Exhibit 10.2


 


Execution Version


 


PURCHASE AND SALE AGREEMENT


 


BY AND BETWEEN


 


LIBERTY RESOURCES MANAGEMENT COMPANY,
LLC


 


LIBERTY RESOURCES BAKKEN OPERATING, LLC


 


(Liberty)


 


AND


 


EMERALD OIL, INC.


 


EMERALD WB LLC


 


(Emerald)


 


AND


 


LIBERTY RESOURCES II, LLC


 


(Guarantor)


 


Dated August 1, 2014


 




    	 



    	 



    

 





TABLE OF CONTENTS




 







	 	Page
	 	 
	ARTICLE 1 DEFINITIONS AND REFERENCES	1
	 	 	 
	1.1	Certain Defined Terms	1
	1.2	References and Construction	10
	 	 
	ARTICLE 2 PURCHASE AND SALE	11
	 	 	 
	2.1	Purchase and Sale	11
	2.2	Consideration	11
	2.3	Allocation of the Purchase Price	11
	2.4	Adjustments to Purchase Price and Preliminary Settlement Statement	13
	2.5	Proration of Costs and Revenues	15
	2.6	Escrow Amount	16
	 	 
	ARTICLE 3 Due Diligence Review	16
	 	 
	3.1	Due Diligence Review	16
	3.2	Access to Transferor Records	16
	3.3	Access to the Transferor Assets	17
	 	 
	ARTICLE 4 TITLE MATTERS	18
	 	 	 
	4.1	Transferor’s Title	18
	4.2	Purchase Price Adjustment Procedures	20
	4.3	Title Dispute Resolution	24
	4.4	Preferential Rights and Consents	25
	 	 
	ARTICLE 5 ENVIRONMENtAL MATTERS	26
	 	 	 
	5.1	Exclusive Remedy	26
	5.2	Environmental Defect Notice	26
	5.3	Remedies for Environmental Defects	26
	5.4	Environmental Threshold; Deductible	27
	5.5	Environmental Dispute Resolution	27
	5.6	Transfer of Burgundy Wellbore Interests	28
	 	 
	ARTICLE 6 LIBERTY’S REPRESENTATIONS AND WARRANTIES	29
	 	 	 
	6.1	Organization and Standing	29
	6.2	Power	29
	6.3	Authorization and Enforceability	30
	6.4	Liability for Brokers’ Fees	30
	6.5	Litigation	30
	6.6	Material Agreements	30
	6.7	Capital Projects	30







 



    	-i-



    	 



    

 


TABLE OF CONTENTS

(continued)






 





	 	 	Page
	 	 	 
	6.8	Taxes	31
	6.9	Audits	31
	6.10	Judgments	31
	6.11	Compliance with Law And Government Authorizations	31
	6.12	Lease Status/Rentals/Royalties	31
	6.13	Well Status	31
	6.14	Calls on Production	32
	6.15	Imbalances	32
	6.16	No Other Representations or Warranties; Disclosed Materials	32
	6.17	Disclaimer	32
	6.18	Liberty’s Evaluation	33
	 	 
	ARTICLE 7 EMERALD’S REPRESENTATIONS AND WARRANTIES	33
	 	 	 
	7.1	Organization and Standing	34
	7.2	Power	34
	7.3	Authorization and Enforceability	34
	7.4	Liability for Brokers’ Fees	34
	7.5	Litigation	34
	7.6	Financial Resources	34
	7.7	Material Agreements	35
	7.8	Capital Projects	35
	7.9	Taxes	35
	7.10	Audits	35
	7.11	Judgments	35
	7.12	Compliance with Law And Government Authorizations	36
	7.13	Lease Status/Rentals/Royalties	36
	7.14	Well Status	36
	7.15	Calls on Production	36
	7.16	Imbalances	36
	7.17	No Other Representations or Warranties; Disclosed Materials	37
	7.18	Disclaimer	37
	7.19	Emerald’s Evaluation	38
	 	 
	ARTICLE 8 COVENANTS AND AGREEMENTS	38
	 	 	 
	8.1	Covenants and Agreements of Transferor	38
	8.2	Covenants and Agreements of Transferee	39
	8.3	Covenants and Agreements of the Parties	40
	 	 
	ARTICLE 9 TAX MATTERS	41
	 	 	 
	9.1	Production Tax Liability	41




 


 



    	-ii-



    	 



    

 


TABLE OF CONTENTS

(continued)


 





	 	 	Page
	 	 	 
	9.2	Transfer Taxes	41
	9.3	Tax Reports and Returns	42
	9.4	Tax Cooperation	42
	 	 
	ARTICLE 10 CONDITIONS PRECEDENT TO CLOSING	42
	 	 	 
	10.1	Liberty’s Conditions	42
	10.2	Emerald’s Conditions	42
	 	 
	ARTICLE 11 RIGHT OF TERMINATION	43
	 	 	 
	11.1	Termination	43
	11.2	Liabilities Upon Termination	43
	 	 
	ARTICLE 12 CLOSING	44
	 	 	 
	12.1	Date of Closing	44
	12.2	Place of Closing	44
	12.3	Closing Obligations	44
	 	 
	ARTICLE 13 POST-CLOSING OBLIGATIONS	45
	 	 	 
	13.1	Post-Closing Adjustments	45
	13.2	Records	46
	13.3	Further Assurances	46
	13.4	Successor Operator	46
	 	 
	ARTICLE 14 INDEMNIFICATION	46
	 	 	 
	14.1	Emerald’s Assumption of Liabilities and Obligations	46
	14.2	Liberty’s Assumption of Liabilities and Obligations	47
	14.3	Retained Obligations	47
	14.4	Indemnification	47
	14.5	Procedure	49
	14.6	Survival of Warranties, Representations and Covenants	50
	14.7	Reservation as to Non-Parties	51
	14.8	Reductions in Losses	51
	14.9	Waiver	51
	 	 
	ARTICLE 15 MISCELLANEOUS	51
	 	 	 
	15.1	Exhibits and Schedules	51
	15.2	Expenses	51
	15.3	Notices	51







 



    	-iii-



    	 



    

 


TABLE OF CONTENTS

(continued)


 





	 	 	Page
	 	 	 
	15.4	Amendments	52
	15.5	Assignment	53
	15.6	Headings	53
	15.7	Counterparts/Fax Signatures	53
	15.8	Governing Law	53
	15.9	Entire Agreement	53
	15.10	Binding Effect	53
	15.11	No Third-Party Beneficiaries	53
	15.12	No Vicarious Liability	53
	15.13	Dispute Resolution and Arbitration	54
	15.14	Publicity	54
	15.15	Severability	55
	15.16	Liberty Resources Guaranty	55







 




    	-iv-



    	 



    

 





	Defined Terms	 	Section Reference
	 	 	 
	Affiliate	 	1.1
	Aggregate Environmental Deductible	 	5.4
	Aggregate Title Deductible	 	4.2(e)
	Agreement	 	Preamble
	Assets	 	1.1
	Burgundy Liabilities	 	5.6(a)
	Burgundy Property Expenses	 	1.1
	Burgundy Remediation Costs	 	5.6(d)
	Burgundy Wellbore Interests	 	5.6(a)
	Business Day	 	1.1
	Cap	 	14.4(c)
	Casualty Loss	 	8.3(b)
	Claim	 	14.5(b)
	Claim Notice	 	14.5(a)
	Closing	 	12.1
	Closing Amount	 	2.2(c)
	Closing Date	 	12.1
	Code	 	1.1
	Condition	 	1.1
	Deductible	 	14.4(c)
	Defect Notice Date	 	3.1
	Defensible Title	 	4.1(a)
	Dispute	 	1.1
	Due Diligence Review	 	3.1
	Due Diligence Period	 	3.1
	Effective Time	 	1.1
	Emerald	 	Preamble
	Emerald Allocated Value	 	2.3(a)
	Emerald Assets	 	1.1
	Emerald Assets Preliminary Adjusted Purchase Price	 	2.4
	Emerald Assets Preliminary Settlement Statement	 	2.4
	Emerald Assets Purchase Price	 	2.2(b)
	Emerald Assignment	 	12.3(b)
	Emerald Assumed Liabilities	 	14.1
	Emerald Capital Expenditures	 	7.8
	Emerald Contracts	 	1.1
	Emerald Disclosed Materials	 	Article 7
	Emerald Hydrocarbons	 	1.1
	Emerald Indemnified Parties	 	14.4(a)
	Emerald Lands	 	1.1
	Emerald Leases	 	1.1







 




    	-v-



    	 



    

 





	Emerald Material Agreements	 	7.7
	Emerald Oil	 	Preamble
	Emerald Records	 	1.1
	Emerald WB	 	Preamble
	Emerald Wells	 	1.1
	Environmental Assessment	 	3.3(a)(1)
	Environmental Defect	 	1.1
	Environmental Defect Notice	 	5.2
	Environmental Defect Property	 	5.2
	Environmental Disputed Matters	 	5.5
	Environmental Laws	 	1.1
	Environmental Liabilities	 	1.1
	Escrow Agent	 	2.6
	Escrow Agreement	 	2.6
	Escrow Amount	 	1.1
	Excluded Assets	 	1.1
	Exclusivity Payment	 	1.1
	Final Emerald Section 1060 Allocation Schedule	 	2.3(d)
	Final Liberty Section 1060 Allocation Schedule	 	2.3(c)
	Final Net Purchase Price	 	13.1(a)
	Final Settlement Date	 	13.1(a)
	Final Settlement Statement	 	13.1(a)
	Force Majeure	 	1.1
	Fundamental Representations	 	14.6
	Governmental Entity	 	1.1
	Hazardous Materials	 	1.1
	Indebtedness	 	1.1
	Indemnified Party	 	14.5(a)
	Indemnifying Party	 	14.5(a)
	Individual Environmental Threshold	 	5.4
	Individual Title Threshold	 	4.2(e)
	Knowledge	 	1.1
	Landowner Release	 	5.6(c)
	Law	 	1.1
	Liberty	 	Preamble
	Liberty Allocated Value	 	2.3(a)
	Liberty Assets	 	1.1
	Liberty Assets Preliminary Settlement Statement	 	2.4
	Liberty Assets Preliminary Adjusted Settlement Statement	 	2.4
	Liberty Assets Purchase Price	 	2.2(a)
	Liberty Assignment	 	12.3(a)







 




    	-vi-



    	 



    

 





	Liberty Assumed Liabilities	 	14.2
	Liberty Bakken	 	Preamble
	Liberty Capital Expenditures	 	6.7
	Liberty Contracts	 	1.1
	Liberty Disclosed Materials	 	Article 6
	Liberty Hydrocarbons	 	1.1
	Liberty Indemnified Parties	 	14.4(b)
	Liberty Lands	 	1.1
	Liberty Leases	 	1.1
	Liberty Management	 	Preamble
	Liberty Material Agreements	 	6.6
	Liberty Records	 	1.1
	Liberty Wells	 	1.1
	Lien	 	1.1
	Losses	 	1.1
	Material Adverse Effect	 	1.1
	NDIC	 	5.6(b)
	Net Acre	 	1.1
	Net Casualty Loss	 	8.3(b)
	Net Revenue Interest	 	4.1(a)(1)
	Notice of Defective Interests	 	4.2(b)
	Obligations	 	14.1
	Party; Parties	 	Preamble
	Permitted Encumbrances	 	4.1(b)
	Person	 	1.1
	Plugging and Abandonment Obligations	 	1.1
	Production Taxes	 	1.1
	Property Expenses	 	1.1
	Proposed Emerald Section 1060 Allocation Schedule	 	2.3(d)
	Proposed Liberty Section 1060 Allocation	 	2.3(c)
	Release	 	1.1
	Retained Obligations	 	14.3
	Remediate; Remediation	 	1.1
	Remediation Costs	 	1.1
	Representatives	 	1.1
	Survival Period	 	14.6
	Taxes	 	1.1
	Tax Proceeding	 	9.4
	Tax Return	 	1.1
	Termination Date	 	11.1(b)
	Term Sheet	 	1.1
	Title Benefit	 	4.2(g)
	Title Benefit Amount	 	4.2(i)







 




    	-vii-



    	 



    

 





	Title Defect	 	4.2(a)
	Title Defect Amount	 	4.2(d)
	Title Defect Property	 	4.2(b)
	Title Disputed Matters	 	4.3
	Transfer Taxes	 	9.2
	Transferee	 	1.1
	Transferee Indemnified Parties	 	1.1
	Transferor	 	1.1
	Transferor Allocated Value	 	1.1
	Transferor Assets	 	1.1
	Transferor Contracts	 	1.1
	Transferor Indemnified Parties	 	1.1
	Transferor Purchase Price	 	1.1
	Transferor Records	 	1.1
	Transferor Well	 	1.1
	Working Interest	 	4.1(a)(2)







 




    	-viii-



    	 



    

 


	List of Exhibits
	 	 
	 	 	 
	Exhibit A-1	 	Liberty Leases
	Exhibit A-2	 	Emerald Leases
	Exhibit B-1	 	Liberty Wells
	Exhibit B-2	 	Emerald Wells
	Exhibit C-1	 	Liberty Surface Agreements
	Exhibit C-2	 	Emerald Surface Agreements
	Exhibit D-1	 	Liberty Material Agreements
	Exhibit D-2	 	Emerald Material Agreements
	Exhibit E-1	 	Form of Assignment, Bill of Sale and Conveyance (Liberty Assets)
	Exhibit E-2	 	Form of Assignment, Bill of Sale and Conveyance (Emerald Assets)
	Exhibit F-1	 	Form of Assignment and Assumption Agreement (Liberty Contracts)
	Exhibit F-2	 	Form of Assignment and Assumption Agreement (Emerald Contracts)
	Exhibit G	 	Affidavit of Non-Foreign Status
	 	 	 
	List of Schedules	 	 
	 	 	 
	Schedule 1.1(a)	 	Emerald’s Knowledge Representatives
	Schedule 1.1(b)	 	Liberty’s Knowledge Representatives
	Schedule 1.1(c)	 	Excluded Assets
	Schedule 2.3(c)	 	Final Liberty Section 1060 Allocation Schedule
	Schedule 2.3(d)	 	Final Emerald Section 1060 Allocation Schedule
	Schedule 2.4(a)	 	Liberty Assets Preliminary Settlement Statement
	Schedule 2.4(b)	 	Emerald Assets Preliminary Settlement Statement
	Schedule 4.4	 	Preferential Rights and Consents
	Schedule 6.5	 	Pending or Threatened Litigation
	Schedule 6.7	 	Liberty Capital Expenditures
	Schedule 6.9	 	Audits
	Schedule 6.13	 	Well Status
	Schedule 6.14	 	Calls on Production
	Schedule 7.5	 	Pending or Threatened Litigation
	Schedule 7.8	 	Emerald Capital Expenditures
	Schedule 7.10	 	Audits
	Schedule 7.14	 	Well Status
	Schedule 7.15	 	Calls on Production
	Schedule 8.1(b)	 	Existing Drilling Plan


 




    	-ix-



    	 



    

 


PURCHASE AND SALE AGREEMENT


 


This Purchase and Sale
Agreement (this “Agreement”), dated as of this 1st day of August, 2014, is entered into by
and between Liberty Resources Management Company, LLC, a Delaware limited liability company (“Liberty Management”)
and Liberty Resources Bakken Operating, LLC, a Delaware limited liability company (“Liberty Bakken” and
together with Liberty Management, “Liberty”), and Emerald Oil, Inc., a Delaware corporation (“Emerald
Oil”) and Emerald WB LLC, a Colorado limited liability company (“Emerald WB” and together
with Emerald Oil, “Emerald”), and Liberty Resources II, LLC, a Delaware limited liability company (“Liberty
Resources”), as guarantor. Each of the foregoing entities are collectively referred to as the “Parties”
and individually as a “Party”.


 


RECITALS


 


WHEREAS, Liberty Bakken
desires to sell and Emerald desires to purchase Liberty’s interest in the Liberty Assets (as defined below) upon the terms
and conditions set forth in this Agreement; and


 


WHEREAS, Emerald desires
to sell and Liberty Bakken desires to purchase Emerald’s interest in the Emerald Assets (as defined below) upon the terms
and conditions set forth in this Agreement.


 


NOW THEREFORE, in consideration
of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:


 


AGREEMENTS


 


ARTICLE
1


DEFINITIONS
AND REFERENCES


 


1.1           Certain
Defined Terms. In addition to the terms defined elsewhere herein, the following terms will have the respective meanings assigned
to them in this Section 1.1 when used in this Agreement with initial capital letters:


 


“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common control
with such Person. For purposes of the immediately preceding sentence, the term “control” (including,
with correlative meanings, the terms “controlling,” “controlled by” and “under
common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities,
by contract or otherwise.


 


“Assets”
means the Liberty Assets or Emerald Assets, as applicable.


 


“Burgundy
Property Expenses” is defined in the definition of “Property Expenses.”


 




    	 



    	 



    

 


“Business
Day” means a day other than a Saturday, Sunday or a day on which commercial banks in Denver, Colorado, or New York,
New York, are authorized or required by applicable Law to be closed for business.


 


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


 


“Condition”
means any circumstance, status or defect that requires Remediation to comply with Environmental Laws.


 


“Dispute”
means any dispute, claim or controversy of any kind or nature related to, arising under, or connected with this Agreement (including
disputes as to the creation, validity, interpretation, breach or termination of this Agreement).


 


“Effective
Time” means May 1, 2014, at 7:00 a.m. Mountain Time.


 


“Emerald
Assets” means all of Emerald’s right, title, and interest, whether present, contingent, or reversionary, in
and to the following, but not including the Excluded Assets:


 


(a)          all
oil and gas leases specifically described in Exhibit A-2, together with all amendments, renewals, extensions, top
leases, and ratifications thereof (collectively, the “Emerald Leases”);


 


(b)          the
lands covered by the Emerald Leases or pooled or unitized therewith (the “Emerald Lands”);


 


(c)          the
oil, gas, casinghead gas, coal bed methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof that
may be produced from under the Emerald Leases or the Emerald Lands (the “Emerald Hydrocarbons”);


 


(d)          all
oil, gas, water or injection wells located on or associated with the Emerald Lands, whether producing, shut-in, or temporarily
abandoned, including the wells described in Exhibit B-2 (the “Emerald Wells”), together
with all of the personal property, equipment, fixtures and improvements used in connection therewith;


 


(e)          the
unitization, pooling and communitization agreements, declarations, spacing orders, and the pools, units, or spacing units created
thereby, in each case, relating to the properties and interests described in Clauses (a) through (d) and to the production
of Emerald Hydrocarbons, if any, attributable to said properties and interests, and the force-pooled and non-consent interests
associated therewith;


 


(f)          all
equipment, machinery, fixtures and other tangible personal property and improvements located on or used or held for use solely
in connection with the operation of the interests described in Clauses (a) through (e) including any tanks, boilers,
buildings, fixtures, injection facilities, saltwater disposal facilities, compression facilities, pumping units and engines, platforms,
flow lines, pipelines, gathering systems, gas and oil treating facilities, machinery, power lines, telephone and telegraph lines,
roads, and other appurtenances, improvements and facilities;


 




    	-2-



    	 



    

 


(g)          all
surface leases, permits, rights-of-way, licenses, easements and other surface rights agreements used in connection with the production,
gathering, treatment, processing, storage, sale or disposal of Emerald Hydrocarbons or produced water from the interests described
in Clauses (a) through (f), including those described on Exhibit C-2, but excluding, in all such instances,
any items the transfer of which is prohibited by applicable Law;


 


(h)          all
existing contracts and effective sales and purchase contracts, operating agreements, exploration agreements, development agreements,
balancing agreements, farmout agreements, service agreements, transportation, processing, treatment or gathering agreements, equipment
leases and other contracts, agreements and instruments, insofar as they are listed on Exhibit D-2 and directly relate
to the properties and interests described in Clauses (a) through (g) and not to other properties of Emerald or Emerald’s
corporate overhead, but excluding any contracts, agreements and instruments the transfer of which is prohibited by applicable Law
(collectively, the “Emerald Contracts”); and


 


(i)          to
the extent transferable without payment of additional consideration, originals, to the extent available, or copies of all the files,
records, and data relating primarily to the items described in Clauses (a) through (h) above, which records shall
include, without limitation: lease records; well records; division order records; well files; title records (including abstracts
of title, title opinions and memoranda, and title curative documents); engineering records; geological and geophysical data (including
seismic data) and all technical evaluations, interpretive data and technical data and information relating primarily to the properties
and interests described in Clauses (a) through (h); correspondence; electronic data files (if any); maps; production
records; electric logs; core data; pressure data; decline curves and graphical production curves; reserve reports; appraisals and
accounting records (collectively, the “Emerald Records”).


