Exhibit 10.4

 

PURCHASE AND SALE AGREEMENT

 

Among

 

EnerVest Energy Institutional Fund XI-A, L.P.

 

and

 

EnerVest Energy Institutional Fund XI-WI, L.P.

 

(collectively, “Seller”)

 

and

 

CGAS Properties, L.P.

 

(“Buyer”)

 

Dated: September 2, 2015

 

 

 

 

Table of Contents

 

  Page     SCHEDULES       ARTICLE IPURCHASE AND SALE 1 Section 1.01 Purchase
and Sale 1 Section 1.02 Assets 1 Section 1.03 Excluded Properties 2 Section 1.04
Effective Time 4       ARTICLE II 4     PURCHASE PRICE 4 Section 2.01 Purchase
Price 4 Section 2.02 Deposit. 4 Section 2.03 Adjustments and Credits to Purchase
Price 4 Section 2.04 Payment of Purchase Price 6       ARTICLE III 6    
REPRESENTATIONS AND WARRANTIES 6 Section 3.01 Representations and Warranties of
Seller 6 Section 3.02 Representations and Warranties of Buyer 9 Section 3.03
Disclaimer of Representations and Warranties 10 Section 3.04 Disclosure
Schedules. 11       ARTICLE IV 11     PRE-CLOSING COVENANTS AND AGREEMENTS 11
Section 4.01 Pre-Closing Covenants and Agreements of Seller 11 Section 4.02
Pre-Closing Covenants and Agreements of Buyer 13 Section 4.03 Preferential
Rights and Consents 13 Section 4.04 Casualty Loss 14       ARTICLE V 15    
TITLE MATTERS 15 Section 5.01 Definitions 15 Section 5.02 Title Defect
Adjustments 16 Section 5.03 Title Benefit Offsets 18 Section 5.04 Special
Warranty of Title 18 Section 5.05 Limitations 18       ARTICLE VI 18    
ENVIRONMENTAL MATTERS 18 Section 6.01 Adverse Environmental Conditions 18
Section 6.02 Adverse Environmental Condition Adjustments 19 Section 6.03
Limitations 19

 

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ARTICLE VII 20     CONDITIONS TO CLOSING 20 Section 7.01 Seller’s Conditions 20
Section 7.02 Buyer’s Conditions 20 Section 7.03 Mutual Conditions 21      
ARTICLE VIII 21     CLOSING 21 Section 8.01 Date of Closing 21 Section 8.02
Place of Closing 21 Section 8.03 Closing Obligations 21       ARTICLE IX 23    
OBLIGATIONS AFTER CLOSING 23 Section 9.01 Post-Closing Adjustment Procedure 23
Section 9.02 Allocation of Revenues 23 Section 9.03 Files and Records 24 Section
9.04 Buyer’s Assumed Obligations and Release 24 Section 9.05 Indemnification 25
Section 9.06 Survival; Limitations on Indemnification 26 Section 9.07
Indemnification Procedures 26 Section 9.08 Suspense Funds 27 Section 9.09
Recordation and Post-Closing Consents 27 Section 9.10 Taxes 27 Section 9.11
Material Contracts. 28       ARTICLE X 28     TERMINATION OF AGREEMENT 28
Section 10.01 Termination 28 Section 10.02 Liabilities Upon Termination or
Breach 29       ARTICLE XI 30     MISCELLANEOUS 30 Section 11.01 Schedules and
Exhibits 30 Section 11.02 Expenses 30 Section 11.03 Notices 30 Section 11.04
Amendments; Waiver 31 Section 11.05 Assignment 31 Section 11.06 Announcements 32
Section 11.07 Governing Law; Venue 32 Section 11.08 Entire Agreement 32 Section
11.09 Parties in Interest 32 Section 11.10 Further Assurances 32 Section 11.11
Severability 32 Section 11.12 Headings; Terminology; Defined Terms 32 Section
11.13 Not to be Construed Against Drafter 33 Section 11.14 Indemnities and
Conspicuousness of Provisions 33

 

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Section 11.15 Counterparts of Assignment. 33 Section 11.16 Counterpart Execution
33 Section 11.17 Definitions 33

 

Exhibit A Ownership Shares

 

Exhibit B Form of Assignment and Bill of Sale

 

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SCHEDULES

 

Schedule 1.02(a) Leases     Schedule 1.02(b) Wells     Schedule 1.03(c) Excluded
Formation Wells     Schedule 3.01(f) Legal Proceedings     Schedule 3.01(h)
Compliance with Laws     Schedule 3.01(n) Preferential Rights     Schedule
3.01(o) Outstanding Capital Expenditures     Schedule 3.01(p) Consents    
Schedule 5.01(a) Allocated Values

 

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PURCHASE AND SALE AGREEMENT

 

This Purchase and Sale Agreement (this “Agreement”), dated September 2, 2015, is
among EnerVest Energy Institutional Fund XI-A, L.P., a Delaware limited
partnership (“EnerVest Institutional Fund”), and EnerVest Energy Institutional
Fund XI-WI, L.P., a Delaware limited partnership (“EnerVest Working Interest
Fund,” which together with EnerVest Institutional Fund, are collectively called
“Seller” and each is a “Seller Party”) and CGAS Properties, L.P., a Delaware
limited partnership (“Buyer”). Buyer and Seller are sometimes individually
referred to herein as a “Party” and collectively referred to herein as the
“Parties.”

 

WITNESSETH

 

WHEREAS, each Seller Party owns the respective proportionate interest set forth
in Exhibit A attached hereto (each Seller’s “Ownership Share”) in and to certain
oil and gas interests which, together with the properties appurtenant thereto,
are more fully described and defined herein as the Assets; and

 

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Assets, subject to the terms and conditions set forth herein.

 

Now, therefore, in consideration of the mutual promises contained herein, the
benefits to be derived by each Party hereunder and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto agree as follows:

 

ARTICLE I
PURCHASE AND SALE

 

Section 1.01         Purchase and Sale. Seller agrees to sell and convey, and
Buyer agrees to purchase and pay for, in accordance with their respective
Ownership Shares, the Assets, subject to the terms and conditions of this
Agreement.

 

Section 1.02         Assets. Subject to Section 1.03, all of each Seller Party’s
right, title and interest in and to the following shall be referred to herein as
the “Assets”:

 

(a)          the leasehold estates created by the oil, gas and/or mineral leases
described in Schedule 1.02(a) (collectively, the “Leases”) and all other rights
in and to the lands covered by the Leases (the “Lands”), together with all other
interests of each Seller Party in the Leases, including overriding royalty
interests, production payments and other payments out of or measured by the
value of oil and gas production from or attributable to the Leases;

 

(b)          any and all oil and gas wells, salt water disposal wells, injection
wells, and other wells and wellbores located on the Leases or Units, whether
producing, operating, plugged or unplugged, shut in, or permanently or
temporarily abandoned, including but not limited to those described in Schedule
1.02(b) (the “Wells”);

 

(c)          any pools or units including all or part of any Lease (the
“Units”);

 

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(d)          all natural gas, casinghead gas, drip gasoline, natural gas
liquids, condensate, products, crude oil and other hydrocarbons, whether gaseous
or liquid (“Products”) produced from or attributable to the Leases or Units from
and after the Effective Time, as well as water produced from or attributable to
the Leases from and after the Effective Time, or, with respect to the Products
described in Section 2.03(a)(i), prior to the Effective Time, and the accounts
and proceeds from the sale thereof (collectively, the “Production”);

 

(e)          all of the personal property, fixtures and improvements appurtenant
to the Wells or the Leases or used solely in connection with the ownership or
operation of the Wells or the Leases or with the production, treatment, storage,
sale or disposal of the Production, including, without limitation, all
pipelines, gathering lines, and compression facilities appurtenant to or located
upon the Leases or Units (the “Equipment”);

 

(f)          all rights-of-way, easements, servitudes, subsurface leases, other
surface rights, permits and licenses, to the extent they are transferable and
are appurtenant to the Leases, the Units, the Wells, or Equipment (the
“Easements”);

 

(g)          to the extent transferable, all agreements, product purchase and
sale contracts, gas gathering contracts, salt water disposal leases, processing
agreements, production handling agreements, facilities sharing agreements,
compression agreements, equipment leases, permits, licenses, farmouts and
farmins, options, orders, pooling, spacing or consolidation agreements and
operating agreements and all other agreements relating to the Leases, the Units,
the Wells, the Production, the Equipment and the Easements (the “Contracts”);

 

(h)          to the extent transferable at no cost to Seller or at additional
cost that Buyer agrees to undertake or pay, each Seller Party’s proprietary and
licensed seismic data relating to the Assets; and

 

(i)          records and files in the possession of each Seller Party relating
to any of the Assets, including, without limitation: (i) lease, division order,
contract and land files and title opinions; (ii) operations, production,
environmental and engineering records; (iii) facility and well records; (iv)
cuttings and cores, (v) accounting, gas and/or oil imbalance files, well payout
files and lease operating statements and files; and (vi) any other files in the
possession of each Seller Party relating to the Assets or the operation thereof
(collectively, the “Records”), save and except for, in respect of each such
category, (A) records that Seller is prohibited from disclosing under
confidentiality agreements with third parties, (B) information entitled to legal
privilege, including, without limitation, attorney work product and
attorney-client communications (except for title opinions, which shall be
included in the Records), (C) economic projections and (D) records of offers
from, or negotiations with, Buyer or third parties with respect to the sale of
the Assets and economic analyses associated therewith.

 

Section 1.03         Excluded Properties. The Assets do not include, and there
is expressly excepted therefrom and reserved to each Seller Party the following
(the “Excluded Properties”):

 

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(a)          the Leases and the Lands, in each case INSOFAR AND ONLY INSOFAR as
the same cover and include the Utica, Point Pleasant and Trenton Formations
(such lands, as to the Utica, Point Pleasant and Trenton Formations, the
"Excluded Formation Lands", and such Leases, as to the Utica, Point Pleasant and
Trenton Formations, the “Excluded Formation Leases”). The "Utica, Point Pleasant
and Trenton Formations" (each one individually referred to as an “Excluded
Formation”) means:

 

(i)          for Leases covering lands located in the State of Ohio, the
stratigraphic equivalent of the interval found below a depth beginning at 300
feet below the Top of the Queenston formation, as encountered at a measured
depth of 6,520’, subsurface (the top of the Queenston Formation being
encountered at 6,220’ subsurface) down to the Top of the Black River formation,
as encountered at a measured depth of 7,984’, subsurface, in each case on the
type log for the Thomas Zechman #1 well, API # 34-067-20737, in Moorefield
Township, Harrison County, Ohio in the compensated neutron/gamma ray log dated
January 14-15, 1986 (recognizing that the actual depth will vary across the
Excluded Properties); and

 

(ii)         for Leases covering lands located in the Commonwealth of
Pennsylvania, the stratigraphic equivalent of those formations found between a
depth of 300 feet below the Top of the Queenston formation, as encountered at a
measured depth of 3,820 feet subsurface,  down to the Top of the Black River
formation  as encountered at a measured depth of 5,882 feet subsurface, on the
type well log for the Moreland #13 Well, API # 37-039-25731, Cussewago
 Township, Crawford County, Pennsylvania (recognizing that the actual depth will
vary across the Excluded Properties).

 

(b)          All Products in, on, or under or that may be produced from the
Excluded Formation in and under the Excluded Formation Leases and the Excluded
Formation Lands, including, without limitation, all rights with respect to
overproduction, underproduction, overdelivery, or underdelivery of Products
produced from or allocable to the Excluded Formation Lands.

 

(c)          The Wells drilled and completed in the Excluded Formation on the
Excluded Formation Lands, including but not limited to those described in
Schedule 1.03(c) (collectively, the "Excluded Formation Wells"), and all
Equipment and improvements appurtenant to the Excluded Formation Wells or the
production, treating, gathering, processing, storing, and transportation of
Products produced therefrom.

 

(d)          All Contracts relating to the interests described in clauses (a),
(b), or (c) above, only insofar as they cover or relate to the Excluded
Formation Wells, the Excluded Formation Leases, and the Excluded Formation
Lands, and excluding any insurance contracts.

 

(e)          All Easements relating to the interests described in clauses (a),
(b), or (c) above, only insofar as they cover or relate to the Excluded
Formation Wells, the Excluded Formation Leases, and the Excluded Formation
Lands.

 

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(f)          The Records relating to the items described in clauses (a) through
(e) above maintained by or in the possession of Seller,

 

Section 1.04         Effective Time. The purchase and sale of the Assets shall
be effective as of July 1, 2015, at 12:01 a.m., at the location of the Assets
(the “Effective Time”).

