PURCHASE AND SALE AGREEMENT BETWEEN ALTA MESA EAGLE, LLC, AS SELLER AND MEMORIAL PRODUCTION OPERATION LLC, AS BUYER

EXHIBIT 10.1

 

 

 

PURCHASE AND SALE AGREEMENT

BETWEEN

ALTA MESA EAGLE, LLC,

AS SELLER

AND

MEMORIAL PRODUCTION OPERATION LLC,

AS BUYER

 

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TABLE OF CONTENTS

 

 

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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (together with the Exhibits and Schedules made a part hereof, this “Agreement”), dated the 25th day of March, 2014, is made by and between Alta Mesa Eagle, LLC, a Texas limited liability company (“Seller”), and Memorial Production Operating LLC, a Delaware limited liability company (“Buyer”).  Seller and Buyer are sometimes hereinafter referred to individually as a “Party” and collectively as the “Parties”:

WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the Assets;

NOW, THEREFORE, for a good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

Definitions; References and Construction

.  In this Agreement, capitalized terms have the meanings provided in this Article 1, unless defined elsewhere in this Agreement.  All defined terms include both the singular and the plural of such terms.  All references to Sections refer to Sections in this Agreement, and all references to Exhibits or Schedules refer to Exhibits or Schedules made a part of this Agreement.  When the term “herein” is used in this Agreement, reference is made to the entire Agreement and not to any particular Section or subparagraph of a Section.  The word “including” shall mean including without limitation.  The words “shall” and “will” are interchangeably used throughout this Agreement and shall accordingly be given the same meaning, regardless of which word is used.

“Accounting Referee” means Deloitte LLP.

“Adjusted Purchase Price” has the meaning set forth in Section 2.2.

“Adjustments” means the adjustments to the Base Purchase Price pursuant to Section 2.4.

“AFE’s” has the meaning set forth in Section 5.13.

“Affiliate” means any Person that, directly or indirectly, through one or more entities, controls or is controlled by or is under common control with the Person specified.  For the purpose of the immediately preceding sentence, the term “control” means the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or agency or otherwise.

“Agreement” has the meaning set forth in the introductory paragraph

“Allocated Values” means the allocation of the Base Purchase Price among the Assets as mutually agreed to by the Parties.

 “Assets” means:

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(The data and records referred to in Clauses (1) through (8) shall hereinafter be referred to as the “Excluded Records” and, subject to such exclusions, the data and records described in this Clause (h) shall be referred to as the “Records”);

“Assignment” means a document in the form of Exhibit E.

“Assumed Liabilities” has the meaning set forth in Section 2.8.

“Base Purchase Price” has the meaning set forth in Section 2.2.

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“Business Day” means a Day other than Saturday, Sunday or any other Day when federally chartered banks in the United States are required to be closed.

“Buyer” has the meaning set forth in the introductory paragraph.

“Buyer Group” means Buyer and its Affiliates together with its and their members, partners, officers, directors, agents, representatives, consultants and employees.

“Casualty Loss” means any loss, damage or reduction in value of the Assets that occurs as a result of acts of God, fire, explosion, earthquake, windstorm, flood or other casualty, but excluding any loss, damage or reduction in value as a result of depreciation, ordinary wear and tear and any change in condition of the Assets for production of Hydrocarbons through normal depletion (including the watering-out of any well, collapsed casing or sand infiltration of any well).

“Central Facilities” has the meaning set forth in clause (d) of the definition of Assets.

“Certificate of Non-Foreign Status” means a certificate in the form of Exhibit F.

“Claims” means any and all written claims, demands, suits, causes of action, losses, damages, liabilities, fines, penalties, fees, expenses and costs (including reasonable attorneys’ fees and costs of litigation).

“Close” or “Closing” means the consummation of the sale of the Assets from Seller to Buyer, including execution and delivery of all documents and other legal consideration as provided for in this Agreement pursuant to Article 8.

“Closing Date” has the meaning set forth in Section 8.1.

“Code” means the Internal Revenue Code of 1986, as amended.

“Condemnation” means the condemnation, exercise of the right of eminent domain, or other taking by a Governmental Authority or other Person.

“Confidentiality Agreement” means that certain Confidentiality Agreement dated August 28, 2013 between Seller and Memorial Resource Development LLC.

“Consent Agreement” has the meaning set forth in Section 7.2.

“Contracts” has the meaning set forth in clause (f) of the definition of Assets.

“Customary Post-Closing Consents” means consents and approvals from Governmental Authorities that are customarily obtained after Closing in connection with a transaction similar to the one contemplated by this Agreement.

“Day” means a calendar day consisting of 24 hours from midnight to midnight.

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“Developmental Wells” has the meaning set forth in clause (b) of the definition of Assets.

“Developmental Wells Equipment” has the meaning set forth in clause (b) of the definition of Assets.

“Dollars” means United States Dollars.

“E&P Business” means the business and operations conducted with the Assets.

“Effective Time” means 12:01 a.m., Central Time, on January 1, 2014.

“Environmental Condition” shall mean (a) a condition existing prior to, at or after the Closing Date with respect to the air, soil, subsurface, surface waters, ground waters and/or sediments that causes any Asset to not be in compliance with any Environmental Laws, Lease, Surface Contract, or Contract, or (b) any environmental pollution, contamination, degradation, or damage to property such that remedial or corrective action is presently (or if known, would be presently) necessary to resolve liability existing under Environmental Laws or any Lease, Surface Contract, or Contract, excluding any Excluded Environmental Condition.

 “Environmental Laws” means any and all Laws relating to the prevention of pollution, the preservation and restoration of environmental quality, the protection of human health, wildlife or environmentally sensitive areas, the remediation of contamination, the generation, handling, treatment, storage, transportation, disposal or release into the environment of waste materials, or the regulation of or exposure to hazardous, toxic or other substances alleged to be harmful.  Environmental Laws include all applicable judicial and administrative Orders, consent decrees or directives issued by a Governmental Authority pursuant to the foregoing.  Unless expressly included in and required by applicable requirements of statutes, regulations, judicial and administrative Orders, consent decrees or directives issued by a Governmental Authority included in Environmental Laws, Environmental Laws do not include good or desirable operating practices or standards that may be employed or adopted by other oil or gas well or pipeline operators or recommended but not required by a Governmental Authority.  Environmental Laws do not include any laws, orders, rules, and regulations of the Railroad Commission of Texas relating to spacing, density, setbacks, specifications or grades for equipment or materials (including drilling mud or fluid), well integrity or construction, the prevention of physical or economic waste, or the protection of correlative rights in Hydrocarbons, and, in each case, any cause of action or other rights in favor of third Persons arising therefrom or relation thereto, but do include laws, order, rules, and regulations Railroad Commission of Texas regarding contamination and cleanup thereof. Furthermore, Environmental Laws do not include the Occupational Safety and Health Act or any other Law governing worker safety or workplace conditions.

