Letterhead of Legacy Reserves Operating, LP]
EXHIBIT
10.19
[Letterhead
of Legacy Reserves Operating, LP]
August
29, 2008
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Chancellor
Group, Inc,
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Western
National Bank
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Gryphon
Production Company, LLC
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Attention:
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Gryphon
Field Services, LLC
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Attention:
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RE:
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Purchase
and Sale Agreement dated July 14, 2008 by and between Chancellor
Group,
Inc. et al, (“Seller”), Legacy Reserves Operating, LP, (“Buyer”) and
Western National Bank et al (“Lender”), (the
“Agreement”).
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Gentlemen:
Reference
is made to that certain Escrow Agreement dated July 14, 2008, attached to and
made a part of the Agreement (the “Escrow Agreement”). Section 2.2 of the
Agreement required that Buyer transmit to Western National Bank (“WNB”), as
Escrow Agent, the Deposit (as that term is defined in the Agreement), in an
amount equal to Six Hundred Seventy-Five Thousand and No/100 Dollars
($675,000.00). Buyer has previously tendered that Deposit, and the Escrow Agent
currently holds the Deposit pursuant to the terms of the Escrow Agreement.
In
recognition of the actions filed by New Concept’s Energy, Inc. (“NCE”) related
to the Bankruptcy Cases, and the indemnification provisions of Section 16.1(D)
the parties have agreed to modify the amount to be held in the Escrow Account
as
well as the terms for release of funds from the Escrow Account by the Escrow
Agent. In that regard, the parties agree to the following:
| 1. |
At
Closing, in addition to the $675,000 that has previously been deposited
in
the Escrow Account, Seller agrees that an additional $825,000 of
Seller’s
Closing Proceeds be placed in the Escrow Account, for a total amount
of
$1,500,000. For purposes of clarity, the Escrow Agent will not make
the
Closing Distribution as provided under Section 1.03 (c) of the Escrow
Agreement, and $1,500,000 will be the amount of the Escrowed Funds
after
Closing. The Escrowed Funds will be held pursuant to the Escrow Agreement,
as modified by this letter agreement.
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| 2. |
Under
Section 1.03(d)(iv), all remaining Escrowed Funds after taking into
account amounts distributed under Sections 1.03(d)(i), (ii) and (iii),
shall be held until the later of (A) 180 days from the date of Closing,
or
(B) the date when the Order of Dismissal becomes a final and
non-appealable order of the Bankruptcy Court not subject to review
by any
court of competent jurisdiction. However, the Escrowed Funds may
be
distributed early, subject to the provisions of Sections 1.03(d)(i),
(ii)
and (iii), if Seller provides Buyer with release executed by NCE
that
fully releases Buyer from any liability related to any and all claims
of
NCE against Buyer in connection with the Assets, the form of which
must be
acceptable to Buyer’s legal counsel, in their sole and complete
discretion.
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| 3. |
In
the event that Buyer is required to expend funds after Closing because
of
actions taken by NCE which affect the Assets, Seller agrees to consent
to
distributions of amounts to Buyer from the Escrowed Funds under Section
1.03(d)(iv), and on a monthly basis, allow Escrow Agent to reimburse
Buyer
for any and all reasonable attorneys’ fees, costs and/or expenses that
Buyer incurs in connection with the claims made by NCE after Closing.
Invoices presented to the Escrow Agent for such expenses as a Notice
of
Liquidated Claim shall provide sufficient evidence for the Escrow
Agent to
reimburse Buyer for such expenses.
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Please
sign in the space provided below indicating your acceptance of all the terms
and
conditions described above and return to me at your earliest possible
convenience.
Sincerely
yours,
/s/
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Executive
Vice President - Business Development and Land
Agreed
to
and Accepted this 29th day of August, 2008.
| CHANCELLOR GROUP, INC. | |||
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President
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| GRYPHON PRODUCTION CO., LLC. | |||
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Manager
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| GRYPHON FIELD SERVICES, LLC | |||
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| Manager |
| ESCROW AGENT: | |||
| WESTERN NATIONAL BANK | |||
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/s/
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice President |