parties;

 

(G)

if applicable, the amount, if any, of Imbalances owing by Seller, multiplied by
$2.00 per Mcf, or, to the extent that the applicable Contracts provide for cash
balancing, the actual cash balance amount determined to be owed by Seller as of
the Effective Time;  and

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(H)

if applicable, the amount any Specified Litigation Costs that are the
responsibility of Sellers pursuant to Section 2.05(a) but that are actually paid
by Buyer on or after Closing (without duplication of any amounts previously paid
by Sellers to Third Parties).

(e)

As soon as practicable after Closing, but no later than one hundred twenty 120)
days following the Closing Date, Seller shall prepare and submit to Buyer a
statement (each, a “Final Settlement Statement”) setting forth each adjustment
or payment which was not finally determined as of the Closing Date and showing
the values used to determine such adjustments to reflect the final adjusted
Purchase Price attributable to the Assets.  On or before thirty (30) days after
receipt of a Final Settlement Statement, Buyer shall deliver to Seller a written
report containing any changes that Buyer proposes be made to such Final
Settlement Statement and an explanation of any such changes and the reasons
therefor together with any supporting information (the “Dispute
Notice”).  During such thirty (30)-day period, Buyer shall be given reasonable
access to Seller’s books and records relating to the matters required to be
accounted for in the Final Settlement Statement.  Any changes not included in
the Dispute Notice for a particular Final Settlement Statement shall be deemed
waived.  If Buyer fails to timely deliver a Dispute Notice to Seller containing
changes Buyer proposes to be made to a Final Settlement Statement, then such
Final Settlement Statement as delivered by Seller will be deemed to be mutually
agreed upon by the Parties and will be final and binding on the Parties.  Upon
delivery of a Dispute Notice, the Parties shall undertake to agree with respect
to any disputed amounts identified therein by the date that is one hundred fifty
(150) days after the Closing Date (the “Post-Closing Date”).  Except for Title
Defect and Environmental Defect adjustments pursuant to Section 2.05(d)(ii)(C),
which shall be subject to the arbitration provisions of Section 11.15, if the
Parties are still unable to agree regarding any item set forth in the Dispute
Notice as of the Post-Closing Date, then the Parties shall submit to a
nationally recognized independent accounting firm mutually agreed to by the
Parties (the “Accounting Firm”) a written notice of such dispute along with
reasonable supporting detail for the position of Buyer and Seller, respectively,
and the Accounting Firm shall finally determine such disputed item in accordance
with the terms of this Agreement.  The Accounting Firm shall act as an expert
and not an arbitrator.  In determining the proper amount of any adjustment to
the Purchase Price related to the disputed item, the Accounting Firm shall not
increase the Purchase Price more than the increase proposed by Seller nor
decrease the Purchase Price more than the decrease proposed by Buyer, as
applicable.  The decision of the Accounting Firm shall be binding on the
Parties, and the fees and expenses of the Accounting Firm shall be borne
one-half (1/2) by Seller and one-half (1/2) by Buyer.  The date upon which all
adjustments and amounts in a Final Settlement Statement are agreed to (or deemed
agreed to) or fully and finally determined by the Accounting Firm as set forth
in this Section 2.05(e) shall be called a “Final Settlement Date,” and the
portion of the final adjusted Purchase Price applicable to the Closing shall be
called the “Final Amount.”  If (a) the Final Amount is more than the Preliminary
Amount, Buyer shall pay to Seller an amount equal to the Final Amount, minus the
Preliminary Amount; or (b) the Final Amount is less than the Preliminary Amount,
Seller shall pay to Buyer an amount equal to the Preliminary Amount, minus the
Final Amount.  Such payment shall be made within five (5) Business Days after
the applicable Final Settlement Date by wire transfer of immediately available
funds to the

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accounts specified pursuant to wire instructions delivered in advance by Seller
or Buyer, as applicable.

2.06Assumption.  

If Closing occurs, from and after the Closing Date, Buyer shall assume, fulfill,
perform, pay, and discharge the following liabilities arising from, based upon,
related to, or associated with the Assets and only to the extent not
constituting Retained Liabilities (collectively, the “Assumed Liabilities”)
subject to Seller’s indemnity obligations under Section 10.02 (further subject
to the limitations and restrictions in Article 10): any and all Damages and
obligations, known or unknown, allocable to the Assets prior to, at, or after
the Effective Time (except as otherwise provided herein), including any and all
Damages and obligations: (a) attributable to or resulting from the use,
maintenance or ownership of the Assets, regardless whether arising before, at or
after the Effective Time, except for Property Costs which shall have been
accounted for as provided under Section 2.05; (b) imposed by any Legal
Requirement or Governmental Body relating to the Assets, (c) for plugging,
abandonment, decommissioning, and surface restoration of the Assets, including
oil, gas, injection, water, or other wells and all surface facilities;
(d) subject to Buyer’s rights and remedies set forth in Article 11 and the
special warranty of Defensible Title set forth in the Instruments of Conveyance,
attributable to or resulting from lack of Defensible Title to the Assets; (e)
attributable to the Suspense Funds, to the extent actually received by Buyer (or
for which a reduction to the Purchase Price was made); (f) attributable to the
Imbalances; (g) subject to Buyer’s rights and remedies set forth in Article 11,
attributable to or resulting from all Environmental Liabilities relating to the
Assets; (h) reserved; (i) attributable to or resulting from Asset Taxes and
assessments attributable to the Assets to the extent attributable to periods (or
portions thereof) from and after the Effective Time; (j) attributable to or
resulting from Transfer Taxes, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties, if any, imposed or required in connection with the sale of the Assets
to Buyer or the filing or recording of all assignments related to the sale of
the Assets to Buyer; (k) attributable to the Leases and the Applicable
Contracts; and (l) subject to Section 2.05(d)(ii)(H), attributable to the
Assumed Litigation.  Buyer acknowledges that: (i) the Assets have been used in
connection with the exploration for, and the development, production, treatment,
and transportation of, Hydrocarbons; (ii) spills of wastes, Hydrocarbons,
produced water, Hazardous Materials, and other materials and substances may have
occurred in the past or in connection with the Assets; (iii) there is a
possibility that there are currently unknown, abandoned wells, plugged wells,
pipelines, and other equipment on or underneath the property underlying the
Assets; (iv) it is the intent of the Parties that all liability associated with
the above matters as well as any responsibility and liability to decommission,
plug, or replug such wells (including the Wells) in accordance with all Legal
Requirements and requirements of Governmental Bodies be passed to Buyer
effective as of the Effective Time and that Buyer shall assume all
responsibility and liability for such matters and all claims and demands related
thereto; (v) the Assets may contain asbestos, Hazardous Materials, or NORM; (vi)
NORM may affix or attach itself to the inside of wells, materials, and equipment
as scale or in other forms; (vii) wells, materials, and equipment located on the
Assets may contain NORM; and (viii) special procedures may be required for
remediating, removing, transporting, and disposing of asbestos, NORM, Hazardous
Materials, and other materials from the Assets.  From and after Closing, but
effective as of the Effective Time, subject to Seller’s indemnity obligations
under Section 10.02 (subject to the limitations and restrictions in Article 10),
Buyer shall assume, with respect to the Assets, all responsibility and liability
for any assessment, remediation, removal, transportation, and disposal

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of these materials and associated activities in accordance with all Legal
Requirements and requirements of Governmental Bodies.  

2.07Allocation of Purchase Price.  

The Purchase Price shall be allocated among the Assets as set forth in Schedule
2.07 hereto. Buyer shall provide the initial draft of Schedule 2.07 and the
Parties shall cooperate in good faith to agree upon such schedule and any
adjustments to such schedule made pursuant to this Section 2.07. Seller and
Buyer agree to be bound by the Allocated Values set forth in Schedule 2.07 for
purposes of Article 11 hereof.  Seller and Buyer further agree that for the
purpose of making the requisite filings under Section 1060 of the Code, and the
regulations thereunder, the Purchase Price and any liabilities assumed by Buyer
under this Agreement that are treated as consideration for Tax purposes shall be
allocated among the Assets in a manner consistent with the Allocated Values, as
set forth on Schedule 2.07 (the “Tax Allocation”).  Seller and Buyer each agree
to report, and to cause their respective Affiliates to report, the federal,
state, and local income and other Tax consequences of the Contemplated
Transactions, and in particular to report the information required by
Section 1060(b) of the Code, and to jointly prepare Form 8594 (Asset Acquisition
Statement under Section 1060 of the Code) as promptly as possible following the
Closing Date and in a manner consistent with the Tax Allocation as revised to
take into account subsequent adjustments to the Purchase Price, including any
adjustments pursuant to this Agreement to determine the Final Amount, and shall
not take any position inconsistent therewith upon examination of any tax return,
in any refund claim, in any litigation, investigation or otherwise, unless
required to do so by any Legal Requirement after notice to and discussions with
the other Party, or with such other Party’s prior consent.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER

Each Seller Party represents and warrants to Buyer as of the Execution Date and
the Closing Date, the following:

3.01Organization and Good Standing.  

Such Seller Party is a Delaware limited liability company, and is duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and, where required, is duly qualified to do business and is in good
standing in each jurisdiction in which the Assets are located, with full limited
liability company power and authority to conduct its business as it is now being
conducted, and to own or use the properties and assets that it purports to own
or use.  Such Seller Party is not a “foreign person” for purposes of Section
1445 of the Code.

3.02Authority; No Conflict.  

(a)

The execution, delivery, and performance of this Agreement and the Contemplated
Transactions have been duly and validly authorized by all necessary limited
liability company action on the part of such Seller Party.  This Agreement has
been duly executed and delivered by such Seller Party and at the Closing, all
instruments executed and delivered by such Seller Party at or in connection with
the Closing shall have been duly executed and delivered by such Seller
Party.  This Agreement constitutes the legal, valid, and binding obligation of
such Seller Party, enforceable against such Seller Party in accordance with its
terms, except as such enforceability may be limited by applicable

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bankruptcy or other similar laws affecting the rights and remedies of creditors
generally and by general principles of equity (regardless of whether such
enforceability is considered in a Proceeding in equity or at law).  Upon
execution and delivery by such Seller Party of the Instruments of Conveyance at
Closing, such Instruments of Conveyance shall constitute legal, valid and
binding transfers and conveyances of the Assets.  Upon the execution and
delivery by such Seller Party of any other documents at Closing (collectively
with the Instruments of Conveyance, such Seller Party’s “Seller Closing
Documents”), such Seller Closing Documents shall constitute the legal, valid,
and binding obligations of such Seller Party, enforceable against such Seller
Party in accordance with their terms, except as such enforceability may be
limited by applicable bankruptcy or other similar laws affecting the rights and
remedies of creditors generally and by general principles of equity (regardless
of whether such enforceability is considered in a Proceeding in equity or at
law).

(b)

Except as set forth in Schedule 3.02(b), and assuming the receipt of all
Consents and the waiver of all Preferential Purchase Rights (in each case)
applicable to the Contemplated Transactions, neither the execution and delivery
of this Agreement by such Seller Party nor the consummation or performance of
any of the Contemplated Transactions by such Seller Party shall, directly or
indirectly (with or without notice or lapse of time):

 

(i)

contravene, conflict with, or result in a violation of (A) any provision of the
Organizational Documents of such Seller Party, or (B) any resolution adopted by
the board of directors, managers or officers of such Seller Party;

 

(ii)

contravene, conflict with, or result in a violation of, or give any Governmental
Body or other Person the right to challenge any of the Contemplated
Transactions, to terminate, accelerate, or modify any terms of, or to exercise
any remedy or obtain any relief under, any Contract or agreement or any Legal
Requirement or Order to which such Seller Party, or any of the Assets, may be
subject;

 

(iii)

contravene, conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Body the right to revoke, withdraw,
suspend, cancel, terminate, or modify, any Governmental Authorization that
relates to the Assets; or

 

(iv)

result in the imposition or creation of any Encumbrance upon or with respect to
any of the Assets, except for Permitted Encumbrances.

3.03Bankruptcy.  

Except for claims or matters related to the bankruptcy case of Linn Energy, LLC
and its subsidiaries commenced on May 11, 2016 and concluded on September 27,
2018, for which the United States Bankruptcy Court for the Southern District of
Texas retains jurisdiction, there are no bankruptcy, reorganization,
receivership, or arrangement proceedings pending or being contemplated by such
Seller Party or, to such Seller Party’s Knowledge, Threatened against such
Seller Party.

3.04Taxes.  

All material Tax Returns required to be filed by such Seller Party with respect
to Asset Taxes have been timely filed and all such Tax Returns are correct and
complete in all material respects.  All material Asset Taxes required to be paid
by such Seller Party with respect to the Assets that are or have become due have
been timely paid in full, and such Seller

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Party is not delinquent in the payment of any such Asset Taxes.  There is not
currently in effect any extension or waiver of any statute of limitations of any
jurisdiction regarding the assessment or collection of any Asset Taxes relating
to the Assets.  There are no administrative or judicial proceedings by any
taxing authority pending against Seller relating to or in connection with any
Asset Taxes relating to the Assets.  All Tax withholding and deposit
requirements imposed by applicable Legal Requirements with respect to any of the
Assets have been satisfied in all material respects.  Except as disclosed on
Schedule 3.04, no Asset is subject to any tax partnership agreement or
provisions requiring a partnership income tax return to be filed under
Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state
statute.  

3.05Legal Proceedings.  

Other than the Assumed Litigation and the Retained Litigation, such Seller Party
has not been served with any Proceeding, no Proceedings are pending and, to such
Seller Party’s Knowledge, there is no Threatened Proceeding (except for
immaterial or frivolous claims) against such Seller Party or any of its
Affiliates, in each case, that (a) relates to such Seller Party’s ownership or
operation of any of the Assets, or (b) challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.

3.06Brokers.  

Neither such Seller Party nor its Affiliates have incurred any obligation or
liability, contingent or otherwise, for broker’s or finder’s fees with respect
to the Contemplated Transactions other than obligations that are and will remain
the sole responsibility of such Seller Party and its Affiliates.

3.07Compliance with Legal Requirements.  

To such Seller Party’s Knowledge, except as set forth in Schedule 3.07 or where
lack of compliance would not have a Material Adverse Effect, there is no uncured
violation by such Seller Party of any Legal Requirements (other than
Environmental Laws) with respect to such Seller Party’s ownership or operation
of the Assets.  

3.08Prepayments.  

Except for any Imbalances, such Seller Party has not received payment under any
Contract for the sale of Hydrocarbons produced from the Assets which requires
delivery in the future to any party of Hydrocarbons previously paid for and not
yet delivered.

3.09Imbalances.

To such Seller Party’s Knowledge, except as set forth in Schedule 3.09, there
are no Imbalances with respect to such Seller Party’s obligations relating to
the Wells as of the Effective Time.

3.10Material Contracts.  

Schedule 3.10 sets forth all Applicable Contracts with respect to such Seller
Party of the type described below as of the Execution Date (collectively, the
“Material Contracts”):

(a)

any Applicable Contract that is a Hydrocarbon purchase and sale, transportation,
gathering, treating, processing, or similar Applicable Contract that is not
terminable without penalty on ninety (90) days’ or less notice;

(b)

any Applicable Contract that can reasonably be expected to result in aggregate
payments by such Seller Party of more than Fifty Thousand Dollars ($50,000) net
to such Seller Party’s interest during the current or any subsequent fiscal year
or more than Two Hundred

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Fifty Thousand Dollars ($250,000) in the aggregate net to such Seller Party’s
interest over the term of such Applicable Contract (based on the terms thereof
and contracted (or if none, current) quantities where applicable);

(c)

any Applicable Contract that is an indenture, mortgage, loan, credit agreement,
sale-leaseback, guaranty of any obligation, bond, letter of credit, or similar
financial Contract or that creates a financial lien or encumbrance on title to
any Asset; and

(d)

any Applicable Contract that constitutes a partnership agreement, joint venture
agreement, area of mutual interest agreement, joint development agreement, joint
operating agreement, farmin or farmout agreement or similar Contract where the
primary obligation has not been completed prior to the Effective Time (in each
case, excluding any tax partnership).  

Neither such Seller Party, nor to the Knowledge of such Seller Party, any other
party is in default under any Material Contract, except as set forth in Schedule
3.10.  Except as set forth in Schedule 3.10, there are no Contracts with
Affiliates of such Seller Party that will be binding on the Assets after
Closing.

3.11Consents and Preferential Purchase Rights.  

