Document:

ex10-1.htm

    Exhibit 10.1

     

    ASSET
PURCHASE AGREEMENT

     

    dated
as of May __, 2009

     

    by
and between

     

    

     

     

    NCEY
Holdings, LLC, and

     

    Brazos
Lateral Holdings Corp.

     

    as
Purchasers

     

    and

     

    

     

     

    New
Century Energy Corp.

     

    Gulf
Coast Oil Corporation, and

     

     

    Century
Resources, Inc.

     

     

    as
Seller

     

    

    

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    ASSET
PURCHASE AGREEMENT

     

    This
ASSET PURCHASE AGREEMENT, dated as of _______________ (this “Agreement”), by and
among New Century Energy Corp., Gulf Coast Oil Corporation, and Century
Resources, Inc. (together, the “Sellers”) and NCEY
Holdings, LLC (“NCEY
Holdings”) and Brazos Lateral Holdings Corp. (“Brazos Lateral”), and
if applicable, their designee (NCEY Holdings, Brazos Lateral, and such designee,
as applicable “Purchaser”).

     

    BACKGROUND

     

    On July
28, 2008, (the “Petition Date”),
Sellers commenced voluntary petitions for relief under chapter 11 of the United
States Code in the United States Bankruptcy Court for the Southern District of
Texas (the “Chapter 11
Cases”).

     

    Sellers
desire to sell, transfer and assign to Purchaser, and Purchaser desires to
purchase, acquire and assume from Sellers, pursuant to sections 363 and 365
of the Bankruptcy Code, all of the Purchased Assets and Assumed Liabilities, on
the terms and subject to the conditions set forth in this Agreement all as more
specifically provided herein.

     

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as
follows:

     

    ARTICLE
I

     

    DEFINITIONS

     

    1.1           Certain
Definitions.

     

    For
purposes of this Agreement, the following terms shall have the meanings
specified in this Section 1.1:

     

    “Affiliate” means,
with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such Person, and the term “control” (including the terms
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting securities, by
contract or otherwise.  A Person is also an Affiliate of a Seller if a
family member (i.e., a spouse, child, parent or sibling) of an employee,
shareholder, owner, manager, director or officer of such Seller controls such
Person.

     

    “Alternative
Transaction” means any transaction involving either (i) except as
contemplated by this Agreement, the consummation of the sale of all or any
portion of the Purchased Assets by Sellers to a purchaser other than Purchaser
and/or one or more of its Affiliates at any time during the pendency of the
Chapter 11 Cases or as a part of, or pursuant to, any plan of reorganization
confirmed in the Chapter 11 Cases or (ii) except to the extent the Closing has
occurred, the filing of a plan of reorganization by Sellers or the confirmation
of a plan of reorganization with respect to Sellers that does not include a sale
of all, or any portions of which in the aggregate involve substantially all, of
the Purchased Assets by Sellers to Purchaser and/or one or more Affiliates of
Purchaser; provided that
“Alternative Transaction” shall not include an orderly liquidation of Sellers’
assets in which (x) Sellers’ assets are sold on an asset-by-asset basis or
in lots of assets, any one of which does not encompass all or substantially all
of Sellers’ assets, or (y) Sellers sell their assets in bulk to an auctioneer or
liquidator.

    
      
        
        

      

      
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    “Assumed Contracts”
has the meaning given to such term in Section 2.1 of this
Agreement.

     

    “Assumed Executory
Contracts” has the meaning given to such term in Section 2.1 of this
Agreement.

     

    “Assumed Liabilities”
has the meaning given to such term in Section 2.3 of this
Agreement.

     

    “Bankruptcy Code”
means Title 11 of the United States Code.

     

    “Bankruptcy Court”
means the United States Bankruptcy Court for the Southern District of Texas,
Houston Division, or such other court having jurisdiction over the Chapter 11
Cases originally administered in the United States Bankruptcy Court for the
Southern District of Texas, Houston Division.

     

    “Business” means the
business of Sellers as of the date hereof relating to the exploration,
production and sale of oil, gas, or other hydrocarbons, minerals, or substances
therefrom.

     

    “Business Day” means
any day of the year on which national banking institutions in New York City are
open to the public for conducting business and are not required or authorized to
close.

     

    “Chapter 11 Cases” has
the meaning given to such term in the Background Section to this
Agreement.

     

    “Closing” has the
meaning given to such term in Section 4.1 of this Agreement.

     

    “Closing Date” has the
meaning given to such term in Section 4.1 of this Agreement.

     

    “COBRA” means Part 6
of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar
state law.

     

    “Claims” means any and
all claims as defined in section 101(5) of the Bankruptcy Code.

     

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

     

    “Competing Bid” has
the meaning given to such term in Section 7.6 of this Agreement.

    
      
        
        

      

      
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    “Confidential
Information” means any confidential information with respect to,
including, without limitation, methods of operation, customers, customer lists,
Products, prices, fees, costs, Technology, inventions, trade secrets, know-how,
software, marketing methods, plans, personnel, suppliers, competitors, markets
or other specialized information or proprietary matters.

     

    “Confidentiality
Agreement” means the agreement attached hereto as Exhibit
__.

     

    “Confirmation Hearing”
means the hearing scheduled in the Bankruptcy Court on _________,
2009.

     

    “Confirmation Order”
means the order to be entered by the Bankruptcy Court at the Confirmation
Hearing in substantially the same form as Exhibit D.

     

    “Contract” means any
written or oral contract, indenture, note, bond, lease (excluding any Assumed
Lease), license or other legally binding agreement or arrangement.

     

    “Copyrights” means all
copyrightable works, and all United States and foreign registered copyrights and
applications, registrations and renewals therefore owned by Sellers, and any
past, present or future claims or causes of actions arising out of or related to
any infringement or misappropriation of any of the foregoing, that are used or
useful in connection with or related to the Purchased Assets as of the date
hereof.  The Copyrights include, but are not limited to, those listed
on Schedule 1.1(c).

     

    “Credit Bid”
means the bid of
Purchaser for the purchase of the Purchased Assets pursuant to this Agreement or
at an auction that may be offset from the Purchase Price in accordance with
Section 363(k) of the Bankruptcy Code.

     

    “Credit Bid Amount”
means a Credit Bid in an amount equal to or less than the Lenders
Debt.

     

    “Cure Amount” has the
meaning given to such term in Section 2.3 of this Agreement.

     

    “Debt” for any Person,
means all obligations of such Person (a) for borrowed money (including
principal, accrued by unpaid interest, prepayment premiums or penalties and
expenses); (b) evidenced by notes, bonds, debentures or similar instruments; (c)
under or relating to letters of credit (including any obligation to reimburse
the issuer thereof with respect to amounts drawn on such instruments); (d) to
pay any accrued dividends or distributions (or dividends or distributions that
have otherwise been declared and not yet paid) or to redeem any securities or
rights; (e) under any lease of any property, which, in accordance with GAAP, is
required to be accounted for as a capital lease on the consolidated balance
sheet of such Person and (f) in respect of the obligations described in clauses
(a) through (e) above, (i) any guarantee of the payment or performance of, or
any Liability in respect of, any Debt or other obligation of any other Person,
(ii) any other arrangement whereby credit is extended to one obligor on the
basis of any promise or undertaking of another Person (A) to pay the Debt of
such obligor, (B) to purchase any obligation owed by such obligor to discharge
one or more of its obligations, or (D) to maintain the capital, working capital,
solvency or general financial condition of such obligor, and (iii) any Liability
as a general partner of a partnership or as a venturer in a joint venture in
respect of Debt or other obligations of such partnership or joint venture of any
other Person.

    
      
        
        

      

      
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    “D&O Claims” has
the meaning given to such term in Section 2.2 of this Agreement.

     

    “Domain Names” means
the internet domain names owned by Sellers, including without limitation those
that are listed or described on Schedule 1.1(b), and all
registrations, applications and renewals related to the foregoing.

     

    “Employee Plans” has
the meaning given to such term in Section 5.7(a) of this Agreement.

     

    “Employees” means all
individuals, whether or not actively at work as of the date hereof, who are
employed by Sellers or their Subsidiaries in connection with the Business,
together with individuals who are hired in respect of the Business after the
date hereof and prior to the Closing.

     

    “Environmental Law”
means any Law that relates to, or otherwise imposes liability or standards of
conduct concerning, pollution, or protection of the environment, or protection
of human or occupational health from environmental hazards, including those
concerning discharges, releases or threatened releases of, petroleum or
hazardous substances.

     

    “Equipment” means all
machinery, equipment, furniture, trade fixtures, furnishings, vehicles,
leasehold improvements and other tangible personal property used in connection
with the Business as presently conducted, including, without limitation, all
artwork, desks, chairs, tables, Hardware, copiers, telephone lines and numbers,
facsimile machines and other telecommunication equipment, cubicles and
miscellaneous office furnishings and supplies, as well as pumps,
surface and subsurface well equipment, gas plants, lines and facilities,
sulfur recovery facilities, compressors, compressor stations, dehydration
facilities, treating facilities, gathering lines, flow lines, valves,
meters, separators, tanks, tank batteries, and other fixtures and facilities
used in connection with the Leased Real Property or the Business.

     

    “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.

     

    “ERISA Affiliate” has
the meaning given to such term in Section 5.7(a) of this Agreement.

     

    “Excluded Assets” has
the meaning given to such term in Section 2.2 of this Agreement.

     

    “Excluded Liabilities”
has the meaning given to such term in Section 2.4 of this
Agreement.

     

    “Financial Statements”
has the meaning given to such term in Section 5.12 of this
Agreement.

    
      
        
        

      

      
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    “GAAP” means generally
accepted accounting principles in the United States as of the date hereof as
applied in a manner consistent with the Seller’s historical accounting
policies.

     

    “Governmental Body”
means any government or governmental or regulatory body thereof, or political
subdivision thereof, whether foreign, federal, state or local, or any agency,
instrumentality or authority thereof, or any court or arbitrator (public or
private).

     

    “Hardware” means any
and all computer and computer-related hardware, including, without limitation,
computers, file servers, facsimile servers, scanners, color printers, laser
printers and networks.

     

    “Hazardous Substances”
means any wastes, substances, products, pollutants or materials, whether solid,
liquid or gaseous, that (i) is or contains asbestos, polychlorinated biphenyls,
radioactive materials, oil, petroleum or any fraction thereof, (ii) requires
removal, remediation or reporting under any Environmental Law, or is defined,
listed or identified as a “contaminant”, “pollutant”, “toxic substance”, “toxic
material”, “hazardous waste” or “hazardous substance” or words of similar
meaning and regulatory effect thereunder or (iii) is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous and is regulated as such by any Governmental Body under any
Environmental Law.

     

    “Intellectual
Property” means intellectual property or other proprietary rights of
every kind throughout the world, both domestic and foreign, which, in each case,
are used or useful in connection with or related to the Business as of the date
hereof, including all inventions and improvements thereon, Patents, Trademarks,
Domain Names, Trademark Rights, Copyrights, Technology and trade
secrets.

     

    “Interest” means any
defect or imperfection in title, encumbrance, interest, Claim, charge, pledge,
mortgage, deed of trust, security interest, lien, lease, sublease, license,
option, right of first refusal, easement, right-of-way, servitude, covenant,
condition, proxy, voting trust or agreement or transfer restriction under any
shareholder or similar agreement.

     

    “Inventory” means all
finished goods, work in process, raw materials, goods in transit, goods at
customer sites and other inventory or goods held for sale of a person in all
forms, wherever located, now or hereafter existing, including without limitation
all produced oil, gas, condensate and natural gas liquids attributable to the
Leased Real Property.

     

    “Knowledge of Sellers”
means the actual knowledge of those officers and directors of Sellers identified
on Schedule
1.1(d), assuming
reasonable inquiry of such individuals in the Ordinary Course of Business, but
without any separate duty to investigate.

     

    “Laurus” or “LMF” means Laurus
Mater Fund, Ltd., a Cayman Islands company and each of its Affiliates,
successors and assigns.

     

    “Laurus’s Allowed
Claim” means the amount of Laurus’s allowed claim in the Chapter 11 Cases
as may be determined by the Bankruptcy Court, and which amount shall not be less
than $66,000,000 as set forth in the Stipulated Final Cash Collateral Order (Dkt
95) entered by the Bankruptcy Court on September 29, 2008.

    
      
        
        

      

      
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    “Law” means any
federal, state or local law, common law, statute, code, ordinance, rule or
regulation.

     

    “Leased Real Property”
has the meaning given to such term in Section 2.1 of this
Agreement.

     

    “Legal Proceeding”
means any judicial, administrative or arbitral actions, demands, suits,
proceedings (public or private), audit or investigation by or before a
Governmental Body or arbitral tribunal.

     

    “Lenders Debt” is the
amount stated in Section 3.1 of this Agreement, or the amount of Laurus’s
Allowed Claim, which ever is the greatest uncontested amount.

     

    “Liability” means any
debt, liability or obligation (whether direct or indirect, known or unknown,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, or due
or to become due) and including all costs and expenses relating
thereto.

     

    “Licensed Intellectual
Property” means all Patents, Trademarks, Domain Names, Trademark Rights,
Copyrights and Technology that are licensed to Sellers from another Person as
set forth on Schedule
1.1(g).

     

    “Losses” means
collectively, all damages, claims, liabilities, fines, penalties, levies, fees,
costs or expenses (including reasonable expenses and disbursements of
accountants and legal counsel).

