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EXHIBIT 10.33
PURCHASE AND SALE AGREEMENT
BETWEEN
ONLINE RESOURCES, INC.
(SELLER)
AND
ENERGY PARTNERS, LTD.
(BUYER)
DATED OCTOBER 29, 1999
EFFECTIVE OCTOBER 1, 1999
SOUTH TIMBALIER/BAY XXXXXXXX AREA
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this "Agreement"), dated as of
October 29, 1999, is by and among ONLINE RESOURCES, INC., a Louisiana
corporation ("ORI"), with a mailing address of 000 Xxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxx, XX 00000 (herein sometimes referred to as "Seller") and Energy
Partners, Ltd., a Delaware corporation ("EPL"), with a mailing address of 000
Xx. Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000 (herein sometimes referred
to as "Buyer").
RECITALS
Seller desires to sell to Buyer and Buyer desires to purchase from
Seller on the terms set forth in this Agreement those certain oil and gas
interests and associated assets herein identified in Exhibits "A" and "B"
attached hereto and other related assets.
In consideration of the foregoing, the parties hereby agree as follows:
AGREEMENT OF THE PARTIES
1. SALE AND PURCHASE OF ASSETS
1.1 Asset To Be Sold. Seller shall sell, transfer, and assign to
Buyer and Buyer shall purchase and receive, all of the right,
title and interest of Seller in (i) the oil and gas Leases
described in Exhibit "A", referred to as "Leases") and the lands
covered thereby ("Lands"), (ii) all oil and/or gas xxxxx (whether
producing, shut-in, temporarily abandoned, plugged and abandoned,
or otherwise), equipment and other appurtenances and tangible
property located thereon or thereunder, including without
limitation, any production platform located on the Leases (the
"Platform") and the xxxxx and other facilities described on
Exhibit "B", (iii) all agreements described in Exhibit "C", to
the extent such agreements relate to the assets described in
clauses (i) or (ii) above (together with the Leases referred to
on Exhibit "A", the "Listed Contracts"), and (iv) all other
tangible property wherever located thereon or extending therefrom
and primarily used in connection with the ownership or
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operation of the Leases or the other assets described in clauses
(i) through (iii) of this sentence (collectively and as to
Seller, the "Assets"). Such transfer of interests will be made at
Closing, but shall be made effective as of the Effective Date of
Sale referred to in Section 2.7.
1.2 Assets Excluded. The Assets do not include:
(i) accounts receivable associated with the Assets and
relating to operations prior to Effective Date of Sale;
(ii) liquid hydrocarbon inventory in tanks above the pipeline
connections as of 7:00 a.m. on the effective Date of
Sale (which shall be sold to Buyer separately as
provided in Section 2.10.1);
(iii) Seller's area wide permits, licenses, bonds or other
permits, licenses or authorizations used to conduct
Seller's business;
(iv) Gas produced and marketed off the Leases through the
designated sales meter prior to 7:00 a.m. on the
Effective Date of Sale, and
(v) All seismic data held or used under license or agreement
to, from or with a third party owner of such data.
1.3 Securities Transaction Disclaimer. Each of the parties hereto
agree that the transaction contemplated herein is not intended as
a securities transaction and further agrees that Seller is not
considered by any party hereto as an issuer of securities for the
purposes of this Agreement.
2. PURCHASE PRICE
2.1 a) Price. As consideration for the sale of the Assets, Buyer
shall pay to Seller $1,500,000.00 (the "Purchase Price"). In
addition, Seller shall retain an overriding royalty interest
equal to 2% of 8/8ths, proportionately reduced to Online's
working interest ownership in each lease or tract. Said override
shall only be payable on production from new operations which are
conducted with a drilling rig and on workover operations which
are recompleted to new zones which require the utilization of a
workover rig or drilling rig.
b) Subject to adjustment as set forth below and the other
provisions of this Agreement, Buyer shall pay the Purchase Price
to Seller, at Closing by company check or wire, in immediately
available funds. Wiring instructions will be provided prior to
closing. This agreement is subject to a deposit equal to 15% of
the purchase price. The deposit has already been tendered to the
Seller by a payment of
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$50,000.00 on October 15, 1999 and $150,000.00 on October 22,
1999 for a total of $200,000.00 deposit.
c) The $200,000.00 deposit shall be refundable within 5 business
days following notice of the occurrence of one of the events for
termination or refund as set forth elsewhere in this Agreement.
2.2 Assumption of Liabilities. As additional consideration for the
sale of the Assets, if the Closing occurs, Buyer shall assume the
following obligations and liabilities ("Assumed Obligations"):
(i) all obligations and liabilities relating to the
ownership or use of the Assets that arise and are
attributable to periods of time subsequent to the
Effective Date of Sale (except for (1) any liability or
obligation that arises under contracts or agreements
other than the Listed Contracts that arise from or are
the subject of a breach by Seller of any of its
covenants, representations or warranties hereunder, or
that is a Retained Obligation, as defined in Section 2.4
hereof, none of which shall be Assumed Obligations, and
(2) any payment obligation associated with an agreement
for the supply of material, goods or service, which
shall be Assumed Obligation only to the extent that the
material, goods or service with respect to which such
payment is due is received by Buyer after the Effective
Date of Sale);
(ii) all obligations and liabilities for site reclamation,
plugging and abandonment of all xxxxx, platforms and
other facilities located on the Lands, and part of the
assets herein conveyed, regardless whether such
obligation or liability arose prior to or after the
Effective Date of Sale, and
(iii) all liabilities and obligations (including, without
limitations, all liabilities and obligations under
present and future federal, state and local laws
relating to the protection of health or the environment)
in respect to the condition of the Assets as of the
Closing (including, without limitation, conditions
resulting from Environmental Matters occurring on or
after the Effective Date of Sale), other than any
condition that is the subject of a breach by Seller of
any of its representations and warranties under this
Agreement or of its obligations under Section 5.3.
