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                                                                   EXHIBIT 10.57

                          PURCHASE AND SALE AGREEMENT

     This PURCHASE AND SALE AGREEMENT (as amended, supplemented, restated or
otherwise modified from time to time in accordance with applicable provisions
hereof, this "Agreement") dated July 3, 2002, is between DDD ENERGY, INC., a
Delaware corporation ("Seller"), the address for which is 50 Briar Hollow Lane,
Seventh Floor West, Houston, Texas 77027, and RISING STAR ENERGY, L.L.C., a
Texas limited liability company ("Purchaser"), the address of which is 3141 Hood
Street, Suite 350, Dallas, Texas 75219.

     In consideration of the mutual agreements set forth herein, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller and Purchaser hereby agree as follows:

                                    ARTICLE I
                                PURCHASE AND SALE

     Purchase and Sale. In accordance with the terms of this Agreement, Seller
agrees to sell all of the Seller's oil and gas properties and related assets
including without limitation all of the interests, rights, and property
(collectively, the "Acquired Assets") described in Section 1.01, excluding,
however, the Excluded Assets as defined below in Section 1.02 to Purchaser and
Purchaser agrees to purchase the Acquired Assets from Seller. As used herein,
the term "Working Interest" means, as to a Lease (as defined in Section 1.01),
the right to exploit, produce and operate the mineral rights covered by such
Lease and the obligation to bear the expense and cost associated with such
exploitation, production and operation, whether or not such rights or
obligations are derived from Record Title (as defined below in Section 1.01) or
Operating Rights (as defined below in Section 1.01). As used herein, the term
"Net Revenue Interest" means:

          (a)  as to a Lease, the ownership percentage of all Substances (as
     defined in Section 1.01) produced from the Lease to which it applies; and

          (b)  as to a Well (as defined in Section 3.01(h)), the ownership
     percentage of all Substances produced from the Well to which it applies.

     The Net Revenue Interest attributable to a Lease or Well that is pooled or
unitized shall be the percentage of Substances produced from the pool or unit
and allocated to the Lease or Well in question. Each Net Revenue Interest shall
be the relevant ownership percentage net of all royalties, overriding royalties,
production payments and other burdens measured by or payable out of Substances
produced from or attributable the relevant Lease, Well, pool or unit. The Net
Revenue Interest shall include overriding royalty interests owned by Seller
measured by or payable out of Substances produced from or attributable the
relevant Lease, Well, pool or unit. As used herein, the term "Record Title"
means the record title ownership of a Lease. As used herein, the term "Operating
Rights" means the interest created out of the record title ownership of a Lease
authorizing the holder of that right to enter upon the lands covered by the
Lease to conduct drilling and related operations, including production of oil or
gas from such lands, in accordance with the terms of the Lease, and the
obligation to bear the expense and cost associated with such operations.

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     1.01 Acquired Assets. The following interests, rights, and property
comprise the Acquired Assets:

          (a)  the interests set forth in the attached Schedule 1-A in the oil
     and gas leases and lands described in such Schedule 1-A, including
     Operating Rights and Record Title, working, leasehold, mineral, royalty,
     overriding royalty, net revenue, net profits or reversionary interests,
     other mineral rights, and any other interests of a similar nature
     expressed, as a percentage, in such Schedule 1-A (collectively, the
     "Leases");

          (b)  all right, title, and interest of Seller in all Wells (including
     the interest of Seller in the Wells specifically described in Schedule
     1-A), equipment, fixtures, platforms, personal property and improvements
     (including materials, plants, pipelines, gathering and processing systems
     and salt water disposal systems) which are, as of the date of this
     Agreement, as of the Effective Time (as defined in Section 1.03) or as of
     the Closing Date (as defined in Section 7.01), as the case may be, located
     on, appurtenant to or used in connection with the Leases (the "Equipment");

          (c)  all right, title, and interest of Seller in all contracts,
     escrowed funds for the abandonment of the Acquired Assets, partnerships,
     joint ventures, limited liability companies and other entities, agreements,
     instruments, payout balances, commitments, licenses, permits, easements,
     rights-of-way, and other rights of Seller relating to the items described
     above in this Section 1.01, together with all rights, claims, and causes of
     action of Seller under such items existing or arising at or after the
     Effective Time, and the contracts specifically described in Schedule 1-B
     (all of the foregoing in this clause (c), collectively, the "Contracts");

          (d)  all right, title, and interest of Seller in oil, gas, condensate,
     related hydrocarbons, and other minerals produced from the Leases on or
     after the Effective Time, including all oil in storage as described in
     clause (i) of Section 2.04, ("Substances");

          (e)  all accounts, including the share of Seller in any gas imbalance,
     makeup obligation, abandonment escrow account, instrument, general
     intangible, lien, and security interest arising from the sale or other
     disposition of the items described in this Section 1.01 on or after the
     Effective Time ("Accounts"); and

          (f)  to the extent available and assignable pursuant to the terms of
     applicable law and third party agreements (without the payment of any funds
     or other consideration by Purchaser), all information, books, records,
     files, muniments of title, reports, documents and materials of Seller that
     are related to the portion of the Acquired Assets described in clauses
     (a)-(e) of this Section 1.01, including (i) all reservoir, land, lease,
     prospect, well, operation and production files, drilling reports,
     engineering reports and data and environmental reports, (ii) all seismic
     records, field notes, interpretations and programs, and all seismic records
     and data and other geological and geophysical information and libraries,
     together with all computers and other hardware and software used to

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     interpret and analyze geological and geophysical data and all other
     proprietary information relating to the Acquired Assets ("Seismic Data"),
     (iii) maps, logs, core analyses, and formation tests; (iv) production
     records; and (v) title and contract files (collectively, with the Seismic
     Data, the "Records").

Notwithstanding the foregoing, the transfer of the Acquired Assets pursuant to
this Agreement shall not include the assumption of any obligations related to
the Acquired Assets unless Purchaser expressly assumes that obligation pursuant
to Section 9.06.

     1.02 Excluded Assets.  The assets of Seller specified in Schedule 1.02
(collectively, the "Excluded Assets") are excluded from the Acquired Assets and
shall remain the property of Seller after the closing, subject to the exercise
by Purchaser of the Purchase Option (as defined in Section 1.03 below).

     1.03 Option to Acquire the Excluded Assets. For a period of thirty (30)
days following the Closing, Seller grants to Purchaser, with respect to items
(a), (b) and (c) set forth in Schedule 1.03 and Endeavor grants to Purchaser
with respect to items (d) and (e) set forth in Schedule 1.03 (as used in this
Section 1.03, Seller and Endeavor are each referred to, individually or
collectively, as applicable, as "Optionor"), the right and option ("Purchase
Option") (i) to purchase any or all of such Excluded Assets at the Option Price
set forth in Section 2.02 or (ii) to enter into a joint venture arrangement with
Optionor (the "Joint Venture") pursuant to which all of the Excluded Assets will
be conveyed to Purchaser in accordance with the mutual agreement of the parties.
This Purchase Option is exercisable by Purchaser, in its sole discretion, at any
time during the thirty (30) day period following the Closing by delivering
written notice to Optionor which shall identify the Excluded Assets to be
purchased or require the parties to enter into the Joint Venture arrangement. If
Purchaser exercises the Purchase Option to enter into such an arrangement, the
Joint Venture may provide for the following, subject to the mutual agreement of
the parties:

          (a)  contribution by Optionor of all or a portion (or if made into a
     Joint Venture, all) of the Excluded Assets at Optionor's basis in, or other
     agreed value of, the Excluded Assets with the right of Purchaser to
     contribute certain other capital from time to time, resulting in adjustment
     of the capital accounts and sharing ratios associated with the Joint
     Venture; and

          (b)  a process requiring Purchaser to present an offer to Optionor to
     (i) purchase Optionor's interest in the Joint Venture for a per-unit price
     nominated by Purchaser or (ii) sell Purchaser's interest in the Joint
     Venture to Optionor for an amount equal to the exact same per-unit price
     specified in clause (i) of this Section 1.03(b). The consummation of the
     transactions contemplated by such sale or purchase, as determined by
     Optionor under this Section 1.03(b), shall occur at the offices of Jackson
     Walker L.L.P. no later than December 31, 2002.

     1.04 Effective Time. The purchase and sale of the Acquired Assets shall be
effective for all purposes as of June 1, 2002, at 12:01 a.m., local time (the
"Effective Time").

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                                   ARTICLE II
                                 PURCHASE PRICE

     2.01 Purchase Price. The purchase price for the Acquired Assets (the
"Purchase Price") is Twenty-Five Million AND 00/100 DOLLARS ($25,000,000.00). In
accordance with Section 2.05 and Section 9.01 the Purchase Price, as adjusted
pursuant to the terms of this Agreement shall be paid to Seller.

     2.02 Option Price. Upon the exercise of the Purchase Option as described in
Section 1.03 above, Purchaser may purchase any or all of the Excluded Assets for
the purchase prices specified below (each a "Option Price"):

          (a)  The Option Price for the Lawson Field Asset shall be Nine Million
     Five Hundred Fifty Thousand Dollars ($9,550,000.00).

          (b)  The Option Price for the Norphlet Project Asset shall be One
     Million Dollars ($1,000,000.00).

          (c)  The Option Price for the West AA Prospect shall be One Million
     Dollars ($1,000,000.00).

          (d)  The Option Price for the Garfield and Magilla Prospects shall be
     One Million Two Hundred Thousand Dollars ($1,200,000.00).

          (e)  The Option Price for the Cox-Perkins Wells shall be One Million
     Nine Hundred Thousand Dollars ($1,900,000.00).

          (f)  The Option Price for the Wharton-Hunt Well shall be Three Hundred
     Fifty Thousand ($350,000.00).

     2.03 Escrow Deposit. Upon receipt of the Board Resolutions and Lender
Approval referred to in Section 8.01(f), Purchaser shall simultaneously deliver
One Million Eight Hundred and Seventy-Five Thousand and 00/100 ($1,875,000.00)
(the "Escrow Deposit") to JP Morgan Chase Bank (the "Escrow Agent"). The Escrow
Deposit shall be kept in an interest bearing escrow account in accordance with
the Escrow Agreement (the "Escrow Agreement") in the form attached hereto as
Schedule 2.03, and, disbursed pursuant to the Escrow Agreement Among Purchaser
or Seller. In accordance with the Escrow Agreement, the Escrow Deposit shall
either (i) be applied toward the payment of the Purchase Price, if the Closing
occurs, (ii) paid to Seller, if this Agreement is terminated as provided in
Section 8.02(a), or (iii) otherwise returned to Purchaser with interest, after
receipt of Purchaser's demand, if this Agreement is terminated or canceled or
the transaction is not consummated for any other reason whatsoever.

     2.04 Adjustments to Purchase Price. The Purchase Price shall be adjusted as
provided in this Section 2.04 and the resulting amount shall be referred to as
the "Adjusted Purchase Price." Not less than five (5) days prior to the Closing
Date, Seller shall deliver to Purchaser a preliminary closing statement (the
"Preliminary Closing Statement"), substantially in the form attached hereto as
Schedule 2.04, setting forth adjustments to the Purchase Price using the best
information then available and prepared in accordance with customary accounting
principles used in the oil and gas industry.

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          (a)  The Purchase Price shall be increased by the following:

               (i)    an amount equal to the quantity of merchantable oil
          produced from the Leases and in storage at the Effective Time, and not
          sold or disposed of prior to Closing (as defined in Section 7.01),
          multiplied by the market price (market price shall be deemed to be the
          amount the Seller would receive if the oil were marketed by the
          operator of the Lease) for such oil at the Effective Time, net of all
          taxes and gravity adjustments and transportation expenses necessary to
          market such production;

               (ii)   the amount of (A) the direct capital expenses for
          operations approved in accordance with Section 4.01 or otherwise made
          in accordance with applicable provisions of this Agreement, direct
          lease operating expenses charged under applicable operating
          agreements, and general and administrative charges, if any, payable to
          any third-party operator under applicable operating agreements, and
          (B) in respect of Leases for which Seller serves as operator, the
          direct capital expenses for operations approved in accordance with
          Section 4.01 or otherwise made in accordance with applicable
          provisions of this Agreement and direct lease operating expenses, in
          each instance that are: (1) attributable to the Acquired Assets during
          the period between the Effective Time and Closing, and (2) incurred
          and paid by Seller (whether before or after Closing);

               (iii)  the amount of premiums under insurance policies
          (including, as applicable, business interruption insurance)
          attributable to the Acquired Assets and the production therefrom for
          the period extending from the Effective Time to Closing;

               (iv)   an amount equal to the average daily market price of
          natural gas per mcf, (mmbtu adjusted) for delivery at the Houston Ship
          Channel for the month of May 31, 2002, as published in Inside FERC,
          representing the agreed value of the net undertaken Imbalances (as
          defined in Section 3.01(n)) as of the Effective Time, as such term is
          defined hereinafter; and

          (b)  The Purchase Price shall be decreased by the following:

               (i)  the amount of net proceeds or other value received by Seller
          for the sale or disposition of Substances, including net proceeds from
          the sale of liquids and other constituents removed in gas plants or
          other processing facilities, produced after the Effective Time;

               (ii) the amount of proceeds or other value received by Seller for
          the sale or disposition, after the Effective Time, of any portion of
          the Acquired Assets;

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               (iii)  an amount equal to the aggregate of all Title Defect
          Amounts (as hereinafter defined) with respect to all uncured Title
          Defects as determined pursuant to the provisions of Section 5.08(a);

               (iv)   the amount of any downward adjustment to the Purchase
          Price on account of any Casualty Loss (as defined in Section 5.07)
          pursuant to the provisions of Section 5.07;

               (v)    the amount of any downward adjustment to the Purchase
          Price on account of any Environmental Laws (as defined in Section
          3.01(p) pursuant to the provisions of Section 5.09(b); and

               (vi)   the amount of any downward adjustment to the Purchase
          Price as a result of the exercise of any preferential rights by the
          holders thereof, as provided in Section 5.09(c).

     2.05 Payment of Adjusted Purchase Price. At Closing, Purchaser shall pay
Seller a cash amount, in immediately available funds, equal to the Adjusted
Purchase Price, as determined on the basis of the Preliminary Closing Statement,
less any amounts payable pursuant to the Escrow Agreement.

     2.05 Allocation of Purchase Price.

          (a)  The Purchase Price shall be allocated among tangibles and
     intangibles comprising the Acquired Assets as follows: (i) ninety percent
     (90%) of the Purchase Price shall be attributed to the Leases and
     associated Contracts; and (ii) ten (10%) of the Purchase Price shall be
     attributed to Equipment and other personal property. Purchaser and Seller
     agree: (i) to be bound by the allocation of the Purchase Price among
     tangibles and intangibles set forth herein for all purposes; (ii) to
     consistently report such allocations for all federal, state and local
     income tax purposes; and (iii) to file timely all reports required by the
     Internal Revenue Code of 1986, as amended (the "Code"), including Form 8594
     (Asset Acquisition Statement Under Section 1060), pursuant to the
     requirements of Section 1060 of the Code, concerning the Purchase Price
     allocation.

          (b)  A portion of the Purchase Price has been allocated to the various
     Acquired Assets in the manner and in accordance with the respective values
     set forth in Schedule 1-A. If any adjustment is made to the Purchase Price
     pursuant to Section 2.04, a corresponding adjustment shall be made to the
     portion of the Purchase Price allocated to the affected Acquired Asset in
     Schedule 1-A. In no event shall any negative adjustment with respect to any
     Acquired Asset exceed the portion of the Purchase Price allocated to such
     Acquired Asset as provided in Schedule 2.06(b).

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

     3.01 Representations and Warranties by Seller. Seller represents and
warrants to Purchaser (which representations and warranties shall survive
Closing and the execution and

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delivery of the documentation to be executed and delivered at Closing, to the
extent provided in Section 10.15) that:

          (a) Seller is a corporation duly organized, existing and in good
     standing under the laws of the State of Delaware and is qualified to do
     business in, and is in good standing under the laws of, the State of Texas
     and each jurisdiction in which the failure to so qualify would have a
     material adverse effect on the Seller. Seller is qualified under applicable
     laws and regulations to own the Acquired Assets. All prior assignments of
     interests in any of the Leases or other Acquired Assets that are pending
     approval by the United States of America, Department of Interior, Bureau of
     Land Management (the "BLM") are in proper form for approval by the BLM in
     accordance with the laws, rules, regulations and practices applicable
     thereto.

          (b) Seller has the full legal power, right and authority to carry on
     its business as presently conducted, to enter into this Agreement and to
     perform its obligations under this Agreement.

          (c) Subject to Section 6.01(g), the execution, delivery and
     performance by Seller of this Agreement and the documentation to be
     executed and delivered at Closing have been authorized by all necessary
     action, corporate and otherwise, on the part of Seller. Execution, delivery
     and performance by Seller of this Agreement do not and execution, delivery
     and performance by Seller of the documentation to be executed and delivered
     at Closing will not, and the consummation of the transactions contemplated
     by this Agreement will not, violate or be in conflict with any (i)
     agreement, instrument, judgment, order, decree, law or regulation
     applicable to Seller or the Acquired Assets or (ii) any provision of the
     articles of incorporation or bylaws of Seller.

          (d) Subject to laws and equitable principles affecting the rights of
     creditors, this Agreement is and the documentation to be executed and
     delivered at Closing will be, upon execution and delivery thereof, legal,
     valid and binding obligations of Seller enforceable according to their
     respective terms.

          (e) Except as set forth in Schedule 3.01(e), no suit, arbitration,
     inquiry, proceeding, audit, claim, demand or investigation is pending or,
     to the knowledge of Seller, threatened that might result in impairment or
     loss or diminution of the title of Seller to the Acquired Assets or
     otherwise adversely affect any of the Acquired Assets in any material
     respect. There are no bankruptcy or reorganization proceedings pending or,
     to the knowledge of Seller, threatened against Seller or any Affiliate of
     Seller.

          (f) Schedule 1-B sets forth a list of the following contracts,
     agreements or commitments to which the Acquired Assets are subject or by
     which Seller is bound with respect to the Acquired assets:

              (i) any written contract or agreement with Seller or any Affiliate
          of Seller relating to the provision of goods or services which will
          survive the Closing;

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               (ii)  any contract, agreement or commitment that commits Seller
          and its assigns to aggregate expenditures with respect to the Acquired
          Assets of more than $100,000 in any calendar year, excluding (x) the
          Leases and any contracts or agreements creating interests or rights in
          the Acquired Assets, (y) joint operating agreements, and (z)
          unitization or pooling agreements;

               (iii) any contract, agreement or commitment that commits Seller
          and its assigns to sell, process, transport or market any Substances
          excluding (x) any such contract, agreement or commitment which expires
          within six months or can be terminated by Seller and its assigns upon
          not more than six months' notice without penalty, (y) joint operating
          agreements and (z) unitization or pooling agreements;

               (iv)  any contract, agreement or commitment that restricts Seller
          and its assigns, as owners of any of the Acquired Assets, from
          competing with any third party in any geographic region or line of
          business; and

               (v) any contract, agreement or commitment that warrants the
          volume of production of Substances to be delivered by Seller and its
          assigns from the Acquired Assets.

          (g)  To the extent Seller is responsible for payment thereof and
     otherwise to the knowledge of Seller, all rentals, royalties, shut-in
     royalties, overriding royalties, taxes and other payments due pursuant to
     or with respect to the Leases or the production of Substances therefrom or
     attributable thereto or revenue attributable to such production have been
     properly paid.