Except as set forth in Schedule 3.11, none of the Assets is subject to any
Preferential Purchase Rights or Consents required to be obtained by such Seller
Party which may be applicable to the Contemplated Transactions, except for (a)
Consents and approvals of Governmental Bodies that are customarily obtained
after Closing and (b) Contracts that are terminable upon not greater than ninety
(90) days’ notice without payment of any fee.

3.12Current Commitments.  

Schedule 3.12 sets forth, as of the Execution Date, all approved authorizations
for expenditures and other approved capital commitments, individually equal to
or greater than Fifty Thousand Dollars ($50,000) (net to such Seller Party’s
interest) (the “AFEs”) relating to the Assets to drill or rework any Wells or
for other capital expenditures pursuant to any of the Material Contracts for
which all of the activities anticipated in such AFEs have not been completed by
the Execution Date.

3.13Environmental Laws.

  Except as disclosed on Schedule 3.13, (a) there are no actions, suits or
proceedings pending, or to such Seller Party’s Knowledge, threatened in writing,
before any Governmental Body with respect to the Assets alleging material
violations of, or material liabilities under, Environmental Laws, or claiming
remediation obligations, (b) such Seller Party has received no notice from any
Governmental Body of any alleged or actual material violation or non-compliance
with, or material liability under, any Environmental Law or of material
non-compliance with the terms or conditions of any Permits required under
Environmental Laws, arising from, based upon, associated with or related to the
Assets or the ownership or operation of any thereof, and (c) to such Seller
Party’s Knowledge, except where lack of compliance would not have a Material
Adverse Effect, there is no uncured violation by such Seller Party of any
Environmental Law with respect to such Seller Party’s ownership or operation of
the Assets.  

3.14Permits.  

To Seller’s Knowledge, except for Permits required under Environmental Laws or
as set forth in Schedule 3.14, (a) with respect to any Assets currently operated
by Seller

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or any of its Affiliates, Seller or its Affiliate (as applicable) has acquired
all Permits from appropriate Governmental Bodies to conduct operations on such
Assets in material compliance with all applicable Legal Requirements; (b) all
such Permits are in full force and effect and no Proceeding is pending or
Threatened to suspend, revoke or terminate any such Permit or declare any such
Permit invalid; and (c) Seller is in compliance in all material respects with
all such Permits.

3.15Wells.  

Except as disclosed on Schedule 3.15 (a) no Well is subject to material
penalties on allowable production after the Effective Time because of any
overproduction, (b) there are no Wells that Seller is currently obligated by
applicable Legal Requirements or contract to plug or abandon or that are
currently subject to exceptions to a requirement to plug or abandon issued by a
Governmental Body, and (c) all Wells that are operated by a Seller Party or its
Affiliate (and that have been drilled during such Seller Party or its
Affiliates’ period of operatorship) have, in all material respects, been drilled
and completed at legal locations and within the limits permitted by all
applicable Leases, and pooling or unit agreements.

3.16Payout Balances.  

Schedule 3.16 sets forth, to Seller’s Knowledge, the payout balances as of the
Execution Date for each Well subject to payout.

3.17Employee Benefits

.  

(a)

Schedule 3.17(a) contains a true and complete list of each “employee benefit
plan,” as defined in Section 3(3) of ERISA, and all other retirement, pension,
deferred compensation, bonus, incentive, severance, executive life insurance,
vacation, stock purchase, stock option, phantom stock, equity, employment,
profit sharing, retention, stay bonus, change of control and other compensation
or benefit plans, programs, agreements or arrangements maintained, sponsored or
contributed to by such Seller Party or any of its ERISA Affiliates for the
benefit of any Available Employee (collectively, such Seller Party’s “Seller
Benefit Plans”).  

(b)

THIS SECTION 3.17 CONTAINS THE EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF SUCH
SELLER PARTY WITH RESPECT TO EMPLOYEE BENEFITS MATTERS.  NO OTHER PROVISION OF
THIS AGREEMENT SHALL BE CONSTRUED AS CONSTITUTING A REPRESENTATION OR WARRANTY
REGARDING SUCH MATTERS.

3.18Royalties; Suspense Funds.

  To Seller’s Knowledge (a) all rentals, royalties and other payments necessary
to prevent the termination of any of the Leases have been paid in all material
respects, other than the Suspense Funds and (b) Schedule 3.18 sets forth all
Suspense Funds as of the date set forth in such Schedule.

 

3.19Knowledge Qualifiers for Non-Operated Assets.

  To the extent that such Seller Party has made representations or warranties in
Sections 3.08, 3.10, 3.12, 3.13(a), 3.15(a)-(b) and 3.18(a) in connection with
matters relating to Non-Operated Assets, each and every such representation and
warranty shall be deemed to be qualified by the phrase, “To such Seller Party’s
Knowledge.”

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3.20Disclosures with Multiple Applicability; Materiality.  

If any fact, condition, or matter disclosed in Seller’s disclosure Schedules
applies to more than one Section of this Article 3, a single disclosure of such
fact, condition, or matter on Seller’s disclosure Schedules shall constitute
disclosure with respect to all sections of this Article 3 to which such fact,
condition, or other matter applies, regardless of the section of Seller’s
disclosure Schedules in which such fact, condition, or other matter is
described.  Inclusion of a matter on Seller’s disclosure Schedules with respect
to a representation or warranty that is qualified by “material” or “Material
Adverse Effect” or any variant thereof shall not necessarily be deemed an
indication that such matter does, or may, be material or have a Material Adverse
Effect.  Matters may be disclosed on a Schedule to this Agreement for purposes
of information only.

3.21Disclosure.

  To the best of Seller’s Knowledge, all documents, information, books, records,
files, and other data that Seller has provided or made available to Buyer is
true and correct in all material respects.  Notwithstanding anything to the
contrary in this Agreement, Seller shall not be in breach of this Section 3.21
in the absence of (and then only to the extent of) Seller’s willful breach,
fraud or bad faith.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller, as of the Execution Date and the
Closing Date, the following:

4.01Organization and Good Standing.  

Buyer is an Oklahoma limited liability company, and duly organized, validly
existing, and in good standing under the laws of the State of Oklahoma and is
duly qualified to do business and is in good standing in each jurisdiction in
which the Assets are located.

4.02Authority; No Conflict.  

(a)

This Agreement constitutes the legal, valid, and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy or other similar laws
affecting the rights and remedies of creditors generally and by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).  Upon the execution and delivery by Buyer of
the Instruments of Conveyance and any other documents executed and delivered by
Buyer at the Closing (collectively, “Buyer’s Closing Documents”), Buyer’s
Closing Documents shall constitute the legal, valid, and binding obligations of
Buyer enforceable against Buyer in accordance with their respective terms,
except as such enforceability may be limited by applicable bankruptcy or other
similar laws affecting the rights and remedies of creditors generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).  Buyer has the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and Buyer’s Closing Documents, and to perform its obligations under
this Agreement and Buyer’s Closing Documents.

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(b)

Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
shall give any Person the right to prevent, delay, or otherwise interfere with
any of the Contemplated Transactions.

(c)

Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
shall (i) contravene, conflict with, or result in a violation of any provision
of the Organizational Documents of Buyer, (ii) contravene, conflict with, or
result in a violation of any resolution adopted by the board of managers, or
members of Buyer, or (iii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to challenge any of
the Contemplated Transactions, to terminate, accelerate, or modify any terms of,
or to exercise any remedy or obtain any relief under, any agreement or any Legal
Requirement or Order to which Buyer may be subject.

(d)

Buyer is not and shall not be required to give any notice to or obtain any
Consent from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.

4.03Certain Proceedings.  

There is no Proceeding pending against Buyer that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.  To Buyer’s Knowledge, no such Proceeding
has been Threatened.

4.04Knowledgeable Investor.  

Buyer is an experienced and knowledgeable investor in the oil and gas
business.  Prior to entering into this Agreement, Buyer was advised by its own
legal, tax, and other professional counsel concerning this Agreement, the
Contemplated Transactions, the Assets, and their value, and it has relied solely
thereon and on the representations and obligations of Seller in this Agreement
and the documents to be executed by Seller in connection with this Agreement at
Closing.  Buyer is acquiring the Assets for its own account and not for sale or
distribution in violation of the Securities Act of 1933, as amended, the rules
and regulations thereunder, any applicable state blue sky laws, or any other
applicable Legal Requirements.

4.05Qualification.  

Buyer is an “accredited investor,” as such term is defined in Regulation D of
the Securities Act of 1933, as amended.  Buyer is not acquiring the Assets in
connection with a distribution or resale thereof in violation of federal or
state securities laws and the rules and regulations thereunder.  Without
limiting Section 6.02, Buyer is, or as of Closing will be, qualified under
applicable Legal Requirements to hold leases, rights-of-way, and other rights
issued or controlled by (or on behalf of) any applicable Governmental Body and
will be qualified under applicable Legal Requirements to own the Assets.  Buyer
has, or as of the Closing Date will have, posted such bonds as may be required
for the ownership or, where applicable, operatorship by Buyer of the Assets.  To
Buyer’s Knowledge, no fact or condition exists with respect to Buyer or the
Assets which may cause any Governmental Body to withhold its approval of the
Contemplated Transactions.

4.06Brokers.  

Neither Buyer nor its Affiliates have incurred any obligation or liability,
contingent or otherwise, for broker’s or finder’s fees with respect to the
Contemplated

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Transactions other than obligations that are or will remain the sole
responsibility of Buyer and its Affiliates.

4.07Financial Ability.  

Buyer has sufficient cash, available lines of credit, or other sources of
immediately available funds to enable it to (a) deliver the amounts due at
Closing, (b) take such actions as may be required to consummate the Contemplated
Transactions, and (c) timely pay and perform Buyer’s obligations under this
Agreement and Buyer’s Closing Documents.  Buyer expressly acknowledges that the
failure to have sufficient funds shall in no event be a condition to the
performance of its obligations hereunder, and in no event shall the Buyer’s
failure to perform its obligations hereunder be excused by failure to receive
funds from any source.

4.08Securities Laws.

The solicitation of offers and the sale of the Assets by Seller have not been
registered under any securities laws.  At no time has Buyer been presented with
or solicited by or through any public promotion or any form of advertising in
connection with the Contemplated Transactions.  Buyer is not acquiring the
Assets with the intent of distributing fractional, undivided interests that
would be subject to regulation by federal or state securities laws, and that if
it sells, transfers, or otherwise disposes of the Assets or fractional undivided
interests therein, it shall do so in compliance with applicable federal and
state securities laws.

4.09Due Diligence.  

Without limiting or impairing any representation, warranty, covenant or
agreement of Seller contained in this Agreement and the Seller Closing
Documents, or Buyer’s right to rely thereon, Buyer and its Representatives have
(a) been permitted full and complete access to all materials relating to the
Assets, (b) been afforded the opportunity to ask all questions of Seller (or
Seller’s Representatives) concerning the Assets, (c) been afforded the
opportunity to investigate the condition of the Assets, and (d) had the
opportunity to take such other actions and make such other independent
investigations as Buyer deems necessary to evaluate the Assets and understand
the merits and risks of an investment therein and to verify the truth, accuracy,
and completeness of the materials, documents, and other information provided or
made available to Buyer (whether by Seller or otherwise).  

4.10Basis of Buyer’s Decision.  

By reason of Buyer’s knowledge and experience in the evaluation, acquisition,
and operation of oil and gas properties, Buyer has evaluated the merits and the
risks of purchasing the Assets from Seller and has formed an opinion based
solely on Buyer’s knowledge and experience, Buyer’s due diligence, and Seller’s
representations, warranties, covenants, and agreements contained in this
Agreement and the Seller Closing Documents, and not on any other representations
or warranties by Seller.  Buyer has not relied and shall not rely on any
statements by Seller or its Representatives (other than those representations,
warranties, covenants, and agreements of Seller contained in this Agreement and
the Seller Closing Documents) in making its decision to enter into this
Agreement or to close the Contemplated Transactions.  Buyer understands and
acknowledges that neither the United States Securities and Exchange Commission
nor any other Governmental Body has passed upon the Assets or made any finding
or determination as to the fairness of an investment in the Assets or the
accuracy or adequacy of the disclosures made to Buyer, and, except as set forth
in Article 9, Buyer is not entitled to cancel, terminate, or revoke this
Agreement, whether due to the inability of Buyer to obtain financing or pay the
Purchase Price, or otherwise.

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4.11Business Use, Bargaining Position.  

Buyer is purchasing the Assets for commercial or business use.  Buyer has
sufficient knowledge and experience in financial and business matters that
enables it to evaluate the merits and the risks of transactions such as the
Contemplated Transactions, and Buyer is not in a significantly disparate
bargaining position with Seller.  Buyer expressly acknowledges and recognizes
that the price for which Seller has agreed to sell the Assets and perform its
obligations under the terms of this Agreement has been predicated upon the
inapplicability of the Texas Deceptive Trade Practices - Consumer Protection
Act, V.C.T.A. BUS & COMM Ann. § 17.41 et seq.  (the “DTPA”), to the extent
applicable, or any similar Legal Requirement.  Buyer further recognizes that
Seller, in determining to proceed with entering into this Agreement, has
expressly relied on the provisions of this Article 4.

4.12Bankruptcy.  

There are no bankruptcy, reorganization, receivership, or arrangement
proceedings pending or being contemplated by Buyer or, to Buyer’s Knowledge,
Threatened against Buyer.  Buyer is, and will be immediately after giving effect
to the Contemplated Transactions, solvent.

ARTICLE 5
COVENANTS OF SELLER

5.01Access and Investigation.  

 

(a)

Between the Execution Date and the Defect Notice Date, to the extent doing so
would not violate applicable Legal Requirements, Seller’s obligations to any
Third Party or other restrictions on Seller, Seller shall afford Buyer and its
Representatives access, by appointment only, during Seller’s regular hours of
business to reasonably appropriate Seller’s personnel, any contracts, books and
records, and other documents and data related (including lease operating
statements) to the Assets, except any such contracts, books and records, or
other documents and data that are Excluded Assets or that cannot, without
unreasonable effort or expense, be separated from any contracts, books and
records, or other documents and data that are Excluded Assets (and upon Buyer’s
request, Seller shall use reasonable efforts to obtain the consent of Third
Party operators to give Buyer and its Representatives reasonable access to
similar information with respect to Assets not operated by Seller or its
Affiliates; provided that Seller shall not be required to make payments or
undertake obligations in favor any Third Parties in order to obtain such
consent); provided that, except as expressly provided in this Agreement or in
the Instruments of Conveyance, Seller makes no representation or warranty, and
expressly disclaims all representations and warranties as to the accuracy or
completeness of the documents, information, books, records, files, and other
data that it may provide or disclose to Buyer.

(b)

Notwithstanding the provisions of Section 5.01(a), (i) Buyer’s investigation
shall be conducted in a manner that minimizes interference with the operation of
the business of Seller and any applicable Third Parties, and (ii) Buyer’s right
of access shall not entitle Buyer to operate equipment or conduct subsurface or
other invasive testing or sampling.  Environmental review shall not exceed the
review contemplated by a Phase I

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Environmental Site Assessment without Seller’s prior written permission, which
may be withheld in Seller’s sole discretion.

(c)

Buyer acknowledges that, pursuant to its right of access to the Records and the
Assets, Buyer will become privy to confidential and other information of Seller
and Seller’s Affiliates and the Assets and that such confidential information
shall be held confidential by Buyer and Buyer’s Representatives in accordance
with the terms of the Confidentiality Agreement.  If Closing should occur, the
foregoing confidentiality restriction on Buyer, including the Confidentiality
Agreement, shall terminate on the Closing Date; provided that such termination
of the Confidentiality Agreement shall not relieve any party thereto from any
liability thereunder for the breach of such agreement prior to the Closing Date.

5.02Ownership of the Assets.  

Except (x) for the Plug Back Operations, (y) as set forth on Schedule 5.02 or
(z) as required by applicable Legal Requirements, between the Execution Date and
the Closing Date, Seller shall operate its business with respect to its
ownership of the Assets in the ordinary course, and, without limiting the
generality of the preceding, shall:

(a)

not transfer, sell, hypothecate, encumber, or otherwise dispose of any of the
Assets, except as required under any Leases or Contracts, and except for sales
of Hydrocarbons, equipment and inventory in the ordinary course of business;

(b)

not abandon any Asset (except the abandonment or expiration of Leases in
accordance with their terms, including with respect to leases not capable of
producing in paying quantities after the expiration of their primary terms or
for failure to pay delay rentals or shut-in royalties or similar types of lease
maintenance payments, which shall, in each case, be at Seller’s sole
discretion);

(c)

not propose, or agree to participate in any single operation with respect to the
Wells or Leases with an anticipated cost in excess of Fifty Thousand Dollars
($50,000) net to Seller’s interest, except for any emergency operations;

(d)

not execute, terminate, cancel, extend, or materially amend or modify any
Material Contract or Lease other than the execution or extension of a Contract
for the sale, exchange, transportation, gathering, treating, or processing of
Hydrocarbons terminable without penalty on ninety (90) days’ or shorter notice.

