Exhibit 10.2


AMENDED AND RESTATED ASSET PURCHASE AGREEMENT


DATED AS OF MAY 16, 2007,


BY AND BETWEEN


CALUMET FLORIDA, L.L.C.,


AS SELLER ,


AND


BREITBURN OPERATING L.P.,


AS BUYER
















TABLE OF
CONTENTS


	
  

  	
   

  	
  PAGE

  
	
  ARTICLE I.

  	
  DEFINITIONS

  	
    1

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Certain Defined
  Terms

  	
    1

  
	
  Section 1.2

  	
  References,
  Gender, Number

  	
    1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  SALE AND PURCHASE OF ASSETS

  	
    2

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Sale and
  Purchase

  	
    2

  
	
  Section 2.2

  	
  Intercompany
  Accounts

  	
    2

  
	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  PURCHASE PRICE AND PAYMENT

  	
    2

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Purchase Price

  	
    2

  
	
  Section 3.2

  	
  Payment

  	
    2

  
	
  Section 3.3

  	
  Adjustment
  Period Cash Flow

  	
    2

  
	
  Section 3.4

  	
  Post Closing
  Review

  	
    3

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  REPRESENTATIONS AND WARRANTIES

  	
    4

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Representations
  and Warranties of Seller

  	
    4

  
	
  (a)

  	
  Organization and
  Qualification

  	
    4

  
	
  (b)

  	
  Authority

  	
    5

  
	
  (c)

  	
  Enforceability

  	
    5

  
	
  (d)

  	
  No Conflict or
  Violation

  	
    5

  
	
  (e)

  	
  Consents

  	
    5

  
	
  (f)

  	
  Actions

  	
    5

  
	
  (g)

  	
  Compliance With
  Laws

  	
    5

  
	
  (h)

  	
  Brokerage Fees
  and Commissions

  	
    5

  
	
  (i)

  	
  Bankruptcy

  	
    6

  
	
  (j)

  	
  Material
  Contracts

  	
    6

  
	
  (k)

  	
  Compliance with
  Contracts

  	
    6

  
	
  (l)

  	
  Tax Matters

  	
    7

  
	
  (m)

  	
  Status of Seller

  	
    7

  
	
  (n)

  	
  Payments for
  Production

  	
    7

  
	
  (o)

  	
  Payout Balance

  	
    7

  
	
  (p)

  	
  Tax Partnership

  	
    7

  
	
  (q)

  	
  AFEs and Other
  Commitments

  	
    7

  
	
  (r)

  	
  Wells

  	
    7

  
	
  (s)

  	
  Production
  Allowables

  	
    7

  
	
  (t)

  	
  Plugging and
  Abandonment

  	
    7

  
	
  (u)

  	
  Seller’s
  Knowledge

  	
    8

  
	
  (v)

  	
  Condemnation

  	
    8

  
	
  (w)

  	
  Special Title
  Warranty

  	
    8

  
	
   

  	
   

  	
   

  
	
  Section 4.2

  	
  Representations
  and Warranties of Buyer

  	
    8

  



 



 i
 









 


	
  (a)

  	
  Organization and
  Qualification

  	
    8

  
	
  (b)

  	
  Authority

  	
    8

  
	
  (c)

  	
  Enforceability

  	
    8

  
	
  (d)

  	
  No Conflict or
  Violation

  	
    8

  
	
  (e)

  	
  Consents

  	
    9

  
	
  (f)

  	
  Actions

  	
    9

  
	
  (g)

  	
  Brokerage Fees
  and Commissions

  	
    9

  
	
  (h)

  	
  Qualified Owner

  	
    9

  
	
  (i)

  	
  Funds

  	
    9

  
	
  (j)

  	
  Buyer’s
  Knowledge

  	
    9

  
	
  (k)

  	
  No Distribution

  	
    9

  
	
  (l)

  	
  Bankruptcy

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  ACCESS TO INFORMATION; NO WARRANTY; ETC

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  General Access

  	
  10

  
	
  Section 5.2

  	
  Confidential
  Information

  	
  10

  
	
  Section 5.3

  	
  No Warranty or
  Representation

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  FORMATION OF AND CONVEYANCE TO COMPANY

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Formation of
  Company

  	
  11

  
	
  Section 6.2

  	
  Conveyance to
  Company

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  TRANSFER REQUIREMENTS

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Compliance

  	
  11

  
	
  Section 7.2

  	
  Certain Consents

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII.

  	
  COVENANTS OF SELLER AND BUYER

  	
  12

  
	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Conduct of
  Business Pending Closing

  	
  12

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Changes in
  Business

  	
  12

  
	
  (b)

  	
  Liens

  	
  12

  
	
  (c)

  	
  Operation of
  Assets

  	
  13

  
	
  (d)

  	
  Contracts and
  Agreements

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 8.2

  	
  Qualifications
  on Conduct

  	
  14

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Emergencies;
  Legal Requirements

  	
  14

  
	
  (b)

  	
  Non-Operated
  Properties

  	
  14

  
	
  (c)

  	
  Certain
  Operations

  	
  14

  
	
   

  	
   

  	
   

  
	
  Section 8.3

  	
  Assignment of
  Membership Interests

  	
  15

  
	
  Section 8.4

  	
  Public
  Announcements

  	
  15

  
	
  Section 8.5

  	
  Amendment of
  Schedules

  	
  16

  
	
  Section 8.6

  	
  Parties’ Efforts
  and Further Assurances

  	
  16

  



 



 ii
 









 


	
  Section 8.7

  	
  Asset Records

  	
  16

  
	
  Section 8.8

  	
  Recording

  	
  17

  
	
  Section 8.9

  	
  Casualty and
  Condemnation

  	
  17

  
	
  Section 8.10

  	
  Transition
  Agreement

  	
  17

  
	
  Section 8.11

  	
  Employees

  	
  17

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Company
  Employees

  	
  17

  
	
  (b)

  	
  Continuing
  Employees

  	
  18

  
	
  (c)

  	
  Savings Plans

  	
  18

  
	
  (d)

  	
  Post-Closing
  Benefits for Continuing Employees

  	
  18

  
	
   

  	
   

  	
   

  
	
  Section 8.12

  	
  Joint
  Development and AMI Agreement

  	
  19

  
	
  Section 8.13

  	
  3-D Seismic Data
  License Agreement

  	
  19

  
	
  Section 8.14

  	
  Cooperation in
  Connection with Preparation and Audit of Financial Statements

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX.

  	
  CLOSING CONDITIONS

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Seller’s Closing
  Conditions

  	
  20

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Representations,
  Warranties and Covenants

  	
  20

  
	
  (b)

  	
  Officer’s
  Certificate

  	
  20

  
	
  (c)

  	
  Closing
  Documents

  	
  20

  
	
  (d)

  	
  No Action

  	
  20

  
	
  (e)

  	
  Opinion of
  Counsel

  	
  20

  
	
   

  	
   

  	
   

  
	
  Section 9.2

  	
  Buyer’s Closing
  Conditions

  	
  20

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Representations,
  Warranties and Covenants

  	
  20

  
	
  (b)

  	
  Officer’s
  Certificate

  	
  21

  
	
  (c)

  	
  Closing
  Documents

  	
  21

  
	
  (d)

  	
  No Action

  	
  21

  
	
  (e)

  	
  Opinion of
  Counsel

  	
  21

  
	
  (f)

  	
  Derivative
  Transfer

  	
  21

  
	
  (g)

  	
  Other Consents

  	
  21

  
	
   

  	
   

  	
   

  
	
  Section 9.3

  	
  Failure to
  Disclose

  	
  21

  
	
   

  	
   

  	
   

  
	
  ARTICLE X.

  	
  CLOSING

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  Closing

  	
  22

  
	
  Section 10.2

  	
  Seller’s Closing
  Obligations

  	
  22

  
	
  Section 10.3

  	
  Buyer’s Closing
  Obligations

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI.

  	
  EFFECT OF CLOSING

  	
  23

  
	
   

  	
   

  	
   

  
	
  Section 11.1

  	
  Revenues

  	
  23

  
	
  Section 11.2

  	
  Expenses

  	
  23

  
	
  Section 11.3

  	
  Payments and
  Obligations

  	
  23

  



 



 iii
 









 


	
  Section 11.4

  	
  Survival

  	
  23

  
	
  Section 11.5

  	
  Certain
  Post-Closing Obligations

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII.

  	
  LIMITATIONS

  	
  24

  
	
   

  	
   

  	
   

  
	
  Section 12.1

  	
  Disclaimer of
  Warranties

  	
  24

  
	
  Section 12.2

  	
  Texas Deceptive
  Trade Practices Act Waiver

  	
  25

  
	
  Section 12.3

  	
  Damages

  	
  26

  
	
  Section 12.4

  	
  Plugging and
  Abandonment Obligations

  	
  26

  
	
  Section 12.5

  	
  Environmental
  Release

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII.

  	
  INDEMNIFICATION

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 13.1

  	
  Indemnification
  By Buyer

  	
  27

  
	
  Section 13.2

  	
  Indemnification
  By Seller

  	
  27

  
	
  Section 13.3

  	
  Indemnification
  and Defense Procedures

  	
  28

  
	
  Section 13.4

  	
  Seller’s General
  Liability Limitation

  	
  30

  
	
  Section 13.5

  	
  Materiality
  Exclusion

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV.

  	
  TERMINATION; REMEDIES

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 14.1

  	
  Termination

  	
  31

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Termination of
  Agreement

  	
  31

  
	
  (b)

  	
  Effect of
  Termination

  	
  31

  
	
   

  	
   

  	
   

  
	
  Section 14.2

  	
  Remedies

  	
  32

  
	
   

  	
   

  	
   

  
	
  (a)

  	
  Seller’s
  Remedies

  	
  32

  
	
  (b)

  	
  Buyer’s Remedies

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV.

  	
  MISCELLANEOUS

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 15.1

  	
  Counterparts

  	
  32

  
	
  Section 15.2

  	
  Governing Law;
  Jurisdiction; Process

  	
  32

  
	
  Section 15.3

  	
  Entire Agreement

  	
  33

  
	
  Section 15.4

  	
  Expenses

  	
  33

  
	
  Section 15.5

  	
  Notices

  	
  34

  
	
  Section 15.6

  	
  Successors and
  Assigns

  	
  34

  
	
  Section 15.7

  	
  Amendments and
  Waivers

  	
  34

  
	
  Section 15.8

  	
  Appendices,
  Schedules and Exhibits

  	
  35

  
	
  Section 15.9

  	
  Interpretation

  	
  35

  
	
  Section 15.10

  	
  Arbitration

  	
  35

  
	
  Section 15.11

  	
  Agreement for
  the Parties’ Benefit Only

  	
  35

  
	
  Section 15.12

  	
  Attorneys’ Fees

  	
  36

  
	
  Section 15.13

  	
  Severability

  	
  36

  
	
  Section 15.14

  	
  No Recordation

  	
  36

  
	
  Section 15.15

  	
  Time of Essence

  	
  36

  
	
  Section 15.16

  	
  Confidentiality

  	
  36

  



 



 iv















EXHIBITS


	
  Exhibit 6.1

  	
  —

  	
  Form of Limited
  Liability Company Agreement

  	
   

  
	
   

  	
   

  	
  Form of Certificate of
  Formation of Company

  	
   

  
	
  Exhibit
  6.2

  	
  —

  	
  Conveyance

  	
   

  
	
  Exhibit
  7.2

  	
  —

  	
  Operations and Proceeds
  Agreement

  	
   

  
	
  Exhibit
  8.3

  	
  —

  	
  Form of Assignment of
  Membership Interests

  	
   

  
	
  Exhibit
  8.4

  	
  —

  	
  Form of Buyer’s Press
  Release

  	
   

  
	
  Exhibit
  8.10

  	
  —

  	
  Transition Agreement

  	
   

  
	
  Exhibit
  8.12

  	
  —

  	
  Joint Development and
  AMI Agreement

  	
   

  
	
  Exhibit
  8.13

  	
  —

  	
  Data License Agreement

  	
   

  
	
  Exhibit
  9.1(e)

  	
  —

  	
  Buyer’s Counsel’s
  Opinion

  	
   

  
	
  Exhibit
  9.2(e)

  	
  —

  	
  Seller’s Counsel’s
  Opinion

  	
   

  
	
  Exhibit
  10.2(e)

  	
  —

  	
  Affidavit of
  Non-Foreign Status

  	
   

  
	
  Exhibit
  10.3(d)

  	
  —

  	
  Form of Parent
  Guarantee

  	
   

  
	
  Exhibit
  A-1

  	
  —

  	
  Arbitration Procedures

  	
   

  



 


SCHEDULES


	
  Schedule A-1

  	
  —

  	
  Property Schedule

  	
   

  
	
  Schedule
  A-2

  	
  —

  	
  Excluded Assets

  	
   

  
	
  Schedule
  A-3

  	
  —

  	
  Certain Permitted
  Encumbrances

  	
   

  
	
  Schedule
  A-4

  	
  —

  	
  Royalty Accounts

  	
   

  
	
  Schedule
  4.1(e)

  	
  —

  	
  Seller’s Consents

  	
   

  
	
  Schedule
  4.1(f)

  	
  —

  	
  Seller’s Actions

  	
   

  
	
  Schedule
  4.1(g)

  	
  —

  	
  Compliance with Laws

  	
   

  
	
  Schedule
  4.1(j)

  	
  —

  	
  Material Contracts

  	
   

  



 



 v
 









 


	
  Schedule 4.1(k)

  	
  —

  	
  Compliance with
  Material Contracts

  	
   

  
	
  Schedule
  4.1(l)

  	
  —

  	
  Tax Matters

  	
   

  
	
  Schedule
  4.1(p)

  	
  —

  	
  Tax Partnerships

  	
   

  
	
  Schedule
  4.1(q)

  	
  —

  	
  AFEs and Other
  Commitments

  	
   

  
	
  Schedule
  4.1(r)

  	
  —

  	
  Wells Being Drilled

  	
   

  
	
  Schedule
  4.1(t)

  	
  —

  	
  Plugging and
  Abandonment

  	
   

  
	
  Schedule
  7.1

  	
  —

  	
  Transfer Requirements

  	
   

  
	
  Schedule
  8.1

  	
  —

  	
  Conduct of Business

  	
   

  
	
  Schedule 8.11(a)

  	
  —

  	
  Company Employees

  	
   

  



 



 vi















AMENDED
AND RESTATED ASSET PURCHASE AGREEMENT


THIS AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of May 16,
2007, is by and between CALUMET FLORIDA, L.L.C., a Delaware limited liability
company (“Seller”), and BREITBURN OPERATING L.P., a Delaware limited
partnership (“Buyer”).


WHEREAS, Seller and Buyer
made and entered into that certain Asset Purchase Agreement dated as of May,
16, 2007 (the “Original Agreement”) pursuant to which Seller agreed to
sell and Buyer agreed to purchase the Assets (as defined therein) upon the
terms and subject to the conditions set forth in the Original Agreement; and


WHEREAS, Buyer has
requested that, prior to Closing, Seller convey the Assets to a single member
Delaware limited liability company of which Seller is the sole member, and
assign to Buyer at Closing, all of the issued and outstanding membership
interests in and to such company; and


WHREAS, Seller has agreed
to accommodate such requests by Buyer upon the terms and subject to the
conditions set forth in this Agreement; and


WHEREAS, the Parties
desire to amend and restate the Original Agreement in it entirety to reflect
the foregoing agreements and certain other agreements between the Parties, as
hereinafter set forth;


NOW, THEREFORE, in consideration
of the premises and the mutual covenants and agreements set forth in this
Agreement, the parties hereto agree that the Original Agreement shall be
amended and restated in its entirety as follows:


ARTICLE I.

DEFINITIONS


Section 1.1             Certain Defined Terms.  Unless the context otherwise requires, the
respective terms defined in Appendix A
attached hereto and incorporated herein shall, when used herein, have the
respective meanings therein specified, with each such definition to be equally
applicable both to the singular and the plural forms of the term so defined.


Section 1.2             References, Gender, Number.  All references in this Agreement to an “Article,”
“Section,” or “subsection” shall be to an Article, Section, or subsection of
this Agreement, unless the context requires otherwise.  Unless the context otherwise requires, the
words “this Agreement,” “hereof,” “hereunder,” “herein,” “hereby,” or words of
similar import shall refer to this Agreement as a whole and not to a particular
Article, Section, subsection, clause or other subdivision hereof.  Whenever the context requires, the words used
herein shall include the masculine, feminine and neuter gender, and the
singular and the plural.













ARTICLE II.

SALE AND PURCHASE OF ASSETS


Section 2.1             Sale and Purchase.  On and subject to the terms and conditions of
this Agreement, Seller agrees to sell and convey to Buyer, and Buyer agrees to
purchase from Seller, all limited liability company interests (including all
membership interests and other equity interests) in and to the Company
(collectively, the “Membership Interests”).


Section 2.2             Intercompany Accounts.  On or before the Closing Date, Seller shall
eliminate any intercompany accounts that exist between (a) Seller and its
Affiliates (other than the Company) and (b) the Company.


ARTICLE III.

PURCHASE PRICE AND PAYMENT


Section 3.1             Purchase Price.  The purchase price for the sale and
conveyance of the Company to Buyer is One Hundred Million Dollars
$100,000,000.00 (the “Purchase Price”), subject to adjustment in
accordance with the terms of this Agreement. 
The “Initial Adjusted Purchase Price” shall be the Purchase Price
as adjusted by the Initial Adjustment Amount determined pursuant to Section
3.3.  The “Adjusted Purchase Price”
shall be the Purchase Price (i) as adjusted in the manner provided in the
immediately preceding sentence,  (ii) as
adjusted downward for the Royalty Accounts and (iii) as adjusted upward by an
amount equal to interest on the Initial Adjusted Purchase Price, as adjusted in
the manner provided in items (i) and (ii) above, from the Effective Time
until the Closing Date at the Agreed Rate.