 


“Environmental
Defect” means a Condition in, on, under or relating to the air, land, soil, surface and subsurface strata, surface
water, groundwater, or sediments of, or at, a particular Transferor Asset, including, without limitation, the presence of Hazardous
Materials, but excluding any Plugging and Abandonment Obligations (which shall not constitute an Environmental Defect).


 


“Environmental
Laws” means all federal, tribal, state, local or foreign law (including common law), statute, rule, regulation, requirement,
ordinance and any writ, decree, bond, authorization, approval, license, permit, registration, binding criteria, standard, consent
decree, settlement agreement, judgment, order, directive or binding policy issued by or entered into with a Governmental Entity
pertaining or relating to: (a) pollution or pollution control, including, without limitation, storm water regulation; (b) protection
of human health and the environment from the Release of Hazardous Materials; and/or (c) the management, presence, use, generation,
processing, extraction, treatment, recycling, refining, reclamation, labeling, transport, storage, collection, distribution, or
Release or threat of Release of Hazardous Materials. “Environmental Laws” shall include, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.; the Solid Waste
Disposal Act (as amended by the Resource Conservation and Recovery Act), 42 U.S.C. § 6901 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. § 1801 et seq.; the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.;
the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the federal Safe Drinking Water Act, 42 U.S.C. §§
300f-300; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.;
the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; the Endangered Species Act, 16 U.S.C. § 1531
et seq.; the National Historic Preservation Act, 16 U.S.C. §470 et seq.; the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. § 11001 et seq., the National Environmental Policy Act, 42 U.S.C. § 4321 et. seq. and the
regulations and orders respectively promulgated thereunder, each as amended, or any equivalent or analogous state or local statutes,
laws or ordinances, any regulation promulgated thereunder and any amendments or reauthorizations thereof or thereto.


 




    	-3-



    	 



    

 


“Environmental
Liabilities” means all Losses (including any civil fines, penalties, Remediation Costs, any personal injury, illness
or death, any damage to, destruction or loss of property, and any damage to natural resources (including soil, air, surface water
or groundwater) and expenses for the modification, repair or replacement of facilities on the Lands) brought or assessed by any
and all Persons, including any Governmental Entity, to the extent any of the foregoing directly or indirectly involves any Condition
relating to the Assets, including Plugging and Abandonment Obligations, the presence, disposal or release of any Hazardous Material
of any kind in, on or under the Assets, created or attributable to any period of time, whether before or after Transferor acquired
ownership of the Assets, including any period of time prior to or after the Effective Time, but not including any Losses relating
to offsite disposal of Hazardous Materials by Transferor or its Affiliates prior to the Effective Time.


 


“Escrow
Amount” means the sum of (i) the aggregate Title Escrow Amounts, if any, and (ii) the aggregate Environmental Escrow
Amounts, if any.


 


“Excluded
Assets” means, with respect to either Liberty or Emerald, (a) (i) all corporate, financial, income, Tax and
legal records of such Party that relate to such Party’s business generally (whether or not relating to the Assets) and (ii) all
books, records and files that relate to the Excluded Assets or this Agreement and the transactions contemplated hereby; (b) (i)
equipment, inventory, machinery, fixtures and other tangible personal property and improvements that are leased by such Party or
located at or used in connection with any field office or yard of such Party that are not used solely in connection with the Assets,
(ii) any computers and related peripheral equipment that are not located on the Assets, and (iii) communications equipment
that is not located on the Assets and not used solely in connection with the Assets; (c) all rights to any refunds for Taxes or
other costs or expenses borne by such Party or such Party’s predecessors in interest and title attributable to periods prior
to the Effective Time in accordance with the principles of Section 9.1; (d) such Party’s area-wide bonds, permits
and licenses or other permits, licenses or authorizations used in the conduct of such Party’s business generally; (e) all
geophysical and other seismic and related technical data and information that is not transferrable without the payment of a fee
or other penalty or is otherwise not transferrable pursuant to a third party agreement or applicable Law; (f) all data that cannot
be disclosed to by a Party to the other Party as a result of confidentiality arrangements under agreements with third parties;
(g) all trade credits, account receivables, note receivables, take or pay amounts receivable, and other receivables attributable
to the Assets with respect to any period of time prior to the Effective Time; (h) any refunds due to either Party by a third party
for any overpayment of rentals, royalties, excess royalty interests or production payments attributable to the Assets with respect
to any period of time prior to the Effective Time; (i) any causes of action, claims, rights, indemnities or defenses with respect
to the Assets, whether arising before or after the Effective Time, that relate to any indemnification obligation of either Party
hereunder as more fully described in Article 14 below; (j) all rights and interests of either Party (i) under any policy
or agreement of insurance or indemnity agreement, (ii) under any bond and (iii) to any insurance or condemnation proceeds or awards
arising, in each case, from acts, omission or events, or damage to or destruction of property prior to the Effective Time; (k)
the assets listed on Schedule 1.1(c); and (l) until the conditions set forth in Section 5.6 are met, the Burgundy
Wellbore Interests.


 




    	-4-



    	 



    

 


“Exclusivity
Payment” means the exclusivity payment of $1,000,000 paid by Emerald to Liberty pursuant to the terms of the Term
Sheet.


 


“Force
Majeure” means acts of terrorism, fire, explosion, earthquake, storm, flood, freezing of wells or pipelines, delays
in obtaining rights-of-way, shutting-in facilities for repair or maintenance, strike, lock out, activities of a combination of
workmen or other labor difficulties, wars, insurrection, riot, Law, act, order, export or import control regulations, proclamation,
decree, regulation, ordinance, or instructions of a Governmental Entity, judgment or decree of a court of competent jurisdiction
or any other cause not reasonably within the control of the party claiming force majeure.


 


“Governmental
Entity” means any national, state, local, native, or tribal government or any subdivision, agency, court, commission,
department, board, bureau, regulatory authority or other division or instrumentality thereof.


 


“Hazardous
Materials” means, without limitation, any waste, substance, product, or other material (whether solid, liquid, gas
or mixed), which is or becomes identified, listed, published, or defined as a hazardous substance, hazardous waste, hazardous material,
toxic substance, pollutant, contaminant, radioactive material, oil, or petroleum waste under any Environmental Law.


 


“Indebtedness”
means, without duplication, with respect to the Emerald Assets or the Liberty Assets, the outstanding principal amount of, accrued
and unpaid interest on, discounts and fees on, and any other payment obligations relating to the Emerald Assets or the Liberty
Assets, as applicable, existing under any and all of the following, whether or not contingent: (i) indebtedness for borrowed money
and (ii) obligations evidenced by notes, bonds, debentures or any other contractual arrangements, including any guarantees or other
commitments or obligations by which Emerald or Liberty, as applicable, assures a creditor against loss.


 


“Knowledge”
means, with respect to Emerald, the actual knowledge of Emerald’s representatives listed on Schedule 1.1(a)
and with respect to Liberty, the actual knowledge of Liberty’s representatives listed on Schedule 1.1(b).


 


“Law”
means any statute, law, principle of common law, rule, regulation, judgment, order, ordinance, requirement, code, writ, injunction,
or decree of any Governmental Entity.


 


“Liberty
Assets” means all of Liberty’s right, title, and interest, whether present, contingent, or reversionary, in
and to the following, but not including the Excluded Assets:


 




    	-5-



    	 



    

 


(a)          all
oil and gas leases specifically described in Exhibit A-1, together with all amendments, renewals, extensions, top
leases, and ratifications thereof (collectively, the “Liberty Leases”);


 


(b)          the
lands covered by the Liberty Leases or pooled or unitized therewith (the “Liberty Lands”);


 


(c)          the
oil, gas, casinghead gas, coal bed methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof that
may be produced from under the Liberty Leases or the Liberty Lands (the “Liberty Hydrocarbons”);


 


(d)          all
oil, gas, water or injection wells located on or associated with the Liberty Lands, whether producing, shut-in, or temporarily
abandoned, including the wells described in Exhibit B-1 (the “Liberty Wells”), together
with all of the personal property, equipment, fixtures and improvements used in connection therewith;


 


(e)          the
unitization, pooling and communitization agreements, declarations, spacing orders, and the pools, units, or spacing units created
thereby, in each case, relating to the properties and interests described in Clauses (a) through (d) and to the production
of Liberty Hydrocarbons, if any, attributable to said properties and interests, and the force-pooled and non-consent interests
associated therewith;


 


(f)          all
equipment, machinery, fixtures and other tangible personal property and improvements located on or used or held for use solely
in connection with the operation of the interests described in Clauses (a) through (e) including any tanks, boilers,
buildings, fixtures, injection facilities, saltwater disposal facilities, compression facilities, pumping units and engines, platforms,
flow lines, pipelines, gathering systems, gas and oil treating facilities, machinery, power lines, telephone and telegraph lines,
roads, and other appurtenances, improvements and facilities;


 


(g)          all
surface leases, permits, rights-of-way, licenses, easements and other surface rights agreements used in connection with the production,
gathering, treatment, processing, storage, sale or disposal of Liberty Hydrocarbons or produced water from the interests described
in Clauses (a) through (f) including those described on Exhibit C-1, but excluding, in all such instances,
any items the transfer of which is prohibited by applicable Law;


 


(h)          all
existing contracts and effective sales and purchase contracts, operating agreements, exploration agreements, development agreements,
balancing agreements, farmout agreements, service agreements, transportation, processing, treatment or gathering agreements, equipment
leases and other contracts, agreements and instruments, insofar as they are listed on Exhibit D-1 and directly relate
to the properties and interests described in Clauses (a) through (g) and not to other properties of Liberty or Liberty’s
corporate overhead, but excluding any contracts, agreements and instruments the transfer of which is prohibited by applicable Law
(collectively, the “Liberty Contracts”); and


 




    	-6-



    	 



    

 


(i)          to
the extent transferable without payment of additional consideration, originals, to the extent available, or copies of all the files,
records, and data relating primarily to the items described in Clauses (a) through (h) above, which records shall
include, without limitation: lease records; well records; division order records; well files; title records (including abstracts
of title, title opinions and memoranda, and title curative documents); engineering records; geological and geophysical data (including
seismic data) and all technical evaluations, interpretive data and technical data and information relating primarily to the properties
and interests described in Clauses (a) through (h); correspondence; electronic data files (if any); maps; production
records; electric logs; core data; pressure data; decline curves and graphical production curves; reserve reports; appraisals and
accounting records (collectively, the “Liberty Records”).


 


“Lien”
means any of the following: mortgage, lien (statutory or other), other security agreement, arrangement or interest, hypothecation,
pledge or other deposit arrangement, assignment, charge, levy, executory seizure, attachment, garnishment, encumbrance (including
any easement, exception, reservation or limitation, right of way, and the like), conditional sale, title retention, voting agreement
or other similar agreement, arrangement, device or restriction, preemptive or similar right, the filing of any financial statement
under the Uniform Commercial Code or comparable Law of any jurisdiction, or any option, equity, claim or right of or obligation
to any other Person of whatever kind and character; provided, however, that the term “Lien” shall
not include any of the foregoing to the extent created by this Agreement.


 


“Losses”
means any actual losses, costs, expenses (including court costs, reasonable fees and expenses of attorneys, technical experts and
expert witnesses and the cost of investigation), liabilities, damages, demands, suits, claims, and sanctions of every kind and
character (including civil fines) arising from, related to or reasonably incident to matters indemnified against; excluding,
however, (x) any special, consequential, punitive or exemplary damages, diminution of value of any Transferor Assets, loss
of profits incurred by a Party or loss incurred as a result of the indemnified party indemnifying a third party and (y) any increase
in liability, loss, cost, expense, claim, award or judgment to the extent such increase is caused by the actions or omissions of
any indemnified party after the Closing Date.


 


“Material
Adverse Effect” means any state of facts, change, event, effect or occurrence (when taken together with all other
states of fact, changes, events, effects or occurrences), that is (i) materially adverse to the ownership, operations or value
of the applicable Party’s Assets, or (ii) materially adverse to the ability of the applicable Party to consummate the transactions
contemplated by this Agreement on a timely basis; provided, however, that no state of facts, change, event, effect or occurrence
arising or related to any of the following shall be deemed to constitute, and none of the following shall be taken into account
in determining whether there has been a “Material Adverse Effect”: (a) national or international business,
economic or political conditions, including the engagement by the United States of America in hostilities, whether or not pursuant
to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States
of America or any of its respective territories, possessions or diplomatic or consular offices or upon any military installation,
equipment or personnel of the United States of America; (b) events affecting the financial, banking or securities markets (including
any disruption thereof or any decline in the price of securities generally or any market or index); (c) conditions (or changes
in such conditions) generally affecting the oil and gas industry or the natural gas liquids industry in any area or areas where
the Assets are located; (d) increases in energy, electricity, natural gas, oil, or other raw materials or operating costs; (e)
changes in generally accepted accounting principles or Law; (f) the taking of any action required by this Agreement; (g) changes
as a result of the negotiation, announcement, pendency or performance of this Agreement, including by reason of the identity of
the Parties or any communication by either Party or any of their respective Affiliates of their plans or intentions regarding the
operation of the applicable Assets; (h) any actions taken or omitted to be taken by or at the request or with the written consent
of a Party; (i) any event of Force Majeure; (j) changes in oil or natural gas prices, including changes in price differentials;
(k) effects or changes that are cured or no longer exist by the earlier of the Closing and the termination of this Agreement pursuant
to Article 11; or (l) changes resulting from the performance of the covenants set forth in Section 8.1 hereof (solely
to the extent that such changes are a result of a Party’s refusal to give its written approval to the other Party’s
written request to take any action restricted therein).


 




    	-7-



    	 



    

 


“Net Acre”
means, as computed separately with respect to each Transferor Lease, the (x) lessor’s percentage interest in the leasehold
estate created by the Transferor Lease multiplied by (y) the number of gross acres covered by the Transferor Lease multiplied
by (z) the Transferor’s Working Interest in such Lease.


 


“Person”
means any individual or entity, including, without limitation, any corporation, limited liability company, partnership (general
or limited), joint venture, association, joint stock company, trust, unincorporated organization or Governmental Entity.


 


“Plugging
and Abandonment Obligations” means any and all responsibility and liability for the following, arising out of or
relating to the Transferor Assets, whether before, on, or after the Effective Time: (a) the necessary and proper plugging, replugging,
and abandonment of all Transferor Wells; (b) the necessary and proper removal, abandonment, and disposal of all structures, pipelines,
equipment, operating inventory, abandoned property, trash, refuse, and junk located on or comprising part of the Transferor Assets;
(c) the necessary and proper capping and burying of all associated flow lines located on or comprising part of the Transferor Assets;
and (d) the necessary and proper restoration of the surface and subsurface to the condition required by applicable Laws, permits,
orders, and contracts, except for interim reclamation previously required to be performed under any Environmental Law.


 


“Production
Taxes” means all ad valorem, property, production, excise, net proceeds, severance, windfall profit and all other
Taxes and similar obligations assessed against the Emerald Assets or the Liberty Assets, as applicable, or based upon or measured
by the ownership of the Emerald Assets or the Liberty Assets, as applicable, or the production of Hydrocarbons or the receipt of
proceeds therefrom, provided that Production Taxes shall not include income, franchise, or margin Taxes, and Transfer Taxes, but
shall include any interest, penalties, additions to tax and fines assessed or due in respect of any Production Taxes, whether disputed
or not.


 


“Property
Expenses” means all (i) capital expenses (including all capital expenditures permitted by Section 8.1(a) and
bonuses, broker fees, and other lease acquisition costs, costs of drilling and completing wells and costs of acquiring equipment),
Production Taxes (as apportioned as of the Effective Time pursuant to Article 9) and operating and production expenses
(including costs of insurance, rentals, shut-in payments and royalty payments; title examination and curative actions; and gathering,
processing and transportation costs in respect of Hydrocarbons produced from the Assets), incurred in the ownership, development
and operation of the Assets in the ordinary course of business, (ii) general and administrative costs with respect to the Assets
and (iii) overhead costs charged to the Assets under the applicable operating agreement; provided however, that with respect
to the Emerald Assets, (1) the Burgundy Remediation Costs shall not constitute Property Expenses, and (2) the aggregate Property
Expenses related to the Burgundy Wellbore Interests (the “Burgundy Property Expenses”) shall not
exceed $5,000,000, regardless of the actual amount incurred by Emerald in excess of that threshold.


 




    	-8-



    	 



    

 


“Release”
means any “release” or “disposal” as defined by or under any Environmental Law.


 


“Remediation”
or “Remediate” means investigation, assessment, characterization, delineation, monitoring, sampling,
analysis, removal action, remedial action, response action, corrective action, mitigation, treatment, cleanup, reporting, or permitting
of (a) any Release of Hazardous Materials or other similar actions as required by any applicable Environmental Law from soil, land
surface, groundwater, sediment, surface water, or subsurface strata or otherwise or (b) any failure of Transferor to operate the
Transferor’s Assets in compliance with all applicable Environmental Laws where such noncompliance would have, individually
or in the aggregate, a Material Adverse Effect.


 


“Remediation
Costs” means all costs to Remediate an Environmental Defect to the extent required to bring an Environmental Defect
Property into compliance with all applicable Environmental Laws, including the costs of any fines, penalties, judgments, or similar
amounts assessed or alleged against Transferor.


 


“Representatives”
means each Party’s stockholders, members, managers, officers, directors, employees, agents, and representatives.


 


“Taxes”
means any taxes and assessments imposed by any Governmental Entity, including net income, gross income, profits, gross receipts,
license, employment, stamp, occupation, premium, alternative or add-on minimum, ad valorem, real property, personal property, transfer,
real property transfer, value added, sales, use, environmental (including taxes under Code Section 59A), customs, duties, capital
stock, franchise, excise, withholding, social security (or similar), unemployment, disability, payroll, fuel, excess profits, windfall
profit, severance, estimated or other tax, including any interest, penalty or addition thereto, whether disputed or not, and any
expenses incurred in connection with the determination, settlement or litigation of the Tax liability, and “Tax”
means any one of these.


 


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


 


“Term Sheet”
means the Term Sheet dated July 11, 2014 entered into between Liberty and Emerald.


 


“Transferee”
means Emerald with respect to Liberty’s conveyance of the Liberty Assets to Emerald, and Liberty, with respect to Emerald’s
conveyance of the Emerald Assets to Liberty.


 




    	-9-



    	 



    

 


“Transferee
Indemnified Parties” means the Transferee, its affiliates, and its and their Representatives.


 


“Transferor”
means Emerald, with respect to Emerald’s conveyance of the Emerald Assets to Liberty, and Liberty, with respect to Liberty’s
conveyance of the Liberty Assets to Emerald.


 


“Transferor
Allocated Value” means the Emerald Allocated Value if Emerald is the Transferor or the Liberty Allocated Value if
Liberty is the Transferor.


 


“Transferor
Assets” means the Emerald Assets if Emerald is the Transferor or the Liberty Assets if Liberty is the Transferor.


 


“Transferor
Contracts” means the Emerald Contracts if Emerald is the Transferor or the Liberty Contracts if Liberty is the Transferor.


 


“Transferor
Indemnified Parties” means the Transferor, its affiliates, and its and their Representatives.


 


“Transferor
Purchase Price” means the Emerald Assets Purchase Price if Emerald is the Transferor or the Liberty Assets Purchase
Price if Liberty is the Transferor.


 


“Transferor
Records” means the Emerald Records if Emerald is the Transferor or the Liberty Records if Liberty is the Transferor.


 


“Transferor
Well” means the Emerald Wells if Emerald is the Transferor or the Liberty Wells if Liberty is the Transferor.


 


1.2          References
and Construction.


 


(a)          When
a reference is made in this Agreement to Articles, Sections, Exhibits or Schedules, such reference will be to an Article, Section,
Exhibit or Schedules to this Agreement unless otherwise indicated. Whenever the words “include,” “includes”
or “including” are used in this Agreement, they will be deemed to be followed by the words “without limitation.”
Unless the context otherwise requires, (i) ”or” is disjunctive but not necessarily exclusive, (ii) words
in the singular include the plural and vice versa, (iii) the words “herein,” “hereof,” “hereby,”
“hereunder” and words of similar nature refer to this Agreement as a whole and not to any particular subdivision unless
expressly so limited, and (iv) the use in this Agreement of a pronoun in reference to a Party hereto includes the masculine,
feminine or neuter, as the context may require.


 


(b)          The
Parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent
or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties, and no presumption or burden of
proof will arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.


