Exhibit 10.1

 

EXECUTION VERSION

 

 

 

 

 

 

 

PURCHASE AND SALE AGREEMENT

 

BETWEEN

SCINTILLA, LLC

AND

NEW SOURCE ENERGY PARTNERS L.P.

 

 

 

 

 

 

 

 

 

 

 

 

 
 

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TABLE OF CONTENTS

 

Page

 

Article

1

DEFINED TERMS

1

 

1.1

Definitions

1

 

1.2

Interpretation and Construction

7

Article

2

PURCHASE AND SALE

8

 

2.1

Purchase and Sale of Assets

8

 

2.2

The Assets

8

 

2.3

Excluded Assets

10

 

2.4

Effective Time

11

 

2.5

Maintenance of Records

12

Article

3

PURCHASE PRICE

12

 

3.1

Purchase Price Amount

12

 

3.2

Payment of Purchase Price

12

 

4

BUYER’S INSPECTION

12

 

4.1

Access to Records

12

 

4.2

Physical Access to the Leases and Wells

13

Article

5

SELLER’S REPRESENTATIONS AND WARRANTIES

13

 

5.1

Organization and Standing

13

 

5.2

Legal Power

13

 

5.3

Authorization and Enforceability

14

 

5.4

Liability for Broker’s Fees

14

 

5.5

No Bankruptcy

14

 

5.6

Litigation

14

 

5.7

Insurance

14

 

5.8

No Liens

14

 

5.9

Judgments

14

 

5.10

Compliance with Law

14

 

5.11

Calls on Production

15

 

5.12

Material Agreements

15

 

5.13

Hydrocarbon Sales Contracts

15

 

5.14

Suspense Proceeds

15

 

5.15

Royalties and Rentals

15

 

5.16

Permits

15

 

5.17

Preferential Rights and Transfer Requirements

15

 

5.18

No Conflicts

15

 

5.19

Consents and Approvals

16

 

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5.20

Taxes and Assessments

16

 

5.21

Wells and Equipment

16

 

5.22

Environmental

17

 

5.23

Surface Use

17

 

5.24

Title

17

Article

6

BUYER’S REPRESENTATIONS AND WARRANTIES

17

 

6.1

Organization and Standing

17

 

6.2

Power

18

 

6.3

Authorization and Enforceability

18

 

6.4

Liability for Brokers’ Fees

18

 

6.5

Litigation

18

 

6.6

No Conflicts

18

 

6.7

Consents and Approvals

18

 

6.8

Securities Law, Access to Data and Information

19

 

6.9

Buyer’s Evaluation

19

Article

7

COVENANTS AND AGREEMENTS

19

 

7.1

Covenants and Agreements of Seller

19

 

7.2

Covenants and Agreements of the Parties

20

Article

8

SELLER’S CONDITIONS TO CLOSE

22

 

8.1

Representations

23

 

8.2

Performance

23

 

8.3

Pending Matters

23

 

8.4

Delivery

23

Article

9

BUYER’S CONDITIONS TO CLOSE

23

 

9.1

Representations

23

 

9.2

Performance

23

 

9.3

Pending Matters

23

 

9.4

Delivery

23

 

9.5

Buyer’s Conflicts Committee

24

Article

10

THE CLOSING

24

 

10.1

Time and Place of the Closing

24

 

10.2

Adjustments to Purchase Price

24

 

10.3

Post-Closing Adjustment

25

 

10.4

Actions of Seller at the Closing

26

 

10.5

Actions of Buyer at the Closing

27

Article

11

TERMINATION

27

 

11.1

Right of Termination

27

 
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11.2

Effect of Termination

28

 

11.3

Termination Damages

28

Article

12

TAXES

29

 

12.1

Fees

29

 

12.2

Income Taxes; Transfer Taxes

29

 

12.3

Asset Taxes

29

 

12.4

Asset Tax Returns

29

Article

13

OBLIGATIONS AND INDEMNIFICATION

30

 

13.1

Retained Obligations

30

 

13.2

Assumed Obligations

30

 

13.3

Buyer’s Indemnification

30

 

13.4

Seller’s Indemnification

30

 

13.5

Limitation for Seller’s Indemnification

31

 

13.6

Notices and Defense of Indemnified Matters

31

 

13.7

Remedies

32

Article

14

LIMITATIONS ON REPRESENTATIONS AND WARRANTIES

31

 

14.1

Disclaimers of Representations and Warranties

32

 

14.2

Survival

33

Article

15

MISCELLANEOUS

33

 

15.1

Expenses

33

 

15.2

Document Retention

33

 

15.3

Entire Agreement

33

 

15.4

Disclosure Schedules

34

 

15.5

Waiver

34

 

15.6

Publicity

34

 

15.7

No Third Party Beneficiaries

34

 

15.8

Assignment

34

 

15.9

Governing Law

34

 

15.10

Notices

35

 

15.11

Severability

36

 

15.12

Time of the Essence

36

 

15.13

Counterpart Execution

36

 

15.14

Determinations by Buyer

36

 

15.15

Further Assurances

36

 

 
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Exhibit A     Leases

Exhibit B     Wells

Exhibit C     Material Agreements

Exhibit D     Form of Conveyance

Exhibit E     Excluded Personal Property

 

 

SCHEDULES

 

1.1(a)     Knowledge of Seller

1.1(b)     Knowledge of Buyer

3.2          Wire Instructions

5.6          Litigation

5.7          Insurance

5.11        Calls on Production

5.12        Breaches and Defaults of Material Agreements

5.13        Hydrocarbons Sales Contracts

5.14        Suspense Proceeds

5.17        Preferential Rights and Transfer Requirements

5.18        No Conflicts

5.21        Wells and Equipment

5.22        Environmental

5.23        Surface Use

5.24        Title

6.6          No Conflicts

 

 
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PURCHASE AND SALE AGREEMENT

 

This Purchase and Sale Agreement (this “Agreement”) is dated as of July 23,
2013, by and between Scintilla, LLC, an Oklahoma limited liability company
(“Seller”), and New Source Energy Partners L.P., a Delaware limited partnership
(“Buyer”). Seller and Buyer are collectively referred to herein as “Parties” and
individually referred to as a “Party.”

 

RECITALS

 

1.     Seller owns various oil and gas properties, either of record or
beneficially, as more fully described in the Exhibits hereto.

 

2.     Seller desires to contribute to Buyer and Buyer desires to receive from
Seller the properties and rights of Seller hereafter described, in the manner
and upon the terms and conditions hereafter set forth.

 

3.     Capitalized terms used herein shall have the meanings ascribed to them in
this Agreement as such terms are identified and/or defined in Article 1 hereof.

 

NOW, THEREFORE, in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereto, intending to be legally bound
by the terms hereof, agree as follows:

 

Article 1
DEFINED TERMS

 

1.1     Definitions.

 

“Accounting Arbitrator” has the meaning set forth in Section 10.3(b) of this
Agreement.

 

“Affiliate” means, with respect to any Person, a Person that directly or
indirectly controls, is controlled by, or is under common control with, such
Person, with control in such context meaning the ability to direct the
management or policies of a Person through ownership of voting shares or other
securities, pursuant to a written agreement, or otherwise.

 

“Agreement” means this Purchase and Sale Agreement.

 

“Assets” has the meaning set forth in Section 2.2 of this Agreement.

 

“Asset Taxes” means ad valorem, property, severance, production, or similar
Taxes (including any interest, fine, penalty or additions to tax imposed by
Governmental Authorities in connection with such Taxes) based upon operation or
ownership of the Assets or the production of Hydrocarbons therefrom, but
excluding, for the avoidance of doubt, income, franchise, and similar Taxes.

 

 
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“Asset Tax Return” shall mean any report, return, information statement,
schedule, attachment, payee statement or other information required to be
provided to any Governmental Authority with respect to Asset Taxes.

 

“Assumed Obligations” has the meaning set forth in Section 13.2 of this
Agreement.

 

“Business Day” means any day other than a Saturday, a Sunday, or a day on which
banks are authorized or required by law to be closed for business in New York,
New York or Oklahoma City, Oklahoma, United States of America.

 

“Buyer” has the meaning set forth in the first paragraph of this Agreement.

 

“Buyer Indemnitees” has the meaning set forth in Section 13.4 of this Agreement.

 

“Casualty Loss” has the meaning set forth in Section 7.2(e) of this Agreement.

 

“Closing” has the meaning set forth in Section 10.1 of this Agreement.

 

“Closing Date” has the meaning set forth in Section 10.1 of this Agreement.

 

“Conflicts Committee” has the meaning set forth in the Partnership Agreement.

 

“Conveyance” means that certain assignment, bill of sale and conveyance the form
of which is more particularly set forth on Exhibit D to this Agreement.

 

“Defensible Title” means such title to the Assets that, subject to and except
for Permitted Encumbrances, is free and clear of encumbrances and Liens and, to
Seller’s knowledge: (a) is not less than the net revenue interest reflected in
Seller’s records (“NRI”) as set forth on Exhibit B for each Well throughout the
life of such Well; and (b) is in an amount not greater than the working interest
reflected in Seller’s records (“WI”) as set forth on Exhibit B throughout the
life of such Well.

 

“Downward Adjustment” has the meaning set forth in Section 10.2(d).

 

“Effective Time” has the meaning set forth in Section 2.4(a) of this Agreement.

 

“Environmental Laws” means all laws, statutes, ordinances, court decisions,
rules and regulations of any Governmental Authority pertaining to health or the
environment as may be interpreted by applicable court decisions or
administrative orders, including, without limitation, the Clean Air Act, as
amended, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, the Federal Water Pollution Control Act, as amended, the
Occupational Safety and Health Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendment and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and comparable state and local laws.

 

“Equipment” has the meaning set forth in Section 2.2(b) of this Agreement.

 

 
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“Excluded Assets” has the meaning set forth in Section 2.3 of this Agreement.

 

“Financial Statements” has the meaning set forth in Section 7.2(d) of this
Agreement.

 

“Fundamental Representations and Warranties” means the representations and
warranties in Sections 5.1, 5.2, 5.3, 5.4, 5.18, 6.1, 6.2, 6.3 and 6.4 of this
Agreement.

 

“Governmental Authority” means, as to any given Asset, any agency, department,
board or other instrumentality of the United States and the state, county,
parish, city and political subdivisions in which such Asset is located and that
exercises jurisdiction over such Asset.

 

“Hazardous Substance(s)” means and includes, each substance defined, designated,
classified or regulated as a hazardous waste, hazardous substance, hazardous
material, pollutant, contaminant, radioactive material or byproduct, or toxic
substance under any Environmental Law, and any petroleum or petroleum products.

 

“Hydrocarbons” has the meaning set forth in Section 2.2(a) of this Agreement.

 

“Indemnity Claim” has the meaning set forth in Section 13.6 of this Agreement.

 

“Information” has the meaning set forth in Section 7.2(a) of this Agreement.

 

“Knowledge” as to the Seller shall mean and be limited to the actual knowledge
of any Person listed on Schedule 1.1(a) and as to the Buyer shall mean and be
limited to the actual knowledge of any Person listed on Schedule 1.1(b).

 

“Lands” has the meaning set forth in Section 2.2(a) of this Agreement.

 

“Laws” means all laws, statutes, rules, regulations, ordinances, orders,
decrees, requirements, judgments, and codes of Governmental Authorities.

 

“Leases” has the meaning set forth in Section 2.2(a) of this Agreement.

 

“Lien(s)” means, with respect to any property or asset, any mortgage, pledge,
charge, security interest, or other encumbrance of any kind in respect of such
property or asset.

 

“Losses” has the meaning set forth in Section 13.3 of this Agreement.

 

“Material Agreements” means, to the extent binding on the Assets or Buyer’s
ownership thereof after Closing, any contract, agreement, or other arrangement,
other than the instruments constituting the Leases, which is one or more of the
following types: (a) contracts with any Affiliate of Seller for services to be
performed on behalf of the Assets, excluding any formation and governance
agreements of Seller and any agreement between Seller and its Affiliates
primarily related to compensation, distributions, dividends or other forms of
consideration by and between the partners and members of Seller or its
Affiliates; (b) contracts for the sale, purchase, exchange, or other disposition
of Hydrocarbons which are not cancelable without penalty on sixty (60) days
prior written notice; (c) non-competition agreements or any agreements that
purport to restrict, limit, or prohibit Seller from engaging in any line of
business or the manner in which, or the locations at which, Seller (or Buyer, as
successor in interest to Seller hereunder) conducts business, including area of
mutual interest agreements; (d) contracts for the gathering, treatment,
processing, storage, or transportation of Hydrocarbons; (e) indentures,
mortgages or deeds of trust, loans, credit or note purchase agreements,
sale-lease back agreements, guaranties, bonds, letters of credit, or similar
financial agreements; and (f) contracts for the construction and installation or
rental of equipment, fixtures, or facilities with guaranteed production
throughput requirements or demand charges or which cannot be terminated by
Seller without penalty on sixty (60) days or less notice; that in each case of
(a) through (f) above, could reasonably be expected to result in (i) aggregate
payments by Seller (net to the interest of Seller) of more than Fifty Thousand
Dollars ($50,000) or (ii) revenues (net to the interest of Seller) of more than
Fifty Thousand Dollars ($50,000) during the current or any subsequent calendar
year.

