Document:

exv10w3

Exhibit 10.3

PURCHASE AND SALE AGREEMENT

     This Purchase and Sale Agreement (the “Agreement”) is entered into this
17th day of June, 2011 (the “Closing Date”), by and among Texas Oil Distribution
& Development, Inc., whose address is 1401 Enclave Parkway, Suite 400, Houston, Texas 77077
(“TODD” ), JAR Resource Holdings, L.P. whose address is 1401 Enclave Parkway, Suite 300,
Houston, Texas 77077 (“JAR”), Joseph A. Reeves, Jr. whose address is 11211 Wilding Lane,
Houston, Texas 77024 (“J. Reeves”), Dianne S. Reeves whose address is 11211 Wilding Lane,
Houston, Texas 77024 (“D. Reeves”, and together with TODD, JAR, and J. Reeves, the
“Seller” or the “Reeves Parties”) and Alta Mesa Energy, LLC, whose address is 15415
Katy Freeway, Suite 800, Houston, Texas 77094 (“Alta Mesa” or “Buyer”). Seller and
Buyer may be referred to herein individually as a “Party” or collectively as the
“Parties”.

WITNESSETH

     WHEREAS, Seller represents that it is the owner of certain leasehold interests and net profits
overriding royalty interests in the Conveyed Properties and Retained Properties that Seller earned
and acquired from The Meridian Resource Corporation (“TMR”); TMR subsidiary TMRX (formerly
known as Texas Meridian Resources Exploration, Inc.); Louisiana Onshore Properties LLC
(“LOPI”), (formerly known as Louisiana Onshore Properties Inc.); and Cairn Energy USA, Inc.
(“Cairn”, and together with TMR, TMRX, LOPI, the “Meridian Parties”), pursuant to
the Reeves/Meridian Agreements (each as hereinafter defined); and

     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 Conveyed Properties, as defined and
described in Article 1.6, LESS AND EXCEPT, and EXPRESSLY EXCLUDING Seller’s Retained Interest, as
hereinafter defined and described in Article 1.18.

     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 “Alta Mesa” has the meaning set forth in the introductory
paragraph to this Agreement.

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

 

 

     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 Conveyed
Properties or Retained 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 June 17, 2011.

     1.6 “Conveyed Properties” means all right, title and interest of
Seller, as of the Closing Date, in and to the following; less and except and
specifically excluding Seller’s Retained Interest (as more particularly described
and defined in Article 1.18 hereinbelow):

     (a) To the extent acquired from, through and under the Meridian
Parties (whether or not pursuant to the Reeves/Meridian Agreements), the
estates created by the oil, gas and mineral leases and other oil and gas
interests described on Exhibit A (the “Conveyed Leases”), and the
lands covered thereby (the “Conveyed Lands”), and any and all oil
and gas interests located in the Project Areas described on Exhibit A,
together with all property and rights incident thereto including all rights
and interests in any unit or pooled area in which the Conveyed Leases and/or
Conveyed Lands are included, to the extent that such rights and interests
arise from and are associated with the Conveyed Leases and/or Conveyed
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 Conveyed Leases and Conveyed Lands whether or not
specifically described on Exhibit A;

     (b) The oil and gas wells located on the Conveyed Leases and/or
Conveyed Lands, or other leases and/or lands pooled therewith, including,
without limitation, the wells described on Exhibit B (“Conveyed
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
Conveyed Leases and Conveyed Lands that are necessary or incidental to
possession and enjoyment thereof or any interest therein under the terms of
the Conveyed 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
Conveyed Leases, Conveyed Lands and the Conveyed Wells, and any and all
other agreements, contracts and rights derived therefrom or acquired by,
through, or under the Meridian Parties and/or their predecessors,
subsidiaries, parents or affiliates, expressly excluding from this
Agreement, the rights and interests of Seller in, to and under the
Reeves/Meridian Agreements as defined and described in Article 1.18;

     (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 Conveyed Leases, Conveyed Lands and/or
Conveyed 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 (subject to the 2011 Split)
attributable to the Conveyed Leases, Conveyed Lands and Conveyed 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 Conveyed Leases, Conveyed Lands and/or Conveyed
Wells, appurtenant thereto, or directly used or obtained in

 

 

connection with the Conveyed Leases or lands pooled therewith and the
Conveyed Lands and/or Conveyed 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 Conveyed Wells, Conveyed Leases and/or
Conveyed Lands (collectively, the “Conveyed Equipment”); and,

     (h) To the extent Seller is not prohibited from such transfer by
any licensing or use agreement between Seller and a 3rd party,
and to the extent Buyer does not already possess, 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 Conveyed Leases, Conveyed
Lands and/or Conveyed Wells.

     The Conveyed 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 Conveyed Leases, Conveyed Lands and the Conveyed Well
Interest, and any and all other agreements, contracts and rights derived therefrom
or acquired by, through, or under the Meridian Parties and/or their predecessors,
subsidiaries, parents or affiliates (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, net profits interests, payments out of
production, and easements and rights-of-way of record.

     1.7 “Effective Time” means 12:01 a.m., Central Standard Time on
June 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 Texas Oil Distribution &
Development, Inc. and Texas Meridian Resources Exploration, Inc. (predecessor to The
Meridian Resources Corporation), together with all joint operating agreements,
attachments, exhibits and/or other agreements, if any, attached thereto, arising
therefrom or related thereto.

