##### 



ASSET SALE AGREEMENT
 ANETH UNIT, RATHERFORD UNIT AND MCELMO CREEK UNIT
 SAN JUAN COUNTY, UTAH
 between
 CHEVRON U.S.A. INC.
 (as Seller)
 And
 RESOLUTE NATURAL RESOURCES COMPANY
 and
 NAVAJO NATION OIL AND GAS COMPANY, INC.
 (as Buyer)
 Dated October 22, 2004




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Table of Contents
 1.
    
    SALE AND PURCHASE OF ASSETS
    
    
    11.1
    
    Assets to be Sold
    
    
    11.2
    
    Transfer of Assets
    
    
    31.3
    
    Exclusions and Reservations
    
    
    31.4
    
    Conveyancing Instruments
    
    
    51.5
    
    Cooperation to Effect IRC §1031 Exchange
    
    
    51.6
    
    Suspended Proceeds
    
    
    52.
    
    PURCHASE PRICE AND EFFECTIVE DATE
    
    
    62.1
    
    Purchase Price
    
    
    62.1.1       Performance Deposit
    
    
    62.1.2       Payment of Adjusted Purchase Price
    
    
    62.2
    
    Transfer of Deposit and Purchase Price
    
    
    62.3
    
    Allocation of Purchase Price
    
    
    62.4
    
    Adjustments to Purchase Price
    
    
    62.4.1       Increases to Purchase Price
    
    
    72.4.2       Decreases to Purchase Price
    
    
    72.5
    
    Closing Statement
    
    
    82.6
    
    Effective Date of Sale
    
    
    83.
    
    ALLOCATION OF REVENUES, ASSUMPTION OF LIABILITIES AND INDEMNIFICATION
    
    
    83.1
    
    Allocation of Revenues
    
    
    83.2
    
    Payment of Invoices
    
    
    93.3
    
    Liabilities After Closing and Indemnities
    
    
    93.3.1       Definition of Claims
    
    
    93.3.2       Buyers Assumption of Abandonment Obligations
    
    
    93.3.3       Buyers Assumption of Contract Obligations
    
    
    103.3.4       Sellers Indemnity with respect to Certain Items
    
    
    103.3.5       Sellers Indemnity with respect to Retained Litigation
    
    
    103.3.6       Buyers General Indemnification
    
    
    124.
    
    GUARANTY
    
    
    12




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5.
    
    TAXES AND PAYABLES
    
    
    125.1
    
    Payment of Taxes
    
    
    126.
    
    REPRESENTATIONS, WARRANTIES, ACKNOWLEDGMENTS, DISCLAIMERS AND WAIVERS
    
    
    136.1
    
    Sellers Representations and Warranties
    
    
    136.1.1       Formation
    
    
    136.1.2       Authorization
    
    
    136.1.3       No Brokers
    
    
    136.1.4       Compliance with Laws
    
    
    136.1.5       Litigation
    
    
    136.1.6       Leases in Good Standing
    
    
    136.1.7       Environmental Matters
    
    
    136.1.8       Assets Not Subject to Payout
    
    
    146.1.9       Preferential Rights
    
    
    146.1.10     No Imbalances
    
    
    146.1.11     Special Warranty of Title
    
    
    146.1.12     Sellers Knowledge
    
    
    146.1.13     Material Adverse Effect
    
    
    146.2
    
    Buyers Representations and Warranties
    
    
    146.2.1       Formation
    
    
    146.2.2       Qualification
    
    
    156.2.3       Authorization
    
    
    156.2.4       No Brokers
    
    
    156.2.5       Compliance
    
    
    156.2.6       Financing
    
    
    156.3
    
    Disclaimers, Waivers & Acknowledgments
    
    
    156.3.1       Disclaimer
    
    
    156.3.2       Acceptance of Assets as is, where is
    
    
    156.3.3       Acknowledgment
    
    
    166.3.4       WAIVER OF CONSUMER RIGHTS
    
    
    166.3.5       NO REPRESENTATIONS OR WARRANTIES
    
    
    167.
    
    TITLE MATTERS
    
    
    187.1
    
    Asset Title Review
    
    
    187.2
    
    Notice of Alleged Title Defects
    
    
    187.3
    
    Alleged Title Defect
    
    
    187.4
    
    Permitted Encumbrances
    
    
    197.5
    
    Remedies for Title Failures
    
    
    207.6
    
    Waiver
    
    
    218.
    
    ENVIRONMENTAL MATTERS
    
    
    21
 ii




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8.1
    
    Environmental Review
    
    
    218.2
    
    Alleged Environmental Defects
    
    
    218.3
    
    Remedies for Alleged Environmental Defect
    
    
    228.4
    
    Indemnity Provisions
    
    
    238.5
    
    Post-Closing Environmental Indemnification by Buyer
    
    
    238.6
    
    Exclusion from Buyers Indemnification
    
    
    248.7
    
    CONDITION OF THE ASSETS AND SPECIFIC BUYER WITH RESPECT TO NORM AND OTHER HAZARDOUS SUBSTANCES
    
    
    248.8
    
    Waiver
    
    
    259.
    
    AGGREGATE ALLEGED DEFECTS AND ASSOCIATED TERMINATION RIGHTS
    
    
    259.1
    
    Termination Amount
    
    
    2510.
    
    ADDITIONAL COVENANTS
    
    
    2510.1
    
    Operations Prior to Closing
    
    
    2510.2
    
    Preferential Rights to Purchase
    
    
    2610.2.1      Issuance of Notices
    
    
    2610.2.2      Third Party Exercise
    
    
    2610.2.3      Third Party Failure to Purchase
    
    
    2610.3
    
    Successor Operator
    
    
    2610.4
    
    Transition
    
    
    2610.4.1      Field Operations
    
    
    2610.4.2      Production Accounting
    
    
    2710.4.3      Data Transfer
    
    
    2710.4.4      IT and Systems
    
    
    2710.4.5      Marketing and Nominations
    
    
    2710.5
    
    Employee and Employee Benefits
    
    
    2710.5.1      Offers of Employment
    
    
    2710.5.2      Defined Benefit Pension Plans
    
    
    2810.5.3      Qualified Defined Contribution Plans
    
    
    2910.5.4      Severance Plans
    
    
    2910.5.5      Vacation Pay
    
    
    3010.5.6      Health Care Plans
    
    
    3010.5.7      Post-Retirement Welfare Benefits
    
    
    3110.5.8      WARN Act Compliance
    
    
    3110.5.9      Buyers Other Employee Benefits
    
    
    3110.5.10      General Employee Provisions
    
    
    3210.5.11      Definition Controlled Groups
    
    
    32
 iii




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11.
    
    COVENANTS, ASSIGNMENTS AND CONTINUING OBLIGATIONS
    
    
    3211.1
    
    Covenants, Assignments and Continuing Obligations
    
    
    3212.
    
    CLOSING, TERMINATION AND FINAL ADJUSTMENTS
    
    
    3312.1
    
    Conditions Precedent to Sellers Obligation to Close
    
    
    3312.2
    
    Conditions Precedent to Buyers Obligation to Close
    
    
    3312.3
    
    Closing
    
    
    3412.4
    
    Termination
    
    
    3512.5
    
    Upon Termination
    
    
    3512.6
    
    Final Adjustments
    
    
    3513.
    
