Exhibit 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

dated as of May 24, 2007

among

Forest Alaska Holding LLC,

As Seller;

Forest Alaska Operating LLC,

As the Company;

Forest Oil Corporation

(for purposes of Sections 7.6, 7.14, 10.1 and Article XII only)

AND

Pacific Energy Resources Ltd.

As Buyer

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TABLE OF CONTENTS

 

 

 

Page

 

ARTICLE I

 

DEFINITIONS

 

1

 

ARTICLE II

 

EFFECTIVE DATE; CLOSING

 

7

 

2.1

 

Effective Date; Closing

 

7

 

2.2

 

Proceedings at Closing

 

8

 

ARTICLE III

 

SALE AND PURCHASE OF MEMBERSHIP INTERESTS; CONSIDERATION

 

8

 

3.1

 

Sale and Purchase of Membership Interests

 

8

 

3.2

 

Amount and Form of Consideration

 

8

 

3.3

 

Payment of Consideration

 

8

 

3.4

 

Price Adjustments

 

8

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY

 

9

 

4.1

 

Organization and Power

 

9

 

4.2

 

Authorizations; Execution and Validity

 

10

 

4.3

 

Capitalization

 

10

 

4.4

 

Financial Statements; Other Financial Data

 

10

 

4.5

 

Consents

 

11

 

4.6

 

No Defaults or Conflicts

 

11

 

4.7

 

Agreements, Contracts and Commitments

 

11

 

4.8

 

Litigation

 

12

 

4.9

 

Taxes

 

12

 

4.10

 

Fees

 

13

 

4.11

 

Absence of Certain Changes or Events

 

13

 

4.12

 

Compliance with Laws

 

14

 

4.13

 

Transactions with Related Parties

 

14

 

4.14

 

Books and Records

 

14

 

4.15

 

Information Furnished

 

14

 

4.16

 

Directors and Officers

 

14

 

4.17

 

Bank Accounts

 

14

 

4.18

 

Owned Real Property

 

15

 

4.19

 

Leased Real Property

 

15

 

4.20

 

Intentionally left blank

 

15

 

4.21

 

Title to Oil and Gas Properties

 

15

 

4.22

 

Environmental Matters

 

16

 

4.23

 

Bonding Matters

 

17

 

4.24

 

Insurance

 

17

 

4.25

 

ERISA

 

17

 

4.26

 

Condition of Assets

 

17

 

4.27

 

Lease Operating Expenses

 

17

 

4.28

 

Hedging Transactions

 

17

 

4.29

 

Prepayment Premium; Total Company Debt

 

18

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

18

 

5.1

 

Organization and Good Standing

 

18

 

5.2

 

Authorization of Agreement

 

18

 

 

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5.3

 

Conflicts, Consents of Third Parties

 

18

 

5.4

 

Brokers

 

19

 

5.5

 

Litigation

 

19

 

5.6

 

Ownership of Membership Interests

 

19

 

5.7

 

Tax Status

 

19

 

5.8

 

Marketable Title

 

19

 

ARTICLE VI

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

19

 

6.1

 

Organization and Good Standing

 

19

 

6.2

 

Authorization of Agreement

 

20

 

6.3

 

Conflicts, Consents of Third Parties

 

20

 

6.4

 

No Default

 

20

 

6.5

 

Litigation

 

20

 

6.6

 

Investment Intent

 

20

 

6.7

 

Disclosure of Information

 

20

 

6.8

 

Funding Commitments

 

21

 

6.9

 

Brokers

 

21

 

ARTICLE VII

 

ADDITIONAL AGREEMENTS

 

21

 

7.1

 

Further Actions

 

21

 

7.2

 

Conduct of Business Pending Closing

 

21

 

7.3

 

Title Defects

 

22

 

7.4

 

Environmental Defects

 

24

 

7.5

 

Gas Imbalances

 

25

 

7.6

 

Access to Information

 

26

 

7.7

 

Regulatory Approvals

 

26

 

7.8

 

Agreement to Defend

 

26

 

7.9

 

Other Actions

 

26

 

7.10

 

LIMITATION AND DISCLAIMER OF IMPLIED REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND SELLER

 

26

 

7.11

 

Change of Company Name

 

27

 

7.12

 

Account Signatories

 

27

 

7.13

 

Cooperation with Financing

 

27

 

7.14

 

Hedge Assumption

 

28

 

ARTICLE VIII

 

CONDITIONS TO CLOSING

 

28

 

8.1

 

Buyer’s Conditions

 

28

 

8.2

 

Seller’s Conditions

 

29

 

ARTICLE IX

 

DELIVERIES AT CLOSING

 

29

 

9.1

 

Deliveries by Seller to Buyer

 

29

 

9.2

 

Deliveries by Buyer to Seller and the Company

 

30

 

ARTICLE X

 

TRANSITION OPERATIONS

 

31

 

10.1

 

Transition Operations

 

31

 

ARTICLE XI

 

TERMINATION

 

31

 

11.1

 

Termination

 

31

 

11.2

 

Effect of Termination

 

32

 

 

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ARTICLE XII

 

INDEMNIFICATION

 

32

 

12.1

 

Seller and FOC Indemnification

 

32

 

12.2

 

Buyer Indemnification

 

32

 

12.3

 

Indemnification Procedures

 

32

 

12.4

 

Limits on Indemnification

 

33

 

ARTICLE XIII

 

TAXES

 

34

 

13.1

 

Sales and Use Taxes; Property Taxes

 

34

 

13.2

 

Tax Proceedings

 

35

 

13.3

 

Real and Personal Property Taxes

 

35

 

13.4

 

Property Tax Reporting

 

35

 

13.5

 

Production Taxes

 

35

 

13.6

 

Income Taxes

 

36

 

13.7

 

Purchase Price Allocation

 

36

 

ARTICLE XIV

 

GENERAL

 

36

 

14.1

 

Governing Law; Choice of Forum

 

36

 

14.2

 

Amendments

 

36

 

14.3

 

Waivers

 

36

 

14.4

 

Notices

 

36

 

14.5

 

Successors and Assigns, Parties in Interest

 

37

 

14.6

 

Severability

 

37

 

14.7

 

Entire Agreement

 

37

 

14.8

 

Schedules

 

38

 

14.9

 

Remedies

 

38

 

14.10

 

Expenses

 

38

 

14.11

 

Release of Information; Confidentiality

 

38

 

14.12

 

Certain Construction Rules

 

38

 

14.13

 

Counterparts

 

39

 

 

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

This Membership Interest Purchase Agreement dated as of May 24, 2007 (the
“Agreement”) is entered into by and among Pacific Energy Resources Ltd., a
Delaware corporation (“Buyer”), Forest Alaska Operating LLC, a Delaware limited
liability company (the “Company”), Forest Alaska Holding LLC, a Delaware limited
liability company (“Seller”), and, for purposes of Sections 7.6, 7.14, 10.1 and
Article XII only, Forest Oil Corporation, a New York corporation (“FOC”)
pertaining to the purchase and sale of 100% of the membership interests of the
Company.

WHEREAS, the Seller owns all the outstanding membership interests (the
“Membership Interests”) of the Company; and

WHEREAS, Buyer desires to purchase from Seller and Seller desires to sell to
Buyer all of the Membership Interests on the terms and subject to the conditions
set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements, representations,
warranties and subject to the conditions contained herein, the parties hereto
hereby agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement:

“Affiliate” means, as to any Person, a Person that, directly or indirectly,
controls, is controlled by, or is under common control with such Person.

“Aggregate Title Defect Value” has the meaning specified in Section 7.3(d).

“Aggregate Environmental Defect Value” has the meaning specified in Section
7.4(c).

“Agreement” has the meaning specified in the preamble hereof.

“Allocated Values” means the allocation of values of the Oil and Gas Properties
included in the Ownership Interests set forth on Exhibit “A-2” attached hereto. 
The Allocated Values for each Oil and Gas Property has been agreed to by Buyer
and Seller and represents a good faith allocation of value of the Oil and Gas
Properties.

“Base Purchase Price” has the meaning specified in Section 3.2.

“Basket Amount” has the meaning specified in Section 11.4(a).

“Buyer” has the meaning specified in the preamble hereof.

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“CERCLA” has the meaning specified in the definition of “Environmental Laws.”

“CERCLIS” means the Comprehensive Environmental Response, Compensation and
Liability Information System List.

“Closing” has the meaning specified in Section 2.1.

“Closing Date” has the meaning specified in Section 2.1.

“Closing Date Amounts” means the aggregate of the amounts set forth in
Subsections 3.3(a)(i), (ii) and (iii).

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning specified in the preamble hereof.

“Company Debt” means (a) all indebtedness of the Company for the repayment of
borrowed money, whether or not represented by bonds, debentures, notes or
similar instruments, all accrued and unpaid interest thereon, and, solely with
respect to the Credit Agreement, all unpaid premiums, prepayment penalties, fees
and other amounts; (b) all other indebtedness of the Company evidenced by bonds,
debentures, notes or similar instruments, including all accrued and unpaid
interest thereon, including intercompany debt; and (c) all obligations of the
Company as lessee under capital leases as determined in accordance with GAAP.

“Company’s Senior Lender” means Credit Suisse.

“Confidentiality Agreement” means that certain Confidentiality Agreement by and
between Forest Oil Corporation and Buyer dated March 8, 2007.

“Contract” means any contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, franchise,
insurance policy or commitment, whether written or oral.

“Credit Agreement” means the First Lien Credit Agreement and the Second Lien
Credit Agreement, each dated as of December 8, 2006 (together with all ancillary
agreements) by and among the Company, as Borrower, the Company’s Senior Lender,
and certain other financial institutions, as Lenders (as amended and
supplemented as of the date hereof).

“Defensible Title” means such right, title and interest that is (a) with respect
to Ownership Interests of record, evidenced by an instrument or instruments
filed of record in accordance with the conveyance and recording laws of the
applicable jurisdiction to the extent necessary to give the Company and Buyer,
through its ownership of the Membership Interests, the right to enjoy the
benefits of possession of the Ownership Interests reflected on Exhibit “A”, and,
with respect to Ownership Interests not yet earned under a farmout agreement, if
any, is described in and subject to a farmout agreement containing terms and
provisions reasonably consistent with terms and provisions used in the domestic
oil and gas business and under which there exists no default by the Company and
(b) subject to Permitted Liens, free and clear of all Liens, claims,
infringements, and other burdens.

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“DGCL” means the Delaware General Corporation Law.

“Effective Date” has the meaning specified in Section 2.1.

“Environmental Defect” has the meaning specified in Section 7.4(b).

“Environmental Law” means any Law of any Governmental Authority whose purpose is
to conserve or protect human health, the environment, wildlife or natural
resources, including, without limitation, the Clean Air Act, as amended, the
Federal Water Pollution Control Act, as amended, the Rivers and Harbors Act of
1899, as amended, the Safe Drinking Water Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended (“CERCLA”),
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Resource Conservation and Recovery Act of 1976, as amended, the Hazardous and
Solid Waste Amendments Act of 1984, as amended, the Toxic Substances Control
Act, as amended, the Hazardous Materials Transportation Act, as amended, and
Title 18 of the Alaska Administrative Code.

“Financial Statements” has the meaning specified in Section 4.4.

“FOC” has the meaning specified in the preamble hereof.

“GAAP” means accounting principles generally accepted in the United States of
America, as in effect from time to time and applied on a consistent basis.

“Governmental Authority” means any federal, state, provincial, local or foreign
government or governmental regulatory body and any of their respective
subdivisions, agencies, instrumentalities, authorities, courts or tribunals.

“Hazardous Material” means (a) any “hazardous substance,” as defined by CERCLA;
(b) any “hazardous waste” as defined by the Resource Conservation and Recovery
Act, as amended; or (c) petroleum, petroleum hydrocarbons, or any fraction or
byproducts thereof.

“Hedging Transaction” means any futures, hedge, swap, collar, put, call, floor,
cap, option or other contract that is intended to benefit from, relate to or
reduce or eliminate the risk of fluctuations in the price of commodities,
including Hydrocarbons, interest rates, currencies or securities.

“Hydrocarbons” means oil, condensate, gas, casinghead gas and other liquid or
gaseous hydrocarbons.

“Income Taxes” means all taxes, assessments, levies or other charges, including
any interest, penalties and additions thereto which are imposed upon a Party
(whether disputed or not), and

i.              which are based or assessed upon a Party’s capital, income or
receipts, including, without limitation, federal, state, local or foreign
income, franchise and gross receipts Taxes assessed by a Governmental Authority
(but only to the extent the same are assessed upon income or receipts), and

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ii.             any payroll taxes, capital taxes or withholding taxes, or any
other taxes, assessments, levies or other charges which are imposed by a
Governmental Authority other than Property Taxes.

“Indemnified Party” has the meaning specified in Section 12.3(a).

“Indemnifying Party” has the meaning specified in Section 12.3(a).

“Injunction” means a temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction, an order
of a Governmental Entity having jurisdiction over any Party hereto, or any legal
restraint or prohibition.

“Knowledge”, with respect to any entity, means knowledge of such entity’s
executive officers, after reasonable investigation.

“Lands” has the meaning specified in the definition of “Oil and Gas Properties.”

“Law” means any federal, state, provincial, municipal, local or foreign law,
statute, rule, rule, writ, order, decree, ordinance, code or regulation.

“Leases” has the meaning specified the definition of “Oil and Gas Properties.”

“Legal Proceeding” means any judicial, administrative or arbitral action, suit,
proceeding (public or private), litigation, investigation, complaint, claim or
governmental proceeding.

“Lien” means any lien, pledge, mortgage, deed of trust, security interest,
attachment, right of first refusal, option, easement, covenant, encroachment, or
any other adverse claim whatsoever.

“Litigation” means the Legal Proceedings, Orders and Official Actions listed on
Schedule 4.8.

“Losses” has the meaning specified in Section 12.1.

“Material Adverse Effect” means:

(i)            As to Buyer, any breach of Buyer’s representations and
warranties, which individually or in the aggregate with other breaches would
materially impair Buyer’s ability to consummate the transactions contemplated by
this Agreement or prevent the consummation of any of the transactions
contemplated hereby.

(ii)           As to  Seller, any breach of Seller’s representations and
warranties, which individually or in the aggregate with other breaches would
materially impair Seller’s ability to consummate the transactions contemplated
by this Agreement or prevent the consummation of any of the transactions
contemplated hereby.

(iii)          As to the Company, (A) any breach of the Company’s
representations and warranties which individually or in the aggregate with other
breaches, would result in a

4

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decrease in the Company’s value by an amount greater or equal to five percent
(5%) of the Purchase Price, or (B) any change in its financial condition or
results of operations which has or would, with the passage of time, result in a
decrease in the Company’s value by an amount greater or equal to five percent
(5%) of the Purchase Price; provided, however, that any effect, direct or
indirect, occasioned by a decline in the price of crude oil or natural gas,
whether in global, national or local markets shall be excluded from any Material
Adverse Effect calculation hereunder.

“Material Contracts” has the meaning specified in Section 4.7.

“Membership Interests” has the meaning specified in the preamble hereof.

“Notification Deadline” has the meaning specified in Section 7.3(a).

“Official Action” shall mean any domestic or foreign decision, order, writ,
injunction, decree, judgment, award or any determination, both as presently
existing and effective or presently existing and as may become effective in the
future, by any court, administrative body, or other tribunal.

“Oil and Gas Properties” means all right, title, interest and estate, real or
personal, recorded or unrecorded, movable or immovable, tangible or intangible,
in and to: (i) oil and gas leases, oil, gas and mineral leases, subleases and
other leaseholds, royalties, overriding royalties, net profit interests, mineral
fee interests, carried interests and other properties and interests (the
“Leases”) and the lands covered thereby (“Land(s)”) and any and all oil, gas,
water or injection wells thereon or applicable thereto (the “Wells”); (ii) any
pools or units which include all or a part of any Land or include any Well (the
“Units”) and including without limitation all right, title and interest in
production from any such Unit, whether such Unit production comes from wells
located on or off of the Lands, and all tenements, hereditaments and
appurtenances belonging to, used or useful in connection with the Leases, Lands
and Units; (iii) interests under or derived from all contracts, agreements and
instruments applicable to or by which such properties are bound or created, to
the extent applicable to such properties, including, but not limited to,
operating agreements, gathering agreements, marketing agreements (including
commodity swap, collar and/or similar derivative agreements), transportation
agreements, processing agreements, unitization, pooling and communitization
agreements, declarations and orders, joint venture agreements, and farmin and
farmout agreements; (iv) easements, permits, licenses, servitudes,
rights-of-way, surface leases and other surface rights appurtenant to, and used
or held for use to the extent applicable to such properties; and (v) equipment,
machinery, fixtures and other tangible personal property and improvements
located on or used or obtained in connection with such properties.  Attached
hereto as Exhibit “A” is a description of the Oil and Gas Properties.  The
respective “net revenue interest” and “working interest” of the Company in the
Oil and Gas Properties described on Exhibit “A” (the “Ownership Interests”)
shall be a part of the definition of “Oil and Gas Properties.”

“Order” means any order, judgment, Injunction, ruling, writ, award, decree,
statute, law, ordinance, rule or regulation.

5

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“Ownership Interests” has the meaning specified in the definition of “Oil and
Gas Properties.”

“Party” mean Seller, the Company, FOC, the Buyer or any permitted successor or
assignee thereof.

“Permit” means any permit, license, certificate (including a certificate of
occupancy) registration, authorization, application, filing, notice,
qualification, waiver of any of the foregoing or approval of a Governmental
Authority.

“Permitted Liens” means:  (a) Liens for Taxes that are not yet due and payable
or that are being contested in good faith by appropriate proceedings and as to
which adequate reserves have been established in accordance with GAAP, (b)
operators’ liens and statutory liens for labor and materials, where payment is
not due (or that, if delinquent, are being contested in good faith); (c)
operating agreements, unit agreements, unitization and pooling designations and
declarations, gathering and transportation agreements, processing agreements,
gas, oil and liquids purchase, sale and exchange agreements and other contracts,
agreements and installments; (d) statutory or regulatory authority of
governmental agencies; (e) easements, surface leases and rights, plat
restrictions, pipelines, grazing, logging, canals, ditches, reservoirs,
telephone lines, power lines, railways and similar encumbrances that have not
materially affected or interrupted, and are not reasonably expected to
materially affect or interrupt, the claimed ownership of the party, the
operation of the Oil and Gas Properties or the receipt of production revenues
from the Oil and Gas Properties affected thereby; (f) liens, charges,
encumbrances and irregularities in the chain of title which, because of
remoteness in or passage of time, statutory cure periods, marketable title acts
or other similar reasons, have not materially affected or interrupted, and are
not reasonably expected to materially affect or interrupt, the claimed ownership
of the party, the operation of the Oil and Gas Properties or the receipt of
production revenues from the Oil and Gas Properties affected thereby; and (g)
other liens set forth in Schedule 4.21.

“Person” means any natural person, corporation, partnership, limited liability
company, trust, unincorporated organization, Governmental Authority, or other
entity.

“Property Taxes” means all federal, state or local taxes, assessments, levies or
other charges, which are imposed upon the Oil and Gas Properties or other real
and personal property owned by the Company, including, without limitation, ad
valorem, property, documentary or stamp, as well as any interest, penalties and
fines assessed or due in respect of any such taxes, whether disputed or not.

“Production Taxes” means all federal, state or local taxes, assessments, levies
or other charges, which are imposed upon production from the Oil and Gas
Properties, including, without limitation, excise taxes on production, severance
or gross production, as well as any interest, penalties and fines assessed or
due in respect of any such taxes, whether disputed or not.

“Purchase Price” has the meaning specified in Section 3.2.

“Real Property Leases” has the meaning specified in Section 4.19.

“Related Party” means (i) any Affiliate of the Company or Seller.

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“Schedule” means a disclosure schedule provided by Seller to Buyer pursuant to
this Agreement.

“Securities Act” means the Securities Act of 1933, as amended.

“Seller” has the meaning specified in the preamble hereof.

“Subsidiaries” means, with respect to any Person, each entity as to which such
Person (either alone or through or together with any other Subsidiary) (i) owns
beneficially or of record or has the power to vote or control, 50% or more of
the voting securities of such entity or of any class of equity interests of such
entity the holders of which are ordinarily entitled to vote for the election of
the members of the Board of Directors or other persons performing similar
functions, (ii) in the case of partnerships, serves as a general partner, (iii)
in the case of a limited liability company, serves as a managing member or owns
a majority of the equity interests or (iv) otherwise has the ability to elect a
majority of the directors, trustees or managing members thereof.

“Taxes” means, collectively, Income Taxes, Property Taxes and Production Taxes.

“Tax Return” means any return, report, information statement, or similar
statement required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.

“Title Defect” has the meaning specified in Section 7.3(a).

“Title Defect Value” means, with respect to each Title Defect, the reduction of
the Allocated Value of the affected Ownership Interest as a result of such Title
Defect as determined in Section 7.3.

“Units” has the meaning specified in the definition of “Oil and Gas Properties”.

“Wells” has the meaning specified in the definition of “Oil and Gas Properties.”

