Exhibit 10.1

_________________________________________________________________
PURCHASE AND SALE AGREEMENT

by and between

DEVON ENERGY PRODUCTION COMPANY, L.P.
(Seller)

and

ABRAXAS PETROLEUM CORPORATION
(Buyer)

Dated as of May 22, 2017
_________________________________________________________________

    

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TABLE OF CONTENTS
ARTICLE I
PROPERTIES
Section 1.1
Agreement to Sell Purchase
1

Section 1.2
Excluded Assets
2

Section 1.3
Effective Time
3

Section 1.4
Assumed Liabilities
3

ARTICLE II
PURCHASE PRICE
Section 2.1
Purchase Price; Deposit
4

Section 2.2
Adjustments to Purchase Price
4

Section 2.3
Allocated Values
6

ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1
Representations and Warranties of Seller
6

Section 3.2
Representations and Warranties of Buyer
8

Section 3.3
Survival of Representations and Warranties.
9

Section 3.4
Waiver of Representations and Warranties
10

Section 3.5
General Disclaimer
10

Section 3.6
Special Warranty of Title
10

Section 3.7
Buyer's Assertion of Special Warranty Breaches
10

Section 3.8
Limitations on Special Warranty
11

ARTICLE IV
COVENANTS
Section 4.1
Conduct of Business
11

Section 4.2
Bonds and Other Credit Support
12

Section 4.3
No Solicitation of Seller Employees
12

Section 4.4
Reports
12

Section 4.5
Successor Operator
12

Section 4.6
Amendment to Schedules
12

Section 4.7
Suspense Funds
13

Section 4.8
Efforts
13

Section 4.9
Acquistion Proposals
13

ARTICLE V
EXAMINATION OF TITLE AND PROPERTIES
Section 5.1
Access to Title Information.
13

Section 5.2
Environmental Property Inspection.
14

Section 5.3
Environmental Property Inspection.
15

Section 5.4
Notice of Title Defects and Title Benefits; Remedies.
19

Section 5.5
Title Defect Amount; Title Benefit Amount.
20

Section 5.6
Notice of Environmental Defects; Remedies.
22

Section 5.7
Title and Environmental Dispute Resolution
23

Section 5.8
Casualty Loss and Condemnation
23

Section 5.9
Preferential Purchase Rights
23

Section 5.10
Applicable Consents.
24

Section 5.11
Special Warranty
25

Section 5.12
Exclusive Remedy
25

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ARTICLE VI
TAX MATTERS
Section 6.1
Certain Definitions.
25

Section 6.2
Apportionment of Asset Taxes
25

Section 6.3
Tax Returns
26

Section 6.4
Liability for Transfer Taxes
26

ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
Section 7.1
Seller’s Conditions
27

Section 7.2
Buyer’s Conditions
27

ARTICLE VIII
CLOSING
Section 8.1
Preliminary Settlement Statement and Closing.
27

Section 8.2
Closing Obligations
28

ARTICLE IX
POST-CLOSING RIGHTS AND OBLIGATIONS
Section 9.1
Files and Records.
29

Section 9.2
Post-Closing Adjustments
29

Section 9.3
Further Assurances
30

Section 9.4
Removal of Signs
30

Section 9.5
Well Data
30

ARTICLE X
INDEMNIFICATION
Section 10.1
Buyer’s Indemnity Obligations
30

Section 10.2
Seller’s Indemnity Obligations
31

Section 10.3
Deductible, Threshold and Cap
31

Section 10.4
Notice of Claim for Indemnification
31

Section 10.5
Waiver of Certain Damages
31

Section 10.6
Exclusive Remedy
32

Section 10.7
Extent of Indemnification
32

ARTICLE XI
ARBITRATION
Section 11.1
Arbitration.
32

Section 11.2
Location
33

Section 11.3
Rules
33

Section 11.4
Hearings
33

Section 11.5
Jurisdiction of Provisions
33

Section 11.6
Written Decision or Award
33

Section 11.7
Authority of Arbitrator
33

ARTICLE XII
TERMINATION
Section 12.1
Termination
34

Section 12.2
Liabilities upon Termination.
34

Section 12.3
Confidentiality Agreement
34

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ARTICLE XIII
MISCELLANEOUS
Section 13.1
Notices
34

Section 13.2
Amendments and Severability
35

Section 13.3
Assignment
36

Section 13.4
Interpretation.
36

Section 13.5
Governing Law
36

Section 13.6
Announcements
36

Section 13.7
Like-Kind Exchange.
36

Section 13.8
Entire Agreement
37

Section 13.9
Parties in Interest
37

Section 13.10
Waiver
37

Section 13.11
Conspicuousness of Provisions
37

Section 13.12
Counterparts
37

Section 13.13
Waiver of Jury Trial; Submission to Jurisdiction.
37

Section 13.14
Specific Performance
38

Exhibits and Schedules
Exhibit A    Leases
Exhibit B    Wells
Exhibit C    Applicable Contracts
Exhibit D    Rights-of-Way
Exhibit E    Form of Assignment and Bill of Sale
Exhibit F    Form of Buyer’s Officer’s Certificate
Exhibit G    Form of Seller’s Officer’s Certificate
Schedule 1.2(e)    Excluded Assets
Schedule 3.1(e)    Litigation
Schedule 3.1(f)    Taxes
Schedule 3.1(g)    Governmental Authorization
Schedule 3.1(i)    Compliance with Law
Schedule 3.1(j)    Rights in Third Parties
Schedule 3.1(k)    Imbalances
Schedule 3.1(n)    Outstanding Capital Commitments
Schedule 4.2    Governmental Bonds
Schedule 9.5    Well Data

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PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (“Agreement”) is entered into this 22nd day of
May, 2017 (the “Execution Date”) between Abraxas Petroleum Corporation, a Nevada
corporation (“Buyer”), having an address of 18803 Meisner Drive, San Antonio,
Texas 78258, and Devon Energy Production Company, L.P., an Oklahoma limited
partnership (“Seller”), having an address of 333 West Sheridan Avenue, Oklahoma
City, Oklahoma 73102. Buyer and Seller are collectively referred to herein as
the “Parties” and each individually referred to herein as a “Party.”
W I T N E S S E T H:
WHEREAS, Seller is willing to sell to Buyer, and Buyer is willing to purchase
from Seller, all of Seller’s right, title and interest in and to the Properties
(as defined in Section 1.1), upon the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual benefits derived and to be
derived herefrom by each Party, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller and Buyer
hereby agree as follows:
ARTICLE I
PROPERTIES

Section 1.1    Agreement to Sell and Purchase. At the Closing (as defined in
Section 8.1(b)) and effective as of the Effective Time (as defined in Section
1.3), subject to the terms and conditions of this Agreement, including the
reservation and retention of the Excluded Assets (as described and defined in
Section 1.2), Seller shall sell, convey and assign to Buyer, and Buyer shall
purchase, pay for, and accept, all of Seller’s right and title to, and interest
in the following assets and properties (other than any assets or properties that
Seller does not own or hold as of the Closing pursuant to actions taken (or not
taken) by Seller in compliance with Section 4.1) (collectively, the
“Properties”, and each, individually, a “Property”):
(a)    the oil and/or gas leases described on Exhibit A (each a “Lease” and
collectively the “Leases”), together with any and all leasehold interests and
other rights, titles and interests of Seller in and to any pooled acreage,
communitized acreage or units arising on account of the Leases having been
pooled, communitized or unitized into such units (the “Unit Interests”);
(b)    all oil wells and gas wells, water injection wells and other injection or
disposal wells, temporarily abandoned and permanently plugged and abandoned
wells, and all other wells of every nature and kind located on or attributable
to the Leases or the Unit Interests, including all of the wells described on
Exhibit B (each a “Well” and collectively the “Wells”, and, together with the
Leases and the Unit Interests, the “Subject Oil and Gas Interests”);
(c)    all oil, gas, well gas, casinghead gas, condensate, and all components of
any of them (including liquids and products produced from any of them) (the
“Hydrocarbons”), in each case, produced from or attributable to the Subject Oil
and Gas Interests from and after the Effective Time (the “Conveyed
Hydrocarbons”) and all Stored Hydrocarbons (as defined in Section 2.2(a)(ii));
(d)    to the extent assignable and to the extent the transfer or disclosure
thereof would not be restricted by binding obligations of confidentiality
(which, at the request of Buyer, Seller will endeavor in good faith to have
lifted, provided that Seller shall not be required to expend any funds that
Buyer does not agree in writing to pay in connection therewith), all agreements
and contracts (oral or written) to which Seller is a party or in which Seller
otherwise holds an interest and (i) by which any of the assets and properties

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described in this Section 1.1 are bound or (ii) that primarily relate to the
assets and properties described in this Section 1.1 or the operations with
respect thereto, including farmin agreements, farmout agreements, operating
agreements, Hydrocarbon purchase, sale, compression, transportation, treating,
marketing, exchange, processing and fractionating agreements, including those
agreements described on Exhibit C (all such contracts and agreements, the
“Applicable Contracts”);
(e)    to the extent assignable or transferable and then only to the extent
primarily related to the use, ownership or operation of any of the Subject Oil
and Gas Interests or any of the Tangible Property, (i) all easements,
rights-of-way, servitudes, surface use agreements, surface leases and similar
rights, obligations and interests (the “Rights-of-Way”) and (ii) unless the
assignment or transfer thereof would require the payment of a fee or other
consideration to any person other than Seller (or any of its affiliates) that
Buyer has not separately agreed in writing to pay, all permits, water rights
(including water withdrawal, storage, discharge, treatment, injection and
disposal rights), licenses, registrations, consents, orders, approvals,
variances, exemptions, waivers, franchises, rights and other authorizations
issued by any governmental agency (the “Permits”), including those Rights-of-Way
and Permits described on Exhibit D;
(f)    (i) all equipment, machinery, fixtures, and other real, immovable,
personal, movable and mixed property that is located on the Leases and primarily
used (or held for use) in connection with the use, ownership or operation of the
Wells, including flow lines, pipelines, well pads, caissons, tank batteries,
equipment inventory (other than any equipment inventory consumed in the ordinary
course of business prior to the Closing), improvements and abandoned property
(the “Tangible Property”);
(g)    except to the extent the transfer or disclosure thereof would be
restricted by binding obligations of confidentiality (which, at the request of
Buyer, Seller will endeavor in good faith to have lifted, provided that Seller
shall not be required to expend any funds that Buyer does not agree in writing
to pay in connection therewith), all of the files, records, and information in
Seller’s possession that are primarily related to Seller’s ownership and/or
operation of the assets and properties described in this Section 1.1, including
all land, title and contract files and operations, accounting, environmental,
production and well records with respect to such properties and assets (the
“Records”); and
(h)    (i) all trade credits, accounts, receivables, instruments, general
intangibles and other proceeds, benefits, income or revenues attributable to any
of the assets and properties described in this Section 1.1 (including from the
sale of any Conveyed Hydrocarbons) with respect to any period of time from and
after the Effective Time.
Section 1.2    Excluded Assets. Notwithstanding anything to the contrary set
forth herein, Seller shall reserve and retain, and Buyer shall have no interest
or rights in, to or under, any of the following properties and assets (such
properties and assets, the “Excluded Assets”):
(a)    all trade credits, accounts, receivables, instruments, general
intangibles and other proceeds, benefits, income or revenues attributable to the
Properties (including from the sale of any Hydrocarbons) with respect to any
period of time prior to the Effective Time;
(b)    all rights and interests of Seller (or any of its affiliates) (i) under
any policy or agreement of insurance or indemnity (including all amounts due or
payable to Seller as adjustments to insurance premiums related to the
Properties), (ii) under any bond, (iii) to any insurance proceeds or award and
(iv) to any condemnation proceeds or awards to the extent relating to any
condemnation of the Properties prior to the Closing;

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(c)    all claims of Seller (or any of its affiliates) for refunds of, and any
loss or credit carryovers or similar items with respect to, (i) Asset Taxes
attributable to any period of time prior to the Effective Time, (ii) Income
Taxes (as defined in Section 6.1(b)) or (iii) any Taxes (as defined in Section
6.1(a)) attributable to the Excluded Assets;
(d)    all of the Seller Marks (as defined in Section 9.4) and all of Seller’s
proprietary computer software, patents, trade secrets, copyrights and other
intellectual property;
(e)    any items described on Schedule 1.2(e), all Retained Properties (as
defined in Section 5.3(c)) and all Governmental Bonds (as defined in Section
4.2);
(f)    all vehicles, rolling stock and drilling rigs, whether owned or leased,
and all spare parts and tools;
(g)    all contracts and agreements that are not Applicable Contracts and any
rights to personal property arising thereunder;
(h)    all contracts and agreements relating to swaps, futures and other similar
derivative-based transactions;
(i)    all master services agreements (including any purchase orders and work
orders thereunder), field data collection agreements and similar contracts and
agreements for the supply of services or products both to the Properties and to
other properties, assets or businesses of Seller;
(j)    all corporate, financial, Tax, legal (including all work product of, and
attorney-client communications with, Seller’s (or any of its affiliates’) legal
counsel) and other business data and records of Seller that relate to Seller’s
business generally (or the business of any of Seller’s affiliates);
(k)    all data and records relating to any sale of the Properties, including
bids received from, and records of negotiations with, any person other than
Buyer and any of its affiliates or representatives; and
(l)    all geophysical and other seismic and related technical data and
information (including interpretive data and information) owned or licensed by
Seller (or any of its affiliates).
Section 1.3    Effective Time. The purchase by Buyer and the sale by Seller of
the Properties, as contemplated by this Agreement, shall be effective as of
12:01 a.m. Central time on February 1, 2017 (the “Effective Time”).
Section 1.4    Assumed Liabilities. Without limiting Buyer’s rights to indemnity
under Article X, and Buyer’s remedies for Title Defects and Environmental
Defects pursuant to Article V, and excluding any Liabilities (as defined in
Section 10.1) for which Seller is required to indemnify Buyer pursuant to
Article X and any Liabilities with respect to which a Purchase Price adjustment
is made pursuant to Section 2.2, from and after the Closing, Buyer shall assume
and hereby agrees to fulfill, perform, pay and discharge (or cause to be
fulfilled, performed, paid and discharged) a) all dismantling and
decommissioning activities and obligations as are required by Law, any
Governmental Authority or agreements including all well plugging, replugging and
abandonment, facility dismantlement and removal, pipeline and flowline removal,
dismantlement and removal of all other property of any kind related to or
associated with operations or activities and associated site clearance, site
restoration and site remediation of the Rodgers #1 Unit and the Subject Oil and
Gas Interests and b) all Liabilities, whether known or unknown, liquidated or
contingent, to the extent arising from, based upon, related to, or associated
with, the Properties, regardless of whether such

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Liabilities are deemed to have arisen or accrued or are attributable to periods
prior to, on or after the Effective Time (all such Liabilities, the “Assumed
Liabilities”).
ARTICLE II
PURCHASE PRICE

