Exhibit 10.3

PURCHASE AND SALE AGREEMENT

BETWEEN

Hedloc INVESTMENT Co. LP

AS SELLER

AND

CALLON PETROLEUM OPERATING COMPANY

AS PURCHASER

 

 

Dated August 29, 2014

 

 

 

 

 

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TABLE OF CONTENTS

Page

CONTENTS

Page

 

 

 

 

ARTICLE 1 Purchase and Sale

1 

 

1.1

Purchase and Sale

1 

 

1.2

Certain Definitions

1 

 

1.3

Excluded Assets

9 

 

 

ARTICLE 2 Purchase Price AND DEPOSIT

10 

 

2.1

Purchase Price and Deposit

10 

 

2.2

Adjustments to Purchase Price

11 

 

2.3

Procedures

12 

 

2.4

Withholding

13 

 

 

ARTICLE 3 Certain Title and Environmental Matters

13 

 

3.1

Seller’s Title

13 

 

3.2

Definition of Defensible Title

13 

 

3.3

Definition of Permitted Encumbrances

14 

 

3.4

Allocated Values

16 

 

3.5

Environmental Assessment; Environmental Defects

17 

 

3.6

Notice of Title and Environmental Defects and Benefits; Adjustment

18 

 

3.7

Cure

19 

 

3.8

Adjustment for Title Defects and Benefits, and Environmental Defects

20 

 

3.9

Calculation of Title and Environmental Defect Amounts and Title Benefit

 

 

 

Amounts

21 

 

3.10

Dispute Resolution

24 

 

3.11

Notice to Holders of Consent, Preferential Purchase and Tag-Along Rights

26 

 

3.12

Consent Requirements

26 

 

3.13

Preferential Purchase Rights

28 

 

3.14

Tag-Along Rights

28 

 

 

ARTICLE 4 Representations and Warranties of Sellers

29 

 

4.1

Seller

29 

 

4.2

Litigation

30 

 

4.3

Taxes and Assessments

30 

 

4.4

Compliance with Laws

31 

 

4.5

Contracts

31 

 

4.6

Payments for Production; Imbalances; Payment of Royalties

32 

 

4.7

Consents, Tag-Along Rights, Rights of First Refusal and Preferential Purchase

 

 

 

Rights

32 

 

 

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TABLE OF CONTENTS

(continued)

Page

 

 

 

 

 

 

4.8

Liability for Brokers’ Fees

32 

 

4.9

Outstanding Capital Commitments

32 

 

4.10

Environmental

32 

 

4.11

Hedges

33 

 

4.12

Bonds and Credit Support

33 

 

4.13

Suspense Accounts

33 

 

4.14

Limitations

33 

 

 

ARTICLE 5 Representations and Warranties of Purchaser

34 

 

5.1

Existence and Qualification

34 

 

5.2

Power

34 

 

5.3

Authorization and Enforceability

35 

 

5.4

No Conflicts

35 

 

5.5

Consents, Approvals or Waivers

35 

 

5.6

Litigation

35 

 

5.7

Financing

35 

 

5.8

Investment Intent

35 

 

5.9

Independent Investigation

36 

 

5.10

Liability for Brokers’ Fees

36 

 

5.11

Bankruptcy

36 

 

 

 

 

ARTICLE 6 Covenants of the Parties

36 

 

6.1

Access

36 

 

6.2

Press Releases

37 

 

6.3

Operation of Business

37 

 

6.4

Indemnity Regarding Access

39 

 

6.5

Further Assurances

39 

 

6.6

Confidentiality

39 

 

6.7

Governmental Reviews

40 

 

6.8

Audits and Filings

40 

 

 

 

 

ARTICLE 7 Conditions to Closing

41 

 

7.1

Conditions of Seller to Closing

41 

 

7.2

Conditions of Purchaser to Closing

42 

 

 

 

 

ARTICLE 8 Closing

43 

 

8.1

Time and Place of Closing

43 

 

8.2

Obligations of Sellers at Closing

43 

 

8.3

Obligations or Purchaser at Closing

44 

 

8.4

Closing Payment and Post-Closing Purchase Price Adjustments

45 

 

 

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TABLE OF CONTENTS

(continued)

Page

 

 

 

 

 

ARTICLE 9 Tax Matters

47 

 

9.1

Tax Returns; Proration of Taxes

47 

 

9.2

Access to Information

48 

 

9.3

Conflict Survival

49 

 

 

 

 

ARTICLE 10 Termination

50 

 

10.1

Termination

50 

 

10.2

Effect of Termination

50 

 

 

 

 

ARTICLE 11 Indemnification; Limitations

51 

 

11.1

Assumed Obligations

51 

 

11.2

Retained Obligations

52 

 

11.3

Indemnification

53 

 

11.4

Indemnification Actions

54 

 

11.5

Casualty and Condemnation

57 

 

11.6

Limitation on Actions

57 

 

 

 

 

ARTICLE 12 Miscellaneous

59 

 

12.1

Counterparts

59 

 

12.2

Notices

59 

 

12.3

Sales or Use Tax, Recording Fees and Similar Taxes and Fees

60 

 

12.4

Expenses

60 

 

12.5

Records

60 

 

12.6

Governing Law

61 

 

12.7

Dispute Resolution

61 

 

12.8

Captions

62 

 

12.9

Waivers

62 

 

12.10

Assignment

62 

 

12.11

Entire Agreement

62 

 

12.12

Amendment

62 

 

12.13

No Third-Person Beneficiaries

62 

 

12.14

Severability

63 

 

12.15

Time of Essence

63 

 

12.16

References

63 

 

12.17

Construction

63 

 

12.18

Limitation on Damages

63 

 

12.19

Financing Sources

64 

 

 

 

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TABLE OF CONTENTS

(continued)

Page

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBITS:

 

 

Exhibit A-1

Leases

 

 

Exhibit A-2

Wells

 

 

Exhibit B

Form of Assignment and Bill of Sale

 

 

 

 

 

SCHEDULES:

 

 

Schedule 1.3

Certain Excluded Assets

 

 

Schedule 2.2

Hydrocarbons in Storage

 

 

Schedule 3.4

Allocated Values

 

 

Schedule 4.2

Litigation

 

 

Schedule 4.3

Taxes and Assessments

 

 

Schedule 4.4

Compliance with Laws

 

 

Schedule 4.5

Material Contracts

 

 

Schedule 4.6

Imbalances

 

 

Schedule 4.7

Consents, Tag-Along Rights and Preferential Purchase Rights

 

Schedule 4.9

Outstanding Capital Commitments

 

 

Schedule 4.10

Environmental Disclosure

 

 

Schedule 4.12

Bonds and Credit Support

 

 

Schedule 4.13

Suspense Amounts

 

 

Schedule 6.3

Existing Plans and Operations

 

 

 

 

-iv-

 

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Accounting Arbitrator

46 

 

NORM

34 

Adjustment Period

12 

 

Paying Party

48 

Allocated Value

16 

 

Permitted Encumbrances

14 

Assumed Obligations

51 

 

Person

7 

Casualty Loss

57 

 

Phase I Assessment

17 

Claim

54 

 

Production Tax

8 

Claim Notice

54 

 

Property Costs

8 

Closing

43 

 

Property Tax

8 

Closing Date

43 

 

Purchase Price

10 

Closing Payment

45 

 

Purchaser Group

53 

Cure Date Post-Closing

19 

 

Records

60 

Cure Date Pre-closing

19 

 

Reimbursing Party

48 

Damages

58 

 

Retained Obligations

52 

Defect Claim Date

18 

 

SEC

36 

Defensible Title

13 

 

Securities Act

35 

Deposit

11 

 

Securities Laws

40 

Environmental Arbitrator

25 

 

Seller Group

39 

Environmental Consultant

17 

 

Straddle Period

48 

Environmental Defect

17 

 

Suspense Amounts

33 

Environmental Defect Amount

20 

 

Tag Parties

29 

Environmental Information

17 

 

Tag-Along Rights

29 

Environmental Permits

32 

 

Tax

9 

Environmental Review

17 

 

Tax Return

30 

Excluded Records

61 

 

Title Arbitrator

25 

Filings

40 

 

Title Benefit

14 

Final Settlement Statement

46 

 

Title Benefit Amount

20 

Indemnified Person

54 

 

Title Defect

14 

Indemnifying Person

54 

 

Title Defect Amount

20 

Individual Indemnity Threshold

58 

 

Unadjusted Purchase Price

10 

 

 

 

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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this “Agreement”), is dated August 29, 2014,
by and between Hedloc Investment Co. LP, a Texas limited partnership (“Seller”)
and Callon Petroleum Operating Company, a Delaware corporation (“Purchaser”) and
together with Seller, the “Parties.”

RECITALS:

Seller desires to sell and Purchaser desires to purchase all of Seller’s
interest in and to those certain oil and gas properties, rights, and related
assets owned by Seller that are defined and described as “Assets” herein.

NOW, THEREFORE, in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions, and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1
PURCHASE AND SALE

1.1     Purchase and Sale.  On the terms and conditions contained in this
Agreement, Seller agrees to sell to Purchaser, and Purchaser agrees to purchase,
accept, and pay for, effective as of 12:01 a.m. local time at the location of
the Assigned Properties on the Effective Date, an undivided two percent (2%) of
8/8ths working interest in and to the Leases, together with an undivided
proportionate interest in and to the following which corresponds with (and would
be attributable to) such undivided (2%) of 8/8ths working interest in and to the
Leases: the Wells, Units, Contracts, Equipment, Surface Interests, Trade Credits
and Liens, Audit Rights, Hydrocarbons and Licenses (such undivided percentage
interest in and to the Leases, and such undivided proportionate interest that
corresponds thereto in and to the other Assets, is collectively referred to
herein as the “Assigned Interests”, and such interest of Seller in the
Properties (being a subset of the Assets) is collectively referred to herein as
the “Assigned Properties”). 

1.2     Certain Definitions.  As used herein:

(a)“Accounting Procedures” means United States Generally Accepted Accounting
Principles, consistently applied.

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

(c)“Agreed Rate” means the lesser of (i) the one month London Inter-Bank Offered
Rate, as published on Page BBAM of the Bloomberg Financial Markets

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Information Services on the last Business Day prior to the Effective Date plus
two percentage points (LIBOR +2%) and (ii) the maximum rate allowed by
applicable Law.

(d)“Assets” means all of the following properties and interests (except to the
extent of any Excluded Assets):

(i)the oil and gas leases (and any ratifications or amendments to such leases),
oil, gas, and mineral leases and subleases (and any ratifications or amendments
to such leases), mineral fee interests, carried interests, and, without limiting
the foregoing, other rights described on Exhibit A-1 (of whatever character,
whether legal or equitable, and whether vested or contingent)  and the lands
covered thereby (the “Lands”) and to the Hydrocarbons in, on, under, and that
may be produced from the Lands (collectively, the “Leases”). It is specifically
understood, however, that the term “Asset” shall not include any overriding
royalty interests and similar non-cost bearing interests owned by Seller in the
Leases and Lands as of the Effective Date;

(ii)any and all oil, gas, water, CO2  or injection wells located on the Lands or
on lands pooled, communitized, or unitized with the Lands, and that includes,
without limiting the foregoing, the interests in the wells shown on Exhibit A‑2,
whether producing, non-producing, temporarily plugged and abandoned, and whether
or not fully described on any exhibit or schedule hereto (the “Wells”);

(iii)all pooled, communitized, or unitized acreage which includes all or part of
the Lands, or any Leases, and all tenements, hereditaments, and appurtenances
belonging thereto (the “Units,” and, together with the Wells, Lands and Leases,
the “Properties”);

(iv)to the extent the same are assignable or transferable without incurring a
fee or cost (other than any fee or cost that Purchaser agrees to pay), all
currently existing contracts, agreements, and instruments, solely to the extent
applicable and attributable to the assigned interest in the Properties,
including operating agreements; unitization, pooling, and communitization
agreements; declarations and/or orders (including, without limitation, all units
formed under orders, rules, regulations, or other official acts of any federal,
state or other authority having jurisdiction, and voluntary unitization
agreements, designations and/or declarations); commingling agreements; area of
mutual interest agreements; farmin and farmout agreements; exchange agreements;
transportation agreements; processing agreements; production sales and marketing
contracts; service agreements; drilling contracts; storage agreements; equipment
leases and rental contracts; and supply agreements (subject to such exclusions
and provisos described herein, the “Contracts”);  provided, however, that the
term “Contracts” shall not include (A) any contracts, agreements, and
instruments included within the definition of “Excluded Assets,” and (B) the
Leases;

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(v)to the extent the same are assignable or transferable without incurring a fee
or cost (other than any fee or cost that Purchaser agrees to pay), all
easements, permits, licenses, servitudes, rights-of-way, surface leases, surface
fee interests, salt water disposal agreements, right of use and easement, and
other rights to use the surface appurtenant to, and used or held for use in
connection with, the Properties, solely to the extent, however,  applicable and
attributable to the assigned interest in the Properties, but excluding any
permits and other appurtenances included within the definition of “Excluded
Assets” (collectively, the “Surface Interests”);

(vi)to the extent transferable without incurring a fee or cost (other than any
fee or cost that Purchaser agrees to pay), all equipment, spare parts, tools,
machinery, communications equipment, telemetry and production measurement
equipment, wellhead equipment, pumps, pumping units, motors, flowlines,
gathering systems, pipe, casing rods, tubing, tanks, boilers, treatment
facilities, injection facilities, disposal facilities, compression facilities,
inventory, fixtures, and other tangible personal property, materials, supplies,
buildings, trailers, offices and improvements located on and used or held for
use in connection with the operation of the Properties or the production,
storage, transportation, treatment, or processing, marketing, or disposition of
Hydrocarbons from the Properties (whether located on or off the Properties),
solely to the extent, however,  applicable and attributable to the assigned
interest in the Properties, but excluding items included within the definition
of “Excluded Assets” (subject to such exclusions, the “Equipment”); 

(vii)to the extent transferable without incurring a fee or cost (other than any
fee or cost that Purchaser agrees to pay), all (A) trade credits, accounts
receivable, notes receivable, take-or-pay amounts receivable, and other
receivables and general intangibles, attributable to the Assigned Interests with
respect to periods of time from and after the Effective Date; and (B) liens and
security interests in favor of Seller relating to the Properties, whether choate
or inchoate, under any Law or Contract to the extent arising from, or relating
to, the ownership, operation, or sale or other disposition on or after the
Effective Date of any of the assigned interests in the Assets or to the extent
arising in favor of Seller as non-operator of any Property (collectively, “Trade
Credits and Liens”);

(viii)to the extent transferable without incurring a fee or cost (other than any
fee or cost that Purchaser agrees to pay), all rights to audit the records of
any Person and to receive refunds or payments of any nature, and all amounts of
money relating thereto with respect to the Assets, insofar as attributable to
periods from and after the Effective Date, to the extent relating to rights
acquired or obligations assumed by Purchaser pursuant to this Agreement
(collectively, the “Audit Rights”);

(ix)all Hydrocarbons produced from, or attributable or allocated to, the
assigned interest in the Properties from and after the Effective Date; all

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Hydrocarbon inventories from and attributable or allocated to the Properties
that are in storage on the Effective Date; and, to the extent related,
attributable or allocated to the Properties, a corresponding interest in all
production, plant, and transportation imbalances as of the Effective Date; and
all make-up rights with respect to take-or-pay payments (collectively,
“Hydrocarbons”); and

(x)to the extent transferable without incurring a fee or cost (other than any
fee or cost that Purchaser agrees to pay), all licenses, permits, approvals,
consents, certificates and other authorizations, and other rights granted by
third Persons, and all certificates of convenience or necessity, immunities,
privileges, grants, and other such rights that relate to, or arise from, the
assigned interests in the Assets or the ownership or operation thereof
(collectively, “Licenses”).

(e)“Assigned Interests” is defined in Section 1.1.

(f)“Assigned Properties” is defined in Section 1.1.

(g)“Assignment and Bill of Sale” means the Assignment, Assumption and Bill of
Sale in the form attached hereto as Exhibit B.

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

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

(j)“Effective Date” means May 1, 2014.

(k)“Environmental Laws” means, as the same have been amended on or prior to the
date hereof, the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”); the Resource Conservation
and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”); the Federal Water Pollution
Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401
et seq. (the “Clean Air Act”); the Hazardous Materials Transportation Act, 49
U.S.C. § 1801 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601
through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency
Planning and Community Right to Know Act, 42 U.S.C. § 11001 et seq.; and the
Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j, and all similar Laws as
in effect on the date hereof of any Governmental Authority having jurisdiction
over the property in question addressing pollution or protection of the
environment or biological or cultural resources and all regulations implementing
the foregoing, excluding, however, all Laws relating to spacing, density,
setbacks, and the protection of correlative rights in Hydrocarbons.

(l)“Financing Sources” means the lenders and any other Persons that have
committed to Purchaser to provide or otherwise have entered into agreements with
Purchaser to provide the financing for the transactions contemplated by this
Agreement,

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including any joinder agreements or credit agreements relating thereto and any
arrangers, book managers, administrative agents, collateral agents, or trustees
as part of the financing or funding of the transactions contemplated by this
Agreement (and any of their representatives or agents) and their respective
affiliates and any of such entities’ or their respective affiliates’ respective
former, current or future general or limited partners, shareholders, managers,
members, directors, officers, employees, representatives or agents or their
heirs, executors, successors and assigns of any of the foregoing); provided that
“Financing Sources” shall not include the Purchaser or its subsidiaries, or any
of their equity owners, partners, shareholders, managers, members, directors,
officers, employees, representatives or agents.

(m)“GAAP” means United States generally accepted accounting principles as in
effect from time to time.

(n)“Governmental Authority” means any federal, state, local, municipal, tribal
or other government and/or government of any political subdivision thereof, and
departments, courts, commissions, boards, bureaus, ministries, agencies, or
other instrumentalities of any of them.

(o)“Hazardous Material” means (a) any “hazardous substance,” as defined by
CERCLA; (b) any “hazardous waste” or “solid waste,” in either case as defined by
RCRA; or (c) any solid, hazardous, dangerous or toxic chemical, material, waste
or substance, within the meaning of and regulated by any Environmental Law.

(p)“Hydrocarbons” means crude oil, gas, casinghead gas, condensate, natural gas
liquids, and other gaseous or liquid hydrocarbons (including, without
limitation, ethane, propane, iso-butane, nor-butane, gasoline, and scrubber
liquids) of any type and chemical composition.

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

(r)“Material Adverse Effect” means (i) with respect to the Seller, any change,
effect, event or occurrence that, individually or in the aggregate, is or would
reasonably be expected to be materially adverse to the ownership or operation of
the Assigned Interests, taken as a whole, or to the ability of the Seller to
consummate the transactions contemplated by this Agreement, including any
post-closing obligations, or (ii) with respect to the Purchaser, any change,
effect, event or occurrence that, individually or in the aggregate, is or would
reasonably be expected to be materially adverse to the ability of the Purchaser
to consummate the transactions contemplated by this Agreement, including any
post-closing obligations; provided that none of the following shall be deemed to
constitute, and none of the following shall be taken into account in determining
whether there has been, a Material Adverse Effect: (a) any change, effect, event
or occurrence arising from or relating to (1) general business or economic
conditions in the industries or markets related to the Assigned Interests, (2)
seasonal reductions in revenues and/or earnings of the Assigned Interests in the
ordinary

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course of business, (3) national or international political, diplomatic or
military conditions, including any engagement in hostilities, whether or not
pursuant to a declaration of war, or the occurrence of any military or terrorist
attack, (4) changes in GAAP or other accounting principles or changes in Laws,
(5) the taking of any action required by this Agreement, or (6) any failure of
Seller to take any action referred to in Section 6.3 that requires the consent
of the Purchaser due to Purchaser’s unreasonable withholding of its consent or
unreasonable delaying its consent; provided that none of the changes, effects,
events or occurrences described in clauses (1) and (3) have a materially
disproportionate effect on the Seller or the Assigned Interests, or the
Purchaser as the case may be, relative to other similarly situated industry
participants and assets in the oil and gas industry, (b) any changes in prices
for commodities (including, without limitation, Hydrocarbons or products derived
therefrom), goods or services, or the availability or costs of hedges, (c) any
set of facts, occurrence or condition that is specified in the exhibits or
schedules attached to this Agreement, (d) the execution and delivery or
announcement of this Agreement, and (e) effects or changes that are cured or no
longer exist by the earlier of the Closing or the termination of this Agreement
pursuant to Article 10.  

