Stephen R. and Mary K. Herbel - Page 19

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                       right to sell such excess gas deliverability                   
                       to third parties on such day during the                        
                       Release Period.                                                
                  3.   Seller agrees that for each MMBtu of                           
                       released gas nominated for purchase by any                     
                       purchaser or sold by Seller (including any                     
                       gas taken by Seller or an affiliate) in                        
                       accordance with this agreement, Buyer shall                    
                       be entitled to credit such quantities of gas                   
                       against any obligations and liabilities it                     
                       may have to take gas, or to pay for gas not                    
                       taken, under any gas sales and purchase                        
                       agreements between Buyer and Seller.                           
                  4.   Seller further hereby agrees to waive and                      
                       release Buyer from any and all obligations                     
                       and liabilities Buyer has or may have                          
                       arising out of any failure to take gas,                        
                       or to pay for gas not taken, under the                         
                       Contracts for all contract years commincing                    
                       [sic] prior to the end of the Release                          
                       Period.                                                        

                  None of the documents executed in connection with the               
             settlement transaction placed any restriction on Malibu's                
             use of the $1,850,000 payment that it received from Arkla.               
             In fact, shortly after the settlement, Malibu lent                       
             approximately one-half of the settlement payment to its                  
             shareholders.  On April 28, 1988, and May 2, 1988,                       
             respectively, Malibu lent $823,263.20 to Mr. Webb and                    
             $112,000 to Mr. Herbel.  Each loan was authorized by a                   
             corporate resolution and was evidenced by a promissory note              
             signed on the same day as the resolution.  The interest                  
             rate on both loans was 8.6 percent.  For the first 3 years,              
             both loans called for the borrower to pay interest only,                 






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