 

ARTICLE II 

PURCHASE PRICE

 

Section 2.01         Purchase Price. The purchase price for the Assets shall be
Fifty Nine Million Eight Hundred Thousand Dollars ($59,800,000.00), payable as
provided in Section 2.04 below (the “Purchase Price”), subject to adjustment and
credit as set forth in Section 2.03. The Purchase Price will be allocated among
the Properties as set forth on Schedule 5.01(a) (such amount being referred to
herein as the “Allocated Value” with respect to each line item on Schedule
5.01(a) (each “Property”)).

 

Section 2.02         Deposit. Contemporaneously with the execution of this
Agreement, Buyer has deposited into a joint control account at Cadence Bank (the
“Deposit Bank”) an amount equal to ten percent (10%) of the Purchase Price (the
“Deposit”). The Deposit, plus any interest accrued thereon, shall be held and
distributed by the Deposit Bank, in accordance with joint signature checks,
drafts, or wire transfer instructions duly executed and delivered to the Deposit
Bank by Buyer and Seller for purposes of effectuating the other provisions of
this Agreement pertaining to the Deposit. In the event that the transaction
contemplated hereby is not consummated in accordance with the terms hereof, then
the Deposit, plus any interest accrued thereon, shall be applied in accordance
with the provisions of Section 10.02(b) and Section 10.02(c). In the event that
the transaction contemplated hereby is consummated in accordance with the terms
hereof, then the Deposit, plus any interest accrued thereon, shall be applied to
the Purchase Price to be paid by Buyer at Closing. For the avoidance of doubt,
Buyer and Seller shall execute and deliver, or shall cause to be executed and
delivered, from time to time such further documents, agreements or instruments,
and shall take such other actions as any Party may reasonably request, to
deliver the Deposit, plus any interest accrued thereon, to Buyer or Seller, in
connection with the Closing or the provisions of Section 10.02(b) and Section
10.02(c).

 

Section 2.03         Adjustments and Credits to Purchase Price.

 

(a)          The Purchase Price shall be adjusted upward by the following:

 

(i)          an amount equal to the posted price in the relevant field as of the
date of the execution of this Agreement of all merchantable liquid Products
produced from or attributable to the Assets which are in storage above the
pipeline connection as of the Effective Time and which have not been sold by
Seller prior to the Closing, less an amount equal to all royalties, overriding
royalties, taxes, gravity adjustments and other amounts deducted in the ordinary
course and consistent with past practices by the purchaser of such Products;

 

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(ii)         the amount of all ad valorem, property, production, excise,
severance and similar taxes based upon or measured by the ownership of the
Assets or the production of Products or the receipt of proceeds therefrom,
expenditures and other charges (excluding delay rentals), including, without
limitation, prepaid expenses and expenses billed under applicable operating
agreements (and, in the absence of an operating agreement, expenses of the sort
customarily billed under such agreements), that are paid by or on behalf of
Seller and that, in accordance with generally accepted accounting principles,
are attributable to the ownership or operation of the Assets from and after the
Effective Time;

 

(iii)        without duplication of adjustments made in accordance with Section
2.03(a)(i) above, net proceeds received by Buyer from the sale of Products
produced from or attributable to the Assets prior to the Effective Time and
other proceeds received by Buyer relating to the ownership or operation of the
Assets that, in accordance with generally accepted accounting principles, are
attributable to periods prior to the Effective Time;

 

(iv)         overhead charges applicable to the operation of the Assets during
the period from the Effective Time to the Closing Date, which shall be Seventy
Three Thousand Dollars ($73,000.00) per month (which shall be prorated for
partial months based on the number of days elapsed); and

 

(v)          any other amount agreed upon by the Parties in writing or set forth
in this Agreement as an adjustment to the Purchase Price.

 

(b)          The Purchase Price shall be adjusted downward by the following:

 

(i)          the amount of all ad valorem, property, production, excise,
severance and similar taxes based upon or measured by the ownership of the
Assets or the production of Products or the receipt of proceeds therefrom,
expenditures and other charges (excluding delay rentals), including, without
limitation, expenses billed under applicable operating agreements (and, in the
absence of an operating agreement, expenses of the sort customarily billed under
such agreements), that are paid by or on behalf of Buyer and that, in accordance
with generally accepted accounting principles, are attributable to the ownership
or operation of the Assets prior to the Effective Time;

 

(ii)         net proceeds received by Seller from the sale of Products produced
from or attributable to the Assets from and after the Effective Time and other
proceeds received by Seller relating to the ownership or operation of the Assets
that, in accordance with generally accepted accounting principles, are
attributable to periods from and after the Effective Time;

 

(iii)        an amount equal to unpaid ad valorem, property and similar taxes
based upon or measured by the ownership of the Assets that are attributable to
periods of time prior to the Effective Time, which amounts shall, to the extent
not actually assessed, be computed based on such taxes for the preceding tax
year (such amount to be prorated for the period of Seller’s ownership before and
Buyer’s ownership after the Effective Time);

 

(iv)        an amount equal to the sum of all adjustments to the Purchase Price:

 

(1)         pursuant to Section 4.03 in respect of preferential purchase rights
and consents;

 

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(2)         pursuant to Section 5.02 in respect of Title Defects;

 

(3)         pursuant to Section 6.02 in respect of Adverse Environmental
Conditions; and

 

(v)         any other amount agreed upon by the Parties in writing or set forth
in this Agreement as an adjustment to the Purchase Price.

 

(c)          At least five (5) Business Days prior to the Closing, Seller shall
prepare and submit to Buyer a settlement statement (the “Preliminary Settlement
Statement”) setting forth each adjustment and credit to the Purchase Price
pursuant to this Section 2.03, using for such adjustments and credits the best
information then reasonably available. Prior to the Closing, Buyer may notify
Seller of any objections to the Preliminary Settlement Statement; provided,
however, that Buyer’s failure to notify Seller of objections prior to the
Closing shall not be deemed a waiver thereof for the purposes of post-Closing
adjustments. The Parties shall use their reasonable efforts to agree on a final
Preliminary Settlement Statement no later than one (l) Business Day prior to the
Closing. The Purchase Price, adjusted and credited as provided in the final
Preliminary Settlement Statement, is referred to herein as the “Preliminary
Purchase Price.” If Buyer and Seller are unable to agree upon the final
Preliminary Settlement Statement, then the Preliminary Purchase Price shall be
as provided in a final Preliminary Settlement Statement acceptable to Seller,
and such dispute shall be resolved in the course of the post-Closing adjustments
pursuant to Section 9.01.

 

Section 2.04         Payment of Purchase Price. The Preliminary Purchase Price
(after giving effect to the Deposit, plus any interest accrued thereon, which
shall be delivered to Seller from the joint control account at the Deposit Bank
in accordance with Section 2.02) shall be payable at the Closing in cash by wire
transfer in accordance with such wire transfer instructions as Seller may
deliver to Buyer at least two (2) Business Days prior to the Closing.

 

ARTICLE III 

REPRESENTATIONS AND WARRANTIES

 

Section 3.01         Representations and Warranties of Seller. Each Seller
Party, as applicable, represents and warrants severally, not jointly, to Buyer
solely as to such Seller Party and such Seller Party’s Ownership Share in the
Assets, as of the date hereof and as of the Closing Date, as follows:

 

(a)          EnerVest Institutional Fund represents and warrants that it is duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified to carry on its business and to own and operate
oil and gas properties in each jurisdiction in which the Assets are located.
EnerVest Working Interest Fund represents and warrants that is duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and is duly qualified to carry on its business and to own and operate oil and
gas properties in each jurisdiction in which the Assets are located. The general
partner of each of the EnerVest Institutional Fund and the EnerVest Working
Interest Fund is duly organized, validly existing and in good standing under the
laws of the State of Texas, and is duly qualified to carry on its business and
to own and operate oil and gas properties in each jurisdiction in which the
Assets are located.

 

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(b)          Seller Party has all requisite power and authority to carry on its
business as presently conducted, to enter into this Agreement and each other
document executed in connection herewith and to perform its obligations under
this Agreement and each other document executed in connection herewith. The
consummation of the transactions contemplated by this Agreement and each other
document executed in connection herewith will not violate, or be in conflict
with or give rise to a right of termination, cancellation or acceleration of any
obligation or creation of a lien under: (i) any provision of the certificate of
limited partnership or limited partnership agreements or similar organizational
or formation documents of Seller Party; (ii) any provision of any agreement or
instrument to which Seller Party is a party or by which it is bound (other than
this Agreement and any other document executed in connection herewith); or (iii)
any judgment, decree, order, statute, rule or regulation applicable to Seller
Party or the Assets.

 

(c)          This Agreement has been, and, if the Closing occurs, the documents
to be executed and delivered by Seller Party at the Closing will be, duly
authorized, executed and delivered on behalf of Seller Party, and this Agreement
constitutes, and, if the Closing occurs, the documents to be executed and
delivered by Seller Party at the Closing will be, the legal, valid and binding
obligation of Seller Party, enforceable in accordance with their respective
terms, subject, however, to the effects of bankruptcy, insolvency,
reorganization and other laws for the protection of creditors.

 

(d)          Seller Party has not incurred any liability, contingent or
otherwise, for brokers’ or finders fees’ relating to the transactions
contemplated by this Agreement for which Buyer shall have any responsibility
whatsoever.

 

(e)          There are no bankruptcy, reorganization or arrangement proceedings
pending, being contemplated by or, to Seller Party’s knowledge, threatened
against Seller Party.

 

(f)          Except as set forth on Schedule 3.01(f), there are no lawsuits,
actions, proceedings or governmental investigations or inquiries pending or, to
Seller Party’s knowledge, threatened against Seller Party that materially affect
the ownership or operation of the Assets.

 

(g)          All material federal, state and local ad valorem, property,
production, severance and similar taxes based upon or measured by Seller Party’s
ownership of the Assets or the production of Products therefrom that are due and
owing have been paid.

 

(h)          Except as set forth on Schedule 3.01(h), to Seller Party’s
knowledge, the Assets have been owned and operated in compliance with all
applicable laws, rules and regulations (excluding, however, Environmental Laws,
which are addressed in Section 3.01(i)), except for any nonmaterial
noncompliance therewith that would not reasonably be expected to have a Material
Adverse Effect.

 

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(i)          To Seller Party’s knowledge, Seller Party (i) is in material
compliance with all Environmental Laws applicable to the Assets, (ii) has
received no notice of any violation of, or investigation relating to, any
federal, state or local laws with respect to pollution or protection of the
environment relating to the Assets and (iii) has obtained all environmental
permits required in connection with the ownership and operation of the Assets,
and has complied with and is in material compliance with all such permits.

 

(j)          There are no Assets that are subject to a payout schedule or payout
balance that may impact Buyer’s Working Interest or Net Revenue Interest as set
forth on Schedule 5.01(a) after the Effective Time.

 

(k)          (i) To Seller Party’s knowledge, all Contracts constituting a part
of and material to the ownership and operation of the Assets (the “Material
Contracts”) are in full force and effect, and (ii) Seller Party is not in
default with respect to any of its material obligations thereunder.

 

(l)          (i) To Seller Party’s knowledge, all Leases are in full force and
effect, and Seller Party is not in default with respect to any of its material
obligations thereunder, and (ii) all rentals, royalties, overriding royalty
interests and other payments due and owing by Seller Party under each of the
Leases have been timely and accurately paid, except amounts that are being held
in suspense as a result of title issues and issues relating to the location of
owners.

 

(m)          Except for the Permitted Encumbrances, the Assets will be conveyed
to Buyer free and clear of all liens, mortgages, claims and encumbrances, and at
or prior to the Closing, Seller Party’s lenders with liens or encumbrances on
the Assets shall execute and deliver all documentation necessary to release all
such liens and encumbrances.

 

(n)          Except as set forth in Schedule 3.01(n) there are no preferential
rights to purchase attributable or with respect to any of the Assets that are
applicable to the transactions contemplated hereby.

 

(o)          Except as set forth in Schedule 3.01(o), there are no outstanding
calls or payments under authorities for expenditures for payments or other
capital commitments relating to the Assets which exceed Fifty Thousand Dollars
($50,000.00) (net to the interest of Seller Party) individually or Two Hundred
Fifty Thousand Dollars ($250,000.00) (net to the interest of Seller Party) in
the aggregate and which are due or which Seller Party has committed to make
which have not been made as of the Effective Time.

 

(p)          Except as set forth in Schedule 3.01(p), there are no consents,
approvals or authorizations of any person or entity relating to any Material
Contract, in each case, required to be obtained by Seller Party that are
applicable to the transactions contemplated hereby.