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Buyer shall not assume any obligations or liabilities of
Seller other than the Assumed Obligations. As used herein, the term
"Environmental Matters" shall mean any pollution, contamination,
degradation, damage or injury caused by, related to or arising from or
in connection with the generation, use, handling, treatment,
remediation, storage, transportation, disposal, discharge, release or
emission of any Hazardous Materials by, in, on or underlying the
Assets. As used in the preceding definition, "Hazardous Materials"
means any asbestos material, pollutants, contaminants, hazardous,
corrosive or toxic substances, special waste or waste of any kind, and
any other material or substance the storage, manufacture, disposal,
treatment, generation, use, transportation, remediation or release into
the environment of which is prohibited, controlled, regulated or
licensed under present or future Federal, State and Local laws
(including statutory and common laws) relating to the protection of
health or the environment.
2.3. Indemnity in Favor of Seller. If the Closing occurs, Buyer shall
indemnify and defend Seller, its officers, directors, agents,
employees, successors and assigns ("Seller Indemnified Parties"),
against any and all losses, claims suits, controversies,
liabilities and expenses (including reasonable attorney's fees)
arising directly or indirectly out of (i) the Assumed
Obligations, (ii) liabilities and obligations (other than
Retained Obligations) relating to or arising out of the ownership
or operation of the Assets and attributable to any act, omission,
occurrence, or event occurring after the Effective Date of Sale
(INCLUDING, WITHOUT LIMITATION, ANY LIABILITIES [OTHER THAN
RETAINED OBLIGATIONS UNDER SECTION 2.4] ARISING IN WHOLE OR IN
PART FROM THE NEGLIGENCE OR STRICT LIABILITY OF SELLER), and
(iii) all liabilities and obligations relating to or arising out
of NORM contamination (as defined in Section 7.3) to the
properties being acquired hereunder, whether such contamination
occurred prior to or after the Effective Date of Sale.
2.4 Retained Obligations. If the Closing occurs, Seller shall retain,
and Buyer shall not assume the following liabilities and
obligations ("Retained Obligations"):
(i) all liabilities and obligations relating to or arising
out of the ownership or operation of the Assets
(including, without limitation, liabilities and
obligations under the listed Contracts) that arose prior
to, or are attributable to periods of time or acts or
omissions prior
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to, the Effective Date of Sale (other than those
liabilities and obligations referred to in clauses (ii)
and (iii) of the definition of Assumed Obligations in
Section 2.2);
(ii) those liabilities and obligations that result in a
credit or payment to Seller under Section 2.10;
(iii) all liabilities and obligations incurred in violation
of, or arising out of a breach of, the covenants,
representations or warranties of Seller under this
Agreement;
(iv) all liabilities and obligations under contracts and
agreements to which the Assets are subject on the date
hereof other than the Listed Contracts.
2.5 Indemnity In Favor of Buyer. If the Closing occurs, Seller shall
indemnify, defend and hold harmless Buyer, and its respective
officers, directors, agents, employees, partners, lenders,
successors and assigns ("Buyer Indemnified Parties") against (i)
any and all losses, claims, suits, controversies, fines,
judgements, penalties, damages, liabilities and expenses of every
kind and nature (including, without limitation, reasonable
attorney's fees) arising out of any breach by Seller of any of
its representations, warranties or covenants under this
Agreement, and (ii) its proportionate share of any and all
losses, claims, suits, controversies, fines, judgements,
penalties, damages, liabilities and expenses of every kind and
nature (including, without limitation, reasonable attorney's
fees), arising out of the Retained Obligations described in
Section 2.4.
2.6 Invoices. After the effective date, Seller shall be required to
pay only that portion of invoices received under the listed
Contracts that are applicable to work performed or goods or
material received in the period prior to the Effective Date of
Sale; other charges and invoices for work performed or goods or
material received will be returned to the vendor for rebilling to
Buyer. Any charges or invoices paid by Seller that are applicable
to work performed or goods or material received subsequent to the
Effective Date of Sale will be credited to Seller pursuant to
Sections 2.10.2 and 2.10.3. Similarly, after the date of Closing,
Buyer shall be required to pay only that portion of invoices
received under the Listed Contracts that are applicable to work
performed or goods or material received in the period on or
subsequent to the Effective Date of Sale; other charges and
invoices for work performed or goods or material received will be
returned to the vendor for rebilling to
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Seller. Any charges or invoices paid by Buyer that are applicable
to work performed or goods or material received prior to the
Effective Date of Sale shall be credited to Buyer pursuant to
Sections 2.10.2 and 2.10.3.
2.7 Effective Date of Sale. The Effective Date of Sale of the Assets
shall be 7:00 a.m. Local Time on October 1, 1999.
2.8 Closing. The Closing of the transactions contemplated herein and
the transfer of the Assets shall occur at 10:30 a.m. local time
on December 15, 1999, at the office of Online Resources, Inc., or
such other date, time and place as Seller and Buyer may agree in
writing. If all conditions to Closing provided in this Agreement
are satisfied or waived on or before Closing, at the Closing the
following shall occur.
(i) Seller and Buyer will execute and deliver an Assignment
and Xxxx of Sale in the form attached hereto as Exhibit
"D", pursuant to which Seller will convey the Assets to
Buyer with special warranty of title;
(ii) Buyer shall pay to Seller the Purchase Price as provided
in Section 2.1;
(iii) Seller shall deliver to Buyer possession of the Assets;
(iv) Seller and Buyer shall execute, acknowledge and deliver
transfer orders or letters in lieu of transfer orders
directing all purchasers of production to make payment
to Buyer of proceeds attributable to production from the
Assets effective with production occurring from and
after the Effective Date of Sale;
(v) Seller and Buyer shall execute and deliver such other
agreements and instruments as shall be necessary to
complete the intent of the Agreement.
