Document:

ex10_1.htm

    
      

    

    PURCHASE
      AND SALE AGREEMENT

    

    

    This
      Agreement is executed on September 6, 2007, by and between Anadarko Petroleum
      Corporation, a Delaware Corporation (“Seller”), and Ignis Louisiana Salt Basin,
      LLC, a Delaware Limited Liability Company (“Purchaser”).

    

    

    ARTICLE
      I

    DESCRIPTION
      OF THE ASSETS

    

    Section
      1.1.  Assets.

    As
      used
      herein, the term “Assets” means, subject to the terms and conditions of this
      Purchase and Sale Agreement, all of Seller’s right, title, interest and estate,
      real or personal, recorded or unrecorded, movable or immovable, tangible or
      intangible, in and to the following:

    

    
      	
              (a)

            	
              All
                leasehold interests on and to the oil and gas leases, including working
                interests, reversionary interests, overriding royalties, net profits
                interests, carried interests, and other properties and interests
                described
                on Exhibit A (collectively, the “Leasehold
                Interests”);

            

    

    
      	
              (b)

            	
              Each
                and every kind and character of right, title, claim, and interest
                that
                Seller has in and to the lands covered by the Leasehold Interests,
                assignments and other documents of title described or referred to
                in
                Exhibit A, or the lands currently pooled, unitized,
                communitized or consolidated therewith (together the
                “Lands”);

            

    

    
      	
              (c)

            	
              All
                oil, gas and all other hydrocarbons (collectively “Hydrocarbons”) in, on
                or under or that may be produced from the Lands and/or Leasehold
                Interests;

            

    

    
      	
              (d)

            	
              All
                oil, gas, water or injection wells located on the Lands identified
                on
                Exhibit B (the
“Wells”);

            

    

    
      	
              (e)

            	
              All
                leasehold interests of Seller in or to any currently existing pools
                or
                units which include any Lands or all or a part of any Leasehold Interests
                or include any Wells, including those pools or units shown on
                Exhibit B (the “Units”; the Units, together with the
                Leasehold Interests,  Lands and Wells being hereinafter referred
                to as the “Property” or “Properties”), and including all leasehold
                interest of Seller in production of hydrocarbons from any such Unit,
                whether such Unit production of hydrocarbons comes from Wells located
                on
                or off of a Leasehold Interest, and all tenements, hereditaments
                and
                appurtenances belonging to the Leasehold Interests, and
                Units;

            

    

    
      	
              (f)

            	
              All
                equipment, machinery, fixtures flow lines, pipelines, gathering systems
                and appurtenances thereto and other tangible personal property and
                improvements located on the Properties or used or held for use primarily
                in connection with the operation of the Properties
                (“Equipment”);

            

    

    
      	
              (g)

            	
              All
                contracts, agreements and instruments described or referred to on
                Exhibit C by which the Properties are bound, or that
                relate to or are otherwise applicable to the Properties
                (“Contracts”);

            

    

    
      	
              (h)

            	
              All
                rights-of-way, easements, surface leases and other surface rights
                described or referred to on Exhibit D (“Surface
                Contracts”);

            

    

    
      	
              (i)

            	
              Copies
                of the files, records, data and information relating to the items
                described in items (a) through (h) above maintained by Seller to
                the
                extent that such files, records, data and information are not subject
                to
                restrictions on assignment or copying (the “Records”); provided, however,
                that Seller may retain the originals of such files and other records
                as
                Seller has determined may be required for litigation, tax, accounting,
                and
                auditing purposes and provide Purchaser with copies thereof at Seller’s
                cost, excluding, however, the Excluded Assets (as defined in Section
                1.2)

            

    

    

    Section
      1.2.  Excluded Assets.

    Notwithstanding
      the foregoing, the Assets shall not include, and there is excepted, reserved
      and
      excluded from the transaction contemplated hereby (collectively, the “Excluded
      Assets”):

    

    
      	
              (a)

            	
              all
                corporate, financial, income and franchise tax and legal records
                of Seller
                that relate to Seller’s business generally (whether or not relating to the
                Assets), and all books, records and files that relate to the Excluded
                Assets;

            

    

    
      
        
        

      

      
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              (b)

            	
              all
                geological and geophysical data (including all seismic data, including
                reprocessed data), all interpretive data, technical evaluations,
                technical
                outputs, reserve estimates and economic estimates related to the
                Assets;

            

    

    
      	
              (c)

            	
              all
                rights to any refund of taxes or other costs or expenses borne by
                Seller
                or Seller’s predecessors in interest and title attributable to periods
                prior to the Effective Date;

            

    

    
      	
              (d)

            	
              Seller’s
                area-wide bonds, permits and licenses or other permits, licenses
                or
                authorizations used in the conduct of Seller’s business
                generally;

            

    

    
      	
              (e)

            	
              all
                trade credits, account receivables, note receivables, take-or-pay
                amounts
                receivable, and other receivables attributable to the Assets with
                respect
                to any period of time prior to the Effective
                Date;

            

    

    
      	
              (f)

            	
              all
                right, title and interest of Seller in and to vehicles or vessels
                used in
                connection with the Assets;

            

    

    
      	
              (g)

            	
              any
                patent, patent application, logo, service mark, copyright, trade
                name or
                trademark of or associated with Seller or any affiliate of Seller
                or any
                business of Seller or of any affiliate of Seller;
                and

            

    

    
      	
              (h)

            	
              a
                nonexclusive right until the 2 year anniversary of the Closing Date
                to
                freely use and copy any logs, maps, engineering data and reports,
                and any
                other data or information being transferred as a part of the Assets
                at
                reasonable times and reasonable places, provided that any such copying
                will be done at Seller’s expense. The 2 year period shall be extended if
                access is required by law or
                litigation.

            

    

    

    Section
      1.3  Effective Time; Proration of Costs and
      Revenues.

    
      	
              (a)

            	
              Possession
                of the Assets shall be transferred from Seller to Purchaser at the
                Closing, but certain financial benefits and burdens of the Assets
                shall be
                transferred effective as of April 1, 2007 (the “Effective
                Date”).

            

    

    
      	
              (b)

            	
              Purchaser
                shall be entitled to all hydrocarbon production from or attributable
                to
                the Leases, Units and Wells at and after the Effective Date (and
                all
                products and proceeds attributable thereto), and to all other income,
                proceeds, receipts and credits earned with respect to the Assets
                at or
                after the Effective Date, and shall be responsible for (and entitled
                to
                any refunds with respect to) all Property Costs incurred at and after
                the
                Effective Date. Seller shall be entitled to all Hydrocarbon production
                from or attributable to Leases, Units and Wells prior to the Effective
                Date (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 Date, and shall be responsible for
                (and
                entitled to any refunds with respect to) all Property Costs incurred
                prior
                to the Effective Date.  “Earned” and "incurred”, as used in this
                Agreement, shall be interpreted in accordance with generally accepted
                accounting principles and Council of Petroleum Accountants Society
                (COPAS)
                standards. “Property Costs” means all costs attributable to the ownership
                and operation of the Assets (including without limitation costs of
                insurance and ad valorem, property, severance, hydrocarbon 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) and capital expenditures incurred in the ownership and
                operation of the Assets in the ordinary course of business and, where
                applicable, in accordance with the relevant operating or unit agreement,
                if any, and customary and usual overhead costs for similar operations
                in
                the area charged to the Assets under the relevant operating agreement
                or
                unit agreement, if any, but excluding any costs incurred to cure
                any Title
                Defects pursuant to Section 3.5 (b) below.  Taxes, right-of-way
                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 and the number of days in the applicable
                period falling at or after the Effective Date, except that hydrocarbon
                production, severance and similar taxes shall be prorated based on
                the
                number of units actually produced, purchased or sold or proceeds
                of sale,
                as applicable, before, and at or after, the Effective Date. For clarification,
                the date an item or work is ordered is not the date of a pre-Effective
                Date transaction for settlement purposes, but rather the date on
                which the
                item ordered is delivered to the job site, or the date on which the
                work
                ordered is performed, shall be the relevant date.  In each case,
                Purchaser shall be responsible for the portion allocated to the period
                at
                and after the Effective Date and Seller shall be responsible for
                the
                portion allocated to the period before the Effective
                Date.

            

    

    
      
        
        

      

      
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    ARTICLE
      II

    PURCHASE
      PRICE

    

    Section
      2.1. Purchase Price.

    The
      purchase price for the Assets (the “Purchase Price”) shall be Three Million
      Dollars ($3,000,000.00) This amount will may be changed to reflect
      the actual dollar amount at closing adjusted as provided in
      Sections 2.3 and 2.4.

