Exhibit 10.8

Execution Version
PURCHASE AND SALE AGREEMENT
BETWEEN
HUNT OIL COMPANY
AS SELLER
AND
PENN VIRGINIA OIL & GAS, L.P.
AS PURCHASER
Executed on December 30, 2017

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TABLE OF CONTENTS
        

Page
 
Article 1 PURCHASE AND SALE
1

Section 1.1
Purchase and Sale
1

Section 1.2
Assets
1

Section 1.3
Excluded Assets
3

Section 1.4
Effective Time; Proration of Revenues
5

Section 1.5
Delivery and Maintenance of Records and Retained Records
6

Article 2 PURCHASE PRICE
7

Section 2.1
Purchase Price
7

Section 2.2
Adjustments to Purchase Price
7

Section 2.3
Allocation of Purchase Price
10

Section 2.4
Deposit
10

Article 3 TITLE MATTERS
11

Section 3.1
Seller’s Title
11

Section 3.2
Certain Definitions
11

Section 3.3
Definition of Permitted Encumbrances
13

Section 3.4
Notice of Title Defects Defect Adjustments
15

Section 3.5
Consents to Assignment and Preferential Rights to Purchase
21

Section 3.6
Casualty or Condemnation Loss
23

Section 3.7
Limitations on Applicability
23

Article 4 ENVIRONMENTAL MATTERS
24

Section 4.1
Assessment
24

Section 4.2
NORM
25

Section 4.3
Notice of Violations of Environmental Laws
26

Section 4.4
Remedies for Violations of Environmental Laws
26

Section 4.5
Limitations
29

Article 5 REPRESENTATIONS AND WARRANTIES OF SELLER
30

Section 5.1
Disclaimers
30

Section 5.2
Existence and Qualification
33

Section 5.3
Power
33

Section 5.4
Authorization and Enforceability
33

Section 5.5
No Conflicts
33

Section 5.6
Liability for Brokers’ Fees
33

Section 5.7
Litigation
33

Section 5.8
Asset Taxes and Assessments
34

Section 5.9
Outstanding Capital Commitments
34

Section 5.10
Compliance with Laws
34

Section 5.11
Contracts
35

Section 5.12
Payments for Production
35

Section 5.13
Governmental Authorizations
35

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TABLE OF CONTENTS
(continued)
        

 
 
Page

Section 5.14
Consents and Preferential Purchase Rights
36

Section 5.15
Environmental Matters
36

Section 5.16
Leases
36

Section 5.17
Wells
36

Section 5.18
Suspense Funds
37

Section 5.19
Imbalances
37

Section 5.20
Bankruptcy
37

Section 5.21
Pipeline Systems
37

Article 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER
37

Section 6.1
Existence and Qualification
37

Section 6.2
Power
37

Section 6.3
Authorization and Enforceability
37

Section 6.4
No Conflicts
38

Section 6.5
Liability for Brokers’ Fees
38

Section 6.6
Litigation
38

Section 6.7
Financing
38

Section 6.8
Independent Investigation
38

Section 6.9
Bankruptcy
39

Section 6.10
Qualification
39

Section 6.11
Consents
40

Section 6.12
Knowledge
40

Article 7 COVENANTS OF THE PARTIES
40

Section 7.1
Access
40

Section 7.2
Government Reviews
40

Section 7.3
Notification of Breaches
41

Section 7.4
Operatorship
41

Section 7.5
Operation of Business
41

Section 7.6
Indemnity Regarding Access
43

Section 7.7
Other Preferential Rights
43

Section 7.8
Tax Matters
44

Section 7.9
Special Warranty of Title
47

Section 7.10
Suspended Proceeds
47

Section 7.11
Further Assurances
48

Section 7.12
Change of Name
48

Section 7.13
Replacement of Bonds; Letters of Credit and Guarantees
48

Section 7.14
Audits and Filings
49

Section 7.15
Tax Partnership Matters
50

Article 8 CONDITIONS TO CLOSING
50

Section 8.1
Conditions of Seller to Closing
50

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TABLE OF CONTENTS
(continued)
        

 
 
Page

Section 8.2
Conditions of Purchaser to Closing
51

Article 9 CLOSING
52

Section 9.1
Time and Place of Closing
52

Section 9.2
Obligations of Seller at Closing
52

Section 9.3
Obligations of Purchaser at Closing
53

Section 9.4
Closing Payment and Post-Closing Purchase Price Adjustments
54

Article 10 TERMINATION
55

Section 10.1
Termination
55

Section 10.2
Effect of Termination
56

Section 10.3
Distribution of Deposit Upon Termination
56

Article 11 POST-CLOSING OBLIGATIONS; INDEMNIFICATION; LIMITATIONS; DISCLAIMERS
AND WAIVERS
58

Section 11.1
Receipts
58

Section 11.2
Assumption and Indemnification
58

Section 11.3
Indemnification Actions
61

Section 11.4
Limitation on Actions
63

Section 11.5
Recording
65

Section 11.6
Waivers
65

Section 11.7
Tax Treatment of Indemnification Payments
66

Article 12 MISCELLANEOUS
66

Section 12.1
Counterparts
66

Section 12.2
Notice
66

Section 12.3
Sales or Use Tax, Recording Fees, and Similar Taxes and Fees
68

Section 12.4
Expenses
68

Section 12.5
Governing Law and Venue
68

Section 12.6
Jurisdiction; Waiver of Jury Trial
68

Section 12.7
Captions
69

Section 12.8
Waivers
69

Section 12.9
Assignment
69

Section 12.10
Entire Agreement
69

Section 12.11
Confidentiality Agreement
69

Section 12.12
Amendment
70

Section 12.13
No Third-Party Beneficiaries
70

Section 12.14
Public Announcements
70

Section 12.15
Invalid Provisions
70

Section 12.16
References
70

Section 12.17
Construction
72

Section 12.18
Limitation on Damages
72

Article 13 DEFINITIONS
72

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EXHIBITS AND SCHEDULES
Exhibit A
Leases
Exhibit A-1
Properties
Exhibit A-2
Certain Equipment
Exhibit A-3
Exhibit A-4
Excluded Assets
Designated Area
Exhibit B
Conveyance
Exhibit C
Persons with Knowledge
Exhibit D
Exhibit E
Exhibit F
Exhibit G

Escrow Agreement
Transition Services Agreement
Exploration Wells
Purchaser Operated Property Costs

Schedule 1.2(d)
Contracts
Schedule 1.2(e)
Schedule 1.3(h)
Surface Contracts
Excluded Permits
Schedule 2.3
Allocated Value
Schedule 3.3(l)
Other Permitted Encumbrances
Schedule 5.7
Litigation
Schedule 5.8
Taxes and Assessments
Schedule 5.9
Outstanding Capital Commitments
Schedule 5.10
Compliance With Laws
Schedule 5.11(a)
Defaults
Schedule 5.11(b)
Material Contracts
Schedule 5.12
Payments For Production
Schedule 5.13
Governmental Authorizations
Schedule 5.14
Preferential Rights & Consents to Assign
Schedule 5.15
Schedule 5.16
Environmental Laws
Leases
Schedule 5.17
Wells
Schedule 5.18
Suspense Funds
Schedule 5.19
Imbalances
Schedule 7.4
Operatorship
Schedule 7.5
Operation of Business
Schedule 7.13(a)
Governmental Bonds
Schedule 7.13(b)
Guarantees
Schedule 9.4(c)
Seller’s Wiring Instructions

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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the “Agreement”), is executed on December 30,
2017 (the “Execution Date”), by and between Hunt Oil Company, a Delaware
corporation (“Seller”), and Penn Virginia Oil & Gas, L.P., a Texas limited
partnership (“Purchaser”). Seller and Purchaser may each be referred to herein
as a “Party” and collectively as the “Parties.”
RECITALS:
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to purchase
from Seller the Assets, in the manner and upon the terms and conditions
hereafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties, intending to be legally bound by the
terms hereof, agree as follows:
ARTICLE 1

PURCHASE AND SALE
Section 1.1    Purchase and Sale. At the Closing, and upon the terms and subject
to the conditions of this Agreement, Seller agrees to sell and convey to
Purchaser and Purchaser agrees to purchase, accept and pay for the Assets and
assume the Assumed Obligations. Capitalized terms used herein shall have the
respective meanings ascribed to them in this Agreement and the capitalized terms
used herein and not otherwise defined shall have the meanings set forth in
‎Article 13 hereof.
Section 1.2    Assets. As used herein, the term “Assets” means, subject to the
terms and conditions of this Agreement, all of Seller’s right, title, interest
and estate, real or personal, recorded or unrecorded, movable or immovable,
tangible or intangible, in and to the following, excluding, however, the
Excluded Assets:
(a)    All of the oil and gas leases, oil, gas and mineral leases, subleases and
other leaseholds, carried interests, net profits interests, mineral fee
interests, overriding royalty interests, reversionary rights, farmout rights,
options, and other similar properties and interests, in each case, to the extent
located in (and/or to the extent applying to properties located in) the
Designated Area, including those described on Exhibit A (collectively, the
“Leases”), together with each and every kind and character of right, title,
claim, and interest that Seller has in and to the Leases, the lands, currently
or previously, covered by the Leases or the lands, currently or previously,
pooled, unitized, communitized or consolidated therewith (such lands, currently
or previously, covered by the Leases or pooled, unitized, communitized or
consolidated therewith being hereinafter referred to as the “Lands”);
(b)    All oil, gas, water, CO2 or injection wells located on or within the
geographical boundaries of the Lands, whether producing, shut-in, plugged or
abandoned, and including the wells shown on Exhibit A-1 attached hereto (the
“Wells”);

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(c)    Any pools or units which include any portion of the Lands or all or a
part of any Leases, including those pools or units referred to on Exhibit A-1
(the “Units,” such Units together with the Leases, Lands and Wells, or in cases
when there is no Unit, the Leases together with the Lands and Wells, being
hereinafter referred to collectively as the “Properties” and individually as a
“Property”), and including all interests of Seller in Hydrocarbon production
from any such Unit, whether such Unit Hydrocarbon production comes from Wells
located on or off of a Lease, and all tenements, hereditaments and appurtenances
belonging to the Leases and Units;
(d)    All contracts, agreements and instruments by which the Properties are
bound, or that relate to or are otherwise applicable to the Properties, but in
each case only to the extent applicable to the Properties and not other
properties of Seller not included in the Assets, including operating agreements,
unitization, pooling and communitization agreements, declarations and orders,
joint venture agreements, farmin and farmout agreements, water rights
agreements, exploration agreements, area of mutual interest agreements,
participation agreements, exchange agreements, transportation or gathering
agreements, agreements for the sale and purchase of Hydrocarbons and processing
agreements, and further including those agreements and instruments identified on
Schedule ‎1.2(d) (hereinafter collectively referred to as the “Contracts”);
provided that “Contracts” shall exclude (i) any master service agreements, (ii)
any contracts, agreements and instruments to the extent transfer is (A)
restricted by their respective terms or Third Party agreement and the Required
Consents to transfer are not obtained pursuant to ‎Section 3.5, or (B) subject
to payment of a fee or other consideration under any license agreement or other
agreement with a Person other than an Affiliate of Seller, and for which no
consent to transfer has been received or for which Purchaser has not agreed in
writing to pay the fee or other consideration, as applicable, and (iii) the
instruments constituting the Leases, Surface Contracts and the assignments or
conveyances in Seller’s chain of title to the Leases or Surface Contracts;
(e)    All easements, permits, licenses, servitudes, rights-of-way, surface
leases and other surface rights appurtenant to, and used or held for use
primarily in connection with, the Properties, including those identified on
Schedule ‎1.2(e) (hereinafter collectively referred to as the “Surface
Contracts”); provided that “Surface Contracts” shall exclude any permits and
other appurtenances to the extent transfer is (i) restricted by their respective
terms or Third Party agreement and the Required Consents to transfer are not
obtained pursuant to ‎Section 3.5, or (ii) subject to payment of a fee or other
consideration under any license agreement or other agreement with a Person other
than an Affiliate of Seller, and for which no consent to transfer has been
received or for which Purchaser has not agreed in writing to pay the fee or
other consideration, as applicable;
(f)    (i) All equipment, machinery, fixtures and other tangible personal
property and improvements located on the Properties and used or held for use
primarily in connection with the operation of the Properties, including any
wells, tanks, boilers, buildings, fixtures, injection facilities, saltwater
disposal facilities, compression facilities, pumping units and engines, flow
lines, gas and oil treating facilities, machinery, power lines, telephone and

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telegraph lines, SCADA and well communication devices, roads, and other
appurtenances, improvements and facilities, and (ii) the items expressly
identified on Exhibit A-2, whether such items identified on Exhibit A-2 are
located on or off the Properties (collectively, the “Equipment”);
(g)    all pipelines and gathering systems located at, on, or under any of the
Lands (collectively, the “Pipeline Systems”);
(h)    All Hydrocarbons produced from or attributable to the Properties from and
after the Effective Time and all inventories of Hydrocarbons produced from or
attributable to the Properties that are in storage in tanks or pipelines on the
Effective Time only to the extent that Seller receives an upward adjustment to
the Purchase Price pursuant to ‎Section 2.2(a)(ix) in respect of such
Hydrocarbons;
(i)    All Imbalances; and
(j)    All lease files, land files, well files, facility records, gas and oil
sales contract files, gas processing files, division order files, abstracts,
title files, title opinions (and all related curative files), land surveys,
logs, maps (including any shape files, plats, and records relating to the
Pipeline Systems), engineering data and reports, Contract files, and all other
books, records, data, files, maps, and accounting records to the extent related
to the Assets, or to the extent used or held for use in connection with the
ownership, maintenance or operation thereof, but excluding (i) any books,
records, data, files, maps and accounting records to the extent disclosure or
transfer is restricted by Third Party agreement or applicable Law and the
Required Consents to transfer are not obtained pursuant to ‎Section 3.5, or
subjected to payment of a fee or other consideration by any license agreement or
other agreement with a Person other than an Affiliate of Seller, or by
applicable Law, and for which no consent to transfer has been received or for
which Purchaser has not agreed in writing to pay the fee or other consideration,
as applicable; (ii) computer software; (iii) all legal records and legal files
of Seller (and work product of Seller’s legal counsel and records), to the
extent protected by attorney-client privilege, but excluding in each case
Leases, Contracts, Surface Contracts and title opinions; (iv) records relating
to the offer, negotiation or consummation of the sale by Seller of the Assets or
any interest in the Properties; and (v) Seller’s reserve studies, estimates and
evaluations, and engineering studies and economic studies (such copies,
collectively, and subject to such exclusions, the “Records”); provided, however,
that Seller may retain the originals of such Records (A) as Seller has
determined may be required for litigation, Tax, accounting, and auditing
purposes (provided that Seller shall provide Purchaser copies of such Records)
or (B) in instances in which the Records for the Assets are commingled with
records for properties not included in the Assets (the “Retained Records”) and
shall provide Purchaser with access to such Retained Records in accordance with
‎Section 1.5(c).
Section 1.3    Excluded Assets. Notwithstanding the foregoing, the Assets shall
not include, and there is excepted, reserved and excluded from the purchase and
sale contemplated hereby (collectively, the “Excluded Assets”):

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(a)    (i) All corporate, partnership, limited liability company, financial, tax
and legal records of Seller that relate to Seller’s business generally (whether
or not relating to the Assets), (ii) all books, records and files that relate to
the Excluded Assets, (iii) those records retained by Seller pursuant to ‎Section
1.2(j) and (iv) copies of any other records retained by Seller pursuant to
‎Section 1.5;
(b)    The items expressly identified on Exhibit A-3;
(c)    All claims for refunds (whether by way of refund, credit, offset or
otherwise) of, credits attributable to or rights to receive funds from any
Governmental Body or loss carry forwards with respect to (i) Asset Taxes
attributable to the Assets for any taxable period, or portion thereof, ending at
or prior to the Effective Time or to Seller’s businesses generally, (ii) Income
Taxes of Seller (or Seller’s Affiliates or its direct or indirect owners), or
(iii) any Taxes attributable to the Excluded Assets;
(d)    All rights to any other costs or expenses borne by Seller or Seller’s
predecessors in interest and title attributable to periods prior to the
Effective Time except to the extent such rights arise from or by their terms
cover obligations or liabilities assumed by Purchaser hereunder;
(e)    All rights relating to existing claims and causes of action (including
insurance claims, whether or not asserted, under policies of insurance or claims
to the proceeds of insurance) that may be asserted against a Third Party, except
those described in Schedule ‎5.7 hereto and except to the extent such rights and
claims and causes of action arise from or by their terms cover obligations or
liabilities assumed by Purchaser hereunder;
(f)    All rights of Seller under Contracts attributable to periods before the
Effective Time insofar as such rights relate to Seller Indemnity Obligations or
other liabilities of Seller retained under this Agreement;
(g)    Rights to initiate and conduct joint interest audits or other audits of
Property Costs incurred before the Effective Time, and to receive costs and
revenues in connection with such audits, in each case to the extent Seller is
responsible for such Property Costs under this Agreement;
(h)    Seller’s bonds, permits and licenses used in the conduct of Seller’s
business generally including as reflected in Schedule ‎1.3(h);
(i)    All trade credits, account receivables, note receivables, take-or-pay
amounts receivable, and other receivables attributable to the Assets (excluding
Hydrocarbon inventories subject to ‎Section 1.2(h) for which Seller receives an
upward adjustment to the Purchase Price) with respect to any period of time
prior to the Effective Time, as determined in accordance with GAAP, except to
the extent that they arise from or by their terms cover obligations or
liabilities assumed by Purchaser hereunder;
(j)    all Intellectual Property of Seller;

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(k)    Bonds, letters of credit and guarantees retained by Seller pursuant to
‎Section 7.13;
(l)    All vehicles used in connection with the Assets;
(m)    All tools, pulling machines, warehouse stock, equipment or material
temporarily located on the Properties and not used or held for use in the
operation of the Properties as currently operated expressly identified on
Exhibit A-3;
(n)    All hedges, futures, swaps and other derivatives, including rights
relating thereto, affecting the Assets;
(o)    All computers, phones, office supplies, furniture and related personal
effects located off the Properties or only temporarily located on the
Properties;
(p)    All buildings, offices, office leases, improvements, appurtenances, field
offices and yards not located on the Properties;
(q)    Assets retained by Seller or excluded from the Assets at Closing pursuant
to this Agreement, including pursuant to Sections ‎3.4(d)(ii), ‎3.5, ‎4.4(a)(ii)
or ‎7.7, subject to the terms of such Sections;
(r)    The G & G Data; and
(s)    All leased personal property (including leased vehicles) expressly
identified on Exhibit A-3.
Section 1.4    Effective Time; Proration of Revenues.
(a)    Possession of the Assets shall be transferred from Seller to Purchaser at
the Closing, but certain financial benefits and obligations of the Assets shall
be transferred effective as of 12:01 A.M., local time, where the respective
Assets are located, on October 1, 2017 (the “Effective Time”), as further set
forth in this Agreement.
(b)    Except to the extent accounted for (or otherwise set forth) in the
adjustments to the Purchase Price made under ‎Section 2.2, (i) Purchaser shall
be entitled to all production from or attributable to the Properties at and
after the Effective Time (and all products and proceeds attributable thereto),
and to all other income, proceeds, receipts and credits earned with respect to
the Assets at or after the Effective Time and (ii) Seller shall be entitled to
all production from or attributable to the Properties prior to the Effective
Time (and all products and proceeds attributable thereto), and to all other
income, proceeds, receipts and credits earned with respect to the Assets prior
to the Effective Time. Seller shall be responsible for all Property Costs
attributable to the Seller Operated Assets incurred prior to the Effective Time
and the Purchaser Operated Property Costs, in both cases solely for the purposes
of the determination of the Adjusted Purchase Price pursuant to ‎Section 2.2.
The terms “earned” and “incurred,” as used in this Agreement, shall be
interpreted in accordance with GAAP and Council of Petroleum Accountants Society
(“COPAS”) standards, as implemented by

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Seller in the ordinary course of business consistent with past practice. For
purposes of allocating production (and accounts receivable with respect
thereto), under this ‎Section 1.4(b), (x) liquid Hydrocarbons shall be deemed to
be “from or attributable to” the Leases, Units and Wells when they pass through
the pipeline connecting into the storage facilities into which they are
transported from the lands covered by the applicable Lease, Unit or Well, or if
there are no storage facilities, when they pass through the LACT meter or
similar meter at the entry point into the pipelines through which they are
transported from such lands and (y) gaseous Hydrocarbons shall be deemed to be
“from or attributable to” the Leases, Units and Wells when they pass through the
delivery point sales meters or similar meters at the entry point into the
pipelines through which they are transported from such lands. Seller shall
utilize reasonable interpolative procedures to arrive at an allocation of
production when exact meter readings or gauging and strapping data is not
available.
Section 1.5    Delivery and Maintenance of Records and Retained Records.
(a)    Seller, at Purchaser’s cost, shall use reasonable efforts to deliver the
Records in Seller’s possession or control (FOB Seller’s office), to Purchaser
within twenty (20) Business Days following Closing. Seller may retain originals
of the Retained Records and/or copies of any Records.
(b)    Purchaser, for a period of five (5) years following the Closing, will (i)
retain the Records, (ii) provide Seller, its Affiliates, and its and their
officers, employees and representatives with access to the Records during normal
business hours for review and copying at Seller’s expense and (iii) provide
Seller, its Affiliates, and its and their officers, employees and legal counsel
with access, during normal business hours, to materials received or produced
after Closing relating to any claim for indemnification made under ‎Section 11.2
of this Agreement (excluding, however, any materials constituting attorney work
product, materials subject to attorney-client privilege or other applicable
immunity of disclosure, and all information subject to an applicable
confidentiality restriction in favor of third parties) for review and copying at
Seller’s expense; provided, however, that Seller provides reasonable advance
notice that Seller wishes to access such Records and/or other materials
described in clauses (ii) and (iii) of this sentence; provided further, that the
Records and/or other materials described in clause (iii) above (x) shall be
subject to the confidentiality restrictions set forth in the Confidentiality
Agreement, (y) shall not constitute an admission that any such materials are
relevant to any given indemnity claim, and (z) (1) any inadvertent disclosure by
Purchaser of materials subject to confidentiality restrictions, attorney-client
privilege or other immunity of disclosure or constituting attorney work product
shall not constitute a waiver of the applicable privilege or protection and (2)
notwithstanding any such inadvertent disclosure, Purchaser shall retain the
right to assert all applicable privileges and protections, and Seller, its
Affiliates, and its and their officers, employees and representatives shall be
prohibited from using the inadvertently disclosed materials for any purpose. At
the end of such five-year period, Purchaser shall provide Seller a reasonable
opportunity, at Seller’s expense, to copy any or all of such Records.

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(c)    Seller, for a period of five (5) years following the Closing, will (i)
retain the Retained Records, (ii) provide Purchaser, its Affiliates, and its and
their officers, employees and representatives with access to the Retained
Records during normal business hours for review and copying at Purchaser’s
expense and (iii) provide Purchaser, its Affiliates, and its and their officers,
employees and legal counsel with access, during normal business hours, to
materials received or produced after Closing relating to any claim for
indemnification made under ‎Section 11.2 of this Agreement (excluding, however,
any materials constituting attorney work product, materials subject to
attorney-client privilege or other applicable immunity of disclosure, and all
information subject to an applicable confidentiality restriction in favor of
third parties) for review and copying at Purchaser’s expense and to Purchaser’s
and its Affiliates’ employees for the purpose of discussing any such claim;
provided, however, that Purchaser provides reasonable advance notice that
Purchaser wishes to access such Records and/or other materials described in
clauses (ii) and (iii) of this sentence; provided further, that the Retained
Records and the information contained therein and the Records and/or other
materials described in clause (iii) above (x) shall be subject to the
confidentiality restrictions set forth in the Confidentiality Agreement, (y)
shall not constitute an admission that any such materials are relevant to any
given indemnity claim, and (z) (1) any inadvertent disclosure by Seller of
materials subject to confidentiality restrictions, attorney-client privilege or
other immunity of disclosure or constituting attorney work product shall not
constitute a waiver of the applicable privilege or protection and (2)
notwithstanding any such inadvertent disclosure, Seller shall retain the right
to assert all applicable privileges and protections, and Purchaser, its
Affiliates, and its and their officers, employees and representatives shall be
prohibited from using the inadvertently disclosed materials for any purpose. At
the end of such five-year period, Seller shall provide Purchaser a reasonable
opportunity, at Purchaser’s expense, to copy any or all of such Records.
ARTICLE 2

PURCHASE PRICE
Section 2.1    Purchase Price. The purchase price for the Assets (the “Purchase
Price”) shall be $86,000,000, and shall be adjusted as provided in ‎Section 2.2
(as adjusted, the “Adjusted Purchase Price”).
Section 2.2    Adjustments to Purchase Price.
(a)    The Purchase Price for the Assets shall be adjusted as follows with all
such amounts being determined in accordance with GAAP and COPAS standards (with
such adjustments being made so as to not give duplicative effect):
(i)    Reduced by the aggregate amount of the following: (A) proceeds received
and retained by Seller from the sale of Hydrocarbons (net of any royalties,
overriding royalties or other burdens on or payable out of production,
gathering, processing and transportation costs) produced from (I) the Properties
(except for the Exploration Wells) after the Effective Time and (II) the
Exploration Wells whether on, prior or after the Effective Time; and (B) all
Property Costs attributable to the

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Seller Operated Assets (excluding the Property Costs described in ‎Section
2.2(a)(xi)) that are paid by Purchaser or its Affiliates and incurred with
respect to any period prior to the Effective Time;
(ii)    Reduced by the Purchaser Operated Property Costs;
(iii)    Reduced in accordance with ‎Section 3.5, by an amount equal to the
Allocated Value of those Properties with respect to which Preferential Rights
have been exercised prior to Closing;
(iv)    Reduced in accordance with ‎Section 7.7 by an amount equal to the
Allocated Value of those Properties that are subject to a suit, action or
proceeding prior to Closing seeking to restrain, enjoin or otherwise prohibit
the consummation of the transactions contemplated hereby in connection with a
claim to enforce preferential rights;
(v)    Subject to ‎Section 3.4(i), reduced by the applicable Title Defect Amount
as a result of Title Defects for which the Title Defect Amount has been finally
determined or agreed pursuant to ‎Section 3.4 (or, for purposes of the Closing
Payment, pursuant to Purchaser’s good faith estimate set forth in a timely
delivered Title Defect Notice), and by the Allocated Value of any Title Defect
Property retained by Seller pursuant to ‎Section 3.4(d)(ii), less the applicable
Title Benefit Amount as a result of Title Benefits for which the Title Benefit
Amount has been finally determined or agreed pursuant to ‎Section 3.4;
(vi)    Reduced by the Allocated Values of any Properties excluded by Seller
pursuant to ‎Section 3.6;
(vii)    Reduced by (A) subject to ‎Section 4.4, any amounts pursuant to
‎Section 4.4(a) regarding Environmental Liabilities for any affected Property
not retained by Seller, and (B) the Allocated Value of any Property retained by
Seller pursuant to ‎Section 4.4(a)(ii);
(viii)    Reduced by the amount of all Asset Taxes allocated to Seller in
accordance with ‎Section 7.8(a) but paid or otherwise economically borne by
Purchaser;
(ix)    Increased by the amount equal to the value of all of Seller’s
inventories of Hydrocarbons produced from or attributable to the Properties
(other than the Exploration Wells) that are in storage above the load line or
pipeline connection, as applicable, as of the Effective Time (which value shall
be computed using the applicable contract price at the Effective Time), less any
applicable royalties and similar burdens; provided, however, that the adjustment
contemplated by this paragraph shall only be made to the extent that Seller does
not receive and retain the proceeds, or portion thereof, attributable to the
sale of such Hydrocarbons;

