Exhibit 10.2
 
ASSET SALE AGREEMENT
 
CAT CANYON, LOS FLORES, CLARK AVENUE, SANTA MARIA VALLEY AND ZACA FIELDS
 
1
  
Sale and Purchase of Assets
2.
  
Closing
3.
  
Effective Date
4.
  
Transfer Date
5.
  
Purchase Price and Manner of Payment
6.
  
[Omitted]
7.
  
Disposition of Accounts Receivable and Other Revenue
8.
  
Proration of Credits and Payment Obligations
9.
  
Proration of Real Estate and Other Taxes
10.
  
Sales Tax and Use Taxes
11.
  
Documentation of Sale and Transfer of Ownership
12.
  
Conditions Precedent to Closing
13.
  
Deliveries at Closing
14.
  
Post-Closing Settlement
15.
  
Title Matters
16.
  
Buyers Acceptance of the Assets
17.
  
Physical Condition of the Assets
18.
  
Buyer’s Investigation and Indemnification
19.
  
Compliance
20.
  
Indemnification and Assumption of Obligations
21.
  
Indemnification and Assumption of Environmental Risks
22.
  
Representations
23.
  
Operation of the Assets Prior to Closing
24.
  
Covenant Not to Sue and Alternative Dispute Resolution
25.
  
Miscellaneous
26.
  
Additional Plugging, Abandonment and Remediation Requirements
27.
  
Security for Plugging and Abandonment
28.
  
Casualty Losses

 
Exhibit A—Corporation Grant Deed
Exhibit B—Bill of Sale
Exhibit C—Assignment of Leases and Agreements
Exhibit D—Sublicense Agreement For Use Of OEC Technology
Exhibit E—Parent Company Guarantee
Exhibit F—Parent Company Confirmation
Exhibit G—Allocation of Value
Exhibit H—Claims and Litigation
Exhibit I—Preferential Rights to Purchase, First Rights of Refusal and Consents
to Assign

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Schedule 1.1(a)—Oil, Gas and Mineral Leases and Real Property
Schedule 1.1(e)—Applicable Contracts
Schedule 8(b)—Suspense Accounts
Schedule 15(c)—Working and Net Revenue Interests
Schedule 22(a)(x)(1)—Defaulted Leases

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ASSET SALE AGREEMENT
 
CAT CANYON, LOS FLORES, CLARK AVENUE, SANTA MARIA VALLEY AND ZACA FIELDS
 
THIS AGREEMENT, made as of this 31st day of May, 2001, between VINTAGE PETROLEUM
CALIFORNIA, INC., an Oklahoma corporation (“Seller”), with a place of business
at 110 West Seventh Street, Tulsa, Oklahoma 74119, and GREKA SMV, INC., a
Colorado corporation (“Buyer”), with a place of business at 3201 Airpark Drive,
Suite 201, Santa Maria, CA 93455.
 
RECITALS
 
Seller desires to sell to Buyer and Buyer desires to purchase from Seller on the
terms and conditions set forth in this Asset Sale Agreement (“Contract”) those
certain oil and gas interests, operating rights, real property, personal
property, fixtures and improvements located on the real property and associated
assets, identified herein. Accordingly, in consideration of the mutual promises
contained herein, the mutual benefits to be derived by each party hereunder and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer and Seller agree as follows:
 
1.  Sale and Purchase of Assets:
 
1.1  Assets To Be Sold:    Seller shall sell, assign, transfer and convey to
Buyer, and Buyer shall purchase and receive at “Closing” (as defined below) all
of Seller’s undivided right, title and interest (but exclusive of the equipment,
machinery, and other real, personal movable, immovable and mixed property
expressly reserved by Seller pursuant to Section 1.2 hereof and elsewhere
herein) in and to the following:
 
a)  the oil, gas, and mineral leases and real property recited and described in
and on Schedule 1.1(a) (“Property”) insofar and only insofar as same are
contained therein and described;
 
b)  all oil and gas wells, salt water disposal wells, injection wells and other
wells on the Property(collectively the “Wells”);
 
c)  all equipment, machinery, fixtures, flowlines, roads, pipelines, pole lines,
appurtenances, materials, improvements, and other real, personal, and mixed
property located on, used in the operation of, or relating to the production,
treatment, sale, or disposal of hydrocarbons, water, and associated substances
produced from the Property including without limitation, the property recited
and described in and on Exhibit B attached hereto and made a part hereof (the
“Personal Property”);

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d)  all hydrocarbons, including, natural gas, casinghead gas, drip gasoline,
natural gasoline, natural gas liquids, condensate products, and crude oil,
whether gaseous or liquid, produced from or allocable to the Property on or
after the Effective Date (the “Hydrocarbons”);
 
e)  all contracts, permits, road use agreements, rights-of-way, easements,
licenses, servitudes and agreements relating to the Property, Personal Property
and Wells, or the ownership or operation thereof, or the production, treatment,
sale, storage or disposal of hydrocarbons, water, or substances associated
therewith recited and described in and on Schedule 1.1(e) (the “Applicable
Contracts”);
 
f)  originals of all of the files, records, information and materials relating
to the Property, Hydrocarbons, Applicable Contracts and Personal Property, owned
by Seller and which Seller is not prohibited from transferring to Buyer by law
or existing contractual relationship (collectively, the “Records”), including,
without limitation: (i) lease, land and title records (including abstracts of
title, title opinions, certificates of title, title curative documents, division
orders, and division order files) (the “Land Files”), (ii) the Applicable
Contracts, (iii) all environmental and production files (the “Production
Files”), and (iv) original Well files;
 
g)  the Sublicense Agreement For Use Of OEC Technology, attached hereto as
Exhibit “D”; and
 
h)  all geophysical, geological, engineering and other technical and
interpretative data relating to the Assets including, without limitation, all
such data and interpretations Seller or its affiliates acquired from Texaco
Exploration and Production Inc. and from Shell Oil Company.
 
All such Property, Wells, Hydrocarbons, Applicable Contracts, Personal Property,
Records, and Sublicense are hereinafter collectively referred to as the “Assets”
and are intended by the parties to include all interests of Seller located in
Santa Barbara, County, California (except for the California lease).
 
1.2  Exclusions and Reservations:    Specifically excepted and reserved from
this transaction are the following, hereinafter referred to as the “Excluded
Assets”.
 
a)  Any of Seller’s reserve estimates, economic analyses, pricing forecasts,
legal opinions or analyses, or information considered by Seller as confidential
or protected by “Attorney-Client Privilege”;

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b)  All rights and claims arising, occurring, or existing in favor of Seller
prior to the Effective Date including, but not limited to, any and all contract
rights, claims, penalties, receivables, revenues, recoupment rights, recovery
rights, accounting adjustments, mispayments, erroneous payments, personal
injury, property damage, royalty or other rights and claims of any nature in
favor of Seller relating to any time period prior to the Effective Date;
 
c)  All corporate, financial, and tax records of Seller; however, Buyer shall be
entitled to receive copies of any financial and tax records which directly
relate to the Assets, or which are necessary for Buyer’s ownership,
administration, or operation of the Assets;
 
d)  All rights, titles, claims and interests of Seller related to the Assets for
all periods prior to the Effective Date (i) under any policy or agreement of
insurance or indemnity, (ii) under any bond, or (iii) to any insurance or
condemnation proceeds or awards;
 
e)  All hydrocarbons produced from or attributable to Seller’s interest in the
Assets with respect to all periods prior to the Effective Date together with all
proceeds from or of such hydrocarbons;
 
f)  Claims of Seller for refund of or loss carry forwards with respect to (i)
production, windfall profit, severance, ad valorem or any other taxes
attributable to the Assets for any period prior to the Effective Date, (ii)
income or franchise taxes attributable to the Assets for any period prior to the
Effective Date;
 
g)  All amounts due or payable to Seller as adjustments or refunds under any
contracts or agreements affecting the Assets for all periods prior to the
Effective Date;
 
h)  All amounts due or payable to Seller as adjustments to insurance premiums
related to the Assets for all periods prior to the Effective Date;
 
i)  Subject to the terms hereof, all monies, proceeds, benefits, receipts,
credits, income or revenues (and any security or other deposits made)
attributable to the Assets prior to the Effective Date;
 
j)  All Seller’s patents, trade secrets, copyrights, names, marks and logos;
 
k)  All software and software licenses; and

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l)  Vehicles.
 
2.  Closing:    Closing shall mean the date on which the Purchase Price (as
defined below) is paid to Seller and the conveyancing instruments referred to in
Paragraph 13 are delivered to Buyer. Closing shall occur at Seller’s office,
five business days after Buyer has delivered notice to Seller that it is ready
to close, but in no event later than July 31, 2001at a mutually agreeable time.
 
3.  Effective Date:    The Effective Date of the sale shall be:
 
a.  For Property without Consents, May 1, 2001, as of 7:00 a.m., PDT.
 
b.  For any individual Property with a Consent requirement, 30 days prior to
receipt of all of the Consents required for such individual Property.
 
