Exhibit 10.1

 

 

 

PURCHASE AND SALE AGREEMENT

 

 

 

Between

 

BANK OF NEW YORK TRUST COMPANY, N.A., solely in its capacity as trustee of

Santa Fe Energy Trust

 

 

And

 

 

 

AMEN PROPERTIES, INC.

 

 

 

Dated

 

 

 

November 8, 2007

 

 

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TABLE OF CONTENTS

1.

Certain Definitions

1

2.

Sale and Purchase

5

3.

Sale Price

5

4.

Deposit

5

5.

Allocated Values

5

6.

Seller’s Representations

6

7.

Buyer’s Representations

6

8.

Access to Records

8

9.

Defects.

9

10.

Consents and Preferential Rights.

12

11.

Physical and Environmental Inspection

13

12.

Period Pending Closing.

13

13.

[Intentionally Omitted.]

14

14.

Notification of Breaches

14

15.

Sale Price Adjustment

14

16.

Termination.

16

17.

Conditions of Closing by Buyer

17

18.

Conditions of Closing by Seller

17

19.

Preliminary Closing Statement

18

20.

Closing

18

21.

Reservations and Exceptions

19

22.

Payments

19

23.

Assumption of Liabilities and Indemnities

19

24.

Indemnification Action

21

25.

Limitation on Actions

22

26.

Casualty and Condemnation

23

27.

Taxes

23

28.

Sales Tax; Recording Fees

23

29.

Records

23

30.

Post-Closing Adjustments; Revenues

24

31.

Notices

25

32.

Further Assurance

26

33.

Disclaimer of Warranties

26

34.

Expenses

27

35.

Due Diligence

27

36.

Material Factor

27

37.

Press Release.

27

38.

Entire Agreement

28

39.

Tax Reporting.

28

40.

Assignability.

28

41.

Choice of Law

28

42.

Dispute Resolution

28

43.

Counterpart Execution.

28

44.

Severance of Invalid Provisions.

28

45.

Limitation on Damages.

29

46.

References.

29

47.

Waivers

29

48.

Third Person Beneficiaries

29

49.

Capacity of Trustee

29

50.

Acknowledgement

29

 

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EXHIBITS AND SCHEDULES

Exhibit A

Oil and Gas Properties

Exhibit B

Allocated Values

Exhibit C

Form of Deed, Assignment and Bill of Sale

Exhibit D

Form of Non-Foreign Affidavit

 

 

Schedule 1(d)

Contracts

Schedule 1(e)

Excluded Properties

Schedule 10

Consents and Preferential Rights

Schedule 15(h)

Subject Assets Excluded from Revised Reserve Report Adjustment

 

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INDEX OF DEFINED TERMS

 

Defined Term

 

 

Section

 

 

 

 

Accounting Arbitrator

 

Section 30(a)

Affiliate

 

Section 1(a)

Agreed Rate

 

Section 15(k)

Agreement

 

Recitals

Allocated Values

 

Section 5

Assumed Obligations

 

Section 23(b)

BNY

 

Recitals

Business Day

 

Section 1(b)

Buyer

 

Recital

Claim Notice

 

Section 24(b)

Claim

 

Section 24(b)

Closing

 

Section 20

Closing Date

 

Section 20

Closing Date WTI Price

 

Section 15(j)

Code

 

Section 1(c)

Commitment Letter

 

Section 7(f)(ii)

Confidentiality Agreement

 

Section 8

Contracts

 

Section 1(d)

current Tax period

 

Section 27

Damages

 

Section 23(a)

Deceptive Trade Practices Act

 

Section 33

Defect Amount

 

Section 9(f)

Defect Arbitrator

 

Section 9(i)

Defect Claim Date

 

Section 9(d)

Defect

 

Section 9(a)

Deposit

 

Section 4

Devon

 

Section 1(e)

Effective Time

 

Section 1(f)

Environmental Arbitrator

 

Section 9(i)

Environmental Defect

 

Section 9(c)

Environmental Interest

 

Section 9(c)

Environmental Laws

 

Section 9(c)

Excluded Properties

 

Section 1(g)

Excluded Records

 

Section 1(h)

Governmental Authority

 

Section 1(i)

Indemnified Person

 

Section 24(a)

Indemnifying Person

 

Section 24(a)

July Reserve Report

 

Section 15(h)

Laws

 

Section 1(j)

Leases

 

Section 1(k)

MMMF

 

Section 33

Net Profits Royalties

 

Section 1(l)

NORM

 

Section 9(c)

Party

 

Recital

Permitted Encumbrances

 

Section 1(n)

Person

 

Section 1(o)

Properties

 

Section 1(p)

Property

 

Section 1(p)

Records

 

Section 1(q)

Revised Reserve Report

 

Section 15(h)

Sale Price

 

Section 3

 

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Seller

 

Recital

Seller Group

 

Section 23(a)

Subject Assets

 

Section 1(r)

Suspended Royalties

 

Section 1(s)

Target Closing Date

 

Section 20

Tax

 

Section 1(t)

Treasury Obligations

 

Section 1(u)

Title Arbitrator

 

Section 9(i)

Title Defect

 

Section 9(b)

Trust

 

Section 49

Trustee

 

Recitals

Units

 

Section 1(v)

Wasson Royalties

 

Section 1(w)

Wells

 

Section 1(x)

 

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PURCHASE AND SALE AGREEMENT

                This PURCHASE AND SALE AGREEMENT, dated as of November 8, 2007
(“Agreement”), is between The Bank of New York Trust Company, N.A. (“BNY”),
solely in its capacity as Trustee of Santa Fe Energy Trust (BNY, solely in its
capacity as trustee of Santa Fe Energy Trust, being herein called the “Trustee”;
and the Trustee, in its capacity as the seller of the Properties, being
sometimes called herein “Seller”), and Amen Properties, Inc., a Delaware
corporation (hereinafter referred to as “Buyer”).  Seller and Buyer are
sometimes referred to collectively as the “Parties” and individually as a
“Party.”

WHEREAS, Seller desires to sell and Buyer desires to purchase those certain
interests in oil and gas properties, rights and related assets that are defined
and described as “Properties” herein.

NOW, THEREFORE, in consideration of the covenants and agreements herein
contained and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Seller and Buyer agree as follows:

1.             Certain Definitions.  As used herein:

(a)           “Affiliate” means, with respect to any Person, a Person that
directly or indirectly controls, is controlled by or is under common control
with such Person, with control in such context meaning the ability to direct the
management or policies of a Person through ownership of voting shares or other
securities, pursuant to a written agreement, or otherwise.

(b)           “Business Day” means any day other than a Saturday, a Sunday, or a
day on which banks are closed for business in New York, New York or Houston,
Texas, United States of America.

(c)           “Code” means the United States Internal Revenue Code of 1986, as
amended.

(d)           “Contracts” means all currently existing contracts, agreements and
instruments with respect to the Properties, to the extent burdening or
applicable to the Properties, including operating agreements, unitization,
pooling, and communitization agreements, declarations and orders, area of mutual
interest agreements, joint venture agreements, farmin and farmout agreements,
exchange agreements, transportation agreements, agreements for the sale and
purchase of oil and gas and processing agreements, including, but not limited
to, those contracts, agreements and instruments set forth on Schedule 1(d), but
excluding any contracts, agreements and instruments included within the
definition of “Excluded Properties”.

(e)           “Devon” shall mean Devon Energy Production Company, L.P., an
Oklahoma limited partnership.

(f)            “Effective Time” shall mean October 1, 2007 at 7:00 a.m., local
time, said time to be determined for each locality in which the Properties are
located in accordance with the time generally observed in said locality.

(g)           “Excluded Properties” shall mean the following:

(i)            the Excluded Records;

(ii)           all copies of other Records retained by Seller pursuant to
Section 29;

(iii)          all contracts, agreements and instruments whose transfer is
prohibited or subjected to payment of a fee or other consideration by an
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 Buyer has
not agreed in writing to pay the fee or other consideration, as applicable;

 

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(iv)          all permits and other appurtenances for which transfer is
prohibited or subjected to payment of a fee or other consideration by an
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 Buyer has
not agreed in writing to pay the fee or other consideration, as applicable;

(v)           all claims against third Persons pending on or prior to the
Effective Time, but excluding any claims related to the Suspended Royalties;

(vi)          any Tax refund (whether by payment, credit, offset or otherwise,
and together with any interest thereon) in respect of any Taxes for which Seller
is liable for payment or required to indemnify Buyer under Section 23 or 28;

(vii)         all refunds relating from severance Tax abatements with respect to
all taxable periods or portions thereof ending on or prior to the Effective
Time, but excluding any refunds relating to the Suspended Royalties;

(viii)        all claims against insurers under policies held by Seller or its
Affiliates;

(ix)           all cash, cash equivalents and amounts receivable held by the
Trustee;

(x)            the Wasson Royalties;

(xi)           the Treasury Obligations;

(xii)          all audit rights under any Contracts or the Leases to the extent
related to periods prior to the Effective Time, but excluding any audit rights
related to the Suspended Royalties;

(xiii)         any surface rights related to the Leases, Units or Wells; and

(xiv)        any other assets, personal property, contracts or other tangible or
intangible rights described on Schedule 1(g).

Notwithstanding anything to the contrary in this Section 1(f) or elsewhere in
this Agreement, “Properties” shall not include any rights with respect to the
Excluded Properties.

(h)           “Excluded Records” shall mean:

(i)            all corporate, financial, Tax and legal data and records of the
Trustee that relate to the Trust generally (whether or not relating to the
Properties);

(ii)           any data, software and records to the extent disclosure or
transfer is prohibited or subjected to payment of a fee or other consideration
by any license agreement or other agreement with a Person, or by applicable Law,
and for which no consent to transfer has been received or for which Buyer has
not agreed in writing to pay the fee or other consideration, as applicable;

(iii)          all legal records and legal files of the Trustee including all
work product of and attorney-client communications with the Trustee’s legal
counsel;

(iv)          all data and records relating to the sale of the Properties,
including communications and correspondence with Stifel, Nicolaus & Company,
Incorporated, Devon and its Affiliates, representatives and agents and bids
received from and records of negotiations with third Persons;

(v)           all data and records relating to the other Excluded Properties;
and

 

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(vi)          all original data, software and records, or copies thereof,
retained by Seller pursuant to Section 29.

(i)            “Governmental Authority” means any national government and/or
state or other government of any political subdivision, and departments, courts,
commissions, boards, bureaus, ministries, agencies or other instrumentalities of
any of them.

(j)            “Laws” means all laws, statutes, rules, regulations, ordinances,
orders, decrees, requirements, judgments and codes of Governmental Authorities.

(k)           “Leases” means, collectively, the oil and gas leases, oil, gas and
mineral leases and subleases, royalties, overriding royalties, net profits
interests, mineral fee interests, carried interests, and other rights to oil and
gas in place, and mineral servitudes, that are described on Attachment 1 to
Exhibit A.

(l)            “Net Profits Royalties” means the interests in the Subject Assets
granted pursuant to those instruments set forth in Part 1 of Exhibit A attached
hereto, including, but not limited to such interests constituting an undivided
variable royalty interest in and to the hydrocarbons that may be produced,
saved, and marketed from the Subject Assets equal to ninety percent (90%) of the
net proceeds attributable to the Properties, all as further described in the
instruments set forth in Attachment 1 of Exhibit A attached hereto.

(m)          [Intentionally Omitted.]

(n)           “Permitted Encumbrances” means any or all of the following:

(i)            Lessors’ royalties and any overriding royalties, reversionary
interests and other burdens (other than the Net Profits Royalties) to the extent
that they do not, individually or in the aggregate, reduce the net revenue
interests with respect to the Subject Assets burdened by the Net Profits
Royalties below that shown in Attachment 2 of Exhibit A or increase the working
interests above that shown in Attachment 2 of Exhibit A without a corresponding
increase in the net revenue interest;

(ii)           All leases, unit agreements, pooling agreements, operating
agreements, production sales contracts, division orders and other contracts,
agreements and instruments applicable to the Subject Assets, including
provisions for penalties, suspensions or forfeitures contained therein, to the
extent that they do not, individually or in the aggregate, reduce the net
revenue interests burdened by the Net Profits Royalties below that shown in
Attachment 2 of Exhibit A or increase the working interests with respect to the
Subject Assets burdened by the Net Profits Royalties above that shown in
Attachment 2 of Exhibit A without a corresponding increase in the net revenue
interest;

(iii)          Rights of first refusal, preferential rights to purchase and
similar rights with respect to the Properties, but excluding, however, any
preferential rights to purchase or similar rights that are applicable to the
sale of the Properties contemplated by this Agreement, including those set forth
on Schedule 10, and for which the holder of such right has validly exercised
such right;

(iv)          Third-Person consent requirements and similar restrictions which
are not applicable to the sale of the Properties contemplated by this Agreement
or with respect to which waivers or consents are obtained 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;

(v)           Liens for Taxes or assessments not yet delinquent or, if
delinquent, that are being contested in good faith by appropriate actions;

 

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(vi)          Materialman’s, mechanic’s, repairman’s, employee’s, contractor’s,
operator’s and other similar liens or charges arising in the ordinary course of
business for amounts not yet delinquent (including any amounts being withheld as
provided by Law), or if delinquent, that are being contested in good faith by
appropriate actions;

(vii)         All rights to consent, required notices to, filings with, or other
actions by Governmental Authorities in connection with the transactions
contemplated hereby if they are customarily obtained subsequent to the sale or
conveyance of similar assets;

(viii)        Rights of reassignment, termination or reversion of title or
interest in the Properties arising (A) upon final intention to abandon or
release the Subject Assets or Properties, or any of them; or (B) under any
instrument set forth in Attachment 1 of Exhibit A;

(ix)           Easements, rights-of-way, covenants, servitudes, permits, surface
leases and other rights in respect of surface operations;

(x)            Calls on production under existing Contracts;

(xi)           Any actual or asserted termination of title to any mineral
servitude or any Subject Asset held by production as a consequence of the
failure to conduct operations, cessation of production or insufficient
production over any period;

(xii)          All rights reserved to or vested in any Governmental Authorities
to control or regulate any of the Properties or the Subject Assets in any manner
or to assess Tax with respect to the Properties or Subject Assets, the
ownership, use or operation thereof, or revenue, income or capital gains with
respect thereto, and all obligations and duties under all applicable Laws of any
such Governmental Authority or under any franchise, grant, license or permit
issued by any Governmental Authority;

(xiii)         Any lien, charge, cause of action, claim or other encumbrance on
or affecting the Properties which is expressly waived, assumed, bonded or paid
by Buyer at or prior to Closing or which is discharged by Seller at or prior to
Closing;

(xiv)        any lien or trust arising in connection with workers’ compensation,
unemployment insurance, pension or employment Laws or regulations;

(xv)         Any matter set forth on any schedule or exhibit hereto, or set
forth on any agreement or instrument identified on any schedule or exhibit
hereto; and

(xvi)        Any other liens, charges, claims, causes of action, encumbrances,
defects or irregularities which do not, individually or in the aggregate,
materially detract from the value of the Net Profits Royalties subject thereto
or affected thereby (as currently used or owned) and which would be accepted by
a reasonably prudent purchaser engaged in the business of owning oil and gas
interests similar in nature to the Net Profits Royalties, including, without
limitation, the absence of any lease amendment or consent by any royalty
interest or mineral interest holder authorizing the pooling of any leasehold
interest, royalty interest or mineral interest and the failure of Exhibit A to
reflect any lease or any unleased mineral interest where the owner thereof was
treated as a non-participating co-tenant during the drilling of any well.

