Document:

Registration Rights Agreement

 Exhibit 4.1 
  
 REGISTRATION RIGHTS AGREEMENT 
  

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of July 7, 2005, by and between
Rosetta Resources Inc., a Delaware corporation (the “Company”), and Friedman, Billings, Ramsey & Co., Inc., a Delaware corporation (“FBR”), for the benefit of the purchasers of the
Company’s common stock, par value $0.001 per share (the “Common Stock”), as participants (“Participants”) in the private placement by the Company of shares of its Common Stock (the
“Private Placement”) and the direct and indirect transferees of FBR and each of the Participants. 
  
 W I T N E S S E T H : 
  
 WHEREAS, the Company and FBR entered into that certain Purchase/Placement Agreement dated as of June 30, 2005 (the “Placement
Agreement”), in connection with which on July 7, 2005, the Company sold or placed 45,312,500 newly issued shares [(plus an additional [6,795,875] to cover additional allotments, if any)] of the Common
Stock, with FBR acting as initial purchaser of the 144A/Regulation S Shares (as defined herein) and placement agent with respect to the Private Placement Shares (as defined herein); 
  
 WHEREAS, to induce FBR to enter into the Placement Agreement, the Company has agreed to provide the registration
rights provided for in this Agreement for the holders of Registrable Shares (as defined below); and 
  
 WHEREAS, the execution of this Agreement is a condition to the closing of the transactions contemplated by the Placement Agreement. 
  
 NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereto, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 
  
 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: 
  
 “144A/Regulation S Shares” means the shares of
Common Stock initially sold to FBR in the Private Placement and resold by FBR to “qualified institutional buyers” (as such term is defined in Rule 144A) or to “non-U.S. persons” (in accordance with Regulation S) in an
“offshore transaction” (in accordance with Regulation S). 
  
 “Affiliate” means, as to any specified Person, (i) any Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the specified Person,
(ii) any executive officer, director, trustee or general partner of the specified Person and (iii) any legal entity for which the specified Person acts as an executive officer, director, trustee or general partner. For purposes of this
definition, “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly, or indirectly through one or
more intermediaries, of the power to direct or cause the direction of the management and policies of such Person, whether by contract, through the ownership of voting securities, partnership interests or other equity interests or otherwise.

  

 1 

 “Agreement” is defined in the introductory paragraph of this Agreement.

  
 “Business Day” means each Monday,
Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by applicable law, regulation or executive order to close. 
  
 “Closing Date” means the Closing Date as defined in
the Placement Agreement. 
  
 “Commission”
means the Securities and Exchange Commission. 
  
 “Common Stock” is defined in the introductory paragraph of this Agreement. 
  
 “Company” is defined in the introductory paragraph of this Agreement, and includes any successor thereto. 
  
 “Controlling Person” is defined in Section 6(a).

  
 “End of Suspension Notice” is defined
in Section 5(b). 
  
 “Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission pursuant thereto. 
  
 “FBR” is defined in the introductory paragraph of this Agreement, and includes any successor thereto. 
  
 “Holder” means each record owner of any Registrable
Shares from time to time, including FBR and its Affiliates. 
  
 “Indemnified Party” is defined in Section 6(c). 
  
 “Indemnifying Party” is defined in Section 6(c). 
  
 “IPO Registration Statement” is defined in Section 7. 
  
 “Liabilities” is defined in Section 6(a). 
  
 “Mandatory Shelf Registration Statement” is defined
in Section 2(a). 
  
 “NASD” means the
National Association of Securities Dealers, Inc. 
  
 “No Objections Letter” is defined in Section 4(t). 
  
 “Notice and Questionnaire” is defined in Section 2(a)(iii). 
  
 “Participants” is defined in the introductory paragraph of this Agreement. 
  

 2 

 “Person” means an individual, limited liability company, partnership,
corporation, trust, unincorporated organization, government or agency or political subdivision thereof, or any other legal entity. 
  
 “Piggyback Registration Statement” is defined in Section 2(b). 
  
 “Placement Agreement” is defined in the first recital clause of this Agreement 
  
 “Private Placement Shares” means Shares initially
sold by the Company directly to “accredited investors” (within the meaning of Rule 501(a) promulgated under the Securities Act) as Participants, with FBR acting as placement agent. 
  
 “Prospectus” means the prospectus included in any
Registration Statement, including any preliminary prospectus, and all other amendments and supplements to any such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference,
if any, in such prospectus. 
  
 “Purchaser
Indemnitee” is defined in Section 6(a). 
  
 “Registrable Shares” means the 144A/Regulation S Shares and the Private Placement Shares, upon original issuance thereof, and at all times subsequent thereto, including upon the transfer thereof by the original
holder or any subsequent holder and any shares or other securities issued in respect of such Registrable Shares by reason of or in connection with any stock dividend, stock distribution, stock split, purchase in any rights offering or in connection
with any exchange for or replacement of such Registrable Shares or any combination of shares, recapitalization, merger or consolidation, or any other equity securities issued pursuant to any other pro rata distribution with respect to the Common
Stock, until, in the case of any such 144A/Regulation S Share or Private Placement Share, the earliest to occur of: 
  
 (i) the date on which it has been sold pursuant to a Registration Statement or sold pursuant to Rule 144; 
  
 (ii) the date on which it is saleable, in the opinion of
counsel to the Company, without registration under the Securities Act, pursuant to Rule 144(k); 
  
 (iii) the date on which it is saleable, without restriction, pursuant to an available exemption from registration under the Securities
Act; or 
  
 (iv) the date on which it is sold to
the Company or its subsidiaries. 
  
 “Registration
Default” is defined in Section 2(d). 
  
 “Registration Expenses” means any and all expenses incident to the performance of or compliance with this Agreement, including: (i) all Commission, securities exchange, NASD registration, listing, inclusion and
filing fees (including those of FBR and Holders associated or 
  

 3 

 affiliated with FBR), (ii) all fees and expenses incurred in connection with compliance with international, federal
or state securities or blue sky laws (including any registration, listing and filing fees and reasonable fees and disbursements of counsel in connection with blue sky qualification of any of the Registrable Shares and the preparation of a blue sky
memorandum and compliance with the rules of the NASD), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, duplicating, printing, delivering and distributing any Registration Statement, any Prospectus, any
amendments or supplements thereto, any underwriting agreements, securities sales agreements, certificates and any other documents relating to the performance under and compliance with this Agreement, (iv) all fees and expenses incurred in
connection with the listing or inclusion of any of the Registrable Shares on the New York Stock Exchange, the American Stock Exchange or The NASDAQ Stock Market pursuant to Section 4(n), (v) the fees and disbursements of counsel for the
Company and of the independent public accountants of the Company (including the expenses of any special audit and “cold comfort” letters required by or incident to such performance), and (vi) any fees and disbursements customarily
paid in issues and sales of securities (including the fees and expenses of any experts retained by the Company in connection with any Registration Statement), provided, however, that Registration Expenses shall exclude brokers’ or
underwriters’ discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Shares by a Holder and the fees and disbursements of any counsel to the Holders other than as provided for in clause
(v) above. 
  
 “Registration
Statement” means any Mandatory Registration Statement or Piggyback Registration Statement. 
  
 “Regulation S” means Regulation S (Rules 901-904) promulgated by the Commission under the Securities Act, as such rules may be
amended from time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such regulation. 
  
 “Rule 144”, “Rule 144A”, “Rule 158”,
“Rule 415”, “Rule 424”, or “Rule 429”, respectively, means such specified rule promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the Commission as a replacement thereto having substantially the same effect as such rule. 
  

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission
thereunder. 
  
 “Shares” means the Shares
of Common Stock being offered and sold pursuant to the terms and conditions of the Placement Agreement. 
  
 “Suspension Event” is defined in Section 5(b). 
  
 “Suspension Notice” is defined in Section 5(b). 
  

 4 

 “Underwritten Offering” means a sale of securities of the Company to an
underwriter or underwriters for reoffering to the public. 
  
 2. Registration
Rights. 
  
 (a) Mandatory Shelf Registration.
As set forth in Section 4, the Company agrees to file with the Commission as soon as reasonably practicable, but in no event later than one hundred twenty (120) days following the Closing Date, (A) a shelf registration statement
on Form S-1 or such other form under the Securities Act then available to the Company providing for the resale pursuant to Rule 415 from time to time by the Holders (including the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement, the “Mandatory Shelf
Registration Statement”), If the Company has an effective Mandatory Shelf Registration Statement on Form S-1 under the Securities Act and becomes eligible to use Form S-3 or such other short-form registration statement form under the
Securities Act, the Company shall promptly give notice of such eligibility to the Holders covered thereby and may, or at the request of such Holders with a majority of such Registrable Shares shall, promptly convert such Mandatory Shelf Registration
Statement on Form S-1 to a registration statement on Form S-3 or such other short-form registration statement by means of a post-effective amendment or otherwise, unless any Holder with Registrable Shares under the initial Mandatory Shelf
Registration Statement notifies the Company within ten (10) Business Days of receipt of the Company notice that such conversion would interfere with its distribution of Registrable Shares already in progress and provides a reasonable
explanation therefor, in which case the Company will delay the conversion of the Mandatory Shelf Registration Statement for a reasonable time after receipt of the first such notice, not to exceed thirty (30) days in the aggregate, for all
Holders requesting such suspension (unless the Company, at such time as the conversion from Form S-1 to Form S-3 or such other short-form registration statement may occur, would otherwise be required to amend the Mandatory Shelf Registration
Statement and require that Holders suspend sales under Section 4(i) or Section 5). 
  
 (i) Effectiveness and Scope. The Company shall use its commercially reasonable efforts to cause the Mandatory Registration Statement to be declared effective by the Commission as soon as reasonably practicable
following such filing, and to remain effective until the date on which all Shares in respect thereof cease to be Registrable Shares. No other Person would have the right to include securities on the Mandatory Shelf Registration Statement. The
Mandatory Shelf Registration Statement shall provide for the resale from time to time, and pursuant to any method or combination of methods legally available (including an Underwritten Offering, a direct sale to purchasers, a sale through brokers or
agents, or a sale over the internet) by the Holders of any and all Registrable Shares. 
  
 (ii) Underwriting. If any Holder proposes to conduct an Underwritten Offering under the Mandatory Shelf Registration Statement, such Holder shall advise the Company and all other Holders whose securities are
included in the Mandatory Shelf Registration Statement (if applicable), of the managing underwriters for such proposed Underwritten Offering (which may be FBR or an Affiliate thereof); such managing underwriters to be subject to the approval of the
Company, not to be unreasonably withheld. In such event, 
  

 5 

 the Company shall enter into an underwriting agreement in customary form with the managing underwriters, which shall
include, among other provisions, indemnities to the effect and to the extent provided in Section 6, and shall take all such other reasonable actions as are requested by the managing underwriter in order to expedite or facilitate the
registration and disposition of the Registrable Shares included in such Underwritten Offering; provided, however, that the Company shall be required to cause appropriate officers of the Company or its Affiliates to participate in a “road
show” or similar marketing effort being conducted by such underwriter with respect to such Underwritten Offering only if the Holders reasonably anticipate gross proceeds from such Underwritten Offering of at least $10 million. All Holders
proposing to distribute their Registrable Shares through such Underwritten Offering shall enter into an underwriting agreement in customary form with the managing underwriters selected for such underwriting and complete and execute any
questionnaires, powers of attorney, indemnities, securities escrow agreements and other documents reasonably required under the terms of such underwriting, and furnish to the Company such information in writing as the Company may reasonably request
for inclusion in the Registration Statement; provided, however, that no Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or
agreements as are customary and reasonably requested by the underwriters. Notwithstanding any other provision of this Agreement, with respect to an Underwritten Offering in connection with the Mandatory Shelf Registration Statement, if the managing
underwriters determine in good faith that marketing factors require a limitation on the number of shares to be included in such Underwritten Offering, then the managing underwriters may exclude shares (including Registrable Shares) from the
Underwritten Offering, and any shares included in the Underwritten Offering shall be allocated to each of the Holders requesting inclusion of their Registrable Shares in such Underwritten Offering on a pro rata basis based on the total number
of Registrable Shares requested to be included. 
  
 (iii)
Selling Stockholder Questionnaires. Each Holder agrees, by its acquisition of Shares, that if such Holder wishes to sell Registrable Shares pursuant to the Mandatory Shelf Registration Statement and related Prospectus, it will do so only in
accordance with this Section 2(a)(iii). Each Holder wishing to sell Registrable Shares pursuant to the Mandatory Shelf Registration Statement and related Prospectus agrees to deliver a written notice, substantially in form and substance of
Annex A (a “Notice and Questionnaire”), to the Company. The Company shall mail the Notice and Questionnaire to the Holders no later than the date of initial filing of the Mandatory Shelf Registration Statement with the
Commission. No Holder shall be entitled to be named as a selling securityholder in the Mandatory Shelf Registration Statement as of the initial effective date of the Mandatory Shelf Registration Statement, and no Holder may use the Prospectus
forming a part thereof for resales of Registrable Shares at any time, unless such Holder has returned a completed and signed Notice and Questionnaire to the Company by the deadline for response set forth therein; provided, however, Holders shall
have at least twenty (20) days from the date on which the Notice and Questionnaire is first mailed to such Holders to return a completed and signed Notice and Questionnaire to the Company. Notwithstanding the foregoing, (x) upon the
request of any Holder that did not return a Notice and Questionnaire on a timely basis or did not receive a Notice and Questionnaire because it was a subsequent transferee of Registrable Shares after the Company mailed the Notice and Questionnaire,
the Company shall distribute a Notice and Questionnaire to such Holders at the address set forth in the request and (y) upon receipt of a properly completed Notice and Questionnaire from such Holder, the 

  

 6 

 
Company shall use its commercially reasonable efforts to name such Holder as a selling securityholder in the Mandatory Shelf Registration Statement by means
of a pre-effective amendment, by means of a post-effective amendment or, if permitted by the Commission, by means of a Prospectus supplement to the Mandatory Shelf Registration Statement; provided, however, that the Company will have no obligation
to add Holders to the Shelf Mandatory Registration Statement as selling securityholders more frequently than one time per every thirty (30) calendar days. 
  

(b) Piggyback Registration. If, after the date hereof, the Company proposes to file a registration statement under the Securities Act
providing for a public offering of the Company’s equity securities, other than the Mandatory Shelf Registration Statement, or a registration statement on Form S-8 or Form S-4 or any similar form hereafter adopted by the Commission as a
replacement therefor (including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed to be
incorporated by reference, if any, in such registration statement, the “Piggyback Registration Statement”), the Company will notify each Holder of the proposed filing if clause (i) or (ii) of the following sentence
applies, or only those affected Holders if clause (iii) of the following sentence applies. If (i) the Piggyback Registration Statement relates to an Underwritten Offering, (ii) the Mandatory Shelf Registration Statement is not then
effective or (iii) Registrable Shares eligible for inclusion on the Mandatory Shelf Registration Statement when initially declared effective were not included in the Mandatory Shelf Registration Statement (unless such shares can and will be
added to the Mandatory Registration Statement at such time), then each Holder in the case of clause (i) and (ii), and each such affected Holder in the case of clause (iii), shall be given an opportunity to include in such Piggyback Registration
Statement all or any part of such Holder’s Registrable Shares. Each such Holder desiring to include in any such Piggyback Registration Statement all or part of such Holder’s Registrable Shares shall, within ten (10) days after
delivery of the above-described notice by the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Shares such Holder wishes to include in such Piggyback Registration Statement and
provide, as a condition to such inclusion, such information regarding itself, its Registrable Shares and the intended method of disposition of such securities as is required pursuant to Regulation S-K promulgated under the Securities Act to effect
the registration of the Registrable Shares. Any election by any Holder to include any Registrable Shares in such Piggyback Registration Statement will not affect the inclusion of such Registrable Shares in the Mandatory Shelf Registration Statement
until such Registrable Shares have been sold under the Piggyback Registration Statement; provided, however, that at such time, the Company may remove from the Mandatory Shelf Registration Statement the Registrable Shares sold pursuant to the
Piggyback Registration Statement. 
  
 (i) Right to Terminate
Piggyback Registration. At any time, the Company may terminate or withdraw any Piggyback Registration Statement referred to in this Section 2(b), and without any obligation to any such Holder whether or not any Holder has elected to
include Registrable Shares in such registration. The Company may suspend the effectiveness and use of any Piggyback Registration Statement at any time for an unlimited amount of time whether or not any Holder has elected to include Registrable
Shares in such registration. 
  

 7 

 (ii) Underwriting. The Company shall advise the Holders of the managing underwriters for any
Underwritten Offering proposed under the Piggyback Registration Statement. The right of any such Holder’s Registrable Shares to be included in any Piggyback Registration Statement pursuant to this Section 2(b) shall be conditioned upon
such Holder’s participation in such Underwritten Offering and the inclusion of such Holder’s Registrable Shares in the Underwritten Offering to the extent provided herein. All Holders proposing to distribute their Registrable Shares
through such Underwritten Offering shall enter into an underwriting agreement in customary form with the managing underwriters selected for such underwriting and complete and execute any questionnaires, powers of attorney, indemnities, securities
escrow agreements and other documents reasonably required under the terms of such underwriting, and furnish to the Company such information in writing as the Company may reasonably request for inclusion in the Registration Statement; provided,
however, that no Holder shall be required to make any representations or warranties to or agreements with the Company or the underwriters other than representations, warranties or agreements as are customary and reasonably requested by the
underwriters. Notwithstanding any other provision of this Agreement, if the managing underwriters determine in good faith that marketing factors require a limitation on the number of shares to be included, then the managing underwriters may exclude
shares (including Registrable Shares) from the Piggyback Registration Statement and the Underwritten Offering, and any Shares included in the Piggyback Registration Statement and the Underwritten Offering shall be allocated, first, to the
Company, and second, to any Person exercising demand registration rights that are the basis for such registration, and third, to each of the Holders requesting inclusion of their Registrable Shares in such Piggyback Registration
Statement on a pro rata basis based on the total number of such shares requested to be included. If any Holder disapproves of the terms of any Underwritten Offering, such Holder may elect to withdraw therefrom by written notice to the Company
and the underwriter, delivered at least ten (10) Business Days prior to the effective date of the Piggyback Registration Statement. Any Registrable Shares excluded or withdrawn from such Underwritten Offering shall be excluded and withdrawn
from the Piggyback Registration Statement. 
  
 (iii) Hold-Back
Agreement. By electing to include Registrable Shares in the Piggyback Registration Statement, if any, the Holder shall be deemed to have agreed not to effect any sale or distribution of securities of the Company of the same or similar class or
classes of the securities included in the Registration Statement or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act, during such periods as reasonably
requested (but in no event for a period longer than sixty (60) days following the effective date of the Piggyback Registration Statement, provided each of the executive officers and directors of the Company that hold shares of Common Stock of
the Company or securities convertible into or exchangeable or exercisable for shares of Common Stock of the Company are subject to the same restriction for the entire time period required of the Holders hereunder) by the representatives of the
underwriters, if an Underwritten Offering. 
  
 (iv) Mandatory
Shelf Registration not Impacted by Piggyback Registration Statement. The Company’s obligation to file any Mandatory Shelf Registration Statement shall not be affected by the filing or effectiveness of the Piggyback Registration
Statement. 
  

 8 

 (c) Expenses. The Company shall pay all Registration Expenses (including those of FBR and Holders
affiliated or associated with FBR) in connection with the registration of the Registrable Shares pursuant to this Agreement. Each Holder participating in a registration pursuant to this Section 2 shall bear such Holder’s proportionate
share (based on the total number of Registrable Shares sold in such registration) of all discounts and commissions payable to underwriters or brokers and all transfer taxes in connection with a registration of Registrable Shares pursuant to this
Agreement and any other expense of the Holders not specifically allocated to the Company pursuant to this Agreement relating to the sale or disposition of such Holder’s Registrable Shares pursuant to any Registration Statement. 
  
 (d) Executive Bonus. If either (i) the Company does not file the
Mandatory Shelf Registration Statement within one hundred twenty (120) days after the Closing Date, other than as a result of the Commission being unable to accept such filings or (ii) the Mandatory Shelf Registration Statement has not
become effective within two hundred ten (210) days after the Closing Date (each a “Registration Default”), then B.A. Berilgen, the President, Chief Executive Officer and Chairman of the Board of Directors of the Company,
or his successor, shall forfeit 1.0% of any cash bonus to which he became entitled or earned as a result of performance during the 2005 fiscal year (whether or not payable in 2005), whether under an employment agreement with the Company, a bonus
plan or any other bonus arrangement, including any bonus compensation for which payment would otherwise be deferred until after 2005, for each business day the Registration Default continues, up to a maximum amount of $380,000; provided,
however that such forfeiture shall not apply at any time when the Company has endeavored in good faith to file the Registration Statement within the time period specified but is unable to make the filing as of the specified date as a result of
circumstances beyond the Company’s reasonable control. 
  
 3. Rule 144 and
Rule 144A Reporting. 
  
 With a view to making available the
benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Shares to the public without registration, the Company agrees to, so long as any Holder owns any Registrable Shares: 
  
 (a) make and keep adequate current public information available, as those
terms are understood and defined in Rule 144(c) at all times after the effective date of the first registration statement filed by the Company relating to an offering of the Company’s securities to the general public; 
  
 (b) use its commercially reasonable efforts to file with the Commission in a
timely manner all reports and other documents required to be filed by the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); 
  
 (c) so long as a Holder owns any Registrable Shares constituting
144A/Regulation S Shares, if the Company is not required to file reports and other documents under the Securities Act and the Exchange Act, it will make available other information as required by, and so long as necessary to permit sales of
Registrable Shares pursuant to, Rule 144 or Rule 144A; and 
  

 9 

 (d) furnish to any Holder promptly upon request a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date the first registration statement filed by the Company for an offering of its securities to the general public) and of the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company, and take such reasonable further actions consistent with this Section 3, as a Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Holder to sell any such Registrable Shares without registration. 
  