 

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(q)          As used herein, “Seller Party’s knowledge” or words of similar
import mean the actual knowledge (after reasonable due inquiry) of any employee
of a Seller Party having a title of portfolio manager, operations manager or
higher. With respect to any representation or warranty pertaining to any Asset
not operated by Seller Party, such representation or warranty shall be deemed to
be limited to Seller Party’s knowledge with respect to such non-operated Asset
(unless such representation or warranty is already qualified by knowledge).

 

(r)          As used herein, “Material Adverse Effect” means a condition or
occurrence that would have an adverse effect on the Assets exceeding One Hundred
Fifty Thousand Dollars ($150,000.00).

 

Section 3.02         Representations and Warranties of Buyer. Buyer represents
and warrants to Seller as of the date hereof and as of the Closing Date as
follows:

 

(a)          Buyer is duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is or, as of Closing, will be duly
qualified to carry on its business and to own and operate oil and gas properties
in each jurisdiction in which the Assets are located; and the general partner of
Buyer is duly organized, validly existing and in good standing under the laws of
the State of Delaware, and is duly qualified to carry on its business and to own
and operate oil and gas properties in each jurisdiction in which the Assets are
located.

 

(b)          Buyer has all requisite power and authority to carry on its
business as presently conducted and has all requisite power and authority to
enter into this Agreement and each other document executed in connection
herewith, to purchase the Assets on the terms described in this Agreement and to
perform its other obligations under this Agreement and each other document
executed in connection herewith. The consummation of the transactions
contemplated by this Agreement will not violate, or be in conflict with or give
rise to a right of termination, cancellation or acceleration of any obligation
or creation of a lien under: (i) any provision of the certificate of limited
partnership or limited partnership agreements or similar organizational or
formation documents of Buyer; (ii) any provision of any agreement or instrument
to which Buyer is a party or by which it is bound (other than this Agreement);
or (iii) any judgment, decree, order, statute, rule or regulation applicable to
Buyer.

 

(c)          This Agreement has been, and, if the Closing occurs, the documents
to be executed and delivered by Buyer at the Closing will be, duly authorized,
executed and delivered on behalf of Buyer, and this Agreement constitutes, and,
if the Closing occurs, the documents to be executed and delivered by Buyer at
the Closing will be, the legal, valid and binding obligation of Buyer,
enforceable in accordance with their respective terms, subject, however, to the
effects of bankruptcy, insolvency, reorganization and other laws for the
protection of creditors.

 

(d)          Buyer has not incurred any liability, contingent or otherwise, for
brokers’ or finders fees’ relating to the transactions contemplated by this
Agreement for which Seller shall have any responsibility whatsoever.

 

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(e)          There are no bankruptcy, reorganization or arrangement proceedings
pending, being contemplated by or, to the knowledge of Buyer, threatened against
Buyer.

 

(f)          Buyer is an experienced oil and gas company and experienced in oil
and gas operations. Buyer has entered into this Agreement on the basis of its
own independent judgment and analysis. Buyer is in the business of purchasing
and owning oil and gas properties. The Assets to be acquired by Buyer pursuant
to this Agreement are being acquired by it for its own account for investment
purposes and not for distribution within the meaning of any securities law. In
acquiring the Assets, Buyer is acting in the conduct of its own business and not
under any specific contractual commitment to any third party, or any specific
nominee agreement with any third party, to transfer to, or to hold title on
behalf of, such third party, with respect to all or any part of the Assets.

 

(g)          Buyer will have at the Closing all funds necessary to pay the
Preliminary Purchase Price and any other amounts contemplated by this Agreement
to be paid at Closing. Buyer’s ability to consummate the transactions
contemplated hereby is not contingent on its ability to secure financing or to
complete any public or private placement of securities prior to or upon Closing.

 

Section 3.03         Disclaimer of Representations and Warranties.

 

(a)          BUYER ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER HEREBY
EXPRESSLY DISCLAIMS AND NEGATES, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED OTHER THAN AS SPECIFICALLY SET FORTH IN THIS AGREEMENT or any document
executed in connection herewith INCLUDING, BUT NOT LIMITED TO, RELATING TO THE
CONDITION OF ANY REAL OR IMMOVABLE PROPERTY, PERSONAL OR MOVABLE PROPERTY,
EQUIPMENT, INVENTORY, MACHINERY AND FIXTURES CONSTITUTING PART OF THE ASSETS
INCLUDING, WITHOUT LIMITATION: (i) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY; (ii) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE; (iii) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS; (iv) ANY RIGHTS OF BUYER UNDER APPROPRIATE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE;
(v) ANY IMPLIED OR EXPRESS WARRANTY, INCLUDING WITHOUT LIMITATION, ANY IMPLIED
OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT; (vi) ANY
IMPLIED OR EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF
MATERIALS INTO THE ENVIRONMENT, INCLUDING, WITHOUT LIMITATION, NATURALLY
OCCURRING RADIOACTIVE MATERIAL OR ASBESTOS, OR PROTECTION OF THE ENVIRONMENT OR
HEALTH. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT OR ANY DOCUMENT EXECUTED
IN CONNECTION HEREWITH, IT IS THE EXPRESS INTENTION OF BUYER AND SELLER THAT THE
REAL OR IMMOVABLE PROPERTY, PERSONAL OR MOVABLE PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY AND FIXTURES SHALL BE CONVEYED TO BUYER AS IS AND IN THEIR PRESENT
CONDITION AND STATE OF REPAIR. BUYER REPRESENTS TO SELLER THAT BUYER WILL MAKE
OR CAUSE TO BE MADE SUCH INSPECTIONS WITH RESPECT TO THE REAL OR IMMOVABLE
PROPERTY, PERSONAL OR MOVABLE PROPERTY, EQUIPMENT, INVENTORY, MACHINERY AND
FIXTURES AS BUYER DEEMS APPROPRIATE AND, EXCEPT FOR BUYER’S REMEDIES WITH
RESPECT TO ADVERSE ENVIRONMENTAL CONDITIONS AS PROVIDED IN ARTICLE 6 HEREIN,
BUYER WILL ACCEPT THE REAL OR IMMOVABLE PROPERTY, PERSONAL OR MOVABLE PROPERTY,
EQUIPMENT, INVENTORY, MACHINERY AND FIXTURES AS IS, IN THEIR PRESENT CONDITION
AND STATE OF REPAIR.

 

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(b)          EXCEPT AS PROVIDED IN SECTION 3.01, SELLER HEREBY EXPRESSLY NEGATES
AND DISCLAIMS, AND BUYER HEREBY WAIVES AND ACKNOWLEDGES THAT SELLER HAS NOT
MADE, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO: (i) THE
ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED TO BUYER BY OR ON BEHALF OF SELLER; OR
(ii) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES, GEOLOGICAL OR
GEOPHYSICAL DATA OR INTERPRETATIONS, OR THE QUALITY, QUANTITY, RECOVERABILITY OR
COST OF RECOVERY.

 

Section 3.04         Disclosure Schedules. Any fact, circumstance or matter
disclosed on any of the schedules to this Agreement shall be deemed to qualify
each and all of Seller’s representations and warranties to the extent that it is
readily apparent that such fact, circumstance, or matter disclosed on such
schedule is applicable to such other representation or warranty and, if such
requirement is satisfied, Buyer shall not be entitled to claim that any such
fact, circumstance or matter constitutes a breach of any of Seller’s
representations or warranties contained herein.

 

ARTICLE IV 

PRE-CLOSING COVENANTS AND AGREEMENTS

 

Section 4.01         Pre-Closing Covenants and Agreements of Seller. Seller
covenants and agrees with Buyer as follows:

 

(a)          Upon execution of this Agreement, Seller will make the Records
available to Buyer for examination at a location designated by Seller and
subject to such other reasonable limitations as Seller may require.

 

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(b)          Prior to the Closing Date and, with respect to non-operated Assets,
subject to any necessary third party operator approval and Buyer’s execution of
any agreement required by such third party operator, Seller shall permit Buyer
and its representatives at reasonable times and at Buyer’s sole risk, cost and
expense, to conduct reasonable inspections of the Assets (including an
environmental assessment); provided, however, Buyer shall repair any damage to
the Assets resulting from such inspections and BUYER SHALL INDEMNIFY, DEFEND AND
HOLD HARMLESS SELLER AND ITS PARTNERS, SUBSIDIARIES AND AFFILIATES AND ITS AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FROM AND AGAINST ANY
AND ALL LOSSES OR CAUSES OF ACTION ARISING FROM THE INSPECTION OF THE ASSETS BY
BUYER OR ITS CONTRACTORS, AGENTS, CONSULTANTS OR REPRESENTATIVES, INCLUDING,
WITHOUT LIMITATION, CLAIMS FOR PROPERTY DAMAGES, PERSONAL INJURIES OR DEATH, BUT
EXCLUDING ANY LOSSES OR CAUSES OF ACTIONS AS A RESULT OF SELLER’S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(c)          During the period from the date of this Agreement to the Closing,
Seller agrees, unless specifically waived by Buyer in writing, as follows:

 

(i)          Subject to the provisions of applicable operating and other
agreements, Seller shall cause EnerVest Operating, L.L.C. to operate, maintain
and administer the Assets in a good and workmanlike manner, consistent with its
past practices as a reasonably prudent operator and shall maintain, or cause to
be maintained, the existing insurance with respect to the Assets.

 

(ii)         Except for emergency action taken in the face of risk to life,
property or the environment (in which case Seller shall promptly notify Buyer of
the cause, the amount expended and contracts and commitments relating to same),
Seller shall submit to Buyer for prior written approval, which approval shall
not be unreasonably withheld, all requests for capital expenditures and all
proposed new contracts and agreements relating to the Assets that involve
individual commitments of more than Fifty Thousand Dollars ($50,000.00), net to
Seller’s interest.

 

(iii)        Seller will not sell, farmout, encumber or dispose of any of the
Assets, except pursuant to existing preferential purchase rights that are
exercised prior to the Closing.

 

(iv)        Seller will not enter into any material new contract affecting the
Assets or modify, amend in any material respect or terminate any Lease or
existing Contract or enter into any new sales contracts or supply contracts with
a term of more than thirty (30) calendar days.

 

(v)         Seller will not settle any claim, action or proceeding relating to
the Assets that is in excess of Fifty Thousand Dollars ($50,000.00), net to
Seller’s interest, without Buyer’s written consent, which consent shall be
timely and shall not be unreasonably withheld.

 

(vi)        Seller will not plug any Well capable of production of hydrocarbons
in commercial quantities.

 

(d)          Buyer acknowledges that Seller owns an undivided interest in
certain of the Assets, and Buyer agrees that the acts or omissions of the other
working interest owners who are not affiliated with Seller shall not constitute
a violation of the provisions of this Section 4.01, nor shall any action
required by a vote of working interest owners constitute such a violation so
long as Seller has voted its interest in a manner that complies with the
provisions of this Article IV.

 

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Section 4.02         Pre-Closing Covenants and Agreements of Buyer. Buyer
covenants and agrees with Seller that Buyer shall maintain its status as a
limited partnership and shall assure that as of the Closing Date it will not be
under any material partnership or contractual restriction that would prohibit or
delay the timely consummation of the transaction contemplated herein.

 

Section 4.03         Preferential Rights and Consents.

 

(a)          Within five (5) Business Days after execution of this Agreement,
Seller shall send notices to the holders of preferential rights or consents to
assign under joint operating agreements (which consents, for purposes of this
Agreement, shall be treated as preferential rights under Section 4.03(b) through
(d) below) applicable to the transactions contemplated hereby. The form and
content of all solicitations for the waivers affecting the Assets shall be
determined by Seller, after consultation with Buyer, and shall not be
inconsistent with any of the terms of this Agreement.

 

(b)          In the event a third party exercises an applicable preferential
right to purchase any of the Assets prior to the Closing Date (and does not,
prior to the Closing, subsequently waive such preferential purchase right) or a
preferential right has not expired prior to the Closing Date, the affected
Assets shall be removed from this Agreement and the Purchase Price shall be
reduced by the Allocated Value of such Assets. For a period of sixty (60) days
after the Closing Date, Seller may, from time to time, notify Buyer in writing
if the holder of such exercised preferential right has withdrawn its exercise
thereof or has failed to close or the applicable preferential right has expired
(without challenge or comment from the holder of such preferential right).
Within ten (10) Business Days after Buyer’s receipt of such notice, Seller shall
sell, assign and convey to Buyer, and Buyer shall purchase and accept from
Seller, the affected Assets pursuant to the terms of this Agreement and for the
Allocated Value thereof (as adjusted pursuant to Section 2.03).