(o)           “Person” means any individual, corporation, partnership, limited
liability company, trust, estate, Governmental Authority or any other entity.

(p)           “Property” or “Properties” means all of Seller’s right, title and
interest in and to the Net Profits Royalties, the Suspended Royalties, the
Contracts, and the Records.

 

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(q)           “Records” means the data and records of Seller, to the extent
relating solely to the Properties, excluding, however, in each case, the
Excluded Records.

(r)            “Subject Assets” means the Leases, Wells and Units.

(s)           “Suspended Royalties” means any amounts attributable to the Net
Profits Royalties payable out of production of oil or gas from the Leases, Units
and Wells or the proceeds thereof to Seller but held in suspense by any Person
as of the Closing Date (regardless of whether such amounts are attributable to
production for periods before, on, or after the Effective Time and any interest
accrued in escrow accounts for such suspended funds.

(t)            “Tax” means all taxes, including any foreign, federal, state or
local income tax, surtax, remittance tax, presumptive tax, net worth tax,
special contribution, production tax, pipeline transportation tax, freehold
mineral tax, value added tax, withholding tax, gross receipts tax, windfall
profits tax, profits tax, severance tax, personal property tax, real property
tax, sales tax, goods and services tax, service tax, transfer tax, use tax,
excise tax, premium tax, stamp tax, motor vehicle tax, entertainment tax,
insurance tax, capital stock tax, franchise tax, occupation tax, payroll tax,
employment tax, unemployment tax, disability tax, alternative or add-on minimum
tax and estimated tax, imposed by a Governmental Authority together with any
interest, fine or penalty thereon.

(u)           “Treasury Obligations”  means the United States Treasury
obligations held by BNY in its capacity as depository for the benefit of the
holders of beneficial interest in the Trust.

(v)           “Units” means all pooled, communitized or unitized acreage which
includes all or part of any Leases, and all tenements, hereditaments and
appurtenances belonging to the Leases and Units.

(w)          “Wasson Royalties” means (i) the interest held by the Trust known
as the Wasson ODC Royalty; and (ii) the interest held or previously held by the
Trust in the Wasson Willard Unit, each as described in the original conveyances
of such interests to the Trustee.

(x)            “Wells” means any and all oil, gas, water, CO2 or injection wells
located on the Leases or on the pooled, communitized or unitized acreage that
includes all or any part of the Leases, including the interests in the wells
shown on Attachment 3 of Exhibit A attached hereto.

2.             Sale and Purchase.     Subject to and upon all of the terms,
conditions, reservations and exceptions hereinafter set forth, Seller shall
sell, transfer, assign, convey and deliver the Properties to Buyer, and Buyer
shall purchase, receive, pay for and accept the Properties from Seller,
effective as of the Effective Time.

3.             Sale Price.    The sale price for the Properties shall be fifty
million and four hundred and forty thousand dollars ($50,440,000.00) (“Sale
Price”), subject only to any applicable price adjustments as provided for in
Section 15.

4.             Deposit.    Concurrently with the execution and delivery of this
Agreement Buyer  has caused the delivery to Seller, via wire transfer of
immediately available funds, of an earnest money deposit in the amount of
fifteen percent (15%) of the Sale Price (such amount, together with all interest
earned thereon, the “Deposit”).  Seller shall hold the Deposit in an interest
bearing account in accordance with written instructions from Buyer and
reasonably acceptable to Seller.  In the event that this Agreement is terminated
pursuant to Section 16, the Deposit shall be distributed in accordance with
Section 16, otherwise the Deposit shall be distributed in accordance with
Section 20(h).

5.             Allocated Values.     Buyer and Seller herein agree upon the
allocation of the Sale Price among the Properties (the “Allocated Value”).  Such
Allocated Values are made a part of this Agreement and are shown on Exhibit B,
which is attached hereto.  The Allocated Value for any Net Profits Royalties
burdening a Lease, Well or Unit equals the portion of the Sale Price that is
allocated to such Net Profits

 

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Royalties burdening the Lease, Well or Unit on Exhibit B, increased or decreased
as provided herein.  The share of each adjustment allocated to a particular Well
or Unit shall be obtained by allocating that adjustment among the various
Properties on a pro rata basis in proportion to the Sale Price allocated to each
such Property on Exhibit B.  Within three (3) Business Days after receipt of the
Revised Reserve Report, Buyer may amend Exhibit B by providing Seller with a
written copy of such amendment, provided, however, that such amendment shall be
void and of no force or effect if the changes reflected in such amendment are
not materially consistent with the differences between the information set forth
in July Reserve Report and the Revised Reserve Report (after taking into account
the values set forth on the original Exhibit B attached hereto and the proposed
amended Exhibit B) and, within three (3) Business Days Seller of Seller’s
receipt of such amendment, Seller provides written notice to Buyer that Seller
objects to such amendment.  Seller has accepted such Allocated Values for
purposes of this Agreement and the transactions contemplated hereby, but
otherwise makes no representation or warranty as to the accuracy of such values.

6.             Seller’s Representations.   Seller represents and warrants to
Buyer that as of the date hereof:

(a)           Qualification and Power.  Seller is validly existing and in good
standing under the Laws of its jurisdiction of formation and has full power and
authority to enter into and perform this Agreement (and all documents required
to be executed and delivered by Seller at Closing) and to consummate the
transactions contemplated by this Agreement (and such documents).

(b)           Authorization.  Seller’s execution, delivery and performance of
this Agreement (and all documents required to be executed by Seller at Closing),
and the consummation of the transactions contemplated hereby and thereby,  have
been duly and validly authorized by Seller.  This Agreement has been duly
executed and delivered by Seller (and all documents required 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 or other similar Laws affecting the rights 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).

(c)           Limitations.

(i)            Except as and to the extent expressly set forth in this Section
6, (A) Seller makes no representations or warranties, express or implied, and
(B) Seller expressly disclaims all liability and responsibility for any
representation, warranty, statement or information made or communicated (orally
or in writing) to Buyer or any of its Affiliates, employees, agents, consultants
or representatives (including, without limitation, any opinion, information,
projection or advice that may have been provided to Buyer by any officer,
director, employee, agent, consultant, representative or advisor of Seller or
any of their Affiliates).

(ii)           Exhibits and Schedules may include matters not required by the
terms of this Agreement to be listed on the Exhibits and Schedules, which
additional matters are disclosed for the convenience of Buyer only, and
inclusion of any such matter does not mean that all such matters are included or
that any of such matters are material.

(iii)          A matter scheduled as an exception to any representation,
warranty or statement set forth in this Section 6, set forth on any schedule or
exhibit hereto, or set forth on any agreement identified on any schedule or
exhibit hereto shall be deemed to be an exception to all representations,
warranties and statements to which it is relevant.

7.             Buyer’s Representations.   Buyer represents and warrants to
Seller that as of the date hereof:

 

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(a)           Qualification and Power.  Buyer (i) is a duly organized
corporation validly existing and in good standing under the Laws of the State of
Delaware; (ii) is, or as of the Closing Date shall be, duly qualified as of the
Closing Date to carry on its business in the states in which the Properties are
located, and (iii) has full power and authority to enter into and perform this
Agreement (and all documents required to be executed and delivered by Buyer at
Closing) and to consummate the transactions contemplated by this Agreement (and
such documents).

(b)           Authorization.  Buyer’s execution, delivery and performance of
this Agreement (and all documents required to be executed by Buyer at Closing),
and the consummation of the transactions contemplated hereby and thereby, have
been duly and validly authorized by all necessary corporate action on the part
of Buyer  This Agreement has been duly executed and delivered by Buyer (and all
documents required to be executed and delivered by Buyer at Closing will be duly
executed and delivered by Buyer) and this Agreement constitutes, and at the
Closing such documents will constitute, the valid and binding obligations of
Buyer, enforceable in accordance with their terms except as such enforceability
may be limited by applicable bankruptcy or other similar Laws affecting the
rights 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).

(c)           No Conflicts.  The execution, delivery and performance of this
Agreement by Buyer, and the consummation of the transactions contemplated by
this Agreement, will not (i) violate any provision of the certificate of
incorporation or bylaws (or other governing instruments) of Buyer, (ii) 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 material note, bond, mortgage, indenture,
or other financing instrument to which Buyer is a party or by which it is bound,
(iii) violate any judgment, order, ruling, or regulation applicable to Buyer as
a party in interest or (iv) violate any Law applicable to Buyer, except any
matters described in clauses (ii), (iii) or (iv) above which would not have a
material adverse effect on Buyer or its properties or Buyer’s ability to
consummate the transactions contemplated hereby.

(d)           Consents, Approvals or Waivers.  The execution, delivery and
performance of this Agreement by Buyer are not subject to any consent, approval
or waiver from any Governmental Authority or other Person.

(e)           Litigation.  There are no actions, suits or proceedings pending,
threatened in writing before any Governmental Authority or arbitrator against
Buyer or any Affiliate of Buyer which could impair or delay Buyer’s ability to
perform its obligations under this Agreement.

(f)            Financing.

(i)            Buyer has sufficient cash, available lines of credit or other
sources of immediately available funds (in United States dollars) to enable it
to pay the Sale Price to Seller at the Closing.

(ii)           Prior to the execution of this Agreement, Buyer has received and
delivered to Seller true and complete copies of commitment letters from First
Southern National Bank, Universal Guaranty Life Insurance Company, Jon Morgan
and  Eric Oliver that, collectively commit to the provision of all of the
financing required by Buyer to pay the unadjusted Sale Price, and any other
amounts payable under this Agreement, and all agreements, arrangements or
undertakings related to that commitment letter to which Buyer or any of its
Affiliates is a party (whether contained in a fee letter or otherwise) and all
schedules, annexes, exhibits or other attachments to any thereof, excluding any
actual fee payment amounts (collectively, the “Commitment Letters”).  The
Commitment Letters are in full force and effect and neither Buyer nor any of its
Affiliates has agreed to any material amendment or modification thereof and
neither Buyer nor any of its Affiliates is in breach or default thereunder. 
Buyer and/or its Affiliates are in a position to satisfy all conditions to
advances under the Commitment Letters to the extent such conditions are within
their control.  The aggregate proceeds of the financings to which the Commitment

 

 

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Letters relate are, together with available funds of the Buyer (details in
respect of which have been delivered by Buyer to Seller), sufficient to pay the
Sale Price.

(g)           Investment Intent.  Buyer is acquiring the Properties for its own
account and not with a view to their sale or distribution in violation of the
Securities Act of 1933, as amended, the rules and regulations thereunder, any
applicable state blue sky Laws, or any other applicable securities Laws.

(h)           Liability for Brokers’ Fees.  Seller shall not directly or
indirectly have any responsibility, liability or expense, as a result of
undertakings or agreements of Buyer, for brokerage fees, finder’s fees, agent’s
commissions or other similar forms of compensation to an intermediary in
connection with the negotiation, execution or delivery of this Agreement or any
agreement or transaction contemplated hereby.

(i)            Qualification.  Buyer is or as of the Closing will be qualified
under applicable Laws to own and hold the Properties.

(j)            Independent Investigation; Reliance.  Buyer is (or its advisors
are) sophisticated and experienced and knowledgeable in the oil and gas business
and aware of the risks of that business.  Buyer acknowledges and affirms that
(i) it has completed its own independent investigation, verification, analysis
and evaluation of the Properties, and (ii) it has made all reviews and
inspections of the Properties and Subject Assets as it has deemed necessary or
appropriate.  Buyer represents and affirms that in entering into this Agreement,
Buyer has relied solely on (i) the express representations and warranties made
expressly by Seller in Section 6 of this Agreement, (ii) Buyer’s independent
investigation of, and judgment with respect to, the Subject Assets and the
Properties and (iii) the advice of its own legal, Tax, economic, environmental,
engineering, geological and geophysical advisors and not on any comments or
other statements of Seller or of any representatives of, or consultants or
advisors engaged by or on behalf of Seller.  Except for the representations and
warranties expressly made by Seller in Section 6 of this Agreement, Buyer
acknowledges that there are no representations or warranties, express or
implied, as to the financial condition, liabilities, operations, business or
prospects with respect to the Properties and that in making its decision to
enter into this Agreement and to consummate the transactions contemplated
hereby, Buyer has relied solely upon its own independent investigation,
verification, analysis and evaluation, has evaluated the merits and risks of
purchasing the Properties from Seller and has formed its own opinion based
solely on Buyer’s knowledge and experience and, except for the representations
and warranties made expressly by Seller in Section 6, not on any representations
or warranties by Seller or any other Person, including any representatives,
consultants or advisors engaged by or on behalf of Seller.

8.             Access to Records.  After execution of this Agreement, Seller
shall give Buyer and its authorized representatives, during regular business
hours, at Buyer’s sole risk, cost and expense, access, with copying privileges,
to data and records, and to all contract, land, title and lease records, to the
extent such data and records are in Seller’s possession and relate to the
Properties, and to such other information in Seller’s possession relating to the
Properties as Buyer may reasonably request; provided, however, that Seller shall
have no obligation to provide Buyer access to any data or information (a) where
such access or disclosure would violate applicable Laws, (b) which Seller
considers proprietary or confidential or (c) to which Seller cannot legally
provide Buyer access because of third-Person restrictions on Seller or the
nature of the interests owned by Seller.  Seller agrees to use its commercially
reasonable efforts to obtain the consent of any such third Person to furnish any
such information to Buyer as reasonably requested by Buyer.  Such access by
Buyer shall be limited to Seller’s normal business hours, and Buyer’s
investigation shall be conducted in a manner that minimizes interference with
the operation of the Subject Assets and the operations of Seller.  Buyer
acknowledges that Seller is not the operator of the Subject Assets and that,
except as set forth in Section 6, Seller makes no representations or warranties
(i) regarding any rights to provide Buyer with access to any data, information,
or other materials relating to the Properties held by third Persons, or (ii) as
to the accuracy, completeness or the sufficiency of the Records or any other
access, or information, data or reports provided hereunder.  All information
obtained by Buyer and its representatives under this Section 8 shall be subject
to the terms of that certain confidentiality agreement between Stifel, Nicolaus
& Company, Incorporated, on behalf of

 

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Seller, and Buyer dated September 6, 2007 (“Confidentiality Agreement”) and any
applicable privacy Laws regarding personal information.

9.             Defects.

(a)           For the purpose of this Agreement, a “Defect” shall mean any Title
Defect or Environmental Defect.

(b)           “Title Defect” shall mean any lien, charge, obligation, cause of
action, claim or title defect burdening the Properties, other than Permitted
Encumbrances, that:

(i)            Entitles the Seller to receive at any time throughout the
duration of the productive life of any Net Profits Royalty, LESS THAN ninety
percent (90%) of the net proceeds attributable to the “net revenue interest” or
“NRI” share shown in Attachment 2 of Exhibit A of all oil, gas and other
minerals produced, saved and marketed from such Lease, Unit or Well, including
decreases in connection with those operations in which those Subject Assets
burdened by the Net Profits Royalties are subject to any non-consent or similar
penalties, decreases resulting from reversion of interest to co-owners with
respect to operations in which such co-owners elected not to consent, decreases
resulting from the establishment or amendment of pools or units, and decreases
required to allow other working interest owners to make up past underproduction
or pipelines to make up past underdeliveries and except as stated in Attachment
2 of Exhibit A;

(ii)           Obligates the portion of the Subject Assets burdened by the Net
Profits Royalties to bear at any time a percentage of the costs and expenses for
the maintenance and development of, and operations relating to, any Lease, Unit
or Well NOT GREATER THAN the “working interest” or “WI” shown in Attachment 2 of
Exhibit A without increase throughout the productive life of such Unit or Well,
except as stated in Attachment 2 of Exhibit A and except increases resulting
from contribution requirements with respect to defaulting co-owners under
applicable operating agreements or applicable Law and increases that are
accompanied by at least a proportionate increase in the net revenue interest.