 4. Registration Procedures. 
  
 In connection with the obligations of the Company with respect to any registration pursuant to this Agreement, the Company shall: 
  
 (a) notify FBR, in writing, at least ten (10) Business Days prior to
filing a Registration Statement, of its intention to file a Registration Statement with the Commission and, at least five (5) Business Days prior to filing, provide a copy of the Registration Statement to FBR; prepare and file with the
Commission, as specified in this Agreement, each Registration Statement, which Registration Statement shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the
Commission to be filed therewith and shall be acceptable to FBR; notify FBR at least five (5) Business Days prior to filing of any amendment or supplement to such Registration Statement and, at least three (3) Business Days prior to
filing, provide a copy of such amendment or supplement to FBR for review and comment; promptly following receipt from the Commission, provide to FBR copies of any comments made by the staff of the Commission relating to such Registration Statement
and the Company’s responses thereto for review and comment; and use its commercially reasonable efforts to cause such Mandatory Shelf Registration Statement to become effective as soon as practicable after filing and to remain effective as set
forth in Section 2(a)(i); 
  
 (b) subject to
Section 4(i), (i) prepare and file with the Commission such amendments and post-effective amendments to each such Registration Statement as may be necessary to keep such Registration Statement effective for the period described in
Section 2(a)(i), (ii) cause each Prospectus contained therein to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 or any similar rule that may be adopted under the Securities
Act, (iii) amend or supplement each such Registration Statement to include the Company’s quarterly and annual financial information and other material developments (until the Company is eligible to incorporate such information by reference
into the Registration Statement), during which time sales of the Registrable Securities under the Registration Statement will be suspended until such amendment or supplement is filed and effective, and (iv) comply in all material respects with
the provisions of the Securities Act with respect to the disposition of all securities covered by each Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the selling Holders
thereof; 
  
 (c) furnish to the Holders, without charge, as many
copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other 

  

 10 

 
documents as such Holder may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Shares; the Company hereby
consents to the use of such Prospectus, including each preliminary Prospectus, by the Holders, if any, in connection with the offering and sale of the Registrable Shares covered by any such Prospectus; 
  
 (d) use its commercially reasonable efforts to register or qualify, or obtain
exemption from registration or qualification for, all Registrable Shares by the time the applicable Registration Statement is declared effective by the Commission under all applicable state securities or “blue sky” laws of such domestic
jurisdictions as FBR or any Holder covered by a Registration Statement shall reasonably request in writing, keep each such registration or qualification or exemption effective during the period such Registration Statement is required to be kept
effective pursuant to Section 4(a) and do any and all other acts and things that may be reasonably necessary or advisable to enable such Holder to consummate the disposition in each such jurisdiction of such Registrable Shares owned by such
Holder; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction or to register as a broker or dealer in such jurisdiction where it would not otherwise be required to qualify
but for this Section 4(d), (ii) subject itself to taxation in any such jurisdiction, or (iii) submit to the general service of process in any such jurisdiction; 
  
 (e) use its commercially reasonable efforts to cause all Registrable Shares covered by such Registration Statement to be
registered and approved by such other domestic governmental agencies or authorities, if any, as may be necessary to enable the Holders thereof to consummate the disposition of such Registrable Shares; 
  
 (f) notify FBR and each Holder with Registrable Shares covered by a
Registration Statement promptly and, if requested by FBR or any such Holder, confirm such advice in writing (i) when such Registration Statement has become effective and when any post-effective amendments and supplements thereto become
effective, (ii) of the issuance by the Commission or any state securities authority of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose, (iii) of any request
by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus or for additional information, (iv) of the happening of any event during the period such
Registration Statement is effective as a result of which such Registration Statement or the related Prospectus or any document incorporated by reference therein contains any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not misleading (which information shall be accompanied by an instruction to suspend the use of the Registration Statement and the Prospectus until the requisite changes have
been made) and (v) at the request of any such Holder, promptly to furnish to such Holder a reasonable number of copies of a supplement to or an amendment of such Prospectus prepared in accordance with Section 4(i); 
  
 (g) during the period of time referred to in Section 2(a)(i), use its
commercially reasonable efforts to avoid the issuance of, or if issued, to obtain the withdrawal of, any order enjoining or suspending the use or effectiveness of a Registration Statement or suspending the qualification (or exemption from
qualification) of any of the Registrable Shares for sale in any jurisdiction, as promptly as practicable; 
  

 11 

 (h) upon request, furnish to each requesting Holder with Registrable Shares covered by a Registration
Statement, without charge, at least one conformed copy of such Registration Statement and any post-effective amendment or supplement thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); 
  
 (i) except as provided in Section 5, upon the occurrence of any event
contemplated by Section 4(f)(iv), use its commercially reasonable efforts to promptly prepare a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the purchasers of the Registrable Shares, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and, upon request, promptly furnish to each requesting Holder covered by such Registration Statement a reasonable number of
copies of each such supplement or post-effective amendment; 
  
 (j) if requested by the representative of the underwriters, if any, or any Holders of Registrable Shares being sold in connection with an Underwritten Offering, (i) promptly incorporate in a Prospectus supplement or post-effective
amendment such material information as the representative of the underwriters, if any, or such Holders indicate relates to them or otherwise reasonably request be included therein and (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as practicable after the Company has received notification of the matters to be incorporated in such Prospectus supplement or post-effective amendment; 
  
 (k) in the case of an Underwritten Offering, use its commercially reasonable
efforts to furnish or caused to be furnished to each Holder of Registrable Shares covered by such Registration Statement and the underwriters a signed counterpart, addressed to each such Holder and the underwriters, of: (i) an opinion of
counsel for the Company, dated the date of each closing under the underwriting agreement, reasonably satisfactory to the underwriters; (ii) a “comfort” letter, dated the effective date of such Registration Statement and the date of
each closing under the underwriting agreement, signed by the independent public accountants who have certified the Company’s financial statements included in such Registration Statement, covering substantially the same matters with respect to
such Registration Statement (and the Prospectus included therein) and with respect to events subsequent to the date of such financial statements, as are customarily covered in accountants’ letters delivered to underwriters in underwritten
public offerings of securities, and such other financial matters as the underwriters may reasonably request and customarily obtained by underwriters in underwritten offerings, provided that, to be an addressee of the comfort letter, each Holder may
be required to confirm that it is in the category of persons to whom a comfort letter may be delivered in accordance with applicable accounting literature; and (iii) a “comfort” letter, dated the effective date of such Registration
Statement and the date of each closing under the underwriting agreement, signed by the independent petroleum engineering consultants who have evaluated the Company’s oil and gas reserves included in such Registration Statement, covering
substantially the same matters with respect to such Registration Statement (and the Prospectus included therein) and with respect to events subsequent to the date of its evaluation of such oil and gas reserves, as are customarily covered in
engineers’ letters delivered to underwriters in underwritten public offerings of securities, and such other related matters as the underwriters may reasonably request and customarily obtained by underwriters in underwritten offerings;

  

 12 

 (l) enter into customary agreements (including in the case of an Underwritten Offering, an underwriting
agreement in customary form) and take all other action in connection therewith to expedite or facilitate the distribution of the Registrable Shares included in such Registration Statement and, in the case of an Underwritten Offering, make
representations and warranties to the underwriters in such form and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same to the extent customary if and when requested; 
  
 (m) in connection with an Underwritten Offering, use its commercially
reasonable efforts to make available for inspection by the representative of any underwriters participating in any disposition pursuant to a Registration Statement, all financial and other records, pertinent corporate documents and properties of the
Company and cause the respective officers, directors and employees of the Company to supply all information reasonably requested by any such representatives, the representative of the underwriters, counsel thereto or accountants in connection with a
Registration Statement; provided, however, that such records, documents or information that the Company determines, in good faith, to be confidential and notifies such representatives, representative of the underwriters, counsel thereto or
accountants are confidential shall not be disclosed by the representatives, representative of the underwriters, counsel thereto or accountants unless (i) the disclosure of such records, documents or information is necessary to avoid or correct
a misstatement or omission in a Registration Statement or Prospectus, (ii) the release of such records, documents or information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, or (iii) such
records, documents or information have been generally made available to the public; provided further, that to the extent practicable, the foregoing inspection and information gathering shall be coordinated on behalf of the Holders and the
other parties entitled thereto by one counsel designated by and on behalf of the Holders and the other parties, which counsel the Company determines in good faith is reasonably acceptable; 
  
 (n) use its commercially reasonable efforts (including seeking to cure in the
Company’s listing or inclusion application any deficiencies cited by the exchange or market) to list or include all Registrable Shares on the New York Stock Exchange, the American Stock Exchange or The Nasdaq Stock Market and thereafter
maintain the listing on such exchange or market; 
  
 (o) prepare
and file in a timely manner all documents and reports required by the Exchange Act and, to the extent the Company’s obligation to file such reports pursuant to Section 15(d) of the Exchange Act expires prior to the expiration of the
effectiveness period of the Registration Statement as required by Section 2(a)(i), the Company shall register the Registrable Shares under the Exchange Act and shall maintain such registration through the effectiveness period required by
Section 2(a)(i); 
  
 (p) provide a CUSIP number for all
Registrable Shares not later than the effective date of the Registration Statement; 
  

 13 

 (q) (i) otherwise use its commercially reasonable efforts to comply in all material respects with
all applicable rules and regulations of the Commission, (ii) make generally available to its stockholders, as soon as reasonably practicable, earnings statements covering at least twelve (12) months that satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder, and (iii) delay filing any Registration Statement or Prospectus or amendment or supplement to such Registration Statement or Prospectus to which any Holder of Registrable Shares
covered by any such Registration Statement shall have reasonably objected on the grounds that such Registration Statement or Prospectus or amendment or supplement does not comply in all material respects with the requirements of the Securities Act,
such Holder having been furnished with a copy thereof at least three (3) Business Days before the filing thereof, provided that the Company may file such Registration Statement or Prospectus or amendment or supplement following such time as the
Company shall have made a good faith effort to resolve any such issue with the objecting Holder and shall have advised the Holder in writing of its reasonable belief that such filing complies in all material respects with the requirements of the
Securities Act; 
  
 (r) cause to be maintained a registrar and
transfer agent for all Registrable Shares covered by any Registration Statement from and after a date not later than the effective date of such Registration Statement; 
  
 (s) in connection with any sale or transfer of the Registrable Shares (whether or not pursuant to a Registration Statement)
that will result in the securities being delivered no longer constituting Registrable Shares, cooperate with the Holders and the representative of the underwriters, if any, to facilitate the timely preparation and delivery of certificates
representing the Registrable Shares to be sold, which certificates shall not bear any transfer restrictive legends (other than as required by the Company’s charter), and to enable such Registrable Shares to be in such denominations and
registered in such names as the representative of the underwriters, if any, or the Holders may request at least three (3) Business Days prior to any sale of the Registrable Shares; and 
  
 (t) if required under the rules of the NASD, in connection with the initial
filing of a Shelf Registration Statement and each amendment thereto with the Commission pursuant to Section 2(a), prepare and, within one (1) Business Day of such filing with the Commission, file with the NASD all forms and information
required or requested by the NASD in order to obtain written confirmation from the NASD that the NASD does not object to the fairness and reasonableness of the underwriting terms and arrangements (or any deemed underwriting terms and arrangements)
(each such written confirmation, a “No Objections Letter”) relating to the resale of Registrable Shares pursuant to the Shelf Registration Statement, including, without limitation, information provided to the NASD through its
COBRADesk system, and pay all costs, fees and expenses incident to the NASD’s review of the Shelf Registration Statement and the related underwriting terms and arrangements, including, without limitation, all filing fees associated with any
filings or submissions to the NASD and the legal expenses, filing fees and other disbursements of FBR and any other NASD member that is the holder of, or is affiliated or associated with an owner of, Registrable Shares included in the Shelf
Registration Statement (including in connection with any initial or subsequent member filing). 
  

 14 

 The Company may require the Holders to furnish to the Company such information regarding the proposed
distribution by such Holder as the Company may from time to time reasonably request in writing or as shall be required to effect the registration of the Registrable Shares, and no Holder shall be entitled to be named as a selling stockholder in any
Registration Statement and no Holder shall be entitled to use the Prospectus forming a part thereof if such Holder does not provide such information to the Company. Each Holder further agrees to furnish promptly to the Company in writing all
information required from time to time to make the information previously furnished by such Holder not misleading. 
  
 Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4(f)(ii),
4(f)(iii) or 4(f)(iv), such Holder will immediately discontinue disposition of Registrable Shares pursuant to a Registration Statement until (i) any such stop order is vacated or (ii) if an event described in Section 4(f)(iii) or
4(f)(iv) occurs, such Holder’s receipt of the copies of the supplemented or amended Prospectus. If so directed by the Company, such Holder will deliver to the Company (at the reasonable expense of the Company) all copies in its possession,
other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Registrable Shares current at the time of receipt of such notice. 
  
 5. Suspension Period. 
  
 (a) Subject to the provisions of this Section 5, following the effectiveness of a Registration Statement (and the filings with any international,
federal or state securities commissions), the Company may direct the Holders, in accordance with Section 5(b), to suspend sales of the Registrable Shares pursuant to a Registration Statement for such times as the Company reasonably may
determine is necessary and advisable (but in no event for more than an aggregate of ninety (90) days in any consecutive twelve (12)-month period commencing on the Closing Date or more than sixty (60) days in any consecutive ninety (90)-day
period, except as a result of a review of any post-effective amendment by the Commission prior to declaring any post-effective amendment to the Registration Statement effective, provided that the Company has used its commercially reasonable
efforts to cause such post-effective amendment to be declared effective), if any of the following events shall occur: (i) the representative of the underwriters of an Underwritten Offering of primary shares by the Company has advised the
Company that the sale of Registrable Shares pursuant to the Registration Statement would have a material adverse effect on the Company’s initial public offering; (ii) the majority of the members of the Board of Directors of the Company
shall have determined in good faith that (1) the offer or sale of any Registrable Shares would materially impede, delay or interfere with any proposed financing, offer or sale of securities, acquisition, merger, tender offer, business
combination, corporate reorganization, consolidation or other significant transaction involving the Company, (2) upon the advice of counsel, the sale of Registrable Shares pursuant to the Registration Statement would require disclosure of
non-public material information not otherwise required to be disclosed under applicable law, and (3) either (x) the Company has a bona fide business purpose for preserving the confidentiality of such transaction, (y) disclosure
would have a material adverse effect on the Company or the Company’s ability to consummate such transaction, or (z) the proposed transaction renders the Company unable to comply with Commission requirements, in each case under
circumstances that would make it impractical or inadvisable to cause the Registration Statement (or such filings) to become effective or to promptly amend or supplement the Registration Statement on a post-effective basis, as applicable; or
(iii) the majority of the members of 
  

 15 

 the Board of Directors of the Company shall have determined in good faith, upon the advice of counsel, that it is
required by law, rule or regulation to supplement the Registration Statement or file a post-effective amendment to the Registration Statement in order to incorporate information into the Registration Statement for the purpose of (1) including
in the Registration Statement any prospectus required under Section 10(a)(3) of the Securities Act; (2) reflecting in the prospectus included in the Registration Statement any facts or events arising after the effective date of the
Registration Statement (or of the most-recent post-effective amendment) that, individually or in the aggregate, represents a fundamental change in the information set forth therein; or (3) including in the prospectus included in the
Registration Statement any material information with respect to the plan of distribution not disclosed in the Registration Statement or any material change to such information. Upon the occurrence of any such suspension, the Company shall use its
commercially reasonable efforts to cause the Registration Statement to become effective or to promptly amend or supplement the Registration Statement on a post-effective basis or to take such action as is necessary to make resumed use of the
Registration Statement compatible with the Company’s best interests, as applicable, so as to permit the Holders to resume sales of the Registrable Shares as soon as possible. 
  
 (b) In the case of an event that causes the Company to suspend the use of a Registration Statement (a “Suspension
Event”), the Company shall give written notice (a “Suspension Notice”) to FBR and the Holders to suspend sales of the Registrable Shares and such notice shall state generally the basis for the notice and that
such suspension shall continue only for so long as the Suspension Event or its effect is continuing and the Company is using its best efforts and taking all reasonable steps to terminate suspension of the use of the Registration Statement as
promptly as possible. No Holder shall effect any sales of the Registrable Shares pursuant to such Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Company and prior to receipt of an End of
Suspension Notice (as defined below). If so directed by the Company, each Holder will deliver to the Company (at the expense of the Company) all copies other than permanent file copies then in such Holder’s possession of the Prospectus covering
the Registrable Shares at the time of receipt of the Suspension Notice. The Holders may recommence effecting sales of the Registrable Shares pursuant to the Registration Statement (or such filings) following further notice to such effect (an
“End of Suspension Notice”) from the Company, which End of Suspension Notice shall be given by the Company to the Holders and FBR in the manner described above promptly following the conclusion of any Suspension Event and its
effect. 
  
 (c) Notwithstanding any provision herein to the
contrary, subject to any Suspension Events or as contemplated by Section 4(f)(iv), each Registration Statement shall be maintained effective pursuant to this Agreement until the Shares and Additional Shares are not Registrable Shares.

  
 6. Indemnification and Contribution. 
  
 (a) The Company agrees to indemnify and hold harmless (i) FBR, each
Holder and any underwriter (as determined in the Securities Act) for such Holder (including, if applicable, FBR), (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act) any of the foregoing (a “Controlling Person”), and (iii) the respective officers, directors, partners, members, employees, representatives and agents 
  

 16 

 of any such Person or any Controlling Person (any Person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an “Purchaser Indemnitee”) from and against any and all losses, claims, damages, judgments, actions, reasonable out-of-pocket expenses, and other liabilities, including, as incurred,
reimbursement of all reasonable costs of investigating, preparing, pursuing or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including the reasonable fees and expenses
of outside counsel to any Purchaser Indemnitee, joint or several (the “Liabilities”), directly or indirectly related to, based upon, arising out of or in connection with any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (as amended or supplemented if the Company shall have furnished to such Purchaser Indemnitee any amendments or supplements thereto), or any preliminary Prospectus or any other
document prepared by the Company used to sell the Registrable Shares, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus, in
light of the circumstances under which they were made), not misleading, except insofar as such Liabilities arise out of or are based upon (i) any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Purchaser Indemnitee furnished to the Company or any underwriter in writing by such Purchaser Indemnitee expressly for use therein, (ii) any untrue statement contained in or omission from a
preliminary Prospectus if a copy of the Prospectus (as then amended or supplemented, if the Company shall have furnished to or on behalf of the Holder participating in the distribution relating to the relevant Registration Statement any amendments
or supplements thereto) was not sent or given by or on behalf of such Holder to the Person asserting any such Liabilities who purchased Shares, if such Prospectus (or Prospectus as amended or supplemented) is required by law to be sent or given at
or prior to the written confirmation of the sale of such Shares to such Person and the untrue statement contained in or omission from such preliminary Prospectus was corrected in the Prospectus (or the Prospectus as amended or supplemented), or
(iii) any sales by any Holder after the delivery by the Company to such Holder of a Suspension Notice and before the delivery by the Company of an End of Suspension Notice. The Company shall notify the Holders promptly of the institution,
threat or assertion of any claim, proceeding (including any governmental investigation), or litigation which it shall have become aware in connection with the matters addressed by this Agreement which involves the Company or a Purchaser Indemnitee.
The indemnity provided for herein shall remain in full force and effect regardless of any investigation made by or on behalf of any Purchaser Indemnitee. 
  
 (b) In connection with any Registration Statement in which a Holder is participating, such Holder agrees, severally and not jointly, to indemnify and hold
harmless FBR, the Company, each Person who controls the Company or FBR within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, and the respective officers, directors, partners, members, representatives,
employees and agents of such Person or Controlling Person to the same extent as the foregoing indemnity from the Company to each Purchaser Indemnitee, but only with reference to (i) untrue statements or omissions or alleged untrue statements or
omissions made in reliance upon and in strict conformity with information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement or Prospectus, any amendment or supplement thereto,
or any preliminary Prospectus and (ii) any sales by any Holder after the delivery by the Company to such Holder of a Suspension Notice and before the delivery by the Company of an End of Suspension Notice. 
  

 17 

 The liability of any Holder pursuant to clause (i) of the immediately preceding sentence shall in no event exceed
the net proceeds received by such Holder from sales of Registrable Shares giving rise to such obligations. If a Holder elects to include Registrable Shares in an Underwritten Offering, the Holder shall be required to agree to such customary
indemnification provisions as may reasonably be required by the underwriter in connection with such Underwritten Offering. 
  