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(x)    Increased by the amount of all Property Costs (but excluding any costs or
expenses attributable to the Exploration Wells) that are paid by Seller and
incurred on or after the Effective Time (or with respect to any period on or
after the Effective Time), except any Property Costs and other such costs
already deducted in the determination of proceeds in ‎Section 2.2(a)(i);
(xi)    Increased by the amount of all Property Costs that are paid by Seller
with respect to the Exploration Wells, whether incurred on, before or after the
Effective Time, except any costs and expenses already deducted in the
determination of proceeds in ‎Section 2.2(a)(i) or taken into account in
‎Section 2.2(a)(x);
(xii)    Increased by the amount of all Asset Taxes allocated to Purchaser in
accordance with ‎Section 7.8(a) but paid or otherwise economically borne by
Seller;
(xiii)    Increased by an amount equal to the value, as determined according to
the COPAS 2005 Accounting Procedures, of all surplus tubular, goods and physical
inventory to the extent such items are owned by Seller, included in the Assets
at the Effective Time, and specifically identified as such on Exhibit A-2;
(xiv)    Increased by an overhead charge of $29,000 per month (pro-rated for any
partial months as applicable) for the period of time beginning at the Effective
Time and ending on the Closing Date;
(xv)    Decreased by the amount of any Suspended Proceeds, in accordance with
‎Section 7.10, as applicable;
(xvi)    Increased or decreased, as the case may be, by an amount equal to the
aggregate amount of Imbalances set forth on Schedule ‎5.19 multiplied by $2.70
per MMBtu; and
(xvii)    Increased or decreased, as the case may be, by any other amount
provided for in this Agreement.
(b)    Neither Party shall have any separate rights to receive any production or
income, proceeds, receipts and credits with respect to which an adjustment has
been made pursuant to ‎Section 2.2(a).
(c)    For the purposes of calculating the adjustments to the Purchase Price
under this ‎Section 2.2 or implementing the terms of ‎Section 7.8 or ‎Article
11, (i) right-of-way fees, insurance premiums and Property Costs (excluding
Taxes which are addressed in clauses (ii), (iii), and (iv) of this sentence),
delay rentals, lease bonuses, minimum royalties, option payments, lease
extension payments and shut-in royalties that are paid periodically shall be
prorated based on the number of days in the applicable period falling before, or
at and after, the Effective Time, (ii) ad valorem, property, severance,
production or similar Taxes which are based on the quantity of or the value of
production of Hydrocarbons shall be apportioned between Seller and Purchaser
based on the number of units or value of production actually

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produced, as applicable, before, and after, the Effective Time, (iii) other ad
valorem, property, severance, production or similar Taxes shall be prorated
based on the number of days in the applicable period falling before, or at and
after, the Effective Time, and (iv) all other Taxes shall be apportioned based
on an interim closing of the books of Seller as of the Effective Time.
Section 2.3    Allocation of Purchase Price.
(a)    For the purposes of determining the value of any Assets in connection
with any Title Defect, Title Benefit, Environmental Liability, Preferential
Rights, Required Consents, breach of the Special Warranty and/or the exclusion
of any Asset from the transaction pursuant to the terms of this Agreement,
concurrent with the execution of this Agreement, Purchaser and Seller have
agreed upon an allocation of the unadjusted Purchase Price among the Units on
Schedule ‎2.3. The “Allocated Value” for any such Unit or Well equals the
portion of the unadjusted Purchase Price allocated to such Unit or Well on
Schedule ‎2.3, increased or decreased as described in ‎Section 2.2.
(b)    For federal income tax purposes, Purchaser and Seller shall use
commercially reasonable efforts to agree on an allocation of the Purchase Price
in a manner consistent with the Allocated Values within thirty (30) days after
the determination of the Adjusted Purchase Price. If the Parties reach an
agreement with respect to the allocation of the Purchase Price under this
subsection, Seller and Purchaser agree (i) that the agreed allocation shall be
used by Seller and Purchaser as the basis for reporting asset values and other
items for purposes of all federal, state, and local Tax Returns, including
Internal Revenue Service Form 8594 and (ii) that, except as required by
applicable Law, neither they nor their Affiliates will take positions
inconsistent with the agreed allocation in any Tax Returns, in notices to
Governmental Bodies, in audit or other proceedings with respect to Taxes, in
notices to preferential purchase right holders, or in other documents or notices
relating to the transactions contemplated by this Agreement without the consent
of the other Party. Each Party shall promptly notify the other Party in writing
upon receipt of notice of any pending or threatened Tax audit or assessment
challenging the agreed allocation, and neither Party shall agree to any proposed
adjustment to the agreed allocation by any Governmental Body without first
giving to the other Party prior written notice. However, nothing contained
herein shall prevent either Party from settling any proposed deficiency or
adjustment by any Governmental Body based upon or arising out of the agreed
allocation, and neither Party shall be required to litigate any proposed
deficiency or adjustment by any Governmental Body challenging such agreed
allocation. If the Parties are unable to reach agreement within thirty (30) days
after the determination of the Adjusted Purchase Price, then each Party shall be
entitled to adopt its own position regarding the allocation of Purchase Price
under this subsection; provided that such position shall, to the extent allowed
under applicable federal income tax Law, be consistent with the Allocated
Values.
Section 2.4    Deposit. Within two (2) Business Days of the Execution Date,
Purchaser will deliver to the Escrow Agent an earnest money deposit in an amount
equal to 5% of the Purchase Price (the “Deposit”), to be held in an escrow
account (the “Escrow Account”) pursuant to the

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Escrow Agreement. The Deposit shall be non-interest bearing and applied against
the Purchase Price if the Closing occurs or otherwise shall be distributed in
accordance with ‎Section 10.3.
ARTICLE 3

TITLE MATTERS
Section 3.1    Seller’s Title.
(a)    This ‎Article 3 and the Special Warranty in the Conveyance (subject to
‎Article 11) shall, to the fullest extent permitted by applicable Law, be the
exclusive right and remedy of Purchaser with respect to title to the Assets.
(b)    The conveyance of the Assets to be delivered by Seller to Purchaser shall
be substantially in the form of Exhibit B (the “Conveyance”).
(c)    For purposes of ‎Article 3 and ‎Article 4, references to “Units” shall be
to the Units set forth on Schedule ‎2.3.
Section 3.2    Certain Definitions.
(a)    As used in this Agreement, the term “Defensible Title” means that title
(whether record, contractual or otherwise) of Seller to a Unit that can be
successfully defended if challenged, as of the Effective Time and the Closing
Date:
(i)    Entitles Seller to receive a share of the Hydrocarbons produced, saved
and marketed from the Target Formation of such Unit (after satisfaction of all
royalties, overriding royalties, nonparticipating royalties, net profits
interests or other similar burdens on or measured by production of Hydrocarbons)
(a “Net Revenue Interest”), of not less than the “net revenue interest” share
shown in Schedule ‎2.3 for such Unit, except for (A) decreases in connection
with those operations permitted under ‎Section 7.5 in which Seller may after the
Execution Date be a non-consenting party, (B) decreases resulting from the
elections to ratify or the establishment or amendment of pools or units, to the
extent permitted under ‎Section 7.5, received on or after the Execution Date,
(C) to the extent constituting Imbalances set forth on Schedule ‎5.19, decreases
required to allow other working interest owners to make up past underproduction
or pipelines to make up past under deliveries, and (D) decreases resulting from
reversionary interests, carried interests, horizontal or vertical severances or
other matters or changes in interest, in each case, as stated in Schedule ‎2.3;
(ii)    Obligates Seller to bear a percentage of the costs and expenses for the
maintenance and development of, and operations relating to the Target Formation
of any such Unit not greater than the “working interest” above that shown in
Schedule ‎2.3, without increase, except (x) increases resulting from matters
stated in Exhibit A-1 or Schedule ‎2.3, (y) increases arising after the
Execution Date resulting from

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contribution requirements with respect to defaulting parties under applicable
operating, unit, pooling, pre-pooling or similar agreements and (z) increases
that are accompanied by at least a proportionate increase in Seller’s Net
Revenue Interest; and
(iii)    Is free and clear of liens and encumbrances on title that affect or
encumber a Unit (but limited to the Target Formation for such Unit), in each
case excluding, subject to and determined without regard to matters constituting
Permitted Encumbrances.
(b)    As used in this Agreement, the term “Title Benefit” shall mean any right,
circumstance or condition that operates to (i) increase the Net Revenue Interest
of Seller in any Unit shown on Schedule ‎2.3, without causing a greater than
proportionate increase in Seller’s working interest above that shown in Schedule
‎2.3 or (ii) decrease the working interest of Seller in a Unit below that shown
on Schedule ‎2.3 for such Unit without a proportionate or greater than
proportionate decrease in the Net Revenue Interest of Seller in such Unit as
shown on Schedule ‎2.3.
(c)    As used in this Agreement, the term “Title Defect” shall mean any lien,
encumbrance, obligation or defect discovered after the Execution Date by
Purchaser that causes Seller’s title to the Target Formation of any such Unit
shown on Schedule ‎2.3 to be less than Defensible Title; provided that “Title
Defect” shall exclude the following:
(i)    defects based solely on a lack of information in Seller’s files or
references to a document if such document is not in Seller’s files;
(ii)    defects arising out of a lack of corporate or other entity authorization
unless Purchaser provides affirmative evidence that the action was not
authorized and results in another Person’s superior claim of title to the
relevant Asset;
(iii)    defects in the chain of title consisting of the failure to recite
marital status in a document or omissions of successions of heirship or estate
proceedings, unless, in each case, Purchaser provides affirmative evidence that
such failure or omission could reasonably be expected to result in another
Person’s superior claim of title to the relevant Asset;
(iv)    defects that have been cured by applicable Laws of limitation or
prescription;
(v)    defects arising out of a lack of survey, unless a survey is expressly
required by applicable Laws;
(vi)    defects based on a gap in Seller’s chain of title in the applicable
county records, unless such gap is affirmatively shown to exist in such records
by an abstract of title, title opinion or landman’s title chain which documents
shall be included in a Title Defect Notice;

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(vii)    defects based upon the failure to record any state or federal Leases or
rights-of-way included in the Assets or any assignments of interests in such
Leases or rights-of-way included in the Assets in any applicable county records
to the extent such recording is not required by the applicable state or federal
lessor;
(viii)    defects based on the failure to receive or provide an assignment of
interests earned under any agreement between or among Seller or its Affiliates
on the one hand and Purchaser or its Affiliates on the other hand (including any
such agreements with Third Parties);
(ix)    any encumbrance or loss of title resulting from Seller’s conduct of
business in compliance with this Agreement;
(x)    encumbrances created under deeds of trust, mortgages and similar
instruments by the lessor under a Lease covering the lessor’s surface and
mineral interests in the land covered thereby that would customarily be accepted
(in the region where the Assets are located) in taking or purchasing such Leases
and for which a reasonable lessee (in the region where the Assets are located)
would not obtain a subordination of such encumbrance to the oil and gas
leasehold estate prior to conducting drilling activities on the Lease;
(xi)    encumbrances created under deeds of trust, mortgages and similar
instruments by the grantor under a right-of-way that would customarily be
accepted in taking or purchasing such rights-of-way; and
(xii)    defects disclosed herein on the applicable Schedule or Exhibit.
Section 3.3    Definition of Permitted Encumbrances. As used herein, the term
“Permitted Encumbrances” means any or all of the following:
(a)    Royalties, nonparticipating royalty interests, net profits interests and
any overriding royalties, reversionary interests and other burdens to the extent
that they do not, individually or in the aggregate, reduce Seller’s Net Revenue
Interest below that shown in Schedule ‎2.3 or increase Seller’s working interest
above that shown in Schedule ‎2.3, without a corresponding increase in the Net
Revenue Interest;
(b)    All leases, unit agreements, pooling agreements, pre-pooling agreements,
operating agreements, production sales contracts, division orders and other
contracts, agreements and instruments applicable to the Assets, to the extent
that they do not, individually or in the aggregate: (i) reduce Seller’s Net
Revenue Interest below that shown in Schedule ‎2.3 or increase Seller’s working
interest above that shown in Schedule ‎2.3 without a corresponding increase in
the Net Revenue Interest or (ii) materially interfere with the ownership and
operation of the Assets as currently owned and operated;
(c)    Subject to compliance with Sections ‎3.5 and ‎7.7, Third Party consents
and Preferential Rights applicable to this or a future transaction involving the
Assets, including

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Third Party consent requirements and similar restrictions with respect to which
waivers or consents are obtained by Seller from the appropriate Persons prior to
the Closing Date or the appropriate time period for asserting the right has
expired or which need not be satisfied prior to a transfer;
(d)    Liens for Taxes or assessments not yet delinquent or, if delinquent,
being contested in good faith by appropriate actions;
(e)    Materialman’s, mechanic’s, repairman’s, contractor’s, operator’s and
other similar liens or charges arising in the ordinary course of business for
amounts not yet delinquent (including any amounts being withheld as provided by
Law), or if delinquent, being contested in good faith by appropriate actions;
(f)    All rights to consent, required notices to, filings with, or other
actions by Governmental Bodies in connection with the sale or conveyance of the
Assets pursuant to this Agreement if they are not required prior to the sale or
conveyance or are of a type customarily obtained after Closing;
(g)    To the extent not triggered prior to Closing, rights of reassignment
arising upon final intention to abandon or release all or any part of the
Assets;
(h)    Easements, rights-of-way, servitudes, permits, surface leases and other
rights in respect of surface operations to the extent that they do not,
individually or in the aggregate, materially interfere with the ownership and
operation of the Assets as currently owned and operated as of the Execution
Date;
(i)    Calls on Hydrocarbon production under existing Contracts disclosed on
Schedule ‎5.11(b) or Schedule ‎5.19;
(j)    All rights reserved to or vested in any Governmental Body to control or
regulate any of the Assets in any manner and all obligations and duties under
all applicable Laws, rules and orders of any such Governmental Body or under any
franchise, grant, license or permit issued by any such Governmental Body, in
each case, to the extent generally applying to oil and gas properties located in
the region in which the Assets are located;
(k)    Any encumbrance on or affecting the Assets which is expressly waived by
Purchaser at or prior to Closing or which is discharged by Seller at or prior to
Closing;
(l)    Any matters shown on Schedule ‎5.7 or Schedule ‎3.3(l);
(m)    Any matters shown on Schedule ‎2.3;
(n)    Imbalances associated with the Assets;
(o)    In the case of any Well for which Seller or its Affiliate is not the
operator and that is located on an undeveloped location or other operation that
has not been commenced

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as of the Closing Date, any permits, easements, rights of way, unit designations
or production or drilling units not yet obtained, formed or created;
(p)    Lack of rights, access or transportation as to any rights of way for
gathering or transportation pipelines or facilities that do not constitute any
of the Assets;
(q)    Any liens, charges, encumbrances, defects or irregularities which affect
a Property from which Hydrocarbons have been and are being produced (or to which
production of Hydrocarbons is allocable) for the last ten (10) years and for
which no claim related to title has been made in writing by any Person during
such ten (10) year period;
(r)    Any liens, charges, encumbrances, defects or irregularities which (i)
would be accepted by a reasonably prudent purchaser engaged in the business of
owning and operating oil and gas properties in the region where the Assets are
located or (ii) which do not, individually or in the aggregate, materially
detract from the value of or materially interfere with the ownership and
operation of the Assets subject thereto or affected thereby (as currently owned
and operated), and do not reduce Seller’s Net Revenue Interest below that shown
in Schedule ‎2.3, or increase Seller’s working interest above that shown in
Schedule ‎2.3, without a corresponding increase in the Net Revenue Interest;
(s)    Such Title Defects or other defects as Purchaser has waived in writing;
(t)    Liens, charges, encumbrances, defects or irregularities released by
Seller at Closing; and
(u)    All defects or irregularities, to the extent affecting depths, intervals,
formations, or strata outside of the Target Formation.
Section 3.4    Notice of Title Defects Defect Adjustments.
(a)    To assert a Title Defect, Purchaser must deliver claim notices to Seller
(each a “Title Defect Notice”) on or before the date that is thirty (30) days
from the date hereof (the “Title Claim Date”), except as otherwise provided
under Sections ‎3.5 or ‎3.6. Each Title Defect Notice shall be in writing and
shall include (i) a description of the alleged Title Defect(s), (ii) the Units
affected by the Title Defect (each a “Title Defect Property”), (iii) the
Allocated Values of each Title Defect Property, (iv) supporting documents
reasonably necessary for Seller (as well as any title attorney or examiner hired
by Seller) to verify the existence of the alleged Title Defect(s) and (v) the
amount by which Purchaser reasonably believes the Allocated Values of each Title
Defect Property are reduced by the alleged Title Defect(s) and the computations
and information upon which Purchaser’s belief is based. Purchaser shall be
deemed to have waived for all purposes hereunder all Title Defects that were not
included in a Title Defect Notice delivered to Seller on or before the Title
Claim Date; provided, however, that, subject to ‎Section 7.9(b), such waiver
shall not apply to claims under the Special Warranty in the Conveyance. To give
Seller an opportunity to commence reviewing and curing alleged Title Defects,
Purchaser agrees to use commercially reasonable efforts to provide Seller, on or
before the end of each calendar week prior to the Title Claim

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Date, written notices of all Title Defects discovered by Purchaser during the
preceding calendar week, which notice may be preliminary in nature and
supplemented prior to the Title Claim Date.
(b)    Seller shall have the right, but not the obligation, to deliver to
Purchaser with respect to each Title Benefit discovered by Seller after the
Execution Date, a written notice (a “Title Benefit Notice”) asserting such Title
Benefit on or before the Title Claim Date. Each Title Benefit Notice shall
include (i) a description of the Title Benefit(s), (ii) the Units affected by
the Title Benefit (each a “Title Benefit Property”), (iii) the Allocated Values
of the Title Benefit Property, (iv) supporting documents reasonably necessary
for Purchaser (as well as any title attorney or examiner hired by Purchaser) to
verify the existence of the alleged Title Benefit(s) and (v) the amount by which
Seller reasonably believes the Allocated Values of those Units are increased by
the Title Benefit, and the computations and information upon which Seller’s
belief is based. Seller shall be deemed to have waived for all purposes
hereunder all Title Benefits that were not included in a Title Benefit Notice
delivered to Purchaser on or before the Title Claim Date.
(c)    Seller shall have the right, but not the obligation, upon delivering
written notice to Purchaser no later than Closing, to attempt, at Seller’s sole
cost, to cure any Title Defects of which it has been timely advised by Purchaser
on or before the expiration of sixty (60) days counted from and after the
Closing Date (the “Cure Period”), unless the Parties otherwise agree. If Seller
has provided notice at or prior to the Closing of Seller’s intent to attempt to
cure a Title Defect within the Cure Period, the affected Property will be
conveyed to Purchaser at Closing.
Subject to the application of the Individual TD Threshold and the Title Defect
Deductible, the Closing Payment shall be reduced in an amount equal to
Purchaser’s good faith estimate set forth in a timely delivered Title Defect
Notice of the Title Defect Amount for which Seller has elected to cure and such
amount by which the Closing Payment is reduced shall be deposited into the
Escrow Account pending the post-Closing cure or resolution of such Title Defect
in accordance with the terms hereof, which amount shall be disbursed pursuant to
the terms of this Agreement and the Escrow Agreement; provided further that if
Seller cures such Title Defect prior to the end of the Cure Period, the Parties
shall instruct the Escrow Agent to release the Title Defect Amount held in the
Escrow Account for such Title Defect within five (5) Business Days of such cure.
However, if, at the end of the Cure Period, the Title Defect is not cured as
agreed by Seller and Purchaser or if Seller and Purchaser cannot agree, and it
is determined by the Title Arbitrator that such Title Defect is not cured at the
end of the Cure Period, then in either case Seller shall either (i) elect one of
the options set forth in ‎Section 3.4(d)(i), ‎(d)(ii) or ‎Section 3.4(d)(iii)
for such Title Defect, in which event, subject to the application of the
Individual TD Threshold and the Title Defect Deductible, the Purchase Price
adjustment required in connection with the selected option under this ‎Article 3
shall be made in the final statement of the Adjusted Purchase Price pursuant to
‎Section 9.4(b), and the Parties shall instruct the Escrow Agent to release the
Title Defect Amount held in the Escrow Account

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for such Title Defect within five (5) Business Days after Seller’s election
hereunder or (ii) submit any disputes in relation to such Title Defects for
arbitration pursuant to ‎Section 3.4(h), in which event the Parties shall
instruct the Escrow Agent to release the Title Defect Amount held in the Escrow
Account for such Title Defect within five (5) Business Days after the final
resolution of any dispute with respect to such Title Defect. Notwithstanding the
above, no action of Seller in electing or attempting to cure a Title Defect
shall constitute a waiver of Seller’s right to dispute the existence, nature or
value of, or cost to cure, the Title Defect pursuant to ‎Section 3.4(h).
(d)    Subject to ‎Section 3.4(h), in the event that (y) any Title Defect
asserted by Purchaser in accordance with ‎Section 3.4(a) is not waived by
Purchaser and (z) Seller has not provided notice to Purchaser at or prior to the
Closing of Seller’s intent to attempt to cure the given Title Defect, or Seller
has provided such notice but the Title Defect is not cured before the expiration
of the Cure Period, then Seller shall, at its sole election, elect to:
(i)    reduce the Purchase Price by the Title Defect Amount determined pursuant
to ‎Section 3.4(f) or ‎Section 3.4(h);
(ii)    if the Title Defect Amount for the affected Title Defect Property is
greater than 70% of the Allocated Value of such Title Defect Property, (A) at
Closing, retain the Property that is associated with such Title Defect, in which
event the Purchase Price shall be reduced by an amount equal to the Allocated
Value of such Property or (B) promptly after expiration of the Cure Period have
Purchaser reconvey the Property that is associated with such Title Defect to
Seller, in which event the Purchase Price shall be reduced by an amount equal to
the Allocated Value of such Property, adjusted as provided in ‎Section 2.2;
(iii)    with Purchaser’s consent, at its sole option, indemnify Purchaser
against all Damages resulting from such Title Defect pursuant to an indemnity
agreement in a form reasonably agreeable to Seller and Purchaser; provided, that
under no circumstances shall Seller’s liability thereunder exceed the Allocated
Value for the Title Defect Property made the subject thereof; or
(iv)    if applicable, terminate this Agreement pursuant to ‎Article 10.
(e)    In the event that any Title Benefit asserted by Seller in accordance with
‎Section 3.4(b) is not waived by Seller, then:
(i)    to the extent Purchaser and Seller agree on the Title Benefit Amount as
calculated pursuant to ‎Section 3.4(g)(ii), such amount shall be taken into
account pursuant to ‎Section 2.2(a)(v); and
(ii)    to the extent there is no agreement under ‎Section 3.4(e)(i) on or
before the Closing, the disagreement between Seller and Purchaser regarding the
Title

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Benefit Property or the Title Benefit Amount, as applicable, shall be submitted
to arbitration in accordance with ‎Section 3.4(h).
(f)    The “Title Defect Amount” resulting from a Title Defect shall be
determined as follows:
(i)    if Purchaser and Seller agree on the Title Defect Amount, then that
amount shall be the Title Defect Amount;
(ii)    if the Title Defect is a lien, encumbrance or other charge which is
undisputed and liquidated in amount, then the Title Defect Amount shall be the
amount necessary to be paid to remove the Title Defect from the Title Defect
Property;
(iii)    if the Title Defect represents a discrepancy between (A) the Net
Revenue Interest for any Title Defect Property and (B) the Net Revenue Interest
stated on Schedule ‎2.3, then the Title Defect Amount shall be the product of
the Allocated Value of such Title Defect Property multiplied by a fraction, the
numerator of which is the actual amount of the decrease in Net Revenue Interest
from that stated on Schedule ‎2.3, and the denominator of which is the Net
Revenue Interest stated on Schedule ‎2.3; provided, however, that if the Title
Defect does not affect the Title Defect Property throughout its entire life, the
Title Defect Amount shall be reduced to take into account the applicable time
period only;
(iv)    if the Title Defect represents an obligation, encumbrance, burden or
charge upon or other defect in title to the Title Defect Property of a type not
described in ‎Section 3.4(f)(i), ‎Section 3.4(f)(ii) or ‎Section 3.4(f)(iii),
then the Title Defect Amount shall be determined by taking into account the
Allocated Value of the Title Defect Property, the portion of the Title Defect
Property affected by the Title Defect, the legal effect of the Title Defect, the
potential economic effect of the Title Defect over the life of the Title Defect
Property, the values placed upon the Title Defect by Purchaser and Seller and
such other factors as are necessary to make a proper evaluation;
(v)    if the Title Defect represents (A) a discrepancy between (1) the Net
Revenue Interest for any Title Defect Property and (2) the Net Revenue Interest
stated on Schedule ‎2.3 and (B) an obligation, encumbrance, burden or charge
upon or other defect in title to the Title Defect Property, then the Title
Defect Amount shall be determined by applying both of ‎Section 3.4(f)(iii) and
‎Section 3.4(f)(iv), to such Title Defect, without duplication; and
(vi)    notwithstanding anything to the contrary in this ‎Article 3, the
aggregate Title Defect Amounts attributable to the effects of all Title Defects
upon any Title Defect Property shall not exceed the Allocated Value of such
Title Defect Property.

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(g)    The “Title Benefit Amount” resulting from a Title Benefit shall be
determined as follows:
(i)    if Purchaser and Seller agree on that Title Benefit Amount, then that
shall be the Title Benefit Amount;
(ii)    if the Title Benefit represents a discrepancy between (A) Seller’s Net
Revenue Interest for any Title Benefit Property and (B) Seller’s Net Revenue
Interest set forth in Schedule ‎2.3 (without any increase in Seller’s working
interest therein) then the Title Benefit Amount shall be the product of the
Allocated Value of the Title Benefit Property multiplied by a fraction, the
numerator of which is the actual amount of the increase in Net Revenue Interest
from that stated on Schedule ‎2.3, and the denominator of which is the Net
Revenue Interest stated on Schedule ‎2.3, provided, however, that if the Title
Benefit does not affect the applicable Title Benefit Property throughout its
entire life, the Title Benefit Amount shall be reduced to take into account the
applicable time period only;
(iii)    if the Title Benefit is of a type not described above, then the Title
Benefit Amount shall be determined by taking into account the Allocated Value of
the Asset affected by such Title Benefit, the portion of such Asset affected by
such Title Benefit, the legal effect of the Title Benefit, the potential
economic effect of the Title Benefit over the life of such Asset, the values
placed upon the Title Benefit by Purchaser and Seller and such other reasonable
factors as are necessary to make a proper evaluation. For the avoidance of
doubt, Title Benefits Amounts shall in no event increase the Purchase Price and
will only be used to offset Title Defect Amounts pursuant to ‎Section 2.2(a)(v).
(h)    With respect to Title Defect Notices and Title Benefit Notices provided
and received on or before the Title Claim Date, Seller and Purchaser shall
attempt to agree on all Title Defects, Title Benefits, Title Defect Amounts and
Title Benefit Amounts on or before the Closing, subject to Seller’s rights under
Sections ‎3.4(d)(ii) and ‎3.4(d)(iii). If Seller and Purchaser are unable to
agree by that date, then subject to ‎Section 3.4(c) and Seller’s rights under
Sections ‎3.4(d)(ii) and ‎3.4(d)(iii), good faith estimates by Purchaser (in the
case of Title Defects and Title Defect Amounts) and Seller (in the case of Title
Benefits and Title Benefit Amounts) for such disputed matters shall be used for
purposes of calculating the Closing Payment pursuant to ‎Section 9.4(a), and the
Title Defects, Title Benefits, Title Defect Amounts and Title Benefit Amounts in
dispute shall be exclusively and finally resolved by arbitration pursuant to
this ‎Section 3.4(h). Likewise, if Seller has provided notice at or prior to the
Closing of Seller’s intent to attempt to cure a Title Defect and by the end of
the Cure Period, Seller and Purchaser have been unable to agree upon the
existence of such Title Defect or whether such Title Defect has been cured, or
Seller has failed to cure any Title Defects which Seller provided notice that
Seller would attempt to cure and Seller and Purchaser have been unable to agree
on the existence of such Title Defects or the Title Defect Amounts for such
Title Defects, then the cure and/or Title Defect Amounts and Title Benefit
Amounts in dispute shall be exclusively and finally resolved by arbitration
pursuant to this

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‎Section 3.4(h), subject to Seller’s right under ‎Section 3.4(d)(ii). For all
matters to be resolved by arbitration pursuant to this ‎Section 3.4(h), a Party
must provide notice of its intent to submit such matter to arbitration (i) in
the case of the disputed matters referenced in the second sentence of this
‎Section 3.4(h), no later than the Closing and (ii) in the case of the disputed
matters referenced in the third sentence of this ‎Section 3.4(h), within ten
(10) Business Days after the end of the Cure Period, with such notice
identifying the applicable Title Defect Notice timely delivered by Purchaser or
Title Benefit Notice Delivered by Seller, as applicable, with respect to such
Title Defect or Title Benefit, as applicable, and the matters identified therein
that remain unresolved (a “Title Arbitration Notice”). Purchaser and Seller
shall be deemed to have waived their respective arbitration rights with respect
to any Title Defects or Title Benefits, as applicable, which are eligible for
arbitration pursuant to this ‎Section 3.4(h) which are not included in a timely
Title Arbitration Notice. There shall be a single arbitrator, who shall be a
title attorney with at least ten (10) years’ experience in oil and gas titles in
the State of Texas as selected by mutual agreement of Purchaser and Seller
within fifteen (15) days of an election by a Party to submit such dispute to
arbitration (or such other time as mutually agreed) and absent such agreement on
the selection of the arbitrator, the arbitrator shall be selected by the
Houston, Texas office of the American Arbitration Association; provided,
however, that in any case such attorney shall not have worked as an employee of
or outside counsel for either Seller or Purchaser or any of their Affiliates
during the five (5)-year period preceding the applicable arbitration or have any
financial interest in the applicable dispute (such attorney, the “Title
Arbitrator”). The arbitration proceeding shall be held in Houston, Texas and
shall be conducted in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, to the extent such rules do not conflict with
the terms of this Agreement. Seller and Purchaser shall each present to the
Title Arbitrator, with a simultaneous copy to the other Party, a single written
statement of its position on the Title Defects, Title Benefits, Title Defect
Amounts and Title Benefit Amounts in dispute, together with a copy of this
Agreement and any supporting material that such Party desires to furnish, not
later than ten (10) Business Days after appointment of the Title Arbitrator. The
Title Arbitrator’s determination shall be made within twenty (20) days after
submission of the matters in dispute and shall be final and binding upon both
Parties, without right of appeal. In determining the existence of each disputed
Title Defect and Title Benefit, together with the proper amount of any disputed
Title Defect Amount and Title Benefit Amount, Title Arbitrator shall accept
Seller’s position or Purchaser’s position, and Title Arbitrator shall not
determine there to be a higher Title Defect Amount or Title Benefit Amount than
claimed by the relevant Party, as applicable. In making his determination, the
Title Arbitrator shall be bound by the rules set forth in this ‎Section 3.4 and
may consider such other matters as in the opinion of the Title Arbitrator are
reasonably necessary or helpful to make a proper determination. Additionally,
the Title Arbitrator may consult with and engage disinterested Third Parties
having expertise in the disputed matter to advise the Title Arbitrator. The
Title Arbitrator shall act as an expert for the limited purpose of determining
the specific disputed Title Defects, Title Benefits, Title Defect Amounts and
Title Benefit Amounts submitted by either Party and may not award damages,
interest or penalties to either Party with respect to any matter. Each Party
shall bear its own legal fees and other costs of presenting its case and shall
bear one-half of the costs and expenses of the Title Arbitrator.

