ESCROW AGREEMENT

 

This ESCROW AGREEMENT, including the Exhibits hereto (as amended or restated
from time to time, this “Escrow Agreement”), is entered into effective as of
September 30, 2013, by and among OSAGE EXPLORATION AND DEVELOPMENT, INC., a
Delaware corporation (the “Seller”), RAVEN PIPELINE COMPANY, LLC, a Delaware
limited liability company (the “Purchaser”) (Seller and Purchaser collectively,
the “Parties,” and individually, a “Party”), and AMEGY BANK NATIONAL ASSOCIATION
(“Escrow Agent”).

 

WHEREAS, the Parties are entering into this Escrow Agreement in connection with
the Membership Interest Purchase Agreement entered into as of the date hereof
(the “Purchase Agreement”), by and between Seller and Purchaser, pursuant to
which Purchaser has agreed to purchase 100% of the membership interest of
Cimarrona Limited Liability Company, an Oklahoma limited liability company, as
further set forth in the Purchase Agreement. Unless otherwise defined herein,
all capitalized terms used but not defined herein shall have the meanings
attributed to them in the Purchase Agreement;

 

WHEREAS, pursuant to Section 2.2 of the Purchase Agreement, the Parties have
agreed to place in escrow certain funds to secure the post-Closing purchase
price adjustments and any indemnity obligations of Seller pursuant to the
Purchase Agreement;

 

WHEREAS, the Parties hereto acknowledge (i) that the Escrow Agent is not a party
to, is not bound by, and has no duties or obligations under, the Purchase
Agreement, (ii) that all references in this Escrow Agreement to the Purchase
Agreement are for convenience, and (iii) that the Escrow Agent shall have no
implied duties beyond the express duties set forth in this Escrow Agreement.

 

NOW, THEREFORE, in consideration of the premises, the undersigned hereby agree
as follows:

 

ARTICLE I

TERMS AND CONDITIONS

 

1.1 Establishment of Fund. Purchaser will cause to be deposited with the Escrow
Agent the sum of USD $250,000 (such sum, or the balance thereof remaining from
time to time being referred to herein as the “Fund”) on the date hereof or
within ten (10) days after the date hereof.

 

1.2 Treatment of Fund. The monies constituting the Fund shall be deposited in a
segregated escrow account pursuant to the terms of this Escrow Agreement. The
Fund is to be invested in Fidelity Prime Money Market Portfolio (FDOXX) unless
the Escrow Agent is provided with direction to invest the Fund in other eligible
investments. It is expressly agreed and understood by the parties hereto that
Escrow Agent shall not in any way whatsoever be liable for losses on any
investments, including, but not limited to, losses from market risks due to
premature liquidation or resulting from other actions taken pursuant to this
Escrow Agreement. Any interest or income earned on the Fund shall be reportable
on Form 1099 by the Escrow Agent to tax identification number 26-0421736 in the
name of Seller and such party agrees to provide Escrow Agent with a Form W-9.

 

1.3 Escrow Procedure and Payment Instruction. The Fund, together with all
interest earned thereon, which interest shall become and remain a part of the
Fund, shall be held and disbursed in accordance with the terms of this Escrow
Agreement as follows:

 

(a)Upon receipt by the Escrow Agent of a Joint Disbursement Request, in the form
of Exhibit A and executed by both Parties, the Escrow Agent is hereby authorized
and directed to deliver the Fund (or any portion thereof) in accordance with
such Joint Disbursement Request.     (b)Upon receipt by the Escrow Agent of a
final non-appealable judgment of a competent court of justice or arbitral
tribunal accompanied by an opinion of counsel stating such judgment is final and
non-appealable, the Escrow Agent is hereby authorized and directed to deliver
the Fund (or any portion thereof) in accordance with such judgment.

 

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Purchaser and Seller hereby agree that they shall execute a Joint Disbursement
Request to distribute the Fund (or any portion thereof) to Purchaser or Seller,
as applicable, if such amount is payable to such Party under the terms of the
Purchase Agreement.

 

1.4 Termination. This Escrow Agreement shall terminate upon the disbursement of
the balance of the Fund in accordance with the provisions of Section 1.3 hereof.

 

ARTICLE II

PROVISIONS AS TO ESCROW AGENT

 

2.1. Limitation of Escrow Agent’s Capacity.

 

A. This Escrow Agreement expressly and exclusively sets forth the duties of
Escrow Agent with respect to any and all matters pertinent hereto, and no
implied duties or obligations shall be read into this Escrow Agreement against
Escrow Agent. This Escrow Agreement constitutes the entire agreement between the
Escrow Agent and the other parties hereto in connection with the subject matter
of this escrow, and no other agreement entered into between the parties, or any
of them, shall be considered as adopted or binding, in whole or in part, upon
the Escrow Agent notwithstanding that any such other agreement may be referred
to herein or deposited with Escrow Agent or the Escrow Agent may have knowledge
thereof, and Escrow Agent’s rights and responsibilities shall be governed solely
by this Escrow Agreement.