 (c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any
Person in respect of which indemnity may be sought pursuant to Section 6(a) or 6(b), such Person (the “Indemnified Party”), shall promptly notify the Person against whom such indemnity may be sought (the
“Indemnifying Party”), in writing (to the extent legally advisable) of the commencement thereof (but the failure to so notify an Indemnifying Party shall not relieve it from any Liability which it may have under this
Section 6, except to the extent the Indemnifying Party is materially prejudiced by the failure to give notice), and the Indemnifying Party, upon request of the Indemnified Party, shall retain counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party and any others the Indemnifying Party may reasonably designate in such proceeding and shall assume the defense of such proceeding and pay the fees and expenses actually incurred by such counsel related to
such proceeding. Notwithstanding the foregoing, in any such proceeding, any Indemnified Party may retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party, unless (i) the Indemnifying
Party and the Indemnified Party shall have mutually agreed in writing to the contrary, (ii) the Indemnifying Party failed within a reasonable time after notice of commencement of the action to assume the defense and employ counsel reasonably
satisfactory to the Indemnified Party, (iii) the Indemnifying Party and its counsel do not pursue in a reasonable manner the defense of such action or (iv) the named parties to any such action (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, or any affiliate of the Indemnifying Party, and such Indemnified Party shall have been reasonably advised by counsel that, either (x) there may be one or more legal defenses available to it
which are different from or additional to those available to the Indemnifying Party or such affiliate of the Indemnifying Party or (y) a conflict may exist between such Indemnified Party and the Indemnifying Party or such affiliate of the
Indemnifying Party, in which event the Indemnifying Party may not assume or direct the defense of such action on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not, in connection with any one such
action or separate but substantially similar or related actions arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all
such Indemnified Parties, which firm shall be designated in writing by those Indemnified Parties who sold a majority of the Registrable Shares sold by all such Indemnified Parties and any such separate firm for the Company, the directors, the
officers and such control Persons of the Company as shall be designated in writing by the Company. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify any Indemnified Party from and against any Liability by reason of such settlement or
judgment to the extent provided in this Section 6 without reference to this sentence. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending 
  

 18 

 or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have
been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all Liability on claims that are the subject matter of such proceeding. 
  
 (d) If the indemnification provided for in Section 6(a) or 6(b) is for
any reason held to be unavailable to an Indemnified Party in respect of any Liabilities referred to therein (other than by reason of the exceptions provided therein) or is insufficient to hold harmless a party indemnified thereunder, then each
Indemnifying Party under such sections, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities (i) in such proportion as is appropriate
to reflect the relative benefits of the Indemnified Party on the one hand and the Indemnifying Parties on the other in connection with the statements or omissions that resulted in such Liabilities, or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Indemnifying Parties and the Indemnified Party,
as well as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and any Purchaser Indemnitees, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by such Purchaser Indemnitees and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. 
  
 (e) The parties agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation (even if such Indemnified Parties were treated as one entity for such purpose), or
by any other method of allocation that does not take account of the equitable considerations referred to in Section 6(d). The amount paid or payable by an Indemnified Party as a result of any Liabilities referred to in Section 6(d) shall be
deemed to include, subject to the limitations set forth above, any reasonable legal or other expenses actually incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions
of this Section 6, in no event shall a Purchaser Indemnitee be required to contribute any amount in excess of the amount by which proceeds received by such Purchaser Indemnitee from sales of Registrable Shares exceeds the amount of any damages
that such Purchaser Indemnitee has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. For purposes of this Section 6, each Person, if any, who controls (within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act) FBR or a Holder shall have the same rights to contribution as FBR or such Holder, as the case may be, and each Person, if any, who controls (within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act) the Company, and each officer, director, partner, member, employee, representative, agent or manager of the Company shall have the same rights to contribution as the Company. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties, notify each party or parties from
whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 6 or otherwise, except
to the extent that any party is materially prejudiced by the failure to give notice. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act), shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation. 
  

 19 

 (f) The indemnity and contribution agreements contained in this Section 6 will be in addition to any
Liability which the indemnifying parties may otherwise have to the indemnified parties referred to above. Each Purchaser Indemnitee’s obligations to contribute pursuant to this Section 6 are not joint but are several in the proportion that
the number of Shares sold by such Purchaser Indemnitee bears to the number of Shares sold by all Purchaser Indemnities. 
  
 7. Market Stand-off Agreement. 
  
 Each Holder hereby agrees that it shall not, to the extent requested by the Company or an underwriter of securities of the Company, directly or indirectly
sell, offer to sell (including without limitation any short sale), grant any option or otherwise transfer or dispose of any Registrable Shares or other shares of Common Stock of the Company or any securities convertible into or exchangeable or
exercisable for shares of Common Stock of the Company then owned by such Holder (other than to donees or partners of the Holder who agree to be similarly bound) for a period of sixty (60) days following the effective date of a registration
statement for an initial public offering of securities by the Company filed under the Securities Act (an “IPO Registration Statement”); provided, however, that: 
  
 (a) the restrictions above shall not apply to Registrable Shares sold
pursuant to the IPO Registration Statement; 
  
 (b) all executive
officers and directors of the Company then holding shares of Common Stock of the Company or securities convertible into or exchangeable or exercisable for shares of Common Stock of the Company enter into similar agreements; 
  
 (c) the Holders shall be allowed any concession or proportionate release
allowed to any officer or director that entered into similar agreements (with such proportion being determined by dividing the number of shares being released with respect to such officer or director by the total number of issued and outstanding
shares held by such officer or director); provided, that nothing in this Section 7(c) shall be construed as a right to proportionate release for the executive officers and directors of the Company upon the expiration of the sixty
(60)-day period applicable to all Holders other than the executive officers and directors of the Company. 
  
 In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the securities
subject to this Section 7 and to impose stop transfer instructions with respect to the Registrable Shares and such other securities of each Holder (and the securities of every other Person subject to the foregoing restriction) until the end of
such period. 
  
 8. Termination of the Company’s Obligations.

  
 The Company shall have no further obligations pursuant to
this Agreement at such time as no Registrable Shares are outstanding after their original issuance, provided, however, that the Company’s obligations under Sections 3, 6 and 10 (and any related definitions) shall remain in full force and effect
following such time. 
  

 20 

 9. Limitations on Subsequent Registration Rights. 
  
 From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a
majority of the Registrable Shares of such Holders, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder (a) to include such securities in the
Mandatory Shelf Registration Statement or Piggyback Registration Statement, if any, filed pursuant to the terms hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities on the Holders Mandatory
Shelf Registration Statement or such Piggyback Registration Statement only to the extent that the inclusion of his securities will not reduce the amount of Registrable Shares of the Holders that is included on the Mandatory Shelf Registration
Statement or such Piggyback Registration Statement or (b) to have its Common Stock registered on a registration statement that could be declared effective within one hundred eighty (180) days of, the effective date of any Registration
Statement filed pursuant to this Agreement. 
  
 10. Miscellaneous.

  
 (a) Remedies. In the event of a breach by the Company
of any of its obligations under this Agreement, each Holder, in addition to being entitled to exercise all rights provided herein or, in the case of FBR, in the Placement Agreement, or granted by law, including recovery of damages, will be entitled
to specific performance of its rights under this Agreement. Subject to Section 6, the Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. 
  
 (b) Amendments and Waivers. This Agreement may not be amended, modified or supplemented, and waivers or consents to
or departures from the provisions hereof may not be given, without the written consent of the Company and Holders beneficially owning a majority of the Registrable Shares; provided, however, that for purposes of this Agreement, Registrable
Shares owned, directly or indirectly, by an entity that is an Affiliate of the Company due to the Company’s owning an interest in such entity shall not be deemed to be outstanding. Notwithstanding the foregoing, a waiver or consent to or
departure from the provisions hereof with respect to a matter that relates exclusively to (i) the Mandatory Shelf Registration Statement may be given only with the consent of a majority of Registrable Shares covered thereby and (ii) the
rights of a Holder whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect, impair, limit or compromise the rights of other Holders may be given by such Holder; provided that the
provisions of this sentence may not be amended, modified or supplemented except in accordance with the provisions of the immediately preceding sentence. 
  
 (c) Notices. All notices and other communications, provided for or permitted hereunder shall be made in writing and delivered by facsimile (with
receipt confirmed), overnight courier or registered or certified mail, return receipt requested, or by telegram, addressed as follows: 
 (i)
if to a Holder, at the most current address given by the transfer agent and registrar of the Shares to the Company; 
  

 21 

 (ii) if to the Company, at the offices of the Company at 717 Texas, Suite 2800, Houston, Texas 77002,
Attention: B.A. (Bill) Berilgen (facsimile (    )                 ); with a copy (which shall not constitute notice) to
Thompson & Knight LLP, 333 Clay Street, Suite 3300, Houston, Texas 77002, Attention: Dallas Parker, Esq. (facsimile (832) 397-8110); and 
  
 (iii) if to FBR, at the offices of FBR at 1001 19th Street North, Arlington, Virginia 22209, Attention: William Ginivan, Esq. (facsimile (804) 788-8218); with a copy (which shall not constitute notice) to Akin Gump Strauss Hauer & Feld
LLP, 1111 Louisiana St., Houston, Texas 77002, Attention: Julien R. Smythe, Esq. (facsimile (713) 236-0822). 
  
 (d) Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and assigns
of each of the parties hereto and shall inure to the benefit of each Holder. The Company agrees that the Holders shall be third party beneficiaries to the agreements made hereunder by FBR and the Company, and each Holder shall have the right to
enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder; provided, however, that such Holder fulfills all of its obligations hereunder. 
  
 (e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 
  
 (f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT OF THE STATE OF NEW YORK OR SITTING IN NEW YORK COUNTY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. 
  

 22 

 (g) Severability. If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.
It is hereby stipulated and declared to be the intention of the parties hereto that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable. 
  
 (h) Entire Agreement. This
Agreement, together with the Placement Agreement, is intended by the parties hereto as a final expression of their agreement, and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. All of the obligations, agreements, covenants, representations and warranties under the engagement letter dated June 15, 2005, between the Company and FBR (the “Engagement
Letter”) shall survive the execution, delivery and termination and the performance of this Agreement and the consummation of the transactions contemplated hereby without any modification thereof; provided, that to the extent
there is a conflict between the provisions of the Engagement Letter and the provisions of this Agreement, this Agreement shall prevail to that extent. 
  
 (i) Registrable Shares Held by the Company or its Affiliates. Whenever the consent or approval of Holders of a specified percentage of Registrable
Shares is required hereunder, Registrable Shares (or securities convertible into Registrable Shares) held by the Company or entities that are Affiliates of the Company due to the Company’s owning an interest in such entities shall not be
counted in determining whether such consent or approval was given by the Holders of such required percentage. 
  
 (j) Survival. This Agreement is intended to survive the consummation of the transactions contemplated by the Placement Agreement. The
indemnification and contribution obligations under Section 6 shall survive the termination of the Company’s obligations under Section 2. 
  
 (k) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the provisions of this
Agreement. All references made in this Agreement to “Section” refer to such Section of this Agreement, unless expressly stated otherwise. 
  
 (l) Adjustment for Stock Splits, etc. Wherever in this Agreement there is a reference to a specific number of shares with respect to any
securities, then upon the occurrence of any subdivision, combination, or stock dividend of such shares, the specific number of shares with respect to any securities so referenced in this Agreement shall automatically be proportionally adjusted to
reflect the effect on the outstanding shares of such class or series of stock by such subdivision, combination, or stock dividend. 
  
 [Remainder of this Page Intentionally Left Blank] 
  

 23 

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

  

			
	ROSETTA RESOURCES INC.
		
	 By:
	 	  

	 Name:
	 	  

	 Title:
	 	  

	
	FRIEDMAN, BILLINGS, RAMSEY & CO., INC. (for the benefit of the Holders)
		
	 By:
	 	  

	 Name:
	 	  

	 Title:
	 	  

  

 24Purchase and Sale Agreement

 Exhibit 10.1 
  

  
 PURCHASE AND SALE AGREEMENT 
  

  
 CALPINE GAS HOLDINGS LLC, 
 a Delaware limited liability company 
  
 and 

 
 CALPINE FUELS CORPORATION, 
 a California corporation 
  
 As Sellers, 
  
 CALPINE CORPORATION, 
 a Delaware corporation, 
  
 As Parent of Sellers, 
  
 ROSETTA RESOURCES INC., 
 a Delaware corporation 
  
 As Buyer, 
  
 and 
  
 certain parties identified herein as the Subject
Companies 
  

  
 July 7, 2005 
  

 PURCHASE AND SALE AGREEMENT 
  
 TABLE OF CONTENTS 
  

							
	 ARTICLE 1 DEFINITIONS
	  	1
		
	 ARTICLE 2 SALE AND PURCHASE OF SUBJECT EQUITY
	  	12
	 	 	 2.1
	  	Purchase and Sale.	  	12
	 	 	 2.2
	  	Sellers’ Retained Liabilities.	  	12
	 	 	 2.3
	  	Preferential Rights and Consents.	  	13
	 	 	 2.4
	  	Governmental Bonds	  	14
		
	 ARTICLE 3 PURCHASE PRICE
	  	14
	 	 	 3.1
	  	Purchase Price	  	14
	 	 	 3.2
	  	Allocated Value	  	14
		
	 ARTICLE 4 ADJUSTMENTS TO PURCHASE PRICE
	  	15
	 	 	 4.1
	  	Increases in Purchase Price	  	15
	 	 	 4.2
	  	Decreases in Purchase Price	  	15
	 	 	 4.3
	  	Schedule of Purchase Price Adjustments at Closing	  	16
		
	 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF CALPINE AND SELLERS
	  	16
	 	 	 5.1
	  	Organization	  	16
	 	 	 5.2
	  	Authority	  	16
	 	 	 5.3
	  	No Conflict	  	16
	 	 	 5.4
	  	Enforceability	  	17
	 	 	 5.5
	  	Contracts	  	17
	 	 	 5.6
	  	Litigation and Claims	  	17
	 	 	 5.7
	  	Financial Statements	  	17
	 	 	 5.8
	  	No Liabilities	  	18
	 	 	 5.9
	  	Subject Equity	  	18
	 	 	 5.10
	  	Notices	  	18
	 	 	 5.11
	  	Imbalances	  	18
	 	 	 5.12
	  	Current Commitments and AFEs	  	18
	 	 	 5.13
	  	Property Operation and Personal Property	  	19
	 	 	 5.14
	  	Take-or-Pay	  	19
	 	 	 5.15
	  	Tax Partnerships.	  	19
	 	 	 5.16
	  	Solvency.	  	19
	 	 	 5.17
	  	Environmental Condition.	  	19
		
	 ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER
	  	19
	 	 	 6.1
	  	Organization	  	19
	 	 	 6.2
	  	Authority	  	20
	 	 	 6.3
	  	No Conflicts	  	20
	 	 	 6.4
	  	Enforceability	  	20
	 	 	 6.5
	  	No Further Distribution	  	20
	 	 	 6.6
	  	Finder’s Fees	  	20

  

 i 

							
	 ARTICLE 7 COVENANTS OF SELLER
	  	20
	 	 	 7.1
	  	Conduct of Business Pending Closing	  	20
	 	 	 7.2
	  	Tax Matters.	  	21
	 	 	 7.3
	  	Satisfaction of Conditions	  	21
		
	 ARTICLE 8 COVENANTS OF BUYER
	  	21
	 	 	 8.1
	  	Satisfaction of Conditions	  	21
		
	 ARTICLE 9 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
	  	21
	 	 	 9.1
	  	Representations and Warranties	  	21
	 	 	 9.2
	  	Covenants	  	22
	 	 	 9.3
	  	No Litigation	  	22
	 	 	 9.4
	  	Consents	  	22
		
	 ARTICLE 10 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
	  	22
	 	 	 10.1
	  	Representations and Warranties	  	22
	 	 	 10.2
	  	Covenants	  	22
	 	 	 10.3
	  	No Litigation	  	22
	 	 	 10.4
	  	Consents	  	22
	 	 	 10.5
	  	Release of Liens	  	22
	 	 	 10.6
	  	FIRPTA Certificate.	  	22
		
	 ARTICLE 11 ENVIRONMENTAL MATTERS
	  	23
	 	 	 11.1
	  	Presence of Wastes, NORM, Hazardous Substances and Asbestos	  	23
		
	 ARTICLE 12 TAX MATTERS
	  	23
	 	 	 12.1
	  	Tax Indemnification.	  	23
	 	 	 12.2
	  	Apportionment of Taxes.	  	23
	 	 	 12.3
	  	Payment of Taxes.	  	24
	 	 	 12.4
	  	Resolution of Disagreements Between Buyer and Sellers.	  	24
	 	 	 12.5
	  	Cooperation.	  	24
		
	 ARTICLE 13 SUSPENSE FUNDS HELD BY SELLER
	  	24
	 	 	 13.1
	  	Suspense Funds Held By Seller	  	24
		
	 ARTICLE 14 CLOSING
	  	25
	 	 	 14.1
	  	The Closing	  	25
	 	 	 14.2
	  	Closing Statement	  	25
	 	 	 14.3
	  	Closing Deliveries	  	25
		
	 ARTICLE 15 POST-CLOSING ADJUSTMENTS
	  	26
	 	 	 15.1
	  	Final Settlement Statement	  	26
	 	 	 15.2
	  	Arbitration	  	26
	 	 	 15.3
	  	Payment of Final Purchase Price	  	26

  

 ii 

							
	 ARTICLE 16 INDEMNIFICATION; RELEASES; ALLOCATION OF RISK
	  	27
	 	 	 16.1
	  	Calpine and Sellers’ Indemnity.	  	27
	 	 	 16.2
	  	Survival of Representations and Warranties	  	28
	 	 	 16.3
	  	Buyer’s Indemnity.	  	28
	 	 	 16.4
	  	Assumption by Buyer	  	29
	 	 	 16.5
	  	Limitations of Warranties	  	29
	 	 	 16.6
	  	Release of Pre-Closing Claims.	  	31
	 	 	 16.7
	  	Gas Balancing	  	33
	 	 	 16.8
	  	Acknowledgement by the Parties	  	33
		
	 ARTICLE 17 RISK OF LOSS
	  	34
	 	 	 17.1
	  	Casualty Loss	  	34
	 	 	 17.2
	  	Buyer’s Risk of Loss	  	34
		
	 ARTICLE 18 TERMINATION AND REMEDIES
	  	34
	 	 	 18.1
	  	Termination	  	34
	 	 	 18.2
	  	Effect of Termination	  	34
		
	 ARTICLE 19 ADDITIONAL COVENANTS
	  	35
	 	 	 19.1
	  	Further Assurances	  	35
	 	 	 19.2
	  	Transfer of Records	  	35
	 	 	 19.3
	  	Use of Sellers’ Name	  	35
	 	 	 19.4
	  	Expenses, Fees and Taxes	  	36
	 	 	 19.5
	  	Public Announcements	  	36
	 	 	 19.6
	  	Confidentiality	  	36
	 	 	 19.7
	  	Cooperation on Legal Matters; Preservation of Legal Privileges	  	37
		
	 ARTICLE 20 ARBITRATION
	  	38
	 	 	 20.1
	  	Arbitrators, Timing, Discovery, Finality of Determination	  	38
	 	 	 20.2
	  	Confidentiality of Arbitration	  	38
		
	 ARTICLE 21 MISCELLANEOUS
	  	38
	 	 	 21.1
	  	Notice	  	38
	 	 	 21.2
	  	Governing Law	  	40
	 	 	 21.3
	  	Assignment	  	40
	 	 	 21.4
	  	Entire Agreement	  	40
	 	 	 21.5
	  	Amendment; Waiver	  	40
	 	 	 21.6
	  	Severability	  	40
	 	 	 21.7
	  	Construction	  	41
	 	 	 21.8
	  	Headings	  	41
	 	 	 21.9
	  	Counterparts	  	41

  

 iii 

 EXHIBITS 
  
 Exhibit A – Subject Companies 
  
 Exhibit B – Leases 
  
 Exhibit B-1 – Non-Consent Leases 
  
 Exhibit C – Wells; Net Revenue Interests 
  
 Exhibit C-1 – Non-Consent Wells; Net Revenue Interests

  
 Exhibit C-2 – Description of Rio Vista
Gathering System Included in the Properties 
  
 Exhibit D – Allocated Values 
  
 Exhibit E – Form of Employee and Employee Benefits Matters Agreement 
  
 Exhibit F – Form of Transition Services Agreement 
  
 Exhibit G – Form of Assignment 
  
 Exhibit H – Form of Joint Defense Agreement 
  

 iv 

 PURCHASE AND SALE AGREEMENT 
  
 This Purchase and Sale Agreement (this “Agreement”) is made and entered into on July 7, 2005, by
and among Calpine Gas Holdings LLC, a Delaware limited liability company (“Calpine Gas”), Calpine Fuels Corporation, a California corporation (“Calpine Fuels” and, collectively with Calpine Gas
“Sellers” and each a “Seller”), Calpine Corporation, a Delaware corporation and parent of Sellers (“Calpine”), Rosetta Resources Inc., a Delaware corporation (“Buyer”), and each of
the signatories hereto that are identified as “Subject Companies” (such Subject Companies, together with Sellers, Calpine, and Buyer, are referred to herein as the “Parties”). 
  
 RECITALS 
  
 WHEREAS, Sellers wish to sell, and Buyer wishes to acquire, certain of
the Sellers’ wholly owned subsidiaries that will own and operate substantially all of the assets used in the oil and gas exploration and production business of Calpine and its subsidiaries; and 
  
 WHEREAS, immediately prior to the sale of the subsidiaries, Calpine,
which is the parent of the Sellers, will contribute or be subject to an agreement to contribute to certain of those subsidiaries all domestic oil and gas exploration and production properties and assets owned by it; and 
  
 WHEREAS, simultaneously with the consummation of the transactions
contemplated herein, the Parties will enter into certain agreements for the transition of the business of the subsidiaries to Buyer. 
  
 NOW, THEREFORE, in exchange for the mutual promises set forth herein, and other good and valuable consideration, the sufficiency of which is herein
acknowledged, the Parties agree as follows: 
  
 ARTICLE 1

 DEFINITIONS 
  
 “Adverse Environmental Condition” means any contamination or condition exceeding regulatory limits and not otherwise permitted or
authorized by Permit or law, resulting from any discharge, release, production, storage, treatment, seepage, escape, leakage, emission, emptying, leaching or any other activities on, in or from any Property, or the migration or transportation from
other lands to any Property, of any wastes, pollutants, contaminants, hazardous materials or other materials or substances subject to regulation relating to the protection of the environment that require Remediation based upon the condition at the
Effective Date pursuant to any current federal, state or local laws or statutes, including the Environmental Laws. 
  
