Exhibit 10.1
Execution Copy
ASSET PURCHASE AGREEMENT
dated as of
January 29, 2010
by and among
Gasco Energy, Inc.,
Riverbend Gas Gathering, LLC
and
Monarch Natural Gas, LLC

 

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TABLE OF CONTENTS

                              Page   ARTICLE I DEFINITIONS AND RULES OF
CONSTRUCTION     1  
 
               
 
  1.1   Definitions     1  
 
  1.2   Rules of Construction     12     ARTICLE II PURCHASE AND SALE OF ASSETS,
CLOSING     12  
 
               
 
  2.1   Sale and Purchase of Assets     12  
 
  2.2   Excluded Assets     14  
 
  2.3   Assumption of Liabilities     15  
 
  2.4   Retained Liabilities     15  
 
  2.5   Consideration     16  
 
  2.6   Salt Water Disposal Assets Closing     16  
 
  2.7   Title Defects     16     ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE SELLER PARTIES     18  
 
               
 
  3.1   Organization of the Seller Parties     18  
 
  3.2   Authorization; Enforceability     18  
 
  3.3   No Conflict; Consents     19  
 
  3.4   Absence of Certain Changes or Events     20  
 
  3.5   Assumed Contracts     20  
 
  3.6   Material Contracts     20  
 
  3.7   Records     21  
 
  3.8   Intellectual Property     21  
 
  3.9   Litigation     21  
 
  3.10   Brokers’ Fees     22  
 
  3.11   Taxes     22  
 
  3.12   Environmental Matters     22  
 
  3.13   Compliance with Laws; Permits     25  
 
  3.14   Insurance     25  
 
  3.15   Condition of Assets, Sufficiency and Conveyance of Title     26  
 
  3.16   Solvency of the Seller Parties     26  
 
  3.17   Auction Process     27  
 
  3.18   Natural Gas and Natural Gas Liquids Imbalances     27  
 
  3.19   Preferential Rights     27  
 
  3.20   Employment and Labor Matters     27  
 
  3.21   Employee Benefits Matters     28  
 
  3.22   Guarantees     28     ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
BUYER     28  
 
               
 
  4.1   Organization of Buyer     28  

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                              Page  
 
  4.2   Authorization; Enforceability     28  
 
  4.3   No Conflict; Consents     29  
 
  4.4   Litigation     29  
 
  4.5   Brokers’ Fees     29  
 
  4.6   Solvency of the Buyer     29  
 
  4.7   Financial Ability     30     ARTICLE V COVENANTS     30  
 
               
 
  5.1   Satisfaction of Conditions Precedent     30  
 
  5.2   Conduct of Business, Operation of Assets     30  
 
  5.3   Access and Information     31  
 
  5.4   Confidentiality     32  
 
  5.5   Non-Consent Contracts     32  
 
  5.6   Preferential Rights and Third Party Consents     33  
 
  5.7   Casualty Loss     33  
 
  5.8   Seller Marks     34  
 
  5.9   Riverbend Marks     34  
 
  5.10   Records     34  
 
  5.11   Transferred Permits     34  
 
  5.12   Guarantees     35  
 
  5.13   Employees     35  
 
  5.14   Insurance     37  
 
  5.15   Liability for Transfer Taxes     37  
 
  5.16   Cooperation on Tax Matters     37  
 
  5.17   Use of Proceeds     37  
 
  5.18   Environmental Matters     38  
 
  5.19   Noncompetition     39  
 
  5.20   Further Assurances     40     ARTICLE VI CLOSING, CLOSING DELIVERIES,
CONDITIONS TO CLOSING     40  
 
               
 
  6.1   The Closing     40  
 
  6.2   Conditions to Obligations of Buyer     40  
 
  6.3   Conditions to the Obligations of Seller Parties     43     ARTICLE VII
INDEMNIFICATION     45  
 
               
 
  7.1   Survival     45  
 
  7.2   Indemnification Provisions for Benefit of Buyer     45  
 
  7.3   Indemnification Provisions for Benefit of the Seller Parties     46  
 
  7.4   Procedures     47  
 
  7.5   Exclusive Remedy and Release     49     ARTICLE VIII TERMINATION     50
 
 
               
 
  8.1   Termination     50  
 
  8.2   Effect of Termination     50  

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                              Page   ARTICLE IX MISCELLANEOUS     51  
 
               
 
  9.1   Notices     51  
 
  9.2   Succession and Assignment     52  
 
  9.3   Rights of Third Parties     52  
 
  9.4   Expenses     52  
 
  9.5   Counterparts     52  
 
  9.6   Entire Agreement     52  
 
  9.7   Disclosure Schedules     52  
 
  9.8   Waiver of Other Representations and Warranties     53  
 
  9.9   Acknowledgment by Buyer     53  
 
  9.10   Amendments     55  
 
  9.11   Publicity     55  
 
  9.12   Non-Waiver     55  
 
  9.13   Severability     56  
 
  9.14   Governing Law; Jurisdiction     56  
 
  9.15   Arbitration     56  

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LIST OF EXHIBITS

     
Exhibit A
  Gathering Agreement
Exhibit B
  Transition Services Agreement
Exhibit C
  Salt Water Disposal Services Agreements
Exhibit D
  Assignment and Assumption Agreement
Exhibit E
  Assignment of Real Property Interests
Exhibit F
  Form of FIRPTA Certificates
Exhibit G-1
  EPA Consent Decree Draft
Exhibit G-2
  Buyer Mark-up of the EPA Consent Decree Draft

LIST OF SELLER PARTIES’ DISCLOSURE SCHEDULES

     
Schedule 1.1(a)
  Seller Parties’ Persons with Knowledge
Schedule 1.1(b)
  Permitted Liens
Schedule 2.1(a)(i)
  Gathering System
Schedule 2.1(a)(ii)
  Real Property Interests
Schedule 2.1(a)(iii)
  Assumed Contracts
Schedule 2.1(a)(iv)
  Transferred Permits
Schedule 2.1(a)(v)
  Personal Property
Schedule 2.1(b)(i)
  Evaporative Facilities
Schedule 2.1(b)(ii)
  Evaporative Facilities Real Property Interests
Schedule 2.2
  Excluded Assets
Schedule 3.3(b)
  Governmental Authority Notices & Consents
Schedule 3.3(e)
  Non-Governmental Authority Notices & Consents
Schedule 3.4
  Certain Changes or Events
Schedule 3.5
  Termination or Breach of Any Assumed Contracts
Schedule 3.6
  Material Contracts
Schedule 3.9
  Litigation
Schedule 3.11
  Tax Matters
Schedule 3.12
  Environmental Matters
Schedule 3.13
  Compliance with Laws; Permits
Schedule 3.14
  Insurance
Schedule 3.15
  Condition of Assets, Sufficiency and Conveyance of Title
Schedule 3.19
  Preferential Rights
Schedule 3.20(a)
  Employee Matters
Schedule 3.20(c)
  Employment and Labor Agreements
Schedule 3.21(a)
  Employee Benefit Plans
Schedule 3.22
  Guarantees
Schedule 5.13(a)
  Employees
Schedule 5.18(c)
  Pneumatic Controls Relating to the EPA Enforcement Action

LIST OF BUYER’S DISCLOSURE SCHEDULES

     
Schedule 1.1(a)
  Buyer’s Persons with Knowledge
Schedule 4.3(b)
  Governmental Authority Notices/Consents

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Schedule 4.3(d)
  Non-Governmental Authority Notices/Consents
Schedule 4.4
  Litigation
Schedule 4.5
  Brokers’ Fees
Schedule 6.2(e)
  Assignment of Agreements
Schedule 6.2(i)
  Consents
Schedule 6.2(k)(xi)
  Lien Releases

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ASSET PURCHASE AGREEMENT
     This Asset Purchase Agreement (this “Agreement”), dated as of January 29,
2010 (the “Effective Date”), is entered into by and among Gasco Energy, Inc., a
Nevada corporation (“Gasco”), Riverbend Gas Gathering, LLC, a Nevada limited
liability company and a wholly owned subsidiary of Gasco (“Seller,” and together
with Gasco, the “Seller Parties”), and Monarch Natural Gas, LLC, a Delaware
limited liability company (“Buyer”). The Seller Parties and Buyer are sometimes
referred to collectively herein as the “Parties” and each individually a
“Party.”
RECITALS
     WHEREAS, Seller is the owner of certain Assets (as defined below) located
in the State of Utah; and
     WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the Assets, subject to the terms and conditions described in this
Agreement;
     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
     1.1 Definitions. As used herein, the following terms shall have the
following meanings:
     “AAA” has the meaning provided to such term in Section 9.15(a).
     “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with, such specified Person through one or more intermediaries or otherwise. For
the purposes of this definition, “control” means, where used with respect to any
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
“controlling” and “controlled” have correlative meanings.
     “Agreed-Upon Title Defect” has the meaning provided to such term in
Section 2.7(e).
     “Agreed-Upon Title Defect Amount” has the meaning provided to such term in
Section 2.7(e).
     “Agreement” has the meaning provided such term in the preamble.
     “Assets” means the Purchased Assets and Salt Water Disposal Assets.

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     “Assignment and Assumption Agreement” means that certain assignment and
assumption agreement, to be dated as of the Closing Date, by and between Buyer
and Seller, substantially in the form of Exhibit D hereto.
     “Assignment of Real Property Interests” means that certain assignment
agreement relating to the Real Property Interests and, if the Salt Water
Disposal Assets are transferred at the Closing, the Evaporative Facilities Real
Property Interests, to be dated as of the Closing Date, by and between Buyer and
Gasco Production, substantially in the form of Exhibit E hereto.
     “Assumed Contracts” has the meaning provided such term in
Section 2.1(a)(iii).
     “Assumed Liabilities” has the meaning provided such term in Section 2.3.
     “Bankruptcy Code” means Title 11 of the United States Code, as amended.
     “Business Day” means any day that is not a Saturday, Sunday or other day on
which banks located in New York City are authorized or required to close.
     “Buyer” has the meaning provided such term in the preamble.
     “Buyer Indemnified Parties” has the meaning provided such term in
Section 7.2.
     “Buyer Mark-up of the EPA Consent Decree Draft” has the meaning provided
such term in Section 5.18(a).
     “Buyer’s Disclosure Schedule” and “Buyer’s Schedule” means the disclosure
schedule of Buyer attached hereto.
     “Casualty Losses” has the meaning provided such term in Section 5.7.
     “Claim Notice” has the meaning provided such term in Section 7.4(a).
     “Claimant” has the meaning provided such term in Section 9.15(e).
     “Closing” has the meaning provided such term in Section 6.1.
     “Closing Date” has the meaning provided such term in Section 6.1.
     “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985.
     “Code” means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
     “Confidentiality Agreement” means that certain confidentiality agreement,
dated as of October 14, 2009, by and among Monarch Investments Holdings, LLC,
Gasco and Gasco Production Company.
     “Conspicuous Disclaimers” has the meaning provided such term in
Section 9.9(a).

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     “Constituents of Concern” means (i) any pollutant, contaminant, waste or
chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise
hazardous substance, waste or material, or any substance, waste or material
having any constituent elements displaying any of the foregoing characteristics;
(ii) any substance defined as a hazardous substance, hazardous waste, hazardous
material, pollutant or contaminant, or words of similar import, under any
Environmental Law; (iii) petroleum and any of its degradation products,
by-products and derivatives, any other hydrocarbons, to the extent that any of
the foregoing is subject to regulation under any Environmental Law; and
(iv) asbestos, asbestos-containing materials and polychlorinated biphenyls.
     “Contingency Plans” has the meaning provided such term in Section 5.18(d).
     “Contract” means any legally binding agreement, commitment, lease, license
or contract.
     “Damages” means all actions, suits, proceedings, hearings, investigations,
charges, complaints, claims, demands, Orders, awards, damages, dues, penalties,
fines, capital expenditures, costs, amounts paid in settlement, Liabilities,
Taxes, liens, actual losses, expenses, and fees (whether criminal, civil,
commercial or related to claims for personal injury), including court costs and
attorneys’, consultants’, engineers’ and other experts’ fees and expenses, but
excluding punitive, exemplary and consequential Damages; provided that the
foregoing limitation with respect to exemplary and punitive Damages shall not
apply to indemnification for such Damages arising from Third Party Claims where
a third party obtains such Damages against the Indemnified Party and for which
indemnification is required hereunder.
     “Deductible” has the meaning provided such term in Section 7.2.
     “Direct Claim” has the meaning provided such term in Section 7.4(d).
     “Disclosure Schedules” means the Buyer’s Disclosure Schedules and the
Seller Parties’ Disclosure Schedules attached hereto.
     “Dispute” has the meaning provided to such term in Section 9.15(a).
     “Dollars” and “$” mean the lawful currency of the United States of America.
     “DOJ” has the meaning provided such term in Section 5.18(a).
     “Due Diligence Information” has the meaning provided such term in
Section 9.9(c)(i).
     “Effective Date” has the meaning provided such term in the preamble.
     “Employee” or “Employees” has the meaning provided such term in
Section 3.20(a).
     “Employee Benefit Plan” means any “employee benefit plan,” within the
meaning of Section 3(3) of ERISA, and any bonus, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, vacation, severance, disability, death benefit, hospitalization or
insurance plan or employment or consulting agreement or arrangement

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providing benefits to any present or former employee of Seller or with respect
to which Seller has any liability, contingent or otherwise.
     “Environmental Costs and Liabilities” means any and all Damages, including
the cost of any Remedial Action, which arise out of or relate to (i) the
existence, release, manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any Constituents of Concern or
(ii) the violation of or liability under any Environmental Law or Environmental
Permit.
     “Environmental Law” means any and all Laws pertaining to or regulating
pollution, environmental protection, natural resource damages, conservation of
resources, wildlife, waste management, occupational health and safety or the
use, handling, storage, generation, production, treatment, emission, discharge,
release, remediation, removal, disposal, or transport of pollutants,
contaminants, wastes or chemicals or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substances, wastes or materials,
including, without limitation: the Comprehensive Environmental Response,
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Federal Water Pollution Control Act (which
includes the Federal Clean Water Act), the Federal Clean Air Act, the Federal
Solid Waste Disposal Act (which includes the Resource Conservation and Recovery
Act), the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Safe Drinking Water Act of 1974, the
Emergency Planning and Community Right-to-Know Act of 1986, the Occupational
Safety and Health Act of 1970, the Hazardous Liquid Pipeline Safety Act, the Oil
Pollution Act of 1990, and the Pipeline Safety Improvement Act of 2002, and any
regulations promulgated thereunder and any similar state and local laws and
regulations, each as amended.
     “Environmental Permits” means all Permits issued pursuant to or required by
Environmental Laws and necessary for or held in connection with the Assets or
the ownership and/or operation thereof.
     “EPA” has the meaning provided such term in Section 5.18(a).
     “EPA Consent Decree” has the meaning provided such term in Section 5.18(a).
     “EPA Consent Decree Draft” has the meaning provided such term in
Section 5.18(a).
     “EPA Enforcement Action” has the meaning provided such term in
Section 3.12.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     “ERISA Affiliate” means any corporation, trade, business, or entity under
“common control” with the Seller, within the meaning of Section 414(b), (c) or
(m) of the Code or Section 4001 of ERISA.
     “Evaporative Facilities” has the meaning provided such term in
Section 2.1(b)(i).
     “Evaporative Facilities Real Property Interests” has the meaning provided
such term in Section 2.1(b)(ii).

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     “Excluded Assets” has the meaning provided such term in Section 2.2.
     “Exhibits” means the exhibits attached hereto.
     “FICA” has the meaning provided such term in Section 5.13(i).
     “FIRPTA Certificates” has the meaning provided such term in
Section 6.2(k)(xii).
     “FUTA” has the meaning provided such term in Section 5.13(i).
     “GAAP” means generally accepted accounting principles of the United States,
consistently applied.
     “Gas Purchase and Sale Agreement” has the meaning provided such term in
Section 6.2(d).
     “Gasco” has the meaning provided such term in the preamble.
     “Gasco Production” has the meaning provided such term in Section 6.2(e).
     “Gathering Agreement” means that certain gathering agreement, to be dated
as of the Closing Date, by and among Buyer and Gasco Production, substantially
in the form of Exhibit A hereto.
     “Gathering System” has the meaning provided such term in Section 2.1(a)(i).
     “Governmental Authority” means any regulatory or administrative agency,
department, division, commission, court or arbitral body, or other similar
recognized organization or body of any domestic federal, state, municipal, or
local governmental authority or of any foreign government or other similar
recognized organization or body exercising similar powers or authority.
     “Guarantees” means any contract or agreement under which any of the Seller
Parties has agreed to act as guarantor or surety with respect to any of the
Assets and any letter of credit, surety bond or performance bond provided by a
third party and securing an obligation of any of the Seller Parties with respect
to any of the Assets.
     “Indebtedness” of any Person means, at any time, without duplication,
(i) any indebtedness for borrowed money of such Person, (ii) any indebtedness of
such Person evidenced by any note, bond, debenture, other debt security, letter
of credit or banker’s acceptance, (iii) any indebtedness for the deferred
purchase price of property or services with respect to which such Person is
liable, contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course of
business), (iv) any indebtedness guaranteed in any manner by such Person,
(v) any obligations under capitalized leases with respect to which such Person
is liable, contingently or otherwise, as obligor, guarantor or otherwise,
(vi) any indebtedness secured by a Lien on such Person’s assets, (vii) any
obligations under any “park and lend” arrangement relating to natural gas,
natural gas liquids or other hydrocarbons and (viii) any obligations under any
swap agreement, cap

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agreement, collar agreement, futures contract, forward contract or similar
agreement or arrangement designed to protect against or mitigate the effect of
fluctuations in interest rates, foreign exchange rates or prices of natural gas,
natural gas liquids or other hydrocarbons or commodities.
     “Indemnified Party” has the meaning provided such term in Section 7.4(a).
     “Indemnifying Party” has the meaning provided such term in Section 7.4(a).
     “Intellectual Property” means all intellectual property rights, statutory
and common law, worldwide, including: (a) trademarks, service marks, trade
dress, slogans, logos and all goodwill associated therewith, and any
applications or registrations for any of the foregoing; (b) copyrights and any
applications or registrations for any of the foregoing; and (c) patents,
know-how, trade secrets and similar proprietary rights in inventions,
discoveries, improvements, processes, techniques, devices, methods, patterns,
formulae, specifications, designs and lists of suppliers, vendors, customers,
and distributors.
     “Knowledge” means (a) with respect to the Seller Parties, the actual
knowledge of the persons identified on Seller Parties’ Schedule 1.1(a) as
“Seller Parties’ Persons With Knowledge” after reasonable inquiry, and (b) with
respect to Buyer, the actual knowledge of the persons identified on Buyer’s
Schedule 1.1(a) as “Buyer’s Persons With Knowledge,” after reasonable inquiry.
     “Law” means any applicable statute, writ, law, common law, rule,
regulation, ordinance, Order, or determination of a Governmental Authority, or
any requirement under the common law, in each case as in effect on and as
interpreted on the Effective Date or on and as of the Closing Date, as
applicable, unless the context otherwise clearly requires a different date, in
which case on and as of such date.
     “Liability” means any debt, liability or obligation (whether direct or
indirect, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due), and including all costs and expenses
relating thereto.
     “Lien” means any liens, claims, easements, servitudes, transfer
restrictions, charges, pledges, options, mortgages, deeds of trust,
hypothecations, encumbrances or security interests.
     “Marketable Securities” means equity securities which are registered under
the Securities Act, listed on a national securities exchange or on the NASDAQ
Stock Market and which may be Transferred without legal or contractual
restrictions, including, without limitation, restrictions arising under Rule 144
or Rule 145 under the Securities Act.
     “Material Adverse Effect” means (a) with respect to the Assets, a
circumstance, change or effect that is materially adverse to the business,
ownership, use, condition, operations (including results of operation), rights
or Liabilities of or related to the Assets, taken as a whole, or (b) with
respect to any Person, a circumstance, change or effect that materially impedes
the ability of such Person to complete the transactions contemplated by this
Agreement and the other Transaction Documents, and to perform its obligations
hereunder and thereunder; excluding, in each case, any such circumstance,
effect, event, development or change resulting from or related

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to (i) changes in general economic, political or business conditions which
affect such Person, except any such changes that affect such Person in a
disproportionate manner compared to similarly situated participants in the
industries in which such Person operates; (ii) conditions affecting the oil and
gas industry or with oil and gas exploration, development and production
generally except any such changes that affect such Person in a disproportionate
manner compared to similarly situated participants in the industries in which
such Person operates; (iii) any change in law or in accounting rules after the
Effective Date except any such change that affects such Person in a
disproportionate manner compared to similarly situated participants in the
industries in which such Person operates; or (iv) conditions or effects that
have been demonstrated by such Person as resulting primarily from the
announcement of the existence of this Agreement.
     “Material Contracts” means (a) all material gas sales, purchase, exchange,
treating, compressor, gathering, transportation, marketing and processing
Contracts to which a Seller Party is a party and which relate to the ownership
or operation of the Assets; provided that any such Contract with a term of
longer than three months and which may not be terminated by the Seller Party
which is a party thereto upon less than three months notice without penalty or
payment shall be deemed a Material Contract; (b) all other Contracts materially
affecting the ownership or operation of the Assets or which impose any material
monetary Liability or other material Liability with respect to Seller’s
ownership in, or operation of, the Assets and (c) all Contracts that would
prohibit or restrict the transfer of the Assets to Buyer pursuant to this
Agreement or under which such transfer would constitute a material breach; but
not including (i) any and all oil and/or gas leases, unit agreements or rights
acquired under farm-in agreements or (ii) any other leases, licenses or
Contracts not specifically assigned to Buyer pursuant to Section 2.1(a)(ii) and
Section 2.1(a)(iii).
     “Net Purchased Assets Sale Price” has the meaning provided such term in
Section 2.5.
     “Non-Consent Contracts” has the meaning provided such term in Section 5.5.
     “Notice of Disagreement” has the meaning provided to such term in
Section 2.7(b).
     “Order” means any order, writ, injunction, decree, award, judgment, ruling,
compliance or consent order or decree, settlement agreement, and similar binding
legal agreement issued by or entered into with a Governmental Authority.
     “Ordinary Course of Business” means the ordinary conduct of Seller’s normal
day to day business related to the Assets in accordance with the past practices
and customs of Seller applied on a consistent basis.
     “Organizational Documents” means any charter, certificate of incorporation,
articles of association, partnership agreements, limited liability company
agreements, bylaws, operating agreement or similar formation or governing
documents, instruments or certificates executed, adopted or filed in connection
with the creation, formation or organization of a Person, including any
amendments thereto.
     “Panel” has the meaning provided such term in Section 9.15(e).