     

    “Material Adverse
Effect” means any events, circumstances, development, change or effect
that, individually or in the aggregate with all other events, circumstances,
developments, changes and effects, has: (i) a material adverse effect on the
Purchased Assets, properties, results of operations or consolidated financial
condition of Sellers (taken as a whole); provided, however, that none of
the following shall be deemed to constitute, and none of the following shall be
taken into account in determining whether there has been, a Material Adverse
Effect: any adverse change, event, development, or effect arising from or
relating to (1) acts of war or terrorism occurring after the date hereof so long
as the Purchased Assets are not disproportionately affected thereby; (2) any
change in the market price or trading volume of the common stock of the Sellers
after the date hereof; (3) any change arising from and related to the market in
general in which Sellers operate the Business (whether in the United States or
abroad), the United States economy as a whole, or international economy; (4)
changes in GAAP or (5) the commencement of the Chapter 11 Cases; or (ii) a
material adverse effect on the ability of Sellers to consummate the transactions
contemplated by this Agreement, in each case (clause (i) or (ii)
above).

     

    “Notes” means (i)
Secured Convertible Term Note, dated June 30, 2005 issued by New Century Energy
Corp. (“NCEY”)
to Laurus Master Fund, Ltd. and subsequently assigned to affiliates of LMF (as
amended, restated, modified and/or supplemented from time to time, the “June 2005 NCEY
Note”), (ii) Secured Term Note, dated September 19, 2005, issued by NCEY
to Laurus Master Fund, Ltd. and subsequently assigned to affiliates of LMF (as
amended, restated, modified and/or supplemented from time to time, the “September 2005 NCEY
Note”), (iii) Secured Term Note, dated December 28, 2006, issued by NCEY
to Laurus and subsequently assigned to affiliates of Laurus Master Fund, Ltd.
(as amended, restated, modified and/or supplemented from time to time, the
“December 2006 NCEY
Note”), (iv) Secured Term Note, dated November 30, 2007, issued by NCEY
to Valens U.S. SPV I, LLC (“Valens US”) and
subsequently assigned to affiliates of Valens US (as amended, restated, modified
and/or supplemented from time to time, the “First November 2007 NCEY
Note”), (v) Secured Term Note, dated November 30, 2007, issued by NCEY to
Valens Offshore SPV II, Corp. (“Valens Offshore II”)
as may be subsequently assigned to affiliates of Valens Offshore II (as amended,
restated, modified and/or supplemented from time to time, the “Second November
2007 NCEY Note”), (vi) Secured Term Note, dated April 27, 2006, issued by Gulf
Coast Oil Corporation (“Gulf”) to Laurus
Master Fund, Ltd. and subsequently assigned to affiliates of LMF (as amended,
restated, modified and/or supplemented from time to time, the “April 2006 Gulf
Note”), (vii) Secured Term Note, dated November 20, 2007 issued by Gulf
to Valens Offshore II as may be subsequently assigned to affiliates of Valens
Offshore II (as amended, restated, modified and/or supplemented from time to
time, the “First
November 2007 Gulf Note”) and (viii) the Secured Term Note, dated
November 20, 2007 issued by Gulf to Valens US as may be subsequently assigned to
affiliates of Valens US (as amended, restated, modified and/or supplemented from
time to time, the “Second November 2007 Gulf
Note”).

    
      
        
        

      

      
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    “Order” means any
order, injunction, judgment, decree, ruling, writ, assessment or arbitration
award of a Governmental Body.

     

    “Ordinary Course of
Business” means the ordinary and usual course of normal day-to-day
operations of the Business since the Petition Date.

     

    “Party” means each of
Sellers and Purchaser and “Parties” means
collectively Sellers and Purchasers.

     

    “Patents” means the
United States patents and patent applications owned by Sellers, including, any
continuations, divisionals, continuations in part, or reissues of patent
applications and patents issuing thereon and any past, present or future claims
or causes of action arising out of or related to any infringement or
misappropriation of any of the foregoing, that are used or useful in connection
with or related to the Business as of the date hereof.  The Patents
include, but are not limited, to those listed on Schedule
1.1(e).

     

    “Permits” means any
approvals, authorizations, consents, licenses, permits or certificates of a
Governmental Body.

     

    “Permitted Exceptions”
means: (i) Interests relating to Taxes which are not due and payable as of the
Closing Date or the amount or validity of which is being contested in good faith
by appropriate proceedings, provided an appropriate reserve for such Taxes is
established in accordance with GAAP; (ii) mechanics’, carriers’, workers’,
repairers’, materialmen’s and similar Interests arising or incurred in the
Ordinary Course of Business, for amounts which are not due and payable as of the
Closing Date or the amount or validity of which is being contested in good faith
by appropriate proceedings, provided an
appropriate reserve for such Interests is established in accordance with GAAP;
(iii) any Interests disclosed on Schedule 1.1(h); and
(iv) any other Interests which will be discharged on or before the Closing
Date in connection with the Confirmation Order or any other actions of the
Bankruptcy Court.

     

    “Person” means any
individual, corporation, limited liability company, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.

    
      
        
        

      

      
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    “Petition Date” has
the meaning given to such term in the Background Section to this
Agreement.

     

    “Plan” has the meaning
given to such term in Section 7.1 of this Agreement.

     

    “Products” means any
and all products developed, manufactured, marketed or sold in connection with
the Business.

     

    “Purchased Assets” has
the meaning given to such term in Section 2.1 of this Agreement.

     

    “Purchased Intellectual
Property” means all of Sellers’ and the Seller Affiliates’ right, title
and interest in and to Intellectual Property (other than Licensed Intellectual
Property).

     

    “Purchaser” has the
meaning given to such term in the Introductory Section to this
Agreement.

     

    “Purchaser Documents”
has the meaning given to such term in Section 6.2 of this
Agreement.

     

    “Purchaser Material Adverse
Effect” means a material adverse effect on the ability of Purchaser to
(i) consummate the transactions contemplated hereby or the Purchaser Documents
without any material delay or (ii) perform their respective obligations under
this Agreement or the Purchaser Documents.

     

    “Purchaser Parties”
has the meaning given to such term in Section 12.2 of this
Agreement.

     

    “Purchaser Plans” has
the meaning given to such term in Section 9.2 of this Agreement.

     

    “Release” means any
release, spill, emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration at, into or onto the environment,
including movement or migration through or in the environment, whether sudden or
non-sudden and whether accidental or non-accidental, or any release, emission or
discharge as those terms are defined in any applicable Environmental
Law.

     

    “Rental Agreement”
means a lease, rental agreement or similar contract, license or
arrangement

    
      
        
        

      

      
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    “Required Consents”
has the meaning given to such term in Section 10.2 of this
Agreement.

     

    “Seller Documents” has
the meaning given to such term in Section 5.2 of this Agreement.

     

    “Seller Party” has the
meaning given to such term in Section 12.3 of this Agreement.

     

    “Sellers” has the
meaning given to such term in the Introductory Section to this
Agreement.

     

    “Subsidiary” means
any Person of which a majority of the outstanding voting securities or other
voting equity interests are owned, directly or indirectly, by
Seller.

     

    “Tax Authority” means
any federal, state, local or foreign government, or any agency, instrumentality
or employee thereof, charged with the administration of any Law relating to
Taxes.

     

    “Tax Return” means all
returns, declarations, reports, estimates, information returns and statements
required to be filed in respect of any Taxes.

     

    “Taxes” means
(i) all federal, state, local or foreign taxes, charges or other
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated taxes; and (ii) all interest, penalties,
fines, additions to tax or additional amounts imposed by any Tax Authority in
connection with any item described in clause (i).

     

    “Technology” means,
collectively, all designs, formulae, algorithms, procedures, methods,
techniques, know-how, research and development, technical data, programs,
subroutines, tools, materials, specifications, processes, inventions (whether
patentable or unpatentable and whether or not reduced to practice), apparatus,
creations, improvements, works of authorship and other similar materials, and
all recordings, graphs, drawings, reports, analyses, and other writings, and
other tangible embodiments of the foregoing, in any form whether or not
specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in, displayed by, or are used in the design, used in
the development, used in the reproduction, used in the maintenance or used in
the modification of, any of the Products.

     

    “Termination Date”
means ___________, 2009.

     

    “Trademarks” means the
trademark registrations and applications for trademark registration owned by
Sellers, together with the goodwill associated with any of the foregoing, and
all applications, registrations and renewals thereof, and any past, present or
future claims or causes of action arising out of or related to any infringement
or misappropriation of any of the foregoing, that are used or useful in
connection with or related to the Business as of the date hereof.  The
Trademarks include, but are not limited to, those listed on Schedule
1.1(f).

    
      
        
        

      

      
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    “Trademark Rights”
means all common law rights in the United States in trade names, corporate
names, logos, slogans, designs, trade dress, and unregistered trademarks and
service marks, together with all translations, adaptations, derivations and
combinations thereof, and the goodwill associated with any of the foregoing,
which, in each case, are used by Sellers with regard to the Business as of the
date hereof.

     

    “Transfer Taxes” means
any and all sales, use stamp, documentary stamp, filing, recording, transfer or
similar fees or taxes or governmental charges (including any interest and
penalty thereon) payable in connection with the transactions contemplated by
this Agreement.

     

    “Transferred
Employees” has the meaning given to such term in Section 9.1(a) of this
Agreement.

     

    “Undisclosed Contract”
has the meaning given to such term in Section 2.1 of this
Agreement.

     

    “WARN” or “WARN Act” means the
Worker Adjustment and Retraining Notification Act of 1988, as amended, and any
similar state Law, and the rules and regulations thereunder.

     

    1.2           Other Definitional and
Interpretive Matters.

     

    (a)           Unless
otherwise expressly provided, for purposes of this Agreement, the following
rules of interpretation shall apply:

     

    Calculation of Time
Period.  When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded.  If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business
Day.

     

    Dollars.  Any
reference in this Agreement to $ shall mean dollars of the United States of
America.

     

    Exhibits/Schedules.  All
Exhibits and Schedules annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.  Any matter or item disclosed on one schedule shall be deemed
to have been disclosed on each other schedule where such matter or item’s
relevance is readily apparent on the face of such item.  Any
capitalized terms used in any Schedule or Exhibit but not otherwise defined
therein shall be defined as set forth in this Agreement.  The
Schedules shall be subject to changes and modifications from time to time that
are reasonably acceptable to the Sellers and the Purchaser.

     

    Gender and
Number.  Any reference in this Agreement to gender shall
include all genders, and words imparting the singular number only shall include
the plural and vice versa.

     

    Headings.  The
provision of a Table of Contents, the division of this Agreement into Articles,
Sections and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect or be utilized in construing
or interpreting this Agreement.  All references in this Agreement to
any “Section” are to the corresponding Section of this Agreement unless
otherwise specified.

    
      
        
        

      

      
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    Herein.  The
words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to
this Agreement as a whole and not merely to a subdivision in which such words
appear unless the context otherwise requires.

     

    Including.  The
words such as “includes” and “including” shall mean “including without
limitation”.

     

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

     

    ARTICLE
II

     

    PURCHASE
AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

     

    2.1           Purchase and Sale of
Assets. On the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser shall purchase, acquire and accept from
Sellers, and Sellers shall sell, transfer, assign, convey and deliver to
Purchaser all of Sellers’ right, title and interest in, to and under the
Purchased Assets.  “Purchased Assets”
shall mean all assets, properties, interests and rights of Sellers, other than
the Excluded Assets, as of the Closing, used or useful in connection with or
related to the Business, including:

     

    (a)           (i)
all leasehold estates created by the oil and gas leases described on Schedule 2.1(b) (the “Leased Real
Property”), including any amendments or extension of said leases, or new
leases covering the same property (in whole or in part) covered by said leases,
together with all contract rights and privileges; surface, reversionary, future
or remainder interests; and all other rights titles and interests associated
with the Leased Real Property or lands or leases pooled therewith; and (ii) all
oil, gas, water disposal and other wells located on the Leases or on lands
pooled therewith (the "Wells"), including, but not limited to, the wells
described on Schedule
2.1(b), together with all of Seller's interest in the rights
and appurtenances incident thereto;

     

    (b)           (i)
all contracts and agreements concerning the Leased Real Property, including, but
not limited to, unit agreements, pooling agreements, areas of mutual
interest agreements, farmout agreements, farmin agreements, saltwater
disposal agreements, water injection agreements, line well injection
agreements, road use agreements, drilling contracts, operating agreements,
well service contracts, production sales contracts, gas contracts, gas
balancing agreements, storage or warehouse agreements, supplier contracts,
service contracts, construction agreements, division orders and transfer
orders, insofar as and only insofar as they relate to the Leased Real
Property, and (iii) all Contracts and purchase orders related to the Business
which are made between the date hereof and Closing in accordance with the terms
of this Agreement, and as agreed to in writing by Laurus with such agreement not
to be unreasonably withheld (the “Assumed Contracts”);

    
      
        
        

      

      
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    (c)           the
Purchased Intellectual Property, together with the right to sue and recover for
past, present or future infringements or misappropriations thereof, and all
telephone numbers assigned to Sellers;

     

    (d)           all
leases and contracts as listed on Schedule 2.1(e) (the
“Assumed Executory
Contracts”);

     

    (e)           all
Equipment except for any equipment or tangible property held by Sellers pursuant
to a Rental Agreement unless the Rental Agreement is an Assumed Contract or an
Assumed Lease;

     

    (f)           
all Inventory;

     

    (g)           all
accounts receivable of the Sellers, except to the extent an Excluded
Asset;

     

    (h)           all
deposits and prepaid expenses set forth on Schedule
2.1(i);

     

    (i)           
all lockboxes and bank accounts and all cash and cash equivalents;

     

    (j)           
all books, records, papers and instruments of whatever nature and wherever
located that are in the possession or control of the Sellers that are used or
useful in connection with or relate to the Business or the Purchased
Assets;

     

    (k)           all
insurance proceeds, claims and causes of action relating to the Purchased
Assets; 

     

    (l)           
all rights, privileges, Permits, Claims, set-offs causes of action, and options
of the Sellers to the extent transferable, except with respect to the Excluded
Assets or the Excluded Liabilities, and excluding all rights and avoidance
Claims of Sellers arising under Chapter 5 of the Bankruptcy Code;
and

     

    (m)          subject
to the exclusions set forth in this Agreement, all other or additional
privileges, rights, interests, properties and assets of every kind and
description and wherever located that are used or useful in connection with the
Business as presently conducted.

