Exhibit
10.1


Execution
Version


 


PURCHASE AND SALE
AGREEMENT


BETWEEN


EQUITABLE
PRODUCTION COMPANY


AS SELLER,


AND


PINE MOUNTAIN OIL
AND GAS, INC.


AS PURCHASER,


 


Dated as of April
13, 2007
















TABLE OF CONTENTS


	
  

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE 1 PURCHASE AND SALE

  	
  1

  
	
  Section
  1.1

  	
  Purchase and Sale

  	
  1

  
	
  Section
  1.2

  	
  Combined Assets

  	
  1

  
	
  Section
  1.3

  	
  Excluded Assets

  	
  3

  
	
  Section
  1.4

  	
  Certain Definitions

  	
  3

  
	
  Section
  1.5

  	
  Effective Time; Proration of Costs and Revenues

  	
  8

  
	
  Section
  1.6

  	
  Back-In Interests

  	
  9

  
	
  Section
  1.7

  	
  Pre-Effective Time Interests and Assets

  	
  9

  
	
  Section
  1.8

  	
  Intentions of the Parties

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 PURCHASE PRICE

  	
  10

  
	
  Section
  2.1

  	
  Purchase Price

  	
  10

  
	
  Section
  2.2

  	
  Adjustments to Purchase Price

  	
  11

  
	
  Section
  2.3

  	
  Effect of Purchase Price Adjustments

  	
  12

  
	
  Section
  2.4

  	
  Allocation of Purchase Price

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 TITLE MATTERS

  	
  12

  
	
  Section
  3.1

  	
  Title

  	
  12

  
	
  Section
  3.2

  	
  Definition of Defensible Title

  	
  13

  
	
  Section
  3.3

  	
  Definition of Permitted Encumbrances

  	
  14

  
	
  Section
  3.4

  	
  Notice of Asserted Title Defects; Defect
  Adjustments

  	
  15

  
	
  Section
  3.5

  	
  Consents to Assignment and Preferential Rights
  to Purchase

  	
  19

  
	
  Section
  3.6

  	
  Casualty or Condemnation Loss

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
  SELLER

  	
  20

  
	
  Section
  4.1

  	
  Disclaimers

  	
  20

  
	
  Section
  4.2

  	
  Seller

  	
  22

  
	
  Section
  4.3

  	
  Liability for Brokers’ Fees

  	
  23

  
	
  Section
  4.4

  	
  Consents, Approvals or Waivers

  	
  23

  
	
  Section
  4.5

  	
  Litigation

  	
  23

  
	
  Section
  4.6

  	
  Taxes

  	
  23

  
	
  Section
  4.7

  	
  Environmental Laws

  	
  24

  
	
  Section
  4.8

  	
  Compliance with Laws

  	
  24

  
	
  Section
  4.9

  	
  Contracts

  	
  24

  
	
  Section
  4.10

  	
  Payments for Production

  	
  24

  
	
  Section
  4.11

  	
  Production Imbalances

  	
  24

  
	
  Section
  4.12

  	
  Permits, etc.

  	
  24

  
	
  Section
  4.13

  	
  Outstanding Capital Commitments

  	
  25

  
	
  Section
  4.14

  	
  Plugging and Abandonment

  	
  25

  
	
  Section
  4.15

  	
  Condition of Equipment, etc.

  	
  25

  
	
  Section
  4.16

  	
  Payments of Royalties and Expenses

  	
  25

  



 



 i
 









 


	
  Section 4.17

  	
  Suspense

  	
  26

  
	
  Section
  4.18

  	
  Absence of Certain Events

  	
  26

  
	
  Section
  4.19

  	
  Information

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF
  PURCHASER

  	
  26

  
	
  Section
  5.1

  	
  Existence and Qualification

  	
  26

  
	
  Section
  5.2

  	
  Power

  	
  26

  
	
  Section
  5.3

  	
  Authorization and Enforceability

  	
  26

  
	
  Section
  5.4

  	
  No Conflicts

  	
  26

  
	
  Section
  5.5

  	
  Liability for Brokers’ Fees

  	
  27

  
	
  Section
  5.6

  	
  Consents, Approvals or Waivers

  	
  27

  
	
  Section
  5.7

  	
  Litigation

  	
  27

  
	
  Section
  5.8

  	
  Financing

  	
  27

  
	
  Section
  5.9

  	
  Qualification

  	
  27

  
	
  Section
  5.10

  	
  No Top Leases

  	
  27

  
	
  Section
  5.11

  	
  Independent Investigation

  	
  27

  
	
  Section
  5.12

  	
  Seller Information

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6 COVENANTS OF THE PARTIES

  	
  28

  
	
  Section
  6.1

  	
  Access

  	
  28

  
	
  Section
  6.2

  	
  Indemnity Regarding Access

  	
  28

  
	
  Section
  6.3

  	
  Pre-Closing Notifications

  	
  28

  
	
  Section
  6.4

  	
  Confidentiality; Public Announcements

  	
  29

  
	
  Section
  6.5

  	
  Governmental Reviews

  	
  30

  
	
  Section
  6.6

  	
  Tax Matters

  	
  30

  
	
  Section
  6.7

  	
  Further Assurances

  	
  32

  
	
  Section
  6.8

  	
  Assumption of Obligations

  	
  32

  
	
  Section
  6.9

  	
  Like-Kind Exchange

  	
  32

  
	
  Section
  6.10

  	
  Operation of Assets

  	
  32

  
	
  Section
  6.11

  	
  Financial Information

  	
  33

  
	
  Section
  6.12

  	
  No Merger of Interests

  	
  33

  
	
  Section
  6.13

  	
  Waiver of Condition for Pittston Litigation

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 CONDITIONS TO CLOSING

  	
  35

  
	
  Section
  7.1

  	
  Conditions of Seller to Closing

  	
  35

  
	
  Section
  7.2

  	
  Conditions of Purchaser to Closing

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 CLOSING

  	
  37

  
	
  Section
  8.1

  	
  Time and Place of Closing

  	
  37

  
	
  Section
  8.2

  	
  Closing Deliveries of Seller

  	
  37

  
	
  Section
  8.3

  	
  Closing Deliveries of Purchaser

  	
  38

  
	
  Section
  8.4

  	
  Closing Payment and Post-Closing Purchase Price
  Adjustments

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 TERMINATION AND AMENDMENT

  	
  40

  
	
  Section
  9.1

  	
  Termination

  	
  40

  
	
  Section
  9.2

  	
  Effect of Termination

  	
  41

  



 



 ii
 









 


	
  ARTICLE 10 INDEMNIFICATIONS; LIMITATIONS

  	
  41

  
	
  Section
  10.1

  	
  Indemnification

  	
  41

  
	
  Section
  10.2

  	
  Indemnification Actions

  	
  43

  
	
  Section
  10.3

  	
  Limitation on Actions

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 MISCELLANEOUS

  	
  46

  
	
  Section
  11.1

  	
  Receipts

  	
  46

  
	
  Section
  11.2

  	
  Property Costs and Gathering Charges

  	
  47

  
	
  Section
  11.3

  	
  Counterparts

  	
  47

  
	
  Section
  11.4

  	
  Notices

  	
  47

  
	
  Section
  11.5

  	
  [Intentionally Omitted]

  	
  48

  
	
  Section
  11.6

  	
  Expenses

  	
  48

  
	
  Section
  11.7

  	
  [Intentionally Omitted]

  	
  48

  
	
  Section
  11.8

  	
  Governing Law; Jurisdiction; Court Proceedings

  	
  48

  
	
  Section
  11.9

  	
  Records

  	
  48

  
	
  Section
  11.10

  	
  Captions

  	
  48

  
	
  Section
  11.11

  	
  Waivers

  	
  48

  
	
  Section
  11.12

  	
  Assignment

  	
  49

  
	
  Section
  11.13

  	
  Entire Agreement

  	
  49

  
	
  Section
  11.14

  	
  Amendment

  	
  49

  
	
  Section
  11.15

  	
  No Third Person Beneficiaries

  	
  49

  
	
  Section
  11.16

  	
  References

  	
  49

  
	
  Section
  11.17

  	
  Construction

  	
  50

  
	
  Section
  11.18

  	
  Limitation on Damages

  	
  50

  
	
  Section
  11.19

  	
  Attorney’s Fees

  	
  50

  
	
  Section
  11.20

  	
  EPC Lease

  	
  50

  



 



 iii
 









EXHIBITS:


	
  Exhibit A-1

  	
  Leases

  
	
  Exhibit A-2

  	
  Wells

  
	
  Exhibit A-3

  	
  Contracts

  
	
  Exhibit A-4

  	
  Water Disposal Wells; Other Excluded Assets

  
	
  Exhibit A-5

  	
  Delinquent Liens for Current Taxes or Assessments

  
	
  Exhibit A-6

  	
  Delinquent Liens Arising in the Ordinary Course of
  Business

  
	
  Exhibit A-7

  	
  Calls on Production Under Existing Contracts

  
	
  Exhibit B

  	
  Form of Conveyance

  
	
  Exhibit C

  	
  Form of New Lease

  
	
  Exhibit D

  	
  Form of Operating Agreement

  
	
  Exhibit E

  	
  Form of Settlement Agreement

  
	
  Exhibit F

  	
  Form of Termination Agreement

  
	
  Exhibit G

  	
  Permitted Encumbrances

  
	
  Exhibit H

  	
  Seller Guaranty

  
	
  Exhibit I

  	
  Purchaser Guaranty

  
	
  Exhibit J

  	
  Form of EPC Lease

  



 


SCHEDULES:


 


	
  Schedule 2.4

  	
  Allocated Values

  
	
  Schedule 4.2(d)

  	
  Conflicts (Seller)

  
	
  Schedule 4.4

  	
  Consents, Approvals or Waivers (Seller)

  
	
  Schedule 4.5A

  	
  Litigation

  
	
  Schedule 4.5B

  	
  Litigation

  
	
  Schedule 4.6

  	
  Taxes and Assessments

  
	
  Schedule 4.8

  	
  Compliance with Laws

  
	
  Schedule 4.9

  	
  Contracts

  
	
  Schedule 4.10

  	
  Payments for Production

  
	
  Schedule 4.11

  	
  Production Imbalances

  
	
  Schedule 4.12

  	
  Governmental Permits

  
	
  Schedule 4.13

  	
  Outstanding Capital Commitments

  
	
  Schedule 4.14

  	
  Plugged or Abandoned Wells

  
	
  Schedule 4.15

  	
  Condition of Equipment, etc.

  
	
  Schedule 4.17

  	
  Suspense Funds

  
	
  Schedule 4.18

  	
  Casualty Events

  
	
  Schedule 6.10

  	
  Operation of Assets and Expenses Associated
  Therewith

  



 



 iv
 









Index of Defined Terms


	
  Defined Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Adjusted Purchase Price

  	
   

  	
  Section 2.2

  
	
  Affiliate

  	
   

  	
  Section 1.4(a)

  
	
  Agreed Interest Rate

  	
   

  	
  Section 1.4(b)

  
	
  Agreement

  	
   

  	
  Preamble

  
	
  Allocated Value

  	
   

  	
  Section 2.4

  
	
  AMI

  	
   

  	
  Section 1.4(c)

  
	
  Asserted Title Defect

  	
   

  	
  Section 3.2

  
	
  Asserted Title Defect Amount

  	
   

  	
  Section 3.4(c)

  
	
  Assets

  	
   

  	
  Section 1.7

  
	
  Business Day

  	
   

  	
  Section 1.4(d)

  
	
  Chosen Court

  	
   

  	
  Section 11.8

  
	
  Claim

  	
   

  	
  Section 10.2(b)

  
	
  Claim Notice

  	
   

  	
  Section 10.2(b)

  
	
  Closing

  	
   

  	
  Section 8.1

  
	
  Closing Date

  	
   

  	
  Section 8.1

  
	
  Closing Payment

  	
   

  	
  Section 8.4(a)

  
	
  Code

  	
   

  	
  Section 2.4

  
	
  Combined Assets

  	
   

  	
  Section 1.2

  
	
  Company

  	
   

  	
  Section 1.4(e)

  
	
  Consents

  	
   

  	
  Section 4.4

  
	
  Contracts

  	
   

  	
  Section 1.2(b)(ii)

  
	
  Contribution Agreement

  	
   

  	
  Section 7.1(c)

  
	
  Conveyance

  	
   

  	
  Section 8.2(a)

  
	
  Conveyed Lease Interests

  	
   

  	
  Section 1.2(a)

  
	
  Damages

  	
   

  	
  Section 10.1(d)

  
	
  Defensible Title

  	
   

  	
  Section 3.2

  
	
  Earned

  	
   

  	
  Section 1.5(b)

  
	
  Effective Time

  	
   

  	
  Section 2.2(a)

  
	
  Encumbrance

  	
   

  	
  Section 3.2

  
	
  Environmental Laws

  	
   

  	
  Section 4.7

  
	
  EPC Lease

  	
   

  	
  Section 1.4(f)

  
	
  Equipment

  	
   

  	
  Section 1.2(b)(iv)

  
	
  Event

  	
   

  	
  Section 4.1(d)

  
	
  Exchange Act

  	
   

  	
  Section 1.4(f)

  
	
  Excluded Assets

  	
   

  	
  Section 1.3

  
	
  Execution Date

  	
   

  	
  Preamble

  
	
  Existing JOA

  	
   

  	
  Section 1.4(h)

  
	
  Exploration Agreement

  	
   

  	
  Section 1.4(i)

  
	
  Exploration Agreement PMOG Area

  	
   

  	
  Section 1.4(j)

  
	
  Future Well

  	
   

  	
  Section 1.4(k)

  
	
  Gas Retention Percentage

  	
   

  	
  Section 1.4(l)

  
	
  Gathering Agreement

  	
   

  	
  Section 1.4(m)

  



 



 v
 









 


	
  Gathering Assets

  	
   

  	
  Section 1.4(n)

  
	
  Gathering Charges

  	
   

  	
  Section 1.4(o)

  
	
  Governmental Authority

  	
   

  	
  Section 1.4(p)

  
	
  Governmental Permits

  	
   

  	
  Section 4.12

  
	
  Hydrocarbons

  	
   

  	
  Section 1.4(q)

  
	
  Incurred

  	
   

  	
  Section 1.5(b)

  
	
  Indemnified Person

  	
   

  	
  Section 10.2(a)

  
	
  Indemnifying Person

  	
   

  	
  Section 10.2(a)

  
	
  LACT

  	
   

  	
  Section 1.4(r)

  
	
  Laws

  	
   

  	
  Section 1.4(s)

  
	
  Leases

  	
   

  	
  Section 1.2(a)

  
	
  Letter of Intent

  	
   

  	
  Section 11.13

  
	
  Like-Kind Exchange

  	
   

  	
  Section 6.9

  
	
  Material Adverse Effect

  	
   

  	
  Section 4.1(d)

  
	
  New Lease

  	
   

  	
  Section 1.7

  
	
  Non-PM Assets

  	
   

  	
  Section 1.4(t)

  
	
  Operating Agreement

  	
   

  	
  Section 8.2(e)

  
	
  Original Lease

  	
   

  	
  Section 1.4(u)

  
	
  Party; Parties

  	
   

  	
  Preamble

  
	
  Party Lawsuit

  	
   

  	
  Section 7.1(e)

  
	
  Permitted Encumbrances

  	
   

  	
  Section 3.3

  
	
  Person

  	
   

  	
  Section 1.4(v)

  
	
  Pittston

  	
   

  	
  Section 6.13(a)

  
	
  Pittston Claims

  	
   

  	
  Section 6.13(a)

  
	
  Pittston Litigation

  	
   

  	
  Section 7.1(e)(ii)

  
	
  PM Assets

  	
   

  	
  Section 1.4(w)

  
	
  PM Undeveloped Lease Interests

  	
   

  	
  Section 1.4(x)

  
	
  PM Wells

  	
   

  	
  Section 1.4(y)

  
	
  Pre-Closing Taxable Period

  	
   

  	
  Section 6.6(c)

  
	
  Pre-Effective Time Interests

  	
   

  	
  Section 1.7

  
	
  Preferential Rights

  	
   

  	
  Section 4.4

  
	
  Production Taxes

  	
   

  	
  Section 1.4(z)

  
	
  Properties

  	
   

  	
  Section 1.2(b)(i)

  
	
  Property Costs

  	
   

  	
  Section 1.5(c)

  
	
  Proration Unit

  	
   

  	
  Section 1.4(aa)

  
	
  Purchaser Indemnified Persons

  	
   

  	
  Section 10.1

  
	
  Purchase Price

  	
   

  	
  Section 2.1

  
	
  Purchaser

  	
   

  	
  Preamble

  
	
  Purchaser Successors

  	
   

  	
  Section 1.2(a)

  
	
  Records

  	
   

  	
  Section 1.4(bb)

  
	
  Review Well

  	
   

  	
  Section 1.4(cc)

  
	
  Scheduled Transfer Requirements

  	
   

  	
  Section 4.4(a)

  
	
  SEC

  	
   

  	
  Section 1.4(dd)

  
	
  Securities Act

  	
   

  	
  Section 1.4(ee)

  
	
  Seller

  	
   

  	
  Preamble

  
	
  Seller Indemnified Persons

  	
   

  	
  Section 10.1

  



 



 vi
 









 


	
  Seller’s knowledge

  	
   

  	
  Section 4.1(c)

  
	
  Statements of Revenues and Expenses

  	
   

  	
  Section 6.11

  
	
  Straddle Taxable Period

  	
   

  	
  Section 6.6(c)

  
	
  Tax

  	
   

  	
  Section 1.4(ff)

  
	
  Tax Return

  	
   

  	
  Section 1.4(gg)

  
	
  Termination Agreement

  	
   

  	
  Section 8.2(g)

  
	
  Termination Date

  	
   

  	
  Section 9.1

  
	
  Title Arbitrator

  	
   

  	
  Section 3.4(f)

  
	
  Title Claim Date

  	
   

  	
  Section 3.4(a)

  
	
  Title Defect

  	
   

  	
  Section 3.2

  
	
  Transaction Documents

  	
   

  	
  Section 11.13

  
	
  Transfer Taxes

  	
   

  	
  Section 1.4(hh)

  
	
  Undeveloped Lease Interests

  	
   

  	
  Section 1.4(ii)

  
	
  Well Location

  	
   

  	
  Section 1.4(jj)

  
	
  Wells

  	
   

  	
  Section 1.2(a)

  



 



 vii















PURCHASE AND SALE AGREEMENT


This
Purchase and Sale Agreement (this “Agreement”), dated as of April 13, 2007,
(the “Execution Date”) is by and between Equitable Production Company, a
corporation organized under the Laws of the Commonwealth of Pennsylvania (“Seller”),
and Pine Mountain Oil and Gas, Inc., a corporation organized under the Laws of
the Commonwealth of Virginia (“Purchaser”). 
Seller and Purchaser are sometimes referred to herein, collectively, as
the “Parties” and, individually, as a “Party.”


RECITALS:


WHEREAS,
Seller is the owner of certain interests in oil and gas properties that are
defined and described herein; and


WHEREAS,
Seller desires to sell and Purchaser desires to purchase a portion of Seller’s
right, title and interest in and to such properties on the terms and conditions
hereinafter set forth.


