Document:

exv10w1

Exhibit 10.1

PURCHASE AND SALE AGREEMENT

     This Purchase and Sale Agreement (the “Agreement”) is entered into this 21st day of April,
2011 (the “Closing Date”), by and between Michael J. Mayell, whose address is 4600 Post Oak Place,
Suite 306, Houston, TX 77027 (“Seller”), and Alta Mesa Energy, LLC, whose address is 15415 Katy
Freeway, Suite 800, Houston, Texas 77094 (“Buyer”). Seller and Buyer may be referred to herein
individually as a “Party” or collectively as the “Parties”.

WITNESSETH

     WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer desires to purchase and
accept all of Seller’s right, title and interest in and to the following (being collectively
referred to herein as the “Properties”):

	 	(a)	 	The entire estates created by the oil, gas and mineral leases and other oil and
gas interests described on Exhibit A (the “Leases”), and the lands covered
thereby (the “Lands”), together with all property and rights incident thereto including
all rights and interests in any unit or pooled area in which the Leases and/or Lands
are included, to the extent that such rights and interests arise from and are
associated with the Leases and/or Lands, including all rights derived from any
unitization, pooling, operating, communitization, area of mutual interest or other
agreement or from any declaration or order of any governmental authority having
jurisdiction, together with all direct and indirect interests in and rights with
respect to oil, gas, mineral and related properties and assets of any kind or nature,
including working, royalty and overriding royalty interests, production payments,
operating rights, net profits interests, other non-working interests and non-operating
interests covering or with respect to the Leases and Lands whether or not specifically
described on Exhibit A;

	 	(b)	 	The oil and gas wells located on the Leases and/or Lands, or other leases
and/or lands pooled therewith, including, without limitation, the wells described on
Exhibit B (“Wells”);

	 	(c)	 	All rights, privileges, benefits and powers with respect to the use and
occupancy of the surface and subsurface depths in and under the Leases and Lands that
are necessary or incidental to possession and enjoyment thereof or any interest therein
under the terms of the Leases applicable thereto;

	 	(d)	 	To the extent transferable at no cost or expense to Seller or that Buyer, at
its sole option, agrees to pay any transfer cost or expense, all valid and existing gas
purchase and sale contracts, operating agreements, participation agreements, prospect
agreements, seismic agreements, and other contracts, and agreements to the extent
relating to the Leases, Lands and the Wells, and any and all other agreements,
contracts and rights derived therefrom;

 

 

	 	(e)	 	To the extent transferable at no cost or expense to Seller or that Buyer, at
its sole option, agrees to pay any transfer cost or expense, all permits, easements,
rights-of-way, surface leases, franchises, licenses, approvals, consents, certificates,
servitudes, surface use agreements, and other similar interests used or held for use in
connection with the ownership or operation of the Leases, Lands and/or Wells or with
production or treatment of hydrocarbons produced therefrom, or sale or disposal of
water, hydrocarbons or associated substances therefrom or attributable thereto;

	 	(f)	 	All oil, gas, and related hydrocarbons and other minerals produced from and
after the Effective Time attributable to the Leases, Lands and Wells;

	 	(g)	 	All wellbores, fixtures, equipment, and other property, both movable and
immovable, by attachment or otherwise that are used or held for use in connection with
the Leases, Lands and/or Wells, appurtenant thereto, or directly used or obtained in
connection with the Leases or lands pooled therewith and the Lands and/or Wells or with
the production, treatment, sale, or disposal of hydrocarbons or water produced
therefrom or attributable thereto, including, without limitation, all gathering
systems, pipelines, processing systems, plants, compressors, meters, injection wells,
salt water disposal wells and facilities, well equipment, casing, tanks, buildings,
tubing, pumps, motors, fixtures, machinery, power lines, roads, field processing plants
and all other equipment and improvements to the extent used in the operation of the
Wells, Leases and/or Lands (collectively, the “Equipment”); and

	 	(h)	 	All other properties and interests (real, personal, contractual or mixed)
including without limitation, to the extent transferable at no cost or expense to
Seller, geological, geophysical and seismic data, owned by Seller in whole or in part,
to the extent they are used or held for use in connection with the Leases, Lands and/or
Wells.

     The Properties shall be conveyed subject to all valid and existing gas purchase and sale
contracts, operating agreements, participation agreements, prospect agreements, seismic agreements,
and other contracts and agreements to the extent relating to the Leases, Lands and the Wells, and
any and all other agreements, contracts and rights derived therefrom (the “Contracts”), and all
valid and existing restrictions, exceptions, reservations, conditions, limitations, interests, and
other matters, if any, of record, including the presently existing and valid third-party royalties,
overriding royalties, payments out of production, and easements and rights-of-way of record.

     NOW, THEREFORE, for valuable consideration and the mutual covenants and agreements herein
contained, Seller and Buyer agree as follows:

 

 

ARTICLE 1

DEFINITIONS

     The following terms shall have the following meanings throughout this Agreement:

     1.1 “Agreement” has the meaning set forth in the introductory paragraph
hereto and includes all Exhibits and Schedules attached hereto or referenced herein.

     1.2 “Agreement with Cross Release” means that certain agreement dated
December 17, 2009 between Michael J. Mayell, Sydson Energy, Inc. and The Meridian
Resource Corporation, et al.

     1.3 “Buyer” has the meaning set forth in the introductory paragraph to
this Agreement.

     1.4 “Claims” means any and all direct or indirect, demands, claims,
notices of violation, notices of probable violation, filings, investigations,
administrative proceedings, actions, causes of action, suits, and other legal
proceedings, judgments, assessments, damages, deficiencies, taxes, penalties, fines,
obligations, responsibilities, liabilities, payments, charges, costs, and expenses
(including without limitation costs and expenses of operating the Properties) of any
kind or character (whether or not asserted prior to the Closing Date, and whether
known or unknown, fixed or unfixed, conditional or unconditional, based on
negligence, strict liability, breach of representation, warranty or agreement, or
otherwise, choate or inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent, or otherwise), including without limitation penalties
and interest on any amount payable as a result of any of the foregoing, any legal or
other costs and expenses incurred in connection with investigating or defending any
Claim, and all amounts paid in settlement of Claims. Without limiting the
generality of the foregoing, the term “Claims” specifically includes,
without limitation, any and all Claims arising from, attributable to or incurred in
connection with any (i) breach of contract, (ii) loss or damage to property, injury
to or death of persons, and other tortious injury, and (iii) violations of
applicable laws, rules, regulations, orders or any other legal right or duty
actionable at law or equity.

     1.5 “Closing Date” means April 21, 2011.

     1.6 “Defensible Title” means, with respect to the Properties, such
title and ownership by the Seller that (a) subject to Article 3.3, entitles the
Seller to receive and retain, without reduction, suspension or termination, not less
than the Seller’s “Net Revenue Interest” of all hydrocarbons produced, saved and
marketed from the Properties; (b) subject to Article 3.3, obligates the Seller to
bear not greater than the Seller’s “Working Interest” of the costs and expenses
relating to the maintenance, development and operation of such Property; and (c)

 

 

	 	 	 	is free and clear of all liens, claims and encumbrances, except Permitted
Encumbrances by, through and under Seller.

     1.7 “Effective Time” means 12:01 a.m., Central Standard Time on April
1, 2011.

     1.8 “Liens” means encumbrances, liens, claims, easement rights,
agreements, instruments, obligations, burdens or defects in title.

     1.9 “Mutual Release” means that certain mutual and final release of all
claims related to Cause No. 2011-01296 styled Sydson Energy, Inc. v. Alta Mesa
Holdings, L.P. and The Meridian Resource & Exploration LLC pending before the 113th
Judicial District Court of Harris County, Texas.

     1.10 “Net Revenue Interest” means that share of hydrocarbons produced
from or allocated to a particular Lease, unit or Well (or the share of revenues
received from the sale of hydrocarbons from or allocated to a particular Lease, unit
or Well) that a party is entitled to receive by virtue of its ownership of such
Lease, unit or Well after deducting any hydrocarbons or proceeds or revenues
allocable to any royalty interest, overriding royalty interest, production payment,
net profits interest or other similar interest, other than taxes, that constitutes a
burden on such interest or is measured by or payable out of the production of
hydrocarbons or the proceeds realized from the sale or other disposition thereof.

     1.11 “NPI Agreement” means that certain agreement dated June 27, 1995
but effective as of January 1, 1994 between Michael J. Mayell and Texas Meridian
Resources Corporation (predecessor to The Meridian Resource Corporation) concerning
net profits interests to be earned by Seller thereunder (“Original NPI Agreement”);
and a Termination Agreement as of April 29, 2008 relating to the Original NPI
Agreement; and an Amendment to Agreement dated June 27, 1995, which amends the
Original NPI Agreement and has been filed of record in various jurisdictions.

     1.12 “Permitted Encumbrances” means (a) liens for taxes not yet
delinquent or which are being contested in good faith by appropriate proceedings,
(b) lessors’ royalties, overriding royalties, division orders, reversionary
interests and similar burdens that do not operate to reduce the Net Revenue Interest
of Seller in any of the Properties, (c) the consents and rights contained in the
Contracts or the Leases, and (d) production sale contracts, unitization and pooling
declarations and agreements, and any operating agreements insofar as such contracts
and agreements do not operate to increase the Working Interest or decrease the Net
Revenue Interest of Buyer for any of the Properties; (e) normal and customary liens
of co-owners under operating agreements, unitization agreements, and pooling orders
relating to the Properties, which obligations are not yet due and pursuant to which
Seller is not in default; (f) mechanic’s and materialmen’s liens relating to the
Properties, which obligations are not yet due

 

 

and pursuant to which Seller is not in default; (g) minor defects and irregularities
in title or other restrictions that are of the nature customarily accepted by
prudent purchasers of oil and gas properties and do not materially affect the value
of any Property encumbered thereby or materially impair the ability of the obligor
to use any such Property in its operations; (h) all approvals required to be
obtained in connection with the transactions contemplated herein from governmental
authorities which are customarily obtained post-closing; (i) preferential rights to
purchase and consent to transfer requirements of any person for which the holder(s)
thereof have waived their rights with respect to the transfer of the Properties
under this Agreement or the period has expired in which the holder may exercise such
rights; and (j) liens created or arising by operation of law to secure a Party’s
obligations as a purchaser of oil and gas in respect of obligations that are not
past-due.

     1.13 “Project Areas” means the areas depicted or described in
Exhibit C attached to and made a part of this Agreement.

     1.14 “Seller” has the meaning set forth in the introductory paragraph
to this Agreement.

     1.15 “Working Interest” means that share of all costs and expenses
associated with the exploration, development or operation of a Lease, unit or Well
or related production facilities or equipment that the owner thereof is required to
bear and pay.

