SM » Topics » (INCLUDING THOSE CLAIMS RESULTING FROM THE SOLE, JOINT OR CONCURRENT NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), STRICT LIABILITY OR OTHER LEGAL FAULT OF SELLER OR ANY OF SELLER’S REPRESENTATIVES)

This excerpt taken from the SM 8-K filed Feb 1, 2008.
(INCLUDING THOSE CLAIMS RESULTING FROM THE SOLE, JOINT OR CONCURRENT NEGLIGENCE (BUT NOT GROSS NEGLIGENCE OR WILLFUL MISCONDUCT), STRICT LIABILITY OR OTHER LEGAL FAULT OF SELLER OR ANY OF SELLER’S REPRESENTATIVES).
 
(b)           In consideration of any conduct of operations of the Assets by Seller on behalf of Buyer after Closing, Buyer shall pay Seller a fee equal to Two Hundred Dollars ($200.00) per month per Well, including all other wells, such as, by way of example and not limitation, salt water disposal wells, wells that are temporarily abandoned and wells that are otherwise inactive, as reimbursement for all general and administrative overhead (“Overhead Fee”) incurred by Seller in connection with the conduct of operations of the Assets. In the event Seller transfers operations to Buyer or its designee between the first and last day of a calendar month, Seller shall be paid such amount of the Overhead Fee prorated over the number of days in which Seller conducted operations for such month. The amount of the Overhead Fee owing to Seller by Buyer shall be paid upon the Final Settlement Date.
 
Section 7.04                                Post Closing Accounting by Seller.  In the event Seller agrees to operate the Assets after Closing, Seller shall perform the following accounting tasks subject to the limitations provide for herein:
 
(a)           Seller will continue to pay royalties and severance, production and similar Taxes for sales through the production month following the month in which Closing occurs (“Post-ClosingProduction Month”). If any revenue is received by Seller for later months, it will be credited to Buyer in the Final Settlement Statement; provided however, Seller shall not be obligated to and will not pay any royalties and severance, production and similar Taxes, if applicable, with respect to Hydrocarbons produced after the Post-Closing Production Month.
 
(b)           Seller will continue to pay or bill joint interest owners for expenses through the Post-Closing Production Month. All later expenses will be either accumulated or charged to Buyer in the Final Settlement Statement, or the invoices will be returned to the vendor for rebilling to Buyer.  Seller will continue to pay to the operator of any Assets not operated by Seller for joint billings for the billing month after the month in which Closing occurs.  All subsequent bills will either be returned to the applicable operator for rebilling to Buyer or forwarded to Buyer for payment, or if already paid by Seller, will be charged against Buyer in the Final Settlement Statement.  Seller will continue to prepare all regulatory and other monthly production reports through the Post-Closing Production Month. Copies of such reports attributable to the period after the Effective Time will be provided to Buyer, along with the final ending inventory balance.
 
(c)           Seller will continue to pay all shut-in royalties, minimum royalties, delay rentals and other lease payment obligations through the Post-Closing Production Month.
 
(d)           Seller shall market and nominate all Hydrocarbons in the same manner as Seller has been marketing and nominating Hydrocarbons.
 
Section 7.05                                Limitations on Liability of Operator.  Notwithstanding anything herein to the contrary, in the event Seller or an affiliate of Seller should assume any accounting functions on behalf of Buyer from and after Closing, notwithstanding anything to the contrary provided herein, Seller shall have no liability to Buyer for, and Buyer hereby agrees to release and defend, indemnify and hold harmless Seller and Seller’s Representatives harmless from, the incorrect payment of expenses, Taxes, billings, delay rentals, royalties, minimum royalties, payments required by any of the Leases, shut-in royalties or similar payments, or for any failure to pay any such payments through mistake or oversight
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