    DISPUTE RESOLUTION AND BINDING ARBITRATION
    
    
    3613.1
    
    Sole and Exclusive Method for Resolution of Disputes
    
    
    3613.2
    
    Negotiation Between Executives
    
    
    3613.3
    
    Mediation
    
    
    3713.4
    
    Arbitration
    
    
    3713.5
    
    Jurisdiction
    
    
    3713.6
    
    Sovereign Immunity
    
    
    3714.
    
    MISCELLANEOUS
    
    
    3814.1
    
    Call on Production
    
    
    3814.2
    
    Oil and Gas Imbalances
    
    
    3814.3
    
    Insurance. With regard to any Seller-operated properties:
    
    
    3814.4
    
    Casualty Loss of Assets
    
    
    3814.4.1      Definition
    
    
    3814.4.2      Notice of Loss
    
    
    3814.4.3      Handling of Casualty Loss
    
    
    3814.5
    
    Transfer of Records
    
    
    3914.6
    
    Publicity
    
    
    3914.7
    
    Assignment
    
    
    3914.8
    
    Entire Agreement
    
    
    40
 iv




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14.9
    
    Notices
    
    
    4014.10
    
    Governing Law
    
    
    4114.11
    
    Confidentiality
    
    
    4114.12
    
    Default
    
    
    4114.12.1    Failure to Respond
    
    
    4114.12.2    Seller Not Obligated to Remedy Buyers Defaults
    
    
    4214.12.3    Invoicing and Recoupment by Seller
    
    
    4214.12.4    Other Remedies Reserved
    
    
    4214.12.5    No Waiver
    
    
    4214.13
    
    Survival of Certain Obligations
    
    
    4214.14
    
    Conflict of Interest
    
    
    4214.15
    
    Further Cooperation
    
    
    4314.16
    
    Counterparts
    
    
    4314.17
    
    Exhibits and Schedules
    
    
    4314.18
    
    Severability
    
    
    4314.19
    
    Expenses, Post-Closing Consents and Recording
    
    
    4314.20
    
    Removal of Signs and Markers
    
    
    4314.21
    
    Intentionally omitted
    
    
    4414.22
    
    CONSPICUOUSNESS / EXPRESS NEGLIGENCE
    
    
    4414.23
    
    Waiver of Certain Damages
    
    
    4414.24
    
    Prior Contract(s) Affecting Production
    
    
    44
 v




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ASSET SALE AGREEMENT
ANETH UNIT, RATHERFORD UNIT AND MCELMO CREEK UNIT
 CHEVRON
U.S.A. INC., RESOLUTE NATURAL RESOURCES COMPANY (RNRC) NAVAJO NATION OIL AND GAS
COMPANY, INC., (NNOG)
 WITNESSETH:
  1. Sale and Purchase of Assets
 Assets to be Sold
 (a)
    
    The oil, gas and mineral leases and/or deeds, operating rights, working interests,
net revenue interests and mineral interests described in Exhibit A, and further
including any renewals, extensions, ratifications and amendments to such leases and/or
deeds or interests, or portions of same (collectively, the Leases), together with all
oil and gas unitization, pooling and/or communitization agreements, declarations,
designations and/or orders relating to the Leases and statutorily, judicially or
administratively created drilling, spacing and/or production units, whether recorded or
unrecorded, insofar as they relate to the Leases, and all of Sellers interest in and to
the properties covered or units created thereby to the extent attributable to the Leases
(collectively, the Units).(b)
    
    Any and all oil and gas wells, salt water disposal wells, injection wells and other
wells and wellbores, whether abandoned, not abandoned, plugged or unplugged, located on
the Leases or within the Units or used in connection with the Leases or Units
(collectively, the Wells).




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##### 



(c)
    
    All buildings, structures, facilities, foundations, wellheads, tanks, pumps,
compressors, separators, casing, tubing, pumps, motors, gauges, valves, heaters, treaters,
gathering lines, gas lines, water lines, vessels, boilers, equipment, machinery, fixtures,
flowlines, materials, improvements, and any other real, personal, immovable and mixed
property located on or near the Leases or Units and currently or formerly used in the
operation of, or relating to the in-field production, treatment, sale, or disposal of
Hydrocarbons (as hereinafter defined), water, and associated substances produced from, the
Leases, or the Units (collectively, the Personal Property).(d)
    
    All natural gas, casinghead gas, drip gasoline, natural gasoline, natural gas liquids,
condensate, products, crude oil and other hydrocarbons, whether gaseous or liquid
(Hydrocarbons), produced and severed from, or allocable, after severance, to the Leases,
the Units, the Wells or the Contracts (as hereinafter defined) on and after the Effective
Date (as defined in Section 2.6) (collectively, the Sale Hydrocarbons).(e)
    
    To the extent transferable, all contracts, permits, rights-of-way, easements, servitudes,
surface leases, subsurface use agreements, licenses, pooling agreements, operating
agreements, processing agreements, division orders, farm-in and farm-out agreements, and
other agreements of any kind or nature, whether recorded or not (including but not limited to
those described on Exhibit A) INSOFAR ONLY as they directly relate and are attributable to
the Leases, Units, the production from either or both, Wells or Personal Property or the
ownership or operation thereof, or the production, treatment, sale, transportation,
gathering, storage or disposal of Sale Hydrocarbons, water, or substances associated
therewith (the Contracts). The Contracts shall include, but not be limited to the Aneth Gas
Plant Joint Operating Agreement dated December 31, 1986, as further described in Exhibit A.(f)
    
    All rights and obligations attributable to Production Imbalances and Assigned Pipeline
Imbalances , if any (the Assigned Imbalances).(g)
    
    Records or copies thereof, relating to the Leases, Units, Wells, Sale Hydrocarbons,
Contracts and Personal Property, in the possession of Seller (the Records), but excluding
any records which (i) Seller is prohibited from transferring to Buyer by law or existing
contractual relationship, or (ii) which constitute Excluded Assets (as defined in Section
1.3).(h)
    
    All surface use rights in and to that certain 24.26 acre parcel of land (the Aneth
Compressor and Gathering Site) described more particularly by metes and bounds in the
attached Schedule 1.1(h), including ingress and egress rights to said parcel over, across and
through the Aneth Plant Site that is excluded from the Assets, and including personal property
and associated contractual rights and obligations, all pipelines, gathering lines, compressors
and associated equipment and facilities located on said 24.26 acre parcel and described on
Schedule 1.1(h) to be used in connection with the operation of what remains of the Aneth Plant
and gathering system.
 2




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Transfer of Assets
 Exclusions and Reservations
 (a)
    
    Sellers proprietary data, reserve estimates and reports, economic analyses,
computer programs and applications, pricing forecasts, legal files and legal opinions
(except abstracts of title, title opinions, certificates of title, or title curative
documents), attorney-client communications, attorney work product, and records and
documents subject to confidentiality provisions, claims of privilege or other
restrictions on access.(b)
    
    All of Sellers separate proprietary software and derivatives therefrom, data
licensing agreements and seismic licenses between Seller and third parties, if any, and
any and all geologic/geophysical interpretations and proprietary or licensed raw or
processed geophysical data (including magnetic tapes, field notes, seismic lines,
analyses and similar data or information).(c)
    