     1.10 “Mutual Release” means that certain mutual and final release
of all claims related to Cause No. 2010-78217 styled Texas Oil Distribution &
Development, Inc. and Matrix Petroleum, LLC v. Alta Mesa Holdings, L.P. and The
Meridian Resource & Exploration LLC pending before the 333rd Judicial

 

 

District Court of Harris County, Texas, as set forth in that certain 2011
Settlement and Release Agreement as defined and described in Article 1.21 and
executed contemporaneously with this Agreement.

     1.11 “NPI Agreement” means that certain agreement dated June 27,
1995 but effective as of January 1, 1994 between Joseph A. Reeves, Jr. and Texas
Meridian Resources Corporation (predecessor to The Meridian Resource Corporation)
concerning net profits interests to be earned by J. Reeves thereunder (“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, and a
Termination Agreement as of April 29, 2008 relating to the Original NPI Agreement; ,
together with all joint operating agreements, attachments, exhibits and/or other
agreements, if any, attached thereto, arising therefrom or related thereto.

     1.12 “Omnibus Agreement” means that certain agreement dated
December 22, 2009, by and among Joseph A. Reeves, Jr., Texas Oil Distribution &
Development, Inc., JAR Resource Holdings, L.P., The Meridian Resources & Exploration
LLC, Louisiana Onshore Properties LLC, and Cairn Energy USA, Inc, together with all
joint operating agreements, attachments, exhibits and/or other agreements, if any,
attached thereto, arising therefrom or related thereto.

     1.13 “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 existing as of the Closing Date, except to the extent
created by, through or under Seller; (c) the consents and rights contained in the
Contracts or the Conveyed Leases; and (d) production sale contracts, unitization and
pooling declarations and agreements, and any operating agreements existing as of the
Closing Date; (e) normal and customary liens of co-owners under operating
agreements, unitization agreements, and pooling orders relating to the Conveyed
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 Conveyed 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 Conveyed Property encumbered thereby or
materially impair the ability of the obligor to use any such Conveyed 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 Conveyed Properties under this Agreement or the
period has expired in which the holder may exercise such rights, including, but not
limited to, the waiver of rights by the Meridian Parties as set forth in Article
7.3(d), hereinbelow; 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.

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

     1.15 “Reeves/Meridian Agreements” means, collectively, the Master
Participation Agreement (see Article 1.9); the NPI Agreement (see Article 1.11); the
Omnibus Agreement (see Article 1.12); and the 2009 Settlement and Release Agreement
(see Article 1.20).

     1.16 “Reeves Parties” has the meaning set forth in the introductory
paragraph to this Agreement.

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

     1.18 “Seller’s Retained Interest” means any property, right, title
or other interest of Seller not specifically described in Article 1.6 (the Conveyed
Properties); including, but not limited to, the following specifically described
interests of Seller which are conspicuously and expressly EXCEPTED, RESERVED and
EXCLUDED from assignment, conveyance or transfer to Buyer and are fully retained by
Seller:

     (a) An undivided four percent of eight-eighths (4% of 8/8ths)
working interest in and to the oil and gas leases, leasehold rights and/or
interests, or other leases and/or lands pooled therewith, and the lands
covered thereby, more particularly set forth and described on Exhibit C
(“Retained Properties”), together with all property and rights
incident thereto including all rights and interests in any unit or pooled
area in which the Retained Properties are included, to the extent that such
rights and interests arise from and are associated with the Retained
Properties, 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, and the oil and gas wells located on the Retained
Properties, or other leases and/or lands pooled therewith, including,
without limitation, the oil and gas wells located on the Retained Properties
and described on Exhibit D (“Retained Interest Wells”), attached
hereto and incorporated herein by reference, together with all rights,
titles and interests arising out of the pooling, unitization or
communitization of the Retained Properties and/or Retained Interest Wells;

     (b) Equal and concurrent rights in 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
Retained Properties and/or Retained Interest Wells, appurtenant thereto, or
directly used or obtained in connection with the Retained Properties or
lands pooled therewith and the Retained Properties and/or Retained Interest
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
Retained Interest Wells and Retained Properties (collectively, the
“Retained Equipment”) in and to all surface and subsurface
facilities and equipment; fixtures; personal property and improvements that
are held or used in connection with the Retained Properties or Retained
Interest Wells at any time;

     (c) All Oil and Gas produced from or attributable to the Conveyed
Properties, and all revenue therefrom, before the Effective Time (and
pursuant to the 2011 Split), and all claims and/or rights to assert a claim
thereto;

     (d) All Oil and Gas produced from or attributable to the Retained
Properties and/or Retained Interest Wells, and all revenue therefrom,
whether before or after the Effective Time, and all claims and/or rights to
assert a claim thereto;

     (e) Equal and concurrent rights in and to any contracts and surface
rights, including rights of ingress and egress, that are appurtenant to or
used in connection with the Retained Properties and/or Retained Interest
Wells, and all rights, titles and interests under contracts and surface
rights to the extent that they cover or affect lands outside the vertical
boundary of the Retained Properties, including, without limitation, all
rights, titles and interests in outside lands that are attributable to area
of mutual interest provisions or similar agreements;

     (f) Equal and concurrent rights with Buyer to conduct, or to
authorize others to conduct, seismic and other geophysical surveys on the
Retained Properties, so long as such operations do not unreasonably
interfere with operations thereon; and, to the extent Buyer is not
prohibited from such transfer by any licensing or use agreement between
Buyer and a 3rd party, and to the extent Seller does not already
possess, geological, geophysical and seismic data, owned by Buyer in whole
or in part, to the extent they are used or held for use in connection with
Seller’s Retained Interest;

 

 