 

(c)          If on the Closing Date preferential purchase rights applicable to
any of the Assets have not expired or been waived, the affected Assets shall be
excluded from the Assets delivered at the Closing and the Purchase Price shall
be reduced by the Allocated Value of such Assets. The Parties shall conduct a
subsequent closing sixty (60) days after the Closing Date (the “Second Closing”)
with respect to each of the excluded Assets for which the applicable
preferential purchase rights have expired or been waived. If any preferential
purchase rights have neither expired nor been waived within sixty (60) days
after the Closing Date, the affected Assets, automatically and without need to
amend this Agreement, shall be removed from this Agreement and the Parties shall
have no further obligations to each other with respect to the same, unless
Seller and Buyer agree in writing to proceed with a closing on such Assets.

 

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(d)          If more than sixty (60) days after the Closing, a third party
exercises an applicable preferential right to purchase any of the Assets of
which Seller and Buyer were not aware prior to the expiration of such period,
then Buyer shall sell, assign and convey the affected Asset to such third party
and Buyer shall be entitled to receive and collect the proceeds of the purchase,
either from such third party directly or from any Seller Party that receives and
collects such proceeds. This provision shall survive the Closing indefinitely.

 

(e)          Seller will use reasonable efforts to attempt to obtain any other
required consents (other than governmental consents customarily obtained
post-Closing, consents under joint operating agreements described in Section
4.03(a) or other approvals customarily obtained post-Closing) for the valid
assignment of any Asset with an Allocated Value of greater than zero prior to
the Closing. If on the Closing Date any such consents have not been obtained,
and (i) the failure to obtain such consent would cause (A) the assignment of the
Assets affected thereby to Buyer to be void or voidable, or (B) the termination
or loss of a contract or an Asset under the express terms thereof, or (ii)
Seller has been notified that the holder of any such consent right has rejected
or will otherwise not grant such consent, then Buyer shall have the right to
elect that any such affected Asset (a “Hard Consent Asset”) not be transferred
to Buyer at Closing. In such cases, such Hard Consent Asset shall be retained by
Seller and the Purchase Price shall be reduced by the Allocated Value of such
Hard Consent Asset. If an unsatisfied consent requirement with respect to a Hard
Consent Asset for which an adjustment is made to the Purchase Price is
subsequently satisfied prior to the date that is sixty (60) days after the
Closing, the Parties shall include such Hard Consent Asset in the Second Closing
at which (y) Seller shall convey such Hard Consent Asset to Buyer in accordance
with this Agreement, and (z) Buyer shall pay an amount equal to the Allocated
Value of such Hard Consent Asset to Seller. If such consent requirement is not
satisfied within sixty (60) days after the Closing, the affected Hard Consent
Assets, automatically and without need to amend this Agreement, shall be removed
from this Agreement and the Parties shall have no further obligations to each
other with respect to the same, unless Seller and Buyer agree in writing to
proceed with a closing on such Hard Consent Assets. If on the Closing Date any
other consents (other than consents relating to Hard Consent Assets) have not
been obtained the affected Assets nevertheless shall be delivered at the Closing
and the Allocated Value therefor shall be included in the Purchase Price, but
after the Closing Seller shall continue its efforts to obtain such consents on a
case by case basis as agreed upon by Buyer and Seller.

 

Section 4.04         Casualty Loss. If, subsequent to the date of this Agreement
and prior to the Closing, all or any portion of the Assets are (i) destroyed by
fire or other casualty or (ii) are taken in condemnation or under the right of
eminent domain (or proceedings for such purposes are pending or threatened)
(collectively, “Casualty Loss”), Buyer shall purchase the affected Assets
notwithstanding any such Casualty Loss and the Purchase Price shall not be
adjusted. At the Closing Seller shall pay to Buyer all sums paid to Seller by
third parties by reason of the Casualty Loss, and shall assign, transfer and set
over or surrogate unto Buyer all of the right, title and interest of Seller in
and to any unpaid awards or other payments from third parties arising out of the
Casualty Loss. Seller shall not voluntarily compromise, settle or adjust any
amounts payable by reason of any Casualty Loss without first obtaining the
written consent of Buyer, such consent not to be unreasonably withheld.

 

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ARTICLE V 

TITLE MATTERS

 

Section 5.01         Definitions.

 

(a)          The term “Defensible Title” shall mean such title held by each
Seller Party on the Effective Time which, except for and subject to the
Permitted Encumbrances: (i) entitles each Seller Party to receive its Ownership
Share as to each Property of not less than the Net Revenue Interest set forth on
Schedule 5.01(a) of the Products produced and saved from such Property for the
life of such Property; (ii) obligates each Seller Party to bear its Ownership
Share of costs and expenses relating to the drilling, maintenance, development,
operation and plugging and abandonment of a Property in an amount not greater
than the Working Interest set forth in Schedule 5.01(a) for such Property
(unless there is a proportionate increase in the corresponding Net Revenue
Interest) for the life of such Property; and (iii) is free and clear of liens,
mortgages, charges, encumbrances, security agreements, interests, claims,
defects and similar burdens.

 

(b)          The term “Permitted Encumbrances,” as used herein, means:

 

(i)          lessors’ royalties, overriding royalties, unitization and pooling
designations and agreements, reversionary interests and similar burdens that do
not reduce the Net Revenue Interest for any Property below that shown on
Schedule 5.01(a) for such Property or increase the Working Interest for any
Property above that set forth on Schedule 5.01(a) for such Property without a
proportionate increase in the corresponding Net Revenue Interest;

 

(ii)         third party consents required for the transfer of any of the Assets
which (i) are obtained prior to the Closing, (ii) if not obtained do not cause
the affected Asset to be a Hard Consent Asset, or (iii) are required consents,
notices to, filings with, or other actions by governmental entities which are
customarily obtained post-Closing;

 

(iii)        preferential rights to purchase all or any portion of the Assets
that are set forth on Schedule 3.01(n);

 

(iv)        easements, rights-of-way, servitudes, licenses and permits on, over,
across or in respect of any of the Assets not materially interfering with the
operation, exploration, development, value or use of any Assets;

 

(v)         materialmen’s, mechanics’, repairmen’s, employees’, contractors’,
operators’, tax and other similar liens or charges arising in the ordinary
course of business incidental to the construction, maintenance or operation of
any of the Assets: (A) if they have not been filed pursuant to law; or (B) if
filed, they have not yet become due and payable; and

 

(vi)        any other liens, charges, encumbrances, contracts, agreements,
instruments, obligations, defects or irregularities of any kind whatsoever
affecting the Assets that, individually or in the aggregate, (i) do not
materially reduce the value of or materially interfere with the use, ownership
or operation of the Assets subject thereto or affected thereby, (ii) would be
accepted by a reasonably prudent purchaser engaged in the business of owning and
operating oil and gas properties, (iii) do not prevent Seller from receiving the
proceeds of production, and (iv) do not operate to: (A) reduce the Net Revenue
Interest for any Property below that set forth on Schedule 5.01(a) for such
Property; or (B) increase the Working Interest for any Property above that set
forth on Schedule 5.01(a) for such Property without a proportionate increase in
the corresponding Net Revenue Interest.

 

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(c)          The term “Title Defect” as used herein shall mean any encumbrance
or defect in Seller’s title to the Leases that renders a Seller Party’s title to
the Leases to be less than Defensible Title.

 

(d)          The term “Title Benefit” as used herein shall mean any condition
that (i) entitles a Seller Party to receive as to a Property set forth in
Schedule 5.01(a) a greater Net Revenue Interest than that set forth on Schedule
5.01(a) for such Property; or (ii) obligates a Seller Party to bear costs and
expenses relating to the drilling, maintenance, development and operation and
plugging and abandonment of a Property in an amount less than the Working
Interest set forth in Schedule 5.01(a) for such Property, unless there is a
proportionate decrease in the corresponding Net Revenue Interest.

 

Section 5.02         Title Defect Adjustments.

 

(a)          No action (including no adjustment to the Purchase Price) shall be
required under Section 5.02(c) below in respect of any individual Title Defect
unless the value of such Title Defect equals or exceeds a threshold of One
Thousand Five Hundred Dollars ($1,500.00) with respect to a Property. With
respect to all Title Defects meeting such threshold, no action (including no
adjustment to the Purchase Price) shall be required under Section 5.02(c) except
and only to the extent that the aggregate value of all such Title Defects and
all timely asserted Adverse Environmental Conditions meeting the individual
claim threshold set forth in Section 6.02(a), net of all Title Benefit Offsets,
exceeds a deductible equal to one percent (1%) of the Purchase Price as to both
Seller Parties.

 

(b)          Buyer shall give Seller written notice of any Title Defects alleged
by Buyer at least three (3) days prior to the Closing Date. Such notice (a
“Defect Notice”) shall be in writing and shall include: (i) a description of
each Title Defect; (ii) the Allocated Value of the Properties affected by each
Title Defect; (iii) the amount by which Buyer believes the Allocated Value of
each of such Properties has been reduced because of each Title Defect, and (iv)
documentation or other evidence reasonably supporting Buyer’s assertion of each
Title Defect and the reduction in Allocated Value asserted pursuant to the
preceding clause (iii) with respect thereto. For the purposes of this Article V,
Buyer shall be deemed to have waived all Title Defects of which Seller has not
been given timely notice and all Title Defects that do not meet the requirements
set forth in Section 5.02(a). All adjustments to the Purchase Price based on
Title Defects will be based on the Allocated Values attributable to the affected
Properties. Upon timely delivery of a Defect Notice under this Section 5.02,
Buyer and Seller Party will in good faith negotiate the validity of the Title
Defect and the amount of any adjustment to the Purchase Price using the
following criteria:

 

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(i)          If the alleged Title Defect is based on owning a Net Revenue
Interest in a Property which is less than the Net Revenue Interest percentage
necessary for the Seller Party to have had Defensible Title in such Property,
then a downward adjustment to the Purchase Price shall be calculated by
multiplying the Allocated Value set forth on Schedule 5.01(a) for such Property
by a fraction, the numerator of which is an amount equal to the Net Revenue
Interest percentage necessary for the Seller Party to have had Defensible Title
to such Property, less the Net Revenue Interest to which the Seller Party is
actually entitled taking such Title Defect into account, and the denominator of
which is the Net Revenue Interest percentage necessary for the Seller Party to
have had Defensible Title to such Property.

 

(ii)         If the Title Defect is based on a lien upon a Property that is
liquidated in amount, then the adjustment is the lesser of the amount necessary
to remove such lien from the affected Property or the Allocated Value of the
affected Property.

 

(iii)        If the Title Defect is based on an obligation, burden or liability
upon a Property for which the Buyer’s economic detriment is not liquidated but
can be estimated with reasonable certainty, then, subject to the other
provisions hereof, the adjustment is the lesser of the amount necessary to
compensate Buyer for the adverse economic effect on the affected Property or the
Allocated Value of the affected Property.

 

(c)          Subject to the limitations contained in Section 5.02(a), a Property
affected by a Title Defect shall be excluded from the Assets to be purchased by
Buyer hereunder and the Purchase Price shall be reduced by an amount equal to
the Allocated Value of such Property unless, prior to one (1) day before the
Closing Date, either: (i) the Title Defect has been cured by Seller to the
reasonable satisfaction of Buyer; (ii) Buyer agrees to waive the relevant Title
Defect and purchase the affected Asset(s) notwithstanding such Title Defect; or
(iii) Buyer and Seller agree upon a reduction of the Purchase Price with respect
to such Title Defect.

 

(d)          With respect to any property affected by a Title Defect which is
excluded from the Assets pursuant to Section 5.02(c), the Seller shall have
sixty (60) days after the Closing to cure any such Title Defect, and to the
extent that such Title Defect is cured to Buyer’s reasonable satisfaction, the
Parties shall include in the Second Closing each of the excluded Assets for
which the Title Defects have been cured. If any Title Defects have not been
cured by the date of the Second Closing, the affected Assets, automatically and
without need to amend this Agreement, shall be removed from this Agreement and
the Parties shall have no further obligations to each other with respect to the
same, unless Seller and Buyer agree in writing to proceed with a closing on such
Assets.