    

    Section
      2.2.  Allocation of Purchase Price for Tax
      Purposes.

    Purchaser
      and Seller will use commercially reasonable efforts to agree within thirty
      (30)
      days of Closing upon an allocation of the unadjusted Purchase Price among the
      Assets, in compliance with the principles of Section 1060 of the Internal
      Revenue Code of 1986, as amended (the “Code”), and the treasury regulations
      thereunder. The “Tax Allocated Value” for any Asset shall equal the portion of
      the unadjusted Purchase Price allocated to such Asset by the parties, increased
      or reduced as described in this Article 2.  Any adjustments to the
      Purchase Price other than the adjustments provided for in Sections 2.4(b) and
      2.4(e) shall be applied on a pro rata basis to the amounts agreed to by the
      parties pursuant to this Section 2.2 for all Assets.  After all such
      adjustments are made, any adjustments to the Purchase Price pursuant to Sections
      2.3(b) and 2.3(e) shall be applied to the amounts agreed to by the parties
      pursuant to this Section 2.2  for the particular affected
      Assets.

    

    Section
      2.3.  Purchase Price Adjustments.

    The
      Purchase Price for the Assets shall be adjusted as follows with all such amounts
      being determined in accordance with generally accepted accounting principles
      and
      Council of Petroleum Accountants Society (COPAS) standards:

    

    
      	
              (a)

            	
              Reduced
                by the aggregate amount of the following proceeds received by Seller
                between the Effective Date and Closing (with the period between the
                Effective Date and Closing referred to as the “Adjustment Period”): (i)
                proceeds from the sale of hydrocarbons (net of any royalties, overriding
                royalties or other burdens on or payable out of hydrocarbon production,
                gathering, processing and transportation costs and any hydrocarbon
                production, severance, sales or excise taxes not reimbursed to Seller
                by
                the purchaser of hydrocarbon production) produced from or attributable
                to
                the Properties during the Adjustment Period, and (ii) other proceeds
                earned with respect to the Assets during the Adjustment
                Period;

            

    

    
      	
              (b)

            	
              If
                Seller makes the election under Section 3.5(c)(i) with respect to
                a Title
                Defect, subject to the Individual Title Deductible and the Aggregate
                Title
                Deductible, the Purchase Price shall be reduced by the Title Defect
                Amount
                with respect to such Title Defect if the Title Defect Amount has
                been
                determined prior to Closing;

            

    

    
      	
              (c)

            	
              Increased
                by the amount of all Property Costs attributable to the ownership
                and
                operation of the Assets which are paid by Seller or incurred at or
                after
                the Effective Date, including, but not limited to, lease extension
                and
                lease option costs;

            

    

    
      	
              (d)

            	
              Reduced
                to the extent provided in Section 3.5(c)(ii) with
                respect to Property subject to Title Defects and retained by
                Seller;

            

    

    
      	
              (e)

            	
              Reduced
                to the extent provided in Section 3.6(b) with respect to Preference
                Rights; and

            

    

    
      	
              (f)

            	
              Increased
                or reduced as agreed upon in writing by Seller and
                Purchaser.

            

    

    

    The
      Purchase Price as adjusted after calculating and applying the adjustments set
      forth in this Section 2.3 is the adjusted purchase price (the “Adjusted Purchase
      Price”).

    
      
        
        

      

      
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    Section
      2.4.  Closing Payment & Post-Closing Purchase Price
      Adjustments.

    
      	
              (a)

            	
              Not
                later than three (3) Business Days (“Business Days” means each calendar
                day except Saturdays, Sundays, and federal holidays) prior to the
                Closing,
                Seller shall prepare and deliver to Purchaser, 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 provided for in this Agreement. The estimate delivered
                in accordance with this Section 2.4(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
                one
                hundred and twenty (120) days following the Closing, Seller shall
                prepare
                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 before and after the Effective Date and
                taking
                into account all adjustments provided for in this Agreement. Seller
                shall
                at Purchaser’s request supply reasonable documentation available to
                support any credit, charge, receipt or other item.  As soon as
                reasonably practicable but not later than the 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
                eighty
                (180) days after the Closing. In the event that the parties cannot
                reach
                agreement within such period of time, either party may refer the
                remaining
                matters in dispute to a nationally-recognized independent accounting
                firm
                not currently representing either party as may be accepted by Purchaser
                and Seller, for review and final determination. The accounting firm
                shall
                conduct the arbitration proceedings in Houston, Texas in accordance
                with
                the Commercial Arbitration Rules of the American Arbitration Association,
                to the extent such rules do not conflict with the terms of this Section
                2.4. 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.

            

    

    

    Section
      2.5.  Payments Required.

    All
      payments made or to be made hereunder to Seller shall be by electronic transfer
      of immediately available funds to the account of Anadarko Petroleum Corporation,
      [Account No. 1862921 at Mellon Bank, Pittsburgh, PA, ABA No.
      043-000-261] for the credit of Seller or to such other bank and
      account as may be specified by Seller in writing.

    

    

    ARTICLE
      III

    SELLER’S
      TITLE

    

    Section
      3.1  Access and Review.

    Between
      the date of execution of this Agreement by both Purchaser and Seller and
      continuing until three (3) Business Days prior to the Closing, Seller will
      give
      Purchaser and its representatives access to the Assets, to the extent Seller
      can
      grant such access, and access to the Records in Seller’s possession, for the
      purpose of conducting an investigation of the Assets, including an environmental
      assessment of the Properties, but only to the extent that Seller may do so
      without violating any obligations to any third party and to the extent that
      Seller has authority to grant such access without breaching any restriction
      binding on Seller. Such access by Purchaser shall be limited to Seller’s normal
      business hours, and any weekends and after hours requested by Purchaser that
      can
      be reasonably accommodated by Seller, and Purchaser’s investigation shall be
      conducted in a manner that minimizes interference with the operation of the
      Assets.  Any assessment shall be conducted at the sole cost and
      expense of Purchaser.  Prior to conducting any physical examination of
      the Properties, including sampling, boring, drilling or other invasive activity
      with respect to the Properties, Purchaser shall furnish for Seller’s review a
      proposed scope of such invasive activity, including a description of the
      activities to be conducted and a description of the approximate locations of
      such activities.  Seller may request an appropriate modification of
      the proposed invasive activity.  All information obtained by Purchaser
      and its representatives under this Section shall be subject to the terms of
      that
      certain confidentiality agreement between Seller and Purchaser dated March
      8,
      2007 (the "Confidentiality Agreement").  PURCHASER HEREBY
      AGREES TO DEFEND, INDEMNIFY, RELEASE, PROTECT, SAVE AND HOLD HARMLESS THE
      SELLER, ITS PARENT, SUBSIDIARIES AND AFFILIATES AND ALL OF THEIR DIRECTORS,
      OFFICERS, EMPLOYEES, REPRESENTATIVES, SUCCESSORS AND ASSIGNS FROM AND AGAINST
      ANY AND ALL LOSSES AND CLAIMS ARISING OUT OF OR RELATING TO ANY DUE DILIGENCE
      ACTIVITY, CONDUCTED BY PURCHASER OR ITS AGENTS, WHETHER BEFORE OR AFTER THE
      EXECUTION OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY LOSSES
      RESULTING, IN WHOLE OR IN PART, FROM THE NEGLIGENCE OR STRICT LIABILITY OF
      SELLER, BUT EXCLUDING ANY LOSSES RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL
      MISCONDUCT OF SELLER.

    
      
        
        

      

      
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    Section
      3.2.  Defensible Title.