ARTICLE 2

TRANSFER OF THE PROPERTY

          2.1 Sale and Purchase. On the Closing Date, upon the terms and conditions
hereinafter set forth, Seller agrees to sell, assign and convey to Buyer all of his right, title
and interest in the Properties, including, without limitation, all rights pursuant to the NPI
Agreement and the Agreement with Cross Release, effective as of the Effective Time, and Buyer
agrees to buy and accept such right, title and interest in the Properties from Seller on the
Closing Date, effective as of the Effective Time.

          2.2 Purchase Price. Thirteen Million Four Hundred and Fifty-Three Thousand and
No/100 Dollars ($13,453,000.00) (the “Mayell Purchase Price”) shall be paid by Buyer to Seller
in immediately available funds on or before the Closing Date. The Mayell Purchase Price is to
be adjusted on the Closing Date as provided in Article 2.3 below (the Mayell Purchase Price, as
so adjusted, is referred to as the “Mayell Net Closing Amount”)

          2.3 Accounting for Expenses and Proceeds of Production and Sales, etc. Prior to the
Closing Date, Seller and Buyer have, based on the schedule of calculations attached as
Exhibit D (the “Estimated Mayell Adjustment Calculations”), arrived at an estimated net
amount of Two Hundred and Thirty-Five Thousand and No/100 Dollars ($235,000.00) (the “Estimated
Mayell Adjustment”) by which the Mayell Purchase Price is to be adjusted

 

 

upwards on the Closing Date to allocate to Seller all estimated un-received revenues and unpaid expenses attributable to the Properties with respect to time periods prior to the
Effective Time and to allocate to Buyer all revenues and expenses attributable to the Properties
with respect to time periods on and after the Effective Time which may have been received by or
paid to Seller. This estimated adjustment to the Mayell Purchase Price will be further adjusted
following the Closing Date in accordance with Article 2.4 below.

          2.4 Post-Closing Adjustments. Within sixty (60) days after the Closing Date, Buyer
shall prepare and deliver to Seller, in accordance with generally accepted accounting
principles, a statement (the “Mayell Final Settlement Statement”) setting forth each adjustment
or payment that was not finally determined by the Estimated Mayell Adjustment and showing the
calculation of such adjustments together with a copy of all data used in arriving at such
calculations (the “Mayell Post-Closing Adjustment(s)”) and the resulting final purchase price
(the “Mayell Final Purchase Price”). As soon as practicable after receipt of the Mayell Final
Settlement Statement, Seller shall deliver to Buyer a written report containing any changes that
Seller proposes to be made to the preliminary Mayell Final Settlement Statement. The Parties
undertake to agree with respect to the amount due pursuant to such Mayell Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon which such
agreement is reached, and upon which the Mayell Final Purchase Price is established, shall be
herein called the “Mayell Final Settlement Date”. In the event that (a) the Mayell Final
Purchase Price is more than the Mayell Net Closing Amount paid by the Buyer on the Closing Date,
Buyer shall pay to Seller the balance of such difference by wire transfer of immediately
available funds, or (b) the Mayell Final Purchase Price is less than the Mayell Net Closing
Amount paid by the Buyer on the Closing Date, Seller shall pay to Buyer the balance of such
difference by wire transfer of immediately available funds.

          If the Parties cannot agree upon the Mayell Post-Closing Adjustments, the Parties agree
that the dispute shall be submitted to a mutually selected third-party accountant, who shall
decide all points of disagreement with respect to the Mayell Post-Closing Adjustments. The
decision of said third party accountant on all such points shall be binding upon the Parties.
The cost and expenses of said third party accountant shall be borne equally by the Parties.

ARTICLE 3

ASSUMPTION AND PARTICIPATION BY BUYER

          3.1 On the Closing Date, Buyer shall, and does hereby expressly agree to incur, assume and
pay, all of the costs, obligations and liabilities of Seller under the Leases, the Contracts and
under all other agreements described in this Agreement or in any Exhibit to this Agreement that
relate to the Properties whether they arise from or relate to events occurring before or after
the Effective Time, provided, however, all such costs attributable to Seller’s interest in the
Properties for all periods prior to the Effective Time shall be accounted for in the Mayell
Post-Closing Adjustments. Buyer agrees, if requested by Seller, to execute any documents or
instruments reasonably requested by Seller to evidence such assumption by Buyer.

 

 

          3.2 On the Closing Date, Buyer shall receive all revenues of Seller under the Leases, the
Contracts and under all other agreements described in this Agreement or in any Exhibit to this
Agreement that relate to the Properties whether they arise from or relate to events occurring
before or after the Effective Time, provided, however, all such revenues attributable to
Seller’s interest in the Properties for all periods prior to the Effective Time shall be
accounted for in the Mayell Post-Closing Adjustments. Buyer agrees, if requested by Seller, to
execute any documents or instruments reasonably requested by Seller to evidence such assumption
by Buyer.

          3.3 Buyer agrees and acknowledges that any Working Interests and Net Revenue Interests
stated in this Agreement, or any Exhibit to this Agreement do not constitute representations or
warranties as to the quantum of interest actually owned by Seller and that any interests in the
Properties conveyed to Buyer shall be subject to its proportionate share, in and to each of the
Project Areas, of any and all lease and overriding royalty burdens of record in the real
property records of the counties in which the Lands are located.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller hereby represents and warrants to Buyer as follows:

          4.1 Organization. Seller is an individual residing in Texas.

          4.2 Authority and Conflicts. Seller has all requisite power and authority to carry
on his business as presently conducted, to enter into this Agreement and to perform his
obligations hereunder. The consummation of the transactions contemplated by this Agreement will
not violate or be in conflict with any provision of any material agreement or instrument to
which Seller is a party or by which Seller is bound, or any judgment, decree, order, statute,
rule or regulation applicable to Seller, other than the Contracts and any other agreements or
instruments to which Buyer is already a party.

          4.3 [Reserved].

          4.4 Enforceability. This Agreement constitutes, and all documents and instruments
required hereunder to be executed and delivered by Seller on the Closing Date will when duly
executed and delivered for value constitute, valid, legal and binding obligations of Seller,
enforceable against Seller, in accordance with their respective terms, subject to applicable
bankruptcy and other similar laws of general application with respect to creditors as well as
the general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

          4.5 Litigation and Claims. Except as otherwise provided in Exhibit E,
attached hereto and made a part hereof, to Seller’s knowledge, there are no demands or suits,
actions or other proceedings pending or threatened before any court or governmental agency
which, taken as a whole, might result in material impairment or loss of Seller’s title to any
part of

 

 

the Properties or the value thereof, or which might materially hinder or impede the
operation of the Properties taken as a whole.

          4.6 Brokers’ Fees. Seller has incurred no liability, contingent or otherwise, for
brokers’ or finders’ fees with respect to the transactions contemplated by this Agreement for
which Buyer shall have any responsibility whatsoever.

          4.7 Preferential Rights and Consent to Assign. Except as otherwise set forth in
the Contracts, Seller represents there are no third party preferential rights to purchase,
rights of first refusal and/or consents to assign that were created by Seller upon or subsequent
to Seller taking title to the Properties.

          4.8 Title. Subject to Permitted Encumbrances, there are no claims arising by,
through or under Seller which would cause Seller to have less than Defensible Title to the
Properties; the Properties are free and clear of all Liens arising by, through or under Seller,
except for Permitted Encumbrances; and Seller shall convey title to Buyer with a special
warranty, by through and under Seller but not otherwise.

          4.9 Contracts. Seller is not delinquent on any invoice it has received for joint
interest billing that is not otherwise accounted for in the Estimated Mayell Adjustment
Calculations.

          4.10 Non-Reliance. Except to the extent of any representations by Buyer herein,
Seller acknowledges and agrees that it has not relied upon any statements, analysis or
representations by Buyer or its representatives in entering into this Agreement, the
transactions contemplated hereby and Seller, and Seller’s spouse, Karen B. Mayell, joining
herein each acknowledge that it has access to all information and data it deems necessary to
evaluate this transaction, including the Purchase Price to be paid by Buyer and the other terms
and conditions herein.

          4.11 Disclaimers. THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN
THIS ARTICLE 4 ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND SELLER EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER
REPRESENTATIONS AND WARRANTIES, WITHOUT LIMITATION OF THE FOREGOING. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS ARTICLE 4, THE PROPERTIES SHALL BE CONVEYED TO BUYER WITHOUT ANY
WARRANTY OR REPRESENTATION WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, RELATING TO TITLE
TO THE PROPERTIES OR RELATING TO THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR
PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES OF MATERIALS OR MERCHANTABILITY OF ANY EQUIPMENT OR
ITS FITNESS FOR ANY PURPOSE, AND, EXCEPT AS PROVIDED OTHERWISE IN THE FIRST SENTENCE OF THIS
PARAGRAPH, WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION
WHATSOEVER. BUYER SHALL HAVE INSPECTED, OR WAIVED (AND ON THE CLOSING DATE SHALL BE DEEMED TO
HAVE WAIVED)

 

 

ITS RIGHT TO INSPECT THE PROPERTIES FOR ALL PURPOSES AND SATISFIED ITSELF AS TO THEIR
PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO
CONDITIONS SPECIFICALLY RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS SUBSTANCES,
SOLID WASTES, ASBESTOS AND OTHER MAN MADE FIBERS, OR NATURALLY OCCURRING RADIOACTIVE MATERIALS
(“NORM”). EXCEPT FOR THE REPRESENTATIONS CONTAINED HEREIN IN ARTICLE 4, BUYER IS RELYING SOLELY
UPON ITS OWN INSPECTION OF THE PROPERTIES. BUYER SHALL ACCEPT ALL OF THE SAME IN THEIR “AS IS”,
“WHERE IS” CONDITION. ALSO WITHOUT LIMITATION OF THE FOREGOING, SELLER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OF COMPLETENESS OF
ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW, HERETOFORE OR HEREAFTER
FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH THIS AGREEMENT INCLUDING, WITHOUT
LIMITATION, RELATIVE TO PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF
ANY) ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OR POTENTIAL OF THE PROPERTIES TO PRODUCE
HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE PROPERTIES OR ANY OTHER MATTERS CONTAINED IN
ANY MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER BY SELLER OR BY SELLER’S AGENTS OR
REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER
MATERIALS (WRITTEN OR ORAL) FURNISHED BY SELLER OR OTHERWISE MADE AVAILABLE OR DISCLOSED TO
BUYER ARE PROVIDED TO BUYER AS A CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY
OF OR AGAINST SELLER AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT BUYER’S SOLE RISK TO THE
MAXIMUM EXTENT PERMITTED BY LAW.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents to Seller as follows:

          5.1 Organization. Buyer is a Delaware limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware and authorized to
conduct business in the State in which the Properties are located.