If the Closing occurs, (a) Buyer shall be deemed to have
represented and warranted to Seller that, except as disclosed to
Seller in writing at Closing, Buyer has performed and complied
with all material terms of the Agreement required to be performed
or complied with by it prior to Closing, and the representations
and warranties of Buyer contained in the Agreement are, if
qualified by materialty standards, true and correct, and if not
so qualified, are true and correct in all material respects, at
and as of the Closing as if such representations and warranties
were made at and as of the Closing, and (b) Seller shall be
deemed to have represented and warranted to Buyer that except as
disclosed to Buyer in writing at Closing, Seller has performed
and complied with all material terms of this Agreement required
to be performed
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or complied with by it prior to Closing, and the representations
and warranties of Seller contained in this Agreement are, if
qualified by materiality standards, true and correct, and if not
so qualified, are true and correct in all material respects, at
and as of the Closing as if such representations and warranties
were made at and as of the Closing.
2.9 Failure to Close. If the Closing does not occur on or before
December 15, 1999, any party, if not in default hereunder, may
terminate this Agreement by giving written notice to the other
party. If the sale contemplated hereby is not consummated at
closing because of the failure of a condition to Closing under
Section 6.1 or 6.2, this Agreement shall terminate and no party
shall have any further obligations to the other party hereunder,
other than liabilities hereunder arising prior to such
termination and those obligations that by their terms survive the
termination of the Agreement. If the sale contemplated hereby is
not consummated at Closing because of a breach by any party (the
"Defaulting Party") of its obligations hereunder, the Agreement
shall not terminate and the other party (the "Non-Defaulting
Party") shall have the right to specific performance of the
obligations of the parties within 30 days after the scheduled
Closing. If the Non-Defaulting Party does not notify the
Defaulting Party of its election to exercise specific performance
within 30-day period, this Agreement shall terminate and no party
shall have any further obligations to the other hereunder, other
than liabilities hereunder arising prior to such termination and
those obligations that by their terms survive the termination of
this Agreement. In the event closing does not occur or this
agreement is terminated for any reason, due to Seller's inability
or refusal to close, the deposit shall be refunded in accordance
with 2.1. However buyer shall retain all rights and remedies
contained herein or otherwise available to buyer.
2.10 Closing Adjustments.
2.10.1 Inventory Value. If applicable, at least five (5) days
prior to Closing, Seller shall furnish to Buyer the quantities of
liquid hydrocarbon inventory as described in Section 1.2 actually
on hand as of the Effective Date of Sale and shall compute the
value of the liquid hydrocarbon inventory using usual industry
valuation practice. The value of the inventory shall be credited
to Seller pursuant to the provisions of Section 2.10.2 and
Section 2.10.3 and the liquid hydrocarbon inventory shall become
the property of buyer as of the Effective Date of Sale.
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2.10.2 Adjustments to Purchase Price. The Purchase Price shall be
adjusted as follows and in accordance with Section 2.10.3:
(i) decreased by the estimated net revenue
received by Seller for hydrocarbons produced
from the Assets subsequent to the Effective
Date of Sale;
(ii) increased by the estimated expenses incurred
by Seller subsequent to the Effective Date
of Sale;
(iii) increased by the inventory value as
determined in Section 2.10.1 hereof, and
(iv) such other adjustments as may be applicable
and agreed to by the parties.
(v) deposit
The Purchase Price, as adjusted herein, shall be paid
by Buyer at closing as required in Section 2.8. Seller shall
furnish Buyer, at least three (3) days prior to Closing, the
adjustments to the Purchase Price.
2.10.3 Final Adjustments. Within one hundred twenty days (120)
days after the date of closing, Seller shall prepare a
final accounting for the actual net revenue received by
Seller for hydrocarbons produced from the Assets
subsequent to the Effective Date of Sale, less actual
expenses incurred by the Seller subsequent to the
Effective Date of Sale and attributable to the operation
of the Assets after the Effective Date of Sale, and plus
the final inventory value (if appropriate) as determined
in Section 2.10.1 hereof. Seller shall submit the final
accounting statement to Buyer, who shall have sixty (60)
days to audit same and confirm the accuracy thereof. Upon
the agreement by Seller and Buyer as to the accuracy of
said final accounting, Seller or Buyer, whichever the case
may be, shall within 30 days, pay to the other such sum as
may be found due, net of the preliminary accounting
amount.
2.10.4 Exclusions. The following expenses shall be excluded from
any adjustment under Sections 2.10.2 and 2.10.3: (i)
intercompany interest expense, and (ii) overhead and
general administrative expenses of Seller other than
direct overhead charges under Listed Contracts.
2.10.5 Gas Imbalances. Seller and Buyer acknowledge that, as of
the Effective Date of Sale, certain gas imbalances may
exist between
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Seller and others with respect to gas production
attributable to Seller's ownership of gas produced from
the Leases prior to the Effective Date of Sale. The
Purchase Price in Section 2.1 shall not be adjusted under
Sections 2.10.2 and 2.10.3 for Seller's gas imbalances.
Notwithstanding anything herein to the contrary, Seller
and Buyer agree that all liabilities, duties, obligations,
benefits and entitlements with respect to the gas
imbalances are specifically included in this sale to
Buyer, and Buyer accepts all entitlements and obligations
(contractual or otherwise), attributable to settle such
imbalances up to 50,000 mcf as of October 1, 1999. Seller
and Buyer further agree that the existence of such
imbalances shall not be deemed to be a deficiency in
Seller's title.
3. TAXES
3.1 Property Taxes. All ad valorem taxes, real property taxes,
personal property taxes, and similar obligations ("Property
Taxes") in respect of the Assets are Seller's obligation for
periods before the Effective Date of Sale and Buyer's obligation
for periods after the Effective Date of Sale. If Property Taxes
for the current tax year have not been assessed and paid as of
the Closing, buyer shall file all required reports and returns
incident to the Property Taxes and pay the Property Taxes for the
current tax year and subsequent periods. Seller will reimburse
Buyer promptly for Seller's proportionate share of the portion of
those taxes attributable to the portion of the current tax year
prior to the Effective Date of Sale upon receipt of evidence of
the Buyer's payment of the taxes. If Property Taxes for the
current tax year have been assessed and paid as of the Closing
Date, Buyer will reimburse Seller for the portion of those taxes
attributable to the portion of the current tax year after the
Effective Date of Sale.