    As
      used
      in this Agreement, the term “Defensible Title” means that title of Seller with
      respect to the Units, Wells, or Leasehold Interests that, except for and subject
      to Permitted Encumbrances:

    

    
      	
              (a)

            	
              Entitles
                Seller to receive not less than the percentage set forth in
                Exhibit A as Seller’s “Net Revenue Interest” of all
                Hydrocarbons produced, saved and marketed from the Leasehold Interests
                as
                set forth in Exhibit A, all without reduction, suspension
                or termination of such interest throughout the productive life of
                such
                well, except decreases in connection with those operations in which
                Seller
                may after the Effective Date be a non-consenting co-owner, decreases
                resulting from the establishment or amendment after the Effective
                Date of
                pools or units, and except for carried interests, production payments,
                reversionary interest or other changes in interest in time as specifically
                set forth in Exhibit A
                ;

            

    

    
      	
              (b)

            	
              Obligates
                Seller to bear not greater than the percentage set forth in
                Exhibit B as Seller’s “Working Interest” of the
                costs and expenses relating to the maintenance, development and operation
                of each Well or Unit as set forth in
                ExhibitB, all without increase
                throughout the productive life of such well, except increases resulting
                from contribution requirements with respect to non-consenting co-owners
                under applicable operating agreements, and except for carried interests,
                production payments, reversionary interest or other changes in interest
                in
                time as specifically set forth in
                ExhibitB;
                and

            

    

    
      	
              (c)

            	
              Is
                free and clear of liens, encumbrances, obligations, security interests,
                irregularities, pledges, mortgages, or other
                defects;

            

    

    
      	
              (d)

            	
              Entitles
                Purchaser to receive not less than the net leasehold acreage described
                on
                Exhibit A ; and

            

    

    
      	
              (e)

            	
              There
                are no contracts which materially detract from the value of or materially
                interfere with the use or ownership of the Units, Wells, or Leasehold
                Interest.

            

    

    

    Section
      3.3.  Title Defect.

    As
      used
      in this Agreement, the term “Title Defect” means any lien, charge, encumbrance,
      obligation (including contract obligation), defect, or other matter (including
      without limitation a material discrepancy in the net leasehold acreage) that,
      alone or in combination with other Title Defects, causes Purchaser not to have
      Defensible Title in and to the Units, Wells, or Leasehold Interest shown in
      Exhibits A and B. Notwithstanding the foregoing, the
      following shall not be considered Title Defects:

    

    
      	
              1.

            	
              defects
                based solely on (i) lack of information in the Seller’s files, or (ii)
                references to a document(s) if such document(s) is not in Seller’s
                files;

            

    

    
      	
              2.

            	
              defects
                in the chain of title prior to January 1,
                1950;

            

    

    
      	
              3.

            	
              defects
                arising out of lack of corporate or other entity authorization unless
                Purchaser provides affirmative evidence that the action was not authorized
                and results in another party’s actual and superior claim of title to the
                relevant Property;

            

    

    
      
        
        

      

      
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              4.

            	
              defects
                based on failure to record oil and gas leases issued by any state,
                or any
                assignments of record title or operating rights in such leases, in
                the
                real property, conveyance or other records of the county in which
                such
                Property is located;

            

    

    
      	
              5.

            	
              defects
                based on a gap in Seller’s chain of title in the county records as to fee
                oil and gas leases, unless such gap is affirmatively shown to exist
                in
                such records by an abstract of title, title opinion or landman’s title
                chain which documents shall be included in a Title Defect
                Notice;

            

    

    
      	
              6.

            	
              defects
                that have been cured by applicable laws of limitations or
                prescription;

            

    

    
      	
              7.

            	
              any
                delay in delivering an assignment earned under a farmout, participation
                or
                similar agreement unless Purchaser provides affirmative evidence
                that the
                farmor or other third party record title holder has refused to deliver
                such assignment; and

            

    

    
      	
              8.

            	
              defects
                disclosed to or known by Purchaser and/or its affiliates prior to
                the
                execution of this Agreement.

            

    

    

    Notwithstanding
      anything in this Agreement to the contrary, the failure of title with regard
      to
      any particular lease shall not be deemed a Title Defect, if the Assets include
      Seller’s interest in one or more protection leases covering all of the same
      mineral rights as the failed lease that would otherwise constitute a Title
      Defect.

    

    

    Section
      3.4.  Definition of Permitted Encumbrances.

    As
      used
      herein, the term “Permitted Encumbrances” means any or all of the following
      provided that such matters do not operate to reduce directly the Net Revenue
      Interests of Seller below those set forth in Exhibits A and
B or increase directly the Working Interests
      of Seller above
      those set forth in Exhibit B without a corresponding increase
      in the Net Revenue Interests;

    

    
      	
              (a)

            	
              All  royalties,
                overriding royalties, reversionary interests and other burdens in
                existence as of the Effective Date to the extent that the net cumulative
                effect of such burdens does not materially reduce Seller’s net leasehold
                acreage below that shown in Exhibit
                A;

            

    

    
      	
              (b)

            	
              All
                leases, unit agreements, pooling agreements, operating agreements,
                Hydrocarbon production sales contracts, division orders and other
                contracts, agreements and instruments applicable to the Assets, to
                the
                extent that the net cumulative effect of such instruments does not
                materially reduce Seller’s net leasehold acreage below that shown in
                Exhibit A;

            

    

    
      	
              (c)

            	
              Preference
                Rights applicable to the Assets with respect to which (A) waivers
                or
                consents are obtained from the appropriate parties for the transaction
                contemplated hereby, or (B) required notices have been given for
                the
                transaction contemplated hereby to the holders of such rights and
                the
                appropriate period for asserting such rights has expired without
                an
                exercise of such rights.

            

    

    
      	
              (d)

            	
              Transfer
                Requirements, third-party consent requirements and other similar
                restrictions or waivers with respect to which (A) waivers or consents
                are
                obtained from the appropriate parties for the transaction contemplated
                hereby, or (B) required notices have been given for the transaction
                contemplated hereby to the holders of such rights and the appropriate
                period for asserting such rights has expired without an exercise
                of such
                rights;

            

    

    
      	
              (e)

            	
              Liens
                for current taxes or assessments not yet delinquent or, if delinquent,
                being contested in good faith by appropriate actions and for which
                any
                Seller has agreed to pay any final settlement related to periods
                prior to
                the Effective Date;

            

    

    
      	
              (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 for which any Seller has agreed to pay any
                final
                settlement related to periods prior to the Effective
                Date;

            

    

    
      	
              (g)

            	
              All
                rights to consent by, required notices to, filings with, or other
                actions
                by governmental bodies in connection with the sale or conveyance
                of the
                Assets or interests therein if they are not required or customarily
                obtained prior to the sale or
                conveyance;

            

    

    
      
        
        

      

      
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              (h)

            	
              Any
                other liens, charges, encumbrances, defects or irregularities which
                do
                not, individually or in the aggregate, materially  interfere
                with the use or ownership of the Assets subject thereto or affected
                thereby (as currently used or owned), which would be accepted by
                a
                reasonably prudent purchaser engaged in the business of owning and
                operating oil and gas properties, and which do not reduce Seller’s net
                leasehold acreage below that shown in Exhibit
                A;

            

    

    
      	
              (i)

            	
              Matters
                that would otherwise be considered Title Defects but that do not
                meet the
                Individual Title Deductible set forth in Section
                3.5(g);

            

    

    
      	
              (j)

            	
              Imbalances
                associated with the Assets;

            

    

    
      	
              (k)

            	
              Rights
                of reassignment arising upon final intention to abandon or release
                the
                Assets, or any of them;

            

    

    
      	
              (l)

            	
              Easements,
                rights-of-way, servitudes, permits, surface leases and other rights
                in
                respect of surface operations to the extent that they do not individually
                reduce Seller’s net leasehold acreage below that shown in Exhibit
                A; and

            

    

    
      	
              (m)

            	
              Calls
                on Hydrocarbon production under existing
                Contracts.

            

    

    

    

    Section
      3.5.  Notice of Title Defect Adjustments.

    
      	
              (a)

            	
              To
                assert a claim of a Title Defect, Purchaser must deliver claim notices
                to
                Seller (each a “Title Defect Notice”) on or before three (3) days prior to
                Closing (the “Title Claim Date”).  Each Title Defect Notice
                shall be in writing and shall include (i) a description of the alleged
                Title Defect(s), (ii) the Unit, Well, or Leasehold Interest affected
                by
                the Title Defect (each a “Title Defect Property”), (iii) supporting
                documents reasonably necessary for Seller (as well as any title attorney
                or examiner hired by Seller) to verify the existence of the alleged
                Title
                Defect(s), and (iv) the amount by which Purchaser reasonably believes
                the
                value of each Title Defect Property is reduced by the alleged Title
                Defect(s) and the computations and information upon which Purchaser’s
                belief is based. Notwithstanding any other provision of this Agreement
                to
                the contrary, Purchaser shall be deemed to have waived its right
                to assert
                Title Defects that Seller has not been given notice on or before
                the Title
                Claim Date.  For purposes of this Agreement, the term “Allocated
                Value” with respect to a particular Property shall mean the portion of the
                Purchase Price that has been allocated to such Property on
                Exhibits A and B (as
                appropriate).

            

    

    
      	
              (b)

            	
              Seller
                shall have the right, but not the obligation, to attempt, at its
                sole
                cost, to cure or remove at any time prior to Closing (the “Cure Period”),
                unless the parties otherwise agree, any Title Defects of which it
                has been
                advised by Purchaser.