Section 2.1    Purchase Price; Deposit.
(a)    The aggregate purchase price for the sale and conveyance of the
Properties to Buyer shall be Twenty Million Eight Hundred Forty-six Thousand
Three Hundred Forty-three and 00/100 dollars ($20,846,343.00), payable via
direct bank deposit or wire transfer of immediately available United States
dollars (the “Purchase Price”), subject to adjustment in accordance with the
provisions of Section 2.2.
(b)    Contemporaneously with the execution of this Agreement, Buyer has
deposited, via direct bank deposit or wire transfer of immediately available
United States dollars, a cash deposit (the “Performance Deposit”) in an amount
equal to five percent (5%) of the Purchase Price to an account designated by
Seller. The Performance Deposit shall be non-refundable (except as provided in
Section 12.2(b)). THE PARTIES HEREBY ACKNOWLEDGE AND AGREE THAT THE EXTENT OF
DAMAGES TO SELLER OCCASIONED BY THE FAILURE OF THIS TRANSACTION TO BE
CONSUMMATED WOULD BE IMPOSSIBLE OR EXTREMELY DIFFICULT TO ASCERTAIN AND AGREE
THAT THE AMOUNT OF THE PERFORMANCE DEPOSIT IS A FAIR AND REASONABLE ESTIMATE OF
SUCH DAMAGES UNDER THE CIRCUMSTANCES AND DOES NOT CONSTITUTE A PENALTY. If the
Closing occurs, the Performance Deposit shall be applied toward the Purchase
Price at the Closing, as set forth in Article VIII. If this Agreement is
terminated prior to the Closing, then the Performance Deposit shall be returned
to Buyer, or retained by Seller, in accordance with Article XII.
Section 2.2    Adjustments to Purchase Price. The Purchase Price shall be
adjusted as follows:
(a)    The Purchase Price shall be adjusted upward by the following (without
duplication of any amounts):
(i)    the amount of all costs and expenses (including rentals, royalties,
utilities, water and sewer charges, capital expenditures, lease operating
expenses, overhead, and other items pre-paid by Seller whether for services,
work or goods performed or to be performed, or delivered or to be delivered
after the Effective Time, paid by or on behalf of Seller (and not deducted or
netted from the proceeds described in Section 2.2(b)(i)) with respect to the
Properties and attributable to any period of time from and after the Effective
Time (whether paid before or after the Effective Time) in accordance with
generally accepted accounting principles;
(ii)    an amount equal to the value (determined using the actual price paid by
the purchaser for the most recent production month prior to the Effective Time
for Hydrocarbons less all applicable deductions) of all Hydrocarbons in storage
or existing in stock tanks above the tap or upstream of a pipeline connection,
as the case may be, as of the Effective Time (any such Hydrocarbons, the “Stored
Hydrocarbons”), less applicable Asset Taxes, royalty and other burdens payable
on such Hydrocarbons as of the Effective Time, to be based on gauge reports to
the extent available or on alternative methods to be agreed upon by the Parties;
(iii)    subject to the Title Threshold and the Title Deductible, an amount
equal to the aggregate of the Title Benefit Amounts with respect to any Title
Benefits asserted by Seller pursuant to Section 5.4(a);

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(iv)    the amount of all Asset Taxes allocated to Buyer in accordance with
Section 6.2 but that are paid or otherwise economically borne by Seller;
(v)    an amount equal to the product of the amount (measured in MMBtus) of any
Imbalance resulting from the Properties being underproduced or from Seller
having overdelivered prior to the Effective Time times $3.00 per MMBtu;
(vi)    to the extent Seller has not been reimbursed prior to Closing, the
aggregate amount of accounts receivable billed after the Effective Time with
respect to the total amount of costs and expenses paid by Seller on behalf of,
or that are properly chargeable to, any third party with respect to any
Property; and
(vii)    any other amount provided for elsewhere in this Agreement or otherwise
mutually agreed upon by Seller and Buyer.
As used herein, the term “Imbalance” means over-production or under-production
at the wellhead or pipeline over-deliveries or under-deliveries, as applicable,
on account of any imbalance between the amount of Hydrocarbons produced from a
Well and allocable to the interests of Seller therein and the shares of
production from the relevant Well that are actually taken by or delivered to or
for the account of Seller.
(b)    The Purchase Price shall be adjusted downward by the following (without
duplication of any amounts):
(i)    the amount of net proceeds (gross proceeds less amounts actually paid or
payable by (or on behalf of) Seller (or any of its affiliates) including,
without limitation, royalties, overriding royalties, and similar burdens on
production, and transportation and processing fees) received by Seller for
production months after the Effective Time and derived from the sale of any of
the Conveyed Hydrocarbons;
(ii)    an amount equal to the sum of the Allocated Value of each Retained
Property (as defined in Section 5.3(c)) with respect to which a reduction of the
Purchase Price is permitted pursuant to Article V;
(iii)    the amount of all Asset Taxes allocated to Seller in accordance with
Section 6.2 but paid or otherwise economically borne by Buyer;
(iv)    subject to the Title Threshold and the Title Deductible, an amount equal
to the aggregate of the Title Defect Amounts with respect to each Included Title
Defect Property that, as of the expiration of the Cure Period, (i) has not been
cured by Seller (or with respect to which Seller has not provided an indemnity
pursuant to Section 5.4(c)(iii)) and (ii) is not the subject of a Disputed
Matter;
(v)    subject to the Environmental Threshold and the Environmental Deductible,
an amount equal to the aggregate of the Environmental Defect Amounts with
respect to each Included Environmental Defect Property that, as of the
expiration of the Cure Period, (i) has not been cured by Seller (or with respect
to which Seller has not provided an indemnity pursuant to Section 5.6(c)(iii))
and (ii) is not the subject of a Disputed Matter;
(vi)    an amount equal to the sum of the Allocated Value of each Property
subject to a Required Consent or an Applicable Consent with respect to which a
reduction of the Purchase Price is permitted pursuant to Section 5.10(c);

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(vii)    an amount equal to the product of the amount (measured in MMBtus) of
any Imbalance resulting from the Properties being overproduced or from Seller
having underdelivered prior to the Effective Time times $3.00 per MMBtu;
(viii)    the amount of any third party funds held in suspense by Seller as of
the Post-Closing Date, to the extent paid (or payable) by Buyer after the
Closing; and
(ix)    any other amount provided for elsewhere in this Agreement or otherwise
mutually agreed upon by Seller and Buyer.
Section 2.3    Allocated Values. For purposes of this Agreement, with respect to
each Lease (or any tract or depth thereof, if applicable) and each Well (solely
as to the currently producing formation) the term “Allocated Value” means the
amount of the Purchase Price allocated to that Property. The Allocated Value for
each such Property is set forth on Exhibit A and B under the column “Allocated
Value”. Seller and Buyer agree and stipulate that the Allocated Values set forth
herein have been established for use where appropriate, including for Seller to
provide any required preferential purchase right notifications and in
calculating adjustments to the Purchase Price as provided herein. Buyer and
Seller shall use commercially reasonable efforts to agree to an allocation of
the Purchase Price and any other items properly treated as consideration for
U.S. federal income Tax purposes among the classes of assets provided for in
Treasury Regulations § 1.338-6 with respect to the Properties and, to the extent
allowed by applicable law, in a manner consistent with the Allocated Value (the
“Allocation Schedule”), within thirty (30) days after the date that the Final
Settlement Statement is delivered pursuant to Section 9.2. If Seller and Buyer
reach an agreement with respect to the Allocation Schedule, (i) Buyer and Seller
shall use commercially reasonable efforts to update the Allocation Schedule in
accordance with Section 1060 of the Internal Revenue Code of 1986, as amended
(the “Code”), following any adjustment to the Purchase Price pursuant to this
Agreement, and (ii) Buyer and Seller shall, and shall cause their affiliates to,
report consistently with the Allocation Schedule on all Tax Returns, including
Internal Revenue Service Form 8594 (Asset Acquisition Statement under Section
1060); provided, however, that no Party shall be unreasonably impeded in its
ability and discretion to negotiate, compromise and/or settle any Tax audit,
claim or similar proceeding in connection with such allocation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES

Section 3.1    Representations and Warranties of Seller. Seller represents and
warrants to Buyer that as of the Execution Date and as of the Closing Date:
(a)    Organization and Good Standing. Seller is a limited partnership, duly
organized, validly existing and in good standing under the laws of the State of
Oklahoma, has full legal power to carry on its business as now conducted, is
authorized to hold title to the Properties and is in good standing and duly
qualified to conduct its business in Texas.
(b)    Authorization. The execution, delivery and performance of this Agreement
by Seller and the consummation by Seller of the transactions contemplated hereby
have been duly and validly authorized pursuant to the governing documents of
Seller.
(c)    Enforceability. This Agreement is the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability and to general equitable principles.
Neither the execution and delivery by Seller of this Agreement, nor the
consummation by Seller of the transactions contemplated by this Agreement, will
violate or be in conflict with: (i) the articles of

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incorporation, bylaws or governing documents of Seller; (ii) any material
provision of any agreement or instrument to which Seller is a party or by which
it, or the Properties, is bound, except any: (A) preferential rights to purchase
all or any portion of the Property (including those set forth on
Schedule 3.1(j)); (B) required consents to transfer (including those set forth
on Schedule 3.1(j)); (C) maintenance of uniform interest provisions; or (D) any
other third-party approvals or consents necessary with respect to the
transactions contemplated herein; or (iii) any material provision of any
judgment, decree, order, statute, rule or regulation applicable to Seller or any
Property.
(d)    Brokers’ Fees. Seller has not made any agreement with respect to any
broker’s or finder’s fees arising out of or in any way related to the
transactions contemplated by this Agreement for which Buyer will have any
liability.
(e)    Litigation. Except as set out on Schedule 3.1(e), as of the Execution
Date, Seller has not received written notice of any suit, litigation or
arbitration that has been threatened or is pending against Seller or involving
any of the Properties before any court, governmental authority or arbitrator,
and there exist no unsatisfied judgments that would result in impairment or loss
of Seller’s interest in any part of the Properties or that would materially
adversely affect the operation by Buyer of the Properties in any respect.
(f)    Taxes. Except as set out on Schedule 3.1(f), during the period of
Seller’s ownership of the Properties, all material Asset Taxes that have become
due and payable by Seller before the Effective Time have been properly paid, and
all Tax Returns related to such Asset Taxes have been timely filed. None of the
Properties are subject to any audit examination or other proceeding related to
Asset Taxes by any governmental authority that would adversely affect the
Properties after Closing, and no such actions are pending or threatened. None of
the Properties are, or prior to Closing will be, subject to a Tax partnership or
related reporting obligations for U.S. federal income Tax purposes.
(g)    Governmental Authorization. Except as set out on Schedule 3.1(g), Seller
has obtained all Permits required for its ownership and operation of the
Properties.
(h)    No Bankruptcy. There are no bankruptcy proceedings pending, being
contemplated by, or threatened against Seller.
(i)    Compliance with Law. Except as set out on Schedule 3.1(i), Seller has not
received a written notice of a material violation of any statute, law,
ordinance, regulation, permit, rule or order of any federal, state or local
government or any other governmental authority, or any judgment, decree or order
of any court, in each case, that is applicable to the Properties or operations
on the Properties, which remains uncured or would have a material adverse effect
on the Properties, taken as a whole.
(j)    Rights in Third Parties. Except as set out on Schedule 3.1(j) or that
will be waived, received or with respect to which the exercise period will
expire prior to the Closing, to Seller’s Knowledge, there are no preferential
rights to purchase or required consents to assign (other than consents from
federal and state governments and similar authorities that customarily are
obtained following the closing of transactions substantially similar to the
transactions contemplated by this Agreement) that are applicable in connection
with the transactions contemplated hereby.
(k)    Imbalances. Schedule 3.1(k) sets out all Imbalances associated with the
Properties as of the Execution Date.

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(l)    Applicable Contracts. Except (i) as set forth on Exhibit C and (ii) to
the extent cancelable without penalty or other material payment on not more than
thirty (30) days prior written notice, to Seller’s Knowledge, there are no (A)
contracts for the purchase, sale or exchange of Hydrocarbons, (B) contracts for
the gathering, treatment, processing, handling, storage or transportation of
Hydrocarbons, (C) purchase agreements, farmin or farmout agreements, exploration
agreements, participation agreements or similar agreements providing for the
earning of any equity interest, (D) partnership agreements, joint venture
agreements or similar agreements or (E) operating agreements, unit agreements or
unit operating agreements, in each case, that will be binding on Buyer or
encumber or bind any of the Properties after the Closing. As used in this
Section 3.1, the term “Seller’s Knowledge” means the actual knowledge (without
investigation) of those persons within Seller’s organization with the following
titles, “Supervisor Land-Delaware” and “Supervisor Energy Marketing”.
(m)    Outstanding Capital Commitments. As of the Execution Date, there are no
outstanding commitments to make capital expenditures that are binding on the
Properties and which Seller reasonably anticipates will individually require
expenditures by the Buyer after Closing in excess of one hundred thousand
dollars ($100,000), other than those set forth on Schedule 3.1(n).
Section 3.2    Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that as of the Execution Date and as of the Closing Date:
(a)    Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada, has
full legal power to carry on its business as now conducted, is authorized to
hold title to the Properties and is in good standing and duly qualified to
conduct its business in Texas.
(b)    Authorization. The execution, delivery and performance of this Agreement
by Buyer and the consummation by Buyer of the transactions contemplated hereby
have been duly and validly authorized pursuant to the governing documents of
Buyer.
(c)    Enforceability. This Agreement is the valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability and to general equitable principles.
Neither the execution and delivery by Buyer of this Agreement, nor the
consummation by Buyer of the transactions contemplated by this Agreement, will
violate, or be in conflict with (i) the articles of incorporation, bylaws or
governing documents of Buyer, (ii) any provision of any agreement or instrument
to which Buyer is a party or by which it (or any of its properties) is bound or
(iii) any judgment, decree, order, statute, rule or regulation applicable to
Buyer (or any of its properties).
(d)    Environmental Condition. Buyer agrees and acknowledges that the
Properties have been used for oil and gas drilling and production operations,
related oil field operations and possibly for the storage and disposal of
deleterious substances, and that the Properties may be contaminated with a
variety of harmful substances. Physical changes in or under the Properties or
adjacent lands may have occurred as a result of such uses. The Properties may
contain wells, sumps landfills, pits, ponds, tanks impoundments, foundations,
pipelines and other equipment whether or not of a similar nature, any of which
may be buried and contain deleterious substances, and the locations of which may
not be readily apparent by a physical inspection of the Property. In addition
Buyer acknowledges that some oil field production equipment may contain
hazardous materials, including asbestos and naturally occurring radioactive
material (“NORM”). In this regard, Buyer expressly understands that NORM in the
form of scale or in other forms may have become dislodged from the inside of
wells, materials and equipment and be located on the Properties. Buyer expressly
understands that special procedures may be required for the removal and disposal
of asbestos, NORM and other deleterious substances from the Properties where
they may be found. Buyer represents that, prior to

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the Closing, it will, and as of the Closing, it has, satisfied itself as to the
physical and environmental condition of the Properties, both surface and
subsurface, and their method of operation, and in making the decision to enter
in this Agreement and consummate the transactions contemplated hereby, Buyer has
relied solely on the basis of its own independent investigation of the
Properties.
(e)    Independent Valuation. Buyer is sophisticated in the evaluation,
purchase, ownership, development, investment in and operation of oil and gas
properties. In making its decision to enter into this Agreement and to
consummate the transactions contemplated herein, Buyer, except to the extent of
Seller’s express representations and warranties in Section 3.1 and the special
warranty of title contained in the Assignment, has relied on its own independent
investigation, review and analysis of the Properties, which investigation,
review and analysis was done by Buyer and its own legal, tax, economic,
environmental, geological and geophysical, engineering and other advisors. In
entering into this Agreement, Buyer acknowledges that it has relied solely upon
the aforementioned investigation, review and analysis and not on any factual
representations or opinions of Seller or any representatives, consultants or
advisors engaged by or otherwise purporting to represent Seller or any affiliate
of Seller (except the specific representations and warranties of Seller set
forth in Section 3.1 and the special warranty of title included in the
Assignment). Buyer hereby acknowledges and agrees that, other than the
representations and warranties of Seller set forth in Section 3.1 and the
special warranty of title set forth in the Assignment, none of Seller, any of
its affiliates, or any of its or their representatives, consultants or advisors
make or have made any representation or warranty, express or implied, at law or
in equity, with respect to the Properties, including as to the environmental or
physical condition of and contractual arrangements and other matters affecting
the Properties. As of the Execution Date, Buyer has no knowledge of any breach
of any representation, warranty or covenant of Seller set forth herein.
(f)    Security Laws. Buyer is acquiring the Properties for its own account and
not with the intent to make a distribution within the meaning of the Securities
Act of 1933 (and the rules and regulations pertaining thereto) or a distribution
thereof in violation of any other applicable securities laws.
(g)    Funds. As of the Execution Date, Buyer has, and at the Closing, Buyer
will have, sufficient cash and other sources of immediately available funds, as
are necessary in order to pay the Purchase Price (as may be adjusted in
accordance with the provisions of this Agreement) to Seller at the Closing and
to otherwise consummate the transactions contemplated hereby.
(h)    Brokers’ Fees. Buyer has not made any agreement with respect to any
broker’s or finder’s fees arising out of or in any way related to the
transactions contemplated by this Agreement for which Seller will have any
liability.
(i)    Litigation. No suit, action or other proceeding has been threatened or is
pending against Buyer before any court, governmental authority or arbitrator and
there exist no unsatisfied judgments, any of which might result in Buyer’s
inability to consummate the transactions contemplated hereby.
(j)    Governmental Authorizations. At the Closing, Buyer will have all
governmental licenses, authorizations, consents and approvals required for the
ownership and operation of the Properties other than governmental approvals
customarily obtained following the consummation of transactions substantially
similar to the transactions contemplated hereby.
Section 3.3    Survival of Representations and Warranties.
(a)    The representations and warranties made by Seller in Section 3.1 shall
survive the Closing for a period of six (6) months thereafter (the “Survival
Period”) and thereafter shall be of no force or effect, and any claim for any
breach thereof must be brought on or prior to the end of the Survival Period.

