Document:

Exhibit
      10.1

     

    AMENDMENT

     

    Made
      as
      of the 30th
      day of
      March, 2007.

     

    
      	Re:	
              Agreement
                dated the 21st
                day of August, 2006,

            

    

     

    BETWEEN:

     

    SAGE
      ASSOCIATES INC.

     

    AND:

     

    SILVER
      RESERVE CORP.

     

    
      	
            	1.	
              Article
                2.2.2 of the Agreement shall be amended by deleting 2.2.2 (b) and
                (d).
                2.2.2
                (c) shall become 2.2.2 (b)

            

    

    

    
      	
            	2.	
              Article
                2.2.2 (c) shall be added as
                follows:

            

    

    

    
      	 	
              (c)

            	
              “Complete
                work programs on the Property including improvement to existing roads,
                new
                roads as required, prospecting, drilling and all support cost to
                the
                drilling program of not less than
                $500,000.”

            

    

    

    
      	
            	3.	
              All
                other terms shall remain the same, and time shall remain of the
                essence.

            

    

    

    
      	
            	4.	
              This
                Agreement may be executed in multiple counterparts, each of which
                shall be
                deemed an original, and all of which together shall constitute one
                and the
                same instrument. Execution and delivery of this Amendment by exchange
                of
                facsimile copies bearing facsimile signature of a party shall constitute
                a
                valid and binding execution and delivery of this Agreement by such
                party.
                Such facsimile copies shall constitute enforceable original
                documents.

            

    

    

    Whereas
      the parties hereto have executed this Amendment as of the date first written
      above.

    

    SAGE
      ASSOCIATES INC.

    
      	 	 	 	 
	Per: /s/David
              B. Hackman	 	 	
            
	
              
                

              

              David
                B. Hackman

            	 	 	
            

    

     

    
      	
              SILVER
                RESERVE CORP.

            	 	 	 
	 	 	 	 
	
              Per:
                /s/
                Stafford Kelley

            	 	 	
            
	
              
                

              

              Stafford
                KelleyEXECUTION
      COPY

     

     

     

    SHARE
      PURCHASE AGREEMENT

     

     

    BETWEEN

     

     

    UP
      ENERGY
      CORPORATION,

     

     

    AS
      SELLER,

     

     

    AND

     

     

    SPC
      E&P (CHINA) PTE. LTD.,

     

     

    AS
      PURCHASER,

     

     

     

    Dated
      as
      of September 26, 2007

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                Table
                  of Contents

              
	 
	
                ARTICLE
                  1. PURCHASE AND SALE

              	
                1

              
	 	 
	
                Section
                  1.1

              	
                Purchase
                  and Sale

              	
                1

              
	
                Section
                  1.2

              	
                Certain
                  Definitions

              	
                1

              
	 	 	 
	
                ARTICLE
                  2. PURCHASE PRICE

              	
                6

              
	
                 

              	 
	
                Section
                  2.1

              	
                Purchase
                  Price

              	
                6

              
	
                Section
                  2.2

              	
                Adjustments
                  to Purchase Price

              	
                6

              
	 	 	 
	
                ARTICLE
                  3. REPRESENTATIONS AND WARRANTIES OF SELLER

              	
                7

              
	 	 
	
                Section
                  3.1

              	
                Disclaimers

              	
                7

              
	
                Section
                  3.2

              	
                Seller

              	
                8

              
	
                Section
                  3.3

              	
                The
                  Company

              	
                10

              
	
                Section
                  3.4

              	
                No
                  Required Consents

              	
                11

              
	
                Section
                  3.5

              	
                Production
                  Sharing Contracts

              	
                12

              
	
                Section
                  3.6

              	
                Material
                  Contracts

              	
                12

              
	
                Section
                  3.7

              	
                Capital
                  Commitments

              	
                13

              
	
                Section
                  3.8

              	
                Production
                  Imbalances

              	
                13

              
	
                Section
                  3.9

              	
                Advance
                  Sales and Prepayments

              	
                13

              
	
                Section
                  3.10

              	
                Calls
                  and Options

              	
                13

              
	
                Section
                  3.11

              	
                Environmental

              	
                13

              
	
                Section
                  3.12

              	
                Financial
                  Commitments Since Effective Time

              	
                14

              
	
                Section
                  3.13

              	
                Preferential
                  Rights

              	
                14

              
	
                Section
                  3.14

              	
                Litigation

              	
                14

              
	
                Section
                  3.15

              	
                Compliance
                  with Laws

              	
                14

              
	
                Section
                  3.16

              	
                Taxes

              	
                15

              
	
                Section
                  3.17

              	
                Agreements
                  with Tax Authorities

              	
                15

              
	
                Section
                  3.18

              	
                Liability
                  for Brokers' Fees

              	
                15

              
	
                Section
                  3.19

              	
                Insurance

              	
                15

              
	
                Section
                  3.20

              	
                Warranties
                  as to No Payments, Gifts of Loans

              	
                16

              
	
                Section
                  3.21

              	
                Absence
                  of Undisclosed Liabilities

              	
                16

              
	
                Section
                  3.22

              	
                Copies
                  of Documents

              	
                16

              
	 	 	 
	
                ARTICLE
                  4. REPRESENTATIONS AND WARRANTIES OF PURCHASER

              	
                17

              
	 	 
	
                Section
                  4.1

              	
                Existence
                  and Qualification

              	
                17

              
	
                Section
                  4.2

              	
                Power

              	
                17

              
	
                Section
                  4.3

              	
                Authorization
                  and Enforceability

              	
                17

              
	
                Section
                  4.4

              	
                No
                  Conflicts

              	
                17

              
	
                Section
                  4.5

              	
                Consents,
                  Approvals or Waivers

              	
                17

              
	
                Section
                  4.6

              	
                Litigation

              	
                17

              
	
                Section
                  4.7

              	
                Financing

              	
                18

              
	
                Section
                  4.8

              	
                Securities
                  Act

              	
                18

              
	
                Section
                  4.9

              	
                Warranties
                  as to No Payments, Gifts or Loans

              	
                18

              
	
                Section
                  4.10

              	
                Review
                  of Disclosed Data

              	
                18

              
	
                Section
                  4.11

              	
                Liability
                  for Brokers’ Fees

              	
                18

              

      

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      
        	
                ARTICLE
                  5. COVENANTS OF THE PARTIES

              	
                19

              
	 	 
	
                   Section
                  5.1

              	
                Access

              	
                19

              
	
                   Section
                  5.2

              	
                Notification
                  of Breaches

              	
                19

              
	
                   Section
                  5.3

              	
                Public
                  Announcements

              	
                19

              
	
                   Section
                  5.4

              	
                Operation
                  of Business

              	
                20

              
	
                   Section
                  5.5

              	
                Conduct
                  of the Company

              	
                20

              
	
                   Section
                  5.6

              	
                Indemnity
                  Regarding Access

              	
                21

              
	
                   Section
                  5.7

              	
                Consents
                  and Preferential Rights

              	
                21

              
	
                   Section
                  5.8

              	
                Governmental
                  Reviews

              	
                21

              
	
                   Section
                  5.9

              	
                [Omitted]

              	
                24

              
	
                   Section
                  5.10

              	
                Replacement
                  of Bonds, Letters of Credit and Guarantees

              	
                22

              
	
                   Section
                  5.11

              	
                Further
                  Assurances

              	
                22

              
	
                   Section
                  5.12

              	
                Permits

              	
                22

              
	 	 	 
	
                ARTICLE
                  6. CONDITIONS TO CLOSING

              	
                23

              
	 	
              
	
                   Section
                  6.1

              	
                Conditions
                  of Seller to Closing

              	
                23

              
	
                   Section
                  6.2

              	
                Conditions
                  of Purchaser to Closing

              	
                23

              
	 	 	 
	
                ARTICLE
                  7. CLOSING

              	
                24

              
	 	
              
	
                   Section
                  7.1

              	
                Time
                  and Place of Closing

              	
                24

              
	
                   Section
                  7.2

              	
                Obligations
                  of Seller at Closing

              	
                24

              
	
                   Section
                  7.3

              	
                Obligations
                  of Purchaser at Closing

              	
                26

              
	
                   Section
                  7.4

              	
                Closing
                  Payment and Post-Closing Purchase Price Adjustments

              	
                26

              
	
                   Section
                  7.5

              	
                Casualty
                  or Condemnation Loss

              	
                27

              
	
                   Section
                  7.6

              	
                Update
                  of Disclosure Schedule.

              	
                27

              
	
                 

              	 	 
	
                ARTICLE
                  8. TAX MATTERS

              	
                27

              
	
                 

              	 
	
                   Section
                  8.1

              	
                Liability
                  for Taxes

              	
                27

              
	
                   Section
                  8.2

              	
                Preparation
                  and Filing of Tax Returns

              	
                28

              
	
                   Section
                  8.3

              	
                Allocation
                  Arrangements

              	
                28

              
	
                   Section
                  8.4

              	
                Access
                  to Information

              	
                29

              
	
                   Section
                  8.5

              	
                Tax
                  Proceedings

              	
                29

              
	
                   Section
                  8.6

              	
                Indemnification
                  Procedures

              	
                29

              
	
                   Section
                  8.7

              	
                Refunds

              	
                30

              
	
                   Section
                  8.8

              	
                Sales
                  or Use Tax, Recording Fees and Similar Taxes and Fees

              	
                30

              
	
                   Section
                  8.9

              	
                   Section
                  338(h)(10) Election.

              	
                30

              
	 	 	 
	
                ARTICLE
                  9. TERMINATION AND AMENDMENT

              	
                31

              
	 	 
	
                   Section
                  9.1

              	
                Termination

              	
                31

              
	
                   Section
                  9.2

              	
                Effect
                  of Termination

              	
                32

              
	 	 	 
	
                ARTICLE
                  10. INDEMNIFICATION; LIMITATIONS

              	
                32

              
	 	
              
	
                   Section
                  10.1

              	
                Indemnification

              	
                32

              
	
                   Section
                  10.2

              	
                Indemnification
                  Actions

              	
                34

              
	
                   Section
                  10.3

              	
                Limitation
                  on Actions

              	
                35

              
	
                   Section
                  10.4

              	
                Exclusive
                  Remedy.

              	
                35

              

      

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    
      
        	
                ARTICLE
                  11. MISCELLANEOUS

              	
                36

              
	 	 
	
                   Section
                  11.1

              	
                Limitation
                  on Damages

              	
                36

              
	
                   Section
                  11.2

              	
                Counterparts

              	
                36

              
	
                   Section
                  11.3

              	
                Notices

              	
                36

              
	
                   Section
                  11.4

              	
                Expenses

              	
                37

              
	
                   Section
                  11.5

              	
                Records

              	
                37

              
	
                   Section
                  11.6

              	
                Governing
                  Law

              	
                37

              
	
                   Section
                  11.7

              	
                Arbitration

              	
                38

              
	
                   Section
                  11.8

              	
                Captions

              	
                38

              
	
                   Section
                  11.9

              	
                Waivers

              	
                38

              
	
                   Section
                  11.10

              	
                Assignment

              	
                38

              
	
                   Section
                  11.11

              	
                Entire
                  Agreement

              	
                38

              
	
                   Section
                  11.12

              	
                Amendment

              	
                39

              
	
                   Section
                  11.13

              	
                No
                  Third-Person Beneficiaries

              	
                39

              
	
                   Section
                  11.14

              	
                References

              	
                39

              
	
                   Section
                  11.15

              	
                Construction

              	
                39

              
	
                   Section
                  11.16

              	
                Severability

              	
                40

              
	 	 	 
	 	 	 
	EXHIBITS:	 	 
	 	 	 
	
                Exhibit
“A” -     The
                  Seller

              	 
	
                Exhibit
“B” 
-     Balance
                  Sheet

              	 
	 	 	 
	SCHEDULE:	 	 
	 	 	 
	
                Disclosure
                  Schedule

              	 
	
              	 

      

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    SHARE
      PURCHASE AGREEMENT

     

    This
      Share Purchase Agreement (this “Agreement”),
      dated
      September 26, 2007 (the “Execution
      Date”),
      is
      between UP Energy Corporation, a Nevada corporation (“Seller”),
      and
      SPC E&P (China) Pte. Ltd., a company organized under the Laws of Singapore
      (Registration No. 200713926M) (“Purchaser”).
      Seller and Purchaser are sometimes referred to herein collectively as the
“Parties”,
      and
      individually as a “Party”.

     

    RECITALS:

     

    Seller
      desires to sell and Purchaser desires to purchase all of the ownership interest
      in and to Sino-American Energy Corporation, a company incorporated in Texas,
      U.S.A. (the “Company”).

     

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

     

    ARTICLE
      1. PURCHASE
      AND SALE

     

    Section
      1.1 Purchase
      and Sale.
      On the terms and conditions contained in this Agreement, Seller agrees to sell,
      convey, transfer and deliver to Purchaser and Purchaser agrees to purchase,
      accept and pay for the Shares (as defined below), free and clear of all
      Encumbrances; 

     

    Section
      1.2 Certain
      Definitions.
      As used herein:

     

    (a)  “Accounting
      Principles”
shall
      bear the meaning ascribed to it in Section 3.3(f).

     

    (b)  “Adjusted
      Purchase Price”
shall
      bear the meaning ascribed to it in Section 2.2.

     

    (c)     
      “Affiliate”
means,
      with respect to any Person, a Person that directly or indirectly controls,
      is
      controlled by or is under common control with such Person, with “control” in
      such context meaning the ability to direct the management or policies of a
      Person through ownership of voting shares or other securities, pursuant to
      a
      written agreement, or otherwise. 

     

    (d)  “Agreed
      Interest Rate”
shall
      bear the meaning ascribed to it in Section 2.2(d).

     

    (e)  “Agreement”
shall
      bear the meaning ascribed to it in the Preamble. 

     

    (f)  “Asset
      Allocation”
shall
      bear the meaning ascribed to it in Section 8.9.

     

    (g)  “Assets”
means
      all of the Company’s right, title, and interest in and to the
      following:

     

    (i) The
      Contract for Petroleum Exploration, Development and Production on Block 04/36
      in
      Bohai Bay Area of the People’s Republic of China between China National Offshore
      Oil Corporation (“CNOOC”)
      and
      the Company, dated August 17, 1994 (the “Block
      04/36 Production Sharing Contract”)
      and
      the Contract for Petroleum Exploration, Development and Production on Block
      05/36 in Bohai Bay Area of the People’s Republic of China between CNOOC and the
      Company, dated January 23, 1996 (the “Block
      05/36 Production Sharing Contract”)
      (collectively referred to as the “Production
      Sharing Contracts”);

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (ii) All
      units
      that include all or a part of the area subject to the Production Sharing
      Contracts (the “Contract
      Area”);

     

    (iii) All
      presently existing contracts, agreements and instruments to which the Company’s
      interest in the Production Sharing Contracts are subject, including operating,
      unitization, pooling and communitization agreements, including that certain
      Agreement for the Unitized Development by and between the Company and CNOOC
      for
      the CFD 11-6/CFD 12-1/CFD 12-1S , Bohai Bay Area, People's Republic of China,
      dated May 27, 2005 (the "Unitization
      Agreement"),
      that
      certain Operating Agreement covering Gulf of Bohai, Block 04/36, People’s
      Republic of China, dated February 6, 1995 (the “04/36 JOA”), that certain
      Operating Agreement covering Gulf of Bohai, Block 05/36, People’s Republic of
      China, dated June 24, 1997 (the “05/36 JOA”) (the 04/36 JOA and the 05/36 JOA
      each referred to as a “JOA” and collectively referred to as the “JOAs”), joint
      venture agreements, farmin and farmout agreements, exchange agreements,
      transportation agreements, processing agreements, agreements for the sale and
      purchase of Hydrocarbons, all of which are hereinafter collectively referred
      to
      as “Contracts”; 

     

    (iv) All
      easements, permits, licenses, servitudes, rights-of-way, surface leases and
      other rights appurtenant to, and used or primarily held for use in connection
      with, the Production Sharing Contracts;

     

    (v) Equipment,
      machinery, fixtures and other tangible personal property and improvements
      located on the Contract Area or used or primarily held for use in connection
      with the operation of the Production Sharing Contracts (the “Equipment”);
      and

     

    (vi) 
      All
      books, records, data, files, maps, accounting records, agreements, documents
      and
      correspondence of the Company or related to the Assets, or used or held for
      use
      in connection with the maintenance or operation thereof, but excluding: (A)
      any
      books, records, data, files, maps and accounting records licensed from a third
      Person for which the license will terminate or a transfer fee or similar payment
      will be incurred upon a sale of the Company; (B) any computer software that
      is
      proprietary to Seller or any Affiliate of Seller; (C) work product of, or
      attorney-client communications with, legal counsel for the Company or any
      Affiliate of the Company, other than the Contracts; and (D) records relating
      to
      the sale of the Shares, including bids received from and records of negotiations
      with third Persons and engagement letters and other correspondence between
      any
      of the Company, the Seller and its Affiliates, and any consultants or advisors
      assisting with the sale of the Shares, provided that nothing in (A), (B), (C)
      or
      (D) above shall include any books, records, data, files, maps and accounting
      records which the Company is required to maintain by applicable Laws
      (collectively the “Records”);
      provided
      that the Assets shall not include the Excluded Assets. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (h)  “Balance
      Sheet”
means
      the balance sheet of the Company as of June 30th,
      2007,
      attached hereto as Exhibit “B”. 