    Except as may be expressly provided otherwise in this Agreement, all rights and
claims arising, occurring, or existing in favor of Seller prior to the Effective Date
including, but not limited to, any and all contract rights, claims, penalties,
receivables, revenues, recoupment rights, recovery rights, accounting adjustments,
mispayments, erroneous payments, personal injury, property damage, royalty and other
rights and claims of any nature in favor of Seller relating to any time period prior to
the Effective Date, to the extent, and only to the extent, that such claims, rights and
other matters do not cause an impairment in the value of the Assets to occur after the
Effective Date.(d)
    
    All corporate, financial, and tax records of Seller; however, upon receipt by Seller
of a written request from Buyer indicating its desire to obtain copies, and the purpose
for same, Seller shall provide Buyer, at Buyers sole cost and expense, copies of any
financial and tax records, other than income tax records, which directly relate, in the
opinion of Seller, to the Assets, or which are necessary for Buyers ownership,
administration, or operation of the Assets.(e)
    
    To the extent, and only to the extent, that such claims, rights and other matters do
not cause an impairment in the value of the Assets to occur after the Effective Date, all
rights, titles, claims and interests of Seller related to the Assets for all periods prior
to
 3




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the Effective Date (i) under any policy or agreement of insurance or indemnity, (ii) under
any bond, or (iii) to any insurance or condemnation proceeds or awards.(f)
    
    All Hydrocarbons produced from or attributable to Sellers interest in the Assets with
respect to all periods prior to the Effective Date, together with all proceeds from and
rights relating to the sale of such Hydrocarbons.(g)
    
    Claims of Seller for any refund of or loss carry forwards with respect to (i) production,
windfall profit, severance, ad valorem or any other taxes attributable to the Assets, and
(ii) income, occupational or franchise taxes, for any period prior to the Effective Date.(h)
    
    Subject to the terms hereof, all monies, proceeds, benefits, receipts, credits, income or
revenues (and any security or other deposits made) attributable to the Assets or the
operation thereof prior to the Effective Date, specifically including, without limitation,
amounts recoverable from audits under operating agreements and any overpayments of royalties.(i)
    
    All amounts due or payable to Seller as adjustments to insurance premiums related to the
Assets for all periods prior to the Effective Date.(j)
    
    All of Sellers intellectual property rights, patents, trade secrets, copyrights, names,
marks and logos.(k)
    
    All rights, obligations, benefits, awards, judgments, settlements, if any, applicable to any
litigation pending in which Seller is a named claimant or plaintiff or holds beneficial
rights or interests, to the extent related to periods prior to the Effective Date, to the
extent, and only to the extent, that such claims, rights and other matters do not cause an
impairment in the value of the Assets to occur after the Effective Date.(1)
    
    Sellers master service agreements and charter party agreements, storage or warehouse
agreements, supplier contracts, service contracts, insurance contracts, and construction
agreements.(m)
    
    All telecommunication and communications equipment and services, Wide Area Radio System
(WARS) control stations, remote terminal units, SCADA software, and proprietary software,
unless otherwise specifically identified as being included on the attached Schedule 1.3.(n)
    
    All fixtures, facilities, pipe lines or gathering lines owned by Chevron Pipe Line Company
or any other division of Seller or subsidiary of ChevronTexaco Corporation.(o)
    
    The vehicles, boats, tools, emergency medical response supplies (including but not limited to
automated external defibulators, oxygen and combi tubes), identified surplus equipment and any
other assets specifically identified as excluded or retained on any of the Exhibits attached
to this Agreement, including those described on Schedule 1.3.
 4




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(p)
    
    All third party owned equipment and property located on or used in connection with
the Assets, including, without limitation, contractor equipment and leased equipment.(q)
    
    All real and personal property located on or previously located on the site of the
Aneth Plant as described in Schedule 1.3(q) (Aneth Plant Site), but expressly excluding
from the Aneth Plant Site the Aneth Compressor and Gathering Site described in Schedule
1.1(h) which 24.26 acre parcel Buyer will acquire as provided in Section 1.1(h) above.
 Conveyancing Instruments
 Cooperation to Effect IRC §1031 Exchange
 Suspended Proceeds
 5




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2. Purchase Price and Effective Date
 Purchase Price
 Performance Deposit
 Payment of Adjusted Purchase Price.
 Transfer of Deposit and Purchase Price
 Receiving Bank: BankOne N.A.
ABA #071000013
BNF: ChevronTexaco Exploration and Production Company
Account #59-51720
REFERENCE: Greater Aneth Area
Attn: Luci Romano-Westuba (925) 842-8015
 Allocation of Purchase Price
 Adjustments to Purchase Price
 6




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Increases to Purchase Price
 (a)
    
    The amount of all expenses and charges relating to the Assets or the operation of the
Assets which are paid by or on behalf of Seller and are attributable to the period of time
from and after the Effective Date, including (i) all operating and capital expenditures
and prepaid expenses attributable to the Assets including, without limitation, royalty
disbursements, rentals and other similar charges, excise, severance and production tax
payments and any other tax payments based upon or measured by the production of Sale
Hydrocarbons or the receipt of proceeds therefrom, and (ii) expenses paid by Seller to any
third party under applicable joint operating agreements or other contracts or agreements
included in or bearing upon the Assets, or in the absence of any joint operating
agreement, those customarily billed under any such agreement, including without
limitation, drilling, completion, reworking, deepening, side-tracking, plugging and
abandoning, geological and geophysical and land costs.(b)
    
    An amount equal to the market value of all Hydrocarbons in storage above the pipeline
connection on the Effective Date (less a reasonable estimate for basic sediment and water)
that are produced from, attributable to, or otherwise credited to the Assets (it being
understood that such value shall be based on the price at which such Hydrocarbons were
sold after the Effective Date (on a first-in, first-out basis), less transportation,
processing, quality adjustments, if any, applicable taxes and royalty payments).(c)
    
    The amount of any property or ad valorem taxes paid by Seller, prorated in accordance
with Section 5.(d)
    
    An amount equal to any unpaid joint interest billings of Buyer relating to the Assets
and attributable to the period of time prior to the Effective Date.(e)
    
    The sum of $15,000 per month for each month or portion thereof from the Effective Date
to the Closing Date as compensation to Seller for issuing royalty and rental checks and
continuing to perform accounting obligations for the Assets through the production month
of January 2005.(f)
    
    Interest, at the rate of 4% per annum, on the Adjusted Purchase Price less the Deposit,
and less the production revenue attributable to the Assets for the period of time from the
Effective Date to the Closing Date.(g)
    
    Any other amount agreed upon by Seller and Buyer.
 Decreases to Purchase Price
 7




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(a)
    
    An amount equal to the net proceeds (the price at which the Sale Hydrocarbons were
sold after the Effective Date (on a first-in, first-out basis), less transportation,
quality adjustments, if any, applicable income and other taxes and royalty payments)
received by Seller from the sale of Sale Hydrocarbons.(b)
    
    Reductions due to Title Failures as provided for in Section 7.(c)
    
    Reductions due to Alleged Environmental Defects as provided for in Section 8.(d)
    