Section 3.2             Payment.  At the Closing, Buyer shall wire transfer the
Adjusted Purchase Price in immediately available funds to Wells Fargo Bank, in
Houston, Texas, ABA No. 121000248 for the account of Seller, Account No.
41211799007, named “Calumet Florida, L.L.C.”, or such other account or accounts
specified by Seller to Buyer on or prior to the Business Day immediately
preceding the Closing Date.


Section 3.3             Adjustment Period Cash Flow.  (a) 
The Purchase Price shall be increased or decreased, as the case may be,
by an amount equal to the Net Cash Flow with respect to the Assets for the time
period (the “Adjustment Period”) beginning at the Effective Time and
ending at 7:00 a.m. (local time) on the Closing Date.  Seller shall deliver to Buyer on or prior to
the calendar day preceding the Closing Date a statement (the “Adjustment
Statement”) setting forth Seller’s preliminary determination (the “Initial
Adjustment Amount”) of the Net Cash Flow. 
If the Initial Adjustment Amount shown on the Adjustment Statement is a
positive number, then the Purchase Price shall be increased by such
amount.  If the Initial Adjustment Amount
shown on the Adjustment Statement is a negative number, then the Purchase Price
shall be decreased by such amount.


(b)           The Adjustment Statement shall be
based upon actual information available to Seller at the time of its
preparation and upon Seller’s good faith estimates and assumptions.  There shall be attached to the Adjustment
Statement such supporting 



 2
 









documentation and
other data as is reasonably necessary to provide a basis for the Net Cash Flow
shown therein.


(c)           The “Net Cash Flow” shall be
the algebraic sum of (i) a positive amount equal to the sum of (A) the
aggregate amount incurred by Seller as costs of maintenance and operation of
the Pipeline System Assets incurred with respect to the Adjustment Period and
(B) the aggregate amount incurred by Seller as Seller’s share of the costs of
exploration, development, maintenance, operation, abandonment and production of
the E & P Assets incurred with respect to the Adjustment Period, which
costs referred to in clauses (A) and (B) above shall include, but shall not be
limited to, royalties, overriding royalties, net profit interests and other
similar burdens on production, general, administrative and indirect costs and
fees in a total amount not to exceed Sixty Thousand Dollars ($60,000) per month
(prorated on a daily basis for partial months), Taxes (other than income Taxes,
franchise Taxes and taxes similar to income or franchise Taxes), the cost of
maintaining leaseholds or other interests included in the Assets, the cost of
extension or renewal of any interest included in the Assets, the cost of
treating, processing, storing, compressing, transporting, selling, marketing
and otherwise handling and dealing with hydrocarbon production with respect to
the Assets, the cost of any exploration or development activities on the Assets
performed in accordance with Article VIII, and costs of insurance coverage
(including prepayments of any costs in accordance with Article VIII), (ii) a
negative amount equal to sum of (A) the aggregate gross revenue received by
Seller from the operation of the Pipeline System Assets during the Adjustment
Period and (B) the aggregate gross proceeds received by Seller from the sale of
hydrocarbons produced from or attributable to the E&P Assets during the
Adjustment Period or from the sale, salvage or other disposition of any Assets
during the Adjustment Period (excluding any payments accounted for under clause
(ii) of Section 3.1), and (iii) a negative amount equal to the aggregate amount
of any costs incurred under clause (i) above and reimbursed to Seller by any third
party (unless such reimbursement is accounted for under clause (ii) above).


Section 3.4             Post Closing Review.  After the Closing, Seller shall review the
Adjustment Statement and determine the actual Net Cash Flow and, if applicable,
the correct interest calculation based on the Adjusted Purchase Price rather
than the Initial Adjusted Purchase Price. 
On or prior to the 60th day after the Closing Date, Seller shall present
Buyer with a statement of the actual Net Cash Flow and such supporting
documentation as is reasonably necessary to support the Net Cash Flow shown
therein (the “Final Adjustment Statement”).  To the extent reasonably necessary to Seller,
Buyer will give personnel, accountants and representatives of Seller reasonable
access to the Assets and Buyer’s premises and to its books and records for
purposes of preparing the Final Adjustment Statement and will cause appropriate
personnel of Buyer to assist Seller and Seller’s personnel, accountants and
representatives, with no charge to Seller for such assistance, in the
preparation of the Final Adjustment Statement. 
Seller will give personnel, accountants and representatives of Buyer
reasonable access to Seller’s premises and to its books and records for
purposes of reviewing the calculation of Net Cash Flow and will cause
appropriate personnel of Seller to assist Buyer and Buyer’s personnel,
accountants and representatives, with no charge to Buyer for such assistance,
in verification of such calculation.  The
Final Adjustment Statement shall become final and binding on Seller and Buyer
as to the Net Cash Flow 30 days following the date the Final Adjustment
Statement is received by Buyer, except to the extent that prior to the
expiration of 



 3
 









such 30-day period Buyer shall deliver to
Seller one or more notices, as hereinafter required, of its disagreement with
the contents of the Final Adjustment Statement. 
Such notices shall be in writing and set forth all of Buyer’s
disagreements with respect to any portion of the Final Adjustment Statement,
together with Buyer’s proposed changes thereto, and shall include an
explanation in reasonable detail of, and such supporting documentation as is
reasonably necessary to support, such changes. 
Any disagreements with or changes to the Final Adjustment Statement not
included in such notices shall be waived by Buyer.  If Buyer has timely delivered one or more
notices of disagreement to Seller in the manner required above, then, upon
written agreement between Buyer and Seller resolving all disagreements of Buyer
set forth in such notices, the Final Adjustment Statement (including any
revisions thereto as are so agreed) will become final and binding on Buyer and
Seller as to the Net Cash Flow.  If the
Final Adjustment Statement has not become final and binding by the 120th day
following the Closing Date, then Buyer or Seller may submit any unresolved
disagreements of Buyer set forth in the aforesaid notices to Ernst & Young,
Houston, Texas for final and binding determination.  The fees and expenses of said accounting firm
in making such determination shall be shared equally by Buyer and Seller.  Upon resolution of such unresolved
disagreements of Buyer, the Final Adjustment Statement (including any revisions
thereto as are so resolved or agreed), shall be conclusive, final and binding
on Buyer and Seller as to the Net Cash Flow. 
If the final amount of Net Cash Flow is more or less than the Initial
Adjustment Amount, the Initial Adjusted Purchase Price shall be redetermined
under Section 3.1 using such final amount of Net Cash Flow.  If such redetermination under Section 3.1
results in a reduction in the Initial Adjusted Purchase Price, Seller shall pay
Buyer the amount of such reduction.  If such
redetermination results in an increase in the Initial Adjusted Purchase Price,
Buyer shall pay Seller the amount of such increase.  Within three (3) Business Days after the
Final Adjustment Statement (as so resolved or agreed) becomes final and
binding, Seller or Buyer, as appropriate, shall pay to the other party the
amount of such increase or reduction, if any, in the Initial Adjusted Purchase
Price, together with interest on the amount of such increase or reduction from
the Closing Date until paid at the Agreed Rate. 
Except for specific costs which are expressly set forth and accounted
for in the final and binding Final Adjustment Statement, neither the Final
Adjustment Statement nor this Section 3.4 shall operate to waive, release or
impair the indemnity and hold harmless obligations of Buyer under Sections 5.1,
and 13.1 or Seller under 13.2.


ARTICLE IV.

REPRESENTATIONS AND WARRANTIES


Section 4.1             Representations and Warranties
of Seller.  Seller represents and
warrants to Buyer as follows:


(a)   Organization and Qualification.   Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite company power to carry on its business as it is
now being conducted.  Seller is duly
qualified to do business, and is in good standing, in the State of Florida and
each other jurisdiction in which the Assets owned or leased by it makes such
qualification necessary, except where the failure to so qualify and be in good
standing will not have a Material Adverse Effect.



 4
 









(b)   Authority.  Seller
has all requisite company power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.  The execution, delivery and performance of
this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all requisite limited liability company action on the
part of Seller.


(c)   Enforceability.  This
Agreement constitutes a valid and binding agreement of Seller enforceable
against Seller in accordance with its terms, subject to (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general application with respect to creditors, (ii) general principles of
equity and (iii) the power of a court to deny enforcement of remedies generally
based upon public policy.


(d)   No Conflict or Violation. 
Except for any exceptions set forth in Section 4.1(e) (or referenced in Schedule 4.1(e)), neither the execution
and delivery of this Agreement nor the consummation of the transactions and
performance of the terms and conditions contemplated hereby by Seller will (i)
conflict with or result in a violation or breach of or default under any
provision of the certificate of formation, by-laws or other similar governing
documents of Seller, (ii) conflict with or result in a violation or breach of or
default under any agreement, indenture or other instrument under which Seller
is bound and to which any Asset is subject, other than such conflicts,
breaches, violations or defaults as will not have a Material Adverse Effect, or
(iii) violate or conflict with any Law applicable to Seller or the Assets.


(e)   Consents.  Except for
(i) consents or approvals of or filings with applicable Governmental
Authorities in connection with assignments of the Subject Interests and
Membership Interests as contemplated by Section 7.2, and (ii) consents,
approvals, authorizations, permits, filings, notices or Preference Rights
referenced in Schedule 4.1(e),
to Seller’s knowledge (x) no consent, approval, authorization or permit of, or
filing with or notification to, any Person is required for or in connection
with the execution and delivery of this Agreement by Seller or for or in
connection with the consummation of the transactions and performance of the
terms and conditions contemplated hereby by Seller and (y) there are no
Preference Rights which are applicable to the sale of the Assets by Seller as
contemplated by this Agreement.


(f)    Actions.  Except as
set forth in Schedule 4.1(f),
there is no Action pending (with service of process therein having been made on
Seller) or, to the knowledge of Seller, threatened (or pending without service
of process therein having been made on Seller) to which Seller is (or is
threatened to be made) a party and which relates to the Assets.


(g)   Compliance With Laws. 
Except as set forth in Schedule
4.1(g), Seller has no knowledge of any material violation by
Seller of any Law with respect to the Assets, provided that, Seller makes no
representation or warranty, express or implied, with respect to (i) any
Environmental Law, (ii) any Tax Law, except as set forth in Section 4.1(l), or
(iii) Seller’s title to the Assets, except as set forth in Section 4.1(w).


(h)   Brokerage Fees and Commissions.  Neither Seller nor any Affiliate of Seller
has incurred any obligation or entered into any agreement for any investment
banking, brokerage or finder’s fee or commission in respect of the transactions
contemplated by this Agreement for which Buyer shall incur any liability.



 5
 









(i)    Bankruptcy.  There
are no bankruptcy, reorganization or arrangement proceedings pending against,
being contemplated by, or, to the knowledge of Seller, threatened against
Seller or any Affiliate of Seller.


(j)    Material Contracts. 
Schedule 4.1(j) sets
forth a list of the following contracts, agreements or commitments to which the
Assets are subject or by which Seller is bound with respect to the Assets:


(1)       any
joint operating agreement, unitization or pooling agreement, unit operating
agreement, purchase agreement, farmin or farmout agreement, exploration
agreement, participation agreement or similar agreement providing for the
earning of an interest;


(2)       any
partnership agreement, tax partnership agreement or joint venture agreement;


(3)       any
agreement containing a right of first refusal, preferential purchase right or
restriction on competition, or delineating an area of mutual interest;


(4)       any
written contract or agreement with Seller or any Affiliate of Seller relating
to the Assets;


(5)       any
contract, agreement or commitment that commits Seller and its assigns to
aggregate expenditures with respect to the Subject Interests or other Assets of
more than $100,000 in any calendar year; excluding the Subject Interests and
any contracts or agreements creating interests or rights in the Subject
Interests or in any Hydrocarbon Interests, wells or units;


(6)       any
contract, agreement or commitment that commits Seller and its assigns to
purchase, sell, exchange, process, treat, handle, store or transport any
Hydrocarbon production attributable to the Subject Interests; excluding the
Subject Interests;


(7)       any
contract, agreement or commitment that commits Seller to gather or transport
any Hydrocarbon production in the Pipeline System; and


(8)       any
future, option, swap, hedge or other derivative or any commitment to enter into
any of the same (individually and collectively, a “Derivative”).


(k)   Compliance with Contracts. 
Except as set forth in Schedule
4.1(k), neither  Seller
nor, to Seller’s knowledge, any other party thereto is, as of the date hereof,
in material breach of or material default under any contract, agreement or
commitment listed in Schedule 4.1(j),
and there does not exist under any provision thereof, to Seller’s knowledge, as
of the date hereof, any event that, with the giving of notice or the lapse of
time or both, would constitute such a breach or default.



 6















(l)    Tax
Matters.  Except for Taxes being
contested in connection with the matters set forth in Schedule 4.1(l), Seller is not
delinquent in the payment of any Taxes (other than Income Taxes, Franchise
Taxes and similar Taxes) attributable to any periods through the Effective Time
relating to or in connection with the Assets, including all excise, property,
sales, transfer, severance and production Taxes.


(m)  Status
of Seller.  Seller is not an “investment
company” or a company “controlled” by an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.


(n)   Payments
for Production.  To Seller’s
knowledge, all rentals, royalties, excess royalty, overriding royalty interests
and other payments due and payable by Seller to overriding royalty holders and
other interest owners under or with respect to the E & P Assets and the
Hydrocarbons produced therefrom or attributable thereto have been paid except
for the amounts held in suspense in the Royalty Accounts.


(o)   Payout
Balance.  To Seller’s knowledge,
there is no “payout” balance attributable to the wells and units comprising the
E & P Assets.


(p)   Tax
Partnership.  Except as set forth in Schedule 4.1(p), none of the Assets is
held by or is subject to any contractual arrangement between Seller and any
other Persons, whether owning undivided interests therein or otherwise, that is
treated as or constitutes a partnership for United States federal Tax purposes.


(q)   AFEs
and Other Commitments.  Except as set
forth in Schedule 4.1(q),
as of the date of this Agreement, there are no AFEs, capital expenditures
related to the drilling or reworking of wells, or other commitments for capital
expenditures outstanding with respect to the Assets.


(r)    Wells.  The only wells being drilled on the Subject
Interests as of the date of this Agreement are those set forth in Schedule 4.1(r).


(s)   Production
Allowables.  To Seller’s knowledge,
Seller has not received written notice that there has been any change proposed
in the production allowables for any wells located on the Subject Interests.


(t)    Plugging
and Abandonment.  To Seller’s
knowledge, since the Effective Time, Seller has not abandoned, and is not in
the process of abandoning, any wells (nor has it removed, nor is it in the
process of removing, any material items of personal property, except those
replaced by items of substantially equivalent suitability and value).  Except as set forth in Schedule 4.1(t), there are no wells
located on the Subject Interests:


(1)       with respect to which Seller has received
an order from any Governmental Authority requiring that such well be plugged
and abandoned;


(2)       that formerly produced but that are
currently shut in or temporarily abandoned; or



 7
 









(3)       that, to Seller’s knowledge, have been
plugged and abandoned but have not been plugged in accordance with all
applicable requirements of each Governmental Authority having jurisdiction over
the Subject Interests.


(u)   Seller’s
Knowledge.  Seller has no knowledge
of any fact which results in any representation or warranty of Buyer in Section
4.2 being breached.  If after the date of
this Agreement Seller obtains knowledge of any fact which results in any
representation or warranty of Buyer in Section 4.2 being breached, Seller will
promptly furnish Buyer written notice thereof.


(v)   Condemnation.  There is no actual or, to Seller’s knowledge,
threatened taking (whether permanent, temporary, whole or partial) of any part
of the Assets by reason of condemnation or the threat of condemnation.


(w)  Special
Title Warranty.  The Subject
Interests and real property interests comprising the Pipeline System are free
from the claims of any persons lawfully claiming or to claim the same or any
part thereof, by, through or under Seller, by virtue of any prior conveyance,
lien or encumbrance made, done or suffered by Seller from and after August 1,
2005, except for Permitted Encumbrances.


Section 4.2             Representations
and Warranties of Buyer.  Buyer
represents and warrants to Seller as follows:


(a)   Organization
and Qualification.  Buyer is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite company power to carry on
its business as it is now being conducted. 
Buyer is duly qualified to do business, and is in good standing, in each
jurisdiction in which the Assets to be acquired by it makes such qualification
necessary.


(b)   Authority.  Buyer has all requisite partnership power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement.  The execution,
delivery and performance of this Agreement and the transactions contemplated
hereby have been duly and validly authorized by all requisite partnership
action on the part of Buyer.


(c)   Enforceability.  This Agreement constitutes a valid and
binding agreement of Buyer enforceable against Buyer in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general application with respect to
creditors, (ii) general principles of equity and (iii) the power of a court to
deny enforcement of remedies generally based upon public policy.


(d)   No
Conflict or Violation.  Except for
any exceptions set forth in Section 4.2(e), neither the execution and delivery
of this Agreement nor the consummation of the transactions and performance of
the terms and conditions contemplated hereby by Buyer will (i) conflict with or
result in a violation or breach of or default under any provision of the
certificate of limited partnership, partnership agreement or other similar
governing documents of Buyer or any material agreement, indenture or other
instrument under which Buyer is bound or (ii) violate or conflict with any Law
applicable to Buyer or the Assets.



 8
 









(e)   Consents.  Except for consents or approvals of or
filings with the applicable Governmental Authorities in connection with
assignments of the Subject Interests and Membership Interests as contemplated
by Section 7.2, no consent, approval, authorization or permit of, or filing
with or notification to, any Person is required for or in connection with the
execution and delivery of this Agreement by Buyer or for or in connection with
the consummation of the transactions and performance of the terms and
conditions contemplated hereby by Buyer.


(f)    Actions.  There is no Action pending (with service of
process therein having been made on Buyer) or, to the knowledge of Buyer,
threatened (or pending without service of process therein having been made on
Buyer) to which Buyer is (or is threaten to be made) a party, other than
Actions which are not reasonably expected by Buyer to have a material adverse
effect on Buyer.