     (g) All of Seller’s right, title and interest in, to and under 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 Retained Properties
and Retained Well Interest, and any and all other agreements, contracts and
rights derived therefrom, including, but not limited to, any agreements,
contracts or other documents arising out of that certain Acreage
Participation and Exploration Agreement, dated June 17, 2011, by and among
Murphy Exploration & Production-USA (“Murphy”), Seller and Buyer;

     (h) All right, title and interest in, to and under any and/or all of
the Reeves/Meridian Agreements necessary and sufficient to pursue any and
all legal and equitable claims and causes of action, of any character or
description, against any person or entity (including, without limitation,
SandRidge Exchange Company, LLC, its parents, affiliates, subsidiaries, and
successors in interest — collectively, “SandRidge”), but
not against Buyer or the Meridian Parties, their officers,
directors, employees, consultants, or agents relating in any way to an
entitlement in favor of the Reeves Parties to any interest (including,
without limitation, any overriding royalty interest and/or net profits
interest) under any and/or all of the Reeves/Meridian Agreements, whether
arising out of SandRidge’s assumption of TMRX’s obligations under the
Reeves/Meridian Agreements as set forth in that certain General Conveyance
dated February 6, 2008, by and between TMRX and SandRidge, filed of record
on March 28, 2008, as Document No. 3405, at Book 1896, Page 197 of Official
Records of Garfield County, State of Oklahoma, State of Oklahoma or
otherwise applicable law; and any oil, gas or mineral lease, or any renewal
or extension thereof, by SandRidge covering any interest, in whole or in
part, in the lands described in (i) the aforementioned Document No. 3405
(Book 1896/Page 197, Garfield County Official Records, State of Oklahoma),
or (ii) that certain Assignment of Net Profits Interest dated April 7, 2007
from TMRX to J. Reeves, filed of record on June 21, 2007, as Document No.
7721, at Book 1861, Page 570 of the Official Records of Garfield County,
Oklahoma. That is, through this Agreement, Seller is reserving any and all
rights necessary to claim and/or enforce their interests against SandRidge,
or its parent(s), subsidiaries, joint-venturers, assignors or successors
(but not against Buyer or the Meridian Parties, their officers,
directors, employees, consultants, or agents) (“Seller’s Retained
Rights”); and

     (i) All right, title, and interest in, to and under any and/or all
of the Reeves/Meridian Agreements necessary to provide the Reeves Parties,
and their heirs, successors, assigns, affiliates or subsidiaries, including
Seller, with the following under the Reeves/Meridian Agreements: (a) all
releases in favor of any of the Reeves Parties and/or Seller, including,
without limitation, those provided for in Section 2 of the 2009 Settlement

 

 

and Release Agreement; (b) all defense and indemnification rights granted to
or in favor of any of the Reeves Parties and/or Seller including, without
limitation, those provided for in Section 7(b) of the 2009 Settlement and
Release Agreement; and (c) all right, title and interest necessary and
sufficient for any of the Reeves Parties to defend against or obtain defense
and indemnification with respect to any legal and/or equitable claim and/or
cause of action of any character or description brought against them by any
person or entity (including, but not limited to Buyer) relating in any way,
touching, or arising out of the Reeves/Meridian Agreements (“Seller’s
Retained Protections”).

     Notwithstanding anything herein, or in the Reeves/Meridian Agreements, to the
contrary, the Parties hereby agree the Seller’s Retained Interest, including but not
limited to, the Retained Properties and the Retained Interest Wells are not
presently and shall in no way be burdened by, and shall be free and clear of all
burdens save and accept Seller’s proportionate share of any lessor royalties created
by the leases set forth and described on Exhibit C.

     1.19 “Specified Employees” means, collectively, J. Andrew Reeves
and Jeff Robinson.

     1.20 “2009 Settlement and Release Agreement” means that certain
agreement dated December 22, 2009, by and among The Meridian Resource Corporation
and Joseph A. Reeves, Jr., Texas Oil Distribution & Development, Inc., and JAR
Resource Holdings, L.P.

     1.21 “2011 Settlement and Release Agreement” means that certain
agreement dated June 17, 2011, by and among TODD, J. Reeves, D. Reeves, JAR, Matrix,
Alta Mesa Holdings, L.P. and The Meridian Resource & Exploration, LLC and its
predecessors in interest, including, without limitation, Texas Meridian Resources
Corporation, Texas Meridian Resources Exploration, Inc., The Meridian Resources
Corporation, and The Meridian Resource Corporation.

     1.22 “2011 Split” means the fifty percent (50%)/fifty percent (50%)
allocation between the Buyer and Seller of revenues and expenses attributable to the
Conveyed Properties with respect to time periods on or after the Effective Time and
up to 11:59 p.m, Central Standard Time on the Closing Date, as set forth in Section
2.3(b).

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 Conveyed Properties, including, without limitation, all rights pursuant to
the

 

 

Reeves/Meridian Agreements insofar as they relate or apply to the Conveyed Properties,
except and excluding the rights reserved by Seller in Article 1.18, effective as of the
Effective Time, and Buyer agrees to buy and accept such right, title and interest in the
Conveyed Properties from Seller on the Closing Date, effective as of the Effective Time.

     Seller’s conveyance and transfer of the Conveyed Properties specifically, conspicuously and
expressly excepts and excludes Seller’s Retained Interest as set forth in Article 1.18
hereinabove.

     2.2 Purchase Price. Twenty-Two Million, Five Hundred Thousand and No/100
Dollars ($22,500,000.00) (the “Purchase Price”) shall be paid by Buyer to Seller
pursuant to an allocation provided by Seller, in immediately available funds on or before the
Closing Date.