            

    

    
      	
              (c)

            	
              Remedies
                for Title Defects - Seller.

            

    

    In
      the event that any Title Defect is
      not waived by Purchaser or cured on or before Closing, Seller shall, at its
      sole
      election, elect to:

    
      	
            	
              (i)

            	
              subject
                to the Individual Title Deductible and the Aggregate Title Deductible,
                reduce the Purchase Price by an amount agreed upon ("Title Defect
                Amount")
                pursuant to Section 3.5(e) or 3.5(f) by Purchaser and Seller as being
                the
                value of such Title Defect, taking into consideration the Allocated
                Value
                of the Property subject to such Title Defect, the portion of the
                Property
                subject to such Title Defect and the legal effect of such Title Defect
                on
                the Property affected thereby; provided, however, that the methodology,
                terms and conditions of Section 3.5(f) shall control any such
                determination; or

            

    

    
      	
            	
              (ii)

            	
              retain
                the entirety of the Property that is subject to such Title Defect,
                together with all associated Assets, in which event the Purchase
                Price
                shall be reduced by an amount equal to the Allocated Value of such
                Property;

            

    

    
      	
              (d)

            	
              Section
                3.5(c) shall be the exclusive right and remedy of Purchaser with
                respect
                to Title Defects asserted by Purchaser pursuant to Section
                3.5.

            

    

    
      	
              (e)

            	
              The
                Title Defect Amount resulting from a Title Defect shall be the amount
                by
                which the Allocated Value of the Title Defect Property affected by
                such
                Title Defect is reduced as a result of the existence of such Title
                Defect
                and shall be determined in accordance with the following methodology,
                terms and conditions:

            

    

    
      	
            	
              (i)

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

            

    

    
      
        
        

      

      
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              (ii)

            	
              if
                the Title Defect is a lien, encumbrance or other charge which is
                undisputed and liquidated in amount, then the Title Defect Amount
                shall be
                the amount necessary to be paid to remove the Title Defect from the
                Title
                Defect Property;

            

    

    
      	
            	
              (iii)

            	
              if
                the Title Defect represents an obligation, encumbrance, burden or
                charge
                upon or other defect in title to the Title Defect Property of a type
                not
                described in subsections (i) or (ii) above, the Title Defect Amount
                shall
                be determined by taking into account the Allocated Value of the Title
                Defect Property, the portion of the Title Defect Property affected
                by the
                Title Defect, the legal effect of the Title Defect, the potential
                economic
                effect of the Title Defect over the life of the Title Defect Property,
                the
                values placed upon the Title Defect by Purchaser and Seller and such
                other
                factors as are necessary to make a proper evaluation;
                and

            

    

    
      	
            	
              (iv)

            	
              notwithstanding
                anything to the contrary in this Article 3, the aggregate Title Defect
                Amounts attributable to the effects of all Title Defects upon any
                Title
                Defect Property shall not exceed the Allocated Value of the Title
                Defect
                Property.

            

    

    
      	
              (f)

            	
              Seller
                and Purchaser shall attempt to agree on all Title Defect Amounts
                prior to
                Closing.  If Seller and Purchaser are unable to agree by
                Closing, the Title Defect Amounts in dispute shall be exclusively
                and
                finally resolved by arbitration pursuant to this Section 3.5(f).
                There
                shall be a single arbitrator, who shall be a title attorney with
                at least
                ten (10) years experience in oil and gas titles involving properties
                in
                the regional area in which the Properties are located, as selected
                by
                mutual agreement of Purchaser and Seller within fifteen (15) Business
                Days
                after the end of the Cure Period, and absent such agreement, by the
                Houston office of the American Arbitration Association (the “Title
                Arbitrator”). The arbitration proceeding shall be held in Houston, Texas
                and shall be conducted in accordance with the Commercial Arbitration
                Rules
                of the American Arbitration Association, to the extent such rules
                do not
                conflict with the terms of this Section.  In making his
                determination, the Title Arbitrator shall be bound by the rules set
                forth
                in Section 3.5(e) and may consider such other matters as in the opinion
                of
                the Title Arbitrator are necessary or helpful to make a proper
                determination.  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, including
                any
                costs incurred by the Title Arbitrator that are attributable to third
                party consultation.

            

    

    
      	
              (g)

            	
              Notwithstanding
                anything to the contrary, (i) in no event shall there be any
                adjustments to the Purchase Price or other remedies provided by Seller
                for
                individual Title Defects that do not exceed $50,000.00 (“Individual Title
                Deductible”); and (ii) in no event shall there be any adjustments to
                the Purchase Price or other remedies provided by Seller for Title
                Defects
                unless the amount of all such Title Defects, in the aggregate, excluding
                any Title Defects cured by Seller, exceeds a deductible in an amount
                equal
                to ten percent (10%) of the value attributed to the leases in
                Exhibit A (“Aggregate Title Deductible”), after which
                point Purchaser shall be entitled to adjustments to the Purchase
                Price or
                other remedies only with respect to Title Defects in excess of such
                Aggregate Title Deductible.

            

    

    

    Section
      3.6.Preference Rights and Transfer Requirements.

    
      	
              (a)

            	
              Purchaser’s
                purchase of the Assets is expressly subject to all validly existing
                and
                applicable Preference Rights and Transfer
                Requirements.  “Preference Right” means any right or agreement
                that enables any person or entity to purchase or acquire any Asset
                or any
                interest therein or portion thereof as a result of or in connection
                with
                the sale, assignment or other transfer of any Asset or any interest
                therein or portion thereof as contemplated in this
                document.  “Transfer Requirement” means any consent, approval,
                authorization or permit of, or filing with or notification to, any
                person
                which is required to be obtained, made or complied with for or in
                connection with any sale, assignment or transfer of any Asset or
                any
                interest therein, other than any consent of, notice to, filing with,
                or
                other action by governmental bodies in connection with the sale or
                conveyance of oil and/or gas leases or interests therein or Surface
                Contracts or interests therein, if they are not required prior to
                the
                assignment of such oil and/or gas leases, Surface Contracts or interests
                or they are customarily obtained subsequent to the sale or conveyance
                (including consents from state agencies). To the knowledge of the
                officers
                of Seller, none of the Assets, or any portion thereof, is subject
                to any
                Preference Right or Transfer Requirement which may be applicable
                to the
                acquisition contemplated by this Agreement, except for (i) Preference
                Rights and Transfer Requirements contained in easements, rights-of-way
                or
                equipment leases and (ii) Preference Rights and Transfer Requirements
                as
                are set forth on Exhibit E.  Within 10 Business
                Days of execution of this Agreement, Seller shall initiate all procedures
                which in Seller’s good faith judgment are reasonably required to comply
                with or obtain the waiver of all Preference Rights and Transfer
                Requirements set forth in Exhibit E with respect to the
                acquisition contemplated by this Agreement.  Seller shall not be
                obligated to pay any consideration to (or incur any cost or expense
                for
                the benefit of) the holder of any Preference Right or Transfer Requirement
                in order to obtain the waiver thereof or compliance
                therewith.

            

    

    
      
        
        

      

      
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          8 of 19

        
          

        

      

      
        
        

      

    

    
      	
              (b)

            	
              The
                portion of the Purchase Price to be allocated to any Asset or portion
                thereof affected by a Preference Right (a “Preference Property”) shall be
                the Allocated Value for the Property set forth in Exhibits A or B
                (as appropriate).  If a Preference Property affects
                only a portion of a Property and a portion of the Purchase Price
                has not
                been allocated specifically to such portion of a Property in
                Exhibits A or B (as appropriate), then the portion of the
                Purchase Price to be allocated to such Preference Property shall
                be
                determined in a reasonable manner taking into account the net acreage
                (or
                net acre feet, as appropriate) that the portion of such Property
                affected
                by such Preference Property bears to the net acreage (or net acre
                feet, as
                appropriate) in the entire Property.  Any Preference Property
                that is a Property shall include a pro rata share of all of Seller’s
                right, title and interest in, to and under all Contracts, Surface
                Contracts, Equipment, hydrocarbon production and Records included
                in the
                Assets that are directly related or attributable to such Preference
                Property.