 

 
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“NRI” has the meaning set forth in the definition of Defensible Title.

 

“Partnership Agreement” means the First Amended and Restated Agreement of
Limited Partnership of Buyer dated as of February 13, 2013, as amended.

 

“Party” and “Parties” has the meaning set forth in the first paragraph of this
Agreement.

 

“Permits” has the meaning set forth in Section 5.16 of this Agreement.

 

“Permitted Encumbrances” means:

 

(a)     the terms and conditions of the Leases and other instruments of record
relating to the Wells, including, without limitation, lessor’s royalties,
overriding royalties, net profits, carried interests, reversionary interests and
similar burdens (payable or in suspense), if the net cumulative effect of such
burdens does not, individually or in the aggregate, operate to reduce the NRI of
Seller below that set forth on Exhibit B or increase the WI of Seller above that
set forth on Exhibit B without a corresponding and proportionate increase in
NRI;

 

(b)     Liens for Taxes, or assessments not yet due and delinquent or, if
delinquent, that are being contested in good faith in the normal course of
business, responsibility for which will be retained by Seller after Closing, and
adequate cash reserves for which are maintained in accordance with United States
generally accepted accounting principles;

 

(c)     all rights to consent by, required notices to, filings with, or other
actions by a Governmental Authority, in connection with the conveyance of the
applicable Asset if the same are customarily obtained after such conveyance;

 

(d)     rights of reassignment upon the surrender or expiration of, and the
intent to abandon or surrender, or to allow to expire, any Lease;

 

(e)     easements, rights of way, servitudes, permits, surface leases and other
rights with respect to surface operations, on, over or in respect of any of the
Assets or any restriction on access thereto that do not materially interfere
with or materially impair the operation of the affected Asset, and do not,
individually or in the aggregate, reduce the NRI of Seller below that set forth
on Exhibit B or increase the WI of Seller above that set forth on Exhibit B
without a corresponding and proportionate increase in NRI;

 

 
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(f)     the terms and conditions of the Material Agreements set forth in Exhibit
C, to the extent the same do not, individually or in the aggregate, reduce the
NRI of Seller below that set forth on Exhibit B or increase the WI of Seller
above that set forth on Exhibit B without a corresponding and proportionate
increase in NRI;

 

(g)     materialmen’s, mechanics’, operators’ or other similar Liens arising in
the ordinary course of business incidental to operation of the Assets if such
Liens and charges have not yet become due and payable or if their validity is
being contested in good faith by appropriate action and Seller retains
responsibility therefor after Closing;

 

(h)     preferential rights to purchase or similar agreements with respect to
which (i) waivers or consents are obtained from the appropriate parties for the
transactions contemplated hereby, or (ii) required notices have been given for
the transactions contemplated hereby to the holders of such rights and the
appropriate period for asserting such rights has expired without an exercise of
such rights;

 

(i)     third party consents to assignments or similar agreements with respect
to which (i) waivers or consents are obtained from the appropriate parties for
the transactions contemplated hereby, or (ii) required notices have been given
for the transactions contemplated hereby to the holders of such rights and (to
the extent such period is specifically stated in the instrument containing such
consent to assignment or similar requirement) the appropriate period for
asserting such rights has expired without an exercise of such rights, request
for further information about the transactions contemplated by this Agreement or
any Party to this Agreement, or other objection to the transactions contemplated
by this Agreement;

 

(j)     immaterial errors or omissions in documents related to the Assets caused
by oversights in drafting, executing, or acknowledging that occurred greater
than ten years prior to the date of this Agreement, do not affect and have not
historically affected the operations of or production from the Assets and do not
reduce the NRI of Seller below that set forth on Exhibit B or increase the WI of
Seller above that set forth on Exhibit B without a corresponding and
proportionate increase in NRI;

 

(k)     rights reserved to or vested in any Governmental Authority to control or
regulate any of the Assets and the applicable laws, rules and regulations of
such Governmental Authorities; and

 

(l)     all defects and irregularities affecting the Assets which individually
or in the aggregate do not operate to reduce the NRI of Seller, increase the
proportionate share of costs and expenses of leasehold operations attributable
to or to be borne by the WI of Seller, and otherwise interfere materially with
the operation, value or use of the Assets, and, in each case above, which would
be accepted or waived by a prudent purchaser of oil and gas properties.

 

“Person” means any individual, firm, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization,
Governmental Authority or any other entity.

 

 
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“Post-Effective Time Environmental Liabilities” means (i) any violation of
Environmental Law arising in connection with the ownership or operation of the
Properties on or after the Effective Time, (ii) any Release of Hazardous
Substances onto or from the Properties on or after the Effective Time or
relating to or arising from any activities conducted on such properties or from
operation of such assets on or after the Effective Time and (iii) any claim,
action, cause of action, inquiry, investigation, remediation, removal or
restoration with respect to the matters set forth in subsection (i) or (ii)
above.

 

“Pre-Effective Time Environmental Liabilities” means (i) any violation of
Environmental Law arising in connection with the ownership or operation of the
Properties prior to the Effective Time, (ii) any Release of Hazardous Substances
onto or from the Properties prior to the Effective Time or relating to or
arising from any activities conducted on such properties or from operation of
such assets prior to the Effective Time and (iii) any claim, action, cause of
action, inquiry, investigation, remediation, removal or restoration with respect
to the matters set forth in subsection (i) or (ii) above

 

“Preferential Rights” means any right or agreement that enables any Person to
purchase or acquire any Asset or any interest therein or portion thereof as a
result of or in connection with (a) the sale, assignment or other transfer of
any Asset or any interest therein or portion thereof, or (b) the execution or
delivery of this Agreement or the consummation or performance of the terms and
conditions contemplated by this Agreement.

 

“Properties” has the meaning set forth in Section 2.2(c).

 

“Property Costs” has the meaning set forth in Section 10.2(b) of this Agreement.

 

“Purchase Price” has the meaning set forth in Section 3.1 of this Agreement.

 

“Purchase Price Adjustments” has the meaning set forth in Section 10.2 of this
Agreement.

 

“Records” has the meaning set forth in Section 2.2(e) of this Agreement.

 

“Recoverable Loss” has the meaning set forth in Section 13.5(b) of this
Agreement.

 

“Release” means any depositing, spilling, leaking, pumping, pouring, placing,
emitting, discarding, abandoning, emptying, discharging, migrating, injecting,
escaping, leaching, dumping, or disposing.

 

“Retained Obligations” has the meaning set forth in Section 13.1 of this
Agreement.

 

“SEC” has the meaning set forth in Section 7.2(d) of this Agreement.

 

“Securities Act” has the meaning set forth in Section 7.2(d) of this Agreement.

 

“Seller” has the meaning set forth in the first paragraph of this Agreement.

 

“Seller Indemnitees” has the meaning set forth in Section 13.3 of this
Agreement.

 

 
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“Straddle Period” means any tax period beginning before and ending after the
Effective Time.

 

“Suspense Proceeds” has the meaning set forth in Section 5.14 of this Agreement.

 

“Tax” means (a) federal, state, local, or foreign taxes, charges, fees imposts,
levies, or other assessments, including all net income, gross receipts,
franchise, capital, sales, use, ad valorem, value added, transfer, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated Taxes, fees, assessments, and charges of any kind whatsoever; (b) all
interest, penalties, fines, additions to tax, or additional amounts imposed by
any Governmental Authority in connection with any item described in subsection
(a); and (c) any liability for any item described in subsections (a) and (b),
payable by reason of contract, assumption, transferee liability, operation of
Law, or otherwise.

 

“Tax Return” has the meaning set forth in Section 5.20(a) of this Agreement.

 

“Transfer Requirement” means any consent, approval, authorization or permit of,
or filing with or notification to, any Person which is required to be obtained,
made or complied with for or in connection with any sale, assignment or transfer
of any Asset or any interest therein, other than any consent of, notice to,
filing with, or other action by Governmental Authorities in connection with the
sale or conveyance of oil and/or gas leases or interests therein, if they are
not required prior to the assignment of such oil and/or gas leases, or interests
or they are customarily obtained subsequent to the sale or conveyance (including
consents from state agencies).

 

“Transfer Taxes” means sales, use, excise, real property transfer, registration,
documentary, stamp, filing or transfer Taxes, recording fees and similar Taxes
and fees incurred and imposed when, or with respect to, the transfer of
property, as well as any interest, penalty or addition thereto whether disputed
or not.

 

“Units” has the meaning set forth in Section 2.2(c) of this Agreement.

 

“Upward Adjustment” has the meaning set forth in Section 10.2(c) of this
Agreement.

 

“Wells” has the meaning set forth in Section 2.2(b) of this Agreement.

 

“WI” has the meaning set forth in the definition of Defensible Title.

 

1.2     Interpretation and Construction. In interpreting and construing this
Agreement, the following principles shall be followed:

 

(a)     If a term is defined as one part of speech (such as a noun), it shall
have a corresponding meaning when used as another part of speech (such as a
verb). The terms “herein,” “hereof,” “hereby,” and “hereunder,” or other similar
terms, refer to this Agreement as a whole and not only to the particular
Article, Section or subdivision in which any such terms may be employed. The
word “includes” and its syntactical variants mean “includes, but is not limited
to” and corresponding syntactical variant expressions. The plural shall be
deemed to include the singular, and vice versa.

 

 
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(b)     Unless the context of this Agreement clearly requires otherwise,
references to Articles, Sections, subsections, Exhibits and Schedules refer to
the Articles, Sections, and subdivisions of, and Exhibits and Schedules to, this
Agreement.

 

(c)     All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles.

 

(d)     No consideration shall be given to the captions of the articles,
sections or subsections, which are inserted for convenience in locating the
provisions of this Agreement and not as an aid in its construction.

 

(e)     Each exhibit, attachment, and schedule to this Agreement constitutes a
part of this Agreement and is incorporated herein by reference, but if there is
any conflict or inconsistency between the main body of this Agreement and any
exhibit, attachment, or schedule, the provisions of the main body of this
Agreement shall prevail.

 

(f)     Every covenant, term and provision of this Agreement shall be construed
simply according to its fair meaning and not strictly for or against any Party
(notwithstanding any rule of law requiring an agreement to be strictly construed
against the drafting party), it being understood that the Parties to this
Agreement are sophisticated and have had adequate opportunity and means to
retain counsel to represent their interests and to otherwise negotiate the
provisions of this Agreement.

 

(g)     Any reference to a statute, regulation or law shall include any
amendment thereof or any successor thereto, and any rules and regulations
promulgated thereunder, in each case as existing on the date of this Agreement.

 

(h)     Any reference to “$”, “Dollars” or “Cents” means United States dollars
or cents, respectively.

 

Article 2
PURCHASE AND SALE

 

2.1     Purchase and Sale of Assets. At the Closing, and upon the terms and
subject to the conditions of this Agreement, Seller shall sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall purchase from Seller, the
Assets, in exchange for the consideration set forth in this Agreement and the
assumption by Buyer of the Assumed Obligations attributable to the Assets.

 

2.2     The Assets. As used herein, the term “Assets” means all of Seller’s
right, title and interest, real or personal, recorded or unrecorded, movable or
immovable, tangible or intangible, in and to the following (but specifically
excluding the Excluded Assets):

 

(a)     The oil and gas leases and the pooling orders attributable to the Wells,
together with any mineral estates and other rights that Seller has in such
leases (whether or not such leases, estates or rights are listed on Exhibit A)
and the leasehold estates created by any oil and gas leases and mineral estates
and other rights described in Exhibit A (collectively, the “Leases”), together
with each and every kind and character of right, title, claim, and interest that
Seller has in the Leases or the lands currently pooled, unitized, communitized
or consolidated therewith (the “Lands”), including, without limitation, carried
interests, royalty interests, mineral interests, production payments and net
profits interests and the oil, gas and all other hydrocarbons (the
“Hydrocarbons”) attributable to the Leases and the Lands.

 

 
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(b)     The oil and gas wells specifically described in Exhibit B (the “Wells”),
and all personal property, equipment and other Well-related items placed on or
in the Wells (the “Equipment”).