ARTICLE II

EFFECTIVE DATE; CLOSING

2.1           EFFECTIVE DATE; CLOSING.  THE EFFECTIVE DATE (FOR ACCOUNTING
PURPOSES ONLY) OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE AT 7:00 A.M.,
ALASKA STANDARD TIME, ON JANUARY 1, 2007 (THE “EFFECTIVE DATE”).  THE CLOSING OF
THE TRANSACTIONS CONTEMPLATED HEREBY (THE “CLOSING”) SHALL TAKE PLACE AT THE
OFFICES OF SELLER, 707 SEVENTEENTH ST., SUITE 3600, DENVER, CO 80202 AT 10:00
A.M., MOUNTAIN STANDARD TIME, ON THE LATER OF (I) TWO BUSINESS DAYS AFTER
SATISFACTION OF ALL CONDITIONS TO CLOSING (INCLUDING AGREEMENT OF THE PARTIES ON
ALL PURCHASE PRICE ADJUSTMENTS PURSUANT TO SECTION 3.4), OR JUNE 30, 2007 (THE
“CLOSING DATE”).  NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY, IN NO
EVENT SHALL THE CLOSING OCCUR LATER THAN JULY 31, 2007.

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2.2           PROCEEDINGS AT CLOSING.  ALL PROCEEDINGS TO BE TAKEN AND ALL
DOCUMENTS TO BE EXECUTED AND DELIVERED BY ALL PARTIES AT THE CLOSING SHALL BE
DEEMED TO HAVE BEEN TAKEN AND EXECUTED SIMULTANEOUSLY, AND NO PROCEEDINGS SHALL
BE DEEMED TAKEN NOR ANY DOCUMENTS EXECUTED OR DELIVERED UNTIL ALL HAVE BEEN
TAKEN, EXECUTED AND DELIVERED.

ARTICLE III

SALE AND PURCHASE OF MEMBERSHIP INTERESTS; CONSIDERATION

3.1           SALE AND PURCHASE OF MEMBERSHIP INTERESTS.  ON THE CLOSING DATE,
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH HEREIN, THE SELLER WILL SELL,
TRANSFER, CONVEY, ASSIGN AND DELIVER TO BUYER, AND BUYER WILL PURCHASE FROM THE
SELLER, THE MEMBERSHIP INTERESTS.

3.2           AMOUNT AND FORM OF CONSIDERATION.  THE TOTAL PURCHASE PRICE TO BE
PAID BY BUYER TO SELLER IN CONSIDERATION OF THE MEMBERSHIP INTERESTS IS FOUR
HUNDRED TWENTY MILLION DOLLARS AND NO/CENTS (US$420,000,000.00) (THE “BASE
PURCHASE PRICE”), SUBJECT TO ADJUSTMENT AS PROVIDED IN SECTION 3.4 (THE BASE
PURCHASE PRICE, AS SO ADJUSTED, IS THE “PURCHASE PRICE”).

3.3           PAYMENT OF CONSIDERATION.

(A)           IN CONSIDERATION OF THE SALE, TRANSFER, CONVEYANCE, ASSIGNMENT AND
DELIVERY OF THE MEMBERSHIP INTERESTS, BUYER WILL, SUBJECT TO ADJUSTMENT PURSUANT
TO SECTION 3.4 HEREOF:

(I)            PAY THE SELLER A PERFORMANCE DEPOSIT (THE “DEPOSIT”) IN THE
AMOUNT OF FOUR MILLION TWO HUNDRED THOUSAND DOLLARS AND NO/CENTS
(US$4,200,000.00) BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS UPON THE
EXECUTION OF THIS AGREEMENT;

(II)           PAY THE SELLER AN AMOUNT EQUAL TO THE BALANCE OF THE PURCHASE
PRICE BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS ON THE CLOSING DATE; AND

(B)           THE PURCHASE PRICE SHALL BE PAID BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS TO SELLER IN ACCORDANCE WITH THE INSTRUCTIONS OF SELLER
DELIVERED TO BUYER NOT LATER THAN 48 HOURS PRIOR TO THE CLOSING).

3.4           PRICE ADJUSTMENTS.  THE BASE PURCHASE PRICE WILL BE ADJUSTED:

(A)                                  UPWARD BY THE AMOUNT OF US$18,433,160 BEING
CONSIDERATION FOR THE COMPANY’S WORKING CAPITAL AS AT DECEMBER 31, 2006;

(B)           DOWNWARD AS MAY BE REQUIRED IN SECTION 7.3 OR 7.4;

(C)           DOWNWARD BY THE AMOUNT OF THE DEPOSIT;

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(D)           DOWNWARD BY THE AMOUNT OF $380,000,000, BEING $375,000,000 IN DEBT
AS REFLECTED ON THE DECEMBER 31, 2006 BALANCE SHEET PLUS THE $5,000,000 PUT
PREMIUM WHICH ARISES UPON THE EARLY TERMINATION OF THE CREDIT AGREEMENT;

(E)           UPWARD BY THE AMOUNT OF ANY CASH EQUITY CONTRIBUTION TO THE
COMPANY BY SELLER OR FOC BETWEEN THE DATE HEREOF AND CLOSING, BUT SOLELY TO THE
EXTENT SUCH CONTRIBUTION (I) REDUCES THE PRINCIPAL OR THE PUT PREMIUM UNDER THE
CREDIT AGREEMENT OR (II) IS MADE PURSUANT TO SECTION 7.02 OF THE FIRST LIEN
CREDIT AGREEMENT; AND

(F)            UPWARD OR DOWNWARD AS MAY BE REQUIRED IN SECTION 13.3.

No later than ten days before Closing, Seller will deliver to Buyer a statement
setting forth the Purchase Price as adjusted pursuant to this Section 3.4. Buyer
shall have five days to review the statement and, if Buyer agrees with Seller’s
calculations, the Parties shall proceed to Closing as scheduled. If Buyer
disagrees with Seller’s calculations, the Parties shall negotiate in good faith
for five days to resolve their differences. If the Parties still cannot agree
after such five day period, they shall proceed to mediation with a mutually
agreeable mediator. If they cannot agree on a mediator within five days, or if
they are unable to reach agreement within ten days after selecting a mediator,
Closing shall proceed with the Purchase Price adjusted per the adjustment demand
of the Buyer.  The allocated value of the adjusted assets subject to dispute, as
set forth in Exhibit A-2, shall be placed by Buyer in an interest-bearing escrow
account pending resolution of the dispute, and, following Closing, the Parties
shall immediately refer the adjustment dispute to binding arbitration.

Such arbitration shall be conducted in Houston, Texas under the auspices of the
US Chamber of Commerce (the “Chamber”).  It shall be conducted by a single
arbitrator chosen by mutual agreement of the Parties.  Should the Parties fail
to reach agreement on an arbitrator, an arbitrator shall be chosen by the
Chamber in accordance with their Rule of Arbitration; provided that such
arbitrator shall be an expert in the valuation of oil & gas properties with at
least 10 years of experience in the industry and may, but need not, be an
attorney.  The arbitration shall be conducted with the greatest possible haste.
The award of the arbitrator shall be limited to an award to Seller of cash
money, bounded by the initial claims of the Parties as to the proper value of
the adjustments. Each Party shall bear its own costs, and the jointly incurred
arbitration fees shall be split equally between the Parties.

The foregoing arbitration clause shall apply only to disputes as to potential
Purchase Price adjustments made under this Section 3.4.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE COMPANY

The Seller and the Company hereby represent and warrant to Buyer as of the date
hereof and as of the Closing Date as follows:

4.1           ORGANIZATION AND POWER.  THE COMPANY IS A LIMITED LIABILITY
COMPANY DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF
THE STATE OF DELAWARE AND IS

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QUALIFIED AND IN GOOD STANDING TO TRANSACT BUSINESS IN EACH JURISDICTION IN
WHICH SUCH QUALIFICATION IS REQUIRED BY LAW, EXCEPT WHERE THE FAILURE TO BE SO
QUALIFIED WOULD NOT HAVE A MATERIAL ADVERSE EFFECT.  THE COMPANY HAS ALL
REQUISITE CORPORATE POWER AND AUTHORITY TO EXECUTE, DELIVER AND PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
HEREBY.  THE COMPANY HAS HERETOFORE DELIVERED TO BUYER COMPLETE AND CORRECT
COPIES OF ITS CONSTITUENT DOCUMENTS, EACH AS AMENDED TO DATE.

4.2           AUTHORIZATIONS; EXECUTION AND VALIDITY.  THE EXECUTION AND
DELIVERY OF THIS AGREEMENT BY THE COMPANY, THE PERFORMANCE OF THIS AGREEMENT BY
THE COMPANY AND THE CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY AND THEREBY TO BE CONSUMMATED BY IT, HAVE BEEN DULY AUTHORIZED BY ALL
NECESSARY CORPORATE ACTION AND NO OTHER CORPORATE ACTION ON THE PART OF THE
COMPANY IS NECESSARY WITH RESPECT THERETO.  THIS AGREEMENT HAS BEEN DULY
EXECUTED AND DELIVERED BY THE COMPANY AND, WHEN DULY AND VALIDLY EXECUTED AND
DELIVERED BY BUYER AND SELLER, WILL CONSTITUTE A VALID AND BINDING OBLIGATION OF
THE COMPANY, ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH ITS TERMS,
EXCEPT AS SUCH ENFORCEABILITY MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM AND SIMILAR LAWS OF GENERAL APPLICABILITY AND BY
GENERAL PRINCIPLES OF EQUITY.

4.3           CAPITALIZATION.

(A)           THE AUTHORIZED EQUITY OWNERSHIP OF THE COMPANY CONSISTS SOLELY OF
THE MEMBERSHIP INTERESTS, WHICH ARE OWNED 100% OF RECORD AND BENEFICIALLY, FREE
AND CLEAR OF ANY LIENS (OTHER THAN LIENS THAT SHALL BE RELEASED AT OR PRIOR TO
CLOSING) BY SELLER, AND HAVE BEEN DULY AUTHORIZED AND VALIDLY ISSUED, AND ARE
FULLY PAID AND NON-ASSESSABLE.  THERE ARE NO OUTSTANDING OPTIONS, SUBSCRIPTIONS,
WARRANTS, CALLS, COMMITMENTS, PRE-EMPTIVE RIGHTS OR OTHER RIGHTS OBLIGATING THE
COMPANY TO ISSUE OR SELL ANY MEMBERSHIP INTERESTS OR ANY SECURITIES CONVERTIBLE
INTO OR EXERCISABLE FOR ANY MEMBERSHIP INTERESTS, OR OTHERWISE REQUIRING SELLER
OR THE COMPANY TO GIVE ANY PERSON THE RIGHT TO RECEIVE ANY BENEFITS OR RIGHTS
SIMILAR TO ANY RIGHTS ENJOYED BY OR ACCRUING TO THE HOLDERS OF MEMBERSHIP
INTERESTS OR ANY RIGHTS TO PARTICIPATE IN THE EQUITY OR NET INCOME OF THE
COMPANY.  ALL OF THE ISSUED MEMBERSHIP INTERESTS OF THE COMPANY WERE ISSUED, AND
TO THE EXTENT PURCHASED OR TRANSFERRED, HAVE BEEN SO PURCHASED OR TRANSFERRED,
IN COMPLIANCE WITH ALL APPLICABLE LAWS, INCLUDING FEDERAL AND STATE SECURITIES
LAWS, AND ANY PREEMPTIVE RIGHTS AND ANY OTHER STATUTORY OR CONTRACTUAL RIGHTS OF
ANY SELLER.

(B)           THE COMPANY HAS NO SUBSIDIARIES.  THE COMPANY DOES NOT OWN,
DIRECTLY OR INDIRECTLY, ANY CAPITAL OF OR OTHER EQUITY INTEREST IN OR HAS ANY
OTHER INVESTMENT IN OR OUTSTANDING LOANS TO ANY CORPORATION, PARTNERSHIP OR
OTHER ENTITY OR ORGANIZATION.  THERE ARE NO STOCKHOLDERS’ AGREEMENTS, VOTING
TRUSTS OR OTHER AGREEMENTS OR UNDERSTANDINGS TO WHICH SELLER OR THE COMPANY IS A
PARTY OR BY WHICH EITHER IS BOUND WITH RESPECT TO THE TRANSFER OR VOTING OF ANY
MEMBERSHIP INTERESTS.

4.4           FINANCIAL STATEMENTS; OTHER FINANCIAL DATA.  ATTACHED HERETO ON
SCHEDULE 4.4 ARE CORRECT AND COMPLETE COPIES OF (I) THE AUDITED BALANCE SHEET OF
THE COMPANY AS OF DECEMBER 31, 2006, TOGETHER WITH THE RELATED AUDITED
STATEMENTS OF INCOME AND RETAINED EARNINGS AND OF CASH FLOWS FOR THE PERIOD
ENDED DECEMBER 31, 2006 AND (II) THE UNAUDITED BALANCE SHEET OF THE COMPANY AS
OF MARCH 31, 2007, TOGETHER WITH THE RELATED UNAUDITED STATEMENTS OF INCOME AND

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RETAINED EARNINGS AND OF CASH FLOWS FOR THE QUARTER ENDED MARCH 31, 2007 (THE
“FINANCIAL STATEMENTS”).  THE FINANCIAL STATEMENTS PRESENT FAIRLY IN ALL
MATERIAL RESPECTS THE FINANCIAL POSITION OF THE COMPANY AS OF THE DATES
INDICATED, AND THE RESULTS OF ITS OPERATIONS FOR THE RESPECTIVE PERIODS
INDICATED. THE FINANCIAL STATEMENTS HAVE BEEN PREPARED IN CONFORMITY WITH GAAP.

4.5           CONSENTS.  SCHEDULE 4.5 SETS FORTH THE CONSENTS, AUTHORIZATIONS
AND APPROVALS THAT MUST BE OBTAINED OR WAIVED PRIOR TO THE CONSUMMATION OR
PERFORMANCE BY THE COMPANY AND SELLER OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT; EXCLUDING, THEREFROM ANY CONSENTS, AUTHORIZATIONS AND APPROVALS THAT
THE BUYER MAY BE REQUIRED TO OBTAIN IN ORDER TO LAWFULLY CONDUCT BUSINESS IN
ALASKA GENERALLY AND TO OPERATE THE OIL AND GAS PROPERTIES, SPECIFICALLY.

4.6           NO DEFAULTS OR CONFLICTS.  NEITHER THE EXECUTION AND DELIVERY BY
THE COMPANY OF THIS AGREEMENT NOR THE CONSUMMATION OR PERFORMANCE BY THE COMPANY
OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT TO BE CONSUMMATED OR
PERFORMED BY IT (I) RESULTS OR WILL RESULT IN ANY VIOLATION OF ITS CONSTITUENT
DOCUMENTS; (II) SUBJECT TO OBTAINING ANY REQUIRED CONSENT UNDER THE CREDIT
AGREEMENT, VIOLATES OR CONFLICTS WITH, OR CONSTITUTES A BREACH OF ANY OF THE
TERMS OR PROVISIONS OF OR A DEFAULT UNDER, OR RESULTS IN THE CREATION OR
IMPOSITION OF ANY LIEN UPON ANY PROPERTY OR ASSET OF THE COMPANY, THE TRIGGER OF
ANY CHARGE, PAYMENT OR REQUIREMENT OF CONSENT, OR THE ACCELERATION OR INCREASE
OF THE MATURITY OF ANY PAYMENT DATE UNDER: (A) ANY CONTRACT OR (B) ANY
APPLICABLE LAW OR ORDER TO WHICH THE COMPANY OR ANY OF ITS RESPECTIVE PROPERTIES
IS SUBJECT.

4.7           AGREEMENTS, CONTRACTS AND COMMITMENTS.  EXCEPT FOR THE LEASES OR
THE UNITS, ALL OF WHICH ARE LISTED ON EXHIBIT “A,” THE COMPANY HAS LISTED IN
SCHEDULE 4.7 ALL LEASES, CONTRACTS, AGREEMENTS AND INSTRUMENTS TO WHICH IT IS A
PARTY AS OF THE DATE HEREOF (I) WHICH IS AN EMPLOYMENT AGREEMENT BETWEEN THE
COMPANY, ON THE ONE HAND, AND ITS OFFICERS AND EMPLOYEES, ON THE OTHER HAND,
(II) WHICH, UPON CLOSING, WILL (EITHER ALONE OR UPON THE OCCURRENCE OF ANY
ADDITIONAL ACTS OR EVENTS, INCLUDING THE PASSAGE OF TIME) RESULT IN ANY MATERIAL
PAYMENT OR BENEFIT (WHETHER OF SEVERANCE PAY OR OTHERWISE) BECOMING DUE, OR THE
ACCELERATION OR VESTING OF ANY RIGHT TO ANY MATERIAL PAYMENT OR BENEFITS, FROM
BUYER OR THE COMPANY TO ANY OFFICER, DIRECTOR, CONSULTANT OR EMPLOYEE OF THE
COMPANY, (III) WHICH INVOLVES PAYMENT BY OR TO THE COMPANY OF MORE THAN
US$250,000 OR EXTENDS FOR A TERM OF SIX MONTHS OR MORE, (IV) WHICH EXPRESSLY
LIMITS THE ABILITY OF THE COMPANY TO COMPETE IN OR CONDUCT ANY LINE OF BUSINESS
OR COMPETE WITH ANY PERSON OR IN ANY GEOGRAPHIC AREA OR DURING ANY PERIOD OF
TIME, IN EACH CASE, IF SUCH LIMITATION IS OR IS REASONABLY LIKELY TO BE MATERIAL
TO THE COMPANY, (V) WHICH IS A MATERIAL JOINT VENTURE AGREEMENT, JOINT OPERATING
AGREEMENT, PARTNERSHIP AGREEMENT OR OTHER SIMILAR CONTRACT OR AGREEMENT
INVOLVING A SHARING OF PROFITS AND EXPENSES WITH ONE OR MORE THIRD PERSONS, (VI)
THE BENEFITS OF WHICH WILL BE INCREASED, OR THE VESTING OF THE BENEFITS OF WHICH
WILL BE ACCELERATED, BY THE OCCURRENCE OF ANY OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT, OR THE VALUE OF ANY OF THE BENEFITS OF WHICH WILL BE
CALCULATED ON THE BASIS OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT (INCLUDING ANY STOCK OPTION PLAN, STOCK APPRECIATION RIGHTS PLAN,
RESTRICTED STOCK PLAN OR STOCK PURCHASE PLAN) OR (VII) WHICH IS A LIMITED
LIABILITY OPERATING AGREEMENT OR EQUITY HOLDER RIGHTS AGREEMENT OR WHICH
OTHERWISE PROVIDES FOR THE ISSUANCE OF ANY SECURITIES IN RESPECT OF THIS
AGREEMENT (THE “MATERIAL CONTRACTS”).  THE COMPANY HAS NOT BREACHED, NOR TO THE
COMPANY’S OR SELLER’S KNOWLEDGE IS THERE ANY CLAIM OR ANY LEGAL BASIS FOR A
CLAIM THAT THE COMPANY OR ANY THIRD PARTY HAS BREACHED, ANY OF THE TERMS OR
CONDITIONS OF ANY MATERIAL

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CONTRACT, EXCEPT WHERE ANY SUCH BREACH, WHETHER CONSIDERED INDIVIDUALLY OR IN
THE AGGREGATE, COULD NOT BE REASONABLY EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT.

4.8           LITIGATION.  THERE ARE NO LEGAL PROCEEDINGS PENDING OR, TO THE
COMPANY’S KNOWLEDGE, THREATENED AGAINST OR AFFECTING THE COMPANY OR ANY OF ITS
ASSETS THAT ARE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON THE
COMPANY.  THE COMPANY IS NOT SUBJECT TO ANY ORDER OR OFFICIAL ACTION.  THERE ARE
NO LEGAL PROCEEDINGS PENDING AGAINST OR, TO THE COMPANY’S OR SELLER’S KNOWLEDGE,
THREATENED IN WRITING AGAINST, THE COMPANY THAT QUESTIONS THE VALIDITY OR
LEGALITY OF ANY OF THIS AGREEMENT OR ANY ACTION TAKEN OR TO BE TAKEN BY THE
COMPANY IN CONNECTION HEREWITH OR THEREWITH.

4.9           TAXES.

(A)           EXCEPT AS DISCLOSED ON SCHEDULE 4.9:

(I)            THERE ARE NO LIENS FOR TAXES UPON ANY OF THE PROPERTIES OR ASSETS
OF THE COMPANY (EXCEPT FOR PERMITTED LIENS).

(II)           NO AGREEMENTS RELATING TO ALLOCATION OR SHARING OF, OR LIABILITY
OR INDEMNIFICATION FOR, TAXES EXIST BETWEEN THE COMPANY AND ANY OTHER PERSON. 
ANY INTERNAL TAX ALLOCATION AGREEMENT SHALL TERMINATE AT THE CLOSING.

(III)          THE COMPANY IS NOT A PARTY TO ANY ARRANGEMENT, NOR DOES IT HOLD
ANY OIL AND GAS PROPERTY IN AN ENTITY TREATED AS A TAX PARTNERSHIP FOR TAX
PURPOSES.

(IV)          WITHIN THE TIMES AND IN THE MANNER PRESCRIBED BY LAW, THE COMPANY
HAS FILED ALL FEDERAL, STATE AND LOCAL TAX RETURNS AND ALL TAX RETURNS FOR
FOREIGN COUNTRIES, PROVINCES AND OTHER GOVERNING BODIES HAVING JURISDICTION TO
LEVY TAXES UPON IT.

(v)           To the Company’s and Seller’s knowledge, all tax returns filed by
the Company for the taxable years ending in 2000 through 2006 constitute
complete and accurate representations of their respective tax liabilities for
such years and accurately set forth all items (to the extent required to be
included or reflected in such returns) relevant to their future tax liabilities,
including the tax bases of its properties and assets.

(V)           THE COMPANY HAS NOT WAIVED OR EXTENDED ANY APPLICABLE STATUTE OF
LIMITATIONS RELATING TO THE ASSESSMENT OF FEDERAL, STATE, LOCAL OR FOREIGN
TAXES.

