ASSET
PURCHASE AND SALE AGREEMENT
by and between

CHAPARRAL ENERGY, L.L.C.
(Seller)

and

RAM ENERGY LLC
(Purchaser)

dated MAY 30, 2014

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

TABLE OF CONTENTS
1.
PURCHASE AND SALE    1

1.1
Agreement to Sell and Purchase    1

1.2
Assets    1

1.3
Effective Date    3

1.4
Gauging and Strapping    3

1.5
Records    3

1.6
Excluded Assets    4

2.
SALE AND PURCHASE    5

2.1
Purchase and Sale    5

2.2
Purchase Price    5

2.3
Performance Deposit    5

2.4
Determination of Adjusted Purchase Price    5

2.5
Payment of Adjusted Purchase Price    7

2.6
Tax Purchase Price Allocations    7

3.
TITLE MATTERS    7

3.1
Access to Records and Assets    7

3.2
Definitions    8

3.3
Notice of Title Defect    10

3.4
Remedies for Title Defects    11

3.5
Procedure for Resolving Title Defects    11

3.6
Value of Defects    11

3.7
Interest Additions    12

3.8
Right to Terminate Agreement    13

3.9
Expert Determination.    13

-i-

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

3.10
Preferential Purchase Rights and Consents to Assign.    15

4.
CASUALTY LOSS.    15

4.1
Casualty Loss    15

5.
ENVIRONMENTAL CONDITION    16

5.1
Physical Condition of the Assets    16

5.2
Environmental Assessment.    16

5.3
Environmental Defect Notice    17

5.4
Remedies for Environmental Defects    17

5.5
Procedure for Resolving Environmental Defects    17

5.6
Definitions    18

6.
REPRESENTATIONS OF SELLER    19

6.1
Disclaimers, Waivers and Agreements of the Parties.    19

6.2
Representations and Waivers    20

6.3
Knowledge    23

7.
REPRESENTATIONS OF PURCHASER    23

7.1
Representations and Waivers    23

7.2
Knowledge    24

8.
PRE-CLOSING OBLIGATIONS OF SELLER    25

8.1
Operations    25

8.2
Contracts    25

8.3
Compensation of Seller    25

8.4
Permissions    26

8.5
Defaults    26

8.6
Operatorship    26

8.7
Geological and Geophysical Information    27

9.
PRE-CLOSING OBLIGATIONS OF PURCHASER    27

-ii-

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

9.1
Return of Data    27

9.2
Efforts    27

10.
CONDITIONS OF SELLER TO CLOSING    27

10.1
Representations    27

10.2
Performance    27

10.3
Governmental Consents    27

10.4
Pending Matters    28

11.
CONDITIONS OF PURCHASER TO CLOSING    28

11.1
Representations    28

11.2
Performance    28

11.3
Governmental Consents    28

11.4
Pending Matters    28

12.
CLOSING    28

12.1
Time and Place of the Closing    28

12.2
Change of the Closing Date    28

12.3
Calculation of Adjusted Purchase Price    28

12.4
Failure to Close    29

12.5
Closing Obligations    29

12.6
Conveyance    30

13.
POST-CLOSING OBLIGATIONS    30

13.1
Post-Closing Adjustments.    30

13.2
Receipts and Credits    31

13.3
Assumption and Indemnification.    32

13.4
Disclaimers    33

13.5
Method of Asserting Claims    33

-iii-

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

13.6
Payment    34

13.7
Recording    35

13.8
Cooperation and Further Assurances    35

14.
TERMINATION    35

14.1
Right of Termination    35

14.2
Effect of Termination    35

15.
TAXES    36

15.1
Apportionment of Ad Valorem and Property Taxes    36

15.2
Taxes Paid for Others    36

15.3
Sales Taxes    37

15.4
Other Taxes    37

15.5
Cooperation    37

15.6
Tax Indemnity    37

16.
MISCELLANEOUS    37

16.1
Entire Agreement    37

16.2
Waiver    38

16.3
Headings    38

16.4
Assignment    38

16.5
No Third Party Beneficiaries    38

16.6
Governing Law    38

16.7
Notices    38

16.8
Execution in Counterparts    39

16.9
Expenses    39

16.10
Confidentiality.    39

16.11
Exhibits and Schedules    40

16.12
Publicity    40

16.13
Use of Seller’s Names    40

16.14
Severability    40

16.15
Affiliate    40

16.16
Certain Limitations, Survivability    40

16.17
Attorney’s Fees    41

16.18
Interest    41

16.19
Certain Limitations    421

16.19
Exchange    42

-iv-

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

Exhibits
Exhibit A    -    Leases

Exhibit B    -    Wells/WI/NRI/Allocated Values

Exhibit C    -    General Assignment

Schedules

Schedule 2.6    -    Tax Allocations

Schedule 3.10.1-
Preferential Purchase Rights; Required Consents to Assignment

Schedule 6.2.7
-    Violations of Law

Schedule 6.2.8    -    Gas Imbalances
Schedule 6.2.9    -    Material Contracts
Schedule 8.1    -    Outstanding AFE’s and Commitments

-v-

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

Glossary of Terms
“AAA” has the meaning given to it in Section 13.1.2 of the Agreement.
“Adjusted Purchase Price” has the meaning given to it in Section 2.4 of the
Agreement.
“Affiliate” has the meaning given to it in Section 16.16 of the Agreement.
“Aggregate Title Deductible” has the meaning given to it in Section 3.5.2 of the
Agreement.
“Aggregate Environmental Deductible” has the meaning given to it in Section
5.5.2 of the Agreement.
“Agreed Rate” has the meaning given to it in Section 13.6.2 of the Agreement.
“Agreement” has the meaning given to it in the introductory paragraph of this
Agreement.
“Allocated Value” has the meaning given to it in Section 3.2.4 of the Agreement.
“Applicable Laws” has the meaning given to it in Section 5.6.1 of the Agreement.
“Assets” has the meaning given to it in Section 1.2 of the Agreement.
“Assumed Obligations” has the meaning given to it in Section 13.3.1 of the
Agreement.
“Casualty Loss” has the meaning given to it in Section 4.1 of the Agreement.
“CERCLA” is defined in Section 5.6.3 of the Agreement.
“Claim Notice” has the meaning given to it in Section 13.5.1 of the Agreement.
“Closing” has the meaning given to it in Section 12.1 of the Agreement.
“Closing Adjustment Statement” has the meaning given to it in Section 12.3 of
the Agreement.
“Closing Date” has the meaning given to it in Section 12.1 of the Agreement.
“Confidentiality Agreement” has the meaning given to it in Section 16.1 of the
Agreement.
“Control,” “controlled by” and “under common control with” have the meanings
given to them in Section 16.15 of the Agreement.
“Costs” has the meaning given to it in Section 3.1 of the Agreement.
“Decision Notice” has the meaning given to it in Section 3.9.2 of the Agreement.
“Defect Expert” has the meaning given to it in Section 3.9.1 of the Agreement.
“Due Diligence Period” has the meaning given to it in Section 3.3 of the
Agreement.
“Effective Date” has the meaning given to it in Section 1.3 of the Agreement.

- 1 -

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

“Environmental Defect” has the meaning given to it in Section 5.6.2 of the
Agreement.
“Environmental Defect Adjustment” has the meaning given to it in Section 5.4 of
the Agreement.
“Environmental Defect Notice” has the meaning given to it in Section 5.3 of the
Agreement.
“Environmental Laws” has the meaning given to it in Section 5.6.3 of the
Agreement.
“Environmental Obligations” has the meaning given to it in Section 13.3.1 of the
Agreement.
“Existing Contracts” has the meaning given to it in Section 1.2.3 of the
Agreement.
“Final Settlement Date” has the meaning given to it in Section 13.1.2 of the
Agreement.
“Form 8594” has the meaning given to it in Section 2.7 of the Agreement.
“Gas Imbalance Adjustment” has the meaning given to it in Section 13.1.4 of the
Agreement.
“General Assignment” has the meaning given to it in Section 12.5.1 of the
Agreement.
“Good and Defensible Title” has the meaning given to it in Section 3.2.1 of the
Agreement.
“Governmental Body” has the meaning given to it in Section 5.6.4 of the
Agreement.
“Hydrocarbon Interests” has the meaning given to it in Section 1.2.1 of the
Agreement.
“Hydrocarbons” has the meaning given to it in Section 1.2.2 of the Agreement.
“Indemnified Party” and “Indemnifying Party” have the meanings given to them in
Section 13.5.1 of the Agreement.
“Individual Environmental Defect Threshold” has the meaning given to it in
Section 5.6.5 of the Agreement.
“Individual Title Defect Threshold” has the meaning given to it in Section 3.2.3
of the Agreement.
“Interest Addition,” “Interest Addition Notice,” “Interest Addition Payment,”
“Interest Addition Rejection Notice,” “Interest Addition Threshold,” and
“Interest Addition Value” have the meanings given to them in Section 3.7 of the
Agreement.
“Interim Period” has the meaning given to it in Section 8.1 of the Agreement.
“IRC” and “Code” have the meanings given to them in Section 2.6 of the
Agreement.
“Material Contracts” has the meaning given to it in Section 6.2.9 of the
Agreement.
“Net Revenue Interest” has the meaning given to it in Section 3.2.1 of the
Agreement.
“NORM” has the meaning given to it in Section 5.1 of the Agreement.
“Notice Period” has the meaning given to it in Section 13.5.1 of the Agreement.

- 2 -

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

“Operations Period” has the meaning given to it in Section 8.3 of the Agreement.
“OSHA” has the meaning given to it in Section 5.6.3 of the Agreement.
“Party” and “Parties” have the meanings given to them in the introductory
paragraph of the Agreement.
“Performance Deposit” has the meaning given to it in Section 2.3 of the
Agreement.
“Permitted Encumbrances” has the meaning given to it in Section 3.2.2 of the
Agreement.
“Personal Property” has the meaning given to it in Section 1.2.5 of the
Agreement.
“Plugging and Abandonment” has the meaning given to it in Section 13.3.1 of the
Agreement.
“Post-Closing Adjustment Statement” has the meaning given to it in Section
13.1.1 of the Agreement.
“Preliminary Amount” has the meaning given to it in Section 2.5 of the
Agreement.
“Properties” and “Property” have the meaning given to them in Section 1.2.1 of
the Agreement.
“Property Taxes” has the meaning given to it in Section 15.1 of the Agreement.
“Purchase Price” has the meaning given to it in Section 2.2 of the Agreement.
“Purchaser” has the meaning given to it in the introductory paragraph of this
Agreement.
“Purchaser Group” has the meaning given to it in Section 5.2.2 of the Agreement.
“Purchaser’s Environmental Assessment” and “Purchaser’s Environmental
Consultant” have the meanings given to them in Section 5.2.1 of the Agreement.
“RCRA” is defined in Section 5.6.3 of the Agreement.
“Records” has the meaning given to it in Section 1.2.7 of the Agreement.
“Rejection Notice” has the meaning given to it in Section 3.5.1 of the
Agreement.
“Remediation” has the meaning given to it in Section 5.6.5 of the Agreement.
“Remediation Amount” has the meaning given to it in Section 5.6.6 of the
Agreement.
“SARA” is defined in Section 5.6.3 of the Agreement.
“Seller” has the meanings given to them in the introductory paragraph of this
Agreement.
“Seller Group” has the meaning given to it in Section 3.1 of the Agreement.
“Title Defect” has the meaning given to it in Section 3.2.3 of the Agreement.
“Title Defect Adjustment” has the meaning given to it in Section 3.4 of the
Agreement.

- 3 -

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

“Title Defect Amount” has the meaning given to it in Section 3.2.6 of the
Agreement.
“Title Defect Notice” has the meaning given to it in Section 3.3 of the
Agreement.
“Title Defect Property” has the meaning given to it in Section 3.2.5 of the
Agreement.
”Wells” has the meaning given to it in Section 1.2.5 of the Agreement.
“Working Interest” has the meaning given to it in Section 3.2.1 of the
Agreement.

- 4 -

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

ASSET PURCHASE AND SALE AGREEMENT
This Asset Purchase and Sale Agreement (this “Agreement”) is made and entered
into this ___ day of May, 2014, by and between Chaparral Energy, L.L.C., an
Oklahoma limited liability company, (the “Seller”), having as its address 701
Cedar Lake Boulevard, Oklahoma City, Oklahoma 73114, and RAM Energy LLC, an
Oklahoma limited liability company, having as its address 2100 S. Utica Avenue,
Suite 165, Tulsa, Oklahoma 74114 (“Purchaser”). Seller and Purchaser are
sometimes collectively referred to in this Agreement as the “Parties” or
individually as a “Party”.
W I T N E S S E T H:
WHEREAS, Seller is the owner of the Assets (as defined below); and
WHEREAS, Seller is willing to sell and deliver to Purchaser, and Purchaser is
willing to purchase and receive from Seller, the Assets upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises of the Parties
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
1.PURCHASE AND SALE
1.1    Agreement to Sell and Purchase. Subject to the terms and conditions of
this Agreement, Purchaser agrees to purchase and receive, and Seller agrees to
sell, assign, transfer, convey, and deliver, the Assets, as of the Effective
Date (as defined below).
1.2    Assets. The term “Assets” as used herein shall mean, subject to the
provisions of Section 1.6, all of Seller’s right, title and interest in and to
the following:
1.2.1
All mineral interests, royalty interests, oil, gas and mineral leases, leasehold
interests, overriding royalty interests, net profits interests, production
payments, operating rights, carried interests, reversionary interests,
conversion rights and options, and other similar interests of whatever kind or
character, whether legal or equitable, vested or contingent (collectively,
“Hydrocarbon Interests”), which authorize or relate to the exploration for and
production of Hydrocarbons in and under, or the right to share in production or
the proceeds of production of Hydrocarbons produced from, the lands described in
Exhibit A attached hereto, including, without limitation, those Hydrocarbon
Interests described in Exhibit A and other Hydrocarbon Interests covering lands
pooled, unitized or communitized with the lands described in Exhibit A. All such
Hydrocarbon Interests described in this Section 1.2.1 are hereinafter
collectively called the “Properties” and singularly a “Property.”

1.2.2
All crude oil, natural gas, condensate, distillate, natural gasoline, natural
gas liquids, plant products, refined petroleum products, other liquid or gaseous
hydrocarbons (including, without limitation, coalbed methane), sulphur, other
gases (including, without limitation, hydrogen and carbon dioxide), and every
other mineral or substance, or any of them, the right to explore for which, or
an interest in which, is granted pursuant to the Properties (collectively
“Hydrocarbons”) (i) produced from or allocable to the interests of Seller in

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

the Properties and existing in pipelines, storage tanks, or other processing or
storage facilities upstream of the delivery points to the relevant purchasers on
the Effective Date, and (ii) produced from or allocable to such interests of
Seller on and after the Effective Date;
1.2.3
To the extent assignable, any and all surface leases; rights-of-way and
easements; operating agreements; consulting agreements; exploration agreements;
Hydrocarbon purchase, sales, exchange, processing, gathering, storage,
treatment, compression, transportation and balancing agreements; farmout and
farmin agreements; dry hole, bottom hole, acreage contribution, purchase and
acquisition agreements; area of mutual interest agreements; salt water injection
and disposal agreements; service contracts; unitization, communitization or
pooling agreements; permits; licenses; servitudes; and all other similar
contracts and agreements and any amendments thereto relating to the Properties
(collectively, the “Existing Contracts”); provided, however, that where an
Existing Contract covers and relates to the Properties and to other properties,
rights or interests owned by Seller, the term Existing Contract shall be limited
to such rights thereunder that relate exclusively to the Properties.

1.2.4
All valid unitization and pooling agreements and/or orders in effect with
respect to the Properties, including, without limitation, all units formed under
orders, rules, regulations, or other official acts of any Governmental Body
having jurisdiction, voluntary unitization agreements, designations and/or
declarations, and so-called “working interest units” created under operating
agreements or otherwise relating to the Properties.