 

(c)     The unitization, pooling and communitization agreements, declarations
and orders, and the units created thereby and all other such agreements relating
to the properties and interests described in Section 2.2(a) and 2.2(b) and to
the production of Hydrocarbons, if any, attributable to said properties and
interests (the “Units”, and, together with the Wells, Leases, and Lands, the
“Properties”).

 

(d)     To the extent transferrable, all existing and effective sales, purchase,
exchange, gathering, transportation and processing contracts, operating
agreements, balancing agreements, farmout agreements, service agreements and
other contracts, agreements and instruments, insofar as they relate to the
Properties, including without limitation, the agreements described in Exhibit C.

 

(e)     The files, maps, logs, records and other data relating to the Properties
and maintained by Seller, but only to the extent not subject to unaffiliated
third party contractual restrictions on disclosure or transfer and only to the
extent related to the Properties (the “Records”).

 

(f)     All rights and benefits arising from or in connection with any gas
production, pipeline, storage, processing or other imbalance attributable to
Hydrocarbons produced from the Properties as of the Effective Time.

 

(g)     All (i) Hydrocarbons produced from, or attributable to, the Properties
from and after the Effective Time; (ii) all Hydrocarbon inventories from or
attributable to the Properties that are in storage on the Effective Time,
whether produced before, on or after the Effective Time; and (iii) all
Hydrocarbons attributable to make-up rights with respect to gas production,
pipeline, storage, processing or other imbalances attributable to the
Properties, whether produced before, on or after the Effective Time.

 

(h)     All (i) trade credits, accounts receivable, notes receivable,
take-or-pay amounts receivable, and other receivables and general intangibles,
attributable to the Properties with respect to periods of time from and after
the Effective Time or that relate to obligations assumed by Buyer pursuant to
this Agreement, whether arising before, on or after the Effective Time; and (ii)
Liens and security interests in favor of Seller or its Affiliate, whether choate
or inchoate, under any law or contract, to the extent arising from, or relating
to, the ownership, operation, or sale or other disposition on or after the
Effective Time of any of the Properties or to the extent arising in favor of
Seller as the operator or non-operator of any Property.

 

(i)     All rights of Seller to audit the records of any Person and to receive
refunds or payments of any nature, and all amounts of money relating thereto,
whether before, on, or after the Effective Time, to the extent relating to
obligations assumed by Buyer pursuant to this Agreement.

 

 
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(j)     All claims, rights, demands, complaints, causes of action, suits,
actions, judgments, damages, awards, fines, penalties, recoveries, settlements,
appeals, duties, obligations, liabilities, losses, debts, costs and expenses
(including court costs, expert witness fees and reasonable attorneys’ fees) in
favor of Seller arising from acts, omissions or events, or damage to or
destruction of the Properties occurring from and after the Effective Time or
which relate to obligations assumed by Buyer pursuant to this Agreement.

 

(k)     To the extent transferrable, all franchises, licenses, permits,
approvals, consents, certificates and other authorizations, and other rights
granted by third Persons, and all certificates of convenience or necessity,
immunities, privileges, grants, and other such rights that relate to, or arise
from, the Properties or the ownership or operation thereof.

 

2.3     Excluded Assets. Notwithstanding the foregoing, the Assets shall not
include, and there is excepted, reserved and excluded from the sale contemplated
hereby (collectively, the “Excluded Assets”): (a) all of Seller’s right, title
and interest in and to any injection and disposal wells on the Lands or on lands
pooled or unitized therewith, and all personal property, equipment, fixtures,
improvements, facilities, permits, surface leases, rights-of-way and easements
used in connection with the treatment, processing, transportation, storing or
disposal of water produced from the Properties; (b) all credits and refunds and
all accounts, instruments and general intangibles (as such terms are defined in
the Oklahoma Uniform Commercial Code) attributable to the Assets to the extent
attributable to any period of time prior to the Effective Time and that do not
relate to obligations assumed by Buyer pursuant to this Agreement; (c) all
claims of Seller for refunds of or loss carry forwards to the extent
attributable to (i) ad valorem, severance, production or any other Taxes
attributable to any period prior to the Effective Time even if applied for after
the Effective Time, (ii) income or franchise Taxes, or (iii) any Taxes
attributable to the Excluded Assets, and such other refunds, and rights thereto,
for amounts paid in connection with the Assets and attributable to the period
prior to the Effective Time, including refunds of amounts paid under any gas
gathering or transportation agreement, to the extent the same do not relate to
obligations assumed by Buyer pursuant to this Agreement; (d) all proceeds,
income or revenues (and any security or other deposits made) to the extent
attributable to (i) the Assets for any period prior to the Effective Time, if
they do not relate to obligations assumed by Buyer pursuant to this Agreement,
or (ii) any Excluded Assets; (e) all of Seller’s proprietary computer software,
technology, patents, trade secrets, copyrights, names, trademarks, logos and
other intellectual property; (f) all of Seller’s rights and interests in
geological and geophysical data that is interpretive in nature or which cannot
be transferred without the consent of or payment to any third Person; (g) all
documents and instruments of Seller that may be protected by an attorney-client
privilege unless such privileged documents and instruments pertain to litigation
(including pending and threatened litigation) which Buyer is assuming; (h) data
and other information that cannot be disclosed or assigned to Buyer as a result
of confidentiality or similar arrangements under agreements with Persons who are
not Affiliates of Seller; (i) concurrent audit rights arising under any of the
Material Agreements or otherwise with respect to any period prior to the
Effective Time (unless relating to obligations assumed by Buyer pursuant to this
Agreement) or to any of the Excluded Assets; (j) all corporate, partnership and
income tax records of Seller; (k) copies of all Records (which shall be prepared
at Seller’s sole cost and expense); (l) all Permits and bonds to the extent not
transferable to Buyer; (m) personal property such as vehicles and certain
equipment, supplies and office equipment, or any other items, in each case, to
the extent described on Exhibit E; and (n) all infrastructure, including but not
limited to all easements, rights-of-way, surface leases, buildings, oil
transport lines, electrical distribution lines, saltwater transport lines,
saltwater disposal wells, saltwater disposal facilities and telecommunication
and SCADA facilities.

 

 
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2.4     Effective Time.

 

(a)     Subject to this Section 2.4, the transactions contemplated by this
Agreement shall be effective as of May 1, 2013 at 12:01 a.m. Central Time (the
“Effective Time”).

 

(b)     Buyer shall be entitled to all Hydrocarbon production from or
attributable to the Leases, Units and Wells at and after the Effective Time (and
all products and proceeds attributable thereto), and to all other income,
proceeds, receipts and credits earned with respect to the Assets at and after
the Effective Time, including, without limitation, delay rentals, shut-in
royalties, and lease bonuses, and shall be responsible for (and entitled to any
refunds and indemnities with respect to) all Property Costs incurred at and
after the Effective Time. Except as set forth to the contrary herein, Seller
shall be entitled to all Hydrocarbon production from or attributable to Leases,
Units and Wells prior to the Effective Time (and all products and proceeds
attributable thereto), and to all other income, proceeds, receipts and credits
earned with respect to the Assets prior to the Effective Time, and shall be
responsible for (and entitled to any refunds with respect to) all Property Costs
incurred prior to the Effective Time. The terms “earned” and “incurred”, as used
in this Agreement, shall be interpreted in accordance with generally accepted
accounting principles and Counsel of Petroleum Accountants Societies standards.
For purposes of this Section 2.4, determination of whether Property Costs are
attributable to the period before or after the Effective Time shall be based on
when services are rendered, when the goods are delivered, or when the work is
performed. For clarification, the date an item or work is ordered is not the
date of a pre-Effective Time transaction for settlement purposes, but rather the
date on which the item ordered is delivered to the job site, or the date on
which the work ordered is performed, shall be the relevant date. For purposes of
allocating Hydrocarbon production (and accounts receivable with respect thereto
including royalties and overriding royalties payable to the owner of the
Assets), under this Section 2.4, (i) liquid Hydrocarbons shall be deemed to be
“from or attributable to” the Leases, Units and Wells when they pass through the
pipeline connecting into the storage facilities into which they are run, or, if
there is no such facility, the applicable LACT meters through which they are
run, and (ii) gaseous Hydrocarbons shall be deemed to be “from or attributable
to” the Leases, Units and Wells when they pass through the delivery point sales
meters on the pipelines through which they are transported. Seller shall utilize
reasonable interpolative procedures to arrive at an allocation of Hydrocarbon
production when exact meter readings or gauging and strapping data is not
available. Taxes, right-of-way fees, insurance premiums and other Property Costs
that are paid periodically shall be prorated based on the number of days in the
applicable period falling before, and the number of days in the applicable
period falling at or after, the Effective Time, except that Hydrocarbon
production, severance and similar Taxes shall be prorated based on the number of
units actually produced, purchased or sold or proceeds of sale, as applicable,
before, and at or after, the Effective Time. In each case, Buyer shall be
responsible for the portion allocated to the period at and after the Effective
Time and Seller shall be responsible for the portion allocated to the period
before the Effective Time. After Closing, each Party shall be entitled to
participate in all joint interest audits and other audits of Property Costs for
which such Party is responsible or revenues to which such Party is entitled
(whether entirely or in part) pursuant to this Section 2.4(b) or Section 10.2.
All adjustments and payments made pursuant to this Section 2.4(b) and Section
10.2 shall be without duplication of any other amounts paid or received under
this Agreement.

 

 
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2.5     Maintenance of Records. Buyer, or its successors or assigns, for a
period of seven (7) years following Closing, will (a) retain the Records, (b)
provide Seller, its Affiliates, and its and their officers, employees and
representatives with access to the Records during normal business hours for
review and copying at Seller’s sole cost and expense, and (c) provide Seller,
its Affiliates, and its and their officers, employees and representatives with
access, during normal business hours, access, at Seller’s sole cost, risk and
expense, to materials received or produced after Closing relating to any
Indemnity Claim made under Section 13.6 of this Agreement for review and
copying.

 

Article 3
PURCHASE PRICE

 

3.1     Purchase Price Amount. The aggregate purchase price for the Assets shall
be Three Million, Three Hundred Thousand Dollars and no Cents ($3,300,000.00)
plus Five Hundred Thousand Dollars and no Cents ($500,000.00) (together, the
“Purchase Price”), subject to adjustment pursuant to Section 2.4(b) and Section
10.2, payable as provided in Section 3.2 below.

 

3.2     Payment of Purchase Price. The Buyer shall pay the Purchase Price to
Seller at Closing in cash, by wire transfer of immediately available funds in
accordance with the wire instructions set forth in Schedule 3.2. Following the
Closing, the Purchase Price shall be adjusted in accordance with Section 2.4(b),
Section 10.2 and Section 10.3, and shall be settled in cash in accordance with
Section 10.3.

 

Article 4
BUYER’S INSPECTION

 

4.1     Access to Records. Prior to Closing, and subject to Section 4.2, Seller
will make the Records available to Buyer and its representatives for inspection
and review at Seller’s offices during normal business hours to permit Buyer to
perform its due diligence review. Subject to the consent and cooperation of
third Persons, Seller will assist Buyer in Buyer’s efforts to obtain, at Buyer’s
expense, such additional information from such Persons as Buyer may reasonably
desire. Buyer may inspect the Records and such additional information only to
the extent it may do so without violating any obligation of confidence or
contractual commitment of Seller to a third Persons. If disclosure or access is
prohibited, Seller shall use commercially reasonable efforts to obtain
permission to grant such access to Buyer and its representatives, and shall use
commercially reasonable efforts to provide Buyer with as much information or
access concerning the matter as is possible while still complying with
applicable Laws and Seller’s obligations; provided that Seller shall not be
required to incur any out-of-pocket third party expenses or make any payments
for the benefit of any third Person in order to do so.

