Exhibit 10.1

CRUDE OIL PURCHASE AGREEMENT

This Crude Oil Purchase Agreement (“Agreement”) is entered into between Resolute
Natural Resources Company, LLC (“Resolute”) and Western Refining Southwest, Inc.
(“Western Southwest”) as of June 1, 2014, regarding Additional Volumes
(“Additional Volume Effective Date”) and as of July 1, 2014, regarding Base
Volumes (the “Base Volume Effective Date”)(collectively the “Effective Dates”)
for the sale and purchase of crude oil under the terms and conditions set forth
herein. This Agreement covers volumes of crude oil owned by Resolute, as well as
volumes owned by Navajo Nation Oil and Gas Company (“NNOGC”) and committed to
this Agreement with NNOGC’s acknowledgement and consent as set forth below.

 

Seller:   Resolute, on behalf of itself and NNOGC Buyer:   Western Southwest
Term:   This Agreement shall commence on the Effective Dates and continue until
December 31, 2014 (the “Term”), at which time this Agreement will automatically
terminate. Product & Quality:   Four Corners Sweet Crude Oil (“Crude Oil” or
“Product”) Quantity:   The percentage of Crude Oil production owned by Resolute
and NNOGC from the lease units in San Juan County, Utah as reflected on Exhibit
A (the “Lease Units”), up to a total of 11,000 barrels per day; with the “Base
Volume” being 8,000 barrels per day and the “Additional Volume” being 3,000
barrels per day (collectively, the “Contract Volume”). Price:   All Volumes of
Product sold pursuant to this Agreement shall be priced at the NYMEX trading
days average for the current (delivery) calendar month less a discount of $9.50
per barrel.   Resolute shall bear the cost of any CPI-based cost of service
increases during the Term of this Agreement in the Running Horse Pipeline
(“RHP”) tariff for movements between Aneth, Utah and Bisti, New Mexico, plus
equivalent amounts (“Gallup Cost Increase”) for assumed equivalent increased
costs in the Western Pipeline tariffs for movements from Bisti to the Gallup
Refinery. Delivery:   FOB at the Lease Units. Royalties & Taxes:   The Price
paid by Western Southwest for Product hereunder includes reimbursement to
Resolute for any production and/or severance taxes and any royalties owed with
respect to Product delivered to Western Southwest by

 

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   Resolute hereunder. Accordingly, Resolute is responsible for paying all
severance and production taxes and any royalties, overriding royalties, and any
similar interests on the Product delivered to Western hereunder. Western
Southwest does not have any obligation under this Agreement to pay any
production or severance taxes or any royalties, overriding royalties, or any
similar interests on the Product delivered to Western Southwest hereunder.
Payment:    Western Southwest shall pay Resolute for the Product delivered
hereunder on the 20th day of the month which immediately follows the month of
delivery, provided that Resolute has submitted all necessary substantiating
documents incident to the transaction for each volume delivered and an invoice
for which sums are due. Payment shall be made via wire transfer on or before the
due date to a bank designated on Resolute’s invoice in immediately available
federal funds.    Any CPI-based cost of service increases on the RHP or the
Gallup Cost Increase for which Resolute is responsible under the Section of this
Agreement entitled “Price” shall be paid by Resolute to Western Southwest, by
offset from the amounts owing by Western Southwest to Resolute and Resolute
hereby consents and agrees to such offset. Late Payment:    Any amount payable
for any of the Product sold hereunder or otherwise payable by Western Southwest
to Resolute hereunder shall, if not paid when due, bear interest from the due
date (inclusive) until the date full payment is received by Resolute (exclusive)
at a rate equal to the lesser of: (a) one percent (1%) above the prime rate in
effect at the opening of business on the due date at the major lending
institutions as quoted in the “Money Rates” section of the Wall Street Journal;
or (b) the maximum rate of interest permitted under applicable law. Western
Southwest shall pay such interest within five (5) calendar days following its
receipt of an invoice for such interest via wire transfer or immediately
available federal funds to Resolute’s designated bank. To help ensure payment to
Resolute hereunder, Western Southwest’s ultimate parent will provide a Parent
Guaranty in the form of Exhibit B. Operational Contacts:   

 

    

Western Southwest:

  

RESOLUTE:

   NNOGC: Scheduling / Nominations    Sunny Leung    FAX:
602.683.5703    Pat Flynn    FAX:
303.623.3628    Chalmer Bitsoi    FAX:
505.436.2055 Contracts / Documents    Patt Wolfe    FAX:
602.683.5655    Pat Flynn    FAX:
303.623.3628    David Rubenking    FAX:
505.436.2055 Invoice / Payments    Mary Ellen O’Brien    FAX:
602.683.5648    Jim Tuell    FAX:
303.623.3628    Loretta Largo    FAX:
928.871.4911

 

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Access & Use of NNOGC Bisti Station:   NNOGC agrees that during the Term of this
Agreement and subject to the limitations described below, it will grant Western
Southwest the non-exclusive but priority right to access and use all loading and
transfer facilities including any tankage necessary to effectuate loading at
NNOGC’s Bisti Station (“Bisti Station”) for the purpose of loading crude oil.
NNOGC agrees that the only other entities that will be permitted to operate the
Bisti station during the Term are NNOGC and/or Resolute (and their respective
agents). Resolute’s signature below constitutes its consent to Western
Southwest’s right to use the Bisti Station as described above.   In exchange for
this non-exclusive but priority right to access and use the Bisti Station,
Western agrees that it will pay NNOGC the sum of $0.25 per barrel of crude oil
loaded at Bisti Station. Western Southwest’s access to and use of Bisti Station
is subject to the following agreements and conditions:   a.   Western Southwest
assumes all risk and liability associated with its use of Bisti Station and
hereby agrees to indemnify and defend NNOGC and Resolute from any claim of any
party resulting from such use other than from a claim arising from Resolute,
NNOGC’s, or either of their contractors or agents’ acts or omissions.   b.  
Western Southwest shall, at its sole expense, supply all appropriate personnel
to operate Bisti Station for its own needs in a prudent and safe manner, in
compliance with all laws, rules and regulations that may apply, and in
accordance with any rules and operating procedures reasonably specified by NNOGC
in writing to Western Southwest. Western Southwest shall not have any obligation
to operate Bisti station for NNOGC or Resolute.   c.   Western Southwest shall
be responsible for and pay for any damage to Bisti Station that occurs as a
result of its use of Bisti Station and shall promptly repair or replace any
damaged portion of Bisti Station or shall reimburse NNOGC for any such repair or
replacement cost as elected by NNOGC.   d.   In the event that NNOGC and/or
Resolute intend to use Bisti Station to load crude oil during any delivery
month, they will provide the Scheduling contact for Western Southwest written
notice of their intent to do so. Thereafter, Western Southwest, Resolute and/or
NNOGC shall promptly consult to coordinate regarding the operational issues
incident to the use of Bisti Station for that delivery month.   e.   If during
any period during the Term, (i) Western Southwest is not purchasing and
receiving all of the Contract Volume for any reason (including but not limited
to temporary inoperability of the Gallup Refinery), or (ii) Resolute and NNOGC
are unable to deliver the Contract Volumes by pipeline to the Gallup Refinery
due to temporary inoperability of the RHP,, then Resolute and NNOGC shall have
priority use of the Bisti Station as to any volumes not purchased and received
by Western Southwest