 “AFEs” is defined in Section 5.12. 
  

“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes of this definition, “control” means the power to direct the 

 management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing, being understood and agreed that with respect to a corporation or other entity, control means direct or indirect
ownership of more than fifty percent (50%) of the voting stock or securities of such corporation or other entity. No member of the Calpine Group is an Affiliate of a member of the Buyer Group, and no member of the Buyer Group is an Affiliate of
any member of the Calpine Group. 
  
 “Agreement”
is defined in the preamble. 
  
 “Ancillary
Agreements” means the Transfer Agreement, the Transition Services Agreement, the Employee Matters Agreement, and each other agreement specifically named in this Agreement and entered into by and among any member of the Calpine Group and any
member of Buyer Group in connection with the closing of the transactions set forth in this Agreement. 
  
 “Annual Financial Statements” is defined in Section 5.7. 
  
 “Applicable Laws” means any applicable law, order, ordinance, rule, regulation, Permit, judgment or decree
of any Governmental Body, including the common or civil law of any Governmental Body, including those relating to occupational safety and health, consumer product safety, environmental laws, securities laws, zoning laws or regulations, employee
benefits, employment and employment practices. 
  
 “Assignments” is defined in Section 14.3.2. 
  
 “Burdens” means royalties (including both lessor royalties and nonparticipating royalty interests), overriding royalties, production payments, and other similar obligations payable out of production.

  
 “Business Day” means each Monday, Tuesday,
Wednesday, Thursday and Friday which is not a day on which banks in San Jose, California or Houston, Texas, are generally authorized or obligated, by law or executive order, to close. 
  
 “Buyer” is defined in the preamble. 
  
 “Buyer Business” means the oil and gas exploration and production business of the Subject Companies that
relates to the Properties, but shall not include the business of any member of the Calpine Group that relates to any properties or assets transferred by such Person prior to the date of this Agreement or any of the Non-Consent Properties until
transferred to a member of the Buyer Group. 
  
 “Buyer
Group” means, whether existing now or in the future, Buyer, its Subsidiaries (including the Subject Companies), its Affiliates, and their respective employees, officers, directors, agents and representatives. 
  

 2 

 “Buyer Liabilities” means (without duplication): (i) any and all Liabilities that
are expressly contemplated in this Agreement or any Ancillary Agreement to be assumed by any member of the Buyer Group; (ii) all agreements and Liabilities of any member of the Buyer Group under this Agreement or any of the Ancillary Agreements
subject to the applicable limitations and restrictions herein; (iii) all Liabilities (other than Taxes), arising out of or resulting from the ownership or operation of the Properties, whenever arising, whether before or after the Effective
Date, including (a) accidents or injuries associated with the Wells, the casings, and all other leasehold equipment in and on the Wells, gathering lines, pipelines, tanks and all other personal property and fixtures used on or in connection
with the Properties, (b) any and all Proceedings described on Schedule 5.6 except for those Proceedings set forth on Schedule 2.2 and included Sellers’ Retained Liabilities, (c) the condition of the Properties including
all Adverse Environmental Conditions, including any such conditions arising out of or relating to any discharge, release, production, storage, treatment or any activities on or in the Properties, or the migration or transportation from any other
lands to the Properties (specifically excluding transportation and disposal by Sellers from the Properties to offsite locations prior to Closing), whether before or after the Effective Date, of materials or substances that are at present, or become
in the future, subject to regulation under Applicable Laws or regulations, whether such Applicable Laws now exist or are hereafter enacted, and (d) all Plugging and Abandonment obligations or liabilities; and (iv) all Liabilities of the
Subject Companies reflected as such in the Financial Statements. Notwithstanding the foregoing, the Buyer Liabilities shall not include the Sellers’ Retained Liabilities. 
  
 “Buyer’s Suspense Account” is defined in Article 13. 
  
 “Calpine” is defined in the preamble. 
  
 “Calpine Business” means any business of the Calpine Group,
other than the Buyer Business. 
  
 “Calpine
Fuels” is defined in the preamble. 
  
 “Calpine
Gas” is defined in the preamble. 
  
 “Calpine
Group” means, whether existing now or in the future, Calpine, its Subsidiaries (including the Sellers, but excluding the Buyer and the Subject Companies), its Affiliates, and their respective employees, officers, directors, agents and
representatives. 
  
 “Casualty Loss” is defined
in Section 17.1. 
  
 “Claim” means
any Loss relating to or arising out of any Proceeding. 
  
 “Closing” is defined in Section 14.1. 
  
 “Closing Date” is defined in Section 14.1. 
  
 “CNGLP” means Calpine Natural Gas L.P., a Delaware limited partnership. 
  

 3 

 “Code” means the Internal Revenue Code of 1986. 
  
 “Confidential Information” is defined in
Section 19.6. 
  
 “CPR” is defined in
Article 20. 
  
 “Cured Non-Consent
Properties” is defined in Section 2.3.4. 
  
 “Easements” means Calpine’s, any of Sellers’ or any of the Subject Companies non-exclusive rights to the use and occupancy of the surface, including, without limitation, tenements, appurtenances, surface leases,
easements, Permits, licenses, franchises, servitudes and rights-of-way in any way appertaining, belonging, affixed or incidental to or used in connection with the ownership or operation of the Leases, whether recorded or unrecorded. 
  
 “Effective Date” means 7:00 a.m., CDT on May 1, 2005.

  
 “Employee Matters Agreement” means the
Employee and Employee Benefits Matters Agreement to be entered into by and among Calpine, Sellers, Calpine Administrative Services Company, Inc. and Buyer in the form of Exhibit E. 
  
 “Environmental Condition” means any condition existing prior to the Effective Date, and only to the extent
in existence on the Effective Date with respect to the air, land, soil, surface, subsurface strata, surface water, ground water, or sediments which causes a Property to be subject to remediation under, or not in compliance with an Environmental Law,
a Lease or Material Contract, but excluding the conditions associated with, or included in the definition of, Plugging and Abandonment. 
  
 “Environmental Law” means any existing Applicable Law relating to pollution or the protection of the environment, health or safety
including, laws relating to air, water, land and the generation, storage, treatment, transportation, handling, release or disposal of waste materials including the Clean Air Act, the Federal Water Pollution Control Act, the Safe Drinking Water Act,
the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the Hazardous and Solid Waste Amendments Act
of 1984, the Toxic Substance Control Act, and the Occupational Safety and Health Act, but shall not include any Applicable Law associated with Plugging and Abandonment. 
  
 “Equity Interests” means, with respect to an entity, the limited liability company interests, limited
partnership interests, partnership interests, or capital shares (as the case may be) of such entity. 
  
 “Excluded Properties” means the Calpine Business and the following: 
  
 (a) all (i) trade credits, accounts receivable, notes receivables and other receivables attributable to the interests
of Calpine, Sellers or their Affiliates in the Properties with respect to 
  

 4 

 any period of time prior to the Effective Date and (ii) deposits, cash, checks in process of collection, cash
equivalents and funds attributable to the interests of Calpine, Sellers or their Affiliates in the Properties with respect to any period of time prior to the Effective Date; 
  
 (b) all claims and causes of action of Calpine, Sellers or their Affiliates (i) arising from acts, omissions or events,
or damage to or destruction of property occurring prior to the Effective Date to the extent related to any of Sellers’ Retained Liabilities or any of indemnification obligations of Calpine or Sellers under this Agreement or (ii) affecting
any of the excluded properties set forth in this definition; 
  
 (c) subject to the provisions of Section 16.7, all Hydrocarbons produced from or attributable to the Properties with respect to all periods prior to the Effective Date; 
  
 (d) claims of Calpine, Sellers or any of their Affiliates for refunds of or
loss carry forwards with respect to (i) Taxes attributable to any period prior to the Closing Date; (ii) Taxes attributable to any of the excluded properties as set forth in this definition; or (iii) any Tax credits accruing to the
Properties prior to the Closing Date; 
  
 (e) all amounts due or
payable to Calpine, Sellers or their Affiliates as adjustments or refunds under any contracts affecting the Properties, with respect to any period prior to the Effective Date including, without limitation, amounts recoverable from audits under
operating agreements; 
  
 (f) all amounts due or payable to
Calpine, Sellers or their Affiliates as adjustments to insurance premiums related to the Properties with respect to any period prior to the Effective Date; 
  
 (g) all proceeds, benefits, income or revenues accruing (and any security or other deposits made) with respect to (i) the Properties prior to the
Effective Date; or (ii) any of the excluded properties as set forth in this definition; 
  
 (h) all geological or geophysical information and data of Calpine, Sellers or their Affiliates, whether proprietary to such Persons or licensed from Third Parties, but only to the extent that the transfer thereof is
prohibited by law or third-party agreement and the necessary consents to transfer are not obtained before Closing or cannot be obtained in accordance with the provisions in the Transition Agreement; 
  
 (i) the non-exclusive right reserved unto the Calpine, Seller and their
Affiliates to use the Easements; 
  
 (j) all the intellectual
property of Calpine, Sellers or their Affiliates, including but not limited to computer software, patents, trade secrets, copyrights, names, marks, and logos related to the Calpine Business; 
  
 (k) originals of all files relating to Sellers’ Retained Liabilities,
Proceedings set forth on Schedule 2.2 and copies (but not the originals) of all files described in Section 19.2); 
  

 5 

 (l) all rights of ingress, egress and surface use retained by Calpine, Seller or their Affiliates in
connection with its ownership and operation of CPN Pipeline Company and its assets; and 
  
 (m) all of the rights, titles, interests and estates of Calpine or Sellers in and to (x) the percentage of Non-Consent Properties and related Wells described in Exhibit B-1 and C-1 and (y) to
the extent the same are situated upon, used or held for use in connection with the Non-Consent Properties and related Wells, the properties, rights, titles, interests and estates of Calpine and Sellers described or referred to in items
(a) through (g) of the definition of “Properties”, but only until such time as such Non-Consent Properties are transferred to Buyer. 
  
 “Final Settlement Statement” is defined in Section 15.1. 
  
 “Financial Statements” is defined in Section 5.7. 
  
 “GAAP” means United States generally accepted accounting
principles. 
  
 “Governmental Body” means any
federal, state, tribal, county, municipal, or other federal, state or local governmental authority or judicial or regulatory agency, board, body, department, bureau, commission, instrumentality, court, tribunal or quasi-governmental authority in any
jurisdiction (domestic or foreign) having jurisdiction over the Subject Companies, the Properties or any Person who is a party to any of the transactions contemplated in this Agreement. 
  
 “Group” means either of the Calpine Group and Buyer Group, as the context requires. 
  
 “Hydrocarbons” means crude oil, natural gas, casinghead gas,
condensate, distillate, sulphur, natural gas liquids, plant products and other liquid or gaseous hydrocarbons (including carbon dioxide), and all other minerals of every kind and character which may be covered by or included in the Properties.

  
 “Indemnified Claims” is defined in
Section 19.7.1. 
  
 “Indemnitee” is
defined in Section 19.7.1. 
  
 “Indemnitor” is defined in Section 19.7.1. 
  
 “Interim Financial Statements” is defined in Section 5.7. 
  
 “Liability” means, with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether
known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise,
and whether or not the same is required to be accrued on the financial statements of such Person. 
  

 6 

 “Lien” means any pledge, lien, mortgage, charge, encumbrance, security interest or other
adverse claim. 
  
 “Loss” means all damages,
losses, Liabilities, obligations, payments, amounts paid in settlement, fines, penalties, costs (including reasonable fees and expenses of attorneys, accountants and other professional advisors, as well as experts, and other costs of investigation,
preparation and litigation in connection with any pleading, claim, demand or other action) of any kind or nature whatsoever, whether known or unknown, contingent or vested, or matured or unmatured. 
  
 “Material Contracts” is defined in Section 5.5.

  
 “Net Revenue Interest” means the interests of
the Subject Companies in and to all Hydrocarbons produced, saved and sold from any Well described in Exhibit C, after giving effect to all Burdens and Liens other than Liens to be released in Schedule 1; but excluding that portion of
the net revenue interest for those Wells set forth in the column entitled “Non-Consent” on Exhibit C-1. 
  
 “Non-Consent Properties” is defined in Section 2.3.2. 
  
 “NORM” means naturally occurring radioactive material. 
  
 “Parties” is defined in the preamble. 
  
 “Permit” means a material license, authorization, permit,
variance and similar right or interest from Governmental Bodies. 
  
 “Permitted Encumbrances” means: 
  
 (a)
Burdens if the cumulative effect thereof does not operate to reduce the Net Revenue Interest in a Well described in Exhibit C below the Net Revenue Interest for such Well set forth in Exhibit C or operate to increase the Subject
Companies’ Working Interest in a Well described in Exhibit C to more than the Working Interest for such Well set forth in Exhibit C (unless there is a corresponding increase in the Net Revenue Interest); 
  
 (b) Division orders and sales contracts terminable without penalty upon no
more than thirty (30) days notice to the purchaser; 
  
 (c)
Required third-party consents to assignment and similar agreements with respect to which waivers or consents (i) are obtained from the appropriate parties or (ii) are routinely obtained after transfer pursuant to transactions of this
nature, including preferential rights to purchase; 
  
 (d)
Materialman’s, mechanic’s, repairman’s, employee’s, contractor’s, operator’s, Tax and other similar Liens or charges arising in the ordinary course of business for obligations (i) that are not delinquent or that
will be paid and discharged in the ordinary course of business or (ii) if delinquent, that are being contested in good faith in the ordinary course of business; 
  

 7 

 (e) All rights to consent by, required notices to, filings with, or other actions by any Governmental
Body in connection with the sale or conveyance of oil and gas leases or interests therein if they are routinely obtained subsequent to the sale or conveyance; 
  

(f) Easements, rights-of-way, servitudes, Permits, surface leases and other rights in respect of surface or pipeline operations that do not materially
interfere with oil and gas operations to be conducted on any Well or Lease; 
  
 (g) All (i) operating agreements, unit agreements, unit operating agreements, pooling agreements and pooling designations affecting the Properties that are contained in Calpine’s, Sellers’ or the
Subject Companies’ files or (ii) compulsory or commissioner’s pooling or units; provided that the effect of any such documents will not reduce the Subject Companies’ interest with respect to oil and gas produced from any Well
below the Net Revenue Interest set forth in Exhibit C, or increase the Subject Companies’ Working Interest in such Well to more than the Working Interest set forth in Exhibit C for such Well (unless there is a corresponding
increase in the Net Revenue Interest); 
  
 (h) Conventional rights
of reassignment prior to release or surrender requiring notice to the holders of the rights; 
  
 (i) All rights reserved to or vested in any Governmental Body to control or regulate any of the Properties in any manner, and all Applicable Laws; 
  
 (j) The terms and conditions of the Leases, and of all agreements that are contained in Calpine’s, Sellers’ or the
Subject Companies’ files or that are recorded in the public records of the appropriate jurisdiction and which do not reduce the Subject Companies’ interest with respect to oil and gas produced from any Well below the Net Revenue Interest
set forth in Exhibit C for such Well, or increase the Subject Companies’ Working Interest in such Well to more than the Working Interest set forth in Exhibit C for such Well (unless there is a corresponding increase in the Net
Revenue Interest); 
  
 (k) All other Liens, contracts, agreements,
instruments, obligations, defects and irregularities affecting the Properties which individually or in the aggregate are not such as to interfere materially with the operation, value or use of any of the Properties, could not reasonably be expected
to prevent or delay Buyer from receiving the proceeds of production from any Well and which do not reduce the Subject Companies’ interest with respect to Hydrocarbons produced from any Well below the Net Revenue Interest set forth in Exhibit
C for such Well, or increase the Subject Companies’ Working Interest in such Well to more than the Working Interest set forth in Exhibit C for such Well (unless there is a corresponding increase in the Net Revenue Interest);

  
 (l) All Liens as set forth on Schedule 1 which will be
released or terminated concurrently with the closing of the transactions contemplated herein; and 
  
 (m) Preferential rights to purchase as described in Section 2.3.2. 
  

 8 

 “Person” means any individual, corporation, partnership, limited liability company,
joint venture, association, joint stock company, trust, estate, unincorporated organization, other business entity or any Governmental Body. 
  
 “Plugging and Abandonment” means all plugging, replugging, abandonment, removal, disposal or restoration associated with the Properties,
including all plugging and abandonment, removal, surface restoration, site clearance and disposal of the wells, structures and personal property located on or associated with the Properties, the removal or capping and burying of all associated
flowlines, the restoration of the surface in accordance with Applicable Laws or the terms and conditions of the applicable Leases, site clearance, as required by Applicable Laws, and any disposal of related waste materials, including NORM and
asbestos, and shall include such Wells, structures, and personal property associated with any of the Properties, whether drilled or placed on a Lease prior to, at, or after the Closing Date. 
  
 “Preferential Rights Properties” is defined in
Section 2.3.2. 
  
 “Preliminary Purchase
Price” is defined in Section 14.2. 
  
 “Privilege” is defined in Section 19.7.2. 
  
 “Proceeding” means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether
public or private) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator. 
  
 “Property” or “Properties” means, collectively, all of the Subject Companies’ right, title and interest in the
following: 
  
 (a) the oil, gas and other mineral leases and
mineral fee, wellbore interests and other interests and estates and the lands and premises covered or affected thereby which are described on Exhibit B but excluding all or any undivided interests in and to the leases, leasehold interests or
other interests (or any portion thereof) identified therein as “Non-Consent Properties” as set forth on Exhibit B-1 (collectively called the “Leases”) or which Leases are otherwise referred to herein; 
  
 (b) (i) the properties pooled or unitized with any of the Leases;
(ii) all unitization, communitization, pooling agreements and declarations of pooled units and the units created thereby (including, without limitation, all units created under orders, regulations, rules or other official acts of any
Governmental Body having jurisdiction and any units created solely among working interest owners pursuant to operating agreements or otherwise) which may affect all or any portion of the Leases including, without limitation, those units which may be
described or referred to on Exhibit B; and (iii) all operating agreements, production sales or other contracts, farmout agreements, farm-in agreements, area of mutual interest agreements, equipment leases and other agreements which
relate to the Leases or interests in the Leases described or referred to herein or on Exhibit B or to the production, sale, purchase, exchange, processing, handling, storage, transporting or marketing of the Hydrocarbons from or attributable
to the Leases; 
  

 9 

 (c) all Hydrocarbons which may be produced and saved after the Effective Date from or attributable to the
Subject Companies’ interests in the Leases, the lands pooled or unitized therewith, including all saleable oil in tanks and all rents, issues, profits, proceeds, products, revenues and other income from or attributable to the Leases and the
lands pooled or unitized therewith; 
  
 (d) all tenements,
hereditaments, appurtenances and properties in anywise appertaining, belonging, affixed or incidental to the Leases, rights, titles, interests and estates described or referred to in paragraphs (a) and (b) above, including any and all
property, real or personal, situated upon, used or held for use in connection with the operating, working or development of any of such Leases or the lands pooled or unitized therewith including any and all oil wells, gas wells, injection wells or
other wells (collectively, such wells are referred to herein as “Wells” and are more fully described on Exhibit C, but excluding that portion of the net revenue and working interest for those Wells set forth in the column entitled
“Non-Consent” on Exhibit C-1), buildings, structures, field separators, liquid extraction plants, plant compressors, pumps, pumping units, pipelines, sales and flow lines, gathering systems including the gathering system described
on Exhibit C-2, field gathering systems, salt water disposal facilities, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing tubing and rods, surface leases, rights-of-way, easements, servitudes, licenses and other surface and subsurface rights situated upon, used or held for use solely in connection of the operating, working or development of any of such
Leases or the lands pooled or unitized therewith, together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing properties; 
  
 (e) interests of every nature in and to the Leases rights, titles, interests and estates and every part and parcel thereof,
including the Leases or any other rights, titles, interests and estates as the same may be enlarged by the discharge of any payments out of production or by the removal of any charges or Permitted Encumbrances to which any of the Lease rights,
titles, interests or estates are subject, or otherwise; together with any and all renewals and extensions of any of the Lease rights, titles, interests or estates; all contracts and agreements supplemental to or amendatory of or in substitution for
the contracts and agreements described or mentioned above; 
  
 (f)
all improvements, tools, parts and equipment used in connection with, all or any part of the Property described in this or any other clause of this definition; and 
  
 (g) to the extent transferable without material restriction or payment of a transfer or licensing fee, all Records.

  
 Notwithstanding anything to the contrary herein or otherwise,
the Properties do not include, and Calpine and Sellers do hereby EXCEPT and EXCLUDE therefrom and do hereby RETAIN and RESERVE unto themselves, their successors and assigns, the Excluded Properties. 
  
 “Purchase Price” is defined in Section 3.1.

  
 “Records” mean all of Calpine’s and
Sellers’ Lease files, abstracts and title opinions, division order files, production records, well files, accounting records (but not including general 
  

 10 

 financial accounting or tax accounting records), and other similar files and records which directly relate to the
Properties, including geological and geophysical data other than those which Calpine or Sellers consider to be proprietary or confidential to it or which Calpine or Sellers cannot provide to a member of the Buyer Group without, in Calpine’s or
Sellers’ opinion, breaching, or incurring a material risk of a breach of, agreements with other parties, or waiving, or incurring a material risk of waiving, legal privilege. 
  
 “Remediation” or “Remediate” means affirmative actions or remedial work taken to remove or
otherwise remedy an Environmental Condition, including any survey, site assessment, audit, investigation, inspection, sampling, analysis, removal, excavation, pump and treat, cleanup, disposal, storage, handling or treatment, excluding those actions
associated with Plugging and Abandonment. 
  