 




    	-10-



    	 



    

 


ARTICLE
2


PURCHASE
AND SALE


 


2.1          Purchase
and Sale. Subject to the terms and conditions of this Agreement, at the Closing, (i) Emerald agrees to purchase from Liberty
and Liberty agrees to sell, assign and deliver to Emerald all of Liberty’s right, title and interest in the Liberty Assets,
and (ii) Liberty agrees to purchase from Emerald and Emerald agrees to sell, assign and deliver to Liberty all of Emerald’s
right, title and interest in the Emerald Assets, in each case, for the consideration specified in this Article 2.


 


2.2          Consideration.


 


(a)          Subject
to the terms and conditions of this Agreement, at the Closing, as consideration for the purchase of the Liberty Assets, Emerald
shall assume and agree to discharge the Emerald Assumed Liabilities and pay to Liberty the sum of $109,031,314 in immediately available
funds (the “Liberty Assets Purchase Price”), as adjusted pursuant to Section 2.4.


 


(b)          Subject
to the terms and conditions of this Agreement, at the Closing, as consideration for the purchase of the Emerald Assets, Liberty
shall assume and agree to discharge the Liberty Assumed Liabilities and pay to Emerald the sum of $30,589,000 in immediately available
funds (the “Emerald Assets Purchase Price”) as adjusted pursuant to Section 2.4.


 


(c)          At
Closing, Emerald shall pay to Liberty in immediately available funds to an account designated by Liberty an amount equal to the
Emerald Assets Preliminary Adjusted Purchase Price, less the Liberty Assets Preliminary Adjusted Purchase Price, less the Exclusivity
Payment (such amount being referred to as the “Closing Amount”).


 


(d)          After
Closing, final adjustments to the Emerald Assets Preliminary Adjusted Purchase Price and the Liberty Assets Preliminary Adjusted
Purchase Price shall be made pursuant to the Final Settlement Statement to be delivered pursuant to Section 13.1(a) and
payments made by Emerald or Liberty as provided in Section 13.1(a).


 


2.3          Allocation
of the Purchase Price.


 


(a)          For
purposes of adjusting the Emerald Assets Purchase Price or the Liberty Assets Purchase Price due to the existence of any title
matters under Article 4 or environmental matters under Article 5, (1) Emerald has allocated the Liberty Assets Purchase
Price among the Liberty Leases and Liberty Wells in the amounts set forth on Exhibit A-1 and Exhibit B-1,
as applicable; and (2) Liberty has allocated the Emerald Assets Purchase Price among the Emerald Leases and Emerald Wells in the
amounts set forth on Exhibit A-2 and Exhibit B-2, as applicable. The value allocated to each Emerald
Asset is the “Emerald Allocated Value,” and the value allocated to each Liberty Asset is the “Liberty
Allocated Value.”


 




    	-11-



    	 



    

 


(b)          Emerald
and Liberty have agreed on the Allocated Values for the Assets, but neither Emerald nor Liberty otherwise makes any representation
or warranty as to the accuracy of such values.


 


(c)          Liberty
shall prepare an allocation of the Liberty Assets Purchase Price on a schedule (the “Proposed Liberty Section 1060
Allocation Schedule”) for purposes of, and in accordance with, Section 1060 of the Code and the regulations promulgated
thereunder within thirty (30) days after the Final Settlement Date. Emerald shall notify Liberty in writing of any objections to
the Proposed Liberty Section 1060 Allocation Schedule within fifteen (15) days of receipt thereof and if, within thirty (30) days
after delivery of notice of such objection, Emerald and Liberty cannot agree to a final allocation schedule to be used for income
Tax reporting purposes, Emerald and Liberty shall submit the Disputed matters to binding arbitration pursuant to Section 15.13
to finally determine the proper allocation of the Liberty Assets Purchase Price for purposes of Section 1060 of the Code, and shall
request that the arbitrator issue a final allocation schedule (the “Final Liberty Section 1060 Allocation
Schedule”) within thirty (30) days of the submission of the Dispute. Liberty and Emerald agree that the allocation
of the Liberty Assets Purchase Price as set forth on the Final Liberty Section 1060 Allocation Schedule shall be used by Liberty
and Emerald as the basis for reporting asset values and other items for purposes of all federal, state and local Tax Returns, including
without limitation Internal Revenue Service Form 8594. Liberty and Emerald further agree that each will take no position inconsistent
with such allocations on any applicable Tax Return, in any audit or proceeding before any Governmental Entity related to Taxes,
in any report made for Tax, financial accounting or any other purpose, or otherwise. In the event that the allocation described
herein is disputed by any Governmental Entity, the Party receiving notice of the dispute shall promptly notify the other Party
concerning resolution of the dispute.


 


(d)          Emerald
shall prepare an allocation of the Emerald Assets Purchase Price on a schedule (the “Proposed Emerald Section 1060
Allocation Schedule”) for purposes of, and in accordance with, Section 1060 of the Code and the regulations promulgated
thereunder within thirty (30) days after the Final Settlement Date. Liberty shall notify Emerald in writing of any objections to
the Proposed Emerald Section 1060 Allocation Schedule within fifteen (15) days of receipt thereof and if, within thirty (30) days
after delivery of notice of such objection, Liberty and Emerald cannot agree to a final allocation schedule to be used for income
Tax reporting purposes, Liberty and Emerald shall submit the Disputed matters to binding arbitration pursuant to Section 15.13
to finally determine the proper allocation of the Emerald Assets Purchase Price for purposes of Section 1060 of the Code, and shall
request that the arbitrator issue a final allocation schedule (the “Final Emerald Section 1060 Allocation
Schedule”) within thirty (30) days of the submission of the Dispute. Emerald and Liberty agree that the allocation
of the Emerald Assets Purchase Price as set forth on the Final Emerald Section 1060 Allocation Schedule shall be used by Emerald
and Liberty as the basis for reporting asset values and other items for purposes of all federal, state and local Tax Returns, including
without limitation Internal Revenue Service Form 8594. Emerald and Liberty further agree that each will take no position inconsistent
with such allocations on any applicable Tax Return, in any audit or proceeding before any Governmental Entity related to Taxes,
in any report made for Tax, financial accounting or any other purpose, or otherwise. In the event that the allocation described
herein is disputed by any Governmental Entity, the Party receiving notice of the dispute shall promptly notify the other Party
concerning resolution of the dispute.


 




    	-12-



    	 



    

 


2.4          Adjustments
to Purchase Price and Preliminary Settlement Statement. The Liberty Assets Purchase Price and the Emerald Assets Purchase
Price shall be adjusted according to this Section 2.4, without duplication. Such adjustment shall be set out in (i)
the “Liberty Assets Preliminary Settlement Statement” that shall be delivered by Liberty to Emerald
at least three (3) Business Days prior to Closing, or (ii) the “Emerald Assets Preliminary Settlement Statement”
that shall be delivered by Emerald to Liberty at least three (3) Business Days prior to Closing. The Liberty Assets Purchase Price,
as adjusted pursuant to this Section 2.4, is referred to as the “Liberty Assets Preliminary Adjusted Purchase
Price” and the Emerald Assets Purchase Price, as adjusted pursuant to this Section 2.4, is referred to as
the “Emerald Assets Preliminary Adjusted Purchase Price”.  No adjustment to the Emerald Assets
Purchase Price shall be made with respect to the Burgundy Wellbore Interests or the Burgundy Property Expenses unless and until
the conditions in Section 5.6 are satisfied and the Burgundy Wellbore Interests are conveyed to Liberty.


 


(a)         Upward
Adjustments. The Liberty Assets Purchase Price and the Emerald Assets Purchase Price, as applicable, shall be adjusted upward
by the following:


 


(1)         (i)
With respect to the Liberty Assets Purchase Price, the proceeds received by Emerald, net of royalties, overriding royalties, profit
payments and similar burdens, from the sale of any Hydrocarbons that were produced from the Liberty Assets prior to the Effective
Time, and (ii) with respect to the Emerald Assets Purchase Price, the proceeds received by Liberty, net of royalties, overriding
royalties, profit payments and similar burdens, from the sale of any Hydrocarbons that were produced from the Emerald Assets prior
to the Effective Time;


 


(2)         (i)
With respect to the Liberty Assets Purchase Price, an amount equal to all Property Expenses attributable to the Liberty Assets
from and after the Effective Time that were paid by Liberty (all to be apportioned as of the Effective Time except as otherwise
provided), and (ii) with respect to the Emerald Assets Purchase Price, an amount equal to all Property Expenses attributable to
the Emerald Assets from and after the Effective Time that were paid by Emerald (all to be apportioned as of the Effective Time
except as otherwise provided);


 


(3)         With
respect to the Liberty Assets Purchase Price, the Transfer Taxes paid by Liberty with respect to the transactions contemplated
by this Agreement;


 


(4)         With
respect to the Emerald Assets Purchase Price, the Transfer Taxes paid by Emerald with respect to the transactions contemplated
by this Agreement;


 




    	-13-



    	 



    

 


(5)         (i)
With respect to the Liberty Assets Purchase Price, an amount equal to the unbilled costs, as of the date hereof, for the joint
interest billings paid by Liberty on behalf of third party working interest owners in the Leases, Wells or Units that are contained
within the Liberty Assets, and (ii) with respect to the Emerald Assets Purchase Price, an amount equal to the unbilled cost, as
of the date hereof, for the joint interest billings paid by Emerald on behalf of third party working interest owners in the Leases,
Wells or Units that are contained within the Emerald Assets;


 


(6)         an
amount equal to the aggregate of the Title Benefit Amounts with respect to any Title Benefits; and


 


(7)         Any
other amount agreed to by Emerald and Liberty.


 


(b)         Downward
Adjustments. The Liberty Assets Purchase Price and the Emerald Assets Purchase Price, as applicable, shall be adjusted downward
by the following:


 


(1)         An
amount equal to the Title Defect Amounts for all Title Defect Properties to be delivered at Closing under Section 4.2(c)(1);


 


(2)         An
amount equal to the Remediation Costs for all Environmental Defect Properties, which downward adjustment shall be made at Closing
under Section 5.3(a);


 


(3)         An
amount equal to the Allocated Values of all Transferor Assets excluded from this transaction under Sections 4.2(c)(2)
and 5.3(b);


 


(4)         The
Allocated Value of those Assets not conveyed at Closing due to the failure to obtain a Material Consent in accordance with Section
4.4(a), or the exercise of any preferential rights to purchase in accordance with Section 4.4(b);


 


(5)         (i)
With respect to the Liberty Assets Purchase Price, any proceeds of Hydrocarbons produced from and after the Effective Time, net
of royalties, overriding royalties, net profit payments and similar burdens and Production Taxes, received by Liberty between the
Effective Time and Closing relating to the Liberty Assets, and (ii) with respect to the Emerald Assets Purchase Price, any proceeds
of Hydrocarbons produced from and after the Effective Time, net of royalties, overriding royalties, net profit payments and similar
burdens and Production Taxes, received by Emerald between the Effective Time and Closing relating to the Emerald Assets;


 


(6)         (i)
With respect to the Liberty Assets Purchase Price, an amount equal to the revenue held in suspense by Liberty, as of the date hereof,
for royalties, overriding royalties and similar leasehold burdens, and (ii) with respect to the Emerald Assets Purchase Price,
an amount equal to the revenue held in suspense by Emerald, as of the date hereof, for royalties, overriding royalties and similar
leasehold burdens; and


 


(7)         Any
other amount agreed to by Emerald and Liberty.


 




    	-14-



    	 



    

 


2.5          Proration
of Costs and Revenues.


 


(a)          For
purposes of determining the amounts of the adjustments to the Liberty Assets Purchase Price and Emerald Assets Purchase Price provided
for in Section 2.4, the principles set forth in this Section 2.5(a) shall apply. Transferee shall be entitled to
all production of Hydrocarbons from or attributable to the Leases, Lands, and Wells relating to those Assets of the Transferor
at and after the Effective Time (and all products and proceeds attributable thereto), and to all other income, proceeds, receipts
and credits earned with respect to such Assets at or after the Effective Time, and shall be responsible for (and entitled to any
refunds with respect to) all Property Expenses relating to those Assets of the Transferor incurred at and after the Effective Time.
Transferor shall be entitled to all Hydrocarbon production from or attributable to Leases, Lands, and Wells relating to those Assets
of the Transferee prior to the Effective Time (and all products and proceeds attributable thereto), and to all other income, proceeds,
receipts and credits earned with respect to such Assets prior to the Effective Time, and shall be responsible for (and entitled
to any refunds with respect to) all Property Expenses relating to those Assets of the Transferor incurred prior to the Effective
Time. “Earned” and “incurred”, as used in the Agreement shall be interpreted
in accordance with generally accepted accounting principles and Council of Petroleum Accountants Society standards, and expenditures
that are incurred pursuant to an operating agreement, unit agreement or similar agreement shall be deemed incurred when expended
by the operator of the applicable Lease, Land or Well, in accordance with the applicable Transferor’s then current practice.
For purposes of allocating production (and accounts receivable with respect thereto), under this Section 2.5(a), (i) liquid
Hydrocarbons shall be deemed to be “from or attributable to” the Leases, Lands, and Wells when they pass
through the inlet flange of the pipeline connecting into the storage facilities into which they are run or, if there are no such
storage facilities, when they pass through the LACT meters or similar meters at the initial point of entry into the pipelines through
which they are transported from the field, and (ii) gaseous Hydrocarbons shall be deemed to be “from or attributable
to” the Leases, Lands, and Wells when they pass through the royalty measurement meters, delivery point sales meters
or custody transfer meters on the gathering lines or pipelines through which they are transported (whichever meter is closest to
the well). Transferor shall utilize reasonable interpolative procedures, consistent with industry practice, to arrive at an allocation
of production when exact meter readings or gauging and strapping data are not available.


 


(b)          Should
Transferee receive after Closing any proceeds, income or other amounts to which Transferor is entitled under Section 2.5(a),
Transferee shall fully disclose, account for and promptly remit the same to Transferor. If, after Closing, Transferor receives
any proceeds, income or other amounts to which Transferor is not entitled pursuant to Section 2.5(a), Transferor shall fully
disclose, account for, and promptly remit the same to Transferee.


 


(c)          Should
Transferee pay after Closing any Property Expenses for which Transferor is responsible under Section 2.5(a), Transferor
shall reimburse Transferee promptly after receipt of an invoice with respect to such Property Expenses, accompanied by copies of
the relevant vendor or other invoice and proof of payment. Should Transferor pay after Closing any Property Expenses for which
Transferor is not responsible under Section 2.5(a), Transferee shall reimburse Transferor promptly after receipt of an invoice
with respect to such Property Expenses, accompanied by copies of relevant vendor or other invoice and proof of payment.


 




    	-15-



    	 



    

 


(d)          After
Closing, Transferee shall handle all joint interest audits and other audits of Property Expenses covering the period for which
Transferor is in whole or in part responsible under Section 2.5(a), provided that Transferee shall not agree to any adjustments
to previously assessed costs for which Transferor is liable without the prior written consent of Transferor. Transferee shall provide
Transferor with a copy of all applicable audit reports and written audit agreements received by Transferee and relating to periods
for which Transferor is wholly or partially responsible.


 


2.6           Escrow
Amount. The Escrow Amount, from time to time, together with the interest earned thereon, shall be deposited and held in an
escrow account and paid out by an “Escrow Agent” in accordance with the provisions of this Section
2.6 and an escrow agreement to be agreed upon by the Parties (the “Escrow Agreement”) if such Escrow
Agreement is necessary under Articles 4 or 5 upon final resolution of any Title Disputed Matters or any Environmental
Disputed Matters in accordance with Articles 4 and 5, respectively, and which Escrow Agreement will require the
joint written instruction of the Parties to the Escrow Agreement for any distributions. The full amount of any Escrow Amount held
under the Escrow Agreement shall be released upon final resolution of the Title Disputed Matter or any Environmental Disputed
Matter underlying such Escrow Amount in accordance with Articles 4 and 5, respectively.  


 


ARTICLE
3


Due
Diligence Review


 


3.1           Due
Diligence Review. Each of Liberty and Emerald will make their respective Records and Assets available to the other Party and
its Representatives for inspection and review, at Transferee’s sole cost, to permit Transferee to perform its due diligence
(“Due Diligence Review”) pursuant to the terms and conditions of Sections 3.2 and 3.3,
respectively. The notices pertaining to the Due Diligence Review for the Notice of Defective Interest (as defined in Section
4.2(b)) and the Environmental Defect Notice (as defined in Section 5.2) must be received by Transferor no later than
5:00 p.m. Mountain Time on August 22, 2014 (the “Defect Notice Date”). Each of Liberty and Emerald shall
be entitled to conduct its Due Diligence Review until the Defect Notice Date (such period from the Effective Date through the
Defect Notice Date, the “Due Diligence Period”).


 


3.2           Access
to Transferor Records. Upon reasonable advance notice, the Transferor will make the Transferor Records available to Transferee
at the offices of Transferor during Transferor’s normal business hours to the extent the Transferor Records can be provided
without unreasonable effort or expense and are not subject to non-disclosure or confidentiality obligations to a third party,
so Transferee and its Representatives may conduct, during the Due Diligence Period, at Transferee’s sole risk and expense,
on-site inspections of all or any portion of the Transferor Records.


 




    	-16-



    	 



    

 


3.3         Access
to the Transferor Assets.


 


(a)          Access.


 


(1)         To
the extent that Transferor may do so as an operator or non-operator of Transferor Assets, Transferor will grant Transferee and
its Representatives access to the Transferor Assets upon reasonable prior notice during Transferor’s normal business hours,
so Transferee and its Representatives may conduct, during the Due Diligence Period, at Transferee’s sole risk and expense,
on-site inspections and an ASTM Phase I environmental review of all or any portion of the Transferor Assets (each, an “Environmental
Assessment”). Transferee shall not conduct an ASTM Phase II environmental assessment or any physical sampling, boring,
drilling, or other invasive investigation activities without the prior notice and consent of Transferor, which consent Transferor
may withhold in its sole and absolute discretion.


 


(2)         
If Transferee or its agents prepares an Environmental Assessment of any Transferor Asset, Transferee agrees to keep such assessment
confidential and to furnish final copies thereof to Transferor only upon request; provided, however, that to the extent
Transferee reasonably believes based on the advice of legal counsel that disclosure to a Governmental Entity is required for any
matter identified by an Environmental Assessment in order for Transferee to comply with Environmental Laws, Transferee may after
prior written notice to Transferor containing a brief analysis of why such Transferee disclosure is required by the Environmental
Laws, disclose such matter to the Governmental Entity to which notice is required. In connection with any on-site inspections,
if any, prior to Closing, Transferee (1) agrees not to interfere with, and will cause its Representatives not to interfere with,
the normal operation of the Transferor Assets, (2) agrees to comply with, and will cause its Representatives to comply with, all
requirements of the operators of the Transferor Assets (to the extent such requirements are disclosed to Transferee prior to such
on-site inspections) and (3) agrees to maintain adequate insurance and to confirm to Transferor that it and its Representatives
are adequately insured.


 


(b)        Indemnity.
Except to the extent caused by the gross negligence or willful misconduct of any member of the Transferor Indemnified Parties,
Transferee waives, releases and agrees to defend, indemnify, and hold harmless the Transferor Indemnified Parties from and against
any and all losses arising out of, resulting from, or relating to the access afforded to Transferee and its Representatives under
this Agreement or the activities of Transferee and its Representatives related to such access or any Environmental Assessment;
even if such Losses arise out of or result from the active, passive, concurrent, or comparative
negligence, strict liability, or other fault or violation of Law of or by a member of the Transferor Indemnified Parties;
provided, however, that such indemnity shall not extend to Remediation Costs required as a result of disclosure to a Governmental
Entity pursuant to Section 3.3(a)(2).


 




    	-17-



    	 



    

 


(c)        Clean-Up.
As soon as is reasonably practicable following completion of Transferee’s due diligence, Transferee shall, at its sole cost
and expense and without any cost or expense to the Transferor Indemnified Parties (1) repair all damage done to the Transferor
Assets in connection with any Environmental Assessment, (2) restore the Transferor Assets to the approximate same or better condition
in existence prior to commencement of any Environmental Assessment, and (3) remove all equipment, tools or other property brought
onto the Transferor Assets in connection with any Environmental Assessment.