“Equipment” has the meaning given to such term in clause (b) of the definition of Assets.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

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“ERISA Affiliate” means each trade or business (whether or not incorporated) that together with the Seller has ever been deemed to be a “single employer” within the meaning of Section 4001 of ERISA or Section 414 of the Code.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excise Taxes” has the meaning set forth in Section 9.2.

“Excluded Assets” means (a) the Retained Interests, (b) those assets, interests, rights and contracts described on Exhibit B, (c) any Consent Agreements excluded from the Assets pursuant to Section 7.2,  or (d) other Assets excluded pursuant to the terms hereof.  

“Excluded Environmental Conditions” means any conditions or Claims arising out of or relating to the presence of naturally occurring radioactive material, but only with respect to Equipment currently being utilized in operations, asbestos, mercury or drilling fluids and chemicals in quantities typical for oilfield operations in Karnes County, Texas, to the extent arising from operations conducted in accordance with applicable Law.

“Excluded Records” has the meaning set forth in clause (h) of the definition of Assets.

“Final Settlement Statement” has the meaning set forth in Section 2.5.

“Financial Statements” has the meaning set forth in Section 7.6.

“Governmental Authority” means any federal, state, local, municipal or other government; any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; and any court or governmental tribunal having jurisdiction.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

“Hazardous Materials” shall mean any substance or material that is, or if released or disposed of would be, designated, classified, characterized or regulated as a “hazardous substance”, “hazardous waste”, “hazardous material”, “toxic substance”, “pollutant” or “contaminant” under Environmental Laws.

“Hedges” means any swap, collar, floor, cap, option or other Contract that is intended to eliminate or reduce the risk of fluctuations in the price of Hydrocarbons.

“Hydrocarbons” means oil, gas, natural gas liquids, casinghead gas, coal bed methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof.

“Imbalance” means over-production or under-production or over-deliveries or under-deliveries on account of (a) any imbalance at the wellhead between the amount of Hydrocarbons produced from a Well and allocable to the interests of Seller being assigned

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hereunder and the amount of production from the relevant Well that are actually taken by or delivered to or for the account of such assigned interest of Seller and (b) any marketing imbalance between the quantity of Hydrocarbons constituting part of the Assets and required to be delivered on behalf of or to or for the account of Seller under any Contracts relating to the purchase and sale, gathering, transportation, storage, treating, processing, or marketing of Hydrocarbons and the quantity of Hydrocarbons actually delivered on behalf of or to or for the account of Seller pursuant to the applicable Contracts.

“Indemnity Claim” has the meaning set forth in Section 3.6.

“Indemnity Claim Notice” has the meaning set forth in Section 3.6.

“Indemnity Deductible Amount” means an amount equal to 1.5% of the Base  Purchase Price.

“Indemnity Obligations” mean the obligations of a Party to RELEASE, DEFEND, INDEMNIFY and HOLD HARMLESS the other Party from and against specified Claims as provided in this Agreement.

“Individual Indemnity Threshold” has the meaning set forth in Section 3.4(a)(ii).

“Knowledge” means (a) with respect to Seller, the actual knowledge of the individuals set forth on Schedule 1.1-A after due inquiry by such individuals of Seller’s employees and officers, and (b) with respect to Buyer, the actual knowledge of the individuals set forth on Schedule 1.1-B after due inquiry by such individuals of Buyer’s employees and officers.

“Laws” means any and all laws, statutes, ordinances, permits, decrees, writs, injunctions, Orders, codes, judgments, rules or regulations (including Environmental Laws) that are promulgated, issued or enacted by a Governmental Authority having jurisdiction.

“Leases” has the meaning set forth in clause (a) of the definition of Assets.

“Legal Proceedings” means any and all proceedings, suits and causes of action by or before any Governmental Authority and all arbitration proceedings.

“Marketing Agreements” means the agreements described on Exhibit A-3.

“Material Adverse Effect” means a change, event, circumstance, development, state of facts or condition that results, or would reasonably be expected to result, in a material adverse effect on the Assets (as currently owned and operated) or the results of operations of Seller with respect to the Wells and Leases, individually or taken as a whole; provided, any actual change or changes in reserves (including any reclassification or recalculation of reserves in the ordinary course of business, consistent with past practice) or in the prices of Hydrocarbons; natural declines in well performances; general business, economic or political conditions; casualty events; local, regional, national or international industry conditions (including changes in applicable Laws and changes in financial or market conditions); changes or reinterpretations in U.S. generally accepted accounting principles or Law; any change

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resulting from the taking of any action required by, or through failure to take any action prohibited by this Agreement; changes as a result of the negotiation, announcement, execution or performance of this Agreement; actions taken or omitted to be taken by or at the request of Buyer; or Orders, actions or inactions of any Governmental Authority, shall be deemed not to constitute a Material Adverse Effect.

“Material Contracts” has the meaning set forth in Section 5.8.

“MCF” means thousand cubic feet.

“Net Profits Interest” means that certain net profits overriding royalty interest defined on Annex 1 to the Assignment.

“Net Revenue Interest” means the interest (expressed as a percentage or decimal fraction) in and to the Hydrocarbons produced from or allocated to a Well or a Lease.

“Non-Party” means any Person other than the Parties or their respective Affiliates.

“Oil and Gas Properties” has the meaning set forth in clause (e) of the definition of Assets.

“Operating Expenses” shall mean Seller’s obligation for any expenses (including, without limitation, lease operating expense, drilling and completion costs, plugging and abandonment costs, surface restoration and remediation costs, seismic costs, workover costs, capital expenditures, joint interest billings and overhead charges) to the extent chargeable under applicable operating agreements which relate to the Assets.

“Operative Documents” means those documents referenced in Section 8.2 and 8.3.

“Order” means any order, judgment, injunction, non-appealable final order, ruling or decree of any court or other Governmental Authority.

“Party” or “Parties” has the meaning set forth in the introductory paragraph.

“PDP Wells” has the meaning set forth in clause (e) of the definition of Assets.

“PDP Wells Equipment” has the meaning set forth in clause (e) of the definition of Assets.

“Permitted Encumbrances” means with respect to any Asset any and all of the following:

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“Person” means an individual, group, partnership, corporation, limited liability company, trust or other entity.

“Preferential Right” has the meaning set forth in Section 5.10.

“Prime Rate” means the rate of interest published and updated from time to time by the Wall Street Journal as the “prime” rate.

“Property Taxes” has the meaning set forth in Section 9.2. 