 

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Section 5.03         Title Benefit Offsets. Buyer shall promptly notify each
Seller Party of any Title Benefits identified by Buyer prior to the Closing,
such notice to include a description of the Title Benefit and the Properties
affected. Each Seller Party shall give Buyer written notice of any Title
Benefits alleged by each Seller Party at least ten (10) days prior to the
Closing Date. Such notice (a “Benefit Notice”) shall be in writing and shall
include: (i) a description of each Title Benefit; (ii) the Allocated Value of
the Properties affected by each Title Benefit; (iii) the amount by which each
Seller Party believes the value of each of such Properties has been increased
because of each Title Benefit, and (iv) documentation or other evidence
reasonably supporting each Seller Party’s assertion of each Title Benefit and
the increase in value asserted pursuant to the preceding clause (iii) with
respect thereto. The upward adjustment to the Purchase Price in respect of each
Title Benefit shall be determined in the same manner as provided in Section 5.02
with respect to Title Defects. Each Seller Party shall be deemed to have waived
all Title Benefits of which Buyer has not been given timely notice. A Property
affected by a Title Benefit shall be excluded from the Assets to be purchased by
Buyer hereunder and the Purchase Price shall be reduced by an amount equal to
the Allocated Value of such Property unless, prior to one (1) day before the
Closing Date, either (i) each Seller Party agrees to waive the relevant Title
Benefit and sell the affected Asset(s) notwithstanding such Title Benefit or
(ii) Buyer and each Seller Party agree upon an adjustment to the Purchase Price
with respect to such Title Benefit (a “Title Benefit Offset”). All Title Benefit
Offsets shall be netted against the value of Title Defects and Adverse
Environmental Conditions as provided in Sections 5.02(c) and 6.02(c). Upon a
timely delivery of a Benefit Notice under this Section 5.03, Buyer and Seller
will in good faith negotiate the validity of the claim and the amount of any
adjustment to the Purchase Price; provided that, (y) no action (including no
adjustment to the Purchase Price) shall be required under this Section 5.03 in
respect of any individual Title Benefit unless the value of such Title Benefit
Offset equals or exceeds a threshold of One Thousand Five Hundred Dollars
($1,500.00) with respect to an Oil and Gas Property and (z) with respect to all
Title Benefits meeting such threshold, no action (including no adjustment to the
Purchase Price) shall be required under this Section 5.03 except and only to the
extent the aggregate value of all such Title Benefits meeting such threshold,
exceeds a deductible equal to one percent (1%) of the Purchase Price as to both
Seller Parties.

 

Section 5.04         Special Warranty of Title. Each Seller Party, individually,
and not jointly, warrants Defensible Title to the Leases and fee minerals
included in the Assets unto Buyer, its successors and assigns, against all
claims BY, THROUGH OR UNDER SUCH SELLER PARTY, BUT NOT OTHERWISE.

 

Section 5.05         Limitations. THIS ARTICLE V AND EACH SELLER PARTY’S SPECIAL
WARRANTY OF TITLE IN SECTION 5.04 AND THE ASSIGNMENT AND BILL OF SALE SHALL BE
THE SOLE AND EXCLUSIVE REMEDY AND RIGHT OF RECOVERY THAT BUYER SHALL HAVE
AGAINST SELLER WITH RESPECT TO SELLER’S TITLE TO THE ASSETS.

 

ARTICLE VI 

ENVIRONMENTAL MATTERS

 

Section 6.01         Adverse Environmental Conditions. An “Adverse Environmental
Condition” means any condition or circumstance of the Assets which is not in
compliance with applicable Environmental Law. “Environmental Law” means all
laws, statutes, ordinances, rules and regulations of any governmental authority
pertaining to protection of the environment in effect as of the Effective Time
and as interpreted by court decisions or administrative orders as of the
Effective Time in the jurisdiction in which such Asset is located. Environmental
Law does not include good or desirable operating practices or standards that may
be employed or adopted by other oil or gas well operators or merely recommended,
but not required, by a governmental authority.

 

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Section 6.02         Adverse Environmental Condition Adjustments.

 

(a)          No action (including no adjustment to the Purchase Price) shall be
required under this Section 6.02 in respect of any individual Adverse
Environmental Condition existing on a Property unless the value of such Adverse
Environmental Condition equals or exceeds a threshold of Twenty Thousand Dollars
($20,000.00) with respect to a Property. With respect to all Adverse
Environmental Conditions meeting such threshold, no action (including no
adjustment to the Purchase Price) shall be required under this Section 6.02
except and to the extent that the aggregate value of all such Adverse
Environmental Conditions and all timely asserted Title Defects meeting the
individual claim threshold set forth in Section 5.02(a), net of all Title
Benefit Offsets, exceeds a deductible equal to one percent (1%) of the Purchase
Price as to both Seller Parties.

 

(b)          Buyer shall give each Seller Party written notice of any Adverse
Environmental Conditions alleged by Buyer at least three (3) days prior to the
Closing Date. Such notice shall be in writing and shall include: (i) a
description of each Adverse Environmental Condition; (ii) the Allocated Value of
the Properties affected by each Adverse Environmental Condition; (iii) the
expenditures that Buyer estimates will be required to place the Assets affected
by each Adverse Environmental Condition into compliance with applicable
Environmental Law, and (iv) documentation or other evidence reasonably
supporting Buyer’s assertion of each Adverse Environmental Condition and the
expenditures provided pursuant to the preceding clause (iii) with respect
thereto. For the purposes of this Article VI, Buyer shall be deemed to have
waived all Adverse Environmental Conditions of which Seller has not been given
timely notice hereunder and all Adverse Environmental Conditions that do not
meet the requirements set forth in Section 6.02(a).

 

(c)          Subject to the limitations contained in Section 6.02(a), a Property
affected by an Adverse Environmental Condition shall be excluded from the Assets
to be purchased by Buyer hereunder and the Purchase Price shall be reduced by an
amount equal to the Allocated Value of such Property unless, prior to one (1)
day before the Closing Date, either: (i) the Adverse Environmental Condition has
been cured by Seller to the reasonable satisfaction of Buyer; (ii) Buyer agrees
to waive the relevant Adverse Environmental Condition and purchase the affected
Assets notwithstanding the Adverse Environmental Condition; or (iii) Buyer and
Seller agree upon a reduction of the Purchase Price with respect to such Adverse
Environmental Condition. If Seller and Buyer agree to a downward adjustment to
the Purchase Price pursuant to clause (iii) above, said adjustment shall not
reflect any costs to remediate to a more stringent remediation standard than is
required by Environmental Laws.

 

Section 6.03         Limitations. THIS ARTICLE VI AND SECTION 9.05(b) SHALL BE
THE SOLE AND EXCLUSIVE REMEDY AND RIGHT OF RECOVERY THAT BUYER SHALL HAVE
AGAINST SELLER WITH RESPECT TO ANY ADVERSE ENVIRONMENTAL CONDITIONS OR OTHER
MATTER OR CIRCUMSTANCE WITH RESPECT TO THE ASSETS RELATING TO ENVIRONMENTAL
LAWS, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR PROTECTION OF THE
ENVIRONMENT OR HEALTH.

 

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ARTICLE VII 

CONDITIONS TO CLOSING

 

Section 7.01         Seller’s Conditions. The obligations of Seller to
consummate the transactions contemplated by this Agreement at the Closing are
subject to the satisfaction at or prior to the Closing, or waiver in writing by
Seller, of the following conditions:

 

(a)          All representations and warranties of Buyer contained in this
Agreement, to the extent qualified with respect to materiality, shall be true
and correct in all respects, and to the extent not so qualified, shall be true
and correct in all material respects, in each case as if such representations
and warranties were made at and as of the Closing, and Buyer shall have
performed and satisfied in all material respects all covenants and agreements
required to be performed and satisfied by it under this Agreement at or prior to
the Closing;

 

(b)          Buyer shall have provided Seller evidence reasonably satisfactory
to Seller that Buyer, as of the Closing is qualified to do business and to own
and operate the Assets in the jurisdictions in which the Assets are located; and

 

(c)          Buyer shall have delivered (and, immediately prior to Closing,
Buyer shall be ready, willing and able to deliver), to Seller at Closing, all
Closing deliveries described in Section 8.03.

 

Section 7.02         Buyer’s Conditions. The obligations of Buyer to consummate
the transactions contemplated by this Agreement at the Closing are subject to
the satisfaction at or prior to the Closing, or waiver in writing by Buyer, of
the following conditions:

 

(a)          All representations and warranties of each Seller Party contained
in this Agreement, to the extent qualified with respect to materiality, shall be
true and correct in all respects, and to the extent not so qualified, shall be
true and correct in all material respects, in each case as if such
representations and warranties were made at and as of the Closing, and Seller
shall have performed and satisfied in all material respects all covenants and
agreements required to be performed and satisfied by it under this Agreement at
or prior to the Closing; and

 

(b)          Seller shall have delivered (and, immediately prior to Closing,
Seller shall be ready, willing and able to deliver), to Buyer at Closing, all
Closing deliveries described in Section 8.03.

 

(c)          Seller shall have delivered evidence, reasonably satisfactory to
Buyer, that the NPORRI Holder has re-conveyed prior to Closing the NPORRI
burdening the Assets, such NPORRI has merged with and into the Assets, and the
Assets shall be conveyed to Buyer at Closing free and clear of such NPORRI.

 

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Section 7.03         Mutual Conditions. The obligations of Buyer and Seller at
the Closing are subject to the satisfaction at or prior to the Closing of the
following conditions:

 

(a)          No suit or proceeding brought by a party other than Buyer, or
either Seller Party, shall be pending, nor shall any order have been entered by
any court or governmental agency having jurisdiction over the Parties or the
subject matter of this Agreement which remains in effect at the time of the
Closing, that restrains or prohibits or seeks to restrain or prohibit, or seeks
damages in connection with, the purchase and sale contemplated by this
Agreement.

 

(b)          All consents, authorizations, orders, permits and approvals for (or
registrations, declarations or filings with) any Governmental Authority required
in connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby shall have been obtained or made.

 

(c)          EnerVest Energy Institutional Fund XI-A, L.P. and EnerVest Energy
Institutional Fund XI-WI, L.P., as Seller, and EV Properties, L.P., as Buyer,
and EnerVest Mesa, LLC, as Company, shall have contemporaneously closed on the
transactions contemplated by that certain Membership Interest Purchase Agreement
dated of even date herewith (the “Membership Interest Purchase Agreement”).

 

ARTICLE VIII 

CLOSING

 

Section 8.01         Date of Closing. Unless the Parties agree otherwise in
writing and subject to the conditions stated in this Agreement, the consummation
of the transactions contemplated hereby (the “Closing”) shall be held on or
before October 1, 2015 (the “Target Closing Date”). The date on which the
Closing occurs shall be referred to herein as the “Closing Date.” The
consummation of the transactions contemplated in Section 4.03(c), Section
4.03(e) and Section 5.02(d) for the Second Closing shall be held on or before
November 30, 2015. Unless the context requires otherwise, when used in Section
7.01 through Section 7.03 and Section 8.02 and Section 8.03, the terms “Closing”
and “Closing Date” shall mean and refer to the Closing and the Second Closing,
as applicable.

 

Section 8.02         Place of Closing. The Closing shall be held at the offices
of Seller in Houston, Texas.

