EXHIBT 10.1

                                            

Execution Version

PURCHASE AND SALE AGREEMENT

between

QEP ENERGY COMPANY
as Seller
and
CIMAREX ENERGY CO.
as Buyer

dated
May 2, 2014

i

--------------------------------------------------------------------------------

EXHIBT 10.1

TABLE OF CONTENTS
Page
 
 
 
ARTICLE I
 
 
DEFINITIONS AND INTERPRETATION
 
1.1

Defined Terms
1

1.2

References and Rules of Construction
1

ARTICLE II
 
PURCHASE AND SALE
 
2.1

Purchase and Sale
1

2.2

Excluded Assets
2

2.3

Revenues and Expenses
2

ARTICLE III
 
PURCHASE PRICE
 
3.1

Purchase Price
3

3.2

Deposit
3

3.3

Adjustments to Purchase Price
4

3.4

Adjustment Methodology
6

3.5

Preliminary Settlement Statement
6

3.6

Final Settlement Statement
6

3.7

Disputes
6

3.8

Allocation of Purchase Price / Allocated Values
7

3.9

Allocation for Imbalances at Closing
7

ARTICLE IV
 
REPRESENTATIONS AND WARRANTIES OF SELLER
 
4.1

Organization, Existence and Qualification
7

4.2

Authority, Approval and Enforceability
7

4.3

No Conflicts
8

4.4

Consents
8

4.5

Bankruptcy
8

4.6

Foreign Person
8

4.7

Litigation
8

4.8

Material Contracts
8

4.9

No Violation of Laws
9

4.10

Preferential Purchase Rights
9

4.11

Royalties, Etc
9

4.12

Imbalances
9

4.13

Current Commitments
9

4.14

Asset Taxes
10

4.15

Brokers’ Fees
10

4.16

Violations of Environmental Laws
10

4.17

Governmental Permits
10

4.18

Take-or-Pay
10

4.19

Calls on Production
10

ii

--------------------------------------------------------------------------------

EXHIBT 10.1

4.20

Appurtenant Assets
11

4.21

Necessary Surface Rights
11

4.22

Property Operation; Non-Producing Wells
11

4.23

Non-Consent Operations
11

4.24

Tax Partnerships
11

ARTICLE V
 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
5.1

Organization, Existence and Qualification
11

5.2

Authority, Approval and Enforceability
11

5.3

No Conflicts
12

5.4

Consents
12

5.5

Bankruptcy
12

5.6

Litigation
12

5.7

Financing
12

5.8

Regulatory
12

5.9

Independent Evaluation
12

5.10

Brokers’ Fees
13

5.11

Accredited Investor
13

ARTICLE VI
 
CERTAIN AGREEMENTS
 
6.1

Conduct of Business
13

6.2

Successor Operator
14

6.3

Governmental Bonds
14

6.4

Record Retention
14

6.5

Guarantees
14

6.6

Notifications
15

6.7

Amendment to Schedules
15

6.8

Intentionally Deleted
15

6.9

Certain Litigation Matters
15

6.10

Employees Matters
16

6.11

Intentionally Deleted
16

6.12

Section 754 Election
16

ARTICLE VII
 
BUYER’S CONDITIONS TO CLOSING
 
7.1

Representations
16

7.2

Performance
17

7.3

No Legal Proceedings
17

7.4

Title Defects and Environmental Defects
17

7.5

Closing Deliverables
17

ARTICLE VIII
 
SELLER’S CONDITIONS TO CLOSING
 
8.1

Representations
17

8.2

Performance
17

8.3

No Legal Proceedings
17

8.4

Title Defects and Environmental Defects
17

8.5

Replacement Bonds and Guarantees
18

iii

--------------------------------------------------------------------------------

EXHIBT 10.1

8.6

Closing Deliverables
18

ARTICLE IX
 
CLOSING
 
 
9.1

Date of Closing
18

9.2

Place of Closing
18

9.3

Closing Obligations
18

9.4

Records
19

ARTICLE X
 
ACCESS/DISCLAIMERS
 
10.1

Access
19

10.2

Confidentiality
20

10.3

Disclaimers
21

ARTICLE XI
 
TITLE MATTERS; CASUALTY; TRANSFER RESTRICTIONS
 
11.1

Seller’s Title
22

11.2

Notice of Title Defects; Defect Adjustments
23

11.3

Casualty Loss
27

11.4

Preferential Purchase Rights and Consents to Assign
28

ARTICLE XII
 
ENVIRONMENTAL MATTERS
 
12.1

Notice of Environmental Defects
29

12.2

NORM, Asbestos, Wastes and Other Substances
32

ARTICLE XIII
 
ASSUMPTION; INDEMNIFICATION; SURVIVAL
 
13.1

Assumption by Buyer
32

13.2

Indemnities of Seller
32

13.3

Indemnities of Buyer
33

13.4

Limitation on Liability
33

13.5

Express Negligence
34

13.6

Exclusive Remedy
34

13.7

Indemnification Procedures
34

13.8

Survival
36

13.9

Waiver of Right to Rescission
36

13.10

Insurance, Taxes
36

13.11

Non-Compensatory Damages
37

13.12

Disclaimer of Application of Anti-Indemnity Statutes
37

ARTICLE XIV
 
TERMINATION, DEFAULT AND REMEDIES
 
14.1

Right of Termination
37

14.2

Effect of Termination
37

14.3

Return of Documentation and Confidentiality
38

ARTICLE XV
 
DEFINED TERMS
 
15.1

Defined Terms
38

ARTICLE XVI
 

iv

--------------------------------------------------------------------------------

EXHIBT 10.1

MISCELLANEOUS
 
16.1

Appendices, Exhibits and Schedules
50

16.2

Expenses and Taxes
50

16.3

Assignment
51

16.4

Preparation of Agreement
51

16.5

Publicity
51

16.6

Notices
52

16.7

Further Cooperation
52

16.8

Filings, Notices and Certain Governmental Approvals
52

16.9

Entire Agreement; Conflicts
53

16.10

Parties in Interest
53

16.11

Amendment
53

16.12

Waiver; Rights Cumulative
53

16.13

Governing Law; Jurisdiction
54

16.14

Severability
54

16.15

Removal of Name
54

16.16

Counterparts
55

16.17

Like-Kind Exchange
55

v

--------------------------------------------------------------------------------

EXHIBT 10.1

LIST OF EXHIBITS AND SCHEDULES

 
 
 
Exhibit A
¯
Leases and Mineral Fee Interests
Exhibit A-1
¯
Wells and Well Locations
Exhibit A-2
¯
Certain Leases and Mineral Fee Interests
Exhibit A-3
¯
Surface Fee Interests
Exhibit A-4
¯
Plat
Exhibit B-1
¯
Form of Assignment and Bill of Sale
Exhibit B-2
¯
Form of Mineral Deed
Exhibit B-3
¯
Form of Surface Deed
Exhibit B-4
¯
Form of Transition Services Agreement
Exhibit C
¯
Excluded Assets
Exhibit D
¯
Target Formations
Exhibit E
¯
URC Related Interests
 
 
 
Schedule 3.8
¯
Allocated Values
Schedule 4.4
¯
Consents
Schedule 4.7
¯
Litigation
Schedule 4.8(a)
¯
Material Contracts
Schedule 4.8(b)
¯
Defaults under Material Contracts
Schedule 4.9
¯
Violation of Laws
Schedule 4.10
¯
Preferential Purchase Rights
Schedule 4.11
¯
Royalties, Etc.
Schedule 4.12
¯
Imbalances
Schedule 4.13
¯
Current Commitments
Schedule 4.14
¯
Asset Taxes
Schedule 4.22
¯
Property Operation; Non-Producing Wells
Schedule 4.24
¯
Tax Partnerships
Schedule 6.1
¯
Conduct of Business
Schedule 6.5
¯
Guarantees
Schedule 6.10
¯
Employees Matters

vi

--------------------------------------------------------------------------------

EXHIBT 10.1

PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (this “Agreement”) is executed as of the 2nd
day of May, 2014 (the “Execution Date”), and is between QEP Energy Company, a
Texas corporation (“Seller”), and Cimarex Energy Co., a Delaware corporation
(“Buyer”). Seller and Buyer are each referred to as a “Party” and collectively
referred to as the “Parties.”
RECITALS
Seller desires to sell and assign, and Buyer desires to purchase and pay for,
all of Seller’s right, title and interest in and to the Assets (as defined
hereinafter) effective as of the Effective Time (as defined hereinafter).
NOW, THEREFORE, for and in consideration of the mutual promises contained
herein, the benefits to be derived by each Party hereunder, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Buyer hereby agree as follows:
ARTTICLE I
DEFINITIONS AND INTERPRETATION

1.1Defined Terms. Capitalized terms used herein shall have the meanings set
forth in Section 15.1, unless the context otherwise requires.

1.2References and Rules of Construction. All references in this Agreement to
Appendices, Exhibits, Schedules, Articles, Sections, subsections and other
subdivisions refer to the corresponding Appendices, Exhibits, Schedules,
Articles, Sections, subsections and other subdivisions of or to this Agreement
unless expressly provided otherwise. Titles appearing at the beginning of any
Articles, Sections, subsections and other subdivisions of this Agreement are for
convenience only, do not constitute any part of this Agreement, and shall be
disregarded in construing the language hereof. The words “this Agreement,”
“herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer
to this Agreement as a whole and not to any particular Article, Section,
subsection or other subdivision unless expressly so limited. The words “this
Article,” “this Section,” and “this subsection,” and words of similar import,
refer only to Article, Section or subsection hereof in which such words occur.
References in this Agreement to any agreement, including this Agreement, refer
to such agreement as it may be amended, supplemented or otherwise modified from
time to time. Wherever the words “include,” “includes” or “including” are used
in this Agreement, they shall be deemed to be followed by the words “without
limiting the foregoing in any respect.” All references to “$” or “dollars” shall
be deemed references to United States Dollars. Each accounting term not defined
herein will have the meaning given to it under GAAP as interpreted as of the
Execution Date. Pronouns in masculine, feminine or neuter genders shall be
construed to state and include any other gender, and words, terms and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise requires.

ARTICLE II
PURCHASE AND SALE
2.1Purchase and Sale. Subject to the terms and conditions of this Agreement,
Seller agrees to sell, and Buyer agrees to purchase and pay for, as of the
Effective Time, all of Seller’s right, title and interest

1

--------------------------------------------------------------------------------

EXHIBT 10.1

in and to the assets described in Section 2.1(a) through Section 2.1(h) below
(such interests, less and except the Excluded Assets, collectively, the
“Assets”):

(a)the oil and gas leases of Seller in Blaine, Caddo, Canadian, Custer, Dewey,
Grady and Kingfisher Counties, Oklahoma set forth on Exhibit A, subject to any
reservations or depth restrictions described on Exhibit A, together with any and
all other right, title and interest of Seller in and to the leasehold estates
created thereby, including any overriding royalty interests, subject to the
terms, conditions, covenants and obligations set forth in such leases and/or on
Exhibit A (such interest in such leases, the “Leases”), and the mineral fee
interests set forth on Exhibit A (the “Mineral Fee Interests”); and in addition,
the Leases and Mineral Fee Interests shall include all of Seller’s right, title
and interest in the lands specifically described on Exhibit A, all lands
described in or covered by the Leases whether or not such lands are specifically
or correctly described in Exhibit A, and all of Seller’s right, title and
interest in all other oil and gas leasehold interests, mineral fee interests and
other oil and gas interests of every kind and nature covering lands within the
outlined area on the plat attached hereto as Exhibit A-4;

(b)all wells located on any of the properties described in Section 2.1(a)
including the Leases or on any other lease with which any such property or Lease
has been unitized (such interest in such wells, including the wells set forth on
Exhibit A-1, the “Wells”), and all Hydrocarbons produced therefrom or allocated
thereto from and after the Effective Time (including all Hydrocarbons in storage
or existing in pipelines, plants and/or tanks (including inventory) as of the
Effective Time);

(c)all rights and interests in, under or derived from all unitization and
pooling orders or agreements in effect with respect to any of the Leases or
Wells and the units created thereby (the “Units”);

(d)to the extent that they may be assigned, all Applicable Contracts and all
rights thereunder;

(e)the surface fee interests set forth on Exhibit A-3, and to the extent that
they may be assigned, all permits, licenses, servitudes, easements and
rights-of-way to the extent used primarily in connection with the ownership or
operation of any of the Leases, Wells, Units or other Assets;

(f)all equipment, machinery, fixtures and other personal, movable and mixed
property, operational and nonoperational, known or unknown, located on any of
the Leases, Mineral Fee Interests, Wells, Units or other Assets or primarily
used in connection therewith, including pipelines, gathering systems, manifolds,
well equipment, casing, tubing, pumps, motors, fixtures, machinery, compression
equipment, flow lines, processing and separation facilities, pads, structures,
materials and other items primarily used in the operation thereof (collectively,
the “Personal Property”);

(g)all Imbalances relating to the Assets; and

(h)all of the files, records, information and data, in the native format as
currently stored by Seller or its Affiliates and primarily relating to the
Assets in Seller’s or its Affiliates’ possession, including: (i) land and title
records (including abstracts of title, title opinions and title curative
documents); (ii) Applicable Contract files; (iii) hardcopy correspondence files;
(iv) operations, environmental, production and accounting records consisting of
existing hardcopy files and production and accounting records in Excel format
reflecting current ownership decks, well master files, division of interest
files, working interest owner name and address files, and revenue and joint
interest billing accounting information, and (v) facility and well records
(collectively, “Records”).

2

--------------------------------------------------------------------------------

EXHIBT 10.1

2.2Excluded Assets. Seller shall reserve and retain all of the Excluded Assets.

2.3Revenues and Expenses. Subject to the provisions hereof, Seller shall remain
entitled to all of the rights of ownership (including the right to all
production, proceeds of production and other proceeds) and shall remain
responsible (by payment, through the adjustments to the Purchase Price hereunder
or otherwise) for all Operating Expenses, in each case, attributable to the
Assets for the period of time prior to the Effective Time. Subject to the
provisions hereof, and subject to the occurrence of Closing, Buyer shall be
entitled to all of the rights of ownership (including the right to all
production, proceeds of production and other proceeds), and shall be responsible
(by payment, through the adjustments to the Purchase Price hereunder or
otherwise) for (i) all Operating Expenses, in each case, attributable to the
Assets for the period of time from and after the Effective Time and (ii) all
operating expenses and capital expenditures relating to each Well that has not
been completed and placed on production prior to the Effective Time, whether or
not such expenses were incurred before or after the Effective Time (the
“Designated Well Costs”). “Operating Expenses” means (other than the Designated
Well Costs) all operating expenses (including costs of insurance and Asset
Taxes) and all capital expenditures incurred in the ownership and operation of
the Assets in the ordinary course of business and, where applicable, in
accordance with the relevant operating or unit agreement or pooling order, if
any, and overhead costs charged to the Assets under the relevant operating or
unit agreement or pooling order, if any, but excluding Liabilities attributable
to (i) personal injury or death, property damage or violation of any Law, (ii)
Decommissioning Obligations, (iii) environmental matters, including obligations
to remediate any contamination of water or Personal Property under applicable
Environmental Laws, (iv) obligations with respect to Imbalances, or (v)
obligations to pay Working Interests, royalties, overriding royalties or other
interest owners revenues or proceeds attributable to sales of Hydrocarbons
relating to the Assets, including those held in suspense. After Closing, each
Party shall be entitled to participate in all joint interest audits and other
audits of Operating Expenses for which such Party is entirely or in part
responsible under the terms of this Section 2.3.
ARTICLE III
PURCHASE PRICE

3.1Purchase Price. The purchase price for (a) the transfer of the Assets and the
transactions contemplated hereby and (b) the assumption by Buyer of the Assumed
Obligations shall be $497,366,360.00 (the “Purchase Price”), as adjusted in
accordance with this Agreement and payable by Buyer to Seller at Closing by wire
transfer in immediately available funds to a bank account of Seller (the details
of which shall be provided by Seller to Buyer in the Preliminary Settlement
Statement).

3.2Deposit.

(a)Concurrently with the execution of this Agreement, Buyer has deposited by
wire transfer in same day funds with Seller the sum of $49,736,636.00,
representing ten percent (10%) of the Purchase Price (such amount, excluding any
interest earned thereon, the “Deposit”). If Closing occurs, the Deposit shall be
applied toward the Adjusted Purchase Price at Closing.

(b)If (i) all conditions precedent to the obligations of Buyer set forth in
Article VII (other than those actions or deliveries to occur at Closing) have
been met or waived by Buyer, and (ii) the transactions contemplated by this
Agreement are not consummated because of: (A) the failure of Buyer to materially
perform any of its obligations hereunder, or (B) the failure of any of Buyer’s
representations or warranties hereunder to be true and correct in all material
respects as of the Execution Date and Closing, then, in such event, Seller shall
have the option to: (1) terminate this Agreement and retain the Deposit together
with any interest or income thereon, free of any claims by Buyer with respect
thereto, as partial

3

--------------------------------------------------------------------------------

EXHIBT 10.1

payment of its damages and seek its remaining damages from Buyer or (2) seek all
remedies available at law or in equity, including specific performance.
 
(c)If this Agreement is terminated by the mutual written agreement of Buyer and
Seller, or if Closing does not occur for any reason other than as set forth in
Section 3.2(b), then Buyer shall be entitled to a refund of the Deposit together
with any interest or income actually earned thereon, free of any claims by
Seller with respect thereto.
  
(d)In the event of a termination of this Agreement pursuant to Section 3.2(b) or
Section 3.2(c) above, Buyer and Seller shall, in each case, have the rights and
obligations set forth in Section 14.2.

3.3Adjustments to Purchase Price. The Purchase Price shall be adjusted as
follows, and the resulting amount shall be herein called the “Adjusted Purchase
Price”:

(a)The Purchase Price shall be adjusted upward by the following amounts (without
duplication):

i.an amount equal to the value of all Hydrocarbons attributable to the Assets in
storage or existing in pipelines, plants and/or tanks (including inventory) and
upstream of the pipeline connection or upstream of the sales meter as of the
Effective Time, the value to be based upon the contract price in effect as of
the Effective Time (or the sales price, if there is no contract price, in effect
as of the Effective Time), less (A) Burdens on such production and (B) severance
Taxes deducted by the purchaser of such production;

ii.an amount equal to all Operating Expenses and all other costs and expenses
paid by Seller that are attributable to the Assets during the period following
the Effective Time, whether paid before or after the Effective Time, including
(A) bond and insurance premiums paid by or on behalf of Seller with respect to
the period following the Effective Time, (B) Burdens, (C) rentals and other
lease maintenance payments and (D) Asset Taxes;

iii.an amount equal to all of the Designated Well Costs paid by Seller, whether
paid before or after the Effective Time;

iv.the Title Benefit Amounts of any Title Benefits for which the Title Benefit
Amounts have been determined prior to Closing;

v.except to the extent taken into account in Section 3.3(a)(ii)(D), the amount
of all Asset Taxes allocated to Buyer in accordance with Section 16.2 but paid
by Seller;

vi.subject to Section 3.9, to the extent that Seller is underproduced as shown
with respect to the net Well Imbalances set forth in Schedule 4.12, as complete
and final settlement of all Well Imbalances attributable to the Assets, the sum
of $175,977.00 which is an amount equal to the product of the underproduced
volumes times $3.00/MMBtu for gaseous Hydrocarbons;

vii.subject to Section 3.9, to the extent that Seller has overdelivered any
Hydrocarbons as of the Effective Time as shown with respect to the net Pipeline
Imbalances set forth in Schedule 4.12, as complete and final settlement of all
Pipeline Imbalances attributable to the Assets, a sum in an amount equal to the
product of the overdelivered volumes times (A) $3.00/MMBtu for gaseous
Hydrocarbons;

4

--------------------------------------------------------------------------------

EXHIBT 10.1

viii.the portion of the Overhead Costs attributable to the Assets from and after
the Effective Time up to the Closing Date; and

ix.any other amount provided for elsewhere in this Agreement or otherwise agreed
upon by Seller and Buyer.

(b)The Purchase Price shall be adjusted downward by the following amounts
(without duplication):

i.an amount equal to all proceeds actually received by Seller attributable to
the sale of Hydrocarbons (1) produced from or allocable to the Assets during the
period following the Effective Time or (2) contained in storage or existing in
pipelines, plants and/or tanks (including inventory) as of the Effective Time
for which an upward adjustment to the Purchase Price was made pursuant to
Section 3.3(a)(i), in each case, net of (A) expenses (other than Operating
Expenses and other expenses taken into account pursuant to Section 3.3(a))
directly incurred in earning or receiving such proceeds, and (B) any sales,
excise or similar Taxes in connection therewith not reimbursed to Seller by a
Third Party purchaser;

ii.if Seller makes the election under Section 11.2(d)(i) with respect to a Title
Defect, the Title Defect Amount with respect to such Title Defect if the Title
Defect Amount has been determined prior to Closing;

iii.if Seller makes the election under Section 12.1(b)(i) with respect to an
Environmental Defect, the Remediation Amount with respect to such Environmental
Defect if the Remediation Amount has been determined prior to Closing;

iv.the Allocated Value of the Assets excluded from the transactions contemplated
hereby pursuant to Section 11.2(d)(iii), Section 11.4(a)(i), Section 11.4(b)(i)
or Section 12.1(b)(ii);

v.except to the extent taken into account in Section 3.3(a)(i)(B), the amount of
all Asset Taxes allocated to Seller in accordance with Section 16.2 but payable
by Buyer;

vi.subject to Section 3.9, to the extent that Seller is overproduced as shown
with respect to the net Well Imbalances set forth in Schedule 4.12, as complete
and final settlement of all Well Imbalances attributable to the Assets, a sum in
an amount equal to the product of the overproduced volumes times $3.00/MMBtu for
gaseous Hydrocarbons;
 
vii.subject to Section 3.9, to the extent that Seller has underdelivered any
Hydrocarbons as of the Effective Time as shown with respect to the net Pipeline
Imbalances set forth in Schedule 4.12, as complete and final settlement of all
Pipeline Imbalances attributable to the Assets, the sum of $6,552.00 which is an
amount equal to the product of the underdelivered volumes times $3.00/MMBtu for
gaseous Hydrocarbons;

viii.an amount equal to all proceeds from sales of Hydrocarbons relating to the
Assets and payable to owners of Working Interests, royalties, overriding
royalties and other similar interests (in each case) that are held by Seller in
suspense as of the Closing Date (such items that are being held in suspense as
of March 31, 2014 are set forth in Schedule 4.11); and

5

--------------------------------------------------------------------------------

EXHIBT 10.1

ix.any other amount provided for elsewhere in this Agreement or otherwise agreed
upon by Seller and Buyer.

3.4Adjustment Methodology. When available, actual figures will be used for the
adjustments to the Purchase Price at Closing. To the extent actual figures are
not available, estimates will be used subject to final adjustments in accordance
with Section 3.6 and Section 3.7.