“Purchase Price Allocation” has the meaning set forth in Section 2.6(b).

“Records” has the meaning set forth in clause (h) of the definition of Assets.

“Retained Interests” means all right, title and interest of Seller in and to the oil and gas leases, wells and other assets described herein which are not conveyed by Seller to Buyer pursuant to this Agreement, including the Net Profits Interest reserved in the Assignment.

 “Retained Liabilities” means the following obligations:

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“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Seller” has the meaning set forth in the introductory paragraph.

“Seller Group” means Seller and its Affiliates, together with its and their members, partners, officers, directors, agents, representatives, consultants and employees.

“Specified Representations and Warranties” means the representations and warranties of Seller set forth in Sections 5.1,  5.2,  5.3,  5.4,  5.6 and 5.7.

“Surface Contracts” has the meaning set forth in clause (c) of the definition of Assets.

“Suspended Funds” means those proceeds from the sale of Hydrocarbons attributable to the Assets and payable to owners of working interests, royalties, overriding royalties and other similar interests that are held by Seller in suspense as of the Closing Date including royalty proceeds held in suspense.

“Tax” or “Taxes” means any taxes, assessments, fees and other governmental charges imposed by any Taxing Authority, including without limitation income, profits, gross receipts, net proceeds, alternative or add-on minimum, ad valorem, value added, turnover, sales, use, property, personal property (tangible and intangible), environmental, stamp, leasing, lease, user, excise, duty, franchise, capital stock, transfer, registration, license, withholding, social security (or similar), unemployment, disability, payroll, employment, fuel, excess profits, occupational, premium, windfall profit, severance, estimated, or other charge of any kind whatsoever, including any interest, penalty, or addition thereto, and including any liability for any of the foregoing items that arises by reason of transferee or successor liability.

“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto.

“Taxing Authority” means, with respect to any Tax, the Governmental Authority or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision, including any governmental or quasi-governmental entity or agency that imposes, or is charged with collecting, social security or similar charges or premiums.

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“Transfer Taxes” has the meaning set forth in Section 9.4.  

“Treasury” means the United States Department of the Treasury.

“Units” has the meaning set forth in clause (a) of the definition of Assets.

“Wells” has the meaning given to such term in clause (e) of the definition of Assets.

“Working Interest” means the percentage of costs and expenses associated with the exploration, drilling, development, operation and abandonment of any Well required to be borne with respect thereto.

         2.1     Purchase and Sale of Assets.  Subject to and in accordance with the terms and conditions of this Agreement, Seller agrees to sell and assign to Buyer, and Buyer agrees to purchase and acquire from Seller the Assets, effective as of the Effective Time.

         2.2      Purchase Price.  The total purchase price, subject to adjustment in accordance with the terms of this Agreement, to be paid to Seller by Buyer for the Assets is ONE HUNDRED SEVENTY-THREE MILLION Dollars ($173,000,000) (the “Base Purchase Price”).  The Base Purchase Price shall be adjusted as set forth in Section 2.4 (as so adjusted, the “Adjusted Purchase Price”) post-Closing in accordance with Section 2.5. 

         2.3     Receipts and Credits.

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         2.4     Purchase Price Adjustments. The Base Purchase Price shall be adjusted, without duplication, as follows:

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         2.5     Final Settlement Statement.    No later than 120 Days after the Closing Date Seller will deliver to Buyer the final settlement statement (the “Final Settlement Statement”) setting forth the actual amounts of Adjustments and the resulting Adjusted Purchase Price, together with associated back-up documentation.  As soon as reasonably practicable, but in no event later than 30 Days after Buyer receives the Final Settlement Statement, Buyer may deliver to Seller a written report containing any changes that Buyer proposes to be made to such statement.  If Buyer fails to timely deliver the written report to Seller containing changes Buyer proposes to be made to the Final Settlement Statement, the statement as delivered by Seller will be deemed to be correct and will be final and binding on the Parties and not subject to further audit or arbitration.  As soon as reasonably practicable, but in no event later than 15 Days after Seller receives Buyer’s written report, the Parties shall meet and undertake to agree on the final adjustments to the Final Settlement Statement.  If the Parties fail to agree on the final adjustments within such 15-Day period, either Party may submit the disputed items to the Accounting Referee for resolution.  The Parties shall direct the Accounting Referee to resolve the disputes within 20 Days after having the relevant materials submitted for review.  The decision of the Accounting Referee will be binding on and non-appealable by the Parties.  The fees and expenses associated with the Accounting Referee will be borne equally by the Parties.  Any amounts owed by one Party to the other as a result of the Final Settlement Statement, together with interest on such amount from (and including) the Closing Date to (and excluding) the date of payment at the Prime Rate, will be paid within 5 Business Days after the date when the amounts are agreed upon by the Parties or the Parties receive a decision of the Accounting Referee, and the Adjustments included in the Final Settlement Statement will be final and binding between the Parties and not subject to further audit or arbitration.

       

 

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2.6     Allocated Values.

         2.7     Suspended Funds. If Seller is holding any Suspended Funds as of the Closing Date, then (a) in lieu of Seller transferring these funds to Buyer at Closing, Seller shall retain the Suspended Funds held in its accounts and the Base Purchase Price shall be adjusted downward in accordance with Section 2.4(b)(v), and (b) from and after Closing, Buyer shall be responsible for the proper payment and distribution of the Suspended Funds to the Non-Parties entitled to receive the Suspended Funds (including with respect to escheat obligations).

         2.8     Assumed Liabilities. Upon Closing, Buyer assumes and hereby agrees to fulfill, perform, be bound by, pay and discharge (or cause to be fulfilled, performed, paid or discharged) all obligations and liabilities of any kind whatsoever of Seller arising from or relating to the Assets that are attributable to periods on or after the Effective Time, including Excluded Environmental Conditions (the “Assumed Liabilities”); provided, Buyer does not assume (and Assumed Liabilities shall not include): (i) the Retained Liabilities, (ii) any obligations or liabilities of Seller to the extent that they are attributable to or arise out of the ownership, use or operation of the Excluded Assets, or (iii) any other Claims for which Seller is required to indemnify Buyer pursuant to Article 3.

         3.1     Opportunity for Review. Each Party represents that it has had an adequate opportunity to review the release and indemnity provisions in this Agreement, including the opportunity to submit the same to legal counsel for review and comment.  Based upon the foregoing representation, the Parties agree to the provisions set forth below.