Buyer acknowledges that Seller owns undivided interests in certain of the
properties comprising the Assets, and Buyer agrees that the acts or omissions of
the other working interest owners who are not Seller or an Affiliate of Seller
shall not constitute a Breach of the provisions of this Section 5.02, nor shall
any action required by a vote of working interest owners constitute such a
Breach so long as Seller or its Affiliate has voted its interest in a manner
that complies with the provisions of this Section 5.02.  Further, no action or
inaction of any Third Party operator with respect to any Asset shall constitute
a Breach of this Section 5.02 to the extent Seller uses commercially reasonable
efforts to cause such Third Party operator to operate such applicable Asset in a
manner consistent with this Section 5.02.  Seller may seek Buyer’s approval to
perform any action that would otherwise be restricted by this Section 5.02, and
Buyer’s approval of any such action shall not be unreasonably withheld,
conditioned, or delayed, and shall be considered granted ten (10)

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days (unless a shorter time is reasonably required by the circumstances and such
shorter time is specified in Seller’s notice) after delivery of notice from
Seller to Buyer requesting such consent unless Buyer notifies Seller to the
contrary during such ten (10)-day period.  Notwithstanding the foregoing
provisions of this Section 5.02, in the event of an emergency, Seller may take
such action as reasonably necessary and shall notify Buyer of such action
promptly thereafter.  Any matter approved (or deemed approved) by Buyer pursuant
to this Section 5.02 that would otherwise constitute a Breach of one of Seller’s
representations and warranties in Article 3 shall be deemed to be an exclusion
from all representations and warranties for which it is relevant.

5.03Insurance.  

Seller shall maintain in force during the period from the Execution Date until
the Closing Date all of Seller’s insurance policies pertaining to the Assets (in
the amounts and with the coverages currently maintained by Seller and, if
applicable after Closing, will continue to maintain insurance coverage at the
levels that would be maintained by a reasonably prudent operator during any
period when Seller is performing the Plug Back Operations.  The daily pro-rated
annual premiums for insurance that accrue after the Effective Time and are
attributable to the insurance coverage for the period after the Effective Time
until the Closing will constitute Property Costs.

5.04Consent and Waivers.  

Seller shall use commercially reasonable efforts to obtain prior to the Closing
written waivers of all Preferential Purchase Rights and all Consents necessary
for the transfer of the Assets to Buyer; provided that in the event Seller is
unable to obtain all such waivers of Preferential Purchase Rights and Consents
after using such commercially reasonable efforts, such failure to satisfy shall
not constitute a Breach of this Agreement.  Seller shall not be required to make
any payments to, or undertake any obligations for the benefit of, the holders of
such rights in order to obtain the Required Consents.  Buyer shall cooperate
with Seller in seeking to obtain such Consents.

5.05Amendment to Schedules.  

Until the fifth (5th) Business Day before Closing, Seller shall have the right
(but not the obligation) to supplement the Schedules relating to the
representations and warranties set forth in Article 3 with respect to any
matters discovered or occurring subsequent to the Execution Date and on or
before the Closing Date.  If any matter shown on such supplement constitutes a
Material Adverse Effect, Buyer may terminate this Agreement by delivering
written notice to Seller (which notice will set forth the basis for such
termination) on or before the third (3rd) Business Days after receipt of
Seller’s supplement to the Schedules without further liability whatsoever
(except as may otherwise be expressly provided herein), whereupon the Deposit
Amount shall be returned to Buyer as provided in Section 9.02(d).  If Buyer does
not terminate this Agreement pursuant to the preceding sentence, then except to
the extent such updates are a direct result of actions taken with Buyer’s
consent pursuant to Section 5.02, prior to Closing, any such supplement shall
not be considered for purposes of determining if Buyer’s Closing conditions have
been met under Section 7.01 or for determining any remedies available under this
Agreement; provided, however, that if Closing occurs, then such supplements
shall be incorporated into Seller’s disclosure Schedules as if the same had been
disclosed on and as of the Execution Date.  

5.06Change of Operator.

  While Buyer acknowledges that it desires to succeed Seller (or its Affiliates)
as operator of those Assets or portions thereof that Seller (or its Affiliates)
may presently operate, Buyer acknowledges and agrees that Seller cannot and does
not covenant or

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warrant that Buyer shall become successor operator of such Assets because the
Assets or portions thereof may be subject to operating or other agreements that
control the appointment of a successor operator.  Seller agrees, however, that
as to the Assets any Seller Party or its Affiliate operates, Seller shall use
commercially reasonable efforts to support Buyer’s efforts to become successor
operator of such Assets (to the extent permitted under any applicable operating
agreement) effective as of the Closing (at Buyer’s sole cost and expense) and to
designate or appoint, to the extent legally possible and permitted under any
applicable operating agreement, Buyer as successor operator of such Assets
effective as of Closing.  Seller will use commercially reasonable efforts to
assist Buyer to obtain all necessary Permits in connection with Buyer’s
designation as operator as to the Assets Seller presently operates as of
Closing.

ARTICLE 6
OTHER COVENANTS

6.01Notification and Cure.  

Between the Execution Date and the Closing Date, Buyer shall promptly notify
Seller in writing and Seller shall promptly notify Buyer in writing if Seller or
Buyer, as applicable, obtain Knowledge of any Breach, in any material respect,
of the other Party’s representations and warranties or covenants as of the
Execution Date, or of an occurrence after the Execution Date that would cause or
constitute a Breach, in any material respect, of any such representation and
warranty or covenant had such representation and warranty or covenants been made
as of the time of occurrence or discovery of such fact or condition.  If any of
Buyer’s or Seller’s representations or warranties are untrue or shall become
untrue in any material respect between the Execution Date and the Closing Date,
or if any of Buyer’s or Seller’s covenants or agreements to be performed or
observed prior to or on the Closing Date shall not have been so performed or
observed in any material respect, and if such breach of representation,
warranty, covenant or agreement shall (if curable) be cured by Closing, then
such breach shall be considered not to have occurred for all purposes of this
Agreement.

6.02Satisfaction of Conditions.  

Between the Execution Date and the Closing Date (a) Seller shall use
commercially reasonable efforts to cause the conditions in Article 7 to be
satisfied, and (b) Buyer shall use commercially reasonable efforts to cause the
conditions in Article 8 to be satisfied; provided, however, that if Seller or
Buyer, as applicable, is unable to satisfy such conditions after using such
commercially reasonable efforts, such failure to satisfy shall not constitute a
Breach of this Agreement.

6.03Replacement of Insurance, Bonds, Letters of Credit, and Guaranties.  

 

(a)

The Parties understand that none of the insurance currently maintained by Seller
or Seller’s Affiliates covering the Assets, nor any of the bonds, letters of
credit, or guaranties, if any, posted by Seller or Seller’s Affiliates with
Governmental Bodies or co-owners and relating to the Assets will be transferred
to Buyer.  On or before the Closing Date (or, with respect to any Retained Plug
Back Wells conveyed to Buyer pursuant to Section 6.05, the date such Retained
Plug Back Wells are conveyed to Buyer), Buyer shall obtain, and deliver to
Seller evidence of, all necessary replacement bonds, letters of credit, and
guaranties, and evidence of such other authorizations, qualifications, and
approvals as may be necessary for Buyer to own the Assets that are to be
conveyed to Buyer at Closing.  

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(b)

Promptly (but in no event later than thirty (30) days) after Closing (or, with
respect to any Retained Plug Back Wells conveyed to Buyer pursuant to Section
6.05, the date such Retained Plug Back Wells are conveyed to Buyer), Buyer
shall, at its sole cost and expense, make all filings with Governmental Bodies
necessary to assign and transfer the Assets conveyed to Buyer at Closing and
title thereto and to comply with applicable Legal Requirements, and Seller shall
reasonably assist Buyer with such filings.  Buyer shall indemnify, defend, and
hold harmless Seller Group from and against all Damages arising out of Buyer’s
holding of such title or operatorship of the Assets after Closing and prior to
the securing of any necessary Consents and approvals of the Contemplated
Transactions from Governmental Bodies.

6.04Governmental Reviews.  

Seller and Buyer shall (and shall cause their respective Affiliates to), in a
timely manner, make all other required filings (if any) with, prepare
applications to, and conduct negotiations with Governmental Bodies as required
to consummate the Contemplated Transactions.  Each Party shall, to the extent
permitted pursuant to applicable Legal Requirements, cooperate with and use all
reasonable efforts to assist the other with respect to such filings,
applications and negotiations.  Buyer shall bear the cost of all filing or
application fees payable to any Governmental Body with respect to the
Contemplated Transactions, regardless of whether Buyer, Seller, or any Affiliate
of any of them is required to make the payment.

6.05Plug Back Wells; Plug Back Well Operations.  

From and after the Execution Date until the Closing Date, Seller shall use
commercially reasonable efforts to plug back and mechanically separate the Plug
Back Wells from the Excluded Depths (making such Well(s) incapable of producing
from the Excluded Depths) in accordance with applicable rules and regulations of
the State of Louisiana (the “Plug Back Operations”).  At least five (5) days in
advance of any Plug Back Operations, Seller shall provide written notice to
Enable Mississippi River Transmission LLC of the approximate dates the Plug Back
Operations will take place along with a description of the procedure of such
Plug Back Operations, along with an invitation to be on site to view the Plug
Back Operations.  If the Plug Back Operations for any Plug Back Well have not
been completed as of the Closing Date, then such Plug Back Well shall be
retained by Seller at Closing as Retained Assets (the “Retained Plug Back
Wells”) and following the Closing, Seller shall continue to use commercially
reasonable efforts to complete the Plug Back Operations for any Retained Plug
Back Wells.  Seller shall provide written notice to Buyer when the Plug Back
Operations on all of the Retained Plug Back Wells have been completed (the
“Retained Plug Back Well Notice”) and within five (5) Business Days following
delivery of the Retained Plug Back Well Notice, Seller shall assign and convey
such Retained Plug Back Wells to Buyer on a form of assignment substantially in
the form of the Assignment (modified to reflect the conveyance of only the
applicable Retained Plug Back Wells and associated assets, rights, and
obligations) effective as of the Effective Time and upon such conveyance, the
Retained Plug Back Wells shall be deemed Assets for all purposes.  

ARTICLE 7
CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

Buyer’s obligation to purchase the Assets and to take the other actions required
to be taken by Buyer at Closing is subject to the satisfaction, at or prior to
Closing, of each of the following conditions (any of which may be waived by
Buyer, in whole or in part), in each case, insofar as such conditions pertain to
the Assets to be conveyed from Seller to Buyer at Closing:

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7.01Accuracy of Representations.  

All of Seller’s representations and warranties in this Agreement must have been
true and correct in all material respects (or, with respect to representations
and warranties qualified by materiality or Material Adverse Effect, true and
correct in all respects) as of the Execution Date, and must be true and correct
in all material respects (or, with respect to representations and warranties
qualified by materiality or Material Adverse Effect, true and correct in all
respects) as of the Closing Date as if made on the Closing Date, other than any
such representation and warranty that refers to a specified date, which need
only be true and correct in all material respects (or, if qualified by
materiality or Material Adverse Effect, true and correct in all respects) on and
as of such specified date.

7.02Seller’s Performance.

  All of the covenants and obligations that Seller is required to perform or to
comply with pursuant to this Agreement at or prior to Closing must have been
duly performed and complied with in all material respects.

7.03No Proceedings.  

Since the Execution Date, there must not have been commenced or Threatened
against Seller, or against any of Seller’s Affiliates, any Proceeding (other
than any matter initiated by either Buyer or its Affiliates) seeking to
restrain, enjoin, or otherwise prohibit or make illegal, or seeking to recover
material damages on account of, any of the Contemplated Transactions.

7.04No Orders.  

On the Closing Date, there shall be no Order pending or remaining in force of
any Governmental Body having appropriate jurisdiction that attempts to restrain,
enjoin, or otherwise prohibit the consummation of the Contemplated Transactions,
or that grants material damages in connection therewith.

7.05Necessary Consents and Approvals.  

All Consents from Governmental Bodies and all approvals from Governmental Bodies
required for the Contemplated Transactions, except Consents and approvals of
assignments by Governmental Bodies that are customarily obtained after closing,
shall have been granted, or the necessary waiting period shall have expired, or
early termination of the waiting period shall have been granted.

7.06Closing Deliverables.

  Seller shall have delivered (or be ready, willing and able to deliver at
Closing) to Buyer the documents and other items required to be delivered by
Seller under Section 2.04(a).

7.07Performance Condition.

  As of the date that is three days prior to the Closing Date, none of the
Performance Wells has undergone a Sustained Production Loss that has not been
subsequently cured (such that a Sustained Production Loss no longer exists for
such Performance Well) on any date on or prior to the Outside Date.

 

ARTICLE 8
CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

Seller’s obligation to sell the Assets and to take the other actions required to
be taken by Seller at Closing is subject to the satisfaction, at or prior to
Closing, of each of the following conditions (any of which may be waived by
Seller, in whole or in part), in each case, insofar as such conditions pertain
to the Assets to be conveyed from Seller to Buyer at Closing:

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8.01Accuracy of Representations.  

All of Buyer’s representations and warranties in this Agreement must have been
true and correct in all material respects (or, with respect to representations
and warranties qualified by materiality or Material Adverse Effect, true and
correct in all respects) as of the Execution Date, and must be true and correct
in all material respects (or, with respect to representations and warranties
qualified by materiality or Material Adverse Effect, true and correct in all
respects) as of the Closing Date as if made on the Closing Date, other than any
such representation and warranty that refers to a specified date, which need
only be true and correct in all material respects (or, if qualified by
materiality or Material Adverse Effect, true and correct in all respects) on and
as of such specified date.

8.02Buyer’s Performance.

  All of the covenants and obligations that Buyer is required to perform or to
comply with pursuant to this Agreement at or prior to Closing must have been
duly performed and complied with in all material respects.

8.03No Proceedings.  

Since the Execution Date, there must not have been commenced or Threatened
against Buyer or against any of its Affiliates, any Proceeding (other than any
matter initiated by Seller or an Affiliate of Seller) seeking to restrain,
enjoin, or otherwise prohibit or make illegal, or seeking to recover material
damages on account of, any of the Contemplated Transactions.

8.04No Orders.  

On the Closing Date, there shall be no Order pending or remaining in force of
any Governmental Body having appropriate jurisdiction that attempts to restrain,
enjoin, or otherwise prohibit the consummation of the Contemplated Transactions,
or that grants material damages in connection therewith.

8.05Necessary Consents and Approvals.  

All Consents from Governmental Bodies and all approvals from Governmental Bodies
required for the Contemplated Transactions, except Consents and approvals of
assignments by Governmental Bodies that are customarily obtained after closing,
shall have been granted, or the necessary waiting period shall have expired, or
early termination of the waiting period shall have been granted.

8.06Closing Deliverables.

  Buyer shall have delivered (or be ready, willing and able to deliver at
Closing) to Seller the documents and other items required to be delivered by
Buyer under Section 2.04(b).

8.07Qualifications.  

Buyer shall have obtained all authorizations, qualifications, and approvals
required to be obtained prior to Closing under Section 6.03(a).

ARTICLE 9
TERMINATION

9.01Termination Events.  