1.2.5
All (i) surface and subsurface machinery, equipment, platforms, facilities,
supplies and other personal property and fixtures of whatsoever kind or nature
now or hereafter located on or under any of the Properties and which relate to
or are useful for the production, treatment, storage, disposal or transportation
of Hydrocarbons or water produced from the Properties, (ii) all oil wells, gas
wells, water wells, salt water disposal wells, injection wells, plugged and
abandoned or temporarily abandoned wells located on the Properties or used or
operated exclusively in connection with the operation of the Properties
(collectively, the “Wells”), including, without limitation, the Wells listed on
Exhibit B attached hereto (where the context reasonably requires, for example,
in the definition of the term “Good and Defensible Title” in Section 3.2.1, the
term “Wells” shall also be deemed to include wells to be drilled at the proved
undeveloped, probable and possible locations specified in Exhibit “B”), and
(iii) all wellhead equipment, casing, tubing, rods, pumping units and engines,
christmas trees, derricks, separators, compressors, dehydration units,
heater-treaters, boilers, valves, gauges, meters, pumps, generators, motors, gun
barrels, flow lines, tanks and tank batteries, water lines, gas lines, gas
processing plants and other plants, gathering lines, laterals and trunklines,
gas systems (for gathering, treating and compression), chemicals, solutions,
water systems (for treating, disposal and/or injection), power plants, poles,
lines, transformers, starters, controllers, machine shops, tools, storage yards
and equipment stored therein, buildings and camps, telegraph, telephone and
other communication systems, loading docks, loading racks and shipping
facilities, equipment and facilities, and any and all additions, accessions to,
substitutions and replacements of any of the foregoing, together with all
attachments, components, parts, equipment and accessories installed thereon or
affixed thereto, located on or used exclusively in connection with the operation
of the Properties (all such

- 2 -

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

machinery, equipment, platforms, facilities, supplies and other property,
excluding, however, the Wells, being collectively called the “Personal
Property”).
1.2.6
All rights and obligations with respect to Hydrocarbon overproduction and
underproduction from the Properties, including, without limitation, the right
and obligation to balance in kind or by cash payment.

1.2.7
All of the applicable files, records and data directly relating to the items
described in subsections 1.2.1 through 1.2.6 (but including only copies of the
hereinafter described tax and accounting records), including, without
limitation, joint interest billings, check receipts and third party disbursement
records, copies of records relating to Property Taxes and severance, sales,
excise, and other production-related taxes, legal files, land and lease files,
title records, division order records, contracts, geological, geophysical and
seismic data, and except where the transfer or disclosure of such data and
records is restricted by agreement with third parties or excluded by the terms
of this Agreement (as more fully set forth in Sections 1.6 and 8.8), production
records, electric logs, core data, pressure data and decline curves and
graphical production curves, and all related matters in the possession of Seller
(collectively the “Records”); provided, however, that Seller has the rights with
respect to such Records as provided in Section 1.5 below.

1.3    Effective Date. Ownership of the Assets shall be transferred from Seller
to Purchaser at the Closing (as defined below), but shall be effective as
provided in Section 2.4 below as of 7:00 a.m. (local time where the Assets are
located) on March 1, 2014 (the “Effective Date”). Except as may be otherwise
specifically provided herein, Seller shall be entitled to any amounts realized
from and accruing to the Assets (including contract rights, gas contract
settlements, take-or-pay claims, and other claims and causes of action) for all
periods prior to the Effective Date and, except as expressly assumed by
Purchaser hereunder, shall be liable for the payment of all expenditures
relating to the Assets and attributable to all periods prior to the Effective
Date. Except as may be otherwise specifically provided herein, Purchaser shall
be entitled to any amounts realized from and accruing to the Assets for all
periods on and after the Effective Date, and shall be liable for the payment of
all expenses relating to the Assets and attributable to all periods on and after
the Effective Date.
1.4    Gauging and Strapping. Seller has caused the oil storage facilities on or
utilized in connection with the Properties to be gauged or strapped as of the
Effective Date for those Properties for which a Seller serves as operator.
Seller also has caused the gas production meter charts (or if such do not exist,
the sales meter charts) on the pipelines transporting gas production from the
Assets to be read as of the Effective Date for those Properties for which a
Seller serves as operator. Prior to the Closing, Purchaser, upon request, shall
be provided with access to the records of the gauging, strapping or chart
reading for the purpose of verifying such records. For those Properties not
operated by a Seller, applicable state regulatory agency production reports or
records shall be used to determine the amount of oil in storage or gas existing
in the pipeline as of the Effective Date. If such state records or reports are
not available or sufficient, Seller’s reasonable estimate based on historical
data shall be used.
1.5    Records. Seller shall deliver to Purchaser, within thirty (30) days after
the Closing or such later time as Purchaser may request, but in no event later
than three (3) months after the Closing, all Records. Seller shall have the
right to make and retain such copies of the Records as Seller may

- 3 -

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

desire prior to the delivery of the Records to Purchaser. Purchaser shall have
no recourse or claim against Seller and shall hold Seller harmless from and
against any claim of whatsoever nature as the result of the Records furnished to
Purchaser by Seller.
1.6    Excluded Assets. Seller excepts, reserves, and retains to itself the
following rights, properties and assets: (i) all corporate, financial, legal,
and tax records of Seller, including, without limitation, all documents
protected by the attorney-client privilege (other than title opinions); (ii) all
deposits, cash, checks, cash equivalents and funds attributable to the Assets
for the period prior to the Effective Date; (iii) all rights, interests, and
claims that any Seller may have under any policy of insurance or indemnity,
surety bond, or any insurance or condemnation proceeds or recoveries from third
persons relating to property damage or Casualty Loss affecting the Assets
occurring prior to the Effective Date; (iv) all claims, whether in contract, in
tort, or arising by operation of law, and whether asserted or unasserted as of
the Closing Date, that any Seller may have against any person arising out of
acts, omissions, or events, or injury to or death of persons or loss or
destruction of or damage to property, relating in any way to, the Assets that
occurred prior to the Effective Date; provided, however, that no such claim may
be settled, compromised, or otherwise resolved in a manner that results in an
obligation borne by Purchaser or the Assets on and after the Effective Date
without the prior written consent of Purchaser, which shall not to be
unreasonably withheld or delayed; (v) all exchange traded futures contracts and
over-the-counter derivative contracts of Seller as to which Seller has an open
position as of the Effective Date; (vi) any and all rights to use Seller’s
names, marks, trade dress or insignia, or to use the name of Seller, and all of
Seller’s intellectual property, including, without limitation, proprietary or
licensed computer software; patents; trade secrets; copyrights; geological and
geophysical information and data (including, without limitation, conventional
2-D and 3-D seismic data) licensed from third persons, and Seller’s proprietary
interpretations thereof; economic analyses; and pricing forecasts; (vii) all
amounts due or payable to Seller as adjustments to insurance premiums related to
the Assets for periods prior to the Effective Date; (viii) all claims of Seller
for any tax refunds and loss carry-forwards and carry-backs with respect to any
taxes relating to the Assets for periods prior to the Effective Date; (iv) all
audit rights and all amounts due or payable to Seller as refunds, adjustments,
or settlements of disputes arising under the Properties or the Existing
Contracts for periods prior to the Effective Date; (x) all inventories of pipe,
equipment and other Personal Property; (xi) all rights, titles, and interests of
Seller in and to all tools, equipment and similar personal property temporarily
located on the Leases or the Land; (xii) all cars, trucks, trailers, backhoes,
graders and other similar rolling stock and equipment; and (xiii) all other
interests, rights, property, and assets of Seller not located on or used in
connection with the Assets or otherwise specifically included in the definition
of the Assets.

2.    SALE AND PURCHASE
2.1    Purchase and Sale. At the Closing, Seller shall sell, assign, transfer,
and convey to Purchaser, and Purchaser shall purchase and pay for, the Assets,
and Purchaser shall also assume the Assumed Obligations as set forth in Section
13.3.1.
2.2    Purchase Price. The purchase price to be paid by Purchaser to Seller with
respect to the Assets shall be Fifty One Million Dollars U.S. ($48,100,000.00)
(the “Purchase Price”), subject to the adjustments provided in Section 2.4. The
amount of the Purchase Price has been agreed to

- 4 -

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

taking into account, among other factors, the perceived value of the Assets and
Purchaser’s assumption of the Assumed Obligations as set forth in Section
13.3.1.
2.3    Performance Deposit. As evidence of good faith intentions to consummate
the transactions contemplated hereby, with the execution of this Agreement,
Purchaser has previously tendered to Seller a cash performance deposit in the
amount of Two Million Dollars U.S. ($2,000,000) on April 25, 2014 (the
“Performance Deposit”). If this Agreement is terminated by Seller pursuant to
Section 14.1.2, Seller may elect to retain the Performance Deposit as liquidated
damages representing Seller’s sole remedy for Purchaser’s failure to consummate
the transaction contemplated herein (without waiving any indemnification
obligation of Purchaser). The Parties agree that the Performance Deposit is a
reasonable sum considering all the circumstances existing on the date of this
Agreement, including the relationship of the sum to the range of harm to Seller
that reasonably could be anticipated and the anticipation that proof of actual
damages would be costly or inconvenient. If this Agreement is terminated for any
reason other than Section 14.1.2, the Performance Deposit shall be returned to
Purchaser as Purchaser’s sole remedy. In the event the transactions contemplated
herein close, the Performance Deposit shall be retained by Seller and credited
against the Purchase Price payable by Purchaser hereunder.
2.4    Determination of Adjusted Purchase Price. The net purchase price for the
Assets (the “Adjusted Purchase Price”) shall be determined as follows:
2.4.1
The Purchase Price;

2.4.2
Plus the amount of the value of all merchantable Hydrocarbons produced from or
allocable to the Properties existing in pipelines, storage tanks, or other
processing or storage facilities (including, without limitation, unsold
inventories of plant products owned by Seller, if any) upstream of the delivery
points to the relevant purchasers as of the Effective Date, the value to be
based on the contract price applicable to such Hydrocarbons in effect as of the
Effective Date (or the market value, if there is no contract price, in effect as
of the Effective Date), less amounts payable as severance taxes, royalties,
overriding royalties, and other similar burdens upon such Hydrocarbons;

2.4.3
Plus the amount of all costs and expenses incurred by Seller on or in connection
with the ownership or operation of the Assets which are attributable to periods
on and after the Effective Date, including, without limitation: rentals, shut-in
well payments, and other lease maintenance payments; capital costs not otherwise
prohibited by the terms of this Agreement (including, without limitation,
drilling costs, completion costs, acreage expenditures, acquisition
expenditures, seismic expenditures, and waterflood expenditures); operating
costs (including direct costs chargeable under applicable operating agreements
or otherwise and consistent with the standards established by COPAS and Seller
charges and overhead reimbursements authorized pursuant to Section 8.3;

2.4.4
Plus the amount of all accounts receivable accruing on or after the Effective
Date which, as of the Closing Date, have been perfected by an operator’s lien
relating to the Properties but which remain uncollected as of the Closing Date;

- 5 -

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

2.4.5
Plus an amount equal to upward adjustments for Interest Additions determined in
accordance with Section 3.7;

2.4.6
Plus the total amount of any Property Taxes (as defined below) paid by Seller,
for its or other’s account, relating to the Assets and attributable to any
period of time on and after the Effective Date, as further provided for in
Sections 15.1 and 15.2 and to the extent same are not included under Section
2.4.3. above;

2.4.7
Less the amount of the actual proceeds received by Seller in the ordinary course
of business that are attributable to Hydrocarbon production from the Properties
on and after the Effective Date (net of any royalties and of any production,
severance, sales, or other taxes actually paid by or on behalf of Seller),
together with any other monies or credits attributable to the ownership or
operation of the Assets on and after the Effective Date;

2.4.8
Less the amount of the Performance Deposit and all other advances and deposits
relating to the Assets that are received by Seller prior to the Closing Date and
attributable to periods of time on or after the Effective Date;

2.4.9
Less an amount equal to the aggregate of all Title Defect Adjustments made in
accordance with Article 3;

2.4.10
Less an amount equal to the aggregate of all Environmental Defect Adjustments
made in accordance with Article 5;

2.4.11
Less an amount equal to the Allocated Value of (i) the Assets with respect to
which preferential purchase rights have been exercised prior to the Closing
Date, or (ii) Assets excluded for failure to obtain a required consent prior to
the Closing Date, each in accordance with Section 3.10;

2.4.12
Less the value of Seller’s prorated shares of all accrued but unpaid Property
Taxes relating to the Assets for the period prior to the Effective Date in
accordance with Sections 15.1 and 15.2;

2.4.13
Less an amount equal to the reduction in value of the Assets as the result of
Casualty Losses in accordance with Article 4;

2.4.14
Less or plus, as the case may be, an amount equal to the Gas Imbalance
Adjustment determined pursuant to Section 13.1.4; and

2.4.15
Less an amount equal to the net proceeds related to the Assets which are payable
to third parties and are held in suspense by Seller on the Closing Date.

2.5    Payment of Adjusted Purchase Price. At the Closing, Purchaser shall cause
to be delivered by wire transfer to Seller in accordance with wire transfer
instructions provided by Seller an amount in immediately available U.S. funds
equal to the Purchase Price, plus or minus the adjustments provided for in
Section 2.4 (to the extent then known) calculated as provided in Section 12.3
(the “Preliminary Amount”). The Preliminary Amount paid at the Closing shall be
subject to later adjustment pursuant to Section 13.1.

- 6 -

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

2.6    Tax Purchase Price Allocations. Seller and Purchaser recognize that
reporting requirements, as imposed by Section 1060 of the Internal Revenue Code
of 1986, as amended (the “IRC” or “Code”), and the regulations thereunder, may
apply to the transaction contemplated by this Agreement. Except as may otherwise
be required by the IRC and regulations thereunder or other Applicable Laws,
Seller and Purchaser agree (i) that for tax reporting purposes, the Purchase
Price shall be allocated among the Assets as set forth in Schedule 2.6, and such
allocation shall be used in preparing Internal Revenue Service Form 8594 (“Form
8594”) pursuant to the regulations under Section 1060, and (ii) not to assert,
in connection with any tax return, tax audit, or similar proceeding, any
allocation of the Purchase Price that differs from that set forth in Schedule
2.6 to this Agreement. Upon any adjustment of the Purchase Price following the
execution of this Agreement, Seller and Purchaser shall adjust the allocations
reflected in Schedule 2.6 accordingly and report such adjustments in conformity
with Section 1060 and the regulations thereunder.
3.    TITLE MATTERS
3.1    Access to Records and Assets. Upon execution of this Agreement and until
the Closing, and thereafter to the extent Seller retains physical possession of
any of the Assets and/or Records, Seller shall make the Records available to
Purchaser at its offices located at the address set forth in the introductory
paragraph of this Agreement, during normal business hours, for examination and
copying by Purchaser and, with respect to the Properties operated by Seller,
shall grant Purchaser access to such Properties for inspection. Seller shall not
be obligated to perform any title work or provide abstracts other than those
presently in Seller’s possession, nor will any existing title opinions be
brought current by Seller. Seller will use reasonable commercial efforts to
furnish to Purchaser all other information with respect to the Assets that
Purchaser may from time to time reasonably request, except to the extent that
Seller determines in good faith that it is prohibited by agreement with a third
party from disclosing the information covered thereby. Purchaser agrees to
conduct its due diligence in a professional and orderly manner and at its own
cost and expense without disruption of Seller’s normal and usual operations.
Purchaser shall indemnify and hold harmless Seller and its partners,
shareholders, members, officers, directors, trustees, employees, agents
(including, without limitation, Richardson Barr Securities, Inc.) and
representatives (collectively the “Seller Group”) from any and all claims,
demands, damages, losses, liabilities, costs and expenses, including court costs
and reasonable attorney’s fees (collectively “Costs”), resulting from
Purchaser’s acts or omissions in connection with its access to the Assets,
regardless of whether such Costs are attributable, in whole or in part, to the
negligence, sole or concurrent, of the Seller Group.
3.2    Definitions. For purposes of this Agreement, the following expressions
and terms will have the meanings set forth hereinafter:
3.2.1
“Good and Defensible Title” shall mean, as to each of the Wells, that (i) Seller
(and upon Closing, Purchaser), by virtue of its ownership interests therein, are
entitled to receive a fractional decimal interest in Hydrocarbons produced from
the Properties (or in the proceeds from the sale of such production) of not less
than the interest identified in Exhibit B as the “Net Revenue Interest” for each
of the Wells, without reduction, suspension, or termination throughout the
productive life of each such Wells (the “Net Revenue Interest”); (ii) Seller is
obligated to bear (and after the Closing shall obligate Purchaser to bear) a
fractional decimal interest of not more than the “Working Interest” set forth
for each Well on Exhibit B of the costs and expenses related to the maintenance,
development, drilling,

- 7 -

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

equipping, testing, completing, sidetracking, reworking and operation of each
such Well, without increase throughout the productive life thereof (unless
otherwise shown on Exhibit B); and (iii) the Wells are subject to no liens,
encumbrances, obligations or defects except those that are Permitted
Encumbrances (as defined below).
3.2.2
“Permitted Encumbrances” shall mean:

(i)
lessors’ royalties, overriding royalties, payments out of production,
reversionary interests and other similar payments out of production affecting
Seller’s Net Revenue Interest if the net cumulative effect of such burdens does
not operate to (a) reduce the Net Revenue Interest of Seller in any of the Wells
to less than the Net Revenue Interest set forth for such Well in Exhibit B; or
(b) increase the Working Interest of Seller in any such Well to greater than the
Working Interest therefor set forth in Exhibit B (unless Seller’s Net Revenue
Interest therein is increased in the same proportion);

(ii)
preferential rights to purchase, required third party consents to assignment,
and similar agreements with respect to which, prior to the Closing, (a) waivers
or consents are obtained from the appropriate parties; (b) the appropriate time
for asserting such rights has expired without an exercise of such rights; (c)
with respect to consents, such consents need not be obtained prior to
assignment; or (d) with respect to consents, the failure to obtain such consents
will not have a material adverse effect on the value of the Well;

(iii)
all rights to consent by, required notices to, filings with, or other actions by
Governmental Bodies in connection with the sale or conveyance of the Assets if
the same are customarily obtained subsequent to such sale or conveyance;

(iv)
non-consent penalties applied against the interest of Seller arising under
applicable operating agreements which are taken into account in the calculation
of the interests shown on Exhibit B;

(v)
easements, rights-of-way, servitudes, permits, surface leases, and other rights
in respect of surface operations which do not and will not materially interfere
with or detract from the operation, value, or use of the Assets by Purchaser;

(vi)
such Title Defects as Purchaser has waived or released or is deemed to have
waived pursuant to the terms of this Agreement, excluding, however, any Title
Defects that would constitute a breach of the special warranty of title
contained in the General Assignment (as hereinafter defined);

(vii)
the terms and conditions of all Existing Contracts, provided the effect of same
is taken into account in the calculation of the Net Revenue Interests and the
Working Interests set forth for the Wells in Exhibit B;

(viii)
rights of reassignment, to the extent any exist as of the date of this
Agreement, upon the surrender or expiration of any lease attributable to a Well;

- 8 -

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

(ix)
liens for taxes not yet due or not yet delinquent or, if due or delinquent, that
are being contested in good faith;

(x)
materialman’s, mechanic’s, repairman’s, employee’s, contractor’s, operator’s,
and other similar liens or charges arising in the ordinary course of business
(a) if they have not been filed pursuant to Applicable Law, (b) if filed, they
have not yet become due and payable or payment is being withheld as provided by
Applicable Law, or (c) if their validity is being contested in good faith by
appropriate action;

(xi)
all rights reserved to or vested in any Governmental Body to control or regulate
any of the Wells in any manner, and all Applicable Laws;

(xii)
defects or irregularities resulting from or related to heirship, administration
or probate proceedings or the lack thereof, which defects or irregularities have
been outstanding for ten (10) years or more;

(xiii)
defects based solely on the existence of prior oil and gas leases relating to
the interests covered by any lease that are expired and no longer in force and
legal effect but not surrendered of record;

(xiv)
defects arising from a mortgage encumbering the oil, gas or mineral estate of
any lessor (unless a complaint of foreclosure has been filed or any similar
action taken by the mortgagee thereunder and in such case such mortgage has not
been subordinated to the interests affected thereby);

(xv)
defects based solely on lack of information in Seller’s files or references to
documents if such documents are not in Seller’s files;

(xvi)
all defects and irregularities of title that would not reasonably be expected to
result in claims that would materially and adversely affect Seller’s title to,
or ownership, operations, or value of, the Assets, including, without limitation
(a) defects in the early chain of title consisting of the failure to recite
marital status; (b) defects or irregularities arising out of the lack of a
survey; (c) defects or irregularities arising out of or relating to the lack of
powers of attorney from corporations to execute and deliver documents on their
behalf or lack of spousal joinder; (d) defects of title which result from the
failure to file assignments or other documents in the state or federal records
so long as such assignments or other documents are properly recorded in the
county records; and (e) irregularities cured by possession under applicable
statutes of limitation and statutes relating to acquisitive (or liberative)
prescription; and

(xvii)
all other liens, charges, encumbrances, instruments, obligations, defects and
irregularities affecting the Assets which, individually or in the aggregate, do
not: (a) interfere materially with the operation, value, or use of any of the
Wells; (b) do not prevent Purchaser from receiving the proceeds of production
from any of the Wells; (c) do not reduce the interests of Seller with respect to
Hydrocarbons produced from any Well below the Net Revenue Interest set forth for
such Well on Exhibit B; or (d) do not increase the share of the costs and
expenses that Seller are obligated to pay above the Working Interest set forth
for such Well in Exhibit B without a proportionate increase in the Net Revenue
Interest for such Well.

- 9 -

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

3.2.3
“Title Defect” shall mean any matter (i) that would cause the title to any Well
or Property to fail to qualify as Good and Defensible Title and (ii) for which
the Title Defect Amount (as hereinafter defined) is greater than the Individual
Title Defect Threshold.

3.2.4
“Individual Title Defect Threshold” shall mean the sum of $50,000.

3.2.5
“Title Defect Property” shall mean a Property affected by a Title Defect timely
and properly asserted by Purchaser.

3.2.6
“Title Defect Amount” shall mean, with respect to a Title Defect Property, the
amount by which the value of such Title Defect Property is impaired by reason of
the existence of one or more Title Defects.

3.2.7
“Allocated Value” means, with respect to each Well or Property, the amount set
forth on Exhibit B under the column styled “Allocated Value” for such Well or
Property. Seller and Purchaser agree that the Allocated Values set forth in
Exhibit B represent a fair and reasonable allocation of the Purchase Price among
the Properties and have been established solely for use in connection with the
administrative provisions of this Agreement, including the calculation of
adjustments to the Purchase Price as provided herein, and not for purposes of
federal, state, local, or foreign income taxation.

3.3    Notice of Title Defect. During the period of time between the execution
of this Agreement and July 11, 2014 (the “Due Diligence Period”), Purchaser may
review title to the Properties and may notify Seller in writing (the “Title
Defect Notice”) of any Title Defect; provided, however, Purchaser shall notify
Seller of any Title Defect it discovers as soon as reasonably practicable after
its discovery. Any notice provided hereunder shall include appropriate evidence
to substantiate the Purchaser’s position, including identification of the Title
Defect Property, a description of the Title Defect(s) asserted by Purchaser with
respect to such Title Defect Property, the basis for the Title Defect(s), the
Allocated Value of the Title Defect Property, the portion of the Title Defect
Property affected by the Title Defect, the Title Defect Amount asserted by
Purchaser with respect to such Title Defect, and the computations and
information upon which Purchaser’s assertion is based. Purchaser will be deemed
to have conclusively waived any Title Defect discovered by Purchaser during the
Due Diligence Period about which it fails to notify Seller in writing in the
manner described above prior to the expiration thereof; provided, however, that
Purchaser shall not be deemed to have waived any such Title Defect for purposes
of the special warranty of title set out in the General Assignment.
3.4    Remedies for Title Defects. For any Title Defect properly asserted by
Purchaser during the Due Diligence Period, subject to the termination rights of
Seller pursuant to Section 3.8 hereof, Seller shall have the option, in its sole
discretion, of (i) curing the Title Defect, (ii) contesting the Title Defect or
the proposed Title Defect Amount, or (iii) reducing the Purchase Price by the
proposed Title Defect Amount (a “Title Defect Adjustment”); provided that if the
Title Defect Adjustment for any Title Defect Property exceeds 50% of the
Allocated Value for such Property, Seller shall have the option of removing the
affected Property from the transaction contemplated herein and reducing the
Purchase Price by the Allocated Value thereof.

- 10 -

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

3.5    Procedure for Resolving Title Defects. With respect to Title Defects
properly and timely asserted by Purchaser and contested by Seller as to
existence or the Title Defect Amount attributable thereto, the following
procedures shall apply.
3.5.1
Seller shall furnish to Purchaser a notice (a “Rejection Notice”) in writing on
or before July 23, 2014. The Rejection Notice shall state with reasonable
specificity the basis of Seller’s rejection of the Title Defect or the proposed
Title Defect Amount. No later than five (5) days following Purchaser’s receipt
of the Rejection Notice, representatives of Purchaser and Seller, knowledgeable
in title matters, shall meet and either: (i) agree to mutually reject the
particular Title Defect, or (ii) agree on the validity of such Title Defect and
the Title Defect Amount attributable thereto, in which case Seller shall cure
such Title Defect at its own expense or, failing such cure, agree to reduce the
Purchaser Price by the Title Defect Adjustment attributable thereto, subject to
the limitations set forth in Section 3.5.2; provided, however, that if the
Parties cannot agree on either option (i) or (ii), then the Closing shall
proceed as scheduled, the Property affected by the asserted Title Defect shall
be conveyed to Purchaser at Closing without adjustment to the Purchase Price
(except to the extent agreed to by the Parties), and the existence of the Title
Defect or the Title Defect Amount subject to the Rejection Notice shall be
submitted to dispute resolution in accordance with the procedures set forth in
Section 3.9.

3.5.2
Notwithstanding the provisions of Section 3.5.1, there shall be no adjustment to
the Purchase Price for Title Defects affecting any Property unless the aggregate
Title Defect Adjustments for asserted Title Defects with respect to all of the
Properties exceeds an amount equal to three percent (3%) of the Purchase Price
(the “Aggregate Title Deductible”), and then only to the extent the sum of the
Title Defect Adjustments exceeds the Aggregate Title Deductible.

3.6    Value of Defects. Subject to the provisions of Section 3.5.2, the
adjustment to the Purchase Price for a Title Defect shall be determined as
follows:
3.6.1
If, because of the Title Defect, title to a particular Title Defect Property
fails completely with the effect that Seller has no ownership interest in the
relevant Property, the adjustment to the Purchase Price attributable to such
Title Defect shall be the Allocated Value of that Property.

3.6.2
If the Title Defect consists of a lien, encumbrance or other charge upon the
Title Defect Property which is liquidated in amount, the adjustment to the
Purchase Price attributable to such Title Defect shall be the amount necessary
to pay the obligee to remove such Title Defect,. If such amount, however, is in
excess of the Allocated Value of that Property, Seller may elect to exclude the
Property from the transaction contemplated herein, and the Purchase Price shall
be reduced by the Allocated Value of such Property.

3.6.3
If Seller’s actual Net Revenue Interest in a Well is less than the Net Revenue
Interest set forth for such Well in Exhibit B throughout the remaining
productive life of such Well, the adjustment to the Purchase Price attributable
to such Title Defect shall be an amount equal to (i) the ratio of (x) the
difference obtained by subtracting the actual Net Revenue Interest for such Well
from the Net Revenue Interest set forth for such Well on Exhibit

- 11 -

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

B, to (y) the Net Revenue Interest set forth for such Well on Exhibit B, (ii)
multiplied by the Allocated Value for such Well.
3.6.4
If Seller’s actual Net Revenue Interest in a Well is less than the Net Revenue
Interest set forth for such Well in Exhibit B for less than the remaining
productive life of the Well, or if Seller’s actual Working Interest in a Well is
greater than the Working Interest set forth for such Well in Exhibit B without a
proportionate increase in the relevant Net Revenue Interest, then the adjustment
to the Purchase Price attributable to such Title Defect shall be determined by
agreement of the Parties, or if they are unable to agree, pursuant to the
dispute resolution procedures set out in the Section 3.9; and

3.6.5
If the Title Defect is one other than described in subparagraphs 3.6.1 through
3.6.4, the adjustment to the Purchase Price attributable to such Title Defect
shall be the amount agreed to by Seller and Purchaser or, failing such
agreement, the Title Defect Adjustment shall be determined pursuant to Section
3.9 below.

3.7    Interest Additions. If Seller discovers (i) that Seller has Good and
Defensible Title in a Property that is not described in Exhibit A but will be
conveyed to Purchaser at Closing, or (ii) that the actual Net Revenue Interest
for a Well described on Exhibit B is greater than the Net Revenue Interest shown
for such Well on Exhibit B (in each case, an “Interest Addition”), then Seller
shall, from time to time, have the right to give Purchaser written notice of
such Interest Additions (“Interest Addition Notice”), as soon as practicable but
no later than the end of the Due Diligence Period, stating with reasonable
specificity the Property affected, the particular Interest Addition claimed, and
Seller’s good faith estimate of the value of the additional Property or the
amount by which the Additional Interest increases the value of the affected
Property over and above the Allocated Value for such Property (“Interest
Addition Value”). If (y) Purchaser agrees with the existence of the Interest
Addition and Seller’s good faith estimate of the Interest Addition Value, and
(z) the Interest Addition Value for such Interest Addition exceeds $50,000 (the
“Interest Addition Threshold”), then the Interest Addition Value shall be either
(i) added to and increase the amount of the Aggregate Title Deductible, or (ii)
if the aggregate Interest Addition Value exceeds the amount of the aggregate
adjustment to the Purchase Price attributable to Title Defects, the amount of
such difference (an “Interest Addition Payment”) shall be paid by Purchaser to
Seller as an adjustment to the Purchase Price at the Closing. Except as
otherwise provided in this Paragraph 3.7, each Interest Addition shall be
subject to review by Purchaser for Title Defects and subject to Title Defect
Adjustments as described in this Article as if the Interest Addition had been
listed on Exhibit A or Exhibit B. If Purchaser contests the existence of the
Interest Addition or Seller’s good faith estimate of the Interest Addition
Value, then Purchaser shall so notify Seller in writing on or before five (5)
days after receipt of the Interest Addition Notice (“Interest Addition Rejection
Notice”). The Interest Addition Rejection Notice shall state with reasonable
specificity the basis of Purchaser’s rejection of the Additional Interest or the
Interest Addition Value. No later than five (5) days following delivery of the
Interest Addition Rejection Notice, representatives of Purchaser and Seller,
knowledgeable in title matters, shall meet and either (i) agree to mutually
reject the Interest Addition, in which case Seller shall waive the Interest
Addition, or (ii) agree on the validity of such Interest Addition and the
Interest Addition Value, in which case Seller shall be entitled to an increase
in the Aggregate Title Deductible or an Interest Addition Payment, as
applicable. If the Parties cannot agree on either option (i) or (ii) in the
preceding sentence, the Interest Addition subject to the Interest Addition
Rejection Notice shall be submitted to dispute resolution in accordance with the
procedures set forth in Section 3.9. If Purchaser fails to timely deliver an
Interest Addition Rejection Notice,

- 12 -

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

Purchaser shall be deemed to have accepted the validity of the Interest Addition
and the Interest Addition Value, and Seller shall be entitled to either an
increase in the Aggregate Title Deductible or an Interest Addition Payment, as
applicable.
3.8    Right to Terminate Agreement. Notwithstanding anything in Article 3,
Article 4 or Article 5, in the event the sum of the adjustments to the Purchase
Price attributed to Title Defects, Environmental Defects, and Casualty Losses
(as hereinafter defined) equals or exceeds twenty percent (20%) of the Purchase
Price, and Seller elects not to cure or is unable to cure such Title Defects,
Environmental Defects, or Casualty Losses, then Seller may, by written notice
given to Purchaser not less than two (2) business days prior to the Closing
Date, elect to terminate this Agreement without liability to Purchaser, in which
case Purchaser shall be entitled to a refund of the Performance Deposit.
3.9    Expert Determination.
3.9.1
If Seller and Purchaser are unable to agree, as herein provided, regarding the
existence of a Title Defect, Environmental Defect, or Casualty Loss, the
adjustment to the Purchase Price attributable to a Title Defect, the Remediation
Amount (as hereinafter defined) attributable to an Environmental Defect, or
reduction in value resulting from a Casualty Loss, or any other matter to be
resolved under this Article 3 or Article 4 or 5, the Parties shall promptly
refer the matter for determination in the manner hereinafter provided to a
person selected by mutual agreement of the Parties who possesses the requisite
knowledge, skill and experience to determine the issue in question (the “Defect
Expert”). Neither Party shall propose as a Defect Expert a person who (i) is
currently working as an employee or consultant for such Party or any Affiliate
of such Party, or is in discussions about potential future work for such Party
or any such Affiliate , (ii) has worked or been engaged as an employee,
attorney, accountant or consultant for such Party or any such Affiliate during
the two year period preceding the Closing Date, or (iii) has any financial
interest in the transaction contemplated by this Agreement other than
compensation for services as a Defect Expert. In the event the Parties are
unable to agree upon a Defect Expert, then each Party shall designate in writing
to the other an independent person having the qualifications necessary to
determine the issue in question, and the two persons so identified shall,
without direction from or prior approval of the Party appointing such person,
select an independent third party having the requisite qualifications to serve
as the Defect Expert. The Defect Expert may enlist the advice of attorneys,
geologists, and landmen, or any petroleum engineer or environmental consultant
mutually agreed upon by the Parties or any neutral expert selected by the Defect
Expert.