(g)   Brokerage
Fees and Commissions.  Neither Buyer
nor any Affiliate of Buyer has incurred any obligation or entered into any
agreement for any investment banking, brokerage or finder’s fee or commission
in respect of the transactions contemplated by this Agreement for which Seller
shall incur any liability.


(h)   Qualified
Owner.  At or prior to the
termination of the Transition Agreement, the Company (i) shall be qualified
under Law to own the Assets and (ii) will have complied with all necessary
governmental bonding requirements required for its ownership of the Assets.


(i)    Funds.  As of the Closing Buyer will have sufficient
funds available to enable Buyer to consummate the transactions contemplated
hereby and to pay the Initial Adjusted Purchase Price and all related fees and
expenses of Buyer.


(j)    Buyer’s
Knowledge.  Buyer has no knowledge of
any fact which results in any representation or warranty of Seller in Section
4.1 being breached.  If after the date of
this Agreement, Buyer obtains knowledge of any fact which results in any
representation or warranty of Seller in Section 4.1 being breached, Buyer will
promptly furnish Seller written notice thereof.


(k)   No
Distribution.  Buyer is an
experienced and knowledgeable investor in the oil and gas business, Buyer is
able to bear the economic risks of its acquisition and ownership of the Company
and the Assets, and Buyer is capable of evaluating (and has evaluated) the
merits and risks of the Company and the Assets and Buyer’s acquisition and
ownership the Company.  Prior to entering
into this Agreement, Buyer was advised by its counsel and such other Persons it
has deemed appropriate concerning this Agreement and has relied solely on an
independent investigation and evaluation of, and appraisal and judgment with
respect to, the geologic and geophysical characteristics of the Subject
Interests, the estimated reserves recoverable therefrom, and the price and
expense assumptions applicable thereto. 
Buyer is an “accredited investor,” as such term is defined in Regulation
D of the Securities Act of 1933, as amended, and will acquire the Membership
Interests for its own account and not with a view to a sale or distribution
thereof in violation of the Securities Act of 1933, as amended, and the rules
and regulations thereunder, any applicable state blue sky laws or any other
applicable securities laws.



 9
 









(l)    Bankruptcy.  There are no bankruptcy, reorganization or
arrangement proceedings pending against, being contemplated by, or to the
knowledge of Buyer, threatened against Buyer or any Affiliate of Buyer.


ARTICLE V.

ACCESS TO INFORMATION; NO WARRANTY; ETC.


Section 5.1             General
Access.  Promptly following the
execution of this Agreement and until the Closing Date (or earlier termination
of this Agreement), Seller shall:


(a)   permit
Buyer and its representatives to have reasonable access at reasonable times in
the Seller’s offices, and in a manner so as not to interfere unduly with the
business operations of Seller, to Seller’s books, records, contracts, abstracts
of title, title opinions, title files, ownership maps, lease files,
assignments, division orders, and documents relating to the Assets insofar as
the same are in Seller’s possession and insofar as Seller may do so without (i)
violating legal constraints or any legal obligation or (ii) waiving any
attorney/client, work product or like privilege; and


(b)   subject
to any required consent of any third Person, permit Buyer and its
representatives at reasonable times and at Buyer’s sole risk, cost and expense,
to conduct, in the presence of Seller’s representatives, reasonable inspections
of the Assets;


provided, however, Buyer shall repair any damage to
the Assets resulting from such inspections and Buyer does hereby indemnify and
hold harmless, release and agree to defend the Seller Indemnified Persons from
and against any and all Covered Liabilities arising, in whole or in part, from
Buyer’s inspection of the Assets, regardless of any
concurrent negligence or strict liability on the part of the Seller Indemnified
Persons and regardless of the form of claim whether at common law, strict
liability, negligence or under any statute or regulation.  Nothing in this Agreement shall be construed
to permit Buyer or its representatives to have access to any files, records,
contracts or documents of Seller relating to this transaction, including,
without limitation, any bids or offers received by Seller for the sale of the
Assets in competition with the Buyer’s bid or offer, it being agreed that all
such competing bids or offers shall be the sole property of Seller.


Section 5.2             Confidential Information.  Buyer agrees to maintain all information made
available to it pursuant to this Agreement confidential and to cause its
partners, directors, officers, employees, agents, representatives, consultants
and advisors to maintain all information made available to them pursuant to
this Agreement confidential, to the extent provided in that certain
confidentiality agreement dated December 27, 2006 (the “Confidentiality
Agreement”), by and between Vulcan Resources Florida Inc. and Buyer, the
terms of which are incorporated herein by reference and made a part of this
Agreement.


Section 5.3             No Warranty or Representation.  Seller makes no warranty
or representation, express, implied, statutory or otherwise, with respect to
any Environmental Matters.  Furthermore,
without limiting the provisions of the eighth grammatical paragraph of the
Confidentiality Agreement (which shall continue in full force and effect) 



 10
 









and except for the representations and warranties
made by Seller in Section 4.1, Seller makes no warranty or representation,
express, implied, statutory or otherwise, with respect to the accuracy or
completeness of the information, records and data now, heretofore or hereafter
made available to Buyer in connection with this Agreement; including, without
limitation, any description of the Assets, pricing assumptions, potential for
production of oil, gas or other hydrocarbons from the Subject Interests,
projected development costs, projected plugging and abandonment costs or any
other matters contained in or related to the Reserve Report; any environmental
information; or any other material furnished to Buyer by Seller or any
director, officer, shareholder, employee, counsel, agent or advisor of Seller.


ARTICLE VI.

FORMATION OF AND CONVEYANCE TO COMPANY


Section 6.1             Formation
of Company.  Prior to the Closing,
Seller shall form a single member Delaware limited liability company of which
Seller is (and shall remain until Closing) the sole member (the “Company”).  The name of the Company shall be “Calumet
Sunniland, LLC” or such other name as may be agreed by Seller and Buyer.  In furtherance of the foregoing, Seller shall
execute a Limited Liability Company Agreement and shall cause to be filed with
the Secretary of State of Delaware a Certificate of Formation of the Company,
substantially in the respective forms attached hereto as Exhibit 6.1.  Promptly upon receipt of evidence of such
filing with the Secretary of State of Delaware, Seller shall furnish a copy of
such evidence of filing with Buyer.  Promptly
following the formation of the Company, Seller shall cause the Company to be
authorized to do business in the State of Florida as a foreign limited
liability company.


Section 6.2             Conveyance
to Company.  After formation of the
Company and prior to Closing, Seller shall execute and deliver to the Company
the General Conveyance, in substantially the form attached hereto as Exhibit 6.2 (the “Conveyance”),
together with all special governmental assignment forms as may be required by
Law to be executed in connection with the conveyance of specific Assets;
provided that the terms and provisions of the Conveyance shall control as to
any conflict between the Conveyance and any such special assignment forms.  To the extent any liens or security interests
securing indebtedness (other than Permitted Encumbrances) encumber any of the
Assets, Seller shall cause such liens and security interests to be terminated
and released concurrently with the Closing.


ARTICLE VII.

TRANSFER REQUIREMENTS


Section 7.1             Compliance.  Buyer’s purchase of the Membership Interests
is expressly subject to all validly existing and applicable Transfer
Requirements.  Prior to the Closing Date,
Seller shall initiate all procedures which in Seller’s good faith judgment are
reasonably required to comply with or obtain the waiver of all Transfer
Requirements set forth in Schedule 7.1
with respect to the transactions contemplated by this Agreement.  Seller shall not be obligated to pay any
consideration to (or incur any cost or expense for the benefit of) the holder
of any Transfer Requirement in order to obtain the waiver thereof or compliance
therewith.


 



 11















Section 7.2             Certain
Consents.  Seller  and Buyer will use commercially reasonable
efforts after Closing to obtain all approvals and consents from, and make all
filings with, any applicable party, including Governmental Authorities, that
may be required under the terms of (or regulations specifically applicable to)
the oil and gas leases and material contracts identified on Schedule 4.1(e) with respect to the
assignment of the interests covered therein from Seller to the Company and the
assignment of the Membership Interests to Buyer.  Until such approvals and consents are
obtained, Seller shall continue to hold legal title to and to remain in privity
under such oil and gas leases and material contracts as nominee for the
Company.  In furtherance of the foregoing,
and if required pursuant to Section 9.2(g), the Parties will execute an
Operations and Proceeds Agreement substantially in the form attached hereto as Exhibit 7.2 (the “Operations and
Proceeds Agreement”).  Seller shall
not be obligated to incur any expenses in Seller’s capacity as nominee.  From and after the Closing Date, and for
purposes of Article XIII, Seller and Buyer shall treat and deal with such
interests as if full legal and equitable title to such interests had passed from
Seller to the Company at Closing.


ARTICLE VIII.

COVENANTS OF SELLER AND BUYER


Section 8.1             Conduct
of Business Pending Closing.  Subject
to Section 8.2 and the constraints of applicable operating agreements and other
existing agreements, from the date hereof through the Closing, except as
disclosed in Schedule 8.1
or as otherwise consented to or approved by Buyer (which consent or approval
shall not be unreasonably withheld or delayed), Seller covenants and agrees
that:


(a)           Changes
in Business.  Seller shall not:


(1)           make any material change in the
conduct of its business or operations with respect to the Assets;


(2)           except in the ordinary course of
business and consistent with past practices, enter into, assign, terminate or
amend, in any material respect, any contract or agreement required to be
disclosed pursuant to Section 4.1(j);


(3)           sell, lease or otherwise dispose of
any of the Assets, except (i) oil, gas and other hydrocarbons sold or otherwise
disposed of in the ordinary course of business, (ii) incident to the exploration,
operation or development of the Assets in accordance with this Section 8.1 or
Section 8.2, (iii) personal property or equipment which is replaced with
personal property or equipment of comparable or better value and utility in
connection with the maintenance, repair and operation of the Assets, and (iv)
any item of personal property or equipment having a value of less than $5,000;
or


(4)           materially increase or change the
wages, salaries and benefits payable to the Company Employees.


(b)           Liens.  Seller shall not create any express lien or
security interest on any Assets, except to the extent (i) required or permitted
incident to the exploration, operation or development of the Assets pursuant to
this Section 8.1 or Section 8.2, (ii) required or evidenced by



 12
 









the Hydrocarbon Interests, joint operating agreements
or unitization or pooling agreements relating to the Subject Interests, or
(iii) required or evidenced by any contract or agreement required to be
disclosed pursuant to Section 4.1(j).


(c)           Operation
of Assets.  Seller shall:


(1)           cause the Assets to be maintained and
operated (and the production attributable thereto marketed, sold, exchanged,
processed and otherwise handled) in the ordinary course of business in
accordance with Seller’s past practices (including the repair or replacement of
damaged, destroyed, obsolete, depreciated, non-working or non-economical items
of equipment or other personal property without regard to the limitation of
Section 8.1(c)(2) below), maintain insurance now in force with respect to the
Assets, and pay or cause to be paid all costs and expenses in connection
therewith promptly when due;


(2)           not commit to participate in the
drilling of any new well or other new operations on the E & P Assets the
projected cost of which (net to Seller’s interest and without consideration of
any cost overruns) is in excess of $25,000 in any single instance, without the
advance written consent of Buyer, which consent or non-consent must be given by
Buyer within the lesser of (x) ten (10) days of Buyer’s receipt of the notice
from Seller or (y) one-half (1⁄2) of the applicable notice period within which
Seller is contractually obligated to respond to third parties to avoid a deemed
election by Seller regarding such operation, as specified in Seller’s notice to
Buyer requesting such consent; provided that, failure by Buyer to respond
within the aforesaid applicable period shall constitute Buyer’s consent to
Seller’s participation in such well or other operation;


(3)           maintain and keep the Assets in full
force and effect, except where such failure is due to (i) the failure to pay a
delay rental, royalty, shut in royalty or other payment by mistake or oversight
(including Seller’s negligence) unless caused by Seller’s gross negligence or
willful misconduct, or (ii) the failure to participate in an operation which
Buyer does not timely approve; and


(4)           use Seller’s reasonable best efforts
to maintain its relationships with suppliers, customers and others having
material business relations with Seller with respect to the Assets so that they
will be preserved for the Company on and after the Closing Date.


(d)           Contracts
and Agreements.  Seller shall not:


(1)           grant or create any Preference Right
or Transfer Requirement with respect to the Assets except (i) in connection
with the performance by Seller of an obligation or agreement existing on the
Effective Time or pursuant to this Agreement or (ii) in connection with the
renewal or extension of Assets after the Effective Time if granting or creating
such Preference Right or Transfer Requirement is a condition of such renewal or
extension;



 13
 









(2)           enter into any oil, gas or other
hydrocarbon sales, exchange, gathering, processing or transportation contract
with respect to the Assets having a term in excess of one (1) year which is not
terminable without penalty on notice of ninety (90) days or less;


(3)           voluntarily relinquish Seller’s
position as operator with respect to any of the Assets; or


(4)           enter into, terminate early, amend or
default under any Derivative without Buyer’s prior written consent.


Section 8.2             Qualifications
on Conduct.


(a)           Emergencies;
Legal Requirements.  Seller may take
(or not take, as the case may be) any of the actions mentioned in Section 8.1
if reasonably necessary under emergency circumstances (or if required or
prohibited, as the case may be, pursuant to Law) and provided Buyer is notified
as soon thereafter as practicable.


(b)           Non-Operated
Properties.  If Seller is not the
operator of a particular portion of the Assets, the obligations of Seller in
Section 8.1 with respect to such portion of the Assets, which have reference to
operations or activities that pursuant to existing contracts are carried out or
performed by the operator, shall be construed to require only that Seller use
its reasonable best efforts (without being obligated to incur any expense or
institute any cause of action) to cause the operator of such portion of the
Assets to take such actions or render such performance within the constraints
of the applicable operating agreements and other applicable agreements.


(c)           Certain
Operations.


(1)           Should Seller not wish to pay any
lease rental or other payment or participate in any reworking, deepening,
drilling, completion, equipping or other operation on or with respect to any well
or other Property Subdivision constituting part of the E & P Assets which
may otherwise be required by Section 8.1, Seller shall give Buyer written
notice thereof at least fifteen (15) days prior to the date such rental or
other payment is due or, in the case of an operation, promptly after Seller
receives notice of such proposed operation from the operator of such property
(or if Seller is the operator, at the same time Seller gives or is required to
give notice of such proposed operation to the non-operators of such
property).  Seller shall not be obligated
to make any such payment or to elect to participate in any such operation which
Seller does not wish to make or participate in unless Seller receives from Buyer,
within a reasonable time prior to the date when such payment or election is
required to be made by Seller, (a) the written election and agreement of Buyer
(i) to require Seller to take such action and (ii) to pay all costs and
expenses of Seller with respect to such lease rental or other payment or such
operation and (b) the funds necessary for such payment or operation as
contained in the applicable AFE therefor or estimated by Seller.  Notwithstanding the foregoing, Seller shall
not be obligated to pay any lease rental or other payment or to elect to
participate in any operation if the operator of the property involved
recommends that such action not be taken. 
If Buyer advances any funds pursuant to this Section 8.2(c) with respect
to a



 14
 









particular portion of the E & P Assets, such
portion of the Assets is excluded from the Assets pursuant to the terms hereof
or Closing does not occur, and such funds are not reimbursed to Buyer within
thirty (30) days after the earlier of Closing or termination of this Agreement,
then with respect to such particular portion of the E & P Assets, (i) Buyer
shall own and be entitled to any interest of Seller that would have lapsed but
for such payment or (ii) in the case of operations, Buyer shall be entitled to
receive the penalty, if any, that Seller, as nonconsenting party, would have
suffered under the applicable operating or other agreement with respect to such
operations as if Buyer were a consenting party thereunder; in each case,
subject to and after deduction of any damages or other relief to which Seller
may be entitled with respect to any breach by Buyer of this Agreement.


(2)           If a notice delivered to Buyer
pursuant to Section 8.1(c)(2) sets forth a recommendation that Seller
participate in an operation or capital expenditure the failure in which to participate
will cause the forfeiture of all or any portion of a Subject Interest (or any
interest in production attributable thereto) and Buyer timely notifies Seller
that it does not desire Seller to participate in same, then, on or before the
Closing, Seller may elect to exclude from the Assets and reserve to Seller the
Subject Interest (or the interest therein or interest in production therefrom)
that would be so forfeited, together with a pro rata share of all Incidental
Rights, oil, gas and other hydrocarbons and other assets attributable or
appurtenant thereto (but only to the extent such Incidental Rights, oil, gas
and other hydrocarbons and other assets are practicably severable from the
Assets without adversely impacting in any material respect the value or
operations of the remaining Assets).  If
such Incidental Rights, oil, gas and other hydrocarbons and other assets are
not so practicably severable from the Assets, Buyer shall execute and deliver
to Seller at Closing a perpetual use agreement on commercially reasonable terms
which grants to Seller and its successors and assigns the practical benefits
Seller would have received from such Incidental Rights, oil, gas and other
hydrocarbons and other assets had they been so excluded and reserved to Seller.  No reduction in the Purchase Price shall be
made on account of any exclusion, reservation, use agreement or other matter
provided for in this Section 8.2(c)(2).


Section 8.3             Assignment
of Membership Interests.  Upon the
terms and subject to the conditions of this Agreement, at or prior to the
Closing, Seller and Buyer shall execute and deliver or cause the execution and
delivery of the Assignment of Membership Interests, in substantially the form
attached hereto as Exhibit 8.3
(the “Assignment”).  To the extent
any liens or security interests securing indebtedness encumber any of the
Membership Interests, Seller shall cause such liens and security interests to
be terminated and released concurrently with the Closing.


Section 8.4             Public
Announcements.  Prior to the Closing
Date, without the prior written approval of the other party hereto, which
approval shall not be unreasonably withheld, no party hereto will issue, or
permit any agent or Affiliate of it to issue, any press releases or otherwise
make, or cause any agent or Affiliate of it to make, any public statements with
respect to this Agreement and the transactions contemplated hereby, except
where such release or statement is deemed in good faith by the releasing party
to be required by Law or under the rules



 15
 









and regulations of the NASDAQ or New York stock
exchanges (or other public stock exchange of similar reputation and standing)
on which the shares of such party or any of its Affiliates are listed.  In each case to which such exception applies,
the releasing party will use its reasonable best efforts to provide a copy of
such release or statement to the other parties prior to releasing or making the
same.  Seller approves Buyer’s issuance
of a press release in the form of Exhibit 8.4
immediately after the execution of this Agreement by both parties.