3.2 Sales Taxes. Buyer shall be responsible for all sales, use and
similar taxes arising out of the sale of the Assets. The Assets
are located offshore in federal waters, and therefore the sale of
Assets pursuant to this Agreement is exempt from state sales
taxes. If Buyer subsequently uses the Assets in a state, such use
is expected to be exempt from sales or use tax as the sale is
expected to qualify as an isolated or occasional sale. Seller
agrees to cooperate with Buyer in demonstrating that the
requirements for an isolated or occasional sale or any
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other sales or use tax exemption have been met. Buyer shall
assume liability for any sales or use taxes assessed by any
taxing authority in respect of this sale, including the amounts
of any penalties and interest. Buyer shall hold harmless and
shall indemnify Seller for any sales or use taxes assessed
against Seller by any taxing authority in respect of this sale,
including the amounts of any penalties, interest and attorney's
fee except to the extent that buyer paid such tax to Seller in
addition to the Purchase Price. The Purchase Price is not
inclusive of any such sales or use taxes. Any reasonable legal
expenses incurred by Seller after consultation with Buyer to
reduce or avoid any of the aforementioned taxes shall be paid or
reimbursed by Buyer.
4. REPRESENTATIONS AND WARRANTIES
4.1 Seller's Representations and Warranties. Seller represents and
warrants that, except as set forth in the Disclosure Statement
attached hereto as Exhibit "F";
4.1.1 Seller is a corporation duly organized and validly
existing, in good standing, under the laws of the
state of its formation. Seller has the power and
authority to own its property and to carry on its
business as now conducted and to enter into and carry
out the terms of this Agreement.
4.1.2 The execution and delivery of this Agreement, the
performance of this Agreement by Seller, and the
consummation of the transactions contemplated hereby,
will not (i) conflict with or result in a breach of
any provision of Seller's certificate of
incorporation or bylaws (ii) except with respect to
third-party consents or preferential rights required
in connection with agreements and properties to be
assigned pursuant to this Agreement, result in a
material default (with due notice or lapse of time or
both) or give rise to any right to termination,
cancellation or acceleration under any of the terms,
conditions or provisions of any note, bond, mortgage,
indenture, license or agreement to which Seller is a
party or by which Seller or any Seller's properties
or assets may be bound, or (iii) violate any order,
writ, injunction, judgement, decree, statute, rule or
regulation applicable to Seller, or Seller's
properties or assets (assuming receipt of all routine
governmental consents typically received after
consummation of transactions of the nature
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contemplated by the Agreement, which governmental
consents Seller has no reason to believe will not be
granted).
4.1.3 To Seller's knowledge (i) there are no contracts or
agreements to which the Assets are subject other than
the Listed Contracts, and (ii) the Listed Contracts
are in full force and effect in accordance with their
respective terms.
4.1.4 Seller has not (i) received any advance "take-or-pay"
or other similar payments under production sales
contracts with respect to any of the Assets that
entitle the production purchasers to "make-up" or
otherwise receive deliveries of hydrocarbons at any
time after the Effective Date of Sale without paying
at such time the contract price therefor (or to
receive a cash payment in lieu thereof), (ii)
received any payments for hydrocarbons delivered
under any production sales or processing contracts
with respect with to any of the Assets in excess of
the amounts to which Seller was actually entitled
under the terms of such contracts, or (iii) received
any payments for hydrocarbons produced from the
Assets that are currently subject to refund.
4.1.5 There are no outstanding Authorities for Expenditure
with respect to the Assets except as shown on Exhibit
"F":
4.1.6 There is no action, investigation, suit or proceeding
pending against Seller or the Assets, with respect to
the Assets, before any court, administrative agency
or arbitral tribunal or, to the knowledge of Seller,
threatened against it or the asset or pending or
threatened against any other person or entity in
which any relief is claimed that, if granted, might
reasonably be expected to have a Material Adverse
Effect (as that term is defined below). Seller has
not been charged with any violation of or, to its
knowledge, threatened with a charge of violation of,
any provision of any law or regulation relating to
the Assets, which violation might be reasonably
expected to have a Material Adverse Effect, and, to
the knowledge of Seller, no other person or entity
has been charged with any violation of, or threatened
with a charge of violation of, any provision of any
law or regulation relating to the Assets, which
violation might reasonably be expected to have a
Material Adverse Effect. As used in this Agreement,
"Material Adverse Effect" shall mean a material
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adverse effect on the value, use, operation or
ownership of the Assets, taken as a whole, or on the
Assumed Obligations, taken as a whole.
4.1.7 To Seller's knowledge neither Seller nor any other
person or entity is in default under, and no
condition exists that with notice or lapse of time or
both would constitute a default under, any order,
judgement, contract, lease, license or instrument,
which default or potential default might reasonable
be expected to have a Material Adverse Effect. To its
knowledge, Seller has compiled with all laws,
regulations, orders, judgements or decrees of any
federal or state court or governmental authority
applicable to the ownership or operation of the
Assets, other than violations that are not,
individually or in the aggregate, reasonably expected
to have a Material Adverse Effect; provided, however,
that no representation or warranty is made as to
compliance with the Natural Gas Act or the Natural
Gas Policy Act of 1978 (or any regulations or orders
pertaining to either of these acts) relating to well
classification filings, other than the representation
that Seller has followed customary practices in the
oil and gas industry and has used all reasonable
efforts in attempting to comply with such laws,
regulations and orders.