          (h)  To the knowledge of Seller, the Leases have been drilled,
     completed, operated, developed and produced in material compliance with all
     applicable judgments, orders, laws, rules and regulations. Except as set
     forth in Schedule 3.01(h), (i) all necessary certificates, consents,
     permits, licenses and other governmental authorizations affecting the
     Acquired Assets have been obtained and are in force, (ii) there are no
     outstanding violations of any applicable regulations, rules or orders of
     the Federal Energy Regulatory Commission, the BLM, or any other regulatory
     agency with respect to the Acquired Assets, (iii) the production status of
     each oil, gas, injection or disposal well included in the Acquired Assets
     (each a "Well") identified in Schedule 1-A as of the Effective Time and, to
     the best knowledge of Seller, as of the date of execution of this
     Agreement, is correctly reflected on such Schedule, and (iv) there are no
     wells included in the Acquired Assets or located on the Leases that (A)
     Seller is obligated, by applicable judgments, orders, laws, rules,
     regulations or contract, to currently plug and abandon or (B) are subject
     to exceptions to a requirement to plug and abandon issued by a governmental
     authority.

          (i)  Seller is not 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 Leases pursuant to applicable
     operating agreements, to produce Substances, or allow Substances to be
     produced, without receiving full payment at

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     the time of delivery in an amount that corresponds to the Net Revenue
     Interest described in Schedule 1-A.

          (j) Seller is timely receiving its share of proceeds from the sale of
     Substances produced from or allocable to the Leases without suspense,
     counterclaim or set-off. There has been no production of Substances from or
     allocable to the Leases in excess of the allowable production established
     pursuant to applicable state or federal law or regulation that would result
     in a restriction on production of Substances from or allocable to the
     Leases subsequent to the Effective Time.

          (k) Except for Casualty Losses after the date of execution of this
     Agreement, which are covered by the provisions of Section 5.07, since
     January 1, 2002 no event has occurred and no condition exists which has, or
     could reasonably be expected to, materially adversely affected the value of
     the Acquired Assets or the ability of Purchaser to own, hold, develop and
     operate the Acquired Assets, except for depletion through normal production
     changes in rates of production that occur in the ordinary course of
     operation, depreciation of the Equipment through ordinary wear and tear,
     and changes in general economic conditions and product pricing generally
     affecting the oil and gas industry

          (l) Seller has incurred no liability for brokers' or finders' fees
     related to the transactions contemplated by this Agreement for which
     Purchaser shall be liable.

          (m) Except as set forth in Schedule 3.01(m), there are no outstanding
     authorities for expenditures or any oral or written commitments or
     proposals to conduct operations on the Leases which are required to be
     approved by non-operators under the terms of the applicable joint operating
     agreement.

          (n) Except as set forth in Schedule 3.01(n), as of the Effective Time,
     no portion of the Acquired Assets is over produced, under produced, or
     otherwise subject to an imbalance or make-up obligation (collectively,
     "Imbalances") with respect to Substances produced from or allocated to the
     Acquired Assets, regardless of whether such Imbalances arise at the
     platform, wellhead, pipeline, gathering system or other level and
     regardless of whether such Imbalances arise under Contract or otherwise.

          (o) No consents or approvals of any third persons are required in
     connection with the transfer of the Acquired Assets from Seller to
     Purchaser other than the approval of the BLM and the consents listed in
     Schedule 3.01(o). Except as set forth in Schedule 3.01(o) there are no
     preference rights applicable to the sale of the Acquired Assets by Seller
     to Purchaser pursuant to this Agreement.

          (p) Seller has obtained all permits, licenses and other authorizations
     (collectively, "Environmental Permits") which are required under any law,
     ordinance, statute, code, rule, regulation, agreement, judgment, order, or
     decree of any federal, state or local governmental authority, applicable to
     the Acquired Assets, relating to pollution, the protection or regulation of
     human health, natural

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     resources, or the environment, or the emission, discharge, release or
     threatened release of pollutants, contaminants, chemicals, or industrial,
     toxic or hazardous substances or waste into the environment, including
     ambient air, surface water, ground water or land or soil (collectively,
     "Environmental Laws"), and all of such Environmental Permits are in full
     force and effect and all fees and charges relating thereto have been paid.
     Seller is in compliance with all Environmental Laws and Environmental
     Permits applicable to the Acquired Assets, and the Acquired Assets are not
     subject to any material unfulfilled remedial obligations pursuant to
     Environmental Laws. Seller has not received notice of any violation or
     alleged violation that is continuing (or of any fact or circumstance which
     with notice or the passage of time or both would constitute a violation) of
     any Environmental Laws or Environmental Permits relating to the Acquired
     Assets or any investigation relating thereto.

          (q) Seller is not a nonresident alien of the United States.

          (r) Except as set forth on the Disclosure Schedule, (i) Seller owns or
     has the right to use without any limitations or restrictions (including
     without limitation restrictions related to transfers to, or use by, any
     individual, corporation, limited liability company, business trust,
     association, company, partnership, joint venture, governmental authority or
     other entity (each, a "Person")), the Seismic Data; (ii) the consummation
     of the transactions contemplated by this Agreement will not alter or impair
     any such rights or breach any agreements with third-party vendors or
     require payments of any additional sums to such Persons; and (iii) the
     manner in which Seller has actually used or copied such Seismic Data does
     not and has not infringed on the rights of any Person.

          (s) All books, records and files of Seller pertaining to the Acquired
     Assets, to Seller's knowledge, fairly and accurately reflect the ownership,
     use, enjoyment and operation by Seller of its assets.

          (t) The transfer of the Acquired Assets to the Purchaser is not being
     made with the actual intent to hinder, delay or defraud any creditor of
     Seller. The Purchase Price constitutes reasonably equivalent value in
     exchange for the sale of the Acquired Assets as such value has been
     determined on or prior to the Closing, will be determined by an
     independent, third party appraiser, selected by Seller prior to the Closing
     and Seller is not insolvent now and will not become insolvent on the
     Closing Date.

          (u) Seller has delivered to Purchaser a copy of the report prepared by
     Garb, Grubb & Harris dated December 31, 2001. To the knowledge of Seller,
     the factual information furnished by Seller to Garb, Grubb & Harris for
     purposes of such report (including, without limitation, production,
     volumes, decline curves, sales prices for production, reserve reports,
     contractual pricing provisions under oil or gas sales or marketing
     contracts under hedging arrangements, costs of operations and development,
     lease operating expenses, and working interest and net revenue information
     relating to Seller's ownership interests in properties) was true and
     correct in all material respects on the date of such reserve report;

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     provided, however (i) the reserves included in such report are estimates
     only and should not be construed as exact quantities, (ii) such reserves
     may or may not be recovered and, if recovered, the revenues therefrom and
     the costs related thereto could be more or less than the estimated amounts,
     (iii) the sales rates, prices received for the reserves, and costs incurred
     in recovering such reserves may vary from assumptions included in such
     report due to governmental policies and uncertainties of supply and demand,
     and (iv) estimates of such reserves may increase or decrease as a result of
     future operations.

          (v) Seller has no knowledge of the breach of any representation,
     warranty, covenant or agreement hereunder by Purchaser or of the failure of
     Purchaser to perform an obligation hereunder, other than such as have been
     disclosed in writing to Purchaser.

     3.02 Representations and Warranties by Purchaser. Purchaser represents and
warrants to Seller (which representations and warranties shall survive Closing
and the execution and delivery of the documentation to be executed and delivered
at Closing) that:

          (a) Purchaser is a limited liability company organized, existing and
     in good standing under the laws of the State of Texas and is qualified to
     do business in, and is in good standing under the laws of the State of
     Texas, and as of the Closing will be qualified to do business in each
     jurisdiction in which the failure to so qualify would have a material
     adverse affect on the Purchaser.

          (b) Purchaser has the full legal power, right and authority to carry
     on its business as presently conducted, to enter into this Agreement and to
     perform its obligations under this Agreement. On or before the Closing,
     Purchaser will be qualified in accordance with applicable law, to own the
     Acquired Assets as a non-operator of such assets and will have complied
     with all necessary governmental bonding requirements required for its
     ownership of the Acquired Assets.

          (c) The execution, delivery and performance by Purchaser of this
     Agreement and the documentation to be executed and delivered at Closing
     have been authorized by all necessary action, corporate and otherwise, on
     the part of Purchaser. Execution, delivery and performance by Purchaser of
     this Agreement do not and execution, delivery and performance by Purchaser
     of the documentation to be executed and delivered at Closing will not, and
     the consummation of the transactions contemplated by this Agreement will
     not, violate or be in conflict with any (i) agreement, instrument,
     judgment, order, decree, law or regulation applicable to Purchaser or (ii)
     any provision of the articles or certificate of incorporation or bylaws of
     Purchaser.

          (d) Subject to laws and equitable principles affecting the rights of
     creditors, this Agreement is and the documentation to be executed and
     delivered by Purchaser at Closing will be, upon execution and delivery
     thereof, legal, valid and binding obligations of Purchaser enforceable
     according to their terms. There are no bankruptcy or reorganization
     proceedings pending or, to the knowledge of Purchaser, threatened against
     Purchaser.

                                                                   Page 15 of 50

<PAGE>

          (e) Purchaser has incurred no liability for brokers' or finders' fees
     related to the transactions contemplated by this Agreement for which Seller
     shall be liable.

          (f) There are no pending suits, actions or other proceedings to which
     Purchaser is a party (or, to the knowledge of Purchaser, which have been
     threatened to be instituted against Purchaser) which affect the execution
     and delivery of this Agreement or the consummation of the transactions
     contemplated hereby. There are no bankruptcy or reorganization proceedings
     pending or to the knowledge of Purchaser threatened against Purchaser or
     any Affiliate of Purchaser.

          (g) Purchaser is a knowledgeable purchaser, owner and operator of oil
     and gas properties, has the ability to evaluate the Acquired Assets for
     purchase, and is acquiring the Acquired Assets for its own account and not
     with the intent to make a distribution in violation of the Securities Act
     of 1933 or any applicable state securities law.

          (h) Purchaser has no knowledge of the breach of any representation,
     warranty, covenant or agreement hereunder by Seller or of the failure of
     Seller to perform an obligation hereunder, other than such as have been
     disclosed in writing to Seller.

          (i) Purchaser has sufficient funds to purchase the Acquired Assets,
     close the subject transaction and pay the Purchase Price and all related
     fees and expenses of Purchaser, all in accordance with the terms of this
     Agreement.

                                   ARTICLE IV
                                    COVENANTS

     4.01 Covenants of Seller. Seller covenants and agrees with Purchaser as
follows:

          (a) Following execution of this Agreement and until Closing, Seller
     shall (i) continue to operate the Acquired Assets or cause the Acquired
     Assets to be operated, in a good and workmanlike manner; (ii) maintain or
     cause to be maintained the insurance now in force with respect to the
     Acquired Assets; (iii) notify Purchaser of any suit, arbitration, inquiry,
     proceeding, audit, claim, demand or investigation known to Seller which
     might adversely affect any of the Acquired Assets; (iv) pay or cause to be
     paid, in the ordinary course of business and consistent with past
     practices, all costs, taxes and expenses which Seller is obligated to pay
     in connection with the Acquired Assets as they become due; (v) pay or cause
     to be paid all rentals, capital contributions and other payments necessary
     to maintain the Leases and the Contracts in force according to their terms
     and comply with all express and implied covenants contained in the Leases
     or the Contracts or cause such to be complied with; (vi) exercise due
     diligence in safeguarding the Acquired Assets and maintaining the
     confidentiality of all data and other confidential or proprietary materials
     relating to the Acquired Assets; (vii) promptly notify Purchaser of all
     significant operations which are proposed with respect to the Acquired
     Assets and of any Casualty Loss; and (viii) use

                                                                   Page 16 of 50

<PAGE>

     efforts, consistent with the standards expected of a reasonably prudent
     operator but without any obligation to pay money, to obtain any consents,
     waivers (including waiver of preferential purchase rights), and approvals
     required of third persons, governmental authorities or other entities in
     connection with consummation of the transactions contemplated by this
     Agreement.

          (b) Following execution of this Agreement, Seller shall not, without
     the consent of Purchaser (i) abandon any Well capable of commercial
     production or any platform, pipeline or other facility; (ii) release all or
     a portion of a Lease; (iii) commence or consent to an operation estimated
     to cost an amount in excess of the amount an operator is entitled to expend
     without non-operator approval under the applicable operating agreement(s)
     (excluding emergency operations and operations undertaken to avoid a
     penalty or forfeiture provision of any applicable agreement or order); (iv)
     create a lien, security interest or other encumbrance on any of the
     Acquired Assets; (v) sell or dispose of any of the Acquired Assets, other
     than Substances sold, consumed or produced or Equipment replaced, in either
     case the ordinary course of business; (vi) amend or waive a material right
     under a Lease or a Contract, compromise an Account or enter into new
     contracts affecting the Acquired Assets, other than those entered into in
     the ordinary course of business with a term of not more than 90 days; (vii)
     waive, compromise or settle any claim that diminishes or adversely burdens
     any Acquired Asset; or (viii) voluntarily relinquish the position of Seller
     as operator of any of the Acquired Assets.

          (c) Following the execution of this Agreement and until Closing,
     Seller shall provide Purchaser and its attorneys, employees, accountants,
     engineers, consultants and agents (collectively "representatives") access,
     during business hours, to (and the right to copy, at the expense of
     Purchaser) the Contracts and other records of Seller pertaining to the
     ownership and/or operation of the Acquired Assets (including title files,
     lease files, prospect files, division order files, production, severance
     and ad valorem tax records, and financial, accounting, engineering,
     geological and geophysical records), insofar as any of such are in the
     possession or control of Seller or insofar as Seller has access thereto,
     and to the extent, in each case, that Seller may do so without violating
     legal constraints or any legal obligation or waiving any attorney-client or
     attorney work product privilege, for the purpose of the conducting, by or
     at the direction of Purchaser, of due diligence reviews of the Acquired
     Assets. Subsequent to Closing, Seller shall not be obligated to furnish any
     updated abstracts, title opinions or additional title information which are
     not in the possession of Seller or title counsel to Seller, but shall
     cooperate with Purchaser in any efforts by Purchaser to obtain (at the
     expense of Purchaser) such additional title information as Purchaser may
     reasonably require.

          (d) Seller shall use its reasonable efforts to obtain before Closing
     all of the consents listed in Schedule 3.01(o) on terms reasonably
     satisfactory to Purchaser and, with respect to the transfer to Purchaser of
     engineering, geological and geophysical data included in the Records for
     which any third-party consents are conditioned upon payment of transfer
     fees, to obtain all such consents for the

                                                                   Page 17 of 50

<PAGE>

lowest applicable transfer fees reasonably possible, which transfer fees shall
be payable by Purchaser.

     (e) Seller shall take or cause to be taken all reasonable actions within
its control as may be necessary or advisable to consummate and make effective
the purchase of the Acquired Assets and the transactions contemplated by this
Agreement and to assure that, as of the Closing Date, it will not be under any
material corporate, legal or contractual restriction that would prohibit or
delay the timely consummation of such transactions.

     (f) Seller shall take or cause to be taken all reasonable actions to cause
all the representations and warranties of Seller contained in this Agreement to
be true and correct on and as of the Closing Date, other than those as are made
as of a specific date. To the extent the conditions precedent to the obligations
of Purchaser are within the control of Seller, Seller shall cause such
conditions to be satisfied on or prior to the Closing Date and, to the extent
the conditions precedent to the obligations of Purchaser are not within the
control of Seller, Seller shall take or cause to be taken all such commercially
reasonable actions as may be necessary to cause such conditions to be satisfied
on or prior to the Closing Date.

     (g) Seller shall notify Purchaser promptly (i) upon learning of any change
in fact or circumstance that causes any representation or warranty of Seller
contained in this Agreement to no longer be accurate and complete or (ii) if
Seller fails to perform or comply with any covenant or agreement contained in
this Agreement or it is reasonably anticipated that Seller will be unable to
perform or comply with any covenant or agreement contained in this Agreement.

     (h) Not later than 5:00 p.m. CDT, July 15, 2002, Seller shall submit to
Purchaser revisions and supplements to the Disclosure Schedules (which amended
schedules shall replace for all purposes the Disclosures Schedules originally
delivered at the time of execution of this Agreement) and Purchaser shall have
until 5:00 p.m. CDT July 19, 2002 to object to any such revisions and
supplements to such Disclosure Schedules, subject however, to the provisions of
Section 8.01(c).

4.02 Covenants of Purchaser. Purchaser agrees with Seller as follows:

     (a) Until Closing, pursuant to the confidentiality agreement (the
"Confidentiality Agreement") contained in Paragraph 4 of Section II of the
Letter of Intent dated June 29, 2002, between Purchaser and Seller and
pertaining, collectively, to the Acquired Assets and certain other properties of
Seller, except as otherwise permitted in this Section 4.02(a), Purchaser shall
keep, and shall cause its representatives to keep, confidential all terms and
provisions of this Agreement, the transaction contemplated by this Agreement,
and all information and data concerning the Acquired Assets and certain other
properties of Seller or the business, financial condition, operations,
strategies and prospects of Seller; provided that after Closing nothing
contained in this Agreement or the Confidentiality Agreement shall restrict the
right of Purchaser, as between

                                                                   Page 18 of 50

<PAGE>

Purchaser and Seller, to use or disclose information regarding the Acquired
Assets. Notwithstanding anything contained in this Section 4.02(a)) to the
contrary and insofar as it relates to the Acquired Assets, Purchaser may
disclose any of the information subject to the preceding sentence of this
Section 4.02(a) or covered by the Confidentiality Agreement to the extent (i)
necessary to enforce, or seek redress for breach of, this Agreement, (ii)
required by applicable law or the rules of a national securities exchange, (iii)
necessary for financing, reserve engineering or accounting purposes, (iv) to
comply with any law or legal process, or (v) otherwise previously made public or
independently received from a third party having a legitimate right to disclose
such information (without breach of the preceding sentence of this Section
4.02(a) or of the Confidentiality Agreement). In addition, Purchaser
acknowledges and agrees that without the prior written approval of Seller,
Purchaser shall not issue any press releases or make other public statements
with respect to this Agreement or the transactions contemplated by this
Agreement.

     (b) Purchaser shall qualify under applicable law and regulations to own and
operate the Acquired Assets and, in particular, Purchaser shall qualify pursuant
to the rules and regulations of the BLM to own and operate federal oil and gas
leases on land subject to the jurisdiction of the BLM and shall be, as of
Closing, in good standing with, and authorized and qualified by, all
governmental agencies with jurisdiction or cognizance over such land, to the
extent Purchaser is required by such agencies to so qualify and maintain good
standing for purposes of ownership and operation of the Acquired Assets.

     (c) Except as otherwise provided in this Agreement, Purchaser shall take or
cause to be taken all reasonable actions within its control as may be necessary
or advisable to consummate and make effective the purchase of the Acquired
Assets and the transactions contemplated by this Agreement and to assure that,
as of the Closing Date, it will not be under any material corporate, legal or
contractual restriction that would prohibit or delay the timely consummation of
such transactions.

     (d) Purchaser shall take or cause to be taken all reasonable actions to
cause all the representations and warranties of Purchaser contained in this
Agreement to be true and correct on and as of the Closing Date, other than such
as are made as of a specific date. To the extent the conditions precedent to the
obligations of Seller are within the control of Purchaser, Purchaser shall cause
such conditions to be satisfied on or prior to the Closing Date and, to the
extent the conditions precedent to the obligations of Seller are not within the
control of Purchaser, Purchaser shall take or cause to be taken all such
commercially reasonable actions as may be necessary to cause such conditions to
be satisfied on or prior to the Closing Date.

     (e) Purchaser shall notify Seller promptly (i) upon learning of any change
in fact or circumstance that causes any representation or warranty of Purchaser
contained in this Agreement to no longer be accurate and complete or (ii) if
Purchaser fails to perform or comply with any covenant or agreement contained in
this Agreement or it is reasonably anticipated that Purchaser will be

                                                                   Page 19 of 50

<PAGE>

     unable to perform or comply with any covenant or agreement contained in
     this Agreement.

         (f) Upon learning of same, in accordance with the provisions of Section
     5.01, Purchaser agrees to notify Seller promptly of any Title Defect (as
     defined in Section 5.05).