     2.3 Accounting for Expenses and Proceeds of Production and Sales / Post-Closing
Adjustments.

     (a) On July 1, 2011, Buyer shall disburse Seller’s revenue then accrued up through the last
day of the prior month to the extent received and processed by Buyer with regard to the Retained
Properties and Conveyed Properties taking into account all revenues and expenses, including ad
valorem and production taxes, attributable to operations on or production from the Conveyed
Properties and Retained Properties.

     (b) Within ninety (90) days after the Closing Date, Buyer shall prepare and deliver to
Seller, in accordance with generally accepted accounting principles, a statement (the “Final
Settlement Statement”) setting forth each adjustment or payment by which the Purchase Price
is to be adjusted on the Final Settlement Date to allocate to Seller (i) all un-received
revenues and unpaid expenses, including ad valorem and production taxes, as offset by an
applicable credits, refunds or other such benefits owed Seller, attributable to operations on or
production from the Conveyed Properties with respect to time periods prior to the Effective Time
(taking into account payment(s) made to Seller pursuant to Article 2.3(a), above) and (ii) fifty
percent (50%) of all un-received revenues and unpaid expenses, including ad valorem and
production taxes, as offset by an applicable credits, refunds or other such benefits owed
Seller, attributable to operations on or production from the Conveyed Properties with respect to
time periods on or after the Effective Time and up to 11:59 p.m., Central Standard Time on the
Closing Date; to allocate to Seller all un-received revenues and unpaid expenses attributable to
operations on or production from the Retained Properties with respect to time periods prior to,
on and after the Effective Time (taking into account payments made to Seller pursuant to Article
2.3(a), above); and to allocate to Buyer (x) all revenues and expenses attributable to the
Conveyed Properties with respect to time periods after 11:59 p.m., Central Standard Time on the
Closing Date which may have been received by or paid to Seller and (y) fifty percent (50%) of
all revenues and expenses attributable to the Conveyed Properties with respect to time periods
on or after the Effective Time and up to 11:59 p.m., Central Standard Time on the Closing Date
and any other adjustments attributable to the Conveyed Properties or Retained Properties in
accordance with the terms of this Agreement, and showing the calculation of such adjustments
together with a copy of

 

 

all data used in arriving at such calculations (the “Post-Closing Adjustments”) and
the resulting final purchase price (the “Final Purchase Price”).

     (c) As soon as practicable after receipt of the Final Settlement Statement, but not later
than one hundred five (105) days after the Closing Date, Seller shall deliver to Buyer a written
report containing any changes that Seller proposes to be made to the preliminary Final
Settlement Statement. The Parties undertake to agree with respect to the amount due pursuant to
such Post-Closing Adjustments no later than one hundred twenty (120) days after the Closing
Date. The date upon which such agreement is reached, and upon which the Final Purchase Price is
established, shall be herein called the “Final Settlement Date”, in no event later than
one-hundred twenty (120) days after the Closing Date. In the event that (a) the Final Purchase
Price is more than the Purchase Price 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 Final Purchase Price is less than the Purchase Price 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.

     (d) If the Parties cannot agree upon the Post-Closing Adjustments, as of the Final
Settlement Date, within one-hundred twenty (120) days after the Closing Date, the Parties agree
that the dispute shall be submitted to a mutually selected third-party oil and gas accountant,
no later than one-hundred fifty (150) days after the Closing Date, who shall decide all points
of disagreement with respect to the 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 at the Effective Time, Buyer shall, and does hereby expressly
agree to incur, assume and pay, all of the costs, obligations and liabilities of Seller under
the Conveyed Leases, the Contracts and under all other agreements described in this Agreement or
in any Exhibit to this Agreement that relate to the Conveyed Properties whether they arise from
or relate to events occurring before or after the Effective Time, provided, however, subject to
the 2011 Split, 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 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 at the Effective Time, subject to the 2011 Split, Buyer shall
be entitled to all revenues of Seller under the Conveyed Leases, the Contracts and under all
other agreements described in this Agreement or in any Exhibit to this Agreement that relate to
the Conveyed Properties insofar and only insofar as they arise from or relate to production
and/or events occurring after the Effective Time, provided, however, all such revenues
attributable to Seller’s interest in the Conveyed Properties for all periods prior to the
Effective Time shall be accounted for in the 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 interests of Seller 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 Conveyed
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 Conveyed Lands are located.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

   Seller hereby represents and warrants to Buyer as follows:

     4.1 Organization. TODD 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 Texas. JAR is a limited partnership 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 Texas. J.
Reeves and D. Reeves are each individuals residing in the State of Texas.

     4.2 Authority and Conflicts. Each of TODD and JAR 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 each of
TODD and JAR’s articles of incorporation or bylaws, other governing documents or any material
agreement or instrument to which TODD or JAR is a party or by which TODD or JAR is bound, or any
judgment, decree, order, statute, rule or regulation applicable to TODD or JAR. Each of J.
Reeves and D. Reeves has all requisite power and authority to carry on his business as presently
conducted, to enter into this Agreement and to perform his or her 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 J. Reeves or D.
Reeves is a party or by which J. Reeves or D. Reeves is bound, or any judgment, decree, order,
statute, rule or regulation applicable to J. Reeves or D. Reeves.

     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 TODD and JAR.

     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, without inquiry, there are no demands or
suits, actions or other proceedings pending or threatened before any court or governmental
agency.