3.5Preliminary Settlement Statement. Not less than five (5) Business Days prior
to Closing, Seller shall prepare and submit to Buyer for review a draft
settlement statement (the “Preliminary Settlement Statement”) that shall set
forth the Adjusted Purchase Price, reflecting each adjustment made in accordance
with this Agreement as of the date of preparation of such Preliminary Settlement
Statement and the calculation of the adjustments used to determine such amount,
together with the designation of Seller’s accounts for the wire transfers of
funds as required by Section 3.1 and Section 9.3(e). Within two (2) Business
Days after receipt of the Preliminary Settlement Statement, Buyer will deliver
to Seller a written report containing all changes, with explanation therefor,
that Buyer proposes to be made to the Preliminary Settlement Statement. The
Parties shall in good faith attempt to agree on the Preliminary Settlement
Statement as soon as possible after Seller’s receipt of Buyer’s written report.
The Preliminary Settlement Statement, as agreed upon by the Parties, will be
used to adjust the Purchase Price at Closing; provided that if the Parties do
not agree upon an adjustment set forth in the Preliminary Settlement Statement,
then the amount of such adjustment used to adjust the Purchase Price at Closing
shall be that amount set forth in the draft Preliminary Settlement Statement
delivered by Seller to Buyer pursuant to this Section 3.5.

3.6Final Settlement Statement.

(a)On or before one hundred twenty (120) days after Closing, a final settlement
statement (the “Final Settlement Statement”) will be prepared by Seller, based
on actual income and expenses during the Interim Period and which takes into
account all final adjustments made to the Purchase Price and shows the resulting
final Purchase Price (the “Final Price”). The Final Settlement Statement shall
set forth the actual proration of the amounts required by this Agreement. As
soon as practicable, and in any event within thirty (30) days, after receipt of
the Final Settlement Statement, Buyer shall return to Seller a written report
containing any proposed changes to the Final Settlement Statement and an
explanation of any such changes and the reasons therefor (the “Dispute Notice”).
Any changes not so specified in the Dispute Notice shall be deemed waived, and
Seller’s determinations with respect to all such elements of the Final
Settlement Statement that are not addressed specifically in the Dispute Notice
shall prevail. If Buyer fails to timely deliver a Dispute Notice to Seller
containing changes Buyer proposes to be made to the Final Settlement Statement,
the Final Settlement Statement as delivered by Seller will be deemed to be
correct and will be final and binding on the Parties and not subject to further
audit or arbitration. If the Final Price set forth in the Final Settlement
Statement is mutually agreed upon by Seller and Buyer, the Final Settlement
Statement and the Final Price, shall be final and binding on the Parties hereto.
Any difference in the Adjusted Purchase Price as paid at Closing pursuant to the
Preliminary Settlement Statement and the Final Price shall be paid by the owing
Party to the owed Party within ten (10) days after final determination of such
owed amounts in accordance herewith. All amounts paid pursuant to this
Section 3.6 shall be delivered in United States currency by wire transfer of
immediately available funds to the account specified in writing by the relevant
Party.

(b)Subject to matters for which a Party has an indemnity obligation pursuant to
Article XIII, the Final Settlement Statement shall be the final accounting for
any and all Operating Expenses, and there shall be no adjustment for, or
obligation to pay, any Operating Expenses between the Parties following the
Final Settlement Statement.

6

--------------------------------------------------------------------------------

EXHIBT 10.1

3.7Disputes. If Seller and Buyer are unable to resolve the matters addressed in
the Dispute Notice (if any), each of Buyer and Seller shall, within fifteen (15)
Business Days after the delivery of such Dispute Notice, summarize its position
with regard to such dispute in a written document of twenty (20) pages or less
and submit such summaries to the Denver, Colorado office of Deloitte & Touche
LLP or such other Person as the Parties may mutually select (the “Accounting
Arbitrator”), together with the Dispute Notice, the Final Settlement Statement
and any other documentation such Party may desire to submit. Within ten (10)
Business Days after receiving the Parties’ respective submissions, the
Accounting Arbitrator shall render a decision choosing either Seller’s position
or Buyer’s position with respect to each matter addressed in any Dispute Notice,
based on the materials submitted to the Accounting Arbitrator as described
above. Any decision rendered by the Accounting Arbitrator pursuant hereto shall
be final, conclusive and binding on Seller and Buyer and will be enforceable
against the Parties in any court of competent jurisdiction. The costs of the
Accounting Arbitrator shall be borne one-half by Buyer and one-half by Seller.
 
3.8Allocation of Purchase Price / Allocated Values. Buyer and Seller agree that
the Purchase Price shall be allocated among the Assets for all purposes as set
forth in Schedule 3.8 to this Agreement (the “Allocated Values”). Buyer and
Seller agree that such allocation is reasonable and shall not take any position
inconsistent therewith, including in notices to Preferential Purchase Right
holders. For Tax purposes, each Party shall utilize the Allocated Values, as
updated by mutual agreement of the Parties to reflect any adjustment to the
Purchase Price pursuant to this Agreement and any Assumed Obligations or other
items treated as consideration for federal income Tax purposes, in accordance
with Section 1060 of the Code for purposes of all federal, state and local Tax
returns and reports, including Internal Revenue Service Form 8594, and neither
any Party nor its Affiliates shall take any position on any Tax return that is
inconsistent with such Allocated Values, as adjusted; provided, however, that
neither Party shall be unreasonably impeded in its ability and discretion to
negotiate, compromise and/or settle any Tax audit, claim or similar proceedings.
Each Party shall provide to the other the first Party’s taxpayer identification
number and address.

3.9Allocation for Imbalances at Closing. If, prior to Closing, either Party
discovers an error in the Imbalances set forth in Schedule 4.12, then the
Purchase Price shall be further adjusted at Closing pursuant to Section
3.3(a)(vi), Section 3.3(a)(vii), Section 3.3(b)(vi) or Section 3.3(b)(vii), as
applicable, and Schedule 4.12 will be deemed amended immediately prior to
Closing to reflect the Imbalances for which the Purchase Price is so adjusted.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER

Subject to the matters specifically listed or disclosed in the Schedules to this
Agreement (as added, supplemented or amended pursuant to Section 6.7), Seller
represents and warrants to Buyer the following:
4.1Organization, Existence and Qualification. Seller is a corporation duly
formed and validly existing under the Laws of the State of Texas. Seller has all
requisite power and authority to own and operate its property (including its
interests in the Assets) and to carry on its business as now conducted. Seller
is duly licensed or qualified to do business as a foreign corporation in all
jurisdictions in which it carries on business or owns assets and such
qualification is required by Law, except where the failure to be so qualified
would not have a Material Adverse Effect.

4.2Authority, Approval and Enforceability. Seller has full power and authority
to enter into and perform this Agreement, the Transaction Documents to which it
is a party and the transactions contemplated herein and therein. The execution,
delivery and performance by Seller of this Agreement have been duly

7

--------------------------------------------------------------------------------

EXHIBT 10.1

and validly authorized and approved by all necessary corporate action on the
part of Seller. Assuming the due authorization, execution and delivery by Buyer,
this Agreement is, and the Transaction Documents to which Seller is a party,
when executed and delivered by Seller, will be, the valid and binding
obligations of Seller and enforceable against Seller in accordance with their
respective terms, subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and similar Laws, as well as to principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

4.3No Conflicts. Assuming the receipt of all Consents and the waiver of, or
compliance with, all Preferential Purchase Rights, the execution, delivery and
performance by Seller of this Agreement and the Transaction Documents to which
it is a party and the consummation of the transactions contemplated herein will
not (a) conflict with or result in a breach of any provisions of the
organizational documents of Seller, (b) except for Permitted Encumbrances,
result in a default or the creation of any Encumbrance or give rise to any right
of termination, cancellation or acceleration under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, license or other
Applicable Contract to which Seller is a party or by which Seller or the Assets
may be bound or (c) violate any Law applicable to Seller or any of the Assets,
except in the case of clauses (b) and (c) where such default, Encumbrance,
termination, cancellation, acceleration or violation would not have a Material
Adverse Effect.

4.4Consents. Except (a) as set forth in Schedule 4.4, (b) for Customary
Post-Closing Consents, (c) under Contracts that are terminable upon not greater
than sixty (60) days’ notice without payment of any fee, and (d) for
Preferential Purchase Rights, there are no restrictions on assignment, including
requirements for consents from Third Parties to any assignment (in each case),
that Seller is required to obtain in connection with the transfer of the Assets
by Seller to Buyer or the consummation of the transactions contemplated by this
Agreement by Seller (each, a “Consent”).

4.5Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or, to Seller’s Knowledge, threatened
in writing against Seller or any Affiliate of Seller.

4.6Foreign Person. Seller is not a “foreign person” within the meaning of
Section 1445 of the Code.

4.7Litigation. Except as set forth in Schedule 4.7(A), Schedule 4.7(B) and
Schedule 4.7(C), as of the Execution Date, to Seller’s Knowledge, there is no
suit, action, litigation or arbitration by any Person or before any Governmental
Authority pending or threatened in writing against Seller with respect to the
Assets.

4.8Material Contracts.

(a)Except for Contracts entered into in accordance with Section 6.1,
Schedule 4.8(a) sets forth all Applicable Contracts of the type described below
(collectively, the “Material Contracts”):

i.any Applicable Contract that can reasonably be expected to result in aggregate
payments by Seller of more than $200,000 during the current or any subsequent
calendar year (based solely on the terms thereof and current volumes, without
regard to any expected increase in volumes or revenues);

ii.any Applicable Contract that can reasonably be expected to result in
aggregate revenues to Seller of more than $200,000 during the current or any
subsequent calendar year (based solely on the terms thereof and current volumes,
without regard to any expected increase in volumes or revenues);

8

--------------------------------------------------------------------------------

EXHIBT 10.1

 
iii.any Hydrocarbon purchase and sale, transportation, processing or similar
Applicable Contract that is not terminable without penalty upon sixty (60) days’
or less notice;
iv.any indenture, mortgage, loan, credit or sale-leaseback or similar Applicable
Contract that can reasonably be expected to result in aggregate payments by
Seller during the current or any subsequent calendar year;

v.any Applicable Contract that constitutes a lease under which Seller is the
lessor or the lessee of real or Personal Property which lease (A) cannot be
terminated by Seller without penalty upon sixty (60) days’ or less notice and
(B) involves an annual base rental of more than $100,000;

vi.any farmout agreement, participation agreement, exploration agreement,
development agreement, joint operating agreement, unit agreement or similar
Applicable Contract;

vii.any area of mutual interest agreements and agreements that include
non-competition restrictions or other similar restrictions on doing business,
and partnership agreements (other than tax partnerships), relating to the
Assets;

viii.any contracts or agreements providing for a call upon, option to purchase
or similar right under any agreements with respect to the Hydrocarbons from the
Assets; and

ix.any Applicable Contract between Seller and any Affiliate of Seller that will
not be terminated prior to Closing.

(b)Except as set forth in Schedule 4.8(b) and except for such matters that would
not have a Material Adverse Effect, there exists no default under any Material
Contract by Seller or, to Seller’s Knowledge, by any other Person that is a
party to such Material Contract, and no event has occurred that with notice or
lapse of time or both would constitute any default under any such Material
Contract by Seller or, to Seller’s Knowledge, any other Person who is a party to
such Material Contract.

4.9No Violation of Laws. To Seller’s Knowledge, except as set forth in
Schedule 4.9 and except where such violations would not have a Material Adverse
Effect, as of the Execution Date, Seller is not and no Third Party operator is
in violation of any applicable Laws with respect to their respective ownership
and operation of the Assets. For the avoidance of doubt, this Section 4.9 does
not include any matters with respect to Environmental Laws, which shall be
exclusively addressed in Section 4.16 and Article XII.

4.10Preferential Purchase Rights. To Seller’s Knowledge, except as set forth in
Schedule 4.10, there are no preferential purchase rights, rights of first
refusal or other similar rights that are applicable to the transfer of the
Assets in connection with the transactions contemplated hereby (each a
“Preferential Purchase Right”).
  
4.11Royalties, Etc. Except as would not have a Material Adverse Effect, except
for such items that are being held in suspense for which the Purchase Price is
adjusted pursuant to Section 3.3(b)(viii) (as set forth in Schedule 4.11 as of
March 31, 2014), and except as set forth on Schedule 4.11, to Seller’s
Knowledge, Seller has paid all Burdens with respect to the Assets due by Seller,
or if not paid, is contesting such Burdens in good faith in the normal course of
business.

4.12Imbalances. To Seller’s Knowledge, Schedule 4.12 sets forth all material
Imbalances associated with the Assets as of the applicable dates set forth on
Schedule 4.12.

9

--------------------------------------------------------------------------------

EXHIBT 10.1

4.13Current Commitments. To Seller’s Knowledge, Schedule 4.13 sets forth, as of
the Execution Date, all approved authorizations for expenditures and other
approved capital commitments, individually in excess of $200,000 net to Seller’s
applicable interest (the “AFEs”), relating to the Assets to drill or rework
wells or for other capital expenditures pursuant to any of the Material
Contracts for which all of the activities anticipated in such AFEs have not been
completed by the Execution Date.

4.14Asset Taxes. Except as set forth in Schedule 4.14, during the period of
Seller’s ownership of the Assets, all Asset Taxes that have become due and
payable by Seller before the Effective Time have been properly paid, other than
any Asset Taxes which are being contested in good faith. There are no extensions
or waivers of any statute of limitations with respect to Asset Taxes, and there
are no Tax liens burdening the Assets except for liens for Taxes not yet due and
payable. Seller has timely filed or caused to be timely filed all material Tax
returns, reports, statements and other filings with respect to Asset Taxes
required to be filed by Seller before the Effective Time.

4.15Brokers’ Fees. Seller has incurred no liability, contingent or otherwise,
for brokers’ or finders’ fees relating to the transactions contemplated by this
Agreement for which Buyer or any Affiliate of Buyer shall have any
responsibility.

4.16Violations of Environmental Laws. As of the Execution Date, neither Seller
nor, to Seller’s Knowledge, any Third Party operator has received written notice
from any Governmental Authority asserting that Seller or the Third Party
operator, as applicable, is in violation of Environmental Laws with respect to
any Asset that has not already been corrected to the satisfaction of the
relevant Governmental Authority. Neither Seller nor, to Seller’s Knowledge, any
Third Party operator has entered into, nor is a party (directly or as a
successor in interest) to, any agreement with any Governmental Authority that
(a) is in existence as of the date of this Agreement, (b) is based on an alleged
violation of Environmental Laws and (c) imposes any material liability on the
owner or operator of the Assets.

4.17Governmental Permits. Seller and, to Seller’s Knowledge, any Third Party
operator, as applicable, has obtained and is in compliance in all material
respects with all permits, licenses and authorizations from Governmental
Authorities (each a “Permit”) required to operate the Assets. All such Permits
are in full force and effect and no violations exist under such Permits except
those that would not have a Material Adverse Effect. To Seller’s Knowledge, no
proceeding is pending or threatened relating to the challenging, revocation or
limitation of any such Permits. For the avoidance of doubt, this Section 4.17
does not include any matters with respect to Environmental Laws, which shall be
exclusively addressed in Section 4.16 and Article XII.

4.18Take-or-Pay. Except as set forth on Schedule 4.8, neither of Seller nor any
of its Affiliates is obligated by any prepayment arrangement, “take-or-pay”
requirement or any other agreement to sell, gather, deliver, process or
transport any Hydrocarbons with respect to the Assets without then or thereafter
receiving full payment therefor. Other than Imbalances, no Person is entitled to
receive any portion of Seller’s or any of its Affiliates’ Hydrocarbons, or to
receive cash or other payments from Seller or any of its Affiliates, to balance
any disproportionate allocation of such Hydrocarbons with respect to the Assets.
Other than Imbalances, neither of Seller nor any of its Affiliates is obligated
to pay any penalties or other amounts under any agreement with respect to the
Assets as a result of the delivery of quantities of Hydrocarbons under or in
excess of any such agreement’s requirements.

10

--------------------------------------------------------------------------------

EXHIBT 10.1

4.19Calls on Production. Except as set forth on Schedule 4.8 and except for
Imbalances, no Third Party has any calls on production, options to purchase
production, or other similar rights with respect to the Assets.

4.20Appurtenant Assets. Except for personal property, fixtures and equipment of
the types set forth in the definition of Excluded Assets, (a) the Assets include
all of the personal property, fixtures and equipment (or leases for the use
thereof) employed by Seller in its current ownership and operation of the Assets
(the “Appurtenant Assets”); and (b) the Appurtenant Assets constitute, taken as
a whole, sufficient personal property, fixtures and equipment for the ownership
and, if operated by Seller, the operation of the Assets immediately following
the Closing in substantially the same manner as conducted on the date of this
Agreement. The Appurtenant Assets, taken as a whole, are in a sufficient state
of repair to permit the operations of the Assets (that are operated by Seller)
immediately following the Closing in substantially the same manner as conducted
on the date of this Agreement.

4.21Necessary Surface Rights. The Assets include all the easements and other
surface rights materially necessary for oil and gas operations as conducted by
Seller with respect to the Assets immediately prior to the Execution Date.

4.22Property Operation; Non-Producing Wells. Schedule 4.22 lists the Wells
operated by Seller that are temporarily abandoned. As to the Wells operated by
Seller, other than the temporarily abandoned Wells set forth on Schedule 4.22,
each abandoned well associated with the Assets is plugged in compliance with the
applicable Laws. To Seller’s Knowledge, no Third Party operator has given Seller
written notice of any material unresolved problem with Governmental Authorities
or landowners concerning wells on the lands included in the Assets operated by
such Person that have been temporarily abandoned or previously plugged.

4.23Non-Consent Operations. As of the Execution Date, there are no operations
(including drilling operations) associated with the Assets with respect to which
Seller is currently or will become a non-consenting or non-participating party.

4.24Tax Partnerships. Except as provided in Schedule 4.24, none of the Assets is
subject to tax partnership reporting requirements under applicable provisions of
the Code.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller the following:
5.1Organization, Existence and Qualification. Buyer is a corporation duly
incorporated, validly existing, and in good standing under the Laws of the State
of Delaware and has all requisite power and authority to own and operate its
property and to carry on its business as now conducted. Buyer is duly licensed
or qualified to do business as a foreign corporation in all jurisdictions in
which it carries on business or owns assets and such qualification is required
by Law except where the failure to be so qualified would not have a material
adverse effect upon the ability of Buyer to consummate the transactions
contemplated by this Agreement or perform its obligations hereunder.

5.2Authority, Approval and Enforceability. Buyer has full power and authority to
enter into and perform this Agreement, the Transaction Documents to which it is
a party and the transactions contemplated herein and therein. The execution,
delivery and performance by Buyer of this Agreement have

11

--------------------------------------------------------------------------------

EXHIBT 10.1

been duly and validly authorized and approved by all necessary corporate action
on the part of Buyer. Assuming the due authorization, execution and delivery by
Seller, this Agreement is, and the Transaction Documents to which Buyer is a
party, when executed and delivered by Buyer, will be, the valid and binding
obligations of Buyer and enforceable against Buyer in accordance with their
respective terms, subject to the effects of bankruptcy, insolvency,
reorganization, moratorium and similar Laws, as well as to principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

5.3No Conflicts. The execution, delivery and performance by Buyer of this
Agreement and the Transaction Documents to which it is a party and the
consummation of the transactions contemplated herein will not (a) conflict with
or result in a breach of any provisions of the organizational documents of
Buyer, (b) result in a default or the creation of any Encumbrance or give rise
to any right of termination, cancellation or acceleration under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, license
or other agreement to which Buyer is a party or by which Buyer or any of its
property may be bound or (c) violate any Law applicable to Buyer or any of its
property, except in the case of clauses (b) and (c) where such default,
Encumbrance, termination, cancellation, acceleration or violation would not have
a material adverse effect upon the ability of Buyer to consummate the
transactions contemplated by this Agreement or perform its obligations
hereunder.

5.4Consents. There are no consents or other restrictions on assignment,
including requirements for consents from Third Parties to any assignment, (in
each case) that Buyer is required to obtain in connection with the consummation
of the transactions contemplated by this Agreement by Buyer.

5.5Bankruptcy. There are no bankruptcy, reorganization or receivership
proceedings pending, being contemplated by or, to Buyer’s knowledge, threatened
in writing against Buyer or any Affiliate of Buyer.

5.6Litigation. As of the Execution Date, there is no suit, action, litigation or
arbitration by any Person or before any Governmental Authority pending, or to
Buyer’s knowledge, threatened in writing against Buyer that would have a
material adverse effect upon the ability of Buyer to consummate the transactions
contemplated by this Agreement or perform its obligations hereunder.
5.7Financing. Buyer has, and Buyer shall have as of the Closing Date, sufficient
cash in immediately available funds with which to pay the Purchase Price,
consummate the transactions contemplated by this Agreement and perform its
obligations under this Agreement and the Transaction Documents.

5.8Regulatory. Buyer is and hereafter shall continue to be qualified per
applicable Law to own and assume operatorship of the Assets in all jurisdictions
where the Assets are located, and the consummation of the transactions
contemplated by this Agreement will not cause Buyer to be disqualified as such
an owner or operator. To the extent required by any applicable Laws, Buyer has
maintained, and will hereafter continue to maintain, lease bonds, area-wide
bonds or any other surety bonds as may be required by, and in accordance with,
all applicable Laws governing the ownership and operation of the Assets and has
filed any and all required reports necessary for such ownership and/or operation
with all Governmental Authorities having jurisdiction over such ownership and/or
operation.

5.9Independent Evaluation. Buyer is sophisticated in the evaluation, purchase,
ownership and operation of oil and gas properties and related facilities. In
making its decision to enter into this Agreement and to consummate the
transactions contemplated hereby, Buyer (a) has relied or shall rely solely on
its own independent investigation and evaluation of the Assets and the advice of
its own legal, Tax, economic, environmental, engineering, geological and
geophysical advisors and the express provisions of this Agreement and not on any
comments, statements, projections or other materials made or given by any

12

--------------------------------------------------------------------------------

EXHIBT 10.1

representatives or consultants or advisors of Seller, and (b) has satisfied
itself through its own due diligence as to the environmental and physical
condition of and contractual arrangements and other matters affecting the
Assets. Buyer has no knowledge of any fact that results in the breach of any
representation, warranty or covenant of Seller given hereunder.

5.10Brokers’ Fees. Buyer has incurred no liability, contingent or otherwise, for
brokers’ or finders’ fees relating to the transactions contemplated by this
Agreement for which Seller or Seller’s Affiliates shall have any responsibility.

5.11Accredited Investor. Buyer is an “accredited investor,” as such term is
defined in Regulation D of the Securities Act of 1933, as amended, and will
acquire the Assets for its own account and not with a view to a sale or
distribution thereof in violation of the Securities Act of 1933, as amended, and
the rules and regulations thereunder, any applicable state blue sky Laws or any
other applicable securities Laws.