    Reductions due to the exercise of preferential rights to purchase as provided for in
Section 10.2.(e)
    
    Reductions due to Casualty Loss as provided in Section 14.4.(f)
    
    The amount of any property or ad valorem taxes prorated in accordance with Section 5.(g)
    
    The principal amount of the Deposit, exclusive of any interest which may be earned or
earnable against the Deposit.(h)
    
    Any other amount agreed upon by Seller and Buyer.
 Closing Statement
 Effective Date of Sale
 3.
Allocation of Revenues, Assumption of Liabilities and
Indemnification
 Allocation of Revenues
 8




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Payment of Invoices
 Liabilities After Closing and Indemnities
 Definition of Claims
 Buyers Assumption of Abandonment Obligations
 9




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Buyers Assumption of Contract Obligations
 Sellers Indemnity with respect to Certain Items
 Sellers Indemnity with respect to Retained Litigation
 (a)
    
    The penalty, capital costs and special environmental project (SEP) costs
attributable to Sellers interest associated with compliance with the Consent Decree in
United States v. Texaco Exploration and Production Inc., Case No.
2:98-CV-00213-ST, United States District Court, District of Utah, Central Division,
regarding the Aneth Unit as such Consent Decree is in effect as of the Effective Date,
but not any future amendments thereof. To the extent such costs are not incurred and
billed to the interest
 10




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acquired from Seller on or before December 31, 2005, Sellers liability shall terminate
thereafter. Seller and Buyer shall perform the specific tasks in regard to the Consent Decree
as set forth on Schedule 3.3.5(a). Seller shall also complete all regulatory reporting
through December 31, 2004 and all reporting under the Consent Decree through July 31, 2005.
Buyer shall handle regulatory and Consent Decree reporting subsequent to these dates. Buyer
shall assume and pay the incremental operating costs attributable to the Consent Decree from
and after the Effective Date except the costs of the reporting Seller has agreed to perform
as set forth above. Pursuant to Article 1(3) of the Consent Decree, a copy of the Consent
Decree is attached to this Agreement, Buyer agrees to perform all obligations of Seller under
the Consent Decree and Seller is not relieved of liability of its obligations under the
Consent Decree.(b)
    
    The penalty, capital costs and SEP costs attributable to Sellers interest associated with
compliance with the Consent Decree in United States v. Mobil Exploration & Producing U.S.
INC., Civ. No. 2-98-CV-00220-ST, United States District Court, District of Utah, Central
Division, regarding McElmo and Ratherford Units as in effect on the Effective Date, but not
any future amendments thereof, provided that to the extent such costs are not incurred and
billed (or reasonably known and quantified by appropriate documentation) to the interest
acquired from Seller on or before December 31, 2005, Sellers liability shall terminate.
Buyer shall assume and pay the incremental operating costs from and after the Effective Date
attributable to the Consent Decree subsequent to the Effective Date.(c)
    
    The penalty, capital, permit and SEP costs associated with settlement of the Clean Air Act
claims asserted by the United States Environmental Protection Agency in Notice of Violation
R9-97-38 dated September 9, 1997 against Mobil Corporation and Notice of Violation R9-99-09
dated June 8, 1999 against Mobil Exploration & Producing USA Inc. both affecting McElmo and/or
Ratherford Units (and any similar Claims asserted in writing as of the Effective Date with
respect to pre-Effective Date violations of the Clean Air Act on such units) in excess of
$90,000 to Sellers interest. To the extent such costs are not incurred and billed (or
reasonably known and quantified by appropriate documentation) on or before December 31, 2006,
Sellers liability shall terminate.(d)
    
    Seller at its expense shall decommission the facilities and equipment on the Aneth Plant
Site and restore and remediate the site in accordance with Environmental Law and any order or
requirement of any agency with jurisdiction thereof. Seller shall defend, indemnify and hold
Buyer Parties harmless from any and all Claims associated with the Aneth Plant Site. For
purposes of the foregoing agreement of Seller to decommission the Aneth Plant Site and
remediate the premises identified on Schedule 1.3(q), Sellers liability and indemnity
obligation shall be limited to complying with those Environmental Laws, regulations, orders
and regulatory policies existing as of the Effective Date. Seller further reserves from the
Assets all necessary rights of access to the Aneth Plant Site necessary to perform the
obligations to decommission and remediate the Aneth Plant Site.
 11




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(e)
    
    In no event shall Sellers liability above and the indemnity provided hereinabove
include costs attributable to the interest acquired from Seller where costs are the
direct result of operators performance occurring after Closing (e.g., penalties assessed
against the McElmo and/or Ratherford operator for spills, untimely reports or the like
occurring subsequent to Closing will not be the responsibility of Seller).
 Buyers General Indemnification
 4. Guaranty
  5. Taxes And Payables
 Payment of Taxes
 12




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##### 



6. Representations, Warranties, Acknowledgments, Disclaimers and Waivers
 Sellers Representations and Warranties
 Formation
 Authorization
 No Brokers
 Compliance with Laws
 Litigation
 Leases in Good Standing
 Environmental Matters
 13




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Assets Not Subject to Payout
 Preferential Rights
 No Imbalances
 Special Warranty of Title
 Sellers Knowledge
 Material Adverse Effect
 Buyers Representations and Warranties
 Formation
 14




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Qualification
 Authorization
 No Brokers
 Compliance
 Financing
 Disclaimers, Waivers & Acknowledgments
 Disclaimer.
 Acceptance of Assets as is, where is
 15




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Acknowledgment
 WAIVER OF CONSUMER RIGHTS
 NO REPRESENTATIONS OR WARRANTIES
 (a)
    
    BUYER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS 3.3.4, 3.3.5, 6.1,
7.5, 8.3, 8.4, 8.6, 10.1, 14.4.3, SELLER MAKES THIS SALE OF THE ASSETS TO BUYER WITHOUT
ANY WARRANTY AS TO THE CONDITION OF THE ASSETS, INCLUDING ABSENCE OF VICES OR DEFECTS
 16




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(WHETHER APPARENT OR LATENT, KNOWN OR UNKNOWN, EASILY DISCOVERABLE OR HIDDEN), FITNESS FOR ANY
ORDINARY USE, OR FITNESS FOR ANY INTENDED USE OR PARTICULAR PURPOSE, EVEN FOR RETURN OR
REDUCTION OF THE PURCHASE PRICE OR OTHERWISE, IT BEING UNDERSTOOD THAT BUYER TAKES THE ASSETS
AS IS AND WHERE IS; BUYER HEREBY ACKNOWLEDGING RELIANCE SOLELY ON ITS OWN INSPECTION OF
THE ASSETS, AND NOT ON ANY WARRANTIES OR REPRESENTATIONS FROM SELLER WITH RESPECT TO THE
CONDITION OF THE ASSETS. IN ADDITION, BUYER ACKNOWLEDGES THAT, EXCEPT AS EXPESSLY PROVIDED IN
SECTIONS 3.3.4, 3.3.5, 6.1, 7.5, 8.3, 8.4, 8.6, 10.1, 14.4.3, SELLER HAS MADE NO
REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO
THE CONDITION OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OR REPRESENTATIONS
AS TO ABSENCE OF VICES OR DEFECTS (WHETHER APPARENT OR LATENT, KNOWN OR UNKNOWN, EASILY
DISCOVERABLE OR HIDDEN), FITNESS FOR ANY ORDINARY USE, FITNESS FOR ANY INTENDED USE OR
PARTICULAR PURPOSE, TAX CONSEQUENCES, OR ENVIRONMENTAL CONDITION OF THE ASSETS. ALL WARRANTIES
WITH RESPECT TO THE MECHANICAL CONDITION OF THE ASSETS ARE HEREBY DISCLAIMED BY SELLER AND
EXPRESSLY WAIVED BY BUYER. BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE
FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR
INFORMATION PERTAINING TO THE CONDITION OF THE ASSETS OR RELATING THERETO MADE OR FURNISHED BY
SELLER, ANY PARTY ACTING OR PURPORTING TO ACT FOR SELLER, OR ANY BROKER OR AGENT REPRESENTING
OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY
OR IN WRITING.
 (b)
    