 

B. Escrow Agent acts hereunder as a depository only, and is not responsible or
liable in any manner whatsoever for the sufficiency, correctness, genuineness or
validity of the subject matter of this Escrow Agreement or any part thereof, or
for the form of execution thereof, or for the identity or authority of any
person executing or depositing such subject matter. Escrow Agent shall be under
no duty to investigate or inquire as to the validity or accuracy of any
document, agreement, instruction or request furnished to it hereunder believed
by it to be genuine and Escrow Agent may rely and act upon, and shall not be
liable for acting or not acting upon, any such document, agreement, instruction
or request. Escrow Agent shall in no way be responsible for notifying, nor shall
it be its duty to notify, any party hereto or any other party interested in this
Escrow Agreement of any payment required or maturity occurring under this Escrow
Agreement or under the terms of any instrument deposited herewith. The parties
acknowledge that the Escrow Agent shall be entitled to distribution plan
payments, shareholder service fees, administrative service fees or similar fees
paid by such money market mutual fund companies, distributors or agents. The
parties hereby consent to the Escrow Agent’s receipt of such fees and that the
interest paid on the funds in the escrow shall be net of such fees.

 

2.2 Authority to Act.

 

A. Escrow Agent is hereby authorized and directed by the undersigned to deliver
the subject matter of this Escrow Agreement only in accordance with the
provisions of Article I of this Escrow Agreement.

 

B. Escrow Agent shall be protected in acting upon any written notice, request,
waiver, consent, certificate, receipt, authorization, power of attorney or other
paper or document which Escrow Agent in good faith believes to be genuine and
what it purports to be, including, but not limited to, items directing
investment or non-investment of funds, items requesting or authorizing release,
disbursement or retainage of the subject matter of this Escrow Agreement and
items amending the terms of this Escrow Agreement.

 

C. Escrow Agent may consult with legal counsel at the joint and several cost and
expense of the undersigned (other than Escrow Agent) in the event of any dispute
or question as to the construction of any of the provisions hereof or its duties
hereunder, and it shall incur no liability and shall be fully protected in
acting in accordance with the advice of such counsel.

 

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D. In the event of any disagreement between any of the parties to this Escrow
Agreement, or between any of them and any other person, resulting in adverse
claims or demands being made in connection with the matters covered by this
Escrow Agreement, or in the event that Escrow Agent, in good faith, be in doubt
as to what action it should take hereunder, Escrow Agent may, at its option,
refuse to comply with any claims or demands on it, or refuse to take any other
action hereunder, so long as such disagreement continues or such doubt exists,
and in any such event, Escrow Agent shall not be or become liable in any way or
to any person for its failure or refusal to act, and Escrow Agent shall be
entitled to continue so to refrain from acting until (i) the rights of all
interested parties shall have been fully and finally adjudicated by a court of
competent jurisdiction, or (ii) all differences shall have been adjudged and all
doubt resolved by agreement among all of the interested persons, and Escrow
Agent shall have been notified thereof in writing signed by all such persons.
Notwithstanding the foregoing, Escrow Agent may in its discretion obey the
order, judgment, decree or levy of any court, whether with or without
jurisdiction, or of any agency of the United States or any political subdivision
thereof, or of any agency of the State of Texas or of any political subdivision
thereof, and Escrow Agent is hereby authorized in its sole discretion, to comply
with and obey any such orders, judgments, decrees or levies. The right of Escrow
Agent under this sub-paragraph are cumulative of all other rights which it may
have by law or otherwise.

 

E. In the event that any controversy should arise among the parties with respect
to the Escrow Agreement, or should the Escrow Agent resign and the parties fail
to select another Escrow Agent to act in its stead, the Escrow Agent shall have
the right to institute a bill of interpleader in any court of competent
jurisdiction to determine the rights of the parties.

 

2.3 Compensation/Indemnification.

 

A. Escrow Agent shall be entitled to reasonable compensation as well as
reimbursement for its reasonable costs and expenses (per Exhibit B attached)
incurred in connection with the performance by it of service under this Escrow
Agreement (including reasonable fees and expenses of Escrow Agent’s counsel) and
the undersigned (other than Escrow Agent) agree to so pay Escrow Agent
reasonable compensation and reimburse Escrow Agent for reasonable costs and
expenses. The parties hereto agree that escrow fees shall be due and payable
each year in advance, and such fees will be deducted from the Fund upon the
commencement of the escrow and thereafter on each anniversary date hereof
without proration.