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     “Party” or “Parties” has the meaning provided such term in the preamble.
     “Permits” means any permit, license or sublicense (other than Intellectual
Property licenses), certificate, consent, approval, waiver, authorization,
registration and any similar item issued by any Governmental Authority or other
entity of any kind.
     “Permitted Liens” means (a) Liens for Taxes not yet due; (b) statutory
Liens (including materialmen’s, warehousemen’s, mechanic’s, repairmen’s,
landlord’s, and other similar Liens) arising in the Ordinary Course of Business
securing payments not yet due; (c) the rights of lessors and lessees under
leases, and the rights of third parties under any agreement, executed in the
Ordinary Course of Business listed on Seller Parties Schedule 1.1(b); (d) the
rights of licensors and licensees under licenses executed in the Ordinary Course
of Business listed on Seller Parties Schedule 1.1(b); (e) restrictive covenants,
easements and defects, imperfections or irregularities of title, if any, as
would not reasonably be expected to adversely affect the ownership, use or
operation of the Assets in any material respect; (f) purchase money Liens and
Liens securing rental payments under capital lease arrangements listed on Seller
Parties Schedule 1.1(b); (g) preferential purchase rights and other similar
arrangements listed on Seller Parties Schedule 1.1(b) with respect to which
consents or waivers are obtained for this transaction prior to Closing or as to
which the time for asserting such rights has expired at the Closing Date without
an exercise of such rights; (h) restrictions on transfer listed on Seller
Parties Schedule 1.1(b) with respect to which consents or waivers are obtained
for this transaction prior to Closing; (i) any Liens created pursuant to
operating or similar agreements listed on Seller Parties Schedule 1.1(b);
(j) Liens entered into in the Ordinary Course of Business that do not secure the
payment of Indebtedness and that do not adversely affect the ability of Buyer to
own, use or operate the Assets; and (k) Liens created by Buyer, or its
successors and assigns.
     “Person” means any individual, firm, corporation, partnership, limited
liability company, incorporated or unincorporated association, joint venture,
joint stock company, Governmental Authority or other entity of any kind.
     “Personal Property” has the meaning provided such term in
Section 2.1(a)(v).
     “Proceeding” means any action, arbitration, audit, cause, claim, complaint,
hearing, inquiry, investigation, litigation, proceeding, review or suit (whether
civil, criminal, administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any Governmental
Authority, arbitrator or any other third party.
     “Property Taxes” has the meaning provided such term in Section 5.16(b).
     “Purchased Assets” has the meaning provided such term in Section 2.1(a).
     “Purchased Assets Sale Price” means $18,500,000.
     “Real Property Interests” has the meaning provided such term in
Section 2.1(a)(ii).
     “Reasonable Efforts” means efforts in accordance with reasonable commercial
practice and without the incurrence of material expense.

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     “Records” means files, documents, instruments, notes, papers, ledgers,
journals, reports, abstracts, surveys, maps, books, records, studies and similar
data and information, whether in written or electronic form.
     “Remedial Action” means the voluntary or involuntary investigation,
feasibility or other study, monitoring, imposition of institutional controls or
deed restrictions, clean-up, removal or remediation (or words of similar import)
of contamination or otherwise relating to or arising from the existence,
release, discharge, disposal, dumping, injection, pumping, deposit, spill, leak,
emission, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Constituents of Concern.
     “Representatives” means a Person’s directors, officers, employees, agents
or advisors (including attorneys, accountants, auditors, consultants, bankers,
financial advisors and any representatives of those advisors).
     “Respondent” has the meaning provided such term in Section 9.15(e).
     “Retained Liabilities” has the meaning provided such term in Section 2.4.
     “Riverbend Marks” means the “Riverbend” mark and all variations thereof and
any and all trademarks, service marks, slogans, logos and trade names containing
or comprising of the same, including all goodwill associated therewith, and any
applications or registrations for any of the foregoing.
     “Rules” has the meaning provided such term in Section 9.15(a).
     “Salt Water Disposal Assets” has the meaning provided such term in
Section 2.1(b).
     “Salt Water Disposal Assets Closing” has the meaning provided such term in
Section 2.6.
     “Salt Water Disposal Assets Sale Price” means $4,500,000.
     “Salt Water Disposal Services Agreements” means that certain agreement,
dated as of either the Closing Date (if the Salt Water Disposal Assets are
transferred at the Closing) or the date of the Salt Water Disposal Assets
Closing (if the Salt Water Disposal Assets are not transferred at the Closing),
by and among Buyer and Seller Parties, substantially in the form of Exhibit C
hereto.
     “Seller” has the meaning provided such term in the preamble.
     “Seller Indemnified Parties” has the meaning provided such term in
Section 7.3.
     “Seller Marks” has the meaning provided such term in Section 5.8.
     “Seller Parties” has the meaning provided such term in the preamble.

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     “Seller Parties’ Disclosure Schedules” and “Seller Parties’ Schedule” means
the disclosure schedules of Seller Parties attached hereto.
     “SPCC Plans” has the meaning provided such term in Section 5.18(d).
     “Start Date” has the meaning provided such term in Section 5.13(c).
     “Subsidiary” means, with respect to any Person, (a) any corporation, of
which a majority of the total voting power of shares of stock entitled (without
regard to the occurrence of any contingency) to vote generally in the election
of directors thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof or (b) any limited liability company, partnership,
association or other business entity, of which a majority of the partnership or
other similar ownership interests thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes of this definition, a Person or
Persons will be deemed to have a majority ownership interest in a limited
liability company, partnership, association or other business entity if such
Person or Persons will be allocated a majority of limited liability company,
partnership, association or other business entity gains or losses, or is or
controls the managing member or general partner of such limited liability
company, partnership, association or other business entity.
     “Target Release Date” has the meaning provided such term in Section 5.12.
     “Tax” and “Taxes” means all taxes, assessments, charges, duties, fees,
levies, imposts or other similar charges imposed by a Governmental Authority,
including all income, franchise, profits, capital gains, capital stock,
transfer, gross receipts, sales, use, transfer, service, occupation, ad valorem,
property, excise, severance, windfall profits, premium, stamp, license, payroll,
employment, social security, unemployment, disability, environmental,
alternative minimum, add-on, value-added, withholding and other taxes,
assessments, charges, duties, fees, levies, imposts or other similar charges of
any kind, and all estimated taxes, deficiency assessments, additions to tax,
penalties and interest. For purposes of Section 3.11, the term “Taxes” includes
only such Taxes that relate to the Assets or for which Buyer may have liability.
     “Tax Returns” means any report, return, election, document, estimated tax
filing, declaration or other filing provided to any Governmental Authority
including any attachments thereto and amendments thereof. For purposes of
Section 3.11, the term “Tax Returns” includes only such Tax Returns associated
with the Taxes that relate to the Assets or for which Buyer may have liability.
     “Termination Date” has the meaning provided such term in Section 5.13(c).
     “Third Party Claim” has the meaning provided such term in Section 7.4(a).
     “Title Defect” means (i) any title defect or Lien, other than a Permitted
Lien, that causes the Buyer to not have good title, free and clear of all Liens
other than Permitted Liens, to any portion of the Real Property Interests
(including the fixtures, buildings and improvements thereon, to the extent
constituting Real Property Interests); (ii) the extent to which the Real
Property Interests do not grant or create for the benefit of the Buyer all
rights reasonably

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necessary for the operations (as currently operated), use, maintenance, repair,
and replacement of the Assets; and (iii) the extent to which the Real Property
Interests are not contiguous or do not cover the continuous length of all
pipelines included in the Gathering System without any gaps. Notwithstanding the
foregoing, Title Defect shall not mean, be with respect to, or include those
portions of any existing rights-of-way lying on or within or that may pass
across or though any United States Department of the Interior Bureau of Land
Management lease or State of Utah Lease from any wellhead to an on lease
connection point, or to a lease boundary, or rights-of-way granted or used under
a relevant Bureau of Land Management Unit Operating Agreement.
     “Title Defect Amount” has the meaning provided to such term in
Section 2.7(a).
     “Title Defect Arbitrator” has the meaning provided to such term in
Section 2.7(c).
     “Title Defect Determination Date” has the meaning provided to such term in
Section 2.7(e).
     “Title Defect Notice” has the meaning provided to such term in
Section 2.7(a).
     “Transferred Employee” has the meaning provided such term in
Section 5.13(c).
     “Transferred Intellectual Property” has the meaning provided such term in
Section 2.1(a)(vi).
     “Transferred Records” has the meaning provided such term in
Section 2.1(a)(vii).
     “Transferred Permits” has the meaning provided such term in
Section 2.1(a)(iv).
     “Transaction Documents” means this Agreement and the other documents
executed and delivered by the Parties at the Closing or thereafter in
consummation of the transactions between them contemplated by this Agreement,
including those documents to be delivered by the Parties pursuant to this
Agreement, and any other Contract, agreement or document by and among the
Parties that is expressly agreed by the Parties to constitute a Transaction
Document for purposes of this Agreement.
     “Transition Period” has the meaning provided such term in Section 5.13(c).
     “Transition Services Agreement” means that certain transition services
agreement, dated as of the Closing Date, by and among Buyer and Gasco,
substantially in the form of Exhibit B hereto.
     “United States” means United States of America.
     “Welfare Benefit Claim” has the meaning provided such term in
Section 5.13(e).

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     1.2 Rules of Construction.
          (a) All article, section, schedule and exhibit references used in this
Agreement are to articles and sections of, and schedules and exhibits to, this
Agreement unless otherwise specified. The schedules and exhibits attached to
this Agreement constitute a part of this Agreement and are incorporated herein
for all purposes as if set forth in full herein. Any capitalized terms used in
any Disclosure Schedule or Exhibit hereto but not otherwise defined therein
shall have the meaning as set forth in this Agreement.
          (b) If a term is defined as one part of speech (such as a noun), it
shall have a corresponding meaning when used as another part of speech (such as
a verb). Terms defined in the singular have the corresponding meanings in the
plural, and vice versa. Unless the context of this Agreement clearly requires
otherwise, words importing the masculine gender shall include the feminine and
neutral genders and vice versa. The terms “include,” “includes” or “including”
shall mean “including without limitation.” The words “hereof,” “hereto,”
“hereby,” “herein,” “hereunder” and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to any particular
section or article in which such words appear.
          (c) The Parties acknowledge that each Party has reviewed this
Agreement and that any rule of construction to the effect that any ambiguities
are to be resolved against the drafting Party, or any similar rule operating
against the drafter of an agreement, shall not be applicable to the construction
or interpretation of this Agreement.
          (d) The captions in this Agreement are for convenience only and shall
not be considered a part of or affect the construction or interpretation of any
provision of this Agreement.
          (e) All references to currency or to “$” herein shall be to, and all
payments required hereunder shall be paid in, Dollars.
          (f) All accounting terms used herein and not expressly defined herein
shall have the meanings given to them under GAAP.
ARTICLE II
PURCHASE AND SALE OF ASSETS, CLOSING
     2.1 Sale and Purchase of Assets. Upon the terms and subject to the
conditions set forth herein, at the Closing, Seller shall sell, assign,
transfer, convey and deliver to Buyer, and Buyer will purchase, acquire and
accept from Seller, all right, title and interest of Seller in, to and under the
following assets, free and clear of Liens other than Permitted Liens:
          (a) the “Purchased Assets”:
               (i) that certain gathering system, together with all gathering
lines, pipelines, above-ground facilities or structures, compression equipment,
the J-T plant, dehydrators, drips, and the valves, pipes, scrubbers, machinery,
gauges, meters, fittings, fixtures, units, tanks, traps, interconnections,
cathodic protection equipment, equipment towers, field separators, liquids
extractors, recorders, storage sheds, pump houses and

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other equipment, fixtures, and improvements related thereto, used or held for
use in Seller’s ownership, operation or maintenance of all or any portion of the
gas gathering system, including those assets set forth on Seller Parties’
Schedule 2.1(a)(i) (collectively, the “Gathering System”);
               (ii) the real property and easement rights owned or held in
connection with the Gathering System, together with the rights, tenements,
easements, licenses, permits, appendages, appurtenant rights, privileges,
rights-of-way, leases, contracts, agreements and other real property interests
related to real property associated with the Gathering System or by, through or
under which the Gathering System is operated, or that is used or held for use in
Seller’s ownership, operation or maintenance of all or any portion of the
Gathering System, including those real property interests and rights set forth
on Seller Parties’ Schedule 2.1(a)(ii) (the “Real Property Interests”);
               (iii) all of Seller’s rights and interest under and pursuant to
those certain Material Contracts (including natural gas transportation and
gathering services contracts) and other licenses (including licenses related to
the Transferred Intellectual Property, if any) and agreements, including those
agreements set forth on Seller Parties’ Schedule 2.1(a)(iii) (the “Assumed
Contracts”);
               (iv) to the extent assignable under applicable Law, those certain
Permits, issued to or held by or on behalf of Seller in connection with Seller’s
ownership or operation of the Assets, including those Permits set forth on
Seller Parties’ Schedule 2.1(a)(iv) (the “Transferred Permits”);
               (v) all items of tangible personal property and equipment owned
or held for use by or on behalf of Seller in connection with Seller’s operation
or maintenance of the Assets, including those items of personal property set
forth on Seller Parties’ Schedule 2.1(a)(v) (collectively, the “Personal
Property”);
               (vi) all Intellectual Property owned by, or licensed to, Seller
and primarily related to the Assets or necessary for the ownership, operation or
maintenance of the Assets, including the Riverbend Marks, except the
Intellectual Property owned by, or licensed to, Seller and primarily related to
that certain Ferguson Beauregard Well Controller Flow Meters Inventory and the
Total Flow Meter Inventory used at the well heads, as more particularly
described on Seller Parties’ Schedule 2.2, and the repeater towers, repeater
tower rights-of-way and access permits (collectively, the “Transferred
Intellectual Property”);
               (vii) all existing Records in the possession of or readily
available to Seller to the extent primarily related to the Assets and reasonably
necessary for the ownership, operation or maintenance thereof, including studies
and other work product of Sellers or third-parties related to future
applications for rights of way (collectively, the “Transferred Records”)
(provided Seller may deliver copies if originals are not readily available and
may retain copies of any original Transferred Records); and
          (b) the “Salt Water Disposal Assets”:

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               (i) those certain evaporative facilities known as the Desert
Spring State Evaporative Facility and the Eight Mile Flat Evaporative Facility,
together with all pipelines, above-ground facilities or structures and other
equipment, fixtures and improvements, related thereto, used or held for use in
Seller’s ownership, operation or maintenance of all or any portion of the
evaporative facilities, including the treatment, disposal and recycling of
wastewater, including those assets set forth on Seller Parties’ Schedule
2.1(b)(i) (collectively, the “Evaporative Facilities”); and
               (ii) the real property and easement rights owned or held in
connection with the Evaporative Facilities, together with the rights, tenements,
easements, licenses, permits (for the commercial use of the Evaporative
Facilities), appendages, appurtenant rights, privileges, rights-of-way, leases,
contracts, agreements and other real property interests related to real property
associated with the Evaporative Facilities or by, through or under which the
Evaporative Facilities are operated, or that are used or held for use in
Seller’s ownership, operation or maintenance of all or any portion of the
Evaporative Facilities, including those real property interests and rights set
forth on Seller Parties’ Schedule 2.1(b)(ii) (the “Evaporative Facilities Real
Property Interests”).
     2.2 Excluded Assets. Any and all assets of Seller not described in
Section 2.1 will be retained by Seller and will not be included in the Assets or
sold, transferred, assigned, conveyed or delivered by Seller to Buyer (the
“Excluded Assets”), including the following assets:
          (a) any and all oil and/or gas leases, unit agreements, rights
acquired under farm-in agreements and other leases (including the Natural Gas
Sale/Purchase Contract, dated December 1, 2007, by and between Anadarko Energy
Services Company and Seller and the Federal Communications Commission Wireless
Telecommunication Bureau Radio Station Authorization) not specifically assigned
to Buyer pursuant to Section 2.1(a)(i), Section 2.1(a)(ii) or
Section 2.1(a)(iii), as set forth on Seller Parties’ Schedule 2.2, and all
rights associated therewith;
          (b) any and all trade credits, accounts receivable, notes receivable,
cash and cash equivalents with respect to the Assets arising out of Seller’s
business and relating to the Assets prior to the Closing;
          (c) any and all refunds or reimbursements of costs or expenses related
to the Assets borne by Seller prior to the Closing;
          (d) any claim, right or interest of Seller in or to any refund,
rebate, abatement or other recovery for Taxes, together with any interest due
thereon or penalty rebate arising therefrom, for any tax period (or portion
thereof) ending on or before the Closing Date;
          (e) any and all personal property that is sold or consumed by Seller
prior to the Closing in the Ordinary Course of Business;
          (f) Seller’s Organizational Documents, duplicate copies of such
records included in the Assets as are necessary to enable Gasco to file its tax
returns and reports, and any other records or materials relating to Seller
generally and not involving or relating to the Assets or the business related to
the Assets;