(s)“Material Contract” means, to the extent relating to the Assigned Interests,
any Contract that is one or more of the following types:

(i)Contracts with any Affiliate of the Seller;

(ii)to the extent that Seller is selling its share of Hydrocarbons directly to a
third party, rather than either selling to the operator (or having the operator
market or sell its share) under the applicable joint operating
agreement--  Contracts for the sale, purchase, exchange, or other disposition of
Hydrocarbons which are not cancelable without penalty on sixty (60) days prior
written notice;

(iii)Contracts to sell, lease, farmout, exchange, or otherwise dispose of all or
any part of the Assigned Interests (including Contracts that contain
preferential purchase rights, rights of first offer, and tag-along rights
relating directly to the Assigned Interests to be sold), but excluding
conventional rights of reassignment upon intent to abandon or release a Well or
Lease;

(iv)Contracts that are or include joint operating agreements, unit operating
agreements, unit agreements, exploration agreements, development agreements,
area of mutual interest agreements, or other similar agreements;

(v)Contracts that are or include non-competition agreements or any agreements
that purport to restrict, limit, or prohibit Seller from engaging in any line of
business or the manner in which, or the locations at which, Seller conducts
business, excluding preferential purchase rights, rights of first offer,
tag-along rights, area of mutual interest agreements or similar agreements;

1 Inclusion of this concept subject to Callon’s review of the
exhibits/schedules.

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(vi)Contracts for the gathering, treatment, processing, storage, or
transportation of Hydrocarbons relating to the Assigned Interests;

(vii)Contracts that are indentures, mortgages or deeds of trust, loans, credit
or note purchase agreements, sale lease-back agreements, guaranties, letters of
credit, or similar financial agreements;

(viii)Contracts for the construction and installation or rental of equipment,
fixtures, or facilities with guaranteed production throughput requirements or
demand charges or which cannot be terminated by Seller without penalty on sixty
(60) days or less notice;

(ix)Contracts that would obligate Purchaser to drill additional wells or conduct
other material development operations after Closing;

(x)Contracts providing for a call upon, option to purchase or similar rights
with respect to the Assigned Interests or the production therefrom or the
processing thereof;

(xi)executory Contracts that are pending purchase and sale agreements or other
contracts providing for the purchase, sale or earning of any Assigned Interest;
or

(xii)Contracts, excluding the Leases, Hydrocarbon sales Contracts and joint
operating agreements, that could reasonably be expected to result in
(A) aggregate payments by Seller (net to the interest of Seller) during the
current or any subsequent calendar year of more than ONE HUNDRED THOUSAND AND
NO/100 DOLLARS ($100,000.00); or (B) revenues (net to the interest of Seller) of
more than ONE HUNDRED THOUSAND AND NO/100 ($100,000.00) during the current or
any subsequent calendar year.

(t)“Other Co-Sellers” means co-interest owners in the Assets, other than Seller,
who have entered into (or prior to Closing will have entered into) one or more
other purchase and sale agreements with Purchaser to sell some or all of their
interests in the Assets.

(u)“Operator” means Henry Resources LLC.

(v)“Operator Resignation and Transition Agreement” means that certain Operator
Resignation and Transition Agreement, dated as of August 29, 2014, by and
between Operator and Purchaser, in the form provided to Seller by email on
August 28, 2014.

(w)“Person” means any individual, corporation, partnership, limited liability
company, association, joint stock company, joint venture, unincorporated
organization, trust, estate, Governmental Authority, or any other entity.

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(x)“Production Tax” means Taxes measured by units of production and severance
Taxes, but excluding Property Taxes.

(y)“Property Costs” means all operating expenses (including costs of insurance,
rentals, shut-in payments, Production Taxes attributable to production of
Hydrocarbons from the Assigned Interests, but excluding Seller’s other Taxes)
and capital expenditures (including bonuses, and other Lease acquisition costs,
costs of drilling and completing wells, and costs of acquiring equipment)
incurred in the ownership and operation of the Assigned Interests in the
ordinary course of business, and overhead costs that may be charged to the
Assigned Interests under the applicable operating agreement and any other cost
that may be charged to the Assigned Interests under the applicable operating
agreement, or otherwise attributable to the ownership or operation of the
Assigned Interests, but excluding (without limitation) liabilities, losses,
costs, and expenses attributable to:

(i)claims, investigations, administrative proceedings, arbitration or litigation
directly or indirectly arising out of or resulting from actual or claimed
personal injury or other torts, illness or death; property damage (other than
damage to structures, fences, irrigation systems and other fixtures, crops,
livestock, and other personal property in the ordinary course of business);

(ii)violation of any Law (or private cause or right of action under any Law);

(iii)environmental damage or liabilities, including obligations to remediate any
contamination of groundwater, surface water, soil, sediments, or Equipment under
applicable Environmental Law;

(iv)title and environmental claims (including claims that Leases have
terminated);

(v)claims of improper calculation or payment of royalties (including overriding
royalties and other burdens on production) related to deduction of
post-production costs or use of posted or index prices or prices paid by
Affiliates;

(vi)gas balancing and other production balancing obligations;

(vii)Casualty Loss; and

(viii)any claims for indemnification, contribution, or reimbursement from any
third Person with respect to liabilities, losses, costs, and expenses of the
type described in preceding clauses (i) through (vii), whether such claims are
made pursuant to contract or otherwise.

(z)“Property Tax” means ad valorem, property, excise, and similar Taxes,
excluding, however, Production Taxes, sales, use and similar transfer Taxes, and
Taxes based upon, measured by, or calculated with respect to (i) net income,
profits, capital or

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similar measures, (ii) multiple bases (including corporate, franchise, business
and occupation, business license, or similar Taxes) if one or more of the bases
on which such Tax is based, measured or calculated is described in subparagraph
(i), above, in each case, together with interest, penalties or additions to such
Tax.

(aa)“Tax” means all taxes, including any foreign, federal, state, or local
income tax, surtax, remittance tax, presumptive tax, net worth tax, special
contribution, production tax, pipeline transportation tax, freehold mineral tax,
value added tax, withholding tax, gross receipts tax, windfall profits tax,
profits tax, severance tax, personal property tax, real property tax, sales tax,
goods and services tax, service tax, transfer tax, use tax, excise tax, premium
tax, stamp tax, motor vehicle tax, entertainment tax, insurance tax, capital
stock tax, franchise tax, occupation tax, payroll tax, employment tax,
unemployment tax, disability tax, alternative or add-on minimum tax, and
estimated tax, duties, fees, or other charges imposed by a Governmental
Authority together with any interest, fine, penalty, or additional amount
thereon, and including any obligation to assume or succeed to the tax liability
of another Person, whether by Law, contract, or otherwise.

1.3     Excluded Assets.  Notwithstanding anything to the contrary in
Section 0(d) or elsewhere in this Agreement, the “Assets” shall not include any
rights with respect to any Excluded Assets.  “Excluded Assets” means all assets,
properties, and business of Seller other than the Assets, including the
following:

(a)the Excluded Records;

(b)copies of other Records retained by Seller pursuant to Section 0;

(c)Assets excluded from this Agreement pursuant to Section 0,  0 or 0 and, if
applicable, Section 0;

(d)all trademarks and trade names;

(e)all of Seller’s interests in office leases and buildings, other than field
offices and buildings located within the parameters of the Properties (if any);

(f)any Tax refund or loss carry-forward (whether by payment, credit, offset,
abatement, or otherwise, and together with any interest thereon) in respect of
any Taxes for which Seller is liable for payment under Section 0;

(g)all indemnities and other claims against Persons (other than Seller and/or
its Affiliates) for Taxes for which Seller or its Affiliates are liable for
payment under Section 0;

(h)revenues associated with all joint interest audits and other audits of
Property Costs or Property Taxes to the extent covering periods prior to the
Effective Date;

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(i)All owned, proprietary or licensed seismic or other geophysical data, rights
or interests;

(j)all futures, options, swaps, and other derivatives;

(k)all rights, interests, and claims that Seller may have under any policy of
insurance or indemnity, surety bond or any insurance or recoveries from any
third Person to the extent relating to property damage or casualty loss
affecting the Assigned Properties occurring prior to the Effective Date;

(l)except for claims constituting Assumed Obligations, all other claims, whether
in contract, in tort, or arising by operation of law, and whether asserted or
unasserted as of the Closing Date, that the Seller may have against any Person
arising out of acts, omissions, or events, or injury to or death of persons or
loss or destruction of or damage to property, to the extent relating in any way
to the Assigned Properties that occurred prior to the Effective Date; provided,
however, that no such claim may be settled, compromised, or otherwise resolved
in a manner that results in an obligation borne by Purchaser on and after the
Effective Date without the prior written consent of Purchaser;

(m)all claims of the Seller for any tax refunds and loss carry-forwards and
carry-backs with respect to any taxes relating to the Assigned Properties for
periods prior to the Effective Date;

(n)all audit rights and all amounts due or payable to the Seller as refunds,
adjustments, or settlements of disputes arising under the Assigned Properties or
any Material Contract for periods prior to the Effective Date;

(o)all right, title and interest of Seller in and to the Assets which are not
included in the Assigned Interests, including, but not limited to, royalty
interests, overriding royalty interests and other non-cost bearing interests
owned by Seller in the Leases and Lands as of the Effective Date; and

(p)all other interests, rights, property, and assets of the Seller which are
specifically described on Schedule 1.3. 

ARTICLE 2
PURCHASE PRICE AND DEPOSIT

2.1     Purchase Price and Deposit. 

(a)The purchase price for the Assigned Interests shall be SIX MILLION EIGHT
HUNDRED FIFTY SEVEN THOUSAND ONE HUNDRED FORTY-TWO AND NO/100 DOLLARS
($6,857,142) (the “Unadjusted Purchase Price”), adjusted as provided in
Section 2.2 or otherwise pursuant to this Agreement (the “Purchase Price”).

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(b)Purchaser shall, within one (1) Business Day after execution of this
Agreement, deliver to Seller the sum equal to five percent (5%) of the
Unadjusted Purchase Price, via wire transfer of immediately available funds (the
“Deposit”).  The Deposit, together with interest, if any, earned on the Deposit
while held by Seller, will be credited to the Purchase Price at Closing, and is
not refundable except as provided in Article 10.  The interest earned on the
Deposit shall become part of the Deposit and shall be paid to the party entitled
to the Deposit in accordance with the terms hereto.

2.2     Adjustments to Purchase Price.  The Unadjusted Purchase Price shall be
adjusted at Closing (and adjusted as contemplated in Section 8.4, if necessary,
in accordance with the Final Settlement Statement) as follows (without
duplication), with all such amounts, to the extent applicable, being determined
in accordance with Accounting Procedures and COPAS standards (in the event such
procedures and standards apply to such amounts):

(a)Decreased or increased, as appropriate, in accordance with Section 0;

(b)Decreased as a consequence of Assigned Interests excluded from the
transactions contemplated by this Agreement as set forth in Sections 0, 0,  0,
or 0;

(c)Decreased by the amount of royalty, overriding royalty, and other burdens
payable out of production of Hydrocarbons from the Assigned Properties or the
net proceeds thereof to third Persons but held in suspense by Seller at the
Closing, and any interest accrued in escrow accounts for such suspended funds,
to the extent such funds are not transferred to Purchaser’s control at the
Closing; 

(d)Decreased (for amounts owed by Seller to any third Person) or increased (for
amounts owed by any third Person to Seller)  (i) in the case of gaseous
Hydrocarbons attributable to the Assigned Properties, on the basis of $6.30 per
Mcf multiplied by the amount of the imbalance in MMBtu; (ii) in the case of
liquid Hydrocarbons attributable to the Assigned Properties, on the basis of
$93.47 per barrel multiplied by the amount of the imbalance in barrels; or
(iii) by an amount agreed to in writing by the Parties.

(e)Increased by the aggregate amount of merchantable Hydrocarbon inventories
from the Assigned Properties in storage on the Effective Date and produced for
the account of Seller with respect to the Assigned Properties prior to the
Effective Date, as set forth on Schedule 2.2, multiplied by the Contract price
therefor, or, if there is no applicable Contract the amount set forth in
Section 2.2(d);

(f)Increased, or decreased, as applicable, by the net amount of all prepaid
expenses (including prepaid Production Taxes; bonuses; rentals; cash calls to
third Person operators; and scheduled payments),  less all third Person cash
call payments received by Seller, in each case, to the extent applying to the
ownership or operation of the Assigned Interests from and after the Effective
Date (to the extent retained by Seller and not paid over to Purchaser);

(g)Adjusted for net proceeds and other income attributable to the Assigned
Interests and Property Costs attributable to the Assigned Interests as follows:

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(i)Decreased by an amount equal to the aggregate amount of the following net
proceeds received by Seller (to the extent retained by Seller and not paid over
to Purchaser):    amounts earned from the sale, during the period from and
including the Effective Date through and including the Closing Date (the
“Adjustment Period”), of Hydrocarbons produced from, or attributable or
allocable to, the Assigned Properties (net of any Property Costs paid by Seller
that are directly incurred with respect to such proceeds or in earning or
receiving thereof, and that are not otherwise reimbursed to Seller by a third
Person purchaser of production, and excluding the effects of any futures,
options, swaps, or other derivatives), and

(ii)Increased by an amount equal to the amount of all Property Costs which are
incurred in the ownership and operation of the Assigned Interests during the
Adjustment Period but paid by or on behalf of Seller or any of its Affiliates,
except in each case (A) any costs already deducted in the determination of
proceeds in Section 2.2(g)(i), and (B) Taxes.

(h)Decreased or increased, as appropriate, as otherwise expressly provided
pursuant to the terms and conditions of this Agreement or agreed by the Parties
in writing affected by such increase or decrease.

2.3     Procedures.

(a)For purposes of allocating production (and accounts receivable with respect
thereto), under Section 0,  (i) liquid Hydrocarbons shall be deemed to be “from
or attributable to” the Assigned Properties when they are produced into the tank
batteries related to each Well, and (ii) gaseous Hydrocarbons shall be deemed
“from or attributable to” the Assigned Properties when they pass through the
delivery point sales meters or similar meters at the point of entry into the
pipelines through which they are gathered or transported from the applicable
Assigned Property. Seller shall utilize reasonable interpolative procedures to
arrive at an allocation of production when exact meter readings are not
available.  Seller shall use commercially reasonable efforts to obtain the same
from the Operator under the applicable operating agreement and, solely to the
extent that Seller has received the same from the Operator, Seller shall provide
to Purchaser, no later than five (5) Business Days prior to Closing, all
reasonably requested data in its possession to support any allocation of
production.  Until one (1) Business Day before the Closing, Purchaser shall have
the opportunity to review and discuss such allocation with Seller; provided,
however, Seller shall not be required to make any change thereto to which Seller
does not agree and the Parties shall resolve such matters in connection with the
settlement of the Purchase Price in accordance with Section 8.4(b).

(b)Surface or facility use or sharing fees, insurance premiums, and other
Property Costs that are paid periodically shall be prorated based on the number
of days in the applicable period falling before the Effective Date, or on or
after the Effective Date but prior to the Closing Date.  Production Taxes shall
be prorated based on the amount of

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Hydrocarbons actually produced, purchased or sold, as applicable, prior to, and
on or after, the Effective Date.

(c)After Closing, each Party shall be entitled to participate in all joint
interest audits and other audits of Property Costs for which such Party is
responsible or revenues to which such Party is entitled (whether entirely or in
part) under the terms of Section  0.

(d)All adjustments and payments made pursuant to this Article 2 shall be without
duplication of any other amounts paid or received under this
Agreement.  “Earned” and “incurred,” as used in Sections 0, shall be interpreted
in accordance with the Accounting Procedures.

2.4     Withholding

. Purchaser shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any Seller such amounts as
Purchaser is required to deduct and withhold under the Code, or any tax law,
with respect to the making of such payment. Any such withholdings, in order to
be withheld by Purchaser, shall be identified on the Preliminary Settlement
Statement to be submitted by Seller in accordance with Section 8.4(a). To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the Person in respect of
whom such deduction and withholding was made.

ARTICLE 3
CERTAIN TITLE AND ENVIRONMENTAL MATTERS

3.1     Seller’s Title.    

(a)The provisions of this Article 3 and the special warranty of title in the
Assignment and Bill of Sale provide Purchaser’s exclusive remedy with respect to
any Title Defects.

(b)The Assignment and Bill of Sale to be executed and delivered by the Parties
at Closing shall be in the form attached as Exhibit B, and shall contain a
special warranty of title to the Leases shown on Exhibit A-1 by, through, and
under Seller, but not otherwise, subject to the Permitted Encumbrances.

3.2     Definition of Defensible Title.

(a)As used in this Agreement, the term “Defensible Title” means that title of
Seller which, subject to the Permitted Encumbrances:

(i)entitles Seller to receive (after satisfaction of all royalties, overriding
royalties, nonparticipating royalties, net profits interests, or other similar
burdens on or measured by production of Hydrocarbons), not less than the “net
revenue interest” share shown in Schedule 3.4 of all Hydrocarbons produced from
a Well;

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(ii)obligates Seller to bear a percentage of the costs and expenses for the
maintenance and development of, and operations relating to, any Well not greater
than the “working interest” shown in Schedule 3.4, unless there is a
proportionate increase in the net revenue interest attributable thereto; and

(iii)with respect to any Assigned Property, is free and clear of liens, claims,
encumbrances, security interests, pledges and other defects adversely affecting
a Seller’s title, except to the extent of any Permitted Encumbrances.

(b)As used in this Agreement, an Assigned Property shall be deemed to have a
“Title Defect” if the Assigned Property is subject to a condition which causes
Seller to not have Defensible Title thereto. As used in this Agreement, the term
“Title Benefit” means any right, circumstance, or condition that operates to
(i) increase the net revenue interest of Seller in any Well above that shown on
Schedule 3.4, without causing a proportionate (or greater) increase in Seller’s
(and Purchaser’s, as successor in interest to Seller) working interest above
that shown in Schedule 3.4, or (ii) decrease the working interest of Seller in
any Assigned Property below that shown on Schedule 3.4 without causing a
decrease in Seller’s net revenue interest.

3.3     Definition of Permitted Encumbrances.  As used in this Agreement, the
term “Permitted Encumbrances” means any or all of the following:

(a)lessors’ royalties and any overriding royalties, reversionary interests,
back-in interests, and other burdens to the extent that they do not,
individually or in the aggregate, reduce the Seller’s (or Purchaser’s, as
successor in interest to Seller) net revenue interest below that shown in
Schedule 3.4 or increase the Seller’s (or Purchaser’s, as successor in interest
to Seller) working interest above that shown in Schedule 3.4 without a
corresponding and proportionate increase in the net revenue interest;

(b)the terms and provisions of all Leases, unit agreements, pooling agreements,
operating agreements, Contracts, including provisions for penalties,
suspensions, or forfeitures contained therein, to the extent that they do not,
individually or in the aggregate, reduce Seller’s (or Purchaser’s, as successor
in interest to Seller) net revenue interest below that shown in Schedule 3.4 or
increase Seller’s (or Purchaser’s, as successor in interest to Seller) working
interest above that shown in Schedule 3.4 without a corresponding and
proportionate increase in the net revenue interest;

(c)rights of first refusal, tag-along rights, preferential rights to purchase,
and similar rights with respect to the Assigned Interests (provided that each of
the foregoing shall still be subject to, as applicable, Sections 3.11,  3.13 and
3.14 of this Agreement);

(d)third-Person consent requirements and similar restrictions (i) that are not
applicable to the sale of the Assigned Interests contemplated by this Agreement,
(ii) for which unconditional waivers or consents required under Section 3.12 are
obtained from the appropriate Persons prior to the Closing Date, or (iii) to the
extent relating to

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Excluded Records or other Excluded Assets (provided that each of the foregoing
shall still be subject to Sections 3.11 and 3.12 of this Agreement);

(e)liens for current taxes not yet due and payable;

(f)materialman’s, mechanic’s, repairman’s, employee’s, contractor’s, operator’s,
and other similar liens or charges arising in the ordinary course of business
for amounts not yet delinquent;

(g)all rights to consent, by required notices to, filings with, or other actions
by Governmental Authorities in connection with the sale or conveyance of the
Leases or rights or interests therein if they are customarily obtained
subsequent to the sale or conveyance and if such Governmental Authority is,
pursuant to applicable Law, without discretion to refuse to grant such consent
if specifically enumerated conditions set forth in such applicable Law are
satisfied;

(h)rights of reassignment arising upon final intention to abandon or release the
Assigned Interests, or any of them, including reassignment upon the surrender or
expiration of any Leases (including, without limitation, with regard to any
continuous drilling clauses or “Pugh” clauses, whether vertical or horizontal);

(i)easements, rights-of-way, covenants, servitudes, permits, surface leases and
other rights to use the surface, and other rights in respect of surface
operations to the extent that they do not materially adversely affect the use
and operation of the Assigned Interests in manner currently used and operated;

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

(k)depth severances or any other change in the working interest or net revenue
interest of Seller with depth to the extent that they do not, individually or in
the aggregate, reduce Seller’s (or Purchaser’s, as successor in interest to
Seller) net revenue interest below that shown on Schedule 3.4 or increase
Seller’s (or Purchaser’s, as successor in interest to Seller) working interest
beyond that shown on Schedule 3.4 without a corresponding and proportionate
increase in net revenue interest;

(l)lack of a survey of the surface of the Assigned Properties, unless a survey
is required by Law;

(m)liens, security interests, deeds of trust, pledges, mortgages or security
interests burdening lessor’s interests under a Lease to the extent that the
foregoing do not detract in any material respect from the value of, or interfere
in any material respect with the use, ownership or operation of, the Assigned
Interests subject thereto or affected

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thereby (as currently used, owned and operated) and which would be considered
acceptable by a reasonably prudent purchaser engaged in the business of owning
and operating oil and gas properties;

(n)liens, security interests, deeds of trust, pledges, mortgages or security
interests burdening lessor’s interests under a Lease, insofar as there is not a
Well on the Lease; and if there is a Well on such Lease, then only to the extent
that such liens, security interests, deeds of trust, pledges, mortgages or
security interests have been subordinated to such Lease;

(o)all liens, security interests, deeds of trust or pledges to be released at
Closing pursuant to release documents in form and substance reasonably
satisfactory to Purchaser; and

(p)defects or irregularities in the chain of title consisting of the failure to
recite marital status in documents or omissions of successions of heirship or
estate proceedings, unless Purchaser provides affirmative evidence that such
failure or omission could reasonably be expected to result in another Person’s
superior claim of title to the relevant Assigned Interest.