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(i)    Notwithstanding anything herein to the contrary, (y) in no event shall
there be any adjustments to the Purchase Price or other remedies provided to
Purchaser for any individual Title Defect for which the Title Defect Amount does
not exceed the lesser of (A) $40,000 and (B) an amount equal to 75% of the
Allocated Value of the relevant Title Defect Property (such lesser amount the
“Individual TD Threshold”); and (z) in no event shall there be any adjustments
to the Purchase Price or other remedies provided to Purchaser for Title Defects
unless the aggregate amount of all Title Defect Amounts for Title Defects
covered by ‎Section 3.4(d)(i) that exceed the Individual TD Threshold exceeds a
deductible in an amount equal to 1.75% of the Purchase Price (the “Title Defect
Deductible”), after which point Purchaser shall be entitled to adjustments to
the Purchase Price or other available remedies under this ‎Article 3 with
respect to all Title Defects in excess of the Title Defect Deductible, subject
to the Individual TD Threshold and Seller’s elections under ‎Section 3.4‎(d).
The provisions of this ‎Section 3.4(i) shall not apply to Title Defects relating
to consent to assignment and Preferential Rights which shall be handled or
treated under ‎Section 3.5. The Allocated Value of any Property retained by
Seller in accordance with ‎Section 3.4(d)(ii) may not be used in meeting the
Title Defect Deductible.
(j)    NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS ARTICLE ‎3 OR OTHERWISE,
PURCHASER SHALL NOT BE ENTITLED HEREUNDER TO ASSERT ANY TITLE DEFECTS FOR THOSE
ASSETS (OR ANY PORTION THEREOF) FOR WHICH PURCHASER OR ANY OF ITS AFFILIATES
SERVES AS OPERATOR, OTHER THAN TITLE DEFECTS ATTRIBUTABLE TO SUCH ASSETS (OR ANY
PORTION THEREOF) TO THE EXTENT SUCH TITLE DEFECTS COULD CONSTITUTE A SPECIAL
WARRANTY OF TITLE BREACH (AS A RESULT OF A CLAIM BY A THIRD PARTY) BY SELLER
UNDER AN ASSIGNMENT OF THE ASSETS BY SELLER.
Section 3.5    Consents to Assignment and Preferential Rights to Purchase.
(a)    Seller shall use commercially reasonable efforts to promptly (and, in any
event, no later than five (5) Business Days following Closing) prepare and send
(i) notices to the Third Party holders (excluding Governmental Bodies, which are
addressed elsewhere in this Agreement) of any necessary consents to the
transactions contemplated hereby (including Required Consents) to request such
consents and (ii) notices to the holders of any applicable preferential rights
to purchase any Asset that would be applicable in connection with the
consummation of the transactions contemplated by this Agreement (each, a
“Preferential Right”) requesting waivers of such Preferential Rights, in each
case that would be triggered by the purchase and sale contemplated by this
Agreement, and of which Seller has knowledge. The consideration payable under
this Agreement for any particular Assets for purposes of Preferential Right
notices shall be the Allocated Value for such Assets (proportionately reduced if
an Asset is only partially affected). Seller shall use commercially reasonable
efforts to cause such consents (including Required Consents) and waivers of
Preferential Rights (or the exercise thereof) to be obtained and delivered prior
to Closing. As requested, Purchaser shall provide reasonable cooperation to
Seller in seeking to obtain such consents (including Required Consents) and
waivers of Preferential Rights.

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Notwithstanding anything contained herein to the contrary, Seller shall have no
liability for failure to obtain such consents or waivers; provided, that such
clause will not limit any of Seller’s obligations herein with respect to
attempting to obtain such consents or waivers.
(b)    Seller shall notify Purchaser in writing on or before the Title Claim
Date of all consents (including Required Consents) which have not been obtained
and the Assets to which they pertain. In no event shall there be included in the
Conveyances at Closing any Assets which are then subject to an unobtained
Required Consent. In cases where a Required Consent is not obtained prior to the
Closing Date, then the Assets associated therewith will not be conveyed to
Purchaser at Closing but shall still be considered part of the Assets in
accordance with provisions of this ‎Section 3.5, adjustments to the Purchase
Price with respect to such Asset will still be made pursuant to Section ‎2.2,
and the Purchase Price will not be reduced as a result of such non conveyance.
If any Assets have been excluded from the Assets sold to the Purchaser at
Closing due to a failure to obtain a Required Consent in accordance with this
‎Section 3.5, and if a Required Consent has been received or deemed received
pursuant to the terms of the underlying agreement on or before the end of the
date two (2) year after the Closing Date, the Seller shall so notify the
Purchaser within ten (10) Business Days after the Purchaser’s receipt of such
notice, Seller shall assign and convey to the Purchaser using the form attached
as Exhibit B and Purchaser shall accept from Seller such Assets pursuant to the
terms of this Agreement. As between the Purchaser and Seller, with respect to
any Asset for which a Required Consent has not been obtained by the Closing, (i)
the Seller shall hold such Asset as nominee for the Purchaser, effective as of
the Effective Time, (ii) the Purchaser shall pay any costs and expenses
associated with such Asset, and (iii) Seller shall pay the Purchaser any
revenues associated with such Asset for periods from and after the Effective
Time. If any Required Consent has not been received or deemed received on or
before the two (2) year anniversary of the Closing Date, the Seller shall no
longer hold such Asset (collectively, a “Nonconsented Interest”) as nominee for
the Purchaser, and each Party shall repay to the other Party any amounts
previously paid hereunder in respect of the Nonconsented Interest (including the
Allocated Value and all other amounts of any adjustments pursuant to Section
‎2.2, with respect to such Nonconsented Interest), and such Nonconsented
Interest will be deemed not to have been conveyed to the Purchaser hereunder and
shall thereafter be an Excluded Asset. Units excluded pursuant to this Section
‎3.5(b) will not be deemed to be affected by Title Defects or be subject to
Sections ‎3.2 and ‎3.4 and the Allocated Value of such excluded properties shall
not be applied toward the Title Defect Deductible. In cases where an Asset is
subject to a Third Party consent requirement that is not a Required Consent,
such Asset shall be included in the Assets at Closing (unless excluded pursuant
to the other provisions of this Agreement) and Purchaser shall be responsible
after Closing for satisfying such consent requirement at its sole cost, risk and
expense, to the extent the applicable consent was not obtained or waived on or
prior to Closing.
(c)    If any Preferential Right is exercised prior to Closing, the Property
transferred to a Third Party as a result of the exercise of such Preferential
Right shall be treated as if it was subject to a Title Defect resulting in the
complete loss of title and the Purchase Price shall be reduced under ‎Section
2.2(a)(ii) by the Allocated Value for such Property

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(proportionately reduced if the Preferential Right affects only a portion of
such Property). Seller shall retain the consideration paid by the Third Party
pursuant to the exercise of such Preferential Right; provided, however, the
adjustment made under this ‎Section 3.5‎(c) for such Property will not be used
in determining the Title Defect Deductible. If any Preferential Right is (i)
exercised but the transfer with respect to the applicable Asset is not
consummated prior to Closing, or (ii) is not exercised and does not expire prior
to Closing, then the terms of ‎Section 7.7 shall apply to such right.
Section 3.6    Casualty or Condemnation Loss. Subject to the provisions of
Sections ‎8.1(e) and ‎8.2(e), if, after the date of this Agreement but prior to
the Closing Date, any portion of the Assets is destroyed by fire or other
casualty or is taken in condemnation or under right of eminent domain (each, a
“Casualty Loss”), and the aggregate amount of such Casualty Losses exceeds
$250,000, Seller shall elect by written notice to Purchaser prior to Closing
either (i) to cause the Assets affected by any casualty to be repaired or
restored prior to Closing to at least its condition prior to such casualty, at
Seller’s sole cost (without an adjustment to the Purchase Price pursuant to
‎Section 2.2 or otherwise), as promptly as reasonably practicable (which work
may extend after the Closing Date), or (ii) unless such casualty or taking is
waived by Purchaser, to exclude the affected Property or Properties from the
Assets and reduce the Purchase Price by the Allocated Value thereof or (iii) to
include the affected Property or Properties in the Assets to be conveyed at
Closing (unless excluded pursuant to the other provisions of this Agreement) and
such Casualty Loss shall be treated as a downward Purchase Price adjustment
equal to the amount of such Casualty Loss; provided, however, that any
adjustment to the Purchase Price pursuant to this ‎Section 3.6 may not be used
in meeting the Title Defect Deductible. If all such Casualty Losses do not
exceed, in the aggregate, $250,000, Seller shall assign, transfer and set over
to Purchaser or subrogate Purchaser to all of Seller’s or its Affiliates’ rights
to insurance and other claims against Third Parties with respect to the Casualty
Losses.
Section 3.7    Limitations on Applicability. The rights of Purchaser under
‎Section 3.1(a) and ‎Section 3.4(a) shall terminate as of the Title Claim Date
and be of no further force and effect thereafter; provided there shall be no
termination of Purchaser’s or Seller’s rights under ‎Section 3.4 with respect to
any bona fide Title Defect properly reported in a Title Defect Notice or bona
fide Title Benefit properly reported in a Title Benefit Notice on or before the
Title Claim Date. EXCEPT AS PROVIDED IN THIS ‎ARTICLE 3 AND FOR THE SPECIAL
WARRANTY IN THE CONVEYANCE (SUBJECT TO ‎ARTICLE 10 (WITH RESPECT TO PURCHASER’S
RIGHT TO TERMINATE THIS AGREEMENT AS A RESULT OF A FAILURE OF THE CLOSING
CONDITION IN ‎SECTION 8.2(E) AND ‎ARTICLE 11), PURCHASER RELEASES, REMISES AND
FOREVER DISCHARGES THE SELLER INDEMNITEES FROM ANY AND ALL SUITS, LEGAL OR
ADMINISTRATIVE PROCEEDINGS, CLAIMS, DEMANDS, DAMAGES, LOSSES, COSTS,
LIABILITIES, INTEREST OR CAUSES OF ACTION WHATSOEVER, IN LAW OR IN EQUITY, KNOWN
OR UNKNOWN, WHICH PURCHASER MIGHT NOW OR SUBSEQUENTLY MAY HAVE, BASED ON,
RELATING TO OR ARISING OUT OF, ANY TITLE DEFECT OR OTHER DEFICIENCY IN OR
ENCUMBRANCE ON TITLE TO ANY ASSET.

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ARTICLE 4

ENVIRONMENTAL MATTERS
Section 4.1    Assessment.
(a)    From and after the date hereof and up to and including the Closing Date
(or upon the earlier termination of this Agreement) but subject to the
limitations set forth herein and in ‎Section 7.1, Purchaser may, at its option,
conduct, or cause to be conducted by a reputable environmental consulting or
engineering firm approved in advance in writing by Seller (the “Environmental
Consultant”) an environmental assessment of all or any portion of the Seller
Operated Assets and/or record reviews, and interviews to the extent relating to
the Properties, including their condition and their compliance with
Environmental Laws (the “Phase I Assessment,” together with (y) the
investigation conducted pursuant to Section ‎7.1 and (z) any Phase II Assessment
conducted pursuant to ‎Section 4.1(b), the “Assessment”). The Assessment shall
be conducted at the sole risk, cost and expense of Purchaser, and all of
Purchaser’s and the Environmental Consultant’s activity conducted under this
‎Section 4.1 and ‎Section 7.1 shall be subject to the indemnity provisions of
‎Section 7.6. Subject to ‎Section 4.1(b), Purchaser’s right of access shall not
entitle Purchaser or the Environmental Consultant to operate equipment or
conduct testing or sampling of soil, groundwater or other materials (including
any testing or sampling for hazardous substances, Hydrocarbons or NORM). Seller
has the right to be present during any activities conducted on the Assets as
part of the Assessment. Purchaser shall give Seller reasonable prior written
notice before gaining physical access to the Assets. Purchaser shall coordinate
the Assessment with Seller to reasonably minimize any inconvenience to or
interruption of the conduct of business by Seller. Purchaser shall abide by
Seller’s, and any Third Party operator’s, safety rules, regulations and
operating policies (which are communicated/provided to Purchaser) while
conducting its due diligence evaluation of the Assets including the Assessment.
Purchaser shall promptly provide, but not later than the Environmental Claim
Date, copies of all final versions of reports prepared or compiled by Purchaser
and/or any of its representatives or agents in connection with the Assessment.
Seller shall not be deemed by its receipt of said documents or otherwise to have
made any representation or warranty, expressed, implied or statutory, as to the
condition of the Assets or the accuracy of said documents or the information
contained therein. Upon completion of the Assessment, Purchaser shall at its
sole cost and expense and without any cost or expense to Seller or any of its
Affiliates (i) repair all damages to the extent caused to any Assets by or in
connection with the Assessment (including due diligence conducted by Purchaser’s
environmental consulting or engineering firm but excluding any damage to the
extent attributable to conditions or defects existing prior to the Assessment),
(ii) to the extent resulting from or in connection with the Assessment, restore
the Assets to the approximate same condition as, or better condition than, they
were prior to commencement of the Assessment, and (iii) remove all equipment,
tools and other property brought onto the Assets in connection with the
Assessment. During all periods that Purchaser or any of its representatives or
contractors are on the Assets, Purchaser shall maintain, at its sole expense and
with reputable insurers,

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such insurance as is reasonably sufficient to support Purchaser’s indemnity
obligations under ‎Section 7.6. All information (including all reports, results
and documentation containing such information) acquired by Purchaser, its agents
or representatives, or the Environmental Consultant, in conducting the
Assessment under this Section shall be subject to the confidentiality
restrictions set forth in the Confidentiality Agreement. In the event this
Agreement is terminated prior to Closing, Purchaser shall return to Seller (or
certify the destruction of) all copies of all such information and data, as well
as any derivative reports, analysis or other items derived or based on any of
such information or data.
(b)    If, in the professional judgment of the Environmental Consultant
performing the Phase I Assessment as set forth in the final report delivered by
such Environmental Consultant in connection therewith, it is determined that
Phase II sampling or other invasive investigations are necessary in order for
Purchaser to prove the existence of an Environmental Defect (a “Phase II
Assessment”), Purchaser will have the right but not the obligation to furnish
Seller, on or prior to the Environmental Claim Date with a written description
prepared by such Environmental Consultant of the proposed scope of such sampling
or invasive activities, including a description of (y) the specific activities
to be conducted and (z) the approximate location and expected timing of such
activities (a “Phase II Request”), as well as the final report recommending such
Phase II Assessment. Purchaser shall not undertake any activities set forth in a
Phase II Request without first obtaining the prior written consent of Seller
(such consent to be granted or withheld in Seller’s sole discretion). Any Phase
II Assessment will be conducted by a reputable environmental consulting or
engineering firm approved in advance by Seller (such approval of such
Environmental Consultant or firm not to be unreasonably withheld, conditioned,
or delayed). If, within five (5) Business Days of Purchaser’s delivery of the
Phase II Request, Seller does not approve said Phase II Request, then Purchaser
will have the right to exclude the affected Assets from the Closing and the
Purchase Price will be adjusted downward by the Allocated Value of such Assets
in accordance with ‎Section 2.2(a)(xvii). If Seller approves the Phase II
Request, the Environmental Claim Date will be extended to the fifth (5th)
Business Day prior to Closing, solely with respect to the matters set forth in
the applicable timely delivered Phase II Request for which such Phase II
Assessment is to be conducted and then solely to the extent such matters are
substantiated in such Phase II Assessment.
Section 4.2    NORM. Purchaser acknowledges the following:
(a)    The Assets have been used for exploration, development, and production of
oil and gas and that there may be petroleum, produced water, wastes, or other
materials located on or under the Properties or associated with the Assets.
(b)    Equipment and sites included in the Assets may contain asbestos,
hazardous substances, or NORM.
(c)    NORM may affix or attach itself to the inside of wells, materials, and
equipment as scale, or in other forms.

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(d)    The wells, materials, and equipment located on the Properties or included
in the Assets may contain NORM and other wastes or hazardous substances.
(e)    NORM containing material and other wastes or hazardous substances may
have come in contact with the soil.
(f)    Special procedures may be required for the remediation, removal,
transportation, or disposal of soil, wastes, asbestos, hazardous substances, and
NORM from the Assets.
Section 4.3    Notice of Violations of Environmental Laws. Purchaser shall
deliver any claim notices to Seller in writing (an “Environmental Defect
Notice”), on or before the date that is thirty (30) days from the date hereof
(the “Environmental Claim Date”), of each individual environmental matter
affecting an Asset that is disclosed by the Assessment that Purchaser reasonably
believes in good faith may constitute or result in Environmental Liabilities for
which the Lowest Cost Response to address the matter exceeds $70,000 (the
“Individual ED Threshold”) (each such environmental matter affecting an Asset,
an “Environmental Defect”), including in the Environmental Defect Notice (i) a
reasonably detailed description of the specific matter that constitutes an
Environmental Defect, including (A) the written conclusion of Purchaser or
Purchaser’s Environmental Consultant that Environmental Liabilities exist, which
conclusion shall be reasonably substantiated by the factual data gathered in
Purchaser’s Assessment and (B) a separate specific citation of the provisions of
Environmental Laws alleged to be violated and the related facts that
substantiate such violation; (ii) the Assets affected; (iii) a detailed estimate
of the Lowest Cost Response to cure or eliminate the alleged matter in question;
and (iv) supporting documents reasonably necessary for Seller (as well as any
consultant, inspector or expert hired by Seller) to verify the existence of the
facts alleged in the Environmental Defect Notice. Purchaser shall use
commercially reasonable efforts to furnish Seller, on or before the end of each
calendar week prior to the Environmental Claim Date, Environmental Defect
Notices with respect to any Environmental Defect that any of Purchaser’s or any
of its Affiliate’s employees, representatives, attorney or other environmental
personnel or contractors, including the Environmental Consultant, discover or
become aware of during the preceding calendar week, which notice may be
preliminary in nature and supplemented prior to the Environmental Claim Date.
Section 4.4    Remedies for Violations of Environmental Laws.
(a)    If Seller believes any individual matter described in an Environmental
Defect Notice delivered pursuant to ‎Section 4.3 may constitute or result in
Environmental Liabilities for which the Lowest Cost Response to address the
matter exceeds the Individual ED Threshold, then Seller shall, at its sole
election prior to the Closing, elect to:
(i)    reduce the Purchase Price by the lesser of (A) the amount set forth in
the applicable Environmental Defect Notice, (B) the Allocated Value of the
affected Unit or (C) such amount otherwise agreed upon in writing by Purchaser
and Seller, in each case, as being a reasonable estimate of the cost of curing
the matter described in such Environmental Defect Notice;

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(ii)    if the Lowest Cost Response therefor is greater than 70% of the
aggregate Allocated Values of the affected Assets, retain the Assets that are
associated with such Environmental Defect Notice and affected by such matter, in
which event the Purchase Price shall be reduced by an amount equal to the
Allocated Values of such Assets;
(iii)    perform or cause to be performed prior to Closing, at the sole cost and
expense of Seller, such operations as may be necessary to bring such affected
Assets into compliance with the applicable Environmental Law disclosed in such
Environmental Defect Notice;
(iv)    enter into an agreement with Purchaser whereby Seller will as soon as
reasonably practicable after Closing, at the sole cost and expense of Seller,
perform or cause to be performed such operations as may be necessary to bring
such affected Asset into compliance with the applicable Environmental Law
disclosed in such Environmental Defect Notice;
(v)    with Purchaser’s consent, at its sole option, indemnify Purchaser against
all Damages resulting from such Environmental Liability pursuant to an indemnity
agreement in a form reasonably agreeable to Seller and Purchaser; provided,
that, under no circumstances shall Seller’s aggregate liability thereunder
exceed the lesser of either the Allocated Value for the Asset made the subject
thereof or the Lowest Cost Response for such Environmental Liability; or
(vi)    if applicable, terminate this Agreement pursuant to ‎Article 10;
provided that, notwithstanding the foregoing, if the Lowest Cost Response (as
asserted by Purchaser in good faith as part of an Environmental Defect Notice)
for any affected Asset exceeds the greater of 70% of the Allocated Value of such
affected Asset and the Individual ED Threshold, Purchaser will, at its sole
option, have the right to require that Seller retain the affected Asset at
Closing pursuant to ‎Section 4.4(a)(ii).
(b)    In the event that (i) Seller elects to proceed under ‎Section 4.4‎(a)(i)
and Purchaser and Seller have failed to agree by Closing on the reduction to the
Purchase Price (which agreement Seller and Purchaser shall use good faith
efforts to reach) or (ii) Purchaser and Seller cannot otherwise agree on the
existence, extent or amount of Environmental Liabilities alleged in an
Environmental Defect Notice before Closing, Seller shall then proceed with
respect to such matter under any of Sections ‎4.4(a)(ii), ‎(a)(iii), ‎(a)(iv),
‎(a)(v) or ‎(a)(vi) or submit such dispute to arbitration pursuant to this
‎Section 4.4. In the event that Seller elects to proceed under ‎Section
4.4(a)(iv) or ‎(a)(v), and Purchaser and Seller have failed to agree by Closing
on the terms of the agreement contemplated thereby (which agreement Seller and
Purchaser shall use good faith efforts to reach), Seller shall then proceed with
respect to such matter under any of the other parts of ‎Section 4.4(a) or submit
such dispute to arbitration pursuant to this ‎Section 4.4.

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(c)    For all matters to be resolved by arbitration pursuant to this ‎Section
4.4, a Party must provide notice of its intent to submit such matter to
arbitration on or before the Closing, with such notice identifying the
applicable Environmental Defect Notice timely delivered by Purchaser with
respect to such Environmental Defect and the matters identified therein that
remain unresolved (a “Environmental Arbitration Notice”). There shall be a
single arbitrator, who shall be an environmental consultant with at least ten
(10) years’ relevant experience in the oil and gas industry as selected by
mutual agreement of Purchaser and Seller within fifteen (15) days of an election
by a Party to submit such dispute to arbitration. Absent such agreement on the
selection of the arbitrator, the arbitrator shall be selected by the Houston,
Texas office of the American Arbitration Association (the “Environmental
Arbitrator”). Each Party shall be deemed to have waived its arbitration rights
with respect to any Environmental Defects which are eligible for arbitration
pursuant to this ‎Section 4.4 which are not included in a timely Environmental
Arbitration Notice. The arbitration proceeding shall be held in Houston, Texas
and shall be conducted in accordance with the Commercial Arbitration Rules of
the American Arbitration Association, to the extent such rules do not conflict
with the terms of this Agreement. Seller and Purchaser shall each present to the
Environmental Arbitrator, with a simultaneous copy to the other Party, a single
written statement of its position on the matter in dispute pursuant to this
‎Section 4.4, together with a copy of this Agreement and any supporting material
that such Party desires to furnish, not later than ten (10) Business Days after
appointment of the Environmental Arbitrator. The Environmental Arbitrator’s
determination shall be made within twenty (20) days after submission of the
matters in dispute and shall be final and binding upon both parties, without
right of appeal. In determining the existence of each disputed Environmental
Defect and the proper amount of any adjustment to the Purchase Price for each
disputed Environmental Defect Amount, the Environmental Arbitrator shall accept
Seller’s position or Purchaser’s position, and the Environmental Arbitrator
shall not determine there to be a higher Environmental Defect Amount than
claimed by Purchaser or a lower Environmental Defect Amount than claimed by
Seller. In making his determination, the Environmental Arbitrator shall be bound
by the rules set forth in this ‎Article 4 and may consider such other matters as
in the opinion of the Environmental Arbitrator are reasonably necessary or
helpful to make a proper determination. In connection with the determination of
a matter submitted to the Environmental Arbitrator, Purchaser may not assert any
violation of Environmental Law that is not specified by Purchaser in the
applicable Environmental Defect Notice. The Environmental Arbitrator shall act
as an expert for the limited purpose of determining the specific disputed
Environmental Liability or the Lowest Cost Response for such Environmental
Liability submitted by Seller and may not award damages, interest or penalties
to either Party with respect to any matter nor may it award Purchaser a greater
amount with respect to the applicable Environmental Liability than the Lowest
Cost Response set forth by Purchaser in the applicable Environmental Claim
Notice. Seller and Purchaser shall each bear its own legal fees and other costs
of presenting its case. Each Party shall bear one-half of the costs and expenses
of the Environmental Arbitrator. If the validity of any Environmental Liability
or the Lowest Cost Response attributable thereto, is not determined prior to
Closing by the Environmental Arbitrator pursuant to this ‎Section 4.4, subject
to Seller’s and Purchaser’s right to exclude the affected Asset pursuant to the
proviso in ‎Section 4.4(a), (i) all affected Properties shall be conveyed to
Purchaser at Closing,

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(ii) subject to the application of the Individual ED Threshold and the
Environmental Defect Deductible, the Closing Payment shall be reduced in an
amount equal to the Purchaser’s good faith estimate of the Lowest Cost Response
for the applicable Environmental Liability, and (iii) such amount by which the
Closing Payment is reduced shall be deposited into the Escrow Account, which
amount shall be disbursed pursuant to the terms of this Agreement and the Escrow
Agreement; provided further that once the Environmental Arbitrator finally
determines the validity of any Environmental Liability or the Lowest Cost
Response with respect thereto, the Parties shall instruct the Escrow Agent to
release the amount held in the Escrow Account for such dispute within five (5)
Business Days of such resolution.
(d)    Notwithstanding anything herein to the contrary, (i) in no event shall
there be any adjustments to the Purchase Price or other remedies provided to
Purchaser for individual Environmental Liabilities for which the Lowest Cost
Response to address same does not exceed the Individual ED Threshold; and (ii)
in no event shall there be any adjustments to the Purchase Price or other
remedies provided to Purchaser for Environmental Liabilities unless and until
the sum of the aggregate amount of all Environmental Liabilities covered by
‎Section 4.4(a) that exceed the Individual ED Threshold, exceeds a deductible in
an amount equal to 1.75% of the Purchase Price (the “Environmental Defect
Deductible”), after which point Purchaser shall be entitled to adjustments to
the Purchase Price or other available remedies under this ‎Section 4.4 with
respect to Environmental Liabilities in excess of such Environmental Defect
Deductible, subject to the Individual ED Threshold and Seller’s elections under
this ‎Section 4.4. The Allocated Value of any Property (or affected portion
thereof) retained by Seller in accordance with ‎Section 4.4(a)(ii) may not be
used in meeting the Environmental Defect Deductible.
(e)    NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS ARTICLE ‎4 OR OTHERWISE,
PURCHASER SHALL NOT BE ENTITLED HEREUNDER TO ASSERT ANY ENVIRONMENTAL DEFECTS
FOR THOSE OF THE ASSETS FOR WHICH PURCHASER OR ANY OF ITS AFFILIATES SERVES AS
OPERATOR.
Section 4.5    Limitations. Notwithstanding anything to the contrary in this
Agreement, except for the indemnity provided under ‎Section 11.2(c) as it
relates to Retained Obligations (limited to Clause (d) of the definition
thereof) and/or breaches of the representation in ‎Section 5.15, this ‎Article 4
(without prejudice to Purchaser’s right to terminate this Agreement pursuant to
‎Article 10 as a result of the failure of the closing condition in ‎Section
8.2(e)) is intended to be the sole and exclusive remedy that Purchaser
Indemnitees shall have against Seller Indemnitees with respect to any matter or
circumstance relating to Environmental Defects, Environmental Laws,
Environmental Liabilities, the release or threatened release of materials into
the environment or protection of the environment, natural resources, threatened
or endangered species or health. Except to the limited extent necessary to
enforce the terms of this ‎Article 4 (without prejudice to Purchaser’s right to
terminate this Agreement pursuant to ‎Article 10 as a result of the failure of
the closing condition in ‎Section 8.2(e)) and the indemnity provided under
‎Section 11.2(c) as it relates to Retained Obligations (limited to clause (d) of
the definition thereof) and/or breaches of the representation in ‎Section 5.15,
Purchaser (on behalf of itself, each of the other Purchaser Indemnitees and
their respective insurers