 “Rules” is defined in Article 20. 
  
 “Sellers” is defined in the preamble. 
  
 “Sellers’ Actual Knowledge” means the actual knowledge of B.A. Bill Berilgen (Executive Vice President of Calpine and President-Calpine Fuels), Charles F. Chambers (Vice President of CNGLP), Roxy Blu (Director of Land
of CNGLP), Michael Rosinski (Chief Financial Officer of CNGLP), Ed Seeman (Director Reservoir Engineering of CNGLP), Denise Bednorz (Controller of CNGLP), or Bert Bates (Director of EH&S of CNGLP). 
  
 “Sellers’ Retained Liabilities” is defined in
Section 2.2. 
  
 “Straddle Period” is
defined in Section 12.1. 
  
 “Subject
Companies” means, collectively, all of the entities listed on Exhibit A; and “Subject Company” means any one of them. 
  
 “Subject Equity” means, collectively, all of the Equity Interests of each of Rosetta Resources California, LLC, Rosetta Resources
Offshore, LLC, Rosetta Resources Rockies, LLC, Rosetta Resources Texas GP, LLC, Rosetta Resources Texas LP, LLC, Calpine Natural Gas GP, LLC, and Calpine Natural Gas Holdings, LLC. 
  
 A “Subsidiary” of any Person means any corporation or other organization whether incorporated or
unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries. 
  
 “Taxes” means any and all fees (including documentation,
license, recording, filing and registration fees), taxes (including income, production, gross receipts, ad valorem, value added, windfall profit tax, environmental tax, turnover, sales, use, personal property (tangible and intangible), stamp,
leasing, lease, user, leasing use, excise, franchise, transfer, heating value, fuel, excess profits, occupational, interest equalization, lifting, oil, gas, or mineral production or 
  

 11 

 severance, and other taxes), levies, imposts, duties, charges or withholdings of any nature whatsoever, imposed by any
Governmental Body or taxing authority thereof, domestic or foreign, together with any and all penalties, fines, additions to tax and interest thereon, whether such tax shall be existing or hereafter adopted. 
  
 “Third Party” means a Person other than a Party or an
Affiliate of a Party. 
  
 “Transfer Agreement”
means that certain Transfer and Assumption Agreement dated, July 7, 2005 by and among Calpine and the Subject Companies pursuant to which the Properties owned by Calpine will be conveyed to the Subject Companies. 
  
 “Transition Services Agreement” means the Transition
Services Agreement in the form of Exhibit F. 
  
 “Working Interest” means, with respect to the Wells, units or Leases set forth in Exhibit C, the interest of the Subject Companies therein, without regard to any valid Burdens or Liens which is burdened with the
obligation to bear and pay costs of operations; but excluding that portion of the working interest for those Wells set forth in the column entitled “Non-Consent” on Exhibit C-1 for those Wells. 
  
 ARTICLE 2 
 SALE AND PURCHASE OF SUBJECT EQUITY 
  
 2.1 Purchase and Sale. Subject to the terms and conditions herein set forth, Sellers agree to sell, assign, convey and deliver to Buyer, and
Buyer agrees to purchase and acquire from Sellers at the Closing all of Sellers’ right, title and interest in and to the Subject Equity. 
  
 2.2 Sellers’ Retained Liabilities. Subject to the terms and conditions herein set forth, the following Liabilities (collectively, the
“Sellers’ Retained Liabilities”) shall remain the sole responsibility of and shall be retained, paid, performed and discharged solely by Calpine and Sellers (and with regard to CNGLP, Calpine Natural Gas GP, LLC and Calpine
Natural Gas Holdings, LLC, Calpine and Sellers shall assume, perform and discharge the following Liabilities and any Liabilities of the Calpine Business for which any of CNGLP, Calpine Natural Gas GP, LLC or Calpine Natural Gas Holdings, LLC could
have any obligation to pay or perform) at and after the Closing: 
  
 2.2.1 any Liability for additional payments of severance taxes, royalties, overriding royalties or other similar Burdens relating to the sales to Sellers or any of their Affiliates of Hydrocarbons produced from the Properties prior to the
Closing Date; 
  
 2.2.2 any Liabilities expressly retained by
Calpine, Sellers or any of their Affiliates pursuant to the Employee Matters Agreement; 
  
 2.2.3 any Liability for Taxes of Calpine, Sellers, or any of their Affiliates (i) attributable to all taxable periods ending on or before the Closing Date, (ii) for the portion of 
  

 12 

 any taxable period that includes but does not end on the Closing Date, or (iii) that may be imposed on any member of
Buyer Group under section 1.1502-6 of the Treasury regulations promulgated under the Code or any analogous provision of state or local law or regulation as a result of the affiliation of Buyer or its Affiliates with Calpine or Sellers; and

  
 2.2.4 any Liability arising out of any Proceeding set forth on
Schedule 2.2. 
  
 2.3 Preferential Rights and
Consents. 
  
 2.3.1 In connection with the transfers of
certain of the Properties to the Subject Companies, Calpine and Sellers have requested (in accordance with the documents creating such rights and/or requirements) all consents to assignment (or waivers to such consents) that, to Sellers’ Actual
Knowledge, are necessary in order for Calpine to consummate the transfer of the Properties to the Subject Companies pursuant to the Transfer Agreement. The Parties agree to use commercially reasonable efforts to obtain such consents or waivers (but
Calpine and Sellers shall have no obligation to assure that such waivers or consents are obtained). On or before the Closing, Sellers will, or will cause the appropriate member of the Calpine Group to, give notice to all Persons who hold
preferential rights to purchase any of the Properties in accordance with the documents creating such rights and/or requirements. 
  
 2.3.2 Notwithstanding that Calpine and Sellers may not be able to obtain waivers of the preferential rights to purchase or consents to assignment which
are necessary in order to convey the Properties to the Subject Companies, the Parties shall proceed with Closing. Prior to the Closing and in accordance with the Transfer Agreement, Calpine and Sellers (i) will assign to the Subject Companies
the Properties, including any Properties that are subject to preferential rights to purchase (“Preferential Right Properties”), for the Purchase Price set forth herein, and (ii) retain all rights to any of the Properties that
are subject to consents that are not received before the Closing (“Non-Consent Properties”). The Purchase Price shall be reduced by the allocated value of Non-Consent Properties as set forth in Exhibit D (with a corresponding
adjustment of any of the items in Section 4.1 or 4.2 that relate to the Non-Consent Properties). The Preferential Right Properties were transferred to the Subject Companies subject to the applicable preferential rights to
purchase. 
  
 2.3.3 From and after the Closing, Calpine shall
continue to hold title to the Non-Consent Properties subject to the provisions of this Section 2.3. Buyer (directly or indirectly through one of the Subject Companies; for the purposes of this Section 2.3, Buyer shall also
include the Subject Companies following the Closing) shall manage, operate and market production from the Non-Consent Properties pursuant to the applicable provisions of the Transition Services Agreement. Buyer, with the cooperation of Calpine and
Sellers, shall continue for a six (6) month period immediately following the Closing to use commercially reasonable efforts to obtain any waivers of the preferential rights relating to the Preferential Right Properties and consents to the
assignment of the Non-Consent Properties, provided that the Parties shall have no obligation to pay any amount to obtain such consent or waivers. 
  
 2.3.4 If during the six (6) month period after the Closing Date, the Parties are able to obtain consents to transfer any Non-Consent Properties (such
Properties are referred to herein as the “Cured Non-Consent Properties”), then such Properties shall be transferred to 
  

 13 

 Buyer (or the Subject Company designated by it) in accordance with the provisions of this Section 2.3.4.
Promptly at the end of each month during such six (6) month period after the Closing Date (but not more than five (5) days thereafter), Calpine shall transfer to Buyer (or the Subject Company designated by it), and Buyer shall purchase
from the transferring party, any Cured Non-Consent Properties for which the consent to assign was obtained during the preceding month. The purchase price for the Cured Non-Consent Properties shall be the allocated value of such properties as set
forth in Exhibit D, with a corresponding adjustment of any of the items in Section 4.1 or 4.2 that relate to the Cured Non-Consent Properties through the date of the transfer to Buyer (or the Subject Company designated by
it). The purchase price for the Cured Non-Consent Properties shall be paid by Buyer in immediately available funds. The purchase of the Cured Non-Consent Properties shall be on the same terms and subject to the same provisions of this Agreement
(other than the purchase price determined in accordance with this Section 2.3.4) as applicable to the Properties that were conveyed pursuant to the Transfer Agreement. Any Non-Consent Properties for which consents have not been obtained
during the six (6) month period after the Closing shall remain with Calpine and shall no longer be subject to this Agreement. 
  
 2.3.5 If any rights to purchase any of Preferential Right Properties are exercised and consummated following the Closing Date, Buyer (or the Subject
Company designated by it) shall be entitled to retain all of the amounts paid therefor and shall have all obligations and Liability relating to the transfer thereof to the purchasing party, including any Liability relating to the allocation of the
Purchase Price to the Preferential Right Properties. 
  
 2.4
Governmental Bonds. Attached hereto as Schedule 2.4 is a list of all bonds placed by Calpine and CNGLP with a Governmental Body for the ownership and operation of the Properties. At or prior to the Closing, Buyer shall deliver
to Calpine and Sellers evidence reasonably satisfactory to Calpine and Sellers that a member of the Buyer Group has posted bonds or other security with each applicable Governmental Body to own and, where appropriate, operate the Properties in
accordance with the requirements of such Governmental Body. Where such bonds or other security are placed in the name of CNGLP and will not be replaced at Closing, Buyer agrees that the Purchase Price shall be increased in the aggregate amount of
such bonds or other security to the extent that Calpine or CNGLP has paid any amounts in connection therewith. Buyer shall indemnify, defend and hold harmless Calpine, Sellers and their Affiliates for any Liability that is assessed against any bond
or other security listed on Schedule 2.4, or for the taking or conversion thereof, that occurs on or after the Closing. 
  
 ARTICLE 3 
 PURCHASE
PRICE 
  
 3.1 Purchase Price. The total
purchase price to be paid by Buyer to Sellers for the Subject Equity shall be One Billion Six Million Five Hundred Thousand Dollars ($1,006,500,000) (the “Purchase Price”), subject to any applicable adjustments as provided in this
Agreement, including Article 4. 
  
 3.2
Allocated Value. Sellers and Buyer agree and stipulate that the Allocated Values set forth for the Properties in Exhibit D have been established solely for use in calculating adjustments to the Purchase Price as provided herein,
such schedule of Allocated Values being 
  

 14 

 solely for the convenience of the Parties. Sellers and Buyer do not intend that such schedule of Allocated Values be
treated or interpreted to constitute an allocation of the Purchase Price among the Properties for federal or state income tax purposes. 
  
 ARTICLE 4 
 ADJUSTMENTS TO
PURCHASE PRICE 
  
 The Purchase Price shall be adjusted as
follows: 
  
 4.1 Increases in Purchase Price. The
Purchase Price shall be increased by an amount equal to the sum of the following amounts: 
  
 4.1.1 The amount of costs and expenses (other than administrative overhead addressed by the fixed charge below) actually paid or to be paid by any of Calpine, Sellers, the Subject Companies or their Affiliates related
to owning, operating, producing and maintaining the Properties from the Effective Date to the Closing Date, including capital expenditures, plus a fixed overhead charge of $0.48/Mcfe per month, which shall be in lieu of any per-well COPAS
administrative charges on wells operated by any of Calpine, Sellers, the Subject Companies, or their Affiliates; 
  
 4.1.2 The amount of all prepaid expenses, including all Taxes based upon or measured by ownership, relating to the Properties, paid by any of Calpine,
Sellers, the Subject Companies or their Affiliates and attributable to periods of time after the Effective Date; 
  
 4.1.3 The amount of all upward adjustments to the Purchase Price provided for in this Agreement; 
  
 4.1.4 The value of (a) all oil and other Hydrocarbons in pipelines or in
tanks above the pipeline sales connection, in each case at the Effective Date that is credited to the Properties and not sold by any of Calpine, Sellers, the Subject Companies or their Affiliates prior to Closing, (b) all unsold inventory of
gas plant products attributable to the Properties at the Effective Date and not sold by any of Calpine, Sellers, the Subject Companies or their Affiliates prior to Closing, each such value to be the market or, if applicable, the contract price in
effect as of the Effective Date, less any applicable Taxes and Burdens and (c) all gas imbalance volumes owed to any of Calpine, Sellers, the Subject Companies or their Affiliates by a Third Party as of the Effective Date as estimated on
Schedule 5.11, multiplied by $3.00 per Mcf; and 
  
 4.1.5
Any other amount provided for in this Agreement as an increase in the Purchase Price. 
  
 4.2 Decreases in Purchase Price. The Purchase Price shall be decreased by an amount equal to the sum of the following amounts: 
  
 4.2.1 The amount of all proceeds paid or to be paid to any of Calpine, Sellers, the Subject Companies or their Affiliates,
including proceeds from the sale of production, net of all applicable Taxes and Burdens paid or to be paid by any of Calpine, Sellers, the Subject Companies or their Affiliates, attributable to the Properties for periods of time after the Effective
Date; 
  

 15 

 4.2.2 An amount equal to all Taxes based upon or measured by ownership, relating to the Properties that
are unpaid as of the Closing Date and attributable to periods of time prior to the Effective Date; 
  
 4.2.3 The value of all gas imbalance volumes owed by any of Calpine, Sellers, the Subject Companies or their Affiliates to a Third Party as of the
Effective Date as estimated on Schedule 5.11, multiplied by $3.00 per Mcf; and 
  
 4.2.4 Any other amount provided for in this Agreement (including under Section 2.3.3) as a decrease in the Purchase Price. 
  
 4.3 Schedule of Purchase Price Adjustments at Closing. Attached hereto as Schedule 4.3 is an estimate
of the Purchase Price and related adjustments as of the Closing Date that is based upon the adjustments in Sections 4.1 and 4.2. Reference is made to Article 15 for post-closing adjustments to be made for any modification to
such adjustments for actual amounts received after closing. 
  
 ARTICLE 5 
 REPRESENTATIONS AND WARRANTIES OF CALPINE AND SELLERS 
  
 Calpine and each of the Sellers represent and warrant, jointly and severally,
to Buyer as to themselves and as to each of the Subject Companies, that each of the statements made in this Article 5 are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date. 
  
 5.1 Organization. Calpine is a Delaware corporation validly
existing and in good standing under the laws of the State of Delaware. Calpine Gas is a limited liability company validly existing and in good standing under the laws of the State of Delaware. Calpine Fuels is a corporation validly existing and in
good standing under the laws of the State of California. Each of the Subject Companies is validly existing and in good standing under the laws of the State of Delaware. Sellers and each of the Subject Companies are in good standing and duly
qualified to do business in each other jurisdiction in which the conduct of its business or ownership or leasing of its properties makes such qualification or registration necessary. 
  
 5.2 Authority. Calpine and each Seller has full power to enter into and perform its obligations under this
Agreement and has taken all proper corporate action to authorize entering into this Agreement and performing its obligations hereunder. 
  
 5.3 No Conflict. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated herein, nor the
compliance with the terms hereof will (a) (i) result in any default under any material agreement or instrument relating to the Calpine Business to which Calpine or any Seller is a party (including its governing documents) or by which any
of its or its Affiliate’s assets or properties is bound or (ii) violate any order, writ, injunction, decree, statute, rule or regulation relating to the Calpine Business to which Calpine or any Seller or to any of its or its
Affiliate’s assets or properties; or (b) to Sellers’ Actual Knowledge, (i) result in any default under any material agreement or instrument relating to the Buyer Business to which Calpine or any Seller is a party or by which any
of its or its Affiliate’s 
  

 16 

 Properties is bound, or (ii) violate any order, writ, injunction, decree, statute, rule or regulation relating to
the Buyer Business which is applicable to Calpine or any Seller or to any of its or its Affiliate’s assets or properties; other than requirements to obtain (x) those consents to assignment or waivers of preferential rights to purchase from
third parties set forth in Schedule 5.3 and (y) approvals from any Governmental Body customarily obtained post-closing. 
  
 5.4 Enforceability. This Agreement has been duly executed and delivered on behalf of Calpine and each Seller and constitutes the legal,
valid and binding obligation of each such Persons, enforceable in accordance with its terms, except as limited by bankruptcy or other similar laws applicable generally to creditors’ rights and as limited by general equitable principles.

  
 5.5 Contracts. To Sellers’ Actual
Knowledge, Schedule 5.5 describes (a) all area of mutual interest agreements (other than area of mutual interest provisions of customary joint operating agreements), all purchase or sale agreements (other than with respect to production
of Hydrocarbons and the disposition of field equipment in the ordinary course of business), partnership (other than tax partnerships), joint venture and/or exploration or development program agreements relating to Wells and Leases or otherwise
included in the Properties, (b) all of the production sales, marketing and processing agreements relating to the Wells and Leases, other than such agreements which are terminable by any of Calpine, Sellers or the Subject Companies without
penalty on ninety (90) or fewer days’ notice, and (c) any contracts or agreements (other than contracts for utility services) burdening the Properties which could reasonably be expected to obligate the Subject Companies to expend in
excess of $1,000,000 in any calendar year ((a) – (c) collectively, the “Material Contracts”). To Sellers’ Actual Knowledge, (x) none of Calpine, Sellers or the Subject Companies has received written notice of its
default in any material respect under any of the Material Contracts, the Leases or the Easements; (y) the Material Contracts and the Leases are in full force and effect; and (z) none of Calpine, Sellers or the Subject Companies is in
default in any material respect thereunder or under any Easement. 
  
 5.6 Litigation and Claims. Except as set forth on Schedule 5.6, no Proceeding is pending or, to Sellers’ Actual Knowledge, threatened with respect to Calpine, Sellers or any Subject Company that could reasonably be
expected to materially and adversely affect the Subject Companies or the ownership, operation or value of the Properties or the Buyer Business, or which would materially adversely affect the ability of Calpine or Sellers to consummate the
transactions contemplated herein. 
  
 5.7 Financial
Statements. Calpine and Sellers have delivered to Buyer accurate and complete copies of (i) the audited combined balance sheets of the Domestic Oil & Gas Properties of Calpine and its Affiliates as of December 31, 2003 and
2004, the related audited combined statements of income, equity, and cash flows/changes in financial position for each of the years then ended and the notes thereto (the “Annual Financial Statements”); and (ii) the unaudited
combined balance sheets of the Domestic Oil & Gas Properties of Calpine and its Affiliates as of March 31, 2005, and the related unaudited combined statements of income, equity, cash flows/changes in financial position for the
three-month period then ended and the notes thereto (the “Interim Financial Statements”; and, collectively with the Annual Financial Statements, the “Financial Statements”). The Financial Statements
(i) represent actual bona fide 
  

 17 

 transactions, (ii) have been prepared from the books and records of Calpine, Sellers and the Subject Companies in
conformity with GAAP applied on a basis consistent with preceding years throughout the periods involved, and (iii) accurately, completely, and fairly present the combined financial position of the assets of the domestic oil and gas exploration
and production business of Calpine and its Affiliates as of the respective dates thereof and their combined results of operations and cash flows/changes in financial position for the periods then ended as if such companies were stand alone entities,
except that the Interim Financial Statements are subject to normal year-end adjustments, which are not reasonably expected to be material in the aggregate. 
  
 5.8 No Liabilities. The Subject Companies have no existing, or to Sellers’ Actual Knowledge, threatened material Liability other than
Liabilities (i) incurred in the ordinary course of the Buyer Business since March 31, 2005; (ii) that are less than $1,000,000 individually; (iii) disclosed in the Financial Statements or (iv) disclosed herein or in the
Schedules hereto. 
  
 5.9 Subject Equity. Sellers
are the sole, record and beneficial owners of the Subject Equity, and upon delivery of the Assignments to Buyer, Sellers shall transfer good and marketable title to the Subject Equity, free and clear of all Liens. There are no rights, subscriptions,
warrants, options, conversion rights or agreements of any kind outstanding to purchase or otherwise acquire any interest in the Subject Equity, and there are no authorized, outstanding or existing proxies, voting trusts, equity holder agreements or
other agreements or understandings with respect to the voting of the Subject Equity. None of Calpine or Sellers nor any agent acting on their behalf has offered any of the Subject Equity for sale to any party which offer remains outstanding on the
date hereof. 
  
 5.10 Notices. Except as set forth
in Schedule 5.10, to Sellers’ Actual Knowledge, (a) Calpine’s and the Subject Companies’ operation of the Properties is not the subject of any pending regulatory Proceedings and (b) none of Calpine, Sellers and
Subject Companies has received written notice, which has not heretofore been complied with, of any violation of Applicable Law issued with respect to any of the Properties. 
  
 5.11 Imbalances. To Sellers’ Actual Knowledge, except as set forth on Schedule 5.11, there
are no gas or other Hydrocarbon production, pipeline, transportation or processing imbalances existing as of the dates set forth in Schedule 5.11 with respect to any of the Properties, other than those that do not exceed $5,000 individually
or relate to transactions occurring less than 30 days before the date of this Agreement. 
  
 5.12 Current Commitments and AFEs. Schedule 5.12 contains a complete and accurate list as of the date of this Agreement of (i) all pending authorizations for expenditures
(“AFEs”) which commit any of Calpine, Sellers or the Subject Companies in excess of $250,000 to drill or rework Wells or for capital expenditures pursuant to any of the Contracts that have been proposed by any person on or after the
Effective Date, whether or not accepted by Calpine, Sellers, the Subject Companies, or any Third Party, and (ii) all AFEs and oral or written commitments in excess of $250,000 to drill or rework Wells or for other capital expenditures pursuant
to any of the Contracts for which all of the activities anticipated in such AFEs or commitments have not been completed by the date of this Agreement. 
  

