AGREEMENT
 FOR
PURCHASE AND SALE
 OF
ASSETS





BY AND
BETWEEN





FOREST
OIL CORPORATION





As
Seller,





FOREST
OIL PERMIAN CORPORATION





As
Seller,





LINN
OPERATING, INC.
 
 As
Purchaser





AND





LINN
ENERGY HOLDINGS, LLC





As
Purchaser,





Dated as
of August 5, 2009


TABLE
OF CONTENTS





ARTICLE
      I
            
            1PURCHASE
      AND SALE
            1Section
      1.1
            Purchase
      and Sale
            1Section
      1.2
            Assets
            1Section
      1.3
            Excluded
      Assets
            3ARTICLE
      II
            
            4PURCHASE
      PRICE
            
            4Section
      2.1
            Purchase
      Price
            4Section
      2.2
            Performance
      Deposit
            4Section
      2.3
            Allocation
      of the Purchase Price
            5Section
      2.4
            Adjustment
      to Purchase Price
            5Section
      2.5
            Payment
      and Calculation of Estimated Final Purchase Price; Payment at
      Closing
            7ARTICLE
      III
            
            7ASSET
      INSPECTION AND TITLE EXAMINATION
            7Section
      3.1
            Access
      to Records and Properties of Seller
            7Section
      3.2
            On-Site
      Tests and Inspections
            7Section
      3.3
            Title
      Matters
            8Section
      3.4
            Title
      Adjustments
            11Section
      3.5
            Casualty
      Loss
            12Section
      3.6
            Identification
      of Additional Defective Interests
            13Section
      3.7
            Termination
      Due to Title Matters and Conditions
            14Section
      3.8
            Title
      Benefits
            14ARTICLE
      IV
            
            15SELLER'S
      REPRESENTATIONS AND WARRANTIES
            15Section
      4.1
            Organization,
      Standing and Power
            15Section
      4.2
            Authority
      and Enforceability
            15Section
      4.3
            Claims
      Affecting the Assets
            16Section
      4.4
            Claims
      Affecting the Sale
            16Section
      4.5
            No
      Demands
            17Section
      4.6
            Taxes
            17Section
      4.7
            Leases
            17Section
      4.8
            Non-Foreign
      Representation
            18Section
      4.9
            Commitments
      for Expenditures
            18Section
      4.10
            Compliance
      with Laws
            18Section
      4.11
            Material
      Contracts
            18Section
      4.12
            Payments
      for Production and Imbalances
            18Section
      4.13
            Governmental
      Authorizations
            19Section
      4.14
            Payout
      Balances
            19Section
      4.15
            Bankruptcy
            19Section
      4.16
            Brokerage
      Fees
            19





ii





ARTICLE
      V
            
            20PURCHASER'S
      REPRESENTATIONS AND WARRANTIES
            20Section
      5.1
            Organization,
      Standing and Power
            20Section
      5.2
            Authority
      and Enforceability
            20Section
      5.3
            Independent
      Evaluation
            21Section
      5.4
            Suits
      Affecting the Sale
            21Section
      5.5
            Eligibility
            21Section
      5.6
            Financing
            21ARTICLE
      VI
            
            21ASSUMPTION
      OF OBLIGATIONS AND INDEMNIFICATION
            21Section
      6.1
            Assumption
      of Certain Liabilities and Obligations by Purchaser
            21Section
      6.2
            Indemnification
      by Purchaser
            22Section
      6.3
            Indemnification
      by Seller
            22Section
      6.4
            Interpretation
            23Section
      6.5
            Notices
            24Section
      6.6
            Tax
      Treatment of Indemnification Amounts
            25ARTICLE
      VII
            
            25SELLER'S
      OBLIGATIONS PRIOR TO CLOSING
            25Section
      7.1
            Restrictions
      on Operations
            25Section
      7.2
            Seller's
      Operations
            27Section
      7.3
            Operated
      Assets
            27Section
      7.4
            Contract
      Operating, Marketing and Financial Services Agreement
            27ARTICLE
      VIII
            
            27ADDITIONAL
      AGREEMENTS OF THE PARTIES
            28Section
      8.1
            Government
      Reviews and Filings
            28Section
      8.2
            Confidentiality
            28Section
      8.3
            Taxes
            28Section
      8.4
            Receipts
      and Credits
            31Section
      8.5
            Suspense
      Accounts
            31ARTICLE
      IX
            
            31CONDITIONS
      TO CLOSING
            31Section
      9.1
            Seller's
      Conditions
            31Section
      9.2
            Purchaser's
      Conditions
            32ARTICLE
      X
            
            33RIGHT
      OF TERMINATION AND ABANDONMENT
            33Section
      10.1
            Termination
            33Section
      10.2
            Liabilities
      Upon Termination
            33ARTICLE
      XI
            
            34CLOSING
      MATTERS
            34Section
      11.1
            Time
      and Place of Closing
            34Section
      11.2
            Closing
      Obligations
            34





iii





ARTICLE
      XII
            
            35POST-CLOSING
      OBLIGATIONS
            35Section
      12.1
            Post-Closing
      Adjustments
            35Section
      12.2
            Files
      and Records
            36Section
      12.3
            Further
      Assurances
            36ARTICLE
      XIII
            
            36ENVIRONMENTAL
      MATTERS
            36Section
      13.1
            Purchaser
      Acknowledgment Concerning Possible Contamination of the
    Assets
            36Section
      13.2
            Adverse
      Environmental Conditions
            37Section
      13.3
            Disposal
      of Materials, Substances, and Wastes; Compliance with Law
            39ARTICLE
      XIV
            
            39EMPLOYEE
      MATTERS
            39Section
      14.1
            Continuing
      Employees
            39Section
      14.2
            No
      Obligation to Hire Seller Employees
            39Section
      14.3
            Interview,
      Screening, and Offers to Seller Employees
            40Section
      14.4
            Employee
      Benefits
            40Section
      14.5
            Control
      of Seller Employees
            42Section
      14.6
            Solicitation
      of Continuing Employees
            42Section
      14.7
            Waiver
      of Restrictions on Continuing Employees
            43Section
      14.8
            No
      Third Party Beneficiaries
            43ARTICLE
      XV
            
            43MISCELLANEOUS
            
            43Section
      15.1
            Notices
            43Section
      15.2
            Binding
      Effect
            44Section
      15.3
            Counterparts
            44Section
      15.4
            Expenses
            44Section
      15.5
            Section
      Headings
            44Section
      15.6
            Entire
      Agreement
            44Section
      15.7
            Conditions
            45Section
      15.8
            Governing
      Law
            45Section
      15.9
            Assignment
            45Section
      15.10
            Public
      Announcements
            45Section
      15.11
            Notices
      After Closing
            45Section
      15.12
            Waiver
      of Compliance with Bulk Transfer Laws
            46Section
      15.13
            Waiver
            46Section
      15.14
            Bonds
            47




iv





SCHEDULES







SCHEDULE
A-1


Description
of Properties


SCHEDULE
A-2


Wells


SCHEDULE
A-3


Agreements


SCHEDULE
B


Value
Allocation


SCHEDULE
C


Suits
and Claims


SCHEDULE
D


Transition
Services Agreement


SCHEDULE
E


Outstanding
AFE's


SCHEDULE
F-1


General
Assignment and Bill of Sale Form


SCHEDULE
F-2


Assignment
Form


SCHEDULE
G


Environmental
Conditions


SCHEDULE
1.3


Excluded
Assets


SCHEDULE
2.3


TANGIBLE/INTANGIBLE
ASSET ALLOCATION


SCHEDULE  3.6


PREFERENTIAL
RIGHTS TO PURCHASE


SCHEDULE  4.10


LAW
VIOLATIONS


SCHEDULE  4.11


UNPAID
OBLIGATIONS


SCHEDULE  4.12(a)


TAKE OR
PAY OBLIGATIONS


SCHEDULE  4.12(b)


IMBALANCES


SCHEDULE  4.13


MISSING
PERMITS


SCHEDULE  4.14


PAYOUT
BALANCES


SCHEDULE
15.14


BONDS AND
PERMITS





v





AGREEMENT
FOR PURCHASE


AND
SALE OF ASSETS








This
Agreement for Purchase and Sale of Assets (the "Agreement"), dated as of August
5 2009, is made and entered into by and among Forest Oil Corporation, a New York
corporation, and Forest Oil Permian Corporation, a Delaware corporation
(collectively "Seller"), and Linn Operating, Inc. a Delaware corporation and
Linn Energy Holdings, LLC a Delaware limited liability company (collectively
"Purchaser").





RECITALS





A.          Seller
desires to sell to Purchaser the assets, properties and rights hereinafter
described upon the terms and subject to the conditions, exceptions and
reservations hereinafter set forth;





B.           Purchaser
desires to purchase from Seller such assets, properties and rights as
hereinafter set forth upon the terms and subject to the conditions, exceptions
and reservations hereinafter set forth; and





C.           In
consideration of the premises and of the mutual promises, representations,
warranties, covenants, conditions and agreements contained herein, Seller and
Purchaser, intending to be legally bound by the terms hereof, agree as
follows:







ARTICLE
I




PURCHASE
AND SALE







Section
      1.1
            Purchase and
      Sale.





Subject
to the provisions of this Agreement, Seller agrees to sell and convey at the
Closing (as defined in Section 11.1), and Purchaser agrees to purchase and
accept at the Closing, such conveyance to be effective for all purposes as of
7:00 a.m. at the location of each of the respective Assets on July 1, 2009 (the
"Effective Time"), all of the following, less and except the Excluded Assets (as
hereinafter defined), which shall be herein referred to collectively as the
"Assets".





Section
      1.2
            Assets.





The
Assets shall mean the following:





(a)  All
right, title and interest of Seller in and to all oil and gas leases, other
similar leases, mineral interests, royalties, and overriding royalties, whether
producing or non-producing, as described on Schedule A-1 attached hereto (the
"Leases"), and any other rights and interests of any type in, on or under or
relating to the lands also described on Schedule A-1 or in any of the Leases
(the "Land"), and including any and all right, title and interest of Seller in
and to the oil, gas and other hydrocarbons and other products produced in
association therewith in, on or under any of the foregoing, and all oil and gas
wells and injection and disposal wells located on any of the foregoing, or used
or useful in connection therewith, or on lands pooled or unitized therewith,
including, without limitation, the wells described in Schedule A-2 attached
hereto (the "Wells");





(b)  All
right, title and interest of Seller in, to and under or derived from all
presently existing or proposed unitization, pooling and communitization
agreements, declarations and orders, and the properties covered and the units
created or to be created thereby (including, but not limited to, all units
formed or to be formed under orders, regulations, rules or other official
actions of any federal, state or other governmental agency having jurisdiction)
including without limitation, the agreements, declarations, orders, properties
and units described in Schedule A-3 attached hereto to the extent that they
relate to or affect all or any part of the Leases , Lands or Wells ("Unit
Agreements") ;





(c)  Subject
to any and all applicable consents to assign and other limitations on Seller’s
rights to assign, all right, title and interest of Seller in, to and under or
derived from all contracts, agreements, and instruments to the extent that the
relate to or affect any of the Leases, Lands, Wells or Unit Agreements,
including presently existing and effective oil, gas liquids, condensate,
casinghead gas and gas sales, purchase, exchange, gathering, transportation and
processing contracts, operating agreements, joint venture agreements, farmout
agreements, partnership agreements, settlement agreements and all other
agreements and instruments, including without limitation the agreements,
instruments, and contracts described in Schedule A-3 attached
hereto;





(d)  All
right, title and interest of Seller in or to all personal property, fixtures,
equipment leases, improvements, and other personal property, whether real,
personal, or mixed (including, but not limited to, well equipment, casing,
tubing, tanks, rods, tank batteries, boilers, buildings, pumps, motors,
machinery, injection facilities, disposal facilities, field separators and
liquid extractors, compressors, pipelines, gathering systems, docking
facilities, air service facilities, helicopter facilities, power lines,
telephone and telegraph lines, roads, and field processing plants, field offices
and office furnishings related thereto, field office leases, equipment leases,
trailers and all other appurtenances thereunto belonging), (the "Equipment") and
in and to all easements, permits, licenses, servitudes, rights-of-way, surface
leases and other surface rights, to the extent now being used or proposed to be
used in connection with the exploration, development, operation or maintenance
of the properties and interests described in subsections (a), (b) and (c) of
this Section 1.2, or now being used or proposed to be used in connection with
the


2


producing,
treating, processing, storing, gathering, transporting or marketing of oil, gas
and other hydrocarbons and other products produced in association therewith
attributable to such properties or interests, and all contract rights (including
rights under leases to third parties) related thereto (the "Easements") and in
and to all natural gas, crude oil, condensate or other products produced from
the properties described or referred to in subsection (a) of this Section 1.2
placed into storage or into pipelines (the "Products");





(e)  All
of Seller's right, title and interest in and to any production imbalances or
balancing agreements relating to any of the Leases or otherwise arising by
virtue of the fact that Seller may not have taken or marketed its full share of
oil, gas and other hydrocarbons and other products produced in association
therewith attributable to its ownership prior to the Effective
Time;





(f)  
Subject to the provisions of Section 1.3, all of Seller's right, title and
interest in and to all causes of action, judgments, pending litigation, claims
and demands set forth on Schedule C; and





(g)  Copies
of all of Seller’s accounting records and books and files relating to any of the
foregoing matters set forth in this Section 1.2 including, without limitation,
all production records, operating records, correspondence, lease records, well
records, and division order records; prospect files; title records (including
abstracts of title, title opinions and memoranda, and title curative documents
related to the Leases and Wells), contracts, electric logs, core data, pressure
data, decline curves, graphical production curves, and a non-exclusive license
to all geophysical data owned by Seller (collectively, the "Records"); provided,
however, that the Records shall not include any interpretive information,
documents, or reports, shall not include any Records that Seller is not
contractually or legally permitted to assign, and, except as specifically
otherwise provided in Article XIV, shall not include payroll or personnel
records; and provided, further, that Seller shall be entitled to retain copies
of all accounting records and other files that Seller reasonably believes it
will need access to for future audit, tax, or reporting
requirements.