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          (g) any and all insurance policies and rights thereunder of Seller,
including refunds of premiums from any insurance policy of Seller resulting from
the transactions contemplated by this Agreement and rights to cancellation value
as of the Closing;
          (h) any and all claims, counterclaims and defenses of Seller against
third parties based on facts or events occurring prior to the Closing with
respect to the Assets to the extent reasonably expected to be necessary to
permit Seller to defend against any claim by such third party against Seller
after the Closing based on facts or events occurring prior to the Closing,
excluding any claims, counterclaims or defenses related to Assumed Liabilities
and except to the extent Buyer indemnifies Seller for such third party claim
pursuant to Section 7.3;
          (i) any and all Seller Marks;
          (j) all Intellectual Property owned by, or licensed to, Seller other
than the Transferred Intellectual Property, including the Intellectual Property
owned by, or licensed to, Seller and primarily related to that certain Ferguson
Beauregard Well Controller Flow Meters Inventory and the Total Flow Meter
Inventory used at the well heads, as more particularly described on Seller
Parties’ Schedule 2.2, and the repeater towers, repeater tower rights-of-way and
access permits;
          (k) that certain Ferguson Beauregard Well Controller Flow Meters
Inventory and the Total Flow Meter Inventory used at the well heads, as more
particularly described on Seller Parties’ Schedule 2.2, and the repeater towers,
repeater tower rights-of-way and access permits;
          (l) all Employee Benefit Plans and any Liabilities thereunder; and
          (m) those other assets listed on Seller Parties’ Schedule 2.2.
     2.3 Assumption of Liabilities. Upon Closing, Buyer shall assume and be
responsible for the payment, performance or discharge of all Liabilities of
Seller resulting from, relating to or arising out of the Assumed Contracts, the
Transferred Permits, the Real Property Interests and Taxes and charges with
respect to the Assets, to the extent related to periods from and after the
Closing, except to the extent any such Liabilities are expressly included as
part of the Retained Liabilities (as defined below) (collectively, the “Assumed
Liabilities”).
     2.4 Retained Liabilities. Notwithstanding anything to the contrary in this
Agreement, all Liabilities and obligations relating to, arising out of, or
attributable to the ownership or operation of the Assets prior to the Closing
Date, whether presently in existence or arising hereafter, shall be retained by
and remain obligations of Seller (the “Retained Liabilities”). The Retained
Liabilities shall include, without limitation, the following:
          (a) any Damages for which the Seller Parties are obligated to
indemnify Buyer pursuant to Section 7.2;
          (b) any Liability of Seller or any Affiliate of Seller, including any
such Liability arising out of or relating to the EPA Enforcement Action or EPA
Consent Decree, which arises out of or relates to any Excluded Asset;

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          (c) (i) any administrative or civil penalties (but not stipulated
penalties) payable to any Governmental Authority; and (ii) any capital
expenditures (including, without limitation, any costs relating to the purchase,
installation and testing of any equipment); in the case of each of clause
(i) and (ii) arising out of or relating to the EPA Enforcement Action or EPA
Consent Decree;
          (d) any Liability of Seller or any Affiliate of Seller resulting from
the transactions contemplated by this Agreement, including any expenses incurred
by or on behalf of Seller or any Affiliate of Seller in connection with this
Agreement or the consummation of the transactions contemplated hereby;
          (e) any Liability arising under any Employee Benefit Plan;
          (f) any Liability for Taxes imposed on Seller or imposed with respect
to the Assets accruing to or for any period (or portion thereof) ending on or
prior to the Closing Date; and
          (g) any Liability with respect to Property Taxes that are the
responsibility of Seller pursuant to Section 5.16(b).
     2.5 Consideration. In consideration for the sale and purchase of the Assets
contemplated by Section 2.1, at the Closing, Buyer shall pay to Gasco (i) the
Purchased Assets Sale Price minus any amounts then due to Buyer pursuant to
Section 2.7(f) (the “Net Purchased Assets Sale Price”) and, if the Salt Water
Disposal Assets are then transferrable, (ii) the Salt Water Disposal Assets Sale
Price in cash by wire transfer of immediately available funds to an account
designated by Gasco.
     2.6 Salt Water Disposal Assets Closing. If the Salt Water Disposal Assets
are not transferred at the Closing, upon the receipt by Buyer of all Permits
necessary for the commercial operation of the Salt Water Disposal Assets as they
are currently operated by Seller, Seller shall sell, assign, transfer, convey
and deliver to Buyer, and Buyer will purchase, acquire and accept from Seller,
all right, title and interest of Seller in, to and under the Salt Water Disposal
Assets, free and clear of Liens other than Permitted Liens. In consideration of
the sale and purchase of the Salt Water Disposal Assets, Buyer shall pay to
Gasco the Salt Water Disposal Assets Sale Price in cash by wire transfer of
immediately available funds to an account designated by Gasco (the “Salt Water
Disposal Assets Closing”). Seller shall transfer the Salt Water Disposal Assets
by such documents, deed, certificates, instruments or agreements as may be
necessary or appropriate to consummate the transfer contemplated in this
Section 2.6, and as may be reasonably requested by Buyer and agreed to by the
Seller Parties prior to the Salt Water Disposal Assets Closing.
     2.7 Title Defects.
          (a) As soon as reasonably practicable following the date of this
Agreement, and in no event later than sixty (60) days from the date hereof,
Buyer shall deliver to Seller written notices identifying each matter that it
believes in good faith to be a Title Defect, together with a good faith estimate
of the associated cost of curing such defect (the “Title Defect Amount”) for
each such alleged Title Defect, and reasonable written documentation, to support

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Buyer’s claims of each such Title Defect (the “Title Defect Notice”); it being
understood that neither the delivery nor cure or resolution of such Title Defect
Notice shall be a condition to the occurrence of the Closing. In order for
Seller to review the alleged Title Defects listed in the Title Defect Notice,
Buyer will provide to Seller and its representatives copies of any documents
used to determine the existence of a Title Defect and the estimated cost to cure
any Title Defect. Buyer shall include in the Title Defect Notice only Title
Defects that are reasonably believed, in good faith, to individually cost in
excess of $25,000 to cure. For purposes of calculating the cost of a Title
Defect, the Parties shall value (i) rights-of-way at $25 per rod and
(ii) surface leases and fee properties at fair market value.
          (b) If Seller disagrees with the existence of a Title Defect or the
associated Title Defect Amount, then Seller shall notify Buyer of such
disagreement in writing (a “Notice of Disagreement”) within thirty (30) days
after its receipt of the applicable Title Defect Notice, it being understood
that neither the delivery nor cure or resolution of such Notice of Disagreement
shall be a condition to the occurrence of the Closing. Such Notice of
Disagreement shall specify in reasonable detail Seller’s grounds for such
disagreement, the Title Defect Amount estimated by Seller therefor, or both, as
the case may be. To the extent Seller does not contest a Title Defect or a Title
Defect Amount in a Notice of Disagreement within the time period specified in
this Section 2.7(b), Seller shall be deemed to have accepted the existence of
such Title Defect or Title Defect Amount, which shall be final, binding and
conclusive for all purposes hereunder.
          (c) If a Notice of Disagreement is timely provided by Seller, Buyer
and Seller shall use commercially reasonable efforts for a period of thirty
(30) days after delivery of such Notice of Disagreement (or such longer period
as they may mutually agree) to resolve any disagreements with respect to the
existence of any Title Defect or Title Defect Amount contested in the Notice of
Disagreement. If, at the end of such period, they are unable to resolve such
disagreements, then, upon the written request of either Party, Seller and Buyer
agree that within a further fifteen (15) day period, they will jointly select an
arbitrator who is an attorney experienced in the natural gas and gas gathering
industry in the United States as well as in real estate and title insurance
matters, or as otherwise mutually agreed upon by Seller and Buyer (the “Title
Defect Arbitrator”), to resolve any remaining disagreements. If Seller and Buyer
are unable to agree upon the designation of a Person as a Title Defect
Arbitrator, they shall request the American Arbitration Association to appoint
the Title Defect Arbitrator and such Title Defect Arbitrator shall hear all
matters submitted under this Section 2.7(c).
          (d) The Title Defect Arbitrator shall determine as promptly as
practicable (but in any event within thirty (30) days following the date on
which such dispute is referred to the Title Defect Arbitrator) the existence of
any alleged Title Defect or the disputed Title Defect Amount, as the case may
require, identified in the Notice of Disagreement and not previously resolved by
the Parties. Each Party shall set forth in writing its position regarding the
existence of each alleged Title Defect and each Title Defect Amount referred to
the Title Defect Arbitrator for resolution, and the Title Defect Arbitrator
shall be required to select the position of either one Party or the other with
respect to each such Title Defect or Title Defect Amount, as the case may
require. Each Party shall bear its own expenses and the fees and expenses of its
own representatives and experts in connection with the preparation, review,
dispute (if any) and final determination of any alleged Title Defects. Buyer, on
the one hand, and Seller, on the other hand, shall share equally the costs,
expenses and fees of the Title Defect Arbitrator. The

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determination of the Title Defect Arbitrator shall be final, conclusive and
binding on the Parties and shall be enforceable in any court having
jurisdiction.
          (e) As used in this Agreement, an “Agreed-Upon Title Defect” shall
mean any of (i) a Title Defect that is not contested under any Notice of
Disagreement timely given, (ii) a Title Defect that is mutually agreed upon by
Buyer and Seller or (iii) a Title Defect resulting from a determination of the
Title Defect Arbitrator pursuant to Section 2.7(d) above. The date on which any
Title Defect becomes an Agreed-Upon Title Defect pursuant to the foregoing is
referred to as the “Title Defect Determination Date.” An “Agreed-Upon Title
Defect Amount” shall mean any of (i) a Title Defect Amount that is not contested
under any Notice of Disagreement timely given, (ii) a Title Defect Amount that
is mutually agreed upon by Buyer and Seller or (iii) a Title Defect Amount
resulting from a determination of the Title Defect Arbitrator pursuant to
Section 2.7(d) above.
          (f) At Closing the Purchased Assets Sale Price shall be reduced by the
aggregate amount of any Agreed-Upon Title Defect Amount finalized by Closing.
After Closing, the Seller shall promptly pay to Buyer any Agreed-Upon Title
Defect Amount finalized after Closing. Buyer understands and agrees that the
Purchased Assets Sale Price adjustment provided in this Section 2.7 is the sole
and exclusive remedy for a Title Defect, and no claim may be made by Buyer with
respect to any representation or warranty made by Seller or any of its
affiliates or representatives. Notwithstanding the provisions of this
Section 2.7, the Purchased Assets Sale Price shall not be decreased by any
Agreed-Upon Title Defect Amount unless and until the aggregate Agreed-Upon Title
Defect Amount exceeds $100,000, then only to the extent of such excess, and the
maximum decrease of the Purchased Assets Sale Price pursuant to this Section 2.7
for all Title Defects shall not exceed $1,000,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
     Each of the Seller Parties hereby represents and warrants, jointly and
severally, to Buyer as follows:
     3.1 Organization of the Seller Parties.
          (a) Seller is a limited liability company duly organized and validly
existing under the laws of the State of Nevada, is qualified to do business and
is in good standing under the laws of the States of Nevada and Utah, and has
full limited liability company power and right to carry on its business as such
is now being conducted and to own, operate, lease and sell, as contemplated by
this Agreement, the Assets.
          (b) Gasco is a corporation duly incorporated and validly existing
under the laws of the State of Nevada and is qualified to do business and is in
good standing under the laws of the State of Nevada.
     3.2 Authorization; Enforceability. Each of the Seller Parties has all
requisite corporate or limited liability company power and authority, as the
case may be, to execute and deliver this Agreement and each other Transaction
Document to which such Seller Party is a party, to perform all obligations to be
performed by such Seller Party hereunder and thereunder,

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and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and each other Transaction Document to
which such Seller Party is a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized and
approved by all requisite corporate or limited liability company, as the case
may be, action on the part of such Seller Party, and no other proceeding on the
part of such Seller Party is necessary to authorize this Agreement or any of the
other Transaction Documents to which such Seller Party is a party. This
Agreement and each other Transaction Document to which any Seller Party is a
party, when duly and validly executed and delivered by such Seller Party
(assuming due authorization, execution and delivery by Buyer and any other
Persons party thereto) will constitute legal, valid and binding obligations of
such Seller Party, enforceable against such Seller Party in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar Laws affecting creditors’
rights generally and subject, as to enforceability, to general principles of
equity (regardless of whether such enforceability is considered in a Proceeding
in equity or at Law).
     3.3 No Conflict; Consents. The execution and delivery by each Seller Party
of this Agreement and each other Transaction Document to which such Seller Party
is a party, the consummation of the transactions contemplated hereby and
thereby, and the compliance by such Seller Party with any of the provisions
hereof or thereof, do not and shall not:
          (a) violate any Law applicable to such Seller Party or the Assets in
any material respect;
          (b) except as set forth on Seller Parties’ Schedule 3.3(b), require
any notice to, filing with, or need to obtain any material Permit or other
material authorization, consent, or approval of any Governmental Authority
(excluding any Permits or other consents or approvals from any Governmental
Authority that are customarily obtained as a matter of routine after Closing);
          (c) violate any Organizational Document of such Seller Party;
          (d) violate or breach any Transferred Permit in any material respect
or give rise or result in the termination or cancellation of any material
Transferred Permit;
          (e) except as set forth on Seller Parties’ Schedule 3.3(e), require
any notice to, filing with, or need to obtain any material Permit or other
material authorization, consent, or approval of any Person (other than a
Governmental Authority); or
          (f) subject to obtaining the consents set forth on Seller Parties’
Schedule 3.3(b) and Seller Parties’ Schedule 3.3(e), (i) conflict with, violate,
result in a breach of or constitute a default under any Assumed Contract in any
material respect; (ii) result in the termination or acceleration of, or create
in any party the right to accelerate, terminate, modify, or cancel any Assumed
Contract in any material respect; (iii) require any other notice, approval, or
consent under any Assumed Contract in any material respect; (iv) result in the
creation of any Lien (other than a Permitted Lien) under any Assumed Contract in
any material respect; or (v) constitute an event that, after notice or lapse of
time or both, would result in any breach,

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termination, or creation of a Lien (other than a Permitted Lien) in connection
with any Assumed Contract in any material respect.
     3.4 Absence of Certain Changes or Events. Except as disclosed on Seller
Parties’ Schedule 3.4 or in Gasco’s periodic reports and other forms, together
with all information included or incorporated by reference therein, filed with
the Securities and Exchange Commission, since January 1, 2009 (a) there has not
been any event, circumstances or facts that has had or could be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Assets and (b) the business of Seller related to the Assets has been
conducted, in all material respects, in the Ordinary Course of Business.
     3.5 Assumed Contracts. Except as set forth on Seller Parties’ Schedule 3.5,
each Assumed Contract (a) is in full force and effect and (b) represents the
legally valid and binding obligation of the Seller Party which is a party
thereto and, to the Knowledge of the Seller Parties, represents the legally
valid and binding obligation of the other Person(s) party thereto, in each case
enforceable in accordance with its terms. Except as set forth on Seller Parties’
Schedule 3.5, neither Seller Party nor, to the Knowledge of Seller, any other
Person(s) party to any of the Assumed Contracts is in material breach of any
Assumed Contract. Except as set forth on Seller Parties’ Schedule 3.5, Seller
Parties have not received any written or oral notice of termination, breach or
other disputes or claims under any Assumed Contract or any other Material
Contract between a Seller Party and a third party that relates to Buyer’s
operation of the Assets.
     3.6 Material Contracts. Except for the Assumed Contracts and those
Contracts disclosed in Seller Parties’ Schedule 3.6, with respect to the
ownership or operation of the Assets, each of the Seller Parties is not a party
to or bound by:
          (a) any lease;
          (b) any agreement or contract for the gathering, treating,
transportation, processing, or storage of natural gas or other hydrocarbons;
          (c) any agreement for the purchase or sale of materials, supplies,
goods, services, equipment or other assets;
          (d) any partnership, joint venture, or other similar agreement or
arrangement;
          (e) any agreement relating to the acquisition or disposition of any
business (whether by merger, sale of stock, sale of assets, or otherwise);
          (f) any agreement relating to Indebtedness for borrowed money or the
deferred purchase price of property (in either case, whether incurred, assumed,
guaranteed or secured by any asset);
          (g) any option, license, franchise, or similar agreement (other than
licenses for commercially available off-the-shelf software involving annual
payments of less than $5,000);
          (h) any agreement with respect to any hedging, swap, forward, future
or derivative transaction or option or similar agreement involving, or settled
by reference to, one or

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more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions;
          (i) any agency, dealer, sales representative, marketing or other
similar agreement;
          (j) any agreement that limits the freedom of Seller to compete in any
line of business or with any Person or in any area or to own, operate, sell,
transfer, pledge or otherwise dispose of or encumber any Assets or which would
so limit the freedom of Buyer after the Closing Date;
          (k) any agreement with or for the benefit of any Affiliate of the
Seller Parties; or
          (l) any other agreement, commitment, or arrangement not made in the
Ordinary Course of Business that is material to the operation of the Assets.
     3.7 Records. All Records of Seller Parties pertaining to the Assets have
been prepared, assembled and maintained in the Ordinary Course of Business.
Seller maintains or causes to be maintained a system of internal accounting
controls relating to the Assets sufficient to provide reasonable assurance that:
(a) transactions are accurately recorded in all material respects;
(b) transactions are executed in accordance with management’s specific or
general authorization; and (c) access to its Records is permitted only in
accordance with Seller’s standard practices.
     3.8 Intellectual Property. Seller, together with its Affiliates owns all
right, title and interest in and to the Riverbend Marks and with respect to all
other Intellectual Property used in the operation or maintenance of the Assets
as currently conducted, including the Transferred Intellectual Property, owns or
has the right to use pursuant to a license, sublicense or agreement all such
other Intellectual Property. The Transferred Intellectual Property, the
Intellectual Property owned by, or licensed to, Seller and primarily related to
that certain Ferguson Beauregard Well Controller Flow Meters Inventory and the
Total Flow Meter Inventory used at the well heads, as more particularly
described on Seller Parties’ Schedule 2.2, and the repeater towers, repeater
tower rights-of-way and access permits, and know-how generally used in the oil
and gas industry, includes all Intellectual Property that is necessary for the
ownership, operation or maintenance of the Assets and there exists no material
restrictions on the disclosure, use, license or transfer of the Transferred
Intellectual Property. To the Knowledge of the Seller Parties, (a) in the last
twelve (12) months, no third party has asserted in writing against any Seller
Party a claim that it is infringing on or misappropriating the Intellectual
Property of such third party and (b) no third party is infringing on or
misappropriating the Transferred Intellectual Property.
     3.9 Litigation. Except as set forth on Seller Parties’ Schedule 3.9, as of
the Effective Date, there are no (a) Proceedings before any Governmental
Authority or arbitration body pending or, to the Knowledge of the Seller
Parties, threatened in writing by any Person against either of the Seller
Parties with respect to the Assets or Seller’s ownership, use or operation of

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the Assets or (b) Orders or unsatisfied judgments from any Governmental
Authority binding upon the Seller Parties relating to the Assets.
     3.10 Brokers’ Fees. Except for the amounts payable by the Seller Parties to
J.P. Morgan Securities Inc. pursuant to the engagement letter dated as of
May 14, 2009, by and between Gasco and J.P. Morgan Securities Inc., there is no
broker, finder, investment banker or other Person who might be entitled to any
brokerage fee, finders’ fee or other commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by the
Seller Parties or any their Affiliates.
     3.11 Taxes. Except as set forth on Seller Parties’ Schedule 3.11 (a) all
material Tax Returns required to be filed by the Seller Parties related to the
Assets have been filed; (b) all Taxes shown as due on such Tax Returns have been
paid; (c) there are no material Liens (other than Permitted Liens) on any of the
Assets that arose in connection with any failure to pay any Tax by the Seller
Parties; (d) there is no claim pending by any Governmental Authority in
connection with any Tax directly related to the Assets; (e) no Tax Returns of
the Seller Parties directly related to the Assets are under audit or examination
by any Governmental Authority; (f) there are no agreements or waivers currently
in effect that provide for an extension of time with respect to the filing of
any Tax Return by the Seller Parties related to the Assets or the assessment or
collection of any Tax related to the Assets and (g) to the Knowledge of the
Seller Parties, no written claim has been made by any Governmental Authority in
a jurisdiction where a Seller Party does not file a Tax Return directly related
to the Assets that it is or may be subject to taxation in that jurisdiction.
     3.12 Environmental Matters. Except as set forth on Seller Parties’ Schedule
3.12, including with respect to that certain EPA enforcement action more
particularly described thereon (the “EPA Enforcement Action”),
          (a) (i) The Assets and, in connection with the Assets, each Seller
Party and Affiliate thereof, are and have been in compliance with all
Environmental Laws in all material respects, which compliance includes the
possession and maintenance of, and compliance with, all material Environmental
Permits required for the ownership or operation of the Assets and all such
Environmental Permits are in full force and effect; (ii) none of the
Environmental Permits will be terminated or impaired, in whole or in part, by
its terms or by operation of Environmental Law as a result of the transactions
contemplated hereby or by the Transaction Documents; and (iii) the Transferred
Permits include all material Environmental Permits necessary for the ownership
and operation of the Assets;
          (b) Neither the Assets nor, in connection with the Assets, any Seller
Party or Affiliate thereof, is subject to any outstanding Order or unsatisfied
judgment issued by, award from, or settlement with any Governmental Authority or
any other third party under or relating to any Environmental Laws or
Constituents of Concern, including any such Order, unsatisfied judgment, award
or settlement that would require any Remedial Action or the incurrence of any
Environmental Costs and Liabilities;
          (c) In connection with the Assets, no Seller Party, nor any Affiliate
thereof, is subject to any Proceeding or review that is pending or, to the
Knowledge of the Seller Parties,