3.9.2
Upon referral to the Defect Expert, the Parties shall each deliver to the other
and the Defect Expert a notice setting forth in adequate detail the issues to be
determined by the Defect Expert and the decision (on a word-for-word basis) that
such Party wishes the Defect Expert to make with respect to the issues to be
determined (the “Decision Notice”); provided, however, in preparing their
Decision Notice, each Party (as well as the Defect Expert) shall be bound by the
terms of this Agreement. Within two (2) business days after the giving of the
two Decision Notices, one or more representatives of each Party shall attend a
meeting with the Defect Expert at a mutually acceptable time and place to
discuss fully the content of such Decision Notice and, based thereon, determine
whether either or both wish to modify their Decision Notices in any way. Any
such modifications shall

- 13 -

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

be discussed, so that when each Party finalizes its Decision Notice, it shall do
so with full knowledge of the content of the other Party’s final Decision
Notice. The finalization of such Decision Notices and the delivery of same by
each Party to the other shall occur at the meeting unless the Parties agree to
have one or more additional meetings for such purposes. The Defect Expert shall
be required to adopt the decision set forth in either final Decision Notice and
shall have no power whatsoever to reach any other result. The Defect Expert
shall adopt the decision that, in his or her judgment, is the more fair and
equitable and in conformity with this Agreement and industry standards.
3.9.3
The decision, made in writing and signed by the Defect Expert, shall determine
such dispute. Such decision shall be made, signed and delivered to the Parties
within two (2) business days after the meeting, unless otherwise agreed by the
Parties. The expenses of the Defect Expert and any other experts retained by the
Defect Expert under this Agreement shall be borne by the Party whose final
Decision Notice was not chosen by the Defect Expert, except that each Party
shall bear the compensation and expense of its own counsel, witnesses and
employees. The determination and award of the Defect Expert shall be final and
binding upon the Parties, shall not be subject to appeal or judicial review of
any nature whatsoever and shall be taken into account in preparing the
Post-Closing Adjustment Statement; provided, however, that nothing contained
herein shall preclude Seller’s right to exclude any Property from the sale and
purchase hereunder pursuant to Section 3.4 or 5.4 after the determination of the
Defect Expert is received.

3.10    Preferential Purchase Rights and Consents to Assign.
3.10.1
Schedule 3.10.1 contains a list of certain Assets that Seller has tentatively
identified as being potentially subject to preferential rights to purchase or
consents to assignment in favor of a third party.

3.10.2
If an Asset is subject to a preferential right to purchase, right of first
refusal, right of first offer, or similar right that is exercised prior to the
Closing, or a third person consent to assignment required to be obtained before
the relevant Asset may be assigned and that is not obtained prior to the
Closing, Seller shall be deemed to have suffered a complete failure of title
with respect to the affected Asset, such Asset shall be excluded from the Assets
conveyed to Purchaser at the Closing, the Purchase Price shall be reduced by an
amount equal to the full Allocated Value of the affected Asset, and, in the case
of such a preferential right to purchase or similar right, Seller shall be
entitled to retain all proceeds paid for the affected Asset by the person
exercising such preferential right to purchase or similar right. Such a
reduction of the Purchaser Price shall be without regard to the $50,000
Individual Title Defect Threshold otherwise applicable to individual Title
Defects under Section 3.2.3 or the 3% Aggregate Title Deductible otherwise
applicable to Title Defect Amounts for uncured Title Defects under Section
3.5.2, and no reduction of the Purchase Price pursuant to this Section 3.10.2
shall be taken into account in determining whether the Aggregate Title
Deductible has been met. If Purchaser purchases at the Closing an Asset burdened
by a preferential right to purchase or similar right that has not been exercised
as of the Closing Date, regardless of whether the time period for the exercise
of such right has expired, no reduction of the Adjusted Purchase Price paid at
the Closing shall be made with respect thereto. If, for any reason, such
preferential right to purchase or similar right is successfully exercised by the
holder thereof after the Closing, Purchaser

- 14 -

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

shall be entitled to retain all proceeds paid for the affected Asset by the
holder of the relevant preferential right to purchase or similar right.
4.    CASUALTY LOSS.
4.1    Casualty Loss. If, prior to the Closing, any of the Assets are
substantially damaged or destroyed by fire, explosion, accident, act of the
public enemy, act of God, or other similar event or occurrence (“Casualty
Loss”), Seller shall notify Purchaser promptly after Seller learns of such
event. Seller shall have the right, but not the obligation, to cure any such
Casualty Loss by repairing such damage or, in the case of Personal Property or
fixtures, replacing the damaged Assets with equivalent items, no later than the
Closing Date. If any Casualty Loss exists at the Closing, Purchaser shall
proceed to purchase the damaged Assets, and the Purchase Price shall be reduced
by the aggregate reduction in value of all Assets affected by such Casualty
Loss, as determined by the mutual agreement of the Parties; provided that if the
Parties are unable to agree on such amount prior to the Closing, then such
determination shall be made by the Defect Expert as provided in Section 3.9
above. Notwithstanding anything to the contrary contained in this Section 4.1,
Seller shall be entitled to retain all insurance proceeds and claims against
other parties relating to any such Casualty Loss. For purposes of this
provision, normal wear and tear shall not be considered a Casualty Loss.
5.    ENVIRONMENTAL CONDITION
5.1    Physical Condition of the Assets. The Assets have been used for
Hydrocarbon drilling and production operations and various related oil field
operations. Physical changes in or under the Properties or adjacent lands may
have occurred as a result of such uses. The Properties also may contain buried
pipelines and other equipment, whether or not of a similar nature, the locations
of which may not now be known by Seller or be readily apparent by a physical
inspection of the Property. Purchaser understands that Seller may not have the
requisite information with which to determine the exact nature or condition of
the Properties or the effect any such use has had on the physical condition of
the Assets. In addition, Purchaser acknowledges that some oil field production
equipment may contain asbestos and/or naturally occurring radioactive material
(“NORM”). In this regard, Purchaser expressly understands that NORM may affix or
attach itself to the inside of wells, materials, and equipment as scale or in
other forms, and that the wells, materials, and equipment located on the Assets
may contain NORM and that NORM containing materials may be buried or have been
otherwise disposed of on the Assets. Purchaser also expressly understands that
special procedures may be required for the removal and disposal of asbestos and
NORM from the Assets where it may be found. The statements in this Section 5.1
are intended as disclosures of possible conditions existing on the Properties
and not an admission or acknowledgment that any such conditions actually exist.
5.2    Environmental Assessment.
5.2.1
Prior to the Closing, and upon reasonable, prior notice to Seller and the
operator(s) of the Properties, Purchaser and any third party environmental
consulting firm approved by Seller (which consent shall not be unreasonable
withheld) and retained by Purchaser (the “Purchaser’s Environmental
Consultant”), to the same extent Seller has such right, shall have the right to
enter upon the Assets and all buildings and improvements thereon, inspect the
same, conduct soil and water tests and borings, and generally conduct such
tests,

- 15 -

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

examinations, investigations, and studies as may be necessary or appropriate for
the preparation of appropriate engineering and other reports, judgments, and
environmental assessments in relation to the Assets, their environmental
condition, and the existence of Environmental Defects (as hereinafter defined)
(such inspection and investigation being called herein “Purchaser’s
Environmental Assessment”). Purchaser shall promptly provide to Seller a copy of
Purchaser’s Environmental Assessment, including any reports, data, and
conclusions. Purchaser and Seller shall keep strictly confidential any data or
information acquired from such examinations and the results of all analyses of
such data and information and shall not disclose same to any person or
Governmental Body without the prior written approval of the other Party, except
such disclosure as may be required by Applicable Law. This obligation of
confidentiality shall survive the Closing.
5.2.2
With respect to Purchaser’s Environmental Assessment, Purchaser shall indemnify
and hold harmless the Seller Group from any and all Costs resulting from the
acts or omissions of Purchaser or Purchaser’s Environmental Consultant,
including, without limitation, Costs relating to (i) any and all statutory or
common-law liens or other encumbrances for labor or materials furnished in
connection with such tests, samplings, studies, or surveys as Purchaser or
Purchaser’s Environmental Consultant may conduct with respect to the Assets and
(ii) claims asserted by Purchaser, its Affiliates, and their respective
partners, shareholders, members, officers, directors, employees, agents and
representatives (collectively the “Purchaser Group”), regardless of whether such
Costs are attributable, in whole or in part, to the negligence, sole or
concurrent, of the Seller Group.

5.3    Environmental Defect Notice. If Purchaser, in its sole discretion,
determines, as a result of Purchaser’s Environmental Assessment, that there
exists or may exist an Environmental Defect, Purchaser may notify Seller thereof
in writing as soon as reasonably practical after its discovery, but in any event
before the end of the Due Diligence Period (the “Environmental Defect Notice”).
Any notice provided hereunder shall include appropriate evidence to substantiate
Purchaser’s position, including a description of the Environmental Defect, the
Environmental Law applicable to the Environmental Defect, Purchaser’s basis for
believing that Seller is in violation of such Environmental Law, the portion of
the Assets affected by the Environmental Defect, a detailed description,
prepared by Purchaser’s Environmental Consultant, of the proposed methods and
scope of the Remediation (as hereinafter defined) required, the proposed
Remediation Amount (as hereinafter defined) attributable thereto, and all
assumptions relied upon by Purchaser’s Environmental Consultant in preparing
such summary and estimate. Purchaser will be deemed to have conclusively waived
any Environmental Defect discovered by Purchaser during the Due Diligence Period
and with respect to which Purchaser fails to timely and properly furnish to
Seller an Environmental Defect Notice.
5.4    Remedies for Environmental Defects. For any Environmental Defect properly
asserted by Purchaser during the Due Diligence Period, subject to the
termination rights of Seller pursuant to Section 3.8, Seller shall have the
option, in its sole discretion, of (i) remedying the Environmental Defect, (ii)
contesting the Environmental Defect or the Remediation Amount, or (iii) reducing
the Purchase Price by an amount equal to the proposed Remediation Amount
(“Environmental Defect Adjustment”); provided that if the asserted Environmental
Defect Adjustment for any Property exceeds 50% of the Allocated Value for such
Property, Seller shall have the option of removing the

- 16 -

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

affected Property from the transaction contemplated herein and reducing the
Purchase Price by the Allocated Value thereof.
5.5    Procedure for Resolving Environmental Defects. With respect to
Environmental Defects properly and timely asserted by Purchaser as provided
herein, the following procedures shall apply.
5.5.1
If Seller contests the existence of an Environmental Defect or the proposed
Remediation Amount attributable thereto, Seller shall provide Purchaser a
Rejection Notice with respect thereto on or before five (5) days after Seller’s
receipt of the Environmental Defect Notice. The Rejection Notice shall state
with reasonable specificity the basis of Seller’s rejection of the Environmental
Defect or the proposed Remediation Amount. No later than five (5) days following
Purchaser’s receipt of the Rejection Notice, representatives of Purchaser and
Seller, knowledgeable in environmental matters, shall meet and either: (i) agree
to mutually reject the particular Environmental Defect, or (ii) agree on the
validity of such Environmental Defect and the Remediation Amount attributable
thereto, in which case Seller shall cure such Environmental Defect at its own
expense and, if required, to the satisfaction of the appropriate Governmental
Body prior to the Closing or as soon thereafter as is reasonably practicable
and, failing such cure, agree to reduce the Purchase Price by the Environmental
Defect Adjustment attributable thereto, subject to the limitation set forth in
Section 5.5.2. If the Parties cannot agree on either option (i) or (ii), then
the Property affected by the asserted Environmental Defect shall be conveyed to
Purchaser at Closing without adjustment to the Purchase Price (except to the
extent agreed to by the Parties), and the existence of the Environmental Defect
or the Remediation Amount subject to the Rejection Notice shall be submitted to
dispute resolution in accordance with the procedures set forth in Section 3.9.

5.5.2
Notwithstanding the provisions of Section 5.5.1, there shall be no adjustment to
the Purchase Price for Environmental Defects affecting any Property unless the
aggregate Environmental Defect Adjustment for all asserted Environmental Defects
with respect to all of the Properties exceeds an amount equal to three percent
(3%) of the Purchase Price (the “Aggregate Environmental Deductible”).

5.6    Definitions. For purposes of this Agreement, the following expressions
and terms will have the meanings set forth hereinafter:
5.6.1
“Applicable Laws” shall mean all laws, statutes, treaties, rules, codes,
ordinances, regulations, certificates, orders, interpretations, licenses and
permits of any Governmental Body, including the common or civil law, (including,
without limitation, those pertaining to occupational health and safety, consumer
product safety, employee benefits, the environment, securities or zoning) and
all judgments, decrees, injunctions, writs, orders, or like action of any court,
arbitrator, or other Governmental Body of competent jurisdiction.

5.6.2
“Environmental Defect” shall mean a condition that exists as of the Effective
Date with respect to the air, land, soil, surface, subsurface strata, surface
water, ground water or sediments which causes an Asset to be subject to
remediation within a time certain under Environmental Laws in effect as of the
Effective Date, but only to the extent that the

- 17 -

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

Remediation Amount, net to Seller’s interest, exceeds the Individual
Environmental Defect Threshold.
5.6.3
“Environmental Laws” shall mean any and all Applicable Laws pertaining to
safety, health or conservation or protection of the environment, wildlife, or
natural reserves in effect in any and all jurisdictions in which the Assets are
located, including, without limitation, the Clean Air Act, as amended, the
Federal Water Pollution Control Act, as amended, the Safe Drinking Water Act, as
amended, the Comprehensive Environmental Response, Compensation and Liability
Act, as amended (“CERCLA”), the Superfund Amendments and Reauthorization Act of
1986, as amended (“SARA”), the Resource Conservation and Recovery Act, as
amended (“RCRA”), the Hazardous and Solid Waste Amendments Act of 1984, as
amended, the Toxic Substances Control Act, as amended, the Occupational Safety
and Health Act, as amended (“OSHA”), and any applicable state, tribal, or local
counterparts, but shall not include any Applicable Law associated with Plugging
and Abandonment (as hereinafter defined). The terms “hazardous substance”,
“release”, and “threatened release” shall have the meanings specified in CERCLA;
provided, however, that to the extent the laws of the state in which the Assets
are located are applicable and have established a meaning for “hazardous
substance”, “release”, “threatened release”, “solid waste”, “hazardous waste”,
and “disposal” that is broader than that specified in CERCLA or RCRA, such
broader meaning shall apply with respect to the matters covered by such laws.

5.6.4
“Governmental Body” shall mean any Federal, state, tribal, county, parish,
municipal, or other federal, state or local governmental authority or judicial
or regulatory agency, board, body, department, bureau, commission,
instrumentality, court, tribunal or quasi-governmental authority in any
jurisdiction (domestic or foreign).

5.6.5
“Individual Environmental Defect Threshold” shall mean the sum of $50,000.

5.6.6
“Remediation” shall mean removal, excavation, capping, construction of
facilities, installation or modification of equipment or other environmental
remedies to the extent required by Environmental Laws in effect as of the
Effective Date to remedy an Environmental Defect existing on or with respect to
an Asset using the least stringent, most cost effective standard, but only to
the extent such requirement relates to the continued use and operation of the
Asset for Hydrocarbon exploration, operation, production, and gathering.

5.6.7
“Remediation Amount” shall mean, with respect to any Environmental Defect, the
present value as of the Closing Date, using a discount rate of ten percent (10%)
per annum, of the cost of Remediation at the time the Remediation is reasonably
expected to be required.

6.    REPRESENTATIONS OF SELLER
6.1    Disclaimers, Waivers and Agreements of the Parties.
6.1.3
Warranty Disclaimers; “As Is, Where Is”. Except as specifically set forth in
this Article 6 or in the General Assignment, Seller makes no representations or
warranties, express or implied, in connection with the Assets. Subject to this
Section 6.1 and to the Permitted Encumbrances, Seller makes the representations
and warranties set forth in Section 6.2.