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(b)    All representations and warranties made by Buyer in Section 3.2 shall
survive the Closing indefinitely.
(c)    All other indemnities, covenants and agreements contained in this
Agreement shall survive the Closing in accordance with their terms. Except for
the special warranty of title made by Seller in the Assignment, the Parties have
made no representations or warranties other than those expressly set forth in
this Agreement.
Section 3.4    Waiver of Representations and Warranties. The express
representations and warranties of Seller contained in this Article III and the
Special Warranty contained in the Assignment, are exclusive and are in lieu of,
and Seller expressly disclaims and negates and Buyer hereby waives, any
representation or warranty, express, statutory, implied, or otherwise, including
with respect to: (a) the quality, accuracy, completeness or materiality of the
data, information and materials furnished (whether electronically, orally, by
video, in writing, in any data room or by any other medium) at any time to
Buyer, its officers, agents, employees and affiliates in connection with Buyer’s
investigation of the Properties and Assumed Liabilities and the transactions
contemplated hereby (including with respect to title, costs, expenses, revenues,
accounts receivable and accounts payable associated with the Properties, the
financial viability or productivity of the Properties, the environmental or
physical condition of the Properties and federal, state, local or tribal income
or other Tax consequences associated with the Properties); (b) title; (c) the
quality, quantity or volume of the reserves, if any, of the Hydrocarbons in or
under the Properties, both surface and subsurface; (d) compliance with
applicable laws (including Environmental Laws); (e) the environmental condition
of the Properties; (f) absence of defects (latent or patent), safety and state
of repair; (g) any rights of Buyer and/or its affiliates under applicable laws
to claim diminution of consideration or return of the Purchase Price; (h) any
warranty of freedom from patent, copyright or trademark infringement; and (i)
production rates, recompletion opportunities, decline rates and gas balancing
information. Seller does not make or provide, and Buyer hereby waives, any
warranty or representation, express or implied, as to the quality,
merchantability, fitness for a particular purpose, or of conformity to models or
samples of materials. Except for the special warranty of title set forth in the
Assignment, the Properties are sold, and Buyer accepts the Properties “AS IS,
WHERE IS AND WITH ALL FAULTS”. Except for the special warranty of title set
forth in the Assignment, there are no representations or warranties that extend
beyond the face of this Agreement.
Section 3.5    General Disclaimer. Except for the Special Warranty set forth in
the Assignment and without limiting Buyer’s remedies for Title Defects set forth
in this Article V, Seller makes no warranty or representation, express, implied,
statutory or otherwise, with respect to Seller’s title to any of the Properties,
and Buyer hereby acknowledges and agrees that Buyer’s sole remedy for any defect
of title, including any Title Defect, with respect to Seller’s title to any of
the Properties (a) before Closing, shall be as set forth in Article V and (b)
from and after Closing, shall be pursuant to the Special Warranty set forth in
the Assignment and in compliance with Section 3.6 below.
Section 3.6    Special Warranty of Title. If Closing occurs, then the Assignment
shall contain a special warranty of title whereby Seller shall, until the end of
the Warranty Period, warrant defensible title, without duplication, to the
Leases set forth on Exhibit A and the Wells set forth in Exhibit B, (limited to
the currently producing formations(s)), unto Buyer against every person
whomsoever lawfully claiming or to claim the same or any part thereof by,
through or under Seller, but not otherwise, subject, however, to the Permitted
Encumbrances (the “Special Warranty”); provided, however, that, except with
respect to any liability of Seller for any claim asserted in writing by Buyer to
Seller in accordance with Section 3.7 and the Assignment before the expiration
of the Warranty Period for breach of the Special Warranty, the Special Warranty
shall cease and terminate at the end of the Warranty Period. The Special
Warranty shall be subject to the further limitations and provisions of
Section 3.8.

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Section 3.7    Buyer’s Assertion of Special Warranty Breaches. Prior to the
expiration of the period of time commencing with the Closing Date and ending at
5:00 P.M. Central Time, on the second anniversary thereof (the “Warranty
Period”), Buyer shall be entitled to furnish Seller a Title Notice meeting the
requirements of Section 5.3(e) setting forth any and all matters which Buyer
intends to assert as a breach of the Special Warranty (collectively the “Special
Warranty Notices” and, individually, a “Special Warranty Notice”). Seller shall
have a reasonable opportunity, but not the obligation, to cure any breach of the
Special Warranty asserted by Buyer pursuant to this Section 3.7. Buyer shall, at
no cost or expense to Buyer, cooperate with any reasonable attempt by Seller to
cure any such breach. For all purposes of this Agreement, Buyer shall be deemed
to have waived, and Seller shall have no further liability for, any breach of
the Special Warranty that Buyer fails to assert by a Special Warranty Notice
given to Seller before the expiration of the Warranty Period.
Section 3.8    Limitations on Special Warranty. Recovery by Buyer for any breach
by Seller of the Special Warranty shall be limited to an amount (without any
interest accruing thereon) equal to the reduction to the Purchase Price to which
Buyer would have been entitled had Buyer asserted the defect giving rise to such
breach of the Special Warranty as a Title Defect prior to the Defect Deadline
pursuant to Section 5.4 and taking into account the last sentence of this
Section 3.8, and in no event shall that recovery exceed the Allocated Value of
the affected Property. The Title Threshold and Title Deductible shall not apply
to any recovery for any breach by Seller of the Special Warranty, and Buyer
shall not be entitled to recover any amount for any breach of the Special
Warranty to the extent that the Purchase Price is or has been reduced for the
same Title Defect.         
ARTICLE IV
COVENANTS
Section 4.1    Conduct of Business. From and after the Execution Date until the
earlier of the Closing or the termination of this Agreement in accordance with
Article XII (the “Interim Period”), except as expressly contemplated by this
Agreement or as consented to in writing by Buyer, Seller shall, to the extent
reasonably within Seller’s control:
(a)    cause the Properties to be maintained and operated in a manner consistent
with the manner of maintenance and operations prior to the Execution Date,
provided, that Seller shall not be obligated to rework, plug or abandon any of
the Wells or drill any additional wells;
(b)    refrain from taking any action to sell, dispose of, distribute, mortgage,
encumber, pledge or enter into any agreement or arrangement for the sale,
disposition, distribution, mortgage, encumbrance or pledge of, any of the
Properties, other than any encumbrances of the foregoing type that would be
Permitted Encumbrances, dispositions where a reasonably prudent lessee or
operator would do the same and dispositions of the Conveyed Hydrocarbons that
are produced from the Properties in the course of normal operations or the
ordinary course of Seller’s business;
(c)    except as permitted by Sections 4.1(a) and 4.1(b), refrain from entering
into any transaction, the effect of which would be to cause Seller’s net revenue
interest with respect to the production of Hydrocarbons from any Listed Interest
(as such term is defined in Section 5.3(a)) to be less than, or Seller’s working
interest with respect to the production of Hydrocarbons from any Listed Interest
to be greater than, that shown in Exhibit A or B, as applicable, for such Listed
Interest, unless, with respect to any such increase in the working interest,
there is a proportionate increase in the net revenue interest with respect to
such Listed Interest;

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(d)    except for emergencies, not enter into any contract or commitment or
assume or incur any obligation with respect to the Properties’ normal operations
involving expenditures in excess of one hundred thousand dollars ($100,000);
(e)    except as may be required to deliver the Seller Deliverables described in
Section 8.2(b)(iii), not relinquish voluntarily its position as operator with
respect to any Property;
(f)    pay, as they become due, all expenses related to the Properties, as would
be paid by a reasonably prudent lessee or operator; and
(g)    use reasonable efforts to attempt to notify Buyer of any election that
Seller is required to make under any Applicable Contract, specifying the nature
and time period associated with such election, and, if Buyer does not respond to
Seller within sufficient time to enable Seller to timely make such election,
then Seller shall make such election as would a reasonably prudent lessee or
operator;
provided, however, that, notwithstanding the foregoing, Buyer acknowledges and
agrees that any acts or omissions of the other working interest owners (and
operators) of the Properties that Seller does not have any contractual right to
control shall not constitute a breach of this Section 4.1.
Section 4.2    Bonds and Other Credit Support. Buyer acknowledges that none of
the bonds, letters of credit and guarantees, if any, posted by Seller with any
governmental authority and relating to the Properties, including those set forth
in Schedule 4.2 (the “Governmental Bonds”), are transferable to Buyer. On or
before the Closing Date, Buyer shall obtain, or cause to be obtained in the name
of Buyer, replacements for such Governmental Bonds to the extent such
replacements are necessary for Buyer’s ownership of the Properties. In addition,
at or prior to Closing, Buyer shall deliver to Seller evidence of the posting of
bonds or other security with all applicable governmental authorities meeting the
requirements of such governmental authorities to own and, if applicable, operate
the Properties.
Section 4.3    No Solicitation of Seller Employees. From and after the Execution
Date until one (1) year after the Closing, Buyer shall not, and shall cause its
affiliates not to, directly or indirectly, solicit in any manner for employment
or hire any employee of Seller or any affiliate of Seller, without Seller’s
prior written consent; provided, however, that the foregoing restriction shall
not apply to the hiring of any person who (a) responds to any general
solicitation that consists of advertising in the media or (b) contacts Buyer (or
any of its affiliates) on his/her own initiative.
Section 4.4    Reports. Seller and Buyer agree to cooperate with each other in
connection with the preparation by such Parties of any report to any federal,
state or local governmental authorities that are required of such Parties as the
result of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
Section 4.5    Successor Operator. Buyer acknowledges that it desires to succeed
Seller as operator of those Properties or any portion thereof that Seller
currently operates. Buyer further acknowledges and agrees that Seller does not
covenant or warrant that Buyer will become successor operator of such
Properties. Seller agrees, however, that, as to the Properties it operates, it
will use its commercially reasonable efforts to support Buyer’s effort to become
successor operator of such Properties effective as of Closing (at Buyer’s sole
cost and expense) and to designate, to the extent legally possible and permitted
under any applicable joint operating agreement or other agreement, Buyer as
successor operator of such Properties effective as of the Closing. At Closing,
or as soon as reasonably practicable thereafter, Seller will execute and deliver
to Buyer, and Buyer shall promptly file, all forms required by any governmental
authority having jurisdiction to transfer record operatorship of those
Properties operated by Seller to Buyer.

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Section 4.6    Amendment to Schedules. Buyer agrees that, with respect to the
representations and warranties of Seller contained in this Agreement, Seller
will have the continuing right until Closing to add, supplement or amend the
Schedules to its representations and warranties with respect to any matter
hereafter arising or discovered which, if existing or known on the Execution
Date or thereafter, would have been required to be set forth or described in
such Schedules. For all purposes of this Agreement, including for purposes of
determining whether the conditions set forth in Section 7.2 have been fulfilled,
the Schedules to Seller’s representations and warranties contained in this
Agreement shall be deemed to include only that information contained therein on
the Execution Date and shall be deemed to exclude all information contained in
any addition, supplement or amendment thereto; provided, however, that if
Closing shall occur, then all matters disclosed pursuant to any such addition,
supplement or amendment at or prior to Closing shall be waived and Buyer shall
not be entitled to make a claim with respect thereto pursuant to the terms of
this Agreement or otherwise.
Section 4.7    Suspense Funds. Notwithstanding anything to the contrary herein,
Buyer will assume and fulfil, perform, pay and discharge (or cause to be
fulfilled, performed, paid and discharged) all obligations and Liabilities
arising from, based upon, related to or associated with the payment of all
proceeds from sales of Hydrocarbons relating to the Properties and payable to
owners of working interests, royalties, overriding royalties and other similar
interests or burdens that are held by Seller in suspense. Such payments held in
suspense (a) will not be included in the calculation of the adjustments to the
Purchase Price for the Preliminary Settlement Statement and (b) shall be
included in the calculation of the adjustments to the Purchase Price for the
Final Settlement Statement in accordance with the terms of this Agreement.
Section 4.8    Efforts. Each Party will use commercially reasonable efforts to
take, or to cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including (a) cooperation in determining whether any action by or in respect of,
or filing with, any governmental body, agency or other official authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated hereby; (b) cooperation in seeking
and obtaining any such actions, consents, approvals, or waivers; and (c) the
execution of any additional instruments necessary to consummate the transactions
contemplated hereby.
Section 4.9    Acquisition Proposals. Excluding for clarity the activities
authorized under Section 4.1, above, from the Execution Date until either (i)
the termination of this Agreement in accordance with the terms hereof or (ii)
the consummation of the transactions contemplated hereby, Seller will not, and
will not authorize or permit any affiliate of the Seller, or any other person,
on its or their behalf to, directly or indirectly, (i) solicit, initiate or
encourage the submission of any proposal or offer to acquire, directly or
indirectly, all or any part of the Properties (an “Acquisition Proposal”), or
(ii) participate in any discussions or negotiations regarding, or furnish to any
person or group or take any other action to facilitate inquiries or the making
of any proposal that constitutes or may reasonably be expected to lead to any
Acquisition Proposal. As used herein, “person” means any individual, firm,
corporation, company, partnership (general and limited), limited liability
company, joint venture, association, trust, estate, unincorporated organization,
or any other entity.
    

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ARTICLE V
EXAMINATION OF TITLE AND PROPERTIES

Section 5.1    Access to Title Information.
(a)    From and after the Execution Date, until 5:00 p.m. Central time on the
date that is thirty (30) days after the Execution Date (the “Defect Deadline”),
Seller shall give Buyer (and any of its officers, employees, agents,
accountants, attorneys, investment bankers, landmen, consultants or other
designated representatives (collectively, “Buyer’s Representatives”)) reasonable
access to the Properties (including the Records) in Seller’s possession, solely
for the purpose of Buyer’s due diligence investigation of the Properties, but
only to the extent that Seller may do so without violating any confidentiality
or other obligations to any third party and only to the extent that Seller has
the authority to grant such access without breaching any obligation or
restriction binding on Seller (or any of its affiliates). Such access by Buyer
shall be limited to Seller’s normal business hours, and any weekends and after
hours requested by Buyer that can be reasonably accommodated by Seller, and
Buyer’s investigation shall be conducted in a manner that minimizes interference
with the operation of the Properties.
(b)    Buyer acknowledges that the permission of the operator (if other than
Seller) or another third person may be required before Buyer will be able to
inspect portions of the Properties and that such permission must be obtained
prior to the inspection of such portions. Seller shall use reasonable efforts to
obtain such permission for Buyer upon Buyer’s request. All inspections pursuant
to this Section 5.1 shall be conducted at Buyer’s sole cost, risk and expense,
and any conclusions made from any such investigation done by Buyer or any of
Buyer’s Representatives shall result from Buyer’s own independent review and
judgment. Buyer agrees to comply with (and to cause Buyer’s Representatives to
comply with) the rules, regulations and instructions issued by Seller or any
operator of the Properties regarding the actions of Buyer (and Buyer’s
Representatives) in conducting any inspection pursuant to this Section 5.1.
Section 5.2    Environmental Property Inspection.
(a)    From and after the Execution Date, until the Defect Deadline, Seller
shall permit Buyer and Buyer’s Representatives, at Buyer’s sole risk, cost and
expense, reasonable access to the Properties operated by Seller (or any of its
affiliates) to conduct field inspections for purposes of Buyer’s due diligence
investigation of environmental matters relating to the Properties (“Buyer’s
Environmental Review”). In connection with the granting of such access, Buyer
agrees that Buyer shall be liable to Seller for any and all damage to the
Properties arising out of or relating to Buyer’s (or Buyer’s Representatives’)
inspection and access to the Properties. Buyer shall, and shall cause Buyer’s
Representatives to, abide by Seller’s (or any of its affiliates’) safety rules,
regulations and operating policies of which they are informed while conducting
Buyer’s Environmental Review. The scope of work comprising Buyer’s Environmental
Review shall be limited to “Phase 1 Activities”, which include a review of the
records maintained by governmental authorities, a pre-inspection questionnaire,
site visits to perform a visual inspection and interviews with Seller’s
personnel having responsibility for environmental compliance matters with
respect to the Properties, but do not include any sampling or similar invasive
activities. Buyer shall (i) consult with Seller before conducting any work
comprising Buyer’s Environmental Review, (ii) perform all such work in a safe
and workmanlike manner and so as to not unreasonably interfere with Seller’s (or
any of its affiliates’) operations, and (iii) comply with all applicable laws,
rules, regulations, and customary industry practices. Seller shall have the
right to have one or more representatives accompany Buyer at all times during
Buyer’s Environmental Review, and Buyer shall give Seller at least forty-eight
(48) hours’ notice prior to any visits by it (or any of its representatives) to
the Properties. The Parties agree that all information discovered during Buyer’s
Environmental Review shall be governed by the terms of the Confidentiality
Agreement.