(VI)          NO EXAMINATION OF THE FEDERAL, STATE, LOCAL OR FOREIGN TAX RETURNS
OF THE COMPANY ARE CURRENTLY IN PROGRESS NOR, TO THE COMPANY’S AND SELLER’S
KNOWLEDGE, IS ANY SUCH EXAMINATION THREATENED.

(B)           THE COMPANY IS A DISREGARDED ENTITY FOR FEDERAL INCOME TAX
PURPOSES UNDER SECTION 7701 OF THE CODE.

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4.10         FEES.  THE COMPANY HAS NOT PAID OR BECOME OBLIGATED TO PAY ANY FEE
OR COMMISSION TO ANY BROKER, FINDER OR INTERMEDIARY IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY FOR WHICH THE COMPANY OR BUYER SHALL HAVE
LIABILITY FOLLOWING THE CLOSING.

4.11         ABSENCE OF CERTAIN CHANGES OR EVENTS.  EXCEPT AS SET FORTH ON
SCHEDULE 4.11, AS DISCLOSED IN THE FINANCIAL STATEMENTS, SINCE DECEMBER 31,
2006, OR OTHERWISE WHERE THE BUYER HAS CONSENTED IN WRITING, (I) THE COMPANY HAS
CONDUCTED ITS BUSINESS ONLY IN THE ORDINARY COURSE CONSISTENT WITH PAST PRACTICE
IN ALL MATERIAL RESPECTS, AND (II) THERE HAS NOT BEEN ANY TRANSACTION OR
OCCURRENCE BY WHICH THE COMPANY HAS:

(A)           SUFFERED ANY MATERIAL ADVERSE EFFECT;

(B)           DECLARED, SET ASIDE OR PAID ANY DIVIDEND OR OTHER DISTRIBUTION
(WHETHER IN CASH, STOCK OR PROPERTY) WITH RESPECT TO ANY OF ITS OUTSTANDING
MEMBERSHIP INTEREST, OR MADE ANY REDEMPTION, PURCHASE OR OTHER ACQUISITION OF
ANY OF ITS EQUITY SECURITIES;

(C)           OTHER THAN THE PRINCIPAL PAYMENT OF US$625,000 MADE UNDER THE
CREDIT AGREEMENT ON MARCH 30, 2007 AND PAYMENTS THAT ARE WITHIN THE SCOPE OF
SECTION 3.4(E) ABOVE, CANCELLED OR PAID ANY COMPANY DEBT (IN ANY AMOUNT) OR
WAIVED ANY RECEIVABLES, CLAIMS OR RIGHTS IN EXCESS OF US$100,000 INDIVIDUALLY OR
IN THE AGGREGATE;

(D)           SUFFERED ANY UNINSURED CASUALTY LOSS OR DAMAGE IN EXCESS OF
US$100,000 INDIVIDUALLY OR IN THE AGGREGATE;

(E)           AMENDED ANY MATERIAL TERM OF ANY EQUITY SECURITY OR MATERIAL
CONTRACT OF THE COMPANY;

(F)            HIRED ANY EMPLOYEES;

(G)           MADE ANY PAYMENTS TO ANY AFFILIATES EXCEPT IN THE ORDINARY COURSE
OF BUSINESS PURSUANT TO THE INTERCOMPANY SERVICES AGREEMENT REFERRED TO IN
SECTION 10.1;

(H)           INCURRED ANY OBLIGATION TO MAKE CAPITAL EXPENDITURES IN EXCESS OF
US$250,000 INDIVIDUALLY OR IN THE AGGREGATE;

(I)            SOLD, LEASED, ENCUMBERED OR OTHERWISE DISPOSED OF, OR AGREED TO
SELL, LEASE (WHETHER SUCH LEASE IS AN OPERATING OR CAPITAL LEASE), ENCUMBER OR
OTHERWISE DISPOSED OF ANY PORTION OF ITS ASSETS, OTHER THAN IN THE ORDINARY
COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE;

(J)            AMENDED ANY OF ITS ORGANIZATIONAL DOCUMENTS, INCLUDING ITS
LIMITED LIABILITY COMPANY OPERATING AGREEMENT;

(K)           ADOPTED ANY PLAN OR AGREEMENT OF MERGER OR LIQUIDATION; OR

(L)            MADE ANY CHANGE IN ITS ACCOUNTING METHODS, PRINCIPLES OR
PRACTICES.

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4.12         COMPLIANCE WITH LAWS.  SCHEDULE 4.12 LISTS ALL MATERIAL PERMITS. 
THE COMPANY HOLDS ALL MATERIAL PERMITS NECESSARY FOR THE LAWFUL CONDUCT OF ITS
BUSINESS AND IS IN COMPLIANCE IN ALL MATERIAL RESPECTS, WITH ALL LAWS AND ORDERS
APPLICABLE TO ITS BUSINESS AND HAS FILED WITH THE PROPER AUTHORITIES ALL
STATEMENTS AND REPORTS REQUIRED BY THE LAWS AND ORDERS TO WHICH THE COMPANY OR
ANY OF ITS PROPERTIES OR OPERATIONS ARE SUBJECT.  NO CLAIM HAS BEEN MADE BY ANY
GOVERNMENTAL AUTHORITY (AND, TO THE COMPANY’S AND SELLER’S KNOWLEDGE, NO SUCH
CLAIM IS ANTICIPATED) TO THE EFFECT THAT THE BUSINESS CONDUCTED BY THE COMPANY
FAILS TO COMPLY, IN ANY RESPECT, WITH ANY LAW.

4.13         TRANSACTIONS WITH RELATED PARTIES.  EXCEPT AS SET FORTH IN SCHEDULE
4.13:

(A)           NO RELATED PARTY OF THE COMPANY OTHER THAN SELLER HAS ENTERED
INTO, OR HAS HAD ANY DIRECT OR INDIRECT FINANCIAL INTEREST IN, ANY MATERIAL
CONTRACT, TRANSACTION OR BUSINESS DEALINGS INVOLVING THE COMPANY;

(B)           NO RELATED PARTY OF THE COMPANY OWNS OR HAS ANY INTEREST IN,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, ANY TANGIBLE OR INTANGIBLE PROPERTY
USED IN THE CONDUCT OF THE BUSINESS OF THE COMPANY; AND

(C)           THE COMPANY HAS NOT, DIRECTLY OR INDIRECTLY, GUARANTEED OR ASSUMED
ANY INDEBTEDNESS FOR BORROWED MONEY OR OTHERWISE FOR THE BENEFIT OF ANY RELATED
PARTY OF THE COMPANY.

4.14         BOOKS AND RECORDS.  THE MINUTE BOOKS AND RECORDS OF THE COMPANY ARE
CURRENT AS OF THE DATE HEREOF (AND SHALL BE CURRENT AS OF THE CLOSING) WITH
RESPECT TO ALL UNDERTAKINGS AND AUTHORIZATIONS, AND CONTAIN A TRUE, COMPLETE AND
CORRECT RECORD OF ALL ACTIONS TAKEN AT ALL MEETINGS AND BY ALL WRITTEN CONSENTS
IN LIEU OF MEETINGS OF THE COMPANY’S BOARD OF DIRECTORS, OR ANY COMMITTEES
THEREOF, AND MEMBERS OF THE COMPANY.  THE CAPITAL LEDGER AND RELATED MEMBERSHIP
INTEREST TRANSFER RECORDS OF THE COMPANY CONTAIN A TRUE, COMPLETE AND CORRECT
RECORD OF THE ORIGINAL ISSUANCE, TRANSFER AND OTHER CAPITALIZATION MATTERS OF
THE MEMBERSHIP INTERESTS.  THE ACCOUNTING, FINANCIAL REPORTING, AND BUSINESS
BOOKS AND RECORDS OF THE COMPANY ACCURATELY AND FAIRLY REFLECT IN ALL MATERIAL
RESPECTS THE BUSINESS AND CONDITION OF THE COMPANY AND THE TRANSACTIONS AND THE
ASSETS AND LIABILITIES OF THE COMPANY WITH RESPECT THERETO.  WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, THE COMPANY HAS NOT ENGAGED IN ANY TRANSACTION
WITH RESPECT TO ITS BUSINESS OR OPERATIONS, MAINTAINED ANY BANK ACCOUNT THEREFOR
OR USED ANY FUNDS OF THE COMPANY IN THE CONDUCT THEREOF EXCEPT FOR TRANSACTIONS,
BANK ACCOUNTS AND FUNDS THAT HAVE BEEN AND ARE REFLECTED IN THE NORMALLY
MAINTAINED BOOKS AND RECORDS OF THE BUSINESS.

4.15         INFORMATION FURNISHED.  THE COMPANY HAS MADE AVAILABLE TO BUYER AND
ITS DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, FINANCING SOURCES,
CUSTOMERS, CREDITORS, ACCOUNTANTS AND AUDITORS, TRUE AND CORRECT COPIES OF ALL
AGREEMENTS, DOCUMENTS, AND OTHER ITEMS LISTED ON THE SCHEDULES TO THIS AGREEMENT
AND ALL BOOKS AND RECORDS OF THE COMPANY.

4.16         DIRECTORS AND OFFICERS.  SCHEDULE 4.16 LISTS ALL OF THE DIRECTORS
AND OFFICERS OF THE COMPANY AS OF THE CLOSING DATE. THE COMPANY HAS NO
EMPLOYEES.

4.17         BANK ACCOUNTS.  ATTACHED HERETO AS SCHEDULE 4.17 IS A LIST OF ALL
BANKS OR OTHER FINANCIAL INSTITUTIONS WITH WHICH THE COMPANY HAS AN ACCOUNT,
SHOWING THE TYPE AND ACCOUNT

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NUMBER OF EACH SUCH ACCOUNT, AND THE NAMES OF THE PERSONS AUTHORIZED AS
SIGNATORIES THEREON OR TO ACT OR DEAL IN CONNECTION THEREWITH.

4.18         OWNED REAL PROPERTY.  OTHER THAN THE OIL AND GAS PROPERTIES AND
THOSE PROPERTIES LISTED ON SCHEDULE 4.18, THE COMPANY DOES NOT OWN ANY REAL
PROPERTY.

4.19         LEASED REAL PROPERTY.  SCHEDULE 4.19 CONTAINS A COMPLETE AND
CORRECT LIST OF ALL REAL PROPERTY LEASES AND ANY AND ALL AMENDMENTS THERETO
RELATING TO THE LEASED REAL PROPERTY TO WHICH THE COMPANY IS A PARTY OR IS BOUND
(THE “REAL PROPERTY LEASES”).  THE COMPANY HAS PROVIDED TO BUYER CORRECT AND
COMPLETE COPIES OF THE REAL PROPERTY LEASES.  EXCEPT AS DISCLOSED IN SCHEDULE
4.19, (I) EACH OF THE REAL PROPERTY LEASES IS IN FULL FORCE AND EFFECT, AND, TO
THE COMPANY’S AND SELLER’S KNOWLEDGE, IS ENFORCEABLE AGAINST THE LANDLORD WHICH
IS PARTY THERETO IN ACCORDANCE WITH ITS TERMS (EXCEPT AS SUCH ENFORCEABILITY MAY
BE LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION AND SIMILAR LAWS AFFECTING
CREDITORS GENERALLY AND BY THE AVAILABILITY OF EQUITABLE REMEDIES), (II) THERE
ARE NO SUBLEASES UNDER THE REAL PROPERTY LEASES AND NONE OF THE REAL PROPERTY
LEASES HAS BEEN ASSIGNED (OTHER THAN COLLATERAL ASSIGNMENTS TO COMPANY’S SENIOR
LENDER WHICH WILL BE RELEASED IN THEIR ENTIRETY AT OR PRIOR TO THE CLOSING),
(III) NO NOTICES OF DEFAULT OR NOTICES OF TERMINATION HAVE BEEN RECEIVED BY THE
COMPANY WITH RESPECT TO THE REAL PROPERTY LEASES WHICH HAVE NOT BEEN WITHDRAWN
OR CANCELED AND (IV) THE COMPANY IS NOT, AND TO THE COMPANY’S AND SELLER’S
KNOWLEDGE, NO OTHER PARTY IS, IN DEFAULT UNDER ANY REAL PROPERTY LEASE.  TO THE
COMPANY’S AND SELLER’S KNOWLEDGE  THERE HAS BEEN NO RECEIPT OF ANY WRITTEN
NOTICE OF A PROCEEDING IN EMINENT DOMAIN OR OTHER SIMILAR PROCEEDING AFFECTING
PROPERTY LISTED ON SCHEDULE 4.19.

4.20         INTENTIONALLY LEFT BLANK.

4.21         TITLE TO OIL AND GAS PROPERTIES.  THE COMPANY NOW HAS AND WILL HAVE
AT CLOSING DEFENSIBLE TITLE TO ALL OIL AND GAS PROPERTIES INCLUDED IN THE
OWNERSHIP INTERESTS.  EACH OIL AND GAS PROPERTY INCLUDED OR REFLECTED IN THE
OWNERSHIP INTERESTS ENTITLES THE COMPANY TO RECEIVE NOT LESS THAN THE UNDIVIDED
INTEREST SET FORTH IN (OR DERIVED FROM) THE OWNERSHIP INTERESTS OF ALL
HYDROCARBONS PRODUCED, SAVED AND SOLD FROM OR ATTRIBUTABLE TO SUCH OIL AND GAS
PROPERTY, AND THE PORTION OF THE COSTS AND EXPENSES OF OPERATION AND DEVELOPMENT
OF SUCH OIL AND GAS PROPERTY THAT IS BORNE OR TO BE BORNE BY THE COMPANY IS NOT
GREATER THAN THE UNDIVIDED INTEREST SET FORTH IN THE OWNERSHIP INTERESTS.  NO
FACT, CIRCUMSTANCE OR CONDITION OF THE TITLE TO AN OIL AND GAS PROPERTY SHALL BE
CONSIDERED TO EFFECT A REDUCTION IN THE VALUE OF THE ASSETS, UNLESS DUE
CONSIDERATION HAS BEEN GIVEN TO (A) THE LENGTH OF TIME THAT SUCH OIL AND GAS
PROPERTY HAS BEEN PRODUCING HYDROCARBONS AND HAS BEEN CREDITED TO AND ACCOUNTED
FOR BY THE COMPANY AND ITS PREDECESSORS IN TITLE, IF ANY, AND (B) WHETHER ANY
SUCH FACT, CIRCUMSTANCE OR CONDITION IS OF THE TYPE THAT CAN GENERALLY BE
EXPECTED TO BE ENCOUNTERED IN THE AREA INVOLVED AND IS USUALLY AND CUSTOMARILY
ACCEPTABLE TO REASONABLE AND PRUDENT OPERATORS, INTEREST OWNERS AND PURCHASERS
ENGAGED IN THE BUSINESS OF THE OWNERSHIP, DEVELOPMENT AND OPERATION OF OIL AND
GAS PROPERTIES. ALL PROCEEDS FROM THE SALE OF THE COMPANY’S SHARE OF THE
HYDROCARBONS BEING PRODUCED FROM ITS OIL AND GAS PROPERTIES ARE CURRENTLY BEING
PAID IN FULL TO THE COMPANY BY THE PURCHASERS THEREOF ON A TIMELY BASIS, AND
NONE OF SUCH PROCEEDS ARE CURRENTLY BEING HELD IN SUSPENSE BY SUCH PURCHASER OR
ANY OTHER PARTY.

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4.22         ENVIRONMENTAL MATTERS.  EXCEPT AS SET FORTH IN SCHEDULE 4.22 OR IN
THE CASE OF MATTERS WHICH HAVE BEEN RESOLVED TO THE EXTENT REQUIRED BY
ENVIRONMENTAL LAWS AND FOR WHICH NO FURTHER REMEDIATION OBLIGATION OR LIABILITY
UNDER ENVIRONMENTAL LAWS EXISTS:

(A)           THE COMPANY HAS CONDUCTED AND CONTINUES TO CONDUCT ITS BUSINESS
AND OPERATED ITS ASSETS, AND THE CONDITION OF EACH FACILITY AND PROPERTY
CURRENTLY OWNED, LEASED AND OPERATED BY THE COMPANY IS, IN MATERIAL COMPLIANCE
WITH ALL ENVIRONMENTAL LAWS;

(B)           THE COMPANY HAS NOT BEEN NOTIFIED BY ANY GOVERNMENTAL AUTHORITY OR
OTHER THIRD PARTY THAT ANY OF THE OPERATIONS OR ASSETS OF THE COMPANY IS THE
SUBJECT OF ANY INVESTIGATION OR INQUIRY BY ANY GOVERNMENTAL AUTHORITY EVALUATING
WHETHER ANY MATERIAL REMEDIAL ACTION IS NEEDED TO RESPOND TO A RELEASE OR
THREATENED RELEASE OF ANY HAZARDOUS MATERIAL OR TO THE IMPROPER STORAGE OR
DISPOSAL (INCLUDING STORAGE OR DISPOSAL AT OFFSITE LOCATIONS) OF ANY HAZARDOUS
MATERIAL WHERE SUCH INVESTIGATION OR INQUIRY REMAINS UNRESOLVED AS OF THE DATE
HEREOF;

(C)           NEITHER THE COMPANY NOR, TO THE COMPANY’S AND SELLER’S KNOWLEDGE,
ANY OTHER PERSON HAS FILED ANY NOTICE UNDER ANY FEDERAL, STATE OR LOCAL LAW
INDICATING THAT (I) THE COMPANY IS RESPONSIBLE FOR THE IMPROPER RELEASE INTO THE
ENVIRONMENT, OR THE IMPROPER STORAGE OR DISPOSAL, OF ANY HAZARDOUS MATERIAL, OR
(II) ANY HAZARDOUS MATERIAL IS IMPROPERLY STORED OR DISPOSED OF UPON ANY
PROPERTY OF THE COMPANY;

(D)           THE COMPANY DOES NOT HAVE ANY MATERIAL CONTINGENT LIABILITY IN
CONNECTION WITH (I) THE RELEASE OR THREATENED RELEASE INTO THE ENVIRONMENT AT,
BENEATH OR ON ANY OF THE OIL AND GAS PROPERTIES, OR (II) THE STORAGE OR DISPOSAL
OF ANY HAZARDOUS MATERIAL;

(E)           THE COMPANY HAS NOT RECEIVED ANY CLAIM, COMPLAINT, NOTICE, INQUIRY
OR REQUEST FOR INFORMATION WITH RESPECT TO ANY ALLEGED VIOLATION OF ANY
ENVIRONMENTAL LAW OR REGARDING POTENTIAL LIABILITY UNDER ANY ENVIRONMENTAL LAW
RELATING TO OPERATIONS OR CONDITIONS OF ANY FACILITY OR PROPERTY (INCLUDING OFF
SITE STORAGE OR DISPOSAL OF ANY HAZARDOUS MATERIAL FROM SUCH FACILITIES OR
PROPERTY) CURRENTLY OR FORMERLY OWNED, LEASED OR OPERATED BY THE COMPANY;

(F)            NONE OF THE OIL AND GAS PROPERTIES IS LISTED ON THE NATIONAL
PRIORITIES LIST PURSUANT TO CERCLA OR ON THE CERCLIS OR ON ANY OTHER FEDERAL OR
STATE LIST AS SITES REQUIRING INVESTIGATION OR CLEANUP;

(G)           THE COMPANY IS NOT DIRECTLY TRANSPORTING AND IS NOT DIRECTLY
ARRANGING FOR THE TRANSPORTATION OF, ANY HAZARDOUS MATERIAL TO ANY LOCATION
WHICH IS LISTED ON THE NATIONAL PRIORITIES LIST PURSUANT TO CERCLA, ON THE
CERCLIS, OR ON ANY SIMILAR FEDERAL OR STATE LIST OR WHICH IS THE SUBJECT OF
FEDERAL, STATE OR LOCAL ENFORCEMENT ACTIONS OR OTHER INVESTIGATIONS THAT MAY
LEAD TO MATERIAL CLAIMS AGAINST THE COMPANY FOR REMEDIAL WORK, DAMAGE TO NATURAL
RESOURCES OR PERSONAL INJURY, INCLUDING CLAIMS UNDER CERCLA;

(H)           THERE ARE NO SITES, LOCATIONS OR OPERATIONS AT WHICH THE COMPANY
IS CURRENTLY UNDERTAKING ANY REMEDIAL OR RESPONSE ACTION RELATING TO ANY SUCH
DISPOSAL OR RELEASE, AS REQUIRED BY ENVIRONMENTAL LAWS; AND

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(I)            ALL UNDERGROUND STORAGE TANKS AND SOLID WASTE DISPOSAL FACILITIES
OWNED OR OPERATED BY THE COMPANY ARE USED AND OPERATED IN MATERIAL COMPLIANCE
WITH ENVIRONMENTAL LAWS.

(J)            THE COMPANY AND ITS SUBSIDIARIES HAVE OBTAINED AND ARE IN
COMPLIANCE WITH ALL MATERIAL PERMITS UNDER ALL ENVIRONMENTAL LAWS REQUIRED FOR
THE OPERATION OF THE BUSINESSES OF THE COMPANY AS CURRENTLY CONDUCTED AND, TO
THE KNOWLEDGE OF THE COMPANY AND SELLER, THERE ARE NO PENDING OR THREATENED,
ACTIONS OR PROCEEDINGS ALLEGING VIOLATIONS OF OR SEEKING TO MODIFY, REVOKE OR
DENY RENEWAL OF ANY SUCH PERMITS. SCHEDULE 4.12 LISTS ALL SUCH PERMITS.