         3.2      Seller’s Indemnity Obligation. Effective from and after the Closing Date Seller shall DEFEND, INDEMNIFY and HOLD HARMLESS Buyer Group from and against any and all Claims arising out of, resulting from, or relating to:

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        3.3     Buyer’s Indemnity Obligation. From and after the Closing Date, Buyer shall RELEASE, DEFEND, INDEMNIFY and HOLD HARMLESS Seller Group from and against any and all Claims arising out of, resulting from, or relating to:

        3.4     Claim Periods, Deductible, Threshold, Cap and Materiality Exclusion.

provided, the limitations above in Section 3.4(a) shall not apply to any Claim for breach of any of the Specified Representations and Warranties which must be asserted within the applicable statute of limitations and Seller’s Indemnity Obligations with respect thereto shall survive for a like amount of time.

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        3.5     Materiality Qualifiers. Notwithstanding anything to the contrary contained in this Article 3, for the purposes of the indemnification obligations of the Parties pursuant to this Article 3, all of the representations and warranties set forth in this Agreement or any certificate or schedule related hereto shall be read without giving effect to any materiality, Material Adverse Effect or qualification with a similar meaning contained or incorporated directly or indirectly in such representation or warranty for purposes of determining whether a breach of any such representation or warranty has occurred and the amount of the Claims resulting from, arising out of, or relating to any such breach of representation or warranty.

        3.6     Notice of Claims. If a Claim is asserted against a Person for which a Party may have Indemnity Obligations under this Agreement (an “Indemnity Claim”), the indemnified Person shall give the indemnifying Party written notice of the underlying Claim setting forth the particulars associated with the underlying Claim (including a copy of the written underlying Claim, if any) as then known by the indemnified Person (“Indemnity Claim Notice”).  The indemnified Person shall, to the extent practicable, give an Indemnity Claim Notice within such time as will allow the indemnifying Party a reasonable period in which to evaluate and timely respond to the underlying Claim; provided failure to do so shall not affect an indemnified

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Person’s rights hereunder except for, and only to the extent of, any incremental increase in the cost of the Indemnity Claim resulting from the failure to give notice.

        3.7     Defense of Non-Party Claims.  Upon receipt of an Indemnity Claim Notice involving a Non-Party for which an indemnifying Party believes it may have an obligation of indemnity under this Agreement, the indemnifying Party shall, if it so elects in accordance with this Section 3.7 (without prejudice to its right to contest its obligation of indemnity under this Agreement), assume the defense of the Non-Party Claim with counsel selected by the indemnifying Party, and the indemnified Person shall cooperate in all reasonable respects.  If any Non-Party Claim involves a fact pattern wherein each Party may have an obligation to indemnify the other Party, each Party may assume the defense of and hire counsel for that portion of the Non-Party Claim for which it may have an obligation of indemnity.  In all instances, the indemnified Person may employ separate counsel and participate in the defense of any Non-Party Claim; provided, if the indemnifying Party has assumed the defense of a Non-Party Claim pursuant to this Section 3.7 and has agreed to indemnify the indemnified Person, the fees and expenses of counsel employed by the indemnified Person shall be borne solely by the indemnified Person.  If the indemnifying Party elects by written notice to undertake the defense of the Non-Party Claim within 30 Days after receipt of the Indemnity Claim Notice, then (i) the indemnifying Party shall defend the indemnified Person against such Non-Party Claim, (ii) the indemnifying Party shall pay any judgment entered or settlement with respect to such Non-Party Claim, (iii) the indemnifying Party shall not consent to the entry of any judgment or enter into any settlement with respect to such Non-Party Claim that (A) does not include a provision whereby the plaintiff or claimant in the matter releases the indemnified Person from all liability with respect to such Non-Party Claim, or (B) would restrict such indemnified Person’s ability to conduct its business in the ordinary course, and (iv) the indemnified Person shall not consent to the entry of any judgment or enter into any settlement with respect to such Non-Party Claim without the indemnifying Party’s prior written consent.  If the indemnifying Party has not elected to undertake the defense of a Non-Party Claim, or if the indemnifying Party assumes the defense of a Non-Party Claim pursuant to this Section 3.7 but fails to diligently defend against the Non-Party Claim within 30 Days following any written notice from such indemnified Person asserting such failure, then the indemnified Person shall have the right to defend, at the sole cost and expense of the indemnifying Party (to the extent the indemnified Person is entitled to indemnification hereunder), the Non-Party Claim by all appropriate proceedings.  In such instances, the indemnified Person shall have full control of such defense and proceedings; provided, the indemnified Person shall not settle such Non-Party Claim without the written consent of the indemnifying Party; provided further, if the indemnifying Party fails to notify the indemnified Person in writing as to whether or not it consents to such settlement within 30 Days following its receipt of notice of such settlement from the indemnified Person, then such consent shall be deemed given.  The indemnifying Party may participate in, but not control, any defense or settlement controlled by an indemnified Person pursuant to this Section 3.7, and the indemnifying Party shall bear its own costs and expenses with respect to such participation.  Notwithstanding the other provisions of this Section 3.7, if the indemnifying Party disputes its potential liability to the indemnified Person under this Section 3.7 and if such dispute is resolved in favor of the indemnifying Party, the indemnifying Party shall not be required to bear the costs and expenses of the indemnified Person’s defense pursuant to this Section 3.7.

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        3.8     Investigation and Knowledge. The right to indemnification or other remedy based on the inaccuracy of or non-compliance with any representation or warranty in this Agreement shall not be enforceable to the extent the Party claiming indemnity or other remedy had Knowledge of such inaccuracy of or noncompliance prior to Closing.

        3.9     Waiver of Certain Damages. Each of the Parties expressly waives and releases, and shall cause its Affiliates to waive and release, special, punitive, remote, unforeseeable, speculative and exemplary damages with respect to any dispute arising under, related to, or in connection with this Agreement or any other agreement, contract or instrument contemplated herein or in connection with the transactions contemplated hereby.

        3.10    Extent of Indemnification. Without limiting the scope of the indemnification, disclaimer, release and assumption obligations set forth in this Agreement, to the fullest extent permitted by Law, an indemnified Person shall be entitled to indemnification hereunder in accordance with the terms hereof, regardless of whether the Claim or indemnifiable loss giving rise to any such Indemnity Obligation is the result of the sole, partial, active, passive, concurrent or comparative negligence, gross negligence, strict liability, other legal fault or responsibility, or violation of any Law of or by any such indemnified Person.