ARTICLE VI
CERTAIN AGREEMENTS
6.1Conduct of Business.

(a)Except (w) as set forth in Schedule 6.1, (x) for the operations covered by
the AFEs and other capital commitments described in Schedule 4.13, (y) for
actions taken in connection with emergency situations or to maintain a lease and
(z) as expressly contemplated by this Agreement or as expressly consented to in
writing by Buyer (which consent shall not be unreasonably delayed, withheld or
conditioned), Seller shall, from and after the Execution Date and until Closing:

i.maintain, and if Seller is the operator thereof, operate, the Assets in the
usual, regular and ordinary manner consistent with its past practice; and

ii.maintain the books of account and Records relating to the Assets in the
usual, regular and ordinary manner, in accordance with the usual accounting
practices of Seller.

(b)Except (w) as set forth in Schedule 6.1, (x) for the operations covered by
the AFEs and other capital commitments described in Schedule 4.13, (y) for
actions taken in connection with emergency situations or to maintain a lease and
(z) as expressly contemplated by this Agreement or as expressly consented to in
writing by Buyer (which consent shall not be unreasonably delayed, withheld or
conditioned), Seller shall, from and after the Execution Date and until Closing:

i.not propose any operation reasonably expected to cost Seller in excess of
$100,000;

ii.not consent to any operation proposed by a Third Party that is reasonably
expected to cost Seller in excess of $100,000;

iii.not enter into an Applicable Contract that, if entered into on or prior to
the Execution Date, would be required to be listed in Schedule 4.8(a), or
terminate (unless such Material Contract terminates pursuant to its stated
terms) or materially amend or change the terms of any Material Contract;

iv.not transfer, sell, mortgage, pledge or dispose of any portion of the Assets
other than (A) the sale and/or disposal of Hydrocarbons in the ordinary course
of business and (B) sales of equipment

13

--------------------------------------------------------------------------------

EXHIBT 10.1

that is no longer necessary in the operation of the Assets or for which
replacement equipment has been obtained;

v.not reduce or terminate existing insurance; and

vi.not commit to do any of the foregoing.

(c)    Buyer acknowledges that Seller owns undivided interests in certain of the
properties comprising the Assets that it is not the operator thereof, and Buyer
agrees that the acts or omissions of the other Working Interest owners
(including the operators) who are not Seller or any Affiliate of Seller shall
not constitute a breach of the provisions of this Section 6.1, and no action
required by a vote of Working Interest owners shall constitute such a breach so
long as Seller has voted its interest in a manner that complies with the
provisions of this Section 6.1.
6.2Successor Operator. While Buyer acknowledges that it desires to succeed
Seller as operator of those Assets or portions thereof that Seller may presently
operate, Buyer acknowledges and agrees that Seller cannot and does not covenant
or warrant that Buyer shall become successor operator of such Assets since the
Assets or portions thereof may be subject to operating or other agreements that
control the appointment of a successor operator. Seller agrees, however, that,
as to the Assets it operates, it shall use its commercially reasonable efforts
to support Buyer’s efforts to become successor operator of such Assets (to the
extent permitted under any applicable joint operating agreement) effective as of
Closing (at Buyer’s sole cost and expense) and to designate and/or appoint, to
the extent legally possible and permitted under any applicable joint operating
agreement, Buyer as successor operator of such Assets effective as of Closing.

6.3Governmental Bonds. Buyer acknowledges that none of the bonds, letters of
credit and guarantees, if any, posted by Seller or its Affiliates with
Governmental Authorities and relating to the Assets are transferable to Buyer.
On or before the Closing Date, Buyer shall obtain, or cause to be obtained in
the name of Buyer, replacements for such bonds, letters of credit and guarantees
to the extent such replacements are necessary (a) for Buyer’s ownership of the
Assets and (b) to permit the cancellation of the bonds, letters of credit and
guarantees posted by Seller and/or its Affiliates with respect to the Assets. In
addition, at or prior to Closing, Buyer shall deliver to Seller evidence of the
posting of bonds or other security with all applicable Governmental Authorities
meeting the requirements of such Governmental Authorities to own and, if
applicable, operate the Assets.
 
6.4Record Retention. Buyer shall and shall cause its successors and assigns to,
for a period of seven (7) years following Closing, (a) retain the Records, (b)
provide Seller, its Affiliates and its and their respective officers, employees
and representatives with access to the Records (to the extent that Seller has
not retained the original or a copy) during normal business hours for review and
copying at Seller’s expense, and (c) provide Seller, its Affiliates and its and
their respective officers, employees and representatives with access, during
normal business hours, to materials received or produced after Closing relating
to any indemnity claim made under Section 13.2 for review and copying at
Seller’s expense. At the end of such seven (7) year period and prior to
destroying any of the Records, Buyer shall notify Seller in advance of such
destruction and provide Seller a reasonable opportunity to copy any or all of
such Records at Seller’s sole cost and expense.

6.5Guarantees. Buyer shall cooperate with Seller in order to cause Seller and
its Affiliates to be released, as of the Closing Date, from all guarantees,
including any performance bonds previously put in place by Seller, set forth in
Schedule 6.5 (the “Guarantees”). Without limiting the foregoing, if required by
the counterparty to any Guarantee, Buyer shall provide, effective as of the
Closing Date, substitute

14

--------------------------------------------------------------------------------

EXHIBT 10.1

arrangements of Buyer or its Affiliates covering all periods covered by the
Guarantees, such substitute arrangements to be equivalent or better in terms of
type of security and creditworthiness of the party providing the security as
compared to the Guarantees. In the event that any counterparty to any such
Guarantee does not release Seller and its Affiliates, then, from and after
Closing, Buyer shall indemnify Seller or its relevant Affiliate against all
amounts incurred by Seller or its relevant Affiliate under such Guarantee (and
all costs incurred in connection with such Guarantee) if applicable to Assets
acquired by Buyer. Notwithstanding anything to the contrary contained in this
Agreement, any cash placed in escrow by Seller or any Affiliate of Seller
pursuant to the Guarantees must be returned to Seller, and shall be deemed an
Excluded Asset for all purposes hereunder.

6.6Notifications. Each Party will notify the other Party promptly after any
officer of the first Party obtains actual knowledge that any representation or
warranty of the other Party contained in this Agreement is, becomes or will be
untrue in any material respect on or before the Closing Date. No breach of any
representation, warranty, covenant, agreement or condition of this Agreement
shall be deemed to be a breach of this Agreement for any purpose under this
Agreement, and no Party or any Affiliate of a Party shall have any claim or
recourse against the other Party or any Affiliate of the other Party, or their
respective directors, officers, employees, buyers, controlling Persons, agents,
advisors or representatives with respect to such breach, if the first Party or
any Affiliate of the first Party, or any of their respective officers or
representatives, had knowledge prior to the Execution Date of such breach or of
the threat of such breach or the circumstances giving rise to such breach.

6.7Amendment to Schedules. Buyer agrees that, with respect to the
representations and warranties of Seller contained in this Agreement, Seller
shall have the continuing right until Closing to add, supplement or amend the
Schedules to its representations and warranties with respect to any matter
hereafter arising or discovered which, if existing or known on the Execution
Date or thereafter, would have been required to be set forth or described in
such Schedules. For all purposes of this Agreement, including for purposes of
determining whether the conditions set forth in Article VII have been fulfilled,
the Schedules to Seller’s representations and warranties contained in this
Agreement shall be deemed to include only that information contained therein on
the Execution Date and shall be deemed to exclude all information contained in
any addition, supplement or amendment thereto; provided, however, that if
Closing shall occur, then all matters disclosed pursuant to any such addition,
supplement or amendment at or prior to Closing shall be waived and Buyer shall
not be entitled to make a claim with respect thereto pursuant to the terms of
this Agreement or otherwise.

6.8Intentionally Deleted.

6.9Certain Litigation Matters.

(a)Buyer agrees that it will comply with the terms and requirements of the
Chieftain Litigation Settlement to the extent relating to the post-Closing
operations of the Assets, including (i) the methodology for payment of future
royalties agreed to in the Chieftain Litigation Settlement, (ii) to the extent
not done so prior to Closing, the covenant to seek amendments to existing
processing contracts to maximize the value or volume of liquids recovered
thereunder to the joint benefit of the royalty owners and the producer, (iii)
the covenant to allow Chieftain Royalty Company to audit the relevant records on
behalf of the Chieftain Class to ensure compliance with the methodology for
payment of future royalties and (iv) to the extent not done so prior to Closing,
the covenant to file a notice of settlement concerning royalty payments in the
relevant counties and indexed against the relevant Assets. Notwithstanding
anything in this Agreement to the contrary, Buyer acknowledges that it is
responsible for complying with the terms and requirements of the Chieftain
Litigation Settlement to the extent relating to the post-Closing operations

15

--------------------------------------------------------------------------------

EXHIBT 10.1

of the Assets and agrees that it has no, and will have no, claim against Seller
relating to the requirements of the Chieftain Litigation Settlement, the results
of such compliance on operations and/or Buyer’s failure to comply with such
requirements.

(b)Subject to the terms of this Section 6.9(b), the Parties acknowledge and
agree that Seller shall have the sole authority to defend the Searle Litigation.
Buyer agrees to cooperate reasonably in connection with such defense, and such
reasonable cooperation shall include access, during normal business hours from
and after the Closing, to the Records and Buyer’s personnel. Seller shall not,
without the written consent of Buyer (which consent shall not be unreasonably
delayed, withheld or conditioned), settle any claim with respect to the Searle
Litigation or consent to the entry of any judgment with respect thereto;
provided, however, that such consent of Buyer shall not be required in the event
that no money damages are incurred by Buyer and there is no material adverse
effect on the ownership and operation of the Assets from and after the date of
such settlement or judgment.

6.10Employees Matters.

(a)Buyer may, in its discretion, within fourteen (14) days prior to the Closing
Date, offer employment, conditioned upon the occurrence of the Closing and
effective as of the Closing Date, to any of Seller’s employees set forth on
Schedule 6.10 (collectively, the “Identified Employees”) who are employed as of
the Closing Date by Seller. Each offer of employment pursuant to the preceding
sentence shall comply with the requirements of Law. No later than the date that
is seven (7) days prior to the Closing Date, Buyer shall notify Seller as to
each Identified Employee who has accepted employment with Buyer or any of its
Affiliates and each Identified Employee who has rejected Buyer’s or its
Affiliate’s offer of employment. Buyer shall indemnify and hold harmless each
Seller Indemnified Party from and against any and all Liabilities relating to or
arising out of Buyer’s or its Affiliate’s employment offer process described in
this Section 6.10(a) (including any claim of discrimination or other illegality
in such selection and offer process).

(b)Subject to the provisions of Section 6.10(a), from the Execution Date until
the one (1) year anniversary of either the Closing Date or the termination of
this Agreement, Buyer will not, and will cause its Affiliates not to, directly
or indirectly, solicit for employment (including by contracting through an
independent contractor, consultant or other Third Party) or employ (including as
a consultant) any officer or employee of Seller or its Affiliates without
obtaining the prior written consent of Seller. This Section 6.10(b) shall not
apply to general solicitations of employment not specifically directed towards
officers or employees of Seller or its Affiliates.

6.11Intentionally Deleted.

6.12Section 754 Election. If Buyer requests prior to Closing, Seller will use
its commercially reasonable efforts to cause each tax partnership, if any, that
is set forth on Schedule 4.24 to either (a) have in effect a valid election
under Section 754 of the Code for any taxable year that includes the Closing
Date or (b) obtain all necessary consents therefor.

ARTICLE VII
BUYER’S CONDITIONS TO CLOSING

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

16

--------------------------------------------------------------------------------

EXHIBT 10.1

7.1Representations. The representations and warranties of Seller set forth in
Article IV shall be true and correct in all respects on and as of the Closing
Date, with the same force and effect as though such representations and
warranties had been made or given on and as of the Closing Date (other than
representations and warranties that refer to a specified date, which need only
be true and correct on and as of such specified date), except for those
breaches, if any, of such representations and warranties that would not have a
Material Adverse Effect.
 
7.2Performance. Seller shall have materially performed or complied with all
obligations, agreements and covenants contained in this Agreement as to which
performance or compliance by Seller is required prior to or at the Closing Date.

7.3No Legal Proceedings. No material suit, action, litigation or other
proceeding by any Third Party shall be pending before any Governmental Authority
seeking to restrain, prohibit, enjoin or declare illegal, or seeking substantial
damages in connection with, the transactions contemplated by this Agreement.

7.4Title Defects and Environmental Defects. In each case subject to the
Individual Title Defect Threshold, the Individual Environmental Threshold, the
Aggregate Title Defect Threshold and the Environmental Defect Deductible, as
applicable, the sum of (a) all Title Defect Amounts determined under
Section 11.2(g) prior to Closing, less the sum of all Title Benefit Amounts
determined under Section 11.2(h) prior to Closing, plus (b) all Remediation
Amounts for Environmental Defects determined under Article XII prior to Closing,
plus (c) the Allocated Values of all Assets affected by a Casualty Loss prior to
the Closing Date shall be less than twenty-five percent (25%) of the Purchase
Price.

7.5Closing Deliverables. Seller shall have delivered (or be ready, willing and
able to deliver at Closing) to Buyer the documents and other items required to
be delivered by Seller under Section 9.3.

ARTICLE VIII
SELLER’S CONDITIONS TO CLOSING
The obligations of Seller to consummate the transactions provided for herein are
subject, at the option of Seller, to the fulfillment by Buyer or waiver by
Seller on or prior to Closing of each of the following conditions:
8.1Representations. The representations and warranties of Buyer set forth in
Article V shall be true and correct in all material respects on and as of the
Closing Date, with the same force and effect as though such representations and
warranties had been made or given on and as of the Closing Date (other than
representations and warranties that refer to a specified date, which need only
be true and correct on and as of such specified date).

8.2Performance. Buyer shall have materially performed or complied with all
obligations, agreements and covenants contained in this Agreement as to which
performance or compliance by Buyer is required prior to or at the Closing Date.

8.3No Legal Proceedings. No material suit, action, litigation or other
proceeding by any Third Party shall be pending before any Governmental Authority
seeking to restrain, prohibit or declare illegal, or seeking substantial damages
in connection with, the transactions contemplated by this Agreement.

8.4Title Defects and Environmental Defects. In each case subject to the
Individual Title Defect Threshold, the Individual Environmental Threshold, the
Aggregate Title Defect Threshold and the Environmental Defect Deductible, as
applicable, the sum of (a) all Title Defect Amounts determined under

17

--------------------------------------------------------------------------------

EXHIBT 10.1

Section 11.2(g) prior to Closing, less the sum of all Title Benefit Amounts
determined under Section 11.2(h) prior to Closing, plus (b) all Remediation
Amounts for Environmental Defects determined under Article XII prior to Closing,
plus (c) the Allocated Values of all Assets affected by a Casualty Loss prior to
the Closing Date shall be less than twenty-five percent (25%) of the Purchase
Price.

8.5Replacement Bonds and Guarantees. Buyer shall have obtained, in the name of
Buyer: (a) replacements for Seller’s and/or its Affiliates’ bonds, letters of
credit and guarantees, to the extent required by Section 6.3 and (b)
replacements for the Guarantees to the extent required by Section 6.5.

8.6Closing Deliverables. Buyer shall have delivered (or be ready, willing and
able to deliver at Closing) to Seller the documents and other items required to
be delivered by Buyer under Section 9.3.

ARTICLE IX
CLOSING

9.1Date of Closing. Subject to the conditions stated in this Agreement, the sale
by Seller and the purchase by Buyer of the Assets pursuant to this Agreement
(the “Closing”) shall occur on or before June 30, 2014, or on such date as Buyer
and Seller may agree upon in writing. The date on which the Closing actually
occurs shall be the “Closing Date.”

9.2Place of Closing. Closing shall be held at the offices of Vinson & Elkins
LLP, 1001 Fannin Street, Suite 2500, Houston, Texas 77002, or such other place
as mutually agreed upon by the Parties.

9.3Closing Obligations. At Closing, the following documents shall be delivered
and the following events shall occur, the execution of each document and the
occurrence of each event being a condition precedent to the others and each
being deemed to have occurred simultaneously with the others:

(a)Seller and Buyer shall execute, acknowledge and deliver the Assignment in
sufficient counterparts to facilitate recording in the applicable counties
covering the Assets.

(b)Seller and Buyer shall execute and deliver assignments, on appropriate forms,
of federal Leases, state Leases and Indian Leases included in the Assets in
sufficient counterparts to facilitate filing with the applicable Governmental
Authority.

(c)Seller shall execute, acknowledge and deliver (i) the mineral deed(s),
substantially in the form attached to this Agreement as Exhibit B-2 and
conveying the Mineral Fee Interests from Seller to Buyer and (ii) the surface
deed, substantially in the form attached to this Agreement as Exhibit B-3 and
conveying Seller’s right, title and interest in and to the surface fee interests
set forth on Exhibit A-3 from Seller to Buyer, in each case, in sufficient
counterparts to facilitate recording in the applicable counties covering such
Assets.

(d)Seller and Buyer shall execute and deliver the Preliminary Settlement
Statement.

(e)Buyer shall deliver to Seller, to the accounts designated in the Preliminary
Settlement Statement, by direct bank or wire transfer in same day funds, the
Adjusted Purchase Price after giving effect to the Deposit.

(f)Seller shall deliver, on forms supplied by Buyer and reasonably acceptable to
Seller, transfer orders or letters in lieu thereof directing all purchasers of
production to make payment to Buyer

18

--------------------------------------------------------------------------------

EXHIBT 10.1

of proceeds attributable to production from the Assets from and after the
Effective Time, for delivery by Buyer to the purchasers of production.

(g)Seller shall deliver an executed statement described in Treasury Regulation
§1.1445-2(b)(2) certifying that Seller is not a “foreign person” within the
meaning of the Code.

(h)To the extent required under any applicable Law or Governmental Authority for
any federal or state Lease, Seller and Buyer shall deliver federal and state
change of operator forms designating Buyer as the operator of the Wells and the
Leases currently operated by Seller.

(i)An authorized officer of Seller shall execute and deliver a certificate,
dated as of Closing Date, certifying that the conditions set forth in Section
7.1 and Section 7.2 have been fulfilled and, if applicable, any exceptions to
such conditions that have been waived by Buyer.

(j)An authorized officer of Buyer shall execute and deliver a certificate, dated
as of Closing, certifying that the conditions set forth in Section 8.1 and
Section 8.2 have been fulfilled and, if applicable, any exceptions to such
conditions that have been waived by Seller.

(k)Buyer shall deliver any instruments and documents required by Section 6.3,
Section 6.5 and/or Section 6.8.

(l)Seller and Buyer shall execute and deliver the Transition Services Agreement.

(m)Seller and Buyer shall execute and deliver any other agreements, instruments
and documents which are required by other terms of this Agreement to be executed
and/or delivered at Closing.

9.4Records. In addition to the obligations set forth under Section 9.3 above,
but notwithstanding anything herein to the contrary, no later than thirty (30)
Business Days after the Closing Date, Seller shall make available to Buyer the
Records for pickup from Seller’s offices during normal business hours; provided
that digital Records in their native format as currently stored by Seller
necessary to allow Buyer to perform expenditure accounting and joint interest
accounting functions as of Closing shall be delivered no later than five (5)
Business Days prior to Closing.

ARTICLE X
ACCESS/DISCLAIMERS
10.1Access.

(a)From and after the Execution Date and up to and including the Closing Date
(or earlier termination of this Agreement), but subject to the other provisions
of this Section 10.1 and obtaining any required consents of Third Parties,
including Third Party operators of the Assets, Seller shall afford to Buyer and
its officers, employees, agents, accountants, consultants, attorneys and other
authorized representatives (“Buyer’s Representatives”) reasonable access, during
normal business hours, to the Assets and all Records in Seller’s or any of its
Affiliates’ possession to the extent necessary to conduct the title or
environmental review described in this Agreement. All investigations and due
diligence conducted by Buyer or any Buyer’s Representative shall be conducted at
Buyer’s sole cost, risk and expense and any conclusions made from any
examination done by Buyer or any Buyer’s Representative shall result from
Buyer’s own independent review and judgment.

19

--------------------------------------------------------------------------------

EXHIBT 10.1

(b)Buyer shall be entitled to conduct a Phase I environmental property
assessment with respect to the Assets; provided that any sampling or invasive
activity by Buyer or Buyer’s Representatives shall require the prior written
consent of Seller. Buyer shall give Seller reasonable prior written notice
before entering onto any of the Assets, and Seller or its designee shall have
the right to accompany Buyer and Buyer’s Representatives whenever they are on
site on the Assets. Notwithstanding anything herein to the contrary, Buyer shall
not have access to, and shall not be permitted to conduct any environmental due
diligence (including any Phase I environmental property assessment) with respect
to, any Assets with respect to which Seller does not have the authority to grant
access for such due diligence.

(c)Buyer shall coordinate its environmental property assessments and physical
inspections of the Assets with Seller and all Third Party operators to minimize
any inconvenience to or interruption of the conduct of business by Seller or
such Third Party operators. Buyer shall abide by Seller’s, and any Third Party
operator’s, safety rules, regulations and operating policies while conducting
its due diligence evaluation of the Assets, including any environmental or other
inspection or assessment of the Assets and, to the extent required by Seller or
any Third Party operator, execute and deliver any required access agreement of
Seller or any such Third Party operator. Buyer hereby defends, indemnifies and
holds harmless the operators of the Assets and the Seller Indemnified Parties
from and against any and all Liabilities arising out of, resulting from or
relating to any field visit, environmental property assessment or other due
diligence activity conducted by Buyer or any Buyer’s Representative with respect
to the Assets, even if such Liabilities arise out of or result from, SOLELY OR
IN PART, the sole, active, passive, concurrent or comparative negligence, strict
liability or other fault or violation of Law of or by a member of THE Seller
Indemnified Parties, excepting only Liabilities TO THE EXTENT actually resulting
FROM the gross negligence or willful misconduct of a member of THE Seller
Indemnified Parties.

(d)Buyer agrees to provide to Seller promptly, but in no event less than five
(5) days after receipt or creation, copies of all final reports and test results
prepared by Buyer and/or any of Buyer’s Representatives which contain data
collected or generated from Buyer’s due diligence with respect to the Assets.
Seller shall not be deemed by its receipt of said documents or otherwise to have
made any representation or warranty, express, implied or statutory, as to the
condition of the Assets or to the accuracy of said documents or the information
contained therein.

(e)Upon completion of Buyer’s due diligence, Buyer shall at its sole cost and
expense and without any cost or expense to Seller or its Affiliates (i) repair
all damage done to the Assets in connection with Buyer’s due diligence,
(ii) restore the Assets to the approximate same condition as, or better
condition than, they were prior to commencement of Buyer’s due diligence and
(iii) remove all equipment, tools and other property brought onto the Assets in
connection with Buyer’s due diligence. Any disturbance to the Assets (including
the leasehold associated therewith) resulting from Buyer’s due diligence will be
promptly corrected by Buyer.