 

 
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4.2     Physical Access to the Leases and Wells. Prior to Closing, during
reasonable business hours, Seller agrees to grant Buyer physical access to the
Properties to allow Buyer to conduct, at Buyer’s sole risk and expense, onsite
inspections and environmental assessments of the Properties. In connection with
any such onsite inspections, Buyer agrees not to unreasonably and materially
interfere with the normal operation of the Properties and agrees to comply with
all requirements of the operators of the Wells. If Buyer or its agents prepares
an environmental assessment of any Lease or Well, Buyer agrees to keep such
assessment confidential, unless disclosure is required pursuant to applicable
Law, and to furnish copies thereof to Seller. In the event of the termination of
this Agreement, pursuant to Article 11 or otherwise, then immediately after the
date of such termination, Buyer shall, at its sole cost and expense, repair any
damage to the Properties caused by or resulting from such inspections and
environmental assessments so that the Properties shall be restored to their
condition immediately prior to such inspections and environmental assessments.
IN CONNECTION WITH GRANTING SUCH ACCESS, BUYER REPRESENTS THAT IT IS ADEQUATELY
INSURED AND WAIVES, RELEASES AND AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS
SELLER, AND ITS DIRECTORS, OFFICERS, MEMBERS, MANAGERS, LIMITED PARTNERS,
SHAREHOLDERS, EMPLOYEES, AGENTS, REPRESENTATIVES AND AFFILIATES AGAINST ALL
CLAIMS FOR INJURY TO, OR DEATH OF, PERSONS OR FOR DAMAGE TO PROPERTY ARISING IN
ANY WAY FROM THE ACCESS AFFORDED TO BUYER HEREUNDER OR THE ACTIVITIES OF BUYER,
REGARDLESS OF CAUSE, INCLUDING WITHOUT LIMITATION THE CONCURRENT NEGLIGENCE OF
SELLER AND ITS CONTRACTORS AND SUBCONTRACTORS AND THEIR EMPLOYEES, BUT EXCLUDING
HOWEVER, THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY SUCH PERSON. THIS
WAIVER, RELEASE AND INDEMNITY BY BUYER SHALL SURVIVE TERMINATION OF THIS
AGREEMENT. SELLER SHALL HAVE THE RIGHT TO PARTICIPATE WITH BUYER IN THE DEFENSE
OF ANY SUCH MATTER AT ITS OWN EXPENSE.

 

Article 5
SELLER’S REPRESENTATIONS AND WARRANTIES

 

Subject to the provisions of this Article 5, Seller represents and warrants to
Buyer as of the date of this Agreement and as of Closing (except as otherwise
limited herein) that:

 

5.1     Organization and Standing. Seller is a limited liability company, duly
organized, validly existing and in good standing under the laws of the State of
Oklahoma and is duly qualified to carry on its business in the states where the
Assets are located.

 

5.2     Legal Power. Seller has all requisite power and authority to own the
Assets to carry on its business as presently conducted, and to enter into and
perform this Agreement (and all documents required to be executed and delivered
by Seller at Closing) and to consummate the transactions contemplated by this
Agreement (and such documents).

 

5.3     Authorization and Enforceability. The execution, delivery and
performance by Seller of this Agreement (and all documents required to be
executed and delivered by Seller at Closing), and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary action on the part of Seller. This Agreement
constitutes (and, at Closing, such documents shall constitute) Seller’s legal,
valid and binding obligation, enforceable against Seller in accordance with its
terms, subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium and other laws for the protection of creditors, as
well as to general principles of equity, regardless whether such enforceability
is considered in a proceeding in equity or at law.

 

 
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5.4     Liability for Broker’s Fees. Seller has not incurred any liability,
contingent or otherwise, for brokers’ fees, finders’ fees or any other similar
fees relating to the transactions contemplated hereby for which Buyer shall have
any responsibility.

 

5.5     No Bankruptcy. There are no bankruptcy, reorganization, or receivership
proceedings pending, being contemplated by, or, to the Knowledge of Seller,
threatened against Seller (or any Affiliate thereof) by any third Person or
other Seller.

 

5.6     Litigation. Except as set forth on Schedule 5.6, (a) Seller has not
received a written claim or written demand notice that has not been resolved and
that would materially adversely affect the Assets; and (b) there are no actions,
suits, administrative or arbitration proceedings governmental investigations,
written governmental inquiries or proceedings pending or, to the Knowledge of
Seller, threatened in writing against Seller or any of the Assets, in any court
or by or before any Governmental Authority or arbitrator with respect to the
Assets or that would affect the Seller’s ability to consummate the transactions
contemplated by this Agreement, or materially adversely affect the Assets.

 

5.7     Insurance. Seller maintains, and through the Closing Date will maintain,
with respect to the Assets, the insurance coverage described on Schedule 5.7.

 

5.8     No Liens. The Assets will be conveyed to Buyer at the Closing free and
clear of all Liens and encumbrances other than Permitted Encumbrances.

 

5.9     Judgments. There are no unsatisfied penalties, awards, judgments or
injunctions issued by a court of competent jurisdiction or other Governmental
Authority and outstanding against Seller or with respect to any Asset that would
be reasonably expected to materially interfere with the operation of the Assets,
impair Seller’s ability to consummate the transactions contemplated by this
Agreement or materially impair the value of any Asset.

 

5.10     Compliance with Law. Seller’s ownership and the operation of the Assets
are in compliance in all material respects with all applicable Laws, and Seller
has not received written notice of a violation of any Law, or any judgment,
decree or order of any court, applicable to its business or operations which
remains uncured.

 

5.11     Calls on Production. Except as set forth on Schedule 5.11, there are no
calls on or preferential rights to purchase production from the Assets,
take-or-pay payments, advance payment, or other arrangements whereby Buyer will
not receive full payment for production delivered at the time that such
production is delivered and no Property is subject to penalties on allowables
due to production in excess of allowables.

 

5.12     Material Agreements. All Material Agreements are listed on Exhibit C.
Each Material Agreement and Lease is in full force and effect and represents the
legal, valid and binding obligation of Seller, enforceable in accordance with
its terms. Except as set forth on Schedule 5.12, (a) Seller is not in breach of
any Material Agreement or Lease, and (b) Seller has not received or delivered a
written notice of default or breach with respect to any Material Agreement or
Lease. Prior to Closing, Seller will have made available to Buyer or its
representatives true and complete copies of each Material Agreement and Lease
and all amendments or modifications thereto. For purposes of this Section 5.12,
references to “Lease” shall only mean to the extent listed on Exhibit A.

 

 
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5.13     Hydrocarbon Sales Contracts. Except as set forth on Schedule 5.13, the
Assets are not subject to any Hydrocarbon sales contracts for the sale of
production from the Assets.

 

5.14     Suspense Proceeds. Except as is customary in the ordinary course of
business or as set forth on Schedule 5.14 (the “Suspense Proceeds”), neither the
proceeds of Seller, nor, with respect to Assets that are operated by Seller or
any Affiliate thereof, any third Person, are being held in suspense.

 

5.15     Royalties and Rentals. To Seller’s Knowledge, all bonuses, delay
rentals, shut-in royalties, overriding royalties, minimum royalties, royalties
and all other similar obligations, other than the Suspense Proceeds, with
respect to the Assets have been timely paid in accordance with applicable Leases
and Laws.

 

5.16     Permits. With respect to Assets for which Seller is the operator,
Seller has and is maintaining all material permits, licenses, approvals and
consents from appropriate Governmental Authorities to conduct operations on such
Assets (collectively, “Permits”). To Seller’s Knowledge, the Assets are in
compliance with applicable Laws, Permits, rules, regulations, ordinances and
orders. To the extent transferable, the Permits will not be subject to
suspension, modification, revocation, or non-renewal as a result of the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.

 

5.17     Preferential Rights and Transfer Requirements. Except as set forth in
Schedule 5.17, there are no Preferential Rights or Transfer Requirements
attributable or with respect to any of the Assets.

 

5.18     No Conflicts. Except as set forth on Schedule 5.18, the execution,
delivery, performance and consummation of this Agreement (and the transactions
contemplated hereby) does not and will not: (a) violate, conflict with or
constitute a default or an event that, with notice or lapse of time or both,
would be a default, breach or violation under any term or provision of any
instrument, agreement, contract, commitment, license, promissory note,
conditional sales contract, indenture, mortgage, deed of trust, lease or other
agreement, instrument or arrangement to which Seller is a party or by which
Seller or any of the Assets is bound (including the governing documents of
Seller); (b) violate, conflict or constitute a breach of any statute, regulation
or judicial or administrative order, award, judgment or decree to which Seller
is a party or by which Seller or any of the Assets is bound; or (c) result in
the creation, imposition or continuation of any adverse claim or interest, or
any Lien, encumbrance, charge, equity or restriction of any nature whatsoever,
on or affecting Seller or the Assets.

 

 
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5.19     Consents and Approvals. No filing or registration with, and no permit,
authorization, certificate, waiver, license, consent or approval of, any
Governmental Authority is necessary for the execution, delivery or performance
by Seller of this Agreement (other than existing permits and other existing
approvals).

 

5.20     Taxes and Assessments.

 

(a)     Each Tax return, declaration, report, claim for refund or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof (a “Tax Return”) required to be
filed by Seller with respect to the Assets has been timely and properly filed
and all Taxes with respect to the Assets have been timely and properly paid.
There is not currently in effect any extension or waiver of any statute of
limitations of any jurisdiction regarding the assessment or collection of any
Tax.

 

(b)     Seller has not received written notice of any pending claim against
Seller (which remains outstanding) from any applicable Governmental Authority
for assessment of Taxes with respect to the Assets. No Governmental Authority
has ever asserted a claim that Seller or its Affiliates are subject to Tax in a
jurisdiction in which Seller or its Affiliate, as applicable, is not filing Tax
Returns.

 

(c)     No Asset is subject to a Tax partnership agreement or provision
requiring a partnership income Tax Return to be filed under applicable Law.

 

5.21     Wells and Equipment. Except as set forth on Schedule 5.21:

 

(a)     all Wells have been drilled and completed at legal locations in
accordance with generally accepted oil and gas field practices and within the
limits permitted by all applicable Leases, contracts, and pooling or unit
agreements;

 

(b)     there are no Wells located on the Assets that (i) Seller or its
Affiliates are currently obligated by any Laws or contract to currently plug,
dismantle or abandon; or (ii) have been plugged, dismantled, or abandoned in a
manner that does not comply in all material respects with Laws; or (iii)
formerly produced but that are currently temporarily abandoned; and

 

(c)     Seller (or the applicable operator) has all material easements, rights
of way, licenses, and authorizations from Governmental Authorities necessary to
access, construct, operate, maintain, and repair the Equipment in the ordinary
course of business as currently conducted and in compliance with all applicable
Laws;

 

5.22     Environmental. Except as may be disclosed in Schedule 5.22 or for
matters that would not, individually or in the aggregate have a material adverse
effect on the Assets (taken as a whole):

 

(a)     to Seller’s Knowledge, the operations of the Assets are, and have been,
in compliance with all Environmental Laws, which compliance includes the
possession and maintenance of, and compliance in all respects with, all Permits
required under all applicable Environmental Laws;

 

 
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(b)     Seller (with respect to the Assets) is not the subject of any
outstanding administrative or judicial order or judgment, agreement or
arbitration award from any Governmental Authority under any Environmental Laws
requiring remediation or the payment of a fine or penalty;

 

(c)     the Assets are not subject to any action, claim, suit, investigation,
inquiry, or proceeding pending or, to Seller’s Knowledge threatened in writing,
whether judicial or administrative, alleging noncompliance with or potential
liability under any Environmental Law;

 

(d)     no circumstances exist with respect to the Assets that give rise to an
obligation by Seller to investigate, remediate, monitor or otherwise address the
presence, on-site or offsite, of Hazardous Substances under any applicable
Environmental Laws;

 

(e)     to Seller’s Knowledge, there has been no Release of any Hazardous
Substances into the environment from any of the Assets; and

 

(f)     Seller has provided, or as of Closing will have provided, copies to
Buyer of all environmental studies, assessments, and investigations related to
the Assets.

 

5.23     Surface Use. With the exception of Lease provisions, including
provisions set forth in recorded addendums to Leases, and agreements listed in
Schedule 5.23, there are no surface use agreements to which Seller is a party
covering a portion of the Assets.

 

5.24     Title. Except as set forth in Schedule 5.24, Seller has, or at Closing
will have, Defensible Title to the Leases and Wells. Upon the Closing, Buyer
will acquire Defensible Title to all Leases and Wells.

 

Article 6
BUYER’S REPRESENTATIONS AND WARRANTIES

 

Subject to the provisions of this Article 6, Buyer represents and warrants to
Seller as of the date of this Agreement and as of Closing (except as otherwise
limited herein) that:

 

6.1     Organization and Standing. Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to carry on its business in each State where the
Assets are located and in each State where failure to be so qualified could
reasonably be expected to adversely affect the Assets or consummation of the
transactions contemplated by this Agreement.

 

6.2     Power. Buyer has all requisite power and authority to carry on its
business as presently conducted and to execute, deliver and perform this
Agreement (and all documents required to be executed and delivered by Buyer at
Closing) and to consummate the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement (and such documents) and
the consummation of the transactions contemplated hereby (and thereby) will not
violate, or be in conflict with, any provision of Buyer’s governing documents or
any provisions of any agreement or instrument to which it is a party or by which
it is bound, or any judgment, decree, order, statute, rule or regulation
applicable to Buyer.

