THE RETURN AND DELIVERY OF THE DEPOSIT, WITHOUT ANY INTEREST OR
EARNINGS THEREON; AND EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE VIII, BREITBURN
AND
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QUICKSILVER SHALL THEREAFTER HAVE NO FURTHER LIABILITY OR OBLIGATION TO EACH
OTHER WITH REGARD TO THIS AGREEMENT OR THE TRANSACTIONS COVERED HEREBY.
Section 2.3
Adjustments to Initial
Consideration Regarding QRI Assets and Certain Other Adjustments. The Initial
Consideration shall be adjusted with regard to the QRI Assets as follows:
(A)
AT CLOSING THE INITIAL CONSIDERATION SHALL
BE ADJUSTED UPWARD BY THE FOLLOWING AMOUNTS (WITHOUT DUPLICATION):
(I)
AN AMOUNT EQUAL TO THE VALUE OF ALL
HYDROCARBONS ATTRIBUTABLE TO THE QRI ASSETS IN STORAGE OR EXISTING IN STOCK
TANKS, PIPELINES, PLANTS AND/OR PLATFORMS (INCLUDING INVENTORY) AS OF THE
EFFECTIVE TIME, WITH THE VALUE TO BE BASED UPON THE CONTRACT PRICE IN EFFECT AS
OF THE EFFECTIVE TIME (OR THE MARKET VALUE, IF THERE IS NO CONTRACT PRICE, IN
EFFECT AS OF THE EFFECTIVE TIME), LESS AMOUNTS PAYABLE AS ROYALTIES, OVERRIDING
ROYALTIES, AND OTHER BURDENS UPON, MEASURED BY, OR PAYABLE OUT OF SUCH
PRODUCTION, AND LESS AMOUNTS OF ANY SEVERANCE TAXES DEDUCTED BY THE PURCHASER OF
SUCH PRODUCTION;
(II)
AN AMOUNT EQUAL TO ALL OPERATING EXPENSES,
CAPITAL EXPENDITURES AND OTHER COSTS AND EXPENSES PAID BY QUICKSILVER THAT ARE
ATTRIBUTABLE TO THE QRI ASSETS FROM AND AFTER THE EFFECTIVE TIME, WHETHER PAID
BEFORE OR AFTER THE EFFECTIVE TIME, INCLUDING, WITHOUT LIMITATION, (A) INSURANCE
PREMIUMS AND PREMIUMS FOR THE BONDS PAID BY OR ON BEHALF OF QUICKSILVER FOR
PERIODS FROM AND AFTER THE EFFECTIVE TIME, (B) ROYALTIES OR OTHER BURDENS UPON,
MEASURED BY OR PAYABLE OUT OF PROCEEDS OF PRODUCTION, (C) RENTALS AND OTHER
LEASE MAINTENANCE PAYMENTS AND (D) AD VALOREM, PROPERTY, SEVERANCE AND
PRODUCTION TAXES AND ANY OTHER TAXES (EXCLUSIVE OF INCOME TAXES) BASED UPON OR
MEASURED BY THE OWNERSHIP OF THE QRI ASSETS, THE PRODUCTION OF HYDROCARBONS, OR
THE RECEIPT OF PROCEEDS THEREFROM;
(III)
IF QUICKSILVER IS THE OPERATOR UNDER A JOINT
OPERATING AGREEMENT COVERING ANY OF THE QRI ASSETS, AN AMOUNT EQUAL TO THE COSTS
AND EXPENSES PAID BY QUICKSILVER ON BEHALF OF THE OTHER JOINT INTEREST OWNERS
THAT ARE ATTRIBUTABLE TO THE PERIODS FROM AND AFTER THE EFFECTIVE TIME;
(IV)
WITHOUT DUPLICATION OF ANY OTHER AMOUNTS SET
FORTH IN THIS SECTION 2.3(A), THE AMOUNT OF ALL TAX, IF ANY, PRORATED TO
BREITBURN IN ACCORDANCE WITH THIS AGREEMENT BUT PAID BY QUICKSILVER;
(V)
TO THE EXTENT THAT QUICKSILVER OR ANY OF ITS
AFFILIATES (INCLUDING ANY ACQUIRED COMPANY) IS UNDERPRODUCED OR HAS AN
OVER-DELIVERED POSITION WITH RESPECT TO ANY ACQUIRED ASSET AS OF THE EFFECTIVE
TIME, AS COMPLETE AND FINAL SETTLEMENT BETWEEN QUICKSILVER AND BREITBURN WITH
RESPECT TO ALL SUCH IMBALANCES (BUT WITHOUT LIMITING BREITBURN'S ASSUMPTION OF
THE ASSUMED LIABILITIES), THE SUM OF THE GAS STRIP PRICE PER MMBTU INCLUDED IN
SUCH IMBALANCES; AND
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(VI)
ANY OTHER AMOUNT PROVIDED FOR ELSEWHERE IN
THIS AGREEMENT OR OTHERWISE AGREED UPON BY QUICKSILVER AND BREITBURN.
(B)
AT CLOSING, THE INITIAL CONSIDERATION SHALL
BE ADJUSTED DOWNWARD BY THE FOLLOWING