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the aforesaid disputes, and in order to avoid
litigation, to limit the hazards and the uncer-
tainties of litigation and in order to buy their
peace, the parties have freely and voluntarily
agreed to settle and compromise all aspects of
the disputes upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, for and in consideration
of the premises and the mutual covenants herein
contained, Seller and Buyer hereby contract and
agree as follows:
1.
Seller and Buyer agree to execute
simultaneously with the execution of this
Settlement Agreement a gas purchase contract
amendment to the Contract in the form of that
attached hereto as Exhibit B, the provisions of
which shall govern the relations of the parties
as to the matters contained therein from its
effective date forward. Upon execution of the
amendment, the obligations imposed by this
paragraph of the Settlement Agreement shall be
completed and the Contract and this Settlement
Agreement shall be completed and the Contract and
this Settlement Agreement shall be treated as
separate and independent contracts so that
ongoing future performance under the Contract
shall not constitute performance under the
Settlement Agreement.
2.
Buyer has this date made a lump sum
prepayment (hereinafter referred to as the
"Prepayment") to Seller in the total sum of
$1,850,000.00 which shall constitute a prepayment
in advance for natural gas to be delivered by
Seller to Buyer on and after May 1, 1988 from all
wells subject to the Contract (hereinafter the
"Subject Wells"). Buyer shall have the right to
receive and recoup out of all natural gas to the
extent specified below produced from the Subject
Wells, attributable to the Gross Working Interest
of Seller, a volume of natural gas which has a
value equal to the Prepayment, calculated by
applying the price per MMBtu in effect under the
terms of the Contract, as amended this date, at
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