This Agreement may, by written notice given prior to or on the Closing Date, be
terminated:

(a)

by mutual written consent of Seller and Buyer;

(b)

by Buyer, if Seller has committed a material Breach of this Agreement and such
Breach causes any of the conditions to Closing set forth in Article 7 not to be
satisfied (or, if prior

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to Closing, such Breach is of such a magnitude or effect that it will not be
possible for such condition to be satisfied); provided, however, that in the
case of a Breach that is capable of being cured, Seller shall have a period of
ten (10) Business Days following receipt of such notice to attempt to cure the
Breach and the termination under this Section 9.01(b) shall not become effective
unless Seller fails to cure such Breach prior to the end of such ten (10)
Business Day period; provided, further, if (i) Seller’s conditions to Closing
have been satisfied or waived in full, (ii) Seller is not in material Breach of
the terms of this Agreement and (iii) all of Buyer’s conditions to Closing have
been satisfied or waived, then the refusal or willful or negligent delay by
Seller to timely close the Contemplated Transactions shall constitute a material
Breach of this Agreement;

(c)

by Seller, if Buyer has committed a material Breach of this Agreement and such
breach causes any of the conditions to Closing set forth in Article 8 not to be
satisfied (or, if prior to Closing, such Breach is of such a magnitude or effect
that it will not be possible for such condition to be satisfied); provided,
however, that in the case of a Breach that is capable of being cured, Buyer
shall have a period of ten (10) Business Days following receipt of such notice
to attempt to cure the Breach and the termination under this Section 9.01(c)
shall not become effective unless Buyer fails to cure such Breach prior to the
end of such ten (10) Business Day period; provided, further, if (i) Buyer’s
conditions to Closing have been satisfied or waived in full, (ii) Buyer is not
in material Breach of the terms of this Agreement and (iii) all of Seller’s
conditions to Closing have been satisfied or waived, then the refusal or willful
or negligent delay by Buyer to timely close the Contemplated Transactions shall
constitute a material Breach of this Agreement;

(d)

by either Seller or Buyer if Closing has not occurred on or before September 30,
2020 (the “Outside Date”), or such later date as the Parties may agree upon in
writing; provided that such failure does not result primarily from the
terminating Party’s material Breach of this Agreement;

(e)

by either Seller or Buyer if (i) any Legal Requirement has made the consummation
of the Contemplated Transactions illegal or otherwise prohibited, or (ii) a
Governmental Body has issued an Order, or taken any other action permanently
restraining, enjoining, or otherwise prohibiting the consummation of the
Contemplated Transactions, and such order, decree, ruling, or other action has
become final and nonappealable;

(f)

by Seller if the sum of (i) all Title Defect Values asserted by Buyer in good
faith and without taking into account the Aggregate Defect Deductible (less the
sum of all Title Benefit Values), plus (ii) the Aggregate Environmental Defect
Values asserted by Buyer in good faith and without taking into account the
Aggregate Defect Deductible, plus (iii) the aggregate downward Purchase Price
adjustments under Section 11.02, plus (iv) the aggregate downward Purchase Price
adjustments under Section 11.03, exceeds twenty percent (20%) of the unadjusted
Purchase Price;

(g)

by Buyer if the sum of (i) all Title Defect Values agreed on by the Parties or
finally determined pursuant to Article 11, plus (ii) all Environmental Defect
Values agreed on by the Parties or finally determined pursuant to Article 11,
plus (iii) the aggregate downward Purchase Price adjustments under Section
11.02, plus (iv) the aggregate downward

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Purchase Price adjustments under Section 11.03, exceeds twenty percent (20%) of
the unadjusted Purchase Price; or

(h)

by Seller if Buyer fails to deposit the Deposit Amount into the Escrow Account
on or before 5:00 p.m. (Central Time) on the first (1st) Business Day after the
Execution Date.

9.02Effect of Termination; Distribution of the Deposit Amount.  

 

(a)

If this Agreement is terminated pursuant to Section 9.01, all further
obligations of the Parties under this Agreement shall terminate; provided that
(a) such termination shall not impair nor restrict the rights of either Party
against the other with respect to the Deposit Amount (or, with respect to Buyer,
damages in an amount up to the Deposit Amount) pursuant to Section 9.02(b), (b)
except to the extent either Party has received the Deposit Amount (or, with
respect to Buyer, damages in an amount up to the Deposit Amount) as liquidated
damages pursuant to Section 9.02(b), the termination of this Agreement shall not
relieve any Party from liability for any failure to perform or observe in any
material respect any of its agreements or covenants contained herein which are
to be performed or observed at or prior to Closing, (c) except to the extent
either Party has received the Deposit Amount (or, with respect to Buyer, damages
in an amount up to the Deposit Amount) as liquidated damages pursuant to Section
9.02(b), to the extent such termination results from the material Breach by a
Party of any of its covenants or agreements hereunder, the other Party shall be
entitled to all remedies available at law or in equity with respect to such
Breach and shall be entitled to recover court costs and reasonable attorneys’
fees in addition to any other relief to which such Party may be entitled, and
(d) the following provisions shall survive the termination: Article 1, Sections
9.02, 10.02(c), 10.03(c), 10.06, 10.07, 10.11, 10.12, 10.13, 10.14, Article 13
(other than Section 13.01) and any such terms as set forth in this Agreement
that are necessary to give context to any of the foregoing surviving Sections.

(b)

Notwithstanding anything to the contrary in Section 9.02(a):

 

(i)

If Seller has the right to terminate this Agreement (A) pursuant to Section
9.01(c) or (B) pursuant to Section 9.01(d), if at such time Seller could have
terminated this Agreement pursuant to Section 9.01(c) (without regard to any
cure periods contemplated therein), then, in either case, Seller shall have the
right, as its sole and exclusive remedy, to terminate this Agreement and receive
the Deposit Amount as liquidated damages (and not as a penalty).  If Seller
elects to terminate this Agreement pursuant to this Section 9.02(b)(i) and
receive the Deposit Amount as liquidated damages, (x) the Parties shall, within
two (2) Business Days of Seller’s election, execute and deliver to the Escrow
Agent a joint instruction letter directing the Escrow Agent to release the
Deposit Amount to Seller and (y) Seller shall be free to enjoy immediately all
rights of ownership of the Assets and to sell, transfer, encumber, or otherwise
dispose of the Assets to any Person without any restriction under this
Agreement.  For the avoidance of doubt, provided that Seller has received the
Deposit Amount as liquidated damages (and not as a penalty), Seller has no right
of specific performance under this Agreement.

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(ii)

If Buyer has the right to terminate this Agreement (A) pursuant to Section
9.01(b) or (B) pursuant to Section 9.01(d), if at such time Buyer could have
terminated this Agreement pursuant to Section 9.01(b) (without regard to any
cure periods contemplated therein), then, in either case, Buyer shall have the
right, at its sole discretion, to either (1) enforce specific performance by
Seller of this Agreement, without posting any bond or the necessity of proving
the inadequacy as a remedy of monetary damages, in which event the Deposit
Amount will be applied as called for herein, or (2) if Buyer does not seek and
successfully enforce specific performance, terminate this Agreement and (in
addition to retention of the Deposit Amount) be entitled to damages from Seller
in an amount equal to the Deposit Amount, as liquidated damages (and not as a
penalty).  If Buyer elects to terminate this Agreement pursuant to this Section
9.02(b)(ii) and receive damages in an amount equal to the Deposit Amount as
liquidated damages, the Parties shall, within two (2) Business Days of Buyer’s
election, (x) execute and deliver to the Escrow Agent a joint instruction letter
directing the Escrow Agent to release the Deposit Amount to Buyer and (y)
Seller, after irrevocable and unconditional payment of the liquidated damages to
Buyer pursuant to this Section 9.02(b)(ii), shall be free to enjoy immediately
all rights of ownership of the Assets and to sell, transfer, encumber, or
otherwise dispose of the Assets to any Person without any restriction under this
Agreement.

(c)

The Parties recognize that the actual damages for a Party’s material Breach of
this Agreement would be difficult or impossible to ascertain with reasonable
certainty and agree that the Deposit Amount would be a reasonable liquidated
damages amount for such material Breach.  

(d)

If this Agreement is terminated by Buyer pursuant to Section 5.05, or by either
Buyer or Seller pursuant to Section 9.01 (other than Section 9.01(h)) for any
reason other than as described in Section 9.02(b), then, in any such case, the
Parties shall, within two (2) Business Days of such termination, execute and
deliver to the Escrow Agent a joint instruction letter directing the Escrow
Agent to release the Deposit Amount to Buyer.  If this Agreement is terminated
by Seller in accordance with Section 9.01(h), then upon such termination, Seller
shall be free to enjoy immediately all rights of ownership of the Assets and to
sell, transfer, encumber, or otherwise dispose of the Assets to any Person
without any restriction under this Agreement.

9.03Return of Records Upon Termination.  

Upon termination of this Agreement, (a) Buyer shall promptly return to Seller or
destroy (at Seller’s option) all title, engineering, geological and geophysical
data, environmental assessments and reports, maps, documents and other
information furnished by Seller to Buyer in connection with its due diligence
investigation of the Assets and (b) an officer of Buyer shall certify Buyer’s
compliance with the preceding clause (a) to Seller in writing.

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ARTICLE 10
INDEMNIFICATION; REMEDIES

10.01Survival.  

The survival periods for the various representations, warranties, covenants and
agreements contained herein shall be as follows: (a) Fundamental Representations
shall survive indefinitely, (b) the representations and warranties in Section
3.04 and the covenants and agreements in Section 2.07 and Section 13.02(b)-(d)
shall survive for the applicable statute of limitations or prescription plus
sixty (60) days, (c) the special warranty of Defensible Title set forth in the
Instruments of Conveyance shall survive for twenty-four (24) months after
Closing, (d) all other representations, warranties of Seller shall survive for
twelve (12) months after Closing, (e) all covenants and agreements of Seller to
be performed at or following the Closing shall survive until fully performed,
(f) all covenants and agreements of Buyer shall survive until fully performed,
and (g) all representations, warranties of Buyer shall survive
indefinitely.  Representations, warranties, covenants and agreements shall be of
no further force and effect after the date of their expiration; provided that
there shall be no termination of any bona fide claim asserted pursuant to this
Agreement with respect to such a representation, warranty, covenant or agreement
prior to its expiration date.  The indemnities in Sections 10.02(a), 10.02(b),
10.03(a) and 10.03(b) shall terminate as of the termination date of each
respective representation, warranty, covenant or agreement that is subject to
indemnification thereunder, except in each case as to matters for which a
specific written claim for indemnity has been delivered to the indemnifying
person on or before such termination date.  All other indemnities, and all other
provisions of this Agreement, shall survive Closing without time limit except as
may otherwise be expressly provided herein.

10.02Indemnification and Payment of Damages by Seller.  

Except as otherwise limited in this Article 10, from and after Closing, Seller
shall defend, release, indemnify, and hold harmless Buyer Group from and
against, and shall pay to the Buyer Group the amount of, any and all Damages,
whether or not involving a Third Party claim or incurred in the investigation or
defense of any of the same or in asserting, preserving, or enforcing any of
their respective rights under this Agreement arising from, based upon, related
to, or associated with:

(a)

any Breach of any representation or warranty made by Seller in this Agreement,
or in any certificate delivered by Seller pursuant to this Agreement;

(b)

any Breach by Seller of any covenant, obligation, or agreement of Seller in this
Agreement;

(c)

the Retained Liabilities;

(d)

the use or ownership of the Excluded Assets; and

(e)

the use or ownership of the Retained Assets (including the Retained Plug Back
Wells, unless and until such time as such Retained Assets are conveyed to Buyer
as Assets under the terms of this Agreement).

Notwithstanding anything to the contrary contained in this Agreement, and except
for Buyer’s termination rights and remedies under Article 9 of this Agreement,
after Closing, the remedies provided in this Article 10 and Article 11, along
with the special warranty of Defensible Title set forth in the Instruments of
Conveyance, are Buyer Group’s exclusive legal remedies for Seller’s

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Breaches, all other legal rights and remedies being expressly waived by Buyer
Group, known or unknown, which Buyer might now or subsequently have, based on,
relating to or in any way arising out of this Agreement, the Contemplated
Transactions, the ownership, use or operation of the Assets prior to Closing, or
the condition, quality, status, or nature of the Assets prior to Closing,
including any and all claims related to environmental matters or liability or
violations of environmental laws and including rights to contribution under the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, breaches of statutory or implied warranties, nuisance, or other tort
actions, rights to punitive damages, common law rights of contribution, and
rights under insurance maintained by Seller or any of Seller’s Affiliates;
provided that Buyer is entitled to any equitable remedies available under
applicable Legal Requirements in connection with any Breach by Seller of Article
13.  Buyer shall have no obligation to indemnify any of the Seller Group for any
Damages for which Seller is obligated to indemnify Buyer Group pursuant to this
Section 10.03.

10.03Indemnification and Payment of Damages by Buyer.  

Except as otherwise limited in this Article 10 and Article 11, from and after
Closing, Buyer shall assume, be responsible for, pay on a current basis, and
shall defend, release, indemnify, and hold harmless Seller Group from and
against, and shall pay to Seller Group the amount of any and all Damages,
whether or not involving a Third Party claim or incurred in the investigation or
defense of any of the same or in asserting, preserving, or enforcing any of
their respective rights under this Agreement arising from, based upon, related
to, or associated with:

(a)

any Breach of any representation or warranty made by Buyer in this Agreement or
in any certificate delivered by Buyer pursuant to this Agreement;

(b)

any Breach by Buyer of any covenant, obligation, or agreement of Buyer in this
Agreement;

(c)

any Damages caused by Buyer arising out of or relating to access to the Assets
and contracts, books and records and other documents and data relating thereto
prior to Closing, including Buyer’s title and environmental inspections pursuant
to Sections 11.01 and 11.10, including Damages attributable to personal injury,
illness or death, or property damage; and

(d)

the Assumed Liabilities.

Notwithstanding anything to the contrary contained in this Agreement, and except
for Seller’s termination rights under Article 9 of this Agreement, the remedies
provided in this Article 10 are Seller Group’s exclusive legal remedies for
Buyer’s Breaches, all other legal rights and remedies being expressly waived by
Seller Group; provided that Seller is entitled to any equitable remedies
available under applicable Legal Requirements in connection with any Breach by
Buyer of Article 13.

10.04Indemnity Net of Insurance.  

The amount of any Damages for which an indemnified Party is entitled to
indemnity under this Article 10 shall be reduced by the amount of

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insurance or indemnification proceeds realized by the indemnified Party or its
Affiliates with respect to such Damages (net of any collection costs, and
excluding the proceeds of any insurance policy issued or underwritten, or
indemnity granted, by the indemnified Party or its Affiliates).

10.05Limitations on Liability.  

Except with respect to the Fundamental Representations and the representations
and warranties included in Section 3.04, if Closing occurs, Seller shall not
have any liability for any indemnification under Section 10.02(a): (a) for any
Damages with respect to any occurrence, claim, award or judgment with respect to
that do not individually exceed Fifty Thousand Dollars ($50,000) net to Seller’s
interest (the “Individual Claim Threshold”); or (b) unless and until the
aggregate Damages for which claim notices for claims meeting the Individual
Claim Threshold are delivered by Buyer exceed three percent (3%) of the
unadjusted Purchase Price, and then only to the extent such Damages exceed three
percent (3%) of the unadjusted Purchase Price.  Except with respect to the
Fundamental Representations and the representations and warranties included in
Section 3.04, in no event will Seller be liable for Damages indemnified under
Section 10.02(a) to the extent such damages, exceed twenty percent (20%) of the
unadjusted Purchase Price.  Notwithstanding anything herein to the contrary, in
no event will Seller’s aggregate liability under this Agreement exceed one
hundred percent (100%) of the unadjusted Purchase Price.

10.06Procedure for Indemnification – Third Party Claims.

(a)

Promptly after receipt by an indemnified party under Section 10.02 or 10.03 of a
Third Party claim for Damages or notice of the commencement of any Proceeding
against it, such indemnified party shall, if a claim is to be made against an
indemnifying Party under such Section, give notice to the indemnifying Party of
the commencement of such claim or Proceeding, together with a claim for
indemnification pursuant to this Article 10.  The failure of any indemnified
party to give notice of a Third Party claim or Proceeding as provided in this
Section 10.06 shall not relieve the indemnifying Party of its obligations under
this Article 10 except to the extent such failure results in insufficient time
being available to permit the indemnifying Party to effectively defend against
the Third Party claim or participate in the Proceeding or otherwise materially
prejudices the indemnifying Party’s ability to defend against the Third Party
claim or participate in the Proceeding.