 

 
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6.3     Authorization and Enforceability. The execution, delivery and
performance by Buyer of this Agreement (and all documents required to be
executed and delivered by Buyer at Closing), and the consummation of the
transactions contemplated hereby (and thereby), have been duly and validly
authorized by all necessary action on behalf of Buyer. This Agreement
constitutes (and, at Closing, such documents shall constitute) Buyer’s legal,
valid and binding obligation, enforceable against Buyer in accordance with its
terms, subject, however, to the effects of bankruptcy, insolvency,
reorganization, moratorium and similar laws for the protection of creditors, as
well as to general principles of equity, regardless whether such enforceability
is considered in a proceeding in equity or at law.

 

6.4     Liability for Brokers’ Fees. Buyer has not incurred any liability,
contingent or otherwise, for brokers’ fees, finders’ fees or any other similar
fees relating to the transactions contemplated by this Agreement for which
Seller shall have any responsibility whatsoever.

 

6.5     Litigation. There is no action, suit, proceeding, claim or investigation
pending or, to the Knowledge of Buyer, threatened by any Person or Governmental
Authority that impedes or is likely to impede Buyer’s ability to consummate the
transactions contemplated hereby and to assume the liabilities to be assumed by
Buyer under this Agreement, including, without limitation, the Assumed
Obligations.

 

6.6     No Conflicts. Except as set forth on Schedule 6.6, the execution,
delivery, performance and consummation of this Agreement (and the transactions
contemplated hereby) does not and will not: (a) violate, conflict with or
constitute a default or an event that, with notice or lapse of time or both,
would be a default, breach or violation under any term or provision of any
instrument, agreement, contract, commitment, license, promissory note,
conditional sales contract, indenture, mortgage, deed of trust, lease or other
agreement, instrument or arrangement to which Seller is a party or by which
Buyer is bound (including the governing documents of Buyer); (b) violate,
conflict or constitute a breach of any statute, regulation or judicial or
administrative order, award, judgment or decree to which Buyer is a party or by
which Buyer is bound; or (c) result in the creation, imposition or continuation
of any adverse claim or interest, or any Lien, encumbrance, charge, equity or
restriction of any nature whatsoever, on or affecting Buyer.

 

6.7     Consents and Approvals. No filing or registration with, and no permit,
authorization, certificate, waiver, license, consent or approval of, any
Governmental Authority is necessary for the execution, delivery or performance
by Buyer of this Agreement (other than existing permits and other existing
approvals).

 

6.8     Securities Law, Access to Data and Information. Buyer is familiar with
the Assets and it is a knowledgeable, experienced and sophisticated investor in
the oil and gas business. Buyer understands and accepts the risks and absence of
liquidity inherent in ownership of the Assets. Buyer acknowledges that the
Assets are or may be deemed to be “securities” under the Securities Act of 1933,
as amended, and certain applicable State securities or Blue Sky laws and that
resales thereof may therefore be subject to the registration requirements of
such acts. The Assets are being acquired solely for Buyer’s own account for the
purpose of investment and not with a view to resale, distributions or granting a
participation therein in violation of any securities Laws.

 

 
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6.9     Buyer’s Evaluation.

 

(a)     Buyer is experienced and knowledgeable in the oil and gas business and
is aware of its risks. Buyer has been afforded the opportunity to examine the
information relating to the Assets. Except for the representations and
warranties of Seller contained in this Agreement, Buyer acknowledges and agrees
that neither Seller, nor Seller’s representatives, have made any representations
or warranties, express or implied, written or oral, as to the accuracy or
completeness of the information relating to the Assets or any other information
relating to the Assets furnished or to be furnished to Buyer or its
representatives by or on behalf of Seller, and Seller hereby disclaims the same,
including, without limitation any estimate with respect to the value of the
Assets, estimates of reserves, estimates or any projections as to events that
could or could not occur, future operating expenses, future workover expenses
and future cash flow.

 

(b)     In entering into this Agreement, Buyer acknowledges and affirms that it
has relied and will rely solely on the terms of this Agreement and upon its
independent analysis, evaluation and investigation of, and judgment with respect
to, the business, economic, legal, tax or other consequences of the transactions
contemplated by this Agreement, including its own estimate and appraisal of the
extent and value of the petroleum, natural gas and other reserves of the Assets,
the value of the Assets and future operation, maintenance and development costs
associated with the Assets. Buyer’s representatives have visited, or, prior to
Closing will visit, the offices of Seller and have been given (or, prior to
Closing will be given) opportunities to examine the information relating to the
Assets. Except as expressly provided in this Agreement, Seller shall not have
any liability to Buyer or its affiliates, agents, representatives or employees
resulting from any use, authorized or unauthorized, of the information relating
to the Assets or other information relating to the Assets provided by or on
behalf of Seller.

 

Article 7
COVENANTS AND AGREEMENTS

 

7.1     Covenants and Agreements of Seller. Seller covenants and agrees with
Buyer as follows:

 

(a)     Operations Prior to Closing. From the date of execution hereof to the
Closing, Seller will operate the Assets in a good and workmanlike manner
consistent with past practices. From the date of execution of this Agreement to
the Closing Date, Seller shall pay or cause to be paid its proportionate share
of all costs and expenses incurred in connection with such operations.

 

(b)     Restriction on Operations. Subject to Section 7.1(a), unless Seller
obtains the prior written consent of Buyer to act otherwise, Seller will use
good-faith efforts within the constraints of the applicable operating agreements
and other applicable agreements: (i) not to abandon any part of the Assets
(except in the ordinary course of business or the abandonment of Lease(s) upon
the expiration of their respective primary terms or if not capable of production
in paying quantities), (ii) not to convey or dispose of any part of the Assets
(other than in the ordinary course of business, including the replacement of
equipment or sale of oil, gas, and other liquid products produced from the
Assets) or enter into, materially amend, terminate, or extend any farmout,
farming or other similar contract affecting the Assets, (iii) not to let lapse
any insurance now in force with respect to the Assets, (iv) not to modify or
terminate any contract relating to the operation of the Assets (other than in
the ordinary course of business), (v) not to grant or create any preferential
right to purchase, right of first negotiation, right of first purchase, Transfer
Restriction or similar right with respect to the Assets; (vi) make any
obligation or requirement with respect to the Assets (other than in the ordinary
course of business); (vii) not to incur any material indebtedness or take, or
fail to take, any action that would cause a Lien or encumbrance to arise or
exist with respect to the Assets, except for the Permitted Encumbrances; and
(viii) not to agree to do any of the foregoing.

 

 
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(c)     Marketing. Unless Seller obtains the prior written consent of Buyer to
act otherwise, Seller will not enter into any new marketing contracts or
agreements providing for the sale of Hydrocarbons for a term beyond December 31,
2013, except in the ordinary course of business.

 

(d)     Notices of Claims. Seller shall promptly notify Buyer, if, between the
date of execution of this Agreement and the Closing Date, Seller receives
written notice of any claim, suit, action or other proceeding relating to the
Assets or written notice of any material breach or default under any Material
Agreement.

 

(e)     Compliance with Laws. During the period from the date of execution of
this Agreement through the Closing Date, Seller shall use good faith efforts to
comply in all material respects with all applicable Laws, statutes, ordinances,
rules, regulations and orders relating to the Assets.

 

(f)     Enforcement of Third Party Provisions. During the period from the date
of execution of this Agreement through the Closing Date, to the extent customary
in the ordinary course of business pertaining to the Assets, Seller shall, at
Buyer’s request, use reasonable efforts to enforce, for the benefit of Buyer, at
Buyer’s cost and expense, all of Seller’s rights against third Persons under any
warranties, guarantees or indemnities given by such third Persons.

 

7.2     Covenants and Agreements of the Parties. The Parties (except as
otherwise limited herein) covenant and agree with each other as follows:

 

(a)     Confidentiality. All data and information, whether written or oral,
obtained from Seller in connection with the transactions contemplated hereby,
including the Records, whether obtained by Buyer before or after the execution
of this Agreement, and data and information generated by Buyer based on data or
information obtained from Seller in connection with the transactions
contemplated hereby (collectively, the “Information”), is deemed by the Parties
to be confidential. Until the Closing (or one year after December 31, 2013, if
the Closing should not occur for any reason) and, with regard to Information
that is not directly related to the Assets, continuing for a period of one year
after the Closing (or one year after December 31, 2013, if the Closing should
not occur for any reason), except as required by Law, Buyer and its officers,
agents and representatives will hold in strict confidence the terms of this
Agreement, and all Information, except any Information which: (i) at the time of
disclosure to Buyer by Seller is in the public domain; (ii) after disclosure to
Buyer by Seller becomes part of the public domain by publication or otherwise,
except by breach of this commitment by Buyer; (iii) Buyer can establish was
rightfully in Buyer’s possession at the time of disclosure to Buyer by Seller;
(iv) Buyer rightfully received from third Persons free of any obligation of
confidence; (v) is developed independently by Buyer without the Information,
provided that the Person or Persons developing the data shall not have had
access to the Information; or (vi) the disclosure of which is reasonably
necessary in order to comply with applicable Transfer Requirements or
Preferential Rights, notices required to be given under applicable contracts or
to seek approvals and consents of Governmental Authorities for the conveyance of
any Assets or the transactions contemplated hereby, but then only to the limited
extent necessary to comply therewith.

 

 
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(b)     Return of Information. If Closing does not occur and this Agreement is
terminated, if Seller so requests at any time, Buyer shall: (i) return to Seller
all copies of the Information in possession of Buyer obtained pursuant to any
provision of this Agreement, which Information is at the time of termination
required to be held in confidence pursuant to this Section ; and (ii) destroy
any and all notes, reports, studies or analyses based on, or incorporating, the
Information. The terms of this Section 7.2 shall survive termination of this
Agreement.

 

(c)     Injunctive Relief. Buyer agrees that Seller will not have an adequate
remedy at law if Buyer violates any of the terms of Sections 7.2(a) and 7.2(b).
In such event, Seller will have the right, in addition to any other it may have,
to obtain injunctive relief to restrain any breach or threatened breach of the
terms of Sections 7.2(a) and/or 7.2(b), or to obtain specific enforcement of
such terms.

 

(d)     Financial Statements. Seller acknowledges that Buyer may be required to
include statements of revenues and direct operating expenses and other financial
information relating to the Assets (“Financial Statements”) in documents filed
with the Securities and Exchange Commission (the “SEC”) by Buyer pursuant to the
Securities Act of 1933, as amended (the “Securities Act”), and that such
Financial Statements may be required to be audited. In that regard, Seller shall
provide Buyer reasonable access to such records relating to the Assets (to the
extent such information is available) and personnel of Seller as Buyer may
reasonably request to enable Buyer, and its representatives and accountants, at
Buyer’s sole cost and expense, to create and audit any Financial Statements that
Buyer deems necessary. Seller shall consent to the inclusion or incorporation by
reference of the Financial Statements in any registration statement, report or
other document of Buyer to be filed with the SEC in which Buyer reasonably
determines that the Financial Statements are required to be included or
incorporated by reference to satisfy any rule or regulation of the SEC or to
satisfy relevant disclosure obligations under the Securities Act or the
Securities Exchange Act of 1934, as amended. Upon request of Buyer, Seller shall
request the external audit firm that audits the Financial Statements to consent
to the inclusion or incorporation by reference of its audit opinion with respect
to the audited Financial Statements in any such registration statement, report
or other document. Seller shall provide Buyer and its independent accountants
with access to (i) any audit work papers of Seller’s independent accountants and
(ii) any management representation letters provided by Seller to Seller’s
independent accountants.

 

 
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(e)     Casualty or Condemnation Loss.

 

(i)     If after the date of this Agreement but prior to the Closing Date, any
portion of the Assets is destroyed by fire or other casualty or is taken in
condemnation or under right of eminent domain (“Casualty Loss”), and the loss as
a result of such Casualty Loss individually or in the aggregate exceeds two
percent (2%) of the Purchase Price, Buyer shall nevertheless be required to
close, and Seller shall elect, by written notice to Buyer prior to Closing,
either (1) to cause the Assets affected by any Casualty Loss to be repaired or
restored to at least their condition prior to such Casualty Loss, at Seller’s
sole cost, risk and expense, as promptly as reasonably practicable (which work
may extend after the Closing Date), or (2) to indemnify Buyer in a manner
reasonably acceptable to Buyer against any costs, losses, or expenses that Buyer
reasonably incurs to repair the Assets subject to any Casualty Loss. Seller
shall retain all rights to insurance and other claims against third Persons with
respect to the Casualty Loss, except to the extent the Parties otherwise agree
in writing.