 

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    or any volumes that Resolute and NNOGC are unable to ship on the RHP. In
addition, for any period during the Term that Western Southwest does not
purchase the Contract Volume and that failure to purchase is not excused under
the Agreement, then Western Southwest will not have rights to use Bisti Station
during that delivery period. Tariff Support:   Resolute and NNOGC agree that
during the Term of this Agreement that they will not challenge any tariffs,
whether setting forth rates or rules & regulations, filed by Western Southwest,
Western Refining Pipeline, LLC (“Western Pipeline”) or any other Western
Southwest affiliate under common ownership and control with Western Southwest
(“Western Affiliate”), regardless of whether such tariff is filed with the
Federal Energy Regulatory Commission, the Texas Railroad Commission or any other
regulatory body governing pipeline movements and operations, provided:   a.  
any tariff rate filed by Western Southwest, Western Pipeline or any other
Western Affiliate does not exceed an aggregate of $7.00 per barrel for
transportation from Bisti Station to Mason Station (as depicted on the attached
Exhibit C), and   b.   The rules and regulations are substantially the same as
the rules and regulations in Western Pipeline F.E.R.C Tariff No. 1.0.0 effective
June 1, 2014   Subject to the foregoing proviso, Resolute and NNOGC agree that
during the Term of this Agreement and upon request by Western Southwest, that
they will reasonably promptly submit to Western Southwest written support of any
tariff filed by Western Southwest, Western Pipeline or any other Western
affiliate, regardless of whether such tariff is filed with the Federal Energy
Regulatory Commission, the Texas Railroad Commission or any other governing
regulatory body, and stating that it is a potential shipper on such pipelines
covered by such tariff and that it may intend to use the service described in
such tariff. NNOGC’s signature below indicates its consent and agreement to not
challenge and to, upon request, provide such written support for Western
Southwest, Western Pipeline and other Western Affiliates’ tariffs in accordance
with this Section. Running Horse Pipeline Integrity:   NNOGC agrees that during
the Term of this Agreement, it will ensure that the RHP, which is currently
owned and operated by NNOGC, is operated and maintained in good working order
and in accordance with all applicable laws, tariffs, rules, regulations, and
sound, workmanlike and prudent practices common to the pipeline industry.
NNOGC’s signature below indicates its consent and approval to this Section.

 

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  If at any time during the Term of this Agreement, the RHP becomes fully or
partially inoperable due to a pipeline integrity issue or other operational
deficiency, then Resolute or NNOGC will provide Western Southwest with written
notice of the operational issue. During the period of time that the RHP is
inoperable provided that such period is expected to last no more than 12 days,
the parties shall cooperate to fully utilize the existing crude oil storage
facilities of the parties such that deliveries of Product can be restored as
soon as possible following the repair of the condition and Western Southwest’s
obligation to purchase Product hereunder shall not be suspended, but
Resolute/NNOGC shall make up deliveries of the stored volumes as soon as
practicable following restoration of service. If Western Southwest is required
to purchase other Product to cover its delivery obligations or to keep the
Gallup refinery operating at preexisting levels in effect prior to the period of
inoperability, then Western Southwest’s obligation to purchase Product hereunder
shall be suspended in the amount and for the duration of such covering
requirement. In addition, during any such period of inoperability of the RHP,
Resolute and NNOGC may at their cost transport some or all of the Contract
Volumes by truck to Bisti and Western Southwest shall have the obligation to
purchase such Contract Volumes in accordance with the terms of this Agreement
(including a refund of the applicable RHP tariff amount). Buy / Sell Option:  
At Resolute’s option, exercised at any time during the term of this Agreement,
up until the date on which Western Southwest and/or Western Pipeline’s TexNewMex
Pipeline (as depicted on the attached Exhibit C) is connected to Western
Pipeline’s Delaware Basin Pipeline System (as depicted on the attached Exhibit
B), and operational, such that shipments can be made from Bisti Station to Mason
Station, Resolute may elect to initiate a Buy/Sell transaction with Western
Southwest on the following terms:   a.   Notice of Exercise of Option: Resolute
will provide Western Southwest with written notice of its election to exercise
the Buy / Sell Option (the “Notification”) at least thirty (30) days prior to
the intended delivery month;   b.   Buyback Period: One (1) calendar month;   c.
  Product & Quality: Four Corners Sweet Crude Oil;   d.   Buyback Volume: As
nominated in Resolute’s Notification for any given delivery month, up to a
maximum of 3,000 barrels per day (the “Buy/Sell Volume”). Resolute warrants and
agrees that the Buy/Sell Volume sold by Resolute to Western under this Buy/Sell
Option shall be: (i) volume of Product that is not already subject to sale to
Western Southwest under this Agreement; or (ii) volume of Product produced
during periods when Western Southwest’s Gallup refinery is unable to process or
otherwise does not take the Contract Volume hereunder.

 

 

