Document:

ex_10-2.htm

    Exhibit
      10.2

     

     

     

    
      PURCHASE
        AND SALE AGREEMENT

      

      BY
        AND BETWEEN

       

      RAVEN
        RESOURCES, LLC and

      SHENANDOAH
        PETROLEUM CORPORATION AS SELLER

       

      AND

       

      LEGACY
        RESERVES OPERATING LP

      AS
        BUYER

       

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      TABLE
        OF
        CONTENTS

      

                                                                                                                                                                                                         
        PAGE

      
        
          
            	
                    1.

                  	
                    SALE
                      AND PURCHASE OF THE ASSETS.

                  	
                    1

                  
	
                    1.1

                  	
                    Acquired
                      Assets

                  	
                    1

                  
	
                    1.2

                  	
                    Assumed
                      Liabilities

                  	
                    2

                  
	
                    2.

                  	
                    PURCHASE
                      PRICE.

                  	
                    3

                  
	
                    2.1

                  	
                    Purchase
                      Price

                  	
                    3

                  
	
                    2.2

                  	
                    Deposit.

                  	
                    3

                  
	
                    2.3

                  	
                    Adjustments
                      to the Base Purchase Price

                  	
                    3

                  
	
                    2.4

                  	
                    Allocation

                  	
                    4

                  
	
                    3.

                  	
                    CLOSING.

                  	
                    4

                  
	
                    3.1

                  	
                    Closing

                  	
                    4

                  
	
                    3.2

                  	
                    Delivery
                      by Seller

                  	
                    4

                  
	
                    3.3

                  	
                    Delivery
                      by Buyer

                  	
                    5

                  
	
                    3.4

                  	
                    Further
                      Cooperation

                  	
                    5

                  
	
                    4.

                  	
                    ACCOUNTING
                      ADJUSTMENTS.

                  	
                    5

                  
	
                    4.1

                  	
                    Closing
                      Adjustments

                  	
                    5

                  
	
                    4.2

                  	
                    Strapping
                      and Gauging.

                  	
                    6

                  
	
                    4.3

                  	
                    Taxes

                  	
                    6

                  
	
                    4.4

                  	
                    Post-Closing
                      Adjustments

                  	
                    7

                  
	
                    4.5

                  	
                    Suspended
                      Funds

                  	
                    7

                  
	
                    4.6

                  	
                    Audit
                      Adjustments

                  	
                    7

                  
	
                    4.7

                  	
                    Cooperation

                  	
                    8

                  
	
                    5.

                  	
                    DUE
                      DILIGENCE: TITLE MATTERS.

                  	
                    8

                  
	
                    5.1

                  	
                    General
                      Access

                  	
                    8

                  
	
                    5.2

                  	
                    Defensible
                      Title

                  	
                    8

                  
	
                    5.3

                  	
                    Defect
                      Letters.

                  	
                    10

                  
	
                    5.4

                  	
                    Effect
                      of Title Defect

                  	
                    11

                  
	
                    5.5

                  	
                    Preferential
                      Rights and Consents.

                  	
                    13

                  
	
                    6.

                  	
                    ENVIRONMENTAL
                      ASSESSMENT.

                  	
                    14

                  
	
                    6.1

                  	
                    Physical
                      Condition of the Assets

                  	
                    14

                  
	
                    6.2

                  	
                    Inspection
                      and Testing.

                  	
                    15

                  
	
                    6.3

                  	
                    Notice
                      of Adverse Environmental Conditions

                  	
                    16

                  
	
                    6.4

                  	
                    Rights
                      and Remedies for Adverse Environmental Conditions.

                  	
                    16

                  
	
                    6.5

                  	
                    Remediation
                      by Seller

                  	
                    18

                  
	
                    7.

                  	
                    REPRESENTATIONS
                      AND WARRANTIES OF SELLER.

                  	
                    19

                  
	
                    7.1

                  	
                    Seller’s
                      Representations and Warranties

                  	
                    19

                  
	
                    7.2

                  	
                    Scope
                      of Representations of Seller.

                  	
                    21

                  
	
                    8.

                  	
                    REPRESENTATIONS
                      AND WARRANTIES OF BUYER.

                  	
                    22

                  
	
                    8.1

                  	
                    Buyer’s
                      Representations and Warranties

                  	
                    22

                  
	
                    9.

                  	
                    CERTAIN
                      AGREEMENTS OF SELLER

                  	
                    23

                  
	
                    9.1

                  	
                    Maintenance
                      of Assets

                  	
                    23

                  
	
                    9.2

                  	
                    Records

                  	
                    24

                  
	
                    9.3

                  	
                    Audit
                      Rights.

                  	
                    24

                  

          

           

          
            
              
              

            

            
              Page
                i

              
                

              

            

            
              
              

            

          

           

          
            	
                    10.

                  	
                    CERTAIN
                      AGREEMENTS OF BUYER

                  	
                    25

                  
	
                    10.1

                  	
                    Plugging
                      Obligation

                  	
                    25

                  
	
                    10.2

                  	
                    Plugging
                      Bond

                  	
                    25

                  
	
                    10.3

                  	
                    Seller’s
                      Logos

                  	
                    25

                  
	
                    10.4

                  	
                    Like-Kind
                      Exchanges

                  	
                    25

                  
	
                    10.5

                  	
                    Charitable
                      Assignment.

                  	
                    25

                  
	
                    11.

                  	
                    CONDITIONS
                      PRECEDENT TO OBLIGATIONS OF BUYER

                  	
                    26

                  
	
                    11.1

                  	
                    No
                      Litigation

                  	
                    26

                  
	
                    11.2

                  	
                    Representations
                      and Warranties

                  	
                    26

                  
	
                    12.

                  	
                    CONDITIONS
                      PRECEDENT TO THE OBLIGATIONS OF SELLER

                  	
                    26

                  
	
                    12.1

                  	
                    No
                      Litigation

                  	
                    26

                  
	
                    12.2

                  	
                    Representations
                      and Warranties

                  	
                    26

                  
	
                    13.

                  	
                    TERMINATION.

                  	
                    26

                  
	
                    13.1

                  	
                    Causes
                      of Termination

                  	
                    26

                  
	
                    13.2

                  	
                    Effect
                      of Termination.

                  	
                    27

                  
	
                    14.

                  	
                    INDEMNIFICATION.

                  	
                    28

                  
	
                    14.1

                  	
                    Indemnification
                      by Seller

                  	
                    28

                  
	
                    14.2

                  	
                    Indemnification
                      by Buyer

                  	
                    30

                  
	
                    14.3

                  	
                    Physical
                      Inspection

                  	
                    30

                  
	
                    14.4

                  	
                    Notification

                  	
                    30

                  
	
                    15.

                  	
                    MISCELLANEOUS.

                  	
                    31

                  
	
                    15.1

                  	
                    Casualty
                      Loss.

                  	
                    31

                  
	
                    15.2

                  	
                    Confidentiality.

                  	
                    32

                  
	
                    15.3

                  	
                    Notices

                  	
                    32

                  
	
                    15.4

                  	
                    Press
                      Releases and Public Announcements

                  	
                    33

                  
	
                    15.5

                  	
                    Compliance
                      with Express Negligence Test

                  	
                    33

                  
	
                    15.6

                  	
                    Governing
                      Law

                  	
                    33

                  
	
                    15.7

                  	
                    Exhibits

                  	
                    33

                  
	
                    15.8

                  	
                    Fees,
                      Expenses, Taxes and Recording.

                  	
                    34

                  
	
                    15.9

                  	
                    Assignment

                  	
                    34

                  
	
                    15.10

                  	
                    Entire
                      Agreement

                  	
                    34

                  
	
                    15.11

                  	
                    Severability

                  	
                    34

                  
	
                    15.12

                  	
                    Captions

                  	
                    35

                  
	
                    15.13

                  	
                    Time
                      of the Essence

                  	
                    35

                  
	
                    15.14

                  	
                    Counterpart
                      Execution,

                  	
                    35

                  
	
                    15.15

                  	
                    Excluded
                      Property Interest.

                  	
                    35

                  

          

        

      

    

     

    
      
        
        

      

      
        Page
          ii

        
          

        

      

      
        
        

      

    

     

    
      EXHIBITS

    

    
      
        
          
            	
                    1.1(A)

                  	
                    Oil
                      and Gas Leases and Land

                  
	
                    2.4

                  	
                    Allocation

                  
	
                    3.2(A)

                  	
                    Form
                      of Assignment and Bill of Sale

                  
	
                    7.1(E)

                  	
                    AFE’s

                  
	
                    7.1(G)

                  	
                    Pending
                      Litigation

                  
	
                    7.1(K)

                  	
                    Material
                      Agreements

                  
	
                    7.1(L)

                  	
                    Consents
                      and Preferential Purchase Rights

                  
	
                    7.1(M)

                  	
                    Gas
                      Imbalances

                  

          

        

         

        
          
            
            

          

          
            Page
              iii

            
              

            

          

          
            
            

          

        

         

        
          PURCHASE
            AND SALE AGREEMENT

           

          This
            Purchase and Sale Agreement (this “Agreement”) is entered into this third
            day of May, 2007, but effective as of 7:00 a.m. (Central Time) on May
            1, 2007
            (the “Effective Time”), by and between Raven Resources, LLC, an Oklahoma limited
            liability company, Shenandoah Petroleum Corporation, a Texas corporation
            (collectively, “Seller”) and Legacy Reserves Operating LP, a Delaware limited
            partnership (“Buyer”), a wholly-owned subsidiary of Legacy Reserves LP, a
            Delaware limited partnership. Buyer and Seller are collectively referred
            to
            herein as the “Parties” and sometimes individually referred to as a
“Party.”

           

          RECITALS:

           

          
            	
                    A.

                  	
                    Seller
                      desires to sell to Buyer certain oil, gas and mineral properties
                      and other
                      assets on the terms and conditions set forth in this
                      Agreement.

                  

          

           

          
            	
                    B.

                  	
                    Buyer
                      desires to purchase from Seller such oil, gas and mineral properties
                      and
                      other assets on the terms and conditions set forth in this
                      Agreement.

                  

          

           

          
            	
                    C.

                  	
                    It
                      is the intent of the Parties that pursuant to this Agreement
                      (i) Raven
                      Resources, LLC will sell to Buyer all of its interest in the
                      Cochran and
                      Garza County, Texas, properties described on Exhibit 1.1(A)
                      attached hereto, and (ii) Shenandoah Petroleum Corporation
                      will sell to
                      Buyer all of its interest in the Cochran County, Texas, properties
                      described on Exhibit 1.1(A) attached hereto, but that Shenandoah
                      Petroleum Corporation will not sell to Buyer pursuant to this
                      Agreement
                      any of its interest in the Garza County, Texas, properties
                      described on
                      Exhibit 1.1(A) attached hereto, all as more particularly set forth
                      in Section 15.15 of this Agreement.

                  

          

           

          WITNESSETH:

           

          In
            consideration of the mutual agreements contained in this Agreement, Buyer
            and
            Seller agree as follows:

           

          1.           SALE
            AND PURCHASE OF THE ASSETS.

           

          1.1           Acquired
            Assets

           

          Subject
            to the terms and conditions of this Agreement, Seller agrees to sell,
            convey and
            deliver to Buyer and Buyer agrees to purchase, acquire and assume from
            Seller
            the following (collectively, the “Assets”):

           

          
            	
                    (A)

                  	
                    All
                      of Seller’s right, title, interest and obligations in, to and under the
                      oil and gas leases described in Exhibit 1.1(A) attached hereto (the
                      “Leases”), covering the land described in Exhibit 1.1(A) (the
                      “Land”), whether or not such interests or land are accurately or
                      completely described on Exhibit 1.1(A), and all of Seller’s oil and
                      gas leasehold or other interests in the Lands, together with
                      all the
                      property and rights incident thereto, including without limitation
                      Seller’s rights and obligations in, to and under all operating agreements;
                      pooling, communitization and unitization agreements; farmout
                      agreements;
                      joint venture agreements; product purchase and sale contracts;
                      transportation, processing, treatment or gathering agreements;
                      leases;
                      permits (the “Permits”); rights-of-way (the “Rights-of-Way”); surface use
                      agreements; surface leases; easements (the “Easements”); licenses;
                      options; declarations; orders; contracts; and instruments in
                      any way
                      relating to the Leases;

                  

          

           

          
            
              
              

            

            
              Page
                1

              
                

              

            

            
              
              

            

          

           

          
            	
                    (B)

                  	
                    All
                      of Seller’s right, title and interest in and to the wells (“Wells”)
                      situated on or used in conjunction with operations on the Leases
                      and Land
                      or on land pooled, communitized or unitized therewith (“Pooled Land”),
                      together with all of Seller’s interests in and to all of the personal
                      property (excluding motor vehicles), fixtures, improvements
                      and other
                      property, whether real, personal or mixed, now or as of the
                      Effective Time
                      on, appurtenant to or used or obtained by Seller in connection
                      with the
                      Leases, Land, Pooled Land or Wells or with the production,
                      injection,
                      treatment, sale or disposal of hydrocarbons and all other substances
                      produced therefrom or attributable thereto (collectively, the
                      “Equipment”), including, without limitation, producing and non-producing
                      wells, injection wells, disposal wells, water supply wells,
                      well
                      equipment, casing, tubing, tanks, generators, boilers, buildings,
                      pumps,
                      motors, machinery, pipelines, gathering systems, power lines,
                      telephone
                      and telegraph lines, roads, field processing plants, field
                      offices and
                      other furnishings related thereto, equipment leases, trailers,
                      inventory
                      in storage, storage yards, and all other improvements or appurtenances
                      thereunto belonging;

                  

          

           

          
            	
                    (C)

                  	
                    Deleted;

                  

          

           

          
            	
                    (D)

                  	
                    All
                      of the oil and gas and associated hydrocarbons (“Oil and Gas”) in and
                      under or otherwise attributable to the Leases, Land, and Pooled
                      Land or
                      produced from the Wells;

                  

          

           

          
            	
                    (E)

                  	
                    To
                      the extent assignable, all governmental permits, licenses and
                      authorizations, as well as any applications for the same, related
                      to the
                      Leases, Land, Pooled Land and Wells or the use thereof;
                      and

                  

          

           

          
            	
                    (F)

                  	
                    All
                      of the files, records, and data of Seller relating to the items
                      described
                      in subsections (A), (B), (C), (D) and (E) above (the “Records”),
                      including, without limitation, lease records, well records,
                      and division
                      order records; well files and prospect files; title records
                      (including
                      abstracts of title, title opinions and memoranda, and title
                      curative
                      documents related to the Leases and Wells); contracts and contract
                      files;
                      correspondence; computer data files; micro-fiche data files;
                      geological,
                      geophysical and seismic records, interpretations, data, maps
                      and
                      information, production records, electric logs, core data,
                      pressure data,
                      decline curves and graphical production curves; and accounting
                      records, to
                      the extent only that the Records can be transferred without
                      violation of
                      any third-party restriction and are not protected by Seller’s
                      attorney-client privilege.  The Records do not include any
                      appraisals or other evaluation materials related to Seller’s preparation
                      of the Assets for sale hereunder, any reservoir and/or development
                      studies
                      prepared by or on behalf of Seller, nor any of Seller’s income tax returns
                      or files related thereto.

                  

          

           

          1.2           Assumed
            Liabilities

           

          .  On
            the Closing Date, Buyer shall assume and agree to timely and fully pay,
            perform
            and otherwise discharge, without recourse to Seller or its affiliates,
            all of
            the liabilities and obligations of Seller and its affiliates, predecessors,
            successors, assigns or 

           

          
            
              
              

            

            
              Page
                2

              
                

              

            

            
              
              

            

          

           

          representatives,
            direct or indirect, known or unknown, asserted or unasserted, absolute
            or
            contingent, accrued or unaccrued, which relate, directly or indirectly,
            to the
            Assets, whether such liabilities and obligations accrue before, on or
            after the
            Effective Time (collectively, the “Assumed
            Liabilities”).  Notwithstanding the foregoing, Assumed Liabilities
            shall not include, and there is excepted, reserved and excluded from
            such
            liabilities assumed by Buyer, the liabilities and obligations for which
            Seller
            indemnifies Buyer pursuant to Section 14.1.

           

          2.           PURCHASE
            PRICE.

           

          2.1           Purchase
            Price

           

          .  The
            purchase price for the Assets is TWELVE MILLION NINE HUNDRED THIRTY-TWO
            THOUSAND
            THREE HUNDRED AND NO/100 DOLLARS ($12,932,300.00) (the “Base Purchase Price”),
            subject to the adjustments provided for herein.