4.1.8 Since the Effective Date of Sale, to Seller's
knowledge there has not been:
(i) any adverse change in the Assets that was
not the result of any industry-wide
development affecting other companies in the
oil and gas industry;
(ii) any damage, destruction or loss to or of the
Assets, whether or not covered by insurance;
(iii) any release, abandonment, encumbrance, sale,
Leases or disposition of any portion of the
Assets other than sales of hydrocarbons in
the ordinary course of business;
(iv) any waiver by Seller of any rights in
respect of Assets unless consented to by
Buyer;
(v) any condemnation or taking of all or any
portion of any of the Assets; or
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(vi) any contract or commitment to do any of the
foregoing unless consented to by Buyer;
that, individually or in the aggregate,
might reasonably be expected to have a
Material Adverse Effect.
4.1.9 Except as identified on Exhibit "A" hereto, there are
no material non-consent operations with respect to
the Assets which have resulted or will result in a
temporary or permanent increase or decrease in
Seller's net revenue interest or working interest in
the Assets.
4.1.10 There are no claims, suits, actions or proceedings
(including government investigations and audits) now
pending or, to the best of Seller's knowledge,
threatened, against Seller relating to material
Environmental Matters with respect to the Assets, and
Seller is not aware of any reasonable basis for
believing that any such claims for material
Environmental Matters may be asserted against Seller,
the Assets or any other person or entity with respect
to the Assets. To Seller's knowledge, Seller has all
material licenses and permits (federal, state,
foreign and local) necessary to own and operate the
Assets, and such licenses and permits are in full
force and effect. To the best of Seller's knowledge,
no violations are or have been recorded in respect of
such licenses or permits and no proceeding is pending
or threatened seeking the revocation or limitation of
any such licenses or permits.
4.1.11 To Seller's knowledge, there are no royalties,
shut-in royalties, Lease rental payments or other
payments for which Seller has or would have any
responsibility or liability that are delinquent, and
all such payments that are due have been timely paid.
4.1.12 Seller is not a party to, or in any way obligated
under, nor does Seller have any knowledge of, any
contract or outstanding claim for the payment of any
broker's or finder's fee in connection with the
origination, negotiation, execution, or performance
of this Agreement for which Buyer has any liability.
4.1.13 All of Seller's representations where made in this
Agreement or in connection with the negotiation,
execution or performance of this Agreement, are
subject to the best of Seller's knowledge. The best
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of Seller's knowledge is limited to matters known to
Seller's current Officers and Directors.
EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2.8 (i) AND 4.1., BUYER
UNDERSTANDS AND AGREES THAT THE ASSETS ARE SOLD "AS IS" AND
"WHERE IS", WITH ALL FAULTS AND DEFECTS, WITHOUT RECOURSE BY
BUYER, ITS SUCCESSORS AND/OR ASSIGNS, AGAINST SELLER AND
WITHOUT COVENANT, REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE; AND WITHOUT
LIMITATION OF THE GENERALITY OF THE IMMEDIATELY PRECEDING
CLAUSE, SELLER EXPRESSLY DISCLAIMS AND NEGATES (a) ANY IMPLIED
AND EXPRESS WARRANT OF FITNESS FOR A PARTICULAR PURPOSE AND/OR
TITLE TO THE ASSETS EXCEPT AS TO TITLE CLAIMS ARISING BY,
THROUGH AND UNDER SELLER (BUT NOT OTHERWISE) AND (b) ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY. EXCEPT AS
PROVIDED IN SECTIONS 2.2 (iii) AND 2.4, BUYER HEREBY RELEASES
SELLER FROM ANY AND ALL LIABILITY WITH RESPECT TO THE CONDITION
OF THE ASSETS, WHETHER OR NOT CAUSED BY SELLER'S SOLE OR
PARTIAL NEGLIGENCE, AND WAIVES ITS RIGHT TO RECOVER FROM SELLER
ANY DAMAGES, CLAIMS, FINES, PENALTIES OR EXPENSES THAT MAY IN
ANY WAY BE CONNECTED WITH THE PHYSICAL CONDITION OF THE ASSETS,
WHETHER NOW KNOWN OR UNKNOWN.
4.2 Buyer's Representations and Warranties. Buyer represents and
warrants:
4.2.1 Buyer is a corporation duly organized and validly
existing, in good standing, under the laws of the
state in which it is incorporated and has the
corporate power and authority to own its property and
to carry on its business as now conducted and to
enter into and to carry out the terms of this
Agreement.
4.2.2 The execution and delivery of this Agreement, the
performance of this Agreement by Buyer, and the
consummation of the transactions
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contemplated hereby, will not (i) conflict with or
result in a breach of any provision of Buyer's
certificate of incorporation or bylaws, (ii) result
in a material default (with due notice or lapse of
time or both) or give rise to any right of
termination, cancellation or acceleration under any
of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license or agreement to
which Buyer is a party or by which Buyer or any of
Buyer's properties or assets any be bound or (iii)
violate any order, writ, injunction, judgement,
decree, statute, rule or regulation applicable to
Buyer, or any Buyer's properties or assets.
4.2.3 Buyer is not a party to, or in any way obligated
under, nor does Buyer have any knowledge of, any
contract or outstanding claim for the payment of any
broker's or finder's fee in connection with the
origin, negotiation, execution, or performance of
this Agreement for which Seller has any liability.
4.2.4 Buyer will make or will arrange for others to make an
inspection of the Assets. Subject to Seller's
foregoing representations and warranties in Section
4.1, Buyer accepts all platforms and equipment in an
"as is" and "where is" condition.
4.2.5 Buyer is directly and actively engaged in the
business of exploration for and production of oil and
gas. Buyer is a sophisticated investor in oil and gas
properties and has knowledge and expertise in
financial and business matters relating to the
evaluation and purchase of producing oil and gas
properties. Buyer is acquiring the interest conveyed
herein for investment purposes and not for
distribution in violation of any applicable
securities laws.
4.2.6 Buyer has sufficient cash, available lines of credit
or other sources of immediately available funds (in
United States dollar) to enable it to pay the
Purchase Price to Seller at the Closing, and to
perform its obligations hereunder.