Section
      1.3
            Excluded
      Assets.





Seller
shall reserve and retain all of the Excluded Assets.  "Excluded
Assets" shall mean:





(a)  
all of Seller’s corporate minute books, accounting and financial records, and
other business records that relate to Seller’s business generally (including the
ownership of the Assets);


(b) 
all trade credits, all accounts, suspended funds not otherwise specifically
accounted for pursuant to Section 8.5, below, receivables (including from the
results of audits), and all other proceeds, income or revenues attributable to
the Assets with respect to any period of time prior to the Effective
Time;


3


(c) 
 all rights and interests of Seller (A) under any policy or agreement of
insurance or indemnity, (B) under any bond or (C) to any insurance or
condemnation proceeds or awards arising, in each case, from acts, omissions or
events, or damage to or destruction of property occurring  prior to
the Effective Time;


(d)  
all Hydrocarbons produced and sold from the Assets with respect to all periods
prior to the Effective Time;


(e)  
all claims of Seller for refunds of or loss carry forwards with respect to (A)
production or any other taxes attributable to any period prior to the Effective
Time, (B) income or franchise taxes or (C) any taxes attributable to the
Excluded Assets;


(f)   
all personal computers and associated peripherals and all radio and telephone
equipment;


(g)  
all of Seller’s computer software, patents, trade secrets, copyrights, names,
trademarks, logos and other intellectual property;


(h)  
all documents and instruments of Seller that may be protected by an
attorney-client privilege other than title opinions;


(i)   
all data that cannot be disclosed to Purchaser as a result of confidentiality
arrangements under agreements with third parties;


(j)   
all hedging transactions and gains or losses attributable to any hedging
activities, whether occurring before or after the Effective Time;


(k)  
all correspondence, reports, analyses and other documents relating to the
transaction contemplated hereby (including without limitation, environmental
reports and analyses), whether internal, with or produced by other prospective
purchasers, produced by consultants or other third parties or otherwise,
and


(l)   
the assets and liabilities listed on Schedule 1.3.





ARTICLE
II




PURCHASE
PRICE







Section
      2.1
            Purchase
      Price.


The
aggregate purchase price payable by Purchaser to Seller for the Assets shall be
Ninety-Five Million Dollars ($95,000,000.00) (the "Preliminary Purchase Price"),
subject to adjustment as set forth in Section 2.4 below.





Section
      2.2
            Performance
      Deposit.




Upon
execution of this Agreement, Purchaser shall pay to Seller by wire transfer a
deposit in the amount of Nine Million, Five-Hundred Thousand Dollars
($9,500,000.00) ("Performance Deposit") to be held by Seller in accordance with
this Agreement.  In the event that the transactions contemplated by
this Agreement are consummated, the Performance Deposit shall be applied to the
Purchase Price as set forth in Section 2.5(b) below.  In the event
this Agreement is terminated, the Performance Deposit shall be applied in
accordance with the provisions of Article X.


4


Section
      2.3
            Allocation of the
      Purchase Price.




(a)           The
Preliminary Purchase Price shall be allocated among the Leases and equipment
included in the Assets in accordance with Section
8.3(b) andthe
allocations set forth on Schedule B.  Any adjustments to the purchase
price under Section 2.4 and Section
12.1shall
correspondingly (as appropriate) adjust the allocations set forth on Schedule
B.







(b)           On
or before the Closing Date, Seller and Purchaser shall agree in writing as to
the allocation of the Final Purchase Price among the Assets under the
methodology required by Section 1060 of the Internal Revenue Code of 1986, as amended (the"Code").  Such
agreed allocation shall be set forth on Schedule 2.3 attached
hereto.  Seller and Purchaser must report the transactions
contemplated hereby on all tax returns, including, but not limited to Form 8594,
in a manner consistent with such allocation.  Any adjustments to the
purchase price under Section 2.4 and Section 12.1shall correspondingly (as appropriate) adjust the allocations set forth
on Schedule B.





Section
      2.4
            Adjustment to Purchase
      Price.




The
Preliminary Purchase Price shall be adjusted as follows and the resulting amount
shall be herein called the "Final Purchase Price":





(a)           The
Preliminary Purchase Price shall be adjusted upward by the following (on a cash
basis and on a sales, not an entitlement, method of accounting):





(i)  The
amount of all capital expenditures (net to Seller's interest) incurred and paid
by Seller during the period on or after the
Effective Time to the Closing Date ("Adjustment Period") in respect of the
ownership and operation of the Assets;





(ii)  The
amount of all operating costs incurred and paid by Seller (excluding amounts
paid in connection with the transactions contemplated by this Agreement) in
respect of the ownership and operation of the Assets during the Adjustment
Period;





(iii)  The
value (determined by the price most recently paid prior to the Effective Time
for such oil less all applicable deductions including, without limitation, deductions for tank
bottom sediment and water) of all oil in storage above the wellhead as of
the Effective Time which is credited to the Assets, less applicable production
taxes, royalty and other burdens on the production payable on such oil and
subsequently paid by Seller, the amount of oil in storage as of the Effective
Time to be based on gauge reports to the extent available or on alternative
methods to be agreed by the parties.


5


(iv)  The
amount of underproduced volumes of gas attributable to Seller as of the
Effective Time, multiplied by a price of $4.00/Mcf for such production (net of
royalties and taxes) in each case to the extent provided by existing balancing
and other agreements affecting the Assets.





(v)  The
amount of any Title Adjustment which is a net increase in the value of an Asset,
as defined in Section 3.4(b).





(b)           The
Preliminary Purchase Price shall be adjusted downward by the following (on a
cash basis and on a sales, not an entitlement, method of
accounting):





(i)  Amounts
received by Seller for the sale of oil, gas, liquids or other associated
minerals produced during the Adjustment Period (net of any production royalties,
transportation costs and of any production, severance or sales taxes paid or to
be paid by Seller), and all other amounts received or to be received by Seller
relating to the ownership and operation of the Assets during the Adjustment
Period including but not limited to amounts attributable to prepayments, cash
calls, advance payments, gas transportation, take or pay payments and similar
payments;





(ii)  Amounts
received by Seller for the sale, salvage or other disposition during the
Adjustment Period of any property, equipment or rights included in the Assets
without Purchaser having received full payment therefor;





(iii)  All
amounts otherwise received by Seller and attributable to the ownership of the
Assets during the Adjustment Period;





(iv)  An
amount equal to the value of the Assets set forth on Schedule B with respect to
which preferential purchase rights have been exercised in accordance with
Section 3.6;





(v)  The
amount of any Title Adjustment which is a net reduction in the value of an
Asset, as defined in Section 3.4(b);





(vi) An
amount equal to the value of any Casualty Loss as defined in Section 3.5;
and





(vii)  The
amount of overproduced volumes of gas attributable to Seller as of the Effective
Time, multiplied by a price of $4.00/Mcf for such production (net of royalties
and taxes) in each case to the extent provided by existing balancing and other
agreements affecting the Assets.


6


(viii)  An
amount equal to any adjustment set forth in Section 13.2(b), Section 13.2(d),
and 13.2(e).





(c)           It
is Seller’s and Purchaser’s intent that the adjustments under this Agreement to
the Preliminary Purchase Price, and any components of such adjustments, shall
not be applied or computed in a manner that results in duplicative
effect.





Section
      2.5
            Payment and
      Calculation of Estimated Final Purchase Price; Payment at
      Closing.




(a)           Seller
shall prepare and deliver to Purchaser, at least five "Business Days" (which
term shall mean any day except a Saturday, Sunday or other day on which
commercial banks in New York, New York are required or authorized by law to be
closed) prior to the Closing Date, Seller's estimate of the Final Purchase Price
to be paid at Closing, based upon the best
information reasonably available to Seller, (such estimated Final
Purchase Price being herein referred to as the "Estimated Final Purchase
Price"), together with a statement setting forth Seller's estimate of the amount
of each adjustment to the Preliminary Purchase Price to be made pursuant to
Section 2.4.  The parties shall negotiate in good faith and attempt to
agree on such estimated adjustments prior to Closing.





(b)           At
Closing, Purchaser shall pay to Seller the Estimated Final Purchase Price
determined as set forth in Section 2.5(a) less an amount equal to the
Performance Deposit without interest earned thereon.







ARTICLE
III




ASSET
INSPECTION AND TITLE EXAMINATION







Section
      3.1
            Access to Records and
      Properties of Seller.




Between
the date of this Agreement and Closing, Seller agrees, subject to Section 8.2,
to give Purchaser and its representatives full access at all reasonable times to
the Assets and to the Records for inspection and copying at Purchaser's expense
at Seller's office in Denver, Colorado.  To the extent records are
kept or maintained by Seller in other locations, Seller agrees to make same
available at such other locations.





Section
      3.2
            On-Site Tests and
      Inspections.




Seller
shall permit or, in case of any third-party operated wells, use its commercially
reasonable efforts to cause the operator thereof to permit, Purchaser's
authorized representatives to consult with Seller's or third-party operator's
agents and employees during reasonable business hours and to conduct, at
Purchaser's sole risk and expense, on-site inspections, tests and inventories of
the Assets.  Purchasers environmental investigation of
the


7


Properties
shall be limited to conducting a Phase I Environmental Site Assessment in
accordance with the American Society for Testing and Materials (A.S.T.M.)
Standard Practice Environmental Site Assessments: Phase I Environmental Site
Assessment Process (Publication Designation: E1527-05) (“Site Assessment”), and
at Seller’s discretion, shall be accompanied by Seller’s representative. If this
agreement is terminated for any reason, Purchaser shall furnish Seller, free of
cost to Seller, a copy of any written report prepared by or for Purchaser
related to any Site Assessment of the Properties as soon as reasonably
possible.  All environmental reports prepared by or for Purchaser
shall be maintained in strict confidence by Purchaser and shall be used by
Purchaser solely in connection with the evaluation of the Properties or in any
dispute with Seller involving the Properties.  Except as provided in
the preceding sentence, if Closing does not occur, such reports shall not be
disclosed to any other party.  If Closing does not occur, the
foregoing obligation of confidentiality shall survive for five (5) years after
the termination of this Agreement.





Section
      3.3
            Title
      Matters.





(a)           For
the sole purpose of determining the existence of Title Defects prior to the
Closing, Seller warrants that it owns Defensible Title (as defined in Section
3.3(b)) to the Leases except to the extent affected by the litigation described
on Schedule C.





(b)           As
used herein, the term "Defensible Title" to the Assets shall mean such title of
Seller that,:


(i)           is
deducible of record either from the records of the applicable county or parish
clerk and recorder or, in the case of federal leases, from the records of the
applicable office of the Bureau of Land Management, or in the case of state
leases, from the records of the applicable state land office, or from some
combination of the foregoing official records;





(ii)          entitles
Seller to receive not less than the net revenue interest (indicated by the
letters "NRI") of Seller set forth in Schedule B of all oil, gas and associated
liquid and gaseous hydrocarbons produced, saved and marketed from the Leases
throughout the life of such properties;





(iii)         obligates
Seller to bear costs and expenses relating to the maintenance, development and
operation of the Leases in an amount not greater than the working interest
(indicated by the letters "WI") set forth in Schedule B throughout the life of
such properties except to the extent such increase in working interest is
accompanied by a proportionate increase in net revenue interest;
and





(iv)         is
free and clear of encumbrances, liens and defects other than the Permitted
Encumbrances.


8


(c)           The
term "Permitted Encumbrances", as used herein, shall mean:





(1)          lessors'
royalties, overriding royalties, and division orders and sales contracts
covering oil, gas or associated liquid or gaseous hydrocarbons, reversionary
interests and similar burdens if and to the extent the net cumulative effect of
such burdens does not operate to reduce the net revenue interest at any time in
any property to less than the net revenue interest set forth in Schedule
B:





(2)         
preferential rights to purchase and required third-party consents to assignments
and similar agreements with respect to which prior to Closing;





(i)           waivers
or consents are obtained from the appropriate parties, or





(ii)          the
appropriate time period for asserting such rights has expired without an
exercise of such rights;





(3)          liens
for taxes or assessments not yet due or not yet delinquent or, if delinquent,
that are not material and are being contested in good faith in the normal course
of business;





(4)          all
rights to approve, required notices to, filings with, or other actions by
governmental or tribal entities in connection with the sale or conveyance of the
Assets if the same are customarily obtained subsequent to such sale or
conveyance;





(5)          rights
of reassignment, to the extent any exist as of the date of this Agreement, upon
the surrender or expiration of any lease;





(6)          easements,
rights-of-way, servitudes, permits, surface leases and other rights in respect
of surface operations, pipelines, or the like; conditions, covenants or other
restrictions; and easements for pipelines, railways and other easements and
rights-of-way, on, over or in respect of any of the Assets which individually,
or in the aggregate, do not materially adversely affect the ownership,
operation, value or use of the Assets, or any of them;





(7)          all
other liens, charges, encumbrances, contracts, agreements, instruments,
obligations, defects and irregularities affecting the Assets (including, without
limitation, liens of operators relating to


9


obligations
not yet due or pursuant to which Seller is not in default) that do not reduce
the net revenue interest set forth in Schedule B, or do not prevent the receipt
of proceeds of production therefrom, or do not increase the share of costs above
the working interest set forth in Schedule B, or that do not materially
interfere with or detract from the operation, value or use of any of the
properties included within the Assets;





(8)          liens,
if any, to be released at Closing in a form acceptable to
Purchaser;





(9)          the
terms and conditions of all Leases, agreements, orders, pooling or unitization
agreements or declarations included in the Assets or to which the Assets are
subject as long as same do not reduce the net revenue interests for the Assets
listed in Schedule B or do not increase the working interests for the interests
set forth in Schedule B; and





(10)        rights
reserved to or vested in any municipality or governmental, statutory or public
authority to control or regulate any of the Assets in any manner, and all
applicable laws, rules and orders of governmental authority; and





(11)        Materialmen's,
mechanics', repairmen's, employees', contractors', operators' or other similar
liens or charges arising in the ordinary course of business incidental to
construction, maintenance or operation of the Assets





(i)           if
they have not been filed pursuant to law,





(ii)          if
filed, they have not yet become due and payable or payment is being withheld as
provided by law and Seller either indemnifies Purchaser or agrees to reduce the
Preliminary Purchase Price for the amount claimed, or





(iii)         if
their validity is being contested in good faith by appropriate action provided
that Seller either indemnifies Purchaser or agrees to reduce the Preliminary
Purchase Price for the amount claimed.