          5.2 Authority and Conflicts. Buyer has all requisite company powers and authority
to carry on its business as presently conducted, to enter into this Agreement, to purchase the
Properties on the terms and conditions described in this Agreement, and to perform its other
obligations under this Agreement. The consummation of the transactions contemplated by this
Agreement will not violate nor be in conflict with any provision of Buyer’s company agreement
and any other governing documents or any material agreement or instrument to which Buyer is a
party or by which Buyer is bound, or any judgment, decree, order, statute, rule or regulation
applicable to Buyer.

 

 

          5.3 Authorization. The execution, delivery and performance of this Agreement and
the transactions contemplated hereunder have been duly and validly authorized by all requisite
partnership action on the part of Buyer.

          5.4 Enforceability. This Agreement and all documents and instruments required or
contemplated hereunder to be executed and delivered by Buyer on the Closing Date will, when duly
executed and delivered for value, constitute valid, legal and binding obligations of Buyer,
enforceable against Buyer, in accordance with their respective terms, subject only to applicable
bankruptcy and other similar laws of general application with respect to creditors.

          5.5 Litigation and Claims. Buyer has no knowledge of any suit, action, claim,
investigation or inquiry by any person or entity or by any administrative agency or governmental
body and no legal, administrative or arbitration proceeding pending or, to Buyer’s knowledge,
threatened against Buyer or any affiliate of Buyer which has or will materially and adversely
affect Buyer’s ability to consummate the transactions contemplated herein.

          5.6 Brokers’ Fees. Buyer has incurred no liability contingent or otherwise, for
brokers’ or finders’ fees with respect to the transactions contemplated by this Agreement for
which Seller shall have any responsibility whatsoever.

          5.7 Non-Reliance. Except to the extent of any representations by Seller herein,
Buyer acknowledges and agrees that it has not relied upon any statements, analysis or
representations by Seller or his representatives in entering into this Agreement, the
transactions contemplated hereby and Buyer acknowledges that it has access to all information
and data it deems necessary to evaluate this transaction, including the Mayell Purchase Price to
be paid to Seller and the other terms and conditions herein.

ARTICLE 6

DUE DILIGENCE REVIEW BY BUYER

          6.1 Due Diligence. Seller acknowledges that prior to the Closing Date, Buyer, or
Buyer’s authorized representatives, have been given access to Seller’s records pertaining to the
ownership and/or operation of the Properties (including, without limitation, title files,
division order files, and production, severance and ad valorem tax records), for the purpose of
conducting due diligence reviews. Buyer has conducted, at its sole cost, such title examination
or investigation, and other examinations and investigations, as it has in its sole discretion
chosen to conduct with respect to the Properties.

          6.2 Due Diligence Indemnity. Buyer hereby INDEMNIFIES and SHALL DEFEND AND HOLD
HARMLESS Seller and his respective employees, agents, representatives, contractors, successors,
and assigns) from and against any and all Claims arising from or relating to Buyer’s physical
inspection of the Properties. THE FOREGOING INDEMNITY INCLUDES, AND THE PARTIES INTEND IT TO
INCLUDE, AN INDEMNIFICATION OF THE INDEMNIFIED PARTIES FROM AND AGAINST CLAIMS ARISING OUT OF OR
RESULTING, IN WHOLE OR PART, FROM THE

 

 

CONDITION OF THE PROPERTY OR THE SOLE, JOINT, COMPARATIVE, OR CONCURRENT NEGLIGENCE OR

STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.

ARTICLE 7

THE CLOSING AND FINAL SETTLEMENT DATE

          7.1 Closing. The closing (the “Closing”) of the transaction contemplated by this
Agreement shall be on the Closing Date at the offices of Buyer, whose address is 15415 Katy
Freeway, Suite 800, Houston, Texas 77094.

          7.2 Deliveries by Seller at Closing. The obligations of the Buyer under this
Agreement shall not become effective until, Seller shall have executed and delivered to Buyer at
the Closing:

	 	(a)	 	An Assignment and Bill of Sale assigning the Properties to
Buyer, substantially the form of the assignment attached hereto as Exhibit
F, in sufficient counterparts to facilitate recording;

	 	(b)	 	Letters-in-Lieu of Division Orders or Transfer Orders or such
other documents necessary to provide notice to each purchaser of production
from the Properties of the change in ownership of the Properties and
instructing each such purchaser to make all future payments directly to Buyer;

	 	(c)	 	A certificate pursuant to Internal Revenue Code Section 1445,
in the form of Exhibit G, certifying that Seller is not a foreign
person;

	 	(d)	 	A fully executed and recordable Release of Lien in sufficient
counterparts for any and all mortgages or other similar liens affecting
Seller’s interest in the Properties; and

	 	(e)	 	The Mutual Release.

          7.3 Deliveries by Buyer at Closing. The obligations of the Seller under this
Agreement shall not become effective until Buyer shall have executed and/or delivered to Seller
at the Closing:

	 	(a)	 	The Assignment and Bill of Sale;

	 	(b)	 	The Mayell Purchase Price (as prescribed to be adjusted under
the terms of this Agreement) by wire transfer in immediately available funds to
an account designated by Seller; and

	 	(c)	 	The Mutual Release.

 

 

          7.4 Deliveries by Seller at Mayell Final Settlement Date. At the Mayell Final
Settlement Date, and pursuant to Article 2.4, if the Mayell Final Purchase Price is less than
the Mayell Net Closing Amount, Seller shall pay to Buyer the balance of such difference by wire
transfer of immediately available funds.

          7.5 Deliveries by Buyer at Final Settlement Date. At Final Settlement Date, and
pursuant to Article 2.4, if the Mayell Final Purchase Price is greater than the Mayell Net
Closing Amount, Buyer shall pay to Seller the balance of such difference by wire transfer of
immediately available funds.

ARTICLE 8

NON-COMPETE

     For a period of five (5) years from the Effective Time Seller, agrees not to acquire directly
or indirectly any oil and gas lease, royalty, overriding royalty, farmout, option, exploration
agreement or mineral interest of any kind within the Project Areas without the prior written
consent of Buyer.

ARTICLE 9

SURVIVAL, INDEMNIFICATION AND RELEASE

          9.1 Survival. Except as set forth in this Article 9, all representations and
warranties contained in this Agreement shall terminate on the Closing Date. All other
agreements and covenants of the Parties shall survive the execution and delivery of the
assignments of the Properties to Buyer by Seller.

          9.2 Indemnification by Seller. From and after the Closing Date, except for the
Assumed Environmental Obligations and the matters for which Buyer indemnifies Seller under
Article 9.4, Seller shall indemnify, defend and hold Buyer harmless from and against any and all
Claims suffered by Buyer as a result of (a) any brokers’ or finders’ fees or commissions arising
with respect to brokers or finders retained or engaged by Seller and resulting from or relating
to the transactions contemplated in this Agreement; (b) the breach of, or failure to perform or
satisfy, any of the covenants of Seller set forth in this Agreement which are to be performed
after the Closing Date; and (c) breach of any representation or warranty of Seller set forth in
this Agreement, except for a breach of Article 4.8. Seller’s indemnity obligations under this
Article 9.2 shall expire as to any claim for indemnification not asserted by Buyer within twelve
(12) months after the Closing Date. In no event shall Seller’s indemnity obligation under this
Article 9.2 exceed ten (10) percent of the Mayell Net Closing Amount. The terms and provisions
of this Article 9.2 shall be the sole and exclusive remedy of each of the persons indemnified
hereunder with respect to the indemnified matters, regardless of whether such Claims are based
on contract, tort, strict liability, or other principles.

 

 

          9.3 Buyer’s Assumed Environmental Obligations. On and after the Closing Date,
Buyer shall assume, bear and pay all costs of the following with respect to the interests of
Seller in the Properties assigned to Buyer (collectively, the “Assumed Environmental
Obligations”) for:

	 	(a)	 	any plugging and abandonment and surface restoration
obligations related to the Wells whether arising before, on or after the
Effective Time;

	 	(b)	 	the following occurrences, events, conditions and activities
on, or related or attributable to the ownership or operation of, the
Properties, regardless of whether arising from the ownership or operation of
the Properties before, on, or after the Effective Time, and regardless of
whether resulting from any negligent acts or omissions or strict liability of
Seller, his partners, officers, directors, agents, and contractors:

	 	(i)	 	Environmental pollution or contamination,
including pollution or contamination of the soil, groundwater or air by
oil and gas, brine, NORM or otherwise;

	 	(ii)	 	Underground injection activities and waste
disposal;

	 	(iii)	 	Clean-up responses, and the cost of
remediation, control, assessment or compliance with respect to surface
and subsurface pollution caused by spills, pits, ponds, lagoons or
subsurface storage tanks;

	 	(iv)	 	Disposal on the Properties of any hazardous
substances, wastes, materials and products generated by or used in
connection with the ownership or operation of the Properties; and

	 	(v)	 	Contractual liability for items of the type
described under subsections (i) through (iv) above.

          9.4 Indemnification by Buyer. To the extent permitted by law and in addition to
the indemnifications provided in the Assignment and Bill of Sale, Buyer, from and after the
Closing Date, shall release, indemnify, defend and hold Seller and his spouse, representatives
and affiliates and any of their officers, directors and employees (the “Seller Group”) harmless
from and against any and all Claims suffered by Seller Group as a result of or relating to any
of the following: (a) any liability or obligation relating to or arising from the ownership or
operation of the Properties on and after the Effective Time; (b) any brokers’ or finders’ fees
or commissions arising with respect to brokers or finders retained or engaged by Buyer and
resulting from or relating to the transactions contemplated in this Agreement; (c) the breach of
any representation or warranty of Buyer set forth in this Agreement; (d) the breach of, or
failure to perform or satisfy any of the covenants of Buyer set forth in this Agreement; (e) the
Assumed Environmental Obligations, regardless of whether the Assumed Environmental Obligations
relate to conditions arising before or after the Effective Time; and (f) any liability to Murphy
Exploration & Production Company—USA (“Murphy”) due to Seller’s

 

 

failure to obtain a waiver of any preferential right of Murphy to purchase the Properties
or any consent to assign the Properties not obtained from Murphy prior to the Closing Date.

          9.5 Indemnity Threshold. Neither Seller nor Buyer shall have any liability for
Claims under the indemnity provided in this Article 9 until the aggregate of all Claims suffered
by Seller or Buyer, respectively, exceeds TWENTY-FIVE THOUSAND DOLLARS ($25,000.00), and then
only to the extent of such excess.