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(b)    BUYER SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS THE SELLER INDEMNIFIED
PARTIES, FROM AND AGAINST ANY AND ALL LIABILITIES ARISING OUT OF, RESULTING
FROM, BASED ON, ASSOCIATED WITH, OR RELATING TO, IN ANY WAY, THE ACCESS AFFORDED
TO BUYER PURSUANT TO THIS ARTICLE V, REGARDLESS OF WHETHER SUCH LIABILITIES
ARISE OUT OF OR RESULT FROM, SOLELY OR IN PART, THE SOLE, ACTIVE, PASSIVE,
CONCURRENT OR COMPARATIVE NEGLIGENCE, GROSS NEGLIGENCE, STRICT LIABILITY OR
OTHER FAULT OR VIOLATION OF LAW OF OR BY ANY OF THE SELLER INDEMNIFIED PARTIES,
EXCEPTING ONLY LIABILITIES TO THE EXTENT RESULTING FROM THE WILLFUL MISCONDUCT
OF ANY OF THE SELLER INDEMNIFIED PARTIES. THE FOREGOING INDEMNITY SHALL CONTINUE
IN FULL FORCE AND EFFECT NOTWITHSTANDING ANY TERMINATION OF THIS AGREEMENT.
Section 5.3    Certain Definitions.
(a)    As used herein, the term “Title Defect” means any matter, other than a
Permitted Encumbrance, which causes one or more of the following to be a correct
statement, as of the Execution Date, with respect to each Well set forth on
Exhibit B, solely as to the currently producing formation, and without
duplication, each Lease (separately as to any tract or depth thereof, if
applicable) set forth on Exhibit A [each Well as to the currently producing
formation, and each Lease (separately as to any tract or depth thereof, if
applicable), a “Listed Interest,”]:
(i)    with respect to each Lease (or any tract or depth thereof, if
applicable), Seller is entitled to receive a fractional decimal interest of less
than the net revenue interest set forth on Exhibit A for such Lease (or such
tract or depth thereof, if applicable);
(ii)    with respect to each Lease (or any tract or depth thereof, if
applicable), Seller is entitled to less than the net mineral acres set forth on
Exhibit A for such Lease (or such tract or depth thereof, if applicable) under
the column “Seller’s Net Acres”, except as otherwise described on Exhibit A. As
used herein “net mineral acre” means, as computed separately for each Lease, (1)
the gross number of acres in the lands covered by that Lease (as determined by
the legal description of the leased premises), multiplied by (2) the undivided
mineral interest (expressed as a percentage) in the lands covered by that Lease
(as determined by aggregating the undivided mineral interests owned by each
lessor of that Lease in such lands), multiplied by Seller’s undivided working
interest percentage in that Lease. Provided, if the items in (2) and/or (3) vary
as to different tracts or depths covered by that Lease, a separate calculation
will be done for each such tract or depth;
(iii)    with respect to each Well, Seller is entitled to receive a fractional
decimal interest of less than the net revenue interest set forth on Exhibit B,
with respect to the production of Hydrocarbons therefrom from the currently
producing formation, except for changes or adjustments that result from (A) the
establishment of units or changes in existing units (or the participating areas
therein), (B) operations conducted as permitted or required by Section 4.1, (C)
any Imbalances or (D) operations for which Seller is a non-consenting owner;
(iv)    with respect to each Well, Seller is obligated to bear a fractional
decimal interest of more than the working interest set forth on Exhibit B for
such Well (unless such increase in the working interest is accompanied by a
proportionate increase in the net revenue interest for such Well set forth on
Exhibit B), with respect to the production of Hydrocarbons from the currently
producing formation, except for changes or adjustments that result from (A) the
establishment of units or changes in existing units (or the participating areas
therein), (B) operations conducted as permitted or required by Section 4.1, (C)
any Imbalances or (D) contribution requirements with respect to defaulting
co-owners; or

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(v)    such Listed Interest is subject to an outstanding mortgage, deed of trust
or other enforceable lien or encumbrance, or other adverse claim or imperfection
in title, which if asserted would cause a material impairment of the use and
enjoyment of or loss of interest in the affected Property and which would not be
acceptable to reasonable and prudent lessees, operators, interest owners or
purchasers of oil and gas properties, giving due consideration to (A) the length
of time that such impairment has affected such Listed Interest and that such
Listed Interest, if applicable, has been producing Hydrocarbons and (B) whether
such impairment is of the type expected to be encountered in the area in which
such Listed Interest is located;
provided, however, that the following shall not constitute Title Defects: (1)
defects based solely on references to an unrecorded document(s) if such
document(s) is not in Seller’s files, (2) defects arising out of lack of
corporate or other entity authorization, unless Buyer provides affirmative
evidence that the action was not authorized and results in a third party’s
actual and superior claim of title, (3) defects based on the failure to record
federal or state Leases, or any assignments of record title or operating rights
in such Leases, in the real property, conveyance or other records of the county
in which such Lease is located, (4) defects or irregularities in the chain of
title consisting of the failure to recite marital status in documents or
omissions of heirship proceedings, (5) defects or irregularities resulting from
or related to probate proceedings or the lack thereof which defects or
irregularities have been outstanding for five (5) years or more, (6) defects
based on a gap in Seller’s chain of title in the federal, state or county
records with respect to any Lease, unless such gap is affirmatively shown to
exist in such records by an abstract of title, title opinion or landman’s title
chain, which documents shall be included in any related notice of Title Defect,
(7) defects arising solely out of lack of survey or lack of metes and bounds
descriptions, (8) defects arising from any change in applicable law after the
Execution Date, (9) defects that have been cured by applicable laws of
limitation or prescription, including adverse possession and the doctrine of
laches, (10) defects based on the exercise of any Preferential Purchase Rights
or failure to obtain any Applicable Consent and (11) defects based on
adjustments for actual or projected changes in the production rates of
hydrocarbons, (12) defects based on alternate or differing interpretations of
proven or probable reserves or production in paying quantities, (13) defects
based on the lack of production from any Well or the status of a Well as shut-in
or temporarily abandoned, and (14) defects arising from prior oil and gas leases
relating to the Leases that are not surrendered of record, unless Buyer provides
affirmative evidence that any such Lease is still valid.
(b)    As used herein, the term “Permitted Encumbrances” means:
(i)    all lessors’ royalties, overriding royalties, non-participating
royalties, payments out of production, reversionary interests, convertible
interests, net profits interests and similar burdens upon, measured by, or
payable out of production, or otherwise affecting Seller’s net revenue interest
in any Listed Interest, if the net cumulative effect of such burdens does not
(A) operate to reduce the net revenue interest of Seller in any Listed Interest
to less than the net revenue interest for such Listed Interest as set forth in
Exhibit A or B, as applicable, or (B) increase the working interest of Seller in
any Listed Interest to greater than the working interest for such Listed
Interest as set forth in Exhibit A or B, as applicable, (unless Seller’s net
revenue interest with respect to such Listed Interest is greater than the net
revenue interest for such Listed Interest as set forth in Exhibit A or B, as
applicable, in the same proportion as such increase in such working interest);
(ii)    all rights to consent by, required notices to, approvals of, filings
with, or other actions by governmental authorities in connection with the
assignment of the Properties to Buyer that are customarily obtained subsequent
to the assignment of properties similar to the Properties;
(iii)    all non-consent penalties applied against the interest of Seller in any
Listed Interest arising prior to the Effective Time, which are taken into
account in the calculation of the working interest and net revenue interest
shown on Exhibit A or B, as applicable, with respect to such Listed Interest;

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(iv)    all easements, rights-of-way, covenants, restrictions, servitudes,
permits, surface leases, sub-surface leases, grazing rights, logging rights,
mining rights and other similar rights (including rights in respect of surface
operations) in the Leases, and canals, ditches, reservoirs, pipelines, utility
lines, power lines, railways, streets, roads, alleys, highways, and other
structures on, over, through or under the Leases;
(v)    all Title Defects that Buyer has waived or released or is deemed to have
waived or released pursuant to the terms of this Agreement;
(vi)    all terms and conditions of (A) all Leases, Applicable Contracts,
Rights-of-Way, Permits and Unit Interests, whether recorded or not and (B) this
Agreement;
(vii)    all rights of reassignment, upon the surrender or expiration of any
Lease;
(viii)    all liens for Taxes or assessments not yet due or not yet delinquent
or, if delinquent, that are not material or that are being contested in good
faith in the normal course of business;
(ix)    all applicable laws and rights reserved to or vested in any governmental
authority (A) to control or regulate any Property in any manner, (B) by the
terms of any right, power, grant or Permit, or by provision of law, to terminate
such right, power, grant or Permit or to purchase, condemn, expropriate or
recapture or to designate a purchaser of any of the Properties, (C) to use the
Properties in any manner and (D) to enforce any obligations or duties owed to
any governmental authority with respect to any Permit;
(x)    liens, mortgages and other encumbrances, if any, to be released prior to
or at the Closing;
(xi)    zoning and planning ordinances and municipal regulations;
(xii)    vendors, carriers, warehousemen’s, repairmen’s, mechanic’s, workmen’s,
materialmen’s, construction or other like liens arising by operation of law in
the ordinary course of business or incident to the construction or improvement
of any Property in respect of obligations that are not yet due in the normal
course of business of, if due, that are being contested in good faith by
appropriate proceedings by or on behalf of Seller;
(xiii)    all liens created under any Leases or Applicable Contracts or by
operation of law;
(xiv)    all preferential purchase rights with respect to which the appropriate
time period for asserting such rights have expired without an exercise of such
rights; and
(xv)    all other liens, charges, encumbrances, contracts, agreements,
instruments, obligations, defects and irregularities affecting the Properties
(including liens of operators that relate to obligations that are not yet due in
the normal course of business or which are being contested in good faith by
appropriate proceedings by or on behalf of Seller) that (A) do not operate to
reduce the net revenue interest of Seller in any Listed Interest to less than
the net revenue interest for such Listed Interest as set forth in Exhibit A or
B, as applicable, (B) do not increase the working interest of Seller in any
Listed Interest to greater than the working interest for such Listed Interest as
set forth in Exhibit A or B, as applicable, (unless Seller’s net revenue
interest with respect to such Listed Interest is greater than the net revenue
interest for such Listed Interest as set forth in Exhibit A or B, as applicable,
in the same proportion as such increase in such working interest), (C) do not
materially interfere with the ownership, operation or use of any of the
Properties and (D) would be accepted by a reasonably prudent and sophisticated
buyer in the business of owning, exploring, developing and operating oil and gas
properties similar to the Properties.

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(c)    As used herein, the term “Retained Property” means any Property excluded
from the conveyance of the Properties by Seller to Buyer hereunder pursuant to
Section 5.4(b)(i), 5.6(b)(i), 5.8(a), 5.9(a) or 5.10(b).
(d)    As used herein, the term “Title Benefit” means any right, circumstance or
condition that, as of the Execution Date, operates to (i) increase the net
revenue interest of Seller in any Listed Interest to an amount above the net
revenue interest set forth on Exhibit A or B, as applicable, with respect to
such Listed Interest, to the extent that such right, circumstance or condition
does not cause a proportionately greater increase in Seller’s working interest
set forth on Exhibit A or B, as applicable, with respect to such Listed
Interest, or (ii) obligate Seller to bear a working interest in any Listed
Interest that is less than the working interest set forth on Exhibit A or B, as
applicable, with respect to such Listed Interest, to the extent that such right,
circumstance or condition does not cause any proportionate decrease in Seller’s
net revenue interest set forth on Exhibit A or B, as applicable, with respect to
such Listed Interest.
(e)    As used herein, the term “Title Notice” means a written notice with
respect to any Title Defect or Title Benefit, as applicable, that includes (i) a
full description and explanation of the Title Defect or Title Benefit, as
applicable, and the Listed Interest affected thereby, (ii) the title opinion,
other reports of experts (including a landman’s runsheet or title chain) or
other documentation on which the assertion of the Title Defect or Title Benefit,
as applicable, is based, (iii) such supporting documents reasonably necessary
for Seller or Buyer (or a title attorney retained by Seller or Buyer, as and if
applicable) to verify the existence of any such Title Defect or Title Benefit,
as applicable, and (iv) the Allocated Value of the Property affected by such
Title Defect or Title Benefit, as applicable, and Buyer’s or Seller’s, as
applicable, estimate of, with respect to any Title Defect, the Title Defect
Amount, and with respect to any Title Benefit, the Title Benefit Amount, and the
computations upon which Buyer’s or Seller’s, as applicable, belief is based.
Notwithstanding anything contained in this Agreement to the contrary, and for
the avoidance of doubt, any Title Defect or breach of the Special Warranty
asserted by Buyer shall be limited to Seller’s interest in the Leases on Exhibit
A (or any tract or depth thereof, as applicable) and in the Wells on Exhibit B,
solely as to the currently producing formation, and Buyer shall not have any
right to assert a Title Defect or a breach of the Special Warranty with respect
any other Properties.
(f)    As used herein, the term “Environmental Defect” means any event,
condition, or circumstance, including any release into the environment of
hazardous substances, relating to the Properties which constitutes a material
violation of any Environmental Law in existence as of the Execution Date.
(g)    As used herein, the term “Environmental Laws” means all laws, statutes,
ordinances, permits, orders, court decisions, rules and regulations issued or
enacted by any governmental authority having appropriate jurisdiction pertaining
to the prevention of pollution or protection of the environment in effect as of
the Effective Time, including the federal Clean Air Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, the Federal Water Pollution Control Act, as amended, the Resources
Conservation and Recovery Act, as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Superfund Amendment
and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, and comparable state and local laws. The term
“Environmental Laws” does not include (a) good or desirable operating practices
or standards that may be employed or adopted by other oil and gas well operators
or recommended by a governmental authority, or (b) the Occupational Safety and
Health Act of 1970, 29 U.S.C. § 651 et seq., as amended, or any other law
governing worker safety or workplace conditions.