(b)

If any Proceeding referred to in Section 10.06(a) is brought against an
indemnified party and the indemnified party gives notice to the indemnifying
Party of the commencement of such Proceeding, the indemnifying Party shall be
entitled to participate in such Proceeding and, to the extent that it wishes
(unless (i) the indemnifying Party is also a party to such Proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate, or (ii) the indemnifying Party fails to provide reasonable
assurance to the indemnified party of its financial capacity to defend such
Proceeding and provide indemnification with respect to such Proceeding), to
assume the defense of such Proceeding with counsel reasonably satisfactory to
the indemnified party, and, after notice from the indemnifying Party to the
indemnified party of the indemnifying Party’s election to assume the defense of
such Proceeding and approval of such counsel, the indemnifying Party shall not,
as long as it diligently conducts such defense, be liable to the indemnified
party under this Article 10 for any fees of other counsel or any other expenses
with respect to the defense of such Proceeding, in each case subsequently
incurred by the indemnified

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party in connection with the defense of such Proceeding.  If reasonably
requested by the indemnifying Party, the indemnified Party agrees to cooperate
in contesting any Proceeding which the indemnifying Party elects to contest (at
the expense of the indemnifying Party); provided that the indemnified Party
shall not be required to pursue any cross-claim or
counter-claim.  Notwithstanding anything to the contrary in this Agreement, the
indemnifying Party shall not be entitled to assume or continue control of the
defense of any such Proceeding if (A) such Proceeding relates to or arises in
connection with any criminal proceeding, (B) such Proceeding seeks an injunction
or equitable relief against any indemnified Party, (C) such Proceeding has or
would reasonably be expected to result in Damages in excess of the amount set
forth in Section 10.05 (i.e., twenty percent (20%) of the unadjusted Purchase
Price), or (D) the indemnifying Party has failed or is failing to defend in good
faith such Proceeding.  If the indemnifying Party assumes the defense of a
Proceeding, no compromise or settlement of such Third Party claims or
Proceedings may be effected by the indemnifying Party without the indemnified
party’s prior written consent unless (1) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
no effect on any other Third Party claims that may be made against the
indemnified party, (2) the sole relief provided is monetary damages that are
paid in full by the indemnifying Party and (3) the indemnified party shall have
no liability with respect to any compromise or settlement of such Third Party
claims or Proceedings effected without its consent.

10.07Procedure for Indemnification – Other Claims.  

A claim for indemnification for any matter not involving a Third Party claim may
be asserted by notice to the Party from whom indemnification is sought.

10.08Indemnification of Group Members.  

The indemnities in favor of Buyer and Seller provided in Section 10.08 and
Section 10.03, respectively, shall be for the benefit of and extend to such
Party’s present and former Group members.  Any claim for indemnity under this
Article 10 by any Group member other than Buyer or Seller must be brought and
administered by the relevant Party to this Agreement.  No indemnified party
other than Buyer and Seller shall have any rights against either Seller or Buyer
under the terms of this Article 10 except as may be exercised on its behalf by
Buyer or Seller, as applicable, pursuant to this Section 10.08. Each of Seller
and Buyer may elect to exercise or not exercise indemnification rights under
this Section on behalf of the other indemnified party affiliated with it in its
sole discretion and shall have no liability to any such other indemnified party
for any action or inaction under this Section.

10.09Extent of Representations and Warranties.  

(a)

Except as and to the extent expressly set forth in this Agreement or in the
Instruments of Conveyance, Seller makes no representations or warranties
whatsoever, and disclaims all liability and responsibility for any
representation, warranty, statement, or information made or communicated (orally
or in writing) to Buyer (including any opinion, information, or advice that may
have been provided to Buyer or its affiliates or representatives by any
Affiliates or Representatives of Seller or by any investment bank or investment
banking firm, any petroleum engineer or engineering firm, Seller’s counsel, or
any other agent,

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consultant, or Representative of Seller).  Without limiting the generality of
the foregoing, except as and to the extent expressly set forth in this Agreement
or in the Instruments of Conveyance, Seller expressly disclaims and negates any
representation or warranty, express, implied, at common law, by statute, or
otherwise, relating to (a) the title to any of the Assets, (b) the condition of
the Assets (including any implied or express warranty of merchantability,
fitness for a particular purpose, or conformity to models or samples of
materials), it being distinctly understood that the Assets are being sold “As
Is,” “Where Is,” and “With All Faults As To All Matters,” (c) any infringement
by Seller of any patent or proprietary right of any Third Party, (d) any
information, data, or other materials (written or oral) furnished to Buyer by or
on behalf of Seller (including the existence or extent of Hydrocarbons or the
mineral reserves, the recoverability of such reserves, any product pricing
assumptions, and the ability to sell Hydrocarbon production after Closing), (e)
the environmental condition and other condition of the Assets and any potential
liability arising from or related to the Assets and (f) the presence or absence
of asbestos, norm, or other wastes or hazardous materials in or on the assets in
quantities typical for oilfield operations in the area where the Assets are
located.

(b)

Buyer acknowledges and affirms that it has made its own independent
investigation, analysis, and evaluation of the Contemplated Transactions and the
Assets (including Buyer’s own estimate and appraisal of the extent and value of
Seller’s Hydrocarbon reserves attributable to the Assets and an independent
assessment and appraisal of the environmental risks associated with the
acquisition of the Assets).  Buyer acknowledges that in entering into this
Agreement, it has relied on the aforementioned investigation and the express
representations and warranties of Seller contained in this Agreement and the
Seller Closing Documents.  Buyer hereby irrevocably covenants to refrain from,
directly or indirectly, asserting any claim, or commencing, instituting, or
causing to be commenced, any Proceeding of any kind against Seller or its
Affiliates, alleging facts contrary to the foregoing acknowledgment and
affirmation.

10.10Redhibition Waiver.

  Buyer: (a) waives all rights in redhibition pursuant to Louisiana Civil Code
Article 2475 and Articles 2520 through 2548; (b) acknowledges that this express
waiver shall be considered a material and integral part of this sale and the
consideration thereof; and (c) acknowledges that this waiver has been brought to
the attention of Buyer, has been explained in detail and that Buyer has
voluntarily and knowingly consented to this waiver of warranty of fitness and
warranty against redhibitory vices and defects with respect to the Assets.

10.11UTPCPL Waiver.

  To the extent applicable to the Assets or any portion thereof, Buyer hereby
waives the provisions of the Louisiana Unfair Trade Practices and Consumer
Protection Law (LA.  R.S. 51.1401, et seq.).  Buyer warrants and represents that
it: (a) is experienced and knowledgeable with respect to the oil and gas
industry generally and with transactions of this type

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specifically; (b) possesses ample knowledge, experience and expertise to
evaluate independently the merits and risks of the Contemplated Transactions;
and (c) is not in a significantly disparate bargaining position.

10.12Compliance With Express Negligence Test.  

The Parties agree that any indemnity, defense, and/or release obligation arising
under this Agreement shall apply without regard to the negligence, strict
liability, or other fault of the indemnified party, whether active, passive,
joint, concurrent, comparative, contributory or sole, or any pre-existing
condition, any breach of contract or breach of warranty, or violation of any
legal requirement, except to the extent such damages were occasioned by the
gross negligence or willful misconduct of the indemnified party or any group
member thereof, it being the Parties’ intention that Damages to the extent
arising from the gross negligence or willful misconduct of the indemnified party
or any group member thereof not be covered by the release, defense, or indemnity
obligations in this Agreement.  The foregoing is a specifically bargained for
allocation of risk among the Parties, which the Parties agree and acknowledge
satisfies the express negligence rule and conspicuousness requirement under
Texas law.

10.13Limitations of Liability.  

Notwithstanding anything to the contrary contained in this Agreement, in no
event shall Seller or Buyer ever be liable for, and each Party releases the
other from, any consequential, special, indirect, exemplary, or punitive damages
or claims relating to or arising out of the Contemplated Transactions or this
Agreement; provided, however, that any consequential, special, indirect,
exemplary, or punitive damages recovered by a Third Party (including a
Governmental Body, but excluding any Affiliate of any Group member) against a
Person entitled to indemnity pursuant to this Article 10 shall be included in
the Damages recoverable under such indemnity.  Notwithstanding the foregoing,
lost profits shall not be excluded by this provision as to recovery hereunder to
the extent constituting direct Damages.

10.14No Duplication.  

Any liability for indemnification hereunder shall be determined without
duplication of recovery by reason of the state of facts giving rise to such
liability constituting a Breach of more than one representation, warranty,
covenant, obligation, or agreement herein.  Neither Buyer nor Seller shall be
liable for indemnification with respect to any Damages based on any sets of
facts to the extent the Purchase Price is being or has been adjusted pursuant to
Section 2.05 by reason of the same set of facts.

10.15Disclaimer of Application of Anti-Indemnity Statutes.

  Seller and Buyer acknowledge and agree that the provisions of any
anti-indemnity statute relating to oilfield services and associated activities
shall not be applicable to this Agreement and/or the Contemplated Transactions.

10.16Waiver of Right to Rescission.

  Seller and Buyer acknowledge that, following Closing, the payment of money
pursuant to the terms of this Agreement, shall be adequate compensation for
Breach of any representation, warranty, covenant or agreement contained herein
or for any other claim arising in connection with or with respect to the
Contemplated Transactions consummated at Closing.  As the payment of money shall
be adequate compensation, following

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Closing, Seller and Buyer waive any right to rescind this Agreement or any of
the transactions contemplated hereby.

ARTICLE 11
TITLE MATTERS AND ENVIRONMENTAL MATTERS; PREFERENTIAL PURCHASE RIGHTS; CONSENTS

11.01Title Examination and Access.  

Buyer may make or cause to be made at its expense such examination as it may
desire of Seller’s title to the Assets.  For such purposes, until the Defect
Notice Date, Seller shall give to Buyer and its Representatives access during
Seller’s regular hours of business to originals or, in Seller’s sole discretion,
copies (which copies may, at Seller’s sole discretion, be in electronic format),
of all of the files, records, contracts, correspondence, maps, data, reports,
plats, abstracts of title, lease files, well files, unit files, division order
files, production marketing files, title opinions, title files, title records,
ownership maps, surveys, and any other information, data, records, and files
that Seller has relating in any way to the title to the Assets, the past or
present operation thereof, and the marketing of production therefrom, in
accordance with, and subject to the limitations in, Section 5.01.

11.02Preferential Purchase Rights.  

Seller shall provide all notices necessary to comply with or obtain the waiver
of all Preferential Purchase Rights which are applicable to the Contemplated
Transactions prior to Closing Date and in accordance with Section 5.04.  To the
extent any such Preferential Purchase Rights are exercised by any holders
thereof, then the Asset(s) subject to such Preferential Purchase Rights shall
not be sold to Buyer and shall be excluded from the Assets and sale under this
Agreement and shall be considered Retained Assets.  The Purchase Price shall be
adjusted downward by the Allocated Value of the Asset(s) so retained.  On the
Closing Date, if the time period for exercising any Preferential Purchase Right
has not expired, but no notice of waiver (nor of the exercise of such
Preferential Purchase Right) has been received from the holder thereof, then the
Asset(s) subject to such Preferential Purchase Right shall be included in the
Closing, with no adjustment to the Purchase Price.  After Closing, if the holder
of such Preferential Purchase Right exercises the Preferential Purchase Right,
then Buyer shall convey the affected Asset(s) to such party, and shall receive
the consideration for such affected Asset(s) directly from such party.  If any
holder of a Preferential Purchase Right initially elects to exercise that
Preferential Purchase Right, but after the Closing Date, refuses to consummate
the purchase of the affected Asset(s), then, subject to the Parties’ respective
rights and remedies as to the obligation to consummate the Contemplated
Transactions, Buyer shall purchase such Asset(s) for the Allocated Value thereof
(subject to the adjustments pursuant to Section 2.05), and the closing of such
transaction shall take place on a date designated by Seller not more than one
hundred eighty (180) days after the Closing Date.  If such holder’s refusal to
consummate the purchase of the affected Asset(s) occurs prior to the Closing
Date, then, subject to the Parties’ respective rights and remedies as to the
obligation to consummate the Contemplated Transactions, Buyer shall purchase the
affected Asset(s) at the Closing in accordance with the terms of this Agreement.

11.03Consents.  

Seller shall initiate all procedures required to comply with or obtain all
Consents required for the transfer of the Assets in accordance with Section
5.04.

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(a)

If Seller fails to obtain any Consent necessary for the transfer of any Asset to
Buyer, Seller’s failure shall be handled as follows:

 

(i)

If the Consent is a not a Required Consent, then the affected Assets shall
nevertheless be conveyed at Closing as part of the Assets.  Any Damages that
arise due to the failure to obtain such Consent shall be borne by Buyer, and
Buyer shall defend, release, indemnify and hold harmless Seller Group from and
against the same.

 

(ii)

If the Consent is a Required Consent, the Purchase Price (or portion thereof
payable at Closing) shall be adjusted downward by the Allocated Value of the
affected Assets (which affected Assets shall include all Wells affected by the
Applicable Contract or Lease for which a Consent is refused), and the affected
Assets shall be treated as Retained Assets.

(b)

Notwithstanding the provisions of Section 11.03(a), if Seller obtains a Required
Consent described in Section 11.03(a)(ii) within one hundred eighty (180) days
after the Closing Date, then Seller shall promptly deliver conveyances of the
affected Asset(s) to Buyer and Buyer shall pay to Seller an amount equal to the
Allocated Value of the affected Asset(s) in accordance with wire transfer
instructions provided by Seller (subject to the adjustments set forth in Section
2.05).

11.04Title Defects.  

Buyer shall notify Seller of Title Defects (“Title Defect Notice(s)”) promptly
after the discovery thereof, but in no event later than 5:00 p.m. Central Time
on August 14, 2020 (the “Defect Notice Date”).  To be effective, each Title
Defect Notice shall be in writing and include (a) a description of the alleged
Title Defect and the Well, Well Location, or portion thereof (including the
currently producing formation, as applicable) or portion of the Pipeline
affected by such alleged Title Defect (each, a “Title Defect Property”), (b) the
Allocated Value of each Title Defect Property, (c) supporting documents
reasonably necessary for Seller to verify the existence of the alleged Title
Defect, (d) Buyer’s preferred manner of curing such Title Defect, and (e) the
amount by which Buyer reasonably believes the Allocated Value of each Title
Defect Property is reduced by such alleged Title Defect and the computations
upon which Buyer’s belief is based (the “Title Defect Value”).  To give Seller
an opportunity to commence reviewing and curing Title Defects, Buyer agrees to
use reasonable efforts to give Seller, on a weekly basis prior to the Defect
Notice Date, written notice of all alleged Title Defects (as well as any claims
that would be claims under the special warranty of Defensible Title set forth in
the Instruments of Conveyance) discovered by Buyer during the preceding
week.  Notwithstanding anything herein to the contrary, subject to Buyer’s
rights under the special warranty of Defensible Title in the Instruments of
Conveyance, Buyer forever waives, and Seller shall have no liability for, Title
Defects not asserted by a Title Defect Notice meeting all of the requirements
set forth in the preceding sentence no later than 5:00 p.m. Central Time on the
Defect Notice Date.  Notwithstanding the foregoing, in the event that any
governmental office required for Buyer to conduct title due diligence of the
Assets is closed during a Business Day (including without limitation, closures
relating to Covid-19), and such governmental office has not made records or
other required diligence information available by electronic or other means
during such closure, then the Defect Notice Date for Title Defects will be
extended for an equivalent period of time of such closure.

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11.05Title Defect Value.  

The Title Defect Value shall be determined pursuant to the following guidelines,
where applicable:

(a)

if the Parties agree on the Title Defect Value, then that amount shall be the
Title Defect Value;

(b)

if the Title Defect is an Encumbrance that is undisputed and liquidated in
amount, then the Title Defect Value shall be the amount necessary to be paid to
remove the Title Defect from the Title Defect Property;

(c)

if the Title Defect represents a discrepancy between (i) Seller’s Net Revenue
Interest for the Title Defect Property and (ii) the Net Revenue Interest set
forth for such Title Defect Property in Schedule 2.07, then the Title Defect
Value shall be the product of the Allocated Value of such Title Defect Property,
multiplied by a fraction, the numerator of which is the Net Revenue Interest
decrease and the denominator of which is the Net Revenue Interest set forth for
such Title Defect Property in Schedule 2.07;

(d)

if the Title Defect represents an increase of (i) Seller’s Working Interest for
any Title Defect Property over (ii) the Working Interest set forth for such
Title Defect Property in Schedule 2.07 (in each case, except (A) increases
resulting from contribution requirements with respect to defaulting co-owners
under applicable operating agreements, or (B) increases to the extent that such
increases are accompanied by a proportionate increase in Seller’s Net Revenue
Interest), then the Title Defect Value shall be determined by calculating the
Net Revenue Interest that results from such larger Working Interest, determining
what the Net Revenue Interest would be using such calculated Net Revenue
Interest and the Working Interest set forth in Schedule 2.07, and then
calculating the adjustment in the manner set forth in clause (c) above; and

(e)

if the Title Defect represents an obligation or Encumbrance upon or other defect
in title to the Title Defect Property of a type not described above, then the
Title Defect Value shall be determined by taking into account the Allocated
Value of the Title Defect Property, the portion of the Title Defect Property
affected by the Title Defect, the legal effect of the Title Defect, the
potential economic effect of the Title Defect over the life of the Title Defect
Property, the values placed upon the Title Defect by Buyer and Seller and such
other reasonable factors as are necessary to make a proper evaluation.