          9.6 Express Negligence Disclosure. UNLESS THIS AGREEMENT EXPRESSLY PROVIDES TO THE
CONTRARY, THE INDEMNITY, RELEASE, WAIVER AND ASSUMPTION PROVISIONS SET FORTH IN THIS AGREEMENT
APPLY REGARDLESS OF WHETHER THE INDEMNIFIED PARTY (OR ITS EMPLOYEES, PARTNERS, AGENTS,
CONTRACTORS, SUCCESSORS OR ASSIGNS) CAUSES, IN WHOLE OR PART, AN INDEMNIFIED CLAIM, INCLUDING
WITHOUT LIMITATION INDEMNIFIED CLAIMS ARISING OUT OF OR RESULTING, IN WHOLE OR IN PART, FROM,
OUT OF OR IN CONNECTION WITH THE CONDITION OF THE PROPERTY OR THE INDEMNIFIED PARTY’S (OR ITS
EMPLOYEES’, PARTNERS’, AGENTS’, REPRESENTATIVES’, CONTRACTORS’, SUCCESSORS’ OR ASSIGNS’) SOLE,
JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE, BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT,
STRICT LIABILITY, BREACH OF REPRESENTATION, WARRANTY OR AGREEMENT, OR FAULT. THE PARTIES
ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.

ARTICLE 10

ADDITIONAL PROVISIONS

          10.1 Further Assurances. After the Closing Date, each of the Parties will execute,
acknowledge and deliver to the other such further instruments, and take such other action as may
be reasonably requested in order to more effectively assure said Party all of the respective
properties, rights, titles, interests, estates, and privileges intended to be assigned,
delivered or inuring to the benefit of such Party in consummation of the transactions
contemplated hereby.

          10.2 Notices. All communications required or permitted under this Agreement shall
be in writing and any communication or delivery hereunder shall be deemed to have been duly
given and received when actually delivered to the address set forth below of the party to be
notified, addressed as follows:

	 	 	 	 	 

	 
	 	If to Seller:	 	Michael J. Mayell
	 
	 	 	 	4600 Post Oak Place, Suite 306
	 
	 	 	 	Houston, TX 77027
	 
	 	 	 	Phone:      713-820-6300
	 
	 	 	 	Facsimile: 713-715-1573
	 
	 	 	 	E-Mail:     mmayell@sydson.com

 

 

	 	 	 	 	 

	 
	 	If to Buyer:	 	Alta Mesa Energy, LLC
	 
	 	 	 	c/o Alta Mesa Holdings, L.P.
	 
	 	 	 	15415 Katy Freeway, Suite 800
	 
	 	 	 	Houston, Texas 77094
	 
	 	 	 	Attn:         F. David Murrell
	 
	 	 	 	                  Vice President Land
	 
	 	 	 	Phone:      281.530.0991
	 
	 	 	 	Facsimile: 281.530.5278
	 
	 	 	 	E-Mail:     dmurrell@altamesa.net

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

          10.3 Expenses. Buyer shall bear and pay all filing, recording or registration fees
for any assignment or conveyance delivered hereunder. Each Party shall bear its own respective
expenses incurred in connection with the closing of this transaction, including its own
consultants’ fees, attorneys’ fees, accountants’ fees and other similar costs and expenses.

          10.4 No Partnership. This Agreement is not intended to create and shall not be
construed as creating a partnership, joint venture or other association between Seller and
Buyer. The respective rights and obligations of the parties hereto shall in all respects be
several and be governed by the express provisions of this Agreement and the Contracts.

          10.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAWS.

          10.6 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by reason of any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect
so long as neither the economic nor legal substance of the transactions contemplated hereby is
materially affected in any adverse manner to either Buyer or Seller. Upon such determination
that any term or other provision is invalid, illegal or incapable of being enforce, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end that the
transaction contemplated hereby are fulfilled to the extent possible.

          10.7 Assignment. Neither Seller nor Buyer may assign their respective rights or
delegate their respective duties or obligations arising under this Agreement without the prior
written consent of the other Party.

          10.8 Integration. This Agreement, the Exhibits and Schedules hereto, the
confidentiality agreement in Article 10.17 and the other agreements to be entered into by the
Parties under the provisions of this Agreement set forth the entire agreement and

 

 

understanding of the Parties in respect of the transactions contemplated hereby and
supersede all prior agreements, prior arrangements and prior understandings relating to the
subject matter hereof. No representation, promise, inducement or statement of intention has
been made by Seller or Buyer that is not embodied in this Agreement or in the documents referred
to herein, and neither Seller nor Buyer shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not so set forth.

          10.9 Waiver or Modification. This Agreement may be amended, modified, superseded
or canceled, and any of the terms, covenants, representations, warranties or conditions hereof
may be waived, only by a written instrument executed by Seller and Buyer, or, in the case of a
waiver or consent, by or on behalf of the Party or Parties waiving compliance or giving such
consent. The failure of any Party at any time or times to require performance of any provision
hereof shall in no manner affect its right at a later time to enforce the same. No waiver by
any Party of any condition, or of any breach of any covenant, agreement, representation or
warranty contained in this Agreement, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or waiver of any
other condition or of any breach of any other covenant, agreement, representation or warranty.

          10.10 Heading. The section headings contained in this Agreement are for convenient
reference only and shall not in any way affect the meaning or interpretation of this Agreement.
All references to a “section” or “Exhibit” shall refer to a section contained in this Agreement
or an Exhibit attached to this Agreement.

          10.11 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future Laws effective during the term hereof,
such provision shall be fully severable; this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part hereof; and the
remaining provisions of this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance from this
Agreement.

          10.12 Public Announcements. No Party may make press releases or other public
announcements concerning this transaction without the other’s prior written approval and
agreement to the form of the announcement, except as may be required by applicable laws or rules
and regulation of any governmental agency or stock exchange.

          10.13 Interpretation. The Parties stipulate and agree that this Agreement shall be
deemed and considered for all purposes to have been jointly prepared by the Parties, and shall
not be construed against any one Party (nor shall any inference or presumption be made) on the
basis of who drafted this Agreement or any particular provision hereof, who supplied the form of
Agreement, or any other event of the negotiation, drafting or execution of this Agreement. Each
Party agrees that this Agreement has been purposefully drawn and correctly reflects its
understanding of the transaction that it contemplates. In construing this Agreement, the
following principles will apply.

 

 

	 	(a)	 	Defined terms in this Agreement are denoted by quotation marks.
A defined term has its defined meaning throughout this Agreement and each
Exhibit and Schedule to this Agreement, regardless of whether it appears before
or after the place where it is defined.

	 	(b)	 	If there is any conflict or inconsistency between the
provisions of the main body of this Agreement and the provisions of any Exhibit
or Schedule hereto, the provisions of this Agreement shall take precedence. If
there is any conflict between the provisions of any pro forma assignment
document or other transaction documents attached to this Agreement as an
Exhibit or Schedule and the provisions of any assignment documents and other
transaction documents actually executed by the Parties, the provisions of the
executed assignment documents and other executed transaction documents shall
take precedence.

	 	(c)	 	To the fullest extent permitted by law, all provisions of this
Agreement are hereby deemed incorporated into the Assignments by reference.

	 	(d)	 	The Article, Section, Exhibit and Schedule references in this
Agreement refer to the Articles, Sections, Exhibits and Schedules of this
Agreement. The headings and titles in this Agreement are for convenience only
and shall have no significance in interpreting or otherwise affect the meaning
of this Agreement.

	 	(e)	 	The term “knowledge,” as applied to each Party, shall mean the
actual knowledge of such Party or such Party’s officers, managers, partners and
directors.

	 	(f)	 	The plural shall be deemed to include the singular, and vice
versa.

	 	(g)	 	The term “including” means “including, without limitation.”

	 	(h)	 	The term “Person” (whether or not capitalized) means any
individual, corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, enterprise, unincorporated
organization, or governmental entity.

          10.14 Third-Party Beneficiaries. It is understood and agreed that there shall be
no third-party beneficiary of this Agreement, and that the provisions hereof do not impart
enforceable rights, benefits, or remedies in anyone who is not a Party or a successor of a Party
hereto.

          10.15 Waiver of Deceptive Trade Practices Act. As partial consideration for this
Agreement, each Party hereby expressly waives the provisions of the Texas Deceptive Trade
Practices Consumer Protection Act, Articles 17.41 et seq. of the Texas Business & Commerce Code,
other than Article 17.555 which is not waived, and all other consumer protection laws of the
State of Texas that may be waived by the Parties to the extent permitted by applicable law. Each
Party represents to the other that such Party has had an

 

 

adequate opportunity to submit this waiver to legal counsel for review and comment, and
understands the rights being waived herein.

          10.16 Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts, each of which for all purposes is to be deemed as original, and all of
which constitute, collectively, one agreement; but in making proof of this Agreement, it shall
not be necessary to produce or account for more than one such counterpart.

          10.17 Confidentiality. Buyer and Seller agree to keep this Agreement and the terms
hereof confidential, except as it may be required to be disclosed by law or by the rules of any
stock exchange.

[signature page follows]

 

 

          IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized officers as of the date first above written.

	 	 	 	 	 
	 	SELLER:

MICHAEL J. MAYELL

 	 
	 	/s/Michael J. Mayell
 	 
	 	Michael J. Mayell 	 
	 	 	 
	 
	 	BUYER:

ALTA MESA ENERGY, LLC

 	 
	 	/s/ Harlan H. Chappelle
 	 
	 	Harlan H. Chappelle 	 
	 	President 	 
	 

          Spousal Consent. Karen B. Mayell, wife of Michael J. Mayell, joins in the execution
of this Agreement to acknowledge that the Properties are community property under the sole
management and control of Michael J. Mayell and consents to the sale and transfer of the Properties
in accordance with the terms of this Agreement. Karen B. Mayell is NOT a Party to this Agreement.

	 	 	 	 	 
	 	KAREN B. MAYELL

 	 
	 	/s/ Karen B. Mayell
 	 
	 	Karen B. Mayellexv10w2

Exhibit 10.2

PURCHASE AND SALE AGREEMENT

     This Purchase and Sale Agreement (the “Agreement”) is entered into this 21st day of April,
2011 (the “Closing Date”), by and between Sydson Energy, Inc., whose address is 4600 Post Oak
Place, Suite 306, Houston, TX 77027 (“Seller”), and Alta Mesa Energy, LLC, whose address is 15415
Katy Freeway, Suite 800, Houston, Texas 77094 (“Buyer”). Seller and Buyer may be referred to
herein individually as a “Party” or collectively as the “Parties”.