NOW,
THEREFORE, in consideration of the premises and of the mutual promises,
representations, warranties, covenants, conditions and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:


ARTICLE 1

PURCHASE AND SALE


Section 1.1            Purchase
and Sale.  On the
terms and conditions contained in this Agreement, Seller agrees to sell to
Purchaser and Purchaser agrees to purchase and accept from Seller the
Assets.  Seller further agrees to
transfer to Purchaser and Purchaser agrees to accept from Seller the
Pre-Effective Time Interests as contemplated by Section 1.7 hereof.


Section 1.2            Combined
Assets.  “Combined
Assets” means the following:


(a)   an
undivided one-half (1⁄2) of all of Seller’s interest in and to those leases
identified on Exhibit A-1 attached hereto (including without limitation, in
accordance with Section 11.20, Seller’s interest as lessee under the EPC Lease,
but for the avoidance of doubt, excluding its interest as lessor thereunder)
(such undivided one-half (1⁄2) interest in such leases, the “Leases”), provided
that, with respect to each of the wellbores of the wells identified on Exhibit
A-2 attached hereto (collectively, the “Wells”) and the Proration Unit
currently existing or to be formed therefor, such interest shall be reduced or
increased to the extent necessary to cause: 
(i) effective as of the Effective Time: 
(A) Purchaser and all Persons holding any working interest in such Well
and the Proration Unit currently existing or that was formed previously held by
Purchaser or any of its Affiliates (all such Persons, “Purchaser Successors”),
to collectively hold, the interest in the wellbore of such Well specified under
the column titled “Purchaser Effective Time Interest” on Exhibit A-2 and the
same interest in the Proration Unit currently existing or



 1
 









to be formed for such Well; and (B) Seller to hold the interest in the
wellbore of such Well specified under the column titled “Seller Effective Time
Interest” on Exhibit A-2 and the same interest in the Proration Unit currently
existing or to be formed for such Well; and (ii) effective as of the
Closing:  (A) Purchaser and all Purchaser
Successors to collectively hold the interest in the wellbore of such Well
specified under the column titled “Purchaser Closing Interest” on Exhibit A-2
and the same interest in the Proration Unit currently existing or to be formed
for such Well; and (B) Seller to hold the interest in the wellbore of such Well
specified under the column titled “Seller Closing Interest” on Exhibit A-2 and
the same interest in the Proration Unit currently existing or to be formed for
such Well (the interests to be transferred to Purchaser described in this
Section 1.2(a), the “Conveyed Lease Interests”);


(b)   that
portion of Seller’s right, title and interest corresponding to the Conveyed
Lease Interests in and to the following:


(i)            all
pooled, communitized or unitized acreage, including acreage in units formed or
prescribed by regulatory order, associated with the Leases or Wells (that
portion of Seller’s right, title and interest in such acreage corresponding to
the Conveyed Lease Interests, together with the Conveyed Lease Interests, the “Properties”),
and all tenements, hereditaments and appurtenances associated therewith;


(ii)           all contracts listed on Exhibit A-3 (that portion of
Seller’s right, title and interest in such contracts corresponding to the
Properties, the “Contracts”);


(iii)          all
easements, licenses, servitudes, rights-of-way, surface leases and other
surface rights appurtenant to, and used or held for use primarily in connection
with, the Properties or other Combined Assets, but excluding any of the
foregoing to the extent that (1) transfer is restricted by third-party
agreement or applicable Law, (2) Seller is unable to obtain, using commercially
reasonable efforts, a waiver of, or otherwise satisfy, such transfer
restriction (provided that Seller shall not be required to provide
consideration or undertake obligations to or for the benefit of the holders of
such rights in order to obtain any necessary consent or waiver), and (3) the
failure to obtain such waiver or satisfy such transfer restriction would cause
a termination of such instrument or a material impairment of the rights
thereunder; and


(iv)          all
equipment, machinery, fixtures, well lines, pipelines and other tangible
personal property and improvements located on the Properties or used or held
for use primarily in connection with the ownership or operation of the
Properties or other Combined Assets, but excluding any such items at and
downstream of any wellsite metering equipment associated with any Well
(including such wellsite metering equipment and any gathering lines, pipelines,
well lines and compressors downstream of such wellsite metering equipment), and
any such items included in the Excluded Assets (that portion of Seller’s right,



 2
 









title and interest in such equipment,
machinery, fixtures and other tangible personal property and improvements
corresponding to the Properties, and subject to such exclusions, the “Equipment”).


Section 1.3            Excluded
Assets.  Notwithstanding
anything to the contrary contained herein, the Combined Assets shall not
include, and the following are excepted, reserved and excluded from the
transactions contemplated hereby (collectively, the “Excluded Assets”):


(a)   all
water disposal wells, and any transfer facility, loadout facility or other
facility associated with such water disposal wells, located on the Leases or
used in connection with the disposal of produced water derived from or
otherwise attributable to any of the Wells, including those water disposal
wells and associated facilities described on Exhibit A-4;


(b)   (i)
computers and peripheral equipment related to such computers; (ii)
communication and telecommunication equipment including but not limited to
radios, towers, and networking equipment; (iii) custom applications and
databases; (iv) measurement and data collection devices; and (v) software and
associated licenses, including but not limited to any software relating to the
SCADA System, Enertia, Altra, Flow-Cal, Talon, Aries, Production Access,
Pre-drill Manager, Geographix, Synergy, and CygNet;


(c)   all
rights and all obligations of Seller with respect to any refund or payment of
Taxes or other costs or expenses borne by Seller or Seller’s predecessors in
interest and title attributable to the Assets and the period prior to the
Effective Time;


(d)   all
rights and all obligations of Seller with respect to the claims and causes of
action relating to the Assets that accrued or arose prior to the Effective Time
(other than claims or causes of action for proceeds to which Purchaser is
entitled under Section 1.5(b));


(e)   Seller’s
area-wide bonds, permits and licenses (including all Federal Communications
Commission licenses) or other permits, licenses or authorizations used in the
conduct of Seller’s business generally;


(f)    the
Gathering Assets;


(g)   all
fee mineral interests in Hydrocarbons; and


(h)   those
other assets and interests identified on Exhibit A-4.


Section 1.4            Certain
Definitions.  As
used herein:


(a)   “Affiliate”
means, with respect to any Person, a Person that directly or indirectly
controls, is controlled by or is under common control with such Person, with
control in such context meaning (i) the power to direct the vote of more than
fifty percent (50%) of the voting shares or other securities of such Person
through ownership, pursuant



 3
 









to a written agreement, or otherwise or (ii) the power to direct the
management and policies of a Person through ownership of voting shares or other
securities, pursuant to a written agreement, or otherwise.  For the purposes of this Agreement, the
Company shall not be considered an Affiliate of either Party or such Party’s
Affiliates.


(b)   “Agreed
Interest Rate” means the lesser of (i) five percent (5%) per annum and (ii) the
maximum rate allowed by applicable Laws.


(c)   “AMI”
has the meaning set forth in the Operating Agreement.


(d)   “Business
Day” means any day other than a Saturday, a Sunday, or a day on which banks are
closed for business in Pittsburgh, Pennsylvania or Fort Worth, Texas.


(e)   “Company”
means Nora Gathering, LLC, a limited liability company organized under the Laws
of the State of Delaware.


(f)    “EPC
Lease” means a Hydrocarbons lease in substantially the form attached hereto as
Exhibit “J”.


(g)   “Exchange
Act” means the Securities Exchange Act of 1934, as amended.


(h)   “Existing
JOA” means the Coalbed Methane Gas Operating Agreement dated as of August 1,
1994 and the Conventional Gas (Non-Coalbed Gas) Operating Agreement dated as of
August 1, 1994.


(i)    “Exploration
Agreement” means the Coalbed Gas Exploration and Development Agreement dated as
of April 5, 1988, together with and as amended, supplemented and modified from
time to time by various amendments and supplemental agreements thereto,
including (i) the Amendment to Coalbed Gas Exploration and Development
Agreement dated as of December 12, 1990, (ii) the Second Amendment to Coalbed
Gas Exploration and Development Agreement dated as of August 26, 1994, (iii)
the Third Amendment to Coalbed Gas Exploration and Development Agreement dated
as of June 10, 1996, (iv) the Fourth Amendment to Coalbed Gas Exploration and
Development Agreement dated as of July 10, 1997, and (v) the Fifth Amendment to
Coalbed Gas Exploration and Development Agreement dated as of December 31,
1998.


(j)    “Exploration
Agreement PMOG Area” means the areas covered by the Exploration Agreement under
which PMOG or any of its Affiliates holds, or leases from third Persons not
affiliated with Seller, the mineral interest.


(k)   “Future
Well” shall mean a well to be drilled in the future upon a Well Location, which
(for the purposes of determining Defensible Title thereto and any Title Defects
associated therewith pursuant to this Agreement) shall be treated as if such
well had been drilled and completed and was in existence as of the date of this
Agreement.


(l)    “Gas
Retention Percentage” has the meaning set forth in the Gathering Agreement.



 4
 









(m)  “Gathering
Agreement” has the meaning set forth in the Contribution Agreement.


(n)   “Gathering
Assets” has the meaning set forth in that certain Contribution Agreement of
even date herewith between Seller, Equitable Gathering Equity, LLC, Purchaser
and the Company.


(o)   “Gathering
Charges” means the Gathering Rate (as defined in the Gathering Agreement) and
all other charges set forth in the Gathering Agreement, except the Gas
Retention Percentage, chargeable in connection with Hydrocarbons produced from
the Assets for the gathering services provided by Seller or its Affiliates
through the Gathering Assets, which charges shall be determined as if the
Gathering Agreement was in place effective as of the Effective Time.


(p)   “Governmental
Authority” means any government and/or any political subdivision thereof,
including departments, courts, commissions, boards, bureaus, ministries,
agencies or other instrumentalities.


(q)   “Hydrocarbons”
means all oil, gas, coalbed methane gas and other associated hydrocarbons.


(r)    “LACT”
means Lease Automatic Custody Transfer.


(s)   “Laws”
means all laws, statutes, rules, regulations, ordinances, orders, requirements
and codes of Governmental Authorities.


(t)    “Non-PM
Assets” means all Assets other than the PM Assets.


(u)   “Original
Lease” means that certain Agreement, dated as of July 25, 1972, between The
Pittston Company (the predecessor in interest to Purchaser), as lessor, and
Philadelphia Oil Company (the predecessor in interest to Seller), as lessee
(together with and as amended, supplemented and modified from time to time by
various amendments and supplemental agreements thereto, including (i) the
Supplemental Agreement, dated as of January 19, 1976, between The Pittston
Company and Philadelphia Oil Company, (ii) the Supplemental Agreement II, dated
as of August 24, 1978, between The Pittston Company and Philadelphia Oil
Company, (iii) the Supplemental Agreement III, dated as of January 1, 1986,
between The Pittston Company and Philadelphia Oil Company, (iv) the First
Amendment to Supplemental Agreement III, dated as of August 26, 1994, and
effective August 1, 1994 between Purchaser and Equitable Resources Exploration,
Inc., (v) the Supplemental Agreement IV, dated as of February 3, 1997, between
Purchaser and Equitable Resources Energy Company – Eastern Region, (vi) the
Additional Acreage Agreement, dated as of January 1, 1986, between The Pittston
Company and Equitable Resources Energy Company, (vii) the Amendment to the
Additional Acreage Agreement, dated as of January 1, 1987, between Purchaser
and Equitable Resources Energy Company, (viii) the Second Amendment to the
Additional Acreage Agreement, dated as of April 11, 1988, and effective January
1, 1988 between Purchaser and Equitable Resources Exploration, Inc., (ix) the
Third Amendment to the Additional Acreage



 5
 









Agreement, dated as of February 26, 1993, and effective January 1, 1993
between Purchaser and Equitable Resources Exploration, Inc., (x) the Fourth
Amendment to the Additional Acreage Agreement, dated as of August 26, 1994,
between Purchaser and Equitable Resources Exploration, Inc., (xi) the Fifth
Amendment to the Additional Acreage Agreement, dated as of March 21, 1995, and
effective January 1, 1995 between Purchaser and Equitable Resources Exploration,
Inc., (xii) the Sixth Amendment to the Additional Acreage Agreement, dated as
of June 10, 1996, and effective December 31, 1995 between Purchaser and
Equitable Resources Exploration, Inc., (xiii) the Seventh Amendment to the
Additional Acreage Agreement, effective as of December 31, 1996, between
Purchaser and Equitable Resources Energy Company, (xiv) the Eighth Amendment to
the Additional Acreage Agreement, dated as of December 29, 1997, and effective
December 31, 1997 between Purchaser and Equitable Resources Energy Company,
(xv) the Ninth Amendment to the Additional Acreage Agreement, dated as of
November 25, 1999, and effective December 31, 1999 between Purchaser and
Seller,  and (xvi) the Tenth Amendment to
the Additional Acreage Agreement, dated as of May 3, 2005, and effective as of
January 1, 2000, between Purchaser and Seller.


(v)    “Person”
means any individual, corporation, partnership, limited liability company,
trust, estate, Governmental Authority or any other entity.


(w)  “PM
Assets” means all PM Undeveloped Lease Interests and all PM Wells.


(x)    “PM
Undeveloped Lease Interests” means all Undeveloped Lease Interests in which
Purchaser or its Affiliates possessed or has the right to possess any part of
the working interest or lessor interest as of the Execution Date.  For avoidance of doubt, Undeveloped Lease
Interests under the Original Lease and any portion of the Exploration Agreement
PMOG Area that constitutes an Undeveloped Lease Interest shall be deemed to be
PM Undeveloped Lease Interests for all purposes of this Agreement.


(y)   “PM
Wells” means all Wells in which Purchaser or its Affiliates possessed or has
the right to possess any part of the working interest or lessor interest as of
the Execution Date.  For the avoidance of
doubt, the Wells listed under “PM Wells” on Exhibit A-2 shall be deemed PM
Wells for all purposes of this Agreement.


(z)    “Production
Taxes” means ad valorem, property, severance, production and similar Taxes
based upon or measured by the ownership or operation of the Assets or the
production of Hydrocarbons therefrom, but excluding any other Taxes


(aa)         “Proration
Unit” means, for any Well (i) the acreage unit size as shown in the pooling or
unit designation for such Well filed in the real property records in the county
in which such Well is located, or if no such designation is filed, as permitted
with the state regulatory agency (or as shown on the issued well permit) for
such Well; provided that if no such acreage size is provided pursuant to any of
the foregoing, then “Proration Unit” means, for any Well, the minimum acreage
unit size permitted by applicable Law for such Well and (ii) the producing
interval or targeted producing interval for such Well.



 6
 









(bb)         “Records”
means all lease files, land files, well files, gas and oil sales contract
files, gas processing files, division order files, abstracts, title opinions,
land surveys, geologic and geophysical data (excluding interpretations thereof)
and files and all other books, records, data, files, maps and accounting
records to the extent relating primarily to the Properties or other Combined
Assets, excluding however, (A) any record to the extent that:  (1) disclosure of such record is restricted
by third-party agreement or applicable Law, (2) Seller is unable to obtain,
using commercially reasonable efforts, a waiver of, or otherwise satisfy, such
disclosure restriction (provided that Seller shall not be required to provide
consideration or undertake obligations to or for the benefit of the holders of
such rights in order to obtain any necessary consent or waiver) and (3) the
failure to obtain such waiver or satisfy such disclosure restriction would
cause a termination of such instrument or a material impairment of the rights
thereunder;  (B) computer
software; (C) all legal records and legal files of Seller (other than (x) title
opinions and (y) Contracts) and all other work product of and attorney-client
communications with any of Seller’s legal counsel; (D) records relating to the
sale of the Assets, including bids received from and records of negotiations
with third Persons; (E) any other records to the extent constituting Excluded
Assets; and (F) contracts and agreements of no further force and effect as of
the Effective Time.


(cc)         “Review
Well” shall mean a Well or a Future Well, as the context requires.


(dd)         “SEC”
means the U.S. Securities and Exchange Commission.


(ee)         “Securities
Act” means the Securities Act of 1933, as amended, and any successor statute
thereto and the rules and regulations of the SEC promulgated thereunder.


(ff)           “Tax”
means all taxes, including income tax, surtax, remittance tax, presumptive tax,
net worth tax, production tax, pipeline transportation tax, value added tax,
withholding tax, gross receipts tax, windfall profits tax, profits tax, severance
tax, personal property tax, real property tax, sales tax, service tax, transfer
tax, use tax, excise tax, premium tax, customs duties, stamp tax, motor vehicle
tax, entertainment tax, insurance tax, capital stock tax, franchise tax,
occupation tax, payroll tax, employment tax, social security, unemployment tax,
disability tax, alternative or add-on minimum tax, estimated tax, and any other
assessments, duties, fees, or levies imposed by a Governmental Authority,
together with any interest, fine or penalty thereon, or addition thereto.


(gg)         “Tax
Return” means any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof, required to be filed with any
Governmental Authority.


(hh)         “Transfer
Taxes” means all transfer, sales, use, documentary, stamp duty, conveyance and
other similar Taxes, duties, fees or charges.



 7
 









(ii)           “Undeveloped
Lease Interests” means any Lease, acreage, area (including the Exploration
Agreement PMOG Area) or portion thereof included in the Properties that is not
included in a Proration Unit corresponding to a Well.


(jj)           “Well
Location” shall mean each lease/tract location identified on Exhibit A-2.


Section 1.5          Effective
Time; Proration of Costs and Revenues.


(a)   Title
and interest in and to the Combined Assets shall be transferred from Seller to
Purchaser at the Closing, but certain financial benefits and burdens in respect
of the Assets shall be transferred effective as of the Effective Time, as
described below.  Notwithstanding
anything to the contrary herein, financial benefits and burdens in respect of
the Pre-Effective Time Interests prior to the Effective Time shall not be
modified or changed from the manner in which such benefits and burdens were
treated in the period prior to the Effective Time by the provisions of this
Section 1.5.


(b)   Purchaser
shall be entitled to all production of Hydrocarbons from or attributable to the
Assets on and after the Effective Time (and all products and proceeds
attributable thereto), and to all other income, proceeds, receipts and credits
earned with respect to the Assets on and after the Effective Time, and shall be
responsible for (and entitled to any refunds with respect to) all Property
Costs incurred on and after the Effective Time (provided that Purchaser’s
entitlement to production, income, proceeds, receipts, and credits earned with
respect to, and responsibility for and entitlement to refunds with respect to
Property Costs relating to, certain of the Assets shall be adjusted as of
Closing in the manner described in Section 2.2).  Seller shall be entitled to all production of
Hydrocarbons from or attributable to the Assets prior to the Effective Time
(and all products and proceeds attributable thereto), and to all other income,
proceeds, receipts and credits earned with respect to the Assets prior to the
Effective Time, and shall be responsible for (and entitled to any refunds with
respect to) all Property Costs incurred prior to the Effective Time
(provided that Seller’s entitlement to production, income, proceeds, receipts,
and credits earned with respect to, and responsibility for and entitlement to
refunds with respect to Property Costs relating to, certain of the Assets shall
be adjusted as of Closing in the manner described in Section 2.2).  “Earned” and “incurred”, as used in this
Agreement, shall be interpreted in accordance with United States generally
accepted accounting principles (as published by the Financial Accounting
Standards Board) and Council of Petroleum Accountants Societies
(COPAS) standards.