           

          2.2           Deposit.

           

          Within
            three (3) days of the execution of this Agreement, Buyer shall deliver
            Seller,
            in cash by wire-transfer in immediately available funds, a Deposit in
            an amount
            equal to SIX HUNDRED FORTY-SIX THOUSAND SIX HUNDRED FIFTEEN AND NO/100
            DOLLARS
            ($646,615.00)  (five percent [5%] of the Base Purchase Price) (the
“Deposit”).  The Deposit shall be distributed to Seller and credited
            to the Base Purchase Price at Closing, or if this Agreement is terminated,
            shall
            be distributed or retained pursuant to Article 13, provided however that
            any interest on the Deposit shall be retained by Seller.  In the event
            the Deposit is not delivered to Seller as prescribed, this Agreement
            shall be
            terminated.

          

          2.3           Adjustments
            to the Base Purchase Price

           

          .  At
            Closing, appropriate adjustments to the Base Purchase Price shall be
            made as
            follows in accordance with Section 4.1 (as adjusted, the “Purchase
            Price”):

           

          
            	
                    (A)

                  	
                    The
                      Base Purchase Price shall be adjusted upward
                      by:

                  

          

           

          
            	
                    (i)

                  	
                    any
                      amount determined to be due Seller pursuant to Section
                      4.2;

                  

          

           

          
            	
                    (ii)

                  	
                    Property
                      Taxes and Severance Taxes related to the Assets paid by Seller
                      for the
                      period following the Effective Time as determined pursuant
                      to Section
                      4.3;

                  

          

           

          
            	
                    (iii)

                  	
                    an
                      amount equal to the costs, expenses and other expenditures
                      (whether
                      capitalized or expensed) paid by Seller in accordance with
                      this Agreement
                      that are attributable to the Assets for the period from and
                      after the
                      Effective Time;

                  

          

           

          
            	
                    (iv)

                  	
                    a
                      monthly rate of $400, prorated if necessary, per active Well,
                      as provided
                      in the applicable operating agreement, for operation and maintenance
                      expenses (excluding workover costs, plugging and abandoning
                      costs, and
                      major costs) incurred by Seller while operating the Assets
                      from and after
                      the Effective Time;

                  

          

           

          
            	
                    (v)

                  	
                    an
                      amount equal to the amount of proceeds derived from the sale
                      of Oil and
                      Gas, net of royalties and severance taxes paid by Buyer, actually
                      received
                      by Buyer and directly attributable to the Wells which are,
                      in accordance
                      with generally accepted accounting procedures, attributable
                      to the period
                      of time prior to the Effective
                      Time;

                  

          

           

          
            	
                    (vi)

                  	
                    any
                      other amount agreed upon in writing by Seller and
                      Buyer.

                  

          

           

          
            
              
              

            

            
              Page
                3

              
                

              

            

            
              
              

            

          

           

          
            	
                    (B)

                  	
                    The
                      Base Purchase Price shall be adjusted downward
                      by:

                  

          

           

          
            	
                    (i)

                  	
                    an
                      amount equal to the amount of proceeds derived from the sale
                      of Oil and
                      Gas, net of royalties and severance taxes paid by Seller, actually
                      received by Seller and directly attributable to the Wells which
                      are, in
                      accordance with generally accepted accounting procedures, attributable
                      to
                      the period of time from and after the Effective
                      Time;

                  

          

           

          
            	
                    (ii)

                  	
                    an
                      amount equal to all expenditures, liabilities and costs relating
                      to the
                      Assets (other than Taxes related to the Assets) that are unpaid
                      as of the
                      Closing Date and assessed for or attributable to periods of
                      time or the
                      ownership of production prior to the Effective Time regardless
                      how such
                      expenditures, liabilities and costs are calculated provided
                      that to the
                      extent the actual amounts cannot be determined prior to the
                      agreement of
                      Buyer and Seller with respect to the Closing Adjustment Statement,
                      a
                      reasonable estimate of such expenditures, liabilities and costs
                      shall be
                      used (and to such extent Buyer shall assume the liability and
                      responsibility for payment
                      therefor);

                  

          

           

          
            	
                    (iii)

                  	
                    all
                      amounts related to Title Defects as determined pursuant to
                      Section 5.4,
                      consents and preferential rights as determined pursuant to
                      Section 5.6,
                      Adverse Environmental Conditions as determined pursuant to
                      Section 6.4,
                      Exclusion Adjustments as determined pursuant to Sections 5.6
                      or 6.4, and
                      Casualty Losses as determined pursuant to Section
                      15.1;

                  

          

           

          
            	
                    (iv)

                  	
                    Property
                      Taxes and Severance Taxes related to the Assets to be paid
                      by Seller for
                      the period prior to the Effective Time as determined pursuant
                      to Section
                      4.3; and

                  

          

           

          
            	
                    (v)

                  	
                    any
                      other amount agreed upon in writing by Seller and
                      Buyer.

                  

          

           

          
            	
                    (C)

                  	
                    Seller
                      shall have the right to collect any receivable, refund or other
                      amounts
                      associated with periods prior to the Effective Time.  To the
                      extent that Buyer collects any such receivable, refund or other
                      amounts,
                      then Buyer shall promptly remit any such amounts to
                      Seller.

                  

          

           

          2.4           Allocation

           

          .  The
            Base Purchase Price shall be allocated to the Assets as set forth in
            Exhibit
            2.4.  The Parties agree that the values allocated to various portions
            of the Assets, which are set forth on Exhibit 2.4 (singularly with respect
            to
            each item, the “Allocated Value” and collectively, the “Allocated Values”),
            shall be binding on Seller and Buyer and shall be used only for the purposes
            of
            adjusting the Base Purchase Price pursuant to Sections 4.3 (relating
            to Taxes),
            5.4 (relating to Title Defects), 15.1 (relating to Casualty Losses),
            and 6
            (relating to Adverse Environmental Conditions), and are not intended
            as a
            measure of value for any other purpose.

           

          3.           CLOSING.

           

          3.1           Closing

           

          .  The
            sale and purchase of the Assets (“Closing”) shall be held on or before May 31,
            2007 (“Closing Date”).  The Closing will take place at the offices of
            Legacy Reserves LP, in Midland, Texas.

           

          3.2           Delivery
            by Seller

           

          .  At
            Closing, Seller shall deliver to Buyer:

           

          
            
              
              

            

            
              Page
                4

              
                

              

            

            
              
              

            

          

           

          
            	
                    (A)

                  	
                    A
                      separate Assignment and Bill of Sale executed by each Seller,
                      substantially in the form attached hereto as Exhibit 3.2(A),
                      effecting the sale, transfer, conveyance and assignment of
                      the Assets,
                      with (i) a special warranty of the real property title by, through
                      and under such Seller but not otherwise, and (ii) with all personal
                      property and fixtures conveyed “AS IS, WHERE IS,” with no warranties
                      whatsoever, express, implied or
                      statutory.

                  

          

           

          
            	
                    (B)

                  	
                    Any
                      governmental forms required to effect transfer in accordance
                      with
                      applicable regulations;

                  

          

           

          
            	
                    (C)

                  	
                    Letters
                      in lieu of transfer orders instructing purchasers of production
                      to pay to
                      Buyer the proceeds of sales of Oil and Gas from the
                      Assets;

                  

          

           

          
            	
                    (D)

                  	
                    Executed
                      change of operator forms as required by applicable governmental
                      regulation;

                  

          

           

          
            	
                    (E)

                  	
                    Releases
                      of the mortgages in favor of any bank that may be currently
                      encumbering
                      the Assets;

                  

          

           

          
            	
                    (F)

                  	
                    The
                      Closing Adjustment Statement;

                  

          

           

          
            	
                    (G)

                  	
                    A
                      Non-Foreign Affidavit of each
                      Seller;

                  

          

           

          
            	
                    (H)

                  	
                    Possession
                      of the Records and all other
                      Assets.

                  

          

           

          
            	
                    (I)

                  	
                    Letters
                      of resignation as operator of these Assets, as appropriate,
                      along with
                      ballot forms to the partners as directed by the operating
                      agreements.

                  

          

           

          3.3           Delivery
            by Buyer

           

          .  At
            Closing, Buyer shall deliver to Seller or Seller’s designee the Purchase Price
            set forth in the Closing Adjustment Statement by wire transfer in immediately
            available funds, less the Deposit and interest earned on the
            Deposit.  Buyer shall also deliver evidence that it has provided
            replacement instruments for each guaranty, bond, letter of credit or
            similar
            contingent obligation given by Seller as required by law or the provisions
            of
            any Lease or other agreement along with the appropriate instruments necessary
            to
            receive immediate approval as Operator of these Assets, as appropriate.
            Buyer
            shall execute and deliver the Assignment and Bill of Sale, Closing Adjustment
            Statement and other closing documents as necessary or appropriate.

           

          3.4           Further
            Cooperation

           

          .  At
            the Closing and thereafter as may be necessary, Seller and Buyer shall
            execute
            and deliver such other instruments and documents and take such other
            actions as
            may be reasonably necessary to evidence and effectuate the transactions
            contemplated by this Agreement.

           

          4.           ACCOUNTING
            ADJUSTMENTS.

           

          4.1           Closing
            Adjustments

           

          .  With
            respect to matters that can be determined as of the Closing, Seller shall
            prepare, in accordance with the provisions of this Article 4, a statement
            (the
“Closing Adjustment Statement”) with relevant supporting information setting
            forth each adjustment to the Base Purchase Price submitted by
            Seller.  Seller shall submit the Closing Adjustment Statement to
            Buyer, together with all records or data supporting the calculation of
            amounts

           

          
            
              
              

            

            
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                5

              
                

              

            

            
              
              

            

          

           

          presented
            on the Closing Adjustment Statement, no later than three (3) business
            days prior
            to the scheduled Closing Date.  Prior to the Closing, Buyer and Seller
            shall review the adjustments proposed by Seller in the Closing Adjustment
            Statement.  Agreed adjustments shall be taken into account in
            computing any adjustments to be made to the Base Purchase Price at the
            Closing.  When available, actual figures will be used for the
            adjustments at Closing.  To the extent actual figures are not
            available, estimates shall be used subject to final adjustments as described
            in
            Section 4.4 below.

           

          4.2           Strapping
            and Gauging.

           

          Seller
            will cause the Oil and Gas in the storage facilities located on, or utilized
            in
            connection with, the Leases to be measured, gauged or strapped as of
            the
            Effective Time.  Seller will cause the production meter charts (or if
            such do not exist, the sales meter charts) on the pipelines transporting
            Oil and
            Gas from the Leases to be read as of such time.  The Oil and Gas in
            such storage facilities above six inches or through the meters on the
            pipelines
            as of the Effective Time shall belong to Seller and shall be valued based
            on the
            price actually paid for Oil and Gas produced from the Assets for the
            month prior
            to the Effective Time, and the Oil and Gas placed in such storage facilities
            after the Effective Time and production upstream of the aforesaid meters
            shall
            belong to Buyer and become part of the Assets.  Buyer or Buyer’s
            representative shall have the option to witness the gauging by
            Seller.  In the event Buyer or Buyer’s representative exercising the
            option to witness the gauging by Seller, Buyer agrees that the waiver
            and
            release provisions set forth in Section 5.1(A) of this Agreement shall
            apply
            thereto.

           

          4.3           Taxes

           

          .

          

          
            	
                    (A)

                  	
                    Property
                      Taxes.  All ad valorem taxes, real property taxes, personal
                      property taxes and similar obligations assessed on the Assets
                      (“Property
                      Taxes”) shall be apportioned as of the Effective Time between Buyer
                      and
                      Seller.  Buyer shall file or cause to be filed all required
                      reports and returns incident to Property Taxes which are due
                      on or after
                      the Closing, and shall pay or cause to be paid to the taxing
                      authorities
                      all such taxes reflected on such reports and returns.  The
                      Post-Closing Adjustment Statement shall settle all liability
                      for Property
                      Taxes, using estimates based on previous assessments to the
                      extent current
                      assessments are not known.

                  

          

           

          
            	
                    (B)

                  	
                    Sales
                      Taxes, Filing Fees, Etc. The Base Purchase Price is net of any sales
                      taxes or other transfer taxes.  Buyer shall be liable for any
                      sales tax or other transfer tax as well as any applicable conveyance,
                      transfer and recording fees, and real estate transfer stamp
                      or taxes
                      imposed upon the sale pursuant to this Agreement.  If Seller is
                      required by applicable state law to report and pay these taxes
                      or fees,
                      Buyer shall promptly reimburse Seller in full payment of the
                      invoice.

                  

          

           

          
            	
                    (C)

                  	
                    Severance
                      Taxes.  All production, severance or excise taxes,
                      conservation fees and other similar such taxes or fees (other
                      than income
                      taxes) payable on a current basis with respect to Oil and Gas
                      produced and
                      sold from the Assets (“Severance Taxes”) shall be borne by Seller to the
                      extent the production on which such taxes are based occurs
                      during Seller’s
                      ownership prior to the Effective Time and shall be borne by
                      Buyer to the
                      extent such production occurs after the Effective
                      Time.

                  

          

           

          
            
              
              

            

            
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                6

              
                

              

            

            
              
              

            

          

           

          4.4           Post-Closing
            Adjustments

           

          
            	
                    (A)

                  	
                    A
                      post-closing adjustment statement (the “Post-Closing Adjustment
                      Statement”) based on the actual income and expenses shall be prepared
                      and
                      delivered by Seller to Buyer within ninety (90) days after
                      the Closing,
                      proposing further adjustments to the calculation of the Purchase
                      Price
                      based on the information then available.  Seller or Buyer, as
                      the case may be, shall be given access to and shall be entitled
                      to review
                      and audit the other Party’s records pertaining to the computation of
                      amounts claimed in such Post-Closing Adjustment
                      Statement.

                  

          

           

          
            	
                    (B)

                  	
                    Within
                      thirty (30) days after receipt of the Post-Closing Adjustment
                      Statement,
                      Buyer shall deliver to Seller a written statement describing
                      in reasonable
                      detail its objections (if any) to any amounts or items set
                      forth on the
                      Post-Closing Adjustment Statement.  If Buyer does not raise
                      objections within such period, then the Post-Closing Adjustment
                      Statement
                      shall become final and binding upon the Parties at the end
                      of such
                      period.

                  

          

           

          
            	
                    (C)

                  	
                    If
                      Buyer raises objections, the Parties shall negotiate in good
                      faith to
                      resolve any such objections.  If the Parties are unable to
                      resolve any disputed item within thirty (30) days after Buyer’s receipt of
                      the Post-Closing Adjustment Statement, any disputed accounting
                      item shall
                      be submitted to a nationally recognized independent accounting
                      firm
                      mutually agreeable to the Parties who shall be instructed to
                      resolve such
                      disputed item within thirty (30) days.  The resolution of
                      disputes by the accounting firm so selected shall be set forth
                      in writing
                      and shall be conclusive, binding and non-appealable upon the
                      Parties with
                      respect to the accounting matters submitted and the Post-Closing
                      Adjustment Statement shall become final and binding upon the
                      Parties on
                      the date of such resolution.  The fees and expenses of such
                      accounting firm shall be paid one-half by Buyer and one-half
                      by
                      Seller.

                  

          

           

          
            	
                    (D)

                  	
                    After
                      the Post-Closing Adjustment Statement has become final and
                      binding on the
                      Parties, Seller or Buyer, as the case may be, shall pay to
                      the other such
                      sums as are due to settle accounts between the Parties due
                      to differences
                      between the estimated Purchase Price paid pursuant to the Closing
                      Adjustment Statement and the actual Purchase Price set forth
                      on the
                      Post-Closing Adjustment Statement.

                  

          

           

          4.5           Suspended
            Funds

           

          .  At
            the Closing, Seller shall provide to Buyer a listing showing all proceeds
            from
            production attributable to the Leases which are currently held in suspense
            and
            shall transfer to Buyer all of those suspended proceeds.  Buyer shall
            be responsible for proper distribution of all the suspended proceeds,
            to the
            extent turned over to it by Seller, to the parties lawfully entitled
            to them and
            any claims related thereto, and Buyer hereby agrees to indemnify, defend
            and
            hold harmless Seller from and against any and all claims, liabilities,
            losses,
            costs and expenses arising out of or relating to those suspended proceeds
            and
            any claims related thereto after the Effective Date.  Seller shall
            remain responsible and liable for any claims, liabilities, losses, costs
            and
            expenses arising out of or relating to those suspended proceeds and any
            claims
            related thereto through the Closing Date.

           

          4.6           Audit
            Adjustments

           

          .  Seller
            retains all rights to adjustments resulting from any operating agreement
            and
            other audit claims asserted against third party operators on transactions
            occurring prior to the Effective Time (which includes Buyer, if
            applicable).  Any credit received by Buyer pertaining to such an audit
            claim shall be paid to Seller within thirty (30) days after
            receipt.

           

          
            
              
              

            

            
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                7

              
                

              

            

            
              
              

            

          

           

          4.7           Cooperation

           

          .  Each
            Party covenants and agrees to promptly inform the other with respect
            to amounts
            owing under Sections 4.4 and 4.6 hereof.