(d)           The
term "Title Defect" as used herein shall mean any encumbrance, encroachment,
irregularity, defect in or objection to Seller's title to the Leases and Wells
(excluding Permitted Encumbrances) which would result in Seller not having
Defensible Title.


10


Section
      3.4
            Title
      Adjustments.




(a)           "Defective
Interest(s)" shall mean that portion of the Assets (as determined in accordance
with Section 3.4(c)) as to which the warranty stated in Section 3.3(a) is
breached or that Purchaser is otherwise entitled under Sections 3.5 or 3.6 to
treat as a Defective Interest, and of which Seller has been given written notice
by Purchaser not later than five (5) Business Days before Closing or any later
date specified in Section 3.6 for Defective Interests described in that Section
("Defective Interest Notice Date").  Such written notice shall
include





(i)           a
description of the Defective Interest,





(ii)          the
basis for the defect that Purchaser believes causes such Asset to be a Defective
Interest,





(iii)         the
Allocated Value of the affected Asset calculated in accordance with Section
3.4(c), and





(iv)         the
amount by which Purchaser believes the Allocated Value of the affected Asset has
been reduced by the Defective Interest;





provided
however, that any Title Defect (or individual Title Benefit, as defined in
Section 3.8) for which the Title Adjustment, as determined in Section 3.4(c),
below, is less than twenty-five thousand dollars ($25,000) shall not be a
Defective Interest or Title Benefit.  For purposes of determining
Title Adjustments pursuant to this Agreement, and without waiver of Purchaser's
rights under the conveyances of the Assets to be delivered at Closing, Purchaser
shall be deemed to have waived all Title Defects of which Seller has not been
given written notice by the Defective Interest Notice Date.  Prior to
Closing, Seller shall have the option, but not the obligation, to cure any Title
Defect or other breach of title warranty for which timely notice is
given.  If Purchaser desires to attempt to cure any Title Defect,
Seller shall cooperate with Purchaser, prior to the Closing Date, in endeavoring
to cure any such Title Defect.





(b)           Defective
Interests and Title Benefits shall be conveyed to Purchaser hereunder, and the
Preliminary Purchase Price shall be reduced or increased, as the case may be, in
accordance with Section 2.4 by an amount determined in accordance with Section
3.4(c) for such Defective Interests and Title Benefits (which net reduction or
increase, as applicable, shall be called a "Title Adjustment") but only to the
extent that the total amount of all Title Adjustments exceeds one percent (1%)
of the Preliminary Purchase Price, unless prior to the Closing, the basis for
treating such Assets as Defective Interests has been removed in a manner
satisfactory to Purchaser.  For avoidance of doubt, Seller and
Purchaser agree that the foregoing threshold is a deductible.  If
Seller and Purchaser cannot agree to the amount of a Title Adjustment for a
specified Title Defect or Title Benefit, all information relating to the
Defective Interest or Title Benefit


11


shall be
submitted to a title attorney chosen by mutual agreement of the parties, who
shall have a minimum of ten (10) years experience in examining oil and gas
titles, who shall, in good faith, determine the Title Adjustment.





(c)           The
value of each of the Leases and Wells for purposes of determining Purchase Price
adjustments under this Section 3.4 (the "Allocated Value") shall be determined
in accordance with Schedule B which Schedule shall be mutually agreed upon by
the parties.  The amount of the Title Adjustment for a Defective
Interest or Title Benefit shall be the Allocated Value thereof if the Defective
Interest or Title Benefit constitutes the entire property given an Allocated
Value.  If the amount of a Title Adjustment cannot be determined
directly because the Defective Interests or Title Benefit constitute a property
or interest included within, but not totally comprising, the Assets to which an
Allocated Value is given, Purchaser and Seller shall proportionately reduce the
Allocated Value to reflect the present or potential impact of the Title Defect
or Title Benefit.  The amount of any Title Adjustment shall reflect
the anticipated reduction or increase of the Allocated Value for the affected
property caused by the breach of title warranty or Title Benefit, taking into
account the method for arriving at such Allocated Value, the legal and practical
effect of the Title Defect  or Title Benefit or other breach, the
probability of adverse impact of the Title Defect or breach of title warranty on
the use and enjoyment of the property interest affected, and the potential
economic effect of the Title Defect or breach of title warranty or Title Benefit
over the life of the property involved; provided, however that if the Title
Defect is an actual reduction in net revenue interest, , then the amount of the
Title Adjustment shall be the product of the Allocated Value of the Defective
Interest multiplied by a fraction, the numerator of which is the actual net
revenue interest or ownership and the denominator of which is the net revenue
interest or percentage ownership stated on Schedule B.





(d)           Notwithstanding
any claimed Title Defect, Purchaser shall have the right at any time up to the
Closing Date to waive any such claim, and purchase the affected property without
reduction of the Purchase Price.





Section
      3.5
            Casualty
      Loss.




If, prior
to the Closing, any portion of the Wells or related equipment is destroyed or
impaired by fire or other casualty, Purchaser may elect:





(a)           to
treat the Assets so affected by such destruction as Defective Interests in
accordance with Section 3.4, provided however that neither the twenty-five
thousand dollar threshold in Section 3.4(a) nor the 1% of Purchase Price
deductible in Section 3.4(b) will be applicable to the exclusion of such Assets
and the Preliminary Purchase Price will be adjusted downward by the amount of
the Allocated Value for such Asset, or





(b)           to
purchase such Assets notwithstanding any such destruction (without adjustment to
the Preliminary Purchase Price therefor), in which case, Seller shall, at
the


12


Closing,
pay to Purchaser all sums paid to Seller by third-parties (including insurance
proceeds relating thereto) and assign to Purchaser all sums to which Seller is
entitled, as the case may be, by reason of the destruction of such Wells and the
underlying Assets to be assigned to Purchaser and shall assign, transfer and set
over unto Purchaser all of the right, title and interest of Seller in and to any
unpaid awards or other payments from third-parties arising out of the
destruction of such Wells and the Assets to be assigned to
Purchaser.





Prior to
the Closing, Seller shall not voluntarily compromise, settle or adjust any
amounts payable by reason of any destruction of such Wells and the underlying
Assets without first obtaining the written consent of Purchaser.





Section
      3.6
            Identification of
      Additional Defective
Interests.





(a)           Seller has listed all preferential rights to purchase
the Assets on Schedule 3.6.   Seller shall promptly prepare and
send (i) notices to the holders of any required consents to assignment of any
Assets requesting such holder’s consent to assign such Assets to Purchaser and
(ii) notices to the holders of any applicable preferential rights to purchase
any Asset requesting waivers of such preferential rights to purchase; provided,
however, that Purchaser shall have the opportunity to review such notices before
they are sent.   The consideration payable under this Agreement
for any particular Assets for purposes of preferential purchase right notices
shall be the Allocated Value for such Assets. Seller shall use commercially
reasonable efforts to cause such consents and waivers of preferential rights to
purchase (or the exercise thereof) to be obtained and delivered prior to
Closing. Purchaser shall cooperate with Seller in seeking to obtain such
consents and waivers of preferential rights.




(b)           If
any preferential purchase right is exercised prior to or after the Closing,
Purchaser may elect to treat that portion of the Assets affected by such
preferential right as a Defective Interest, subject to the additional provisions
of this paragraph.  If Seller receives notice of such exercise prior
to Closing, Seller shall give Purchaser notice thereof in accordance with
Section 3.4(a) prior to the Closing, in which event the property affected by
such preferential purchase right shall be treated as a Defective Interest;
provided however that neither the twenty-five thousand dollar threshold in
Section 3.4(a) nor the 1% of Purchase Price deductible in Section 3.4(b) will be
applicable to the exclusion of such Assets and the Preliminary Purchase Price
will be adjusted downward by the amount of the Allocated Value for such
Asset.  If Seller or Purchaser receive notice of such exercise after
the Closing, the party receiving such notice shall promptly give notice to the
other party, and Purchaser shall convey the affected property interest to the
holder of the preferential purchase right upon receipt of the Allocated Value
attributable thereto from such party.





(c)           If,
prior to the Closing Date, Purchaser or Seller become aware of any suit, action
or other proceeding before any court or government agency other than those
listed


13


in
Schedule C that would result in loss or impairment of Seller's title to any
portion of the Assets, or a portion of the value thereof, Purchaser may elect to
treat that portion of the Assets affected thereby as a Defective Interest by
giving Seller notice thereof in accordance with Section 3.4(a) no later than the
Closing Date, in which event the procedures specified in Section 3.4 shall apply
to the property affected by such proceeding; provided however that neither the
twenty-five thousand dollar threshold in Section 3.4(a) nor the 1% of Purchase
Price deductible in Section 3.4(b) will be applicable to the exclusion of such
Assets and the Preliminary Purchase Price will be adjusted downward by the
amount of the Allocated Value for such Asset.





(d)           If
with respect to any preferential purchase rights and required third-party
consents to assignment and similar agreements, one or more of the conditions set
forth in Section 3.3(c)(2) has not been met prior to the Closing, Purchaser may
elect to treat that portion of the Assets affected thereby as a Defective
Interest by giving Seller notice thereof in accordance with Section 3.4(a) no
later than the Closing Date, in which event the procedures specified in Section
3.4 shall apply to the property affected by such third-party right; provided
however that neither the twenty-five thousand dollar threshold in Section 3.4(a)
nor the 1% of Purchase Price deductible in Section 3.4(b) will be applicable to
the exclusion of such Assets and the Preliminary Purchase Price will be adjusted
downward by the amount of the Allocated Value for such Asset





Section
      3.7
            Termination Due to
      Title Matters and
Conditions.




If, prior
to Closing, the aggregate amount of the value of (a) all Title Adjustments
asserted in good faith under this Article III and (b) all adjustments for
Conditions pursuant to Section 13.2(b)(i), equals or exceeds twenty percent
(20%) of the Preliminary Purchase Price, then either party, at its option
exercised by the giving of written notice to the other party not later than the
Closing, may elect to terminate this Agreement, in which event Seller and
Purchaser shall be under no obligation to each other with regard to the purchase
and sale of any of the Assets, such termination to be without liability to
either party.  Failure of either party to give timely notice to the
other party of an election to terminate this Agreement pursuant to this Section
3.7 shall be deemed an election not to terminate this Agreement.







Section
      3.8
            Title
      Benefits.




(a)           If
a Party discovers any Title Benefit affecting the Assets, it shall promptly
notify the other Party in writing thereof on or before the expiration of the
Defective Interest Notice Date.   Subject to Section 3.4(a) and 3.4(b), Seller shall be entitled to an upward
adjustment to the Purchase Price pursuant to Section 2.4(a)(vi) with respect to
all Title Benefits, in an amount determined in accordance with Section
3.4(c).  For purposes of this Agreement, the term "Title Benefit"
shall mean Seller’s Net Revenue Interest in any Asset is greater than that set
forth in Schedule B or Seller's Working Interest in any Asset less than that set
forth in Schedule B (without a corresponding decrease in the Net Revenue
Interest) subject to the restriction of
Section


14


3.4(a). Any matters
that may otherwise constitute Title Benefits, but of which neither party has
been specifically notified in accordance with the foregoing, shall be deemed to
have been waived by Seller for all purposes.





(b)           Subject
to Section 3.4(a) and 3.4(b), the aggregate
amount of undisputed Title Benefits shall be netted against the aggregate amount
of undisputed Defective Interests prior to any adjustment of the Purchase Price
at Closing pursuant to Section 2.4.





(c)            If with
respect to a Title Benefit the Parties have not agreed on the amount of the
upward Purchase Price adjustment or have not otherwise agreed on such amount
prior to the Closing Date, Seller or Purchaser shall have the right to elect to
have such Purchase Price adjustment determined pursuant to Section
3.4(b).  If the amount of such adjustment is not determined pursuant
to this Agreement by the Closing, the undisputed portion of the Purchase Price
with respect to the Asset affected by such Title Benefit shall be paid by
Purchaser at the Closing and, subject to Section 3.4(b), upon determination of
the amount of such adjustment, any unpaid portion thereof shall be paid by
Purchaser to Seller or shall be netted against the aggregate amount of any
disputed Title Adjustments that also are determined after Closing.




ARTICLE
IV




SELLER'S
REPRESENTATIONS AND WARRANTIES







As used
in this Article IV when referring to Seller, "Knowledge" means all information
attributed to Seller that is actually known to the following employees of
Seller :  Glen J. Mizenko, Senior Vice President Business
Development & Engineering, Scott Laverde, Vice President Acquisitions &
Divestitures, Leonard Gurule, Senior Vice President Western Region, Ralph
Thomas, Director of Tax, and Stephen Rawlings, Production Manager Western
Region.


Seller
represents and warrants to Purchaser as follows:





Section
      4.1
            Organization, Standing
      and Power.




Forest
Oil Corporation is a corporation duly organized, validly existing and in good
standing under the laws of the state of New York and Forest Oil Permian
Corporation is a corporation duly organized and in good standing under the laws
of the state of Delaware.  Each Seller has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted.   Seller is duly qualified to
carry on its business in each state identified in Schedule A where failure to so
qualify would have a materially adverse effect upon its business or properties
in such state.





Section
      4.2
            Authority and
      Enforceability.