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threatened, has received any notice, notification, demand, request for
information, citation, summons or complaint, or has been assessed any fine or
penalty, in each case alleging or relating to any noncompliance with or
potential liability under or relating to any Environmental Law, Environmental
Permit or Constituents of Concern;
          (d) All (i) environmental reports relating to the Assets, or the
ownership or operation thereof, prepared by or at the direction of or which is
in the possession of a Seller Party or its Affiliates, (ii) correspondence of
any Seller Party or its Affiliates with any Governmental Authority or any other
third party addressing environmental matters relating to the Assets, or the
ownership or operation thereof, and (iii) other material environmental Records
maintained in the Ordinary Course of Business or otherwise required to be
maintained by applicable Environmental Laws, as set forth on Seller Parties’
Schedule 3.12, have been made available for Buyer’s inspection; and all
environmental Records of the Seller Parties pertaining to the Assets have been
prepared, assembled and maintained in the Ordinary Course of Business;
          (e) There is and has been no exposure of any Person or property to, or
any release, discharge, disposal, dumping, injection, pumping, deposit, spill or
emission of, Constituents of Concern at, on, under or in connection with the
Assets, or the ownership or operation thereof, that would reasonably be expected
to result in any Environmental Costs and Liabilities;
          (f) There are no Liabilities arising in connection with or in any way
relating to the Assets or, in connection with the Assets, any Seller Party or
Affiliate thereof, arising under or relating to any Environmental Law or
Constituents of Concern;
          (g) No polychlorinated biphenyls, radioactive material (other than
naturally occurring radioactive material), lead-based paint, asbestos,
asbestos-containing material, incinerator (other than air pollution control
equipment), sump, surface impoundment, landfill, septic system, or underground
storage tank (active or inactive) is or has been present at, on or under any
Asset;
          (h) No Asset and no property at which Constituents of Concern have
been disposed or transported, directly or indirectly, by any Seller Party or
Affiliate thereof, in connection with any Asset, is listed or, to the Knowledge
of the Seller Parties, proposed for listing on any federal, state, local or
foreign list of sites requiring investigation or cleanup; and
          (i) The wetlands investigation by the United States Army Corps of
Engineers and United States Environmental Protection Agency into the Seller
Parties’ activities on the Lamb Trust site in Uintah County, Utah relates solely
to the Excluded Assets and does not relate to or in any way affect any Asset.
          (j) The execution and delivery by each Seller Party of this Agreement
and each other Transaction Document to which such Seller Party is a party, the
consummation of the transactions contemplated hereby and thereby, and the
compliance by such Seller Party with any of the provisions hereof or thereof, do
not and shall not: (i) violate any Environmental Law applicable to such Seller
Party or the Assets in any material respect; (ii) require any notice to, filing
with, or need to obtain any material Environmental Permit or other material
authorization,

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consent, or approval of any Governmental Authority (excluding any Environmental
Permits or other consents or approvals from any Governmental Authority that are
customarily obtained as a matter of routine after Closing); (iii) violate or
breach any Environmental Permit in any material respect or result in the
termination or cancellation of any material Environmental Permit by the terms of
such permit or by operation of Environmental Law; or (iv) require any notice to,
filing with, or need to obtain any material Environmental Permit or other
material authorization, consent, or approval of any Person (other than a
Governmental Authority);
          (k) Except as disclosed in Gasco’s periodic reports and other forms,
together with all information included or incorporated by reference therein,
filed with the Securities and Exchange Commission, since January 1, 2009
(i) there has not been any event, circumstance or fact relating to compliance
with or Liability under any Environmental Law that has had or could reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
on the Assets, and (ii) the business of Seller relating to compliance with or
Liability under any Environmental Law with respect to the Assets has been
conducted, in all material respects, in the Ordinary Course of Business;
          (l) Neither Seller Party nor, to the Knowledge of Seller, any other
Person(s) party to any of the Assumed Contracts is in material breach of any
provision of any Assumed Contract relating to any Environmental Law,
Constituents of Concern or any other environmental matter and (ii) Seller
Parties have not received any written or oral notice of termination, breach or
other disputes or claims under any Assumed Contract or any other Material
Contract between a Seller Party and a third party relating to a provision of
such Assumed Contract or Material Contract relating to any Environmental Law,
Constituents of Concern or any other environmental matter;
          (m) With respect to ownership or operation of the Assets, each of the
Seller Parties is not a party to or bound by any agreement, commitment, or
arrangement not made in the Ordinary Course of Business that (x) is material to
the operation of the Assets and (y) relates to any Environmental Law,
Constituents of Concern or any other environmental matter;
          (n) Seller Parties’ Schedule 3.14 contains a summary description of
all material insurance policies providing pollution legal liability,
environmental impairment and any other environmental insurance coverage held by
or for the benefit of Seller Parties that relate to the Assets as of the
Effective Date. There is no material claim by either of the Seller Parties under
any such policies to which coverage has been questioned, disputed or denied by
the underwriters or issuers of such policies nor has any denial of coverage or
reservation of rights notice been given by any such underwriter or issuer with
respect to a claim that is still pending. All premiums due and payable thereon
under such policies have been timely paid and the Seller Parties have otherwise
complied in all material respects with the terms and conditions thereof. Such
policies have been in effect since January 1, 2006, are in full force and effect
as of the date hereof and will remain in full force and effect as of the Closing
Date. Such policies are, to the Knowledge of the Seller Parties, of the type and
in amounts customarily carried by Persons conducting operations similar to the
operation of the Assets. To the Knowledge of the Seller Parties, there is no
threatened termination of, or material alteration of coverage under, any such
policies. After Closing, Seller Parties shall have coverage under such policies
with respect to events occurring prior to the Closing;

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          (o) Seller Parties’ Schedule 3.22 identifies all Guarantees relating
to any Environmental Law, Constituents of Concern, or any other environmental
matter and relating to the Assets;
          (p) Notwithstanding any provision in this Agreement to the contrary,
this Section 3.12 shall be the exclusive representations and warranties with
respect to Environmental Laws, Constituents of Concern, and any other
environmental matter, and no other representations or warranties are made with
respect to such matters.
     3.13 Compliance with Laws; Permits.
          (a) Except as set forth on Seller Parties’ Schedule 3.13 or otherwise
disclosed in this Agreement, each of the Seller Parties is and has been since
January 1, 2007 in material compliance with all applicable Laws related to it.
Seller owns and operates the Assets in material compliance with all applicable
Laws related to the Assets. Notwithstanding the foregoing or any other provision
of this Agreement to the contrary, this Section 3.13 does not address compliance
with Laws relating to Tax, Environmental, Employment and Labor or Employee
Benefits matters, which matters are addressed solely by Section 3.11,
Section 3.12, Section 3.3, Section 3.20 and Section 3.21, respectively, and no
other representations or warranties are made with respect to such matters,
including pursuant to this Section 3.13.
          (b) The Transferred Permits include all material Permits (other than
Intellectual Property licenses) necessary for the ownership and operation of the
Assets as currently conducted. Except as set forth on Seller Parties’
Schedule 3.13, (i) all such Transferred Permits are in full force and effect;
(ii) Seller is not in material violation or default of or material conflict
with, and no condition exists that with notice or lapse of time or both would
constitute a violation, default or conflict with or under, any material
Transferred Permit; and (iii) there are no Proceedings pending or threatened in
writing before any Governmental Authority that seek the revocation,
cancellation, suspension or adverse modification of any material Transferred
Permit; and (iv) none of the Permits will be terminated or impaired or become
terminable, in whole or in part, as a result of the transactions contemplated
hereby or by the Transaction Documents.
     3.14 Insurance. Seller Parties’ Schedule 3.14 contains a summary
description of all material policies of property, fire and casualty, product
liability, workers’ compensation and other insurance held by or for the benefit
of Seller Parties that relate to the Assets as of the Effective Date. There is
no material claim by either of the Seller Parties under any such policies or
bonds to which coverage has been questioned, disputed or denied by the
underwriters or issuers of such policies or bonds nor has any denial of coverage
or reservation of rights notice been given by any such underwriter or issuer
with respect to a claim that is still pending. All premiums due and payable
thereon under such policies and bonds have been timely paid and the Seller
Parties have otherwise complied in all material respects with the terms and
conditions thereof. Such policies and bonds have been in effect since January 1,
2006, are in full force and effect as of the date hereof and will remain in full
force and effect as of the Closing Date. Such policies and bonds are, to the
Knowledge of the Seller Parties, of the type and in amounts customarily carried
by Persons conducting operations similar to the operation of the Assets. To the
Knowledge of the Seller Parties, there is no threatened termination of, or
material alteration

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of coverage under, any such policies and bonds. After Closing, Seller Parties
shall have coverage under such policies and bonds with respect to events
occurring prior to the Closing.
     3.15 Condition of Assets, Sufficiency and Conveyance of Title.
          (a) Except as set forth on Seller Parties’ Schedule 3.15, the Assets
that are tangible assets are in good repair, working order and operating
condition, subject to normal wear and tear.
          (b) The Purchased Assets constitute all of the property and assets
used or held for use by Seller and its Affiliates in connection with the
operation of the Gathering System and are adequate to operate the Gathering
System as currently operated.
          (c) All Real Property Interests are valid and enforceable, except as
the enforceability thereof may be affected by bankruptcy, insolvency or other
Laws of general applicability affecting the rights of creditors generally or
principles of equity. The Real Property Interests grant the rights purported to
be granted thereby and all rights necessary thereunder for the operation of the
Assets as currently conducted. There are no gaps in the Real Property Interests,
other than gaps that would not reasonably be expected to impair the business or
operation of the Assets as currently conducted, and no part of the material
tangible Assets are located on property that is not subject to a Real Property
Interest included in the Assets.
          (d) Seller has, as of the date hereof, and will, as of the Closing
Date, sell, transfer, assign and convey to Buyer, good and valid title to and
rights and interests in the Assets, free and clear of all Liens, other than
Permitted Liens, Title Defects, if any, and Liens which will be discharged on or
before the Closing Date.
     3.16 Solvency of the Seller Parties. Immediately after giving effect to the
transactions contemplated by this Agreement, (i) no Seller Party nor any
Subsidiary of a Seller Party will have incurred debts beyond its ability to pay
such debts as they mature or become due, (ii) the then present fair salable
value of the assets of each of the Seller Parties and their respective
Subsidiaries will exceed the amount that will be required to pay its probable
liabilities (including the probable amount of all contingent liabilities) and
its debts as they become absolute and matured, (iii) the assets of each of the
Seller Parties and their respective Subsidiaries, in each case at a fair
valuation, will exceed its respective debts (including the probable amount of
all contingent liabilities) and (iv) none of each of the Seller Parties and
their respective Subsidiaries will have unreasonably small capital to carry on
its business as presently conducted or as proposed to be conducted. No transfer
of property is being made and no obligation is being incurred in connection with
the transactions contemplated by this Agreement with the intent to hinder, delay
or defraud either present or future creditors of any Seller Party or its
Subsidiaries. No Seller Party nor any of its Subsidiaries currently intends to
(a) institute, consent to the institution of, or request institution of any
voluntary case or proceeding under any provision or chapter of the Bankruptcy
Code or (b) institute, consent to, or request the institution of any proceeding
under any other similar foreign, federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation, winding up or reorganization or seek
any arrangement, adjustment, protection, relief or composition of its debts, or
make a general assignment for the benefit of its creditors.

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     3.17 Auction Process. The auction process that the Seller Parties
structured for the sale of the Assets was reasonably customary for a transaction
of this sort involving, among other things, making confidential data and Seller
Parties’ management teams available to those bidders to inform them about the
Assets. Based on the conduct and outcome of that auction, Seller Parties believe
that this auction process was reasonably designed to realize the highest
possible value attainable for the Assets based on current market conditions.
     3.18 Natural Gas and Natural Gas Liquids Imbalances. To the Knowledge of
the Seller Parties, there do not exist any natural gas or natural gas liquid
imbalances (production, gathering, processing, transportation or otherwise)
which are associated with the Assets.
     3.19 Preferential Rights. Except as set forth on Seller Parties’ Schedule
3.19, no third party holds a preferential right to purchase any Asset.
     3.20 Employment and Labor Matters.
          (a) Seller Parties’ Schedule 3.20(a) contains a true and complete list
of (i) all employees that perform services primarily related to the Gathering
System who are available for hire by Buyer (the “Employees”), and their
positions, (ii) the amount of current monthly salary or hourly rate, as
applicable, of each such Employee, (iii) the date of hire of each such Employee
and (iv) any benefits or other compensation to which each such Employee is
entitled.
          (b) No Seller Party has agreed to recognize any labor union or other
collective bargaining representative as the representatives of any Employee and,
to the Knowledge of Seller Parties, no labor union or other collective
bargaining representative claims to or is seeking to represent any Employee. To
the Knowledge of Seller Parties, no union organizational campaign or
representation petition is currently pending with respect to any Employee.
          (c) Except as set forth on Seller Parties’ Schedule 3.20(c), neither
of the Seller Parties nor any of their respective Affiliates or Subsidiaries is
a party to or bound by any collective bargaining agreement, other labor contract
or individual agreement applicable to any of the Employees. No collective
bargaining agreements, other labor contract or individual agreements relating to
any of the Employees are being negotiated.
          (d) There is no labor strike or labor dispute, slow down, lockout or
stoppage actually pending or, to the Knowledge of Seller Parties, threatened
against or affecting the Employees or the Assets, and the Seller Parties have
not experienced any labor strikes or material labor disputes, slowdowns,
lockouts or stoppages with relating to the Assets. Seller Parties are not
engaged, nor have engaged, in any unfair labor practices, and have not had any
unfair labor practice charges or complaints before any Governmental Authority
pending or, to the Knowledge of Seller, threatened against the Seller Parties
relating to the Employees.
          (e) Except as set forth on Seller Parties’ Schedule 3.20(c), no
Employee is a party to any employment agreement or other Contract or subject to
any requirement that is, in any way, inconsistent with such Employee’s possible
future status with Buyer as an employee-at-will who may be terminated at any
time without cause or notice, except as otherwise provided by applicable Law.

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          (f) As of the Effective Date, neither Buyer nor any of the Seller
Parties had any communication with the Employees regarding any offers of
employment with Buyer.
Notwithstanding any provision in this Agreement to the contrary, this
Section 3.20 shall be the exclusive representations and warranties with respect
to Employment and Labor matters, and no other representations or warranties are
made with respect to such matters, including pursuant to Section 3.13.
     3.21 Employee Benefits Matters. Set forth on Seller Parties’ Schedule
3.21(a), as of the Effective Date, is a list of all Employee Benefit Plans.
          (b) Neither the Seller nor, to the Knowledge of the Seller, any ERISA
Affiliate, maintains, contributes to, or has any liability or obligation to
contribute to, or has, within the last six (6) years preceding the Closing Date,
ever maintained, contributed to, or had any liability or obligation to
contribute to: (i) any Employee Benefit Plan that is subject to the minimum
funding requirements of Section 412 of the Code or Title IV of ERISA or (ii) any
“multi-employer plan,” within the meaning of Section 3(37) or Section 4001(a)(3)
of ERISA.
          (c) True, correct and complete copies of each of the Employee Benefit
Plans have been furnished or made available to Buyer and/or its representatives.
Notwithstanding any provision in this Agreement to the contrary, this
Section 3.21 shall be the exclusive representations and warranties with respect
to Employee Benefits matters, and no other representations or warranties are
made with respect to such matters, including pursuant to Section 3.13.
     3.22 Guarantees. Except as set forth on Seller Parties’ Schedule 3.22,
there are no Guarantees.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
     Buyer hereby represents and warrants to the Seller Parties as follows:
     4.1 Organization of Buyer. Buyer is a limited liability company, duly
formed and validly existing under the laws of the State of Delaware and is
qualified to do business and is in good standing under the laws of the State of
Delaware.
     4.2 Authorization; Enforceability. Buyer has all requisite power and
authority to execute and deliver this Agreement and each other Transaction
Document to which Buyer is a Party, to purchase the Assets on the terms
described herein and to perform all obligations to be performed by Buyer
hereunder and thereunder, and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and each other
Transaction Document to which Buyer is a Party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized and approved by all action required on the part of Buyer, and no
other proceeding on the part of Buyer is necessary to authorize this Agreement
or any of the other Transaction Documents to which Buyer is a party. This
Agreement and each other Transaction Document to which Buyer is a party, when
duly and

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validly executed and delivered by Buyer (assuming due authorization, execution
and delivery by the Seller Parties and any other Persons party thereto) will
constitute legal, valid and binding obligations of Buyer, enforceable against
Buyer in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar Laws affecting creditors’ rights generally and subject, as to
enforceability, to general principles of equity (regardless of whether such
enforceability is considered in a Proceeding in equity or at Law).
     4.3 No Conflict; Consents. The execution and delivery by Buyer of this
Agreement and each other Transaction Document to which Buyer is a party, the
consummation of the transactions contemplated hereby and thereby, and the
compliance by Buyer with any of the provisions hereof or thereof, do not and
shall not:
          (a) violate any Law applicable to Buyer in any material respect;
          (b) except as set forth on Buyer’s Schedule 4.3(b), require any notice
to or filing with, or need to obtain any material Permit or other material
authorization, consent, or approval of any Governmental Authority (excluding any
Permits or other consents or approvals from any Governmental Authority that is
customarily obtained as a matter of routine after Closing);
          (c) violate any Organizational Document of Buyer;
          (d) except as set forth on Buyer’s Schedule 4.3(d), require any notice
to or filing with, or need to obtain any material Permit or other material
authorization, consent, or approval of any Person (other than a Governmental
Authority); or
          (e) subject to obtaining the consents set forth on Buyer’s
Schedule 4.3(b) or Buyer’s Schedule 4.3(d), (i) conflict with, violate, result
in a breach of or constitute a default under, (ii) result in the termination or
acceleration of, or create in any party the right to accelerate, terminate,
modify or cancel any, or (iii) require any notice, approval or consent under,
any Contract, Permit or other arrangement to which Buyer is a party or by which
Buyer or its properties or assets are bound, in each case, in any material
respect.
     4.4 Litigation. Except as set forth on Buyer’s Schedule 4.4, as of the
Effective Date, there are no (a) Proceedings before any Governmental Authority
or arbitration body pending or, to the Knowledge of Buyer, threatened in writing
by any Person against Buyer or (b) Orders or unsatisfied judgments from any
Governmental Authority binding upon Buyer.
     4.5 Brokers’ Fees. Except as disclosed on Buyer’s Schedule 4.5, there is no
broker, finder, investment banker or other Person who might be entitled to any
brokerage fee, finders’ fee or other commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
Buyer or any of its Affiliates. No Person other than Buyer has any liability or
obligations for any costs or expenses related to Buyer’s engagement of the
parties, if any, set forth on Buyer’s Schedule 4.5.
     4.6 Solvency of the Buyer. Immediately after giving effect to the
transactions contemplated by this Agreement, (i) neither Buyer nor any
Subsidiary of Buyer will have