(f)During all periods that Buyer and/or any of Buyer’s Representatives are on
the Assets, Buyer shall maintain, at its sole expense and with insurers
reasonably satisfactory to Seller, policies of insurance of the types and in the
amounts reasonably requested by Seller. Coverage under all insurance required to
be carried by Buyer hereunder will (i) be primary insurance, (ii) list the
Seller Indemnified Parties as additional insureds, (iii) waive subrogation
against the Seller Indemnified Parties and (iv) provide for ten (10) days’ prior
written notice to Seller in the event of cancellation, expiration or
modification of the policy or reduction in coverage. Upon request by Seller,
Buyer shall provide evidence of such insurance to Seller prior to entering the
Assets.

20

--------------------------------------------------------------------------------

EXHIBT 10.1

10.2Confidentiality. Buyer acknowledges that, pursuant to its right of access to
the Records or the Assets, Buyer and/or Buyer’s Representatives will become
privy to confidential and other information of Seller or its Affiliates, and
Buyer shall ensure that such confidential information (i) shall not be used for
any purpose other than in connection with the transactions contemplated hereby
and (ii) shall be held confidential by Buyer and Buyer’s Representatives in
accordance with the terms of the Confidentiality Agreement. If Closing should
occur, the foregoing confidentiality restriction on Buyer, including the
Confidentiality Agreement, shall terminate (except as to (a) such portion of the
Assets that are not conveyed to Buyer pursuant to the provisions of this
Agreement, (b) the Excluded Assets and (c) information related to Seller or its
Affiliates or to assets other than the Assets).

10.3Disclaimers.

(a)EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY SET FORTH IN ARTICLE IV OR
SECTION 11.1(b), (I) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS,
STATUTORY OR IMPLIED, AND (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND
RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE
OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER OR ANY OF ITS AFFILIATES,
EMPLOYEES, AGENTS, CONSULTANTS OR REPRESENTATIVES (INCLUDING ANY OPINION,
INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO BUYER BY ANY
OFFICER, DIRECTOR, EMPLOYEE, AGENT, CONSULTANT, REPRESENTATIVE OR ADVISOR OF
SELLER OR ANY OF ITS AFFILIATES).

(b)EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED OTHERWISE IN
ARTICLE IV OR SECTION 11.1(b), AND WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS,
STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF THE ASSETS, (II) THE CONTENTS,
CHARACTER OR NATURE OF ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR
ANY ENGINEERING, GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION RELATING TO THE
ASSETS, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS IN OR FROM
THE ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES TO
BE GENERATED BY THE ASSETS, (V) THE PRODUCTION OF OR ABILITY TO PRODUCE
HYDROCARBONS FROM THE ASSETS, (VI) THE MAINTENANCE, REPAIR, CONDITION, QUALITY,
SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, (VII) THE CONTENT, CHARACTER
OR NATURE OF ANY INFORMATION MEMORANDUM, REPORTS, BROCHURES, CHARTS OR
STATEMENTS PREPARED BY SELLER OR THIRD PARTIES WITH RESPECT TO THE ASSETS,
(VIII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE TO
BUYER OR ITS AFFILIATES, OR ITS OR THEIR RESPECTIVE EMPLOYEES, AGENTS,
CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING
THERETO AND (IX) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR
TRADEMARK INFRINGEMENT. EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY
REPRESENTED OTHERWISE IN ARTICLE IV OR SECTION 11.1(b), SELLER FURTHER DISCLAIMS
ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF
MERCHANTABILITY, FREEDOM FROM LATENT VICES OR DEFECTS, FITNESS FOR A PARTICULAR
PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY OF THE ASSETS,
RIGHTS OF A PURCHASER UNDER

21

--------------------------------------------------------------------------------

EXHIBT 10.1

APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE
PURCHASE PRICE, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT
BUYER SHALL BE DEEMED TO BE OBTAINING THE ASSETS IN THEIR PRESENT STATUS,
CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS OR DEFECTS
(KNOWN OR UNKNOWN, LATENT, DISCOVERABLE OR UNDISCOVERABLE), AND THAT BUYER HAS
MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE.

(c)EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY SET FORTH IN SECTION 4.16,
SELLER HAS NOT AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING ANY
MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS
INTO THE ENVIRONMENT OR THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL
RESOURCES OR THE ENVIRONMENT, OR ANY OTHER ENVIRONMENTAL CONDITION OF THE
ASSETS, AND NOTHING IN THIS AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A
REPRESENTATION OR WARRANTY. SUBJECT TO BUYER’S RIGHTS UNDER SECTION 12.1, BUYER
SHALL BE DEEMED TO BE TAKING THE ASSETS “AS IS” AND “WHERE IS” WITH ALL FAULTS
FOR PURPOSES OF THEIR ENVIRONMENTAL CONDITION, AND BUYER HAS MADE OR CAUSED TO
BE MADE SUCH ENVIRONMENTAL INSPECTIONS AS BUYER DEEMS APPROPRIATE.

(d)Seller and Buyer agree that, to the extent required by applicable law to be
effective, the disclaimers of certain representations and warranties contained
in this Section 10.3 are “conspicuous” disclaimers for the purpose of any
applicable law.

ARTICLE XI
TITLE MATTERS; CASUALTY; TRANSFER RESTRICTIONS
11.1Seller’s Title.

(a)General Disclaimer of Title Warranties and Representations. Except for the
special warranty of title as set forth in Section 11.1(b) and without limiting
Buyer’s remedies for Title Defects set forth in this Article XI, Seller makes no
warranty or representation, express, implied, statutory or otherwise, with
respect to Seller’s title to any of the Assets, and Buyer hereby acknowledges
and agrees that Buyer’s sole remedy for any defect of title, including any Title
Defect, with respect to any of the Assets (i) before Closing, shall be as set
forth in Section 11.2 and (ii) after Closing, shall be pursuant to the special
warranty of title set forth in Section 11.1(b).

(b)Special Warranty of Title. If Closing occurs, then effective as of the
Closing Date and until the end of the Survival Period, Seller warrants
Defensible Title, without duplication, to (i) the Wells and Well Locations set
forth on Exhibit A-1 (subject to the depth restrictions set forth on Exhibit A
and Exhibit A-1, and, for a Well, limited to any currently producing formations,
and, for a Well Location, limited to the applicable Target Formations set forth
on Exhibit A-1 for such Well Location) and (ii) the Leases and the Mineral Fee
Interests set forth on Exhibit A-2 (subject to the depth restrictions set forth
on Exhibit A-2 and limited to the applicable Target Formations set forth on
Exhibit A-2) unto Buyer against every Person whomsoever lawfully claiming or to
claim the same or any part thereof by, through or under Seller or its
Affiliates, but not otherwise, subject, however, to the Permitted Encumbrances
and to any matters of record in the applicable counties or in the applicable
state or federal records prior to the Title Claim Date; provided, however, that,
except with respect to any liability of Seller for any claim asserted in writing
by Buyer to Seller in accordance with Section 11.1(c) on or before the
expiration of the Survival Period for

22

--------------------------------------------------------------------------------

EXHIBT 10.1

breach of such special warranty, such special warranty shall cease and terminate
at the end of such Survival Period.

(c)Recovery on Special Warranty.

i.Buyer’s Assertion of Title Warranty Breaches. Prior to the expiration of the
period of time commencing as of the Closing Date and ending at 5 p.m. Central
Time on the three (3) year anniversary thereof (the “Survival Period”), Buyer
shall furnish Seller a Title Defect Notice meeting the requirements of
Section 11.2(a) setting forth any matters which Buyer intends to assert as a
breach of Seller’s special warranty in Section 11.1(b). For all purposes of this
Agreement, Buyer shall be deemed to have waived, and Seller shall have no
further liability for, any breach of Seller’s special warranty that Buyer fails
to assert by a Title Defect Notice given to Seller on or before the expiration
of the Survival Period. Seller shall have a reasonable opportunity, but not the
obligation, to cure any Title Defect asserted by Buyer pursuant to this
Section 11.1(c)(i). Buyer agrees to reasonably cooperate with any attempt by
Seller to cure any such Title Defect.

ii.Limitations on Special Warranty. For purposes of Seller’s special warranty of
title, the value of the Leases, Mineral Fee Interests, Wells and/or Well
Locations set forth in Schedule 3.8, as appropriate ((1) for a Well, subject to
the depth restrictions set forth on Exhibit A and Exhibit A-1 and limited to any
currently producing formations, (2) for a Well Location, subject to the depth
restrictions set forth on Exhibit A and Exhibit A-1 and limited to the
applicable Target Formations set forth on Exhibit A-1 for such Well Location,
(3) for a Lease set forth on Exhibit A-2, subject to the depth restrictions set
forth on Exhibit A-2 and limited to the applicable Target Formations set forth
on Exhibit A-2 for such Lease, and (4) for the Mineral Fee Interest set forth on
Exhibit A-2, subject to the depth restrictions set forth on Exhibit A-2 and
limited to the applicable Target Formations set forth on Exhibit A-2 for such
Mineral Fee Interest), shall be deemed to be the Allocated Value thereof, as
adjusted herein. Recovery on Seller’s special warranty of title shall be limited
to an amount (without any interest accruing thereon) equal to the reduction in
the Purchase Price to which Buyer would have been entitled had Buyer asserted
the defect giving rise to such breach of Seller’s special warranty of title as a
Title Defect prior to the Title Claim Date pursuant to Section 11.2, except that
the Individual Title Defect Threshold and the Aggregate Title Defect Threshold
shall not apply. Seller shall be entitled to offset any amount owed by Seller
for breach of its special warranty of title with respect to any Asset by the
amount of any Title Benefits with respect to such Asset as to which Seller gives
Buyer notice after the Title Claim Date.

11.2Notice of Title Defects; Defect Adjustments.

(a)Title Defect Notices. Buyer must deliver, no later than forty-five (45) days
after the Execution Date (the “Title Claim Date”), claim notices to Seller
meeting the requirements of this Section 11.2(a) (collectively, the “Title
Defect Notices” and, individually, a “Title Defect Notice”) setting forth any
matters which, in Buyer’s reasonable opinion, constitute Title Defects and which
Buyer intends to assert as a Title Defect pursuant to this Section 11.2(a). For
all purposes of this Agreement and notwithstanding anything herein to the
contrary, Buyer shall be deemed to have waived, and Seller shall have no
liability for, any Title Defect which Buyer fails to assert as a Title Defect by
a properly delivered Title Defect Notice received by Seller on or before the
Title Claim Date; provided, however, that, for purposes of Seller’s special
warranty of title under Section 11.1(b), such waiver shall not apply to any
matter that, prior to the Title Claim Date, is neither reflected of record in
the applicable counties or in the applicable state or federal records nor
discovered by any of Buyer’s or any of its Affiliate’s employees, title
attorneys, landmen or other title examiners while conducting Buyer’s due
diligence with respect to the Assets. To be effective, each Title Defect Notice
shall be in writing, and shall include (i) a description

23

--------------------------------------------------------------------------------

EXHIBT 10.1

of the alleged Title Defect and the Asset (including the legal description of
such Asset and the Leases applicable to such Asset), or portion thereof,
affected by such Title Defect (each a “Title Defect Property”), (ii) the
Allocated Value of each Title Defect Property, (iii) supporting documents
reasonably necessary for Seller to verify the existence of such alleged Title
Defect, (iv) Buyer’s preferred manner of curing each Title Defect and Buyer’s
proposed documentation for such cure and (v) the amount by which Buyer
reasonably believes the Allocated Value of each Title Defect Property is reduced
by such alleged Title Defect and the computations upon which Buyer’s belief is
based. To give Seller an opportunity to commence reviewing and curing Title
Defects, Buyer agrees to use reasonable efforts to give Seller, on or before the
end of each calendar week prior to the Title Claim Date, written notice of all
alleged Title Defects (as well as any claims that would be claims under the
special warranty set forth in Section 11.1) discovered by Buyer during the
preceding calendar week, which notice may be preliminary in nature and
supplemented prior to the Title Claim Date. Buyer shall also, promptly upon
discovery, furnish Seller with written notice of any Title Benefit which is
discovered by any of Buyer’s or any of its Affiliate’s employees, title
attorneys, landmen or other title examiners while conducting Buyer’s due
diligence with respect to the Assets prior to the Title Claim Date.

(b)Title Benefit Notices. Seller shall have the right, but not the obligation,
to deliver to Buyer on or before the Title Claim Date with respect to each Title
Benefit a notice (a “Title Benefit Notice”) including (i) a description of the
alleged Title Benefit and the Asset, or portion thereof, affected by such
alleged Title Benefit (each a “Title Benefit Property”), and (ii) the amount by
which Seller reasonably believes the Allocated Value of such Title Benefit
Property is increased by such alleged Title Benefit and the computations upon
which Seller’s belief is based. Except as set forth in Section 11.1(c)(ii) and
Section 11.2(a), Seller shall be deemed to have waived all Title Benefits for
which a Title Benefit Notice has not been delivered on or before the Title Claim
Date.

(c)Seller’s Right to Cure. Seller shall have the right, but not the obligation,
to attempt, at its sole cost, to cure at any time prior to one hundred twenty
(120) days after Closing (the “Cure Period”), any Title Defects of which it has
been advised by Buyer. During the period of time from Closing to the expiration
of the Cure Period, Buyer agrees to afford Seller and its officers, employees
and other authorized representatives reasonable access, during normal business
hours, to the Assets and all Records in Buyer’s or any of its Affiliates’
possession in order to facilitate Seller’s attempt to cure any such Title
Defects. No reduction shall be made to the Purchase Price with respect to any
Title Defect for which Seller has provided notice to Buyer prior to or on the
Closing Date that Seller intends to attempt to cure the Title Defect during the
Cure Period. An election by Seller to attempt to cure a Title Defect shall be
without prejudice to its rights under Section 11.2(j) and shall not constitute
an admission against interest or a waiver of Seller’s right to dispute the
existence, nature or value of, or cost to cure, the alleged Title Defect.

(d)Remedies for Title Defects. Subject to Seller’s continuing right to dispute
the existence of a Title Defect and/or the Title Defect Amount asserted with
respect thereto, and subject to the rights of the Parties pursuant to
Section 14.1(c), in the event that any Title Defect timely asserted by Buyer in
accordance with Section 11.2(a) is not waived in writing by Buyer or cured
during the Cure Period, Seller shall, at its sole option, elect to:

i.subject to the Individual Title Defect Threshold and the Aggregate Title
Defect Threshold, reduce the Purchase Price or Final Price, as applicable, by
the Title Defect Amount determined pursuant to Section 11.2(g) or
Section 11.2(j);

ii.indemnify Buyer, but only with Buyer’s consent, against all Liability (up to
the Allocated Value of the applicable Title Defect Property) resulting from such
Title Defect with respect to

24

--------------------------------------------------------------------------------

EXHIBT 10.1

such Title Defect Property pursuant to an indemnity agreement in a form and
substance mutually agreed upon by the Parties (a “Title Indemnity Agreement”);

iii.retain the entirety of the Title Defect Property that is subject to such
Title Defect, together with all associated Assets, in which event the Purchase
Price or Final Price, as applicable, shall be reduced by an amount equal to the
Allocated Value of such Title Defect Property and such associated Assets; or

iv.if applicable, terminate this Agreement pursuant to Section 14.1(c).

(e)Remedies for Title Benefits. With respect to each Title Benefit Property
reported under Section 11.2(b), the Purchase Price shall be increased by an
amount equal to the increase in the Allocated Value for such Title Benefit
Property caused by such Title Benefit, as determined pursuant to Section 11.2(h)
or Section 11.2(j) (the “Title Benefit Amount”) and as adjusted in accordance
with the following terms and conditions: (i) in no event shall there be any
adjustments to the Purchase Price for any individual Title Benefit for which the
Title Benefit Amount does not exceed an amount equal to the Individual Title
Defect Threshold; and (ii) in no event shall there be any adjustment to the
Purchase Price for any Title Benefit that exceeds the amount equal to the
Individual Title Defect Threshold unless (A) the amount of the sum of the
aggregate Title Benefit Amounts of all such Title Benefits that exceed the
amount equal to the Individual Title Defect Threshold exceeds (B) an amount
equal to the Aggregate Title Defect Threshold, after which point the Purchase
Price shall be increased by the aggregate of the Title Benefit Amounts from the
first dollar.

(f)Exclusive Remedy. Except for Buyer’s rights under Seller’s special warranty
of title under Section 11.1(b) and Buyer’s rights to terminate this Agreement
pursuant to Section 14.1(c), the provisions set forth in Section 11.2(d) shall
be the exclusive right and remedy of Buyer with respect to Seller’s failure to
have Defensible Title with respect to any Asset or any other title matter.

(g)Title Defect Amount. The amount by which the Allocated Value of a Title
Defect Property is reduced as a result of the existence of a Title Defect shall
be the “Title Defect Amount” and shall be determined in accordance with the
following terms and conditions (without duplication):

i.if Buyer and Seller agree on the Title Defect Amount, then that amount shall
be the Title Defect Amount;

ii.if the Title Defect is an Encumbrance that is undisputed and liquidated in
amount, then the Title Defect Amount shall be the amount necessary to be paid to
remove the Title Defect from the Title Defect Property;

iii.if the Title Defect represents a discrepancy between (A) Seller’s Net
Revenue Interest for any Title Defect Property and (B) the Net Revenue Interest
set forth for such Title Defect Property on Exhibit A-1, then the Title Defect
Amount shall be the product of the Allocated Value of such Title Defect Property
multiplied by a fraction, the numerator of which is the Net Revenue Interest
decrease and the denominator of which is the Net Revenue Interest set forth for
such Title Defect Property on Exhibit A-1;

iv.if the Title Defect represents a discrepancy where (A) the actual Net Acres
for any Title Defect Property is less than (B) the Net Acres for such Title
Defect Property as stated on Exhibit A-2, then the Title Defect Amount shall be
the product obtained by multiplying such difference by the Allocated Value (on a
per Net Acre dollar amount) for such Title Defect Property as set forth on
Schedule 3.8;

25

--------------------------------------------------------------------------------

EXHIBT 10.1

v.if the Title Defect represents an obligation or Encumbrance upon or other
defect in title to the Title Defect Property of a type not described above, then
the Title Defect Amount shall be determined by taking into account the Allocated
Value of the Title Defect Property, the portion of the Title Defect Property
affected by the Title Defect, the legal effect of the Title Defect, the
potential economic effect of the Title Defect over the life of the Title Defect
Property, the values placed upon the Title Defect by Buyer and Seller and such
other reasonable factors as are necessary to make a proper evaluation; provided,
however, that if such Title Defect is reasonably capable of being cured, the
Title Defect Amount shall not be greater than the reasonable cost and expense of
curing such Title Defect;

vi.the Title Defect Amount with respect to a Title Defect Property shall be
determined without duplication of any costs or losses included in another Title
Defect Amount hereunder; and

vii.notwithstanding anything to the contrary in this Article XI, the aggregate
Title Defect Amounts attributable to the effects of all Title Defects upon any
Title Defect Property shall not exceed the lesser of (A) the Allocated Value of
such Title Defect Property and (B) the reasonable cost to cure such Title
Defects.

(h)Title Benefit Amount. The Title Benefit Amount resulting from a Title Benefit
shall be determined in accordance with the following methodology, terms and
conditions (without duplication):

i.if Buyer and Seller agree on the Title Benefit Amount, then that amount shall
be the Title Benefit Amount;

ii.if the Title Benefit represents a discrepancy between (A) Seller’s Net
Revenue Interest for any Title Benefit Property and (B) the Net Revenue Interest
set forth for such Title Benefit Property on Exhibit A-1, then the Title Benefit
Amount shall be the product of the Allocated Value of such Title Benefit
Property multiplied by a fraction, the numerator of which is the Net Revenue
Interest increase and the denominator of which is the Net Revenue Interest set
forth for such Title Benefit Property on Exhibit A-1;

iii.if the Title Benefit represents a discrepancy where (A) the actual Net Acres
for any Title Benefit Property is greater than (B) the Net Acres for such Title
Benefit Property stated on Exhibit A-2, then the Title Benefit Amount shall be
the product obtained by multiplying such difference by the Allocated Value (on a
per Net Acre dollar amount) for such Title Benefit Property as set forth on
Schedule 3.8; and

iv.if the Title Benefit is of a type not described above, then the Title Benefit
Amounts shall be determined by taking into account the Allocated Value of Title
Benefit Property, the portion of such Title Benefit Property affected by such
Title Benefit, the legal effect of the Title Benefit, the potential economic
effect of the Title Benefit over the life of such Title Benefit Property, the
values placed upon the Title Benefit by Buyer and Seller and such other
reasonable factors as are necessary to make a proper evaluation.

(i)Title Defect Thresholds. Notwithstanding anything herein to the contrary, (x)
in no event shall there be any adjustments to the Purchase Price or other
remedies provided by Seller for any individual Title Defect for which the Title
Defect Amount (in the aggregate for all Assets affected by such Title Defect)
does not exceed $25,000 for Title Defects relating to the Well Locations set
forth on Exhibit A-1 and the Assets set forth on Exhibit A-2 and $50,000 for
Title Defects relating to the Wells set forth on

26

--------------------------------------------------------------------------------

EXHIBT 10.1

Exhibit A-1 (in each case, the “Individual Title Defect Threshold”); and (y) in
no event shall there be any adjustment to the Purchase Price or other remedies
provided by Seller for any Title Defect that exceeds the applicable Individual
Title Defect Threshold unless (A) the aggregate Title Defect Amounts of all such
Title Defects that exceed the applicable Individual Title Defect Threshold (but
excluding any such Title Defects cured by Seller) exceeds (B) the Aggregate
Title Defect Threshold, after which point Buyer shall be entitled to adjustments
to the Purchase Price or other applicable remedies available hereunder, as to
the aggregate of the Title Defect Amounts from the first dollar. For the
avoidance of doubt, if Seller retains any Title Defect Property pursuant to
Section 11.2(d)(iii), the Title Defect Amount related to such Title Defect
Property will not be counted towards the Aggregate Title Defect Threshold and
will not be considered for purposes of Section 7.4 and/or Section 8.4.