4.  Transfer Date:    The Transfer Date shall be at 7:00 a.m. on the next
ensuing day after Closing.
 
5.  Purchase Price and Manner of Payment:    Buyer shall pay to Seller, or its
respective designee, as consideration for the Assets, a Purchase Price of
Seventeen Million Seven Hundred Fifty Thousand Dollars ($17,750,000), as
adjusted, plus interest, as hereinafter provided:
 
a.  At Closing, Buyer shall pay to Seller the Purchase Price, as adjusted
herein.
 
b.  Buyer shall pay to Seller at Closing interest on the Purchase Price. Such
interest shall be calculated at LIBOR (3 month rate) and shall be based upon the
period beginning 30 days after the Effective Date and ending at the Closing
(calculated separately for each individual Property); provided that no interest
shall accrue during any period for which Seller’s actions or omissions have
caused a delay in Closing.
 
c.  All amounts to be paid hereunder to Seller shall be paid by wire transfer of
immediately available funds made payable to “Vintage Petroleum California, Inc.”
or its designee.
 
d.  Seller may request no later than five (5) days prior to Closing, that Buyer
bring additional funds to Closing for the reasonably estimated costs for filing
fees, transfer taxes, sales and gross receipt taxes on the tangible personal
property, and such other charges necessary to transfer the Assets. The Purchase
Price shall be allocated among tangibles and intangibles comprising the Assets
as follows: Ninety Percent (90%) of the Purchase Price shall be

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attributed to the real property (15% attributable to real property surface and
85% attributable to real property oil and gas) and Ten Percent (10%) shall be
attributed to the Equipment and other personal property. Buyer and Seller agree
to be bound by the allocation of the Purchase Price among tangible and
intangible Assets, set forth herein, for all purposes; to consistently report
such allocations for all federal, state and local income tax purposes; and to
timely file all reports required by the Internal Revenue Code of 1986, as
amended, concerning the Purchase Price allocations. Buyer shall timely reimburse
Seller for any and all charges paid by Seller over the estimated amount and
Seller shall refund any excess amount to Buyer.
 
6.  [Omitted]
 
7.  Disposition of Accounts Receivable and Other Revenue:    Accounts receivable
or other revenue associated with the Assets, to the extent that such accounts
receivable or revenue are attributable to times prior to the Effective Date, and
oil in tanks above the pipeline connections and gas produced prior to such date
shall not be part of the sale but shall remain the property of Seller. All
storage tanks, if any, on the property subject to this Contract shall be gauged
at 7:00 a.m. local time on the Effective Date. Buyer shall have the right to be
present to witness such gauging; if Buyer elects not to be present, Buyer shall
be deemed to have accepted the gauging as to quantity and gravity set at the
gauging. Such gauging shall deduct reasonable and customary amounts for
line-fill and tank bottoms necessary for operations. Seller and Buyer shall
execute such additional documents as may be necessary to properly evidence the
transfer of the interests herein sold and purchased. Seller shall have the right
to enter upon the Assets to remove all oil and gas not sold herein within a
reasonable time following Closing, or sell the same to Buyer at the highest
posted field price for oil and Seller’s gas sales contract price for gas
prevailing in the field as of Closing.
 
8.  Proration of Credits and Payment Obligations:
 
a.  All credits and payment obligations associated with the Assets, including
but not limited to royalties, lease rentals, and other forms of contractual
payments shall be prorated between Seller and Buyer as of the Effective Date.
Seller shall be responsible for all such items attributable to periods prior to
the Effective Date or Closing, as applicable, and Buyer shall be responsible for
and shall pay for all such items attributable to periods on and after such date.
Buyer shall pay and be responsible for all sales, transfer, and use taxes, plus
any penalty or interest thereon, applicable to the sale of the Assets.

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b.  Notwithstanding paragraph 8.a., at Closing or such other time as Seller and
Buyer agree, Seller shall deliver to Buyer all funds as an offset against Buyers
payment to Seller as required in Paragraph 5.a., in an amount representing the
value or proceeds of production removed or sold from the Assets and then held by
Seller in accounts from which payments have been suspended and as disclosed on
Schedule 8(b). Thereafter Buyer shall be solely responsible for the proper
distribution of such funds, including any obligation under law to identify and
locate the persons entitled to such funds and to report and escheat such funds
under applicable state unclaimed property law.
 
c.  Seller shall retain all rights and obligations regarding outstanding
receivables pertaining to the Assets which accrued to Seller prior to the
Effective Date.
 
d.  Seller shall retain all rights and obligations regarding outstanding trade
payables related to the Assets which accrued to Seller prior to the Effective
Date.
 
e.  In accordance with generally accepted accounting principles, Seller shall
complete a settlement statement accounting within 90 days of Closing pursuant to
Paragraph 14.
 
9.  Proration of Real Estate and Other Taxes:    All real estate, occupation, ad
valorem, personal property, and severance taxes and charges on any of the Assets
shall be prorated as of the Effective Date. Seller shall pay all such items for
all periods prior to such date and shall be entitled to all refunds and rebates
with regard to such periods. In the event Buyer pays additional taxes or charges
which are assessed upon or levied against any of the Assets after Closing with
respect to any period prior to the Effective Date, Seller shall promptly
reimburse Buyer the amount thereof upon presentation of a receipt therefor. If
Seller elects to challenge the validity of such assessment or levy, or any
portion thereof, Buyer shall extend reasonable cooperation to Seller in such
efforts, at no expense to Buyer. Buyer shall be responsible for the
determination and payment of any sales tax or transfer tax due on the sale and
purchase of any tangible personal property hereunder.
 
10.  Sales Tax and Use Taxes:    Buyer shall be responsible for all sales, use,
transfer and similar taxes arising out of the sale of the Assets. At Closing,
Buyer shall pay Seller all state and local sales or use taxes applicable to that
portion of the Assets which is tangible personal property, and Seller shall
remit such amount to the appropriate taxing authority in accordance with
applicable law. All recording and transfer fees shall be paid by Buyer.

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Should this purchase and sale constitute an isolated or occasional sale and not
be subject to sales or use tax with any of the taxing authorities having
jurisdiction over this transaction, no sales tax will be collected by Seller
from Buyer at the date of Closing. Seller agrees to cooperate with Buyer in
demonstrating that the requirements for an isolated or occasional sale or any
other sales tax exemption have been met.
 
11.  Documentation of Sale and Transfer of Ownership:    Subject to the terms of
this Contract, the Assets to be conveyed by Seller to Buyer shall be conveyed
“AS IS, WHERE IS” pursuant to the instruments substantially in the form of the
Exhibits attached hereto and such other form or forms customary and necessary to
properly transfer the Assets according to the requirements of any applicable
federal, state or local agency. Buyer assumes the risk of description, title and
condition of the Assets and shall satisfy itself with respect thereto.
 
a.  Seller shall deliver the Assets to Buyer on the Transfer Date subject to the
reservations, limitations, conditions and restrictions contained in this
Contract and the instruments of conveyance attached hereto.
 
b.  The title to the Assets shall be subject to all matters appearing of record
or that can be ascertained by an inspection thereof and shall be conveyed to
Buyer without any warranty of title, express or implied, except that Seller has
not heretofore disposed of, burdened or otherwise encumbered, any interest
herein offered for sale. The cost of title insurance, if any, shall be paid for
by the party requesting it.
 
12.  Conditions Precedent to Closing:
 
a.  Seller’s Conditions Precedent:    Unless waived in writing on notice given
not later than five (5) days prior to Closing, the obligations of Seller to
consummate the transactions contemplated by this Contract are subject to each of
the following conditions:
 
(i).  Buyer shall have performed and complied with all terms of this Contract
required to be performed or complied with by Buyer prior to Closing;
 
(ii).  No action or proceeding by or before any governmental authority shall
have been instituted or threatened (and not subsequently dismissed, settled or
otherwise terminated) which might restrain, prohibit or invalidate any of the
transactions contemplated by this Contract, other than an action or proceeding
instituted or threatened by Seller or any of its affiliates;

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(iii).  Seller and Buyer shall have executed, delivered and acknowledged a
bilateral form of assignment and a bilateral form of grant deed whereby Seller
transfers its right, title and interest in the Assets to Buyer and Buyer assumes
the obligations and liabilities pursuant to Paragraphs 20 and 21, hereof;
 
(iv).  Buyer shall have provided Seller with a copy of the bond required by
Section 3206 of the Public Resources Code of the State of California or other
security acceptable to the State of California for wells which have not produced
oil or gas or have not been used as injectors, for a period of five (5) years,
not later than ten (10) days before Closing.
 
(v).  The representations and warranties of Buyer contained in this Contract
shall be true and correct in all material respects on the Closing Date as though
made on and as of such date.
 
b.  Buyer’s Conditions Precedent:    Unless waived in writing on notice given
not later than five (5) days prior to Closing, the obligations of Buyer to
consummate the transactions contemplated by this Contract are subject to each of
the following conditions;
 
(i).  Seller shall have performed and complied with all terms of this Contract
required to be performed or complied with by Seller prior to Closing;
 
(ii).  No action or proceeding by or before any governmental authority shall
have been instituted or threatened (and not subsequently dismissed, settled or
otherwise terminated) which might restrain, prohibit or invalidate any of the
transactions contemplated by this Contract, other than an action or proceeding
instituted or threatened by Buyer or any of its affiliates;
 
(iii).  Seller and Buyer shall have executed, delivered and acknowledged a
bilateral form of assignment and a bilateral form of grant deed whereby Seller
transfers its right, title and interest in the Assets to Buyer, and Buyer
assumes the obligations and liabilities pursuant to Paragraphs 20 and 21,
hereof.
 
(iv).  The representations and warranties of Seller contained in this Contract
shall be true and correct in all material respects on the Closing Date as though
made on and as of such date.
 
(v).  All Consents shall have been obtained, waived or the time to exercise such
rights have expired.

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(vi).  Vintage Petroleum Inc. (“Vintage”) shall have transferred all of the
Assets to Seller subject to all of the representations, warranties, and
conditions (including the obtaining of all Consents from Vintage to Seller)
described in this Agreement.
 