     

    Notwithstanding
anything to the contrary contained herein, Purchaser may (x) at any time up to
fifteen (15) days prior to the Confirmation Hearing (except where the
counterparty to a Contract or lease consents (in which case Purchaser may
supplement, as applicable, Schedule 2.1(e) at
any time prior to the Confirmation Hearing)) supplement, as applicable, Schedule 2.1(e) to
add any Contract or lease that was not previously listed thereon, in which case
such Contract or lease shall be, as applicable, an Assumed Contract or an
Assumed Lease, or (y) at any time prior to the Closing remove any Contract
or lease from, as applicable, Schedule 2.1(e)
listed thereon, in which case such Contract or lease shall not be, as
applicable, an Assumed Contract or Assumed Lease, but rather shall be an
Excluded Asset.  In the case of any Contract or lease the existence of
which were not disclosed to the Purchaser in reasonable detail prior to the date
hereof (an “Undisclosed
Contract”), Purchaser may remove or add such Undisclosed Contract to
Schedule
2.1(e), as applicable, at any time prior to Closing, and Sellers shall
take all actions desirable or necessary, including filing any necessary or
desirable motions or applications and obtaining any appropriate Orders from the
Bankruptcy Court, in order to effectuate the assignment of such Undisclosed
Contract to the Purchaser.

    
      
        
        

      

      
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    2.2           Excluded
Assets.  Nothing contained herein shall be deemed to sell,
transfer, assign or convey the Excluded Assets to Purchaser, and Sellers shall
retain all right, title and interest to, in and under the Excluded
Assets.  “Excluded Assets”
shall mean the following assets of Sellers:

     

    (a)           any
and all rights under this Agreement, and any rights, Claims, counterclaims,
demands and causes of action of Sellers that relate to the Excluded Liabilities,
including, without limitation, avoidance Claims or causes of action arising
under the Bankruptcy Code or applicable state law, including, without
limitation, all rights and avoidance Claims of Sellers arising under Chapter 5
of the Bankruptcy Code, and, except for Claims, counterclaims, causes of action
and demands that are expressly described herein as Purchased Assets (including
those included in the definitions of Copyrights, Patents and Trademarks), any
and all Claims, counterclaims, demands, and causes of action of Sellers
against any current or former directors, officers,  attorneys,
accountants, investment bankers, and other professionals, employees,
shareholders or agents of Seller sounding in tort or otherwise arising
under the Bankruptcy Code or applicable state law  (the “D&O
Claims”) and any directors and officers insurance
policies;

     

    (b)           all
leases other than the Assumed Contracts or Assumed Executory Contracts or
associated with the Leased Real Property, and all Contracts other than the
Assumed Contracts and Assumed Executory Contracts, including any accounts
receivable arising out of or in connection with any Contracts other than the
Assumed Contracts and Assumed Executory Contracts;

     

    (c)           any
and all deposits and prepaid expenses that are not set forth on Schedule 2.1(i) and
any and all instruments, letters of credit proceeds, unbilled costs and fees,
and accounts primarily relating to any Excluded Assets;

     

    (d)           the
Purchase Price;

     

    (e)           any:
(i) confidential personnel and medical records pertaining to any Employee to the
extent such records may not be transferred to Purchaser pursuant to applicable
Law; (ii) other books and records that Sellers are required by Law to retain
including, without limitation, Tax Returns, taxpayer and other identification
numbers, financial statements and corporate or other entity filings; provided, that
Purchaser shall have the right to make copies of any portions of such retained
books and records to the extent that such portions relate to the Business or any
of the Purchased Assets; (iii) any information management systems of
Sellers, other than those used in or useful in connection with or related to the
Business; and (iv) minute books, stock ledgers and stock certificates of any
Seller or any of its Subsidiaries except for entities the stock of which, if
any, is a Purchased Asset;

     

    (f)           any
claim, right or interest of Sellers in or to any refund, rebate, abatement or
other recovery for Taxes, together with any interest due thereon or penalty
rebate arising therefrom, for any Tax period (or portion thereof) ending on or
before the Closing Date;

     

    (g)           assets
of any Employee Plan, except as provided in Article IX; and

    
      
        
        

      

      
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    (h)           other
assets listed on Schedule
2.2(h).

     

    2.3           Assumption of
Liabilities.  On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Purchaser shall assume the following,
and only the following, Liabilities of Sellers (the “Assumed
Liabilities”):

     

    (a)           all
Liabilities relating to the Purchased Assets that arise from events, facts or
circumstances that occur after the Closing;

     

    (b)           all
Liabilities of Sellers under the Assumed Contracts and Assumed Executory
Contracts arising after the Closing;

     

    (c)           Liabilities
(whether known or unknown) arising from the sale of Products or Inventory after
the Petition Date pursuant to product warranties (provided that the only
liability assumed under such warranties is the obligation to replace defective
product), product returns and rebates;

     

    (d)           amounts
payable under Section 365 of the Bankruptcy Code to cure monetary defaults under
the Assumed Contracts and the Assumed Executory Contracts (the “Cure
Amount”);

     

    (e)           all
other Liabilities with respect to the Purchased Assets arising after the
Closing; and

     

    (f)           all
Liabilities relating to amounts required to be paid by Purchaser
hereunder.

     

    2.4           Excluded
Liabilities.  Notwithstanding anything in this Agreement to the
contrary, except for the Assumed Liabilities specifically described in Section
2.3 (it being understood that if a Liability could be construed to be described
in both Section 2.3 and Section 2.4, then it shall be deemed an Excluded
Liability), Purchaser shall not assume or be liable for, and shall be deemed not
to have assumed or be liable for, any of the Liabilities of the Sellers
(collectively, the “Excluded
Liabilities”), which Excluded Liabilities include:

     

    (a)           all
Liabilities arising out of Excluded Assets, including Contracts that are not
Assumed Contracts or Assumed Executory Contracts;

     

    (b)           except
for the Assumed Liabilities described in Schedule 2.3(d), Liabilities (whether
known or unknown) arising from the sale of Products of Inventory prior to the
Closing, whether pursuant to product warranties, product recalls, returns and
rebates or otherwise;

     

    (c)           except
as provided in Article IX, all Liabilities with respect to all employee benefit
plans, policies, agreements and arrangements of the Sellers and their
Affiliates, including all Employee Plans, and any Liability to or in respect of,
or arising out of or in connection with, the employment by any of the Sellers or
cessation of employment with any of the Sellers of any employees or independent
contractors or former employees or independent contractors of any of the
Sellers, including any severance obligations that arise on or prior to the
Closing Date;

    
      
        
        

      

      
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    (d)           except
for the Assumed Liabilities described in Schedule 2.3(d), all Liabilities for
(i) Taxes of Sellers (including all Liabilities for Taxes relating to the
Purchased Assets) for any Tax periods (or portions thereof) ending on or before
the Closing Date and (ii) Transfer Taxes;

     

    (e)           Liabilities
incurred in the Ordinary Course of Business and existing prior to the filing of
the Chapter 11 Cases that are subject to compromise under the Bankruptcy Code
(the “Compromised
Liabilities”);

     

    (f)           
any Debt of Sellers;

     

    (g)           all
Liabilities relating to amounts required to be paid by Sellers
hereunder;

     

    (h)           all
Liabilities associated with brokers, finders or other consultants or advisors to
Sellers entitled to a fee or reimbursement of expenses with respect to this
transaction; and

     

    (i)           
all other Liabilities, accrued expenses, accounts payable of Seller arising from
or associated with the Business or the Permits arising from events, facts or
circumstances occurring before the Closing, except to the extent expressly
identified as an Assumed Liability.

     

    2.5           Further Conveyances and
Assumptions.

     

    (a)           From
time to time following the Closing, Sellers shall, or shall cause their
Affiliates to, make available to Purchaser on a timely basis such data in
personnel records of Employees as is reasonably necessary for Purchaser to
transition such employees into Purchaser’s records to the extent not prohibited
by applicable Law.

     

    (b)           From
time to time following the Closing, Sellers and Purchaser shall, and shall cause
their respective Affiliates to, on a timely basis, execute, acknowledge and
deliver all such further conveyances, notices, assumptions, releases and such
other instruments, and shall, on a timely basis, take such further actions, as
may be reasonably necessary or appropriate to assure fully to Purchaser and its
respective successors or assigns, all of the properties, rights, titles,
interests, estates, remedies, powers and privileges intended to be conveyed to
Purchaser under this Agreement and the Seller Documents and to assure fully to
Sellers and their Affiliates and their successors and assigns, the assumption of
the liabilities and obligations intended to be assumed by Purchaser under this
Agreement and such other agreements contemplated hereby, and to otherwise make
effective the transactions contemplated hereby and thereby.

     

    ARTICLE
III

     

    CONSIDERATION

     

    3.1           Purchase
Price.  Each Seller hereby acknowledges, confirms and agrees
that as of the close of business on the date hereof, (a) each Seller is indebted
to LMF with respect to loans and advances in the aggregate amount (including
principal, interest, fees, costs, and other charges payable by each Seller) of
$75,000,000.00 (the “Lender Debt”) and (b)
the Lender Debt is a valid and unconditional obligation of each Seller to LMF
(as hereinafter defined) and is due and owing without offset, defense or
counterclaim of any kind, nature or description whatsoever.  Subject
to overbidding, the Purchase Price for the Acquired Assets shall be the Credit
Bid Amount.

    
      
        
        

      

      
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    3.2           Reservations of
Rights.  Notwithstanding anything contained herein to the
contrary, LMF does not terminate nor in any manner whatsoever release any rights
granted to it under or in connection with and/or any obligations, representation
or warranties of the Sellers under (i)that certain Option, dated June 30, 2005,
issued by New Century Energy Corp. ("NCEY") to LMF and
subsequently assigned in full to affiliates of LMF, including without
limitation, LMF Select Assets, Ltd. ("Select") (as amended,
restated, modified and/or supplemented from time to time, the "June Option"), (ii)
that certain Common Stock Purchase Warrant, dated, June 30, 2005, issued by NCEY
to LMF and subsequently assigned in full to Select (as amended, restated,
modified and/or supplemented from time to time, the "June Warrant"),(iii)
that certain Option, dated December 30, 2005, issued by NCEY to LMF and
subsequently assigned in full to Select (as amended, restated, modified and/or
supplemented from time to time, the "December Option")and
(iv) that certain Common Stock Purchase Warrant, dated April 28, 2006, issued by
Gulf Coast Oil Corporation to LMF and subsequently assigned in full to Select
and Valens U.S. SPV I, LLC (as amended, restated, modified and/or supplemented
from time to time, the “Gulf Warrant” and,
together with the June Option, the June Warrant and the December Option, the
“Warrants”), which such Warrants shall remain in full force and effect in
accordance with their terms.

     

    3.3           Payment of Purchase
Price.

     

    (a)           Not
later than one (1) Business Day prior to the Closing Date, the Seller and
Purchaser shall cooperatively prepare a closing statement consisting of the Cure
Amount.

     

    (b)           At
the Closing, Purchaser shall cancel the sum of the Credit Bid Amount under the
Notes.

     

    (c)           At
the Closing, Purchaser and each of its Affiliates shall be deemed to have
relinquished and released all claims, demands, and causes of action against and
interests in the Sellers and their Affiliates as set forth in Exhibit
E.

     

    ARTICLE
IV

     

    CLOSING
AND TERMINATION

     

    4.1           Closing
Date.  Subject to the satisfaction of the conditions set forth
in Sections 10.1, 10.2 and 10.3 hereof (or the waiver thereof by the Party
entitled to waive that condition):  (a) so long as no objection or
other challenge to Purchaser’s good faith has been made or asserted at or before
the Confirmation Hearing and no appeal has been filed challenging or disputing
any finding or decree, whether under Section 363(m) or 363(n) of the Bankruptcy
Code or otherwise, by the Bankruptcy Court relating to Purchaser’s good faith,
the closing of the purchase and sale of the Purchased Assets and the assumption
of the Assumed Liabilities provided for in Article II hereof (collectively, the
“Closing”)
shall take place at 10:00 a.m. (Houston time) on the business day selected by
Purchaser that is after entry of the Confirmation Order on the docket; or (b) if
any objection or other challenge to Purchaser’s good faith has been made or
asserted at or before the Confirmation Hearing and no appeal has been filed
challenging or disputing any finding or decree, whether under Section 363(m) or
363(n) of the Bankruptcy Code or otherwise, by the Bankruptcy Court relating to
Purchaser’s good faith, the Closing shall take place at 10:00 a.m. (Houston
time) on the Business Day selected by Purchaser that is after the Confirmation
Order becomes a final order no longer subject to appeal or reconsideration; or
(c) if (i) any appeal is filed challenging or disputing any finding or decree,
whether under Section 363(m) or 363(n) of the Bankruptcy Code or otherwise, by
the Bankruptcy Court relating to Purchaser’s good faith but the Confirmation
Order is not otherwise stayed, and (ii) Purchaser decides, in its sole and
absolute discretion, to proceed with the Closing, the Closing shall take place
at 10:00 a.m. (Houston time) on the business day selected by Purchaser after
entry of the Confirmation Order on the docket.  The Closing shall take
place at the offices of Andrews Kurth LLP, 600 Travis, Suite 4200, Houston,
Texas  77002 (or at such other place as the Parties may designate in
writing).  The date on which the Closing shall be held is referred to
in this Agreement as the “Closing
Date.”