The
execution and delivery by Seller of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by all
necessary


15


corporate
action, on the part of Seller.  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 equity
principles.  Neither the execution and delivery by Seller of this
Agreement nor the consummation of the transactions contemplated hereby, nor
compliance by Seller with any of the provisions hereof, will





(a)           conflict
with or result in a breach of any provision of Seller's certificate of
incorporation or bylaws,





(b)           except
with respect to third-party consents or waivers required in connection with
agreements and properties to be assigned pursuant to this Agreement (it being
understood that Seller will make reasonable efforts to obtain such required
consents or waivers) result in a material default (with due notice or lapse of
time or both) or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license or agreement to which Seller is a party or by which
Seller or any of Seller's properties or assets may be bound or,





(c)           violate
any order, writ, injunction, judgment, decree, statute, rule or regulation
applicable to any Seller, or any Seller's properties or assets, assuming receipt
of all routine governmental consents normally acquired after the consummation of
transactions such as transactions of the nature contemplated by this
Agreement,





except,
in any of (a)-(c), where any such foregoing effect would not be likely to affect
Purchaser’s ability to own, possess, control or enjoy the Assets.





Section
      4.3
            Claims Affecting the
      Assets.




Except as
disclosed on Schedule C, to Seller’s Knowledge, there is no suit, action, claim,
investigation or inquiry by any person or entity or by any administrative agency
or governmental body and no legal, administrative or arbitration proceeding
pending, or to Seller's Knowledge, threatened against or affecting the
Assets.  Except as disclosed on Schedule C, Seller has not received
any notice in writing from any Governmental Body or any other Person claiming
any violation of or noncompliance with any Law with respect to the Assets
(including any such Law concerning the conservation of natural
resources).





Section
      4.4
            Claims Affecting the
      Sale.




Except as
disclosed on Schedule C, to Seller’s Knowledge there is no suit, action, claim,
investigation or inquiry by any person or entity or by any administrative agency
or governmental body and no legal, administrative or arbitration proceeding
pending, or to Seller's Knowledge, threatened against Seller or any Affiliate of
Seller which has affected or could affect Seller's ability to consummate the
transactions contemplated by this Agreement.


16


In this
Agreement, "Affiliate" means any person or entity which controls, is controlled
by or is under common control with, the subject person or entity.





Section
      4.5
            No
      Demands.




Except as
disclosed on Schedule C, Seller has received no notice of any claimed defaults,
offsets or cancellations from any lessors with respect to the Leases, and Seller
has no Knowledge of the existence of any default existing with respect to any of
the Leases or any express or implied term of any Lease.





Section
      4.6
            Taxes.




(a)           To
Seller's Knowledge all ad valorem, real property, personal property, production,
severance, excise and other taxes applicable to the ownership and operation of
the Assets prior to the Effective Time have been or will be duly and timely paid
except as may be contested by Seller in good faith.




(b)           With respect to all taxes related to the Assets, (i) all
material tax returns relating to such taxes required to be filed on or before
the Effective Time by Seller with respect to any taxes for any period ending on
or before the Effective Time have been timely filed with the appropriate
governmental authority, (ii) to Seller’s Knowledge such tax returns are true and
correct in all respects, and (iii) all taxes reported on such tax returns have
been paid or provided for, except those being contested in good
faith.




(c)           With respect to all taxes related to the Assets (i)
there are not currently in effect any extension or waiver by Seller of any
statute of limitations of any jurisdiction regarding the assessment or
collection of any such taxes, and (ii) there are no administrative proceedings
or lawsuits pending against the Assets or Seller with respect to the Assets by
any taxing authority.




(d)           To Seller’s Knowledge, none of the Assets were bound as
of the Effective Time or will be bound at Closing by any tax partnership
agreement or other agreement binding upon Seller that would preclude Seller from
being entitled to dispose of the property.




(e)           There are no liens for taxes encumbering any of the
Assets.





Section
      4.7
            Leases.




To the
Knowledge of Seller:





(a)           The
Leases have been maintained according to their terms, in compliance with the
agreements to which the Leases are subject; and





(b)           The
Leases are presently in full force and effect; and all other oil and gas leases
covering the Lands have expired and are no longer of any force or
effect.


17


Section
4.8             Non-Foreign
Representation.




Seller is
not a non-resident alien, foreign corporation, foreign partnership, foreign
trust or foreign estate (as those terms are defined in the "Code" and the Income Tax Regulations promulgated thereunder (the "Income Tax
Regulations").





Section
      4.9
            Commitments for
      Expenditures.




Except as
set forth on Schedule E there are no outstanding authorities for expenditures
(AFE's) which Seller has received from a third party operator, but has not
responded to. Except as set forth on Schedule E, Seller has not consented to any
AFEs that Seller reasonably anticipates will require expenditures by the owner
of the Assets after the Effective Time in excess of $100,000.00 net to Seller’s
interest.





Section
      4.10
            Compliance with
      Laws.




Except as
disclosed on Schedule 4.10, the Assets operated by Seller are, and Seller’s
operation of the same has been and currently is and to Seller’s Knowledge the
non-operated Assets are and the operation of the non-operated Assets has been
and currently is, in substantial compliance with the provisions and requirements
of all Laws of all Governmental Bodies having jurisdiction with respect to the
Assets.







Section
      4.11
            Material
      Contracts.




(a)           Except
as disclosed on Schedule 4.11(a), to Seller’s Knowledge, Seller has paid its
share of all costs payable by it under the contracts set forth on Schedule A-3,
and all such contracts are in full force and effect and constitute valid and
binding obligations of the parties thereto.  Seller is not in breach
or default (and no situation exists that, which the passing of time or giving of
notice would create a breach or default) under any of such contracts, and no
breach or default by any third party (or situation that, with the passing of
time or giving of notice would create a breach or default) exists, except such
defaults as would not, individually or in the aggregate have a material adverse
effect.





(b)           To
Seller's Knowledge, Schedule A-3 sets forth all of the following contracts,
agreements, and commitments (excluding Leases and surface contracts) to which
any of the Assets will be bound as of the Closing: (i) any agreement with any
Affiliate; (ii) any agreement or contract for the sale, exchange, or other
disposition of Hydrocarbons produced from or attributable to Seller’s interest
in the Assets that is not cancelable without penalty or other material payment
on not more than 30 days prior written notice; (iii) any agreement of or binding
upon Seller to sell, lease, farmout, or otherwise dispose of any interest in any
of the Assets after the date hereof, other than conventional rights of
reassignment arising in connection with Seller’s surrender or release of any of
the Assets; and (iv) any tax partnership agreement of or binding upon Seller
affecting any of the Assets.


18


Section
4.12           Payments for Production and
Imbalances.




(a)           Except
as set forth on Schedule 4.12(a), Seller is not obligated under any contract or
agreement for the sale of gas from the Assets containing a take-or-pay, advance
payment, prepayment, or similar provision, or under any gathering, transmission,
or any other contract or agreement with respect to any of the Assets to gather,
deliver, process, or transport any gas  without then or thereafter
receiving full payment therefor.


(b)           Schedule
4.12(b) sets forth all of Seller’s Imbalances and penalties as of the Effective
Time arising with respect to the Assets and except as disclosed in Schedule
4.12(b) as of the Effective Time (i) no Person is entitled to receive any
portion of the Seller’s Hydrocarbons produced from the Assets or to receive cash
or other payments to "balance" any disproportionate allocation of Hydrocarbons
produced from the Assets under any operating agreement, gas balancing or storage
agreement, gas processing or dehydration agreement, gas transportation
agreement, gas purchase agreement, or other agreements, whether similar or
dissimilar, (ii) Seller is not obligated to deliver any quantities of gas or to
pay any penalties or other amounts, in connection with the violation of any of
the terms of any gas  contract or other agreement with shippers with
respect to the Assets, and (iii) Seller is not obligated to pay any penalties or
other payments under any gas transportation or other agreement as a result of
the delivery of quantities of gas from the Wells in excess of the contract
requirements.





Section
      4.13
            Governmental
      Authorizations.




To
Seller’s Knowledge, and except as disclosed on Schedule 4.13, Seller has (i)
obtained and is maintaining all federal, state and local governmental licenses,
permits, franchises, orders, exemptions, variances, waivers, authorizations,
certificates, consents, rights, privileges and applications therefor (the
"Governmental Authorizations") that are presently necessary or required for the
ownership and operation of the Assets operated by Seller as currently owned and
operated and (ii) operated the Assets operated by Seller in accordance with the
conditions and provisions of such Governmental Authorizations,except,
in each of (i) and (ii) above, to the extent that such failure does not have a
material affect on the Assets or the operation of the same.





Section
      4.14
            Payout
      Balances.




To
Seller’s Knowledge, Schedule 4.14 contains a complete and accurate list of the
status of any "payout" balance, as of the Effective Time, for the Wells and
Units subject to a reversion or other adjustment at some level of cost recovery
or payout (or passage of time or other event other than termination of a Lease
by its terms).


19




Section
      4.15
            Bankruptcy.




To
Seller’s Knowledge, there are no bankruptcy, reorganization, or similar
arrangement proceedings pending, being contemplated by or, to Seller’s
Knowledge, threatened against Seller or any Affiliate.




Section
      4.16
            Brokerage
      Fees.




Purchaser
shall not directly or indirectly have any responsibility, liability or expense,
as a result of undertakings or agreements of Seller, for brokerage fees,
finder’s fees, agent’s commissions or other similar forms of compensation in
connection with this Agreement or any agreement or transaction contemplated
hereby.




ARTICLE
V




PURCHASER'S
REPRESENTATIONS AND WARRANTIES





Section
      5.1
            Organization, Standing
      and Power.




Linn
Energy Holdings, LLC is a Delaware limited liability company duly organized,
validly existing and in good standing under the laws of the state of its
formation and Linn Operating, Inc. is a Delaware corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and each has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being
conducted.  Purchaser is duly qualified to carry on its business in
each state identified in Schedule A where the failure to so qualify would have a
materially adverse effect on Purchaser's business or properties in such
state.





Section
      5.2
            Authority and
      Enforceability.




The
execution and delivery by Purchaser of this Agreement, and the consummation of
the transactions contemplated hereby, have been duly and validly authorized by
all necessary corporate action on the part of Purchaser.  This
Agreement is the valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability and to general equity principles.  Neither the execution
and delivery by Purchaser of this Agreement nor the consummation of the
transactions contemplated hereby, nor compliance by Purchaser with any of the
provisions hereof, will





(a)           conflict
with or result in a breach of any provision of its certificate of incorporation,
formation or bylaws (as applicable),





(b)           result
in a material default (with due notice or lapse of time or both) or give rise to
any right of termination, cancellation or acceleration under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license or
agreement to


20


which
Purchaser is a party or by which it or any of its properties or assets may be
bound or





(c)           violate
any order, writ, injunction, judgment, decree, statute, rule or regulation
applicable to Purchaser, or any of its properties or assets, assuming receipt of
all routine governmental consents normally acquired after the consummation of
transactions such as transactions of the nature contemplated by this
Agreement.





Section
      5.3
            Independent
      Evaluation.




Purchaser
is knowledgeable and experienced in the evaluation, acquisition and operation of
oil and gas properties.  Except as set forth in this Agreement,
Purchaser acknowledges that Seller has made no representations or warranties as
to the accuracy or completeness of such information, and, in entering into and
performing this Agreement, Purchaser has relied and will rely solely upon its
independent investigation of, and upon its own knowledge and experience and that
of its advisors' with respect to, the Assets and their value.





Section
      5.4
            Suits Affecting the
      Sale.


There is
no suit, action, claim, investigation or inquiry by any person or entity or by
any administrative agency or governmental body and no legal, administrative or
arbitration proceeding pending or, to Purchaser's  knowledge,
threatened against Purchaser or any Affiliate of Purchaser which has affected or
could materially affect Purchaser's ability to consummate the transactions
contemplated by this Agreement.





Section
      5.5
            Eligibility.




The
Purchaser is eligible under all applicable laws and regulations to own the
Assets, including, without limitation, the Leases.





Section
      5.6
            Financing.




Purchaser
has the financial ability to purchase the Assets, and Closing of the transaction
is not contingent upon obtaining financing.




ARTICLE
VI




ASSUMPTION
OF OBLIGATIONS AND INDEMNIFICATION





Section
      6.1
            Assumption and
      Retention of Certain Liabilities and Obligations by Purchaser and
      Seller.




(a)           If
the Closing occurs, (a) Purchaser assumes all obligations that are attributable
to the Assets on or after the Effective Time including, but not limited to, any
obligation for make-up gas according to the terms and conditions of the
applicable gas contracts, and all obligations to properly plug and abandon all
wells, pipelines and other  facilities now or thereafter located on
the Leases (regardless of whether any such


21


obligation
to plug and abandon is attributable to periods of time prior to or after the
Effective Time) and restore the surface of the Leases in accordance with
applicable lease or other agreements and governmental (including environmental)
laws, orders and regulations, and (b) Purchaser agrees to execute and deliver
any specific assumption agreements, bonds, or other financial assurances, if
any, required to effectuate the assumption of such obligations.







(b)           Notwithstanding
anything to the contrary in this Agreement, Seller will retain any liabilities
of Seller or any of its Affiliates with regard to the Seller Plans (as defined
in Section 14.4(c) or otherwise relating to any present or former employees of
Seller or any of its Affiliates ("Seller Employee Liabilities").





Section
      6.2
            Indemnification by
      Purchaser.




If the
Closing occurs Purchaser agrees to release, indemnify, defend and hold harmless
Seller, its agents and representatives from and against any and all suits,
judgments, damages, claims, liabilities, losses, costs and expenses (including
court costs and reasonable attorney's fees)





(a)           that
are attributable to the use, ownership and operation of the Assets arising and
attributable to periods of time after the Effective Time (but including, the
obligation to properly plug and abandon all wells now or hereafter located on
the Leases), regardless of whether Seller, its agents and representatives were
wholly or partially negligent or otherwise at fault,





(b)           that
arise out of any breach by Purchaser of any representation, warranty, covenant
or agreement hereunder.





Section
      6.3
            Indemnification by
      Seller.