13.  Deliveries at Closing:
 
a.  Buyer shall deliver to Seller at or before Closing the following:
 
(i).  the amount specified in Paragraph 5.a. above, as adjusted by this
Contract;
 
(ii).  a duplicate original notice to the Division of Oil, Gas and Geothermal
Resources as required by Section 3202 of the Public Resources Code of the State
of California including satisfactory evidence of indemnity bonds in amounts as
provided in Section 3204 or 3205 or such other security acceptable to the State
of California;
 
(iii).  a certificate of insurance policy as further described in Paragraph 27
herein;
 
(iv).  a duplicate original Parent Company Guarantee substantially identical to
Exhibit “E”; and
 
(v).  such other instruments or documents as Seller may reasonably request of
Buyer to consummate the transaction contemplated herein.
 
b.  Seller shall deliver to Buyer at Closing the following:
 
(i).  a duplicate original Assignment of Oil and Gas Leases and Corporation
Grant Deed, in the form of Exhibit “A”, in favor of Buyer duly executed and
acknowledged by Seller, the original of which will be recorded by Buyer at
Buyer’s expense; and
 
(ii).  a duplicate original Bill of Sale, in the form of Exhibit “B”, in favor
of Buyer conveying the personal property located on the premises, duly executed
by Seller; and
 
(iii).  a duplicate original Assignment of Agreements, in the form of Exhibit
“C”, in favor of Buyer, duly executed and acknowledged by Seller, the original
of which will be recorded by Buyer at Buyer’s expense;

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(iv).  a duplicate original notice to the Division of Oil, Gas and Geothermal
Resources as required by Section 3201 of the Public Resources Code of the State
of California;
 
(v).  a duplicate original Sublicense Agreement For Use of OEC Technology
identical to Exhibit “D”;
 
(vi).  a duplicate original notice to OEC, pursuant to the Sublicense Agreement
attached as Exhibit “D”;
 
(vii).  an executed Parent Company Confirmation substantially identical to
Exhibit “F”;
 
(viii).  conveyance documents from Vintage to Seller duly executed and
acknowledged in the same form as will be provided from Seller to Buyer together
with written evidence of all Consents to such assignment, and
 
(ix).  such other instruments or documents as Buyer may reasonably request of
Seller to consummate the transaction contemplated herein.
 
14.  Settlement:    Not later than five (5) days prior to Closing, Seller shall
deliver to Buyer a preliminary settlement statement that will reconcile the
reasonably estimated expenses and revenues attributable to the period between
the Effective Date and the Closing and other adjustments to the Purchase Price
as prescribed in this Contract. The parties shall use their reasonable efforts
to agree on such preliminary settlement statement no later than one (1) day
prior to Closing. Not later than 90 days after Closing, or as soon thereafter as
practicable, Seller shall deliver to Buyer a final settlement statement that
will reconcile the actual expenses and revenues attributable to the period
between the Effective Date and the Closing and other adjustments to the Purchase
Price as prescribed in this Contract including, without limitation, any
outstanding joint interest billings owed by either party or its affiliates to
the other party or its affiliates, irrespective of whether it relates to the
Property. The Parties shall use their best efforts to agree to such settlement
statement within 30 days after delivery to Buyer. If unable to reach agreement,
the parties agree to enter into alternative dispute resolution pursuant to
Paragraph 24 of this Contract. Settlement will be made within 15 days following
agreement on the settlement statement. Thereafter, additional proceeds received
by or expenses paid by either Seller or Buyer for or on behalf of the other
shall be settled by invoicing the other party for expenses paid or remitting to
the other party any proceeds received within 10 days of receipt of such invoice.

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15.  Title Matters:
 
a.  Asset Title Review:    Seller shall make available until two (2) days before
Closing at Seller’s office at 110 West Seventh Street, Tulsa, Oklahoma, 74119,
or such other place as deemed appropriate by Seller, upon execution of this
Contract, during normal business hours, and Buyer shall examine such title
information and abstracts as may then be available in Seller’s and Vintage’s
files. Seller also agrees to provide copies to Buyer of all documents, reports,
or similar information, if available, in Seller’s and Vintage’s files, which
document and evidence Seller’s ownership of the real property and working
interest portions of the Assets being conveyed hereunder, as well as copies of
any contracts, agreements or similar documents which benefit or obligate Seller
as to the Assets or the production therefrom, i.e., production purchase
contracts with third parties, including accounting records related thereto.
Seller shall not perform any additional title work, and any existing abstracts
and title opinions will not be made current by Seller. NO WARRANTY OF ANY KIND
IS MADE BY SELLER AS TO THE COMPLETENESS OR ACCURACY OF INFORMATION SO SUPPLIED,
and Buyer agrees that any conclusions drawn therefrom shall be the result of its
own independent review and judgment; provided, however, that Seller represents
that to the best of its knowledge, it has made available all of Seller’s and
Vintage’s title information related to the Assets.
 
b.  Title Adjustments:    In the event of a “Title Defect” as defined in
Paragraph 15.c below, Buyer shall notify Seller in writing of any matter Buyer
considers to be a Title Defect not later than 9:00 a.m. CST on June 30, 2001
(the “Preliminary Defect Notice”); provided, however, that Buyer may notify
Seller in writing of any Title Defect occurring subsequent to June 30, 2001 but
prior to Closing (“Final Defect Notice”). Such notices shall include (i) a
specific description of the matter Buyer asserts as a Title Defect, (ii) a
specific description of the Asset or portion of the Assets that is affected by
the Title Defect, (iii) Buyer’s calculation of the amount by which each Title
Defect has diminished the value of the Assets, such amount to be determined by
Buyer in good faith and in a commercially reasonable manner, and (iv) reasonable
supporting documentation. Buyer shall be deemed to have waived any Title Defect
which Buyer fails to assert in its notices prior to the dates set forth in this
Paragraph 15.b, or which Buyer accepts or assumes by Closing on that Asset.
 
c.  Title Defect:    The term “Title Defect” shall refer to any defect or
deficiency in title to the Property, except for Permitted Encumbrances, that in
Buyer’s reasonable opinion (i) create a lien, claim, encumbrance, restriction or
other obligation affecting the interests of Seller in the Assets, (ii) diminish
Seller’s net revenue interest described on Schedule 15.c., (iii) increase
Seller’s working interest described on Schedule 15.c. (defined as Seller’s

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share of the costs of operation, development or production borne by the owner of
such interest without a corresponding increase in Seller’s net revenue interest,
or which creates an obligation to pay costs or expenses in an amount greater
than such interest), or (iv) materially diminishes Seller’s ability to exercise
its ownership rights or operations of the Assets.
 
d.  Permitted Encumbrances:    As used in this Paragraph 15, the term “Permitted
Encumbrance” means:
 
(i).  lessor’s royalties, non-participating royalties, overriding royalties and
division orders and sales contracts containing customary terms and provisions
covering oil, gas or associated liquefied or gaseous hydrocarbons, reversionary
interests, and similar burdens if the net cumulative effect of such burdens does
not operate to reduce the net revenue interest claimed by Seller;
 
(ii).  subject to the provisions of Paragraph 25.2 hereof, preferential rights
to purchase and required third party consents to assignments and similar
agreements, exclusive of governmental consents or approvals, with respect to
which prior to Closing (a ) waivers or consents are obtained from the
appropriate parties or (b) the appropriate time period for asserting such rights
has expired without an exercise of such rights;
 
(iii).  liens for taxes or assessments not yet due or delinquent;
 
(iv).  all rights to consent by, required notices to, filings with, or other
actions by governmental entities in connection with the sale or conveyance of
oil and gas leases or interests therein, if the same are customarily obtained
subsequent to such sale or conveyance and Buyer has no reason to believe they
cannot be obtained;
 
(v).  conventional rights of reassignment requiring less than ninety (90) days
notice to the holders of such rights;
 
(vi).  such Title Defects as Buyer may have waived;
 
(vii).  easements, road-use agreements, rights-of-way, servitudes, permits,
surface leases and other rights in respect of surface operations; provided they
do not materially interfere with Buyer’s operation or use of the Assets;
 
(viii).  defects, irregularities and deficiencies in title of or to any
rights-of-way, road-use agreements, easements, surface leases or other rights
which in the aggregate do not materially impair the use of such rights of-way,
road-use agreements, easements, surface leases or other rights

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for the purpose of which such rights will be held by Buyer and would not have a
material adverse effect on the operation or value of any of the Assets;
 
(ix).  zoning, planning and environmental laws and regulations to the extent
valid and applicable to the Assets;
 
(x).  vendors’, carriers’, warehousemen’s, repairmen’s mechanics’, workmen’s,
materialmen’s, construction or other like liens arising by operation of law in
the ordinary course of business or incident to the construction or improvement
of any property in respect of obligations which are not yet due;
 
(xi).  defects, irregularities and deficiencies in title of any of the Assets
listed in Schedule 22.a.(x)(1); and
 
(xii).  defects, irregularities and deficiencies in title of any of the Assets
listed in the Notice of Defects letter dated November 24, 1999 sent by Buyer to
Vintage Petroleum, Inc. (“Vintage”) relating to the Asset Sale Agreement dated
November 2, 1999 between Buyer and Vintage (the “Defect Notice”).
 