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  e.   Delivery Location:     1.   Deliveries by Western to Resolute: As the
Product passes the last flange of Western Southwest’s delivering facilities into
the rail cars provided by Resolute at the rail facility that is owned and
operated by Western Southwest at its petroleum refinery in Gallup, New Mexico
(the “Gallup Refinery”).     2.   Deliveries by Resolute to Western: At the
Lease Units in the Aneth Field as the Product exits Resolute’s meters at each
tank battery near Aneth, Utah (“Aneth Station”) into the RHP or from the RHP as
the Product passes through the connecting flange that connects the RHP to the
terminal operated by Western Southwest/Western Pipeline at Bisti Station located
in San Juan County, New Mexico (“Bisti Station”), as elected by Resolute in its
Buyback Notification.   f.   Price: Resolute agrees that the Price it pays for
Product delivered under this Buy/Sell Option shall include the following
differential costs:     1.   If the Buy/Sell transaction is initiated at Aneth
Station $2.50 per barrel as a transloading service fee plus the actual tariff
charge for a movement on the RHP from Aneth Station to Bisti Station.     2.  
If the Buy/Sell transaction is initiated at Bisti Station, $2.50 per barrel as a
transloading service fee.   g.   Payment: The Price owing by one Party to
another under this Buy/Sell Option shall be netted.   h.   Rail Issues: Resolute
is solely responsible for providing and arranging for railcars, switching of
railcars and any demurrage charges.   i.   Survival and Termination: Resolute’s
right to exercise this Buy/Sell Option under the conditions specified in this
Agreement shall survive the expiration or termination of this Agreement until
July 31, 2019, at which time sich Buy/Sell Option shall automatically terminate.
Provided, that at any time following the expiration or termination of this
Agreement, Western Southwest may elect to terminate the Buy/Sell Option by
giving Resolute ninety (90) days notice thereof and on or before the effective
date of such termination, refunding to Resolute the rail facility capital
contribution made by Resolute and NNOGC in the amount of $500,000.   j.  
Pipeline Capacity: Western Southwest’s obligation to enter into a Buy/Sell
transaction provided for in this section is conditioned upon there being
adequate pipeline capacity between Bisti Station and the Gallup Refinery to
physically transport these additional barrels of Product.

 

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  k.   Documentation of Buy/Sell Transaction: The Parties agree that any
Buy/Sell Transaction initiated hereunder shall be documented in a separate
written agreement, consistent with customary industry standards (including those
regarding loss allowances) and any provisions specifically set forth in this
Section entitled “Buy/Sell Option.” Termination   Notwithstanding the Term, at
any time during the Term of this Agreement, Western Southwest may terminate this
Agreement in its entirety in the event of the following:   a.   upon sixty
(60) days written notice to Resolute, in the event that the Navajo Nation takes
the position that any portion of the Western Southwest and/or Western Pipeline’s
right-of-ways that Western Southwest or Western Pipeline utilize to deliver
Product to the Gallup Refinery are not valid and Western Refining and/or Western
Pipeline (a) are unable to use such right-of-ways, or, (b) the Navajo Nation
asserts that Western Southwest or Western Pipeline is in trespass regarding such
right-of-ways   b.   Upon seven (7) days written notice, upon Resolute’s
challenge of any tariff rates or rules and regulations filed by Western
Southwest, Western Pipeline or any other Western affiliate if and only if such
challenge is in violation of the covenants set forth in Section of this
Agreement entitled “Tariff Support.”   Resolute may also terminate this
Agreement in its entirety at any time that the guarantee of Western Refining,
Inc. (“Western”) substantially in the form of Exhibit B is revoked or the amount
guaranteed is less than the amount of exposure to Resolute; provided that
Resolute has given Western Southwest and Western written notice that the
guarantee is less than the amount of exposure to Resolute and Western has not,
within thirty (30) days modified the guarantee to exceed the amount of exposure
to Resolute.   Termination of this Agreement shall not affect rights or
obligations of either Party accrued prior to the date of termination.
Miscellaneous:           i.   Attorneys Fees: In the event of a dispute between
the Parties in connection with this Agreement, the prevailing Party in the
resolution of any such dispute, whether by litigation or otherwise, shall be
entitled to full recovery of all reasonable attorney’s fees, costs and expenses
incurred in connection therewith, including costs of court, against the
non-prevailing Party. This provision will survive the expiration or termination
of this Agreement.

 

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    ii.   Limitations: IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR
ANY LOST PROFITS OR SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR
INDIRECT LOSSES OR DAMAGES ARISING FROM OR RELATED TO THIS AGREEMENT. THE
PARTIES AGREE THAT THE RESTRICTIONS AND LIMITATIONS ON DAMAGES CONTAINED IN THIS
PARAGRAPH DO NOT DEPRIVE THE PARTIES OF MINIMUM ADEQUATE REMEDIES AS
CONTEMPLATED IN TEXAS UCC SECTION 2-719. ANY CLAIM HEREUNDER MUST BE FILED IN
WRITING WITHIN TWO YEARS FROM THE INCIDENT. This provision will survive the
expiration or termination of this Agreement.     iii.   Indemnity: Subject to
the limitations contained herein, each Party (the “Indemnifying Party”) to this
Agreement shall indemnify, defend (using counsel reasonably acceptable to the
other Party), and hold the other Party and the other Party’s parents, affiliates
and subsidiaries, and the officers directors and employees of any of them
(collectively, the “Indemnified Party”) harmless from all claims, demands,
expenses (including penalties, interest and reasonable attorneys’ fees), and
causes of action asserted against the other by any person (including without
limitation employees of either Party or any Federal, state or local governmental
authority), including but not limited to claims for personal injury or death, or
loss or damage to property to the extent caused by or resulting or arising from
the willful or negligent acts or omissions of the Indemnifying Party or of the
Indemnifying Party’s contractors or agents, the Indemnifying Party’s breach of
this Agreement, or from the Indemnifying Party’s or its contractors or agents’
failure to comply with Federal, state or local laws or regulations relevant and
applicable to the crude oil or delivery or receipt of any crude oil hereunder.
Where personal injury, death or loss of or damage to the property is a result of
the joint negligence or misconduct of the Parties hereto, the Parties expressly
agree to indemnify each other in proportion to their share of such joint
negligence or misconduct. This provision will survive the expiration or
termination of this Agreement.     iv.   Audit Rights: Each Party shall have the
right at all reasonable times, upon written request, to audit all records of the
other Party pertinent to this agreement to verify such Party’s compliance with
the terms and conditions of this agreement. Notwithstanding the foregoing, each
Party shall be entitled to protect the confidentiality of any information that
it considers proprietary. If any audit conducted pursuant to this section
reveals that there was an inaccuracy or omission in the invoices submitted under
this agreement, the Parties shall, within ten (10) days of a request by either
Party therefore, meet to discuss the adjustments and/or payments that would be
necessary to correct such inaccuracy or

 