If the
Closing occurs, Seller agrees, for a period of one (1) year, two (2) years in
the case of the special warranty of title described in Section 6.4(a), below,
after the Effective Time, to release, indemnify, defend and hold harmless
Purchaser from and against any and all suits, judgments, damages, claims,
liabilities, losses, costs and expenses (including, without limitation, court
costs and reasonable attorneys' fees)





(a)           that
are attributable to use, ownership or operation of the Assets attributable to
periods of time prior to the Effective Time (other than relating to the
obligation to properly plug and abandon wells located on the Leases) regardless
of whether Purchaser was wholly or partially negligent or otherwise at fault,
or





(b)           that
arise out of any breach by Seller of any covenant, agreement, representation, or
warranty, hereunder, including the special warranty of title contained in the
conveyances to be delivered at closing,


22


(c)           that
are attributable to claims by third parties for damages caused by or arising out
of the escape of salt water prior to the Closing Date from the lands described
on Schedule G, attached hereto, (the “Schedule G Lands”) or that are
attributable to claims by the following former surface owners of said lands,
Robert Milton O’Daniel, Cindy O’Daniel, and Lorin Patrick O’Daniel;





provided,
however, that such indemnity, defense and hold harmless obligations shall not
apply to (A) any amount that was taken into account as an adjustment to the
Purchase Price pursuant to the provisions hereof, (B) any liability of Purchaser
to Seller under the provisions of this Agreement, and (C) any amount in excess
of twenty-five percent (25%) of the Purchase Price; and provided further, that
if Purchaser (i) provides Seller with a plan (the “Mitigation Plan”) for
mitigating the flow of water off of the Schedule G Lands by installing a water
recovery system (the “Mitigation System”), (ii) implements the Mitigation Plan
on or before March 31, 2010 (provided, however, that such date will be extended
in the event of a force majeure or other delay caused by a third-party or
governmental authority), (iii) maintains the Mitigation System as a prudent
operator would, (iv) provides Seller with the opportunity to inspect the
Mitigation System twice per year, once the Mitigation System is installed, (v)
upon request (but no more frequently than once per year) provides the Seller
with an annual report describing the amount of water that has been collected by
the Mitigation System, and estimating the volume of water, if any, that has not
been collected by the Mitigation System, and (vi) has not caused the release of
water from the Schedule G Lands through Purchaser’s gross negligence or willful
misconduct, then the indemnity provided in Section 6.3(c), above, shall be
extended for so long as the foregoing described conditions are met by Purchaser,
in no event however to exceed six (6) years after the Closing
Date.  As used herein, force majeure shall mean acts of God; strikes,
lockouts, or other industrial disturbances; acts of a public enemy; wars;
blockades; insurrections; riots; epidemics; landslides; lightning; earthquakes;
fires; storms (including but not limited to hurricanes or hurricane warnings);
floods; washouts; arrests and restraints of the government, either federal or
state, civil or military; civil disturbances; shutdowns for purposes of
necessary repairs; relocation, or construction of facilities; breakage or
accident to machinery or lines of pipe; the necessity for testing accidents;
breakdowns and any other causes, whether of the kind enumerated or otherwise,
which are not reasonably in the control of the party claiming suspension. It is
understood and agreed that the settlement of strikes or lockouts shall be
entirely within the discretion of the party having the difficulty and that the
above requirement that any force majeure shall be remedied with all reasonable
dispatch shall not require the settlement of strikes or lockouts by acceding to
the demands of an opposing party when such course is inadvisable in the
discretion of the party having the difficulty.





Section
      6.4
            Interpretation.




The
provisions of each of the foregoing Sections 6.2 and 6.3 shall be interpreted as
follows:





(a)           The
indemnity provided for by each of such Sections shall extend to any loss, cost,
expense, liability or damage ("Loss") incurred or suffered by the indemnified
party, including reasonable fees and expenses of attorneys, technical experts
and expert


23


witnesses
reasonably incident to matters indemnified against.  The indemnity
provided for in Section 6.3 with respect to a breach or failure of a special
warranty of title of any interest contained in the conveyance shall be for a
period of two (2) years following the Effective Time and shall be reduced by the
value of production from the interest actually received by Purchaser (to the
extent such production received is not subject to any repayment or offset), net
of expenses incurred for the interest by the Purchaser, for which a special
warranty of title was breached or failed, but only in proportion to and to the
extent of such breach or failure.  After the Defective Interest Notice
Date (prior to which the adjustment provisions of Section 3.4 also shall be in
effect) and subject to the provisions of Section 3.6, the indemnity provided for
herein shall be the sole and exclusive remedy, as between the parties hereto,
for a breach or failure of a warranty or representation of title.  The
adjustment provisions for breaches of title representations and warranties as
set forth in Section 3.4 are applicable only as to breaches of title
representations and warranties for which notice has been given on or prior to
the Defective Interest Notice Date subject to the provisions of Section
3.6.  Subject to Section 3.6 and this Article 6, after the Defective
Interest Notice Date, the exclusive applicable representations and warranties of
title shall be the special warranty of title by, through and under Seller,
contained in the conveyances delivered pursuant hereto, and not
otherwise.





(b)           The
amount of each payment claimed by an indemnified party to be owing as described
in each of such Sections, together with a list identifying to the extent
reasonably possible each separate item of Loss for which payment is so claimed,
shall be set forth by such party in a statement delivered to the indemnifying
party or parties, as the case may be, setting forth the basis of such claim and
shall be paid by such indemnifying party or parties, as the case may be, as and
to the extent required herein with thirty (30) days after receipt of such
statement.





(c)           Except
each party’s obligations in Section 3.5, Section 6.1(b), Section 8.2, Section
8.3, Section 13.2(b)(iii), Article X, or Article XIV of this Agreement, and as
may be permitted under the conveyances delivered hereunder, the remedies set
forth in this Article VI shall be the sole and exclusive remedies of Seller and
Purchaser for any breach of a covenant, agreement, representation or warranty,
other than the special warranty of title to be included on any conveyance
delivered to Purchaser at Closing.





Section
      6.5
            Notices.




(a)           Within  sixty
(60) days after notification to an indemnified party with respect to any claim
or legal action or other matter that may or could result in a Loss for which
indemnification may be sought under Article VI, but in any event in time
sufficient for the indemnifying party to contest any action, claim or proceeding
that has become the subject of proceedings before any court or tribunal, such
indemnified party shall give written notice of such claim, legal action or other
matter to the indemnifying party and, at the request of such indemnifying party,
shall furnish the indemnifying party or its counsel


24


with
copies of all pleadings and other information with respect to such claim, legal
action or other matter and shall, at the election of the indemnifying party made
within sixty (60) days after receipt of such notice, permit the indemnifying
party to assume control of such claim, legal action or other matter (to the
extent only that such claim, legal action or other matter relates to a Loss for
which the indemnifying party is liable), including the determination of all
appropriate actions, the negotiation of settlements on behalf of the indemnified
party, and the conduct, of litigation, through attorneys of the indemnifying
party's choice.  In the event of such an election by the indemnifying
party,





(i)  any
expense incurred by the indemnified party thereafter for investigation or
defense of the matter shall be borne by the indemnifying party, and





(ii)  the
indemnified party shall give all reasonable information and assistance, other
than pecuniary, that the indemnifying party shall deem reasonably necessary to
the proper defense of such claim, legal action, or other matter.





In the
absence of such an election, the indemnified party will use its commercially
reasonable efforts to defend any claim, legal action or other matter to which
such other party's indemnifications under this Article VI applies.





(b)           Failure
to provide timely notice pursuant to subsection (a) of this Section 6.5 shall
not deprive the party seeking indemnification of its right to indemnifications
pursuant to this Article VI, although such party shall be liable for any damages
occasioned by its delay in affording the party entitled to notice with such
notice and shall not be entitled to indemnifications for any costs incurred
during the period of such delay that could reasonably have been avoided by the
indemnifying party if timely notice had been given.





Section
      6.6
            Tax Treatment of
      Indemnification Amounts.




Seller and Purchaser agree that any amounts recoverable
by any party pursuant to this Article VI shall be treated as adjustments to the
Purchase Price for all tax purposes.




ARTICLE
VII




SELLER'S
OBLIGATIONS PRIOR TO CLOSING





Section
      7.1
            Restrictions on
      Operations.




(a)           From
the date hereof until the end of the Transition Period (as defined in Section
14.1), Seller shall (or, with respect to non-operated Wells, shall use its
commercially reasonable efforts to cause the operator of all Wells in which it
owns working interests to):


25


(i)           not
abandon any Well on any Lease capable of commercial production, or release or
abandon all or any part of the Assets capable of commercial production, or
release or abandon all or any portion of the Leases without Purchaser's written
consent;





(ii)          not
cause the Assets to be developed, maintained or operated in a manner materially
inconsistent with prior operation;





(iii)         not
commence or agree to participate in any operation on the Assets anticipated to
cost in excess of one hundred thousand and NO/100 Dollars ($100,000.00) per
operation net to Seller's interest without Purchaser's written consent (except
emergency operations, operations required under presently existing contractual
obligations, and operations undertaken to avoid any penalty provision of any
applicable agreement or order);





(iv)        not
create any lien, security interest or other encumbrance with respect to the
Assets (except for Permitted Encumbrances), or, without Purchaser's written
consent, enter into any agreement for the sale, disposition or encumbrance of
any of the Assets, or dedicate, sell, encumber or dispose of any oil and gas
production, except in the ordinary course of business on a contract which is
terminable on not more than thirty (30) days notice except production sold under
a contract listed on Schedule A-3;





(v)         not
agree to any alterations in the contracts included in or relating to a material
portion of the Assets or enter into any material new contracts relating to the
Assets (other then contracts terminable on not more than thirty (30) days
notice) without Purchaser's written consent;





(vi)        maintain
in force all insurance policies covering the Assets;





(vii)       maintain
the Leases in full force and effect and comply with all express or implied
covenants contained therein (provided that this covenant shall not be deemed to
expand Seller's title warranties beyond those expressly contained in this
Agreement);





(viii)      furnish
Purchaser with copies of all AFE's in excess of one hundred thousand dollars
($100,000.00) received or issued by Seller prior to the Closing.





(b)           From
and after the date of this Agreement until the end of the Transition Period,
Seller shall:


26


(i)           provide
Purchaser with access (or, where Seller is not an operator, use its commercially
reasonable efforts to arrange for access) to the Assets for inspection thereof
at the sole cost, risk and expense of Purchaser;





(ii)           use
reasonable efforts to obtain any and all necessary consents, waivers (including
waiver of preferential purchase rights), permissions and approvals of third
parties or governmental authorities in connection with the sale and transfer of
the Assets other than approvals of federal lease assignments to
Purchaser;





(iii)           cause
to be filed all reports required to be filed by Seller with governmental
authorities relating to the Assets;





(iv)           provide
prompt notice to Purchaser of any notice received by Seller of a default, claim,
obligation or suit which affects any of the Assets; and





(v)           notify
Purchaser of any event, condition, or occurrence which results in any of the
representations and warranties made herein to be untrue.





Section
      7.2
            Seller’s
      Operations




From the date hereof until the end of the Transition
Period, Seller will (i) continue the routine operation of the Assets operated by
Seller in the ordinary course of business; and (ii) operate the Assets operated
by Seller in material compliance with all applicable laws and in material
compliance with all Leases and contracts described in Schedule
A-3.





Section
      7.3
            Operated
      Assets




Seller
makes no representations or warranties to Purchaser as to transferability or
assignability of operatorship of any Assets operated by
Seller.  Rights and obligations associated with operatorship of such
Assets are governed by operating and similar agreements covering the Assets and
will be decided in accordance with the terms of such agreements. However, Seller
will assist Purchaser in its efforts to succeed Seller as operator of any Wells
included in the Assets.  For all assets operated by Seller, Seller
shall execute and deliver to Purchaser and Purchaser shall promptly file the
appropriate forms with the applicable regulatory agency transferring
operatorship of such Assets to Linn Operating, Inc., to the extent permitted or
approved pursuant to the applicable operating agreement.







Section
      7.4
            Contract Operating,
      Marketing and Financial Services
  Agreement




Seller
agrees to provide Purchaser those services listed in the Transition Services
Agreement ("TSA"), which shall be substantially in the form attached hereto as
Exhibit D, for the term as set forth in the TSA.




ARTICLE
VIII





27


ADDITIONAL
AGREEMENTS OF THE PARTIES





Section
      8.1
            Government Reviews and
      Filings.




Both
prior to and after the Closing, as appropriate, each of Seller and the Purchaser
shall in a timely manner





(a)           make
required filings with, prepare applications to and conduct negotiations with
each governmental agency as to which such filings, applications or negotiations
are necessary or appropriate for the consummation of the transactions
contemplated hereby, and


(b)           provide
such information as each may reasonably request to make such filings, prepare
such applications and conduct such negotiations.





Seller
shall cooperate with and assist Purchaser in pursuing such filings, applications
and negotiations, and Purchaser shall cooperate with and assist Seller with
respect to such filings, applications and negotiations.  Each party
shall be responsible for and shall make any governmental filings occasioned by
the ownership or structure of such party.





Section
      8.2
            Confidentiality.




Until
completion of the Closing (and without limitation in the event Closing should
not occur for any reason), except as required by law, Purchaser and its
officers, agents and representatives shall continue to be bound by the
Confidentiality Agreement  between the parties dated July 20,
2009.





Section
      8.3
            Taxes.




(a)           Each
party shall provide the other party with reasonable information which may be
required by the other party for the purpose of preparing tax returns and
responding to any audit by any taxing jurisdiction.  Each party shall
cooperate with all reasonable requests of the other party made in connection
with contesting the imposition of taxes.  Notwithstanding anything to
the contrary in this Agreement neither party shall be required at any time to
disclose to the other party any tax returns or other confidential tax
information.





(b)           Seller
and Purchaser shall report the information required by Section 1060 of the Code,
(or any corresponding state or local income tax statute), on
all tax returns including, but not limited to, Internal Revenue Service Form
8594,in a manner consistent with





(i)           the
allocations set forth on Schedule 2.3(b), as adjusted pursuant to this Agreement
and





(ii)          the
requirements of such Section 1060.


28


If,
contrary to the intent of the parties hereto as expressed in this
Section 8.3(b), any taxing authority makes or proposes an allocation
different from the allocation determined under this Section 8.3(b),
Purchaser and Seller shall cooperate with each other in good faith to contest
such taxing authority’s allocation (or proposed allocation), provided, however,
that, after consultation with the party adversely affected by such allocation
(or proposed allocation), the other party hereto may file such protective claims
or tax returns as may be reasonably required to protect its
interests.