     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. Seller has not created any, and
represents they have no knowledge, without inquiry, of any claims involving third party
preferential rights to purchase, rights of first refusal and/or consents to assign, where such
rights or consents have arisen out of any action taken solely by Seller upon or subsequent to
Seller taking title to the Conveyed Properties.

     4.8 Title. Except as may be otherwise set forth herein, and subject to
Permitted Encumbrances, Seller represents and warrants that 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 without warranty, whether express or implied, statutory or
otherwise, except for a special warranty, by through and under Seller but not otherwise.

     4.9 Contracts. Seller is not delinquent on any invoice for joint interest
billing that is not otherwise accounted for in the Post Closing Adjustments.

     4.10 Non-Reliance. Except to the extent of any representations by Buyer
herein, Seller acknowledges and agrees that they have not relied upon any statements, analysis
or representations by Buyer or the Meridian Parties or their representatives in entering into
this Agreement, or the transactions contemplated hereby and Seller acknowledges that they have
access to all information and data they deem 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 CONVEYED PROPERTIES SHALL BE CONVEYED TO
BUYER WITHOUT ANY WARRANTY OR REPRESENTATION WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE:

(i) WITH REGARD TO MERCHANTABILITY;

(ii) RELATING TO TITLE TO THE CONVEYED PROPERTIES;

 

 

(iii) RELATING TO THE CURRENT OR FUTURE PHYSICAL, ENVIRONMENTAL OR LEGAL CONDITION (BOTH
SUBSURFACE AND SURFACE) OF THE CONVEYED PROPERTIES;

(iv) COMPLIANCE WITH LAW;

(iv) THE EXISTENCE OF HARZARDS, POLLUTANTS AND OTHER RISKS IN, ON OR UNDER THE CONVEYED
PROPERTIES OR THAT MAY BE ASSOCIATED WITH OWNERSHIP, OPERATION OR USE OF THE CONVEYED
PROPERTIES;

(v) WITH REGARD TO WHETHER ANY LEASE, CONTRACT OR SURFACE RIGHT REMAINS IN EFFECT, OR
ARE OTHERWISE ENFORCEABLE, IN WHOLE OR IN PART;

(vi) ANY GEOLOGICAL, GEOPHYSICAL OR ENGINEERING, DATA, INFORMATION OR INTERPRETATIONS
RELATING TO THE CONVEYED PROPERTIES;

(vii) RESERVES, DECLINE RATES, EXPLORATION, DEVELOPMENT OR ENHANCED RECOVERY POTENTIAL,
HYDROCARBON PRICES, COSTS, TAXES AND ANY OTHER CURRENT OR FUTURE CHARACTERISTIC OF THE
CONVEYED PROPERTIES THAT MIGHT AFFECT THEIR OWNERSHIP, OPERATION, USE OR VALUE;

(viii) THE AVAILABILITY OF MARKETING OUTLETS OR TREATMENT OR OTHER FACILITIES REQUIRED
TO MAKE OIL OR GAS MARKETABLE,

(ix) WHETHER BUYER WILL BECOME OR IS ENTITLED TO BECOME THE CONTRACT OR REGULATORY
OPERATOR OF ANY OF THE CONVEYED PROPERTIES;

(x) THE EXTENT TO WHICH BUYER WILL BE ABLE TO CONTROL EXPLORATION, DEVELOPMENT,
PRODUCTION OR ENHANCED RECOVERY OF THE CONVEYED PROPERTIES; AND

(xi) WITH REGARD TO 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 CONVEYED 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 CONVEYED
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
CONVEYED PROPERTIES OR THE ABILITY OR POTENTIAL OF THE CONVEYED PROPERTIES TO PRODUCE
HYDROCARBONS OR THE ENVIRONMENTAL CONDITION OF THE CONVEYED 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.

     THE CONVEYED PROPERTIES ARE CONVEYED AS IS, WHERE IS, WITH ALL FAULTS AND IN THEIR PRESENT
PHYSICAL, ENVIRONMENTAL AND LEGAL CONDITION, LOCATION AND STATE OF REPAIR.

     BUYER ACKNOWLEDGES THAT THE CONVEYED PROPERTIES HAVE BEEN USED IN CONNECTION WITH THE
EXPLORATION, DEVELOPMENT, OPERATION AND PRODUCTION OF OIL, GAS, ASSOCIATED HYDROCARBONS AND
OTHER MINERALS, AND THAT THERE ARE AND MAY HAVE BEEN PRODUCTION AND POST-PRODUCTION FACILITIES
LOCATED ON THE CONVEYED PROPERTIES. BUYER ACKNOWLEDGES THAT THERE MAY HAVE BEEN RELEASES OR
MIGRATIONS OF HYDROCARBON SUBSTANCES, PRODUCED WATER, POLLUTANTS, CONTAMINANTS, TOXIC, OR
HAZARDOUS MATERIALS, WASTES AND OTHER SUBSTANCES THAT MAY HAVE AFFECTED THE SURFACE OR
SUBSURFACE (“POLLUTANTS”). BUYER ACKNOWLEDGES THAT SOME ITEMS AMONG THE CONVEYED
PROPERTIES MAY CONTAIN NORM. BUYER UNDERSTANDS THAT NORM MAY ATTACH ITSELF TO THE INSIDE OF
WELLS AND FACILITIES AS SCALE OR IN OTHER FORMS, THAT THE WELLS AND FACILITIES MAY CONTAIN NORM
AND THAT NORM-CONTAINING MATERIALS MAY BE BURIED OR OTHERWISE DISPOSED OF ON THE CONVEYED
PROPERTIES. BUYER ACKNOWLEDGES THAT SPECIAL

 

 

PROCEDURES MAY BE REQUIRED TO REMOVE AND DISPOSE OF POLLUTANTS, ASBESTOS AND NORM.

