NOTWITHSTANDING ANY PROVISION HEREOF TO THE
CONTRARY, SELLER MAY RECEIVE THE DEPOSIT AS A LIQUIDATED DAMAGE ONLY IN THE
EVENT THIS AGREEMENT IS TERMINATED DUE SOLELY TO THE BREACH HEREOF BY BUYER IN
THE ABSENCE OF ANY MATERIAL BREACH HEREOF BY SELLER. BUYER AND SELLER AGREE THAT
IN THE EVENT OF SUCH BREACH OF THIS AGREEMENT BY BUYER, THE PARTIES ACKNOWLEDGE
THAT SELLER WILL BE DAMAGED (INCLUDING LOSS OF OTHER POTENTIAL BUYERS,
UNRECOVERABLE MARKETING, SALES AND PROCESSING COSTS AND COSTS OF HOLDING THE
PROPERTIES BEYOND THE CLOSING DATE) AND WILL BE ENTITLED TO COMPENSATION FOR
THESE DAMAGES, BUT THE PARTIES FURTHER ACKNOWLEDGE AND AGREE SUCH DAMAGES WOULD
BE EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN BECAUSE, AMONG OTHER
REASONS, (i) THE DAMAGES TO WHICH SELLER WOULD BE ENTITLED IN A COURT OF LAW
WOULD BE BASED ON THE DIFFERENCE BETWEEN THE ACTUAL VALUE OF THE PROPERTIES AT
THE CLOSING DATE AND THE PURCHASE PRICE FOR THE PROPERTIES AS SET FORTH IN THIS
AGREEMENT, WHICH DIFFERENCE WOULD HAVE TO BE BASED ON OPINIONS OF VALUE OF THE
PROPERTIES, WHICH CAN VARY IN SIGNIFICANT AMOUNTS AND WHICH WOULD SIGNIFICANTLY
DEPEND ON UNCERTAIN AND VARYING ESTIMATES AND PROJECTIONS REGARDING OIL AND GAS
RESERVES AND ANTICIPATED FUTURE PRICES FOR OIL AND GAS; AND (ii) IT IS
IMPOSSIBLE TO PREDICT, AS OF THE DATE OF THIS AGREEMENT,
32
WHETHER THE VALUE OF THE PROPERTIES WILL INCREASE OR DECREASE AS OF CLOSING
DATE, AND BUYER DESIRES TO LIMIT THE AMOUNT OF DAMAGES FOR WHICH BUYER MIGHT BE
LIABLE. MOREOVER, BUYER AND SELLER WISH TO AVOID THE COSTS, LENGTHY DELAYS AND
SUBSTANTIAL UNCERTAINTIES THAT WOULD RESULT IF SELLER FILED A LAWSUIT TO COLLECT
ITS DAMAGES FOR BUYER'S BREACH OF THIS AGREEMENT.
ACCORDINGLY, IN THE EVENT THIS AGREEMENT IS TERMINATED BY SELLER DUE SOLELY TO
THE BREACH HEREOF BY BUYER IN THE ABSENCE OF ANY MATERIAL BREACH HEREOF BY
SELLER, BUYER AND SELLER AGREE THAT IT WOULD BE REASONABLE AT SUCH TIME TO AWARD
SELLER "LIQUIDATED DAMAGES" EQUAL TO THE SEVEN MILLION FIVE HUNDRED THOUSAND
DOLLAR ($7,500,000) PERFORMANCE DEPOSIT PAID BY BUYER AND FOR SELLER TO RECEIVE
SAID PERFORMANCE DEPOSIT FROM THE ESCROW AGENT AS "LIQUIDATED DAMAGES." SELLER
AND BUYER ACKNOWLEDGE AND AGREE THAT THE FOREGOING AMOUNT IS REASONABLE AS
LIQUIDATED DAMAGES AND SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY IF THIS
AGREEMENT IS TERMINATED DUE SOLELY TO THE BREACH HEREOF BY BUYER. SELLER AND
BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS
ARTICLE 17.1 AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS
TERMS.
________________________
________________________ SELLER'S INITIALS
BUYER'S
INITIALS
17.2. Buyer's Remedies.
If the Closing fails to occur due solely to a breach of this Agreement by Seller
and in the absence of any material breach by Buyer, Buyer, at its sole option,
may (i) enforce specific performance, or (ii) terminate this Agreement, as
Buyer's sole and exclusive remedies for such default, all other remedies (except
as expressly retained in Article 17.3) being expressly waived by Buyer. In the