3.4     Allocated Values.  Schedule 3.4 sets forth the agreed allocation of the
Unadjusted Purchase Price among the Assigned Interests. The “Allocated Value”
for any Assigned Property equals the portion of the Unadjusted Purchase Price
that is allocated to such Assigned Property on Schedule 3.4 in accordance with
Section 1060 of the Code and the Treasury Regulations promulgated thereunder
(and any similar provision or state, local or foreign law, as appropriate),
increased or decreased by a share of each adjustment to the Unadjusted Purchase
Price under Sections 2.2(c), (d), (e), (f), and (g). Seller and Purchaser agree
that the Unadjusted Purchase Price shall be allocated among the Assigned
Interests as set forth on Schedule 3.4 for the purpose of (i) giving notices of
value to the owners of any preferential rights to purchase the Assigned
Interests, and (ii) determining the value of a Title Defect, and certain
adjustments related to Environmental Defects, for purposes of adjusting the
Unadjusted Purchase Price.  Seller and Purchaser acknowledge such Allocated
Values for purposes of this Agreement and the transaction contemplated hereby,
but otherwise make no representation or warranty as to the accuracy of such
values.  Seller and Purchaser shall file all Tax Returns (including, but not
limited to, Internal Revenue Service Form 8594) consistent with the Allocated
Values as set forth on Schedule 3.4.  Seller and Purchaser further agree that,
except when required by applicable Laws, neither they nor their Affiliates will
take positions inconsistent with such Allocated Values, as adjusted, in notices
to any applicable taxing or governmental authority, in audit or other
proceedings with respect to taxes, or in other documents or notices relating to
the transaction contemplated by this Agreement; provided, however, that neither
Party shall be unreasonably impeded in its ability and discretion to negotiate,
compromise and/or settle any Tax audit, claim or similar proceedings using
values different than the Allocated Values, as updated and adjusted, and, if
values different than such Allocated Values are utilized by a Party, to
negotiate, compromise and/or settle any Tax audit, claim or similar proceeding,
written notice describing the circumstances and amount of such deviation shall
be provided by such Party to the other Parties.

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3.5     Environmental Assessment; Environmental Defects.

(a)Subject to Purchaser’s first obtaining a separate access agreement with the
third-party operator of the Assigned Interests to permit the same (which Seller
shall use commercially reasonable efforts to assist Purchaser in obtaining),
from and after the date of this Agreement, Purchaser and its officers,
directors, employees, agents, authorized representatives, contractors,
consultants, and other advisers would have the right to conduct, or Purchaser
may cause a reputable environmental consulting or engineering firm (the
“Environmental Consultant”), to conduct, an environmental review of the Assigned
Properties (the “Environmental Review”), which may include a Phase I
environmental property assessment that satisfies the basic assessment
requirements set forth under the current American Society for Testing and
Material Standard Practice for Phase I environmental property assessments
(Designation E1527-05) (the “Phase I Assessment”).  Purchaser shall not be
entitled to conduct any sampling, boring, or other invasive activity without the
prior written consent of Seller and any applicable third Person operator (and
Seller shall use commercially reasonably efforts to request  such consent from
the operator, but cannot guaranty that such approval would be
obtained).  Seller’s consent shall not be unreasonably withheld.  Purchaser
shall provide Seller with copies of any environmental reports generated by the
Environmental Consultant.  Except (i) as may be required or permitted pursuant
to the exercise of the rights and fulfillment of the obligations of a Party
under this Agreement, (ii) as may be required by applicable Law, or (iii) for
information which is or becomes public knowledge through no fault of Purchaser,
Environmental Consultant (or any of its or their respective officers, directors,
employees, agents, authorized representatives, contractors, consultants, and
other advisers), Purchaser and its Affiliates shall maintain, and shall cause
their respective officers, directors, employees, agents, authorized
representatives, contractors, consultants (including the Environmental
Consultant), and other advisors to maintain all information, reports (whether
interim, draft, final, or otherwise), data, work product, and other matters
obtained or generated from or attributable to the Environmental Review (the
“Environmental Information”)  as strictly confidential, and shall not disclose
all or any portion of the Environmental Information to any third Person without
the consent of Seller, as applicable, which consent shall not be unreasonably
withheld or delayed.  Each Party shall be responsible for the compliance of its
Affiliates, and its and their respective officers, directors, employees, agents,
authorized representatives, contractors, consultants (including the
Environmental Consultant), and other advisors with the immediately preceding
sentence.

(b)As used in this Agreement, the term “Environmental Defect” means any
condition, matter, obligation, circumstance with respect to the Assigned
Interests that (i) constitutes, or arises from, or relates to, a violation of
Environmental Law; or (ii) represents environmental pollution, contamination,
degradation, damage or injury caused by or related to an Assigned Interest for
which remedial or corrective action is presently required (or if known, would be
required) under Environmental Laws or the terms of any applicable Lease;
provided, however, that “Environmental Defect” shall not include any of the
following: (a) the existence of NORM, or (b) any matters disclosed in Schedule
4.10.

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3.6     Notice of Title and Environmental Defects and Benefits; Adjustment.

(a)Unless Seller and Purchaser mutually agree in writing to a different date, in
order to assert a claim for Title or Environmental Defects, Purchaser must
deliver a defect claim notice or notices to Seller on or before 5:00 p.m. local
time in Midland, Texas on September 26, 2014 (the “Defect Claim Date”).  Each
such notice shall be in writing and shall include:

(i)a description of the alleged Title or Environmental Defect(s);

(ii)the Assigned Property or Assigned Properties affected;

(iii)the Allocated Values of the Assigned Property or Assigned Properties
subject to the alleged Title or Environmental Defect(s);

(iv)such supporting documentation as is available to Purchaser and is reasonably
necessary for Seller (as well as any attorney, examiner or consultant hired by
Seller) to verify the existence of the alleged Title or Environmental Defect(s)
and the Title Defect Amount or Environmental Defect Amount; and

(v)an estimate of the Title Defect Amount or Environmental Defect Amount
associated with the alleged Title or Environmental Defect(s) and the
computations and information upon which Purchaser’s belief is based.

Purchaser shall be deemed to have waived all TITLE DEFECTS AND, subject to
Seller’s indemnity obligations in article 11 BASED ON THE REPRESENTATIONS IN
SECTION 4.10, ALL ENVIRONMENTAL DEFECTS of which SELLER has not been given
notice on or before the DEFECT Claim Date.  

(b)To assert a claim for or with respect to a Title Benefit, Seller shall, as
soon as practicable, but in any case on or before the Defect Claim Date, deliver
to Purchaser a notice including:

(i)a description of the Title Benefit;

(ii)the Assigned Properties affected;

(iii)the Allocated Values of the Assigned Properties subject to such Title
Benefit;

(iv)such supporting documentation as is reasonably necessary for Purchaser (as
well as any attorney or examiner hired by Purchaser) to verify the existence of
the alleged Title Benefit(s); and

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(v)the amount by which Seller reasonably believes the Allocated Values of those
Assigned Properties are increased by the Title Benefit, and the computations and
information upon which Purchaser’s belief is based.

Seller shall be deemed to have waived all Title Benefits of which seller has not
given notice on or before the Defect Claim Date.

3.7     Cure.

(a)Until two (2) Business Days prior to the Closing (the “Cure Date
Pre-Closing”), Seller shall have the right, but not the obligation, to attempt,
at Seller’s sole cost, risk, and expense, to cure any alleged Title Defects or
Environmental Defects of which Seller has been advised by Purchaser pursuant to
Section 0. Seller’s election to cure an alleged Title Defect or Environmental
Defect shall not constitute a waiver of any of the rights of Seller pursuant to
this Article 3, including Seller’s right to dispute the existence, nature, or
value of such Title Defect or Environmental Defect. To the extent Seller has
cured or remediated an alleged Title or Environmental Defect with respect to an
Assigned Property prior to the Cure Date Pre-Closing (and any dispute as to
whether the same has been cured shall be resolved pursuant to the dispute
resolution provisions described in Section 3.10), the affected Assigned Property
shall be assigned by Seller to Purchaser at Closing and shall be treated as if
it was not subject to a Title or Environmental Defect.    In addition, if Seller
provides written notice to Purchaser no later than two calendar days prior to
Closing of their desire to attempt to cure such alleged Title Defects or
Environmental Defects after the Closing, Seller shall have the right, but not
the obligation, to attempt, at Seller’s sole cost, risk, and expense, to cure
such alleged Title Defects or Environmental Defects during the period of time
from the Closing Date, until the date that is 90 days after the Closing Date
(the “Cure Date Post-Closing”). The Assigned Interests affected by any Title
Defect or Environmental Defect for which Seller has notified Purchaser that
Seller would like to retain the right to cure after Closing (or which is the
subject of a dispute under Section 3.10), shall be withheld from the Assigned
Interests conveyed to Purchaser at Closing.  To the extent Seller has cured or
remediated an alleged Title or Environmental Defect with respect to an Assigned
Property after Closing but prior to the Cure Date Post-Closing (and any dispute
as to whether the same has been cured shall be resolved pursuant to the dispute
resolution provisions described in Section 3.10), the affected Assigned Interest
shall be assigned by Seller to Purchaser (and Purchaser shall simultaneously pay
to Seller the Allocated Values therefor, subject to adjustments provided under
this Agreement related thereto) within three (3) Business Days after the date of
such cure (or resolution of any dispute with respect to such cure) and shall be
treated as if it was not subject to a Title or Environmental Defect, and any
adjustments that had been made with regard thereto at Closing in connection with
the Closing payment shall be re-paid to Seller in connection with the Final
Settlement Statement.  As applicable, the Cure Date Pre-Closing and the Cure
Date Post-Closing shall be referred to as the “Cure Date.”

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(b)If, on or before the Cure Date, Seller has not, completely cured or
remediated one or more of the applicable Title Defects or Environmental Defects
(and any dispute regarding whether the same has been cured, has been resolved
pursuant to the dispute resolution provisions described in Section 3.10) with
respect to an Assigned Property prior to the Cure Date, the Preliminary
Settlement Statement shall include a line item to reduce the Unadjusted Purchase
Price for the applicable Title Defect Amounts or Environmental Defect Amounts
(or portion thereof if partially cured) corresponding to those Title Defects or
Environmental Defects which have not been cured or remediated, subject to any
adjustments thereto in the Final Settlement Statement based on resolution of any
dispute regarding the same or pursuant to the mutual agreement of the parties.

(c)Any dispute relating to whether and to what extent a Title Defect or
Environmental Defect has been cured shall be resolved as set forth in Section 0,
except that any such matter shall be submitted to the Title Arbitrator or
Environmental Arbitrator, as applicable, on or before ten (10) Business Days
after the Cure Date; provided, however, that any prior or concurrent
determination by a Title Arbitrator or Environmental Arbitrator with respect to
Title Defects or Environmental Defects (or factual or legal matters relating
thereto, even if determined in connection with the resolution of an otherwise
unrelated dispute) which Seller has elected to cure pursuant to this Section 0
shall be binding on the Parties with respect to such Title Defect or
Environmental Defect (or factual or legal matters relating thereto, even if
determined in connection with the resolution of an otherwise unrelated dispute).

3.8     Adjustment for Title Defects and Benefits, and Environmental Defects.

(a)Each Assigned Interest affected by Title Defects or Environmental Defects
timely reported under Section 0 shall be assigned at Closing subject to all
uncured Title Defects and Environmental Defects and the Unadjusted Purchase
Price shall be reduced by (i) in the case of a Title Defect, an amount (the
“Title Defect Amount”) equal to the reduction in the Allocated Value for such
Assigned Property caused by such Title Defects, as determined pursuant to
Section 0 and (ii) in the case of an Environmental Defect, an amount (the
“Environmental Defect Amount”) determined pursuant to Section 0.

(b)With respect to each Assigned Property affected by Title Benefits reported
under Section 0, the Unadjusted Purchase Price shall be increased by an amount
(the “Title Benefit Amount”) equal to the increase in the Allocated Value for
such Assigned Property caused by such Title Benefits, as determined pursuant to
Section 0.

(c)WITHOUT LIMITING PURCHASER’S RIGHTS AND REMEDIES UNDER THE SPECIAL WARRANTY
OF TITLE IN THE ASSIGNMENT AND BILL OF SALE, ARTICLE 3 SHALL, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, BE THE EXCLUSIVE RIGHT AND REMEDY OF
PURCHASER WITH RESPECT TO TITLE DEFECTS.  SECTION 0 SHALL, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, BE THE EXCLUSIVE RIGHT AND REMEDY OF SELLER 

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WITH RESPECT TO TITLE BENEFITS.  WITHOUT LIMITING PURCHASER’S RIGHTS AND
REMEDIES PURSUANT TO ARTICLE 11 (SOLELY WITH REGARD TO REPRESENTATIONS AND
WARRANTIES UNDER SECTION 4.10), aRTICLE 3 SHALL, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, BE THE EXCLUSIVE RIGHT AND REMEDY OF PURCHASER WITH RESPECT
TO ENVIRONMENTAL DEFECTS AND THE ENVIRONMENTAL CONDITION OF THE ASSIGNED
PROPERTIES.  Further, Purchaser on its own behalf and on behalf of the Purchaser
Group, hereby releases, remises, and forever discharges Seller, the seller
group, and their respective Affiliates from any right of contribution or cost
recovery that Purchaser may have at common law or under Environmental Laws,
including the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended and the Texas Solid Waste Disposal Act, as amended.

3.9     Calculation of Title and Environmental Defect Amounts and Title Benefit
Amounts.

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

(i)if Purchaser and Seller agree in writing upon the Title Defect Amount, that
amount shall be the Title Defect Amount;

(ii)if the Title Defect is a lien, encumbrance, or other charge which will not
otherwise be released at Closing and which is liquidated in amount, then the
Title Defect Amount shall be the amount necessary to be paid to unconditionally
remove the Title Defect from Seller’s (and Purchaser’s as successor in interest
to Seller) interest in the affected Assigned Property, not to exceed, however,
the Allocated Value of the affected Assigned Properties;

(iii)if the Title Defect represents a discrepancy between (A) the net revenue
interest for any Assigned Property and (B) the net revenue interest stated on
Schedule 3.4, and the working interest for such Assigned Property has been
reduced proportionately, then the Title Defect Amount shall be the product of
the Allocated Value of such Assigned Property multiplied by a fraction, the
numerator of which is the decrease in Seller’s net revenue interest and the
denominator of which is Seller’s net revenue interest stated on Schedule 3.4;
 provided, however, that if the Title Defect does not affect the Assigned
Property throughout its entire life, the Title Defect Amount determined under
this Section 0 shall be reduced to take into account the applicable time period
only, provided that if a Title Defect that would otherwise qualify for valuation
under this Section 0 affects a horizontal well location, and in Purchaser’s sole
discretion, the Title Defect would cause Purchaser not to drill the well
associated with such

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horizontal well location, the Title Defect Amount for such Title Defect shall be
the Allocated Value of such horizontal well location, less the value agreed upon
between Seller and Purchaser for any vertical wells that are reasonably capable
of being located on the same acreage associated with said horizontal well
location;

(iv)if the Title Defect represents an obligation, encumbrance, burden, or charge
upon, or other defect in title to, the affected Assigned Property of a type not
described in subsections 0,  0, or 0, above, the Title Defect Amount shall be
determined by taking into account the Allocated Value of the Assigned Property
so affected (and may not exceed such Allocated Value), the portion of Seller’s
interest in the Assigned Property affected by the Title Defect, the legal effect
of the Title Defect, the potential economic effect of the Title Defect over the
life of the affected Assigned Property, the reasonable values placed upon the
Title Defect by Purchaser and Seller, and such other factors as are reasonably
necessary to make a proper evaluation;

(v)the Title Defect Amount with respect to a Title Defect shall be determined
without duplication of any costs or losses included in another Title Defect
Amount hereunder, to the extent such costs or losses generate an adjustment to
the Purchase Price; and

(vi)notwithstanding anything to the contrary in this Article 3:

(A)an individual claim (or series of related claims) for a Title Defect for
which a claim notice is given prior to the Defect Claim Date shall only generate
an adjustment to the Unadjusted Purchase Price under this Article 3 if the Title
Defect Amount with respect thereto exceeds FIFTY THOUSAND AND NO/100 DOLLARS
($50,000.00); 

(B)if the aggregate Title Defect Amounts and/or Environmental Defect Amounts
attributable to the effects of all Title Defects and Environmental Defects upon
any given Assigned Property shall exceed 50% of Allocated Value of such Assigned
Property, then Seller may, at its election and by written notice to Purchaser,
cause such Assigned Property to be excluded from this Agreement, in which case,
the affected Assigned Property shall constitute an Excluded Asset, the affected
Assigned Property shall be deemed to have been deleted from Exhibits A-1 and A-2
and Schedule 3.4 hereto, and the Purchase Price shall be reduced by the
Allocated Value thereof.  In the event Seller elects to treat a given Assigned
Property as an Excluded Asset due to the aggregate of all Title Defects and/or
Environmental Defects asserted by Purchaser against such Assigned Property,
Seller shall make such election and provide written notice of same to Purchaser
no later than two (2) Business Days prior to the Closing Date; 

(C)there shall be no adjustment to the Unadjusted Purchase Price for Title
Defects unless and until the aggregate of all Title Defect Amounts
and  Environmental Defect Amounts which generate an adjustment to the Unadjusted
Purchase Price pursuant to Section 3.9(a)(vi)(A) or Section 0 exceeds two
percent (2.0%) of the Unadjusted

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Purchase Price, and then only to the extent that such aggregate amount exceeds
two percent (2.0%) of the Unadjusted Purchase Price; and

(D)a Title Defect Amount may not exceed the Allocated Value of the affected
Assigned Properties or Assigned Interests.

(b)The Title Benefit Amount resulting from a Title Benefit shall be determined
as follows:

(i)if Purchaser and Seller agree in writing upon the Title Benefit Amount, that
amount shall be the Title Benefit Amount;

(ii)if the Title Benefit represents a discrepancy between (A) the net revenue
interest for any Assigned Property and (B) the net revenue interest or
percentage stated with respect to such Assigned Property on Schedule 3.4, the
Title Benefit Amount shall be the product of the Allocated Value of the affected
Assigned Property multiplied by a fraction, the numerator of which is the net
revenue interest increase and the denominator of which is the net revenue
interest stated on Schedule 3.4;  provided, however, that if the Title Benefit
does not affect an Assigned Property throughout the entire life of the Assigned
Property, the Title Benefit Amount determined under this Section 0 shall be
reduced to take into account the applicable time period only;

(iii)the Title Benefit Amount shall, in any case, be determined by taking into
account the Allocated Value of the Assigned Property so affected, the portion of
the Assigned Property and Seller’s (and Purchaser’s as successor in interest to
Seller) interest therein so affected, the legal effect of the Title Benefit, the
potential economic effect of the Title Benefit over the life of any affected
Assigned Property, the reasonable values placed upon the Title Benefit by
Purchaser and Seller, whether and to what extent the applicable instruments are
filed in the applicable county real property records and would constitute
constructive notice to third Persons of the existence thereof under applicable
Law, and such other factors as are necessary to make a proper evaluation;

(iv)the Title Benefit Amount with respect to a Title Benefit shall be determined
without duplication of any costs or losses included in another Title Benefit
Amount or adjustment to the Purchase Price; and

(v)notwithstanding anything to the contrary in this Article 3:

(A)an individual claim for a Title Benefit shall only generate an adjustment to
the Unadjusted Purchase Price if the Title Benefit Amount with respect thereto
exceeds FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00); and

(B)there shall be no adjustment to the Unadjusted Purchase Price for Title
Benefits unless and until the aggregate of all Title Benefit Amounts which would
generate an adjustment to the Unadjusted Purchase Price pursuant to
Section 3.9(b)(v)(A) 

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exceeds two percent (2.0%) of the Unadjusted Purchase Price, and then only to
the extent that such aggregate amount exceeds two percent (2.0%) of the
Unadjusted Purchase Price.  