WITNESSETH

     WHEREAS, Seller desires to sell, assign and convey to Buyer and Buyer desires to purchase and
accept all of Seller’s right, title and interest in and to the following (being collectively
referred to herein as the “Properties”):

	 	(a)	 	The entire estates created by the oil, gas and mineral leases and other oil and
gas interests described on Exhibit A (the “Leases”), and the lands covered
thereby (the “Lands”), together with all property and rights incident thereto including
all rights and interests in any unit or pooled area in which the Leases and/or Lands
are included, to the extent that such rights and interests arise from and are
associated with the Leases and/or Lands, including all rights derived from any
unitization, pooling, operating, communitization, area of mutual interest or other
agreement or from any declaration or order of any governmental authority having
jurisdiction, together with all direct and indirect interests in and rights with
respect to oil, gas, mineral and related properties and assets of any kind or nature,
including working, royalty and overriding royalty interests, production payments,
operating rights, net profits interests, other non-working interests and non-operating
interests covering or with respect to the Leases and Lands whether or not specifically
described on Exhibit A;
	 
	 	(b)	 	The oil and gas wells located on the Leases and/or Lands, or other leases
and/or lands pooled therewith, including, without limitation, the wells described on
Exhibit B (“Wells”);
	 
	 	(c)	 	All rights, privileges, benefits and powers with respect to the use and
occupancy of the surface and subsurface depths in and under the Leases and Lands that
are necessary or incidental to possession and enjoyment thereof or any interest therein
under the terms of the Leases applicable thereto;
	 
	 	(d)	 	To the extent transferable at no cost or expense to Seller or that Buyer, at
its sole option, agrees to pay any transfer cost or expense, all valid and existing gas
purchase and sale contracts, operating agreements, participation agreements, prospect
agreements, seismic agreements, and other contracts and agreements to the extent
relating to the Leases, Lands and the Wells, and any and all other agreements,
contracts and rights derived therefrom;

 

 

	 	(e)	 	To the extent transferable at no cost or expense to Seller or that Buyer, at
its sole option, agrees to pay any transfer cost or expense, all permits, easements,
rights-of-way, surface leases, franchises, licenses, approvals, consents, certificates,
servitudes, surface use agreements, and other similar interests used or held for use in
connection with the ownership or operation of the Leases, Lands and/or Wells or with
production or treatment of hydrocarbons produced therefrom, or sale or disposal of
water, hydrocarbons or associated substances therefrom or attributable thereto;
	 
	 	(f)	 	All oil, gas, and related hydrocarbons and other minerals produced from and
after the Effective Time attributable to the Leases, Lands and Wells;
	 
	 	(g)	 	All wellbores, fixtures, equipment, and other property, both movable and
immovable, by attachment or otherwise that are used or held for use in connection with
the Leases, Lands and/or Wells, appurtenant thereto, or directly used or obtained in
connection with the Leases or lands pooled therewith and the Lands and/or Wells or with
the production, treatment, sale, or disposal of hydrocarbons or water produced
therefrom or attributable thereto, including, without limitation, all gathering
systems, pipelines, processing systems, plants, compressors, meters, injection wells,
salt water disposal wells and facilities, well equipment, casing, tanks, buildings,
tubing, pumps, motors, fixtures, machinery, power lines, roads, field processing plants
and all other equipment and improvements to the extent used in the operation of the
Wells, Leases and/or Lands (collectively, the “Equipment”); and
	 
	 	(h)	 	All other properties and interests (real, personal, contractual or mixed)
including without limitation, to the extent transferable at no cost or expense to
Seller, geological, geophysical and seismic data, owned by Seller in whole or in part,
to the extent they are used or held for use in connection with the Leases, Lands and/or
Wells.

     The Properties shall be conveyed subject to all valid and existing gas purchase and sale
contracts, operating agreements, participation agreements, prospect agreements, seismic agreements,
and other contracts and agreements to the extent relating to the Leases, Lands and the Wells, and
any and all other agreements, contracts and rights derived therefrom (the “Contracts”), and all
valid and existing restrictions, exceptions, reservations, conditions, limitations, interests, and
other matters, if any, of record, including the presently existing and valid third-party royalties,
overriding royalties, payments out of production, and easements and rights-of-way of record.

     NOW, THEREFORE, for valuable consideration and the mutual covenants and agreements herein
contained, Seller and Buyer agree as follows:

 

 

ARTICLE 1

DEFINITIONS

     The following terms shall have the following meanings throughout this Agreement:

     1.1 “Agreement” has the meaning set forth in the introductory paragraph
hereto and includes all Exhibits and Schedules attached hereto or referenced herein.

     1.2 “Agreement with Cross Release” means that certain agreement dated
December 17, 2009 between Michael J. Mayell, Sydson Energy, Inc. and The Meridian
Resource Corporation, et al.

     1.3 “Buyer” has the meaning set forth in the introductory paragraph to
this Agreement.

     1.4 “Claims” means any and all direct or indirect, demands, claims,
notices of violation, notices of probable violation, filings, investigations,
administrative proceedings, actions, causes of action, suits, and other legal
proceedings, judgments, assessments, damages, deficiencies, taxes, penalties, fines,
obligations, responsibilities, liabilities, payments, charges, costs, and expenses
(including without limitation costs and expenses of operating the Properties) of any
kind or character (whether or not asserted prior to the Closing Date, and whether
known or unknown, fixed or unfixed, conditional or unconditional, based on
negligence, strict liability, breach of representation, warranty or agreement, or
otherwise, choate or inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent, or otherwise), including without limitation penalties
and interest on any amount payable as a result of any of the foregoing, any legal or
other costs and expenses incurred in connection with investigating or defending any
Claim, and all amounts paid in settlement of Claims. Without limiting the
generality of the foregoing, the term “Claims” specifically includes,
without limitation, any and all Claims arising from, attributable to or incurred in
connection with any (i) breach of contract, (ii) loss or damage to property, injury
to or death of persons, and other tortious injury, and (iii) violations of
applicable laws, rules, regulations, orders or any other legal right or duty
actionable at law or equity.

     1.5 “Closing Date” means April 17, 2011.

     1.6 “Defensible Title” means, with respect to the Properties, such
title and ownership by the Seller that (a) subject to Article 3.3, entitles the
Seller to receive and retain, without reduction, suspension or termination, not less
than the Seller’s “Net Revenue Interest” of all hydrocarbons produced, saved and
marketed from the Properties; (b) subject to Article 3.3, obligates the Seller to
bear not greater than the Seller’s “Working Interest” of the costs and expenses
relating to the maintenance, development and operation of such Property; and (c)

 

 

is free and clear of all liens, claims and encumbrances, except Permitted
Encumbrances by, through and under Seller.

     1.7 “Effective Time” means 12:01 a.m., Central Standard Time on April
1, 2011.

     1.8 “Liens” means encumbrances, liens, claims, easement rights,
agreements, instruments, obligations, burdens or defects in title.

     1.9 “Master Participation Agreement” means that certain agreement dated
July 15, 1996, but effective July 1, 1994, between Sydson Energy, Inc. and Texas
Meridian Resources Exploration, Inc. (predecessor to The Meridian Resources
Corporation).

     1.10 “Mutual Release” means that certain mutual and final release of
all claims related to Cause No. 2011-01296 styled Sydson Energy, Inc. v. Alta Mesa
Holdings, L.P. and The Meridian Resource & Exploration LLC pending before the
113th Judicial District Court of Harris County, Texas.

     1.11 “Net Revenue Interest” means that share of hydrocarbons produced
from or allocated to a particular Lease, unit or Well (or the share of revenues
received from the sale of hydrocarbons from or allocated to a particular Lease, unit
or Well) that a party is entitled to receive by virtue of its ownership of such
Lease, unit or Well after deducting any hydrocarbons or proceeds or revenues
allocable to any royalty interest, overriding royalty interest, production payment,
net profits interest or other similar interest, other than taxes, that constitutes a
burden on such interest or is measured by or payable out of the production of
hydrocarbons or the proceeds realized from the sale or other disposition thereof.

     1.12 “Permitted Encumbrances” means (a) liens for taxes not yet
delinquent or which are being contested in good faith by appropriate proceedings,
(b) lessors’ royalties, overriding royalties, division orders, reversionary
interests and similar burdens that do not operate to reduce the Net Revenue Interest
of Seller in any of the Properties, (c) the consents and rights contained in the
Contracts or the Leases, and (d) production sale contracts, unitization and pooling
declarations and agreements, and any operating agreements insofar as such contracts
and agreements do not operate to increase the Working Interest or decrease the Net
Revenue Interest of Buyer for any of the Properties; (e) normal and customary liens
of co-owners under operating agreements, unitization agreements, and pooling orders
relating to the Properties, which obligations are not yet due and pursuant to which
Seller is not in default; (f) mechanic’s and materialmen’s liens relating to the
Properties, which obligations are not yet due and pursuant to which Seller is not in
default; (g) minor defects and irregularities in title or other restrictions that
are of the nature customarily accepted by prudent purchasers of oil and gas
properties and do not materially affect the value of any Property encumbered thereby
or materially impair the ability of the obligor to use

 

 

any such Property in its operations; (h) all approvals required to be obtained
in connection with the transactions contemplated herein from governmental
authorities which are customarily obtained post-closing; (i) preferential rights to
purchase and consent to transfer requirements of any person for which the holder(s)
thereof have waived their rights with respect to the transfer of the Properties
under this Agreement or the period has expired in which the holder may exercise such
rights; and (j) liens created or arising by operation of law to secure a Party’s
obligations as a purchaser of oil and gas in respect of obligations that are not
past-due.

     1.13 “Project Areas” means the areas depicted or described in
Exhibit C attached to and made a part of this Agreement.

     1.14 “Seller” has the meaning set forth in the introductory paragraph
to this Agreement.

     1.15 “Working Interest” means that share of all costs and expenses
associated with the exploration, development or operation of a Lease, unit or Well
or related production facilities or equipment that the owner thereof is required to
bear and pay.

ARTICLE 2

TRANSFER OF THE PROPERTY

     2.1 Sale and Purchase. On the Closing Date, upon the terms and conditions
hereinafter set forth, Seller agrees to sell, assign and convey to Buyer all of its right, title
and interest in the Properties, including, without limitation, all rights pursuant to the Master
Participation Agreement and the Agreement with Cross Release, effective as of the Effective
Time, and Buyer agrees to buy and accept such right, title and interest in the Properties from
Seller on the Closing Date, effective as of the Effective Time.