     

    (i)  “Business
      Day”
means
      any day other than a Saturday, a Sunday, or a day on which banks are closed
      for
      business in New York, New York, in Singapore or in the People’s Republic of
      China.

     

    (j)  “Claim”
shall
      bear the meaning ascribed to it in Section 10.2(a).

     

    (k)  “Claim
      Notice”
shall
      bear the meaning ascribed to it in Section 10.2(a).

     

    (l)  “Closing”
shall
      bear the meaning ascribed to it in Section 7.1.

     

    (m)  “Closing
      Date”
shall
      bear the meaning ascribed to it in Section 7.1.

     

    (n)  “Closing
      Payment”
shall
      bear the meaning ascribed to it in Section 7.4(a). 

     

    (o)  “Code”
means
      the United States Internal Revenue Code of 1986, as amended. All references
      to
      the Code, U.S. Treasury Regulations, or other governmental pronouncements shall
      be deemed to include references to any applicable successor regulations or
      amending pronouncement.

     

    (p)  “Company”
shall
      bear the meaning ascribed to it in the Recitals.

     

    (q)  “Confidentiality
      Agreement”
shall
      bear the meaning ascribed to it in Section 5.1.

     

    (r)
        “Contracts”
shall
      bear the meaning ascribed to it in Section 1.2(g)(iii).

     

    (s)  “Damages”
shall
      bear the meaning ascribed to it in Section 10.1(c).

     

    (t)  “Effective
      Time”
shall
      bear the meaning ascribed to it in Section 2.2(a).

     

    (u)  “Encumbrances”
shall
      bear the meaning ascribed to it in Section 3.2(e).

     

    (v)  “Environment”
means:
      (i) air, land, groundwater, soil and subsurface soil; (ii) all layers of the
      atmosphere; and (iii) natural resources; and “Environmental”
has
      a
      corresponding meaning.

     

    (w)  “Environmental
      Laws”
means
      all Laws relating to the protection of the Environment or related employee,
      public health and safety, and without restricting the generality of the
      foregoing, includes those Laws relating to the treatment and disposal of
      Hydrocarbons, the emission, discharge, release or threatened release of
      hazardous substances into the air, water or land and the clean-up and
      remediation of contaminated sites.

     

    (x)      
      “Excluded
      Assets”
means
      (i) any Export Levy Refund, (ii) any Special Profit Charge Refund and (iii)
      amounts payable pursuant to that certain Retainer Agreement by and between
      the
      Company and Kerr-McGee.

     

    (y)      
      “Execution
      Date”
shall
      bear the meaning ascribed to it in the Preamble. 

     

    (z)        “Export
      Levy Refund”
means
      any refund received by the Company from any applicable Governmental Authority
      in
      respect of tariffs or levies paid on the export of crude oil from the People’s
      Republic of China pursuant to the provisions of the Notice
      Concerning Adjusting Interim Tariff Rates of Several
      Commodities
      promulgated by the State Council on October 27, 2006, and effective from and
      after November 1, 2006.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (aa)     “Former
      Seller Group”
shall
      bear the meaning ascribed to it in Section 3.16.

     

    (bb)  
      “Governmental
      Authority”
means
      any government and/or any political, judicial, administrative, legislative
      subdivision thereof, including (i) any national, state, local, municipal or
      other governmental body, authority or agency, and (ii) any governmental,
      regulatory or administrative, judicial departments, courts, commissions, boards,
      bureaus, ministries, agencies or other instrumentalities exercising any
      administrative, executive, judicial, legislative, police, arbitral or taxing
      authority or power.

     

    (cc)  
       “Governmental
      Authorization”
means
      any permit, license, waiver, variance or other authorization issued by any
      country or jurisdiction (including the People’s Republic of China), or any
      Governmental Authority thereof.

     

    (dd)  
       “Hydrocarbons”
mean
      oil, gas and/or other liquid or gaseous hydrocarbons or any combination
      thereof.

     

    (ee)   
       “Indemnified
      Person”
means,
      when used in connection with particular Damages, a Person having the right
      to be
      indemnified with respect to such Damages pursuant to Article 10.

     

    (ff)      
      “Indemnifying
      Person”
shall
      bear the meaning ascribed to it in Section 10.2(a).

     

    (gg)    
      “Independent
      Auditors”
shall
      bear the meaning ascribed to it in Section 7.4(b).

     

    (hh)    
      “Intellectual
      Property Rights”
means
      any of the following which are licenses by the Company to third parties or
      which
      are licensed by third parties to the Company: patents, registered designs,
      trade
      marks and service marks (whether registered or not), copyright, design right,
      and all similar property rights, provided that “Intellectual Property Rights”
shall not include geological or geophysical data or interpretations thereof
      which are licensed to the Company under the Contracts.

     

    (ii)  “Intragroup
      Advances”
shall
      bear the meaning ascribed to it in Section 2.2(b).

     

    (jj)  “Intragroup
      Receipts”
shall
      bear the meaning ascribed to it in Section 2.2(c).

     

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

     

    (ll)  “LCIA”
shall
      bear the meaning ascribed to it in Section 11.7.

     

    (mm) 
       “LCIA
      Rules”
shall
      bear the meaning ascribed to it in Section 11.7.

     

    (nn)   
      “Liabilities”
      includes any liability or obligation (whether direct or indirect, absolute
      or
      contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
      become due, reflected on a balance sheet or otherwise) determined in accordance
      with the Accounting Principles and including costs and expenses related
      thereto.

     

    (oo)    
      “Material
      Adverse Effect”
shall
      bear the meaning ascribed to it in Section 3.1(d).

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (pp)    
      “Material
      Contract”
means
      those Contracts identified in Section 1.2(pp) of the Disclosure
      Schedule.

     

    (qq)    
      “Party”
and
      “Parties”
shall
      bear the meaning ascribed to it in the Preamble.

     

    (rr)  “Permits”
means,
      in relation to the Company, all franchises, grants, authorizations, licenses,
      permits, easements, variances, exemptions, consents, certificates,
      identification, registration numbers, approvals, orders, business licenses,
      tax
      registrations, and customs registrations necessary to own, lease and operate
      its
      properties and to carry on its business as it is now being conducted, including
      all Governmental Authorizations issued by Governmental Authorities of the
      People’s Republic of China necessary to own and operate the Assets.

     

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

     

    (tt)      
      “Post-Effective
      Time Period”
shall
      bear the meaning ascribed to it in Section 8.1(c).

     

    (uu)    
      “Pre-Effective
      Time Period”
shall
      bear the meaning ascribed to it in Section 8.1(b).

     

    (vv)    
      “Section
      338(h)(10) Elections”
shall
      bear the meaning ascribed to it in Section 8.9.

     

    (ww)   “Section
      338 Forms”
shall
      bear the meaning ascribed to it in Section 8.9.

     

    (xx)  “Purchase
      Price”
shall
      bear the meaning ascribed to it in Section 2.1.

     

    (yy)    
      “Purchaser”
shall
      bear the meaning ascribed to it in the Preamble.

     

    (zz)     
      “Securities
      Act”
shall
      bear the meaning ascribed to it in Section 4.8.

     

    (aaa)  
      “Seller”
shall
      bear the meaning ascribed to it in the Preamble.

     

    (bbb) 
      “Seller
      Group”
shall
      bear the meaning ascribed to it in Section 3.16.

     

    (ccc)   “Shares”
means
      all the issued and outstanding shares in the capital of the Company. 

     

    (ddd) 
      “Special
      Profit Charge Refund”
means
      any refund received by the Company from any applicable Governmental Authority
      in
      respect of charges or levies paid on the sale of crude oil produced in the
      People’s Republic of China pursuant to the provisions of the State Council’s
Decision
      on the Levy of the Petroleum Special Profit Charge
      promulgated April 1, 2006, the Circular
      on Adjustment of Oil Products Prices
      promulgated by the National Development and Reform Commission on March 26,
      2006,
      and the Administrative
      Measures on the Levy of the Petroleum Special Profit Charge
      promulgated by the Ministry of Finance on April 1, 2006. 

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (fff)     
      “Tax
      Items”
shall
      bear the meaning ascribed to it in Section 8.2(a).

     

    (ggg) 
      “Tax
      Refund”
means
      any refund or credit (including interest thereon or claims therefore) with
      respect to any Taxes relating to the Assets attributable to any taxable period
      before the Effective Time and includes the Export Levy Refund and the Special
      Profit Charge Refund.

     

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

     

    (iii)  “Ultra”
shall
      bear the meaning ascribed to it in Section 3.2(g). 

     

    (jjj)  “Working
      Capital”
shall
      bear the meaning ascribed to it in Section 2.2(a).

     

     

    ARTICLE
      2. PURCHASE
      PRICE

     

    Section
      2.1 Purchase
      Price.
      The purchase price for the Shares (the “Purchase
      Price”)
      shall
      be Two Hundred and Twelve Million United States Dollars ($212,000,000) adjusted
      as provided in Section 2.2.

     

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

     

    (a) Adding,
      if positive, or subtracting, if negative, the Working Capital of the Company
      as
      of 12:01 a.m. local time in the Contract Area on July 1, 2007 (the “Effective
      Time”);
      as
      used herein, the term “Working
      Capital”
means
      the positive or negative amount obtained by subtracting (i) the sum of all
      accounts payable, accrued current liabilities and other current liabilities
      of
      the Company from (ii) the sum of all cash, accounts receivable, net inventory
      (which for avoidance of doubt shall mean inventory net of the overlifted or
      underlifted position (as applicable) as of the Effective Time) and other current
      assets of the Company, all as shown on the Balance Sheet, except that net oil
      inventory shall be valued at $60.44 per barrel. For the purpose of determining
      Working Capital, the existence of any intercompany borrowings (whether long-term
      or short-term), intercompany accounts receivable or intercompany accounts
      payable to or from Affiliates shall be excluded, other than those accounts
      receivable or payable with respect to purchases of goods and services from
      or
      sales of goods and services to any Affiliate of the Company;

     

    (b) Increased
      by the amount of any Intragroup Advances from the Effective Time to the Closing
      Date; as used herein, the term “Intragroup
      Advances”
shall
      mean any capital contributions, loans, or advances paid by Seller or any other
      Affiliate of the Company to the Company, and any other payments made by Seller
      or any other Affiliate of the Company on behalf of and for the account of the
      Company;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (c) Decreased
      by the amount of any Intragroup Receipts from the Effective Time to the Closing
      Date; as used herein, the term “Intragroup
      Receipts”
shall
      mean any dividends, share redemptions, share purchases, or repurchases, debt
      repayments or other distributions made by the Company to a Seller or any other
      Affiliate of the Company, and any other amounts payable to the Company but
      received and retained by a Seller or any other Affiliate of the Company;
      excluding payments made by the Company to a Seller or any other Affiliate of
      the
      Company for the purchase of goods and services (including financial services)
      which are in compliance with this Agreement and excluding distributions of
      Excluded Assets; and 

     

    (d) Increased
      by the amount of interest that would be calculated on the Purchase Price, as
      adjusted under clauses (a), (b) and (c) above, at the Agreed Interest Rate,
      for
      the period from and including the Effective Time to but excluding the Closing
      Date; as used herein, the term “Agreed
      Interest Rate”
shall
      mean the lesser of: (i) 6 month LIBOR + 0.5% per annum; or (ii) the maximum
      interest rate permissible under applicable Laws.
      

     

    The
      Purchase Price, adjusted as set forth in clauses (a), (b), (c), and (d) shall
      be
      referred to herein as the “Adjusted
      Purchase Price”.

     

    ARTICLE
      3. REPRESENTATIONS
      AND WARRANTIES OF SELLER

     

    Section
      3.1 Disclaimers

     

    (a) Except
      as
      and to the extent expressly set forth in this Article 3 or in the certificate
      of
      Seller to be delivered pursuant to Section 7.2(d), (i) Seller makes no
      representations or warranties, express or implied, and (ii) Seller expressly
      disclaims all liability and responsibility for any representation, warranty,
      statement or information made or communicated (orally or in writing) to
      Purchaser or any of its Affiliates, employees, agents, consultants or
      representatives (including any opinion, information, projection or advice that
      may have been provided to Purchaser by any officer, director, employee, agent,
      consultant, representative or advisor of any Seller or any of its Affiliates).
      

     

    (b) EXCEPT
      AS
      EXPRESSLY REPRESENTED OTHERWISE IN THIS ARTICLE 3 OR IN THE CERTIFICATE OF
      SELLER TO BE DELIVERED AT CLOSING PURSUANT TO SECTION 7.2(d), WITHOUT LIMITING
      THE GENERALITY OF SECTION 3.1(a), SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION
      OR WARRANTY, EXPRESS OR IMPLIED, AS TO: (I) TITLE TO ANY OF THE ASSETS;
      (II) THE CONTENTS, CHARACTER OR NATURE OF ANY REPORT OF ANY PETROLEUM
      ENGINEERING OR OTHER CONSULTANT, OR ANY GEOLOGICAL, GEOPHYSICAL OR SEISMIC
      DATA
      OR INTERPRETATION RELATING TO THE ASSETS; (III) THE QUANTITY, QUALITY OR
      RECOVERABILITY OF HYDROCARBONS IN OR FROM THE ASSETS; (IV) ANY ESTIMATES OF
      THE
      VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS; (V) THE
      PRODUCTION OF HYDROCARBONS FROM THE ASSETS, OR WHETHER SUCH PRODUCTION, IF
      ANY,
      HAS BEEN CONTINUOUS, OR IN PAYING QUANTITIES; (VI) THE MAINTENANCE, REPAIR,
      CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS; OR
      (VII)
      ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR
      COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS,
      CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS
      CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING
      THERETO, AND SELLER FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS
      OR
      IMPLIED, OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY
      TO
      MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD
      AND AGREED BY THE PARTIES THAT PURCHASER HAS MADE OR CAUSED TO BE MADE SUCH
      INSPECTIONS AS PURCHASER DEEMS APPROPRIATE.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (c) Any
      representation made by Seller that is qualified “to the knowledge of Seller” or
“to Seller’s knowledge” is limited to matters within the actual knowledge of
      those Persons identified on Exhibit “A” as “Knowledge Persons” with respect
      to Seller, and such additional knowledge as should have been known by a
      reasonably prudent person experienced in the oil and gas industry.