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and successors in interest) hereby releases and discharges any and all claims
and remedies at Law or in equity, known or unknown, whether now existing or
arising in the future, contingent or otherwise, against the Seller Indemnitees
with respect to any matter or circumstance relating to Environmental Defects,
Environmental Laws, Environmental Liabilities, the release or threatened release
of materials into the environment or protection of the environment, natural
resources, threatened or endangered species, or health EVEN IF SUCH CLAIMS OR
DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR
CONCURRENT, EXCLUDING GROSS NEGLIGENCE AND WILLFUL MISCONDUCT), STRICT LIABILITY
OR OTHER LEGAL FAULT OF SELLER INDEMNITEES. Except as expressly provided in
‎Section 5.15, Purchaser acknowledges that Seller has not made and will not make
any representation or warranty regarding any matter or circumstance relating to
Environmental Defects, Environmental Laws, Environmental Liabilities, the
release or threatened release of materials into the environment or protection of
the environment, natural resources, threatened or endangered species, or health,
and that except as set forth in ‎Section 5.15, nothing in ‎Article 5 or
otherwise shall be construed as such a representation or warranty.
ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF SELLER
Section 5.1    Disclaimers.
(a)    EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN ARTICLE ‎5 OF THIS
AGREEMENT OR IN THE CERTIFICATE OF SELLER TO BE DELIVERED PURSUANT TO ‎SECTION
9.2(G), OR FOR THE SPECIAL WARRANTY IN THE CONVEYANCE (AND WITHOUT LIMITING
PURCHASER’S REMEDIES UNDER ‎ARTICLE 10 (WITH RESPECT TO PURCHASER’S RIGHT TO
TERMINATE THIS AGREEMENT AS A RESULT OF A FAILURE OF THE CLOSING CONDITION IN
‎SECTION 8.2(A)) OR ‎ARTICLE 11), WITH RESPECT TO THE ASSETS AND THE
TRANSACTIONS CONTEMPLATED HEREBY (i) SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES, STATUTORY, EXPRESS OR IMPLIED, AND (ii) PURCHASER HAS NOT RELIED
UPON, AND SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR, ANY
REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED (ORALLY
OR IN WRITING) TO PURCHASER OR ANY OF ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES,
AGENTS, OFFICERS, DIRECTORS, MEMBERS, MANAGERS, EQUITY OWNERS, CONSULTANTS,
REPRESENTATIVES OR ADVISORS (INCLUDING ANY OPINION, INFORMATION, PROJECTION OR
ADVICE THAT MAY HAVE BEEN PROVIDED TO PURCHASER BY ANY EMPLOYEE, AGENT, OFFICER,
DIRECTOR, MEMBER, MANAGER, EQUITY OWNER, CONSULTANT, REPRESENTATIVE OR ADVISOR
OF SELLER OR ANY OF ITS AFFILIATES).
(b)    EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN ‎ARTICLE 5 OR IN THE
CERTIFICATE OF SELLER TO BE DELIVERED PURSUANT

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TO ‎SECTION 9.2(G), OR FOR THE SPECIAL WARRANTY IN THE CONVEYANCE (AND WITHOUT
LIMITING PURCHASER’S REMEDIES UNDER ‎ARTICLE 10 (WITH RESPECT TO PURCHASER’S
RIGHT TO TERMINATE THIS AGREEMENT AS A RESULT OF A FAILURE OF THE CLOSING
CONDITION IN ‎SECTION 8.2(A) OR ‎SECTION 8.2(E)) OR ‎ARTICLE 11), WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, SELLER (Y) EXPRESSLY DISCLAIMS, AND
PURCHASER ACKNOWLEDGES AND AGREES THAT IT HAS NOT RELIED UPON, ANY
REPRESENTATION OR WARRANTY, STATUTORY, EXPRESS OR IMPLIED, AS TO (i) TITLE TO
ANY OF THE ASSETS, (ii) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE
MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY
GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE ASSETS, (iii) THE
QUANTITY, QUALITY OR RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE
ASSETS, (iv) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES
GENERATED BY THE ASSETS, (v) THE PRODUCTION OF PETROLEUM SUBSTANCES FROM THE
ASSETS, (vi) ANY ESTIMATES OF OPERATING COSTS AND CAPITAL REQUIREMENTS FOR ANY
WELL, OPERATION, OR PROJECT, (vii) THE MAINTENANCE, REPAIR, CONDITION, QUALITY,
SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, (viii) THE CONTENT,
CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, REPORTS, BROCHURES, CHARTS OR
STATEMENTS PREPARED BY THIRD PARTIES, (ix) ANY OTHER MATERIALS OR INFORMATION
THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO PURCHASER OR ITS
AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, OFFICERS, DIRECTORS, MEMBERS,
MANAGERS, EQUITY OWNERS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR
PRESENTATION RELATING THERETO, AND (Z) FURTHER DISCLAIMS (AND PURCHASER
ACKNOWLEDGES AND AGREES THAT IT HAS NOT RELIED UPON) ANY REPRESENTATION OR
WARRANTY, STATUTORY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY
EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT, WITHOUT
LIMITING ITS RIGHTS AND REMEDIES SET FORTH HEREIN, (I) PURCHASER HAS OR, BY
CLOSING, WILL HAVE INSPECTED, OR WAIVED PURCHASER’S RIGHT TO INSPECT, THE ASSETS
FOR ALL PURPOSES AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL
CONDITION, BOTH SURFACE AND SUBSURFACE, INCLUDING BUT NOT LIMITED TO CONDITIONS
SPECIFICALLY RELATED TO THE PRESENCE, RELEASE OR DISPOSAL OF HAZARDOUS
SUBSTANCES, SOLID WASTES OR NORM, (II) PURCHASER SHALL BE DEEMED TO BE OBTAINING
THE ASSETS, INCLUDING THE EQUIPMENT, IN ITS PRESENT STATUS, CONDITION AND STATE
OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS AND DEFECTS, AND (III)
PURCHASER HAS OR, BY CLOSING, WILL HAVE MADE OR CAUSED TO BE MADE SUCH
INSPECTIONS AS PURCHASER DEEMS APPROPRIATE.

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(c)    PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR POSITIONS TAKEN ON A
TAX RETURN WITH RESPECT TO ASSET TAXES FOR A TAXABLE PERIOD BEGINNING BEFORE AND
ENDING AFTER THE EFFECTIVE TIME WHERE SUCH POSITION IS BASED ON COMMENTS
RECEIVED FROM SELLER AND IMPLEMENTED BY PURCHASER PURSUANT TO ‎SECTION 7.8(B)
(IN WHICH CASE PURCHASER CAN RELY ON SUCH POSITION SOLELY FOR SUCH TAXABLE
PERIOD) PURCHASER CANNOT RELY ON OR FORM ANY CONCLUSIONS FROM SELLER’S
METHODOLOGIES FOR THE DETERMINATION AND REPORTING OF ANY ASSET TAXES THAT WERE
UTILIZED FOR ANY TAX PERIOD (OR PORTION THEREOF) BEGINNING PRIOR TO THE CLOSING
DATE FOR PURPOSES OF CALCULATING AND REPORTING ASSET TAXES ATTRIBUTABLE TO ANY
TAX PERIOD (OR PORTION THEREOF) BEGINNING AFTER THE CLOSING DATE, IT BEING
UNDERSTOOD THAT PURCHASER MUST MAKE ITS OWN DETERMINATION AS TO THE PROPER
METHODOLOGIES THAT CAN OR SHOULD BE USED FOR ANY SUCH LATER TAX RETURN.
(d)    Any representation “to the knowledge of Seller”, “to Seller’s knowledge”
or references to any matters that Seller “knew”, including such matters set
forth in ‎Section 11.4(f), is limited to matters within the “actual knowledge”
of the Persons set forth on Exhibit C.
(e)    Inclusion of a matter on a Schedule to a representation or warranty which
addresses matters having a material or Material Adverse Effect shall not be
deemed an indication that such matter does, or may, have a material or Material
Adverse Effect. Matters may be disclosed on a Schedule to this Agreement for
purposes of information only. Matters disclosed in each Schedule shall qualify
the representation and warranty in which such Schedule is referenced and any
other representation and warranty to which the applicability of matters
disclosed is reasonably apparent on its face.
(f)    From time to time prior to the Closing Date, Seller shall have the right
(but not the obligation) to supplement or amend the Schedules hereto to correct
any matter that would otherwise constitute a breach of any representation or
warranty of Seller contained herein (each a “Schedule Supplement”), and each
such Schedule Supplement shall be deemed to be incorporated into and supplement
and amend the Schedules with respect to matters arising between the Execution
Date and the Closing Date for all purposes hereunder; provided, however, that
any such Schedule Supplement shall be disregarded for purposes of, and shall not
affect, (i) Purchaser’s conditions to Closing set forth in ‎Section 8.2 or (ii)
Purchaser’s remedies under ‎Section 11.2(c)(ii) with respect to any breaches of
Seller’s representations related to the Seller Operated Assets that do not
individually or in the aggregate give rise to a right by Purchaser to terminate
this Agreement pursuant to ‎Section 10.1(c).
(g)    WITHOUT LIMITING ANY KNOWLEDGE QUALIFIERS OTHERWISE SET FORTH HEREIN, ALL
SUCH REPRESENTATIONS AND WARRANTIES ARE

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DEEMED TO BE QUALIFIED TO SELLER’S KNOWLEDGE IN THE CASE OF ASSETS THAT DO NOT
CONSTITUTE SELLER OPERATED ASSETS.
(h)    Subject to the foregoing provisions of this ‎Section 5.1, and the other
terms and conditions of this Agreement, Seller represents and warrants to
Purchaser the matters set out in Section ‎5.2 through ‎Section 5.21 as of the
date of this Agreement, as modified by the Schedules.
Section 5.2    Existence and Qualification. Seller is duly organized, validly
existing and in good standing under the Laws of the state of Delaware and is
duly qualified to do business in Texas. Seller has all requisite power and
authority to own and operate its property (including the Assets) and to carry on
its business as now conducted.
Section 5.3    Power. Seller has the requisite power to enter into and perform
this Agreement and consummate the transactions contemplated by this Agreement.
Section 5.4    Authorization and Enforceability. The execution, delivery and
performance of this Agreement, and the performance of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of Seller. This Agreement has been duly executed and
delivered by Seller (and all documents required hereunder to be executed and
delivered by Seller at Closing will be duly executed and delivered by Seller)
and this Agreement constitutes, and at the Closing such documents will
constitute, the valid and binding obligations of Seller, enforceable in
accordance with their terms except as such enforceability may be limited by
applicable bankruptcy, insolvency or other similar Laws affecting creditors’
rights generally as well as to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at Law).
Section 5.5    No Conflicts. The execution, delivery and performance of this
Agreement by Seller, and the transactions contemplated by this Agreement, will
not (a) violate any provision of the governing documents of Seller, (b) result
in a material default (with due notice or lapse of time or both) or the creation
of any lien or encumbrance, or give rise to any right of termination,
cancellation or acceleration under any of the terms, conditions or provisions of
any promissory note, bond, mortgage, indenture, loan or similar financing
instrument to which Seller is a party or by which Seller or the Assets may be
bound, (c) violate in any material respect any judgment, order, ruling, or
decree applicable to Seller as a party in interest or (d) violate in any
material respect any Laws applicable to Seller or any of the Assets (except for
rights to consent by, required notices to, and filings with or other actions by
Governmental Bodies where the same are not required prior to the assignment of
oil and gas interests).
Section 5.6    Liability for Brokers’ Fees. Purchaser shall not directly or
indirectly have any responsibility, liability or expense, as a result of
undertakings or agreements of Seller, for brokerage fees, finder’s fees, agent’s
commissions or other similar forms of compensation in connection with this
Agreement or any agreement or transaction contemplated hereby.
Section 5.7    Litigation. Except as disclosed on Schedule ‎5.7, there are no
actions, suits or proceedings pending for which Seller has received written
notice, or to Seller’s knowledge

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threatened in writing, before any Governmental Body or arbitrator to which the
Assets are subject or that would otherwise prevent or hinder the consummation of
the transactions contemplated by this Agreement or Seller’s performance of its
obligations hereunder; and there has been no settlement of litigation with Third
Parties or order of any Governmental Body with respect to the ownership or
operation of the Assets that would be binding on Purchaser (or adversely affect
the Assets) after Closing.
Section 5.8    Asset Taxes and Assessments. Except as set forth on Schedule
‎5.8, Seller warrants and represents, as to the Seller Operated Assets, that (a)
all material Asset Taxes that have become due and payable by Seller have been
timely paid in full, (b) all material reports, returns, statements (including
estimated reports, returns or statements), and other similar filings with
respect to Asset Taxes (the “Tax Returns”) required to be filed by Seller have
been timely filed (taking into account all applicable extensions) with the
appropriate Governmental Body in all jurisdictions in which such Tax Returns are
required to be filed; (c) such Tax Returns are true and correct in all material
respects; (d) there is not currently in effect any extension or waiver of any
statute of limitations regarding the assessment or collection of any Asset Tax
with respect to the Assets, which period has not yet expired; (e) there are no
administrative proceedings or lawsuits pending with respect to any Asset Tax
with respect to the Assets by any taxing authority for which Seller has received
written notice; and (f) there are no liens on any of the Assets attributable to
Taxes other than liens for Taxes not yet due. Except as set forth on Schedule
‎5.8, none of the Assets is, or prior to the Closing will be, subject to a Tax
partnership or related reporting obligations for U.S. federal income tax
purposes. With respect to any Tax partnership that is set forth on Schedule
‎5.8, Seller is responsible for compliance with all tax reporting obligations of
the Tax partnership (including filing income tax returns of the Tax
partnership). With respect to each Tax partnership that is set forth on Schedule
‎5.8, the capital account balance in respect of such Tax partnership that
Purchaser will be deemed to acquire as a result of the purchase of the Assets
pursuant to this Agreement will be the portion of Seller’s capital account
balance attributable to the purchased Assets as of the Closing, and the amount
of such capital account balance of Purchaser attributable to the purchased
Assets immediately following the Closing will be at least 65% of the aggregate
capital account balances immediately following the Closing of all persons who
are treated as partners of such Tax partnership (including Purchaser) which are
attributable to their respective interests in the properties underlying the
Assets. Neither Seller nor any of its Affiliates is a party to or is bound by
any Tax allocation or Tax sharing or indemnification agreement with respect to
the Assets. Notwithstanding anything in this Agreement to the contrary, this
‎Section 5.8 contains the exclusive representations and warranties with respect
to Tax matters, and no other Section in this ‎Article 5 shall apply to Tax
matters.
Section 5.9    Outstanding Capital Commitments. As of the date of this
Agreement, there is no individual outstanding authority for expenditure which is
(or, as of the Effective Time, was) binding on the Assets, the value of which
Seller reasonably anticipates exceeds $100,000 chargeable to Seller’s interests
participating in the operation covered by such authority for expenditure after
the Effective Time, other than those shown on Schedule ‎5.9 hereto.
Section 5.10    Compliance with Laws. Except as disclosed on Schedule ‎5.10, the
Assets are, and the operation of the Assets has been and currently is, in
compliance in all material respects

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with the provisions and requirements of all Laws (excluding Environmental Laws,
which are addressed in ‎Section 5.15) of all Governmental Bodies having
jurisdiction with respect to the Assets, or the ownership, operation,
development, maintenance, or use of any thereof.
Section 5.11    Contracts. Seller is not and, to Seller’s knowledge, no other
party is, in default or breach under any Contract except as disclosed on
Schedule ‎5.11(a). Schedule ‎5.11(b) sets forth all of the following Contracts
included in the Assets or to which any of the Assets or Purchaser will be bound,
in each case, from and after the Effective Time (each, a “Material Contract”):
(a) any Contract that can reasonably be expected to result in aggregate payments
or obligations by or revenues of more than $100,000 during the remainder of the
current or any subsequent fiscal year (based solely on the terms thereof and
current volumes, without regard to any expected increase in volumes or
revenues); (b) any agreement with any Affiliate of Seller; (c) any agreement or
contract for the sale, exchange, or other disposition of, or for the
transportation, gathering, marketing, treating, processing or similar Contracts
of, Hydrocarbons produced from or attributable to the Assets that is not
cancelable without penalty or other material payment on not more than sixty (60)
days’ prior written notice; (d) any agreement of or binding upon Seller to sell,
lease, farmout, or otherwise dispose of any interest in any of the Assets after
the Effective Time; (e) any exploration agreement, participation agreement,
development agreement, unit operating agreement, joint operating agreement or
similar Contract; (f) any Contract that constitutes a lease under which Seller
is the lessor or the lessee of real or personal property which involves an
annual base rental of more than $100,000; (g) area of mutual interest agreements
and farmout and farmin agreements or agreements that otherwise contain material
non-competition restrictions, or material rights of first refusal, or other
similar restrictions; (h) any Contract the sole purpose of which (as of the
execution of such Contract) is to indemnify another Person; and (i) any
indenture, mortgage, loan, credit lien, sale-leaseback or similar Contract
affecting any of the Assets that will not be released on or prior to the
Closing. No currently effective notices have been received by Seller or any of
its Affiliates of the exercise of any premature termination, price
redetermination, market-out, shut-in or curtailment of or under any Material
Contract. Seller has made available to Purchaser full, true and correct copies
of all Material Contracts (including all material amendments thereto) that are
not in the possession of or otherwise available to Purchaser.
Section 5.12    Payments for Production. Except as set forth on Schedule ‎5.12,
Seller is (and, from and after the Effective Time, was) not obligated under any
contract or agreement containing a take-or-pay, advance payment, prepayment, or
similar provision (including volumetric production payments and net profits
interests), or under any gathering, transmission, or any other contract or
agreement with respect to any of the Seller Operated Assets to sell, gather,
deliver, process, or transport any Hydrocarbons without then or thereafter
receiving full payment therefor, and Seller is not obligated to pay any
penalties under any agreement as a result of the delivery of quantities of
Hydrocarbons under or in excess of any such agreement’s requirements.
Section 5.13    Governmental Authorizations. Except as disclosed on Schedule
‎5.13, Seller has obtained and is maintaining and is in compliance with all
federal, state and local governmental licenses, permits, franchises, orders,
exemptions, variances, waivers, authorizations, certificates, consents, rights,
privileges and applications therefor (the “Governmental Authorizations”) that
are presently necessary or required for the operation of the Seller Operated

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Assets as currently operated (excluding those required under Environmental
Laws). All such Governmental Authorizations are in full force and effect and
there are no violations of such Governmental Authorizations that would (or could
with notice or lapse of time) result in their termination or revocation.
Section 5.14    Consents and Preferential Purchase Rights. Except as disclosed
in Schedule ‎5.14, no interest of Seller in an Asset is subject to any (a)
Preferential Right (or any part thereof) or (b) Required Consent of any Third
Party to the sale and conveyance of Seller’s interest in the Assets as provided
for in this Agreement (except for Customary Post-Closing Consents).
Section 5.15    Environmental Matters. Except as disclosed on Schedule ‎5.15,
(a) to Seller’s knowledge, the Seller Operated Assets are, and the operation of
the Seller Operated Assets has been and currently is, in compliance in all
material respects with the provisions and requirements of all applicable
Environmental Laws; (b) there are no pending proceedings, and to knowledge of
Seller, there are no threatened proceedings, relating to an alleged
Environmental Liability or breach of Environmental Laws on or with respect to
the Seller Operated Assets, and Seller has not received any written notice from
a Governmental Body of any environmental claim, demand, filing or investigation
relating to the Seller Operated Assets or written notice from a Governmental
Body of any alleged or actual Environmental Liabilities or violation or
non-compliance with any Environmental Law or of non-compliance with the terms or
conditions of any environmental permits, arising from, based upon, associated
with or related to the Seller Operated Assets or the ownership or operation of
any thereof, except for prior instances of non-compliance that have been fully
and finally resolved to the satisfaction of all Governmental Bodies with
jurisdiction over such matters or Environmental Liabilities that have been fully
satisfied; and (c) Seller has not entered into or is subject to any agreement,
consent, order, decree or judgment of any Governmental Body that is based on any
violations of Environmental Laws and that relates to the current or future use
of any Seller Operated Assets. The representation and warranty in this ‎Section
5.15 constitutes the only representation and warranty with respect to
Environmental Laws, Environmental Liabilities the release or threatened release
of materials into the environment or protection of the environment, natural
resources, threatened or endangered species, or health and no other
representation or warranty appearing in this Agreement shall be construed to
cover Environmental Laws, Environmental Liabilities, the release or threatened
release of materials into the environment or protection of the environment,
natural resources, threatened or endangered species, or health.
Section 5.16    Leases. Except as set forth on Schedule ‎5.16: (a) Seller has
not received any written notice from a lessor of a Lease of any alleged default
or breach under any such Lease by Seller or its Affiliates or, to Seller’s
knowledge, by any other Person that is a party to such Lease; and (b) no royalty
owner has requested to perform or, to Seller’s knowledge, is currently
performing, an audit regarding the payment of any royalties under the Leases or
any similar payment.
Section 5.17    Wells. With respect to the Seller Operated Assets, except as set
forth on Schedule ‎5.17, (a) no Well is subject to penalties on allowables
because of any overproduction or any other violation of Laws; (b) there are no
Wells that have been plugged and abandoned in a manner that does not comply with
applicable Laws; and (c) with respect to the Properties, there are currently no
obligations, whether under Laws or Contracts, and Seller has not received notice
or

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demand from any Governmental Body or Third Party, to plug any Wells, dismantle
any facilities, or close any pits and restore or remediate the surface around
such Wells, facilities, or pits. All currently producing Wells and Equipment
operated by Seller are in an operable state of repair adequate to maintain
normal operations in accordance with past practices of Seller, ordinary wear and
tear excepted. Schedule ‎5.17 contains a true and complete list of the status of
the Payout Balance as of the Effective Time for each Well operated by Seller.
Section 5.18    Suspense Funds. Schedule ‎5.18 lists all funds held in suspense
by Seller or its Affiliates (including the Person last known by Seller to be the
appropriate payee and the reason such payments are being held in suspense) as of
the Effective Time that are attributable to the Seller Operated Assets.
Section 5.19    Imbalances. Schedule ‎5.19 sets forth all Imbalances associated
with the Seller Operated Assets as of the Effective Time.
Section 5.20    Bankruptcy. There are no bankruptcy, reorganization or
receivership proceedings pending, being contemplated by or, to Seller’s
knowledge, threatened in writing against Seller or any Affiliate of Seller.
Seller is not insolvent.
Section 5.21    Pipeline Systems. The Pipeline Systems (a) comply in all
material respects with all applicable Laws, (b) are free and clear of liens and
encumbrances (other than Permitted Encumbrances), and (c) are in an operable
state of repair adequate to maintain normal operations in accordance with past
practices, ordinary wear and tear excepted.
ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller the following:
Section 6.1    Existence and Qualification. Purchaser is duly organized, validly
existing and in good standing under the Laws of the state of Texas and is duly
qualified to do business in Texas. Purchaser has all requisite power and
authority to own and operate the Assets and to carry on its business as now
conducted.
Section 6.2    Power. Purchaser has the requisite power to enter into and
perform this Agreement and consummate the transactions contemplated by this
Agreement.
Section 6.3    Authorization and Enforceability. The execution, delivery and
performance of this Agreement, and the performance of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
action on the part of Purchaser. This Agreement has been duly executed and
delivered by Purchaser (and all documents required hereunder to be executed and
delivered by Purchaser at Closing will be duly executed and delivered by
Purchaser) and this Agreement constitutes, and at the Closing such documents
will constitute, the valid and binding obligations of Purchaser, enforceable in
accordance with their terms except as such enforceability may be limited by
applicable bankruptcy or other similar Laws affecting the rights

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and remedies of creditors generally as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at Law).
Section 6.4    No Conflicts. The execution, delivery and performance of this
Agreement by Purchaser, and the transactions contemplated by this Agreement,
will not (a) violate any provision of the limited partnership agreement or other
governing or charter documents of Purchaser, (b) result in a material default
(with due notice or lapse of time or both) or the creation of any lien or
encumbrance, or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any promissory
note, bond, mortgage, indenture, loan or similar financing instrument to which
Purchaser is a party or which affects Purchaser’s assets, (c) violate in any
material respect any judgment, order, ruling, or decree applicable to Purchaser
as a party in interest or (d) violate in any material respect any Laws
applicable to Purchaser or any of its assets (except for rights to consent by,
required notices to, and filings with or other actions by Governmental Bodies
where the same are not required prior to the assignment of oil and gas
interests).
Section 6.5    Liability for Brokers’ Fees. Seller shall not directly or
indirectly have any responsibility, liability or expense, as a result of
undertakings or agreements of Purchaser, for brokerage fees, finder’s fees,
agent’s commissions or other similar forms of compensation in connection with
this Agreement or any agreement or transaction contemplated hereby.
Section 6.6    Litigation. As of the date of the execution of this Agreement,
there are no actions, suits or proceedings pending, or to Purchaser’s knowledge,
threatened in writing before any Governmental Body against Purchaser or any
subsidiary of Purchaser which are reasonably likely to materially impair
Purchaser’s ability to promptly and fully perform its obligations under this
Agreement.
Section 6.7    Financing. Purchaser has sufficient cash, available lines of
credit or other sources of immediately available funds (in United States
dollars) to enable it to pay the Closing Payment to Seller at the Closing.
Section 6.8    Independent Investigation. Purchaser (a) is sophisticated in the
evaluation, purchase, ownership and operation of oil and gas properties and
related facilities and is aware of the risks associated with the purchase,
ownership and operation of such properties and facilities, (b) is capable of
evaluating, and hereby acknowledges that it has so evaluated, the merits and
risks of the Assets, ownership and operation thereof and its obligations
hereunder, and (c) is able to bear the economic risks associated with the
Assets, ownership and operation thereof and its obligations hereunder. In making
its decision to enter into this Agreement and to consummate the transactions
contemplated hereby, Purchaser (i) has relied or shall rely solely on its own
independent investigation and evaluation of the Assets and the advice of its own
legal, Tax, economic, environmental, engineering, geological and geophysical
advisors and the express provisions of this Agreement and acknowledges and
agrees that, except for the express representations, warranties, covenants and
remedies provided in this Agreement, (A) it has not been induced by and has not
relied upon any representations, warranties or statements, whether express or
implied, made at any time by Seller or any of its directors, officers,
shareholders, employees, Affiliates, controlling persons, agents, advisors or
representatives or any other Person, whether or not any such representations,
warranties or statements were made in writing or orally, (B) neither Seller nor
any of its directors, officers,