     2.2 Purchase Price. Fourteen Million Forty-Seven Thousand and No/100 Dollars
($14,047,000.00) (the “Sydson Purchase Price”) shall be paid by Buyer to Seller in immediately
available funds on or before the Closing Date. The Sydson Purchase Price is to be adjusted on
the Closing Date as provided in Article 2.3 below (the Sydson Purchase Price, as so adjusted, is
referred to as the “Sydson Net Closing Amount”)

     2.3 Accounting for Expenses and Proceeds of Production and Sales, etc. Prior to
the Closing Date, Seller and Buyer have, based on the schedule of calculations attached as
Exhibit D he “Estimated Sydson Adjustment Calculations”), arrived at an estimated net
amount of One Million One Hundred Thousand and No/100 Dollars ($1,100,000.00) (the “Estimated
Sydson Adjustment”) by which the Sydson Purchase Price is to be adjusted downwards on the
Closing Date to allocate to Seller all estimated un-received revenues and unpaid expenses
attributable to the Properties with respect to time periods prior to the Effective Time and to
allocate to Buyer all revenues and expenses attributable to the Properties with respect to time
periods on and after the Effective Time which may have been

 

 

received by or paid to Seller. This estimated adjustment to the Sydson Purchase Price will
be further adjusted following the Closing Date in accordance with Article 2.4 below.

     2.4 Post-Closing Adjustments. Within sixty (60) days after the Closing Date, Buyer
shall prepare and deliver to Seller, in accordance with generally accepted accounting
principles, a statement (the “Sydson Final Settlement Statement”) setting forth each adjustment
or payment that was not finally determined by the Estimated Sydson Adjustment and showing the
calculation of such adjustments together with a copy of all data used in arriving at such
calculations (the “Sydson Post-Closing Adjustment(s)”) and the resulting final purchase price
(the “Sydson Final Purchase Price”). As soon as practicable after receipt of the Sydson Final
Settlement Statement, Seller shall deliver to Buyer a written report containing any changes that
Seller proposes to be made to the preliminary Sydson Final Settlement Statement. The Parties
undertake to agree with respect to the amount due pursuant to such Sydson Post-Closing
Adjustments no later than ninety (90) days after the Closing Date. The date upon which such
agreement is reached, and upon which the Sydson Final Purchase Price is established, shall be
herein called the “Sydson Final Settlement Date”. In the event that (a) the Sydson Final
Purchase Price is more than the Sydson Net Closing Amount paid by the Buyer on the Closing Date,
Buyer shall pay to Seller the balance of such difference by wire transfer of immediately
available funds, or (b) the Sydson Final Purchase Price is less than the Sydson Net Closing
Amount paid by the Buyer on the Closing Date, Seller shall pay to Buyer the balance of such
difference by wire transfer of immediately available funds. The Parties agree as follows
regarding the accounting for the Sydson Post-Closing Adjustment calculations: (a) that the
Schendel and Crow Leases shall be included in the Sydson Post-Closing Adjustment calculations to
determine the costs and revenues attributable to Sydson’s interest in the properties; provided,
however, the fractional working interests of Seller for purposes of such calculations in respect
of the Schendel Lease will be 2% of 8/8ths and in respect of the Crow Lease will be 0.44% of
8/8ths, and (b) the costs of any lease acquisition, renewal, extension or top leases (“Lease
Costs”) shall be included in the Sydson Post-Closing Adjustment calculations to the extent, and
only to the extent that prior to the Closing Date (i) Seller received an election notice for
such Lease Costs from Buyer pursuant to Buyer’s receipt of a proposal for a unit and
corresponding initial well from Murphy Exploration & Production Company—USA (“Murphy”), (ii)
Seller has approved and elected to incur the Lease Costs and (iii) Seller has received an
assignment of the subject leases, renewals, extensions or top leases all in accordance with the
provisions of that certain letter from F. David Murrell to Michael Mayell dated November 12,
2010 Captioned “Re: Revised Noticed date October 19, 2010 covering Additional Oil and Gas
Interests, Karnes County, Texas.”

     If the Parties cannot agree upon the Sydson Post-Closing Adjustments, the Parties agree
that the dispute shall be submitted to a mutually selected third-party accountant, who shall
decide all points of disagreement with respect to the Sydson Post-Closing Adjustments. The
decision of said third party accountant on all such points shall be binding upon the Parties.
The cost and expenses of said third party accountant shall be borne equally by the Parties.

 

 

ARTICLE 3

ASSUMPTION AND PARTICIPATION BY BUYER

          3.1 On the Closing Date, Buyer shall, and does hereby expressly agree to incur, assume and
pay, all of the costs, obligations and liabilities of Seller under the Leases, the Contracts and
under all other agreements described in this Agreement or in any Exhibit to this Agreement that
relate to the Properties whether they arise from or relate to events occurring before or after
the Effective Time, provided, however, all such costs attributable to Seller’s interest in the
Properties for all periods prior to the Effective Time shall be accounted for in the Sydson
Post-Closing Adjustments. Buyer agrees, if requested by Seller, to execute any documents or
instruments reasonably requested by Seller to evidence such assumption by Buyer.

          3.2 On the Closing Date, Buyer shall receive all revenues of Seller under the Leases, the
Contracts and under all other agreements described in this Agreement or in any Exhibit to this
Agreement that relate to the Properties whether they arise from or relate to events occurring
before or after the Effective Time, provided, however, all such revenues attributable to
Seller’s interest in the Properties for all periods prior to the Effective Time shall be
accounted for in the Sydson Post-Closing Adjustments. Buyer agrees, if requested by Seller, to
execute any documents or instruments reasonably requested by Seller to evidence such assumption
by Buyer.

          3.3 Buyer agrees and acknowledges that any Working Interests and Net Revenue Interests
stated in this Agreement, or any Exhibit to this Agreement, do not constitute representations or
warranties as to the quantum of interest actually owned by Seller and that any interests in the
Properties conveyed to Buyer shall be subject to its proportionate share, in and to each of the
Project Areas, of any and all lease and overriding royalty burdens of record in the real
property records of the counties in which the Lands are located.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller hereby represents and warrants to Buyer as follows:

          4.1 Organization. Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas and is qualified to do business in and is in
good standing under the laws of the State of Louisiana.

          4.2 Authority and Conflicts. Seller has all requisite company powers and authority
to carry on its business as presently conducted, to enter into this Agreement and to perform its
obligations hereunder. The consummation of the transactions contemplated by this Agreement will
not violate or be in conflict with any provision of Seller’s articles of incorporation or
bylaws, other governing documents or any material agreement or instrument to which Seller is a
party or by which Seller is bound, or any judgment, decree, order, statute,

 

 

rule or regulation applicable to Seller, other than the Contracts and any other agreements
or instruments to which Buyer is already a party.

          4.3 Authorization. The execution, delivery and performance of this Agreement and
the transactions contemplated hereunder have been duly and validly authorized by all requisite
company action on the part of Seller.

          4.4 Enforceability. This Agreement constitutes, and all documents and instruments
required hereunder to be executed and delivered by Seller on the Closing Date will when duly
executed and delivered for value constitute, valid, legal and binding obligations of Seller,
enforceable against Seller, in accordance with their respective terms, subject to applicable
bankruptcy and other similar laws of general application with respect to creditors as well as
the general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).

          4.5 Litigation and Claims. Except as otherwise provided in Exhibit E
attached hereto and made a part hereof, to Seller’s knowledge, there are no demands or suits,
actions or other proceedings pending or threatened before any court or governmental agency
which, taken as a whole, might result in material impairment or loss of Seller’s title to any
part of the Properties or the value thereof, or which might materially hinder or impede the
operation of the Properties taken as a whole.

          4.6 Brokers’ Fees. Seller has incurred no liability, contingent or otherwise, for
brokers’ or finders’ fees with respect to the transactions contemplated by this Agreement for
which Buyer shall have any responsibility whatsoever.

          4.7 Preferential Rights and Consent to Assign. Except as otherwise set forth in
the Contracts, Seller represents there are no third party preferential rights to purchase,
rights of first refusal and/or consents to assign that were created by Seller upon or subsequent
to Seller taking title to the Properties.

          4.8 Title. Subject to Permitted Encumbrances, there are no claims arising by,
through or under Seller which would cause Seller to have less than Defensible Title to the
Properties; the Properties are free and clear of all Liens arising by, through or under Seller,
except for Permitted Encumbrances; and Seller shall convey title to Buyer with a special
warranty, by through and under Seller but not otherwise.

          4.9 Contracts. Seller is not delinquent on any invoice it has received for joint
interest billing that is not otherwise accounted for in the Estimated Sydson Adjustment
Calculations.

          4.10 Non-Reliance. Except to the extent of any representations by Buyer herein,
Seller acknowledges and agrees that it has not relied upon any statements, analysis or
representations by Buyer or its representatives in entering into this Agreement, the
transactions contemplated hereby and Seller acknowledges that it has access to all information
and data it deems necessary to evaluate this transaction, including the Purchase Price to be
paid by Buyer and the other terms and conditions herein.

 

 

          4.11 Disclaimers. THE EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN
THIS ARTICLE 4 ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AND SELLER EXPRESSLY DISCLAIMS ANY AND ALL SUCH OTHER
REPRESENTATIONS AND WARRANTIES, WITHOUT LIMITATION OF THE FOREGOING. EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN THIS ARTICLE 4, THE PROPERTIES SHALL BE CONVEYED TO BUYER WITHOUT ANY
WARRANTY OR REPRESENTATION WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, RELATING TO TITLE
TO THE PROPERTIES OR RELATING TO THE CONDITION, QUANTITY, QUALITY, FITNESS FOR A PARTICULAR
PURPOSE, CONFORMITY TO THE MODELS OR SAMPLES OF MATERIALS OR MERCHANTABILITY OF ANY EQUIPMENT OR
ITS FITNESS FOR ANY PURPOSE, AND, EXCEPT AS PROVIDED OTHERWISE IN THE FIRST SENTENCE OF THIS
PARAGRAPH, WITHOUT ANY OTHER EXPRESS, IMPLIED, STATUTORY OR OTHER WARRANTY OR REPRESENTATION
WHATSOEVER. BUYER SHALL HAVE INSPECTED, OR WAIVED (AND ON THE CLOSING DATE SHALL BE DEEMED TO
HAVE WAIVED) ITS RIGHT TO INSPECT THE PROPERTIES FOR ALL PURPOSES AND SATISFIED ITSELF AS TO
THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT
LIMITED TO CONDITIONS SPECIFICALLY RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS
SUBSTANCES, SOLID WASTES, ASBESTOS AND OTHER MAN MADE FIBERS, OR NATURALLY OCCURRING RADIOACTIVE
MATERIALS (“NORM”). EXCEPT FOR THE REPRESENTATIONS CONTAINED HEREIN IN ARTICLE 4, BUYER IS
RELYING SOLELY UPON ITS OWN INSPECTION OF THE PROPERTIES. BUYER SHALL ACCEPT ALL OF THE SAME IN
THEIR “AS IS”, “WHERE IS” CONDITION. ALSO WITHOUT LIMITATION OF THE FOREGOING, SELLER MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OF
COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW,
HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH THIS AGREEMENT
INCLUDING, WITHOUT LIMITATION, RELATIVE TO PRICING ASSUMPTIONS, OR QUALITY OR QUANTITY OF
HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE PROPERTIES OR THE ABILITY OR POTENTIAL OF THE
PROPERTIES TO PRODUCE HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE PROPERTIES OR ANY OTHER
MATTERS CONTAINED IN ANY MATERIALS FURNISHED OR MADE AVAILABLE TO BUYER BY SELLER OR BY SELLER’S
AGENTS OR REPRESENTATIVES. ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION
AND OTHER MATERIALS (WRITTEN OR ORAL) FURNISHED BY SELLER OR OTHERWISE MADE AVAILABLE OR
DISCLOSED TO BUYER ARE PROVIDED TO BUYER AS A CONVENIENCE AND SHALL NOT CREATE OR GIVE RISE TO
ANY LIABILITY OF OR AGAINST SELLER AND ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT BUYER’S
SOLE RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW.