(j)Title Dispute Resolution. Seller and Buyer shall attempt to agree on matters
regarding (i) all Title Defects, Title Benefits, Title Defect Amounts and Title
Benefit Amounts, and (ii) the adequacy of any curative materials provided by
Seller to cure an alleged Title Defect (the “Disputed Title Matters”) prior to
Closing. If Seller and Buyer are unable to agree by Closing (or by the end of
the Cure Period if Seller elects to attempt to cure a Title Defect after
Closing), the Disputed Title Matters shall be exclusively and finally resolved
pursuant to this Section 11.2(j). There shall be a single arbitrator, who shall
be a title attorney with at least ten (10) years’ experience in oil and gas
titles involving properties in the regional area in which the Title Defect
Properties are located, as selected by mutual agreement of Buyer and Seller
within fifteen (15) days after the Closing or the end of the Cure Period, as
applicable, or, absent such agreement, by the Denver, Colorado office of the
American Arbitration Association (the “Title Arbitrator”). Each of Buyer and
Seller shall submit to the Title Arbitrator its proposed resolution of the
Disputed Title Matter. The proposed resolution of the Disputed Title Matter
shall include the best offer of the submitting Party in a single monetary amount
that such Party is willing to pay or accept (as applicable) to settle the
Disputed Title Matter. The Title Arbitrator shall be limited to awarding only
one or the other of the two proposed settlement amounts. The arbitration
proceeding shall be held in Denver, Colorado and shall be conducted 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 11.2(j). The Title Arbitrator’s determination shall be made within
twenty (20) days after submission of the matters in dispute and shall be final
and binding upon both Parties, without right of appeal. In making his
determination, the Title Arbitrator shall be bound by the rules set forth in
Section 11.2(g) and Section 11.2(h) and, subject to the foregoing, may consider
such other matters as, in the opinion of the Title Arbitrator, are necessary to
make a proper determination. The Title Arbitrator, however, may not award Buyer
a greater Title Defect Amount than the Title Defect Amount claimed by Buyer in
its applicable Title Defect Notice. The Title Arbitrator shall act as an expert
for the limited purpose of determining the specific Disputed Title Matter
submitted by either Party and may not award damages, interest or penalties to
either Party with respect to any matter. Seller and Buyer shall each bear its
own legal fees and other costs of presenting its case to the Title Arbitrator.
Each of Seller and Buyer shall bear one-half of the costs and expenses of the
Title Arbitrator. To the extent that the award of the Title Arbitrator with
respect to any Title Defect Amount or Title Benefit Amount is not taken into
account as an adjustment to the Purchase Price pursuant to Section 3.5 or
Section 3.6(a), then, within ten (10) days after the Title Arbitrator delivers
written notice to Buyer and Seller of his award with respect to a Title Defect
Amount or a Title Benefit Amount, and, subject to Section 11.2(i), (i) Buyer
shall pay to Seller the amount, if any, so awarded by the Title Arbitrator to
Seller, and (ii) Seller shall pay to Buyer the amount, if any, so awarded by the
Title Arbitrator to Buyer. Nothing herein shall operate to cause Closing to be
delayed on account of any arbitration conducted pursuant to this Section 11.2(j)
and, to the extent any adjustments are not agreed upon by the Parties as of
Closing, the Purchase Price shall not be adjusted therefor at Closing and
subsequent adjustments to the Purchase Price, if any, will be made pursuant to
Section 3.6 or this Section 11.2.

27

--------------------------------------------------------------------------------

EXHIBT 10.1

11.3Casualty Loss.

(a)Notwithstanding anything herein to the contrary, from and after the Effective
Time, if Closing occurs, Buyer shall assume all risk of loss with respect to
production of Hydrocarbons through normal depletion (including watering out of
any well, collapsed casing or sand infiltration of any well) and the
depreciation of Personal Property due to ordinary wear and tear, in each case,
with respect to the Assets, and Buyer shall not assert such matters as Casualty
Losses or Title Defects hereunder.

(b)If, after the Execution Date but prior to the Closing Date, any portion of
the Assets is damaged or destroyed by fire or other casualty or is taken in
condemnation or under right of eminent domain (each, a “Casualty Loss”), and the
Closing thereafter occurs, Seller, at Closing, shall pay to Buyer all sums paid
to Seller by Third Parties by reason of any Casualty Loss insofar as with
respect to the Assets 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 Parties
(excluding any Liabilities, other than insurance claims, of or against any
Seller Indemnified Parties) arising out of such Casualty Loss insofar as with
respect to the Assets; provided, however, that Seller shall reserve and retain
(and Buyer shall assign to Seller) all right, title, interest and claims against
Third Parties for the recovery of Seller’s costs and expenses incurred prior to
Closing in repairing such Casualty Loss and/or pursuing or asserting any such
insurance claims or other rights against Third Parties.

11.4Preferential Purchase Rights and Consents to Assign.

(a)With respect to each Preferential Purchase Right set forth in Schedule 4.10,
Seller, prior to Closing, shall send to the holder of each such Preferential
Purchase Right a notice in material compliance with the contractual provisions
applicable to such Preferential Purchase Right, which notice shall be subject to
Buyer’s prior approval.

i.If, prior to Closing, any holder of a Preferential Purchase Right notifies
Seller that it intends to consummate the purchase of the Asset to which its
Preferential Purchase Right applies, then the Asset subject to such Preferential
Purchase Right shall be excluded from the Assets to be assigned to Buyer at
Closing (but only to the extent of the portion of such Asset affected by the
Preferential Purchase Right), and the Purchase Price shall be reduced by the
Allocated Value of the Asset (or portion thereof) so excluded. Seller shall be
entitled to all proceeds paid by any Person exercising a Preferential Purchase
Right prior to Closing. If such holder of such Preferential Purchase Right
thereafter fails to consummate the purchase of the Asset (or portion thereof)
covered by such Preferential Purchase Right on or before sixty (60) days
following the Closing Date, (A) Seller shall so notify Buyer, (B) Buyer shall
purchase, on or before ten (10) days following receipt of such notice, such
Asset (or portion thereof) that was so excluded from Seller, under the terms of
this Agreement and for a price equal to the amount by which the Purchase Price
was reduced at Closing with respect to such excluded Asset (or portion thereof)
and (C) Seller shall assign to Buyer the Asset (or portion thereof) so excluded
at Closing pursuant to an instrument in substantially the same form as the
Assignment. If, as of Closing, the time for exercising a Preferential Purchase
Right has not expired and such Preferential Purchase Right has not been
exercised or waived, then the Asset subject to such Preferential Purchase Right
shall be included in the Assets to be assigned to Buyer at Closing, and Buyer
shall be solely responsible for complying with the terms of such Preferential
Purchase Right and shall be entitled to the proceeds, if any, associated with
the exercise of such Preferential Purchase Right.

ii.All Assets for which any applicable Preferential Purchase Right has been
waived, or as to which the period to exercise the applicable Preferential
Purchase Right has expired without

28

--------------------------------------------------------------------------------

EXHIBT 10.1

exercise by the holder thereof, in each case, prior to Closing, shall be sold to
Buyer at Closing pursuant to the provisions of this Agreement.

(b)With respect to each Consent (other than Customary Post-Closing Consents) set
forth in Schedule 4.4, Seller, prior to Closing, shall send to the holder of
each such Consent a notice in material compliance with the contractual
provisions applicable to such Consent seeking such holder’s consent to the
transactions contemplated hereby.

i.If (A) Seller fails to obtain a Consent (other than Customary Post-Closing
Consents) set forth in Schedule 4.4 prior to Closing and the failure to obtain
such Consent would cause (1) the assignment of the Assets affected thereby to
Buyer to be void or (2) the termination of a Lease or Contract under the express
terms thereof or (B) a Consent (other than Customary Post-Closing Consents)
requested by Seller is denied in writing, then, in each case, the Asset (or
portion thereof) affected by such un-obtained Consent shall be excluded from the
Assets to be assigned to Buyer at Closing, and the Purchase Price shall be
reduced by the Allocated Value of such Asset (or portion thereof) so excluded.
In the event that a Consent (other than Customary Post-Closing Consents and with
respect to an Asset excluded pursuant to this Section 11.4(b)(i)) that was not
obtained prior to Closing is obtained within one hundred eighty (180) days
following Closing, then, within ten (10) days after such Consent is obtained (x)
Buyer shall purchase the Asset (or portion thereof) that was so excluded as a
result of such previously un-obtained Consent and pay to Seller the amount by
which the Purchase Price was reduced at Closing with respect to the Asset (or
portion thereof) so excluded and (y) Seller shall assign to Buyer the Asset (or
portion thereof) so excluded at Closing pursuant to an instrument in
substantially the same form as the Assignment.

ii.If (A) Seller fails to obtain a Consent (other than Customary Post-Closing
Consents) set forth in Schedule 4.4 prior to Closing and the failure to obtain
such Consent would not cause (1) the assignment of the Asset (or portion
thereof) affected thereby to Buyer to be void or (2) the termination of a Lease
or Contract under the express terms thereof and (B) such Consent requested by
Seller is not denied in writing by the holder thereof, then the Asset (or
portion thereof) subject to such un-obtained Consent shall nevertheless be
assigned by Seller to Buyer at Closing as part of the Assets and Buyer shall
have no claim against, and Seller shall have no Liability for, the failure to
obtain such Consent.

iii.Prior to Closing, Seller and Buyer shall use their commercially reasonable
efforts to obtain all Consents (other than Customary Post-Closing Consents)
listed on Schedule 4.4; provided, however, that neither Party shall be required
to incur any Liability or pay any money in order to obtain any such Consent.
Subject to the foregoing, Buyer agrees to provide Seller with any information or
documentation that may be reasonably requested by Seller and/or the Third Party
holder(s) of such Consents in order to facilitate the process of obtaining such
Consents.

ARTICLE XII
ENVIRONMENTAL MATTERS

12.1Notice of Environmental Defects.

a.Environmental Defects Notice. Buyer must deliver no later than forty-five (45)
days after the Execution Date (the “Environmental Claim Date”) claim notices to
Seller meeting the requirements of this Section 12.1(a) (collectively, the
“Environmental Defect Notices” and, individually, an “Environmental Defect
Notice”) setting forth any matters which, in Buyer’s reasonable opinion,
constitute Environmental Defects and which Buyer intends to assert as
Environmental Defects pursuant to this Section 12.1. For all purposes of this
Agreement, Buyer shall be deemed to have waived, and Seller

29

--------------------------------------------------------------------------------

EXHIBT 10.1

shall have no liability for, any Environmental Defect which Buyer fails to
assert as an Environmental Defect by a properly delivered Environmental Defect
Notice received by Seller on or before the Environmental Claim Date. To be
effective, each Environmental Defect Notice shall be in writing and shall
include (i) a description of the matter constituting the alleged Environmental
Condition (including the applicable Environmental Law violated or implicated
thereby) and the Assets affected by such alleged Environmental Condition, (ii)
the Allocated Value of the Assets (or portions thereof) affected by such alleged
Environmental Condition, (iii) supporting documents reasonably necessary for
Seller to verify the existence of such alleged Environmental Condition, and (iv)
a calculation of the Remediation Amount (itemized in reasonable detail) that
Buyer asserts is attributable to such alleged Environmental Defect. Buyer’s
calculation of the Remediation Amount included in the Environmental Defect
Notice must describe in reasonable detail the Remediation proposed for the
alleged Environmental Condition that gives rise to the asserted Environmental
Defect and identify all assumptions used by Buyer in calculating the Remediation
Amount, including the standards that Buyer asserts must be met to comply with
Environmental Laws. Seller shall have the right, but not the obligation, to cure
any asserted Environmental Defect on or before the expiration of the Cure
Period. To the extent that Seller has provided notice to Buyer prior to or on
the Closing Date that Seller intends to attempt to cure the asserted
Environmental Defect during the Cure Period, the Assets (or portion thereof)
affected by such asserted Environmental Defect shall be excluded from the Assets
to be assigned to Buyer at Closing, and the Purchase Price shall be reduced by
the Allocated Value of such Asset (or portion of) so excluded. In the event that
any asserted Environmental Defect is cured prior to the expiration of the Cure
Period, then, within ten (10) days after such cure (A) Buyer shall purchase the
Asset (or portion thereof) that was so excluded in accordance with the
immediately preceding sentence and pay to Seller the amount by which the
Purchase Price was reduced at Closing with respect to the Asset (or portion
thereof) so excluded and (B) Seller shall assign to Buyer the Asset (or portion
thereof) so excluded at Closing pursuant to an instrument in substantially the
same form as the Assignment. To give Seller an opportunity to commence reviewing
and curing Environmental Defects, Buyer agrees to use reasonable efforts to give
Seller, on or before the end of each calendar week prior to the Environmental
Claim Date, written notice of all alleged Environmental Defects discovered by
Buyer during the preceding calendar week, which notice may be preliminary in
nature and supplemented prior to the Environmental Claim Date.
b.Remedies for Environmental Defects. Subject to Seller’s continuing right to
dispute the existence of an Environmental Defect and/or the Remediation Amount
asserted with respect thereto, and subject to the rights of the Parties pursuant
to Section 14.1(c), in the event that any Environmental Defect timely asserted
by Buyer in accordance with Section 12.1(a) is not waived in writing by Buyer or
cured during the Cure Period, Seller shall, at its sole option, elect to:

i.subject to the Individual Environmental Threshold and the Environmental Defect
Deductible, reduce the Purchase Price by the Remediation Amount;

ii.retain the entirety of the Asset that is subject to such Environmental
Defect, together with all associated Assets, in which event the Purchase Price
shall be reduced by an amount equal to the Allocated Value of such Asset and
such associated Assets;

iii.with Buyer’s consent, indemnify Buyer against all Liability resulting from
such Environmental Defect with respect to the Assets pursuant to an indemnity
agreement in a form and substance mutually agreeable to the Parties (each, an
“Environmental Indemnity Agreement”); or

iv.if applicable, terminate this Agreement pursuant to Section 14.1(c).
If Seller elects the option set forth in clause (i) above, Buyer shall be deemed
to have assumed responsibility for all of the costs and expenses attributable to
the Remediation of the Environmental Condition attributable to such
Environmental Defect and for all Liabilities with respect thereto and such
responsibility of Buyer

30

--------------------------------------------------------------------------------

EXHIBT 10.1

shall be deemed to constitute part of the Assumed Obligations hereunder. If the
Parties are unable to reach agreement with respect to any Environmental Defect
or Remediation Amount as set forth in clauses (i) through (iii) above, then such
dispute shall be submitted to arbitration under Section 12.1(e) and the Asset
(or portion thereof) affected by such asserted Environmental Defect shall be
removed from the Assets to be assigned to Buyer at Closing, and the Purchase
Price shall be reduced by the Allocated Value of such Asset (or portion thereof)
so removed.
c.Exclusive Remedy. Except for Buyer’s rights to terminate this Agreement
pursuant to Section 14.1(c), the provisions set forth in Section 12.1(b) shall
be the exclusive right and remedy of Buyer with respect to any Environmental
Defect with respect to any Asset or other environmental matter.

d.Environmental Deductibles. Notwithstanding anything herein to the contrary,
(i) in no event shall there be any adjustment to the Purchase Price or other
remedies provided by Seller for any individual Environmental Defect for which
the Remediation Amount does not exceed $75,000 (the “Individual Environmental
Threshold”); and (ii) in no event shall there be any adjustment to the Purchase
Price or other remedies provided by Seller for any Environmental Defect for
which the Remediation Amount exceeds the Individual Environmental Threshold
unless (A) the aggregate Remediation Amounts of all such Environmental Defects
that exceed the Individual Environmental Threshold (but excluding any
Environmental Defects cured by Seller) exceeds (B) the Environmental Defect
Deductible, after which point Buyer shall be entitled to adjustments to the
Purchase Price or other applicable remedies available hereunder, but only with
respect to the amount by which the aggregate amount of such Remediation Amounts
exceeds the Environmental Defect Deductible. For the avoidance of doubt, if
Seller retains any Assets pursuant to Section 12.1(b)(ii), the Remediation
Amounts relating to such retained Assets will not be counted towards the
Environmental Defect Deductible and will not be considered for purposes of
Section 7.4 and/or Section 8.4.

e.Environmental Dispute Resolution. Seller and Buyer shall attempt to agree on
(i) all Environmental Defects and Remediation Amounts prior to Closing and (ii)
the adequacy of any cure by Seller of any asserted Environmental Defect prior to
the end of the Cure Period (items (i) and (ii), collectively, the “Disputed
Environmental Matters”). If Seller and Buyer are unable to agree by Closing (or
by the end of the Cure Period if Seller elects to attempt to cure an asserted
Environmental Defect after Closing), the Disputed Environmental Matters shall be
exclusively and finally resolved by arbitration pursuant to this
Section 12.1(e). There shall be a single arbitrator, who shall be an
environmental attorney with at least ten (10) years’ experience in environmental
matters involving oil and gas producing properties in the regional area in which
the affected Assets are located, as selected by mutual agreement of Buyer and
Seller within fifteen (15) days after the Closing Date or the end of the Cure
Period, as applicable, or, absent such agreement, by the Denver, Colorado office
of the American Arbitration Association (the “Environmental Arbitrator”). The
arbitration proceeding shall be held in Denver, Colorado and shall be conducted
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 12.1. The Environmental Arbitrator’s determination shall be made within
twenty (20) days after submission of the matters in dispute and shall be final
and binding upon both Parties, without right of appeal. In making his
determination, the Environmental Arbitrator shall be bound by the rules set
forth in this Section 12.1 and, subject to the foregoing, may consider such
other matters as in the opinion of the Environmental Arbitrator are necessary or
helpful to make a proper determination. The Environmental Arbitrator, however,
may not award Buyer any greater Remediation Amount than the Remediation Amount
claimed by Buyer in its applicable Environmental Defect Notice. The
Environmental Arbitrator shall act as an expert for the limited purpose of
determining the specific Disputed Environmental Matters submitted by either
Party and may not award damages, interest or penalties to either Party with
respect to any matter. Seller and Buyer shall each bear its own legal fees

31

--------------------------------------------------------------------------------

EXHIBT 10.1

and other costs of presenting its case to the Environmental Arbitrator. Each of
Seller and Buyer shall bear one-half of the costs and expenses of the
Environmental Arbitrator. To the extent that any Asset (or portion thereof) is
removed from the Assets to be assigned to Buyer at Closing pursuant to the last
sentence of Section 12.1(b), then, within ten (10) days after the Environmental
Arbitrator delivers written notice to Buyer and Seller of his award with respect
to any Disputed Environmental Matter, Seller shall sell, assign and convey, and
Buyer shall purchase and accept, the Asset (or portion thereof) so removed from
Closing pursuant to an instrument in substantially the same form as the
Assignment, and Buyer shall pay to Seller the Allocated Value for such Asset (or
portion thereof) so removed from Closing (subject to any applicable adjustments
contemplated in this Agreement) less the Remediation Amount, if any, determined
for such Asset (or portion thereof) in accordance with the Environmental
Arbitrator’s written notice; provided that, in the event the Remediation Amount
with respect to such Asset (or portion thereof) exceeds the Allocated Value
thereof, such Asset (or portion thereof) shall be deemed Excluded Assets
hereunder. Nothing herein shall operate to cause Closing to be delayed on
account of any arbitration conducted pursuant to this Section 12.1(e), and, to
the extent any adjustments are not agreed upon by the Parties as of Closing, the
Purchase Price shall be adjusted therefor at Closing pursuant to Section 12.1(b)
and/or this Section 12.1(e).

12.2NORM, Asbestos, Wastes and Other Substances. Buyer acknowledges that the
Assets have been used for exploration, development, and production of oil and
gas and that there may be petroleum, produced water, wastes or other substances
or materials located in, on or under the Assets or associated with the Assets.
Equipment and sites included in the Assets may contain asbestos, NORM or other
Hazardous Substances. NORM may affix or attach itself to the inside of wells,
materials and equipment as scale, or in other forms. The wells, materials and
equipment located on the Assets or included in the Assets may contain NORM,
asbestos and other wastes or Hazardous Substances. NORM containing material
and/or other wastes or Hazardous Substances may have come in contact with
various environmental media, including, water, soils or sediment. Special
procedures may be required for the assessment, remediation, removal,
transportation, or disposal of environmental media, wastes, asbestos, NORM and
other Hazardous Substances from the Assets. The presence of NORM or
asbestos-containing materials that are non-friable cannot be claimed as an
Environmental Defect, except to the extent constituting a violation of
Environmental Laws.

ARTICLE XIII
ASSUMPTION; INDEMNIFICATION; SURVIVAL

13.1Assumption by Buyer. Without limiting Buyer’s rights to indemnity under this
Article XIII, Buyer’s rights under any Title Indemnity Agreement or
Environmental Indemnity Agreement, and the provisions of Sections 11.2(d) and
12.1(b) with respect to the Title Defects and Environmental Defects that Seller
elects to cure but does not cure during the Cure Period, from and after Closing,
Buyer assumes and hereby agrees to fulfill, perform, pay and discharge (or cause
to be fulfilled, performed, paid and discharged) (a) all obligations and
Liabilities, known or unknown, arising from, based upon, related to or
associated with the Assets, regardless of whether such obligations or
Liabilities arose prior to, on or after the Effective Time, including
obligations and Liabilities relating in any manner to the use, ownership or
operation of the Assets, including obligations to (i) furnish makeup gas and/or
settle Imbalances according to the terms of applicable gas sales, processing,
gathering or transportation Contracts, (ii) pay Working Interests, royalties,
overriding royalties and other interest owners’ revenues or proceeds
attributable to sales of Hydrocarbons, including those held in suspense
(including those amounts for which the Purchase Price was adjusted pursuant to
Section 3.3(b)(viii)), (iii) Decommission the Assets (the “Decommissioning
Obligations”), (iv) clean up and/or remediate the Assets in accordance with
applicable Contracts and Laws, and (v) perform all obligations applicable to or
imposed on the lessee, owner or operator under the Leases and the Applicable
Contracts, or as required by Law, and (b) all obligations and Liabilities, known
or unknown, arising from, based upon,

32

--------------------------------------------------------------------------------

EXHIBT 10.1

related to or associated with (i) Buyer’s compliance (or failure thereof) with
the terms and requirements of the Chieftain Litigation Settlement to the extent
relating to the post-Closing operations of the Assets and (ii) regardless of
whether such obligations or Liabilities arose prior to, on or after the
Effective Time, the litigation, claims or other matters set forth in
Schedule 4.7(A), (all of said obligations and Liabilities described in clauses
(a) and (b), subject to the exclusions below, herein being referred to as the
“Assumed Obligations”).

13.2Indemnities of Seller. Effective as of Closing, subject to the limitations
set forth in Section 13.4 and Section 13.8 or otherwise in this Agreement,
Seller shall be responsible for, shall pay on a current basis, and hereby agrees
to defend, indemnify, hold harmless and forever release Buyer and its
Affiliates, and all of its and their respective equityholders, partners,
members, directors, officers, managers, employees, agents and representatives
(collectively, the “Buyer Indemnified Parties”) from and against any and all
Liabilities, whether or not relating to Third Party Claims or incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of their respective rights hereunder, arising from, based upon,
related to or associated with the following (all of said Liabilities described
in clauses (c), (d), (e) and (f) herein being referred to as the “Retained
Liabilities”):

(a)any breach by Seller of any of its representations or warranties contained in
Article IV;
 
(b)any breach by Seller of any of its covenants or agreements under this
Agreement;

(c)any Liabilities to Third Parties for personal injury or death, or for
Seller’s payment of royalties and overriding royalties (except as related to the
Chieftain Litigation Settlement) attributable to Seller’s operation or ownership
of the Assets prior to the Effective Time;

(d)any Liabilities with respect to the matters set forth on Schedule 4.7(B), and
any Liabilities with respect to the Searle Litigation attributable to the period
of time prior to the Closing Date;

(e)any Liabilities arising with respect to the distribution of proceeds in
respect of the URC Related Interests attributable to the operation of the Assets
prior to the Closing Date; or

(f)any and all Liabilities arising from or related to the ownership or operation
of the Excluded Assets before, on or after the Effective Time.