           

          5.           DUE
            DILIGENCE: TITLE MATTERS.

           

          5.1           General
            Access

           

          .

          

          
            	
                    (A)

                  	
                    During
                      reasonable business hours, Seller agrees to grant Buyer physical
                      access to
                      the Leases and Wells to allow Buyer to conduct, at Buyer’s sole risk and
                      expense, on-site inspections and environmental assessments
                      of the Leases
                      and Wells. Buyer agrees not to enter onto the Leases or contact
                      field
                      employees without Seller’s prior knowledge. In connection with any such
                      on-site inspections, Buyer agrees not to interfere with the
                      normal
                      operation of the Leases and Wells and agrees to comply with
                      all
                      requirements of the operators of the Wells.  If Buyer or its
                      agents prepares an environmental assessment of any Lease or
                      Well, Buyer
                      agrees to keep such assessment confidential and to furnish
                      copies thereof
                      to Seller.  In connection with granting such access, Buyer
                      represents that it is adequately insured and waives, releases
                      and agrees
                      to indemnify the Seller against all claims for injury to, or
                      death of,
                      persons or for damage to operations or property arising in
                      any way from
                      the access afforded to Buyer hereunder or the activities of
                      Buyer.  This waiver, release and indemnity by Buyer shall
                      survive termination of this
                      Agreement.

                  

          

          

          
            	
                    (B)

                  	
                    Upon
                      the execution of this Agreement, Seller shall give Buyer and
                      its
                      representatives, employees, consultants, independent contractors,
                      attorneys and other advisors reasonable access to the Records
                      during
                      regular office hours for any and all inspections and
                      copying.

                  

          

          

          5.2           Defensible
            Title

           

          .  As
            used herein the term Defensible Title shall mean:

           

          
            	
                    (A)

                  	
                    As
                      to the Assets, that record title or operating rights of Seller
                      which:

                  

          

           

          
            	
                    (i)

                  	
                    entitles
                      Seller to receive not less than the interests shown in Exhibit
                      2.4 as the
                      “Net Revenue Interest” of all Oil and Gas produced, saved and marketed
                      from or allocated to the formations in the associated Wells
                      which are
                      producing as of the date of this Agreement or which have otherwise
                      been
                      given Allocated Value, all without reduction, suspension or
                      termination
                      except as stated in such Exhibit or otherwise permitted as
                      Permitted
                      Encumbrances; and

                  

          

           

          
            	
                    (ii)

                  	
                    obligates
                      Seller to bear a percentage of the costs and expenses relating
                      to the
                      maintenance and development of, and operations relating to,
                      the producing
                      formations in each associated Well not greater than the “Working Interest”
                      shown in Exhibit 2.4 (without a proportionate increase in the
                      Net Revenue
                      Interest), all without increase except as stated in such Exhibit
                      or
                      otherwise permitted as Permitted Encumbrances;
                      and

                  

          

           

          
            
              
              

            

            
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                8

              
                

              

            

            
              
              

            

          

           

          
            	
                    (B)

                  	
                    That
                      title of Seller to the Assets is free and clear of liens, encumbrances
                      and
                      defects that materially and adversely affect the ownership,
                      operation or
                      use of the Assets, except for Permitted
                      Encumbrances.

                  

          

           

          
            	
                    (C)

                  	
                    As
                      used herein, the term “Permitted Encumbrances” shall mean any one or more
                      of the following:

                  

          

           

          
            	
                    (1)

                  	
                    The
                      provisions of the Leases and any lessor’s royalties, overriding royalties,
                      net profits interests, carried interests, production payments,
                      reversionary interests and similar burdens reflected in the
                      public records
                      or in the Records, if the net cumulative effect of the burdens
                      does not
                      operate to reduce the Net Revenue Interest of Seller below
                      the interests
                      described in Exhibit 2.4;

                  

          

           

          
            	
                    (2)

                  	
                    Any
                      increase in lessor’s royalty occasioned by the repeal or suspension of any
                      governmental regulation providing for the reduction of royalty
                      for wells
                      producing below defined threshold
                      amounts;

                  

          

           

          
            	
                    (3)

                  	
                    Division
                      orders and production sales contracts terminable without penalty
                      upon no
                      more than ninety (90) days notice to the
                      purchaser;

                  

          

           

          
            	
                    (4)

                  	
                    Preferential
                      Rights and required third party consents to assignment and
                      similar
                      agreements with respect to which waivers or consents are obtained
                      from the
                      appropriate parties, or the appropriate time period for asserting
                      any such
                      right has expired without an exercise of the
                      right;

                  

          

           

          
            	
                    (5)

                  	
                    Materialman’s,
                      mechanic’s, repairman’s, employee’s, contractor’s, operator’s and other
                      similar liens or charges arising in the ordinary course of
                      business for
                      obligations that are not delinquent or that will be paid and
                      discharged in
                      the ordinary course of business, or if delinquent, that are
                      being
                      contested in good faith by appropriate action of which Buyer
                      is notified
                      in writing before Closing;

                  

          

           

          
            	
                    (6)

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

                  

          

           

          
            	
                    (7)

                  	
                    Easements,
                      rights-of-way, servitudes, permits, surface leases and other
                      rights in
                      respect of surface operations that do not materially interfere
                      with the
                      oil and gas operations to be conducted on any Well or
                      Lease;

                  

          

           

          
            	
                    (8)

                  	
                    All
                      operating agreements, unit agreements, unit operating agreements,
                      pooling
                      agreements and pooling designations affecting the Assets that
                      are either
                      (i) of record in Seller’s chain of title or (ii) reflected or
                      referenced in the Records or (iii) included as Material Agreements on
                      Exhibit 7.1(K);

                  

          

           

          
            	
                    (9)

                  	
                    Conventional
                      rights of reassignment prior to release or surrender requiring
                      notice to
                      the holders of the rights;

                  

          

           

          
            
              
              

            

            
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                9

              
                

              

            

            
              
              

            

          

           

          
            	
                    (10)

                  	
                    All
                      rights reserved to or vested in any governmental, statutory
                      or public
                      authority to control or regulate any of the Assets in any manner,
                      and all
                      applicable laws, rules and orders of governmental
                      authority;

                  

          

           

          
            	
                    (11)

                  	
                    Defects
                      that are defensible by possession under applicable statutes
                      of limitation
                      for adverse possession or for prescription;
                      and

                  

          

           

          
            	
                    (12)

                  	
                    All
                      other liens, charges, encumbrances, contracts, agreements,
                      instruments,
                      obligations, defects and irregularities affecting the Assets
                      that
                      individually or in the aggregate are not such as to materially
                      interfere
                      with or affect the operation, value or use of any of the Assets
                      or have
                      not prevented, and cannot reasonably be expected to prevent,
                      Buyer from
                      receiving the proceeds of production from the affected
                      Assets.

                  

          

           

          5.3           Defect
            Letters.

           

          
            	
                    (A)

                  	
                    Buyer
                      may from time to time and no later than three (3) business
                      days prior to
                      Closing notify Seller in writing (a “Notice”) of any matter which would
                      cause title to all or part of the Assets not to be Defensible
                      Title
                      (“Title Defect”), provided that no Title Defect shall be deemed to exist
                      unless the Title Defect Value thereof exceeds Ten Thousand
                      Dollars
                      ($10,000.00). Further, there shall be no adjustment to the
                      Base Purchase
                      Price unless the aggregate Title Defect Values of all Title
                      Defects
                      satisfying the condition in clause (i) exceed one percent (1%) of the
                      Base Purchase Price (the “Title Defect Threshold”) (such amount being a
                      threshold, not a deductible).  In order to provide Seller a
                      reasonable opportunity to cure any Title Defects prior to Closing,
                      Buyer
                      shall use reasonable efforts to provide the Notice as soon
                      as reasonably
                      possible after becoming aware of or making its determination
                      of the Title
                      Defect.

                  

          

           

          
            	
                    (B)

                  	
                    In
                      the Notice, Buyer must describe with reasonable detail each
                      alleged Title
                      Defect it has discovered and the steps required to cure each
                      Title Defect,
                      include Buyer’s reasonable estimate of the Title Defect Value attributable
                      to each, and include all data and information in Buyer’s possession or
                      control bearing thereon.  Subject to the special warranty in the
                      Assignment and Bill of Sale delivered at Closing, Buyer shall
                      be deemed to
                      have conclusively waived all Title Defects not disclosed to
                      Seller in a
                      Notice before three (3) business days prior to Closing.  Subject
                      to the special warranty in the Assignment and Bill of Sale
                      delivered at
                      Closing, Buyer waives any remedy against Seller for Title Defects
                      that do
                      not exceed the Title Defect Threshold or for which timely notice
                      is not
                      given as provided hereunder or for which adjustment is made
                      as hereafter
                      provided.

                  

          

           

          
            	
                    (C)

                  	
                    Upon
                      timely delivery of a Notice by
                      Buyer:

                  

          

           

          
            	
                    (i)

                  	
                    within
                      three (3) business days after Seller’s receipt of the Title Defects
                      Notice, Seller shall notify Buyer whether Seller agrees with
                      Buyer’s
                      claimed Title Defects and/or the proposed Title Defect Values
                      therefor
                      (“Seller’s Response”).  If Seller does not agree with any
                      claimed Title Defect and/or the proposed Title Defect Value
                      therefor, then
                      the Parties shall enter into good faith negotiations and shall
                      attempt to
                      agree on such matters;

                  

          

           

          
            
              
              

            

            
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                10

              
                

              

            

            
              
              

            

          

           

          
            	
                    (ii)

                  	
                    within
                      one (1) business day after Seller’s notice of its cure of a Title Defect,
                      Buyer shall notify Seller whether Buyer agrees with Seller’s proposed cure
                      of a Title Defect (“Buyer’s Response”).  If Buyer does not agree
                      with any such cure, then the Parties shall enter into good
                      faith
                      negotiations and shall attempt to agree on such
                      matters;

                  

          

           

          
            	
                    (iii)

                  	
                    if
                      the Parties cannot reach agreement concerning either the existence
                      of a
                      Title Defect, Seller’s proposed cure of a Title Defect, or a Title Defect
                      Value within ten (10) days after Buyer’s receipt of Seller’s Response or
                      Seller’s receipt of Buyer’s Response, as applicable, upon either Party’s
                      request, the Parties shall mutually agree on and employ an
                      attorney
                      experienced in title examination in the state where the Assets
                      are located
                      (“Title Consultant”) to resolve all points of disagreement relating to
                      Title Defects and Title Defect Values; provided that Seller
                      or Buyer may
                      elect not to proceed to Closing with regard to such Assets
                      and adjust the
                      Base Purchase Price in the amount of the Allocated Value and
                      not submit
                      such matter to arbitration;

                  

          

           

          
            	
                    (iv)

                  	
                    if
                      at any time any Title Consultant so chosen fails or refuses
                      to perform
                      hereunder, a new Title Consultant shall be chosen by the
                      Parties.  The cost of any such Title Consultant shall be borne
                      fifty percent (50%) by Seller and fifty percent (50%) by
                      Buyer.  Each Party shall present a written statement of its
                      position on the Title Defect and/or Title Defect Value in question
                      to the
                      Title Consultant within five (5) days after the Title Consultant
                      is
                      selected, and the Title Consultant shall make a determination
                      of all
                      points of disagreement in accordance with the terms and conditions
                      of this
                      Agreement within ten (10) business days of receipt of such
                      position
                      statements.  The determination by the Title Consultant shall be
                      conclusive and binding on the Parties, and shall be enforceable
                      against
                      any Party in any court of competent jurisdiction.  If necessary,
                      the Closing Date shall be deferred only as to those Assets
                      affected by any
                      unresolved disputes regarding the existence of a Title Defect
                      and/or the
                      Title Defect Value until the Title Consultant has made a determination
                      of
                      the disputed issues with respect thereto and all subsequent
                      dates and
                      required activities with respect to any such Assets having
                      reference to
                      the Closing Date shall be correspondingly deferred; provided,
                      however,
                      that, unless Seller and Buyer mutually agree to the contrary,
                      the Closing
                      Date shall not be deferred in any event for more than thirty
                      (30) days
                      beyond the scheduled Closing Date in Section 3.1.  Once the
                      Title Consultant’s determination has been expressed to both Parties, if
                      applicable, Seller shall have five (5) days in which to advise
                      Buyer in
                      writing which of the options available to Seller under Section
                      5.4 that
                      Seller elects regarding each of the Assets as to which the
                      Title
                      Consultant has made a determination.  In evaluating whether a
                      Title Defect exists, due consideration shall be given to the
                      length of
                      time that the particular Asset has been producing Oil and Gas
                      and whether
                      such fact, circumstance or condition is of the type expected
                      to be
                      encountered in the area involved and is usual and customarily
                      acceptable
                      to reasonable and prudent operators, working interest owners
                      and/or
                      purchasers engaged in the business of the exploration, development,
                      and
                      operation of oil and gas
                      properties.

                  

          

           

          5.4           Effect
            of Title Defect

           

          
            	
                    (A)

                  	
                    In
                      the event Buyer provides Seller with a timely Notice and the
                      Title Defects
                      are valid and exceed the Title Defect Threshold, for those
                      Title Defects
                      not cured by Closing, Seller may, at its sole
                      discretion:

                  

          

           

          
            
              
              

            

            
              Page
                11

              
                

              

            

            
              
              

            

          

           

          
            	
                    (i)

                  	
                    adjust
                      the Base Purchase Price in the amount of the Title Defect Value
                      of the
                      Asset to which such Title Defect relates and proceed to Closing
                      on all
                      Assets; provided that Seller shall not be obligated to transfer
                      any Assets
                      for which the Title Defect Value equals or exceeds such Asset’s Allocated
                      Value; or

                  

          

           

          
            	
                    (ii)

                  	
                    proceed
                      with (a) Closing on those Assets not affected by the valid
                      Title Defects
                      and such Assets to which a Title Defect relates but for which
                      Seller has
                      elected to proceed to Closing with an adjustment of the Base
                      Purchase
                      Price in the amount of the Title Defect Value of such Assets
                      and
                      (b) defer Closing on those other Assets to which a Title Defect
                      relates and for which Seller has elected to attempt to cure
                      such Title
                      Defect and to not proceed to Closing, for which Buyer shall
                      place into
                      escrow an amount equal to the Allocated Values of the Assets
                      affected by
                      the valid Title Defects, which withheld amount shall be paid
                      to Seller
                      when the Asset affected by any valid Title Defect is cured
                      or the Title
                      Defect is waived by Buyer and the affected Asset is conveyed
                      from Seller
                      to Buyer.  If neither of the above occurs and if Seller later
                      determines it will not cure a Title Defect on or before six
                      (6) months
                      from the Closing Date, the amount in the escrow account attributable
                      to
                      such Title Defect will be returned to Buyer and Seller shall
                      retain such
                      Asset affected by such Title
                      Defect.

                  

          

           

          
            	
                    (B)

                  	
                    The
                      diminution in value of an Asset attributable to a valid Title
                      Defect (the
                      “Title Defect Value”) notified in a Notice shall be determined by the
                      following:

                  

          

           

          
            	
                    (i)

                  	
                    if
                      the valid Title Defect asserted is that the actual Net Revenue
                      Interest
                      attributable to the producing or valued formation in any Asset
                      is less
                      than that stated in the applicable Exhibit, then the Title
                      Defect Value is
                      the product of the Allocated Value attributed to the affected
                      formation(s)
                      in such Asset, multiplied by a fraction, the numerator of which
                      is the
                      difference between the Net Revenue Interest set forth in the
                      applicable
                      Exhibit and the actual Net Revenue Interest, and the denominator
                      of which
                      is the Net Revenue Interest stated in the applicable Exhibit;
                      or

                  

          

           

          
            	
                    (ii)

                  	
                    if
                      the valid Title Defect represents an obligation, encumbrance,
                      burden or
                      charge upon the affected Asset (including any increase in Working
                      Interest
                      for which there is not a proportionate increase in Net Revenue
                      Interest),
                      the amount of the Title Defect Value is to be determined by
                      taking into
                      account the Allocated Value of such Asset, the portion of the
                      Asset
                      affected by the Title Defect, the legal effect of the Title
                      Defect, the
                      potential economic effect of the Title Defect over the life
                      of the
                      affected Asset, and the Title Defect Values placed upon the
                      Title Defect
                      by Buyer and Seller.

                  

          

           

          
            	
                    (iii)

                  	
                    Notwithstanding
                      the above, in no event shall the total of the Title Defect
                      Values related
                      to a particular Asset exceed the Allocated Value of such
                      Asset.

                  

          

           

          
            	
                    (C)

                  	
                    If
                      the aggregate value of (i) the Base Purchase Price adjustment for
                      Title Defect Values plus (ii) the Allocated Value of Assets which are
                      retained in lieu of cure or adjustment equals or exceeds ten
                      percent (10%)
                      of the Base Purchase Price, then by notice delivered prior
                      to the Closing
                      either Party may terminate this Agreement and neither Party
                      shall have any
                      further obligation to conclude the transfer of the Assets under
                      this
                      Agreement.