            

    

    
      	
              (c)

            	
              If
                the holder of a Preference Right who has been offered a Preference
                Property pursuant to Section 3.6(a) elects prior to Closing to purchase
                such Preference Property in accordance with the terms of such Preference
                Right, and Seller and Purchaser receive written notice of such election
                prior to the Closing, such Preference Property will be eliminated
                from the
                Assets and the Purchase Price shall be reduced by the portion of
                the
                Allocated Value of the Preference Property pursuant to Section
                3.6(b).  If the holder of a Preference Right who has been
                offered a Preference Property or who has been requested to waive
                its
                Preference Right pursuant to Section 3.6(a) does not elect to purchase
                such Preference Property or waive such Preference Right with respect
                to
                the acquisitions contemplated by this Agreement prior to the Closing
                and
                the time in which the Preference Right may be exercised has not expired,
                such Preference Property shall be conveyed to Purchaser at Closing
                subject
                to the rights, if any, of the holder of such Preference
                Right.  In such event, Seller shall continue its efforts to
                obtain the waiver of such Preference Rights to the extent provided
                in
                Section 3.6(a) and Purchaser shall cooperate with such
                efforts.  If the holder of a Preference Right elects to purchase
                a Preference Property subject to its Preference Right and Closing
                has
                already occurred with respect to such Preference Property, Purchaser
                shall
                be obligated to comply with such Preference Right to the extent,
                if any,
                that the same remains valid and enforceable with respect to this
                acquisition and Purchaser shall be entitled to the consideration
                for the
                sale of such Preference Property from Purchaser to such Preference
                Right
                holder.  If a Transfer Requirement that has been requested prior
                to Closing has not been granted prior to Closing and the time in
                which to
                respond has not expired (to the extent there is a time period to
                respond),
                Purchaser shall have the option to: (i) delay the Closing until such
                Transfer Requirement has been satisfied, or (ii) proceed to Closing,
                but
                with an Adjustment to the Purchase Price by the Allocated Value of
                the
                Transfer Requirement Property.  If Purchaser selects option (ii)
                in the previous sentence, Seller shall continue commercial reasonable
                best
                efforts to obtain the consent from the Transfer Requirement holder
                within
                a reasonable period of time after Closing.  If such consent is
                obtained within a reasonable time after Closing, Seller shall convey
                such
                property to Purchaser and the Purchaser shall pay the amount of the
                corresponding Purchase Price Adjustment to
                Seller.

            

    

    
      	
              (d)

            	
              Purchaser
                acknowledges that Seller desires to sell all of the Assets and would
                not
                have entered into this Agreement but for Purchaser’s agreement to purchase
                all of the Assets as herein provided.  Accordingly, it is
                expressly understood and agreed that Seller does not desire to sell
                any
                Preference Property unless the sale of all of the Assets is consummated
                by
                the Closing in accordance with the terms of this Agreement.  In
                furtherance of the foregoing, Seller’s obligation hereunder to sell the
                Preference Properties to Purchaser is expressly conditioned upon
                the
                consummation by the Closing of the sale of all of the Assets in accordance
                with the terms of this Agreement, either by conveyance to Purchaser
                or
                conveyance pursuant to an applicable Preference Right; provided that,
                nothing herein is intended or shall operate to extend or apply any
                Preference Right to any portion of the Assets which is not otherwise
                burdened thereby.  Time is of the essence with respect to the
                parties’ agreement to consummate the sale of the Assets by the
                Closing.

            

    

    
      
        
        

      

      
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    ARTICLE
      IV

    REPRESENTATIONS
      AND WARRANTIES OF SELLER

    

    Section
      4.1  Generally.

    
      	
              (a)

            	
              Any
                representation “to the knowledge of Seller” or “to Seller’s knowledge” or
                “to the knowledge of Purchaser” or “to Purchaser’s knowledge” is limited
                to matters within the actual knowledge of (i) the respective land,
                legal,
                accounting and health, safety and environmental managers of Seller
                or
                Purchaser and (ii) the general manager responsible for the operations
                as
                the case may be.

            

    

    
      	
              (b)

            	
              Subject
                to the foregoing provisions of this Section 4.1, the disclaimers
                and
                waivers contained in Sections 6.4 and 6.5 and the other terms and
                conditions of this Agreement, Seller represents and warrants to Purchaser
                the matters set out in Sections 4.2 through 4.8.  The
                representations and warranties of Seller set forth herein shall terminate
                upon Closing.

            

    

    

    Section
      4.2 Existence and
      Qualification.

    Seller
      is
      a corporation duly organized, validly existing and in good standing under the
      laws of the State of Delaware and is duly qualified to do business as a foreign
      corporation  where the Assets are located, except where the failure to
      so qualify would not have a material adverse effect.

    

    Section
      4.3  Power.

    Seller
      has the corporate power to enter into and perform this Agreement and consummate
      the transactions contemplated by this Agreement.

    

    Section
      4.4  Authorization and Enforceability.

    The
      execution, delivery and performance of this Agreement, and the performance
      of
      the transactions contemplated hereby, 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 hereunder
      to
      be executed and delivered by Seller at Closing will be duly executed and
      delivered by Seller) and this Agreement constitutes, and at the Closing such
      documents will 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).

    
      
        
        

      

      
        Page
          10 of 19

        
          

        

      

      
        
        

      

    

    Section
      4.5  No Conflicts.

    The
      execution, delivery and performance of this Agreement by Seller, and the
      transactions contemplated by this Agreement will 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 any lien or
      encumbrance or give rise to any right of termination, cancellation or
      acceleration under any of the terms, conditions or provisions of any note,
      bond,
      mortgage, indenture, license or agreement to which Seller is a party or which
      affect the Assets, (iii) violate any judgment, order, ruling, or decree
      applicable to Seller as a party in interest, (iv) violate any laws applicable
      to
      Seller or any of the Assets, except for rights to consent by, required notices
      to, and filings with or other actions by governmental bodies where the same
      are
      not required prior to the assignment of oil and gas interests, or (v) require
      any filing with, notification of or consent, approval or authorization of any
      governmental body except any matters described in clauses (ii), (iii) or (iv)
      above which would not have a material adverse effect.

    

    Section
      4.6  Condemnation.

    To
      Seller’s knowledge, there is no actual or threatened taking (whether permanent,
      temporary, whole or partial) of any part of the Properties by reason of
      condemnation or the threat of condemnation.

    

    Section
      4.7 
Bankruptcy.

    There
      are
      no bankruptcy, reorganization, or similar arrangement proceedings pending,
      being
      contemplated by or, to Seller’s knowledge, threatened against Seller or any
      Affiliate.

    

    Section
      4.8  Investment Company.

    Seller
      is
      not (a) an investment company or a company controlled by an investment company
      within the meaning of the Investment Company Act of 1940, as amended or (b)
      subject in any respect to the provisions of said act.

    

    The
      representations and warranties of Seller set forth herein shall terminate upon
      Closing.

    

    

    ARTICLE
      V

    REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

    

    

    Purchaser
      represents and warrants to Seller the following:

    

    Section
      5.1  Existence and Qualification.

    Purchaser
      is a limited liability company organized, validly existing and in good standing
      under the laws of the state of its formation; and Purchaser is duly qualified
      to
      do business as a foreign entity in every jurisdiction in which it is required
      to
      qualify in order to conduct its business except where the failure to so qualify
      would not have a material adverse effect on Purchaser or its properties; and
      Purchaser is duly qualified to do business as a foreign corporation in the
      respective jurisdictions where the Assets to be transferred to it are
      located.

    

    Section
      5.2  Power.

    Purchaser
      has the company power to enter into and perform this Agreement and consummate
      the transactions contemplated by this Agreement.   

    

    Section
      5.3  Authorization and Enforceability.

    The
      execution, delivery and performance of this Agreement, and the performance
      of
      the transaction contemplated hereby, have been duly and validly authorized
      by
      all necessary company action on the part of Purchaser. This Agreement has been
      duly executed and delivered by Purchaser (and all documents required hereunder
      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).

    
      
        
        

      

      
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          11 of 19

        
          

        

      

      
        
        

      

    

    Section
      5.4  No Conflicts.

    The
      execution, delivery and performance of this Agreement by Purchaser, and
      the  transactions contemplated by this Agreement will not (i) violate
      any provision of the certificate of  incorporation or bylaws of
      Purchaser, (ii) result in a material 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 any of the terms, conditions
      or
      provisions of any note, bond, mortgage, indenture, license or agreement to
      which
      Purchaser is a party, (iii) violate any judgment, order, ruling, or regulation
      applicable to Purchaser as a party in interest, or (iv) violate any law, rule
      or
      decree applicable to Purchaser or any of its assets, or (v) require any filing
      with, notification of or consent, approval or authorization of any governmental
      body or authority, except any matters described in clauses (ii), (iii), (iv)
      or
      (v) above which would not have a material adverse effect on
      Purchaser.