 


ARTICLE
4


TITLE
MATTERS


 


4.1         Transferor’s
Title.


 


(a)       Defensible
Title. The term “Defensible Title” means such ownership of record to the Transferor Leases and Transferor
Wells that is deducible from the applicable county, state and federal records such that a reasonably prudent person engaged in
the business of the ownership, development and operation of oil and gas leaseholds and properties and having knowledge of all of
the facts and their legal bearing would be willing to accept the same, and that, subject to and except for Permitted Encumbrances
as defined in Section 4.1(b):


 


(1)         entitles
Transferor to receive a share of the Hydrocarbons produced, saved and marketed from any Transferor Lease or Transferor Well throughout
the duration of the productive life of such Transferor Lease or Transferor Well, only insofar as to the specified formation(s)
shown on Exhibit A-1, Exhibit A-2, Exhibit B-1, or Exhibit B-2 for such
Transferor Lease or Transferor Well, as applicable, and if there are no such specified formation(s), then as to all formations,
after satisfaction of all royalties, overriding royalties, nonparticipating royalties, net profits interests or other similar burdens
on or measured by production of Hydrocarbons (a “Net Revenue Interest”), of not less than the Net Revenue
Interest share shown in Exhibit A-1 or Exhibit A-2, as applicable for such Transferor, for such Transferor
Lease (on an 8/8ths basis), or Exhibit B-1 or Exhibit B-2, as applicable for such Transferor, for such
Transferor Well;


 


(2)         obligates
Transferor to bear a percentage of the costs and expenses for the maintenance, development, operation and the production relating
to any Transferor Well throughout the productive life of such Transferor Well (“Working Interest”) not
greater than the Working Interest shown in Exhibit B-1 or Exhibit B-2, as applicable for such Transferor,
from the currently producing formations for such Transferor Well, without increase, except increases to the extent that they are
accompanied by a proportionate increase in Transferor’s Net Revenue Interest;


 


(3)         enables
such Transferor Lease to cover the Net Acre interest set forth in Exhibit A-1 or Exhibit A-2, as applicable
for such Transferor, only insofar as to the specified formation(s) shown on Exhibit A-1 or Exhibit A-2
for such Transferor Lease, as applicable, and if there are no such specified formation(s), then as to all formations for such Transferor
Lease; and


 




    	-18-



    	 



    

 


(4)         is
free and clear of Liens.


 


(b)          Permitted
Encumbrances. The term “Permitted Encumbrances” shall mean:


 


(1)         lessors’
royalties, overriding royalties, net profits interests, production payments, reversionary interests and similar burdens if the
net cumulative effect of such burdens does not operate to reduce the Net Revenue Interests below those set forth in Exhibit
A-1 or Exhibit A-2, as applicable for such Transferor, for such Transferor Lease, or Exhibit B-1
or Exhibit B-2, as applicable for such Transferor, for such Transferor Well, only insofar as to the specified formation(s)
shown on Exhibit A-1, Exhibit A-2, Exhibit B-1, or Exhibit B-2 for such
Transferor Lease or Transferor Well, as applicable, and if there are no such specified formation(s), then as to all formations;


 


(2)         statutory
Liens for taxes that are not yet due and payable or that are being contested in good faith in the normal course of business;


 


(3)         all
rights to consent by, required notices to, filings with, or other actions by Governmental Entities, in connection with the conveyance
of the applicable Transferor Asset if the same are customarily sought after such conveyance;


 


(4)         rights
of reassignment contained in any Transferor Leases, or assignments thereof, providing for reassignment upon the surrender or expiration
of any Transferor Leases;


 


(5)         easements,
rights of way, servitudes, permits, surface leases and other rights with respect to surface operations, pipelines, grazing, logging,
canals, ditches, reservoirs or the like, and easements for streets, alleys, highways, pipelines, telephone lines, power lines,
railways and other easements and rights-of-way, on, over or in respect of any of the Transferor Assets or any restriction on access
thereto that do not materially interfere with the operation of the affected Transferor Asset;


 


(6)         the
terms and conditions of the Transferor Contracts listed in Exhibit C-1 or Exhibit C-2, as applicable
for each Transferor, or any compulsory pooling order of the North Dakota Industrial Commission; provided, however, that
the effect of any such items do not cause (i) the Net Revenue Interest to be less than as set forth in Exhibit A-1,
Exhibit A-2, Exhibit B-1, or Exhibit B-2 respectively, only insofar as to the specified
formation(s) shown on Exhibit A-1, Exhibit A-2, Exhibit B-1, or Exhibit B-2,
as applicable, and if there are no such specified formation(s), then as to all formations, for the applicable Transferor Asset,
or (ii) the Working Interest to be more than as set forth in in Exhibit B-1 or Exhibit B-2, as
applicable, from the currently producing formations;


 


(7)         materialmen’s,
mechanics’, operators’ or other similar Liens arising in the ordinary course of business (i) if such Liens have not
been filed pursuant to Law and the time for filing such Liens has expired, (ii) if filed, such Liens have not yet become due and
payable or payment is being withheld as provided by Law, or (iii) if their validity is being contested in good faith by appropriate
action;


 




    	-19-



    	 



    

 


(8)         such
Title Defects as Transferee has waived;


 


(9)         any
Liens or encumbrances burdening the Transferor Assets which will be released at or before Closing;


 


(10)        any
defects, irregularities or deficiencies in title to easements, rights-of-way or surface use agreements that do not materially adversely
affect the value of any Transferor Asset; and


 


(11)        all
other Liens, contracts, agreements, instruments, obligations, defects and irregularities affecting the Transferor Assets that do
not (or would not upon foreclosure or other enforcement) reduce the Net Revenue Interest set forth in Exhibit A-1,
Exhibit A-2, Exhibit B-1, or Exhibit B-2 respectively, only insofar as to the specified
formation(s) shown on Exhibit A-1, Exhibit A-2, Exhibit B-1, or Exhibit B-2,
as applicable, and if there are no such specified formation(s), then as to all formations, nor prevent the receipt of proceeds
of production therefrom, nor increase the share of costs above the Working Interest set forth in Exhibit B-1 or Exhibit
B-2 respectively, from the currently producing formations, nor materially adversely interfere with or detract from the
ownership, operation, value or use of the Transferor Assets.


 


4.2         Purchase
Price Adjustment Procedures.


 


(a)          Title
Defect. The term “Title Defect” means any Lien, obligation (including contract obligation), defect,
or other matter (including without limitation a discrepancy in Net Revenue Interest or Working Interest) that causes the Transferor
not to have Defensible Title to any Transferor Lease or Transferor Well. Notwithstanding the foregoing, the following shall not
be considered Title Defects:


 


(1)         defects
based solely on lack of information in connection with documents filed of record not contained in Transferor’s files;


 


(2)         defects
in the chain of title consisting of the mere failure to recite marital status in a document or omissions of successions of heirship
or estate proceedings, unless Transferee provides clear and convincing evidence that such failure or omission has resulted in another
Person’s actual and superior claim of title to the relevant Transferor Asset;


 


(3)         defects
arising out of lack of corporate or other entity authorization unless Transferee provides affirmative evidence that such corporate
or other entity action was not authorized and results in another Person’s actual and superior claim of title to the relevant
Transferor Asset;


 


(4)         defects
arising out of lack of survey, unless a survey is expressly required by applicable Laws;


 






    	-20-



    	 



    

 


(5)         Liens
created under deeds of trust, mortgages and similar instruments by the lessor under a Transferor Lease covering the lessor’s
surface and mineral interests in the land covered thereby which would customarily be accepted in taking oil and gas leases or purchasing
undeveloped oil and gas leases and for which the lessee would customarily seek a subordination of such Lien to the oil and gas
leasehold estate prior to conducting drilling activities on the Transferor Lease;


 


(6)         defects
based on failure to record a Transferor Lease issued by the Bureau of Land Management or the North Dakota Board of University and
School Lands, or any assignments of record title or operating rights in such Transferor Leases, in the real property, conveyance
or other records of the county in which such Transferor Lease is located; and


 


(7)         defects
that have been cured by applicable Laws of limitations, prescription or otherwise.


 


(b)          Notice
of Defective Interest. On or before the Defect Notice Date, Transferee may formally advise Transferor in writing of any matters
that in Transferee’s reasonable opinion constitute a Title Defect with respect to Transferor’s title to all or any
portion of the Transferor Leases and Transferor Wells (“Notice of Defective Interests”). The Notice of
Defective Interests shall be in writing and contain the following: (1) a clear, complete and accurate description of the alleged
Title Defect(s), (2) the Transferor Leases or Transferor Wells (and the applicable zone(s) therein) affected by the alleged Title
Defect(s) (each a “Title Defect Property”), (3) the Transferor Allocated Value of each Transferor Lease
or Transferor Well subject to the alleged Title Defect(s), (4) supporting documents reasonably necessary for Transferor (as well
as any title attorney or examiner hired by Transferor) to verify the existence of the alleged Title Defect(s), and (5) the amount
by which Transferee reasonably believes the Transferor Allocated Value of each Title Defect Property is reduced by the alleged
Title Defect(s) and the computations and information upon which Transferee’s belief is based. To give Transferor an opportunity
to commence reviewing and curing Title Defects, Transferee agrees to give Transferor written notice of all Title Defects discovered
by Transferee at the end of each calendar week during the Due Diligence Period; provided, however, any such written notice
may be preliminary in nature and supplemented prior to the Defect Notice Date. Any matters that may otherwise constitute a Title
Defect, but of which Transferor has not been notified by Transferee in accordance with this Section 4.2(b) prior to the
Defect Notice Date, shall be deemed to have been waived by Transferee.


 


(c)          Remedies
for Title Defects. Subject to (x) Transferor’s continuing right to title Dispute resolution under Section 4.3,
(y) the Individual Title Threshold and (z) the Aggregate Title Deductible, in the event that any Title Defect timely asserted by
Transferee in accordance with Section 4.2(b) actually exists and is not waived by Transferee or cured on or before Closing,
the Transferor shall, with the prior written consent of Transferee, take one of the following options with respect to such Title
Defect prior to Closing:


 






    	-21-



    	 



    

 


(1)         Transferor
may convey the Title Defect Property to Transferee at Closing and reduce the Transferor Purchase Price by the Title Defect Amount
and retain the right to cure the Title Defect after Closing;


 


(2)         Transferor
may exclude the Title Defect Property from the transaction and reduce the Transferor Purchase Price by an amount equal to the Transferor
Allocated Value of the Title Defect Property; or


 


(3)         Transferor
may convey the Title Defect Property to Transferee at Closing, make no adjustment to the Transferor Purchase Price, and indemnify
Transferee against all Losses resulting from such Title Defect, pursuant to the terms and conditions of an indemnification agreement
to be agreed to between the Parties.


 


In the event that the Transferor
elects one of the remedies set forth in this Section 4.2(c) as of the Closing but the Transferee does not consent on
or before Closing to such election, then the Parties will be deemed to have elected the remedy in Section 4.2(c)(2).


 


(d)          Title
Defect Amount. The “Title Defect Amount” means the amount by which the Transferor Allocated Value
of the Title Defect Property affected by such Title Defect is reduced as a result of the existence of such Title Defect and shall
be determined in accordance with the following methodology, terms and conditions:


 


(1)         if
Transferee and Transferor agree on the Title Defect Amount, that amount shall be the Title Defect Amount;


 


(2)         if
the Title Defect is a Lien that is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount of the
payment necessary to remove such Title Defect from the Title Defect Property; and


 


(3)         if
the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the Title Defect Property
of a type not described in subsections (1) or (2) above, the Title Defect Amount shall be determined by taking into account the
following factors: (i) any discrepancy between (A) the Net Revenue Interest or Working Interest for any Title Defect Property and
(B) the Net Revenue Interest or Working Interest stated in Exhibit A-1, Exhibit A-2, Exhibit
B-1, or Exhibit B-2, respectively; (ii) the Transferor Allocated Value of the Title Defect Property; (iii)
the portion of the Title Defect Property affected by the Title Defect; (iv) the legal effect of the Title Defect; (v) the values
placed upon the Title Defect by Transferee and Transferor; (vi) any discrepancy between (A) the Net Acre interest covered by a
Transferor Lease and (B) the Net Acre interest covered by such Transferor Lease stated in Exhibit A-1 or Exhibit
A-2; and (vii) such other reasonable factors as are necessary to make a proper evaluation.


 


Notwithstanding anything to the contrary
in this Agreement, the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any Title Defect Property
shall not exceed the Transferor Allocated Value of the Title Defect Property.


 






    	-22-



    	 



    

 


(e)          Title
Threshold and Deductible. Notwithstanding anything to the contrary, (1) in no event shall there be any adjustments to the Transferor
Purchase Price or other remedies provided by (i) Transferor for any individual Title Defect, or (ii) Transferee for any
individual Title Benefit for which the Title Defect Amount or Title Benefit Amount, as applicable, does not exceed $50,000 (“Individual
Title Threshold”); and (2) in no event shall there be any adjustments to the Transferor Purchase Price or other remedies
provided by (i) Transferor for any Title Defect that exceeds the Individual Title Threshold or (ii) Transferee for any
individual Title Benefit unless the Title Defect Amounts of all such Title Defects or Title Benefit Amounts of all such Title Benefits,
in the aggregate, excluding any Title Defects cured by Transferor (with respect to Title Defects), exceeds a deductible in an amount
equal to 2.5% of the Transferor Purchase Price (the “Aggregate Title Deductible”), after which point
Transferor or Transferee shall be entitled to adjustments to the Transferor Purchase Price or other remedies only with respect
to such Title Defects or Title Benefits, as applicable, in excess of such Aggregate Title Deductible.  


 


(f)          Transferor’s
Right to Cure. 


 


(1)         Transferor
shall have the right, but not the obligation, to attempt, at its sole cost, to cure or remove at any time prior to Closing any
Title Defects of which it has been advised by Transferee.


 


(2)         Subject
to the provisions of this Article 4, if there is a reduction in the Transferor Purchase Price pursuant to Section 4.2(c),
then Transferor shall retain the right but not the obligation for 180 days after the Closing Date to attempt to cure any such Title
Defects at Transferor’s sole cost. If Transferor cures any such Title Defect to Transferee’s reasonable satisfaction,
then Transferee shall promptly pay Transferor the Title Defect Amount with respect to the Title Defect that is so cured.


 


(g)          Title
Benefits. The term “Title Benefit” means any right, circumstance, or condition that operates to increase:


 


(1)         the
Transferor’s Net Revenue Interest in any Transferor Lease or Transferor Well throughout the duration of the productive life
of such Transferor Lease or Transferor Well, only insofar as to the specified formation(s) shown on Exhibit A-1,
Exhibit A-2, Exhibit B-1, or Exhibit B-2 for such Transferor Lease or Transferor Well,
as applicable, and if there are no such specified formation(s), then as to all formations, above the Net Revenue Interest share
shown in Exhibit A-1 or Exhibit A-2, as applicable for such Transferor, for such Transferor Lease (on
an 8/8ths basis), or Exhibit B-1 or Exhibit B-2, as applicable for such Transferor, for such Transferor
Well, to the extent the same does not cause a greater than proportionate increase in Transferor’s Working Interest; or


 


(2)         the
Transferor’s Net Acres in each such Transferor Lease above the Net Acres set forth in Exhibit A-1 or Exhibit
A-2, as applicable for such Transferor, only insofar as to the specified formation(s) shown on Exhibit A-1
or Exhibit A-2 for such Transferor Lease, as applicable, and if there are no such specified formation(s), then as
to all formations for such Transferor Lease.


 






    	-23-



    	 



    

 


(h)          Title
Benefit Notice. If Transferor or Transferee discovers any Title Benefit, then such Party may (but shall have no obligation
to, other than with respect to any Title Benefit discovered by Transferee, with respect to which Transferee shall be obligated
to) deliver to the other Party, prior to the Defect Notice Date, a notice with respect to such Title Benefit. The notice must be
in writing and be asserted in good faith and include (1) a description of the Title Benefit, (2) the Transferor Leases
and/or Transferor Wells affected by the Title Benefit, (3) the Transferor Allocated Values of the Transferor Leases and/or
Transferor Wells subject to such Title Benefit, and (4) the amount by which Transferor or Transferee, as applicable, reasonably
believes the Transferor Allocated Value of those Transferor Leases and/or Transferor Wells is increased by the Title Benefit, and
the computations and information upon which such Party’s belief is based.


 


(i)          Title
Benefit Amount. The amount by which the Transferor Allocated Value of any Transferor Lease or Transferor Well is increased
as a result of the existence of a Title Benefit with respect thereto is the “Title Benefit Amount.” The
Title Benefit Amount shall be determined in accordance with the same methodology, terms, and conditions for determining the Title
Defect Amount.


 


4.3           Title
Dispute Resolution. The Parties shall resolve Disputes concerning the following matters pursuant to this Section 4.3:
(a) the existence and scope of a Title Defect, Title Benefit, Title Defect Amount, or Title Benefit Amount, (b) the Title Defect
Amount or Title Benefit Amount of that portion of the Transferor Asset affected by a Title Defect or Title Benefit, respectively,
and (c) the adequacy of Transferor’s Title Defect curative materials and Transferee’s reasonable satisfaction thereof
(the “Title Disputed Matters”). The Parties agree to attempt to initially resolve all Disputes through
good faith negotiations. If the Parties cannot resolve the Title Disputed Matters on or before Closing, then (y) with respect
to all Title Defects subject to a Title Disputed Matter, the Transferor Purchase Price shall be reduced by the Allocated Value
of the affected Transferor Asset and the Title Defect Property shall not be conveyed at Closing, and (z) with respect to all Title
Benefits subject to a Title Disputed Matter, the Transferor Purchase Price shall not be adjusted at Closing but the Title Defect
Property shall be conveyed at Closing, and, at Closing, Transferee shall pay the Title Escrow Amount to the Escrow Agent to be
held as part of the Escrow Amount. The term “Title Escrow Amount” means (I) with respect to all Title
Defects subject to a Title Disputed Matter, the Allocated Value of the affected Transferor Asset, and (II) with respect to all
Title Benefits subject to a Title Disputed Matter, the Title Benefit Amount associated with such Title Benefit. Further, the Title
Disputed Matters will be finally determined by binding arbitration before an independent arbitrator appointed by the Parties,
who shall be an oil and gas title attorney licensed in North Dakota with a minimum of 10 years’ experience with title issues
affecting the types of properties which are the subject of the Title Disputed Matters. The arbitrator shall employ such independent
attorneys, petroleum engineers and/or other consultants as deemed necessary. On or before thirty (30) days after Closing, Transferee
and Transferor shall present their respective positions in writing to the arbitrator, together with such evidence as each Party
deems appropriate. The arbitrator shall be instructed to resolve the Dispute through a final decision within twenty (20) days
after submission of the matters in Dispute and the final decision may be reflected in the Final Settlement Statement. Upon final
resolution of any Title Disputed Matters with respect to any Title Defects that are subject to such Title Disputed Matters, the
Parties shall make the election of remedies under Section 4.2(c) and take such further actions as are necessary to
carry out such election including executing the Liberty Assignment or Emerald Assignment, as applicable, and delivering joint
written instructions to the Escrow Agent directing the distribution of the Title Escrow Amount. Upon final resolution of any Title
Disputed Matters with respect to any Title Benefits that are subject to such Title Disputed Matters, the Parties shall take such
further actions as are necessary to carry out the arbitrator’s decision including executing the Liberty Assignment or Emerald
Assignment, as applicable, and delivering joint written instructions to the Escrow Agent directing the distribution of the Title
Escrow Amount. All of Transferor’s covenants under Article 8 will apply to the Title Defect Property until such time
as the Parties have taken such actions as are required based on the arbitrator’s decision.


 






    	-24-



    	 



    

 


4.4           Preferential
Rights and Consents Except for Permitted Encumbrances, all preferential rights to purchase and consents to assign relating
to the Assets are listed on Schedule 4.4.  The remedies set forth in this Section 4.4 are the
exclusive remedies under this Agreement for consents to assign and preferential rights to purchase that are disclosed on Schedule 4.4
or are discovered prior to Closing. A Transferor Asset affected by a Material Consent or preferential right to purchase
that is outstanding at Closing shall be referred to as an “Affected Asset”.


 


(a)          Consents.
Promptly after the date hereof, Transferor shall use commercially reasonable efforts to send notices to those Persons necessary
to request all consents to assignment of the Assets. If prior to Closing, Transferor fails to obtain a consent to assign that would
invalidate the conveyance of the Asset affected by the consent to assign or materially affect the value or use of the Asset (a
“Material Consent”) and the failure to obtain such Material Consent has not been waived by Transferee,
then Transferor shall retain the Affected Asset and the Transferor Purchase Price shall be reduced by the Transferor Allocated
Value of the Affected Asset. If such Material Consent has been obtained as of the Final Settlement Date, Transferor shall convey
the Affected Asset to Transferee effective as of the Effective Time and Transferee shall pay Transferor the Transferor Allocated
Value of the Affected Asset in accordance with the terms and conditions of this Agreement. If such Material Consent has not been
obtained as of the Final Settlement Date, the Affected Asset shall be permanently excluded from the sale and the Transferor Purchase
Price shall be deemed to be permanently reduced by an amount equal to the Transferor Allocated Value of the Affected Asset. Transferee
shall reasonably cooperate with Transferor in obtaining any Material Consent, including providing assurances of reasonable financial
conditions, but Transferee shall not be required to expend funds or make any other type of financial commitments as a condition
of obtaining such Material Consent.