Section 8.5             Amendment
of Schedules.  As of the Closing
Date, all Schedules hereto shall be deemed amended and supplemented to include
reference to any matter (a) relating to Seller or the Assets which first arises
or occurs after the date of execution of this Agreement and does not result
from a breach by Seller of Section 8.1, (b) which results in an adjustment to
the Purchase Price pursuant to Section 3.1, or (c) which relates to a property
excluded from the Assets pursuant to Section 8.2(c)(2).


Section 8.6             Parties’
Efforts and Further Assurances. 
Buyer covenants and agrees to take all actions which are necessary for
it to be in compliance with its warranties and representations contained in
Sections 4.2(h), 4.2(i) and 4.2(j) on the Closing Date.  Each of the parties agrees to use
commercially reasonable efforts (and to cause its Affiliates to use
commercially reasonable efforts) to refrain from taking any action within its
control which would cause a breach of any of its representations and warranties
contained in Article IV or which would prevent it from delivering to the other
parties the certificate which it is required to deliver pursuant to Section
9.1(b) or 9.2(b), as the case may be. 
Seller and Buyer each agree that from time to time after the Closing
Date, each of them will execute and deliver or cause their respective
Affiliates to execute and deliver such further instruments, and take (or cause
their respective Affiliates to take) such other action, as may be reasonably
necessary to carry out the purposes and intents of this Agreement.


Section 8.7             Asset
Records.  Within a reasonable period
of time following the end of the term of the Transition Agreement, Seller shall
make all Asset Records available for delivery to Buyer at Seller’s offices in
Houston, Texas or at the locations of the Assets in the case of Asset Records
maintained at such locations.  Buyer
agrees to maintain all Asset Records until the fifth anniversary of the Closing
Date (or for such longer period of time as Seller shall advise Buyer is
necessary in order to have the Asset Records available with respect to open
years for Tax audit purposes), or, if any of the Asset Records pertain to any
claim or dispute pending on the fifth anniversary of the Closing Date, Buyer
shall maintain any of the Asset Records designated by Seller until such claim
or dispute is finally resolved and the time for all appeals has been
exhausted.  Buyer shall provide Seller
and its representatives reasonable access to and the right to copy the Asset
Records for the purposes of (i) preparing and delivering any accounting
provided for under this Agreement and adjusting, prorating and settling the
charges and credits provided for in this Agreement, (ii) complying with any Law
affecting Seller’s interest in the Assets prior to the Closing Date, (iii)
conducting and preparing any audit of the books and records of any third party
relating to Seller’s interest in the Assets prior to the Closing Date, or
responding to any audit conducted or prepared by such third parties, (iv)
preparing Tax returns, (v) responding to or disputing any Tax audit or (vi)
asserting, defending or otherwise dealing with any claim or dispute under this
Agreement or with respect to the Assets. 
In no event shall Buyer or any of its Affiliates destroy any Asset
Records without giving Seller sixty (60) days’



 16
 









advance written notice thereof and the opportunity, at
Seller’s expense, to obtain such Asset Records prior to their destruction.


Section 8.8             Recording.  Immediately following the Closing, Buyer, at
its cost and expense, shall record the Conveyance and all other instruments of
assignment in the appropriate governmental offices of the jurisdictions in
which the Assets are located.  Promptly following
such recording, Buyer shall advise Seller in writing of the pertinent recording
data.


Section 8.9             Casualty
and Condemnation.  If after the
Effective Time and prior to the Closing any part of the Assets shall be
destroyed or damaged by fire or other casualty or if any part of the Assets
shall be taken in condemnation or under the right of eminent domain or if
proceedings for such purposes shall be pending or threatened, this Agreement
shall remain in full force and effect notwithstanding any such destruction,
taking or proceeding or the threat thereof. 
To the extent insurance proceeds, condemnation awards or other payments
are not committed, used or applied by Seller prior to the Closing Date to
repair, restore or replace such damaged, destroyed or taken Assets, Seller
shall at the Closing (i) assign to the Company Seller’s right to receive all
insurance or condemnation proceeds, awards or payments owed to Seller by reason
of such destruction or taking, less any reasonable costs and expenses incurred
by Seller in collecting same or in connection with such proceedings or the
threat thereof, and (ii) pay to the Company all insurance or condemnation
proceeds, awards or payments theretofore paid to Seller by reason of such
destruction or taking, less any reasonable costs and expenses incurred by
Seller in collecting same or in connection with such proceedings or the threat
thereof.  Notwithstanding the foregoing,
any insurance or condemnation proceeds, awards or payments (or any rights
thereto) by reason of such destruction or taking which are held by or owed to
Seller for the account or benefit of any third party joint interest owners
shall not be paid or assigned by Seller to the Company pursuant to this Section
and shall instead be transferred to the successor operator or other Person
responsible therefor pursuant to the terms of the applicable operating or other
agreement.


Section 8.10           Transition
Agreement.  At Closing, Seller and
the Company shall execute and deliver a Transition Services Agreement (the “Transition
Agreement”) providing for the performance by Seller or its Affiliates of
certain transition services with respect to the operation of the Assets after
Closing in substantially the form attached hereto as Exhibit 8.10.


Section 8.11           Employees.


(a)           Company
Employees.  “Company Employees”
shall mean the employees of Seller listed on Schedule 8.11(a) attached hereto.  Effective as of 12:01 a.m. on the day
immediately following the date of termination of the Transition Agreement (the Transition
Termination Date”), the employment of the Company Employees with Seller
shall terminate. Buyer or another member of the controlled group (within the
meaning of Section 414(b), (c), (m) or (o) of the Code) of which Buyer is a
member (the “Buyer Controlled Group”) shall have the right commencing on
the Transition Termination Date to make a comparable offer of employment to any
or all of the Company Employees in its sole discretion.  A comparable offer of employment to a Company
Employee shall be an offer of employment (a) at the Company Employee’s current
base salary with Seller as of the date of this Agreement (as set out on Schedule 8.11(a)); (b) with
substantially the



 17
 









same duties and responsibilities; (c) at the same
location (or such other worksite as the Company Employee may agree to), and (d)
made only after prior written notice to Seller of the name of each such Company
Employee and the terms of such offer.


(b)           Continuing
Employees.  Company Employees who
accept an offer of employment and become employed by a member of the Buyer
Controlled Group on such day following the Transition Termination Date, are
hereinafter referred to as the “Continuing Employees.”  The effective date of employment of the
Continuing Employee with the employing member of the Buyer Controlled Group
shall be such day following the Transition Termination Date.  Nothing contained herein shall confer upon
any Continuing Employee any right with respect to continuance of employment by
Buyer or any other member of the Buyer Controlled Group, nor shall anything
herein interfere in any way with the right of an employing member of the Buyer
Controlled Group to terminate the employment of a Continuing Employee at any
time with or without cause.  Seller shall
remain solely responsible for all its obligations with respect to Company
Employees who do not become Continuing Employees.


(c)           Savings
Plans.  To the extent a Continuing
Employee has an outstanding plan loan from a Seller 401(k) plan, such
Continuing Employee shall be entitled to rollover such loan to a Buyer
Controlled Group 401(k) plan to the extent permitted by the Code.


(d)           Post-Closing
Benefits for Continuing Employees.


(i)            Buyer shall, or shall cause another member of the Buyer
Controlled Group to, provide coverage and benefits for each Continuing Employee
in each employee benefit plan, program, practice and policy (within the meaning
of Section 3(3) of ERISA) and any other similar arrangement of the Buyer
Controlled Group member employing the Continuing Employee, on at least as
favorable a basis as Buyer or such other member of the Buyer Controlled Group
provides to its other employees similarly situated.  Each Continuing Employee shall be given
credit for eligibility and vesting under each employee benefit plan, program,
practice and policy of the Buyer Controlled Group employing member for all
service prior to the day following the Transition Termination Date, with
Seller, or any predecessor employer (to the extent such credit was given by
Seller).  Further, no preexisting
condition, exclusion or limitation shall be applicable with respect to the
participation of any Continuing Employee in any medical benefit plan of any
member of the Buyer Controlled Group and each Continuing Employee shall be
given credit under each Buyer Controlled Group medical benefit plan for all
deductibles such employee has paid under the Seller group medical plan.


(ii)           Each Buyer Controlled Group employing
member shall calculate a Continuing Employee’s vacation entitlement by
crediting each such Continuing Employee with years of service and seniority
with Seller as well as all unused vacation days previously accrued with
Seller.  Seller shall also credit the
amount of accrued vacation of such Continuing Employee as of the day following
the Transition Termination Date, in determining vacation entitlement for the
current year.



 18















Section 8.12           Joint
Development and AMI Agreement.  Upon
the terms and subject to the conditions of this Agreement, at or prior to
Closing, Seller and the Company shall execute and deliver or cause the
execution and delivery of a Joint Development and Area of Mutual Interest
Agreement, in substantially the form attached hereto as Exhibit 8.12 (the “Joint Development
and AMI Agreement”).


Section 8.13           3-D
Seismic Data License Agreement.  Upon
the terms and subject to the conditions of this Agreement, at or prior to
Closing, Seller and the Company shall execute and deliver or cause the
execution and delivery of a 3-D Seismic Data License Agreement, in
substantially the form attached hereto as Exhibit
8.13 (the “Data License Agreement”).


Section 8.14           Cooperation
in Connection with Preparation and Audit of Financial Statements.


(a)           Seller
shall, and shall use its good faith efforts to cause its Affiliates and their
respective officers, employees, independent auditor and other advisors
(collectively, “Representatives”) to, cooperate with Buyer, its
Affiliates and their Representatives in connection with (i) the preparation and
audit of any financial statements relating to the Assets and the operations and
business conducted by Seller in connection with the Assets (the “Business
and Assets”) that may be required to be filed by Buyer or its Affiliates
with the Securities and Exchange Commission (the “SEC”) pursuant to the
Securities Act of 1933, as amended (the “Act”), and the rules and
regulations thereunder, or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations thereunder, or to be
filed with, or provided to, any other regulatory authority or pursuant to any
other applicable law, and (ii) the preparation and audit of any financial
statements relating to the Business and Assets that may be required in
connection with any financing transaction by Buyer and its Affiliates.


(b)           In
connection with the preparation and audit of any financial statements as
contemplated in clause (a) above, Seller agrees to make available to Buyer and
its Affiliates and their Representatives copies of (i) any and all books,
records, information and documents that are attributable to the Business and
Assets that are in Seller’s or its Affiliates’ possession as may be required by
Buyer and its Affiliates in order for Buyer and its Affiliates to prepare such
financial statements in accordance with the requirements of Regulation S-X
under the Securities Act, and (ii) any documentation attributable to the
Business and Assets that is in Seller’s or its Affiliates’ possession as may be
required to complete any audit associated with such financial statements.


(c)           Without
limiting the generality of the foregoing, Seller shall, and shall use its good
faith efforts to cause its Affiliates and their respective Representatives to,
cooperate with the independent auditor of Buyer and its Affiliates in
connection with any audit of any financial statements relating to the Business
and Assets that Buyer or any of its Affiliates requires in connection with such
audit, including without limitation, to execute any representation letters for
pre-Closing periods that may be required to be delivered in connection with
such audit that are reasonably satisfactory to Seller.


(d)           For
a period of five (5) years following the Closing, Seller shall, and shall cause
it Affiliates to, retain all books, records, information and documents in its
or its Affiliates’ 



 19
 









possession that may be necessary in connection with
the preparation and audit of financial statements with respect to the Business
and Assets.


(e)           Buyer
shall reimburse Seller for all costs and expenses incurred by Seller or its
Affiliates, including fees and expenses of third Persons providing accounting
or other services to Seller or its Affiliates, in complying with the provisions
of this Section 8.14.


ARTICLE IX.

CLOSING CONDITIONS


Section 9.1             Seller’s
Closing Conditions.  The obligation
of Seller to proceed with the Closing contemplated hereby is subject, at the
option of Seller, to the satisfaction on or prior to the Closing Date of all of
the following conditions:


(a)   Representations,
Warranties and Covenants.  The (i)
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects (and in all respects, in the case of
representations and warranties which are qualified by the requirement of a
material adverse effect) on and as of the Closing Date, and (ii) covenants and
agreements of Buyer to be performed on or before the Closing Date in accordance
with this Agreement shall have been duly performed in all material respects.


(b)   Officer’s
Certificate.  Seller shall have
received a certificate dated as of the Closing Date, executed on behalf of
Buyer by a duly authorized officer of the general partner of Buyer, to the
effect that the conditions set forth in subsection (a) of this Section 9.1 have
been satisfied.


(c)   Closing
Documents.  On or prior to the
Closing Date, Buyer shall have delivered, or be standing ready to deliver at
Closing, all agreements, instruments and other documents required to be
delivered by Buyer pursuant to Section 10.3.


(d)   No
Action.  On the Closing Date, no
suit, action or other proceeding (excluding any such matter initiated by Seller
or any of its Affiliates) shall be pending or threatened before any court or
governmental agency or body of competent jurisdiction seeking to enjoin or
restrain the consummation of the Closing or recover damages from Seller or any
Affiliate of Seller resulting therefrom.


(e)   Opinion
of Counsel.  Buyer shall have
delivered to Seller the written opinion, dated as of the Closing Date, of
Vinson & Elkins, L.L.P., counsel to Buyer, substantially in the form
attached hereto as Exhibit 9.1(e).


Section 9.2             Buyer’s
Closing Conditions.  The obligation
of Buyer to proceed with the Closing contemplated hereby is subject, at the
option of Buyer, to the satisfaction on or prior to the Closing Date of all of
the following conditions:


(a)   Representations,
Warranties and Covenants.  The (i)
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects (and in all respects, in the case of
representations and warranties which are qualified by materiality 



 20
 









or the requirement of a Material Adverse Effect) on and as of the
Closing Date as though made as of the Closing Date with the Schedules to this
Agreement amended and supplemented in accordance with Section 8.5, and (ii)
covenants and agreements of Seller to be performed on or before the Closing
Date in accordance with this Agreement shall have been duly performed in all
material respects.


(b)   Officer’s
Certificate.  Buyer shall have
received a certificate dated as of the Closing Date, executed on behalf of
Seller by a duly authorized officer of Seller, to the effect that the
conditions set forth in subsection (a) of this Section 9.2 have been satisfied.


(c)   Closing
Documents.  On or prior to the
Closing Date, Seller shall have delivered, or be standing ready to deliver at
the Closing, all agreements, instruments and other documents required to be
delivered by Seller pursuant to Section 10.2.


(d)   No
Action.  On the Closing Date, no
suit, action or other proceeding (excluding any such matter initiated by Buyer
or any of its Affiliates) shall be pending or threatened before any court or
governmental agency or body of competent jurisdiction seeking to enjoin or
restrain the consummation of the Closing or recover damages from Buyer or any
Affiliate of Buyer resulting therefrom.


(e)   Opinion
of Counsel.  Seller shall have
delivered to Buyer the written opinion, dated as of the Closing Date, of
Fulbright & Jaworski L.L.P., counsel to Seller, substantially in the form
attached hereto as Exhibit 9.2(e).


(f)    Derivative
Transfer.  All documentation in a
form reasonably acceptable to Buyer required to fully transfer to the Company,
on the same terms and conditions, the Derivatives, including (i) Crude Oil
Purchase Contract (No. 6340-1003) dated February 24, 2006, by and between
Calumet Florida Division of Plains Resources and Plains Marketing, L.P., as
amended by First Amendment dated May 15, 2006, and Third Amendment dated
January 18, 2007, (ii) Crude Oil Marketing Agreement dated November 17, 1998,
by and among Plains Resources, Inc., Calumet Florida, Inc., Plains Illinois,
Stocker Resources and Plains Marketing, as amended by the Amended and Restated
Crude Oil Marketing Agreement dated July 23, 2004, and (iii) Crude Oil Purchase
Contract (No. 6340-1004) dated May 8, 2006, by and between Calumet Florida
Division of Plains Resources and Plains Marketing, L.P., as amended by First
Amendment dated January 18, 2007.


(g)   Other
Consents.  All consents to assign or
transfer required pursuant to the terms of the oil and gas lease and material
contracts set forth in Schedule 4.1(e)
shall have been obtained, provided, however, that in the event that such
consents have not been fully obtained as of Closing, the Parties shall enter
into the Operations and Proceeds Agreement, whereupon this condition to Closing
shall be deemed waived by Buyer.


Section 9.3             Failure
to Disclose.  The breach by Buyer of
its obligation to give notice to Seller under Section 4.2(j) shall not
constitute a failure of the conditions to Closing under Section 9.1.  From and after Closing, Seller shall not have
any obligation or liability under this Agreement or otherwise in connection
with the transaction contemplated in this Agreement for any breach of a
representation or warranty by Seller prior to Closing by reason of any fact or 



 21
 









facts of which Buyer had knowledge prior to Closing if and to the
extent Buyer breached its obligation to give notice of such fact or facts to
Seller pursuant to Section 4.2(j).  From
and after Closing, Buyer shall not have any obligation or liability under this
Agreement or otherwise in connection with the transaction contemplated in this
Agreement for any breach of a representation or warranty by Buyer prior to
Closing by reason of any fact or facts of which Seller had knowledge prior to
Closing if and to the extent Seller breached its obligation to give notice of
such fact or facts to Buyer pursuant to Section 4.l(u).


ARTICLE X.

CLOSING


Section 10.1           Closing.  The Closing shall be held on the Closing Date
at 10:00 a.m., Houston time, at the offices of Fulbright & Jaworski L.L.P.,
Fulbright Tower, 1301 McKinney, Suite 5100, Houston, Texas, or at such other
time or place as Seller and Buyer may otherwise agree in writing.