5. ADDITIONAL COVENANTS
5.1 Approvals, Consents and Preferential Rights to Purchase. If the
transfer of the Assets, or any portion thereof, is subject to the
consent or approval of a lessor or any governmental agency having
jurisdiction, or is subject to rights of first refusal,
preferential rights to purchase, or any other form of
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consent or restriction on transfer, the Buyer and Seller shall
use reasonable efforts to obtain such consents and approvals and
releases or waivers of any such rights of first refusal,
preferential rights to purchase and other transfer restrictions
prior to the Closing, unless the same are customarily obtained
after closing. In the event preferential rights are exercised,
this agreement shall terminate between the parties. The deposit
shall be refunded to buyer in accordance with 2.1 and all
provisions which may otherwise survive termination, including but
not limited to indemnities, warranties and representations, shall
terminate upon exercise of such preferential rights or rights of
first refusal. In the event consents or approvals required to be
obtained prior to closing are not obtained, Buyer, at its option,
may terminate this agreement and the deposit shall be refunded
under 2.1. In the event that the Assignments are not approved by
the Minerals Management Service or any other governmental body
whose approval is required, Buyer at its option may rescind this
agreement and all closing documents and shall be entitled to a
full refund of the purchase price including the deposit, adjusted
for revenue and expenses in the interim. Buyer shall execute any
and all instruments required to reconvey the assets to the
Seller.
5.2 Asset Title Review. Immediately upon execution of this agreement,
Seller shall make available to Buyer next day, without express or
implied warranty of any kind regarding the accuracy of such
information, copies of information in Seller's possession
regarding its title to the Assets. Seller shall not perform any
additional title work, and Seller will not make existing
abstracts and title opinions current. Buyer specifically agrees
that any conclusions made from any examination done or caused to
be done shall result from its own independent review and
judgement only. In the event of a title defect that would result
in Seller not having Defensible Title (as such term is defined
below) to one of the Assets, Buyer shall notify Seller of such
defect no later than 5 days before closing. If Seller and Buyer
cannot agree on resolution of such defect, Seller shall elect (a)
a cure the defect at its own expense prior to Closing, or (b) to
delete its interest in the Asset with such defect from the sale
to Buyer in which event the amount to be paid by Buyer for the
Assets at Closing and the amount which Seller would otherwise be
entitled to receive under Section 2.1 shall be reduced by an
amount mutually agreed to by Seller and Buyer provided,
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however, that if Seller does not cure such defect, and if Seller
and Buyer cannot agree upon the downward adjustment to the
Purchase Price, or the total reductions under this Section 5.2 as
a result of all uncured title defects exceeds 10% of the Purchase
Price, either Seller or Buyer may terminate this Agreement. In
such event the deposit shall be refunded to Buyer in accordance
with 2.1. In the case of an interest in the Leases, "Defensible
Title" shall mean, with respect to Seller such title, free and
clear of all liens, claims, impairments, or encumbrances other
than the Listed Contracts, as (a) will entitle Buyer to receive a
percentage of the oil and gas produced and saved from the lands
covered by such Leases, without limitation as to the depth, after
deducting all applicable Production Burdens, that is not less
than the "Net Revenue Interest" of Seller in the Leases shown on
Exhibit "A" without reduction throughout the productive life of
the Leases, and (b) will obligate Buyer to bear and pay a portion
of the costs and expenses of operating the lands covered by such
interest in the Leases that is not greater than the "Working
Interest" of Seller shown on Exhibit "A" without increase
throughout the productive life of the Leases. In the case of all
other Assets, "Defensible Title" shall mean, with respect to
Seller, good and marketable title free and clear of all liens,
claims, impairments or encumbrances other than the Listed
Contracts and any encumbrances created thereby. As used herein,
"Production Burdens" shall mean royalty interests, overriding
royalty interests, production payments, net profit interests or
other similar interests that constitute a burden on, are measured
by or are payable out of the production of hydrocarbons or the
proceeds realized from the sale or other disposition thereof.
5.3 Operations Prior to Closing. After the date of this Agreement and
prior to the Closing, Seller shall use its best efforts to
maintain the Assets in substantially the same manner in which
they have been used and maintained prior to this Agreement.
Unless Seller and Buyer otherwise agree, Seller shall not enter
into any agreement or transaction in relation to the Assets
excepting those with unaffiliated third parties which (i)
individually involve a fair market value of less than Ten
Thousand Dollars ($10,000), and (ii) are entered into in the
ordinary course of business consistent with past practices.
Seller shall not incur without the concurrence of Buyer, any
expenditures for purposes other than normal day-to-day operations
and actions required to address any sudden emergency to safeguard
life and
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property (Seller agrees that it will respond to any such
emergency in the same manner that it would customarily respond to
a similar emergency affecting similar properties owned by Seller
that are not the subject of a pending sale), between the
execution of this Agreement and the Closing. If an expenditure
for other purposes is proposed or contemplated, Seller shall
submit such proposal to Buyer for its approval. If the Closing
occurs, Buyer will assume the risk of any consequences, which
arise as a result of Buyer's failure or refusal to approve and
pay such expenditure. Unless Buyer and Seller otherwise agree,
Seller shall not materially alter the Assets (other than the use
of supplies and consumables) or remove any improvements,
equipment or property which comprise the Assets (other than the
use of supplies and consumables) with the exception of individual
Assets (i) involving a fair market value of less than Two
Thousand Dollars ($2,000) and (ii) sold or transferred to
unaffiliated third parties or disposed of or consumed in the
ordinary course of business. From the date of this Agreement
until Closing, Seller will not, without the prior written consent
of Buyer (which consent will not be unreasonably withheld),
directly or indirectly (i) waive any right of material value
relating to the Assets, (ii), modify, in any material respects or
terminate any of the Listed Contracts. From the date of this
Agreement until Closing, Seller shall maintain and operate the
Assets as a reasonably prudent operator, in compliance in all
material respects with all applicable laws, rules, regulations
and orders, and in accordance with the Listed Contracts. Seller
shall promptly notify Buyer of any material matter affecting the
Assets known to Seller which arises from the date of this
Agreement to the date of Closing.