     

    (d) Inclusion
      of a matter on a schedule attached hereto with respect to a representation
      or
      warranty that addresses matters having a Material Adverse Effect shall not
      be
      deemed an indication that such matter does, or may, have a Material Adverse
      Effect. Matters may be disclosed on a schedule as a precautionary matter. As
      used herein, “Material
      Adverse Effect”
means
      a
      material adverse effect on the ownership, operation or value of the Company
      or
      the Assets, taken as a whole; provided, however, that an adverse effect shall
      be
      deemed “material” if the aggregate damages resulting therefrom exceed
      US$15,000,000 and (ii) “Material Adverse Effect” shall not include a material
      adverse effect resulting from general changes in Hydrocarbon prices, general
      changes in industry, economic or political conditions, civil unrest,
      insurrection or similar disorders or changes in Laws.

     

    (e) Subject
      to the foregoing provisions of this Section 3.1, and the other terms and
      conditions of this Agreement, Seller represents and warrants to Purchaser the
      matters set out in Sections 3.2 through 3.22.

     

    Section
      3.2 Seller

     

    (a) Existence
      and Qualification.
      Seller
      is a corporation duly organized, validly existing and in good standing under
      the
      laws of its jurisdiction of incorporation, and duly qualified to do business
      as
      a foreign company in each jurisdiction where it does business, except where
      the
      failure to so qualify would not, individually or in the aggregate, have a
      Material Adverse Effect. Seller is duly qualified to own the Shares both
      beneficially and of record.

     

    (b) Power.
      Seller
      has the corporate power under its organizational documents to enter into and
      perform this Agreement (and all documents required to be executed and delivered
      by Seller as set out herein) and to consummate the transactions contemplated
      by
      this Agreement (and such documents).

     

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

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (d) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement by Seller, and the
      consummation of the transactions contemplated by this Agreement shall not:
      (i)
      violate any provision of the governance documents of Seller; (ii) result in
      a
      default (with due notice or lapse of time or both) or the creation of any
      Encumbrance or give rise to any right of termination, cancellation or
      acceleration under any material note, bond, mortgage, indenture, license or
      agreement to which Seller is a party or by which it is bound; (iii) violate
      any judgment, order, ruling, or decree applicable to Seller as a party in
      interest; or (iv) violate any Laws applicable to Seller, or any of the Assets,
      except any matters described in clauses (ii), (iii), or (iv) above which would
      not have a Material Adverse Effect.

     

    (e) Capitalization;
      Title to Shares.
      Seller
      holds of record and owns beneficially the Shares identified on Exhibit “A”,
      free and clear of any liens, claims, encumbrances, security interests, options,
      charges, preferential rights, consent rights, rights of first refusal and other
      restrictions of any kind (“Encumbrances”)
      (other
      than restrictions under the Securities Act and state securities laws). Upon
      Closing, good and valid title to the Shares shall pass to the Purchaser, free
      and clear of any Encumbrances. The Shares constitute all of the outstanding
      equity of the Company. All of the Shares are duly authorized, validly issued,
      fully paid and non-assessable. Other than this Agreement, the Shares are not
      subject to, nor have they been issued in violation of, any voting agreement
      or
      other contract, agreement, arrangement, commitment or understanding, including
      any such agreement, arrangement, commitment or understanding restricting or
      otherwise relating to the voting, distribution rights or disposition of the
      Shares. 

     

    (f) Warranties
      as to No Payments, Gifts or Loans.
      Neither
      Seller nor any of its Affiliates has made, with respect to the Shares, the
      Assets or the transactions contemplated by this Agreement, any offer, payment,
      promise to pay or authorization of the payment of any money, or any offer,
      gift,
      promise to give or authorization of the giving of anything of value, directly
      or
      indirectly, to or for the use or benefit of any official or employee of any
      Governmental Authority or public international organization or to or for the
      use
      or benefit of any political party, official, or candidate unless such offer,
      payment, gift, promise or authorization is authorized by applicable written
      Laws. Neither Seller nor any of its Affiliates has made any such offer, payment,
      gift, promise or authorization to or for the use or benefit of any other Person
      if Seller or such Affiliate knew, had a firm belief, or was aware that there
      was
      a high probability that the other Person would use such offer, payment, gift,
      promise or authorization for any of the purposes described in the preceding
      sentence. The foregoing warranties do not apply to any facilitating or
      expediting payment to secure the performance of routine government
      action.

     

     

    (g) Representation
      as to Seller’s Assets.
      Seller
      is a wholly-owned subsidiary of Ultra Petroleum Corp., a Yukon Territory, Canada
      corporation (“Ultra”).
      Seller, through its wholly-owned subsidiaries, is the indirect owner of
      substantially all of the assets, liabilities and businesses that constitute
      the
      consolidated assets, liabilities and businesses of Ultra and its consolidated
      subsidiaries as reflected in the consolidated financial statements of Ultra
      filed with the United States Securities and Exchange Commission.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Section
      3.3 The
      Company.

     

    (a) Existence
      and Qualification.
      The
      Company is a corporation duly organized and validly existing and in good
      standing under the Laws of the State of Texas and is duly qualified to do
      business as a foreign company in each jurisdiction where it does business,
      except where the failure to so qualify would not, individually or in the
      aggregate, have a Material Adverse Effect. 

     

    (b) Power.
      The
      Company has full corporate power and authority to own, lease or otherwise hold
      the Assets and conduct its business in the manner presently
      conducted.

     

    (c) No
      Conflicts.
      The
      execution, delivery, and performance of this Agreement (and all documents
      required to be executed and delivered by the Company as set out herein) and
      the
      consummation of the transactions contemplated by this Agreement shall not:
      (i)
      violate any provision of the articles of incorporation or bylaws of the Company;
      (ii) result in default (with due notice or lapse of time or both) or the
      creation of any Encumbrance or give rise to any right of termination,
      cancellation or acceleration under any material note, bond, mortgage, indenture,
      license or agreement to which the Company is a party or by which it is bound;
      (iii) violate any judgment, order, ruling, or decree applicable to the Company
      as a party in interest; or (iv) violate any Laws applicable to the Company,
      or
      any of the Assets, except any matters described in clauses (ii), (iii), or
      (iv)
      above which would not have a Material Adverse Effect.

     

    (d) Articles
      of Incorporation and Bylaws.
      Seller
      has delivered to Purchaser true and complete copies of the articles of
      incorporation and bylaws of the Company as are in effect as of the Execution
      Date.

     

    (e) Books
      and Records .
      The
      books and records that the Company is required to maintain under applicable
      Laws
      contain accurate records of all meetings (in all material aspects) and
      accurately reflect (in all material aspects) all corporate action of the
      shareholders and the board of directors (including committees) of the Company.
      Section 3.3(e) of the Disclosure Schedule sets out the current directors,
      officers, and powers of attorney that have been granted (and not effectively
      revoked) by the Company, except as otherwise agreed by Purchaser.

     

    (f) Balance
      Sheet.
      The
      Balance Sheet has been prepared from the books and records of the Company in
      conformity with United States generally accepted accounting principles as
      published by the Financial Accounting Standards Board (the “Accounting
      Principles”)
      consistently applied and fairly presents the financial position of the Company
      as of the date thereof.

     

    (g) Subsidiaries.
      The
      Company does not directly or indirectly own any capital stock or other equity
      interest in any Person. As of the time of their respective dissolutions,
      Pendaries Production Inc., a Delaware corporation, and Sino-American Overseas
      Energy Corp, a Cayman Islands corporation, were solvent.

     

    (h) Employees.
      The
      Company has no employees.

     

    (i) Intellectual
      Property Rights.
      The
      Company does not own or license any Intellectual Property Rights.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    (j) Real
      Property.
      Except
      pursuant to the Contracts, the Company has no interest in any real
      property.

     

    (k) Distributions.
      Except
      as disclosed in Section 3.3(k) of the Disclosure Schedule, since the Effective
      Time, the Company has not paid any dividends, made any returns of capital or
      made any other distributions. 

     

    (l) Indebtedness.
      Immediately after the Closing Date, the Company shall not have any indebtedness
      for borrowed money other than accounts payable for goods and services related
      to
      the Assets.

     

    (m) Absence
      of Material Adverse Effect.
      Except
      as contemplated by this Agreement or as set forth in Section 3.3(m) of the
      Disclosure Schedule, since the Effective Time, the Company has conducted its
      businesses only in the ordinary course and there has not been: (1) any damage,
      destruction or loss with respect to any property, assets or business of the
      Company that would constitute a Material Adverse Effect; (2) any purchase,
      sale
      or other disposition, or any agreement or other arrangement for the purchase,
      sale or other disposition, of any of the properties or assets of the Company;
      (3) any contingent liability incurred by the Company as guarantor or otherwise
      with respect to the obligations of others or any cancellation of any debt or
      claim owing to, or waiver of any right of the Company; (4) any Encumbrance
      or
      lien placed on any of the properties of the Company that remains in existence
      on
      the date this representation is made; (5) any payment or discharge of a material
      lien or liability of the Company that was not shown in the Balance Sheet or
      incurred in the ordinary course of business thereafter; (6) any declaration
      or
      payment of any dividend on or any other distribution made in respect of the
      Shares; (7) any change in the financial condition, properties, assets,
      liabilities, business or operations of the Company, which change by itself
      or in
      conjunction with all other such changes, has resulted in a Material Adverse
      Effect; or (8) any agreement or understanding for the Company to take any of
      the
      actions specified in sub-sections (1) through (7) above.

     

    (n) 
      Claims.
      Except
      as set forth in Section 3.3(n) of the Disclosure Schedule, since the Effective
      Time, the Company has not canceled or waived any accounts receivable, claims
      or
      rights in excess of $250,000 in the aggregate.

     

    (o) Related
      Arrangements.
      Except
      as set forth in Section 3.3(o) of the Disclosure Schedule, the Company is not
      a
      party to any contract or agreement with Seller or any of Seller’s or the
      Company’s Affiliates or any former or current officer or manager of the
      Company.

     

    (p) No
      Other Business.
      The
      Company does not operate any business other than in relation to or in connection
      with the Production Sharing Contracts and the Contracts. The Company has no
      sales in or into, the United States of America.

           

            Section
      3.4 No
      Required Consents.
      Except
      as disclosed in Section 3.4 of the Disclosure Schedule, no consent, approval,
      authorization, order, filing, notification, registration, qualification or
      waiver of or with any third party or, to Seller’s knowledge, any Governmental
      Authority, is required for the execution, delivery and performance by Seller
      of
      this Agreement or the completion of the transactions contemplated
      hereby.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

            Section
      3.5 Production
      Sharing Contracts.
      The Company owns 18.18% of the Contractor’s (as defined therein) interest in the
      Block 04/36 Production Sharing Contract and 23.08% of the Contractor’s (as
      defined therein) interest in the Block 05/36 Production Sharing Contract. The
      Production Sharing Contracts are in full force and effect with respect to the
      Company. Except as disclosed in Section 3.5 of the Disclosure Schedule, the
      Company’s interest in the Production Sharing Contracts are free and clear of any
      Encumbrances or burdens other than those created by the Production Sharing
      Contracts, applicable Law or any Contract. To Seller’s knowledge, the Company
      has not done any act or committed any default whereby the Production Sharing
      Contracts or the Company’s interest therein would reasonably be expected to be
      cancelled, terminated, encumbered, suspended, expropriated or seized, except
      as
      would not have a Material Adverse Effect. Notwithstanding anything to the
      contrary in this Section 3.5 or elsewhere in this Agreement, Seller does not
      represent that the Company will be able to take full advantage of its rights
      under the Production Sharing Contracts, that CNOOC (or its successor in
      interest) will perform its obligations under, or comply with the terms of,
      the
      Production Sharing Contracts, or that CNOOC (or its successor in interest)
      or
      any Chinese Governmental Authority will refrain from attempting to terminate
      the
      Production Sharing Contracts, or that CNOOC (or its successor in interest)
      or
      any Chinese Governmental Authority will refrain from attempting to apply varying
      terms or laws to the Production Sharing Contracts, the Contractor under the
      Production Sharing Contracts, or the Company.

     

            Section
      3.6 Material
      Contracts.
      The Seller has delivered or caused to be delivered to the Purchaser true and
      complete copies of each Material Contract in its possession. The Company has
      and, to Seller’s knowledge, each of the other parties thereto has, complied with
      all of the material terms and provisions of the Material Contracts and neither
      the Company, nor to the knowledge of Seller, any other party, is in breach
      or
      default under any Material Contract, except
      as
      would not have a Material Adverse Effect.
      Except
      as disclosed in Section 3.6 of the Disclosure Schedule, to Seller’s knowledge,
      no Material Contract has expired or been terminated or cancelled. Other than
      the
      Material Contracts, the Company is not a party to any contracts:

     

    (a) for
      the
      lease of real or personal property to or from any Person;

     

    (b) for
      the
      purchase or sale of natural gas, liquid fuel or electric power or capacity,
      or
      for the furnishing or receipt of services relating thereto such as
      transportation services); 

     

    (c) for
      the
      purchase or sale or license of personal property or for the furnishing or
      receipt of services;

     

    (d) with
      warranties still in effect in favor of the Company and/or Seller (and, in the
      case of Seller, relating to assets of, or services provided to, the
      Company);

     

    (e) concerning
      a partnership or joint venture;

     

    (f) under
      which the Company has incurred any debt or under which it has imposed an
      Encumbrance on any of its assets, tangible or intangible;

     

    (g) that
      contains a covenant not to compete, in whole or in part, in any line of business
      or with any Person in any geographical area;

     

    (h) with
      Seller or its Affiliates;

     

    (i) for
      the
      employment of any individual on a full-time, part-time, consulting or other
      basis;

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    (j) for
      loans
      to directors, officers or employees;

     

    (k) or
      collective bargaining agreements with any labor union or representative of
      employees.

     

    (l) relating
      to any employee benefit plans, stock option plans, stock purchase plans, stock
      appreciation plans, profit sharing plans, bonus plans or arrangements, incentive
      awards plans, vacation policies, severance pay plans, deferred compensation
      agreements or arrangements, executive compensation or supplemental income
      arrangements;

     

    (m) relating
      to swap, exchange or financial commodity futures transactions; or 

     

    (n) which
      were not entered into in the ordinary course of business or which are material
      to the business Company.

     

            Section
      3.7 Capital
      Commitments.
      Except as disclosed in Section 3.7 of the Disclosure Schedule, as of the
      Execution Date, the Company has not received any authorization for expenditure
      and, to Seller’s knowledge, there are no outstanding contracts, commitments, or
      agreements to make capital expenditures which are binding on the Company’s
      interest in the Production Sharing Contracts which, in either case, Seller
      reasonably anticipates will require expenditures by the Company after the
      execution of this Agreement in excess of $500,000.

     

            Section
      3.8 Production
      Imbalances.
      Except as disclosed in Section 3.8 of the Disclosure Schedule, as of the
      Effective Time, the Company had no obligation to deliver Hydrocarbon production
      (or cash in lieu thereof) from the Contract Area attributable to the Company’s
      interest in the Production Sharing Contracts to other owners of interests in
      the
      Contract Area as a result of past sales by the Company in excess of the share
      of
      production
      to
      which they were entitled.

     

            Section
      3.9 Advance
      Sales and Prepayments.
      Except as disclosed in Section
      3.9 of
      the Disclosure Schedule, all proceeds from the sale of Hydrocarbons attributable
      to the Company’s interest in the Production Sharing Contracts are currently
      being paid in full and no portion of such proceeds is currently being held
      in
      suspense by the purchaser thereof. Further, the Company is not obligated by
      virtue of a take or pay payment, advance payment, or other similar payment,
      to
      deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the
      Company’s interest in the Production Sharing Contracts at some future time
      without receiving full payment therefore at or after the time of
      delivery.