Section 10.2           Seller’s
Closing Obligations.  At Closing,
Seller shall execute and deliver, or cause to be executed and delivered, to
Buyer the following:


(a)           The
Assignment contemplated by Section 8.3, the Joint Development and AMI Agreement
contemplated by Section 8.12, the Transition Agreement contemplated by Section
8.10, and the Data License Agreement contemplated by Section 8.13;


(b)           The
officer’s certificate referred to in Section 9.2(b);


(c)           The
legal opinion referred to in Section 9.2(e);


(d)           Letters
in lieu of division and transfer orders executed by Seller relating to the
Subject Interests in form reasonably necessary to reflect the conveyances
contemplated hereby;


(e)           A
non-foreign affidavit, as such affidavit is referred to in Section 1445(b)(2)
of the Code, in form attached hereto as Exhibit 10.2(e),
dated as of the Closing Date; and


(f)            Any
other agreements, instruments and documents which are required by other terms
of this Agreement to be executed and/or delivered by Seller to Buyer at the
Closing.


Section 10.3           Buyer’s
Closing Obligations.  At Closing,
Buyer shall (i) deliver, or cause to be delivered, the Initial Adjusted
Purchase Price to Seller in immediately available funds to the bank account as
provided in Section 3.2 and (ii) execute and deliver, or cause to be executed
and delivered, to Seller the following:


(a)           The
officer’s certificate of Buyer referred to in Section 9.1(b);


(b)           The
legal opinion referred to in Section 9.1(e);



 22
 









(c)           The
Joint Development and AMI Agreement contemplated by Section 8.12, the
Transition Agreement contemplated by Section 8.10, and the Data License Agreement
contemplated by Section 8.13;


(d)           A
parent guarantee pursuant to which Buyer shall guarantee the obligations of the
Company to Seller under the Conveyance, the Joint Development and AMI
Agreement, the Transition Agreement and the Data License Agreement, in
substantially the form attached hereto as Exhibit 10.3(d);
and


(e)           Any
other agreements, instruments and documents which are required by other terms
of this Agreement to be executed and/or delivered by Buyer to Seller at the
Closing.


ARTICLE XI.

EFFECT OF CLOSING


Section 11.1           Revenues.  After Closing, all proceeds, accounts
receivable, notes receivable, income, revenues, monies and other items included
in or attributable to the Excluded Assets and all other Excluded Assets shall
belong to and be paid over to Seller, and all proceeds, accounts receivable,
notes receivable, income, revenues, monies and other items included in or
attributable to the Assets with respect to any period of time after the
Effective Time shall belong to and be paid over to the Company, except that, to
the extent any such items are credited to the Company in calculating the
Initial Adjusted Purchase Price, as adjusted pursuant to Section 3.4, the same
shall belong to and be paid over to Seller.


Section 11.2           Expenses.  After Closing, all accounts payable and other
costs and expenses with respect to the Assets for which Seller is given credit
in the determination of Net Cash Flow pursuant to Section 3.3, as adjusted
pursuant to Section 3.4, shall be borne by Seller.  Ad valorem taxes related to the Assets and
not accounted for in the determination of Net Cash Flow will be prorated as of
the Effective Time.  For any such ad
valorem taxes for a period which the Effective Time splits and which are paid
by Seller, Buyer shall reimburse Seller for the portion thereof equal to the
percentage of such period represented by the portion of such period beginning
at the Effective Time.  For any such ad
valorem taxes for a period which the Effective Time splits and which are not
paid by Seller, Buyer shall pay such taxes and Seller shall reimburse Buyer for
a percentage of such taxes equal to the portion of such period which ends on
the day immediately preceding the Effective Time.


Section 11.3           Payments
and Obligations.  If monies are
received by any party hereto which, under the terms of this Article XI, belong
to another party, the same shall immediately be paid over to the proper
party.  If an invoice or other evidence
of an obligation is received which under the terms of this Article XI is partially
the obligation of Seller and partially the obligation of the Company, then the
parties shall consult each other and each shall promptly pay its portion of
such obligation to the obligee.


Section 11.4           Survival.  Except as provided in this Section 11.4, no
representations, warranties, covenants and agreements made herein shall survive
the Closing.  Each representation,
warranty, covenant and agreement made herein shall terminate and cease to be of




 23
 









further force and effect as of the Closing or such later date after
Closing as is expressly stipulated in this Section 11.4 for the survival
thereof.  Following the Closing or such
later date stipulated in this Section 11.4 for the survival thereof, such
representation, warranty, covenant or agreement shall not form the basis for or
give rise to any claim, demand, cause of action, counterclaim, defense, damage,
indemnity, obligation or liability which is asserted, claimed, made or filed
following the Closing or such later date stipulated for survival.  It is expressly agreed that the terms and
provisions of:


(a)   Sections 3.4, 8.1 and 8.2 and Article IV
(other than Sections 4.1(b), 4.1(c), 4.1(w), 4.2(b) and 4.2(c)) shall survive
the Closing for a period of eight (8) months from the Closing Date, and


(b)   Sections 4.1(b), 4.1(c), 4.1(w), 4.2(b),
4.2(c), 5.2, 5.3, 7.2, 8.5, 8.6, 8.7, 8.8, 8.11, 8.14, and 9.3, Articles XI,
XII, XIII, XIV and XV and Buyer’s indemnity and hold harmless of the Seller
Indemnified Persons under Section 5.1 shall survive the Closing indefinitely or
for such shorter period of time as may be stipulated in such provisions.


Any claim, demand, cause of action, counterclaim,
defense, damage, indemnity, obligation or liability which is asserted, claimed
or made in writing to the other Party within the applicable survival period
shall be deemed timely made under this Agreement.  In addition, the definitions set forth in Appendix A to this Agreement or in
any other provision of this Agreement which are used in the representations,
warranties, covenants and agreements which survive the Closing pursuant to this
Section 11.4 shall survive the Closing to the extent necessary to give
operative effect to such surviving representations, warranties, covenants and
agreements.


Section 11.5           Certain
Post-Closing Obligations.  Within
twenty (20) days after the Closing, Buyer shall (i) obtain and file with the
appropriate Governmental Authorities replacement surety bonds and/or guarantees
for all Assets for which Seller has surety bonds and/or guarantees outstanding (as
reflected in a list of such surety bonds and/or guarantees to be provided to
Buyer by Seller), (ii) obtain the full and complete release of Seller from (or
the full and complete cancellation of) all such bonds and/or guarantees insofar
as they relate to the Assets, and (iii) furnish Seller appropriate evidence of
Buyer’s compliance with the requirements of clauses (i) and (ii), including
copies of such replacement bonds and/or guarantees and such releases and/or
cancellations.  Within a reasonable period
of time following the Closing, Buyer shall remove or paint over, as
appropriate, any logo, service mark, trade name or trademark which constitutes
an Excluded Asset and is on the Assets.


ARTICLE XII.

LIMITATIONS


Section 12.1           Disclaimer
of Warranties.  NOTWITHSTANDING ANYTHING
CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, IT IS THE
EXPLICIT INTENT OF EACH PARTY HERETO THAT SELLER IS NOT MAKING ANY
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS, IMPLIED, STATUTORY OR
OTHERWISE, BEYOND THOSE REPRESENTATIONS OR WARRANTIES EXPRESSLY GIVEN IN THIS
AGREEMENT AND THE SPECIAL 



 24
 









WARRANTY OF TITLE SET FORTH IN THE
CONVEYANCE, AND IT IS UNDERSTOOD
THAT, WITHOUT LIMITING SUCH EXPRESS REPRESENTATIONS AND WARRANTIES
AND SPECIAL WARRANTY OF TITLE,
BUYER TAKES THE COMPANY, THE MEMBERSHIP INTERESTS AND THE ASSETS AS IS AND
WHERE IS AND WITH ALL FAULTS.  WITHOUT
LIMITING THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, SELLER HEREBY
(I) EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO (A) THE CONDITION
OF THE ASSETS, THE COMPANY AND THE MEMBERSHIP INTERESTS (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE
PRESENCE OR ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OF OR
DISCHARGED FROM, THE ASSETS) OR (B) ANY INFRINGEMENT BY SELLER OR ANY OF ITS
AFFILIATES OF ANY PATENT OR PROPRIETARY RIGHT OF ANY THIRD PARTY; AND (II)
NEGATES ANY RIGHTS OF BUYER UNDER STATUTES TO CLAIM DIMINUTION OF CONSIDERATION
AND ANY CLAIMS BY BUYER FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR
UNKNOWN, IT BEING THE INTENTION OF SELLER AND BUYER THAT THE ASSETS, THE
COMPANY AND THE MEMBERSHIP INTERESTS ARE TO BE ACCEPTED BY BUYER IN THEIR
PRESENT CONDITION AND STATE OF REPAIR.


Section 12.2           Texas
Deceptive Trade Practices Act Waiver. 
BUYER (A)
REPRESENTS AND WARRANTS TO SELLER THAT IT (I) IS ACQUIRING THE COMPANY, THE
MEMBERSHIP INTERESTS AND THE ASSETS FOR COMMERCIAL OR BUSINESS USE, (II) IS
REPRESENTED BY LEGAL COUNSEL, (III) ACKNOWLEDGES THE CONSIDERATION PAID OR TO
BE PAID FOR THE ASSETS WILL EXCEED $500,000, AND (IV) HAS KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS SUCH THAT ENABLE IT TO EVALUATE
THE MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND IS
NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION WITH RESPECT TO THE
SELLER; AND (B) HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY AND ALL
RIGHTS OR REMEDIES IT MAY HAVE UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER
PROTECTION ACT OF THE STATE OF TEXAS, TEX. BUS. & COM. CODE § 17.41 ET
SEQ. TO THE MAXIMUM EXTENT IT CAN DO SO UNDER APPLICABLE LAW, IF SUCH ACT
WOULD FOR ANY REASON BE DEEMED APPLICABLE TO THE TRANSACTIONS CONTEMPLATED
HEREBY.


WAIVER OF CONSUMER RIGHTS


BUYER WAIVES ITS RIGHTS UNDER THE
DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ., BUSINESS & COMMERCE CODE, A LAW THAT GIVES
CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. 
AFTER CONSULTATION WITH AN ATTORNEY OF BUYER’S OWN SELECTION, BUYER
VOLUNTARILY CONSENTS TO THIS WAIVER.


FURTHERMORE,
WITH RESPECT TO ASSETS WHICH ARE LOCATED IN A STATE OR SUBJECT TO A
JURISDICTION OTHER THAN TEXAS, BUYER WAIVES ANY COMPARABLE PROVISION OF THE LAW
OF THE STATE OR OTHER JURISDICTION WHERE SUCH ASSETS ARE LOCATED OR TO WHICH
SUCH ASSETS ARE SUBJECT.



 25















Section 12.3           Damages.  NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY
OTHER PROVISION OF THIS AGREEMENT, SELLER AND BUYER AGREE THAT, EXCEPT FOR THE
LIQUIDATED DAMAGES SPECIFICALLY PROVIDED FOR IN SECTIONS 13.4 AND 14.2, THE
RECOVERY BY EITHER PARTY HERETO OF ANY DAMAGES SUFFERED OR INCURRED BY IT AS A
RESULT OF ANY BREACH BY THE OTHER PARTY OF ANY OF ITS REPRESENTATIONS,
WARRANTIES OR OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED TO THE ACTUAL
DAMAGES SUFFERED OR INCURRED BY THE NON-BREACHING PARTY (AND THE INDEMNIFIED
PERSONS TO WHICH SUCH OBLIGATIONS MAY EXTEND UNDER THE TERMS HEREOF) AS A
RESULT OF THE BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES
OR OBLIGATIONS HEREUNDER AND IN NO EVENT SHALL THE BREACHING PARTY BE LIABLE TO
THE NON-BREACHING PARTY OR ANY INDEMNIFIED PERSON FOR ANY INDIRECT,
CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING, WITHOUT
LIMITATION, ANY DAMAGES ON ACCOUNT OF LOST PROFITS OR OPPORTUNITIES, BUSINESS
INTERRUPTION OR LOST OR DELAYED PRODUCTION) SUFFERED OR INCURRED BY THE
NON-BREACHING PARTY OR ANY INDEMNIFIED PERSON AS A RESULT OF THE BREACH BY THE
BREACHING PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES OR OBLIGATIONS
HEREUNDER.  For purposes of
the foregoing, actual damages may, however, include indirect, consequential,
special, exemplary or punitive damages to the extent (i) the injuries or losses
resulting in or giving rise to such damages are incurred or suffered by a
Person which is not a Seller Indemnified Person, a Buyer Indemnified Person or
an Affiliate of any of the foregoing and (ii) such damages are recovered
against an Indemnified Person by a Person which is not a Seller Indemnified
Person, a Buyer Indemnified Person or an Affiliate of any of the foregoing.  This Section 12.3 shall operate only to limit
a party’s liability and shall not operate to increase or expand any contractual
obligation of a party hereunder or cause any contractual obligation of a party
hereunder to survive longer than provided in Section 11.4.


Section 12.4           Plugging and Abandonment
Obligations.  NOTWITHSTANDING ANYTHING
CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT, IT IS
EXPRESSLY AGREED FOR ALL PURPOSES OF THIS AGREEMENT THAT (I) THE PLUGGING AND
ABANDONMENT OBLIGATIONS CONSTITUTE COMPANY LIABILITIES, UNLESS AND TO THE
EXTENT SELLER IS REQUIRED TO INDEMNIFY BUYER FOR THE SAME PURSUANT TO SECTION
13.2, (II) THE PLUGGING AND ABANDONMENT OBLIGATIONS SHALL NOT CONSTITUTE
ENVIRONMENTAL LIABILITIES OR ENVIRONMENTAL MATTERS, (III) EXCEPT FOR THE
REPRESENTATION SET FORTH IN SECTION 4.1(t),
SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO
THE PLUGGING AND ABANDONMENT OBLIGATIONS, AND (IV) SELLER SHALL HAVE NO
LIABILITIES OR OBLIGATIONS WITH RESPECT TO PLUGGING AND ABANDONMENT OBLIGATIONS
EXCEPT TO THE EXTENT SUCH OBLIGATIONS RELATE TO PROPERTY LOCATED ON THE
EXCLUDED ASSETS AND UNLESS AND TO THE EXTENT SELLER IS REQUIRED TO INDEMNIFY
BUYER FOR THE SAME PURSUANT TO SECTION 13.2.


Section 12.5           Environmental Release.  From and after Closing, the Buyer Indemnified
Persons shall have no rights to recovery or indemnification for Environmental
Liabilities or any Environmental Matters relating to the Assets under this
Agreement or Law, and all rights or remedies which any Buyer Indemnified Person
may have at or under Law with respect to any Environmental Liabilities or
Environmental Matters are expressly waived. 
FROM AND AFTER




 26
 









CLOSING, ALL BUYER
INDEMNIFIED PERSONS DO HEREBY AGREE, WARRANT AND COVENANT TO RELEASE, ACQUIT
AND FOREVER DISCHARGE ALL SELLER INDEMNIFIED PERSONS FROM ANY AND ALL CLAIMS,
DEMANDS AND CAUSES OF ACTION OF WHATSOEVER NATURE, INCLUDING WITHOUT LIMITATION
ALL CLAIMS, DEMANDS AND CAUSES OF ACTION FOR CONTRIBUTION AND INDEMNITY UNDER
STATUTE, INCLUDING THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND
LIABILITY ACT, OR COMMON LAW, WHICH COULD BE ASSERTED NOW OR IN THE FUTURE AND
THAT RELATE TO OR IN ANY WAY ARISE OUT OF ENVIRONMENTAL LIABILITIES OR
ENVIRONMENTAL MATTERS RELATING TO THE ASSETS. 
FROM AND AFTER CLOSING, ALL BUYER INDEMNIFIED PERSONS WARRANT, AGREE AND
COVENANT NOT TO SUE OR INSTITUTE ARBITRATION AGAINST ANY SELLER INDEMNIFIED
PERSON UPON ANY CLAIM, DEMAND OR CAUSE OF ACTION FOR INDEMNITY AND CONTRIBUTION
THAT HAVE BEEN ASSERTED OR COULD BE ASSERTED FOR ANY ENVIRONMENTAL LIABILITIES
OR ENVIRONMENTAL MATTERS RELATING TO THE ASSETS.


ARTICLE XIII.

INDEMNIFICATION


Section 13.1           Indemnification By Buyer.  From and after the Closing, the Company shall
assume, pay, perform, fulfill and discharge all Company Liabilities, and Buyer
and the Company, jointly and severally, shall indemnify and hold harmless
Seller, Seller’s Affiliates, each of Seller’s and its Affiliates’ respective
past, present and future directors, officers, employees, consultants and
agents, and each of the directors, officers, heirs, executors, successors and
assigns of any of the foregoing (collectively, the “Seller Indemnified
Persons”) from and against any and all (i) Company Liabilities incurred by
or asserted against any of the Seller Indemnified Persons, INCLUDING, WITHOUT LIMITATION, ANY COMPANY LIABILITY
BASED ON NEGLIGENCE, GROSS NEGLIGENCE OR STRICT LIABILITY OF THE SELLER
INDEMNIFIED PERSON OR ON ANY OTHER THEORY OF LIABILITY, WHETHER IN LAW (WHETHER
COMMON OR STATUTORY) OR EQUITY and (ii) subject to the limitations
of Section 11.4 and Article XII, any Covered Liability resulting from any
breach or nonfulfillment of any representation, warranty, covenant or agreement
on the part of Buyer which is expressly set forth in this Agreement, including
Buyer’s agreements to pay Taxes, fees, costs, expenses and other amounts as
provided in Section 15.4.