 

Section 8.03         Closing Obligations. At the Closing, the following events
shall occur, each being a condition precedent to the others and each being
deemed to have occurred simultaneously with the others:

 

(a)          Seller and Buyer shall execute, acknowledge and deliver Assignments
and Bills of Sale, in sufficient counterparts to facilitate recording,
substantially in the form of Exhibit B attached hereto, assigning the Assets to
Buyer;

 

(b)          After giving effect to the Deposit, plus any interest accrued
thereon, which shall be delivered to Seller from the joint control account at
the Deposit Bank in accordance with Section 2.02, Buyer shall deliver to Seller
the Preliminary Purchase Price by wire transfer in immediately available federal
funds;

 

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(c)          Seller and Buyer shall execute, acknowledge and deliver transfer
orders or letters in lieu thereof directing all purchasers of production to make
payment to Buyer of proceeds attributable to production from the Assets assigned
to Buyer;

 

(d)          Each Seller Party shall deliver a certificate executed by an
authorized officer of such Seller Party certifying on behalf of such Seller
Party that, to the best of such officer’s knowledge, the representations and
warranties of such Seller Party set forth in Section 3.01 hereof, to the extent
qualified with respect to materiality, are true and correct in all respects, and
to the extent not so qualified, are true and correct in all material respects,
at and as of the Closing and that all obligations of Seller hereunder that are
required to be performed at or prior to the Closing have been performed in all
material respects;

 

(e)          Buyer shall deliver a certificate executed by an authorized officer
or representative of Buyer certifying on behalf of Buyer that, to the best of
such officer’s knowledge, the representations and warranties of Buyer set forth
in Section 3.02 hereof, to the extent qualified with respect to materiality, are
true and correct in all respects, and to the extent not so qualified, are true
and correct in all material respects, at and as of the Closing and that all
obligations of Buyer hereunder that are required to be performed at or prior to
the Closing have been performed in all material respects;

 

(f)          Each Seller Party shall deliver a certificate duly executed by an
authorized officer or representative of such Seller Party, dated as of the
Closing, (i) attaching and certifying on behalf of such Seller Party those
instruments authorizing the execution, delivery and performance by Seller or
such Seller Party, as the case may be, of this Agreement and the transactions
contemplated hereby; and (ii) certifying on behalf of such Seller Party the
incumbency of each officer or authorized representative of Seller executing this
Agreement or any document delivered at the Closing;

 

(g)          Buyer shall deliver a certificate duly executed by an authorized
officer or representative of Buyer, dated as of the Closing, (i) attaching and
certifying on behalf of Buyer those instruments authorizing the execution,
delivery and performance by Buyer of this Agreement and the transactions
contemplated hereby; and (ii) certifying on behalf of Buyer the incumbency of
each officer or authorized representative of Buyer executing this Agreement or
any document delivered at the Closing;

 

(h)          Each Seller Party shall deliver a certificate duly executed by an
authorized officer or representative of such Seller Party, dated as of the
Closing, certifying as to such Seller Party’s non-foreign status pursuant to,
and in conformity with the requirements of, Treasury Regulation Section 1.1445-2
of the Internal Revenue Code of 1986, as amended;

 

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(i)          Each Seller Party shall deliver to Buyer a release of all liens and
encumbrances from the lenders under any credit facilities of such Seller Party
and from the holders of any other mortgages, deeds of trust, security agreements
or comparable security interests on title created by, through, or under such
Seller Party (other than with respect to Permitted Encumbrances); and

 

(j)          Each Party shall execute and deliver any and all other original
instruments, documents and other items reasonably necessary to effectuate the
terms of this Agreement, as may be reasonably requested by another Party.

 

ARTICLE IX 

OBLIGATIONS AFTER CLOSING

 

Section 9.01         Post-Closing Adjustment Procedure. As soon as reasonably
practicable, but no later than ninety (90) days after the Closing Date, Seller
shall deliver to Buyer a final settlement statement (the “Final Settlement
Statement”) setting forth each adjustment to the Purchase Price required under
Section 2.03. Seller shall make available the necessary records to permit Buyer
to conduct an audit of the Final Settlement Statement during the forty-five (45)
day period commencing on the date the Final Settlement Statement is delivered to
Buyer (the “Audit Period”). As soon as reasonably practicable, but no later than
the end of the Audit Period, Buyer may deliver to Seller a written report
containing any changes Buyer proposes to such statement. Any matters covered by
the Final Settlement Statement as delivered by Seller to which Buyer fails to
object in the written report shall be deemed correct and shall be final and
binding on the Parties and not subject to further review, audit or arbitration.
The undisputed amounts (net of any amounts in dispute) will be paid or collected
promptly in cash only. The Parties agree to negotiate in good faith to resolve
any disputes relating to items in the Final Settlement Statement and shall meet
no later than fifteen (15) days after Seller receives Buyer’s written report to
attempt to agree on any adjustments to the Final Settlement Statement. If the
Parties fail to agree on final adjustments within that fifteen (15) day period,
either Party may submit the disputed items, no later than the thirtieth (30th)
day following the expiration of such fifteen (15) day period, to KPMG or another
nationally-recognized, United States-based accounting firm on which the Parties
agree in writing (the “Accounting Referee”). The Parties shall direct the
Accounting Referee to resolve the disputes within thirty (30) days after its
receipt of relevant materials pertaining to the dispute. The Accounting Referee
shall act as an expert for the limited purpose of determining the specific
disputed matters submitted by either Party and may not award damages or
penalties to either Party with respect to any matter. Seller and Buyer shall
share equally the Accounting Referee’s fees and expenses. The Final Settlement
Statement, whether as agreed between the Parties or as determined by a decision
of the Accounting Referee, shall be binding on and non-appealable by the Parties
and not subject to further review, audit or arbitration. Payment by Buyer or
Seller, as applicable, for any disputed amount on the Final Settlement Statement
shall be made within five (5) Business Days after the earlier of (i) the date
such amount is agreed, or deemed agreed, by the Parties and (ii) the date the
Parties receive the Accounting Referee’s decision (such earlier date being the
“Final Settlement Date”).

 

Section 9.02         Allocation of Revenues. Seller shall be entitled to all
operating revenues (and related accounts receivable) attributable to the Assets
to the extent the foregoing relate to the period of time prior to the Effective
Time and Buyer shall be entitled to all operating revenues (and related accounts
receivable) attributable to the Assets to the extent the foregoing relate to the
period of time from and after the Effective Time. Except for amounts accounted
for in connection with the Preliminary Settlement Statement or the Final
Settlement Statement, (a) if Buyer receives any funds to which Seller is
entitled pursuant to the preceding sentence, then Buyer shall promptly, and in
no event more than thirty (30) days after receipt, deliver such funds to Seller
and (b) if Seller receives any funds to which Buyer is entitled pursuant to the
preceding sentence, then Seller shall promptly, and in no event more than thirty
(30) days after receipt, deliver such funds to Buyer.

 

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Section 9.03         Files and Records. As soon as practicable, but in any event
within ten (10) days after the Closing Date, Seller shall deliver the Records to
Buyer (other than division order files, which will be delivered within thirty
(30) days following the Closing). Seller shall furnish originals of paper files
to the extent they are maintained in the normal course of business. If any
related file information is maintained as imaged documents, this data will be
delivered to Buyer on CD format for Buyer to print the documents or load to an
imaging system. Seller, at its sole cost, shall have the right to make copies of
all Records delivered to Buyer. Buyer shall retain, or shall cause its assigns
to retain, the Records and make them available to Seller for seven (7) full
calendar years following the Closing Date, in Buyer’s office during normal
business hours. If Buyer desires to destroy any portion of the Records within
such seven (7) year period, it shall notify Seller prior to such destruction and
provide Seller an opportunity to take possession of the Records to be destroyed,
at Seller’s expense.

 

Section 9.04         Buyer’s Assumed Obligations and Release. If Closing occurs,
subject to Seller’s indemnification obligations under Section 9.05(b):

 

(a)          BUYER EXPRESSLY AGREES TO ASSUME RESPONSIBILITY FOR AND AGREES TO
PAY, PERFORM, FULFILL AND DISCHARGE ALL CLAIMS, COSTS, EXPENSES, LIABILITIES AND
OBLIGATIONS ACCRUING OR RELATING TO OWNING, DEVELOPING, EXPLORING, OPERATING AND
MAINTAINING THE ASSETS, WHETHER RELATING TO PERIODS BEFORE OR AFTER THE
EFFECTIVE TIME, INCLUDING, WITHOUT LIMITATION, ALL ENVIRONMENTAL CLAIMS, WHETHER
ARISING OR ACCRUING BEFORE OR AFTER THE EFFECTIVE TIME, REGARDLESS OF THE
NEGLIGENCE OR STRICT LIABILITY OF SELLER (THE “ASSUMED OBLIGATIONS”). AS USED
HEREIN, “ENVIRONMENTAL CLAIMS” MEANS ALL CLAIMS OR DEMANDS, INCLUDING, WITHOUT
LIMITATION, CLAIMS FOR PROPERTY DAMAGE, PERSONAL INJURY, WRONGFUL DEATH, AND
NATURAL RESOURCE DAMAGE ARISING (OR ALLEGED TO ARISE) FROM OR RELATED TO ADVERSE
ENVIRONMENTAL CONDITIONS WITH RESPECT TO THE ASSETS OR OTHERWISE RELATING TO THE
DISPOSAL, RELEASE, DISCHARGE OR EMISSION IN, ON, UNDER OR FROM THE ASSETS OF
HYDROCARBONS, HAZARDOUS SUBSTANCES, HAZARDOUS WASTES, HAZARDOUS MATERIALS, SOLID
WASTES, OR POLLUTANTS.

 

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(b)          BUYER HEREBY RELEASES AND DISCHARGES ANY AND ALL CLAIMS AT LAW OR
IN EQUITY, KNOWN OR UNKNOWN, WHETHER NOW EXISTING OR ARISING IN THE FUTURE,
CONTINGENT OR OTHERWISE, AGAINST SELLER WITH RESPECT TO ANY OF THE ASSUMED
OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL CLAIMS OR ADVERSE
ENVIRONMENTAL CONDITIONS, INCLUDING, BUT NOT LIMITED TO, MATTERS OR
CIRCUMSTANCES RELATING TO ENVIRONMENTAL LAWS, THE DISPOSAL, RELEASE, DISCHARGE
OR EMISSION OF HYDROCARBONS, HAZARDOUS SUBSTANCES, HAZARDOUS WASTES, HAZARDOUS
MATERIALS, SOLID WASTES, OR POLLUTANTS INTO THE ENVIRONMENT OR PROTECTION OF THE
ENVIRONMENT OR HEALTH. BUYER EXPRESSLY ASSUMES THE RISK THAT THE ASSETS MAY
CONTAIN WASTE MATERIALS, INCLUDING NATURALLY OCCURRING RADIOACTIVE MATERIALS,
HYDROCARBONS, HAZARDOUS SUBSTANCES, HAZARDOUS WASTES, HAZARDOUS MATERIALS,
ASBESTOS, SOLID WASTES, OR POLLUTANTS, AND THAT ADVERSE PHYSICAL CONDITIONS,
INCLUDING, BUT NOT LIMITED TO, THE PRESENCE OF UNKNOWN ABANDONED OIL AND GAS
WELLS, WATER WELLS, SUMPS AND PIPELINES MAY NOT HAVE BEEN REVEALED BY BUYER’S
INVESTIGATION.

 

(c)          WITHOUT LIMITING THE GENERALITY OF ANY OF THE FOREGOING, IF CLOSING
OCCURS, BUYER, FROM AND AFTER CLOSING, ACCEPTS SOLE RESPONSIBILITY FOR AND
AGREES TO PAY ALL COSTS AND EXPENSES ASSOCIATED WITH PLUGGING AND ABANDONMENT OF
ALL WELLS, DECOMMISSIONING OF ALL FACILITIES, AND CLEARING AND RESTORATION OF
SITES ASSOCIATED WITH THE ASSETS.

 

Section 9.05         Indemnification. From and after the Closing:

 

(a)          BUYER SHALL DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS SELLER,
ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS (“SELLER INDEMNIFIED PARTIES”)
AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS, SUITS, COSTS, EXPENSES,
LIABILITIES AND SANCTIONS OF EVERY KIND AND CHARACTER, INCLUDING WITHOUT
LIMITATION REASONABLE ATTORNEYS’ FEES, COURT COSTS AND COSTS OF INVESTIGATION,
WHICH ARISE FROM OR IN CONNECTION WITH (i) ANY ASSUMED OBLIGATION, OR (ii)
BUYER’S BREACH OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR COVENANTS HEREIN.

 

(b)          SELLER SHALL DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS BUYER,
ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS (“BUYER INDEMNIFIED PARTIES”)
AGAINST ALL LOSSES, DAMAGES, CLAIMS, DEMANDS, SUITS, COSTS, EXPENSES,
LIABILITIES AND SANCTIONS OF EVERY KIND AND CHARACTER, INCLUDING WITHOUT
LIMITATION REASONABLE ATTORNEYS’ FEES, COURT COSTS AND COSTS OF INVESTIGATION,
WHICH ARISE FROM OR IN CONNECTION WITH SELLER’S BREACH OF ANY OF ITS
REPRESENTATIONS, WARRANTIES OR COVENANTS HEREIN.

 

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Section 9.06         Survival; Limitations on Indemnification.

 

(a)          The representations and warranties of Seller contained in Section
3.01(f) through Section 3.01(o) shall survive the Closing and expire at 5:00
p.m. Central Time on December 31, 2015. The remainder of the representations,
warranties, covenants and agreements shall survive indefinitely unless expressly
stated to survive for a shorter period of time. Representations, warranties,
covenants and agreements shall be of no further force and effect after the date
of their expiration.

 

(b)          The indemnification obligations under Section 9.05 shall terminate
as of the termination date of each respective representation, warranty, covenant
or agreement that is subject to indemnification, except in each case as to
claims with respect to which a Claim Notice has been delivered in accordance
with Section 9.07 prior to such termination date. Buyer’s indemnification
obligations under Section 4.01(b) shall continue without time limit.