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incurred debts beyond its ability to pay such debts as they mature or become due
and (ii) none of Buyer nor its respective Subsidiaries will have unreasonably
small capital to carry on its business as presently conducted or as proposed to
be conducted. No transfer of property is being made and no obligation is being
incurred in connection with the transactions contemplated by this Agreement with
the intent to hinder, delay or defraud either present or future creditors of
Buyer or its Subsidiaries. Neither Buyer nor any of its Subsidiaries currently
intends to (a) institute, consent to the institution of, or request institution
of any voluntary case or proceeding under any provision or chapter of the
Bankruptcy Code or (b) institute, consent to, or request the institution of any
proceeding under any other similar foreign, federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation, winding up or
reorganization or seek any arrangement, adjustment, protection, relief or
composition of its debts, or make a general assignment for the benefit of its
creditors.
     4.7 Financial Ability. At the Closing, Buyer will have funds sufficient to
(i) pay the Purchased Assets Sale Price and, if the Salt Water Disposal Assets
are then transferrable, the Salt Water Disposal Assets Sale Price, and any other
expenses incurred by Buyer in connection with this Agreement and (ii) fund the
consummation of the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS
     5.1 Satisfaction of Conditions Precedent. From the Effective Date until the
earlier of the Closing or the termination of this Agreement in accordance with
ARTICLE VIII hereto, each Party will use all Reasonable Efforts to take all
action and to do all things necessary, proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement,
including the satisfaction of the applicable conditions to Closing set forth in
ARTICLE VI hereto.
     5.2 Conduct of Business, Operation of Assets.
          (a) From the Effective Date until the earlier of the Closing or the
termination of this Agreement in accordance with ARTICLE VIII hereto, Seller
shall, and Gasco shall cause Seller to, operate its business solely as it
relates to the Assets in the Ordinary Course of Business and, without limiting
the generality or effect of the foregoing, Seller will and Gasco will cause
Seller to use its Reasonable Efforts to preserve intact, in all material
respects, its business solely as it relates to the Assets.
          (b) Without limiting the generality or effect of Section 5.2(a), prior
to the Closing, Seller shall not, and Gasco shall cause Seller not to, take any
action to:
          (i) liquidate, dissolve, recapitalize or otherwise wind up its
business solely as it relates to the Assets;
          (ii) change its accounting methods, policies or practices, in each
case solely as they relate to the Assets, except as required by applicable Law;

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          (iii) sell, assign, transfer, lease, grant or otherwise dispose of any
material right to any Person regarding the Assets;
          (iv) create, incur or assume any Lien on any Asset, other than
Permitted Liens or any Liens that are satisfied and released by Seller prior to
the Closing;
          (v) enter into any agreement or arrangement with respect to the Assets
that would, after the Closing Date, limit or otherwise restrict (1) the
operation of the Assets by Buyer or any of its Affiliates or any successor
thereto or (2) Buyer or any of its Affiliates from engaging or competing in any
line of business, in any location, with any Person;
          (vi) enter into, amend, modify, waive, release or assign any rights or
obligations under any Assumed Contract, other than in the Ordinary Course of
Business, or terminate any Assumed Contract before the expiration of the terms
thereof, other than to the extent any such Assumed Contract terminates pursuant
to its terms in the Ordinary Course of Business;
          (vii) settle, or propose to settle, (i) any litigation, investigation,
arbitration, proceeding or other claim involving or against the Assets or
(ii) any litigation, arbitration proceeding or dispute that relates to the
transactions contemplated hereby;
          (viii) engage in any practice or take any action that would cause or
result in, or permit by inaction, any of the representations and warranties
contained in ARTICLE III to become untrue; or
          (ix) agree, whether in writing or otherwise, to do any of the
foregoing.
     5.3 Access and Information.
          (a) From the date hereof through the Closing, Seller shall, and Gasco
shall cause Seller to, afford to Buyer and its authorized Representatives
reasonable access, during normal business hours and in such manner as not to
unreasonably interfere with normal operation of the business, to the properties,
books, contracts, records and appropriate management and employees of Seller
related to the Assets, and shall furnish such authorized Representatives with
all financial and operating data and other information concerning the Assets as
Buyer and such Representatives may reasonably request, provided that Buyer and
its authorized Representatives will not request information, or otherwise
contact, any officer director or employee of Seller without arranging such
contact with King Grant, Gasco’s Executive Vice President and Chief Financial
Officer, or David Smith, Gasco’s Manager of Land and Regulatory Affairs. Seller
shall have the right to have a Representative present at all times during any
such inspections, interviews and examinations. Additionally, to the extent
required by Section 5.4, Buyer shall hold in confidence all such information
obtained from the Seller Parties. Notwithstanding the foregoing, Buyer shall
have no right of access to, and Seller shall have no obligation to provide to
Buyer, information relating to (a) bids received from others in connection with
the transactions contemplated by this Agreement (or similar transactions) and
information and analyses (including financial analyses) relating to such bids;
(b) any information (other than information relating to the EPA Enforcement
Action) the disclosure of which would jeopardize

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any privilege available to Seller relating to such information or that would
cause Seller to breach a confidentiality obligation; or (c) any information that
the Seller Parties are legally prohibited from supplying or the disclosure of
which would result in a violation of Law.
          (b) On and after the Closing Date, Seller will, and Gasco will cause
Seller to, afford promptly to Buyer and its agents reasonable access to its
books of account, financial and other Records (including accountant’s work
papers), information, employees and auditors to the extent necessary or useful
for Buyer in connection with any audit, investigation, dispute or litigation or
any other reasonable business purpose relating to the Assets; provided that any
such access by Buyer shall not unreasonably interfere with the conduct of the
business of Seller.
     5.4 Confidentiality. All terms and provisions of this Agreement, any
information obtained in due diligence or in the review of title, or any other
information obtained from the Seller Parties shall be maintained as confidential
by Buyer, its Affiliates, and their respective Representatives, and shall not be
disclosed to any Person without the prior written consent the Seller Parties,
which consent may be withheld in its sole discretion; provided, however, that no
consent shall be required for any disclosure to the extent such is required to
comply with applicable Laws; provided further, that the foregoing shall not
apply to information that can be shown to have been (i) previously known on a
nonconfidential basis by Buyer, (ii) in the public domain through no action of
Buyer and through disclosure by sources not known by Buyer to be subject to
disclosure restrictions, or (iii) later lawfully acquired by Buyer from sources
not known by Buyer to be subject to obligations of confidentiality to a Seller
Party. The Seller Parties agree that after the Closing Date, all confidential
documents and information concerning the Assets shall be maintained in
confidence and shall not be divulged by the Seller Parties, their respective
Representatives, their respective Affiliates or the Representatives of their
respective Affiliates to any Person unless and until (x) they shall become
public knowledge (other than by disclosure in breach of this Section 5.4),
(y) required by applicable Laws, including applicable securities laws and
regulations, or (z) later lawfully acquired by a Seller Party from sources not
known by such Seller Party to be subject to obligations of confidentiality to
Buyer. In the event that any such confidential information must be disclosed by
Buyer or the Seller Parties to comply with applicable Laws, Buyer or the Seller
Parties shall provide the other Party with prompt prior notice so that the other
Party may seek a protective order or other appropriate remedy. If such
protective order or other remedy is not obtained, Buyer or the Seller Parties
will furnish only that portion of the information which is legally required, and
Buyer or the Seller Parties will cooperate with the other Party’s counsel to
enable the other Party to obtain a protective order or other reliable assurance
that confidential treatment will be accorded the same. The obligation of each
Party to hold any information in confidence shall be satisfied if such Party
exercises the same care with respect to such information as such Party would
take to preserve the confidentiality of such Party’s own similar information.
     5.5 Non-Consent Contracts. If the Parties fail to obtain any authorization,
consent, approval or waiver (including those listed on Seller Parties’
Schedule 3.3(b), Seller Parties’ Schedule 3.3(e), Buyer’s Schedule 4.3(b) and
Buyer’s Schedule 4.3(d)) needed for the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents, or if any
such consent, approval or waiver is otherwise not in full force and effect as of
the Closing, then, in the case of each Assumed Contract as to which such
consent, approval or waiver was not obtained (or otherwise is not in full force
and effect) (the “Non-Consent

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Contracts”), notwithstanding anything to the contrary in this Agreement, neither
this Agreement, nor any of the other Transaction Documents, nor any other
document related to the consummation of the transactions contemplated hereby
shall constitute a sale, assignment, assumption, transfer, conveyance or
delivery or an attempted sale, assignment, assumption, transfer, conveyance or
delivery of the Non-Consent Contracts, and, following the Closing, the Parties
shall cooperate with each other to obtain the consent, approval or waiver
relating to each Non-Consent Contract. Pending the obtaining of such consent,
approval or waiver relating to any Non-Consent Contract, the Parties shall
cooperate with each other in any reasonable and lawful arrangements designed to
provide to Buyer the benefits and burdens of use of each Non-Consent Contract
for its term (or any right, benefit, obligation or duty arising thereunder,
including the enforcement for the benefit of Buyer of any and all rights of the
Seller Parties or their Affiliates against any Person thereunder). After the
consent, approval or waiver for the sale, assignment, assumption, transfer,
conveyance and delivery of a Non-Consent Contract is obtained, the Seller
Parties shall promptly assign, transfer, convey and deliver such Non-Consent
Contract to Buyer, and Buyer shall assume the obligations under such Non-Consent
Contract assigned to Buyer from and after the date of assignment to Buyer
pursuant to a separate assignment and assumption agreement substantially similar
in terms to those of the Assignment and Assumption Agreement (which separate
agreement the parties shall prepare, execute and deliver in good faith at the
time of such transfer, all at no additional cost to Buyer).
     5.6 Preferential Rights and Third Party Consents. Seller will, and Gasco
will cause Seller to, request, from the appropriate parties (and in accordance
with the documents creating such rights and/or requirements), waivers of any
preferential rights to purchase or other requirements of consent to assignment.
Seller shall have no obligation hereunder other than to so request waivers, and
if any such waiver is not obtained, Buyer may treat any waiver with respect to
Real Property Interests which is not obtained as a Title Defect; provided that
if the unobtained waiver is a waiver of a preferential right to purchase and
such necessary waiver of the preferential right is obtained or the period to
exercise such right expires before the Closing Date, such waiver shall not be
considered a Title Defect.
     5.7 Casualty Loss. If, after the date hereof and prior to the Closing Date,
all or any part of the Assets shall be damaged or destroyed by explosion, fire
or other casualty (“Casualty Losses”), and if the Closing occurs, each of the
Seller Parties shall pay to Buyer all sums paid to such Seller Party by third
parties (including under any insurance policies) by reason of such Casualty
Loss, and such Seller Party shall assign, transfer and set over unto Buyer all
of the right, title and interest of such Seller Party in and to any unpaid
awards or other payments from third parties (including under any insurance
policies) arising out of such Casualty Loss, in all cases less (i) any amounts
received by such Seller Party under business interruption insurance policies
with respect to all periods on or prior to the Closing Date and (ii) any amount
incurred by Seller to restore the affected property or protect it against
further damage or loss. Seller shall, and Gasco shall cause Seller to, also pay
to Buyer upon receipt all sums paid to Seller by third parties (including under
any insurance policies) with respect to business interruption for all periods
after the Closing Date. Seller shall, and Gasco shall cause Seller to, indemnify
and hold harmless Buyer to the extent provided in Section 7.2(a) against any
Casualty Losses not paid or otherwise reimbursed to Buyer pursuant to this
Section 5.7. Seller shall not, and Gasco shall cause Seller not to, voluntarily
compromise, settle or adjust any amounts payable with respect to

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insurance relating to such Casualty Loss without the prior written consent of
Buyer, which shall not be unreasonably withheld, delayed or conditioned.
     5.8 Seller Marks. Buyer shall obtain no right, title, interest, license or
any other right whatsoever to use the term “Gasco” or any trademarks, service
marks, slogans or logos containing or comprising the foregoing, or any
trademark, service mark, slogan or logo confusingly similar thereto or dilutive
thereof (collectively, the “Seller Marks”). From and after the Closing, Buyer
agrees that it shall (a) cease using the Seller Marks in any manner, directly or
indirectly, except for such limited uses as cannot be terminated within a
reasonable time period (e.g., signage, e-mail addresses, and as a referral or
pointer to the acquired website), and to cease such limited usage of the Seller
Marks and (b) remove, strike over or otherwise obliterate all Seller Marks from
all Assets, in each case within a reasonable time period after the Closing and
in any event within one hundred-twenty (120) days following the Closing Date.
The Parties agree, because damages would be an inadequate remedy, that a Party
seeking to enforce this Section 5.8 shall be entitled to seek specific
performance and injunctive relief as remedies for any breach thereof in addition
to other remedies available at law or in equity. This covenant shall survive
indefinitely without limitation as to time.
     5.9 Riverbend Marks. Promptly after the Closing, each of the Seller Parties
shall (a) cease using the Riverbend Marks in any manner, directly or indirectly
except for such limited uses as cannot be terminated within a reasonable time
period, and to cease such limited usage of the Riverbend Marks within a
reasonable time period after the Closing and in any event within one
hundred-twenty (120) days following the Closing Date and (b) take all necessary
actions to change the corporate name of such Seller Party so that it does not
contain the Riverbend Marks or any term confusingly similar thereto. The Parties
agree, because damages would be an inadequate remedy, that the Buyer shall be
entitled to seek specific performance and injunctive relief as remedies for any
breach of this Section 5.9 in addition to other remedies available at law or in
equity. This covenant shall survive indefinitely without limitation as to time.
     5.10 Records. Each of the Parties shall preserve and keep a copy of all
records relating to the Gathering System or the Assets (including the
Transferred Records) in its possession for a period of at least seven (7) years
after the Closing Date. After such seven-year period, before any Party shall
dispose of any such records, such Party shall give the other Parties at least
ninety (90) days’ prior notice to such effect, and each of the other Parties
shall be given an opportunity, at its cost and expense, to remove and retain all
or any part of such records as it may select. Each of the Parties shall provide
to the other, at no cost or expense to the other, full access to such records as
remain in such Party’s possession and full access to its properties and
employees in connection with matters relating to the Assets on or before the
Closing and any disputes relating to this Agreement.
     5.11 Transferred Permits. Buyer shall use Reasonable Efforts to provide all
notices and otherwise take all actions required to transfer or reissue any
Transferred Permits as a result of or in furtherance of the transactions
contemplated by this Agreement and the other Transaction Documents. Buyer shall
reasonably promptly provide Seller with copies of all such filings when made.
Seller shall, and Gasco shall cause Seller to, use Reasonable Efforts to
cooperate with Buyer to provide information necessary to achieve the transfer or
reissue of such Transferred Permits.

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     5.12 Guarantees. Buyer acknowledges the list of Guarantees set forth on
Seller Parties’ Schedule 3.22 and agrees in the case of any such Guarantee that
it shall use Reasonable Efforts to cooperate with the Seller Parties in order to
(i) to terminate any such Guarantee (including offering to substitute a
guarantee of Buyer or one of its Affiliates or Subsidiaries for such Guarantee)
and (ii) procure from the existing obligee the release of the Seller Party that
is a party to such Guarantee from any and all Liability from and under such
Guarantee accruing after the Closing Date (if the Salt Water Disposal Assets are
transferred at the Closing) or the date of the Salt Water Disposal Assets
Closing (if the Salt Water Disposal Assets are not transferred at the Closing)
(as applicable, the “Target Release Date”), which release shall be acceptable to
the existing obligee and shall take effect at and as of the Target Release Date.
To the extent that the Seller Party is not able to terminate any such Guarantee
and obtain any such release prior to the Target Release Date in accordance with
clause (ii) of the preceding sentence, Buyer agrees that it shall (a) continue
to use Reasonable Efforts thereafter to effect such a termination and release
and (b) defend, indemnify and hold harmless the Seller Parties of, from and
against any Damages that such Seller Party may incur or suffer as a result of
being required to perform any obligations under, or against any claim made or
threatened to be made in connection with, any such Guarantees to the extent
relating to actions first occurring or conditions first existing from and after
the Target Release Date. This indemnification shall be in addition to the
indemnification provided pursuant to ARTICLE VII and shall not be subject to the
thresholds, Deductible or other limitations on amount set forth therein;
provided that in no event shall Buyer be required to defend, indemnify and hold
harmless the Seller Parties for any such Damages to the extent the Seller
Parties are required to indemnify the Buyer Parties for such Damages pursuant to
Section 7.2.
     5.13 Employees. Seller Parties’ Schedule 5.13(a) lists all employees of
Seller Parties that have worked on the operations of the Gathering System as
their principal job duty in the preceding 12 months.
          (b) Only those Employees listed on Seller Parties’ Schedule 3.20(a)
are available for hire by Buyer. Any employment offers to any of the Employees
shall be under the terms that Buyer, in its sole discretion, determines. Nothing
herein shall require Buyer to offer employment to any particular Employee or to
offer any specific terms of employment to any Employee.
          (c) No earlier than the Effective Date and no later than five (5) days
before the termination date of the Transition Services Agreement (the
“Transition Period”), Buyer shall make an offer of employment to those Employees
that it wishes to hire; provided that, not later than two (2) days before the
termination date of the Transition Services Agreement, Buyer shall inform Seller
in writing of the names of those Employees to whom it has made offers and the
terms of such offers. On the date that Buyer selects for such employee to be
hired (the “Start Date”), which date shall not be earlier than the Closing Date,
Gasco shall terminate or cause to be terminated the employment of each Employee
who accepts Buyer’s offer of employment (each, a “Transferred Employee”), such
termination to be effective as of the Start Date. From and after the Effective
Date until the earlier to occur of his or her respective Start Date or the
expiration of the Transition Period, each Transferred Employee shall continue to
be an employee of Seller or its Affiliates and participate in the Employee
Benefit Plans. As of the termination date of the Transition Services Agreement,
all Transferred Employees shall be entitled to

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participate in the benefit plans and arrangements sponsored by Buyer, subject to
the terms and conditions of such benefit plans and arrangements. The Seller
Parties shall waive enforcement of any and all non-compete, confidential
information and restrictive covenants or agreements applicable to each such
Transferred Employee, so that any such Transferred Employee will not be in
violation of any such obligations to the Seller Parties when such Transferred
Employee is employed by Buyer or by any Affiliate or Subsidiary of Buyer.
          (d) Prior to the Closing, the Seller Parties shall comply (and shall
cause all of their Affiliates and Subsidiaries to comply) with all applicable
Laws in connection with the termination of employment of any Transferred
Employee, and Gasco shall retain all liability relating to the employment of
each Transferred Employee to the extent arising prior to his or her Start Date,
it being understood that Buyer or its Affiliates, as applicable, shall assume
all liability relating to the employment of each Transferred Employee arising on
or after their respective Start Dates.
          (e) Gasco or the insurer of the Seller Parties’ welfare plans shall be
responsible for all claims for welfare benefits (“Welfare Benefit Claim”) with
respect to all Transferred Employees (and their covered dependents and
beneficiaries) that arose prior to their respective date of hiring. Any Welfare
Benefit Claims incurred by any Transferred Employee on or after the date of
hiring shall be Buyer’s responsibility in accordance with the terms of any
applicable welfare benefit plan maintained by Buyer for the Transferred
Employees. A Welfare Benefit Claim shall be deemed to have arisen when the
services relating to the condition that is the subject of the claim are
performed.
          (f) Gasco waives (and shall cause all Affiliates and Subsidiaries of
Gasco to waive) any and all claims against Buyer and the Transferred Employees
arising from any Transferred Employee’s employment by Buyer, to the extent such
claims arise under any employment agreement, confidentiality or non-disclosure
agreement or policy, or non-competition agreement between any such Transferred
Employee and Gasco (or any Affiliate or Subsidiary of Gasco).
          (g) As of the termination date of the Transition Services Agreement,
to the extent any of the Available Employees become Transferred Employees, Buyer
shall assume liability for the Seller Parties’ obligations under COBRA,
including the obligation, if any, to provide notice and continuation of coverage
to any Transferred Employee who is a covered employee or qualified beneficiary
(as such terms are defined in section 4980(f) of the Code) or has a qualifying
event (as defined in Section 4980(f) of the Code) incident to the transactions
contemplated by this Agreement.
          (h) Buyer will not assume any Employee Benefit Plan or any Liabilities
thereunder, and none shall be considered an acquired “Asset,” an “Assumed
Contract,” or an “Assumed Liability” for purposes of this Agreement.
          (i) FUTA; FICA. Subject to Buyer determining in good faith that it is
legally permitted to do so, Gasco and Buyer shall treat Buyer as a “successor
employer” and each Seller as a “predecessor” within the meaning of
Sections 3121(a)(1) and 3306(b)(1) of the Code with respect to Transferred
Employees for purposes of Taxes imposed under the United States Federal

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Unemployment Tax Act (“FUTA”) or the United States Federal Insurance
Contributions Act (“FICA”).
     5.14 Insurance. Buyer hereby acknowledges that on and as of the Closing
Date, Buyer shall be responsible for obtaining and maintaining insurance
covering the Assets and that, subject to Section 3.14, on and as of the Closing
Date, the Seller Parties shall not be responsible for the maintenance of any
insurance policy relating to the Assets.
     5.15 Liability for Transfer Taxes. Any state or local transfer, sales, use,
stamp, registration or other similar Taxes resulting from or that are imposed as
a result of the transactions contemplated by this Agreement shall be borne
equally by Seller and Buyer. Buyer and Seller Parties, as appropriate, shall
file, to the extent required by applicable Laws, all necessary Tax Returns and
other documentation with respect to such Taxes, and, if required by applicable
Laws, Buyer and/or Seller Parties, as appropriate, will join in the execution of
any such Tax Return or other documentation of the other.
     5.16 Cooperation on Tax Matters.
          (a) In connection with the preparation of Tax Returns directly related
to the Assets, audit examinations directly related to the Assets, and any
administrative or judicial proceedings regarding Tax Liabilities that are
imposed on the Seller Parties or Buyer and directly relate to the Assets, Buyer
and the Seller Parties shall cooperate fully with each other, including with
respect to the furnishing or making available during normal business hours of
records, personnel (as reasonably required), books of account, powers of
attorney or other materials necessary or helpful for the preparation of such Tax
Returns, the conduct of such audit examinations or the defense of claims by
Governmental Authorities as to the imposition of such Taxes.
          (b) For purposes of determining Retained Liabilities and Assumed
Liabilities, (i) all ad valorem taxes, real property taxes, personal property
taxes and similar obligations (“Property Taxes”) attributable to the Assets with
respect to a tax period in which the Closing Date occurs shall be apportioned
between the period ending on the Closing Date and the period from and after the
Closing Date by prorating such Property Taxes on a daily basis over the entire
tax period, and (ii) all taxes that are based upon or related to income or
receipts attributable to the Assets with respect to a tax period in which the
Closing Date occurs shall be apportioned based on an interim closing of the
books as of the Closing Date with the Seller Parties being allocated the amount
that would be payable if the taxable year of the Seller Parties ended with (and
included) the Closing Date; provided that exemptions, allowance or deduction
that are calculated on an annual basis (including depreciation and amortization
deductions) shall be allocated between the period ending on the Closing Date and
the period from and after the Closing Date in proportion to the number of days
in each period.
     5.17 Use of Proceeds. Promptly after the Closing, Gasco shall (x) use
$15 million of the proceeds from the sale of the Assets to repay outstanding
Indebtedness for money borrowed of Gasco and its Subsidiaries and (y) obtain the
consent to such payment of those lenders holding a first lien on the Assets.