     4.03 Employees of Seller. Purchaser is not obligated to hire any employees
employed by Seller on the Closing Date.

                                   ARTICLE V
             REVIEW BY PURCHASER AND TITLE AND ENVIRONMENTAL MATTERS

     5.01 Due Diligence. 1. Following execution of this Agreement and until the
Closing, Purchaser may conduct at its cost, further examinations and
investigations in respect of the Acquired Assets, including without limitation,
review of accounting, legal, corporate, engineering, reserve, title,
environmental and other data and information pertaining to the Acquired Assets.
If Purchaser undertakes an environmental assessment of the Acquired Assets, both
the consultant (if a consultant is employed) and the scope of the proposed
assessment, including testing protocols, must be acceptable to Seller before the
work may begin, such acceptance not to be unreasonably withheld or delayed by
Seller.

          (b) Title Defects. Should, as a result of examinations and
     investigations or otherwise, one or more matters come to the attention of
     Purchaser which constitute a Title Defect that Purchaser desires to assert
     as a basis to seek an adjustment of the Purchase Price and/or as a basis
     not to proceed with the Closing, Purchaser shall notify Seller in writing
     of such Title Defects no later than 5:00 p.m. CDT, July 23, 2002. Such
     notification (a "Title Defect Notice") shall include for each asserted
     Title Defect (i) a description of the Title Defect and the Acquired Asset
     to which it applies, (ii) an explanation of the basis for the claim of a
     Title Defect (including reasonable supporting documentation) and (iii) the
     Title Defect Amount (as defined in Section 5.09) claimed by Purchaser with
     respect thereto. Any matter, regardless of whether asserted in a Title
     Defect Notice, that could constitute a Title Defect shall be deemed to have
     been waived by Purchaser, for purposes of adjustments to the Purchase Price
     (but not for purposes of the special warranty of title made by Seller in
     the conveyance instruments or in any of the documents to be executed and
     delivered at Closing), in the event that Purchaser proceeds with Closing
     without such matter having been cured and without any adjustment to the
     Purchase Price as a result of such matter.

          (c) Environmental Defects. Purchaser shall deliver to Seller, within
     seven days of receipt of any of such by Purchaser and at the cost of
     Purchaser, copies of all final reports, results, data, and analyses of site
     visits, inspections, and assessments. If required by applicable law, Seller
     may disclose such reports, results, data, and analyses of site visits,
     inspections, and assessments delivered to Seller by Purchaser. Should, as a
     result of examinations and investigations or otherwise, one or more matters
     come to the attention of Purchaser which constitute an Environmental Defect
     that Purchaser desires to assert as a basis to

                                                                   Page 20 of 50

<PAGE>

     seek an adjustment of the Purchase Price and/or as a basis not to proceed
     with the Closing, Purchaser shall notify Seller in writing of such
     Environmental Defect no later than the close of business of the fifth
     Business Day immediately preceding the Closing Date. Such notification (an
     "Environmental Defect Notice") shall include for each asserted
     Environmental Defect (i) a description of the Environmental Defect and the
     Acquired Asset to which it applies, (ii) an explanation of the basis for
     the claim of an Environmental Defect (including reasonable supporting
     documentation) and (iii) the Environmental Defect Amount (as defined in
     Section 5.09(b)) claimed by Purchaser with respect thereto. Any matter
     regardless of whether asserted in an Environmental Defect Notice, that
     could constitute an Environmental Defect shall be deemed to have been
     waived by Purchaser, for purposes of adjustments to the Purchase Price (but
     not for purposes of the representations of Seller made by Seller in Section
     3.01(p) or any of the provisions of Section Error! Reference source not
     found., in the event that Purchaser proceeds with Closing without such
     matter having been cured and without any adjustment to the Purchase Price
     as a result of such matter.

     5.02 Access to Acquired Assets. Following the execution of this Agreement
and until Closing, Seller shall provide Purchaser and its representatives access
to the Acquired Assets and the right to observe operations and inspect any and
all of the Acquired Assets, the Equipment and improvements and fixtures included
in the Acquired Assets, to the extent that Seller has the legal right to grant
such access and right. All visits by Purchaser or by others on behalf of
Purchaser to any facilities associated with any of the Leases shall be scheduled
by mutual consent of Purchaser and Seller, subject to Purchaser providing to
Seller reasonable advance notice of the locations that Purchaser wishes to visit
and the proposed times. Seller may accompany Purchaser and its representatives
during their site visits. Entry onto any Acquired Asset will (i) be subject to
valid third-party restrictions, if any, existing under the terms of the
Contracts, and to industrial safety, hygiene, and drug and alcohol requirements
of Seller or the relevant operator and (ii) be at the sole risk and expense of
Purchaser. Seller shall use reasonable efforts to arrange for Purchaser access
to, and the right to observe operations on and inspect, any Acquired Assets
requested by Purchaser with respect to which Seller alone does not have the
right to grant such access and rights. Seller shall use reasonable efforts to
identify for Purchaser, upon request, any third-party restrictions to which
Purchaser may be subject in exercising its rights to enter upon any of the
Acquired Assets. Purchaser agrees to protect, indemnify, defend and hold
harmless Seller and its co-owners, farmers and contractors, its and their
respective subcontractors, and its and their respective directors, managers,
officers, employees, agents, representatives and invitees from and against any
and all losses, claims and demands in connection with personal injuries,
including death, and property damage arising out of or relating to the access of
Purchaser and its representatives to the Acquired Assets, the Equipment and
improvements and fixtures included in the Acquired Assets.

     5.03 Environmental Defects. "Environmental Defect" means any irregularity
or defect existing or related to or arising or connection with an Acquired Asset
which, alone or in combination with other irregularities or defects, gives rise
to an Environmental Liability (as defined in Section 9.06 below) or causes the
Seller or such Acquired Asset to be in violation of Environmental Laws and with
respect to which the Environmental Defect Amount (as defined in Section 5.09(b))
is more than $10,000. Any dispute arising after the Closing with respect to any
unwaived Environmental Defect shall be resolved in accordance with the
provisions of Section 10.16.

                                                                   Page 21 of 50

<PAGE>

     5.04 Imbalances. Upon the occurrence of Closing, but effective as of the
Effective Time, Purchaser shall succeed to and assume the position of Seller
with respect to all Imbalances related to the Acquired Assets and described in
Section 3.01(n). As a result of such succession, Purchaser shall be (i) entitled
to receive any and all benefits which Seller would have been entitled to receive
by virtue of such position (including rights to produce and receive volumes of
production in excess of volumes which it would otherwise be entitled to produce
and receive by virtue of ownership of the Acquired Assets and rights to receive
cash balancing payments), (ii) obligated to suffer any detriments which Seller
would have been obligated to suffer by virtue of such position (including the
obligation to deliver to others production volumes which would have otherwise
been attributable to its ownership of the Acquired Assets, to deliver production
to purchasers hereof without receiving full payment therefor, or to make cash
balancing payments or to repay take or pay payments) and (iii) responsible for
any and all royalty obligations with respect to such Imbalances (including any
of such arising out of royalties having been paid on an "entitlements" basis
rather than a "receipts" basis). Seller shall protect, defend indemnify and hold
Purchaser harmless from and against any obligations, losses or liabilities
arising out of any Imbalances that exist on the Effective Time, other than those
described in Section3.01(n).

     5.05 Title Defects. "Title Defect" means any encumbrance, irregularity or
defect in the title of Seller to an Acquired Asset which, alone or in
combination with other defects, causes the title of Seller to such Acquired
Asset to be less than Defensible Title and with respect to which the Title
Defect Amount (as defined in Section 5.09(a) below) is more than $10,000. A
Title Defect shall not include any of the following: (i) defects arising out of
lack of survey; (ii) defects arising out of lack of corporate authorization,
unless Purchaser provides affirmative evidence that such corporate action was
not authorized and results in another Person's superior claim of title to the
relevant interest or portion thereof; (iii) defects that have been cured by
applicable statutes of limitations or statutes of prescription; and (iv) defects
in the early chain of title consisting of the failure to recite marital status
in documents or omissions of heirship proceedings. Any dispute arising after the
Closing with respect to any unwaived Title Defect shall be resolved in
accordance with the provisions of Section 10.16.

     5.06 Defensible Title.

          (a) "Defensible Title" means such right, title and interest of Seller
     that, in each case (x) will entitle Purchaser, as the successor to Seller,
     to receive and retain without suspension, reduction or termination, not
     less than the relevant Net Revenue Interest described in Schedule 1-A of
     Substances produced under the terms of the Leases (or other property
     denominated in Schedule 1-A) through plugging, abandonment and salvage of
     all Wells comprising or included in such Acquired Assets and all Wells now
     or hereafter producing from or attributable to such Acquired Assets; (y)
     will obligate Purchaser, as the successor to Seller to bear a percentage of
     costs and expenses related to the maintenance, operation and development of
     the Leases (or other property denominated in Schedule 1-A) not greater than
     the relevant Working Interest shown in Schedule 1-A, through plugging,
     abandonment and salvage of all wells comprising or included in such
     Acquired Assets and all wells now or hereafter producing from or
     attributable to such Acquired Assets, unless the circumstances causing the
     Working Interest to be greater will cause the corresponding Net Revenue
     Interest to increase in the same proportion; and (z) is free of all claims,
     liens, security interests,

                                                                   Page 22 of 50

<PAGE>

encumbrances, irregularities and defects, except for Permitted Encumbrances (as
defined below in this Section 5.06).

     (b)  "Permitted Encumbrances" are:

          (i)    lessor's royalties, overriding royalties, production payments,
     net profits interests, reversionary interests and similar burdens measured
     by or payable out of production of Substances or proceeds from the sale
     thereof that do not, and will not, reduce the relevant Net Revenue Interest
     of Purchaser, as the successor in title to Seller, below the relevant Net
     Revenue Interest shown in Schedule 1-A or increase Working Interest, as
     Seller's successor in title, above the relevant Working Interest of
     Purchaser shown in Schedule 1-A (unless the circumstance causing such
     Working Interest to increase will cause the corresponding Net Revenue
     Interest to increase at least in the same proportion);

          (ii)   preferential rights to purchase and third-party consents with
     respect to which, prior to Closing, (i) waivers or consents are obtained
     from the appropriate persons or entities or (ii) the time for asserting
     such rights has expired without exercise;

          (iii)  mechanics', materialmen's, operator's and non-operators', tax
     and similar liens or charges arising in the ordinary course of business
     related to an Acquired Asset, if such liens or charges secure payments not
     yet due;

          (iv)   all consents from, notices to, approvals by or other actions by
     any governmental authority in connection with the sale or transfer of the
     Acquired Assets by Seller to Purchaser pursuant to this Agreement if such
     matters are customarily and appropriately obtained after the sale or
     transfer;

          (v)    liens, security interests or other encumbrances that are
     released at or prior to Closing pursuant to the terms of releases and other
     instruments in form and substance reasonably satisfactory to Purchaser and
     executed, delivered and acknowledged by the owner and holder thereof;

          (vi)   rights of a governmental entity to control or regulate the
     Acquired Assets, together with all applicable laws, rules and regulations;

          (vii)  easements, rights-of-way, surface leases and other surface use
     restrictions if such restrictions will not materially adversely affect the
     use, value or operation of the Acquired Assets; and

          (viii) title matters waived or deemed to be waived by Purchaser
     pursuant to the provisions of Section 5.01;

          (ix)   liens for taxes not yet due and payable;

                                                                   Page 23 of 50

<PAGE>

                  (x)  liens reserved in oil and gas leases, joint operating
          agreements and other similar documents and agreements which secure
          payments not yet due; and

                  (xi) the title matter described on Schedule 5.06(b)(xi)
          relating to the assignment of a production payment.

     5.07 Casualty Loss. If, subsequent to the execution of this Agreement but
prior to Closing, all or any portion of an Acquired Asset is damaged or
destroyed (each such instance a "Casualty Loss"), this Agreement shall remain in
full force and effect notwithstanding any such damage or destruction, except as
provided below in this Section 5.07. Either Purchaser or Seller shall have the
right to elect to terminate this Agreement on or before the Closing Date if the
value of all Acquired Assets affected by one or more Casualty Losses exceeds
$2,500,000, in the aggregate. Unless this Agreement is terminated by Purchaser
or Seller as provided in the preceding sentence, then Purchaser shall have the
option to (a) treat the Casualty Loss as a Title Defect and receive a downward
adjustment of the Purchase Price, if the damaged Acquired Assets are not
repaired, restored or replaced by Seller (in which case Seller shall be entitled
to receive and retain all insurance proceeds with respect to the relevant
Casualty Loss), or (b) to the extent insurance proceeds are not committed, used
or applied by Seller prior to the Closing Date to repair, restore or replace
such damaged Acquired Assets, require Seller, at the Closing, to (i) assign to
Purchaser the right of Seller to receive all insurance proceeds owed to Seller
by reason of such Casualty Loss, less any reasonable costs and expenses incurred
by Seller in collecting such proceeds and (ii) pay to Purchaser all insurance
proceeds theretofore paid to Seller by reason of such destruction, less any
reasonable costs and expenses incurred by Seller in collecting such proceeds.
Notwithstanding the foregoing, any insurance proceeds (or any rights thereto) by
reason of any Casualty loss which are held by or owed to Seller for the account
or benefit of any third party joint interest owners shall not be paid or
assigned by Seller to Purchaser pursuant to this Section 5.07 and shall instead
be transferred to the successor operator or other party responsible therefor
pursuant to the terms of the applicable operating or other agreement. Seller
shall not compromise or settle a Casualty Loss without the consent of Purchaser.

     5.08 Disposition of Title Defects and Environmental Defects. (a) In the
event that Purchaser gives Seller any Title Defect Notice:

                  (i)  Seller may (but shall not be obligated to) attempt to
          cure such Title Defect at its cost and expense until two Business Days
          prior to Closing; and

                  (ii) if Seller within such time fails to cure any Title
          Defects of which Purchaser has given timely written notice as required
          above and Purchaser does not execute a written waiver of the same on
          or before two Business Days prior to the Closing Date, the Acquired
          Asset or portion thereof affected by such uncured and unwaived Title
          Defect shall be a "Title Defect Property".

          (b)     In the event that Purchaser gives Seller any Environmental
     Defect Notice:

                                                                   Page 24 of 50

<PAGE>

               (i)   Seller may (but shall not be obligated to) attempt to cure
           such Environmental Defect at its cost and expense until two Business
           Days prior to Closing; and

               (ii)  If Seller within such time fails to cure any Environmental
           Defects of which Purchaser has given timely written notice as
           required above and Purchaser does not execute a written waiver of the
           same on or before two Business Days prior to the Closing Date, the
           Acquired Asset or portion thereof affected by such uncured and
           unwaived Environmental Defect shall be an "Environmental Defect
           Property".

     5.09  Purchase Price Adjustments.

           (a) Title Defects. Purchaser shall be entitled to reduce the Purchase
     Price by the aggregate amount of Title Defect Amounts with respect to all
     Title Defect Properties; provided, however, Purchaser or Seller shall have
     the right to elect to terminate this Agreement if the sum of all Title
     Defect Amounts (including any Casualty Loss to be treated as a Title Defect
     pursuant to the provisions of Section 5.07) proposed by Purchaser in good
     faith in Title Defect Notices delivered by Purchaser to Seller pursuant to
     the provisions of Section 5.01(b), when added to Environmental Defect
     Amounts, exceed $2,500,000. "Title Defect Amount" shall mean, with respect
     to a Title Defect Property, the amount by which the value of such Title
     Defect Property is impaired as a result of the existence of one or more
     Title Defects, which amount shall be determined as follows:

               (i)   If the Title Defect results from Seller having a lesser Net
           Revenue Interest in such Title Defect Property than the Net Revenue
           Interest specified therefor in Schedule 1-A, the Title Defect Amount
           shall be equal to the product obtained by multiplying the portion of
           the Purchase Price allocated to such Title Defect Property in
           Schedule 1-A by a fraction, the numerator of which is the reduction
           in the Net Revenue Interest and the denominator of which is the Net
           Revenue Interest specified for such Title Defect Property in Schedule
           1-A.

               (ii)  If the Title Defect results from Seller having a greater
           Working Interest in a Title Defect Property than the Working Interest
           specified therefor in Schedule 1-A, the Title Defect Amount shall be
           equal to the present value (discounted at 10% compounded annually) of
           the increase in the costs and expenses reasonably forecasted as set
           forth in the Reserve Report prepared by Garb, Grubbs & Harris dated
           December 31, 2001, with respect to such Title Defect Property for the
           period from and after the Effective Time which is attributable to
           such increase in the Working Interest of Seller.

               (iii) If the Title Defect results from the existence of a lien,
           the Title Defect Amount shall be an amount sufficient to discharge
           such lien.

                                                                   Page 25 of 50

<PAGE>

               (iv)   If the Title Defect results from any matter not described
           in paragraphs (i), (ii) or (iii) above, the Title Defect Amount shall
           be an amount equal to the difference between the value of the Title
           Defect Property affected by such Title Defect with such Title Defect
           and the value of such Title Defect Property without such Title Defect
           (taking into account the portion of the Purchase Price allocated in
           Schedule 1-A to such Title Defect Property).

               (v)    If a Title Defect is not effective or does not affect a
           Title Defect Property throughout the entire productive life of such
           Title Defect Property, such fact shall be taken into account in
           determining the Title Defect Amount.

               (vi)   The Title Defect Amount with respect to a Title Defect
           Property shall be determined without duplication of any costs or
           losses included in another Title Defect Amount hereunder and actually
           used to reduce the Purchase Price. For example, but without
           limitation, if a lien affects more than one Title Defect Property,
           the amount necessary to discharge such lien shall only be included in
           the Title Defect Amount for one Title Defect Property and only once
           in such Title Defect Amount, except that if such lien affects another
           Title Defect Property for which the Title Defect Amount, but for the
           application of paragraph (viii) below, would exceed the portion of
           the Purchase Price allocated to such other Title Defect Property,
           then the amount necessary to discharge such lien up to such excess
           may be included in another Title Defect Amount.

               (vii)  If a Title Defect affects only a portion of an Acquired
           Asset (as contrasted with an undivided interest in the entirety of
           such Acquired Asset) and a portion of the Purchase Price has not been
           allocated specifically to such portion of such Acquired Asset in
           Schedule 1-A, then for purposes of computing the Title Defect Amount,
           the portion of the Purchase Price allocated to such Acquired Asset
           shall be further allocated among the portions of such Acquired Asset
           in the proportion that the portion of such Acquired Asset affected by
           such Title Defect bears to the entire Acquired Asset.

               (viii) Except to the extent Purchaser could incur any liability
           therefor as a result of the transaction contemplated by this
           Agreement or the value of another part of the Acquired Assets could
           be impaired by such Title Defect, the Title Defect Amount
           attributable to a Title Defect Property or any portion thereof shall
           not exceed the portion of the Purchase Price allocated to such Title
           Defect Property or such portion in Schedule 1-A and giving effect to
           the provisions of paragraph (vii) above in this Section 5.09. For
           example, but without limitation, if Seller does not own 50% of the
           Net Revenue Interest specified in Schedule 1-A for a Title Defect
           Property and such unowned 50% interest is also burdened by a lien for
           which Purchaser will not incur any liability as a result of the
           transaction which is the subject of this Agreement, the Title Defect
           Amount for such Title Defect Property shall not exceed the portion of
           the

                                                                   Page 26 of 50

<PAGE>

           Purchase Price allocable to such 50% interest notwithstanding that it
           may be affected by multiple Title Defects; however, if such lien
           affects another Title Defect Property the amount necessary to
           discharge such lien may be included in the Title Defect Amount for
           such other Title Defect Property as contemplated by paragraph (vi)
           above in this Section 5.09.

               (ix) No Title Defect Amount shall be allowed on account of and to
           the extent that an increase in the Working Interest of Seller in an
           Acquired Asset has the effect of increasing proportionately the Net
           Revenue Interest of Seller in such Acquired Asset.