 

(ii)     If after the date of this Agreement but prior to the Closing Date , any
portion of the Assets experiences a Casualty Loss, and the loss as a result of
such Casualty Loss individually or in the aggregate is two percent (2%) of the
Purchase Price or less, Buyer shall nevertheless be required to close and Seller
shall, at Closing, pay to Buyer all sums paid to Seller by third Persons by
reason of such Casualty Loss and shall assign, transfer and set over to Buyer or
subrogate Buyer to all of Seller’s right, title and interest (if any) in
insurance claims, unpaid awards, and other rights against third Persons (other
than Affiliates of Seller, other than captive insurance Affiliates, and its and
their directors, officers, employees and agents) arising out of the Casualty
Loss.

 

(f)     Updating Exhibit A, Exhibit B and Exhibit to Conveyance. From and after
the Closing Date and continuing for a period of up to twelve (12) months
thereafter, Buyer and Seller shall cooperate in good faith to (i) update Exhibit
A hereto and the related Exhibit to the Conveyance to include a more complete
and accurate list of all Leases to be conveyed under the Conveyance in
accordance with the terms of this Agreement (ii) update Exhibit B and (ii)
execute and file an amendment, restatement or correction to the Conveyance as
necessary to reflect the complete and accurate list of Leases described in
subsection (i) above.

 

Article 8
SELLER’S CONDITIONS TO CLOSE

 

The obligations of Seller to consummate the transactions provided for herein are
subject, at the option of Seller, to the fulfillment at or prior to the Closing
of each of the following conditions:

 

8.1     Representations. The representations and warranties of Buyer herein
contained shall be true and correct in all material respects as of the Closing
Date as though made on and as of such date.

 

8.2     Performance. Buyer shall have performed in all material respects all
obligations, covenants and agreements contained in this Agreement to be
performed or complied with by it at or prior to the Closing.

 

 
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8.3     Pending Matters. No suit, action or other proceeding shall be pending or
threatened, and no injunction, order or award shall have been issued, that seeks
to restrain, enjoin or otherwise prohibit, or recover material damages with
respect to, the consummation of the transactions contemplated by this Agreement,
excluding any such matter initiated by a Seller or any Affiliate of Seller.

 

8.4     Delivery. Buyer shall have executed, acknowledged, delivered or
performed, as appropriate, or shall stand ready to execute, acknowledge, deliver
or perform, as appropriate, all items described in Section 10.5.

 

Article 9
BUYER’S CONDITIONS TO CLOSE

 

The obligations of Buyer to consummate the transactions provided for herein are
subject, at the option of Buyer, to the fulfillment at or prior to the Closing
of each of the following conditions:

 

9.1     Representations. The representations and warranties of Seller herein
contained shall be true and correct in all material respects (and in all
respects, in the case of representations and warranties qualified by materiality
or material adverse effect, after giving effect to such qualification), as of
the Closing Date as though made on and as of such date, other than
representations and warranties that refer to a specified date, which need only
be true and correct as of such date.

 

9.2     Performance. Seller shall have performed in all material respects (and
in all respects, in the case of obligations, covenants and agreements qualified
by materiality, after giving effect to such qualification) all obligations,
covenants and agreements contained in this Agreement to be performed or complied
with by it at or prior to the Closing.

 

9.3     Pending Matters. No suit, action or other proceeding shall be pending or
threatened, and no injunction, order or award shall have been issued, that seeks
to restrain, enjoin or otherwise prohibit, or recover material damages with
respect to, the consummation of the transactions contemplated by this Agreement,
excluding any such matter initiated by Buyer or any of its Affiliates.

 

9.4     Delivery. Seller shall have executed, acknowledged, delivered or
performed, as appropriate, or shall stand ready to execute, acknowledge, deliver
or perform, as appropriate, all items described in Section 10.4.

 

9.5     Buyer’s Conflicts Committee. Buyer shall have received approval of this
Agreement in a form satisfactory to Buyer in its sole and complete discretion
from the Conflicts Committee.

 

Article 10
THE CLOSING

 

10.1     Time and Place of the Closing. If the conditions referred to in Article
8 and Article 9 have been satisfied or waived in writing, and subject to any
extensions provided for herein, the transactions contemplated by this Agreement
(the “Closing”) shall take place at the offices of Buyer, whose address is 914
N. Broadway Ave., Suite 230, Oklahoma City, Oklahoma 73102, at 1:00 p.m. Central
Time on July 23, 2013, or if all such conditions have not been satisfied or
waived by that date, then two Business Days after all such conditions have been
satisfied or waived (the “Closing Date”).

 

 
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10.2     Adjustments to Purchase Price.

 

(a)     All adjustments to the Purchase Price shall be made (i) according to the
factors described in this Agreement, (ii) in accordance with generally accepted
accounting principles as consistently applied in the oil and gas industry, and
(iii) without duplication.

 

(b)     For the purposes of this Agreement, the term “Property Costs” shall mean
all capital expenses, joint interest billings, lease operating expenses, lease
rental and maintenance costs, royalties, overriding royalties, leasehold
payments, Taxes, drilling expenses, workover expenses, geological, geophysical
and any and all other expenditures chargeable under applicable operating
agreements, participation agreements or other agreements and all expenditures
consistent with the standards established by the Council of Petroleum Accountant
Societies of North America that are attributable to the maintenance and
operation of the Assets during the period in question; provided, however, that
Property Costs shall not include any liabilities, losses, costs and expenses
attributable to: (i) claims, investigations, administrative proceedings,
arbitration or litigation directly or indirectly arising out of or resulting
from actual or claimed personal injury or other torts, illness or death;
property damage (other than damage to structures, fences, irrigation systems and
other fixtures, crops, livestock, and other personal property in the ordinary
course of business); (ii) violation of any Law (or private cause or right of
action under any Law); (iii) environmental damage or liabilities, including
obligations to remediate any contamination of groundwater, surface water, soil,
sediments, or Equipment under applicable Environmental Law; (iv) title and
environmental claims (including claims that Leases have terminated); (v) claims
of improper calculation or payment of royalties (including overriding royalties
and other burdens on production) related to deduction of post-production costs
or use of posted or index prices or prices paid by Affiliates; (vi) gas
balancing and other production balancing obligations; (vii) Casualty Loss; and
(viii) any claims for indemnification, contribution, or reimbursement from any
third Person with respect to liabilities, losses, costs, and expenses of the
type described in preceding clauses (i) through (vii), whether such claims are
made pursuant to contract or otherwise.

 

(c)     Following the Closing in accordance with Section 10.3, the Purchase
Price shall be increased by the following amounts (the “Upward Adjustments”):

 

(i)     the amount equal to any Property Costs paid by Seller from and after the
Effective Time, except costs already deducted in the determination of proceeds
pursuant to Section 10.2(d)(ii);

 

(ii)    the value of all merchantable oil in storage at the Effective Time,
which is sold and which is attributable to the Assets and paid to Buyer, such
value to be the actual price received less Taxes and royalties paid by Buyer;

 

 
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(iii)   any other amount provided for in this Agreement or agreed upon in
writing by Buyer and Seller.

 

(d)     Following the Closing in accordance with Section 10.3, the Purchase
Price shall be decreased by the following amounts (the “Downward Adjustments”):

 

(i)     proceeds received and retained by Seller or its Affiliates (net of
applicable Taxes and royalties paid or to be paid by Seller and that are not
otherwise reimbursed to Seller or its Affiliate by a third Person purchaser of
production) that are attributable to production from the Assets from and after
the Effective Time, together with any other income earned with respect to the
Assets from and after the Effective Time, excluding the effects of any futures,
options, swaps, or other derivatives;

 

(ii)    the amount of all royalty, overriding royalty, and other burdens payable
out of production of Hydrocarbons from or attributable to the Properties or the
proceeds thereof to third Persons but held in suspense by or on behalf of Seller
or its Affiliate at Closing, and any interest accrued in escrow accounts for
such suspended funds, to the extent such funds are not transferred to Buyer’s
control at Closing;

 

(iii)   the amount of all third Person cash call payments received by Seller or
its Affiliate, to the extent applying to the ownership or operation of the
Assets from and after the Effective Time; and

 

(iv)   any other amount provided for in this Agreement or agreed upon in writing
by Seller and Buyer.

 

The adjustments described in this Section 10.2 are hereinafter referred to as
the “Purchase Price Adjustments.”

 

10.3     Post-Closing Adjustment.

 

(a)     As soon as reasonably practicable after the Closing but not later than
one hundred and sixty (160) days following the Closing Date, Buyer shall prepare
and deliver to Seller a draft statement setting forth the final calculation of
the Purchase Price and showing the calculation of each Purchase Price Adjustment
under Section 10.2, based on the most recent actual figures for each Purchase
Price Adjustment. Buyer shall make such reasonable documentation as is in
Buyer’s possession available to support the final figures. As soon as reasonably
practicable, but not later than the thirtieth (30th) day following receipt of
such statement from Buyer, Seller shall deliver to Buyer a written report
containing any changes that Seller proposes be made to such statement. If Seller
does not deliver such report to Buyer on or before the end of such thirty (30)
day period, Seller shall be deemed to have agreed with Buyer’s statement, and
such statement shall become binding upon the Parties.

 

 
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(b)     The Parties shall undertake to agree on the final statement of the
Purchase Price, including each Purchase Price Adjustment, no later than ninety
(90) days after delivery of Seller’s statement. In the event that the Parties
cannot reach agreement within such period of time, any Party may refer the items
of adjustment which are in dispute to the Oklahoma City, Oklahoma office of
Smith, Carney & Co., p.c. or, if such firm is not able or willing to serve, a
nationally-recognized independent accounting firm or consulting firm mutually
acceptable to both Buyer and Seller (the “Accounting Arbitrator”), for review
and final determination by arbitration. The Accounting Arbitrator shall conduct
the arbitration proceedings in Oklahoma City, Oklahoma in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, to the
extent such rules do not conflict with the terms of this Section 10.3. The
Accounting Arbitrator’s determination shall be made within forty-five (45) days
after submission of the matters in dispute and shall be final and binding on all
Parties, without right of appeal. In determining the proper amount of any
Purchase Price Adjustment, the Accounting Arbitrator shall be bound by the terms
of this Agreement and may not increase any such Purchase Price Adjustment more
than the increase proposed by Seller nor decrease any such Purchase Price
Adjustment more than the decrease proposed by Buyer, as applicable. The
Accounting Arbitrator shall act as an expert for the limited purpose of
determining the specific disputed aspects of the Purchase Price Adjustment
submitted by any Party and may not award damages, interest or penalties to any
Party with respect to any matter. Seller and Buyer shall each bear their own
legal fees and other costs of presenting its case. Seller shall bear one-half
and Buyer shall bear one-half of the costs and expenses of the Accounting
Arbitrator. Within ten (10) days after the earlier of (i) the expiration of
Buyer’s thirty (30) day review period without delivery of any written report or
(ii) the date on which the Parties or the Accounting Arbitrator finally
determine the Purchase Price Adjustment, (x) Buyer shall pay to Seller by wire
transfer of immediately available funds in accordance with the wire instructions
set forth in Schedule 3.2, the amount (if any) by which the aggregate Upward
Adjustments exceed the aggregate Downward Adjustments or (y) Seller shall
deliver to Buyer by wire transfer of immediately available funds in accordance
with Buyer’s reasonable instructions, the amount (if any) by which the aggregate
Downward Adjustments exceed the aggregate Upward Adjustments, as applicable.

 

10.4     Actions of Seller at the Closing. At the Closing, Seller shall:

 

(a)     execute, acknowledge and deliver to Buyer counterparts of the Conveyance
and such other instruments (in form and substance agreed upon by Seller and
Buyer) as may be reasonably necessary to convey the Assets to Buyer in
sufficient duplicate originals to allow recording in all appropriate
jurisdictions and offices;

 

(b)     deliver, or make available, to Buyer possession of the Assets;

 

(c)     execute and deliver to Buyer an affidavit attesting to the non-foreign
status of Seller;

 

(d)     deliver to Buyer a certificate, duly executed by an authorized officer
of Seller, certifying on behalf of Seller that the conditions set forth in
Sections 9.1 and 9.2 have been fulfilled;

 

(e)     execute, acknowledge and deliver to Buyer any forms required by any
Governmental Authority relating to the assumption of operations by Buyer, where
applicable;

 

(f)     deliver to Buyer duly executed and acknowledged releases and
terminations of any and all mortgages, deeds of trust, assignments of
production, financing statements, fixture filings, and other encumbrances and
interests burdening the Assets (or any thereof), excluding the Permitted
Encumbrances; and

 

 
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(g)     execute, acknowledge and deliver any other agreements provided for
herein or necessary or desirable to effectuate the transactions contemplated
hereby.