5.4 Casualty. If the Assets are damaged by fire, casualty or any
other cause prior to Closing and such damage is not repaired by
Seller (the parties agreeing that Seller has no obligation to do
so) before Closing, Buyer shall have the right either to
terminate this Agreement, or to purchase the Assets in such
damaged condition, in which event the Purchase Price will be
reduced by Seller's share of the estimated cost of repairing such
damage. In the event this agreement should be terminated the
deposit shall be refunded pursuant to 2.1.
5.5 Buyer has contractual obligations with owners or right holders of
other undivided interest owners of the leases and lands subject
to this agreement. In the event Buyer's due diligence review of
Seller's assets reveals an
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agreement, requirement, obligation etc. which causes or requires
Buyer to violate, breach or impinge on Buyer's current
contractual arrangements, then Buyer shall immediately notify
Seller and this agreement shall be terminated at Buyer's option.
In such event the deposit shall be refunded in accordance with
2.1.
6. CONDITIONS PRECEDENT TO CLOSING
6.1 Seller's Conditions Precedent. The obligation of Seller to
consummate the transactions contemplated by this Agreement is
subject to the satisfaction or waiver by Seller of each of the
following conditions:
6.1.1 Buyer shall have performed and compiled with all
terms of this Agreement required to be performed or
complied with by Buyer prior to Closing.
6.1.2 No action or proceeding by or before any governmental
authority shall have been instituted or threatened
(and not subsequently dismissed, settled or otherwise
terminated) which might restrain, prohibit or
invalidate any of the transactions contemplated by
this Agreement.
6.1.3 The representations and warranties of Buyer contained
in the Agreement shall, if qualified by materiality
standards, be true, and if not so qualified, shall be
true in all material respects, on the date of this
Agreement and also at and as of the Closing as if
such representations and warranties were made at and
as of the Closing.
6.1.4 All material federal, state and local government
consents or approvals required for the consummation
of the transactions contemplated hereby (other than
those routine consents and approvals that are
customarily obtained after the consummation of
transactions of the type contemplated hereby) shall
have been obtained.
6.2 Buyer's Conditions Precedent. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are
subject to the satisfaction or waiver by Buyer of each of the
following conditions:
6.2.1 Seller shall have performed and complied with all
terms of this Agreement required to be performed or
complied with by Seller prior to Closing.
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6.2.2 No action or proceeding by or before any governmental
authority shall have been instituted or threatened
(and not subsequently dismissed, settled, or
otherwise terminated) which might restrain, prohibit
or invalidate any of the transactions contemplated by
this Agreement.
6.2.3 The representatives and warranties of Seller
contained in this Agreement shall, if qualified by
materiality standards, be true, and if not so
qualified, shall be true in all material respects, on
the date of this Agreement and also at and as of the
Closing as if such representations and warranties
were made at and as of the Closing.
6.2.4 All material federal, state and local government
consents or approvals required for the consummation
of the transactions contemplated hereby (other than
those routine consents and approvals that are
customarily obtained after the consummation of
transactions of the type contemplated hereby) shall
have been obtained.
6.2.5 Since the Effective Date of Sale, no events shall
have occurred that, individually or in the aggregate,
may reasonably be expected to:
(i) materially and adversely affect the value of
all or any material portion of the Assets,
except affecting the value of oil and gas
properties generally, or
(ii) result in substantial liabilities with respect
to which Seller is entitled to indemnification
by Buyer under this Agreement, or
(iii) result in substantial liabilities with respect
to which Buyer is entitled to indemnification
by Seller under this Agreement.
6.2.6 This transaction is subject to Buyer obtaining
approval of its Board of Directors. Buyer will use
its best efforts to obtain such approval, which shall
be promptly sought and Seller shall be timely
notified. However should Buyer fail to obtain such
approval, deposit shall be refunded to Buyer as
provided in 2.1.
7. MISCELLANEOUS
7.1 Payment of Expenses and Fees. Each party hereto shall bear its
own costs and expenses, including buy not limited to attorney's
fees incurred in connection with the transactions contemplated in
this Agreement; provided,
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however, Buyer shall pay all recording, MMS and filing fees or
transfer fees and/or taxes in connection with the recording of
any instrument of transfer of Assets from Seller to Buyer
hereunder.
7.2 Environmental Review. Promptly after signing this Agreement,
Seller shall give Buyer access to environmental data in Seller's
files for the Assets to be sold herein. Buyer specifically
acknowledges that such access is given as an accommodation only,
that Seller makes no representations whatsoever as to the
accuracy, completeness, or reliability of any such environmental
information disclosed to or obtained by Buyer and that Buyer
relies and depends on and uses any and all such environmental
information exclusively and entirely at its own risk and without
any recourse whatsoever. Seller shall use reasonable efforts to
arrange for the performance of any additional environmental
testing at Buyer's expense which Buyer may reasonably request,
and Seller and Buyer shall cooperate to ensure that such testing
is performed on an expedited basis before Closing. If it is
determined by Closing that any conditions exist on the Assets
that are the result of any Environmental Matter, and if Seller
and Buyer cannot agree on the resolution of such matter prior to
Closing, any party shall have the right to terminate this
Agreement, in which event there shall be no further obligation or
liability between Buyer and Seller. In the event the agreement
shall be terminated as provided herein, the deposit shall be
refunded to buyer as provided in 2.1.
7.3 NORM. It is expressly recognized and acknowledged by Buyer that
naturally occurring radioactive material (NORM) is normally
associated with oil and gas producing operations, and as a result
the facilities and production equipment transferred herein may be
contaminated by NORM. Accordingly, Buyer shall comply with
present and future applicable federal and state laws and
regulations governing (I) NORM and (ii) facilities and equipment
contaminated by or containing NORM.