    EXCEPT AS EXPESSLY PROVIDED IN SECTIONS 3.3.4, 3.3.5, 6.1, 7.5, 8.3, 8.4, 8.6, 10.1, 14.4.3,
SELLER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO
THE ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION OR
MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH
THIS SALE, INCLUDING, WITHOUT LIMITATION, THE QUALITY, QUANTITY OR ENVIRONMENTAL CONDITION OF
THE ASSETS OR ANY OTHER MATTERS CONTAINED IN THE DATA OR ANY OTHER MATERIALS FURNISHED OR MADE
AVAILABLE TO BUYER BY SELLER, ITS AGENTS, REPRESENTATIVES OR EMPLOYEES. ANY AND ALL SUCH DATA,
RECORDS, REPORTS, PROJECTIONS, INFORMATION AND OTHER MATERIALS FURNISHED BY SELLER OR
OTHERWISE MADE AVAILABLE TO BUYER ARE PROVIDED TO BUYER AS A CONVENIENCE, AND SHALL NOT CREATE
OR GIVE RISE TO ANY LIABILITY OF OR AGAINST SELLER. ANY RELIANCE ON OR USE OF THE SAME SHALL
BE AT BUYERS SOLE
 17




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RISK TO THE MAXIMUM EXTENT PERMITTED BY LAW AND EXCEPT AS EXPRESSLY PROVIDED IN SECTIONS
3.3.4, 3.3.5, 6.1, 7.5, 8.3, 8.4, 8.6, 10.1, 14.4.3.
 7. Title Matters
 Asset Title Review
 Notice of Alleged Title Defects
 Alleged Title Defect
 18




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Permitted Encumbrances
 (a)
    
    Lessors royalties, non-participating royalties, overriding royalties, division
orders, sales and transportation contracts containing customary terms and provisions,
reversionary interests, and similar burdens if the net cumulative effect of such burdens
does not operate to reduce the net revenue interest in any Asset to an amount less than
the net revenue interest set forth on Exhibit A or increase the working interest of any
Asset from that set forth in Exhibit A without a corresponding increase in the revenue
interest.(b)
    
    Preferential rights to purchase and required non-governmental 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.(c)
    
    Liens for taxes or assessments not yet due or delinquent or, if delinquent, that are
being contested in good faith in the normal course of business.(d)
    
    All rights to consent by, required notices to, filings with, or other actions by
governmental entities in connection with the sale or conveyance of oil and gas leases or
interests therein, if the same are customarily obtained subsequent to such sale or
conveyance and Buyer and Seller have no reason to believe they cannot be obtained.(e)
    
    Alleged Title Defects or other deficiencies or irregularities that have been waived by
Buyer in writing or not asserted on or before the Defect Notice Date.(f)
    
    Easements, rights-of way, servitudes, permits, surface leases and other rights in
respect of surface operations, provided they do not materially interfere with Buyers
operation or use of the Assets.(g)
    
    Defects, irregularities and deficiencies in title of or to any rights-of-way,
easements, surface leases or other rights which in the aggregate do not materially impair
the use of such rights-of-way, easements, surface leases or other rights for the purpose
for which such rights will be held by Buyer and would not have a material adverse effect on
the operation or value of any of the Assets.(h)
    
    Environmental laws and regulations, to the extent valid and applicable to the Assets.(i)
    
    Vendors, carriers, warehousemens, repairmens, mechanics, workmens,
materialmens, construction or other like liens which have expired as a matter of law, or
arising by operation of law in the ordinary course of business or incident to the
 19




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##### 



construction or improvement of any property in respect of obligations which are not yet
due.
 (j)
    
    All other liens, claims, charges, encumbrances, contracts, agreements, instruments,
obligations, defects, and irregularities affecting the Assets relating to obligations not
yet in default, and/or which individually or in the aggregate are not such as to interfere
materially with the operation, value, or use of any of the Assets, do not materially
prevent Buyer from receiving the proceeds of production from the Assets, do not reduce the
net revenue interest of any of the Assets to less than the net revenue interest set forth
on Exhibit A and do not obligate Buyer to bear costs and expenses relating to the
maintenance, development, and operation of any of the interests in any amount greater than
the working interest set forth on Exhibit A (unless the net revenue interest for such
Asset is greater than the net revenue interest set forth in Exhibit A in the same
proportion as any increase in such working interest).
 Remedies for Title Failures
 (a)
    
    If the Title Failure results from a difference in the net revenue interest for a Lease
from that shown on Exhibit A, the parties shall proceed to Closing and reduce the
Purchase Price by an amount (the Defect Amount) determined by multiplying the amount of
the Purchase Price allocated to the affected Lease by a fraction, the numerator of which
shall be the difference between the actual net revenue interest being conveyed and the net
revenue interest shown on Exhibit A and the denominator of which shall be the net revenue
interest shown on Exhibit A.(b)
    
    If the Title Failure results from a difference in the working interest for a Lease
from that shown on Exhibit A, the parties shall proceed to Closing and reduce the
Purchase Price by a Defect Amount determined by multiplying the amount of the Purchase
Price allocated to the affected Lease by a fraction, the numerator of which shall be the
difference between the actual working interest being conveyed and the working interest
shown on Exhibit A and the denominator of which shall be the working interest shown on
Exhibit A.(c)
    
    If the Title Failure is one other than described in Sections 7.5 (a) or (b), the
Defect Amount shall be an amount determined in good faith by the mutual agreement of Buyer
and Seller, taking into account the portion of the Purchase Price to be allocated by
agreement of Seller and Buyer to the portion of the Assets affected by the Title Failure,
 20




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##### 



the legal effect of the Title Failure, and the potential economic effect of the Title
Failure over the life of the Assets.
 Waiver
 8. Environmental Matters
 Environmental Review
 Alleged Environmental Defects
 21




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##### 



Remedies for Alleged Environmental Defect
 (a)
    
    Prior to or at Closing, Seller and Buyer shall mutually agree in writing separate
and apart from this Agreement that Seller shall correct or make arrangements for the
correction of such Alleged Environmental Defect, and Closing shall proceed with Seller
defending, indemnifying and holding Buyer and the Buyer Parties harmless against all
Claims attributable to such Alleged Environmental Defect and without reduction of the
Purchase Price;(b)
    