    
      
        
        

      

      
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    4.2           Deliveries by
Seller.  At the Closing, Seller shall deliver to
Purchaser:

     

    (a)           a
bill of sale in the form of Exhibit A hereto,
duly executed by the Sellers, as applicable;

     

    (b)           an
assignment and assumption agreement in the form attached hereto as Exhibit B
hereto, duly executed by the Sellers, as applicable;

     

    (c)           an
assignment and assumption of lease for each Leased Real Property in the form
attached to this Agreement as Exhibit C, with such
modifications as are necessary to properly describe such Leased Real Property
(collectively, the “Lease Assignments”),
duly executed by the applicable Sellers that holds the leasehold interest in
such Leased Real Property;

     

    (d)           duly
executed assignments of (i) the Patents and Trademarks, if any, in forms
suitable for recording in the United States Patent and Trademark Office, and
(ii) duly executed assignments of the copyright registrations and applications
for copyright registration owned by Sellers that are included in Purchased
Intellectual Property (if applicable);

     

    (e)           the
officer’s certificate required to be delivered pursuant to Sections 10.1(a)
and 10.1(b);

     

    (f)           
a copy of all orders of the Bankruptcy Court pertaining to the transactions
contemplated herein, including the Confirmation Order;

     

    (g)           a
certificate duly executed by an officer of the Seller certifying that as of the
Closing Date no appeal of or motion for stay, reargument, rehearing or
reconsideration with respect to the Confirmation Order has been served on the
Debtor or, based solely on a review of the online docket of the Chapter 11
Cases, has been filed;

     

    (h)           all
consents or notices of third parties obtained or given by Sellers as of the
Closing Date to the transfer of the Purchased Assets, if any; and

     

    (i)           
all other instruments of conveyance and transfer, in form and substance
reasonably acceptable to Purchaser, as may be necessary to convey the Purchased
Assets to Purchaser and to allow the Purchaser to operate properties in which
the Seller is currently operating.

    
      
        
        

      

      
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    4.3           Deliveries by
Purchaser.

     

    (a)           an
assignment and assumption agreement in the form attached hereto as Exhibit B
hereto, duly executed by Purchaser;

     

    (b)           the
Lease Assignments duly executed by Purchaser (Exhibit
C);

     

    (c)           the
release described in Section 3.3 (Exhibit
E).

     

    (d)           the
officer’s certificate required to be delivered pursuant to Sections 10.2(a)
and 10.2(b); and

     

    (e)           all
other instruments of conveyance and transfer, in form and substance reasonably
acceptable to Seller, as may be necessary to convey the Purchased Assets to
Purchaser.

     

    4.4           Termination of
Agreement.  This Agreement may be terminated prior to the
Closing as follows:

     

    (a)           by
Purchaser or Seller, if the Closing shall not have occurred by the close of
business on the Termination Date;

     

    (b)           by
Purchaser if (i) the Confirmation Order, in form and content provided by
Purchaser before execution of this Agreement, is not entered by the Bankruptcy
Court on or before _____________ 2009, or (ii) if the approved auction process
for the sale of the Purchased Assets is not completed on or before __________,
2009;

     

    (c)           by
mutual written consent of Sellers and Purchaser;

     

    (d)           by
Purchaser, if any of the conditions to the obligations of Purchaser set forth in
Sections 10.1 and 10.3 shall have become incapable of fulfillment other
than as a result of a breach by Purchaser of any covenant or agreement contained
in this Agreement, and such condition is not waived by Purchaser;

     

    (e)           by
Sellers, if any condition to the obligations of Sellers set forth in
Sections 10.2 and 10.3 shall have become incapable of fulfillment other
than as a result of a breach by any Seller of any covenant or agreement
contained in this Agreement, and such condition is not waived by
Sellers;

     

    (f)           
by Purchaser, if there shall be a breach by any Seller of any representation or
warranty, or any covenant or agreement contained in this Agreement, which would
result in a failure of a condition set forth in Section 10.1 or 10.3, and
which breach cannot be cured or has not been cured by the earlier of
(i) seven (7) Business Days after the giving of written notice by Purchaser
to Sellers of such breach and (ii) the Termination Date;

    
      
        
        

      

      
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    (g)           by
Sellers, if there shall be a breach by Purchaser of any representation or
warranty, or any covenant or agreement contained in this Agreement, which would
result in a failure of a condition set forth in Section 10.2 or 10.3, and
which breach cannot be cured or has not been cured by the earlier of (i) seven
(7) Business Days after the giving of written notice by Sellers to Purchaser of
such breach and (ii) the Termination Date;

     

    (h)           by
Sellers or Purchaser if there shall be in effect a final nonappealable Order of
a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby,
or the Bankruptcy Court or another court of competent jurisdiction shall stay
the Confirmation Order;

     

    (i)           
by Purchaser, if Purchaser is unable to retain the necessary Employees, as
determined by Purchaser in its sole discretion, to, among other things, operate
the Business and perform under the Assumed Contracts and Assumed Executory
Contracts;

     

    (j)           
by Purchaser if Seller or Seller’s board of directors elects to pursue an
Alternative Transaction; or

     

    (k)           by
Purchaser or Sellers, if the Bankruptcy Court shall enter an Order approving a
Competing Bid.

     

    4.5           Procedure Upon
Termination.  In the event of termination by Purchaser or
Sellers, or both, pursuant to Section 4.4 hereof, written notice thereof
shall forthwith be given to the other Party or Parties, and this Agreement shall
terminate, and the purchase of the Purchased Assets hereunder shall be
abandoned, without further action by Purchaser or Sellers.  If this
Agreement is terminated as provided herein each Party shall redeliver all
documents, work papers and other material of any other Party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the Party furnishing the same.

     

    4.6           Effect of
Termination.

     

    (a)           In
the event that this Agreement is validly terminated as provided herein, then
each of the Parties shall be relieved of its duties and obligations arising
under this Agreement after the date of such termination and such termination
shall be without liability to Purchaser or Sellers; provided, however, that the
obligations of the Parties set forth in this Section 4.6, Section 8.6
and Article XIII hereof shall survive any such termination and shall be
enforceable hereunder.

     

    (b)           Nothing
in this Section 4.6 shall relieve Purchaser or Sellers of any liability for
a breach of this Agreement prior to the date of termination.

     

    4.7           Post-Closing
Deliveries.  Any documents required to allow the Purchaser to
operate properties in which the Seller is currently operating, including without
limitation letters in lieu of division orders and/or transfer orders and
appropriate Texas Railroad Commission P-4 forms.

    
      
        
        

      

      
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    ARTICLE
V

     

    REPRESENTATIONS
AND WARRANTIES OF SELLERS

     

     

    Each
Seller hereby represents and warrants to Purchaser that:

     

    5.1           Debtor-in-Possession.  Seller
is the Debtor-in-Possession in the Bankruptcy Case.

     

    5.2           Authority.  Subject
to the approval of the Bankruptcy Court, Seller has the authority to carry on
its business as presently conducted, to enter into this Agreement and the
Assignment (as hereinafter defined) and to perform its obligations hereunder and
thereunder.

     

    5.3           Corporate
Power.  Subject to the approval of this Agreement and the
Closing Documents (hereinafter defined) by the Bankruptcy Court, the making and
performance by Seller of (i) this Agreement, (ii) that certain Assignment, Bill
of Sale and Conveyance, a form of which is attached hereto as Exhibit B (the
“Assignment”), and (iii) all other instruments to be executed in connection with
the Agreement and the Assignment, including the MMS Assignment as hereinafter
defined, (all such other instruments, together with the Assignment, are
collectively referred to herein as the “Closing Documents”)
are within Seller’s corporate powers, and have been duly authorized by all
necessary corporate action on the part of Seller.

     

    5.4           Litigation.  Except
as set forth on Schedule 5.4, there are no suits, claims, demands, filings,
causes of action, administrative proceedings, lawsuits or other litigation
pending, or, to Seller’s knowledge, threatened that could now or hereafter
adversely affect the ownership or operation of any of the Assets or the
transactions contemplated by this Agreement.

     

    5.5           Brokers.  Except
as set forth in Schedule 5.5, no broker or finder is entitled to any brokerage
or finder’s fee, or to any commission, based in any way on agreements,
arrangements or understandings made by or on behalf of Seller for which Buyer
has or will have any liabilities or obligations (contingent or
otherwise).

     

    5.6           Compliance with
Laws.  Except as set forth in Schedule 5.6(a), to the best of
Seller’s knowledge, the Assets have been operated in accordance with all
material laws, orders, rules and regulations of all Governmental Body having or
asserting jurisdiction relating to the ownership and operation thereof,
including the production of all hydrocarbons attributable thereto.  To
the best of Seller’s knowledge, all necessary material governmental
certificates, consents, permits, licenses or other authorizations with regard to
the ownership or operation of the Assets have been obtained and no violations
exist or have been recorded in respect of such licenses, permits or
authorizations.

     

    5.7           Consents, Waivers and
Preferential Rights.  To the best of Seller’s knowledge and
except with respect to the Licensed Intellectual Property and the Required
Consents, there are no consents or waivers of preferential purchase or other
rights necessary to permit the valid conveyance to Purchaser of the Purchased
Assets (excluding governmental consents and approvals customarily obtained
post-closing).

     

    5.8           Sufficiency of the Purchased
Assets.  Except for the property or consents described in
Schedules 5.6(a) and 1.1(h), the Purchased Assets are sufficient to operate the
Business in substantially the same manner as it was operated by the Seller’s
immediately prior to the Closing Date.

    
      
        
        

      

      
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    5.9           Material
Liabilities.  To the knowledge of Sellers, other than as
expressly set forth in the applicable schedules attached hereto and the
Confirmation Order there are no material liabilities which could be reasonably
expected to attach to the Purchased Assets upon transfer.

     

    5.10           Leased Real
Property.  To the best of Seller’s knowledge, the leases
included within the Leased Real Property are in full force and effect and are
valid and existing documents covering the entire estates which they purport to
cover and all conditions necessary to keep the said leases in force have been
performed.

     

    5.11           Sale of
Production.  To the best of Seller’s knowledge, no hydrocarbons
produced from the Leased Real Property or existing as in-ground reserves in such
Leased Real Property are subject  to a sales contract (other
than  a contract or division order terminable upon no more than 30
days notice), and no person or entity other than a lessor under a lease included
within the Leased Real Property has any call upon, option to purchase or similar
rights with respect to production from such Leased Real Property.  To
the best of Seller’s knowledge, Seller is receiving proceeds from the sale of
production from the Wells from the production purchasers or from operator(s) of
the Leased Real Property in a timely manner, and the proceeds payable to Seller
are not being held in suspense by any production purchaser or
operator.

     

    5.12           Environmental
Laws.  Other than in respect of the acknowledged risks set
forth in Section 6.9, to the best of Sellers’ knowledge, (i) such Purchased
Assets are in compliance in all material respects with all Environmental Laws
(as hereinafter defined) and all orders or requirements of any court or federal,
state, or local governmental authority, and possess and are in compliance with
all required permits, licenses, or similar authorizations, (ii) such Purchased
Assets and related operations are not subject to any existing or threatened
suit, investigation, or proceeding related to any obligation under any
Environmental Law, and (iii) there is no material liability (contingent or
otherwise) in connection with the release or threatened release into the
environment of any Hazardous Substances  as a result of or in
connection with such Assets or the operations related thereto.

     

    ARTICLE
VI

     

    REPRESENTATIONS
AND WARRANTIES OF PURCHASER

     

    Purchaser
hereby represents and warrants to Sellers that:

     

    6.1           Organization and Good
Standing.  Brazos Lateral Holdings Corp. is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties, to carry on its business as now conducted and to perform
its obligations under this Agreement and the Purchaser Documents, and NCEY
Holdings, LLC is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
requisite power and authority to own, lease and operate its properties, to carry
on its business as now conducted and to perform its obligations under this
Agreement and the Purchaser Documents.

    
      
        
        

      

      
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    6.2           Authorization of
Agreement.  Purchaser has full power and authority to execute
and deliver this Agreement and each other agreement, document, instrument or
certificate contemplated by this Agreement or to be executed by Purchaser in
connection with the consummation of the transactions contemplated by this
Agreement (the “Purchaser
Documents”), to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.  The
execution and delivery by Purchaser of this Agreement and the Purchaser
Documents and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action on behalf of
Purchaser.  This Agreement has been, and each Purchaser Document will
be at or prior to the Closing, duly executed and delivered by Purchaser and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each Purchaser Document when
so executed and delivered will constitute, the legal, valid and binding
obligations of Purchaser, enforceable against Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including,
without limitation, principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).

     

    6.3           Conflicts; Consents of Third
Parties.

     

    (a)           None
of the execution and delivery by Purchaser of this Agreement or the Purchaser
Documents, the consummation of the transactions contemplated hereby or thereby,
or compliance by Purchaser with any of the provisions hereof or thereof will
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination or
cancellation under any provision of (i) the certificate of incorporation
and by-laws of Brazos Lateral Holdings Corp., (ii) the formation documents of
NCEY Holdings, LLC, (iii)  any Contract or Permit to which Purchaser is a
party or by which Purchaser or its properties or assets are bound or
(iv) any applicable Law.