e.  Remedies for Title Failures:    Seller shall have the right but not the
obligation to cure any Title Defect asserted in such Preliminary Defect Notice
or Final Defect Notice at its own expense prior to Closing. If Seller chooses to
cure a Title Defect, Seller must cure the Title Defect to the reasonable
satisfaction of Buyer before Closing. If Seller cures the Title Defect, the
parties shall proceed to Closing without adjustment of the Purchase Price or
termination of this Contract. Seller may delay Closing in order to attempt to
cure any such Title Defect, but in no event shall closing be delayed beyond
August 31, 2001; provided, however, Seller notifies Buyer in writing on or
before Closing of Seller’s delay. If Seller fails to cure any Title Defect on or
prior to Closing, it shall be deemed to be a title failure (‘Title Failure”) for
the relevant Asset. Buyer shall not be entitled to any adjustment to the
Purchase Price until such time as the Title Failures aggregate to five percent
(5%) of the Purchase Price (the “Deductible Amount”). Notwithstanding the
provisions of the foregoing sentence or any other provision of this Contract, it
is specifically agreed and understood that liquidated amounts due and owing in
respect of vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’,
workmen’s, materialmen’s, construction or other like liens shall not be included
in the Deductible Amount, but shall otherwise be treated as Title Defects in
accordance with the provisions of this Paragraph 15, including, without
limitation, the provisions of this Paragraph 15.e (i)-(iii). It is fully
understood by Seller and Buyer that Buyer shall never be entitled to an
adjustment to the Purchase Price for the Deductible Amount. Buyer and Seller

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shall negotiate in good faith to reach agreement regarding the value of any
Title Failure based on the allocated lease values listed in Exhibit “G” attached
hereto, and unless waived by Buyer shall mutually agree to one of the following
options with respect to each Title Failure:
 
(i).  if the Title Failure results from a difference in net revenue interest
from that claimed by Seller, the parties shall proceed to Closing and reduce the
Purchase Price by an amount (“Defect Amount”) determined by multiplying the
Allocated Portion of the Purchase Price by a fraction, the numerator of which
shall be the difference between the actual net revenue interest being conveyed
and the net revenue interest claimed by Seller and the denominator of which
shall be the net revenue interest claimed by Seller;
 
(ii).  if the Title Failure affects all of Seller’s interest in a defined
portion of the Assets, such that the defect results in a complete failure of
title to or total condemnation of such defined portion of the Assets, such
affected Asset or defined portion of the Assets shall be deleted from the sale
and the Purchase Price shall be reduced by the Defect Amount which shall be the
portion of the Purchase Price that is allocated to the affected Asset or defined
portion of the Asset; and
 
(iii).  if the Title Failure is one other than described in items (i) or (ii),
the Defect Amount shall be an amount determined in good faith by the mutual
agreement of Buyer and Seller, taking into account the portion of the Purchase
Price to be allocated by agreement of Seller and Buyer to the portion of the
Assets affected by the Title Failure, the legal effect of the Title Failure, and
the potential economic effect of the Title Failure over the life of the Assets.
 
f.  Contract Termination:    Notwithstanding anything to the contrary within
this Paragraph 15, if the Parties cannot agree on the value of any Title Failure
or if the aggregate amount of adjustments to the Purchase Price for Title
Failures as set forth in the Preliminary and Final Defect Notice exceeds an
amount equal to fifteen percent (15%) of the initial unadjusted Purchase Price,
Seller or Buyer shall have the option to terminate this Contract, without any
liability, upon written notice to the other on or prior to the Closing. For
purposes of determining Seller’s right to terminate this contract pursuant to
this Paragraph 15.f the amount of Title Defect adjustments shall be the amounts
set forth in Buyer’s notices unless Buyer and Seller agree to a lesser amount in
accordance with Paragraph 15.e. If either party exercises its option to
terminate this Contract pursuant to this Paragraph 15.f, this Contract shall
become void and have no effect and neither party shall have any further right or
duty to or claim against the other party under this Contract, except as
expressly provided to the contrary in this Contract.

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g.  Increase in Purchase Price:    Seller shall be entitled to an increase in
the Purchase Price with respect to any interest to which Seller has (i) record
title ownership of a net revenue interest that is greater than the net revenue
interest claimed by Seller and/or (ii) an ownership interest in any Personal
Property greater than the interest for such Asset claimed by Seller. In the
event that Seller is entitled to an adjustment, such adjustment shall be
calculated in the same manner as downward adjustments to the Purchase Price in
accordance with Paragraph 15.e. Buyer shall be obligated to notify Seller, if
Buyer makes any determination of any interest increase at the same time as
required for Title Defects Notice.15.e. Notwithstanding anything to the contrary
herein, Buyer shall have the option to terminate this Contract due to an
increase in the Purchase Price that Buyer deems is material, in its sole
discretion. If Buyer exercises its option to terminate this Contract pursuant to
this Paragraph 15.g., this Contract shall become void and have no effect and
neither party shall have any further right or duty to or claim against the other
party under this Contract, except as expressly provided to the contrary in this
Contract.
 
16.  Buyer’s Acceptance of the Assets:
 
a.  Subject to the terms of this Contract, at Closing Buyer assumes the risk of
condition of the Assets, including compliance with all laws, rules, orders and
regulations affecting the environment, whether existing before or after Closing
and Buyer shall satisfy itself with respect thereto.
 
b.  OTHER THAN AS STATED HEREIN, THE ASSETS ARE SOLD “AS IS, WHERE IS” AND
SELLER MAKES NO WARRANTY, WHETHER EXPRESS OR IMPLIED IN FACT OR IN LAW, OF
MERCHANTABILITY, FITNESS FOR ANY PURPOSE, STATE OF REPAIR, CONDITION OR SAFETY
OF THE REAL OR PERSONAL PROPERTY, NOR COMPLIANCE WITH APPLICABLE LAW, RULE,
ORDER AND REGULATION, CONCERNING THE ASSETS.
 
17.  Physical Condition of the Assets:
 
a.  The Assets have been used for oil and gas drilling and producing operations,
related oilfield operations and possibly for the storage and disposal of waste
materials or hazardous substances. Physical changes in the land may have
occurred as a result of such uses. The Assets contain buried pipelines and other
equipment, whether or not of a similar nature, the locations of which may not
now be within the knowledge of Seller’s or Vintage’s current

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employees, easily determined by an examination of Seller’s records, or be
readily apparent by a physical inspection of the property.
 
Except as set forth herein to the contrary, Buyer understands that neither
Seller nor Vintage has the requisite information with which to determine the
exact nature or condition of the Assets or the effect any such use has had on
the physical condition of the Assets.
 
b.  Buyer acknowledges that:
 
(i).  It has entered into this Contract on the basis of its own investigation of
the physical condition of the Assets, including subsurface condition.
 
(ii).  The Assets have been used in the manner and for the purposes set forth
above and that physical changes to the Assets may have occurred as a result of
such use.
 
(iii).  Low levels of naturally occurring radioactive material (NORM) may be
present at some locations. NORM is a natural phenomena associated with many oil
fields in the U.S. and throughout the world. Buyer should make its own
determination on this matter.
 
(iv).  Pursuant to the California Safe Drinking Water and Toxic Enforcement Act
of 1986 (Proposition 65), Buyer is hereby notified and assumes the risk that
detectable amounts of chemicals known to the State of California to cause
cancer, birth defects and other reproductive harm may be found in, on or around
the Assets.
 
(v).  California Health and Safety Code Section 25359.7 provides that any owner
of nonresidential real property who knows, or has reasonable cause to believe,
that any release of hazardous substances as defined under California law, has
come to be located on or beneath that real property shall, prior to the sale of
that real property by that owner, give written notice of that condition to the
Buyer of that real property. Buyer acknowledges that one or more hazardous
substances as defined under California law, may have come to be located in or on
the Assets.
 
(vi).  Buyer acknowledges that some or all of the Assets may be situated in a
seismic hazard zone as designated under Seismic Hazards Mapping Act (Public
Resources Code Sections 2690-2699.6). Buyer and Seller agree that the Assets
shall be deemed to be within a Seismic Hazard Zone for all purposes related to
this Contract.

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(vii).  Buyer acknowledges that the Assets may be situated in an Earthquake
Fault Zone under the Alquist-Priolo Earthquake Fault Zoning Act (Cal. PRC
Sections 2621-2630) and the construction or development on the Assets of any
structure for human occupancy may be subject to the findings of a geologic
report prepared by a geologist registered in California, unless such report is
waived by the city or county under the terms of that Act. Buyer and Seller agree
that the Assets shall be deemed to be within an Earthquake Fault zone for all
purposes related to this Contract.
 
(viii).  Subject to the provisions contained in Paragraphs 18 and 20, on
Closing, Buyer shall assume the risk that the Assets may contain wastes or
contaminants and that adverse physical conditions, including the presence of
wastes or contaminants may not have been revealed by Buyer’s or Seller’s
investigation, and all responsibility and liability related to disposal, spills,
waste, or contamination on and below the Assets shall be transferred from Seller
to Buyer. This provision shall survive the Closing.
 
18.  Buyer’s Investigation and Indemnification:
 
a.  Buyer shall conduct a thorough environmental and physical condition
assessment of the Assets during the period (“Examination Period”) beginning on
the date of this Contract and ending four business days prior to Closing. Buyer
and its agents shall have the right to do the following (and Seller agrees to
cooperate reasonably with Buyer in this regard): to enter upon and within the
Assets and all buildings and improvements thereon, inspect the same, conduct
soil and water tests and borings, and generally conduct such tests,
examinations, investigations and studies as may be necessary or appropriate in
Buyer’s sole judgment for the preparation of appropriate engineering and other
reports and judgments relating to the Assets, their condition, and the presence
of waste or contaminants. Additionally, Buyer shall have the right to thoroughly
review all environmental, regulatory, engineering and other technical documents
in Seller’s or Vintage’s possession relating directly to the Assets and those
documents located in the Data Room. Buyer shall keep any data or information
acquired by all such examinations and the results of all analyses of such data
and information strictly confidential and not disclose same to any person or
agency without the prior written approval of Seller; provided that, if Buyer or
its agents obtain information that subjects it to any reporting requirement or
duty to disclose under any environmental law, Buyer shall not be required to
obtain Seller’s approval prior to making the required report or disclosure, but
Buyer shall notify Seller that it intends to make the required report or
disclosure within a reasonable time so as to provide Seller an opportunity to
object or legally prevent or protect such disclosure. Buyer shall

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also supply to Seller, at no cost to Seller, a copy of any data or information
compiled by Buyer.
 
b.  Buyer is hereby granted access to the Assets prior to Closing to conduct its
environmental assessment upon the following conditions:
 
(i).  Buyer waives and releases all claims against Seller and Vintage, their
respective directors, officers, employees and agents for injury to or death of
persons or damage to property arising in any way from the exercise of rights
granted to Buyer hereby or the activities of Buyer or its employees or agents on
the Assets. Buyer shall indemnify Seller, Vintage, their respective directors,
officers, employees and agents of Seller against and hold each and all of said
indemnitees harmless from any and all loss, cost, damage, expense or liability,
including attorneys’ fees, whatsoever arising out of (a) 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 Buyer may conduct
with respect to the Assets, and (b) any injury to or death of persons or damage
to property occurring in, on or about the Assets as a result of such exercise or
activities (except where any such injury or damage is caused solely by the gross
negligence or willful misconduct of any of said indemnitees). The foregoing
obligation of indemnity shall survive Closing or termination of this Contract
without Closing.
 