4.23         BONDING MATTERS.  SCHEDULE 4.23 LISTS ALL OF THE BONDS AND OTHER
SECURITY ARRANGEMENTS THAT SELLER OR COMPANY MAINTAINS AS TO THE OIL AND GAS
PROPERTIES OR ANY PORTION THEREOF.  NO CLAIM HAS BEEN MADE BY ANY GOVERNMENTAL
AUTHORITY THAT THE COMPANY HAS FAILED TO COMPLY WITH ANY LAW OR REGULATION
GOVERNING THE REQUIREMENTS OF BONDS AS TO THE SELLER’S OR COMPANY’S OPERATIONS
OF THE OIL AND GAS PROPERTIES.

4.24         INSURANCE.  SCHEDULE 4.24 LISTS ALL OF THE INSURANCE POLICIES AND
COVERAGES OF ANY SORT MAINTAINED BY THE COMPANY, SELLER OR ANY OF THEIR
AFFILIATES WHICH, ANY WAY, AFFECT THE COMPANY’S OPERATIONS RELATING TO THE OIL
AND GAS PROPERTIES. SUCH INSURANCE COVERAGE COMPLIES WITH ALL LEGAL AND
CUSTOMARY REQUIREMENTS FOR A BUSINESS CONDUCING OPERATIONS SUCH AS THOSE
CONDUCTED BY THE COMPANY ON OR RELATING TO THE OIL AND GAS PROPERTIES. THE
COMPANY HAS COMPLIED IN ALL MATERIAL RESPECTS WITH THE TERMS AND PROVISIONS OF
SUCH POLICIES. BETWEEN THE EFFECTIVE DATE AND CLOSING, SELLER SHALL INSURE THAT
POLICIES SUBSTANTIALLY EQUIVALENT TO THOSE SET FORTH ON SCHEDULE 4.24 SHALL
REMAIN IN FULL FORCE AND EFFECT.

4.25         ERISA. THE COMPANY DOES NOT EMPLOY AND HAS NOT AT ANY TIME EMPLOYED
ANY INDIVIDUAL. THE COMPANY NEITHER MAINTAINS NOR CONTRIBUTES TO, NOR HAS IT
PREVIOUSLY MAINTAINED OR CONTRIBUTED TO, ANY “EMPLOYEE BENEFIT PLANS,” AS
DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED (“ERISA”), WHETHER OR NOT SUBJECT TO ERISA, AND THE COMPANY HAS NOT,
NOR WILL IT HAVE ANY LIABILITIES OR OBLIGATIONS WITH RESPECT TO EMPLOYEE BENEFIT
PLANS MAINTAINED OR CONTRIBUTED TO OR PREVIOUSLY MAINTAINED OR CONTRIBUTED TO BY
THE COMPANY OR ANY TRADE OR BUSINESS, WHETHER OR NOT INCORPORATED THAT TOGETHER
WITH THE COMPANY WOULD BE DEEMED A “SINGLE EMPLOYER” WITHIN THE MEANING OF
SECTION 4001(A)(15) OF ERISA, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.

4.26         CONDITION OF ASSETS.  THE COMPANY HAS MAINTAINED ALL OF THE
COMPANY’S TANGIBLE ASSETS AND PROPERTIES OWNED OR LEASED ON THE DATE HEREOF IN
GOOD WORKING ORDER AND OPERATING CONDITION, SUBJECT ONLY TO ORDINARY WEAR AND
TEAR.

4.27         LEASE OPERATING EXPENSES.  THE INFORMATION PROVIDED TO BUYER BY
SELLER AND THE COMPANY WITH RESPECT TO THE COMPANY’S HISTORICAL LEASE OPERATING
EXPENSES IS ACCURATE AND COMPLETE IN ALL MATERIAL RESPECTS.

4.28         HEDGING TRANSACTIONS.  SCHEDULE 4.28 CONTAINS A COMPLETE AND
CORRECT LIST OF ALL HEDGING TRANSACTIONS (INCLUDING EACH OUTSTANDING COMMODITY
OR FINANCIAL HEDGING POSITION) ENTERED INTO BY OR ASSIGNED TO THE COMPANY OR FOR
THE ACCOUNT OF ANY OF ITS CUSTOMERS AS OF THE

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DATE OF THIS AGREEMENT (“FOREST HEDGES”). ALL MATERIAL FOREST HEDGES WERE, AND
ANY MATERIAL FOREST HEDGES ENTERED INTO AFTER THE DATE OF THIS AGREEMENT WILL
BE, ENTERED INTO IN ACCORDANCE WITH APPLICABLE LAWS, AND IN ACCORDANCE WITH THE
INVESTMENT, SECURITIES, COMMODITIES, RISK MANAGEMENT AND OTHER POLICIES,
PRACTICES AND PROCEDURES EMPLOYED BY THE COMPANY, AND WERE, AND WILL BE, ENTERED
INTO WITH COUNTERPARTIES BELIEVED AT THE TIME AND STILL BELIEVED TO BE
FINANCIALLY RESPONSIBLE AND ABLE TO UNDERSTAND (EITHER ALONE OR IN CONSULTATION
WITH ITS ADVISERS) AND TO BEAR THE RISKS OF SUCH MATERIAL FOREST HEDGES. THE
COMPANY HAS, AND WILL HAVE, DULY PERFORMED ALL OF ITS OBLIGATIONS UNDER THE
MATERIAL FOREST HEDGES TO THE EXTENT THAT SUCH OBLIGATIONS TO PERFORM HAVE
ACCRUED, AND, TO THE KNOWLEDGE OF THE COMPANY AND SELLER, THERE ARE AND WILL BE
NO BREACHES, VIOLATIONS, COLLATERAL DEFICIENCIES, REQUESTS FOR COLLATERAL OR
DEMANDS FOR PAYMENT, OR DEFAULTS OR ALLEGATIONS OR ASSERTIONS OF SUCH BY ANY
PARTY THEREUNDER.

4.29         PREPAYMENT PREMIUM; TOTAL COMPANY DEBT. THE TOTAL OF ALL PENALTIES,
PREMIUMS, FEES, COST REIMBURSEMENTS OR OTHER PAYMENTS (OTHER THAN PRINCIPAL AND
ACCRUED INTEREST) PAYABLE AS A RESULT OF THE EARLY TERMINATION OF THE CREDIT
AGREEMENT DUE TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT DO NOT EXCEED
US$5,000,000, AND THE TOTAL PRINCIPAL AMOUNT OF COMPANY DEBT DOES NOT EXCEED
$375,000,000. THE COMPANY IS CURRENT WITH RESPECT TO ALL INTEREST PAYMENTS ON
COMPANY DEBT.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller hereby represents and warrants to Buyer as follows:

5.1           ORGANIZATION AND GOOD STANDING.  SELLER IS DULY ORGANIZED, VALIDLY
EXISTING AND IN GOOD STANDING UNDER THE LAWS OF DELAWARE AND HAS ALL REQUISITE
POWER AND AUTHORITY SELLER TO EXECUTE, DELIVER AND PERFORM ITS OBLIGATIONS UNDER
THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY TO BE CONSUMMATED BY IT.  SELLER IS NOT A “FOREIGN PERSON” WITHIN THE
MEANING OF SECTION 1445 OF THE CODE.

5.2           AUTHORIZATION OF AGREEMENT.  THE EXECUTION AND DELIVERY OF THIS
AGREEMENT BY SELLER AND THE PERFORMANCE OF THE TRANSACTIONS CONTEMPLATED HEREIN
BY SELLER HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION, AND NO OTHER ACTION
ON THE PART OF SELLER IS NECESSARY TO AUTHORIZE THIS AGREEMENT OR CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY.  THIS AGREEMENT HAS BEEN DULY AND VALIDLY
EXECUTED AND DELIVERED BY SELLER AND CONSTITUTES A VALID AND BINDING OBLIGATION
OF SELLER, ENFORCEABLE AGAINST SELLER IN ACCORDANCE WITH ITS TERMS, EXCEPT AS
SUCH ENFORCEABILITY MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION,
MORATORIUM AND SIMILAR LAWS OF GENERAL APPLICABILITY AND BY GENERAL PRINCIPLES
OF EQUITY.

5.3           CONFLICTS, CONSENTS OF THIRD PARTIES.  NEITHER THE EXECUTION AND
DELIVERY BY SELLER OF THIS AGREEMENT NOR CONSUMMATION OR PERFORMANCE BY SELLER
OF THE TRANSACTIONS CONTEMPLATED HEREBY TO BE CONSUMMATED OR PERFORMED BY SELLER
WILL: (A) VIOLATE ANY LAW, (B) VIOLATE ITS CONSTITUENT DOCUMENTS, (C) VIOLATE
ANY ORDER TO WHICH SELLER IS A PARTY OR BY WHICH SELLER IS BOUND OR (D) REQUIRE
ANY CONSENT, APPROVAL OR AUTHORIZATION, EXCEPT FOR THOSE LISTED ON SCHEDULE 5.3.

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5.4           BROKERS.  SELLER HAS NOT PAID OR BECOME OBLIGATED TO PAY ANY FEE
OR COMMISSION TO ANY BROKER, FINDER OR INTERMEDIARY IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY FOR WHICH THE BUYER SHALL HAVE ANY LIABILITY
FOLLOWING THE CLOSING.

5.5           LITIGATION.  AS OF THE DATE OF THIS AGREEMENT THERE ARE NO LEGAL
PROCEEDINGS, OR, TO THE KNOWLEDGE OF SELLER, THREATENED AGAINST OR AFFECTING
SELLER THAT IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON SELLER OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, NOR IS THERE ANY JUDGMENT,
DECREE, INJUNCTION, RULE OR ORDER OF ANY GOVERNMENTAL ENTITY OR ARBITRATOR
OUTSTANDING AGAINST SELLER THAT IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE
EFFECT ON SELLER OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

5.6           OWNERSHIP OF MEMBERSHIP INTERESTS.  SELLER IS THE RECORD AND
BENEFICIAL OWNER OF ALL OF THE MEMBERSHIP INTERESTS, AND THOSE MEMBERSHIP
INTERESTS ARE OWNED BY SELLER FREE AND CLEAR OF ALL LIENS (OTHER THAN THOSE THAT
SHALL BE RELEASED AT CLOSING), INCLUDING, WITHOUT LIMITATION, VOTING TRUSTS OR
STOCKHOLDERS AGREEMENTS.  SELLER HAS FULL AUTHORITY TO TRANSFER PURSUANT TO THIS
AGREEMENT ALL OF THE MEMBERSHIP INTERESTS, FREE AND CLEAR OF ALL LIENS (OTHER
THAN THOSE THAT SHALL BE RELEASED AT CLOSING), INCLUDING, WITHOUT LIMITATION,
VOTING TRUSTS OR STOCKHOLDERS AGREEMENTS.

5.7           TAX STATUS.

(A)           SELLER IS A NOT A NON-RESIDENT ALIEN, FOREIGN CORPORATION, FOREIGN
PARTNERSHIP, FOREIGN TRUST, OR FOREIGN ESTATE (AS THOSE TERMS ARE DEFINED IN THE
INTERNAL REVENUE CODE AND INCOME TAX REGULATIONS).

(B)           SELLER SHALL PROVIDE TO BUYER THE CERTIFICATE OF NON-FOREIGN
STATUS IN THE FORM SET FORTH IN EXHIBIT “B”.

(C)           SELLER IS A DISREGARDED ENTITY FOR FEDERAL INCOME TAX PURPOSES
UNDER SECTION 7701 OF THE CODE, SUCH THAT THIS TRANSACTION WILL BE TREATED, FOR
FEDERAL INCOME TAX PURPOSES, AS A SALE OF ASSETS BY ITS PARENT COMPANY, FOC.

5.8           MARKETABLE TITLE.  THE DELIVERY BY SELLER TO BUYER AT THE CLOSING
OF THE MEMBERSHIP INTERESTS VEST BUYER AT SUCH TIME OF DELIVERY WITH GOOD AND
MARKETABLE TITLE TO ALL OF THE MEMBERSHIP INTERESTS, FREE AND CLEAR OF ALL LIENS
(OTHER THAN RESTRICTIONS ON TRANSFER PURSUANT TO APPLICABLE SECURITIES LAWS).

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer hereby represents and warrants to Seller and the Company as follows:

6.1           ORGANIZATION AND GOOD STANDING.  BUYER IS A CORPORATION DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF
DELAWARE.  PRIOR TO THE CLOSING DATE, BUYER SHALL BE DULY QUALIFIED TO DO
BUSINESS IN AND SPECIFICALLY TO OPERATE OIL AND GAS PROPERTIES IN THE STATE OF
ALASKA.  BUYER HAS ALL REQUISITE POWER AND AUTHORITY TO EXECUTE, DELIVER AND

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PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY TO BE CONSUMMATED BY IT.

6.2           AUTHORIZATION OF AGREEMENT.  THE EXECUTION AND DELIVERY OF THIS
AGREEMENT BY BUYER AND THE PERFORMANCE OF THE TRANSACTIONS CONTEMPLATED HEREIN
BY THE BUYER HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY ACTION BY THE BUYER, AND
NO OTHER ACTION ON THE PART OF BUYER IS NECESSARY TO AUTHORIZE THIS AGREEMENT OR
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.  THIS AGREEMENT HAS BEEN
DULY AND VALIDLY EXECUTED AND DELIVERED BY BUYER AND CONSTITUTES A VALID AND
BINDING OBLIGATION OF BUYER AND IS ENFORCEABLE AGAINST BUYER IN ACCORDANCE WITH
ITS TERMS, EXCEPT AS SUCH ENFORCEABILITY MAY BE LIMITED BY BANKRUPTCY,
INSOLVENCY, REORGANIZATION, MORATORIUM AND SIMILAR LAWS OF GENERAL APPLICABILITY
AND TO GENERAL PRINCIPLES OF EQUITY.

6.3           CONFLICTS, CONSENTS OF THIRD PARTIES.  NEITHER THE EXECUTION AND
DELIVERY BY BUYER OF THIS AGREEMENT NOR CONSUMMATION OR PERFORMANCE BY BUYER OF
THE TRANSACTIONS CONTEMPLATED HEREBY TO BE CONSUMMATED OR PERFORMED BY BUYER
WILL: (A) VIOLATE ANY LAW, (B) VIOLATE THE CERTIFICATE OF INCORPORATION OR
BYLAWS OF BUYER, (C) VIOLATE ANY ORDER TO WHICH BUYER IS A PARTY OR BY WHICH
BUYER IS BOUND (D) VIOLATE ANY LOAN OR CREDIT AGREEMENT (SUBJECT TO OBTAINING
REQUIRED CONSENT UNDER ITS CREDIT AND GUARANTY AGREEMENT DATED NOVEMBER 30, 2006
WITH J. ARON & COMPANY (THE “PERL CREDIT AGREEMENT”)), NOTE, BOND, MORTGAGE,
INDENTURE, LEASE OR OTHER AGREEMENT, INSTRUMENT, PERMIT, CONCESSION, FRANCHISE,
OR LICENSE APPLICABLE TO BUYER, (III) ANY JOINT VENTURE OR OTHER OWNERSHIP
ARRANGEMENT OF BUYER OR (E) REQUIRE ANY CONSENT FROM, AUTHORIZATION OR APPROVAL
OR OTHER ACTION BY, AND NO NOTICE TO OR DECLARATION, FILING OR REGISTRATION WITH
ANY GOVERNMENTAL AUTHORITY, , EXCEPT FOR THOSE REGULATORY APPROVALS AND CONSENTS
AS WOULD BE REQUIRED OF ANY COMPANY SIMILARLY SITUATED.

6.4           NO DEFAULT.  EXCEPT AS WOULD NOT REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT ON BUYER, BUYER IS NOT IN DEFAULT OR VIOLATION OF ANY
TERM, CONDITION OR PROVISION OF (A) THE ITS CONSTITUENT DOCUMENTS, (B) ANY LOAN
OR CREDIT AGREEMENT (SUBJECT TO OBTAINING REQUIRED CONSENT UNDER THE PERL CREDIT
AGREEMENT, NOTE, BOND, MORTGAGE, INDENTURE, LEASE OR OTHER AGREEMENT,
INSTRUMENT, PERMIT, CONCESSION, FRANCHISE OR LICENSE TO WHICH BUYER IS NOW A
PARTY OR BY WHICH BUYER OR ANY OF ITS PROPERTIES OR ASSETS IS BOUND, OR (C) ANY
ORDER APPLICABLE TO BUYER.

6.5           LITIGATION.  AS OF THE DATE OF THIS AGREEMENT THERE IS NO SUIT,
ACTION OR PROCEEDING PENDING, OR, TO THE KNOWLEDGE OF BUYER, THREATENED AGAINST
OR AFFECTING BUYER THAT IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT
ON BUYER, NOR IS THERE ANY JUDGMENT, DECREE, INJUNCTION, RULE OR ORDER OF ANY
GOVERNMENTAL ENTITY OR ARBITRATOR OUTSTANDING AGAINST BUYER THAT IS REASONABLY
LIKELY TO HAVE A MATERIAL ADVERSE EFFECT ON BUYER.

6.6           INVESTMENT INTENT.  BUYER IS ACQUIRING THE MEMBERSHIP INTERESTS
FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TOWARDS DISTRIBUTION THEREOF WITHIN THE
MEANING OF SECTION 2(11) OF THE SECURITIES ACT.

6.7           DISCLOSURE OF INFORMATION.  BUYER REPRESENTS THAT IT HAS HAD A
FULL OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE COMPANY
REGARDING THE COMPANY AND ITS BUSINESS, ASSETS, RESULTS OF OPERATION, AND
FINANCIAL CONDITION.

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6.8           FUNDING COMMITMENTS.  BUYER HAS IN PLACE SUCH FINANCING
COMMITMENTS AS ARE NECESSARY TO PAY THE CLOSING DATE AMOUNTS IN FULL AT THE
CLOSING. BUYER HAS PROVIDED EVIDENCE OF SUCH COMMITMENTS ON SCHEDULE 6.8, WHICH
COMMITMENTS ARE SUBJECT TO THE TERMS AND CONDITIONS SET FORTH ON SCHEDULE 6.8
(THE FINANCING CONTEMPLATED BY SUCH COMMITMENTS IS REFERRED TO HEREIN AS THE
“DEBT FINANCING”).

6.9           BROKERS.  BUYER HAS NOT PAID OR BECOME OBLIGATED TO PAY ANY FEE OR
COMMISSION TO ANY BROKER, FINDER OR INTERMEDIARY IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY FOR WHICH THE SELLER SHALL HAVE ANY LIABILITY
FOLLOWING THE CLOSING.

ARTICLE VII

ADDITIONAL AGREEMENTS

7.1           FURTHER ACTIONS.  AT ANY TIME FROM AND AFTER THE CLOSING, AT THE
REQUEST OF A PARTY AND WITHOUT FURTHER CONSIDERATION, EACH OTHER PARTY SHALL
EXECUTE AND DELIVER SUCH FURTHER AGREEMENTS, CERTIFICATES, INSTRUMENTS AND
DOCUMENTS AND PERFORM SUCH OTHER ACTIONS AS THE REQUESTING PARTY MAY REASONABLY
REQUEST IN ORDER TO FULLY CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AND
CARRY OUT THE PURPOSES AND INTENT OF THIS AGREEMENT.

7.2           CONDUCT OF BUSINESS PENDING CLOSING.  PRIOR TO THE CLOSING DATE,
THE COMPANY WILL (EXCEPT AS APPROVED IN WRITING BY BUYER OR OTHERWISE PERMITTED
UNDER THIS AGREEMENT):

(A)           CARRY ON ITS BUSINESS ONLY IN THE ORDINARY COURSE AND IN A MANNER
CONSISTENT WITH PAST PRACTICE;

(B)           MAINTAIN ITS PROPERTIES AND FACILITIES, INCLUDING THOSE HELD UNDER
LEASES, IN THEIR CURRENT GOOD WORKING ORDER AND CONDITION, ORDINARY WEAR AND
TEAR EXCEPTED;

(C)           NOT SELL, LEASE, ENCUMBER OR OTHERWISE DISPOSE OF, OR AGREE TO
SELL, LEASE (WHETHER SUCH LEASE IS AN OPERATING OR CAPITAL LEASE), ENCUMBER OR
OTHERWISE DISPOSE OF ANY PORTION OF ITS ASSETS, OTHER THAN IN THE ORDINARY
COURSE CONSISTENT WITH PAST PRACTICE;

(D)           USE ALL COMMERCIALLY REASONABLE EFFORTS TO MAINTAIN AND PRESERVE
ITS BUSINESS ORGANIZATION INTACT, RETAIN ITS PRESENT OFFICERS AND MAINTAIN ITS
RELATIONSHIPS WITH SUPPLIERS, VENDORS, CUSTOMERS, CREDITORS AND OTHERS HAVING
BUSINESS RELATIONS WITH IT;

(E)           NOT DECLARE, SET ASIDE OR PAY ANY DIVIDEND OR OTHER DISTRIBUTION
(WHETHER IN STOCK OR PROPERTY) WITH RESPECT TO ANY OF ITS EQUITY SECURITIES, OR
MAKE ANY REDEMPTION, PURCHASE OR OTHER ACQUISITION OF ANY OF ITS EQUITY
SECURITIES;

(F)            NOT ISSUE ANY MEMBERSHIP INTERESTS OR OPTIONS, WARRANTS OR OTHER
RIGHTS TO PURCHASE MEMBERSHIP INTERESTS, OR ANY SECURITIES CONVERTIBLE INTO, OR
EXCHANGEABLE FOR MEMBERSHIP INTERESTS;

(G)           NOT BORROW ANY MONEY OR INCUR OR GUARANTEE ANY INDEBTEDNESS FOR
BORROWED MONEY;

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(H)           NOT ENTER INTO OR AMEND ANY MATERIAL CONTRACTS OR AGREEMENTS;

(I)            NOT AMEND ITS ORGANIZATIONAL DOCUMENTS, INCLUDING WITHOUT
LIMITATION ITS LIMITED LIABILITY OPERATING AGREEMENT;

(J)            NOT ADOPT ANY PLAN OR AGREEMENT OF MERGER OR LIQUIDATION;

(K)           NOT CANCEL OR PAY ANY COMPANY DEBT (IN ANY AMOUNT, BUT EXCEPT FOR
PAYMENTS THAT ARE WITHIN THE SCOPE OF SECTION 3.4(E) ABOVE) OR WAIVE ANY
RECEIVABLES, CLAIMS OR RIGHTS IN EXCESS OF US$100,000 INDIVIDUALLY OR IN THE
AGGREGATE;

(L)            NOT MAKE ANY PAYMENTS TO ANY AFFILIATES EXCEPT IN THE ORDINARY
COURSE OF BUSINESS PURSUANT TO THE CONTRACT OPERATING AGREEMENT REFERRED TO IN
SECTION 10.1;

(M)          NOT MAKE ANY CHANGE IN ITS ACCOUNTING METHODS, PRINCIPLES OR
PRACTICES

(N)           NOT ENTER INTO ANY COMMITMENTS FOR CAPITAL EXPENDITURES IN EXCESS
OF US$250,000 (WITH THE EXCEPTION OF EMERGENCY OR LEASE-SAVING EXPENSES, WHICH
SHALL BE DISCLOSED TO BUYER AS SOON AS IS PRACTICABLE); AND

(O)           NOT ENTER INTO ANY EMPLOYMENT, CONSULTING OR SIMILAR CONTRACT OR
AGREEMENT WITH ANY OFFICER OR DIRECTOR OF THE COMPANY, OR HIRE ANY EMPLOYEES.