DISCLAIMER

 

        4.1     Disclaimer as to Representations and Warranties. Buyer acknowledges and agrees that, except as otherwise expressly provided in Article 5 and in the special warranty set forth in the Assignment, neither Seller nor any Affiliate of Seller has made or makes any representation or warranty, express, statutory, implied or otherwise with respect to the Assets and the transactions contemplated hereby and Buyer has not relied upon any other such representation, warranty, statement or information made or communicated to Buyer or any of its Affiliates, or its or their employees, agents, officers, representatives or advisors.  Except as otherwise expressly provided in Article 5 and in the special warranty set forth in the Assignment, Seller, for itself and its Affiliates, hereby expressly disclaims and negates any and all representations and warranties, express, statutory, implied or otherwise, and projections, forecasts, statements or information made, communicated or furnished (orally or in writing) to Buyer or any of its Affiliates or Representatives, associated with the Assets.

         4.2     Non-reliance on Projections.  Except to the extent expressly set forth in Article 5 and the special warranty set forth in the Assignment, without limiting the generality of Section 4.1, Seller expressly disclaims, and Buyer acknowledges and agrees that it has not relied upon, any representation or warranty, statutory, express or implied, as to (i) title to any of the Assets, (ii) the contents, character or nature of any descriptive memorandum, or any report of any petroleum engineering consultant, or any geological or seismic data or interpretation, relating to the Assets, (iii) the quantity, quality or  recoverability of petroleum substances in or from the Assets, (iv) any estimates of the value of the Assets or future revenues generated by the Assets, (v) the production of petroleum substances from the Assets, (vi) any estimates of operating costs and capital requirements for any Well,  

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operation, or project, (vii) the maintenance, repair, condition, quality, suitability, design or marketability of the Assets, (viii) the content, character or nature of any descriptive memorandum, reports, brochures, charts or statements prepared by third parties, or (ix) any other materials or information that may have been made available or communicated to Buyer or its Affiliates, or its or their employees, agents, officers, representatives or advisors in connection with the transactions contemplated by this Agreement or any discussion or presentation relating thereto, and further disclaims any representation or warranty, statutory, express or implied, of merchantability, fitness for a particular purpose or conformity to models or samples of materials of any equipment, it being expressly understood and agreed by the Parties hereto that Buyer shall be deemed to be obtaining the Assets,  including the Equipment, in its present status, condition and state of repair, “as is” and “where is” with all faults and that Buyer has made or caused to be made such inspections as Buyer deems appropriate.

Seller represents and warrants to Buyer the following as of the date hereof:

         5.1     Organization and Good Standing.    

         5.2     Authority; Authorization of Agreement.  Seller has all requisite power and authority to execute and deliver this Agreement and the Operative Documents to which it is a party, to consummate the transactions contemplated by this Agreement and the Operative Documents to which it is a party and to perform all of its obligations under this Agreement and the Operative Documents to which it is a party.  This Agreement constitutes, and the Operative Documents to which it is a party, when executed and delivered by Seller, shall constitute, the valid and binding obligations of Seller, enforceable against it in accordance with their respective terms, except as such enforceability may be limited by bankruptcy, insolvency or other Laws relating to or affecting the enforcement of creditors’ rights and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

         5.3     No Violations.  Except for (i) Customary Post-Closing Consents, (ii) any consents or approvals listed on Schedule 5.3, and (iii) any preferential rights listed on Schedule 5.10, Seller’s execution and delivery of this Agreement and the Operative Documents to which it is a party and the consummation and performance of the transactions contemplated by this Agreement by it shall not:

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         5.4     Liability for Brokers’ Fees.  Seller has not incurred any liability, contingent or otherwise, for investment bankers’, brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Buyer or any Affiliate of Buyer shall, directly or indirectly, have any responsibility whatsoever.

        5.5     Legal Proceedings.    Schedule 5.5 sets forth all Legal Proceedings pending or, to Seller’s Knowledge, threatened in writing against Seller or, to Seller’s Knowledge, the operator of the Oil and Gas Properties in respect of any of the Assets.

        5.6    Bankruptcy.  There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by, or to Seller’s Knowledge, threatened against, Seller.

       5.7     Taxes.  Except as disclosed on Schedule 5.7, (i) all Tax Returns required to be filed by Seller with respect to the Assets have been timely filed, (ii) all Taxes with respect to the Assets have been timely paid and all Tax Returns filed by Seller with respect to the Assets are true, correct and complete in all material respects, (iii) there are no liens existing on any of the Assets that arose in connection with any failure (or alleged failure) by Seller to pay any Tax, (iv) there are no claims pending or threatened by any Taxing Authority in connection with any such Tax that would adversely affect the Assets after the Closing, (v) to Seller’s Knowledge there are no Tax audits currently pending that would adversely affect the Assets after the Closing, (vi) none of the Assets is an equity interest in any entity, and no Asset is subject to a tax partnership or provision requiring a partnership Tax Return to be filed for U.S. federal or applicable state income tax purposes.

         5.8     Material Contracts.

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         5.9     No Violation of Laws.  Except as set forth on Schedule 5.9, neither Seller nor, to Seller’s Knowledge, the operator of the Oil and Gas Properties has violated any applicable Laws with respect to the ownership or operation of the Assets.

        5.10     Preferential Rights.  Except as set forth on Schedule 5.10, there are no preferential rights to purchase that are applicable to the transaction contemplated hereby (each, a “Preferential Right”).

        5.11     Consents.  Except as set forth on Schedule 5.3, there are no third party consent requirements that are applicable to the transaction contemplated hereby.

        5.12     Royalties.  All royalties due with respect to the Oil and Gas Properties have been timely paid, or if not paid, are being contested in good faith in the normal course of business and are set forth on Schedule 5.12.

       5.13     Current Commitments.    Schedule 5.13 sets forth all authorities for expenditures in excess of $50,000 (“AFE’s”) (net to the interest of Seller) relating to the Oil and Gas Properties to drill or rework wells or for other capital expenditures pursuant to any of the Material Contracts for which all of the activities covered in such AFE’s have not been completed.

      5.14     ERISA

.  Neither the Seller nor any of its ERISA Affiliates has made or been required to make contributions to (i) any plan that is subject to Section 302 or Title IV of ERISA or Section 412 or 430 of the Code, (ii) a “multiemployer plan” within the meaning of Section 3(37) and 4001(a)(3) of ERISA, (iii) a “multiple employer plan” within the meaning of Sections 4063 and 4064 of ERISA or Section 413(c) of the Code, or (iv) a “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA.  Seller and its ERISA Affiliates have paid and discharged promptly all obligations and liabilities arising under ERISA or the Code of a character which, if unpaid or unperformed, might result in a claim against Buyer or its Affiliates or the imposition of a lien against the Buyer or its Affiliates or with respect to the Assets.

      5.15     Assets of the E&P Business.  Neither Seller nor its Affiliates are operator of any of the Oil and Gas Properties.  To Seller’s Knowledge, since January 1, 2013, the Assets have been operated in the ordinary course of business consistent with past practices of the operator of the Oil and Gas Properties and the Assets are sufficient to conduct the E&P Business.