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(h)    As used herein, the term “Lowest Cost Response” means the response
required or allowed under Environmental Laws that addresses the identified
condition at the lowest cost (considered as a whole, taking into consideration
any material negative impact such response may have on the operations of the
relevant Properties and any potential material additional costs or liabilities
that may likely arise as a result of such response) as compared to any other
response that is required or allowed under Environmental Laws. The Lowest Cost
Response shall include taking no action, leaving the condition unaddressed,
periodic monitoring or the recording of notices in lieu of remediation, if such
responses are allowed under Environmental Laws. The Lowest Cost Response shall
not include (i) the costs of Buyer’s and/or its affiliate’s employees, project
manager(s) or attorneys, (ii) expenses for matters that are costs of doing
business, e.g., those costs that would ordinarily be incurred in the day-to-day
operations of the Properties, or in connection with permit renewal/amendment
activities, maintenance on active Resource Conservation and Recovery Act of 1976
(as amended, “RCRA”) waste management units, and operation and oversight of
active RCRA waste management units, (iii) overhead costs of Buyer and/or its
affiliates, (iv) costs and expenses that would not have been required under
Environmental Laws as they exist on the Execution Date, (v) costs or expenses
incurred in connection with remedial or corrective action that is designed to
achieve standards that are more stringent than those required for similar
facilities or that fails to reasonably take advantage of applicable risk
reduction or risk assessment principles allowed under applicable Environmental
Laws, and/or (vi) any costs or expenses relating to the assessment, remediation,
removal, abatement, transportation and disposal of any asbestos, asbestos
containing materials or NORM.
(i)    As used herein, the term “Environmental Notice” means a written notice
with respect to any Environmental Defect that includes (i) a full description
and explanation of the matter constituting the alleged Environmental Defect and
the Listed Interest affected thereby, (ii) the Allocated Value of each Listed
Interest affected thereby, and Buyer’s estimate of the Environmental Defect
Amount with respect to such Environmental Defect (and the computations upon
which Buyer’s belief is based) and (iii) all associated supporting reports,
data, analysis and conclusions (which shall be governed by the terms of the
Confidentiality Agreement).
(j)    As used herein, the term “Environmental Defect Amount” means, with
respect to each Environmental Defect, the amount of the Lowest Cost Response of
remediation for such Environmental Defect.
(k)    As used herein, the term “Environmental Liabilities” means (i) any order,
notice of responsibility, directive (including requirements embodied in
Environmental Laws), injunction, judgment or similar ruling or act (including
settlements) by any governmental authority to the extent arising out of any
violation of, or remedial obligation under, any Environmental Law or (ii) claim
or cause of action by a governmental authority or other person for personal
injury, death, property damage, damage to natural resources, remediation or
response costs, or similar costs or expenses to the extent arising out of a
release of any pollutant, contaminant or any hazardous or toxic material,
substance or waste, or any violation of, or any remediation obligation under,
any Environmental Laws.
Section 5.4    Notice of Title Defects and Title Benefits; Remedies.
(a)    If Seller discovers any Title Benefit, or Buyer discovers any Title
Defect or Title Benefit, then such Party may (but shall have no obligation to,
other than with respect to any Title Benefit discovered by Buyer, with respect
to which Buyer shall be obligated to) deliver to the other Party, prior to the
Defect Deadline, a Title Notice with respect to such Title Benefit or Title
Defect, as applicable. Except as set forth in the special warranty of title
contained in the Assignment, Seller and Buyer shall be deemed to have waived,
and neither Buyer nor Seller, respectively, shall have any liability for, any
Title Benefit or Title Defect for

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which Buyer or Seller, respectively, has not received (and, in the case of any
Title Benefit discovered by Buyer, delivered to Seller) a Title Notice on or
before the Defect Deadline.
(b)    On or before 5:00 p.m. Central time on the date that is two (2) business
days prior to the Closing Date, with respect to each Listed Interest for which
Buyer has asserted a Title Defect pursuant to a properly and timely delivered
Title Notice (each such Listed Interest, a “Title Defect Property”), Seller
shall elect (in its sole and absolute discretion) to (i) exclude such Title
Defect Property (and all related or associated Lease(s) and other Properties)
from the Properties conveyed by Seller to Buyer at the Closing pursuant to this
Agreement, in which case, subject to the application of the Title Threshold and
the Title Deductible, the Purchase Price shall be adjusted downward by the
Allocated Value of such Listed Interest in accordance with Section 2.2(b)(iv) or
(ii) subject to the application of the Title Threshold and the Title Deductible,
after the Closing, dispute the existence of or cure (in accordance with the
provisions of Section 5.4(c)), such Title Defect, in either of which case, such
Title Defect Property shall be included in the Properties conveyed by Seller to
Buyer at the Closing pursuant to this Agreement, without any reduction to the
Purchase Price at the Closing with respect thereto.
(c)    With respect to any Title Defect Property included in the conveyance of
the Properties to Buyer at the Closing (an “Included Title Defect Property”),
Seller shall have until 5:00 p.m. Central time on the date that is ninety (90)
days after the Closing Date (such period, the “Cure Period”) to (i) dispute the
existence of the Title Defect asserted with respect to such Included Title
Defect Property pursuant to the provisions of Section 5.7, (ii) subject to the
application of the Title Threshold and the Title Deductible, cure the Title
Defect asserted with respect to such Included Title Defect Property or (iii)
indemnify and hold Buyer harmless from and against any actual Liabilities Buyer
may suffer as a result of a third party claim based on the Title Defect asserted
with respect to such Included Title Defect Property. If, as of the expiration of
the Cure Period, Seller has not cured (and has not elected to provide an
indemnity pursuant to Section 5.4(c)(iii) with respect to) any Title Defect
affecting any Included Title Defect Property, and such Included Title Defect
Property is not the subject of a Disputed Matter, then, subject to the
application of the Title Threshold and the Title Deductible, the Purchase Price
shall be decreased, pursuant to Section 2.2(b)(v) by the Title Defect Amount
determined with respect to each such Title Defect.
(d)    Notwithstanding anything to the contrary set forth herein, in no event
shall there be any remedies provided by Seller, and Seller shall not be
responsible for, (i) any individual Title Defect for which the Title Defect
Amount does not exceed fifty thousand dollars ($50,000) (the “Title Threshold”)
and (ii) any Title Defect with respect to which the Title Defect Amount exceeds
the Title Threshold, unless and until the aggregate of all such Title Defect
Amounts that exceed the Title Threshold (excluding any Title Defect Amounts
attributable to Title Defects that are cured by Seller pursuant to Section
5.4(c)(ii) or with respect to which Seller provides the indemnity contemplated
in Section 5.4(c)(iii)), exceeds an amount equal to five percent (5%) of the
Purchase Price (the “Title Deductible”), and then only with respect to the
amount of such Title Defect Amounts that exceed the Title Deductible and that
(when aggregated with all Environmental Defect Amounts that exceed the
Environmental Deductible and the amounts of all indemnity claims that exceed the
Indemnity Deductible), do not exceed the Indemnity Cap.
(e)    Notwithstanding anything to the contrary set forth herein, in no event
shall there be any remedies provided by Buyer, and Buyer shall not be
responsible for, (i) any individual Title Benefit for which the Title Benefit
Amount does not exceed the Title Threshold and (ii) any Title Benefit with
respect to which the Title Benefit Amount exceeds the Title Threshold, unless
and until the aggregate of all such Title Benefit

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Amounts that exceed the Title Threshold, exceeds the Title Deductible, and then
only with respect to the amount of such Title Benefit Amounts that exceed the
Title Deductible.
Section 5.5    Title Defect Amount; Title Benefit Amount.
(a)    The amount by which the Allocated Value of any Listed Interest is reduced
as a result of the existence of a Title Defect with respect thereto is the
“Title Defect Amount”, which shall be determined in accordance with the
following methodology, terms and conditions:
(i)    if Buyer and Seller agree on the Title Defect Amount, then such amount
shall be the Title Defect Amount;
(ii)    if the Title Defect is an encumbrance that is undisputed and liquidated
in amount, then the Title Defect Amount shall be equal to the amount necessary
to be paid to remove such encumbrance from the Included Title Defect Property;
(iii)    if the Title Defect represents a discrepancy between (A) the actual net
revenue interest for any Listed Interest and (B) the net revenue interest stated
on Exhibit A or B, as applicable, with respect to such Listed Interest, then the
Title Defect Amount shall be the product of (1) the Allocated Value of such
Listed Interest multiplied by (2) one (1), minus a fraction, the numerator of
which is the actual net revenue interest for such Listed Interest and the
denominator of which is the net revenue interest for such Listed Interest stated
on Exhibit A or B, as applicable;
(iv)    if the Title Defect represents a discrepancy between (A) the actual
working interest for any Listed Interest and (B) the working interest stated on
Exhibit A or B, as applicable, with respect to such Listed Interest (unless,
with respect to such Listed Interest, there is any discrepancy in the net
revenue interest for such Listed Interest set forth on Exhibit A or B, as
applicable), then the Title Defect Amount shall be the product of (1) the
Allocated Value of such Listed Interest multiplied by (2) a fraction, the
numerator of which is the difference between the working interest for such
Listed Interest stated on Exhibit A or B, as applicable, and the actual working
interest for such Listed Interest and the denominator of which is the working
interest for such Listed Interest stated on Exhibits A or B, as applicable;
(v)    if the Title Defect represents an obligation or encumbrance upon, or
other defect in title to, the Included Title Defect Property of a type not
described above, the Title Defect Amount shall be determined by taking into
account the Allocated Value of such Included Title Defect Property, the portion
of such Included Title Defect Property affected by the Title Defect, the legal
effect of the Title Defect, the potential economic effect of the Title Defect
over the life of such Included Title Defect Property, the values placed upon the
Title Defect by Buyer and Seller and such other reasonable factors as are
necessary to make a proper evaluation; provided, that if such Title Defect is
reasonably capable of being cured, the Title Defect Amount shall not be greater
than the reasonable cost and expense of curing such Title Defect;
(vi)    the Title Defect Amount with respect to any Included Title Defect
Property shall be determined without duplication of any costs or losses included
in another Title Defect Amount hereunder; and
(vii)    notwithstanding anything to the contrary set forth herein, the
aggregate Title Defect Amounts attributable to the effects of all Title Defects
upon any Included Title Defect Property shall not exceed the Allocated Value of
such Included Title Defect Property.

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(b)    The amount by which the Allocated Value of any Listed Interest is
increased as a result of the existence of a Title Benefit with respect thereto
is the “Title Benefit Amount”, which shall be determined in accordance with the
following methodology, terms and conditions:
(i)    if Buyer and Seller agree on the Title Benefit Amount, then such amount
shall be the Title Benefit Amount;
(ii)    if the Title Benefit represents a discrepancy between (A) the actual net
revenue interest for any Listed Interest and (B) the net revenue interest stated
on Exhibit A or B, as applicable, with respect to such Listed Interest (and the
working interest in such Listed Interest is not increased), then the Title
Benefit Amount shall be the product of (1) the Allocated Value of such Listed
Interest multiplied by (2) the result obtained by subtracting one (1) from a
fraction, the numerator of which is the actual net revenue interest for such
Listed Interest and the denominator of which is the net revenue interest for
such Listed Interest stated on Exhibit A or B, as applicable; and
(iii)    if the Title Benefit represents a discrepancy between (A) the actual
working interest for any Listed Interest and (B) the working interest stated on
Exhibit A or B, as applicable, with respect to such Listed Interest (and the net
revenue interest in such Listed Interest is not decreased proportionately), then
the Title Benefit Amount shall be the product of (1) the Allocated Value of such
Listed Interest multiplied by (2) a fraction, the numerator of which is the
difference between the actual working interest for such Listed Interest and the
working interest for such Listed Interest stated on Exhibit A or B, as
applicable, and the denominator of which is the working interest for such Listed
Interest stated on Exhibit A or B, as applicable.
Section 5.6    Notice of Environmental Defects; Remedies.
(a)    If Buyer discovers any Environmental Defect, then Buyer may (but shall
have no obligation to) deliver to Seller, prior to the Defect Deadline, an
Environmental Notice with respect to such Environmental Defect. Buyer shall be
deemed to have waived, and Seller shall have no liability for, any Environmental
Defect for which Seller has not received an Environmental Notice on or before
the Defect Deadline.
(b)    On or before 5:00 p.m. Central time on the date that is two (2) business
days prior to the Closing Date, with respect to each Listed Interest for which
Buyer has asserted an Environmental Defect pursuant to a properly and timely
delivered Environmental Notice (each such Property, an “Environmental Defect
Property”), Seller shall elect (in its sole and absolute discretion) to (i)
exclude such Environmental Defect Property (and all related or associated
Lease(s) and other Properties) from the Properties conveyed by Seller to Buyer
at the Closing pursuant to this Agreement, in which case, subject to the
application of the Environmental Threshold and the Environmental Deductible, the
Purchase Price shall be adjusted downward by the Allocated Value of such
Property in accordance with Section 2.2(b)(iv) or (ii) after the Closing,
dispute the existence of, or, subject to the application of the Environmental
Threshold and the Environmental Deductible, cure such Environmental Defect, in
either of which case, such Environmental Defect Property shall be included in
the Properties conveyed by Seller to Buyer at the Closing pursuant to this
Agreement, without any reduction to the Purchase Price at the Closing with
respect thereto.
(c)    With respect to any Environmental Defect Property included in the
conveyance of the Properties to Buyer at the Closing (an “Included Environmental
Defect Property”), Seller shall have until the end of the Cure Period to (i)
dispute the existence of the Environmental Defect asserted with respect to such
Included Environmental Defect Property pursuant to the provisions of Section
5.7, (ii) subject to the application of the Environmental Threshold and the
Environmental Deductible, cure the Environmental Defect asserted with respect to
such Included Environmental Defect Property or (iii) indemnify and hold Buyer
harmless from and against any actual Liabilities Buyer may suffer as a result of
a third party claim based on the Environmental Defect asserted with respect to
such Included Environmental Defect Property.

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If, as of the expiration of the Cure Period, Seller has not cured (and has not
elected to provide an indemnity pursuant to Section 5.6(c)(iii) with respect
to), any Environmental Defect affecting any Included Environmental Defect
Property, and such Included Environmental Defect Property is not the subject of
a Disputed Matter, then, subject to the application of the Environmental
Threshold and the Environmental Deductible, the Purchase Price shall be
decreased, pursuant to Section 2.2(b)(vi) by the Environmental Defect Amount
determined with respect to each such Environmental Defect.
(d)    Notwithstanding anything to the contrary set forth herein, in no event
shall there be any remedies provided by Seller, and Seller shall not be
responsible for, (i) any individual Environmental Defect for which the
Environmental Defect Amount does not exceed fifty thousand dollars ($50,000)
(the “Environmental Threshold”) and (ii) any Environmental Defect with respect
to which the Environmental Defect Amount exceeds the Environmental Threshold,
unless and until the aggregate of all such Environmental Defect Amounts that
exceed the Environmental Threshold (excluding the amount of Environmental Defect
Amounts attributable to Environmental Defects that are cured by Seller pursuant
to Section 5.6(c)(ii) or with respect to which Seller provides the indemnity
contemplated in Section 5.6(c)(iii)), exceeds an amount equal to five percent
(5%) of the Purchase Price (the “Environmental Deductible”), and then only with
respect to the amount of such Environmental Defect Amounts that exceed the
Environmental Deductible and that (when aggregated with all Title Defect Amounts
that exceed the Title Deductible and amounts of all indemnity claims that exceed
the Indemnity Deductible), do not exceed the Indemnity Cap.
Section 5.7    Title and Environmental Dispute Resolution. If, as of the
expiration of the Cure Period, the Parties cannot agree upon (a) the existence
of a Title Defect, the adequacy of any Title Defect curative materials submitted
to Buyer, or the Title Defect Amount with respect to any Title Defect (each, a
“Disputed Title Matter”) or (b) the existence of an Environmental Defect, the
adequacy of any Environmental Defect curative actions taken by Seller, or the
Environmental Defect Amount with respect to any Environmental Defect (each, a
“Disputed Environmental Matter” and, together with any Disputed Title Matter, a
“Disputed Matter”) then the Disputed Matter shall be submitted to arbitration in
accordance with the provisions of Article XI.
Section 5.8    Casualty Loss and Condemnation. If, during the Interim Period,
all or any portion of the Properties are destroyed or damaged by fire, flood,
earthquake, windstorm, theft, vandalism, explosion, blowout, riot, sabotage,
accident or other casualty of a similar nature or shall be taken by condemnation
or under the right of eminent domain (each, a “Casualty Loss”) and the value of
such Casualty Loss (a) exceeds one hundred thousand dollars ($100,000), then the
Property affected by such Casualty Loss shall be excluded from the Properties
conveyed by Seller to Buyer at the Closing pursuant to this Agreement and the
Purchase Price shall be adjusted downward by the Allocated Value of such
Property in accordance with Section 2.2(b)(iv) or (b) is less than one hundred
thousand dollars ($100,000), then the Property affected by such Casualty Loss
shall be included in the Properties conveyed by Seller to Buyer pursuant to this
Agreement at the Closing, notwithstanding such Casualty Loss, without any
reduction to the Purchase Price with respect thereto and Seller shall transfer
to Buyer all rights to third-party insurance and the proceeds thereof (net of
any self-retention or deductible amount) and other claims against third parties,
in each case, with respect to such Casualty Loss. Notwithstanding anything to
the contrary set forth herein, the rights and remedies of Buyer set forth in
this Section 5.8, shall be Buyer’s exclusive rights and remedies with respect to
any Casualty Loss with respect to the Properties.