     AS BETWEEN THE SELLER AND BUYER, BUYER SHALL ASSUME AND FULLY BEAR SOLE RESPONSBILITY FOR
ALL RISKS, WITHOUT LIMITATION, ASSOCIATED WITH OR ARISING OUT OF THE CONDITION OF THE CONVEYED
PROPERTIES INSOFAR AS BUYER’S INTEREST THEREIN, ANY PAST, PRESENT, OR FUTURE ACTIVITIES ON THE
SAID CONVEYED PROPERTIES, ANY REQUIRED ENVIRONMENTAL REMEDIATIONS OR ENVIRONMENTAL VIOLATIONS OR
LIABILITY ASSOCIATED WITH OR ARISING OUT OF THE OPERATION OR OWNERSHIP OF THE CONVEYED
PROPERTIES IN THE PAST, PRESENT, OR FUTURE, AND/OR ITEMS COVERED BY THIS SECTION
(“HAZARDS”) IN CONNECTION WITH THE EXECUTION OF THIS AGREEMENT, THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE CONDUCT OF OPERATIONS ON THE CONVEYED
PROPERTIES BEFORE AND AFTER THE EFFECTIVE DATE, WITHOUT LIMITATION AND WITH REGARD TO OPERATIONS
ON THE CONVEYED PROPERTY AND WITHOUT REGARD TO THE OCURRENCE, DISCOVERY OR CAUSE.

     To the extent permitted by law, Buyer releases and agrees not to sue or take any other
action against the Seller, their members, shareholders, officers, directors, partners, trustees,
beneficiaries, employees, agents, consultants, attorneys, or any of their heirs, successors,
legal representatives and assigns, from and for all Claims covered by the disclaimers contained
in this Article 4.11.

     4.12 Seller’s Retained Interest Disclaimer. AS BETWEEN THE SELLER AND BUYER,
SELLER SHALL RETAIN AND FULLY BEAR SOLE RESPONSBILITY FOR ALL RISKS, WITHOUT LIMITATION,
ASSOCIATED WITH OR ARISING OUT OF THE CONDITION OF SELLER’S RETAINED INTEREST, ANY PAST,
PRESENT, OR FUTURE ACTIVITIES ON THE SAID SELLER’S RETAINED INTEREST, ANY REQUIRED ENVIRONMENTAL
REMEDIATIONS OR ENVIRONMENTAL VIOLATIONS OR LIABILITY ASSOCIATED WITH OR ARISING OUT OF THE
OPERATION OR OWNERSHIP OF SELLER’S RETAINED INTEREST IN THE PAST, PRESENT, OR FUTURE, AND/OR
ITEMS COVERED BY THIS SECTION IN CONNECTION WITH THE EXECUTION OF THIS AGREEMENT, THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THE CONDUCT OF OPERATIONS ON
SELLER’S RETAINED INTEREST BEFORE AND AFTER THE EFFECTIVE DATE, WITHOUT LIMITATION AND WITH
REGARD TO OPERATIONS ON SELLER’S RETAINED INTEREST AND WITHOUT REGARD TO THE OCURRENCE,
DISCOVERY OR CAUSE.

 

 

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 Conveyed 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. Except as otherwise provided on Exhibit E, Buyer
has no knowledge, without inquiry, 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 related to or arising out of the Conveyed Properties or Retained
Properties.

     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. Buyer acknowledges that it has access to all information and
data it deems necessary to evaluate this transaction, including all information, material and
data in possession of or owned by the Meridian Parties with regard to the Conveyed Properties
and Retained Properties, including the 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. Buyer acknowledges that prior to the Closing Date, Buyer
had access to all material information it deemed necessary as part of the due diligence it
conducted in part because the Seller acquired the Conveyed Properties from the Meridian Parties
and/or affiliates or wholly-owned subsidiary(ies) of the Buyer. 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 Conveyed Properties. As
set forth in Article 4.9, Seller makes no representations, covenants or warranties concerning
the Conveyed Properties, express, implied or statutory, other than as specifically set forth in
this Agreement.

     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
due diligence and physical inspection of the Conveyed 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
CONVEYED PROPERTIES 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 Conveyed
Properties to Buyer, in substantially the form of the assignment attached
hereto as Exhibit F-1 (for counties/parishes without Seller’s Retained
Interest) and Exhibit F-2 (for counties with Seller’s Retained Interest), in
sufficient counterparts to facilitate recording;

	 	(b)	 	To the extent necessary, and subject to Article 10.1,
Letters-in-Lieu of Division Orders or Transfer Orders or such other documents
necessary to provide notice to each purchaser of production from the Conveyed
Properties of the change in ownership of the Conveyed 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;
and

	 	(d)	 	Executed 2011 Settlement and Release Agreement.

     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 Purchase Price by wire transfer in immediately
available funds to an account designated by Seller;

	 	(c)	 	Revenues attributable to the Conveyed Properties and
Seller’s Retained Interest due and owing on June 1, 2011;

	 	(d)	 	Executed 2011 Settlement and Release Agreement; and

	 	(e)	 	Waiver of any Preferential Right pursuant to the
Reeves/Meridian Agreements by the Meridian Parties.