13.3Indemnities of Buyer. Effective as of Closing, Buyer and its successors and
assigns shall assume and be responsible for, shall pay on a current basis, and
hereby agrees to defend, indemnify, hold harmless and forever release Seller and
its Affiliates, and all of its and their respective equityholders, partners,
members, directors, officers, managers, employees, agents and representatives
(collectively, the “Seller Indemnified Parties”) from and against any and all
Liabilities, whether or not relating to Third Party Claims or incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of their respective rights hereunder, arising from, based upon,
related to or associated with:

(a)any breach by Buyer of any of its representations or warranties contained in
Article V;

(b)any breach by Buyer of any of its covenants or agreements under this
Agreement; or

(c)the Assumed Obligations, except to the extent included in the Retained
Liabilities as limited by Section 13.4 and Section 13.8.

13.4Limitation on Liability.

33

--------------------------------------------------------------------------------

EXHIBT 10.1

(a)Seller shall not have any liability for any indemnification under
Section 13.2 of this Agreement (i) for any individual Liability unless the
amount with respect to such Liability exceeds $75,000, and (ii) until and unless
the aggregate amount of all Liabilities for which Claim Notices are delivered by
Buyer exceeds the Indemnity Deductible, and then only to the extent such
Liabilities exceed the Indemnity Deductible; provided that the adjustments to
the Purchase Price under Section 3.3, Section 3.5, Section 3.6 or Section 3.7
and any payments in respect thereof shall not be limited by this
Section 13.4(a).

(b)Notwithstanding anything to the contrary contained in this Agreement, Seller
shall not be required to indemnify Buyer for aggregate Liabilities in excess of
an amount equal to twenty percent (20%) of the Purchase Price; provided that (i)
Sections 13.4(a) and 13.4(b) shall not apply to or limit any recovery on or with
respect to Seller’s indemnification obligation as provided in Section 13.2(e) or
Seller’s special warranty of title as provided in Sections 11.1(b) and 11.1(c)
and (ii) the adjustments to the Purchase Price under Section 3.3, Section 3.5,
Section 3.6 and Section 3.7 and any payments in respect thereof shall not be
limited by this Section 13.4(b).

13.5Express Negligence. EXCEPT AS OTHERWISE PROVIDED IN SECTION 6.5, SECTION
6.10(a) AND SECTION 10.1(c), THE DEFENSE, INDEMNIFICATION, HOLD HARMLESS,
RELEASE AND ASSUMED OBLIGATIONS PROVISIONS PROVIDED FOR IN THIS AGREEMENT SHALL
BE APPLICABLE WHETHER OR NOT THE LIABILITIES, LOSSES, COSTS, EXPENSES AND
DAMAGES IN QUESTION AROSE OR RESULTED SOLELY OR IN PART FROM THE GROSS, SOLE,
ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER
FAULT OR VIOLATION OF LAW OF OR BY ANY INDEMNIFIED PARTY. BUYER AND SELLER
ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS
“CONSPICUOUS.”

13.6Exclusive Remedy. Notwithstanding anything to the contrary contained in this
Agreement, the Parties agree that, from and after Closing, Section 6.5, Section
6.10(a), Section 10.1(c), Section 11.1(c), Section 13.2 and Section 13.3, any
Title Indemnity Agreement or Environmental Indemnity Agreement entered into by
the Parties, and the provisions of Sections 11.2(d) and 12.1(b) with respect to
the Title Defects and Environmental Defects that Seller elects to cure but does
not cure during the Cure Period, contain the Parties’ exclusive remedies against
each other with respect to the transactions contemplated hereby, including
breaches of the representations, warranties, covenants and agreements of the
Parties contained in this Agreement or in any document or certificate delivered
pursuant to this Agreement. Except as specified in Section 11.1(c), Section 13.2
and any Title Indemnity Agreement or Environmental Indemnity Agreement entered
into by the Parties, effective as of Closing, Buyer, on its own behalf and on
behalf of the Buyer Indemnified Parties, hereby releases, remises and forever
discharges Seller and its Affiliates and all of such Persons’ equityholders,
partners, members, directors, officers, employees, agents and representatives
from any and all suits, legal or administrative proceedings, claims, demands,
damages, losses, costs, Liabilities, interest or causes of action whatsoever, at
Law or in equity, known or unknown, which Buyer or the Buyer Indemnified Parties
might now or subsequently have, based on, relating to or arising out of this
Agreement, the transactions contemplated by this Agreement, the ownership, use
or operation of any of the Assets prior to Closing or the condition, quality,
status or nature of any of the Assets prior to Closing, including rights to
contribution under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, breaches of statutory or implied warranties,
nuisance or other tort actions, rights to punitive damages, common law rights of
contribution and rights under insurance maintained by Seller or any of its
Affiliates (except as provided in Section 11.3(b)).

34

--------------------------------------------------------------------------------

EXHIBT 10.1

13.7Indemnification Procedures. All claims for indemnification under Section
6.5, Section 6.10(a), Section 10.1(c), Section 13.2 and Section 13.3 shall be
asserted and resolved as follows:

(a)For purposes of Section 6.5, Section 6.10(a), Section 10.1(c) and this
Article XIII, the term “Indemnifying Party” when used in connection with
particular Liabilities shall mean the Party or Parties having an obligation to
indemnify the other Party and/or other Persons with respect to such Liabilities
pursuant to Section 6.5, Section 6.10(a), Section 10.1(c) or this Article XIII,
and the term “Indemnified Party” when used in connection with particular
Liabilities shall mean the Party and/or other Persons having the right to be
indemnified with respect to such Liabilities by the Indemnifying Party pursuant
to Section 6.5, Section 6.10(a), Section 10.1(c) or this Article XIII.

(b)To make a claim for indemnification under Section 6.5, Section 6.10(a),
Section 10.1(c), Section 13.2 or Section 13.3, an Indemnified Party shall notify
the Indemnifying Party of its claim under this Section 13.7, including the
specific details of and specific basis under this Agreement for its claim (the
“Claim Notice”). In the event that the claim for indemnification is based upon a
claim by a Third Party against the Indemnified Party (a “Third Party Claim”),
the Indemnified Party shall provide its Claim Notice promptly after the
Indemnified Party has actual knowledge of the Third Party Claim and shall
enclose a copy of all papers (if any) served with respect to the Third Party
Claim; provided that the failure of any Indemnified Party to give notice of a
Third Party Claim as provided in this Section 13.7(b) shall not relieve the
Indemnifying Party of its obligations under Section 6.5, Section 6.10(a),
Section 10.1(c), Section 13.2 or Section 13.3 (as applicable) except to the
extent such failure results in insufficient time being available to permit the
Indemnifying Party to effectively defend against the Third Party Claim or
otherwise materially prejudices the Indemnifying Party’s ability to defend
against the Third Party Claim. In the event that the claim for indemnification
is based upon an inaccuracy or breach of a representation, warranty, covenant or
agreement, the Claim Notice shall specify the representation, warranty, covenant
or agreement that was inaccurate or breached.
(c)In the case of a claim for indemnification based upon a Third Party Claim,
the Indemnifying Party shall have thirty (30) days from its receipt of the Claim
Notice to notify the Indemnified Party whether it admits or denies its
obligation to defend and indemnify the Indemnified Party against such Third
Party Claim at the sole cost and expense of the Indemnifying Party. The
Indemnified Party is authorized, prior to and during such thirty (30) day
period, to file any motion, answer or other pleading that it shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party and that is not prejudicial to the Indemnifying Party.

(d)If the Indemnifying Party admits its obligation to defend and indemnify the
Indemnified Party against a Third Party Claim, it shall have the right and
obligation to diligently defend, at its sole cost and expense, the Indemnified
Party against such Third Party Claim. The Indemnifying Party shall have full
control of such defense and proceedings, including any compromise or settlement
thereof. If requested by the Indemnifying Party, the Indemnified Party agrees to
cooperate in contesting any Third Party Claim which the Indemnifying Party
elects to contest. The Indemnified Party may participate in, but not control, at
its own expense, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section 13.7(d). An Indemnifying
Party shall not, without the written consent of the Indemnified Party,
(i) settle any Third Party Claim or consent to the entry of any judgment with
respect thereto which does not include an unconditional written release of the
Indemnified Party from all liability in respect of such Third Party Claim or
(ii) settle any Third Party Claim or consent to the entry of any judgment with
respect thereto in any manner that may materially and adversely affect the
Indemnified Party (other than as a result of money damages covered by the
indemnity).

35

--------------------------------------------------------------------------------

EXHIBT 10.1

(e)If the Indemnifying Party does not admit its obligation or admits its
obligation to defend and indemnify the Indemnified Party against a Third Party
Claim, but fails to diligently prosecute, indemnify against or settle the Third
Party Claim, then the Indemnified Party shall have the right to defend against
the Third Party Claim at the sole cost and expense of the Indemnifying Party,
with counsel of the Indemnified Party’s choosing, subject to the right of the
Indemnifying Party to admit its liability and assume the defense of the Third
Party Claim at any time prior to settlement or final determination thereof. If
the Indemnifying Party has not yet admitted its obligation to defend and
indemnify the Indemnified Party against a Third Party Claim, the Indemnified
Party shall send written notice to the Indemnifying Party of any proposed
settlement and the Indemnifying Party shall have the option for ten (10) days
following receipt of such notice to (i) admit in writing its liability to
indemnify the Indemnified Party from and against the liability and consent to
such settlement, (ii) if liability is so admitted, reject, in its reasonable
judgment, the proposed settlement, or (iii) deny liability. Any failure by the
Indemnifying Party to respond to such notice shall be deemed to be an election
under subsection (iii) above.

(f)In the case of a claim for indemnification not based upon a Third Party
Claim, the Indemnifying Party shall have thirty (30) days from its receipt of
the Claim Notice to (i) cure the Liabilities complained of, (ii) admit its
liability for such Liability or (iii) dispute the claim for such Liabilities. If
the Indemnifying Party does not notify the Indemnified Party within such thirty
(30) day period that it has cured the Liabilities or that it disputes the claim
for such Liabilities, the amount of such Liabilities shall conclusively be
deemed a liability of the Indemnifying Party hereunder.

13.8Survival.

(a)Except for the Specified Representations, the representations and warranties
of the Parties in Article IV and Article V and the covenants and agreements of
the Parties in Sections 6.1 and 9.4 shall survive Closing for a period of nine
(9) months. The Specified Representations shall survive Closing without time
limit. The representation and warranty of Seller in Section 11.1(b) shall
terminate as of the expiration of the Survival Period. Subject to the foregoing
and Section 13.8(b), the remainder of this Agreement shall survive Closing
without time limit. Representations, warranties, covenants and agreements shall
be of no further force or effect after the date of their expiration; provided
that there shall be no termination of any bona fide claim asserted pursuant to
this Agreement with respect to such a representation, warranty, covenant or
agreement prior to its expiration date.

(b)The indemnities in Section 13.2(a), Section 13.2(b), Section 13.3(a)
and Section 13.3(b) shall terminate as of the expiration date of each respective
representation, warranty, covenant or agreement that is subject to
indemnification, except in each case as to matters for which a specific written
claim for indemnity has been delivered to the Indemnifying Party on or before
such expiration date. Seller’s indemnities in Section 13.2(c) shall terminate
nine (9) months after the Closing. Seller’s indemnities in Section 13.2(d) shall
terminate after the expiration of any applicable statute of limitations.
Seller’s indemnities in Section 13.2(e) shall survive Closing without time
limit. Seller’s indemnities in Section 13.2(f) and Buyer’s indemnities in
Section 6.5, Section 6.10(a), Section 10.1(c) and Section 13.3(c) shall survive
Closing without time limit and shall be deemed covenants running with the Assets
(provided that Buyer and its successors and assigns shall not be released from
any of, and shall remain jointly and severally liable to the Seller Indemnified
Parties for, the obligations and Liabilities of Buyer under such Sections of
this Agreement upon any transfer or assignment of any Asset).

13.9Waiver of Right to Rescission. Seller and Buyer acknowledge that, following
Closing, the payment of money, as limited by the terms of this Agreement, shall
be adequate compensation for breach of any representation, warranty, covenant or
agreement contained herein or for any other claim arising in

36

--------------------------------------------------------------------------------

EXHIBT 10.1

connection with or with respect to the transactions contemplated by this
Agreement. As the payment of money shall be adequate compensation, following
Closing, Buyer and Seller waive any right to rescind this Agreement or any of
the transactions contemplated hereby.

13.10Insurance, Taxes. The amount of any Liabilities for which any of the Buyer
Indemnified Parties is entitled to indemnification under this Agreement or in
connection with or with respect to the transactions contemplated by this
Agreement shall be reduced by any corresponding (a) Tax benefit created or
generated by the incurrence of the Liability and (b) insurance proceeds from
insurance policies carried by a Party realized or that could reasonably be
expected to be realized by such Party if a claim were properly pursued under the
relevant insurance arrangements.

13.11Non-Compensatory Damages. None of the Buyer Indemnified Parties nor the
Seller Indemnified Parties shall be entitled to recover from Seller or Buyer, as
applicable, or their respective Affiliates, any special, indirect,
consequential, punitive, exemplary, remote or speculative damages (including
damages for lost profits of any kind) arising under or in connection with this
Agreement or the transactions contemplated hereby, except to the extent any such
Party suffers such damages to a Third Party, which damages (including costs of
defense and reasonable attorneys’ fees incurred in connection with defending
against such damages) shall not be excluded by this provision as to recovery
hereunder. Subject to the preceding sentence, each of Buyer, on behalf of each
of the Buyer Indemnified Parties, and Seller, on behalf of each of the Seller
Indemnified Parties, waives any right to recover any special, indirect,
consequential, punitive, exemplary, remote or speculative damages (including
damages for lost profits of any kind) arising in connection with or with respect
to this Agreement or the transactions contemplated hereby.

13.12Disclaimer of Application of Anti-Indemnity Statutes. The Parties
acknowledge and agree that the provisions of any anti-indemnity statute relating
to oilfield services and associated activities shall not be applicable to this
Agreement and/or the transactions contemplated hereby.

ARTICLE XIV
TERMINATION, DEFAULT AND REMEDIES

14.1Right of Termination. This Agreement and the transactions contemplated
herein may be terminated at any time prior to Closing:

(a)by Seller, at Seller’s option, if any of the conditions set forth in
Article VIII have not been satisfied on or before the Closing Date, and,
following written notice thereof from Seller to Buyer specifying the reason such
condition is unsatisfied (including any breach by Buyer of this Agreement), such
condition remains unsatisfied for a period of ten (10) Business Days after
Buyer’s receipt of written notice thereof from Seller;

(b)by Buyer, at Buyer’s option, if any of the conditions set forth in Article
VII have not been satisfied on or before the Closing Date, and, following
written notice thereof from Buyer to Seller specifying the reason such condition
is unsatisfied (including any breach by Seller of this Agreement), such
condition remains unsatisfied for a period of ten (10) Business Days after
Seller’s receipt of written notice thereof from Buyer;

(c)by Buyer if the condition set forth in Section 7.4 has not been satisfied on
or before the Closing Date or by Seller if the condition set forth in
Section 8.4 is not satisfied on or before the Closing Date; or

37

--------------------------------------------------------------------------------

EXHIBT 10.1

(d)by Seller or Buyer if Closing shall not have occurred on or before July 30,
2014;
provided, however, that no Party shall have the right to terminate this
Agreement pursuant to clause (a), (b) or (d) above if such Party or its
Affiliates are at such time in material breach of any provision of this
Agreement.
14.2Effect of Termination. If the obligation to close the transactions
contemplated by this Agreement is terminated pursuant to any provision of
Section 14.1 hereof, then, except as provided in Section 3.2 and except for the
provisions of Sections 10.1(c) through (f), 10.2, 10.3, 13.11, this
Section 14.2, Section 14.3, Article I and Article XVI (other than
Sections 16.2(b), 16.7 and 16.8) and such of the defined terms set forth in
Section 15.1 to give context to such Sections, this Agreement shall forthwith
become void, and the Parties shall have no liability or obligation hereunder
except and to the extent such termination results from the material breach by a
Party of any of its covenants or agreements hereunder in which case the other
Party shall have the right to seek all remedies available at law or in equity,
including specific performance, for such material breach; provided that if
Seller is entitled to and elects to retain the Deposit as partial payment of its
damages pursuant to Section 3.2, then Seller shall not also be entitled to seek
specific performance.

14.3Return of Documentation and Confidentiality. Upon termination of this
Agreement, Buyer shall return to Seller all title, engineering, geological and
geophysical data, environmental assessments and/or reports, maps and other
information furnished by Seller to Buyer or prepared by or on behalf of Buyer in
connection with its due diligence investigation of the Assets, in each case in
accordance with the Confidentiality Agreement, and an officer of Buyer shall
certify same to Seller in writing.

ARTICLE XV
DEFINED TERMS

15.1Defined Terms. Capitalized terms used herein shall have the meanings set
forth in this Section 15.1 unless the context requires otherwise.

“Accounting Arbitrator” shall have the meaning set forth in Section 3.7.
“Adjusted Purchase Price” shall have the meaning set forth in Section 3.3.
“AFEs” shall have the meaning set forth in Section 4.13.
“Affiliate” shall mean any Person that, directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with, another Person. The term “control” and its derivatives with respect to any
Person mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
“Aggregate Title Defect Threshold” shall mean an amount equal to one percent
(1%) of the Purchase Price.
“Agreement” shall have the meaning set forth in the introductory paragraph
herein.
“Allocated Values” shall have the meaning set forth in Section 3.8.
“Applicable Contracts” shall mean all Contracts to which Seller is a party or is
bound relating to any of the Assets and (in each case) that will be binding on
Buyer after Closing, including: communitization agreements; net profits
agreements; production payment agreements; area of mutual interest agreements;

38

--------------------------------------------------------------------------------

EXHIBT 10.1

joint venture agreements; confidentiality agreements; farmin and farmout
agreements; bottom hole agreements; crude oil, condensate and natural gas
purchase and sale, gathering, transportation and marketing agreements;
hydrocarbon storage agreements; acreage contribution agreements; operating
agreements; balancing agreements; pooling declarations or agreements;
unitization agreements; processing agreements; saltwater disposal agreements;
facilities or equipment leases; and other similar contracts and agreements, but
exclusive of any master service agreements and Contracts relating to the
Excluded Assets.
“Appurtenant Assets” shall have the meaning set forth in Section 4.20.
“Asset Taxes” shall mean ad valorem, property, severance, production, sales, use
and similar Taxes (which for the avoidance of doubt, does not include income,
franchise or similar Taxes) based upon or measured by the ownership or operation
of the Assets or the production of Hydrocarbons therefrom or the receipt of
proceeds therefrom.
“Assets” shall have the meaning set forth in Section 2.1.
“Assignment” shall mean the Assignment and Bill of Sale from Seller to Buyer,
pertaining to the Assets, substantially in the form attached to this Agreement
as Exhibit B-1.
“Assumed Obligations” shall have the meaning set forth in Section 13.1.
“Burden” shall mean any and all royalties (including lessor’s royalty),
overriding royalties, production payments, net profits interests and other
burdens upon, measured by or payable out of production.
“Business Day” shall mean a day (other than a Saturday or Sunday) on which
commercial banks in Denver, Colorado are generally open for business.
“Buyer” shall have the meaning set forth in the introductory paragraph herein.
“Buyer Indemnified Parties” shall have the meaning set forth in Section 13.2.
“Buyer’s Representatives” shall have the meaning set forth in Section 10.1(a).
“Casualty Loss” shall have the meaning set forth in Section 11.3(b).
“Chieftain Class” shall mean the royalty owners within the description of the
certified class in the Chieftain Class Action Litigation and who have not filed
a request for exclusion.
“Chieftain Class Action Litigation” shall mean that class action which was
pending in the United States District Court, Western District of Oklahoma,
styled and numbered: Chieftain Royalty Company and Jack Lancet, on behalf of
themselves and the class, as representatives of the class v. QEP Energy Company,
Case No. CIV-11-212-R.
“Chieftain Litigation Settlement” shall mean the Stipulation and Agreement of
Settlement, dated February 13, 2013, between Chieftain Royalty Company and Jack
Lancet, on behalf of themselves and the Chieftain Class, as representatives of
the Chieftain Class, and Seller settling all claims in the Chieftain Class
Action Litigation.
“Claim Notice” shall have the meaning set forth in Section 13.7(b).
“Closing” shall have the meaning set forth in Section 9.1.