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      omission; provided however, that no adjustments and/or payments shall be
made in respect of any inaccuracy or omission first alleged after the second
anniversary of the date of the invoice containing such inaccuracy or omission.
This provision will survive the expiration or termination of this Agreement.    
v.   Authority to Contract: Each of Resolute and NNOGC represent and warrant to
Western Southwest, as to itself only, that Resolute and NNOGC, as applicable,
has full right and authority to enter into this Agreement with respect to all of
the Product volumes to be delivered hereunder and and other obligations assumed
hereunder, and that the execution and performance of the Agreement by Resolute
and NNOGC shall not, at any time, constitute a breach or violation or breach of
any agreement or duty which Resolute and NNOGC may have with/to any third party.
    vi.   Successors & Assigns: This Agreement shall be binding upon and inure
to the benefit of the Parties hereto, and their respective heirs,
representatives, successors and permitted assigns. However, neither Party shall
assign this Agreement to any person or firm except with the prior written
consent of the other Party, which consent shall not be unreasonably withheld or
delayed. Notwithstanding the foregoing, either party may, without the consent of
the other party, assign this Agreement to any of its parent, affiliate or
subsidiary entities or to a purchaser of all or substantially all of its assets.
    vii.   Arbitration: THE PARTIES AGREE THAT TO THE EXTENT ANY DISPUTE
RELATING TO OR ARISING OUT OF THIS AGREEMENT DOES NOT EXCEED $5,000,000, SUCH
DISPUTE SHALL BE DECIDED BY CONFIDENTIAL, BINDING NEUTRAL ARBITRATION AS
PROVIDED BY TEXAS LAW TO BE CONDUCTED IN ACCORDANCE WITH THE JAMS STREAMLINED
ARBITRATION RULES AND PROCEDURES BY A SINGLE NEUTRAL ARBITRATOR. THE PARTIES ARE
GIVING UP ANY RIGHTS EACH MIGHT POSSESS TO DISCOVERY AND APPEAL OF SUCH DISPUTES
AND TO HAVE SUCH DISPUTES LITIGATED IN A COURT OR BY JURY TRIAL. THE AGREEMENT
TO THIS PROVISION IS VOLUNTARY. Any interpretation of the arbitration provision
shall also be governed by the Federal Arbitration Act.       Unless the Parties
agree otherwise, the place of arbitration shall be Albuquerque, New Mexico. The
arbitrators shall issue a reasoned written decision and award which shall not
exceed $5,000,000 including any interest, costs or any other amount. The
obligations of the Parties under this Section shall survive the expiration or
termination of this

 

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      Agreement. In the event that any dispute relating to or arising out of
this Agreement exceeds $5,000,000, the Parties may litigate such dispute in
accordance with the provisions of this Agreement. This provision will survive
the expiration or termination of this Agreement.     viii.   Venue &
Jurisdiction: If, for any reason, any dispute hereunder becomes the subject of
litigation, rather than arbitration, as provided in this Agreement, venue for
such litigation shall be exclusive in the state or federal court(s) of competent
jurisdiction in Albuquerque, Bernalillo County, New Mexico. The Parties waive,
to the fullest extent permitted by applicable law, any objection which they may
now or hereafter have to the bringing of any such action or proceeding in such
jurisdiction. This provision will survive the expiration or termination of this
Agreement.     ix.   Conflicts of Interest: Neither Party, nor any subcontractor
or vendor of either Party shall give or receive any commission, fee, rebate, or
gift or entertainment of significant cost or value in connection with this
Agreement, or enter into any business arrangement with any director, employee or
agent of the other Party or its parent, affiliate or subsidiary entities other
than as a representative of the Party to this Agreement, without the other
Party’s prior written agreement. Each Party shall promptly notify the other of
any known violation of this paragraph.     x.   Notice: In the event that either
Party is required or desires to give notice to the other Party under the terms
of this Agreement, such notice shall be given by certified or registered
first-class mail, return receipt requested, or by delivery by a nationally
recognized overnight courier (i.e. FedEx) addressed as follows:      

If to Western Southwest:

 

Western Refining Southwest, Inc.

ATTN: General Counsel

1250 W. Washington Street, Suite 101

Tempe, AZ 85281

 

If to Resolute:

 

Resolute Natural Resources Company, LLC

Attn: General Counsel

1700 Lincoln, Suite 2800

Denver, CO 80203

 

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If to NNOGC:

 

Navajo Nation Oil & Gas Company

P.O. Box 4439

Window Rock, Arizona 86515

Attn: Legal Department

      The Parties may change the notice addresses as needed from time to time,
upon providing written notice to the other Party in accordance with this
provision.     xi.   Savings Clause: If any term or provision of this Agreement
or the application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Agreement or the application of
such terms or provisions to persons or circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby and each
term and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.     xii.   Confidentiality: The provisions of
this Agreement shall be treated by the Parties as strictly confidential and
shall not be disclosed by either Party to any person, entity or corporation
without the prior written consent of the other Party, which shall not be
unreasonably withheld or delayed, unless required by law. Notwithstanding the
foregoing, either Party may disclose this Agreement, without the other Party’s
consent, to any parent, affiliate or subsidiary or to the extent required by
law, rule or regulation, legal process, order of court or other judicial body,
or pursuant to any government agency, regulatory body or security exchange. This
provision will survive the expiration or termination of this Agreement for a
period of two (2) years thereafter.     xiii.   Conoco GTCs: Where not in
conflict with the express terms hereof, this Agreement shall be governed by the
Conoco General Provisions for Domestic Crude Oil Agreements dated January 1,
1993, as amended by Amendment dated August 1, 2009 (the “Conoco GTCs”), which is
Attached hereto as Exhibit D. This Agreement constitutes “Special Provisions” as
that term is used in the Conoco GTCs. As used in the Conoco GTCs, Western
Southwest shall be the “Buyer” and Resolute shall be the “Seller.” The terms of
this Agreement will control to the extent there is any conflict between the
terms of this Agreement and the Conoco GTCs.     xiv.   Entire Agreement: This
Agreement, together with the Conoco GTCs, represents the entire agreement of the
Parties regarding the subject matter hereof and there are no other promises,
representations, warranties, or reciprocal agreements affecting, incidental to,
conditional upon, or related to this Agreement. All previous understandings and

 

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      agreements, whether oral or written, are superseded by and merged into
this Agreement. For the avoidance of doubt, the previous agreement between the
Parties for the sale and purchase of crude oil, entitled “Crude Oil Purchase
Agreement” dated August 27, 2009, as amended on August 31, 2011 and April 1,
2012 (Western Contract #LP818) (the “Prior Agreement”), is terminated in its
entirety as of the Effective Date, including but not limited to the provisions
in the Prior Agreement regarding use of the rail facility at Western Southwest’s
Gallup Refinery and Resolute’s right thereunder to elect to enter into a
buy/sell arrangement under certain circumstances.

AGREED to as of the Effective Dates.