- 18 -

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

To the extent required by Applicable Law to be operative, the disclaimers of
certain warranties contained in this Section 6.1 are “conspicuous disclaimers”
for purposes of any Applicable Law. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN SECTION 6.2 AND THE PROCEDURES AND REMEDIES APPLICABLE
TO TITLE DEFECTS UNDER ARTICLE 3, CASUALTY LOSS UNDER ARTICLE 4, AND
ENVIRONMENTAL DEFECTS UNDER ARTICLE 5, AND EXCEPT TO THE EXTENT REPRESENTATIONS
AND WARRANTIES ARE CONTAINED IN THE GENERAL ASSIGNMENT, PURCHASER AGREES THAT
SELLER IS CONVEYING THE ASSETS WITHOUT REPRESENTATION OR WARRANTY, EITHER
EXPRESSED OR IMPLIED AT COMMON LAW, BY STATUTE, OR OTHERWISE (ALL OF WHICH
SELLER HEREBY DISCLAIMS), RELATING TO (i) TITLE, (ii) OPERATING CONDITION, (iii)
MERCHANTABILITY, DESIGN, OR QUALITY, (iv) FITNESS FOR ANY PARTICULAR PURPOSE,
(v) ABSENCE OF LATENT DEFECTS, (vi) ENVIRONMENTAL CONDITION OF THE ASSETS, (vii)
VALUE, OR (viii) ANY OTHER MATTER WHATSOEVER, IT BEING UNDERSTOOD THAT, EXCEPT
AS OTHERWISE PROVIDED IN THIS AGREEMENT AND THE GENERAL ASSIGNMENT, SELLER IS
CONVEYING TO PURCHASER, AND PURCHASER IS ACCEPTING, THE ASSETS “AS IS,” “WHERE
IS,” “WITH ALL FAULTS,” AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR, AND
PURCHASER IS ASSUMING ALL RISK WITH RESPECT TO THE ASSETS, INCLUDING, WITHOUT
LIMITATION, ALL RISK ASSOCIATED WITH THE ENVIRONMENTAL CONDITION OF THE ASSETS.
6.1.4
Texas DTPA. TO THE EXTENT APPLICABLE TO THE TRANSACTION CONTEMPLATED BY THIS
AGREEMENT, PURCHASER WAIVES ITS RIGHTS, IF ANY, UNDER THE DECEPTIVE TRADE
PRACTICES-CONSUMER PROTECTION ACT, SECTION 17.41, ET SEQ., TEXAS BUSINESS AND
COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER
CONSULTATION WITH AN ATTORNEY OF ITS OWN SELECTION, PURCHASER VOLUNTARILY
CONSENTS TO THIS WAIVER.

6.2    Representations and Warranties. Seller represents and warrants to
Purchaser, as of the date hereof and as of the Closing Date, as follows:
6.2.3
Existence. Seller is a limited liability company, duly organized, validly
existing, and in good standing under the laws of the State of Oklahoma. Seller
is duly qualified to carry on its business in the states in which the Assets are
located.

6.2.4
Power. Seller has full capacity, power, and authority to carry on its business
as presently conducted, to enter into this Agreement and any other documents and
agreements contemplated hereby, and to perform its obligations under this
Agreement.

6.2.5
Authorization. The execution, delivery, and performance by Seller of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized and approved by all necessary action of Seller and
will not violate or be in conflict with, or result in a breach, or trigger a
default (or an event that, with the lapse of

- 19 -

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

time or notice, would constitute a default) under the provisions of, (i) any
material note, bond, mortgage, indenture, contract, agreement, or instrument to
which Seller is a party, (ii) the organizational and governing documents of
Seller, or (iii) any material judgment, decree, order, law, statute, rule, or
regulation applicable to Seller or any Asset, the non-compliance with which
would have a material adverse effect on Purchaser, its ownership or operation,
after the Closing, of any of the Assets, or the ability of Seller to consummate
the transactions contemplated herein. This Agreement has been, and the other
documents provided for herein to be executed and delivered by Seller to
Purchaser will be, duly executed and delivered on behalf of Seller and
constitute or shall constitute the legal, valid, and binding obligations of
Seller, enforceable in accordance with its respective terms, subject to the
effects of bankruptcy, insolvency, reorganization, moratorium, and similar laws,
as well as principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
6.2.6
Brokers. Seller has incurred no obligation or liability, contingent or
otherwise, for brokers’ or finders’ fees relating to the matters provided for in
this Agreement which will be the responsibility of Purchaser; and any such
obligation or liability of Seller shall be the sole obligation of Seller.

6.2.7
Certain Tax Matters. To the knowledge of Seller, Seller has filed all material
tax returns with respect to the Assets that it was required to file and has paid
all taxes shown thereon as owing or subsequently assessed with respect thereto,
except where the failure to file any such return or pay any such tax would not
have a material adverse effect on Purchaser or the Assets. To Seller’s
knowledge, with respect to the Properties for which Seller has been designated
operator, the agreements to which such Properties are subject do not create, for
federal income tax purposes, a partnership among any of the parties to such
agreements for which a partnership income tax return is required to be filed
under Subchapter K of Chapter 1 of Subtitle A of the IRC (other than a
partnership for which an election is in effect pursuant to the provisions of
Section 761 of the IRC and the regulations thereunder to be excluded from such
provisions).

6.2.8
Pending Claims and Litigation. There are no suits, actions or other legal,
administrative, or arbitration proceedings (i) in the case of Assets for which
Seller has been designated operator, that are pending or, to Seller’s knowledge,
threatened in writing against Seller, or any of such Assets, and (ii) in the
case of Assets for which Seller has not been designated operator, to Seller’s
knowledge, that are pending or threatened in writing against Seller, the
operator of such Assets, or any of such Assets, in each case that would, if
determined adversely to Seller, (a) result in the material impairment or loss of
Seller’s title to the relevant Assets, (b) materially hinder or impede the
operation of all or any material portion of any Asset, or (c) that would, if
determined adversely to the Parties, restrain, prohibit, or impose damages on
Purchaser or Seller with respect to, or otherwise materially impair Seller’s
ability to consummate, the transactions contemplated by this Agreement.

6.2.9
Violations. Except as set forth on Schedule 6.2.7, to the knowledge of Seller,
Seller has not violated any laws, statutes, regulations or orders applicable to
any of its Assets or the operation thereof which violation may reasonably be
expected to have a material adverse effect on the value of the Assets affected
thereby (other than Environmental Laws, which

- 20 -

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

are governed     exclusively by Article 5, and laws related to taxes, as to
which Seller’s sole representations and warranties are set forth in Section
6.2.5).
6.2.10
Gas Imbalances. Except for those listed on Schedule 6.2.8, to Seller’s knowledge
there exist no production imbalances or imbalances with respect to any pipeline,
storage or processing facility, or other conditions regarding Hydrocarbons taken
or marketed from the Assets or any portion thereof which could result in:

(i)
a portion of any Seller’s interest in such Hydrocarbon production being taken or
delivered after the Closing without Purchaser receiving payment therefor or at
the price it would have received absent such imbalance; or

(ii)
Seller or Purchaser being obligated to make payment to any person or entity as a
result of such imbalance; or

(iii)
Seller being obligated, by virtue or any prepayment arrangement, take-or-pay
agreement, or similar arrangement, to deliver Hydrocarbons produced from the
Assets at some future time without then receiving full payment therefor.

The gas imbalances listed in Schedule 6.2.8, if any, have been taken into
account in determining the Purchase Price. Notwithstanding anything else to the
contrary contained herein, Purchaser’s sole and exclusive remedy with respect to
any breach of the representation and warranty contained in this Section 6.2.8
shall be an adjustment to the Purchase Price at the Closing or in the
Post-Closing Adjustment Statement.
6.2.9    Material Contracts. Schedule 6.2.9 sets forth a list of all Material
Contracts (as hereinafter defined) that exist as of the date of this Agreement.
Except as set forth on Schedule 6.2.9, each Material Contract is a valid and
binding agreement of Seller, enforceable against Seller in accordance with its
terms, and, to Seller’s knowledge, enforceable against each other party thereto
in accordance with its terms, subject, in each case, to (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application with respect to creditors, (ii) general principles of equity
and (iii) the power of a court to deny enforcement of remedies generally based
upon public policy. Except as set forth on Schedule 6.2.9, to Seller’s
knowledge, no event has occurred that would, with the passage of time or
compliance with any applicable notice requirements or both, constitute a
material breach, violation or default by Seller or any other party thereto,
under any of the Material Contracts. As used herein, the term “Material
Contract” shall mean, to the extent binding upon the Assets and Purchaser’s
ownership thereof or operations with respect thereto from and after Closing, any
contract or agreement which is one or more of the following types:
(i)    Any contract or agreement with any Affiliate of Seller;
(ii)
Any contract or agreement for the sale, transportation, processing or other
disposition or marketing of Hydrocarbons having a term extending beyond the date
that is six (6) months after the Effective Date and that is not cancelable
without penalty on sixty (60) days or less prior written notice;

(iii)    Any area of mutual interest agreement;

- 21 -

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

(iv)
Any contract or agreement pursuant to which any third party has the right to
earn or acquire any portion of the Properties (other than pursuant to customary
non-consent provisions); and

(v)
Any contract or agreement that could reasonably be expected to require aggregate
payments by Seller in an amount greater than $250,000 during the current or any
subsequent calendar year, other than routine operating, unitization, pooling or
communitization agreements.

6.3    Knowledge. As used in this Agreement, words “to Seller’s knowledge,” “to
the knowledge of Seller,” or other words of similar import mean that the
statement so qualified is true to the actual knowledge of the senior executive
officers of Seller.
7.    REPRESENTATIONS OF PURCHASER
7.1    Representations and Warranties. Purchaser represents and warrants to
Seller, as of the date hereof and as of the Closing Date, as follows:
7.1.11
Existence. Purchaser is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of Oklahoma and will
be duly qualified at the Closing to carry on its business in all states where
the Assets are located.

7.1.12
Power. Purchaser has all requisite power and authority to carry on its business
as presently conducted, to enter into this Agreement and the other documents and
agreements contemplated hereby, and to perform its obligations under this
Agreement.

7.1.13
Authorization. The execution, delivery, and performance by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized and approved by all necessary action of Purchaser
and will not violate or be in conflict with, or result in a breach, or trigger a
default (or an event that, with the lapse of time or notice, would constitute a
default) under the provisions of, (i) any material note, bond, mortgage,
indenture, contract, agreement, or instrument to which Purchaser is a party,
(ii) the organizational and governing documents of Purchaser, or (iii) any
material judgment, decree, order, law, statute, rule, or regulation applicable
to Purchaser, the non-compliance with which would have a material adverse effect
on Seller or its ownership or operation, on or before the Closing, of any of the
Assets, or the ability of Purchaser to consummate the transactions contemplated
herein. This Agreement has been, and the documents provided for herein to be
executed and delivered by Purchaser to Seller will be, duly executed and
delivered on behalf of Purchaser and constitute or shall constitute the legal,
valid and binding obligations of Purchaser, enforceable in accordance with their
respective terms, subject to the effects of bankruptcy, insolvency,
reorganization, moratorium, and similar laws, as well as principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

7.1.14
Brokers. Purchaser has incurred no obligation or liability, contingent or
otherwise, for brokers’ or finders’ fees relating to the matters provided for in
this Agreement which will be the responsibility of any Seller; and any such
obligation or liability of Purchaser that might exist shall be the sole
obligation of Purchaser.

- 22 -

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

7.1.15
Sophistication; No Distribution. Purchaser is an experienced and knowledgeable
investor in the oil, gas and mineral resources industry that has previously
expended substantial amounts in the acquisition and development of oil and gas
properties. Prior to entering into this Agreement, Purchaser has been advised by
its counsel and such other persons as it has deemed appropriate concerning this
Agreement. The Assets to be acquired by Purchaser pursuant to this Agreement are
being acquired by Purchaser for its own account, for investment, and not with a
view to distribution or resale of securities within the meaning of the
Securities Act of 1933, or any other applicable securities law, rule,
regulation, or order that could impose any liability on Seller.

7.1.16
Claims and Litigation. There is no claim, legal or administrative proceeding, or
investigation now pending or, to the knowledge of Purchaser, threatened before
any court or any administrative body against Purchaser or any Affiliate of
Purchaser that would, if determined adversely to Purchaser, restrain, prohibit,
or impose damages on Purchaser or Seller with respect to, or otherwise
materially impair Purchaser’s ability to consummate, the transactions
contemplated by this Agreement.

7.1.17
Financial Ability to Perform. Purchaser has, or has arranged to have at the
Closing, sufficient funds and credit arrangements to consummate the transactions
contemplated by this Agreement.

7.1.18
Bonds. Purchaser has obtained, or will obtain by the Closing, all of the bonds
or sureties required by Applicable Laws to own and, where applicable, operate
the Properties.

7.1.19
Non-Reliance. Except with respect to the representations and warranties of
Seller set forth in Section 6.2, Purchaser has not relied upon any oral or
written statements, representations, or warranties that may have been made by or
on behalf of Seller, Richardson Barr Securities, Inc. or any of their Affiliates
concerning the condition, operation, performance, or prospects of the Assets, or
upon any written reports, financial data, business plans, projections, or
forecasts, any audits, studies, or assessments, or any other written materials,
copies of which may have been furnished to Purchaser or as to which Purchaser
may have been provided access in connection with the transactions contemplated
by this Agreement. EXCEPT AS PROVIDED ELSEWHERE HEREIN TO THE CONTRARY, TO THE
EXTENT THAT PURCHASER HAS BEEN FURNISHED COPIES OF OR PROVIDED ACCESS TO ANY OF
THE FOREGOING, PURCHASER ACKNOWLEDGES THAT SELLER, NOR ANY OF ITS AFFILIATES,
NOR ANY OF SELLER’S OFFICERS, DIRECTORS, EMPLOYEES, REPRESENTATIVES, AGENTS OR
RICHARDSON BARR SECURITIES, INC., HAVE MADE, AND SELLER HEREBY EXPRESSLY
DISCLAIMS, ANY REPRESENTATION OR WARRANTY AS TO THE ACCURACY OR COMPLETENESS OF
SUCH INFORMATION OR ANY OTHER INFORMATION, DATA, OR MATERIALS (WHETHER WRITTEN
OR ORAL) THAT MAY HAVE BEEN FURNISHED TO PURCHASER OR ITS REPRESENTATIVES,
AGENTS OR RICHARDSON BARR SECURITIES, INC. BY OR ON BEHALF OF SELLER OR ANY OF
ITS AFFILIATES IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED IN THIS
AGREEMENT, EXCEPT THAT SELLER HAS ACTUAL KNOWLEDGE THAT

- 23 -

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

ANY OF SUCH INFORMATION, DATA, OR MATERIALS ARE MATERIALLY FALSE OR MISLEADING.
7.2    Knowledge. As used in this Agreement, words “to Purchaser’s knowledge,”
“to the knowledge of Purchaser,” or other words of similar import mean that the
statement so qualified is true to the actual knowledge of the senior executive
officers of Purchaser.
8.    PRE-CLOSING OBLIGATIONS OF SELLER
8.1    Operations. From the date of this Agreement until the Closing (the
“Interim Period”), to the extent Seller can exert influence over such matters,
Seller will use reasonable commercial efforts to see that the Properties not
operated by Seller are maintained in full force and effect and are operated in a
good and workmanlike manner and in accordance with the terms and conditions of
the applicable oil, gas, and mineral leases, Existing Contracts, and all
Applicable Laws. Seller, as to the portion of the Properties which Seller now
operates, shall continue to operate the same in a good and workmanlike manner
and in accordance with the terms and conditions of the applicable oil, gas and
mineral leases, the Existing Contracts, and all Applicable Laws, until such
operations are turned over to and become the responsibility of Purchaser.
However, Seller will not have any obligation to operate any portion of the
Properties after the expiration of the Interim Period except as provided for in
Section 8.3. Subject to the terms of Section 8.3, Seller will pay its
proportionate share of all costs and expenses incurred in connection with
Properties for which invoices are received prior to the Closing Date. During the
Interim Period, Seller will, to the extent Seller controls the operation of any
of the Properties, maintain the lease equipment in the same condition, working
order, and state of repair as currently exists, subject to ordinary wear and
tear. During the Interim Period and thereafter until operations are transferred
to Purchaser or the duly elected or appointed successor operator, without the
prior written consent of Purchaser, Seller will not (i) cause the Properties to
be developed, maintained or operated in a manner substantially inconsistent with
prior operations, (ii) abandon any part of the Properties, (iii) commence any
operation on the Properties anticipated to cost, as to Seller’s interest in the
Properties, in excess of $150,000 per operation, except emergency operations,
operations required under presently existing contractual obligations, the
outstanding AFE’s and other commitments described in Schedule 8.1, and
operations undertaken to avoid any penalty provision of any Existing Contract or
order (with respect to emergency operations, Seller shall notify Purchaser of
said emergency as soon as reasonably practical), or (iv) convey or dispose of
any part of the Properties (other than Personal Property and equipment replaced
with items of comparable or superior quality and Hydrocarbons produced from the
Properties in the ordinary course of business).
8.2    Contracts. During the Interim Period, Seller will not, without the prior
written consent of Purchaser, enter into any agreement (i) that would be a
Material Contract if existing on the date of this Agreement, or (ii) amending,
modifying, or terminating any of the Material Contracts.
8.3    Compensation of Seller. With respect to those Properties operated by
Seller, (i) Seller shall operate such Properties for the benefit of Purchaser
during the period from the Effective Date through the date(s) when the operation
of such Properties is turned over to, and becomes the responsibility of,
Purchaser or the duly elected or appointed successor operator (the “Operations
Period”), (ii) Seller shall be entitled to retain all amounts paid or owing to
Seller by non-operators pursuant to the terms of the existing operating or
similar agreements or otherwise required by law, (iii) Purchaser shall pay to
Seller an amount equal to (A) the overhead charge attributable to Seller’s