    Buyer shall correct or make arrangements for the correction of such Alleged
Environmental Defect after Closing, and the parties shall proceed to Closing with a
reduction of the Purchase Price in an amount mutually agreed to by the parties and with
Buyer defending, indemnifying and holding Seller and the Seller Parties harmless against
all Claims attributable to such Alleged Environmental Defect; or(c)
    
    Buyer shall accept the Assets subject to such Alleged Environmental Defect, the
parties shall proceed to Closing without adjustment of the Purchase Price, and Seller
shall defend, indemnify and hold Buyer and the Buyer Parties harmless against all Claims
incurred by Buyer with respect to such Alleged Environmental Defect, up to, but in no
event to exceed, the sum of $20,000,000 (such amount being cumulative for any and all
claims of Alleged Environmental Defect made by Buyer) and only as to that portion of such
Claims which are in excess of $500,000. In the event of a claim of an Alleged
Environmental Defect and a demand for indemnification by Buyer hereunder, Seller reserves
the right to jointly negotiate with Buyer and the agency or party, if any, making such
claim the right of access to the affected site, the use of temporary storage and resources
at such site, to the full extent held by Buyer, and the right to perform assessment,
removal and remedial operations for such Alleged Environmental Defect, at its cost and
risk, and any sums so expended by Seller shall be a credit against Sellers indemnity
obligation, if any, under this Section 8.3 (c).
 22




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##### 



Indemnity Provisions
 Post-Closing Environmental Indemnification by Buyer
 23




---



##### 



Exclusion from Buyers Indemnification
 CONDITION OF THE ASSETS AND SPECIFIC BUYER WITH RESPECT TO NORM AND OTHER HAZARDOUS SUBSTANCES
 24




---



##### 



Waiver
 9. Aggregate Alleged Defects and Associated Termination Rights
 Termination Amount
 10. Additional Covenants
 Operations Prior to Closing regardless of the sole, joint or concurrent negligence, strict liability,
regulatory liability, statutory liability, breach of contract, breach of warranty, or other fault
or responsibility of Seller or any other person or party, except such Buyer losses, Claims or
damages as may result directly and solely from Sellers gross negligence or willful misconduct.
 25




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##### 



Preferential Rights to Purchase
 Issuance of Notices
 Third Party Exercise
 Third Party Failure to Purchase
 Successor Operator
 Transition
 Field Operations
 26




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##### 



Production Accounting th
 Data Transfer
 IT and Systems
 Marketing and Nominations
 Employee and Employee Benefits
 Offers of Employment
 (a)
    
    Sellers employees listed on Schedule 10.5 are the Prospective Employees. Buyer
(for purposes of this Section 10.5 meaning RNRC only) shall offer employment to all of the
Prospective Employees.(b)
    
    Buyers employment offers to Prospective Employees shall be made in writing during a
hiring period beginning on the Execution Date and ending two weeks prior to the
scheduled Closing. Buyer may require each Prospective Employee to submit a formal
application for employment and submit to Buyers customary hiring procedures. Each such
employment offer shall be for a position with Buyer at a salary or wage that is no less
than the base salary (or the base wage rate) plus any shift differential applicable with
respect to such Prospective Employee on the Closing Date (Equivalent Wage). Equivalent
Wage shall not include the value of any benefit plan or program, including without
limitation, the ChevronTexaco Success Sharing Program and/or Management Incentive Plan,
or any other company incentive program in effect as of the Closing Date. Each such
employment offer shall also be for a position at a work location that is fifty (50) miles
or less from the Prospective Employees work location at the time of the offer.
 27




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##### 



(c)
    
    Seller will terminate the employment of all Prospective Employees who accept Buyers
employment offers on the Closing Date. Prospective Employees who become Buyers employees as
of the Closing Date are the Affected Employees. Prospective Employees who do not become
Affected Employees are Remaining Employees.(d)
    
    Nothing in this Agreement shall affect Buyers right to terminate the employment of any
Affected Employee on or after the date he or she becomes Buyers employee, with or without
cause; provided that Buyer shall comply with the terms of the severance program required by
Section 10.5.5(b) below if such termination is prior to one year after the Closing Date.(e)
    
    Buyer shall control and be responsible for the process by which the Buyer offers employment
to Prospective Employees. Buyer may interview any Prospective Employee during normal working
hours (including interviews on site) consistent with the operating requirements of Seller
and, with the written permission of the Prospective Employee (a copy of which written
permission shall be furnished to Buyer), may review and retain copies of such Prospective
Employees training, attendance and safety records (if any) maintained by Seller. All of the
original personnel records maintained by Seller relating to the Prospective Employees shall
remain with Seller after the Closing Date and shall not be turned over to Buyer. Buyer shall,
however, have access to and use of such records as may be required in connection with the
prosecution or defense of any administrative or court claim, and Seller shall not destroy any
such records prior to the time such records are scheduled for destruction pursuant to
Sellers records retention policy applicable to records of this type.(f)
    
    Buyer shall not reduce an Affected Employees salary (or wage rate) below the Affected
Employees Equivalent Wage prior to one year after the Closing Date.
 Defined Benefit Pension Plans
 (a)
    
    Sellers Defined Benefit Pension Plan. Seller shall cause the ChevronTexaco
Corporation Retirement Plan and related excess or top hat benefit plans designed to provide
benefits not otherwise payable under the ChevronTexaco Corporation Retirement Plan due to
various Internal Revenue Code limitations or limitations to compensation taken into account
under the ChevronTexaco Corporation Retirement Plan (Sellers Pension Plan) to:
 (i)
    
    retain all liability for pension benefits, including under Sellers Pension
Plan, accrued by each Affected Employee as of the Transfer Date;(ii)
    
    provide for distributions to any Affected Employee eligible for an immediate
distribution as of the date he or she terminates employment with Seller when permitted
by the provisions of Sellers Pension Plan; and(iii)
    
    fully vest each Affected Employee in his or her accrued benefits under the
Sellers Pension Plan effective as of the Transfer Date.
 28




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For purposes of the foregoing, however, vesting in an excess or top hat benefit plan shall be
construed to mean that ones rights under the plans terms are non-forfeitable, not that the
Affected Employee is vested in the particular amount that would be payable under such plans
if he or she commenced a distribution on the Transfer Date.(b)
    
    Buyers Pension Plan. Buyer does not currently maintain a defined benefit pension
plan for its employees. In the event Buyer subsequently establishes a defined benefit pension
plan that is qualified under Section 401 of the Internal Revenue Code (Buyers Pension
Plan) Buyer shall allow each Affected Employee to participate in such plan on the same terms
as Buyers other similarly situated employees. Same terms shall be construed as recognizing
service with the Seller for all purposes that Buyer recognizes prior service with it under
the terms of such plan.
 Qualified Defined Contribution Plans
 (a)
    
    Seller shall cause the ChevronTexaco Corporation Employee Savings Investment Plan and any
related excess or top hat benefit plans designed to provide benefits not otherwise payable
under the ChevronTexaco Corporation Employee Savings Investment Plan due to various Internal
Revenue Code limitations or limitations to compensation taken into account under the
ChevronTexaco Corporation Employee Savings Plan (Sellers Defined Contribution Plan) to
provide for the distribution of such Affected Employees vested benefit in accordance with
such Sellers Defined Contribution Plans distribution rules. All Affected Employees are one
hundred percent (100%) vested in Sellers Defined Contribution Plan under its terms.(b)
    