(c)           “Environmental Defect” shall mean the failure of the ownership and
operation of the Subject Assets to be in material compliance with all applicable
Environmental Laws or any contamination of groundwater, surface water, soil or
seabed on the Subject Assets resulting from hydrocarbon activities on such
Subject Assets required to be remediated under applicable Environmental Laws on
or before the date of this Agreement, in each case that are chargeable as
Production Costs (as such term is defined in the applicable instrument set forth
on Attachment 1 of Exhibit A) to the Properties in accordance with the
instrument set forth on Attachment 1 of Exhibit A but which have not been
remediated, provided, however, the presence or absence of naturally occurring
radioactive material (“NORM”), asbestos, mercury, drilling fluids and chemicals,
and produced waters and hydrocarbons in or on the Subject Assets in quantities
typical for oilfield operations in the areas in which the Subject Assets are
located or usual and customary obligations to plug and abandon wells and
dismantle structures shall in no event constitute an “Environmental Defect”. 
“Environmental Laws” means, as the same have been amended to the date hereof,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. § 9601 et seq.; 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, in each
case as amended to the date hereof, and all similar Laws as of the date hereof
of any Governmental Authority having jurisdiction over the property in question
addressing pollution or protection of the environment or biological or cultural
resources and all regulations implementing the foregoing.

(d)           To assert a claim for any Defect, Buyer must deliver a claim
notice or notices to Seller on or before the date ten (10) Business Days prior
to the Target Closing Date (“Defect Claim Date”).  Each such notice shall be in
writing and shall include: (i) a description of the alleged Defect(s); (ii) the
Leases,

 

9

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Units or Wells affected; (iii) the Allocated Values of the Leases, Units or
Wells subject to the alleged Defect(s); (iv) supporting documents reasonably
necessary for Seller (as well as any title attorney, environmental consultant or
examiner hired by Seller) to verify the existence of the alleged Defect(s); and
(v) the amount by which Buyer reasonably believes the Allocated Values of those
Leases, Units or Wells are reduced by the alleged Defect(s) and the computations
and information upon which Buyer’s belief is based.  Buyer shall be deemed to
have waived, and hereby does waive, all claims for Defects of which Buyer has
not provided Seller notice on or before the Defect Claim Date.

(e)           Seller shall have the right, but not the obligation, to attempt,
at Seller’s sole cost, to cure or remove on or before the Closing Date any
Defects of which Seller has been notified by Buyer in accordance with Section
9(d).  If the Defect is not cured prior to the Closing Date, the adjustment
required under this Section 9 shall be made pursuant to this Section 9. 
Seller’s election to attempt to cure a Defect shall not constitute a waiver of
Seller’s right to dispute the existence, nature or value of, or cost to cure,
the Defect.

(f)            With respect to each Lease, Unit or Well affected by Defects
reported in accordance with Section 9(d), the Net Profits Royalties burdening
such Lease, Unit or Well shall nevertheless be assigned to and acquired by Buyer
at Closing, subject to all uncured Defects, and the Sale Price shall be reduced
by an amount (“Defect Amount”) equal to the reduction in the Allocated Value for
the Net Profits Royalties burdening such Lease, Unit or Well caused by such
Defects, as determined pursuant to Section 9(h).

(g)           Seller makes no warranty or representation as to the quantity or
quality of title to the Properties.  Buyer releases, remises and forever
discharges Seller and its Affiliates and all such Persons’ stockholders,
officers, directors, employees, agents, advisors and representatives 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 Buyer might now or subsequently may have,
based on, relating to or arising out of, any Defect or other deficiency in title
or environmental condition relating to the Properties. Buyer affirms that Buyer
has relied exclusively on its own independent investigation of all title and
environmental conditions relating to the Properties, including all Defects, and
that Buyer has not relied on Seller or on any of the representatives,
consultants, or advisors engaged by or on behalf of Seller.

(h)           The Defect Amount resulting from a Defect shall be determined as
follows:

(i)            if Buyer and Seller agree on the Defect Amount, that amount shall
be the Defect Amount;

(ii)           if the Title Defect is a lien, encumbrance, cause of action,
claim, or other charge which is undisputed and liquidated in amount, then the
Defect Amount shall be the liquidated amount necessary to be paid to remove,
cure or remediate the Defect, but only to the extent such amount is chargeable
as Production Costs (as such term is defined in the applicable instrument set
forth on Attachment 1 of Exhibit A) to the Net Profits Royalties in accordance
with the instruments set forth on Attachment 1 of Exhibit A;

(iii)          if the Title Defect is that (A) the net revenue interest for any
Lease, Unit or Well is less than (B) the net revenue interest or percentage
stated on Attachment 2 of Exhibit A, then the Defect Amount shall be the product
of the Allocated Value of the Net Profits Royalties burdening such Lease, Unit
or Well multiplied by a fraction, the numerator of which is the actual net
revenue interest or percentage ownership and the denominator of which is the net
revenue interest or percentage ownership stated on Attachment 2 of Exhibit A,
provided that if the Defect does not affect the Lease, Unit or Well throughout
its entire productive life, the Defect Amount determined under this Section
9(h)(iii) 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 affected Lease, Unit or Well of a
type not described in Sections 9(h)(i) through 9(h)(iii) above, the Defect
Amount shall be determined by taking into account the Allocated Value

 

 

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of the Net Profits Royalties burdening such Lease, Unit or Well so affected, the
portion of Seller’s interest in the Net Profits Royalties burdening the Lease,
Unit or Well affected by the Defect, the legal effect of the Defect, the
potential economic effect of the Defect over the life of the Net Profits
Royalties burdening the affected Lease, Unit or Well, the values placed upon the
Defect by Buyer and Seller and such other factors as are necessary to make a
proper evaluation;

(v)           if the Defect is an Environmental Defect, the Defect Amount shall
be the lesser of (A) the costs and expenses necessary to remediate the portion
of the Subject Assets burdened by the Net Profits Royalties, but only to the
extent such costs and expenses are chargeable as Production Costs (as such term
is defined in the applicable instrument set forth on Attachment 1 of Exhibit A)
to the Net Profits Royalties in accordance with the instruments set forth on
Attachment 1 of Exhibit A, or (B) an amount equal to the adverse economic effect
of the Defect on the Properties;

(vi)          notwithstanding anything to the contrary in this Section 9, (A) an
individual claim for a Defect for which a claim notice is given prior to the
Defect Claim Date shall only generate an adjustment to the Sale Price under this
Section 9 if the Defect Amount with respect thereto exceeds twenty thousand
dollars ($20,000.00), (B) the aggregate Defect Amounts attributable to the
effects of all Title Defects upon the Net Profits Royalties burdening any given
Lease, Unit or Well shall not exceed the Allocated Value of the Net Profits
Royalties burdening such Lease, Unit or Well and (C) there shall be no
adjustment to the Sale Price for Defects unless and until the aggregate Defect
Amounts that are entitled to an adjustment under Section 9(h)(vi)(A) and for
which Claim Notices were properly delivered on or before the Defect Claim Date
exceed two percent (2%) of the unadjusted Sale Price, and then only to the
extent that such aggregate Defect Amounts exceed two percent (2%) of the
unadjusted Sale Price;

(vii)         if a Defect is reasonably susceptible of being cured or
remediated, the Defect Amount determined under Sections 9(h)(iii), (iv) or (v)
above shall not be greater than the reasonable cost and expense of curing or
remediating such Defect, but only to the extent such costs and expenses are
chargeable as Production Costs (as such term is defined in the applicable
instruments set forth on Attachment 1 of Exhibit A) to the Net Profits Royalties
in accordance with the instrument set forth on Attachment 1 of Exhibit A;

(viii)        if a Title Defect is attributable to any asserted claim or cause
of action that has not been finally adjudicated or resolved prior to the Closing
Date, the Defect Amount with respect to such Title Defect shall equal the
amount, if any, that may be reasonably determined based on the final
adjudication or resolution of such claim or cause of action, as such
adjudication or resolution may be reasonably determined based on the facts known
to the Parties hereto as of the Closing Date; and

(ix)           the Defect Amount with respect to a Defect shall be determined
without duplication of any costs or losses included in another Defect Amount
hereunder, or for which Buyer otherwise receives credit in the calculation of
the Sale Price.

(i)            Notwithstanding anything herein to the contrary, in the event
that the aggregate of all Defect Amounts attributable to Environmental Defects
that Buyer has validly asserted in accordance with this Section 9 exceeds twenty
percent (20%) of the unadjusted Sale Price, then Seller may elect, in its sole
discretion, to terminate this Agreement by delivering written notice to Seller
prior to the Closing.

(j)            Seller and Buyer shall attempt to agree on all Defect Amounts by
the Closing Date.  If Seller and Buyer are unable to agree by the Closing Date,
Seller’s estimate shall be used to determine the adjusted Sale Price pursuant to
Section 15, and the Defect Amounts in dispute shall be exclusively and finally
resolved by arbitration pursuant to this Section 9(i).  During the 15-day period
following the Closing Date, Defect Amounts in dispute with respect to Title
Defects shall be submitted to a title attorney or attorneys reasonably
satisfactory to Buyer and to Seller  having at least ten (10) years of
experience in oil and gas title review and examination in the state where the
Properties subject to the disputed Title Defects are located (“Title
Arbitrator”).  During the 15-day period following the Closing Date, Defect
Amounts in dispute with respect to Environmental Defects shall be submitted to
E.Vironment or such other environmental consulting firm as may be reasonably
agreed upon by Buyer or Seller

 

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(“Environmental Arbitrator” and  with the Title Arbitrator, each a “Defect
Arbitrator”.). The Defect Arbitrators shall not have worked as an employee,
consultant or outside counsel for either Party or its Affiliates during the five
(5) year period preceding the arbitration or have any financial interest in the
dispute.  The arbitration proceedings 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 Section 9.  The Defect Arbitrators’ determination shall be made within
thirty (30) days after submission of the matters in dispute and shall be final
and binding upon the Parties, without right of appeal.  In making his
determination, the applicable Defect Arbitrator shall be bound by the rules set
forth in Sections 9(h) and may consider such other matters as in the opinion of
the applicable Defect Arbitrator are necessary or helpful to make a proper
determination.  Additionally, each applicable Defect Arbitrator may consult with
and engage disinterested third Persons to advise the arbitrator, including title
attorneys from other states and petroleum engineers.  Each applicable Defect
Arbitrator shall act as an expert for the limited purpose of determining the
specific disputed Defect Amounts submitted by any Party and may not award
damages, interest or penalties to any Party with respect to any matter.  Seller
and Buyer shall each bear its own legal fees and other costs of presenting its
case.  Buyer shall bear one-half of the costs and expenses of each Defect
Arbitrator, and Seller shall bear the remaining one-half of such costs and
expenses.

10.           Consents and Preferential Rights.

(a)           Promptly after the date hereof, Seller shall prepare and send
(i) notices to the holders of any required consents to assignment, if any, that
are set forth on Schedule 10 requesting consents to the transactions
contemplated by this Agreement and (ii) notices to the holders of any applicable
preferential rights to purchase or similar rights, if any, that are set forth on
Schedule 10 in compliance with the terms of such rights and requesting waivers
of such rights. Any preferential purchase right must be exercised subject to all
terms and conditions set forth in this Agreement, including the successful
Closing of this Agreement pursuant to Section 20.  The consideration payable
under this Agreement for any particular Property for purposes of preferential
purchase right notices shall be the Allocated Value for such Property.  Seller
shall use commercially reasonable efforts to cause such consents to assignment
and waivers of preferential rights to purchase or similar rights (or the
exercise thereof) to be obtained and delivered prior to Closing, provided that
Seller shall not be required to make payments or undertake obligations to or for
the benefit of the holders of such rights in order to obtain the required
consents and waivers.  Buyer shall use commercially reasonable efforts to
cooperate with Seller in seeking to obtain such consents to assignment and
waivers of preferential rights.

(b)           In no event shall there be transferred at Closing any Property for
which a consent requirement has not been satisfied and for which transfer is
prohibited or a fee is payable (and which has not been paid by Buyer).  In cases
in which the Property subject to such a requirement is a Contract and Buyer is
assigned the Net Profits Royalties to which the Contract relates, but the
Contract is not transferred to Buyer due to the unwaived consent requirement,
Buyer shall continue after Closing to use commercially reasonable efforts to
obtain the consent so that such Contract can be transferred to Buyer upon
receipt of the consent, the Contract shall be held by Seller for the benefit of
Buyer, Buyer shall pay all amounts due thereunder, and Buyer shall be
responsible for the performance of any obligations under such Contract to the
extent that Buyer has been transferred the Properties necessary to perform under
such Contract until such consent is obtained.  In cases in which the Property
subject to such a requirement is a Net Profits Royalty and the third Person
consent to the transfer of the Net Profits Royalty is not obtained by Closing,
Buyer may elect to treat the unsatisfied consent requirements as a Defect and
receive the appropriate adjustment to the unadjusted Sale Price under Section 15
by giving Seller written notice thereof in accordance with Section 9, except
that such notice may be given up to one (1) Business Day prior to the Closing
Date.  If an unsatisfied consent requirement with respect to which an adjustment
to the unadjusted Sale Price is made under Section 15 is subsequently satisfied
prior to the date of the final adjustment to the unadjusted Sale Price under
Section 30, Seller shall be reimbursed in that final adjustment for the amount
of any previous deduction from the unadjusted Sale Price, the Net Profits
Royalty, if not previously transferred to Buyer, shall be transferred, and the
provisions of this Section 10(b) shall no longer apply to such consent
requirement.

 

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(c)           If any preferential right to purchase any Properties is exercised
prior to Closing, (i) the Sale Price shall be decreased by the Allocated Value
for such Properties, (ii) the affected Properties shall not be transferred at
Closing, (iii) the affected Properties shall be deemed to be deleted from
Exhibit A for all purposes, (iv) Seller shall convey the affected Properties to
the holder of the preferential right to purchase on the terms and provisions set
out in the applicable preferential right provision, (v) Seller shall be entitled
to the consideration paid by such holder; and (vi) the effective date of the
sale of the affected Properties shall be the Effective Time, regardless of the
actual closing date of such sale.

(d)           Should a third Person fail to validly exercise or waive its
preferential right to purchase as to any portion of the Properties prior to
Closing and the time for exercise or waiver has expired, then subject to the
remaining provisions of this Section 10, such Properties shall be included in
the transaction at Closing and there shall be no adjustment to the Sale Price at
Closing with respect to such preferential right to purchase.