 

(c)          Notwithstanding anything to the contrary contained herein, Seller
shall have no obligation to indemnify Buyer under this Agreement unless, and
then only to the extent that, the aggregate losses, damages, claims, demands,
suits, costs, expenses, liabilities and sanctions to which Buyer would be
entitled to indemnification (but for the provision of this Section 9.06(c))
exceeds a deductible equal to Two Hundred Fifty Thousand Dollars ($250,000.00).

 

(d)          Notwithstanding anything to the contrary contained herein, Seller’s
aggregate liability under this Agreement in respect of all breaches of its
representations, warranties and covenants contained herein shall not exceed
twenty-five percent (25%) of the Purchase Price.

 

(e)          Neither Party shall have any obligation under Section 9.05 with
respect to any amount finally agreed in the Final Settlement Statement pursuant
to Section 9.01, provided such Party has paid all amounts due from it in
accordance therewith.

 

Section 9.07         Indemnification Procedures. All claims for indemnification
under this Agreement shall be asserted and resolved pursuant to this Section
9.07. Any person claiming indemnification hereunder is hereinafter referred to
as the “Indemnified Party” and any person against whom such claims are asserted
hereunder is hereinafter referred to as the “Indemnifying Party.” In the event
that any claims are asserted against or sought to be collected from an
Indemnified Party by a third party, and a Party wishes to assert a claim for
indemnity hereunder such Party shall with reasonable promptness provide to the
Indemnifying Party a written notice of the indemnity claim it wishes to assert
on behalf of itself or another Indemnified Party, including the specific details
of and specific basis under this Agreement for its indemnity claim (a “Claim
Notice”). A Party seeking indemnity by an Indemnifying Party hereunder shall
provide its Claim Notice promptly after such Party has actual knowledge of the
claim for which it seeks indemnification and shall enclose a copy of all papers
(if any) served by a third party on the applicable Indemnified Party with
respect to the claim; provided that the failure of any Party to give notice of a
claim as provided in this Section shall not relieve the Indemnifying Party of
its obligations under this Agreement except to the extent such failure results
in insufficient time being available to permit the Indemnifying Party to
effectively defend against the claim or otherwise prejudices the Indemnifying
Party’s ability to defend against the claim. If requested by the Indemnifying
Party, the Indemnified Party agrees to cooperate with the Indemnifying Party and
its counsel in contesting any claims that the Indemnifying Party elects to
contest. Such cooperation shall include, without limitation, the retention and
provision to the Indemnifying Party of all records and other information that
are reasonably relevant to the claims at issue. No claim may be settled or
otherwise compromised without the prior written consent of the Indemnifying
Party. No claim may be settled or compromised by the Indemnifying Party without
the prior written consent of the Indemnified Party unless such settlement or
compromise (i) entails a full and unconditional release of the Indemnified Party
(and any other members of the Indemnified Party’s group, i.e., all Seller
Indemnified Parties or all Buyer Indemnified Parties) without any admission or
finding of fault or liability and (ii) does not impose on the Indemnified Party
any material non-financial obligation or any financial obligation that is not
fully paid by the Indemnifying Party.

 

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Section 9.08         Suspense Funds. The responsibility for payment of amounts
held in suspense by Seller for periods prior to the Effective Time as to any of
the Assets (such as suspended royalties held in the ordinary course of business
as a result of title defects or changes of ownership) and the funds so held
shall be transferred to Buyer at the Closing Date (along with all reasonable
supporting documentation to the extent in Seller’s possession). After such time,
any items accruing to suspense on account of production from the Assets shall be
the responsibility of Buyer. From and after the Closing Date, Buyer shall assume
all responsibility for such accounts and shall indemnify and hold Seller
harmless from any claim or liability with respect thereto.

 

Section 9.09         Recordation and Post-Closing Consents. After the Closing,
Buyer shall be responsible for filing and recording the documents associated
with assignment of the Assets to Buyer and for all costs and fees associated
therewith, including filing the assignments with appropriate federal, state and
local authorities as required by law and in all applicable counties. As soon as
practicable after recording or filing, Buyer shall furnish Seller all recording
data and evidence of all required filings. Buyer shall be responsible for
obtaining all consents and approvals of governmental entities or authorities
customarily obtained subsequent to transfer of title and all costs and fees
associated therewith.

 

Section 9.10         Taxes.

 

(a)          Real and Personal Property Taxes. Pursuant to Section 2.03, all ad
valorem taxes, real property taxes and personal property taxes (“Real and
Personal Property Taxes”) for the year in which the Effective Time occurs shall
be apportioned as of the Effective Time between Seller and Buyer. For any year
in which an apportionment is required, Buyer shall file all required reports and
returns incident to these taxes assessed for the year in which the Effective
Time occurs that are not paid by Seller as of the Closing Date.

 

(b)          Sales and Other Transfer Taxes. The Purchase Price does not include
any sales taxes or other transfer taxes imposed in connection with the sale of
the Assets. Buyer shall pay any sales tax or other transfer tax, as well as any
applicable conveyance, transfer and recording fee and real estate transfer
stamps or taxes imposed on the transfer of the Assets pursuant to the Agreement.
If Buyer is of the opinion that it is exempt from the payment of any such sales
tax or transfer tax, Buyer shall furnish to Seller the appropriate tax exemption
certificate.

 

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(c)          Tax Proceedings. In the event Buyer receives notice of any
examination, claim, adjustment or other proceeding relating to the liability for
taxes with respect to any period prior to the Effective Time, Buyer shall notify
Seller in writing within thirty (30) days of receiving notice thereof. The
Parties shall cooperate with each other and with their respective affiliates in
the negotiations and settlement of any proceeding described in this Section
9.10.

 

(d)          Purchase Price Allocation. The allocation of Purchase Price
provided for on Schedule 5.01(a) is intended to comply with the allocation
method required by Section 1060 of the Internal Revenue Code. Buyer and Seller
shall cooperate to comply with all substantive and procedural requirements of
Section 1060 and regulations thereunder, including without limitation the filing
by Buyer and Seller of an IRS Form 8594 with their federal income tax returns
for the taxable year in which the Closing occurs. Buyer and Seller agree that
each will not take for income tax purposes, or permit any affiliate to take, any
position inconsistent with the allocation of Purchase Price prescribed on
Schedule 5.01(a).

 

Section 9.11         Material Contracts. The Parties believe that Buyer already
is a party to and/or a participant in all of the Material Contracts. If at any
time after the Effective Time, the Parties discover that Buyer is not a party to
and/or a participant in a Material Contract, then Seller shall take all
commercially reasonable and necessary steps (including the execution of any
required documents) to cause Buyer to become a party to and/or a participant in
such Material Contract or to cause the counterparty(ies) to such Material
Contract to consent to the assignment of such Material Contract to Buyer. To the
extent that any such joinder or consent cannot be obtained, Seller will use its
commercially reasonable efforts and take such actions as may be reasonably
possible without violation or breach of any such Material Contract to
effectively grant to Buyer the economic benefits of, and impose upon Buyer the
economic burdens of such Material Contract.

 

ARTICLE X 

TERMINATION OF AGREEMENT

 

Section 10.01         Termination. This Agreement and the transactions
contemplated hereby may be terminated prior to the Closing as follows:

 

(a)          By Seller if any of the conditions set forth in Section 7.01 are
not satisfied in all material respects or waived as of the Target Closing Date;

 

(b)          By Buyer if the conditions set forth in Section 7.02 are not
satisfied in all material respects or waived as of the Target Closing Date;

 

(c)          By Buyer or Seller if the conditions set forth in Section 7.03 are
not satisfied or waived as of the Target Closing Date;

 

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(d)          By Seller if the Closing has not occurred by October 15, 2015
(provided that Seller is not at the time of such termination in material breach
of any of its representations, warranties, or covenants under this Agreement);

 

(e)          By Buyer if the Closing has not occurred by October 15, 2015
(provided that Buyer is not at the time of such termination in material breach
of any of its representations, warranties, or covenants under this Agreement);

 

(f)          By Buyer or Seller if the aggregate of all Title Defects meeting
the individual claim threshold set forth in Section 5.02(a), all timely asserted
Adverse Environmental Conditions meeting the individual claim threshold set
forth in Section 6.02(a), net of all Title Benefit Offsets as set forth in
Section 5.03, the Allocated Value of all Properties affected by Casualty Loss,
the Allocated Value of all Properties removed from the Assets at the Closing as
a result of the exercise of preferential rights and the Allocated Value of all
Properties that are Hard Consent Assets exceeds twenty-five percent (25%) of the
Purchase Price; or

 

(g)          At any time by the mutual written agreement of Buyer and Seller.

 

Section 10.02         Liabilities Upon Termination or Breach.

 

(a)          In the event that the Closing does not occur as a result of a Party
exercising its right to terminate pursuant to Section 10.01, then except as set
forth in Section 10.02(b), this Agreement shall become null and void and no
Party shall have any further rights or obligations hereunder; provided that, the
provisions of Sections 11.02 (Expenses), 11.03 (Notices), 11.04 (Amendments;
Waiver), 11.06 (Announcements), 11.07 (Governing Law; Venue), 11.09 (Parties in
Interest) and this Section 10.02 shall survive any such termination.

 

(b)          If all of the conditions precedent to the obligations of Buyer
hereunder have been met, the transactions contemplated hereby are not
consummated on or before the Target Closing Date because of Buyer’s failure to
perform any of its material obligations hereunder or Buyer’s breach of any
representation herein, Seller has performed all of its material obligations
hereunder and has not breached any of its representations herein, and Seller is
ready, willing and able to close the transactions contemplated hereby, then
Seller shall have the option to terminate this Agreement, in which case, within
three (3) Business Days after the event giving rise to such termination, Seller
shall be entitled to receive the Deposit, plus any interest accrued thereon,
from the Deposit Bank, free of any claims by Buyer with respect thereto, as
liquidated damages on account of Buyer’s failure to perform its obligations
hereunder, which remedy shall be the sole and exclusive remedy available to
Seller for Buyer’s failure to perform. Buyer and Seller acknowledge and agree
that (i) Seller’s actual damages upon the event of such a termination are
difficult to ascertain with any certainty, (ii) the Deposit, plus any interest
accrued thereon, is a reasonable estimate of such actual damages and (iii) such
liquidated damages do not constitute a penalty. Notwithstanding the foregoing,
in the event that the transactions contemplated hereby are not consummated on or
before the Target Closing Date as a result of the conditions set forth in
Section 7.03(c) not having been satisfied, Seller shall not be entitled to
receive the Deposit, plus any interest accrued thereon, from the Deposit Bank,
and instead Buyer shall be entitled to receive the Deposit, plus any interest
accrued thereon, from the Deposit Bank, free of any claims by Seller with
respect thereto.

 

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(c)          If all of the conditions precedent to the obligations of Seller
hereunder have been met, the transactions contemplated hereby are not
consummated on or before the Target Closing Date because of Seller’s failure to
perform any of its material obligations hereunder or Seller’s breach of any
representation herein, Buyer has performed all of its material obligations
hereunder and has not breached any of its representations herein, and Buyer is
ready, willing and able to close the transactions contemplated hereby, then
Buyer shall have the option to (i) terminate this Agreement, in which case,
within three (3) Business Days after the event giving rise to such termination,
Buyer shall be entitled to receive the Deposit, plus any interest accrued
thereon, from the Deposit Bank, free of any claims by Seller with respect
thereto, and Buyer shall be entitled to receive the Deposit (as defined therein)
under the Membership Interest Purchase Agreement, plus any interest accrued
thereon, from the Deposit Bank (as defined therein), free of any claims by
Seller with respect thereto, or (ii) seek specific performance.

 

(d)          If this Agreement is terminated for any reason other than as set
forth in Section 10.02(b) or Section 10.02(c), then within three (3) Business
Days after the event giving rise to such termination, Buyer shall be entitled to
receive the Deposit, plus any interest accrued thereon, from the Deposit Bank,
free of any claims by Seller with respect thereto.

 

ARTICLE XI 

MISCELLANEOUS

 

Section 11.01         Schedules and Exhibits. All schedules and exhibits to this
Agreement are hereby incorporated by reference herein and constitute a part of
this Agreement.

 

Section 11.02         Expenses. All fees, costs and expenses incurred by Buyer
or Seller in negotiating this Agreement or in consummating the transactions
contemplated by this Agreement shall be paid by the Party incurring the same,
including, without limitation, legal and accounting fees, costs and expenses.