(ii).  Buyer shall obtain and maintain comprehensive public liability and
property damage insurance with respect to the exercise by Buyer and its agents
of the rights granted in this Paragraph 18, which insurance shall: (a) be
obtained from and maintained with an insurer acceptable to Seller, (b) have
limits of not less than $1,000,000.00 per occurrence for death or injury and
$500,000.00 for property damage, (c) cover Buyer’s obligations under the
indemnity provisions of this paragraph 18, (d) name Seller and Vintage as
additional insureds, and (e) contain a provision pursuant to which the insurer
agrees not to cancel or modify the insurance coverage without furnishing at
least thirty (30) days’ prior written notice to Seller. Prior to any exercise of
the rights granted hereby, Buyer shall furnish to Seller a certificate
evidencing the existence of the insurance required hereunder.
 
c.  If as a result of information which Buyer obtains from any such assessment
done by Buyer, it is determined by Buyer in its reasonable opinion that a
material defect exists in regard to the Assets (“Material Defect”) and/or that
the environment associated with the Assets has been materially contaminated
(“Materially Contaminated” or “Material Contamination”), such terms being
defined as the violation of existing applicable federal or state laws or
regulations or common law principles, with respect to environmental

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conditions, to the extent that (i) prosecution, if instituted, would be
reasonably likely to result in a penalty, fine or damage payment or (ii) removal
and remediation of such contamination required by present federal or state laws
or regulations or court order would be reasonably likely to result, and, other
than the California and Hunter Cat leases, information of such Material Defect
or Material Contamination was not contained in the data room during Buyer’s 1999
visit, observable in the Buyer’s 1999 site visits, or contained in the Defect
Notice, Buyer shall notify Seller in writing of any and all such Material
Defects or Material Contamination claims (“Preliminary Notice of Claims”) no
later than 9:00 a.m. CST, June 30, 2001; provided, however, that Buyer may
notify Seller in writing any Material Defects or Material Contamination
occurring subsequent to June 30, 2001 but prior to Closing (“Final Notice of
Claims”). Buyer shall be deemed to have waived any Material Defect or Material
Contamination which Buyer fails to assert on or before such dates. Notification
shall include (i) a detailed description of such claim, (ii) a copy of any
environmental assessment, reports, data and information pertaining to such
claim, if applicable, and (iii) Buyer’s calculation of the amount by which such
claim has diminished the value of the Assets, such amount to be determined by
Buyer in good faith and in a commercially reasonable manner. As used in this
Paragraph 18, the term Damages shall mean any and all damage, loss, injury, or
liabilities.
 
d.  If Material Defects or Material Contamination exists the parties shall use
their reasonable efforts to agree to an adjustment of the Purchase Price. If the
parties cannot agree on the adjustment of the Purchase Price, either party shall
be entitled to terminate this Contract without further liability to either
party, unless Buyer agrees to waive such Material Defects and Material
Contamination and assume all liability and obligations relating thereto. Each
party shall cooperate with the other party’s reasonable corrective work, and any
operations unreasonably interfering with the corrective work shall cease until
correction is completed. If Buyer or Seller exercises its option to terminate
this Contract pursuant to this Paragraph 18.d, this Contract shall become null
and void and have no effect and neither party shall have any further right or
duty to or claim against the other party under this contract, except as
expressly provided to the contrary in this Contract.
 
e.  Subject to the provisions contained in Paragraphs 18 and 20, in the event of
Closing, then Buyer shall acquire the Assets in an “AS IS, WHERE IS” condition
and shall assume the risk that the Assets may contain waste materials or
hazardous substances, and that adverse physical conditions, including but not
limited to the presence of waste materials or hazardous substances or the
presence of unknown abandoned and unabandoned oil and gas wells, water wells,
sumps and pipelines or other Material Defects or Material Contamination may not
have been revealed by Buyer’s investigation,

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AND ALL RESPONSIBILITY AND LIABILITY RELATED TO ALL OF SUCH CONDITIONS WILL BE
TRANSFERRED FROM SELLER TO BUYER.
 
f.  Except as otherwise stated in this Contract, as of Closing, Buyer
specifically assumes and shall be responsible for all obligations and
liabilities and shall defend, indemnify and hold Seller and Vintage harmless in
accordance with Paragraph 21 (including, but not limited to, indemnification for
liability under CERCLA, RCRA, environmental laws and regulations, as well as all
acts, laws and regulations amendatory or supplemental thereto) against any and
all damages pertaining to the environmental or physical condition of the Assets
(whether relating to periods before or after the Effective Date).
 
g.  In the event of Closing and with reasonable prior notice, Buyer shall grant
to Seller a right of entry to the Assets to perform environmental remedial work
at Seller’s sole cost, risk and expense, if Seller, in its sole discretion,
determines that such action is necessary to reduce alleged future environmental
liabilities of Seller. Seller agrees to indemnify, hold harmless, and defend
Buyer from and against all loss, liability, claims, fines, expenses, costs
(including attorneys’ fees and expenses), and causes of action caused by or
arising out of Seller’s use of the right of entry granted hereby and/or Seller’s
performance of environmental remedial work hereunder. Any such entry or action
on the Assets by Seller shall not be construed as an admission of responsibility
by Seller, nor shall Seller’s action lessen or reduce Buyer’s responsibility for
environmental liability. A perpetual right of entry for environmental remedial
work may be incorporated in the final documents transferring title to Buyer.
 
19.  Compliance:    Buyer shall comply with all applicable laws, rules,
ordinances and regulations, and shall promptly obtain or request assignment from
Seller or Vintage of all permits required by public authorities in connection
with the Assets. Buyer shall comply with all covenants in the instruments in the
chain of title to the Assets and with all terms and provisions, expressed or
implied, in the agreements, deeds, and leases to which the Assets are subject.
Seller and Vintage shall cooperate with Buyer before and after Closing in
securing the issuance and assignment to Buyer of all permits relating to the
ownership or operation of the Assets. Seller and Vintage shall cooperate with
Buyer after the Closing in assigning all permits. In the event of Buyer’s
noncompliance resulting in Seller’s or Vintage’s receipt of a notice of breach
that could result in cancellation of any oil and gas lease included in the
Assets, Seller shall have the option, but not the obligation to cure such
breach, within thirty (30) days from receipt of such notice; provided notice of
Seller’s intent to cure is given to Buyer in writing within fifteen (15) days of
receipt. Buyer shall indemnify and hold harmless Seller for any action taken and
upon further notice from Seller, Buyer shall have a period of thirty (30) days
from receipt of further notice from Seller to reimburse Seller for any action
taken.

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20.  Indemnification and Assumption of Obligations:    Except as otherwise
provided in Paragraph 21 below and elsewhere in this Contract, to the fullest
extent permitted by law, but no further, Buyer shall assume full responsibility
for the Assets as of Closing including, but not limited to, all operations,
royalty payments, rental payments, suspense accounts and all accounting and
reporting thereof and shall indemnify, hold harmless and defend Seller and
Vintage from and against all loss, liability, claims, fines, expenses, costs
(including attorney’s fees and expenses) and causes of action, arising after the
Closing, with respect thereto, including but not limited to, plugging and
abandonment of existing wells, liability for previously plugged and abandoned
wells, the restoration of the surface of the land as may be required under the
applicable lease or as may be required by any federal, state or local agency
having jurisdiction and the removal of or failure to remove any sumps,
foundation, structures, or equipment. Except as otherwise provided in this
Contract, for a period of 3 years after Closing, Seller and Vintage indemnify
and hold Buyer harmless from and against all loss, liability, claims, fines,
expenses, costs (including attorney’s fees and expenses) and causes of action,
arising prior to the Closing, with respect to operations, royalty payments,
rental payments, suspense accounts and all accounting and reporting thereof; and
any offsite disposal of hazardous waste, or Seller’s gross negligence or willful
misconduct related to the Property prior to Closing.
 
21.  Indemnification and Assumption of Environmental Risks:    Upon Closing and
subject to Paragraph 20 above, to the fullest extent permitted by law, but no
further, Buyer assumes full responsibility for, and agrees to indemnify, hold
harmless and defend Seller and Vintage from and against all loss, liability,
claims, fines, expenses, costs (including attorney’s fees and expenses) and
causes of action caused by or arising out of any current or hereinafter enacted
federal, state or local laws, rules, orders, regulations and amendments thereto,
applicable to any waste material or hazardous substances on or included with the
Assets or the presence, disposal, release or threatened release of all waste
material or hazardous substance from the Assets into the atmosphere or into or
upon land or any water course or body of water, including ground water, or
disposal of any waste material or hazardous substances on or included with the
Assets, whether or not attributable to Seller’s or Vintage’s activities or
ownership or the activities of Seller’s or Vintages respective officers,
employees or agents, or to the activities of third parties prior to, during or
after the period of Seller’s or Vintage’s ownership of the Assets. This
Indemnification and Assumption shall apply to liability for any environmental
response actions undertaken pursuant to the Comprehensive Environmental Response
Compensation and Liability Act (CERCLA) or any other federal, state or local
law.
 