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shareholders, employees, Affiliates, controlling persons, agents, advisors or
representatives or any other Person makes or has made any representation or
warranty, either express or implied, as to the accuracy or completeness of any
of the information provided or made available to Purchaser or its directors,
officers, employees, Affiliates, controlling persons, agents or representatives,
including any information, document or material provided or made available, or
statements made or provided to Seller (including its directors, officers,
employees, Affiliates, controlling persons, agents or representatives) in
connection with the transactions contemplated by this Agreement, including
without limitation, any such information contained in or provided in “data
rooms,” management presentations or supplemental due diligence information
provided by Seller or discussions or access to management of Seller; and (C) the
information referred to in (B) above may include certain projections, estimates
and other forecasts and plans and that there are uncertainties inherent in
attempting to make such projections, estimates and other forecasts and plans and
Purchaser is familiar with such uncertainties and takes full responsibility for
making its own evaluation of the adequacy and accuracy of all such projections,
estimates and other forecasts and plans and any use or reliance by Purchaser on
such information referred to in (B) above is (or the projections, estimates and
other forecasts and plans that may be contained therein) at Purchaser’s sole
risk; (ii) without limiting Purchaser’s rights and remedies herein, has
satisfied or shall satisfy itself through its own due diligence as to the
environmental and physical condition of and contractual arrangements and other
matters affecting the Assets; and (iii) agrees to the fullest extent permitted
by Law that neither Seller nor any of its directors, officers, employees,
Affiliates, controlling persons, agents or representatives shall have any
liability or responsibility whatsoever to Purchaser or its directors, officers,
employees, Affiliates, controlling persons, agents or representatives on any
basis (including in contract or tort, under Federal or state securities laws or
otherwise) resulting from the distribution to Purchaser or Purchaser’s use of
any of the information referred to in clause (i)(B) above. Purchaser
acknowledges and affirms as of the Closing Date that (i) it has completed and
relied solely upon its own independent investigation, verification, analysis and
evaluation of the Assets and the express provisions of this Agreement, (ii) made
all such reviews and inspections of the Assets as it has deemed necessary or
appropriate and (iii) except for the express representations, warranties,
covenants and remedies provided in this Agreement, it is acquiring the Assets on
an as-is, where-is basis with all faults, and has not relied upon any other
representations, warranties, covenants or statements of Seller in entering into
this Agreement.
Section 6.9    Bankruptcy. Except for claims or matters related to the
bankruptcy case of Penn Virginia Corporation and its subsidiaries commenced
under Case No. 16-32395 on May 12, 2016 and concluded on September 12, 2016, for
which the United States Bankruptcy Court for the Eastern District of Virginia
retains jurisdiction, there are no bankruptcy, reorganization or receivership
proceedings pending against, being contemplated by, or, to Purchaser’s
knowledge, threatened, in writing, against Purchaser or any Affiliate of
Purchaser. Purchaser is not insolvent.
Section 6.10    Qualification. Purchaser shall be, at Closing, qualified to own
and assume operatorship of the Assets in all jurisdictions where the Assets to
be transferred to it are located, and the consummation of the transactions
contemplated in this Agreement will not cause Purchaser to be disqualified as
such an owner or operator. To the extent required by applicable Law, as of the
Closing, Purchaser has, and will continue to maintain, all bonds and any other
surety instruments

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as may be required by, and in accordance with, such state or federal regulations
governing the ownership and operation of the Assets.
Section 6.11    Consents. Except for (a) consents and approvals for the
assignment of the Assets to Purchaser that are customarily and lawfully obtained
after the assignment of properties similar to the Assets and (b) any consents
that Seller is required to obtain under this Agreement or otherwise, there are
no consents, approvals or other restrictions on assignment applicable to
Purchaser that Purchaser is obligated to obtain or furnish, including
requirements for consents from Third Parties to any assignment (in each case),
that would be applicable in connection with the consummation of the transactions
contemplated by this Agreement or the performance and observance of the
covenants and obligations of Purchaser.
Section 6.12    Knowledge. As of the Execution Date, Purchaser does not have any
knowledge of an actual breach (or any fact, condition or circumstance that could
reasonably be considered to constitute or could reasonably be considered to give
rise to a breach) of any representation or warranty of Seller hereunder.
ARTICLE 7

COVENANTS OF THE PARTIES
Section 7.1    Access. Between the date of execution of this Agreement and
continuing until the Closing Date, Seller will give Purchaser and its
representatives reasonable access to Seller’s offices and the Records, including
the right to copy, at Purchaser’s expense, the Records in Seller’s possession,
for the sole purpose of conducting an investigation of the Assets, but only to
the extent that Seller may do so without violating any applicable Law or
obligations to any Third Party and to the extent that Seller has authority to
grant such access without breaching any restriction binding on Seller for which
Seller has not, after commercially reasonable efforts without the payment of any
money or fees (with respect to which Purchaser has not agreed in writing to
pay), obtained the permission, consent or waiver applicable to the records
affected by applicable Law or Third Party obligations. Such access by Purchaser
shall be subject to applicable limitations in ‎Section 4.1 and shall be limited
to Seller’s normal business hours, and any weekends and after hours requested by
Purchaser that can be reasonably accommodated by Seller, and Purchaser’s
investigation shall be conducted in a manner that minimizes interference with
the operation of the Assets. All information obtained by and access granted to
Purchaser and its representatives under this Section shall be subject to the
terms of ‎Section 7.6 and the confidentiality restrictions set forth in the
Confidentiality Agreement.
Section 7.2    Government Reviews. Each Party shall in a timely manner (a) make
all required filings, if any, with and prepare applications to and conduct
negotiations with, each Governmental Body as to which such filings, applications
or negotiations are necessary or appropriate for such Party to consummate the
transactions contemplated hereby, and (b) provide such information as the other
Party each may reasonably request to make such filings, prepare such
applications and conduct such negotiations. Each Party shall cooperate with and
use all commercially reasonable efforts to assist the other with respect to such
filings, applications and negotiations.

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Section 7.3    Notification of Breaches.
(a)    If any of Purchaser’s or Seller’s representations or warranties is untrue
or shall become untrue in any material respect between the date of execution of
this Agreement and the Closing Date, or if any of Purchaser’s or Seller’s
covenants or agreements to be performed or observed prior to or on the Closing
Date (other than on a specified date) shall not have been so performed or
observed in any material respect, but, if such breach of representation,
warranty, covenant or agreement shall (if curable) be cured by the Closing (or,
if the Closing does not occur, by the Outside Date), then such breach shall be
considered not to have occurred for all purposes of this Agreement.
(b)    Notwithstanding anything to the contrary contained herein, if Purchaser
elects to proceed with Closing with knowledge by Purchaser of any failure of any
condition to be satisfied in its favor or the breach of any agreement or
covenant by the Seller, then the condition that is unsatisfied or the agreement
or covenant that is breached at the Closing Date shall be deemed waived by
Purchaser and Purchaser shall be deemed to fully release and forever discharge
Seller on account of any and all claims, demands or charges, known or unknown,
with respect to such condition, agreement or covenant; provided, however, that
any Purchaser Interim Matter shall not be so released or discharged.
(c)    Notwithstanding anything to the contrary contained herein, if Seller
elects to proceed with Closing with knowledge by Seller of any failure of any
condition to be satisfied in its favor or the breach of any agreement or
covenant by the Purchaser, then the condition that is unsatisfied or the
agreement or covenant that is breached at the Closing Date shall be deemed
waived by Seller and Seller shall be deemed to fully release and forever
discharge Purchaser on account of any and all claims, demands or charges, known
or unknown, with respect to such condition, agreement or covenant; provided,
however, that any Seller Interim Matter and/or Excluded Asset shall not be so
released or discharged.
Section 7.4    Operatorship. Except with respect to the Assets identified on
Schedule ‎7.4, upon reasonable request from Purchaser, at Purchaser’s sole cost
and expense, for a period of one hundred and eighty (180) days after the Closing
Date, Seller will assist Purchaser in Purchaser’s efforts to succeed Seller as
operator of any Wells included in the Seller Operated Assets. Seller makes no
representation and does not warrant or guarantee that Purchaser will succeed in
being appointed successor operator. Purchaser shall promptly, following Closing
(or earlier to the extent provided under ‎Section 7.13), file and diligently
pursue until receipt of any acknowledgement, consent or confirmation by
applicable agencies all appropriate or required forms, applications, permit
transfers, declarations, guarantees, or bonds or other financial support with
federal and state agencies relative to its assumption of operatorship. Except
with respect to the Assets identified on Schedule ‎7.4, for all Seller Operated
Assets, Seller shall execute and deliver to Purchaser, on forms to be prepared
by Purchaser and acceptable to Seller, and Purchaser shall promptly file, the
applicable forms transferring operatorship of such Seller Operated Assets to
Purchaser.
Section 7.5    Operation of Business.

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(a)    Except (i) as set forth on Schedule ‎7.5, (ii) as may be required to deal
with an emergency, (iii) for expenditures or operations set forth on Schedule
‎5.9, (iv) as required under a Material Contract or (v) as otherwise consented
to in writing by Purchaser, which consent shall not be unreasonably withheld,
conditioned or delayed, until the Closing, Seller (a) will own the Assets, and
operate the Seller Operated Assets, in the ordinary course consistent with past
practices, applicable Laws, the Leases and the Contracts, (b) with respect to
the Seller Operated Assets, will not commit to any single operation, or series
of related operations, reasonably anticipated by Seller to require future
capital expenditures by the owner of the Assets in excess of $100,000 (net to
Seller’s interest) or make any capital expenditures related to the Assets in
excess of $100,000 (net to Seller’s interest), (c) will not terminate, amend,
execute or extend any Material Contracts except for any Material Contracts set
forth on Schedule ‎5.8, (d) will maintain its current insurance coverage on the
Assets, if any, presently furnished by nonaffiliated Third Parties in the
amounts and of the types presently in force, (e) will use commercially
reasonable efforts to maintain in full force and effect all Leases, (f) will
maintain all material Governmental Authorizations necessary for the ownership or
operation of the Assets as currently operated, (g) will not transfer, farmout,
sell, hypothecate, encumber or otherwise dispose of any Assets except for sales
and dispositions of Hydrocarbon production and Equipment made in the ordinary
course of business consistent with past practices, (h) will not, without
Purchaser’s prior consent, not to be unreasonably withheld, conditioned or
delayed, become or permit itself to be deemed a non-consenting party to any
operation proposed by a Third Party (excluding any Affiliates of Purchaser) with
respect to any Property and (i) will not commit to do any act prohibited by the
foregoing clauses (a)-(h). Purchaser’s approval of any action restricted by this
‎Section 7.5 shall be considered granted within five (5) Business Days (unless a
shorter time is reasonably required by the circumstances and such shorter time
is specified in Seller’s written notice) of Seller’s notice to Purchaser
requesting such consent unless Purchaser notifies Seller to the contrary during
that period. In the event of an emergency, Seller may take such action as a
prudent operator would take and shall notify Purchaser of such action promptly
thereafter.
(b)    Notwithstanding anything to the contrary contained in this Agreement,
with respect to any Asset for which Seller is not the operator, Seller shall not
be deemed to have breached or otherwise violated any of its covenants or
agreements contained in this Agreement that are applicable to such Assets as a
result of an action or inaction of a Third Party operator so long as Seller
exercises commercially reasonable efforts to attempt to cause any Third Party
operator of such Assets to comply with such covenant or agreement.
(c)    Purchaser acknowledges that Seller may own an undivided interest in
certain of the Assets and Purchaser agrees that the acts or omissions of the
other working interest owners who are not affiliated with Seller shall not
constitute a violation of the provisions of this ‎Article 7 nor shall any action
required by a vote of working interest owners constitute such a violation so
long as Seller has voted its interest in a manner consistent with the provisions
of this ‎Article 7.

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(d)    Notwithstanding anything to the contrary contained in this Agreement,
until the earlier to occur of termination of this Agreement pursuant to Article
10 and the Closing, should Seller not wish to participate in any operation
properly proposed by Purchaser or its Affiliates with respect to any Property
pursuant to the applicable Contract to which such Property is subject, Seller
shall give Purchaser written notice thereof no later than five (5) Business Days
prior to the conclusion of the timeframes set forth in such Contract; and Seller
shall not be obligated to participate in any such operation unless Seller
receives from Purchaser, no later than three (3) Business Days prior to the date
when a decision with respect to such operation is required to be made by Seller
under such Contract, the written election of Purchaser (i) to require Seller to
participate in such operation and (ii) to pay all Property Costs of Seller with
respect to such operation. If Purchaser provides such written election, Seller
shall make an election to participate in such operation in accordance with such
Contract, and (A) Purchaser shall be responsible for all Property Costs
associated therewith and (B) pursuant to and as set forth in the applicable
Contract for which such election was made, Purchaser shall be entitled to
collect out of any revenues attributable to the applicable operation the
penalty, if any, that Seller, as nonconsenting party, would have suffered under
the applicable Contract, with such penalty to be paid and/or received in the
same manner as such penalty would have been paid to and/or received thereunder
by the consenting parties to such operation.
Section 7.6    Indemnity Regarding Access. Purchaser, on behalf of itself and
the Purchaser Indemnitees, hereby releases and agrees to indemnify, defend and
hold harmless all Seller Indemnitees and the other owners of interests in the
Assets from and against any and all claims, liabilities, losses, costs and
expenses (including court costs, expert fees and reasonable attorneys’ fees)
attributable to personal injuries, death, or property damage, to the extent
arising out of or relating to Purchaser’s access to the Assets or Seller’s
offices, the Records and other related activities or information prior to the
Closing by Purchaser Indemnitees (in each case, pursuant to this Agreement),
EVEN IF CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR
CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT OF ANY INDEMNIFIED PERSON,
EXCEPT TO THE EXTENT ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE SELLER INDEMNITEES OR ANY PARTY SEEKING INDEMNIFICATION UNDER THIS ‎SECTION
7.6.
Section 7.7    Other Preferential Rights.
(a)    Should a Third Party fail to exercise its Preferential Right as to any
portion of the Assets prior to Closing and the time for exercise or waiver has
not yet expired, or in the event such Third Party has exercised its Preferential
Right prior to Closing but the transfer with respect to the applicable Property
has not been consummated as of Closing, subject to the remaining provisions of
this ‎Section 7.7, such Assets shall be included in the transaction at Closing,
such Preferential Right to purchase shall be a Permitted Encumbrance hereunder,
and the following procedures shall be applicable. Purchaser shall satisfy all
such Preferential Right obligations of Seller to such holders and shall
indemnify and hold harmless all Seller Indemnitees from and against any and all
claims, liabilities, losses, damages, costs and expenses (including court costs,
expert fees and reasonable attorney’s fees) in connection

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therewith, and Purchaser shall be entitled to receive (and Seller hereby assigns
to Purchaser all of Seller’s rights to) all proceeds, received from such holders
in connection with such Preferential Rights.
(b)    Prior to Closing, should any Third Party bring any suit, action or other
proceeding seeking to restrain, enjoin or otherwise prohibit the consummation of
the transactions contemplated hereby in connection with a claim to enforce
Preferential Rights, the Assets or portion thereof subject to such suit, action
or other proceeding shall be excluded from the Assets transferred at Closing and
the Purchase Price shall be reduced by the Allocated Value of such excluded
Assets or portions thereof. Promptly after the suit, action or other proceeding
is dismissed or settled or a judgment is rendered in favor of Seller, as
applicable, Seller shall sell to Purchaser, and Purchaser shall purchase from
Seller, all such Assets or portions thereof not being sold to the Third Party
for a Purchase Price equal to the Allocated Value of such Assets or portions
thereof, adjusted as provided in ‎Section 2.2.
Section 7.8    Tax Matters.
(a)    Subject to the provisions of ‎Section 12.3, Seller shall (i) be
responsible for all Asset Taxes related to the ownership or operation of the
Assets that are attributable to any taxable period, or portion thereof, that
ends at or prior to the Effective Time and (ii) indemnify and hold harmless
Purchaser from and against such Asset Taxes (to the extent not already paid by
Seller to Purchaser pursuant to ‎Section 7.8‎(c) or borne by Seller as a result
of the adjustment to Purchase Price pursuant to ‎Section 2.2(a)(viii). Purchaser
shall (i) be responsible for all other Asset Taxes related to the ownership or
operation of the Assets. and (ii) indemnify and hold harmless Seller from and
against such Assets Taxes (to the extent not already paid by Purchaser to Seller
pursuant to ‎Section 7.8‎(c) or borne by Purchaser as a result of the adjustment
to Purchase Price pursuant to ‎Section 2.2(a)(xii)). For purposes of determining
these allocations and the allocations described in ‎Section 2.2, (i) Asset Taxes
that are attributable to the severance or production of Hydrocarbons (other than
such Asset Taxes described in clause (iii), below) shall be allocated to the
period in which the severance or production giving rise to such Asset Taxes
occurred, (ii) Asset Taxes that are based upon or related to sales or receipts
or imposed on a transactional basis (other than such Asset Taxes described in
clause (i) or (iii)), shall be allocated to the period in which the transaction
giving rise to such Asset Taxes occurred, and (iii) Asset Taxes that are ad
valorem, property or other Asset Taxes imposed on a periodic basis pertaining to
a taxable period beginning before and ending after the Effective Time shall be
allocated between the portion of such taxable period ending immediately prior to
the Effective Time and the portion of such taxable period beginning at the
Effective Time by prorating each such Asset Tax based on the number of days in
the applicable taxable period that occur before the date on which the Effective
Time occurs, on the one hand, and the number of days in such taxable period that
occur on or after the date on which the Effective Time occurs, on the other
hand. For purposes of clause (iii) of the preceding sentence, the period for
such Asset Taxes shall begin on the date on which ownership of the applicable
Assets gives rise to liability for the particular Asset Tax and shall end on the
day before the next such date.

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(b)    Regardless of which Party is responsible for Asset Taxes pursuant to
‎Section 7.8‎(a), Seller shall handle payment to the appropriate Governmental
Body of all Asset Taxes related to the ownership or operation of the Assets
which are required to be paid prior to Closing (and shall file all Tax Returns
with respect to such Asset Taxes); provided, that to the extent such Asset Taxes
relate to the periods from and after the Effective Time, as determined pursuant
to ‎Section 7.8‎(a), such payment shall be on behalf of Purchaser, and promptly
following the Closing Date, following Seller’s request, Purchaser shall pay to
Seller any such Asset Taxes (but only to the extent that such amounts have not
already been accounted for under ‎Section 2.2). Purchaser shall handle payment
to the appropriate Governmental Body of all Asset Taxes related to the ownership
or operation of the Assets which are required to be paid after Closing (and
shall file all Tax Returns with respect to such Asset Taxes); provided, that in
the event that Seller is required by applicable Law to file a Tax Return with
respect to such Asset Taxes after the Closing Date which includes all or a
portion of a Tax period for which Purchaser is liable for such Asset Taxes,
following Seller’s request, Purchaser shall promptly pay to Seller all such
Asset Taxes allocable to the period or portion thereof beginning at or after the
Effective Time (but only to the extent that such amounts have not already been
accounted for under ‎Section 2.2).
(c)    If Seller or Purchaser (or an Affiliate of Seller or Purchaser) receives
a refund of any Taxes (whether by payment, credit offset or otherwise, with any
interest thereon) covered by ‎Section 7.8‎(a) that are paid by and required to
be borne by the other Party, the Party that received (or whose Affiliate
received) such refund shall promptly (but no later than thirty (30) days after
receipt) remit payment to such other Party of an amount equal to the refund
amount, with any interest thereon, less expenses incurred in obtaining such
refund, including all relevant documentation. Each Party shall cooperate with
the other and its Affiliates (at the request of such other Party or its
Affiliates) in order to take all reasonably necessary steps to claim any refund
to which it is entitled. Purchaser agrees to notify Seller promptly following
the discovery of a right to claim any refund to which Seller is entitled and
upon receipt of any such refund. In the event a Party has paid a refund to the
other Party pursuant to this ‎Section 7.8(c) and is subsequently required to
repay such refund to any Governmental Body, upon written request, the Party that
had received a payment under this ‎Section 7.8(c) shall promptly repay such
amount to the Party required to repay the refund to the Governmental Body.
(d)    Except to the extent required by applicable Laws, Purchaser shall not and
shall not permit its Affiliates to amend any Tax Return with respect to Taxes
for which Seller is liable under ‎Section 7.8‎(a). Any Tax Return prepared by
Purchaser for a taxable period, or portion thereof, beginning before the
Effective Time shall (except as otherwise required by applicable Laws) be
prepared in accordance with Seller’s prior practice and shall not be filed
without Seller’s written consent (not to be unreasonably withheld, conditioned
or delayed) after providing Seller a copy thereof reasonably in advance of the
due date for filing such Tax Returns. In the event that Seller is required by
applicable Law to file any Tax Return with respect to Taxes for which Purchaser
is responsible hereunder, Seller shall prepare and timely file such Tax Return
but shall not file such Tax Return without Purchaser’s written consent (not to
be unreasonably withheld, conditioned or delayed) after providing

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Purchaser a copy thereof reasonably in advance of the due date for filing such
Tax Return. If Seller or Purchaser disputes any item on a Tax Return described
in this ‎Section 7.8(d), it shall notify the other Party of such disputed item
(or items) and the basis for its objection. The Parties shall act in good faith
to resolve any such dispute prior to the date on which the relevant Tax Return
is required to be filed. Purchaser and Seller shall each provide the other with
all information reasonably necessary to prepare any Tax Return described in this
‎Section 7.8(d).
(e)    After the Closing, Purchaser shall notify Seller in writing within five
(5) days of the receipt of the notice of any proposed assessment or commencement
of any Asset Tax audit or administrative or judicial proceeding and of any Asset
Tax demand or claim on Purchaser or any of its Affiliates that, if determined
adversely to the taxpayer or after the lapse of time, could reasonably be
grounds for indemnification by Seller; provided, that failure to timely provide
such notice shall not affect the right of Purchaser’s indemnification hereunder,
except to the extent Seller is prejudiced by such delay or omission. Such notice
shall contain factual information describing the asserted Asset Tax liability in
reasonable detail and shall include copies of any notice or other document
received from any Governmental Body in respect of any such asserted Asset Tax
liability. Seller shall control any proceeding with respect to any Asset Taxes
or Tax Returns (“Tax Audit”) for any item relating to a Tax for which Seller is
reasonably likely to be solely responsible pursuant to ‎Section 7.8‎(a). Neither
Purchaser nor Seller shall settle any such Tax Audit in a way that would
adversely affect the other Party without the other Party’s written consent,
which consent the other Party shall not unreasonably withhold, delay or
condition. Purchaser and Seller shall each provide the other with all
information reasonably necessary to conduct a Tax Audit with respect to Asset
Taxes or the transactions contemplated by this Agreement. For the avoidance of
doubt, the provisions of this ‎Section 7.8‎(e) (and not the provisions of
‎Section 11.3) shall exclusively govern the Parties’ rights and obligations with
respect to Tax Audits.
(f)    If, prior to Closing, Seller has paid on behalf of other working interest
owners, royalty interest owners, overriding royalty interest owners and other
interest owners in the Assets, ad valorem, property, severance, production and
similar Taxes imposed on the ownership of the Assets or the production of
Hydrocarbons produced from such Assets for Tax periods or portions thereof after
the Effective Time (such amounts, “Post-Effective Time Tax Advances”) and has
not recouped such Post-Effective Time Tax Advances before the Closing Date from
such working interest owners, royalty interest owners, overriding royalty
interest owners and other interest owners in the Assets, Purchaser shall, at
Seller’s written request, use its commercially reasonable efforts to take such
actions requested by Seller, at Seller’s expense, to recoup the Post-Effective
Time Tax Advances from such other working interest owners, royalty interest
owners, overriding royalty interest owners and other interest owners in such
Assets and shall promptly remit any such recovered Post-Effective Time Tax
Advance amounts to Seller.
(g)    Purchaser and Seller agree that either or both of Seller and Purchaser
may elect to treat the acquisition or sale of the Assets as an exchange of
like-kind property under

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Section 1031 of the Code (an “Exchange”) to the extent permitted by applicable
Law; provided that the Closing shall not be delayed by reason of the Exchange.
Upon request, each Party agrees to use reasonable efforts to cooperate with the
other Party in the completion of such an Exchange including an Exchange subject
to the procedures outlined in Treasury Regulation Section 1.1031(k)-1 and/or
Internal Revenue Service Revenue Procedure 2000-37. Each of Seller and Purchaser
shall have the right at any time prior to Closing to assign all or a part of its
rights under this Agreement to a qualified intermediary (as that term is defined
in Treasury Regulation Section 1.1031(k)-1(g)(4)(iii)) or an exchange
accommodation titleholder (as that term is defined in Internal Revenue Service
Revenue Procedure 2000-37) to effect an Exchange. Each Party acknowledges and
agrees that neither an assignment of a Party’s rights under this Agreement nor
any other actions taken by a Party or any other Person in connection with the
Exchange shall release either Party from, or modify, any of its liabilities and
obligations (including indemnity obligations to each other) under this
Agreement, and neither Party makes any representations as to any particular tax
treatment that may be afforded to the other Party by reason of such assignment
or any other actions taken in connection with the Exchange. The Party electing
to treat the acquisition or sale of the Assets as an Exchange shall be obligated
to pay all additional costs incurred hereunder as a result of the Exchange, and
in consideration for the cooperation of the other Party, the Party electing
Exchange treatment shall agree to pay all costs associated with the Exchange and
to indemnify and hold the other Party, its Affiliates, and their respective
former, current and future partners, members, shareholders, owners, officers,
directors, managers, employees, agents and representatives harmless from and
against any and all Damages arising out of, based upon, attributable to or
resulting from the Exchange or transactions or actions taken in connection with
the Exchange that would not have been incurred by the other Party but for the
electing Party’s Exchange election.
Section 7.9    Special Warranty of Title.
(a)    The Conveyance shall contain a covenant of Seller to warrant and defend
Defensible Title to the Properties after Closing from and against the lawful
claims of Third Parties arising by, through or under Seller, but not otherwise
(the “Special Warranty”). All claims in respect of the Special Warranty must be
brought under ‎Section 11.2(c)(iv) and are subject to the survival period set
forth in ‎Section 11.4(a).
(b)    Notwithstanding anything to the contrary in this Agreement, Seller shall
have no liability for breach of the Special Warranty for matters for which and
to the extent Purchaser had knowledge prior to the Title Claim Date that such
matters constituted a Title Defect hereunder and failed to assert the same under
this Agreement prior to the Title Claim Date.
Section 7.10    Suspended Proceeds. Seller shall transfer and remit to
Purchaser, in the form of an adjustment to the Purchase Price, all Suspended
Proceeds. Purchaser shall be solely responsible for the proper distribution of
such Suspended Proceeds to the Person or Persons which or who are entitled to
receive payment of the same.