     7.4 Deliveries by Seller at Final Settlement Date. At the Final Settlement
Date, and pursuant to Article 2.3, if the Final Purchase Price is less than the Purchase Price,
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 the Final Settlement
Date, pursuant to Article 2.3, if the Final Purchase Price is greater than the Purchase Price,
Buyer shall pay to Seller the balance of such difference by wire transfer of immediately
available funds.

ARTICLE 8

NON-COMPETE; RELEASE OF PRIOR NON-COMPETE

     8.1 Non-Compete. For a period of one (1) year from the Effective Time, Seller
and the Specified Employees agree 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 Non-Compete Areas, as defined and described on Exhibit H attached hereto and
incorporated herein by reference, 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 (specifically, the representations and warranties in
Articles 4.1 — 4.10 and Article 5) 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
Conveyed Properties to Buyer by Seller.

     9.2 Indemnification by Seller. From and after the Closing Date, except for 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 five (5) percent of
the Purchase Price. 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 Environmental Obligations. On and after the Closing Date, Buyer
shall assume, bear and pay all costs of the following with respect to the interests assigned
hereunder by Seller in the Conveyed Properties assigned to Buyer as of the Effective Time
(collectively, the “Environmental Obligations”) for:

	 	(a)	 	any plugging and abandonment and surface restoration
obligations related to the Conveyed 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
Conveyed 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 their 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 (before, on or
after the Effective Time) of the Conveyed Properties (specifically excluding Claims arising out
of Seller’s special warranty of title as contained in Article 4.8); (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; and (e)
the Environmental Obligations, regardless of whether the Environmental Obligations relate to
conditions arising before or after the Effective Time.

     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 Mutual Release, Waiver & Disclaimer.

     (a) Release, Waiver & Disclaimer of Certain Obligations Under the Reeves/Meridian
Agreements. Subject to the surviving rights retained in Seller’s Retained Interest
(specifically, as set forth in Article 1.18, the Parties to this Agreement stipulate and agree
that, from the Effective Date of this Agreement, each hereby releases and waives the following
with respect to the Reeves/Meridian Agreements:

(i) any obligation of a party to the Reeves/Meridian Agreements to give, offer or
allow Seller to participate in “Prospects” (as defined in the Reeves/Meridian
Agreements) or make an assignment or conveyance thereof; and

(ii) any obligation of a party to the Reeves/Meridian Agreements to assign or
convey, or right of Seller to earn, any net profits overriding royalty interest in
“Properties”, as defined in the Reeves/Meridian Agreements.

 

 

	(b)	 	In addition to that set forth under Article 9.6(a), the Parties hereto have
executed and entered into the 2011 Settlement and Release Agreement, as more particularly
defined and described in Article 1.21.

     9.7 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 CONVEYED PROPERTY OR RETAINED PROPERTY OR THE
INDEMNIFIED PARTY’S (OR ITS EMPLOYEES’, PARTNERS’, AGENTS’, REPRESENTATIVES’, CONTRACTORS’,
SUCCESSORS’ OR ASSIGNS’) SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE, STRICT LIABILITY,
BREACH OF REPRESENTATION, WARRANTY OR AGREEMENT, OR FAULT, BUT NOT GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. 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:

	 	TODD; JAR; J. Reeves & D. Reeves
	 

	 	ATTN: Joseph A. Reeves, Jr.
	 

	 	1401 Enclave Parkway, Suite 400
	 

	 	Houston, Texas 77077
	 

	 	Phone: 281.597.7012
	 

	 	Fax: 281.597.8880
	 

	 	Email:
jreeves@matrixpetroleumllc.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; Jurisdiction and Venue. 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. Each Party submits to the exclusive jurisdiction
and venue of the state and federal district courts located in Harris County, Texas, for purposes
of resolving any dispute, claim or controversy arising out of, in relation to, or in connection
with this Agreement.

               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; Successors and Assigns. 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. Subject thereto, this Agreement
is binding upon and shall inure to the benefit of the Parties and, as applicable,

 

 

their heirs, successors, legal representatives and assigns. No other person shall have any
benefits, rights or remedies under this Agreement.

               10.8 Integration. This Agreement, the Exhibits and Schedules hereto, the
confidentiality agreement in Article 10.16 and the 2011 Settlement and Release Agreement, 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 (except where provided otherwise herein) 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 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.

               10.12 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)	 	Except as allowed by Article 10.1, 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.

         10.13 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.

         10.14 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.

               10.15 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.

               10.16 Confidentiality. Except as required by law or the provisions of the
indenture for Buyer 9 5/8% senior notes due 2018, following execution of this Agreement, the
Parties shall keep this Agreement and all drafts of this Agreement confidential as required by
this Article 10.16, but may disclose all or any portion of this Agreement to their respective
consultants, attorneys, advisors and current and prospective lenders, investors and
purchasers, who shall be bound by the confidentiality obligations of this Article 10.16.
Similarly, the Parties’ respective consultants, attorneys, advisors, and current and prospective
lenders, investors, and purchasers may also disclose this Agreement to their respective
consultants, attorneys, advisors and lenders and purchasers, and so on, who shall all be bound
by the confidentiality obligations of this Article 10.16. The foregoing shall not restrict
either Party from disclosing the consummation of this transaction and the transfer of the
Conveyed Properties to Buyer; provided, however, that Buyer shall not disclose the name of J.
Reeves or D. Reeves in any press releases or other public announcements concerning this
transaction.