(e)           Should a third Person fail to exercise or waive its preferential
right to purchase as to any portion of the Properties prior to Closing and the
time for exercise or waiver has not yet expired, then subject to the remaining
provisions of this Section 10(e), such Properties shall be transferred to Buyer
at Closing, there shall be no adjustment to the Purchase Price at Closing with
respect to such preferential right to purchase, and Seller shall, at its sole
expense, continue to use commercially reasonable efforts to obtain a waiver of
the preferential purchase rights and shall continue to be responsible for the
compliance therewith.  Should the holder of the preferential purchase right
validly exercise such right after Closing, then: (i) the Sale Price shall be
decreased by the Allocated Value for such Properties, (ii) the affected
Properties shall be deemed to be deleted from Exhibit A for all purposes, (iii)
Buyer shall promptly convey the affected Properties to the holder on the terms
and provisions set out in the applicable preferential right provision, and (iv)
Seller shall be entitled to the consideration paid by such holder.

11.           Physical and Environmental Inspection.       After the execution
of this Agreement, Seller shall use commercially reasonable efforts (but in no
event shall Seller be required to make any payments or incur any other
obligations to any Person) to cause Buyer and its authorized representatives to
have physical access to the Properties and Subject Assets at Buyer’s sole cost,
risk and expense for the purpose of inspecting the same, conducting such tests,
examination, investigations and assessments as may be reasonable and necessary
or appropriate to evaluate the environmental and physical condition of the
Properties and Subject Assets. Buyer’s right of access, if any, to the
Properties and Subject Assets shall not entitle Buyer to operate equipment or
conduct intrusive testing or sampling, and any such access shall be further
limited by the Persons with rights to own, operate or use the Subject Assets or
the surface rights burdened thereby.  Buyer acknowledges that Seller is not the
operator or owner of the Subject Assets and Seller has no right or ability to
grant Seller access to the Properties or the Subject Assets and that Seller
makes no representations or warranties as to access to the Properties or the
Subject Assets by Buyer.  BUYER SHALL HOLD HARMLESS, DEFEND AND INDEMNIFY
SELLER, ITS AFFILIATES, THE OTHER OWNERS OF INTERESTS IN THE PROPERTIES AND ALL
SUCH PERSONS’ DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND REPRESENTATIVES FROM
AND AGAINST ANY AND ALL LIABILITY, CLAIMS, LOSSES, CAUSES OF ACTION, COSTS AND
EXPENSES (INCLUDING COURT COSTS AND REASONABLE ATTORNEYS’ FEES), INJURY TO
BUYER’S EMPLOYEES, AGENTS, CONTRACTORS, SUBCONTRACTORS OR INVITEES OR TO BUYER’S
PROPERTY, AND/OR INJURY TO SELLER’S PROPERTY, EMPLOYEES, AGENTS OR CONTRACTORS
WHICH MAY ARISE OUT OF OR ARE ATTRIBUTABLE TO ACCESS TO THE PROPERTIES OR
BUYER’S INSPECTIONS THEREOF, , 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.  Buyer agrees to provide to Seller a copy of
any environmental assessments, including any reports, data, and conclusions. 
Any and all data or information acquired by all such examinations and results of
all analysis of such data and information shall be subject to the terms of the
Confidentiality Agreement.

12.           Period Pending Closing.  Except as may be required by the terms of
this Agreement or as may be approved by Buyer in writing, from the date hereof
until the Closing Date Seller shall not transfer, sell, hypothecate, encumber or
otherwise dispose of any of the Properties.  Buyer’s approval of any action

 

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restricted by this Section 12 shall not be unreasonably withheld or delayed and
shall be considered granted within ten (10) days (unless a shorter time is
reasonably required by the circumstances and such shorter time is specified in
Seller’s notice) of Seller’s notice to Buyer requesting such consent unless
Buyer notifies Seller to the contrary during that period.  Notwithstanding the
foregoing provisions of this Section 12, in the event of an emergency, Seller
may take such action as may be reasonably necessary and shall notify Buyer of
such action promptly thereafter.

13.           [Intentionally Omitted].

14.           Notification of Breaches.  Until the Closing,

(a)           Buyer shall notify Seller promptly after Buyer obtains actual
knowledge that any representation or warranty of Seller contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement to be performed
or observed by Seller prior to or on the Closing Date has not been so performed
or observed in any material respect;

(b)           Seller shall notify Buyer promptly after Seller obtains actual
knowledge that any representation or warranty of Buyer contained in this
Agreement is untrue in any material respect or will be untrue in any material
respect as of the Closing Date or that any covenant or agreement to be performed
or observed by Buyer prior to or on the Closing Date has not been so performed
or observed in any material respect; and

(c)           If any of Buyer’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 Buyer’s or
Seller’s covenants or agreements to be performed or observed prior to or on the
Closing Date shall not have been so performed or observed in any material
respect, but such breach of representation or warranty or non-performance of
covenant or agreement shall (if curable) be cured by the Closing (or, if the
Closing does not occur, by the date set forth in Section 16(a)), then such
breach shall be considered not to have occurred for all purposes of this
Agreement.

15.           Sale Price Adjustments.  The unadjusted Sale Price shall be
adjusted as follows, but only with respect to matters (i) in the case of Section
15(a), for which notice is given on or before the Defect Claim Date, and (ii) in
the case of Sections 15(b), (c), (d), (e), (f), (g), (h) (i) and (j) identified
on or before the February 1, 2008:

(a)           Decreased, as appropriate, in accordance with Section 9;

(b)           Decreased as a consequence of Properties being excluded from this
transaction as a consequence of the exercise of preferential rights to purchase,
as described in Section 10;

(c)           Increased by the aggregate amount (using a settlement price of
three dollars ($3.00) per thousand cubic feet (Mcf)) that the Subject Assets are
underproduced, if at all, as to the Net Profits Royalties share of total oil,
condensate, gas or end product production, any balancing obligation or credit
arising from such underproduction, and any pipeline imbalance underproduced, in
each case determined as of the Effective Time;

(d)           Decreased by the aggregate amount (using a settlement price of
three dollars ($3.00) per thousand cubic feet (Mcf)) that the Subject Assets are
overproduced, if at all, as to the Net Profits Royalties share of total oil,
condensate, gas or end product production, any balancing obligation or credit
arising from such overproduction, and any pipeline imbalance overproduced, in
each case determined as of the Effective Time;

 

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(e)           Decreased by an amount equal to the amounts received by Seller
that are attributable to the ownership of the Properties for periods on or after
the Effective Time and received by Seller on or prior to the Closing Date;

(f)            Increased by the expenses paid by Seller that are attributable to
the ownership of the Properties for periods on or after the Effective Time;

(g)           Decreased by an amount equal to the portion of the Allocated Value
of any Properties transferred or sold by Seller during the period on or after
July 1, 2007 but prior to the Closing Date; provided, however, that any
decreases made under this Section 15(g) shall be shall be determined without
duplication of any costs or losses included in another adjustment, or for which
Buyer otherwise receives credit in the calculation of the Sale Price and shall
exclude any transfer or sale of any Properties to Buyer or its Affiliates at
Closing as contemplated hereunder;

(h)           Increased by a positive amount, if any, equal to (i) ninety
percent (90%) of the total proved discounted future net income aggregate value
(discounted at ten percent (10%)) of all of the Subject Assets as of December
31, 2006 as shown in the reserve report to be delivered by Ryder Scott Company
after the date of this Agreement and prior to November 30, 2007 (“Revised
Reserve Report”) minus (ii) $28,241,400 (such amount representing ninety percent
(90%) of the total proved discounted future net income aggregate value
(discounted at ten percent (10%)) as reported in the reserve report covering the
Subject Assets delivered by Ryder Scott Company dated July 16, 2007 (“July
Reserve Report”) minus (iii) ninety percent (90%) of the total proved discounted
future net income aggregate value, discounted at ten percent (10%), of those
Subject Assets set forth on Schedule 15(h) attached hereto  (as such value is
set forth in the Revised Reserve Report);

(i)            In the event that the forward price of West Texas Intermediate
Crude Oil for December 2008 as posted by the New York Mercantile Exchange as of
the close of trading on the Business Day immediately preceding the Closing Date
(“Closing Date WTI Price”) is less then seventy four dollars and eighty cents
($74.80), then decreased by an amount equal to the product of (i) the Sale
Price, as adjusted under clauses (a) through (h) of this Section 15, multiplied
by (ii) five tenths ((0.50), multiplied by (iii) the remainder of (A) ninety
five one hundredths (0.95), minus (B) the quotient of (1) the Closing Date WTI
Price, divided by (2) seventy eight dollars and seventy four cents (784.74);
provided, however, the adjustment to the Sale Price provided in this Section
15(i) shall in no event exceed ten percent (10%) of the Sale Price, as adjusted
under clauses (a) through (h) of this Section 15;

(j)            In the event that the Closing Date WTI Price exceeds eighty two
dollars and sixty eight cents ($82.68), then increased by an amount equal to the
product of (i) the Sale Price, as adjusted under clauses (a) through (h) of this
Section 15, multiplied by (ii) twenty five hundredths (0.25), multiplied by
(iii) the remainder of (A) the quotient of (1) the Closing Date WTI Price,
divided by (2) seventy eight dollars and seventy four cents (784.74), minus (B)
one hundred and five one hundredths (1.05);

(k)           Decreased by an amount equal to the Deposit; and

(l)            In the event that closing does not occur on or prior to the
Target Closing Date due to the sole fault of Buyer, increased by an amount equal
to (1) the Agreed Rate multiplied by (2)(A) the unadjusted Sale Price, as
adjusted under clauses (a) through (j) above, multiplied by (B)(y) the number of
days in the period from the Target Closing Date through and including the
Closing Date divided by (z) 365.  As used herein, the term “Agreed Rate” shall
mean the lesser of (i)  the one month London Inter-Bank Offered Rate, as
published on Telerate Page 3750 on the last Business Day prior to the Effective
Time, plus five percentage points (LIBOR +5%) and (ii) the maximum rate allowed
by applicable Law.

The adjustments set forth in this Section 15 shall be determined in the order of
priority set forth in this Section 15, with the intent of the Parties being that
the adjustment set forth in Section 15(a) shall be made prior to the adjustment
set forth in Section 15(b) and the adjustment set forth in Section 15(b) shall

 

 

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be made prior to the adjustment set forth in Section 15(c), and so on and so
forth.  The amount of each adjustment to the unadjusted Sale Price described in
Sections 15(e), and 15(g) shall be determined in accordance with the United
States generally accepted accounting principles.

16.           Termination.

(a)           Right of Termination.  This Agreement may be terminated at any
time prior to Closing:

(i)            by the mutual prior written consent of Seller and Buyer; or

(ii)           by Buyer if, through no fault of Buyer, any condition set forth
in Section 17 has not been satisfied or waived by Buyer by December 31, 2007, or

(iii)          by Seller if, Seller has timely delivered to Buyer a valid notice
of termination in accordance with Section 9(i); or

(iv)          by Seller if, through no fault of Seller, any condition set forth
in Section 18 has not been satisfied or waived by Seller by December 31, 2007;
or

(v)           by Seller, no later than November 23, 2007 if Seller deems it
reasonably necessary, in its sole discretion, to do so in order to comply with
its fiduciary duties; or

(vi)          by Seller or Buyer if the aggregate adjustment to the Sale Price
provided in Section 15(h) exceeds four million dollars ($4,000,000), by
delivery, within two (2) Business Days after the delivery of the reserve report
described in Section 15(h)(i), to the other Party a written notice of
termination.

(b)           Effect of Termination.

(i)            If this Agreement is terminated pursuant to Section 16(a)(i), as
each Party’s exclusive remedy, Seller shall promptly (but in no event later than
three (3) Business Days after such termination) return the Deposit to Buyer via
wire transfer of immediately available funds.

(ii)           If this Agreement is terminated pursuant to Section 16(a)(ii), as
each Party’s exclusive remedy, Seller shall promptly (but in no event later than
three (3) Business Days after such termination) return the Deposit to Buyer via
wire transfer of immediately available funds.

(iii)          If this Agreement is terminated pursuant to Section 16(a)(iii),
as each Party’s exclusive remedy, Seller shall promptly (but in no event later
than three (3) Business Days after such termination return the Deposit to Buyer
via wire transfer of immediately available funds.

(iv)          If this Agreement is terminated pursuant to Section 16(a)(iv)
above, then Seller shall be entitled to retain the Deposit as liquidated damages
and as reimbursement for Seller’s out-of-pocket fees and expenses incurred in
connection with the transactions contemplated by this Agreement and Seller may,
at its option, assert its right of specific performance; provided, however, if
this Agreement is terminated pursuant to Section 16(a)(iv) solely due to the
failure to receive the opinion described in Section 18(d), then, as each Party’s
exclusive remedy, Seller shall promptly (but in no event later than three (3)
Business Days after such termination) return the Deposit to Buyer via wire
transfer of immediately available funds.  The Parties hereby acknowledge that
the extent of damages to Seller occasioned by any breach or default or failure
to proceed by Buyer would be impossible or extremely impractical to ascertain
and that the amount of the Deposit is a fair and reasonable estimate of such
damage.

 

 

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(v)           If this Agreement is terminated pursuant to Section 16(a)(v), as
each Party’s exclusive remedy, Seller shall promptly (but in no event later than
three (3) Business Days after such termination) return the Deposit to Buyer via
wire transfer of immediately available funds.

(vi)          If this Agreement is terminated pursuant to Section 16(a)(vi), as
each Party’s exclusive remedy, Seller shall promptly (but in no event later than
three (3) Business Days after such termination) return the Deposit to Buyer via
wire transfer of immediately available funds.

(c)           If this Agreement is terminated pursuant to this Section 16, this
Agreement shall become void and of no further force or effect (except for the
provisions of Section 1, 4, 8, 11, 16, 31, 33, 34, 37, 41, 44, 45, 46 48, and 49
and for the Confidentiality Agreement, all of which shall continue in full force
and effect).  Notwithstanding anything to the contrary in this Agreement, the
termination of this Agreement under this Section 16 shall not relieve any Party
from liability (including liability for consequential damages) for any willful
or negligent failure to perform or observe in any material respect any of its
agreements or covenants contained herein that are to be performed or observed at
or prior to Closing.  In the event this Agreement terminates under Section 16
and any Party has willfully or negligently failed 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, then the other Party shall
be entitled to all remedies available at law or in equity (including strict
performance) and shall be entitled to recover court costs and attorneys’ fees
from the other Party in addition to any other relief to which such Party may be
entitled.

17.           Conditions of Closing by Buyer.  The obligation of Buyer to close
is subject to the satisfaction of the following conditions:

(a)           All representations and warranties of Seller contained in Sections
6(a) and 6(b) of this Agreement shall be true and correct in all material
respects as of the Closing Date as though made on and as of the Closing Date,
and Seller shall have performed and satisfied in all material respects all
agreements and covenants required by Sections 8, 10, 11, 12 and 14 of this
Agreement to be performed and satisfied by Seller prior to or on the Closing
Date;

(b)           No suit, injunction, order or award, or other proceeding shall be
pending or threatened before any court or governmental agency seeking to
restrain, enjoin or prohibit the consummation of the transactions contemplated
by this Agreement; and

(c)           All material consents and approvals of any Governmental Authority
required for the transfer of the Properties from Seller to Buyer as contemplated
by this Agreement, except consents and approvals that are customarily obtained
after closing, shall have been granted, or, if applicable, the necessary waiting
period shall have expired, or early termination of the waiting period shall have
been granted.