 

WESTERN REFINING SOUTHWEST, INC.     RESOLUTE NATURAL RESOURCES COMPANY, LLC By:
 

/s/ Mark J. Smith

    By:  

/s/ James M. Piccone

Printed Name:   Mark J. Smith     Printed Name:   James M. Piccone Title:  
Pres. Ref/Mktg     Title:   President Date:   July 1, 2014     Date:   July 7,
2014

AGREED AND ACKNOWLEDGED:

Navajo Nation Oil and Gas Company, a/k/a Navajo Nation Oil & Gas Company, Inc.
(“NNOGC”) hereby acknowledges and agrees that its crude oil volumes covered by
this Agreement are validly committed to sale pursuant to the terms of this
Agreement and that all other commitments that NOGC makes hereunder are agreed to
and accepted.

 

Navajo Nation Oil and Gas Company By:  

/s/ Louis Denetsosie

Printed Name:   Louis Denetsosie Title:   Chief Executive Officer Date:   July
10, 2014

 

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EXHIBIT A

 

Lease Name

  

County/State

   Percentage
(Resolute & NNOGC
combined)  

Aneth Unit – all leases

   San Juan, Utah      87.780903 % 

McElmo Creek Unit – all leases

   San Juan, Utah      82.136081 % 

Ratherford Unit – all leases

   San Juan, Utah      86.716277 % 

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EXHIBIT B

FORM OF GUARANTY OF WESTERN REFINING, INC.

GUARANTY

IN CONSIDERATION of Resolute Natural Resources Company, LLC and all its
subsidiaries and affiliates (hereinafter referred to as “Creditor”), extending
credit to Western Refining Southwest, Inc. and all its subsidiaries, affiliates,
and divisions, including Western Refining Wholesale, Inc., (hereinafter referred
to as “Debtor”), and other good and sufficient consideration to the undersigned
accruing, the undersigned hereby gives this Guaranty to Creditor for payment in
full of any and all payment obligations of the said Debtor to the said Creditor
whether on open account or evidenced by note, secured or unsecured, due and
owing at the present time, or that may hereafter be due and owing by said Debtor
to said Creditor, up to an aggregate maximum amount of Fifty Million Dollars
($50,000,000). And, it is further agreed that if said bills are not paid when
due, subject to all defenses the Debtor has, excluding insolvency and/or
bankruptcy, the undersigned will pay the same upon notice and demand. The
undersigned’s obligation under this Guaranty is a guaranty of payment and not of
collection. Guarantor’s obligations and liability under this Guaranty shall be
limited to payment obligations, and Guarantor shall have no obligation to buy,
sell, deliver, supply or transport crude oil, hydrocarbons, condensate, propane,
natural gas liquids or any other product under the Transactions.

The undersigned, Western Refining, Inc., a Delaware corporation (the
“Guarantor”) for itself, its successors and assigns, agrees that it is
financially interested in the said Debtor and agrees to be held responsible for
said payment obligations, precisely as if the same had been contracted and due
and owing by the undersigned itself, and agrees to pay said obligations upon
notice and on demand, for any balance that may be due and owing at any time for
the products sold and furnished by said Creditor to the said Debtor, subject to
all defenses the Debtor has, excluding insolvency and/or bankruptcy. This
Guaranty shall extend to and cover all renewals of any claims or demands
guaranteed under this instrument, or the extension of time of payment thereof,
or any other modification of terms between Debtor and Creditor. Guarantor shall
have no obligation to buy, sell, deliver, supply or transport crude oil,
hydrocarbons, condensate, propane, natural gas liquids or any other product.

This Guaranty shall be effective for one (1) year from the date set forth below,
unless the Guarantor shall have given notice of revocation in writing to the
Creditor addressed as follows: “Resolute Natural Resources Company, LLC, 1700
Lincoln, Suite 2800, Denver, CO 80203, Attention: James M. Piccone,” and such
notice shall have been received by the Creditor from the Guarantor. Such
revocation, when made, shall have no effect on the Guarantor’s obligations with
respect to transactions previously entered into, and shall apply only to
obligations incurred by Debtor prior to Creditor’s receipt of such notice of
revocation. This Guaranty shall also terminate upon the earlier termination of
the Crude Oil Purchase Agreement and payment of all amounts due under that
contract to Creditor. This Guaranty supersedes and replaces any prior Guaranties
signed by the undersigned parties or their predecessor entities, related to the
same obligations hereunder. This Guaranty shall not be modified expect in
writing signed by the Parties.

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Guarantor hereby waives (a) notice of acceptance of the Guaranty by Creditor,
(b) notice of purchases, sales, and deliveries of oil and/or condensate by or to
Debtor, the amounts and terms of such transactions, and any modifications
thereof, (c) notice of any extension of time for the payment of sums due and
payable to Creditor and (d) suretyship defenses otherwise available to the
undersigned. This Guaranty shall inure to the benefit of the Creditor, its
successors and assigns, and can be modified only by a written instrument signed
by Creditor and the undersigned. This Guaranty shall be governed by and
construed in accordance with the Laws of the State of Texas. Any legal action or
proceeding with respect to this Guaranty or any document related hereto must be
brought in the state or federal courts of competent jurisdiction located in
Albuquerque, Bernalillo County, New Mexico and by execution and delivery of this
Guaranty, the Parties hereby accept, for themselves and in respect of their
property, generally and unconditionally, the jurisdiction of such courts. The
Parties irrevocably waive any objection including any objection to the laying of
venue or based on the grounds of forum non conveniens, which the Parties may now
or hereafter have to the brining of any such action or proceeding in such
respective jurisdiction.

IN WITNESS WHEREOF, the undersigned corporation has signed this Guaranty as
Guarantor this 1st day of July, 2014.

 

WESTERN REFINING, INC.

(a Delaware corporation)

By:  

/s/ Jeff A. Stevens

  Jeff A. Stevens   President and CEO By:  

/s/ Gary Dalke

Name:   Gary Dalke Title:   CFO

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EXHIBIT C

Depiction of Pipeline Systems

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LOGO [g755768exa_pg017.jpg]

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EXHIBIT D

CONOCO’S GENERAL TERMS AND CONDITIONS

GENERAL PROVISIONS

DOMESTIC CRUDE OIL AGREEMENTS

A. Measurement and Tests: All measurements hereunder shall be made from static
tank gauges on 100 percent tank table basis or by positive displacement meters.
All measurements and tests shall be made in accordance with the latest ASTM or
ASME-API (Petroleum PD Meter Code) published methods then in effect, whichever
apply. Volume and gravity shall be adjusted to 60 degrees Fahrenheit by the use
of Table 6A and 5A of the Petroleum Measurement Tables ASTM Designation D1250 in
their latest revision. The crude oil delivered hereunder shall be marketable and
acceptable in the applicable common or segregated stream of the carriers
involved but not to exceed 1% S&W. Full deduction for all free water and S&W
content shall be made according to the API/ASTM Standard Method then in effect.
Either party shall have the right to have a representative witness all gauges,
tests and measurements. In the absence of the other party’s representative, such
gauges, tests and measurements shall be deemed to be correct.