     

    (b)           No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is required on
the part of Purchaser in connection with the execution and delivery of this
Agreement or the Purchaser Documents, the compliance by Purchaser with any of
the provisions hereof or thereof, the consummation of the transactions
contemplated hereby without any material delay, the performance by Purchaser of
their respective obligations hereunder, or the taking by Purchaser of any other
action contemplated hereby, or for Purchaser to conduct the
Business.

     

    6.4           Litigation.  There
are no Legal Proceedings pending or, to the best of the knowledge of Purchaser,
threatened against Purchaser, or to which Purchaser is otherwise a party before
any Governmental Body, which, if adversely determined, would reasonably be
expected to have a Purchaser Material Adverse Effect.  Purchaser is
not subject to any Order of any Governmental Body except to the extent the same
would not reasonably be expected to have a Purchaser Material Adverse
Effect.

    
      
        
        

      

      
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    6.5           Financial
Advisors.  No Person has acted, directly or indirectly, as a
broker, finder or financial advisor for Purchaser in connection with the
transactions contemplated by this Agreement, and no Person is entitled to any
fee or commission or like payment from any Seller in respect
thereof.

     

    6.6           Financial
Capability.  Purchaser (i) has sufficient funds available to
pay the Purchase Price and any expenses incurred by Purchaser in connection with
the transactions contemplated by this Agreement, (ii)  has the resources
and capabilities (financial or otherwise) to perform its obligations hereunder
and (iii) has not incurred any obligation, commitment, restriction or
Liability of any kind, that would impair or adversely affect such resources and
capabilities or could reasonable be expected to have a Purchaser Material
Adverse Effect.  Purchaser is not insolvent, does not have
unreasonably small capital with which to operate the Business, and has not
incurred or committed to incur debts beyond its ability to repay such
debts.  Without limiting the foregoing, Purchaser’s ability to
consummate, and to consummate the transactions contemplated hereby and the
Purchaser Documents is not contingent on Purchaser’s ability to complete any
equity or debt financing or to obtain any other financial commitments before or
on the Closing.

     

    6.7           Purchaser’s
Investigation.  Purchaser represents that it is a sophisticated
entity that was advised by knowledgeable counsel and financial and other
advisors and hereby acknowledges that it has conducted to its satisfaction, its
own independent investigation and analysis of the Purchased Assets and the
Assumed Liabilities and, in making the determination to proceed with the
transactions contemplated by this Agreement, Purchaser has relied solely on the
results of its own independent investigation and the express representations set
forth in this Agreement.

     

    6.8           Adequate Assurances
Regarding Executory Contracts.  Purchaser is and will be
capable of satisfying the conditions contained in section 365(b)(1)(C) and
365(f) of the Bankruptcy Code with respect to the Assumed Contracts and the
Assumed Executory Contracts.

     

    6.9           Environmental
Matters.  The Purchaser Parties (as defined below) acknowledge
that some of the Purchased Assets have been used for the exploration,
development and production of oil, gas, associated hydrocarbons and other
minerals. The Purchaser Parties acknowledge that there may have been releases of
crude oil, produced water, pollutants or other material in the past. The
Purchaser Parties acknowledge that some items among the properties may contain
asbestos or naturally occurring radioactive materials (“NORM”).  The
Purchaser Parties understand that NORM may attach itself to the inside of wells
and equipment as scale or in other forms, that the wells and equipment may
contain NORM and that the NORM containing materials may be buried or otherwise
disposed of on the properties.  The Purchaser Parties acknowledge that
special procedures may be required to remove and dispose of asbestos and
NORM.

    
      
        
        

      

      
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    ARTICLE
VII

    BANKRUPTCY
COURT MATTERS

     

    7.1           Bankruptcy
Actions.  On March 12, 2009, the Sellers filed (a) their First
Amended Joint Plan of Reorganization (the “Plan”) seeking among
other things the entry of an order approving this Agreement and the transactions
contemplated thereby (including the unconditional allowance of a secured claim
by Purchaser in the Chapter 11 Cases in an amount at least equal to the Credit
Bid Amount, and the credit bid pursuant to Section 363(k) of the Bankruptcy Code
the sale of the Purchased Assets to Purchaser free and clear of all Interests
except for the Permitted Exceptions described on Schedule 1.1(h))
should the purchase offer made by this Agreement constitute the highest or best
offer for the Purchased Assets, which order shall be substantially in the form
of Exhibit D
hereto or otherwise acceptable to Sellers and Purchaser (the “Confirmation
Order”).

     

    7.2           Seller
Actions.  A hearing on the Plan is currently scheduled for
____________.  Furthermore, Sellers shall use their reasonable efforts
to obtain any other approvals or consents from the Bankruptcy Court that may be
reasonably necessary to consummate the transactions contemplated in this
Agreement.

     

    7.3           Purchaser
Actions.  Purchaser agrees that it will promptly take such
reasonable actions as are reasonably requested by Sellers to assist in obtaining
the Confirmation Order, including, without limitation, furnishing affidavits or
other documents or information for filing with the Bankruptcy Court for the
purposes, among others, of providing necessary assurances of performance by
Purchaser under this Agreement and demonstrating that Purchaser is a “good
faith” purchaser under section 363(m) of the Bankruptcy Code.

     

    7.4           Adequate
Assurances.  With respect to each Assumed Contract and Assumed
Lease, Purchaser shall provide adequate assurance of the future performance of
such Assumed Contract and Assumed Lease by Purchaser.

     

    7.5           Competing
Transaction.  This Agreement is subject to approval by the
Bankruptcy Court and the consideration by Sellers of higher or better competing
bids (each a “Competing
Bid”).  For purposes of consideration of competing bids, the
Sellers’ hereby agree that the Purchaser’s Credit Bid Amount shall be deemed to
be equivalent to a cash bid in an amount equal to the Lenders Debt constituting
the Purchaser’s Credit Bid Amount.  From the date hereof (and any
prior time) and until the Plan is approved by the Bankruptcy Court, Sellers are
permitted to cause its representatives and Affiliates to initiate contact with,
solicit or encourage submission of any inquiries, proposals or offers by, any
Person (in addition to Purchaser and its Affiliates, agents and representatives)
in connection with any sale or other disposition of the Purchased
Assets.  In addition, Sellers shall have the responsibility and
obligation to respond to any inquiries or offers to purchase all or any part of
the Purchased Assets and perform any and all other acts related thereto that are
required under the Bankruptcy Code or other applicable law, including, without
limitation, supplying information relating to the Business and the assets of
Sellers to prospective purchasers.

    
      
        
        

      

      
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    ARTICLE
VIII

     

    COVENANTS

     

    8.1           Access to
Information.  Sellers agree that, prior to the Closing Date,
Purchaser shall be entitled, through its officers, employees and representatives
(including, without limitation, its legal advisors and accountants), to make
such investigation of the properties, businesses and operations of the Business
and such examination of the books and records of the Business, the Purchased
Assets and the Assumed Liabilities as it reasonably requests and to make
extracts and copies of such books and records.  Any such investigation
and examination shall be conducted during regular business hours upon reasonable
advance notice and under reasonable circumstances and shall be subject to
restrictions under applicable Law.  Sellers shall cause the officers,
employees, consultants, agents, accountants, attorneys and other representatives
of Sellers to cooperate with Purchaser and Purchaser’s representatives in
connection with such investigation and examination, and Purchaser and its
representatives shall cooperate with Sellers and their representatives and shall
use their reasonable efforts to minimize any disruption to the
Business.  Notwithstanding anything herein to the contrary, no such
investigation or examination shall be permitted to the extent that it would
require Sellers to disclose information subject to attorney-client privilege or
conflict with any confidentiality obligations to which any Seller is
bound.  Purchaser will not contact any employee, customer or supplier
of Sellers with respect to this Agreement without the prior written consent of
Sellers (which such consent will not be unreasonably withheld or delayed);
provided, however, that so long as there is no disruption to the Business and
Purchaser’s conduct is in accordance with the reasonable requirements of
Sellers, Purchaser shall be entitled to contact and engage in discussions with
(i) counterparties to Assumed Contracts and Assumed Executory Contracts in
connection with Purchaser’s attempt to negotiate amounts necessary to cure any
breach or default under such contracts, (ii) Sellers’ vendors and (iii) Seller’s
customers, and,  Sellers shall cooperate with Purchaser to facilitate
such contact and discussions between Purchaser and such counterparties, vendors
and customers.  Promptly following the date of this Agreement, Sellers
shall provide Purchaser with contact information for Seller’s customers and
suppliers and notwithstanding any agreement between the parties to the contrary,
Purchaser shall be entitled to contact such customers and
suppliers.

     

    8.2           Conduct of the Business
Pending the Closing.

     

    (a)           Prior
to the Closing and further to any obligations as debtors-in-possession under the
Bankruptcy Code and except (1) as set forth on Schedule 8.2(a), (2) as
required by applicable Law, (3) as otherwise expressly contemplated by this
Agreement or (4) with the prior written consent of Purchaser (which consent
shall not be unreasonably withheld, delayed or conditioned), Sellers
shall:

     

    (i)           
use commercially reasonable efforts to maintain the Purchased Assets in the
Ordinary Course of Business, pay expenses and payables, bill customers, collect
receivables, purchase Inventory, repair and continue normal maintenance (normal
wear and tear excepted) and otherwise conduct the Business in the Ordinary
Course of Business;

    
      
        
        

      

      
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    (ii)           (A)
comply in all material respects with all Laws and Assumed Contracts and Assumed
Executory Contracts, (B) maintain all existing Permits applicable to the
Business, and (C) pay all applicable Taxes as such Taxes become due and
payable;

     

    (iii)           Use
commercially reasonable efforts to maintain working capital and current asset
and current liability levels consistent with those reflected in the Sellers’
financial statements previously provided to Purchaser;

     

    (iv)           maintain
in full force and effect all Purchased Intellectual Property;

     

    (v)           utilize
commercially reasonable efforts to pursue Section 363 of the Bankruptcy Code
sales processes and to comply at all times with the Plan and the Confirmation
Order;

     

    (vi)           use
their commercially reasonable efforts to (A) preserve the present business
operations, organization and goodwill of the Business and (B) preserve the
present relationships with customers and suppliers of the Business;
and

     

    (vii)          promptly
inform Purchaser in writing of the occurrence or non-occurrence of any event
known to any Seller which would cause the condition set forth in Section 10.1(a)
not to be satisfied or the breach of any covenant hereunder by any
Seller.

     

    (b)           Subject
to any obligations as debtors-in-possession under the Bankruptcy Code and except
(1) as set forth on Schedule 8.2(b), (2) as
required by applicable Law, (3) as otherwise contemplated by this Agreement or
(4) with the prior written consent of Purchaser, no Seller shall solely as it
relates to the Business:

     

    (i)           
modify or amend, in any material respect, or terminate any Material Contract or
waive, release or assign any material rights or claims thereunder;

     

    (ii)           enter
into any contract or transaction relating to the purchase of assets primarily
for use in the Business in excess of fifty thousand dollars
($50,000);

     

    (iii)           increase
salaries or wages, declare bonuses, increase compensation or benefits or
institute any new employment arrangement, benefit plan or program with respect
to any Employee, except as required by law, as required by the terms of
previously existing Employee Plans or in the Ordinary Course of Business, and
except that Sellers can declare or pay bonuses or enter into deferred
compensation or similar arrangements in connection with the retention of the
continued services of directors, employees or consultants;

     

    (iv)           sell,
lease, transfer, mortgage, encumber, alienate or dispose of Purchased Assets
except for sales of Inventory in the Ordinary Course of Business;
and

     

    (v)           agree
to do anything prohibited by this Section 8.2.

    
      
        
        

      

      
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    (c)           Prior
to the Closing, each of the Sellers shall take any and all necessary actions to
transfer, assign, record or perfect in its name record title to any of its
Purchased Assets that is not presently held or recorded in its name, including,
without limitation, filing any necessary notices of assignment in the United
States Patent and Trademark Office or United States Copyright Office, as
applicable, with respect to the Purchased Intellectual Property.

     

    8.3           Regulatory
Approvals.  Purchaser and Sellers shall use commercially
reasonable efforts to (a) obtain all consents and approvals of all
Governmental Bodies and all other Persons required to be obtained by Purchaser
or Sellers to effect the transactions contemplated by this Agreement and
(b) take, or cause to be taken, all action, and to do, or cause to be done,
all things necessary, consistent with applicable Law, to consummate the
transactions contemplated hereby.

     

    8.4           Further
Assurances.  Each of Sellers and Purchaser shall use its
commercially reasonable best efforts to (i) take all actions necessary or
appropriate to consummate the transactions contemplated by this Agreement and
(ii) cause the fulfillment at the earliest practicable date of all of the
conditions to their respective obligations to consummate the transactions
contemplated by this Agreement.

     

    8.5           Assumed
Liabilities.  Subsequent to the Closing, Purchaser agrees to
pay, perform and discharge the Assumed Liabilities as they become due,
including, without limitation, the discharge and performance when due of each
and every obligation of Sellers to be satisfied or performed on or after the
Closing Date, under the Assumed Contracts and Assumed Executory
Contracts.