           (b) Environmental Defects. Purchaser shall be entitled to reduce the
      Purchase Price by the aggregate amount of Environmental Defect Amounts
      with respect to all Environmental Defect Properties; provided, however,
      Purchaser or Seller shall have the right to elect to terminate this
      Agreement if the sum of all Environmental Defect Amounts proposed by
      Purchaser in good faith in Environmental Defect Notices delivered by
      Purchaser to Seller pursuant to the provisions of Section 5.01(c), when
      added to Title Defect Amounts, exceed $2,500,000. "Environmental Defect
      Amount" shall mean, with respect to an Environmental Defect Property, the
      amount by which the value of such Environmental Defect Property is
      impaired as a result of the existence of one or more Environmental
      Defects, which amount shall be determined as follows:

           The Environmental Defect Amount shall be an amount sufficient to cure
           and remediate such Environmental Liability to the standards necessary
           to comply with Environmental Laws as of the time of such Title Defect
           Notice, utilizing remediation methodologies reasonably required to
           remediate such Environmental Defect at the minimum cost necessary to
           comply with Environmental Laws as determined by taking the average
           estimate of two independent, nationally recognized environmental
           consulting firms, one of which has been selected by each of the
           parties.

           (c) Preference Rights. If a third party, who has been offered a
      property which constitutes a portion of the Acquired Assets with respect
      to which a portion of the Purchase Price is to be allocated and which is
      subject to preference rights in favor of such third party (a "Preference
      Property"), elects prior to Closing to purchase such Preference Property
      in accordance with the terms of such preference right, and Seller and
      Purchaser receive written notice of such election prior to the Closing,
      such Preference Property will be eliminated from the Acquired Assets and
      the Purchase Price shall be reduced by the portion of the Purchase Price
      allocated to such Preference Property. If a third party who has been
      offered a Preference Property or who has been requested to waive its
      preference right with respect to any Preference Property does not elect to
      purchase such Preference Property or waive such Preference Right with
      respect to the transactions contemplated by this Agreement prior to the
      Closing, such Preference Property shall be conveyed to Purchaser at
      Closing subject to such preference right, unless such Preference Property
      has been otherwise eliminated from the Acquired Asserts in accordance with
      other provisions of this Agreement. If a third party elects to purchase a
      Preference Property subject to a preference right

                                                                   Page 27 of 50

<PAGE>

      and Closing has already occurred with respect to such Preference Property,
      Buyer shall be obligated to convey said Preference Property to such third
      party and shall be entitled to the consideration for the sale of such
      Preference Property. Purchaser acknowledges that Seller desires to sell
      all of the Acquired Assets and would not have entered into this Agreement
      but for Purchaser's agreement to purchase all of the Acquired Assets as
      herein provided. Accordingly, it is expressly understood and agreed that
      Seller does not desire to sell any Preference Property unless the sale of
      all of the Acquired Assets is consummated at the Closing in accordance
      with the terms of this Agreement. In furtherance of the foregoing,
      Seller's obligation hereunder to sell the Preference Proprieties to
      Purchaser is expressly conditioned upon the consummation at the Closing of
      the sale of all of the Acquired Assets in accordance with the terms of
      this Agreement, either by conveyance to Purchaser or conveyance pursuant
      to an applicable preference right; provided that, nothing herein is
      intended or shall operate to extend or apply any preference right to any
      portion of the Acquired Assets which is not otherwise burdened thereby.
      Time is of the essence with respect to the parties agreement to consummate
      the sale of the Acquired Assets at the time of the Closing.

      5.10 Deferred Claims and Disputes. In the event that Purchaser and Seller
have not agreed upon one or more adjustments to the Purchase Price claimed by
Purchaser for Title Defects or Environmental Defects pursuant to and in
accordance with the requirements of this Article V, any such claim (a "Deferred
Adjustment Claim") shall be settled pursuant to the provisions of this Section
5.10 and, except as otherwise provided in Sections 5.09(a) and 5.09(b), shall
not prevent or delay Closing. With respect to each potential Deferred Adjustment
Claim, Purchaser and Seller shall deliver to the other a written notice
describing each such potential Deferred Adjustment Claim, the amount in dispute
and a statement setting forth the facts and circumstances that support the
position of the party hereto delivering such written notice with respect to such
Deferred Adjustment Claim. Subject to the right of Purchaser to withhold Title
Defect Amounts, or Environmental Defect Amounts as provided below in this
Section 5.10, until a Deferred Adjustment Claim is resolved in accordance with
the provisions of this Section 5.10, the Purchase Price shall not be adjusted
and no other adjustments shall be made on account of such Deferred Adjustment
Claim and no effect shall be given to such Deferred Adjustment Claim. At
Closing, Purchaser shall deposit with the Escrow Agent that part of the
aggregate amount of Title Defect Amounts, or the Environmental Defect Amounts,
as applicable, claimed by Purchaser with respect to unresolved Deferred
Adjustment Claims (the "Withheld Amount"), and in such event the portion of the
Purchase Price which would otherwise be paid in cash by Purchaser to Seller at
Closing shall be held in escrow by the Escrow Agent in accordance with the terms
of the Escrow Agreement. On or prior to the 30/th/ day following the Closing
Date (the "Deferred Matters Date"), Seller and Purchaser shall attempt in good
faith to reach agreement on the Deferred Adjustment Claims and, ultimately, to
resolve by written agreement all disputes regarding the Deferred Adjustment
Claims. Any Deferred Adjustment Claims which are not so resolved on or before
the Deferred Matters Date shall be submitted to final and binding arbitration in
accordance with the provisions of Section 10.16. The amount of the Purchase
Price to which Purchaser becomes entitled under the final and binding written
decision of the board of arbitrators or the written agreement of Purchaser and
Seller shall be promptly paid by Escrow Agent to Purchaser. Any Withheld Amount
of the Purchase Price to which Seller becomes entitled under the final and
binding written decision of the board of arbitrators or the written agreement of
Purchaser and Seller shall be promptly paid by Escrow Agent to Seller.

                                                                   Page 28 of 50

<PAGE>

     5.11  No Warranty of Merchantability or Fitness. Except as otherwise
specifically set forth in this Agreement, Seller makes no warranties, express or
implied, including the warranty of merchantability and the implied warranty of
fitness for a particular purpose, regarding the Acquired Assets and other like
personal property located on or included in the Acquired Assets and such are to
be sold on an "as is, where is", basis and condition.

     5.12  Waiver of Consumer Rights. PURCHASER WAIVES ITS RIGHTS UNDER THE
TEXAS DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ.,
TEXAS BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY SELECTED BY PURCHASER,
PURCHASER VOLUNTARILY CONSENTS TO THIS WAIVER. IN ORDER TO EVIDENCE ITS ABILITY
TO GRANT SUCH WAIVER, PURCHASER HEREBY REPRESENTS AND WARRANTS TO SELLER THAT
PURCHASER (I) IS IN THE BUSINESS OF SEEKING OR ACQUIRING, BY PURCHASE OR LEASE,
GOODS OR SERVICES FOR COMMERCIAL OR BUSINESS USE, (II) HAS KNOWLEDGE AND
EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE IT TO EVALUATE THE
MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED HEREBY AND (III) IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION.

                                   ARTICLE VI
                              CONDITIONS TO CLOSING

     6.01  Conditions to Obligations of Seller. The obligations of Seller at
Closing are subject to the satisfaction, at or prior to Closing, of the
following conditions, which shall be deemed satisfied upon the occurrence of
Closing:

           (a) the representations and warranties of Purchaser set forth in this
     Agreement that are qualified as to materiality shall be true and correct
     and those that are not so qualified shall be true and correct in all
     material respects, in each case, as of the date hereof and (except to the
     extent such representations and warranties speak as of an earlier date) as
     of Closing as though made at and as of Closing;

           (b) Purchaser shall have performed in all material respects the
     covenants and agreements which Purchaser was required to perform or satisfy
     at or prior to Closing;

           (c) except for matters not customarily and appropriately obtained
     prior to Closing, Seller shall have received evidence, in form reasonably
     satisfactory to Seller and its counsel, that all permits, consents,
     approvals, licenses, qualifications and favorable orders required by
     governmental authorities or by the terms of the Acquired Assets to be
     obtained prior to Closing to consummate this Agreement have been obtained
     or waived, including the waiver or exercise of all preferential rights and
     similar rights of any joint venture partners that may arise in connection
     with the transactions contemplated by this Agreement;

                                                                   Page 29 of 50

<PAGE>

          (d)  neither Purchaser nor Seller shall have elected to terminate this
     Agreement pursuant to the provisions of either Section 5.07 or Section
     5.09;

          (e)  no action or proceeding (excluding any such matter initiated by
     Seller or any of its Affiliates) shall be pending or threatened before a
     court, arbitrator or governmental authority seeking to restrain or prohibit
     the consummation of the transactions contemplated by this Agreement or to
     obtain substantial damages from Seller related to this Agreement and no
     effective injunction, writ, or temporary restraining order or any other
     order of any nature has been issued by a court or governmental agency of
     competent jurisdiction directing that the transactions contemplated by this
     Agreement not be consummated;

          (f)  Purchaser shall have caused an opinion of Jackson Walker L.L.P.
     to be delivered to Seller, dated the Closing Date, in the form attached
     hereto as Exhibit 6.01(f); and

          (g)  Seller shall have received (i) resolutions (the "Board
     Resolutions") of the Board of Directors of Seitel, Inc. ("Seitel"), which
     is the Seller's parent, approving the terms and provisions of this
     Agreement and (ii) a letter (the "Lender Approval") from Seitel's
     noteholders addressed to Seitel and Seller approving the sale of the
     Acquired Assets in accordance with the terms of this Agreement

     6.02 Conditions to Obligations of Purchaser. The obligations of Purchaser
at Closing are subject to the satisfaction, at or prior to Closing, of the
following conditions, which shall be deemed satisfied upon the occurrence of
Closing:

          (a)  the representations and warranties of Seller set forth in this
     Agreement that are qualified as to materiality shall be true and correct
     and those that are not so qualified shall be true and correct in all
     material respects, in each case, as of the date hereof and (except to the
     extent such representations and warranties speak as of an earlier date) as
     of Closing as though made at and as of Closing;

          (b)  Seller shall have performed in all material respects the
     covenants and agreements which Seller was required to perform or satisfy at
     or prior to Closing;

          (c)  except for matters not customarily and appropriately obtained
     prior to Closing, Purchaser shall have received evidence, in form
     reasonably satisfactory to Purchaser and its counsel, that all permits,
     consents, approvals, licenses, qualifications and favorable orders required
     by governmental authorities or by the terms of the Acquired Assets to be
     obtained prior to Closing to consummate this Agreement have been obtained
     or waived, including the waiver or exercise of all preferential rights and
     similar rights of any joint venture partners that may arise in connection
     with the transactions contemplated by this Agreement;

                                                                   Page 30 of 50

<PAGE>

          (d)  neither Purchaser nor Seller shall have elected to terminate this
     Agreement pursuant to the provisions of either Section Section 5.07 or
     Section 5.09;

          (e)  there shall be no action or proceeding (excluding any such matter
     initiated by Purchaser or any of its Affiliates) pending or threatened
     before a court, arbitrator or governmental authority seeking to restrain or
     prohibit the consummation of the transactions contemplated by this
     Agreement, to obtain substantial damages from Purchaser related to this
     Agreement and there shall be no effective injunction, writ, or temporary
     restraining order or any other order of any nature has been issued by a
     court or governmental agency of competent jurisdiction directing that the
     transactions contemplated by this Agreement not be consummated;

          (f)  except for Casualty Losses covered by the provisions of Section
     5.07, since the date of this Agreement no event shall have occurred and no
     condition shall exist which has, or could reasonably be expected to,
     materially adversely affected the value of the Acquired Assets or the
     ability of Purchaser to own, hold, develop and operate the Acquired Assets,
     except for depletion through normal production, changes in rates of
     production that occur in the ordinary course of operation, depreciation of
     the Equipment through ordinary wear and tear, and changes in general
     economic conditions and product pricing generally affecting the oil and gas
     industry

          (g)  All consents and waivers necessary in order to permit Purchaser
     to use the Seismic Data without limitation and without additional payment
     by Purchaser and all other consents listed in Schedule 3.01(o) shall have
     been obtained on terms reasonably satisfactory to Purchaser;

          (h)  As a result of examinations, assessments, investigations, and
     other due diligence conducted by Purchaser (i) material adverse facts come
     to the attention of Purchaser which constitute a Material Discovery; (ii)
     Purchaser delivers a Material Discovery Notice to Seller; and (iii) Seller
     fails to satisfy, in the reasonable determination of Purchaser, Purchaser's
     concerns over such Material Discovery. For purposes of this Section
     6.02(h), the term "Material Discovery" means a discovery of facts or
     conditions which are discovered by Purchaser during the course of its due
     diligence other than those which constitute Title Defects, or Environmental
     Defects and which are not the subject of the representations and warranties
     of Seller set forth in Section 3.01 of this Agreement and which after the
     Closing would have or would be likely to have a material adverse impact on
     Purchaser in an amount of at least $250,000; the term "Material Discovery
     Notice" means a written notice from Purchaser delivered to Seller no later
     than July 11, 2002 setting forth the Material Discovery and including in
     such notice (i) a description of the Material Defect and Acquired Asset to
     which it applies, or if it is of a more general concern, so stating
     therein; (ii) an explanation of the basis for Purchaser's concerns; and
     (iii) the dollar amount by which Purchaser believes the Material Discovery
     would adversely affect the Purchaser.

                                                                   Page 31 of 50

<PAGE>

          (i)  Seller shall have caused an opinion of Seller's (or Seitel's)
     in-house counsel to be delivered to Purchaser, dated the Closing Date, in
     the form attached hereto as Schedule 6.02(i).

                                   ARTICLE VII
                                     CLOSING

     7.01 Closing Date. Subject to applicable provisions of this Agreement, the
consummation of the transactions contemplated by this Agreement ("Closing")
shall occur at the office of Seller listed above (or at such other place and
time as the parties hereto may agree) on July 31, 2002 at 10:00 a.m. (any such
date being the "Closing Date").

     7.02 Closing Obligations. At Closing, the following shall occur, each being
a condition precedent to the others and each being deemed to have occurred
simultaneously:

          (a)  Seller shall execute and deliver to Purchaser assignments
     conveying the Acquired Assets to Purchaser in the forms attached to this
     Agreement as Exhibit B-1, Exhibit B-2 and/or Exhibit B-3. Seller shall also
     execute and deliver such other assignments on appropriate forms as may be
     required by governmental authorities, subject to the terms of the
     assignment forms attached as Exhibit B-1, Exhibit B-2 and/or Exhibit B-3
     and such other licenses, deeds, bills of sale and other conveyance
     instruments as shall be required to consummate the transactions
     contemplated by this Agreement; provided that the special warranty to be
     granted by the Seller in connection therewith shall be limited to a period
     of one (1) year from the date of granting thereof. The individual forms of
     assignment prepared by Seller, where relevant and appropriate, shall
     contain provisions regarding assumption of obligations required by the
     Contracts in the relevant chain of title.

          (b)  Seller and Purchaser shall execute and deliver to each other the
     Preliminary Closing Statement.

          (c)  Purchaser shall deliver the Adjusted Purchase Price to Seller by
     direct wire transfer, as directed by Seller by notice in writing to
     Purchaser delivered not less than two Business Days prior to the Closing
     Date.

          (d)  Seller shall transfer and deliver to Purchaser possession of the
     Acquired Assets.

          (e)  Seller shall execute transfer orders or letters-in-lieu on forms
     prepared by Purchaser, and reasonably satisfactory to Seller, directing
     purchasers of Substances produced on or after the Effective Time to make
     payment to Purchaser for such Substances as contemplated by this Agreement.

          (f)  Seller shall furnish Purchaser an affidavit stating the United
     States taxpayer identification number of Seller and that Seller is not a
     foreign person, pursuant to Section 1445(b)(2) of the Code.

          (g)  Seller shall deliver to Purchaser a certificate of the Secretary
     of Seller, dated the Closing Date, certifying (i) that a true and correct
     copy of the

                                                                   Page 32 of 50

<PAGE>

     resolutions of the board of directors of Seller authorizing this Agreement
     and the transactions contemplated hereby are attached thereto and have been
     duly adopted and are in full force and effect and (ii) as to the incumbency
     and authorization of the officers of Seller executing, on behalf of Seller,
     this Agreement and the other documents to be executed and delivered by
     Seller at Closing.

          (h)  Purchaser shall deliver to Seller a certificate of the Secretary
     of Purchaser, dated the Closing Date, certifying (i) that a true and
     correct copy of the resolutions of the board of directors of Purchaser
     authorizing this Agreement and the transactions contemplated hereby are
     attached thereto and have been duly adopted and are in full force and
     effect and (ii) as to the incumbency and authorization of the officers of
     Purchaser executing, on behalf of Purchaser, this Agreement and the other
     documents to be executed and delivered by Purchaser at Closing.

          (i)  Seller shall execute and deliver to Purchaser designation of
     operator forms, as applicable, executed by Seller and, to the extent Seller
     has been able to arrange for such execution prior to Closing, each of the
     other owners of interests in the Leases from which such designations are
     required designating Purchaser as operator of the Leases.

          (j)  Seller and Purchaser shall each execute and deliver such other
     instruments and take such other actions as may be necessary to carry out or
     to evidence their obligations under this Agreement.

     7.03 Operatorship. Upon Closing, transfer of operatorship of each such
Lease shall occur and Purchaser shall assume full responsibility for the
completion of all such operations applicable to such Lease and all risk of loss
of or damage to any portion of the Acquired Assets attributable to ownership,
use or operation by Purchaser, including any Casualty Loss, shall pass to
Purchaser as of the Closing Date and all losses, costs, claims, suits,
judgments, awards or damages on account of bodily injury, illness, death or
property damage or loss suffered by any persons or entities other than Purchaser
arising out of or related to the performance of such operations on or after the
Closing Date shall pass to and be assumed by Purchaser as of the Closing Date.
Notwithstanding anything herein to the contrary, Seller does not represent to
Purchaser that Purchaser will succeed to operatorship of any of the Acquired
Assets other than those Leases owned solely by Seller. Purchaser acknowledges
and agrees that the parties hereto will be required to comply with the terms of
any applicable Contract relating to any elections or other selection procedures
in order for Purchaser to succeed Seller as operator thereunder. If all owners
of interests in any Lease have not executed and delivered, prior to the Closing,
all instruments necessary to designate Purchaser as operator of any Lease and
Purchaser elects to waive such condition to Closing, to the extent it is a
condition to Closing, Seller shall have no liability arising out of the failure
to obtain such instruments provided that Seller complies with its obligations
under Section 9.05.

                                  ARTICLE VIII
                                   TERMINATION

     8.01 Termination. This Agreement and the transactions contemplated by this
Agreement may be terminated prior to Closing in the following situations:

                                                                   Page 33 of 50

<PAGE>

          (a)  by Seller or Purchaser, if Closing does not occur on or before
     August 31, 2002; provided, however, that neither party hereto shall be
     entitled to so terminate if it is in breach of any provision of this
     Agreement;

          (b)  by Seller, if the conditions contained in Section 6.01 are not
     satisfied or waived as of the Closing Date;

          (c)  by Purchaser, (i) if the conditions contained in Section 6.02 are
     not satisfied or waived as of the Closing Date or (ii) within three
     business days following Seller's delivery of the revised or supplemented
     Disclosure Schedules delivered pursuant to Section 4.01(h), if Purchaser in
     its sole reasonable discretion determines that any of the information set
     forth thereon that was not included in the original Disclosure Schedules
     makes it inadvisable to proceed with the proposed acquisition contemplated
     herein;

          (d)  by Seller, if Purchaser has provided notice to Seller of any
     circumstance that would give rise to indemnification by Seller under any
     applicable provision of this Agreement;

          (e)  by Seller and Purchaser pursuant to written agreement;

          (f)  by Purchaser, if Seller has not delivered to Purchaser, on or
     before 5:00 p.m. CDT, July 10, 2002 (i) the Board Resolutions approving the
     terms and provisions of this Agreement and (ii) the Lender Approval from
     Seitel's noteholders addressed to Seitel and Seller approving the sale of
     the Acquired Assets in accordance with the terms of this Agreement; and

          (g)  by Purchaser if Seller, Seitel or any of their Affiliates enters
     into any bankruptcy or insolvency proceedings of any kind, voluntary or
     involuntary.