    

    Section
      5.5  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
      5.6  Performance Assurances.

    Purchaser
      has the authority and ability to provide financial and performance assurances
      to
      Seller to enable Purchaser to meet the obligations contained in this
      Agreement.

    

    Section
      5.7  SEC Disclosure.

    Purchaser
      is acquiring the Assets for its own account for use in its trade or business,
      and not with a view toward or for sale associated with any distribution thereof,
      nor with any present intention of making a distribution thereof within the
      meaning of the Securities Act of 1933, as amended and applicable state
      securities laws.

    

    Section
      5.8  Bankruptcy.

    There
      are
      no bankruptcy, reorganization or receivership proceedings pending against,
      or,
      to Purchasers knowledge being contemplated by, or threatened against
      Purchaser.

    

    The
      representations and warranties of Purchaser set forth herein shall terminate
      upon Closing.

    

    ARTICLE
      VI

    POST-CLOSING
      OBLIGATIONS; INDEMNIFICATION; RELEASE; DISCLAIMERS; AND
      WAIVERS

    

    Section
      6.1  Obligations.

    Effective
      as of the Closing Date, Purchaser shall assume and hereby agrees to fulfill,
      perform, pay and discharge (or cause to be fulfilled, performed, paid or
      discharged) all of the obligations and liabilities of Seller, known or unknown,
      with respect to the Assets, regardless of whether such obligations or
      liabilities arose prior to, on or after the Effective Date, including but not
      limited to obligations to (i) furnish makeup gas according to the terms of
      applicable gas sales, gathering or transportation contracts, and to satisfy
      all
      other gas balancing obligations, if any, (ii) pay working interests, royalties,
      overriding royalties and other interests held in suspense, (iii) properly plug
      and abandon any and all wells, including inactive wells or temporarily abandoned
      wells, drilled on the Properties or otherwise pursuant to the Assets, (iv)
      replug any well, wellbore, or previously plugged well on the Properties to
      the
      extent required by governmental body, (v) dismantle, salvage and remove any
      equipment, structures, materials, platforms, flowlines, and property of whatever
      kind related to or associated with operations and activities conducted on the
      Properties or otherwise pursuant to the Assets, (vi) clean up, restore and/or
      remediate the premises covered by or related to the Assets in accordance with
      applicable agreements and laws, and (vii) perform all obligations applicable
      to
      or imposed on the lessee, owner, or operator under the Leasehold Interests
      and
      related contracts, or as required by applicable laws (all of said obligations
      and liabilities, subject to the exclusions below); provided, however, that
      Purchaser does not accrue any rights or assume any obligations or liabilities
      of
      Seller to the extent that they are attributable to or arise out of the Excluded
      Assets; provided further, that this Section shall not affect Seller’s
      responsibility under Section 1.3(b) for Property Costs incurred prior to the
      Effective date or Seller’s responsibility to make purchase price adjustments, if
      any, in accordance Section 2.4.

    
      
        
        

      

      
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    Section
      6.2  Indemnities.

    
      	
              (a)

            	
              PURCHASER
                FURTHER AGREES TO DEFEND (INCLUDING BUT NOT LIMITED TO PAYMENT OF
                REASONABLE ATTORNEYS’ FEES AND COSTS OF LITIGATION), INDEMNIFY AND HOLD
                HARMLESS Seller from and against any and all demands, damages, debts,
                liabilities, lawsuits, fines, penalties, liens, encumbrances, judgments,
                interest, causes of action or claims for relief of any kind or character,
                known or unknown, at law or in equity, in contract, in tort, under
                statute, or otherwise, (including but not limited to those for property
                damage, personal injury, mental or emotional distress, medical monitoring,
                or death [including loss of parental or spousal consortium and wrongful
                death]), which any entity or individual ever had or now has or may
                in the
                future have against Seller (collectively “Claims”) in any way connected
                with, arising out of, or related in any manner to the Assets to the
                extent
                such Claims arise after the Effective Date, including but not limited
                to:
                (i) the failure, or alleged failure, to properly drill, complete,
                operate
                and plug and abandon any wellbores, production related equipment
                and/or
                complete any cleanup, reclamation or restoration of the surface and
                wellsite(s) as may be required; (ii) the ownership, use or operation
                of
                the Assets, (iii) the potential presence of NORM, asbestos and any
                other
                environmental contaminants or pollutants which may be in, on, under
                or
                near the Assetsincluding releases of materials into the
                environment or any other environmental condition arising from the
                Assets,;
                and (iv) the personal injury, death or property damage of third parties,
                Purchaser’s employees, its contractors and subcontractors and their
                employees, or any of their invitees;  REGARDLESS OF WHETHER
                CAUSED BY THE SOLE OR CONCURRENT NEGLIGENCE, FAULT, OMISSION, OR
                STRICT OR
                STATUTORY LIABILITY OF SELLER, AND WHETHER CAUSED BY A PRE-EXISTING
                CONDITION, and regardless of whether the law, rule, or judgment related
                to
                the Claim is in existence on the Effective Date, but excluding any
                Claims
                arising out of Seller’s own gross negligence or willful
                misconduct.

            

    

    

    
      	
              (b)

            	
              SELLER
                AGREES TO DEFEND (INCLUDING BUT NOT LIMITED TO PAYMENT OF REASONABLE
                ATTORNEYS’ FEES AND COSTS OF LITIGATION), INDEMNIFY AND HOLD HARMLESS
                Purchaser from and against any and all Claims in any way connected
                with,
                arising out of, or related in any manner to the Assets, or the ownership,
                use or operation thereof, to the extent such Claims arise before
                the
                Effective Date or relate to the Excluded Assets (arising at any time);
                REGARDLESS OF WHETHER CAUSED BY THE SOLE OR CONCURRENT NEGLIGENCE,
                FAULT,
                OMISSION, OR STRICT OR STATUTORY LIABILITY OF PURCHASER, AND WHETHER
                CAUSED BY A PRE-EXISTING CONDITION, and regardless of whether the
                law,
                rule, or judgment related to the Claim is in existence on the Effective
                Date, but excluding any Claims arising out of Purchaser’s own gross
                negligence or willful
                misconduct.

            

    

    
      
        
        

      

      
        Page
          13 of 19

        
          

        

      

      
        
        

      

    

    Section
      6.3 Release.

    PURCHASER
      HEREBY AGREES TO RELEASE, ACQUIT AND FOREVER DISCHARGE SELLER from any and
      all
      Claims, in any way connected with, arising out of, or related in any manner
      to
      (i) the Assets or (ii) any actions taken by or omitted to be taken by Seller
      on,
      under, near, or connected to the Assets or regarding the operations thereof,
      but
      excluding any Claims in connection with, arising out of, or related in any
      manner to (i) the Excluded Assets, (ii) Property Costs incurred prior to the
      Effective Date, or (iii) Seller’s responsibility to make purchase price
      adjustments, if any, in accordance Section 2.4.

    

    The
      foregoing release shall include, without limitation, any and all Claims relating
      to or arising out of any alleged contamination, whether of land, soil, subsoil,
      ambient air, surface water, and/or groundwater, watercourses, wetlands, publicly
      owned treatment works, drains, sewer systems or septic systems on or under
      or
      near the Assets. PURCHASER COVENANTS AND AGREES THAT IT WILL NOT ATTEMPT
      TO AVOID THE EFFECT OF THIS RELEASE BY LATER ARGUING THAT AT THE TIME OF THE
      RELEASE IT DID NOT FULLY APPRECIATE THE EXTENT OF CONTAMINATION, IF ANY, ON
      THE
      ASSETS.

    

    Section
      6.4  Disclaimers.

    

    
      	
              (a)

            	
              EXCEPT
                AS AND TO THE EXTENT EXPRESSLY SET FORTH HEREIN OR IN THE CONVEYANCE
                INSTRUMENTS TO BE DELIVERED BY SELLER TO PURCHASER HEREUNDER, (I)
                SELLER
                MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY OR IMPLIED,
                AND
                (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY
                FOR ANY
                REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED
                (ORALLY OR IN WRITING) TO PURCHASER OR ANY OF ITS AFFILIATES, EMPLOYEES,
                AGENTS, CONSULTANTS OR
                REPRESENTATIVES.