(c)           All
ad valorem taxes, real property taxes, personal property taxes and similar
obligations ("Property Taxes") attributable to the Assets with respect to the
tax period in which the Effective Time occurs shall be apportioned as of the
Effective Time between Seller and Purchaser based on the number of days in such
period which fall on each side of the Effective Time (with the day on which the
Effective Time falls being counted in the period after the Effective
Time).  The owner of record on the assessment date shall file or cause
to be filed all required reports and returns incident to the Property Taxes and
shall pay or cause to be paid to the taxing authorities all Property Taxes
relating to the tax period on which the Effective Time occurs.  If
Seller is the owner of record on the assessment date, then Purchaser shall pay
to Seller Purchaser's pro rata portion of Property Taxes within 30 days after
receipt of Seller's invoice therefor, except to the extent taken into account as
an adjustment to the Purchase Price pursuant to Section 2.4.  If
Purchaser is the owner of record as of the assessment date then Seller shall pay
to Purchaser Seller's pro rata portion of Property Taxes within 30 days after
receipt of Purchaser's invoice therefor.





(d)           Subject
to the provisions of Section 8.3(e), Seller shall indemnify Purchaser for all
liabilities that are assessed against Purchaser for foreign, federal, state,
local or Indian Tribal taxes  in respect of the ownership or operation
of the Assets prior to the Effective Time, together with penalties and interest
thereon (provided such penalties and interest do not result from the negligence,
late filing, fraud or acts of misfeasance or malfeasance of Purchaser), to the
extent such liabilities exceed the amounts of such taxes paid by Seller;
provided that Seller shall be entitled to all refunds or rebates of taxes paid
in respect of the ownership or operation of the Assets prior to the Effective
Time that may be received by Seller or Purchaser.  Subject to the
provisions of Section 8.3(e), Purchaser shall indemnify Seller for all
liabilities which are assessed against Seller for foreign, federal, state, local
or Indian Tribal taxes, together with penalties and interest thereon (provided
such penalties and interest do not result from the negligence, late filing,
fraud or acts of misfeasance or malfeasance of Seller), to the extent such
liabilities relate to the ownership or operation of the Assets from and after
the Effective Time; provided, however, that such indemnity shall not apply to
such taxes to the extent (but only to the extent) such taxes are included in the
determination of the Final Purchase Price, and provided further, however, that
Purchaser shall be entitled to all refunds or rebates of taxes attributable to
the Assets on or after the Effective Time that may be received by


29


Seller or
Purchaser, except to the extent (but only to the extent) such refunds or rebates
are included in the determination of the Final Purchase Price.  Seller
and Purchaser agree that any amounts recoverable by any party pursuant to this
Section 8.3(d) shall be treated as adjustments to the Purchase Price for all tax
purposes.





(e)           In
order for Seller or Purchaser ("Claimant") to make a claim against the other
("Indemnitor") under this Section 8, Claimant shall give prompt notice to
Indemnitor of any liability for which Claimant would claim indemnification under
this Section 8.3, which notice shall include the circumstances surrounding such
liability.  Indemnitor shall then have the right but not the
obligation, to contest such liability at its sole cost and expense by giving
written notice to Claimant of such election within 30 days after Indemnitor
receives Claimant's notice.  Should Indemnitor fail to notify Claimant
within such 30-day period, Indemnitor shall be deemed to have elected not to
contest such liability.  Should Indemnitor elect (or be deemed to have
elected) not to contest such liability, Indemnitor shall pay the full amount due
under Section 8.3(d) in respect of such liability to Claimant in cash within 30
days after Indemnitor elects (or is deemed to have elected) not to contest such
liability.  Except as specifically provided in this Section 8.3 with
respect to certain tax issues which must be combined or joined with other tax
issues, if Indemnitor elects to contest any such liability, Claimant shall give
Indemnitor full authority to defend, adjust, compromise or settle such liability
and any action, suit, or proceeding in which Indemnitor contests such liability,
in the name of Claimant or otherwise as Indemnitor shall elect.  In
any administrative or legal proceeding, Indemnitor shall employ counsel selected
by it and reasonably acceptable to Claimant.  With respect to tax
issues incident to any such liability that must be combined or joined with one
or more other tax issues which Claimant desires to contest, Claimant and
Indemnitor shall cooperate fully, and control of any administrative legal
proceeding shall rest with the party having the greater ultimate liability
(including liability under Section 8.3(d) for the taxes in
dispute).  The party in control may not adjust, compromise or settle
taxes which are contested by or on behalf of the other party without the consent
of the other party.  With respect to any liability contested by
Indemnitor under the terms of this Section 8.3(d), Indemnitor shall pay the full
amount due under Section 8.3(d) in respect of such liability to Claimant in cash
within 30 days after the liability is finally determined either by settlement or
pursuant to the final unappealable judgment of a court of competent
jurisdiction.





(f)           Purchaser
shall pay and be liable for all sales taxes occasioned by the sale of the Assets
and all documentary, transfer, filing, licensing, and recording fees required in
connection with the processing, filing, licensing or recording of any
assignments, titles, or bills of sale.





(g)           The
provisions of Article VI limiting the obligations of Seller notwithstanding, the
obligations of the parties pursuant to this Section 8.3 shall survive for a
period of four (4) years following Closing.


30


Section
      8.4
            Receipts and
      Credits.




Subject
to the terms hereof and except to the extent same have already been taken into
account as an adjustment to the Purchase Price, all monies, proceeds, receipts,
credits and income attributable to the ownership and operation of the Assets (a)
for all periods of time from and subsequent to the Effective Time, shall be the
sole property and entitlement of Purchaser, and to the extent received by
Seller, Seller shall within 10 business days after such receipt, fully disclose,
account for and transmit same to Purchaser and (b) for all periods of time prior
to the Effective Time, shall be the sole property and entitlement of Seller and,
to the extent received by Purchaser, Purchaser shall fully disclose, account for
and transmit same to Seller within 10 business days.  Subject to the
terms hereof and except to the extent same have already been taken into account
as an adjustment to the Purchase Price, all costs, expenses, disbursements,
obligations and liabilities attributable to the Assets (i) for periods of time
prior to the Effective Time, regardless of when due or payable, shall be the
sole obligation of Seller and Seller shall promptly pay, or if paid by
Purchaser, promptly reimburse Purchaser for and hold Purchaser harmless from and
against same and (ii) for periods of time from and subsequent to the Effective
Time, regardless of when due or payable, shall be the sole obligation of
Purchaser and Purchaser shall promptly pay, or if paid by Seller, promptly
reimburse Seller for and hold Seller harmless from and against
same.





Section
      8.5
            Suspense
      Accounts.




At the
Closing, Seller agrees to transfer to Purchaser and provide information
regarding all of Seller's payable accounts holding monies in suspense
attributable to the Assets.  Purchaser agrees to take and apply such
monies in a manner consistent with prudent oil and gas business practices and to
indemnify Seller against any claim relating to the failure to pay such funds
after the Closing.




ARTICLE
IX




CONDITIONS
TO CLOSING





Section
      9.1
            Seller's
      Conditions.




The
obligations of Seller at the Closing are subject, at the option of Seller, to
the satisfaction at or prior to the Closing of the following
conditions.





(a)           All
representations and warranties of Purchaser contained in this Agreement shall be
true in all material respects at and as of the Closing as if such
representations and warranties were made at and as of the Closing, and Purchaser
shall have performed and satisfied all agreements in all material respects
required by this Agreement to be performed and satisfied by Purchaser at or
prior to the Closing.





(b)           Seller
shall have received a certificate dated as of the Closing, executed by the
President or any Vice President of Purchaser, to the effect that the statements
in Section 9.1(a) are true in all material respects at and as of the
Closing.


31


(c)           No
order shall have been entered by any court or governmental agency having
jurisdiction over the parties or the subject matter of this contract that
restrains or prohibits the purchase and sale contemplated by this Agreement and
which remains in effect at the time of Closing, except





(i)           any
order affecting a matter with respect to which Seller has been adequately
indemnified by Purchaser or





(ii)          any
order affecting only a portion of the Assets, which portion of the Assets could
be treated as a Casualty Loss in accordance with Section 3.5.





(d)           Seller
shall have been provided with such documentation or other assurance as Seller
deems necessary that Purchaser has obtained all bonds or approvals as may be
required for assigning, owning or operating the Assets and all obligations
associated with the Assets; or as may be necessary to comply with Purchaser’s
assumption of obligations as described in Section 6.1, hereof.





Section
      9.2
            Purchaser's
      Conditions.




The
obligations of Purchaser at the Closing are subject, at the option of Purchaser,
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 in all material respects at and as of the Closing as if such
representations were made at and as of the Closing, and Seller shall have
performed and satisfied all agreements in all material respects required by this
Agreement to be performed and satisfied by Seller at or prior to the
Closing.





(b)           Purchaser
shall have received a certificate dated as of the Closing, executed by the
President or any Vice President of Seller, to the effect that





(i)           the
statements in Section 9.2(a) are true in all material respects at and as of the
Closing, and





(ii)          the
covenants and agreements contained in Article VII have been performed in all
material respects.





(c)           No
order shall have been entered by any court or governmental agency having
jurisdiction over the parties or the subject matter of this contract that
restrains or prohibits the purchase and sale contemplated by this Agreement and
which remains in effect at the time of closing, except


32


(i)           any
order affecting a matter with respect to which Purchaser has been adequately
indemnified by Seller or





(ii)           any
order affecting only a portion of the Assets, which portion of the Assets could
be treated as Casualty Loss in accordance with Section 3.5.







ARTICLE
X




RIGHT
OF TERMINATION AND ABANDONMENT







Section
      10.1
            Termination.




This
Agreement and the transactions contemplated hereby may be terminated in the
following instances:





(a)           by
Seller if the conditions set forth in Section 9.1 are not satisfied or waived as
of the Closing Date;





(b)           by
Purchaser if the conditions set forth in Section 9.2 are not satisfied or waived
as of the Closing Date;





(c)           by
Seller if, through no fault of Seller, the Closing does not occur on or before
November 30, 2009;





(d)           by
Purchaser if, through no fault of Purchaser, the Closing does not occur on or
before November 30, 2009;





(e)           by
either party as provided in Section 3.7; or





(f)           at
any time by the mutual written agreement of Purchaser and Seller and in
accordance with any other express provisions of this Agreement.





Section
      10.2
            Liabilities Upon
      Termination.


If this
Agreement is terminated pursuant to Section 10.1(a), except by reason of a
failure of the condition set forth in Section 9.1(c), or is terminated as a
result of the negligence, fault or willful failure of Purchaser to perform its
obligations hereunder, Seller shall be entitled to retain the Performance
Deposit, plus any interest earned thereon, as liquidated damages for lost
opportunities and not as a penalty.  If this Agreement is terminated
for any other reason, Seller shall return the Performance Deposit to Purchaser,
plus any interest earned thereon.  Upon termination of this Agreement
by Seller pursuant to an express right to do so set forth herein, Seller shall
be free to enjoy immediately all rights of ownership of the Assets and to sell,
transfer, encumber and otherwise dispose of the Assets to any party without any
restriction under this Agreement.  In no event shall either party ever
be entitled to consequential or speculative damages including, without
limitation, lost profits.


33


ARTICLE
XI




CLOSING
MATTERS







Section
      11.1
            Time and Place of
      Closing.




(a)           The
purchase by Purchaser and the sale by Seller of the Assets, as contemplated by
this Agreement (the "Closing"), shall, unless otherwise agreed to in writing by
Purchaser and Seller, take place at the offices of Seller.  The time
of the Closing shall be at 10:00 a.m., local time, on September 30,
2009.





(b)           The
date on which the Closing occurs is referred to herein as the "Closing
Date."





Section
      11.2
            Closing
      Obligations.




At the
Closing the following events shall occur, each being a condition precedent to
the others and each being deemed to have occurred simultaneously with the
others:





(a)           Seller
shall execute, acknowledge and deliver to Purchaser





(i)           a
General Assignment and Bill of Sale of the Assets in the form of Schedule F-1
attached hereto,





(ii)          assignments,
bills of sale and conveyances (in sufficient counterparts to facilitate
recording) substantially in the form of Schedule F-2 (the "Conveyance") together
with any transfer forms to be filed with governmental and tribal agencies
conveying the Leases and Wells effective as of the Effective Time to
Purchaser,





(iii)         letters
in lieu of transfer orders in a form acceptable to both parties,
and





(iv)        deeds,
assignments, bills of sale and any other specialized instruments of transfer
necessary to convey to or perfect in Purchaser the Assets other than the Leases
and Wells;





(b)           Seller
and Purchaser shall execute and deliver a preliminary settlement statement (the
"Preliminary Settlement Statement") prepared by Seller that shall set forth the
Estimated Final Purchase Price together with the calculations of all adjustments
using for such adjustments the best information available;





(c)           Purchaser
shall deliver to Seller the Estimated Final Purchase Price by wire transfer in
immediately available funds;


(d)           Seller
shall deliver to Purchaser possession of the Assets;


34


(e)           
Seller shall deliver to the Purchaser the certificate referred to in Section
9.2(b).





(f)         
  Purchaser shall deliver to Seller the certificate referred to in
Section 9.1(b);





(g)           Purchaser
shall assume the obligation to disburse all royalty, overriding royalty and
other payments due under or with respect to the Leases to the extent Seller was
responsible for such payments prior to the Closing, except to the extent
described otherwise in the TSA;





(h)           Seller
shall deliver a certificate of Non-Foreign Status of Seller that meets the
requirements of Treasury Regulations § 1.1445-2(b)(2);





(i)          
 Seller and Purchaser shall execute the TSA; and





(j)           
Seller and Purchaser shall execute and deliver all other documents or agreements
called for herein.




ARTICLE
XII




POST-CLOSING
OBLIGATIONS







Section
      12.1
            Post-Closing
      Adjustments.