(c)The Environmental Defect Amount resulting from an Environmental Defect shall
be determined as follows:

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

(ii)the Environmental Defect Amount shall include the amount required to remove
or remediate the Environmental Defect and otherwise rehabilitate or restore the
affected Assigned Interest or Assigned Property, such that it is in compliance
with Environmental Laws, in the most cost effective manner;

(iii)the Environmental Defect Amount with respect to an Environmental Defect
shall be determined without duplication of any costs or losses included in
another Environmental Defect Amount or adjustment to the Purchase Price; and

(iv)notwithstanding anything to the contrary in this Article 3:

(A)an individual claim for an Environmental Defect shall only generate an
adjustment to the Unadjusted Purchase Price if the Environmental Defect Amount
with respect thereto exceeds FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00); and

(B)there shall be no adjustment to the Purchase Price for Environmental Defects
unless and until the aggregate of all Title Defect Amounts and Environmental
Defect Amounts which would generate an adjustment to the Unadjusted Purchase
Price pursuant to Section 3.9(a)(vi)(A) or Section 0 exceeds two percent (2.0%)
of the Unadjusted Purchase Price, and then only to the extent that such
aggregate amount exceeds two percent (2.0%) of the Unadjusted Purchase Price. 

3.10     Dispute Resolution.

(a)Seller and Purchaser shall attempt to agree upon all Title Defects, Title
Defect Amounts, Title Benefits, Title Benefit Amounts, Environmental Defects and
Environmental Defect Amounts on or before the Closing Date (or with regard to
efforts to cure after Closing as contemplated in Section 3.7).  If Seller and
Purchaser are unable to agree by that date, then Seller’s good faith estimate
shall be used to determine the Closing Payment pursuant to Section 0, if any,
and the Title Defects, Title Defect Amounts, Title Benefits, Title Benefit
Amounts, Environmental Defects and Environmental Defect Amounts in dispute shall
be exclusively and finally resolved by arbitration pursuant to Section 0 with
respect to Title Defects, Title Defect Amounts, Title Benefits and Title Benefit
Amounts, and Section 0 with respect to Environmental Defects and Environmental
Defect Amounts.

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(b)With respect to the existence of Title Defects, Title Defect Amounts, the
existence of Title Benefits and Title Benefit Amounts, on or before a date that
is ten (10) Business Days following the Closing Date, Seller shall submit all
Title Defects, Title Defect Amounts, Title Benefits and Title Benefit Amounts in
dispute to a title attorney with at least ten (10) years’ experience in oil and
gas titles in the State of Texas, as selected by mutual agreement of Purchaser
and Seller (the “Title Arbitrator”).  If Purchaser and Seller have not agreed
upon an alternate Person to serve as Title Arbitrator during such ten (10)
Business Day period, Seller shall, within ten (10) Business Days after the end
of such initial ten (10) Business Day period, formally apply to the Houston,
Texas office of the American Arbitration Association to choose the Title
Arbitrator.  The Title Arbitrator shall not have worked as an employee or
outside counsel for any Party or its Affiliates during the five (5) year period
preceding the arbitration or have any financial interest in the dispute.  If
Seller has not submitted such Title Defect, Title Defect Amounts, Title Benefit
and/or Title Benefit Amounts in dispute to the Title Arbitrator or the Houston,
Texas office of the American Arbitration Association, as applicable, within the
relevant time period set forth above, Seller shall be deemed to have waived
their dispute of such Title Defect, Title Defect Amounts, Title Benefit and/or
Title Benefit Amounts. 

(c)With respect to the existence of Environmental Defects and the Environmental
Defect Amounts, on or before a date that is ten (10) Business Days following the
Closing Date, Seller shall submit all Environmental Defects and Environmental
Defect Amounts in dispute to a reputable environmental consultant or engineer
with at least ten (10) years’ experience in corrective environmental action
regarding oil and gas properties in the State of Texas, as selected by mutual
agreement of Purchaser and Seller (the “Environmental Arbitrator”).  If
Purchaser and Seller have not agreed upon a Person to serve as Environmental
Arbitrator during such ten (10) Business Day period, Seller shall, within ten
(10) Business Days after the end of such initial ten (10) Business Day period,
formally apply to the Houston, Texas office of the American Arbitration
Association to choose the Environmental Arbitrator. The Environmental Arbitrator
shall not have worked as an employee or outside counsel for any Party or its
Affiliates during the five (5) year period preceding the arbitration or have any
financial interest in the dispute.  If Seller has not submitted such disputed
Environmental Defect and/or Environmental Defect Amounts in dispute to the
Environmental Arbitrator or the Houston, Texas office of the American
Arbitration Association, as applicable, within the relevant time period set
forth above, Seller shall be deemed to have waived their dispute of such
Environmental Defect and/or Environmental Defect Amounts.

(d)In each case above, the arbitration proceeding shall be held in Houston,
Texas and shall be conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association, to the extent such rules do not
conflict with the terms of this Section 0.  The Title Arbitrator’s or
Environmental Arbitrator’s determination, as applicable, shall be made within
forty-five (45) days after submission of the matters in dispute and shall be
final and binding upon the Parties, without right of appeal. The Title
Arbitrator or Environmental Arbitrator, once appointed, shall have no ex parte
communications with any of the Parties concerning the determination required

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hereunder.  All communications between any Party or its Affiliates and the Title
Arbitrator or Environmental Arbitrator, as applicable, shall be conducted in
writing, with copies sent simultaneously to the other Party in the same manner,
or at a meeting or conference call to which the representatives of both Parties
have been invited and of which such Parties have been provided at least five (5)
days’ notice.  In making his determination, the Title Arbitrator or
Environmental Arbitrator shall be bound by the provisions of this Article 3 and
may consider such other matters as in the opinion of the Title Arbitrator or
Environmental Arbitrator, as applicable are necessary or helpful to make a
proper determination, provided, with respect to the determination of the
estimated cost of remedying any Title Defect or Environmental Defect, as
applicable, the Parties shall direct the Title Arbitrator or Environmental
Arbitrator, as applicable, that in no event shall the Title Defect Amount, or
Environmental Defect Amount be determined to be greater than the amount asserted
by Purchaser or less than the amount asserted by Seller, and in no event shall
the Title Benefit Amount be determined to be greater than the amount asserted by
Seller or less than the amount asserted by Purchaser. The Title Arbitrator or
Environmental Arbitrator may consult with and engage disinterested third Persons
to advise the arbitrator, including petroleum engineers.  The Title Arbitrator
and Environmental Arbitrator shall act as experts for the limited purpose of
determining the existence of any such Title Defect, Title Benefit or
Environmental Defect and/or the specific disputed Title Defect Amounts, Title
Benefit Amounts, or Environmental Defect Amounts, as applicable, submitted by
any Party and may not award damages, interest, or penalties to any Party with
respect to any matter.  Seller and Purchaser shall each bear their own legal
fees and other costs of presenting their respective cases.  Purchaser shall bear
one-half of the costs and expenses of the Title Arbitrator or Environmental
Arbitrator, as applicable, and Seller shall be responsible for the remaining
one-half of the costs and expenses.    

3.11     Notice to Holders of Consent, Preferential Purchase and Tag-Along
Rights; Notice to Working Interest Owners.    Within five (5) Business Days
after the date hereof, Seller send (a) notices to the holders of any required
consents to assignment that are set forth on Schedule 4.7 requesting consents to
the transactions contemplated by this Agreement, (b) notices to the holders of
any applicable preferential rights to purchase or similar rights that are set
forth on Schedule 4.7 in compliance with the terms of such rights and requesting
waivers of such rights, and (c) notices to the holders of any tag-along rights
that are set forth on Schedule 4.7 requesting such rights be exercised on the
same terms and conditions as this Agreement.  Purchaser shall cooperate with any
reasonable request made by Seller with respect to obtaining such consents,
approvals, permissions, and waivers.    

3.12     Consent Requirements.

(a)Seller shall deliver a written notice to Purchaser on or before Closing
setting forth each consent requirement which, as of such date, has not been
unconditionally satisfied or waived.  In no event shall there be transferred at
Closing any Assigned Interest for which a consent requirement has not been
satisfied and for which transfer is prohibited or a fee is payable (unless such
fee has been paid by Purchaser) without the consent, other than consents and
approvals of Governmental Authorities

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customarily obtained after Closing (if such Governmental Authority is, pursuant
to applicable Law, without discretion to refuse to grant such consent if certain
specifically enumerated conditions set forth in such applicable Law are
satisfied).

(b)In cases in which the Assigned Interest subject to such an unobtained consent
is an Assigned Interest other than an Assigned Property, and Purchaser is
assigned the Assigned Property or Assigned Properties to which such Assigned
Interest relates, but such Assigned Interest is not transferred to Purchaser due
to the unwaived consent requirement, Purchaser and Seller shall continue after
Closing to use commercially reasonable efforts to obtain the consent so that
such Assigned Interest can be transferred to Purchaser upon receipt of the
consent, and, (i) there shall be no downward adjustment to the Unadjusted
Purchase Price relative to such Assigned Interest, (ii) if permitted pursuant to
applicable Law and agreement, such Assigned Interest shall be held by Seller for
the benefit of Purchaser, (iii) Purchaser shall pay all amounts and liabilities
due thereunder or with respect thereto (and Purchaser agrees to indemnify,
defend and hold harmless Seller with regard thereto), and (iv) Purchaser shall
be responsible for the performance of any obligations under or with respect to
such Assigned Interest.

(c)In cases in which the Assigned Interest subject to such a consent requirement
is an Assigned Property and the third Person consent to the transfer of such
Assigned Property is not obtained by Closing, Purchaser may elect to treat the
unsatisfied consent requirements as a Title Defect and receive the appropriate
adjustment to the Purchase Price under Section 0 (and such Assigned Interest
shall constitute an Excluded Asset, subject to the remainder of this Section 0)
by giving Seller written notice thereof in accordance with Section 0, except
that such notice may be given on or before the Closing Date, and the provisions
of Section 0 and the portion of Section 0 following the words “provided,
however,” shall not apply.  If any such consent requirement with respect to
which an adjustment to the Unadjusted Purchase Price is made under Section 0 is
subsequently satisfied prior to the date of the final adjustment to the
Unadjusted Purchase Price under Section 0, Seller shall be reimbursed in that
final adjustment for the amount of any previous deduction from the Unadjusted
Purchase Price, the relevant Assigned Property, if not previously transferred to
Purchaser, shall be transferred, and the provisions of this Section 0 shall no
longer apply to such consent requirement.  If such consent requirement is not
satisfied prior to the date of the final adjustment to the Purchase Price under
Section 0, subject to the remainder of this Section 3.12, the affected Assigned
Property shall be deemed to have been deleted from Exhibits A-1 and A-2 hereto
and shall constitute an Excluded Asset. 

(d)Notwithstanding anything to the contrary herein, Purchaser may (but shall not
be obligated to) request, at any time prior to the final determination of the
Purchase Price pursuant to Section 0, that Seller transfer to Purchaser any
Assigned Interest not transferred at Closing due to an unsatisfied or unwaived
consent requirement if such consent requirement does not provide that the
transfer of the affected Assigned Interest without satisfaction or waiver of the
consent requirement would be void, or would otherwise impair the affected
Assigned Interest or Seller’s or Purchaser’s title thereto. 

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Promptly after receipt of such a request, Seller shall, pursuant to an
assignment and bill of sale substantially in the form attached hereto as
Exhibit B, convey to Purchaser, effective as of the Effective Date, the affected
Assigned Interest; and Seller shall simultaneously with the delivery of the
conveyance (and as a condition precedent to delivery of the conveyance) be
reimbursed in the final adjustment for the amount of any previous deduction from
the Unadjusted Purchase Price; and Purchaser shall defend, indemnify, and hold
each member of the Seller Group harmless from and against all Damages arising
from the conveyance of such Assigned Interest without the satisfaction or waiver
of the consent requirement.

3.13     Preferential Purchase Rights.

(a)Any preferential purchase right must be exercised subject to all terms and
conditions set forth in this Agreement, including the successful Closing of this
Agreement pursuant to Article 8 on the dates certain set forth herein.  The
consideration payable under this Agreement for any particular Assigned Interest
for purposes of preferential purchase right notices shall be the Allocated Value
for such Assigned Interest, adjusted as set forth in this Agreement.

(b)If any preferential right to purchase any Assigned Interest is validly
exercised prior to Closing or the time for exercising a preferential purchase
right has not expired as of the Closing, the Assigned Interests (or portions
thereof) affected thereby shall constitute Excluded Assets and the Purchase
Price shall be decreased by the Allocated Value of the affected Assigned
Interests, and the affected Assigned Interests shall not be transferred at
Closing and shall constitute an Excluded Asset.

(c)In the event that a preferential purchase right with respect to an Assigned
Interest deleted and excluded from the transactions contemplated by this
Agreement at Closing pursuant to Section 0 is later waived prior to acquisition
from Seller, then:

(i)Purchaser shall, subject to its conditions precedent in Sections 0,  0,
7.2(c) and 7.2(e), purchase the affected Assigned Interest (or portion thereof)
on the terms set forth in this Agreement at a delayed closing which shall occur
within ten (10) Business Days following the date on which Seller obtains such
waiver, or the time period for exercising the applicable preferential right has
expired (which date shall, with respect to such Assigned Interest, or portion
thereof, be considered to be the Closing Date); and

(ii)Purchase Price adjustments calculated in the same manner as the adjustments
in Section 2.2 with respect to the affected Assigned Interest (or portion
thereof), if any, shall be calculated from the period from and after the
Effective Date to the date of the conveyance, and the net amount of such
adjustment, if positive, shall be paid by Purchaser to Seller, and, if negative,
by Seller to Purchaser.

3.14     Tag-Along Rights.    Purchaser acknowledges and agrees that certain of
the Assets (or Assigned Interests) may be subject to those certain tag-along
rights set forth on Schedule 4.7    

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(“Tag-Along Rights”) pursuant to which the holders of such rights (the “Tag
Parties”) may hold certain beneficial or record title interests in or related to
certain of the Assets.  To the extent Tag-Along Rights apply to this Agreement
with respect to, and only with respect to, the Assets (or Assigned Interests)
that are burdened by the Tag-Along Rights, within five (5) Business Days after
the execution hereof Seller shall deliver to the Tag Parties notices as required
under Section 3.11.  To the extent any Tag Parties validly exercise any options
they may have under their Tag-Along Rights to sell any interest in or related to
the Assets, then Purchaser shall purchase such interests on or after Closing in
accordance with the terms hereof and in accordance with the Tag-Along Rights,
and shall make all payments and execute and deliver all agreements and
instruments required under the terms of the Tag-Along Rights or otherwise
reasonably necessary for Purchaser to acquire all such interests of the Tag
Parties in or related to the Assigned Interests.      

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER

This Article 4 and the other terms and conditions of this Agreement, the Seller,
as of the date hereof and by the terms hereof, represents and warrants to
Purchaser the matters set out in Sections 0 through 0:

4.1     Seller.    

(a)Seller is a limited partnership that is duly organized, validly existing, and
in good standing under the laws of the State of Texas, and is duly qualified to
do business in each state in which the Assigned Properties and other Assigned
Interests are located.     

(b)Seller has the power to enter into and perform this Agreement (and all
documents required to be executed and delivered by Seller prior to or at Closing
under this Agreement) and to consummate the transactions contemplated by this
Agreement (and such documents).

(c)The execution, delivery and performance of this Agreement (and all documents
required to be executed and delivered by Seller prior to, at or after Closing),
and the consummation of the transactions contemplated hereby and thereby, have
been duly and validly authorized by all necessary action on the part of Seller.
This Agreement has been duly executed and delivered by Seller (and all documents
required to be executed and delivered by Seller prior to or at Closing under
this Agreement shall be duly executed and delivered by Seller), and this
Agreement constitutes, and such other documents executed and delivered under
this Agreement, shall constitute, the valid and binding obligations of Seller,
enforceable in accordance with their terms except as such enforceability may be
limited by applicable bankruptcy or other similar Laws affecting the rights and
remedies of creditors generally as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

(d)The execution, delivery and performance of this Agreement by Seller, and the
consummation of the transactions contemplated by this Agreement shall not

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(i) violate any provision of Seller’s governing instruments, (ii) result in a
default (with due notice or lapse of time or both) or the creation of any lien
or encumbrance or give rise to any right of termination, cancellation, or
acceleration under any promissory note, bond, mortgage, or indenture to which
Seller is a party or by which it is bound, (iii) violate any judgment, order,
ruling, or decree applicable to Seller as a party in interest, or (iv) violate
any Laws applicable to Seller, except any matters described in clauses (iii) or
(iv) above which would not have a Material Adverse Effect on Seller.

(e)There are no bankruptcy, reorganization, receivership or arrangement
proceedings pending against, being contemplated by, or threatened against Seller
or any Affiliate of Seller (whether by Seller or a third Person).    

4.2     Litigation.  Except as set forth on Schedule 4.2:  (a)(i) there are no
actions, suits, demands, investigations, administrative proceedings, or other
proceedings to which Seller is a party pending or threatened in writing to
Seller with respect to the Assigned Interests or Seller’s interest therein, and
(ii) to the knowledge of Seller, there are no actions, suits, demands,
investigations, administrative proceedings, or other proceedings otherwise
pending or threatened, before any Governmental Authority or arbitrator with
respect to the Assigned Interests or Seller’s interest therein, and (b) there
are no actions, suits or proceedings pending or threatened in writing, or to the
knowledge of Seller, otherwise threatened, before any Governmental Authority or
arbitrator against Seller or any of its Affiliates, which are reasonably likely
to impair or delay materially Seller’s ability to perform its obligations under
this Agreement. 

4.3     Taxes and Assessments.  Except as disclosed on Schedule 4.3:

(a)each Tax return, declaration, report, claim for refund or information return
or statement relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereof (a “Tax Return”) required to be filed by
Seller with respect to the Assigned Interests has been timely and properly
filed, all such Tax Returns are correct and complete in all material respects;

(b)Seller has timely and properly paid all Taxes that Seller is obligated to pay
with respect to the Assigned Interests (whether or not such Taxes are reflected
on a Tax Return);

(c)there is not currently in effect any extension or waiver of any statute of
limitations of any jurisdiction regarding the assessment or collection of any
Tax;

(d)no Assigned Interest is subject to a Tax partnership agreement or provision
requiring a partnership income Tax Return to be filed under applicable Law, and
any Tax partnership listed on Schedule 4.3 has, or as of Closing shall have, in
effect an election under Section 754 of the Code that will apply with respect to
the Assigned Interests;

(e)neither Seller nor its Affiliates have received written notice of any pending
claim against Seller or its Affiliates (which remains outstanding) from any
applicable Governmental Authority for assessment of any material Taxes with
respect to the

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Assigned Interests, and there are no audits, suits, proceedings, assessments,
reassessments, deficiency claims, or other claims relating to any Taxes of
Seller or its Affiliates with any applicable Governmental Authority;

(f)there are no liens for Taxes on any of the Assigned Interests other than
liens constituting Permitted Encumbrances;

(g)no Governmental Authority has ever asserted a claim, in writing, that Seller
or its Affiliates are subject to Tax in a jurisdiction in which Seller or its
Affiliate, as applicable, is not filing Tax Returns;

(h)to Seller’s knowledge, all tax withholding and deposit requirements imposed
by applicable law with respect to any of the Assigned Interests or the business
of Seller have been satisfied in full in all respects; and

(i) Seller is not (a) a “foreign person” within the meaning of Section 1445 of
the Code or (b) an entity disregarded as separate from any other Person within
the meaning of Section 301.7701-3(a) of the regulations promulgated by the
United States Department of Treasury pursuant to and in respect of provisions of
the Code.

4.4     Compliance with Laws.   Except with respect to Environmental Laws, and
except as disclosed on Schedule 4.4,  to Seller’s knowledge: (a) Seller’s
ownership and the operation of the Assigned Interests is in compliance with all
applicable Laws, except such failures to comply as would not, individually or in
the aggregate, have a Material Adverse Effect on Seller; and (b) all necessary
permits, licenses, approvals, consents, certificates, and other authorizations
with respect to the ownership and operation of the Assigned Interests have been
obtained and maintained in full force and effect.