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Section 7.11    Further Assurances. After Closing, Seller and Purchaser each
agrees to take such further actions and to execute, acknowledge and deliver all
such further documents as are reasonably requested by the other Party for
carrying out the purposes of this Agreement or of any document delivered
pursuant to this Agreement.
Section 7.12    Change of Name. Unless otherwise authorized by Seller in
writing, as promptly as practicable, but in any case within thirty (30) days
after the Closing Date, Purchaser shall eliminate the name “Hunt Oil” and any
variants thereof from the Assets acquired pursuant to this Agreement and, except
with respect to such grace period for eliminating existing usage, shall have no
right to use any Marks belonging to Seller or any of its Affiliates.
Section 7.13    Replacement of Bonds; Letters of Credit and Guarantees.
(a)    Purchaser acknowledges that none of the bonds, letters of credit and
guarantees, if any, posted by Seller or its Affiliates with any Governmental
Bodies and/or relating to the Assets, including those set forth in Schedule
‎7.13‎(a) (the “Governmental Bonds”) are to be transferred to Purchaser. On or
before Closing, Purchaser shall obtain, or cause to be obtained in the name of
Purchaser, replacements for such Governmental Bonds to the extent such
replacements are necessary (i) for Purchaser’s ownership of the Assets, and (ii)
to permit the cancellation of the Governmental Bonds posted by Seller and/or any
Affiliate of Seller with respect to the Assets. In addition, at or prior to
Closing, Purchaser shall deliver to Seller evidence of the posting of bonds or
other security with all applicable Governmental Bodies meeting the requirements
of such Governmental Bodies to own and, if applicable, operate the Assets.
(b)    At Seller’s request, Purchaser shall cooperate with Seller in order to
cause Seller and its Affiliates to be released, as of the Closing Date, from all
guarantees, performance bonds, letters of credit, escrow accounts and other
forms of financial assurance previously put in place by Seller with Third
Parties that are not Governmental Bodies in connection with its ownership and
operation of the Assets and that are set forth in Schedule ‎7.13(b) (the
“Guarantees”). Without limiting the foregoing, if required by a counterparty to
any Guarantee, Purchaser shall, and, if applicable, shall cause its Affiliates
to, provide, effective as of the Closing Date or such later date as may be
required by such counterparty, substitute guarantee or similar arrangements for
all post-Closing periods covered by the Guarantees, which guarantee or similar
arrangements shall (i) constitute a type of security, and (ii) be provided by a
party whose creditworthiness is, in each case, equivalent to or better than that
required by the counterparty to such Guarantee. In the event that any
counterparty to any such Guarantee does not release Seller or any of its
Affiliates or in the event that any Governmental Body does not permit the
cancellation of any Governmental Bond posted by Seller and/or any Affiliate of
Seller with respect to the Assets, then, from and after Effective Time,
Purchaser shall indemnify Seller or any Affiliate of Seller, as applicable,
against all amounts thereafter incurred by Seller or any Affiliate of Seller, as
applicable, under such Guarantee or such Governmental Bond (and all costs
incurred in connection with such Guarantee or such Governmental Bond) if
applicable to the Assets acquired by Purchaser. Notwithstanding anything to the
contrary contained in this

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Agreement, any cash placed in escrow by Seller or any Affiliate of Seller
pursuant to the Guarantees must be returned to Seller as soon as practicable and
shall be deemed an Excluded Asset for all purposes hereunder.
Section 7.14    Audits and Filings.
(a)    Seller acknowledges that Purchaser and its Affiliates may be required to
include statements of revenues and direct operating expenses and other financial
information relating to the Assets for one or more years or interim periods
ending on or prior to the Closing (collectively, the “Financial Statements”),
and that such Financial Statements may be required to be audited or reviewed in
accordance with GAAP and may need to comply with the requirements of the
Securities Exchange Commission for inclusion or incorporation by reference into
one or more registration statements, reports or other documents (collectively,
“SEC Documents”) required to be filed by Purchaser or its Affiliates under the
Securities Act of 1933, as amended (the “Securities Act”), the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and the rules set forth
in Regulation S-X, or other rules promulgated thereunder or in an offering
memorandum relating to a private placement of securities exempt from
registration under the Securities Act (“Offering Document”). From and after the
Execution Date, Seller shall, shall cause its Affiliates to, and shall use
commercially reasonable efforts to cause its accountants and counsel to,
cooperate with Purchaser, its Affiliates and their respective agents, advisors
and representatives in preparing and obtaining the Financial Statements to the
extent that Seller or such other Persons has such information available or can
obtain such information using commercially reasonable efforts. Further, from and
after the Execution Date and following reasonable advance notice from Purchaser
to Seller, Seller shall, shall cause its Affiliates to, and shall use
commercially reasonable efforts to cause its accountants and counsel to, make
available during normal business hours to Purchaser and its Affiliates and their
agents, advisors and representatives reasonable access to any and all books,
records, information and documents that are attributable to the Assets in any of
Seller’s or any of its Affiliates’ possession or control if reasonably required
by Purchaser or its Affiliates in connection with the creation and audit or
review of the Financial Statements. Purchaser shall be responsible, and
obligated to promptly reimburse Seller, for any and all reasonable costs and
expenses incurred by Seller or its Affiliates to the extent associated with
preparing and obtaining the Financial Statements pursuant to this ‎Section 7.14
and otherwise complying with the provisions of this ‎Section 7.14.
(b)    To the extent reasonably requested by Purchaser, Seller shall use its
commercially reasonable efforts to obtain representation letters and similar
documents (in each case, in form and substance customary for representation
letters provided to external audit firms by management of a company whose
financial statements are the subject of an audit or review used in filings of
acquired company financial statements under the Exchange Act) from applicable
personnel of Seller and its Affiliates as may be required in connection with the
preparation and audit or review of the Financial Statements or delivery of a
“comfort letter” for a securities offering by Purchaser or its Affiliates and
solely to the extent related to the Assets; provided, that Purchaser shall
provide customary indemnity for any officer

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or employee of Seller or its Affiliates executing any such representation
letter. To the extent requested by Purchaser, Seller shall use its commercially
reasonable efforts to request that each independent audit firm that audits or
reviews the Financial Statements provide consents necessary for the inclusion or
incorporation by reference of the Financial Statements in any SEC Document or
any Offering Document in which the Financial Statements are required to be
included or incorporated.
(c)    All of the information provided by Seller or its Affiliates pursuant to
this ‎Section 7.14 is given without any representation or warranty, express or
implied, and no Seller Indemnitee shall have any liability or responsibility
with respect thereto.
(d)    For a period of three (3) years following the Closing Date, Seller shall,
and shall cause its respective Affiliates to, retain all books, records,
information and documents in their or their Affiliates’ possession that are
necessary to prepare and audit the Financial Statements, except to the extent
originals or copies thereof are transferred to Purchaser in connection with
Closing.
Section 7.15    Tax Partnership Matters
ARTICLE 8

CONDITIONS TO CLOSING
Section 8.1    Conditions of Seller to Closing. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject, at the
option of Seller, to the satisfaction on or prior to Closing of each of the
following conditions:
(a)    Representations. The representations and warranties of Purchaser set
forth in ‎Article 6 shall be true and correct as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (other
than representations and warranties that refer to a specified date, which need
only be true and correct on and as of such specified date), except for such
breaches, if any, as would not individually have a Material Adverse Effect
(provided, that to the extent such representation or warranty is qualified by
its terms by materiality or Material Adverse Effect, such qualification in its
terms shall be inapplicable for purposes of this Section and the Material
Adverse Effect qualification contained in this ‎Section 8.1‎(a) shall apply in
lieu thereof);
(b)    Performance. Purchaser shall have performed and observed, in all material
respects, all covenants and agreements to be performed or observed by it under
this Agreement prior to or on the Closing Date;
(c)    Pending Litigation. No suit, action or other proceeding by any
Governmental Body seeking to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement shall be pending
before any Governmental Body;

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(d)    Deliveries. Purchaser shall have delivered to Seller duly executed
counterparts of the Conveyances and the other documents and certificates to be
delivered by Purchaser under ‎Section 9.3;
(e)    Title Defects, Casualty or Condemnation and Environmental Liabilities.
The aggregate amount of (i) the sum of all Title Defect Amounts for actual Title
Defects covered by ‎Section 3.4(d)(i) or (ii) (excluding Preferential Rights
treated as Title Defects under ‎Section 3.5), less the sum of all Title Benefit
Amounts for actual Title Benefits, as determined under ‎Article 3, plus (ii) the
sum of all adjustments to the Purchase Price for Environmental Liabilities
covered by ‎Section 4.4(a)(i) or (ii), plus (iii) the aggregate amount of the
Allocated Values of all Properties excluded from the Properties to be conveyed
to Purchaser at Closing pursuant to ‎Section 3.6 shall not exceed an amount
equal to 20% of the Purchase Price; and
(f)    Payment. Purchaser shall be ready, willing and able to pay the Closing
Payment.
Section 8.2    Conditions of Purchaser to Closing. The obligations of Purchaser
to consummate the transactions contemplated by this Agreement are subject, at
the option of Purchaser, to the satisfaction on or prior to Closing of each of
the following conditions:
(a)    Representations. The representations and warranties of Seller set forth
in ‎Article 5 shall be true and correct as of the date of this Agreement and as
of the Closing Date as though made on and as of the Closing Date (other than
representations and warranties that refer to a specified date, which need only
be true and correct on and as of such specified date), except for such breaches,
if any, as would not individually have a Material Adverse Effect (provided, that
to the extent such representation or warranty is qualified by its terms by
materiality or Material Adverse Effect, such qualification in its terms shall be
inapplicable for purposes of this Section and the Material Adverse Effect
qualification contained in this ‎Section 8.2‎(a) shall apply in lieu thereof);
(b)    Performance. Seller shall have performed and observed, in all material
respects, all covenants and agreements to be performed or observed by it under
this Agreement prior to or on the Closing Date;
(c)    Pending Litigation. No suit, action or other proceeding by any
Governmental Body seeking to restrain, enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement shall be pending
before any Governmental Body;
(d)    Deliveries. Seller shall be ready, willing and able to deliver to
Purchaser duly executed counterparts of the Conveyances and the other documents
and certificates to be delivered by Seller under ‎Section 9.2; and
(e)    Title Defects, Casualty or Condemnation and Environmental Liabilities.
The aggregate amount of (i) the sum of all Title Defect Amounts for actual Title
Defects covered by ‎Section 3.4(d)(i) or (ii) (excluding Preferential Rights
treated as Title Defects under ‎Section 3.5), less the sum of all Title Benefit
Amounts for actual Title Benefits, as determined

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under ‎Article 3, plus (ii) the sum of all adjustments to the Purchase Price for
Environmental Liabilities covered by ‎Section 4.4(a)(i) or (ii), plus (iii) the
aggregate amount of the Allocated Values of all Properties excluded from the
Properties to be conveyed to Purchaser at Closing pursuant to ‎Section 3.6 shall
not exceed an amount equal 20% of the Purchase Price.
ARTICLE 9

CLOSING
Section 9.1    Time and Place of Closing.
(a)    Consummation of the purchase and sale transaction as contemplated by this
Agreement (the “Closing”), shall, unless otherwise agreed to in writing by
Purchaser and Seller, take place at the offices of Seller at 1900 N Akard St,
Dallas, TX 75201, at 10:00 a.m. local time, on the earlier to occur of (i) March
1, 2018 (the “Target Closing Date”) or (ii) if all conditions in ‎Article 8 to
be satisfied prior to Closing have not yet been satisfied or waived on such
date, as soon as thereafter as such conditions have been satisfied or waived,
subject to the rights of the parties under ‎Article 10.
(b)    The date on which the Closing occurs is herein referred to as the
“Closing Date.”
Section 9.2    Obligations of Seller at Closing. At the Closing, upon the terms
and subject to the conditions of this Agreement, Seller shall deliver or cause
to be delivered to Purchaser the following:
(a)    the Conveyance, in sufficient duplicate originals to allow recording in
all appropriate jurisdictions and offices, duly executed by Seller;
(b)    the Preliminary Settlement Statement, duly executed by Seller, in
accordance with ‎Section 9.4(a);
(c)    to the extent applicable assignments, on appropriate forms, of state and
of federal leases comprising portions of the Assets, duly executed by Seller;
(d)    to the extent required under any law or Governmental Body, Seller and
Purchaser shall deliver federal and state change of operator forms designating
Purchaser as the operator of the Properties currently operated by Seller;
(e)    letters-in-lieu of division or transfer orders covering the Assets that
are prepared and provided by Purchaser and reasonably satisfactory to Seller to
reflect the transactions contemplated hereby, duly executed by Seller;
(f)    duly executed and acknowledged (where applicable) releases and
terminations of any mortgages, deeds of trust, security interests, and other
arrangements (with the exception of Memorandums of Operating Agreements and
similar documents filed of record in the ordinary course for the purpose of
providing notice to Third Parties of the

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liens and security interests provided for therein) substantially equivalent
thereto put in place by Seller or its Affiliates and burdening the Assets, in
sufficient counterparts to facilitate recording in each county in which the
Assets are located, as applicable, or (for terminations of financing statements)
filing with the Secretary of State in the State where Seller is organized;
(g)    a certificate duly executed by an authorized officer of Seller, dated as
of Closing, certifying on behalf of Seller that the conditions set forth in
Sections ‎8.2(a) and ‎8.2(b) have been fulfilled; and
(h)    an executed statement described in Treasury Regulation §1.1445-2(b)(2)
certifying that Seller is not a foreign person within the meaning of the
Internal Revenue Code of 1986, as amended;
(i)    the Transition Services Agreement, duly executed by Seller; and
(j)    any other agreements, instruments and documents that are required by
other terms of this Agreement to be executed and/or delivered at Closing or
reasonably necessary to effectuate the transactions contemplated by this
Agreement.
Section 9.3    Obligations of Purchaser at Closing. At the Closing, upon the
terms and subject to the conditions of this Agreement, Purchaser shall deliver
or cause to be delivered to Seller the following:
(a)    a wire transfer of the Closing Payment in same-day funds;
(b)    the Preliminary Settlement Statement, duly executed by Purchaser;
(c)    the Conveyance, duly executed by Purchaser, in sufficient duplicate
originals to allow recording in all appropriate jurisdictions and offices;
(d)    to the extent set forth on Schedule ‎7.13(a), copies of all bonds,
letters of credit and guarantees required to be obtained by Purchaser under
‎Section 7.13 or other written evidence that Purchaser is not required under
‎Section 7.13 to obtain such items;
(e)    to the extent required under any law or Governmental Body, Seller and
Purchaser shall deliver federal and state change of operator forms designating
Purchaser as the operator of the Properties currently operated by Seller;
(f)    letters-in-lieu of division and transfer orders covering the Assets, duly
executed by Purchaser;
(g)    a certificate by an authorized officer of Purchaser, dated as of Closing,
certifying on behalf of Purchaser that the conditions set forth in Sections
‎8.1(a) and ‎8.1(b) have been fulfilled;
(h)    the Transition Services Agreement, duly executed by Purchaser; and

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(i)    any other agreements, instruments and documents that are required by
other terms of this Agreement to be executed and/or delivered at Closing or
reasonably necessary to effectuate the transactions contemplated by this
Agreement.
Section 9.4    Closing Payment and Post-Closing Purchase Price Adjustments.
(a)     Not later than five (5) Business Days prior to the Closing Date, Seller
shall prepare and deliver to Purchaser, based upon the best information
available to Seller, acting in good faith, a preliminary settlement statement
(along with reasonable supporting information and calculations) estimating the
Adjusted Purchase Price after giving effect to all Purchase Price adjustments
set forth in ‎Section 2.2, the Deposit, and any amounts placed in the Escrow
Account pursuant to ‎Section 3.4(c) (the “Preliminary Settlement Statement”). In
the event that Purchaser objects to the Preliminary Settlement Statement and
Seller and Purchaser cannot come to a resolution with respect to Purchaser’s
objection, Seller’s Preliminary Settlement Statement (with any such
modifications agreed by the Parties) shall be used for the purposes of Closing
and the estimate delivered in accordance with this ‎Section 9.4‎(a) shall
constitute the dollar amount to be paid by Purchaser to Seller at the Closing
(the “Closing Payment”).
(b)    No earlier than sixty (60) days after the Closing but not later than
ninety (90) days following the Closing Date, Seller shall prepare, with
Purchaser’s cooperation, and deliver to Purchaser a statement (the “Final
Settlement Statement”) setting forth the final calculation of the Adjusted
Purchase Price and showing the calculation of each adjustment, based, to the
extent possible on actual credits, charges, receipts and other items before and
after the Effective Time and taking into account (x) adjustments provided for in
this Agreement, and (y) any amounts held in and/or released from the Escrow
Account pursuant to ‎Section 3.4(c) and ‎Section 4.4(c). Seller shall at
Purchaser’s request supply reasonable documentation available to support any
credit, charge, receipt or other item. As soon as reasonably practicable but not
later than the thirtieth (30th) day following receipt of Seller’s statement
hereunder, Purchaser shall deliver to Seller a written report containing any
changes that Purchaser proposes be made to such Final Settlement Statement;
provided that, except for any such changes timely delivered by Purchaser, the
Final Settlement Statement shall be deemed agreed and final. The Parties shall
undertake to agree on the final statement of the Adjusted Purchase Price no
later than one hundred thirty (130) days after the Closing Date. In the event
that the Parties cannot agree on the Adjusted Purchase Price within one hundred
thirty (130) days after the Closing, such determination will be automatically
referred to an independent expert of the Parties’ choosing with at least ten
(10) years of oil and gas accounting experience for arbitration (the
“Independent Expert”). If the Parties are unable to agree upon an Independent
Expert, then such Independent Expert shall be selected by any Federal District
Court Judge or State District Court Judge in Houston, Texas. The Independent
Expert shall conduct the arbitration proceedings in Houston, Texas in accordance
with the Commercial Arbitration Rules of the American Arbitration Association,
to the extent such rules do not conflict with the terms of this Section. Seller
and Purchaser shall each present to the Independent Expert, with a simultaneous
copy to the other Party, a single written statement of its position on the
Adjusted Purchase Price, together with a

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copy of this Agreement and any supporting material that such Party desires to
furnish, not later than ten (10) Business Days after appointment of the
Independent Expert. The Independent Expert’s determination shall be made within
thirty (30) days after submission of the matters in dispute and shall be final
and binding on both Parties, without right of appeal. In determining the proper
amount of any adjustment to the Purchase Price, the Independent Expert shall
accept Seller’s position or Purchaser’s position with respect to each disputed
matter, and the Independent Expert shall not increase the Purchase Price more
than the increase proposed by Seller nor decrease the Purchase Price more than
the decrease proposed by Purchaser with respect to each such matter, as
applicable. The Independent Expert shall act as an expert for the limited
purpose of determining the specific disputed matters submitted by either Party
and may not award damages or penalties to either Party with respect to any
matter. Each Party shall bear its own legal fees and other costs of presenting
its case. Each Party shall bear one-half of the costs and expenses of the
Independent Expert. Within ten (10) days after the date on which the Parties or
the Independent Expert, as applicable, finally determines the disputed matters,
(i) Purchaser shall pay to Seller the amount by which the Adjusted Purchase
Price exceeds the Closing Payment or (ii) Seller shall pay to Purchaser the
amount by which the Closing Payment exceeds the Adjusted Purchase Price, as
applicable. Any post-closing payment pursuant to this ‎Section 9.4 shall bear
interest from the Closing Date to the date of payment at the Agreed Interest
Rate.
(c)    All payments made or to be made hereunder to Seller shall be by
electronic transfer of immediately available funds to the account of Seller
pursuant to the wiring instructions reflected in Schedule ‎9.4(c) or as
separately provided in writing. All payments made or to be made hereunder to
Purchaser shall be by electronic transfer of immediately available funds to a
bank and account specified by Purchaser in writing to Seller.
ARTICLE 10

TERMINATION
Section 10.1    Termination. Subject to ‎Section 10.2, this Agreement may be
terminated: (a) at any time prior to Closing by the mutual prior written consent
of Seller and Purchaser; (b) by Seller or Purchaser if Closing has not occurred
on or before the Outside Date; (c) by the Purchaser, if Seller has materially
breached this Agreement and such breach causes any of the conditions to Closing
set forth in ‎Section 8.2 not to be satisfied as of the Target Closing Date;
provided, however, that in the case of a breach that is capable of being cured,
the Seller shall have a period of ten (10) days following receipt of such notice
to attempt to cure the breach and the termination under this ‎Section 10.1(c)
shall not become effective unless the Seller fails to cure such breach prior to
the end of such ten (10) day period; (d) by the Seller if the Purchaser has
materially breached this Agreement and such breach causes any of the conditions
to Closing set forth in ‎Section 8.1 not to be satisfied as of the Target
Closing Date; provided, however, that in the case of a breach that is capable of
being cured, the Purchaser shall have a period of ten (10) days following
receipt of such notice to attempt to cure the breach and the termination under
this ‎Section 10.1(d) shall not become effective unless the Purchaser fails to
cure such breach prior to the end of such ten (10) day period;

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or (e) by Seller if the Purchaser fails to pay the Deposit on or before 5:00
p.m. (Central Time) on the second (2nd) Business Day after the Execution Date;
provided, however, that termination under clauses (b), (c), (d) or (e) shall not
be effective until the Party electing to terminate has delivered written notice
to the other Party of its election to so terminate; provided further, that no
Party shall have the right to terminate this Agreement pursuant to clauses (c)
or (d) above, if such Party or its Affiliates are at such time in material
breach of this Agreement; provided further, that a Party shall not have the
right to terminate under clause (b) if the Closing has not occurred as a result
of the terminating Party’s breach of its representations, warranties or
covenants in this Agreement.
Section 10.2    Effect of Termination. If this Agreement is terminated pursuant
to ‎Section 10.1, except as set forth in this ‎Section 10.2 and in ‎Section
10.3, this Agreement shall be of no further force or effect (except for the
provisions of this ‎Article 10, Sections ‎5.6, ‎6.5, ‎7.5(d), ‎7.6, ‎11.6 (other
than clause (b)), ‎12.2, ‎12.4, ‎12.5, ‎12.6, ‎12.7, ‎12.8, ‎12.9, ‎12.10,
‎12.11, ‎12.12, ‎12.13, ‎12.14, ‎12.15, ‎12.16, ‎12.17 and ‎12.18 and ‎Article
13 (as to definitions used in the other surviving provisions only)), all of
which shall continue in full force and effect in accordance with their terms)
and Seller shall be free immediately to enjoy all rights of ownership of the
Assets and to sell, transfer, encumber or otherwise dispose of the Assets to any
Person without any restriction or limitation under this Agreement. Subject to
‎Section 10.3, the termination of this Agreement under ‎Section 10.1(b),
‎10.1(c), ‎10.1(d), or 10.1(e) shall not relieve any Party from liability to the
other Party at Law or in equity for any failure to perform or observe in any
material respect any of its agreements or covenants contained herein which are
to be performed or observed at or prior to Closing.
Section 10.3    Distribution of Deposit Upon Termination.
(a)    If Seller is entitled to terminate this Agreement pursuant to ‎Section
10.1(b) (in the event that Purchaser does not also have the right to terminate
under ‎Section 10.1(b)) or ‎10.1(d) and Seller has performed or is ready,
willing and able to perform all of its agreements and covenants contained herein
which are to be performed or observed at or prior to Closing, then Seller may
elect to:
(i)    terminate this Agreement and receive the Deposit from the Escrow Agent
(and the Parties shall instruct the Escrow Agent accordingly within five (5)
Business Days of such termination) as liquidated damages and as Seller’s sole
and exclusive remedy for any breach or failure to perform by Purchaser under
this Agreement, and all other remedies (except those under ‎Section 7.6 and
under the Confidentiality Agreement) are hereby expressly waived by Seller, and
upon such termination (A) Seller and Purchaser agree upon the Deposit as
liquidated damages due to the difficulty and inconvenience of measuring actual
damages and the uncertainty thereof, and Seller and Purchaser agree that such
amount would be a reasonable estimate of Seller’s loss in the event of any such
breach or failure to perform by Purchaser and (B) Seller shall be free
immediately to enjoy all rights of ownership of the Assets and to sell,
transfer, encumber or otherwise dispose of the Assets to any Person without any
restriction or limitation under this Agreement; or
(ii)    in lieu of termination of this Agreement, seek specific performance of
this Agreement, it being specifically agreed that monetary damages will not be

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sufficient to compensate Seller if Seller determines the same in its sole
discretion. If Seller elects to seek specific performance of this Agreement
pursuant to this ‎Section 10.3(a)(ii), (A) the Escrow Agent shall retain the
Deposit, until a non-appealable final judgment or award on Seller’s claim for
specific performance is rendered, at which time the Deposit shall be applied as
provided in ‎Section 2.4 of this Agreement and (B) if Seller is not granted
specific performance, Seller shall have the right to terminate this Agreement as
set forth in ‎Section 10.3(a)(i).
(b)    If Purchaser is entitled to terminate this Agreement pursuant to Section
‎10.1(c) and Purchaser has performed or is ready, willing and able to perform
all of its agreements and covenants contained herein which are to be performed
or observed at or prior to Closing, then Purchaser may elect to:
(i)    terminate this Agreement, receive the Deposit from the Escrow Agent (and
the Parties shall instruct the Escrow Agent accordingly within five (5) Business
Days of such termination) and seek actual damages against Seller not to exceed
the amount of the Deposit, and Seller shall be free immediately to enjoy all
rights of ownership of the Assets and to sell, transfer, encumber or otherwise
dispose of the Assets to any Person without any restriction or limitation under
this Agreement; or
(ii)    in lieu of termination of this Agreement, Purchaser shall be entitled to
seek specific performance of this Agreement, it being specifically agreed that
monetary damages will not be sufficient to compensate Purchaser if Purchaser
determines the same in its sole discretion. If Purchaser elects to seek specific
performance of this Agreement pursuant to this ‎Section 10.3(b)(ii), (A) the
Escrow Agent shall retain the Deposit, until a non-appealable final judgment or
award on Purchaser’s claim for specific performance is rendered, at which time
the Deposit shall be distributed as provided in ‎Section 2.4 of this Agreement
or (B) if Purchaser is not granted specific performance, Purchaser shall have
the right to terminate this Agreement as set forth in ‎Section 10.3(b)(i).
(c)    If this Agreement terminates for reasons other than those set forth in
‎Section 10.3(a), ‎Section 10.3(b) or Section 10.1(e), the Parties shall
instruct the Escrow Agent to return the Deposit to Purchaser, free of any claims
by Seller or any other Person with respect thereto, within five (5) Business
Days of termination, and each Party shall have no further liability hereunder of
any nature whatsoever to the other Party, including any liability for Damages
(except for the provisions of Sections ‎5.6, ‎6.5, ‎7.6, ‎10.2 and ‎12.4 which
shall continue in full force and effect in accordance with their terms), and
Seller shall be free immediately to enjoy all rights of ownership of the Assets
and to sell, transfer, encumber or otherwise dispose of the Assets to any Person
without any restriction or limitation under this Agreement.
(d)    If this Agreement terminates pursuant to Section 10.1(e), each Party
shall have no further liability hereunder of any nature whatsoever to the other
Party, including any liability for Damages (except for the provisions of
Sections ‎5.6, ‎6.5, ‎7.6, ‎10.2 and ‎12.4 which shall continue in full force
and effect in accordance with their terms), and Seller shall

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be free immediately to enjoy all rights of ownership of the Assets and to sell,
transfer, encumber or otherwise dispose of the Assets to any Person without any
restriction or limitation under this Agreement.
ARTICLE 11

POST-CLOSING OBLIGATIONS; INDEMNIFICATION;
LIMITATIONS; DISCLAIMERS AND WAIVERS
Section 11.1    Receipts.
(a)    Except as otherwise provided in this Agreement, any production from or
attributable to the Assets (and all products and proceeds attributable thereto)
and any other income, proceeds, receipts and credits attributable to the Assets
which are not reflected in the adjustments to the Purchase Price following the
final adjustment pursuant to ‎Section 9.4(b) shall be treated as follows: (i)
all production from or attributable to the Assets (and all products and proceeds
attributable thereto) and all other income, proceeds, receipts and credits
earned with respect to the Assets to which Purchaser is entitled under ‎Section
1.4 shall be the sole property and entitlement of Purchaser, and, to the extent
received by Seller, Seller shall fully disclose, account for and remit the same
to Purchaser in each case within ten (10) days after receipt thereof; and (ii)
all production from or attributable to the Assets (and all products and proceeds
attributable thereto) and all other income, proceeds, receipts and credits
earned with respect to the Assets to which Seller is entitled under ‎Section 1.4
shall be the sole property and entitlement of Seller and, to the extent received
by Purchaser, Purchaser shall fully disclose, account for and remit the same to
Seller in each case within ten (10) days after receipt thereof.
(b)    Notwithstanding any other provisions of this Agreement to the contrary,
Seller shall be entitled to retain (and Purchaser shall not be entitled to any
decrease to the Purchase Price in respect of) all overhead charges it has
collected, billed or which shall be billed later, relating to the Seller
Operated Assets for the period from the Effective Time to the date Seller
relinquishes operatorship of the applicable Seller Operated Assets, even if
after the date of Closing.
Section 11.2    Assumption and Indemnification.
(a)    Without limiting Purchaser’s rights to indemnity under this ‎Article 11
and, if applicable, any indemnity entered into pursuant to ‎Section 3.4(d)(iii)
or ‎Section 4.4(a)(v), from and after the Closing, Purchaser shall assume and
hereby agrees to timely fulfill, perform, pay and discharge (or cause to be
fulfilled, performed, paid or discharged) all of the obligations and liabilities
of Seller, known or unknown, with respect to the Assets, regardless of whether
such obligations or liabilities arose prior to, on or after the Effective Time,
including but not limited to (i) obligations to furnish makeup gas according to
the terms of applicable gas sales, gathering or transportation contracts, (ii)
gas balancing obligations and other obligations arising from Imbalances, (iii)
obligations to pay Property Costs and other costs and expenses attributable to
the ownership or operation of the Assets,

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(iv) obligations to pay working interests, royalties, overriding royalties and
other interests held in suspense, including the Suspended Proceeds, (v)
obligations to plug or abandon wells and associated equipment and dismantle
structures, or re-plug previously abandoned wells, and to restore and/or
remediate the Assets in accordance with applicable agreements, Leases or Laws
(including Environmental Laws), (vi) any claims regarding the general method,
manner or practice of calculating or making royalty payments (or payments for
overriding royalties or similar burdens on production) with respect to the
Properties, (vii) to the extent disclosed on Schedule ‎5.11(b), continuing
obligations, if any, under any Contracts or other agreements pursuant to which
Seller or its Affiliates purchased or acquired Assets prior to the Closing and
(viii) all obligations and liabilities associated with or related to the
Exploration Wells (all of said obligations and liabilities, subject to the
exclusions below, herein being referred to as the “Assumed Obligations”);
provided that, notwithstanding anything to the contrary herein, Purchaser shall
not assume, and Seller shall retain, all of the Retained Obligations; provided,
further that to the extent a Retained Obligation ceases to be a Retained
Obligation it shall thereafter be an Assumed Obligation.
(b)    If Closing occurs, from and after Closing, except for Damages for which
Seller is required to indemnify Purchaser Indemnitees under ‎Section 11.2(c),
Purchaser shall indemnify, defend and hold harmless the Seller Indemnitees from
and against all Damages incurred or suffered by the Seller Indemnitees to the
extent:
(i)    caused by, arising out of, resulting from or relating to the Assumed
Obligations;
(ii)    caused by, arising out of or resulting from Purchaser’s breach of any of
Purchaser’s covenants or agreements that survive the Closing;
(iii)    caused by, arising out of or resulting from any breach of any
representation or warranty made by Purchaser contained in ‎Article 6 of this
Agreement or in the certificate delivered by Purchaser at Closing pursuant to
‎Section 9.3(g); or
(iv)    caused by, arising out of or resulting from any claims or actions
asserted by Persons (including Governmental Bodies) with respect to (A) any
condition affecting any Asset that violates or requires remediation under
Environmental Law, (B) any operations conducted on such Asset that violate any
Environmental Law or (C) any remediation required for an Asset under any
Environmental Law regardless of whether known or unknown, or whether
attributable to periods of time before, on or after the Effective Time.
EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER
SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT (EXCEPT FOR
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF SELLER INDEMNITEES.