- 24 -

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

Working Interest in each such Property that would be payable to the operator
pursuant to the terms of existing operating or similar agreements or otherwise
required by law if Seller were a non-operator, or (B) if Seller owns 100% of the
working interest in such Property, a per month overhead charge equal to $7,000
per drilling well and $700 per producing well, all in accordance with the 1984
COPAS Onshore Model Accounting Procedure, which is hereby incorporated by
reference (with the salaries, wages and personal expenses of technical employees
employed directly on the Property, or temporarily or permanently assigned to and
directly employed in the operation of the Property, charged as a direct cost and
excluded from such overhead charges), and (iv) all reasonable and necessary
expenses attributable to Seller’s Working Interest incurred by Seller in
operating, protecting, and maintaining the subject Properties. Any such charges
and expenses shall be recovered by Seller as part of the Closing or post-Closing
adjustments, as appropriate. Except in the event of an emergency, Seller will
have no obligation to make capital expenditures or extraordinary operating
expenditures in connection with the Properties during the Operations Period.
Additionally, during the Operations Period, Seller may require Purchaser to
prepay, on a monthly basis, Purchaser’s share of any and all expenses estimated
by Seller to become due with respect to operations on the Properties operated by
a Seller during the next succeeding month. If Purchaser is ultimately elected as
operator of the Properties which Seller currently operates, Purchaser will
additionally reimburse Seller for the amounts of any unpaid operating expenses
and capital expenditures of other working interests owners paid by Seller and
attributable to operations during the Operations Period.
8.4    Permissions. During the Interim Period, Seller shall use reasonable
efforts to obtain all permissions, approvals, and consents by Federal, state and
local governmental authorities and others as may be required to consummate the
transactions contemplated by this Agreement (excluding governmental permissions,
approvals and consents which are customarily obtained after the assignment of an
oil and gas interest which shall be the responsibility of Purchaser to obtain).
8.5    Defaults. Seller shall give prompt written notice to Purchaser of any
notice of material default (or written threat of material default, whether
disputed or denied by Seller) received or given by Seller subsequent to the
Effective Date under any instrument or agreement affecting the Properties to
which Seller is a party or by which Seller or any of the Assets is bound.
8.6    Operatorship. It is understood that in most (if not all) of the operating
agreements covering any of the Properties, Seller does not retain the right to
transfer operation of such Properties that are the subject of such operating
agreements to a purchaser of Seller’s interests. Notwithstanding the foregoing,
at the Closing Seller will execute and deliver to Purchaser such change of
operator forms as may be required by the applicable Governmental Bodies
reflecting Purchaser as successor operator; however, Purchaser shall be solely
responsible for obtaining approval to succeed Seller as operator from both the
non-operators of each such Property and from the applicable Governmental Body.
If requested by Purchaser, Seller shall use reasonable commercial efforts to
assist Purchaser in securing the consent of all interested parties to
Purchaser’s election as operator of all of the Properties for which Seller is
the current operator, but in no event shall Seller be required to devote
substantial employee time or expend funds in connection therewith, nor shall
Seller have any liability or responsibility with respect thereto. Purchaser
shall have the right to obtain agreements from such interested parties after the
transaction contemplated by this Agreement has been publicly announced and
thereafter during the Interim Period.

- 25 -

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

8.7    Geological and Geophysical Information. During the Interim Period, with
respect to any right, title, and interest of Seller in any item of geological
and geophysical information:
8.7.1
Seller shall use all reasonable efforts to determine whether such item of
geological and geophysical information is subject to a contractual restriction
on transfer or confidentiality obligation (including, without limitation,
contacting appropriate parties in cases where Seller’s files are not clear in
this regard).

8.7.2
Where geological and geophysical data is restricted, no access shall be
permitted to such data and the same shall not be delivered to Seller at the
Closing.

8.7.3
Seller shall retain pursuant to Section 1.6 certain of its other geological and
geophysical information, and the Parties shall mutually agree as to the method
of handling the balance of such information.

9.    PRE-CLOSING OBLIGATIONS OF PURCHASER
9.1    Return of Data. If this Agreement is terminated for any reason
whatsoever, Purchaser, at Seller’s request, shall return promptly to Seller all
information and data furnished to Purchaser, its officers, employees, and
representatives in connection with this Agreement or Purchaser’s investigation
of the Assets, and Purchaser shall not retain any copies of such information or
data.
9.2    Efforts. Purchaser shall use its reasonable commercial efforts to cause
its representations and warranties under this Agreement to be true and correct
on and as of the Closing.
10.    CONDITIONS OF SELLER TO CLOSING
The obligations of Seller to consummate the transactions contemplated by this
Agreement are subject, at the option of Seller, to the fulfillment on or prior
to the Closing Date of each of the following conditions:
10.1    Representations. The representations and warranties of Purchaser
contained in this Agreement shall be true and correct in all material respects
on the Closing Date as though made on and as of such date; provided, however,
that for purposes of this Section 10.1, all qualifications relating to
materiality contained in such representations and warranties shall be
disregarded.
10.2    Performance. Purchaser shall have performed in all material respects all
obligations, covenants, and agreements hereunder and shall have complied in all
material respects with all covenants and conditions contained in this Agreement
to be performed or complied with by it at or prior to the Closing.
10.3    Governmental Consents. Purchaser shall have received all consents,
authorizations, waivers, and approvals required to be obtained prior to the
Closing by any Governmental Body under any Applicable Law concerning the
transactions contemplated herein, except those approvals, waivers or consents
that are customarily obtained after Closing.
10.4    Pending Matters. No suit, action, or other proceeding by a Governmental
Body or other person shall be pending, or to the best of Seller’s knowledge,
threatened which seeks substantial

- 26 -

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

damages from Seller in connection with, or seeks to restrain, enjoin, or
otherwise prohibit, the consummation of the transaction contemplated by this
Agreement.
11.    CONDITIONS OF PURCHASER TO CLOSING
The obligations of Purchaser to consummate the transaction contemplated by this
Agreement are subject, at the option of Purchaser, to the fulfillment on or
prior to the Closing Date of each of the following conditions:
11.1    Representations. The representations and warranties of Seller contained
in this Agreement shall be true and correct in all material respects on the
Closing Date as though made on and as of such date; provided, however, that for
purposes of this Section 11.1, all qualifications relating to materiality
contained in such representations and warranties shall be disregarded.
11.2    Performance. Seller shall have performed in all material respects all
obligations, covenants, and agreements hereunder and shall have complied in all
material respects with all covenants and conditions contained in this Agreement
to be performed or complied with by Seller at or prior to the Closing.
11.3    Governmental Consents. Seller shall have received all consents,
authorizations, waivers, and approvals required to be obtained prior to the
Closing by any Governmental Body under any Applicable Law concerning the
transactions contemplated herein, except those approvals, waivers or consents
that are customarily obtained after the Closing
11.4    Pending Matters. No suit, action, or other proceeding by a Governmental
Body or other person shall be pending or, to the best of Purchaser’s knowledge,
threatened which seeks substantial damages from Purchaser in connection with, or
seeks to restrain, enjoin, or otherwise prohibit, the consummation of the
transactions contemplated by this Agreement.
12.    CLOSING
12.1    Time and Place of the Closing. The consummation of the transactions
contemplated by this Agreement (the “Closing”) shall occur at 10:00 a.m.,
Central Time, on July 25, 2014 (such date, or any subsequent date agreed to by
the Parties pursuant to Section 12.2, the “Closing Date”). The Closing shall
take place at the offices of Seller in Oklahoma City, Oklahoma, or such other
place as the Parties may agree upon.
12.2    Change of the Closing Date. The Closing Date may be extended only by
mutual agreement of the Parties, with such mutually agreed date to become the
Closing Date.
12.3    Calculation of Adjusted Purchase Price. Seller shall prepare, in
accordance with the provisions of this Agreement, a statement (the “Closing
Adjustment Statement”) setting forth the Preliminary Amount, including each
adjustment to the Purchase Price made, to the best of Seller’s knowledge, in
accordance with the terms of Section 2.4, calculated based on actual information
available on the date such statement is prepared or estimates when actual
information is not available. Seller shall submit the Closing Adjustment
Statement to Purchaser no later than two (2) business days prior to the Closing
Date and shall include, upon Purchaser’s request, appropriate supporting
documentation for the Closing Adjustment Statement. If the Parties cannot agree
on the Closing Adjustment Statement or the Preliminary Amount, the Closing shall
occur as scheduled based on

- 27 -

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

Seller’s good faith calculation of the Preliminary Amount with the difference
between Seller’s and Purchaser’s calculation of the Preliminary Amount to be
placed into escrow with a disinterested third party and reconciled in connection
with making post-closing adjustments as provided in Section 13.1.
12.4    Failure to Close. If the conditions precedent to the obligation of a
Party to close the transactions contemplated herein have been satisfied or
waived on or before the Closing Date, and such Party nevertheless fails or
refuses to close, the Party failing or refusing to close shall be deemed to have
breached the obligations it has undertaken hereunder to perform at the Closing,
and shall be subject to the provisions of Article 14.
12.5    Closing Obligations. At the Closing:
12.5.1
Seller and Purchaser shall execute and acknowledge, and Seller shall deliver to
Purchaser, (i) a master original of the Assignment, Bill of Sale and Conveyance
in substantially the form attached hereto as Exhibit C (the “General
Assignment”), together with a complete Exhibit A attached, and (ii) sufficient
counterparts of the General Assignment to enable the recording of a counterpart
of the General Assignment in each of the counties where the Assets are located.

12.5.2
Seller shall provide to Purchaser a listing showing all net proceeds and
receivables related to production attributable to the Assets which are currently
held in suspense pending completion of a division order title opinion or because
of lack of identity or address of owners, title defects, changes of the
ownership, or similar reasons. After the Closing Date, Purchaser shall be
responsible for proper distribution of all the suspended funds to the parties
lawfully entitled thereto, and Purchaser agrees to indemnify and hold Seller and
the Seller Group harmless from and against any Costs associated with Purchaser’s
distribution of such suspended funds, but only to the extent of the funds for
which the Purchase Price shall have been adjusted pursuant to the provisions of
Section 2.4.15.

12.5.3
Purchaser shall pay the Adjusted Purchase Price in the manner set forth in
Section 2.5.

12.5.4
Seller and Purchaser shall execute, acknowledge, and deliver federal, state, and
Indian forms of lease assignments, if necessary or expedient.

12.5.5
Seller and Purchaser shall execute, acknowledge, and deliver transfer orders or
letters-in-lieu thereof directing all purchasers of production and remitters of
production proceeds to make payment to Purchaser of proceeds attributable to
production from the Assets for the period of time on and after the Effective
Date.

12.5.6
Except as otherwise provided in this Agreement, Seller shall deliver to
Purchaser, and Purchaser shall take, possession of the Assets, and, as provided
in this Agreement, subject to applicable provisions of the Existing Contracts,
take over all operations of the Assets for which any Seller is designated as
operator.

12.5.7
Seller shall execute and deliver to Purchaser appropriate change of operator
forms for each of the Properties operated by Seller.

- 28 -

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

12.5.8
Seller shall deliver to Purchaser a non-foreign affidavit meeting the
requirements of Section 1445(b)(2) of the IRC and the regulations thereunder.

12.5.9
Seller and Purchaser shall execute such other instruments and take such other
actions as may be necessary to carry out their respective obligations under this
Agreement.

12.6    Conveyance. The General Assignment shall be without representation or
warranty of title, express or implied, except that Seller shall specially
warrant and agree to defend the title to the Assets against the lawful claims
and demands of all persons claiming the same, or any part thereof, but limited
to claims arising by, through, or under Seller but not otherwise, subject to and
excepting all Permitted Encumbrances. The damages recoverable for a breach of
such special warranty of title with respect to any Asset shall not exceed the
Allocated Value of the relevant Asset.
13.    POST-CLOSING OBLIGATIONS
13.1    Post-Closing Adjustments.
13.1.1
As soon as reasonably practicable after the Closing, but in no event later than
ninety (90) days after the Closing, Seller shall prepare, in accordance with
this Agreement, and deliver to Purchaser, a statement setting forth each
adjustment to the Purchase Price made pursuant hereto (the “Post-Closing
Adjustment Statement”). The Post-Closing Adjustment Statement will include any
adjustments necessary in connection with (i) any Title Defect Adjustment,
Environmental Defect Adjustment or Casualty Loss determined pursuant to Section
3.9, (ii) any Gas Imbalance Adjustment determined in accordance with Section
13.1.4, and (iii) any other adjustments required under the provisions of Section
2.4 and not taken into account in determining the Closing Adjustment Statement.
As soon as reasonably practicable, but in no event later than thirty (30) days
after Purchaser’s receipt of the Post-Closing Adjustment Statement from Seller,
Purchaser shall deliver to Seller any objections that Purchaser has to the
Post-Closing Adjustment Statement. If Purchaser fails to object to such
Post-Closing Adjustment Statement within such thirty (30) day time period, the
Post-Closing Adjustment Statement shall be conclusively deemed to be final and
accepted by both Parties. The Parties shall undertake to agree on the final
Adjusted Purchase Price no later than one hundred twenty (120) days after the
Closing.

13.1.2
If Purchaser and Seller, acting in good faith, are unable to agree upon the
adjustments in the Post-Closing Adjustment Statement required under the
provisions of Section 2.4 (other than any Title Defect Adjustment, Environmental
Defect Adjustment or Casualty Loss determined pursuant to Section 3.9, which
determinations shall be final), within one hundred twenty (120) days after the
Closing, the final Post-Closing Adjustment Statement amount shall be determined
either (i) by subsequent agreement of the Parties, or (ii) by binding
arbitration pursuant to an arbitration proceeding initiated and conducted in
accordance with the then in force Commercial Arbitration Rules of the American
Arbitration Association (“AAA”). Either Party may initiate arbitration. The
arbitration proceedings shall be conducted in Oklahoma City, Oklahoma, by a
single arbitrator agreed to by the Parties, or if they are unable to agree,
selected by the AAA. The arbitrator shall be a certified public accountant
licensed to practice in the State of Oklahoma with at least (10) years’
experience in the oil and gas business. In fulfilling its duties hereunder with
respect to the Final Settlement Statement, the arbitrator shall be bound by the
matters set

- 29 -

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

forth in this Agreement. The decision of the arbitrator shall be conclusive and
binding on the Parties. The general expenses of arbitration, including the fees
and expenses of the arbitrator, shall be borne equally by Seller and Purchaser;
however, each Party shall bear and pay the fees and expenses of its own
witnesses, legal counsel and of the collection and presentation of its evidence.
The award of the arbitrator shall not be subject to appeal or judicial review of
any nature and shall be enforceable in any court of competent jurisdiction.
PURCHASER EXPRESSLY CONSENTS TO THE JURISDICTION OF AND APPROPRIATE VENUE IN ANY
STATE DISTRICT COURT OR, SUBJECT TO SATISFYING JURISDICTIONAL REQUIREMENTS, ANY
FEDERAL DISTRICT COURT, SITTING IN OKLAHOMA CITY, OKLAHOMA, FOR PURPOSES OF
ENFORCING THE ARBITRATION AWARD.
13.1.3
The date upon which the Adjusted Purchase Price is agreed to by the Parties or
determined by arbitration pursuant to Section 13.1.2 is referred to herein as
the “Final Settlement Date.” Within five (5) business days after the Final
Settlement Date, those credits agreed upon by Purchaser and Seller shall be
netted, and the final settlement shall be paid in cash by the Party owing same,
via wire transfer as directed in writing by the receiving Party.