     8.02 Liabilities Upon Termination.

          (a)  In the event Purchaser breaches this Agreement by failing or
     refusing to close the transaction contemplated hereby on the Closing Date
     and each of the conditions contained in Section 6.02 has been either
     fulfilled or waived, Seller, at its sole option, may (i) enforce specific
     performance of this Agreement or (ii) terminate this Agreement and the
     Escrow Deposit, including interest, shall be paid to the Seller in
     accordance with the terms and provisions of the Escrow Agreement. The
     Parties hereby acknowledge that the extent of damages to the Seller and its
     shareholder occasioned by such failure or refusal by Purchaser would be
     impossible or extremely impractical to ascertain and that the amount of the
     Escrow Deposit is a fair and reasonable estimate of the damages under the
     circumstances and the payment of the Escrow Deposit shall be Seller and its
     shareholder's sole and exclusive remedy in such event, all other remedies
     being expressly waived by Seller.

          (b)  In the event the Closing does not occur and the Escrow Deposit is
     not paid to the Seller pursuant to Section 8.02(a), the Escrow Deposit,
     including interest, shall be returned to Purchaser in accordance with the
     terms and provisions of the Escrow Agreement.

                                                                   Page 34 of 50

<PAGE>

            (c)  Notwithstanding anything provided to the contrary in this
     Agreement, upon any failure of Seller to fulfill any undertaking or
     commitment provided for herein on the part of Seller that is required to be
     fulfilled on or prior to the Closing Date, Purchaser, at its sole option,
     may (i) enforce specific performance of this Agreement or (ii) terminate
     this Agreement and have the Escrow Deposit returned.

            (d)  NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER
     PROVISION OF THIS AGREEMENT, SELLER AND PURCHASER AGREE THAT THE RECOVERY
     BY EITHER PARTY HERETO OF ANY DAMAGES SUFFERED OR INCURRED BY IT AS A
     RESULT OF ANY BREACH BY THE OTHER PARTY OF ANY OF ITS REPRESENTATIONS,
     WARRANTIES OR OBLIGATIONS UNDER THIS AGREEMENT SHALL BE LIMITED TO THE
     ACTUAL DAMAGES SUFFERED OR INCURRED BY THE NON-BREACHING PARTY AS A RESULT
     OF THE BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES OR
     OBLIGATIONS HEREUNDER, AND IN NO EVENT SHALL THE BREACHING PARTY BE LIABLE
     TO THE NON-BREACHING PARTY FOR ANY INDIRECT, CONSEQUENTIAL, EXEMPLARY OR
     PUNITIVE DAMAGES SUFFERED OR INCURRED BY THE NON-BREACHING PARTY AS A
     RESULT OF THE BREACH BY THE BREACHING PARTY OF ANY OF ITS REPRESENTATIONS,
     WARRANTIES OR OBLIGATIONS HEREUNDER.

                                   ARTICLE IX
                            OBLIGATIONS AFTER CLOSING

     9.01   Post-Closing Adjustments. Seller and Purchaser acknowledge that the
amount of all adjustments to the Purchase Price under Section 2.04 may not be
available prior to Closing. As soon as practicable after Closing, but in any
event within 90 days after Closing, Seller shall prepare and submit to Purchaser
a statement containing adjustments to the Purchase Price contemplated by the
provisions of Section 2.04 that were not finally determined as of Closing (the
"Final Settlement Statement") and such supporting documentation as is reasonably
necessary to support the adjustments shown therein. Purchaser shall give
representatives of Seller reasonable access to its premises and to its books and
records for purposes of preparing the Final Settlement Statement and shall cause
appropriate personnel of Purchaser to assist Seller and representatives of
Seller, at no cost to Seller, in the preparation of the Final Settlement
Statement. Seller shall give representatives of Purchaser reasonable access to
its premises and to its books and records for purposes of reviewing the
calculation of any such adjustments and will cause appropriate personnel of
Seller to assist Purchaser and representatives of Purchaser, at no cost to
Purchaser, in verification of such calculations. The Final Settlement Statement
shall become final and binding on Seller and Purchaser as to the calculation of
the Adjusted Purchase Price 90 days following the date the Final Settlement
Statement is received by Purchaser, except to the extent that, prior to the
expiration of such 90 day period, Purchaser shall deliver to Seller notice, as
hereinafter required, of its disagreement with the contents of the Final
Settlement Statement. Such notice shall be in writing and set forth all
disagreements of Purchaser with respect to any portion of the Final Settlement
Statement, together with any changes thereto proposed by Purchaser, and shall
include an explanation in reasonable detail of, and such

                                                                   Page 35 of 50

<PAGE>

supporting documentation as is reasonably necessary to support, such changes. If
Purchaser has timely delivered such a notice of disagreement to Seller, then,
upon written agreement between Purchaser and Seller resolving all disagreements
of Purchaser set forth in such notice, the Final Settlement Statement shall
become final and binding upon Purchaser and Seller as to the calculation of the
Adjusted Purchase Price. If the Final Settlement Statement has not become final
and binding by the 120th day following its receipt by Purchaser, then Purchaser
or Seller may submit to an independent public accounting firm mutually
satisfactory to Seller and Purchaser for resolution any unresolved disagreements
of Purchaser set forth in the notice from Purchaser to Seller. The fees and
expenses of such accounting firm in making such determination shall be shared
equally by Purchaser and Seller. Upon resolution of such unresolved
disagreements of Purchaser, the Final Settlement Statement (including any
revisions thereto as are so resolved or agreed) shall be conclusive, final and
binding upon Purchaser and Seller as to the calculation of the Adjusted Purchase
Price. Payment of any net amount due to Seller or Purchaser, as the case may be,
on the basis thereof shall be made within five days after the Final Settlement
Statement (as so resolved or agreed) becomes final and binding on the parties
hereto (the "Final Settlement Date").

     9.02   Subsequent Adjustments. Seller and Purchaser recognize that either
may receive funds or pay expenses after the Final Settlement Date which are
properly the property or obligation of the other. Upon receipt of net proceeds
or payment of net expenses due to or payable by the other party hereto,
whichever occurs first, Seller or Purchaser, as the case may be, shall submit a
statement to the other party hereto showing the relevant items of income and
expense. Payment of any net amount due by Seller or Purchaser, as the case may
be, on the basis thereof shall be made within ten days of receipt of the
statement.

     9.03   Reservation of Claims. Except as provided in this Agreement, Seller
is entitled to all claims related to the Acquired Assets prior to the Effective
Time regardless of when payment is made. Except as provided in this Agreement,
Purchaser is entitled to all claims related to the Acquired Assets which arise
after the Effective Time.

     9.04   Files and Records. Upon Closing, subject to the provisions of
Section 1.01(f), Seller shall permit Purchaser, at the expense of Purchaser, to
take possession of originals, or with respect to accounting records relating to
periods prior to the Closing Date, copies, of all Records in the possession or
control of Seller and relating to the Acquired Assets. Seller shall have the
right to copy (at the expense of Seller) and retain a copy of all such files,
records and data. Insofar as Seller reasonably believes such Records may be
needed or useful in connection with federal, state or local regulatory or tax
matters or resolution of existing disputes or contract compliance issues with
third parties or for any other appropriate purposes, Seller shall have the right
to make, at the expense of Seller, and retain copies of Records subsequent to
the delivery of such Records to Purchaser; provided, however, any such copies of
Records retained by Seller shall be confidential and proprietary to Purchaser to
the extent the relevant Records were theretofore maintained as such by Seller,
and to such extent and except as provided herein to the contrary, Seller may not
divulge any matters contained therein or any other information provided by
Purchaser to Seller pursuant to the terms of this Agreement, without the prior
express written consent of Purchaser, except (a) as required by Law, (b) as
required by order of any court, (c) to the extent otherwise previously made
public (other than by disclosure in breach of this Agreement) or (d) as is
necessary to enforce, or seek redress for breach of, this Agreement. Except as
may be otherwise required by any of the Contracts or applicable law, Purchaser
shall be obligated to maintain the Records for a period of seven years following
the Closing Date;

                                                                   Page 36 of 50

<PAGE>

provided, however, Purchaser shall not be obligated to maintain any Records that
relate in all material respects to any of the Acquired Assets that cease to be
owned by Purchaser if Purchaser has obligated its successors and assigns of such
Records to maintain and allow access to such Records for the remainder of such
seven-year period; and provided further, however, Purchaser shall not be
required to retain any Records that it has offered to deliver to Seller.

     9.05   Further Assurances; Cooperation. After Closing, Seller, Endeavor and
Purchaser agree to execute and deliver such instruments and take such other
actions as may be necessary or advisable to carry out their obligations under
this Agreement or any other document delivered pursuant hereto. In particular,
Seller and Purchaser agree to execute and deliver such instruments and take such
other actions as may be necessary and advisable to (a) make all filings,
registrations, and recordings which must be made with respect to the Leases in
the records of all appropriate counties, parishes, and state and federal
agencies and offices in order that the records maintained by the appropriate
state and federal agencies and the appropriate records of the relevant parishes
and counties shall accurately reflect the transfer of the Acquired Assets to
Purchaser; (b) enable Seller to take promptly all actions over which Seller has
control to allow Purchaser to be designated as the operator with respect to
those Acquired Assets as to which Seller is the operator as of the Effective
Time; and (c) obtain prompt and unconditional approvals of transfers of the
Leases as applicable. To the extent required, Purchaser agrees to take promptly
any and all actions necessary to post any supplemental bonds and provide any and
all documentation that may be required to evidence the financial responsibility
of Purchaser under applicable federal regulations policies.

     9.06   Assumption and Indemnity.

            (a)  Upon Closing, Purchaser hereby assumes responsibility for and
     agrees to pay, perform and discharge the obligations as set forth below
     (the "Assumed Obligations"):

                 (i)  the prompt and complete payment, performance and discharge
            of all obligations and liabilities of Seller attributable to or
            arising out of any of the Leases and any of the Contracts listed on
            Schedule 1-B (the "Assumed Contracts") for the period from and after
            the Closing, to the extent such liabilities and obligations are (A)
            attributable to or arise out of the ownership, use or operation of
            the Acquired Assets; (B) attributable to the period of time on or
            after the Effective Time, and (C) are not the result of any default
            of or failure to perform by Seller under any of the Assumed
            Contracts as to any point in time prior to Closing (collectively,
            the "Assumed Contractual Obligations");

                 (ii) all costs, expenses, liabilities, claims and obligations
            arising out of or in connection with the ownership or operation of
            the Acquired Assets after the Closing Date, including all
            obligations regarding site clearance, plugging, abandoning, and
            removing all existing Wells, platforms, facilities and pipelines
            located on or used in connection with the Acquired Assets in
            accordance with the requirements of all applicable governmental
            authorities and the terms of all applicable Leases and Contracts
            (such obligations being the "Abandonment and Clean Up Obligations")
            and all Environmental Liabilities arising out of or in

                                                                   Page 37 of 50

<PAGE>

      connection with the ownership or operation of the Acquired Assets after
      the Closing Date.

      provided, however, notwithstanding anything contained in clause (i) of
      this Section 0 to the contrary, Purchaser shall not assume and shall have
      no liability (contingent or otherwise) whatsoever with respect to the
      Retained Obligations or any matter with respect to which Seller has
      indemnified Purchaser pursuant to clause (ii) of Section 9.06(c).

      (b)  Seller shall retain responsibility for and agrees to pay, perform and
discharge, all of the following (collectively, the "Retained Obligations"),
including all indebtedness, liabilities or other obligations not expressly
assumed by the Purchaser pursuant to Section 9.06(a) above:

           (i)   the prompt and complete payment, performance and discharge of
      all obligations and liabilities of Seller attributable to or arising out
      of any of the Leases and any of the Assumed Contracts for the period prior
      to the Closing;

           (ii)  all costs, expenses, liabilities, claims and obligations
      arising out of or in connection with the ownership or operation of the
      Acquired Assets prior to the Closing Date, including all Abandonment and
      Clean-Up Obligations and all Environmental Liabilities arising out of or
      in connection with the ownership or operation of the Acquired Assets prior
      to the Closing Date and the proper accounting or payment to third parties
      for their interests therein insofar as such claims relate to periods of
      time prior to the Closing Date.

      The term "Environmental Liabilities," as used herein, shall mean all
      costs, expenses, liabilities, and obligations attributable to the Acquired
      Assets and arising out of or in connection with any violation of
      Environmental Laws or any Environmental Non-Violation of Laws Matters (as
      defined below in this Section 9.06(b). The term "Environmental
      Non-Violation of Laws Matters," as used herein, shall mean any cost,
      expense, liability or obligation with respect to the Acquired Assets (x)
      resulting from or attributable to actual, threatened, or alleged
      emissions, discharges, or releases of Hazardous Substances (as defined
      below in this Section 9.06(b) into ambient air, surface water, groundwater
      or land; (y) resulting from or attributable to the manufacture,
      processing, distribution, use, treatment, storage, disposal, transport, or
      handling of Hazardous Substances; or (z) otherwise arising under or
      related to Environmental Laws. The term "Hazardous Substances" shall have
      the meaning given such term in the Comprehensive Environmental, Response,
      Compensation, and Liability Act of 1980.

      (c)  In the event that Closing occurs, except as to matters waived in
writing by the party hereto against which the waiver is sought to be enforced,
(i) Purchaser shall protect, defend, release, indemnify and hold harmless Seller
and the shareholders, directors, officers, employees, and agents of Seller and
the

                                                                   Page 38 of 50

<PAGE>

     heirs, personal representatives, successors, and assigns of any of the
     foregoing (each a "Seller Indemnified Party") from and against any and all
     damages, claims, losses, demands, fines, penalties, judgments (including
     interest), costs, expenses, environmental liabilities, and other
     liabilities, direct, contingent, or otherwise, including consultant and
     attorneys' fees and costs of court ("Damages") which may be alleged against
     any Seller Indemnified Party, arising or accruing with respect to (A) any
     representation or warranty made by Purchaser in or pursuant to this
     Agreement being untrue or incorrect in any material respect; (B) any
     failure by Purchaser to perform any covenant or agreement set forth in this
     Agreement or any other agreement or document executed by it in connection
     with the transactions contemplated hereby; or (C) the Assumed Obligations
     and (ii) Seller shall protect, defend, release, indemnify and hold harmless
     Purchaser and the shareholders, directors, officers, employees, and agents
     of Purchaser and the heirs, personal representatives, successors, and
     assigns of any of the foregoing (each a "Purchaser Indemnified Party") from
     any Damages not to exceed the amount of the Purchase Price which may be
     alleged against any Purchaser Indemnified Party, arising or accruing with
     respect to (A) any representation or warranty made by Seller in or pursuant
     to this Agreement being untrue or incorrect in any material respect; (B)
     any failure by Seller to perform any covenant or agreement set forth in
     this Agreement or any other agreement or document executed by it in
     connection with the transactions contemplated hereby; or (C) the Retained
     Obligations or any other indebtedness, liabilities or obligations of Seller
     not expressly assumed by Purchaser as an Assumed Obligation pursuant to
     Section 9.06. The term "Damages," as used in this Section 9.06, shall not
     include (x) any amount which was taken into account as an adjustment to the
     Purchase Price pursuant to any applicable provision of this Agreement; or
     (y) costs and expenses of either party hereto as described in Section
     10.02.

          (d)  Neither Party shall be entitled to indemnification under this
     Section 9.06 unless the aggregate of all amounts for which indemnity would
     otherwise be due to Seller Indemnified Parties or Purchaser Indemnified
     Parties, as the case may be, exceeds $250,000 in the aggregate, in which
     case Seller Indemnified Parties or Purchaser Indemnified Parties, as the
     case may be, shall be entitled to recover in full with respect to all such
     amounts. This threshold does not apply to (and shall not be satisfied by)
     Title Defect Amounts or Environmental Defects or defaults related to the
     payment of money or other liquidated amounts. NOTWITHSTANDING ANYTHING IN
     THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL PURCHASER OR SELLER BE
     LIABLE TO THE OTHER PARTY FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT,
     CONSEQUEN-TIAL, INCIDENTAL, STATUTORY, REMOTE OR SPECULATIVE DAMAGES.

     9.07 Conspicuousness/Express Negligence. The defense, indemnification and
hold harmless provisions provided for in this Agreement shall be applicable
whether or not the Damages in question arose solely or in part from the active,
passive or concurrent negligence, or other fault (including strict liability),
of any Seller Indemnified Party or Purchaser Indemnified

                                                                   Page 39 of 50

<PAGE>

Party. Purchaser and Seller acknowledge that this statement complies with the
express negligence rule and is conspicuous.

     9.08 Indemnification Procedure. All claims for indemnification under the
provisions of Section 9.06 shall be asserted and resolved pursuant to the
provisions of this Section 9.08. Any person or entity claiming indemnification
hereunder is hereinafter referred to as the "Indemnified Party" and any person
or entity against whom such claims are asserted hereunder is hereinafter
referred to as the "Indemnifying Party." In the event that any Damages are
asserted against or sought to be collected from an Indemnified Party by a third
party, such Indemnified Party shall, with reasonable promptness, provide to the
Indemnifying Party a written notice of claim specifying, in reasonable detail,
the specific nature of and specific basis of the Damages and the estimated
amount of such Damages and including a copy of all papers served with respect to
such claim (if any) and the basis of such claim for indemnification under the
provisions of Section 9.06 (each a "Claim Notice"). Notwithstanding the
preceding sentence, failure of an Indemnified Party to give notice hereunder
shall not release the Indemnifying Party from its obligations under the
provisions of Section 9.06, except to the extent the Indemnifying Party is
actually prejudiced by such failure to give notice; provided, that, the
Indemnifying Party shall not be obligated to defend, indemnify or otherwise hold
harmless an Indemnified Party with respect to a third party claim until a Claim
Notice meeting the foregoing requirements is furnished to the Indemnifying Party
by the party seeking indemnity hereunder. The Indemnifying Party shall have 30
days from the personal delivery or receipt of any Claim Notice (the "Notice
Period") in which to notify the Indemnified Party (a) whether or not it disputes
the liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such Damages; and/or (b) whether or not it desires, at the sole cost
and expense of the Indemnifying Party, to defend the Indemnified Party against
such Damages; provided, however, that any Indemnified Party is hereby authorized
prior to and during the Notice Period to file any motion, answer or other
pleading that it shall deem necessary or appropriate to protect its interests or
those of the Indemnifying Party (and of which it shall have given notice and
opportunity to comment to the Indemnifying Party) and not prejudicial to the
Indemnifying Party. If the Indemnifying Party fails to so notify the Indemnified
Party during the Notice Period, the Indemnifying Party shall be deemed to have
elected to dispute such liability and not to defend against such third party
claim. In the event that the Indemnifying Party notifies the Indemnified Party
within the Notice Period that it (x) does not dispute its liability to indemnify
the Indemnified Party under the provisions of Section 9.06 (or reserves the
right to dispute whether such claim is an indemnified claim under the provisions
of Section 9.06; and (y) elects to defend the Indemnified Party against such
Damages, the Indemnifying Party shall have the right to defend, at its sole cost
and expense, such third party claim by all appropriate proceedings, and with
counsel of its own choosing, which proceedings shall be promptly settled or
prosecuted by them to a final conclusion. If the Indemnified Party desires to
participate in, but not control, any such defense or settlement, it may do so at
its sole cost and expense. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any Damages that the Indemnifying Party elects to contest.
No claim may be settled or otherwise compromised without the prior written
consent of the Indemnifying Party. If the Indemnifying Party elects not to
assume the defense of a third party claim, or elects to assume the defense of a
third party claim, but reserves the right to dispute whether such claim is an
indemnified claim under the provisions of Section 9.06, the determination of
whether the Indemnified Party is entitled to indemnification under the
provisions of Section 9.06 shall be resolved pursuant to arbitration as provided
in Section 10.16.