     

     

            Section
      3.10 Calls
      and Options.
      Except as disclosed in Section 3.10 of the Disclosure Schedule, no Person has
      any call upon, option to purchase, or similar right to obtain production from
      or
      attributable to the Company’s interest in the Production Sharing Contracts,
      other than the rights of existing production purchasers to continue taking
      production pursuant to the terms of existing production sales contracts
      (including renewals thereof).

     

            Section
      3.11 Environmental.
      Except as set forth in Section 3.11 of the Disclosure Schedule, to Seller’s
      knowledge, the operation of the Assets and other activities conducted under
      the
      Contracts have not violated applicable Environmental Laws except as would not
      have a Material Adverse Effect. Except as set forth in Section 3.11 of the
      Disclosure Schedule, neither Seller nor the Company is aware of or has received,
      as of the date hereof:

     

    
      
        
        

      

      
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                (a) any
      written order or directive under any Environmental Law from any Governmental
      Authority that requires any work, repairs, construction or capital expenditures
      with respect to the Assets, where such orders or directives have not been
      complied with in all material respects; or

     

                (b) any
      written demand or notice issued by any Governmental Authority with respect
      to
      the breach of an Environmental Law applicable to the Assets, which demand or
      notice remains outstanding on the date hereof.

     

    To
      Seller’s knowledge, except with respect to the wells that have been identified
      to Purchaser as having been suspended and except as provided in the contracts
      set forth on Section 1.2(pp) of the Disclosure Schedule, there are no remaining
      obligations or liabilities to plug and abandon any wells that have been drilled
      pursuant to the Contracts and there are no obligations or liabilities in respect
      of decommissioning, dismantling, reclamation or restoration that have arisen
      as
      a result of activities conducted pursuant to the Contracts.

     

            Section
      3.12 Financial
      Commitments Since Effective Time.
      Except as disclosed in Section 3.12 of the Disclosure Schedule and except for
      operating costs incurred in the ordinary course of business, there have been
      no
      outstanding approved budget items or authorizations for expenditure or other
      financial commitments respecting the Company’s interest in the Assets which have
      become due, or to which the Company has committed, since the Effective Time
      requiring individual expenditures of greater than $500,000.

     

            Section
      3.13 Preferential
      Rights.
      Except as disclosed in Section 3.13 of the Disclosure Schedule, there are no
      preferential rights to purchase contained in the Material Contracts, or to
      Seller’s knowledge, any other preferential rights to purchase, in either case
      applicable to the transactions contemplated by this Agreement.

     

            Section
      3.14 Litigation.
      Except as disclosed in Section 3.14 of the Disclosure Schedule, there is no
      claim, action, proceeding or investigation pending against Seller, the Company
      or, to Seller’s knowledge, relating to the Assets or threatened against Seller,
      the Company or relating to the Assets, before any court, arbitrator or
      Governmental Authority, or any judgment, decree or order of any court,
      arbitrator or Governmental Authority that, individually or in the aggregate:
      (a) is reasonably likely to result, or has resulted, in: (i) the
      institution of legal proceedings to prohibit or restrain the consummation of
      the
      transactions contemplated hereby; (ii) a claim against Purchaser or any of
      its Affiliates for damages as a result of Seller entering into this Agreement
      or
      the consummation of the transactions contemplated hereby; or (iii) a
      material impairment of the ability of Seller to perform its obligations under
      this Agreement; or (b) is reasonably likely to have a Material Adverse
      Effect.

     

            Section
      3.15 Compliance
      with Laws.
      Except as disclosed in Section 3.15 of the Disclosure Schedule, to Seller’s
      knowledge, there is no uncured violation by the Company with respect to the
      Production Sharing Contracts of any applicable Law or judgment of any
      Governmental Authority in existence as of the Effective Time, except for
      violations or alleged violations that, individually or in the aggregate, are
      not
      reasonably likely to have a Material Adverse Effect.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

            Section
      3.16 Taxes.
      To Seller’s knowledge, other than the U.S. federal income tax consolidated group
      of which Seller is the common parent corporation (the “Seller Group”), and the
      U.S. federal income tax consolidated group formed by the Company and its
      subsidiaries prior to the Company becoming a member of the Seller Group (the
      “Former Seller Group”), the Company is not and has not been a member of any
      consolidated, combined or unitary group of business entities for U.S. federal,
      state, or local Tax purposes and has no liability for the Taxes of any other
      person or group by contract. To Seller’s knowledge, each of the Company, the
      Seller Group, and the Former Seller Group has duly and timely: (a) filed all
      Tax
      Returns required to be filed by it prior to the Execution Date and such Tax
      Returns are true, complete and accurate in all material respects; (b) paid
      all
      Taxes (including installments) due and payable by it prior to the Execution
      Date, other than Taxes being contested in good faith; and (c) withheld and
      remitted to the appropriate Governmental Authorities all amounts required to
      be
      withheld by it in respect of the Tax liability of any other Person, and there
      are no claims pending or, to Seller’s knowledge, threatened by any Governmental
      Authority against the Company in respect of Taxes, except where the failure
      to
      file returns or pay or withhold Taxes would not have a Material Adverse
      Effect.

     

            Section
      3.17 Agreements
      with Tax Authorities.
      Except as disclosed in Section 3.17 of the Disclosure Schedule, with respect
      to
      the ownership of and operations under the Production Sharing Contracts, the
      Company has not entered into any agreement, waivers or other arrangement with
      any Governmental Authority respecting Taxes payable by the Company or Tax
      Returns required to be filed by the Company.

     

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

     

            Section
      3.19 Insurance.

     

    (a) Section
      3.19 of the Disclosure Schedule sets forth a list and brief description of
      all
      policies of insurance currently held by or for the benefit of the Company,
      or
      any of its Affiliates on behalf of the Company, with respect to the business
      or
      operations of the Company and the Assets, true and correct copies of which
      policies, including all endorsements, have been, or will promptly after the
      date
      hereof be, furnished to Purchaser. Such insurance policies are in full force
      and
      effect. The execution of this Agreement and the consummation of the transactions
      contemplated hereby will not cause any such insurance policies to lapse,
      terminate or be canceled and will not result in any party thereto having the
      right to terminate or cancel such insurance policies; provided that the
      insurance policies maintained by Affiliates of the Company on behalf of the
      Company and its Assets shall not be transferred pursuant to this
      Agreement.

     

    
      
        
        

      

      
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    (b) All
      assets owned by the Company that are of an insurable nature have at all times
      been and are insured in amounts to the full replacement value thereof against
      such risks as are, in accordance with commercial best practices, normally
      insured against in the People’s Republic of China in the industry in which the
      Company operates or possesses such assets. Each of such insurances has been
      obtained from a well-established and reputable insurer. The Company has at
      all
      times been adequately covered against accident (including workplace accident
      for
      property and employees), third party, public liability and other risks normally
      covered by insurance taken out by companies carrying on the same type of
      business or having similar assets as the Company and nothing has been done
      or
      omitted to be done by or on behalf of the Company which would make any policy
      of
      insurance void or voidable or enable the insurers to avoid the same and there
      is
      no claim outstanding under any such policy and there are no facts or
      circumstances likely to give rise to such a claim or result in an increased
      rate
      of premium.

     

    (c) All
      information furnished in obtaining or renewing the insurance policies of the
      Company was correct, full and accurate when given and any change in that
      information required to be given was correctly given. The Company is not in
      default under any of these policies.

     

    (d) The
      Company has not suffered any uninsured losses or waived any rights of material
      or substantial value or allowed any insurances to lapse.

     

    (e) There
      are
      no circumstances which would or might entitle the Company to make a claim under
      any of the Company’s insurance policies, or which would or might be required
      under any of the said policies to be notified to the insurer. 

     

            Section
      3.20 Warranties
      as to No Payments, Gifts or Loans.
      Neither the Company nor any of its Affiliates has made, with respect to the
      Shares, the Assets or the transactions contemplated by this Agreement, any
      offer, payment, promise to pay or authorization of the payment of any money,
      or
      any offer, gift, promise to give or authorization of the giving of anything
      of
      value, directly or indirectly, to or for the use or benefit of any official
      or
      employee of any Governmental Authority or public international organization
      or
      to or for the use or benefit of any political party, official, or candidate
      unless such offer, payment, gift, promise or authorization is authorized by
      applicable written Laws. Neither the Company nor any of its Affiliates has
      made
      any such offer, payment, gift, promise or authorization to or for the use or
      benefit of any other Person if the Company or such Affiliate knew, had a firm
      belief, or was aware that there was a high probability that the other Person
      would use such offer, payment, gift, promise or authorization for any of the
      purposes described in the preceding sentence. The foregoing warranties do not
      apply to any facilitating or expediting payment to secure the performance of
      routine government action.

     

     

            Section
      3.21 Absence
      of Undisclosed Liabilities.
      To Seller’s knowledge, except for Liabilities that are disclosed in or arise
      under this Agreement and the Disclosure Schedule hereto, the Company has no
      Liabilities other than: (a) Liabilities reflected or reserved against in the
      Balance Sheet, or (b) Liabilities which have arisen in the ordinary course
      of
      business. 

     

     

            Section
      3.22 Copies
      of Documents.
      All documents purporting to be copies of originals provided to or caused to
      be
      provided by Seller or the Company to the Purchaser or its legal counsel,
      accountants or other representatives are true, correct and complete copies
      of
      the originals.

     

    
      
        
        

      

      
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    ARTICLE
      4. REPRESENTATIONS
      AND WARRANTIES OF PURCHASER

     

    Purchaser
      represents and warrants to Seller the following:

     

            Section
      4.1 Existence
      and Qualification.
      Purchaser is a corporation duly organized, validly existing and in good standing
      under the Laws of Singapore.

     

            Section
      4.2 Power.
      Purchaser has full corporate power and authority to enter into and perform
      this
      Agreement (and all documents required to be executed and delivered by Purchaser
      as set out herein) and to consummate the transactions contemplated by this
      Agreement (and such documents).

     

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

     

            Section
      4.4 No
      Conflicts.
      The
      execution, delivery and performance of this Agreement by Purchaser, and the
      consummation of the transactions contemplated by this Agreement, will not:
      (a)
      violate any provision of the governing documents of Purchaser; (b) result in
      a
      default (with due notice or lapse of time or both) or the creation of any
      Encumbrance or give rise to any right of termination, cancellation or
      acceleration under any material note, bond, mortgage, indenture, license or
      agreement to which Purchaser is a party or by which it is bound; (c) violate
      any
      judgment, order, ruling, or regulation applicable to Purchaser as a party in
      interest; or (d) violate any Laws applicable to Purchaser or any of its
      assets, except any matters described in clauses (b), (c) or (d) above which
      would not have a material adverse effect on Purchaser or its
      properties.

     

            Section
      4.5 Consents,
      Approvals or Waivers.
      The
      execution, delivery and performance of this Agreement by Purchaser will not
      be
      subject to any consent, approval or waiver from any Governmental Authority
      or
      other third Person except as set forth in Section 4.5 of the Disclosure
      Schedule.

     

            Section
      4.6 Litigation.
      There
      are no outstanding judgments, orders, injunctions or decrees issued by any
      Governmental Authority or arbitrator specifically affecting Purchaser’s ability
      to perform its obligations under this Agreement, and there are no actions,
      suits
      or proceedings pending, or to Purchaser’s knowledge, threatened in writing
      before any Governmental Authority or arbitrator against Purchaser or any
      Affiliate of Purchaser which are reasonably likely to impair materially
      Purchaser’s ability to perform its obligations under this
      Agreement.

     

    
      
        
        

      

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

     

     

            Section
      4.8 Securities
      Act.
      The Shares are being acquired for investment only and not with a view to any
      public distribution thereof, and Purchaser shall not offer to sell or otherwise
      dispose of any of the Shares in violation of any applicable registration
      requirements of the U.S. Securities Act of 1933 (the “Securities
      Act”),
      or
      any other applicable Law. Purchaser (i) understands that the Shares have not
      been registered under the Securities Act or under any state securities or blue
      sky laws, and, as a result, are subject to substantial restrictions on transfer;
      and (ii) acknowledges that the Shares must be held indefinitely unless
      subsequently registered under the Securities Act and any applicable state
      securities or blue sky laws, or sold or otherwise transferred pursuant to
      exemptions from registration under the Securities Act or such laws.

     

            Section
      4.9 Warranties
      as to No Payments, Gifts or Loans.
      Neither Purchaser nor any of its Affiliates has made, with respect to the
      Shares, the Assets or the transactions contemplated by this Agreement, any
      offer, payment, promise to pay or authorization of the payment of any money,
      or
      any offer, gift, promise to give or authorization of the giving of anything
      of
      value, directly or indirectly, to or for the use or benefit of any official
      or
      employee of any Governmental Authority or public international organization
      or
      to or for the use or benefit of any political party, official, or candidate
      unless such offer, payment, gift, promise or authorization is authorized by
      applicable written Laws. Purchaser further warrants that neither it nor any
      of
      its Affiliates has made any such offer, payment, gift, promise or authorization
      to or for the use or benefit of any other Person if Purchaser or such Affiliate
      knew, had a firm belief, or was aware that there was a high probability that
      the
      other Person would use such offer, payment, gift, promise or authorization
      for
      any of the purposes described in the preceding sentence. The foregoing
      warranties do not apply to any facilitating or expediting payment to secure
      the
      performance of routine government action.

     

            Section
      4.10 Review
      of
      Disclosed Data.
      Purchaser is experienced and sophisticated in the acquisition of oil and gas
      interests and is capable of independently evaluating the merits and risks of
      the
      purchase of the Shares and the Assets. Purchaser has been granted access to
      the
      Assets and certain consultants of the Company and the Records. Purchaser has
      familiarized itself with the Laws of the People’s Republic of China that are
      relevant to the business of the Company and all written information provided
      or
      made available to Purchaser by Seller or Seller’s representatives in connection
      with Purchaser’s investigation of the Company to the extent each regulates or
      affects the business of the Company. Purchaser was advised by independent
      counsel of its own choosing and such other Persons it deemed appropriate in
      connection with this Agreement, and Purchaser has relied solely on the basis
      of
      its own independent due diligence investigation of the Company and the Assets
      in
      making its decision to enter into this Agreement and to consummate the
      transactions contemplated hereby. Purchaser is able to bear the economic risks
      of its acquisition of and ownership of the Shares.

     

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

     

    
      
        
        

      

      
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    ARTICLE
      5.  COVENANTS
      OF THE PARTIES

     

            Section
      5.1 Access.From
      the
      Execution Date until the Closing Date, Seller shall cause the Company to give
      Purchaser and its representatives access to the Assets and access to and the
      right to copy, at Purchaser’s expense, the Records, each for the purpose of
      conducting an investigation of the Company, but only to the extent that the
      Company may do so without violating any obligations to any third Person and
      to
      the extent that the Company has authority to grant such access without breaching
      any restriction binding on the Company. Such access by Purchaser shall be
      limited to the Company’s normal business hours with reasonable advance notice,
      and Purchaser’s investigation shall be conducted in a manner that minimizes
      interference with the operations of the Company and the Assets. All information
      obtained by Purchaser and its representatives under this Section 5.1 shall
      be
      subject to the terms of the Confidentiality Agreement between Ultra and
      Purchaser dated July 2, 2007 (the “Confidentiality
      Agreement”).
      

     

            Section
      5.2 Notification
      of Breaches

     

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

     

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

        

                (c) If
      any of
      Purchaser’s or Seller’s representations or warranties is untrue or shall become
      untrue in any material respect between the Execution Date and the Closing Date,
      or if any of Purchaser’s or Seller’s covenants or agreements to be performed or
      observed prior to or on the Closing Date shall not have been so performed or
      observed in any material respect, but if such breach of representation,
      warranty, covenant or agreement shall (if curable) be cured by or before Closing
      without causing a Material Adverse Effect, then such breach shall be considered
      not to have occurred for all purposes of this Agreement.