            

    

    

    
      	
              (b)

            	
              EXCEPT
                AS EXPRESSLY REPRESENTED OTHERWISE HEREIN OR IN THE CONVEYANCE INSTRUMENTS
                TO BE DELIVERED BY SELLER TO PURCHASER HEREUNDER, AND WITHOUT LIMITING
                THE
                GENERALITY OF THE FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION
                OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY
                OF THE
                ASSETS, (II) THE QUANTITY, QUALITY OR  RECOVERABILITY OF
                PETROLEUM SUBSTANCES IN OR FROM THE ASSETS, (III) ANY ESTIMATES OF
                THE
                VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (IV)
                THE
                PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (V) THE MAINTENANCE,
                REPAIR,
                CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS,
                (VI) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE
                OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES,
                AGENTS,  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, STATUTORY OR IMPLIED, OF FREEDOM FROM PATENT OR
                TRADEMARK INFRINGEMENT, MERCHANTABILITY, FREEDOM FROM REDHIBITORY
                VICES OR
                DEFECTS (INCLUDING THOSE CONTEMPLATED IN LOUISIANA CIVIL CODE ARTICLES
                2475, AND 2520 THROUGH 2548), 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 PURCHASER
                SHALL
                BE DEEMED TO BE OBTAINING THE ASSETS IN THEIR PRESENT STATUS, CONDITION
                AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS AND THAT
                PURCHASER HAS MADE OR CAUSED TO BE  MADE SUCH INSPECTIONS AS
                PURCHASER DEEMS
                APPROPRIATE.

            

    

    
      
        
        

      

      
        Page
          14 of 19

        
          

        

      

      
        
        

      

    

    
      	
              (c)

            	
              SELLER
                HAS NOT AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING
                ANY
                MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, ENVIRONMENTAL
                LIABILITIES, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR THE
                PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT,
                OR ANY OTHER ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN
                THIS
                AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION
                OR
                WARRANTY, AND PURCHASER SHALL BE DEEMED TO BE TAKING THE ASSETS “AS IS”
                AND “WHERE IS” FOR PURPOSES OF THEIR ENVIRONMENTAL
                CONDITION.

            

    

    

    Section
      6.5  Waivers.

    

    Section
      6.5.1  Waiver of Trade Practices Acts.

    

    
      	
              (a)

            	
              It
                is the intention of the parties that Purchaser's rights and remedies
                with
                respect to this transaction and with respect to all acts or practices
                of
                Seller, past, present or future, in connection with this transaction
                shall
                be governed by legal principles other than the Texas Deceptive Trade
                Practices--Consumer Protection Act, Tex. Bus. & Com. Code Ann.
                § 17.41 et seq. (the "DTPA") or the Louisiana unfair trade
                practices and consumer protection law, La. R.S. 51:1402, et seq.
                (the “UTPCPL”).  As such, Purchaser hereby waives the
                applicability of the DTPA and the UTPCPL to this transaction and
                any and
                all duties, rights or remedies that might be imposed by the DTPA
                and/or
                the UTPCPL, whether such duties, rights and remedies are applied
                directly
                by the DTPA or the UTPCPL itself or indirectly in connection with
                other
                statutes; provided, however, Purchaser does not waive
                § 17.555 of the DTPA.  Purchaser acknowledges, represents
                and warrants that it is purchasing the goods and/or services covered
                by
                this Agreement for commercial or business use;; that it has knowledge
                and
                experience in financial and business matters that enable it to evaluate
                the merits and risks of a transaction such as this; and that it is
                not in
                a significantly disparate bargaining position with
                Seller.

            

    

    
      	
              (b)

            	
              Purchaser
                expressly recognizes that the price for which Seller has agreed to
                perform
                its obligations under this Agreement has been predicated upon the
                inapplicability of the DTPA and the UTPCPL and this waiver of the
                DTPA and
                the UTPCPL.  Purchaser further recognizes that Seller, in
                determining to proceed with the entering into of this Agreement,
                has
                expressly relied on this waiver and the inapplicability of the DTPA
                and
                the UTPCPL.

            

    

    

    Section
      6.5.2  Redhibition Waiver.

    Purchaser
      waives all rights in redhibition pursuant to Louisiana Civil Code Articles
      2475
      and 2520 through 2548, and acknowledges that this express waiver shall be
      considered a material and integral part of this sale and the consideration
      thereof.  Purchaser acknowledges that this waiver has been brought to
      its attention and has been explained in detail and that Purchaser has
      voluntarily and knowingly consented to this waiver of warranty of fitness and
      warranty against redhibitory vices and defects for the Assets.

    

    Section
      6.5.3  UTPCPL Waiver.

    To
      the
      extent applicable to the Properties or any portion thereof, Purchaser hereby
      waives the provisions of the Louisiana unfair trade practices and consumer
      protection law (La. R.S. 51:1402, et seq.).  Purchaser warrants and
      represents that it:  (i) is experienced and
      knowledgeable  with respect to the oil and gas industry generally and
      with transactions of this type specifically;(ii) possesses ample knowledge,
      experience and expertise to evaluate independently the merits and risks of
      the
      transactions herein contemplated; and (iii) is not in a significantly disparate
      bargaining position.

    
      
        
        

      

      
        Page
          15 of 19

        
          

        

      

      
        
        

      

    

    ARTICLE
      VII

    CLOSING

    

    Section
      7.1.  Time and Place of Closing

    Unless
      otherwise agreed to in writing by Seller and Purchaser, consummation of the
      acquisition contemplated by this Agreement (the “Closing”) shall take place at
      the offices of Seller located at 1201 Lake Robbins Drive, The Woodlands, Texas,
      at 10:00 a.m., central standard time, on September 12, 2007 (the “Closing Date”)
      or if all conditions to Closing have not yet been satisfied or waived, as soon
      thereafter as such conditions have been satisfied or waived, subject to the
      rights of the parties under Section 7.2; provided, however that neither
      Purchaser nor Seller shall  be under any obligation to close the
      acquisition contemplated herein if the adjustment to the Purchase Price on
      account of the sum of (i) all Title Defect Amounts for Title Defects determined
      under Section 3.5(e) prior to the Closing, (ii) all outstanding Preference
      Rights under Section 3.6(c), and (iii) the value of any casualty losses on
      the
      Assets incurred between the Effective Date and the Closing Date, is greater
      than
      ten percent (10%) of the unadjusted Purchase Price.

    

    Section
      7.2.  Failure to Close.

    The
      acquisition must close no later than September 28, 2007, subject to Section
      7.1,
      unless the parties mutually agree to an extension of such
      date.  Failure to close the acquisition on or before September 28,
      2007 will result in the termination of this Agreement, at which time neither
      Purchase nor Seller shall have any further obligations or liability to one
      another or any other third party under this Agreement.

    

    Section
      7.3.  Actions to be Taken at Closing.

    At
      the
      Closing, (i) Purchaser will wire transfer the Closing Payment to Seller; and
      (ii) both parties will execute the following documents, after adjusting the
      exhibits attached thereto to reflect any Assets excluded from the acquisition
      in
      accordance with Sections 3.5(c) (ii) and 3.6(c), in sufficient duplicate
      originals to allow for recording in all jurisdictions and offices: the
      Assignment and Bill of Sale (“Assignments”) attached hereto as Exhibits
      F,

    

    Section
      7.4  Effect of Termination.

    If
      this
      Agreement is terminated, this Agreement shall become void and of no further
      force or effect (except for the provisions of Sections 6.4, 6.5, 8.7, 8.8,
      8.9
      and 8.10 of this Agreement all of which shall continue in full force and effect)
      and Seller shall be free immediately to enjoy all rights of ownership of the
      Assets and to sell, transfer, encumber or otherwise dispose of the Assets to
      any
      party without any restriction under this Agreement.

    

    

    ARTICLE
      VIII

    OTHER
      PROVISIONS

    

    Section
      8.1.  Delivery of Records.

    Following
      Closing, but in no event later than thirty (30) Business Days following Closing,
      Seller, at Seller’s cost, shall deliver the Records to Purchaser.

    

    Section
      8.2.  Recording and Filing of Assignments.

    As
      soon
      as practicable after Closing, Purchaser shall (i) record the Assignments in
      the
      appropriate counties, and (ii) all other assignment documents and other state
      and federal transfer documents required to effectuate the transfer of the
      Assets.  Purchaser further agrees promptly after Closing to take all
      other actions reasonably required of it by federal or state agencies having
      jurisdiction to obtain all requisite regulatory approvals with respect to this
      acquisition, and to use its reasonable commercial efforts to obtain the approval
      by such federal or state agencies, as applicable, of Seller’s assignment
      documents requiring federal or state approval in order for Purchaser to be
      recognized by the federal or state agencies as the owner of the
      Assets.  As soon as they are available, Purchaser shall promptly
      provide Seller with recorded copies of the Assignments and other state and
      federal transfer documents.