 






    	-25-



    	 



    

 


(b)          Preferential
Purchase Rights.  Transferor shall use commercially reasonable efforts to give notices required in connection with preferential
purchase rights prior to Closing.  If any preferential right to purchase any portion of the Assets is exercised prior to the
Closing Date, then the Affected Assets shall be excluded from the sale and the Transferor Purchase Price shall be adjusted downward
by an amount equal to the Transferor Allocated Value of such Affected Assets.  If by Closing, either (1) the time frame for
the exercise of a preferential purchase right has not expired and Transferor has not received notice of an intent not to exercise
or a waiver of the preferential purchase right, or (2) a third Person exercises its preferential right to purchase, but the time
frame for consummation of the preferential purchase right has not expired prior to the Closing, then Transferor shall retain the
Affected Assets and the Transferor Purchase Price shall be adjusted downward by an amount equal to the Transferor Allocated Value
of such Affected Assets.  As to any Affected Assets retained by Transferor hereunder, following Closing if a preferential
right to purchase is not consummated by the Final Settlement Date, then the Affected Asset shall be permanently excluded from the
sale, and the Transferor Purchase Price shall be deemed to be permanently reduced by an amount equal to the Transferor Allocated
Value of the Affected Asset, provided, however, that with respect to any Affected Assets retained by Transferor hereunder,
if a preferential right to purchase is not consummated within the time frame specified in the preferential purchase right following
Closing and before the Final Settlement Date, or if the time frame for exercise of the preferential purchase right expires without
exercise after the Closing and before the Final Settlement Date, then Transferor shall promptly convey the Affected Assets to Transferee,
effective as of the Effective Time, and Transferee shall pay the Transferor Allocated Value thereof pursuant to the terms of this
Agreement.


 


ARTICLE
5


ENVIRONMENtAL MATTERS


 


5.1           Exclusive
Remedy. This Article V shall be the exclusive right and remedy of Transferor with respect to the existence of any Condition
or Transferee’s failure to comply with Environmental Laws with respect to the Transferor Assets.


 


5.2           Environmental
Defect Notice. On or before the Defect Notice Date, Transferee may formally advise Transferor in writing of any matters that
in Transferee’s reasonable opinion constitute an Environmental Defect (“Environmental Defect Notice”).
The Environmental Defect Notice shall be in writing and contain the following: (a) a clear, complete and accurate description
of the alleged Environmental Defect(s), (b) the Transferor Assets affected by the alleged Environmental Defect(s) (each an “Environmental
Defect Property”), (c) the Transferor Allocated Value of each Environmental Defect Property, (d) supporting documents
reasonably necessary for Transferor (as well as any consultant hired by Transferor) to verify the existence of the alleged Environmental
Defect(s), and (e) an estimate of Remediation Costs and the amount by which Transferee reasonably believes the Transferor Allocated
Value of each Environmental Defect Property is reduced by the alleged Environmental Defect(s) and the computations and information
upon which Transferee’s belief is based.


 


5.3           Remedies
for Environmental Defects. Subject to (x) Transferor’s continuing right to environmental Dispute resolution under Section
5.5, (y) the Individual Environmental Threshold as defined in Section 5.4 and (z) the Aggregate Environmental Deductible
as defined in Section 5.4, in the event that any Environmental Defect timely asserted by Transferee in accordance with
Section 5.2 actually exists and is not waived by Transferee or cured on or before Closing, the Transferor shall, with the
prior written consent of Transferee, take one of the following options with respect to such Environmental Defect prior to Closing:


 






    	-26-



    	 



    

 


(a)          Transferor
may convey the Environmental Defect Property to Transferee at Closing and reduce the Transferor Purchase Price by the Remediation
Costs of the Environmental Defect Property;


 


(b)          Transferor
may exclude the Environmental Defect Property from the transaction and reduce the Transferor Purchase Price by an amount equal
to the Transferor Allocated Value of the Environmental Defect Property; or


 


(c)          Transferor
may convey the Environmental Defect Property to Transferee at Closing, make no adjustment to the Transferor Purchase Price, and
indemnify Transferee against all Losses resulting from such Environmental Defect, pursuant to the terms and conditions of an indemnification
agreement to be agreed to between the Parties.


 


In the event that the Transferor elects
one of the remedies set forth in this Section 5.3 as of the Closing but the Transferee does not consent on or before
Closing to such election, then the Parties will be deemed to have elected the remedy in Section 5.3(b).


 


5.4           Environmental
Threshold; Deductible. Notwithstanding anything to the contrary, (a) in no event shall there be any adjustments to the Transferor
Purchase Price or other remedies provided by Transferor for any individual Environmental Defect for which the Remediation Costs
does not exceed $50,000 (“Individual Environmental Threshold”); and (b) in no event shall there be any
adjustments to the Transferor Purchase Price or other remedies provided by Transferor for any Environmental Defect that exceeds
the Individual Environmental Threshold unless the Remediation Costs of all Environmental Defects, in the aggregate, excluding
any Environmental Defects cured by Transferor, exceed a deductible in an amount equal to 2.5% of the Transferor Purchase Price
(the “Aggregate Environmental Deductible”), after which point Transferee shall be entitled to adjustments
to the Transferor Purchase Price or other remedies only with respect to such Remediation Costs in excess of such Aggregate Environmental
Deductible.


 


5.5           Environmental
Dispute Resolution. The Parties shall resolve Disputes concerning the following matters pursuant to this Section
5.5: (a) the existence and scope of an Environmental Defect or the Remediation Costs, (b) the Remediation Costs of that portion
of the Transferor Asset affected by an Environmental Defect and (c) the adequacy of Transferor’s cure of an Environmental
Defect and Transferee’s reasonable satisfaction thereof (the “Environmental Disputed Matters”).
The Parties agree to attempt to initially resolve all Disputes through good faith negotiations. If the Parties cannot resolve
the Environmental Disputed Matters on or before Closing, then the Purchase Price shall be reduced by the Allocated Value of such
Environmental Defect Property (such amount, the “Environmental Escrow Amount”), such Environmental Defect
Property shall not be conveyed at Closing, and, at Closing, Transferee shall pay such Environmental Escrow Amount to the Escrow
Agent as part of the Escrow Amount. The Environmental Disputed Matters will be finally determined by binding arbitration before
an independent arbitrator appointed by the Parties, provided that the independent arbitrator shall be qualified by education,
knowledge of, and experience with environmental defects affecting the types of properties which are subject to or relate to the
disputed Environmental Defect or Environmental Disputed Matters. The arbitrator shall employ such independent attorneys and/or
other consultants as the arbitrator deems necessary, with the costs of such employment to be shared equally by the Transferor
and Transferee. On or before thirty (30) days after Closing, Transferor and Transferee shall present their respective positions
in writing to the arbitrator, together with such evidence as each Party deems appropriate. The arbitrator shall be instructed
to resolve the Dispute through a final decision within twenty (20) days after submission of the matters in dispute, and the final
decision may be reflected in the Final Settlement Statement. Upon final resolution of any Environmental Disputed Matters with
respect to any Environmental Defects that are subject to such Environmental Disputed Matters, the Parties shall make the election
of remedies under Section 5.3 and take such further actions as are necessary to carry out such election including
executing the Liberty Assignment or Emerald Assignment, as applicable, and delivering joint written instructions to the Escrow
Agent directing the distribution of the Environmental Escrow Amount. All of Transferor’s covenants under Article 8
will apply to the Environmental Defect Property until such time as the Parties have taken such actions as are required based on
the arbitrator’s decision.


 






    	-27-



    	 



    

 


5.6         Transfer
of Burgundy Wellbore Interests.


 


(a)          Notwithstanding
any other provision of this Agreement, Emerald shall retain ownership, and shall not convey the Ron Burgundy 3-23-14H well identified
on Exhibit A-1 together with (1) all associated facilities and equipment and (2) the applicable Leases
in the unit for such well only insofar as such Leases cover the wellbore of such Well (such assets, properties, and wellbore interest
in the Leases are, collectively, the “Burgundy Wellbore Interests”) to Liberty, and the Liberty Assumed
Obligations shall not include any Obligations arising from or related to the Burgundy Wellbore Interests (the “Burgundy
Liabilities”), unless and until the conditions set forth in this Section 5.6 are satisfied.


 


(b)          On
or prior to the Final Settlement Date, Emerald shall take all action necessary and appropriate to Remediate the Burgundy Wellbore
Interests to the extent required to comply with Environmental Laws and industry standards generally followed in the upstream oil
extraction business in the Bakken formation. Emerald shall manage, supervise and administer the Remediation in accordance with
industry standards generally followed in the upstream oil extraction business in the Bakken formation, and applicable Environmental
Laws, including applicable regulations of the North Dakota Industrial Commission (“NDIC”), and
Emerald shall provide Liberty prompt advance notice of the status, and intended plan, of the Remediation, and shall provide
Liberty prompt notice of any notice from or discussions with the NDIC or any other Governmental Entity concerning the Remediation.


 


(c)          On
or prior to the Final Settlement Date, Emerald shall obtain, at its sole cost and expense, a comprehensive waiver, release and
settlement of claims in a form satisfactory to Liberty in its reasonable discretion, from each Person that owns surface rights
on or adjacent to the Burgundy Wellbore Interests (each, a “Landowner Release”).


 


(d)          All
expenses related to, arising from or incurred in connection with the Remediation or the Landowner Releases (collectively, the “Burgundy
Remediation Costs”) shall be borne Emerald. Liberty shall not be required to pay or incur any cost or make any other
type of financial or operational commitment in connection with the obligations of Emerald under this Section 5.6.


 






    	-28-



    	 



    

 


(e)          If
the Remediation is completed and the Landowner Releases are delivered on or prior to the Final Settlement Date, in each case, to
the satisfaction of Liberty in its reasonable discretion (provided that Liberty shall not be permitted to assert it is dissatisfied
with the completion of the Remediation if Liberty has received verbal or written notice from the NDIC and the North Dakota Department
of Health, to the extent each such agency asserts jurisdiction over the Remediation, that the Burgundy Well is in compliance with
applicable Environmental Laws and that no further action is required), then (1) Emerald shall convey to Liberty the Burgundy Wellbore
Interests in exchange for the payment by Liberty of the Burgundy Property Expenses, and (2) Liberty shall assume the Burgundy
Liabilities, including Environmental Liabilities associated with the Burgundy Wellbore Interests (but not including the payment
of any Burgundy Remediation Costs).


 


(f)          If
the Remediation is not completed or the Landowner Releases are not delivered on or prior to the Final Settlement Date, then unless
Liberty delivers written notice electing to acquire the Burgundy Wellbore Interests within ten (10) days following the Final Settlement
Date, the Burgundy Wellbore Interests shall be permanently excluded from the Emerald Assets acquired pursuant to this Agreement.


 


(g)          In
no event shall any expenses incurred by Emerald be counted toward the Aggregate Environmental Deductible for purposes of Section
5.4.


 


ARTICLE
6


LIBERTY’S REPRESENTATIONS AND WARRANTIES


 


Except as set forth
in the schedule delivered to Emerald prior to the execution of this Agreement setting forth specific exceptions to Liberty’s
representations and warranties set forth in this Agreement (each section of which qualifies the correspondingly numbered representation
and warranty by Liberty) (the “Liberty Disclosed Materials”), Liberty represents and warrants to Emerald
as of the date hereof and as of the Closing Date as follows:


 


6.1           Organization
and Standing. Each of Liberty Resources, Liberty Management and Liberty Bakken is a limited liability company duly formed,
validly existing and in good standing under the Laws of the State of Delaware and is duly qualified to carry on its business in
such other jurisdictions as may be necessary, except where the failure to be so qualified would not have a Material Adverse Effect.


 


6.2           Power.
Liberty has all requisite limited liability company power and authority to carry on its business as presently conducted, to enter
into this Agreement, and to perform its obligations hereunder. The execution and delivery of this Agreement does not, and the
fulfillment of and compliance with the terms and conditions hereof will not, violate, or be in conflict with, any material provision
of Liberty’s governing documents, or any judgment, decree, order, statute, rule or regulation applicable to Liberty.


 






    	-29-



    	 



    

 


6.3           Authorization
and Enforceability. Assuming the due authorization, execution and delivery by Emerald, this Agreement constitutes Liberty’s
legal, valid and binding obligation, enforceable in accordance with its terms, subject, however, to the effects of bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other Laws for the protection of creditors, as well as to general
principles of equity, regardless whether such enforceability is considered in a proceeding in equity or at law.


 


6.4           Liability
for Brokers’ Fees. Liberty has not incurred any liability, contingent or otherwise, for investment bankers’, brokers’
or finders’ fees relating to the transactions contemplated by this Agreement for which Emerald shall have any responsibility
whatsoever.


 


6.5           Litigation.
Except as provided on Schedule 6.5, there are no actions, suits or proceedings pending or, to the Knowledge
of Liberty, threatened, against Liberty (with respect to the Liberty Assets) or any of the Liberty Assets, in any court or by
or before any Governmental Entity that would have a Material Adverse Effect on Liberty (with respect to the Liberty Assets) or
the Liberty Assets or impair Liberty’s ability to consummate the transactions contemplated by this Agreement and to assume
the liabilities to be assumed by Liberty under this Agreement.


 


6.6           Material
Agreements. Except for the Leases, Exhibit D-1 includes the following types of contracts (the “Liberty
Material Agreements”) by which any of the Liberty Assets are bound as of the date hereof: (a) any agreement
with any Affiliate of Liberty; (b) any agreement or contract for the sale, exchange, or other disposition of Hydrocarbons
produced from or attributable to Liberty’s interest in the Liberty Assets or for the purchase, processing or transportation
of any Hydrocarbons, in each case that is not cancelable without penalty or other payment on not more than ninety (90) days prior
written notice; (c) any agreement of or binding upon Liberty to sell, lease, farmout, or otherwise dispose of any interest
in any of the Liberty Assets after the date hereof, other than nonconsent penalties for nonparticipation in operations under operating
agreements, conventional rights of reassignment arising in connection with Liberty’s surrender or release of any of the
Liberty Assets; (d) any Tax partnership agreement of or binding upon Liberty affecting any of the Liberty Assets; and (e) any
agreement that creates any area of mutual interest or similar provision with respect to the Liberty Assets. To Liberty’s
Knowledge, Liberty is not (and to Liberty’s Knowledge, no other Person is) in material default (or with the giving of notice
or the lapse of time or both, would not be in default) under any Liberty Material Agreement except as disclosed on Exhibit D-1.
Prior to execution of this Agreement, Liberty has provided Emerald or made available to Emerald, true, correct and complete copies
of the Liberty Material Agreements. To Liberty’s Knowledge, the Liberty Material Agreements are in full force and effect
in accordance with their terms, are valid and binding obligations of Liberty, and to Liberty’s Knowledge, are enforceable
in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
and similar Laws affecting creditor’s rights generally and by equitable principles.


 


6.7           Capital
Projects. Except as described on Schedule 6.7 (“Liberty Capital Expenditures”),
(i) Liberty has incurred no expenses, and has made no commitments to make expenditures in connection with the ownership or operation
of the Liberty Assets after the Effective Time (other than with respect to routine operations performed in the ordinary course
of operating the existing Wells), which expenditures are, individually or in the aggregate, estimated to exceed five hundred thousand
dollars ($500,000), net to Liberty’s interest, and (ii) no contractual obligations, proposals or authorities for expenditures
are currently outstanding (whether made by Liberty or by any other party) to drill additional wells, or to deepen, plug back,
rework any Well, to abandon any Well, or to conduct any other operation on the Liberty Assets for which the estimated cost exceeds
five hundred thousand dollars ($500,000), net to Liberty’s interest.


 






    	-30-



    	 



    

 


6.8           Taxes.
All material Taxes pertaining to the Liberty Assets based on or measured by Liberty’s ownership of the Liberty Assets for
all taxable periods prior to the taxable period in which this Agreement is executed that were required to be paid prior to the
Effective Time have been paid. All income Taxes pertaining to Liberty’s ownership of the Liberty Assets that, if unpaid,
could give rise to a Lien or other claim against any of the Liberty Assets have been properly paid. Liberty has not received written
notice of any pending claim against or audit of Liberty from any taxing authority for the assessment of any material Tax pertaining
to the Liberty Assets that, if unpaid, could give rise to a Lien or other claim against any of the Liberty Assets.


 


6.9           Audits.
Except as provided on Schedule 6.9, there are no audits currently being conducted by Liberty of the joint account
under any operating agreements related to the Liberty Assets nor are there any such audits of Liberty currently underway.


 


6.10         Judgments.
There are no unsatisfied judgments or injunctions issued by a court of competent jurisdiction or other Governmental Entity outstanding
against Liberty related to the Liberty Assets.


 


6.11         Compliance
with Law And Government Authorizations. To Liberty’s Knowledge, the Liberty Assets are being operated in compliance
with all applicable Laws except for such noncompliance that would not have, individually or in the aggregate, a Material Adverse
Effect. Notwithstanding the foregoing, this Section 6.11 does not relate to Taxes or Environmental Laws, which are
addressed in Section 6.8 and Article V, respectively.


 


6.12         Lease
Status/Rentals/Royalties. To Liberty’s Knowledge, all rentals, royalties and operating expenses payable with respect
to the Liberty Assets prior to the Effective Time, have been duly and properly paid in all material respects, except as would
not, individually or in the aggregate, have a Material Adverse Effect. To Liberty’s Knowledge, there are no currently pending
requests or demands for payments, adjustments of payments or performance pursuant to obligations under the Leases, to the extent
that non-compliance with the forgoing would have a Material Adverse Effect on any of the Assets.


 


6.13         Well
Status. Except as set forth in Schedule 6.13, to the Knowledge of Liberty, there are no wells located on the
Liberty Assets that: (a) Liberty is obligated by Law or contract to currently plug and abandon; or (b) to the extent
plugged and abandoned, have not been plugged in accordance with applicable material requirements of each Governmental Entity having
jurisdiction over the Liberty Assets.


 






    	-31-



    	 



    

 


6.14         Calls
on Production. Except as set forth on Schedule 6.14, Liberty has not (i)  received any material advance,
“take-or-pay” or other similar payments under production sales contracts that entitle the purchasers to “make
up” or otherwise receive deliveries of Hydrocarbons without paying at such time the contract price therefore or (ii) 
taken or received any amount of Hydrocarbons under any gas balancing agreements or any similar arrangements not accounted for
in a purchase price adjustment that permit any Person thereafter to receive any portion of the interest of Liberty to “balance”
any disproportionate allocation of Hydrocarbons. Except as set forth on Schedule 6.14, no Hydrocarbons attributable
to the Liberty Assets are subject to a sales contract (other than contracts terminable on no more than thirty (30) days’
notice or in accordance with rights of termination by non-operators under the applicable joint operating agreement) and no Person
has any call upon, option to purchase or similar rights with respect to the production from the Liberty Assets; production from
the Liberty Assets is not bound by any gas dedications or subject to any monetary or in kind through-put fees or charges in connection
with gathering or transportation; and the Liberty Assets are not bound by futures, hedge, swap, collar, put, call, floor, cap,
option or other contracts that are intended to benefit from, relate to or reduce or eliminate the risk of fluctuations in the
price of commodities, including Hydrocarbons, securities, foreign exchange rates or interest rates that will continue after Closing.
To Liberty’s Knowledge, proceeds from the sale of oil, condensate, and gas from the Liberty Assets are being received by
Liberty, as applicable, in a timely manner and are not being held in suspense for any reason.