4.5     Contracts. To Seller’s knowledge, Schedule 0 lists all Material
Contracts.  Neither Seller, nor, to the knowledge of Seller, any other Person is
in default under any Material Contract, or, with the passage of time, the giving
of notice, or both, would be in breach or default under any Material Contract,
except as disclosed on Schedule 0.  All Material Contracts are in full force and
effect, except as would not, individually or in the aggregate, have a Material
Adverse Effect on Seller.  Except as disclosed on Schedule 0, no written notice
of default or breach has been received or delivered by Seller under any Material
Contract, the resolution of which is outstanding as of the date hereof, and
there are no current notices received by Seller of the exercise of any premature
termination, price redetermination, market-out, or curtailment of any Material
Contract.  To Seller’s knowledge, prior to the date of this Agreement, Seller
has made available to Purchaser (or its representatives) true and complete
copies of each Material Contract and all amendments or modifications thereto.
 Except as disclosed on Schedule 0 and Schedule 4.7, to Seller’s knowledge, the
execution, delivery and performance of this Agreement (and all documents
required to be executed and delivered by Seller prior to or at Closing under
this Agreement) and the consummation of transactions contemplated by this
Agreement shall not violate or result in a default (with due notice or lapse of
time or both) under any Material Contract.  For the purposes of this Section
4.5, to the extent Seller is not party to a Material

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Contract, then the representation and warranty made by Seller as to such
Material Contract shall be limited solely to the knowledge of Seller and only
with regard to Seller’s own interest.

4.6     Payments for Production; Imbalances; Payment of Royalties.  To Seller’s
knowledge, except as set forth on Schedule 0, Seller is not obligated by virtue
of a take-or-pay payment, advance payment, or other similar payment (other than
royalties, overriding royalties, similar arrangements established in the
Leases), to deliver Hydrocarbons, or proceeds from the sale thereof,
attributable to Seller’s interest in the Assigned Properties at some future time
without receiving full payment therefor at or after the time of delivery.   To
Seller’s knowledge, Schedule 0 lists all production, transportation, plant, or
other imbalances with respect to production from the Assigned Properties.  To
Seller’s knowledge, no imbalance constitutes all of Seller’s (or its
Affiliate’s) share of ultimately recoverable reserves in any balancing area
pursuant to any gas balancing agreement.

4.7     Consents, Tag-Along Rights, Rights of First Refusal and Preferential
Purchase Rights.  Except as set forth on Schedule 0, there are no preferential
rights to purchase, rights of first refusal, tag-along rights or consent
requirements which may be applicable to the transactions contemplated by this
Agreement, except for consents and approvals of Governmental Authorities that
are customarily obtained after Closing (if such Governmental Authority is,
pursuant to applicable Law, without discretion to refuse to grant such consent
if certain specifically enumerated conditions set forth in such applicable Law
are satisfied), and consents related to Excluded Records. Schedule 4.7 sets
forth a true and accurate list of all Contracts which contain Tag-Along Rights
and the Tag Parties holding such Tag-Along Rights.

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

4.9     Outstanding Capital Commitments.  To Seller’s knowledge, as of the date
of this Agreement, there are no outstanding authorities for expenditure which
are binding on the Assigned Properties and which Seller reasonably anticipates
will individually require expenditures by Seller or its successor in interest
from and after the Effective Date in excess of Fifty Thousand Dollars
($50,000.00), net to the interest of Seller, other than as shown on Schedule 0.
 

4.10     Environmental.  To the knowledge of Seller, except as shown on
Schedule 0:

(a)Seller has not received any notice from any applicable Governmental Authority
(or operator of an Assigned Property) alleging the existence of, and has no
knowledge of any condition on or with respect to the Assigned Properties which,
if true, would constitute, a material violation of, or require remediation
under, Environmental Laws, and the Assigned Properties (and Seller’s ownership
thereof) are in material compliance with all applicable Environmental Laws.

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(b)All material permits, licenses, approvals, consents, certificates and other
authorizations required by Environmental Laws or by any Governmental Authority
or third Person with respect to the ownership or operation of the Assigned
Assets (the “Environmental Permits”) have been properly obtained and have been
and are being maintained in full force and effect, and the Assigned Assets are
being maintained in material compliance with the Environmental Permits.

4.11     Hedges.  To Seller’s knowledge, except for those constituting part of
the Excluded Assets, there are no futures, options, swaps, or other derivatives
with respect to the sale of Hydrocarbons from the Seller’s Assigned Interests
that will be binding on the Assigned Interest after Closing.

4.12     Bonds and Credit Support.  To Seller’s knowledge, Schedule 4.12 lists
all bonds, letters of credit and other similar credit support instruments
maintained by Seller and its Affiliates with any Governmental Authority or other
Third Party with respect to the Assigned Interests which Purchaser will be
required to maintain from and after Closing with respect to the ownership or
operation of the Seller’s Assigned Interest.

4.13     Suspense Accounts.  To Seller’s knowledge, Schedule 4.13 lists all
funds held in suspense (including funds held in suspense for unleased interests)
by Seller or its Affiliates as of the date of this Agreement that are
attributable to the Assigned Interests (the “Suspense Amounts”), a description
of the source of the Suspense Amounts and the reason they are being held in
suspense and, if known, the name or names of the Persons claiming the Suspense
Amounts or to whom the Suspense Amounts are owed.

4.14     Limitations.    

(a)EXCEPT AS AND TO THE EXTENT EXPRESSLY REPRESENTED OTHERWISE IN
THIS article 4, IN THE ASSIGNMENT AND BILL OF SALE, OR IN THE CERTIFICATE OF
SELLER TO BE DELIVERED AT CLOSING PURSUANT TO SECTION 0, (I) SELLER EXPRESSLY
DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, OR STATUTORY, AS TO
(A) TITLE TO ANY OF THE ASSIGNED INTERESTS; (B) THE CONTENTS, COMPLETENESS,
ACCURACY, CHARACTER OR NATURE OF ANY DATA OR RECORDS MADE AVAILABLE OR DELIVERED
TO PURCHASER WITH RESPECT TO THE ASSIGNED INTERESTS; (C) THE QUANTITY, QUALITY
OR RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE ASSIGNED INTERESTS;
(D) THE ABILITY OF THE ASSIGNED PROPERTIES TO PRODUCE HYDROCARBONS, INCLUDING
PRODUCTION RATES, DECLINE RATES, AND RECOMPLETION OPPORTUNITIES; (E) ANY
ESTIMATES OF THE VALUE OF THE ASSIGNED INTERESTS OR FUTURE REVENUES GENERATED BY
THE ASSIGNED INTERESTS; (F) INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHT;
(G) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR
COMMUNICATED TO PURCHASER OR ITS AFFILIATES,

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OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY
DISCUSSION OR PRESENTATION RELATING THERETO; AND (II) SELLER FURTHER DISCLAIMS
ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, OR STATUTORY, OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR
SAMPLES OF MATERIALS OR ANY EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED
BY THE PARTIES THAT, EXCEPT AS PROVIDED TO THE CONTRARY IN THIS AGREEMENT, IN
THE ASSIGNMENT AND BILL OF SALE, OR IN THE CERTIFICATE OF SELLER TO BE DELIVERED
AT CLOSING PURSUANT TO SECTION 0,  THE ASSIGNED INTERESTS ARE BEING TRANSFERRED
“AS IS, WHERE IS,” WITH ALL FAULTS AND DEFECTS. SELLER AND PURCHASER AGREE THAT,
TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF
CERTAIN WARRANTIES CONTAINED IN THIS SECTION ARE “CONSPICUOUS” DISCLAIMERS FOR
THE PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDERS.

(b)Purchaser acknowledges that Equipment and sites included in the Assigned
Interests may contain naturally occurring radioactive material (“NORM”).  NORM
may affix or attach itself to the inside of wells, materials, and equipment as
scale, or in other forms.  The wells, materials, and equipment located on the
Assigned Properties or included in the Assigned Interests may contain
NORM.  NORM may have come into contact with various environmental media,
including water, soils, or sediment.  Notwithstanding anything to the contrary
in this Section or elsewhere in this Agreement, Seller makes no, and hereby
disclaim any, representation or warranty, express or implied, with respect to
the presence or absence of NORM in or on the Assigned Properties or Equipment in
quantities in compliance with applicable Law and typical for oilfield operations
in the areas in which the Assigned Interests are located.  NORM in place within
the Lease and Well equipment (but not NORM stored on the Assigned Properties)
shall not be considered an Environmental Defect as described herein.

(c)As used in this Agreement, in those instances where representations are made
on the basis of “to the knowledge of Seller”, “to Seller’s knowledge”, or
phrases of similar import, such representations are made by Seller on the basis
of the actual knowledge, of the following persons, without any further inquiry
or investigation: Dan Hord III, Michael McWilliams and Jack Harper.    

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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to Seller the following:

5.1     Existence and Qualification.  Purchaser is a corporation organized,
validly existing and in good standing under the laws of the State of
Delaware.  Purchaser is, or as of Closing shall be, qualified to do business in
the State of Texas.

5.2     Power.  Purchaser has the power to enter into and perform its
obligations under this Agreement (and all documents required to be executed and
delivered by Purchaser prior to, at or after Closing) and to consummate the
transactions contemplated by this Agreement (and such documents).

5.3     Authorization and Enforceability.  The execution, delivery and
performance of this Agreement (and all documents required to be executed and
delivered by Purchaser prior to, at or after Closing), and the consummation of
the transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of Purchaser.  This
Agreement has been duly executed and delivered by Purchaser (and all documents
required to be executed and delivered by Purchaser prior to, at or after Closing
will be duly executed and delivered by Purchaser) and this Agreement
constitutes, and such other documents will constitute, the valid and binding
obligations of Purchaser, enforceable in accordance with their terms except as
such enforceability may be limited by applicable bankruptcy or other similar
laws affecting the rights and remedies of creditors generally as well as to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

5.4     No Conflicts.  The execution, delivery and performance of this Agreement
by Purchaser, and the consummation of the transactions contemplated by this
Agreement, will not (a) violate any provision of the governing instruments of
Purchaser, (b) result in a material default (with due notice or lapse of time or
both) or the creation of any lien or encumbrance or give rise to any right of
termination, cancellation or acceleration under any material note, bond,
mortgage, indenture, or other financing instrument to which Purchaser is a party
or by which it is bound, (c) violate any judgment, order, ruling, or regulation
applicable to Purchaser as a party in interest, or (d) violate any Law
applicable to Purchaser, except any matters described in clauses (b), (c), or
(d) above which would not have a Material Adverse Effect on Purchaser or its
properties.

5.5     Consents, Approvals or Waivers.  The execution, delivery and performance
of this Agreement by Purchaser will not be subject to any consent, approval or
waiver from any Governmental Authority or other third Person except for consents
and approvals of Governmental Authorities that are customarily obtained after
Closing (if such Governmental Authority is, pursuant to applicable Law, without
discretion to refuse to grant such consent if certain conditions set forth in
such applicable Law are satisfied).

5.6     Litigation.  There are no actions, suits or proceedings pending by any
Person, or to Purchaser’s knowledge, threatened in writing before any
Governmental Authority or arbitrator

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against Purchaser or any Affiliate of Purchaser which are reasonably likely to
impair or delay materially Purchaser’s ability to perform its obligations under
this Agreement.

5.7     Financing.  Purchaser has or, as of the Closing, will have sufficient
cash, available lines of credit, or other sources of immediately available funds
to enable it to pay the Closing Payment to Seller at the Closing.

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

5.9     Independent Investigation.  Purchaser is (or its advisors are)
experienced and knowledgeable in the oil and gas business and aware of the risks
of that business.  Purchaser acknowledges and affirms that (a) it has completed
such independent investigation, verification, analysis and evaluation of the
Assigned Interests and has made all such reviews and inspections of the Assigned
Interests as it has deemed necessary or appropriate to enter into this
Agreement, including, without limitation, all well files, well bores, morning
reports, field and well inspections, and (b) prior to Closing, it will have
completed its independent investigation, verification, analysis, and evaluation
of the Assigned Interests and made all such reviews and inspections of the
Assigned Interests as it has deemed necessary or appropriate to consummate the
transactions contemplated hereby including, without limitation, all well files,
well bores, morning reports, field and well inspections.  Purchaser understands
and acknowledges that neither the United States Securities and Exchange
Commission (the “SEC”) nor any federal, state, or foreign agency has passed upon
the Assigned Interests or made any finding or determination as to the fairness
of an investment in the Assigned Interests or the accuracy or adequacy of the
disclosures made to Purchaser, and, except as set forth in Article 10, Purchaser
is not entitled to cancel, terminate, or revoke this Agreement.

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

5.11     Bankruptcy.  There are no bankruptcy, reorganization, or receivership
proceedings pending, being contemplated by, or, to the knowledge of Purchaser,
threatened against Purchaser or any Affiliate of Purchaser (whether by Purchaser
or a third Person). 

ARTICLE 6
COVENANTS OF THE PARTIES

6.1     Access.  Subject to the limitations expressly set forth in this
Agreement, Seller shall provide Purchaser and its representatives access to and
the right to copy, at Purchaser’s sole expense, the Records in Seller’s
possession for the purpose of conducting a confirmatory review of the Assigned
Interests, but only to the extent (a) that Seller may do so without violating
applicable Laws or agreements with third Persons; (b) Seller has authority to
grant such access

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without breaching any obligation of confidentiality binding on Seller;  (c) no
such Records are subject to any third party license or agreement that restricts
or prohibits Seller’s ability to disclose or transfer such Records, and (d) the
disclosure by Seller would not waive any legal right or privilege of
Seller.  Except with regard to information described in subparts (a)-(d) in the
immediately prior sentence, Seller shall use commercially reasonable efforts to
request such access for Purchaser, but Seller shall not be required to spend any
amounts nor waive any of the rights or restrictions described in subparts
(a)-(d) above.  Such access by Purchaser shall be limited to normal business
hours, and Purchaser’s investigation shall be conducted in a manner that
minimizes interference with the operation of the business of Seller and any
applicable third Person operator.  Access for Purchaser to the Assigned
Interests will be subject to Purchaser’s obtaining an access agreement with the
Operator (which Seller shall use commercially reasonable efforts to assist
Purchaser in obtaining).

6.2     Press Releases.  Neither Seller nor Purchaser, nor any Affiliate
thereof, shall make any press release regarding the existence of this Agreement,
the contents hereof, or the transactions contemplated hereby without the prior
written consent of Purchaser (in the case of announcements by Seller or its
Affiliates) or Seller (in the case of announcements by Purchaser or its
Affiliates), which consent, in each case, may be withheld for any reason or no
reason; provided, however, the foregoing shall not restrict disclosures by
Purchaser or Seller (i) to the extent that such disclosures are required by
applicable securities or other Laws or the applicable rules of any stock
exchange having jurisdiction over the disclosing Party or its Affiliates;
(ii) to Governmental Authorities and third Persons holding preferential rights
to purchase, tag-rights, rights of first refusal, or other rights that may be
applicable to the transactions contemplated by this Agreement, as reasonably
necessary to provide notices, seek waivers, amendments or terminations of such
rights, or seek such consents; or (iii) to such Party’s investors and
members,  provided such disclosures are made to Persons subject to an obligation
of confidentiality with respect to such information.  The Parties agree that
neither Purchaser nor Seller will have an adequate remedy at law if any of the
foregoing Persons violate (or threaten to violate) any of the terms of this
Section 0.  In such event, Purchaser or Seller, as applicable, shall have the
right, in addition to any other it may have, to obtain injunctive relief to
restrain any breach or threaten breach of the terms of this Section 0.  Each
Party shall be responsible for the compliance of its Affiliates with this
Section 0. 

6.3     Operation of Business.  Until the Closing, except with regard to matters
described in Schedule 6.3 attached hereto, Seller shall do the following in the
ordinary course (only to the extent applicable to Seller’s non-operated
interest):

(a)not take any affirmative action to transfer, sell, hypothecate, encumber, or
otherwise dispose of any of its interest in the Assigned Interests, except for
sales and dispositions of Hydrocarbons or equipment and materials made in the
ordinary course of business which, in the case of equipment and materials, are
replaced (to the extent reasonably necessary for the operation of the Assigned
Interests) with equipment and materials of comparable or better value and
utility in connection with the maintenance, repair, and operation of the
Assigned Interests, and except with regard to certain title curative efforts;

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(b)solely to the extent that Seller is a party thereto, not take any affirmative
action to terminate, materially amend, execute, or extend any Material Contract
other than the execution or extension of a Contract for the sale, exchange or
marketing of oil, gas and/or other Hydrocarbons terminable without penalty on
sixty (60) days or shorter notice, or enter into or amend any Contract after the
date hereof that, if so entered into or amended prior to the date hereof, would
have been required to have been disclosed on Schedule 4.5;

(c)not make any election to be excluded from any insurance coverage on the
Assigned Interests provided by an operator for the joint account pursuant to a
joint operating agreement;

(d)except with regard to Permitted Encumbrances, not grant or create any new
preferential right to purchase, right of first refusal, preferential purchase
right, right of first negotiation, option, or transfer restriction or similar
right, obligation, or requirement, with respect to Seller’s interest the
Assigned Interests, except in connection with the renewal or extension of Leases
after the Effective Date if granting such right or requirement is a condition of
such renewal or extension (and in which case, Seller shall provide Purchaser
notice of such grant or creation);

(e)not incur any indebtedness or take any affirmative action that would cause a
lien or encumbrance to arise or exist on the Assigned Interests or otherwise
allow a lien to attach to or encumber the Assigned Interests or any portion
thereof, except for materialman’s, mechanic’s, repairman’s, employee’s,
contractor’s, operator’s, and other similar liens or charges that are Permitted
Encumbrances;

(f)not take any affirmative action to make, change or revoke any Tax election;
change an annual accounting period; adopt or change any accounting method with
respect to Taxes; file any amended Tax Return, enter into any closing agreement;
settle or compromise any Tax claim or assessment; or consent to any extension or
waiver of the limitation period applicable to any claim or assessment with
respect to Taxes;

(g)except with regard to matters described in Schedule 6.3, not propose (as a
non-operating interest owner) any new operation under the applicable joint
operating agreement, nor approve (as a non-operating interest owner) any new
operation under the applicable joint operating agreement which would require
Seller to  make any capital expenditures in respect of the Assigned Interests in
excess of $250,000, in the aggregate, net to Seller’s interest; and

(h)not commit to do any of the foregoing that are prohibited by this Section
6.3.

Requests for approval of any action restricted by this Section 0 shall be
delivered to the following individual, who shall have full authority to grant or
deny such requests for approval on behalf of Purchaser:

Callon Petroleum Operating Company

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1401 Enclave Parkway

Suite 600

Houston, TX 77077

Attention: Gary Newberry

Telephone: (281) 589-5219

E-mail: gnewberry@callon.com

Purchaser’s approval of any action restricted by this Section 0 shall not be
unreasonably withheld or delayed and shall be considered granted in full within
two (2) Business Days of Seller’s notice to Purchaser in accordance with this
Section 0 requesting such consent, unless Purchaser notifies Seller to the
contrary during that period.  Notwithstanding the foregoing provisions of this
Section 0, in the event of an emergency, Seller may take such action as
reasonably necessary and shall notify Purchaser of such action promptly
thereafter.  Purchaser acknowledges that Seller may own undivided interests in
certain of the Assigned Interests, and Purchaser agrees that the acts or
omissions of third Persons (including any applicable operator) who are not
affiliated with Seller shall not constitute a violation of the provisions of
this Section 0, nor shall any action required by a vote of working interest
owners constitute such a violation so long as Seller (and any applicable
Affiliate) has voted their interests in a manner consistent with the provisions
of this Section 0.

6.4     Indemnity Regarding Access.  Purchaser’s access to the Assigned
Interests and its (and its Affiliates’ and representatives’) examinations and
inspections, pursuant to this Agreement or otherwise, shall be at Purchaser’s
sole risk, cost, and expense, and Purchaser waives and releases all claims
against Seller, THE SELLER GROUP, and its and their respective partners,
CO-INTEREST OWNERS, OPERATORS, members, officers, directors, employees,
attorneys, contactors, agents, or other representatives, arising in any way
therefrom, or in any way connected therewith, EXCEPT TO THE EXTENT ARISING FROM,
OR RELATING TO, THE GROSS NEGLIGENCE OR WILFUL MISCONDUCT OF ANY SUCH
PERSON.  Purchaser agrees to INDEMNIFY, DEFEND AND HOLD HARMLESS Seller and its
Affiliates, the other owners of interests in, and operators of, the Assigned
Properties and Assigned Interests, and all such Persons’ directors, officers,
partners, members, equity owners, investors, employees, agents, and
representatives (collectively, the “Seller Group”) from and against any and all
claims, liabilities, losses, costs, and expenses (including court costs and
reasonable attorneys’ fees), including claims, liabilities, losses, costs, and
expenses attributable to personal injury, death, or property damage, arising out
of, or relating to, access to the Assigned Interests and any inspections or
diligence activities by Purchaser, its Affiliates, or its or their respective
directors, officers, employees, agents, consultants, advisors or
representatives, even if caused in whole or in part by the negligence (whether
sole, joint or concurrent), strict liability or other legal fault of any
indemnified Person, EXCEPT TO THE EXTENT ARISING FROM, OR RELATING TO THE GROSS
NEGLIGENCE OR WILFUL MISCONDUCT OF ANY SUCH PERSON.