13.1.4
If either Party determines, prior to the delivery of the Post-Closing Adjustment
Statement, that Hydrocarbon production imbalances or imbalances with respect to
any pipeline, storage, or processing facility attributable to Wells included in
the Assets as of the Effective Date are other than as set forth in Schedule
6.2.8, subject to verification of the other Party, the Purchase Price shall be
adjusted upward or downward in connection with the Post-Closing Adjustment
Statement, depending upon whether there is a net overproduction or a net
underproduction attributable to such Wells. The amount to be paid by Purchaser
to Seller with respect to any underproduction, or by Seller to Purchaser with
respect to any overproduction, shall be based on a value of $2.00 per MMBtu,
without adjustment for present value or other discount factors. Notwithstanding
the foregoing, in no event shall any adjustment be made or any amount owing by
either Party unless the net amount owed (the “Gas Imbalance Adjustment”) is
greater than $50,000.

13.2    Receipts and Credits. Except as otherwise provided in this Agreement,
all monies, proceeds, receipts, credits, and income attributable to the Assets
for all periods of time on and after the Effective Date shall be the sole
property of Purchaser, and, to the extent received by any Seller after the
Closing, Seller shall fully disclose, account for, and transmit the same
promptly to Purchaser. Except as otherwise provided in this Agreement, all
monies, proceeds, receipts, credits, and income attributable to the Assets for
all periods of time prior to the Effective Date shall be the sole property of
Seller, and, to the extent received by Purchaser after the Closing, Purchaser
shall fully disclose, account for, and transmit the same promptly to Seller.
Except as otherwise provided in this Agreement (including, without limitation,
the Assumed Obligations expressly assumed by Purchaser), all costs, expenses,
disbursements, obligations, and liabilities attributable to the Assets for
periods of time prior to the Effective Date, regardless of when due or payable,
shall be the sole obligation of Seller, and Seller shall promptly pay, or if
paid by Purchaser, promptly reimburse Purchaser for, and hold Purchaser and its
successors and assigns harmless from and against, the same. Except as otherwise
provided in this Agreement (including, without limitation, the Assumed
Obligations expressly assumed by Purchaser), all costs, expenses, disbursements,
obligations, and liabilities attributable to the Assets for periods of time on
and after the Effective Date, regardless of when due or payable, shall be the
sole obligation of Purchaser, and Purchaser shall promptly pay,

- 30 -

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

or if paid by Seller, promptly reimburse Seller for, and hold Seller and its
respective successors and assigns harmless from and against, the same.
13.3    Assumption and Indemnification.
13.3.1
If the Closing occurs, Purchaser shall assume and agrees to pay, perform, and
discharge any and all Assumed Obligations (as hereinafter defined). As used
herein, “Assumed Obligations” means all liabilities, responsibilities, duties,
and obligations that arise from or relate to the ownership, use, or operation of
the Assets and the production and marketing of Hydrocarbons therefrom, whether
arising before, on, or after the Effective Date, including, without limitation,
liabilities, responsibilities, duties, and obligations arising out of or
relating to: (i) Plugging and Abandonment (as hereinafter defined);
(ii) contracts or agreements affecting the Assets in existence as of the
Effective Date or the Closing Date, including, but not limited to, the Existing
Contracts; (iii) the Environmental Obligations (as hereinafter defined),
(iv) imbalances due to overproduction of gas by Seller or pipeline imbalances
owed by Seller under transportation agreements; and (v) obligations otherwise
assumed by Purchaser under this Agreement. As used herein, “Environmental
Obligations” means any claim, obligation, or liability relating to the
environmental condition of the Assets, regardless of whether resulting from
acts, omissions, events, or conditions occurring before, on, or after the
Effective Date, including, without limitation, (u) all Environmental Defects
timely and properly asserted by Purchaser pursuant to Article 5, regardless of
whether or not an Environmental Defect Adjustment is made with respect thereto,
(v) any other environmental pollution or contamination with respect to the air,
land, soil, surface, subsurface strata, surface water, ground water, or
sediments, (w) underground injection activities and waste disposal, (x) the
presence of hazardous substances and /or NORM, (y) the presence of unknown
abandoned oil and gas wells, water wells, sumps, pits, pipelines, and other
equipment, and (z) necessary Remediation, and the cost of such Remediation, or
any control, assessment, or compliance with respect to any pollution or
contamination. As used herein, “Plugging and Abandonment” means all plugging,
replugging, abandonment, removal, disposal or restoration associated with the
Assets, including, but not limited to, all plugging and abandonment, removal,
surface restoration (including, without limitation, wetlands and marsh
restoration), site clearance, and disposal of the Wells, well collars,
structures and Personal Property located on or associated with the Assets
(whether drilled or placed on an Asset prior to, on, or after the Effective
Date), the removal and capping of all associated flowlines, the restoration of
the surface, site clearance, and any disposal of related waste materials,
including, without limitation, NORM and asbestos, all in accordance with all
Applicable Laws and the terms and conditions of the Properties and Existing
Contracts; provided, however, this definition of Plugging and Abandonment is not
intended to preclude Purchaser from raising an Environmental Defect as provided
in Article 5.

13.3.2
Purchaser hereby indemnifies and agrees to defend and hold harmless Seller and
the Seller Group from and against all Costs based upon, arising out of, in
connection with, or relating to (i) any breach of any representation, warranty,
covenant, or agreement of Purchaser contained in this Agreement and (ii)
Purchaser’s inspection of the Assets prior to the Closing. If the Closing
occurs, Purchaser shall indemnify, defend, and hold harmless

- 31 -

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

Seller and the Seller Group from and against all Costs based upon, arising out
of, in connection with, or relating to the Assumed Obligations.
13.3.3
Subject to the provisions of Sections 16.16.1 and 16.16.2, Seller hereby
indemnifies and agrees to defend and hold harmless Purchaser and the Purchaser
Group from and against all Costs based upon, arising out of, in connection with,
or relating to (i) any breach of any representation, warranty, covenant, or
agreement of Seller contained in this Agreement, and (ii) the Retained
Obligations. “Retained Obligations” means (x) the Excluded Assets; and (y) ALL
CLAIMS AND LIABILITIES FOR INJURY TO OR DEATH OF ANY PERSON, PERSONS, OR OTHER
LIVING THINGS, OR LOSS OR DESTRUCTION OF OR DAMAGE TO PROPERTY AFFECTING OR
RELATING TO THE ASSETS RESULTING FROM ANY ACT, OMISSION, OR EVENT OCCURRING
PRIOR TO THE EFFECTIVE DATE, BUT EXCLUDING ANY SUCH CLAIM OR LIABILITY ARISING
UNDER ENVIRONMENTAL LAWS.

13.4    Disclaimers. PURCHASER’S OBLIGATIONS UNDER SECTIONS 13.3.1 AND 13.3.2
SHALL APPLY REGARDLESS OF THE FAULT OR NEGLIGENCE (OTHER THAN THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) OF SELLER, INCLUDING STRICT OR STATUTORY
LIABILITY OF SELLER UNDER ANY APPLICABLE LAW. SELLER’S OBLIGATIONS UNDER SECTION
13.3.3 SHALL APPLY REGARDLESS OF THE FAULT OR NEGLIGENCE (OTHER THAN THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) OF PURCHASER, INCLUDING STRICT OR STATUTORY
LIABILITY OF PURCHASER UNDER ANY APPLICABLE LAW.
13.5    Method of Asserting Claims. All claims for indemnification under this
Agreement shall be asserted and resolved as follows; provided that the
provisions of Sections 13.5 and 13.6 shall be covenants and not conditions to
the defense and indemnity obligations to which they apply:
13.5.1
If that any claim for which a Party providing indemnification (the “Indemnifying
Party”) would be liable to a Party or any of its officers, directors, employees,
agents or representatives entitled to indemnification hereunder (the
“Indemnified Party”) is asserted against or sought to be collected by a third
person, the Indemnified Party shall promptly notify the Indemnifying Party of
such claim, specifying the nature of such claim and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim) (the “Claim Notice”). The
Indemnifying Party shall have thirty (30) days from its receipt of the Claim
Notice (the “Notice Period”) to notify the Indemnified Party (i) whether it
disputes its liability to the Indemnified Party hereunder with respect to such
claim; and (ii) if it does not dispute such liability, whether it desires, at
its sole cost and expense, to defend the Indemnified Party against such claim;
provided, however, that the Indemnified Party is hereby authorized, prior to and
during the Notice Period, to file any motion, answer, or other pleading,
submission or document which it shall deem necessary or appropriate to protect
its interests. If the Indemnifying Party notifies the Indemnified Party within
the Notice Period that it does not dispute such liability and desires to defend
against such claim or demand, then, except as hereinafter provided, the
Indemnifying Party shall have the right to defend such claim or demand by
appropriate proceedings, which proceedings shall be promptly settled or
prosecuted to a final conclusion, in such a manner as to avoid any risk of the

- 32 -

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

Indemnified Party becoming subject to liability. If the Indemnified Party
desires to participate in, but not control, any such defense or settlement, it
may do so at its own cost and expense. If the Indemnifying Party disputes its
liability with respect to such claim, or elects not to defend such claim,
whether by not giving timely notice as provided above or otherwise, the
Indemnified Party shall have the right, but not the obligation, to defend
against such claim, and the amount of any such claim, or if the same be
contested by the Indemnifying Party or by the Indemnified Party, then that
portion thereof as to which such defense is unsuccessful, shall be conclusively
deemed to be a liability of the Indemnifying Party hereunder.
13.5.2
If the Indemnified Party shall have a claim against the Indemnifying Party
hereunder which does not involve a claim or demand being asserted or sought to
be collected from it by a third person, the Indemnified Party shall promptly
send a Claim Notice with respect to such claim to the Indemnifying Party.

13.6    Payment. Payments under this Article 13 and under any other indemnity
provision of this Agreement shall be made as follows:
13.6.1
If the Indemnifying Party is required to make any payment hereunder, the
Indemnifying Party shall promptly pay the Indemnified Party the amount so
determined. If there should be a dispute as to the amount or manner of
determination of any indemnity obligation owed hereunder, the Indemnifying Party
shall nevertheless pay when due such portion, if any, of the obligation as shall
not be subject to dispute. The difference, if any, between the amount of the
obligation ultimately determined as properly payable hereunder and the portion,
if any, theretofore paid shall bear interest at the Agreed Rate (as provided in
Section 13.6.2). Upon the payment in full of any claim, the Indemnifying Party
shall be subrogated to the rights of the Indemnified Party against any person or
other entity with respect to the subject matter of this claim.

13.6.2
If all or part of any indemnification obligation under this Agreement is not
paid when due upon resolution of the claim, then the Indemnifying Party shall
pay upon demand to the Indemnified Party interest at the Agreed Rate on the
unpaid amount of the obligation for each day from the date the amount became due
until payment in full. As used herein, “Agreed Rate” means a rate per annum
calculated on a 360-day basis which is equal to the lesser of (i) a rate which
is two percent (2%) above the prime rate of interest of Bank of America, N.A.,
as announced or published by such bank from time to time (adjusted from time to
time to reflect any changes in such rate determined hereunder), or (ii) the
maximum rate from time to time permitted by Applicable Law.

13.7    Recording. As soon as practicable after the Closing, Purchaser shall
file and record all counterparts of the General Assignment in the appropriate
counties and, if necessary, with all relevant Governmental Bodies, and provide
Seller, at Purchaser’s expense, with copies of all recorded counterparts of the
General Assignment.
13.8    Cooperation and Further Assurances. After the Closing, Seller and
Purchaser agree to take such further actions and to execute, acknowledge, and
deliver all such further documents as are necessary or useful in carrying out
the purposes of this Agreement or of any document delivered pursuant to this
Agreement, including, but not limited to, the execution of state change of
operator

- 33 -

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

forms and other required state regulatory filings. Each Party also agrees to
cooperate with each other by providing reasonable information which may be
required by the other Party for the purpose of administering the Assets and
preparing or reviewing the Post-Closing Adjustment Statement.
14.    TERMINATION
14.1    Right of Termination. This Agreement may be terminated at any time at or
prior to the Closing only:
14.1.4
by mutual consent of the Parties;

14.1.5
by Seller, at Seller’s option, if any of the conditions applicable to Purchaser
set forth above in Article 10 have not been satisfied as provided therein or
waived by Seller on or before the Closing Date;

14.1.6
by Purchaser, at Purchaser’s option, if any of the conditions applicable to
Seller set forth above in Article 11 have not been satisfied as provided therein
or waived by Purchaser on or before the Closing Date; and

14.1.7
by Seller pursuant to the provisions of Section 3.8, if applicable.

14.2    Effect of Termination. If this Agreement is terminated pursuant to
Section 14.1 above, this Agreement shall become void and of no further force or
effect (except for the provisions of the final sentence of Section 3.1 and
Sections 5.2.2, 9.2, 16.10, and this Section 14.2, which shall continue in full
force and effect). If this Agreement is terminated pursuant to either Section
14.1.1 or Section 14.1.4, neither Party shall have any further liability to the
other as the result of such termination. If this Agreement is terminated by
Seller pursuant to Section 14.1.2, then Seller shall have the option of
retaining the Performance Deposit as liquidated damages pursuant to Section 2.3,
or proceeding against Purchaser for such damages as may be determined by a court
of competent jurisdiction. If this Agreement is terminated by Purchaser pursuant
to Section 14.1.3, then the Performance Deposit shall be returned to Purchaser
as Purchaser’s sole remedy, with all other remedies being expressly waived by
Purchaser. Notwithstanding anything to the contrary contained in this Agreement,
upon any termination of this Agreement pursuant to Section 14.1, Seller shall be
free immediately to enjoy all rights of ownership of the Assets and to sell,
transfer, encumber, or otherwise dispose of the Assets to any party without any
restriction under this Agreement; and Purchaser shall be liable for all actual,
incidental, and consequential damages (including, without limitation, lost
profits) if it attempts to interfere in any way with any such enjoyment or
action by Seller.
15.    TAXES
15.1    Apportionment of Ad Valorem and Property Taxes. All ad valorem taxes,
real property taxes, Personal Property taxes, and similar tax obligations (the
“Property Taxes”) with respect to the Assets for the tax period in which the
Effective Date occurs shall be apportioned, based on the Effective Date, between
Seller and Purchaser and, if already paid by Seller, an appropriate increase in
the Purchase Price shall be made pursuant to Section 2.4.6. If such Property
Taxes are not already paid, but the tax liability is known or can be reasonably
estimated, Seller’s portion of such Property Taxes shall be credited to
Purchaser’s account pursuant to Section 2.4.12. Purchaser shall pay or cause to
be paid to the taxing authorities all Property Taxes of which it has knowledge
not already

- 34 -

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

paid relating to the tax period in which the Effective Date occurs and if
appropriate adjustments to the Purchase Price pursuant to Section 2.4 were not
made at the Closing or in connection with the Post-Closing Adjustment Statement,
Purchaser shall invoice Seller (with copies of applicable tax bills and
assessments to confirm same) for Seller’s apportioned shares of such Property
Taxes, and Seller shall pay the same within thirty (30) days of receipt of said
notice. Purchaser shall defend, indemnify, and hold Seller harmless with respect
to the payment of such Property Taxes of which Purchaser has knowledge and which
Purchaser is obligated to pay to the applicable taxing authorities (including
any interest or penalties assessed thereon), provided Seller pays its share (as
apportioned hereunder) within thirty (30) days of being properly invoiced (with
accompanying documents to support the invoice) by Purchaser. For the tax period
in which the Effective Date occurs, Seller agrees (i) to forward immediately to
Purchaser copies of all Property Tax reports and returns received by Seller
after the Closing and (ii) to provide Purchaser with appropriate information
which is necessary for Purchaser to file any required Property Tax reports and
returns. For non-operated Properties (except for that portion of those Property
Taxes paid by Seller or others attributable to non-operated production burdens
as set forth in Section 15.2 below), the Property Taxes will be allocated
between Seller and Purchaser upon the receipt of joint interest billings in
which such Property Taxes are charged. All tax apportionments determined under
this Section 15.1 and Section 15.2 shall be deemed a final settlement of
Property Taxes between the Parties. Notwithstanding the foregoing, Seller or
Purchaser may contest with the appropriate taxing authority the amount of or
liability for any Property Tax apportioned to it pursuant to this Section 15.1.
The Party pursuing the contest shall indemnify the other Party from and against
all Costs incurred by the other Party in connection with the contest, and upon
final settlement or resolution of the contest, the economic burden of the
contested tax shall be adjusted among the parties in a manner consistent with
the intent of this Section 15.1.
15.2    Taxes Paid for Others. To the extent Purchaser has a right to do so,
Purchaser agrees to withhold from future income distributions to royalty owners,
overriding royalty interest owners, and other production burden holders as to
the Assets amounts sufficient to reimburse Seller for various taxes (e.g.,
Property Taxes, severance, environmental excise, etc.) paid by Seller on behalf
of such interest holders while Seller owned the Assets (which shall include
withholdings for co-working interest owners when Seller has paid its taxes and
has not previously collected such taxes through joint interest billings). Seller
will provide Purchaser with sufficient documentation to allow Purchaser to
confirm amounts to be withheld and will indemnify and hold Purchaser harmless
from liability for deducting such sums as directed by Seller. Purchaser agrees
promptly to forward to Seller such sums which are withheld pursuant to this
Section 15.2.
15.3    Sales Taxes. Purchaser shall pay, or cause to be paid, all sales, use,
transfer, and similar taxes, if any, resulting from the sale and transfer of the
Assets to Purchaser hereunder (including without limitation, all applicable
conveyance, transfer and recording fees, and real estate transfer stamps or
taxes imposed on the transfer of the Assets pursuant to this Agreement), and
shall prepare and file all tax returns required to be filed with respect to such
taxes.
15.4    Other Taxes. All production, severance, excise, and other similar taxes
that are based upon production of, or income or revenues from, Hydrocarbons
attributable to the Assets prior to the Effective Date shall be paid by Seller,
and all such taxes relating to such production on or after the Effective Date
shall be paid by Purchaser. The Party responsible for payment of such tax shall
prepare and file all tax returns required to be filed in respect thereof. This
Section 15.4 shall not apply to any tax to the extent specifically otherwise
provided elsewhere in this Agreement.