 

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer represents to Seller as follows:

          5.1 Organization. Buyer is a Delaware limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware and authorized to
conduct business in the State in which the Properties are located.

          5.2 Authority and Conflicts. Buyer has all requisite company powers and authority
to carry on its business as presently conducted, to enter into this Agreement, to purchase the
Properties on the terms and conditions described in this Agreement, and to perform its other
obligations under this Agreement. The consummation of the transactions contemplated by this
Agreement will not violate nor be in conflict with any provision of Buyer’s company agreement
and any other governing documents or any material agreement or instrument to which Buyer is a
party or by which Buyer is bound, or any judgment, decree, order, statute, rule or regulation
applicable to Buyer.

          5.3 Authorization. The execution, delivery and performance of this Agreement and
the transactions contemplated hereunder have been duly and validly authorized by all requisite
partnership action on the part of Buyer.

          5.4 Enforceability. This Agreement and all documents and instruments required or
contemplated hereunder to be executed and delivered by Buyer on the Closing Date will, when duly
executed and delivered for value, constitute valid, legal and binding obligations of Buyer,
enforceable against Buyer, in accordance with their respective terms, subject only to applicable
bankruptcy and other similar laws of general application with respect to creditors.

          5.5 Litigation and Claims. Buyer has no knowledge of any suit, action, claim,
investigation or inquiry by any person or entity or by any administrative agency or governmental
body and no legal, administrative or arbitration proceeding pending or, to Buyer’s knowledge,
threatened against Buyer or any affiliate of Buyer which has or will materially and adversely
affect Buyer’s ability to consummate the transactions contemplated herein.

          5.6 Brokers’ Fees. Buyer has incurred no liability contingent or otherwise, for
brokers’ or finders’ fees with respect to the transactions contemplated by this Agreement for
which Seller shall have any responsibility whatsoever.

          5.7 Non-Reliance. Except to the extent of any representations by Seller herein,
Buyer acknowledges and agrees that it has not relied upon any statements, analysis or
representations by Seller or its representatives in entering into this Agreement, the
transactions contemplated hereby and Buyer acknowledges that it has access to all information
and data it deems necessary to evaluate this transaction, including the Sydson Purchase Price to
be paid to Seller and the other terms and conditions herein.

 

 

ARTICLE 6

DUE DILIGENCE REVIEW BY BUYER

          6.1 Due Diligence. Seller acknowledges that prior to the Closing Date, Buyer, or
Buyer’s authorized representatives, have been given access to Seller’s records pertaining to the
ownership and/or operation of the Properties (including, without limitation, title files,
division order files, and production, severance and ad valorem tax records), for the purpose of
conducting due diligence reviews. Buyer has conducted, at its sole cost, such title examination
or investigation, and other examinations and investigations, as it has in its sole discretion
chosen to conduct with respect to the Properties.

          6.2 Due Diligence Indemnity. Buyer hereby INDEMNIFIES and SHALL DEFEND AND HOLD
HARMLESS Seller and its respective employees, agents, representatives, contractors, successors,
and assigns from and against any and all Claims arising from or relating to Buyer’s physical
inspection of the Properties. THE FOREGOING INDEMNITY INCLUDES, AND THE PARTIES INTEND IT TO
INCLUDE, AN INDEMNIFICATION OF THE INDEMNIFIED PARTIES FROM AND AGAINST CLAIMS ARISING OUT OF OR
RESULTING, IN WHOLE OR PART, FROM THE CONDITION OF THE PROPERTY OR THE SOLE, JOINT, COMPARATIVE,
OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.

ARTICLE 7

THE CLOSING AND FINAL SETTLEMENT DATE

          7.1 Closing. The closing (the “Closing”) of the transaction contemplated by this
Agreement shall be on the Closing Date at the offices of Buyer, whose address is 15415 Katy
Freeway, Suite 800, Houston, Texas 77094.

          7.2 Deliveries by Seller at Closing. The obligations of the Buyer under this
Agreement shall not become effective until, Seller shall have executed and delivered to Buyer at
the Closing:

	 	(a)	 	An Assignment and Bill of Sale assigning the Properties to
Buyer, substantially the form of the assignment attached hereto as Exhibit
F in sufficient counterparts to facilitate recording;
	 
	 	(b)	 	Letters-in-Lieu of Division Orders or Transfer Orders or such
other documents necessary to provide notice to each purchaser of production
from the Properties of the change in ownership of the Properties and
instructing each such purchaser to make all future payments directly to Buyer;
	 
	 	(c)	 	A certificate pursuant to Internal Revenue Code Section 1445,
in the form of Exhibit G certifying that Seller is not a foreign
person;

 

 

	 	(d)	 	A fully executed and recordable Release of Lien in sufficient
counterparts for any and all mortgages or other similar liens affecting
Seller’s interest in the Properties; and
	 
	 	(e)	 	The Mutual Release.

          7.3 Deliveries by Buyer at Closing. The obligations of the Seller under this
Agreement shall not become effective until Buyer shall have executed and/or delivered to Seller
at the Closing:

	 	(a)	 	The Assignment and Bill of Sale;
	 
	 	(b)	 	The Sydson Purchase Price (as prescribed to be adjusted under
the terms of this Agreement) by wire transfer in immediately available funds to
an account designated by Seller; and
	 
	 	(c)	 	The Mutual Release.

          7.4 Deliveries by Seller at Sydson Final Settlement Date. At the Sydson Final
Settlement Date, and pursuant to Article 2.4, if the Sydson Final Purchase Price is less than
the Sydson Net Closing Amount, Seller shall pay to Buyer the balance of such difference by wire
transfer of immediately available funds.

          7.5 Deliveries by Buyer at Sydson Final Settlement Date. At the Sydson Final
Settlement Date, pursuant to Article 2.4, if the Sydson Final Purchase Price is greater than the
Sydson Net Closing Amount, Buyer shall pay to Seller the balance of such difference by wire
transfer of immediately available funds.

ARTICLE 8

NON-COMPETE

     For a period of five (5) years from the Effective Time, Seller agrees not to acquire directly
or indirectly any oil and gas lease, royalty, overriding royalty, farmout, option, exploration
agreement or mineral interest of any kind within the Project Areas without the prior written
consent of Buyer.

ARTICLE 9

SURVIVAL, INDEMNIFICATION AND RELEASE

          9.1 Survival. Except as set forth in this Article 9, all representations and
warranties contained in this Agreement shall terminate on the Closing Date. All other
agreements and covenants of the Parties shall survive the execution and delivery of the
assignments of the Properties to Buyer by Seller.

          9.2 Indemnification by Seller. From and after the Closing Date, except for the
Assumed Environmental Obligations and the matters for which Buyer indemnifies Seller

 

 

under Article 9.4, Seller shall indemnify, defend and hold Buyer harmless from and against
any and all Claims suffered by Buyer as a result of (a) any brokers’ or finders’ fees or
commissions arising with respect to brokers or finders retained or engaged by Seller and
resulting from or relating to the transactions contemplated in this Agreement; (b) the breach
of, or failure to perform or satisfy, any of the covenants of Seller set forth in this Agreement
which are to be performed after the Closing Date; and (c) breach of any representation or
warranty of Seller set forth in this Agreement, except for a breach of Article 4.8. Seller’s
indemnity obligations under this Article 9.2 shall expire as to any claim for indemnification
not asserted by Buyer within twelve (12) months after the Closing Date. In no event shall
Seller’s indemnity obligation under this Article 9.2 exceed ten (10) percent of the Sydson Net
Closing Amount. The terms and provisions of this Article 9.2 shall be the sole and exclusive
remedy of each of the persons indemnified hereunder with respect to the indemnified matters,
regardless of whether such Claims are based on contract, tort, strict liability, or other
principles.

     9.3 Buyer’s Assumed Environmental Obligations. On and after the Closing Date,
Buyer shall assume, bear and pay all costs of the following with respect to the interests of
Seller in the Properties assigned to Buyer (collectively, the “Assumed Environmental
Obligations”) for:

	 	(a)	 	any plugging and abandonment and surface restoration
obligations related to the Wells whether arising before, on or after the
Effective Time;
	 
	 	(b)	 	the following occurrences, events, conditions and activities
on, or related or attributable to the ownership or operation of, the
Properties, regardless of whether arising from the ownership or operation of
the Properties before, on, or after the Effective Time, and regardless of
whether resulting from any negligent acts or omissions or strict liability of
Seller, its partners, officers, directors, agents, and contractors:

	 	(i)	 	Environmental pollution or contamination,
including pollution or contamination of the soil, groundwater or air by
oil and gas, brine, NORM or otherwise;
	 
	 	(ii)	 	Underground injection activities and waste
disposal;
	 
	 	(iii)	 	Clean-up responses, and the cost of
remediation, control, assessment or compliance with respect to surface
and subsurface pollution caused by spills, pits, ponds, lagoons or
subsurface storage tanks;
	 
	 	(iv)	 	Disposal on the Properties of any hazardous
substances, wastes, materials and products generated by or used in
connection with the ownership or operation of the Properties; and
	 
	 	(v)	 	Contractual liability for items of the type
described under subsections (i) through (iv) above.

 

 

     9.4 Indemnification by Buyer. To the extent permitted by law and in addition to
the indemnifications provided in the Assignment and Bill of Sale, Buyer, from and after the
Closing Date, shall release, indemnify, defend and hold Seller and its owners, affiliates,
officers, directors and employees (the “Seller Group”) harmless from and against any and all
Claims suffered by Seller Group as a result of or relating to any of the following: (a) any
liability or obligation relating to or arising from the ownership or operation of the Properties
on and after the Effective Time; (b) any brokers’ or finders’ fees or commissions arising with
respect to brokers or finders retained or engaged by Buyer and resulting from or relating to the
transactions contemplated in this Agreement; (c) the breach of any representation or warranty of
Buyer set forth in this Agreement; (d) the breach of, or failure to perform or satisfy any of
the covenants of Buyer set forth in this Agreement; (e) the Assumed Environmental Obligations,
regardless of whether the Assumed Environmental Obligations relate to conditions arising before
or after the Effective Time; and (f) any liability to Murphy due to Seller’s failure to obtain a
waiver of any preferential right of Murphy to purchase the Properties or any consent to assign
the Properties not obtained from Murphy prior to the Closing Date.

