PROPERTIES TO BE SERVED BY OIL AND GAS
GATHERING AND OTHER FACILITIES OF THE BUYER AND THE SUBSIDIARIES AFTER THE
CLOSING.
ARTICLE VIII
BUYER'S DUE DILIGENCE AND TITLE DEFECT PROCESS
8.1
TITLE DUE DILIGENCE EXAMINATION.
(A)
FROM THE DATE OF THIS AGREEMENT UNTIL CLOSING (THE "EXAMINATION
PERIOD"), PFC AND THE COMPANY SHALL AFFORD TO BUYER AND ITS REPRESENTATIVES
REASONABLE ACCESS DURING NORMAL BUSINESS HOURS TO THE OFFICES, PERSONNEL AND
BOOKS AND RECORDS OF PFC, RELATED AFFILIATES, THE COMPANY AND THE SUBSIDIARIES
IN ORDER FOR BUYER TO CONDUCT A TITLE EXAMINATION AS IT MAY IN ITS SOLE
DISCRETION CHOOSE TO CONDUCT WITH RESPECT TO THE PROPERTIES IN ORDER TO
DETERMINE WHETHER TITLE DEFECTS (AS DEFINED BELOW) EXIST. BUYER SHALL COMPLETE
ITS REVIEW OF THE COMPANY AND THE
54
SUBSIDIARIES' TITLE TO PROPERTIES CONSTITUTING AT LEAST 80% OF THE AGGREGATE
ALLOCATED VALUES OF ALL PROPERTIES NO LATER THAN THE END OF THE EXAMINATION
PERIOD. PFC, GP, AND THE COMPANY AND BUYER ACKNOWLEDGE THAT DRILL SITE TITLE
OPINIONS HAVE NOT BEEN OBTAINED FOR CERTAIN WELLS IN LOUISIANA INCLUDING ANY
WELLS DRILLED SUBSEQUENT TO THE DATE HEREOF AND FOR WHICH DRILL SITE TITLE
OPINIONS HAVE NOT BEEN OBTAINED AT LEAST 5 BUSINESS DAYS PRIOR TO THE CLOSING
DATE (THE "DRILL SITE PROPERTIES"). BUYER, PFC, GP AND THE COMPANY WILL
COOPERATE TO PREPARE TITLE OPINIONS ON THE DRILL-SITE PROPERTIES DURING THE
EXAMINATION PERIOD.
(B)
BUYER AND ITS REPRESENTATIVES MAY EXAMINE ALL ABSTRACTS OF TITLE,
TITLE OPINIONS, TITLE FILES, OWNERSHIP MAPS, LEASE FILES, ASSIGNMENTS, DIVISION
ORDERS, OPERATING RECORDS AND AGREEMENTS, WELL FILES, FINANCIAL AND ACCOUNTING
RECORDS, GEOLOGICAL, GEOPHYSICAL AND ENGINEERING RECORDS, IN EACH CASE INSOFAR
AS THE SAME MAY NOW BE IN EXISTENCE AND IN THE POSSESSION OF PFC, RELATED
AFFILIATES, THE COMPANY OR ANY SUBSIDIARY, PROVIDED, HOWEVER, THAT PFC AND THE
COMPANY MAY WITHHOLD ACCESS TO ANY INFORMATION THAT PFC, RELATED AFFILIATES, THE
COMPANY OR ANY SUBSIDIARY IS PROHIBITED FROM DISCLOSING BY BONA FIDE, THIRD
PARTY CONFIDENTIALITY RESTRICTIONS; PROVIDED THAT PFC AND THE COMPANY SHALL USE
THEIR REASONABLE EFFORTS TO OBTAIN A WAIVER OF ANY SUCH RESTRICTIONS IN FAVOR OF
BUYER. THE COST AND EXPENSE OF BUYER'S REVIEW OF THE TITLE TO THE PROPERTIES
SHALL BE BORNE SOLELY BY BUYER. BUYER SHALL NOT CONTACT ANY OF THE CUSTOMERS OR
SUPPLIERS OF THE COMPANY OR ITS WORKING INTEREST CO-OWNERS, OPERATORS, LESSORS
OR SURFACE INTEREST OWNERS, IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
HEREBY, WHETHER IN PERSON OR BY TELEPHONE, MAIL OR OTHER MEANS OF COMMUNICATION,
WITHOUT THE SPECIFIC PRIOR AUTHORIZATION OF THE COMPANY, WHICH CONSENT SHALL NOT
BE UNREASONABLY WITHHELD.
(C)
IF BUYER DISCOVERS ANY TITLE DEFECT AFFECTING ANY OF THE
PROPERTIES, BUYER MAY NOTIFY PFC OF SUCH ALLEGED TITLE DEFECT FROM TIME TO TIME
PRIOR TO THE EXPIRATION OF THE EXAMINATION PERIOD. TO BE EFFECTIVE, SUCH NOTICE
("TITLE DEFECT NOTICE") MUST (I) BE IN WRITING, (II) BE RECEIVED BY PFC PRIOR TO
THE EXPIRATION OF THE EXAMINATION PERIOD, (III) DESCRIBE THE TITLE DEFECT IN
REASONABLE DETAIL INCLUDING THE BASIS THEREFOR (INCLUDING ANY ALLEGED VARIANCE
IN