    Buyer shall cause the Buyers Defined Contribution Plan to recognize each Affected
Employees service under the Buyers Defined Contribution Plan as of his or her Hire Date for
purposes of vesting and eligibility (including, without limitation, eligibility to commence
participation). Such Affected Employees service for this purpose shall be the service used
by the ChevronTexaco Corporation Retirement Plan for vesting and eligibility.
 Severance Plans
 (a)
    
    Sellers Severance Pay Plans. Seller shall cause the execution of a severance pay
plan(s) for the benefit of qualifying Prospective Employees (Sellers Severance Pay Plans).
Prospective Employees will only receive severance pay in connection with the termination of
their employment with Seller if they qualify for it under the terms of Sellers Severance Pay
Plans. Without limitation, Sellers Severance Pay Plans shall provide that a Prospective
Employee is ineligible for severance pay if he or she received an employment offer from Buyer
at an Equivalent Wage and at a work location within 50 miles of his or her work location with
Seller at the Closing Date, regardless of whether such offer is accepted or rejected. In
addition, Sellers Severance Pay Plans shall provide that no Affected Employee shall be
eligible for severance pay.
 29




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##### 



(b)
    
    Buyers Severance Program. If within one year of the Close Date:
 (i)
    
    Buyer involuntarily terminates the employment of an Affected Employee (for
reasons other than cause or to commence employment with another entity within
Buyers Controlled Group),(ii)
    
    the Affected Employee elects to terminate employment with the Buyer (or
another entity within Buyers Controlled Group) rather than be required to transfer
to a job location more than 50 miles from his or her current job location, or(iii)
    
    the Affected Employee elects to terminate employment with the Buyer (or
another entity within the Buyers Controlled Group) rather than accept a reduction
in compensation below his or her Equivalent Wage (without regard to whether such
reduction in compensation would violate Section 10.5.1 (f) of this Agreement).
 (c)
    
    Buyer shall provide severance pay and other benefits to such Affected Employee as
described below (Buyers Severance Program). Buyer agrees to adopt such Buyers
Severance Program no later than the Close Date and not to terminate it or amend it in a
manner inconsistent with this Section 10.5 prior to one year after the Close Date.(d)
    
    Buyers Severance Program shall provide severance pay in an amount no less than two
weeks of such Affected Employees Equivalent Wage (or his then-current base rate of pay,
if greater) for each combined year of service with Seller and Buyer (each including any
other entity within its respective Controlled Group). Such service shall be prorated for
completed calendar months and subject to a minimum of four years and a maximum of
twenty-six years. Service with Seller for these purposes shall be Sellers service used to
calculate severance pay under Sellers Severance Pay Plan. Buyers Severance Program shall
also provide for the continuation of employee rates and Buyers contribution for medical
coverage that are applicable to otherwise similarly situated active Buyer employees for up
to six months after the Closing Date.(e)
    
    Notwithstanding the foregoing, Buyer may condition eligibility for any benefit under
Buyers Severance Program on the execution of a release or waiver of any liability. Such
release or waiver shall be in such form as Buyer determines in its sole discretion.
 Vacation Pay
 Health Care Plans
 30




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##### 



Post-Retirement Welfare Benefits
 (a)
    
    Sellers Post Retirement Health Care Coverage. Seller shall be responsible
for any post-retirement medical, mental health, substance abuse, and dental coverage for
the Remaining Employees (Sellers Post-Retirement Health Care Coverage). Seller also
shall make available Post-Retirement Health Care Coverage to any Affected Employee who as
of the date he or she terminates employment with Seller is eligible to receive and enroll
in Sellers Post-Retirement Health Care Coverage (Eligible Affected Employees). For
purposes of calculating the amount of any Company contributions toward such coverage,
Seller shall have no obligation to consider any age greater than the Affected Employees
age upon termination of employment with Seller or any service with Buyer. Notwithstanding
the foregoing, Sellers Post-Retirement Health Care Coverage shall be subject to Sellers
unilateral and discretionary right (including the rights of any entity within Sellers
Controlled Group) to amend or terminate such coverage at any time and with respect to
anyone.(b)
    
    Buyers Post Retirement Health Care Coverage. Buyer does not currently
maintain post retirement health care coverage for its employees. In the event Buyer
subsequently establishes post retirement health care coverage, the Buyer shall allow each
Affected Employee to participate in such plan on the same terms as Buyers other
similarly situated employees.
 WARN Act Compliance
 Buyers Other Employee Benefits
 31




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##### 



General Employee Provisions
 (a)
    
    Each of Seller and Buyer shall give any notices required by law and take whatever
other actions with respect to the plans, programs and policies described in this Section
10.5 as may be necessary to carry out the arrangements described in this Section 10.5.
Seller and Buyer shall provide each other with such plan documents and descriptions,
employee data or other information as may be reasonably required to carry out the
arrangements described in this Section 10.5.(b)
    
    If any of the arrangements described in this Section 10.5 are determined by the
Internal Revenue Service or other applicable governmental authority, or by a court of
competent jurisdiction, to be prohibited by law, Seller and Buyer shall modify such
arrangements to (as closely as possible) retain the intent and economic benefits and
burdens of the Parties as reflected herein in a manner which is not prohibited by law.(c)
    
    In the event that Buyer hires any Remaining Employee within six months after Closing,
Buyer will notify Seller of such event and shall reimburse Seller for any severance pay
paid by Seller to such Remaining Employee as a result of the transaction contemplated by
this Agreement within three business days after the date they are employed by Buyer.
 Definition Controlled Groups
 11. Covenants, Assignments And Continuing Obligations
 Covenants, Assignments and Continuing Obligations
 32




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12. Closing, Termination and Final Adjustments
 Conditions Precedent to Sellers Obligation to Close
 (a)
    
    Buyer shall have performed and complied with all material terms of this Agreement
required to be performed or complied with by it at or prior to Closing.(b)
    
    No action or proceeding by or before any governmental authority shall have been
instituted or threatened (and not subsequently dismissed, settled or otherwise terminated)
which might restrain, prohibit or invalidate any of the transactions contemplated by this
Agreement, other than an action or proceeding instituted or threatened by Seller or any of
its affiliates.(c)
    
    The representations and warranties of Buyer contained in Section 6.2 shall be true
and correct in all material respects on the Closing Date as though made on and as of the
Closing Date.
 Conditions Precedent to Buyers Obligation to Close
 33




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##### 



(a)
    
    Seller shall have performed and complied with all material terms of this Agreement
required to be performed or complied with by it at or prior to Closing.(b)
    
    No action or proceeding by or before any governmental authority shall have been
instituted or threatened (and not subsequently dismissed, settled or otherwise terminated)
which might restrain, prohibit or invalidate any of the transactions contemplated by this
Agreement, other than an action or proceeding instituted or threatened by Buyer or any of
its affiliates.(c)
    
    The representations and warranties of Seller contained in Section 6.1 shall be true
and correct in all material respects on the Closing Date as though made on and as of the
Closing Date.
 Closing
 (a)
    