B. Warranty: The Seller warrants good title to all crude oil delivered hereunder
and warrants that such crude oil shall be free from all royalties, liens,
encumbrances and all applicable foreign, federal, state and local taxes.

Seller further warrants that the crude oil delivered shall not be contaminated
by chemicals foreign to virgin crude oil including, but not limited to
chlorinated and/or oxygenated hydrocarbons and lead. Buyer shall have the right,
without prejudice to any other remedy available to Buyer, to reject and return
to Seller any quantities of crude oil which are found to be so contaminated,
even after delivery to Buyer.

C. Rules and Regulations: The terms, provisions and activities undertaken
pursuant to this Agreement shall be subject to all applicable laws, orders and
regulations of all governmental authorities. If at any time a provision hereof
violates any such applicable laws, orders or regulations, such provision shall
be voided and the remainder of the Agreement shall continue in full force and
effect unless terminated by either party upon giving written notice to the other
party hereto. If applicable, the parties hereto agree to comply with all
provisions (as amended) of the Equal Opportunity Clause prescribed in 41 C.F.R.
60-1.4; the Affirmative Action Clause for disabled veterans and veterans of the
Vietnam Era prescribed in 41 C.F.R. 60-250.4; the Affirmative Action Clause for
Handicapped Workers prescribed in 41 C.F.R. 60-741.4; 48 C.F.R. Chapter 1
Subpart 19.7 regarding Small Business and Small Disadvantaged Business Concerns;
48 C.F.R. Chapter 1 Subpart 20.3 regarding Utilization of Labor Surplus Area
Concerns; Executive Order 12138 and regulations thereunder regarding
subcontracts to women-owned business concerns; Affirmative Action Compliance
Program (41 C.F.R. 60-1.40); annually file SF-100 Employer Information Report
(41 C.F.R. 60-1.7); 41 C.F.R. 60-1.8 prohibiting segregated facilities; and the
Fair Labor Standards Act of 1938 as amended, all of which are incorporated in
this Agreement by reference.

D. Hazard Communication: Seller shall provide its Material Safety Data Sheet
(“MSDS”) to Buyer. Buyer acknowledges the hazards and risks in handling and
using crude oil. Buyer shall read the MSDS and advise its employees, its
affiliates, and third parties, who may purchase or come into contact with such
crude oil, about the hazards of crude oil, as well as the precautionary
procedures for handling said crude oil, which are set forth in such MSDS and any
supplementary MSDS or written warning(s) which Seller may provide to Buyer from
time to time.

E. Force Majeure: Except for payment due hereunder, either party hereto shall be
relieved from liability for failure to perform hereunder for the duration and to
the extent such failure is occasioned by war, riots, insurrections, fire,
explosions, sabotage, strikes, and other labor or industrial disturbances, acts
of God or the elements, governmental laws, regulations, or requests, acts in
furtherance of the International Energy Program, disruption or breakdown of
production or transportation facilities, delays of pipeline carrier in receiving
and delivering crude oil tendered, or by any other cause, whether similar or
not, reasonably beyond the control of such party. Any such failures to perform
shall be remedied with all reasonable dispatch, but neither party shall be
required to supply substitute quantities from other sources of supply. Failure
to perform due to events of Force Majeure shall not extend the terms of this
Agreement.

Notwithstanding the above, and in the event that the Agreement is an associated
purchase/sale, or exchange of crude oil, the parties shall have the rights and
obligations described below in the circumstances described below:

(1) If, because of Force Majeure, the party declaring Force Majeure (the
“Declaring Party”) is unable to deliver part or all of the quantity of crude oil
which the Declaring Party is obligated to deliver under the Agreement or
associated contract, the other party (the “Exchange Partner”) shall have the
right but not the obligation to reduce its deliveries of crude oil under the
same Agreement or associated contract by an amount not to exceed the number of
barrels of crude oil that the Declaring Party fails to deliver.

 

Effective January 1, 1993

Supersedes November 1983 General Provisions

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

(2) If, because of Force Majeure, the Declaring Party is unable to take delivery
of part or all of the quantity of crude oil to be delivered by the Exchange
Partner under the Agreement or associated contract, the Exchange Partner shall
have the right but not the obligation to reduce its receipts of crude oil under
the same Agreement or associated contract by an amount not to exceed the number
of barrels of crude oil that the Declaring Party fails to take delivery of.

F. Payment: Unless otherwise specified in the Special Provisions of this
Agreement, Buyer agrees to make payment against Seller’s invoice for the crude
oil purchased hereunder to a bank designated by Seller in U.S. dollars by
telegraphic transfer in immediately available funds. Unless otherwise specified
in the Special Provisions of this Agreement, payment will be due on or before
the 20th of the month following the month of delivery. If payment due date is on
a Saturday or New York bank holiday other than Monday, payment shall be due on
the preceding New York banking day. If payment due date is on a Sunday or a
Monday New York bank holiday, payment shall be due on the succeeding New York
banking day.

Payment shall be deemed to be made on the date good funds are credited to
Seller’s account at Seller’s designated bank.

In the event that Buyer fails to make any payment when due, Seller shall have
the right to charge interest on the amount of the overdue payment at a per annum
rate which shall be two percentage points higher than the published prime
lending rate of Morgan Guaranty Trust Company of New York on the date payment
was due, but not to exceed the maximum rate permitted by law.

G. Financial Responsibility: Notwithstanding anything to the contrary in this
Agreement, should Seller reasonably believe it necessary to assure payment,
Seller may at any time require, by written notice to Buyer, advance cash payment
or satisfactory security in the form of a Letter or Letters of Credit at Buyer’s
expense in a form and from a bank acceptable to Seller to cover any or all
deliveries of crude oil. If Buyer does not provide the Letter of Credit on or
before the date specified in Seller’s notice under this section, Seller or Buyer
may terminate this Agreement forthwith. However, if a Letter of Credit is
required under the Special Provisions of this Agreement and Buyer does not
provide same, then Seller only may terminate this Agreement forthwith. In no
event shall Seller be obligated to schedule or complete delivery of the crude
oil until said Letter of Credit is found acceptable to Seller.

Each party may offset any payments or deliveries due to the other party under
this or any other agreement between the parties.

If a party to this Agreement (the “Defaulting Party”) should (1) become the
subject of bankruptcy or other insolvency proceedings, or proceedings for the
appointment of a receiver, trustee, or similar official, (2) become generally
unable to pay its debts as they become due, or (3) make a general assignment for
the benefit of creditors, the other party to this Agreement may withhold
shipments without notice.