               All obligations under this Article 10.16 terminate on the earlier of (i) as to a particular
person in receipt of this Agreement, the date that person is required to disclose the Agreement
by a court or other governmental authority or regulations, (ii) the date the Agreement becomes
available to the public other than by breach of this Article 10.16, or (iii) as to the
non-disclosing Party, the date the disclosing Party discloses this Agreement in a manner that
fails to preserve its confidentiality. There shall also be no restriction on either Party’s
disclosure of the Agreement in connection with enforcement of its rights under this Agreement,
although should it become necessaryn to file the Agreement in a court proceeding, such Party
will endeavor to file the Agreement under seal.

[Signature pages attached]

 

 

     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:

TEXAS OIL DISTRIBUTION & DEVELOPMENT, INC.

 	 
	 	/s/ Joseph A. Reeves, Jr.
 	 
	 	Joseph A. Reeves, Jr. 	 
	 	President and Chief Executive Officer 	 
	 
	 	JAR RESOURCE HOLDINGS, L. P.
 	 
	 	By:  	                       JAR RESOURCE CORPORATION
 	 
	 	its General Partner	 
	 	 	 
	 	                       /s/ Joseph A. Reeves, Jr.
 	 
	 	Joseph A. Reeves, Jr. 	 
	 	President 	 
	 
	 	JOSEPH A. REEVES, JR.

 	 
	 	/s/ Joseph A. Reeves, Jr.
 	 
	 	Joseph A. Reeves, Jr. 	 
	 	 	 
	 
	 	DIANNE S. REEVES

 	 
	 	/s/ Dianne S. Reeves
 	 
	 	Dianne S. Reeves 	 
	 	 	 

 

 

	 	 	 	 	 
	 	SPECIFIED EMPLOYEES:

(signing for the purpose of Article 8.1 of this Agreement)

 	 
	 	/s/ J. Andrew Reeves
 	 
	 	J. Andrew Reeves 	 
	 	 	 
	 	                     /s/ Jeff Robinson
 	 
	 	Jeff Robinson 	 
	 	 	 
	 
	 	BUYER:

ALTA MESA ENERGY, LLC

 	 
	 	/s/ Harlan H. Chappelle
 	 
	 	Harlan H. Chappelle 	 
	 	PresidentExhibit 10.1

EXHIBIT 10.1

FOURTH AMENDMENT TO NOTE AND SECURITY AGREEMENT

THIS FOURTH AMENDMENT (THE “FOURTH AMENDMENT”) DATED AUGUST 10, 2011 TO THE NOTE AND SECURITY
AGREEMENT (THE “AGREEMENT”) DATED AS OF SEPTEMBER 4, 2007 AMONG SAFESTICH MEDICAL, INC.,
SAFESTITCH, LLC (COLLECTIVELY THE “BORROWER”) AND THE UNDERSIGNED LENDERS (“LENDERS”), AS AMENDED.

RECITALS

WHEREAS, Borrower and Lenders (collectively, the “Parties”) are parties to the Agreement which
became effective on September 4, 2007; and

WHEREAS, the Borrowers and Lenders previously amended the Agreement to extend the Maturity
Date (as defined in the Agreement) from June 30, 2010 until June 30, 2011 and from June 30, 2011
until June 30, 2012, and

WHEREAS, the Borrowers and Lenders desire to again amend the Agreement to extend the Maturity
Date from June 30, 2012 until June 30, 2013.

NOW THEREFORE, in consideration of the mutual covenants and promises contained in the
Agreement and this Fourth Amendment and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lenders agree as follows:

AMENDMENT

1. Extension of Maturity Date. Section 3 of the Agreement is hereby amended and restated in
its entirety as follows:

Payments of Obligations, including Principal and Interest. The principal amount of the Loan evidenced hereby, together with any accrued
and unpaid interest, and any and all the Obligations, including unpaid costs, fees
and expenses accrued, such as Lender’s Expenses, shall be due and payable in full on
June 30, 2013 (the “Maturity Date”).

2. Governing Law. This Fourth Amendment shall be governed by the laws of the State of Florida
without regard to its conflict of laws rules or principles.

3. Amendments. Except as expressly amended hereby, the Agreement shall remain unmodified and
in full force and effect.

4. Entire Agreement. This Fourth Amendment and the Agreement and any schedules or exhibits
attached to the Agreement constitute the entire agreement of the Parties with respect to the
subject matter hereof and supersede all prior understandings and writings between the Parties
relating thereto.

5. Interpretation. Any capitalized terms used in this Fourth Amendment but not otherwise
defined shall have the meaning provided in the Agreement.

 

 

6. Counterparts. This Fourth Amendment may be executed manually, electronically in Adobe® PDF
file format, or by facsimile by the Parties, in any number of counterparts, each of which shall be
considered one and the same amendment and shall become effective when a counterpart hereof shall
have been signed by each of the Parties and delivered to the other Party.

IN WITNESS WHEREOF, the Parties hereto have caused this Fourth Amendment to be executed in
their names as of the date first written above.

	 	 	 	 	 
	 	SAFESTITCH MEDICAL, INC.

 	 
	 	By:  	/s/ James J. Martin
 	 
	 	 	Name:  	James J. Martin 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	SAFESTITCH LLC

 	 
	 	By:  	/s/ James J. Martin
 	 
	 	 	Name:  	James J. Martin 	 
	 	 	Title:  	Chief Financial Officer 	 

THE FROST GROUP, LLC

	 	 	 	 	 
	By:

	 	/s/ Jane Hsiao
 

Name: Jane Hsiao
	 	 
	 

	 	Title:   Member	 	 

JEFFREY G. SPRAGENS

	 	 	 	 	 
	By:

	 	/s. Jeffrey G. Spragens
 

Name: Jeffrey G. Spragens
	 	 

 

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