6.5     Further Assurances.  After Closing, Seller and Purchaser each agree to
take such further actions and to execute, acknowledge, and deliver all such
further documents as are

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reasonably requested by the other for carrying out the purposes of this
Agreement or of any document delivered pursuant to this Agreement.

6.6     Confidentiality.  Purchaser acknowledges that, as a result of its access
to the Records and the Assigned Interests, confidential information of Seller
may be disclosed to, made available to, or otherwise obtained by Purchaser,
whether prior to or after the date of this Agreement.  Purchaser may disclose
such information to its directors, officers, employees, agents, representatives,
consultants, contractors, attorneys and advisors who need to know such
information for the purpose of aiding Purchaser in the transactions contemplated
hereby or matters relating thereto; provided, however, that, subject to the
remainder of this Section 0, until the first to occur of the Closing or the one
year anniversary of the termination of this Agreement, Purchaser agrees to
maintain (and to cause its Affiliates, and its and their respective directors,
officers, employees, agents, representatives, consultants, contractors,
attorneys and advisors, to maintain) all information made available to it
pursuant to this Agreement confidential, except to the extent such information
(a) is or becomes generally available to the public other than as a result of a
breach by Purchaser of this Section 0,  (b) was (or becomes) available to
Purchaser (or its Affiliates, and its and their respective directors, officers,
employees, agents, representatives, consultants, and advisors) on a
non-confidential basis prior to its disclosure to Purchaser; (c) is included in
the Assigned Interests transferred to Purchaser at Closing, (d) is required, by
applicable securities or other Laws or the applicable rules of any stock
exchange having jurisdiction over the disclosing Party or its Affiliates, to be
disclosed, or (e) is required, by deposition, interrogatories, requests for
information or documents in legal or regulatory proceedings, subpoena, civil
investigative demand or other similar process or Law to be disclosed (provided
that Purchaser shall, if not prohibited by Law, provide Seller with prompt
written notice of any such request or requirement so Seller may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 0).  In addition, however, it is acknowledged that
Purchaser may disclose the terms of this Agreement to other co-interest owners
in the Properties and Assets in connection with the proposed purchase by
Purchaser of their interests in the Assets.

6.7     Governmental Reviews.  Prior to Closing, Seller and Purchaser shall,
(a) as soon as is reasonably practicable after the date of this Agreement, make
(or cause their Affiliates to make) all required filings, including (if
applicable) filings required under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, and prepare applications to and conduct negotiations with, each
Governmental Authority as to which such filings, applications or negotiations
are necessary or appropriate in the consummation of the transactions
contemplated hereby, and (b) promptly after the request of the other Party,
provide such information as the other Party may reasonably request in order to
make such filings, prepare such applications and conduct such negotiations.

6.8     Audits and Filings.

(a)From and after the Closing, Seller shall cooperate with Purchaser, its
Affiliates and their respective agents and representatives to provide
information regarding the Assigned Interests only to the extent necessary for
Purchaser and its Affiliates to comply with their Tax, financial, or other
reporting requirements and audits, including (i) any filings with any
Governmental Authority; and (ii) any filings that may be required by

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the SEC under securities Laws applicable to Purchaser and its Affiliates
(together with the Securities Act and the rules and regulations promulgated
under such acts, the “Securities Laws”) (collectively, the “Filings”). 

(b)Notwithstanding the foregoing, nothing in Section 6.8(a) shall expand
Seller’s representations, warranties, covenants, or agreements set forth in this
Agreement or give Purchaser, its Affiliates, or any third Person any rights to
which it is not entitled hereunder.

(c)For a period of four (4) years following the Closing, Seller shall retain all
books, records, information and documents in their or their Affiliates’
possession that are reasonably necessary to prepare and audit financial
statements with respect to the Assigned Interests, except to the extent
originals or copies thereof are transferred to Purchaser in connection with
Closing.

ARTICLE 7
CONDITIONS TO CLOSING

7.1     Conditions of Seller to Closing.  The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject, at the
option of Seller, to the satisfaction on or prior to Closing of each of the
following conditions:

(a)The representations and warranties of Purchaser set forth in Article 5 shall
be true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date (other
than representations and warranties that refer to a specified date, which need
only be true and accurate as of such specified date);

(b)Purchaser shall have performed and observed, in all material respects, all
covenants and agreements to be performed or observed by Purchaser under this
Agreement prior to or on the Closing Date;

(c)on the Closing Date, no injunction, order or award restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement, or granting substantial Damages in connection therewith, shall have
been issued and remain in force, and no suit, action, or other proceeding
(excluding any such matter initiated by Seller or any of its Affiliates) shall
be pending before any Governmental Authority or body of competent jurisdiction
(or threatened) seeking to enjoin or restrain or otherwise prohibit the
consummation of the transactions contemplated by this Agreement or recover
Damages from any Seller or any Affiliate of any Seller resulting therefrom;  

(d)the net sum of all adjustments to the Unadjusted Purchase Price for any
reason, including, but not limited to adjustments for Title Defects,
Environmental Defects, Excluded Assets, Casualty Losses, adjustments at Closing
under Section 3.7, failure to obtain and/or exercise of preferential rights, but
excluding adjustments pursuant

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to Section 2.2(c) through (i) shall have been less than five percent (5%) of the
Unadjusted Purchase Price;

(e)none of the Other Co-Sellers have agreed to sell their respective interests
in the Properties and Assets to Purchaser (or any affiliate of Purchaser) upon
terms and conditions that are more favorable to such Other Co-Sellers than the
terms and conditions upon which Seller agreed to sell its Assigned Interests
under this Agreement; and 

(f)the current operator of the Assets and Purchaser shall be party to the
Operator Resignation and Transition Agreement providing for (1) the current
operator of the Assets to resign as operator, effective after Closing of this
Agreement, the closing of purchase and sale agreements with Other Co-Sellers
that result in Purchaser acquiring not less than an undivided 61% (out of
8/8ths) working interest in the Leases and the satisfaction of the other
conditions set forth in Section 2.2 of the Operator Resignation and Transition
Agreement, and (2) all actions necessary to appoint Callon Petroleum Operating
Company (or a wholly-owned subsidiary of Callon Petroleum Operating Company) as
the successor operator of the Assets, including under the applicable joint
operating agreement and those actions required pursuant to Section 8.2(e), to be
taken and approved (other than approvals by Governmental Authorities in
connection with the transfer of operatorship of the Assets that are customarily
obtained subsequent to the transfer of operatorship of such Assets); and

(g)the Operator Resignation and Transition Agreement shall not have been
amended, except in a manner satisfactory to Seller, in its sole discretion.

7.2     Conditions of Purchaser to Closing.  The obligations of Purchaser to
consummate the transactions contemplated by this Agreement are subject, at the
option of Purchaser, to the satisfaction on or prior to Closing of each of the
following conditions:

(a)The representations and warranties of Seller set forth in Article 4 shall be
true and correct in all material respects (and in all respects, in the case of
representations and warranties qualified by materiality or Material Adverse
Effect) as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date (other than representations and warranties
that refer to a specified date, which need only be true and correct on and as of
such specified date);

(b)Seller shall have performed and observed, in all material respects (and in
all respects, in the case of covenants qualified by materiality or Material
Adverse Effect), all covenants and agreements to be performed or observed by
them under this Agreement prior to or on the Closing Date; 

(c)on the Closing Date, no injunction, order or award restraining, enjoining, or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement, or granting substantial damages in connection therewith, shall have
been issued and remain in force, and no suit, action, or other proceeding
(excluding any such matter initiated by Purchaser or any of its Affiliates)
shall be pending before any Governmental Authority or body of competent
jurisdiction (or threatened) seeking to

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enjoin or restrain or otherwise prohibit the consummation of the transactions
contemplated by this Agreement or recover substantial damages from Purchaser or
any Affiliate of Purchaser resulting therefrom;  

(d)the net sum of all adjustments to the Unadjusted Purchase Price for any
reason, including, but not limited to adjustments for Title Defects,
Environmental Defects, Excluded Assets, Casualty Losses, adjustments at Closing
under Section 3.7, failure to obtain and/or exercise of preferential rights, but
excluding adjustments pursuant to Section 2.2(c) through (i) shall be less than
five percent (5%) of the Unadjusted Purchase Price.

(e)(1) the closing and consummation of the sale of the interests of the Other
Co-Sellers in the Assets who, separate and apart from Seller, have agreed to
sell some or all of their interests in the Assets to Purchaser occurs
simultaneously or substantially concurrently with the closing and consummation
of the sale by Seller of the Assigned Interests under this  Agreement, and (2)
the interests of those Other Co-Sellers, together with the Assigned Interests,
equal or exceed an undivided 61% (out of 8/8ths) working interest and a
corresponding 45% (out of 8/8ths) net revenue interest in the Leases (together
with such proportionate interest that corresponds thereto in and to the other
Assets); and

(f)the current operator of the Assets and Purchaser shall be party to the
Operator Resignation and Transition Agreement providing for (1) the current
operator of the Assets to resign as operator after the Closing of this
Agreement, the closing of purchase and sale agreements with Other Co-Sellers
that result in Purchaser acquiring not less than an undivided 61% (out of
8/8ths) working interest in the Leases, and the satisfaction of the other
conditions set forth in Section 2.2 of the Operator Resignation and Transition
Agreement that are not within the reasonable control of Purchaser, and (2) all
actions necessary to appoint Callon Petroleum Operating Company (or a
wholly-owned subsidiary of Callon Petroleum Operating Company) as the successor
operator of the Assets, including under the applicable joint operating agreement
and those actions required pursuant to Section 8.2(e), to be taken and approved
(other than approvals by Governmental Authorities in connection with the
transfer of operatorship of the Assets that are customarily obtained subsequent
to the transfer of operatorship of such Assets).

ARTICLE 8
CLOSING

8.1     Time and Place of Closing.  The consummation of the purchase and sale of
the Assigned Interests contemplated by this Agreement (the “Closing”) shall,
unless otherwise agreed to in writing by Purchaser and Seller, take place at
the offices of Seller in Houston, Texas, at 10:00 a.m., local time, on October
8, 2014, or such other date as is mutually acceptable to Seller and Purchaser,
or if all conditions in Article 7 to be satisfied prior to Closing have not yet
been satisfied or waived, as soon thereafter as such conditions have been
satisfied or waived, subject to the provisions of Article 10.  All events of
Closing shall each be deemed to have occurred simultaneously with the other,
regardless of when actually occurring, and each shall be

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a condition precedent to the other.  The date on which the Closing occurs is
referred to herein as the “Closing Date”.

8.2     Obligations of Seller at Closing.  At the Closing, upon the terms and
subject to the conditions of this Agreement, and subject to the simultaneous
performance by Purchaser of its obligations pursuant to Section 0, Seller shall
deliver or cause to be delivered to Purchaser, among other things, the
following:

(a)counterparts of the Assignment and Bill of Sale, duly executed by Seller, in
sufficient duplicate originals to allow recording in all appropriate
jurisdictions and offices;

(b)assignments in form required by any Governmental Authority for the assignment
of any Assigned Interests controlled by such Governmental Authority (if any),
duly executed by Seller, in sufficient duplicate originals to allow recording
and/or filing in all appropriate offices;

(c)executed certificates described in Treasury Regulation § 1.1445-2(b)(2)
certifying that Seller (or their respective owners, as appropriate) is not a
foreign person within the meaning of the Code;

(d)letters-in-lieu of transfer or division orders executed by Seller relating to
the Assigned Interests to reflect the transaction contemplated hereby, which
letters shall be on forms prepared by Seller and reasonably satisfactory to
Purchaser;

(e)documents, approvals or consents executed by Seller that are required under
the applicable joint operating agreements for Seller to vote for Purchaser (or a
wholly owned subsidiary of Purchaser) to succeed Operator as operator of the
Properties; 

(f)a certificate duly executed by an authorized officer of Seller, dated as of
the Closing, certifying on behalf of Seller that the conditions set forth in
Sections 7.2(a) and 7.2(b) have been fulfilled;

(g)where notices of approval, consent, or waiver are received by Seller pursuant
to a filing or application under Section 0, copies of those notices of approval;

(h)any other forms legally required by any Governmental Authority relating to
the assignments of the Assigned Interests and relating to the assumption of
operations by Purchaser, where applicable; 

(i)all lien releases from Seller’s lenders relating to all mortgages affecting
the Assigned Interests prepared in accordance with applicable law and all
termination statements required to terminate all filings under the Uniform
Commercial Code regarding the Assigned Interests, which releases and filings
shall in form reasonably satisfactory to Purchaser;

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(j)a certificate duly executed by the secretary or any assistant secretary of
Seller, dated as of the Closing, (i) attaching and certifying on behalf of
Seller complete and correct copies of the resolutions of the Board of Directors,
Board of Managers, General Partner or other equivalent governing body of Seller
authorizing the execution, delivery, and performance by Seller of this Agreement
and the transactions contemplated hereby and (ii) certifying on behalf of Seller
the incumbency of each officer of Seller executing this Agreement or any
document to which it is a party delivered in connection with the Closing; and

(k)all other instruments, documents, and other items reasonably necessary to
effectuate the terms of this Agreement, as may be reasonably requested by
Purchaser.

8.3     Obligations of Purchaser at Closing.  At the Closing, upon the terms and
subject to the conditions of this Agreement, and subject to the simultaneous
performance by Seller of their obligations pursuant to Section 0, Purchaser
shall deliver or cause to be delivered to Seller, among other things, the
following:

(a)a wire transfer of the Closing Payment in same-day funds, payable to Seller
as provided in the preliminary settlement statement delivered to Purchaser
pursuant to Section 0;

(b)[reserved];

(c)counterparts of the Assignment and Bill of Sale, duly executed by Purchaser,
in sufficient duplicate originals to allow recording in all appropriate
jurisdictions and offices;

(d)assignments in form required by any Governmental Authority for the assignment
of any Assigned Interests controlled by such Governmental Authority, duly
executed by Purchaser, in sufficient duplicate originals to allow recording
and/or filing in all appropriate offices;

(e)a certificate by an authorized officer of Purchaser, dated as of the Closing,
certifying on behalf of Purchaser that the conditions set forth in Sections 0
and 0 have been fulfilled;

(f)a certificate duly executed by the secretary or any assistant secretary of
Purchaser, dated as of the Closing, (i) attaching and certifying on behalf of
Purchaser complete and correct copies of the resolutions of the Board of
Directors or other equivalent governing body of Purchaser authorizing the
execution, delivery, and performance by Purchaser of this Agreement and the
transactions contemplated hereby and (ii) certifying on behalf of Purchaser the
incumbency of each officer of Purchaser executing this Agreement or any document
delivered in connection with the Closing; and

(g)all other instruments, documents, and other items reasonably necessary to
effectuate the terms of this Agreement, as may be reasonably requested by
Seller.

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8.4     Closing Payment and Post-Closing Purchase Price Adjustments.

(a)Not later than three (3) Business Days prior to Closing, Seller shall prepare
and deliver to Purchaser, using and based upon the best information available to
Seller, a preliminary settlement statement (the “Preliminary Settlement
Statement”), together with reasonable supporting documentation, estimating the
Purchase Price for the Assigned Interests after giving effect to all adjustments
set forth in Section 2.2,  and any withholdings pursuant to Section
2.4.  Purchaser may provide Seller comments on or revisions to the Preliminary
Settlement Statement at any time prior to the Closing Date, and Seller shall
consider any such comments and revisions in good faith, provided that, except to
the extent set forth to the contrary in Section 0, the estimate delivered in
accordance with this Section 0 shall constitute the dollar amount to be payable
by Purchaser to Seller at the Closing (the “Closing Payment”) and any disputed
amounts in the Preliminary Settlement Statement shall be resolved in connection
with the finalization on the Final Settlement Statement. 

(b)As soon as reasonably practicable after the Closing but not later than ninety
(90) days following the Closing Date, Seller shall prepare and deliver to
Purchaser a draft statement setting forth the final calculation of the Purchase
Price and showing the calculation of each adjustment under Section 0, based on
the most recent actual figures for each adjustment (the “Final Settlement
Statement”).  The Final Settlement Statement shall include such reasonable
documentation as is in Seller’s possession to support the final figures.  As
soon as reasonably practicable, but not later than thirty (30) days following
receipt of the Final Settlement Statement from Seller, Purchaser shall deliver
to Seller a written report containing any changes that Purchaser proposes be
made to such statement.  Seller may deliver a written report to Purchaser during
this same period reflecting any changes that Seller proposes to be made to such
statement as a result of additional information received after the Final
Settlement Statement was prepared.  If Purchaser does not deliver such report to
Seller on or before the end of such thirty (30) day period (or, if Seller
proposes any changes to such statement, thirty (30) days from the date Seller
delivers written notice thereof to Purchaser), Purchaser shall be deemed to have
agreed with Seller’s statement, and the Final Settlement Statement shall become
binding upon the Parties.  The Parties shall undertake to agree on the Final
Settlement Statement no later than ninety (90) days after delivery of Seller’s
statement.  In the event that the Parties cannot reach agreement within such
period of time, any Party may refer the items of adjustment which are in dispute
to the Houston, Texas office of KPMG or, if such Person is not able or willing
to serve, a nationally recognized independent accounting firm or consulting firm
mutually acceptable to both Purchaser and Seller (the “Accounting Arbitrator”),
for review and final determination by arbitration.  The Accounting Arbitrator
shall conduct the arbitration proceedings in Houston, Texas in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, to the
extent such rules do not conflict with the terms of this Section 0.  The
Accounting Arbitrator’s determination shall be made within forty-five (45) days
after submission of the matters in dispute and shall be final and binding on all
Parties, without right of appeal.  In determining the proper amount of any
adjustment to the Purchase Price, the Accounting Arbitrator shall be bound by
the terms of Article 2 and may not

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increase the Purchase Price more than the increase proposed by Seller nor
decrease the Purchase Price more than the decrease proposed by Purchaser, as
applicable.  The Accounting Arbitrator shall act as an expert for the limited
purpose of determining the specific disputed aspects of Purchase Price
adjustments submitted by any Party and may not award damages, interest or
penalties to any Party with respect to any matter.  Seller and Purchaser shall
each bear their own legal fees and other costs of presenting its case.  Seller
shall bear one‑half and Purchaser shall bear one‑half of the costs and expenses
of the Accounting Arbitrator.  Within ten (10) days after the earlier of (i) the
expiration of Purchaser’s thirty (30) day review period (including any
extensions provided for above) without delivery of any written report or
(ii) the date on which the Parties or the Accounting Arbitrator finally
determine the Purchase Price, (x) Purchaser shall pay to Seller the amount by
which the Purchase Price exceeds the Closing Payment or (y) Seller shall pay to
Purchaser the amount by which the Closing Payment exceeds the Purchase Price, as
applicable. Any post-Closing payment pursuant to this Section 0 shall bear
interest from the Closing Date to the date of payment at the Agreed Rate
(without duplication of any interest at the Agreed Rate otherwise provided for
in this Agreement on any such amount).  Once the Final Settlement Statement is
final or deemed final, in accordance with the terms above, there shall be no
further adjustments based on this Section 0 or Section 2.2.

(c)Purchaser shall assist Seller in preparation of the Final Settlement
Statement under Section 0 by furnishing invoices, receipts, reasonable access to
personnel and such other assistance as may be requested by Seller to facilitate
such process post-Closing.  Seller shall assist Purchaser in its review of the
Final Settlement Statement under Section 0 by using commercially reasonable
efforts to cause Operator to furnish invoices, receipts, reasonable access to
personnel and such other assistance as may be requested by Purchaser to
facilitate such process post-Closing. 

(d)All payments made or to be made under this Agreement to Seller or Purchaser
shall be made by electronic transfer of immediately available funds to Seller or
Purchaser, as applicable, or to such other bank and account as may be specified
by Seller or Purchaser in writing.

ARTICLE 9
TAX MATTERS

9.1     Tax Returns; Proration of Taxes.

(a)Except with respect to Production Taxes and Property Taxes, or as provided
otherwise in this Agreement:

(i)for any Tax period or the portion of any Tax period ending on or before the
Closing Date, Seller shall be responsible for preparing and timely filing of all
Tax Returns required by applicable Law to be filed and for the payment of all
Taxes levied or imposed that are attributable to the Assigned Interests;

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(ii)for any Tax period or portion of any Tax period beginning after the Closing
Date, Purchaser shall be responsible for preparing and the timely filing of all
Tax Returns required by applicable Law to be filed and for the payment of all
Taxes levied or imposed that are attributable to the Assigned Interests; and

(iii)control of any legal or administrative proceedings concerning any Taxes
with respect to the Assigned Interests, and entitlement to any refunds or awards
concerning any such Taxes with respect to such Assigned Interests, shall rest
with the Party responsible for payment therefor under this Section 0.