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(c)    If Closing occurs, from and after Closing, Seller shall indemnify, defend
and hold harmless Purchaser Indemnitees against and from all Damages incurred or
suffered by Purchaser Indemnitees to the extent (the “Seller Indemnity
Obligations”):
(i)    caused by, arising out of or resulting from any breach of any of Seller’s
covenants or agreements that survive the Closing;
(ii)    caused by, arising out of or resulting from any breach of any
representation or warranty made by Seller contained in ‎Article 5 of this
Agreement or in the certificate delivered by Seller at Closing pursuant to
‎Section 9.2(g);
(iii)    caused by, arising out of, resulting from or related to the Retained
Obligations; or
(iv)    caused by, arising out of or resulting from any breach of the Special
Warranty.
EVEN IF SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER
SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT (EXCEPT FOR
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF PURCHASER INDEMNITEES.

(d)    Notwithstanding anything to the contrary contained in this Agreement,
except for the rights of the Parties under ‎Article 10, ‎Section 7.6, and
‎Section 7.8, including breaches of the Special Warranty in the Conveyance, this
‎Section 11.2 contains the Parties’ exclusive remedy against each other with
respect to breaches of this Agreement, including breaches of the representations
and warranties contained in Articles ‎5 and ‎6, the covenants and agreements
that survive the Closing pursuant to the terms of this Agreement and the
affirmations of such representations, warranties, covenants and agreements
contained in the certificates delivered by the Parties at Closing pursuant to
Sections ‎9.2(g) or ‎9.3(g), as applicable. Except for the rights and remedies
specifically contained in this ‎Section 11.2 and for the rights of the Parties
under ‎Article 10, ‎Section 7.6, and ‎Section 7.8, each Party (on behalf of
itself, each of the other Purchaser Indemnitees, in the case of Purchaser, and
the Seller Indemnitees, in the case of Seller, and their respective insurers and
successors in interest) releases, remises and forever discharges the other Party
(including, in the case of Purchaser, the Purchaser Indemnitees, and, in the
case of Seller, the Seller Indemnitees) from any and all suits, legal or
administrative proceedings, claims, remedies, demands, damages, losses, costs,
liabilities, interest, or causes of action whatsoever, in Law or in equity,
known or unknown, which such Parties might now or subsequently may have, based
on, relating to or arising out of this Agreement, the ownership, use or
operation of the Assets, or the condition, quality, status or nature of the
Assets, including rights to contribution under CERCLA, as amended, and under
other Environmental Laws, breaches of statutory or implied warranties, nuisance
or other tort actions, rights to punitive damages and common law rights of
contribution, rights under agreements between a Party and any Persons who are
Affiliates of such Party (except to the extent any such agreements constitute
Contracts), and rights under insurance maintained by a Party or any Person who
is an Affiliate of such

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Party, EVEN IF CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT
OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT (EXCEPT FOR THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) OF ANY RELEASED PERSON. NOTWITHSTANDING
ANYTHING TO THE CONTRARY HEREIN, (I) THE RIGHTS OF EACH PARTY RELATING TO AUDITS
UNDER ANY AGREEMENT BETWEEN OR AMONG SELLER OR ITS AFFILIATES ON THE ONE HAND
AND PURCHASER OR ITS AFFILIATES ON THE OTHER HAND RELATING TO THE DESIGNATED
AREA (INCLUDING ANY SUCH AGREEMENTS WITH THIRD PARTIES) VIS-À-VIS THE OTHER
PARTY, EXISTING IMMEDIATELY PRIOR TO THE EXECUTION DATE SHALL NOT BE PREJUDICED
OR OTHERWISE AFFECTED BY THE PROVISIONS OF THIS AGREEMENT AND (II) PURCHASER
SHALL HAVE THE RIGHT TO NET OUT ANY CONSULTANT EXPENSES (FOR WHICH, IF NOT FOR
THE TRANSACTIONS CONTEMPLATED HEREBY, SELLER OR ITS AFFILIATES WOULD OTHERWISE
BE RESPONSIBLE) INCURRED OR OTHERWISE PAID BY PURCHASER OR ITS AFFILIATES IN
CONNECTION WITH ANY SALES AND USE TAX AUDIT FROM ANY AMOUNTS RECOVERED THEREFROM
AND PAID TO SELLER.
(e)    “Damages,” for purposes of this Agreement, shall mean the amount of any
actual liability, loss, cost, diminution in value, expense, claim, demand,
notice of violation, investigation by any Governmental Body, administrative
proceeding, payment, charge, obligation, fine, penalty, deficiency, award or
judgment incurred or suffered by any Indemnified Party arising out of or
resulting from the indemnified matter, including reasonable fees and expenses of
attorneys, consultants, accountants or other agents and experts reasonably
incident to matters indemnified against, and the costs of investigation and/or
monitoring of such matters, and the costs of enforcement of the indemnity;
provided, however, that no Person shall be entitled to indemnification under
this ‎Section 11.2 for Damages that constitute consequential, special or
indirect damages suffered by Purchaser, or any punitive damages, except to the
extent a Person is required to pay such damages to a Third Party that is not an
Indemnified Party.
(f)    Notwithstanding any other provision of this Agreement or a document to be
delivered hereto to the contrary, any claim for indemnity to which a Seller
Indemnitee or Purchaser Indemnitee is entitled must be asserted by and through
Seller or Purchaser, as applicable.
Section 11.3    Indemnification Actions. Except as otherwise provided in
‎Section 7.8(e), all claims for indemnification under ‎Section 11.2 shall be
asserted and resolved as follows:
(a)    For purposes of this ‎Article 11, the term “Indemnifying Party” when used
in connection with particular Damages shall mean the Party having an obligation
to indemnify another Person or Persons with respect to such Damages pursuant to
this ‎Article 11, and the term “Indemnified Party” when used in connection with
particular Damages shall mean the Person or Persons having the right to be
indemnified with respect to such Damages by another Party pursuant to this
‎Article 11, subject to ‎Section 11.2(f).

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(b)    To make a claim for indemnification under ‎Article 11, an Indemnified
Party shall notify the Indemnifying Party of its claim under this ‎Section 11.3,
including the specific details of and specific basis under this Agreement for
its claim (the “Claim Notice”). In the event that the claim for indemnification
is based upon a claim by a Third Party against the Indemnified Party (a “Third
Party Claim”), the Indemnified Party shall provide its Claim Notice promptly
after the Indemnified Party has actual knowledge of the Third Party Claim and
shall enclose a complete copy of all papers (if any) served with respect to the
Third Party Claim; provided, that the failure of any Indemnified Party to give
notice of a Third Party Claim as provided in this ‎Section 11.3 shall not
relieve the Indemnifying Party of its obligations under ‎Section 11.2 except to
the extent such failure materially prejudices the Indemnifying Party’s ability
to defend against the Third Party Claim. In the event that the claim for
indemnification is based upon an inaccuracy or breach of a representation,
warranty, covenant or agreement, the Claim Notice shall specify the
representation, warranty, covenant or agreement which was inaccurate or
breached.
(c)    In the case of a claim for indemnification based upon a Third Party
Claim, the Indemnifying Party shall have thirty (30) days from its receipt of
the Claim Notice to notify the Indemnified Party whether it elects to assume the
defense of the Indemnified Party against such Third Party Claim under this
‎Article 11. If the Indemnifying Party does not notify the Indemnified Party
within such thirty (30) day period regarding whether the Indemnifying Party
elects to assume the defense of the Indemnified Party, it shall be deemed to
have denied its obligation to provide such indemnification hereunder. The
Indemnified Party is authorized, prior to and during such thirty (30)-day
period, to file any motion, answer or other pleading that it shall deem
necessary or appropriate to protect its interests or those of the Indemnifying
Party.
(d)    If the Indemnifying Party elects to assume the defense of the Indemnified
Party, it shall have the right and obligation to diligently defend, at its sole
cost and expense, the Third Party Claim. The Indemnifying Party shall have full
control of such defense and proceedings, including any compromise or settlement
thereof, subject to the remainder of this ‎Section 11.3(d). If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate in contesting any
Third Party Claim which the Indemnifying Party elects to contest; provided that
the Indemnified Party shall not be required to bring any counterclaim or
cross-complaint against any Person. The Indemnified Party may participate in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this ‎Section 11.3(d). An Indemnifying
Party shall not, without the written consent of the Indemnified Party settle any
Third Party Claim or consent to the entry of any judgment with respect thereto
that (i) does not result in a final, non-appealable, resolution of the
Indemnified Party’s liability with respect to the Third Party Claim (including,
in the case of a settlement, an unconditional written release of the Indemnified
Party from all further liability in respect of such Third Party Claim) or
results in any monetary liability of the Indemnified Party or (ii) may
materially and adversely affect the Indemnified Party (other than as a result of
money damages covered by the indemnity).

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(e)    If the Indemnifying Party does not admit its obligation or admits its
obligation but fails to diligently defend or settle the Third Party Claim, then
the Indemnified Party shall have the right to defend against the Third Party
Claim (at the sole cost and expense of the Indemnifying Party, if the
Indemnified Party is entitled to indemnification hereunder), with counsel of the
Indemnified Party’s choosing, subject to the right of the Indemnifying Party to
admit its obligation to indemnify the Indemnified Party and assume the defense
of the Third Party Claim at any time prior to settlement or final,
non-appealable determination thereof.
(f)    In the case of a claim for indemnification not based upon a Third Party
Claim, the Indemnifying Party shall have thirty (30) days from its receipt of
the Claim Notice to (i) cure or remedy the Damages complained of, (ii) admit its
obligation to provide indemnification with respect to such Damages or (iii)
dispute the claim for such Damages. If the Indemnifying Party does not notify
the Indemnified Party within such thirty (30)-day period that it has cured or
remedied the Damages or that it admits the claim for such Damages, the
Indemnifying Party shall be conclusively deemed to have disputed the claim for
indemnification hereunder.
(g)    Any claim for indemnity under ‎Section 11.2 by any Affiliate, officer,
director, partner, employee or agent must be brought and administered by the
applicable Party to this Agreement. No Indemnified Party other than Seller and
Purchaser shall have any rights against either Seller or Purchaser under the
terms of ‎Section 11.2 except as may be exercised on its behalf by Purchaser or
Seller, as applicable, pursuant to this ‎Section 11.3‎(g).
Section 11.4    Limitation on Actions.
(a)    Except for the Fundamental Representations, all representations and
warranties of Seller and Purchaser contained herein shall survive until the date
that is twelve (12) months from and after the Closing Date and expire
thereafter. The Fundamental Representations shall survive the Closing until the
expiration of 60 days after the applicable statute of limitations. The Special
Warranty (together with the indemnification rights with respect thereto) will
survive for a period of forty-eight (48) months from and after the Closing Date.
The covenants and other agreements of Seller and Purchaser set forth in this
Agreement to be performed on or before Closing shall expire six (6) months
following the Closing Date and each other covenant and agreement of Seller and
Purchaser shall, subject to this ‎Section 11.4, survive the Closing until fully
performed in accordance with its terms and expire thereafter. The affirmations
of representations, warranties, covenants and agreements contained in the
certificate delivered by each Party at Closing pursuant to Sections ‎9.2(g) and
‎9.3(g), as applicable, shall survive the Closing as to each representation,
warranty covenant and agreement so affirmed for the same period of time that the
specific representation, warranty, covenant or agreement survives the Closing
pursuant to this ‎Section 11.4, and shall expire thereafter. Representations,
warranties, covenants and agreements shall terminate and be of no further force
and effect after the respective date of their expiration, after which time no
claim may be asserted thereunder by any Person; provided,

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that there shall be no termination of any bona fide claim timely asserted
pursuant to this ‎Section 11.4.
(b)    The indemnities in ‎Section 11.2(b)(ii), ‎11.2(b)(iii), ‎11.2(c)(i),
‎11.2(c)(ii) and ‎11.2(c)(iv) shall terminate as of the termination date of each
respective representation, warranty, covenant or agreement that is subject to
indemnification, except in each case as to matters (and solely with respect to
such matters) for which a specific written claim for indemnity has been
delivered to the Indemnifying Party on or before such termination date.
Purchaser’s indemnities in Sections ‎7.6, ‎11.2(b)(i), and ‎11.2(b)(iv) and
Seller’s indemnities in ‎Section 11.2(c)(iii) shall continue without time limit.
(c)    Notwithstanding anything to the contrary contained elsewhere in this
Agreement:
(i)    Seller shall not be required to indemnify any Person under ‎Section
11.2(c)(ii) for any individual liability, loss, cost, expense, claim, award or
judgment that does not exceed $125,000;
(ii)    Subject to ‎Section 11.4(c)(i), Seller shall not have any liability for
indemnification under ‎Section 11.2(c)(ii) until and unless the aggregate amount
of the liability for all Damages for which Claim Notices are timely delivered by
Purchaser exceeds a deductible amount equal to 1.75% of the Purchase Price (the
“Indemnity Deductible”), after which point Purchaser (or Purchaser Indemnitees)
shall be entitled to claim Damages in excess of the Indemnity Deductible;
(iii)    Seller shall not be required to indemnify Purchaser and Purchaser
Indemnitees under ‎Section 11.2(c)(ii) for aggregate Damages claimed by
Purchaser and Purchaser Indemnitees in excess of 15% of the Purchase Price;
(iv)    Seller shall not be required to indemnify any Person under ‎Section
11.2(c) unless Seller has received a timely delivered Claim Notice with respect
to such claim at or prior to the expiration of the applicable representation,
warranty, covenant or Retained Obligation; and
(v)    Solely for purposes of determining the amount of any Damages that are the
subject matter of a claim for indemnification under ‎Section 11.2(c)(ii), each
representation and warranty herein that is qualified by materiality or a
specified dollar amount will be read without regard and without giving effect to
such qualifier.
(d)    Seller and Purchaser acknowledge that after the Closing the payment of
money, as limited by the terms of this Agreement, shall be adequate compensation
for breach of any representation, warranty, covenant or agreement contained in
this Agreement or for any other claim arising in connection with or with respect
to the transactions contemplated in this Agreement. As the payment of money
shall be adequate compensation, Purchaser and Seller waives any right to rescind
this Agreement or any of the transactions contemplated hereby.

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(e)    Notwithstanding anything in this Agreement to the contrary, in no event
shall any Purchaser Indemnitees be entitled to assert the breach of any
representation or warranty of Seller in this Agreement or any related document
or any certificate delivered pursuant hereto or thereto or assert any claim
hereunder for any such breach, if Purchaser or its Affiliates knew, prior to the
Closing Date, of any fact, condition or circumstance that would give rise to
such claim or cause such representation or warranty to not be true and correct
as of the Execution Date and/or the Closing Date; provided, however, that this
‎Section 11.4(e) shall not apply to any Purchaser Interim Matter.
(f)    Notwithstanding anything in this Agreement to the contrary, in no event
shall any Seller Indemnitees be entitled to assert the breach of any
representation or warranty of Purchaser in this Agreement or any related
document or any certificate delivered pursuant hereto or thereto or assert any
claim hereunder for any such breach, if Seller or its Affiliates knew, prior to
the Closing Date, of any fact, condition or circumstance that would give rise to
such claim or cause such representation or warranty to not be true and correct
as of the Execution Date and/or the Closing Date; provided, however, that this
‎Section 11.4(f) shall not apply to any Seller Interim Matter or Excluded Asset.
(g)    The limitations in ‎Section 11.4(c)(i)-(iii) shall not apply to the
Fundamental Representations.
Section 11.5    Recording. As soon as practicable after Closing, Purchaser shall
record the Conveyances in the appropriate counties as well as the appropriate
governmental agencies and provide Seller with copies of all recorded or approved
instruments.
Section 11.6    Waivers.
(a)    The Parties do not intend that any implied obligation of good faith or
fair dealing requires any Party to incur, suffer or perform any act, condition
or obligation contrary to the terms of this Agreement or any documents delivered
in connection herewith and that it would be unfair, and that they do not intend,
to increase any of the obligations of any Party under this Agreement or any
documents delivered in connection herewith on the basis of any such implied
obligation.
(b)    Purchaser acknowledges that plugging, abandonment, removal and
restoration obligations for the Assets are material and significant. Purchaser
acknowledges that Purchaser has conducted its own investigation and evaluation
as to the cost and timing of such obligations and that, other than the
representations and warranties set forth in ‎Article 5 of this Agreement, Seller
has made no representation or warranty as to the expected cost or timetable for
incurring costs of plugging, abandonment, removal and restoration obligations
for the Assets. Purchaser acknowledges that Seller is entering into this
Agreement in reliance upon Purchaser’s agreement to assume the Assumed
Obligations and that the assumption of the Assumed Obligations constitutes
material agreed consideration to Seller in consideration for the Assets.

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(c)    It is the intention of the Parties that Purchaser’s rights and remedies
with respect to this transaction and with respect to all acts or practices of
Seller, past, present or future, in connection with this transaction shall be
governed by legal principles other than the Texas Deceptive Trade
Practices-Consumer Protection Act, Subchapter E of Chapter 17, Sections 17.41 et
seq., of the Texas Business and Commerce Code, as amended (the “DTPA”). As such,
Purchaser hereby waives the applicability of the DTPA to this transaction and
any and all duties, rights or remedies that might be imposed by the DTPA,
whether such duties, rights and remedies are applied directly by the DTPA
themselves or indirectly in connection with other statutes. Purchaser
acknowledges, represents and warrants (i) that it is purchasing the goods and/or
services covered by this Agreement for commercial or business use; (ii) that it
has assets of $5,000,000 or more according to its most recent financial
statement prepared in accordance with GAAP; (iii) that it has knowledge and
experience in financial and business matters that enable it to evaluate the
merits and risks of a transaction such as this; (iv) that it is represented by
legal counsel of its own choosing in seeking or acquiring the goods or services
contemplated by this Agreement; and (v) that it is not in a significantly
disparate bargaining position with Seller. Purchaser expressly recognizes that
the price for which Seller has agreed to perform its obligations under this
Agreement has been predicated upon the inapplicability of the DTPA and this
waiver of the DTPA. Purchaser further recognizes that Seller, in determining to
proceed with the entering into of this Agreement, has expressly relied on this
waiver and the inapplicability of the DTPA.
Section 11.7    Tax Treatment of Indemnification Payments. The Parties agree
that any payments made by one Party to the other Party pursuant to this ‎Article
11 shall be treated for all Tax purposes as an adjustment to the Purchase Price
for the Assets unless otherwise required by applicable Law.
ARTICLE 12

MISCELLANEOUS
Section 12.1    Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original instrument, but all such counterparts
together shall constitute but one agreement. Delivery of an executed counterpart
signature page by facsimile or electronic transmittal (PDF) is as effective as
executing and delivering this Agreement in the presence of other Parties to this
Agreement.
Section 12.2    Notice. All notices which are required or may be given pursuant
to this Agreement shall be sufficient in all respects if given in writing and
delivered personally, by facsimile or by registered or certified mail, postage
prepaid, as follows:

If to Seller:
Hunt Oil Company
1900 N. Akard St.

Dallas, TX 75202
Attention: Travis Armayor

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Telephone: (214) 978-8000
Fax: (214) 978-8888
Email: TArmayor@huntoil.com
With a copy to:
Hunt Oil Company
1900 N. Akard St.

Dallas, TX 75202
Attention: General Counsel
Telephone: (214) 978-8000
Fax: (214) 978-8888
Email: mmonroe@huntoil.com
If to Purchaser:
Penn Virginia Oil & Gas, L.P.
14701 St. Mary’s Lane
Suite 275

Houston, Texas 77079
Attention: John A. Brooks, Chief Executive Officer
Email: John.Brooks@pennvirginia.com

With a copy to:
Penn Virginia Oil & Gas, L.P.
14701 St. Mary’s Lane
Suite 275

Houston, Texas 77079
Attention: Katie Ryan, Vice President, Chief Legal Counsel & Corporate Secretary
Email: Katie.Ryan@pennvirginia.com

With a copy to (which shall not constitute notice):

Gibson, Dunn & Crutcher LLP
1221 McKinney
Houston, Texas 77010
Attention: Justin T. Stolte
Email: JStolte@gibsondunn.com

Either Party may change its address for notice by notice to the other in the
manner set forth above. All notices shall be deemed to have been duly given (i)
when physically delivered in person to the Party to which such notice is
addressed, (ii) when transmitted to the Party to which such notice is addressed
by confirmed facsimile transmission, or (iii) at the time of receipt by the
Party to which such notice is addressed. Notwithstanding the foregoing, delivery
by Seller or Purchaser (as applicable) of a Title Defect Notice, Title Benefit
Notice or statement of the Purchase Price under ‎Section 9.4, or a response to
any of the foregoing, shall be deemed to have been duly given to the other Party
when transmitted via email (with hard copy mailed or shipped by U.S. Mail or
commercial delivery service, respectively, on the day such email is transmitted)
to the address(es) of the representative(s) of such Party named above that were
previously furnished to the delivering

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Party upon an affirmative reply by email by the intended recipient that such
email was received (provided that, for the avoidance of doubt, an automated
response from the email account or server of the intended recipient shall not
constitute an affirmative reply) or, if earlier, the delivery confirmation date
of such mailed or shipped hard copy.
Section 12.3    Sales or Use Tax, Recording Fees, and Similar Taxes and Fees.
Purchaser shall (i) bear any sales, use, excise, real property transfer, gross
receipts, goods and services, registration, capital, documentary, stamp or
transfer Taxes, recording fees and similar Taxes and fees incurred and imposed
upon, or with respect to, the property transfers or other transactions
contemplated hereby (“Transfer Taxes”) and (ii) bear, and reimburse Seller for,
any costs reasonably incurred in connection with any audit, examination or other
proceeding by or with any taxing authority relating to the determination of the
amount of such Transfer Taxes. Seller will determine, and Purchaser agrees to
cooperate with Seller in determining, Transfer Taxes, if any, that applicable
law requires Seller to collect from Purchaser in connection with the sale of
Assets hereunder, and Purchaser agrees to pay any such tax to Seller at Closing;
provided, however, that Seller’s failure to collect any such Transfer Taxes at
Closing shall not absolve Purchaser from Purchaser’s responsibility for such
Transfer Taxes. If such transfers or transactions are exempt from any such Taxes
or fees upon the filing of an appropriate certificate or other evidence of
exemption, Purchaser will timely furnish to Seller such certificate or evidence.
Section 12.4    Expenses. Except as otherwise provided in ‎Section 12.3, all
expenses incurred by Seller in connection with or related to the authorization,
preparation or execution of this Agreement, the Conveyance and the Exhibits and
Schedules hereto and thereto, and all other matters related to the Closing,
including all fees and expenses of counsel, accountants and financial advisers
employed by Seller, shall be borne solely and entirely by Seller, and all such
expenses incurred by Purchaser shall be borne solely and entirely by Purchaser.
Section 12.5    Governing Law and Venue. This Agreement and the legal relations
between the Parties shall be governed by and construed in accordance with the
Laws of the State of Texas without regard to principles of conflicts of Law that
would direct the application of the Law of another jurisdiction. The venue for
any action brought under this Agreement shall be Harris County, Texas.
Section 12.6    Jurisdiction; Waiver of Jury Trial. EACH PARTY CONSENTS TO
PERSONAL JURISDICTION IN ANY ACTION BROUGHT IN THE UNITED STATES FEDERAL COURTS
LOCATED WITHIN HARRIS COUNTY, TEXAS (OR, IF JURISDICTION IS NOT AVAILABLE IN THE
UNITED STATES FEDERAL COURTS, TO PERSONAL JURISDICTION IN ANY ACTION BROUGHT IN
THE STATE COURTS LOCATED IN HARRIS COUNTY, TEXAS) WITH RESPECT TO ANY DISPUTE,
CLAIM OR CONTROVERSY ARISING OUT OF OR IN RELATION TO OR IN CONNECTION WITH THIS
AGREEMENT, AND EACH OF THE PARTIES AGREES THAT ANY ACTION INSTITUTED BY IT
AGAINST THE OTHER WITH RESPECT TO ANY SUCH DISPUTE, CONTROVERSY OR CLAIM (EXCEPT
TO THE EXTENT A DISPUTE, CONTROVERSY, OR CLAIM ARISING OUT OF OR IN RELATION TO
OR IN CONNECTION WITH THE DETERMINATION OF A TITLE DEFECT AMOUNT OR TITLE
BENEFIT AMOUNT PURSUANT TO ‎SECTION 3.4(H), THE

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DETERMINATION OF AN ENVIRONMENTAL DEFECT PURSUANT TO ‎SECTION 4.4(C), OR THE
DETERMINATION OF PURCHASE PRICE ADJUSTMENTS PURSUANT TO ‎SECTION 9.4(B) IS
REFERRED TO AN EXPERT PURSUANT TO THOSE SECTIONS) WILL BE INSTITUTED EXCLUSIVELY
IN THE UNITED STATES FEDERAL COURTS LOCATED WITHIN HARRIS COUNTY, TEXAS (OR, IF
JURISDICTION IS NOT AVAILABLE IN THE UNITED STATES FEDERAL COURTS, TO PERSONAL
JURISDICTION IN ANY ACTION BROUGHT IN THE STATE COURTS LOCATED IN HARRIS COUNTY,
TEXAS). THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANOTHER IN ANY MATTER WHATSOEVER
ARISING OUT OF OR IN RELATION TO OR IN CONNECTION WITH THIS AGREEMENT. IN
ADDITION, EACH PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION IN THE RESPECTIVE
JURISDICTIONS REFERENCED IN THIS SECTION.
Section 12.7    Captions. The captions in this Agreement are for convenience
only and shall not be considered a part of or affect the construction or
interpretation of any provision of this Agreement.
Section 12.8    Waivers. Any failure by any Party to comply with any of its
obligations, agreements or conditions herein contained may be waived in writing,
but not in any other manner, by the Party or Parties to whom such compliance is
owed. No waiver of, or consent to a change in, any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of, or consent to a
change in, other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
Section 12.9    Assignment. Neither Party shall assign all or any part of this
Agreement, nor shall any Party assign or delegate any of its rights or duties
hereunder, without the prior written consent of the other Party and any
assignment or delegation made without such consent shall be void.
Section 12.10    Entire Agreement. This Agreement and the documents to be
executed hereunder and the Exhibits and Schedules attached hereto, constitute
the entire agreement between the Parties pertaining to the subject matter
hereof, and supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties pertaining to the subject
matter hereof.
Section 12.11    Confidentiality Agreement. Subject to and upon the occurrence
of Closing and as between the Parties hereto only, the Confidentiality Agreement
shall be deemed to have terminated; provided, however, the Confidentiality
Agreement shall remain in force and effect with respect to the following, each
of which shall be considered “Confidential Information” as defined in and under
the terms of the Confidentiality Agreement, (a) the existence and terms of this
Agreement and any documents or information exchanged between the Parties
pursuant hereto (except to the extent the same constitutes an Asset hereunder),
(b) any matters made expressly subject to the Confidentiality Agreement pursuant
to this Agreement and (c) in the event Purchaser

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does not acquire all of the Assets in accordance with the terms of this
Agreement, then all such Assets that are not so acquired by Purchaser and any
information or data related thereto. Further, if the Closing should occur, then
from and after Closing the terms and conditions of the Confidentiality Agreement
will apply mutatis mutandis to Seller and its Affiliates (as if it, and they,
were the “Recipient” thereunder) for a period equal to the initial term of the
Confidentiality Agreement, it being the intent of the Parties that Seller will
treat the “Confidential Information” (as defined therein) in strict confidence
for such period after the Closing; provided, however, that Purchaser
acknowledges and agrees that Seller and/or its Affiliates have presented
information and data that may constitute Confidential Information to other
potential purchasers of the Assets and that this sentence shall not apply to and
Seller and its Affiliates shall not have any liability with respect to any such
disclosures or any disclosures by such other potential purchasers. In the event
of a conflict between the Confidentiality Agreement and this Agreement, then as
between the Parties hereto the terms and provisions of this Agreement shall
prevail.
Section 12.12    Amendment. This Agreement may be amended or modified only by an
agreement in writing executed by both Parties. No waiver of any right under this
Agreement shall be binding unless executed in writing by the Party to be bound
thereby.
Section 12.13    No Third-Party Beneficiaries. Nothing in this Agreement shall
entitle any Person other than Purchaser and Seller to any claims, cause of
action, remedy or right of any kind, except the rights expressly provided to the
Persons described in ‎Section 11.2(f).
Section 12.14    Public Announcements. The Parties acknowledge and agree that no
press release or other public announcement, or public statement or comment in
response to any inquiry, or other disclosure that is reasonably expected to
result in a press release or public announcement, relating to the subject matter
of this Agreement shall be issued or made by Seller or Purchaser, or their
respective Affiliates, without the joint written approval of Seller and
Purchaser (such approval not to be unreasonably withheld, conditioned or
delayed); provided, that, a press release or other public announcement, or
public statement or comment in response to any inquiry, made without such joint
approval shall not be in violation of this Section if it is made, upon advice of
counsel, in order for the disclosing Party or any of its Affiliates to comply
with applicable Laws or stock exchange rules or regulations and provided it is
limited to those disclosures that are required to so comply.
Section 12.15    Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under present or future Laws effective
during the term hereof, such provision shall be fully severable; this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be affected
by the illegal, invalid or unenforceable provision or by its severance from this
Agreement.
Section 12.16    References. In this Agreement:
(a)    References to any gender includes a reference to all other genders;
(b)    References to the singular includes the plural, and vice versa;