     

    8.6           Confidentiality.

     

    (a)           Purchaser
acknowledges that the Confidential Information provided to it in connection with
this Agreement, including under Section 8.1, and the consummation of the
transactions contemplated hereby, is subject to the terms of the Confidentiality
Agreement the terms of which are incorporated herein by
reference.  Effective upon, and only upon, the Closing Date, the
Confidentiality Agreement shall terminate with respect to information relating
solely to the Business or otherwise included in the Purchased Assets; provided, however, that
Purchaser acknowledges that any and all other Confidential Information provided
to it by any Seller or its representatives concerning any Seller and their
Subsidiaries shall remain subject to the terms and conditions of the
Confidentiality Agreement after the Closing Date.

     

    (b)           The
Sellers have had access to and contributed to information and materials of a
highly sensitive nature (including Confidential Information) regarding the
Purchased Assets and the Business.  Each Seller agrees that unless it
first secures the written consent of an authorized representative of Purchaser,
it shall not use for itself or anyone else, and shall not disclose to others,
any Confidential Information except to the extent such use or disclosure is
required by Law (in which event it shall inform Purchaser in advance of any such
required disclosure, shall cooperate with Purchaser in all reasonable ways in
obtaining a protective order or other protection in respect of such required
disclosure, and shall limit such disclosure to the extent reasonably possible
while still complying with such requirements).  Each Seller shall use
reasonable care to safeguard Confidential Information and to protect it against
disclosure, misuse, espionage, loss and theft.

    
      
        
        

      

      
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    8.7           Preservation of
Records.  For a period of five (5) years after the Closing Date
(or such longer period as may be required by any Governmental Body or ongoing
claim):

     

    (a)           Purchaser
shall not dispose of or destroy any of the business records and files of the
Business held by Purchaser and relating to the period preceding the Closing
Date.  If Purchaser wishes to dispose of or destroy such records and
files after that time, or if Sellers wish at any time to destroy any business
records and files of the Business held by it, the party proposing such
disposition or destruction shall first give thirty (30) days’ prior written
notice to the other party, and such other party shall have the right, at its
option and expense, upon prior written notice to the notifying party within such
thirty (30) day period, to take possession of the records and files within
fifteen (15) days after the date of such notice.  Purchaser shall bear
the costs associated with preserving these records.

     

    (b)           Each
party (the “Requested
Party”) shall allow the other party and any of its directors, officers,
employees, counsel, representatives, accountants and auditors reasonable access
during normal business hours to all employees and files of the Requested Party
and any books and records and other materials included in the Purchased Assets
relating to periods prior to the Closing Date in connection with general
business purposes, whether or not relating to or arising out of this Agreement
or the transactions contemplated hereby (including the preparation of tax
returns, amended tax return or claim for refund (and any materials necessary for
the preparation of any of the foregoing), and financial statements for periods
ending on or prior to the Closing Date, the management and handling of any
audit, investigation, litigation or other proceeding in, whether such audit,
investigation, litigation or other proceeding is a matter with respect to which
indemnification may be sought hereunder), to comply with the rules and
regulations of the Internal Revenue Service, the Securities and Exchange
Commission or any other Governmental Body or otherwise relating to Sellers’
other businesses or operations.  Seller shall further provide prompt
notice to Purchaser of any notices, documents or the like delivered or forwarded
to any Seller that relate to the Purchased Assets acquired by
Purchaser.

     

    8.8           Publicity.  Neither
Sellers nor Purchaser shall issue any press release or public announcement
concerning this Agreement or the transactions contemplated hereby without
obtaining the prior written approval of the other Party hereto, which approval
will not be unreasonably withheld or delayed, unless, in the sole judgment of
Purchaser or Sellers, disclosure is otherwise required by applicable Law or by
the Bankruptcy Court with respect to filings to be made with the Bankruptcy
Court in connection with this Agreement or by the applicable rules of any stock
exchange on which Purchaser or Sellers list securities, provided that the Party
intending to make such release shall use its reasonable efforts consistent with
such applicable Law or Bankruptcy Court requirement to consult with the other
Party with respect to the text thereof.

     

    8.9           Certain
Consents.  Sellers shall use their commercially reasonable
efforts to obtain prior to (or, if not obtained prior to, subsequent to) the
Closing all of the Required Consents.  Purchaser will cooperate with
Seller in connection with seeking and obtaining such Consents.

     

    8.10         Sublease and
Subcontract.  For a period of sixty (60) days after the Closing
Date (the “Transition
Period”), Sellers shall, as applicable, sublease or subcontract to
Purchaser the contracts and leases set forth on Schedule 8.10 (the
“Transition
Agreements”) and subcontract to Purchaser during the Transition Period
the provision of such utilities and other services reasonably necessary and
useful to conduct the Business as determined by Purchaser in its sole discretion
(the “Subcontracted
Services”), in order to transition the Purchased Assets to
Purchaser.  Not less than six (6) Business Days before the
Closing Date, the Purchaser shall provide a schedule setting forth the
Subcontract Services (the “Schedule of Subcontracted
Services”). Not more than three (3) Business Days after actually
receiving the Schedule of Subcontracted Services, Sellers shall provide
Purchaser with a schedule setting forth the estimated costs that Sellers will
likely accrue or incur under or on account of the Transition Agreements and the
Subcontracted Services during the Transition Period (the “Estimated Transition
Costs”).  Purchaser shall be liable for and shall pay within
two (2) Business Days of notice thereof from Sellers or their agent,
representative or designee any actual Transition Costs incurred under the
Transition Agreements and Subcontracted Services during the Transition
Period.  During the Transition Period, Sellers shall not seek to
reject or terminate any of the Transition Agreements or the Subcontracted
Services except to the extent that any such rejection or termination becomes
effective after the end of the Transition Period.  During the
Transition Period, Sellers shall, at the expense and request of Purchaser and to
the extent they continue as debtors in possession, object to or challenge any
motion or other attempt to reject, terminate, suspend or modify the Transition
Agreements or the Subcontracted Services except to the extent that any such
rejection, termination, suspension or modification becomes effective after the
end of the Transition Period.

    
      
        
        

      

      
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    ARTICLE
IX

     

    EMPLOYEES
AND EMPLOYEE BENEFITS

     

    9.1           Employment.

     

    (a)           Sellers
shall terminate all Employees on the Closing Date.  Purchaser shall
offer employment effective as of the Closing to certain Employees at its
discretion on terms and conditions that are substantially comparable in all
material respects to the terms and conditions of the Employee’s employment with
Seller immediately prior to Closing (including position, responsibilities and
job location) as set forth on Schedule
5.25(a).  Employees who accept Purchaser’s offer of employment
and become employees of Purchaser as of or after the Closing Date shall be
referred to as the “Transferred
Employees” effective on their respective initial dates of employment with
Purchaser.  Purchaser shall notify Sellers before the Confirmation
Hearing as to the minimum number of Employees to whom it has offered or will
offer employment..  On or before three (3) days prior to the Closing
Date, Purchaser shall provide to Sellers a schedule listing the Transferred
Employees.

     

    (b)           Sellers
shall be responsible for providing all WARN notices related to the termination
of the Employees by any Seller, and Sellers shall bear full liability for all
WARN liability associated with termination of Employees other than the
Transferred Employees.  Purchaser shall bear full liability for all
WARN liability for all Transferred Employees in the event any such persons are
terminated by Purchaser after the Closing Date.  Purchaser shall bear
no responsibility to provide any WARN notice associated with the termination of
Employees pursuant to the transaction contemplated herein.

     

    9.2           Employee
Benefits in
General.

     

    (a)           Purchaser
shall provide or cause to be provided to each Transferred Employee who remains
actively employed with Purchaser a base salary or hourly wage that is
substantially similar to such Transferred Employee’s base salary or hourly wage
in effect immediately prior to the Closing Date.  Purchaser agrees to
assume and maintain all liabilities with respect to accrued vacation pay for
each Transferred Employee in accordance with such vacation policies set forth on
Schedule
9.2(a).

    
      
        
        

      

      
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    (b)           Effective
as of the Closing Date, Purchaser shall cause each Transferred Employee who was
covered and actively participating in the Employee Plans that are benefits,
retirement and/or welfare plans (excluding equity based plans) immediately prior
to the Closing Date to be covered under employee benefit plans, programs and
arrangements maintained or established by Purchaser (the “Purchaser Plans”)
that are substantially similar in the aggregate (based on value and/or benefit)
to such plans in effect immediately prior to the Closing.  The
Purchaser Plans shall recognize each Transferred Employee’s prior service that
is recognized under the Employee Plans (including prior service with predecessor
employers to the extent such prior service is recognized under the Employee
Plans) for eligibility and vesting purposes and, in the case of vacation or
severance benefits, for purposes of determining the amount of benefits, provided
that such recognition or prior service does not result in duplication of
benefits.

     

    9.3           COBRA.  Purchaser
shall be solely responsible for satisfying the COBRA notice and continuation
coverage requirements for all Transferred Employees (and their eligible
dependents) who are entitled to elect COBRA coverage (or any similar state or
local Law) on account of a qualifying event occurring on or after the Closing
Date.  The Sellers shall be solely responsible for satisfying the
COBRA notice and continuation coverage requirements for all Employees (and their
eligible dependents) who are entitled to elect COBRA coverage (or any similar to
state or local Law) on account of a qualifying event occurring on or prior to
the Closing Date.

     

    9.4           Third-Party
Beneficiaries.

     

    (a)           Notwithstanding
the foregoing, nothing contained herein, whether express or implied, shall be
treated as an amendment or other modification of any Purchaser Plan, or shall
limit the right of Purchaser or any of its Affiliates to amend, terminate or
otherwise modify any Purchaser Plan following the Closing Date.  In
the event that (i) a party other than the Sellers or any of their Affiliates or
Purchaser or any of its Affiliates makes a claim or takes other action to
enforce any provision in this Agreement as an amendment to any Purchaser Plan,
and (ii) such provision is deemed to be an amendment to such Purchaser Plan even
though not explicitly designated as such in this Agreement, then such provision
shall lapse retroactively and shall have no amendatory effect.

     

    (b)           The
Sellers and Purchaser acknowledge and agree that all provisions contained in
this Article IX with respect to Employees are included for the sole benefit of
the Sellers and Purchaser, and that nothing in this Agreement, whether express
or implied, shall create any third party beneficiary or other rights (i) in any
other Person, including, without limitation, any current or former Employees,
any participant in any Employee Plan or Purchaser Plan, or any dependent or
beneficiary thereof, or (ii) to continued employment with the Sellers,
Purchaser, or any of their respective Affiliates.

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

    

    ARTICLE
X

     

    CONDITIONS
TO CLOSING

     

    10.1           Conditions Precedent to
Obligations of Purchaser.  The obligation of Purchaser to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by Purchaser in whole or in part
to the extent permitted by applicable Law):

     

    (a)           each
of the representations and warranties of Sellers set forth in Article V shall be
true and correct, in all material respects as of the Closing Date (or on the
date when made in the case of any representation and warranty which specifically
relates to an earlier date) with the same force and effect as though made on and
as of the Closing Date, and Purchaser shall have received a certificate signed
by an authorized officer of Sellers on behalf of all Sellers, dated the Closing
Date, to the foregoing effect;

     

    (b)           Sellers
shall have performed and complied in all material respects with all obligations
and agreements required in this Agreement to be performed or complied with by it
prior to the Closing Date, and Purchaser shall have received a certificate
signed by an authorized officer of Sellers on behalf of all Sellers, dated the
Closing Date, to the forgoing effect;

     

    (c)           all
Required Consents set forth on Schedule 10.2(a) shall have been duly obtained,
made or given and shall be in full force and effect;

     

    (d)           there
shall not have occurred after the date hereof an event or failure to act causing
a Material Adverse Effect; and

     

    (e)           Sellers
shall have delivered, or caused to be delivered, to Purchaser all of the items
set forth in Section 4.2.

     

    10.2           Conditions Precedent to
Obligations of Sellers.  The obligations of Sellers to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, prior to or on the Closing Date, of each of the following
conditions (any or all of which may be waived by Sellers in writing in whole or
in part to the extent permitted by applicable Law):

     

    (a)           each
of the representations and warranties of Purchaser set forth in Article VI shall
be true and correct, in all material respects on and as of the date hereof and
as of the Closing Date (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date) with
the same force and effect as though made on and as of the Closing Date, except
that those representations and warranties that are qualified by materiality,
Material Adverse Effect or similar phrase shall be true and correct in all
respects as of the date hereof and on and as of the Closing Date (or on the date
when made in the case of any representation and warranty which specifically
relates to an earlier date) with the same force and effect as though made on and
as of the Closing Date, and Sellers shall have received a certificate signed by
an authorized officer of Purchaser, dated the Closing Date, to the foregoing
effect;

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

    

    (b)           Purchaser
shall have performed and complied in all material respects with all obligations
and agreements required by this Agreement to be performed or complied with by
Purchaser on or prior to the Closing Date, and Sellers shall have received a
certificate signed by an authorized officer of Purchaser, dated the Closing
Date, to the foregoing effect;

     

    (c)           [intentionally
omitted]

     

    (d)           Purchaser
shall have delivered, or caused to be delivered, to Sellers all of the items set
forth in Section 4.3; and

     

    (e)           At
or prior to the Closing, Purchaser shall have paid the Cure Amount, or made
arrangements, satisfactory to Sellers in their sole discretion, to promptly pay
the Cure Amount, so that the Assumed Contracts and Assumed Executory Contracts
may be assumed by Sellers and assigned to Purchaser in accordance with the
provisions of section 365 of the Bankruptcy Code.