     5.16      Environmental Laws

.  Except as disclosed on Schedule 5.17, to Seller’s Knowledge, the ownership and operation of the Assets by Seller and the operator of the Oil and Gas Properties is in compliance with all applicable Environmental Laws.  Except as disclosed on

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Schedule 5.17, to Seller’s Knowledge there is not an Environmental Condition existing with respect to the Assets.

         5.17     Production Imbalances.  Seller is not obligated by virtue of a take-or-pay payment, advance payment, or other similar payment (other than royalties, overriding royalties, similar arrangements established in the Leases), to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to Seller's interest in the Oil and Gas Properties at some future time without receiving payment for the market value thereof at or after the time of delivery.  Schedule 5.17 sets forth all Imbalances with respect to Oil and Gas Properties. 

       5.18     Leases.  Except for proceeds attributable to interests being held in suspense, Seller (or, to Seller's Knowledge, the applicable operator of the Oil and Gas Properties) has timely and properly paid all accrued bonuses, delay rentals, minimum royalties, and royalties due with respect to Seller's interest in the Leases, in each case in accordance with the Leases and applicable Law.  With respect to Leases issued by any Governmental Authority, Seller has received no notice that any Lease accounts are not current or that any payments required thereunder have not been paid.  Schedule 5.19 contains a true, correct, and complete list of all Leases which (a) are currently held by payment of shut-in royalties, reworking operations, any substitute for production in paying quantities, or any other means other than production in paying quantities that will expire or terminate on or before a date that is sixty (60) days after the Closing Date unless the lessee thereunder conducts operations in accordance with the terms of such Lease on or before such date or (b) Seller has received written notice of a default from a lessor with respect thereto which is currently unresolved.

          5.19     Permits.  To Seller’s Knowledge, the operator of the Oil and Gas Properties has maintained and is maintaining all material permits with respect to the Assets necessary to operate the Oil and Gas Properties in accordance with the methods and practices of a prudent operator of oil and gas properties in Karnes County, Texas. To Seller’s Knowledge, the Assets are in material compliance with applicable permits and no event has occurred which permits, or after the giving of notice or lapse of time or both would permit, the revocation or termination of any permit or the imposition of any restrictions of such a nature as may limit the operation or use of the Assets in accordance with the methods and practices of a prudent operator of oil and gas properties in Karnes County, Texas.

        5.20     Equipment and Personal Property.  Except as set forth on Schedule 5.20, to Seller’s Knowledge the Equipment and the Central Facilities are in an operable state of repair adequate to maintain normal operations in accordance with the methods and practices of a prudent operator of oil and gas properties in Karnes County, Texas, ordinary wear and tear excepted.  Seller or, to Seller’s Knowledge, the respective operator of the Oil and Gas Properties, has all material easements, rights of way, licenses and authorizations, from Governmental Authorities and Non-Parties necessary to access, construct, operate, maintain and repair the Equipment and the Central Facilities in the ordinary course of business as currently conducted and in material compliance with all Laws, except such failures would not individually or in the aggregate have a Material Adverse Effect.

          5.21      Wells.  To Seller’s Knowledge, (i) all wells have been drilled and completed within the limits permitted by all applicable Leases and Contracts, (ii) no well is subject to

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penalties on allowables after the Effective Time because of any overproduction or any other violation of Laws, and (iii) there are not any wells, equipment or other facilities located on the Assets that (A) Seller or the operator of the Oil and Gas Properties is obligated by any Laws or contract to currently plug, dismantle and/or abandon, or (B) have been plugged, dismantled or abandoned in a manner that does not comply in all material respects with Laws.  To Seller’s Knowledge, all currently producing Wells are in an operable state of repair adequate to maintain normal operations in accordance with the methods and practices of a prudent operator of oil and gas properties in Karnes County, Texas, ordinary wear and tear excepted, and, without limiting the foregoing, do not contain junk or other obstructions which could reasonably be expected to materially interfere with drilling, completion, and recompletion, stimulation, or other operations on, with respect to, or affecting the Assets.

         5.22     Non-Consent Operations.  Seller has not elected not to participate in any operation or activity proposed with respect to the Oil and Gas Properties which could result in any of Seller's interest in such Oil and Gas Properties becoming subject to a penalty or forfeiture as a result of such election not to participate in such operation or activity.

         5.23     Casualty Loss; Condemnation.  Since January 1, 2013, to Seller’s Knowledge (i) there has not been any material Casualty Loss to or Condemnation of any Asset and (ii) no Condemnation is pending or threatened against the Assets. 

         5.24     Insurance.    Schedule 5.24 lists all the insurance policies (and descriptions thereof, including deductibles) maintained by Seller that provide coverage to the Assets.  Each such policy is in full force and effect.

Buyer represents and warrants to Seller the following as of the date hereof:

         6.1    Organization and Good Standing.  Buyer is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite power and authority to own the Assets.

         6.2     Authority; Authorization of Agreement.  Buyer has all requisite power and authority to execute and deliver this Agreement and the Operative Documents to which it is a party, to consummate the transactions contemplated by this Agreement and the Operative Documents to which it is a party and to perform all of its obligations under this Agreement and the Operative Documents to which it is a party.  This Agreement constitutes, and the Operative Documents to which it is a party, when executed and delivered by Buyer, shall constitute, the valid and binding obligation of Buyer, enforceable against it in accordance with their terms, except as such enforceability may be limited by bankruptcy, insolvency or other Laws relating to or affecting the enforcement of creditors’ rights and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

         6.3   No Violations.  No consent is required to be obtained with respect to the consummation of the transactions contemplated by this Agreement by Buyer.  Buyer’s execution and delivery of this Agreement and the Operative Documents, to which it is a party and the

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consummation and performance of the transactions contemplated by this Agreement by it shall not:

        6.4     Liability for Brokers’ Fees.  Buyer has not incurred any liability, contingent or otherwise, for investment bankers’, brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Seller or any Affiliate of Seller shall, directly or indirectly, have any responsibility whatsoever.

        6.5     Claims, Disputes and Litigation.  There are no Legal Proceedings pending or, to Buyer’s Knowledge, threatened in writing against Buyer that would prevent the consummation of the transactions contemplated by this Agreement.

         6.6     Bankruptcy.  There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by or, to Buyer’s Knowledge, threatened against Buyer.

        6.7   Independent Evaluation.    Buyer is sophisticated in the evaluation, purchase, ownership and operation of oil and gas properties and related facilities.  Buyer acknowledges and agrees that Seller has not made any representations or warranties as to the Assets except as expressly and specifically provided in Article 5 and the special warranty set forth in the Assignment, and that Buyer may not rely on any other representations or warranties made by Seller or its representatives or on any of Seller’s estimates with respect to reserves or the value of the Assets, or any projections as to future events or other analyses or forward looking statements. 