 18 

 5.13 Property Operation and Personal Property. To Sellers’ Actual Knowledge, the Wells
have been drilled, completed, operated, developed and produced in material compliance with all Applicable Laws (other than those relating to environmental matters, which are dealt with in Section 5.17) and all necessary Permits (other
than those relating to environmental matters, which are dealt with in Section 5.17) which are material to the ownership, use or operation of the Properties have been obtained and are in force. To Sellers’ Actual Knowledge, the
equipment and fixtures located on the Properties constitutes the equipment and fixtures reasonably necessary for the operations of the Properties for the production of the Hydrocarbons. To the Sellers’ Actual Knowledge, such equipment and
fixtures currently in service are in good repair and operating condition and are suitable for the purposes for which such equipment and fixtures are employed. 
  

5.14 Take-or-Pay. To Sellers’ Actual Knowledge, except as set forth on Exhibit C, no Subject Company is obligated, under a
take-or-pay or similar arrangement, or by virtue of an election to non-consent, or not participate in a past or current operation on the Properties pursuant to the applicable operating agreement, to produce Hydrocarbons, or allow Hydrocarbons to be
produced, without receiving full payments at the time of delivery in an amount that corresponds to the Net Revenue Interest in the Hydrocarbons attributable to any Well described in Exhibit C. 
  
 5.15 Tax Partnerships. Except as disclosed on Schedule
5.15, none of the Properties is subject to or burdened by any partnership, joint venture or other arrangement that is treated as a partnership for federal and applicable state income tax purposes. 
  
 5.16 Solvency. Calpine and Sellers are not insolvent, nor will
Calpine or Sellers be rendered insolvent by the occurrence of the transactions contemplated in this Agreement, as such terms are used or defined in applicable state and federal fraudulent conveyance or transfer laws. 
  
 5.17 Environmental Condition. Except as set forth on
Schedule 5.17, to Sellers’ Actual Knowledge, there are no pending written claims, actions or Proceedings by any Third Party or Governmental Body caused by or arising out of any Environmental Condition pending with regard to the ownership
or operation of the Properties and there are no Environmental Conditions presently under Remediation with respect to the Properties. 
  
 ARTICLE 6 
 REPRESENTATIONS
AND WARRANTIES OF BUYER 
  
 Buyer represents and warrants
to Calpine and Sellers that each of the statements made in this Article 6 are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date. 
  
 6.1 Organization. Buyer is a corporation validly existing and in good standing under the laws of the State of
Delaware. Buyer is in good standing and duly qualified to do business in each other jurisdiction in which the conduct of its business or ownership or leasing of its properties makes such qualification or registration necessary. 
  

 19 

 6.2 Authority. Buyer has full power to enter into and perform its obligations under this
Agreement and has taken all proper corporate action to authorize entering into this Agreement and performing its obligations hereunder. 
  
 6.3 No Conflicts. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated herein, nor
the compliance with the terms hereof will result in any default under any material agreement or instrument to which Buyer is a party (including its governing documents), or violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Buyer or any of its properties. 
  
 6.4
Enforceability. This Agreement has been duly executed and delivered on behalf of Buyer and constitutes the legal, valid and binding obligation of Buyer, enforceable in accordance with its terms, except as limited by bankruptcy or other
similar laws applicable generally to creditor’s rights and as limited by general equitable principles. 
  
 6.5 No Further Distribution. Buyer is acquiring the Subject Equity for its own account and not with a view to, or for offer of resale in
connection with, a distribution thereof, within the meaning of the Securities Act of 1933, 15 U.S.C. § 77a et seq., and any other Applicable Laws pertaining to the distribution of securities, except in compliance with the applicable securities
laws. 
  
 6.6 Finder’s Fees. Except for fees
payable to Friedman, Billings, Ramsey & Co., Inc., Buyer has not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees in respect to this transaction for which any Seller shall have any responsibility
whatsoever. 
  
 ARTICLE 7 
 COVENANTS OF SELLER 
  
 7.1 Conduct of Business Pending Closing. From the date hereof to the Closing Date, except as provided herein or in Article 7 of the
Transfer Agreement, as required by any obligation, agreement, Lease, contract, or instrument referred to on any Exhibit or Schedule or as otherwise consented to in writing by Buyer, Calpine and each Seller shall, or shall cause its respective
Subject Companies, to: 
  
 7.1.1 Not (a) act in any manner
with respect to the Properties other than in the normal, usual and customary manner, consistent with prior practice; (b) dispose of, encumber or relinquish any of the Properties (other than any relinquishment resulting from the expiration of
any Lease or Material Contract in accordance with its terms); (c) waive, compromise or settle any material right or claim with respect to any of the Properties; or (d) except with respect to those matters identified in Schedule
5.12, propose capital or workover expenditures with respect to the Properties in excess of $1,000,000 (net to Calpine’s, Sellers’ or the Subject Companies’ interest), except when required by an emergency when there shall have been
insufficient time to obtain advance consent (provided, that Calpine or Sellers will promptly notify Buyer of any such emergency expenditures); 
  
 7.1.2 Cooperate with Buyer in the notification of any Governmental Body of the transactions contemplated herein and cooperate with Buyer in obtaining the
issuance by each such authority of such Permits as may be necessary for Buyer to own and operate the Subject Companies and their respective Properties following the Closing; 
  

 20 

 7.1.3 Use commercially reasonable efforts, when necessary in Buyer’s opinion, to seek appointment of
one of the Subject Companies designated by Buyer as the successor operator to Calpine or Sellers with respect to all Properties currently operated by Calpine or Sellers; 
  
 7.1.4 Until Closing, maintain all insurance with respect to the Subject Companies and the Properties currently in force with
approximately the same coverages and limits as are in effect at the date hereof; and 
  
 7.1.5 Obtain the resignation, or terminate the positions, of those officers, directors, and managers of the Subject Companies as requested by Buyer in writing prior to the Closing. 
  
 7.2 Tax Matters. No extension of time to assess any Tax or
settle any Tax claim relating to or in any way affecting the Properties may be requested or granted after the date of this Agreement without the prior written consent of Buyer. No election with respect to Taxes relating to or in any way affecting
the Properties may be made or changed by Calpine or Sellers after the date of this Agreement without the prior written consent of Buyer. 
  
 7.3 Satisfaction of Conditions. Calpine and Sellers will use commercially reasonable efforts to consummate, make effective and comply with
all of the terms of this Agreement (including satisfaction, but not waiver, of the Closing conditions for which they are responsible or otherwise in control). 
  

ARTICLE 8 
 COVENANTS OF
BUYER 
  
 8.1 Satisfaction of Conditions.
Buyer will use commercially reasonable efforts to consummate, make effective and comply with all of the terms of this Agreement (including satisfaction, but not waiver, of the Closing conditions for which it is responsible or otherwise in control).

  
 ARTICLE 9 
 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER 
  
 The obligations of Calpine and Sellers to be performed at or after the Closing are subject to the fulfillment (or waiver by Calpine and Sellers in their
sole discretion), before or at the Closing, of each of the following conditions: 
  
 9.1 Representations and Warranties. The representations and warranties by Buyer set forth in Article 6 and each of the Ancillary Agreements shall be true and correct in all material respects at
and as of the Closing as though made at and as of the Closing. 
  

 21 

 9.2 Covenants. Buyer shall have performed and complied with in all material respects all
covenants and agreements required to be performed and satisfied by it pursuant to this Agreement and each of the Ancillary Agreements at or prior to Closing. 
  
 9.3 No Litigation. There shall be no Proceeding pending or threatened to restrain or prohibit the consummation of the transactions
contemplated in this Agreement. 
  
 9.4 Consents.
All consents and approvals required to be obtained before Closing shall have been obtained or shall have expired without being exercised and have therefore been waived, except for those consents and approvals which are customarily obtained after
closing of transactions similar to those contemplated herein and those relating to the Properties that have been excluded from the transfers to the Subject Companies in accordance with Section 2.3.2. 
  
 ARTICLE 10 
 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER 
  
 The obligations of Buyer to be performed at or after the Closing are subject to the fulfillment (or waiver by Buyer in its sole discretion), before or at
the Closing, of each of the following conditions: 
  
 10.1
Representations and Warranties. The representations and warranties of Calpine and Sellers set forth in Article 5 and each of the Ancillary Agreements shall be true and correct in all material respects at and as of the Closing as
though made at and as of the Closing; provided, however, that in no event shall the failure to obtain a consent or waiver on Schedule 5.3 (to the extent addressed in Section 2.3) or the existence of an Adverse Environmental
Condition cause a representation or warranty to be untrue or incorrect. 
  
 10.2 Covenants. Calpine and Sellers shall have performed and complied with in all material respects all covenants and agreements required to be performed and satisfied by them pursuant to this Agreement and each of the
Ancillary Agreements at or prior to Closing. 
  
 10.3 No
Litigation. There shall be no Proceeding pending or threatened to restrain or prohibit the consummation of the transactions contemplated in this Agreement. 
  
 10.4 Consents. All consents and approvals required to be obtained before Closing shall have been obtained or
shall have expired without being exercised and have therefore been waived, except for those consents and approvals which are customarily obtained after closing of transactions similar to those contemplated herein and those relating to the Properties
that have been excluded from the transfers to the Subject Companies in accordance with Section 2.3.2. 
  
 10.5 Release of Liens. All Liens of record burdening the Properties (other than Permitted Encumbrances) shall be released at or before
Closing and Calpine and Sellers shall have made arrangements reasonably acceptable to Buyer for the payment and release of all Liens described on Schedule 1. 
  
 10.6 FIRPTA Certificate. Each Seller shall have delivered to Buyer a non-foreign certificate required by
Section 1445 of the Code to avoid withholding on any portion of the Purchase Price. 
  

 22 

 ARTICLE 11 
 ENVIRONMENTAL MATTERS 
  
 11.1 Presence of Wastes, NORM, Hazardous Substances and Asbestos. BUYER ACKNOWLEDGES THAT THE PROPERTIES HAVE BEEN USED TO EXPLORE FOR, DEVELOP AND PRODUCE HYDROCARBONS, AND THAT SPILLS OF WASTES, CRUDE OIL, PRODUCED WATER,
HAZARDOUS SUBSTANCES AND OTHER MATERIALS MAY HAVE OCCURRED THEREON. ADDITIONALLY, THE PROPERTIES, INCLUDING PRODUCTION EQUIPMENT, MAY CONTAIN ASBESTOS, HAZARDOUS SUBSTANCES OR NORM. NORM MAY AFFIX OR ATTACH ITSELF TO THE INSIDE OF WELLS, MATERIALS
AND EQUIPMENT AS SCALE OR IN OTHER FORMS, AND NORM-CONTAINING MATERIAL MAY HAVE BEEN BURIED OR OTHERWISE DISPOSED OF ON THE PROPERTIES. A HEALTH HAZARD MAY EXIST IN CONNECTION WITH THE PROPERTIES BY REASON THEREOF. SPECIAL PROCEDURES MAY BE REQUIRED
FOR REMEDIATION, REMOVING, TRANSPORTING AND DISPOSING OF ASBESTOS, NORM, HAZARDOUS SUBSTANCES AND OTHER MATERIALS FROM THE PROPERTY. With respect to the Properties owned by the Subject Companies at the Closing and all Properties that may be
subsequently transferred pursuant to Section 2.3, Buyer assumes all liability for the assessment, Remediation, removal, transportation and disposal of these materials and associated activities in accordance with the applicable rules,
regulations and requirements of any Governmental Body. Buyer understands that the Properties were conveyed to the Subject Companies by Calpine or Sellers on an “as is, where is” basis, and Buyer waives, and shall cause the Subject
Companies to waive, all claims against the Sellers for the condition of the Properties, including any Adverse Environmental Condition relating to the Properties. 
  
 ARTICLE 12 
 TAX MATTERS 
  
 12.1 Tax
Indemnification. Calpine and Sellers shall indemnify, defend and hold harmless Buyer from and against (i) any Liability for Taxes of Calpine, Sellers or their Affiliates in respect of all taxable periods ending on or before the Closing
Date, (ii) any Liability for Taxes of Calpine, Sellers or their Affiliates for the portion of any taxable period that includes but does not end on the Closing Date (the “Straddle Period”), and (iii) any Liability that may
be imposed on any member of Buyer Group under section 1.1502-6 of the Treasury regulations promulgated under the Code or any analogous provision of state or local law or regulation as a result of the affiliation of Buyer or its Affiliates with
Calpine or Sellers. 
  
 12.2 Apportionment of Taxes.
All Straddle Period Taxes imposed on or with respect to the Properties shall be prorated between Calpine and Sellers, on the one hand, and Buyer, on the other hand, as of the Closing Date, based on the number of days in the calendar year before and
after the Closing Date. Calpine and Sellers shall be responsible for those days up to and including the Closing Date, and Buyer shall be responsible for those days after the Closing Date. Where Taxes have not been assessed and are not yet payable as
of the Closing Date, the Parties shall estimate the Taxes as of the Closing Date (based upon the prior year’s Taxes) and prorate the estimated Taxes accordingly. When the actual amount of Taxes is known by the Parties, the Parties shall prorate
the actual amount of Taxes to correct any erroneous payment based on the earlier proration of estimated Taxes. 
  

 23 

 12.3 Payment of Taxes. Subject to the representations and warranties of Calpine and Sellers
contained herein, any Tax in respect of any Tax period beginning after the Closing Date and that portion of any Straddle Period beginning after the Closing Date shall be the responsibility of Buyer. 
  
 12.4 Resolution of Disagreements Between Buyer and Sellers. If
Buyer, on the one hand, and Calpine or Sellers, on the other hand, disagree as to the amount of Taxes for which each is liable under this Agreement, Buyer, Calpine and Sellers shall promptly consult each other in an effort to resolve such dispute.
If any such point of disagreement cannot be resolved within sixty (60) days of the initial date of consultation, Buyer, Calpine and Sellers shall within ten (10) days after such sixty (60) day period jointly select a nationally
recognized independent public accounting firm which has not, except pursuant to this Agreement, performed any services for Buyer, Calpine, Sellers or their respective Affiliates, to act as an arbitrator to resolve, within sixty (60) days after
their selection, all points of disagreement concerning Tax matters with respect to this Agreement and presented to such accounting firm at the time of its selection. If no nationally recognized independent public accounting firm meets the
aforementioned standard, the Parties nonetheless shall attempt to agree on an accounting or law firm that is satisfactory to all of them. If Buyer, Calpine and Sellers cannot agree on the selection of an accounting or law firm within such ten
(10) day period, within five (5) Business Days after such ten (10) day period, the Parties shall select an eligible nationally recognized accounting firm by lot. 
  
 12.5 Cooperation. 
  
 12.5.1 Buyer shall promptly inform Calpine and Sellers if any taxing authority asserts a claim, makes an assessment, or otherwise disputes the amount of
Taxes of any member of the Buyer Group for which any member of the Calpine Group is or may be liable under this Agreement. Calpine and Sellers shall conduct, and Buyer shall have the right to reasonably cooperate in, the defense of any Claim or
Proceeding pertaining to Taxes for which indemnity may be sought against any member of the Calpine Group. In the event of any Claim or Proceeding relating to Taxes, Buyer, Calpine and Sellers shall cooperate in such matters in the same manner as
other legal matters in accordance with Section 19.7. 
  
 12.5.2 Buyer, Calpine and Sellers agree, upon request, to use, or cause to be used, commercially reasonable efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including but not limited to, with respect to the transactions contemplated hereby). 
  
 ARTICLE 13 
 SUSPENSE FUNDS
HELD BY SELLER 
  
 13.1 Suspense Funds Held By
Seller. BUYER HAS PRIOR TO THE DATE OF THIS AGREEMENT OBTAINED A LIST OF ALL PROCEEDS FROM PRODUCTION ATTRIBUTABLE TO THE PROPERTIES THAT ARE CURRENTLY HELD IN SUSPENSE 
  

 24 

 WHICH ARE OWING TO THIRD PARTY OWNERS OF ROYALTY, OVERRIDING ROYALTY, WORKING OR OTHER INTERESTS IN RESPECT OF PAST
PRODUCTION OF OIL, GAS OR OTHER HYDROCARBONS ATTRIBUTABLE TO THE PROPERTIES. AT THE CLOSING, THE SUBJECT COMPANIES SHALL HAVE CONTROL OF ALL SUCH SUSPENDED PROCEEDS (“BUYER’S SUSPENSE ACCOUNTS”). UPON CLOSING, BUYER AND THE
SUBJECT COMPANIES SHALL ADMINISTER ALL SUCH ACCOUNTS AND ASSUME ALL PAYMENT OBLIGATIONS RELATING TO THE SUSPENSE FUNDS IN ACCORDANCE WITH ALL APPLICABLE LAWS AND SHALL BE LIABLE FOR THE PAYMENT THEREOF TO THE PROPER PARTIES. 
  
 ARTICLE 14 
 CLOSING 
  
 14.1 The Closing. The closing of the purchase and sale of the Subject Equity pursuant to this Agreement (“Closing”)
shall be held at the offices of Thompson & Knight LLP, 333 Clay St., Suite 3300, Houston, Texas at 10:00 a.m. on July 7, 2005 or such date as may be mutually agreed by the Parties (the “Closing Date”), provided
that the Closing shall not occur until the closing of the transactions contemplated in the Transfer Agreement. 
  
 14.2 Closing Statement. Sellers shall provide Buyer with a closing statement reflecting its good faith estimation of the Purchase Price and
allocations between the Sellers, as adjusted pursuant to Article 4 (the “Preliminary Purchase Price”), prior to the Closing. 
  
 14.3 Closing Deliveries. At Closing the following events shall occur, each event under the control of a Party hereto being a condition
precedent to the events under the control of the other Party, and each event being deemed to have occurred simultaneously with the other events: 
  
 14.3.1 Buyer shall deliver via wire transfer to an account specified by Sellers, in immediately available funds, the Preliminary Purchase Price;

  
 14.3.2 Each of Sellers shall execute, acknowledge, and deliver
to Buyer, and Buyer shall accept by execution, an Assignment of Membership Interest, or Assignment of Partnership Interest, as applicable, of all the right, title, and interest of that Seller in and to the Membership Interest or Partnership Interest
of that Seller substantially in the form of Exhibit G (collectively, the “Assignments”); 
  
 14.3.3 The Parties shall execute and deliver the Transition Services Agreement; 
  
 14.3.4 Calpine and Buyer shall execute and deliver the Employee Matters Agreement; 
  
 14.3.5 Calpine and Sellers shall have obtain and deliver the releases of
Liens described in Section 10.5; and 
  
 14.3.6 Each
Party shall execute, acknowledge and deliver, or shall cause to be executed, acknowledged, and delivered, division orders, transfer orders or letters in lieu thereof directing all purchasers of production from the Properties to make payment of
proceeds attributable to such production occurring on or after the Effective Date to Buyer or the Subject Companies, or designated by Buyer. 
  

 25 

 ARTICLE 15 
 POST-CLOSING ADJUSTMENTS 
  
 15.1 Final Settlement Statement. After the Closing Date, Buyer shall prepare, in accordance with this Agreement, a statement (“Final Settlement Statement”), a copy of which shall be delivered to Calpine and
Sellers no later than ninety (90) days after the Closing Date, setting forth each adjustment to the Purchase Price necessary to determine the Purchase Price and showing the calculation of such adjustments in accordance with Article 4.
Calpine and Sellers shall have thirty (30) days after receipt of the Final Settlement Statement to review such statement and to provide written notice to Buyer of Calpine’s or Sellers’ objection to any item on the statement. In
reviewing the Final Settlement Statement, Calpine and Sellers will have the right to communicate with, and to review the work papers, schedules, memoranda and other documents Buyer has prepared or reviewed in creating the Final Settlement Statement
and thereafter will have access to all relevant books and records, all to the extent Calpine or Sellers reasonably require to complete their review of the Final Settlement Statement. Sellers’ notice shall clearly identify the item(s) objected
to and the reasons and support for the objection(s). If Calpine or Sellers do not provide written objection(s) within the thirty (30) day period, the Final Settlement Statement shall be deemed correct and shall not be subject to further
adjustment. If Calpine or Sellers provide written objection(s) within the thirty (30) day period, the Final Settlement Statement shall be deemed correct with respect to the items not objected to. Buyer, Calpine and Sellers shall meet to
negotiate and resolve the objections within thirty (30) days of Buyer’s receipt of Calpine’s or Sellers’ objections. If the Parties agree on all objections, the adjusted Final Settlement Statement shall be deemed correct and
shall not be subject to further adjustment. Any items not agreed to at the end of the thirty (30) day period may, upon any Party’s written request, be resolved by arbitration in accordance with Section 15.2. 
  
 15.2 Arbitration. If the Parties cannot agree upon the Final
Settlement Statement, the dispute shall be promptly submitted to a mutually agreeable third-party accountant, which shall act as an arbitrator and promptly decide all points of disagreement with respect to the Final Settlement Statement. The
decision of such arbitrator on all such points shall be final and binding upon the Parties and shall be enforceable against any Party in any court of competent jurisdiction. The costs and expenses of the such arbitrator shall be borne fifty percent
(50%) by Sellers and fifty percent (50%) by Buyer. 
  
 15.3 Payment of Final Purchase Price. If the Purchase Price shown on the Final Settlement Statement is more than the Preliminary Purchase Price, Buyer shall pay such difference to Sellers in immediately available funds within
five (5) Business Days after the Final Settlement Statement has been agreed by the Parties or decided by the arbitrator, as applicable. If the Purchase Price shown on the Final Settlement Statement is less than the Preliminary Purchase Price,
Calpine shall cause Sellers to pay such difference to Buyer in immediately available funds within five (5) Business Days after the Final Settlement Statement has been agreed by the Parties or decided by the arbitrator, as applicable.