(c)   “Property
Costs” means all operating expenses (including costs of insurance and
Production Taxes), capital expenditures incurred in the ownership and operation
of the Assets in the ordinary course of business, and overhead costs charged to
the Assets under the applicable operating agreement or if none, charged to the
Assets on the same basis as Seller has historically charged under the Existing
JOA.  “Property Costs” as used herein
shall not include the Gathering Charges.



 8
 









(d)   For
purposes of allocating production (and accounts receivable with respect
thereto), under this Section 1.5, (i) liquid Hydrocarbons shall be deemed
to be “from or attributable to” the Assets when they pass through the pipeline
flange connecting into the storage facilities located on the Leases or, if
there are no such storage facilities, when they pass through the LACT meters or
similar meters at the point of entry into the pipelines through which they are
transported from the Leases, and (ii) gaseous Hydrocarbons shall be deemed
to be “from or attributable to” the Assets when they pass through the delivery
point sales meters or similar meters at the point of entry into the pipelines
through which they are transported from the Leases.  Seller shall utilize reasonable interpolative
procedures to arrive at an allocation of production when exact meter readings
are not available.  Production Taxes,
surface use fees, insurance premiums and other Property Costs that are paid
periodically shall be prorated based on the number of days in the applicable
period falling before, or at and after, the Effective Time, except that
Production Taxes measured by units of production shall be prorated based on the
amount of Hydrocarbons actually produced, purchased or sold, as applicable,
before, or at and after, the Effective Time. 
In each case, Purchaser shall be responsible for the portion allocated
to the period on and after the Effective Time and Seller shall be responsible
for the portion allocated to the period before the Effective Time.


Section 1.6            Back-In
Interests.  Purchaser
acknowledges and agrees that any and all existing back-in rights of the
Purchaser or its Affiliates to an additional or increased working interest in
the Wells listed in Exhibit A-2 to which Purchaser was entitled pursuant
to the Existing JOA shall be extinguished in full, and any liabilities or
rights associated with such back-in rights shall cease to exist and shall no
longer be enforceable.


Section 1.7            Pre-Effective
Time Interests and Assets.  Immediately
prior to the Closing, Purchaser and Seller are the owners of certain working
interests relating to lands subject to the Original Lease and the Exploration
Agreement.  As part of this Agreement and
the transactions contemplated hereby (as well as other transactions between the
Parties and their Affiliates), the Parties desire to enter into a new lease
agreement in substantially the form attached hereto as Exhibit C (the “New
Lease”), effective as of the Closing Date, with Purchaser as the lessor and
Seller as the lessee, and to terminate the Original Lease, the Exploration
Agreement and certain related agreements, effective as of the Closing
Date.  In addition to the working interests
in the Leases and Review Wells and the related assets that Purchaser is
purchasing from Seller under this Agreement (as such working interests are more
particularly described in the column titled “Conveyed Working Interest” on
Exhibit A-2 and the corresponding undivided interests in the Combined Assets
associated therewith, the “Assets”). For purposes of clarification, the Parties
acknowledge that each Party may currently own some of the interests that will
be conveyed or cross conveyed under the Conveyance and that the Conveyance is
intended to stipulate and clarify as of the Closing the interests that each of
the Parties will own as of the Closing. 
In order to reflect Purchaser’s pre-Effective Time working interests in
the Wells drilled under the Original Lease and/or the Exploration Agreement,
Seller, as the lessee under the New Lease, will enter into such conveyances
(including the Conveyance) with Purchaser to confirm the pre-Effective Time
working interests of Purchaser in such Wells and related assets that will be
subject to the New Lease (as such pre-Effective Time working interests are more
particularly described in the column titled “Purchaser Pre-Effective Time



 9
 









Working Interest”
on Exhibit A-2 and the corresponding undivided interests included in the
Combined Assets associated therewith, the “Pre-Effective Time Interests”).  The Parties acknowledge that the Assets and
the Pre-Effective Time Interests together constitute the Combined Assets and
the term “Assets” as defined in this Agreement shall be the Combined Assets
excluding the Pre-Effective Time Interests, and upon Closing, Purchaser and all
Purchaser Successors shall collectively hold the interest in each Review Well
identified on Exhibit A-2 as the “Purchaser Closing Interest” for such Review
Well and the same interest in the Proration Unit for such Review Well, and
Seller shall hold the interest in each Review Well identified on Exhibit A-2 as
the “Seller Closing Interest” for such Review Well and the same interest in the
Proration Unit for such Review Well. 
Further, the parties acknowledge that certain existing wells drilled by
PMOG or its predecessors upon the lands covered by the Original Lease were
excluded under the Original Lease and are being excluded under the New Lease
(as more particularly described therein), and such excluded wells shall not be
part of the Combined Assets, Assets or Pre-Effective Time Interests.


Section 1.8            Intentions
of the Parties.  The
Parties acknowledge that it is their intent that (a) Seller transfer to Purchaser
and Purchaser accept as of the Effective Time an undivided one-half (1/2) of
Seller’s interest existing as of the Closing Date in all leases (including
without limitation Seller’s interest as lessee under the EPC Lease, but for the
avoidance of doubt, excluding its interest as lessor thereunder) included in
Buchanan, Russell and Dickenson Counties, Virginia (excluding any interests in
the lands and properties excluded from the AMI) and (b) pursuant to the
Conveyance, Purchaser shall cross convey to Seller such interest in such leases
(but excluding its interest as lessor under the Original Lease or the New
Lease), such that the respective interests of the Parties in such leases as
lessees thereunder shall be equal as of the Effective Time, whether or not such
leases are included in or accurately described on Exhibit A-1.  The Parties further acknowledge and agree
that it is their intent that, notwithstanding anything herein to the contrary,
to the extent that there are any Wells in which both Seller and Purchaser
currently have a working interest that exist upon any Leases or within the AMI
and that are not described on Exhibit A-2, the respective interests of the
Parties in such Wells shall be the same interests as the Parties have in such
Wells as of the date hereof; provided, however, if any such Well has been
drilled by Seller upon the Leases or within the AMI on or after the Effective
Time, then the Parties agree that their respective interests in such Wells and
the Proration Units therefor as of the Effective Time shall be equal.


ARTICLE 2

PURCHASE PRICE


Section 2.1            Purchase
Price.  The
purchase price for the Assets (the “Purchase Price”) shall be Two Hundred
and Sixty-Two Million Dollars (US$262,000,000), adjusted as provided in Section
2.2.



 10
 









Section 2.2            Adjustments
to Purchase Price.  The
Purchase Price shall be adjusted as follows:


(a)   Decreased
by the aggregate amount of the following proceeds received by Seller
attributable to the Assets on and after 12:01 a.m. local time where the
Assets are located on June 1, 2006 (the “Effective Time”):


(i)            proceeds
from the sale of Hydrocarbons produced from or attributable to the Assets (less
any royalties, overriding royalties net profits interests and other similar
burdens payable out of the production of Hydrocarbons from the Assets or the
proceeds thereof which are not included in “Property Costs”); and


(ii)           any
other proceeds received by Seller attributable to the Assets;


(b)   Decreased
in accordance with Section 3.4;


(c)   Decreased
in accordance with Section 3.5;


(d)   Increased
by the amount of all Property Costs attributable to the Assets on and after the
Effective Time which are incurred and paid by Seller excluding, however, any
amounts deducted pursuant to Section 2.2(a)(i) above;


(e)   [Intentionally
omitted].


(f)    Increased
by the amount of the Gathering Charges attributable to the Assets on and after
the Effective Time;


(g)   Decreased
by Six Hundred Thousand Dollars (US$600,000) to represent an adjustment (i) to
the gathering rate paid by Purchaser in connection with gathering services on
the Gathering Assets provided by Seller and its Affiliates prior to the
Effective Time, (ii) for certain pre-Effective Time capital expenditures and
(iii) for the Parties’ agreement regarding resolution of the Pittston Litigation;
and


(h)   Decreased
by an amount equal to the difference between the (i) aggregate amount paid by
Purchaser for gathering services on the Gathering Assets provided by Seller and
its Affiliates for the period from (and including) the Effective Time until the
Closing with respect to the Pre-Effective Time Interests, and (ii) the
aggregate amount that would have been paid by Purchaser for gathering services
on the Gathering Assets provided by Seller and its Affiliates for the period
from (and including) the Effective Time until the Closing with respect to the
Pre-Effective Time Interests if Purchaser would have been charged the Gathering
Charges for such services.


The
Purchase Price, adjusted as set forth in this Section 2.2, shall be the “Adjusted
Purchase Price.”



 11
 









Section 2.3            Effect
of Purchase Price Adjustments.  The
adjustment described in Section 2.2(a) shall serve to satisfy, up to the
amount of the adjustment, Purchaser’s entitlement under Section 1.5 to
Hydrocarbon production from or attributable to the Assets between the Effective
Time and the Closing and to other income, proceeds, receipts and credits earned
with respect to the Assets between the Effective Time and the Closing, and
Purchaser shall not have any separate rights to receive any production or
income, proceeds, receipts and credits with respect to which an adjustment has
been made.  Similarly, the adjustment
described in Section 2.2(d) shall serve to satisfy, up to the amount of
the adjustment, Purchaser’s obligation under Section 1.5 to pay Property Costs
attributable to the ownership and operation of the Assets which are incurred
between the Effective Time and the Closing, and Purchaser shall not be
separately obligated to pay for any Property Costs with respect to which an
adjustment has been made.


Section 2.4            Allocation
of Purchase Price.  Schedule 2.4
sets forth the agreed allocation of the unadjusted Purchase Price among the
Assets, which has been made in accordance with Section 1060 of the
Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury
regulations thereunder.  The “Allocated
Value” for any Asset shall equal the portion of the unadjusted Purchase Price
allocated to such Asset on Schedule 2.4, increased or decreased as
described in this Section 2.4.  Any adjustments
to the Purchase Price other than the adjustments provided for in Section
2.2(b) and Section 2.2(c) shall be applied on a pro rata basis to the
amounts set forth on Schedule 2.4 for all Assets.  After all such adjustments are made, any
adjustments to the Purchase Price pursuant to Section 2.2(b) and Section
2.2(c) shall be applied to the amounts set forth in Schedule 2.4 for
the particular affected Assets.  Seller
and Purchaser have accepted such Allocated Values for purposes of this
Agreement and the transactions contemplated hereby, however, neither Seller nor
Purchaser make any representation or warranty as to the accuracy of such
Allocated Values.  Seller and Purchaser
agree (a) that the Allocated Values shall be used by Seller and Purchaser
as the basis for reporting asset values and other items for purposes of all
applicable Tax returns, and (b) that neither they nor their Affiliates
will take positions inconsistent with the Allocated Values in notices to
Governmental Authorities, in audit or other proceedings with respect to Taxes,
in notices to preferential purchaser right holders, or in other documents or
notices relating to the transactions contemplated by this Agreement.


ARTICLE 3

TITLE MATTERS


Section 3.1          Title.


(a)   The
Conveyance shall contain a special warranty of title against every Person
lawfully claiming or to claim the interest to be conveyed by Seller to
Purchaser or any part thereof by, through and under Seller and its Affiliates,
but not otherwise, subject to Permitted Encumbrances, but shall otherwise be
without warranty of title, express, implied or statutory, except that the
Conveyance shall transfer to Purchaser all rights or actions on title
warranties given or made by Seller’s predecessors (other than Affiliates of
Seller), to the extent Seller may legally transfer such rights.



 12
 









(b)   Notwithstanding
anything to the contrary in Section 3.1(a) and the Conveyance, Section 3.4
shall provide Purchaser’s exclusive remedy in respect of Asserted Title Defects
reported in accordance with this Article 3, and, Purchaser shall not be
entitled to make any claims against Seller or any of its Affiliates under
Seller’s special warranty of title in the Conveyance against any such Asserted
Title Defect.  Except to the extent
expressly provided herein (including Purchaser’s rights with respect to any
breach of Seller’s covenant under Section 6.10(f) and Purchaser’s rights under
this Article 3) and except under the special warranty of title set forth in the
Conveyance, Purchaser shall not be entitled to make any claims against Seller
or any of its Affiliates with respect to any Title Defects to the extent that
such Title Defects pertain to the PM Assets (provided that if such Title
Defects affect both the PM Assets and the other Assets, then Purchaser shall be
entitled to any and all of its rights and remedies with respect to such Title
Defects insofar and only insofar as such Title Defects affect such other
Assets).


Section 3.2            Definition
of Defensible Title.  As
used in this Agreement, the term “Defensible Title” means that title of Seller
with respect to the Assets which, subject to Permitted Encumbrances:


(a)   entitles
Seller to receive throughout the duration of the productive life of any Review
Well (after satisfaction of all royalties, overriding royalties,
nonparticipating royalties, net profits interests or other similar burdens on
or measured by production of Hydrocarbons), not less than the “Conveyed Net
Revenue Interest” share shown in Exhibit A-2 for such Review Well of all
Hydrocarbons produced and sold from such Review Well, as applicable, except
(solely to the extent that such actions do not cause a breach of Seller’s
covenants under Section 6.10 hereof) decreases in connection with those
operations in which, from or after the date of this Agreement, Seller may be a
nonconsenting co-owner, decreases resulting from the establishment or amendment
of pools or units from and after the date of this Agreement, and decreases
required to allow other working interest owners to make up past underproduction
or pipelines to make up past underdeliveries;


(b)   obligates
Seller to bear a percentage of the costs and expenses for the maintenance and
development of, and operations relating to, a Review Well not greater than the “Conveyed
Working Interest” shown in Exhibit A-2 for such Review Well without
increase throughout the productive life of such Review Well, as applicable,
except as stated in Exhibit A-2, respectively, and except increases
resulting from contribution requirements with respect to defaulting co-owners
under applicable operating agreements and increases that are accompanied by at
least a proportionate increase in Seller’s net revenue interest; and


(c)   is
free and clear of all Encumbrances.


As
used in this Agreement, the term “Encumbrance” means any lien, charge,
encumbrance, irregularity or other defect (including a discrepancy or error in
net revenue interest or working interest as set forth in Exhibit A-2 for a
Review Well).  The term “Title Defect”
means, with respect to any Asset that is a Non-PM Asset, any Encumbrance that
would cause



 13
 









Seller not to have
Defensible Title to such Non-PM Asset, and with respect to any Asset that is a
PM Asset, the term “Title Defect” means any Encumbrance created by, through or
under Seller or any of its Affiliates that would cause Seller not to have
Defensible Title to such PM Asset.  The
term “Asserted Title Defect” means a Title Defect reported by Purchaser
pursuant to Section 3.4 hereof.


Section 3.3            Definition
of Permitted Encumbrances.  As
used herein, the term “Permitted Encumbrances” means any or all of the
following:


(a)   lessors’
royalties and any overriding royalties, reversionary interests and other
burdens on production of Hydrocarbons to the extent that they do not,
individually or in the aggregate, reduce the “Conveyed Net Revenue Interest”
below that shown in Exhibit A-2 with respect to any Review Well or
increase the “Conveyed Working Interest” above that shown in Exhibit A-2
with respect to any Review Well without at least a proportionate increase in
the net revenue interest for such Review Well;


(b)   all
Contracts, to the extent that they do not, individually or in the aggregate,
reduce the “Conveyed Net Revenue Interest” below that shown in Exhibit A-2
with respect to any Review Well or increase the “Conveyed Working Interest”
above that shown in Exhibit A-2 with respect to any Review Well without at
least a proportionate increase in the net revenue interest for such Review
Well;


(c)   Preferential
Rights;


(d)   third-party
consent requirements and similar restrictions with respect to which waivers or
consents are obtained by Seller from the appropriate parties prior to the
Closing Date or the appropriate time period for asserting the right has expired
or which are expressly not required to be satisfied prior to a transfer;


(e)   liens
for current Taxes or assessments not yet delinquent or, if delinquent, being
contested in good faith by appropriate actions and listed on Exhibit A-5;


(f)    materialman’s,
mechanic’s, repairman’s, employee’s, contractor’s, operator’s and other similar
liens or charges arising in the ordinary course of business for amounts not yet
delinquent (including any amounts being withheld as provided by law), or if
delinquent, being contested in good faith by appropriate actions and listed on
Exhibit A-6;


(g)   all
rights to consent, by required notices to, filings with, or other actions by
Governmental Authorities in connection with the sale or conveyance of oil and
gas leases, licenses, concessions, production sharing agreements or interests
therein if they are customarily obtained subsequent to the sale or conveyance;


(h)   rights
of reassignment arising upon final intention to abandon or release the Leases
included in the Proration Unit for such Review Well;



 14
 









(i)    easements,
rights-of-way, servitudes, permits and other rights in respect of surface and
subsurface operations not involving the extraction of Hydrocarbons to the
extent that they do not, individually or in the aggregate (i) reduce the “Conveyed
Net Revenue Interest” below that shown in Exhibit A-2 with respect to any
Review Well, (ii) increase the “Conveyed Working Interest” above that shown in
Exhibit A-2 with respect to any Review Well without at least a proportionate
increase in the “Conveyed Net Revenue Interest” for such Review Well, or (iii)
materially detract from the value of, or materially interfere with the use,
ownership or operation of, any Review Well subject thereto or affected thereby
(as currently used, owned and operated) and which would be accepted by a
reasonably prudent purchaser engaged in the business of owning and operating
oil and gas properties in the Appalachian Basin;


(j)    calls
on production under existing Contracts that are listed on Exhibit A-7;


(k)   all
rights reserved to or vested in any Governmental Authority to control or
regulate any of the Wells or Undeveloped Lease Interests in any manner and all
obligations and duties under all applicable Laws or under any franchise, grant,
license or permit issued by any such Governmental Authority;


(l)    any
Encumbrance which is discharged by Seller at or prior to Closing;


(m) 
any rights related to coal, coal seams or coal mining, whether statutory or
otherwise, other than rights to explore for, develop and produce coalbed
methane and associated Hydrocarbons and rights attendant thereto;


(n)   any
matters shown on Exhibit G; and


(o)   any
other Encumbrances which do not, individually or in the aggregate, (i) reduce
the “Conveyed Net Revenue Interest” below that shown in Exhibit A-2  with respect to any Review Well, (ii) increase the “Conveyed
Working Interest” above that shown in Exhibit A-2 with respect to any Review
Well without at least a proportionate increase in the net revenue interest for
such Review Well, or (iii) materially detract from the value of or materially
interfere with the use, ownership or operation of the Review Wells subject
thereto or affected thereby (as currently used, owned or operated) and
which would be accepted by a reasonably prudent purchaser engaged in the
business of owning and operating oil and gas properties in the Appalachian
Basin.


Section 3.4          Notice of
Asserted Title Defects; Defect Adjustments.