         6.8     Capabilities.  Buyer has the financial, technical and other capabilities to perform all of Buyer’s other obligations under this Agreement and all of the obligations assumed from Seller with respect to the Assets.

         7.1     Data Sharing.  The Parties agree to meet, at a mutually agreeable location, at least semiannually in order to share data, including reserve reports, and other technical information

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related to the operation of the Oil and Gas Properties, provided neither Party shall be obligated to violate any agreement of confidentiality or pay any material amounts to Non-Parties, in order to fulfill the foregoing obligation, and provided further, the foregoing obligation shall apply only to the extent the Parties own an interest in the oil and gas leases, wells and other assets described herein. 

         7.2     Consents.

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        7.3     Approvals of Governmental Authorities.  Seller and Buyer shall use their commercially reasonable efforts to take or cause to be taken all appropriate action, and to do, or cause to be done, all things necessary or reasonably advisable under applicable Laws to consummate and make effective the transactions contemplated by this Agreement, including using their commercially reasonable efforts to obtain, or cause to be obtained, all waivers, permits, consents, approvals, authorizations, qualifications and orders of all Governmental Authorities and officials and parties to contracts with the Parties that may be or become necessary for the performance of obligations pursuant to this Agreement and the consummation of the transactions contemplated by this Agreement and each Party will cooperate fully with the other Party in promptly seeking to obtain all such waivers, permits, consents, approvals, authorizations, qualifications and orders. 

         7.4     Efforts.  Each Party shall use commercially reasonable efforts to take all actions and to do all things necessary to consummate, make effective and comply with all of the terms of this Agreement.  Without limiting the generality of the foregoing, from time to time after Closing, Seller and Buyer shall each execute, acknowledge and deliver to the other such further instruments as may be reasonably requested by the other Party, at such requesting Party’s cost, and as are commercially reasonable to be performed in order to accomplish more effectively the purposes of the transactions contemplated by this Agreement, including those post-Closing

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actions contemplated by Section 7.2.  Promptly after Closing, Buyer shall: (a) record the Assignment and all state and federal assignments executed at the Closing in all applicable real property records and/or, if applicable, all state and federal Governmental Authorities and Buyer shall provide to Seller copies of such recorded documents; (b) actively pursue the approval of all Customary Post-Closing Consents from the applicable Governmental Authorities; and (c) except as otherwise provided for herein, actively pursue all other consents and approvals that may be required in connection with the assignment of the Assets to Buyer and the assumption of the rights, interests, obligations and liabilities assumed by Buyer hereunder that have not been obtained prior to Closing, provided that Seller shall reasonably cooperate with Buyer in obtaining such other consents and approvals.  Promptly after Closing, Seller shall deliver all notices that are required to be delivered in connection with the assignment of the Assets to Buyer and the assumption of the rights, interests, obligations and liabilities assumed by Buyer hereunder.

         7.5     Records in Seller’s Possession.  Following Closing, Seller shall grant Buyer reasonable access (at reasonable times and upon reasonable notice) to the Records.  Within 5 Business Days after the Closing Date, Seller shall furnish to Buyer legible copies of the Records.  Buyer shall maintain the Records received from Seller for a period of 5 years after Closing.

         7.6     SEC Matters.  Seller acknowledges that Buyer and its Affiliates may be required to include statements of revenues and direct operating expenses and other financial information relating to the Assets (“Financial Statements”) in documents filed with the SEC by Buyer and its Affiliates pursuant to the Securities Act or the Exchange Act, and that such Financial Statements may be required to be audited.  In that regard, Seller shall reasonably cooperate with Buyer, and provide Buyer reasonable access to such records (to the extent such information is available) and personnel of Seller as Buyer may reasonably request to enable Buyer, and its representatives and accountants, at Buyer’s sole cost and expense, to create and audit any Financial Statements that Buyer deems necessary. Notwithstanding anything to the contrary herein, Seller shall provide Buyer and its independent accountants with reasonable access to any and all existing information, books, records, and documents in Seller’s possession that relate to the Assets (subject to any privilege or confidentiality obligations) and other data delivered to Buyer by Seller pursuant to the provisions of this Agreement relevant to the periods being audited.

         7.7     Confidentiality Agreement.  If Closing of the transaction contemplated under the terms of this Agreement occurs, the Confidentiality Agreement shall terminate (which termination shall be effective as of Closing).

         7.8     Closing.  The consummation of the purchase and sale of the Assets contemplated by this Agreement shall, unless otherwise agreed to in writing by Buyer and Seller, take place at the offices of Haynes and Boone, LLP located at 1221 McKinney, Suite 2100, Houston, Texas, 77010 at 10:00 a.m., local time, on the date hereof (the “Closing Date”).  Seller shall provide Buyer with wiring instructions designating the account or accounts to which the Base Purchase Price is to be delivered.

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         8.2     Obligations of Seller at Closing.  At Closing, Seller shall, subject to the simultaneous performance by Buyer of its obligations pursuant to Section 8.3, deliver or cause to be delivered to Buyer, unless waived by Buyer (provided, Buyer may not waive the requirements of Section 8.2(i)), the following:

Seller shall take such other actions and deliver such other documents as are contemplated by this Agreement or as may be reasonably requested by Buyer.

         8.3     Obligations of Buyer at Closing

.  At Closing, Buyer shall, subject to the simultaneous performance by Buyer of its obligations pursuant to Section 8.2, deliver or cause to be delivered to Seller, unless waived by Seller, the following:

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         9.1     Cooperation on Tax Matters.  Buyer and Seller shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of any Tax Return and any audit, litigation or other proceeding with respect to Taxes.  Such cooperation shall include the retention and (upon the other party’s request) the provision of records and information which are reasonably relevant to any such Tax Return, audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.  Each of Buyer and Seller agrees (a) to retain all books and records with respect to Tax matters pertinent to the acquired Assets relating to any taxable period beginning before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by Buyer or Seller, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Taxing Authority, and (b) in the case of Seller, to give the Buyer reasonable written notice prior to transferring, destroying or discarding any such books and records and, if Buyer so requests, Seller shall allow Buyer the option of taking possession of such books and records prior to their disposal.  Buyer and Seller further agree, upon request, to use their commercially reasonable efforts to obtain any certificate or other document from any Taxing Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed with respect to the transactions contemplated.