In no event, however, shall the total of the Title Defect Values related to a
particular Asset exceed the Allocated Value of such Asset.  The Title Defect
Value with respect to a Title Defect shall be determined without any duplication
of any costs or losses included in any other Title Defect Value hereunder, or
for which Buyer otherwise receives credit in the calculation of the Purchase
Price.  The value of any claim against the special warranty of Defensible Title
set forth in the Instruments of Conveyance shall be determined pursuant to the
guidelines in this Section 11.05, mutates mutandis, where applicable.

11.06Seller’s Cure or Contest of Title Defects.  

 

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Seller may contest any asserted Title Defect or Buyer’s good faith estimate of
the Title Defect Value as described in Section 11.06(b) and may seek to cure any
asserted Title Defect as described in Section 11.06(a).  

(a)

Seller shall have the right to cure any Title Defect on or before sixty (60)
days after the Defect Notice Date or, if later, after the date of resolution of
such Title Defect or the Title Defect Value by an Expert pursuant to Section
11.15 (the “Title Defect Cure Period”) by giving written notice to Buyer of its
election to cure prior to the Closing Date or, if later, after the applicable
Expert Decision date.  If Seller elects to cure and:  

 

(i)

actually cures the Title Defect (“Cure”), prior to Closing, then the Asset
affected by such Title Defect shall be conveyed to Buyer at Closing, and no
Purchase Price adjustment will be made for such Title Defect; or

 

(ii)

does not cure the Title Defect prior to Closing, then Seller shall:

 

(A)

convey the affected Asset to Buyer at Closing and Buyer shall pay for the
affected Asset at Closing; provided, however that if Seller is unable to Cure
the Title Defect within the time provided in this Section 11.06, then Seller
shall include a downward adjustment in the Final Settlement Statement equal to
the Title Defect Value for such Asset; or

 

(B)

if and only if Buyer agrees to this remedy in its sole discretion, indemnify
Buyer against all Damages (up to the Allocated Value of the applicable Title
Defect Property) resulting from such Title Defect with respect to such Title
Defect Property pursuant to an indemnity agreement prepared by Seller in a form
and substance reasonably acceptable to Buyer.

(b)

Seller and Buyer shall attempt to agree on the existence and Title Defect Value
for all Title Defects.  Representatives of the Parties, knowledgeable in title
matters, shall meet during the Title Defect Cure Period for this
purpose.  However, either Party may at any time prior to the final resolution of
the applicable Title Defect hereunder submit any disputed Title Defect or the
Title Defect Value to arbitration in accordance with the procedures set forth in
Section 11.15.  If a contested Title Defect cannot be resolved prior to Closing,
except as otherwise provided herein, (i) the Asset affected by such Title Defect
shall nevertheless be conveyed to Buyer at Closing; (ii) subject to the
Aggregate Defect Deductible, the Purchase Price shall be adjusted downward in an
amount equal to the Title Defect Value set forth in the Title Defect Notice for
such contested Title Defect for such Asset (the “Disputed Title Amount”), which
Disputed Title Amount (after taking into account the Aggregate Defect
Deductible) shall be deposited into the Defect Escrow Account at Closing pending
final resolution of such Title Defect; and (iii) within two (2) Business Days
following final resolution of such Title Defect in accordance with Section
11.15, Seller and Buyer shall execute and deliver a joint written instruction to
the Escrow Agent to release the Disputed Title Amount to Seller or Buyer (or
portions thereof to both Parties), as applicable.

11.07Limitations on Adjustments for Title Defects.  

Notwithstanding the provisions of Sections 11.04, 11.05 and 11.06, Seller shall
be obligated to adjust the Purchase Price to account

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for uncured Title Defects only to the extent that the sum of (x) the aggregate
Title Defect Values of all uncured Title Defects (the “Aggregate Title Defect
Value”) (after taking into account any offsetting Title Benefit Values), plus
(y) the Aggregate Environmental Defect Value (such sum, the “Aggregate Defect
Value”) exceeds the Aggregate Defect Deductible (and then only with respect to
the amount by which the Aggregate Defect Value exceeds the Aggregate Defect
Deductible).  In addition, if the Title Defect Value for any single Title Defect
for a particular Well, Well Location or the Pipeline is less than the De Minimis
Title Defect Cost, such value shall not be considered in calculating the
Aggregate Title Defect Value or the Aggregate Defect Value.

11.08Title Benefits.  

If Seller discovers any right, circumstance or condition that operates (a) to
increase the Net Revenue Interest for any Well or Well Location above that shown
in Schedule 2.07, to the extent the same does not cause a greater than
proportionate increase in Seller’s Working Interest therein above that shown in
Schedule 2.07 for such Well or Well Location or (b) to decrease the Working
Interest of Seller in any Well below that shown in Schedule 2.07, to the extent
the same causes a decrease in Seller’s Working Interest that is proportionately
greater than the decrease in Seller’s Net Revenue Interest therein below that
shown in Schedule 2.07 for such Well or Well Location (each, a “Title Benefit”),
then Seller shall, from time to time and without limitation, have the right, but
not the obligation, to give Buyer written notice of any such Title Benefits (a
“Title Benefit Notice”), as soon as practicable but not later than 5:00 p.m.
Central Time on the Defect Notice Date, stating with reasonable specificity the
Assets affected, the particular Title Benefit claimed, and Seller’s good faith
estimate of the amount the additional interest increases the value of the
affected Assets over and above that Asset’s Allocated Value (the “Title Benefit
Value”).  Buyer shall also promptly furnish Seller with written notice of any
Title Benefit (including a description of such Title Benefit and the Assets
affected thereby with reasonable specificity (the “Title Benefit Properties”))
which is discovered by any of Buyer’s or any of its Affiliates’ Representatives,
employees, title attorneys, landmen, or other title examiners prior to the
Defect Notice Date.  The Title Benefit Value of any Title Benefit shall be
determined by the following methodology, terms and conditions (without
duplication): (i) if the Parties agree on the Title Benefit Value, then that
amount shall be the Title Benefit Value; (ii) if the Title Benefit represents a
discrepancy between (A) Seller’s Net Revenue Interest for any Title Benefit
Property and (B) the Net Revenue Interest set forth for such Title Benefit
Property in Schedule 2.07 then the Title Benefit Value shall be the product of
the Allocated Value of such Title Benefit Property multiplied by a fraction, the
numerator of which is the Net Revenue Interest increase and the denominator of
which is the Net Revenue Interest set forth for such Title Benefit Property in
Schedule 2.07; (iii) if the Title Benefit represents a decrease of (A) Seller’s
Working Interest for any Title Benefit Property below (B) the Working Interest
set forth for such Title Benefit Property in Schedule 2.07 (with respect to any
Well or Well Location), then the Title Benefit Value shall be determined by
calculating the Net Revenue Interest that results from such reduced Working
Interest, determining what the Net Revenue Interest would be using such
calculated Net Revenue Interest and the Working Interest set forth in Schedule
2.07, and then calculating the adjustment in the manner set forth in clause (ii)
above; and (iv) if the Title Benefit is of a type not described above, then the
Title Benefit Value shall be determined by taking into account the Allocated
Value of the Title Benefit Property, the portion of such Title Benefit Property
affected by such Title Benefit, the legal effect of the Title Benefit, the
potential economic effect of the Title Benefit over the life of such Title
Benefit Property, the values placed upon the Title Benefit by Buyer and Seller
and such other reasonable factors as are necessary to make a proper evaluation.

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Seller and Buyer shall attempt to agree on the existence and Title Benefit Value
for all Title Benefits on before the end of the Title Defect Cure Period.  If
Buyer agrees with the existence of the Title Benefit and Seller’s good faith
estimate of the Title Benefit Value, then the Aggregate Title Defect Value shall
be offset by the amount of the Title Benefit Value.  If the Parties cannot reach
agreement by the end of the Title Defect Cure Period, the Title Benefit or the
Title Benefit Value in dispute shall be submitted to arbitration in accordance
with the procedures set forth in Section 11.15. Notwithstanding the foregoing,
the Parties agree and acknowledge that there shall be no upward adjustment to
the Purchase Price for any Title Benefit.  If a contested Title Benefit cannot
be resolved prior to the Closing, Seller shall convey the affected Asset to
Buyer and Buyer shall pay for the Asset at Closing in accordance with this
Agreement as though there were no Title Benefits; provided, however, if the
Title Benefit contest results in a determination that a Title Benefit exists,
then the Aggregate Title Defect Value shall be adjusted downward by the Title
Benefit Value as determined in such contest (which adjustment shall be made on
the Final Settlement Statement).

11.09Buyer’s Environmental Assessment.  

Beginning on the Execution Date and ending at 5:00 p.m. Central Time on the
Defect Notice Date, Buyer shall have the right, at its sole cost, risk,
liability, and expense, to conduct a Phase I Environmental Site Assessment of
the Assets.  During Seller’s regular hours of business and after providing
Seller with written notice of any such activities no less than two (2) Business
Days in advance (which written notice shall include the written permission of
the operator (if other than Seller) and any applicable Third Party operator or
other Third Party whose permission is legally required, which Seller shall
reasonably cooperate with Buyer in securing), Buyer and its representatives
shall be permitted to enter upon the Assets, inspect the same, review all of
Seller’s files and records (other than those for which Seller has an
attorney-client privilege) relating to the Assets, and generally conduct visual,
non-invasive tests, examinations, and investigations.  No sampling or other
invasive inspections of the Assets may be conducted prior to Closing without
Seller’s prior written consent.  Buyer’s access shall be in accordance with, and
subject to the limitations in, Section 5.01.

11.10Environmental Defect Notice.  

Buyer shall notify Seller in writing of any Environmental Defect (an
“Environmental Defect Notice”) promptly after the discovery thereof, but in no
event later than 5:00 p.m. Central Time on the Defect Notice Date.  To be
effective, an Environmental Defect Notice shall include: (i) the Well(s), Well
Location, or portion of the Pipeline affected; (ii) a complete and detailed
description of the alleged Environmental Defect and the basis for such assertion
under the terms of this Agreement; (iii) Buyer’s good faith estimate of the
Environmental Defect Value with respect to such Environmental Defect; and (iv)
appropriate documentation reasonably necessary for Seller to substantiate
Buyer’s claim and calculation of the Environmental Defect Value.  To give Seller
an opportunity to commence reviewing and curing alleged Environmental Defects
asserted by Buyer, Buyer shall use reasonable efforts to give Seller, on or
before the end of each calendar week prior to the Defect Notice Date, written
notice of all alleged Environmental Defects discovered by Buyer during such
calendar week, which notice may be preliminary in nature and supplemented prior
to the Defect Notice Date. Notwithstanding anything herein to the contrary,
Buyer forever waives Environmental Defects not asserted by an Environmental
Defect Notice meeting all of the requirements set forth in the preceding
sentence no later than 5:00 p.m. Central Time on the Defect Notice Date.  

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11.11Exclusion, Cure or Contest of Environmental Defects.

Either Party may, in its sole discretion, elect to exclude from the Closing any
Asset (and any directly related Asset that, in Seller’s reasonable discretion,
cannot be practically separated from the affected Asset, which will become
Retained Assets) affected by an asserted Environmental Defect if (x) the
Environmental Defect value with respect to such Environmental Defect equals or
exceeds the Allocated Value(s) of such affected Asset(s) and reduce the Purchase
Price by the Allocated Value(s) thereof or (y) in the event the affected Asset
has no Allocated Value, if the Environmental Defect exceeds $50,000, (provided
there shall be no adjustment to the Purchase Price on account of such defect)
(each of (x) and (y), an “Excludable Environmental Defect”).  In addition,
Seller may, in its sole discretion, contest any asserted Environmental Defect or
the good faith estimate of the Environmental Defect Value as described in
Section 11.11(b) (including for purposes of determining whether Buyer is
permitted to exclude any Asset(s) in accordance with the previous
sentence).  Without limiting Seller’s right to exclude any Asset or contest any
Environmental Defect in accordance with this Section 11.11, Seller may (by
delivering written notice of such election at or prior to the Closing Date) seek
to remediate or cure any asserted Environmental Defect to the extent of the
Lowest Cost Response as described in Section 11.11(a).  

(a)

Seller shall have the right to remediate or cure an Environmental Defect to the
extent of the Lowest Cost Response on or before the Closing Date or, if later,
after the date of resolution of such Environmental Defect or the Environmental
Defect Value by an Expert (the “Environmental Defect Cure Period”) by giving
written notice to Buyer to that effect prior to the Closing Date or, if later,
after the applicable Expert Decision date, together with Seller’s proposed plan
and timing for such remediation, and Seller shall remain liable for all Damages
arising out of or in connection with such Environmental Defect until such time
as such remediation or cure is completed.  If Seller elects to pursue
remediation or cure as set forth in this clause (a), Seller shall implement such
remediation or cure in a manner that is in compliance with all applicable Legal
Requirements in a prompt and timely fashion for the type of remediation or
cure.  If Seller elects to pursue remediation or cure and:

 

(i)

completes a Complete Remediation of an Environmental Defect prior to the Closing
Date, the affected Well(s), Well Location, or the Pipeline shall be included in
the Assets conveyed at Closing, and no Purchase Price adjustment will be made
for such Environmental Defect;  

 

(ii)

does not complete a Complete Remediation prior to Closing, unless Seller or
Buyer is permitted to (and elects to) exclude such Asset(s) in accordance with
this Section 11.11, then Seller shall convey the affected Asset(s) to Buyer at
Closing and Buyer shall pay for the affected Asset(s) at Closing; provided,
however that if Seller is unable to complete a Complete Remediation of the
Environmental Defect within the time provided in this Section 11.11, then Seller
shall include a downward adjustment in the Final Settlement Statement equal to
the Environmental Defect Value for such Asset(s) (after taking into account
Seller’s partial remediation or cure, if any, of such Environmental Defect).

(b)

Seller and Buyer shall attempt to agree on the existence and Environmental
Defect Value of all Environmental Defects.  Representatives of the Parties,
knowledgeable in

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environmental matters, shall meet for this purpose.  However, a Party may at any
time prior to the final resolution of the applicable Environmental Defect
hereunder elect to submit any disputed item to arbitration in accordance with
the procedures set forth in Section 11.15.  If a contested Environmental Defect
cannot be resolved prior to Closing, (i) the affected Well(s), Well Location or
Pipeline, together with any other Assets appurtenant thereto, shall be included
with the Assets conveyed to Buyer at Closing (provided that, if the dispute
relates to whether a Party can exclude an Asset subject to an alleged Excludable
Environmental Defect, then such Asset shall be retained by Seller at Closing and
shall be a Retained Asset); (ii) subject to the Aggregate Defect Deductible, the
Purchase Price shall be reduced by the estimated Environmental Defect Value set
forth in the Environmental Defect Notice for such contested Environmental Defect
(the “Disputed Environmental Amount”), which Disputed Environmental Amount
(after taking into account the Aggregate Defect Deductible) shall be deposited
into the Defect Escrow Account at Closing pending final resolution of such
Environmental Defect; (iii) within two (2) Business Days following final
resolution of such Environmental Defect in accordance with Section 11.15, Seller
and Buyer shall execute and deliver a joint written instruction to the Escrow
Agent to release the Disputed Environmental Amount to Seller or Buyer (or
portions thereof to both Parties), as applicable; and (iv) if the resolution of
any dispute is that an Environmental Defect does not constitute an Excludable
Environmental Defect, Seller shall assign and convey to Buyer (and Buyer will
accept and receive from Seller) the affected Assets (effective as of the
Effective Time) on a form of assignment substantially in the form of the
Assignment (modified to reflect the conveyance of only such Assets), which will
no longer be deemed Retained Assets.  

11.12Limitations.  

Notwithstanding the provisions of Sections 11.10 and 11.11, no adjustment to the
Purchase Price for Environmental Defect Values shall be made unless and until
the sum of (x) the aggregate value of all Environmental Defect Values (the
“Aggregate Environmental Defect Value”) plus (y) the Aggregate Title Defect
Value (after taking into account any offsetting Title Benefit Values) exceeds
the Aggregate Defect Deductible.  If the Environmental Defect Value with respect
to any single Environmental Defect is less than the De Minimis Environmental
Defect Cost, such cost shall not be considered in calculating the Aggregate
Environmental Defect Value.

11.13Exclusive Remedies.  