(a)   To
assert a claim of a Title Defect prior to Closing, Purchaser must deliver a
claim notice to Seller on or before 5:00 p.m. EDT on April 25, 2007 (the “Title
Claim Date”), except as otherwise provided under Section 3.5 or Section 3.6;
provided that Purchaser agrees to furnish Seller at the end of every week
period following the execution of this Agreement and prior to the Title Claim
Date with a claim notice if any officer of Purchaser or its Affiliates
discovers or learns of any Title Defect during such  period. 
Each such notice shall be in writing and shall include (i) a
description of the Asserted Title Defect(s), (ii) the Wells and/or Undeveloped
Lease Interests affected,



 15
 









(iii) the Allocated Values of the Wells and/or Undeveloped Lease
Interests subject to such Asserted Title Defect(s), (iv) supporting
documents reasonably necessary for Seller (as well as any title attorney or
examiner hired by Seller) to verify the existence of such Asserted Title
Defect(s) and (v) the amount by which Purchaser reasonably believes
the Allocated Values of those Wells and/or Undeveloped Lease Interests are
reduced by such Asserted Title Defect(s) and the computations and
information upon which Purchaser’s belief is based.  Subject to Purchaser’s rights under the
special warranty of title described in Section 3.1(a) and its rights with
respect to any breach of Seller’s covenant under Section 6.10(f), Purchaser
shall be deemed to have waived all Title Defects of which Seller has not been
given notice on or before the Title Claim Date.


(b)   In
the event that Purchaser notifies Seller of a Title Defect before the Title
Claim Date, Seller shall have the right, but not the obligation, to attempt, at
its sole cost, to cure or remove any Asserted Title Defects of which it has
been notified by Purchaser.  If Seller so
elects to cure or remove any Asserted Title Defect, Purchaser shall use
commercially reasonable efforts to cooperate with Seller’s efforts to cure or
remove such Asserted Title Defect.  If
prior to Closing, Seller has been unable to cure or remove any Asserted Title
Defect, then Seller and Purchaser mutually shall elect to have one of the following
options apply:


(i)            Remove
the interests in such Well or Undeveloped Lease Interest included in the Assets
that is subject to such Asserted Title Defect and those other Assets primarily
related to such interest in such Well or Undeveloped Lease Interest from the transaction
contemplated by this Agreement.  Such
removed Assets shall not be assigned at the Closing, shall become “Excluded
Assets” for all purposes hereunder and the Purchase Price shall be reduced by
an amount equal to the Allocated Value for such Assets, provided that if any
Asserted Title Defect is cured at any time prior to one hundred eighty (180)
days after Closing, within five (5) days of Seller’s notice to Purchaser of
such event, the Parties shall conduct a subsequent Closing (in accordance with
the same terms hereof) for the purchase and sale of the Excluded Asset that was
subject to such cured Asserted Title Defect.


(ii)           Assign
the Asset subject to the Asserted Title Defect to Purchaser at Closing, and
defend, indemnify and hold the Purchaser Indemnified Persons and Purchaser
Successors harmless from and against all Damages that arise out of or that any
such Person may suffer as a result of such Asserted Title Defect pursuant to a
form of indemnity agreement mutually agreeable to the Parties.


(iii)          Assign
the Asset subject to the Asserted Title Defect to Purchaser at Closing, and
reduce the Purchase Price in accordance with Section 3.4(c).


Provided that, if
Seller and Purchaser are unable to mutually agree on one of the foregoing
options, then the Parties shall be deemed to have chosen the option under
subsection (i) above.



 16
 









(c)   The
Purchase Price shall be reduced by an amount (the “Asserted Title Defect Amount”) equal
to the reduction in the Allocated Value for the interest in such Well or
Undeveloped Lease Interest included in the Assets that is subject to an uncured
Asserted Title Defect, which reduction is caused by such uncured Asserted Title
Defect as determined pursuant to Section 3.4(e); provided that no reduction
shall be made in the Purchase Price with respect to any Asserted Title Defect
for which an election has been made pursuant to Section 3.4(b)(ii).


(d)   Except
for Purchaser’s rights under the special warranty of title described in Section
3.1(a) and its rights with respect to any breach of Seller’s covenant under
Section 6.10(f), Section 3.4(c) shall, to the fullest extent permitted by
applicable Laws, be the exclusive right and remedy of Purchaser against Seller
or its Affiliates with respect to any Title Defect attributable to the Combined
Assets.


(e)   The
Asserted Title Defect Amount resulting from an Asserted Title Defect shall be
determined as follows:


(i)            if
Purchaser and Seller agree on the Asserted Title Defect Amount, that amount
shall be the Asserted Title Defect Amount;


(ii)           if
the Asserted Title Defect is an Encumbrance which is undisputed and liquidated
in amount, then the Asserted Title Defect Amount shall be the amount necessary
to be paid to remove the Asserted Title Defect from the affected Well or
Undeveloped Lease Interest;


(iii)          if
the Asserted Title Defect represents a discrepancy between (A) the actual
net revenue interest included in the Assets for any Well or Undeveloped Lease
Interest and (B) the “Conveyed Net Revenue Interest” stated on
Exhibit A-2 for such Review Well, then the Asserted Title Defect Amount
shall be the product of the Allocated Value for the interest in the affected
Well or Undeveloped Lease Interest included in the Assets multiplied by a
fraction, the numerator of which is the net revenue interest decrease and the
denominator of which is the net revenue interest stated on Exhibit A-2 for
such interest; provided that if the Asserted Title Defect does not affect a
Review Well throughout the life of such Review Well, the Asserted Title Defect
Amount determined under this Section 3.4(e)(iii) shall be reduced
accordingly;


(iv)          if
the Asserted Title Defect represents an Encumbrance of a type not described in
subsections (i), (ii) or (iii) above, the Asserted Title Defect
Amount shall be determined by taking into account the Allocated Value of the
interest in the Review Well included in the Assets so affected, the portion of
such interest in the Review Well affected by the Asserted Title Defect, the
legal effect of the Asserted Title Defect, the potential economic effect of the
Asserted Title Defect over the life of the affected Review Well, the values
placed upon the Asserted Title Defect by Purchaser and Seller and such other
factors as are necessary to make a proper evaluation; and



 17
 









(v)           notwithstanding
anything to the contrary in this Article 3, (A) except for adjustments
required by Section 3.6, the aggregate Asserted Title Defect Amounts
attributable to all Asserted Title Defects upon any given interest in a Review
Well included in the Assets shall not exceed the Allocated Value of such
interest in the Review Well and (B) except for adjustments required by
Section 3.5 or Section 3.6, there shall be no Purchase Price adjustment for
Asserted Title Defects unless and until the aggregate Asserted Title Defect Amounts
for all interests in the Review Wells included in the Assets for which claim
notices were timely delivered pursuant to Section 3.4(a) exceed Two Million Six
Hundred Twenty Thousand Dollars (US$2,620,000.00), and then only to the extent
that the aggregate Asserted Title Defect Amounts exceed Two Million Six Hundred
Twenty Thousand Dollars (US$2,620,000.00);


(vi)          if
an Asserted Title Defect of the type not described in subsections (i), (ii) or
(iii) above is reasonably susceptible of being cured, the Asserted Title Defect
Amount determined under subsection (iv) above shall not be greater than the
lesser of (1) the reasonable cost and expense of curing such Asserted
Title Defect or (2) the share of such curative work cost and expense which
is allocated to such interest in such Review Well included in the Assets
pursuant to subsection (vii) below; and


(vii)         the
Asserted Title Defect Amount with respect to a Review Well shall be determined
without duplication of any costs or losses (i) included in another Asserted
Title Defect Amount hereunder, or (ii) included in a casualty loss under
Section 3.6.  To the extent that the cost
to cure any Asserted Title Defect will result in the curing of all or a part of
one or more other Asserted Title Defects, such cost of cure shall be allocated
for purposes of Section 3.4(e)(vi) among the interests in the Review Wells
so affected on a fair and reasonable basis.


(f)    Seller
and Purchaser shall attempt to agree on all Asserted Title Defects and Asserted
Title Defect Amounts by two (2) Business Days prior to the Closing
Date.  If Seller and Purchaser are unable
to agree by that date, the average of Seller’s and Purchaser’s estimates with
respect to the Asserted Title Defect Amounts for the Asserted Title Defects
shall be used to determine the Closing Payment pursuant to Section 8.4(a), and
all Asserted Title Defects and Asserted Title Defect Amounts in dispute shall
be exclusively and finally resolved by arbitration pursuant to this Section
3.4(f).  During the ten (10) Business Day
period following the Closing Date, Asserted Title Defects and Asserted Title
Defect Amounts in dispute shall be submitted to an attorney with at least ten
(10) years of experience in oil and gas titles in southwestern Virginia as
selected by mutual agreement of Purchaser and Seller (the “Title Arbitrator”).  The arbitration proceeding shall be held in
Pittsburgh, Pennsylvania and shall be conducted in accordance with the
Commercial Arbitration Rules of the American Arbitration Association in effect
as of the date hereof, to the extent such rules do not conflict with the terms
of this Section 3.4(f).  The Title
Arbitrator’s determination shall be made within twenty (20) days after
submission of the matters in dispute and shall be final and binding



 18
 









upon both Parties, without right of appeal.  In making his determination, the Title
Arbitrator shall be bound by the rules set forth in Section 3.4(e) and may
consider such other matters as in the opinion of the Title Arbitrator are
necessary or helpful to make a proper determination.  Additionally, with the prior written consent
of Purchaser and Seller, the Title Arbitrator may consult with and engage
disinterested third parties to advise the Title Arbitrator, including title
attorneys from other states and petroleum engineers.  In no event shall any Asserted Title Defect
Amount exceed the estimate given by Purchaser in its claim notice delivered in
accordance with Section 3.4(a).  The
Title Arbitrator shall act as an expert for the limited purpose of determining
the specific disputed Asserted Title Defects and Asserted Title Defect Amounts
submitted by either Party and may not award damages, interest or penalties to
either Party with respect to any matter. 
Seller and Purchaser shall each bear its own legal fees and other costs
of presenting its case.  Each Party shall
bear one-half of the costs and expenses of the Title Arbitrator.


Section 3.5            Consents
to Assignment and Preferential Rights to Purchase.


(a)   Seller will use reasonable efforts,
consistent with industry practices in transactions of this type, to identify,
with respect to all Assets, the names and addresses of all parties holding
Preferential Rights and Consents applicable to the transactions contemplated
hereby.  In attempting to identify the
names and addresses of such parties holding such Preferential Rights and
Consents, Seller shall in no event be obligated to go beyond its own
records.  Seller will request, from the
parties so identified (and from any parties identified by Purchaser prior to Closing
who have Preferential Rights or from whom a Consent may be required), in
accordance with the documents creating such rights, execution of waivers of
Preferential Rights or Consents so identified. 
Seller shall have no obligation other than to identify such Preferential
Rights and Consents and to so request such execution of waivers of Preferential
Rights and Consents (including, without limitation, Seller shall have no
obligation to assure that such waivers of Preferential Rights and Consents are
obtained).


(b)   With respect to Preferential Rights but not
Consents, if a Person from whom a waiver of a Preferential Right is requested
refuses to give such waiver prior to Closing, the interest in the Asset subject
to such Preferential Right will be excluded from the transaction contemplated
hereby, such interest in such Asset will become an “Excluded Asset” for all
purposes hereunder (except in the case of any subsequent transfer of such
interest in such Asset to Purchaser pursuant to the following sentence) and the
Purchase Price will be adjusted downward by the Allocated Value
(proportionately reduced to the excluded interest) for such interest in such
Asset.  If within ninety (90) days
following Closing such holder does waive its Preferential Right, then Purchaser
agrees that, within five (5) days following Seller’s notice thereof, the
Parties hereto will conduct a subsequent Closing (in accordance with same terms
hereof) for the purchase and sale of such excluded Asset.


(c)   If (i) an Asset is subject to a Consent that
prohibits the transfer of such Asset without compliance with the provisions of
such Consent, (ii) the failure to comply with or obtain such Consent will
result in a termination or other material impairment of any rights in relation
to such Asset and (iii) such Consent is not obtained or complied with prior to
the Closing, then



 19
 









unless otherwise agreed to by
Purchaser and Seller, the Asset or portion thereof affected by such Consent
will be excluded from the transactions contemplated hereby, such Asset will
become an “Excluded Asset” for all purposes hereunder (except in the case of
any subsequent transfer of such Asset to Purchaser pursuant to the following
sentence), and the Purchase Price will be adjusted downward by the Allocated
Value for such excluded Asset or if no Allocated Value was given for such
excluded Asset, then a value derived from the Allocated Value of the Assets to
which such excluded Asset relates.  If,
within ninety (90) days  following Closing, such Consent is obtained
or otherwise complied with, then Purchaser agrees that, within five (5) days
following Seller’s notice thereof, the Parties hereto will conduct a subsequent
Closing (in accordance with the same terms hereof) for the purchase and sale of
such excluded Asset.


(d)   To the extent that the consent of PMOG with
respect to the assignment of the Assets contemplated hereby is required under
any agreement or arrangement, as of the Closing, PMOG hereby irrevocably grants
such consent.


Section 3.6            Casualty
or Condemnation Loss.  Subject
to the provisions of Section 7.1(f) and Section 7.2(f) hereof, if, after the
date of this Agreement but prior to the Closing Date, any portion of the Assets
is destroyed by fire or other casualty or is taken in condemnation or under
right of eminent domain, Purchaser shall nevertheless be required to close and
the Parties mutually shall elect prior to Closing one of the following
options:  (i) to have Seller cause
the Assets affected by any casualty to be repaired or restored, at Seller’s
sole cost, as promptly as reasonably practicable (which work may extend after
the Closing Date), (ii) to have Seller indemnify Purchaser through a
document reasonably acceptable to Seller and Purchaser against any costs or
expenses that Purchaser reasonably incurs to repair the Assets subject to any
casualty or (iii) to treat such casualty or taking as an Asserted Title
Defect with respect to the affected Assets under Section 3.4; provided that in
the event that the Purchase Price is adjusted pursuant to Section 3.4(b)(iii),
then in no event shall such Asserted Title Defect be subject to the provisions
of Section 3.4(e)(v) hereof; and provided further that if the Parties are
unable to mutually elect one of the foregoing options, then the Parties shall
be deemed to have chosen the option under subsection (iii) above.  In each case, Seller shall retain all rights
to insurance and other claims against third parties with respect to the
casualty or taking except to the extent the Parties otherwise agree in writing.


ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER


Section 4.1          Disclaimers.


(a)   Except
as expressly set forth in Article 3, Article 4, in the certificate delivered by
Seller at Closing pursuant to Section 8.2(b) or in the Conveyance,
(i) Seller makes no representations or warranties, express or implied,
with respect to the Combined Assets or the transactions contemplated hereby and
(ii) Seller expressly disclaims all liability and responsibility for any
representation, warranty, statement or information with respect to the Combined
Assets or the transactions contemplated hereby made or communicated (orally or
in writing) to Purchaser or any of its Affiliates, employees, agents,
consultants or representatives (including any opinion, information, projection or
advice that may



 20
 









have been provided to Purchaser by any officer, director, employee,
agent, consultant, representative or advisor of Seller or any of its
Affiliates).


(b)   EXCEPT
AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 3, ARTICLE 4, IN THE
CERTIFICATE DELIVERED BY SELLER AT CLOSING PURSUANT TO SECTION 8.2(b) OR IN THE
CONVEYANCE, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO
(I) TITLE TO ANY OF THE COMBINED ASSETS, (II) THE CONTENTS, CHARACTER
OR NATURE OF ANY INFORMATION PROVIDED BY SELLER WITH RESPECT TO THE COMBINED
ASSETS, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY
GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE COMBINED ASSETS,
(III) THE QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS IN OR FROM
THE COMBINED ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE COMBINED
ASSETS OR FUTURE REVENUES GENERATED BY THE COMBINED ASSETS, (V) THE
PRODUCTION OF HYDROCARBONS FROM THE COMBINED ASSETS, OR WHETHER PRODUCTION HAS
BEEN CONTINUOUS, OR IN PAYING QUANTITIES, (VI) THE MAINTENANCE, REPAIR,
CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE COMBINED
ASSETS, OR (VII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN
MADE AVAILABLE OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR
EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR
PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT, IT
BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT, SUBJECT TO
SELLER’S REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE 3, ARTICLE 4, IN
THE CERTIFICATE DELIVERED BY SELLER AT CLOSING PURSUANT TO SECTION 8.2(b) AND
IN THE CONVEYANCE, PURCHASER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS
PURCHASER DEEMS APPROPRIATE, PURCHASER IS RECEIVING EQUIPMENT AND ALL OTHER
TANGIBLE PROPERTY IN ITS PRESENT STATUS, CONDITION AND STATE OF REPAIR, “AS IS”
AND “WHERE IS” WITH ALL FAULTS.


(c)   Any
representation “to the knowledge of Seller” or “to Seller’s knowledge” is
limited to matters within the actual conscious awareness of Ted O’Brien, Lester
Zitkus, Mike Canich, John Centofanti, Ken Kirk, Rick Crites and Phil Elliott.


(d)   Inclusion
of a matter on a schedule attached hereto with respect to a representation or
warranty that addresses matters having a Material Adverse Effect shall not be
deemed an indication that such matter does, or may, have a Material Adverse



 21
 









Effect.  Matters may be disclosed
on a schedule for purposes of information only. 
As used herein, “Material Adverse Effect” means any change, inaccuracy,
circumstance, event, result, occurrence, condition or an act (each, an “Event”)
that has had or could reasonably be expected to have a material adverse effect
on the ownership, operation or value of the Assets, taken as a whole or the
ability of Seller or Purchaser, as applicable, to consummate the transactions
contemplated hereby or meet its obligations under this Agreement and the
documents to be executed hereunder; provided, however, that “Material Adverse
Effect” shall not include Events resulting from general changes in Hydrocarbon
prices; general changes in the Hydrocarbon exploration and production industry
or general economic or political conditions; civil unrest, insurrection or
similar disorders; or changes in Laws.


(e)   Subject
to the foregoing provisions of this Section 4.1, and the other terms and
conditions of this Agreement, Seller represents and warrants to Purchaser the
matters set out in the remainder of this Article 4.


Section 4.2          Seller.


(a)   Existence and Qualification.  Seller is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and is duly qualified to do business as a foreign corporation in
the Commonwealth of Virginia.


(b)   Power.  Seller has the corporate power to enter into
and perform this Agreement (and all documents required to be executed and
delivered by Seller at Closing) and to consummate the transactions
contemplated by this Agreement (and such documents).


(c)   Authorization and Enforceability.  The execution, delivery and performance of
this Agreement by Seller (and all documents required to be executed and
delivered by Seller at Closing) and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action on the part of Seller.  This Agreement has been duly executed and
delivered by Seller (and all documents required to be executed and delivered by
Seller at Closing shall be duly executed and delivered by Seller) and this
Agreement constitutes (and at the Closing such documents shall constitute) the
valid and binding obligations of Seller, enforceable in accordance with their
terms except as such enforceability may be limited by applicable bankruptcy or
other similar Laws affecting the rights and remedies of creditors generally, as
well as to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at Law).


(d)   No Conflicts.  The execution, delivery and performance of
this Agreement by Seller (and all documents required to be executed and
delivered by Seller at Closing), and the consummation of the transactions
contemplated by this Agreement (and by such documents) shall not (i) violate
any provision of the certificate of incorporation or bylaws of Seller,
(ii) result in default (with due notice or lapse of time or both) or
the creation of



 22
 









any lien or encumbrance or give rise to any right of termination,
cancellation or acceleration under any note, bond, mortgage, indenture, license
or agreement to which Seller is a party or by which it is bound,
(iii) violate any judgment, order, ruling, or decree applicable to Seller
as a party in interest, or (iv) violate any Laws applicable to Seller or
any of the Assets, except any matters described in clauses (ii), (iii), or
(iv) above which would not have a Material Adverse or as set forth on
Schedule 4.2(d).


