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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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