     

            Section
      5.3 Public
      Announcements.
      Until
      Closing, no Party, nor any of its Affiliates, shall make any press release
      or
      other public announcement regarding the existence of this Agreement, the
      contents hereof or the transactions contemplated hereby without the prior
      written consent of the other Party (which consent shall not be unreasonably
      withheld or delayed); provided, however, the foregoing shall not restrict
      disclosures by any Party or any of its Affiliates: (a) that are required by
      applicable securities or other Laws, court orders or the applicable rules of
      any
      stock exchange having jurisdiction over the disclosing Party or any of its
      Affiliates; or (b) to Governmental Authorities and third Persons holding
      preferential rights to purchase or similar rights, or rights of consent, that
      may be applicable to the transactions contemplated by this Agreement, as
      reasonably necessary to obtain waivers of such rights, or such
      consents.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

            Section
      5.4 Operation
      of Business.
      Except
      as provided in the current approved work program and budget under the JOAs,
      as
      otherwise set forth in Sections 3.7 and 3.12 to the Disclosure Schedule or
      upon
      the prior written consent of Purchaser, which consent shall not be unreasonably
      withheld, until Closing, Seller shall cause the Company to: (a) operate its
      business in the ordinary course; (b) not assign, transfer, terminate, amend,
      execute or extend any Material Contracts; (c) maintain insurance coverage
      on the Assets in the amounts and of the types presently in force; (d) use
      commercially reasonable efforts to maintain in full force and effect the
      Production Sharing Contracts; (e) maintain any Governmental Authorizations
      affecting the Assets which are held by the Company; (f) not transfer, sell,
      hypothecate, encumber or otherwise dispose of any Assets except for sales and
      dispositions of Hydrocarbons and Equipment made in the ordinary course of
      business; (g) notify Purchaser, and provide Purchaser with a copy of, as soon
      as
      reasonably practicable, any written notice, demand, citation or other
      communication received by the Company or Seller from any third Person (including
      any Governmental Authority) that is material to the operation and management
      of
      the Contracts; (h) not compromise, waive or settle any claim relating to the
      Assets; and (i) prior to any vote or decision to be taken by any committee
      under
      any Contract or any subcommittee of such committees, consult with Purchaser
      in
      relation to such vote or decision. Except as provided in the current approved
      work program and budget under the JOAs, as otherwise set forth in Sections
      3.7
      and 3.12 to the Disclosure Schedule or upon prior written notification to the
      Purchaser, until Closing, Seller shall cause the Company to not commit to any
      operation reasonably anticipated to require future capital expenditures by
      the
      Company in excess of $500,000. In the event of an emergency, Seller may cause
      the Company to take such action as a prudent operator would take and shall
      notify Purchaser of such action promptly thereafter.

     

            Section
      5.5 Conduct
      of the Company. Seller
      shall not permit the Company to do any of the following without the prior
      written consent of the Purchaser: (a) amend its articles of incorporation
      or bylaws; (b) issue, redeem or otherwise acquire any Shares or issue any
      option, warrant or right relating to the Shares or any securities convertible
      into or exchangeable for any Shares or declare or pay any distribution (whether
      in cash, property or any combination thereof), except distributions of Excluded
      Assets and distributions that will be deducted from the Purchase Price as
      Intragroup Receipts; (c) incur or assume any liabilities, obligations or
      indebtedness for borrowed money or guarantee any such liabilities, obligations
      or indebtedness, other than accounts payable incurred in the ordinary course
      of
      business or Intragroup Advances or Intragroup Receipts; (d) lend to any Person
      (except as set forth in Section 5.5(i)) or make an equity investment in any
      other Person; (e) make any change in any method of accounting or accounting
      practice or policy other than those required by the Accounting Principles;
      (f)
      acquire by merging or consolidating with, or by purchasing a substantial portion
      of the assets of, or by any other manner, any business or any corporation,
      partnership, association or other business organization or division thereof;
      or
      otherwise acquire any assets (other than in the ordinary course of business)
      for
      an amount greater than $500,000; (g) enter into any lease of real property,
      except any renewals of existing leases in the ordinary course of business;
      (h)
      enter into any settlement of any issue with respect to any assessment or audit
      or other administrative or judicial proceeding with respect to Taxes; (i) make
      any loan to any Person other than: (A) accounts receivable in the ordinary
      course of business; (B) advances or cash call payments to the operator as
      required under applicable operating agreements (including the JOAs); (C)
      advances on behalf of co-owners for costs under applicable operating agreements
      (including the JOAs); or (D) other loans in the ordinary course of business;
      (j)
      waive, compromise, or settle any claim of the Company; (k) terminate or
      voluntarily relinquish any Governmental Authorization necessary for the conduct
      of the Company’s business or operations or which relates in any way to any
      Asset; (l) hire any employee or engage, or materially amend the terms of
      engagement of, any consultant, contractor or advisor other than in the ordinary
      course of business or where the term of any such engagement will not continue
      in
      effect after Closing; (m) enter into any settlement agreement with any Person
      in
      relation to any dispute arising after the Execution Date; or (n) agree to do
      any
      of the foregoing.
      Purchaser’s approval of any action restricted by this Section 5.5 shall not be
      unreasonably withheld or delayed and shall be considered granted within five
      (5)
      Business Days (unless a shorter time is reasonably required by the circumstances
      and such shorter time is specified in Seller’s notice) of Seller’s notice to
      Purchaser requesting such consent unless Purchaser notifies Seller to the
      contrary during that period.

     

    
      
        
        

      

      
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            Section
      5.6 Indemnity
      Regarding Access.
      Purchaser agrees to indemnify, defend and hold harmless Seller, the Company,
      all
      of its Affiliates, the other owners of interests in the Assets, and all such
      Persons’ directors, officers, employees, agents and representatives from and
      against any and all claims, liabilities, losses, costs and expenses (including
      court costs and reasonable attorneys’ fees), including claims, liabilities,
      losses, costs and expenses attributable to personal injury, death, or property
      damage, arising out of or relating to access to the Assets prior to Closing
      by
      Purchaser, its Affiliates, or its or their directors, officers, employees,
      agents or representatives, EXCEPT TO THE EXTENT CAUSED IN WHOLE OR IN PART
      BY
      THE NEGLIGENCE (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER
      LEGAL FAULT OF ANY INDEMNIFIED PERSON.

     

            Section
      5.7 Consents
      and Preferential Rights.
      Promptly after the Execution Date, Seller shall cause the Company to prepare
      and
      send: (i) notices to the holders of any required consents to assignment, if
      any,
      that are set forth in Section 3.4 of the Disclosure Schedule requesting consents
      to the transactions contemplated by this Agreement; and (ii) notices to the
      holders of any applicable preferential rights to purchase, rights of first
      opportunity or similar rights, if any, that are set forth in Section 3.13 of
      the
      Disclosure Schedule in compliance with the terms of such rights and requesting
      waivers of such rights. Seller shall cause the Company to use commercially
      reasonable efforts to cause such consents to assignment and waivers of
      preferential rights to purchase or similar rights (or the exercise thereof)
      to
      be obtained and delivered prior to Closing, provided that neither Seller nor
      the
      Company shall be required to make payments or undertake obligations to or for
      the benefit of the holders of such rights in order to obtain the required
      consents and waivers. Upon Seller’s request, Purchaser shall reasonably
      cooperate with the Company in seeking to obtain such consents to assignment
      and
      waivers of preferential rights. Seller shall cause the Company to timely provide
      Purchaser with copies of all notices, consents and waivers obtained pursuant
      to
      in this Section 5.7.

     

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

     

    
      
        
        

      

      
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            Section
      5.9 [Omitted]

     

            Section
      5.10 Replacement
      of Bonds, Letters of Credit and Guarantees.
      The Parties understand that none of the bonds, letters of credit and guarantees,
      if any, posted by Seller or any Affiliate of Seller with any Governmental
      Authority or third Person and relating to the Company or the Assets are to
      be
      transferred to Purchaser. On or before Closing, Purchaser shall obtain, or
      cause
      to be obtained in the name of Purchaser, replacements for the bonds, letters
      of
      credit and guarantees set out in Section 5.10 of the Disclosure Schedule, to
      the
      extent such replacements are necessary to permit the cancellation of the bonds,
      letters of credit and guarantees posted by Seller or any Affiliate of Seller,
      or
      to consummate the transactions contemplated by this Agreement.

     

            Section
      5.11 Further
      Assurances.

     

                (a) Purchaser
      and Seller shall use (and Seller shall cause the Company to use) their
      commercially reasonable efforts to (i) obtain (or cooperate with the other
      Party
      to obtain) all approvals, consents and waivers necessary or advisable for the
      consummation of the transactions contemplated by this Agreement, (ii) take
      all
      actions necessary or appropriate to consummate the transactions contemplated
      by
      this Agreement and (iii) cause the fulfillment at the earliest practicable
      date
      of all the conditions to their respective obligations to consummate the
      transactions contemplated by this Agreement. After Closing, each Party agrees
      to
      take such further actions and to execute, acknowledge and deliver all such
      further documents as are reasonably requested by the other Party for carrying
      out the purposes of this Agreement or of any document delivered pursuant to
      this
      Agreement.

     

                 (b) No
      Party
      shall enter into any transaction (i) that would prevent such Party from
      obtaining an approval from a Governmental Authority that is required for such
      Party to consummate the transactions contemplated by this Agreement, or (ii)
      that would require or give rise to an additional waiting period or an
      investigation by a Governmental Authority or that would require an additional
      approval of a Governmental Authority, in each case with respect to the
      consummation of the transactions contemplated by this Agreement.

     

            Section
      5.12 Permits.
      Seller shall cause the Permits described in Section 3.3(a)(i) of the Disclosure
      Schedule to be, as of the Closing Date, valid and in full force and effect.
      Seller and Purchaser will cooperate in good faith to determine if the Permits
      described in Section 3.3(a)(ii) of the Disclosure Schedule are reasonably
      necessary for the conduct of the Company’s business prior to Closing. If Seller
      and Purchaser conclude that any of such Permits are reasonably necessary, Seller
      will use all reasonable efforts to acquire such necessary Permits and cause
      them
      to be valid and in full force and effect on the Closing Date. If any of the
      Permits described in Section 3.3(a)(i) of the Disclosure Schedule or any of
      the
      Permits described in Section 3.3(a)(ii) of the Disclosure Schedule that are
      determined to be reasonably necessary for the conduct of the Company’s business
      are not, as of the Closing Date, valid and in full force and effect, Seller
      agrees to indemnify Purchaser for any costs, fees or penalties incurred by
      Purchaser in order to cause the Permits to be valid and in full force and effect
      subsequent to the Closing Date. The indemnification provided for herein shall
      not be limited to the amounts set forth in Section 10.1(e). If any other Permits
      are required for the operation of the Company’s business, Seller will cooperate
      with Purchaser in acquiring such Permits, but shall have no liability to
      Purchaser if such Permits are not acquired prior to or after the Closing Date,
      and the failure to acquire such Permits shall not be deemed a Material Adverse
      Effect as provided in Section 3.3(m). 

     

    
      
        
        

      

      
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    ARTICLE
      6. CONDITIONS
      TO CLOSING

     

            Section
      6.1 Conditions
      of Seller to Closing.
      The
      obligations of Seller to consummate the transactions contemplated by this
      Agreement are subject to the satisfaction on or prior to Closing, or
      unconditional waiver by Seller in writing, of each of the following
      conditions:

     

            (a) Representations.
      The
      representations and warranties of Purchaser set forth in Article 4 shall be
      true
      and correct in all material respects, other than those representations and
      warranties of Purchaser that are qualified by materiality, which shall be true
      and correct in all respects, as of the Execution Date and as of the Closing
      Date
      as though made on and as of the Closing Date, except representations and
      warranties which specifically relate to a particular date or period, which
      shall
      be true and correct as of such date or for such period; 

            

            (b) Performance.
      Purchaser shall have performed and observed, in all material respects, all
      covenants and agreements to be performed or observed by it under this Agreement
      prior to or on the Closing Date;

     

            (c) No
      Action.
      On the
      Closing Date, there shall be no outstanding judgment, order, injunction or
      decree issued by a Governmental Authority or arbitrator enjoining or restraining
      the consummation of the transactions contemplated by this Agreement, nor shall
      any action, suit or other proceeding (excluding any such matter initiated by
      Seller or any Affiliate of Seller) be pending or threatened before any
      Governmental Authority or arbitrator seeking to enjoin or restrain the
      consummation of the transactions contemplated by this Agreement or recover
      substantial damages from Seller or any Affiliate of Seller resulting therefrom;
      

     

            (d) Consents
      and Waivers.
      All
      consents and approvals set forth in Section 3.4 of the Disclosure Schedule
      required for the transfer of the Shares from Seller to Purchaser as contemplated
      under this Agreement shall have been granted, and all preferential purchase
      rights, rights of first opportunity and similar rights set forth in Section
      3.13
      of the Disclosure Schedule shall have been waived, expired without exercise
      or,
      in the case of rights of first opportunity, resulted in an offer that was
      rejected by Seller in accordance with the terms of the right; provided, however,
      that if any preferential right described in Section 3.13 of the Disclosure
      Schedule is exercised with respect to the Block 04/36 Production Sharing
      Contract and not the Block 05/36 Production Sharing Contract, or vice-versa,
      the
      condition to closing set forth herein shall be deemed satisfied with respect
      to
      the portion of the Assets not acquired pursuant to the exercise of such
      preferential right; and

     

            (e) Delivery.
      Purchaser
      shall have delivered, or be prepared to deliver on the Closing Date, each item
      set forth in Section 7.3. 

     

            Section
      6.2 Conditions
      of Purchaser to Closing.
      The
      obligations of Purchaser to consummate the transactions contemplated by this
      Agreement are subject to the satisfaction on or prior to Closing, or
      unconditional waiver by Purchaser in writing, of each of the following
      conditions:

     

    (a) Representations.
      The
      representations and warranties of Seller set forth in Article 3 shall be true
      and correct in all material respects, other than those representations and
      warranties of Seller that are qualified by Material Adverse Effect or
      materiality, which shall be true and correct in all respects, as of the
      Execution Date and as of the Closing Date as though made on and as of the
      Closing Date, except representations and warranties which specifically relate
      to
      a particular date or period, which shall be true and correct as of such date
      or
      for such period;

     

    
      
        
        

      

      
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    (b) Performance.
      Seller
      shall have performed and observed, in all material respects, all covenants
      and
      agreements to be performed or observed by it under this Agreement prior to
      or on
      the Closing Date;

     

    (c) No
      Action.
      On the
      Closing Date, there shall be no outstanding judgment, order, injunction or
      decree issued by a Governmental Authority or arbitrator enjoining or restraining
      the consummation of the transactions contemplated by this Agreement, nor shall
      any action, suit or other proceeding (excluding any such matter initiated by
      Purchaser or any of its Affiliates) be pending or threatened before any
      Governmental Authority or arbitrator seeking to enjoin or restrain the
      consummation of the transactions contemplated by this Agreement or recover
      substantial damages from Purchaser or any Affiliate of Purchaser resulting
      therefrom; 

     

    (d) Consents
      and Waivers.
      All
      consents and approvals set forth in Section 3.4 of the Disclosure Schedule
      required for the transfer of the Shares from Seller to Purchaser as contemplated
      under this Agreement shall have been granted, and all preferential purchase
      rights, rights of first opportunity and similar rights set forth in Section
      3.13
      of the Disclosure Schedule shall have been waived, expired without exercise
      or,
      in the case of rights of first opportunity, resulted in an offer that was
      rejected by Seller in accordance with the terms of the right; provided, however,
      that if any preferential right described in Section 3.13 of the Disclosure
      Schedule is exercised with respect to the Block 04/36 Production Sharing
      Contract and not the Block 05/36 Production Sharing Contract, or vice-versa,
      the
      condition to closing set forth herein shall be deemed satisfied with respect
      to
      the portion of the Assets not acquired pursuant to the exercise of such
      preferential right; and

     

    (e) Delivery.
      Seller
      shall have delivered, or be prepared to deliver on the Closing Date, each item
      set forth in Section 7.2.