 

10.5     Actions of Buyer at the Closing. At the Closing, Buyer shall:

 

(a)     deliver to Seller the Purchase Price, in accordance with Article 3;

 

(b)     take possession of the Assets;

 

(c)     deliver to Seller a certificate, duly executed by an authorized officer
of Buyer, certifying on behalf of Buyer that the conditions set forth in
Sections 8.1, 8.2 and 9.5 have been fulfilled;

 

(d)     execute, acknowledge and deliver to Seller counterparts of the
Conveyance and such other instruments (in form and substance agreed upon by
Seller and Buyer) as may be reasonably necessary to convey the Assets to Buyer;
and

 

(e)     execute, acknowledge and deliver any other agreements provided for
herein or necessary or desirable to effectuate the transactions contemplated
hereby.

 

Article 11
TERMINATION

 

11.1     Right of Termination. This Agreement may be terminated at any time at
or prior to the Closing:

 

(a)     by mutual written consent of the Parties;

 

(b)     by any Party if the Closing shall not have occurred on or before
December 31, 2013;

 

(c)     by any Party if any Governmental Authority shall have issued an order,
judgment or decree or taken any other action challenging, delaying, restraining,
enjoining, prohibiting or invalidating the consummation of any of the
transactions contemplated herein;

 

(d)     by Seller if Buyer (i) is in material breach of this Agreement, (ii) has
received notice of such breach by Seller and (iii) has not cured such breach
within three (3) Business Days prior to Closing, unless such breach has been
waived by Seller;

 

(e)     by Buyer if Seller (i) is in material breach of this Agreement, (ii) has
received notice of such breach by Buyer and (iii) has not cured such breach
within three Business Days prior to Closing, unless such breach has been waived
by Buyer;

 

provided, however, that no Party shall have the right to terminate this
Agreement pursuant to clause (b) above if such Party is at such time in material
breach of its representations and warranties set forth in this Agreement or
negligently or willfully failed to perform or observe its covenants and
agreements herein in any material respect.

 

 
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11.2     Effect of Termination. In the event that the Closing does not occur as
a result of any Party exercising its right to terminate pursuant to Section
11.1, then except as set forth in Sections 4.2, 7.2(a), 7.2(b), 7.2(c), 11.2,
11.3, and Article 1 and Article 14, this Agreement shall be null and void
subject to Section 11.3.

 

11.3     Termination Damages.

 

(a)     If all conditions precedent to the obligations of Buyer set forth in
Article 9 have been met and the transactions contemplated by this Agreement are
not consummated on or before the Closing Date because of the negligent or
willful failure of Buyer to perform any of its obligations hereunder in any
material respect, or the material breach of any representation or warranty
herein by Buyer, then in such event, Seller shall have the option to terminate
this Agreement, in which case Seller may pursue all available legal and
equitable remedies.

 

(b)     If all conditions precedent to the obligations of Seller set forth in
Article 8 have been met and the transactions contemplated by this Agreement are
not consummated on or before the Closing Date because of the negligent or
willful failure of Seller to perform any of its obligations hereunder in any
material respect, or the breach of any representation or warranty herein by
Seller, then in such event, Buyer shall have the option to terminate this
Agreement, in which case as Buyer may pursue all available legal and equitable
remedies, including, without limitation, specific performance.

 

(c)     Notwithstanding anything to the contrary in this Agreement, in no event
shall any Party be entitled to receive any punitive, indirect or consequential
damages unless same are a part of a third Person claim for which a Party is
seeking indemnification hereunder, REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED
TO BY THE SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY
OF THE OTHER PARTY, BUT EXPRESSLY EXCLUDING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.

 

Article 12
TAXES

 

12.1     Fees. All required documentary, filing and recording fees and expenses
in connection with the filing and recording of the assignments, conveyances or
other instruments required to convey title to the Assets shall be borne by
Buyer.

 

12.2     Income Taxes; Transfer Taxes. Seller shall retain responsibility for,
and shall bear and pay, all federal income Taxes, state income Taxes, and other
similar Taxes (including any applicable interest or penalties) incurred or
imposed with respect to the transactions described in this Agreement. To the
extent any Transfer Taxes are payable by reason of the sale of the Assets under
this Agreement, such Transfer Taxes shall be borne and timely paid by Buyer. The
Parties will cooperate in good faith to minimize any Transfer Taxes to the
extent permissible under applicable Law.

 

 
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12.3     Asset Taxes. Seller shall retain responsibility for, and shall bear and
pay, all Asset Taxes assessed with respect to the ownership and operation of the
Assets for (i) any period ending prior to the Effective Time and (ii) the
portion of any Straddle Period ending immediately prior to the Effective Time.
All Asset Taxes with respect to the ownership or operation of the Conveyed
Interests arising on or after the Effective Time (including all Straddle Period
Taxes not apportioned to Seller) shall be allocated to and borne by Buyer. For
purposes of allocation between the Parties of Asset Taxes that are payable with
respect to Straddle Periods, the portion of any such Taxes that are attributable
to the portion of the Straddle Period that ends immediately prior to the
Effective Time shall (A) in the case of Asset Taxes that are based upon or
related to revenues, income or receipts or imposed on a transactional basis such
as severance or production Taxes, be allocated based on revenues from sales
occurring before the Effective Time (which shall be Seller’s responsibility) and
from and after the Effective Time (which shall be Buyer’s responsibility); and
(B) in the case of other Asset Taxes, be allocated pro rata per day between the
period immediately prior to the Effective Time and the period beginning on the
Effective Time. For purposes of clause (A) of the preceding sentence, any
exemption, deduction, credit or other item that is calculated on an annual basis
shall be allocated pro rata per day between the period ending immediately prior
to the Effective Time and the period beginning on the Effective Time. To the
extent the actual amount of Asset Taxes is not determinable at Closing, Buyer
and Seller shall utilize the most recent information available in estimating the
amount of Asset Taxes. Upon determination of the actual amount of Asset Taxes,
Seller shall pay to Buyer to the extent not taken into account in the final
statement of the Purchase Price any additional amount necessary to equal
Seller’s share of the Asset Taxes. In the event the amount of Asset Taxes paid
by Seller or included as a reduction to the Purchase Price at Closing exceeds
Seller’s share of Asset Taxes, Buyer shall pay the amount of any such overage to
Seller. Any allocation of Asset Taxes between the Parties shall be in accordance
with this Section 12.3.

 

12.4     Asset Tax Returns. Seller shall prepare and file all Asset Tax Returns
with respect to Asset Taxes that are due on or prior to the Closing Date and,
subject to this Section , pay all Asset Taxes shown to be due thereon. To the
extent that any amount of such Asset Taxes paid represents an amount
attributable to Buyer under this Section 12.4, Seller shall provide a statement
to Buyer apportioning such Asset Taxes pursuant to this Section 12.4. Within 10
Business Days of receipt of such statement, Buyer shall reimburse Seller for
Buyer’s allocated portion of such Asset Taxes. With respect to Asset Taxes that
are due after the Closing Date, each Party shall, subject to the provisions of
this Section 12.4, (i) pay (or cause to be paid) all such Asset Taxes for which
such Party is responsible and (ii) prepare and file (or cause to be prepared and
filed) all such Asset Tax Returns for which such Party is responsible. All Tax
Returns for any Straddle Periods shall be prepared and filed by Buyer, and Buyer
shall provide a statement to Seller apportioning such Straddle Period Asset
Taxes. Within ten (10) Business Days of receipt of such statement, Seller shall
pay Buyer for Seller’s allocated portion of such Asset Taxes.

 

Article 13
OBLIGATIONS AND INDEMNIFICATION

 

13.1     Retained Obligations. Provided that the Closing occurs, Seller shall
retain all obligations and liabilities (collectively “Retained Obligations”)
related to (i) the Excluded Assets, (ii) Property Costs and other costs which
are for the account of Seller pursuant to Section 2.4(b) or Section 10.2, (iii)
the business and operation of the Assets relating to periods prior to the
Effective Time, including Pre-Effective Time Environmental Liabilities, (iv) Tax
obligations retained by Seller pursuant to Article 12 and (v) all litigation
existing as of the Effective Time, whether or not disclosed on Schedule 5.6,
indefinitely.

 

 
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13.2     Assumed Obligations. Subject to Section 4.2, provided that the Closing
occurs, Buyer hereby assumes all duties, obligations and liabilities
(collectively, the “Assumed Obligations”) related to (i) the business and
operation of the Assets relating to periods on and after the Effective Time,
including Post-Effective Time Environmental Liabilities, (ii) any and all
plugging and abandonment operations associated with the Assets, regardless of
when such obligations arose and (iii) the obligations of Buyer pursuant to
Article 12.

 

13.3     Buyer’s Indemnification. Provided that the Closing occurs, Buyer shall
release, defend, indemnify and hold harmless Seller, its affiliates, and their
respective officers, directors, managers, employees, agents, partners,
representatives, members, shareholders, affiliates, subsidiaries, successors and
assigns (collectively, the “Seller Indemnitees”) from and against any and all
claims, damages, liabilities, losses, causes of action, costs and expenses
(including, without limitation, those involving theories of negligence or strict
liability and including court costs and attorneys’ fees) (collectively, the
“Losses”) as a result of, arising out of, or related to, (a) the Assumed
Obligations, (b) Buyer’s breach of any of its covenants or agreements contained
in this Agreement, or (c) the breach of any representation or warranty made by
Buyer in Article 6, but expressly excluding, in each case, Losses against which
Seller would be required to indemnify Buyer pursuant to Section 13.4.

 

13.4     Seller’s Indemnification. Provided that the Closing occurs, Seller
shall release, defend, indemnify and hold harmless Buyer, its partners, and
their respective officers, directors, managers, employees, agents,
representatives, members, shareholders, affiliates and subsidiaries
(collectively, the “Buyer Indemnitees”) from and against any and all Losses
arising out of, or relating to, (a) the Retained Obligations, (b) Seller’s
breach of any of its covenants or agreements contained in this Agreement, or (c)
the breach of any representation or warranty made by Seller in Article 5, but
expressly excluding, in each case, Losses against which Buyer would be required
to indemnify Seller pursuant to Section 13.3.

 

13.5     Limitation for Seller’s Indemnification.

 

(a)     Notwithstanding anything to the contrary contained herein, Seller’s
indemnification obligation under Section 13.4 shall only apply if Buyer has
provided Seller with written notice claiming indemnification with respect to
breaches of representations, warranties, covenants or agreements, on or before
the date on which the applicable representation, warranty, covenant or agreement
expires pursuant to Section 14.2.

 

(b)     Seller shall have no liability arising out of or relating to Section
13.4 for any Loss that does not exceed $15,000 (a “Recoverable Loss”) and then
only to the extent the aggregate amount of all such Recoverable Losses actually
incurred by Buyer Indemnitees thereunder exceed an amount equal to one and one
half percent (1.5%) of the Purchase Price (and then, subject to Section 13.5(c),
only to the extent such aggregate Recoverable Losses exceed such amount).

 

 
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(c)     In no event shall Seller’s aggregate liability arising out of or
relating to Section 13.4 exceed an amount equal to ten percent (10%) of the
Purchase Price.

 

(d)     The amount of any Loss for which a Buyer Indemnitee claims
indemnification under this Agreement shall be reduced by: (i) any insurance
proceeds actually recovered with respect to such Loss and (ii) indemnification
or reimbursement payments actually recovered from third parties with respect to
such Loss.

 

(e)     For purposes of determining whether there has been a breach of a
representation or warranty by a Party in connection with the assertion of a
claim for indemnification under this Article 13, or determining the amount of a
Loss, with respect to any asserted breach, such determination shall be made
without regard to any qualifier as to “material,” “materiality” or “material
adverse effect” contained in Article 5 or Article 6.

 

(f)     The Parties shall treat, for Tax purposes, any amounts paid pursuant to
this Article 13 as an adjustment to the Purchase Price.

 

(g)     Seller’s indemnification obligations under Section 13.4 shall not apply
for any Losses arising out of an inaccurate representation, warranty, covenant
or agreement made by Seller if Buyer had Knowledge of such inaccuracy prior to
Closing; provided, that if Buyer notifies Seller in writing of such inaccuracy
within a reasonable period of time prior to Closing and Seller fails to take
commercially reasonable steps to remedy such inaccuracy, the Seller’s
indemnification obligations under Section 13.4 shall be applicable.

 

13.6     Notices and Defense of Indemnified Matters. Each Party shall promptly
notify the other Party of any matter of which it becomes aware and for which it
is entitled to indemnification from the other Party under this Agreement
(“Indemnity Claims”); provided, however, that failure of a Party to so notify
any other Party shall not relieve the indemnifying Party of its obligations,
except to the extent that such failure results in insufficient time being
available to permit the indemnifying Party to effectively defend against any
third Person claim. The indemnifying Party shall be obligated to defend, at the
indemnifying Party’s sole expense, any litigation or other administrative or
adversarial proceeding against the indemnified Party relating to any matter for
which the indemnifying Party has agreed to indemnify and hold the indemnified
Party harmless under this Agreement. However, the indemnified Party shall have
the right to participate with the indemnifying Party in the defense of any such
matter at its own expense.