22.  Representations:
 
a.  Seller’s Representations.    Seller represents and warrants that:
 
(i).  Seller:    (a) is a corporation duly organized, validly existing and in
good standing under the laws of Oklahoma, (b) is duly qualified to transact
business in California and in each jurisdiction where the

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nature and extent of its business and properties require the same in order for
it to perform its obligations under this Contract; and (c) possesses all
requisite authority and power to conduct its business and execute, deliver and
comply with the terms and provisions of this Contract and to perform all of its
obligations hereunder.
 
(ii).  This Contract and the Transaction have been duly authorized by Seller and
do not conflict with any provisions of any by-law or other document under which
Seller is organized.
 
(iii).  This Contract has been duly executed and delivered by Seller and
constitutes the valid and binding obligation of Seller, enforceable against it
in accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency or other laws relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
 
(iv).  Seller represents that to the knowledge of Seller’s or Vintage’s senior
management (“Seller’s Knowledge”) as of the date of this Contract and Closing,
Seller’s interests in the Assets shall be free and clear of any liens other than
Permitted Encumbrances.
 
(v).  To Seller’s Knowledge, the Assets have been and are being operated in a
prudent, workmanlike manner in accordance with industry standard and in
compliance with all applicable laws, and the rules and regulations of any agency
or authority having jurisdiction.
 
(vi).  Buyer shall have no responsibility whatsoever, contingent or otherwise,
for any brokers’ or finders’ fees incurred by Seller relating to the
Transaction.
 
(vii).  Not all files, records, information and materials related to the
Property were provided to Buyer in the data room during Buyer’s 1999 visit.
Seller or Vintage will provide Buyer, prior to Closing all files, records,
information and materials, in its possession, related to the Property.
 
(viii).  There are no lawsuits, claims, actions, suits or investigations,
pending or threatened that would materially impede the ownership or operation of
the Property except as listed in Exhibit “H”.
 
(ix).  There are no consents to assign or preferential rights to purchase the
Assets affecting any of the Assets except as listed in Exhibit “I”.
 
(x).  Call on Production.    At the Closing Date, no party shall have any call
upon, option to purchase or similar rights under any agreement with respect to
the production of the Property from or attributable to the Assets.
 
(xi).  Status and Operation of the Leases.
 
(1)  Except as related to the Assets set forth in Schedule 22.a.(x)(1), to the
best knowledge of Seller and Vintage, the leases associated with the Property
(“Leases”) are (i) in full force and effect

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in accordance with their respective terms, (ii) Seller is in substantial
compliance with their respective terms regarding the payment of royalties, (iii)
Seller is not in default in the performance of any obligation on the part of
Seller thereunder which could reasonably be expected to result in termination or
cancellation thereof, and (iv) no third party claims or demands related to
(i)-(iii) above have been made during the period between the Buyer’s 1999 visit
and Closing.
 
(2)  To the best knowledge of Seller and Vintage, except for funds properly
suspended for good cause in a separate account maintained by Seller, Seller has
not received any proceeds from the sale of Hydrocarbons from the Interests which
are subject to potential refund.
 
(3)  Seller is being paid, without bond or indemnity of any kind except the
usual warranties found in division orders and Hydrocarbon sales contracts
customarily used in the petroleum industry, for its interest in the proceeds of
the sale of Hydrocarbons from the Leases.
 
(4)  With respect to all Leases operated by Seller and Vintage, and with respect
to all Leases operated by unaffiliated third parties, to the best knowledge of
Seller and Vintage, all costs incurred in connection with the operation of the
Leases have been fully paid and discharged in accordance with the terms of
payment therefor except (i) normal expenses incurred within the period between
Buyer’s 1999 visit and Closing and as to which Seller has not yet been billed,
and (ii) costs that are being contested in good faith by Seller.
 
(5)  Except as to the Assets listed on schedule 22.a.(x)(1), all material
Applicable Contracts are in full force and effect, and neither Seller nor, to
the best knowledge of Seller and Vintage, any other party is in default
thereunder in any material respect.
 
(6)  To the best knowledge of Seller and Vintage, no other party to any joint
operating agreement or other Applicable Contract binding on the Interests is
entitled to any adjustments of past accounts at the expense of Seller.
 
(7)  Seller is not obligated by virtue of a claim arising from Seller, having
prior to the Effective Date, taken gas in excess of the volume to which Seller
was entitled or to deliver Hydrocarbons produced from the Interests at some
future time.
 
(xii).  Operation of the Assets Prior to Closing.    Except as set forth in
Paragraph 26 below, Seller is not aware of any legally binding agreements
presently existing, except in the ordinary course of business, that may cause
Seller prior to Closing, or Buyer after Closing, to acquire assets related to
the Assets or otherwise improve the Assets.

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(8)  With respect to the Assets set forth in Schedule 22.a.(x)(1), to the best
knowledge of Seller and Vintage, no third party claims or demands have been made
during the period between the date of this Contract and Closing relating to
whether the associated leases were in full force and effect in accordance with
their respective terms, or whether the related material Applicable Contracts are
in full force and effect or whether any third party is in default thereunder in
any material respect. To the best knowledge of Seller and Vintage, (i) Seller is
in substantial compliance with the associated Leases regarding the payment of
royalties, (ii) Seller is not in default in the performance of any obligation on
the part of Seller thereunder which could reasonably be expected to result in
termination or cancellation thereof, and (iii) no third party claims or demands
related to (i) and (ii) above have been made during the period between the date
of this Contract and Closing.
 
b.  Buyer’s Representations. Buyer represents and warrants that:
 
(i).  Buyer:    (a) is a corporation duly organized, validly existing and in
good standing under the laws of Colorado, (b) is duly qualified to transact
business California and in each jurisdiction where the nature and extent of its
business and properties require the same in order for it to perform its
obligations under this Contract; and (c) possesses all requisite authority and
power to conduct its business and execute, deliver and comply with the terms and
provisions of this Contract and to perform all of its obligations hereunder; and
at Closing, Buyer shall be authorized to own and operate the Properties under
the laws and regulations of California.
 
(ii).  This Contract and the Transaction have been duly authorized by Buyer and
do not conflict with the provisions of any by-law or other document under which
Buyer is organized.
 
(iii).  This Contract has been duly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable against it in
accordance with its terms except as such enforceability may be limited by
bankruptcy, insolvency or other laws relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
 
(iv).  Buyer has incurred no liability, contingent or otherwise, for brokers’ or
finders’ fees relating to the Transaction for which Seller shall have any
responsibility whatsoever.
 
(v).  Buyer is knowledgeable, competent, and experienced in the oil and gas
industry and has independently evaluated and interpreted the technical data and
other information regarding the Assets prior to entering into this Contract,
understands and is financially able to bear the risk associated with ownership
of the Assets, and will

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independently conduct all the due diligence investigations and reviews of all
matters concerning the Assets as it deems necessary prior to Closing. Buyer
acknowledges that Buyer is not relying upon any statement or representations
made by Seller concerning the present or future value of, or anticipated income,
costs, or profits, if any, to be derived from the Assets and other than Seller’s
representations and warranties provided in this Contract, Buyer has relied
solely upon its independent inspections, estimates, computations, evaluations,
reports, studies, knowledge and other information regarding the Assets.
 
(vi).  Buyer is not buying the Assets for resale in any manner that would
subject the transaction to requirements for registration under applicable
securities laws.
 
c.  Seller’s representations under this Paragraph 22 shall survive three (3)
years after Closing.
 
23.  Operation of the Assets Prior to Closing:    From the date hereof until
Closing, Seller, if within Seller’s reasonable power to do so: (1) shall not
abandon any well capable of commercial production, or release or abandon all or
any part of its interest in the Assets without Buyer’s prior written consent;
(2) shall cause the Assets to be developed, maintained or operated in a manner
materially consistent with prior operations; (3) shall not commence or agree to
participate in any operation on the Assets anticipated to be conducted after
Closing and to cost in excess of twenty five thousand dollars ($25,000) per
operation net to Buyer’s interest without Buyer’s prior written consent; (4)
shall not create any lien, security interest or other encumbrance with respect
to their interest in the Assets or enter into any agreement for the sale,
disposition or encumbrance of any of their interest in the Assets, or dedicate,
sell, encumber or, without notifying Buyer, dispose of any oil and gas
production, except in the ordinary course of business on a contract which is
terminable on not more than thirty (30) days notice; (5) shall maintain in force
all insurance policies covering their interest in the Assets; (6) shall maintain
all agreements comprising or affecting the Assets in full force and effect and
comply with all express or implied covenants contained therein; (7) shall pay or
cause to be paid all material costs and expenses incurred in connection with
their interest in the Assets before the earlier of forty-five (45) days from
receipt or the date on which they became delinquent; and (8) shall maintain in
all material respects the Assets taken as a whole in good and effective
operating condition.
 
24.  Covenant Not to Sue and Alternative Dispute Resolution:
 
This Paragraph applies to any dispute between the parties and their affiliates,
arising at any time, related to the Assets or this Contract, including whether
there is a contract between the parties.