                                                                   Page 40 of 50

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     9.09  Allocation of Proceeds. Seller shall receive all proceeds from the
sale of Substances physically produced or allocable to the Acquired Assets prior
to the Effective Time. Purchaser shall receive all proceeds from the sale of
Substances physically produced or allocable to the Acquired Assets on or after
the Effective Time.

     9.10  Termination of Confidentiality Agreements. Effective on Closing, the
obligations of Purchaser under the Confidentiality Agreements, insofar and only
insofar as they relate to the Acquired Assets, are terminated.

                                    ARTICLE X
                                  MISCELLANEOUS

     10.01 Notices. All notices required or permitted under this Agreement shall
be effective upon receipt if personally delivered, if mailed by registered or
certified mail, postage prepaid, or if delivered by telegram, telecopy or
facsimile if directed to the relevant party hereto as follows:

     TO SELLER:                              TO PURCHASER:

     DDD Energy, Inc.                        Rising Star Energy, L.L.C.
     50 Briar Hollow Lane, Seventh Floor     3141 Hood Street, Suite 350
     West, Houston, Texas 77027              Dallas, Texas 75219
     Tel.: (713) 881-8940                    Tel.: (214) 522-0742
     Fax: (713) 881-8941                     Fax: (214) 522-0616
     Attn: Matthew S. Ramsey                 Attn: Mike K. Grimm

     With copy to:                           With copy to:

     Fulbright & Jaworski L.L.P.             Jackson Walker L.L.P.
     1301 McKinney, Suite 5100               1100 Louisiana, Suite 4200
     Houston, Texas 77010-3095               Houston, Texas 77002
     Tel.: (713) 651-3705                    Tel.: 713/752-4200
     Fax: (713) 651-5246                     Fax: 713/752-4221
     Attn: Michael P. Irvin                  Attn: Richard L. Burleson

Either party hereto may give written notice to the other, in the aforesaid
manner, of a change in the address or individual to whom delivery shall be made.

     10.02 Expenses. Except as otherwise provided in this Agreement, all fees,
costs and expenses incurred by either party hereto in negotiating this Agreement
or in consummating the transactions contemplated by this Agreement shall be paid
by the party hereto incurring them.

     10.03 Amendment. This Agreement may not be altered or amended, nor any
rights waived, except by a written instrument executed by the party hereto to be
charged with the amendment or waiver. No waiver of any provision of this
Agreement shall be construed as a continuing waiver of the same provision or of
any other provision of this Agreement.

     10.04 Assignment. Except as provided in the following sentence of this
Section 10.04, neither party hereto may assign or delegate any of its rights or
duties hereunder without the prior written consent of the other party hereto.
Purchaser shall have the right, without obtaining the

                                                                   Page 41 of 50

<PAGE>

prior written consent of Seller, to assign the rights of Purchaser hereunder to
an Affiliate (as defined below in this Section 10.04) of Purchaser; provided
that no such assignment shall relieve Purchaser of its obligations or
liabilities under this Agreement. The term "Affiliate" as used herein shall
mean, as to the person or entity specified, any person or entity controlling,
controlled by or under common control with such specified person or entity. The
concept of control, controlling or controlled by as used in the aforesaid
context means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of another, whether through
the ownership of voting securities, by contract or otherwise. No person or
entity shall be deemed an Affiliate of any person or entity by reason of the
exercise or existence of rights, interests or remedies under this Agreement.

     10.05 Conditions. The inclusion in this Agreement of conditions to the
obligations of Seller or Purchaser at Closing shall not, in and of itself, be a
covenant of either party hereto to satisfy the conditions to the obligations of
the other party hereto at Closing.

     10.06 References. References in this Agreement to Schedule, Exhibit,
Article, or Section numbers shall be to Schedules, Exhibits, Articles, or
Sections of this Agreement, unless expressly stated to the contrary. References
in this Agreement to "hereby," "herein," "hereinafter," "hereinabove,"
"hereinbelow," "hereof," "hereunder" and words of similar import shall be to
this Agreement in its entirety and not only to the particular Schedule, Exhibit,
Article, or Section in which such reference appears. References in this
Agreement to "includes" or "including" shall mean "includes, without
limitation," or "including, without limitation," as the case may be. Except as
otherwise indicated, references in this Agreement to statutes, sections, or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending, replacing, succeeding, or supplementing the
statute, section, or regulation referred to. References in this Agreement to
"writing" include printing, typing, lithography, facsimile reproduction, and
other means of reproducing words in a tangible visible form. References in this
Agreement to agreements and other contractual instruments shall be deemed to
include all exhibits and appendices attached thereto and all subsequent
amendments and other modifications to such instruments, but only to the extent
such amendments and other modifications are not prohibited by the terms of this
Agreement. References in this Agreement to persons or entities include their
respective successors and permitted assigns.

     10.07 Articles and Sections. This Agreement, for convenience only, has been
divided into Articles and Sections; and it is understood that the rights and
other legal relations of the parties hereto shall be determined from this
instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.

     10.08 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative.

                                                                   Page 42 of 50

<PAGE>

     10.09 Incorporation of Schedules and Exhibits. The Schedules and Exhibits
attached to this Agreement are incorporated herein and shall be considered a
part of this Agreement for all purposes.

     10.10 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original and which, taken together, shall constitute the same
instrument.

     10.11 Governing Law. Except to the extent the laws of another jurisdiction
mandatorily govern any aspect of the transactions contemplated by this
Agreement, this Agreement and the transactions contemplated by this Agreement
shall be governed and construed in accordance with the internal laws of the
State of Texas, without giving effect to any principles of conflict of laws.

     10.12 Integration. This Agreement and the documentation to be executed and
delivered at Closing constitute the entire understanding between Seller and
Purchaser concerning the subject matter of this Agreement and supersede all
negotiations, discussions, representations, prior agreements and understandings,
whether oral or written, except the Confidentiality Agreement.

     10.13 Parties in Interest. Except as otherwise expressly provided herein,
this Agreement is binding upon and shall inure to the benefit of Seller and
Purchaser and their respective successors, representatives, and permitted
assigns. Except as otherwise expressly provided herein, no other person or
entity is intended to have any benefits, rights or remedies under this Agreement
nor shall any person or entity other than Purchaser and Seller be entitled to
any claim, cause of action, remedy, or right of any kind under this Agreement.

     10.14 Severability. If any provision of this Agreement is found to be
illegal or unenforceable, the other terms of this Agreement shall remain in
effect and this Agreement shall be construed as if the illegal or unenforceable
provision had not been included.

     10.15 Survival. The covenants, agreements, representations, warranties and
indemnities contained in this Agreement shall survive Closing of the
transactions contemplated hereby; provided, however, except as to the
representations and warranties made by Seller in Sections 3.01(a) (other than
the last sentence thereof), (b), (c), (d), and (e) and by Purchaser in Section
3.02, the representations and warranties made by Seller and Purchaser in this
Agreement and indemnities by Seller and Purchaser associated therewith shall
survive Closing for eighteen months only.

     10.16 Arbitration.

          (a) Any and all claims, counterclaims, demands, cause of action,
     disputes, controversies, and other matters in question arising out of or
     relating to this Agreement, any provision hereof, the alleged breach of any
     such provision, or in any way relating to the subject matter of this
     Agreement or the relationship between the parties hereto created by this
     Agreement, involving the parties hereto and/or their respective
     representatives (all of which are referred to herein as "Claims"), even
     though some or all of such Claims allegedly are extra-contractual in
     nature, whether such Claims sound in contract, tort, or otherwise, at law
     or in equity, under state or federal law, whether provided by statute or
     the common law, for damages or any other relief, shall be resolved by
     binding arbitration.

                                                                   Page 43 of 50

<PAGE>

          (b) The arbitration shall be conducted pursuant to the Federal
     Arbitration Act, as such Act is modified by this Agreement. The validity,
     construction, and interpretation of this Agreement to arbitrate, and all
     procedural aspects of the arbitration conducted pursuant to this agreement
     to arbitrate, including the determination of the issues that are subject to
     arbitration (i.e., arbitrability), the scope of the arbitrable issues,
     allegations of "fraud in the inducement" to enter into this Agreement or
     this arbitration provision, allegations of waiver, laches, delay or other
     defenses to arbitrability, and the rules governing the conduct of the
     arbitration (including the time for filing an answer, the time for the
     filing of counterclaims, the times for amending the pleadings, the
     specificity of the pleadings, the extent and scope of discovery, the
     issuance of subpoenas, the times for the designation of experts, whether
     the arbitration is to be stayed pending resolution of related litigation
     involving third parties not bound by this Agreement, the receipt of
     evidence, and the like), shall be decided by the arbitrators. Failing
     agreement upon the rules governing the conduct of the arbitration within 30
     days after appointment of the third arbitrator (as provided below in this
     Section 10.16), the arbitrators shall adopt the Commercial Arbitration
     Rules of the American Arbitration Association, but the arbitration shall
     not be under the supervision of, and no fee shall be paid to, the American
     Arbitration Association. In deciding the substance of any Claims in
     arbitration, except to the extent that it is mandatory that the law of some
     other jurisdiction wherein the Acquired Assets are located shall apply, the
     arbitrators shall refer to the substantive laws of the State of Texas for
     guidance (excluding choice-of-law principles of such laws that might call
     for the application of the law of some other state). Notwithstanding any
     other provision in this Section 10.16 to the contrary, the parties hereto
     expressly agree that the arbitrators shall have absolutely no authority to
     award consequential, statutory, treble, exemplary or punitive damages of
     any type under any circumstances, regardless of whether such damages may be
     available under the law of the State of Texas, the law of any other state,
     or federal law, or under the Federal Arbitration Act, or under the
     Commercial Arbitration Rules of the American Arbitration Association, the
     parties hereto hereby waiving their right, if any, to recover
     consequential, statutory, treble, exemplary or punitive damages in
     connection with any such Claims.

          (c) The arbitration proceeding shall be conducted in Houston, Texas.
     Within 30 days of the notice of initiation of the arbitration procedure,
     Seller shall select one arbitrator and Purchaser shall select one
     arbitrator. Each arbitrator shall be experienced in those aspects of the
     oil and gas industry relevant to the transactions contemplated by this
     Agreement. The two arbitrators shall select a third arbitrator, failing
     agreement on which within 90 days of the original notice, the parties
     hereto (or either of them) shall apply to any United States District Judge
     for the Southern District of Texas, Houston Division, who shall appoint the
     third arbitrator. While the third arbitrator shall be neutral, the two
     arbitrators appointed by the parties hereto are not required to be neutral
     and it shall not be grounds for removal of either of such arbitrators or
     for vacating the award of the arbitrators that either of such arbitrators
     has past or present minimal relationships with the party hereto that
     appointed such arbitrator.

                                                                   Page 44 of 50

<PAGE>

          (d) Each party hereto shall pay the fees of the arbitrator appointed
     by it and all fees of the third arbitrator shall be borne equally by the
     parties hereto.

          (e) To the fullest extent permitted by law, the arbitration proceeding
     and the award of the arbitrators shall be maintained in confidence by the
     parties hereto.

          (f) The award of the arbitrators shall be final and binding on the
     parties of the arbitrators, and judgment thereon may be entered in a court
     of competent jurisdiction.

     10.17 Endeavor Exploration, LLC. Endeavor Exploration, LLC ("Endeavor") has
executed this Agreement solely to evidence the granting of the Purchase Option
as provided in Section 1.03. Reference source not found.. Endeavor agrees to
execute and deliver any and all instruments and take such other actions as may
be necessary or advisable to carry out its obligations under this Agreement or
any other document delivered pursuant hereto.

                  [Remainder of page intentionally left blank.]

                                                                   Page 45 of 50

<PAGE>

     IN WITNESS WHEREOF, Purchaser and Seller have executed and delivered this
Agreement as of the date first set forth above.

                                SELLER:

                                DDD ENERGY, INC.

                                By: /s/ Matthew S. Ramsey
                                    ----------------------------------------
                                Name: Matthew S. Ramsey
                                     ---------------------------------------
                                Title: President
                                       -------------------------------------

                                PURCHASER:

                                RISING STAR ENERGY, L.L.C.

                                By: /s/ Michael K. Grimm
                                    ----------------------------------------
                                Name: Michael K. Grimm
                                     ---------------------------------------
                                Its: President
                                    ----------------------------------------

                                ENDEAVOR EXPLORATION, LLC

                                By: /s/ Matthew S. Ramsey
                                    ----------------------------------------
                                Name: Matthew S. Ramsey
                                     ---------------------------------------
                                Title: President
                                      --------------------------------------

                                                                   Page 46 of 50Prepared by R.R. Donnelley Financial -- Common Stock Purchase Agreement

 Exhibit 10.1 
 
 
 UNITED LEISURE CORPORATION 
  
 COMMON STOCK
PURCHASE AGREEMENT 
  
 July 27, 2002 
  
 

 
TABLE OF CONTENTS 
  
 
	  	  	  	  	 Page
 

	 Section 1.    
 	  	 
Authorization and Sale of Common Stock 
 	  	 1
 
	 1.1  
 	  	 
Authorization of Common Stock 
 	  	 1
 
	 1.2  
 	  	 
Sale and Issuance of the Shares 
 	  	 1
 
	 1.3  
 	  	 
Schedule 13D; Form 3 
 	  	 1
 
	 
	 Section 2.    
 	  	 
Closing Date; Delivery 
 	  	 1
 
	 2.1  
 	  	 
Closing Date 
 	  	 1
 
	 2.2  
 	  	 
Delivery and Payment 
 	  	 1
 
	 2.3  
 	  	 
Delay in Closing 
 	  	 2
 
	 2.4  
 	  	 
Escrow Deposit 
 	  	 2
 
	 
	 Section 3.    
 	  	 
Representations and Warranties of the Company 
 	  	 2
 
	 3.1  
 	  	 
Organization and Standing; Certificate of Incorporation and Bylaws 
 	  	 2
 
	 3.2  
 	  	 
Corporate Power 
 	  	 2
 
	 3.3  
 	  	 
Subsidiaries 
 	  	 3
 
	 3.4  
 	  	 
Capitalization 
 	  	 3
 
	 3.5  
 	  	 
Authorization 
 	  	 3
 
	 3.6  
 	  	 
Proprietary Rights 
 	  	 3
 
	 3.7  
 	  	 
Registration Rights 
 	  	 4
 
	 3.8  
 	  	 
Governmental Consent, etc. 
 	  	 4
 
	 3.9  
 	  	 
Offering 
 	  	 4
 
	 3.10
 	  	 
Permits 
 	  	 4
 
	 3.11
 	  	 
Compliance with Other Instruments 
 	  	 4
 
	 3.12
 	  	 
Company Public Information 
 	  	 5
 
	 3.13
 	  	 
Brokers or Finders 
 	  	 5
 
	 3.14
 	  	 
Use of Proceeds 
 	  	 5
 
	 
	 Section 4.    
 	  	 
Representations and Warranties of the Purchaser 
 	  	 5
 
	 4.1  
 	  	 
Business and Financial Experience 
 	  	 5
 
	 4.2  
 	  	 
Investment Intent; Blue Sky 
 	  	 6
 
	 4.3  
 	  	 
Subscription Agreement 
 	  	 6
 
	 4.4  
 	  	 
Access to Company Information 
 	  	 6
 
	 4.5  
 	  	 
Authorization 
 	  	 6
 
	 4.6  
 	  	 
Brokers or Finders 
 	  	 6
 
	 4.7  
 	  	 
Tax Liability 
 	  	 6
 
	 
	 Section 5.    
 	  	 
Conditions to Closing of the Purchaser 
 	  	 7
 
	 5.1  
 	  	 
Representations and Warranties Correct 
 	  	 7
 
	 5.2  
 	  	 
Covenants 
 	  	 7
 
	 5.3  
 	  	 
Blue Sky 
 	  	 7
 
	 5.4  
 	  	 
Certificate 
 	  	 7
 
	 5.5  
 	  	 
Subscription Agreement 
 	  	 7
 

 
  
 

 i 

  
 
	 5.6  
 	  	 
Compliance Certificate 
 	  	 7
 
	 5.7  
 	  	 
Share Certificates 
 	  	 7
 
	 
	 Section 6.    
 	  	 
Conditions to Closing of the Company 
 	  	 7
 
	 6.1  
 	  	 
Representations and Warranties Correct 
 	  	 7
 
	 6.2  
 	  	 
Covenants 
 	  	 8
 
	 6.3  
 	  	 
Certificate 
 	  	 8
 
	 6.4  
 	  	 
Subscription Agreement 
 	  	 8
 
	 6.5  
 	  	 
Investment 
 	  	 8
 
	 6.6  
 	  	 
Schedule 13D 
 	  	 8
 
	 6.7  
 	  	 
Information Statement 
 	  	 8
 
	 
	 Section 7.    
 	  	 
Miscellaneous
 
 	  	 8
 
	 7.1  
 	  	 
Governing Law 
 	  	 8
 
	 7.2  
 	  	 
Entire Agreement; Amendment 
 	  	 8
 
	 7.3  
 	  	 
Notices, etc. 
 	  	 8
 
	 7.4  
 	  	 
Delays or Omissions 
 	  	 9
 
	 7.5  
 	  	 
Expenses 
 	  	 10
 
	 7.6  
 	  	 
Counterparts 
 	  	 10
 
	 7.7  
 	  	 
Severability 
 	  	 10
 
	 7.8  
 	  	 
Titles and Subtitles 
 	  	 10
 
	 7.9  
 	  	 
Survival of Warranties 
 	  	 10
 
	 7.10
 	  	 
Successors and Assigns 
 	  	 10
 
	 7.11
 	  	 
Further Assurance 
 	  	 10
 
	 
	 Exhibit A
 	  	 Form of Amendment to Certificate of Incorporation
 	  	  
	 
	 Exhibit B
 	  	 Disclosure Schedule
 	  	  
	 
	 Exhibit C
 	  	 Form of Subscription Agreement
 	  	  

 
  
 

 ii 

 UNITED LEISURE CORPORATION 
  
 COMMON STOCK PURCHASE AGREEMENT 
  
 COMMON STOCK PURCHASE
AGREEMENT (“Agreement”), dated as of July 27, 2002, by and among UNITED LEISURE CORPORATION, a Delaware corporation (the “Company”), and DR. ANDREAS OHLE (the “Purchaser”). 
  
 RECITALS 
  
 The Company is offering for sale 50,000,000 shares of its Common Stock, par value $.01 per share (the “Common Stock”), to the Purchaser, and the Purchaser desires to purchase such shares of Common Stock upon the terms and
conditions set forth in this Agreement. 
  
 AGREEMENT 
  
 In consideration of the mutual promises and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

  
 Section 1.    Authorization and Sale of Common Stock. 
  

1.1    Authorization of Common Stock.    The Company has authorized the sale and issuance to the Purchaser of 50,000,000
shares of its Common Stock (the “Shares”), and in connection with the transaction contemplated by this Agreement will increase its authorized capitalization as set forth in the Amendment to Certificate of Incorporation in substantially the
form attached hereto as Exhibit A (the “Certificate”). 
  
 1.2     Sale and Issuance
of the Shares.    Subject to the terms and conditions set forth in this Agreement, the Company will issue and sell to the Purchaser and the Purchaser will buy from the Company an aggregate of 50,000,000 shares of Common Stock
at a per share purchase price of $.50 (the “Per Share Price”). 
  
 1.3    Schedule
13D; Form 3.    The Purchaser shall file a Schedule 13D and a Form 3 as required under the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”). 
  
 Section 2.    Closing Date; Delivery. 
  