 

 

(a)

Except for the special warranty of Defensible Title in the Assignment, and
without limiting Buyer’s remedies for Title Defects set forth in this Article
11, Sellers make no warranty or representation, express, implied, statutory or
otherwise with respect to Sellers’ title to any of the Assets, and Buyer hereby
acknowledges and agrees that Buyer’s sole remedy for any defect of title,
including any Title Defect, with respect to any of the Assets (a) before
Closing, shall be as set forth in Section 11.06 or, if applicable, Section
9.01(h) and (b) after Closing, shall be pursuant to the special warranty of
Defensible Title in the Assignment.  Buyer shall not be entitled to protection
under Sellers’ special warranty of Defensible Title in the Assignment against
any Title Defect reported by Buyer under Section 11.06.

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(b)

The rights and remedies granted to Buyer in this Article 11, the representations
and warranties in Section 3.13 or, if applicable, Section 9.01(h), are the
exclusive rights and remedies against Seller related to any Environmental
Condition, Environmental Laws, or Damages related thereto.  BUYER EXPRESSLY
WAIVES, AND RELEASES SELLER GROUP FROM, ANY AND ALL OTHER RIGHTS AND REMEDIES IT
MAY HAVE UNDER ENVIRONMENTAL LAWS AGAINST SELLER REGARDING ENVIRONMENTAL
CONDITIONS, WHETHER FOR INDEMNITY OR OTHERWISE, INCLUDING RIGHTS TO CONTRIBUTION
UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT
OF 1980, AS AMENDED.  The foregoing is a specifically bargained for allocation
of risk among the Parties, which the Parties agree and acknowledge satisfies the
express negligence rule and conspicuousness requirement under Texas law.

11.14Casualty Loss and Condemnation.  

If, after the Execution Date but prior to the Closing Date, any portion of the
Assets is destroyed by fire or other casualty or is expropriated or taken in
condemnation or under right of eminent domain (a “Casualty Loss”), this
Agreement shall remain in full force and effect, and Buyer shall nevertheless be
required to close the Contemplated Transactions, unless such Casualty Loss
constitutes at Material Adverse Effect.  In the event that the amount of the
costs and expenses associated with repairing or restoring the Assets affected by
such Casualty Loss exceeds Five Hundred Thousand Dollars ($500,000) net to
Seller’s interest, Seller must elect by written notice to Buyer prior to Closing
either to (a) cause the Assets affected by such Casualty Loss to be repaired or
restored, at Seller’s sole cost, as promptly as reasonably practicable (which
work may extend after the Closing Date), or (b) indemnify Buyer under an
indemnification agreement mutually acceptable to the Parties against any costs
or expenses that Buyer reasonably incurs to repair or restore the Assets subject
to such Casualty Loss.  In each case, Seller shall retain all rights to
insurance and other claims against Third Parties with respect to the applicable
Casualty Loss except to the extent the Parties otherwise agree in
writing.  Seller shall have no other liability or responsibility to Buyer with
respect to a condemnation or Casualty Loss, even if such Casualty Loss shall
have resulted from or shall have arisen out of the sole or concurrent
negligence, fault, violation of a Legal Requirement of Seller or any member of
Seller Group.

11.15Expert Proceedings.  

(a)

Each matter referred to this Section 11.15 (a “Disputed Matter”) shall be
conducted in accordance with the Commercial Arbitration Rules of the AAA as
supplemented to the extent necessary to determine any procedural appeal
questions by the Federal Arbitration Act (Title 9 of the United States Code),
but only to the extent that such rules do not conflict with the terms of this
Section 11.15.  Any notice from one Party to the other referring a dispute to
this Section 11.15 shall be referred to herein as an “Expert Proceeding Notice”.

(b)

The arbitration shall be held before a one member arbitration panel (the
“Expert”), mutually agreed by the Parties.  The Expert must (a) be a neutral
party who has never been an officer, director or employee of or performed
material work for a Party or any Party’s Affiliate within the preceding five
(5)-year period and (b) agree in writing to keep strictly confidential the
specifics and existence of the dispute as well as all proprietary records of the
Parties reviewed by the Expert in the process of resolving such dispute.  The
Expert

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must have not less than ten (10) years’ experience as a lawyer in the State of
Louisiana with experience in exploration and production issues.  If disputes
exist with respect to both title and environmental matters, the Parties may
mutually agree to conduct separate arbitration proceedings with the title
disputes and environmental disputes being submitted to separate Experts.  If,
within five (5) Business Days after delivery of an Expert Proceeding Notice, the
Parties cannot mutually agree on an Expert, then within seven (7) Business Days
after delivery of such Expert Proceeding Notice, each Party shall provide the
other with a list of three (3) acceptable, qualified experts, and within ten
(10) Business Days after delivery of such Expert Proceeding Notice, the Parties
shall each separately rank from one through six in order of preference each
proposed expert on the combined lists, with a rank of one being the most
preferred expert and the rank of six being the least preferred expert, and
provide their respective rankings to the Houston office of the AAA.  Based on
those rankings, the AAA will appoint the expert with the combined lowest
numerical ranking to serve as the Expert for the Disputed Matters.  If the
rankings result in a tie or the AAA is otherwise unable to determine an Expert
using the Parties’ rankings, the AAA will appoint an arbitrator from one of the
Parties’ lists as soon as practicable upon receiving the Parties’
rankings.  Each Party will be responsible for paying one-half (1/2) of the fees
charged by the AAA for the services provided in connection with this Section
11.15(b).

(c)

Within five (5) Business Days following the receipt by either Party of the
Expert Proceeding Notice, the Parties will exchange their written description of
the proposed resolution of the Disputed Matters.  Provided that no resolution
has been reached, within five (5) Business Days following the selection of the
Expert, the Parties shall submit to the Expert the following: (i) this
Agreement, with specific reference to this Section 11.15 and the other
applicable provisions of this Article 11, (ii) Buyer’s written description of
the proposed resolution of the Disputed Matters, together with any relevant
supporting materials, (iii) Seller’s written description of the proposed
resolution of the Disputed Matters, together with any relevant supporting
materials, and (iv) the Expert Proceeding Notice.

(d)

The Expert shall make its determination by written decision within fifteen (15)
days following receipt of the materials described in Section 11.15(c) above (the
“Expert Decision”).  The Expert Decision with respect to the Disputed Matters
shall be limited to the selection of the single proposal for the resolution of
the aggregate Disputed Matters proposed by a Party that best reflects the terms
and provisions of this Agreement, i.e., the Expert must select either Buyer’s
proposal or Seller’s proposal for resolution of the aggregate Disputed Matters.

(e)

The Expert Decision shall be final and binding upon the Parties, without right
of appeal, absent manifest error.  In making its determination, the Expert shall
be bound by the rules set forth in this Article 11.  The Expert may consult with
and engage disinterested Third Parties to advise the Expert, but shall disclose
to the Parties the identities of such consultants.  Any such consultant shall
not have worked as an employee or consultant for either Party or its Affiliates
during the five (5)-year period preceding the arbitration nor have any financial
interest in the dispute.

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(f)

The Expert shall act as an expert for the limited purpose of determining the
specific matters submitted for resolution herein and shall not be empowered to
award damages, interest, or penalties to either Party with respect to any
matter.  Each Party shall bear its own legal fees and other costs of preparing
and presenting its case.  All costs and expenses of the Expert shall be borne by
the non-prevailing Party in any such arbitration proceeding.

ARTICLE 12
EMPLOYMENT MATTERS

12.01Seller Benefit Plans

.  Effective as of the Employee Start Date, the Continuing Employees shall cease
to accrue further benefits and shall cease to be active participants under the
Seller Benefit Plans.  Buyer shall not assume any of the Seller Benefits
Plans.  From and after the Employee Start Date, Seller and its ERISA Affiliates
shall retain and shall be solely responsible for all obligations and liabilities
under the Seller Benefit Plans, and neither Buyer nor its Affiliates shall have
any obligation, liability or responsibility from and after the Employee Start
Date to or under the Seller Benefit Plans, whether such obligation, liability or
responsibility arose before, on or after the Employee Start Date.

12.02Pre-Employee Start Date Claims under Seller Benefit Plans and Vacation
Rollover

.

(a)To the extent that an Available Employee was a participant in a Seller
Benefit Plan, the Seller Benefit Plans shall be responsible for providing
welfare benefits (including medical, hospital, dental, accidental death and
dismemberment, life, disability and other similar benefits) to any participating
Available Employees for all claims incurred prior to the Employee Start Date
under and subject to the generally applicable terms and conditions of such
plans.  For purposes of this Section 12.02, a claim is incurred with respect to
(i) accidental death and dismemberment, disability, life and other similar
benefits when the event giving rise to such claim occurred and (ii) medical,
hospital, dental and other similar benefits when the services with respect to
such claim are rendered.

(b)Seller shall provide Buyer a schedule of each Continuing Employee’s accrued
and unused vacation balance (the “Vacation Rollover”) as of five (5) Business
Days prior to the Employee Start Date and will provide a supplementary schedule
five (5) Business Days after the Employee Start Date, if necessary, to show any
changes to any Continuing Employee’s Vacation Rollover prior to the Employee
Start Date.  Seller shall be responsible for paying all accrued and unused
vacation balances to its Continuing Employees.

12.03Available Employees’ Offers and Post-Employee Start Date Employment and
Benefits

.

(a)Within two (2) Business Days of the Execution Date, Seller shall deliver to
Buyer a schedule that includes a list of all Available Employees (the “Employee
Letter”).  The Employee Letter shall include the following data: name, job
title, salary or wage, bonus eligibility / target, long term incentive
eligibility / target, vacation eligibility, start date, and any vehicle
described on Exhibit F assigned to the Available Employee by the Seller.

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(b)Beginning five (5) Business Days following the Execution Date and ending
eight (8) Business Days prior to the anticipated Closing Date, Buyer or its
Affiliate may make written offers of employment to each of the Available
Employees to whom Buyer elects to make an offer of employment, with such offers
providing such Available Employees at least five (5) Business Days to either
accept or reject such offers, with a copy of such offer given to Seller prior to
Closing;

(c)No later than the date that is three (3) Business Days prior to the
anticipated Closing Date, Buyer shall notify Seller as to each Available
Employee who has accepted employment with Buyer or any of its Affiliates, which
acceptance shall be conditioned upon the occurrence of the Closing and effective
as of the Employee Start Date and may be conditioned on other typical hiring
policies, and each Available Employee who has rejected Buyer’s offer of
employment.

(d)Buyer shall indemnify and hold harmless Seller and its Affiliates with
respect to all Damages relating to or arising out of Buyer’s employee selection
and employment offer process described in this Section 12.03 (including any
claim of discrimination or other illegality in such selection and offer
process);

(e)As to each Available Employee who does not become a Continuing Employee,
Buyer agrees that it and its Affiliates shall not employ such Available Employee
from the Employee Start Date until the date that is six (6) months after the
Employee Start Date.  

12.04Savings Plans

.  Effective as of the Employee Start Date, Continuing Employees shall become
eligible to participate in the Nadel & Gussman 401(k) Profit Sharing Plan (the
“Buyer Savings Plan”).  Buyer shall cause the Buyer Savings Plan to accept the
direct rollover of electing Continuing Employees’ benefits in cash.

12.05Post-Employee Start Date Employment Claims

.  Buyer shall indemnify, defend and hold Seller and its Affiliates harmless
from and against any and all liability of any kind or nature involving or
related to the employment of the Continuing Employees by Buyer after the
Employee Start Date, including any liability related to any employee benefit
plan sponsored or maintained by Buyer or its ERISA Affiliates after the Employee
Start Date.  Seller shall indemnify, defend and hold Buyer and its Affiliates
harmless from and against any and all liability of any kind or nature or related
to (a) the employment of any Available Employee who does not become a Continuing
Employee, including any liability related to any Seller Benefit Plan and (b) the
employment of the Continuing Employees by Seller before the Employee Start Date,
including any liability related to any employee benefit plan sponsored or
maintained by Seller or its ERISA Affiliates before the Employee Start Date.

12.06 Buyer Welfare Plans

.  Buyer shall cause the waiver of all limitations as to pre-existing
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Continuing Employees.  Buyer shall
provide continuation health care coverage to Continuing Employees and their
qualified beneficiaries who incur a qualifying event, in accordance with the
continuation health care coverage requirements of Section 4980B of the Code and
Title I, Subtitle B, Part 6 of ERISA (“COBRA”) or any similar provisions of
state Legal Requirement, on or after the Employee Start Date. Buyer shall
provide any required notice

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under COBRA or any similar provisions of any state Legal Requirement to
Continuing Employees in respect of any qualifying event that occurs as a result
of the transactions contemplated by this Agreement.

12.07WARN Act.

  From the date of this Agreement until the Employee Start Date, Seller shall
not and shall cause its Affiliates not to terminate the employment of any
Available Employees such that a “plant closing” or “mass layoff” (as those terms
are defined in the WARN Act or any similar state Legal Requirement) occurs prior
to the Employee Start Date without complying with the WARN Act.  Buyer agrees
that it will make the offers of employment, as described in Section 12.03, to a
sufficient number of Available Employees, and in a manner that does not
constitute constructive discharge, such that there will be no notice or other
obligations required by the WARN Act as a result of the transactions
contemplated by this Agreement.  Buyer agrees to provide any notice required
under the WARN Act or any similar state Legal Requirement with respect to any
“plant closing” or “mass layoff” affecting Continuing Employees that may occur
on or after the Employee Start Date or arise, in whole or in part, as a result
of the transactions contemplated by this Agreement.  Buyer shall indemnify,
defend and hold Seller harmless from and against any liability, damages, fines
or costs (including reasonable attorneys’ fees) under the WARN Act or any
similar state Legal Requirement for any “plant closing” or “mass layoff”
occurring on or after the Employee Start Date or arising, in whole or in part,
from the actions (or inactions) of Buyer on or after the Employee Start Date or
as a result of the transactions contemplated by this Agreement.  In addition,
Buyer shall not effectuate a “plant closing” or “mass layoff” or any other
similar triggering event under the WARN Act or any other applicable Legal
Requirement for six (6) months after the Employee Start Date, affecting any
Continuing Employee, except in compliance with the WARN Act or other applicable
Legal Requirement.

12.08No Third Party Beneficiary Rights.

  Nothing herein, expressed or implied, shall confer upon any Available
Employees (or any of their beneficiaries or alternate payees) any rights or
remedies (including any right to employment or continued employment, or any
right to compensation or benefits for any period) of any nature or kind
whatsoever, under or by reason of this Agreement or otherwise.  In addition, the
provisions of this Article 12, are for the sole benefit of the Parties and are
not for the benefit of any Third Party.  Nothing in this Article 12, express or
implied, shall be (a) deemed an amendment of any Seller Benefit Plan providing
benefits to any Available Employee or (b) construed to prevent Buyer or its
Affiliates from terminating or modifying to any extent or in any respect any
employee benefit plan that Buyer or its Affiliates may establish or maintain.  

ARTICLE 13
GENERAL PROVISIONS

13.01Records.  

Seller, at Buyer’s cost and expense, shall deliver originals of all Records to
Buyer (FOB Seller’s office) within thirty (30) days after Closing (other than
such Records (if any) that pertain exclusively to any Retained Assets, which
shall be delivered promptly after the assignment to Buyer of such Retained
Assets, but in no event longer than seven (7) Business Days after the assignment
to Buyer of such Retained Assets).  With respect to any original Records
delivered to Buyer, (a) Seller shall be entitled to retain copies of such
Records, and (b) Buyer shall retain any such original Records for at least seven
(7) years beyond the Closing Date, during which seven (7)-year period Seller
shall be entitled to obtain access to such Records, at reasonable

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business hours and upon prior notice to Buyer, so that Seller may make copies of
such original Records, at its own expense, as may be reasonable or necessary for
tax purposes or in connection with any Proceeding or Threatened Proceeding
against Seller.

13.02Expenses.  

 

(a)

Except as otherwise expressly provided in this Agreement, each Party to this
Agreement shall bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants.  However, the prevailing Party in any Proceeding
brought under or to enforce this Agreement, excluding any expert proceeding
pursuant to Section 11.15 or Section 2.05(e), shall be entitled to recover court
costs and arbitration costs, as applicable, and reasonable attorneys’ fees from
the non-prevailing Party or Parties, in addition to any other relief to which
such Party is entitled.