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Section 5.9    Preferential Purchase Rights. Prior to Closing, Seller shall use
commercially reasonable efforts to notify the holder of each preferential
purchase right set forth on Schedule 3.1(j), in accordance with the contractual
provisions applicable to such right, of the transactions contemplated hereby. If
any holder of a preferential purchase right with respect to any of the
Properties exercises such preferential purchase right (a) prior to Seller’s
delivery of the Preliminary Settlement Statement, then the Properties with
respect to which such exercised preferential purchase right relates shall be
excluded from the Properties conveyed by Seller to Buyer at the Closing pursuant
to this Agreement and the Purchase Price shall be adjusted downward by the
Allocated Value of such Property in accordance with Section 2.2(b)(iv) or (b)
after Seller’s delivery of the Preliminary Settlement Statement but prior to the
Closing, then the Properties with respect to which such exercised preferential
purchase right relates shall be included in the Properties conveyed by Seller to
Buyer at the Closing pursuant to this Agreement, notwithstanding the exercise of
such preferential purchase right, without any reduction to the Purchase Price
with respect thereto. Except for any Retained Property (with respect to which
Seller shall be obligated to comply with the terms, and entitled to all the
proceeds paid in connection with any exercise, of any preferential purchase
right applicable thereto), Buyer shall be obligated to comply with the terms,
and entitled to all the proceeds paid in connection with any exercise of, any
preferential purchase right applicable to the Properties. If the holder of a
preferential purchase right with respect to any Retained Property fails to
consummate the purchase of such Retained Property in accordance with the terms
and conditions of such preferential purchase right, then, within ten (10)
business days of Seller’s providing Buyer with notice thereof, Buyer shall
purchase (at a purchase price equal to the Allocated Value thereof), and Seller
shall assign to Buyer pursuant to an assignment in substantially the same form
as the Assignment, such Retained Property. Notwithstanding anything to the
contrary set forth herein, the rights and remedies of Buyer set forth in this
Section 5.9 shall be Buyer’s exclusive rights and remedies with respect to any
preferential purchase right applicable to the Properties. As used in this
Agreement, “business day” or “business days” means any day (other than Saturday
and Sunday) on which national and state commercial banks in Oklahoma City,
Oklahoma are generally open for business. With respect to any time period set
out in this Agreement that ends on a day that is not a business day, such time
period will be automatically extended to 5:00 p.m. Central time on the next
occurring business day.
Section 5.10    Applicable Consents.
(a)    Seller shall use commercially reasonable efforts to procure any required
third party consents necessary to transfer the Properties to Buyer (such
consents, the “Applicable Consents”) prior to the Closing and, with respect to
any Applicable Consents not obtained (or denied, in writing) on or prior to the
Closing, until the expiration of the Cure Period (provided, however, that Seller
shall not be obligated to pay any consideration or waive or release any right or
privilege in order to obtain any such consent). Subject to the immediately
succeeding proviso, notwithstanding the existence of an outstanding Applicable
Consent with respect to any Property at Closing, such Property shall be included
in the Properties conveyed by Seller to Buyer pursuant to this Agreement at the
Closing, without any reduction to the Purchase Price with respect thereto;
provided, however, that, if, as of the Closing, Seller has not obtained any
Applicable Consent with respect to any Lease and (i) the holder of such
Applicable Consent is a governmental authority or (ii) the Lease contains
language to the effect that the transfer of the Lease without such Applicable
Consent would be void or cause the termination of such Lease (any such
Applicable Consent, a “Required Consent”), then, such Lease (and any associated
Listed Interest) shall not be included in the Properties conveyed by Seller to
Buyer pursuant to this Agreement at the Closing, but no reduction to the
Purchase Price at Closing shall be made with respect thereto.
(b)    Any Properties that are subject to an Applicable Consent that is denied
in writing prior to the Closing shall be excluded from the Properties conveyed
by Seller to Buyer at the Closing pursuant to this Agreement and, subject to the
application of the Title Threshold and the Title Deductible, the Purchase Price
shall be adjusted downward by the Allocated Value of such Property in accordance
with Section 2.2(b)(iv).

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(c)    If, as of the expiration of the Cure Period, any Required Consent with
respect to any Lease has not been obtained (or has been denied, in writing), or
any other Applicable Consent has been denied, in writing, then, subject to the
application of the Title Threshold and the Title Deductible, the Purchase Price
shall be adjusted downward by the Allocated Value of such Property (including,
in the case of any Required Consent affecting a Lease associated with any Listed
Interest, the Allocated Value of such Listed Interest) in accordance with
Section 2.2(b)(vii). With respect to any Lease that is subject to a Required
Consent that has been obtained as of the expiration of the Cure Period, within
five (5) business days of the expiration of the Cure Period, Seller shall assign
to Buyer pursuant to an assignment in substantially the same form as the
Assignment, such Lease (and, if applicable, any associated Listed Interest).
(d)    If any Applicable Consent with respect to any Applicable Contract is not
obtained prior to the Closing, then, until the earlier of the expiration of the
Cure Period and such time that such Applicable Consent is obtained (or denied in
writing), to the extent permissible under law and under the terms of such
Applicable Contract, Seller shall provide the benefits and burdens of such
Applicable Contract to Buyer, and Buyer shall promptly reimburse Seller for, and
shall DEFEND, INDEMNIFY and HOLD HARMLESS Seller (and each of the other Seller
Indemnified Parties (as defined in Section 10.1)) from and against any and all
Liabilities incurred by Seller (or any of the other Seller Indemnified Parties)
in connection therewith, REGARDLESS OF WHETHER SUCH LIABILITIES ARISE OUT OF OR
RESULT FROM, SOLELY OR IN PART, THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR
COMPARATIVE NEGLIGENCE, GROSS NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR
VIOLATION OF LAW OF OR BY ANY OF THE SELLER INDEMNIFIED PARTIES, EXCEPTING ONLY
LIABILITIES TO THE EXTENT RESULTING FROM THE WILLFUL MISCONDUCT OF ANY OF THE
SELLER INDEMNIFIED PARTIES. With respect to any Applicable Contract for which
any Applicable Consent has not been obtained as of the expiration of the Cure
Period or is denied in writing, Seller shall endeavor to mutually agree with
Buyer with respect to alternative arrangements intended to provide Buyer, to the
greatest extent possible, with the benefit and burden of any such Applicable
Contract. Notwithstanding anything to the contrary set forth herein, the rights
and remedies of Buyer set forth in this Section 5.10 shall be Buyer’s exclusive
rights and remedies with respect to any Applicable Consent applicable to the
Properties.
(e)    Notwithstanding any provisions of this Section 5.10 to the contrary or
the inclusion in the Assignment of any Properties subject to a Required Consent
outstanding as of the Closing, neither this Agreement nor the Assignment shall
be deemed to provide for the conveyance of any such Properties to Buyer at the
Closing.
Section 5.11    Special Warranty. Buyer shall not assert any claim under the
special warranty of title under the Assignment with respect to any matter for
which Buyer (a) has previously asserted a claim under this Article V or (b) at
the time Buyer (or any of Buyer’s Representatives) discovered such claim, had a
right to assert such claim under this Article V.
Section 5.12    Exclusive Remedy. Except for the special warranty of title under
the Assignment, the rights and remedies of Buyer set forth in this Article V,
shall be Buyer’s exclusive rights and remedies with respect to any defect of
title (including any Title Defect) or any Environmental Defect or any
Environmental Liability with respect to the Properties, and the provisions of
Article X shall not apply with respect to any defect in title (including any
Title Defect) or Environmental Liability.

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ARTICLE VI
TAX MATTERS

Section 6.1    Certain Definitions.
(a)    As used herein, the term “Tax” or “Taxes” means all taxes, assessments
and other governmental charges imposed by any governmental authority, including
net income, gross income, profits, gross receipts, alternative or add-on
minimum, ad valorem, property, production, severance, fuel, excess profits,
windfall profit, transfer, real property transfer, value added, sales, use,
environmental, excise, withholding, social security, unemployment, disability,
payroll, estimated or other tax, including any interest, penalty or addition
thereto.
(b)    As used herein, the term “Income Taxes” means all Taxes based upon or
measured by gross or net income, and franchise taxes based upon income, capital,
assets or operations.
(c)    As used herein, the term “Asset Taxes” means all ad valorem, property,
production, severance, sales, use, gross receipts, and similar Taxes based upon
or measured by the ownership or operation of the Properties or the production of
Hydrocarbons therefrom (excluding, for the avoidance of doubt, any Income Taxes
or Transfer Taxes).
(d)    As used herein, the term “Transfer Taxes” means all transfer, sales, use,
gross receipts, real property transfer, documentary, stamp and other similar
taxes, and recording fees incurred or imposed with respect to the transactions
described in this Agreement.
(e)    As used herein, the term “Tax Return” means any return, declaration,
report, information return or statement relating to Taxes, including any
schedule or attachment thereto and any amendment thereof.
Section 6.2    Apportionment of Asset Taxes. Seller shall be responsible for all
Asset Taxes attributable to the Properties for any period or portion thereof
ending before the Effective Time. Buyer shall be responsible for all Asset Taxes
attributable to the Properties for any period or portion thereof beginning on or
after the Effective Time. For purposes of this Section 6.2, (i) Asset Taxes that
are attributable to the severance or production of Hydrocarbons will be
allocated to the period in which the severance or production giving rise to such
Asset Taxes occurred, (ii) Asset Taxes that are based upon or related to income
or receipts or imposed on a transactional basis (other than such Asset Taxes
described in clause (i)), will be allocated to the period in which the
transaction giving rise to such Asset Taxes occurred, and (iii) Asset Taxes that
are ad valorem, property or other Asset Taxes imposed on a periodic basis
pertaining to a Straddle Period will be allocated between the portion of such
Straddle Period ending immediately prior to the Effective Time and the portion
of such Straddle Period beginning at the Effective Time by prorating each such
Asset Tax based on the number of days in the applicable Straddle Period that
occur before the date on which the Effective Time occurs, on the one hand, and
the number of days in such Straddle Period that occur on or after the date on
which the Effective Time occurs, on the other hand. For purposes of clause (iii)
of the preceding sentence, the period for such Asset Taxes will begin on the
date on which ownership of the applicable Properties gives rise to liability for
the particular Asset Tax and will end on the day before the next such date. The
apportionment of Asset Taxes between the Parties will take place as an
adjustment to the Purchase Price pursuant to Section 2.2 in the Preliminary
Settlement Statement for Asset Taxes for which information is available at the
Closing and pursuant to Section 9.2 in the Final Settlement Statement for all
remaining Asset Taxes, using estimates of such Asset Taxes if actual numbers are
not available. As used herein, “Straddle Period” means any Tax period beginning
before and ending after the Effective Time.

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Section 6.3    Tax Returns. Buyer shall be responsible for the preparation and
timely filing of any Tax Return and the payment to the applicable taxing
authority of all Asset Taxes that become due and payable on or after the Closing
Date, and Buyer shall indemnify and hold Seller harmless for any failure to file
such Tax Return and to make such payments subject to Buyer’s right of
reimbursement for any Asset Taxes for which Seller is responsible pursuant to
this Agreement. Seller shall be responsible for the preparation and timely
filing of any Tax Return and payment to the applicable taxing authority of all
Asset Taxes that become due and payable prior to the Closing Date, and Seller
shall indemnify and hold Buyer harmless for any failure to file such Tax Return
and to make such payments, subject to Seller’s right of reimbursement for any
Asset Taxes for which Buyer is responsible pursuant to this Agreement.
Notwithstanding the foregoing regarding filing and payment, Seller shall be
responsible for the preparation and timely filing of any Tax Return and the
payment to the applicable taxing authority of any ad valorem or property taxes
on Seller operated properties which are due and payable within the calendar year
2017, subject to Seller’s right of reimbursement for any such taxes for which
Buyer is responsible.
Section 6.4    Liability for Transfer Taxes. Buyer shall be responsible for the
payment of all Transfer Taxes that arise by reason of the consummation of the
transactions contemplated by this Agreement. Buyer shall pay or cause to be
paid, when due, to the appropriate taxing authorities all such Transfer Taxes
and shall send to Seller a statement confirming such payment, which shall be
accompanied by proof of Buyer’s actual payment of such Transfer Taxes. However,
if Seller is required by applicable law to collect and remit any Transfer Taxes,
(i) Buyer shall promptly pay to Seller the amount of such Transfer Taxes and
(ii) Seller shall timely remit the same to the applicable governmental
authority. Buyer shall indemnify and hold Seller harmless from and against such
Transfer Taxes within thirty (30) days of Seller’s written demand thereof. If
Seller (not Buyer) is required by law to appeal or protest the assessment of
Transfer Taxes, the appeal or protest of such proposed assessment shall be
treated as an item for which Seller is entitled to indemnification and, if Buyer
provides a written request and instructs Seller to do so, Seller shall prosecute
the protest or appeal; in such event Buyer shall pay all out-of-pocket expenses
of Seller (including attorneys’ fees) incurred by Seller in connection with such
appeal or protest. Seller and Buyer shall reasonably cooperate in good faith to
minimize, to the extent permissible under law, the amount of any such Transfer
Taxes.
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
Section 7.1    Seller’s Conditions. The obligations of Seller at the Closing
are, at its option, subject to the satisfaction at or prior to the Closing of
the following conditions:
(a)    All representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects at and as of the Closing
(other than representations and warranties that refer to a specified date, which
need only be true and correct in all material respects as of such specified
date) and Buyer shall have performed, or complied with, in all material
respects, the agreements and covenants required by this Agreement to be
performed and satisfied by Buyer prior to or at the Closing.
(b)    No material action, suit or proceeding shall have been instituted before,
and no material order, award or judgment shall have been issued by, any court,
governmental agency or arbitrator (i) seeking to restrain or prohibit, or
restraining or prohibiting, the consummation in whole or in part, of the
transactions contemplated hereby or (ii) seeking to obtain damages from Buyer,
or ordering Buyer to pay damages, in respect of any of the transactions
contemplated hereby.
(c)    Buyer shall have delivered to Seller all of the Buyer Deliverables (as
defined in Section 8.2(a)).