Section 4.3            Liability
for Brokers’ Fees.  Purchaser
shall not directly or indirectly have any responsibility, liability or expense,
as a result of undertakings or agreements of Seller or its Affiliates, for
brokerage fees, finder’s fees, agent’s commissions or other similar forms of
compensation to an intermediary in connection with the negotiation, execution
or delivery of this Agreement or any agreement or transaction contemplated
hereby.


Section 4.4            Consents,
Approvals or Waivers.  Except
(a) for preferential rights (collectively “Preferential Rights”) to purchase
and all Lease or other provisions restricting assignment without consent (“Consents”)
which would be applicable to the transactions contemplated hereby that are set
forth on Schedule 4.4 (the “Scheduled Transfer Requirements”), (b) as would
not, individually or in the aggregate, have a Material Adverse Effect, and (c)
for approvals customarily obtained from a Governmental Authority post-Closing,
neither the execution and delivery of this Agreement (nor any documents
required to be executed by Seller at Closing), nor the consummation of the
transactions contemplated hereby nor thereby, nor the compliance with the terms
hereof nor thereof (in each case) by Seller will (i) conflict with or result in
a violation of any provision of, or constitute (with or without the giving of
notice or the passage of time or both) a default under, or give rise to (with
or without the giving of notice or the passage of time or both) any right of
termination, cancellation, or acceleration under, any bond, debenture, note,
mortgage or indenture, or any lease, contract, agreement, or other instrument
or obligation to which Seller is a party or by which Seller or any of the
Assets may be bound, or (ii) violate any applicable Law binding upon Seller or
the Assets.  Except for the (x) Scheduled
Transfer Requirements, and (y) for approvals customarily obtained from a
Governmental Authority post-Closing, the execution of this Agreement by Seller
and the consummation of the transactions contemplated hereby by Seller will not
require any material consent, approval or waiver of any Governmental Authority
or other third Person, or create a right in favor of any Person to purchase all
or any material part of the Assets.


Section 4.5            Litigation.  Except as disclosed on
Schedule 4.5A or Schedule 4.5B and except for the Party Lawsuit,
there are no actions, suits or proceedings pending, or to Seller’s knowledge,
threatened in writing, by or before any Governmental Authority or arbitrator
with respect to the Assets or Seller’s or any of its Affiliates’ ownership,
operation or use thereof.  To Seller’s
knowledge, no written notice from any third Person (including any Governmental
Authority) claiming material Damages or any material breach of duty or care has
been received by Seller or any of its Affiliates relating to the Assets or
Seller’s or any of its Affiliates’ ownership, operation or use thereof, except
for the suits, actions and proceedings set forth in Schedule 4.5A or
Schedule 4.5B and the Party Lawsuit.


Section 4.6            Taxes.  Except as disclosed on
Schedule 4.6: (i) all material Tax Returns required to be filed with respect to
the Assets have been duly and timely filed; (ii) each such Tax



 23
 









Return is in all
material respects true, correct and complete; (iii) all material Taxes owed
with respect to the Assets have been timely paid in full; (iv) there are no
Encumbrances for Taxes on any of the Assets other than Permitted Encumbrances;
(v) there is no outstanding dispute or claim concerning any material Taxes with
respect to the Assets, and, to Seller’s knowledge, no assessment, deficiency or
adjustment has been asserted or proposed with respect thereto; and (vi) to
Seller’s knowledge, all of the Assets have been properly listed and described
on the property tax rolls for the taxing units in which such Assets are located
and no portion of the Assets constitutes omitted property for property tax
purposes.


Section 4.7            Environmental
Laws.  To Seller’s
knowledge, Seller and its Affiliates have complied in all respects with, and
the operation of the Assets has been in compliance in all respects with, all
applicable Laws relating to the environment (“Environmental Laws”), except such
failures to comply as, individually or in the aggregate, would not have a
Material Adverse Effect.  Except for
contamination that would not, individually or in the aggregate, have a Material
Adverse Effect, to Seller’s knowledge, there has been no contamination of
groundwater, surface water or soil resulting from activities relating to the
Assets, which requires remediation under applicable Environmental Laws.


Section 4.8            Compliance
with Laws.  Except
with respect to Environmental Laws, which are addressed in Section 4.7, and
except as disclosed on Schedule 4.8, to Seller’s knowledge, Seller and its
Affiliates have complied in all respects with, and the Assets have been
operated and maintained in compliance in all respects with, all applicable
Laws, except such failures to comply as would not, individually or in the
aggregate, have a Material Adverse Effect.


Section 4.9            Contracts.  Neither Seller, nor, to the
knowledge of Seller, any other Person is in default under any Contract or any
contract or other agreement otherwise affecting the Assets, except as disclosed
on Schedule 4.5A, Schedule 4.5B or Schedule 4.9 and except for
such defaults as would not, individually or in the aggregate, have a Material
Adverse Effect.


Section 4.10         Payments
for Production.  Except
as disclosed on Schedule 4.10, all proceeds from the sale of Hydrocarbons
attributable to the Assets are currently being paid in full to Seller (after Tax
withholdings or similar deductions required by the terms of the Contracts or
applicable Law).  Further, Seller is not
obligated by virtue of a take or pay payment, advance payment or other similar
payment (other than royalties and similar arrangements established in the
Leases and reflected in the net revenue interests set forth in Exhibit A-2 or
except as is otherwise reflected in such exhibits), to deliver Hydrocarbons, or
proceeds from the sale thereof, attributable to the Properties included in the Assets
at some future time without receiving payment therefor at or after the time of
delivery.


Section 4.11         Production
Imbalances.  Except
as set forth in Schedule 4.11, as of the Effective Time and as of the date
of this Agreement, Seller has no production imbalances with co-owners of the
Properties included in the Assets as a result of past production in excess of
the share to which it is entitled.


Section 4.12         Permits,
etc..  To Seller’s
knowledge, except as disclosed on Schedule 4.12, Seller has obtained and is
maintaining all material federal, state and local governmental



 24
 









licenses, permits,
franchises, orders, exemptions, variances, waivers, authorizations,
certificates, consents, rights, privileges and applications therefor (the “Governmental
Permits”) that are presently necessary or required for the ownership and
operation of the Assets as currently owned and operated. To Seller’s knowledge,
except as disclosed in Schedule 4.12, (a) the Assets have been operated in all
material respects in accordance with the conditions and provisions of such
Governmental Permits, and (b) no written notices of material violation of such
Governmental Permits have been received by Seller or its Affiliates.


Section 4.13         Outstanding
Capital Commitments.  As
of the date hereof, there are no outstanding authorities for expenditures or
other commitments to make capital expenditures which are binding on the Assets
and which Seller reasonably anticipates will individually require expenditures
by the owner of the Assets after the Effective Time other than (a) those
reflected in the capital budget included as Schedule 4.13 and (b) those of
which an officer of Purchaser is aware because of the Purchaser’s ownership of
working interests included in the Pre-Effective Time Interests.


Section 4.14         Plugging
and Abandonment.  Except
as set forth in Schedule 4.14, from the Effective Time through the date of this
Agreement, Seller has not abandoned, and is not in the process of abandoning,
any Wells included in the Assets (nor has it removed, nor is it in the process
of removing, any material items of personal property located upon the
Properties included in the Assets, except those replaced by items of
substantially equivalent suitability and value).  Except as set forth in Schedule 4.14 or as
otherwise would not have a Material Adverse Effect, there are no Wells included
in the Assets that:


(a)           Seller
is currently required by Law or by Contract to plug and abandon as of the date
hereof;


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


(c)           have
been plugged and abandoned but have not been plugged in accordance with all
applicable requirements of each Governmental Authority having jurisdiction over
such Properties.


Section 4.15         Condition
of Equipment, etc..  Except
as set forth in Schedule 4.15, to the knowledge of Seller, all Wells, fixtures,
facilities and Equipment included in the Assets (other than the PM Wells) have
been maintained in all material respects in a state of adequate repair
consistent with industry standards in the Appalachian Basin and are otherwise
generally adequate for the normal operation thereof.


Section 4.16         Payments
of Royalties and Expenses.  Except
as set forth on Schedule 4.5A or Schedule 4.5B, to Seller’s knowledge,
royalties, overriding royalties, compensatory royalties and other payments due
from or in respect of production from the Properties included in the Non-PM
Assets and all Property Costs attributable to the Assets have been properly and
correctly paid or provided for in all material respects by Seller.



 25















Section 4.17         Suspense.  Schedule 4.17 sets forth,
by Well, the amount of money held in suspense by Seller out of the collected
proceeds from the sale of Hydrocarbons attributable to the Assets.


Section 4.18         Absence
of Certain Events.  Except
as disclosed on Schedule 4.18 or as contemplated by this Agreement, since the
Effective Time, there has not been any damage, destruction or loss, whether
covered by insurance or not, with respect to the Assets that has had or is
reasonably likely to have a Material Adverse Effect.


Section 4.19         Information.  To Seller’s knowledge,
Seller has complied in all material respects with Purchaser’s requests for
supporting documentation and information relating to the transactions
contemplated by this Agreement to the extent Seller has such documentation or
information in Seller’s or its Affiliates’ possession or control.


ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF PURCHASER


Purchaser
represents and warrants to Seller the following:


Section 5.1            Existence
and Qualification.  Purchaser
is a corporation organized, validly existing and in good standing under the
Laws of the Commonwealth of Virginia.


Section 5.2            Power.  Purchaser has the corporate
power to enter into and perform this Agreement (and all documents required to
be executed and delivered by Purchaser at Closing) and to consummate the
transactions contemplated by this Agreement (and such documents).


Section 5.3            Authorization
and Enforceability.  The
execution, delivery and performance of this Agreement by Purchaser (and all documents
required to be executed and delivered by Purchaser at Closing), and the
consummation of the transactions contemplated hereby and thereby, have been
duly and validly authorized by all necessary corporate action on the part of
Purchaser.  This Agreement has been duly
executed and delivered by Purchaser (and all documents required to be executed
and delivered by Purchaser at Closing will be duly executed and delivered by
Purchaser) and this Agreement constitutes (and at the Closing such
documents will constitute) the valid and binding obligations of Purchaser,
enforceable in accordance with their terms except as such enforceability may be
limited by applicable bankruptcy or other similar Laws affecting the rights and
remedies of creditors generally, as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at Law).


Section 5.4            No
Conflicts.  The
execution, delivery and performance of this Agreement by Purchaser (and all
documents required to be executed and delivered by Purchaser at Closing), and
the consummation of the transactions contemplated by this Agreement and (by
such documents) will not (a) violate any provision of the certificate of
incorporation or bylaws of Purchaser, (b) result in a default (with due
notice or lapse of time or both) or the creation of any lien or
encumbrance or give rise to any right of termination, cancellation or
acceleration under



 26
 









any note, bond,
mortgage, indenture, license or agreement to which Purchaser is a party or by
which it is bound, (c) violate any judgment, order, ruling, or regulation
applicable to Purchaser as a party in interest, or (d) violate any Law
applicable to Purchaser or any of its assets, except any matters described in clauses
(b), (c) or (d) above which would not have a material adverse effect
on Purchaser’s ability to consummate the transactions contemplated hereby.


Section 5.5            Liability
for Brokers’ Fees.  Seller
shall not directly or indirectly have any responsibility, liability or expense,
as a result of undertakings or agreements of Purchaser or its Affiliates, for
brokerage fees, finder’s fees, agent’s commissions or other similar forms of
compensation to an intermediary in connection with the negotiation, execution
or delivery of this Agreement or any agreement or transaction contemplated
hereby.


Section 5.6            Consents,
Approvals or Waivers.  Neither
the execution and delivery of this Agreement (nor any documents required to be
executed by Purchaser at Closing), nor the consummation of the transactions
contemplated hereby and thereby, nor the compliance with the terms hereof and
thereof (in each case, by Purchaser), will (a) be subject to obtaining any
consent, approval, or waiver from any Governmental Authority or other third Person,
or (b) except as would not, individually or in the aggregate, have a material
adverse effect on Purchaser’s ability to consummate the transactions
contemplated hereby, violate any applicable Law binding upon Purchaser.


Section 5.7            Litigation.  Except for the Party
Lawsuit, there are no actions, suits or proceedings pending, or to Purchaser’s
knowledge, threatened in writing by or before any Governmental Authority or
arbitrator against Purchaser which are reasonably likely to impair Purchaser’s
ability to consummate the transactions contemplated hereby.


Section 5.8            Financing.  Purchaser has sufficient
cash, available lines of credit or other sources of immediately available funds
(in United States dollars) to enable it to pay the Closing Payment to Seller
at the Closing.


Section 5.9            Qualification.  Purchaser is, or as of the
Closing will be, qualified under applicable Laws to receive the assignment of
the Assets.


Section 5.10         No
Top Leases.  Since
1972, none of Purchaser, its Affiliates, or any of its or their predecessors in
interest under the Original Lease has previously granted any rights to explore
for and develop Hydrocarbons that are exclusively granted to Seller as lessee
under the New Lease, except such rights granted to Seller, its Affiliates or
any of its or their predecessors in interest pursuant to the Original Lease or
under the Exploration Agreement.


Section 5.11         Independent
Investigation.  Subject
to Seller’s representations and warranties set forth in Article 3 and Article 4
hereof (or in any certificate furnished or to be furnished to Purchaser
pursuant to this Agreement) and in the Conveyance, Purchaser acknowledges and
affirms that it has made (or will make prior to Closing) all such reviews and
inspections of the Assets as Purchaser has deemed necessary or
appropriate.  Except for the
representations and warranties expressly made by Seller in Article 3 and
Article 4 of this Agreement (or in any certificate furnished or to be furnished
to Purchaser pursuant to this



 27
 









Agreement) and in
the Conveyance, Purchaser acknowledges that there are no representations or
warranties, express or implied, as to the Assets or prospects thereof, and that
in making its decision to enter into this Agreement and to consummate the
transactions contemplated hereby, Purchaser has relied solely upon its own
independent investigation, verification, analysis and evaluation.


Section 5.12         Seller
Information.  To
the knowledge of the officers of Purchaser, as of the execution date of this
Agreement, Seller has complied in all material respects with Purchaser’s
requests for supporting documentation and information relating to the
transactions contemplated by this Agreement.


ARTICLE 6

COVENANTS OF THE PARTIES


Section 6.1            Access.  Seller will give Purchaser
and its representatives access to the Assets and access to and the right to
copy, at Purchaser’s expense, the Records in Seller’s possession, for the
purpose of conducting an investigation of the Assets, but only to the extent
that Seller may do so without violating any obligations to any third Person;
provided that Seller shall use its commercially reasonable efforts to obtain
all consents and waivers from such third Persons if necessary to permit
Purchaser’s access to the Assets and Records. 
Such access by Purchaser shall be limited to Seller’s normal business
hours, and Purchaser’s investigation shall be conducted in a manner that
minimizes interference with the operation of the Assets.  Purchaser at its option may conduct a Phase I
environmental audit of any or all of the Assets, to the extent Seller has
authority to permit such an audit, provided that neither Purchaser nor its
representatives shall conduct any testing or sampling on or with respect to the
Assets prior to Closing.


Section 6.2            Indemnity
Regarding Access.  Purchaser
agrees to indemnify, defend and hold harmless Seller, its Affiliates, the other
owners of interests in the Assets (other than Purchaser or its Affiliate), and
all such Persons’ directors, officers, employees, agents and representatives
from and against any and all Damages directly attributable to access to the
Assets prior to the Closing by Purchaser, its Affiliates, or its or their
directors, officers, employees, agents or representatives in connection with
Purchaser’s due diligence activities with respect to the transactions
contemplated hereby, even if caused in whole
or in part by the negligence (whether sole, joint or concurrent), strict
liability or other legal fault of any Indemnified Person but excluding any
Damages to the extent caused by the gross negligence or willful misconduct of
any Indemnified Person.


Section 6.3            Pre-Closing
Notifications.  Until
the Closing,


(a)   Purchaser
shall notify Seller promptly after any officer of Purchaser obtains actual
knowledge that (i) any representation or warranty of Seller contained in
this Agreement is untrue in any material respect or will be untrue in any
material respect as of the Closing Date or (ii) any covenant or agreement
to be performed or observed by Seller



 28
 









prior to or on the Closing Date has not been so performed or observed
in any material respect.


(b)   Seller
shall notify Purchaser promptly after any officer of Seller obtains actual
knowledge that (i) any representation or warranty of Purchaser contained
in this Agreement is untrue in any material respect or will be untrue in any
material respect as of the Closing Date or (ii) any covenant or agreement
to be performed or observed by Purchaser prior to or on the Closing Date has
not been so performed or observed in a material respect.


If any of
Purchaser’s or Seller’s representations or warranties is untrue or shall become
untrue in any material respect between the date of execution of this Agreement
and the Closing Date, or if any of Purchaser’s or Seller’s covenants or
agreements to be performed or observed prior to or on the Closing Date shall
not have been so performed or observed in any material respect, but if such
breach of representation, warranty, covenant or agreement shall (if
curable) be cured by the Closing and the other Party has not terminated
this Agreement pursuant to Section 9.1, then such breach shall be considered
not to have occurred for all purposes of this Agreement; provided that any
costs or expenses arising out of or relating to such cure shall be borne solely
by the Party who committed the breach (notwithstanding anything to the contrary
herein, including the Purchase Price adjustments set forth in Section 2.2).


Section 6.4            Confidentiality;
Public Announcements.  Until
the Closing, the Parties shall keep confidential and cause their Affiliates and
their respective officers, directors, employees and representatives to keep
confidential all information relating to this Agreement and the Assets, except
as required by applicable Laws, administrative process or the applicable rules
of any stock exchange to which such Party or its Affiliates are subject, and
except for information which is available to the public on the date hereof or
thereafter becomes available to the public other than as a result of a breach
of this Section 6.4 by such Party or any such other Person.  Until the Closing, no Party shall make any
press release or other public announcement regarding the existence of this
Agreement (or any documents contemplated by this Agreement), the contents
hereof or thereof or the transactions contemplated hereby or thereby without
the prior written consent of the other Party; provided, however, the foregoing
shall not restrict disclosures by Purchaser or Seller (a) that are
mutually agreed to in writing, (b) that are required by applicable
securities or other Laws or the applicable rules of any stock exchange having
jurisdiction over the disclosing Party or its Affiliates, or (c) to
Governmental Authorities and third Persons holding Preferential Rights or
Consents that may be applicable to the transactions contemplated by this
Agreement (or any documents contemplated by this Agreement), as reasonably
necessary to obtain waivers of such rights or such consents.  The Parties agree to negotiate a reasonable
and customary post-Closing press release. 
Notwithstanding the foregoing, at no time (before or after the Closing)
shall either Party or its Affiliates disclose the specific development plans
for the properties included within the AMI except (i) with the prior written
consent of the other Party, (ii) to suppliers and other Persons bound by
similar confidentiality provisions as is reasonably necessary to conduct
operations within the AMI, (iii) that are required by applicable securities or
other Laws or the applicable rules of any stock exchange having jurisdiction
over the disclosing Party or its Affiliates, (iv) as is reasonably necessary to
Governmental Authorities, (v) to prospective purchasers bound by similar
confidentiality



 29
 









provisions, (vi)
to the disclosing Party’s Affiliates and such Party’s representatives bound by
similar confidentiality provisions, (vii) to the disclosing Party’s lenders or
financials advisors, or (viii) information which is available to the public on
the date hereof or thereafter becomes available to the public other than as a
result of a breach of this Section 6.4 by such Party or any such other Person;
provided that the disclosing Party shall be responsible for any breach by the
parties listed under subsections (ii), (v), (vi) or (vii) above of the confidentiality
provisions set forth in this sentence.