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     5.18 Environmental Matters.
          (a) Buyer acknowledges that Gasco and the Gathering System are the
subject of the EPA Enforcement Action brought by the United States Department of
Justice (“DOJ”) on behalf of the United States Environmental Protection Agency
(“EPA”) that is more particularly described on Seller Parties’ Schedule 3.12.
Gasco has been negotiating and continues to negotiate a consent decree to
resolve the EPA Enforcement Action (“EPA Consent Decree”), but Gasco believes
that the EPA Consent Decree will not have been finalized or entered before the
Closing Date. The most recent draft of the EPA Consent Decree provided by Seller
to Buyer (“EPA Consent Decree Draft”) is attached hereto as Exhibit G-1. The
Parties shall cooperate to attempt to negotiate with DOJ and EPA a final EPA
Consent Decree that (i) does not impose upon Buyer or the Assets any costs or
obligations that are in addition to or more stringent than those included in the
EPA Consent Decree Draft as amended in accordance with Buyer’s comments attached
hereto as Exhibit G-2 (the “Buyer Mark-up of the EPA Consent Decree Draft”); and
(ii) is otherwise satisfactory in form and substance to Buyer.
          (b) Following the date hereof, Buyer and its representatives shall
have the right to participate fully in all discussions and negotiations with the
DOJ and EPA with regard to the resolution of the EPA Enforcement Action,
including in connection with the drafting and negotiation of the EPA Consent
Decree. In conjunction therewith, the Seller Parties shall at all times (i) keep
Buyer reasonably informed relating to discussions or negotiations with DOJ and
EPA and notify Buyer of, and give Buyer an opportunity to attend, scheduled
voice or in-person conferences with DOJ, EPA and any other third party (other
than consultants or counsel retained by the Seller Parties) relating to the EPA
Enforcement Action or EPA Consent Decree; (ii) provide Buyer with a reasonable
period of time, given the specific circumstances, to permit it to comment on any
drafts of the EPA Consent Decree; and (iii) timely provide copies of any
reports, correspondence and other documentation received from DOJ, EPA or any
other third party or consultants retained by the Seller Parties relating to the
EPA Enforcement Action or EPA Consent Decree.
          (c) The Seller Parties will, concurrently with negotiating the EPA
Consent Decree, work diligently and promptly from the date hereof until the
Closing Date to complete and pay for all actions or projects required by the EPA
Consent Decree Draft or otherwise necessary to resolve completely all issues
raised by the EPA Enforcement Action other than installation of pneumatic
controls as set forth on Schedule 5.18(c). The Seller Parties will provide to
Buyer written documentation and other evidence reasonably requested by Buyer as
soon as reasonably practicable, but no later than the Closing Date,
demonstrating to the reasonable satisfaction of Buyer that the actions and
projects required by this clause (c) have been completed.
          (d) The Seller Parties will work diligently and promptly to complete
and pay for all actions or projects, including all Remedial Actions,
(i) necessary to ensure that (x) Spill Prevention, Control and Countermeasure
Plans (“SPCC Plans”) and Spill Contingency Plans (“Contingency Plans”) have been
prepared for all Assets required to have such SPCC Plans and Contingency Plans
under any Environmental Law and (y) all SPCC Plans and Contingency Plans
maintained or required to be maintained by the Seller Parties in connection with
the Assets are accurate and complete and meet all requirements under
Environmental Laws; and (ii) necessary

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to identify the source, content and scope of the staining and standing fluids at
the Questar Tap and Gate Canyon Compressor Station and to fully address such
matters, including undertaking and completing all Remedial Action to address any
affected soil, surface water and groundwater, in each case to the reasonable
satisfaction of Buyer and in compliance with the terms of all Environmental Laws
and the requirements of any Governmental Authorities, and to promptly and
properly repair, upgrade or replace any processes, equipment or facilities at
the Questar Tap or Gate Canyon Compressor Station that are causing or
contributing to such staining or standing fluids. The Seller Parties will
provide to Buyer written documentation and other evidence reasonably requested
by Buyer as soon as reasonably practicable and, with respect to clause
(i) above, no later than the Closing Date, demonstrating to the reasonable
satisfaction of Buyer that the actions and projects required by this clause
(d) have been completed.
     5.19 Noncompetition. (a) Each of the Seller Parties agrees that until
December 31, 2014, neither it nor any of its Affiliates, excluding (i) the
executive officers of Gasco and its subsidiaries that cease to be employed by
Gasco or any of its subsidiaries and (ii) the directors of Gasco, shall:
          (i) engage, either directly or indirectly, as a principal or for its
own account or solely or jointly with others, or as stockholders in any
corporation or joint stock association, in any business that competes with the
Gathering System or the Salt Water Disposal Assets as they exist on the Closing
Date within the counties of Carbon, Dagget, Duchesne, Grand, Summit, Uintah and
Wasatch in the State of Utah and the counties of Garfield, Moffat and Rio Blanco
in the State of Colorado; provided that nothing in this Section 5.19 shall
prohibit the directors of Gasco from having beneficial ownership of the issued
and outstanding Marketable Securities of any entity engaged in the energy
industry generally; or
          (ii) solicit the performance of services by, any Transferred Employee;
          (iii) provided however, that for purposes of this Section,
production-related activities carried out by any of the Seller Parties,
including drilling and closing wells, entering and exiting easements and
leaseholds, engaging in preliminary field gathering to enable delivery of gas to
the Gathering System pursuant to the terms of the Gathering Agreement, and
otherwise engaging in the actions and responsibilities authorized or required
pursuant to the Gathering Agreement, the Salt Water Disposal Services Agreement
or any of the Seller Parties’ joint operating agreements, Unit Operating
Agreements and Gas Balancing Agreements (solely to the extent that such actions
and responsibilities pursuant to Seller Parties’ joint operating agreements,
Unit Operating Agreements and Gas Balancing Agreements do not involve natural
gas gathering or processing or the collection, disposal or recycling of salt
water) are deemed by the Parties to be business that does not compete with the
Gathering System.
          (b) If any provision contained in this Section shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Section, but this Section shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein. It is the intention of
the Parties that if any of the restrictions or covenants contained herein is
held to cover a

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geographic area or to be for a length of time which is not permitted by
applicable Law, or in any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable Law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable Law.
Each of the Seller Parties acknowledges that Buyer would be irreparably harmed
by any breach of this Section and that there would be no adequate remedy at law
or in damages to compensate Buyer for any such breach. Each of the Seller
Parties agrees that Buyer shall be entitled to injunctive relief requiring
specific performance by each of the Seller Parties of this Section, and each of
the Seller Parties consents to the entry thereof.
     5.20 Further Assurances. Each Party hereto will, notwithstanding the
existence of a Title Defect Notice or Notice of Disagreement, make Reasonable
Efforts as are necessary or desirable and execute any additional documents,
instruments or conveyances of any kind which may be reasonably necessary to
further effect the transactions contemplated by this Agreement and the other
Transaction Documents; provided, however, that no such action, document,
instrument or conveyance shall increase a Party’s liability beyond that
contemplated by this Agreement.
ARTICLE VI
CLOSING, CLOSING DELIVERIES, CONDITIONS TO CLOSING
     6.1 The Closing. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the “Closing”) shall
take place at the offices of Vinson & Elkins L.L.P., 1001 Fannin St, Suite 2500,
Houston, Texas 77002 or at such other place as the Parties may designate,
commencing at 9:00 a.m. local time on the third Business Day following the
satisfaction or waiver of all conditions to the obligations of the Parties set
forth in ARTICLE VI herein, or such other date as Buyer and Seller may mutually
determine. The date on which the Closing occurs is referred to herein as the
“Closing Date.”
     6.2 Conditions to Obligations of Buyer. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions, any one or more of which may be waived
in writing by Buyer:
          (a) Representations, Warranties and Covenants of Seller. (i) Each of
the representations and warranties of Seller Parties made in this Agreement will
be true and correct in all respects (provided, however, that for purposes of
determining whether such representations and warranties are true and correct,
all qualifications in such representations and warranties as to materiality, in
all material respects and similar materiality qualifications contained in such
representations and warranties shall be disregarded, except with respect to any
contained in Section 3.4) as of the Effective Date and as of the Closing (as if
made anew at and as of the Closing), except (x) where the breach of a
representation or warranty (individually or when aggregated with any other
breaches of representations and warranties) would not reasonably be expected to
have a Material Adverse Effect on the Assets or on the Seller Parties and
(y) any representation or warranty made as of a specified date, shall be
required to be so true and correct

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only on and as of such specified date; (ii) each of the Seller Parties shall
have performed or complied in all material respects with all of the covenants
and agreements required by this Agreement to be performed or complied with by
the Seller Parties on or before the Closing; and (iii) each of the Seller
Parties shall have delivered to Buyer a certificate executed by two of their
respective officers, dated the Closing Date, representing that the conditions
specified in this Section 6.2(a) have been fulfilled.
          (b) No Injunction, Etc. No Order or provision of any applicable Law
will be in effect that prohibits or restricts the consummation of the Closing.
          (c) Gas Gathering Agreement. The Parties will execute the Gathering
Agreement.
          (d) Gas Purchase and Sale Agreement. Gasco and Buyer will enter into a
gas purchase and sale agreement (the “Gas Purchase and Sale Agreement”) whereby
Buyer will agree to sell and deliver and Gasco will agree to purchase and
receive, Buyer’s gas produced from certain wells, according to the terms of such
Gas Purchase and Sale Agreement.
          (e) Assignment of Agreements. Seller will assign its rights and
obligations in, to and under the agreements listed on Buyer’s Schedule 6.2(e) to
Gasco Production Company, a Delaware corporation (“Gasco Production”).
          (f) Termination of Gas Purchase Agreement. The Seller Parties will
terminate or cause to be terminated (i) that certain gas purchase agreement,
dated January 1, 2006, by and between Riverbend Gas Gathering Company, LLC and
Gasco Production and (ii) that certain letter of intent, dated July 23, 2007, by
and between Westport Field Services, LLC, a subsidiary of Anadarko Petroleum
Corporation, and Gasco Energy Inc. for gathering and processing services from
Westport Field Services, LLC.
          (g) Salt Water Disposal Services Agreements. The Parties will execute
the Salt Water Disposal Services Agreements.
          (h) Easement and Right-of-Way Agreements. Buyer shall have received
all easements and right-of-way agreements (which will include the right to
transport third party gas and natural gas liquids) reasonably necessary for the
operation, maintenance, repair and replacement of the Assets, in each case in
form and substance reasonably satisfactory to Buyer.
          (i) Consents. Seller shall have obtained all approvals, consents and
releases listed on Buyer’s Schedule 6.2(i), in each case in form and substance
reasonably satisfactory to Buyer, and no such approval, consent or release shall
have been revoked;
          (j) EPA and DOJ Discussions. Buyer shall have participated in a
discussion with the appropriate representatives of the EPA and DOJ regarding the
EPA Enforcement Action and EPA Consent Decree, which shall have been arranged by
the Seller Parties at a time and under conditions reasonably satisfactory to
Buyer, and the content of such discussion shall have been reasonably
satisfactory to Buyer.

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          (k) The Seller Parties Deliveries. At the Closing, the Seller Parties
shall deliver or cause to be delivered to Buyer each of the following documents,
as applicable:
          (i) copies of certificates of existence and good standing for each of
the Seller Parties issued by the appropriate public officials of the State of
Nevada, each dated as of a recent date;
          (ii) a certificate, dated the Closing Date, of an officer of Seller
(i) attaching certified copies of Seller’s Organizational Documents,
(ii) certifying on behalf of Seller that all actions required to authorize and
approve the execution and delivery of this Agreement and the other Transaction
Documents to which Seller is a party and the transactions contemplated hereby
and thereby, have been taken by Seller and setting forth copies of such actions
and (iii) certifying the accuracy of the specimen signature of the officers or
such authorized representatives of Seller executing this Agreement, the other
Transaction Documents to which Seller is a party and such other documents and
agreements on behalf of Seller;
          (iii) a certificate, dated the Closing Date, of an officer of Gasco
(i) attaching certified copies of Gasco’s Organizational Documents,
(ii) certifying on behalf of Gasco that all actions by Gasco required to
authorize and approve the execution and delivery of this Agreement and the other
Transaction Documents to which Gasco is a party and the transactions
contemplated hereby and thereby, have been taken by Gasco and setting forth
copies of such actions and (iii) certifying the accuracy of the specimen
signature of the officers or such other authorized representatives of Gasco
executing this Agreement, the other Transaction Documents to which Gasco is a
party and such other documents and agreements on behalf of Gasco;
          (iv) an executed counterpart of the Gathering Agreement;
          (v) an executed counterpart of the Gas Purchase and Sale Agreement;
          (vi) an executed counterpart of the Transition Services Agreement;
          (vii) an executed counterpart of the Salt Water Disposal Services
Agreement;
          (viii) an executed counterpart of Assignment and Assumption Agreement;
          (ix) one or more originals (as necessary) of an executed and
recordable Assignment of Real Property Interests;
          (x) releases of all Liens against the Assets created under or pursuant
to any Indebtedness of Gasco or any of its Subsidiaries.
          (xi) releases of those Liens set forth on Buyer’s Schedule 6.2(k)(xi).

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          (xii) (A) a statement, reasonably satisfactory to Buyer, issued by
Gasco and signed by an officer of Gasco under penalties of perjury, certifying
(i) that Seller is a disregarded entity as defined in Treas. Reg. Sec.
1.1445-2(b)(2)(iii), (ii) that Gasco is not a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in the
Code and regulations thereunder), (iii) that Gasco is not a disregarded entity
as defined in Treas. Reg. Sec. 1.1445-2(b)(2)(iii) and (iv) Gasco’s U.S.
employer identification number and office address and (B) a statement,
reasonably satisfactory to Buyer, issued by Gasco Production Company and signed
by an officer of Gasco Production Company under penalties of perjury, certifying
(i) that Gasco Production Company is not a foreign corporation, foreign
partnership, foreign trust or foreign estate (as those terms are defined in the
Code and regulations thereunder), (ii) that Gasco Production Company is not a
disregarded entity as defined in Treas. Reg. Sec. 1.1445-2(b)(2)(iii) and
(iii) Gasco Production Company’s U.S. employer identification number and office
address (each, a “FIRPTA Certificate”).
          (xiii) all Permits and any other authorizations, consents, approvals
and waivers of any third party or Governmental Authority, the granting of which
are necessary for the consummation of the transactions contemplated herein,
including for effecting the transfer of any Assumed Contract, Guarantee and
Transferred Permit and preventing the termination of any Assumed Contract upon
the consummation of the transactions contemplated herein, as set forth on Seller
Parties’ Schedule 3.3(b) and Seller Parties’ Schedule 3.3(e).
          (xiv) a letter from each of the Seller Parties waiving enforcement of
any and all non-compete and restrictive covenants or agreements applicable to
each Transferred Employee, if any, as contemplated by Section 5.13(c).
          (xv) copies or originals, of all documents relating to the Real
Property Interests, Assumed Contracts and Transferred Records; and
          (xvi) such other documents, deeds, certificates, instruments or
agreements contemplated hereby or as may be necessary or appropriate to
consummate the transactions contemplated hereby, or as may be reasonably
requested by Buyer and agreed to by the Seller Parties prior to the Closing Date
to carry out the intent and purposes of this Agreement.
     6.3 Conditions to the Obligations of Seller Parties. The obligation of
Seller Parties to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following conditions, any one or more of
which may be waived in writing by either Seller Party:
          (a) Representations, Warranties and Covenants of Buyer. (i) Each of
the representations and warranties of Buyer made in this Agreement will be true
and correct in all respects (provided, however, that for purposes of determining
whether such representations and warranties are true and correct, all
qualifications in such representations and warranties as to materiality,
Material Adverse Effect, in all material respects and similar materiality
qualifications contained in such representations and warranties shall be
disregarded) as of the Effective Date and as of the Closing (as if made anew at
and as of the Closing), except (x) where

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the breach of a representation or warranty (individually or when aggregated with
other breaches of representations or warranties) would not reasonably be
expected to have a Material Adverse Effect on Buyer and (y) any representation
or warranty made as of a specified date, shall be required to be so true and
correct only on and as of such specified date; (ii) Buyer shall have performed
or complied in all material respects with all of the covenants and agreements
required by this Agreement to be performed or complied with by Buyer on or
before the Closing; and (iii) Buyer shall have delivered to Seller a certificate
executed by two of its officers, dated the Closing Date, representing that the
conditions specified in this Section 6.3(a) have been fulfilled.
          (b) No Injunction, Etc. No Order or provision of any applicable Law
will be in effect that prohibits or restricts the consummation of the Closing.
          (c) Buyer Deliveries. At the Closing, Buyer shall deliver or cause to
be delivered to Seller:
          (i) the Net Purchased Assets Sale Price;
          (ii) the Salt Water Disposal Assets Sale Price, but only if the Salt
Water Disposal Assets are transferred at the Closing.
          (iii) copies of a certificate of existence and good standing for Buyer
issued by the appropriate public officials of the State of Delaware, and dated
as of a recent date;
          (iv) a certificate, dated the Closing Date, of an officer of Buyer
(i) attaching certified copies of Buyer’s Organizational Documents,
(ii) certifying on behalf of Buyer that all actions required to authorize and
approve the execution and delivery of this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby, have been taken
by Buyer and setting forth copies of such actions and (iii) certifying the
accuracy of the specimen signatures of the officer or other authorized
representatives of Buyer executing this Agreement, the other Transaction
Documents and such other documents and agreements on behalf of Buyer;
          (v) an executed counterpart of the Gathering Agreement;
          (vi) an executed counterpart of the Gas Purchase and Sale Agreement;
          (vii) an executed counterpart of the Transition Services Agreement;
          (viii) an executed counterpart of the Assignment and Assumption
Agreement;
          (ix) one or more originals (as necessary) of an executed and
recordable Assignment of Real Property Interests;
          (x) copies of all Permits and any other authorizations, consents,
approvals and waivers of any third party or Governmental Authority, the granting
of which are necessary for the consummation of the transactions contemplated
herein,