7.3           TITLE DEFECTS.

(A)           BUYER MUST DELIVER TO THE COMPANY IN WRITING AT LEAST THREE
BUSINESS DAYS PRIOR TO THE CLOSING DATE (THE “NOTIFICATION DEADLINE”) A WRITTEN
NOTICE SPECIFYING EACH ALLEGED DEFECT ASSOCIATED WITH THE OWNERSHIP INTERESTS IN
THE OIL AND GAS PROPERTIES THAT IT ASSERTS CONSTITUTES A VIOLATION OF THE
REPRESENTATIONS SET FORTH IN SECTION 4.21 (A “TITLE DEFECT”), A DESCRIPTION OF
EACH SUCH TITLE DEFECT AND BUYER’S PROPOSED TITLE DEFECT VALUE FOR SUCH TITLE
DEFECT.  IF SUCH NOTICE IS NOT TIMELY SUBMITTED, BUYER WILL BE DEEMED TO HAVE
WAIVED ANY BASIS FOR AN ADJUSTMENT BASED ON A VIOLATION OF THE REPRESENTATIONS
SET FORTH IN SECTION 4.21, AS WELL AS WAIVED ITS BASIS FOR ANY CLAIM OR OTHER
ASSERTION OF RIGHTS OR DAMAGES BASED ON A BREACH OF SUCH REPRESENTATIONS.

(B)           BUYER MAY REQUEST AN ADJUSTMENT TO THE BASE PURCHASE PRICE AT ANY
TIME ON OR BEFORE THE NOTIFICATION DEADLINE, IF THE ADJUSTMENT IS BASED ON A
TITLE DEFECT. A NOTICE REQUESTING AN ADJUSTMENT MUST BE MADE IN ACCORDANCE WITH
SECTION 7.3(A).  IF BUYER GIVES NOTICE UNDER SUBSECTION (A) ABOVE, THE PARTIES
WILL MEET AND USE THEIR BEST EFFORTS TO AGREE ON THE VALIDITY OF THE CLAIM AND,
IF APPLICABLE, THE AMOUNT OF THE ADJUSTMENT, USING THE FOLLOWING CRITERIA:

(I)            IF THE CLAIM IS BASED ON THE COMPANY OWNING A DIFFERENT NET
REVENUE INTEREST THAN THAT SHOWN ON EXHIBIT “A”, THEN THE ADJUSTMENT WILL BE THE
ABSOLUTE VALUE OF THE NUMBER DETERMINED BY THE FOLLOWING FORMULA:

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Adjustment = A x (1-[B/C])

A  =        Allocated Value for the affected Ownership Interest

B  =         Correct net revenue interest for the affected Ownership Interest

C  =         Net revenue interest for the affected Ownership Interest as shown
on Exhibit “A”

(II)           IF THE CLAIM IS BASED ON AN OBLIGATION OR BURDEN THAT IS
LIQUIDATED, THE ADJUSTMENT WILL BE THE SUM NECESSARY TO REMOVE THE OBLIGATION OR
BURDEN FROM THE AFFECTED OWNERSHIP INTEREST.

(III)          IF THE CLAIM IS BASED ON AN OBLIGATION OR BURDEN THAT IS NOT
LIQUIDATED, BUT CAN BE ESTIMATED WITH REASONABLE CERTAINTY, THE ADJUSTMENT WILL
BE THE SUM NECESSARY TO COMPENSATE BUYER FOR THE ADVERSE ECONOMIC EFFECT ON THE
AFFECTED PROPERTY.

(C)           IF THE AMOUNT OF THE ADJUSTMENT FOR EACH TITLE DEFECT CANNOT BE
DETERMINED BASED ON THE ABOVE CRITERIA, AND IF BUYER, SELLER AND THE COMPANY
CANNOT OTHERWISE AGREE ON THE AMOUNT OF AN ADJUSTMENT OR THE PARTIES ARE UNABLE
TO AGREE UPON WHETHER A TITLE DEFECT EXISTS, SUBJECT TO THE PROVISIONS OF
SECTION 7.3(D) BELOW, THE PARTIES SHALL AGREE TO RESOLVE THE DISPUTE UNDER THE
ARBITRATION PROVISIONS IN THIS AGREEMENT.

(D)           NO ADJUSTMENT TO THE BASE PURCHASE PRICE FOR TITLE DEFECTS SHALL
BE MADE UNLESS AND UNTIL THE AGGREGATE VALUE OF ALL TITLE DEFECTS (HEREIN CALLED
THE “AGGREGATE TITLE DEFECT VALUE”) EXCEEDS ONE PERCENT (1%) OF THE BASE
PURCHASE PRICE, AND ONCE THE DEDUCTIBLE IS EXCEEDED, ONLY THE VALUE OF ALL TITLE
DEFECTS IN EXCESS OF SUCH DEDUCTIBLE SHALL BE CONSIDERED IN APPLYING THIS
SECTION 7.3.

(E)           FOR PURPOSES OF THIS SECTION, THE COSTS TO CURE A TITLE DEFECT
UNDER SECTION 7.3(B) ABOVE SHALL NOT BE COUNTED TOWARDS THE AGGREGATE TITLE
DEFECT VALUE.

(F)            SELLER MAY, AT ITS SOLE OPTION, NOTIFY BUYER ON OR BEFORE THE
CLOSING THAT IT ELECTS TO CURE SOME OR ALL OF THE TITLE DEFECTS.  NO PRICE
ADJUSTMENT WILL BE MADE FOR TITLE DEFECTS THAT SELLER ELECTS TO CURE.  IF ANY
TITLE DEFECT IS NOT CURED PRIOR TO CLOSING, AN ADJUSTMENT TO THE BASE PURCHASE
PRICE WILL BE CALCULATED UNDER THE CRITERIA SET FORTH IN THIS SECTION, BUT ONLY
IF THE NET AMOUNT OF ALL ADJUSTMENTS BASED ON THE TITLE DEFECTS EXCEEDS THE
AGGREGATE TITLE DEFECT VALUE.

(G)           IF, PRIOR TO THE CLOSING, ANY PORTION OF THE OIL AND GAS
PROPERTIES OR RELATED EQUIPMENT IS DESTROYED OR IMPAIRED BY FIRE OR OTHER
CASUALTY, BUYER MAY ELECT:

(I)            TO TREAT SUCH DESTRUCTION OR IMPAIRMENT AS A TITLE DEFECT IN
ACCORDANCE WITH THIS SECTION 7.3, OR

(II)           TO PURCHASE THE MEMBERSHIP INTERESTS NOTWITHSTANDING ANY SUCH
DESTRUCTION (WITHOUT ADJUSTMENT TO THE PURCHASE PRICE THEREFOR), IN WHICH CASE,
SELLER SHALL, AT THE CLOSING, PAY TO BUYER ALL SUMS PAID TO THE COMPANY OR
SELLER

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BY THIRD-PARTIES (INCLUDING INSURANCE PROCEEDS RELATING THERETO) AND ASSIGN TO
BUYER ALL SUMS TO WHICH SELLER IS ENTITLED, AS THE CASE MAY BE, BY REASON OF THE
DESTRUCTION OF SUCH OIL AND GAS PROPERTIES OR RELATED EQUIPMENT AND SHALL
ASSIGN, TRANSFER AND SET OVER UNTO THE COMPANY OR BUYER ALL OF THE RIGHT, TITLE
AND INTEREST OF SELLER IN AND TO ANY UNPAID AWARDS OR OTHER PAYMENTS FROM
THIRD-PARTIES ARISING OUT OF THE DESTRUCTION OF SUCH OIL AND GAS PROPERTIES OR
RELATED EQUIPMENT.

(H)           NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 7.3, THE
ADJUSTMENTS ATTRIBUTABLE TO THE EFFECTS OF ALL TITLE DEFECTS UPON ANY OIL AND
GAS PROPERTY SHALL NOT EXCEED THE ALLOCATED VALUE OF SUCH PARTICULAR OIL AND GAS
PROPERTY.

(I)            ALL TITLE DEFECTS NOT RAISED WITHIN THE TIME PERIOD PROVIDED IN
PARAGRAPH (B) ABOVE SHALL BE WAIVED BY BUYER FOR ALL PURPOSES, INCLUDING BUT NOT
LIMITED TO ARTICLE XII.

7.4           ENVIRONMENTAL DEFECTS.

(A)           BUYER SHALL HAVE THE RIGHT TO CONDUCT AN ENVIRONMENTAL ASSESSMENT
OF THE OIL AND GAS PROPERTIES DURING THE PERIOD BEGINNING ON THE DATE OF THIS
AGREEMENT AND ENDING AT THE CLOSE OF BUSINESS ON THE NOTIFICATION DEADLINE.  THE
CONFIDENTIALITY OBLIGATIONS OF THE CONFIDENTIALITY AGREEMENT SHALL BE APPLICABLE
TO ALL INFORMATION ACQUIRED BY BUYER IN THE COURSE OF ITS ENVIRONMENTAL
ASSESSMENT.  DURING NORMAL BUSINESS HOURS AND AFTER PROVIDING THE COMPANY AND
SELLER REASONABLE PRIOR NOTICE OF ANY SUCH ACTIVITIES, BUYER AND ITS
REPRESENTATIVES SHALL BE PERMITTED TO ENTER UPON THE OIL AND GAS PROPERTIES AND
ALL BUILDINGS AND IMPROVEMENTS THEREON, INSPECT THE SAME, REVIEW FILES AND
GENERALLY CONDUCT SUCH TESTS, EXAMINATIONS, AND INVESTIGATIONS AS ARE CONSISTENT
WITH THE AMERICAN SOCIETY FOR TESTING AND MATERIALS STANDARD PHASE I
ENVIRONMENTAL AUDIT AND WHICH HAVE BEEN APPROVED BY COMPANY IN WRITING.  SELLER
WILL HAVE THE RIGHT TO (I) WITNESS SUCH INVESTIGATION AND (II) PROMPTLY RECEIVE
A COPY OF ALL RESULTS, ANALYSES AND REVIEWS.

(B)           BUYER WILL NOTIFY SELLER ON OR BEFORE THE NOTIFICATION DEADLINE OF
(I) THE EXISTENCE OF ANY ENVIRONMENTAL CONDITION ON THE OIL AND GAS PROPERTIES
THAT BUYER REASONABLY BELIEVES CONSTITUTES A BREACH OF THE COMPANY’S
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 4.22 (“ENVIRONMENTAL
DEFECT”), AND (II) THE ESTIMATED COST TO REMEDIATE OR CURE SUCH CONDITION ON
EACH INDIVIDUAL OIL AND GAS PROPERTY, DETERMINED UTILIZING THE MOST COST
EFFECTIVE AND APPROPRIATE METHOD OF CURE OR REMEDIATION AVAILABLE UNDER THE
CIRCUMSTANCES.  WITH RESPECT TO ANY ENVIRONMENTAL DEFECT:

(I)            SELLER SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO UNDERTAKE
SUCH REMEDIAL ACTION AS MAY BE REQUIRED ENVIRONMENTAL LAW AS CURRENTLY APPLIED
TO CURE BY SUCH ENVIRONMENTAL DEFECT BY SENDING WRITTEN NOTICE OF ITS BINDING
COMMITMENT TO EFFECTUATE SUCH CURE AND THE DETAILS AND TIMING OF SUCH CURATIVE
ACTION, AND IF SUCH COMMITMENT IS REASONABLY SATISFACTORY TO BUYER, THE BASE
PURCHASE PRICE WOULD NOT BE REDUCED ON ACCOUNT OF SUCH ENVIRONMENTAL DEFECT

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(II)           BUYER AND SELLER MAY ALSO, UPON THEIR MUTUAL AGREEMENT, SET THE
COSTS TO CURE THE ENVIRONMENTAL DEFECT AND THE BASE PURCHASE PRICE SHALL BE
REDUCED BY SUCH AGREED COSTS WHILE BUYER SHALL BE RESPONSIBLE FOR ANY CURE; AND

(III)          IF, WITHIN FIFTEEN (15) DAYS FOLLOWING THE NOTICE OF AN
ENVIRONMENTAL DEFECT AS TO ANY OIL AND GAS PROPERTY, BUYER AND SELLER CANNOT
REACH MUTUAL AGREEMENT AS CONTEMPLATED IN SECTION 7.4(B)(I) OR (II) ABOVE ON
EITHER THE VALUE OF AN ENVIRONMENTAL DEFECT OR WHETHER AN ENVIRONMENTAL DEFECT
EXISTS, THE PARTIES AGREE TO RESOLVE THE DISPUTE UNDER THE ARBITRATION
PROVISIONS IN THIS AGREEMENT.

(C)           NO ADJUSTMENT TO THE BASE PURCHASE PRICE FOR ENVIRONMENTAL DEFECTS
SHALL BE MADE UNLESS AND UNTIL THE AGGREGATE VALUE OF ALL ENVIRONMENTAL DEFECTS
(HEREIN CALLED THE “AGGREGATE ENVIRONMENTAL DEFECT VALUE”) EXCEEDS ONE PERCENT
(1%) OF THE BASE PURCHASE PRICE, AND ONCE THE DEDUCTIBLE IS EXCEEDED, ONLY THE
VALUE OF ALL ENVIRONMENTAL DEFECTS IN EXCESS OF SUCH DEDUCTIBLE SHALL BE
CONSIDERED IN APPLYING THIS SECTION 7.4.

(D)           FOR PURPOSES OF THIS SECTION, THE COSTS TO CURE AN ENVIRONMENTAL
DEFECT DETERMINED UNDER SECTION 7.4(B)(I) AND (II) ABOVE SHALL NOT BE COUNTED
TOWARDS THE AGGREGATE ENVIRONMENTAL DEFECT VALUE.

(E)           NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS SECTION 7.4, THE
ADJUSTMENTS ATTRIBUTABLE TO THE EFFECTS OF ALL ENVIRONMENTAL DEFECTS UPON ANY
OIL AND GAS PROPERTY SHALL NOT EXCEED THE ALLOCATED VALUE OF SUCH PARTICULAR OIL
AND GAS PROPERTY.

(F)            ALL ENVIRONMENTAL DEFECTS NOT RAISED WITHIN THE TIME PERIOD
PROVIDED IN PARAGRAPH (B) ABOVE SHALL BE WAIVED BY BUYER FOR ALL PURPOSES,
INCLUDING BUT NOT LIMITED TO ARTICLE XII.

7.5           GAS IMBALANCES.  WITHIN 120 DAYS AFTER THE CLOSING DATE, SELLER
AND BUYER SHALL, BASED UPON DATA AVAILABLE AT THAT TIME, DETERMINE (A) THE TOTAL
AMOUNT OF OVERPRODUCTION OF GAS ATTRIBUTABLE TO AND ACCOUNTED FOR UNDER THE NAME
OF THE COMPANY AND RELATED TO THE OIL AND GAS PROPERTIES (E.G., VOLUMES OF GAS
TAKEN FROM THE LEASES, OR ON LANDS UNITIZED THEREWITH, BY THE COMPANY IN EXCESS
OF THOSE VOLUMES WHICH THE COMPANY WOULD BE ENTITLED TO RECEIVE) AND (B) THE
TOTAL AMOUNT OF UNDERPRODUCTION OF GAS ATTRIBUTABLE TO AND ACCOUNTED FOR UNDER
THE NAME OF THE COMPANY AND RELATED TO THE OIL AND GAS PROPERTIES (E.G., VOLUMES
OF GAS NOT TAKEN FROM THE LEASES, OR ON LANDS UNITIZED THEREWITH, DESPITE THE
COMPANY’S OWNERSHIP INTEREST IN AND RIGHT TO RECEIVE SUCH VOLUMES).  IF THE
TOTAL AMOUNT OF OVERPRODUCTION (AS SO DETERMINED) EXCEEDS THE TOTAL AMOUNT OF
UNDERPRODUCTION (AS SO DETERMINED) THE BASE PURCHASE PRICE SHALL BE ADJUSTED
DOWNWARD IN AN AMOUNT EQUAL TO US$5.72 PER MCF TIMES SUCH EXCESS. IF THE TOTAL
AMOUNT OF UNDERPRODUCTION (AS SO DETERMINED) EXCEEDS THE TOTAL AMOUNT OF
OVERPRODUCTION (AS SO DETERMINED) THE BASE PURCHASE PRICE SHALL BE ADJUSTED
UPWARD IN AN AMOUNT EQUAL TO  US$5.72 PER MCF TIMES SUCH EXCESS. THE AMOUNT OF
ANY UPWARD ADJUSTMENT SHALL BE PAID BY BUYER TO SELLER, OR THE AMOUNT OF ANY
DOWNWARD ADJUSTMENT SHALL BE PAID BY SELLER TO BUYER, WITHIN FIVE DAYS AFTER
DETERMINATION THEREOF. NOTWITHSTANDING THE FOREGOING, ONLY IMBALANCES SUBJECT TO
LEGALLY ENFORCEABLE RIGHTS OF RECOVERY WILL BE SUBJECT TO THE DETERMINATION
HEREUNDER.

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7.6           ACCESS TO INFORMATION.  UPON REASONABLE NOTICE, THE COMPANY, FOC
AND SELLER SHALL AFFORD TO BUYER’S OFFICERS, EMPLOYEES, ACCOUNTANTS, COUNSEL AND
OTHER REPRESENTATIVES ACCESS, FROM THE DATE HEREOF UNTIL THE CLOSING DATE, TO
ALL OF THE PROPERTIES, BOOKS, CONTRACTS, COMMITMENTS, FILES AND RECORDS OF THE
COMPANY AND, TO THE EXTENT THAT THEY PERTAIN TO THE OIL AND GAS PROPERTIES, FOC,
AS WELL AS TO THE COMPANY’S, SELLER’S AND FOC’S OFFICERS AND EMPLOYEES (TO THE
EXTENT THAT ANY OF FOC’S OFFICERS AND EMPLOYEES ARE RESPONSIBLE FOR MATTERS
PERTAINING TO THE COMPANY OR ITS ASSETS AND PROPERTIES) AND, DURING SUCH PERIOD,
THE COMPANY SHALL FURNISH TO BUYER (A) A COPY OF EACH MATERIAL REPORT, SCHEDULE,
REGISTRATION STATEMENT AND OTHER DOCUMENT FILED OR RECEIVED BY IT DURING SUCH
PERIOD AND (B) ALL OTHER INFORMATION CONCERNING ITS BUSINESS, PROPERTIES AND
PERSONNEL AS BUYER MAY REASONABLY REQUEST. BUYER AGREES THAT IT WILL NOT, AND
WILL CAUSE ITS RESPECTIVE REPRESENTATIVES NOT TO, USE ANY INFORMATION OBTAINED
PURSUANT TO THIS SECTION 7.6 FOR ANY PURPOSE UNRELATED TO THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  THE CONFIDENTIALITY AGREEMENT
SHALL APPLY WITH RESPECT TO THE INFORMATION FURNISHED THEREUNDER AND HEREUNDER,
AND ANY OTHER ACTIVITIES CONTEMPLATED THEREBY. BUYER SHALL INDEMNIFY, DEFEND AND
HOLD HARMLESS THE COMPANY AND THE SELLER FROM AND AGAINST ANY AND ALL CLAIMS,
ACTIONS, CAUSES OF ACTION, DEMANDS, ASSESSMENTS, LOSSES, DAMAGES, LIABILITIES,
JUDGMENTS, SETTLEMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS’ FEES AND EXPENSES), OF ANY NATURE WHATSOEVER ASSERTED AGAINST OR
SUFFERED BY THE COMPANY OR THE SELLER RELATING TO, RESULTING FROM OR ARISING OUT
OF THE CONDUCT OF BUYER OR ITS REPRESENTATIVES IN THE COURSE OF ANY EXAMINATIONS
OR INSPECTIONS MADE BY BUYER OR ITS REPRESENTATIVES UNDER THIS SECTION 7.6,
EXCEPT TO THE EXTENT OF GROSS NEGLIGENCE OR WILFULL MISCONDUCT ON THE PART OF
COMPANY, OR ANY OF ITS EMPLOYEES, AGENTS OR AFFILIATES.

