ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (this "Agreement") is made and
entered as of May 14, 1998, by and between Frontier Natural Gas Corporation,
an Oklahoma corporation ("Frontier"), and Aspect Resources LLC, a Colorado
limited liability company ("Aspect").
W I T N E S S E T H:
WHEREAS, Frontier, Aspect and Esenjay Petroleum Corporation ("Esenjay")
entered into that certain Acquisition Agreement and Plan of Exchange, dated
as of January 19, 1998 (the "Acquisition Agreement"), providing for, among
other things, the transfer to Frontier of certain of the assets and
properties of Aspect, in consideration of the payment by Frontier to Aspect
of the shares of common stock of Frontier set forth in the Acquisition
Agreement, and the assumption by Frontier of certain of the liabilities and
obligations of Aspect; and
WHEREAS, all of the instruments, documents and agreements required to be
executed and delivered in order to consummate the transactions provided in
the Acquisition Agreement are being executed by and delivered to the
respective parties to the Acquisition Agreement concurrently herewith;
NOW, THEREFORE, in consideration of the premises and the transfer by
Aspect concurrently herewith of the Aspect Assets (as defined in the
Acquisition Agreement), in accordance with and pursuant to the Acquisition
Agreement, the parties hereby agrees as follows:
1. All capitalized terms used but not defined herein shall have the
meaning ascribed to them in the Acquisition Agreement. The parties agree that
the Group A Aspect Assets and the Group B Aspect Assets, as such terms are
used in the Acquisition Agreement and herein, shall mean those Aspect Assets
identified on Schedule 1 hereto under the respective headings "Group A Aspect
Assets" and "Group B Aspect Assets".
2. Frontier hereby assumes and agrees to pay or perform in accordance
with their terms, the following obligations and liabilities of Aspect
(collectively, the "Assumed Liabilities"), as follows:
(a) Aspect's obligation, as of and after the date hereof, to pay when
due unpaid principal in the amount of $3,800,000, and interest accruing
thereon after the date hereof, representing a portion of the amount owing
under that certain Loan Agreement, dated September 17, 1997 (the "Loan
Agreement"), by and between Aspect and Joint Energy Development
Investments Limited Partnership ("JEDI-1"), whereby JEDI-1 agreed to lend
up to $16 million to Aspect on the terms and conditions set forth in the
Loan Agreement;
(b) the obligations and liabilities of Aspect arising after the date
hereof under the agreements, contracts and commitments relating to the
Aspect Assets (the "Assumed Contracts"); provided, however, that Frontier
does not assume any liability arising out of the performance or
nonperformance of, or a violation, breach or default (including any event
which with notice or lapse of time or both will give rise to a
default) by, Aspect prior to the date hereof;
(c) all Post Effective Date Costs relating to the Group A Aspect
Assets incurred after the Effective Date and remaining unpaid as of the
date hereof; and
(d) all Operating Costs in excess of $5,989,000 (regardless of when
incurred) attributable to the Group B Aspect Assets.
3. Aspect hereby assigns to Frontier all of its right, title and
interest in, to and under the Assumed Contracts, except to the extent the
Assumed Contracts relate to assets ("Retained Assets") in which Aspect will
continue to have an interest after the transfers contemplated hereby and by
the Acquisition Agreement, in which case Aspect retains rights, coterminous
with those assigned to Frontier hereunder, with respect to the Retained
Assets.
4. Aspect expressly understands and agrees that except for the Assumed
Liabilities, Frontier has not agreed to pay, shall not be required to assume,
and shall have no liability or obligation, direct or indirect, absolute or
contingent, arising out of or related the liabilities of Aspect existing on
or arising after the date hereof. It is expressly understood and agreed that
all liabilities, obligations and commitments not assumed hereunder by
Frontier shall remain, as between Frontier, on the one hand, and Aspect, on
the other hand, the sole obligation of Aspect and its respective successors
and assigns.
5. The parties acknowledge that, after the date hereof, Aspect may (but
shall have no obligation to) pay certain of the Assumed Liabilities in the
ordinary course of its business. In the event Aspect pays any of the Assumed
Liabilities, Frontier agrees to promptly reimburse Aspect for any such
payment.
6. Nothing herein shall be deemed to deprive Frontier of any defenses,
setoffs or counterclaims (collectively, "Defenses") which Aspect may have had
or which Frontier shall have with respect to any of the obligations,
liabilities or commitments assumed hereby. Aspect hereby transfers, conveys
and assigns to Frontier all Defenses and agrees to reasonably cooperate with
Frontier to maintain, secure, perfect and enforce the Defenses.
7. Frontier further covenants and agrees with Aspect that Frontier will
do, execute and deliver, or cause to be done, executed and delivered, all
such further instruments, documents, agreements and assurances as may be
reasonably requested by Aspect, which may be necessary in
2
order to evidence and provide for the specific assumption by Frontier of any
one or more of the Assumed Liabilities.
8. Subject to the indemnification of Frontier by Aspect contained in
Section 15.03 of the Acquisition Agreement, Frontier hereby indemnifies and
agrees to defend and hold Aspect harmless from and against any and all loss,
damage, liability, cost and expense, including reasonable attorneys' fees,
suffered or incurred by Aspect after the date hereof and arising out of any
claims, liabilities, obligations, damages and expenses with respect to the
Assumed Liabilities.
9. Aspect and Frontier, by their execution hereof, each hereby
acknowledges and agrees that, except as expressly provided herein, neither
the representations and warranties nor the rights and remedies of either
party under the Acquisition Agreement shall be deemed to be enlarged,
modified or altered in any way by this Agreement. Nothing in this Agreement
is intended to waive any rights of Frontier and/or Aspect under Section
3.02(d) of the Acquisition Agreement. This Agreement is solely for the
benefit of Frontier and Aspect and nothing contained herein shall be
construed to grant any third party any rights against Frontier or Aspect.
10. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas (without regard to its conflicts of law
doctrine).
IN WITNESS WHEREOF, Frontier has caused this Agreement to be duly
executed by its authorized officers as of the date first above written.
FRONTIER:
Frontier Natural Gas Corporation
By: /s/ Xxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxx, President
ASPECT:
Aspect Resources LLC
By: Aspect Management Corporation,
its Manager
By: /s/ Xxxx Xxxxxxxx
-------------------------------
Xxxx Xxxxxxxx, President
3
Schedule 1
to
Assignment and Assumption Agreement
Group A Aspect Assets:
----------------------
Lipsmacker (aka Lipsmacker field, Xxxxxx field,
Oktuppa field, Cedar Creek field and Xxxxxxxx Field)
Raymondville South
Midfield
Hordes Creek
Houston Endowment (aka Vicksburg II, Phase 2)
Wolfpoint
El Maton
Blessing
Hall Ranch
Xxxxxxx
Piledriver
Tidehaven
Group B Aspect Assets:
----------------------
Caney Creek
Xxxxxxx
Xxxxxx Lake
Xxxxx Ranch
Lox B
West Port Acres
Stowell/Big Hill
X. Xxxxxxxx
SW Pheasant
Sheriff
East Texas