    Buyer and Seller shall execute and acknowledge the Assignment in substantially the
form of Exhibit B, in form and substance sufficient to convey title to the Assets in
accordance with the terms of this Agreement. The assignment shall convey an undivided 25%
of the Assets to NNOG (or its designee) and an undivided 75% of the assets to RNRC (or
its designee).(b)
    
    Buyer and Seller shall execute and acknowledge any such other instruments as are
reasonably necessary to effectuate the transfer, sale or conveyance of the Assets to
Buyer, including without limitation, separate assignments of the Assets on officially
approved forms in sufficient counterparts to satisfy applicable statutory and regulatory
requirements for the transfer of the Assets.(c)
    
    Seller shall prepare and Seller and Buyer shall execute at Closing transfer orders or
letters-in-lieu in form and substance satisfactory to Buyer for each purchaser or remitter
of proceeds from the Leases, Wells and Units.(d)
    
    Upon and against delivery of the Assignment and other instruments described in this
Section, Buyer shall pay to Seller the Adjusted Purchase Price by bank wire, as
designated in advance by Seller under Section 2.2.(e)
    
    On or before Closing, Seller shall, where Buyer is to become operator, supply Buyer
with an appropriate governmental form as required by the governmental agency, board or
commission having jurisdiction and authority to change the name of operator from Seller to
Buyer, for each Seller-operated Well (whether dry, inactive, injector or producing), Lease
or any other well or facility or Personal Property, as may be required
 34




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##### 



or defined by said agency, board or commission, located on the premises that form a part
of the subject matter of this Agreement. All such forms shall be executed by Buyer and/or
Seller as may be required prior to or during Closing. Buyer shall be responsible for any
fee as may be required by such governmental agency, board or commission and, at the
parties option, shall either deliver its check payable to the governmental agency, board
or commission to Seller at Closing or credit this fee amount to Seller in the applicable
Final Settlement Statement. Seller shall mail the completed form and fee to the proper
governmental agency, board or commission after Closing.
 (f)
    
    Immediately after Closing, Buyer shall notify all pertinent operators, non-operators,
oil or gas purchasers, governmental agencies and royalty owners that it has purchased the
Assets. Buyer shall also timely notify the appropriate taxing authorities following
Closing of Buyers ownership and provide copies of such notices to Seller.
 Termination
 (a)
    
    By Buyer or Seller in accordance with Section 9.1.(b)
    
    By Buyer or Seller in accordance with Section 14.4.(c)
    
    By Seller if any condition set forth in Section 12.1 has not been satisfied and such
condition has not been waived by Seller by the Closing Date.(d)
    
    By Buyer if any condition set forth in Section 12.2 has not been satisfied and such
condition has not been waived by Buyer by the Closing Date.(e)
    
    By mutual written agreement of Buyer and Seller.(f)
    
    By Seller or Buyer if the Closing does not occur on or before December 15, 2004,
through no fault of the terminating party or its affiliates, unless the date of such
Closing shall have been extended in writing by mutual agreement of the parties.
 Upon Termination
 Final Adjustments
 35




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##### 



13. Dispute Resolution and Binding Arbitration
 Sole and Exclusive Method for Resolution of Disputes
 Negotiation Between Executives
 36




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##### 



Mediation
 Arbitration
 Jurisdiction
 Sovereign Immunity
 37




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##### 



14. Miscellaneous
 Call on Production
  Oil and Gas Imbalances NONE
 Insurance
 (a)
    
    Seller and Buyer acknowledge that insurance coverage for the Assets and the operations
in which the Assets have been used has been provided, in part, under insurance programs
arranged and maintained by ChevronTexaco Corporation for itself and its subsidiaries and
affiliates (such policies are herein called ChevronTexaco Policies).(b)
    
    Seller and Buyer agree that, as of the Closing Date, all of the ChevronTexaco Policies
shall cease to apply to the Assets and the operations in which the Assets are used and
that Buyer shall make no claims under the ChevronTexaco Policies with respect to any
matter whatsoever, whether arising before or after the Closing Date.(c)
    
    In the event that any Claim is hereafter made under or with respect to any of the
ChevronTexaco Policies by or through Buyer or any person subrogated to its rights, Buyer
shall indemnify and defend Seller and the Seller Parties against and shall hold them
harmless from such Claim and all costs and expenses (including without limitation
attorneys fees and court costs) related thereto.
 Casualty Loss of Assets
 Definition.
 Notice of Loss
 Handling of Casualty Loss
 38




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Transfer of Records
 Publicity
 Assignment
 39




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Entire Agreement
 Notices
 If
to Seller:
    
    If to Buyer:Chevron U.S.A. Inc.
    
    Resolute Natural Resources Company1111 Bagby St.
    
    1675 Broadway, Suite 1950Houston, Texas 77002
    
    Denver, Colorado 80202Attention: M. H. Forman
    
    Attention: James M. PicconeManager, Acquisitions & Divestitures
    
    President and General CounselFax No.: 1-866-741-5436
    
    Fax # 1-303-534-4600Navajo Nation Oil & Gas Company, Inc.P.O. Box 4439Window Rock, Arizona 86515Attention: Wilson GroenPresident & General ManagerFax# 1-928-871-4862
  40




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Governing Law
 Confidentiality
 Default
 Failure to Respond
 41




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Seller Not Obligated to Remedy Buyers Defaults
 Invoicing and Recoupment by Seller
 Other Remedies Reserved
 No Waiver
 Survival of Certain Obligations
 Conflict of Interest
 42




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Further Cooperation
 Counterparts
 Exhibits and Schedules
 Severability
 Expenses, Post-Closing Consents and Recording
 Removal of Signs and Markers
 43




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CONSPICUOUSNESS / EXPRESS NEGLIGENCE
 Waiver of Certain Damages Notwithstanding anything to the contrary contained elsewhere in this Agreement,
Sellers cumulative indemnity obligations to Buyer and the Buyer Parties under this Agreement
shall not exceed the Purchase Price.
 Prior Contract(s) Affecting Production
 44




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BUYER:NAVAJO NATION OIL AND GAS COMPANY, INC.By:
    /s/ Manuel MorganName:
    Manual MorganTitle:
    ChairmanBy:

/s/ WILSON GROENName:
    WILSON GROENTitle:
    PresidentRESOLUTE NATURAL RESOURCES
COMPANYBy:
    /s/ NICHOLAS J. SUTTONName:
    NICHOLAS J. SUTTONTitle:
    CHIEF EXECUTIVE OFFICERSELLER:CHEVRON U.S.A. INC.By:
    /s/ Larry C. LaFleurName:
    Larry C. LaFleurTitle:
    Attorney-in-Fact 45




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OMITTED SCHEDULES
  
    
    Exhibit A  Lease Data Table
    
    Exhibit B  Form of Assignment
    
    Schedule 10.5  Prospective Employees
    
    Schedule 1.1(h)  Aneth Compressor and Gathering Site
    
    Schedule 1.3(q)  Aneth Plant Site
    
    Schedule 1.3  Exclusions and Reservations
    
    Schedule 2.3  Allocation of Purchase Price
    
    Schedule 3.3.5(a)  Consent Decree Responsibilities
    
    Schedule 5.1.9  Preferential Rights