7.7           REGULATORY APPROVALS.  EACH PARTY HERETO SHALL COOPERATE AND USE
ITS REASONABLE BEST EFFORTS TO PROMPTLY PREPARE AND FILE ALL NECESSARY
DOCUMENTATION TO EFFECT ALL NECESSARY APPLICATIONS, NOTICES, PETITIONS, FILINGS
AND OTHER DOCUMENTS, AND USE ALL COMMERCIALLY REASONABLE EFFORTS TO OBTAIN (AND
WILL COOPERATE WITH EACH OTHER IN OBTAINING) ANY CONSENT, ACQUIESCENCE,
AUTHORIZATION, ORDER OR APPROVAL OF, AND ANY EXEMPTION OR NONOPPOSITION BY, ANY
GOVERNMENTAL ENTITY REQUIRED TO BE OBTAINED OR MADE BY COMPANY, THE SELLER OR
BUYER OR ANY OF THEIR RESPECTIVE AFFILIATES IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE TAKING OF ANY ACTION CONTEMPLATED THEREBY OR BY THIS
AGREEMENT.

7.8           AGREEMENT TO DEFEND.  IN THE EVENT ANY CLAIM, ACTION, SUIT,
INVESTIGATION OR OTHER PROCEEDING BY ANY GOVERNMENTAL BODY OR OTHER PERSON OR
OTHER LEGAL OR ADMINISTRATIVE PROCEEDING IS COMMENCED THAT QUESTIONS THE
VALIDITY OR LEGALITY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR SEEKS DAMAGES IN
CONNECTION THEREWITH, THE PARTIES HEREBY AGREE TO COOPERATE AND USE THEIR
COMMERCIALLY REASONABLE EFFORTS TO DEFEND AGAINST AND RESPOND THERETO.

7.9           OTHER ACTIONS.  EXCEPT AS CONTEMPLATED BY THIS AGREEMENT, NEITHER
THE COMPANY, THE SELLER NOR BUYER SHALL, NOR PERMIT ANY OF ITS AFFILIATES TO,
TAKE OR AGREE OR COMMIT TO TAKE ANY ACTION THAT IS REASONABLY LIKELY TO RESULT
IN ANY OF ITS RESPECTIVE REPRESENTATIONS OR WARRANTIES HEREUNDER BEING UNTRUE IN
ANY MATERIAL RESPECT OR IN ANY OF THE CONDITIONS TO THE TRANSACTIONS
CONTEMPLATED HEREBY SET FORTH IN ARTICLE VIII NOT BEING SATISFIED.  EACH OF THE
PARTIES AGREES TO USE ITS REASONABLE BEST EFFORTS TO SATISFY THE CONDITIONS TO
CLOSING SET FORTH IN THIS AGREEMENT.

7.10         LIMITATION AND DISCLAIMER OF IMPLIED REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND SELLER.  THE EXPRESS REPRESENTATIONS

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AND WARRANTIES OF THE COMPANY AND SELLER CONTAINED IN THIS AGREEMENT ARE
EXCLUSIVE AND ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE.  AT OR PRIOR TO CLOSING, BUYER SHALL HAVE
CONDUCTED SUCH INSPECTIONS OF THE COMPANY AND ITS ASSETS AS BUYER DEEMS
NECESSARY AND SHALL HAVE SATISFIED ITSELF AS TO THE CONDITION OF THE COMPANY AND
ITS ASSETS; HOWEVER, NO SUCH INSPECTION SHALL BE DEEMED BE IN LIEU OR CONSTITUTE
A WAIVER OF ANY EXPRESS REPRESENTATION OR WARRANTY CONTAINED IN THIS AGREEMENT. 
EXCEPT AS OTHERWISE PROVIDED IN THE REPRESENTATIONS AND WARRANTIES SET FORTH IN
THIS AGREEMENT, THE COMPANY AND SELLER MAKE NO WARRANTY OR REPRESENTATION,
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF
ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR MATERIALS NOW,
HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER OR ITS
REPRESENTATIVES BY THE COMPANY, SELLER OR BY THE AGENTS OR REPRESENTATIVES OF
EITHER; ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS, INFORMATION AND
OTHER MATERIALS FURNISHED BY THE COMPANY, SELLER OR BY THE AGENTS OR
REPRESENTATIVES OF EITHER OR OTHERWISE MADE AVAILABLE TO BUYER OR BUYER’S
REPRESENTATIVES ARE PROVIDED TO OR FOR THE BENEFIT OF BUYER AS A CONVENIENCE,
AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST THE COMPANY,
SELLER OR ANY AGENT OR REPRESENTATIVE OF EITHER; AND ANY RELIANCE ON OR USE OF
THE SAME SHALL BE AT BUYER’S SOLE RISK.

7.11         CHANGE OF COMPANY NAME.  EACH OF BUYER AND THE COMPANY UNDERTAKES
AND AGREES THAT PROMPTLY AFTER THE CLOSING, IT WILL TAKE ALL ACTIONS NECESSARY
TO CHANGE THE NAME OF THE COMPANY TO DELETE THE USE OF THE NAME “FOREST”, ANY
DERIVATIVE THEREOF AND/OR ANY LOGOS OR TRADEMARKS RELATED THERETO BY SIXTY (60)
DAYS AFTER CLOSING.

7.12         ACCOUNT SIGNATORIES.  SELLER SHALL CAUSE THE COMPANY TO CHANGE THE
NAMES OF THE ACCOUNTS AND THE NAMES OF THE OFFICERS, EMPLOYEES, AGENTS OR OTHER
SIMILAR REPRESENTATIVES OF THE COMPANY, AS DESIGNATED BY BUYER AT OR PRIOR TO
THE CLOSING, WHO THEREAFTER SHALL BE AUTHORIZED TO TRANSACT BUSINESS WITH
RESPECT TO THE ACCOUNTS, SAFE DEPOSIT BOXES, LOCK BOXES OR OTHER RELATIONSHIPS
WITH THE BANKS, TRUST COMPANIES, SECURITIES BROKERS AND OTHER FINANCIAL
INSTITUTIONS SET FORTH IN SCHEDULE 4.17.

7.13         COOPERATION WITH FINANCING.  IN ORDER TO ASSIST WITH OBTAINING
FINANCING FOR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE COMPANY SHALL
PROVIDE AND SHALL USE THEIR COMMERCIALLY REASONABLE BEST EFFORTS TO CAUSE ITS
REPRESENTATIVES (INCLUDING LEGAL AND ACCOUNTING ADVISORS) TO PROVIDE ALL
COOPERATION REASONABLY REQUESTED BY BUYER IN CONNECTION WITH SUCH FINANCING,
INCLUDING, BUT NOT LIMITED TO, (I) ASSISTING BUYER AND ITS FINANCING SOURCES IN
PREPARING ANY OFFERING DOCUMENT AND MATERIALS FOR RATING AGENCY PRESENTATIONS,
(II) FURNISHING INFORMATION FOR THE PREPARATION OF FINANCIAL STATEMENTS, PRO
FORMA STATEMENTS AND OTHER FINANCIAL DATA CUSTOMARILY INCLUDED IN OFFERINGS OF
THE TYPE CONTEMPLATED BY THE FINANCING, AND (III) COOPERATION WITH PROSPECTIVE
LENDERS IN PERFORMING THEIR DUE DILIGENCE.  BUYER SHALL USE ITS COMMERCIALLY
REASONABLE BEST EFFORTS TO OBTAIN THE DEBT FINANCING (OR, IF THE DEBT FINANCING
IS NOT AVAILABLE TO

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BUYER, ALTERNATIVE ACQUISITION FINANCING SUFFICIENT TO FUND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT) AND TO OBTAIN THE REQUIRED CONSENT UNDER BUYER’S
CREDIT AND GUARANTY AGREEMENT DATED NOVEMBER 30, 2006 WITH J. ARON & COMPANY
(THE “PERL CREDIT AGREEMENT”).

7.14         HEDGE ASSUMPTION. BETWEEN THE DATE HEREOF AND THE CLOSING DATE,
SELLER AND FOC WILL USE REASONABLE COMMERCIAL EFFORTS, AT NO COST TO SELLER OR
FOC, TO ASSIST BUYER IN FINALIZING ITS HEDGING STRATEGY FOLLOWING CLOSING,
INCLUDING EFFORTS TO ASSIGN AND NOVATE ALL OF THE FOREST HEDGES TO A FINANCIAL
COUNTERPARTY OF BUYER’S CHOOSING.  IN THE EVENT THAT BUYER FAILS TO SO NOVATE
AND ASSIGN ALL OF THE FOREST HEDGES, BUYER SHALL HAVE THE FOLLOWING OPTION:
BETWEEN THE DATE OF EXECUTION HEREOF AND FIVE BUSINESS DAYS PRIOR TO CLOSING,
BUYER SHALL ELECT EITHER:

(A)           TO HAVE THE COMPANY ASSIGN AND NOVATE, AT NO COST AND WITH NO
FURTHER LIABILITY OR OBLIGATION TO BUYER OR THE COMPANY, ALL OF THE FOREST
HEDGES TO FOC; OR

(B)           TO HAVE THE COMPANY ASSIGN AND NOVATE, AT NO COST AND WITH NO
FURTHER LIABILITY OR OBLIGATION TO BUYER OR THE COMPANY, ALL OF THE FOREST
HEDGES TO FOC, WHEREUPON FOC SHALL IMMEDIATELY ENTER INTO IDENTICAL TRANSACTIONS
(EACH, A “MIRROR HEDGE”) WITH BUYER, EACH OF WHICH SHALL BE SUPPORTED BY
CUSTOMARY DERIVATIVE AGREEMENTS AND SHALL PROVIDE BUYER THE SAME ECONOMIC
BENEFITS, RIGHTS AND OBLIGATIONS THAT THE COMPANY WOULD HAVE UNDER ALL OF THE
FOREST HEDGES BUT FOR THE NOVATION TO FOC; PROVIDED, HOWEVER, THAT SUCH MIRROR
HEDGE SHALL HAVE A TERM OF NO MORE THAN 60 DAYS.

ARTICLE VIII

CONDITIONS TO CLOSING

8.1           BUYER’S CONDITIONS.  UNLESS OTHERWISE WAIVED IN WRITING PRIOR TO
THE CLOSING, THE OBLIGATION OF BUYER TO COMPLETE THE CLOSING IS SUBJECT TO
FULFILLMENT PRIOR TO OR AT THE CLOSING OF EACH OF THE FOLLOWING CONDITIONS:

(A)           NO LEGAL PROCEEDING.  AT THE CLOSING, NO LEGAL PROCEEDING SHALL BE
PENDING OR THREATENED SEEKING TO ENJOIN OR PREVENT, NOR SHALL AN INJUNCTION,
ORDER OR OFFICIAL ACTION HAVE BEEN ISSUED PROHIBITING CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

(B)           BANK ACCOUNTS.  SELLER SHALL HAVE CAUSED THE COMPANY TO CHANGE THE
AUTHORIZED ACCOUNT SIGNATORIES AS CONTEMPLATED BY SECTION 7.12.

(C)           FULFILLMENT OF OBLIGATIONS.  SELLER SHALL HAVE DULY PERFORMED OR
COMPLIED WITH ALL OF THE OBLIGATIONS AND COVENANTS TO BE PERFORMED OR TO WHICH
COMPLIANCE IS REQUIRED UNDER THE TERMS OF THIS AGREEMENT AT OR PRIOR TO THE
CLOSING DATE.

(D)           ACCURACY OF REPRESENTATIONS AND WARRANTIES.  THE REPRESENTATIONS
AND WARRANTIES OF THE COMPANY AND SELLER SET FORTH HEREIN SHALL BE TRUE AND
CORRECT (WITHOUT GIVING EFFECT TO ANY LIMITATION AS TO “MATERIALITY” OR
“MATERIAL ADVERSE EFFECT” SET FORTH THEREIN) AT AND AS OF THE CLOSING DATE, AS
IF MADE AT AND AS OF SUCH TIME EXCEPT WHERE THE FAILURE OF SUCH REPRESENTATIONS
AND WARRANTIES TO BE SO TRUE AND CORRECT (WITHOUT GIVING EFFECT TO ANY
LIMITATION AS TO “MATERIALITY” OR “MATERIAL ADVERSE EFFECT” SET FORTH THEREIN)

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INDIVIDUALLY OR IN THE AGGREGATE HAS NOT HAD, AND WOULD NOT BE REASONABLY LIKELY
TO HAVE OR RESULT IN, A MATERIAL ADVERSE EFFECT ON THE COMPANY.

(E)           CLOSING DELIVERIES.  SELLER OR THE COMPANY AS IS APPROPRIATE SHALL
HAVE DELIVERED AT OR BEFORE CLOSING ALL OF THE ITEMS LISTED IN SECTION 9.1.

(F)            OTHER ITEMS.  BUYER SHALL HAVE RECEIVED (I) THE PROCEEDS OF THE
DEBT FINANCING OR ALTERNATIVE FINANCING SUFFICIENT TO FUND THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, AND (II) THE REQUIRED CONSENT UNDER THE PERL
CREDIT AGREEMENT.

8.2           SELLER’S CONDITIONS.  UNLESS OTHERWISE WAIVED IN WRITING PRIOR TO
CLOSING, THE OBLIGATION OF SELLER TO COMPLETE THE CLOSING IS SUBJECT TO
FULFILLMENT PRIOR TO OR AT CLOSING OF EACH OF THE FOLLOWING CONDITIONS.

(A)           NO LEGAL PROCEEDINGS.  AT THE CLOSING, NO LEGAL PROCEEDING SHALL
BE PENDING OR THREATENED SEEKING TO ENJOIN OR PREVENT, NOR SHALL AN INJUNCTION,
ORDER OR OFFICIAL ACTION HAVE BEEN ISSUED PROHIBITING CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

(B)           ACCURACY OF REPRESENTATIONS AND WARRANTIES.  THE REPRESENTATIONS
AND WARRANTIES OF BUYER SET FORTH HEREIN SHALL BE TRUE AND CORRECT (WITHOUT
GIVING EFFECT TO ANY LIMITATION AS TO “MATERIALITY” OR “MATERIAL ADVERSE EFFECT”
SET FORTH THEREIN) AT AND AS OF THE CLOSING DATE, AS IF MADE AT AND AS OF SUCH
TIME EXCEPT WHERE THE FAILURE OF SUCH REPRESENTATIONS AND WARRANTIES TO BE SO
TRUE AND CORRECT (WITHOUT GIVING EFFECT TO ANY LIMITATION AS TO “MATERIALITY” OR
“MATERIAL ADVERSE EFFECT” SET FORTH THEREIN) INDIVIDUALLY OR IN THE AGGREGATE
HAS NOT HAD, AND WOULD NOT BE REASONABLY LIKELY TO HAVE OR RESULT IN, A MATERIAL
ADVERSE EFFECT ON BUYER.

(C)           CLOSING DELIVERIES.  BUYER SHALL HAVE DELIVERED AT OR BEFORE
CLOSING ALL OF THE ITEMS LISTED IN SECTION 9.2.

ARTICLE IX

DELIVERIES AT CLOSING

9.1           DELIVERIES BY SELLER TO BUYER.  AT THE CLOSING, SELLER OR THE
COMPANY AS IS APPROPRIATE SHALL DELIVER, OR SHALL CAUSE TO BE DELIVERED, TO
BUYER THE FOLLOWING:

(A)           APPROPRIATE EVIDENCE OF THE MEMBERSHIP INTERESTS, AND SUCH
INSTRUMENTS OR DOCUMENTS EVIDENCING THE SALE, ASSIGNMENT, TRANSFER AND
CONVEYANCE BY THE SELLER TO BUYER OF THE MEMBERSHIP INTERESTS IN ACCORDANCE WITH
THE TERMS HEREOF;

(B)           A CERTIFICATE OF BOTH THE COMPANY AND THE SELLER, DATED AS OF THE
CLOSING DATE, SETTING FORTH THOSE RESOLUTIONS AUTHORIZING THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY, AND CERTIFYING THAT SUCH RESOLUTIONS WERE
DULY ADOPTED AND HAVE NOT BEEN RESCINDED OR AMENDED AS OF THE CLOSING DATE;

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(C)           CERTIFICATE OF BOTH THE COMPANY AND THE SELLER ATTESTING AS TO THE
INCUMBENCY AND SIGNATURE OF EACH OFFICER OF THE COMPANY AND THE SELLER, AS
APPLICABLE, WHO SHALL EXECUTE THIS AGREEMENT AND ANY OTHER AGREEMENT IN
CONNECTION HEREWITH ON BEHALF OF THE COMPANY OR THE SELLER, AS THE CASE MAY BE,
AND CERTIFYING AS BEING COMPLETE AND CORRECT THE COPIES ATTACHED TO SUCH
CERTIFICATE OF THE COMPANY’S CONSTITUENT DOCUMENTS, EACH AS IN EFFECT ON SUCH
DATE;

(D)           A CERTIFICATE OF EXISTENCE OF THE COMPANY FROM THE SECRETARY OF
STATE OF THE STATE OF DELAWARE AND A CERTIFICATE OF THE GOOD STANDING OF THE
COMPANY FROM STATE OF DELAWARE, AND A CERTIFICATE OF QUALIFICATION OF THE
COMPANY AS AN ENTITY AUTHORIZED TO DO BUSINESS IN ALASKA, IN EACH CASE DATED AS
OF A DATE NOT EARLIER THAN 10 DAYS PRIOR TO THE CLOSING DATE;

(E)           THE ORIGINALS OF ALL MINUTE BOOKS, MEMBERSHIP INTERESTS TRANSFER
RECORDS, ELECTRONIC DATA AND CORPORATE AND ALL OTHER RECORDS OF THE COMPANY,
INCLUDING BUT NOT LIMITED TO, ALL LAND, GEOLOGICAL, ENGINEERING AND GEOPHYSICAL
WORK FILES RELATING TO THE COMPANY’S OIL AND GAS PROPERTIES;

(F)            PAY-OFF LETTERS FROM CREDIT SUISSE, JP MORGAN CHASE AND ANY OTHER
PROVIDERS OF COMPANY DEBT IN FORM AND SUBSTANCE SATISFACTORY TO BUYER AND ITS
FINANCING SOURCE, SPECIFYING, AMONG OTHER THINGS, THAT ALL OF THE CREDIT
AGREEMENT AND ALL OTHER LOAN DOCUMENTS RELATED THERETO SHALL BE CANCELED UPON
PAYMENT OF THE PAY-OFF AMOUNTS SET FORTH THEREIN, TOGETHER WITH EVIDENCE THAT
ALL LIENS IN FAVOR OF CREDIT SUISSE, JP MORGAN AND ANY OTHER SECURED LENDERS
HAVE BEEN OR, UPON PAYMENT OF THE PAY-OFF AMOUNTS SET FORTH THEREIN WILL BE,
RELEASED (THE “PAY-OFF LETTERS”);

(G)           GENERAL RELEASES OF CLAIMS AGAINST THE COMPANY, IN FORM AND
SUBSTANCE SATISFACTORY TO BUYER AND ITS FINANCING SOURCE, FROM SELLER, FOC AND
THEIR AFFILIATES, AND ALL OFFICERS AND DIRECTORS OF THE COMPANY;

(H)           THE RESIGNATION OF EACH OF THE PRESENT DIRECTORS AND OFFICERS OF
THE COMPANY; AND

(I)            ALL CONSENTS OR WAIVERS REFERRED TO ON SCHEDULE 4.5.

9.2           DELIVERIES BY BUYER TO SELLER AND THE COMPANY.  AT THE CLOSING, IN
ADDITION TO MAKING THE PAYMENTS DESCRIBED IN SECTIONS 3.2 AND 3.3, BUYER SHALL
DELIVER TO SELLER THE FOLLOWING:

(A)           A CERTIFICATE OF A DULY AUTHORIZED REPRESENTATIVE OF BUYER, DATED
THE CLOSING DATE, AUTHORIZING THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND
THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND CERTIFYING THAT
SUCH AUTHORIZATIONS ARE IN FULL FORCE AND EFFECT AND HAVE NOT BEEN RESCINDED OR
AMENDED AS OF THE CLOSING DATE;

(B)           EVIDENCE SATISFACTORY TO SELLER INDICATING (I) PAYMENT IN FULL OF
THE AMOUNTS REFLECTED IN THE PAY-OFF LETTERS OR (II) A COMPLETE AND GENERAL
RELEASE OF THE SELLER AND FOC FROM ALL LIABILITIES AND OBLIGATIONS UNDER THE
COMPANY DEBT; AND

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(C)           A CERTIFICATE OF A DULY AUTHORIZED REPRESENTATIVE OF BUYER
ATTESTING AS TO THE INCUMBENCY AND SIGNATURE OF EACH PERSON WHO SHALL EXECUTE
THIS AGREEMENT OR ANY OTHER MATERIAL DOCUMENT RELATED TO THIS TRANSACTION.