For the avoidance of doubt, any and all Tax Returns of the Seller relating to
income Taxes or franchise Taxes of any type, whether federal, state, local or
foreign, shall not be attributable to the Assigned Interests and Seller and its
principals shall have the sole authority and responsibility to prepare and file
such Tax Returns and pay such Taxes.

(b)With respect to Property Taxes,

(i)for any Property Taxes assessed on any of the Assigned Interests for a Tax
period that begins before and ends after the Closing Date (a “Straddle Period”),
liability for such Property Taxes shall be prorated on a daily basis between
Purchaser and Seller, with Seller being liable for the portion of such Property
Taxes equal to the product of (A) the amount of such Property Taxes for the
entirety of the Straddle Period, multiplied by (B) a fraction, the numerator of
which is the number of days in the Straddle Period ending prior to the Effective
Date and the denominator of which is the total number of days in the Straddle
Period, and with Purchaser being liable for the remainder of such Property
Taxes;

(ii)after the Closing, the Party (the “Paying Party”) receiving a Property Tax
bill or notice applicable to the Assigned Interests for a Straddle Period shall
promptly notify the other Party or Parties that may be responsible for a portion
of such Property Taxes pursuant to this Section 0 (the “Reimbursing Party”) in
writing, and the Paying Party shall pay such Property Tax bill prior to the last
day such Property Taxes may be paid without penalty or interest.  Upon receipt
of the written notice from the Paying Party, which shall include appropriate
supporting documentation, the Reimbursing Party shall promptly pay the Paying
Party any amount equal to the portion of the Taxes for which the Reimbursing
Party is liable under this Agreement.  The Parties shall reasonably cooperate
with each other after Closing with respect to any Property Tax assessment or
valuation (or protest in connection therewith) by any Governmental Authority
with respect to a Straddle Period; and

(iii)If any Party receives a refund of any Property Taxes with respect to the
Assigned Interests that is attributable to a Straddle Period, the Party
receiving such refund, whether received in cash, or as a credit against another
state and/or local Tax, shall, within thirty (30) days after the receipt of such
refund, pay to the other Party who was responsible for a portion of such
Property

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Taxes an amount equal to the product of (A) the amount of the refund, multiplied
by (B) a fraction, the numerator of which is the number of days in the Straddle
Period that such other Party was responsible for such Property Taxes and the
denominator of which is the total number of days in the Straddle Period.

(c)Notwithstanding anything to the contrary in this Agreement, Production Taxes
levied or imposed on or before the Closing Date, shall not be subject to this
Section 0 and responsibility therefor and payment thereof shall be exclusively
addressed by Sections 0 and 2.2 and Article 12.

9.2     Access to Information.

(a)From and after Closing, Seller shall grant to Purchaser (or its designees)
access at all reasonable times to all of the information, books and records
relating to the Assigned Interests within the possession of Seller (including
work papers and correspondence with any Governmental Authority, but excluding
work product of and attorney-client communications with Seller’s legal counsel;
confidential communications and records with third parties; and personnel
files), and excluding any other information, data and agreements restricted
under Section 6.1 above or Section 12.5(a)(vii) below; and shall afford
Purchaser (or its designees) the right (at Purchaser’s sole expense) to take
extracts therefrom and to make copies thereof, to the extent reasonably
necessary to permit Purchaser (or its designees) to prepare Tax Returns, to
conduct negotiations with any Governmental Authority, and to implement the
provisions of, or to investigate or defend any claims between the Parties
arising under, this Agreement.

(b)From and after the Closing Date, Purchaser shall grant to Seller (or its
designee) access at all reasonable times to all of the information, books and
records relating to the Assigned Interests within the possession of Purchaser
(including work papers and correspondence with Governmental Authorities, but
excluding work product of and attorney-client communications with any of
Purchaser’s legal counsel and personnel files), and shall afford Seller (or its
designee) the right (at Seller’s expense) to take extracts therefrom and to make
copies thereof, to the extent reasonably necessary to permit Seller (or its
designee) to prepare Tax Returns, to conduct negotiations with Governmental
Authorities, and to implement the provisions of, or to investigate or defend any
claims between the Parties arising under, this Agreement.

(c)In the case of any Taxes with respect to the Assigned Interests for which the
other Party may be liable hereunder, each of the Parties will preserve and
retain all schedules, work papers and other documents relating to any Tax
Returns or to any Tax claims, audits or other proceedings until the expiration
of the statute of limitations (including extensions) applicable to the taxable
period to which such documents relate or until the final determination of any
controversy with respect to such taxable period, and until the final
determination of any payments that may be required with respect to such taxable
period under this Agreement.  Purchaser and Seller shall cooperate fully with
each other in the conduct of any audit, litigation or other proceeding relating
to Taxes involving the Assigned Interests or the Allocated Value of such
Assigned Interests.

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(d)Seller shall promptly notify Purchaser in writing upon receipt by Seller of
notice of any pending or threatened Tax audit or assessments relating to the
income, properties or operations of Seller that reasonably may be expected to
relate to or give rise to a Lien on the Assigned Interests. Purchaser and Seller
shall promptly notify each other party in writing upon receipt of a notice of
any pending or threatened Tax audit or assessment challenging the Allocated
Values.

(e)At Seller’s request, Purchaser shall provide reasonable access to Purchaser’s
and its Affiliates’ personnel who have knowledge of the information described in
this Section 0.    

9.3     Conflict and Survival.  In the event of a conflict between the
provisions of this Article 9 and any other provision of this Agreement, except
Section 11.2(e), this Article 9 shall control.

 

ARTICLE 10
TERMINATION

10.1    Termination.  This Agreement may be terminated at any time prior to
Closing:

(a) by the mutual prior written consent of Seller and Purchaser;  

(b) by written notice from either Purchaser or Seller to the other, if the net
sum of all adjustments to the Unadjusted Purchase Price for Title Defects,
Environmental Defects, Excluded Assets, Casualty Losses, adjustments at Closing
under Section 3.7, failure to obtain and/or exercise of preferential rights, but
excluding adjustments pursuant to Section 2.2(c) through (i) is equal to or
greater than five percent (5%) of the Unadjusted Purchase Price;

(c) (1) by written notice from Seller to Purchaser, following Purchaser’s breach
of this Agreement that would, or is reasonably likely to, result in a Material
Adverse Effect on Purchaser, which breach remains uncured for ten (10) days
following written notice thereof to Purchaser, or (2) immediately upon written
notice from Seller to Purchaser, if Purchaser fails to pay and deliver to Seller
the Deposit within one (1) Business Day following the execution and delivery of
this Agreement,

(d) by written notice from Purchaser to Seller, following Seller’s breach of
this Agreement that would, or is reasonably likely to, result in a Material
Adverse Effect on Seller, which breach remains uncured for ten (10) days
following written notice thereof to Seller, or

(e) by written notice from either Seller or Purchaser if the Closing has not
occurred on or before 5:00 pm local time in Midland, Texas on October 31, 2014.

10.2    Effect of Termination. 

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(a)If this Agreement is terminated pursuant to Section 0, neither Party nor its
Affiliates shall have any liability to the other Party or its Affiliates under,
or related to, this Agreement as a result of such termination, whether in
contract, equity, Law or otherwise, and this Agreement shall become void and of
no further force or effect (except for the provisions of Article 1, this Article
10, Sections 0,  0,  0,  0,  0,  0, 6.6,  12.1, 12.2, 12.4, 12.6, 12.7, 12.8,
12.10, 12.11, 12.12, 12.13, 0, 12.16, 12.17 and 12.18, all of which shall
continue in full force and effect).  Notwithstanding the foregoing, nothing
contained in this Section 10.2 shall relieve any party from liability for
Damages (as defined in Section 11) resulting from its breach of this Agreement.

(b)If Purchaser, notwithstanding the satisfaction of all of
Purchaser’s  conditions to closing set forth in Section 7.2, fails, refuses, or
is unable for any reason not permitted by this Agreement to close the sale
pursuant hereto (or if this Agreement is terminated by Seller under Section
10.1(c)), the Deposit and all interest earned thereon, shall, except as
otherwise provided herein, be retained by Seller, as liquidated damages, or, at
Seller’s  sole option and election, Seller may instead of termination, either
assert their right of specific performance and/or pursue any other rights or
remedies to which they may be entitled, whether at law or in equity or both.   

(c)If Seller, notwithstanding the satisfaction of all of Seller’s conditions to
closing set forth in Section 7.1 fails, refuses, or is unable for any reason not
permitted by this Agreement to close the sale pursuant hereto (in such case, a
“Bad Faith Refusal”) (or if this Agreement is terminated by Purchaser under
Section 10.1(d) for reasons other than a Bad Faith Refusal), then, as
Purchaser’s sole and exclusive remedy, Purchaser (i) may terminate the
Agreement, in which case the Deposit and all interest earned thereon, shall,
except as otherwise provided herein, be returned by Seller to Purchaser, and
seek damages for, and reimbursement from Seller of, Purchaser’s actual
documented, out-of-pocket expenses and costs incurred in connection with this
Agreement and transactions with Seller under this Agreement and its financing of
the transactions contemplated by this Agreement) up to an aggregate amount, and
Seller’s aggregate liability for the same shall not exceed an aggregate amount,
equal to either: (A) in the case of a Bad Faith Refusal-- five percent (5%) of
the Unadjusted Purchase Price, or (B) in the case of termination of this
Agreement by Purchaser under Section 10.1(d) for reasons other than a Bad Faith
Refusal-- one percent (1%) of the Unadjusted Purchase Price, or (ii) at
Purchaser’s sole option and election, Purchaser may, instead of termination of
this Agreement, assert its right of specific performance.  The remedies set
forth in this Section 10.2(c) shall constitute Purchaser’s sole and exclusive
remedies in connection with the termination of this Agreement for the reasons
specified in this Section.     

(d)Notwithstanding the foregoing, (i) if this Agreement is terminated by either
Purchaser or Seller under Sections 10.1(a), 10.1(b) or 10.1(e) (excluding,
circumstances where failure to close by such date is due to the fault of
Purchaser), the Deposit, and all interest earned on the Deposit, shall be
returned by Seller to Purchaser; and neither party shall have any further
liability whatsoever to the other party pursuant to this Agreement (other than
as described in Section 10.2(a)).  The Parties hereby acknowledge that the
extent of damages to Seller occasioned by breach or default or

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failure to proceed by Purchaser would be impossible or extremely impractical to
ascertain and that the Deposit is a fair and reasonable estimate of such damages
under the circumstances and is not a penalty.

ARTICLE 11
INDEMNIFICATION; LIMITATIONS

11.1    Assumed Obligations.  Without limiting Purchaser’s rights to indemnity
under this Article 11, and except solely with regard to the Retained Obligations
and the indemnity rights under Section 11.3(b) (as limited and qualified under
the terms of this Agreement), on the Closing, Purchaser shall assume, and hereby
agrees to fulfil, perform, pay, and discharge (or cause to be fulfilled,
performed, paid, or discharged) all of the obligations or liabilities of the
Seller of any kind whatsoever with respect to the Assigned Interests, whether
known and disclosed to Purchaser or unknown, whether attributable to periods
prior to, on or after the Effective Date, and regardless of theory of liability
asserted (the “Assumed Obligations”), including, without limitation, the
following:

(a)Subject to the remainder of this Article 11, all of the obligations,
liabilities, and duties relating to, or with respect to, the ownership and
operation of the Assigned Interests that are attributable to periods of time
prior to, on and after the Effective Date, whether known or unknown;

(b)Subject to the adjustments to the Purchase Price set forth in Section 2.2(d),
and the representation and warranty set forth in Section 0, all obligations and
liabilities arising from or in connection with any imbalance, including
production, pipeline, storage, or processing imbalances attributable to
Hydrocarbons produced from the Assigned Properties, whether before, on, or after
the Effective Date;

(c)Obligations for plugging and abandonment of the Wells and dismantlement or
abandonment of all structures and Equipment included in the Assigned Interests
and restoration of the surface covered by the Leases and Units in accordance
with applicable Laws;

(d)Subject to the special warranty of title in the Assignment and Bill of Sale,
all Damages and obligations arising from or relating to Title Defects, whether
arising or relating to periods of time before, on, or after the Effective Date; 

(e)All obligations that are the responsibility of Purchaser under Section 2.2,
including obligations to pay working interests, royalties, overriding royalties,
and other interests held in suspense by Seller at Closing to the extent, and
only to the extent, that (i) Purchaser received an adjustment therefor pursuant
to Section 2.2(c); or (ii) such funds are transferred to Purchaser’s control at
Closing;

(f)All obligations, Damages and liabilities arising under any Leases, Contracts,
and permits; and

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(g)Damages and obligations arising from, or relating to, Environmental Defects,
or other environmental matters, whether arising or relating to periods of time
before, on, or after the Effective Date, together with any other Damages,
obligations and liabilities of any kind whatsoever relating to the physical
condition and environmental condition of the Assigned Interests and Assigned
Properties, including, without limitation, those that may arise under
Environmental Laws.

11.2    Retained Obligations.  Except for the Assumed Obligations as set forth
in Section 0, Purchaser shall not assume or otherwise become liable for any of
the following liabilities, Damages, duties or other obligations of Seller
arising from the following (collectively, the “Retained Obligations”):

(a)claims of improper calculation or payment of royalties (including overriding
royalties and other burdens on production), solely to the extent attributable to
production of Hydrocarbons prior to the Effective Date allocable to the Assigned
Interests;

(b)the Excluded Assets;

(c)solely to the extent that Seller has a valid claim for the same under an
existing insurance policy (carried or maintained under applicable joint
operating agreements covering the Assigned Interests) of which Seller is a
beneficiary and that would cover such liabilities or Damages (and assuming
Seller uses commercially reasonable efforts to pursue such valid claim for the
same under the insurance policy, the Retained Obligations shall be limited
solely to the actual proceeds received by Seller under such insurance policy):
the injury or death to any natural Person attributable to, or arising out of,
the operation of the Assets prior to the Closing;

(d)obligations or Liabilities incurred by Seller with respect to the matters set
forth on Schedule 4.2 to the extent allocable to the Assigned Interests, except
to the extent the same relate to a Title Defect or an Environmental Defect,
which shall be addressed under the other provisions of this Agreement; or

(e)any Tax obligations retained by Seller pursuant to Article 9.

11.3    Indemnification.

(a)From and after Closing, Purchaser shall INDEMNIFY, DEFEND, AND HOLD HARMLESS
Seller and each of the other members of the Seller Group from and against all
Damages incurred or suffered by any of them:

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

(ii)caused by, arising out of, or resulting from Purchaser’s breach of any of
its covenants or agreements contained in this Agreement, or

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(iii)caused by, arising out of, or resulting from any breach of any
representation or warranty made by Purchaser contained in Article 5 or in the
certificate delivered at Closing pursuant to Section 8.3(e),

even if such Damages are caused in whole or in part by the negligence (whether
sole, joint or concurrent), strict liability or other legal fault of any
Indemnified Person, invitee or third Person, and whether or not caused by a
pre-existing condition.

(b)From and after Closing, subject to the provisions of the initial paragraph of
this Agreement, Seller shall INDEMNIFY, DEFEND, AND HOLD HARMLESS Purchaser and
its Affiliates and its and their respective directors, officers, partners,
members, equity owners, investors, employees, agents, and representatives
(“Purchaser Group”) from and against all Damages incurred or suffered by
Purchaser Group:

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

(ii)caused by, arising out of, or resulting from, Seller’s breach of any of its
Closing and post-Closing covenants or agreements contained in this Agreement; or

(iii)caused by, arising out of, or resulting from, any breach of any
representation or warranty made by Seller contained in Article 4, or in the
certificates delivered at Closing pursuant to Section 0,

even if such Damages are caused in whole or in part by the negligence (whether
sole, joint or concurrent), strict liability or other legal fault of any
Indemnified Person, invitee, or third Person, and whether or not caused by a
pre-existing condition.

(c)Notwithstanding anything to the contrary contained in this Agreement, from
and after Closing, Seller’s and Purchaser’s sole and exclusive remedy against
each other with respect to breaches of the representations, warranties,
covenants, and agreements of the Parties contained in this Agreement (excluding
Sections 3.12(b), 0, 6.5, 6.6, 8.4 and Article 9, which shall be separately
enforceable by Seller pursuant to whatever rights and remedies are available to
it outside of this Article 11), and the affirmations of such representations,
warranties, covenants, and agreements contained in the certificates delivered by
each Party at Closing pursuant to Sections 0 and 8.3(e), as applicable, is set
forth in this Article 11.  The Parties shall have all other remedies at law or
in equity for breaches for all provisions of this Agreement, except as set forth
above and except as limited under Section 0.

(d)The Parties shall treat, for Tax purposes, any amounts paid pursuant to this
Article 11 as an adjustment to the Purchase Price, with payments by Seller to
Purchaser being a reduction of the Purchase Price and payments by Purchaser to
Seller being an increase in the Purchase Price.

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11.4    Indemnification Actions.  All claims for indemnification under Section 0
shall be asserted and resolved as follows:

(a)For purposes of this Article 11, the term “Indemnifying Person” when used in
connection with particular Damages shall mean the Person having an obligation to
indemnify another Person or Persons with respect to such Damages pursuant to
this Article 11, and the term “Indemnified Person” when used in connection with
particular Damages shall mean a Person having the right to be indemnified with
respect to such Damages pursuant to this Article 11 (including, for the
avoidance of doubt, those Persons identified in Section 11.4(h)).

(b)To make a claim for indemnification under Section 0, an Indemnified Person
shall notify the Indemnifying Person of its claim, including the specific
details of and specific basis under this Agreement for its claim (the “Claim
Notice”).  In the event that the claim for indemnification is based upon a claim
by a third Person against the Indemnified Person (a “Claim”), the Indemnified
Person shall provide its Claim Notice promptly after the Indemnified Person has
actual knowledge of the Claim and shall enclose a complete copy of all papers
(if any) served with respect to the Claim; provided that the failure of any
Indemnified Person to give notice of a Claim as provided in this Section 0 shall
not relieve the Indemnifying Person of its obligations under Section 0, except
to the extent such failure results in insufficient time being available to
permit the Indemnifying Person to effectively defend against the Claim or
otherwise prejudices the Indemnifying Person’s ability to defend against the
Claim.  In the event that the claim for indemnification is based upon an
inaccuracy or a breach of a representation, warranty, covenant, or agreement,
the Claim Notice shall specify the representation, warranty, covenant or
agreement that was inaccurate or breached and the reasonably specific details
of, and specific basis for, such asserted inaccuracy or breach.

(c)In the case of a claim for indemnification based upon a Claim, unless the
situation requires a shorter period of time to respond to a Claim, the
Indemnifying Person shall have thirty (30) days from its receipt of the Claim
Notice to notify the Indemnified Person whether it admits or denies its
obligation to defend the Indemnified Person against such Claim under this
Article 11.  If the Indemnifying Person does not notify the Indemnified Person
within such thirty (30) day period regarding whether the Indemnifying Person
admits or denies its obligation to defend the Indemnified Person, it shall be
deemed to have denied its obligation to provide such indemnification
hereunder.  The Indemnified Person is authorized, prior to and during such
thirty (30) day period, to file any motion, answer or other pleading that it
shall deem necessary or appropriate to protect its interests or those of the
Indemnifying Person and that is not prejudicial to the Indemnifying Person.

(d)If the Indemnifying Person admits its obligation, it shall have the right and
obligation to diligently defend, at its sole cost and expense, the Claim.  The
Indemnifying Person shall have full control of such defense and proceedings,
including any compromise or settlement thereof.  If requested by the
Indemnifying Person, the Indemnified Person agrees to cooperate in contesting
any Claim which the Indemnifying

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Person elects to contest (provided, however, that the Indemnified Person shall
not be required to bring any counterclaim or cross-complaint against any
Person).  The Indemnified Person may participate in, but not control, any
defense or settlement of any Claim controlled by the Indemnifying Person
pursuant to this Section 11.4(d).  An Indemnifying Person shall not, without the
written consent of the Indemnified Person, settle any Claim or consent to the
entry of any judgment with respect thereto that (i) does not result in a final,
non-appealable, resolution of the Indemnified Person’s liability with respect to
the Claim (including, in the case of a settlement, an unconditional written
release of the Indemnified Person from all further liability in respect of such
Claim); or (ii) may materially and adversely affect the Indemnified Person
(other than as a result of money damages covered by the indemnity).

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

(f)If a Party would be required to defend a Claim as provided in this Section 0,
which Claim is unliquidated in amount, but for the assertion that the other
Party would not be entitled to indemnification for any liability, loss, cost,
expense, claim, award, judgment, or other Damages incurred or suffered by such
Party due solely to the limitations set forth in Section 11.6(c) with respect to
the amount of such Claim, such Party shall nevertheless have the right and
obligation to defend against such Claim as set forth in Section 11.4(d), subject
to the indemnification obligations of such Party set forth in this Article 11;
 provided, however, that if, upon final, non-appealable liquidation of the
amount of such Claim, the Party defending such Claim pursuant to this
Section 11.4(f) would not have had the obligation to defend such Claim under
Section 11.6(c) due solely to the limitations set forth in Section 11.6(c) with
respect to the amount of such Claim, the Party defending such Claim shall be
entitled to reimbursement of all reasonable costs and expenses incurred with
respect to the defense of such Claim.