As soon
as practicable after the Closing, but in no event later than one hundred eighty
(180) days thereafter, Seller shall prepare and deliver to Purchaser a final
settlement statement (the "Final Settlement Statement") setting forth each
adjustment or payment that was not finally determined as of the Closing and
showing the calculation of such adjustments and the resulting Final Purchase
Price.  Seller shall make its workpapers and other information
available to Purchaser to review in order to confirm the adjustments shown on
Seller's draft.  As soon as practicable after receipt of the Final
Settlement Statement, but in no event later than ninety (90) days thereafter,
Purchaser shall deliver to Seller a written report containing any changes that
Purchaser proposes to make to the Final Settlement Statement.  Any
failure by Purchaser to deliver to Seller the written report detailing
Purchaser's proposed changes to the Final Settlement Statement within ninety
(90) days following Purchaser's receipt of the Final Settlement Statement shall
be deemed an acceptance by Purchaser of the Final Settlement Statement as
submitted by Seller.  The parties shall agree with respect to the
changes proposed by Purchaser, if any, no later than sixty (60) days after
Seller receives from Purchaser the written report described above containing
Purchaser's proposed changes.  If the Purchaser and the Seller cannot
then agree upon the Final Settlement Statement, the determination of the amount
of the Final Settlement Statement shall be submitted to a mutually agreed firm
of independent public accountants (the "Accounting Firm").  The
determination by the Accounting Firm shall be conclusive and binding on the
parties hereto and shall be enforceable against any party hereto in any court of
competent jurisdiction.  Any costs and expenses incurred by the
Accounting Firm pursuant to this Section 12.1 shall be borne by the Seller and
the Purchaser equally.  The date upon which such agreement is
reached


35


or upon
which the Final Purchase Price is established, shall be herein called the "Final
Settlement Date."  In the event





(a)          the
Final Purchase Price is more than the Estimated Final Purchase Price, Purchaser
shall pay to Seller the amount of such difference, or





(b)          the
Final Purchase Price is less than the Estimated Final Purchase Price, Seller
shall pay to Purchaser the amount of such difference,





in either
event by wire transfer in immediately available funds or, if the amount of such
difference is less than Twenty-Five Thousand and No/100 Dollars ($25,000.00), by
check.  Payment by Purchaser or Seller, as the case may be, shall be
within five (5) days of the Final Settlement Date.





Section
      12.2
            Files and
      Records.




Within
thirty (30) business days following the Closing Date, Seller shall deliver to
Purchaser at Purchaser's expense the Records, to the extent not previously
delivered.  For a period of seven (7) years after the Closing Date,
Purchaser shall maintain the Records, and Seller shall have access thereto
during normal business hours upon advance written notice to Purchaser to audit
the same in connection with federal, state or local regulatory or tax matters,
resolution of existing disputes or contract compliance matters affecting
Seller.





Section
      12.3
            Further
      Assurances.




From time
to time after Closing, Seller and Purchaser shall execute, acknowledge and
deliver to the other such further instruments, and take such other action as may
be reasonably requested in order more effectively to assure to said party all of
the respective properties, rights, titles, interests and estates intended to be
assigned and delivered in consummation of the transactions contemplated by this
Agreement.




ARTICLE
XIII




ENVIRONMENTAL
MATTERS




Section
      13.1
            Purchaser
      Acknowledgment Concerning Possible Contamination of the
      Assets.




Purchaser
is aware that the Assets have been used for exploration, development, and
production of oil and gas and that there may be petroleum, produced water,
wastes, or other materials located on or under the Assets or associated with the
Assets.  Equipment and sites included in the Assets may contain
asbestos, hazardous substances, or naturally-occurring radioactive materials
("NORM").  NORM may affix or attach itself to the inside of wells,
materials, and equipment as scale, or in other forms; the wells, materials, and
equipment located on the Assets or included in the Assets may contain NORM and
other wastes or hazardous substances; and NORM-containing material and other
wastes or hazardous substances may have been buried, come in contact with the
soil, or otherwise been disposed of on the
Assets.  Special


36


procedures
may be required for the remediation, removal, transportation, or disposal of
wastes, asbestos, hazardous substances, and NORM from the Assets.





Purchaser
will assume liability for the assessment, remediation, removal, transportation,
and disposal of wastes, asbestos, hazardous substances, and NORM from the Assets
and associated activities and will conduct these activities in accordance with
applicable federal, state, and local laws, including statutes, regulations,
orders, ordinances, and common law, currently enacted or enacted in the future
and relating to protection of public health, welfare, and the environment,
including those laws relating to storage, handling, and use of chemicals and
other hazardous materials; those relating to the generation, processing,
treatment, storage, transport, disposal, cleanup, remediation, or other
management of waste materials or hazardous substances of any kind; and those
relating to the protection of environmentally sensitive or protected areas
("Environmental Laws").





Section
      13.2
            Adverse Environmental
      Conditions.





(a)           Purchaser
will have until 5 Business Days before the Closing to notify Seller of any
material adverse environmental condition of the Assets that Purchaser finds
unacceptable and provide evidence of the condition to Seller.  An
environmental condition is a material adverse environmental condition
("Condition") only if all the following criteria are met:





(i)           The
environmental condition is required to be remediated at the Effective Time under
the Environmental Laws in effect at the Effective Time.





(ii)          The
total of the cost to remediate each environmental condition identified by
Purchaser to levels required by the Environmental Laws in effect at the
Effective Time is reasonably estimated to be more than twenty-five thousand
dollars ($25,000) (net to Seller's interest).





(iii)         The
environmental condition was not disclosed on Schedule G.





(b)           For
any Condition Purchaser notifies Seller of in accordance with Section 13.2(a),
Seller will have until two (2) Business Days before the Closing Date to elect
any of the following:





(i)           adjust
the Allocated Value for an Asset by a mutually acceptable amount reflecting
Seller's proportionate share, based on its working interest, of the cost
reasonably estimated to remediate a Condition affecting the Asset and adjust the
Purchase Price in accordance with Section 2.4 (b)(viii),


37


(ii)          remove
the affected Asset from this Agreement and adjust the Purchase Price by the
Allocated Value for the affected Asset in accordance with Section 2.4 (b)(viii),
or





(iii)         indemnify
the Purchaser for the Condition.  For avoidance of doubt Seller and
Purchaser agree that if Seller elects to indemnify Purchaser for any Condition
pursuant to this subsection, the duration and maximum amount of liability will
be negotiated by the parties at the time of such election, and, if Purchaser and
Seller are unable to agree on the duration and maximum amount of liability prior
to Closing, Seller will elect to proceed under either subsection (i) or
subsection (ii) with respect to the Affected Asset.





(c)           If
Seller and Purchaser agree to an adjustment under subsection (b) (i), the
adjustment will be the estimated cost to remediate the Condition, but only to
the level required by the Environmental Laws in effect at the Effective Time,
and only to the extent that the total value of all Conditions exceeds one
percent (1%) of the Preliminary Purchase Price, it being understood by Purchaser
and Seller that such amount is a deductible.





(d)           If
the estimated cost to remediate any Condition exceeds one percent (1%) of the
Preliminary Purchase Price, Purchaser may, prior to Closing, elect to remove the
affected Asset from this Agreement and adjust the Purchase Price by the
Allocated Value for the affected Asset in accordance with Section
2.4(b)(viii).





(e)           If,
prior to Closing, Seller and Purchaser are unable to reach an agreement as to
whether a Condition exists, or if it does exist, the cost estimated to remediate
the Condition, each party shall have the right to submit the dispute to an
independent expert (the "Independent Expert"), who
shall serve as sole arbitrator.  If either party so elects, the
affected Asset shall be removed from the Closing and the Preliminary Purchase
Price shall be adjusted by the Allocated Value of the affected Asset in
accordance with Section 2.4(b)(viii).  For a period of sixty (60) days
following Closing the parties shall make good faith efforts to negotiate an
agreement as to the affected Asset failing which the parties shall submit the
dispute to the Independent Expert in accordance with the following
procedure.  The Independent Expert shall be appointed by mutual
agreement of Seller and Purchaser from among candidates with experience and
expertise in the area that is the subject of such dispute, and failing such
agreement, such Independent Expert for such dispute shall be selected in
accordance with the Commercial Arbitration Rules of the AAA (the "Rules").  Disputes
to be resolved by an Independent Expert under this subsection shall be resolved
in accordance with mutually agreed procedures and rules and failing such
agreement, in accordance with the Rules.  The Independent Expert shall
be instructed by the parties to resolve such dispute as soon as reasonably
practicable in light of the circumstances.  The decision of the
Independent Expert shall be binding upon the parties as an award


38


under the
Federal Arbitration Act.   Subject to Seller’s right to remove
the affected Asset from this Agreement and terminate all further proceedings
related to the affected Asset, the parties shall conduct a delayed Closing as to
the affected Asset as soon as reasonably possible following the decision of the
Independent Expert.  Except for the Closing Date, all other terms and
provisions of this Agreement, including without limitation the Purchase Price
adjustment provisions of Article II, shall apply to the delayed Closing of the
affected Asset and all other conditions to Closing shall have been deemed
satisfied as of the date of the delayed Closing.





Section
      13.3
            Disposal of Materials,
      Substances, and Wastes; Compliance with Law.




Except as
provided for in Section 13.3, above, Purchaser will store, handle, transport,
and dispose of or discharge all materials, substances, and wastes from the
Assets (including produced water, drilling fluids, NORM, and other wastes),
whether present before or after the Effective Time, in accordance with
applicable local, state, and federal laws and regulations.  Purchaser
will keep records of the types, amounts, and location of materials, substances,
and wastes that are stored, transported, handled, discharged, released, or
disposed of onsite and offsite.  When any lease terminates, an
interest in which has been assigned under this Agreement, Purchaser will
undertake additional testing, assessment, closure, reporting, or remedial action
with respect to the Assets affected by the termination as is necessary to
satisfy all local, state, or federal requirements in effect at that time and
necessary to restore the Assets.




ARTICLE
XIV




Employee
Matters




Section
      14.1
            Continuing
      Employees.




From and
after the date hereof, and throughout the term of the TSA (the "Transition Period")
Seller will assist Purchaser in seeking to retain certain of Seller’s employees
to effectuate a smooth transition of the operation of the Assets to the
Purchaser.  Within 10 days from the date hereof, Seller will provide
Purchaser with a list of employees (the "Seller Employees") available for
employment with Purchaser, which will include the following data: name, job
title, salary or wage, bonus eligibility, vacation eligibility, hire date, and
service date.  The Seller Employees that Purchaser hires and who
complete one hour of actual service with Purchaser are referred to as the
"Continuing Employees."







Section
      14.2
            No Obligation to Hire
      Seller Employees.




Nothing
in this Agreement shall require or be construed or interpreted as requiring the
Purchaser to offer employment to any employee of Seller or its Affiliates or to
continue the employment of any employee of Seller or its Affiliates (including
any Continuing Employees) following their respective Hire Date, or to prevent
Purchaser thereof from changing the terms and conditions of employment
(including compensation and benefits) of any of its employees (including any
Continuing Employees) following their respective Hire Dates.  Seller
and the Purchaser hereby acknowledge and agree that any employment offered by
Purchaser to a


39


Continuing
Employee will be "at will" and may be terminated by the Purchaser or such
Continuing Employee at any time for any reason (subject to applicable Laws and
to any specific written commitments made to the contrary by Purchaser or by such
Continuing Employee).  Further, any such offer of employment shall be
on such terms and conditions as Purchaser determines and may be conditioned upon
the Seller Employee’s passage of Purchaser’s pre-employment screening
requirements.





Section
      14.3
            Interview, Screening,
      and Offers to Seller
Employees.





(a)           Seller
will notify the Seller Employees of Purchaser’s desire to interview
them.  Seller and Purchaser will assist one another in providing such
employees one or more meetings with representatives of Purchaser to discuss the
capacity in which such persons may be employed by Purchaser and the terms and
conditions under which such employment would be offered; provided, however, that
no employee of Seller shall be required to accept an offer of employment with
Purchaser thereof if such an offer is made.  Seller will retain all
liability for all severance benefits owed to the employees of Seller who do not
become Continuing Employees (including but not limited to any Seller Employees
who receive but do not accept offers of employment from Purchaser) under
Seller’s employment agreements, offer letters, or severance plans or policies,
if any, as well as liability arising under the Worker's Adjustment and
Retraining Act ("WARN Act").  During the Transition Period, Purchaser
will provide offers of employment to the Seller Employees the Purchaser desires
to hire, with each offer stipulating that the date for commencement of work is
the date immediatelyfollowing thetermination
date of the TSA (the "Hire Date").  Purchaser will provide Seller with
notice of the names of those Seller Employees to whom Purchaser intends to make
employment offers two (2) days prior to making such offers.




(b)           No
Seller Employee will become a Continuing Employee unless he or she (i) accepts
Purchaser’s offer of employment under the terms provided in Purchaser’s offer,
(ii) passes any required pre-employment screening required by Purchaser, and
(iii) on the termination date of the TSA, is actively at work, on sickness or
disability leave, or an approved leave of absence and (iv) completed one hour of
actual service with Purchaser.




Section
      14.4
            Employee
      Benefits.




(a)           Purchaser
will grant to the Continuing Employees credit for their past service years as
outlined in the data provided by Seller to Purchaser pursuant to Section 14.1
for the following: (i) vesting and eligibility purposes under any employee
benefit programs maintained by Purchaser in which they are available to
participate and (ii) determining the duration and amount of their benefits under
any sick pay or sick leave policy or vacation policy, maintained by Purchaser in
which they are eligible to participate.  Seller must use commercially
reasonable efforts to provide Purchaser with all necessary transition
assistance, including any applicable service credit information


40


relating
to Continuing Employees, to enable Purchaser to develop and implement
compensation and benefit plans and programs for any Continuing
Employees.