18.           Conditions of Closing by Seller.  The obligation of Seller to
close is subject to the satisfaction of the following conditions:

(a)           All representations and warranties of Buyer contained in Section 7
of this Agreement shall be true and correct in all material respects as of the
Closing Date as though made on and as of the Closing Date, and Buyer shall have
performed and satisfied in all material respects all agreements and covenants
required by this Agreement to be performed and satisfied by Buyer prior to or on
the Closing Date;

(b)           No suit, injunction, order or award, or other proceeding shall be
pending or threatened before any court or governmental agency seeking to
restrain, enjoin or prohibit the consummation of the transactions contemplated
by this Agreement;

 

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(c)           All material consents and approvals of any Governmental Authority
required for the transfer of the Properties from Seller to Buyer as contemplated
by this Agreement, except consents and approvals that are customarily obtained
after closing, shall have been granted, or, if applicable, the necessary waiting
period shall have expired, or early termination of the waiting period shall have
been granted; and

(d)           Seller shall have received an opinion satisfactory to Seller from
a nationally recognized investment banking firm regarding the fairness, from a
financial point of view, of the transactions contemplated hereby to the Trust.

19.           Preliminary Closing Statement.  Seller shall prepare and furnish
to Buyer at least three (3) days prior to Closing a preliminary closing
statement setting forth the adjustments, if any, to the Sale Price and the total
amount of funds to be paid by Buyer at Closing.  Such statement shall reflect
each adjustment and the calculation used to determine such amount.  The adjusted
Sale Price shall mean the Sale Price adjusted as provided herein.

20.           Closing. The consummation of the transactions contemplated hereby
(“Closing”) shall unless otherwise agreed to in writing by Buyer and Seller,
take place at the offices of Devon located at 20 N. Broadway, Oklahoma City,
Oklahoma, at 10:00 a.m., local time, on December 17, 2007 (“Target Closing
Date”), or if all conditions in Sections 17 and 18 to be satisfied prior to
Closing have not yet been satisfied or waived, as soon thereafter as such
conditions have been satisfied or waived, subject to the provisions of Section
16.  The date on which the Closing occurs is referred to herein as the “Closing
Date”.  At Closing the following shall occur:

(a)           Seller and Buyer shall execute, acknowledge and deliver
counterparts of a Deed, Assignment and Bill of Sale substantially in the form
and substance of Exhibit C attached hereto, covering all of the Properties to be
sold pursuant hereto;

(b)           Buyer shall deliver to Seller by wire transfer of immediately
available funds the total Sale Price as adjusted hereunder, subject to further
adjustment after Closing as provided for herein;

(c)           In compliance with Section 1445 of the Code, Seller shall execute
and deliver to Buyer a Non-Foreign Affidavit in the form of Exhibit D attached
hereto;

(d)           Seller and Buyer shall execute and deliver assignments, if any,
prepared by Buyer in form required by federal, state or tribal agencies for the
assignment of Net Profits Royalties burdening any federal, state or tribal lands
burdened by the Subject Assets, duly executed by Seller, in sufficient duplicate
originals to allow recording in all appropriate offices;

(e)           Seller and Buyer shall execute and deliver letters-in-lieu of
transfer orders, if any, with respect to the Properties, as applicable;

(f)            Buyer shall deliver to Seller a certificate duly executed by the
secretary or any assistant secretary of Buyer, dated as of the Closing,
(i) attaching and certifying on behalf of Buyer complete and correct copies of
(A) the certificate of incorporation and the bylaws of Buyer, each as in effect
as of the Closing, (B)  resolutions of the Board of Directors of Buyer
authorizing the execution, delivery, and performance by Buyer of this Agreement
and the transactions contemplated hereby or an opinion of counsel to Buyer
addressed to Seller to the effect that board approval is not required (such
opinion to be in form and substance reasonably satisfactory to Seller and from
counsel reasonably satisfactory to Seller), and (C) any required approval by the
stockholders of Buyer of this Agreement and the transactions contemplated hereby
and (ii) certifying on behalf of Buyer the incumbency of each officer of Buyer
executing this Agreement or any document delivered in connection with the
Closing;

 

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(g)           Buyer shall deliver to Seller a certificate duly executed by an
authorized corporate officer of Buyer, dated as of the Closing Date, certifying
on behalf of Buyer that the conditions set forth in Section 18(a) have been have
been fulfilled;

(h)           Seller shall be entitled to retain the Deposit for its own account
and the amount of the Deposit shall be applied to the payment of the Sale Price
in accordance with Section 15(k); and

(i)            Seller shall deliver to Buyer a certificate duly executed by an
authorized corporate officer of Seller, dated as of the Closing Date, certifying
on behalf of Seller that the conditions set forth in Section 17(a) have been
have been fulfilled.

21.           Reservations and Exceptions.  The sale and purchase of the
Properties is made subject to all reservations, exceptions, limitations,
contracts and other burdens or instruments which are stated herein, on Exhibit
A, or on any schedule or exhibit hereto, which are of record or of which Buyer
has actual or constructive notice, including any matter included or referenced
in the any schedule or exhibit hereto or any materials made available by Seller
to Buyer.

22.           Payments.  All payments made or to be made under this Agreement to
Seller shall be made by electronic transfer of immediately available funds to an
account of Seller that shall be designated by Seller in writing prior to the
Closing Date, for the credit of Seller, or to such other bank and account as may
be specified by Seller in writing on or before the Closing Date.  All payments
made or to be made hereunder to Buyer shall be by electronic transfer of
immediately available funds to a bank and account specified by Buyer in writing
to Seller, for the credit of Buyer.

23.           Assumption of Liabilities and Indemnities.

(a)           Damages.  As used in this Section 23, “Damages” shall mean the
amount of any actual liability, loss, cost, expense, claim, award or judgment
incurred or suffered by any Indemnified Person arising out of or resulting from
the indemnified matter, whether attributable to personal injury or death,
property damage, contract claims, torts or otherwise, 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 Buyer and Seller shall not be entitled to
indemnification under this Section 23 for, and Damages shall not include,
(i) loss of profits or other special or consequential damages suffered by the
Party claiming indemnification, or any punitive damages, (ii) any liability,
loss, cost, expense, claim, award or judgment to the extent resulting from or
increased by the actions or omissions of any Indemnified Person after the
Closing Date or (iii) except with respect to claims for breach of Section 6, any
liability, loss, cost, expense, claim, award or judgment that does not
individually exceed two percent (2%) of the Sale Price, and, provided, further,
that “Damages” shall not include any adjustment for Taxes that may be assessed
on payments under this Section 23 or for Tax benefits received by the
Indemnified Person as a consequence of any Damages.  “Seller Group” shall mean
Seller, and its current and former Affiliates, and its and their respective
directors, officers, employees, agents, contractors, insurers and invitees.

(b)           Assumed Obligations.  Without limiting Buyer’s rights to indemnity
under this Section 23, on the Closing Date Buyer shall assume and hereby agrees
to fulfill, perform, pay and discharge (or cause to be fulfilled, performed,
paid or discharged) all of the obligations and liabilities of Seller and its
Affiliates, known or unknown, with respect to the Properties, regardless of
whether such obligations or liabilities arose prior to or after the Closing
Date, including but not limited to, obligations to furnish makeup gas according
to the terms of applicable gas sales, gathering or transportation Contracts,
production balancing obligations, crude oil scheduling imbalances, obligations
to pay working interests, royalties, overriding royalties and other interests
held in suspense, obligations under any Environmental Laws, obligations to plug
and abandon wells and dismantle structures, and to restore and/or remediate the
Properties, ground water, surface water, soil or seabed in accordance with
applicable agreements and Laws, including any obligations to assess, remediate,
remove and dispose of NORM, MMMF, asbestos, mercury, drilling fluids and
chemicals, and produced waters and hydrocarbons, other environmental

 

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liabilities with respect to the Properties and continuing obligations under the
Contracts or any agreements pursuant to which the Seller or its Affiliates
purchased Properties prior to the Closing (all of said obligations and
liabilities, subject to the exclusions of the proviso below, herein being
referred to as “Assumed Obligations”); provided, however, that Buyer does not
assume any obligations to the extent that they are: (i) attributable to or arise
out of the Excluded Properties; (ii) required to be borne by Seller under
Section 15; (iii) Tax obligations retained by Seller pursuant to Section 27 or
28; or (iv) the responsibility of Seller under Section 23(d).

(c)           Buyer Indemnification.  From and after Closing, Buyer shall
indemnify, defend and hold harmless Seller and its Affiliates from and against
all Damages incurred or suffered by Seller or any of Seller’s Affiliates:

(i)            caused by or arising out of or resulting from the Assumed
Obligations,

(ii)           otherwise caused by or arising out of or resulting from the
ownership, use or operation of the Properties, whether before or after the
Closing Date,

(iii)          caused by or arising out of or resulting from Buyer’s breach of
any of Buyer’s covenants or agreements contained herein, or

(iv)          caused by or arising out of or resulting from any breach of any
representation or warranty made by Buyer contained herein or in any certificate
delivered by Buyer at Closing pursuant to Section 20,

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 OF ANY
INDEMNIFIED PERSON, but excepting in each case Damages against which Seller
would be required to indemnify Buyer under Section 23(d) at the time the claim
notice is presented by Buyer.

 

(d)           Seller Indemnification.  From and after Closing, Seller shall
indemnify, defend and hold harmless Buyer and its Affiliates from and against
any and all Damages incurred or suffered by Buyer or any of Buyer’s Affiliates:

(i)            caused by or arising out of or resulting from Seller’s breach of
any of Seller’s covenants or agreements contained in Section 12,

(ii)           caused by or arising out of or resulting from any breach of any
representation or warranty made by Seller contained in Section 6 of this
Agreement, or

(iii)          caused by or arising out of or resulting from any the
undertakings or agreements of Seller for brokerage fees, finder’s fees, agent’s
commissions or other similar forms of compensation to an intermediary in
connection with the negotiation, execution or delivery of this Agreement or any
agreement or transaction contemplated hereby,

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 OF ANY
INDEMNIFIED PERSON.

 

(e)           Notwithstanding anything to the contrary contained in this
Agreement, Seller’s and Buyer’s exclusive remedy against each other with respect
to breaches of the representations, warranties, covenants and agreements of the
Parties contained in Sections 6 through 14 (excluding Sections 9 or 10, which
shall be separately enforceable by Seller pursuant to whatever rights and
remedies are available to it outside of this Section 23) and the affirmations of
such representations, warranties, covenants and agreements contained in the
certificates delivered by Buyer at Closing pursuant to Section 20, is set forth
in this Section 23 (and, where applicable with respect to Section 16).  Except
for the remedies contained

 

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in this Section 23 and Section 16, and any other remedies available to the
Parties at law or in equity for breaches of provisions of this Agreement other
than Sections 6 through 8 or 11 through 14, Seller and Buyer each release,
remise and forever discharge the other and their or its Affiliates and all such
Persons’ stockholders, officers, directors, employees, agents, advisors and
representatives 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 such Parties
might now or subsequently may have, based on, relating to or arising out of this
Agreement or Seller’s ownership, use or operation of the Properties, or the
condition, quality, status or nature of the Properties, including rights to
contribution under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, breaches of statutory and implied warranties,
nuisance or other tort actions, rights to punitive damages, common law rights of
contribution, any rights under insurance policies and any rights under
agreements between Seller and any Affiliate of Seller, EVEN IF CAUSED IN WHOLE
OR IN PART BY THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT
LIABILITY OR OTHER LEGAL FAULT OF ANY RELEASED PERSON.  Without limiting the
generality of the preceding sentence, Buyer agrees that its only remedy with
respect to Seller’s breach of its covenants and agreements in Sections 8, 10,
11, 12 and 14 shall be the indemnity of Seller in Section 23(d), as limited by
the terms of this Section 23, and, if applicable, as set forth in Section 16.

(f)            The indemnity to which each Party is entitled under this Section
23 shall be for the benefit of and extend to such Party’s current and former
Affiliates and its and their respective directors, officers, employees, and
agents.  Any claim for indemnity under this Section 23 by any such Affiliate,
director, officer, employee or agent must be brought and administered by the
applicable Party to this Agreement.  No Indemnified Person other than Seller and
Buyer shall have any rights against either Seller or Buyer under the terms of
this Section 23 except as may be exercised on its behalf by Buyer or Seller, as
applicable, pursuant to this Section 23(f).  Each of Seller and Buyer may elect
to exercise or not exercise indemnification rights under this Section on behalf
of the other Indemnified Persons affiliated with it in its sole discretion and
shall have no liability to any such other Indemnified Person for any action or
inaction under this Section.

(g)           This Section 23 shall not apply in respect of title matters, which
are exclusively covered by Section 9, or Tax matters, which are exclusively
covered by Sections 27 and 28.

(h)           The Parties shall treat, for Tax purposes, any amounts paid under
this Section 23 as an adjustment to the applicable Sale Price.

24.           Indemnification Actions.  All claims for indemnification under
Section 23 shall be asserted and resolved as follows:

(a)           The term “Indemnifying Person” when used in connection with
particular Damages shall mean the Person having an obligation to indemnify
another Person or Persons with respect to such Damages pursuant to Section 23,
and the term “Indemnified Person” when used in connection with particular
Damages shall mean a Person having the right to be indemnified with respect to
such Damages pursuant to Section 23 (including, for the avoidance of doubt,
those Persons identified in Section 23(f)).

(b)           To make a claim for indemnification under Section 23, an
Indemnified Person shall notify the Indemnifying Person of its claim, including
the specific details of and specific basis under this Agreement for its claim
(“Claim Notice”).  In the event that the claim for indemnification is based upon
a claim by a third Person against the Indemnified Person (a “Claim”), the
Indemnified Person shall provide its Claim Notice promptly after the Indemnified
Person has actual knowledge of the Claim and shall enclose a copy of all papers
(if any) served with respect to the Claim; provided that the failure of any
Indemnified Person to give notice of a Claim as provided in this Section 24
shall not relieve the Indemnifying Person of its obligations under Section 23
except to the extent such failure results in insufficient time being available
to permit the Indemnifying Person to effectively defend against the Claim or
otherwise prejudices the Indemnifying Person’s ability to defend against the
Claim.  In the event that the claim for indemnification is based upon an
inaccuracy or breach of a representation, warranty,

 

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covenant or agreement, the Claim Notice shall specify the representation,
warranty, covenant or agreement that was inaccurate or breached.

(c)           In the case of a claim for indemnification based upon a Claim, the
Indemnifying Person shall have thirty (30) days from its receipt of the Claim
Notice to notify the Indemnified Person whether it admits or denies its
obligation to defend the Indemnified Person against such Claim under this
Section 24.  If the Indemnifying Person does not notify the Indemnified Person
within such thirty (30) day period regarding whether the Indemnifying Person
admits or denies its obligation to defend the Indemnified Person, it shall be
conclusively deemed obligated to provide such indemnification hereunder.  The
Indemnified Person 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
Person and that is not prejudicial to the Indemnifying Person.