 

13.7     Remedies. Subject to the provisions of Section 4.2, 7.2(c) and 11.3,
the indemnification obligations set forth in this Article 13 are the exclusive
remedies available to either Seller or Buyer under this Agreement, except that
Seller or Buyer may obtain specific performance of such indemnification
obligations.

 

Article 14
LIMITATIONS ON REPRESENTATIONS AND WARRANTIES

 

 
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14.1     Disclaimers of Representations and Warranties. The express
representations and warranties of Seller contained in this Agreement are
exclusive and are in lieu of all other representations and warranties, express,
implied or statutory. EXCEPT FOR THE EXPRESS REPRESENTATIONS OF SELLER IN THIS
AGREEMENT (AND EXCEPT FOR THE SPECIAL WARRANTY OF TITLE TO BE CONTAINED IN THE
CONVEYANCE), BUYER ACKNOWLEDGES THAT SELLER, AND SELLER’S REPRESENTATIVES HAVE
NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY
EXPRESSLY WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON
LAW, BY STATUTE OR OTHERWISE RELATING TO (a) TITLE TO THE ASSETS, (b) PRODUCTION
RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES, OR THE QUALITY, QUANTITY OR
VOLUME OF THE RESERVES OF HYDROCARBONS, IF ANY, ATTRIBUTABLE TO THE ASSETS, (c)
THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) NOW, HERETOFORE OR HEREAFTER FURNISHED TO BUYER BY
OR ON BEHALF OF SELLER, AND (d) THE ENVIRONMENTAL CONDITION OF THE ASSETS.
EXCEPT FOR THE EXPRESS REPRESENTATIONS OF SELLER IN THIS AGREEMENT, SELLER
EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY WAIVES, AS TO PERSONAL
PROPERTY, EQUIPMENT, INVENTORY, MACHINERY AND FIXTURES CONSTITUTING A PART OF
THE ASSETS (i) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (ii) ANY
IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (iii) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,
(iv) ANY RIGHTS OF BUYERS UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION OR RETURN OF THE PURCHASE PRICE, (v) ANY IMPLIED OR EXPRESS
WARRANTY OF FREEDOM FROM DEFECTS, WHETHER KNOWN OR UNKNOWN, (vi) ANY AND ALL
IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW, AND (vii) ANY IMPLIED OR
EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE
ENVIRONMENT, OR PROTECTION OF THE ENVIRONMENT OR HEALTH, IT BEING THE EXPRESS
INTENTION OF BUYER AND SELLER THAT THE PERSONAL PROPERTY, EQUIPMENT, INVENTORY,
MACHINERY AND FIXTURES INCLUDED IN THE ASSETS SHALL BE CONVEYED TO BUYER, AND
BUYER SHALL ACCEPT SAME, AS IS, WHERE IS, WITH ALL FAULTS AND IN THEIR PRESENT
CONDITION AND STATE OF REPAIR AND BUYER REPRESENTS TO SELLER THAT BUYER WILL
MAKE OR CAUSE TO BE MADE SUCH INSPECTIONS WITH RESPECT TO SUCH PERSONAL
PROPERTY, EQUIPMENT, INVENTORY, MACHINERY AND FIXTURES AS BUYER DEEMS
APPROPRIATE. SELLER AND BUYER AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE
LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN THIS
SECTION ARE “CONSPICUOUS” DISCLAIMERS FOR THE PURPOSES OF ANY APPLICABLE LAW,
RULE OR ORDER.

 

14.2     Survival. The representations and warranties of the Parties contained
herein and all covenants contained herein that are to be performed prior to the
Closing will survive for twelve (12) months following the Closing; provided,
however, the Fundamental Representations and Warranties shall survive the
Closing until the expiration of the applicable statute of limitations. All
covenants contained herein that are to be performed following the Closing shall
survive the Closing until fully performed. No Party shall have any liability for
indemnification claims made under Article 13 with respect to any representation,
warranty or covenant unless an Indemnity Claim is provided by the non-breaching
Party to the other Party prior to the expiration of the applicable survival
period for such representation, warranty or covenant. If an Indemnity Claim has
been timely given in accordance with this Agreement prior to the expiration of
the applicable survival period for such representation, warranty or covenant or
claim, then the applicable representation, warranty or covenant shall survive as
to such claim until such claim has been finally resolved.

 

 
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Article 15
MISCELLANEOUS

 

15.1     Expenses. Except as otherwise provided in this Agreement or any
document to be executed pursuant hereto, regardless of whether the transactions
contemplated by this Agreement occur, each Party shall be solely responsible for
all expenses, including due diligence expenses, incurred by it in connection
with the transactions contemplated hereby, and neither Party shall be entitled
to any reimbursement for such expenses from the other Party.

 

15.2     Document Retention. As used in this Section 15.2, the term “Documents”
shall mean all files, documents, books, records and other data delivered to
Buyer by Seller pursuant to the provisions of this Agreement (other than those
that Seller have retained either the original or a copy of), including, but not
limited to: financial and tax accounting records; land, title and division of
interest files; contracts; engineering and well files; and books and records
related to the operation of the Assets prior to the Closing Date. Buyer shall
retain and preserve the Documents for a period of no less than seven (7) years
following the Closing Date (or for such longer period as may be required by law
or governmental regulation), and shall allow Seller or its representatives, at
Seller’s expense, to inspect the Documents at reasonable times and upon
reasonable notice during regular business hours during such time period. Seller
shall have the right during such period to make copies of the Documents at its
expense.

 

15.3     Entire Agreement. This Agreement, the documents to be executed pursuant
hereunto, and the exhibits attached hereto constitute the entire agreement
between the Parties pertaining to the subject matter hereof and supersede all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the Parties pertaining to the subject matter hereof. No supplement,
amendment, alteration, modification or waiver of this Agreement shall be binding
unless executed in writing by the Parties and specifically referencing this
Agreement and identified as a supplement, amendment, alteration, modification or
waiver.

 

15.4     Disclosure Schedules. The disclosure of any matter or item in any
schedule hereto shall not be deemed to constitute an acknowledgment that any
such matter is required to be disclosed. Matters may be disclosed on a schedule
to this Agreement for purposes of information only. Disclosure of any matter
under one schedule shall be deemed disclosure of that matter under any other
schedules to the extent reasonably ascertainable on the face of such disclosure.
From time to time prior to Closing, Seller shall have the right (but not the
obligation) to supplement or amend the schedules hereto, after notice to Buyer,
with respect to any matter hereafter arising or of which it becomes aware after
the date hereof, which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in the
schedules (each a “Schedule Supplement”), and each such Schedule Supplement
shall be deemed to be incorporated into and supplement and amend the schedules
as of the date of this Agreement and as of the Closing Date.

 

 
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15.5     Waiver. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.

 

15.6     Publicity. The Parties hereto shall consult with each other prior to
issuing any public announcement or statement with respect to the transactions
contemplated hereby and shall give the other Party the opportunity to provide
comments to such public announcement or statement, unless such announcement or
statement is required by applicable law or stock exchange requirements.

 

15.7     No Third Party Beneficiaries. Except as provided in Sections 4.2, 13.3
and 13.4, nothing in this Agreement shall provide any benefit to any third
Person or entitle any third Person to any claim, cause of action, remedy or
right of any kind, it being the intent of the Parties that this Agreement shall
otherwise not be construed as a third party beneficiary contract.

 

15.8     Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned, by operation of law otherwise, by any
Party without the prior written consent of the other Parties, and any attempted
assignment without such consent shall be void.

 

15.9     Governing Law. This Agreement, other documents delivered pursuant
hereto and the legal relations between the Parties shall be governed by and
construed and enforced in accordance with the laws of the State of Oklahoma,
without giving effect to principles of conflicts of law that would result in the
application of the laws of another jurisdiction. The Parties hereto irrevocably
submit to the jurisdiction of the courts of the State of Oklahoma and the
federal courts of the United States of America located in Oklahoma City,
Oklahoma over any dispute between the Parties arising out of this Agreement or
the transactions contemplated hereby, and each Party irrevocably agrees that all
such claims in respect of such dispute shall be heard and determined in such
courts (except to the extent a dispute, controversy, or claim arising out of or
in connection with a determination of Purchase Price adjustments pursuant to
Section 10.3(b) is referred to an expert pursuant to such Section). The Parties
hereto irrevocably waive, to the fullest extent permitted by law, any objection
which they may now or hereafter have to the venue of any dispute arising out of
this Agreement or the transactions contemplated hereby being brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each Party agrees that a judgment in any such dispute may be enforced in other
jurisdictions by a suit on the judgment or any other manner provided by law. THE
PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY AGAINST ANOTHER PARTY IN ANY MATTER WHATSOEVER ARISING OUT
OF OR IN RELATION TO OR IN CONNECTION WITH THIS AGREEMENT.

 

15.10     Notices. Any notice, communication, request, instruction or other
document by any party to another required or permitted hereunder shall be given
in writing and delivered in person or sent by U.S. Mail postage prepaid, return
receipt requested, overnight courier or facsimile to the addresses of Seller and
Buyer set forth below. Any such notice shall be effective only upon receipt;
provided, that notice given by facsimile transmission shall be confirmed by
appropriate answer-back and shall be effective upon actual receipt if received
during the recipient’s normal business hours, or at the beginning of the
recipient’s next Business Day after receipt if not received during the
recipient’s normal business hours.

 

 
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Seller: 

 

Scintilla, LLC 

1307 S. Boulder Ave. 

Tulsa, OK 74119 

Phone: 918.587.6242 

Fax: 918.587.9250
Attn: Kevin Easley 

 

Buyer: 

 

New Source Energy Partners L.P. 

914 N. Broadway Ave., Suite 230 

Oklahoma City, OK 73101 

Phone: 405.272.3028 

Fax: 405.272.3034 

Attention: Kristian Kos 

 

With a copy (which shall not constitute notice) to: 

 

New Source Energy GP, LLC 

c/o New Source Energy Partners L.P. 

914 N. Broadway Ave., Suite 230 

Oklahoma City, OK 73101 

Phone: 405.272.3028 

Fax: 405.272.3034 

Attention: Kristian Kos 

 

Either Party may, by written notice so delivered to the other Party, change its
contact information for notice purposes hereunder.

 

15.11     Severability. If any term or other provision of this Agreement is held
to be invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect, and the Parties shall negotiate in
good faith to modify this Agreement so as to effect their original intention as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.

 

15.12     Time of the Essence. Time shall be of the essence with respect to all
time periods and notice periods set forth in this Agreement. If the date
specified in this Agreement for giving any notice or taking any action is not a
Business Day (or if the period during which any notice is required to be given
or any action taken expires on a date which is not a Business Day), then the
date for giving such notice or taking such action (and the expiration of such
period during which notice is required to be given or action taken) shall be the
next day which is a Business Day.

 

 
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15.13     Counterpart Execution. This Agreement may be executed in any number of
counterparts. If counterparts of this Agreement are executed, the signature
pages from various counterparts may be combined into one composite instrument
for all purposes. All counterparts together shall constitute only one Agreement,
but each counterpart shall be considered an original. No Party shall be bound
until all Parties have executed a counterpart. Facsimile copies of signatures
shall constitute original signatures for all purposes of this Agreement and any
enforcement hereof.

 

15.14     Determinations by Buyer. Whenever a determination, decision or
approval by Buyer is called for by this Agreement, such determination, decision
or approval must by authorized by the Conflicts Committee.

 

15.15     Further Assurances. After Closing, Seller and Buyer agree to take such
further actions and to execute, acknowledge and deliver, without further
consideration, all such further documents as are reasonably requested by the
other for carrying out the purposes of this Agreement or of any document
delivered pursuant to this Agreement.

[Signature Pages Follow]

 

 
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IN WITNESS WHEREOF, Seller and Buyer have executed and delivered this Purchase
and Sale Agreement as of the date first set forth above.

 

  SELLER:

SCINTILLA, LLC         By: /s/ Kevin Easley     Name: Kevin Easley     Title:
Manager & CEO  

 

 

 

 

 

 

 

Seller’s Signature Page to Purchase and Sale Agreement

 
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IN WITNESS WHEREOF, Seller and Buyer have executed and delivered this Purchase
and Sale Agreement as of the date first set forth above.

 

  BUYER:

NEW SOURCE ENERGY PARTNERS L.P.             By:   New Source Energy GP, LLC,
its general partner               By: /s/ Kristian Kos       Name: Kristian Kos
      Title: President & CEO  

 

 

 

 

 

 

 

 

Buyer’s Signature Page to Purchase and Sale Agreement

 

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