     

    ARTICLE
      7. CLOSING

     

     

            Section
      7.1 Time
      and
      Place of Closing.
      The
      consummation of the purchase and sale of the Shares contemplated by this
      Agreement (the “Closing”)
      shall,
      unless otherwise agreed to in writing by Purchaser and Seller, take place at
      the
      offices of Purchaser, 1 Maritime Square, #10-10, HarbourFront Center 099253,
      at
      10:00 a.m., local time, on October 26, 2007, or if all conditions in Article
      6
      to be satisfied prior to Closing have not yet been satisfied or waived, as
      soon
      thereafter as such conditions have been satisfied or waived, subject to the
      provisions of Article 9. The date on which Closing occurs is referred to herein
      as the “Closing
      Date”.
      

     

            Section
      7.2 Obligations
      of Seller at Closing.
      At
      Closing, upon the terms and subject to the conditions of this Agreement, and
      subject to the simultaneous performance by Purchaser of its obligations pursuant
      to Section 7.3, Seller shall deliver or cause to be delivered to Purchaser,
      among other things, the following:

     

    
      
        
        

      

      
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    (a) original
      stock certificates representing all of the Shares, endorsed in blank or
      accompanied by duly executed assignment documents;

     

    (b) certificates
      as to legal existence and good standing from the appropriate Governmental
      Authorities, dated on or about the Closing Date, as to the Company and Seller
      and qualification to do business in the jurisdictions in which it operates
      as to
      the Company;

     

    (c) certified
      copies of the resolutions of the board of directors of the Seller approving
      the
      transactions contemplated in this Agreement, and authorizing the transfer of
      the
      Shares from the Seller to the Purchaser as contemplated in this
      Agreement;

     

    (d) an
      officer’s certificate in a form reasonably satisfactory to Purchaser to the
      effect that each of the conditions set forth in Section 6.2 is satisfied in
      all
      respects;

     

    (e) an
      original of a resolution of the Board of Directors of the Company terminating,
      rescinding and canceling all powers of attorney previously issued by the Company
      authorizing Persons to act on behalf of the Company;

     

    (f) an
      original of the resignation of each member of the Board of Directors of the
      Company, which shall include such member’s waiver of all claims against the
      Company;

     

    (g) an
      original of the notices of resignation of each member, representative, alternate
      representative or other appointee, as applicable, of the Company on all
      committees formed pursuant to any of the Contracts, and all subcommittees of
      each such committee;

     

    (h) written
      evidence reasonably satisfactory to Purchaser of the appointment as new members
      of the Board of Directors of the Company of such Persons that Purchaser shall
      have identified in written notice to Seller at least ten (10) Business Days
      prior to the Closing Date, with such appointments to be effective as of
      Closing;

     

    (i) an
      original of the Company’s notices of appointment of each replacement member,
      representative, alternate representative or other appointee, as applicable,
      of
      the Company on all committees formed pursuant to any of the Contracts, and
      all
      subcommittees of each such committee, in each case as notified by Purchaser
      to
      Seller at least ten (10) Business Days prior to the Closing Date, with such
      appointments to be effective as of Closing;

     

    (j) a
      copy of
      each consent or waiver of preferential purchase rights made by the holders
      of
      any consent rights disclosed in Section 3.4 of the Disclosure Schedule, or
      any
      of the preferential purchase rights disclosed in Section 3.13 of the Disclosure
      Schedule;

     

    (k) the
      corporate books and records of the Company; 

     

    (l) written
      evidence reasonably satisfactory to Purchaser of the termination of any tax
      indemnity, sharing, allocation or similar agreement or arrangement between
      Seller and/or any of its Affiliates and the Company; and

     

    
      
        
        

      

      
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    (m) written
      evidence reasonably satisfactory to Purchaser that Seller and the Company have
      caused all intercompany obligations of the Company to Seller or Seller to
      Company to be cancelled.

     

            Section
      7.3 Obligations
      of Purchaser at Closing.
      At
      Closing, upon the terms and subject to the conditions of this Agreement, and
      subject to the simultaneous performance by Seller of its obligations pursuant
      to
      Section 7.2, Purchaser shall deliver or cause to be delivered to Seller among
      other things, the following:

     

    (a) the
      Closing Payment specified in Section 7.4 (a);

     

    (b) certified
      copies of the resolutions of the board of directors of Purchaser approving
      the
      transactions contemplated by this Agreement and authorizing the purchase of
      the
      Shares from Seller as contemplated by this Agreement; and

     

    (c)
      an
      officer’s certificate in a form reasonably satisfactory to Seller to the effect
      that each of the conditions set forth in Section 6.1 is satisfied in all
      respects. 

     

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

     

    (a) Not
      later
      than ten (10) Business Days prior to the Closing Date, Seller shall prepare
      and
      deliver to Purchaser, using and based upon the best information available to
      Seller, a preliminary settlement statement estimating the Adjusted Purchase
      Price after giving effect to all Purchase Price adjustments set forth in Section
      2.2, as well as the bank name, account number and routing information for the
      account into which Seller desires Purchaser deposit the payment to be made
      by
      Purchaser at Closing pursuant to Section 7.3(a). The estimate delivered in
      accordance with this Section 7.4(a) shall constitute the dollar amount to be
      paid by Purchaser at the Closing (the “Closing
      Payment”).

     

    (b) As
      soon
      as reasonably practicable after Closing but not later than the sixtieth (60th)
      day following the Closing Date, Purchaser shall prepare and deliver to Seller
      a
      statement setting forth the final calculation of the Adjusted Purchase Price
      and
      showing the calculation of each adjustment. Purchaser shall, at Seller’s
      request, supply reasonable documentation available to evidence any Intragroup
      Advances and Intragroup Receipts. Seller agrees to permit Purchaser and its
      representatives, during normal business hours, to have reasonable access to,
      and
      to examine and make copies of all books and records necessary to prepare the
      Adjusted Purchase Price. As soon as reasonably practicable, but not later than
      the thirtieth (30th) day following receipt of Purchaser’s statement hereunder,
      Seller shall deliver to Purchaser a written report containing any changes that
      Seller proposes be made to such statement. The Parties shall undertake to agree
      on the final statement of the Adjusted Purchase Price no later than one hundred
      twenty (120) days after the Closing Date. In the event that the Parties cannot
      reach agreement within such period of time, any Party may refer the remaining
      matters in dispute for resolution to an independent accounting firm mutually
      agreed to by the Parties (the “Independent
      Auditors”).
      The
      Independent Auditors’ determination shall be made within thirty (30) days after
      submission of the matters in dispute, shall be set forth in a written report
      delivered to the Parties and shall be final and binding on all Parties, without
      right of appeal. In determining the proper amount of any adjustment to the
      Purchase Price, the Independent Auditors shall not increase the Purchase Price
      more than the increase proposed by Seller nor decrease the Purchase Price more
      than the decrease proposed by Purchaser, as applicable. The Independent Auditors
      shall act as an expert for the limited purpose of determining the specific
      disputed matters submitted by the Parties and may not award damages or penalties
      to any Party with respect to any matter. Each Party shall bear its own legal
      fees and other costs of presenting its case. Seller shall bear one-half (1⁄2) of
      the costs and expenses of the Independent Auditors, and Purchaser shall bear
      one-half (1⁄2) of the costs and expenses of the Independent Auditors. Within ten
      (10) Business Days after the earlier of (i) the expiration of Seller’s thirty
      (30) day review period without delivery of any written report or (ii) the date
      on which the Parties or the Independent Auditors, as applicable, finally
      determines the Adjusted Purchase Price, (x) Purchaser shall pay to Seller
      (to Seller’s account as delivered to Purchaser pursuant to Section 7.4(a)) the
      amount by which the Adjusted Purchase Price exceeds the Closing Payment, or
      (y) Seller shall pay to Purchaser the amount by which the Closing Payment
      exceeds the Adjusted Purchase Price, as applicable. Any post-closing payment
      pursuant to this Section 7.4 shall bear interest from the Closing Date to the
      date of payment at the Agreed Interest Rate.

     

    
      
        
        

      

      
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            Section
      7.5 Casualty
      or Condemnation Loss.
      If,
      after the Execution Date but prior to Closing Date, any portion of the Assets
      is
      destroyed by fire or other casualty or is expropriated or taken in condemnation
      or under right of eminent domain, Purchaser shall nevertheless be required
      to
      close and Seller shall at Closing assign to Purchaser all rights to insurance
      and other claims against third parties, if any, with respect to the casualty
      or
      taking except insurance issued by or rights against Seller or its Affiliates.
      Notwithstanding the preceding, if the loss caused by such casualty or taking
      exceeds $25,000,000, Seller or Purchaser may, by notice to the other(s) within
      five (5) days of such casualty or taking (or, in the case of Purchaser, within
      five (5) Business Days of learning about such casualty or taking), but in no
      event later than one (1) Business Day prior to Closing, elect to terminate
      this
      Agreement under Section 9.1

     

     

            Section
      7.6 Update
      of Disclosure Schedule.  Prior
      to
      the Closing Date, Seller may, at its option, update the Disclosure Schedule
      with
      additional disclosures that have arisen since the Execution Date. If Seller
      chooses to exercise such option, Seller shall provide such additional
      disclosures to Purchaser by written notice no later than three (3) Business
      Days
      prior to Closing. The additional disclosures delivered by Seller shall be deemed
      to be part of the Disclosure Schedule as delivered to Purchaser on the date
      of
      this Agreement for all purposes of this Agreement. 

     

    ARTICLE
      8.  TAX
      MATTERS 

     

    Section
      8.1 Liability
      for Taxes

     

    (a) Except
      as
      set out in Section 8.1(b), Purchaser shall be liable for, and shall indemnify
      and hold harmless Seller and its Affiliates from and against, any Taxes imposed
      on or incurred by the Company attributable to any taxable period after the
      Effective Time; provided, however, that except for Purchaser’s indemnification
      obligations provided in this Article 8, Purchaser will have no obligation to
      reimburse Seller with respect to any U.S.
      federal
      income taxes imposed on the Seller Group or Former Seller Group.

     

    (b) Seller
      shall be liable to reimburse Purchaser for any Taxes imposed on or incurred
      by
      the Company and attributable to any taxable period ending on or prior to the
      Effective Time (other than by retroactive or retrospective application), and
      the
      portion, determined as described in Section 8.1(c), of any such Taxes for any
      taxable period beginning prior to the Effective Time and ending after the
      Effective Time which is allocable to the portion of such period occurring prior
      to the Effective Time (the “Pre-Effective
      Time Period”)
      (other
      than by retroactive or retrospective application), but excluding any such Taxes
      that have been reflected as current accrued liabilities of the Company on the
      Balance Sheet; but only after Purchaser has used its reasonable efforts to
      mitigate and minimize such Taxes and to seek recovery of such Taxes or portions
      thereof from appropriate third parties, and then only to the extent that
      Purchaser has been unable to mitigate or minimize such Taxes or recover such
      Taxes or portions thereof from appropriate third parties.
      In
      addition to the foregoing, subject to Purchaser’s indemnification obligations as
      set forth in this Article 8, Seller shall be liable to reimburse Purchaser
      for
      any Taxes of the Seller Group or Former Seller Group that are imposed upon
      or
      required to be paid by the Company. Upon receipt of notice from Purchaser of
      such reimbursement amount, Seller shall within thirty (30) Business Days pay
      such amounts to Purchaser.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

       

    

    (c) Whenever
      it is necessary for purposes of this Agreement to determine the portion of
      any
      Taxes of or with respect to the Company for a taxable period beginning prior
      to
      and ending after the Effective Time which is allocable to the Pre-Effective
      Time
      Period or the period occurring on or after the Effective Time (the “Post-Effective
      Time Period”),
      the
      determination shall be made: (i) in the case of property, ad valorem or similar
      Taxes (which are not based on or measured by units of production of
      Hydrocarbons), by allocating all such Taxes on a per diem basis; (ii) in the
      case of franchise, capital or similar Taxes (which are not based on or measured
      by income or profit), by allocating all such Taxes on a per diem basis; and
      (iii) in the case of other Taxes, by assuming that each of the Pre-Effective
      Time Period and the Post-Effective Time Period constitutes a separate taxable
      period and by taking into account the actual taxable events occurring during
      each such period. 

     

    Section
      8.2 Preparation
      and Filing of Tax Returns.

     

    (a) With
      respect to each Tax Return for, by or with respect to the Company that is
      required to be filed on or before the Closing Date, Seller shall cause the
      Company to: (i) cause such Tax Return to be prepared; (ii) cause to be included
      in such Tax Return all items of income, gain, loss, deduction and credit or
      other items (collectively, “Tax
      Items”)
      required to be included therein; (iii) timely file or cause to be filed
      (assuming it has authority to do so) such Tax Return with the appropriate taxing
      authority; and (iv) subject to any right of indemnification under Section 8.1,
      pay the amount of Taxes shown to be due on such Tax Return.
      Purchaser shall not, without the prior written consent of Seller, file or cause
      to be filed an amended Tax Return with respect to any Tax Return required to
      be
      filed by the Company pursuant to this Section 8.2(a).

     

    (b) With
      respect to each Tax Return for, by or with respect to the Company that is
      required to be filed after the Closing Date, Purchaser shall cause such Tax
      Return to be prepared, shall cause to be included in such Tax Return all Tax
      Items required to be included therein, and shall cause the Company to timely
      file such Tax Return with the appropriate taxing authority and shall timely
      pay
      the amount of Taxes shown to be due on such Tax Return.

     

    (c) Any
      Tax
      Return to be prepared pursuant to the provision of this Article 8 shall be
      prepared in a manner consistent with tax accounting practices and
      interpretations followed in prior years with respect to similar Tax Returns,
      except for changes required by changes in Law.

     

            Section
      8.3 Allocation
      Arrangements.
      Effective as of the Closing Date, any tax indemnity, sharing, allocation or
      similar agreement or arrangement that may be in effect prior to the Closing
      Date
      between Seller and the Company, shall be extinguished in full, and any
liabilities or rights existing under any such agreement or arrangement shall
      cease to exist and shall no longer be enforceable.

     

    
      
        
        

      

      
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    Section
      8.4 Access
      to
      Information.

     

    (a) Seller
      shall grant to Purchaser access at all reasonable times to all of the
      information, books and records relating to the Company within the possession
      of
      Seller (including work papers and correspondence with taxing authorities, but
      excluding Excluded Records), and shall afford Purchaser the right (at
      Purchaser’s expense) to take extracts therefrom and to make copies thereof, to
      the extent reasonably necessary to permit Purchaser to prepare Tax Returns,
      to
      conduct negotiations with Tax authorities, and to implement the provisions
      of,
      or to investigate or defend any claims between the Parties arising under, this
      Article 8; provided that such information, books and records, and extracts
      therefrom, shall be maintained as strictly confidential, unless
      otherwise required by applicable Laws, Governmental Authority, stock exchange
      regulations or legal proceedings.

     

    (b) Purchaser
      shall grant Seller access at all reasonable times to all of the information,
      books and records relating to the Company within the possession of Purchaser
      or
      the Company (including work papers and correspondence with taxing authorities),
      and shall afford Seller the right (at Seller’s expense) to take extracts
      therefrom and to make copies thereof, to the extent reasonably necessary to
      permit Seller to prepare Tax Returns, to conduct negotiations with Tax
      authorities, and to implement the provisions of, or to investigate or defend
      any
      claims between the Parties arising under, this Article 8; provided that such
      information, books and records, and extracts therefrom, shall be maintained
      as
      strictly confidential unless otherwise required by applicable Laws, Governmental
      Authority, stock exchange regulations or legal proceedings.