ARTICLE X

TRANSITION OPERATIONS

10.1         TRANSITION OPERATIONS.  WITH RESPECT TO ANY PORTION OF THE OIL AND
GAS PROPERTIES OPERATED BY COMPANY OR ITS AGENT, AFTER CLOSING AND UNTIL SUCH
TIME AS BUYER MAY BE RECOGNIZED AND APPROVED BY THE APPLICABLE FEDERAL OR STATE
AGENCY AS OPERATOR OF SUCH PORTION OF THE OIL AND GAS PROPERTIES, FOC SHALL
OPERATE SUCH PORTION OF THE OIL AND GAS PROPERTIES FOR THE ACCOUNT OF BUYER,
UNDER THE TERMS OF THE INTERCOMPANY SERVICES AGREEMENT LISTED ON SCHEDULE 4.7
BETWEEN THE COMPANY AND FOC.  IN CONNECTION WITH SUCH OPERATIONS UNDER THE
INTERCOMPANY SERVICES AGREEMENT, THE COMPANY SHALL PAY FOC CONSISTENT WITH THE
PROVISIONS OF THEREOF, PLUS AN ADDITIONAL FEE EQUAL TO US$200,000 PER MONTH,
PROVIDED THAT SUCH ADDITIONAL FEES SHALL BEGIN TO ACCRUE FROM THE FIRST DAY OF
THE FIRST MONTH BEGINNING AT LEAST 90 DAYS AFTER CLOSING. UPON BUYER BEING
RECOGNIZED AS OPERATOR AS TO ALL OF THE OIL AND GAS PROPERTIES, BUYER SHALL
DELIVER TO FOC WRITTEN NOTICE OF ITS INTENTION TO ASSUME OPERATIONS, DESIGNATING
THE DATE OF ITS INTENDED ASSUMPTION.  ON SUCH DATE, THE INTERCOMPANY SERVICES
AGREEMENT SHALL IMMEDIATELY TERMINATE AND BE OF NO FURTHER FORCE AND EFFECT,
WITH NO FURTHER LIABILITY THEREUNDER ON THE PART OF EITHER BUYER OR THE COMPANY,
EXCEPT FOR REIMBURSEMENTS AND A PRO RATA PORTION OF THE OPERATING FEE FOR THE
PERIOD THROUGH THE DATE OF TERMINATION AND ANY INDEMNITY PROTECTIONS THAT
SURVIVE TERMINATION PER THE TERMS OF THE INTERCOMPANY SERVICES AGREEMENT.

ARTICLE XI

TERMINATION

11.1         TERMINATION.  THIS AGREEMENT MAY BE TERMINATED AND THE TRANSACTIONS
CONTEMPLATED HEREBY MAY BE ABANDONED AT ANY TIME PRIOR TO THE CLOSING DATE:

(A)           BY MUTUAL WRITTEN CONSENT OF THE COMPANY, SELLER AND BUYER;

(B)           BY ANY OF THE COMPANY, SELLER OR BUYER IF ANY GOVERNMENTAL ENTITY
SHALL HAVE ISSUED ANY INJUNCTION OR TAKEN ANY OTHER ACTION PERMANENTLY
RESTRAINING, ENJOINING OR OTHERWISE PROHIBITING THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND SUCH INJUNCTION OR OTHER ACTION SHALL HAVE
BECOME FINAL AND NONAPPEALABLE;

(C)           (I) BY SELLER IN THE EVENT OF A MATERIAL BREACH BY THE BUYER OF
ONE OR MORE PROVISIONS OF THIS AGREEMENT, IN PARTICULAR THE REPRESENTATIONS AND
WARRANTIES IN ARTICLE VI ABOVE AND (II) BY BUYER IN THE EVENT OF A MATERIAL
BREACH BY EITHER THE SELLER OR THE COMPANY OF ONE OR MORE PROVISIONS OF THIS
AGREEMENT, IN PARTICULAR THE REPRESENTATIONS AND WARRANTIES IN ARTICLES IV AND V
ABOVE;

(D)           BY SELLER OR BUYER IF THE TOTAL AMOUNT OF UNCURED AND UNWAIVED
TITLE DEFECTS AND/OR ENVIRONMENTAL DEFECTS EXCEEDS 10% OF THE BASE PURCHASE
PRICE;

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11.2      EFFECT OF TERMINATION.

(A)           IN THE EVENT OF TERMINATION OF THIS AGREEMENT BY SELLER PURSUANT
TO SECTION 11.1(C)(I) ABOVE OR IF ALL OTHER CLOSING CONDITIONS HAVE BEEN
SATISFIED (OTHER THAN THOSE THAT CAN ONLY BE SATISFIED AT CLOSING), EXCEPT THAT
THE CONDITION IN SECTION 8.1(F) HAS NOT BEEN SATISFIED, SELLER SHALL BE ENTITLED
TO RETAIN THE DEPOSIT, TOGETHER WITH ANY INTEREST EARNED THEREON. THIS SHALL BE
IN THE NATURE OF LIQUIDATED DAMAGES FOR BUYER’S BREACH, AND NOT A PENALTY. IF
THE CLOSING DOES NOT OCCUR BY JULY 31, 2007 OR IS TERMINATED AS A RESULT OF A
BREACH BY BUYER AS CONTEMPLATED BY SECTION 11.1(C)(I) ABOVE OR IF THE FAILURE TO
CLOSE IS THE RESULT OF THE CONDITION IN SECTION 8.1(F) NOT BEING SATISFIED AS
CONTEMPLATED ABOVE, THE SELLER’S RETENTION OF THE DEPOSIT IS SELLER’S SOLE
REMEDY AGAINST THE BUYER.  HOWEVER, IF THIS AGREEMENT DOES NOT CLOSE ON THE DATE
SPECIFIED ABOVE OR IS TERMINATED DUE THE NEGLIGENCE, FAULT OR WILLFUL FAILURE OF
THE SELLER OR FOR THE REASONS DESCRIBED IN SECTION 11.1(A), (B), (C)(II), OR
(D), THE DEPOSIT, TOGETHER WITH ANY INTEREST EARNED THEREON SHALL BE DELIVERED
TO BUYER.

(B)           IN THE EVENT OF TERMINATION OF THIS AGREEMENT BY ANY PARTY HERETO
AS PROVIDED IN SECTION 11.1, THIS AGREEMENT SHALL FORTHWITH BECOME VOID AND
THERE SHALL BE NO LIABILITY OR OBLIGATION ON THE PART OF ANY PARTY HERETO EXCEPT
(I) UNDER THE CONFIDENTIALITY AGREEMENT, (II) WITH RESPECT TO THIS SECTION 11.2,
THE SECOND AND THIRD SENTENCES OF SECTION 7.6, AND SECTION 14.10, AND (III) TO
THE EXTENT THAT SUCH TERMINATION RESULTS FROM THE WILLFUL BREACH BY A PARTY
HERETO OF ANY OF ITS REPRESENTATIONS AND WARRANTIES OR OF ANY OF ITS COVENANTS
OR AGREEMENTS CONTAINED IN THIS AGREEMENT.

ARTICLE XII

INDEMNIFICATION

12.1         SELLER AND FOC INDEMNIFICATION.  SUBJECT TO THE LIMITATIONS SET
FORTH IN SECTION 12.4 HEREOF, THE SELLER AND FOC HEREBY JOINTLY AND SEVERALLY
AGREE TO INDEMNIFY AND HOLD BUYER AND EACH OF ITS AFFILIATES, AND THE OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS THEREOF, HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, JUDGMENTS, CAUSES OF ACTION, LIABILITIES, OBLIGATIONS, GUARANTEES,
DAMAGES, LOSSES, DEFICIENCIES, COSTS, PENALTIES, INTEREST AND EXPENSES,
INCLUDING WITHOUT LIMITATION, COST OF INVESTIGATION AND DEFENSE, AND REASONABLE
ATTORNEYS’ FEES AND EXPENSES, NET OF ANY COLLECTED INSURANCE PROCEEDS
(COLLECTIVELY, “LOSSES”), ARISING OUT OF, BASED UPON, ATTRIBUTABLE TO OR
RESULTING FROM ANY, BREACH OF A REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT
OF THE COMPANY OR SELLER CONTAINED IN OR MADE PURSUANT TO THIS AGREEMENT
(WITHOUT GIVING EFFECT TO ANY LIMITATION AS TO “MATERIALITY” OR “MATERIAL
ADVERSE EFFECT” SET FORTH THEREIN).

12.2         BUYER INDEMNIFICATION.  BUYER HEREBY AGREES TO INDEMNIFY AND HOLD
SELLER, THE COMPANY, EACH OF THEIR RESPECTIVE AFFILIATES AND EACH OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS HARMLESS FROM AND AGAINST
ANY AND ALL LOSSES ARISING OUT OF, BASED UPON, ATTRIBUTABLE TO OR RESULTING FROM
ANY BREACH OF ANY REPRESENTATION, WARRANTY, AGREEMENT OR COVENANT ON THE PART OF
BUYER CONTAINED IN OR MADE PURSUANT TO THIS AGREEMENT (WITHOUT GIVING EFFECT TO
ANY LIMITATION AS TO “MATERIALITY” OR “MATERIAL ADVERSE EFFECT” SET FORTH
THEREIN).

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12.3         INDEMNIFICATION PROCEDURES.

(A)           IF ANY THIRD PARTY ASSERTS ANY CLAIM AGAINST A PARTY TO THIS
AGREEMENT WHICH, IF SUCCESSFUL, WOULD ENTITLE THE PARTY TO INDEMNIFICATION UNDER
THIS ARTICLE XII (THE “INDEMNIFIED PARTY”), IT SHALL GIVE NOTICE OF SUCH CLAIM
TO THE PARTY FROM WHOM IT INTENDS TO SEEK INDEMNIFICATION (THE “INDEMNIFYING
PARTY”) AND THE INDEMNIFYING PARTY SHALL HAVE THE RIGHT TO ASSUME THE DEFENSE
AND, SUBJECT TO SECTION 12.3(B), SETTLEMENT OF SUCH CLAIM AT ITS EXPENSE BY
REPRESENTATIVES OF ITS OWN CHOOSING ACCEPTABLE TO THE INDEMNIFIED PARTY (WHICH
ACCEPTANCE SHALL NOT BE UNREASONABLY WITHHELD).  THE FAILURE OF THE INDEMNIFIED
PARTY TO NOTIFY THE INDEMNIFYING PARTY OF SUCH CLAIM SHALL NOT RELIEVE THE
INDEMNIFYING PARTY OF ANY LIABILITY THAT THE INDEMNIFYING PARTY MAY HAVE WITH
RESPECT TO SUCH CLAIM, EXCEPT TO THE EXTENT THAT THE DEFENSE IS MATERIALLY
PREJUDICED BY SUCH FAILURE.  THE INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO
PARTICIPATE IN THE DEFENSE OF SUCH CLAIM AT ITS EXPENSE (WHICH EXPENSE SHALL NOT
BE DEEMED TO BE A LOSS), IN WHICH CASE THE INDEMNIFYING PARTY SHALL COOPERATE IN
PROVIDING INFORMATION TO AND CONSULTING WITH THE INDEMNIFIED PARTY ABOUT THE
CLAIM.  IF THE INDEMNIFYING PARTY FAILS OR DOES NOT ASSUME THE DEFENSE OF ANY
SUCH CLAIM WITHIN 20 DAYS AFTER WRITTEN NOTICE OF SUCH CLAIM HAS BEEN GIVEN BY
THE INDEMNIFIED PARTY TO THE INDEMNIFYING PARTY, THE INDEMNIFIED PARTY MAY
DEFEND AGAINST OR, SUBJECT TO SECTION 12.3(B), SETTLE SUCH CLAIM WITH COUNSEL OF
ITS OWN CHOOSING AT THE EXPENSE (TO THE EXTENT REASONABLE UNDER THE
CIRCUMSTANCES) OF THE INDEMNIFYING PARTY.

(B)           IF THE INDEMNIFYING PARTY DOES NOT ASSUME THE DEFENSE OF A CLAIM
INVOLVING THE ASSERTED LIABILITY OF THE INDEMNIFIED PARTY UNDER THIS ARTICLE
XII, NO SETTLEMENT OF SUCH CLAIM SHALL BE MADE BY THE INDEMNIFIED PARTY WITHOUT
THE PRIOR WRITTEN CONSENT OF THE INDEMNIFYING PARTY, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD OR DELAYED.  IF THE INDEMNIFYING PARTY ASSUMES THE DEFENSE
OF SUCH A CLAIM, (I) NO SETTLEMENT THEREOF MAY BE EFFECTED BY THE INDEMNIFYING
PARTY WITHOUT THE INDEMNIFIED PARTY’S CONSENT UNLESS (A) THERE IS NO FINDING OR
ADMISSION OF ANY VIOLATION OF LAW OR ANY VIOLATION OF THE RIGHTS OF ANY PERSON
AND NO EFFECT ON ANY OTHER CLAIM THAT MAY BE MADE AGAINST THE INDEMNIFIED PARTY,
(B) THE SOLE RELIEF PROVIDED IS MONETARY DAMAGES THAT HAVE BEEN PAID IN FULL BY
THE INDEMNIFYING PARTY AND (C) THE SETTLEMENT INCLUDES, AS AN UNCONDITIONAL TERM
THEREOF, THE GIVING BY THE CLAIMANT OR THE PLAINTIFF TO THE INDEMNIFIED PARTY OF
A RELEASE IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE INDEMNIFIED
PARTY, FROM ALL LIABILITY IN RESPECT OF SUCH CLAIM, AND (II) THE INDEMNIFIED
PARTY SHALL HAVE NO LIABILITY WITH RESPECT TO ANY COMPROMISE OR SETTLEMENT
THEREOF EFFECTED WITHOUT ITS CONSENT.

12.4         LIMITS ON INDEMNIFICATION.  NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT:

(A)           SELLER SHALL NOT HAVE ANY OBLIGATION TO PROVIDE INDEMNIFICATION
FOR LOSSES ARISING OUT OF BREACHES OF REPRESENTATIONS AND WARRANTIES, UNLESS THE
AMOUNT OF ALL SUCH LOSSES PURSUANT TO SECTION 12.1 EXCEEDS US$250,000 (THE
“BASKET AMOUNT”).  THE MAXIMUM AGGREGATE AMOUNT FOR WHICH SELLER MAY BE LIABLE
UNDER THIS ARTICLE XII FOR BREACHES OF REPRESENTATIONS AND WARRANTIES SHALL BE
LIMITED TO TWENTY-FIVE PERCENT (25%) OF THE BASE PURCHASE PRICE. THIS PARAGRAPH
(A) SHALL NOT APPLY TO LOSSES SUFFERED BY A BUYER INDEMNIFIED PARTY PURSUANT TO
SECTIONS 4.3, 4.4 (BUT AT ONLY AS TO THE LAST SENTENCE THEREOF), 4.8, 4.9, 4.10,
4.11, 4.13, 4.25, 5.4, 5.6, 5.7 AND 5.8.

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(B)           BUYER SHALL NOT HAVE ANY OBLIGATION TO PROVIDE INDEMNIFICATION FOR
LOSSES PURSUANT TO SECTION 12.2 ARISING OUT OF OR RELATED TO BREACHES OF
REPRESENTATIONS AND WARRANTIES UNLESS THE AGGREGATE AMOUNT OF ALL SUCH LOSSES
PURSUANT TO SUCH SECTION EXCEEDS THE BASKET AMOUNT IN WHICH CASE BUYER SHALL BE
ONLY LIABLE TO SELLER FOR THE AMOUNT OF SUCH LOSSES THAT EXCEED THE BASKET
AMOUNT.  THE MAXIMUM AGGREGATE AMOUNT FOR WHICH BUYER MAY BE LIABLE UNDER THIS
ARTICLE XII SHALL BE LIMITED TO TWENTY-FIVE PERCENT (25%) OF THE BASE PURCHASE
PRICE.

(C)           EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF (I) THE COMPANY
IN SECTIONS 4.21 AND 4.22, THE EXCLUSIVE REMEDIES FOR WHICH ARE PROVIDED IN
SECTIONS 7.3 AND 7.4, RESPECTIVELY, (II) SELLER CONTAINED IN SECTION 5.6, WHICH
SHALL SURVIVE INDEFINITELY, AND SECTION 4.25, WHICH SHALL SURVIVE UNTIL THE
EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS, THE RESPECTIVE
REPRESENTATIONS OF THE COMPANY, SELLER AND BUYER CONTAINED IN THIS AGREEMENT
SHALL SURVIVE THE CLOSING FOR A PERIOD OF ONE YEAR, AND THEREAFTER NONE OF THE
COMPANY, SELLER OR BUYER SHALL HAVE ANY LIABILITY WHATSOEVER (WHETHER PURSUANT
TO THIS AGREEMENT OR OTHERWISE) WITH RESPECT TO SUCH REPRESENTATION OR
WARRANTY.  THIS SECTION 12.4(C) SHALL HAVE NO EFFECT UPON ANY OTHER OBLIGATIONS
OF THE PARTIES HERETO UNDER THIS AGREEMENT, WHETHER TO BE PERFORMED BEFORE, AT
OR AFTER THE CLOSING, WHICH SHALL SURVIVE UNTIL FULFILLED OR THE EXPIRATION IN
ACCORDANCE WITH THEIR TERMS.

(D)           ANY PAYMENTS MADE TO SELLER, THE COMPANY OR THE BUYER PURSUANT TO
THIS ARTICLE XII SHALL CONSTITUTE AN ADJUSTMENT OF THE PURCHASE PRICE FOR TAX
PURPOSES AND SHALL BE TREATED AS SUCH BY THE BUYER AND SELLER ON THEIR TAX
RETURNS.

(E)           AN INDEMNIFYING PARTY SHALL NOT BE LIABLE UNDER THIS ARTICLE XII
FOR LOSSES RESULTING FROM ANY EVENT RELATING TO A BREACH OF A REPRESENTATION OR
WARRANTY IF THE INDEMNIFYING PARTY CAN ESTABLISH THAT THE INDEMNIFIED PARTY HAD
ACTUAL KNOWLEDGE ON OR BEFORE THE CLOSING DATE OF SUCH EVENT.

(F)            NOTWITHSTANDING ANYTHING ELSE CONTAINED IN THIS ARTICLE XII,
SELLER HEREBY AGREES TO INDEMNIFY AND HOLD BUYER AND EACH OF ITS AFFILIATES
(INCLUDING THE COMPANY), AND THE OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
THEREOF, HARMLESS FROM AND AGAINST ANY AND ALL LOSSES ARISING FROM ANY
LITIGATION (I) WHICH ARISES OUT OF ACTIONS, CONDUCT OR EVENTS WHICH OCCUR PRIOR
TO THE EFFECTIVE DATE OR (II) THAT WAS NOT DISCLOSED TO BUYER AND WHICH ARISES
OUT OF ACTIONS, CONDUCT OR EVENTS THAT OCCURRED BETWEEN THE EFFECTIVE DATE AND
THE CLOSING DATE.  THIS INDEMNITY SHALL BE SUBJECT TO THE PROCEDURES OF SECTION
12.3, AND SHALL SURVIVE INDEFINITELY.

ARTICLE XIII

TAXES

13.1         SALES AND USE TAXES; PROPERTY TAXES.  THE PURCHASE PRICE, AS
ADJUSTED HEREIN, IS EXCLUSIVE OF ANY SALES TAXES AND OTHER TRANSFER TAXES IN
CONNECTION WITH THE SALE OF THE MEMBERSHIP INTERESTS.  BUYER SHALL BEAR THE COST
OF ALL APPLICABLE SALES TAXES, REAL PROPERTY TRANSFER TAXES, AND FILING AND
RECORDING FEES PAYABLE AS A RESULT OF THE TRANSFER OF THE MEMBERSHIP INTERESTS. 
IF AT ANY TIME AFTER THE CLOSING, SELLER OR ANY AFFILIATE SHALL BECOME LIABLE
FOR TAXES OR

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FEES FOR WHICH BUYER IS RESPONSIBLE UNDER THIS PARAGRAPH, BUYER SHALL PROMPTLY
REIMBURSE SELLER OR SUCH AFFILIATE FOR SUCH TAXES AND FEES, INCLUDING ANY
PENALTIES AND INTEREST THEREON.  BUYER SHALL DEFEND, INDEMNIFY AND HOLD SELLER
HARMLESS WITH RESPECT TO THE PAYMENT OF ANY SUCH TAXES AND FEES, INCLUDING ANY
INTEREST OR PENALTIES ASSESSED THEREON.

13.2         TAX PROCEEDINGS.  IN THE EVENT SELLER RECEIVES NOTICE OF ANY
PAYMENTS DUE, CLAIM, ADJUSTMENT OR OTHER PROCEEDING RELATING TO REAL OR PERSONAL
PROPERTY TAXES FOR THE YEAR IN WHICH THE EFFECTIVE DATE OCCURS, SELLER SHALL
NOTIFY BUYER IN WRITING WITHIN 30 DAYS OF RECEIVING NOTICE THEREOF.  AS TO ANY
SUCH TAXES BUYER SHALL, AT BUYER’S EXPENSE, CONTROL OR SETTLE THE CONTEST OF
SUCH EXAMINATION, CLAIM, ADJUSTMENT, OR OTHER PROCEEDING, AND SHALL INDEMNIFY
SELLER AGAINST ALL LOSSES, DAMAGES, COSTS, EXPENSES, LIABILITIES, CLAIMS,
DEMANDS, PENALTIES, FINES, ASSESSMENTS, SETTLEMENTS, AND ANY RELATED EXPENSES IN
CONNECTION THEREWITH.  IF, ON EXECUTION OF THIS AGREEMENT, SELLER OR THE COMPANY
IS ACTIVELY DISPUTING ANY REAL OR PERSONAL PROPERTY TAX ASSESSMENTS INVOLVING
THE OIL AND GAS PROPERTIES FOR THE YEAR IN WHICH THE EFFECTIVE DATE OCCURS,
SELLER SHALL FULLY INFORM BUYER OF THE BASIS FOR, AND STATUS OF, THE DISPUTE AND
SHALL PERMIT BUYER TO DIRECT AND/OR PARTICIPATE IN THE DISPUTE TO THE FULL
EXTENT PERMITTED BY LAW.