 

B. The parties to this Escrow Agreement (other than Escrow Agent) hereby jointly
and severally agree to indemnify and hold Escrow Agent, its affiliates and their
directors, officers, employees, successors, assigns, attorneys and agents (each
an “Indemnified Party”) harmless from all losses, costs, claims, demands,
expenses, damages, penalties and attorney’s fees suffered or incurred by any
Indemnified Party or Escrow Agent as a result of anything which it may do or
refrain from doing in connection with this Escrow Agreement or any litigation or
cause of action arising from or in conjunction with this Escrow Agreement or
involving the subject matter hereof or Escrow Funds or monies deposited
hereunder or for any interest upon any such monies, including, without
limitation, arising out of the negligence of Escrow Agent; provided that the
foregoing indemnification shall not extend to the gross negligence or willful
misconduct of Escrow Agent. This indemnity shall include, but not be limited to,
all costs incurred in conjunction with any interpleader which the Escrow Agent
may enter into regarding this Escrow Agreement.

 

2.4 Miscellaneous.

 

A. Escrow Agent shall make no disbursement, investment or other use of funds
until and unless it has collected funds. Escrow Agent shall not be liable for
collection items until the proceeds of the same in actual cash have been
received or the Federal Reserve has given Escrow Agent credit for the funds.

 

B. Escrow Agent may resign at any time by giving written notice to the parties
hereto, whereupon the parties hereto will immediately appoint a successor Escrow
Agent. Until a successor Escrow Agent has been named and accepts its appointment
or until another disposition of the subject matter of this Escrow Agreement has
been agreed upon by all parties hereto, Escrow Agent shall be discharged of all
of its duties hereunder save to keep the subject matter whole.

 

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C. All representations, covenants, and indemnifications contained in this
Article II shall survive the termination of this Escrow Agreement.

 

D. Escrow Agent shall send monthly statements to the undersigned of all activity
and transactions processed for the escrow account and the undersigned (except
Escrow Agent) hereby agree to waive their right to receive trade confirmations
as they occur.

 

E. All facsimile signature(s) to this agreement is as valid and effective for
all purposes as an original signature.

 

ARTICLE III

GENERAL PROVISIONS

 

3.1 Discharge of Escrow Agent. Upon the delivery of all of the subject matter or
monies pursuant to the terms of this Escrow Agreement, the duties of Escrow
Agent shall terminate and Escrow Agent shall be discharged from any further
obligation hereunder.

 

3.2 Escrow Instructions. Where directions or instructions from more than one of
the undersigned are required, such directions or instructions may be given by
separate instruments of similar tenor. Any of the undersigned may act hereunder
through an agent or attorney-in-fact, provided satisfactory written evidence of
authority is first furnished to any party relying on such authority.

 

3.3 Notice. Any payment, notice, request for consent, report, or any other
communication required or permitted in this Escrow Agreement shall be in writing
and shall be deemed to have been given when personally delivered or sent
electronically or by facsimile to the party hereunder specified or when placed
in the United States mail, registered or certified, with return receipt
requested, postage prepaid and addressed as follows:

 

If to Escrow Agent:

 

AMEGY BANK NATIONAL ASSOCIATION

Attn: Corporate Trust Department

1801 Main Street, 8th Floor

Houston, Texas 77002

Tel: 713-232-1919

Fax: 713-571-5010

Email: arla.scott@amegybank.com

 

If to Seller:

 

Osage Exploration and Development, Inc.

2445 5th Avenue, Suite 310

San Diego, CA 92131

Attn: Kim Bradford

email: kbradford@osageexploration.com

 

With a copy, which shall not constitute notice, to:

 

Robertson & Williams

9658 N. May Avenue, Suite 200

Oklahoma City, OK 73120

Attn: Tom Williams

email: tcw@robertsonwilliams.com

 

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If to Purchaser:

 

Raven Pipeline Company, LLC

1001 Fannin Street, Suite 4775

Houston, Texas 77002

Attention: Brian Stone

Email: bstone@ravenpipeline.com &

rrussell@ravenpipeline.com

 

With a copy, which shall not constitute notice, to:

 

Porter Hedges LLP

1000 Main, 36th Floor

Houston, TX 77002

Facsimile No.: 713-226-6244

Attention: Corey C. Brown

Email: cbrown@porterhedges.com

 

Any party may unilaterally designate a different address by giving notice of
each such change in the manner specified above to each other party.
Notwithstanding the foregoing, no notice to the Escrow Agent shall be deemed
given to or received by the Escrow Agent unless actually delivered to an officer
of the Escrow Agent having responsibility under this Escrow Agreement.