H. Liquidation:

(1) Right to Liquidate. At any time after the occurrence of one or more of the
events described in the third paragraph of Section G, Financial Responsibility,
the other party to the Agreement (the “Liquidating Party”) shall have the right,
at its sole discretion, to liquidate this Agreement by terminating this
Agreement. Upon termination, the parties shall have no further rights or
obligations with respect to this Agreement, except for the payment of the
amount(s) (the “Settlement Amount” or “Settlement Amounts”) determined as
provided in Paragraph (3) of this section.

(2) Multiple Deliveries. If this Agreement provides for multiple deliveries of
one or more types of crude oil in the same or different delivery months, or for
the purchase or exchange of crude oil by the parties, all deliveries under this
Agreement to the same party at the same delivery location during a particular
delivery month shall be considered a single commodity transaction (“Commodity
Transaction”) for the purpose of determining the Settlement Amount(s). If the
Liquidating Party elects to liquidate this Agreement, the Liquidating Party must
terminate all Commodity Transactions under this Agreement.

(3) Settlement Amount. With respect to each terminated Commodity Transaction,
the Settlement Amount shall be equal to the contract quantity of crude oil,
multiplied by the difference between the contract price per barrel specified in
this Agreement (the “Contract Price”) and the market price per barrel of crude
oil on the date the Liquidating Party terminates this Agreement (the “Market
Price”). If the Market Price exceeds the Contract Price in a Commodity
Transaction, the selling party shall pay the Settlement Amount to the buying
party. If the Market Price is less than the Contract Price in a Commodity
Transaction, the buying party shall pay the Settlement Amount to the selling
party. If the Market Price is equal to the Contract Price in a Commodity
Transaction, no Settlement Amount shall be due.

(4) Termination Date. For the purpose of determining the Settlement Amount, the
date on which the Liquidating Party terminates this Agreement shall be deemed to
be (a) the date on which the Liquidating Party sends written notice of
termination to the Defaulting Party, if such notice of termination is sent by
telex or facsimile transaction; or (b) the date on which the Defaulting Party
receives written notice of termination from the Liquidating Party, if such
notice of termination is given by United States mail or a private mail delivery
service.

 

Effective January 1, 1993

Supersedes November 1983 General Provisions

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

(5) Market Price. Unless otherwise provided in this Agreement, the Market Price
of crude oil sold or exchanged under this Agreement shall be the price for crude
oil for the delivery month specified in this Agreement and at the delivery
location that corresponds to the delivery location specified in this Agreement,
as reported in Platt’s Oilgram Price Report (“Platt’s”) for the date on which
the Liquidating Party terminates this Agreement. If Platt’s reports a range of
prices for crude oil on that date, the Market Price shall be the arithmetic
average of the high and low prices reported by Platt’s. If Platt’s does not
report prices for the crude oil being sold under this Agreement, the Liquidating
Party shall determine the Market Price of such crude oil in a commercially
reasonable manner, unless otherwise provided in this Agreement.

(6) Payment of Settlement Amount. Any Settlement Amount due upon termination of
this Agreement shall be paid in immediately available funds within two business
days after the Liquidating Party terminates this Agreement. However, if this
Agreement provides for more than one Commodity Transaction, or if Settlement
Amounts are due under other agreements terminated by the Liquidating Party, the
Settlement Amounts due to each party for such Commodity Transactions and/or
agreements shall be aggregated. The party owing the net amount after such
aggregation shall pay such net amount to the other party in immediately
available funds within two business days after the date on which the Liquidating
Party terminates this Agreement.

(7) Miscellaneous. This section shall not limit the rights and remedies
available to the Liquidating Party by law or under other provisions of this
Agreement. The parties hereby acknowledge that this Agreement constitutes a
forward contract for purposes of Section 556 of the U.S. Bankruptcy Code.

I. Equal Daily Deliveries: For pricing purposes only, unless otherwise specified
in the Special Provisions, all crude oil delivered hereunder during any calendar
month shall be considered to have been delivered in equal daily quantities
during such month.

J. Exchange Balancing: If volumes are exchanged, each party shall be responsible
for maintaining the exchange in balance on a month-to-month basis, as near as
pipeline or other transportation conditions will permit. In all events upon
termination of this Agreement and after all monetary obligations under this
Agreement have been satisfied, any volume imbalance existing at the conclusion
of this Agreement of less than 1,000 barrels will be declared in balance. Any
volume imbalance of 1,000 barrels or more, limited to the total contract volume,
will be settled by the underdelivering party making delivery of the total volume
imbalance in accordance with the delivery provisions of this Agreement
applicable to the underdelivering party, unless mutually agreed to the contrary.
The request to schedule all volume imbalances must be confirmed in writing by
one party or both parties. Volume imbalances confirmed by the 20th of the month
shall be delivered during the calendar month after the volume imbalance is
confirmed. Volume imbalances confirmed after the 20th of the month shall be
delivered during the second calendar month after the volume imbalance is
confirmed.

K. Delivery, Title, and Risk of Loss: Delivery, title, and risk of loss of the
crude oil delivered hereunder shall pass from Seller to Buyer as follows: For
lease delivery locations, delivery of the crude oil to the Buyer shall be
effected as the crude oil passes the last permanent delivery flange and/or meter
connecting the Seller’s lease/unit storage tanks or processing facilities to the
Buyer’s carrier. Title to and risk of loss of the crude oil shall pass from
Seller to Buyer at the point of delivery.

For delivery locations other than lease/unit delivery locations, delivery of the
crude oil to the Buyer shall be effected as the crude oil passes the last
permanent delivery flange and/or meter connecting the delivery facility
designated by the Seller to the Buyer’s carrier. If delivery is by in-line
transfer, delivery of the crude oil to the Buyer shall be effected at the
particular pipeline facility designated in this Agreement. Title to and risk of
loss of the crude oil shall pass from the Seller to the Buyer upon delivery.

L. Term: Unless otherwise specified in the Special Provisions, delivery months
begin at 7:00 a.m. on the first day of the calendar month and end at 7:00 a.m.
on the first day of the following calendar month.

M. Governing Law: This Agreement and any disputes arising hereunder shall be
governed by the laws of the State of Texas.

N. Necessary Documents: Upon request, each party agrees to furnish all
substantiating documents incident to the transaction, including a Delivery
Ticket for each volume delivered and an invoice for any month in which the sums
are due.

O. Waiver: No waiver by either party regarding the performance of the other
party under any of the provisions of this Agreement shall be construed as a
waiver of any subsequent performance under the same or any other provisions.