     

    (c) Each
      of
      Seller and Purchaser shall preserve and retain all schedules, work papers and
      other documents in its possession directly relating to any Tax returns of,
      or
      with respect to, the Company or to any tax claims, tax audits or other tax
      proceedings affecting the Company, until the expiration of the statute of
      limitations (including extensions) applicable to the taxable period to which
      such documents relate or until the final determination of any controversy with
      respect to such taxable period, and until the final determination of any
      payments that may be required with respect to such taxable period under this
      Agreement.

     

            Section
      8.5 Tax
      Proceedings.
      In the
      event Purchaser, the Company, or any of their Affiliates receives notice of
      any
      examination, claim, adjustment or other proceeding with respect to the liability
      of the Company for Taxes for any taxable period for which Seller is or may
      be
      liable under Section 8.1, Purchaser shall, within ten (10) days, notify Seller
      in writing thereof and Seller shall be entitled, at its option and at its
      expense, to control or settle the contest of such examination, claim, adjustment
      or other proceeding. The Parties shall cooperate with each other, and with
      their
      respective Affiliates, and will consult with each other in the settlement of
      any
      proceeding described in this Section 8.5 that could affect the others. Purchaser
      will provide, or cause to be provided, to Seller and its Affiliates necessary
      authorizations, including powers of attorney, to control any such
      proceeding.

     

            Section
      8.6 Indemnification
      Procedures.
      Any
      indemnification claims pursuant to this Article 8 shall be asserted and resolved
      in accordance with the terms of Section 10.2, which shall be deemed to be
      incorporated herein by reference, mutatis
      mutandis.

     

    
      
        
        

      

      
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            Section
      8.7 Refunds.
      Purchaser agrees to pay to Seller any Tax Refund (whether by payment, credit,
      offset or otherwise, and together with any interest thereon) received after
      the
      Closing Date by Purchaser or its Affiliates, including the Company, in respect
      of any Taxes for which Seller is liable under Section 8.1. For a period of
      eighteen (18) months from the Closing Date, Purchaser shall reasonably cooperate
      with Seller and its Affiliates (at Seller’s cost) in order to take all necessary
      steps to claim any such Tax Refund; provided, however, that with respect to
      any
      Export Levy Refund or Special Profit Charge Refund, such period of cooperation
      shall be for five (5) years from the Closing Date; and provided further that
      Purchaser shall not be required to take any actions that reasonably would result
      in additional Tax liability being imposed on the Purchaser or its Affiliates
      for
      which Seller is not obligated to indemnify hereunder. Any such Tax Refund
      received by Purchaser or its Affiliates or the Company shall be paid to Seller
      within thirty (30) Business Days after such Tax Refund is received.

     

            Section
      8.8 Sales
      or Use Tax, Recording Fees and Similar Taxes and Fees.
      Purchaser shall bear any sales, use, excise, real property transfer or gain,
      gross receipts, goods and services, registration, capital, documentary, stamp
      or
      transfer Taxes, recording fees and similar Taxes and fees incurred and imposed
      upon, or with respect to, the property transfers or other transactions
      contemplated hereby. If such transfers or transactions are exempt from any
      such
      taxes or fees upon the filing of an appropriate certificate or other evidence
      of
      exemption, Purchaser shall timely furnish to Seller such certificate or
      evidence.

     

            Section
      8.9 Section 338(h)(10)
      Election.

     

    (a) Purchaser
      and Seller shall make timely and effective joint elections (the “Section 338(h)(10)
      Elections”)
      under
      Section 338(h)(10) of the Code with regard to the purchase of the Shares.
      At Closing, Purchaser and Seller shall execute a properly completed IRS
      Form 8023 (Elections Under Section 338 for Corporations Making
      Qualified Stock Purchases) making the Section 338(h)(10) Election and
      Purchaser shall file such IRS Form 8023 with the IRS on a timely basis
      following the Closing Date. 

     

    (b)  Purchaser
      and Seller agree to allocate the Adjusted Purchase Price (together with any
      assumed liabilities and other items required to be taken into account by the
      Code) among the assets of the Company as set forth on
      Section 8.9 of
      the
      Disclosure Schedule (the
      “Asset
      Allocation”).
      The
      Asset Allocation shall be reflected on the appropriate Section 338 Forms
      (as defined below). The Asset Allocation shall be used for purposes of
      determining the aggregate deemed sales price and adjusted grossed-up basis
      under
      the applicable Treasury Regulations and in reporting the deemed sale of assets
      of the Company in connection with the Section 338(h)(10) Elections.
      Purchaser, Seller and their respective Affiliates hereby agree that they will
      report the federal, state, foreign and other tax consequences of the
      transactions contemplated by this Agreement in a manner consistent with the
      Section 338(h)(10) Elections and the Asset Allocation. 

     

    (c)  Purchaser
      shall be responsible for the preparation of all forms and documents required
      in
      connection with the Section 338(h)(10) Elections. Purchaser, Seller and
      their respective Affiliates shall timely file all forms required to be filed
      to
      make the Section 338(h)(10) Elections and shall provide each other with
      evidence that such filings have been made. Seller and/or its Affiliates shall
      execute and deliver to Purchaser such documents or forms consistent with the
      Asset Allocation (including Section 338 Forms, as defined below) as
      Purchaser shall request or as are required by applicable Law for an effective
      Section 338(h)(10) Election. “Section 338
      Forms”
shall
      mean all returns, documents, statements, and other forms that are required
      to be
      submitted to any federal, state, county or other local taxing authority in
      connection with a Section 338(h)(10) Election, including any “statement of
      Section 338 election” and Internal Revenue Service Forms 8023 and 8883
      (together with any schedules or attachments thereto) that are required pursuant
      to the Treasury Regulations. 

     

    
      
        
        

      

      
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    (d)  Purchaser
      shall indemnify Seller from and against any increase in Taxes payable by Seller
      due to the Section 338(h)(10) Elections. The indemnification shall be in an
      amount equal to the quotient of (i) the Taxes paid by Seller with respect
      to the sale of the Shares with the Section 338(h)(10) Election minus the taxes
      which would have been paid by the Seller with respect to the sale of the Shares
      without the Section 338(h)(10) Elections, divided by (ii) 1 minus the sum
      of the federal income tax rate on capital gains plus the state income tax rate
      on capital gains plus the local income tax rate on capital gains applicable
      to
      Seller at the time indemnification payments are made under this
      Section 8.9(d). For purposes of calculating the amount of Taxes payable by
      Seller or which would have been payable by Seller had the election not been
      made, such amounts will be calculated without regard to tax attributes or
      then-current year taxable income or loss attributable to any member of the
      Seller Group (other than the Company). For avoidance of doubt, if a member
      of
      the Seller Group (other than the Company) has tax deductions which reduce the
      taxes payable by the Seller, then such deduction shall not be used in
      calculating taxes payable by the Seller for purposes of this Section. Purchaser
      shall indemnify Seller within thirty (30) days following Purchaser’s
      receipt of the submission by Seller to Purchaser of written calculations of
      the
      indemnification amount, supported by either (i) the actual tax returns of
      Seller, (ii) assessment of taxes by any Governmental Authority, or (iii) the
      Section 338 Forms and a calculation of the Company’s adjusted tax basis of its
      properties certified by an officer of the Seller and pro forma calculations
      of
      taxes which Seller would have paid with respect to the sale of the Shares
      without the Section 338(h)(10) Elections. Purchaser’s indemnification obligation
      under this Section 8.9(d) shall survive Closing and continue in effect
      until ninety (90) days following the expiration of the statute of
      limitations on all federal, state and local Taxes for any and all years in
      which
      payments of Adjusted Purchase Price are made under this Agreement. Purchaser’s
      indemnification obligations under this Section 8.9(d) shall not be subject
      to and shall not be limited by Article X. 

     

    ARTICLE
      9.  TERMINATION
      AND AMENDMENT

     

            Section
      9.1 Termination.
      This
      Agreement may be terminated at any time prior to Closing: (a) by the mutual
      prior written consent of the Parties, or the prior written agreement of
      Purchaser and the Seller; (b) by either Seller or Purchaser by notice to the
      other pursuant to Section 7.5; or (c) by either Seller or Purchaser by notice
      to
      the other if Closing has not occurred on or before one hundred eighty (180)
      days
      from the date of this Agreement or such other date as may be agreed to in
      writing by the Parties, provided, however, that no Party shall be entitled
      to
      terminate this Agreement under this Section 9.1(c) if Closing has failed to
      occur because such Party negligently or willfully failed to perform or observe
      in any material respect its covenants and agreements hereunder. 

     

    
      
        
        

      

      
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            Section
      9.2 Effect
      of
      Termination.
      If this
      Agreement is terminated pursuant to Section 9.1, this Agreement shall become
      void and of no further force or effect (except for the provisions of Article
      10
      and provided that all confidentiality provisions contained herein and in the
      Confidentiality Agreement shall survive termination). In the event of
      termination of this Agreement by Purchaser under Section 9.1(c) due to
      non-satisfaction of a closing condition set out in Section 6.2, Seller shall
      have no liability whatsoever to Purchaser, notwithstanding anything to the
      contrary in this Agreement. In the event of termination of this Agreement by
      Seller under Section 9.1(c) due to non-satisfaction of a closing condition
      set
      out in Section 6.1, Purchaser shall have no liability whatsoever to Seller,
      notwithstanding anything to the contrary in this Agreement. Termination of
      this
      Agreement by either Party under Section 9.1(c) shall not relieve the other
      Party
      from liability for any willful or negligent failure to perform or observe in
      any
      material respect any of its agreements or covenants contained herein that are
      to
      be performed or observed at or prior to Closing, and in such event, the
      first-mentioned Party shall be entitled to all remedies available at law or
      in
      equity, and shall be entitled to recover court costs, attorneys’ fees and any
      other relief to which such Party may be entitled.

     

    ARTICLE
      10. INDEMNIFICATION;
      LIMITATIONS

     

            Section
      10.1 Indemnification.

     

    (a) From
      and
      after Closing, Purchaser shall indemnify, defend and hold harmless Seller from
      and against all Damages:

     

    (i) caused
      by
      or arising out of or resulting from the condition, ownership, use or operation
      of the Assets or ownership of any of the Shares, whether before or after the
      Effective Time or the Closing Date (unless such Damages are the result of a
      breach of a representation or warranty by Seller as set forth in Section
      10.1(e));

     

    (ii) caused
      by
      or arising out of or resulting from Purchaser’s breach of any of Purchaser’s
      covenants or agreements contained in Article 5; or 

     

    (iii) caused
      by
      or arising out of or resulting from any breach of any representation or warranty
      made by Purchaser contained in Article 4 or in the certificate delivered by
      Purchaser at Closing pursuant to Section 7.3(c);

     

    EXCEPT
      TO
      THE EXTENT SUCH DAMAGES ARE CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE
      (WHETHER SOLE, JOINT OR CONCURRENT), STRICT LIABILITY OR OTHER LEGAL FAULT
      OF
      ANY INDEMNIFIED PERSON.

     

    (b) Except
      as
      provided for in Section 10.1(e), Purchaser releases, remises and forever
      discharges Seller and its Affiliates and all such Persons’ stockholders,
      officers, directors, trustees, employees, agents, advisors and representatives
      from any and all suits, legal or administrative proceedings, claims, demands,
      damages, losses, costs, liabilities, interest or causes of action whatsoever,
      at
      law or in equity, known or unknown, which Purchaser might now or subsequently
      may have, based on, relating to or arising out of this Agreement, the Shares
      of
      the Company or the Company’s ownership, use or operation of the Assets or the
      condition of the Assets, including any rights under insurance policies issued
      or
      underwritten by Seller or any of its Affiliates and any rights under agreements
      between the Company and Seller or any other Affiliate of the Company.
      Notwithstanding the foregoing, Purchaser and its heirs, legal representatives,
      successors and assignees retain, and do not release, their rights and interests
      under this Agreement and any documents to be delivered as set out
      herein.

     

    
      
        
        

      

      
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    (c) “Damages”,
      for
      purposes of this Agreement, shall mean the amount of any actual liability,
      loss,
      cost, expense, claim, award or judgment incurred or suffered by any Indemnified
      Person arising out of or resulting from the indemnified matter, whether
      attributable to personal injury or death, property damage, contract claims,
      torts or otherwise including reasonable fees and expenses of attorneys,
      consultants, accountants or other agents and experts reasonably incident to
      matters indemnified against, and the costs of investigation and/or monitoring
      of
      such matters, and the costs of enforcement of the indemnity; provided, however,
      that no Party shall be entitled to indemnification under this Section 10.1
      for,
      and “Damages” shall not include: (i) any loss of profits, other indirect or
      consequential damages, special damages, exemplary damages or punitive damages
      except those payable to third Persons; or (ii) any liability, loss, cost,
      expense, claim, award or judgment to the extent resulting from or increased
      by
      the actions or omissions of any Indemnified Person after the Closing
      Date.

     

    (d) The
      indemnities to which each Party is entitled under this Section 10.1 shall be
      for
      the benefit of and extend to such Party’s present and former Affiliates, and all
      of its respective directors, officers, employees and agents. Any claim for
      indemnity under this Section 10.1 by any such Affiliate, director, officer,
      employee or agent must be brought and administered by the relevant Party on
      behalf of such Indemnified Person. No Indemnified Person other than a Party
      hereto shall have any rights against any Party under the terms of this Section
      10.1 except as may be exercised on its behalf by the relevant Party pursuant
      to
      this Section 10.1(d). A Party may elect to exercise or not exercise
      indemnification rights under this Section on behalf of the other Indemnified
      Persons affiliated with it in its sole discretion and shall have no liability
      to
      any such other Indemnified Person for any action or inaction under this
      Section.

     

    (e) Subject
      to the limitations provided in this Section 10.1 and Section 10.3, in the event
      Seller breaches any of its representations and warranties contained in Sections
      3.2 through 3.22 herein or in the certificate delivered by Seller at Closing
      pursuant to Section 7.2(d), or breaches any of its covenants and agreements
      contained in Article 5, and, provided that Purchaser makes a written claim
      for
      indemnification against Seller pursuant to Section 10.2 below within the
      survival period, then Seller shall be obligated to indemnify Purchaser from
      and
      against the entirety of any Damages Purchaser may suffer resulting from, arising
      out of, relating to, in the nature of, or caused by the breach (or the alleged
      breach); provided,
      however,
      (A)
      that Seller shall not have any obligation to indemnify Purchaser from and
      against any Damages resulting from, arising out of, relating to, in the nature
      of, or caused by the breach of any representation or warranty of Seller
      contained in Sections 3.2 through 3.22 (except for Section 3.16) until the
      Purchaser shall have suffered Damages by reason of all such breaches in excess
      of a $500,000 aggregate threshold (at which point Seller will be obligated
      to
      indemnify Purchaser from and against all such Damages), and (B) that the
      aggregate liability of the Seller under this Section 10.1(e) with respect to
      the
      representations and warranties contained in Sections 3.4 through 3.22 shall
      not
      exceed fifteen percent (15%) of the Adjusted Purchase Price and with respect
      to
      all other Damages shall not exceed the Adjusted Purchase Price. For the
      avoidance of doubt, all materiality qualifications contained in any of the
      representations and warranties made in Article 3 or Article 4 of this Agreement,
      and/or any document required to be executed and delivered as set out herein,
      including the term “Material Adverse Effect” will be taken into account in this
      Article 10 solely for purposes of determining whether a breach or violation
      of
      such representation or warranty has occurred for which an indemnity obligation
      exists. Without limiting the generality of the foregoing, all such materiality
      qualifications will be ignored and not given effect for the purposes of
      determining the amount of Damages for any such breach or violation.