 


6.15         Imbalances.
There are no well or pipeline imbalances affecting the Liberty Assets.


 


6.16         No
Other Representations or Warranties; Disclosed Materials. Except for the representations and warranties contained in this
Article 6 (as qualified by the Liberty Disclosed Materials), neither Liberty nor any other Person makes (and Emerald is
not relying upon) any other express or implied representation or warranty with respect to Liberty (including the value, condition
or use of any Liberty Asset) or the transactions contemplated by this Agreement, and Liberty disclaims any other representations
or warranties not contained in this Article 6, whether made by Liberty, any Affiliate of Liberty or any of their respective
officers, directors, managers, employees or agents. The disclosure of any matter or item in the Liberty Disclosed Materials shall
not be deemed to constitute an acknowledgment that any such matter is required to be disclosed or is material or that such matter
would or would reasonably be expected to result in a Material Adverse Effect


 


6.17         Disclaimer.
EXCEPT AS EXPRESSLY WARRANTED, REPRESENTED OR COVENANTED OTHERWISE IN THIS AGREEMENT OR IN THE SPECIAL WARRANTY OF TITLE CONTAINED
IN THE ASSIGNMENT, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND WITHOUT LIMITING IN ANY RESPECT EMERALD INDEMNIFIED PARTIES’
RIGHTS TO DEFENSE AND INDEMNIFICATION UNDER ARTICLE 14, LIBERTY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, AS TO (I) LIBERTY’S TITLE TO ANY OF THE LIBERTY ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE
MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING
TO THE LIBERTY ASSETS, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE LIBERTY ASSETS, (IV)
ANY ESTIMATES OF THE VALUE OF THE LIBERTY ASSETS OR FUTURE REVENUES GENERATED BY THE LIBERTY ASSETS, (V) THE PRODUCTION OF PETROLEUM
SUBSTANCES FROM THE LIBERTY ASSETS, OR WHETHER PRODUCTION HAS BEEN CONTINUOUS OR IN PAYING QUANTITIES, (VI) THE MAINTENANCE, REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE LIBERTY ASSETS, OR (VII) ANY OTHER MATERIALS OR INFORMATION THAT
MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO EMERALD OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES
OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO,
AND EXCEPT AS STATED IN THIS AGREEMENT, FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY OF THE LIBERTY ASSETS, IT BEING EXPRESSLY
UNDERSTOOD AND AGREED BY THE PARTIES THAT EMERALD SHALL BE DEEMED TO BE OBTAINING THE LIBERTY ASSETS IN THEIR PRESENT STATUS,
CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS AND THAT EMERALD HAS MADE OR CAUSED
TO BE MADE SUCH INSPECTIONS AS EMERALD DEEMS APPROPRIATE.


 






    	-32-



    	 



    

 


6.18       Liberty’s
Evaluation.


 


(a)          Review.
Liberty is an experienced and knowledgeable investor in the oil and gas industry or is an owner of oil, gas and mineral properties
and is aware of its risks. Liberty has been afforded the opportunity to examine the Records and materials made available to it
by Emerald in Emerald’s offices with respect to the Emerald Assets. Liberty acknowledges that Emerald has not made any representations
or warranties as to the Records or otherwise except as expressly and specifically provided herein and that Liberty may not rely
on any of Emerald’s estimates with respect to reserves, the value of the Emerald Assets, projections as to future events
or other internal analyses or forward looking statements.


 


(b)          Independent
Evaluation. In entering into this Agreement, Liberty acknowledges and affirms that it has relied and will rely solely on the
terms of this Agreement and upon its independent analysis, evaluation and investigation of, and judgment with respect to, the business,
economic, legal, tax or other consequences of this transaction including without limitation its own estimate and appraisal of the
extent and value of the Hydrocarbon reserves of the Emerald Assets.


 


ARTICLE
7


EMERALD’S REPRESENTATIONS AND WARRANTIES


 


Except as set forth
in the schedule delivered to Liberty prior to the execution of this Agreement setting forth specific exceptions to Emerald’s
representations and warranties set forth in this Agreement (each section of which qualifies the correspondingly numbered representation
and warranty by Emerald)(the “Emerald Disclosed Materials”), Emerald represents and warrants to Liberty
as of the date hereof and as of the Closing Date as follows:


 






    	-33-



    	 



    

 


7.1           Organization
and Standing. Emerald Oil is a corporation duly organized, validly existing and in good standing under the Laws of Delaware,
(ii) Emerald WB is a limited liability company duly organized, validly existing and in good standing under the Laws of Colorado,
and (iii) each of Emerald Oil and Emerald WB is duly qualified to carry on its business in such other jurisdictions as may be
necessary, except where the failure to be so qualified would not have a Material Adverse Effect.


 


7.2           Power.
Emerald has all requisite power and authority to carry on its business as presently conducted, to enter into this Agreement, and
to perform its obligations hereunder. The execution and delivery of this Agreement does not, and the fulfillment of and compliance
with the terms and conditions hereof will not, as of Closing, violate, or be in conflict with, any material provision of Emerald’s
governing documents, or, to Emerald’s Knowledge, any judgment, decree, order, statute, rule or regulation applicable to
Emerald.


 


7.3           Authorization
and Enforceability. Assuming the due authorization, execution and delivery by Liberty, this Agreement constitutes Emerald’s
legal, valid and binding obligation, enforceable in accordance with its terms, subject, however, to the effects of bankruptcy,
insolvency, reorganization, moratorium and other Laws for the protection of creditors, as well as to general principles of equity,
regardless whether such enforceability is considered in a proceeding in equity or at law.


 


7.4           Liability
for Brokers’ Fees. Emerald has not incurred any liability, contingent or otherwise, for investment bankers’, brokers’
or finders’ fees relating to the transactions contemplated by this Agreement for which Liberty shall have any responsibility
whatsoever.


 


7.5           Litigation.
Except as provided on Schedule 7.5, there are no actions, suits, or proceedings pending or, to Emerald’s
Knowledge, threatened against Emerald (with respect to the Emerald Assets) or any of the Emerald Assets, in any court or by or
before any Governmental Entity that would have a Material Adverse Effect on Emerald (with respect to the Emerald Assets) or the
Emerald Assets or impair Emerald’s ability to consummate the transactions contemplated by this Agreement and to assume the
liabilities to be assumed by Emerald under this Agreement.


 


7.6           Financial
Resources. Emerald has the financial resources available to consummate the transactions contemplated by this Agreement and
to pay the Closing Amount and any and all fees and expenses incurred by Emerald in connection with the transactions contemplated
by this Agreement.


 






    	-34-



    	 



    

 


7.7           Material
Agreements. Except for the Leases, Exhibit D-2 includes the following types of contracts (the “Emerald
Material Agreements”) by which any of the Emerald Assets are bound as of the date hereof: (a) any agreement
with any Affiliate of Emerald; (b) any agreement or contract for the sale, exchange, or other disposition of Hydrocarbons
produced from or attributable to Emerald’s interest in the Emerald Assets or for the purchase, processing or transportation
of any Hydrocarbons, in each case that is not cancelable without penalty or other payment on not more than ninety (90) days prior
written notice, (c) any agreement of or binding upon Emerald to sell, lease, farmout, or otherwise dispose of any interest
in any of the Emerald Assets after the date hereof, other than nonconsent penalties for nonparticipation in operations under operating
agreements, conventional rights of reassignment arising in connection with Emerald’s surrender or release of any of the
Emerald Assets; (d) any Tax partnership agreement of or binding upon Emerald affecting any of the Emerald Assets; and (e) any
agreement that creates any area of mutual interest or similar provision with respect to the Emerald Assets. To Emerald’s
Knowledge, Emerald is not (and to Emerald’s Knowledge, no other Person is) in material default (or with the giving of notice
or the lapse of time or both, would not be in default) under any Emerald Material Agreement except as disclosed on Exhibit D-2.
Prior to execution of this Agreement, Emerald has provided Liberty or made available to Liberty, true, correct and complete copies
of the Emerald Material Agreements. To Emerald’s Knowledge, the Emerald Material Agreements are in full force and effect
in accordance with their terms, are valid and binding obligations of Emerald, and to Emerald’s Knowledge, are enforceable
in accordance with their terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
and similar Laws affecting creditor’s rights generally and by equitable principles.


 


7.8           Capital
Projects. Except as described on Schedule 7.8 (“Emerald Capital Expenditures”),
(i) Emerald has incurred no expenses, and has made no commitments to make expenditures in connection with the ownership or operation
of the Emerald Assets after the Effective Time (other than with respect to routine operations performed in the ordinary course
of operating the existing Wells), which expenditures are, individually, or in the aggregate, estimated to cost exceeds five hundred
thousand dollars ($500,000), net to Emerald’s interest, and (ii) no contractual obligations, proposals or authorities for
expenditures are currently outstanding (whether made by Emerald or by any other party) to drill additional wells, or to deepen,
plug back, rework any Well, to abandon any Well, or to conduct any other operation on the Emerald Assets for which the estimated
cost exceeds five hundred thousand dollars ($500,000), net to Emerald’s interest.


 


7.9           Taxes.
All material Taxes pertaining to the Emerald Assets based on or measured by Emerald’s ownership of the Emerald Assets for
all taxable periods prior to the taxable period in which this Agreement is executed that were required to be paid prior to the
Effective Time have been paid. All income Taxes pertaining to Emerald’s ownership of the Emerald Assets that, if unpaid,
could give rise to a Lien or other claim against any of the Emerald Assets have been properly paid. Emerald has not received written
notice of any pending claim against or audit of Emerald from any taxing authority for the assessment of any material Tax pertaining
to the Emerald Assets that, if unpaid, could give rise to a Lien or other claim against any of the Emerald Assets.


 


7.10         Audits.
Except as provided on Schedule 7.10, there are no audits currently being conducted by Emerald of the joint
account under any operating agreements related to the Emerald Assets nor are there any such audits of Emerald currently underway.


 


7.11         Judgments.
There are no unsatisfied judgments or injunctions issued by a court of competent jurisdiction or other Governmental Entity outstanding
against Emerald related to the Emerald Assets.


 






    	-35-



    	 



    

 


7.12         Compliance
with Law And Government Authorizations. To Emerald’s Knowledge, the Emerald Assets are being operated in compliance
with all applicable Laws except for such noncompliance that would not have, individually or in the aggregate, a Material Adverse
Effect. Notwithstanding the foregoing, this Section 7.12 does not relate to Taxes or Environmental Laws, which are
addressed in Section 7.9 and Article V, respectively.


 


7.13         Lease
Status/Rentals/Royalties. To Emerald’s Knowledge, all rentals, royalties and operating expenses payable with respect
to the Emerald Assets prior to the Effective Time, have been duly and properly paid in all material respects, except as would
not, individually or in the aggregate, have a Material Adverse Effect. To Emerald’s Knowledge, there are no currently pending
requests or demands for payments, adjustments of payments or performance pursuant to obligations under the Leases, to the extent
that non-compliance with the forgoing would have a Material Adverse Effect on any of the Emerald Assets.


 


7.14         Well
Status. Except as set forth in Schedule 7.14, to the Knowledge of Emerald, there are no wells located on the
Emerald Assets that: (a) Emerald is obligated by Law or contract to currently plug and abandon; or (b) to the extent
plugged and abandoned, have not been plugged in accordance with applicable material requirements of each Governmental Entity having
jurisdiction over the Emerald Assets.


 


7.15         Calls
on Production. Except as set forth on Schedule 7.15, Emerald has not (i)  received any material advance,
“take-or-pay” or other similar payments under production sales contracts that entitle the purchasers to “make
up” or otherwise receive deliveries of Hydrocarbons without paying at such time the contract price therefore or (ii) 
taken or received any amount of Hydrocarbons under any gas balancing agreements or any similar arrangements not accounted for
in a purchase price adjustment that permit any Person thereafter to receive any portion of the interest of Emerald to “balance”
any disproportionate allocation of Hydrocarbons. Except as set forth on Schedule 7.15, no Hydrocarbons attributable
to the Emerald Assets are subject to a sales contract (other than contracts terminable on no more than thirty (30) days’
notice or in accordance with rights of termination by non-operators under the applicable joint operating agreement) and no Person
has any call upon, option to purchase or similar rights with respect to the production from the Emerald Assets; production from
the Emerald Assets is not bound by any gas dedications or subject to any monetary or in kind through-put fees or charges in connection
with gathering or transportation; and the Emerald Assets are not bound by futures, hedge, swap, collar, put, call, floor, cap,
option or other contracts that are intended to benefit from, relate to or reduce or eliminate the risk of fluctuations in the
price of commodities, including Hydrocarbons, securities, foreign exchange rates or interest rates that will continue after Closing.
To Emerald’s Knowledge, proceeds from the sale of oil, condensate, and gas from the Emerald Assets are being received by
Emerald, as applicable, in a timely manner and are not being held in suspense for any reason.


 


7.16         Imbalances.
There are no well or pipeline imbalances affecting the Emerald Assets.


 






    	-36-



    	 



    

 


7.17         No
Other Representations or Warranties; Disclosed Materials. Except for the representations and warranties contained in this
Article 7 (as qualified by the Emerald Disclosed Materials), neither Emerald nor any other Person makes (and Liberty is
not relying upon) any other express or implied representation or warranty with respect to Emerald (including the value, condition
or use of any Emerald Asset) or the transactions contemplated by this Agreement, and Emerald disclaims any other representations
or warranties not contained in this Article 7, whether made by Emerald, any Affiliate of Emerald or any of their respective
officers, directors, managers, employees or agents. Except for the representations and warranties contained in this Article
7 (as qualified by the Emerald Disclosed Materials), Emerald disclaims all liability and responsibility for any representation,
warranty, projection, forecast, statement or information made, communicated or furnished (orally or in writing) to Liberty or
any of its Affiliates or any of its officers, directors, managers, employees or agents (including any opinion, information, projection
or advice that may have been or may be provided to Liberty by any director, officer, employee, agent, consultant or representative
of Emerald or any of its Affiliates). The disclosure of any matter or item in the Emerald Disclosed Materials shall not be deemed
to constitute an acknowledgment that any such matter is required to be disclosed or is material or that such matter would or would
reasonably be expected to result in a Material Adverse Effect.


 


7.18         Disclaimer.
EXCEPT AS EXPRESSLY WARRANTED, REPRESENTED OR COVENANTED OTHERWISE IN THIS AGREEMENT OR IN THE SPECIAL WARRANTY OF TITLE CONTAINED
IN THE ASSIGNMENT, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING AND WITHOUT LIMITING IN ANY RESPECT LIBERTY INDEMNIFIED PARTIES’
RIGHTS TO DEFENSE AND INDEMNIFICATION UNDER ARTICLE 14, EMERALD EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, AS TO (I) EMERALD’S TITLE TO ANY OF THE ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM,
OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE EMERALD
ASSETS, (III) THE QUANTITY, QUALITY OR RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE EMERALD ASSETS, (IV) ANY ESTIMATES
OF THE VALUE OF THE EMERALD ASSETS OR FUTURE REVENUES GENERATED BY THE EMERALD ASSETS, (V) THE PRODUCTION OF PETROLEUM SUBSTANCES
FROM THE EMERALD ASSETS, OR WHETHER PRODUCTION HAS BEEN CONTINUOUS OR IN PAYING QUANTITIES, (VI) THE MAINTENANCE, REPAIR, CONDITION,
QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE EMERALD ASSETS, OR (VII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE
BEEN MADE AVAILABLE OR COMMUNICATED TO LIBERTY OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES
OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO,
AND EXCEPT AS STATED IN THIS AGREEMENT, FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY OF THE EMERALD ASSETS, IT BEING EXPRESSLY
UNDERSTOOD AND AGREED BY THE PARTIES THAT LIBERTY SHALL BE DEEMED TO BE OBTAINING THE EMERALD ASSETS IN THEIR PRESENT STATUS,
CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS AND THAT LIBERTY HAS MADE OR CAUSED
TO BE MADE SUCH INSPECTIONS AS LIBERTY DEEMS APPROPRIATE.


 






    	-37-



    	 



    

 


7.19       Emerald’s
Evaluation.


 


(a)          Review.
Emerald is an experienced and knowledgeable investor in the oil and gas industry or is an owner of oil, gas and mineral properties
and is aware of its risks. Emerald has been afforded the opportunity to examine the Records and materials made available to it
by Liberty in Liberty’s offices with respect to the Liberty Assets. Emerald acknowledges that Liberty has not made any representations
or warranties as to the Records or otherwise except as expressly and specifically provided herein and that Emerald may not rely
on any of Liberty’s estimates with respect to reserves, the value of the Liberty Assets, projections as to future events
or other internal analyses or forward looking statements.


 


(b)          Independent
Evaluation. In entering into this Agreement, Emerald acknowledges and affirms that it has relied and will rely solely on the
terms of this Agreement and upon its independent analysis, evaluation and investigation of, and judgment with respect to, the business,
economic, legal, tax or other consequences of this transaction including without limitation its own estimate and appraisal of the
extent and value of the Hydrocarbon reserves of the Liberty Assets.


 


ARTICLE
8

COVENANTS AND AGREEMENTS


 


8.1         Covenants
and Agreements of Transferor. Transferor covenants and agrees with Transferee as follows:


 


(a)          Operations
Prior to Closing. Except as otherwise consented to in writing by Transferee or provided in this Agreement, from the date of
execution of this Agreement to the Closing Date, where Transferor is the operator, Transferor will operate the Assets or cause
the Assets to be operated in a manner consistent in all material respects with past practice. From the date of execution of this
Agreement to the Closing Date, Transferor shall pay or cause to be paid its proportionate share of all costs and expenses incurred
in connection with such operations. Transferor will notify Transferee of capital expenditures anticipated to cost in excess of
two hundred fifty thousand dollars ($250,000) per operation, net to Transferor’s interest, conducted on the Assets, exclusive
of the Capital Projects listed on Schedule 6.7. All costs and expenses incurred by the Parties with respect
to the Capital Projects will be apportioned between the Parties as of the Effective Time, with Transferee assuming all post-Effective
Time costs and expenses and Transferor retaining all pre-Effective Time costs and expenses.


 






    	-38-



    	 



    

 


(b)          Restriction
on Operations. Subject to Section 8.1(a) and except as otherwise provided in this Section 8.1(b), unless
Transferor obtains the prior written consent of Transferee to act otherwise, which consent shall not be unreasonably withheld,
conditioned or delayed, Transferor will use commercially reasonable efforts within the constraints of the applicable operating
agreements and other applicable agreements not to: (i) abandon any part of the Assets (except in the ordinary course of business,
Leases that have terminated in the ordinary course of business based upon the expiration of their primary terms, or Leases that
are no longer capable of production in paying quantities); (ii) except for the Capital Projects listed on Schedule 6.7
and operations consistent with the existing drilling plan attached hereto as Schedule 8.1(b), approve any operations
on the Assets anticipated in any instance to cost more than two hundred fifty thousand dollars ($250,000) per activity,
net to Transferor’s interest (excepting emergency operations required under presently existing contractual obligations, ongoing
commitments under existing AFEs and operations undertaken to avoid a monetary penalty or forfeiture provision of any applicable
agreement or order all of which shall be deemed to be approved, provided Transferor immediately notifies Transferee of any emergency
operation or operation to avoid monetary penalty or forfeiture excepted herein); or (iii) convey or dispose of any part of
the Assets (other than replacement of equipment or sale of Hydrocarbons produced from the Assets in the ordinary course of business).


 


(c)          Consents.
For the purposes of obtaining the written consents for AFEs required in this Section 8.1, Liberty designates the following
contact person: Paul Vitek, and Emerald designates the following contact person Ryan Smith, in each case, at the address and telephone
number for Transferee set forth in Section 15.3. Such consents may be obtained in writing by overnight courier or given
by .pdf or facsimile transmission.


 


(d)          Notices
of Claims. Transferor shall promptly notify Transferee, if, between the date of execution of this Agreement and the Closing
Date, Transferor receives verbal or written notice of any claim, suit, action or other proceeding or verbal or written notice of
any material default under any Material Agreement affecting the Assets.


 


(e)          Notices
of Changes in Unit Sizes. Transferor shall promptly notify Transferee, if, between the date of execution of this Agreement
and the Closing Date, Transferor receives verbal or written notice of any purported change in drilling and spacing units, tract
allocation, or other changes in pool or unit participation occurring by a Person other than the Transferor;


 


(f)          Suspense
Accounts. Prior to Closing, Transferor will provide to Transferee (a) information regarding all of Transferor’s
accounts holding moneys in suspense together with a written explanation (as contained in Transferor’s files) of why such
moneys are held in suspense or other information identifying the proper disposition of such moneys and (b) Transferor’s
division of interest and all supporting documentation regarding those royalty owners and working interest owners in the Leases
for whom Transferor disburses proceeds of production. After Closing, Transferee shall be solely responsible for the proper distribution
of such moneys held in suspense to the party or parties which or who are entitled to receive payment of the same, and hereby agrees
to indemnify, defend and hold Transferor harmless from any Claims therefor.