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Any claim or controversy related to the Assets or this Contract of whatever
nature, including an action in tort or contract or a statutory action (“Disputed
Claim”), or the arbitrability of a Disputed Claim, will be resolved under the
terms, conditions, and procedures of this Paragraph and will be binding on both
parties and their respective affiliates, successors and assigns. Neither party
nor their affiliates may prosecute or commence any suit or action against the
other party relating to any matters that are subject to the Paragraph.
 
A claim filed by a third party against the Buyer or Seller or their affiliates
will be subject to this Paragraph. If Buyer has notified Seller before Closing
of a Disputed Claim by Buyer before Closing and the Disputed Claim in not
resolved prior to Closing, the Disputed Claim will not be subject to this
Paragraph unless agreed to by the parties.
 
Disputed Claims covered by this Paragraph shall be governed by the following
procedure to resolve such dispute:
 
(i).  A meeting shall be held promptly between the parties, attended by
individuals with decision-making authority regarding the dispute, to attempt in
good faith to negotiate a resolution of the dispute.
 
(ii).  If, within thirty (30) days after such meeting, the parties have not
succeeded in negotiating a resolution of the dispute, the parties shall submit
the dispute to mediation in accordance with the Commercial Mediation Rules of
the American Arbitration Association. The parties shall bear equally the costs
of the mediation.
 
(iii).  The parties will jointly appoint a mutually acceptable mediator, seeking
assistance in such regard from the American Arbitration Association if they have
been unable to agree upon such appointment within twenty (20) days from the
conclusion of the negotiation period.
 
(iv).  The parties shall participate in good faith in the mediation and
negotiations related thereto for a period of thirty (30) days. If the parties
are not successful in resolving the dispute through mediation, then the parties
shall settle the dispute through binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association. Judgment
upon the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction. The place of arbitration shall be Los Angeles, California. The
arbitrator(s) are not empowered to award damages in excess of actual damages,
such as, but not limited to punitive damages.

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BINDING ARBITRATION
 
NOTICE:    BY INITIALING IN THE SPACE PROVIDED BELOW YOU ARE AGREEING TO HAVE
ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDING THE “ALTERNATIVE DISPUTE
RESOLUTION” PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA
LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE
LITIGATED IN A COURT OR JURY TRIAL. BY INITIALLING IN THE SPACE PROVIDED BELOW
YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS THOSE
RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ALTERNATIVE DISPUTE RESOLUTION”
PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS
PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE
CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION
IS VOLUNTARY.
 
WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING
OUT OF THE MATTERS INCLUDED IN THE “ALTERNATIVE DISPUTE RESOLUTION” PROVISON TO
NEUTRAL ARBITRATION.
 
SELLER                                         
                    BUYER                  
                                                       
 
25.  Miscellaneous:
 
25.1.  Force Majeure:    In the event all or part of the Assets, including
fixtures and improvements, is damaged or destroyed by fire or other calamity
prior to Closing, Seller shall have the option, but not the obligation, of
repairing the damage at its sole cost or deleting the damaged Assets from the
proposed sale and determining the value of the property in the manner prescribed
in Paragraph 15.e.(ii).
 
25.2.  Preferential Rights and Consents to Assign:
 
a.  Preferential Rights to Purchase or Rights of First Refusal:    Attached
hereto as Exhibit “I” is a list of Properties containing preferential rights to
purchase, first rights of refusal or consents to assign from Seller to Buyer
(collectively “Consents”). Assets subject to Consents are subject to Buyer
obtaining, at Buyer’s expense, a waiver of such right or expiration of the
appropriate time period for asserting such right without any exercise thereof
prior to Closing. Seller shall not be liable to Buyer by reason of inability or
failure to obtain any waiver of Consents. Seller shall give reasonable
cooperation to Buyer in obtaining

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such Consents, including sending the first requests, but other than as specified
elsewhere in this Contract Seller shall not be liable to Buyer if Consents are
not obtained. Within three (3) business days of the execution of this Contract,
Seller shall use its best efforts to (1) notify the holders of the Consent that
it intends to transfer the Assets to Buyer, (2) provide them with any
information about the transfer of the Assets to which they are contractually
entitled, and (3) ask the holders of the Consents to consent to or waive the
preferential right of purchase of the assignment of the affected Assets to
Buyer, and (4) provide to Buyer copies of Seller’s notification to the holders
within five (5) business days. Seller shall promptly notify Buyer when any
preferential rights are exercised, waived or deemed waived, any Consents are
given, denied or the requisite time periods have elapsed without any rights
being exercised or Consent being received.
 
b.  In the event Buyer elects to waive its rights to terminate this agreement
pursuant to Paragraph 12 and Close without first having obtained all such
Consents, BUYER AGREES TO AND SHALL PROTECT, DEFEND, INDEMNIFY, SAVE, HOLD
HARMLESS, DISCHARGE AND RELEASE SELLER AND VINTAGE FROM AND AGAINST ANY AND ALL
DEMANDS, CLAIMS, SUITS, OR CAUSES OF ACTION (INCLUDING, BUT NOT LIMITED TO ANY
JUDGMENTS, LOSSES, LIABILITIES, EXPENSES, INTEREST, LEGAL FEES, AND DAMAGES,
WHETHER IN LAW OR EQUITY, WHETHER GENERAL, SPECIAL, PENAL, STAUTORY, OR
CONSEQUENTIAL, AND WHETHER IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATED TO THE ASSIGNMENT OF THE ESCROW PROPERTIES ASSIGNED WITHOUT CONSENT.
 
25.3.  Fees, Costs and Expenses:    Except as otherwise provided herein, all
fees, costs and expenses incurred by Seller or Buyer relating to this Contract
shall be paid by the party incurring the same.
 
25.4.  Notices:    All notices and consents to be given hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally,
telexed with receipt acknowledged, mailed by registered mail, postage prepaid,
or delivered by a recognized commercial courier to the party at the address set
forth within this Paragraph 25.4. or such other address as any party shall have
designated for itself by ten (10) days’ prior written notice to the other party.

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Seller

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

  
Buyer

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

Vintage Petroleum California, Inc.
  
Greka SMV, Inc.,
110 West Seventh Street
  
3201 Airpark Drive, Suite 201
Tulsa, Oklahoma 74119
  
Santa Maria, CA 93455
Attn: General Counsel
  
Attn: Randeep S. Grewal
FAX 918-878-5783
  
FAX 805-347-1072

 
25.5.  Severability:    In the event any covenant, condition, or provision
contained herein is held to be invalid by a court of competent jurisdiction, the
invalidity of any such covenant, condition or provision shall in no way affect
any other covenant, condition or provision contained herein; provided, however,
that any such invalidity does not materially prejudice either the Buyer or
Seller in its respective rights and obligations contained in the valid
covenants, conditions, and provisions of this Contract.
 
25.6.  Construction of Ambiguity:    In the event of any ambiguity in any of the
terms or conditions of this Contract, including any exhibits whether or not
placed of record, such ambiguity shall not be construed for or against any party
hereto on the basis that such party did or did not author the same.
 
25.7.  Audit:    Buyer and Seller, for itself and for its directors, partners,
employers, and agents warrants, covenants and represents to the other that,
except as otherwise expressly provided in this Contract, neither it nor any of
its directors, employees, partners or agents has given to or received from the
other party, for any of such party’s directors, partners, employees or agents
any commission, fee, rebate, gift or other thing or service in connection with
this Contract, and Buyer and Seller each agree that its books and records shall
be subject to reasonable audit by the other as may be required to substantiate
compliance with this provision.
 
25.8.  Confidentiality:    Buyer acknowledges that all information furnished or
disclosed pursuant hereto must remain confidential. Buyer may disclose such
information only to its subsidiaries or affiliates, agents, advisors or
representatives (herein “Representatives”) who have agreed in writing, prior to
being given access to such information, to be bound by the terms of this
Contract. An original of the signed agreement(s) of the Representatives will be
furnished to Seller upon request. In the event that Closing of the transactions
contemplated by this Contract does not occur for any reason, Buyer and its
Representatives shall promptly return to Seller or destroy any and all materials
and information, including any notes, summaries, compilations, analyses or other
material derived from the inspection or evaluation of such material and
information, without retaining copies thereof, except for the purposes of any
action instituted to enforce the terms of this Contract. Notwithstanding the
provisions of Paragraph 25.10., nothing in this Paragraph 25.8. and this
Contract shall have the effect of terminating, modifying or superseding any

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confidentiality agreement entered into by and between Buyer and Seller in
relation to this Contract.
 
Prior to Closing, without prior consent of the other Party (which consent may
not be unreasonably withheld), neither Party may make any public disclosure or
issue any press release or other communication regarding the subject matter of
this Agreement, whether directly or indirectly. A Party shall have 48 hours
exclusive of Saturdays, Sundays and legal holidays, to respond to a proposed
disclosure, press release or communication. Notwithstanding the foregoing, a
Party may make such disclosures as are required by applicable law or by the
rules of a relevant stock exchange, provided however that a Party shall promptly
advise the other Parties that such disclosure is so mandated. For purposes of
consultation under this section, the following individuals are designated as
primary contacts:
 
For Seller

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

  
For Buyer

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

Bob Phaneuf
  
Richard A. L’Altrelli
Vice President
  
Director of Corporate Development
Corporate Development
  
212-218-4680
918-592-0101
    

 
25.9.  Time of Performance:    Time is of the essence of this Contract and each
and every provision hereof which in time or performance is a factor.
 
25.10.  Entire Agreement:    This Contract constitutes the entire agreement
between Seller and Buyer with respect to the subject matter hereof, superseding
all prior statements, representations, discussions, agreements and
understandings relating to such subject matter. No amendment shall be binding
unless in writing and signed by representatives of both parties. Headings used
in this Contract are only for convenience of reference and shall not be used to
define the meaning of any provision. This Contract is for the benefit of Seller
and Buyer only and not for the benefit of third parties.
 