(d)           If the Indemnifying Person admits its obligation, it shall have
the right and obligation to diligently defend, at its sole cost and expense, the
Claim.  The Indemnifying Person shall have full control of such defense and
proceedings, including any compromise or settlement thereof.  If requested by
the Indemnifying Person, the Indemnified Person agrees to cooperate in
contesting any Claim which the Indemnifying Person elects to contest (provided,
however, that the Indemnified Person shall not be required to bring any
counterclaim or cross-complaint against any Person).  The Indemnified Person may
participate in, but not control, any defense or settlement of any Claim
controlled by the Indemnifying Person pursuant to this Section 24.  An
Indemnifying Person shall not, without the written consent of the Indemnified
Person, settle any Claim or consent to the entry of any judgment with respect
thereto that does not result in a final, complete and unconditional release of
the Indemnified Person’s liability with respect to the Claim.

(e)           If the Indemnifying Person does not admit its obligation or admits
its obligation but fails to diligently defend or settle the Claim, then the
Indemnified Person shall have the right to defend against the Claim (at the sole
cost and expense of the Indemnifying Person, if the Indemnified Person is
entitled to indemnification hereunder), with counsel of the Indemnified Person’s
choosing, subject to the right of the Indemnifying Person to admit its
obligation to indemnify the Indemnified Person and assume the defense of the
Claim at any time prior to settlement or final determination thereof.  If the
Indemnifying Person has not yet admitted its obligation to indemnify the
Indemnified Person, the Indemnified Person shall send written notice to the
Indemnifying Person of any proposed settlement and the Indemnifying Person shall
have the option for ten (10) days following receipt of such notice to (i) admit
in writing its obligation for indemnification with respect to such Claim and
(ii) if its obligation is so admitted, assume the defense of the Claim,
including the power to reject the proposed settlement.  If the Indemnified
Person settles any Claim over the objection of the Indemnifying Person after the
Indemnifying Person has timely admitted its obligation for indemnification in
writing and assumed the defense of the Claim, the Indemnified Person shall be
deemed to have waived any right to indemnity therefor.

(f)            In the case of a claim for indemnification not based upon a
Claim, the Indemnifying Person shall have thirty (30) days from its receipt of
the Claim Notice to (i) cure 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 Person does not
notify the Indemnified Person within such thirty (30) day period that it has
cured the Damages or that it disputes the claim for such Damages, the
Indemnifying Person shall be conclusively deemed obligated to provide
indemnification hereunder.

25.           Limitation on Actions.

(a)           The representations and warranties of the Seller in Section 6 and
the covenants and agreements of Seller in Section 12 shall survive the Closing
for a period of three (3) months after Closing.  All other representations,
warranties and covenants of Seller shall terminate as of the Closing Date.

(b)           The remainder of this Agreement shall survive the Closing without
time limit except as may otherwise be expressly provided herein. 
Representations, warranties, covenants and agreements shall be of no further
force and effect after the date of their expiration, provided that there shall
be no

 

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termination of any bona fide claim asserted pursuant to this Agreement with
respect to such a representation, warranty, covenant or agreement prior to its
expiration date.

(c)           The indemnities in Section 23(d) 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
for which a specific written claim for indemnity has been delivered to the
Indemnifying Person on or before such termination date.  The indemnities in
Section 23(c) shall continue without time limit.

(d)           Seller shall not have any liability for any indemnification under
Section 23 until and unless the aggregate amount of the liability for all
Damages for which Claim Notices are delivered by Buyer exceeds two percent (2%)
of the unadjusted Sale Price, and then only to the extent the amount of such
Damages exceeds two percent (2%) of the unadjusted Sale Price.

(e)           Notwithstanding anything to the contrary contained elsewhere in
this Agreement, Seller shall not be required to indemnify Buyer under Section 23
for aggregate Damages in excess of twenty five percent (25%) of the unadjusted
Sale Price.

(f)            The amount of any Damages for which an Indemnified Person is
entitled to indemnity under Section 23 shall be reduced by the amount of any
insurance proceeds realized by the Indemnified Person or its Affiliates with
respect to such Damages (net of any collection costs).

26.           Casualty and Condemnation.  If, after the date of this Agreement
but prior to Closing Date, any portion of the Properties is destroyed by fire or
other casualty or is expropriated or taken in condemnation or under right of
eminent domain, Buyer shall nevertheless be required to close.  In the event
that the amount of the diminutions in value of the Properties attributable to
such casualty, expropriation or taking (determined by reference to the Allocated
Value, determined in the same manner as a Defect in accordance with Section 9),
exceeds fifty thousand dollars ($50,000.00), Seller and Buyer shall treat the
diminution of value of the Properties attributable to such casualty,
expropriation or taking (determined by reference to Allocated Value) as a Defect
under Section 9.  In each case, Seller shall retain all rights to insurance and
other claims against third Persons with respect to the casualty or taking except
to the extent the Parties otherwise agree in writing.

27.           Taxes.  All ad valorem Taxes, real property Taxes, and similar
obligations with respect to the Tax period in which the Effective Time occurs
(the “current Tax period”) shall be apportioned between Seller and Buyer as of
the Effective Time based on the current Tax period assessment.  Seller shall
pay, and indemnify, defend and hold Buyer harmless with respect to payment of
all such Taxes on the Properties for the current Tax period, together with any
interest or penalties assessed thereon.  Buyer shall pay, and indemnify, defend
and hold Seller harmless with respect to payment of all such Taxes on the
Properties for any time subsequent to the current Tax period, together with any
interest or penalties assessed thereon.

28.           Sales Tax; Recording Fees.  The Sale Price provided for hereunder
excludes any sales Taxes or other Taxes in connection with the sale contemplated
by this Agreement.  If a determination is ever made that a sales Tax or other
transfer Tax applies, Buyer shall be liable for such Tax as well as any
applicable conveyance, transfer and recording fees, and real estate transfer
stamps or Taxes imposed on any transfer of property pursuant to this Agreement. 
Buyer shall indemnify, defend and hold Seller harmless with respect to the
payment of all such Taxes, if any, including any interest or penalties assessed
thereon.  Notwithstanding other provisions of this Agreement, Buyer shall be
responsible for the prompt filing and recording of the conveyances, assignments
or other instruments required to convey title to the Properties to Buyer in the
appropriate federal, state and local records.  Buyer shall supply Seller with a
true and accurate photocopy of all the recorded and filed conveyances within a
reasonable period of time after such are available and in any event within sixty
(60) days after the Closing Date.

29.           Records.  Within ten (10) days after the Closing Date, Seller
shall deliver or cause to be delivered to Buyer any Records that are in the
possession of Seller, subject to this Section 28.  Seller may retain

 

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the originals of those Records relating to Tax and accounting matters and
provide Buyer, at its request, with copies of such Records that pertain to
non-income Tax matters solely related to the Properties.  Seller may retain
copies of any other Records.  Buyer, for a period of seven (7) years following
the Closing, shall: (i) retain the Records, (ii) provide Seller, its Affiliates,
and their respective officers, employees and representatives with access to the
Records during normal business hours for review and copying at Seller’s expense,
(iii) provide Seller, its Affiliates, and their respective officers, employees
and representatives with access for, during normal business hours, to materials
received or produced after Closing relating to (A) Seller’s obligations under
Section 27, or (B) any claim for indemnification made under Sections 23 or 28 of
this Agreement (excluding, however, attorney work product and attorney-client
communications with respect to any such claim being brought by Buyer under this
Agreement), for review and copying at Seller’s expense, and (iv) provide Seller,
its Affiliates, and their respective officers, employees and representatives
with access for, during normal business hours, to Buyer’s personnel for the
purpose of discussing any such matter or claim described in Section 29(iii).

30.           Post-Closing Adjustments; Revenues.

(a)           As soon as reasonably practicable after the Closing but not later
than the later of (i) the February 1, 2007 and (ii) the date on which the
Parties or the Defect Arbitrators, as applicable, finally determines all Defect
Amounts under Section 9, Seller shall prepare and deliver to Buyer a draft
statement setting forth the final calculation of the Sale Price and showing the
calculation of each adjustment under Section 15, based on the most recent actual
figures for each adjustment.  Seller shall at Buyer’s request make reasonable
documentation available to support the final figures.  As soon as reasonably
practicable but not later than the fifteenth (15th) day following receipt of
Seller’s statement hereunder, Buyer shall deliver to Seller a written report
containing any changes that Buyer proposes be made in such statement.  Seller
may deliver a written report to Buyer during this same period reflecting any
changes that Seller proposes to be made in such statement as a result of
additional information received after the statement was prepared.  The Parties
shall undertake to agree on the final statement of the Sale Price no later than
thirty (30) days after delivery of Seller’s statement.  In the event that the
Parties cannot reach agreement within such period of time, any Party may refer
the items of adjustment which are in dispute to Grant Thornton LLP or to any
other nationally-recognized independent accounting firm or consulting firm
mutually acceptable to both Buyer and Seller (“Accounting Arbitrator”), for
review and final determination by arbitration.  The Accounting Arbitrator 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.  The
Accounting Arbitrator’s determination shall be made within thirty (30) days
after submission of the matters in dispute and shall be final and binding on all
Parties, without right of appeal.  In determining the proper amount of any
adjustment to the Sale Price, the Accounting Arbitrator shall be bound by the
terms of Section 15 and may not increase the Sale Price more than the increase
proposed by Seller nor decrease the Sale Price more than the decrease proposed
by Buyer, as applicable.  The Accounting Arbitrator shall act as an expert for
the limited purpose of determining the specific disputed aspects of Sale Price
adjustments submitted by any Party and may not award damages, interest (except
as expressly provided for in this Section) or penalties to any Party with
respect to any matter.  Seller and Buyer shall each bear its own legal fees and
other costs of presenting its case.  Seller shall bear one-half and Buyer shall
bear one-half of the costs and expenses of the Accounting Arbitrator.  Within
ten (10) days after the earlier of (i) the expiration of Buyer’s fifteen
(15) day review period without delivery of any written report or (ii) the date
on which the Parties or the Accounting Arbitrator finally determine the Sale
Price, (x) Buyer shall pay to Seller the amount by which the adjusted Sale Price
paid by Buyer to Seller on the Closing Date exceeds the final adjusted Sale
Price as determined pursuant to this Section 30 or (y) Seller shall pay to Buyer
the amount by which the final adjusted Sale Price as determined pursuant to this
Section 30 exceeds the adjusted Sale Price paid by Buyer to Seller on the
Closing Date, as applicable.  Any post-adjusted Sale Price pursuant to this
Section 30 shall bear interest from the Closing Date to the date of payment at
the Agreed Interest Rate.  Buyer shall assist Seller in preparation of the final
statement of the Sale Price under this Section 30 by furnishing invoices,
receipts, reasonable access to personnel and such other assistance as may be
requested by Seller to facilitate such process post-Closing.

 

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(b)           With respect to any proceeds attributable to the ownership of the
Properties prior to the Effective Time that are received after the Closing Date
(other than the Suspended Royalties), Seller shall be entitled to all such
proceeds.  Should Buyer receive after Closing any proceeds to which Seller is
entitled under the immediately foregoing sentence, Buyer shall fully disclose,
account for and promptly, but in no event later than thirty (30) days after
receipt, remit the same to Seller.

(c)           With respect to any proceeds attributable to (i) the ownership of
the Properties on or after the Effective Time or (ii) the Suspended Royalties
that are, in each case, received after the Closing Date, Buyer shall be entitled
to all such proceeds.  Should Seller or its Affiliates receive after Closing any
proceeds to which Buyer is entitled under the immediately foregoing sentence,
Seller shall fully disclose, account for and promptly, but in no event later
than thirty (30) days after receipt, remit the same to Buyer.

31.           Notices. All communications required or permitted under this
Agreement shall be in writing, in English, and any communication or delivery
hereunder shall be deemed to have been fully made if delivered by personal
delivery or if sent by nationally recognized next-business-day delivery courier
service or sent by facsimile transmission, to the address as set forth below:

If to
Seller:                                                                                      
The Bank of New York Trust Company, N.A., as trustee of Santa Fe Energy Trust
919 Congress, Suite 500
Austin, Texas 78701
Attention:              Mike Ulrich
Telecopy:              512-236-9275

 

With a copy to:                                                         The Bank
of New York Trust Company, N.A., as trustee of Santa Fe Energy Trust
One Wall Street, 11th Floor
New York, New York 10286
Attention:              Robert E. Bailey
Telecopy:              212-635-6590

 

and with a copy to:                                                Bracewell &
Giuliani LLP

111 Congress Avenue

Suite 2300

Austin, Texas 78701-4061

Attention:              Thomas W. Adkins

Telecopy:              512.479.3940

 

If to
Buyer:                                                                                   
Amen Properties, Inc.
303 W. Wall Street, Suite 2300
Midland, Texas 79701
Attention:              Jon Morgan
Telephone:            (432) 684-8200
Telecopy:              (432) 685-3143

 

With a copy to:                                                         Beckham,
Rector & Eargle, L.L.P.
First Financial Bank Building
400 Pine Street, Suite 1020
Abilene, Texas  79604
Attention:              John L. Beckham
Telephone:            (325) 673-1393
Telecopy:              (325) 673-3504

 

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 at
the time of receipt by the Party to which such notice

 

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is addressed, or in the case by notice sent by courier service or mail, on the
date three (3) Business Days after the date sent.

32.           Further Assurance.  After Closing each of the Parties shall
execute, acknowledge and deliver to the other such further instruments, and take
such other actions as may be reasonably necessary to carry out the provisions of
this Agreement.  However, Buyer shall assume all responsibility for notifying
the purchaser(s) of oil and gas production from the Properties, and such other
designated persons who may be responsible for disbursing payments for the
purchase of such production, of the change of ownership of the Properties, and
Buyer shall take all actions necessary to effectuate the transfer of such
payments to Buyer.