     

    10.3           Conditions Precedent to
Obligations of Purchaser and Sellers.  The respective
obligations of Purchaser and Sellers to consummate the transactions contemplated
by this Agreement are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions (any or all of which may be waived by
Purchaser and Sellers in whole or in part to the extent permitted by applicable
Law):

     

    (a)           there
shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby; and

     

    (b)           the
Bankruptcy Court shall have entered the Confirmation Order; provided that,
notwithstanding anything contained in this Agreement to the contrary, if
the Bankruptcy Court issues the Confirmation Order but fails to approve the
assignment to Purchaser of any Assumed Contract or Assumed Lease
contemplated to be assigned to Purchaser pursuant to this Agreement solely by
reason of a failure by Purchaser to provide adequate assurance of future
performance as required by the Bankruptcy Code, then  the Assumed
Contract or Assumed Lease, the contemplated assignment of which was not approved
by the Bankruptcy Court by reason of such failure by Purchaser, shall become an
Excluded Asset, and, assuming the other conditions to Purchaser’s obligations
under the Agreement have been satisfied, the Parties shall proceed with the
Closing without any corresponding adjustment to the Purchase Price.

     

    10.4           Frustration of Closing
Conditions.  Neither Sellers nor Purchaser may rely on the
failure of any condition set forth in Section 10.1, 10.2 or 10.3, as the
case may be, if such failure was caused by such Party’s failure to comply with
any provision of this Agreement.

     

    ARTICLE
XI

     

    TAXES

     

    11.1           Transfer
Taxes.  Purchaser shall have no liability for and Transfer
Taxes.  Sellers shall indemnify and hold harmless Purchaser from and
against any such Transfer Taxes so long as Purchaser is in compliance with
Section 11.2.  Any amounts payable by Sellers to Purchaser on account
of such indemnity shall be entitled to super priority administrative treatment
under sections 503(b) and 507 of the Bankruptcy Code.  Sellers and
Purchaser shall cooperate and otherwise take commercially reasonable efforts to
obtain any available refunds for Transfer Taxes.

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

    11.2           Purchase Price
Allocation.  Purchaser shall allocate the Purchase Price
(including the Assumed Liabilities) among the Purchased Assets within one-year
after Closing and Sellers and Purchaser shall file their income Tax Returns in
Form 8594, in accordance with such allocation; provided that nothing contained
herein shall prevent Sellers and Purchaser from settling any proposed deficiency
or adjustment by any Taxing Authority based upon or arising out of the purchase
price allocation, and no Sellers nor Purchaser shall be required to litigate
before any court, any proposed deficiency or adjustment by any taxing authority
challenging such allocation.  Purchaser shall revise from time to time
purchase price allocation so as to report any matters that need updating
(including purchase price adjustments, if any) consistent with the agreed upon
allocation.

     

    ARTICLE
XII

     

    REMEDIES
FOR BREACHES OF THIS AGREEMENT

     

    12.1           Survival of Representations
and Warranties. All of the
representations and warranties set forth in this Agreement or in any certificate
delivered by any Seller in connection with the Closing shall survive the
execution and delivery of this Agreement and through the Closing, but shall not
survive, and shall terminate, at the Closing.

     

    12.2           Indemnification of
Purchaser.

     

    (a)           Subject
to the limitations set forth in Sections 12.2(b) and 12.2(c), Sellers shall
indemnify Purchaser and each of its respective Affiliates, officers, directors,
employees, agents, representatives, successors and assigns (each a “Purchaser Party”),
and save and hold each of them harmless from and against, and pay on behalf of
or reimburse any Purchaser Party as and when incurred for, all Losses arising
out of or relating to:

     

    (i)           any
Taxes of the Sellers (other than Transfer Taxes); and

     

    (ii)           the
fraud of Sellers or any of Sellers’ officers, directors, employees, or agents in
connection with the representations and warranties set forth in Article V
hereof.

     

    (b)           Sellers’
aggregate liability for indemnity of Losses hereunder shall not exceed an amount
equal to the Credit Bid Amount.

     

    (c)           Any
amounts payable by Sellers to Purchaser on account of the indemnity contained in
this Section 12.2 shall be entitled to super-priority administrative treatment
under sections 503(b) and 507 of the Bankruptcy Code.

     

    12.3           Indemnification of
the
Sellers.

     

    (a)           Subject
to the limitations set forth in Sections 12.3(b) and 12.3(c), Purchaser
shall indemnify the Sellers and each of their respective Affiliates, officers,
directors, employees, agents, representatives, successors and assigns (each a
“Seller Party”)
and save and hold each of them harmless from and against, and pay on behalf of
or reimburse any Seller Party as and when incurred for, all Losses arising out
of or relating to:

    
      
        
        

      

      
        -34-

        
          

        

      

      
        
        

      

    

    (i)           
from and after the Closing Date, any Assumed Liability; and

     

    (ii)           the
fraud of Purchaser or any of Purchaser’s officers, directors, employees, or
agents in connection with the representations and warranties set forth in
Article VI hereof.

     

    (b)           Purchaser’s
aggregate liability for indemnity of Losses hereunder shall not exceed the
Credit Bid Amount.

     

    12.4           Matters Involving Third
Parties.

     

    (a)           If
any Seller Party or any Purchaser Party seeks indemnification under this
Section 12.4, such Person (the “Indemnified Party”)
shall give written notice to the other Person(s) (the “Indemnifying Party”).
In that regard, if any Liability shall be brought or asserted by any third party
which, if adversely determined, may entitle the Indemnified Party to indemnity
pursuant to this Section 12.4 (a “Third Party Claim”),
the Indemnified Party shall promptly notify the Indemnifying Party of the same
in writing, specifying in detail the basis of such Liability and the facts
pertaining thereto; provided, however, that except
as otherwise provided in this Article XII, no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any Liability or Losses hereunder unless the delay in
notice has a material adverse effect on the Indemnifying Party’s ability to
successfully defend such claim.

     

    (b)           Any
Indemnifying Party will have the right to defend the Indemnified Party against
the Third Party Claim with counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing within fifteen (15) days after the Indemnified
Party has given notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of any Losses
(without any limitations) the Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or caused by the Third Party
Claim, (ii) the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (iii)  and (iv) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.

     

    (c)           So
long as the Indemnifying Party is conducting the defense of the Third Party
Claim in accordance with Section 12.4(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (which consent shall not be withheld unreasonably) and
(iii) the Indemnifying Party will not consent to the entry or any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (which consent shall not be
withheld unreasonably).

    
      
        
        

      

      
        -35-

        
          

        

      

      
        
        

      

    

    (d)           In
the event that any of the conditions in Section 12.4(b) above is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Party
will reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys’ fees
and expenses), and (iii) the Indemnifying Party will remain responsible for
any Losses the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Section 12.4.

     

    12.5           Manner of Payment.  Any
indemnification payment of the Seller Parties pursuant to this Article XII or
any payment of the Seller Parties pursuant to Section 4.6 shall be by way of
cashier’s or certified check or by wire transfer of immediately available funds,
if any, of the Seller, to an account designated by the Purchaser Parties, in
each case within five (5) days after the determination of indemnification
amounts.

     

    12.6           Insurance and Third Party
Recovery.  In
determining the liability of a Party for any Losses pursuant to this Article
XII, no loss, liability, damage or expense shall be deemed to have been
sustained by such Party to the extent of any proceeds previously received by
such Party from any insurance recovery (net of all out-of-pocket costs directly
related to such recovery) with respect to insurance coverage in place as of the
date hereof or other recovery from a third party (net of all out-of-pocket costs
directly related to such recovery).  If an amount is actually
recovered from an insurance carrier or other third party after damages have been
paid by the Indemnifying Party pursuant to Article XII hereof, then the party
receiving such amount shall promptly remit such amount to the Indemnifying
Party.

     

    12.7           Exclusive Remedy;
Mitigation.  Subject to Section 4.6, the Parties hereto agree
that the indemnification provisions set forth in this Article XII are the
exclusive provisions in this Agreement with respect to the liability of the
Sellers or Purchaser for the breach,  and the sole remedy of Sellers,
Purchaser, the Purchaser Parties and the Seller Parties for any claims for
breach of representation or warranty arising out of this Agreement or any law or
legal theory applicable thereto; provided, that nothing herein shall preclude
any Party from seeking any remedy based upon fraud.  Each Person
entitled to indemnification hereunder shall take reasonable steps to mitigate
all Losses that are indemnified hereunder.  Notwithstanding the
foregoing, in the event of a termination of this Agreement by either Purchaser
or Seller, nothing shall limit the rights and remedies of parties under Section
4.6 hereof.

     

    12.8           Tax Treatment of
Indemnification Payments.  All indemnification payments made
pursuant to this Agreement shall be treated by the Parties as adjustments to the
Purchase Price for all relevant Tax purposes.

    
      
        
        

      

      
        -36-

        
          

        

      

      
        
        

      

    

    ARTICLE
XIII

     

    MISCELLANEOUS

     

    13.1           Expenses.  Except
as otherwise provided in this Agreement, Sellers and Purchaser shall bear their
own expenses, including attorney’s fees, incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby.  Notwithstanding the
foregoing, in the event of any action or proceeding to interpret or enforce this
Agreement, the prevailing party in such action or proceeding shall be entitled
to have and recover from the non-prevailing party such costs and expenses
(including, without limitation, all court costs and reasonable attorneys’ fees)
as the prevailing party may incur in the pursuit or defense
thereof.

     

    13.2           Injunctive
Relief.  Damages at law may be an inadequate remedy for the
breach of any of the covenants, promises and agreements contained in this
Agreement, and, accordingly, any Party hereto shall be entitled to injunctive
relief with respect to any such breach, including, without limitation, specific
performance of such covenants, promises or agreements or an order enjoining a
party from any threatened, or from the continuation of any actual, breach of the
covenants, promises or agreements contained in this Agreement.  The
rights set forth in this Section 13.2 shall be in addition to any other
rights which a Party may have at law or in equity pursuant to this
Agreement.

     

    13.3           Submission to Jurisdiction;
Consent to Service of Process.

     

    (a)           Without
limiting any Party’s right to appeal any order of the Bankruptcy Court,
(i) the Bankruptcy Court shall retain exclusive jurisdiction to enforce the
terms of this Agreement and to decide any Claims or disputes which may arise or
result from, or be connected with, this Agreement, any breach or default
hereunder, or the transactions contemplated hereby, and (ii) any and all
proceedings related to the foregoing shall be filed and maintained only in the
Bankruptcy Court, and the Parties hereby consent to and submit to the
jurisdiction and venue of the Bankruptcy Court and shall receive notices at such
locations as indicated in Section 13.8 hereof; provided, however, that if the
Chapter 11 Cases have closed, the Parties agree to unconditionally and
irrevocably submit to the exclusive jurisdiction of any state or federal court
located in the State of New York and any appellate court from any thereof, for
the resolution of any such claim or dispute.  The Parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute.  Each of the Parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.

     

    (b)           Each
of the Parties hereby consents to process being served by any Party in any suit,
action or proceeding by delivery of a copy thereof in accordance with the
provisions of Section 13.8.

    
      
        
        

      

      
        -37-

        
          

        

      

      
        
        

      

    

    13.4           WAIVER OF RIGHT TO TRIAL BY
JURY.  EACH PARTY TO THIS AGREEMENT WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION, MATTER OR PROCEEDING REGARDING THIS AGREEMENT OR ANY
PROVISION HEREOF.

     

    13.5           Entire Agreement; Amendments
and Waivers.  This Agreement (including the schedules and
exhibits hereto) and the Confidentiality Agreement represent the entire
understanding and agreement between the Parties with respect to the subject
matter hereof.  This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this Agreement signed by the Party against whom
enforcement of any such amendment, supplement, modification or waiver is
sought.  No action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any Party, shall be
deemed to constitute a waiver by the Party taking such action of compliance with
any representation, warranty, covenant or agreement contained
herein.  The waiver by any Party of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach.  No
failure on the part of any Party to exercise, and no delay in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of such right, power or remedy by such Party
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy.

     

    13.6           Parties in
Interest.  Nothing in this Agreement is intended to confer any
rights or remedies under or by reason of this Agreement on any Persons other
than Sellers and Purchaser and their respective successors and permitted
assigns.  Nothing in this Agreement is intended to relieve or
discharge the obligations or liability of any third Persons to Sellers or
Purchaser.  No provision of this Agreement shall give any third
Persons any right of subrogation or action over or against Sellers or
Purchaser.

     

    13.7           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the Bankruptcy Code and to the extent not consistent with the
Bankruptcy Code, the laws of the State of New York applicable to contracts made
and performed in such State.

     

    13.8           Notices.  All
notices and other communications under this Agreement shall be in writing and
shall be deemed given (i) when delivered personally by hand (with written
confirmation of receipt), (ii) when sent by facsimile (with written
confirmation of transmission) or (iii) one Business Day following the day
sent by overnight courier (with written confirmation of receipt), in each case
at the following addresses and facsimile numbers (or to such other address or
facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):

     

     

    If to
Sellers, to:

     

    New
Century Energy Corp.