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Section 7.2    Buyer’s Conditions. The obligations of Buyer at the Closing are,
at its option, subject to the satisfaction at or prior to the Closing of the
following conditions:
(a)    All representations and warranties of Seller contained in this Agreement
shall be true and correct in all material respects (other than any
representations and warranties of Seller that are qualified by materiality or
material adverse effect, which, to the extent so qualified, shall be true and
correct in all respects) at and as of the Closing (other than representations
and warranties that refer to a specified date, which need only be true and
correct in all material respects as of such specified date) and Seller shall
have performed, or complied with, in all material respects, the agreements and
covenants required by this Agreement to be performed and satisfied by Seller
prior to or at the Closing.
(b)    No material action, suit or proceeding shall have been instituted before,
and no material order, award or judgment shall have been issued by, any court,
governmental agency or arbitrator (i) seeking to restrain or prohibit, or
restraining or prohibiting, the consummation in whole or in part, of the
transactions contemplated hereby or (ii) seeking to obtain damages from Seller,
or ordering Seller to pay damages, in respect of any of the transactions
contemplated hereby.
(c)    Seller shall have delivered to Buyer all of the Seller Deliverables (as
defined in Section 8.2(b)).
ARTICLE VIII
CLOSING
Section 8.1    Preliminary Settlement Statement and Closing.
(a)    Preliminary Settlement Statement. With respect to the items listed in
Section 2.2 that can be determined as of the Closing, Seller shall prepare and
deliver to Buyer, on or before 5:00 p.m. Central time on the date that is five
(5) days prior to the Closing Date, a settlement statement (the “Preliminary
Settlement Statement”) setting forth the Closing Amount and each adjustment (and
the calculation of such adjustments) used to determine the Closing Amount. As
used herein, the term “Closing Amount” means the Purchase Price (i) adjusted
(upward or downward) as provided in Section 2.2, using for such adjustment
amounts the best information then available, and (ii) less the Performance
Deposit (which shall be retained by Seller at the Closing as provided in
Section 2.1). All other upward or downward adjustments to the Purchase Price
provided in Section 2.2 and not included in the Preliminary Settlement
Statement, shall be taken into account in the Final Settlement Statement (as
defined in Section 9.2).
(b)    Closing. The purchase by Buyer and the sale by Seller of the Properties
as contemplated by this Agreement (the “Closing”) shall take place at 10:00 a.m.
Central time on the date that is 45 days after the Execution Date (the “Closing
Date”), at the offices of Seller at 333 West Sheridan Avenue, Oklahoma City,
Oklahoma, or such other time or place as the Parties may mutually agree in
writing.
Section 8.2    Closing Obligations. At the Closing:
(a)    Buyer shall deliver (or cause to be delivered) to Seller the following
items (all documents, certificates and other items listed below that are
required to be executed, will be duly executed and acknowledged, where required,
by an authorized signatory of Buyer or, if applicable, an affiliate of Buyer)
(collectively, the “Buyer Deliverables”):
(i)    by direct bank deposit or wire transfer in same day funds to Seller (or
any QI designated by Seller), in accordance with Seller’s written instructions
(to be provided to Buyer at least two (2) business days prior to the Closing),
an amount equal to the Closing Amount;

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(ii)    an Assignment and Bill of Sale, in form and substance substantially
similar to that set forth on Exhibit E (the “Assignment”), containing an
overriding royalty equal to the positive difference between twenty five percent
(25%) and any existing royalties, overriding royalties, and any other burdens on
production, and covering the Properties, in sufficient counterparts for
recordation in each of the counties in which the Properties are located and all
appropriate U.S. state and U.S. federal assignments as may be reasonably
necessary to convey the Properties to Buyer;
(iii)    a certificate in the form set forth on Exhibit F;
(iv)    (A) such evidence (including evidence of satisfaction of all applicable
bonding requirements) as Seller may reasonably require, that Buyer is qualified
with the applicable authorities to succeed Seller as the owner and, where
applicable, operator of the Properties and (B) such forms as Seller may
reasonably request for filing with the applicable authorities to reflect Buyer’s
assumption of plugging and abandonment liabilities with respect to the Wells and
the Unit Interests; and
(v)    all necessary letters in lieu of transfer orders directing all purchasers
of production to pay Buyer the proceeds attributable to production from each
Listed Interest from and after the Effective Time.
(b)    Seller shall deliver (or cause to be delivered) to Buyer the following
items (all documents, certificates and other items listed below that are
required to be executed will be duly executed and acknowledged, where required,
by an authorized signatory of Seller or, if applicable, an affiliate of Seller)
(collectively, the “Seller Deliverables”):
(i)    an Assignment covering the Properties, in sufficient counterparts for
recordation in each of the counties in which the Properties are located and all
appropriate U.S. state and U.S. federal assignments as may be reasonably
necessary to convey the Properties to Buyer;
(ii)    a certificate in the form set forth on Exhibit G;
(iii)    any change of operator forms or notices that may be required to
transfer operations on Seller operated Properties to Buyer (it being understood
and agreed, however, that except for its obligation to deliver the Seller
Deliverables described in this Section 8.2(b)(iii), Seller shall have no
obligation to ensure (and does not warrant) that Buyer will succeed Seller as
operator of any Properties operated by Seller or any of its affiliates); and
(iv)    a certification of non-foreign status from Devon, in the form prescribed
by Treasury Regulation Section 1.1445-2(b)(2).

ARTICLE IX
POST-CLOSING RIGHTS AND OBLIGATIONS

Section 9.1    Files and Records.
(a)    No later than thirty (30) days after the Closing Date, Seller will make
available to Buyer the Records at Seller’s offices in their current form and
format as maintained by Seller, and Buyer will have five (5) business days after
the first day Seller makes the Records available to Buyer to remove the Records
from Seller’s offices. Notwithstanding the foregoing or any other provision in
this Agreement to the contrary, from and after the Closing Date, Seller may
retain a copy (written or electronic) of any or all of the Records.

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(b)    Buyer will retain and will provide Seller with reasonable access to the
Records for a period of seven (7) years from and after the Closing Date,
together with such additional files, data and records of Buyer as may be
reasonably requested by Seller in order to pursue any claims, obligations and
disputes relating to the Properties. Buyer shall use all reasonable efforts to
obtain access, for Seller’s benefit, to all such books and records related to
any Property that may be subsequently conveyed by Buyer. Provided, with respect
to Tax matters, the Parties agree to retain all books and records with respect
to Tax matters pertinent to the Properties relating to any Tax period beginning
before the Closing Date until the later of (i) seven (7) years or (ii) the
expiration of the applicable statute of limitations of the respective Tax
periods and to abide by all record retention agreements entered into with any
governmental authority.
Section 9.2    Post-Closing Adjustments. On or before 5:00 p.m. Central time on
the date that is 120 days after the Closing Date (the “Post-Closing Date”),
Seller shall prepare and deliver to Buyer, in accordance with this Agreement and
generally accepted accounting principles, a statement (the “Final Settlement
Statement”) setting forth each adjustment to the Purchase Price that was not
included in the Preliminary Settlement Statement and showing the calculation of
such adjustments, which adjustments shall be in accordance with the principles
of this Agreement. Within twenty (20) days of receipt of the Final Settlement
Statement, Buyer shall deliver to Seller a written report containing any changes
that Buyer proposes be made to the Final Settlement Statement. The Parties shall
negotiate in good faith and undertake to agree with respect to the amounts due
pursuant to such Final Settlement Statement no later than fifteen (15) days
after Buyer’s submission of its written report hereunder to Seller (the date
upon which such agreement is reached shall be herein called the “Final
Settlement Date”). Buyer shall, within seven (7) days of the Final Settlement
Date, pay to Seller, or Seller shall pay to Buyer, whatever the case may be, in
immediately available funds the final settlement adjustment amount set forth
therein. Any disputed items that cannot be resolved by the mutual agreement of
the Parties, shall be removed from the Final Settlement Statement and submitted
to arbitration as a Disputed Matter in accordance with the procedures set forth
in Article XI. Notwithstanding anything to the contrary set forth herein, there
shall be no further Purchase Price adjustments pursuant to Section 2.2 for any
item not included in the Final Settlement Statement delivered by Seller (or
Buyer’s written report, if any, delivered with respect thereto) in accordance
with the provisions of this Section 9.2.
Section 9.3    Further Assurances. From and after the Closing, at the request of
Seller but without further consideration, Buyer will execute and deliver or use
reasonable efforts to cause to be executed and delivered such other instruments
of conveyance and take such other actions as Seller reasonably may request to
more effectively put Seller in possession of any property or assets which was
not intended by the Parties to be conveyed to Buyer, including the Excluded
Assets. From and after the Closing, at the request of Buyer but without further
consideration, Seller shall execute and deliver or use reasonable efforts to
cause to be executed and delivered such other instruments of conveyance and take
such other actions as Buyer reasonably may request to more effectively put Buyer
in possession of the Properties. If any of the Properties are incorrectly
described in any Assignment, the description shall be corrected upon proof of
the proper description.
Section 9.4    Removal of Signs. Notwithstanding anything to the contrary set
forth herein, Buyer shall obtain no right, title, interest, license or other
right whatsoever to use the word “Devon” or any trademarks containing or
comprising the foregoing, or any trademark confusingly similar thereto or
dilutive thereof (collectively, the “Seller Marks”). Buyer agrees that, as soon
as practicable after the Closing, and in any event on or before the thirtieth
(30th) day after the Closing, it will cease using the Seller Marks in any
manner, directly or indirectly, and remove, strike over or otherwise obliterate
all Seller Marks from the Properties. The Parties acknowledge and agree (a)
because damages would be an inadequate remedy, that Seller shall be entitled to
seek specific performance and injunctive relief as remedies for any breach of
this Section 9.4, in addition to other remedies available to it at law or in
equity, and (b) that the covenant of Buyer set forth

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in this Section 9.4, shall survive the Closing indefinitely, including following
any subsequent transfer of the Properties by Buyer, without limitation as to
time.
Section 9.5    Well Data. At any time upon the request of Seller, Buyer will
provide to Seller its proprietary well data, including the Well Data
Requirements (to the extent such data exists) set out on Schedule 9.5, for any
wells drilled and operated in the lands described on Schedule 9.5.
ARTICLE X
INDEMNIFICATION
Section 10.1    Buyer’s Indemnity Obligations. If the Closing shall occur, then
effective from and after the Closing, subject to the limitations set forth in
Section 3.3, this Article X and otherwise herein, Buyer and its successors and
assigns shall be responsible for, shall pay, and will DEFEND, INDEMNIFY and HOLD
HARMLESS Seller and its affiliates, and all of its and their respective equity
holders, partners, members (excluding, in each case, such equity holders,
partners or members that are equity holders, partners or members of Seller or
any of its affiliates solely by virtue of their holding publicly traded shares,
units or partnership interests), directors, officers, managers, employees,
agents and representatives (collectively, the “Seller Indemnified Parties”) from
and against any and all claims, causes of actions, payments, charges, judgments,
assessments, liabilities, losses, damages, supplemental environmental projects,
penalties, fines or costs and expenses, including any fees of attorneys,
experts, consultants, accountants and other professional representatives and
legal or other expenses incurred in connection therewith and including
liabilities, costs, losses and damages for personal injury, illness or death,
property damage, contracts claims, torts or otherwise (collectively,
“Liabilities”), arising out of, resulting from, based on, associated with, or
relating to:
(a)    any breach by Buyer of Buyer’s representations, warranties or covenants
set forth in this Agreement; and
(b)    the Assumed Liabilities.
Section 10.2    Seller’s Indemnity Obligations. If the Closing shall occur, then
effective from and after the Closing, subject to the limitations set forth in
Section 3.3 and otherwise herein, Seller and its successors and assigns shall be
responsible for, shall pay, and will DEFEND, INDEMNIFY and HOLD HARMLESS Buyer
and its affiliates, and all of its and their respective equity holders,
partners, members (excluding, in each case, such equity holders, partners or
members that are equity holders, partners or members of Buyer or any of its
affiliates solely by virtue of their holding publicly traded shares, units or
partnership interests), directors, officers, managers, employees, agents and
representatives (collectively, the “Buyer Indemnified Parties”) from and against
any and all Liabilities arising out of, resulting from, based on, associated
with, or relating to, any breach by Seller of Seller’s representations,
warranties or covenants set forth in this Agreement. In no event shall Seller
have any obligation to provide indemnification for (a) any matters to the extent
accounted for in the Preliminary Settlement Statement or the Final Settlement
Statement or (b) any Liabilities arising under this Section 10.2 if Buyer has
knowledge of the breach by Seller of its representations, warranties or
covenants giving rise to such Liability at the Closing.
Section 10.3    Deductible, Threshold and Cap. Notwithstanding anything to the
contrary set forth herein, Seller shall have no obligation or liability for
indemnification under Section 10.2 (except for breaches of the representations
and warranties set forth in Sections 3.1(a), 3.1(b), 3.1(c), 3.1(d), 3.1(f) and
3.1(l)) for (a) any individual indemnity claim under this Article X, the amount
of which does not exceed fifty thousand dollars ($50,000) (the “Indemnity
Threshold”) or (b) any individual indemnity claim that exceeds the Indemnity
Threshold, unless and until the aggregate of all such individual indemnity
claims that exceed the Indemnity Threshold, exceeds an amount equal to five
percent (5%) of the Purchase Price (the “Indemnity Deductible”), and then only
with respect to the amount of such indemnity claims that exceed the Indemnity

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Deductible and that are less than ten percent (10%) of the Purchase Price (as
adjusted pursuant to the provisions of Section 2.2) (the “Indemnity Cap”).
Section 10.4    Notice of Claim for Indemnification. Each indemnified party
hereunder agrees that upon its discovery of facts giving rise to a claim for
indemnity under the provisions of this Agreement, including receipt by it of
notice of any demand, assertion, action or proceeding, judicial or otherwise, by
any third party with respect to any matter to which it believes itself to be
entitled to indemnity under the provisions of this Agreement, it shall give
prompt notice thereof in writing to the indemnifying party, together with a
statement of such information regarding any of the foregoing as it shall then
have. Such notice shall include a formal demand for indemnification under this
Agreement. For claims for indemnity with respect to which the Indemnity
Threshold applies, such claim shall be deemed to have been made (subject to the
application of the Indemnity Threshold, the Indemnity Deductible and the
Indemnity Cap) upon the indemnified person’s providing an initial notice for a
claim of indemnity to the indemnifying party stating that the claim underlying
such claim for indemnity could reasonably be expected to exceed the Indemnity
Threshold. Buyer must provide any such notice within the Survival Period,
otherwise all indemnifications granted by Seller hereunder shall terminate and
expire. The indemnified party shall afford the indemnifying party a reasonable
opportunity to pay, settle or contest the claim at the indemnifying party’s
expense. With respect to any claim subject to indemnification pursuant to this
Article X or otherwise pursuant to this Agreement, the indemnified party shall
use reasonable efforts to cooperate (at the indemnifying party’s sole cost and
expense) with the indemnifying party in asserting any defense that may be
available to the indemnified party with respect to any such claim.
Section 10.5    Waiver of Certain Damages. Except with respect to any third
party claims for which a Party is entitled to be indemnified under this Article
X or otherwise pursuant to this Agreement, each of the Parties expressly waives
and releases, on its own behalf and on behalf of its affiliates, indirect,
special, consequential, punitive and exemplary damages and damages for lost
profits of any kind with respect to any dispute arising out of, resulting from,
based on, associated with, or relating to, this Agreement, the breach hereof or
the transactions contemplated hereby.
Section 10.6    Exclusive Remedy. If the Closing occurs, the indemnity
obligations set forth in this Agreement shall be the exclusive remedies for the
Parties for the breach of any representation, warranty or covenant set forth in
this Agreement or any claim arising out of, resulting from or related to the
transactions contemplated hereby, and each Party hereby releases, waives and
discharges, and covenants not to sue (and shall cause its affiliates to waive,
discharge and covenant not to sue) with respect to, any cause of action not
expressly provided for in this Agreement, including claims under state or
federal securities laws and claims available at common law, in equity or by
statute.
Section 10.7    Extent of Indemnification. The indemnification and assumption
provisions provided for in this Agreement shall be applicable whether or not the
Liabilities in question arose out of or resulted from, solely or in part, the
sole, active, passive, concurrent or comparative negligence, gross negligence,
strict liability or other fault or violation of law of or by any Seller
Indemnified Party or Buyer Indemnified Party, excepting only Liabilities to the
extent resulting from the willful misconduct of any Seller Indemnified Party or
Buyer Indemnified Party.