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(c)    Reference to any Article or Section means an Article or Section of this
Agreement;
(d)    Reference to any Exhibit or Schedule means an Exhibit or Schedule to this
Agreement, all of which are incorporated into and made a part of this Agreement;
provided that, in the event of conflict between any Exhibit or Schedule and any
provision set forth in the body of this Agreement, the provisions set forth in
this Agreement shall control to the extent of such conflict;
(e)    References to $ or Dollars means the lawful currency of the United States
of America;
(f)    Unless expressly provided to the contrary, “hereunder,” “hereof,”
“herein” and words of similar import are references to this Agreement as a whole
and not any particular Section or other provision of this Agreement;
(g)    “Include” and “including” shall mean include or including without
limiting the generality of the description preceding such term;
(h)    “Shall” and “will” have equal force and effect;
(i)    A reference to a writing includes a facsimile or email transmission of it
and any means of reproducing of its words in a tangible and permanently visible
form;
(j)    A reference to any agreement or document (including without limitation a
reference to this Agreement) is to the agreement or document as amended, varied,
supplemented, novated, or replaced, except to the extent prohibited by this
Agreement or that other agreement or document;
(k)    A reference to legislation or to a provision of legislation includes a
modification or reenactment of it, a legislative provision substituted for it,
and a regulation or statutory instrument issued under it;
(l)    A reference to any Party to this Agreement or another agreement or
document includes the Party’s permitted successors and assigns;
(m)    If a word or phrase is defined, its other grammatical forms have a
corresponding meaning;
(n)    No action shall be required of the Parties except on a Business Day, and
in the event an action is required on a day which is not a Business Day, such
action shall be required to be performed on the next succeeding day which is a
Business Day;
(o)    All references to “day” or “days” shall mean calendar days unless
specified as a “Business Day;”

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(p)    All accounting terms used and not expressly defined herein have the
respective meanings given to them under GAAP;
(q)    Any item herein “to the knowledge of Purchaser” (or similarly qualified),
including that Purchaser “knew” such as set forth in ‎Section 11.4(e), is
limited to matters within the actual knowledge of HARRY QUARLS (Executive
Chairman), JOHN A. BROOKS (President and Chief Executive Officer), CHARLOTTE
GUIDRY (Manager, Land) or SEAN MAHAFFEY (Manager, HSE); and
(r)    “Actual knowledge” for purposes of this Agreement means information
actually personally known (i) in the case of Seller, by the Persons set forth on
Exhibit C, after reasonable inquiry of those employees of Seller or its
Affiliates reporting directly to such Person who would reasonably be expected to
have knowledge of the fact, event or circumstance in question and (ii) in the
case of Purchaser, by the Persons identified in ‎Section 12.16‎(q), after
reasonable inquiry of those employees of Purchaser or its Affiliates reporting
directly to such Person who would reasonably be expected to have knowledge of
the fact, event or circumstance in question.
Section 12.17    Construction. Each of Seller and Purchaser has had substantial
input into the drafting and preparation of this Agreement and has had the
opportunity to exercise business discretion in relation to the negotiation of
the details of the transaction contemplated hereby. This Agreement is the result
of arm’s-length negotiations from equal bargaining positions.
Section 12.18    Limitation on Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY
CONTAINED HEREIN, NONE OF PURCHASER, SELLER OR ANY OF THEIR RESPECTIVE
AFFILIATES OR INDEMNITEES SHALL BE ENTITLED TO EITHER PUNITIVE, SPECIAL,
INDIRECT OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND EACH OF PURCHASER AND SELLER, FOR ITSELF
AND ON BEHALF OF ITS AFFILIATES AND INDEMNITEES, HEREBY EXPRESSLY WAIVES ANY
RIGHT TO PUNITIVE, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT TO THE EXTENT AN
INDEMNIFIED PARTY IS REQUIRED TO PAY PUNITIVE, SPECIAL, INDIRECT OR
CONSEQUENTIAL DAMAGES TO A THIRD PARTY THAT IS NOT AN INDEMNIFIED PARTY.
    
ARTICLE 13

DEFINITIONS
“Adjusted Purchase Price” has the meaning set forth in ‎Section 2.1.
“Affiliates” with respect to any Person, means any Person that directly or
indirectly controls, is controlled by or is under common control with such
Person. For purposes of this definition, “control” means the possession,
directly or indirectly, of the power, directly or indirectly, to direct

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or cause the direction of the management or policies of the controlled Person,
whether through the ownership of equity interests in or voting rights
attributable to the equity interests in such Person, by contract or agency, by
the general partner of a Person that is a partnership, or otherwise; and
“controls” and “controlled” have meanings correlative thereto.
“Agreed Interest Rate” shall mean simple interest computed at the rate of the
prime interest rate as published in the Wall Street Journal.
“Agreement” has the meaning set forth in the first paragraph of this Agreement.
“Allocated Value” has the meaning set forth in ‎Section 2.3(a).
“Assessment” has the meaning set forth in ‎Section 4.1.
“Assets” has the meaning set forth in ‎Section 1.2.
“Asset Taxes” shall mean ad valorem, property, excise, severance, production,
sales, use, and similar Taxes based upon or measured by the ownership or
operation of the Assets or the production of Hydrocarbons or the receipt of
proceeds therefrom, but excluding, for the avoidance of doubt, Income Taxes and
Transfer Taxes.
“Assumed Obligations” has the meaning set forth in ‎Section 11.2(a).
“Business Day” means each calendar day except Saturdays, Sundays, and Federal
holidays.
“CERCLA” has the meaning set forth in the definition of Environmental Laws.
“Claim Notice” has the meaning set forth in ‎Section 11.3(b).
“Closing” has the meaning set forth in ‎Section 9.1(a).
“Closing Date” has the meaning set forth in ‎Section 9.1(b).
“Closing Payment” has the meaning set forth in ‎Section 9.4(a).
“Code” means the Internal Revenue Code of the United States.
“Confidentiality Agreement” means that certain Confidentiality Agreement dated
October 25, 2017, between Seller, as the Disclosing Party, and Purchaser, as the
Receiving Party, relating to the Assets.
“Contracts” has the meaning set forth in ‎Section 1.2(d).
“Conveyance” has the meaning set forth in ‎Section 3.1(b).
“COPAS” has the meaning set forth in ‎Section 1.4(b).

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“Copyrights” means all copyrights and works of authorship in any media
(including computer programs, Software, databases and compilations, files,
applications, internet site content, documentation, and related items), whether
or not registered, copyright registrations, or copyright applications.
“Cure Period” has the meaning set forth in ‎Section 3.4(c).
“Customary Post-Closing Consents” means the consents and approvals from
Governmental Bodies for the assignment (directly or indirectly) of the Assets
(or any portion thereof) or the transfer of operations of any of the Wells to
Purchaser, in each case, that are customarily obtained after such assignment of
properties similar to the Assets or transfer of operations of a well.
“Damages” has the meaning set forth in ‎Section 11.2(e).
“Defensible Title” has the meaning set forth in ‎Section 3.2(a).
“Deposit” has the meaning set forth in ‎Section 2.4.
“Designated Area” means the area shown on Exhibit A-4.
“DTPA” has the meaning set forth in ‎Section 11.6(c).
“Effective Time” has the meaning set forth in ‎Section 1.4(a).
“Environmental Arbitration Notice” has the meaning set forth in ‎Section 4.4(c).
“Environmental Arbitrator” has the meaning set forth in ‎Section 4.4(c).
“Environmental Claim Date” has the meaning set forth in ‎Section 4.3.
“Environmental Consultant” has the meaning set forth in ‎Section 4.1.
“Environmental Defect” has the meaning set forth in ‎Section 4.3.
“Environmental Defect Deductible” has the meaning set forth in ‎Section 4.4(d).
“Environmental Defect Notice” has the meaning set forth in ‎Section 4.3.
“Environmental Laws” means, as the same have been amended as of the Effective
Time, the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. § 9601 et seq. (“CERCLA”); the Resource Conservation and Recovery Act,
42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. §
1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq. the Hazardous
Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic Substances
Control Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act, 33 U.S.C. §
2701 et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C.
§ 11001 et seq.; and the Safe Drinking Water Act, 42 U.S.C. §§ 300f through
300j; and all Laws as of the Effective Time of any Governmental Body having
jurisdiction over the property in question addressing pollution or

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protection of the environment and all regulations implementing the foregoing.
Notwithstanding the foregoing, the phrase “violation of Environmental Laws” and
words of similar import used herein shall mean, as to any given Asset, the
violation of or failure to meet specific objective requirements or standards
that are clearly applicable to such Asset under applicable Environmental Laws
where such requirements or standards are in effect as of the Effective Time. The
phrase does not include good or desirable operating practices or standards that
may be employed or adopted by other oil or gas well operators or recommended by
a Governmental Body.
“Environmental Liabilities” shall mean any and all environmental response costs
(including costs of remediation), Damages, natural resource damages,
settlements, consulting fees, expenses, penalties, fines, orphan share,
prejudgment and post-judgment interest, court costs, attorneys’ fees, and other
liabilities incurred or imposed (i) pursuant to any order, notice of
responsibility, directive (including requirements embodied in Environmental
Laws), injunction, judgment or similar act (including settlements) by any
Governmental Body to the extent arising out of any violation of or liability
under any Environmental Law which is attributable to the ownership or operation
of the Seller Operated Assets prior to the Effective Time or (ii) pursuant to
any claim or cause of action by a Governmental Body for damage to natural
resources to the extent arising out of any violation of or liability under any
Environmental Law to the extent attributable to the ownership or operation of
the Seller Operated Assets prior to the Effective Time; provided, that
Environmental Liabilities excludes any of the foregoing liabilities to the
extent caused by or relating to NORM or otherwise disclosed in any Schedule.
“Equipment” has the meaning set forth in ‎Section 1.2(f).
“Escrow Account” has the meaning set forth in ‎Section 2.4.
“Escrow Agent” means Citibank, National Association.
“Escrow Agreement” means the agreement attached hereto as Exhibit D.
“Exchange” has the meaning set forth in ‎Section 7.8(g).
“Exchange Act” has the meaning set forth in ‎Section 7.14(a).
“Excluded Assets” has the meaning set forth in ‎Section 1.3.
“Execution Date” has the meaning set forth in the first paragraph of this
Agreement.
“Exploration Wells” means those wells set forth on Exhibit F.
“Final Settlement Statement” has the meaning set forth in ‎Section 9.4(b).
“Financial Statements” has the meaning set forth in ‎Section 7.14(a).
“Fundamental Representations” means the representations and warranties in
Sections ‎5.2, ‎5.3, ‎5.4, ‎5.5, ‎5.6, ‎5.8 and ‎5.20.

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“G & G Data” means any and all geological or geophysical information licensed by
Seller.
“GAAP” means United States generally accepted accounting principles.
“Governmental Authorizations” has the meaning set forth in ‎Section 5.13.
“Governmental Body” means any federal, state, local, municipal, or other
governments; any governmental, regulatory or administrative agency, commission,
body or other authority exercising or entitled to exercise any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power; and any court or governmental tribunal.
“Governmental Bonds” has the meaning set forth in ‎Section 7.13(a).
“Guarantees” has the meaning set forth in ‎Section 7.13(b).
“Hazardous Substances” means any pollutants, contaminants, toxins or hazardous
or extremely hazardous substances, materials, wastes, constituents, compounds,
or chemicals that are regulated by, or may form the basis of liability under,
any Environmental Laws, including NORM.
“Hydrocarbons” means oil, gas, condensate and other gaseous and liquid
hydrocarbons or any combination thereof, including scrubber liquid inventory and
ethane, propane, isobutene, nor-butane and gasoline inventories (excluding tank
bottoms), and sulphur and other minerals extracted from or produced from the
foregoing hydrocarbons.
“Imbalance” means any over-production, under-production, over-delivery,
under-delivery or similar imbalance of Hydrocarbons produced from or allocated
to the Assets, regardless of whether such imbalance arises at the platform,
wellhead, pipeline, gathering system, transportation system, processing plant or
other location.
“Income Taxes” shall mean (a) all Taxes based upon, measured by, or calculated
with respect to gross or net income, gross or net receipts or profits (including
franchise Taxes and any capital gains, alternative minimum, and net worth Taxes,
but excluding ad valorem, property, excise, severance, production, sales, use,
real or personal property transfer or other similar Taxes), (b) Taxes based
upon, measured by, or calculated with respect to multiple bases (including
corporate franchise, doing business or occupation Taxes) if one or more of the
bases upon which such Tax may be based, measured by, or calculated with respect
to is included in clause (a) above, or (c) withholding Taxes measured with
reference to or as a substitute for any Tax included in clauses (a) or (b)
above.
“Indemnified Party” has the meaning set forth in ‎Section 11.3(a).
“Indemnifying Party” has the meaning set forth in ‎Section 11.3(a).
“Indemnity Deductible” has the meaning set forth in ‎Section 11.4(c)(ii).
“Independent Expert” has the meaning set forth in ‎Section 9.4(b).
“Individual ED Threshold” has the meaning set forth in ‎Section 4.3.

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“Individual TD Threshold” has the meaning set forth in ‎Section 3.4(i).
“Intellectual Property” means all intellectual property rights arising from or
in respect of the following, whether protected, created, or arising under the
Laws of the United States or any other jurisdiction: (a) all Patents; (b) all
Marks; (c) all Copyrights; (d) all Trade Secrets; and (e) all Software and
Technology.
“Lands” has the meaning set forth in ‎Section 1.2(a).
“Law” or “Laws” means all statutes, rules, regulations, ordinances, orders, and
codes of Governmental Bodies.
“Leases” has the meaning set forth in ‎Section 1.2(a).
“Lowest Cost Response” means the response required or allowed under
Environmental Laws that cures, remediates, removes or remedies the applicable
present condition alleged pursuant to an Environmental Defect Notice at the
lowest cost (considered as a whole taking into consideration any material
negative impact such response may have on the operations of the relevant Assets
and any potential material additional costs or liabilities that may likely arise
as a result of such response) sufficient to comply with Environmental Laws as
compared to any other response that is required or allowed under Environmental
Laws. The Lowest Cost Response shall include taking no action, leaving the
condition unaddressed, periodic monitoring or the recording of notices in lieu
of remediation, if such responses are allowed under Environmental Laws.
“Material Adverse Effect” means any adverse effect on the ownership or operation
of the Assets that individually or in the aggregate has or would reasonably be
expected to have an adverse effect in an amount that exceeds $12,900,000
(without taking into account any insurance proceeds or other similar benefits
received by a Party with respect to same); provided, however, that “Material
Adverse Effect” shall not include any material adverse effects resulting from:
(a) changes in general market, economic, financial or political conditions
(including changes in commodity prices, fuel supply or transportation markets,
interest or rates) in the area in which the Assets are located, the United
States or worldwide; (b) changes in Laws or in regulatory policies from and
after the date of this Agreement (to the extent generally applying to oil and
gas properties located in the region where the Assets are located); (c) changes
or conditions resulting from civil unrest or terrorism or acts of God or natural
disasters; (d) change or conditions resulting from the failure of a Governmental
Body to act or omit to act pursuant to Law; (e) entering into this Agreement or
the announcement of the transactions contemplated by this Agreement; (f) changes
in conditions or developments generally applicable to the oil and gas industry
in the area where the Assets are located; (g) matters that are cured or no
longer exist by the earlier of the Closing and the termination of this
Agreement, without cost to Purchaser; (h) reclassification or recalculation of
reserves in the ordinary course of business; (i) changes in the prices of
Hydrocarbons; (j) declines in well performance; and (k) operational issues
occurring in the ordinary course of business.
“Material Contract” has the meaning set forth in ‎Section 5.11.

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“Marks” mean all trademarks, trademark applications, trademark registrations,
trade names, fictitious business names (d/b/a’s), service marks, service mark
applications, service mark registrations, URL’s, domain names, trade dress, and
logos.
“Net Revenue Interest” has the meaning set forth in ‎Section 3.2(a)(i).
“Nonconsented Interest” has the meaning set forth in ‎Section 3.5(b).
“NORM” means naturally occurring radioactive material.
“Offering Document” has the meaning set forth in ‎Section 7.14(a).
“Outside Date” means May 1, 2018.
“Patents” means all patents, patent applications, statutory invention
registrations, or similar types of protection for inventions and innovations,
including reissues, divisions, continuations, continuations in part, and
reexaminations thereof.
“Permitted Encumbrances” has the meaning set forth in ‎Section 3.3.
“Party” or “Parties” has the meaning set forth in the Preamble to this
Agreement.
“Payout Balance” means the status, as of the date of the calculation, of the
recovery by Seller or a Third Party of a cost amount specified in the contract
relating to a Well out of the revenue from such Well where the Net Revenue
Interest of Seller therein will be reduced or increased or Seller’s working
interest therein will be reduced or increased when such amount has been
recovered.
“Person” means any individual, firm, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization,
government or agency or subdivision thereof or any other entity.
“Phase I Assessment” has the meaning set forth in ‎Section 4.1(a).
“Phase II Assessment” has the meaning set forth in ‎Section 4.1(b).
“Phase II Request” has the meaning set forth in ‎Section 4.1(b).
“Pipeline Systems” has the meaning set forth in ‎Section 1.2(g).
“Post-Effective Time Tax Advances” has the meaning set forth in ‎Section 7.8(f).
“Preferential Right” has the meaning set forth in ‎Section 3.5(a).
“Preliminary Settlement Statement” has the meaning set forth in ‎Section 9.4(a).
“Properties” and “Property” have the meanings set forth in ‎Section 1.2(c).

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“Property Costs” means (a) all costs attributable to the ownership, development,
operation or maintenance of the Assets (including costs of insurance, but
excluding lease bonus payments, renewals, extensions or amendments) in the
ordinary course of business or the production of Hydrocarbons therefrom, but
excluding any Taxes, (b) capital expenditures incurred in the ownership,
development, operation and maintenance of the Assets in the ordinary course of
business, (c) where applicable, such costs and capital expenditures charged in
accordance with the relevant operating agreement, unit agreement, pooling
agreement, pre-pooling agreement, pooling order or similar instrument, and (d)
overhead costs charged to the Assets under the relevant operating agreement,
unit agreement, pooling agreement, pre-pooling agreement, pooling order or
similar instrument by unaffiliated third parties; provided that “Property Costs”
shall exclude, without limitation, liabilities, losses, costs, and expenses
attributable to (i) claims, investigations, administrative proceedings or
litigation directly or indirectly arising out of or resulting from actual or
claimed personal injury or death, property damage or violation of any Law
(including private rights or causes of action under any Law), (ii) title claims
(including claims that the Leases have terminated), (iii) obligations to plug
wells, dismantle facilities, close pits and restore the surface or seabed around
such wells, facilities and pits, (iv) obligations to cure, address or remediate
any contamination of groundwater, surface water, soil or Equipment under
applicable Environmental Laws, (v) obligations to furnish make-up gas according
to the terms of applicable gas sales, gathering or transportation contracts,
(vi) gas balancing obligations and similar obligations arising from Imbalances,
(vii) Asset Taxes, Income Taxes and Transfer Taxes, and (viii) obligations to
pay working interests, royalties, overriding royalties or other interests held
in suspense.
“Purchase Price” has the meaning set forth in ‎Section 2.1.
“Purchaser” has the meaning set forth in the first paragraph of this Agreement.
“Purchaser Indemnitees” means Purchaser, its Affiliates, and the officers,
directors, managers, members, stockholders, general or limited partners,
employees, agents, representatives, advisors, subsidiaries, successors and
assigns of Purchaser or its Affiliates.
“Purchaser Interim Matter” shall mean any matter, solely to the extent related
to the Seller Operated Assets, that (i) individually or in the aggregate would
not give rise to Purchaser’s right to terminate this Agreement pursuant to
‎Section 10.1(c) and (ii) is discovered by Purchaser between the Execution Date
and the Closing Date.

“Purchaser Operated Property Costs” means those costs and expenses identified on
Exhibit G.
“Records” has the meaning set forth in ‎Section 1.2(j).
“Required Consent” means a consent by a Third Party that, if not obtained prior
to the assignment of an Asset, (a) makes the assignment with respect to such
Asset void or voidable, (b) terminates Seller’s interest in the Asset subject to
such consent, or (c) requires the payment of a fee for such consent or assesses
a fine or monetary penalty for failure to obtain such consent; provided,
however, “Required Consent” does not include any consent which by its terms
cannot be unreasonably withheld or any Customary Post-Closing Consent.

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“Retained Obligations” means any and all of the obligations and liabilities of
Seller, known or unknown, arising from, based upon, related to or associated
with: (a) Seller’s payment, nonpayment or mispayment of all royalties, shut-in
royalties, overriding royalties and compensatory royalties attributable to the
Seller Operated Assets prior to the Execution Date (other than Suspended
Proceeds transferred by Seller to Purchaser pursuant to ‎Section 7.10); (b)
personal injury, death, or Third Party property damage attributable to Seller’s
operation of the Seller Operated Assets prior to the Closing; (c) Taxes for
which Seller is responsible pursuant to ‎Section 7.8 or any Income Taxes of
Seller (or any of its Affiliates) for any period (whether before, on or after
the Effective Time); (d) off-site transportation and disposal by Seller of
Hazardous Substances from or relating to the Seller Operated Assets in
connection with Seller’s operation of thereof; (e) the gross negligence or
willful misconduct of Seller or the other Seller Indemnitees related to the
operation by Seller of the Seller Operated Assets prior to the Execution Date;
(f) the actions, suits or proceedings listed on Schedule ‎5.7; and (g) the
Excluded Assets; provided, however, that such obligation and liability under
clauses (a) and (b) above will only be a Retained Obligation insofar as
Purchaser provides notice of the indemnifiable claim related to clause (a) or
(b) on or before the second anniversary of the Closing Date.
“Retained Records” has the meaning set forth in ‎Section 1.2(j).
“Schedule Supplement” has the meaning set forth in ‎Section 5.1(f).
“SEC Documents” has the meaning set forth in ‎Section 7.14(a).
“Securities Act” has the meaning set forth in ‎Section 7.14(a).
“Seller” has the meaning set forth in the first paragraph of this Agreement.
“Seller Indemnitees” shall mean Seller, its Affiliates, and the officers,
directors, managers, members, stockholders, general or limited partners,
coventurers, employees, agents, representatives, advisors, subsidiaries,
successors and assigns of Seller or its Affiliates.
“Seller Indemnity Obligations” has the meaning set forth in ‎Section 11.2(c).
“Seller Interim Matter” shall mean any matter, solely to the extent related to
the Assets operated by Purchaser, that (i) individually or in the aggregate
would not give rise to Seller’s right to terminate this Agreement pursuant to
‎Section 10.1(d) and (ii) is discovered by Seller between the Execution Date and
the Closing Date.

“Seller Operated Assets” shall mean Assets operated by Seller or its Affiliates
as of the date of this Agreement.
“Software” means any and all (a) computer programs, including any and all
software implementations of algorithms, models, and methodologies, whether in
source code or object code, (b) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (c)
descriptions, flow-charts, and other work product used to design, plan,
organize, and develop any of the foregoing, screens, user interfaces, report
formats, firmware,

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development tools, templates, menus, buttons, and icons, and (d) all
documentation, including user manuals and other training documentation, related
to any of the foregoing.
“Special Warranty” has the meaning set forth in ‎Section 7.9(a).
“Subchapter K” means Subchapter K of the Code.
“Surface Contracts” has the meaning set forth in ‎Section 1.2(e).
“Suspended Proceeds” means proceeds of production which Seller is holding as of
the Closing Date which are owing to Third Party owners of royalty, overriding
royalty, working or other interests in respect of past production of oil, gas or
other Hydrocarbons attributable to the Assets.
“Target Closing Date” has the meaning set forth in ‎Section 9.1(a).
“Target Formation” shall mean (i) the entire correlative interval from 10,294
feet to 10,580 feet as shown on the log of the EOG Resources, Inc. – Milton
Unit, Well No. 1 (API No. 42-255-31608), Section 64, John Random Survey, A-247,
Karnes County, Texas, and (ii) the zone or formation containing the perforated
interval(s) from which any Well located in the relevant Unit is currently
producing oil and/or gas, as applicable, as reported for such Well to the
applicable Governmental Body governing such Well as of the Effective Time.
“Tax Audit” has the meaning set forth in ‎Section 7.8(e).
“Tax Returns” has the meaning set forth in ‎Section 5.8.
“Taxes” means all federal, state, local, and foreign income, profits, franchise,
sales, use, ad valorem, property, severance, production, excise, stamp, license,
documentary, real property transfer or gain, gross receipts, goods and services,
registration, capital, transfer, occupation, employment, payroll or withholding
Taxes or other governmental fees or charges imposed by any taxing authority,
including any interest, penalties or additional amounts which may be imposed
with respect thereto.
“Technology” means, collectively, all documents, books, and records embodying
the Intellectual Property and any other technical information used in the
business of Seller, including copies of all manufacturing drawings, designs,
formulae, algorithms, procedures, methods, techniques, ideas, know-how, research
and development, technical data, programs, subroutines, tools, materials,
specifications, bill of materials, processes, inventions (whether patentable or
unpatentable and whether or not reduced to practice), apparatus, ideas,
creations, improvements, customer lists, business plans, marketing studies,
works of authorship, and other similar materials, and all recordings, graphs,
drawings, reports, analyses, and other writings, and other tangible embodiments
of the foregoing, in any form whether or not specifically listed herein, and all
related technology, that are used in, incorporated in, embodied in, displayed
by, or related to, or are used by Seller.
“Third Party” means any Person other than a Party or an Affiliate of a Party.
“Third Party Claim” has the meaning set forth in ‎Section 11.3(b).

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“Title Arbitration Notice” has the meaning set forth in ‎Section 3.4(h).
“Title Arbitrator” has the meaning set forth in ‎Section 3.4(h).
“Title Benefit” has the meaning set forth in ‎Section 3.2(b).
“Title Benefit Amount” has the meaning set forth in ‎Section 3.4(g).
“Title Benefit Notice” has the meaning set forth in ‎Section 3.4(b).
“Title Benefit Property” has the meaning set forth in ‎Section 3.4(b).
“Title Claim Date” has the meaning set forth in ‎Section 3.4(a).
“Title Defect” has the meaning set forth in ‎Section 3.2(c).
“Title Defect Amount” has the meaning set forth in ‎Section 3.4(f).
“Title Defect Deductible” has the meaning set forth in ‎Section 3.4(i).
“Title Defect Notice” has the meaning set forth in ‎Section 3.4(a).
“Title Defect Property” has the meaning set forth in ‎Section 3.4(a).
“Trade Secrets” means all trade secrets and confidential information, including
all confidential drawings, designs, manufacturing processes, source code,
know-how, technology, formulae, customer lists, inventions, and marketing
information.
“Transfer Taxes” has the meaning set forth in ‎Section 12.3.
“Transition Services Agreement” means the form Transition Services Agreement, to
be dated as of Closing, attached as Exhibit E.
“Units” has the meaning set forth in ‎Section 1.2(c).
“Wells” has the meaning set forth in ‎Section 1.2(b).

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IN WITNESS WHEREOF, this Agreement has been signed by each of the Parties on the
date first above written.
 
 
SELLER
HUNT OIL COMPANY
By:/s/ Travis Armayor   
Name: Travis V. Armayor
Title: Senior Vice President
PURCHASER
PENN VIRGINIA OIL & GAS, L.P.

By:/s/ Katherine Ryan   
Name: Katherine J. Ryan
Title: Vice President, Chief Legal Counsel and Corporate Secretary
 
 
 

[Signature page to Purchase and Sale Agreement]

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Exhibit A
Leases
The Parties agree that Exhibit A is intended to list all of the Leases which are
intended to be included as part of the Assets to be conveyed to Purchaser
hereunder. In the event that between the date of the execution of this Agreement
and Closing it is determined that there are Leases that have been inadvertently
omitted from or incorrectly described on Exhibit A, Seller, with the consent of
Purchaser, which consent shall not be unreasonably withheld, conditioned or
delayed, shall be permitted to supplement Exhibit A to include those Leases
which have been inadvertently omitted or incorrectly described.