     9.5 Indemnity Threshold. Neither Seller nor Buyer shall have any liability for
Claims under the indemnity provided in this Article 9 until the aggregate of all Claims suffered
by Seller or Buyer, respectively, exceeds TWENTY-FIVE THOUSAND DOLLARS ($25,000.00), and then
only to the extent of such excess.

     9.6 Express Negligence Disclosure. UNLESS THIS AGREEMENT EXPRESSLY PROVIDES TO THE
CONTRARY, THE INDEMNITY, RELEASE, WAIVER AND ASSUMPTION PROVISIONS SET FORTH IN THIS AGREEMENT
APPLY REGARDLESS OF WHETHER THE INDEMNIFIED PARTY (OR ITS EMPLOYEES, PARTNERS, AGENTS,
CONTRACTORS, SUCCESSORS OR ASSIGNS) CAUSES, IN WHOLE OR PART, AN INDEMNIFIED CLAIM, INCLUDING
WITHOUT LIMITATION INDEMNIFIED CLAIMS ARISING OUT OF OR RESULTING, IN WHOLE OR IN PART, FROM,
OUT OF OR IN CONNECTION WITH THE CONDITION OF THE PROPERTY OR THE INDEMNIFIED PARTY’S (OR ITS
EMPLOYEES’, PARTNERS’, AGENTS’, REPRESENTATIVES’, CONTRACTORS’, SUCCESSORS’ OR ASSIGNS’) SOLE,
JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE, BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT,
STRICT LIABILITY, BREACH OF REPRESENTATION, WARRANTY OR AGREEMENT, OR FAULT. THE PARTIES
ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.

ARTICLE 10

ADDITIONAL PROVISIONS

     10.1 Further Assurances. After the Closing Date, each of the Parties will execute,
acknowledge and deliver to the other such further instruments, and take such other action as may
be reasonably requested in order to more effectively assure said Party all of the respective
properties, rights, titles, interests, estates, and privileges intended to be assigned,

 

 

delivered or inuring to the benefit of such Party in consummation of the transactions
contemplated hereby.

     10.2 Notices. All communications required or permitted under this Agreement shall
be in writing and any communication or delivery hereunder shall be deemed to have been duly
given and received when actually delivered to the address set forth below of the party to be
notified, addressed as follows:

	 	 	 	 	 	 	 

	 	 	If to Seller:	 	Sydson Energy, Inc.
	 	 	 	 	4600 Post Oak Place, Suite 306
	 	 	 	 	Houston, TX 77027
	 
	 	 	 	Attn:	 	Michael J. Mayell
	 
	 	 	 	Phone:	 	713-820-6300
	 
	 	 	 	Facsimile:	 	713-715-1573
	 
	 	 	 	E-Mail:	 	mmayell@sydson.com
	 
	 	 	 	 	 	 
	 	 	If to Buyer:	 	Alta Mesa Energy, LLC
	 	 	 	 	c/o Alta Mesa Holdings, L.P.
	 	 	 	 	15415 Katy Freeway, Suite 800
	 	 	 	 	Houston, Texas 77094
	 
	 	 	 	Attn:	 	F. David Murrell
	 
	 	 	 	 	 	Vice President Land
	 
	 	 	 	Phone:	 	281.530.0991
	 
	 	 	 	Facsimile:	 	281.530.5278
	 
	 	 	 	E-Mail:	 	dmurrell@altamesa.net

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

          10.3 Expenses. Buyer shall bear and pay all filing, recording or registration fees
for any assignment or conveyance delivered hereunder. Each Party shall bear its own respective
expenses incurred in connection with the closing of this transaction, including its own
consultants’ fees, attorneys’ fees, accountants’ fees and other similar costs and expenses.

          10.4 No Partnership. This Agreement is not intended to create and shall not be
construed as creating a partnership, joint venture or other association between Seller and
Buyer. The respective rights and obligations of the parties hereto shall in all respects be
several and be governed by the express provisions of this Agreement and the Contracts.

          10.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF
CONFLICTS OF LAWS.

          10.6 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by reason of any rule of law or public policy, all other

 

 

conditions and provisions of this Agreement shall nevertheless remain in full force and
effect so long as neither the economic nor legal substance of the transactions contemplated
hereby is materially affected in any adverse manner to either Buyer or Seller. Upon such
determination that any term or other provision is invalid, illegal or incapable of being
enforce, the parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an acceptable manner to the
end that the transaction contemplated hereby are fulfilled to the extent possible.

          10.7 Assignment. Neither Seller nor Buyer may assign their respective rights or
delegate their respective duties or obligations arising under this Agreement without the prior
written consent of the other Party.

          10.8 Integration. This Agreement, the Exhibits and Schedules hereto, the
confidentiality agreement in Article 10.17 and the other agreements to be entered into by the
Parties under the provisions of this Agreement set forth the entire agreement and understanding
of the Parties in respect of the transactions contemplated hereby and supersede all prior
agreements, prior arrangements and prior understandings relating to the subject matter hereof.
No representation, promise, inducement or statement of intention has been made by Seller or
Buyer that is not embodied in this Agreement or in the documents referred to herein, and neither
Seller nor Buyer shall be bound by or liable for any alleged representation, promise, inducement
or statement of intention not so set forth.

          10.9 Waiver or Modification. This Agreement may be amended, modified, superseded
or canceled, and any of the terms, covenants, representations, warranties or conditions hereof
may be waived, only by a written instrument executed by Seller and Buyer, or, in the case of a
waiver or consent, by or on behalf of the Party or Parties waiving compliance or giving such
consent. The failure of any Party at any time or times to require performance of any provision
hereof shall in no manner affect its right at a later time to enforce the same. No waiver by
any Party of any condition, or of any breach of any covenant, agreement, representation or
warranty contained in this Agreement, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or waiver of any
other condition or of any breach of any other covenant, agreement, representation or warranty.

          10.10 Heading. The section headings contained in this Agreement are for convenient
reference only and shall not in any way affect the meaning or interpretation of this Agreement.
All references to a “section” or “Exhibit” shall refer to a section contained in this Agreement
or an Exhibit attached to this Agreement.

          10.11 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future Laws effective during the term hereof,
such provision shall be fully severable; this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part hereof; and the
remaining provisions of this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance from this
Agreement.

 

 

          10.12 Public Announcements. No Party may make press releases or other public
announcements concerning this transaction without the other’s prior written approval and
agreement to the form of the announcement, except as may be required by applicable laws or rules
and regulation of any governmental agency or stock exchange.

          10.13 Interpretation. The Parties stipulate and agree that this Agreement shall be
deemed and considered for all purposes to have been jointly prepared by the Parties, and shall
not be construed against any one Party (nor shall any inference or presumption be made) on the
basis of who drafted this Agreement or any particular provision hereof, who supplied the form of
Agreement, or any other event of the negotiation, drafting or execution of this Agreement. Each
Party agrees that this Agreement has been purposefully drawn and correctly reflects its
understanding of the transaction that it contemplates. In construing this Agreement, the
following principles will apply.

	 	(a)	 	Defined terms in this Agreement are denoted by quotation marks.
A defined term has its defined meaning throughout this Agreement and each
Exhibit and Schedule to this Agreement, regardless of whether it appears before
or after the place where it is defined.
	 
	 	(b)	 	If there is any conflict or inconsistency between the
provisions of the main body of this Agreement and the provisions of any Exhibit
or Schedule hereto, the provisions of this Agreement shall take precedence. If
there is any conflict between the provisions of any pro forma assignment
document or other transaction documents attached to this Agreement as an
Exhibit or Schedule and the provisions of any assignment documents and other
transaction documents actually executed by the Parties, the provisions of the
executed assignment documents and other executed transaction documents shall
take precedence.
	 
	 	(c)	 	To the fullest extent permitted by law, all provisions of this
Agreement are hereby deemed incorporated into the Assignments by reference.
	 
	 	(d)	 	The Article, Section, Exhibit and Schedule references in this
Agreement refer to the Articles, Sections, Exhibits and Schedules of this
Agreement. The headings and titles in this Agreement are for convenience only
and shall have no significance in interpreting or otherwise affect the meaning
of this Agreement.
	 
	 	(e)	 	The term “knowledge,” as applied to each Party, shall mean the
actual knowledge of such Party or such Party’s officers, managers, partners and
directors.
	 
	 	(f)	 	The plural shall be deemed to include the singular, and vice
versa.
	 
	 	(g)	 	The term “including” means “including, without limitation.”
	 
	 	(h)	 	The term “Person” (whether or not capitalized) means any
individual, corporation, partnership, limited liability company, joint venture,

 

 

	 	 	 	association, joint-stock company, trust, enterprise, unincorporated
organization, or governmental entity.

          10.14 Third-Party Beneficiaries. It is understood and agreed that there shall be
no third-party beneficiary of this Agreement, and that the provisions hereof do not impart
enforceable rights, benefits, or remedies in anyone who is not a Party or a successor of a Party
hereto.

          10.15 Waiver of Deceptive Trade Practices Act. As partial consideration for this
Agreement, each Party hereby expressly waives the provisions of the Texas Deceptive Trade
Practices Consumer Protection Act, Articles 17.41 et seq. of the Texas Business & Commerce Code,
other than Article 17.555 which is not waived, and all other consumer protection laws of the
State of Texas that may be waived by the Parties to the extent permitted by applicable law. Each
Party represents to the other that such Party has had an adequate opportunity to submit this
waiver to legal counsel for review and comment, and understands the rights being waived herein.

          10.16 Multiple Counterparts. This Agreement may be executed in a number of
identical counterparts, each of which for all purposes is to be deemed as original, and all of
which constitute, collectively, one agreement; but in making proof of this Agreement, it shall
not be necessary to produce or account for more than one such counterpart.

          10.17 Confidentiality. Buyer and Seller agree to keep this Agreement and the terms
hereof confidential, except as it may be required to be disclosed by law or by the rules of any
stock exchange.

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized officers as of the date first above written.

	 	 	 	 	 
	 	

SELLER:

SYDSON ENERGY, INC.

 	 
	 	
/s/  Michael J. Mayell
 	 
	 	Michael J. Mayell 	 
	 	President 	 
	 
	 	BUYER:

ALTA MESA ENERGY, LLC

 	 
	 	/s/ Harlan H. Chappelle
 	 
	 	Harlan H. Chappelle 	 
	 	President

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