 2.1    Closing Date.    The Closing of the purchase and sale of the Shares shall take place at the offices of United Leisure Corporation, 1990 Westwood
Blvd., Los Angeles, CA 90025 at 10:00 a.m., within 30 days of the date of execution of this Agreement, or at such other location, date, and time as may be agreed upon between the Purchaser and the Company (such closing being called a
“Closing” and such date and time being called the “Closing Date”). 
  
 2.2
    Delivery and Payment.    At Closing, the Company will deliver to the Purchaser a certificate or certificates, registered in the Purchaser’s name, representing the number of Shares 

 
to be purchased by the Purchaser at the Closing, against payment of the purchase price therefor, by (i) a certified or official bank check payable to the Company, (ii) by wire transfer per the
Company’s instructions, or (iii) by any combination of (i) and (ii) above. 
  
 2.3    
Delay in Closing.    The Purchaser understands that the Company is a public reporting company subject to the reporting requirements of the Securities Exchange Act. Purchaser also understands that
pursuant to such reporting requirements the Company must: (i) file a preliminary information statement on Schedule 14C (the “Information Statement”) with the Securities and Exchange Commission at least thirty days prior to the Closing
Date, and (ii) distribute copies of the definitive Information Statement at least twenty days prior to the Closing Date. Purchaser understands and agrees that any delay in Closing caused by, indirectly or directly, the Company’s obligation to
file or distribute an Information Statement shall not constitute a breach of this Agreement. The parties agree that the Closing Date shall be extended as required to enable the Company to comply with the above requirements of law. 

 
 2.4    
Escrow Deposit.    The parties acknowledge and agree that the only reason that the Closing under this Agreement is to be delayed as set forth above in Section 2.1 is the obligations to which the
Company is subject under the Securities Exchange Act. All other conditions to Closing have been completed to the satisfaction of both parties. The parties shall place all Closing documents, including the certificates representing the Shares and the
total Per Share Price into escrow with either a mutually satisfactory bank or escrow company to be held until the time required to complete the Information Statement, mail it to the Company’s stockholders and allow the passage of the requisite
20 days. 
  
 2.5    The Company shall grant the purchaser such registration rights with respect
to the Shares as are normal in change of control transactions of this type. Such registration rights shall be evidenced by a Registration Rights Agreement prepared by counsel for the Company. 
  

Section 3.    Representations and Warranties of the Company.    Except as set forth on the Disclosure Schedule (the “Disclosure Schedule”) attached hereto as Exhibit
B, which shall designate the exception by reference to the applicable Section of this Section 3, the Company represents and warrants to the Purchaser that, as of the Closing Date: 
  
 3.1    
Organization and Standing; Certificate of Incorporation and Bylaws.    The Company is a corporation duly organized and validly existing and is in good standing under the laws of the State of
Delaware. The Company has requisite corporate power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted. The Company is presently qualified to do business as
a foreign corporation in California and there is no other jurisdiction in which the failure to be so qualified would have a material adverse effect on the business or financial condition of the Company. The Company has made available to counsel for
the Purchaser copies of its Certificate of Incorporation and Bylaws. Said copies are true, correct and complete and reflect all amendments now in effect. 
  
 3.2    
Corporate Power.    The Company has all requisite legal and corporate power and authority to execute and deliver this Agreement and all documents or instruments contemplated

 

 2 

 
hereby, to sell and issue the Shares hereunder, to issue the Common Stock in accordance with the provisions of the Certificate, and to carry out and perform its obligations under the terms of
this Agreement. 
  
 3.3    
Subsidiaries.    Except as provided in Section 3.3 of the Disclosure Schedule, the Company has no subsidiaries or affiliated companies and does not otherwise own or control, directly or indirectly,
any equity interest in any corporation, association or business entity. 
  
 3.4    
Capitalization.    The authorized capital stock of the Company will, upon the filing of the Certificate, consist of 100,000,000 shares of Common Stock, par value $.01 per share (“Common
Stock”), and 100,000 shares of Preferred Stock, par value $.01 per share. As of the Closing Date, the number of outstanding shares of the Company’s capital stock is as set forth on Section 3.4 of the Disclosure Schedule. Except as set
forth above or in Section 3.4 of the Disclosure Schedule, there are no options, warrants or other rights to purchase or acquire any of the Company’s authorized and unissued capital stock. 
  

3.5    
Authorization.    All corporate action on the part of the Company and its directors necessary for the authorization, execution, delivery and performance of this Agreement and all documents or
instruments contemplated hereby by the Company, the authorization, sale, issuance and delivery of the Shares and the performance of the Company’s obligations under such Agreement has been taken or will be taken prior to the Closing. This
Agreement and all documents or instruments contemplated hereby, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company, enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies. The Shares, when issued in compliance with the provisions of this Agreement,
will be validly issued, fully paid and nonassessable, and will have the rights, preferences, privileges and restrictions described in the Certificate; and the Shares will be free of any liens or encumbrances (assuming the Purchaser takes the Shares
with no notice thereof) other than any liens or encumbrances created by or imposed upon the holders; provided, however, that the Shares may be subject to restrictions on transfer under state or federal securities laws and restrictions set forth in
the Subscription Agreement (as herein defined). The issuance of the Shares is not subject to any preemptive rights or rights of first refusal which have not been complied with or waived. 
  
 3.6    
Proprietary Rights.    The Company has title and ownership of, or full right to use, all patents, trademarks, service marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes necessary for its business as now conducted and, to the Company’s knowledge, without any conflict with or infringement of the rights of others. Other than licenses for off-the-shelf software, or as set forth on Section 3.6
of the Disclosure Schedule, there are no material options, licenses, or agreements of any kind relating to the foregoing, nor is the Company bound by or a party to any options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, proprietary rights and processes of any other person or entity. The Company has not received any communications alleging that the Company has violated or, by
conducting its business as currently conducted, would violate any of the patents, trademarks, service marks,

 

 3 

 
trade names, copyrights or trade proprietary rights of any other person or entity. To the knowledge of the Company, none of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or is subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Company or
that would conflict with the Company’s business as currently conducted. Neither the execution and delivery of this Agreement, nor the carrying on of the Company’s business by the employees of the Company, nor the conduct of the
Company’s business as currently conducted, will, to the Company’s knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any
of such employees is now obligated. The Company does not believe it is or will be necessary to utilize any inventions of any of its employees (or people it currently intends to hire) made prior to their employment by the Company. 

 
 3.7    
Registration Rights.    Except as set forth in this Agreement, the Company is not under any contractual obligation to register under the Securities Act of 1933, as amended (the “Securities
Act”), any of its presently outstanding securities or any of its securities which may hereafter be issued. 
  
 3.8    
Governmental Consent, etc.    No consent, approval order or authorization of or registration, qualification, designation, declaration or filing with any governmental authority on the part of the
Company is required in connection with the valid execution and delivery of this Agreement, or the offer, sale or issuance of the Shares, or the consummation of any other transaction contemplated hereby, except (i) the filing of the Certificate in
the office of the Secretary of State of the State of Delaware prior to the Closing and (ii) the qualification (or taking of such action as may be necessary to secure an exemption from qualification, if available) of the offer and sale of the Shares
and the Conversion Stock under applicable Blue Sky laws, which filings and qualifications, if required, will be accomplished in a timely manner. 
  
 3.9    
Offering.    Subject to the accuracy of the Purchaser’s representations in the Subscription Agreement, the offer, sale and issuance of the Shares constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act. 
  
 3.10    
Permits.    The Company has all franchises, permits, licenses, and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially
and adversely affect the business, properties, or financial condition of the Company, and the Company believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted. To its
knowledge, the Company is not in default in any material respect under any of such franchises, permits, licenses, or other similar authority. 
  
 3.11    
Compliance with Other Instruments.    The Company is not in violation of any term of the Certificate of Incorporation or Bylaws, or in any respect of any term or provision of any mortgage,
indenture, contract, agreement, instrument, judgment or decree, and to its knowledge, is not in violation of any order, statute, rule or regulation applicable to the Company, which violation reasonably would be expected to have a material adverse
effect on the Company’s

 

 4 

 
business. The execution, delivery and performance of and compliance with this Agreement, and the other agreements and instruments contemplated hereby and the consummation of the transactions
contemplated hereby and thereby, and the issuance of the Shares, have not resulted and will not result in any violation of, or conflict with, or constitute a default under any such term or provision, or result in the creation of, any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of the Company; and there is no such violation or default or event which, with the passage of time or giving of notice or both, would constitute a violation or default which
would materially and adversely affect the business of the Company or any of its properties or assets. 
  
 3.12    
Company Public Information.    The Company has heretofore made available to the Purchaser a true and complete copy of each report, schedule, registration statement and definitive proxy statement
filed by it with the Securities and Exchange Commission (the “SEC”) (as any such documents have since the time of their original filing been amended, the “Company Documents”) since January 1, 2000, which are all the documents
(other than preliminary material) that it was required to file with the SEC since such date. As of their respective dates, the Company Documents did not contain any untrue statements of material facts or omit to state material facts required to be
stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the Company Documents complied in all material respects with the applicable
requirements of the Securities Act, and the Securities Exchange Act, and the rules and regulations promulgated under such statutes. The consolidated financial statements contained in the Company Documents, together with the notes thereto, have been
prepared in accordance with generally accepted accounting principles consistently followed throughout the periods indicated (except as may be indicated in the notes thereto, or, in the case of the unaudited financial statements, as permitted by Form
10-QSB), reflect all known liabilities of the Company and it subsidiaries, fixed or contingent, required to be stated therein, and present fairly the financial condition of the Company and its subsidiaries at said dates and the consolidated results
of operations and cash flows of the Company and its subsidiaries for the periods then ended. 
  
 3.13    
Brokers or Finders.    The Company has not and will not incur, directly or indirectly, as a result of any action taken by the Company or any of its officers or directors, any liability for brokerage
or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or the transactions contemplated hereby. 
  
 3.14    
Use of Proceeds.    After payment of all costs and expenses incurred in connection with this Agreement and the transactions related hereto, the net proceeds from the sale of the Common Stock will be
used for general working capital, specifically for the benefit of United Internet Technologies, Inc., a wholly-owned subsidiary of the Company, consistent with the prospective activities described in the Business Plan, dated May 2002, provided the
Purchaser, as determined by the Board of Directors in operating the business of the Company after the Closing. 
  
 
Section 4.    Representations and Warranties of the Purchaser.    The Purchaser hereby represents and warrants to the Company as follows: 
 

 5 

 4.1    
Business and Financial Experience.    The Purchaser is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act. The Purchaser’s
knowledge and experience in financial and business matters are such that the Purchaser is capable of evaluating the merits and risks of the Purchaser’s purchase of the Shares as contemplated by this Agreement. The Purchaser’s financial
situation is such that it can afford to bear the economic risk of holding the Shares for an indefinite period of time and suffer complete loss of the Purchaser’s investment. 
  
 4.2    
Investment Intent; Blue Sky.    The Purchaser is acquiring the Shares for investment for the Purchaser’s own account, not as a nominee or agent, and not with a view to or for resale in
connection with any distribution thereof. The Purchaser understands that the issuance of the Shares has not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the bona fide nature of the Purchaser’s investment intent and the accuracy of the Purchaser’s representations as expressed herein. The Purchaser’s address set
forth in Section 7.3(a) of this Agreement represents the Purchaser’s true and correct place of domicile, upon which the Company may rely for the purpose of complying with applicable Blue Sky laws. 
  
 4.3    
Subscription Agreement.    The representations, warranties and covenants made by the Purchaser in the Subscription Agreement and Letter of Investment Intent, of even date herewith in the form
attached hereto as Exhibit C (the “Subscription Agreement”) are true, complete and accurate as of the Closing Date. 
  
 4.4    
Access to Company Information.    The Purchaser has had an opportunity to discuss the Company’s business, management and financial affairs with the Company’s management. The Purchaser
has also had an opportunity to ask questions of officers of the Company. The Purchaser understands that such discussions, as well as any written information issued by the Company, were intended to describe the material aspects of the Company’s
business and prospects, but were not a thorough or exhaustive description. 
  
 4.5    
Authorization.    All action on the part of the Purchaser, the Purchaser’s partners, Board of Directors, members and stockholders, as applicable, necessary for the authorization, execution,
delivery and performance of this Agreement and all agreements or instruments contemplated hereby, by the Purchaser, the purchase of and payment for the Shares, if applicable, and the performance of all of the Purchaser’s obligations under this
Agreement has been taken or will be taken prior to the Closing. This Agreement, when executed and delivered by the Purchaser, shall constitute valid and binding obligations of the Purchaser, enforceable in accordance with their terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies. 
  
 4.6    
Brokers or Finders.    The Company has not and will not incur, directly or indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or finders’ fees or
agents’ commissions or any similar charges in connection with this Agreement or the transactions contemplated hereby. 
 

 6 

 4.7    
Tax Liability.    The Purchaser has reviewed with the Purchaser’s own tax advisors the tax consequences of the transactions contemplated by this Agreement. The Purchaser relies solely on
such advisors and not on any statements or representations of the Company or any of the Company’s agents with respect to such tax consequences. The Purchaser understands that the Purchaser, and not the Company, shall be responsible for the
Purchaser’s own tax liability that may arise as a result of the transactions contemplated by this Agreement. 
  
 Section 5.    
Conditions to Closing of the Purchaser.    The Purchaser’s obligation to purchase the Shares is, unless waived in writing by the Purchaser, subject to the fulfillment as of the Closing Date of
the following conditions: 
  
 5.1    
Representations and Warranties Correct.    The representations and warranties made by the Company in Section 3 hereof shall be true and correct in all material respects as of the date of the
Closing. 
  
 5.2    
Covenants.    All covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company on or prior to the Closing Date shall have been performed or
complied with in all material respects. 
  
 5.3    
Blue Sky.    The Company shall have obtained all necessary Blue Sky law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer and sale
of the Shares. 
  
 5.4    
Certificate.    The Certificate shall have been properly filed in the office of the Secretary of State of the State of Delaware. 
  
 5.5    
Subscription Agreement.    The Purchaser shall have executed and delivered the Subscription Agreement and the Company shall have accepted the Subscription Agreement with respect to the purchase
of the Shares as contemplated by this Agreement. 
  
 5.6    
Compliance Certificate.    The Company shall have delivered to the Purchaser a certificate of the Company executed by the Chairman of the Board, President and Chief Executive Officer of the
Company, dated as of the date of the Closing and certifying to the fulfillment of the conditions specified in Sections 5.1 and 5.2 of this Agreement. 
  
 5.7    
Share Certificates.    The Company shall have issued to the Purchaser certificates representing the Shares in accordance with this Agreement. 
  

Section 6.    
Conditions to Closing of the Company.    The Company’s obligation to sell and issue the Shares is, unless waived in writing by the Company, subject to the fulfillment as of the Closing Date of
the following conditions: 
  
 6.1    
Representations and Warranties Correct.    The representations and warranties made by the Purchaser in Section 4 hereof shall be true and correct in all material respects as of the Closing Date.

 

 7 

 6.2    
Covenants.    All covenants, agreements, and conditions contained in this Agreement to be performed or complied with by the Purchaser on or prior to the Closing Date shall have been performed or
complied with in all material respects. 
  
 6.3    
Certificate.    The Certificate shall have been filed in the office of the Secretary of State of the State of Delaware. 
  
 6.4    
Subscription Agreement.    The Purchaser shall have executed and delivered the Subscription Agreement and the Company shall have accepted the Subscription Agreement with respect to the purchase of
the Shares as contemplated by this Agreement. 
  
 6.5    
Investment.    The Purchaser shall have tendered, in the aggregate, at the Closing, consideration in the amount of $25,000,000. 
  
 6.6    
Schedule 13D.    The Purchaser shall have prepared for filing with the SEC a Schedule 13D and a Form 3 as required by the Securities Exchange Act, which Schedule and Form shall be filed
immediately following the Closing, in form and substance satisfactory to both the Purchaser and the Company. 
  
 6.7    
Information Statement.    The Company shall have filed a preliminary Information Statement with the SEC at least 30 days prior to the Closing Date and a definitive Information Statement will be
filed with the SEC and distributed to the Company’s stockholders at least twenty days prior to the Closing Date. 
  
 
Section 7.    Miscellaneous. 
  
 7.1    
Governing Law.    This Agreement shall be governed in all respects by the internal laws of the State of Delaware without regard to conflict of laws provisions. 
  
 7.2    
Entire Agreement; Amendment.    This Agreement and the other documents delivered pursuant hereto, including the Exhibits hereto, constitute the full and entire understanding and agreement among the
parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. Except as expressly
provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is
sought. 
  
 7.3    
Notices, etc.    All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered
by facsimile transmission, by hand or by messenger or overnight express, addressed: 
  
 (a)  if to the Purchaser, to: 
 

 8 

  
 Dr. Andreas Ohle 
 Holsteiner Chaussee 183 A- 2245 Hamburg 
 Telefon 040 / 57 00 33 50 Telefax 040 / 57 00 33 51 
  
 or at such other address as the Purchaser shall have furnished to
the Company, with a copy to: 
  
 (b)  if to the Company, to: 
  
 United Leisure Corporation 
 1990 Westwood Blvd., PH 
 Los Angeles, CA 90025 
 Attention: Mr. Brian Shuster 
 Fax:    310-441-0900 

 
 or at such other address as the Company shall have furnished to the Purchaser, with a copy to: 
  

Baker, Johnston & Wilson LLP 
 2501
20th Place South, Suite 250 
 Birmingham, AL 35223-1747 
 Attn: J. Brooke Johnston, Jr., Esq. 
 Fax:    205-263-9051 
  
 Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when received if delivered personally, if sent by facsimile, the first business day after the date
of confirmation that the facsimile has been successfully transmitted to the facsimile number for the party notified, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained
receptacle for the deposit of the United States mail, addressed and mailed as aforesaid. 
  
 7.4    
Delays or Omissions.    Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach or default of another party under this
Agreement, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by
law or otherwise afforded to any party, shall be cumulative and not alternative. 
  
 7.5    
Expenses.    Each of the Parties to this Agreement shall bear its own expenses in connection with the negotiation and consummation of the terms hereof. 
 

 9 

 7.6    
Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which together shall constitute one instrument. 
  
 7.7    
Severability.    In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in
full force and effect without said provision, which shall be replaced with an enforceable provision closest in intent and economic effect as the severed provision; provided that no such severability shall be effective if it materially changes the
economic benefit of this Agreement to any party. 
  
 7.8    
Titles and Subtitles.    The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 

 
 7.9    
Survival of Warranties.    The warranties, representations and covenants of the Company and the Purchaser contained in or made pursuant to this Agreement or any other agreement or instrument
contemplated hereby shall survive execution and delivery of this Agreement and the Closing for a period of two years and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Purchaser or the
Company. 
  
 7.10    
Successors and Assigns.    Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, permitted assigns, heirs,
executors and administrators of the parties hereto. 
  
 7.11    
Further Assurances.    Each party hereto agrees to do all acts and things, and to make, execute and delivery such written instruments, as shall from time to time be reasonably required to carry out
the terms and provisions of this Agreement. 
 

 10 

  
 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written. 
  