                  

          

           

          
            
              
              

            

            
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                12

              
                

              

            

            
              
              

            

          

           

          5.5           Preferential
            Rights and Consents.

           

          Seller
            shall use its best efforts to obtain all required consents and to give
            notices
            required in connection with preferential purchase rights, so that the
            third
            party election date to exercise the preferential right will occur at
            least seven
            (7) business days prior to Closing.  If Buyer discovers other affected
            Assets during the course of Buyer’s due diligence activities, Buyer shall notify
            Seller immediately and Seller shall use its best efforts to obtain such
            consents
            and to give the notices required in connection with the preferential
            rights
            prior to Closing.

          

          
            	
                    (A)

                  	
                    Consents.

                  

          

           

          Except
            for consents and approvals which are customarily obtained post-Closing
            and those
            consents which would not invalidate the conveyance of the Assets, if
            a necessary
            consent to assign any Lease has not been obtained as of the Closing that
            would
            invalidate the conveyance of the Asset, then (i) the portion of the Assets
            for which such consent has not been obtained shall not be conveyed at
            the
            Closing, (ii) the Allocated Value for that Asset shall not be paid to
            Seller, and (iii) Seller shall use best efforts to obtain such consent as
            promptly as possible following Closing.  If such consent has been
            obtained as of the date on which the Post-Closing Adjustment Statement
            becomes
            final, Seller shall convey the affected Asset to Buyer effective as of
            the
            Effective Time and Buyer shall pay Seller the Allocated Value of the
            affected
            Asset, less any proceeds from the affected Asset received by Seller attributable
            to the period of time after the Effective Time (calculated in accordance
            with
            Section 2.3).  If such consent has not been obtained or has not been
            waived by Buyer as of the date on which the Post-Closing Adjustment Statement
            becomes final, Seller shall elect either to (i) challenge in court the
            enforceability of such consent right, in which event Seller shall retain
            the
            affected Asset until such legal challenge is finally resolved by settlement
            or
            non-appealable court order, after which either Seller shall convey the
            affected
            Asset to Buyer under the terms of this Agreement and Buyer shall pay
            the
            Allocated Value of the Purchase Price for such Asset, less any proceeds
            received
            by Seller attributable to such Asset for the period from and after the
            Effective
            Time (calculated in accordance with Section 2.3) or (ii) retain the
            affected Asset and the Purchase Price shall be reduced by an amount equal
            to the
            Allocated Value of the retained Asset (with such adjustment being an
“Exclusion
            Adjustment”).  Buyer shall reasonably cooperate with Seller in
            obtaining any required consent including providing assurances of reasonable
            financial conditions, but Buyer shall not be required to expend funds
            or make
            any other type of financial commitments a condition of obtaining such
            consent.

          

          
            	
                    (B)

                  	
                    Preferential
                      Purchase Rights.

                  

          

           

          
            	
                    (i)

                  	
                    If
                      any preferential right to purchase any portion of the Assets
                      is exercised
                      prior to the Closing Date, or if the time frame for the exercise
                      of such
                      preferential purchase rights has not expired and Seller has
                      not received
                      notice of an intent not to exercise or waiver of the preferential
                      purchase
                      right, that portion of the Assets affected by such preferential
                      purchase
                      right shall be excluded from the Assets and the Purchase Price
                      shall be
                      adjusted downward by an amount equal to the Allocated Value
                      of such
                      affected Assets without the requirement for Buyer to give notice
                      (with
                      such adjustment being an “Exclusion Adjustment”). Notwithstanding any
                      other provision in this Agreement, if a preferential purchase
                      right
                      subject to this Agreement is exercised, Buyer has the right,
                      at its sole
                      discretion, to terminate this Agreement, provided that the
                      allocated value
                      of all preferential rights exercised is equal to or exceeds
                      ten percent
                      (10%) of the Base Purchase Price.

                  

          

           

          
            
              
              

            

            
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                13

              
                

              

            

            
              
              

            

          

           

          
            	
                    (ii)

                  	
                    If
                      a third party exercises its preferential right to purchase,
                      but fails to
                      consummate the purchase prior to the Closing, Seller shall
                      retain the
                      affected Assets and the Purchase Price shall be adjusted downward
                      by an
                      amount equal to the Allocated Value of such affected Assets
                      (with such
                      adjustment being an “Exclusion
                      Adjustment”).

                  

          

           

          
            	
                    (iii)

                  	
                    If
                      a third party exercises its preferential right to purchase,
                      but does not
                      consummate the purchase within the time frame specified in
                      the
                      preferential purchase right, Seller agrees to convey the affected
                      Asset to
                      Buyer effective as of the Effective Time, and Buyer agrees
                      to pay Seller
                      the Allocated Value of the Affected
                      Asset.

                  

          

           

          
            	
                    (iv)

                  	
                    If
                      a preferential purchase right is not discovered prior to Closing,
                      and the
                      affected Asset is conveyed to Buyer at Closing, and the preferential
                      purchase right is exercised and subsequently consummated after
                      Closing,
                      Buyer agrees to convey such affected Assets to the party exercising
                      such
                      right on the same terms and conditions under which Seller conveyed
                      such
                      Assets to Buyer and retain all amounts paid by the party exercising
                      such
                      preferential right to purchase.  In the event of such exercise,
                      Buyer shall prepare, execute and deliver a form of conveyance
                      of such
                      Asset to such exercising party, such conveyance to be in form
                      and
                      substance as provided in this Agreement, and Seller agrees
                      to hold
                      harmless and indemnify Buyer from any and all liabilities and
                      obligations
                      associated with such conveyed Asset, and to reimburse Buyer
                      for reasonable
                      expenses incurred by Buyer relating to the conveyed
                      Asset.

                  

          

           

          
            	
                    (C)

                  	
                    Exclusive
                      Remedy.

                  

          

           

            The
            remedies set forth in this Section 5.5 are the exclusive remedies under
            this
            Agreement for exercised preferential purchase rights and required consents
            to
            assign the Assets.

          

          6.           ENVIRONMENTAL
            ASSESSMENT.

           

          6.1           Physical
            Condition of the Assets

           

          .

           

          
            	
                    (A)

                  	
                    Buyer
                      acknowledges that the Assets have been used for oil and gas
                      drilling and
                      production operations and possibly for the storage and disposal
                      of waste
                      materials or hazardous substances related to standard oil field
                      operations.  Physical changes in or under the Assets or adjacent
                      lands may have occurred as a result of such uses.  The Assets
                      also may contain previously plugged and abandoned wells, buried
                      pipelines,
                      storage tanks and other equipment, whether or not of a similar
                      nature, the
                      locations of which may not now be known by Seller or be readily
                      apparent
                      by a physical inspection of the Assets.  Buyer understands that
                      Seller does not have the requisite information with which to
                      determine the
                      exact nature or condition of the Assets nor the effect any
                      such use has
                      had on the physical condition of the Assets.  Pursuant to the
                      Safe Water Drinking and Toxic Enforcement Act of 1986, Buyer
                      is hereby
                      notified and assumes the risk that detectable amounts of chemicals
                      known
                      to cause cancer, birth defects and other reproductive harm
                      may be found
                      in, on or around the Assets.  Upon consummation of the Closing
                      Buyer shall be deemed to have assumed the risk of expense,
                      claim, damage
                      or liability arising from any such matter referred to in this
                      section,
                      including without limitation the risk that the Assets may contain
                      waste or
                      contaminants and that adverse physical conditions, including
                      the presence
                      of waste or contaminants, may not have been revealed by Buyer’s
                      investigation.  Consummation of the Closing shall transfer all
                      responsibility and liability related to disposal, spills, waste
                      or
                      contamination from, on or below the Assets from Seller to
                      Buyer.

                  

          

           

          
            
              
              

            

            
              Page
                14

              
                

              

            

            
              
              

            

          

           

          
            	
                    (B)

                  	
                    In
                      addition, Buyer acknowledges that some oil field production
                      equipment
                      located on the Assets may contain asbestos and/or naturally-occurring
                      radioactive material (“NORM”).  In this regard, Buyer expressly
                      understands that NORM may affix or attach itself to inside
                      of wells,
                      materials and equipment as scale or in other forms, and that
                      wells,
                      materials and equipment located on the Assets described herein
                      may contain
                      NORM and that NORM-containing materials may be buried or have
                      been
                      otherwise disposed of on the Assets.  Buyer also expressly
                      understands that special procedures may be required for the
                      removal and
                      disposal of asbestos and NORM from the Assets where it may
                      be found, and
                      that upon consummation of the Closing Buyer shall be deemed
                      to have
                      assumed all liability when such activities are
                      performed.

                  

          

           

          6.2           Inspection
            and Testing.

           

          
            	
                    (A)

                  	
                    Prior
                      to Closing, Buyer shall have the right, at its sole cost and
                      risk, to
                      review Seller’s Phase I environmental assessments of the Assets, if any
                      exist, and to conduct any further environmental assessment
                      of the Assets
                      it deems appropriate, to the extent that Seller has the authority
                      to grant
                      such right to Buyer; provided that Seller shall have the right
                      to review
                      and approve any plan to conduct such an environmental assessment,
                      with
                      such approval not to be unreasonably withheld, delayed or conditioned
                      by
                      Seller.  Buyer shall immediately provide to Seller any data
                      obtained from such assessments, including any reports and
                      conclusions.  Seller and Buyer shall keep all information
                      relating to such assessments strictly confidential whether
                      or not Closing
                      occurs, except as may be required pursuant to any Environmental
                      Laws.

                  

          

           

          
            	
                    (B)

                  	
                    Buyer
                      waives and releases all claims against Seller, its affiliates,
                      and each of
                      their respective directors, officers, employees, agents, and
                      other
                      representatives and their successors and assigns (collectively,
                      the
                      “Seller’s Group”), for injury to or death of persons, or damage to
                      property, arising in any way from the exercise of rights granted
                      to Buyer
                      hereby or the activities of Buyer or its employees, agents
                      or contractors
                      on the Assets.  BUYER SHALL INDEMNIFY THE SELLER’S GROUP AGAINST
                      AND HOLD THE MEMBERS OF THE SELLER’S GROUP HARMLESS FROM ANY AND ALL LOSS,
                      COST, DAMAGE, EXPENSE OR LIABILITY, INCLUDING REASONABLE ATTORNEY’S FEES,
                      WHATSOEVER ARISING OUT OF (I) ANY AND ALL STATUTORY OR COMMON
                      LAW LIENS OR
                      OTHER ENCUMBRANCES FOR LABOR OR MATERIALS FURNISHED IN CONNECTION
                      WITH
                      SUCH TESTS, SAMPLINGS, STUDIES OR SURVEYS AS BUYER MAY CONDUCT
                      WITH
                      RESPECT TO THE ASSETS; AND (II) ANY INJURY TO OR DEATH OF PERSONS OR
                      DAMAGE TO PROPERTY OCCURRING IN, ON OR ABOUT THE ASSETS AS
                      A RESULT OF
                      SUCH EXERCISE OR ACTIVITIES.

                  

          

           

          
            	
                    (C)

                  	
                    “Environmental
                      Laws” means all applicable local, state, and federal laws, rules,
                      regulations, and orders regulating or otherwise pertaining
                      to:
                      (i) the use, generation, migration, storage, removal, treatment,
                      remedy, discharge, release, transportation, disposal, or cleanup
                      of
                      pollutants, contamination, hazardous wastes, hazardous substances,
                      hazardous materials, toxic substances or toxic pollutants;
                      (ii) surface waters, ground waters, ambient air and any other
                      environmental medium on or off any Lease; or (iii) the environment,
                      habitat protection or health and safety-related matters; including
                      the
                      following as from time to time amended and all others whether
                      similar or
                      dissimilar: the Comprehensive Environmental Response, Compensation,
                      and
                      Liability Act of 1980, as amended by the Superfund Amendments
                      and
                      Reauthorization Act of 1986, the Resource Conservation and
                      Recovery Act of
                      1976, as amended by the Used Oil Recycling Act of 1980, the
                      Solid Waste
                      Disposal Act Amendments of 1980, and the Hazardous and Solid
                      Waste
                      Amendments of 1984, the Hazardous Materials Transportation
                      Act, the Toxic
                      Substance Control Act, the Clean Air Act, the Clean Water Act,
                      the Safe
                      Drinking Water Act, the National Environmental Policy Act,
                      the Endangered
                      Species Act, the Oil Pollution Act of 1990, and all regulations
                      promulgated pursuant thereto.

                  

          

           

          
            
              
              

            

            
              Page
                15

              
                

              

            

            
              
              

            

          

           

          6.3           Notice
            of Adverse Environmental Conditions

           

          .  No
            later than three (3) business days prior to Closing, Buyer shall notify
            Seller
            in writing of any Adverse Environmental Condition with respect to the
            Assets.  Such notice shall describe in reasonable detail the Adverse
            Environmental Condition and include the estimated Environmental Defect
            Value
            attributable thereto (the “Environmental Defect Notice”) based on a verifiable
            estimate of the cost to Remediate the Adverse Environmental
            Condition.  No Adverse Environmental Condition shall be deemed to
            exist unless the Environmental Defect Value exceeds Ten Thousand Dollars
            ($10,000.00) in each individual case.  Further, there shall be no
            adjustment to the Base Purchase Price unless the aggregate Environmental
            Defect
            Values of all Adverse Environmental Conditions satisfying the condition
            in
            clause (i) exceeds one percent (1%) of the Base Purchase Price (the
“Environmental Defect Threshold”) (such amount being a threshold, not a
            deductible).  The “Environmental Defect Value” attributable to any
            Adverse Environmental Condition shall be the estimated amount (net to
            Seller’s
            interest) of all reasonable costs and claims necessary to Remediate the
            Adverse
            Environmental Conditions, as reasonably determined and estimated by
            Buyer.  The term “Adverse Environmental Condition” means (i) the
            failure of the Assets to be in material compliance with all applicable
            Environmental Laws; (ii) the Assets being subject to any agreements,
            consent orders, decrees or judgments currently in existence based on
            any
            Environmental Laws that negatively and materially impact the future use
            of any
            portion of the Assets or that require any material change in the present
            conditions of any of the Assets; or (iii) the Assets being subject to any
            material uncured notices of violations of or non-compliance with any
            applicable
            Environmental Laws or any claim of material violation of any Environmental
            Laws
            to the extent not disclosed to Buyer prior to execution of this
            Agreement.  Buyer shall be deemed to have conclusively waived
            (i) all Adverse Environmental Conditions not contained in an Environmental
            Defect Notice delivered to Seller at least three (3) business days prior
            to
            Closing and (ii) any remedy against Seller for Adverse Environmental
            Conditions that do not exceed the Environmental Defect Threshold.

           

          6.4           Rights
            and Remedies for Adverse Environmental Conditions.

           

          
            	
                    (A)

                  	
                    With
                      respect to any Adverse Environmental Conditions affecting one
                      or more of
                      the Assets which exceed the Environmental Defect Threshold,
                      Seller may on
                      an Asset-by-Asset basis (i) Remediate the Adverse Environmental
                      Conditions prior to Closing, but Seller shall have no obligation
                      to do so,
                      and proceed to Closing with no adjustment of the Base Purchase
                      Price;
                      (ii) proceed to Closing and adjust the Base Purchase Price in an
                      amount equal to the applicable Environmental Defect Value;
                      or
                      (iii) retain the affected Asset and reduce the Base Purchase Price
                      by
                      the Allocated Value of the affected Asset (“Exclusion
                      Adjustment”).

                  

          

           

          
            
              
              

            

            
              Page
                16

              
                

              

            

            
              
              

            

          

           

          
            	
                    (B)

                  	
                    Buyer
                      waives any Adverse Environmental Condition for which Buyer
                      has received an
                      adjustment to the Base Purchase Price in accordance with Section
                      6.4(A).

                  

          

           

          
            	
                    (C)

                  	
                    If
                      Buyer delivers a valid Environmental Defect Notice to Seller
                      and if the
                      aggregate of the Environmental Defects claimed is less than
                      or equals the
                      Environmental Defect Threshold, Buyer will be deemed to have
                      accepted the
                      Assets “where-is, as-is” with respect to all Adverse Environmental
                      Conditions in, on or under the Assets and the Adverse Environmental
                      Condition(s) in, on and under the Assets will be deemed to
                      be part of the
                      Assumed Liabilities.  The Environmental Defect Threshold is a
                      threshold and not a deductible.  The Environmental Defect
                      Threshold and the Title Defect Threshold are separate and distinct
                      and
                      operate independently.