7.4 Books and Records. Seller shall deliver to Buyer promptly after
Closing copies of any records, materials, contract, accounting
and agreement files, logs, well files, uninterpreted engineering
data (such as bottom-hole pressure data, gas analysis) and field
records pertaining to the Assets which may exist in Seller's
files.
7.5 Assignment. Prior to Closing, Seller may not assign any rights
acquired hereunder or delegate any duties assumed hereunder
without the prior
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written consent of Buyer, and Buyer may not assign any rights
acquired hereunder or delegate any duties assumed hereunder
without the prior written consent of Seller. After Closing, Buyer
may freely assign any interest it acquires in the Assets, assign
any rights acquired, or delegate any duties assumed herein or
hereafter. Notwithstanding anything herein to the contrary, Buyer
shall remain responsible to Seller for all obligations and
liabilities under this Agreement and under said sale and
assignment.
7.6 Entire Agreement. This Agreement constitutes the entire agreement
between Seller and Buyer with respect to the transactions
contemplated herein, and supersedes all prior oral or written
agreements, commitments, understandings, or information otherwise
furnished by Seller to Buyer with respect to such matters. No
amendments shall be binding unless in writing and signed by
representatives of both parties. Headings used in this Agreement
are only for convenience of reference and shall not be used to
define the meaning of any provision. This Agreement is for the
benefit of Seller, the Seller Indemnified Parties, Buyer and the
Buyer Indemnified Parties only and not for the benefit of third
parties.
7.7 Notices. All notices and consents to be given hereunder shall be
in writing and shall be deemed to have been duly given if
delivered personally, telecopied with receipt acknowledged,
mailed by registered mail, or delivered by a recognized
commercial courier to the party at the address set forth on the
first page of this Agreement or such other address as any party
shall have designated by ten days written notice to the other
party.
7.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Louisiana without
regard to rules concerning conflicts of law.
7.9 Confidentiality. Buyer acknowledges that all information
furnished or disclosed pursuant hereto must remain confidential.
Buyer may disclose such information only to its subsidiaries or
affiliates, agents, advisors, financial sources, investors,
banks, partners or representatives (herein "Representatives") who
have agreed in writing, prior to being given access to such
information, to be bound by the terms of this Section 7.9. The
provisions of this Section 7.9 shall no longer apply if closing
occurs.
7.10 No Negotiations. From and after the date of this Agreement,
Seller and its directors, officers, employees and representatives
shall not directly or indirectly solicit, encourage or initiate
any offer or proposal from, or
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engage in any discussions or negotiations with, or provide any
information to, any person, entity or group (other than Buyer and
its employees, agents and representatives) concerning any
inquires or proposals for the acquisition of all or any portion
of the Assets.
7.11 Further Assurances. After the Closing, each of the parties shall
execute, acknowledge and deliver to the other such further
documents and take such other action, as may be reasonably
required in order to carry out the purposes of this Agreement or
any document delivered pursuant to the Agreement.
7.12 Price Allocation. In the event either party desires to file IRS
Form 8594, then that party shall give written notice to the other
party. Seller and Buyer shall then jointly prepare such form
pursuant to the Temporary Treasury Regulation Section 1.1060-1T
to report the allocation of the purchase price among the Assets.
Such allocation shall be as set forth in Exhibit "G". Each party
hereto agrees not to assert, in connection with any tax return,
tax audit or similar proceeding, any allocation of the Purchase
Price that differs from that set forth in such Exhibit.
7.13 Access. With reasonable advance notice to Seller, Seller shall
give Buyer reasonable access to the Assets prior to Closing to
permit Buyer to conduct their due diligence review of the Assets.
7.14 Public Announcements. Subject to the provisions of Section 7.9,
the parties hereto agree that prior to making any public
announcement or statement with respect to the transaction
contemplated by this Agreement, the party desiring to make such
public announcement or statement shall consult with the other
party hereto and exercise its best efforts to (i) agree upon the
text of a joint public announcement or statement to be made by
both of such parties or (ii) obtain approval of the other party
hereto to the text of a public announcement or statement to be
made solely by Seller or Buyer, as the case may be. Nothing
contained is this paragraph shall be construed to require either
party to obtain approval of the other party hereto to disclose
information with respect to the transaction contemplated by this
Agreement to any state or federal governmental authority or
agency to the extent required by applicable law or by any
applicable rules, regulations or orders of any governmental
authority or agency having jurisdiction or as advised by counsel
to comply with disclosure standards of
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the New York Stock Exchange and applicable securities exchange
laws and rules.
7.15 Amendment. No amendment or modification of this Agreement shall
be effective unless in writing signed by all parties.
7.16 Waiver. No waiver of any provision of or rights under this
Agreement shall be effective unless in writing signed by the
waiving party. No waiver of any specified right or provision
shall be construed as a waiver of any other right or provision.
7.17 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this
Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any material adverse
manner to any party. Upon any binding determination that any term
or other provision is invalid, illegal or incapable of being
enforced, 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 and in an acceptable manner, to
the end that the transactions contemplated hereby may be
completed to the extent possible.
7.18 Exhibits. Exhibits attached to and referenced in this Agreement
are hereby incorporated in this Agreement and made a part of this
Agreement.
7.19 Survival. The provisions of this Agreement shall survive the
Closing. Seller's and Buyer's Representations and Warranties and
indemnities shall survive the closing for a period of eighteen
(18) months, other than Section 4.1.4 which shall survive the
term of this Agreement.
7.20 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
Agreement.
7.21 Not a consumer under LA UFTPA. Buyer and Seller both hereby
confirm that neither is a "consumer" as used in the Louisiana
Unfair Trade Practices and Consumer Protection Act, Louisiana
Revised Statutes, 51:1401 et. Seq.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first set forth above.
SELLER
ONLINE RESOURCES, INC.
By: /s/ XXX X. XXXXXXX
----------------------------------------
Name: Max. X. Xxxxxxx
Title: President
BUYER
ENERGY PARTNERS, LTD.
By: /s/ XXXXX X. XXXX
----------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President, Production &
Engineering
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