 PURCHASER 
  
 
	 
	 /s/    ANDREAS OHLE        

	 Dr. Andreas Ohle
 

 
  
 Address of Purchaser: 
  
 Dr. Andreas Ohle 
 Holsteiner Chaussee 183 A- 2245 Hamburg 
 Telefon 040 / 57 00 33 50 Fax 040 / 57 00 33 51 
  
 UNITED LEISURE CORPORATION 
  
 
	 
	 By:
 	 	 /s/    BRIAN
SHUSTER        
 

	  	 	 Brian Shuster
 Chairman of the
Board, President
 and Chief Executive Officer
 

 
 

 11 

 Exhibit A 
  
 CERTIFICATE OF AMENDMENT 
 OF 
 CERTIFICATE
OF INCORPORATION 
 OF 
 UNITED LEISURE CORPORATION

  
 United Leisure Corporation, a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: 
  
 FIRST: That by a Unanimous Written Consent
of the Board of Directors of the Corporation, resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said Corporation, declaring said amendment to be advisable and providing that the written consent
of the stockholders to such amendment should be obtained. The resolution setting forth the proposed amendment is as follows: 
  
 RESOLVED, that the Certificate of Incorporation of this Corporation be amended by amending the Article thereof numbered “FOURTH” by substituting a new Article FOURTH as set forth
below: 
  
 FOURTH: The total number of shares of stock which the Corporation shall have authority to
issue is One Hundred Million One Hundred Thousand (100,100,000) shares, of which One Hundred Million (100,000,000) shares shall be Common Stock, par value One Cent ($.01) per share, and One Hundred Thousand (100,000) shares shall be Preferred Stock,
par value One Cent ($.01) per share (the “Preferred Stock). The Board of Directors is authorized, subject to any limitations prescribed by law, to provide for the issuance of shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Delaware (such certificate being hereinafter referred to as the “Preferred Stock Designation”), to establish from time to time the number of shares to be included in each such series, and to
fix the designation, powers, preferences, and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the
number of shares thereof outstanding) by the affirmative vote of the holders of a majority of the Common Stock, without a vote of the holders of Preferred Stock, or of any series thereof, unless a vote of any such holders is required pursuant to the
terms of any Preferred Stock Designation. 
  
 SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the written consent of the stockholders of the Corporation was obtained in accordance with Section 228 of the General Corporation Law of the State of Delaware, by which consent the necessary number of shares as required by statute
consented to the amendment, and written notice of action taken by such stockholders’ consent has been given as provided in Section 228 of the General Corporation Law. 
  
 THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. 

  
 IN WITNESS WHEREOF, said Corporation has caused this certificate to be signed by
Brian Shuster, an authorized officer, this 27 day of July, 2002. 
  
 
	 
	 By:
 	 	 /s/    BRIAN SHUSTER
 
	 	
	

	  	 	 Brian Shuster
Chairman of the Board, President 
and Chief Executive Officer
 

 
 

 2 

  
 Exhibit B 
  
 Disclosure Schedule related to Common Stock 
 Purchase Agreement, dated as of July
27, 2002, 
 between United Leisure Corporation 
 and the
Purchaser thereunder. 
  
 Set forth below are the exceptions to the representations and warranties set forth in
Section 3 of the Common Stock Purchase Agreement, dated as of July 27, 2002, between United Leisure Corporation and Dr. Andreas Ohle (the “Common Stock Purchase Agreement”). Each section of this Disclosure Schedule designates the exception
by relation to the applicable Section in the Common Stock Purchase Agreement to which it relates. 
  
 Schedule 3.3 

 
 The only operating subsidiary of the Company is United Internet Technologies, Inc., a Delaware corporation, all of the issued
and outstanding shares of which are owned by the Company. 
  
 Schedule 3.4 
  

 
 
	 At June 30, 2002, the issued and outstanding capital stock and outstanding securities convertible into shares of Common Stock of the Company
(i.e., warrants, options, etc.) was as follows:
 
	 
	 Common Stock Outstanding
 	  	 20,511,375 shares
 
	 
	 Outstanding Options to purchase shares of Common Stock of United Leisure Corporation at June 30, 2002
 	  	 4,100,950 shares
 
	 
	 Outstanding Common Stock Warrants to purchase shares of Common Stock of United Leisure Corporation at June 30, 2002 (publicly held)
 	  	 3,297,649 shares
 
	 
	 Outstanding options to purchase shares of Common Stock Of United Internet Technologies, Inc. at June 30, 2002
 	  	 3,786,500
 
	 
	 There are no issued and outstanding shares of Preferred Stock of the Company.
 	  	  

 
  
 Schedule 3.6 
  
 Light Sensors technology 
 AT&T TTS ENGINE 

 Exhibit C 
  
 UNITED LEISURE CORPORATION 
  
 SUBSCRIPTION AGREEMENT 
 and 
  
 LETTER OF INVESTMENT INTENT 
  
 United Leisure Corporation 
 1990 Westwood Boulevard 
 Los Angeles, California 90025 
  
 Gentlemen: 
  
 In connection with a private placement by United Leisure Corporation, a Delaware corporation (the “Company”), of 50,000,000
shares of its Common Stock, par value $.01 per share, for a purchase price of $.50 per share, to Dr. Andreas Ohle, which is an “accredited investor” as that term is defined in the Securities Act of 1933 (the “Purchaser”), the
Purchaser hereby tenders this subscription for the purchase of 50,000,000 shares of the Common Stock of the Company. By execution below, the Purchaser acknowledges that the Company is relying upon the accuracy and completeness of the representations
contained herein in complying with its obligations under applicable securities laws. 
  
 1.    Subscription Commitment.    The Purchaser hereby subscribes for the purchase of Fifty Million (50,000,000) shares of the Common Stock, par value $.01 per share, of the Company (the
“Securities”) for a purchase price of $.50 per share, and as full payment therefor, agrees to pay the sum of Twenty-Five Million Dollars ($25,000,000) concurrently with the execution hereof. All dollar amounts referred to herein refer to
U.S. Dollars. 
  
 2.    Representations and Warranties.    In order to
induce the Company to accept this subscription, the Purchaser hereby represents and warrants to, and covenants with, the Company as follows: 
  
 (a)  The Purchaser has been given reasonable opportunity to ask questions of, and receive answers from, representatives of the Company concerning the terms and conditions of the offering of
the Securities and to obtain any additional information, to the extent available; 
  
 (b)  The Purchaser
believes that an investment in the securities is suitable for the Purchaser based upon the Purchaser’s investment objectives and financial needs. The Purchaser has adequate means for providing for the Purchaser’s current financial needs
and personal contingencies; has no need for liquidity in this investment; at the present time, can afford a complete loss of such investment; and does not have an overall commitment to investments which are not readily marketable that is
disproportionate to the Purchaser’s net worth, and the Purchaser’s investment in the Securities will not cause such overall commitment to become excessive; 
  
 (c)  The Purchaser, in reaching a decision to subscribe, has such knowledge and experience in financial and business matters that the Purchaser is capable of
reading and interpreting financial statements and evaluating the merits and risk of an investment in the Securities and has the net worth to undertake such risks; 
  
 (d) The Purchaser was not offered or sold the Securities, directly or indirectly, by means of any form of general advertising or general solicitation, including, but not
limited to, the following: (1) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar medium of or broadcast over television or radio; or (2) to the knowledge of the undersigned, any seminar or
meeting whose attendees had been invited by any general solicitation or general advertising; 

  
 (e)  The Purchaser has obtained, to the extent the Purchaser deems
necessary, the Purchaser’s own personal professional advice with respect to the risks inherent in the investment in the securities, and the suitability of an investment in the Securities in light of the Purchaser’s financial condition and
investment needs; 
  
 (f)  The Purchaser recognizes that the Securities as an investment involves a high
degree of risk; 
  
 (g)  The representations made by the Purchaser herein are true, complete and correct in
all material respects as of the date hereof; the Purchaser understands that the Company’s determination that the exemption from the registration provisions of the Securities Act of 1933, as amended (the “Act”), which is based upon
non-public offerings and applicable to the offer and sale of the Securities, is based, in part, upon the representations, warranties, and agreements made by the Purchaser herein; 
  
 (h)  The Purchaser realizes that the purchase of the Securities is a long-term investment; the purchaser of the Securities must bear the economic risk of
investment for an indefinite period of time because the Securities of the Company have not been registered under the Securities Act of 1933 or under the securities laws of any state and, therefore, the Securities cannot be resold unless they are
subsequently registered under said laws or exemptions from such registrations are available; and the transferability of the Securities is restricted and (A) requires conformity with the restrictions contained in paragraph 3 below and (B) legends
will be placed on the instruments representing the Securities referring to the applicable restrictions on transferability; and 
  
 (i)  Stop transfer instructions will be placed with the transfer agent for the Securities, and a legend may be placed on any instrument or certificate representing the Securities substantially to the following effect:

  
 THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN THE ACT AND REGULATION D UNDER THE ACT. AS SUCH, THE PURCHASE OF THIS SECURITY WAS NECESSARILY WITH THE INTENT OF INVESTMENT AND NOT WITH A VIEW
FOR DISTRIBUTION. THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE UNLAWFUL UNLESS IT IS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. FURTHERMORE, IT IS UNLAWFUL TO CONSUMMATE A
SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, WITHOUT THE OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT THE PROPOSED TRANSFER OR SALE DOES NOT AFFECT THE EXEMPTIONS RELIED UPON BY THE COMPANY IN ORIGINALLY DISTRIBUTING THE SECURITY
AND THAT REGISTRATION IS NOT REQUIRED. 
  
 3.    Restricted Nature of the
Securities.    The Purchaser has been advised and understands that the Securities have not been registered under the Securities Act of 1933 or applicable state securities laws and that the securities are being offered and
sold pursuant to exemptions from such laws. The Purchaser represents and warrants that the Securities are being purchased for the Purchaser’s own account and for investment purposes only, and without the intention of reselling or redistributing
the same; the Purchaser has made no agreement with others regarding any of the Securities (other than Stockholder Lock-Up Agreements entered into contemporaneously herewith) with certain stockholders and the Company; and the Purchaser’s
financial condition is such that it is not likely that it will be necessary to dispose of any of such Securities in the foreseeable future. The Purchaser is aware that, in the view of the Securities and Exchange Commission, a purchase of such
securities with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market value, or any change in the condition of the Company, or in connection with a contemplated liquidation settlement of any loan
obtained for the acquisition of such securities and for which such securities were pledged, would represent an intent inconsistent with the representations set forth above. The Purchaser further represents and agrees that if, contrary to the
foregoing intentions, the Purchaser should later desire to dispose of or transfer any of such securities in any manner, the Purchaser shall not do so unless and until said Securities shall have first been registered under the Act and all

 

 2 

 applicable securities laws; or an exemption from registration under both federal and state securities laws is available. 

 
 4.    Additional Representations.    The undersigned, if other than an
individual, makes the following additional representations: 
  
 (a)  The Purchaser was not
organized for the specific purpose of acquiring the Securities; and 
  
 (b)  This
Subscription Agreement and Letter of Investment Intent has been duly authorized by all necessary action on the part of the Purchaser, has been duly executed by an authorized officer or representative of the Purchaser, and is a legal, valid and
binding obligation of the Purchaser enforceable in accordance with its terms. 
  
 5.    Sophistication.    The Purchaser further represents and warrants that he has such knowledge and experience in financial and business matters so as to be capable of evaluating the
merits and risks of an investment in the Securities and protecting the Purchaser’s own interests in this transaction, and does not desire to utilize the services of any other person in connection with evaluating such merits and risks.

  
 6.    Use of Proceeds.    Both the Purchaser and the Company agree
and acknowledge that the purchase price paid by the Purchaser hereunder shall be used only in connection with the business, operations or for the benefit of United Internet Technologies, Inc., a wholly-owned subsidiary of the Company. 

 
 7.    Counterparts.    This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document. 
  
 IN WITNESS WHEREOF, the undersigned do hereby execute this Subscription Agreement and Letter of Investment Intent this 27th day of July, 2002. 
  
 
	  	 	 /s/    ANDREAS OHLE
 
	
	
	

	  	 	 Dr. Andreas Ohle
 
	 
	 By:
 	 	  
	 	
	

	 
	 Its:
 	 	  
	 	
	

	 
	 Address of Purchaser:
 
	 
	 Dr. Andreas Ohle
 Holsteiner Chaussee 183 A-2245 Hamburg

Telefon 040 / 57 00 33 50 Fax 040 / 57 00 33 51
 

 
  
 ACCEPTANCE 
  

This Subscription Agreement is accepted as of the      day of July, 2002. 
  
 
	 UNITED LEISURE CORPORATION
 
	 
	 By:
 	 	 /s/    BRIAN SHUSTER
 
	 	
	

	 
	 Its:
 	 	 CEO
 
	 	
	

 
 

 3 

 UNITED LEISURE CORPORATION 
  
 SUBSCRIPTION AGREEMENT 
 and 
  
 LETTER OF INVESTMENT INTENT 
  
 United Leisure Corporation

 1990 Westwood Boulevard 
 Los Angeles, California 90025 
  
 Gentlemen: 
  
 In connection
with a private placement by United Leisure Corporation, a Delaware corporation (the “Company”), of 50,000,000 shares of its Common Stock, par value $.01 per share, for a purchase price of $.50 per share, to Dr. Andreas Ohle, which is an
“accredited investor” as that term is defined in the Securities Act of 1933 (the “Purchaser”), the Purchaser hereby tenders this subscription for the purchase of 50,000,000 shares of the Common Stock of the Company. By execution
below, the Purchaser acknowledges that the Company is relying upon the accuracy and completeness of the representations contained herein in complying with its obligations under applicable securities laws. 
  
 1.    Subscription Commitment.    The Purchaser hereby subscribes for the purchase of Fifty
Million (50,000,000) shares of the Common Stock, par value $.01 per share, of the Company (the “Securities”) for a purchase price of $.50 per share, and as full payment therefor, agrees to pay the sum of Twenty-Five Million Dollars
($25,000,000) concurrently with the execution hereof. All dollar amounts referred to herein refer to U.S. Dollars. 
  
 2.    Representations and Warranties.    In order to induce the Company to accept this subscription, the Purchaser hereby represents and warrants to, and covenants with, the Company as
follows: 
  
 (a)  The Purchaser has been given reasonable opportunity to ask questions of, and receive
answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and to obtain any additional information, to the extent available; 
  
 (b)  The Purchaser believes that an investment in the securities is suitable for the Purchaser based upon the Purchaser’s investment objectives and financial
needs. The Purchaser has adequate means for providing for the Purchaser’s current financial needs and personal contingencies; has no need for liquidity in this investment; at the present time, can afford a complete loss of such investment; and
does not have an overall commitment to investments which are not readily marketable that is disproportionate to the Purchaser’s net worth, and the Purchaser’s investment in the Securities will not cause such overall commitment to become
excessive; 
  
 (c)  The Purchaser, in reaching a decision to subscribe, has such knowledge and experience
in financial and business matters that the Purchaser is capable of reading and interpreting financial statements and evaluating the merits and risk of an investment in the Securities and has the net worth to undertake such risks; 

 
 (d)  The Purchaser was not offered or sold the Securities, directly or indirectly, by means of any form of general
advertising or general solicitation, including, but not limited to, the following: (1) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar medium of or broadcast over television or radio; or (2)
to the knowledge of the undersigned, any seminar or meeting whose attendees had been invited by any general solicitation or general advertising; 

 (e) The Purchaser has obtained, to the extent the Purchaser deems necessary, the Purchaser’s own personal
professional advice with respect to the risks inherent in the investment in the securities, and the suitability of an investment in the Securities in light of the Purchaser’s financial condition and investment needs; 
  
 (f) The Purchaser recognizes that the Securities as an investment involves a high degree of risk; 
  
 (g) The representations made by the Purchaser herein are true, complete and correct in all material respects as of the date hereof; the
Purchaser understands that the Company’s determination that the exemption from the registration provisions of the Securities Act of 1933, as amended (the “Act”), which is based upon non-public offerings and applicable to the offer and
sale of the Securities, is based, in part, upon the representations, warranties, and agreements made by the Purchaser herein; 
  
 (h) The Purchaser realizes that the purchase of the Securities is a long-term investment; the purchaser of the Securities must bear the economic risk of investment for an indefinite period of time because the Securities of the
Company have not been registered under the Securities Act of 1933 or under the securities laws of any state and, therefore, the Securities cannot be resold unless they are subsequently registered under said laws or exemptions from such registrations
are available; and the transferability of the Securities is restricted and (A) requires conformity with the restrictions contained in paragraph 3 below and (B) legends will be placed on the instruments representing the Securities referring to the
applicable restrictions on transferability; and 
  
 (i) Stop transfer instructions will be placed with the transfer
agent for the Securities, and a legend may be placed on any instrument or certificate representing the Securities substantially to the following effect: 
  
 THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION
PROVIDED IN THE ACT AND REGULATION D UNDER THE ACT. AS SUCH, THE PURCHASE OF THIS SECURITY WAS NECESSARILY WITH THE INTENT OF INVESTMENT AND NOT WITH A VIEW FOR DISTRIBUTION. THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN WILL BE UNLAWFUL UNLESS IT IS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. FURTHERMORE, IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, WITHOUT THE OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT THE PROPOSED TRANSFER OR SALE DOES NOT AFFECT THE EXEMPTIONS RELIED UPON BY THE COMPANY IN ORIGINALLY DISTRIBUTING THE SECURITY AND THAT REGISTRATION IS NOT REQUIRED. 
  
 3.    Restricted Nature of the Securities.    The Purchaser has been advised and
understands that the Securities have not been registered under the Securities Act of 1933 or applicable state securities laws and that the securities are being offered and sold pursuant to exemptions from such laws. The Purchaser represents and
warrants that the Securities are being purchased for the Purchaser’s own account and for investment purposes only, and without the intention of reselling or redistributing the same; the Purchaser has made no agreement with others regarding any
of the Securities (other than Stockholder Lock-Up Agreements entered into contemporaneously herewith) with certain stockholders and the Company; and the Purchaser’s financial condition is such that it is not likely that it will be necessary to
dispose of any of such Securities in the foreseeable future. The Purchaser is aware that, in the view of the Securities and Exchange Commission, a purchase of such securities with an intent to resell by reason of any foreseeable specific contingency
or anticipated change in market value, or any change in the condition of the Company, or in connection with a contemplated liquidation settlement of any loan obtained for the acquisition of such securities and for which such securities were pledged,
would represent an intent inconsistent with the representations set forth above. The Purchaser further represents and agrees that if, contrary to the foregoing intentions, the Purchaser should later desire to dispose of or transfer any of such
securities in any manner, the Purchaser shall not do so unless and until said Securities shall have first been registered under the Act and all 
 

 2 

 applicable securities laws; or an exemption from registration under both federal and state securities laws is available. 

 
 4.    Additional Representations.    The undersigned, if other than an
individual, makes the following additional representations: 
  
 (a) The Purchaser was not organized for the specific
purpose of acquiring the Securities; and 
  
 (b) This Subscription Agreement and Letter of Investment Intent has been
duly authorized by all necessary action on the part of the Purchaser, has been duly executed by an authorized officer or representative of the Purchaser, and is a legal, valid and binding obligation of the Purchaser enforceable in accordance with
its terms. 
  
 5.    Sophistication.    The Purchaser further
represents and warrants that he has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of an investment in the Securities and protecting the Purchaser’s own interests in this
transaction, and does not desire to utilize the services of any other person in connection with evaluating such merits and risks. 
  
 6.    Use of Proceeds.    Both the Purchaser and the Company agree and acknowledge that the purchase price paid by the Purchaser hereunder shall be used only in connection with the
business, operations or for the benefit of United Internet Technologies, Inc., a wholly-owned subsidiary of the Company. 
  
 7.    Counterparts.    This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same
document. 
  
 IN WITNESS WHEREOF, the undersigned do hereby execute this Subscription Agreement and Letter of
Investment Intent this 27th day of July, 2002. 
  
 
	  	 	 /s/  ANDREAS OHLE
 
	
	
	

	 Dr. Andreas Ohle
 
	 
	 By:
 	 	  
	 	
	

	 
	 Its:
 	 	  
	 	
	

	 
	 Address of Purchaser:
 
	 
	 Dr. Andreas Ohle
 Holsteiner Chaussee 183 A- 2245 Hamburg

Telefon 040 / 57 00 33 50 Fax 040 / 57 00 33 51
 

 
  
 ACCEPTANCE 
  

This Subscription Agreement is accepted as of the 27th day of July, 2002. 
  
 
	 UNITED LEISURE CORPORATION
 
	 
	 By:
 	 	 /s/  BRIAN SHUSTER
 
	 	
	

	 
	 Its:
 	 	 CEO
 
	 	
	

 
 

 3

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