                  

          

           

          
            	
                    (D)

                  	
                    If
                      the aggregate value of (i) the Base Purchase Price adjustment for
                      Adverse Environmental Conditions plus (ii) any Exclusion Adjustments
                      in lieu of Remediating any Adverse Environmental Conditions
                      equals or
                      exceeds ten percent (10%) of the Base Purchase Price, either
                      Party may
                      terminate this Agreement and neither Party shall have any further
                      obligation to conclude the transfer of the Assets under this
                      Agreement.

                  

          

           

          
            	
                    (E)

                  	
                    The
                      term “Remediate” or “Remediation” means, with respect to any valid Adverse
                      Environmental Condition, the undertaking and completion of
                      those actions
                      and activities necessary to eliminate or correct such Adverse
                      Environmental Condition to the degree sufficient that such
                      Adverse
                      Environmental Condition no longer constitutes an Adverse Environmental
                      Condition as defined above.  Seller shall promptly notify Buyer
                      at such time as it believes that it has Remediated an Adverse
                      Environmental Condition.  Buyer shall promptly notify Seller
                      whether it agrees such condition is Remediated.  If Buyer fails
                      to notify Seller of its determination with respect to such
                      Remediation
                      within ten (10) business days following Seller’s notice, such Adverse
                      Environmental Condition shall be deemed
                      Remediated.

                  

          

           

          
            	
                    (F)

                  	
                    If
                      Seller and Buyer are unable to agree on the amount of the Environmental
                      Defect Value within ten (10) business days after Seller’s receipt of the
                      Environmental Defect Notice or that an Adverse Environmental
                      Condition
                      exists, has been Remediated or is required to be Remediated,
                      then the
                      dispute will be submitted to a mutually acceptable company
                      with recognized
                      expertise in the oil and gas environmental remediation and
                      regulation
                      field (the “Environmental Consultant”) whose determination shall be final
                      and binding upon the Parties.  Seller and Buyer shall each bear
                      their respective costs and expenses incurred in connection
                      with any such
                      dispute, and one-half (1/2) of the fees, costs and expenses
                      charged by the
                      Environmental Consultant.  Each Party shall present a written
                      statement of its position on the Adverse Environmental Condition
                      and/or
                      the Environmental Defect Value in question to the Environmental
                      Consultant
                      within five (5) business days after the Environmental Consultant
                      is
                      selected, and the Environmental Consultant shall make a determination
                      of
                      all points of disagreement in accordance with the terms and
                      conditions of
                      this Agreement within ten (10) business days of receipt of
                      such position
                      statements.  If necessary, the Closing Date shall be deferred
                      only as to those Assets affected by any unresolved disputes
                      regarding the
                      existence of an Adverse Environmental Condition and/or the
                      Environmental
                      Defect Value until the Environmental Consultant has made a
                      determination
                      of the disputed issues with respect thereto and all subsequent
                      dates and
                      required activities with respect to any such Assets having
                      reference to
                      the Closing Date shall be correspondingly deferred; provided,
                      however,
                      that, unless Seller and Buyer mutually agree to the contrary,
                      the Closing
                      Date shall not be deferred in any event for more than thirty
                      (30) days
                      beyond the scheduled Closing Date in Section 3.1.  All Assets as
                      to which no such dispute(s) exist shall be conveyed to Buyer
                      subject to
                      the terms of this Agreement at Closing.  Once the Environmental
                      Consultant’s determination has been expressed to both Parties, if
                      applicable, Seller shall have five (5) business days in which
                      to advise
                      Buyer in writing which of the options available to Seller under
                      Section
                      6.4(A) Seller elects regarding each of the Assets as to which
                      the
                      Environmental Consultant has made a
                      determination.

                  

          

           

          
            
              
              

            

            
              Page
                17

              
                

              

            

            
              
              

            

          

           

          6.5           Remediation
            by Seller

           

          .  If
            Seller elects to Remediate an Adverse Environmental Condition or is required
            by
            a governmental or regulatory agency to Remediate an Adverse Environmental
            Condition, the following will govern the Remediation:

           

          
            	
                    (A)

                  	
                    Seller
                      shall be responsible for all negotiations and contacts with
                      federal,
                      state, and local agencies and authorities.  Buyer may not make
                      any independent contacts with any agency, authority, or other
                      third party
                      with respect to the Adverse Environmental Condition or Remediation
                      and
                      shall keep all information regarding the Adverse Environmental
                      Condition
                      and Remediation confidential, except in each instance to the
                      extent
                      required by applicable law.

                  

          

           

          
            	
                    (B)

                  	
                    Seller
                      shall Remediate the Adverse Environmental Condition to the
                      level agreed
                      upon by Seller and Buyer (or failing such agreement to the
                      level
                      determined by the Environmental Consultant), but in no event
                      shall Seller
                      be required to Remediate the Adverse Environmental Condition
                      beyond the
                      level required by the Environmental Laws in effect at the Effective
                      Time.

                  

          

           

          
            	
                    (C)

                  	
                    Buyer
                      shall grant and warrant access and entry to the Assets after
                      Closing to
                      Seller and third parties conducting assessments or Remediation,
                      to the
                      extent and as long as necessary to conduct and complete the
                      assessment or
                      Remediation work, to remove equipment and facilities, and to
                      perform any
                      other activities reasonably necessary in connection with assessment
                      or
                      Remediation.

                  

          

           

          
            	
                    (D)

                  	
                    Buyer
                      shall facilitate Seller’s ingress and egress or assessment or Remediation
                      activities after the Closing.  Seller shall make reasonable
                      efforts to perform the work so as to minimize disruption to
                      Buyer’s
                      business activities.

                  

          

           

          
            	
                    (E)

                  	
                    Seller
                      shall continue Remediation of the Adverse Environmental Condition
                      until
                      the first of the following occurs:

                  

          

           

          
            
              
              

            

            
              Page
                18

              
                

              

            

            
              
              

            

          

           

          
            	
                    (i)

                  	
                    the
                      appropriate governmental authorities provide notice to Seller
                      or Buyer
                      that no further Remediation of the Adverse Environmental Condition
                      is
                      required; or

                  

          

           

          
            	
                    (ii)

                  	
                    the
                      Adverse Environmental Condition has been Remediated to the
                      level required
                      by the Environmental Laws or as agreed by the
                      Parties.

                  

          

           

          Upon
            the
            occurrence of either (i) or (ii) above, Seller shall notify Buyer that
            Remediation of the Adverse Environmental Condition is complete and provide
            a
            copy of the notification described in (i) above, if
            applicable.  Upon delivery of said notice, Seller shall be released
            from all liability and have no further obligations under any provisions
            of this
            Agreement in connection with an Adverse Environmental Condition.

           

          
            	
                    (F)

                  	
                    Until
                      Seller completes Remediation of an Adverse Environmental Condition,
                      Seller
                      and Buyer shall each notify the other of any pending or threatened
                      claim,
                      action, or proceeding by any authority or private party that
                      relates to or
                      would affect the environmental condition, the assessment, or
                      the
                      Remediation of the Assets.

                  

          

           

          7.           REPRESENTATIONS
            AND WARRANTIES OF SELLER.

           

          7.1           Seller’s
            Representations and Warranties

           

          .  Except
            as set forth in the exhibits to this Agreement or as otherwise disclosed
            to
            Buyer by Seller in connection with preparation of Buyer’s offer to purchase the
            Assets, Seller represents and warrants the following as of the date of
            execution
            of this Agreement and the Closing:

           

          
            	
                    (A)

                  	
                    Status.  Raven
                      Resources, LLC is a limited liability company duly organized,
                      legally
                      existing and in good standing under the laws of the State of
                      Oklahoma.  Shenandoah Petroleum Corporation is a corporation
                      duly organized, legally existing and in good standing under
                      the laws of
                      the State of Texas.

                  

          

           

          
            	
                    (B)

                  	
                    Authority.  Seller
                      owns the Assets and has the requisite power and authority to
                      enter into
                      this Agreement, to carry out the transactions contemplated
                      hereby, to
                      transfer the Assets in the manner contemplated by this Agreement,
                      and to
                      undertake all of the obligations of Seller set forth in this
                      Agreement.

                  

          

           

          
            	
                    (C)

                  	
                    Validity
                      of Obligations.  This Agreement and any documents or
                      instruments delivered by Seller at the Closing shall constitute
                      legal,
                      valid and binding obligations of Seller enforceable in accordance
                      with
                      their terms subject, however, to the effects of bankruptcy,
                      insolvency,
                      reorganization, moratorium and other laws for the protection
                      of creditors,
                      as well as to general principles of equity, regardless of whether
                      such
                      enforceability is considered in a proceeding in equity or at
                      law.

                  

          

           

          
            	
                    (D)

                  	
                    No
                      Violation.  The execution and delivery of this Agreement
                      does not, and the fulfillment of and compliance with the terms
                      and
                      conditions hereof will not, as of Closing, violate, or be in
                      conflict
                      with, any provision of Seller’s governing documents, or any statute, rule
                      or regulation applicable to Seller or any agreement or instrument
                      to which
                      Seller is a party or by which it is bound, or, to Seller’s knowledge,
                      violate, or be in conflict with any judgment, decree or order
                      applicable
                      to Seller or require the approval or consent of any third party
                      (subject
                      to governmental consents and approvals customarily obtained
                      after the
                      Closing).

                  

          

           

          
            
              
              

            

            
              Page
                19

              
                

              

            

            
              
              

            

          

           

          
            	
                    (E)

                  	
                    AFE’s.  With
                      respect to the joint, unit or other operating agreements relating
                      to the
                      Assets, except as set forth in Exhibit 7.1(E), there are no
                      material outstanding calls or payments under authorities for
                      expenditures
                      for payments relating to the Assets which are due or which
                      Seller has
                      committed to make which have not been
                      made.

                  

          

           

          
            	
                    (F)

                  	
                    Contractual
                      Restrictions.  Except to the extent otherwise permitted by
                      this Agreement, Seller has not entered into any contracts for
                      or received
                      prepayments, take-or-pay arrangements, buydowns, buyouts for
                      Oil and Gas,
                      or storage of the same relating to the Assets which Buyer shall
                      be
                      obligated to honor and make deliveries of Oil and Gas or pay
                      refunds of
                      amounts previously paid under such contracts or
                      arrangements.

                  

          

           

          
            	
                    (G)

                  	
                    Litigation.  Except
                      as set forth in Exhibit 7.1(G), there is no suit or action pending,
                      arising out of, or to Seller’s knowledge threatened that would have a
                      material adverse affect upon the ownership, operation or value
                      of the
                      Assets.

                  

          

           

          
            	
                    (H)

                  	
                    Permits
                      and Consents.  To Seller’s knowledge, with respect to Assets
                      for which Seller is the operator, Seller has (i) acquired all
                      material permits, licenses, approvals and consents from appropriate
                      governmental bodies, authorities and agencies to conduct operations
                      on the
                      Assets in compliance with applicable laws, rules, regulations,
                      ordinances
                      and orders; and (ii) is in material compliance with all such permits,
                      licenses, approvals and consents.

                  

          

           

          
            	
                    (I)

                  	
                    Broker’s
                      Fees.  Seller has incurred no obligation or liability,
                      contingent or otherwise, for brokers’ or finders’ fees in respect of the
                      matters provided for in this Agreement for which Buyer shall
                      have any
                      responsibility.

                  

          

           

          
            	
                    (J)

                  	
                    Taxes.  (i) Seller
                      has filed (with respect to the Assets) all material returns
                      for Property
                      Taxes and Severance Taxes that are due, (ii) all payments (with
                      respect to the Assets) shown to be due on such returns have
                      been paid, and
                      (iii) there is no material dispute or claim concerning any Property
                      Tax or Severance Tax liability of the Seller (with respect
                      to the Assets)
                      claimed or raised by any tax authority in
                      writing.

                  

          

           

          
            	
                    (K)

                  	
                    Material
                      Agreements.  To the best of Seller’s knowledge, all
                      agreements material to the ownership, operation or value of
                      the Assets are
                      listed in Exhibit 7.1(K) (“Material
                      Agreements”).

                  

          

           

          
            	
                    (L)

                  	
                    Consents
                      and Preferential Purchase Rights.  To the best of Seller’s
                      knowledge, Exhibit 7.1(L) lists all consents and preferential
                      purchase rights contained in the Leases or Material
                      Agreements.

                  

          

           

          
            	
                    (M)

                  	
                    Gas
                      Imbalances.  To the best of Seller’s knowledge, Exhibit
                      7.1(M) lists all gas imbalances with respect to the Assets as
                      of the
                      Effective Time.

                  

          

           

          
            	
                    (N)

                  	
                    Royalties.  All
                      rentals, royalties and other payments due under the Leases
                      have been paid,
                      except those amounts properly being held in
                      suspense.

                  

          

           

          
            
              
              

            

            
              Page
                20

              
                

              

            

            
              
              

            

          

           

          
            	
                    (O)

                  	
                    Production
                      Sales Contracts.  There are no production sales contracts
                      pertaining to the Assets that provide for a fixed price and
                      that cannot be
                      cancelled at any time upon ninety (90) days (or less) prior
                      notice.

                  

          

          

          
            	
                    (P)

                  	
                    Calls
                      on Production.  There are no calls on production pertaining
                      to the Assets that provide for payment at less than applicable
                      current
                      market prices.

                  

          

          

          7.2           Scope
            of Representations of Seller.

           

          
            	
                    (A)

                  	
                    Information
                      About the Assets.  Except as expressly set forth in this
                      Agreement, Seller disclaims all liability and responsibility
                      for any
                      representation, warranty, statements or communications (orally
                      or in
                      writing) to Buyer, including any information contained in any
                      opinion,
                      information or advice that may have been provided to Buyer
                      by any
                      employee, officer, director, agent, consultant, engineer or
                      engineering
                      firm, representative, partner, member, beneficiary, owner or
                      contractor of
                      Seller wherever and however made, including those made in any
                      data room or
                      internet site and any supplements or amendments thereto or
                      during any
                      negotiations with respect to this Agreement or any confidentiality
                      agreement previously executed by the Parties with respect to
                      the
                      Asset.  EXCEPT AS SET FORTH IN ARTICLE 7 OF THIS AGREEMENT,
                      SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS, STATUTORY
                      OR IMPLIED,
                      AS TO (i) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY DATA,
                      INFORMATION OR RECORDS FURNISHED TO BUYER IN CONNECTION WITH
                      THE ASSETS OR
                      OTHERWISE CONSTITUTING A PORTION OF THE ASSETS; (ii) THE PRESENCE,
                      QUALITY
                      AND QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE
                      TO THE ASSETS,
                      INCLUDING WITHOUT LIMITATION SEISMIC DATA AND SELLER’S INTERPRETATION AND
                      OTHER ANALYSIS THEREOF; (iii) THE ABILITY OF THE ASSETS TO PRODUCE
                      HYDROCARBONS, INCLUDING WITHOUT LIMITATION PRODUCTION RATES,
                      DECLINE RATES
                      AND RECOMPLETION OPPORTUNITIES; (iv) IMBALANCE OR PAYOUT ACCOUNT
                      INFORMATION, ALLOWABLES, OR OTHER REGULATORY MATTERS; (v) THE PRESENT
                      OR FUTURE VALUE OF THE ANTICIPATED INCOME, COSTS OR PROFITS,
                      IF ANY, TO BE
                      DERIVED FROM THE ASSETS; (vi) THE ENVIRONMENTAL CONDITION OF THE
                      ASSETS; (vii) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT
                      OCCUR; (viii) THE TAX ATTRIBUTES OF ANY ASSET; (ix) ANY OTHER
                      MATTERS CONTAINED IN OR OMITTED FROM ANY INFORMATION OR MATERIAL
                      FURNISHED
                      TO BUYER BY SELLER OR OTHERWISE CONSTITUTING A PORTION OF THE
                      ASSETS; AND,
                      (x) THE COMPLETENESS OR ACCURACY OF THE INFORMATION CONTAINED
                      IN ANY
                      EXHIBIT HERETO.  ANY DATA, INFORMATION OR OTHER RECORDS
                      FURNISHED BY SELLER ARE PROVIDED TO BUYER AS A CONVENIENCE
                      AND BUYER’S
                      RELIANCE ON OR USE OF THE SAME IS AT BUYER’S SOLE
                      RISK.

                  

          

           

          
            	
                    (B)

                  	
                    Independent
                      Investigation.  Buyer agrees that it has, or by Closing will
                      have, made its own independent investigation, analysis and
                      evaluation of
                      the Assets and the transaction contemplated by this Agreement
                      (including
                      Buyer’s own estimate and appraisal of the extent and value of Seller’s Oil
                      and Gas reserves attributable to the Assets and an independent
                      assessment
                      and appraisal of the environmental risks and liabilities associated
                      with
                      the acquisition of the Assets).  Buyer agrees that it has had,
                      or will have prior to Closing, access to all information necessary
                      to
                      perform its investigation and has not relied and will not rely
                      on any
                      representations by Seller other than those expressly set forth
                      in this
                      Agreement

                  

          

           

          
            
              
              

            

            
              Page
                21

              
                

              

            

            
              
              

            

          

           

          8.           REPRESENTATIONS
            AND WARRANTIES OF BUYER.

           

          8.1           Buyer’s
            Representations and Warranties

           

          .  Buyer
            represents and warrants as follows as of the date hereof and the
            Closing:

           

          
            	
                     

                  	
                    (A)

                  	
                    Status.