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including for the assumption of any Assumed Contract, Transferred Permit and, if
the Salt Water Disposal Assets are transferred at the Closing, Guarantee upon
the consummation of the transactions contemplated herein as set forth on Buyer’s
Schedule 4.3(b) and Buyer’s Schedule 4.3(d); and
          (xi) such other documents, deeds, certificates, instruments or
agreements contemplated hereby or as may be necessary to consummate the
transactions contemplated hereby, or as may be reasonably requested by the
Seller Parties and agreed to by Buyer prior to the Closing Date to carry out the
intent and purposes of this Agreement.
ARTICLE VII
INDEMNIFICATION
          7.1 Survival. The representations and warranties contained in this
Agreement and any certificate delivered pursuant to Section 6.2(a) and
Section 6.3(a) shall survive the Closing and shall continue in force and effect
until twelve (12) months after the Closing Date, except that (a) the
representations and warranties in Section 3.1 (Organization of Seller),
Section 3.2 (Authorization; Enforceability), Section 3.10 (Brokers’ Fees),
Section 4.1 (Organization of Buyer), Section 4.2 (Authorization; Enforceability)
and Section 4.5 (Brokers’ Fees) shall survive the Closing indefinitely; (b) the
representations and warranties in Section 3.12 (Environmental Matters) shall
survive until the second anniversary of the Closing; and (c) the representations
and warranties in Section 3.11 (Taxes) shall survive until sixty (60) days
following the expiration of the applicable statute of limitations. The covenants
and agreements of the Parties contained in this Agreement or in any certificate
or other writing delivered pursuant hereto or in connection herewith shall
survive the Closing indefinitely or for the shorter period explicitly specified
therein, except that for such covenants and agreements that survive for such
shorter period, breaches thereof shall survive indefinitely or until the latest
date permitted by law. Notwithstanding the preceding sentence, any covenant,
representation or warranty in respect of which indemnity may be sought under
this Agreement will survive the time at which it would otherwise terminate
pursuant to the preceding sentence if written notice of the inaccuracy or breach
thereof giving rise to such right of indemnity has been given to the Party
against whom such indemnification may be sought prior to such time; provided
that such right of indemnity shall continue to survive and shall remain a basis
for indemnification hereunder only until the related claim for indemnification
is resolved or disposed of in accordance with the terms of this ARTICLE VII,
provided that such Party is pursuing such claim in good faith.
     7.2 Indemnification Provisions for Benefit of Buyer. From and after the
Closing and subject to the terms and conditions hereof, the Seller Parties,
jointly and severally, will indemnify, defend and hold harmless Buyer and its
Affiliates and each of their respective officers, members, directors, managers,
partners, shareholders and employees (the “Buyer Indemnified Parties”) for and
against:
     (a) any and all Damages incurred or suffered as a result of, relating to or
arising out of:

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          (i) any failure of any representation or warranty made by the Seller
Parties in ARTICLE III of this Agreement or in any certificate delivered
pursuant to Section 6.2(a), to be true and correct as of the Effective Date or
as of the Closing, except to the extent any such representation or warranty
speaks to an earlier date, in which case, to be true and correct as of that
earlier date;
          (ii) the breach or non-performance by the Seller Parties of any
covenant or agreement made or to be performed by the Seller Parties pursuant to
this Agreement; and
     (b) Retained Liabilities;
     (c) all Damages and the costs of all actions and projects, including all
Remedial Actions and the payment of any fines or penalties, relating to (i) the
existence of staining and standing fluids at the Questar Tap and Gate Canyon
Compressor Station and (ii) a failure of any Assets to have, at any time prior
to the Closing Date, final, accurate and complete SPCC Plans and Contingency
Plans that meet all requirements of Environmental Laws; and
     (d) all court costs and attorneys’, consultants’, engineers’ and other
experts’ fees and expenses incurred after the Closing Date that relate to
negotiating, drafting, reviewing and executing the EPA Consent Decree and all
actions related thereto, including without limitation the costs, fees, and
expenses to prepare, review and submit an amendment to the Title V permit
application for the Riverbend Compressor Station as required by the terms of the
EPA Consent Decree and to take any other actions required in connection with
obtaining such amendment to the Title V permit application;
in the case of each of clause (a), (b), (c) and (d) above, regardless of whether
the foregoing arise as a result of the negligence, strict liability or any other
liability under any theory of law or equity of Buyer, or any of its Affiliates
or any of their respective successors or assignees.
Notwithstanding anything herein to the contrary, (x) the Seller Parties will not
be liable under Section 7.2(a)(i) until Buyer Indemnified Parties have suffered
aggregate Damages under Section 7.2(a)(i) in excess of $250,000.00 (the
“Deductible”), in which case only Damages under Section 7.2(a)(i) in excess of
the Deductible are recoverable, (y) the Seller Parties will not be liable under
Section 7.2(a)(i) for Damages in excess of $5,750,000, provided however, that
the limitations in clauses (x) and (y) shall not apply to any breach of
representation or warranty set forth in Section 3.1 (Organization of the Seller
Parties), Section 3.2 (Authorization, Enforceability), Section 3.10 (Brokers’
Fees) or Section 3.18 (Natural Gas and Natural Gas Liquids Imbalances), and
(z) the Seller Parties shall not be liable under Section 7.2(d) (A) until Buyer
Indemnified Parties have incurred aggregate costs, fees and expenses in excess
of $25,000.00 after the Closing Date, in which case only costs, fees and
expenses in excess of $25,000.00 are recoverable and (B) the Seller Parties
shall not be liable under Section 7.2(d) for Damages in excess of $75,000.00.
     7.3 Indemnification Provisions for Benefit of the Seller Parties. From and
after the Closing, Buyer will indemnify, defend and hold harmless the Seller
Parties and their respective

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Affiliates and each of their officers, members, directors, managers, partners,
shareholders and employees (the “Seller Indemnified Parties”) for and against:
          (a) any and all Damages incurred or suffered as a result of, relating
to or arising out of:
          (i) any failure of any representation or warranty made by Buyer in
ARTICLE IV of this Agreement or in any certificate delivered pursuant to
Section 6.3(a) to be true and correct as of the Effective Date or as of the
Closing, except to the extent any such representation or warranty speaks to an
earlier date, in which case, to be true and correct as of that earlier date; and
          (ii) the breach or non-performance by Buyer of any covenant or
agreement made or to be performed by Buyer pursuant to this Agreement;
          (b) any Assumed Liabilities or Assumed Contracts; and
          (c) any and all Damages incurred or suffered as a result of the
ownership, operation, repair, replacement or maintenance of the Assets, in each
case solely to the extent resulting from actions first occurring or conditions
first existing after the Closing, and excluding (i) the Retained Liabilities and
(ii) any Damages arising out of a breach by any Seller Party of any
representations or warranties of such Seller Party in ARTICLE III or any
covenant of such Seller Party in this Agreement for which a Claim Notice has
been timely delivered.
in the case of each of clause (a), (b), or (c), regardless of whether such
Damages arise as a result of the negligence, strict liability or any other
liability under any theory of law or equity of the Seller Parties, or any of
their Affiliates or any of their respective successors or assignees.
Notwithstanding anything herein to the contrary, Buyer will not be liable under
this Section 7.3 for the Retained Liabilities.
Notwithstanding anything herein to the contrary, (x) the Buyer will not be
liable under Section 7.3(a)(i) until Seller Indemnified Parties have suffered
aggregate Damages under Section 7.3(a)(i) in excess the Deductible, in which
case only Damages under Section 7.3(a)(i) in excess of the Deductible are
recoverable, and (y) the Buyer will not be liable under Section 7.3(a)(i) for
Damages in excess of $5,750,000, provided however, that the limitation in clause
(x) and (y) shall not apply to any breach of representation or warranty set
forth in Section 4.1 (Organization of the Seller Parties), Section 4.2
(Authorization, Enforceability) or Section 4.5 (Brokers Fees).
     7.4 Procedures. Claims for indemnification under this Agreement shall be
asserted and resolved as follows:
          (a) If any Person entitled to seek indemnification under Section 7.2
and Section 7.3 (an “Indemnified Party”) receives notice of the assertion or
commencement of any claim asserted against an Indemnified Party by a third party
(“Third Party Claim”) in respect of any matter that is subject to
indemnification under Section 7.2 or Section 7.3 the Indemnified Party shall
promptly (i) notify the party against whom indemnification is sought (the

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“Indemnifying Party”) of the Third Party Claim and (ii) transmit to the
Indemnifying Party a written notice (“Claim Notice”) describing in reasonable
detail the nature of the Third Party Claim, a copy of all papers served with
respect to such claim (if any), the Indemnified Party’s good faith estimate of
the amount of Damages attributable to the Third Party Claim and the basis of the
Indemnified Party’s request for indemnification under this Agreement. Failure to
timely provide such Claim Notice shall not affect the right of the Indemnified
Party’s indemnification hereunder, except to the extent the Indemnifying Party
is materially prejudiced by such failure.
          (b) The Indemnifying Party shall have the right to defend the
Indemnified Party against such Third Party Claim. If the Indemnifying Party
notifies the Indemnified Party that the Indemnifying Party elects to assume the
defense of the Third Party Claim, then the Indemnifying Party shall have the
right to defend such Third Party Claim with counsel selected by the Indemnifying
Party (who shall be reasonably satisfactory to the Indemnified Party), by all
appropriate proceedings, to a final conclusion or settlement at the discretion
of the Indemnifying Party in accordance with this Section 7.4(b). The
Indemnifying Party shall have full control of such defense and proceedings,
including any compromise or settlement thereof; provided that the Indemnifying
Party shall not enter into any settlement agreement without the written consent
of the Indemnified Party (which consent shall not be unreasonably withheld,
conditioned or delayed); provided further, that such consent shall not be
required if (i) the settlement agreement contains a complete and unconditional
general release by the third party asserting the claim to all Indemnified
Parties affected by the claim and (ii) the settlement agreement contemplates
only the payment of monetary damages by the Indemnifying Party or its
Affiliates. Subject to the foregoing, if requested by the Indemnifying Party,
the Indemnified Party agrees, at the sole cost and expense of the Indemnifying
Party, to use Reasonable Efforts to cooperate with the Indemnifying Party and
its counsel in contesting any Third Party Claim which the Indemnifying Party
elects to contest, including the making of any related counterclaim against the
Person asserting the Third Party Claim or any cross complaint against any
Person. The Indemnified Party may participate in, but not control, any defense
or settlement of any Third Party Claim controlled by the Indemnifying Party
pursuant to this Section 7.4(b), and the Indemnified Party shall bear its own
costs and expenses with respect to such participation.
          (c) If the Indemnifying Party does not notify the Indemnified Party
that the Indemnifying Party elects to defend the Indemnified Party pursuant to
Section 7.4(b), then the Indemnified Party shall have the right to defend, and
be reimbursed for its reasonable cost and expense (but only if the Indemnified
Party is actually entitled to indemnification hereunder) in regard to the Third
Party Claim with counsel selected by the Indemnified Party (who shall be
reasonably satisfactory to the Indemnifying Party), by all appropriate
proceedings, which proceedings shall be prosecuted diligently by the Indemnified
Party. In such circumstances, the Indemnified Party shall defend any such Third
Party Claim in good faith and have full control of such defense and proceedings;
provided, however, that the Indemnified Party may not enter into any compromise
or settlement of such Third Party Claim if indemnification is to be sought
hereunder, without the Indemnifying Party’s consent (which consent shall not be
unreasonably withheld, conditioned or delayed). If requested by the Indemnified
Party, the Indemnifying Party agrees, at the sole cost and expense of the
Indemnifying Party, to use Reasonable Efforts to cooperate with the Indemnified
Party and its counsel in contesting any Third Party Claim which the Indemnified
Party elects to contest, including the making of any related counterclaim
against the Person asserting the Third Party Claim or any cross complaint
against any Person. The

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Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Section 7.4(c),
and the Indemnifying Party shall bear its own costs and expenses with respect to
such participation.
          (d) Any claim by an Indemnified Party on account of Damages that does
not result from a Third Party Claim (a “Direct Claim”) must be asserted by
giving the Indemnifying Party reasonably prompt written notice thereof, but in
any event not later than forty-five (45) days after an officer of the
Indemnified Party becomes aware of such Direct Claim. Such notice by the
Indemnified Party shall describe the Direct Claim in reasonable detail, include
copies of all available material written evidence thereof and indicate the
estimated amount, if reasonably practicable, of Damages that have been or may be
sustained by the Indemnified Party. The Indemnifying Party will have a period of
twenty (20) Business Days within which to respond in writing to such Direct
Claim. If the Indemnifying Party does not so respond within such twenty
(20) Business Day period, the Indemnifying Party will be deemed to have rejected
such claim, in which event the Indemnified Party will be free to pursue such
remedies as may be available to the Indemnified Party on the terms and subject
to the provisions of this Agreement.
          (e) Any indemnification payment made pursuant to this Agreement shall
be net of (i) any insurance proceeds actually realized by and paid to the
Indemnified Party in respect of such claim and (ii) any indemnification or
reimbursement payments actually received or recovered, if recoverable, by the
Indemnified Party from third parties with respect to such Damages. The amount of
any Damages shall take into account any net Tax benefits attributable to the
circumstance or event giving rise to such Damages and any Tax costs attributable
to the receipt of indemnity payments hereunder. The Indemnified Party shall use
Reasonable Efforts to collect any amounts to which they may be entitled under
insurance policies or from third parties (pursuant to indemnification
arrangements or otherwise) with respect to such Damages.
          (f) Except with respect to the EPA Enforcement Action, no Indemnified
Party shall be entitled to bring a claim for indemnification for any breach or
inaccuracy of any representation, warranty or covenant if such Indemnified Party
had Knowledge of such breach or inaccuracy as of the Effective Date or if the
facts or circumstances underlying such breach or inaccuracy are disclosed in the
Disclosure Schedules.
          (g) Any Indemnified Party that becomes aware of Damages for which it
seeks indemnification under this ARTICLE VII shall be required to use Reasonable
Efforts to mitigate the Damages, including taking any actions reasonably
requested by, and at the expense of, the Indemnifying Party, and the Indemnified
Party shall not have any right to indemnification for any Damages to the extent
that it is attributable to any Indemnified Party’s failure to use Reasonable
Efforts to mitigate. The Indemnified Party shall not have any right to
indemnification under this ARTICLE VII with respect to Damages to the extent
that the Damages were materially and directly exacerbated by any action taken by
any Indemnified Party for the first time on or after the Closing.
     7.5 Exclusive Remedy and Release. The Parties hereby acknowledge and agree
that, other than with respect to (i) Title Defects, the sole and exclusive
remedy for which is set forth in Section 2.7 hereof, and (ii) claims for actual
fraud (as distinguished from constructive fraud) by the other Party or Parties,
the indemnification provisions and remedies set forth in this ARTICLE

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VII shall, from and after the Closing, constitute the sole and exclusive
remedies of the Parties with respect to this Agreement and the transactions
contemplated hereby and the Parties acknowledge and agree that the remedies
available in this ARTICLE VII supersede any other remedies available at law or
in equity.
ARTICLE VIII
TERMINATION
     8.1 Termination. At any time prior to the Closing, this Agreement may be
terminated and the transactions contemplated hereby abandoned:
          (a) by the mutual consent of Buyer and Seller as evidenced in a
writing signed by each of Buyer and the Seller Parties;
          (b) by Buyer, if there has been a material breach of any
representation, warranty or covenant of the Seller Parties contained in this
Agreement that has prevented the satisfaction of any condition to the
obligations of Buyer at the Closing and, if such breach is of a character that
it is capable of being cured, such breach has not been cured by the Seller
Parties within thirty (30) days after written notice thereof from Buyer;
          (c) by Seller, if there has been a material breach of any
representation, warranty or covenant of Buyer contained in this Agreement that
has prevented the satisfaction of any condition to the obligations of the Seller
Parties at the Closing and, if such breach is of a character that it is capable
of being cured, such breach has not been cured by Buyer within thirty (30) days
after written notice thereof from Seller;
          (d) by either Buyer or Seller if any Governmental Authority having
competent jurisdiction has issued a final, non-appealable Order (other than a
temporary restraining order) or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement; or
          (e) by either Buyer or Seller if the Closing shall not have been
consummated on or before March 1, 2010; provided that the right to terminate
this Agreement under this Section 8.1(e) shall not be available to a Party if
its willful act or willful failure to act or whose Affiliate’s willful act or
willful failure to act has been the principal cause of or resulted in the
failure of the Closing to occur on or before such date.
     8.2 Effect of Termination. If this Agreement is terminated under
Section 8.1, all further obligations of the Parties under this Agreement will
terminate without further liability or obligation of any Party to the other
Parties hereunder; provided, however, that no Party will be released from
liability for any willful and intentional breach of this Agreement. Nothing in
this Section 8.2 will relieve any Party to this Agreement of liability for
breach of this Agreement occurring prior to any termination, or for breach of
any provision of this Agreement that specifically survives termination
hereunder. The provisions of ARTICLE IX shall survive any termination hereof
pursuant to Section 8.1. The Confidentiality Agreement shall not be affected by
a termination of this Agreement.

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ARTICLE IX
MISCELLANEOUS
     9.1 Notices. All notices and other communications between the Parties shall
be in writing and shall be deemed to have been duly given when (i) delivered in
person, (ii) five days after posting in the United States mail having been sent
registered or certified mail return receipt requested or (iii) delivered by
telecopy and promptly confirmed by delivery in person or post as aforesaid in
each case, with postage prepaid, addressed as follows:
If to Buyer, to:
Monarch Investments Holdings, LLC
5445 DTC Parkway, Suite P-4
Greenwood Village, Colorado 80111
Telephone No.: 303-486-6904
Facsimile No.: 303-486-6994
Attention: Keith R. Finger
With a copy to:
Metalmark Capital Holdings LLC
1177 Avenue of the Americas, 40th Floor
New York, NY 10036
Telephone No.: (212) 823-1948
Facsimile No.: (212) 823-1949
Attention: Gregory D. Myers
With a second copy to:
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
Telephone No.: (212) 450-4350
Facsimile No.: (212) 701-5350
Attention: John A. Bick
If to a Seller Party, to:
Gasco Energy, Inc.
8 Inverness Drive East, Suite 100
Englewood, Colorado 80112
Telephone No.: (303) 483-0044
Facsimile No.: (303) 483-0011
Attn: King Grant
With a copy to:

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Vinson & Elkins L.L.P.
666 Fifth Avenue, 26th Floor
New York, New York 10103-0040
Telephone No.: (212) 237-0000
Facsimile No.: (212) 237-0100
Attn: Caroline Blitzer
or to such other address or addresses as the Parties may from time to time
designate in writing.
     9.2 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign this Agreement or any rights,
interest, obligations or other parts hereof without the prior written consent of
the other Parties, which consent and approval may be denied in such other
Party’s sole discretion.
     9.3 Rights of Third Parties. Nothing expressed or implied in this Agreement
is intended or shall be construed to confer upon or give any Person, other than
the Parties and their respective successors and permitted assigns, any right or
remedies under or by reason of this Agreement.
     9.4 Expenses. Except as otherwise expressly provided herein, each Party
shall bear its own costs expenses incurred in connection with this Agreement and
the transactions contemplated hereby whether or not such transactions shall be
consummated, including all fees of its legal counsel, financial advisers and
accountants.
     9.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Any facsimile copies
hereof or signature hereon shall, for all purposes, be deemed originals.
     9.6 Entire Agreement. This Agreement (together with the Exhibits and
Disclosure Schedules to this Agreement) and the documents referred to in this
Agreement, including the other Transaction Documents and other certificates,
documents and instruments to be executed and delivered pursuant hereto,
constitute the entire agreement among the Parties and supersede any other
agreements or representations, whether written or oral, that may have been made
or entered into by or among any of the Parties or any of their respective
Affiliates relating in any way to the transactions contemplated hereby or the
subject matter of this Agreement.
     9.7 Disclosure Schedules. No reference to or disclosure of any item or
other matter on the Disclosure Schedules shall be construed as an admission or
indication that such item or other matter is material or that such item or other
matter is required to be referred to or disclosed on the Disclosure Schedules.
No disclosure on the Disclosure Schedules relating to any possible breach or
violation of any agreement or Law shall be construed as an admission or
indication that any such breach or violation exists or has actually occurred.
The inclusion of any information on the Disclosure Schedules shall not be deemed
to be an admission or acknowledgment by the Seller Parties, in and of itself,
that such information is material to or outside the ordinary course of the
business of the Seller Parties or required to be disclosed on the Disclosure
Schedules.