  

 26 

 ARTICLE 16 
 INDEMNIFICATION; RELEASES; ALLOCATION OF RISK 
  
 16.1 Calpine and Sellers’ Indemnity. 
  
 16.1.1 After Closing and subject to the provisions of this Section 16.1, Calpine and each Seller shall jointly and severally indemnify, defend, and hold harmless each member of the Buyer Group from and
against any and all Losses suffered by such member of the Buyer Group arising from or relating to (without duplication): 
  
 16.1.1.1 the failure of any member of the Calpine Group to pay, perform or otherwise promptly discharge any of the Sellers’ Retained Liabilities in
accordance with their respective terms; 
  
 16.1.1.2 ownership or
operation of the Calpine Business or any Liability of any member of the Calpine Group, other than the Buyer’s Liabilities; 
  
 16.1.1.3 any breach (subject to any applicable limitations or rights to cure that are set forth in this Agreement or the Ancillary Agreements) by any
member of the Calpine Group of any provision of this Agreement or any Ancillary Agreement; and 
  
 16.1.1.4 any untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements
therein not misleading, with respect to information that relates to any member of the Calpine Group but not related to Buyer’s Business, the Properties or the Non-Consent Properties, and that is provided by any member of the Calpine Group to
Buyer for inclusion in any offering documents, prospectus or registration statement used by Buyer in connection with raising the funds necessary to consummate the transactions pursuant to this Agreement or any subsequent sale of the equity issued by
Buyer in connection therewith. 
  
 SUCH INDEMNIFICATION BY CALPINE AND SELLERS
SHALL INCLUDE ANY LOSSES ARISING IN WHOLE OR IN PART FROM THE SOLE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF ANY MEMBER OF THE BUYER GROUP. WITH REGARD TO SELLERS’ RETAINED LIABILITIES AND OWNERSHIP OR OPERATION OF THE CALPINE BUSINESS
(OTHER THAN BUYER LIABILITIES), CALPINE AND EACH SELLER HEREIN RELEASES EACH MEMBER OF THE BUYER GROUP FROM AND AGAINST ANY AND ALL CLAIMS FOR CONTRIBUTION UNDER CERCLA AND/OR ANY OTHER PRESENT OR FUTURE ENVIRONMENTAL LAW. 
  
 16.1.2 Notwithstanding the above, no member of the Buyer Group shall have any
right to bring any claim for indemnification pursuant to this Section 16.1, and neither Calpine nor any of Sellers shall have any obligation to make any payment as indemnification hereunder: 
  
 16.1.2.1 with regard to any Losses covered by Section 16.1.1,
unless the amount to be recovered with respect to any individual item or group of related items of Loss is reasonably expected to exceed $50,000 (provided that any Losses relating to matters under Section 16.1.1.3 or 16.1.1.4 that
cannot be recovered because of this restriction shall be considered in the determination of the amount in Section 16.1.2.2); 
  

 27 

 16.1.2.2 with regard to any Losses covered by Section 16.1.1.3 or 16.1.1.4, until
such time as the Losses relating thereto shall exceed, in the aggregate, $10,000,000; and 
  
 16.1.2.3 with regard to any Losses covered by Section 16.1.1.3 or 16.1.1.4, in no event shall Calpine or any of Sellers be liable for any amounts hereunder once asserted and paid Losses paid by
Calpine and Sellers (either collectively or individually) aggregate $100,000,000. 
  
 16.2 Survival of Representations and Warranties. Notwithstanding anything to the contrary contained herein, the representations, warranties made by Calpine, Sellers and Buyer in this Agreement shall not
survive the Closing Date and shall not be actionable thereafter, except: 
  
 16.2.1 the representations of Calpine and Sellers in Section 5.9 (Subject Equity) shall survive until 30 days after the date on which the statutes of limitation applicable to such matters expire and shall
not be actionable thereafter; 
  
 16.2.2 the representations of
Calpine and Sellers in Section 5.15 (Tax Partnerships) shall survive until 30 days after the date on which the statutes of limitation applicable to such matters expire and shall not be actionable thereafter; and 
  
 16.2.3 the representations and warranties of Calpine and Sellers in
Sections 5.1 (Organization), 5.2 (Authority), and 5.4 (Enforceability) shall survive for one year following the Closing Date and shall not be actionable thereafter; 
  
 16.2.4 the representations and warranties of Calpine and Sellers in Sections 5.3 (No Conflict) and 5.16
(Solvency) shall survive for two years following the Closing Date and shall not be actionable thereafter; 
  
 16.2.5 the representations and warranties of Buyer in Sections 6.1 (Organization), 6.2 (Authority), and 6.4 (Enforceability) shall
survive for one year following the Closing Date and shall not be actionable thereafter; and 
  
 16.2.6 the representations and warranties of Buyer in Section 6.3 (No Conflict) shall survive for two years following the Closing Date and shall not be actionable thereafter. 
  
 16.3 Buyer’s Indemnity. 
  
 16.3.1 Except to the extent of Sellers’ Retained Liabilities, after
Closing, Buyer shall indemnify, defend and hold harmless each member of the Calpine Group from and against any and all Losses suffered by such member of the Calpine Group arising from or relating to (without duplication): 
  
 16.3.1.1 the failure of any member of the Buyer Group or any other Person
to pay, perform or otherwise promptly discharge any Buyer Liabilities in accordance with their respective terms; 
  

 28 

 16.3.1.2 the ownership or operation of the Subject Companies on and after the Closing Date; 

 
 16.3.1.3 any breach (subject to any applicable limitations or rights to
cure that are set forth in this Agreement or the Ancillary Agreements) by any member of the Buyer Group of any provision of this Agreement or any Ancillary Agreement; and 
  
 16.3.1.4 any untrue statement of a material fact or omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, with respect to all information (other than the information specifically addressed by Section 16.1.1.4) contained in any offering documents, prospectus or registration statement
used by Buyer in connection with raising the funds necessary to consummate the transactions pursuant to this Agreement or any subsequent sale of the equity issued by Buyer in connection therewith. 
  
 SUCH INDEMNIFICATION BY BUYER SHALL INCLUDE ANY LOSSES ARISING IN WHOLE OR IN PART FROM THE
SOLE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF ANY MEMBER OF THE CALPINE GROUP. WITH REGARD TO BUYER LIABILITIES AND OWNERSHIP OR OPERATION OF THE BUYER BUSINESS, BUYER HEREIN RELEASES EACH MEMBER OF THE CALPINE GROUP FROM AND AGAINST ANY AND
ALL CLAIMS FOR CONTRIBUTION UNDER CERCLA AND/OR ANY OTHER PRESENT OR FUTURE ENVIRONMENTAL LAW. 
  
 16.3.2 Notwithstanding the above, no member of the Calpine Group shall have any right to bring any claim for indemnification pursuant to this Section 16.3, and Buyer shall not have any obligation to make
any payment as indemnification hereunder: 
  
 16.3.2.1 with
regard to any Losses covered by Section 16.3.1, unless the amount to be recovered with respect to any individual item or group of related items of Loss is reasonably expected to exceed $50,000 (provided that any Losses relating to
matters under Section 16.3.1.3 or 16.3.1.4 that cannot be recovered because of this restriction shall be considered in the determination of the amount in Section 16.3.2.2); and 
  
 16.3.2.2 with regard to any matter covered by Section 16.3.1.3
or 16.3.1.4, until such time as Losses relating thereto shall exceed, in the aggregate, $10,000,000. 
  
 16.4 Assumption by Buyer. Except to the extent of Sellers’ Retained Liabilities, effective at Closing, Buyer herein assumes and agrees
to fully and timely pay, perform, and discharge in accordance with their terms, all the Buyer Liabilities. 
  
 16.5 Limitations of Warranties. Notwithstanding anything in this Agreement to the contrary herein or otherwise, Buyer understands that the
Properties were conveyed to and are held by the Subject Companies without recourse, covenant, or warranty of any kind, express, implied, or statutory from any member of the Calpine Group, and that no member of the Calpine Group is providing any
warranty to Buyer (and have not made any warranty to any of the Subject Companies) with respect to the Properties, except (i) to the extent of Sellers’ Retained Liabilities and as otherwise contemplated by Section 16.1 and
(ii) that Sellers hereby warrant title to the Net Revenue Interests and Working Interests in the Properties as set forth in Exhibit C (but excluding that portion of the net revenue and working interest set forth on Exhibit C-1 for
those wells 
  

 29 

 identified as “Non-Consent” on Exhibit C-1), subject to the Permitted Encumbrances, against every Person
whomsoever lawfully claiming or to claim the same or any part thereof by, through, or under Sellers, but not otherwise. WITHOUT LIMITATION OF THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, EXCEPT TO THE EXTENT OF SELLERS’ RETAINED
LIABILITIES AND AS OTHERWISE CONTEMPLATED IN SECTION 16.1, THE PROPERTIES SHALL BE ASSIGNED OR CONVEYED AS-IS, WHERE-IS AND WITH ALL FAULTS AND CALPINE AND SELLERS EXPRESSLY DISCLAIM AND NEGATE ANY IMPLIED OR EXPRESS WARRANTY OF
(A) MERCHANTABILITY, (B) FITNESS FOR A PARTICULAR PURPOSE, (C) CONFORMITY TO MODELS OR SAMPLES OF MATERIALS AND (D) FREEDOM FROM REDHIBITORY VICES OR DEFECTS. CALPINE AND SELLERS ALSO EXPRESSLY DISCLAIM AND NEGATE ANY IMPLIED OR
EXPRESS WARRANTY AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO THE ACCURACY OF ANY OF THE INFORMATION FURNISHED WITH RESPECT TO THE EXISTENCE OR EXTENT OF RESERVES OR THE VALUE OF THE PROPERTIES BASED THEREON OR THE CONDITION OR STATE OF REPAIR
OF ANY OF THE PROPERTIES; THIS DISCLAIMER AND DENIAL OF WARRANTY ALSO EXTENDS TO THE EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS TO THE PRICES ANY MEMBER OF THE BUYER GROUP OR ANY MEMBER OF THE CALPINE GROUP IS OR WILL BE ENTITLED TO RECEIVE
FROM PRODUCTION OF HYDROCARBONS FROM THE PROPERTIES, IT BEING UNDERSTOOD THAT ALL RESERVE, PRICE AND VALUE ESTIMATES UPON WHICH BUYER HAS RELIED OR IS RELYING HAVE BEEN DERIVED BY THE INDIVIDUAL EVALUATION OF BUYER. BUYER (FOR ITSELF AND EACH MEMBER
OF THE BUYER GROUP) HEREIN WAIVES ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE ACCURACY, COMPLETENESS OR MATERIALITY OF THE INFORMATION, REPORTS, PROJECTIONS, MATERIALS, RECORDS, AND DATA NOW, HERETOFORE, OR HEREAFTER
FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH THE PROPERTIES OR THIS AGREEMENT (INCLUDING ANY DESCRIPTION OF THE PROPERTIES, WORKING INTERESTS OR NET REVENUE INTERESTS, QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY), PRODUCTION
RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES, PRICING ASSUMPTIONS, ABILITY OR POTENTIAL FOR PRODUCTION OF HYDROCARBONS FROM THE LEASES, ENVIRONMENTAL CONDITION OF THE PROPERTIES, OR ANY OTHER MATTERS CONTAINED IN ANY OTHER MATERIAL FURNISHED OR
MADE AVAILABLE TO BUYER BY ANY MEMBER OF THE CALPINE GROUP OR BY THEIR AGENTS OR REPRESENTATIVES). ANY AND ALL SUCH INFORMATION, REPORTS, PROJECTIONS, MATERIALS, RECORDS, AND DATA NOW, HERETOFORE OR HEREAFTER FURNISHED BY ANY MEMBER OF THE CALPINE
GROUP IS PROVIDED AS A CONVENIENCE ONLY AND ANY RELIANCE ON OR USE OF SAME IS AT BUYER’S SOLE RISK. WITH RESPECT TO THE EASEMENTS, CALPINE AND SELLERS EXPRESSLY DISCLAIM, AND BUYER (FOR ITSELF AND EACH MEMBER OF THE BUYER GROUP) HEREIN WAIVES
(BUT WITHOUT PREJUDICE TO ANY MEMBER OF THE BUYER GROUP’S RIGHTS TO ENFORCE ANY SPECIAL WARRANTY OF TITLE WITH RESPECT THERETO CONTAINED IN ANY ASSIGNMENT OR CONVEYANCE RELATING TO THE PROPERTIES), ANY WARRANTIES AND REPRESENTATIONS THAT
CALPINE OR 
  

 30 

 SELLERS OWN THE EASEMENTS; AND EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5.5, CALPINE AND SELLERS DISCLAIM ALL
WARRANTIES OR REPRESENTATIONS THAT SUCH EASEMENTS ARE IN FORCE AND EFFECT; THAT THEY MAY BE ASSIGNED; THAT THEY ARE CONTIGUOUS; THAT THE PIPELINES LIE WITHIN THE EASEMENTS, OR THAT THEY GRANT THE RIGHT TO LAY, MAINTAIN, REPAIR, REPLACE, OPERATE,
CONSTRUCT, OR REMOVE ANY PIPELINES. If necessary, Buyer shall (or shall cause the respective member of the Buyer Group to) secure its own rights and Permits to operate and maintain any pipelines or facilities comprising a portion of the Properties
on the land of others at its own expense. Subject to the provisions of Section 2.3, if any consents or approvals of third parties, including any Governmental Body, are required to assign the surface leases, easements, rights-of-way,
Permits, or other agreements with respect to the pipelines or facilities and are not secured prior to Closing, Buyer shall (or shall cause the respective member of the Buyer Group to) secure any necessary consents to assign and approvals at its own
expense; provided, however, that Calpine and Sellers shall provide such assistance to Buyer to secure the consents and approvals as may reasonably be required. THERE ARE NO WARRANTIES THAT EXTEND BEYOND THE FACE OF THIS AGREEMENT AND THE ANCILLARY
AGREEMENTS. BUYER ACKNOWLEDGES THAT THIS WAIVER IS CONSPICUOUS. 
  
 16.6 Release of Pre-Closing Claims. 
  
 16.6.1 Except as provided in Section 16.6.3, effective as of the Closing Date, Calpine does hereby, for itself and each other member of the Calpine Group, and their successors and assigns, remise, release and forever discharge
each member of the Buyer Group and their successors and assigns, from any and all Liabilities whatsoever which are known, actually or otherwise, on the date hereof to any member of the Calpine Group (which knowledge shall not include the knowledge,
actual or otherwise, of any individual who is an employee of any member of the Calpine Group immediately preceding the Closing Date and who becomes an employee of any member of the Buyer Group on or within ninety (90) days after the Closing
Date), whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur, or alleged to
have occurred or to have failed to occur, or any conditions existing or alleged to have existed on or before the date hereof. 
  
 16.6.2 Except as provided in Section 16.6.3, effective as of the Closing Date, Buyer does hereby, for itself and each other member of the
Buyer Group, their respective successors and assigns, remise, release and forever discharge each member of the Calpine Group, and their respective successors and assigns, from any and all Liabilities whatsoever which are known, actually or
otherwise, on the date hereof to any member of the Buyer Group (which knowledge shall include the knowledge, actual or otherwise, of any individual who is an employee of any member of the Calpine Group immediately preceding the Closing Date and who
becomes an employee of any member of the Buyer Group on or within ninety (90) days after the Closing Date), whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law
or otherwise, existing or arising from any acts or events occurring or failing to occur, or alleged to have occurred or to have failed to occur, or any conditions existing or alleged to have existed on or before the date hereof. 
  

 31 

 16.6.3 Nothing contained in Section 16.6.1 or 16.6.2 shall impair any right of any
Person to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings that are specified in this Agreement or in any Ancillary Agreement. Nothing contained in Section 16.6.1 or
16.6.2 shall release any Person from: 
  
 (i) any Liability retained or assumed by, or transferred, assigned or allocated among the members of the Calpine Group or Buyer Group in accordance with this Agreement or any Ancillary Agreement; 
  
 (ii) any Liability for or related to the sale, lease,
construction or receipt of goods, property or services purchased, obtained or used by a member of the Calpine Group or Buyer Group from a member of the other group in the ordinary course of business; 
  
 (iii) any Liability that the Parties may have with respect
to indemnification or contribution pursuant to this Agreement for claims brought against the Parties, any other member of such Party’s respective Group and their respective Affiliates (except for any member of such other Party’s Group) by
third Persons, which Liability shall be governed by the provisions of this Article 16 and, if applicable, the appropriate provisions of the Ancillary Agreements; 
  
 (iv) any Liability the release of which would result in the release of any Person other than a Person
released pursuant to this Section 16.6; provided that the Parties agree not to bring suit or permit any members of their respective Group to bring suit against any Party, any other member of such Party’s respective Group and their
respective Affiliates with respect to any Liability to the extent that such Person would be released with respect to such Liability by this Section 16.6.3 but for the provisions of this clause (iv); or 
  
 (v) any Liability resulting from the actual fraud of such
Person or its Affiliate. 
  
 16.6.4 Calpine shall not make, and
shall not permit any member of the Calpine Group to make, any claim or demand, or commence any action asserting any claim or demand, including any claim of contribution or any indemnification, against any member of the Buyer Group, or any other
Person released pursuant to Section 16.6.1, with respect to any Liabilities released pursuant to Section 16.6.1. Buyer shall not make, and shall not permit any member of the Buyer Group to make, any claim or demand, or
commence any action asserting any claim or demand, including any claim of contribution or any indemnification, against any member of the Calpine Group, or any other Person released pursuant to Section 16.6.2, with respect to any
Liabilities released pursuant to Section 16.6.2. 
  
 16.6.5 Except as expressly set forth in Section 16.6.3, each Party intends through this Section 16.6 to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and
events occurring or failing to occur, or alleged to have occurred or to have failed to occur, and all conditions existing or alleged to have existed on or before the date hereof, between or among any member of the Calpine Group, on the one hand,

  

 32 

 and any member of the Buyer Group, on the other hand (including any contractual agreements or arrangements existing or
alleged to exist between or among any such members on or before the date hereof). At the reasonable request of any other Party, each Party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions
hereof 
  
 16.6.6 Buyer, Sellers and Calpine each acknowledge that
they have been advised by their legal counsel and are familiar with the provisions of California Section 1542, which provides as follows: 
  
 “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH DEBTOR.” EACH OF BUYER, SELLERS AND CALPINE BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY HAVE THEREUNDER AS WELL AS
UNDER ANY OTHER STATUTE OR COMMON LAW PRINCIPLE OF SIMILAR EFFECT. 
  

			
	Buyer’s Initials	  	 Calpine’s Initials

		
	____________	  	 ____________

		
	 	  	 Sellers’ Initials

		
	 	  	 ____________

		
	 	  	 ____________

		
	 	  	 ____________

  
 16.7 Gas
Balancing. The Parties recognize that as of the Effective Date there are over and under imbalances with respect to gas production or processing attributable to the Properties and herein agree that the Properties acquired by Buyer at Closing
will be conveyed at Closing specifically subject to such imbalances, with Buyer bearing and assuming all obligations with respect to any overproduction account or liability associated with the Properties and receiving the benefit of and being
credited with any underproduction account or credit existing as of the Effective Date with respect to the Properties. From and after the Closing, Buyer shall indemnify, defend and hold harmless each member of the Calpine Group, their respective
successors and assigns, and their respective Affiliates, directors, officers, equity holders and partners, as appropriate, from all Claims or Losses arising from such overproduction accounts and liabilities. 
  
 16.8 Acknowledgement by the Parties. Each of the Parties by its
execution and delivery of this Agreement does hereby acknowledge and agree that (i) any claims or Losses that it may have pursuant to the terms of the Transfer Agreement are hereby subject to the caps, baskets and limits set forth in this
Agreement, including the provisions of this Article 16, and (ii) the sole and exclusive remedy for any claims or Losses arising out of or relating to the Transfer Agreement are provided for in this Agreement except for any Losses arising
from or relating to the special warranty of title contained in the conveyance as set forth in Exhibit C to the Transfer Agreement. In the event of any conflict between the provisions of this Agreement and the Transfer Agreement, this Agreement shall
control. 
  

 33 

 ARTICLE 17 
 RISK OF LOSS 
  
 17.1 Casualty Loss. If, after the date hereof and prior to the Closing any material portion of the Properties owned by the Subject Companies (or transferable thereto pursuant to the Transfer Agreement) shall be substantially
damaged or destroyed by fire or other casualty, or if any material portion of such Properties shall be taken by condemnation or the exercise of eminent domain (in either case, a “Casualty Loss”), Buyer shall be entitled to any
applicable insurance proceeds or condemnation awards and an adjustment to the Purchase Price based upon the allocated value of the Property destroyed or harmed, to the extent such loss is not covered by insurance or condemnation award. 

 
 17.2 Buyer’s Risk of Loss. Except as specifically
provided in Section 17.1 with respect to any Casualty Loss, Buyer shall assume all risk of loss with respect to any change in condition of the Properties owned by Calpine, Sellers or the Subject Companies (or transferable pursuant to the
Transfer Agreement) from the Effective Date and neither Calpine nor any Sellers shall have any liability, as operator of the Properties or otherwise, for losses or damages sustained with respect to the condition of the Properties or their ability to
produce Hydrocarbons. 
  