                  

          

           

          
            	
                     

                  	
                    Buyer
                      is a limited partnership duly organized, validly existing and
                      in good
                      standing under the laws of the State of
                      Delaware.

                  

          

           

          
            	
                    (B)

                  	
                    Authority.

                  

          

           

          Buyer
            has
            the power and authority to enter into this Agreement, to carry out the
            transactions contemplated hereby and to undertake all of the obligations
            of
            Buyer set out in this Agreement.

           

          
            	
                    (C)

                  	
                    Validity
                      of Obligations.

                  

          

           

          
            	
                     

                  	
                    The
                      consummation of the transactions contemplated by this Agreement
                      will not
                      in any respect violate, nor be in conflict with, any provision
                      of Buyer’s
                      charter, by-laws or other governing documents, or any agreement
                      or
                      instrument to which Buyer is a party or is bound, or any judgment,
                      decree,
                      order, statute, rule or regulation applicable to Buyer (subject
                      to
                      governmental consents and approvals customarily obtained after
                      the
                      Closing).  This Agreement and the documents executed and
                      delivered by Buyer in connection with the Closing shall constitute
                      legal,
                      valid and binding obligations of Buyer, enforceable in accordance
                      with
                      their terms, subject, however, to the effects of bankruptcy,
                      insolvency,
                      reorganization, moratorium and other laws for the protection
                      of creditors,
                      as well as to general principles of equity, regardless of whether
                      such
                      enforceability is considered in a proceeding in equity or at
                      law.

                  

          

           

          
            	
                    (D)

                  	
                    Qualification
                      and Bonding.  Buyer is in compliance with the bonding and
                      liability insurance requirements of all applicable state or
                      federal laws
                      or regulations that could affect Buyer’s ability or authority to own and
                      operate the Assets and is qualified to own any federal, Indian
                      or state
                      oil and gas leases that constitute part of the
                      Assets.

                  

          

           

          
            	
                    (E)

                  	
                    Non-Security
                      Acquisition.  Buyer intends to acquire the Assets for its
                      own benefit and account and is not acquiring the Assets with
                      the intent of
                      distributing fractional undivided interests thereof such as
                      would be
                      subject to regulation by federal or state securities laws,
                      and if, in the
                      future, it should sell, transfer or otherwise dispose of the
                      Assets or
                      fractional undivided interests therein, it will do so in compliance
                      with
                      any applicable federal and state securities
                      laws.

                  

          

           

          
            	
                    (F)

                  	
                    Evaluation.  By
                      reason of Buyer’s knowledge and experience in the evaluation, acquisition
                      and operation of oil and gas properties, Buyer has evaluated
                      the merits
                      and risks of purchasing the Assets from Seller and has formed
                      an opinion
                      based solely upon Buyer’s knowledge and experience and not upon any
                      representations or warranties by
                      Seller.

                  

          

           

          
            
              
              

            

            
              Page
                22

              
                

              

            

            
              
              

            

          

           

          
            	
                    (G)

                  	
                    Financing.  Buyer
                      has sufficient cash, available lines of credit or other sources
                      of
                      immediately available funds to enable it to pay the Purchase
                      Price to
                      Seller at the Closing.

                  

          

           

          
            	
                    (H)

                  	
                    Broker’s
                      Fees.  Buyer has incurred no obligation or liability,
                      contingent or otherwise, for brokers’ or finders’ fees in respect of the
                      matters provided for in this Agreement, and, if any such obligation
                      or
                      liability exists, it shall remain an obligation of Buyer, and
                      Seller shall
                      have no responsibility therefor.

                  

          

           

          
            	
                    (I)

                  	
                    No
                      Knowledge of Seller’s Breach.  As of the date of execution
                      of this Agreement, Buyer has no knowledge of any breach by
                      Seller of any
                      representation or warranty of Seller, or of any other fact,
                      event,
                      condition or circumstance that would excuse Buyer from the
                      timely
                      performance of its obligations
                      hereunder.

                  

          

           

          9.           CERTAIN
            AGREEMENTS OF SELLER

           

          .  Seller
            agrees and covenants that, unless Buyer shall have otherwise agreed in
            writing,
            the following provisions shall apply:

           

          9.1           Maintenance
            of Assets

           

          .  From
            the Effective Time until Closing, Seller agrees that, for those Assets
            which it
            operates, it shall:

           

          
            	
                    (A)

                  	
                    Administer
                      and operate the Assets in accordance with the applicable operating
                      agreements.

                  

          

           

          
            	
                    (B)

                  	
                    Not
                      introduce any new methods of management, operation or accounting
                      with
                      respect to any or all of the
                      Assets.

                  

          

           

          
            	
                    (C)

                  	
                    Use
                      commercially reasonable efforts to maintain and keep the Assets
                      in full
                      force and effect; and fulfill all contractual or other covenants,
                      obligations and conditions imposed upon Seller with respect
                      to the Assets,
                      including, but not limited to, payment of royalties, delay
                      rentals,
                      shut-in gas royalties and any and all other required
                      payments.

                  

          

           

          
            	
                    (D)

                  	
                    Except
                      to the extent necessary or advisable to avoid forfeiture or
                      penalties, not
                      enter into agreements to drill new wells or to rework, plug
                      back, deepen,
                      plug or abandon any Well, nor commence any drilling, reworking
                      or
                      completing or other operations on the Leases which requires
                      estimated
                      expenditures exceeding Ten Thousand Dollars ($10,000.00), net
                      to the
                      working interest of Seller, for each operation (except for
                      emergency
                      operations and operations required under presently existing
                      contractual
                      obligations) without obtaining the prior written consent of
                      Buyer (which
                      consent shall not be unreasonably withheld, delayed or conditioned);
                      provided that the terms of this paragraph (D) shall not apply
                      to any
                      expenditures of Seller which will not be charged to
                      Buyer.

                  

          

           

          
            	
                    (E)

                  	
                    Not
                      voluntarily relinquish its position as operator to anyone other
                      than Buyer
                      with respect to any of the Assets or voluntarily abandon any
                      of the Wells
                      other than as required pursuant to the terms of a Lease or
                      by
                      regulation.

                  

          

           

          
            	
                    (F)

                  	
                    Not,
                      without the prior written consent of Buyer (which consent shall
                      not be
                      unreasonably withheld, delayed or conditioned), (i) enter into any
                      agreement or arrangement (other than one constituting a Permitted
                      Encumbrance) transferring, selling or encumbering any of the
                      Assets (other
                      than in the ordinary course of business, including ordinary
                      course sales
                      of production, inventory or salvage; (ii) grant any preferential or
                      other right to purchase or agree to require the consent of
                      any party not
                      otherwise required to consent to the transfer and assignment
                      of the Assets
                      to Buyer; (iii) enter into any new sales contracts or supply
                      contracts which cannot be cancelled upon thirty (30) days prior
                      notice; or
                      (iv) incur or agree to incur any contractual
                      obligation  (absolute or contingent) with respect to the Assets
                      except as otherwise provided herein (including ordinary course
                      sales of
                      production, inventory or salvage or pursuant to any disclosed
                      AFEs
                      covering the Assets).

                  

          

           

          
            
              
              

            

            
              Page
                23

              
                

              

            

            
              
              

            

          

           

          
            	
                    (G)

                  	
                    To
                      the extent known to Seller, provide Buyer with written notice
                      of
                      (i) any claims, demands, suits or actions made against Seller which
                      materially affect the Assets; or (ii) any proposal from a third party
                      to engage in any material transaction (e.g., a farmout) with
                      respect to
                      the Assets.

                  

          

           

          9.2           Records

           

          .  Seller
            shall have the right to make and retain copies of the Records as Seller
            may
            desire prior to the delivery of the Records to Buyer.  Buyer, for a
            period of seven (7) years after the Closing Date, shall make available
            to Seller
            (at the location of such Records in Buyer’s organization) access to such Records
            as Buyer may have in its possession (or to which it may have access)
            upon
            written request of Seller, during normal business hours; provided, however,
            that
            Buyer shall not be liable to Seller for the loss of any Records by reason
            of
            clerical error or inadvertent loss or destruction of Records.

           

          9.3           Audit
            Rights.

           

          Seller
            agrees to make available to Buyer prior to and for a period of twelve
            months
            following Closing any and all existing information and documents in the
            possession of Seller that Buyer may reasonably require to comply with
            Buyer’s
            tax and financial reporting requirements and audits.  Without limiting
            the generality of the foregoing, Seller will use its commercially reasonable
            efforts after execution of this Agreement and for twelve months following
            Closing to cooperate with the independent auditors chosen by Buyer (“Buyer’s
            Auditor”) in connection with their audit of any annual revenue and expenses
            statements of the Assets that Buyer or any of its Affiliates requires
            to comply
            with their tax and financial reporting requirements, and their review
            of any
            interim quarterly revenue and expense statements of the Assets that Buyer
            requires to comply with such reporting requirements.  Buyer’s
            cooperation will include (i) such reasonable access to Seller’s employees who
            were responsible for preparing the revenue and expense statements and
            work
            papers and other supporting documents used in the preparation of such
            financial
            statements as may be required by Buyer’s Auditor to perform an audit in
            accordance with generally accepted auditing standards, and (ii) delivery
            of one
            or more customary representation letters (in substantially the form previously
            approved by Seller and Buyer) from Seller to Buyer’s Auditor that are requested
            by Buyer to allow such auditors to complete an audit (or review of any
            interim
            quarterly financials), and to issue an opinion that in Buyer’s experience is
            acceptable with respect to an audit or review of those revenue and expense
            statements required pursuant to this Section.  Buyer will reimburse
            Seller, within three (3) business days after demand therefore, for any
            reasonable out-of-pocket and overhead costs with respect to any costs
            incurred
            by Seller in complying with the provisions of this Section.

           

          
            
              
              

            

            
              Page
                24

              
                

              

            

            
              
              

            

          

           

          10.           CERTAIN
            AGREEMENTS OF BUYER

           

          .  Buyer
            agrees and covenants that unless Seller shall have consented otherwise
            in
            writing, the following provisions shall apply:

           

          10.1           Plugging
            Obligation

           

          .  Upon
            consummation of the Closing, Buyer shall perform and assume all liability
            for
            the necessary and proper plugging and abandonment of all Wells and all
            surface
            restoration and reclamation required by law or the Leases.

           

          10.2           Plugging
            Bond

           

          .  Buyer
            shall post, prior to Closing, the necessary bonds or letters of credit
            as
            required by the state in which the Leases are located for the plugging
            of all
            Wells, and provide Seller with a copy of same, and provide proof satisfactory
            to
            Seller that the applicable state has accepted such bonds or letters of
            credit as
            sufficient assurance to cover the plugging of all Wells and related
            matters.  Further, Buyer shall provide to Seller copies of the
            approval by any applicable regulatory agencies concerning change of operatorship
            of the Assets if Buyer is duly elected Operator.

           

          10.3           Seller’s
            Logos

           

          .  Commencing
            no later than thirty (30) days after Closing, Buyer shall promptly cover
            or
            cause to be covered by decals or new signage any names and marks used
            by Seller,
            and all variations and derivatives thereof and logos relating thereto,
            from the
            Assets and shall not thereafter make any use whatsoever of such names,
            marks and
            logos.

           

          10.4           Like-Kind
            Exchanges

           

          .  Each
            party consents to the other party’s assignment of its rights and obligations
            under this Agreement to its Qualified Intermediary (as that term is defined
            in
            Section 1.1031(k)-1(g)(4)(v) of the Treasury Regulations), or to its
            Qualified
            Exchange Accommodation Titleholder (as that term is defined in Rev. Proc.
            2000-37), in connection with effectuation of a like-kind
            exchange.  However, Seller and Buyer acknowledge and agree that any
            assignment of this Agreement to a Qualified Intermediary or to a Qualified
            Exchange Accommodation Titleholder does not release either party from
            any of
            their respective liabilities and obligations to each other under the
            Agreement.  Each party agrees to cooperate with the other to attempt
            to structure the transaction as a like-kind exchange.

           

          10.5           Charitable
            Assignment.

           

          Notwithstanding
            anything contained in this Agreement, Buyer consents to the Seller or
            either of
            them assigning or conveying their interest in the Assets, or a portion
            thereof,
            to a charitable organization or foundation prior to Closing, provided
            that:

           

          (i)           the
            assignment shall be made subject to this  Agreement and the assignee
            must agree to be bound by all of the obligations of the assigning Seller
            to
            convey the Assets to Buyer at Closing;

           

          (ii)           the
            assigning Seller (and not the assignee) shall remain responsible for
            each of the
            liabilities, warranties and indemnities set forth herein notwithstanding
            any
            such Assignment;

           

          (iii)           Buyer
            shall have the right to approve in advance the form of any such Assignment;
            and

           

          (iv)           the
            identity of any such assignee shall be made known to the Buyer at least
            three
            (3) business days prior to the Closing.

           

          
            
              
              

            

            
              Page
                25

              
                

              

            

            
              
              

            

          

           

          11.           CONDITIONS
            PRECEDENT TO OBLIGATIONS OF BUYER

           

          .  All
            obligations of Buyer under this Agreement are, at Buyer’s election, subject to
            the fulfillment, prior to or at the Closing, of each of the following
            conditions:

           

          11.1           No
            Litigation

           

          .  At
            the Closing, no suit, action or other proceeding shall be pending before
            any
            court or governmental agency which attempts to prevent the occurrence
            of the
            transactions contemplated by this Agreement.

           

          11.2           Representations
            and Warranties

           

          .  All
            representations and warranties of Seller contained in this Agreement
            shall be
            true in all material aspects as of the Closing as if such representations
            and
            warranties were made as of the Closing Date (except for those representations
            or
            warranties that are expressly made only as of another specific date,
            which
            representations and warranties shall be true in all material respects
            as of such
            other date) and Seller shall have performed and satisfied in all material
            respects all covenants and fulfilled all conditions required by this
            Agreement
            to be performed and satisfied by Seller at or prior to the Closing.

           

          12.           CONDITIONS
            PRECEDENT TO THE OBLIGATIONS OF SELLER

           

          .  All
            obligations of Seller under this Agreement are, at Seller’s election, subject to
            the fulfillment, prior to or at the Closing, of each of the following
            conditions:

           

          12.1           No
            Litigation

           

          .  At
            the Closing, no suit, action or other proceeding shall be pending before
            any
            court or governmental agency which attempts to prevent the occurrence
            of the
            transactions contemplated by this Agreement.

           

          12.2           Representations
            and Warranties

           

          .  All
            representations and warranties of Buyer contained in this Agreement shall
            be
            true in all material aspects as of the Closing, as if such representations
            and
            warranties were made as of the Closing Date (except for those representations
            or
            warranties that are expressly made only as of another specific date,
            which
            representations and warranties shall be true in all material respects
            as of such
            other date) and Buyer shall have performed and satisfied in all material
            respects all covenants and fulfilled all conditions required by this
            Agreement
            to be performed and satisfied by Buyer at or prior to the Closing.

           

          13.           TERMINATION.

           

          13.1           Causes
            of Termination

           

          .  This
            Agreement and the transactions contemplated herein may be
            terminated:

           

          
            	
                    (A)

                  	
                    At
                      any time by mutual consent of the
                      Parties.

                  

          

           

          
            	
                    (B)

                  	
                    By
                      either Party as provided in Sections 5.4(C), 5.5(B) or 6.4(D)
                      pertaining
                      to Title Defects, preferential rights or Adverse Environmental
                      Conditions,
                      respectively.

                  

          

           

          
            	
                    (C)

                  	
                    By
                      Buyer if, on the Closing Date, any of the conditions set forth
                      in Article
                      11 hereof shall not have been satisfied or waived; provided,
                      however, that
                      Seller shall have the right to satisfy such condition for a
                      period of
                      twenty (20) days following delivery of notice from Buyer regarding
                      such
                      failure or, if such condition cannot reasonably be satisfied
                      within such
                      20-day period, Seller shall have the right to commence the
                      actions
                      necessary to satisfy such condition within such 20-day period
                      and
                      thereafter to diligently continue such actions beyond such
                      period until
                      such satisfaction has been
                      effected.