Section 6.5            Governmental
Reviews.  Seller
and Purchaser shall each in a timely manner (a) make all required filings,
if any, and prepare applications to and conduct negotiations, with each
Governmental Authority as to which such filings, applications or negotiations
are necessary or appropriate in the consummation of the transactions
contemplated hereby, and (b) provide such information as the other may
reasonably request in order to make such filings, prepare such applications and
conduct such negotiations.  Each Party
shall cooperate with and use all reasonable efforts to assist the other with
respect to such filings, applications and negotiations.


Section 6.6            Tax
Matters.  The
provisions of this Section 6.6 shall apply to all Taxes except to the extent
that Production Taxes are dealt with in Section 1.5.


(a)   Effective
Time for Tax Purposes.  
Notwithstanding any other provision of this Agreement, the Parties shall
treat the sale of the Assets hereunder as occurring as of the Closing for all
Tax purposes.


(b)     Transfer
Taxes.  Seller and Purchaser shall
each pay any Transfer Taxes imposed on it by Law as a result of the
transactions contemplated by this Agreement, but, notwithstanding such
requirement at Law, each of Seller and Purchaser shall bear one-half of the
total of all such Transfer Taxes. 
Accordingly, if either Party is required at Law to pay more than its
one-half of any such Transfer Taxes, the other Party shall promptly reimburse
such first Party for amounts in excess of such one-half.  Seller and Purchaser shall timely file their
own Transfer Tax returns as required by Law and shall notify the other Party
when such filings have been made.  Seller
and Purchaser shall cooperate and consult with each other prior to filing such
Transfer Tax returns to ensure that all such returns are filed in a consistent
manner.


(c)   Preparation
of Tax Returns.   With respect to any
Tax Return covering a taxable period ending on or before the Closing Date (a “Pre-Closing
Taxable Period”) that is required to be filed after the Closing Date with
respect to the Assets, Seller shall cause such Tax Return to be prepared (in a
manner consistent with practices followed in prior taxable periods except as
required by a change in Law or fact) and shall cause such Tax Return to be
executed and duly and timely filed with the appropriate Governmental Authority
and shall pay all Taxes shown as due on such Tax Return.  With respect to any Tax Return covering a
taxable period beginning on or before the Closing Date and ending after the
Closing Date (a “Straddle Taxable Period”) that is required to be filed after
the Closing Date with respect to the Assets, Purchaser shall cause such Tax
Return to be prepared (in a manner consistent with practices followed in prior
taxable periods except



 30
 









as required by a change in Law or fact) and shall cause such Tax Return
to be executed and duly and timely filed with the appropriate Governmental
Authority and, subject to Seller’s payment to Purchaser of a portion of such
Tax pursuant to Section 6.6(d), shall pay all Taxes shown as due on such Tax
Return.


(d)   Liability
for Taxes.   Seller shall be
responsible for and indemnify Purchaser against, and Seller shall be entitled
to all refunds or credits of, any Tax with respect to the Assets that is
attributable to a Pre-Closing Taxable Period or to that portion of a Straddle
Taxable Period that ends on the Closing Date. 
With respect to a Straddle Taxable Period, Purchaser and Seller shall
determine the Tax attributable to the portion of the Straddle Taxable Period
that ends on the Closing Date by an interim closing of the books with respect
to the Assets as of the Closing Date, except for ad valorem Taxes which shall
be prorated on a daily basis to the Closing Date, and Seller shall pay to
Purchaser an amount equal to the Tax so determined to be attributable to that
portion of a Straddle Taxable Period that ends on the Closing Date within five
(5) days prior to the due date for the payment of such Tax, to the extent not
previously paid by Seller.  Purchaser
shall be responsible for and indemnify Seller against, and Purchaser shall be
entitled to all refunds and credits of, all Taxes with respect to the Assets
that are attributable to that portion of any Straddle Taxable Period beginning
after the Closing Date.  Notwithstanding
the foregoing, Seller shall be entitled to the general abatement of property
taxes issued by Dickenson County in the amount of one hundred thousand dollars
(US$100,000) per year for a period of five (5) years.


(e)   Tax
Proceedings.  With respect to any Tax
for which Seller is responsible, Seller shall have the right, at its sole cost
and expense, to control (in the case of a Pre-Closing Taxable Period) or
participate in (in the case of a Straddle Taxable Period) the prosecution,
settlement or compromise of any proceeding involving such Tax, including the
determination of the value of property for purposes of real and personal
property ad valorem Taxes.  Purchaser
shall take such action in connection with any such proceeding as Seller shall
reasonably request from time to time to implement the preceding sentence,
including the execution of powers of attorney. 
Notwithstanding the foregoing, neither Seller nor Purchaser shall settle
any proceeding with respect to any issue that could adversely affect the other
Party in a taxable period (or portion thereof) beginning after the Closing Date
without such other Party’s prior written consent, not to be unreasonably
withheld, conditioned or delayed. 
Purchaser shall give written notice to Seller of its receipt of any
notice of any audit, examination, claim or assessment for any Tax which could
result in any such proceeding within twenty (20) days after its receipt of such
notice.


(f)    Assistance
and Cooperation.  Seller shall grant
to Purchaser (or its designees) access at all reasonable times to all of the
information, books and records relating to the Assets within the possession of
Seller (including workpapers and correspondence with Governmental Authorities),
and shall afford Purchaser (or its designees) the right (at Purchaser’s
expense) to take extracts therefrom and to make copies thereof, to the extent
reasonably necessary to permit Purchaser (or its designees) to prepare Tax
Returns and to conduct negotiations with Governmental Authorities.  Purchaser shall grant to Seller (or



 31
 









its designees) access at all reasonable times to all of the
information, books and records relating to the Assets within the possession of
Purchaser (including workpapers and correspondence with Governmental
Authorities), and shall afford Seller (or its designees) the right (at Seller’s
expense) to take extracts therefrom and to make copies thereof, to the extent
reasonably necessary to permit Seller (or its designees) to prepare Tax Returns
and to conduct negotiations with Governmental Authorities.  After the Closing Date, Seller and Purchaser
will preserve all information, records or documents relating to liabilities for
Taxes with respect to the Assets until six (6) months after the expiration of
any applicable statute of limitations (including extensions thereof) with
respect to the assessment of such Taxes.


Section 6.7            Further
Assurances.  After
Closing, Seller and Purchaser each agrees to take such further actions and to
execute, acknowledge and deliver all such further documents as are reasonably
requested by the other Party for carrying out the purposes of this Agreement,
or of any document delivered pursuant to this Agreement.


Section 6.8            Assumption
of Obligations.  By
the consummation of the transactions contemplated by this Agreement at Closing,
and without limiting the indemnification obligations of either Party under this
Agreement, from and after Closing, Purchaser agrees to assume and pay, perform
and discharge all obligations of Seller accruing under the Leases and Contracts
with respect to the Assets.


Section 6.9            Like-Kind
Exchange.  Seller
may elect to structure this transaction as a like-kind exchange pursuant to
section 1031 of the Code, and the regulations promulgated thereunder, with
respect to any or all of the Assets (a “Like-Kind Exchange”) at any time prior
to the date of Closing.  In order to
effect a Like-Kind Exchange, Purchaser shall cooperate and do all acts as may
be reasonably required or requested by Seller with regard to effecting the
Like-Kind Exchange, including, but not limited to, permitting such Seller to
assign its rights (but not its obligations) under this Agreement to a qualified
intermediary of Seller’s choice in accordance with Treasury Regulation
§1.1031(k)-1(g)(4) or executing additional escrow instructions, documents,
agreements, or instruments to effect an exchange; provided, however, (a)
Purchaser shall incur no expense or liability in connection with such Like-Kind
Exchange, (b) Purchaser shall not be required to take title to any asset other
than the Assets in connection with the Like-Kind Exchange, (c) Seller’s
liability hereunder (including its indemnification obligations under Article
10) shall not be alleviated, amended or altered in any manner as a result of
any Like-Kind Exchange, and (d) Purchaser’s possession of the Assets will not
be delayed by reason of any Like-Kind Exchange.


Section 6.10         Operation
of Assets.  Except
as set forth on Schedule 6.10, until the Closing, Seller (a) will operate the
Non-PM Assets and its business with respect thereto in the ordinary course, (b)
will not, without the prior written consent of Purchaser, which consent shall
not be unreasonably withheld, conditioned or delayed, commit to any operation,
or series of related operations with respect to the Assets, requiring future
capital expenditures by Purchaser as the owner of the Assets in excess of those
amounts reflected in the capital budget previously provided by Seller to
Purchaser, or terminate, materially amend, execute or extend any material
Contracts affecting the Assets, (c) will maintain insurance coverage on the
Assets in the amounts



 32
 









and of the types
presently in force, (d) will use its commercially reasonable efforts to
maintain in full force and effect all Leases included in the Non-PM Assets, (e)
will maintain all material Governmental Permits affecting the Assets, (f) will
not transfer, farmout, sell, hypothecate, encumber or otherwise dispose of any
Assets, except for (1) sales and dispositions of Hydrocarbon production in the
ordinary course of business consistent with past practices or (2) transfers,
farmouts, sales, or other similar dispositions of Assets, in one or more
transactions, not exceeding Five Hundred Thousand Dollars (US$500,000) of
consideration (in any form), in the aggregate, and (g) will not commit to do
any of the foregoing. Purchaser’s approval of any action restricted by this
Section 6.10 shall be considered granted within ten (10) days (unless a shorter
time is reasonably required by the circumstances and such shorter time is
specified in Seller’s written notice) of Seller’s written notice to Purchaser
requesting such consent unless Purchaser notifies Seller to the contrary in
writing during that period. In the event of an emergency, Seller may take such
action as a prudent operator would take and shall notify Purchaser of such
action promptly thereafter.  Purchaser
acknowledges that Seller may own an undivided interest in certain Assets, and
Purchaser agrees that the acts or omissions of the other working interest
owners who are not affiliated with Seller shall not constitute a violation of
the provisions of this Section 6.10 nor shall any action required by a vote of
working interest owners constitute such a violation so long as Seller has voted
its interest in a manner consistent with the provisions of this Section 6.10.


Section
6.11         Financial Information.  Seller shall use its
commercially reasonable efforts to (a) assist Purchaser and Purchaser’s
accountants, at the sole cost and expense of Purchaser, in the preparation of
either (i) if relief is granted by the SEC, statements of revenues and direct
operating expenses and all notes thereto related to the Assets or (ii) if such
relief is not granted by the SEC, the financial statements required by the SEC
(such financial statements set forth in the foregoing clauses (i) and (ii), as
applicable, the “Statements of Revenues and Expenses”) in each case of clauses
(i) and (ii), that will be required of Purchaser or any of its Affiliates in
connection with reports, registration statements and other filings to be made
by Purchaser or any of its Affiliates related to the transactions contemplated
by this Agreement with the SEC pursuant to the Securities Act, or the Exchange
Act, in such form that such statements and the notes thereto can be audited,
and (b) cooperate with Purchaser to provide to Purchaser access to such
financial information as is reasonably related to the preparation of the
Statements of Revenues and Expenses; provided that in no event shall Seller be
obligated to prepare or provide financial information, records or financial
statements other than those kept by it in its ordinary course of business.


Section 6.12       No Merger of
Interests.


(a)           The
interests of Purchaser as lessee and lessor under the New Lease shall at all
times be separate and apart and shall in no event be merged, notwithstanding
the fact that the leased interest created thereby, or any interest therein, may
be held directly or indirectly by or for the account of the same Person who
owns the fee mineral title to the Hydrocarbons subject to the New Lease or any
portion thereof; and no such merger shall occur by the operation of law or
otherwise unless and until all Persons directly holding any of the interests of
lessee and lessor thereunder join in the execution of a written instrument
effecting such merger of interests.



 33
 









(b)           The
interests of Seller as lessee and lessor under the EPC Lease shall at all times
be separate and apart and shall in no event be merged, notwithstanding the fact
that the leased interest created thereby, or any interest therein, may be held
directly or indirectly by or for the account of the same Person who owns the
fee mineral title to the Hydrocarbons subject to the EPC Lease or any portion
thereof; and no such merger shall occur by the operation of law or otherwise
unless and until all Persons directly holding any of the interests of lessee
and lessor thereunder join in the execution of a written instrument effecting
such merger of interests.


(c)           Upon
a determination by a court of competent jurisdiction that any of Section
6.12(a) of this Agreement, Section 6.12(b) of this Agreement, or Section 22(B)
of the EPC Lease, is invalid, illegal or incapable of being enforced, then (i)
all other conditions and provisions of this Agreement, the New Lease, and the
EPC Lease shall nevertheless remain in full force and effect, (iii) the Parties
shall negotiate in good faith to modify this Agreement, the New Lease and/or
the EPC Lease to give effect to the original economic and legal intent of the
Parties as closely as possible in an acceptable manner to the end that the
intentions of the Parties as described in Sections 6.12(a) and 6.12(b) of this
Agreement and Section 22(B) of the EPC Lease are fulfilled to the extent
possible, and (iii) if the Parties are unable to agree on such modifications to
this Agreement, the New Lease and/or the EPC Lease, and the economic or legal
substance of the transactions contemplated by this Agreement, the New Lease,
and/or the EPC Lease is affected in any manner materially adverse to either
Party, then this Agreement, the New Lease and the EPC Lease shall be
interpreted to give effect to the original economic and legal intent of the
Parties as closely as possible in an acceptable manner to the end that the
transactions contemplated by this Agreement, the New Lease and the EPC Lease
are fulfilled to the extent possible.


(d)           It
is further agreed that, upon a determination by a court of competent jurisdiction
that Section 6.12(b) of this Agreement and/or Section 22(B) of the EPC Lease is
invalid, illegal or incapable of being enforced, and that as a result, no
interest of the lessee under the EPC Lease was conveyed to Purchaser pursuant
to the Conveyance, such occurrence shall not be a breach of Seller’s warranty
of title made to Purchaser in such Conveyance.


Section 6.13       Waiver of
Condition for Pittston Litigation.


(a)           On
or before the date hereof, PMOG shall request that Pittston Coal Company (“Pittston”)
assign all of its claims against EPC raised or that could have been raised in
the Pittston Litigation (the “Pittston Claims”), and if such assignment is so
made, PMOG shall cause the Pittston Litigation to be dismissed with prejudice.


(b)           If
Pittston does not assign the Pittston Claims to PMOG as contemplated by Section
6.13(a), then within eight (8) days of the execution hereof, PMOG shall (i)
deliver to Pittston a release of all claims by PMOG with respect to or
otherwise relating to the Pittston Claims and (ii) request Pittston to release
EPC with respect to the Pittston Claims and dismiss the Pittston Litigation
with prejudice.



 34
 









(c)           Purchaser
agrees that if the conditions set forth in Section 7.1(e)(ii) and Section
7.2(e)(ii) are not satisfied prior to Closing and if Seller desires to
unconditionally waive the satisfaction of its condition under Section
7.1(e)(ii), then Purchaser shall also unconditionally waive the satisfaction of
its condition under Section 7.2(e)(ii).


ARTICLE 7

CONDITIONS TO CLOSING


Section 7.1            Conditions
of Seller to Closing.  The
obligations of Seller to proceed to consummate the transactions contemplated by
this Agreement are subject, at the option of Seller, to the satisfaction on or
prior to Closing of each of the following conditions:


(a)   Representations.  The representations and warranties of
Purchaser set forth in Article 5 shall be true and correct (disregarding any
materiality qualifiers) as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (other than representations
and warranties that refer to a specified date, which need only be true and
correct, disregarding any materiality qualifiers, on and as of such specified
date), except for such breaches, if any, that in the aggregate would not have a
Material Adverse Effect;


(b)   Performance.  Purchaser shall have performed and observed,
in all material respects, all covenants and agreements to be performed or
observed by it under this Agreement prior to or on the Closing Date and all
deliveries contemplated by Section 8.3 shall have been made (or Purchaser shall
be ready, willing and able to immediately make such deliveries);


(c)   Gathering
System Transaction. The transactions contemplated by that certain
Contribution Agreement of even date herewith among Seller, Equitable Gathering
Equity, LLC, Purchaser and the Company (the “Contribution Agreement”) shall
have closed (or Purchaser shall be ready, willing and able to simultaneously
close such transactions with the transaction contemplated hereby);


(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
Governmental Authority or body of competent jurisdiction seeking to enjoin or
restrain the consummation of the transactions contemplated by this Agreement or
recover substantial damages from Seller or any Affiliate of Seller resulting
therefrom;


(e)   Litigation.


(i)            Seller
and Purchaser shall have come to a mutually agreeable settlement of all ongoing
litigation and claims between Seller and Purchaser, or their respective
Affiliates in the action styled as Pine Mountain Oil & Gas, Inc. v.
Equitable Production Company, USDC WD Va, Abingdon Division, CA No. 1:05CV095
(including the related September 22, 2005 arbitration proceeding) (the “Party
Lawsuit”), and Seller shall have received a settlement agreement executed



 35
 









by Purchaser (on behalf of itself and its
Affiliates) in substantially the form attached hereto as Exhibit E; and


(ii)           Pittston
and Seller shall have entered into a mutually agreeable settlement of all
ongoing litigation and claims between Seller and Pittston, or their respective
Affiliates, and Seller shall have received a mutual release executed by
Pittston (on behalf of itself and its Affiliates) in form and substance
reasonably satisfactory to Seller which shall include, without limitation, a
dismissal by Pittston and its Affiliates of all claims relating to Pittston
Coal Company v. Equitable Production Company, Henrico County Circuit Court,
VA, CA No. CL06-1454 removed to U.S. District Court, E.D. Virginia, CA No.
3:06CV494 (the “Pittston Litigation”); and


(f)    Asserted
Title Defects/Casualties.  The sum of
all Asserted Title Defect Amounts for Asserted Title Defects properly reported
under Section 3.4(a), plus the Damages resulting from any casualty loss
occurring on or after the Effective Time to all or any portion of the Assets,
shall be less than ten percent (10%) of the unadjusted Purchase Price.