(b)           Effective
as of each Seller Employee’s respective Hire Date, such Seller Employee that
becomes a Continuing Employee will cease to actively participate or be eligible
to actively participate in any Seller Plan except whereSeller
Plan provides forcontinuation of benefits or conversion to individual insurance polices
upon termination of employment with Seller.  Purchaser will not assume
any Seller Plan or be liable in any respect for the funding of, or contributions
to, or liabilities under any Seller Plan.  Until each Continuing
Employee’s respective Hire Date, such Continuing Employee shall remain the
employee of Seller and Seller shall provide his or her wages and employee
benefits at Seller’s sole expense.  Without limiting the foregoing, or
Section 6.1(b) or Section 6.3 of this Agreement for all periods prior to the
Closing Date and from the Closing Date until each Seller Employee’s respective
Hire Date, under the TSA, Seller shall be responsible for (i) the base salaries
or wages and overtime payments of the Seller Employees along with any bonuses to
which such Seller Employee may be entitled, (ii) the costs of the Seller
Employees’ participation in the retirement, medical, dental and other employee
benefit plans sponsored by Seller, (iii) workers’ compensation coverage of the
Seller Employees, (iv) vacation and leave pay for the Seller Employees, (v) the
employer’s portion of any health, life, disability or other insurance provided
as a part of Seller’s employee benefit plans in effect after the Closing Date
and in which the Seller Employees participate, (vi) the employer’s portionofall employee
taxes (including Social Security, Medicare and unemployment taxes) and any tax
withholdings required of the employer, and (vii) all payroll processing, payroll
deduction, tax withholding and tax reporting services, employee benefit
administration, claims processing, personnel administration, and all such
related human resources services with respect to the Seller
Employees.





(c)           When
used in this Agreement:




(i)           the
term "Seller Plan" means any plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, severance,
change-in-control, termination pay, deferred compensation, retirement or pension
payments, bonuses, performance awards, retention payments, incentive
compensation, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written or unwritten or otherwise,
funded or unfunded, including without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and any
plans that would be "employee benefit plans" within the meaning of Section 3(3)
of ERISA if they were subject to ERISA (such as foreign plans and plans for
directors) which, in each case, is or ever has been sponsored, maintained,
contributed to, or required to be contributed to, by Seller or any ERISA
Affiliate of the Seller (present or former) for the benefit of any present or
former


41


employee
or officer, consultant or similar representative of Seller or any of such ERISA
Affiliates, and with respect to which Seller or any of such ERISA Affiliates has
or may have any liability or obligation on behalf of any of such
individuals.




(ii)          the
term “ERISA Affiliate” means, with respect to any entity, any entity, trade or
business that is a under common control with such entity, within the meaning of
Section 414(b), (c), (m) or (o) of the Code or Section 4001 of
ERISA.





Section
      14.5
            Control of Seller
      Employees.




Prior to
the Hire Date, if any, of a Seller Employee, Seller has the right to control and
direct the Seller Employees as to the performance of duties and as to the means
by which such duties are performed, including the right to terminate the
employment of any Seller Employee, provided that Purchaser will not be liable
for any costs, expense, liabilities, severance benefits, or WARN Act liability,
if any, related to any such terminated Seller
Employee.    Notwithstanding the foregoing, prior to each
Seller Employee’s respective Hire Date, Seller has the right to direct such
employee to perform reasonable administrative duties on behalf of Seller in
connection with the winding down of Seller’s services with respect to the Assets
and the termination of any Seller Plan.  During the Transition Period,
but prior to the Seller Employees’ respective Hire Dates, Seller will not
permanently reassign, make compensation changes, promote or relocate any Seller
Employee, other than in the ordinary course of business or as required by any
Seller Plan or applicable law, without the written consent of
Purchaser.  Seller will be responsible for complying with all safety,
health and work-related laws, regulations and rules with respect to the Seller
Employees employed by Seller during the Transition Period.  Nothing
herein is intended to affect Seller’s status as employer of each Seller Employee
while employed by Seller or Seller’s control over such individual until his or
her respective Hire Date.





Section
      14.6
            Solicitation of
      Continuing Employees.




For the
period beginning on each Continuing Employee’s Hire Date and ending on the date
that is two (2) years after the Closing Date, neither Seller nor any of its
Affiliates may, unless acting in accordance with Purchaser’s prior written
consent, solicit, encourage or otherwise induce such Continuing Employee to
leave the employment of Purchaser or become an employee of Seller or any of its
Affiliates.  Notwithstanding the foregoing, neither Seller nor its
Affiliates will be prohibited from hiring or contracting for the services of a
Continuing Employee who has terminated his or her employment relationship with
Purchaser without solicitation or inducement from Seller or its
Affiliates.  A general advertisement by Seller or its Affiliates for
employment that is not targeted at any Continuing Employee or group of
Continuing Employees will not constitute a breach of the obligations of Seller
or its Affiliates under this Section 14.6.


42


Section
      14.7
            Waiver of Restrictions
      on Continuing Employees.




On or
before each Continuing Employee’s Hire Date, if any, Seller must (i) take and
must cause its Affiliates to take any necessary action to waive any covenants
not to compete, confidentiality provisions or similar restrictions under
agreements between Seller and/or such Affiliates and the Continuing Employee
that may be applicable to any Continuing Employee, but only to the extent any of
the foregoing would preclude a Continuing Employee from accepting employment
with Purchaser, and (ii) not restrain such Continuing Employee in any way in
performing his services for the Purchaser.




Section
      14.8
            No Third Party
      Beneficiaries.




Notwithstanding
any other provisions of this Agreement, the provisions of this Article XIV are
not intended to and shall not create or confer any third-party beneficiary
rights respecting any Seller Employee or Continuing Employee.






Article
XV




MISCELLANEOUS





Section
      15.1
            Notices.




All
communications required or permitted under this Agreement shall be in writing
and any communication or delivery hereunder shall be deemed to have been duly
made if actually delivered or if mailed by registered or certified mail, postage
prepaid, or if sent by overnight courier service, charges prepaid, or if sent by
telecopy or facsimile machine, addressed to the party being notified as set
forth below.  Any party may, by written notice so delivered to the
other, change the address to which delivery shall thereafter be
made.  Notices to Seller and Purchaser shall be made at the addresses
set forth below:





(a)         
If to Seller, to:





Forest
Oil Corporation


707
17th
Street, Suite 3600


Denver,
CO  80202


FAX:  (303)
812-1445


ATTN:  General
Counsel


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(b)          If
to Purchaser, to:





Linn
Energy Holdings, LLC


600
Travis Street, Suite 5100


Houston,
Texas  77002


FAX:  281-840-4001


ATTN:
Charlene A. Ripley, Senior Vice President, General Counsel and Corporate
Secretary





All
notices shall be deemed given at the time of receipt by the party to which such
notice is addressed.





Section
      15.2
            Binding
      Effect.




This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective heirs, successors and permitted assigns.





Section
      15.3
            Counterparts.




This
Agreement may be executed in any number of counterparts, which taken together
shall constitute one and the same instrument and each of which shall be
considered an original for all purposes.





Section
      15.4
            Expenses.




All
expenses incurred by Seller in connection with or related to the authorization,
preparation or execution of this Agreement, the conveyances and the Schedules
hereto, and all other matters related to the Closing, including without
limitation, all fees and expenses of counsel, engineers, accountants and
financial advisors employed by Seller shall be borne solely and entirely by
Seller; and all such expenses incurred by Purchaser shall be borne solely and
entirely by Purchaser.





Section
      15.5
            Section
      Headings.




The Section headings contained in this
Agreement are for convenient reference only and shall not in any way affect the
meaning or interpretation of this Agreement.





Section
      15.6
            Entire
      Agreement.




This
Agreement, the documents to be executed hereunder, and the Schedules attached
hereto constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written of the parties pertaining
to the subject matter hereof, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth herein or in documents delivered
pursuant


44


hereto.  No
supplement, amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties
hereto.  All of the Schedules referred to in this Agreement are hereby
incorporated in this Agreement by reference and constitute a part of this
Agreement.





Section
      15.7
            Conditions.




The
inclusion in this Agreement of conditions to Seller's and Purchaser's
obligations at Closing shall not, in and of itself, constitute a covenant of
either Seller or Purchaser to satisfy the conditions to the other party's
obligations at Closing.





Section
      15.8
            Governing
      Law.




THE
VALIDITY OF THE VARIOUS CONVEYANCES AFFECTING THE TITLE TO REAL PROPERTY SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE JURISDICTION IN
WHICH SUCH PROPERTY IS SITUATED.  THIS AGREEMENT, THE OTHER DOCUMENTS
DELIVERED PURSUANT HERETO AND THE LEGAL RELATIONS AMONG THE PARTIES HERETO SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF TEXAS AND THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF TEXAS SHALL BE
THE SOLE VENUE FOR THE RESOLUTION OF ANY DISPUTES ARISING
HEREUNDER.





Section
      15.9
            Assignment.




Neither
Party may assign all or any portion of its respective rights or delegate any
portion of its respective duties hereunder without the prior written consent of
the other Party.




Section
      15.10
            Public
      Announcements.




Prior to
making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other party hereto and attempt
to obtain approval of the other party or parties hereto to the text of a public
announcement or statement to be made solely by Seller or Purchaser, as the case
may be; provided, however, if Seller or Purchaser is required by law to make
such public announcement or statement, then the same may be made without the
approval of the other party; provided further, however, neither party may
identify the other party by name in any such announcement or statement or filing
with the Securities and Exchange Commission without the other party’s prior
written consent.




Section
      15.11
              Notices After
      Closing.


Each of
the parties hereto shall notify the others of its receipt, after the Closing
Date, of any instrument, notification or other documents affecting the Assets
while owned by such other party or parties.


45






Section
      15.12
            Waiver of Compliance
      with Bulk Transfer Laws.





Purchaser
waives compliance with any applicable bulk transfer laws relating to the
transactions contemplated by this Agreement.




Section
      15.13
            Waiver.


The
parties agree that to the extent required by applicable law, rule or order to be
operative the disclaimers of certain warranties contained in this Section and in
the conveyancing documents to be delivered pursuant to this Agreement are
"conspicuous" disclaimers for the purposes of any such applicable law, rule or
order.  SELLER EXPRESSLY DISCLAIMS AND NEGATES ANY WARRANTY AS TO THE
CONDITION OF ANY PERSONAL PROPERTY, EQUIPMENT, FIXTURES AND ITEMS OF MOVABLE
PROPERTY COMPRISING ANY PART OF THE ASSETS, INCLUDING:





(a)           ANY
IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY;





(b)         
ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE;





(c)           ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF
MATERIALS,





(d)           ANY
RIGHTS OF PURCHASER UNDER APPLICABLE STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION, AND





(e)           ANY
CLAIM BY PURCHASER FOR DAMAGE BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, IT
BEING EXPRESSLY UNDERSTOOD BY PURCHASER THAT SAID PERSONAL PROPERTY, FIXTURES,
EQUIPMENT, AND ITEMS ARE BEING CONVEYED TO PURCHASER "AS IS", "WHERE IS", WITH
ALL FAULTS, AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR AND THAT
PURCHASER WILL MAKE, PRIOR TO CLOSING, SUCH INSPECTIONS THEREOF AS PURCHASER
DEEMS APPROPRIATE.





Except as
otherwise expressly set forth herein, Seller also expressly disclaims and
negates any implied or express warranty as to the accuracy of any of the
information furnished with respect to the existence or extent of reserves or the
value of the Assets based thereon or the condition or state of repair of any of
the Assets (it being understood that all estimates of quantities of oil and gas
reserves on which Purchaser has relied or is relying have been derived by
individual evaluation of Purchaser).  Purchaser EXPRESSLY WAIVES THE
PROVISIONS OF CHAPTER XVII, SUBCHAPTER E, SECTION 17.41 THROUGH 17.63, INCLUSIVE
(OTHER THAN SECTION 17.555, WHICH IS NOT WAIVED), VERNON'S TEXAS CODE ANNOTATED,
BUSINESS AND COMMERCE CODE (the "Deceptive Trade Practices Act").


46


Section
15.14                         Bonds.





Except
for bonds, letters of credit and guarantees related primarily to the Excluded
Assets, Schedule 15.14 identifies the bonds, letters of credit and guarantees
posted by Seller in conjunction with ownership or operation of the Assets as of
the date of this Agreement.














The
signature page follows










47


SELLER:                FOREST
OIL CORPORATION








By:/s/ Glen J.
Mizenko


Name:   Glen
J. Mizenko


Title:     Senior
Vice President Business Development and Engineering





SELLER:                FOREST
OIL PERMIAN CORPORATION








By:/s/ Glen J.
Mizenko


Name:   Glen
J. Mizenko


Title:     Vice
President Business Development














PURCHASER:       
LINN ENERGY HOLDINGS, LLC





By:/s/ Charlene A.
Ripley


Name:   Charlene
A. Ripley


Title:     Senior
Vice President, General Counsel and Corporate Secretary








PURCHASER:       
LINN OPERATING, INC.





By:/s/ Charlene A.
Ripley


Name:   Charlene
A. Ripley


Title:     Senior
Vice President, General Counsel and Corporate Secretary











48




Schedule
A-1




Description
of Properties










49




Schedule
A-2




Wells













50




Schedule
A-3




Agreements







51




Schedule
B




Value
Allocation







52




Schedule
C




Suits
and Claims










53





Schedule
D


Transition
Services Agreement




Form
to be agreed upon by Seller and Purchaser prior to Closing.







54




Schedule
E






Outstanding
AFE's







55




Schedule
F-1




General
Assignment and Bill of Sale Form






[Parties
will agree to the form of this Schedule within 7 days of the date
hereof]





56




Schedule
F-2




Assignment
Form













57





Schedule
G





Environmental
Conditions








58





Schedule
1.3





Excluded
Assets





59





Schedule
2.3





Allocated
Value (Includes Tangible Assets)











60





Schedule
3.6





Preferential
Rights to Purchase





61





Schedule
4.10





Law
Violations








62





Schedule
4.11





Unpaid
Obligations








63





Schedules
4.12(a)





Take
or Pay Obligations











64





Schedule
4.12(b)





Imbalances





65





Schedule
4.13





Missing
Permits








66





Schedule
4.14





Payout
Balances





67





Schedule
15.14





Bonds