 


8.2          Covenants
and Agreements of Transferee. Transferee covenants and agrees with Transferor that Transferee shall use all reasonable efforts
to assure that as of the Closing Date it will not be under any material legal or contractual restriction that would prohibit or
delay the timely consummation of the transactions contemplated hereby.


 






    	-39-



    	 



    

 


8.3          Covenants
and Agreements of the Parties.


 


(a)          Communication
Between the Parties Regarding Breach. If Transferee or Transferor acquires Knowledge during its due diligence that leads either
Party to believe that the other Party has materially breached a representation or warranty under this Agreement, the non-breaching
Party shall inform the alleged breaching Party in writing of such potential breach as soon as possible, but in any event, at or
prior to Closing.


 


(b)          Casualty
Loss. Prior to Closing, if a portion of the Assets is destroyed by fire or other casualty or if a portion of the Assets is
taken or threatened to be taken in condemnation or under the right of eminent domain (“Casualty Loss”),
Transferee shall not be obligated to purchase such Asset. If Transferee declines to purchase such Asset, the Purchase Price shall
be reduced by the Allocated Value of such Asset. If Transferee elects to purchase such Asset, the Purchase Price shall be reduced
by the estimated cost to repair such Asset (with equipment of similar utility), less all insurance proceeds which shall be payable
to Transferee, up to the Allocated Value thereof (the reduction being the “Net Casualty Loss”). Transferor,
at its sole option, may elect to cure such Casualty Loss and, in such event, Transferor shall be entitled to all insurance proceeds.
If Transferor elects to cure such Casualty Loss, Transferor may replace any personal property that is the subject of a Casualty
Loss with equipment of similar grade and utility, or replace any real property with real property of similar nature and kind if
such property is acceptable to Transferee in its sole discretion. If Transferor elects to cure the Casualty Loss, Transferee shall
purchase the affected Asset at Closing for the Allocated Value thereof.


 


(c)          Cooperation
and Good Faith. Upon the terms and subject to the conditions set forth in this Agreement, Transferee and Transferor will use
their respective reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other Party or Parties hereto in doing, all things reasonably necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the transactions, including using reasonable efforts to: (i) cause
the conditions set forth in Article 10 to be satisfied and (ii) execute or deliver any additional instruments reasonably
necessary to consummate the transactions contemplated by this Agreement and to fully carry out the purposes of this Agreement;
provided, however, that the foregoing provisions of this Section 8.3(d) will not require (y) any Party to perform,
satisfy or discharge any obligations of any other Party under this Agreement or otherwise or (z) Transferor or Transferee to pay
any money or other consideration or grant forbearances to any third party in order to perform, satisfy or discharge any of its
obligations under this Agreement.


 


(d)          Successor
Operator. Promptly after Closing, Transferor shall send notices (in form mutually agreed to by Transferee) to co-owners, if
any, of those Assets that Transferor currently operates stating that Liberty Management (in the case of Liberty) and Emerald WB
(in the case of Emerald), is resigning as operator, effective upon the Closing Date, and providing notice that Transferee or one
of its Affiliates shall become (or to the extent governed by an operating agreement or similar agreement, recommending that Transferee
be elected) successor operator for the Assets operated by Transferor. Transferor makes no representations or warranties to Transferee
as to the transferability of operatorship of any Assets which Transferor currently operates. Rights and obligations associated
with operatorship of the Assets may be governed by operating agreements or similar agreements and will be decided in accordance
with the terms of such agreements.


 






    	-40-



    	 



    

 


ARTICLE
9


TAX MATTERS


 


9.1           Production
Tax Liability. Subject to the treatment of ad valorem Taxes provided below, all Production Taxes shall be allocated between
Transferor and Transferee as of the Effective Time for all taxable periods that include the Effective Time. All Production Taxes
that are not ad valorem taxes shall be allocated to Transferor to the extent they relate to production prior to the Effective
Time and to Transferee to the extent they relate to production on or after the Effective Time. No liability for Production Taxes
shall duplicate an adjustment to the Liberty Assets Preliminary Adjusted Purchase Price or the Emerald Assets Preliminary Adjusted
Purchase Price, as applicable, made pursuant to Section 2.4. Ad valorem Taxes for each assessment period shall be allocated
to Transferor based on the percentage of the assessment period occurring before the Effective Time and to Transferee based on
the percentage of the assessment period occurring on or after the Effective Time. Each Party shall promptly furnish to the other
copies of any Production Tax assessments and statements (or invoices therefor from the operator of the applicable Assets) received
by it to the extent such assessment, statement, or invoice relates to a Production Tax allocable to the other Party under this
Section. Each Party shall timely pay all Production Taxes subject to allocation under this Section and shall furnish to the other
Party evidence of such payment. The Parties shall estimate all Taxes (excluding Transferor’s income, franchise, or margin
Taxes) attributable to the ownership or operation of the Assets to the extent they relate to the period on and after the Effective
Time and through the date hereof and all Transfer Taxes and incorporate such estimates into the Preliminary Settlement Statement.
The actual amounts (to the extent the actual amounts differ from the estimates included in the Preliminary Settlement Statement
and are known at the time of the Final Settlement Statement) shall be accounted for in the Final Settlement Statement. If the
actual amounts are not known at the time of the Final Settlement Statement, the amounts shall be re-estimated based on the best
information available at the time of the Final Settlement Statement. When the actual amounts are known, Emerald and Liberty shall
make such payments to the other (if any) as are necessary to effect the allocation of Taxes described in this Section 9.1.


 


9.2           Transfer
Taxes. All sales, use or other Taxes (other than Taxes on gross income, net income or gross receipts) and duties, levies,
recording fees or other governmental charges incurred by or imposed with respect to the property transfers undertaken pursuant
to this Agreement (“Transfer Taxes”) shall be the responsibility of, and shall be paid by, Emerald provided
that, in the event that Liberty pays any Transfer Tax, Emerald shall promptly reimburse Liberty for such payment (without duplication
to any adjustment to the Liberty Assets Purchase Price or the Emerald Assets Purchase Price, as applicable). The Parties
shall reasonably cooperate in taking steps that would minimize or eliminate any Transfer Taxes. 


 






    	-41-



    	 



    

 


9.3           Tax
Reports and Returns. For Tax periods in which the Effective Time occurs, Transferor agrees to forward to Transferee within
five (5) days of receipt copies of any Tax reports and returns received or filed by Transferor after Closing and provide Transferee
with any information Transferor has that is reasonably necessary for Transferee to file any required Tax Return related to the
Assets. Transferee agrees to file all Tax Returns and reports applicable to the Assets that Transferee is required to file after
the Closing and, subject to the provisions of Section 9.1, to pay all required Production Taxes payable with respect
to the Assets.


 


9.4           Tax
Cooperation. The Parties shall cooperate fully as and to the extent reasonably requested by the other party, in connection
with the filing of any Tax Returns and any audit, litigation or other proceeding (each, a “Tax Proceeding”)
with respect to Taxes relating to or in connection with the Assets. Such cooperation shall include the retention and (upon the
other Party’s request) the provision of such records and information which are reasonably relevant to any such Tax Return
or Tax Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder.


 


ARTICLE
10


CONDITIONS PRECEDENT TO CLOSING


 


10.1       Liberty’s
Conditions. The obligations of Liberty to consummate the transactions contemplated in this Agreement are subject, to the satisfaction
(or waiver in writing by Liberty) at or prior to the Closing of the following conditions precedent:


 


(a)          All
representations and warranties of Emerald contained in this Agreement will be true and correct in all material respects as of the
Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties are made as
of a specified date, in which case such representations and warranties shall be true and correct as of the specified date).


 


(b)          Emerald
shall have performed and satisfied in all material respects all covenants and agreements required by this Agreement to be performed
and satisfied by Emerald at or prior to the Closing.


 


(c)          No
temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement will be
in effect.


 


(d)          All
authorizations, consents, orders, or approvals of, or declarations or filings with, or expirations of waiting periods imposed by,
any Governmental Entity necessary for the consummation of the transactions contemplated by this Agreement will have been filed,
occurred, or been obtained.


 


10.2        Emerald’s
Conditions. The obligations of Emerald at the Closing are subject, at the option of Emerald, to the satisfaction or waiver
at or prior to the Closing of the following conditions precedent:


 






    	-42-



    	 



    

 


(a)          All
representations and warranties of Liberty contained in this Agreement will be true and correct in all material respects as of the
Closing Date as though made on and as of the Closing Date (except to the extent such representations and warranties are made as
of a specified date, in which case such representations and warranties shall be true and correct as of the specified date).


 


(b)          Liberty
shall have performed and satisfied in all material respects all covenants and agreements required by this Agreement to be performed
and satisfied by Liberty at or prior to the Closing.


 


(c)          No
temporary restraining order, preliminary or permanent injunction, or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement will be
in effect.


 


(d)          All
authorizations, consents, orders, or approvals of, or declarations or filings with, or expirations of waiting periods imposed by,
any Governmental Entity necessary for the consummation of the transactions contemplated by this Agreement will have been filed,
occurred, or been obtained.


 


ARTICLE
11


RIGHT OF TERMINATION


 


11.1       Termination.
This Agreement may be terminated in accordance with the following provisions:


 


(a)          by
mutual consent of Liberty and Emerald; or


 


(b)          by
Liberty or Emerald if the Closing has not occurred on or before October 15, 2014 (the “Termination Date”);
provided that the right to terminate this Agreement under this Section 11.1(b) shall not be available to the Party requesting
termination if the Closing has failed to occur because of such Party’s breach of representation, warranty or covenant;


 


(c)          by
Liberty or Emerald, if the sum of (i) the Title Defect Amounts and (ii) the Remediation Costs with respect to the Liberty Assets
exceeds 15% of the Liberty Assets Purchase Price;


 


(d)          by
Liberty or Emerald, if the sum of (i) the Title Defect Amounts and (ii) the Remediation Costs with respect to the Emerald Assets
exceeds 15% of the Emerald Assets Purchase Price.


 


11.2       Liabilities
Upon Termination.


 


(a)          Liberty’s
Default. If Closing does not occur because of Liberty’s failure to act in good faith toward the consummation of the transaction,
Emerald shall be entitled to, in its sole discretion, require that Liberty return the Exclusivity Payment as its sole remedy for
Liberty’s failure.


 






    	-43-



    	 



    

 


(b)          Other
Termination; Specific Performance. If Closing does not occur because either Party has breached any representation, warranty
or covenant set forth in this Agreement, and such breach has caused a failure of any condition in Section 10.1 or 10.2
to be satisfied, each Party shall be entitled to pursue any and all other rights and remedies to which such Party may be entitled
at law or in equity, including without limitation the remedy of specific performance.


 


ARTICLE
12


CLOSING


 


12.1         Date
of Closing. Subject to the satisfaction of the conditions to Closing set forth in Article 10, the “Closing”
of the transactions contemplated hereby shall be held on September 2, 2014, or a later date prior to the Termination Date agreed
to by Emerald and Liberty. The date the Closing actually occurs is called the “Closing Date.”


 


12.2         Place
of Closing. Subject to the satisfaction of the conditions to Closing set forth in Article 10, the Closing shall be
held at the offices of Davis Graham & Stubbs LLP at 9:00 a.m. Denver, Colorado time or at such other time and place as
Emerald and Liberty may agree in writing.


 


12.3         Closing
Obligations. Subject to the satisfaction of the conditions to Closing set forth in Article 10, at 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)          Liberty
shall execute, acknowledge and deliver to Emerald (i) an Assignment, Bill of Sale and Conveyance of Liberty Assets effective
as of the Effective Time substantially in the form of Exhibit E-1 (the “Liberty Assignment”)
with a special warranty of title by, through and under Liberty but not otherwise and with no warranties, express or implied, as
to the personal property, fixtures or condition of the Liberty Assets which are conveyed “as is, where is”; (ii) such
other assignments, bills of sale, certificates of title, or deeds necessary to transfer the Liberty Assets to Emerald including,
without limitation, federal and state forms of assignment; and (iii) an Assignment and Assumption Agreement in the form attached
as Exhibit F-1 under which Emerald assigns and Liberty assumes Emerald’s interest in the Contracts in accordance
with the terms of this Agreement;


 


(b)          Emerald
shall execute, acknowledge and deliver to Liberty (i) an Assignment, Bill of Sale and Conveyance of Emerald Assets effective
as of the Effective Time substantially in the form of Exhibit E-2 (the “Emerald Assignment”)with
a special warranty of title by, through and under Emerald but not otherwise and with no warranties, express or implied, as to the
personal property, fixtures or condition of the Emerald Assets which are conveyed “as is, where is”; (ii) such
other assignments, bills of sale, certificates of title, or deeds necessary to transfer the Emerald Assets to Liberty including,
without limitation, federal and state forms of assignment; and (iii) an Assignment and Assumption Agreement in the form attached
as Exhibit F-2 under which Liberty assigns and Emerald assumes Liberty’s interest in the Contracts in accordance
with the terms of this Agreement;


 






    	-44-



    	 



    

 


(c)          Liberty
and Emerald shall each deliver a certificate duly executed by an officer thereof confirming that the closing conditions set forth
in Sections 10.1(a) and (b) and 10.2(a) and (b), respectively, have been satisfied;


 


(d)          Liberty
and Emerald shall execute and deliver the Preliminary Settlement Statement;


 


(e)          Emerald
shall cause the Closing Amount to be paid by wire transfer of immediately available funds;


 


(f)          Each
Party shall execute, acknowledge and deliver transfer orders or letters in lieu thereof notifying all purchasers of production
of the change in ownership of the Assets and directing all purchasers of production to make payment to Emerald or Liberty, as applicable,
of proceeds attributable to production from the Assets;


 


(g)          Each
Party shall execute and deliver to the other Party an affidavit of non-foreign status and no requirement for withholding under
Section 1445 of the Code in the form of Exhibit G;


 


(h)          Each
Party shall deliver, or cause to be delivered to the other Party, a recordable form of release of any pledges, mortgages, financing
statements, fixture filings and security agreements, if any, affecting the Assets; and


 


(i)          Liberty
and Emerald shall take such other actions and deliver such other documents as are contemplated by this Agreement.


 


ARTICLE
13


POST-CLOSING OBLIGATIONS


 


13.1       Post-Closing
Adjustments.


 


(a)          Final
Settlement Statements. As soon as practicable after the Closing, but in no event later than ninety (90) days after Closing,
Liberty, with the assistance of Emerald’s staff and with access to such records as necessary, will cause to be prepared and
delivered to Emerald, in accordance with customary industry accounting practices, (i) the final settlement statement (the
“Final Settlement Statement”) setting forth each adjustment to the Liberty Assets Preliminary Adjusted
Purchase Price and the Emerald Assets Preliminary Adjusted Purchase Price, respectively, in accordance with Section 2.4
and showing the calculation of such adjustments and the resulting final purchase price (the “Final Net Purchase Price”).
As soon as practicable after receipt of the Final Settlement Statement but in no event later than on or before forty-five (45)
days after receipt of such statement, Emerald shall deliver to Liberty a written report containing any changes that Emerald proposes
to make to the Final Settlement Statement. Emerald’s failure to deliver to Liberty a written report detailing proposed changes
to the Final Settlement Statement by that date shall be deemed an acceptance by Emerald of the Final Settlement Statement as submitted
by Liberty. The Parties shall engage in good faith efforts to agree with respect to the changes proposed by Emerald, if any, no
later than forty-five (45) days after Emerald’s delivery to Liberty of its proposed changes to the Final Settlement
Statement. The date upon which such agreement is reached or upon which the Final Net Purchase Price is established shall be herein
called the “Final Settlement Date.” If the Final Net Purchase Price is more than the Closing Amount,
Emerald shall pay to Liberty the amount of such difference by wire transfer of immediately available funds no later than five (5)
days after the Final Settlement Date. If the Final Net Purchase Price is less than the Closing Amount, Liberty shall pay the amount
of such difference to Emerald by wire transfer in immediately available funds no later than five (5) days after the Final
Settlement Date.


 






    	-45-



    	 



    

 


(b)          Dispute
Resolution. If the Parties are unable to resolve a dispute as to the Final Purchase Price within sixty (60) days after
Emerald’s receipt of Liberty’s proposed Final Settlement Statement, the Parties shall submit the dispute to binding
arbitration to be conducted in accordance with the provisions of Section 15.13.


 


13.2         Records.
Transferor shall make the Records available for pick up by Transferee at Closing to the extent possible, but in any event, within
thirty (30) days after Closing. Transferor may retain copies of the Records and Transferor shall have the right to review
and copy the Records during standard business hours upon reasonable notice for so long as Transferee retains the Records. Transferee
agrees that the Records will be maintained in compliance with all applicable Laws governing document retention.


 


13.3         Further
Assurances. From time to time after Closing, each Party shall each execute, acknowledge and deliver to the other such further
instruments and take such other action as may be reasonably requested in order to accomplish more effectively the purposes of
the transactions contemplated by this Agreement.


 


13.4         Successor
Operator. Promptly after Closing, Transferor shall send notices (in form mutually agreed to by Transferee) to co-owners, if
any, of those Assets that Transferor currently operates stating that Transferor is resigning as operator, effective upon the Closing
Date, and providing notice that Transferee shall become (or to the extent governed by an operating agreement or similar agreement,
recommending that Transferee be elected) successor operator for the Assets operated by Transferor. Transferor makes no representations
or warranties to Transferee as to the transferability of operatorship of any Assets which Transferor currently operates. Rights
and obligations associated with operatorship of the Assets may be governed by operating agreements or similar agreements and will
be decided in accordance with the terms of such agreements.


 


ARTICLE
14


INDEMNIFICATION


 


14.1         Emerald’s
Assumption of Liabilities and Obligations Upon Closing, Emerald shall assume and pay, perform, fulfill and discharge
all claims, costs, expenses, liabilities and obligations (“Obligations”) accruing or relating to the
following, but not including the Retained Obligations: (a) ownership and operation of the Liberty Assets after the Effective
Time including owning, developing, exploring, operating or maintaining the Liberty Assets or the producing, transporting and marketing
of Hydrocarbons from the Liberty Assets, the payment of Property Expenses, the make-up and balancing obligations for overproduction
of gas from the Wells, and all liability for royalty and overriding royalty payments and Production Taxes (allocated in accordance
with Article 9) made with respect to the Liberty Assets; and (b) all Environmental Liabilities accruing or relating
to the ownership or operation of the Liberty Assets, whether accruing before or after the Effective Time except to the extent
that Liberty elects to indemnify Emerald against such Environmental Liabilities pursuant to Section 5.3 (subsections (a)
and (b) of this Section 14.1, collectively, the “Emerald Assumed Liabilities”).


 






    	-46-



    	 



    

 


14.2         Liberty’s
Assumption of Liabilities and Obligations. Upon Closing, Liberty shall assume and pay, perform, fulfill and discharge all
Obligations accruing or relating to the following, but not including the Retained Obligations: (a) ownership and operation
of the Emerald Assets after the Effective Time including owning, developing, exploring, operating or maintaining the Emerald Assets
or the producing, transporting and marketing of Hydrocarbons from the Emerald Assets, the payment of Property Expenses, the make-up
and balancing obligations for overproduction of gas from the Wells, and all liability for royalty and overriding royalty payments
and Production Taxes (allocated in accordance with Article 9) made with respect to the Emerald Assets; and (b) all
Environmental Liabilities accruing or relating to the ownership or operation of the Emerald Assets, whether accruing before or
after the Effective Time (except to the extent that Emerald elects to indemnify Liberty against such Environmental Liabilities
pursuant to Section 5.3 (subsections (a) and (b) of this Section 14.2, collectively, the “Liberty Assumed
Liabilities”); provided that the Liberty Assumed Liabilities shall not include the Burgundy Liabilities unless
and until the conditions set forth in Section 5.6 are satisfied and the Burgundy Wellbore Interests are conveyed to Liberty.


 


14.3         Retained
Obligations. Other than with respect to the Emerald Assumed Liabilities and the Liberty Assumed Liabilities, the treatment
of which is set forth in Sections 14.1 and 14.2, each Party shall retain and shall pay, perform, fulfill and discharge
all Obligations accruing or relating to the following (the “Retained Obligations”): (a) the ownership
and operation of such Party’s Assets prior to the Effective Time including owning, developing, exploring, operating or maintaining
such Assets or producing, transporting and marketing Hydrocarbons from such Assets, the payment of Property Expenses, the make-up
and balancing obligations for overproduction of gas from the Wells, all liability for royalty and overriding royalty payments
and Production Taxes (allocated in accordance with Article 11) made with respect thereto, (b) offsite disposal of
Hazardous Materials by Transferor or its Affiliates prior to the Closing Date, and (c) with respect to Emerald, the Burgundy Liabilities,
unless and until the conditions set forth in Section 5.6 are satisfied and the Burgundy Wellbore Interests are conveyed
to Liberty.


