APPROVED DEVELOPMENT OPERATIONS WILL BE
PERFORMED, (iii) WHETHER ALL APPROVED DEVELOPMENT OPERATIONS WILL BE PERFORMED,
OR (iv) THE ACTUAL ULTIMATE COST OF ANY OPERATION, INCLUDING THE APPROVED
DEVELOPMENT OPERATIONS.
REP UNDERSTANDS THAT THERE MAY BE SIGNIFICANT EXPENSES
IN EXCESS OF THE ESTIMATED COSTS OF OPERATIONS, INCLUDING WITH RESPECT TO THE
APPROVED DEVELOPMENT OPERATIONS WHICH WOULD RESULT IN REMAINING APPROVED
DEVELOPMENT
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OPERATIONS NOT BEING PERFORMABLE WITHOUT FUNDS IN ADDITION TO THE CARRY
OBLIGATION.
THIS AGREEMENT DOES NOT LIMIT THE OPERATOR'S RIGHT TO PROPOSE AND
PERFORM OPERATIONS PURSUANT TO THE APPLICABLE OPERATING AGREEMENT THAT WILL
REQUIRE EXPENDITURES IN ADDITION TO THE CARRY OBLIGATION.
5.7
NORM. REP ACKNOWLEDGES THAT IT HAS BEEN INFORMED THAT OIL AND GAS
PRODUCING FORMATIONS CAN CONTAIN NATURALLY OCCURRING RADIOACTIVE MATERIAL. SCALE
FORMATION OR SLUDGE DEPOSITS CAN CONCENTRATE LOW LEVELS OF NORM ON EQUIPMENT,
MATERIALS AND OTHER PURCHASED PROPERTY. SOME OR ALL OF THE EQUIPMENT, MATERIALS
AND OTHER PURCHASED PROPERTY SUBJECT TO THE TRANSACTION DOCUMENTS MAY HAVE
LEVELS OF NORM ABOVE BACKGROUND LEVELS. A HEALTH HAZARD MAY EXIST IN CONNECTION
WITH THE EQUIPMENT, MATERIALS AND OTHER PURCHASED PROPERTY BY REASON THEREOF.
THEREFORE, REP MAY NEED TO FOLLOW SAFETY PROCEDURES WHEN HANDLING THE EQUIPMENT,
MATERIALS AND OTHER PURCHASED PROPERTY.
5.8
DISCLAIMERS DEEMED CONSPICUOUS. TO THE EXTENT REQUIRED TO BE
OPERATIVE, REP HEREBY AGREES THAT THE DISCLAIMERS OF WARRANTIES CONTAINED IN THE
TRANSACTION DOCUMENTS ARE CONSPICUOUS DISCLAIMERS FOR THE PURPOSE OF ANY
APPLICABLE LAW, RULE OR ORDER.
ARTICLE VI
Relation Of Parties And Acknowledgments
6.1
No Partnership.
The parties acknowledge that the Transaction
Documents, and the activities which may be under or pursuant hereto are not
intended, and shall not be construed, to create a partnership, a joint venture,
agency relationship, or other fiduciary relationship among the parties hereto
within the meaning of the federal common law nor under the applicable laws of
any state nor under the laws of the state of which either party is incorporated,
organized or conducting business.
6.2
Non-Affiliation.
The SMP Parties have no ownership interest in
REP.
REP has no ownership interest in the SMP Parties.
There is no agreement
pursuant to which any SMP Party would merge or consolidate with REP.
The
Transaction Documents, upon execution (and the agreements provided for herein),
will be the only agreements between the parties.
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ARTICLE VII
Operations
7.1
Operating Agreement.
All operations will be conducted in
accordance with the applicable Operating Agreement.
REP consents to PEL or SMP
service as operator.
7.2
Development Committee.
A committee composed of representatives of
Seller and REP shall meet quarterly to discuss the status of operations.
The
purpose of the meeting shall be to share information.
All decisions with
respect to operations will be made pursuant to the terms of the applicable
Operating Agreement.
7.3
Carry Obligation.
The funds paid to Seller at the Closing
conducted with respect to the Purchase of the Second Orcutt Interests and each
subsequent Closing pursuant to the Development Agreement shall be applied to
satisfy the Carry Obligation. Any expenditure that is included