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Each disclosure on the Disclosure Schedules shall be deemed to qualify all
representations and warranties of the Seller Parties notwithstanding the lack of
a specific cross-reference if the relevance of that disclosure as an exception
to (or a disclosure for purposes of) such representations and warranties would
be reasonably apparent to a reasonable person who has read that reference and
such representations and warranties, without any independent knowledge on the
part of the reader regarding the matter(s) so disclosed.
     9.8 Waiver of Other Representations and Warranties. EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN ARTICLE III OF THIS AGREEMENT (AS
MODIFIED BY THE DISCLOSURE SCHEDULES HERETO), NEITHER OF THE SELLER PARTIES NOR
ANY OTHER PERSON MAKES ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS
OR IMPLIED, AT LAW OR IN EQUITY, WITH RESPECT TO SELLER PARTIES, THEIR
RESPECTIVE AFFILIATES OR SUBSIDIARIES, THE ASSETS, THE ASSUMED LIABILITIES OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND THE SELLER PARTIES HEREBY
EXPRESSLY DISCLAIM ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY
SELLER PARTIES, ANY OF THEIR RESPECTIVE AFFILIATES OR SUBSIDIARIES, OR ANY OF
THEIR RESPECTIVE OFFICERS, DIRECTORS, MANAGERS, MEMBERS, SHAREHOLDERS,
EMPLOYEES, AGENTS OR REPRESENTATIVES. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN ARTICLE III HEREOF (AS MODIFIED BY THE DISCLOSURE
SCHEDULES HERETO), THE SELLER PARTIES (I) EXPRESSLY DISCLAIM AND NEGATE ANY
REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, AT COMMON LAW, BY STATUTE, OR
OTHERWISE, RELATING TO THE CONDITION OF THE ASSETS (INCLUDING ANY IMPLIED OR
EXPRESSED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS) AND THE SELLER PARTIES’ INTEREST
IN THE ASSETS ARE BEING TRANSFERRED THROUGH THE SALE TO BUYER “AS IS, WHERE IS ,
WITH ALL FAULTS,”; PROVIDED THAT THE PARTIES AGREE THAT THE FOREGOING SHALL NOT
LIMIT BUYER’S RIGHT TO INDEMNIFICATION FOR RETAINED LIABILITIES PURSUANT TO
SECTION 7.2(b) AND (II) HEREBY DISCLAIM ALL LIABILITY AND RESPONSIBILITY FOR ANY
REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE,
COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO BUYER OR ITS AFFILIATES OR
REPRESENTATIVES (INCLUDING ANY OPINION, INFORMATION, PROJECTION, OR ADVICE THAT
MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER BY ANY DIRECTOR, OFFICER, EMPLOYEE,
AGENT, CONSULTANT, OR REPRESENTATIVE OF SELLER OR ANY OF ITS AFFILIATES OR
SUBSIDIARIES). THE SELLER PARTIES MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND OR NATURE, EXPRESS OR IMPLIED, TO BUYER REGARDING THE CONDITION, VALUE OR
QUALITY THE ASSETS OR THE PROBABLE SUCCESS OR PROFITABILITY OF THE ASSETS.
     9.9 Acknowledgment by Buyer.

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          (a) BUYER HEREBY ACKNOWLEDGES THAT IT HAS NOT RELIED ON ANY
REPRESENTATION OR WARRANTY FROM THE SELLER PARTIES OR ANY OF THEIR RESPECTIVE
AFFILIATES OR SUBSIDIARIES, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. THE
DISCLAIMERS OF CERTAIN WARRANTIES CONTAINED IN SECTION 9.8 AND THIS SECTION 9.9
AND ELSEWHERE IN THIS AGREEMENT ARE “CONSPICUOUS DISCLAIMERS” FOR PURPOSES OF
ANY APPLICABLE LAW, RULE OR ORDER.
          (b) BUYER HEREBY ACKNOWLEDGES THAT (I) IT HAS MADE ITS OWN INDEPENDENT
EXAMINATION, INVESTIGATION, ANALYSIS AND EVALUATION OF THE BUSINESS, OPERATIONS,
LIABILITIES, RESULTS OF OPERATIONS, FINANCIAL CONDITION, TECHNOLOGY AND
PROSPECTS OF THE ASSETS, (II) IT HAS BEEN PROVIDED ACCESS TO PERSONNEL,
PROPERTIES, PREMISES AND RECORDS OF THE ASSETS, FOR SUCH PURPOSE AND HAS
RECEIVED AND REVIEWED SUCH INFORMATION AND HAS HAD A REASONABLE OPPORTUNITY TO
ASK QUESTIONS OF AND RECEIVE ANSWERS RELATING TO SUCH MATTERS AS IT DEEMED
NECESSARY OR APPROPRIATE TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREIN,
(III) IT HAS SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS
THAT IT IS CAPABLE OF EVALUATING THE MERITS AND RISKS OF THE ASSETS AND AN
INVESTMENT IN THE ASSETS AND (IV) THE SELLER PARTIES HAVE DELIVERED OR MADE
AVAILABLE TO BUYER OR ITS ADVISORS ALL INFORMATION WHICH BUYER OR SUCH ADVISORS
HAVE REQUESTED FOR THE PURPOSE OF DECIDING WHETHER OR NOT TO ENTER INTO THIS
AGREEMENT.
          (c) IN ENTERING INTO THIS AGREEMENT, BUYER HAS RELIED UPON, AMONG
OTHER THINGS, ITS DUE DILIGENCE INVESTIGATION AND ANALYSIS OF THE ASSETS, AND
BUYER:
          (i) ACKNOWLEDGES AND AGREES THAT NONE OF THE SELLER PARTIES OR ANY OF
THEIR RESPECTIVE DIRECTORS, MANAGERS, OFFICERS, EQUITY HOLDERS, EMPLOYEES,
AFFILIATES, CONTROLLING PERSONS, AGENTS, ADVISORS OR REPRESENTATIVES MAKES OR
HAS MADE ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE
ACCURACY OR COMPLETENESS OF ANY OF THE INFORMATION PROVIDED OR MADE AVAILABLE TO
BUYER OR ITS DIRECTORS, MANAGERS, OFFICERS, EQUITY HOLDERS, EMPLOYEES,
AFFILIATES, CONTROLLING PERSONS, AGENTS, ADVISORS OR REPRESENTATIVES, INCLUDING
ANY INFORMATION, DOCUMENT, OR MATERIAL PROVIDED OR MADE AVAILABLE, OR STATEMENTS
MADE, TO BUYER OR ITS DIRECTORS, MANAGERS, OFFICERS, EQUITY HOLDERS, EMPLOYEES,
AFFILIATES, CONTROLLING PERSONS, AGENTS, ADVISORS OR REPRESENTATIVES DURING SITE
OR OFFICE VISITS, IN ANY “DATA ROOMS” (INCLUDING INTERNET-BASED DATA ROOMS),
MANAGEMENT PRESENTATIONS OR SUPPLEMENTAL DUE DILIGENCE INFORMATION PROVIDED TO
BUYER

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OR ITS DIRECTORS, MANAGERS, OFFICERS, EQUITY HOLDERS, EMPLOYEES, AFFILIATES,
CONTROLLING PERSONS, AGENTS, ADVISORS OR REPRESENTATIVES IN CONNECTION WITH
DISCUSSIONS OR ACCESS TO MANAGEMENT OF THE SELLER PARTIES OR IN ANY OTHER FORM
IN EXPECTATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, IN EACH CASE
EXCEPT, WITH RESPECT TO SELLER PARTIES, AS APPLICABLE, TO THE EXTENT EXPRESSLY
SET FORTH IN THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE III
(COLLECTIVELY, THE “DUE DILIGENCE INFORMATION”); AND
          (ii) ACKNOWLEDGES AND AGREES THAT (X) THE DUE DILIGENCE INFORMATION
INCLUDES CERTAIN PROJECTIONS, ESTIMATES AND OTHER FORECASTS, AND CERTAIN
BUSINESS PLAN INFORMATION, (Y) THERE ARE UNCERTAINTIES INHERENT IN ATTEMPTING TO
MAKE SUCH PROJECTIONS, ESTIMATES AND OTHER FORECASTS AND PLANS AND IT IS
FAMILIAR WITH SUCH UNCERTAINTIES, AND (Z) IT IS TAKING FULL RESPONSIBILITY FOR
MAKING ITS OWN EVALUATIONS OF THE ADEQUACY AND ACCURACY OF ALL PROJECTIONS,
ESTIMATES AND OTHER FORECASTS AND PLANS SO FURNISHED TO IT AND ANY USE OF OR
RELIANCE BY IT ON SUCH PROJECTIONS, ESTIMATES AND OTHER FORECASTS AND PLANS
SHALL BE AT ITS SOLE RISK.
     9.10 Amendments. This Agreement may be amended or modified in whole or in
part, and terms and conditions may be waived, only by a duly authorized
agreement in writing which makes reference to this Agreement executed by all of
the Parties.
     9.11 Publicity. All press releases or other public communications of any
nature whatsoever relating to the transactions contemplated by this Agreement,
and the method of the release for publication thereof, shall be subject to the
prior written consent of Buyer and Gasco, which consent shall not be
unreasonably withheld, conditioned or delayed by such Party; provided, however,
that nothing herein shall prevent a Party from publishing such press releases or
other public communications as is necessary to satisfy such Party’s obligations
at Law or under the applicable rules of any stock or commodities exchange after
consultation with the other Party.
     9.12 Non-Waiver. No waiver by either Party of any default by the other
Party in the performance of any provision, condition or requirement herein shall
be deemed to be a waiver of, or in any manner release the other Party from,
performance of any other provision, condition or requirement herein, nor shall
such waiver be deemed to be a waiver of, or in any manner a release of, the
other Party from future performance of the same provision, condition or
requirement. Any delay or omission of either Party to exercise any right
hereunder shall not impair the exercise of any such right, or any like right,
accruing to it thereafter. The failure of either Party to perform its
obligations hereunder shall not release the other Party from the performance of
such obligations.

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     9.13 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. The Parties further agree
that if any provision contained herein is, to any extent, held invalid or
unenforceable in any respect under the Laws governing this Agreement, they shall
take any actions necessary to render the remaining provisions of this Agreement
valid and enforceable to the fullest extent permitted by Law and, to the extent
necessary, shall amend or otherwise modify this Agreement to replace any
provision contained herein that is held invalid or unenforceable with a valid
and enforceable provision giving effect to the intent of the Parties to the
greatest extent legally permissible in order that the transactions contemplated
herein are consummated as originally contemplated to the fullest extent
possible.
     9.14 Governing Law; Jurisdiction.
          (a) This Agreement, the other Transaction Documents, and any claim,
controversy or dispute arising under or related to this Agreement or the other
Transaction Documents, the transactions contemplated hereby or thereby or the
rights, duties and relationship of the parties hereto and thereto, shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware, except to the extent that the laws of the State of Utah are
mandatorily applicable to the nature of any property interests and any
conveyances of property interests involving real property located in the State
of Utah.
     9.15 Arbitration.
          (a) Agreement to Arbitrate. Any and all claims, counterclaims,
demands, causes of action, disputes, controversies and other matters in question
arising out of or relating to this Agreement, or the alleged breach hereof, or
in any way relating to the subject matter of this Agreement, or the relationship
between the Parties created by this Agreement, except for any action by Buyer to
seek specific performance pursuant to Section 5.19(b), which action shall be
brought in the United States District Court for the District of Delaware or any
Delaware State court sitting in Wilmington, Delaware, (each a “Dispute”), shall
be finally resolved by binding arbitration administered by the American
Arbitration Association (“AAA”) under the AAA Commercial Rules (the “Rules”)
then in force, to the extent such Rules are not inconsistent with the provisions
of this Agreement, regardless of whether some or all of such Disputes allegedly
are (a) extra-contractual in nature; (b) sound in contract, tort, or otherwise;
are provided by federal or state statute, common law or otherwise; or (d) seek
damages or any other relief whether in law, in equity, or otherwise.
          (b) Venue, Procedural Issues. The seat of this arbitration shall be in
Wilmington, Delaware. The hearings in this Arbitration shall be held at the seat
or at such other place as the Parties may agree. The Parties agree that the
United States Arbitration Act, Title 9, United States Code, as modified by this
Agreement, shall govern procedural aspects of the arbitration.
          (c) Powers of the Arbitrators, Limitations on Remedies. The making,
validity, construction, and interpretation of this agreement to arbitrate, and
all procedural aspects of the Arbitration conducted pursuant to this agreement
to arbitrate, including but not limited to, the determination of the issues that
are subject to arbitration (i.e., arbitrability), the scope of the

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arbitrable issues, the application of this agreement to arbitrate to signatories
and non-signatories, shall be decided by the Panel. The Panel shall have the
power to award all remedies available under this Agreement and, to the extent
not excluded by this Agreement, the applicable law. The Panel shall also have
the power to enter such interim orders as it deems necessary, including, without
limitation, orders to preserve the subject matter of the Dispute or to preserve
or adjust the status of the Parties pending resolution of the Dispute in
Arbitration. The Parties agree to accept and honor any interim orders and agree
that any such interim orders may be enforced as necessary in any court having
relevant jurisdiction. The Panel shall have the power to assess the attorneys’
fees, costs and expenses of the Arbitration (including the arbitrators’ fees and
expenses) against one or more of the Parties in whatever manner or allocation it
deems appropriate. The Panel shall not decide the Dispute ex aequo et bono or as
amiable compositeur or by reliance on any other doctrine or principle that would
permit the Panel to avoid the application of this Agreement and/or the governing
law. The Panel shall not have the authority to modify or amend any term or
provision of this Agreement.
          (d) Parties. This Section 9.15 shall apply to any Dispute between the
Parties, and it shall also apply to any (a) Dispute between a Party and any
Affiliate of the other Party, (b) Dispute between a Party and any officer,
director, employee, representative, agent, successor or assign of the other
Party or of an Affiliate of such other Party, (c) Dispute between an Affiliate
of one Party and an Affiliate of the other Party, and (d) Dispute between an
Affiliate of a Party and an officer, director, employee, representative, agent,
successor or assign of the other Party or of an Affiliate of the other Party.
With regard to any Dispute, the Affiliates of the Parties and the officers,
directors, employees, representatives, agents, successors and assigns of the
Parties, and their Affiliates, are intended third party beneficiaries of the
agreement to arbitrate set out in this Section 9.15.
          (e) Selection of the Arbitral Panel. The arbitral panel shall be
composed of three neutral arbitrators (the “Panel”). The Party requesting
arbitration (the “Claimant”) shall appoint one (1) arbitrator at the time it
files its request for arbitration with the AAA. The Party named as respondent by
the Claimant (“Respondent”) shall appoint one (1) arbitrator within the time
specified in the Rules. If a Party fails to appoint an arbitrator, then that
arbitrator shall be appointed in accordance with the Rules. The two arbitrators
nominated by Claimant and Respondent shall together nominate the third
arbitrator, who shall be the Chairman of the Panel, by mutual agreement within
fifteen (15) days of the appointment of the second arbitrator. If the
party-appointed arbitrators fail to timely appoint a third arbitrator, the AAA
shall make the appointment.
          (f) The Award. The award shall be in writing, shall give reasons for
the decisions reached by the Tribunal and shall be signed and dated by the
arbitrators, and a copy of the award shall be delivered to each of the Parties.
The Party against which an award assesses a monetary obligation or enters an
injunctive or mandatory order shall pay that obligation or comply with that
order on or before the 30th calendar day following the receipt of the award or
by such other date as the award may provide. The award shall be final and
binding on the parties and may be confirmed in, and judgment upon the award
entered by, any court having jurisdiction over the Parties. The Tribunal’s award
shall be entitled to all of the protections and benefits of a final judgment as
to any Dispute, including compulsory counterclaims, that were or could have

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been presented to the Tribunal, and shall be final and binding on the Parties
and non-appealable to the maximum extent permitted by law.
          (g) Exclusive Method of Resolving Claims; Assistance of Courts. It is
the intent of the Parties that the Arbitration shall be conducted expeditiously,
without initial recourse to the courts and without interlocutory appeals of the
Panel’s decisions to the courts. However, if a Party refuses to honor its
obligations under this agreement to arbitrate, the other Party may obtain
appropriate relief staying such litigation and/or compelling arbitration in any
court having jurisdiction over the refusing Party; each Party hereby consenting
to personal jurisdiction and venue in the federal and State courts in
Wilmington, Delaware; in any event, the order compelling arbitration shall
require that the arbitration proceedings take place in Wilmington, Delaware and
in the manner specified herein. The Parties may apply to any court having
relevant jurisdiction for orders requiring witnesses to obey subpoenas issued by
the arbitrators. Prior to the appointment of the chairman, a Party may apply to
any court having relevant jurisdiction for an order preserving the status quo
ante and/or evidence in anticipation of arbitration (for avoidance of doubt,
such an application is not intended to constitute waiver of the right to
arbitrate Disputes nor does it refer any Dispute to court for decision). Any and
all of the Tribunal’s orders and decisions, including, without limitation,
interim orders, may be enforced by any court having relevant jurisdiction. Each
Party agrees that arbitration pursuant to this Section 9.15 shall be the
exclusive method for resolving all Disputes and that it will not commence an
action or proceeding, except as provided in this Section 9.15. The Panel’s award
may be confirmed in, and judgment upon the award entered by, any federal or
State court having jurisdiction over the Parties. Each party hereby consents to
personal jurisdiction over itself and its property and venue in the federal and
State courts in Wilmington, Delaware.
          (h) Confidentiality. Except to the extent necessary for proceedings
relating to enforcement of the arbitration agreement, the award, or other,
related rights of the Parties, the fact of the arbitration, the arbitration
proceeding itself, all evidence, memorials or other documents exchanged or used
in the arbitration and the arbitrators’ award shall be maintained in confidence
by the Parties to the fullest extent permitted by applicable law. However, a
violation of this covenant shall not affect the enforceability of this agreement
to arbitrate or of the arbitrators’ award.
          (i) Severability. The provisions of this agreement to arbitrate are
independent of the remaining provisions of the Agreement and the Parties intend
that they shall continue in effect even though one or more provisions of the
Agreement shall be determined null or void. This agreement to arbitrate shall
also survive the termination or expiration of this Agreement.
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     IN WITNESS WHEREOF this Agreement has been duly executed and delivered by
each Party as of the date first above written.

            SELLER PARTIES:

RIVERBEND GAS GATHERING, LLC         By:   GASCO ENERGY, INC.         ITS
MANAGING MEMBER              By:   /s/ W. King Grant         Name:   W. King
Grant        Title:   President and Chief Financial Officer        GASCO ENERGY,
INC.         By:   /s/ W. King Grant         Name:   W. King Grant       
Title:   President and Chief Financial Officer     

Signature Page
Asset Purchase Agreement

 

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            BUYER:

MONARCH NATURAL GAS, LLC         By:   /s/ Greg W. Sales         Name:   Greg W.
Sales        Title:   Chairman & CEO     

Signature Page
Asset Purchase Agreement

 

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Exhibit A
Form of Gathering Agreement
Exhibit A — 1

 

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Exhibit B
Form of Transition Services Agreement
Exhibit B — 1

 

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Exhibit C
Form of Salt Water Disposal Service Agreement
Exhibit C — 1

 

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Exhibit D
Form of Assignment and Assumption Agreement
Exhibit D — 1

 

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Exhibit E
Form of Assignment of Real Property Interests
Exhibit E — 1

 

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Exhibit F
Form of FIRPTA Certificates
Exhibit F

 

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Exhibit G-1
EPA Consent Decree Draft
Exhibit G

 

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Exhibit G-2
Buyer Mark-up of the EPA Consent Decree Draft
Exhibit G

 

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Disclosure Schedules
Seller Parties’ Disclosure Schedules (attached)
Buyer’s Disclosure Schedules (attached)
Disclosure Schedules