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ARTICLE XI
ARBITRATION

Section 11.1    Arbitration.
(a)    All Disputed Matters arising under or related to this Agreement shall be
determined by arbitration and governed by this Article XI.
(b)    With respect to any Disputed Title Matter, the Parties shall select a
mutually agreeable single arbitrator, who shall be a title attorney with at
least ten (10) years experience in oil and gas titles involving properties in
the regional area in which the Properties are located, within fifteen (15) days
of the expiration of the Cure Period. With respect to any Disputed Environmental
Matter, the Parties shall select a mutually agreeable single arbitrator, who
shall be an environmental consultant with at least ten (10) years experience,
within fifteen (15) days of the Closing. With respect to any matter (other than
any Disputed Title Matter or Disputed Environmental Matter) for which
arbitration is required under this Agreement (an “Arbitrable Matter”), the
Parties shall select a mutually agreeable single arbitrator within thirty (30)
days of the filing of a notice of arbitration with respect to such matter by a
Party. If the Parties have not selected a mutually agreeable arbitrator in
accordance with the provisions and deadlines set forth in this Section 11.1(b),
then such arbitrator shall be chosen in accordance with the Commercial
Arbitration Rules (“Rules”) of the American Arbitration Association (“AAA”) (the
arbitrator selected in accordance with this Section 11.1(b), the “Arbitrator”).
(c)    The Arbitrator’s determination shall be made within twenty (20) days
after submission of the Disputed Matters or Arbitrable Matter, as applicable, to
it and shall be binding on and non-appealable by the Parties.
(d)    In making his determination with respect to any Disputed Matter, the
Arbitrator shall be bound by the rules set forth in Article V and, subject to
the foregoing, may consider such other matters as in the opinion of the
Arbitrator are necessary to make a proper determination; provided, however, that
with respect to any Disputed Matter related to any Title Defect Amount, Title
Benefit Amount or Environmental Defect Amount, the Arbitrator shall not award
Buyer (or Seller, if applicable) a greater amount than the amount claimed by
Buyer (or Seller, if applicable) in its Title Notice or Environmental Notice, as
applicable.
(e)    With respect to any Disputed Matter, the Arbitrator shall act as an
expert for the limited purpose of determining such specific Disputed Matter,
and, unless the Disputed Matter relates to a Title Defect Amount, a Title
Benefit Amount or an Environmental Defect Amount, may not award damages,
interest or penalties to either Party with respect to any Disputed Matter.
Notwithstanding the immediately preceding sentence, the Arbitrator may, however,
award reasonable costs, including attorney fees and fees and expenses associated
with the Arbitrator, to the Party determined by the Arbitrator to be the
prevailing Party in the arbitration of any Disputed Matter or Arbitrable Matter,
as applicable. Within ten (10) days after the Arbitrator delivers written notice
to Buyer and Seller of its award, (A) Buyer shall pay to Seller the amount, if
any, so awarded by the Arbitrator to Seller and (B) Seller shall pay to Buyer
the amount, if any, so awarded by the Arbitrator to Buyer.
Section 11.2    Location. Any arbitration hearing, legal proceeding or action to
enforce arbitration or otherwise shall be held in Oklahoma City, Oklahoma,
unless another place is determined to be mutually acceptable to the Arbitrator
and the Parties.

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Section 11.3    Rules. The Arbitrator shall settle all Disputed Matters and
Arbitrable Matters, in accordance with the Rules of the AAA to the extent such
Rules do not conflict with the terms of this Agreement.
Section 11.4    Hearings. Except as otherwise provided in Section 11.1 with
respect to a Disputed Matter, the Arbitrator promptly shall hear and determine
(after giving the Parties due notice of the hearing and a reasonable opportunity
to be heard) the questions submitted and shall render a decision within sixty
(60) days after notifying the Parties that the arbitration hearings have been
closed or, if oral hearings have been waived, from the date of the transmittal
of the Parties’ final statements and proofs to the Arbitrator. Notwithstanding
anything to the contrary set forth herein, the Arbitrator shall finally
determine all Disputed Environmental Matters by, on or before the Cure Deadline.
Section 11.5    Jurisdiction of Provisions. The Arbitrator shall not have
jurisdiction or authority to add to, detract from or alter in any way the
provisions of this Agreement. Pending the final decision of the Arbitrator of
any Disputed Matter or Arbitrable Matter, as applicable, both Parties will
proceed diligently with performance of all contractual obligations, including
the payment of all sums not in dispute, required by this Agreement.
Notwithstanding the foregoing, the Parties reserve the right to apply to any
court of competent jurisdiction for the purpose of obtaining security or other
provisional relief to satisfy or effectuate an eventual arbitration award,
including attachment and injunctive relief. The commencement of any action for
such relief in aid of arbitration shall not constitute a waiver of the right to
arbitration nor shall it prejudice in any way the right to proceed to
arbitration.
Section 11.6    Written Decision or Award. The written decision or award of the
Arbitrator shall be final and binding upon the Parties and the Parties shall
abide by and comply with such decision and a judgment may be rendered upon such
decision or award in a court of competent jurisdiction. Unless apportioned
otherwise by the Arbitrator under Section 11.1 or 11.7, Buyer and Seller shall
equally bear the cost of the services and expenses of the Arbitrator and all
other costs of the arbitration proceedings.
Section 11.7    Authority of Arbitrator. The Arbitrator shall be authorized to
consider only issues that this Agreement expressly requires to be submitted to
arbitration. The Arbitrator shall have the authority to determine whether the
Arbitrator is authorized by this Agreement to consider a matter submitted for
arbitration. If the Arbitrator concludes that he has no such authority, it shall
cease consideration of that matter and so notify both Parties. The Arbitrator
shall have the authority to equitably apportion the costs and expenses of any
arbitration between Buyer and Seller. The Arbitrator shall have no authority to
award incidental, indirect, special, consequential (including lost profits or
other consequential or business interruption damages or any other damages not
measured by actual damages), multiple, statutory, punitive or exemplary damages
with respect to any dispute arising under, related to, or in connection with
this Agreement, the breach hereof or the transactions contemplated hereby. This
limitation of losses and damages shall apply to any arbitration no matter when
the proceeding is initiated and shall survive the termination of this Agreement
without limit.
ARTICLE XII
TERMINATION

Section 12.1    Termination. This Agreement and the transactions contemplated
hereby may only be terminated on or before the Closing and only:
(a)    by Seller, if the conditions set forth in Section 7.1 are not satisfied
(or waived in writing by Seller) as of the Closing;

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(b)    by Buyer, if the conditions set forth in Section 7.2 are not satisfied
(or waived in writing by Buyer) as of the Closing; and
(c)    by the mutual written agreement of Buyer and Seller.
Section 12.2    Liabilities upon Termination.
(a)    If Seller terminates this Agreement pursuant to Section 12.1(a) because a
condition set forth in Section 7.1(a) was not satisfied, then Seller shall be
entitled to retain the Performance Deposit, and any accrued interest thereon, as
liquidated damages. It is expressly stipulated by the Parties that the actual
amount of damages resulting from such a termination would be difficult if not
impossible to determine accurately because of the unique nature of this
Agreement, the unique nature of the Properties, the uncertainties of applicable
commodity markets and differences of opinion with respect to such matters, and
that the liquidated damages provided for herein are a reasonable estimate by the
Parties of such damages. In such event, in exchange for retention of the
Performance Deposit, Seller irrevocably disclaims, waives, and releases any and
all claims against Buyer and its affiliates arising in connection with this
Agreement and any of the transactions contemplated hereby.
(b)    If this Agreement is terminated for any reason other than as set forth in
Section 12.2(a), then the Performance Deposit, and any accrued interest thereon,
shall be returned by Seller to Buyer.
Section 12.3    Confidentiality Agreement. The Parties acknowledge and agree
that that certain Confidentiality Agreement, dated as of May 4, 2017, by and
between Seller and Buyer (the “Confidentiality Agreement”) shall remain in
effect following the Execution Date and any termination of this Agreement in
accordance with this Article XII; provided, that if the Closing shall occur,
then the Confidentiality Agreement shall terminate as of the Closing and be of
no further force and effect thereafter.

ARTICLE XIII
MISCELLANEOUS
Section 13.1    Notices. All notices and communications required or permitted
under this Agreement shall be in writing and shall be sufficiently given,
effective upon receipt, if (a) personally delivered in writing, (b) mailed by
registered or certified mail, postage prepaid, or bonded overnight carrier, (c)
sent by electronic mail with a portable document format (.pdf) of the notice or
other communication attached (with the original sent by U.S. mail the same day
such electronic mail is sent) or (d) communicated by facsimile with confirmation
of a successful transmission, to the following address for each Party:
Buyer:            Abraxas Petroleum Corporation
18803 Meisner Drive
San Antonio, Texas 78258
Phone:    210-757-9855
Fax:    210-495-1107
Attention: Stephen T. Wendel, VP Land and Marketing
Email: swendel@abraxaspetroleum.com

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

Abraxas Petroleum Corporation
18803 Meisner Drive
San Antonio, Texas 78258
Phone:    210-757-9835

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Fax:    210-918-6675
Attention: Mr. Geoffrey King, Vice President and CFO

Seller:            Devon Energy Production Company, L.P.
333 West Sheridan Avenue
Oklahoma City, Oklahoma 73102
Phone: (405) 228-4800
Fax: (405) 228-4358
Attention: Catherine Lebsack, Vice President, Land
Email: cathy.lebsack@dvn.com

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

Devon Energy Production Company, L.P.
333 West Sheridan Avenue
Oklahoma City, Oklahoma 73102
Phone: (405) 228-4800
Fax: (405) 228-8825
Attention: Steven Welch, Associate General Counsel
Email: steven.welch@dvn.com
Notwithstanding the foregoing, any notice required or permitted under this
Agreement will be effective if given verbally within the time period provided,
so long as such verbal notice is followed by written notice thereof in the
manner provided in this Section 13.1 within twenty four (24) hours following the
end of such time period. Any Party may, by written notice so delivered to the
other Party in accordance with this Section 13.1, change the address or
individual to which delivery of any communication or notice under this Agreement
shall be made to such Party.
Section 13.2    Amendments and Severability. No provision of this Agreement may
be amended, modified or waived, except by an instrument in writing executed, by
Buyer and Seller in the case of amendment or modification, or, in the case of a
waiver, by the Party to whom the obligation waived was owed. The invalidity of
any one or more provisions of this Agreement shall not affect the validity of
this Agreement as a whole, and in case of any such invalidity, this Agreement
shall be construed as if the invalid provision had not been included herein.
Section 13.3    Assignment. Except as set forth in Section 13.7 and except for
assignments by Buyer to an affiliate of Buyer, this Agreement may not be
assigned by either Party without the prior written consent of the other Party.
Any such assignment without the other party’s prior written consent will be null
and void. Notwithstanding any permitted assignment by a Party hereunder, such
Party shall not be released from its obligations hereunder without the written
consent of the other Party.
Section 13.4    Interpretation.
(a)    Headings. The headings of the Articles and Sections of this Agreement are
for guidance and convenience of reference only and shall not limit or otherwise
affect the interpretation of any of the terms or provisions of this Agreement.
(b)    Construction. Unless the context requires otherwise: (i) the gender (or
lack of gender) of all words used in this Agreement includes the masculine,
feminine and neuter; (ii) references to Articles, Sections, Exhibits and
Schedules refer to Articles, Sections, Exhibits and Schedules of this Agreement;
(iii) references to laws refer to such laws as they may be amended from time to
time, and references to

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particular provisions of a law include any corresponding provisions of any
succeeding law; (iv) references to money refer to legal currency of the United
States of America; (v) the word “including” shall mean “including, without
limitation”; and (vi) all capitalized terms defined herein are equally
applicable to both the singular and plural forms of such terms.
(c)    Exhibits and Schedules. All Exhibits and Schedules attached to or
referred to in this Agreement are incorporated into and made a part of this
Agreement. Any matter disclosed on any Schedule shall be deemed disclosed on all
Schedules.
(d)    Not to be Construed Against Drafter. The Parties acknowledge that they
have had an adequate opportunity to review each and every provision contained in
this Agreement and to submit the same to legal counsel for review and comment,
including the waivers and indemnities contained herein. Based on said review and
consultation, the Parties agree with each and every term contained in this
Agreement. Based on the foregoing, the Parties agree that the rule of
construction that a contract be construed against the drafter, if any, shall not
be applied in the interpretation and construction of this Agreement.
Section 13.5    Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Texas, excluding any choice of law rules which
may direct the application of the laws of another jurisdiction,.
Section 13.6    Announcements. Seller and Buyer shall consult with each other
with regard to all press releases and other announcements issued at or prior to
the Closing concerning this Agreement or the transactions contemplated hereby
and, except as may be required by applicable laws or the applicable rules or
regulations of any governmental agency or stock exchange, neither Buyer nor
Seller shall issue any such press release or other publicity without the prior
written consent of the other Party.
Section 13.7    Like-Kind Exchange. Buyer and Seller agree that either or both
of Seller and Buyer may elect to treat the acquisition or sale of the Properties
as an exchange of like-kind property under Section 1031 of the Code (an
“Exchange”), provided that the Closing shall not be delayed by reason of the
Exchange. Each Party agrees to use reasonable efforts to cooperate with the
other Party in the completion of such an Exchange including an Exchange subject
to the procedures outlined in Treasury Regulation § 1.1031(k)‑1 and/or Internal
Revenue Service Revenue Procedure 2000‑37. Each of Seller and Buyer shall have
the right at any time prior to Closing to assign all or a part of its rights
under this Agreement to a qualified intermediary (as that term is defined in
Treasury Regulation § 1.1031(k)‑1(g)(4)(iii)) or an exchange accommodation
titleholder (as that term is defined in Internal Revenue Service Revenue
Procedure 2000‑37) to effect an Exchange. In connection with any such Exchange,
any exchange accommodation titleholder shall have taken all steps necessary to
own the Properties under applicable law.  Each Party acknowledges and agrees
that neither an assignment of a Party’s rights under this Agreement nor any
other actions taken by a Party or any other person in connection with the
Exchange shall release either Party from, or modify, any of its liabilities and
obligations (including indemnity obligations to the other Party) under this
Agreement, and neither Party makes any representations as to any particular Tax
treatment that may be afforded to any other Party by reason of such assignment
or any other actions taken in connection with the Exchange.  Either Party
electing to treat the acquisition or sale of the Properties as an Exchange shall
be obligated to pay all additional costs incurred hereunder as a result of the
Exchange, and in consideration for the cooperation of the other Party, the Party
electing Exchange treatment shall agree to pay all costs associated with the
Exchange and to indemnify and hold the other Party, its affiliates, and their
respective former, current and future partners, members, shareholders, owners,
officers, directors, managers, employees, agents and representatives harmless
from and against any and all liabilities and Taxes arising out of, based upon,
attributable to or resulting from the Exchange or transactions or actions taken
in connection with the Exchange that would not have been incurred by the other
Party but for the electing Party’s Exchange election.

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Section 13.8    Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire understanding between the Parties with respect
to the subject matter hereof, superseding all negotiations, prior discussions
and prior agreements and understandings relating to such subject matter, whether
oral or written.
Section 13.9    Parties in Interest. This Agreement shall be binding upon, and
shall inure to the benefit of, the Parties and their respective successors and
permitted assigns. Except with respect to Sections 5.2(b) and 5.10(d) and
Article X, nothing contained in this Agreement, express or implied, is intended
to confer upon any other person or entity (other than the Parties, and their
respective successors and permitted assigns) any benefits, rights or remedies.
Section 13.10    Waiver. Except as set forth in Section 13.2, the failure of a
Party hereto to insist on the strict performance of any provision of this
Agreement or to exercise any right, power or remedy upon a breach thereof shall
not constitute a waiver of any provisions of this Agreement or limit such
Party’s right thereafter to enforce any provision or exercise any right.
Section 13.11    Conspicuousness of Provisions. The Parties acknowledge and
agree that the provisions contained in this Agreement that are set out in “bold”
and/or all capital letters satisfy the requirement of the “express negligence
rule” and any other requirement at law or in equity that provisions contained in
a contract be conspicuously marked or highlighted.
Section 13.12    Counterparts. This Agreement may be executed by Seller and
Buyer in any number of counterparts, each of which shall be deemed an original
instrument, but all of which together shall constitute one and the same
instrument.
Section 13.13    Waiver of Jury Trial; Submission to Jurisdiction.
(a)    SUBJECT TO THE PROVISIONS OF ARTICLE XI, THE PARTIES IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO A TRIAL BY JURY
WITH RESPECT TO ANY ACTION, SUIT OR OTHER LEGAL PROCEEDING BASED ON, RELATED TO,
OR ARISING OUT OF (IN WHOLE OR IN ANY PART IN ANY WAY) THIS AGREEMENT (AN
“ACTION”).
(b)    SUBJECT TO THE PROVISIONS OF ARTICLE XI, WITH RESPECT TO ANY ACTION, EACH
PARTY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE STATE DISTRICT COURT FOR
HARRIS COUNTY, TEXAS OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION MAY BE HEARD AND DETERMINED IN SUCH TEXAS STATE OR FEDERAL COURT.
EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION.
THE PARTIES FURTHER AGREE, TO THE EXTENT PERMITTED BY LAW, THAT A FINAL AND
UNAPPEALABLE JUDGMENT AGAINST ANY OF THEM IN ANY ACTION CONTEMPLATED ABOVE SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON THE
JUDGMENT, A CERTIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND
AMOUNT OF SUCH JUDGMENT.

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Section 13.14    Specific Performance. The Parties agree that if any of the
provisions of this Agreement are not performed by a Party in accordance with
their specific terms, the other Party shall be entitled to specific performance
of the terms hereof, in addition to any other remedy available at law or in
equity.

Signature Page Follows

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