P. Assignment: Neither party shall assign this Agreement or any rights hereunder
without the written consent of the other party unless such assignment is made to
a person controlling, controlled by or under common control of assignor, in
which event assignor shall remain responsible for nonperformance.

Q. Entirety of Agreement: The Special Provisions and these General Provisions
contain the entire Agreement of the parties; there are no other promises,
representations or warranties. Any modification of this Agreement shall be by
written instrument. Any conflict between the Special Provisions and these
General Provisions shall be resolved in favor of the Special Provisions. The
section headings are for convenience only and shall not limit or change the
subject matter of this Agreement.

 

Effective January 1, 1993

Supersedes November 1983 General Provisions

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

R. Definitions: When used in this Agreement, the terms listed below have the
following meanings:

“API” means the American Petroleum Institute.

“ASME” means the American Society of Mechanical Engineers.

“ASTM” means the American Society for Testing Materials.

“Barrel” means 42 U.S. gallons of 231 cubic inches per gallon corrected to 60
degrees Fahrenheit.

“Carrier” means a pipeline, barge, truck, or other suitable transporter of crude
oil.

“Crude Oil” means crude oil or condensate, as appropriate.

“Day,” “month,” and “year” mean, respectively, calendar day, calendar month, and
calendar year, unless otherwise specified.

“Delivery Ticket” means a shipping/loading document or documents stating the
type and quality of crude oil delivered, the volume delivered and method of
measurement, the corrected specific gravity, temperature, and S&W content.

“Invoice” means a statement setting forth at least the following information:
The date(s) of delivery under the transaction; the location(s) of delivery; the
volume(s); price(s); the specific gravity and gravity adjustments to the
price(s) (where applicable); and the term(s) of payment.

“S&W” means sediment and water.

 

Effective January 1, 1993

Supersedes November 1983 General Provisions

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

Amendments to

ConocoPhillips 1993 General Provisions for Domestic Crude Oil Agreements

Effective August 1, 2009

*****

E. Force Majeure: Except for payment due hereunder, either party hereto shall be
relieved from liability for failure to perform hereunder for the duration and to
the extent such failure is occasioned by war, riots, insurrections, fire,
explosions, sabotage, strikes, and other labor or industrial disturbances, acts
of God or the elements, governmental laws, regulations, or requests, acts in
furtherance of the International Energy Program, disruption or breakdown of
production or transportation facilities, delays of pipeline carrier in receiving
and delivering crude oil tendered, or by any other cause, whether similar or
not, reasonably beyond the control of such party. Neither party shall be
required to supply substitute quantities from other sources of supply. Failure
to perform due to events of Force Majeure shall not extend the term of this
Agreement; except the extent necessary to comply with the provisions of Section
J (“Buy/Sell and Exchange Balancing”). The party affected by a force majeure
situation (the “Affected Party”) shall take commercially reasonable steps to
ameliorate the cause of such force majeure event to enable it to resume
performance during the term of this Agreement.

In addition to the above, and in the event substantially similar volumes are
intended to be bought and sold or exchanged under this Agreement, the parties
shall have the rights and obligations set forth in the circumstances described
below:

(1) If, because of Force Majeure, the Affected Party is unable to deliver part
or all of the quantity of crude oil which it is obligated to deliver under this
Agreement, the other party shall have the right, but not the obligation, to
reduce its deliveries of crude oil under this Agreement to match the volume
actually delivered by the Affected Party.

(2) If, because of Force Majeure, the Affected Party is unable to take part or
all of the quantity of crude oil which it is obligated to take under this
Agreement, the other party shall have the right, but not the obligation, to
reduce its receipts of crude oil under this Agreement to match the volume
actually taken by the Affected Party.

*****

J Buy/Sell and Exchange Balancing: The terms of this Section J shall only apply
to this Agreement if substantially similar volumes are intended to be bought and
sold or exchanged under this Agreement:

(1) Each party shall be responsible for maintaining the volumes bought and sold
or exchanged in balance on a month-to-month basis, as near as reasonably
possible.

(2) If, for any reason (including events of force majeure), a party complies
with the requirements of Section J(1) but fails to deliver or accept delivery of
the contractually specified volume during any month (an “Imbalance Month”), then
the

 

Effective January 1, 1993

Supersedes November 1983 General Provisions

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

party that delivered the lesser volume during the Imbalance Month (the
“Underdelivering Party”) shall deliver to the other party a volume of crude oil
equal to the difference between (a) the volume delivered by the Underdelivering
Party during the Imbalance Month, and (b) the volume delivered by the other
party during the Imbalance Month (such difference being the “Imbalance Volume”).
The Imbalance Volume shall be delivered as soon after the Imbalance Month as is
reasonably practicable it being understood that the parties shall endeavor to
cause the Imbalance Volumes confirmed by the 20th day of the Imbalance Month to
be delivered during the immediately following calendar month, and the Imbalance
Volumes confirmed after the 20th day of the Imbalance month to be delivered
during the second calendar month after the Imbalance Month, except to the extent
prevented by a new or continued event of force majeure.

(3) When a party fails to deliver or accept delivery of the contractually
specified volume during an Imbalance Month due to an event of force majeure, if
the Imbalance Volume has not been delivered before the end of the second
calendar month after the Imbalance Month, and if no other resolution of the
Imbalance Volumes has been agreed between the Parties, during the third month
after the Imbalance Month, the Underdelivering Party shall deliver, and the
other party shall take, an amount of crude oil equal to the Imbalance Volume,
and such delivery shall be of the same type of crude oil, at the same location
and (except as provided in Section J(4) below) at the same price as the crude
oil received by the Underdelivering Party during the Imbalance Month.

(4) To the extent that an Imbalance Volume is delivered after the Imbalance
Month, and except as provided in the Special Provisions of this Agreement:
(1) if the price specified in this Agreement is a fixed price or a formula price
based on the price of crude oil on a date or during a specified range of dates
(e.g., “April 12, 2009,” or “April 12-19, 2009”), the price of the Imbalance
Volumes shall be equal to such price without regard to the month of actual
delivery; and (2) if the price specified in this Agreement is a formula price
based on the price of crude oil on a date or during a range of dates that is not
tied to a specific date or range of dates (e.g., “bill of lading date,” “month
of delivery,” “NYMEX trade month” or “calendar month average”), the price for
the Imbalance Volumes will be calculated according to such formula for the
actual month the Imbalance volume is delivered.

(5) The foregoing notwithstanding, the obligation of either party to deliver or
take an Imbalance Volume less than 1000 barrels at the end of this Agreement
shall be excused.

 

Effective January 1, 1993

Supersedes November 1983 General Provisions