INTEREST IN AND TO ALL OF THE
PERSONAL PROPERTY, FIXTURES, IMPROVEMENTS AND OTHER PROPERTY, WHETHER REAL,
PERSONAL OR MIXED, NOW OR AS OF THE EFFECTIVE TIME ON, APPURTENANT TO OR USED OR
OBTAINED BY THE COMPANY IN CONNECTION WITH THE LEASES, LAND, POOLED LAND OR
WELLS OR WITH THE PRODUCTION, INJECTION, TREATMENT, SALE OR DISPOSAL OF
HYDROCARBONS AND ALL OTHER SUBSTANCES PRODUCED THEREFROM OR ATTRIBUTABLE
THERETO, INCLUDING, WITHOUT LIMITATION, WELL EQUIPMENT, CASING, TUBING, TANKS,
GENERATORS, BOILERS, BUILDINGS, PUMPS, MOTORS, MACHINERY, PIPELINES, GATHERING
SYSTEMS, POWER LINES, TELEPHONE AND TELEGRAPH LINES, ROADS, FIELD PROCESSING
PLANTS, FIELD OFFICES AND OTHER FURNISHINGS RELATED THERETO, ALL VEHICLES,
ROLLING STOCK, PULLING UNITS, EQUIPMENT LEASES, TRAILERS, INVENTORY IN STORAGE
AND STORAGE YARDS LOCATED THEREON OR USED IN CONNECTION THEREWITH, ALL OF THE
EQUIPMENT AND OTHER PERSONAL PROPERTY DESCRIBED ON EXHIBIT C ATTACHED HERETO,
AND ALL OTHER IMPROVEMENTS OR APPURTENANCES THEREUNTO BELONGING (COLLECTIVELY,
THE "EQUIPMENT");
5
(B)
"OIL AND GAS" MEANS ALL OF THE OIL AND GAS AND ASSOCIATED
HYDROCARBONS IN AND UNDER OR OTHERWISE ATTRIBUTABLE TO THE LEASES, LAND, AND
POOLED LAND OR PRODUCED FROM THE WELLS; AND
(C)
"EFFECTIVE TIME" MEANS 7:00 A.M. (CENTRAL TIME) ON JULY 1, 2008.
(D)
"AFFILIATE" MEANS, WITH RESPECT TO ANY PERSON, ANY OTHER PERSON
THAT DIRECTLY OR INDIRECTLY, THROUGH ONE OR MORE INTERMEDIARIES, CONTROLS, IS
CONTROLLED BY, OR IS UNDER COMMON CONTROL WITH, SUCH FIRST PERSON.
2.4
ADJUSTMENTS TO THE BASE PURCHASE PRICE.
AT CLOSING, APPROPRIATE
ADJUSTMENTS TO THE BASE PURCHASE PRICE SHALL BE MADE AS FOLLOWS IN ACCORDANCE
WITH SECTION 4.1 (AS ADJUSTED, THE "PURCHASE PRICE"):
(A)
THE BASE PURCHASE PRICE SHALL BE ADJUSTED UPWARD BY:
(I)
THE VALUE OF THE OIL AND GAS IN INVENTORY AS OF THE EFFECTIVE TIME
PURSUANT TO SECTION 4.2;
(II)
PROPERTY TAXES AND SEVERANCE TAXES RELATED TO THE ASSETS PREPAID BY
SELLER OR THE COMPANY BUT ATTRIBUTABLE TO THE PERIOD FOLLOWING THE EFFECTIVE
TIME AS DETERMINED PURSUANT TO SECTION 4.3;
(III)
AN AMOUNT EQUAL TO THE COSTS, EXPENSES AND OTHER EXPENDITURES,
EXCLUDING AMOUNTS PAID FOR OVERHEAD, (WHETHER CAPITALIZED OR EXPENSED) PREPAID
BY THE COMPANY BEFORE THE EFFECTIVE TIME IN ACCORDANCE WITH THIS AGREEMENT THAT
ARE ATTRIBUTABLE TO THE OIL AND GAS PROPERTIES FOR THE PERIOD FROM AND AFTER THE
EFFECTIVE TIME;
(IV)
FOR ALL OPERATED WELLS, A MONTHLY OVERHEAD FEE OF $400, PRORATED FOR
PARTIAL MONTHS, PER ACTIVE PRODUCING WELL WHILE SELLER OR ITS AFFILIATE IS
OPERATING THE OIL AND GAS PROPERTIES FROM AND AFTER THE EFFECTIVE TIME;
(V)
AN AMOUNT EQUAL TO THE AMOUNT OF PROCEEDS DERIVED FROM THE SALE OF OIL
AND GAS NET OF ROYALTIES AND SEVERANCE TAXES PAID BY THE COMPANY, ACTUALLY
RECEIVED BY THE COMPANY AFTER THE EFFECTIVE TIME AND DIRECTLY ATTRIBUTABLE TO
THE WELLS WHICH ARE, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PROCEDURES, ATTRIBUTABLE TO THE PERIOD OF TIME PRIOR TO THE EFFECTIVE TIME; AND
(VI)
ANY OTHER AMOUNT AGREED UPON IN WRITING BY SELLER AND BUYER.
(B)
THE BASE PURCHASE PRICE SHALL BE ADJUSTED DOWNWARD BY:
(I)
AN AMOUNT EQUAL TO THE AMOUNT OF PROCEEDS