Section 7.2            Conditions
of Purchaser to Closing.  The
obligations of Purchaser to consummate the transactions contemplated by this
Agreement are subject, at the option of Purchaser, to the satisfaction on or
prior to Closing of each of the following conditions:


(a)   Representations.  The representations and warranties of Seller
set forth in Article 4 shall be true and correct (disregarding any
materiality qualifiers, including Material Adverse Effect) as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date (other than representations and warranties that refer to a
specified date, which need only be true and correct, disregarding any
materiality qualifiers, including Material Adverse Effect, on and as of such
specified date), except for such breaches, if any, that in the aggregate would
not have a Material Adverse Effect;


(b)   Performance.  Seller shall have performed and observed, in
all material respects, all covenants and agreements to be performed or observed
by it under this Agreement prior to or on the Closing Date and all deliveries
contemplated by Section 8.2 shall have been made (or Seller shall be ready,
willing and able to immediately make such deliveries);


(c)   Gathering
System Transaction. The transactions contemplated by the Contribution
Agreement shall have closed (or Seller and its Affiliates shall be ready,
willing and able to simultaneously close such transactions with the
transactions contemplated hereby);


(d)   No
Action.  On the Closing Date, no
suit, action, or other proceeding (excluding any such matter initiated by
Purchaser or any of its Affiliates) shall be pending or threatened before
any Governmental Authority or body of competent



 36
 









jurisdiction seeking to enjoin or restrain the consummation of the
transactions contemplated by this Agreement or recover substantial damages from
Purchaser or any Affiliate of Purchaser resulting therefrom;


(e)   Litigation.


(i)            Seller
and Purchaser shall have come to a mutually agreeable settlement of all ongoing
litigation and claims between Seller and Purchaser, or their respective
Affiliates in the action styled as Pine Mountain Oil & Gas, Inc. v.
Equitable Production Company, USDC WD Va, Abingdon Division, CA No.
1:05CV095 (including the related September 22, 2005 arbitration proceeding),
and Purchaser shall have received a settlement agreement executed by Seller (on
behalf of itself and its Affiliates) in substantially the form attached hereto
as Exhibit E; and


(ii)           Pittston
and Seller shall have entered into a mutually agreeable settlement of all
ongoing litigation and claims between Seller and Pittston, or their respective
Affiliates, and Seller shall have received a mutual release executed by
Pittston (on behalf of itself and its Affiliates) in form and substance
reasonably satisfactory to Seller which shall include, without limitation, a
dismissal by Pittston and its Affiliates of all claims relating to the Pittston
Litigation; and


(f)    Asserted
Title Defects/Casualties.  The sum of
all Asserted Title Defect Amounts for Asserted Title Defects properly reported
under Section 3.4(a), plus the Damages resulting from any casualty loss
occurring on or after the date Effective Time to all or any portion of the
Assets, shall be less than ten percent (10%) of the unadjusted Purchase Price.


ARTICLE 8

CLOSING


Section 8.1            Time
and Place of Closing.  The
consummation of the purchase and sale of the Assets as contemplated by this
Agreement (the “Closing”) shall, (i) unless otherwise agreed to in writing by
Purchaser and Seller or otherwise provided in this Agreement, take place at the
offices of Seller located at 225 North Shore Drive, Pittsburgh, Pennsylvania
15212, at 10:00 a.m., local time, on May 4, 2007, (ii) if all conditions in
Article 7 to be satisfied prior to Closing have not yet been satisfied or
waived, as soon thereafter as such conditions have been satisfied or waived,
subject to the provisions of Article 9. 
For the avoidance of doubt, each Closing subsequent to the initial
Closing pursuant to Section 3.4 or Section 3.5 shall constitute a Closing for
purposes of this Agreement and, as such, the conditions to Closing set forth in
Section 7.1 and Section 7.2, the actions required at Closing by Section 8.2 and
Section 8.3, and the adjustments required by Section 2.2 and Section 8.4 shall
apply with respect to each such Closing. 
The date on which a Closing occurs is referred to herein as the “Closing
Date.”


Section 8.2            Closing
Deliveries of Seller.  At
the Closing, upon the terms and subject to the conditions of this Agreement,
and subject to the simultaneous performance by Purchaser of



 37
 









its obligations
pursuant to Section 8.3, Seller shall deliver or cause to be delivered to
Purchaser, among other things, the following:


(a)   Duly
executed conveyances of the Combined Assets in substantially the form attached
hereto as Exhibit B (the “Conveyance”), in sufficient duplicate originals
to allow recording in all appropriate jurisdictions and offices;


(b)   A
certificate duly executed by an authorized corporate officer of Seller, dated
as of the Closing, certifying on behalf of Seller that the conditions set forth
in Section 7.1(a) and Section 7.1(b) have been fulfilled;


(c)   A
certification of non-foreign status in the form prescribed by U.S. Treasury
Regulation § 1.1445-2(b)(2) with respect to Seller;


(d)   The
New Lease duly executed by an authorized corporate officer of Seller, dated as
of the Closing;


(e)   An
operating agreement duly executed by an authorized corporate officer of Seller,
dated as of the Closing, in substantially the form attached hereto as
Exhibit D (the “Operating Agreement”);


(f)    The
settlement agreement specified in Section 7.2(e);


(g)   A
termination agreement duly executed by an authorized corporate officer of
Seller, dated as of the Closing, in substantially the form attached hereto as
Exhibit F (the “Termination Agreement”);


(h)   A
guaranty agreement duly executed by an authorized corporate officer of EQT
Investments, LLC, dated as of the Closing, in substantially the form attached
hereto as Exhibit H; and


(i)    The
EPC Lease duly executed by an authorized corporate officer of Seller, dated as
of the Closing.


Section 8.3            Closing
Deliveries of Purchaser.  At
the Closing, upon the terms and subject to the conditions of this Agreement,
and subject to the simultaneous performance by Seller of its obligations
pursuant to Section 8.2, Purchaser shall deliver or cause to be delivered to
Seller, among other things, the following:


(a)   A
wire transfer of the Closing Payment in same-day funds;


(b)   A
certificate duly executed by an authorized corporate officer of Purchaser,
dated as of the Closing, certifying on behalf of Purchaser that the conditions
set forth in Section 7.2(a) and Section 7.2(b) have been fulfilled;


(c)   The
New Lease duly executed by an authorized corporate officer of Purchaser, dated
as of the Closing;



 38
 









(d)   The
Operating Agreement duly executed by an authorized corporate officer of
Purchaser, dated as of the Closing;


(e)   The
settlement agreement specified in Section 7.1(e);


(f)    The
Termination Agreement duly executed by an authorized corporate officer of
Purchaser, dated as of the Closing; and


(g)   A
guaranty agreement duly executed by an authorized corporate officer of Range
Resources Corporation, dated as of the Closing, in substantially the form
attached hereto as Exhibit I.


Section 8.4          Closing
Payment and Post-Closing Purchase Price Adjustments.


(a)   Not
later than five (5) Business Days prior to the Closing Date, Seller shall
prepare in good faith and deliver to Purchaser, using and based upon the best
information available to Seller, a preliminary settlement statement estimating
the Adjusted Purchase Price after giving effect to all Purchase Price
adjustments set forth in Section 2.2 (together with all reasonable back-up and
support information for such statement) and providing the account information
for the account into which the Closing Payment is to be deposited by
Purchaser.  Purchaser shall review such
preliminary settlement statement and discuss with Seller any changes necessary
thereto.  The Parties shall use their
reasonable efforts exercised in good faith to agree upon such preliminary
settlement statement as of Closing.  The
estimate set forth in the preliminary settlement statement mutually agreed to
by the Parties in accordance with this Section 8.4(a) shall constitute the
dollar amount to be paid by Purchaser to Seller at the Closing (the “Closing
Payment”).


(b)   As
soon as reasonably practicable after the Closing but not later than the one
hundred and twentieth (120th) day following the Closing Date, Seller
shall prepare in good faith and deliver to Purchaser a statement setting forth
the final calculation of the Adjusted Purchase Price and showing the
calculation of each adjustment, based, to the extent possible on actual
credits, charges, receipts and other items attributable to the period of time
from and after the Effective Time (together with reasonable back-up and support
information for such statement).  As soon
as reasonably practicable but not later than the thirtieth (30th) day following receipt of Seller’s
statement hereunder, Purchaser shall deliver to Seller a written report
containing any changes that Purchaser proposes be made to such statement.  The Parties shall undertake to agree on the
final statement of the Adjusted Purchase Price no later than one hundred and
eighty (180) days after the Closing Date. 
In the event that the Parties cannot reach agreement within such period
of time, either Party may refer the remaining matters in dispute to Ernst &
Young LLP, or if Ernst & Young LLP is unable or unwilling to perform under
this Section 8.4(b), such other nationally-recognized independent accounting
firm as may be accepted by Purchaser and Seller, for review and final
determination.  The accounting firm shall
conduct the arbitration proceedings in Pittsburgh, Pennsylvania in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
in effect as of the



 39
 









date hereof, to the extent such rules do not conflict with the terms of
this Section 8.4(b).  The accounting firm’s
determination shall be made within thirty (30) days after submission of
the matters in dispute and shall be final and binding on both Parties, without
right of appeal.  In determining the
proper amount of any adjustment to the Purchase Price, the accounting firm
shall not increase the Purchase Price more than the increase proposed by Seller
nor decrease the Purchase Price more than the decrease proposed by Purchaser,
as applicable.  The accounting firm shall
act as an expert for the limited purpose of determining the specific disputed
matters submitted by either Party and may not award damages or penalties to
either Party with respect to any matter. 
Seller and Purchaser shall each bear its own legal fees and other costs
of presenting its case.  Each Party shall
bear one-half of the costs and expenses of the accounting firm.  Within ten (10) days after the earlier
of (i) the expiration of Purchaser’s thirty (30) day review period
without delivery of any written report or (ii) the date on which the
Parties or the accounting firm, as applicable, finally determine the Adjusted
Purchase Price, (x) Purchaser shall pay to Seller the amount by which the
Adjusted Purchase Price exceeds the Closing Payment or (y) Seller shall
pay to Purchaser the amount by which the Closing Payment exceeds the Adjusted
Purchase Price, as applicable.  Any
post-Closing payment pursuant to this Section 8.4 shall bear interest from the
Closing Date to the date of payment at the Agreed Interest Rate.


ARTICLE 9

TERMINATION AND AMENDMENT


Section 9.1            Termination.  This Agreement may be
terminated at any time prior to Closing: 
(i) by the mutual prior written consent of Seller and Purchaser;
(ii) by either Purchaser or Seller, if the Closing has not occurred on or
before sixty (60) days after the date hereof (the “Termination Date”);
provided, however, that the right to terminate this Agreement under this
Section 9.1 shall not be available (A) to Seller, if any breach of this
Agreement by Seller has been the principal cause of, or resulted in, the
failure of the Closing to occur on or before the Termination Date or (B) to
Purchaser, if any breach of this Agreement by Purchaser has been the principal
cause of, or resulted in, the failure of the Closing to occur on or before the
Termination Date; (iii) by Seller, if (A) any of the representations and
warranties of Purchaser contained in this Agreement shall not be true and
correct in all material respects (provided that any such representation or
warranty that is already qualified by a materiality standard or a material
adverse effect qualification shall not be further qualified); or (B) Purchaser
shall have failed to fulfill in any material respect any of its obligations
under this Agreement; and, in the case of each of clauses (A) and (B) of this
subsection (iii), Seller shall have given Purchaser written notice of such
misrepresentation, breach of warranty or failure, if curable, and such
misrepresentation, breach of warranty or failure has not been cured by the
Termination Date; or (iv) by Purchaser, if (A) any of the representations and
warranties of Seller contained in this Agreement shall not be true and correct
in all material respects (provided that any such representation or warranty
that is already qualified by a materiality or Material Adverse Effect
qualification shall not be further qualified); or (B) Seller shall have failed
to fulfill in any material respect any of its obligations under this Agreement,
and, in the case of each of clauses (A) and (B) of this subsection (iv), Purchaser
shall have given Seller written notice of such misrepresentation, breach of
warranty or



 40
 









failure, if
curable, and such misrepresentation, breach of warranty or failure has not been
cured by the Termination Date.


Section 9.2            Effect
of Termination.  If
this Agreement is terminated pursuant to Section 9.1, this Agreement shall
become void and of no further force or effect except for the provisions of
Section 4.3, Section 5.5, Section 6.2, Section 6.4 (other than the last
sentence thereof), Section 11.8, Section 11.17, Section 11.18 and Section
11.19, which shall continue in full force and effect.  Notwithstanding anything to the contrary in
this Agreement, the termination of this Agreement under Section 9.1 shall
not relieve any Party from liability for Damages resulting from any willful or
negligent breach by such Party of this Agreement in any material respect.


ARTICLE 10

INDEMNIFICATIONS; LIMITATIONS


Section 10.1       Indemnification.


(a)   From
and after Closing, Purchaser shall indemnify, defend, and hold harmless the
Seller Indemnified Persons from and against all Damages incurred or suffered by
any Seller Indemnified Person:


(i)            caused
by, arising out of or resulting from the ownership, use or operation of the
Assets from and after the Closing,


(ii)           caused
by, arising out of or resulting from Purchaser’s breach of any of Purchaser’s
covenants or agreements contained in Article 6, or


(iii)          caused
by, arising out of or resulting from any breach of any representation or
warranty made by Purchaser contained in Article 5 of this Agreement or in the
certificate delivered by Purchaser at Closing pursuant to Section 8.3(b),


except to the extent such Damages are
caused in whole or in part by the negligence (whether sole, joint, or
concurrent), strict liability, or other legal fault of any Indemnified Person,
and excepting in each case Damages against which Seller would be required to
indemnify Purchaser under Section 10.1(b) at the time the Claim Notice is
presented by Purchaser.  The term “Seller
Indemnified Persons” as used herein means Seller and its Affiliates and their
respective directors, officers, employees, stockholders, members, agents,
consultants, advisors and other representatives (including legal counsel,
accountants and financial advisors).


(b)   From
and after Closing, Seller shall indemnify, defend, and hold harmless the
Purchaser Indemnified Persons against and from all Damages incurred or suffered
by any Purchaser Indemnified Person:



 41
 









(i)            caused
by, arising out of or resulting from the ownership, use or operation of the
Asset before the Closing,


(ii)           caused
by, arising out of or resulting from Seller’s breach of any of Seller’s
covenants or agreements contained in Article 6,


(iii)          caused
by, arising out of or resulting from any breach of any representation or
warranty made by Seller contained in Article 4 of this Agreement or in the
certificate delivered by Seller at Closing pursuant to Section 8.2(b),


(iv)          caused
by, arising out of or resulting from the claims, suits, proceedings and actions
described in Schedule 4.5A hereto; or


(v)           caused
by, arising out of or resulting from the Excluded Assets,


except to the extent such Damages are
caused in whole or in part by the negligence (whether sole, joint, or
concurrent), strict liability, or other legal fault of any Indemnified Person.  Notwithstanding the foregoing, Seller shall
not be required under this Section 10.1(b) to indemnify, defend or hold
harmless the Purchaser Indemnified Person from Property Costs and Gathering
Charges accruing from and after the Effective Time and attributable to the
Assets.  The term “Purchaser Indemnified
Persons” as used herein means Purchaser and its Affiliates and their respective
directors, officers, employees, stockholders, members, agents, consultants,
advisors and other representatives (including legal counsel, accountants and
financial advisors). Notwithstanding anything to the contrary contained herein,
Purchaser’s rights to indemnification shall be limited to the Assets conveyed
to Purchaser at the Closing, and shall not extend to any Pre-Effective Time
Interests owned by Purchaser prior to the Closing.


(c)   Notwithstanding
anything to the contrary contained in this Agreement, from and after Closing,
this Section 10.1 contains the Parties’ exclusive remedy against each other
with respect to breaches of the representations, warranties, covenants and
agreements of the Parties contained in Article 4, Article 5 and Article 6
(excluding Section 6.2, which shall be separately enforceable by the injured
Party pursuant to whatever rights and remedies are available to it outside of
this Article 10) and the affirmations of such representations, warranties,
covenants and agreements contained in the certificate delivered by each Party
at Closing pursuant to Section 8.2(b) or Section 8.3(b), as applicable.  Except for (i) the remedies contained in this
Section 10.1, (ii) any other remedies available to the Parties at Law or in
equity for breaches of provisions of this Agreement other than Article 4,
Article 5 and Article 6 (excluding Section 6.2), and (iii) the remedies
available at Law or in equity in connection with any other document delivered
by a Party in connection with the consummation of the transactions contemplated
hereby, from and after Closing, Seller and Purchaser each releases, remises,
and forever discharges the other and its Affiliates and all such Persons’
stockholders, officers, directors, employees, agents, advisors and
representatives from any and all suits,



 42
 









legal or administrative proceedings, claims, demands, damages, losses,
costs, liabilities, interest, or causes of action whatsoever, in Law or in
equity, known or unknown, which such Parties might now or subsequently may
have, based on, relating to or arising out of this Agreement or the
consummation of the transactions contemplated hereby, except to the extent caused in whole or in part by the negligence
(whether sole, joint, or concurrent), strict liability, or other legal fault of
any released Person.


(d)   “Damages”
shall mean the amount of any actual liability, loss, cost, expense, claim,
award, or judgment incurred or suffered by any Indemnified Person arising out
of or resulting from the indemnified matter, whether attributable to personal
injury or death, property damage, contract claims, torts or otherwise including
reasonable fees and expenses of attorneys, consultants, accountants, or other
agents and experts reasonably incident to matters indemnified against, and the
costs of investigation and/or monitoring of such matters, and the costs of
enforcement of the indemnity; provided, however, that Purchaser and Seller
shall not be entitled to indemnification under this Agreement for, and “Damages”
shall not include (except to the extent that such Damages are awarded to an
unaffiliated third Person ) (i) loss of profits or other consequential damages
suffered by the Party claiming indemnification, or any punitive damages or (ii)
in the event the Indemnified Person takes any action that exceeds the scope of
the operating authority granted to it under the Operating Agreement, any
liability, loss, cost, expense, claim, award or judgment to the extent and only
to the extent increased by such action.


(e)   The
indemnity to which each Party is entitled under this Agreement shall be for the
benefit of and extend to the Indemnified Persons affiliated with such Party as
described above in this Section 10.1. 
Any claim for indemnity under this Agreement by any such Indemnified
Person other than a Party must be brought and administered by the applicable
Party to this Agreement.  No Indemnified
Person other than Seller and Purchaser shall have any rights against either
Seller or Purchaser under the terms of this Section 10.1 or otherwise under
this Agreement, except as may be exercised on its behalf by Purchaser or
Seller, as applicable, pursuant to this Section 10.1(e).  Each of Seller and Purchaser may elect to
exercise or not exercise indemnification rights under this Agreement on behalf
of the other Indemnified Persons affiliated with it in its sole discretion and
shall have no liability to any such other Indemnified Person for any action or
inaction under this Agreement.


(f)    For
the sole purposes of the indemnities set forth in this Section 10.1, in
determining a breach or inaccuracy of any Party’s representations or warranties
and in calculating the amount of Damages incurred, arising out of or relating
to any such breach or inaccuracy of a representation or warranty, any
references to “Material Adverse Effect” or other materiality qualifications (or
correlative terms) shall be disregarded.


Section 10.2         Indemnification
Actions.  All
claims for indemnification under Section 10.1 shall be asserted and resolved as
follows:


(a)   For
purposes of this Agreement, the term “Indemnifying Person” when used in
connection with particular Damages shall mean the Person having an obligation
to



 43
 









indemnify another Person or Persons with respect to such Damages
pursuant to this Agreement, and the term “Indemnified Person” when used in
connection with particular Damages shall mean a Person having the right to be
indemnified with respect to such Damages pursuant to this Agreement.