13.3         REAL AND PERSONAL PROPERTY TAXES.  ALL AD VALOREM TAXES, REAL
PROPERTY TAXES AND PERSONAL PROPERTY TAXES (“REAL AND PERSONAL PROPERTY TAXES”)
FOR THE YEAR IN WHICH THE EFFECTIVE DATE OCCURS SHALL BE APPORTIONED AS OF THE
EFFECTIVE DATE BETWEEN SELLER AND BUYER.  SELLER SHALL BE LIABLE FOR THE PORTION
OF SUCH REAL AND PERSONAL PROPERTY TAXES BASED UPON THE NUMBER OF DAYS IN THE
YEAR OCCURRING PRIOR TO THE EFFECTIVE DATE, AND BUYER SHALL BE LIABLE FOR THE
PORTION OF SUCH TAXES BASED UPON THE NUMBER OF DAYS IN THE YEAR OCCURRING ON AND
AFTER THE EFFECTIVE DATE.  AT LEAST 5 DAYS PRIOR TO CLOSING, SELLER WILL PROVIDE
BUYER WITH THE AMOUNT OF REAL AND PERSONAL PROPERTY TAXES PAID BY SELLER WITH
RESPECT TO THE YEAR WHICH INCLUDES THE EFFECTIVE DATE AND THE  AMOUNT OF SUCH
TAXES ALLOCABLE TO BUYER, WHICH AMOUNT SHALL BE DEDUCTED FROM THE PURCHASE PRICE
AT CLOSING.

13.4         PROPERTY TAX REPORTING.  COMPANY HAS, OR WILL HAVE, FILED ANY SUCH
RENDITIONS, REPORTS, OR RETURNS REQUIRED TO BE FILED WITH RESPECT TO REAL AND
PERSONAL PROPERTY TAXES BEFORE CLOSING.  BUYER SHALL FILE ALL REPORTS AND
RETURNS REQUIRED TO BE FILED OR SUBMITTED AFTER CLOSING THAT ARE INCIDENT TO
REAL AND PERSONAL PROPERTY TAXES ASSESSED FOR THE YEAR IN WHICH THE EFFECTIVE
DATE OCCURS BUT THAT ARE NOT SUBMITTED BY SELLER PRIOR TO THE CLOSING DATE. 
BUYER SHALL PAY ANY ASSESSED REAL AND PERSONAL PROPERTY TAXES ASSESSED AFTER
CLOSING AND SHALL INVOICE SELLER FOR ITS ALLOCABLE SHARE OF SUCH TAXES, IF ANY,
PURSUANT TO SECTION 13.3 ABOVE, WHICH INVOICE SHALL BE PAID PROMPTLY BY SELLER.

13.5         PRODUCTION TAXES.  ALL PRODUCTION TAXES (INCLUDING DEDUCTIONS,
CREDITS OR REFUNDS PERTAINING THERETO) ATTRIBUTABLE TO THE OWNERSHIP OR
OPERATION OF, OR PRODUCTION AND REVENUE FROM, THE OIL AND GAS PROPERTIES PRIOR
TO THE EFFECTIVE DATE ARE SELLER’S RESPONSIBILITY, AND SHALL BE ALLOCATED TO AND
PAID BY SELLER. ALL PRODUCTION TAXES (INCLUDING DEDUCTIONS, CREDITS OR REFUNDS
PERTAINING THERETO) ATTRIBUTABLE TO THE OWNERSHIP OR OPERATION OF, OR PRODUCTION
AND REVENUE FROM, THE OIL AND GAS PROPERTIES ON AND AFTER THE EFFECTIVE DATE ARE
THE RESPONSIBILITY OF BUYER, AND SHALL BE ALLOCATED TO AND PAID BY BUYER.
PRODUCTION TAXES WILL BE ALLOCATED BY THE PARTIES SO THAT THE PARTY WHICH IS
ENTITLED TO THE REVENUE FROM PRODUCTION SHALL BEAR THE BURDEN OF THE PRODUCTION
TAX IN RESPECT THERETO.  NOTWITHSTANDING THE FOREGOING, ANY EXCESS PRODUCTION
TAX CREDITS

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AVAILABLE TO THE COMPANY OR SELLER, BUT UNUSED AS OF CLOSING SHALL ACCRUE TO THE
COMPANY OR BUYER TO THE EXTENT PERMITTED BY APPLICABLE LAW.

13.6         INCOME TAXES.  SELLER SHALL BE RESPONSIBLE FOR INCOME TAXES IMPOSED
ON SELLER TO THE EXTENT THEY RELATE TO ANY PERIOD, WHETHER BEFORE, ON, OR AFTER
THE EFFECTIVE DATE, AND ALL ITEMS OF DEDUCTION, CREDIT, LOSS OR GAIN OR REFUND
PERTAINING TO INCOME TAXES IMPOSED ON SELLER SHALL REMAIN AND BELONG TO SELLER,
NO MATTER WHEN RECEIVED, ASSESSED OR PAID.  BUYER SHALL BE RESPONSIBLE FOR
INCOME TAXES IMPOSED ON BUYER TO THE EXTENT THEY RELATE TO ANY PERIOD, WHETHER
BEFORE, ON, OR AFTER THE EFFECTIVE DATE, AND ALL ITEMS OF DEDUCTION, CREDIT,
LOSS OR GAIN OR REFUND PERTAINING TO INCOME TAXES IMPOSED ON BUYER SHALL REMAIN
AND BELONG TO BUYER, NO MATTER WHEN RECEIVED, ASSESSED OR PAID.

13.7         PURCHASE PRICE ALLOCATION.  THE ALLOCATION OF THE PURCHASE PRICE IN
ACCORDANCE WITH EXHIBIT A-2 IS INTENDED TO COMPLY WITH THE ALLOCATION METHOD
REQUIRED BY SECTION 1060 OF THE CODE.  BUYER AND SELLER SHALL COOPERATE TO
COMPLY WITH ALL SUBSTANTIVE AND PROCEDURAL REQUIREMENTS OF SECTION 1060 AND THE
TREASURY REGULATIONS THEREUNDER, INCLUDING WITHOUT LIMITATION THE FILING BY
BUYER AND SELLER OF IRS FORM 8594 WITH THEIR FEDERAL INCOME TAX RETURNS FOR THE
TAXABLE YEAR IN WHICH THE CLOSING OCCURS.  BUYER AND SELLER AGREE THAT NEITHER
WILL TAKE, NOR WILL THEY PERMIT ANY AFFILIATE TO TAKE, A POSITION FOR INCOME TAX
PURPOSES THAT IS INCONSISTENT WITH THE ALLOCATION OF THE PURCHASE PRICE.

ARTICLE XIV

GENERAL

14.1         GOVERNING LAW; CHOICE OF FORUM.  THIS AGREEMENT SHALL BE GOVERNED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.  ANY DISPUTE ARISING HEREUNDER
SHALL BE BROUGHT, IF AT ALL, IN THE STATE OR FEDERAL COURTS LOCATED IN DELAWARE.
EACH PARTY AGREES NOT TO ASSERT ANY ARGUMENT OF INCONVENIENT FORUM IN RESPONSE
TO THE FILING OF AN ACTION IN ANY SUCH COURT.

14.2         AMENDMENTS.  THIS AGREEMENT MAY ONLY BE AMENDED BY AN INSTRUMENT IN
WRITING EXECUTED BY COMPANY, BUYER AND SELLER.

14.3         WAIVERS.  THE OBSERVANCE OF ANY TERM OF THIS AGREEMENT MAY BE
WAIVED (EITHER GENERALLY OR IN A PARTICULAR INSTANCE AND EITHER RETROACTIVELY OR
PROSPECTIVELY) BY THE PARTY ENTITLED TO ENFORCE SUCH TERM, BUT SUCH WAIVER SHALL
BE EFFECTIVE ONLY IF IT IS IN A WRITING SIGNED BY THE PARTY ENTITLED TO ENFORCE
SUCH TERM AND AGAINST WHICH SUCH WAIVER IS TO BE ASSERTED.  UNLESS OTHERWISE
EXPRESSLY PROVIDED IN THIS AGREEMENT, NO DELAY OR OMISSION ON THE PART OF ANY
PARTY IN EXERCISING ANY RIGHT OR PRIVILEGE UNDER THIS AGREEMENT SHALL OPERATE AS
A WAIVER THEREOF, NOR SHALL ANY WAIVER ON THE PART OF ANY PARTY OF ANY RIGHT OR
PRIVILEGE UNDER THIS AGREEMENT OPERATE AS A WAIVER OF ANY OTHER RIGHT OR
PRIVILEGE UNDER THIS AGREEMENT NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF ANY
RIGHT OR PRIVILEGE PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE
EXERCISE OF ANY OTHER RIGHT OR PRIVILEGE UNDER THIS AGREEMENT.

14.4         NOTICES.  ANY NOTICE OR OTHER COMMUNICATIONS REQUIRED OR PERMITTED
HEREUNDER SHALL BE IN WRITING AND SHALL BE SUFFICIENTLY GIVEN (AND SHALL BE
DEEMED TO HAVE BEEN DULY GIVEN

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UPON RECEIPT) IF SENT BY OVERNIGHT MAIL, REGISTERED MAIL OR CERTIFIED MAIL,
POSTAGE PREPAID, OR BY HAND, TO THE PARTIES AT THE FOLLOWING ADDRESSES (OR AT
SUCH OTHER ADDRESS FOR A PARTY AS SHALL BE SPECIFIED BY LIKE NOTICE):

(A)                                   IF TO BUYER, TO:
111 W. OCEAN BOULEVARD
SUITE 1240
LONG BEACH, CA 9080
ATTN: PRESIDENT
TEL.: 562.628.1531
FAX: 562.628.1536

(B)           IF TO SELLER AND/OR THE COMPANY, TO:

707 Seventeenth Street
Suite 3600
Denver, CO 80202
Attn: General Counsel
Tel.: 303.812.1701
Fax: 303.812.1445

14.5         SUCCESSORS AND ASSIGNS, PARTIES IN INTEREST.  THIS AGREEMENT SHALL
BE BINDING UPON AND SHALL INURE SOLELY TO THE BENEFIT OF THE PARTIES HERETO AND
THEIR RESPECTIVE SUCCESSORS, LEGAL REPRESENTATIVES AND PERMITTED ASSIGNS. 
NEITHER THIS AGREEMENT NOR ANY RIGHTS OR OBLIGATIONS HEREUNDER MAY BE ASSIGNED
WITHOUT THE WRITTEN CONSENT OF THE OTHER PARTIES, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD, EXCEPT THAT BUYER MAY MAKE AN ASSIGNMENT OF ITS RIGHTS
HEREUNDER TO ITS FINANCING SOURCE FOR COLLATERAL SECURITY PURPOSES.  NOTHING IN
THIS AGREEMENT, EXPRESS OR IMPLIED, IS INTENDED TO OR SHALL CONFER UPON ANY
PERSON, OTHER THAN THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS, LEGAL
REPRESENTATIVES AND PERMITTED ASSIGNS, ANY RIGHTS, BENEFITS OR REMEDIES OF ANY
NATURE WHATSOEVER UNDER OR BY REASON OF THIS AGREEMENT, AND NO PERSON SHALL BE
DEEMED A THIRD PARTY BENEFICIARY UNDER OR BY REASON OF THIS AGREEMENT.

14.6         SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT OR THE
APPLICATION OF ANY SUCH PROVISION TO ANY PERSON OR CIRCUMSTANCE, SHALL BE
DECLARED JUDICIALLY TO BE INVALID, UNENFORCEABLE OR VOID, SUCH DECISION SHALL
NOT HAVE THE EFFECT OF INVALIDATING OR VOIDING THE REMAINDER OF THIS AGREEMENT,
IT BEING THE INTENT AND AGREEMENT OF THE PARTIES THAT THIS AGREEMENT SHALL BE
DEEMED AMENDED BY MODIFYING SUCH PROVISION TO THE EXTENT NECESSARY TO RENDER IT
VALID, LEGAL AND ENFORCEABLE WHILE PRESERVING ITS INTENT OR, IF SUCH
MODIFICATION IS NOT POSSIBLE, BY SUBSTITUTING THEREFOR ANOTHER PROVISION THAT IS
VALID, LEGAL AND ENFORCEABLE AND THAT ACHIEVES THE SAME OBJECTIVE.

14.7         ENTIRE AGREEMENT.  THIS AGREEMENT (INCLUDING THE CONFIDENTIALITY
AGREEMENT, THE EXHIBITS AND SCHEDULES HERETO, AND THE DOCUMENTS AND INSTRUMENTS
EXECUTED AND DELIVERED IN CONNECTION HEREWITH) CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL
PRIOR AND CONTEMPORANEOUS AGREEMENTS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, AMONG THE PARTIES OR ANY OF THEM WITH RESPECT TO THE SUBJECT MATTER
HEREOF, AND THERE ARE NO REPRESENTATIONS, UNDERSTANDINGS OR AGREEMENTS RELATING
TO

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THE SUBJECT MATTER HEREOF THAT ARE NOT FULLY EXPRESSED IN THIS AGREEMENT AND THE
DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH.  ALL
EXHIBITS AND SCHEDULES ATTACHED TO THIS AGREEMENT ARE EXPRESSLY MADE A PART OF,
AND INCORPORATED BY REFERENCE INTO, THIS AGREEMENT.

14.8         SCHEDULES.  NOTHING IN THE SCHEDULES IS INTENDED TO BROADEN THE
SCOPE OF ANY REPRESENTATION OR WARRANTY CONTAINED IN THE AGREEMENT OR TO CREATE
ANY COVENANT UNLESS CLEARLY SPECIFIED TO THE CONTRARY HEREIN.  ANY DISCLOSURE ON
ONE SCHEDULE SHALL BE DEEMED TO BE DISCLOSED ON ALL SCHEDULES AND UNDER THE
AGREEMENT.  INCLUSION OF ANY ITEM IN THE SCHEDULES (A) SHALL BE DEEMED TO BE
DISCLOSURE OF SUCH ITEM ON ALL SCHEDULES AND UNDER THE AGREEMENT, (B) DOES NOT
REPRESENT A DETERMINATION THAT SUCH ITEM IS MATERIAL NOR SHALL IT BE DEEMED TO
ESTABLISH A STANDARD OF MATERIALITY, (C) DOES NOT REPRESENT A DETERMINATION THAT
SUCH ITEM DID NOT ARISE IN THE ORDINARY COURSE OF BUSINESS, (D) DOES NOT
REPRESENT A DETERMINATION THAT THE TRANSACTIONS CONTEMPLATED BY THE AGREEMENT
REQUIRE THE CONSENT OF THIRD PARTIES AND (E) SHALL NOT CONSTITUTE, OR BE DEEMED
TO BE, AN ADMISSION TO ANY THIRD PARTY CONCERNING SUCH ITEM.  THE SCHEDULES
INCLUDE DESCRIPTIONS OF INSTRUMENTS OR BRIEF SUMMARIES OF CERTAIN ASPECTS OF THE
COMPANY AND ITS BUSINESS AND OPERATIONS.  THE DESCRIPTIONS AND BRIEF SUMMARIES
ARE NOT NECESSARILY COMPLETE AND ARE PROVIDED IN THE SCHEDULES TO IDENTIFY
DOCUMENTS OR OTHER MATERIALS PREVIOUSLY DELIVERED OR MADE AVAILABLE.

14.9         REMEDIES.  EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT
(I) THE PROVISIONS OF THIS AGREEMENT ARE REASONABLE AND NECESSARY TO PROTECT THE
PROPER AND LEGITIMATE INTERESTS OF THE OTHER PARTIES HERETO, AND (II) THE OTHER
PARTIES HERETO WOULD BE IRREPARABLY DAMAGED IN THE EVENT ANY OF THE PROVISIONS
OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR
WERE OTHERWISE BREACHED.  IT IS ACCORDINGLY AGREED THAT THE PARTIES HERETO SHALL
BE ENTITLED TO PRELIMINARY AND PERMANENT INJUNCTIVE RELIEF TO PREVENT BREACHES
OF THE PROVISIONS OF THIS AGREEMENT BY OTHER PARTIES HERETO WITHOUT THE
NECESSITY OF PROVING ACTUAL DAMAGES UPON POSTING OF A SUITABLE BOND, AND TO
ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF AND THEREOF, WHICH RIGHTS
SHALL BE CUMULATIVE AND IN ADDITION TO ANY OTHER REMEDY TO WHICH THE PARTIES
HERETO MAY BE ENTITLED HEREUNDER OR AT LAW OR EQUITY.

14.10       EXPENSES.  THE SELLER, ON THE ONE HAND, AND BUYER, ON THE OTHER
HAND, SHALL BEAR THEIR RESPECTIVE EXPENSES (INCLUDING, WITHOUT LIMITATION, FEES
AND DISBURSEMENTS OF COUNSEL, ACCOUNTANTS AND OTHER EXPERTS) INCURRED IN
CONNECTION WITH THE PREPARATION, NEGOTIATION, EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT, EACH OF THE OTHER DOCUMENTS AND INSTRUMENTS
EXECUTED IN CONNECTION WITH OR CONTEMPLATED BY THIS AGREEMENT AND THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.

14.11       RELEASE OF INFORMATION; CONFIDENTIALITY.  THE PARTIES SHALL
COOPERATE WITH EACH OTHER IN RELEASING INFORMATION CONCERNING THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY.  NO PRESS RELEASES OR OTHER PUBLIC
ANNOUNCEMENTS CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL
BE MADE BY ANY PARTY WITHOUT PRIOR CONSULTATION WITH AND WRITTEN CONSENT OF EACH
OTHER PARTY, EXCEPT FOR ANY LEGALLY REQUIRED COMMUNICATION BY ANY PARTY AND THEN
ONLY WITH PRIOR CONSULTATION AND AT LEAST 12 HOURS NOTICE TOGETHER WITH COPIES
OF ALL DRAFTS OF THE PROPOSED TEXT, PRIOR TO THE TIME THE COMMUNICATION IS MADE
PUBLIC.

14.12       CERTAIN CONSTRUCTION RULES.  THE ARTICLE AND SECTION HEADINGS AND
THE TABLE OF CONTENTS CONTAINED IN THIS AGREEMENT ARE FOR CONVENIENCE OF
REFERENCE ONLY AND SHALL IN NO WAY

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DEFINE, LIMIT, EXTEND OR DESCRIBE THE SCOPE OR INTENT OF ANY PROVISIONS OF THIS
AGREEMENT.  WHENEVER THE CONTEXT MAY REQUIRE, ANY PRONOUN USED IN THIS AGREEMENT
SHALL INCLUDE THE CORRESPONDING MASCULINE, FEMININE OR NEUTER FORMS, AND THE
SINGULAR FORM OF NOUNS, PRONOUNS AND VERBS SHALL INCLUDE THE PLURAL AND VICE
VERSA.  IN ADDITION, AS USED IN THIS AGREEMENT, UNLESS OTHERWISE PROVIDED TO THE
CONTRARY, (A) ALL REFERENCES TO DAYS, MONTHS OR YEARS SHALL BE DEEMED REFERENCES
TO CALENDAR DAYS, MONTHS OR YEARS AND (B) ANY REFERENCE TO A “SECTION,”
“ARTICLE,” OR “SCHEDULE” SHALL BE DEEMED TO REFER TO A SECTION OR ARTICLE OF
THIS AGREEMENT OR AN EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT.  THE WORDS
“HEREOF”, “HEREIN”, AND “HEREUNDER” AND WORDS OF SIMILAR IMPORT REFERRING TO
THIS AGREEMENT REFER TO THIS AGREEMENT AS A WHOLE AND NOT TO ANY PARTICULAR
PROVISION OF THIS AGREEMENT.  UNLESS OTHERWISE SPECIFICALLY PROVIDED FOR HEREIN,
THE TERM “OR” SHALL NOT BE DEEMED TO BE EXCLUSIVE.

14.13       COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED (INCLUDING BY
FACSIMILE TRANSMISSION) IN MULTIPLE COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED
AN ORIGINAL AND ALL OF WHICH TAKEN TOGETHER SHALL CONSTITUTE ONE INSTRUMENT
BINDING ON ALL THE PARTIES, NOTWITHSTANDING THAT ALL THE PARTIES ARE NOT
SIGNATORIES TO THE ORIGINAL OR THE SAME COUNTERPART.

[Signatures contained on following page]

39

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*              *              *

IN WITNESS WHEREOF, this Agreement has been duly executed as of the date first
above written.

 

 

BUYER:

 

 

 

 

 

 

 

PACIFIC ENERGY RESOURCES LTD.

 

 

 

 

 

 

 

By:

/s/ DARREN KATIC

 

 

 

 

Name:

Darren Katic

 

 

 

 

Title:

President

 

 

 

 

 

 

COMPANY:

 

 

 

 

 

 

 

FOREST ALASKA OPERATING LLC

 

 

 

 

 

 

 

By:

/s/ GLEN J. MIZENKO

 

 

 

 

Name:

Glen J. Mizenko

 

 

 

 

Title:

Vice President, Business Development

 

 

 

 

 

 

 

 

 

SELLER:

 

 

 

 

 

 

 

FOREST ALASKA HOLDING LLC

 

 

 

 

 

 

 

 

 

By:

/s/ CYRUS D. MARTER IV

 

 

 

 

Name:

Cyrus D. Marter IV

 

 

 

 

Title:

Vice President & Secretary

 

 

 

 

 

 

 

 

 

FOC (for purposes of Sections 7.6, 7.14, 10.1 and Article XII only):

 

 

 

 

 

 

 

FOREST OIL CORPORATION

 

 

 

 

 

 

 

By:

/s/ DAVID H. KEYTE

 

 

 

 

Name:

David H. Keyte

 

 

 

 

Title:

Executive Vice President & Chief Financial Officer

 

 

 

 

40

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