 


14.4         Indemnification.
After the Closing, Emerald and Liberty shall indemnify each other as follows:


 


(a)          Liberty’s
Indemnification. Liberty shall defend, indemnify and save and hold harmless Emerald and its Affiliates and their respective
members, managers, shareholders, officers, directors, employees and agents (the “Emerald Indemnified Parties”),
from and against all Losses which arise directly or indirectly from or in connection with (i) the Liberty Assumed Liabilities,
(ii) any breach by Liberty of any of Liberty’s representations and warranties contained in this Agreement or in the certificate
delivered pursuant to Section 12.3, or (iii) any breach of Liberty’s covenants or agreements contained in this Agreement.


 






    	-47-



    	 



    

 


(b)          Emerald’s
Indemnification. Emerald shall defend, indemnify and save and hold harmless Liberty and its Affiliates and their respective
members, managers, shareholders, officers, directors, employees and agents (the “Liberty Indemnified Parties”),
from and against all Losses which arise directly or indirectly from or in connection with (i) the Emerald Assumed Liabilities,
(ii) any breach by Emerald of any of Emerald’s representations and warranties contained in this Agreement or in the
certificate delivered pursuant to Section 12.3, or (iii) any breach of Emerald’s covenants or agreements contained
in this Agreement.


 


(c)          Limitations
on Indemnity. Notwithstanding anything to the contrary set forth herein, each of Liberty and Emerald shall have no liability
for indemnification hereunder or for any Losses pursuant to Section 14.4(a)(ii) or (b)(ii), as applicable, until
the total of all Losses with respect to such matters exceed (i) with respect to Liberty’s obligations under Section 14.4(a)(ii),
2% of the Liberty Assets Purchase Price, and (ii) with respect to Emerald’s obligations under Section 14.4(b)(ii),
2% of the Emerald Assets Purchase Price (as to each of (i) and (ii), the “Deductible”), after which point
the Emerald Indemnified Parties or the Liberty Indemnified Parties, as applicable, shall be entitled to indemnification only in
excess of the Deductible. The aggregate liability of Liberty or Emerald, as applicable for indemnification pursuant to Section
14.4(a)(ii) or (b)(ii), as applicable, with respect to Losses suffered by the Emerald Indemnified Parties or the Liberty
Indemnified Parties, as applicable shall not exceed (I) with respect to Liberty’s obligations under Section 14.4(a)(ii),
10% of the Liberty Assets Purchase Price, and (ii) with respect to Emerald’s obligations under Section 14.4(b)(ii),
10% of the Emerald Assets Purchase Price (as to each of (I) and (II), the “Cap”). Notwithstanding the
foregoing, the Deductible and the Cap will not apply to a breach of the Fundamental Representations.


 


(d)          Notwithstanding
anything to the contrary contained in this Agreement, from and after Closing, the Parties’ sole and exclusive remedy against
each other with respect to breaches of the representations, warranties, covenants and agreements of the Parties contained in this
Agreement is set forth in this Section 14.4, and if no such right of indemnification is expressly provided, then such claims
are hereby waived to the fullest extent permitted by Law; provided however, that each Party shall retain the right to seek
injunctive or other equitable relief, including specific performance for breaches of this Agreement. Except as set forth in the
preceding sentence, upon Closing, each Party releases, remises, and forever discharges the other Party from any and all suits,
legal or administrative proceedings, claims, demands, damages, Losses, costs, liabilities, interest, or causes of action whatsoever,
in law or in equity, known or unknown, which such Parties might now or subsequently may have, based on, relating to, or arising
out of this Agreement or such Party’s ownership, use, or operation of the Assets, or the condition, quality, status, or nature
of the Assets, INCLUDING RIGHTS TO CONTRIBUTION OR COST RECOVERY UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION
AND LIABILITY ACT OF 1980, AS AMENDED, BREACHES OF STATUTORY AND IMPLIED WARRANTIES, NUISANCE OR OTHER TORT ACTIONS, RIGHTS TO
PUNITIVE DAMAGES, COMMON LAW RIGHTS OF CONTRIBUTION, ANY RIGHTS UNDER INSURANCE POLICIES ISSUED OR UNDERWRITTEN BY THE OTHER PARTY
OR ANY OF ITS AFFILIATES, even if caused in whole or in part by the negligence (whether
sole, joint, or concurrent), strict liability, or other legal fault of any released person, invitee, or third Person, and whether
or not caused by a preexisting condition.


 






    	-48-



    	 



    

 


(e)          EACH
PARTY CONFIRMS THAT IT IS NOT RELYING ON ANY REPRESENTATION OR WARRANTY OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT,
AND EACH PARTY ACKNOWLEDGES THAT THIS NO RELIANCE CONFIRMATION IS A MATERIAL INDUCEMENT TO THE OTHER PARTY’S WILLINGNESS
TO ENTER INTO THIS AGREEMENT AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.


 


14.5         Procedure.
The indemnifications contained in Section 14.4 shall be implemented as follows:


 


(a)          Claim
Notice. The Party seeking indemnification under the terms of this Agreement (“Indemnified Party”)
shall submit a written “Claim Notice” to the other Party (“Indemnifying Party”)
which, to be effective, must be delivered prior to the end of the Survival Period applicable under Section 14.6 to the representation
or warranty that is the subject of such Claim Notice and must state: (i) the amount of each payment claimed by an Indemnified
Party to be owing, (ii) the basis for such claim, with supporting documentation, and (iii) a list identifying to the
extent reasonably possible each separate item of Loss for which payment is so claimed. Unless, within sixty days of receipt of
a Claim Notice, the Indemnifying Party provides written notice to the Indemnified Party that it contests the Losses identified
in such Claim Notice, the Indemnifying Party shall, subject to the other terms of this Section 14.5, pay to the Indemnified
Party the amount of the Losses related to such indemnification claim or the uncontested portion thereof. If the Indemnifying Party
objects to a Claim Notice on the basis that it lacks sufficient information, it shall promptly request from the Indemnified Party
any specific additional information reasonably necessary for it to assess such indemnification claim, and the Indemnified Party
shall provide the additional information reasonably requested. Upon receipt of such additional information, the Indemnifying Party
shall notify the Indemnified Party of any withdrawal or modification of the objection. All disputed indemnification claims shall
be resolved by Emerald and Liberty in accordance with either (A) a mutual agreement between Emerald and Liberty, which shall
be memorialized in writing, or (B) final arbitration in accordance with Section 15.13.


 






    	-49-



    	 



    

 


(b)          Information.
Promptly after the Indemnified Party receives notice of a claim or legal action by a third party that may result in a Loss for
which indemnification may be sought under this Article 14 (a “Claim”), the Indemnified Party
shall give written notice of such Claim to the Indemnifying Party. If the Indemnifying Party or its counsel so requests, the Indemnified
Party shall furnish the Indemnifying Party with copies of all pleadings and other information with respect to such Claim. At the
election of the Indemnifying Party made within sixty (60) days after receipt of such notice, the Indemnified Party shall permit
the Indemnifying Party to assume control of such Claim (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; provided, however, that no such settlement can result in any liability or cost to the Indemnified Party for which
it is entitled to be indemnified hereunder without its consent. If the Indemnifying Party elects to assume control, (i) any
expense incurred by the Indemnified Party thereafter for investigation or defense of the matter shall be borne by the Indemnified
Party, and (ii) the Indemnified Party shall give all reasonable information and assistance, other than pecuniary, that the
Indemnifying Party shall deem 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 best efforts to defend, at the Indemnifying Party’s expense, any claim, legal
action or other matter to which such other Party’s indemnification under this Article 14 applies until the Indemnifying
Party assumes such defense, and, if the Indemnifying Party fails to assume such defense within the time period provided above,
settle the same in the Indemnified Party’s reasonable discretion at the Indemnifying Party’s expense with the Indemnifying
Party’s consent which shall not be unreasonably withheld. If such a Claim requires immediate action, both the Indemnified
Party and the Indemnifying Party will cooperate in good faith to take appropriate action so as not to jeopardize defense of such
Claim or either Party’s position with respect to such Claim. If the Indemnifying Party is entitled to, and does, assume the
defense of any such Claim, the Indemnified Party shall have the right to employ separate counsel at its own expense and to participate
in the defense thereof; provided, however, that notwithstanding the foregoing, the Indemnifying Party shall pay the reasonable
attorneys’ fees of the Indemnified Party if the Indemnified Party’s counsel shall have advised the Indemnified Party
that there is a conflict of interest that could make it inappropriate under applicable standards of professional conduct to have
common counsel for the Indemnifying Party and the Indemnified Party (provided that the Indemnifying Party shall not be responsible
for paying for more than one separate firm of attorneys and one local counsel to represent all of the Indemnified Parties subject
to such Claim).


 


14.6         Survival
of Warranties, Representations and Covenants. All representations and warranties contained in Articles 3 and 4
of this Agreement shall survive the Closing and remain in full force and effect until 5:00 p.m., Denver, Colorado time, on
the date that is six (6) months after the date hereof, at which time they shall terminate, except that those representations
and warranties set forth in Sections 6.1 (Status), 6.2 (Power) and 6.3 (Authorization and Enforceability)
made by Liberty, and Sections 7.1 (Organization and Standing), 7.2 (Power) and 7.3 (Authorization and Enforceability)
made by Emerald (those representations made by Liberty and Emerald, collectively the “Fundamental Representations”),
will survive indefinitely (the applicable period, being referred to herein as the “Survival Period”).
The covenants and performance obligations contained in this Agreement that contemplate performance after the Closing shall survive
the Closing and shall continue until all obligations with respect thereto shall have been performed or satisfied or shall have
been terminated in accordance with their terms. Both Parties acknowledge that the limitations on survival in this Section 14.6
are a contractual statute of limitations that limits such Party’s ability to make a claim against the other Party that
such Party may otherwise have available under Law.


 






    	-50-



    	 



    

 


14.7         Reservation
as to Non-Parties. Nothing herein is intended to limit or otherwise waive any recourse Emerald or Liberty may have against
any non-party for any obligations or liabilities that may be incurred with respect to the Assets.


 


14.8         Reductions
in Losses. The amount of any Losses for which an Indemnified Person is entitled to indemnity under this Article 14
shall be reduced by the amount of insurance proceeds realized by the Indemnified Person or its Affiliates with respect to such
Losses (net of any collection costs, and excluding the proceeds of any insurance policy issued or underwritten by the Indemnified
Person or its insurance captive or other Affiliate), and by the amount of any net Tax benefit actually realized by either Party
as a result of the events giving rise to the Losses in question.


 


14.9         Waiver.
Neither Party shall have any obligation or liability under this Agreement or in connection with or with respect to the transactions
contemplated by this Agreement for any breach, misrepresentation, or noncompliance with respect to any representation, warranty,
covenant, indemnity, or obligation if such breach, misrepresentation, or noncompliance shall have been waived by the other Party,
or if the other Party had knowledge of the relevant facts at or before Closing.


 


ARTICLE
15


MISCELLANEOUS


 


15.1         Exhibits
and Schedules. The Exhibits and Schedules to this Agreement are hereby incorporated in this Agreement by reference and constitute
a part of this Agreement.


 


15.2         Expenses.
Except as otherwise specifically provided, all fees, costs and expenses incurred by Emerald or Liberty in negotiating this Agreement
or in consummating the transactions contemplated by this Agreement shall be paid by the Party incurring the same, including, without
limitation, engineering, land, title, legal and accounting fees, costs and expenses.


 


15.3         Notices.
All notices and communications required or permitted under this Agreement shall be in writing and addressed as set forth below.
Any communication or delivery hereunder shall be deemed to have been duly made and the receiving Party charged with notice (i) if
personally delivered, when received, (ii) if sent by facsimile transmission, when received, (iii) if mailed, five (5)
Business Days after mailing, certified mail, return receipt requested, or (iv) if sent by overnight courier, one (1) Business
Day after sending. All notices shall be addressed as follows:


 






    	-51-



    	 



    

 


If to Liberty:



Liberty Resources LLC

1200 17th Street, Suite 2050

Denver, CO 80202

Attn: Paul Vitek

Telephone: (303) 749-5714

Fax: (303) 749-5759


 


With a copy to:



Davis Graham & Stubbs LLP

1550 17th Street, Suite 500

Denver, CO 80202

Attn: Brian Boonstra

Telephone: (303) 892-7334

Fax: (303) 893-1379


 


If to Emerald:



Emerald Oil, Inc.

1600 Broadway, Suite 1360

Denver, CO 80202

Attn: Ryan Smith

Telephone: 303-595-5600


 


With a copy to:



Husch Blackwell LLP

1700 Lincoln, Suite 4700

Denver, CO 80203

Attn: James Muchmore

Telephone: 303-749-7264

Fax: 303-749-7272


 


Any Party may, by written
notice so delivered to the other Party, change the address or individual to which delivery shall thereafter be made.


 


15.4         Amendments.
This Agreement may not be amended except by an instrument expressly modifying this Agreement signed by each of the Parties. Except
for waivers specifically provided for in this Agreement, no waiver by either Party of any breach of any provision of this
Agreement shall be binding unless made expressly in writing. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (regardless of whether similar), nor shall any such waiver constitute
a continuing waiver unless expressly so provided. Delay in the exercise, or non-exercise, of any such right is not a waiver of
that right.


 






    	-52-



    	 



    

 


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


 


15.6         Headings.
The headings of the Articles and Sections of this Agreement are for guidance and convenience of reference only and shall not limit
or otherwise affect any of the terms or provisions of this Agreement.


 


15.7         Counterparts/Fax
Signatures. This Agreement may be executed and delivered in one or more counterparts, each of which when executed and delivered
shall be an original, and all of which when executed shall constitute one and the same instrument. The exchange of copies of this
Agreement and of signature pages by facsimile or by electronic image scan transmission in .pdf format shall constitute effective
execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes.
Signatures of the Parties transmitted by facsimile or electronic image scan transmission in .pdf format shall be deemed to be
their original signatures for all purposes. Any Party that delivers an executed counterpart signature page by facsimile or by
electronic scan transmission in .pdf format shall promptly thereafter deliver a manually executed counterpart signature page to
each of the other Parties; provided, however, that the failure to do so shall not affect the validity, enforceability,
or binding effect of this Agreement.


 


15.8         Governing
Law. This Agreement and the transactions contemplated hereby and any arbitration or dispute resolution conducted pursuant
hereto shall be construed in accordance with, and governed by, the Laws of the State of Colorado, without regards to conflicts
of Laws principles.


 


15.9         Entire
Agreement. This Agreement constitutes the entire understanding among the Parties, their respective partners, members, trustees,
shareholders, officers, directors and employees with respect to the subject matter hereof, superseding all negotiations, prior
discussions and prior agreements and understandings relating to such subject matter, including the Term Sheet.


 


15.10         Binding
Effect. This Agreement shall be binding upon, and shall inure to the benefit of, the Parties hereto, and their respective
successors and assigns. Notwithstanding anything to the contrary herein, this Agreement is not a binding agreement between the
Parties hereto unless and until this Agreement is duly executed in writing by representatives of the Parties and delivered by
the Parties.


 


15.11         No
Third-Party Beneficiaries. This Agreement is intended only to benefit the Parties hereto and their respective permitted successors
and assigns


 


15.12         No
Vicarious Liability. Emerald and Liberty shall not, and shall cause the Emerald Indemnified Parties and the Liberty Indemnified
Parties not to, assert or threaten any claim or other method of recovery, in contract, in tort or under statute, against any Person
other than Liberty or Emerald. Liberty and Emerald, as applicable shall be liable for all attorneys’ fees and court costs
arising from a breach of this Section 15.12.


 






    	-53-



    	 



    

 


15.13      Dispute
Resolution and Arbitration. All Disputes between the Parties related to this Agreement shall be resolved by arbitration, pursuant
to the following procedures:


 


(a)          The
parties to any arbitration pursuant to this Section 15.13 shall select an arbitrator or arbitrators as follows:


 


(1)         Each
side to such arbitration shall each select a single, independent arbitrator within ten (10) days after written demand for such
arbitration by any Party. The two (2) arbitrators selected by the respective sides shall, in turn, select the third neutral and
independent arbitrator. For any Dispute concerning Section 9.4 (with respect to the preparation of Tax Returns and the payment
of Taxes), each of the three (3) arbitrators shall be a tax accountant with a minimum of ten years’ experience with the types
of Taxes in question.


 


(b)          The
arbitration shall be governed by Colorado Law but the specific procedure to be followed shall be determined by the arbitrator(s).
It is the intent of the Parties that the arbitration be conducted as efficiently and inexpensively as possible, with only limited
discovery as determined by the arbitrator without regard to the discovery permitted under the Colorado or Federal Rules of Civil
Procedure.


 


(c)          The
arbitration proceeding shall be held in the City and County of Denver, Colorado, and a hearing shall be held no later than sixty (60)
days after submission of the matter to arbitration, and a written decision shall be rendered by the arbitrators within thirty (30)
days of the hearing.


 


(d)          At
the hearing, the Parties shall present such evidence and witnesses as they may choose, with or without counsel. Adherence to formal
rules of evidence shall not be required but the arbitrator shall consider any evidence and testimony that he or she determines
to be relevant, in accordance with procedures that it determines to be appropriate.


 


(e)          Any
award entered in the arbitration shall be made by a written opinion stating the reasons and basis for the award made.


 


(f)          The
costs incurred in employing the arbitrators, including the arbitrators’ retention of any independent qualified experts, shall
be borne 50% by Liberty and 50% by Emerald.


 


(g)          The
arbitrator’s award may be filed in any court of competent jurisdiction and may be enforced by any Party as a final judgment
of such court.


 


(h)          IN
ENTERING INTO THIS AGREEMENT, THE PARTIES ARE KNOWINGLY AND VOLUNTARILY WAIVING THEIR RIGHTS TO A TRIAL BY JURY.


 


15.14      Publicity.
Neither Emerald or Liberty nor any of their respective Affiliates or representatives shall issue or cause the publication of any
press release or other announcement with respect to the transactions contemplated by this Agreement without the prior consultation
of the other Party, except as may be required by applicable Law, and each Party shall use its reasonable efforts to provide copies
of such release or other announcement to the other Party hereto, and give due consideration to such comments as each such other
Party may have, prior to such release or other announcement.


 






    	-54-



    	 



    

 


15.15         Severability.
Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement, and any
such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other
jurisdiction. Should any provision of this Agreement be or become invalid or unenforceable as a whole or in part, this Agreement
shall be reformed to come closest to the original intent and purposes of the parties hereto.


 


15.16         Liberty
Resources Guaranty. Liberty Resources hereby irrevocably and unconditionally guarantees the full and prompt payment and performance
of all obligations of Liberty to pay any amounts and perform any obligations under this Agreement prior to or concurrent with
the Closing when and if such payment as performance obligations become due and payable prior to or concurrent with the Closing
in accordance with the terms of the Agreement. Liberty Resources acknowledges that valuable consideration supports this guaranty
and that it executed this guaranty as an inducement to Emerald to enter into this Agreement and consummate the transactions contemplated
herein on the terms and subject to the conditions contained herein.


 


[Signature page follows.]


 




    	-55-



    	 



    

 


IN WITNESS WHEREOF,
the Parties hereto have duly executed this Agreement as of the day and year first above written.


 





	 	LIBERTY RESOURCES MANAGEMENT COMPANY, LLC
	 	 	 
	 	By:	/s/ Christopher A Wright
	 	Name:	Christopher A Wright
	 	Title:	CEO
	 	 
	 	LIBERTY RESOURCES BAKKEN OPERATING LLC
	 	 
	 	By:	/s/ Christopher A Wright
	 	Name:	Christopher A Wright
	 	Title:	CEO
	 	 
	 	EMERALD OIL, INC.
	 	 
	 	By:	/s/ McAndrew A. Rudisill
	 	Name:	McAndrew A. Rudisill
	 	Title:	CEO and President
	 	 
	 	EMERALD WB, LLC
	 	 
	 	By:	/s/ McAndrew A. Rudisill
	 	Name:	McAndrew A. Rudisill
	 	Title:	CEO




 


	Executing this Agreement solely with 	 
	respect to Section 15.16 hereof: 	 
	 	 
	LIBERTY RESOURCES II, LLC 	 
	 	 
	By:	/s/ Christopher A Wright	 
	Name:	Christopher A Wright	 
	Title:	CEO	 







 





[Signature Page – Purchase and Sale Agreement]