33.           Disclaimer of Warranties.  EXCEPT AS PROVIDED IN SECTION 6, ANY
INSTRUMENT OF CONVEYANCE OR SALE EXECUTED PURSUANT HERETO SHALL BE EXECUTED
WITHOUT ANY WARRANTY OF TITLE, EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE,
WITHOUT ANY EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION AS TO THE
MERCHANTABILITY OF ANY OF THE EQUIPMENT OR OTHER PERSONAL PROPERTY INCLUDED IN
THE PROPERTIES OR ITS FITNESS FOR ANY PARTICULAR PURPOSE, AND WITHOUT ANY OTHER
EXPRESS OR IMPLIED WARRANTY OR REPRESENTATION WHATSOEVER.  IT IS UNDERSTOOD AND
AGREED THAT BUYER SHALL HAVE INSPECTED THE PROPERTIES FOR ALL PURPOSES,
INCLUDING WITHOUT LIMITATION FOR THE PURPOSE OF DETECTING THE PRESENCE OF NORM
AND MAN MADE MATERIAL FIBERS (HEREINAFTER REFERRED TO AS “MMMF”) AND SATISFIED
ITSELF AS TO THEIR PHYSICAL AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND
SUBSURFACE, INCLUDING, BUT NOT LIMITED TO, CONDITIONS RELATED TO THE PRESENCE,
RELEASE, OR DISPOSAL OF HAZARDOUS SUBSTANCES, AND THAT BUYER IS RELYING SOLELY
UPON THE RESULTS OF SUCH INSPECTION OF THE PROPERTIES AND SHALL ACCEPT ALL OF
THE SAME IN THEIR “AS IS, WHERE IS” CONDITION.  SELLER DISCLAIMS ALL LIABILITY
ARISING IN CONNECTION WITH THE PRESENCE OF NORM OR MMMF ON THE PROPERTIES AND IF
TESTS HAVE BEEN CONDUCTED BY SELLER FOR THE PRESENCE OF NORM OR MMMF, SELLER
DISCLAIMS ANY WARRANTY RESPECTING THE ACCURACY OF SUCH TESTS OR RESULTS.  IN
ADDITION, SELLER AND ITS CONSULTANTS MAKES NO AND EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) TITLE TO ANY OF THE
PROPERTIES, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE
MEMORANDUM, ECONOMIC INFORMATION OR REPORTS, OR ANY REPORT OF ANY PETROLEUM
ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION,
RELATING TO THE SUBJECT ASSETS OR THE PROPERTIES, (III) THE QUANTITY, QUALITY OR
RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE SUBJECT ASSETS OR THE
PROPERTIES, (IV) THE EXISTENCE OF ANY PROSPECT, RECOMPLETION, INFILL OR STEP-OUT
DRILLING OPPORTUNITIES, (V) ANY ESTIMATES OF THE VALUE OF THE SUBJECT ASSETS OR
PROPERTIES OR FUTURE REVENUES GENERATED BY THE SUBJECT PROPERTIES OR SUBJECT
ASSETS, (VI) THE PRODUCTION OF PETROLEUM SUBSTANCES FROM THE PROPERTIES OR
SUBJECT ASSETS, OR WHETHER PRODUCTION HAS BEEN CONTINUOUS, OR IN PAYING
QUANTITIES, OR ANY PRODUCTION OR DECLINE RATES, (VII) THE MAINTENANCE, REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE SUBJECT ASSETS
OR PROPERTIES, (VIII) INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT, OR
(IX) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR
COMMUNICATED TO SELLER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS,
CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING
THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  ANY AND ALL
SUCH DATA, INFORMATION AND OTHER MATERIALS FURNISHED BY SELLER IS PROVIDED TO
BUYER AS A CONVENIENCE AND BUYER AFFIRMS THAT IT HAS RELIED SOLELY ON ITS OWN
EVALUATION OF THE PROPERTIES AND NOT ON INFORMATION FURNISHED BY SELLER.  AFTER
CONSULTATION WITH AN ATTORNEY OF ITS OWN SELECTION, BUYER EXPRESSLY WAIVES THE
PROVISIONS OF CHAPTER XVII, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63,
INCLUSIVE (OTHER THAN SECTION 17.555,

 

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WHICH IS NOT WAIVED), VERNON’S TEXAS CODE ANNOTATED, BUSINESS AND COMMERCE CODE
(THE “DECEPTIVE TRADE PRACTICES ACT”) AND IF ANY OF THE PROPERTIES ARE LOCATED
IN LOUISIANA AND ARE SUBJECT TO LOUISIANA LAW, BUYER EXPRESSLY WAIVES THE
WARRANTY OF FITNESS FOR INTENDED PURPOSES OR GUARANTEE AGAINST HIDDEN OR LATENT
REDHIBITORY VICES UNDER LOUISIANA LAW, INCLUDING LOUISIANA CIVIL CODE ARTICLES
2520 (1870) THROUGH 2548 (1870) AND THE WARRANTY IMPOSED BY LOUISIANA CIVIL CODE
ARTICLES 2476; WAIVES ALL RIGHTS IN REDHIBITION PURSUANT TO LOUISIANA CIVIL CODE
ARTICLES 2420, ET SEQ; ACKNOWLEDGES THAT THIS EXPRESS WAIVER SHALL BE CONSIDERED
A MATERIAL AND INTEGRAL PART OF THIS SALE AND THE CONSIDERATION THEREOF; AND
ACKNOWLEDGES THAT THIS WAIVER HAS BEEN BROUGHT TO THE ATTENTION OF BUYER AND
EXPLAINED IN DETAIL AND THAT BUYER HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO
THIS WAIVER OF WARRANTY OF FITNESS AND/OR WARRANTY AGAINST REDHIBITORY VICES AND
DEFECT FOR THE PROPERTIES.  BUYER ACKNOWLEDGES THAT THIS EXPRESS WAIVER SHALL BE
CONSIDERED A MATERIAL AND INTEGRAL PART OF THIS SALE AND THE CONSIDERATION
THEREOF; AND ACKNOWLEDGES THAT THIS WAIVER HAS BEEN BROUGHT TO THE ATTENTION OF
BUYER AND EXPLAINED IN DETAIL AND THAT BUYER HAS VOLUNTARILY AND KNOWINGLY
CONSENTED TO THIS WAIVER.  ALL INSTRUMENTS OF CONVEYANCE TO BE DELIVERED BY
SELLER AT CLOSING SHALL EXPRESSLY SET FORTH THE DISCLAIMERS OF REPRESENTATIONS
AND WARRANTIES CONTAINED IN THIS PARAGRAPH.  IN ORDER TO EVIDENCE ITS ABILITY TO
GRANT SUCH WAIVER, BUYER HEREBY REPRESENTS AND WARRANTS TO SELLER THAT BUYER (A)
IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION AND (B) IS REPRESENTED
BY LEGAL COUNSEL, OF ITS OWN SELECTION, IN SEEKING OR ACQUIRING THE INTERESTS.

34.           Expenses.  Except as expressly otherwise provided herein, all
expenses incurred by Seller in connection with this Agreement, and all other
matters related to the Closing, including without limitation, 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
Buyer shall be borne solely and entirely by Buyer.

35.           Due Diligence.     Buyer represents that it has performed, or will
perform prior to Closing, sufficient review and due diligence with respect to
the Properties, which includes reviewing well-data, title, and other files, and
performing necessary evaluations, assessments, and other tasks involved in
evaluating the Properties, to satisfy its requirements completely and to enable
it to make an informed decision to acquire the Properties under the terms of
this Agreement.  Buyer is capable of making such investigation, inspection,
review and evaluation of the Properties as a prudent purchaser would deem
appropriate under the circumstances, including with respect to all matters
relating to the Properties, their value, operation and suitability.  Each of
Seller and Buyer has had the opportunity to exercise business discretion in
relation to the negotiation of the details of the transactions contemplated
hereby.  This Agreement is the result of arm’s-length negotiations from equal
bargaining positions.  It is expressly agreed that this Agreement shall not be
construed against any Party, and no consideration shall be given or presumption
made, on the basis of who drafted this Agreement or any particular provision
thereof.

36.           Material Factor.  Buyer acknowledges that Buyer’s representations
herein are a material inducement to Seller to enter into this Agreement with,
and close the sale to, Buyer.

37.           Press Release.  Until the Closing, except as approved by the
Parties there shall be no press release or public communication concerning this
purchase and sale or any other transaction contemplated hereby by either Party
or their Affiliates; provided, however, the foregoing shall not restrict
disclosures by Buyer or Seller (i) to the extent that such disclosures are
required by applicable securities or other Laws or the applicable rules of any
stock exchange having jurisdiction over the disclosing Party or its Affiliates,
(ii) to Governmental Authorities and third Persons holding preferential rights
to purchase, rights of consent or other rights that may be applicable to the
transactions contemplated by this Agreement, as reasonably necessary to provide
notices, seek waivers. amendments or terminations of such rights, or seek such
consents, or (iii) to third Persons to the extent required by the Contracts. 
Seller and Buyer shall each be liable for the compliance of its respective
Affiliates with the terms of this Section

 

 

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37.  The Parties will endeavor to consult each other in a timely manner on all
press releases required by applicable Law.  Seller has advised Buyer that Seller
will be required under applicable Law to make certain disclosures regarding this
Agreement and the transactions contemplated hereby.

38.           Entire Agreement.               This Agreement and the
Confidentiality Agreement and the agreements and instruments contemplated hereby
and thereby state the entire agreement between the Parties regarding the subject
matter hereof and thereof and may be supplemented, altered, amended, modified or
revoked by writing only, signed by both Parties.  This Agreement supersedes any
prior agreements between the Parties concerning sale of the Properties, except
that the Confidentiality Agreement shall survive the execution and of this
Agreement and shall terminate at Closing.  The headings are for guidance only
and shall have no significance in the interpretations of this Agreement.

39.           Tax Reporting.     The allocated values set forth on Exhibit B
shall be completed in the manner required by Section 1060 of the Code.  Buyer
and Seller further agree to comply with all filing, notice and reporting
requirements described in Section 1060 of the Code, including the timely
preparation and filing of Form 8594 based on the allocated values.  Buyer and
Seller hereby agree that they will report the federal, state, foreign and other
Tax consequences of the transactions contemplated by this Agreement in a manner
consistent with the allocated values set forth on Exhibit B (as such may be
revised per the terms hereof).

40.           Assignability.       This Agreement and the rights and obligations
hereunder shall not be assignable or delegable by either Party hereto without
the prior written consent of the other, which consent may be given or withheld
at the sole discretion of the Party entitled to grant such consent, and any
transfer or delegation made without such consent shall be void.  Notwithstanding
anything to the contrary in this Section 40, Buyer may, prior to Closing, assign
its rights hereunder to a wholly-owned Affiliate of Buyer by delivering to
Seller prior to Closing an assignment agreement in form and substance mutually
acceptable to Seller; provided, however, such assignment shall not release, and
Buyer shall remain liable for, all obligations to be performed by Buyer under
this Agreement and the instruments delivered by Buyer or its Affiliates
hereunder.  Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors and
assigns.

41.           Choice of Law.     This Agreement shall be governed by the Laws of
the State of Texas, without regard to principles of conflicts of laws that would
direct the application of the Laws of another jurisdiction.

42.           Dispute Resolution.  Each Party consents to personal jurisdiction
in any action brought in the United States federal courts located in the State
of 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 hereto
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 allocation
of the Sale Price pursuant to Section 5, the determination of a Defect Amount
pursuant to Section 9 or the determination of Sale Price adjustments pursuant to
Section 15 is referred to an expert pursuant to those Sections) will be
instituted exclusively in the United States District Court for the Southern
District of Texas, Houston Division.  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.

43.           Counterpart Execution.     This Agreement may be executed in
counterparts and each counterpart shall constitute a binding agreement as if the
Parties had executed a single document.

44.           Severance of Invalid Provisions.      If, for any reason and for
so long as, any clause or provision of this Agreement is held by a court of
competent jurisdiction to be illegal, invalid, unenforceable or unconscionable
under any present or future Law (or interpretation thereof), the remainder of
this Agreement shall not be affected by such illegality or invalidity.  Any such
invalid provision shall be deemed severed from this Agreement as if this
Agreement had been executed with the invalid provision eliminated.  The
surviving provisions of this Agreement shall remain in full force and effect
unless the removal of the invalid provision destroys the legitimate purpose of
this Agreement; in which event this

 

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Agreement shall be null and void.  The Parties shall negotiate in good faith for
any required modifications to this Agreement.

45.           Limitation on Damages.  Notwithstanding anything to the contrary
contained herein, none of Buyer, Seller or any of their respective Affiliates
shall be entitled to special, consequential, lost profits or punitive damages in
connection with this Agreement and the transactions contemplated hereby (other
than special, consequential, lost profits or punitive damages suffered by third
Persons for which responsibility is allocated between the Parties) and each of
Buyer and Seller, for itself and on behalf of its Affiliates, hereby expressly
waives any right to special or punitive damages in connection with this
Agreement and the transactions contemplated hereby.  The Parties acknowledge
that the waivers and indemnities set forth herein constitute a specifically
bargained for allocation of risk among the Parties, which the Parties agree and
acknowledge satisfies the express negligence rule and conspicuousness
requirement under Texas Law.

46.           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; (c) reference to any Section means a
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; (e) 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; (f) references to “$” or “dollars” means United States dollars;
and (g) “include” and “including” shall mean include or including without
limiting the generality of the description preceding such term.

47.           Waivers.  Any failure by any Party to comply with any of its
obligations, agreements or conditions herein contained may be waived by the
Party to whom such compliance is owed by an instrument signed by the Party to
whom compliance is owed and expressly identified as a waiver, but not in any
other manner.  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.

48.           Third Person Beneficiaries.  Nothing in this Agreement shall
entitle any Person other than Buyer and Seller to any claim, cause of action,
remedy or right of any kind, except the rights expressly provided to the Persons
described in Sections 11 and 23.

49.           Capacity as Trustee.  Seller is executing and delivering this
Agreement solely in its capacity as Trustee of Santa Fe Energy Trust (the
“Trust”), and the Parties intend that the rights of Buyer shall be strictly
limited to those expressly set forth in this Agreement, and that any and all
liabilities and obligations of Seller arising hereunder or in connection with
the transactions contemplated hereby shall be satisfied, if at all, only by
recourse to the assets of the Trust, and that in no circumstance whatsoever
shall BNY be liable or responsible for any liability or obligation arising
hereunder or in connection with the transactions contemplated hereby.

50.           Acknowledgement.  BUYER ACKNOWLEDGES THAT IT HAS READ THIS
AGREEMENT IN ITS ENTIRETY, AND THAT IT UNDERSTANDS ALL THE PROVISIONS SET FORTH
THEREIN, INCLUDING, BUT NOT LIMITED TO, THOSE PROVISIONS LOCATED IN SECTIONS 11
AND 23 WHEREIN BUYER AGREES TO INDEMNIFY SELLER GROUP IN CERTAIN CIRCUMSTANCES
EVEN THOUGH THE LOSSES, COSTS, EXPENSE AND/OR DAMAGES MAY HAVE BEEN CAUSED BY
THE GROSS, SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE OF THE SELLER, ITS
EMPLOYEES, OR ANY THIRD PARTY AND EVEN THOUGH THE SELLER MAY BE RESPONSIBLE FOR
SUCH LOSSES, COSTS, EXPENSES AND/OR DAMAGES UNDER ANY THEORY OF LAW, INCLUDING
BUT NOT LIMITED TO STRICT LIABILITY

[Remainder of Page Intentionally Left Blank.  Signature Page to Follow]

 

 

 

 

29

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                IN WITNESS WHEREOF, this Agreement has been signed by each of
the Parties effective as of the date first above written.

 

 

 

SELLER:

 

 

 

THE BANK OF NEW YORK TRUST COMPANY, N.A.,
solely in its capacity as Trustee of Santa Fe Energy Trust

 

 

 

 

 

 

 

 

 

By:

/s/ Mike Ulrich

 

Name:

Mike Ulrich

 

Title:

Vice President

 

 

 

 

BUYER:

 

 

 

AMEN PROPERTIES, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Eric Oliver

 

Name:

Eric Oliver

 

Title:

Chairman

 

 

 

 

 

 

 

 

Signature Page to Purchase and Sale Agreement

 

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EXHIBIT C

 

FORM OF ASSIGNMENT, BILL OF SALE AND CONVEYANCE

 

 

ASSIGNMENT, BILL OF SALE AND CONVEYANCE

 

The Bank of New York Trust Company, N.A., solely in its capacity as Trustee of
Santa Fe Energy Trust (“Assignor”), whose address is 919 Congress, Suite 500,
Austin, Texas 78701 for Ten Dollars and other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), does hereby
GRANT, BARGAIN, SELL, CONVEY, ASSIGN, TRANSFER, SET OVER, and DELIVER unto [Amen
Properties, Inc.], a Delaware corporation, whose address is 303 W. Wall Street,
Suite 2300, Midland, Texas 79701 (“Assignee”), effective as of October 1, 2007
at 7:00 a.m., local time (“Effective Time”), said time to be determined for each
locality in which the Properties (as such term is defined below) are located in
accordance with the time generally observed in said locality, all of Assignor’s
right, title and interest in and to the following:

A.                                   any and all interests in the instruments
set forth in Attachment 1 of Exhibit A attached hereto, including, but not
limited to such interests constituting an undivided variable royalty interest in
and to the hydrocarbons that may be produced, saved, and marketed from the
Subject Assets equal to ninety percent (90%) of the net proceeds attributable to
the Properties, all as further described in the instruments set forth in
Attachment 1 of Exhibit A attached hereto (“Net Profits Royalties”);

B.                                     any and all interests in the oil and gas
leases, oil, gas and mineral leases and subleases, royalties, overriding
royalties, net profits interests, mineral fee interests, carried interests, and
other rights to oil and gas in place, and mineral servitudes, that are described
on Attachment 2 of Exhibit A (“Leases”);

C.                                     any and all interests in any and all oil,
gas, water, CO2 or injection wells located on the Leases or on the pooled,
communitized or unitized acreage that includes all or any part of the Leases,
including, but not limited to the interests in the wells shown on Attachment 3
of Exhibit A attached hereto (“Wells”):

D.                                    any and all interests in all pooled,
communitized or unitized acreage which includes all or part of any Leases
(“Units”, and together with the Leases and the Wells, the “Subject Assets”), and
all tenements, hereditaments and appurtenances belonging to the Leases and
Units.