25.11.  Assignment:    Prior to Closing, neither party may assign this Contract
to another party, except to an affiliate, without the express written consent of
the other party, which consent shall not be unreasonably withheld, and
thereafter such assignee will exercise and perform the assigning party’s rights
and duties under this Contract; provided, however, that the assigning party
shall remain responsible to the other party in all respects and will defend,
indemnify and hold the other party harmless from any liability, damages or costs
including reasonable attorney’s fees, that may arise as a result of the
assignment.

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25.12.  Removal of Signs and Markers:    Buyer shall, at its own expense and
within 90 days after Closing either: (i) remove or cause to be removed all
references to Seller or Vintage (including its name or logo and those of is
predecessors) from all lease and well signs and placards which identify or
indicate Seller’s or Vintage’s prior ownership in the Assets and place Buyers
name and logo, or those of its designated operator, whichever is applicable
thereon, (ii) remove said lease and well signs and placards and erect or install
signs and placards as may be required by state or other governmental agencies
indicating Buyer or its designated operator, whichever is applicable, as the
owner–operator of the Assets and/or property or (iii) any combination of (i) and
(ii) above, so long as any reference to the Seller or Vintage is removed from
all lease and well signs and placards.
 
Buyer acknowledges that Seller is relying on Buyer to remove references of
Seller and Vintage from all signs and placards. If Buyer fails to comply with
this paragraph within thirty (30) days notice of breach by Seller, then Seller
shall be entitled to the costs incurred in enforcing this paragraph.
 
25.13.  Governing Law:    This Contract shall be governed by the law of the
State of California without regard to rules concerning conflicts of law.
 
25.14.  Waiver:    The waiver or failure of either party to enforce any
provision of this Contract shall not be construed or operate as a waiver of any
further breach of such provision or of any other provision of this Contract.
 
25.15.  Survival of Agreements:    Except as otherwise specifically provided in
this Contract, all covenants, agreements, representations, guaranties and
warranties shall survive the execution of this Contract, Closing, the delivery
and recordation of any deeds, assignments or bill of sales which convey the
Assets from Seller to Buyer.
 
25.16.  Successors and Assigns:    This Contract and the provisions herein,
which shall survive Closing, shall bind and inure to the benefit and burden of
the heirs, successors and assigns of the parties hereto.
 
25.17.  Recording and Filing:    Buyer shall be solely responsible for recording
of the assignments, deeds, and any other document related to the conveyance of
the Assets, and shall promptly furnish Seller copies of the recorded originals
or with the recording information, dependent upon whether the applicable
governmental body returns or retains the recorded originals. Seller shall be
responsible for all filings with state and federal agencies for change of
operator, and shall promptly provide Buyer with the original approved copies of
all such filings, or confirmation thereof. All recording and filing shall be at
the sole cost and expense of Buyer and Buyer shall promptly reimburse Seller for
all such costs upon presentation of appropriate invoices.

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25.18  Further Assurances.    Buyer and Seller agree to execute and deliver to
the other all division orders, transfer orders and all other documents necessary
to fully vest in Buyer the rights, obligations and benefits acquired pursuant to
this Contract. If requested by Buyer, Seller and Vintage agree to provide within
a reasonable time access to their financial information for the Properties for
each of the three years ending December 31, 2000, 1999, and 1998 so that Buyer
may perform a look back audit.
 
25.19  Attorney’s Fees and Costs.    If any action is instituted to enforce the
terms of this Contract, the prevailing party shall be entitled to recover from
the losing party all attorney’s fees and costs incurred in such action.
 
26.  Additional Plugging, Abandonment and Remediation Requirements:
 
a.  Zaca Field:
 
(i).  Buyer acknowledges that the Assets located in the Zaca Field are subject
to that certain Purchase and Sale Agreement by and between Texaco Exploration
and Production Inc. and Vintage Petroleum, Inc. dated May 10, 1995 and in
particular to the provisions set forth in Sections 2.6 and 4.2(b) contained
therein. Pursuant to such Sections, Buyer hereby agrees to plug and abandon all
idle wells located in Zaca field, but in any event no less than twenty-four (24)
wells, by December 31, 2004. Buyer shall plug no less than four (4) wells in
each year prior to 2005. Buyer shall provide Seller with supporting
documentation in the form of paid invoices or other similar proof (reasonably
acceptable to Seller) of costs actually incurred and governmental approvals upon
such abandonments as soon as practical in order that Seller may furnish such to
Texaco. Buyer hereby agrees to indemnify, hold harmless and defend Seller and
its affiliates from and against all loss, liability, claims, fines, expenses,
contractual penalty, costs (including attorney’s fees and expenses) and causes
of action directly or indirectly caused by or arising out of any breach by Buyer
of this provision.
 
(ii).  Buyer acknowledges the remediation requirements set for in the Surface
Lease Agreement dated November 28, 1995 by and between Firestone Farming Company
Limited Partnership and Vintage Petroleum, Inc. Buyer hereby agrees to perform
the obligation set forth in Paragraph 3.b. of said Lease to remediate the lower
sump as described in Exhibit “D” of such Lease no later than September 30, 2001.
 
b.  Cat Canyon, Los Flores, Clark Avenue, Santa Maria Valley Fields:

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(i).  Buyer shall be responsible for remediating the two remaining sumps located
on the Nicholson lease (4.29 acre production site) in accordance with the
October 14, 1997 Letter of Intent by and between Vintage Petroleum, Inc. and
O.J. Portwood, LLC.
 
(ii).  Buyer shall be responsible for completing the remediation requirements
set forth in the Arbitration Award in the Ontiveros v. Shell case and
remediation of diluent leaks identified as a result of the Work Plan for
Characterization of KD Impacted Soil on the California Lease performed by
Waterstone Environmental, Inc.
 
(iii).  Seller has remediated the soil on the Edmonston lease, however, the
Santa Barbara County Protection Services Division has not provided written
releases to close out the remediation. Buyer shall be responsible for any
remaining remediation on the Edmonston lease imposed by the County to close out
the project.
 
(iv).  Buyer shall be responsible for any remediation work required to be done
on the soil stockpile located on the United California, Security and Harbordt
properties.
 
SUBJECT TO BUYER’S RIGHTS UNDER PARAGRAPH 18, BUYER WARRANTS THAT IT HAS
REVIEWED THE ESTIMATED COMPLIANCE COSTS REPRESENTED BY THIS PARAGRAPH AND HAS A
FULL UNDERSTANDING OF THE WORK TO BE PERFORMED AND THE COST OF COMPLIANCE AND
THAT BUYER HAS INCLUDED SUCH COSTS IN THE PURCHASE PRICE. BUYER RECOGNIZES THAT
BUYER’S AGREEMENT UNDER THIS PARAGRAPH WAS A MATERIAL INDUCEMENT TO SELLER TO
ENTER INTO THIS AGREEMENT. IN ADDITION TO ANY OTHER PROVISION CONTAINED IN THIS
AGREEMENT, BUYER FOREVER RELEASES, INDEMNIFIES AND HOLDS HARMLESS SELLER FROM
ANY AND ALL COSTS, WHETHER KNOWN OR UNKNOWN, ASSOCIATED WITH ANY OF THE
REQUIREMENTS SET FORTH IN THIS PARAGRAPH.
 
27.  Security for Plugging and Abandonment:    Buyer shall obtain insurance to
assure Buyer’s performance of its obligations in Paragraph’s 20, 21 and 26
relating specifically to the Property conditions and plugging and abandonment
obligations. Such insurance shall have policy limits of Ten Million Dollars
($10,000,000) and shall be pre-paid by Seller for a period of five (5) years.
Buyer must obtain Seller’s approval of the terms of such insurance policy and
the company or companies underwriting such prior to Closing. Seller shall be
named an additional insured in such insurance, which shall be primary to any
insurance of Seller that may apply. No “other insurance” provision shall be
applicable to Seller and its affiliates, subsidiaries and/or interrelated
companies, by virtue of having been named as additional insured or loss payee
under any policy of insurance. Buyer shall obtain

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from its insurer(s) a waiver of subrogation against Seller in the insurance
policy set forth in this Paragraph 27. If the Parties are unable to agree on the
terms of insurance, either Party shall have the option to terminate this
Contract without any liability to the other party
 
28.  Casualty Losses:    If, prior to Closing Date, any facility or equipment
included within the Assets to be transferred by Seller is damaged or destroyed
by fire, flood, storm or other casualty (hereinafter called “Casualty Loss”),
Seller shall notify Buyer immediately. If such Casualty Loss in Buyer’s
reasonable opinion is greater than five percent (5%) of the Purchase Price,
excluding any insurance proceeds, Buyer shall be entitled to an adjustment in
the Purchase Price. If the Casualty Loss in Buyer’s reasonable opinion is
greater than fifteen percent (15%) of the Purchase Price, both parties shall
have the option to terminate this Contract without any liability to the other
party. If Closing occurs, Buyer shall receive any insurance proceeds payable to
Seller with respect to such Casualty Loss.
 
IN WITNESS WHEREOF the undersigned parties to this Contract have executed it as
of the day and year first mentioned above.
 
BUYER
  
SELLER
GREKA SMV, INC.
  
VINTAGE PETROLEUM CALIFORNIA, INC.
By:                        /S/    RANDEEP S. GREWAL

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

  
By:                            /s/    ROBERT W. COX

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

        Randeep S. Grewal
        Chairman, CEO and President
  
        Robert W. Cox
        Vice President

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