                  

          

           

          
            
              
              

            

            
              Page
                26

              
                

              

            

            
              
              

            

          

           

          
            	
                    (D)

                  	
                    By
                      Seller if, on the Closing Date, any of the conditions set forth
                      in Article
                      12 hereof shall not have been satisfied or waived; provided,
                      however, that
                      with respect to any condition other than a material failure
                      of Buyer to
                      perform its obligations under Section 3.2, as to which the
                      granting of any
                      cure period shall be entirely within Seller’s sole and absolute
                      discretion, Buyer shall have the right to satisfy such condition
                      for a
                      period of twenty (20) days following delivery of notice from
                      Seller
                      regarding such failure or, if such condition cannot reasonably
                      be
                      satisfied within such 20-day period, Buyer shall have the right
                      to
                      commence the actions necessary to satisfy such condition within
                      such
                      20-day period and thereafter to diligently continue such actions
                      beyond
                      such period until such satisfaction has been
                      effected.

                  

          

           

          13.2           Effect
            of Termination.

           

          
            	
                    (A)

                  	
                    Buyer’s
                      Breach.  If Closing does not occur because Buyer wrongfully
                      fails to tender performance at Closing or otherwise breaches
                      this
                      Agreement prior to Closing, and Seller is ready to close and
                      is not in
                      material breach of this Agreement, Seller shall have the right
                      to
                      terminate this Agreement and retain the Deposit, together with
                      interest
                      thereon, as liquidated damages.  Buyer’s failure to close shall
                      not be considered wrongful if (i) conditions to Buyer’s obligation to
                      close under Article 11 are not satisfied through no fault of
                      Buyer and are
                      not waived, or (ii) Buyer has terminated this Agreement as of right
                      under Section 13.1.  The remedy set forth herein shall be
                      Seller’s sole and exclusive remedy for Buyer’s wrongful failure to close
                      hereunder and Seller expressly waives any and all other remedies,
                      legal
                      and equitable, that it otherwise may have for Buyer’s failure to
                      close.

                  

          

           

          
            	
                    (B)

                  	
                    Seller’s
                      Breach.

                  

          

           

          If
            Closing does not occur because Seller wrongfully fails to tender performance
            at
            Closing or otherwise breaches this Agreement prior to Closing, and Buyer
            is
            ready to close and is not in material breach of this Agreement, Buyer
            may
            terminate this Agreement, in which event Seller will return the Deposit,
            together with interest thereon, to Buyer immediately after the determination
            that the Closing will not occur.  If Buyer elects not to terminate
            this Agreement upon any such breach by Seller, Buyer shall retain all
            legal
            remedies for Seller’s breach of this Agreement, including, without limitation,
            specific performance of this Agreement; provided, however, that in any
            suit for
            damages by Buyer against Seller for any such breach (i) Buyer’s total
            damages arising out of or related to Seller’s breach of any provision of this
            Agreement shall be limited to the amount of the Deposit, and (ii) Seller
            shall not have any liability to Buyer for consequential, special, punitive
            or
            exemplary damages arising out of or related to Seller’s breach of any provision
            of this Agreement.  The foregoing limitations on damages shall not
            preclude Buyer from seeking specific performance of this
            Agreement.  Seller’s failure to close shall not be considered wrongful
            if (i) conditions to Seller’s conditions to close under Article 12 are not
            satisfied through no fault of Seller and are not waived; or (ii) Seller has
            terminated this Agreement as of right under Section 13.1.

           

          
            
              
              

            

            
              Page
                27

              
                

              

            

            
              
              

            

          

           

          
            	
                    (C)

                  	
                    Termination
                      Pursuant to Section 13.1.

                  

          

           

          If
            Buyer
            or Seller terminates this Agreement pursuant to Section 13.1 in the absence
            of a
            breach by the other Party, Seller shall return the Deposit to Buyer and
            neither
            Buyer nor Seller shall have any liability to the other Party for termination
            of
            this Agreement.  If Buyer or Seller terminates this Agreement pursuant
            to Section 13.1 and asserts that a breach of this Agreement has occurred,
            the
            notice of termination shall include a statement describing the nature
            of the
            alleged breach together with supporting documentation.

           

          
            	
                    (D)

                  	
                    Effect
                      of Termination.

                  

          

           

          In
            the
            event of the termination of this Agreement pursuant to the provisions
            of this
            Article 13 or elsewhere in this Agreement, this Agreement shall become
            void and
            have no further force and effect and, except as provided in this Article
            13, for
            the indemnities provided for in Sections 6.2(B) and 14.3, any breach
            of this
            Agreement prior to such termination and any continuing confidentiality
            requirement, neither Party shall have any further right, duty or liability
            to
            the other hereunder.  Upon termination, Buyer agrees to return to
            Seller or destroy all materials, documents and copies thereof provided,
            obtained
            or discovered in the course of any due diligence investigations of the
            Assets.

           

          14.           INDEMNIFICATION.

           

          14.1           Indemnification
            by Seller

           

          .  UPON
            CLOSING, SELLER SHALL TO THE FULLEST EXTENT PERMITTED BY LAW, RELEASE,
            DEFEND,
            INDEMNIFY, AND HOLD HARMLESS BUYER, ITS AFFILIATES, AND EACH OF THEIR
            RESPECTIVE
            DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND OTHER REPRESENTATIVES (COLLECTIVELY
            THE “BUYER GROUP”) FROM AND AGAINST THE FOLLOWING:

           

          
            	
                    (A)

                  	
                    MISREPRESENTATIONS.  ALL
                      CLAIMS, DEMANDS, LIABILITIES, JUDGMENTS, LOSSES AND REASONABLE
                      COSTS,
                      EXPENSES AND ATTORNEYS’ FEES (INDIVIDUALLY A “LOSS” AND COLLECTIVELY, THE
                      “LOSSES”) ARISING FROM THE BREACH BY SELLER OF ANY REPRESENTATION OR
                      WARRANTY SET FORTH IN THIS AGREEMENT THAT SURVIVES
                      CLOSING;

                  

          

           

          
            	
                    (B)

                  	
                    BREACH
                      OF COVENANTS.  ALL LOSSES ARISING FROM THE BREACH BY SELLER
                      OF ANY COVENANT SET FORTH IN THIS AGREEMENT;
                      AND

                  

          

           

          
            	
                    (C)

                  	
                    OWNERSHIP
                      AND OPERATION.  ALL LOSSES ARISING FROM SELLER’S OWNERSHIP
                      AND OPERATION OF THE ASSETS PRIOR TO THE EFFECTIVE TIME DIRECTLY
                      ASSOCIATED WITH THE FOLLOWING
                      MATTERS:

                  

          

           

          
            	
                    (i)

                  	
                    DAMAGES
                      TO PERSONS OR PROPERTY FOR CLAIMS ASSERTED BY ANY THIRD PARTY
                      AND ACCRUING
                      PRIOR TO THE EFFECTIVE TIME;

                  

          

           

          
            	
                    (ii)

                  	
                    THE
                      VIOLATION BY SELLER OF THE TERMS OF ANY AGREEMENT BINDING UPON
                      SELLER;
                      AND

                  

          

           

          
            	
                    (iii)

                  	
                    CLAIMS
                      AGAINST SELLER BY CO-OWNERS, PARTNERS, JOINT VENTURERS AND
                      OTHER
                      PARTICIPANTS IN THE WELLS.

                  

          

           

          
            
              
              

            

            
              Page
                28

              
                

              

            

            
              
              

            

          

           

          
            	
                    (D)

                  	
                    Notwithstanding
                      the above, the following limitations shall apply to Seller’s
                      indemnification obligations:

                  

          

           

          
            	
                    (i)

                  	
                    Seller
                      shall not be obligated to indemnify Buyer for any Loss unless
                      Buyer has
                      delivered a written notice of such Loss within the Survival
                      Period (as
                      defined below) applicable to such Loss.  Any Loss for which
                      Seller does not receive written notice before the end of the
                      Survival
                      Period shall be deemed to be an Assumed Liability.  The
                      “Survival Period” applicable to Losses shall
                      mean:

                  

          

           

          
            	
                     

                  	
                    (1)

                  	
                    With
                      regard to a breach of representations and warranties contained
                      in Sections
                      7.1(A), (B), (C) and (D), for a period of one (1) year following
                      the
                      Closing;

                  

          

           

          
            	
                     

                  	
                    (2)

                  	
                    All
                      of the other representations and warranties by Seller in this
                      Agreement
                      for a period of six (6) months following the
                      Closing;

                  

          

           

          
            	
                     

                  	
                    (3)

                  	
                    With
                      regard to a breach of covenants, an indefinite period following
                      the
                      Closing;

                  

          

           

          
            	
                     

                  	
                    (4)

                  	
                    With
                      regard to the matters covered by Section 14.1 (C), for a period
                      of six
                      months after the Closing.

                  

          

           

          
            	
                    (ii)

                  	
                    The
                      indemnification obligations of Seller pursuant to this Agreement
                      shall be
                      limited to actual Losses and shall not include incidental,
                      consequential,
                      indirect, punitive, or exemplary Losses or
                      damages;

                  

          

           

          
            	
                    (iii)

                  	
                    Seller’s
                      aggregate liabilities and obligations under this Article 14
                      shall not
                      exceed ten percent (10%) of the Base Purchase
                      Price;

                  

          

           

          
            	
                    (iv)

                  	
                    Seller
                      shall have no liability or obligation for any Losses, unless
                      and until and
                      only to the extent that the aggregate Losses for which Buyer
                      is entitled
                      to recover under this Agreement exceeds one percent (1%) of
                      the Base
                      Purchase Price (the “Indemnity Deductible”) (such amount being a
                      deductible and not a threshold).

                  

          

           

          
            	
                    (v)

                  	
                    Seller
                      shall have no liability in excess of the Allocated Value, less
                      any prior
                      adjustments to the Base Purchase Price, for any Losses associated
                      with the
                      claim that Seller does not have Defensible Title associated
                      with a
                      particular Asset;

                  

          

           

          
            	
                    (vi)

                  	
                    The
                      amount of Losses required to be paid by Seller to indemnify
                      Buyer pursuant
                      to this Agreement shall be reduced to the extent of any amounts
                      actually
                      received by Buyer pursuant to the terms of the insurance policies
                      (if any)
                      covering such claim and any tax benefits received by
                      Buyer.

                  

          

           

          
            	
                    (vii)

                  	
                    Seller’s
                      indemnification obligations shall not cover any liabilities,
                      duties and
                      obligations relating to properly plugging and abandoning wells,
                      restoring
                      and reclaiming the surface, removal of all pipelines, equipment,
                      and
                      related facilities now or hereafter located on the Assets,
                      and cleaning
                      up, restoring and Remediation of the Assets in accordance with
                      the
                      Environmental Laws and the relevant Leases, or any other violation
                      or
                      claimed violation of Environmental Laws (including but not
                      limited to the
                      payment of fines, penalties, monetary sanctions or other civil
                      liabilities) or the presence, disposal, release or threatened
                      release of
                      any hazardous substance or hazardous waste from the Assets
                      into the
                      atmosphere or into or upon land or any water course or body
                      of water,
                      including groundwater, whether or not attributable to Seller’s activities
                      or the activities of third parties.  All such matters are
                      covered exclusively by Article 6 of this
                      Agreement.

                  

          

           

          
            
              
              

            

            
              Page
                29

              
                

              

            

            
              
              

            

          

           

          
            	
                    (viii)

                  	
                    Buyer
                      acknowledges and agrees that the indemnification provisions
                      in this
                      Article 14 and the termination rights in Article 13 shall be
                      the exclusive
                      remedies of Buyer with respect to the transactions contemplated
                      by this
                      Agreement.

                  

          

           

          14.2           Indemnification
            by Buyer

           

          .  UPON
            CLOSING, BUYER SHALL TO THE FULLEST EXTENT PERMITTED BY LAW, RELEASE,
            DEFEND,
            INDEMNIFY, AND HOLD HARMLESS SELLER’S GROUP FROM AND AGAINST THE
            FOLLOWING:

           

          
            	
                    (A)

                  	
                    MISREPRESENTATIONS.  ALL
                      LOSSES ARISING FROM THE BREACH BY BUYER OF ANY REPRESENTATION
                      OR WARRANTY
                      SET FORTH IN THIS AGREEMENT THAT SURVIVES
                      CLOSING;

                  

          

           

          
            	
                    (B)

                  	
                    BREACH
                      OF COVENANTS.  ALL LOSSES ARISING FROM THE BREACH BY BUYER
                      OF ANY COVENANT SET FORTH IN THIS
                      AGREEMENT;

                  

          

           

          
            	
                    (C)

                  	
                    ASSUMED
                      LIABILITIES.  ALL LOSSES ARISING FROM OR COMPRISING THE
                      ASSUMED LIABILITIES.

                  

          

           

          14.3           Physical
            Inspection

           

          .  BUYER
            INDEMNIFIES AND AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS
            THE
            SELLER’S GROUP FROM AND AGAINST ANY AND ALL CLAIMS ARISING FROM BUYER’S
            INSPECTING AND OBSERVING THE ASSETS, INCLUDING (A) CLAIMS FOR PERSONAL
            INJURIES TO OR DEATH OF EMPLOYEES OF THE BUYER, ITS CONTRACTORS, AGENTS,
            CONSULTANTS AND REPRESENTATIVES, AND DAMAGE TO THE PROPERTY OF BUYER
            OR OTHERS
            ACTING ON BEHALF OF BUYER; AND (B) CLAIMS, DEMANDS, LOSSES, DAMAGES,
            LIABILITIES, JUDGMENTS, CAUSES OF ACTION, COSTS OR EXPENSES FOR PERSONAL
            INJURIES TO OR DEATH OF EMPLOYEES OF THE SELLER’S GROUP OR THIRD PARTIES, AND
            DAMAGE TO THE PROPERTY OF THE SELLER’S GROUP OR THIRD PARTIES.  THE
            FOREGOING INDEMNITY INCLUDES, AND THE PARTIES INTEND IT TO INCLUDE, AN
            INDEMNIFICATION OF THE SELLER’S GROUP FROM AND AGAINST CLAIMS ARISING OUT OF OR
            RESULTING, IN WHOLE OR PART, FROM THE CONDITION OF THE ASSETS OR THE
            SELLER’S
            GROUP’S SOLE, JOINT, COMPARATIVE, OR CONCURRENT NEGLIGENCE, STRICT LIABILITY
            OR
            FAULT BUT NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SELLER’S
            GROUP.

           

          14.4           Notification

           

          .  As
            soon as reasonably practical after obtaining knowledge thereof, the indemnified
            Party shall notify the indemnifying Party of any claim or demand which
            the
            indemnified Party has determined has given or could give rise to a claim
            for
            indemnification under this Article 14.  Such notice shall specify the
            agreement, representation or warranty with 

           

          
            
              
              

            

            
              Page
                30

              
                

              

            

            
              
              

            

          

           

          respect
            to which the claim is made, the facts giving rise to the claim and the
            alleged
            basis for the claim, and the amount (to the extent then determinable)
            of
            liability for which indemnity is asserted.  In the event any action,
            suit or proceeding is brought with respect to which a Party may be liable
            under
            this Article 14, the defense of the action, suit or proceeding (including
            all
            settlement negotiations and arbitration, trial, appeal, or other proceeding)
            shall be at the discretion of and conducted by the indemnifying
            Party.  If an indemnified Party shall settle any such action, suit or
            proceeding without the written consent of the indemnifying Party (which
            consent
            shall not be unreasonably withheld), the right of the indemnified Party
            to make
            any claim against the indemnifying Party on account of such settlement
            shall be
            deemed conclusively denied.  An indemnified Party shall have the right
            to be represented by its own counsel at its own expense in any such action,
            suit
            or proceeding, and if an indemnified Party is named as the defendant
            in any
            action, suit or proceeding, it shall be entitled to have its own counsel
            and
            defend such action, suit or proceeding with respect to itself at its
            own
            expense.  Subject to the foregoing provisions of this Article 14,
            neither Party shall, without the other Party’s written consent, settle,
            compromise, confess judgment or permit judgment by default in any action,
            suit
            or proceeding if such action would create or attach any liability or
            obligation
            to the other Party.  The Parties agree to make available to each
            other, and to their respective counsel and accountants, all information
            and
            documents reasonably available to them which relate to any action, suit
            or
            proceeding, and the Parties agree to render to each other such assistance
            as
            they may reasonably require of each other in order to ensure the proper
            and
            adequate defense of any such action, suit or proceeding.

           

          15.           MISCELLANEOUS.

           

          15.1           Casualty
            Loss.

           

          
            	
                    (A)

                  	
                    An
                      event of casualty means volcanic eruptions, acts of God, fire,
                      explosion,
                      earthquake, wind storm, flood, drought, condemnation, the exercise
                      of any
                      right of eminent domain, confiscation and seizure (a
                      “Casualty”).  A Casualty does not include depletion due to
                      normal production and depreciation or failure of equipment
                      or
                      casing.