E.                                      any and all any amounts payable to
Assignor that are attributable to the Net Profits Royalties that are, on or
after the Closing Date, held in suspense by any Person as of the Closing Date
(regardless of whether such amounts are attributable to production for periods
before, on or after the Effective Time and any interest accrued in escrow
accounts for such suspended funds (“Suspended Royalties”);

F.                                      all currently existing contracts,
agreements and instruments with respect to the Properties, to the extent
burdening or applicable to the Properties, including operating agreements,
unitization, pooling, and communitization agreements, declarations and orders,
area of mutual interest agreements, joint venture agreements, farmin and farmout
agreements, exchange agreements, transportation agreements, agreements for the
sale and purchase of oil and gas and processing agreements (“Contracts”); and

G.                                     all data and records of Assignor, to the
extent relating solely to the Net Profits Royalties, the Suspended Royalties or
the Contracts.

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All of the real and personal properties, rights, titles, and interests described
in paragraphs (A) through (D) above are hereinafter collectively called the
“Properties” or, individually, a “Property”, subject to the limitations and
terms expressly set forth herein and in Exhibit A and Exhibit B; provided,
however, the Properties shall in no event include any of the Excluded Properties
(as such tem is defined in the Purchase Agreement.

TO HAVE AND TO HOLD the Properties unto Assignee, its successors and assigns,
forever.

This Assignment, Bill of Sale and Conveyance (the “Assignment”) is made and
accepted expressly subject to the following terms and conditions:

1.     This Assignment is executed and delivered pursuant to and made subject to
that certain Purchase and Sale Agreement dated November 8, 2007 (the “Purchase
Agreement”) between Assignor, as Seller, and Assignee, as Buyer, and in the
event of any conflict or inconsistency between any term hereof and any term of
the Purchase Agreement, the terms of the Purchase Agreement shall in all
respects control.  All capitalized terms not defined herein shall have the
meaning ascribed to such term in the Purchase Agreement

2.     THIS ASSIGNMENT IS MADE AND DELIVERED WITHOUT ANY WARRANTY OF TITLE,
EITHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, WITHOUT ANY EXPRESS OR IMPLIED
WARRANTY OR REPRESENTATION AS TO THE MERCHANTABILITY OF ANY OF THE EQUIPMENT OR
OTHER PERSONAL PROPERTY INCLUDED IN THE PROPERTIES OR ITS FITNESS FOR ANY
PARTICULAR PURPOSE, AND WITHOUT ANY OTHER EXPRESS OR IMPLIED WARRANTY OR
REPRESENTATION WHATSOEVER.  IT IS UNDERSTOOD AND AGREED THAT ASSIGNEE HAS
INSPECTED THE PROPERTIES FOR ALL PURPOSES, INCLUDING WITHOUT LIMITATION FOR THE
PURPOSE OF DETECTING THE PRESENCE OF NORM AND MAN MADE MATERIAL FIBERS
(HEREINAFTER REFERRED TO AS “MMMF”) AND SATISFIED ITSELF AS TO THEIR PHYSICAL
AND ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, INCLUDING, BUT NOT
LIMITED TO, CONDITIONS RELATED TO THE PRESENCE, RELEASE, OR DISPOSAL OF
HAZARDOUS SUBSTANCES, AND THAT ASSIGNEE IS RELYING SOLELY UPON THE RESULTS OF
SUCH INSPECTION OF THE PROPERTIES AND SHALL ACCEPT ALL OF THE SAME IN THEIR “AS
IS, WHERE IS” CONDITION.  ASSIGNOR DISCLAIMS ALL LIABILITY ARISING IN CONNECTION
WITH THE PRESENCE OF NORM OR MMMF ON THE PROPERTIES AND IF TESTS HAVE BEEN
CONDUCTED BY ASSIGNOR FOR THE PRESENCE OF NORM OR MMMF, ASSIGNOR DISCLAIMS ANY
WARRANTY RESPECTING THE ACCURACY OF SUCH TESTS OR RESULTS.  IN ADDITION,
ASSIGNOR AND ITS CONSULTANTS MAKES NO AND EXPRESSLY DISCLAIMS ANY REPRESENTATION
OR WARRANTY, EXPRESS OR IMPLIED, AS TO (I) TITLE TO ANY OF THE PROPERTIES,
(II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, ECONOMIC
INFORMATION OR REPORTS, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT,
OR ANY GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE SUBJECT
ASSETS OR THE PROPERTIES, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF
PETROLEUM SUBSTANCES IN OR FROM THE SUBJECT ASSETS OR THE PROPERTIES, (IV) THE
EXISTENCE OF ANY PROSPECT, RECOMPLETION, INFILL OR STEP-OUT DRILLING
OPPORTUNITIES, (V) ANY ESTIMATES OF THE VALUE OF THE SUBJECT ASSETS OR
PROPERTIES OR FUTURE REVENUES GENERATED BY THE SUBJECT PROPERTIES OR SUBJECT
ASSETS, (VI) THE PRODUCTION OF PETROLEUM SUBSTANCES FROM THE PROPERTIES OR
SUBJECT ASSETS, OR WHETHER PRODUCTION HAS BEEN CONTINUOUS, OR IN PAYING
QUANTITIES, OR ANY PRODUCTION OR DECLINE RATES, (VII) THE MAINTENANCE, REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE SUBJECT ASSETS
OR PROPERTIES, (VIII) INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT, OR
(IX) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR
COMMUNICATED TO ASSIGNOR OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS,
CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS ASSIGNMENT OR ANY DISCUSSION OR PRESENTATION RELATING
THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, OF MERCHANTABILITY OR FITNESS

2

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FOR A PARTICULAR PURPOSE.  ANY AND ALL SUCH DATA, INFORMATION AND OTHER
MATERIALS FURNISHED BY ASSIGNOR IS PROVIDED TO ASSIGNEE AS A CONVENIENCE AND
ASSIGNEE AFFIRMS THAT IT HAS RELIED SOLELY ON ITS OWN EVALUATION OF THE
PROPERTIES AND NOT ON INFORMATION FURNISHED BY ASSIGNOR.  AFTER CONSULTATION
WITH AN ATTORNEY OF ITS OWN SELECTION, ASSIGNEE EXPRESSLY WAIVES THE PROVISIONS
OF CHAPTER XVII, SUBCHAPTER E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER
THAN SECTION 17.555, WHICH IS NOT WAIVED), VERNON’S TEXAS CODE ANNOTATED,
BUSINESS AND COMMERCE CODE (THE “DECEPTIVE TRADE PRACTICES ACT”) AND IF ANY OF
THE PROPERTIES ARE LOCATED IN LOUISIANA AND ARE SUBJECT TO LOUISIANA LAW,
ASSIGNEE EXPRESSLY WAIVES THE WARRANTY OF FITNESS FOR INTENDED PURPOSES OR
GUARANTEE AGAINST HIDDEN OR LATENT REDHIBITORY VICES UNDER LOUISIANA LAW,
INCLUDING LOUISIANA CIVIL CODE ARTICLES 2520 (1870) THROUGH 2548 (1870) AND THE
WARRANTY IMPOSED BY LOUISIANA CIVIL CODE ARTICLES 2476; WAIVES ALL RIGHTS IN
REDHIBITION PURSUANT TO LOUISIANA CIVIL CODE ARTICLES 2420, ET SEQ; ACKNOWLEDGES
THAT THIS EXPRESS WAIVER SHALL BE CONSIDERED A MATERIAL AND INTEGRAL PART OF
THIS SALE AND THE CONSIDERATION THEREOF; AND ACKNOWLEDGES THAT THIS WAIVER HAS
BEEN BROUGHT TO THE ATTENTION OF ASSIGNEE AND EXPLAINED IN DETAIL AND THAT
ASSIGNEE HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO THIS WAIVER OF WARRANTY OF
FITNESS AND/OR WARRANTY AGAINST REDHIBITORY VICES AND DEFECT FOR THE
PROPERTIES.  ASSIGNEE ACKNOWLEDGES THAT THIS EXPRESS WAIVER SHALL BE CONSIDERED
A MATERIAL AND INTEGRAL PART OF THIS SALE AND THE CONSIDERATION THEREOF; AND
ACKNOWLEDGES THAT THIS WAIVER HAS BEEN BROUGHT TO THE ATTENTION OF ASSIGNEE AND
EXPLAINED IN DETAIL AND THAT ASSIGNEE HAS VOLUNTARILY AND KNOWINGLY CONSENTED TO
THIS WAIVER.  ALL INSTRUMENTS OF CONVEYANCE TO BE DELIVERED BY ASSIGNOR AT
CLOSING SHALL EXPRESSLY SET FORTH THE DISCLAIMERS OF REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS PARAGRAPH.  IN ORDER TO EVIDENCE ITS ABILITY TO
GRANT SUCH WAIVER, ASSIGNEE HEREBY REPRESENTS AND WARRANTS TO ASSIGNOR THAT
ASSIGNEE (A) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION AND (B) IS
REPRESENTED BY LEGAL COUNSEL, OF ITS OWN SELECTION, IN SEEKING OR ACQUIRING THE
INTERESTS.

3.     To the extent permitted by law, Assignee shall be subrogated to
Assignor’s rights in and to representations, warranties and covenants given by
others with respect to the Properties, and Assignor hereby grants and transfers
to Assignee, its successors and assigns, to the extent so transferable and
permitted by law, the benefit of and the right to enforce the covenants,
representations and warranties, if any, which Assignor is entitled to enforce
with respect to the Properties.

4.     Assignee hereby assumes and agrees to fully and timely pay, perform, and
discharge in accordance with their terms, the all duties, liabilities and
obligations directly and primarily arising out of the Properties.

5.     This Assignment is made expressly subject to and Assignee hereby assumes
and ratifies all Leases and Contracts, of which Assignee has actual notice,
(collectively, the “Assumed Contracts”).  Assignee shall observe and comply with
all covenants, terms and provisions, express or implied, to the extent of
Assignee’s interest in the Properties, in the Assumed Contracts, and shall
execute such instruments of ratification and joinder as may be required by the
terms thereof or the other parties thereto.

6.     Assignor agrees to execute, acknowledge and deliver, or cause its
affiliates to execute, acknowledge and deliver, to Assignee, from time to time,
such other and additional instruments, notices, and other documents, and to do
all such other and further acts and things as may be necessary to more fully and
effectively grant, convey and assign to Assignee the Properties.

7.     This Assignment shall be binding upon and inure to the benefit of
Assignor and Assignee and their respective successors and assigns and are
covenants running with the land and with each subsequent transfer or assignment
of the Properties or any part thereof.

3

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8.     This Assignment may be executed in any number of counterparts, each of
which will for all purposes be deemed to be an original, and all of which are
identical except that, to facilitate recordation, in any particular county or
parish counterpart portions of Exhibit A hereto which describe properties
situated in counties or parishes other than the county or parishes in which such
counterpart is to be recorded may have been omitted.

[Remainder of Page Intentionally Left Blank]

 

4

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IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment, Bill of
Sale and Conveyance on the date set forth in their respective acknowledgments
below, but effective as of the Effective Time. 

 

ASSIGNOR:

WITNESSES:

 

 

THE BANK OF NEW YORK TRUST COMPANY, N.A.,
solely in its capacity as Trustee of Santa Fe Energy Trust

 

 

 

Printed Name:

 

 

 

 

By:

 

 

 

        Name:

Printed Name:

 

        Title:

 

 

 

ASSIGNEE:

WITNESSES:

 

 

 

 

AMEN PROPERTIES, INC.

 

 

 

Printed Name:

 

 

 

 

By:

 

 

 

        Name:

Printed Name:

 

        Title:

 

 

5

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[INSERT APPROPRIATE NOTARY BLOCKS PER EACH APPLICABLE STATE]

 

 

 

 

 

 

 

6

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EXHIBIT A

 

PROPERTIES

 

 

Attachment 1:  Net Profits Royalties Conveyances

 

Attachment 2:  Leases

 

Attachment 3:  Wells

 

 

1

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EXHIBIT D

 

FORM OF NON-FOREIGN AFFIDAVIT

CERTIFICATE OF NON-FOREIGN SELLER

 

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S.
real property interest must withhold tax if the transferor is a foreign person. 
For U.S. tax purposes (including section 1445 of the Internal Revenue Code), the
owner of a disregarded entity (which has legal title to a U.S. real property
interest under local law) will be the transferor of the property and not the
disregarded entity. To inform the transferee, Amen Properties, LLC, a Delaware
corporation, (“Buyer”), that withholding of tax is not required upon the
disposition of a U.S. real property interest by The Bank of New York Trust
Company, N.A. (“BNY”) solely in its capacity of trustee of Santa Fe Energy Trust
(the Trust”) (BNY, in its capacity as trustee of the Trust, being herein called
“Trustee”; and the Trustee, in its capacity as the seller of the properties,
being called herein “Seller”), the undersigned hereby certifies the following on
behalf of the Trust and the Seller:

 

1.             [Seller is a national association;

2.             Trust is a trust;

3.             Neither Seller nor the Trust is a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are defined in the
Internal Revenue Code and Income Tax Regulations);

4.             Neither Seller nor the Trust is a disregarded entity as defined
in Treasury Regulations Section 1.1445-2(b)(b)(2)(iii);

5.             Seller’s U.S. employer identification number is
                                    ;

6.             Trust’s U.S. employer identification number is
                                    ;

7.             Seller’s office address is:  303
                                                              ;

8.             Trust’s office address is: 
                                                                     .]

                Seller understands that this certification may be disclosed to
the Internal Revenue Service by Buyer and that any false statement contained
herein could be punished by fine, imprisonment, or both.

 

                Under penalties of perjury I declare that I have examined this
certification and to the best of my knowledge and belief it is true, correct,
and complete, and I further declare that I have authority to sign this document
on behalf of Seller.

 

SELLER:

 

THE BANK OF NEW YORK TRUST COMPANY, N.A., solely in its capacity as Trustee of
Santa Fe Energy Trust

 

 

By:

 

Name:

Title:

Date:

 

 

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