(b)   To
make claim for indemnification under Section 10.1, an Indemnified Person shall
notify the Indemnifying Person of its claim, including the specific details of
and specific basis under this Agreement for its claim (the “Claim Notice”).  In the event that the claim for
indemnification is based upon a claim by a third Person against the Indemnified
Person (a “Claim”), the Indemnified Person shall provide its Claim Notice promptly
after the Indemnified Person has actual knowledge of the Claim and shall
enclose a copy of all papers (if any) served with respect to the Claim;
provided that the failure of any Indemnified Person to give notice of a Claim
as provided in this Section 10.2 shall not relieve the Indemnifying Person of
its obligations under Section 10.1 except to the extent (and only to the extent
of such incremental Damages incurred) such failure results in insufficient time
being available to permit the Indemnifying Person to effectively defend against
the Claim or otherwise prejudices the Indemnifying Person’s ability to defend
against the Claim.  In the event that the
claim for indemnification is based upon an inaccuracy or breach of a
representation, warranty, covenant, or agreement, the Claim Notice shall
specify the representation, warranty, covenant, or agreement that was
inaccurate or breached.


(c)   In
the case of a claim for indemnification based upon a Claim, the Indemnifying
Person shall have thirty (30) days from its receipt of the Claim Notice to
notify the Indemnified Person whether or not it agrees to indemnify and defend
the Indemnified Person against such Claim under this Article 10.  The Indemnified Person is authorized, prior
to and during such thirty (30) day period, to file any motion, answer, or
other pleading that it shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Person and that is not prejudicial to
the Indemnifying Person.


(d)   If
the Indemnifying Person agrees to indemnify the Indemnified Person, it shall
have the right and obligation to diligently defend, at its sole cost and
expense, the Claim.  The Indemnifying
Person shall have full control of such defense and proceedings, including any
compromise or settlement thereof.  If
requested by the Indemnifying Person, the Indemnified Person agrees to
cooperate in contesting any Claim, which the Indemnifying Person elects to
contest (provided, however, that the Indemnified Person shall not be required
to bring any counterclaim or cross-complaint against any Person).  The Indemnified Person may participate in,
but not control, at its sole cost and expense, any defense or settlement of any
Claim controlled by the Indemnifying Person pursuant to this Section
10.2(d).  An Indemnifying Person shall
not, without the written consent of the Indemnified Person, such consent not to
be unreasonably withheld, conditioned or delayed, settle any Claim or consent
to the entry of any judgment with respect thereto that (i) does not result
in a final resolution of the Indemnified Person’s liability with respect to the
Claim (including, in the case of a settlement, an unconditional written release
of the Indemnified Person from all liability in respect of such Claim) or
(ii) may materially and



 44
 









adversely affect the Indemnified Person (other than as a result of
money damages covered by the indemnity).


(e)   If
the Indemnifying Person does not agree to indemnify the Indemnified Person
within the thirty (30) day period specified in Section 10.2(c), fails to give
notice to the Indemnified Party within such thirty (30) day period regarding
its election, or if the Indemnifying Party agrees to indemnify, but fails to
diligently defend or settle the Claim, then the Indemnified Person shall have the
right to defend against the Claim (at the sole cost and expense of the
Indemnifying Person, if the Indemnified Person is entitled to indemnification
hereunder), with counsel of the Indemnified Person’s choosing; provided,
however, that the Indemnified Party shall make no settlement, compromise,
admission, or acknowledgment that would give rise to liability on the part of
any Indemnifying Party without the prior written consent of such Indemnifying
Party, which consent shall not be unreasonably withheld, conditioned or
delayed.


(f)    In
the case of a claim for indemnification not based upon a Claim, the
Indemnifying Person shall have thirty (30) days from its receipt of the
Claim Notice to (i) cure the Damages complained of, (ii) agree to
indemnify the Indemnified Person for such Damages, or (iii) dispute the
claim for such Damages. If such Indemnifying Person does not respond to such
Claim Notice within such thirty (30) day period, such Person will be deemed to
dispute the claim for Damages.


Section 10.3       Limitation
on Actions.


(a)           The
representations and warranties of the Parties in Article 4 and Article 5 and
the covenants and agreements of the Parties in Article 6, and the corresponding
representations and warranties given in the certificates delivered at the
Closing pursuant to Section 8.2(b) and Section 8.3(b), as applicable, shall
survive the Closing for a period of one (1) year, except that (i) with respect
to any taxable period, the representations, warranties, covenants and
agreements contained in Section 4.6 and Section 6.6 shall survive the Closing
until the applicable statute of limitations closes such taxable period, (ii)
the provisions of Section 5.10 shall survive the Closing for a period of five
(5) years, (iii) the provisions of Section 1.8 shall survive the Closing for
the term of the Operating Agreement, and (iv) the provisions of Section 4.3,
Section 5.5, the last sentence in Section 6.4, and Section 6.12 shall survive
without time limit.  The remainder of
this Agreement shall survive the Closing without time limit except as provided
in Section 10.3(b) below. 
Representations, warranties, covenants, and agreements shall be of no
further force and effect after the date of their expiration (if any), provided that
there shall be no termination of any bona fide claim asserted pursuant to this
Agreement with respect to such a representation, warranty, covenant, or
agreement prior to its expiration date.


(b)   The
indemnities in Section 10.1(a)(ii), Section 10.1(a)(iii), Section
10.1(b)(ii)  and Section 10.1(b)(iii) shall terminate as of the
termination date of each respective representation, warranty, covenant or
agreement that is subject to indemnification, except (in each case) as to
matters for which a specific written claim for indemnity has been delivered to
the Indemnifying Person on or before such termination date.  The



 45
 









indemnities in Section 10.1(a)(i)  and Section 10.1(b)(i) 
shall terminate on the date which is three (3) years from the Closing Date
except (in each case) as to matters for which a specific written claim for
indemnity has been delivered to the Indemnifying Person on or before such
termination date.


(c)   Except
for claims relating to a breach of a Party’s obligations under Section 4.3,
Section 4.6, Section 5.5, Section 6.6, no individual claim of an Indemnified
Person may be made against any Party for any Damages under Section 10.1(b) or
unless such Damages exceed an amount equal to Fifty Thousand Dollars
(US$50,000).  Furthermore, except for claims
relating to a breach of Seller’s obligations under Section 4.3, Section 4.6,
Section 5.5, the last sentence of Section 6.4, Section 6.6, Section 10.1(b)(iv)
and Section 10.1(b)(v), Seller shall not have any liability for any
indemnification under Section 10.1(b) until and unless the aggregate amount of
the liability for all Damages for which Claim Notices are delivered by
Purchaser exceeds Two Million Six Hundred Twenty Thousand Dollars
(US$2,620,000.00), then only to the extent such Damages exceed Two Million Six
Hundred Twenty Thousand Dollars (US$2,620,000.00).  The adjustments to the Purchase Price under
Section 2.2, any further adjustments with respect to production, income,
proceeds, receipts and credits under Section 11.1, any future adjustments with
respect to Property Costs under Section 11.2 and any payments in respect of any
of the preceding, as well as any Damages arising out of a breach by a Party of
any other provision of this Agreement (excluding the provisions of Article 4,
Article 5 and Article 6), shall not be limited by this Section.


(d)   Notwithstanding
anything to the contrary contained elsewhere in this Agreement, Seller shall
not be required to indemnify Purchaser under this Article 10 (excluding Section
10.1(b)(iv) and Section 10.1(b)(v)) for aggregate Damages in excess of fifteen
percent (15%) of the unadjusted Purchase Price.


(e)   The
amount of any Damages for which an Indemnified Person is entitled to indemnity
under this Article 10 shall be reduced by the amount of insurance proceeds
actually realized and received by the Indemnified Person or its Affiliates with
respect to such Damages (net of any collection costs, and excluding the
proceeds of any insurance policy issued or underwritten by the Indemnified
Person or its Affiliates).


ARTICLE 11

MISCELLANEOUS


Section 11.1         Receipts.  Any production of
Hydrocarbons from or attributable to the Assets (and all products and proceeds
attributable thereto) and any other income, proceeds, receipts and credits
attributable to the Assets which are not reflected in the adjustments to the
Purchase Price following the final adjustment pursuant to Section
8.4(b) shall be treated as follows: 
(a) all production of Hydrocarbons from or attributable to the
Assets (and all products and proceeds attributable thereto) and all other
income, proceeds, receipts and credits earned with respect to the Assets to
which Purchaser is entitled under Section 1.5 shall be the sole property and
entitlement of Purchaser, and, to the extent received by Seller, Seller shall
fully disclose, account for and remit the same promptly to Purchaser; and
(b) all production of



 46
 









Hydrocarbons from
or attributable to the Assets (and all products and proceeds attributable
thereto) and all other income, proceeds, receipts and credits earned with
respect to the Assets to which Seller is entitled under Section 1.5 shall be
the sole property and entitlement of Seller and, to the extent received by
Purchaser, Purchaser shall fully disclose, account for and remit the same
promptly to Seller.


Section 11.2         Property
Costs and Gathering Charges.  Any
Property Costs and Gathering Charges which are not reflected in the adjustments
to the Purchase Price following the final adjustment pursuant to Section
8.4(b) shall be treated as follows: 
(a) all Property Costs and gathering charges for which Seller is
responsible under Section 1.5 shall be the sole obligation of Seller and Seller
shall promptly pay, or if paid by Purchaser, promptly reimburse Purchaser for
and hold Purchaser harmless from and against same; and (b) all Property
Costs and Gathering Charges for which Purchaser is responsible under Section
1.5 shall be the sole obligation of Purchaser and Purchaser shall promptly pay,
or if paid by Seller, promptly reimburse Seller for and hold Seller harmless
from and against same.


Section 11.3         Counterparts.  This Agreement may be
executed in counterparts, each of which shall be deemed an original instrument,
but all such counterparts together shall constitute but one agreement.


Section 11.4         Notices.  All notices that are
required or may be given pursuant to this Agreement shall be sufficient in all
respects if given in writing and delivered personally, by facsimile or by
recognized courier service, as follows:


	
  If to Seller:

  	
  225 North Shore Drive

  
	
   

  	
  Pittsburgh, Pennsylvania 15212

  
	
   

  	
  Attention:

  	
  Corporate Secretary

  
	
   

  	
  Telephone:

  	
  (412)553-5700

  
	
   

  	
  Telecopy:

  	
  (412)553-7781

  
	
   

  	
   

  
	
  With a copy to:

  	
  Baker Botts L.L.P.

  
	
   

  	
  1500 San Jacinto Center

  
	
   

  	
  98 San Jacinto Boulevard

  
	
   

  	
  Austin, Texas 78701

  
	
   

  	
  Attention:

  	
  Michael Bengtson

  
	
   

  	
  Telephone:

  	
  (512)322-2661

  
	
   

  	
  Telecopy:

  	
  (512)322-8349

  
	
   

  	
   

  
	
  If to Purchaser:

  	
  777 Main Street, Suite 800

  
	
   

  	
  Fort Worth, Texas 76102

  
	
   

  	
  Attention:

  	
  Chad Stephens

  
	
   

  	
  Telephone:

  	
  (810) 817-1929

  
	
   

  	
  Telecopy:

  	
  (810) 817-1990

  
	
   

  	
   

  
	
  With a copy to:

  	
  125 State Route 43

  



 



 47
 









 


	
  

  	
  P.O. Box 550

  
	
   

  	
  Hartville, OH 44632

  
	
   

  	
  Attention:

  	
  Jeffery A. Bynum

  
	
   

  	
  Telephone:

  	
  (330) 877-6747

  
	
   

  	
  Telecopy:

  	
  (330) 877-6129

  



 


Either Party may
change its address for notice by notice to the other Party in the manner set
forth above.  All notices shall be deemed
to have been duly given at the time of receipt by the Party to which such
notice is addressed if received during regular business hours on a Business Day
or, if not so received, on the next Business Day.


Section 11.5         [Intentionally
Omitted].


Section 11.6         Expenses.  All expenses incurred by
Seller in connection with or related to the authorization, preparation or
execution of this Agreement, and the Exhibits and Schedules hereto and thereto,
and all other matters related to the Closing, including all fees and expenses
of counsel, accountants and financial advisers employed by Seller, shall be
borne solely and entirely by Seller, and all such expenses incurred by
Purchaser shall be borne solely and entirely by Purchaser.


Section 11.7         [Intentionally
Omitted].


Section 11.8         Governing
Law; Jurisdiction; Court Proceedings. 
This Agreement and the legal relations between the
Parties shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia without regard to principles of conflicts of laws that
would direct the application of the laws of another jurisdiction.  Each of the Parties agrees that it shall
bring any action or proceeding in respect of any claim arising out of or related
to this Agreement or the transactions contemplated hereby exclusively in the
Federal Court for the Western District of Virginia (the “Chosen Court”) and,
solely in connection with claims arising under this Agreement or the
transactions contemplated hereby, (i) irrevocably submits to the exclusive
jurisdiction of the Chosen Court, (ii) waives any objection to laying venue in
any such action or proceeding in the Chosen Court, and (iii) waives any
objection that the Chosen Court is an inconvenient forum or does not have
jurisdiction over it.  The foregoing
consents to jurisdiction shall not constitute general consents for any purpose
except as provided herein and shall not be deemed to confer rights on any
Person other than the Parties.


Section 11.9         Records.
 Seller shall provide
access to Purchaser to such Records as Purchaser shall reasonably request that
are in the possession of Seller or its Affiliates, in order for Purchaser to
make copies of the same, provided that Seller shall be permitted to retain the
originals of all such Records.


Section 11.10       Captions.  The captions in this
Agreement are for convenience only and shall not be considered a part of or
affect the construction or interpretation of any provision of this Agreement.


Section 11.11       Waivers.  Any failure by any Party to
comply with any of its obligations, agreements or conditions herein contained
may be waived by the Party to whom such



 48
 









compliance is owed
by an instrument signed by the Party to whom compliance is owed and expressly
identified as a waiver, but not in any other manner.  No waiver of, or consent to a change in, any
of the provisions of this Agreement shall be deemed or shall constitute a
waiver of, or consent to a change in, other provisions hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.


Section 11.12       Assignment.  No Party shall assign or
otherwise transfer all or any part of this Agreement, except to a wholly-owned
Affiliate in a transfer whereby this Agreement remains binding upon the
transferring Party, nor shall any Party delegate any of its rights or duties
hereunder, without the prior written consent of the other Party and any
transfer or delegation made without such consent shall be void.  Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the Parties hereto and their
respective successors and assigns.


Section 11.13       Entire
Agreement.  This
Agreement, the Exhibits and Schedules attached hereto and the documents to be
executed hereunder or in connection with a condition to Closing, together with
the Contribution Agreement, the exhibits and schedules attached thereto and the
documents to be executed thereunder or in connection with a condition to the
closing thereof (the “Transaction Documents”), shall constitute the entire
agreement between the Parties and their Affiliates pertaining to the subject
matter of the Transaction Documents, and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, among
the Parties and their Affiliates regarding such subject matter, including that
certain letter of intent, dated as of September 25, 2006, between Range
Resources Corporation and Equitable Resources, Inc. (the “Letter of Intent”).  The Parties agree that, effective as of the
Execution Date, the Letter of Intent shall be of no further force and effect.


Section 11.14       Amendment.  This Agreement may be
amended or modified only by an agreement in writing signed by both Parties and
expressly identified as an amendment or modification.


Section 11.15       No
Third Person Beneficiaries.  Nothing
in this Agreement shall entitle any Person other than Purchaser and Seller to
any claim, cause of action, remedy or right of any kind, except the rights
expressly provided to the Persons described in Section 10.1(e).


Section 11.16       References.


In
this Agreement:


(a)   References
to any gender include a reference to all other genders;


(b)   References
to the singular include the plural, and vice versa;


(c)   Reference
to any Article or Section means an Article or Section of this Agreement;


(d)   Reference
to any Exhibit or Schedule means an Exhibit or Schedule to this Agreement, all
of which are incorporated into and made a part of this Agreement;



 49
 









(e)   Unless
expressly provided to the contrary, “hereunder”, “hereof”, “herein” and words
of similar import are references to this Agreement as a whole and not any
particular Section or other provision of this Agreement; and


(f)    “Include”
and “including” shall mean include or including without limiting the generality
of the description preceding such term.


Section 11.17       Construction.  Purchaser is a party
capable of making such investigation, inspection, review and evaluation of the
Assets as a prudent purchaser would deem appropriate under the circumstances,
including with respect to all matters relating to the Assets, their value,
operation and suitability.  Each of
Seller and Purchaser has had the opportunity to exercise business discretion in
relation to the negotiation of the details of the transaction contemplated
hereby.  This Agreement is the result of
arm’s-length negotiations from equal bargaining positions.


Section 11.18       Limitation
on Damages.  Notwithstanding
anything to the contrary contained herein, none of Purchaser, Seller or any of
their respective Affiliates shall be entitled to consequential, special or
punitive damages in connection with this Agreement and the transactions
contemplated hereby (other than consequential, special or punitive damages
suffered by unaffiliated third Persons for which responsibility is allocated to
a Party) and each of Purchaser and Seller, for itself and on behalf of its
Affiliates, hereby expressly waives any right to consequential, special or
punitive damages in connection with this Agreement and the transactions
contemplated hereby.


Section 11.19       Attorney’s
Fees.  Except as
expressly provided in Section 3.4(f) and Section 2.2(b),  in connection with any suit, action or
other proceeding to enforce any Party’s obligations under this Agreement, the
Party prevailing in such suit, action or other proceeding shall be entitled to
seek the recovery of all its costs and fees (including attorneys’ fees, experts’
fees, administrative fees, arbitrators’ fees and court costs) incurred in
connection with such suit, action or other proceeding.


Section 11.20       EPC
Lease.  The Parties
acknowledge that the EPC Lease is to be executed at the Closing, provided,
however, that, for purposes of defining “Assets”, “Combined Assets”, “Conveyed
Lease Interests”, “Leases”, “Non-PM Assets” and “Undeveloped Lease Interests”
and using such terms herein, the EPC Lease shall be deemed to have been
executed and in effect as of the date hereof. 
Further, at the Closing, the EPC Lease shall be deemed to have been
executed immediately prior to the Conveyance, so that the Conveyance has the
effect of transferring to Purchaser an undivided one-half (1⁄2) of Seller’s
interest as lessee thereunder.


[SIGNATURE
PAGE FOLLOWS]



 50














IN WITNESS WHEREOF, this Agreement has been
signed by each of the Parties as of  the
date first above written.


	
  

  	
  SELLER:

  	
  Equitable Production Company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Joseph E. O’Brien

  
	
   

  	
  Name:

  	
  Joseph E. O’Brien

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER:

  	
  Pine Mountain Oil and Gas, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Chad L. Stephens

  
	
   

  	
  Name:

  	
  Chad L. Stephens

  
	
   

  	
  Title:

  	
  Senior Vice President -

  
	
   

  	
   

  	
  Corporate Development

  



 


 


SIGNATURE PAGE TO PURCHASE AND
SALE AGREEMENT