    
      
        
        

      

      
        Page
          16 of 19

        
          

        

      

      
        
        

      

    

    Section
      8.3.  Assignment.

    No
      party
      shall assign all or any part of this Agreement, nor shall any party assign
      or
      delegate any of its rights or duties hereunder, without the prior written
      consent of the other party and any assignment or delegation made without such
      consent shall be void.  This Agreement shall be binding upon and inure
      to the benefit of the parties hereto and their respective successors and
      permitted assigns.

    

    Section
      8.4.  Amendment.

    This
      Agreement may be amended or modified only by an agreement in writing executed
      by
      both parties.  No waiver of any right under this Agreement shall be
      binding unless executed in writing by the party to be bound
      thereby.

    

    Section
      8.5  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
      8.6  Governing Law and Venue.

    This
      Agreement and the legal relations between the parties shall be governed by
      and
      construed in accordance with the laws of the State of Texas without regard
      to
      principles of conflicts of laws otherwise applicable to such
      determinations.

    

    Section
      8.7  No Third-Party
      Beneficiaries.

    Nothing
      in this Agreement shall entitle any person other than Purchaser and Seller
      to
      any Claims, remedy or right of any kind.

    

    Section
      8.8  Limitation on Damages.

    Notwithstanding
      any other provision contained elsewhere in this Agreement to the contrary,
      the
      parties acknowledge that this Agreement does not authorize one party to sue
      for
      or collect from the other party its own punitive damages, or its own
      consequential or indirect damages in connection with this Agreement and the
      transactions contemplated hereby and each party expressly waives for itself
      and
      on behalf of its affiliates, any and all Claims it may have against the other
      party for its own such damages in connection with this Agreement and the
      transactions contemplated hereby.

    

    Section
      8.9  Not to be Construed Against Drafter.

    Each
      party has had an adequate opportunity to review each and every provision of
      this
      Agreement and to submit the same to legal counsel for review and
      advice.  Based on the foregoing, the rule of construction, if any,
      that a contract be construed against the drafter shall not apply to
      interpretation or construction of this Agreement.

    

    Section
      8.10  No Partnership.

    This
      Agreement shall not be construed to create a partnership, principal/agency
      relationship or other relationship among the parties comprising the Purchaser
      such that one party would be liable for the actions or omissions of another
      party.  The obligations under this Agreement of the parties comprising
      the Purchaser shall be several and not joint or collective.

    

    Section
      8.11  Operation of the Assets

    The
      parties agree to enter into a Transition Agreeement substantially in the form
      attached as Exhibit G.

    
      
        
        

      

      
        Page
          17 of 19

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, this Agreement has been signed by each of the parties hereto
      on
      the date first above written.

    

    

    

    
      	
              SELLER:

            	
              PURCHASER:

            
	
              ANADARKO
                PETROLEUM CORPORATION

            	
              IGNIS
                LOUISIANA SALT BASIN, LLC

            

    

    

    
      	
              /s/
                James L. Newcomb

            	 	
              /s/
                Michael P. Piazza

            
	
              By:

            	
              James
                L. Newcomb

            	 	
              By:

            	
              Michael
                P. Piazza

            
	
              Title:

            	
              Agent
                and Attorney-in-Fact

            	 	
              Title:

            	
              President
                and CEO

            

    

     

    
      
        
        

      

      
        Page
          18 of 19

        
          

        

      

      
        
        

      

    

    EXHIBITS
      AND SCHEDULES

    

    
      	
              EXHIBIT
                A

            	
              LEASEHOLD
                INTERESTS

            
	
              EXHIBIT
                B

            	
              WELLS
                AND UNITS

            
	
              EXHIBIT
                C

            	
              CONTRACTS

            
	
              EXHIBIT
                D

            	
              SURFACE
                AGREEMENTS

            
	
              EXHIBIT
                E

            	
              PREFERENCE
                RIGHTS AND TRANSFER REQUIREMENTS

            
	
              EXHIBIT
                F

            	
              ASSIGNMENTS

            
	
              EXHIBIT
                G

            	
              Transition
                Agreement

            

    

    

     

    Page
      19 of
      19FIRST
      AMENDMENT TO

    REVOLVING
      NOTE AGREEMENT

    

    This
      First Amendment to the Revolving Note Agreement ("the AMENDMENT") is
entered
      into as of September 6, 2007, by and among Marine
      Growth Ventures Inc., Marine Growth Charter, Inc., Marine Growth Finance, Inc.,
      Marine Growth Freight, Inc., Marine Growth Real Estate, Inc., and Gulf Casino
      Cruises, Inc., Delaware corporations (collectively the "Borrower"),
      and
Irrevocable
      Children’s Trust (the
      “Lender”).

    

    WHEREAS,
      the Borrower and the Lender are parties to a Revolving Note Agreement dated
      as
      of August 1, 2007 (the "NOTE AGREEMENT") pursuant to which, among other things,
      the Borrower promised to pay the Lender the principal sum of up to One Hundred
      Thousand Dollars ($100,000.00), or so much thereof as shall have been advanced
      by the Lender to the Borrower plus interest thereon at an annual rate equal
      to
      ten percent (10%) on the Maturity date of such Note being July 31,
      2008.

    

    WHEREAS,
      the parties desire to make a certain amendment to the Note Agreement to permit
      the Borrower to acquire an additional One Hundred Thousand Dollars ($100,000.00)
      in funds from the Lender.

    

    NOW,
      THEREFORE, in consideration of the premises and the mutual covenants contained
      in this Amendment the parties agree as follows:

    

    1.
      Paragraph One of the Note Agreement is hereby amended and restated to provide
      as
      follows:

    

    FOR
      VALUE
      RECEIVED, Marine Growth Ventures Inc., Marine Growth Charter, Inc., Marine
      Growth Finance, Inc., Marine Growth Freight, Inc., Marine Growth Real Estate,
      Inc., and Gulf Casino Cruises, Inc., Delaware corporations (collectively the
      "Borrower"), having an office at 405-A Atlantis Road, Cape Canaveral, Florida
      32920, hereby promises to pay to the order of Irrevocable Children’s Trust (the
      "Lender"), at the Lender's office located at 1818 North Farwell Avenue,
      Milwaukee, Wisconsin 53202 or at such other place in the continental United
      States as the Lender may designate in writing, upon demand, in lawful money
      of
      the United States, and in immediately available funds, the principal sum of
      up
      to TWO HUNDRED THOUSAND DOLLARS ($200,000), or so much thereof as shall have
      been advanced by the Lender to the Borrower as hereinafter set forth and then
      be
      outstanding, and to pay interest thereon on the Maturity Date at an annual
      rate
      equal to ten percent (10%), as follows:

       

    2.
      This
      Amendment constitutes the sole and entire agreement of the parties with respect
      to the subject matter hereof. Except as amended hereby, all other terms and
      conditions of the Note Agreement shall remain in full force and
      effect.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     IN
      WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
      first above written. 

    

    

      
        	
                LENDER

              	 	 
	 	 	 
	 	 	 
	 	 	 
	
                /s/
                  David M. Marks

              	 	 
	
                David
                  M. Marks, Trustee

              	 	 
	 	 	 
	 	 	 
	
                BORROWER

              	 	 
	 	 	 
	 	 	 
	
                /s/
                  Paul L. Schwabe

              	 	
                /s/
                  Paul L. Schwabe

              
	
                Paul
                  L. Schwabe, Secretary

              	 	
                Paul
                  L. Schwabe, Secretary

              
	
                Marine
                  Growth Ventures, Inc.

              	 	
                Marine
                  Growth Charter, Inc.

              
	 	 	 
	 	 	 
	
                /s/
                  Paul L. Schwabe

              	 	
                /s/
                  Paul L. Schwabe

              
	
                Paul
                  L. Schwabe, Secretary

              	 	
                Paul
                  L. Schwabe, Secretary

              
	
                Marine
                  Growth Finance, Inc.

              	 	
                Marine
                  Growth Freight, Inc.

              
	 	 	 
	 	 	 
	
                /s/
                  Paul L. Schwabe

              	 	
                /s/
                  Paul L. Schwabe

              
	
                Paul
                  L. Schwabe, Secretary

              	 	
                Paul
                  L. Schwabe, Secretary

              
	
                Marine
                  Growth Real Estate, Inc.

              	 	
                Gulf
                  Casino Cruises, Inc.

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