 ARTICLE 18 
 TERMINATION AND REMEDIES 
  
 18.1 Termination. This Agreement may be terminated as provided below. 
  
 18.1.1 The Parties may terminate this Agreement by mutual written consent at any time prior to the Closing Date. 

 
 18.1.2 If the transactions contemplated herein do not close on or before
July 7, 2005, any Party may terminate this Agreement by delivery of written notice to the other Parties; provided, however, that no Party may terminate this Agreement pursuant to this Section 18.1.2 if such Party’s failure to
comply with its obligations under this Agreement caused the Closing not to occur on or before July 7, 2005. 
  
 18.1.3 Buyer may terminate this Agreement by delivery of written notice to Calpine and Sellers at any time prior to the Closing Date if, as of the Closing
Date, Calpine or any Seller has breached any representation, warranty or covenant in this Agreement in any material respect and Calpine or any Seller has failed to cure such breach within a reasonable time period after receiving written notice of
such breach. 
  
 18.1.4 Calpine or Sellers may terminate this
Agreement by delivery of written notice to Buyer at any time prior to the Closing Date if Buyer has breached any representation, warranty or covenant in this Agreement in any material respect and Buyer has failed to cure such breach within a
reasonable time period after receiving written notice of such breach. 
  
 18.2 Effect of Termination. Each Party’s right of termination under Section 18.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of such right of termination
will not be an election of remedies. If this Agreement is terminated pursuant to Section 18.1, all obligations of the Parties under this Agreement will terminate. 
  

 34 

 ARTICLE 19 
 ADDITIONAL COVENANTS 
  
 19.1 Further Assurances. After the Closing, the Parties shall execute, acknowledge and deliver or cause to be executed, acknowledged and delivered such instruments and take such other action as may be necessary or advisable to
carry out their respective obligations under this Agreement and under any exhibit, document, certificate or other instrument delivered pursuant hereto. Calpine and Sellers shall use commercially reasonable efforts to cooperate with Buyer’s
efforts to obtain all approvals and consents required by or necessary for the transactions contemplated in this Agreement that are customarily obtained after Closing. Without limiting the foregoing, the Parties shall use all commercially reasonable
efforts to cooperate with one another in the prosecution, defense and/or settlement of the claims and litigation matters, including those matters set forth on Schedule 5.6, which relate to or arise in connection with the oil and gas business
of any member of the Calpine Group or the Buyer Group. 
  
 19.2
Transfer of Records. Within thirty (30) days after Closing, Calpine and each Seller shall deliver to Buyer, at Calpine or Sellers’ address, or at such other place as any of same may be kept, the originals of all Records,
except that Calpine and each Seller may retain (a) the originals of all Records which are related to the Excluded Properties, in which case Calpine or such Seller shall deliver duplicate copies of any such retained originals to Buyer; and
(b) the originals of all accounting Records, in which case Calpine or such Seller shall deliver duplicate copies of any such retained originals which relate to the Properties to Buyer; provided that Calpine and Sellers shall deliver the
originals of all Records relating to Cured Non-Consent Properties when such properties are transferred to Buyer in accordance with Section 2.3. For a period of four (4) years after the date of Closing, Buyer will retain the Records
delivered to it pursuant hereto and will make such Records available to Calpine or any Seller upon reasonable notice at Buyer’s headquarters at reasonable times and during office hours. Without limiting the generality of the foregoing, Buyer,
Calpine and Sellers shall retain, until the applicable statutes of limitations (including all extensions) have expired, copies of all Tax returns, supporting workpapers, and other books and records or information which may be relevant to such
returns for all Tax periods or portions thereof ending before or including the Closing Date, and shall not destroy or dispose of such records or information without first providing the other party with a reasonable opportunity to review and copy the
same. Buyer shall notify Calpine and each Seller in writing within thirty (30) days of the sale to a Third Party of all or any part of the Properties which involves the transfer of any of the Records of the name and address of the buyer(s) in
any such sale. Buyer shall require as part of any such sales transaction that such Third Party assume the obligations imposed on Buyer in this Section 19.2. 
  
 19.3 Use of Sellers’ Name. Buyer agrees that, as soon as practicable after the Closing, but in no event
more than one hundred twenty (120) days thereafter, it will remove or cause to be removed the names and marks “Calpine Corporation,” “Calpine Fuels Corporation,” and all variations and derivatives thereof and logos relating
thereto from the Properties of which it has assumed operations, it will cause CNGLP, Calpine Natural Gas GP, LLC and Calpine Natural Gas Holdings, LLC to be changed to remove the name “Calpine”, and will not thereafter make any use
whatsoever of such names, marks and logos except with the express written consent of Calpine. 
  

 35 

 19.4 Expenses, Fees and Taxes. Calpine shall pay all fees and expenses incident to the
negotiation and preparation of this Agreement including those of Thompson & Knight LLP and Covington & Burling and consummation of the transactions contemplated herein; provided that Buyer shall be responsible for the cost of all
fees for the recording of transfer documents, obtaining all bonds for the operation of the properties, and all other costs and expenses relating to the operation of the Properties after the Effective Date. Notwithstanding anything to the contrary
herein, it is acknowledged and agreed by and between Calpine and Sellers, on the one hand, and Buyer, on the other hand, that the Purchase Price excludes any sales taxes in connection with the sale of property or assets pursuant to this Agreement.
If a determination is ever made that a sales tax or other transfer tax applies, Buyer shall be liable for such Tax as well as any applicable conveyance, transfer and recording fees, and real estate transfer stamps or Taxes imposed on any transfer of
property pursuant to this Agreement. Buyer shall indemnify, defend, and hold harmless Calpine and Sellers with respect to the payment of any of such Taxes, including any interest or penalties assessed thereon. The indemnity, defense, and hold
harmless obligation contained in the preceding sentence shall survive the Closing. To the extent permitted by Applicable Law, the Parties agree to reasonably cooperate with each other to complete any and all exemption certificates or other documents
that exempt any of the Purchase Price from any of such Taxes before either the Closing or the due date for such Tax. 
  
 19.5 Public Announcements. The Parties agree that prior to making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the Party desiring to make such public announcement or statement shall consult with the other Parties hereto and endeavor in good faith to obtain approval of the other Parties hereto to the text of a public
announcement or statement to be made solely by Sellers, on the one hand, or Buyer, on the other, as the case may be; provided, however, if Calpine and Sellers, on the one hand, or Buyer, on the other is required by any Applicable Law or the rules of
the New York Stock Exchange (or any other applicable securities exchange) to make such public announcement or statement, then the same may be made without the approval of any of the other Parties. 
  
 19.6 Confidentiality. The Parties shall hold and shall each
cause their respective affiliates, officers, employees, agents, consultants and advisors to hold, in strict confidence and not to disclose or release without the prior written consent of the other Party, any and all Confidential Information (as
defined herein); provided, that the Parties may disclose, or may permit disclosure of, Confidential Information (i) to their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors who have a
need to know such information or (ii) to the extent any of the Parties is compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of legal counsel, by other requirements of Applicable
Law. Notwithstanding the foregoing, if any demand or request for disclosure of Confidential Information is made pursuant to clause (ii) above, each of the Parties shall promptly notify the other of the existence of such request or demand and
shall provide the other a reasonable opportunity to seek an appropriate protective order or other remedy, which the Parties will cooperate in seeking to obtain. If such appropriate protective order or other remedy is not obtained, the Party whose
Confidential Information is required to be disclosed shall furnish, or shall cause the other Parties to furnish, or cause to be furnished, only that portion of the 
  

 36 

 Confidential Information that is legally required to be disclosed. As used in this Section 19.6,
“Confidential Information” means all proprietary, technical or operational information, data or material of one Party that, prior to or following the Closing Date, has been disclosed by one Party to another, in written, oral
(including by recording), electronic, or visual form to, or otherwise has come into the possession of, the other, including pursuant to the access provisions of this Agreement (except to the extent that such Confidential Information can be shown to
have been (a) in the public domain through no fault of such Party or (b) later lawfully acquired from other sources by the Party to which it was furnished; provided, however, in the case of (b) that, to the knowledge of such Party,
such sources did not provide such Confidential Information in breach of any confidentiality obligations). “Confidential Information” shall include for Buyer’s benefit, all confidential information related to the Buyer Business and the
Properties that Sellers may transfer to Buyer pursuant to this Agreement and the Ancillary Agreements. Notwithstanding anything to the contrary set forth herein, the Parties shall be deemed to have satisfied their obligations hereunder with respect
to Confidential Information if they exercise the same degree of care (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information. 
  
 19.7 Cooperation on Legal Matters; Preservation of Legal
Privileges. 
  
 19.7.1 The provisions of Exhibit H
shall apply to any Claims (“Indemnified Claims”), whether presently or hereafter asserted, for which any Party or Parties (collectively the “Indemnitor”) is obligated to indemnify another Party or Parties
(collectively the “Indemnitee”). For purposes of the application of the provisions of Exhibit H to the Indemnified Claims, (a) Claims as used therein, shall mean Indemnified Claims as defined in this
Section 19.7, (b) “Indemnitor” as used therein, shall mean Indemnitor as defined in this Section, (c) “Indemnitee”, as used therein, shall mean Indemnitee as defined in this Section, (d) “Party
Representative” as used therein shall mean, as to each Party, the person that such Party shall designate from time to time as its representative by written notice to the other Parties, (e) “Effective Date,” as used therein, shall
mean the Closing Date as defined in this Agreement and (f) “Law firm” shall mean the reputable attorneys selected and retained by Indemnitor to defend the Indemnified Claims. If a Proceeding is hereafter filed or instituted in which
an Indemnified Claim is asserted against a Party, Indemnitor and Indemnitee shall, at the request of either, promptly execute a separate Joint Defense Agreement, which is substantially in the form of Exhibit H, to memorialize the application
of this Section to such Indemnified Claim and lawsuit. 
  
 19.7.2
The Parties recognize that the members of their respective groups possess and will possess information and advice that has been previously developed but is legally protected from disclosure under federal and state legal privileges, such as the
attorney-client privilege or work product exemption and other concepts of legal protection (“Privilege”). Each Party recognizes that they shall be jointly entitled to the Privilege with respect to such privileged information and
that each shall be entitled to maintain and use for its own benefit all such information and advice, but both Parties shall ensure that such information is maintained so as to protect the Privileges with respect to the other Party’s interest.
To that end neither Party will knowingly waive or compromise any Privilege associated with such information and advice without the consent of the other Party. If privileged information is required to be disclosed to any arbitrator or mediator in
connection with a dispute between the Parties, such disclosure shall not be deemed a waiver of Privilege with respect to such information, and any Party receiving it in connection with a Proceeding shall be informed of its nature and shall be
required to safeguard and protect it. 
  

 37 

 ARTICLE 20 
 ARBITRATION 
  
 The
Parties expressly agree that, except as elsewhere provided in this Agreement, any and all disputes or claims by any Party arising from or related to this Agreement that cannot be amicably settled shall be determined solely and exclusively by
arbitration in accordance with the CPR Institute for Dispute Resolution (“CPR”) Rules for Non-Administered Arbitration (“Rules”) or any successor thereof when not in conflict with such Rules. 
  
 20.1 Arbitrators, Timing, Discovery, Finality of Determination.
Disputes arising hereunder that are not resolved within five (5) Business Days shall be referred to each Party Representative (or other designated senior representatives of the Parties). If the Party Representatives are unable to solve the
dispute within twenty (20) days after initial referral, the dispute may be submitted by request of either Party to binding arbitration. Arbitration shall take place at an appointed time and place in Houston, Texas. Calpine and Sellers
(collectively) and Buyer shall each select one impartial arbitrator, and the two arbitrators so designated shall select a third impartial arbitrator. If any Party shall fail to designate an arbitrator within fourteen (14) days after arbitration
is requested, or if the two arbitrators shall fail to select a third arbitrator within thirty (30) days after arbitration is requested, then an arbitrator shall be selected by CPR. Judgment upon an award of the majority of the arbitrators shall
be binding, it being understood and agreed that in no event may the arbitrators award punitive damages. Discovery shall be made pursuant to the Rules and completed within one hundred and twenty (120) days of selection of the third arbitrator.
Final hearing on the matter shall be had within one hundred sixty-five (165) days of the selection of the third arbitrator and a final decision (which may include the award of attorney’s fees and costs) with a written opinion stating the
reasons therefor shall be rendered within two hundred ten (210) days of said date. Should any time deadlines in Section 20.1 conflict with those set forth in the Rules, the deadlines in Section 20.1 shall take
precedence, to the greatest extent possible. The decision of the arbitrators, or the majority thereof, made in writing shall be final and binding upon the parties hereto as to the questions submitted, shall be enforceable against any Party in any
court of competent jurisdiction, and Buyer and Sellers will abide by and comply with such decision. The expenses of arbitration, including reasonable compensation to the arbitrators, shall be borne equally by the parties hereto. 
  
 20.2 Confidentiality of Arbitration. The arbitration process
shall be kept confidential and such conduct, statements, promises, offers, views and opinions shall not be discoverable or admissible in any Proceeding for any purpose, except to the extent reasonably necessary to enforce the final decision of the
arbitrators. 
  
 ARTICLE 21 
 MISCELLANEOUS 
  
 21.1 Notice. All notices required or permitted under this Agreement shall be in writing and shall be delivered personally or by certified
mail, postage prepaid and return receipt requested or by telecopier as follows: 
  

					
	Sellers:	  	Calpine Gas Holdings LLC
	 	  	50 West San Fernando, Suite 500
	 	  	San Jose, California 95113
	 	  	Attention:	 	John King
	 	  	Telephone:	 	(408) 794-2608
	 	  	Telecopier:	 	(408) 294-1740

  

 38 

					
	 	  	Calpine Fuels Corporation
	 	  	50 West San Fernando, Suite 500
	 	  	San Jose, California 95113
	 	  	Attention:	 	John King
	 	  	Telephone:	 	(408) 794-2608
	 	  	Telecopier:	 	(408) 294-1740
		
	Calpine:	  	Calpine Corporation
	 	  	50 West San Fernando, Suite 500
	 	  	San Jose, California 95113
	 	  	Attention:	 	John King, Senior Vice President-International
	 	  	Telephone:	 	(408) 794-2608
	 	  	Telecopier:	 	(408) 294-1740
	
	with a copy (which shall not constitute notice) to:
		
	 	  	Calpine Corporation
	 	  	50 West San Fernando, Suite 500
	 	  	San Jose, California 95113
	 	  	Attention:	 	Lisa M. Bodensteiner and Nancy L. Murray
	 	  	Telephone:	 	(408) 792-1120
	 	  	Telecopier:	 	(408) 995-0505
		
	 	  	Calpine Corporation
	 	  	717 Texas, Suite 1000
	 	  	Houston, Texas 77002
	 	  	Attention:	 	Nanette J. Crawford
	 	  	Telephone:	 	(713) 830-2085
	 	  	Telecopier:	 	(713) 830-8751
	
	Buyer or any of the Subject Companies:
		
	 	  	Rosetta Resources Inc.
	 	  	717 Texas, Suite 2800
	 	  	Houston, Texas 77002
	 	  	Attention:	 	B. A. (Bill) Berilgen
	 	  	Telephone:	 	(713) 335-2400
	 	  	Telecopier:	 	(713) 651-3056

  

 39 

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

					
	 	  	Thompson & Knight LLP
	 	  	 333 Clay, Suite 3300

	 	  	 Houston, Texas 77002

	 	  	 Attention:
	 	Dallas Parker or Timothy T. Samson
	 	  	 Telephone:
	 	(713) 951-5800
	 	  	 Telecopier:
	 	(832) 397-8110

  
 or to such other place within the
United State of America as a Party may designate for itself as to itself by written notice to the other. All notices given by personal delivery or mail shall be effective on the date of actual receipt at the appropriate address. Notices given by
telecopier shall be effective upon actual receipt if received during recipient’s normal business hours or at the beginning of the next Business Day after receipt if received after the recipient’s normal business hours. All notices by
telecopier shall be confirmed in writing on the day of transmission by either mailing by postage prepaid certified mail with return receipt requested, or by personal delivery. 
  
 21.2 Governing Law. This Agreement and the obligations of the Parties hereunder will be governed by and
construed in accordance with the laws of the State of Texas, without giving effect to any choice of law principles thereof. 
  
 21.3 Assignment. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective permitted
successors and assigns. Notwithstanding the preceding sentence, neither party shall assign this Agreement or its rights hereunder without the other party’s written consent, which shall not be unreasonably withheld. 
  
 21.4 Entire Agreement. This Agreement and the Ancillary
Agreements, together with the Exhibits and Schedules hereto and thereto, and the certificates, documents, instruments and writings that are delivered pursuant hereto and thereto, constitutes the entire agreement and understanding of the Parties in
respect of its subject matters and supersedes all prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated
herein. Except as contemplated by Article 16, there are no Third Party beneficiaries having rights under or with respect to this Agreement, except that any of Buyer’s lenders may rely upon Calpine’s representations in
Section 5.16. 
  
 21.5 Amendment;
Waiver. No amendment, modification, replacement, termination or cancellation of any provision of this Agreement will be valid, unless the same will be in writing and signed by Buyer, Sellers and Calpine. No waiver by any Party of any
default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any
rights arising because of any prior or subsequent occurrence. 
  
 21.6 Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not affect the validity or enforceability of the other provisions hereof; provided,
however, that if any provision of this Agreement, as 
  

 40 

 applied to any Party or to any circumstance, is adjudged by a court of competent jurisdiction, arbitrator, or mediator
not to be enforceable in accordance with its terms, the Parties agree that the court of competent jurisdiction, arbitrator, or mediator making such determination will have the power to modify the provision in a manner consistent with its objectives
such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced. 
  

21.7 Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question
of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party because of the authorship of any provision of this
Agreement. Any reference to any Applicable Law will be deemed also to refer to such law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes” and
“including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the
plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereunder” and words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. References herein to any Section or Article shall be references to a Section or
Article of this Agreement unless the context clearly requires otherwise. 
  
 21.8 Headings. The article and section headings contained in this Agreement are inserted for convenience only and will not affect in any way the meaning or interpretation of this Agreement. 

 
 21.9 Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. 
  
 [Remainder of page intentionally left blank] 
  

 41 

 Executed as of the date set forth above. 
  

			
	SELLERS:
	
	 CALPINE GAS HOLDINGS LLC

		
	 By:
	 	  

	 Name:
	 	 John King

	 Title:
	 	  

	
	 CALPINE FUELS CORPORATION

		
	 By:
	 	  

	 Name:
	 	 John King

	 Title:
	 	  

	
	CALPINE:
	
	 CALPINE CORPORATION

		
	 By:
	 	  

	Name:	 	John King
	Title:	 	Senior Vice President-International
	
	BUYER:
	
	 ROSETTA RESOURCES INC.

		
	 By:
	 	  

	Name:	 	B.A. (Bill) Berilgen
	Title:	 	Chairman of the Board, President and Chief Executive Officer

  

 42 

			
	SUBJECT COMPANIES:
	
	 ROSETTA RESOURCES CALIFORNIA, LLC

		
	 By:
	 	  

	 Name:
	 	 B.A. (Bill) Berilgen

	 Title:
	 	Chairman of the Board, President and Chief Executive Officer
	
	 ROSETTA RESOURCES OFFSHORE, LLC

		
	 By:
	 	  

	 Name:
	 	 B.A. (Bill) Berilgen

	 Title:
	 	Chairman of the Board, President and Chief Executive Officer
	
	 ROSETTA RESOURCES ROCKIES, LLC

		
	 By:
	 	  

	 Name:
	 	 B.A. (Bill) Berilgen

	 Title:
	 	Chairman of the Board, President and Chief Executive Officer
	
	 ROSETTA RESOURCES TEXAS GP, LLC

		
	 By:
	 	  

	 Name:
	 	 B.A. (Bill) Berilgen

	 Title:
	 	Chairman of the Board, President and Chief Executive Officer
	
	 ROSETTA RESOURCES TEXAS LP, LLC

		
	 By:
	 	  

	 Name:
	 	 B.A. (Bill) Berilgen

	 Title:
	 	 Chairman of the Board, President and Chief

	 	 	 Executive Officer

  

 43 

			
	 ROSETTA RESOURCES TEXAS LP

		
	 By:
	 	Rosetta Resources Texas GP, LLC, its general partner
		
	 By:
	 	  

	 Name:
	 	 B.A. (Bill) Berilgen

	 Title:
	 	Chairman of the Board, President and Chief Executive Officer
	
	 CALPINE NATURAL GAS GP, LLC

		
	 By:
	 	  

	 Name:
	 	 B.A. (Bill) Berilgen

	 Title:
	 	Chairman of the Board, President and Chief Executive Officer
	
	 CALPINE NATURAL GAS HOLDINGS, LLC

		
	 By:
	 	  

	 Name:
	 	 B.A. (Bill) Berilgen

	 Title:
	 	Chairman of the Board, President and Chief Executive Officer
	
	 CALPINE NATURAL GAS L.P.

		
	 By:
	 	Calpine Natural Gas GP, LLC, its general partner
		
	 By:
	 	  

	 Name:
	 	 B.A. (Bill) Berilgen

	 Title:
	 	 Chairman of the Board, President and Chief

	 	 	 Executive Officer

  

 44 

 EXHIBIT A 
  
 SUBJECT COMPANIES 
  
 Calpine Natural Gas GP, LLC 
 Calpine Natural Gas Holdings, LLC 
 Calpine Natural Gas L.P. 
 Rosetta Resources California, LLC 
 Rosetta Resources Offshore, LLC 
 Rosetta Resources Rockies, LLC 
 Rosetta Resources Texas GP, LLC 
 Rosetta Resources Texas LP, LLC 
 Rosetta Resources Texas LP

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00091-of-00352.parquet"}]]