Section 13.2           Indemnification By Seller.  Subject to the provisions of Section 13.4,
from and after the Closing, Seller shall indemnify and hold harmless Buyer, the
Company, each of their respective present and future partners, directors,
officers, employees, consultants and agents, and each of the directors,
officers, heirs, executors, successors and assigns of any of the foregoing
(collectively, the “Buyer Indemnified Persons”) from and against any and
all (i) Excluded Liabilities incurred by or asserted against any of the Buyer
Indemnified Persons, INCLUDING,
WITHOUT LIMITATION, ANY EXCLUDED LIABILITY BASED ON NEGLIGENCE, GROSS
NEGLIGENCE OR STRICT LIABILITY OF THE BUYER INDEMNIFIED PERSON OR ON ANY OTHER
THEORY OF LIABILITY, WHETHER IN LAW (WHETHER COMMON OR STATUTORY) OR EQUITY
and (ii) subject to the limitations of Section 11.4 and Article XII, any
Covered Liability resulting from any breach or nonfulfillment of any
representation, warranty, covenant or agreement on the part of Seller which is
expressly set forth in this Agreement.



 27
 









Section 13.3           Indemnification and Defense
Procedures.  A Person which is
entitled to be indemnified under Section 5.1, 13.1 or 13.2 is herein referred
to as an “Indemnified Person” and the party which is obligated to
indemnify an Indemnified Person under Section 5.1, 13.1 or 13.2 is herein
referred to as the “Indemnifying Party” with respect to the matter for
which it is obligated to indemnify such Indemnified Person.  All claims for indemnification under Sections
5.1, 13.1 and 13.2 shall be asserted and resolved as follows:


(a)           If a third party claim for which an
Indemnified Person is entitled to indemnity under Sections 5.1, 13.1 and/or
13.2 (an “Indemnified Claim”) is made against an Indemnified Person, and
if Buyer or Seller intends to seek indemnity with respect thereto by or from an
Indemnifying Party pursuant to Sections 5.1, 13.1 and/or 13.2, then the party
electing to seek indemnity on behalf of such Indemnified Person shall promptly
transmit to the Indemnifying Party a written notice (“Claim Notice”) (i)
notifying such Indemnifying Party of such Indemnified Claim and requesting
indemnity on behalf of such Indemnified Person with respect to such Indemnified
Claim under Sections 5.1, 13.1 and/or 13.2, as the case may be,
(ii) setting forth the full name, address for all notices and the
authorized representatives of such Indemnified Person with respect to such
Indemnified Claim, and (iii) describing in reasonable detail the nature of the
Indemnified Claim, including a copy of all papers served with respect to such
Indemnified Claim (if any) and the basis of such request for indemnification under
Sections 5.1, 13.1 and/or 13.2, as the case may be.  Failure to provide such Claim Notice promptly
shall not affect the right of the Indemnified Person to indemnification
hereunder except to the extent the Indemnifying Party is prejudiced thereby;
provided that, the Indemnifying Party shall not be obligated to defend,
indemnify or otherwise hold harmless an Indemnified Person with respect to a
third party claim until a Claim Notice meeting the foregoing requirements is
furnished to the Indemnifying Party by the party seeking indemnity
hereunder.  Within 30 days after receipt
of any Claim Notice (the “Election Period”), the Indemnifying Party
shall notify the party who sent the Claim Notice (A) whether the Indemnifying
Party disputes its potential liability to indemnify the Indemnified Person
under Sections 5.1, 13.1 and/or 13.2, as the case may be, with respect to such
third party claim and (B) whether the Indemnifying Party desires to defend the
Indemnified Person against such third party claim; provided that, if the
Indemnifying Party fails to so notify the Indemnified Person during the
Election Period, the Indemnifying Party shall be deemed to have elected to
dispute such liability and not to defend against such third party claim.


(b)           If the Indemnifying Party notifies
the party who sent the Claim Notice within the Election Period that the
Indemnifying Party (i) does not dispute its liability to indemnify the
Indemnified Person under Sections 5.1, 13.1 and/or 13.2, as the case may be (or
reserves the right to dispute whether such claim is an Indemnified Claim under
Sections 5.1, 13.1 and/or 13.2) and (ii) elects to assume the defense of such
Indemnified Person with respect to such third party claim, then the
Indemnifying Party shall have the right to defend, at its sole cost and
expense, such third party claim by all appropriate proceedings, which
proceedings shall be prosecuted diligently by the Indemnifying Party to a final
conclusion or settled at the discretion of the Indemnifying Party in accordance
with this Section 13.3(b).  If an
Indemnifying Party elects pursuant to the foregoing to assume the defense of an
Indemnified Person with respect to a third party claim which is subsequently
determined not to be an Indemnified Claim, the Indemnifying Party shall not be
entitled to recover from the Indemnified Person the costs and expenses incurred
by the Indemnifying Party in providing such defense.  The Indemnifying Party 



 28
 









shall have full
control of such defense and proceedings, including any compromise or settlement
thereof; provided that the Indemnifying Party shall not enter into any
settlement agreement (or settle or compromise any such third party claim in a
manner) which provides for or results in any payment by or liability of the
Indemnified Person of or for any damages or other amount, any lien, charge or
encumbrance on any property of the Indemnified Person, any finding of
responsibility or liability on the part of the Indemnified Person or any
sanction or restriction upon the conduct of any business by the Indemnified
Person without the Indemnified Person’s express written consent, which consent
shall not be unreasonably withheld.  The
Indemnified Person is hereby authorized, at the sole cost and expense of the
Indemnifying Party (but only if the Indemnified Person is actually entitled to
indemnification hereunder), to file, during the Election Period, any motion,
answer or other pleadings which the Indemnified Person shall deem necessary or
appropriate to protect its interests or those of the Indemnifying Party and not
reasonably expected to be prejudicial to the Indemnifying Party.  If requested by the Indemnifying Party, the
Indemnified Person agrees, at the sole cost and expense of the Indemnifying
Party, to cooperate with the Indemnifying Party and its counsel in contesting
any such third party claim which the Indemnifying Party elects to contest,
including the making of any related counterclaim or cross-complaint against any
Person (other than a Buyer Indemnified Person, if the Indemnified Person is a
Buyer Indemnified Person, or a Seller Indemnified Person, if the Indemnified
Person is a Seller Indemnified Person). 
The Indemnified Person may participate in, but not control, any defense
or settlement of any third party claim controlled by the Indemnifying Party
pursuant to this Section 13.3(b), and the Indemnified Person shall bear its own
costs and expenses with respect to such participation.  The prosecution of the defense of a third
party claim with reasonable diligence shall include the taking of such action
(including the posting of a bond, deposit or other security) as may be
necessary to prevent any action to foreclose a lien against or attachment of
the property of the Indemnified Person for payment of such third party claim.


(c)           If the Indemnifying Party (i) fails
to notify the party who sent the Claim Notice within the Election Period that
the Indemnifying Party elects to defend the Indemnified Person pursuant to
Section 13.3(b) or (ii) elects to defend the Indemnified Person pursuant to Section
13.3(b) but fails to prosecute the defense of (or to settle) the third party
claim with reasonable diligence, then the Indemnified Person shall have the
right to defend, at the sole cost and expense of the Indemnifying Party (but
only if the Indemnified Person is actually entitled to indemnification
hereunder), the third party claim by all appropriate proceedings, which
proceedings shall be promptly and vigorously prosecuted by the Indemnified
Person to a final conclusion or settled. 
The Indemnified Person shall have full control of such defense and
proceedings; provided, however, that the Indemnified Person may not enter into
any compromise or settlement of such third party claim, without the
Indemnifying Party’s express written consent, which shall not be unreasonably
withheld.  The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by the
Indemnified Person pursuant to this Section 13.3(c), and the Indemnifying Party
shall bear its own costs and expenses with respect to such participation.


(d)           If the Indemnifying Party elects not
to assume the defense of a third party claim, or elects to assume the defense
of a third party claim, but reserves the right to dispute whether such claim is
an Indemnified Claim under Sections 5.1, 13.1 and/or 13.2, as the case 



 29
 









may be, the
determination of whether the Indemnified Person is entitled to indemnification
hereunder shall be resolved pursuant to arbitration as provided in Section
15.10.


(e)           If an Indemnified Person is entitled
to indemnity under Sections 5.1, 13.1 and/or 13.2 for a claim or other matter
which does not involve a third party claim, and if Buyer or Seller intends to
seek indemnity on behalf of an Indemnified Person with respect thereto by or
from an Indemnifying Party pursuant to Sections 5.1, 13.1 and/or 13.2, then the
party electing to seek indemnity on behalf of an Indemnified Person shall
promptly transmit to the Indemnifying Party a written notice describing in
reasonable detail the nature of such claim or other matter, the Indemnified
Person’s best estimate of the amount of damages attributable to such claim or
other matter and the basis for the Indemnified Person’s entitlement to
indemnification under Sections 5.1, 13.1 and/or 13.2, as the case may be.  If the Indemnifying Party does not notify the
party who sent such notice within 30 days from its receipt of such notice that
the Indemnifying Party does not dispute such claim for indemnity, the
Indemnifying Party shall be deemed to have disputed such claim.  If the Indemnifying Party has disputed such
claim, such dispute shall be resolved pursuant to arbitration as provided in
Section 15.10.


(f)            To the extent any claim, action,
suit or proceeding includes one or more Indemnified Claims with respect to an
Indemnified Person and one or more third party claims which are not Indemnified
Claims with respect to such Indemnified Person, any such non-Indemnified Claim
insofar as it is with respect to such Indemnified Person shall not be covered
by the indemnity in Sections 5.1, 13.1 and 13.2, the Indemnifying Party shall
not be obligated to undertake, conduct and control the defense or settlement of
such non-Indemnified Claim insofar as it is with respect to such Indemnified
Person, and such Indemnified Person shall be responsible for its own defense
and settlement of such non-Indemnified Claim. 
The seeking by a party of indemnity hereunder on behalf of any
Indemnified Person with respect to any third party claim or other claim or
matter shall not prevent such party from then or thereafter also seeking
indemnity hereunder on behalf of any other Indemnified Person with respect to
such third party claim or other claim or matter and shall not prevent the other
party from seeking indemnity hereunder on behalf of any Indemnified Person with
respect to the same third party claim or other claim or matter.


(g)           The term “Indemnified Transfer Tax
Claim” as used herein means a claim by or on behalf of any Governmental
Authority in the State of Florida for any Tax or fee described in the first
sentence of Section 15.4. 
Notwithstanding the provisions of Sections 13.3(b) and (c), with respect
to any Indemnified Transfer Tax Claim, any Seller Indemnified Person may enter
into any compromise or settlement of such Indemnified Transfer Tax Claim, in
such Seller Indemnified Person’s sole discretion, without the Indemnifying
Party’s prior consent, and no Seller Indemnified Person shall be required to
make any related counterclaim or cross-complaint against any Person in
connection with such Indemnified Transfer Tax Claim or otherwise cooperate with
the Indemnifying Party or its counsel in contesting any such Indemnified
Transfer Tax Claim.


Section 13.4           Seller’s General Liability
Limitation.  (a) Notwithstanding
anything herein provided to the contrary, Seller shall have no liability to
Buyer or any of the other Buyer Indemnified Persons pursuant to Section 13.2 or
for any breach by Seller of any representation or 



 30
 









warranty made by Seller in clauses (a) and
(d) through (u) of Section 4.1 to the extent that the aggregate amount of all
Covered Liabilities attributable to all such liabilities or breaches exceeds an
amount equal to fifty percent (50%) of the Adjusted Purchase Price.


(b)           Notwithstanding
anything herein provided to the contrary but without in any way affecting the
obligations of a Buyer Indemnified Person to notify Seller of a third party
claim pursuant to Section 13.3, Seller shall not have any liability to a Buyer
Indemnified Person with respect to any Covered Liability pursuant to Section
13.2 unless and until Buyer has used reasonable efforts to enforce its rights
and remedies, if any, with respect to such Covered Liability against any other
Person pursuant to (i) any insurance maintained for the joint account under any
operating agreement with respect to the Assets and (ii) any other agreements
for insurance, indemnification, guarantee or similar assurances which may be
included in the Assets.


Section 13.5           Materiality Exclusion.  Notwithstanding anything to the contrary
contained in this Agreement, for purposes of determining if there has been a
breach of any representation or warranty hereunder by Seller or Buyer and the
amount of the Covered Liabilities in respect thereof, the representations and
warranties of Seller and Buyer shall, for purposes of this Article XIII, be
read without giving effect to any materiality, Material Adverse Effect or
qualification with a similar meaning in such representation or warranty.


ARTICLE XIV.

TERMINATION; REMEDIES


Section 14.1           Termination.


(a)   Termination of Agreement. 
This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing:


(1)       By
the mutual consent of Seller and Buyer; or


(2)       If
the Closing has not occurred by the close of business on the Closing Date, then
(i) by Seller if any condition specified in Section 9.1 has not been satisfied
on or before such close of business, and shall not theretofore have been waived
by Seller, or (ii) by Buyer if any condition specified in Section 9.2 has not
been satisfied on or before such close of business, and shall not theretofore
have been waived by Buyer; provided, in each case, that the failure to
consummate the transactions contemplated hereby on or before such date did not
result from the failure by the party or parties seeking termination of this
Agreement to fulfill any undertaking or commitment provided for herein on the
part of such party or parties that is required to be fulfilled on or prior to
Closing.


(b)   Effect of Termination. 
In the event of termination of this Agreement by Seller, on the one
hand, or Buyer, on the other hand, pursuant to Section 14.1(a), written notice
thereof shall forthwith be given by the terminating party or parties to the
other party or parties hereto, and this Agreement shall thereupon terminate;
provided, however, that following such termination Buyer will continue to be
bound by its obligations set forth in Sections 5.1 and 5.2.  If this Agreement is terminated as provided
herein all filings, applications and other submissions made 



 31
 









to any Governmental Authority shall, to the
extent practicable, be withdrawn from the Governmental Authority to which they
were made.


Section 14.2           Remedies.


(a)   Seller’s Remedies. 
Notwithstanding anything herein provided to the contrary, if this
Agreement is not terminated by Buyer pursuant to Section 14.1(a) and Buyer
fails to satisfy on or prior to the Closing Date the conditions to Closing or
the Closing obligations, as the case may be, set forth in Sections 9.1(a),
9.1(b), 9.1(c), 9.1(e) or 10.3, Seller, at its sole option, may (i) enforce
specific performance of this Agreement or (ii) terminate this Agreement and,
without waiving or releasing Buyer’s obligations under Sections 5.1 and 5.2,
recover from Buyer the sum of $50,000,000.00 as liquidated damages.  Such remedies shall be Seller’s sole and
exclusive remedies for such failure, all other remedies being expressly waived
by Seller.  Seller and Buyer agree upon
such amount as liquidated damages due to the difficulty and inconvenience of
measuring actual damages and the uncertainty thereof, and Seller and Buyer
agree that such amount is a reasonable estimate of Seller’s loss in the event
of any such failure by Buyer.  Without
waiving or releasing Buyer from any of its other representations, warranties,
covenants and agreements contained herein, specific performance with respect to
clause (ii)(a) of Section 10.3 shall not require Buyer to make a false
statement in the officer’s certificate of Buyer.


(b)   Buyer’s Remedies. 
Notwithstanding anything herein provided to the contrary, if this
Agreement is not terminated by Seller pursuant to Section 14.1(a) and Seller
fails to satisfy on or prior to the Closing Date the conditions to Closing or
the Closing obligations, as the case may be, set forth in Sections 9.2(a),
9.2(b), 9.2(c), 9.2(e) or 10.2, Buyer, at its sole option, may (i) enforce
specific performance of this Agreement or (ii) terminate this Agreement and
recover from Seller the sum of $50,000,000.00, as liquidated damages.  Such remedies shall be Buyer’s sole and
exclusive remedies for such failure, all other remedies being expressly waived
by Buyer.  Seller and Buyer agree upon
such amount as liquidated damages due to the difficulty and inconvenience of
measuring actual damages and the uncertainty thereof, and Seller and Buyer
agree that such amount is a reasonable estimate of Buyer’s loss in the event of
any such failure by Seller.  Without
waiving or releasing Seller from any of its other representations, warranties,
covenants and agreements contained herein, specific performance with respect to
Section 10.2(b) shall not require Seller to make a false statement in the
officer’s certificate of Seller.


ARTICLE XV.

MISCELLANEOUS


Section 15.1           Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party.


Section 15.2           Governing Law; Jurisdiction;
Process.


(a)           THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF 



 32
 









TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS
OF LAW RULES THAT WOULD DIRECT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION, EXCEPT TO THE EXTENT THAT IT IS MANDATORY THAT THE LAW OF ANOTHER
JURISDICTION, WHEREIN OR ADJACENT TO WHICH THE ASSETS ARE LOCATED, SHALL APPLY.


(b)           SUBJECT
TO THE ARBITRATION AGREEMENT SET FORTH IN SECTION 15.10, BUYER CONSENTS TO
PERSONAL JURISDICTION IN ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT IN ANY COURT, FEDERAL OR STATE, WITHIN HARRIS COUNTY, TEXAS,
HAVING SUBJECT MATTER JURISDICTION AND WITH RESPECT TO ANY SUCH CLAIM, BUYER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY CLAIM, OR ANY
OBJECTION THAT BUYER MAY NOW OR HEREAFTER HAVE, THAT VENUE OR JURISDICTION IS
NOT PROPER WITH RESPECT TO ANY SUCH LEGAL ACTION, SUIT OR PROCEEDING BROUGHT IN
SUCH COURT IN HARRIS COUNTY, TEXAS, INCLUDING ANY CLAIM THAT SUCH LEGAL ACTION,
SUIT OR PROCEEDING BROUGHT IN SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM AND ANY CLAIM THAT BUYER IS NOT SUBJECT TO PERSONAL JURISDICTION OR
SERVICE OF PROCESS IN SUCH HARRIS COUNTY, TEXAS FORUM.


Section 15.3           Entire Agreement.  This Agreement (including the Confidentiality
Agreement) and the Appendices, Schedules and Exhibits hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein.