(b)

All Transfer Taxes and all required documentary, filing and recording fees and
expenses in connection with the filing and recording of the assignments,
conveyances or other Instruments of Conveyance required to convey title to the
Assets to Buyer shall be borne by Buyer.  Seller shall retain responsibility
for, and shall bear, all Asset Taxes assessed with respect to the Assets for (i)
any period ending prior to the Effective Time and (ii) the portion of any
Straddle Period ending immediately prior to the Effective Time.  All Asset Taxes
with respect to the Assets arising on or after the Effective Time (including the
portion of any Straddle Period beginning at the Effective Time) shall be
allocated to and borne by Buyer.  For purposes of allocation between the Parties
of Asset Taxes assessed with respect to the Assets for any Straddle Period, (A)
Asset Taxes that are attributable to the severance or production of Hydrocarbons
shall be allocated based on severance or production occurring before the
Effective Time (which shall be Seller’s responsibility) and from and after the
Effective Time (which shall be Buyer’s responsibility); (B) Asset Taxes that are
based upon or related to income or receipts or imposed on a transactional basis
(other than such Asset Taxes described in clause (A)) shall be allocated based
on revenues from sales occurring before the Effective Time (which shall be
Seller’s responsibility) and from and after the Effective Time (which shall be
Buyer’s responsibility); and (C) Asset Taxes that are ad valorem, property or
other Asset Taxes imposed on a periodic basis shall be allocated pro rata per
day between the portion of the Straddle Period ending immediately prior to the
Effective Time (which shall be Seller’s responsibility) and the portion of the
Straddle Period beginning at the Effective Time (which shall be Buyer’s
responsibility).  For purposes of the preceding sentence, any exemption,
deduction, credit or other item that is calculated on an annual basis shall be
allocated pro rata per day between the portion of the Straddle Period ending
immediately prior to the Effective Time and the portion of the Straddle Period
beginning at the Effective Time.  To the extent the actual amount of any Asset
Taxes described in this Section 13.02(b) is not determinable at Closing, Buyer
and Seller shall utilize the most recent information available in estimating the
amount of such Asset Taxes for purposes of Section 2.05.  Upon determination of
the actual amount of such Asset Taxes, timely payments will be made from one
Party to the other to the extent necessary to cause each Party to bear the
amount of such Asset Tax that is allocable to such Party under this Section
13.02(b).  Any allocation of Asset Taxes between the Parties shall be in
accordance with this Section 13.02(b).

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(c)

Except as required by applicable Legal Requirements, in respect of Asset Taxes,
(i) Seller shall be responsible for timely remitting all Asset Taxes due with
respect to the Assets on or prior to the Effective Time (subject to Seller’s
right to reimbursement by Buyer under Section 13.02(b)), and Buyer shall be
responsible for timely remitting all Asset Taxes due with respect to the Assets
after the Effective Time (subject to Buyer’s right to reimbursement by Seller
under Section 13.02(b)), in each case, to the applicable taxing authority, and
(ii) Seller shall prepare and timely file any Tax Return for Asset Taxes with
respect to the Assets required to be filed on or before the Closing Date, and
Buyer shall prepare and timely file any Tax Return for Asset Taxes with respect
to the Assets required to be filed after the Closing Date (including Tax Returns
relating to any Straddle Period).  Each Party shall indemnify and hold the other
Party harmless for any failure to file such Tax Returns and to make such
payments.  Buyer shall prepare all Tax Returns relating to any Straddle Period
required to be filed after the Closing Date, and such Tax Returns shall be filed
on a basis consistent with past practice except to the extent otherwise required
by applicable Legal Requirements.  Buyer shall provide Seller with a copy of any
such Tax Return for Seller’s review at least ten (10) days prior to the due date
for the filing of such Tax Return (or within a commercially reasonable period
after the end of the relevant Taxable period, if such Tax Return is required to
be filed less than ten (10) days after the close of such Taxable period), and
Buyer shall incorporate all reasonable comments of Seller provided to Buyer in
advance of the due date for the filing of such Tax Return.

(d)

Buyer and Seller agree to furnish or cause to be furnished to the other, upon
request, as promptly as practicable, such information and assistance relating to
the Assets, including access to books and records, as is reasonably necessary
for the filing of all Tax Returns by Buyer or Seller, the making of any election
relating to Taxes, the preparation for any audit by any taxing authority and the
prosecution or defense of any claim, suit or proceeding relating to any
Tax.  The Parties agree to retain all books and records with respect to Tax
matters pertinent to the Assets relating to any Tax period beginning before the
Closing Date until sixty (60) days after the expiration of the statute of
limitations of the respective Tax periods (taking into account any extensions
thereof) and to abide by all record retention agreements entered into with any
taxing authority.

13.03Notices.  

All notices, consents, waivers, and other communications under this Agreement
must be in writing and shall be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by electronic
mail with receipt acknowledged, with the receiving Party affirmatively obligated
to promptly acknowledge receipt, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate recipients, addresses, and emails set forth below
(or to such other recipients, addresses, or email addresses as a Party may from
time to time designate by notice to the other Party):

NOTICES TO BUYER:

NGLF Energy, LLC
15 East 5th Street, Suite 3300
Tulsa, Oklahoma 74103Attention: James F. Adelson
E-mail: jim@naguss.com

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With a copy (which shall not constitute notice) to:

Cook, Yancey, King & Galloway

333 Texas Street, Suite 1700

Shreveport, LA 71101

Attention: Matthew May; Logan Schroeder

Email: matt.may@cookyancey.com; logan.schroeder@cookyancey.com

 

NOTICES TO SELLER:

Riviera Operating, LLC

Riviera Upstream, LLC
717 Texas Avenue, Suite 2000

Houston, Texas 77002
Attention: General Counsel

E-mail: Handerson@Rvraresources.com

 

With a copy (which shall not constitute notice) to:

 

Kirkland & Ellis LLP

609 Main Street, Suite 4500

Houston, TX 77002

Attention:  Rahul D. Vashi, P.C.

 

Lindsey M. Jaquillard

 

Email:

rahul.vashi@kirkland.com

 

lindsey.jaquillard@kirkland.com

 

13.04Governing Law; Jurisdiction; Service of Process; Jury Waiver.

THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE RIGHTS, DUTIES AND
THE LEGAL RELATIONS AMONG THE PARTIES HERETO AND THERETO SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY
CONFLICTS OF LAW RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF SUCH
PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION; PROVIDED, HOWEVER, THAT ANY
MATTERS RELATED TO REAL PROPERTY SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
LOUISIANA.  WITHOUT LIMITING THE PARTIES’ AGREEMENT TO ARBITRATE IN SECTION
11.15 OR THE DISPUTE RESOLUTION PROCEDURE PROVIDED IN SECTION 2.05(e) WITH
RESPECT TO DISPUTES ARISING THEREUNDER, THE PARTIES HERETO CONSENT TO THE
EXERCISE OF JURISDICTION IN PERSONAM BY THE FEDERAL COURTS OF THE UNITED STATES
LOCATED IN HOUSTON, TEXAS OR THE STATE COURTS LOCATED IN HOUSTON, TEXAS FOR ANY
ACTION ARISING OUT OF THIS AGREEMENT, ANY TRANSACTION DOCUMENTS, OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY.  ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED
TO, OR FROM THIS AGREEMENT, ANY TRANSACTION

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DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY SHALL BE EXCLUSIVELY
LITIGATED IN SUCH COURTS DESCRIBED ABOVE HAVING SITES IN HOUSTON, TEXAS AND EACH
PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF SUCH COURTS SOLELY IN RESPECT
OF ANY PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.  EACH PARTY
HERETO VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY TRANSACTION DOCUMENTS OR ANY TRANSACTION CONTEMPLATED HEREBY
OR THEREBY.  THE PARTIES FURTHER AGREE, TO THE EXTENT PERMITTED BY LAW, THAT A
FINAL AND NONAPPEALABLE JUDGMENT AGAINST A PARTY IN ANY ACTION OR PROCEEDING
CONTEMPLATED ABOVE SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER
JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES BY SUIT ON THE JUDGMENT, A
CERTIFIED OR EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT
AND AMOUNT OF SUCH JUDGMENT.  TO THE EXTENT THAT A PARTY OR ANY OF ITS
AFFILIATES HAS ACQUIRED, OR HEREAFTER MAY ACQUIRE, ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH PARTY (ON ITS OWN
BEHALF AND ON BEHALF OF ITS AFFILIATES) HEREBY IRREVOCABLY (I) WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS WITH RESPECT TO THIS AGREEMENT AND (II)
SUBMITS TO THE PERSONAL JURISDICTION OF ANY COURT DESCRIBED IN THIS SECTION
13.04.

13.05Further Assurances.  

The Parties agree (a) to furnish upon request to each other such further
information, (b) to execute, acknowledge, and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other Party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the documents referred to in this Agreement.

13.06Waiver.  

The rights and remedies of the Parties are cumulative and not
alternative.  Neither the failure nor any delay by either Party in exercising
any right, power, or privilege under this Agreement or the documents referred to
in this Agreement shall operate as a waiver of such right, power, or privilege,
and no single or partial exercise of any such right, power, or privilege shall
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege.  To the maximum extent
permitted by applicable Legal Requirement, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one Party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other Party, (b) no waiver that may be
given by a Party shall be applicable except in the specific instance for which
it is given, and (c) no notice to or demand on one Party shall be deemed to be a
waiver of any obligation of such Party or of the right of the Party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.

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13.07Entire Agreement and Modification.  

This Agreement supersedes all prior discussions, communications, and agreements
(whether oral or written) between the Parties with respect to its subject matter
and constitutes (along with the documents referred to in this Agreement) a
complete and exclusive statement of the terms of the agreement between the
Parties with respect to its subject matter.  This Agreement may not be amended
or otherwise modified except by a written agreement executed by both
Parties.  No representation, promise, inducement, or statement of intention with
respect to the subject matter of this Agreement has been made by either Party
that is not embodied in this Agreement together with the documents, instruments,
and writings that are delivered pursuant hereto, and neither Party shall be
bound by or liable for any alleged representation, promise, inducement, or
statement of intention not so set forth.  In the event of a conflict between the
terms and provisions of this Agreement and the terms and provisions of any
Schedule or Exhibit hereto, the terms and provisions of this Agreement shall
govern, control, and prevail.

13.08Assignments, Successors, and No Third Party Rights.  

Neither Party may assign any of its rights, liabilities, covenants, or
obligations under this Agreement without the prior written consent of the other
Party (which consent may be granted or denied at the sole discretion of the
other Party), and (a) any assignment made without such consent shall be void,
and (b) in the event of such consent, such assignment nevertheless shall not
relieve such assigning Party of any of its obligations under this Agreement
without the prior written consent of the other Party.  Subject to the preceding
sentence, this Agreement shall apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the
Parties.  Nothing expressed or referred to in this Agreement shall be construed
to give any Person other than the Parties or any other agreement contemplated
herein (and Buyer Group and Seller Group who are entitled to indemnification
under Article 10), any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement.  Subject to the
preceding sentence, this Agreement, any other agreement contemplated herein, and
all provisions and conditions hereof and thereof, are for the sole and exclusive
benefit of the Parties and such other agreements (and Buyer Group and Seller
Group who are entitled to indemnification under Article 10), and their
respective successors and permitted assigns.

13.09Severability.  

If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement shall remain
in full force and effect.  Any provision of this Agreement held invalid or
unenforceable only in part or degree shall remain in full force and effect to
the extent not held invalid or unenforceable.

13.10Article and Section Headings, Construction.  

The headings of Sections, Articles, Exhibits, and Schedules in this Agreement
are provided for convenience only and shall not affect its construction or
interpretation.  All references to “Section,” “Article,” “Exhibit,” or
“Schedule” refer to the corresponding Section, Article, Exhibit, or Schedule of
this Agreement.  Unless expressly provided to the contrary, the words
“hereunder,” “hereof,” “herein,” and words of similar import are references to
this Agreement as a whole and not any particular Section, Article, Exhibit,
Schedule, or other provision of this Agreement.  Each definition of a defined
term herein shall be equally applicable both to the singular and the plural
forms of the term so defined.  All words used in this Agreement shall be
construed to be of such gender or number, as the circumstances require.  Unless
otherwise expressly provided, the word “including” does not limit the preceding
words or terms and (in its various forms) means including without
limitation.  If the date specified in this

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Agreement for giving any notice or taking any action is not a Business Day (or
if the period during which any notice is required to be given or any action
taken expires on a date which is not a Business Day), then the date for giving
such notice or taking such action (or the expiration date of such period during
which notice is required to be given or action taken) shall be the next day
which is a Business Day.  Each Party has had substantial input into the drafting
and preparation of this Agreement and has had the opportunity to exercise
business discretion in relation to the negotiation of the details of the
Contemplated Transactions.  This Agreement is the result of arm’s-length
negotiations from equal bargaining positions.  This Agreement shall not be
construed against either Party, and no consideration shall be given or
presumption made on the basis of who drafted this Agreement or any particular
provision hereof or who supplied the form of Agreement.

13.11Counterparts.  

This Agreement may be executed and delivered (including by facsimile or e-mail
transmission) in one or more counterparts, each of which shall be deemed to be
an original copy of this Agreement and all of which, when taken together, shall
be deemed to constitute one and the same agreement.

13.12Press Release.

If any Party wishes to make a press release or other public announcement
respecting this Agreement or specific to the Contemplated Transactions, such
Party will provide a courtesy copy to the other Party of the language relevant
to the transaction prior to the release or public announcement.  Neither Party
will issue a press release or other public announcement that includes the name
of a non-releasing Party or its Affiliates without the prior written consent of
such non-releasing Party (which consent may be withheld in such non-releasing
Party’s sole discretion). Seller and Buyer shall each be liable for the
compliance of their respective Affiliates with the terms of this Section 13.12.
  

13.13Confidentiality.  

The Confidentiality Agreement shall terminate on the Closing Date (except with
respect to the Retained Assets (if any); provided that the Confidentiality
Agreement shall terminate with respect to Retained Assets when and if such
Retained Assets are conveyed to Buyer in accordance with this Agreement (or, if
earlier, such time as the Confidentiality Agreement terminates on its own
terms), and will thereafter be of no further force or effect.  Each Party shall
keep confidential, and cause its Affiliates and instruct its Representatives to
keep confidential, all terms and provisions of this Agreement, except (a) as
required by Legal Requirements or any standards or rules of any stock exchange
to which such Party or any of its Affiliates is subject, (b) for information
that is available to the public on the Closing Date, or thereafter becomes
available to the public other than as a result of a breach of this Section
13.13, (c) to the extent required to be disclosed in connection with complying
with or obtaining a waiver of any Preferential Purchase Right or Consent or
other similar rights arising out of operating agreements or other Contracts, and
(d) to the extent that such Party must disclose the same in any Proceeding
brought by it to enforce its rights under this Agreement.  This Section 13.13
shall not prevent either Party from recording the Instruments of Conveyance
delivered at Closing or from complying with any disclosure requirements of
Governmental Bodies that are applicable to the transfer of the Assets.  The
covenant set forth in this Section shall terminate one (1) year after the
Closing Date.

13.14Name Change.  

As promptly as practicable, but in any event within sixty (60) days after the
Closing Date, Buyer shall eliminate, remove or paint over the use of the names
“Linn” or “Riviera” and variants thereof from the Assets, and, except with
respect to such grace period for

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eliminating the existing usage, shall have no right to use any logos,
trademarks, or trade names belonging to Seller or any of its Affiliates.  Buyer
shall be solely responsible for any direct or indirect costs or expenses
resulting from the change in use of name and any resulting notification or
approval requirements.

13.15Preparation of Agreement.

  Both Seller and Buyer and their respective counsel participated in the
preparation of this Agreement.  In the event of any ambiguity in this Agreement,
no presumption shall arise based on the identity of the draftsman of this
Agreement.

13.16Appendices, Exhibits and Schedules.

  All of the Appendices, Exhibits and Schedules referred to in this Agreement
are hereby incorporated into this Agreement by reference and constitute a part
of this Agreement.  Each Party to this Agreement and its counsel has received a
complete set of Appendices, Exhibits and Schedules prior to and as of the
execution of this Agreement.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of
the date first written above.

 

 

SELLER:

 

 

 

Riviera Upstream, LLC

 

 

 

 

 

By:

/s/ David B. Rottino

 

Name:

David B. Rottino

 

Title:

President and Chief Executive Officer

 

 

 

 

 

Riviera Operating, LLC

 

 

 

 

 

By:

/s/ David B. Rottino

 

Name:

David B. Rottino

 

Title:

President and Chief Executive Officer

 

 

 

Signature Page to Purchase and Sale Agreement

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BUYER:

 

 

 

NGLF Energy, LLC

 

 

 

 

 

By:

/s/ James F. Adelson

 

Name:

James F. Adelson

 

Title:

Chief Executive Officer

 

Signature Page to Purchase and Sale Agreement