(g)In the case of a claim for indemnification not based upon a Claim, the
Indemnifying Person shall have thirty (30) days from its receipt of the Claim
Notice to

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(i) cure the Damages complained of; (ii) admit its obligation to provide
indemnification with respect to such Damages; or (iii) dispute the claim for
such Damages.  If the Indemnifying Person does not notify the Indemnified Person
within such thirty (30) day period that it has cured the Damages or that it
disputes the claim for such Damages, the Indemnifying Person shall be
conclusively deemed to have disputed the claim for indemnification hereunder.

(h)Any claim for indemnity under Section 0 by any Affiliate, director, officer,
employee or agent must be brought and administered by the applicable Party to
this Agreement.  No Indemnified Person other than Seller and Purchaser shall
have any rights against either Seller or Purchaser under the terms of Section 0
except as may be exercised on its behalf by Purchaser or Seller, as applicable,
pursuant to this Section 11.4(h).  Each of Seller and Purchaser may elect to
exercise or not exercise indemnification rights under this Section 0 on behalf
of the other Indemnified Persons affiliated with it in its sole discretion and
shall have no liability to any such other Indemnified Person for any action or
inaction under this Section 0.

11.5    Casualty and Condemnation.

(a)If, after the date of this Agreement but prior to Closing, any portion of the
Assigned Interests is destroyed by fire or other casualty or is expropriated or
taken in condemnation or under right of eminent domain (a “Casualty Loss”), this
Agreement shall remain in full force and effect, and Purchaser shall
nevertheless be required to close.    

(b)In the event of a Casualty Loss, at Seller’s election: (i) Seller may cause
the Assigned Interests affected by any Casualty Loss to be repaired or restored
(and any dispute regarding whether repaired or restored shall be resolved
pursuant to the dispute resolution provisions hereof), at Seller’s sole cost, as
promptly as reasonably practicable (but in any event prior to the Closing Date),
and Seller shall retain all rights to insurance and other claims against third
Persons with respect to the Casualty Loss or taking except to the extent the
Parties otherwise agree in writing); or (ii) at the election of Seller, the
affected Assigned Interests shall be deleted from this Agreement and all
exhibits and schedules hereto and shall constitute Excluded Assets, and the
Purchase Price shall be decreased by the Allocated Value thereof; or (iii) upon
consent of Purchaser, the Unadjusted Purchase Price shall be reduced on the
value lost by such Casualty Loss (not to exceed the Allocated Value of the
affected Assigned Properties or Assigned Interests).

11.6    Limitation on Actions.

(a)The representations and warranties of Purchaser in Article  5 shall survive
indefinitely and the covenants of Purchaser in this Agreement shall survive
Closing indefinitely, and the corresponding representations, warranties, and
affirmations given in the certificates delivered at Closing pursuant to Sections
8.3(d) and 8.3(e), as applicable, shall survive the Closing indefinitely.  The
representations and warranties of Seller in set forth in Article 4 (other
than  the representations and warranties in Sections 4.1, 4.3 and 4.8) shall
survive the Closing for a period of one (1) year; the representations and

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warranties in Sections 4.1 and 4.8 shall survive the Closing indefinitely; and
the representations and warranties in Section 4.3 shall survive the Closing for
the applicable statute of limitations period (including any extensions
thereof).  The covenants of Seller to be performed prior to Closing shall
survive until the Closing, and all other covenants of the Seller in this
Agreement to be performed at or after Closing shall survive Closing as
reasonably necessary to perform the same, and subject to the limitations set
forth in Section 11.6(b) and 11.6(c) below.  The representations, warranties,
and affirmations given in the certificates delivered at Closing pursuant to
Section 8.2(e) shall only survive for the period of survival for the respective
representations, warranties and covenants for with they cover, as described
above in this Section 11.6.  The remainder of this Agreement shall survive the
Closing without time limit except as may otherwise be expressly provided
herein.  Representations, warranties, covenants, and agreements shall be of no
further force and effect after the date of their expiration, provided that there
shall be no termination of any bona fide claim asserted pursuant to this
Agreement with respect to such a representation, warranty, covenant, or
agreement prior to its expiration date.

(b)The indemnities in Sections 11.3(a)(ii) and (iii) and Sections 11.3(b)(ii)
and (iii) shall terminate as of the termination date of each respective
representation, warranty, covenant, or agreement that is subject to
indemnification, except in each case as to matters for which a specific written
claim for indemnity has been delivered to the Indemnifying Person on or before
such termination date.  The indemnity in Section 11.3(b)(i) shall survive the
Closing without time limit.  The indemnity in Section 11.3(a)(i) shall survive
the Closing without time limit. 

(c)Seller shall not have any liability for any indemnification under
Section 11.3(b) for an individual matter until and unless the amount of the
liability for Damages with respect to which such Party admits (or it is
otherwise finally determined) that Seller  has an obligation to indemnify
Purchaser Group pursuant to the terms of Section 11.3(b) exceeds FIFTY THOUSAND
AND NO/100 DOLLARS ($50,000.00) (the “Individual Indemnity Threshold”).  Without
limiting the foregoing, to the extent Damages for a particular matter do exceed
the Individual Indemnity Threshold, Seller shall have no liability for any
indemnification under Section 11.3(b) until and unless the aggregate amount of
the liability for all such Damages (being only those for matters that exceed the
Individual Indemnity Threshold) for all such matters exceeds two percent (2.0%)
of the Unadjusted Purchase Price, and then only to the extent such Damages
exceed two percent (2.0%) of the Unadjusted Purchase Price; provided, however,
that this Section 11.6(c) shall not limit indemnification for the Retained
Obligations or breaches of Seller’s representations and warranties in Sections
4.1, 4.3, and 4.8, covenants in Section 0, the special warranty of title in the
Assignment and Bill of Sale, or the covenants of the Parties in Section 0; and
provided further, that, for the purposes of this Article 11, any representation,
warranty, or covenant set forth in this Agreement which is qualified by
materiality or Material Adverse Effect, if breached, shall be deemed not to be
so qualified in connection with the calculation of the Damages.

(d)Notwithstanding anything to the contrary contained elsewhere in this
Agreement, Seller shall not be required to indemnify Purchaser or other members
of the

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Purchaser Group under this Article 11 for aggregate Damages in excess of ONE
HUNDRED SIXTY-SIX THOUSAND SIX HUNDRED SIXTY-SIX AND NO/100 DOLLARS
($166,666.00); provided, however, that this Section 11.6(d) shall not limit
indemnification for the Retained Obligations or breaches of Seller’s
representations and warranties in Sections 4.1, 4.3, and 4.8, covenants in
Section 0, the special warranty of title in the Assignment and Bill of Sale.   

(e)The amount of any Damages for which Purchaser or Purchaser Group is entitled
to indemnity under this Article 11 shall be reduced by the amount of insurance
proceeds realized by such Indemnified Person or its Affiliates with respect to
such Damages (net of any collection costs, and excluding the proceeds of any
insurance policy issued or underwritten by such Indemnified Person or its
Affiliates);  provided, however, that no Party shall be required to seek
recovery under any policy of insurance as a condition to indemnification
hereunder.

(f)As used in this Agreement, the term “Damages” means the amount of any actual
liability, loss, cost, expense, claim, award, or judgment incurred or suffered
by any Indemnified Person arising out of or resulting from the indemnified
matter, whether attributable to personal injury or death, property damage,
contract claims, torts, or otherwise, including reasonable fees and expenses of
attorneys, consultants, accountants, or other agents and experts reasonably
incident to matters indemnified against, and the reasonable costs of
investigation and/or monitoring of such matters, and the costs of enforcement of
the indemnity; provided,  however, that “Damages” shall not include any
adjustment for Taxes that may be assessed on payments under this Article 11 or
for Tax benefits received by the Indemnified Person as a consequence of any
Damages.  Notwithstanding the foregoing, neither Purchaser nor Seller shall be
entitled to indemnification under this Article 11 for, and Damages shall not
include, (i) loss of profits, whether actual or consequential, indirect,
special, or other consequential damages suffered by the Party claiming
indemnification, nor any punitive damages (other than loss of profits,
consequential, indirect, special or punitive damages suffered by third Persons
for which responsibility is allocated among the Parties); and (ii) any increase
in liability, loss, cost, expense, claim, award or judgment to the extent such
increase is caused by the actions or omissions of any Indemnified Person after
the Closing Date.

ARTICLE 12
mISCELLANEOUS

12.1    Counterparts.  This Agreement may be executed in counterparts, each of
which shall be deemed an original instrument, but all such counterparts together
shall constitute but one agreement.

12.2    Notices.  All notices that are required or may be given pursuant to this
Agreement shall be sufficient in all respects if given in writing, in English
and delivered personally, by telecopy or by recognized courier service, as
follows:

 

 

 

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If to Seller:

Hedloc Investment Co. LP

 

 

P.O. Box 882

 

 

Midland, TX 79702

 

 

Attention:

Jack Harper

 

Telephone:

(432) 253-7808

 

Facsimile:

(432) 253-7840

 

Email:

jharper@concho.com

 

 

 

If to Purchaser:

Callon Petroleum Company

 

 

1401 Enclave Parkway

 

 

Suite 600

 

 

Houston, Texas 77077

 

 

Attention:

Joe Gatto, Chief Financial Officer

 

Telephone:

(281) 589-5521

 

Email:

jgatto@callon.com

 

 

 

With a copy to:

Callon Petroleum Company

 

 

1401 Enclave Parkway

 

 

Suite 600

 

 

Houston, TX 77077

 

 

Attention:

Jerry Weant, VP Land

 

Telephone:

(281) 589-5264

 

Email:

jweant@callon.com

 

Either Party may change its address for notice by notice to the other in the
manner set forth above.  All notices shall be deemed to have been duly given at
the time of receipt by the Party to which such notice is addressed.

12.3    Sales or Use Tax, Recording Fees and Similar Taxes and Fees. 
Notwithstanding anything to the contrary in Article  9, Purchaser shall bear any
sales, use, excise, real property transfer or gain, gross receipts, goods and
services, registration, capital, documentary, stamp or transfer Taxes, recording
fees and similar Taxes and fees incurred and imposed upon, or with respect to,
the property transfers or other transactions contemplated hereby.  Should Seller
or any Affiliate of Seller pay any amount for which Purchaser is liable under
this Section 0, Purchaser shall, promptly following receipt of Seller’s invoice,
describing the amount in reasonable detail, reimburse the amount paid.  If such
transfers are exempt from any such Taxes or fees upon the filing of an
appropriate certificate or other evidence of exemption, Purchaser shall timely
furnish to Seller such certificate or evidence.

12.4    Expenses.  All expenses incurred by the Parties in connection with or
related to the authorization, preparation or execution of this Agreement, and
the Exhibits and Schedules hereto and thereto, and all other matters related to
the Closing, including all fees and expenses of counsel, accountants and
financial advisers employed by the Parties, shall be borne solely and entirely
by Party incurring the same.

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12.5    Records.

(a)As soon as practicable, but in no event later than fifteen (15) days after
the Closing Date, Seller shall deliver or cause to be delivered to Purchaser
copies (at Purchaser’s expense) of the books and records relating to the
Assigned Interests that are in the possession of Seller (except for the Excluded
Records, as defined below, the “Records”), subject to Section 12.5(b) and
excluding, however:

(i)all corporate, financial, Tax, and legal (other than title records that
relate to the Assigned Interests) data and records of Seller that relate to
Seller’s business generally (whether or not relating to the Assigned Interests)
or to Seller’s business, operations, assets, and properties not expressly
included in this Agreement;

(ii)all legal records and legal files of Seller including all work product of,
and attorney-client communications with, Seller’s legal counsel (other than
Leases, title opinions, and Contracts), and records and files that cannot be
disclosed or provided without waiving a legal privilege;

(iii)data and records relating to the sale of the Assigned Interests, including
communications with the advisors or representatives of Seller or any of their
Affiliates;

(iv)any data and records, to the extent relating to the Excluded Assets; 

(v)all data and records that are subject to confidentiality restrictions owed to
unaffiliated third-parties, for which, after a good faith effort by Seller,
consent has not been obtained; and

(vi)copies of all original data and records retained by Seller pursuant to
Section 0.

(Clauses (i) through (vi) shall hereinafter be referred to as the “Excluded
Records”).

(b)Seller may retain the originals of those Records relating to Tax and
accounting matters with respect to periods of time prior to the Effective Date.

(c)Without limiting the foregoing, all Well files and Lease files, revenue, JIB,
and division order files and decks, and related name and address files shall be
delivered to Purchaser.

(d)Until such time as Seller delivers the Records to Purchaser, Seller will
allow Purchaser and its representatives, consultants and advisors reasonable
access, during normal business hours and upon reasonable notice, to the Records
in its possession.

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12.6    Governing Law.  This Agreement and the legal relations between the
Parties shall be governed by and construed in accordance with the laws of the
State of Texas, without regard to principles of conflicts of laws that would
direct the application of the laws of another jurisdiction.

12.7    Dispute Resolution.  Each Party consents to personal jurisdiction in any
action brought in the district courts located in the State of Texas with respect
to any dispute, claim or controversy arising out of or in relation to or in
connection with this Agreement, and each of the Parties agrees that any action
instituted by it against the other with respect to any such dispute, controversy
or claim (except to the extent a dispute, controversy, or claim arising out of
or in relation to or in connection with title matters pursuant to Section 0, or
the determination of Purchase Price adjustments pursuant to Section 0 is
referred to an expert pursuant to those Sections) will be instituted exclusively
in the District Court of Harris County, Texas.  Each Party (a) irrevocably
submits to the exclusive jurisdiction of such courts, (b) waives any objection
to laying venue in any such action or proceeding in such courts, (c) waives any
objection that such courts are an inconvenient forum or do not have jurisdiction
over it, and (d) agrees that service of process upon it may be effected by
mailing a copy thereof by registered mail (or any substantially similar form of
mail), postage prepaid, to it at its address specified in Section 0.  The
foregoing consents to jurisdiction and service of process shall not constitute
general consents to service of process in the State of Texas for any purpose
except as provided herein and shall not be deemed to confer any rights on any
Person other than the Parties to this Agreement.  The Parties hereby waive trial
by jury in any action, proceeding or counterclaim brought by any Party against
another in any matter whatsoever arising out of or in relation to or in
connection with this Agreement.

12.8    Captions.  The captions in this Agreement are for convenience only and
shall not be considered a part of or affect the construction or interpretation
of any provision of this Agreement.

12.9    Waivers.  Any failure by any Party to comply with any of its
obligations, agreements or conditions herein contained may be waived by the
Party to whom such compliance is owed by an instrument signed by the Party to
whom compliance is owed and expressly identified as a waiver, but not in any
other manner.  No waiver of, or consent to a change in, any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of, or consent to a
change in, other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.

12.10   Assignment.  No Party shall assign (including by change of control,
merger, consolidation, or stock purchase) or otherwise transfer all or any part
of this Agreement to any third Person other than an Affiliate, nor shall any
Party delegate any of its rights or duties hereunder (including by change of
control, merger, consolidation, or stock purchase) to any third Person other
than an Affiliate, without the prior written consent of the other Party and any
transfer or delegation made without such consent shall be void.  Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and assigns. 

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12.11   Entire Agreement.  This Agreement and the documents to be executed
hereunder and the Exhibits and Schedules attached hereto constitute the entire
agreement among the Parties pertaining to the subject matter hereof, and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties pertaining to the subject matter hereof.
 In entering into this Agreement, neither Party has relied on any statement,
representation, warranty, covenant, or agreement of the other Party or its
representatives other than those expressly contained in this Agreement.

12.12   Amendment.  This Agreement may be amended or modified only by an
agreement in writing signed by Seller and Purchaser and expressly identified as
an amendment or modification.

12.13   No Third-Person Beneficiaries.  Nothing in this Agreement shall entitle
any Person other than Purchaser and Seller to any claim, cause of action, remedy
or right of any kind, except the rights expressly provided to the Persons
described in Section 6.4 and Section 11.3.

12.14   Severability.  If any provision of this Agreement, or any application
thereof, is held invalid, illegal or unenforceable in any respect under any Law,
this Agreement shall be reformed to the extent necessary to conform, in each
case consistent with the intention of the Parties, to such Law, and, to the
extent such provision cannot be so reformed, then such provision (or the
invalid, illegal or unenforceable application thereof) shall be deemed deleted
from (or prohibited under) this Agreement, as the case may be, and the validity,
legality and enforceability of the remaining provisions contained herein (and
any other application of such provision) shall not in any way be affected or
impaired thereby.

12.15   Time of the Essence.  Time is of the essence in this Agreement.  If the
date specified in this Agreement for giving any notice or taking any action is
not a Business Day (or if the period during which any notice is required to be
given or any action taken expires on a date which is not a Business Day), then
the date for giving such notice or taking such action (and the expiration of
such period during which notice is required to be given or action taken) shall
be the next day which is a Business Day.

12.16   References.  In this Agreement: (a) references to any gender includes a
reference to all other genders; (b) references to the singular includes the
plural, and vice versa; (c) reference to any Article or Section means an Article
or Section of this Agreement; (d) reference to any Exhibit or Schedule means an
Exhibit or Schedule to this Agreement, all of which are incorporated into and
made a part of this Agreement; (e) unless expressly provided to the contrary,
“hereunder”, “hereof”, “herein” and words of similar import are references to
this Agreement as a whole and not any particular Section or other provision of
this Agreement; (f) references to “$” or “dollars” means United States Dollars;
and (g) ”include” and “including” mean include or including without limiting the
generality of the description preceding such term.

12.17   Construction.  Purchaser is capable of making such investigation,
inspection, review and evaluation of the Assigned Interests as a prudent
purchaser would deem appropriate under the circumstances, including with respect
to all matters relating to the Assigned Interests, their value, operation and
suitability.  Seller and Purchaser have had the opportunity to exercise

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business discretion in relation to the negotiation of the details of the
transaction contemplated hereby.  This Agreement is the result of arm’s-length
negotiations from equal bargaining positions.  It is expressly agreed that this
Agreement shall not be construed against any Party, and no consideration shall
be given or presumption made, on the basis of who drafted this Agreement or any
particular provision thereof.

12.18   Limitation on Damages.  Notwithstanding anything to the contrary
contained herein, neither Purchaser nor Seller, nor any of their respective
Affiliates shall be entitled to consequential, indirect, special, or punitive
damages in connection with this Agreement and the transactions contemplated
hereby (other than consequential, indirect, or special, or punitive damages
suffered by third Persons for which responsibility is allocated between the
Parties) and each of Purchaser and Seller, for itself and on behalf of its
Affiliates, hereby expressly waives any right to consequential, indirect,
special, or punitive damages in connection with this Agreement and the
transactions contemplated hereby (other than consequential, indirect, special,
or punitive damages suffered by third Persons for which responsibility is
allocated between the Parties).

12.19   Financing Sources.  Notwithstanding anything to the contrary contained
herein, none of the Financing Sources shall have any liability or obligation
with respect to any claims or actions arising out of or relating to any breach
or termination of or under this Agreement or any of the transactions
contemplated hereunder, and in no event shall any party hereto, any of their
respective subsidiaries or Affiliates or any of such entities’ representatives
seek any recovery, judgment or damages of any kind, including consequential,
indirect or punitive damages, against any Financing Source, by the enforcement
of any assessment or by any legal or equitable proceeding against any Financing
Source, by virtue of any statute, regulation or applicable Law, or otherwise,
whether at law or in equity, in contract, in tort or otherwise, in each case in
connection with this Agreement or the transactions contemplated hereunder;
provided, that nothing contained in this Section 12.19 is intended or shall be
construed to affect or limit (i) any obligations of the Financing Sources to
Purchaser or the remedies available to Purchaser with respect to such
obligations or (ii) any obligations of the Parties to each other under this
Agreement or any other agreement, certificate or other document to be delivered
by them pursuant to this Agreement.

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

 

 

 

 

 

 

 

 

 

 

SELLER:

 

 

 

 

 

 

 

NEDLOC INVESTMENT CO. LP

 

 

 

 

 

By:

Hedloc Investment G.P. LLC

 

 

 

 

 

 

 

 

 

 

By:

/s/ Jack Harper

 

 

Name:

Jack Harper

 

 

Title:

Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PURCHASER

 

 

 

 

 

 

CALLON PETROLEUM OPERATING COMPANY

 

 

 

 

 

 

 

 

 

By:

/s/ Joseph C. Gatto, Jr.

 

 

Name:

Joseph C. Gatto, Jr.

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

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