Section 15.4           Expenses.  Buyer shall be responsible for and agrees to
pay in full (i) any sales Taxes, including any penalties and interest, which
may become due and owing by reason of the transfer of the Assets to the Company
and/or the assignment of the Membership Interests to Buyer hereunder, (ii) all
transfer, stamp, documentary and similar Taxes, including any penalties and
interest, imposed on the parties hereto (or on either party) with respect to
all transfers of property contemplated pursuant to this Agreement, including
the transfer of the Assets to the Company and the assignment of the Membership
Interests to Buyer hereunder, and (iii) all recording, filing or registration
fees, including any penalties and interest, relating to the filing, recording
or registration of the Conveyance, the special governmental assignment forms
contemplated by Section 6.2 and any other instruments or documents transferring
title in or to the Assets or any part thereof from Seller to the Company
pursuant to this Agreement.  Further,
Buyer shall be responsible for and agrees to pay in full all costs and expenses
incurred by Seller (including attorney’s fees, accountant’s fees and fees of
other professionals) in connection with Seller’s undertakings to accommodate
Buyer’s request mentioned in the recitals of this Agreement, including fees and
expenses incurred in connection with the amendment and restatement of this
Agreement, the formation of the Company in Delaware and qualification of the
Company in Florida, and the preparation and modification of closing documents
contemplated herein and relating to such amendment and restatement.  All other costs and expenses incurred by each
party hereto in connection with all things required to be done by it hereunder,
including attorney’s fees, accountant’s fees and the expense of environmental
and title examination, shall be borne by the party incurring same.



 33















Section 15.5           Notices.  Unless otherwise expressly provided in this
Agreement, all notices required or permitted hereunder shall be in writing and
deemed sufficiently given for all purposes hereof if (i) delivered in person,
by courier or by registered or certified United States Mail to the Person to be
notified, with receipt obtained, or (ii) sent by telecopy, telefax or other
facsimile or electronic transmission, with “answer back” or other “advice of
receipt” obtained, in each case to the appropriate address or number as set
forth below.  Each notice shall be deemed
effective on receipt by the addressee as aforesaid; provided that, notice
received by telex, telecopy, telefax or other facsimile or electronic transmission
after 5:00 p.m. at the location of the addressee of such notice shall be deemed
received on the first Business Day following the date of such electronic
receipt.  Notices to Seller shall be
addressed as follows:


Calumet Florida, L.L.C.


c/o Vulcan
Resources Florida, Inc.


700 Louisiana,
Suite 4150


Houston, Texas
77002


Attention:   Mr. Tim Goff


Telecopy No.:
(713) 579-5110


 


or at such other address or to such other telecopy,
telefax or other facsimile or electronic transmission number and to the
attention of such other Person as Seller may designate by written notice to
Buyer.  Notices to Buyer shall be
addressed to:


BreitBurn Operating L.P.

515 S. Flower St., Suite 4800

Los Angeles, CA  90071

Attention:   Gregory C. Brown

Telecopy No.:  (213) 225-5916


or at such other address
or to such other telecopy, telefax or other facsimile or electronic
transmission number and to the attention of such other Person as Buyer may
designate by written notice to Seller.


Section 15.6           Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided,
however, that the respective rights and obligations of the parties
hereto shall not be assignable or delegable by any party hereto without the express
written consent of the non-assigning or non-delegating party.


Section 15.7           Amendments
and Waivers.  Except as contemplated
by Section 8.5, this Agreement may not be modified or amended except by an
instrument or instruments in writing signed by the party against whom
enforcement of any such modification or amendment is sought.  Any party hereto may, only by an instrument
in writing, waive compliance by another party hereto with any term or provision
of this Agreement on the part of such other party hereto to be performed or
complied with.  The waiver by any party
hereto of a breach of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.



 34
 









Section 15.8           Appendices,
Schedules and Exhibits.  All
Appendices, Schedules and Exhibits hereto which are referred to herein are
hereby made a part of this Agreement and incorporated herein by such reference.


Section 15.9           Interpretation.  It is expressly agreed that this Agreement
shall not be construed against any party, and no consideration shall be given
or presumption made, on the basis of who drafted this Agreement or any
particular provision hereof or who supplied the form of Agreement.  Each party agrees that this Agreement has been
purposefully drawn and correctly reflects its understanding of the transaction
that this Agreement contemplates.  In
construing this Agreement:


(a)           examples shall not be construed to
limit, expressly or by implication, the matter they illustrate;


(b)           the word “includes” and its
derivatives means “includes, but is not limited to” and corresponding
derivative expressions;


(c)           a defined term has its defined
meaning throughout this Agreement and each Appendix, Exhibit and Schedule to
this Agreement, regardless of whether it appears before or after the place
where it is defined;


(d)           each Exhibit and Schedule to this
Agreement is a part of this Agreement, but if there is any conflict or
inconsistency between the main body of this Agreement (including Appendix A
which shall be considered part of the main body of this Agreement) and any
Exhibit or Schedule, the provisions of the main body of this Agreement shall
prevail;


(e)           the term “cost” includes expense and
the term “expense” includes cost; and


(f)            the headings and titles herein are
for convenience only and shall have no significance in the interpretation
hereof.


Section 15.10         Arbitration.  It is agreed, as a severable and independent
arbitration agreement separately enforceable from the remainder of this
Agreement, that if the parties hereto, the Indemnified Persons or the
respective successors, assigns, heirs or legal representatives of any of the
foregoing are unable to amicably resolve any dispute or difference arising
under or out of, in relation to or in any way connected with this Agreement (whether
contractual, tortious, equitable, statutory or otherwise), such matter shall be
finally and exclusively referred to and settled by arbitration under the
Commercial Arbitration Rules of the American Arbitration Association pursuant
and subject to the arbitration procedures set forth in the Arbitration
Procedures; provided that, the foregoing shall not prevent Seller or its
Affiliates from seeking specific performance, an injunction or other equitable
relief with respect to their rights under the Confidentiality Agreement through
judicial means in any jurisdiction.  In
the event of any conflict between the Commercial Arbitration Rules of the
American Arbitration Association and the Arbitration Procedures, the Arbitration
Procedures shall govern and control.


Section 15.11         Agreement for the Parties’ Benefit
Only.  This Agreement is for the sole
benefit of Buyer, Seller and their respective successors and assigns as
permitted herein and no 



 35
 









other Person shall be entitled to enforce this
Agreement, rely on any representation, warranty, covenant or agreement
contained herein, receive any rights hereunder or be a third party beneficiary
of this Agreement.  Any Indemnified
Person which is a third party shall be indemnified and held harmless under the
terms of this Agreement only to the extent that a party expressly elects to
exercise such right of indemnity and hold harmless on behalf of such third
party Indemnified Person pursuant to Section 13.3; and no party shall have any
direct liability or obligation to any third party or be liable to any third
party for any election or non-election or any act or failure to act under or in
regard to any term of this Agreement. 
Any claim for indemnity or hold harmless hereunder on behalf of an
Indemnified Person must be made and administered by a party to this
Agreement.  Any claim on behalf of an
Indemnified Person may only be brought against the defaulting party or parties.


Section 15.12         Attorneys’
Fees.  The prevailing party in any
legal proceeding brought under or to enforce this Agreement shall be
additionally entitled to recover court costs, reasonable costs of arbitration
and reasonable attorneys’ fees from the nonprevailing party.


Section 15.13         Severability.  If any term, provision or condition of this
Agreement, or any application thereof, is held invalid, illegal or
unenforceable in any respect under any Law, this Agreement shall be reformed to
the extent necessary to conform, in each case consistent with the intention of
the parties, to such Law, and to the extent such term, provision or condition
cannot be so reformed, then such term, provision or condition (or such invalid,
illegal or unenforceable application thereof) shall be deemed deleted from (or
prohibited under) this Agreement, as the case may be, and the validity,
legality and enforceability of the remaining terms, provisions and conditions
contained herein (and any other application such term, provision or condition)
shall not in any way be affected or impaired thereby.  Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to
the extent possible.


Section 15.14         No
Recordation.  Without limiting any
party’s right to file suit to compel arbitration to enforce its rights under
this Agreement, Buyer and Seller expressly covenant and agree not to record or
place of record this Agreement or any copy or memorandum hereof.


Section 15.15         Time
of Essence.  Time is of the essence
in this Agreement.  If the date specified
in this Agreement for giving any notice or taking any action is not a Business
Day (or if the period during which any notice is required to be given or any
action taken expires on a date which is not a Business Day), then the date for
giving such notice or taking such action (and the expiration date of such
period during which notice is required to be given or action taken) shall be
the next day which is a Business Day.


Section 15.16         Confidentiality.  At the Closing Seller and Buyer shall take
(or cause to be taken) such actions as are necessary to terminate the Confidentiality
Agreement.



 36
 









IN WITNESS WHEREOF, this Agreement has been signed by
or on behalf of each of the parties as of the day first above written.


 


	
  

  	
  SELLER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CALUMET FLORIDA, L.L.C.,

  	
   

  	
   

  
	
   

  	
  a Delaware limited liability company

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Vulcan Resources Florida, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
  a Delaware corporation,

  	
   

  	
   

  
	
   

  	
   

  	
  its Sole Managing Member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Tim J. Goff

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President and
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BUYER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BREITBURN OPERATING L.P.,

  	
   

  	
   

  
	
   

  	
  a Delaware limited partnership

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BreitBurn Operating GP, LLC,

  	
   

  	
   

  
	
   

  	
   

  	
  a Delaware limited liability company,

  	
   

  	
   

  
	
   

  	
   

  	
  its General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Randall H.
  Breitenbach

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Co-Chief
  Executive Officer

  	
   

  	
   

  
								



 


 


 



 37















APPENDIX A


TO


ASSET PURCHASE AGREEMENT


DEFINITIONS


“Action” shall mean any action, suit,
proceeding, condemnation or audit by or before any court or other Governmental
Authority or any arbitration proceeding.


“Adjusted Purchase Price” shall be as defined in
Section 3.1.


“Adjustment Period” shall be as defined in
Section 3.3(a).


“Adjustment Statement” shall be as defined in
Section 3.3(a).


“Affiliate” shall mean, as to the Person
specified, any Person controlling, controlled by or under common control with such
specified Person.  The concept of
control, controlling or controlled as used in the aforesaid context means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of another, whether through the
ownership of voting securities, by contract or otherwise.  No Person shall be deemed an Affiliate of any
Person by reason of the exercise or existence of rights, interests or remedies
under this Agreement.


“Agreed Rate” shall mean an annual rate of interest
equal to the lesser of (i) eight percent (8%)  and
(ii) the maximum rate of interest allowed by Law.


“Arbitration Procedures” shall mean the
arbitration procedures set forth in Exhibit A-1.


“Assets” shall mean (i) the E & P Assets,
(ii) the Pipeline System Assets, (iii) the Office Buildings and Yard, and (iv)
all Derivatives in existence as of the Closing Date.


“Asset Records” shall mean, except to the
extent constituting Excluded Assets, and except to the extent the transfer
thereof may not be made without violating legal constraints or legal
obligations or waiving any attorney/client privilege, any and all lease files,
land files, division order files, production marketing files, well files,
production records, seismic, geological, geophysical and engineering data,
litigation files, and all other files, maps and data (in whatever form) arising
out of or relating to the Subject Interests or the ownership, use, maintenance
or operation of the Assets.


“Assignment” shall be as defined in Section
8.3.


“Business Day” shall mean any day which is not
a Saturday, Sunday or legal holiday recognized by the United States of America.


“Buyer Controlled Group” shall be as defined in
Section 8.11(a).



 A-1
 









“Buyer Indemnified Persons” shall be as defined
in Section 13.2.


“Claim Notice” shall be as defined in Section
13.3.


“Claims” shall mean all right, title and
interest of Seller to any claims to the extent attributable to ownership, use,
construction, maintenance or operation of the Assets subsequent to the
Effective Time, including, without limitation, past, present or future claims,
whether or not previously asserted by Seller, excluding, however, any claims
against Seller or any past or present Affiliate of Seller.


“Closing” shall be the consummation of the
transaction contemplated by Article X. 
The Closing with respect to part of the Assets may be delayed or
extended as provided in Section 7.2.


“Closing Date” shall mean (a) May 24, 2007; or
(b) such other date as may be mutually agreed to by Seller and Buyer.  The Closing Date with respect to part of the
Assets may also be delayed or extended as provided in Section 7.2.


“Code” shall mean the Internal Revenue Code of
1986, as amended, and any successor thereto, together with all regulations
promulgated thereunder.


“Company” shall be as defined in Section 6.1.


“Company Employees” shall be as defined in
Section 8.11(a).


“Company Liabilities” shall mean (i) all
Covered Liabilities arising out of the enforcement or assertion of any Claim
referenced in the definition of the term “E&P Assets”, all Covered
Liabilities with respect to the Royalty Accounts, title to the Assets and/or
any Permitted Encumbrances with respect to the Assets (other than Taxes
allocated to Seller  pursuant to Section
11.2), (ii) the Plugging and Abandonment Obligations, (iii) all Covered
Liabilities to the extent arising out of or attributable to the ownership, use,
construction, maintenance or operation of any of the Assets on or subsequent to
the Effective Time, (iv) any and all Environmental Liabilities and any and all
other Covered Liabilities arising out of or attributable to any Environmental
Matter with respect to the Assets or any Environmental Matter arising out of or
attributable to the ownership, use, construction, maintenance or operation of any
of the Assets before or after the Effective Time, and (v) all Covered
Liabilities arising out of or attributable to any injury, death or damage to
person or property occurring on or after the Closing Date on or to the Assets
or the Lands (or any adjacent lands or any pooled or unitized lands) or in
connection with any operations or activities relating thereto to the extent
arising out of or attributable to the use, construction, maintenance or
operation of any of the Assets before or after the Closing Date; provided that,
the Company Liabilities shall not include any Covered Liability resulting from
any breach or nonfulfillment of any representation, warranty, covenant or
agreement on the part of Seller hereunder for which Seller is obligated to
indemnify the Buyer pursuant to clause (ii) of Section 13.2.


“Confidentiality Agreement” shall be as defined
in Section 5.2.


“Continuing Employees” shall be as defined in
Section 8.11(b).



 A-2
 









“Conveyance” shall be as defined in Section
6.2.


“Covered Liabilities” shall mean any and all
debts, losses, liabilities, duties, fines, damages, claims, Taxes, costs and
expenses (including, without limitation, those arising out of any demand,
assessment, settlement, judgment or compromise relating to any actual or
threatened Action and any court costs, reasonable fees and expenses of expert
witnesses, reasonable investigative expenses, reasonable fees and disbursements
of legal counsel and other reasonable legal and investigative fees and expenses
incurred in investigating, preparing or defending any Action), matured or
unmatured, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, known or unknown, including, without limitation, any of the
foregoing arising under, out of or in connection with any Action, any order or
consent decree of any Governmental Authority, any award of any arbitrator, or
any Law, contract, commitment or undertaking.


“Data License Agreement” shall be as defined in
Section 8.13.


“Derivative” shall be as defined in Section
4.1(j)(8).


“Disputed Issues” shall be as defined in the
Arbitration Procedures.


“E & P Assets” shall mean the following
described assets and properties (except to the extent constituting Excluded
Assets):


(a)           the Subject Interests;


(b)           the Incidental Rights attributable to
the Subject Interests;


(c)           the Claims attributable to the
Subject Interests;


(d)           the Royalty Accounts; and


(e)           all (i) oil, gas and other
hydrocarbons produced from or attributable to the Subject Interests with
respect to all periods subsequent to the Effective Time and (ii) proceeds from
or of such oil, gas and other hydrocarbons.


“Effective Time” shall mean 7:00 a.m., Houston
Time, on January 1, 2007; provided that, with respect to occurrences,
prorations and allocations with respect to a particular Asset, Effective Time
shall be 7:00 a.m. at the location of such Asset on January 1, 2007.


“Election Period” shall be as defined in
Section 13.3.


“Environmental Laws” shall mean all Laws
relating to (a) the control of any potential pollutant or Hazardous Materials,
or protection of the air, water or land or other natural resources, (b) solid,
gaseous or liquid waste generation, handling, treatment, storage, disposal or
transportation, and (c) exposure to hazardous, toxic or other substances
alleged to be harmful, or Hazardous Materials. 
“Environmental Laws” shall include, but are not limited to, the Clean
Air Act, the Clean Water Act, the Resource Conservation Recovery Act, the
Superfund Amendments 



 A-3
 









and Reauthorization Act, the Toxic Substances Control
Act, the Safe Drinking Water Act, and CERCLA and shall also include all state,
local and municipal Laws dealing with the subject matter of the above listed
Federal statutes or promulgated by any governmental or quasi-governmental
agency thereunder in order to carry out the purposes of any Federal, state,
local or municipal Law.


“Environmental Liabilities” shall mean any and
all costs (including costs of remediation), damages, settlements, expenses,
penalties, fines, taxes, prejudgment and post-judgment interest, court costs
and attorneys’ fees incurred or imposed (i) pursuant to any order, notice of
responsibility, directive (including requirements embodied in Environmental
Laws), injunction, judgment or similar act (including settlements) by any
Governmental Authority to the extent arising out of or under Environmental Laws
(excluding any claim or cause of action of Buyer or any Affiliate of Buyer) or
(ii) pursuant to any claim or cause of action by a Governmental Authority or
other third Person (other than Buyer and any Affiliate of Buyer) for personal
injury, property damage, damage to natural resources, remediation or response
costs to the extent arising out of or attributable to any violation of, or any
remedial obligation under, any Environmental Law.


“Environmental Matters” shall mean (i) any
order, decree, notice of responsibility, directive (including requirements
embodied in Environmental Laws), injunction, judgment or similar act (including
settlements) by any Governmental Authority arising out of or under any
Environmental Laws or (ii) pursuant to any claim or cause of action by a
Governmental Authority or other Person for personal injury, property damage,
damage to natural resources, remediation or response costs arising out of or
attributable to any Hazardous Materials or any violation of, or any remedial
obligation under, any Environmental Law.