 

3.4 Governing Law. This Escrow Agreement is being made in and is intended to be
construed according to the laws of the State of Texas. It shall inure to and be
binding upon the parties hereto and their respective successors, heirs and
assigns.

 

3.5 Construction. Words used in the singular number may include the plural and
the plural may include the singular. The section headings appearing in this
instrument have been inserted for convenience only and shall be given no
substantive meaning or significance whatsoever in construing the terms and
conditions of this the Escrow Agreement.

 

3.6 Amendment. The terms of this Escrow Agreement may be altered, amended,
modified or revoked only by an instrument in writing signed by the undersigned
and Escrow Agent.

 

3.7 Force Majeure. Escrow Agent shall not be liable to the undersigned for any
loss or damage arising out of any acts of God, strikes, equipment or
transmission failure, war, terrorism, or any other act or circumstance beyond
the reasonable control of Escrow Agent.

 

3.8 Written Agreement. This Escrow Agreement represents the final agreement
between the parties, and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties. This Escrow Agreement shall not
be deemed to create a fiduciary relationship between the parties hereto under
state or federal law.

 

3.9 Counterparts; Facsimile Signature. This Agreement may be executed in one or
more counterparts in which event all of said counterparts shall be deemed to
constitute one original of this Agreement. This Agreement is effective upon
delivery of one executed counterpart from each party to the other parties. In
proving this Agreement, a party must produce or account only for the executed
counterpart of the party to be charged. Delivery of an executed counterpart
signature page by facsimile is as effective as executing and delivering this
Agreement in the presence of the other parties to this Agreement.

 

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EXECUTED as of the dates set forth below.

 

  OSAGE EXPLORATION AND DEVELOPMENT, INC.

  

Date: September 30, 2013       By:     Name:     Title:  

  

  RAVEN PIPELINE COMPANY, LLC

  

Date: September 30, 2013 By:     Name:     Title:  

 

AMEGY BANK NATIONAL ASSOCIATION, Escrow Agent, hereby accepts its appointment as
Escrow Agent as described in the foregoing Escrow Agreement, subject to the
terms and conditions set forth therein.

  

  AMEGY BANK NATIONAL ASSOCIATION

  

Date: By:     Name     Title:  

 

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EXHIBIT A

 

JOINT DISBURSEMENT REQUEST

 

Pursuant to that certain Escrow Agreement dated effective September 30, 2013
among OSAGE EXPLORATION AND DEVELOPMENT, INC., RAVEN PIPELINE COMPANY, LLC, and
AMEGY BANK NATIONAL ASSOCIATION the parties hereto hereby request disbursement
of funds in the amount and manner described below from account number
__________________ styled “__________________________________________”, Escrow
Account.

 

Please disburse to:           Amount to disburse:           Form of
disbursement:                            

 

IN WITNESS WHEREOF: the parties hereto have executed this Agreement in multiple
counterparts, each of which is and shall be considered an original for all
intents and purposes, effective as of the date first written above.

 

 

OSAGE EXPLORATION AND DEVELOPMENT, INC.   RAVEN PIPELINE COMPANY, LLC          
By:     By:             Name:     Name:             Title:     Title:          
  Date:     Date:  

 

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EXHIBIT B

 

FEE SCHEDULE

 

Acceptance Fee: $500.00 (One-time fee to review and negotiate documents and
setup account(s))     Annual Administration Fee: $3,500.00     To administer the
account per terms of the agreement including maintenance, transactions, etc.
(Due upon execution of the agreement and on each anniversary date thereafter
without pro-ration)     Transaction Charges $30.00 per item in excess of 20 per
year (Deposits or Disbursements via check or wire)       Trades or Sells of
Securities $35.00 per item (Unless invested in sweep fund)       Foreign
Currency Conversion Processing $50.00 per item     Out of pocket expenses At
Cost     Any expenses such as travel expenses related to closing, courier
charges, etc. will be billed at cost.     Tax Reporting       There is no charge
for tax reporting to one entity only. However, if reporting is to be apportioned
to various distributes, there will be an additional charge of $85.00 per 1099
INT produced.     Extraordinary Services By appraisal

 

This fee does not cover any extraordinary expenses, including, but not limited
to, legal fees which may be incurred by the Escrow Agent in performing its
duties hereunder or any extraordinary services such as default, termination,
etc. which will be assessed by appraisal at the time such services may be
required.

 

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