    1770 St.
James Place, Suite 380

    Houston,
Texas  77056

    Attn:
Edward R. DeStefeno

    Telephone:  713-266-4344

    Facsimile:  713-266-4358

    
      
        
        

      

      
        -38-

        
          

        

      

      
        
        

      

    

    With a
copy (which shall not constitute notice) to:

     

    Andrews
Kurth LLP

    600
Travis, Suite 4200

    Houston,
Texas  77002

    Attn: David
A. Zdunkewicz

    Telephone: 713-220-4200

    Facsimile: 713-220-4285

     

    If to
Purchaser, to:

     

    NCEY
Holdings, LLC

    874
Walker Road, Suite C

    Dover, DE
19904

    Telephone: 800.899.8648

    Facsimile: 914.949.9618

     

     

    With a
copy (which shall not constitute notice) to:

     

    Laurus
Capital Management, LLC

    335
Madison Avenue, 10th
Floor

    New York,
New York 10017

    Attn:
General Counsel

    Telephone: 212.541.5800

    Facsimile:212.661.6564

     

    13.9           Severability.  If
any term or other provision of this Agreement is invalid, illegal or incapable
of being enforced by any law or public policy, all other terms or provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any Party.  Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

     

    13.10         Binding Effect;
Assignment.  This Agreement shall be binding upon and inure to
the benefit of the Parties and their respective successors and permitted
assigns.  Nothing in this Agreement shall create or be deemed to
create any third party beneficiary rights in any Person or entity not a Party to
this Agreement except as provided below.  No assignment of this
Agreement or of any rights or obligations hereunder may be made by Sellers or
Purchaser (by operation of law or otherwise) without the prior written consent
of the other Parties hereto and any attempted assignment without the Required
Consents shall be void; provided, that Purchaser may assign this Agreement to an
Affiliate without Sellers’ consent.  No assignment of any obligations
hereunder shall relieve the Parties hereto of any such
obligations.  Upon any such permitted assignment, the references in
this Agreement to Purchaser shall also apply to any such assignee unless the
context otherwise requires.

    
      
        
        

      

      
        -39-

        
          

        

      

      
        
        

      

    

    13.11         Non-Recourse.  No
past, present or future director, officer, employee, incorporator, member,
partner or equityholder (other than Seller) of any Seller shall have any
liability for any obligations or liabilities of Sellers under this Agreement or
the Seller Documents of or for any Claim, counterclaim, cause of action or
demand based on, in respect of, or by reason of, the transactions contemplated
hereby and thereby except for any claim against an individual based on the fraud
of such individual in connection with the representations set forth in Article V
hereof.

     

    13.12          Warranties
Exclusive.  The representations and warranties contained herein
are the only representations or warranties given by Sellers or being relied upon
by Purchaser, and all other express or implied warranties are
disclaimed.  Without limiting the foregoing, Purchaser acknowledges
that the Purchased Assets are conveyed “AS IS, WHERE IS” AND SELLER MAKES NO,
AND DISCLAIMS ANY, REPRESENTATION OR WARRANTY, WHETHER EXPRESSED OR IMPLIED, AND
WHETHER BY LAW, STATUTE OR OTHERWISE, AS TO FITNESS FOR ANY PARTICULAR PURPOSE,
MERCHANTABILITY, CONFORMITY OF MODELS OR SAMPLES OF MATERIALS, AND PHYSICAL
CONDITION.

     

    13.13          Counterparts.  This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

     

    13.14         Mutual
Drafting.  This Agreement is the result of the joint efforts of
Purchaser and Sellers, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of the parties and there is to be no
construction against either party based on any presumption of that party’s
involvement in the drafting thereof.

     

     

    * * * *
*

    
      
        
        

      

      
        -40-

        
          

        

      

      
        
        

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 
      	
                                        PURCHASERS

                                      
	 	 
	 
      	
                                        NCEY
      HOLDINGS, LLC

                                      
	 	 
	 
      	
                                        By: /s/
      Edward R. DeStefano

                                      
	 
      	
                                        Name:
      Edward R. DeStefano

                                      
	 
      	
                                        Title:
      Manager

                                      
	 	 
	 
      	
                                        BRAZOS
      LATERAL HOLDINGS CORP.

                                      
	 	 
	 
      	
                                        By: /s/
      Edward R. DeStefano

                                      
	 
      	
                                        

                                          Name:
      Edward R. DeStefano

                                        

                                      
	 
      	
                                        Title:

                                      
	 	 
	 
      	
                                        SELLERS

                                      
	 	 
	 
      	
                                        NEW
      CENTURY ENERGY CORP.

                                      
	 	 
	 
      	
                                        By:
      /s/ Edward R.
      DeStefano

                                      
	 
      	
                                        Name:
      Edward R. DeStefano

                                      
	 
      	
                                        Title:
      President

                                      
	 	 
	 
      	
                                        GULF
      COAST OIL CORPORATION

                                      
	 	 
	 
      	
                                        By:
      /s/ Edward R.
      DeStefano

                                      
	 
      	
                                        
                                          Name:
      Edward R. DeStefano

                                        

                                      
	 
      	
                                        
                                          Title:
      President

                                        

                                      
	 	 
	 
      	
                                        CENTURY
      RESOURCES, INC.

                                      
	 	 
	 
      	
                                        
                                          By:
      /s/ Edward R.
      DeStefano

                                        

                                      
	 
      	
                                        
                                          Name:
      Edward R. DeStefano

                                        

                                      
	 
      	
                                        
                                          Title:
      President

                                        

                                      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        
        

      

      
        -41-

        
          

        

      

      
        
        

      

    

    
      
        
          	
                  Exhibits

                
	
                  A

                	
                  Bill
      of Sale

                
	
                  B

                	
                  Assignment
      and Assumption Agreement

                
	
                  C

                	
                  Assignment
      and Assumption of Lease

                
	
                  D

                	
                  Confirmation
      Order

                
	
                  E

                	
                  Release

                

        

      

    

     

     

     

    
      
        
        

      

      
        -42-

        
          

        

      

      
        
        

      

    

    
      
        
          
            
              
                
                  	
                          Schedules

                        	 
      
	 
      	 
      
	
                          1.1(b)

                        	
                          Domain
      Names

                        
	
                          1.1(c)

                        	
                          Copyrights

                        
	
                          1.1(d)

                        	
                          Knowledge
      of Seller

                        
	
                          1.1(e)

                        	
                          Patents

                        
	
                          1.1(h)

                        	
                          Permitted
      Exception

                        
	
                          1.1(f)

                        	
                          Trademarks

                        
	
                          2.1(b)

                        	
                          Oil
      and Gas Leases

                        
	
                          2.1(e)

                        	
                          Assumed
      Executory Contracts

                        
	
                          2.1(i)

                        	
                          Deposits
      and Prepaid Expenses

                        
	
                          2.2(h)

                        	
                          Other
      Assets

                        
	
                          5.5

                        	
                          Broker
      Fees

                        
	
                          5.6(a)

                        	
                          Compliance
      with Laws

                        
	
                          8.2(a)

                        	
                          Conduct
      of the Business

                        
	
                          8.2(b)

                        	
                          Conduct
      of the Business

                        
	
                          8.10

                        	
                          Subcontract
      Services

                        

                

              

            

          

        

      

    

    
      
        
        

      

      
        -43-

        
          

        

      

      
        
        

      

    

    Schedule
1.1(b)

    

    Domain
Names

    

    

    1.           newcenturyenergy.com

    

    

    
      
        
        

      

      
        -44-

        
          

        

      

      
        
        

      

    

    

    Schedule
1.1(c)

    

    Copyrights

    

    None

     

     

     

    
      
        
        

      

      
        -45-

        
          

        

      

      
        
        

      

    

    Schedule
1.1(d)

    

    Knowledge of
Seller

    

    1.           Edward
R. DeStefano

     

     

     

    
      
        
        

      

      
        -46-

        
          

        

      

      
        
        

      

    

    Schedule
1.1(e)

    

    Patents

    

    None

     

     

     

    
      
        
        

      

      
        -47-

        
          

        

      

      
        
        

      

    

    Schedule
1.1(h)

    

    Permitted
Exceptions

    

    1.          Tax
liens on the Purchased Property that secure the payment of ad valorem
taxes.

    2.           Possible
Unpaid Severance Taxes on the Hamill & Hamill #2 well  API#:
42-321-00813

     

     

     

     

    
      
        
        

      

      
        -48-

        
          

        

      

      
        
        

      

    

    Schedule
1.1(f)

    

    Trademarks

    

    None

     

     

     

     

    
      
        
        

      

      
        -49-

        
          

        

      

      
        
        

      

    

     

     

     

    Schedule
2.1(b)

    

    Oil and Gas
Leases

    

    

    

    See
attached

     

     

     

    
      
        
        

      

      
        -50-

        
          

        

      

      
        
        

      

    

    

    Schedule
2.1(e)

    

    Assumed Executory
Contracts

     

    See
attached.

     

     

     

     

     

    
      
        
        

      

      
        -51-

        
          

        

      

      
        
        

      

    

    Schedule
2.1(i)

    

    Deposits and Prepaid
Expenses

    

    
      	
              1.

            	
              Karnes
      Electric COOP

            	
              $11,466.00

            
	
              2.

            	
              CPL
      Electric Services

            	
              $6,880.00

            
	
              3.

            	
              1770
      St. James Corp.

            	
              $5,545.00

            

    

     

     

     

     

    
      
        
        

      

      
        -52-

        
          

        

      

      
        
        

      

    

    Schedule
2.2(h)

    

    Other
Assets

    

    

    1.           100%
of the common stock of Gulf Coast Oil Corporation owned by New CenturyEnergy
Corp.

    

    2.           100%
of the common stock of Century Resources, Inc. owned by New Century
EnergyCorp.

    

    

     

     

    
 

    
      
        
        

      

      
        -53-

        
          

        

      

      
        
        

      

    

     

     

    Schedule
5.5

    

    Broker
Fees

    

    None

     

     

     

     

    
      
        
        

      

      
        -54-

        
          

        

      

      
        
        

      

    

    

    Schedule
5.6(a)

    

    Compliance with
Laws

    

    1.           Required
Texas Railroad Commission consents and/or approvals.

    

    

    

    

    
      
        
        

      

      
        -55-

        
          

        

      

      
        
        

      

    

    Schedule
8.2(a)

    

    Conduct of the
Business

    

    Not
applicable.

     

     

     

     

    
      
        
        

      

      
        -56-

        
          

        

      

      
        
        

      

    

    Schedule
8.2(b)

    

    Conduct of the
Business

    

    Not
applicable.

     

     

     

     

    
      
        
        

      

      
        -57-

        
          

        

      

      
        
        

      

    

    Schedule
8.10

    

    Subcontract
Services

    

    See
attached.

     

     

     

     

    
      
        
        

      

      
        -58-Converted by EDGARwiz

Exhibit 10.1

LETTER OF INTENT CURT SAFETY CONSULTANTS

 

LETTER OF INTENT

Between

Curt Safety Consulting Inc

&

On Demand Heavy Duty CORP. (On Demand)

This letter of intent will outline the essential terms and conditions between Curt Safety Consulting Inc and On Demand Heavy Duty for developing strategic joint ventures of mutual opportunity capitalizing on the strengths of both organizations through a agreed referral contract.  This letter of intent is non binding and requires the approval of the respective boards of both Curt Safety Consulting Inc. and On Demand Heavy Duty. 

The terms of specific joint venture activities will be more particularly set forth in one or more definitive agreements (collectively “Definitive Agreements”) to be mutually agreed upon by the parties. This Letter outlines the proposed joint venture activities based on each party’s current understanding of opportunities. 

The following numbered paragraphs constitute a general outline of the proposed joint venture working relationship and important conditions. The provisions shall be included in the Definitive Agreements, but in all instances shall be subject to and contingent upon the parties reaching agreement on the Definitive Agreements and the terms and conditions set forth in the Definitive Agreements. The parties’ expressly state their intention that this Letter as a whole, and shall not constitute a legal and binding obligation, contract or agreement between any of the parties, are not intended to be an extensive summary of all of the terms and conditions of the proposed acquisition or the Definitive Agreements, and are subject to the approval of each company’s board of directors. 

Curt Safety Consulting Inc. is a private owned enterprise that inspects and rates the safety equipment used by oil and gas companies across Canada. There seeking a business partner that has the capabilities and operational means to fix equipment that needs repairing that Curt Safety Consulting Inc comes across.

On Demand Heavy Duty is a development company with intentions to operate as national fully functional mobile mechanical machinery repaired company.

Both parties will endeavor to utilize existing contacts and opportunities to joint venture for the mutual benefit of each other.

 

Both parties to this Letter of Intent will abide by the following terms and conditions:

1.DUE DLIGENCE SATISFACTION. The satisfactory completion of due diligence investigation by both parties.

2.WORK CONTRACT: Curt Safety Consulting Inc agrees to provide On Demand with at least 10 Referral work 

Contracts per years quarter.

3.PAYMENTS: On Demand Shall compensate a 6% Referral fee for each contact provided by Curt Safety Consulting Inc. 

4.CONSENTS & APPROVALS. The approval and consent of the Definitive Agreements by the respective Boards of each company and the receipt of the consents and approvals from all governmental entities and regulatory authorities. 

 

1

5.CONFIDENTIALITY. By their signature below, each party agrees to keep in strict confidence all information regarding the terms of the joint venture, all material exchanged between companies and all business contacts supplied by each company.

6. TERMINATION. Both parties hereby reaffirms its intention that this Letter as a whole, is not intended to constitute, and shall not constitute, a legal and binding obligation, contract or agreement between any of the parties, and are not intended to be relied upon by any party as constituting such. Accordingly, the parties agree that any party to this Letter may unilaterally withdraw from negotiation or dealing with 30 days written notice for any or no reason at the withdrawing party’s sole discretion. If either party fails to negotiate in good faith then this agreement will be terminated immediately.

                                     

Per:  /s/   Curtis Karau                                                                                             December 9, 2008

----------------------------

Curtis Karau , President Curt Safety Consultants

                                      

Per:  /s/   Cody Love                                                                                                   December 9, 2008

----------------------------

Cody Love , President On Demand Heavy Duty

2

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