“Excluded Assets” shall mean the following:


(a)           the right to retain copies (but not
the originals) of all Asset Records;


(b)           except to the extent constituting the
Royalty Accounts, all deposits, cash, checks, funds and accounts receivable
attributable to Seller’s interests in the Assets with respect to any period of
time prior to the Effective Time;


(c)           all (i) oil, gas and other
hydrocarbons produced from or attributable to the Subject Interests with
respect to all periods prior to the Effective Time, (ii) oil, gas and other
hydrocarbons attributable to the Subject Interests which, at the Effective
Time, are in storage, within processing plants, in pipelines or otherwise held
in inventory, and (iii) proceeds from or of such oil, gas and other
hydrocarbons;


(d)           any interests, properties and assets
which Seller elects to exclude from the Assets pursuant to Section 8.2(c)(2),
in each case together with a pro rata share of all applicable Incidental
Rights, oil, gas and other minerals, and other 



 A-4
 









assets attributable or appurtenant thereto which are
excluded from the Assets in connection therewith;


(e)           all receivables and cash proceeds
which were expressly taken into account and for which credit was given in the
determination of Net Cash Flow pursuant to Section 3.3, as adjusted pursuant to
Section 3.4;


(f)            claims of Seller for refund of or
loss carry forwards with respect to (i) Taxes attributable to any period prior
to the Effective Time or (ii) any Taxes attributable to the Excluded Assets;


(g)           all corporate, financial, tax and
legal records of Seller;


(h)           all rights, interests, assets and
properties, including the seismic, geological, geophysical, engineering and
other data, files and records, described in Schedule
A-2;


(i)            except as otherwise provided in
Section 8.9, all rights, titles, claims and interests of Seller or any
Affiliate of Seller (i) under any policy or agreement of insurance, (ii) under
any bond, or (iii) to any insurance or condemnation proceeds or awards;


(j)            all computer or communications
software or intellectual property (including tapes, data and program
documentation and all tangible manifestations and technical information
relating thereto) owned, licensed or used by Seller; and


(k)           any logo, service mark, copyright,
trade name or trademark of or associated with Seller or any Affiliate of Seller
or any business of Seller or of any Affiliate of Seller.


“Excluded Liabilities” shall mean (i) any and
all Covered Liabilities to the extent arising out of or attributable to the
ownership, use, construction, maintenance or operation of the Excluded Assets,
(ii) any and all Covered Liabilities arising out of or attributable to any
injury, death or damage to person or property occurring prior to the Closing
Date to the extent arising out of or attributable to the use, construction,
maintenance or operation of the Assets by Seller prior to the Closing Date,
(iii) any and all Covered Liabilities to the extent arising out of or
attributable to the disposal prior to the Effective Time, by Seller or any
Person engaged by Seller, of Hazardous Materials resulting from the operation
of the Assets at locations other than the properties comprising the Assets,
(iv) fines, penalties and sanctions asserted or levied by any Governmental
Authority and arising out of the ownership, use, maintenance or operation of
the Assets prior to the Effective Time, and (v) any and all claims, demands and
actions, and related liabilities and obligations, for the non-payment,
underpayment, or miscalculation of royalties, overriding royalties, Taxes and
similar items attributable to the production of oil, gas and other hydrocarbons
from the Assets prior to the Effective Time, in each case excluding any Covered
Liability which any Buyer Indemnified Person or any Affiliate thereof may have
without regard to the Company’s acquisition of the Assets from Seller and Buyer’s
acquisition of the Membership Interests from Seller.



 A-5















“Final Adjustment Statement” shall be as
defined in Section 3.4.


“Governmental Authority” shall mean (i) the
United States of America, (ii) any state, county, municipality or other
governmental subdivision within the United States of America, and
(iii) any court or any governmental department, commission, board, bureau,
agency or other instrumentality of the United States of America or of any
state, county, municipality or other governmental subdivision within the United
States of America.


“Hazardous Materials” shall mean any
explosives, radioactive materials, asbestos material, urea formaldehyde,
hydrocarbon contaminants, underground tanks, pollutants, contaminants,
hazardous, corrosive or toxic substances, special waste or waste of any kind,
including compounds known as chlorobiophenyls and any material or substance the
storage, manufacture, disposal, treatment, generation, use, transport,
mediation or release into the environment of which is prohibited, controlled,
regulated or licensed under Environmental Laws, including, but not limited to,
(i) all “hazardous substances” as that term is defined in Section 101(14)
of the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, and (ii) petroleum and petroleum products.


“Hydrocarbon Interests” shall mean (a) mineral
servitudes and leases affecting, relating to or covering any oil, gas and other
hydrocarbons in place and the leasehold interests and estates in the nature of
working or operating interests under such leases, as well as overriding
royalties, net profits interests, production payments, carried interests,
rights of recoupment and other interests in, under or relating to such leases,
(b) fee interests in oil, gas or other hydrocarbons in place,
(c) royalty interests in oil, gas or other hydrocarbons in place,
(d) any other interest in oil, gas or other hydrocarbons in place,
(e) any economic or contractual rights, options or interests in and to any
of the foregoing, including, without limitation, any sublease, farmout or farmin
agreement or production payment affecting any interest or estate in oil, gas or
other hydrocarbons in place, and (f) any and all rights and interests
attributable or allocable thereto by virtue of any pooling, unitization,
communitization, production sharing or similar agreement, order or declaration.


“Incidental Rights” shall mean, with respect to
the E & P Assets, all right, title and interest of Seller in and to or
derived from the following insofar as the same are attributable to the Subject
Interests:  (a) all rights with respect
to the use and occupancy of the surface of and the subsurface depths under the
Lands; (b) all rights with respect to any pooled, communitized or unitized
acreage by virtue of any Subject Interest being a part thereof; (c) all
agreements and contracts, easements, rights-of-way, servitudes and other
estates; and (d) all real and personal property located upon the Lands and
used in connection with the exploration, development or operation of the
Subject Interests; and (e) the Asset Records relating to the Subject
Interests.  “Incidental Rights”
shall mean, with respect to the Pipeline System Assets, all right, title and
interest of Seller in and to or derived from the following insofar as the same
are attributable to the Pipeline System: (a) all gathering agreements,
equipment leases, operating, service or maintenance agreements and other
agreements entered into or used primarily in connection with, or otherwise
pertaining primarily to, the ownership or operation of the Pipeline System and
(b) the Asset Records relating to the Pipeline System.


“Indemnified Claim” shall be as defined in
Section 13.3.



 A-6
 









“Indemnified Person” shall be as defined in
Section 13.3.


“Indemnified Transfer Tax Claim” shall be as
defined in Section 13.3(g).


“Indemnifying Party” shall be as defined n
Section 13.3.


“Initial Adjusted Purchase Price” shall be as
defined in Section 3.1.


“Initial Adjustment Amount” shall be as defined
in Section 3.3(a).


“Joint Development and AMI Agreement” shall be
as defined in Section 8.12.


“knowledge” shall mean the actual knowledge
(excluding any imputed or implied knowledge) of any fact, circumstance or
condition by a current officer or manager of the party involved.


“Lands” shall mean the lands covered by or
subject to the Subject Interests.


“Law” shall mean any applicable statute, law
(including common law), ordinance, regulation, rule, ruling, order, writ,
injunction, decree or other official act of or by any Governmental Authority.


“Material Adverse Effect” shall mean a material
adverse effect on the value of the Assets (taken as a whole and after taking
into account any insurance, indemnity and other recoveries payable in respect
thereof), excluding any effect resulting from any change in economic, industry
or market conditions (whether general or regional in nature or limited to any
area where any Assets are located) or from any change in Law or regulatory
policy.


“Membership Interests” shall be as defined in
Section 2.1.


“Net Cash Flow” shall be as defined in Section
3.3(c).


“Net Revenue Interest” shall mean an interest
(expressed as a percentage or decimal fraction) in and to all oil and gas
produced and saved from or attributable to a Property Subdivision.


“Office Buildings and Yard” shall mean the real
property constituting the “Office Buildings and Yard” as described in Part III
of the Schedule A-1.


“Operations and Proceeds Agreement” shall be as
defined in Section 7.2.


“Original Agreement” shall be as defined in the
recitals of this Agreement.


“Permitted Encumbrances” shall mean any of the
following matters:


(a)           all agreements, instruments,
documents, liens, encumbrances, and other matters which are described in Schedule A-3 or any other Schedule
or Exhibit to this Agreement;



 A-7
 









(b)           any (i) inchoate liens or charges
constituting or securing the payment of expenses which were incurred incidental
to maintenance, development, production or operation of the Assets or for the
purpose of developing, producing or processing oil, gas or other hydrocarbons
therefrom or therein and (ii) materialman’s, mechanics’, repairman’s,
employees’, contractors’, operators’ or other similar liens, security interests
or charges for liquidated amounts arising in the ordinary course of business
incidental to construction, maintenance, development, production or operation
of the Assets or the production or processing of oil, gas or other hydrocarbons
therefrom, that are not delinquent and that will be paid in the ordinary course
of business or, if delinquent, that are being contested in good faith;


(c)           any liens for Taxes not yet
delinquent or, if delinquent, that are being contested in good faith in the
ordinary course of business;


(d)           any liens or security interests
created by Law or reserved in oil, gas and/or mineral leases for royalty, bonus
or rental or for compliance with the terms of the Subject Interests;


(e)           except as otherwise specifically
provided for in the Agreement, all Transfer Requirements;


(f)            any easements, rights-of-way,
servitudes, permits, licenses, surface leases and other rights with respect to
operations to the extent such matters do not interfere in any material respect
with Seller’s operation of the portion of the Assets burdened thereby;


(g)           all agreements and obligations
relating to (1) imbalances with respect to the production, gathering,
transportation or processing of gas, (2) calls or purchase options on oil,
gas or other minerals exercisable at current fair market prices or the posted
prices of such purchaser, or (3) processing rights or commitments, in the
case of clauses (2) and (3) preceding to the extent the same are disclosed in
any Schedule or Exhibit to this Agreement;


(h)           all royalties, overriding royalties,
net profits interests, carried interests, reversionary interests and other
burdens to the extent that the net cumulative effect of such burdens, as to a
particular Property Subdivision, does not operate to reduce the Net Revenue
Interest of Seller in such Property Subdivision as specified in the Property
Schedule or increase the Working Interest of Seller in such Property
Subdivision as specified in the Property Schedule;


(i)            all obligations by virtue of a
prepayment, advance payment or similar arrangement under any contract for the
sale of gas production, including by virtue of “take-or-pay” or similar
provisions, to deliver gas produced from or attributable to the Subject
Interests after the Effective Time without then or 



 A-8
 









thereafter being entitled to receive full payment
therefor, in each case to the extent the same are disclosed in any Schedule or
Exhibit to this Agreement;


(j)            all liens, charges, encumbrances,
contracts, agreements, instruments, obligations, defects, irregularities and
other matters affecting any Asset which individually or in the aggregate are
not such as to interfere materially with the operation, value or use of such
Asset or increase the Working Interest of Seller in such Property Subdivision
as specified in the Property Schedule;


(k)           rights reserved to or vested in any
Governmental Authority to control or regulate any of the wells or units or
other properties  included in the Assets
and all applicable laws, rules, regulations and orders of such authorities so
long as the same do not decrease Seller’s Net Revenue Interest below the Net
Revenue Interest shown in the Property Schedule or increase the Working
Interest of Seller in such Property Subdivision as specified in the Property
Schedule;


(l)            the terms and conditions of all
contracts and agreements relating to the Subject Interests, including, without
limitation, exploration agreements, gas sales contracts, processing agreements,
farmins, farmouts, operating agreements, area of mutual interest agreements,
and right-of-way agreements, to the extent such terms and conditions do not
decrease Seller’s Net Revenue Interest below the Net Revenue Interest shown in
the Property Schedule or increase the Working Interest of Seller in such
Property Subdivision as specified in the Property Schedule;


(m)          rights of reassignment requiring
notice and/or the reassignment (or granting an opportunity to receive a
reassignment) of a leasehold interest to the holders of such reassignment
rights prior to surrendering or releasing such leasehold interest; and


(n)           all consents and approvals of or
filings with applicable Governmental Authorities in connection with assignments
of the Subject Interests or Membership Interests as contemplated by Section
7.2.


“Person” shall mean any Governmental Authority
or any individual, firm, partnership, corporation, association, joint venture,
trust, unincorporated organization or other entity or organization.


“Pipeline System” shall mean the oil pipeline
system known as the 23 mile Raccoon Point Pipeline located in Collier and
Broward Counties, Florida, as more particularly described in Part II of Schedule A-1, including, without
limitation the following described assets and properties (except to the extent
constituting Excluded Assets):


(a) those certain
rights-of-way, easements, fee interests, leasehold interests, property rights
and other rights and interests in land created by the conveyances, deeds,
leases and other instruments listed in Part II of Schedule
A-1, 



 A-9
 









and all the rights, interests and privileges granted
by such instruments or reserved to Seller (or Seller’s predecessors in title)
in such instruments;


(b) those certain servitudes,
permits, licenses, franchises, certificates, orders, approvals, authorizations
and similar rights and privileges described in Part II of Schedule
A-1 and having been secured in connection with the herein
described oil pipeline system from private agencies or Governmental
Authorities;


(c) all of Seller’s
rights, titles and interests in and to all other rights-of-way, easements,
servitudes, permits, licenses, franchises, certificates, orders, approvals,
authorizations and similar rights and privileges of every kind and nature
acquired, used or useful for or in connection with, or otherwise pertaining to,
the ownership or operation of , or the transportation, measurement, metering,
treatment, or other handling of oil, gas and other hydrocarbons in the pipeline
system and related facilities described in paragraph (d) below;


(d) those certain
pipelines and all appurtenances thereto situated upon, over and across the
aforesaid rights-of-way, easements, fee interests, leasehold interests,
property rights and other rights and interests in land depicted or described in
said Part II of Schedule A-1
and any other facilities for the transportation, measurement, treatment or
other handling of hydrocarbons in connection with said pipelines; and


(e) all pipe, valves,
compressors, generators, motors, gauges, meters and other measuring equipment,
power lines, fuel lines, improvements, fittings, fixtures, machinery and
equipment incorporated or installed in the above-described pipelines.


“Pipeline System Assets” shall mean the
following described assets and properties (except to the extent constituting
Excluded Assets):


(a)           the Pipeline System;


(b)           the Incidental Rights attributable to
the Pipeline System; and


(c)           the Claims attributable to the
Pipeline System.


“Plugging and Abandonment Obligations” shall
mean any and all Covered Liabilities arising out of or attributable to the
plugging, abandonment or removal, or any obligation to plug, abandon or remove,
any well, platform, pipeline, facilities, equipment, fixtures or other property
described or referenced in the Property Schedule or located on the Assets which
as of the Effective Time has not been plugged, abandoned and removed in
accordance with the terms of the Subject Interests and all Laws applicable
thereto, but excluding any such Covered Liabilities for which Seller is
obligated to indemnify Buyer pursuant to Section 13.2.


“Preference Right” shall mean any right or
agreement that enables or may enable any Person to purchase or acquire any
Asset or any interest therein or portion thereof as a result of or 



 A-10
 









in connection with (i) the sale, assignment,
encumbrance or other transfer of any Asset or any interest therein or portion
thereof or (ii) the execution or delivery of this Agreement or the
consummation or performance of the terms and conditions contemplated by this
Agreement.


“Property Schedule” means Schedule
A-1 attached to and made a part of this Agreement.


“Property Subdivision” means each well, well
completion, multiple well completion, unit, lease or other subdivision of
property described or referenced in the Property Schedule.


“Purchase Price” shall be as defined in Section
3.1.


“Representatives” shall be as defined in
Section 8.14(a).


“Reserve Report” shall mean that certain
reserve report dated February 2, 2006, prepared by Netherland, Sewell &
Associates, Inc., with respect to the Subject Interests as of December 31,
2005.


“Rights-of-Way” shall mean, with respect to the
Pipeline System, those certain rights, interests and privileges described in paragraph
(a) of the definition of Pipeline System set forth in this Appendix
A.


“Royalty Accounts” shall mean those separately
identifiable accounts (and all monies contained therein) which are expressly
identified and set forth in Schedule A-4
in which Seller or any third party operator is holding as of the Effective Time
monies which (i) are owing to third party owners of royalty, overriding
royalty, working or other interests in respect of past production of oil, gas
or other hydrocarbons attributable to the E & P Assets or (ii) may be
subject to refund by royalty owners or other third parties to purchasers of
past production of oil, gas or other hydrocarbons attributable to the
E & P Assets.


“Seller Indemnified Persons” shall be as
defined in Section 13.1.


“Subject Interests” shall mean and include
(i) the undivided interests specified in the Property Schedule in, to or
under the Hydrocarbon Interests specifically described in the Property
Schedule, and (ii) all other interests of Seller in, to or under any
Hydrocarbon Interests in, to or under or derived from any lands covered by or
subject to any of the Hydrocarbon Interests described in the Property Schedule,
even though such interests of Seller may be incorrectly described or referred
to in, or a description thereof may be omitted from, the Property Schedule,
excluding any interests which become Excluded Assets.


“Tax” shall mean any federal, state and local
tax or similar assessment or fee, together with all interest, fines, penalties
and additions thereto.


“Transfer Requirement” shall mean any consent,
approval, authorization or permit of, or filing with or notification to, any
Person which is required to be obtained, made or complied with for or in
connection with any sale, assignment, transfer or encumbrance of any Asset or
any interest therein, or any sale, assignment, transfer or encumbrance of the
Membership Interests, other than any consent or approval of or filing with any
Governmental Authority in connection 



 A-11
 









with the assignment of any Subject Interest or
Membership Interests as contemplated by Section 7.2.


“Transition Agreement” shall be as defined in
Section 8.10.


“Transition Termination Date” shall be as
defined in Section 8.11(a).


“Working Interest” shall mean the percentage of
costs and expenses attributable to the maintenance, development and operation
of a Property Subdivision.



 A-12