         9.2      Property and Excise Taxes

.  All ad valorem, real property, personal property, and similar Taxes assessed on the Assets (“Property Taxes”) and excise Taxes associated with any of the Assets (“Excise Taxes”) are Seller’s obligation with respect to periods before the Effective Time and Buyer’s obligation with respect to periods from and after the Effective Time; provided that, if the taxable period with respect to such a Tax begins on or before and ends after the Effective Time, then such Tax shall be attributable to the portions of such taxable period before and after the Effective Time based on the relative number days in each portion of such taxable period.  If either Party pays Property Taxes or Excise Taxes for which the other Party is responsible, and the amount of such payment is not taken into account as an adjustment to the Base Purchase Price under Section 2.4, then upon receipt of evidence of payment the nonpaying Party will reimburse the paying Party promptly for the nonpaying Party’s share of such Taxes.

         9.3     Severance Taxes.  Seller shall bear and pay all severance or other Taxes based upon or measured by Hydrocarbon production from the Assets, or the receipt of proceeds therefrom, to the extent attributable to production from the Assets before the Effective Time. Buyer shall bear and pay all such Taxes on production from the Assets from and after the Effective Time.  Seller shall withhold and pay on behalf of Buyer all such Taxes on production from the Assets between the Effective Time and the Closing Date, and the amount of any such payment shall be reimbursed to Seller as an adjustment to the Base Purchase Price pursuant to Section 2.4.  If either Party pays any such Taxes owed by the other, and the amount of such payment is not taken into account as an adjustment to the Base Purchase Price under Section 2.4, then upon receipt of evidence of payment the nonpaying Party will reimburse the paying Party promptly for the nonpaying Party’s share of such Taxes

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         9.4     Transfer Taxes.  Buyer shall be responsible for the payment of all state and local transfer, sales, use, stamp, registration or other similar Taxes (the “Transfer Taxes”) resulting from the acquisition of the Assets contemplated by this Agreement.  Buyer and Seller shall cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Transfer Taxes.

         10.1     Notices.  All notices and other communications required or desired to be given hereunder must be in writing and sent (properly addressed as set forth below) by:  (a) U.S. mail with all postage and other charges fully prepaid, (b) electronic mail with a PDF of the notice or other communication attached (with the original sent by U.S. mail the same day such electronic mail is sent), or (c) facsimile transmission.  A notice shall be deemed effective on the date on which such notice is received by the addressee, if by mail, or on the date sent, if by facsimile (as evidenced by fax machine confirmation of receipt) or if by electronic mail (as evidenced by computer generated confirmation of receipt); provided, if such date is not a Business Day, then date of receipt shall be on the next date that is a Business Day.  Each Party may change its address by notifying the other Party in writing of such address change.

If to Seller:

 

Alta Mesa Eagle, LLC

15021 Katy Freeway, Suite 400

Houston TX 77094

Phone: 281 ###-###-####

Facsimile: 281 ###-###-####

Attn:Mike McCabe

Email: ***@***

 

If to Buyer:

 

Memorial Production Operating LLC

c/o Memorial Production Partners LP

1301 McKinney Street, Suite 2100

Houston, TX 77010

Attention: Kyle N. Roane

Phone: (713) 588-8300

Fax: (713) 588-8301

Email: ***@***

 

          10.2     Transaction and Filing Costs.  Buyer shall be responsible for recording and filing documents associated with the transfer of the Assets to it and for all costs and fees associated therewith, including filing the assignments with appropriate federal, state and local Governmental Authorities as required by applicable Law.  Buyer shall also be responsible for the payment of any and all stamp, documentary, real property transfer, sales, gross receipts, use or similar Taxes or assessments resulting from its acquisition of the Assets contemplated by this

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Agreement.  As soon as practicable after recording or filing, Buyer shall furnish Seller with all recording data and evidence of all required filings including filings with the appropriate state counties.

         10.3     Amendments and Severability.  No amendments or other modifications to this Agreement shall be effective or binding on either of the Parties unless the same are in writing, designated as an amendment or modification, and signed by both Seller and Buyer.  The invalidity of any one or more provisions of this Agreement shall not affect the validity of this Agreement as a whole, and in case of any such invalidity, this Agreement shall be construed as if the invalid provision had not been included herein.

         10.4     Successors and Assigns.  Except as set forth in this Section 10.4, this Agreement may not be assigned, either in whole or in part, without the express written consent of the non-assigning Party, such consent not to be unreasonably withheld, conditioned or delayed.  The terms, covenants and conditions contained in this Agreement are binding upon and inure to the benefit of Seller and Buyer and their respective successors and permitted assigns. 

         10.5    Headings.  The titles and headings set forth in this Agreement have been included solely for ease of reference and may not be considered in the interpretation or construction of this Agreement.

        10.6     Governing Law; Jurisdiction; Waiver of Trial by Jury.

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          10.7     No Partnership Created.  It is not the purpose or intention of this Agreement to create (and it should not be construed as creating) a joint venture, partnership or any type of association, and the Parties are not authorized to act as an agent or principal for each other with respect to any matter related hereto.

         10.8      Public Announcements.  Neither Seller nor Buyer (including any of their agents, employees or Affiliates in either case) may issue a public statement or press release with respect to the transaction contemplated hereby (including the price and other terms) without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed, except as required by Law or listing agreement with a national security exchange and then only after prior consultation with the other Party.

         10.9      No Third Party Beneficiaries.  Nothing contained in this Agreement shall entitle anyone other than Seller and Buyer, their successors and permitted assigns or the express beneficiaries of indemnity provisions to any Claim, cause of action, remedy or right of any kind whatsoever. 

        10.10    Construction.  The Parties acknowledge that they have had an adequate opportunity to review each and every provision contained in this Agreement and to submit the same to legal counsel for review and comment.  Moreover, the Parties have participated jointly in the negotiation and drafting of this Agreement.  Based on the foregoing, the Parties agree that the rule of construction that a contract be construed against the drafter, if any, not be applied in the interpretation or construction of this Agreement.

         10.11    Schedules.  The inclusion of any matter upon any Schedule does not constitute an admission or agreement that such matter is material with respect to the representations and warranties contained herein.

         10.12     Conspicuousness of Provisions.  The Parties acknowledge and agree that the provisions contained in this Agreement that are set out in “bold” satisfy the requirement of the “express negligence rule” and any other requirement at Law or in equity that provisions contained in a contract be conspicuously marked or highlighted.

         10.13     Execution in Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, all of which when taken together shall constitute one and the same agreement.

         10.14     Entire Agreement.  Except for the Confidentiality Agreement, this Agreement supersedes all prior and contemporaneous negotiations, understandings, letters of intent and agreements (whether oral or written) between the Parties with respect to the subject matter hereof and constitute the entire understanding and agreement between the Parties with respect thereto.

[signatures follow on next page]

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year first set forth above.

 

 

 

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