39

--------------------------------------------------------------------------------

EXHIBT 10.1

“Closing Date” shall have the meaning set forth in Section 9.1.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Confidentiality Agreement” shall mean that certain Confidentiality Agreement
between Seller and Buyer dated as of February 4, 2014.
“Consent” shall have the meaning set forth in Section 4.4.
“Contract” shall mean any written or oral contract, agreement or any other
legally binding arrangement, but excluding, however, any Lease, pooling order,
easement, right-of-way, permit or other instrument creating or evidencing an
interest in the Assets or any real or immovable property related to or used in
connection with the operations of any Assets.
“Cure Period” shall have the meaning set forth in Section 11.2(c).
“Customary Post-Closing Consents” shall mean the consents and approvals from
Governmental Authorities for the assignment of the Assets to Buyer that are
customarily obtained after the assignment of properties similar to the Assets.
“Decommission” and “Decommissioning” shall mean all dismantling and
decommissioning activities and obligations as are required by Law, any
Governmental Authority or agreements including all well plugging, replugging and
abandonment, facility dismantlement and removal, pipeline and flowline removal,
dismantlement and removal of all other property of any kind related to or
associated with operations or activities and associated site clearance, site
restoration and site remediation.
“Decommissioning Obligations” shall have the meaning set forth in Section 13.1.
“Defensible Title” shall mean such title of Seller with respect to the Wells and
Well Locations set forth on Exhibit A-1 and the Leases and the Mineral Fee
Interests set forth on Exhibit A-2 that, as of the Effective Time and the
Execution Date and subject to Permitted Encumbrances:
(a)    with respect to each Well or Well Location set forth on Exhibit A-1
(subject to the depth restrictions set forth on Exhibit A and Exhibit A-1, and,
for a Well, limited to any currently producing formations, and, for a Well
Location, limited to the applicable Target Formations set forth on Exhibit A-1
for such Well Location), entitles Seller to receive not less than the Net
Revenue Interest set forth on Exhibit A-1 for such Well or Well Location, except
for (i) decreases in connection with those operations in which Seller or its
successors or assigns may from and after the Execution Date elect to be a
non-consenting co-owner, (ii) decreases resulting from the establishment or
amendment from and after the Execution Date of pools or units, (iii) decreases
required to allow other Working Interest owners to make up past underproduction
or pipelines to make up past under deliveries, and (iv) as otherwise set forth
on Exhibit A-1;
(b)    with respect to each Lease or Mineral Fee Interest set forth on Exhibit
A-2 (subject to the depth restrictions set forth on Exhibit A-2 and the
applicable Target Formations set forth on Exhibit A-2), entitles Seller to
receive not less than the Net Acres set forth on Exhibit A-2 for such Lease or
such Mineral Fee Interest, except for (i) decreases in connection with those
operations in which Seller or its successors or assigns may from and after the
Execution Date elect to be a non-consenting co-owner, (ii) decreases resulting
from the establishment or amendment from and after the Execution Date of pools
or units, (iii) decreases required to allow other Working Interest owners to
make up

40

--------------------------------------------------------------------------------

EXHIBT 10.1

past underproduction or pipelines to make up past under deliveries, and (iv) as
otherwise set forth on Exhibit A-2;
(c)    with respect to each Well or Well Location set forth on Exhibit A-1
(subject to the depth restrictions set forth on Exhibit A and Exhibit A-1, and,
for a Well, limited to any currently producing formations, and, for a Well
Location, limited to the applicable Target Formations set forth on Exhibit A-1
for such Well Location), obligates Seller to bear not more than the Working
Interest set forth on Exhibit A-1 for such Well or Well Location, except (i)
increases resulting from contribution requirements with respect to defaulting
co-owners under applicable operating agreements, (ii) increases to the extent
that such increases are accompanied by a proportionate increase in Seller’s Net
Revenue Interest, and (iii) as otherwise set forth on Exhibit A-1; and
(d)    is free and clear of all Encumbrances.
“Deposit” shall have the meaning set forth in Section 3.2(a).
“Designated Well Costs” shall have the meaning set forth in Section 2.3.
“Devon” shall mean Devon Energy Production Company, L.P.
“Dispute Notice” shall have the meaning set forth in Section 3.6(a).
“Disputed Environmental Matters” shall have the meaning set forth in Section
12.1(e).
“Disputed Title Matters” shall have the meaning set forth in Section 11.2(j).
“Effective Time” shall mean 7:00 a.m. (Central Time) on January 1, 2014.
“email” shall have the meaning set forth in Section 16.6.
“Encumbrance” shall mean any lien, mortgage, security interest, pledge, charge
or similar encumbrance.
“Environmental Arbitrator” shall have the meaning set forth in Section 12.1(e).
“Environmental Claim Date” shall have the meaning set forth in Section 12.1(a).
“Environmental Condition” shall mean (a) a condition existing on the Execution
Date with respect to the air, soil, subsurface, surface waters, ground waters
and/or sediments that causes an Asset (or Seller with respect to an Asset) not
to be in compliance with any Environmental Law or (b) the existence as of the
Execution Date with respect to the Assets or the operation thereof of any
environmental pollution, contamination or degradation where remedial or
corrective action is presently required (or if known, would be presently
required) under Environmental Laws.
“Environmental Defect” shall mean an Environmental Condition with respect to an
Asset.
“Environmental Defect Deductible” shall mean an amount equal to one percent (1%)
of the Purchase Price.
“Environmental Defect Notice” shall have the meaning set forth in
Section 12.1(a).
“Environmental Indemnity Agreement” shall have the meaning set forth in Section
12.1(b)(iii).

41

--------------------------------------------------------------------------------

EXHIBT 10.1

“Environmental Laws” shall mean all applicable Laws in effect as of the
Execution Date, including common law, relating to the protection of the public
health, welfare and the environment, including, those Laws relating to the
storage, handling and use of chemicals and other Hazardous Substances and those
Laws relating to the generation, processing, treatment, storage, transportation,
disposal or other management thereof. The term “Environmental Laws” does not
include good or desirable operating practices or standards that may be employed
or adopted by other oil and gas well operators or recommended by a Governmental
Authority.
“Exchange” shall have the meaning set forth in Section 16.17.
“Excluded Assets” shall mean (a) all of Seller’s corporate minute books,
financial records and other business records that relate to Seller’s business
generally (including the ownership and operation of the Assets); (b) to the
extent that they do not relate to the Assumed Obligations for which Buyer is
providing indemnification hereunder, all trade credits, all accounts, all
receivables and all other proceeds, income or revenues attributable to the
Assets and attributable to any period of time prior to the Effective Time; (c)
to the extent that they do not relate to the Assumed Obligations for which Buyer
is providing indemnification hereunder, Seller’s rights with respect to all
claims and causes of action of Seller arising under or with respect to any
Contract that are attributable to periods of time prior to the Effective Time
(including claims for adjustments or refunds); (d) subject to Section 11.3 and
to the extent that they do not relate to the Assumed Obligations for which Buyer
is providing indemnification hereunder, all rights and interests of Seller (i)
under any policy or agreement of insurance or indemnity, (ii) under any bond or
(iii) to any insurance or condemnation proceeds or awards arising, in each case,
from acts, omissions or events or damage to or destruction of property; (e)
Seller’s rights with respect to all Hydrocarbons produced and sold from the
Assets with respect to all periods prior to the Effective Time; (f) all claims
of Seller or its Affiliates for refunds of, rights to receive funds from any
Governmental Authority or loss carry forwards with respect to (i) production or
any other Taxes attributable to any period prior to the Effective Time, (ii)
income or franchise Taxes or (iii) any Taxes attributable to the Excluded
Assets; (g) all of Seller’s personal computers and associated peripherals and
all of Seller’s radio and telephone equipment; (h) all of Seller’s proprietary
computer software, patents, trade secrets, copyrights, names, trademarks, logos
and other intellectual property; (i) all documents and instruments of Seller
that may be protected by an attorney-client privilege or any attorney work
product doctrine; (j) all data of Seller that cannot be disclosed to Buyer as a
result of confidentiality arrangements under agreements with Third Parties; (k)
all audit rights of Seller arising under any of the Applicable Contracts or
otherwise with respect to any period prior to the Effective Time or to any of
the Excluded Assets, except for any Imbalances assumed by Buyer; (l) all
geophysical and other seismic and related technical data and information
relating to the Assets which Seller may not disclose, assign or transfer under
its existing agreements and licenses without making any additional payments or
incurring any liabilities or obligations; (m) documents prepared or received by
Seller or its Affiliates with respect to (i) lists of prospective purchasers for
such transactions compiled by Seller, (ii) bids submitted by other prospective
purchasers of the Assets, (iii) analyses by Seller or its Affiliates of any bids
submitted by any prospective purchaser, (iv) correspondence between or among
Seller, its respective representatives, and any prospective purchaser other than
Buyer and (v) correspondence between Seller or any of its representatives with
respect to any of the bids, the prospective purchasers or the transactions
contemplated by this Agreement; (n) any leases and other assets specifically
listed on Exhibit C; (o) any Hedge Contracts; (p) any debt instruments of
Seller; (q) the vehicles set forth on Exhibit C; (r) all of Seller’s personnel
files and records and (s) any assets described in Section 2.1(d) or Section
2.1(e) that are not assignable.
“Execution Date” shall have the meaning set forth in the introductory paragraph
herein.
“Final Price” shall have the meaning set forth in Section 3.6(a).

42

--------------------------------------------------------------------------------

EXHIBT 10.1

“Final Settlement Statement” shall have the meaning set forth in Section 3.6(a).
“GAAP” shall mean United States generally accepted accounting principles.
“Governmental Authority” shall mean any federal, state, local, municipal, tribal
or other government; any governmental, regulatory or administrative agency,
commission, body or other authority exercising or entitled to exercise any
administrative, executive, judicial, legislative, regulatory or Taxing Authority
or power, and any court or governmental tribunal, including any tribal authority
having or asserting jurisdiction.
“Guarantees” shall have the meaning set forth in Section 6.5.
“Hazardous Substances” shall mean any pollutants, contaminants, toxins or
hazardous or extremely hazardous substances, materials, wastes, constituents,
compounds or chemicals that are regulated by, or may form the basis of liability
under, any Environmental Laws, including NORM and other substances referenced in
Section 12.2.
“Hedge Contract” shall mean any Contract to which Seller or any of its
Affiliates is a party with respect to any swap, forward, future or derivative
transaction or option or similar agreement, whether exchange traded,
“over-the-counter” or otherwise, involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions.
“Hydrocarbons” shall mean oil and gas and other hydrocarbons produced or
processed in association therewith.
“Identified Employees” shall have the meaning set forth in Section 6.10(a).
“Imbalances” shall mean all Well Imbalances and Pipeline Imbalances.
“Indemnified Party” shall have the meaning set forth in Section 13.7(a).
“Indemnifying Party” shall have the meaning set forth in Section 13.7(a).
“Indemnity Deductible” shall mean an amount equal to one percent (1%) of the
Purchase Price.
“Individual Environmental Threshold” shall have the meaning set forth in
Section 12.1(d).
“Individual Title Defect Threshold” shall have the meaning set forth in
Section 11.2(i).
“Interim Period” shall mean that period of time commencing with the Effective
Time and ending at 7:00 a.m. (Central Time) on the Closing Date.
“Knowledge” shall mean with respect to Seller, the actual knowledge (without
investigation) of the following Persons: Jim Mueggenborg, field operations; Mike
Reitz, Operation Manager; Alice Ley, Vice President and Controller; Mike
Watanabe, Vice President, Land; Richard Gill, Manager, Title and Lease; Harriet
Connolly, landman; and Otto Svendsen, General Manager, Midcontinent Division.
“Law” shall mean any applicable statute, law, rule, regulation, ordinance,
order, code, ruling, writ, injunction, decree or other official act of or by any
Governmental Authority.
“Leases” shall have the meaning set forth in Section 2.1(a).

43

--------------------------------------------------------------------------------

EXHIBT 10.1

“Liabilities” shall mean any and all claims, obligations, causes of action,
payments, charges, judgments, assessments, liabilities, losses, damages,
penalties, fines and costs and expenses, including any attorneys’ fees, legal or
other expenses incurred in connection therewith and including liabilities,
costs, losses and damages for personal injury or death or property damage or
environmental damage or Remediation.
“Material Adverse Effect” shall mean an event or circumstance that, individually
or in the aggregate, results in a material adverse effect on the ownership,
operation or value of the Assets taken as a whole and as currently operated as
of the Execution Date or a material adverse effect on the ability of Seller to
consummate the transactions contemplated by this Agreement and perform its
obligations hereunder; provided, however, that a Material Adverse Effect shall
not include any material adverse effect resulting from: (a) entering into this
Agreement or the announcement of the transactions contemplated by this
Agreement; (b) any action or omission of Seller taken in accordance with the
terms of this Agreement without the violation thereof or with the prior written
consent of Buyer; (c) changes in general market, economic, financial or
political conditions (including changes in commodity prices, fuel supply or
transportation markets, interest or rates) in the area in which the Assets are
located, the United States or worldwide; (d) changes in conditions or
developments generally applicable to the oil and gas industry in the area where
the Assets are located; (e) acts of God, including hurricanes, tornados, storms
or other naturally occurring events; (f) acts or failures to act of Governmental
Authorities; (g) civil unrest, any outbreak of disease or hostilities, terrorist
activities or war or any similar disorder; (h) matters that are cured or no
longer exist by the earlier of Closing and the termination of this Agreement;
(i) a change in Laws and any interpretations thereof from and after the
Execution Date; (j) any reclassification or recalculation of reserves in the
ordinary course of business; (k) changes in the prices of Hydrocarbons; and
(l) natural declines in well performance.
“Material Contracts” shall have the meaning set forth in Section 4.8(a).
“Mineral Fee Interests” shall have the meaning set forth in Section 2.1(a).
“Net Acre” shall mean, as computed separately (a) with respect to each Lease or
each Mineral Fee Interest, as applicable, set forth on Exhibit A-2, in each case
subject to the depth restrictions set forth on Exhibit A-2 and with respect to
the applicable Target Formations set forth on Exhibit A-2 only, (i) the number
of gross acres in the lands covered by such Lease or such Mineral Fee Interest,
as applicable, multiplied by (ii) the undivided percentage interest in oil, gas
and other minerals covered by such Lease or such Mineral Fee Interest, as
applicable, in such lands, multiplied by (iii) Seller’s portion of such
undivided percentage interest that is burdened with the obligation to bear and
pay costs and expenses, and (b) with respect to each other property included in
the Assets, (i) the number of gross acres in the lands covered by such Asset,
multiplied by (ii) the undivided percentage interest in oil, gas and other
minerals covered by such Asset in such lands, multiplied by (iii) Seller’s
portion of such undivided percentage interest that is burdened with the
obligation to bear and pay costs and expenses.
“Net Revenue Interest” shall mean, with respect to any Well or Well Location set
forth on Exhibit A-1 (subject to the depth restrictions set forth on Exhibit A
and Exhibit A-1, and, for a Well, limited to any currently producing formations,
and, for a Well Location, limited to the applicable Target Formations set forth
on Exhibit A-1 for such Well Location), the interest in and to all Hydrocarbons
produced, saved and sold from or allocated to such Well or Well Location
(subject to the depth restrictions set forth on Exhibit A and Exhibit A-1, and,
for a Well, limited to any currently producing formations, and, for a Well
Location, limited to the applicable Target Formations set forth on Exhibit A-1
for such Well Location), after giving effect to all Burdens.
“NORM” shall mean naturally occurring radioactive material.

44

--------------------------------------------------------------------------------

EXHIBT 10.1

“Operating Expenses” shall have the meaning set forth in Section 2.3.
“Overhead Costs” shall mean with respect to those Assets that are operated by
Seller, the amount of $700,000 as an overhead charge attributable to such Assets
during the Interim Period.
“Party” and “Parties” shall have the meaning set forth in the introductory
paragraph herein.
“Permit” shall have the meaning set forth in Section 4.17.
“Permitted Encumbrances” shall mean:
(a)the terms and conditions of all Leases and all Burdens if the net cumulative
effect of such Leases and Burdens (i) does not operate to reduce the Net Revenue
Interest of Seller with respect to any Well or Well Location set forth on
Exhibit A-1 to an amount less than the Net Revenue Interest set forth on Exhibit
A-1 for such Well or Well Location, (ii) does not obligate Seller to bear a
Working Interest with respect to any Well or Well Location set forth on Exhibit
A-1 in any amount greater than the Working Interest set forth on Exhibit A-1 for
such Well or Well Location (unless the Net Revenue Interest for such Well or
Well Location is greater than the Net Revenue Interest set forth on Exhibit A-1
in the same or greater proportion as any increase in such Working Interest), and
(iii) does not operate to reduce the Net Acres of Seller with respect to any
Lease or any Mineral Fee Interest set forth on Exhibit A-2, as applicable, to an
amount less than the Net Acres set forth on Exhibit A-2 for such Lease or for
such Mineral Fee Interest, as applicable;

(b)preferential rights to purchase and required consents to assignment and
similar agreements, subject to compliance with the provisions of this Agreement;

(c)liens for Taxes or assessments not yet due or delinquent or, if delinquent,
that are being contested in good faith in the normal course of business;

(d)Customary Post-Closing Consents;

(e)conventional rights of reassignment;

(f)such Title Defects as Buyer may have waived or is deemed to have waived
pursuant to the terms of this Agreement;

(g)all applicable Laws and all rights reserved to or vested in any Governmental
Authority (i) to control or regulate any Asset in any manner; (ii) by the terms
of any right, power, franchise, grant, license or permit, or by any provision of
Law, to terminate such right, power, franchise, grant, license or permit or to
purchase, condemn, expropriate or recapture or to designate a purchaser of any
of the Assets; (iii) to use such property in a manner which does not materially
impair the use of such property for the purposes for which it is currently owned
and operated; or (iv) to enforce any obligations or duties affecting the Assets
to any Governmental Authority with respect to any franchise, grant, license or
permit;

(h)rights of a common owner of any interest in rights-of-way, permits or
easements held by Seller and such common owner as tenants in common or through
common ownership;

(i)easements, conditions, covenants, restrictions, servitudes, permits,
rights-of-way, surface leases and other rights in the Assets for the purpose of
operations, facilities, roads, alleys, highways, railways, pipelines,
transmission lines, transportation lines, distribution lines, power lines,
telephone lines,

45

--------------------------------------------------------------------------------

EXHIBT 10.1

removal of timber, grazing, logging operations, canals, ditches, reservoirs and
other like purposes, or for the joint or common use of real estate,
rights-of-way, facilities and equipment, which, in each case, do not materially
impair the operation or use of the Assets as currently operated and used;

(j)vendors, carriers, warehousemen’s, repairmen’s, mechanics’, workmen’s,
materialmen’s, construction or other like liens arising by operation of Law in
the ordinary course of business or incident to the construction or improvement
of any property in respect of obligations which are not yet due or which are
being contested in good faith by appropriate proceedings by or on behalf of
Seller;

(k)liens created under Leases and/or operating agreements or by operation of Law
in respect of obligations that are not yet due or that are being contested in
good faith by appropriate proceedings by or on behalf of Seller;

(l)with respect to any interest in the Assets acquired through compulsory
pooling, failure of the records of any Governmental Authority to reflect Seller
as the owner of an Asset;

(m)any Encumbrance affecting the Assets that is discharged by Seller at or prior
to Closing;
(n)any matters referenced and set forth on Exhibit A, Exhibit A-1, Exhibit A-2
or Exhibit A-3 and all litigation set forth in Schedule 4.7;

(o)mortgage liens burdening a lessor’s interest in the Assets;

(p)the terms and conditions of all Contracts (including the Applicable
Contracts) if the net cumulative effect of such Contracts (i) does not operate
to reduce the Net Revenue Interest of Seller with respect to any Well or Well
Location set forth on Exhibit A-1 to an amount less than the Net Revenue
Interest set forth on Exhibit A-1 for such Well or Well Location, (ii) does not
obligate Seller to bear a Working Interest with respect to any Well or Well
Location set forth on Exhibit A-1 in any amount greater than the Working
Interest set forth on Exhibit A-1 for such Well or Well Location (unless the Net
Revenue Interest for such Well or Well Location is greater than the Net Revenue
Interest set forth on Exhibit A-1 in the same or greater proportion as any
increase in such Working Interest), and (iii) does not operate to reduce the Net
Acres of Seller with respect to any Lease or any Mineral Fee Interest set forth
on Exhibit A-2, as applicable, to an amount less than the Net Acres set forth on
Exhibit A-2 for such Lease or for such Mineral Fee Interest, as applicable; and

(q)all other Encumbrances, instruments, obligations, defects and irregularities
affecting the Assets that, individually or in the aggregate, (i) are not such as
to materially interfere with the operation or use of any of the Assets (as
currently operated and used), (ii) do not reduce the Net Revenue Interest of
Seller with respect to any Well or Well Location set forth on Exhibit A-1 to an
amount less than the Net Revenue Interest set forth on Exhibit A-1 for such Well
or Well Location, (iii) do not obligate Seller to bear a Working Interest in any
amount greater than the Working Interest set forth on Exhibit A-1 for such Well
or Well Location (unless the Net Revenue Interest for such Well or Well Location
is greater than the Net Revenue Interest set forth on Exhibit A-1 in the same or
greater proportion as any increase in such Working Interest), and (iv) do not
reduce the Net Acres of Seller with respect to any Lease or any Mineral Fee
Interest set forth on Exhibit A-2, as applicable, to an amount less than the Net
Acres set forth on Exhibit A-2 for such Lease or for such Mineral Fee Interest,
as applicable.

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

46

--------------------------------------------------------------------------------

EXHIBT 10.1

“Personal Property” shall have the meaning set forth in Section 2.1(f).
“Pipeline Imbalance” shall mean any marketing imbalance between the quantity of
Hydrocarbons attributable to the Assets required to be delivered by Seller under
any Contract relating to the purchase and sale, gathering, transportation,
storage, processing (including any production handling and processing at a
separation facility) or marketing of Hydrocarbons and the quantity of
Hydrocarbons attributable to the Assets actually delivered by Seller pursuant to
the relevant Contract, together with any appurtenant rights and obligations
concerning production balancing at the delivery point into the relevant sale,
gathering, transportation, storage or processing facility.
“Preferential Purchase Right” shall have the meaning set forth in Section 4.10.
“Preliminary Settlement Statement” shall have the meaning set forth in
Section 3.5.
“Purchase Price” shall have the meaning set forth in Section 3.1.
“Records” shall have the meaning set forth in Section 2.1(h).
“Remediation” shall mean, with respect to an Environmental Condition, the
implementation and completion of any remedial, removal, response, construction,
closure, disposal or other corrective actions required under Environmental Laws
to correct or remove such Environmental Condition.
“Remediation Amount” shall mean, with respect to an Environmental Condition, the
present value as of the Closing Date (using an annual discount rate of ten
percent (10%)) of the cost (net to Seller’s interest prior to the consummation
of the transactions contemplated by this Agreement) of the most cost-effective
Remediation of such Environmental Condition.
“Retained Liabilities” shall have the meaning set forth in Section 13.2.
“Searle Litigation” shall mean that action which was pending in the District
Court, Caddo County, Oklahoma, set forth in Schedule 4.7(C) and styled and
numbered: Jack B. Searle, Tamara D. Searle, OGI, Inc., John A. Smallwood, Linsi
N. C. Smallwood, Marc O. Fox and Connie E. Fox v. QEP Energy Company (including
predecessors, successors and affiliates), Case No. CJ-2013-134.
“Seller” shall have the meaning set forth in the introductory paragraph of this
Agreement.
“Seller Indemnified Parties” shall have the meaning set forth in Section 13.3.
“Specified Representations” shall mean the representations and warranties in
Sections 4.1, 4.2, 4.15, 5.1, 5.2, 5.9, 5.10 and 5.11.
“Survival Period” shall have the meaning set forth in Section 11.1(c)(i).
“Target Formations” shall mean the geological formations set forth in Exhibit D.
“Taxes” shall mean any taxes, assessments and other governmental charges imposed
by any Governmental Authority, including net income, gross income, profits,
gross receipts, license, employment, stamp, occupation, premium, alternative or
add-on minimum, ad valorem, real property, personal property, transfer, real
property transfer, value added, sales, use, environmental (including taxes under
Code Section 59A), customs, duties, capital stock, franchise, excise,
withholding, social security (or similar), unemployment, disability, payroll,
fuel, excess profits, windfall profit, severance, estimated or other tax,