 

Section 11.03         Notices. All notices and communications required or
permitted under this Agreement shall be in writing and any communication or
delivery hereunder shall be deemed to have been duly made when (a) personally
delivered to the individual indicated below, (b) if delivered by facsimile
transmission to the individual indicated below, then on the day of transmission
if received during business hours or on the next Business Day after transmission
if received after business hours or (c) if mailed to the individual indicated
below, when received. Addresses for all such notices and communication shall be
as follows:

 

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  If to Seller: EnerVest Energy Institutional Fund XI-A, L.P.   EnerVest Energy
Institutional Fund XI-WI, L.P.   c/o EnerVest, Ltd.   1001 Fannin Street, Suite
800   Houston, Texas  77002   Attention:  Mr. James M. Vanderhider  
Telephone:  (713) 659-3500   Facsimile:  (713) 659-3556  
Email:  jvanderhider@enervest.net       with a copy to: Reed Smith LLP   711
Main Street, Suite 1700   Houston, Texas 77002   Phone:  (713) 469-3860  
Attention:  Gary C. Johnson, Esquire       If to Buyer: CGAS Properties, L.P.  
c/o EV Energy Partners, L.P.   1001 Fannin St., Suite 800   Houston,
Texas  77002   Attention:  Mr. Michael E. Mercer   Telephone:  (713) 659-3500  
Facsimile:  (713) 659-3556   Email:  mmercer@energypartners.com        with a
copy to: Haynes and Boone, LLP   1221 McKinney Street, Suite 2100   Houston,
Texas 77010   Phone:  (713) 547-2084   Attention:  Bill Nelson, Esquire  

 

Any Party may, by written notice so delivered to the other Party, change the
address or individual to which delivery shall thereafter be made.

 

Section 11.04         Amendments; Waiver. This Agreement may only be amended by
a written instrument executed by all of the Parties. Any agreement on the part
of a Party to any extension or waiver of any provision hereof shall be valid
only if set forth in an instrument in writing signed on behalf of such Party. A
waiver by a Party of the performance of any covenant, agreement, obligation,
condition, representation or warranty shall not be construed as a waiver of any
other covenant, agreement, obligation, condition, representation or warranty. A
waiver by any Party of the performance of any act shall not constitute a waiver
of the performance of any other act or an identical act required to be performed
at a later time.

 

Section 11.05         Assignment. Neither Party may assign all or any portion of
its rights or delegate all or any portion of its duties hereunder unless it
continues to remain liable for the performance of its obligations hereunder and
obtains the prior written consent of the other Party, which consent shall not be
unreasonably withheld.

 

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Section 11.06         Announcements. Except as may be required by applicable
laws or the applicable rules and regulations of any governmental agency or stock
exchange, neither Buyer nor Seller shall, prior to the Closing, issue any press
release or other public disclosure concerning this Agreement or the transactions
contemplated hereby without the prior written consent of the other Party, which
consent shall not be unreasonably withheld.

 

Section 11.07         Governing Law; Venue. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and governed by, the
laws of the State of Texas, without giving effect to its conflicts of law
provisions. The Parties stipulate and agree to submit to the jurisdiction and
venue of the United States District Court and the Texas State District Court
sitting in Houston, Harris County, Texas with respect to all disputes in any way
relating to, arising under, connected with, or incident to this Agreement.

 

Section 11.08         Entire Agreement. This Agreement (including the Exhibits
hereto) constitutes the entire understanding among the Parties with respect to
the subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.

 

Section 11.09         Parties in Interest. This Agreement shall be binding upon,
and shall inure to the benefit of, the Parties hereto, and their respective
successors and assigns, and, except as expressly provided in the indemnity
provisions hereof with respect to the Buyer Indemnified Parties and the Seller
Indemnified Parties, nothing contained in this Agreement, express or implied, is
intended to confer upon any other person or entity any benefits, rights or
remedies.

 

Section 11.10         Further Assurances. After the Closing, Seller and Buyer
shall execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments, and shall take such other action as may be necessary
or advisable to carry out their obligations under this Agreement and under any
document, certificate or other instrument delivered pursuant hereto.

 

Section 11.11         Severability. Invalidity of any provisions in this
Agreement shall not affect the validity of this Agreement as a whole, and in
case of such invalidity, this Agreement shall be construed as if the invalid
provision has not been included herein.

 

Section 11.12         Headings; Terminology; Defined Terms. Titles and headings
in this Agreement have been included solely for ease of reference and shall not
be considered in interpretation or construction of this Agreement. All article,
section, subsection, clause, schedule and exhibit references used in this
Agreement are to articles, sections, subsections, clauses, schedules and
exhibits to this Agreement unless otherwise specified. All schedules and
exhibits attached to this Agreement constitute a part of this Agreement and are
incorporated herein for all purposes. Unless the context of this Agreement
clearly requires otherwise (a) the singular shall include the plural and the
plural shall include the singular wherever and as often as may be appropriate,
(b) the words “includes” or “including” shall mean “includes without limitation”
and “including without limitation,” (c) the words “hereof,” “hereby,” “herein,”
“hereunder” and similar terms in this Agreement shall refer to this Agreement as
a whole and not any particular section or article in which such words appear and
(d) any reference to a statute, regulation, or law shall include any amendment
thereof or any successor thereto. All capitalized terms (including all terms
included in ALL CAPS in any portion of this Agreement) shall have the meaning
assigned thereto herein.

 

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Section 11.13         Not to be Construed Against Drafter. Each Party has had an
adequate opportunity to review each and every provision of this Agreement and to
submit the same to legal counsel for review and advice. Based on the foregoing,
the rule of construction, if any, that a contract be construed against the
drafter shall not apply to interpretation or construction of this Agreement.

 

Section 11.14         Indemnities and Conspicuousness of Provisions. Except as
expressly provided otherwise in this Agreement, the release, defense,
indemnification and hold harmless provisions provided for in this Agreement
shall be applicable whether or not the claims, demands, suits, causes of action,
losses, damages, liabilities, fines, penalties and costs (including attorneys’
fees and costs of litigation) in question arose solely or in part from the
active, passive or concurrent negligence, strict liability, breach of duty
(statutory or otherwise), violation of law, or other fault of any indemnified
party, or from any pre-existing defect. The Parties agree that provisions of
this Agreement in “ALL CAPS” or “bold” type satisfy any requirement of the
“express negligence rule” and other requirement at law or in equity that
provisions be conspicuously marked or highlighted.

 

Section 11.15         Counterparts of Assignment. The Assignment and Bill of
Sale in the form attached as Exhibit B is intended to assign all of the Assets
being assigned pursuant to this Agreement. Certain Assets that are leased from,
or require the approval to transfer by, a governmental entity are conveyed under
the Assignment and Bill of Sale and also are described and covered by other
separate assignments made by Seller to Buyer on officially approved forms, or
forms acceptable to such entity, in sufficient multiple originals to satisfy
applicable statutory and regulatory requirements. The interests conveyed by such
separate assignments are the same, and not in addition to, the interests
conveyed in the Assignment and Bill of Sale.

 

Section 11.16         Counterpart Execution. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.

 

Section 11.17         Definitions.

 

(a)          Certain Definitions. The following terms, as used herein, have the
meanings set forth below:

 

(i)          “Business Day” means a day, other than Saturday or Sunday, on which
commercial banks are open for commercial business with the public in Houston,
Texas.

 

(ii)         “Net Revenue Interest” means the percentage share in all
hydrocarbons produced from a Lease after the satisfaction of applicable lessor
royalties, overriding royalties, oil payments and other payments out of or
measured by the production of hydrocarbons from or under such Lease.

 

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(iii)        “NPORRI” means any net profits overriding royalty interest or
similar interest burdening the Assets owned by the NPORRI Holder including,
without limitation, that certain Net Profits Overriding Royalty Interest created
by (i) Conveyance of Net Profits Overriding Royalty Interest dated October 21,
2011 from EnerVest Energy Institutional Fund XI-WI, L.P. to EnerVest Energy
Institutional Fund XI-B, L.P., recorded at RP 079–51–1209, Official Public
Records, Harris County, Texas (counterparts or memoranda of which are recorded
in the counties where the Asset are located), as amended and restated by that
certain Amended and Restated Conveyance of Net Profits Overriding Royalty
Interest dated November 18, 2011 from EnerVest Energy Institutional Fund XI-WI,
L.P. to EnerVest Energy Institutional Fund XI-B, L.P., recorded at RP
079–88–1456, Official Public Records, Harris County, Texas (counterparts or
memoranda of which are recorded in the counties where the Asset are located),
and (ii) Conveyance of Net Profits Overriding Royalty Interest dated October 21,
2011 from EnerVest Energy Institutional Fund XI-WI, L.P. to EnerVest Energy
Institutional Fund XI-B, L.P., recorded at RP 079–51–1582, Official Public
Records, Harris County, Texas (counterparts or memoranda of which are recorded
in the counties where the Asset are located), as amended and restated by that
certain Amended and Restated Conveyance of Net Profits Overriding Royalty
Interest dated November 18, 2011 from EnerVest Energy Institutional Fund XI-WI,
L.P. to EnerVest Energy Institutional Fund XI-B, L.P., recorded at RP
079–88–1880, Official Public Records, Harris County, Texas (counterparts or
memoranda of which are recorded in the counties where the Asset are located).

 

(iv)        “NPORRI Holder” means EnerVest Energy Institutional Fund XI-B, L.P.,
a Delaware limited partnership, whose address is 1001 Fannin, Suite 800,
Houston, Texas 77002.

 

(v)         “Working Interest” means the percentage interest in a Lease and all
rights and obligations of every kind and character pertinent thereto or arising
therefrom, without regard to any valid lessor royalties, overriding royalties
and other burdens against production, insofar as said interest in such Lease is
burdened with the obligation to bear and pay the cost of exploration,
development and operation.

 

(b)          Other Definitions. The following terms shall have the meanings
ascribed to them in the body of this Agreement as set forth below:

 

Term   Section Accounting Referee   § 9.01 Adverse Environmental Condition   §
6.01 Agreement   Preamble Allocated Value   § 2.01 Assets   § 1.02 Assumed
Obligations   § 9.04(a) Benefit Notice   § 5.03 Audit Period   § 9.01 Buyer  
Preamble

 

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Buyer Indemnified Parties   § 9.05(b) Casualty Loss   § 4.04(ii) Claim Notice  
§ 9.07 Closing   § 8.01 Closing Date   § 8.01 Contracts   § 1.02(g) Defensible
Title   § 5.01(a) Defect Notice   § 5.02(b) Easements   § 1.02(f) Deposit   §
2.02 Deposit Bank   § 2.02 Effective Time   § 1.03 EnerVest Institutional Fund  
Preamble EnerVest Working Interest Fund   Preamble Environmental Claims   §
9.04(a) Environmental Law   § 6.01 Equipment   § 1.02(e) Excluded Formation   §
1.03(a) Excluded Formation Lands   § 1.03(a) Excluded Formation Leases   §
1.03(a) Excluded Formation Wells   § 1.03(c) Excluded Properties   § 1.03 Final
Settlement Date   § 9.01 Final Settlement Statement   § 9.01 Hard Consent Asset
  § 4.03(b) Indemnified Party   § 9.07 Indemnifying Party   § 9.07 Lands   §
1.02(a) Leases   § 1.02(a) Material Adverse Effect   § 3.01(r) Material
Contracts   § 3.01(k) Membership Interest Purchase Agreement   § 7.03(c)
Ownership Share   Recital Parties   Preamble Party   Preamble Permitted
Encumbrances   § 5.01(b) Preliminary Purchase Price   § 2.03© Preliminary
Settlement Statement   § 2.03(c)

 

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Production   § 1.02(d) Products   § 1.02(d) Property   § 2.01 Purchase Price   §
2.01 Real and Personal Property Taxes   § 9.10(a) Records   § 1.02(i)(v) Second
Closing   § 4.03(c) Seller Indemnified Parties   § 9.05(a) Seller Party  
Preamble Seller Party’s knowledge   § 3.01(q) Target Closing Date   § 8.01 Title
Benefit   § 5.01(d) Title Benefit Offset   § 5.03 Title Defect   § 5.01(c) Units
  § 1.02(c) Utica, Point Pleasant and Trenton Formations   § 1.03(a) Wells   §
1.02(b)

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly
executed as of the date first written above.

 

  SELLER:       ENERVEST ENERGY INSTITUTIONAL FUND XI-A, L.P.   ENERVEST ENERGY
INSTITUTIONAL FUND X-IWI, L.P.         By: EnerVest, Ltd.     Its General
Partner         By: EnerVest Management GP, L.C.     Its General Partner        
By: /s/ JAMES M. VANDERHIDER     James M. Vanderhider     Executive Vice
President and Chief Financial Officer         BUYER:       CGAS PROPERTIES, L.P.
        By: EVCG GP, LLC     Its General Partner         By: /s/ MICHAEL E.
MERCER     Michael E. Mercer     President and Chief Executive Officer

 

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