     

    
      
        
        

      

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

     

    (a) To
      make
      claim for indemnification under Section 10.1, an Indemnified Person shall notify
      the Purchaser or Seller, as applicable (the “Indemnifying
      Person”)
      of its
      claim, including the specific details of and specific basis under this Agreement
      for its claim (the “Claim
      Notice”).
      In
      the event that the claim for indemnification is based upon a claim by a third
      Person against the Indemnified Person (a “Claim”),
      the
      Indemnified Person shall provide its Claim Notice promptly after the Indemnified
      Person has actual knowledge of the Claim and shall enclose a copy of all papers
      (if any) served with respect to the Claim; provided that the failure of any
      Indemnified Person to give notice of a Claim as provided in this Section 10.2
      shall not relieve the Indemnifying Person of its obligations under Section
      10.1
      except to the extent such failure materially prejudices the Indemnifying
      Person's ability to defend against the Claim.

     

    (b) In
      the
      case of a claim for indemnification based upon a Claim, the Indemnifying Person
      shall have thirty (30) days from its receipt of the Claim Notice to notify
      the
      Indemnified Person whether it admits or denies its obligation to defend the
      Indemnified Person against such Claim under this Article 10. If the Indemnifying
      Person does not notify the Indemnified Person within such thirty (30) day period
      regarding whether Purchaser admits or denies its obligation to defend the
      Indemnified Person, the Damages for which the Indemnified Person is seeking
      indemnity shall be conclusively deemed a liability of the Indemnifying Person
      hereunder. The Indemnified Person is authorized, prior to and during such thirty
      (30) day period, to file any motion, answer or other pleading that it shall
      deem
      necessary or appropriate to protect its interests or those of the Indemnifying
      Person and that is not prejudicial to the Indemnifying Person.

     

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

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

       

    

    (d) If
      the
      Indemnifying Person does not admit its obligation to indemnify the Indemnified
      Person or admits its obligation but fails to diligently defend or settle the
      Claim, the Indemnified Person shall have the right to defend against the Claim
      (at the sole cost and expense of the Indemnifying Person, if the Indemnified
      Person is entitled to indemnification hereunder), with counsel of the
      Indemnified Person’s choosing, subject to the right of the Indemnifying Person
      to admit its obligation to indemnify the Indemnified Person and assume the
      defense of the Claim at any time prior to the settlement or the final
      determination thereof. If the Indemnifying Person has not yet admitted its
      obligation to indemnify the Indemnified Person, the Indemnified Person shall
      send written notice to the Indemnifying Person of any proposed settlement and
      the Indemnifying Person shall have the option for ten (10) days following
      receipt of such notice to: (i) admit in writing its obligation for
      indemnification with respect to such Claim; and (ii) if its obligation is so
      admitted, assume the defense of the Claim, including the power to reject the
      proposed settlement. If the Indemnified Person settles any Claim over the
      objection of the Indemnifying Person after the Indemnifying Person has timely
      admitted its obligation for indemnification in writing and assumed the defense
      of the Claim, the Indemnified Person shall be deemed to have waived any right
      to
      indemnity for such Claim hereunder.

     

    (e) In
      the
      case of a claim for indemnification not based upon a Claim, the Indemnifying
      Person shall have thirty (30) days from its receipt of the Claim Notice to:
      (i)
      cure the Damages complained of; (ii) admit its obligation to indemnify the
      Indemnified Person for such Damages; or (iii) dispute the Indemnified Person’s
      claim for such Damages. If the Indemnifying Person does not notify the
      Indemnified Person within such thirty (30) day period that it has cured the
      Damages or that it disputes the claim for such Damages, the amount of such
      Damages shall conclusively be deemed an obligation of the Indemnifying Person
      hereunder.

     

    Section
      10.3 Limitation
      on Actions.

     

    (a) All
      of
      the representations and warranties of the Parties contained in this Agreement
      shall survive Closing and continue in full force and effect for a period of
      eighteen (18) months thereafter; provided, however, that the representations
      and
      warranties in Sections 3.1, 3.2(a)-(c), 3.2(e), 3.3(a)-(b), 3.3(d)-(p), 3.16,
      4.1, 4.2, 4.3 and 4.5 through 4.11 shall survive without limitation as to time.
      Covenants shall survive Closing in accordance with their terms and any covenants
      or agreements contained in this Agreement that by their terms are to be
      performed after Closing shall survive until fully discharged. Notwithstanding
      the foregoing, there shall be no termination of any bona fide claim asserted
      by
      Seller pursuant to this Agreement with respect to a representation, warranty,
      covenant or agreement of Purchaser prior to its expiration date.

     

    (b) The
      indemnities in Sections 10.1(a)(ii), 10.1(a)(iii) and 10.1(e) shall terminate
      as
      of the termination date of each respective representation, warranty, covenant
      or
      agreement that is subject to indemnification, except in each case as to matters
      for which a specific written claim for indemnity has been delivered to the
      Indemnifying Party on or before such termination date. The indemnity in Section
      10.1(a)(i) shall continue without time limit.

     

     

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

     

    Section
      10.4 Exclusive
      Remedy. 

     

    The
      indemnification provisions of this Article 10 and Section 8.9 shall, following
      Closing, be the sole remedy for the parties hereto for enforcement of the
      provisions of this Agreement, including claims for any breach, default or other
      violation of the terms of this Agreement.

     

    
      
        
        

      

      
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    ARTICLE
      11. MISCELLANEOUS

     

            Section
      11.1 Limitation
      on Damages.
      No Party or any Affiliate of a Party shall be entitled to indirect or
      consequential damages, special damages, exemplary damages or punitive damages
      in
      connection with this Agreement and the transactions contemplated hereby, except
      those payable to third Persons for which responsibility is allocated among
      the
      Parties under this Agreement, and each Party, for itself and on behalf of its
      Affiliates, hereby expressly waives any right to indirect or consequential
      damages, special damages, exemplary damages or punitive damages in connection
      with this Agreement and the transactions contemplated hereby.

     

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

     

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

     

    
      	If to Seller:	UP
              Energy Corporation 
              
                363
                  North Sam Houston Parkway East,

              

              Houston,
                Texas 77060

              Attention: Marshall
                D. Smith

              Telephone: 281.876.0120

              Facsimile: 281.876.2831

            
	
              
              

            	
            
	
              With
                a copy to   

              (which
                shall not 

            	
            
	
              constitute
                notice): 

            	Haynes and Boone, LLP
              1221
                McKinney Street, Suite 2100

              Houston,
                Texas 77010-2007

              Attention: George
                G. Young III

              Telephone:
                 713.547.2081

              Facsimile: 713.236.5699

            
	
            	
               

            
	If to Purchaser:	
              SPC
                E&P (China) Pte. Ltd.

              1
                Maritime Square, #10-10

              HarbourFront
                Center

              Singapore
                099253

              Attention: Brian
                K. Boslaugh

              Telephone: (65)
                6276.6006

              Facsimile: (65)
                6271.1829

            
	
            	
              
              

            
	
              With
                a copy to   

              (which
                shall not 

            	
            
	constitute notice):	SPC E&P (China) Pte. Ltd.
              1
                Maritime Square, #10-10

              HarbourFront
                Center

              Singapore
                099253

              Attention: Helen
                Chong/Sharon Pang

              Telephone: (65)
                6276.6006

              Facsimile: (65)
                6271.1963

            

    

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    
      	
              With
                a copy to   

              (which
                shall not 

            	
            
	constitute notice):	Vinson & Elkins LLP
              No.
                149 Yan Qing Road

              Shanghai
                P.R. China 200031

              Attention: David
                M. Blumental

              Telephone: (86)
                21.6474.8088

              Facsimile: (86)
                21.6474.8099

            

    

     

    A
      Party
      may change its address for notice by notice to the other Party in the manner
      set
      forth above. All notices shall be deemed to have been duly given at the time
      of
      receipt by the Party to which such notice is addressed.

     

            Section
      11.4 Expenses.
      Except
      as provided in Section 8.8, all expenses incurred by a Party in connection
      with
      or related to the authorization, preparation or execution of this Agreement,
      and
      the Exhibits and Schedules hereto and thereto, and all other matters related
      to
      Closing, including all fees and expenses of counsel, accountants and financial
      advisers employed by such Party, shall be borne solely and entirely by such
      Party.

     

            Section
      11.5 Records.

     

                (a) No
      later
      than thirty (30) Business Days after the Closing Date, Seller shall deliver
      or
      cause to be delivered to Purchaser any Records that are in the possession of
      Seller or its Affiliates, subject to Section 11.5(b).

                

                (b) 
      Seller
      may retain the originals of those Records relating to Tax and accounting matters
      or ongoing litigation, if any, and provide Purchaser with copies thereof. Seller
      may retain copies of any other Records.

     

                (c) Purchaser,
      for a period of seven (7) years following the Closing Date, shall:
      (i) retain the Records existing as of the Closing Date; and (ii) provide
      Seller and its Affiliates upon request with reasonable access to the Records
      during normal business hours for review and copying at Seller’s
      expense.

     

            Section
      11.6 Governing
      Law.
      This
      Agreement and the legal relations between the Parties shall be governed by
      and
      construed in accordance with the Laws of the State of New York, USA, without
      regard to principles of conflicts of laws that would direct the application
      of
      the Laws of another jurisdiction. 

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

       

    

            Section
      11.7 Arbitration.
      It is
      agreed, as a severable and independent arbitration agreement separately
      enforceable from the remainder of this Agreement, that any dispute, controversy
      or claim arising out of or in relation to or in connection with this Agreement
      (other than a dispute, controversy or claim arising out of or in relation to
      or
      in connection with the calculation of the Adjusted Purchase Price, which shall
      be resolved in accordance with Section 7.4(b)), including any dispute as to
      the
      construction, validity, interpretation, enforceability, or breach of this
      Agreement, shall be exclusively and finally settled by arbitration in accordance
      with this Section 11.7. Any Party may submit such a dispute, controversy or
      claim to arbitration by notice to the other Parties and the administrator for
      the London Court of International Arbitration (“LCIA”).
      The
      arbitration proceedings shall be conducted in London, England in accordance
      with
      the Rules of the LCIA (“LCIA
      Rules”)
      as in
      effect on the Execution Date. The arbitration shall be heard and determined
      by
      three (3) arbitrators. Seller shall appoint one (1) arbitrator and Purchaser
      shall appoint one (1) arbitrator within twenty (20) days of the submission
      of
      the notice of arbitration. The Party-appointed arbitrators shall in turn appoint
      a presiding arbitrator for the tribunal within twenty (20) days following the
      appointment of the second Party-appointed arbitrator. If the Party-appointed
      arbitrators cannot reach agreement on a presiding arbitrator for the tribunal
      and/or Seller or Purchaser fails to appoint its Party-appointed arbitrator
      within the applicable period, the LCIA shall act as appointing authority to
      appoint an independent arbitrator with at least ten (10) years experience in
      the
      legal and/or commercial aspects of the petroleum industry. None of the
      arbitrators shall have been an employee of or consultant to any Party or any
      of
      its Affiliates within the five (5) year period preceding the arbitration, or
      have any financial interest in the dispute, controversy or claim. All decisions
      of the arbitral tribunal shall be by majority vote. The arbitration shall be
      conducted in the English language. The arbitrators may not award indirect or
      consequential damages, special damages, exemplary damages or punitive damages,
      other than those payable to third Persons for which responsibility is being
      allocated among the Parties, and consequential damages permissible under Section
      9.2. Each Party shall pay its own expenses in connection with the arbitration,
      but the compensation and expenses of the arbitrators as well as any fees payable
      to the LCIA in connection with such arbitration shall be borne in such manner
      as
      may be specified in the arbitral award. Privileges protecting attorney-client
      communications and attorney work product from compelled disclosure or use in
      evidence, as recognized by the courts of the State of New York, shall apply
      to
      and be binding in any arbitration proceeding conducted under this Section
      11.7.

     

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

     

            Section
      11.9  Waivers.
      Any
      failure by any Party to comply with any of its obligations, agreements or
      conditions herein contained may be waived by the Party or Parties to whom such
      compliance is owed by an instrument signed by the Party or Parties to whom
      compliance is owed and expressly identified as a waiver, but not in any other
      manner. No waiver of, or consent to a change in, any of the provisions of this
      Agreement shall be deemed or shall constitute a waiver of, or consent to a
      change in, other provisions hereof (whether or not similar), nor shall such
      waiver constitute a continuing waiver unless otherwise expressly
      provided.

     

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

     

            Section
      11.11 Entire
      Agreement.
      The
      Confidentiality Agreement, this Agreement, the Exhibits and Schedules attached
      hereto and the documents to be executed hereunder constitute the entire
      agreement among the Parties pertaining to the subject matter hereof, and
      supersede all prior agreements, understandings, negotiations and discussions,
      whether oral or written, of the Parties pertaining to the subject matter
      hereof.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

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

     

            Section
      11.13 No
      Third-Person Beneficiaries.
      Nothing
      in this Agreement shall entitle any Person other than the Parties to any claim,
      cause of action, remedy or right of any kind, except the rights expressly
      provided to the Persons described in Section 10.1(d).

     

            Section
      11.14 References.

     

    In
      this
      Agreement:

     

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

     

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

     

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

     

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

     

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

     

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

     

    (g) The
      word
“or” is not exclusive; and

     

    (h) Currency
      amounts referred to herein, unless otherwise specified, are in United States
      dollars. For purposes of determining whether dollar thresholds described in
      this
      Agreement have been exceeded when the relevant contract, debt, claim or other
      item described relates to currencies other than United States dollars, the
      exchange rates used to make such determination shall be the exchange rates
      quoted by the JPMorgan Chase Bank, New York as of 9 a.m. New York time on the
      date of the representation or warranty (being the Execution Date or the Closing
      Date, as applicable). 

     

            Section
      11.15 Construction.
      Purchaser is a party capable of making such investigation, inspection, review
      and evaluation of the Shares and the Assets as a prudent purchaser would deem
      appropriate under the circumstances including with respect to all matters
      relating to the Shares and the Assets, their value, operation and suitability.
      Each Party was represented by independent counsel of its own choosing in the
      drafting, preparation and negotiation of this Agreement, and has had the
      opportunity to exercise business discretion in relation to the negotiation
      of
      the details of the transactions contemplated hereby. This Agreement is the
      result of arm’s length negotiations from equal bargaining positions. It is
      expressly agreed that this Agreement shall not be construed against any Party,
      and no consideration shall be given or presumption made, on the basis of who
      drafted this Agreement or any particular provision hereof or who supplied the
      form of Agreement.

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

            Section
      11.16 Severability.
      If at any time any provision of this Agreement is or become illegal, invalid
      or
      unenforceable in any respect under the Laws of any jurisdiction that shall
      not
      affect or impair (a) the legality, validity or enforceability in that
      jurisdiction of any other provision of this Agreement; or (b) the legality,
      validity or enforceability under the Laws of any other jurisdiction of that
      or
      any other provision of this Agreement. In such event, the Parties hereto agree
      and consent that such provisions and this Agreement shall be modified and
      reformed so as to effect the original intent of the Parties as closely as
      possible with respect to those provisions which were held to be invalid or
      unenforceable. 

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, this Agreement has been signed by each of the Parties on the
      Execution Date.

     

    
      	
               SELLER:

            	 	
              UP
                ENERGY CORPORATION

            
	 	 	 	 
	 	 	 	 
	 	 	By:	/s/
              Marshall D. Smith
	
            	 	Title:	
              
 Chief
              Financial Officer
	 	 	 	 

    

     

    
      	 	 	 	 
	
               PURCHASER:

            	 	
              SPC
                E&P (CHINA) PTE. LTD.

            
	 	 	 	 
	 	 	By:	 /s/
              Brian K. Boslaugh
	
            	 	Title: 	
              
Authorized
              Representative
	 	 	 	 

    

     

    
      
        
        

      

      
        41

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