- 35 -

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

15.5    Cooperation. Each Party shall cooperate with the other Party and provide
the other Party with all information in its possession or to which it has access
which may be reasonably required by the other Party in connection with the
preparation of any tax return relating to the Assets, the audit or examination
of any such returns by any tax authority, and the determination of or contest of
any tax relating to the Assets. Notwithstanding anything to the contrary in this
Agreement, neither Party shall be required at any time to disclose to the other
Party any tax returns or other confidential tax information except to the extent
required by Applicable Law or court order.
15.6    Tax Indemnity. Seller shall indemnify and hold harmless Purchaser, and
Purchaser shall indemnify and hold harmless Seller, in each case with respect to
the payment of any taxes, including any interest or penalties assessed thereon,
for which the indemnifying Party is responsible pursuant to the provisions of
this Article 15.
16.    MISCELLANEOUS
16.1    Entire Agreement. This Agreement, the Confidentiality Agreement dated
__________, 2014, between Seller and Purchaser (the “Confidentiality
Agreement”), the General Assignment, the documents to be executed pursuant to
this Agreement, and the attached Exhibits and Schedules constitute the entire
agreement between the Parties pertaining to the subject matter of this Agreement
and supersede all prior agreements, understandings, negotiations and discussions
of the Parties, whether oral or written, and there are no warranties,
representations or other agreements between the Parties in connection with the
subject matter of this Agreement except as specifically set forth herein or in
documents delivered pursuant hereto. No supplement, amendment, alteration,
modification, or waiver of this Agreement shall be binding unless executed in
writing by the Parties.
16.2    Waiver. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions of this Agreement
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
16.3    Headings. The headings of articles and sections used in this Agreement
are for convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. References
herein to articles, sections, exhibits, and schedules are to articles, sections,
exhibits, and schedules to this Agreement unless expressly stated otherwise.
16.4    Assignment. Except as otherwise provided in Section 16.19, prior to the
Closing, no Party shall assign all or any part of this Agreement, nor shall any
Party assign or delegate any of its rights or duties hereunder, without the
prior written consent of the other Party. Any such assignment made without such
consent shall be void, and such purported assignee shall have no rights,
directly or indirectly, to enforce the rights of its purported assignor under
this Agreement. Except as otherwise provided in this Section 16.4, this
Agreement shall be binding upon and inure to the benefit of the Parties and
their respective permitted successors, assigns, and legal representatives. No
assignment or designation shall relieve the assigning Party from any obligation
hereunder unless expressly so agreed by the other Party.
16.5    No Third Party Beneficiaries. Nothing in this Agreement shall entitle
any party other than Purchaser and Seller and their duly authorized successors
or assigns (to the extent permitted by Section 16.4 above) to any claim, cause
of action, remedy, or right of any kind.

- 36 -

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

16.6    Governing Law. This Agreement, the other documents delivered pursuant
hereto, and the legal relations between the Parties shall be governed and
construed in accordance with the laws of the State of Oklahoma applicable to
agreements made and to be performed wholly within the State of Oklahoma. The
validity of the various assignments or conveyances affecting the title to the
Assets (and the warranties of title thereunder) shall be governed by and
construed in accordance with the laws of the jurisdictions in which the Assets
are located.
16.7    Notices. Any notice, communication, request, instruction or other
document required or permitted by this Agreement shall be given in writing by
certified mail, return receipt requested, postage prepaid, or by prepaid air
express, hand delivery, e-mail, or facsimile (except that notice given by
facsimile or email shall be effective upon receipt only if received during
normal business hours, and if received after normal business hours, such notice
shall be deemed given at the commencement of normal business hours on the next
business day) as follows:
If to Seller: 

Chaparral Energy, L.L.C.
Attn: David Ketelsleger
701 Cedar Lake Boulevard
Oklahoma City, Oklahoma 73114, 
Telephone:
Facsimile:
E-mail: David.Ketelsleger@chaparralenergy.com
 
If to Purchaser: 

RAM Energy LLC
2100 S. Utica Avenue, Suite 165
Tulsa, Oklahoma 74114
Telephone: (918) 936-4600
Facsimile: (918) 779-4462
E-mail: larrylee@ramenergy.net

with a copy to:

Justin Jackson
McAfee & Taft A P.C.
10th Floor Two Leadership Square
211 N. Robinson
Oklahoma City, OK 73102
Telephone: (405) 552-2240
Facsimile: (405) 228-7440
E-mail: Justin.jackson@mcafeetaft.com

 

16.8    Execution in Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but such counterparts together shall constitute for all purposes one
agreement.
16.9    Expenses. Except as otherwise provided in this Agreement, each Party
shall be solely responsible for all expenses incurred by it in connection with
the transaction contemplated herein (including, without limitation, fees and
expenses of its own counsel and accountants) and shall not be entitled to
reimbursement therefor from the other Party.
16.10    Confidentiality.
16.10.1
Seller’s and Purchaser’s respective obligations under the Confidentiality
Agreement shall terminate upon the Closing. Purchaser agrees that if this
Agreement is terminated for any

- 37 -

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

reason whatsoever, Purchaser’s obligations under the Confidentiality Agreement
shall continue in accordance with the terms thereof.
16.10.2
After the Closing, Seller agrees not to disclose geological, seismic and other
proprietary data related to the Assets, or other information that Seller would
treat as confidential if it were the owner of the Assets or any confidential
information provided by Purchaser to Seller, and Purchaser agrees not to
disclose proprietary or confidential information other than the Records provided
by Seller to Purchaser unless (i) the Party to which such confidentiality
obligation is owed shall have consented thereto in writing, (ii) disclosure is
required pursuant to a court order or by subpoena or similar legal process, or
(iii) disclosure is made on advice of its counsel, pursuant to a request by a
Governmental Body, pursuant to Applicable Laws, or to comply with the rules and
regulations of any stock exchange, or (iv) such information has been previously
made public (except as a result of a breach of this Agreement); provided,
however, each Party may disclose such information to its representatives,
agents, attorneys, consultants, and auditors as needed, but in such event, the
relevant Party shall use reasonable efforts to cause such persons to keep such
information confidential.

16.11    Exhibits and Schedules. All references in this Agreement to Exhibits
shall be deemed to be references to such Exhibits as the same may be amended and
supplemented by mutual agreement of the Parties through and as of the Closing,
and all such Exhibits, as amended and supplemented, are hereby incorporated into
this Agreement by reference.
16.12    Publicity. Prior to making any press or other similar release or public
announcements regarding the transactions contemplated by this Agreement, each
Party shall consult with the other Party regarding the proposed contents
thereof, but no approval thereof shall be required.
16.13    Use of Seller’s Names. Purchaser agrees to use reasonable efforts, as
soon as practicable after the Closing, but in any case no later than one hundred
eighty (180) days after the Closing, to remove or cause to be removed from the
Assets, to the extent it has knowledge of the existence of same, all names and
marks used by Seller and all variations and derivatives thereof and logos
relating thereto, and will not thereafter make any commercial use of such names,
marks and logos.
16.14    Severability. 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 contemplated transactions is not affected in any material adverse manner to
either 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
contemplated transactions are fulfilled to the extent possible.
16.15    Affiliate. For purposes of this Agreement, the term “Affiliate”
(whether capitalized or not) shall mean, when used with respect to a person or
entity, any other person or entity (i) which directly or indirectly (through one
or more intermediaries) controls, or is controlled by, or is under common
control with, such first mentioned person or entity, or (ii) which beneficially
owns, holds, or controls fifty percent (50%) or more of the interest of such
first mentioned person or entity. The term “control” (including the terms
“controlled by” and “under common control with”) means the

- 38 -

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

possession, directly or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management policies of a person or entity,
whether through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise.
16.16    Survival; Certain Limitations.
16.16.1
The representations and warranties of Seller (i) contained in (i) Sections
6.2.1, 6.2.2, 6.2.3 and 6.2.4 (the “Fundamental Representations”) shall survive
the Closing until barred by the applicable statutes of limitations, (ii) Section
6.2.5 shall survive until the expiration of the applicable statute of
limitations for assessment of the applicable tax, and (iii) Sections 6.2.6,
6.2.7, and 6.2.9 shall survive the Closing for a period of six (6) months.
Except as otherwise provided in the preceding sentence, all other
representations and warranties of Seller under this Agreement shall not survive
the Closing. The representations and warranties of Purchaser contained in
Article 7 shall survive the Closing until barred by the applicable statutes of
limitations. The respective covenants of the Parties under this Agreement (i) to
be performed at or prior to the Closing shall expire and be of no further force
or effect after the Closing, and (ii) to be performed after the Closing shall
survive the Closing until barred by the applicable statutes of limitations (for
this purpose, nothing contained in Article 6 or 7 shall be deemed to be a
covenant).

16.16.2
In no event shall Seller have or incur any liability to Purchaser for any Costs
incurred by Purchaser arising from a breach of a representation or warranty of
Seller that is not a Fundamental Representation: (i) for any individual claim
for Costs that does not exceed $50,000.00 (the “Individual Threshold”); (ii)
until Purchaser has suffered Costs (in excess of the Individual Threshold) in
the aggregate in excess of an amount equal to three percent (3%) of the Purchase
Price (the “Aggregate Indemnity Deductible”), after which point Seller will be
obligated only to indemnify Purchaser from and against further Costs in excess
of the Individual Threshold and in excess of the Aggregate Indemnity Deductible;
and (iii) in the aggregate in excess of twenty percent (20%) of the Purchase
Price.

16.17    Attorney’s Fees. Any Party successfully pursuing a claim for the
enforcement of any provision of this Agreement, including, without limitation,
agreements of indemnity contained herein or any of the documents to be delivered
pursuant hereto, shall be entitled to recover from the unsuccessful Party
reasonable attorneys’ fees, court costs, and other expenses incurred by the
successful Party in such action.
16.18    Interest. In the event that either Party brings suit to collect any
amount owed by the other Party hereunder, such other Party shall pay the Party
bringing such suit interest on any amount so collected from the date of demand
(or, if earlier, the date due) until the date of payment at the Agreed Rate.
16.19    Certain Limitations. SELLER AND PURCHASER AGREE THAT, EXCEPT FOR THE
LIQUIDATED DAMAGES SPECIFICALLY PROVIDED FOR IN SECTION 2.3, AND THE POSSIBILITY
OF THE RECOVERY BY SELLER OF INCIDENTAL AND CONSEQUENTIAL DAMAGES AS
SPECIFICALLY PROVIDED IN SECTION 14.2, THE RECOVERY BY EITHER PARTY OF ANY
DAMAGES SUFFERED OR INCURRED BY IT AS A RESULT OF ANY BREACH BY THE OTHER PARTY
OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR OBLIGATIONS UNDER THIS
AGREEMENT SHALL BE LIMITED TO THE

- 39 -

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

ACTUAL DAMAGES SUFFERED OR INCURRED BY THE NONBREACHING PARTY AS A RESULT OF THE
BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS
HEREUNDER AND IN NO EVENT SHALL THE BREACHING PARTY BE LIABLE TO THE
NONBREACHING PARTY FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR
PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST
PROFITS OR OPPORTUNITIES, BUSINESS INTERRUPTION OR LOST OR DELAYED PRODUCTION)
SUFFERED OR INCURRED BY THE NONBREACHING PARTY AS A RESULT OF THE BREACH BY THE
BREACHING PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS
HEREUNDER. For purposes of the foregoing, actual damages may, however, include
indirect, consequential, special, exemplary or punitive damages to the extent
(i) the injuries or losses resulting in or giving rise to such damages are
incurred or suffered by a person which is not Seller or Purchaser, as
applicable, or its Affiliates and (ii) such damages are recovered against Seller
or Purchaser, as applicable, by a person which is not Seller or Purchaser, as
applicable, or its Affiliates. This Section 16.19 shall operate only to limit a
Party’s liability and shall not operate to increase or expand any contractual
obligation of a party hereunder or cause any contractual obligation of a party
hereunder to survive longer than provided in Section 16.16.
16.20    Exchange. Seller shall have the right to utilize all or part of the
Assets as part of a tax deferred exchange pursuant to Section 1031 of the IRC
and applicable state and local tax laws. In connection with an exchange, and
notwithstanding the terms of Section 16.4, all or part of Seller’s rights under
this Agreement may be assigned, without the need for Purchaser’s consent, to an
intermediary, escrow agent, trustee, or other exchange accommodation party,
provided that such assignment shall not relieve Seller of its obligations to
Purchaser hereunder. Purchaser shall cooperate with Seller in effecting such an
exchange, including, without limitation, the execution of escrow instructions
and other instruments, provided that: (i) the acquisition and exchange of any
exchange property shall not impose upon Purchaser any additional financial
obligation other than as set out in this Agreement; (ii) Purchaser shall have no
obligation to become a holder of record title to any exchange property;
(iii) Seller shall indemnify and hold Purchaser harmless from any and all Costs
which Purchaser incurs or to which Purchaser may be exposed as a result of
Purchaser’s participation in the contemplated exchange, including reasonable
attorneys’ fees and costs of defense; (iv) the Closing shall not be delayed or
affected by reason of such exchange nor shall the consummation or accomplishment
of such exchange be a condition precedent or condition subsequent to Seller’s
obligations under this Agreement; (v) Purchaser shall not, by this Agreement or
acquiescence to such exchange, have its rights under this Agreement affected or
diminished in any manner; and (vi) Purchaser shall not, by this Agreement or
acquiescence to such exchange, be responsible for compliance with or deemed to
have warranted to Seller that such exchange in fact complies with Section 1031
of the IRC or any state or local tax law. If any exchange contemplated by Seller
should fail to occur, for whatever reason, the sale of the Assets shall
nonetheless be consummated as provided herein.

- 40 -

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

IN WITNESS WHEREOF, Purchaser and Seller have executed and delivered this
Agreement as of the date first written above but effective as of the Effective
Date.
SELLER:

Chaparral Energy, L.L.C., an Oklahoma limited liability company

By:    /s/ Mark A. Fischer    
Mark A. Fischer, Manager
 

PURCHASER:

RAM Energy LLC, an Oklahoma limited liability company

By: /s/ Larry Lee        
Larry Lee, Manager

- 41 -