47

--------------------------------------------------------------------------------

EXHIBT 10.1

including any interest, penalty or addition thereto, whether disputed or not,
and any reasonable expenses incurred in connection with the determination,
settlement or litigation of the Tax liability.
“Taxing Authority” shall mean, with respect to any Tax, the governmental entity
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision,
including any governmental or quasi-governmental entity or agency that imposes,
or is charged with collecting, social security or similar charges or premiums.
“Third Party” shall mean any Person other than a Party to this Agreement or an
Affiliate of a Party to this Agreement.
“Third Party Claim” shall have the meaning set forth in Section 13.7(b).
“Title Arbitrator” shall have the meaning set forth in Section 11.2(j).
“Title Benefit” shall mean, (a) with respect to each Well and Well Location
shown on Exhibit A-1, any right, circumstance or condition that operates to (i)
increase the Net Revenue Interest of Seller above that shown for such Well or
Well Location on Exhibit A-1 to the extent the same does not cause a greater
than proportionate increase in Seller’s Working Interest therein above that
shown on Exhibit A-1, or (ii) to decrease the Working Interest of Seller in any
Well or Well Location below that shown for such Well or Well Location on Exhibit
A-1 to the extent the same causes a decrease in Seller’s Working Interest that
is proportionately greater than the decrease in Seller’s Net Revenue Interest
therein below that shown on Exhibit A-1, and (b) with respect to each Lease or
each Mineral Fee Interest shown on Exhibit A-2 or any other property included in
the Assets, as applicable, any right, circumstance or condition that operates to
increase the Net Acres of Seller above that shown for such Lease, Mineral Fee
Interest or other property shown on Exhibit A-2, if applicable.
“Title Benefit Amount” shall have the meaning set forth in Section 11.2(e).
“Title Benefit Notice” shall have the meaning set forth in Section 11.2(b).
“Title Benefit Property” shall have the meaning set forth in Section 11.2(b).
“Title Claim Date” shall have the meaning set forth in Section 11.2(a).
“Title Defect” shall mean any Encumbrance, defect or other matter that causes
Seller not to have Defensible Title in and to the Wells or the Well Locations
set forth on Exhibit A-1, the Leases or the Mineral Fee Interests set forth on
Exhibit A-2 as of the Effective Time, without duplication; provided that the
following shall not be considered Title Defects:
(a)    defects arising out of lack of corporate or other entity authorization
unless Buyer provides affirmative evidence that such corporate or other entity
action was not authorized and results in another Person’s superior claim of
title to the relevant Asset;
(b)    defects based on a gap in Seller’s chain of title in the applicable
federal, state or county records, unless such gap is affirmatively shown to
exist in such records by an abstract of title, title opinion or landman’s title
chain which documents shall be included in a Title Defect Notice;
(c)    defects based upon the failure to record any federal, state or Indian
Leases or any assignments of interests in such Leases in any applicable county
records;

48

--------------------------------------------------------------------------------

EXHIBT 10.1

(d)    defects based on the failure to recite marital status in a document or
omission of successors or heirship or estate proceedings;
(e)    any Encumbrance or loss of title resulting from Seller’s conduct of
business in compliance with this Agreement;
(f)    defects based upon the exercise of any Preferential Purchase Rights or
failure to obtain any Consents;
(g)    defects arising from any prior oil and gas lease relating to the lands
covered by a Lease not being surrendered of record, unless Buyer provides
affirmative evidence that such prior oil and gas lease is still in effect and
results in another Person’s actual and superior claim of title to the relevant
Lease or Well;
(h)    defects that affect only which Person has the right to receive royalty
payments (rather than the amount or the proper payment of such royalty payment);
(i)    defects based solely on: (i) lack of information in Seller’s files; (ii)
references to an unrecorded document(s) to which neither Seller nor any
Affiliate is a party, if such document is dated earlier than January 1, 1960 and
is not in Seller’s files; or (iii) Tax assessment, Tax payment or similar
records (or the absence of such activities or records);
(j)    defects or irregularities that would customarily be waived by a
reasonable owner or operator of oil and gas properties;
(k)    the expiration of a Lease by its terms after September 1, 2014;
(l)    defects arising out of lack of survey, unless a survey is expressly
required by applicable Laws;
(m)    defects that have been cured by applicable Laws of limitations or
presumptions;
(n)    defects arising from any change in applicable Law after the Execution
Date, including changes that would raise the minimum landowner royalty; and
(o)    defects or irregularities resulting from or related to probate
proceedings or the lack thereof, which defects or irregularities have been
outstanding for seven and a half (7.5) years or more.
“Title Defect Amount” shall have the meaning set forth in Section 11.2(g).
“Title Defect Notice” shall have the meaning set forth in Section 11.2(a).
“Title Defect Property” shall have the meaning set forth in Section 11.2(a).
“Title Indemnity Agreement” shall have the meaning set forth in
Section 11.2(d)(ii).
“Transaction Documents” shall mean those documents executed pursuant to or in
connection with this Agreement.
“Transition Services Agreement” shall mean the Transition Services Agreement
between Seller and Buyer, substantially in the form attached to this Agreement
as Exhibit B-4.

49

--------------------------------------------------------------------------------

EXHIBT 10.1

“Treasury Regulations” shall mean the regulations promulgated by the United
States Department of the Treasury pursuant to and in respect of provisions of
the Code. All references herein to sections of the Treasury Regulations shall
include any corresponding provision or provisions of succeeding, similar,
substitute, proposed or final Treasury Regulations.
“Units” shall have the meaning set forth in Section 2.1(c).
“URC Related Interests” shall mean the interests set forth on Exhibit E.
“Wells” shall have the meaning set forth in Section 2.1(b).
“Well Imbalance” shall mean any imbalance at the wellhead between the amount of
Hydrocarbons produced from a Well and allocable to the interests of Seller
therein and the shares of production from the relevant Well to which Seller is
entitled, together with any appurtenant rights and obligations concerning future
in kind and/or cash balancing at the wellhead.
“Well Location” shall mean each well location set forth on Exhibit A-1 and the
applicable spacing unit or governmental spacing unit, described in that certain
virtual data room maintained and updated from time to time by BMO Capital and
existing approved spacing, associated with such well location.
“Working Interest” shall mean, with respect to any Well or Well Location set
forth on Exhibit A-1 (subject to the depth restrictions set forth on Exhibit A
and Exhibit A-1, and, for a Well, limited to any currently producing formations,
and, for a Well Location, limited to the applicable Target Formations set forth
on Exhibit A-1 for such Well Location), the interest in and to such currently
producing formations (for such Well) or such applicable Target Formations (for
such Well Location) that is burdened with the obligation to bear and pay costs
and expenses of maintenance, development and operations on or in connection with
such currently producing formations (for such Well) or such applicable Target
Formations (for such Well Location), but without regard to the effect of any
Burdens.

ARTICLE XVI
MISCELLANEOUS

16.1Appendices, Exhibits and Schedules. All of the Appendices, Exhibits and
Schedules referred to in this Agreement are hereby incorporated into this
Agreement by reference and constitute a part of this Agreement. Each Party to
this Agreement and its counsel has received a complete set of Appendices,
Exhibits and Schedules prior to and as of the execution of this Agreement.

16.2Expenses and Taxes.

(a)Except as otherwise specifically provided herein, all fees, costs and
expenses incurred by Buyer or Seller in negotiating this Agreement or in
consummating the transactions contemplated by this Agreement shall be paid by
the Party incurring the same, including, legal and accounting fees, costs and
expenses.

(b)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 to Buyer shall be borne
by Buyer. Seller shall retain responsibility for, and shall bear and pay, all
federal income Taxes, state income Taxes, and other similar income Taxes
incurred or imposed with

50

--------------------------------------------------------------------------------

EXHIBT 10.1

respect to (i) the transactions described in this Agreement or (ii) the
ownership of the Assets, the production of Hydrocarbons, or the receipt of
proceeds therefrom for all periods prior to the Closing Date. Buyer shall assume
responsibility for, and shall bear and pay, all state sales and use Taxes and
real property transfer and documentary stamp Taxes incurred or imposed with
respect to the transactions described in this Agreement. Seller shall be
allocated and bear all Asset Taxes for any period or portion thereof ending
prior to the Effective Time (for purposes of this Section, the period for ad
valorem and property Taxes begins on January 1st and ends on December 31st of
the particular year), and Buyer shall be allocated and bear all Asset Taxes for
any period or portion thereof that begins on or after the Effective Time. For
purposes of determining the allocations described in the preceding sentence, (A)
Asset Taxes that are attributable to the severance or production of Hydrocarbons
shall be allocated to the period in which the severance or production giving
rise to such Asset Taxes occurred, (B) Asset Taxes that are based upon or
related to income or receipts or imposed on a transactional basis (other than
such Asset Taxes described in clause (A)), shall be allocated to the period in
which the transaction giving rise to such Asset Taxes occurred, and (C) Asset
Taxes that are ad valorem, property or other Asset Taxes imposed on a periodic
basis pertaining to a taxable period beginning before and ending after the
Effective Time shall be allocated between the portion of such period ending
immediately prior to the date on which the Effective Time occurs and the portion
of such period beginning on the date on which the Effective Time occurs by
prorating each such Asset Tax based on the number of days in the applicable
period that occur before the date on which the Effective Time occurs, on the one
hand, and the number of days in such period that occur on or after the date on
which the Effective Time occurs, on the other hand. Notwithstanding anything
herein to the contrary, subject to Buyer’s indemnification rights under Section
13.2, Buyer shall be responsible for filing all Tax returns, reports, statements
and other filings for Asset Taxes that are required to be filed after the
Closing Date and paying all Asset Taxes that become due and payable after the
Closing Date.

16.3Assignment. Subject to the provisions of Section 16.17, this Agreement may
not be assigned by Buyer without the prior written consent of Seller. In the
event Seller consents to any such assignment, such assignment shall not relieve
Buyer of any obligations and responsibilities hereunder, including obligations
and responsibilities arising following such assignment. Buyer shall be permitted
to assign to Devon prior to Closing Buyer’s right to be assigned fifty percent
(50%) of the Assets; in the event of such assignment, Buyer shall continue to be
solely entitled to all other rights and benefits under this Agreement with
respect to the fifty percent (50%) of the Assets so assigned, including rights
to assert claims of indemnity and breach of special warranty under this
Agreement with respect to the fifty percent (50%) of the Assets so assigned. Any
assignment or other transfer by Buyer or its successors and assigns of any of
the Assets (including the assignment to Devon described in the preceding
sentence) shall not relieve Buyer or its successors or assigns of any of their
obligations (including indemnity obligations) hereunder, as to the Assets so
assigned or transferred.

16.4Preparation of Agreement. Both Seller and Buyer and their respective counsel
participated in the preparation of this Agreement. In the event of any ambiguity
in this Agreement, no presumption shall arise based on the identity of the
draftsman of this Agreement.

16.5Publicity. Seller and Buyer shall promptly consult with each other with
regard to all press releases or other public or private announcements issued or
made at or prior to Closing concerning this Agreement or the transactions
contemplated herein, and, except as may be required by applicable Laws or the
applicable rules and regulations of any Governmental Authority or stock
exchange, neither Buyer nor Seller shall issue any such press release or other
public or private announcement without the prior written consent of the other
Party, which shall not be unreasonably withheld or delayed. The Parties shall be
obligated to hold all specific terms and provisions of this Agreement strictly
confidential until the expiration of the two (2)-year period after the Closing;
provided, however, that the foregoing shall not (a) restrict disclosures

51

--------------------------------------------------------------------------------

EXHIBT 10.1

by Buyer or Seller that are required by applicable securities or other Laws or
regulations or the applicable rules of any stock exchange having jurisdiction
over the disclosing Party or its Affiliates, provided that such disclosures
shall be made only to the extent required thereunder, (b) prevent Buyer or
Seller from recording the Assignment and any federal or state assignments
delivered at Closing or from complying with any disclosure requirements of
Governmental Authorities that are applicable to the transfer of the Assets from
Seller to Buyer, (c) prevent Buyer or Seller from making any disclosure of
information relating to this Agreement if made in a manner, under conditions and
to Persons that would be permitted under the Confidentiality Agreement so long
as such Person continues to hold such information confidential on the same terms
as set forth in this Section 16.5 and (d) prevent Seller from making disclosures
in connection with complying with Preferential Purchase Rights and other
transfer restrictions applicable to the transactions contemplated hereby.

16.6Notices. All notices and communications required or permitted to be given
hereunder shall be in writing and shall be delivered personally, or sent by
bonded overnight courier, or mailed by U.S. Express Mail or by certified or
registered United States Mail with all postage fully prepaid, or sent by
electronic mail (“email”) transmission (provided that a receipt of such email is
requested and received), addressed to the appropriate Party at the address for
such Party shown below or at such other address as such Party shall have
theretofore designated by written notice delivered to the Party giving such
notice:

If to Seller:
QEP Resources, Inc.
Independence Plaza
1050 17th Street, Suite 500
Denver, CO 80265
Attention: Austin S. Murr, Senior Vice President, Land and Business Development
Email: Austin.Murr@qepres.com

If to Buyer:
Cimarex Energy Co.
1700 Lincoln Street, Suite 1800
Denver, CO 80203
Attention: Stephen P. Bell, Executive Vice President, Business Development
Email: Sbell@cimarex.com

Any notice given in accordance herewith shall be deemed to have been given only
when delivered to the addressee in person, or by courier, or transmitted by
email transmission during normal business hours on a Business Day (or if
delivered or transmitted after normal business hours on a Business Day or on a
day other than a Business Day, then on the next Business Day), or upon actual
receipt by the addressee during normal business hours on a Business Day after
such notice has either been delivered to an overnight courier or deposited in
the United States Mail, as the case may be (or if delivered after normal
business hours on a Business Day or on a day other than a Business Day, then on
the next Business Day). The Parties may change the address and the email address
to which such communications are to be addressed by giving written notice to the
other Parties in the manner provided in this Section 16.6. 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 date of such period
during which notice is required to be given or action taken) shall be the next
day which is a Business Day.

52

--------------------------------------------------------------------------------

EXHIBT 10.1

16.7Further Cooperation. After Closing, Buyer and Seller shall execute and
deliver, or shall cause to be executed and delivered, from time to time such
further instruments of conveyance and transfer, and shall take such other
actions as any Party may reasonably request, to convey and deliver the Assets to
Buyer, to perfect Buyer’s title thereto, and to accomplish the orderly transfer
of the Assets to Buyer in the manner contemplated by this Agreement.

16.8Filings, Notices and Certain Governmental Approvals. Promptly after Closing,
Buyer shall (a) record all assignments executed at Closing in the records of the
applicable Governmental Authority (including any federal or state agencies, if
applicable), (b) if applicable, send notices to vendors supplying goods and
services for the Assets and to the operator of such Assets of the assignment of
such Assets to Buyer, (c) actively pursue the unconditional approval of all
applicable Governmental Authorities of the assignment of the Assets to Buyer and
(d) actively pursue all other consents and approvals that may be required in
connection with the assignment of the Assets to Buyer and the assumption of the
Liabilities assumed by Buyer hereunder, in each case, that shall not have been
obtained prior to Closing. Buyer obligates itself to take any and all action
required by any Governmental Authority in order to obtain such unconditional
approval, including the posting of any and all bonds or other security that may
be required in excess of its existing lease, pipeline or area-wide bond.

16.9Entire Agreement; Conflicts. THIS AGREEMENT, THE APPENDICES, EXHIBITS AND
SCHEDULES HERETO, THE TRANSACTION DOCUMENTS AND THE CONFIDENTIALITY AGREEMENT
COLLECTIVELY 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. THERE ARE NO WARRANTIES, REPRESENTATIONS OR OTHER
AGREEMENTS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF EXCEPT AS
SPECIFICALLY SET FORTH IN THIS AGREEMENT, AND NEITHER SELLER NOR BUYER SHALL BE
BOUND BY OR LIABLE FOR ANY ALLEGED REPRESENTATION, PROMISE, INDUCEMENT OR
STATEMENTS OF INTENTION NOT SO SET FORTH. IN THE EVENT OF A CONFLICT BETWEEN (A)
THE TERMS AND PROVISIONS OF THIS AGREEMENT AND THE TERMS AND PROVISIONS OF ANY
SCHEDULE OR EXHIBIT HERETO OR (B) THE TERMS AND PROVISIONS OF THIS AGREEMENT AND
THE TERMS AND PROVISIONS OF ANY TRANSACTION DOCUMENT, THE TERMS AND PROVISIONS
OF THIS AGREEMENT SHALL GOVERN AND CONTROL; PROVIDED, HOWEVER, THAT THE
INCLUSION IN ANY OF THE SCHEDULES AND EXHIBITS HERETO OR ANY TRANSACTION
DOCUMENT OF TERMS AND PROVISIONS NOT ADDRESSED IN THIS AGREEMENT SHALL NOT BE
DEEMED A CONFLICT, AND ALL SUCH ADDITIONAL PROVISIONS SHALL BE GIVEN FULL FORCE
AND EFFECT, SUBJECT TO THE PROVISIONS OF THIS SECTION 16.9.

16.10Parties in Interest. The terms and provisions of this Agreement shall be
binding upon and inure to the benefit of Seller and Buyer and their respective
successors and permitted assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the Parties or their successors and
permitted assigns, or the Parties’ respective related Indemnified Parties
hereunder any rights, remedies, obligations or Liabilities under or by reason of
this Agreement; provided that only a Party and its successors and assigns will
have the right to enforce the provisions of this Agreement on its own behalf or
on behalf of any of its related Indemnified Parties (but shall not be obligated
to do so).

53

--------------------------------------------------------------------------------

EXHIBT 10.1

16.11Amendment. This Agreement may be amended, restated, supplemented or
otherwise modified only by an instrument in writing executed by both Parties and
expressly identified as an amendment, restatement, supplement or modification.

16.12Waiver; Rights Cumulative. Any of the terms, covenants, representations,
warranties or conditions hereof may be waived only by a written instrument
executed by or on behalf of the Party waiving compliance. No course of dealing
on the part of Seller or Buyer or their respective officers, employees, agents,
or representatives, and no failure by Seller or Buyer to exercise any of its
rights under this Agreement, shall, in any such case, operate as a waiver
thereof or affect in any way the right of such Party at a later time to enforce
the performance of such provision. No waiver by any Party of any condition, or
any breach of any term, covenant, representation or warranty contained in this
Agreement, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of any breach of any other term, covenant, representation or
warranty. The rights of Seller and Buyer under this Agreement shall be
cumulative, and the exercise or partial exercise of any such right shall not
preclude the exercise of any other right.

16.13Governing Law; Jurisdiction.

(a)This Agreement and any claim, controversy or dispute arising under or related
to this Agreement or the transactions contemplated hereby or the rights, duties
and relationship of the parties hereto and thereto, shall be governed by and
construed and enforced in accordance with the laws of the State of Colorado,
excluding any conflicts of law, rule or principle that might refer construction
of provisions to the Laws of another jurisdiction.

(b)The Parties agree that the appropriate, exclusive and convenient forum for
any disputes between any of the Parties arising out of this Agreement, the
Transaction Documents or the transactions contemplated hereby shall be in any
state or federal court in Denver, Colorado and each of the Parties irrevocably
submits to the jurisdiction of such courts solely in respect of any proceeding
arising out of or related to this Agreement. The Parties further agree that the
Parties shall not bring suit with respect to any disputes arising out of this
Agreement, the Transaction Documents or the transactions contemplated hereby in
any court or jurisdiction other than the above specified courts. The Parties
further agree, to the extent permitted by Law, that a final and nonappealable
judgment against a Party in any action or proceeding contemplated above shall be
conclusive and may be enforced in any other jurisdiction within or outside the
United States by suit on the judgment, a certified or exemplified copy of which
shall be conclusive evidence of the fact and amount of such judgment.

(c)To the extent that any Party or any of its Affiliates has acquired, or
hereafter may acquire, any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) with respect to itself
or its property, such Party (on its own behalf and on behalf of its Affiliates)
hereby irrevocably (i) waives such immunity in respect of its obligations with
respect to this Agreement and (ii) submits to the personal jurisdiction of any
court described in Section 16.13(b).

(d)THE PARTIES HERETO AGREE THAT THEY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION BASED
HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE
TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

54

--------------------------------------------------------------------------------

EXHIBT 10.1

16.14Severability. If any term or other provision of this Agreement is 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 so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any adverse manner to any
Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.

16.15Removal of Name. As promptly as practicable, but in any case within thirty
(30) days after the Closing Date, Buyer shall eliminate the names “QEP Energy”,
“QEP” and any variants thereof from the Assets and, except with respect to such
grace period for eliminating existing usage, shall have no right to use any
logos, trademarks or trade names belonging to Seller or any of its Affiliates.

16.16Counterparts. This Agreement may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument,
but all of such counterparts shall constitute for all purposes one agreement.
Any signature hereto delivered by a Party by facsimile or other electronic
transmission shall be deemed an original signature hereto.

16.17Like-Kind Exchange. Buyer and Seller agree that either or both of Seller
and Buyer may elect to treat the acquisition or sale of the Assets as an
exchange of like-kind property under Section 1031 of the Code (an “Exchange”). 
Each Party agrees to use reasonable efforts to cooperate with the other Party in
the completion of such an Exchange including an Exchange subject to the
procedures outlined in Treasury Regulation Section 1.1031(k)-1 and/or Internal
Revenue Service Revenue Procedure 2000-37.  Each of Seller and Buyer shall have
the right at any time prior to Closing to assign all or a part of its rights
under this Agreement to a qualified intermediary (as that term is defined in
Treasury Regulation Section 1.1031(k)-1(g)(4)(iii)) or an exchange accommodation
titleholder (as that term is defined in Internal Revenue Service Revenue
Procedure 2000-37) to effect an Exchange.  In connection with any such Exchange,
any exchange accommodation titleholder shall have taken all steps necessary to
own the Assets under applicable Law.  Each Party acknowledges and agrees that
neither an assignment of a Party’s rights under this Agreement nor any other
actions taken by a Party or any other person in connection with the Exchange
shall release any Party from, or modify, any of its liabilities and obligations
(including indemnity obligations to each other) under this Agreement, and no
Party makes any representations as to any particular tax treatment that may be
afforded to any other Party by reason of such assignment or any other actions
taken in connection with the Exchange.  Any Party electing to treat the
acquisition or sale of the Assets as an Exchange shall be obligated to pay all
additional costs incurred hereunder as a result of the Exchange, and in
consideration for the cooperation of the other Party, the Party electing
Exchange treatment shall agree to pay all costs associated with the Exchange and
to indemnify and hold the other Party, its Affiliates, and their respective
former, current and future partners, members, shareholders, owners, officers,
directors, managers, employees, agents and representatives harmless from and
against any and all liabilities and taxes arising out of, based upon,
attributable to or resulting from the Exchange or transactions or actions taken
in connection with the Exchange that would not have been incurred by the other
Party but for the electing Party’s Exchange election.

[Remainder of page intentionally left blank. Signature page follows.]

55

--------------------------------------------------------------------------------

EXHIBT 10.1

IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the date
first written above.
SELLER:
    
QEP ENERGY COMPANY

By:    /s/ Austin Murr        
Name:    Austin Murr
Title:    Senior Vice President,
Business Development

BUYER:

CIMAREX ENERGY CO.

By:    /s/ Stephen P. Bell    
Name:    Stephen P. Bell
Title:    Executive Vice President,
Business Development

[SIGNATURE PAGE TO PRUCHASE AND SALE AGREEMENT}

56