                  

          

           

          
            	
                    (B)

                  	
                    If,
                      prior to the Closing, a Casualty occurs (or Casualties occur)
                      which
                      results in a reduction in the value of any of the Assets in
                      excess of
                      twenty-five percent (25%) of the Allocated Value of the affected
                      Assets
                      (“Casualty Loss”), (i) Seller may retain such Asset and such Asset
                      shall be the subject of an adjustment to the Base Purchase
                      Price in the
                      same manner set forth in Section 5.4 hereof, or (ii) at the Closing,
                      Seller shall assign to Buyer the right to receive all insurance
                      proceeds
                      or other sums payable to Seller by reason of such Casualty
                      Loss, the Base
                      Purchase Price shall not be adjusted by reason of such payment,
                      and Seller
                      shall convey the affected Assets to
                      Buyer.

                  

          

           

          
            	
                    (C)

                  	
                    For
                      purposes of determining the diminution in value of an Asset
                      as a result of
                      a Casualty Loss, the Parties shall use the same methodology
                      as applied in
                      determining the diminution in value of an Asset as a result
                      of a Title
                      Defect as set forth in Section 5.4.

                  

          

           

          
            
              
              

            

            
              Page
                31

              
                

              

            

            
              
              

            

          

           

          15.2           Confidentiality.

           

          
            	
                    (A)

                  	
                    Prior
                      to Closing, to the extent not already public, Buyer shall not
                      disclose to
                      any party that it is conducting negotiations with Seller or
                      has entered
                      into this Agreement other than as expressly permitted in the
                      confidentiality agreement executed by Buyer in Seller’s favor prior to the
                      execution of this Agreement, which shall continue to apply
                      until the
                      Closing and thereafter in the event of termination of this
                      Agreement prior
                      to the Closing. Buyer shall exercise all due diligence in safeguarding
                      and
                      maintaining secure all engineering, geological and geophysical
                      data,
                      seismic data, reports and maps, the results and findings of
                      Buyer with
                      regard to its due diligence associated with the Assets (including
                      without
                      limitation with regard to due diligence associated with environmental
                      and
                      title matters) and other data relating to the Assets (collectively,
                      the
                      “Confidential Information”).  Buyer acknowledges that, prior to
                      Closing, all Confidential Information shall be treated as confidential.
                      Notwithstanding the foregoing, Seller understands that Buyer
                      has public
                      reporting obligations that may require public announcement
                      of certain
                      information relating to this Agreement.  Seller and Buyer shall
                      consult with each other with regard to all publicity and other
                      releases at
                      or prior to the Closing concerning this Agreement and the transaction
                      contemplated hereby and, except as required by applicable law
                      or other
                      applicable rules or regulations of any governmental body or
                      stock
                      exchange, neither party shall issue any publicity or other
                      release without
                      the prior written consent of the other party, such consent
                      not to be
                      unreasonably withheld.

                  

          

           

          
            	
                    (B)

                  	
                    In
                      the event of termination of this Agreement for any reason,
                      Buyer shall not
                      use or knowingly permit others to use such Confidential Information
                      in a
                      manner detrimental to Seller, and will not disclose any such
                      Confidential
                      Information to any person, firm, corporation, association or
                      other entity
                      for any reason or purpose whatsoever, except to Seller or to
                      a
                      governmental agency pursuant to a valid subpoena or other order
                      or
                      pursuant to applicable governmental regulations, rules or
                      statutes.

                  

          

           

          
            	
                    (C)

                  	
                    The
                      undertaking of confidentiality shall not diminish or take precedence
                      over
                      any separate confidentiality agreement between the
                      Parties.  Should this Agreement terminate, such separate
                      confidentiality agreement shall remain in full force and
                      effect.

                  

          

           

          15.3           Notices

           

          .  Any
            notice, request, demand, or consent required or permitted to be given
            hereunder
            shall be in writing and delivered in person or by certified letter, with
            return
            receipt requested, or by facsimile addressed to the Party for whom intended
            at
            the following addresses:

           

          SELLER:

           

          Raven
            Resources, LLC

          13220
            North MacArthur

          Oklahoma
            City, Oklahoma 73142

          Attn:                      Mr.
            Michael Lee

          Tel:  (405)
            773-7340

          Fax:  (405)
            773-7488

          

          Shenandoah
            Petroleum Corporation

          24
            Smith
            Road, Suite 601

          Midland,
            Texas  79705

          Attn:
            Troy Martin

          Tel:  (432)
            685-1964

          Fax:  (432)
            685-0024

           

          
            
              
              

            

            
              Page
                32

              
                

              

            

            
              
              

            

          

           

          BUYER:

           

          Legacy
            Reserves Operating
            LP

          303
            West Wall, Suite 1600

          Midland,
            Texas 79701

          Attn:                      Mr.
            Kyle A. McGraw

          Tel:
            (432) 682-2516

          Fax:
            (432) 684-3774

          

          With
            copy
            to:  Cotton, Bledsoe, Tighe & Dawson500 W. Illinois, Suite
            300Midland, Texas   79701Attention:  Bill
            Howard

          

          or
            at
            such other address as any of the above shall specify by like notice to
            the
            other.

           

          15.4           Press
            Releases and Public Announcements

           

          .  No
            Party shall issue any press release or make any public announcement relating
            to
            the subject matter of this Agreement prior to the Closing without the
            prior
            written approval of the other Party; provided, however, that any Party
            may make
            any public disclosure it believes in good faith is required by applicable
            law or
            any listing or trading agreement concerning its or its affiliates’
publicly-traded securities (in which case the disclosing Party shall
            use all
            reasonable efforts to advise the other Party, and give the other Party
            an
            opportunity to comment on the proposed disclosure, prior to making the
            disclosure).  Notwithstanding the foregoing, no press release or any
            public announcement shall identify Seller or the principals of Seller
            without
            Seller’s prior written consent, which consent shall not be unreasonably
            withheld.

           

          15.5           Compliance
            with Express Negligence Test

           

          .  THE
            PARTIES AGREE THAT THE INDEMNIFICATION OBLIGATIONS OF THE INDEMNIFYING
            PARTY
            SHALL BE WITHOUT REGARD TO THE NEGLIGENCE (EXCLUDING GROSS NEGLIGENCE)
            OR STRICT
            LIABILITY OF THE INDEMNIFIED PERSON(S), WHETHER THE NEGLIGENCE OR STRICT
            LIABILITY IS ACTIVE, PASSIVE, JOINT, CONCURRENT OR SOLE.

           

          15.6           Governing
            Law

           

          .  This
            Agreement is governed by and must be construed according to the laws
            of the
            State of Texas, excluding any conflicts-of-law rule or principle that
            might
            apply the law of another jurisdiction.  All disputes related to this
            Agreement shall be submitted exclusively to the jurisdiction of the courts
            of
            the State of Texas and venue shall be in the civil district courts of
            Midland,
            Midland County, Texas.

           

          15.7           Exhibits

           

          .  The
            Exhibits attached to this Agreement are incorporated into and made a
            part of
            this Agreement.

           

          
            
              
              

            

            
              Page
                33

              
                

              

            

            
              
              

            

          

           

          15.8           Fees,
            Expenses, Taxes and Recording.

           

          
            	
                    (A)

                  	
                    Each
                      Party shall be solely responsible for all costs and expenses
                      incurred by
                      it in connection with this transaction (including, but not
                      limited to fees
                      and expenses of its counsel and accountants) and shall not
                      be entitled to
                      any reimbursements from the other Party, except as otherwise
                      provided in
                      this Agreement.

                  

          

           

          
            	
                    (B)

                  	
                    Buyer
                      shall file all necessary Tax returns and other documentation
                      with respect
                      to all transfer, documentary, sales, use, stamp, registration
                      and other
                      similar Taxes and fees, and, if required by applicable law,
                      Seller shall
                      join in the execution of any such Tax returns and other
                      documentation.  Notwithstanding anything set forth in this
                      Agreement to the contrary, Buyer shall pay any transfer, documentary,
                      sales, use, stamp, registration and other similar Taxes and
                      fees incurred
                      in connection with this Agreement and the transactions contemplated
                      hereby.  Buyer shall also pay any equipment lease transfer fees
                      or other fees or expenses incurred in connection with transfer
                      of the
                      Assets to Buyer except as otherwise provided by this
                      Agreement.

                  

          

           

          
            	
                    (C)

                  	
                    Buyer
                      shall, at its own cost, immediately record all instruments
                      of conveyance
                      and sale in the appropriate office of the state and county
                      in which the
                      lands covered by such instrument are located.  Buyer shall
                      immediately file for and obtain the necessary approval of all
                      federal,
                      Indian, tribal or state government agencies to the assignment
                      of the
                      Assets.  The assignment of any state, federal or Indian tribal
                      oil and gas leases shall be filed in the appropriate governmental
                      offices
                      on a form required and in compliance with the applicable rules
                      of the
                      applicable government agencies.  Buyer shall supply Seller with
                      a true and accurate photocopy reflecting the recording information
                      of all
                      the recorded and filed assignments within a reasonable period
                      of time
                      after their recording and filing.  In the event that Seller
                      undertakes to record and/or file the conveyance instruments
                      and other
                      documents associated with this transfer of interest, Buyer
                      shall reimburse
                      Seller for all associated fees at Post
                      Closing.

                  

          

           

          15.9           Assignment

           

          .  Subject
            to Section 10.5, this Agreement or any part hereof may not be assigned
            by either
            Party without the prior written consent of the other Party; provided,
            however,
            upon notice to the other Party, either Party shall have the right to
            assign all
            or part of its rights (but none of its obligations) under this Agreement
            in
            order to qualify transfer of the Assets as a “like-kind” exchange for federal
            tax purposes.  Subject to the foregoing, this Agreement is binding
            upon the Parties hereto and their respective successors and
            assigns.

           

          15.10                      Entire
            Agreement

           

          .  This
            Agreement constitutes the entire agreement reached by the Parties with
            respect
            to the subject matter hereof, superseding all prior negotiations, discussions,
            agreements and understandings, whether oral or written, relating to such
            subject
            matter.

           

          15.11                      Severability

           

          .  In
            the event that any one or more covenants, clauses or provisions of this
            Agreement shall be held invalid or illegal, such invalidity or unenforceability
            shall not affect any other provisions of this Agreement.

           

          
            
              
              

            

            
              Page
                34

              
                

              

            

            
              
              

            

          

           

          15.12                      Captions

           

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

           

          15.13                      Time
            of the Essence

           

          .  The
            parties recognize and agree that time is of the essence of this
            Agreement.

          

          15.14                      Counterpart
            Execution,

           

          This
            Agreement may be executed in any number of counterparts, and each counterpart
            hereof shall be effective as to each Party that executes the same whether
            or not
            all such Parties execute the same counterpart.  If counterparts of
            this Agreement are executed, the signature pages from various counterparts
            may
            be combined into one composite instrument for all purposes.  All
            counterparts together shall constitute only one Agreement but each counterpart
            shall be considered an original.

           

          15.15                      Excluded
            Property Interest.

           

          Notwithstanding
            anything contained in this Agreement to the contrary or that might be
            construed
            to the contrary, it is understood and agreed that pursuant to this Agreement
            Shenandoah Petroleum Corporation is only agreeing to sell to Buyer and
            Buyer is
            only agreeing to purchase from Shenandoah Petroleum Corporation, Shenandoah
            Petroleum Corporation’s interest in the Cochran County, Texas, properties
            described in Exhibit 1.1(A) attached hereto and all of the Assets related
            thereto.  This Agreement shall not create any obligation on the part
            of Shenandoah Petroleum Corporation to sell to Buyer or any obligation
            of the
            part of Buyer to purchase from Shenandoah Petroleum Corporation, any
            interest
            that Shenandoah Petroleum Corporation owns in the Garza County, Texas,
            properties described in Exhibit 1.1(A) attached hereto or any Assets
            related thereto.

          

           

          

          [REMAINDER
            OF PAGE LEFT INTENTIONALLY BLANK]

           

          
            
              
              

            

            
              Page
                35

              
                

              

            

            
              
              

            

          

          

           

          Executed
            as of the day and year first above written.

           

          
            	 	
                    SELLER:

                     

                    RAVEN RESOURCES, LLC

                  	 
	 	 	 	 
	
                     

                  	
                    By:
                      

                  	/s/ David
                    Stewart	 
	 	 	David
                    Stewart	 
	 	 	Managing
                    Member	 
	 	 	 	 

          

        

      

    

    
      	 	SHENANDOAH
              PETROLEUM CORPORATION	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/Troy
              G. Martin     	 
	 	 	Troy
              G. Martin 	 
	 	 	President 	 
	 	 	 	 

    

    
      	 	
              BUYER:

               

              LEGACY RESERVES OPERATING LP, by Legacy
                Reserves
                GP, LLC, its general partner

            	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/Kyle
              A. McGraw     	 
	 	 	Kyle
              A. McGraw 	 
	 	 	Executive
              Vice President Business Development & Land 	 
	 	 	 	 

    

     

    
      
        
        

      

      
        Page
          36Filed by Bowne Pure Compliance

 

EXHIBIT 10.1

July 25, 2007

Mrs. Nancy Rowden Brock

Chief Financial Officer

Rock of Ages Corporation

772 Graniteville, Rd.

Graniteville, Vermont 05654

Dear Nancy:

This letter sets forth the terms of our mutual agreement concerning your voluntary resignation
from Rock of Ages Corporation, its subsidiaries and affiliates (collectively, “Rock of Ages” or the
“Company”). Before getting to the required formalities, let me first express my appreciation for
your efforts on behalf of Rock of Ages and for your efforts to assure the orderly transition of
your responsibilities. A lot has changed since your joining us when we were in a planned retail
growth initiative under the leadership of Rick Wrabel. You have toughed it out with us through the
very difficult times we endured in 2005 and 2006 and been an important part of returning the
Company to stability and expected profitability in 2007. I greatly appreciate your efforts and
your support during a transition neither of us expected when you joined us, and I understand your
desire to now move on to new opportunities. And now to the formalities:

1. Your resignation from employment becomes effective on August 14th, 2007 upon the
completion of the filing of our 10Q for the second quarter of 2007 (the Resignation Date). You
agree to continue in your current position with your current responsibilities through the
Resignation Date, and accordingly will participate in the preparation and timely filing of that 10Q
in compliance with the rules and regulations of the Securities Exchange Commission and will assist
in an orderly transition to Laura Plude who will become the Chief Financial Officer on the
effective date of your resignation. You hereby confirm that as of the Resignation Date, you will
no longer hold any position of any kind with the Company or any of its subsidiaries or affiliates.

 

 

 

You will be paid at your current salary level through the Resignation Date on the normal payroll
cycle.

2. In consideration of your agreement to assure an orderly transition by being available to
Laura for advice through the end of November and the execution of this Resignation Agreement, and
subject to your continued compliance with this Agreement, Rock of Ages agrees to pay you in respect
of the period from the Resignation Date through November 30, 2007, as severance, amounts at your
current salary rate of $15,416.67 per month, payable on the 15th day of each month, the
last such payment to be made on November 15, 2007. Such payments will be less appropriate state,
federal, unemployment and social security tax deductions. You understand and agree that such
payments and this Resignation Agreement shall in no way be deemed to constitute or give rise to a
continuing employment relationship between you and the Company or, except as expressly provided
herein, entitle you to any other benefits to which employees of the Company may be entitled.

Rock of Ages will continue the coverage that you have elected at current contribution rates
under its group health, dental and vision insurance plans (or successor plans providing
substantially the same coverage) until December 31, 2007. After said date, under current COBRA law
you may have the right to remain on the Company’s group plan for an additional period of time,
contingent upon your payment of the full premium in effect during that time. A COBRA notice and
election form will be sent to your home on a timely basis.

3. Your group term life insurance, optional life insurance, disability insurance, retirement
plan and all other fringe benefits not specifically provided for herein shall cease and terminate
on the Resignation Date. All Company contributions to your 401(k) account shall cease on the
Resignation Date; provided, however, you may remain in the 401(k) plan according to its terms for
as long as you wish and as long as your account balance remains over Five Thousand Dollars
($5,000.00), or you may withdraw or rollover your account balance at any time after the Resignation
Date in accordance with the provisions of the 401(k) Plan and in accordance with applicable law and
regulations. A notice explaining your distribution options will be sent to your home. In
accordance with the terms of your incentive stock option agreement dated September 13, 2005 (the
Option Grant) and the option acceleration agreement dated October 28, 2005 (the Option
Acceleration), you have rights to exercise the vested options at any time within ninety (90) days
from the Resignation Date subject to the provisions of the Option Grant and the Option Acceleration
which imposes certain restrictions on the sale of shares acquired upon the exercise of accelerated
options. Mike Tule will assist you in understanding the details involved as well as the tax
consequences of an exercise at any time at your request prior to the expiration of the option on
November 12, 2007.

 

2

 

4. You will submit all outstanding, unreimbursed, business expenses incurred on behalf of the
Company on our prior to August 14, 2006 so we may promptly reimburse you for any business expenses.

5. The Company will transfer your company automobile to you at no cost. It will be transferred
to you “as is” “where is” and you will be responsible for paying any transfer taxes, registration
fees and other amounts in connection with the transfer. You are aware that you will be taxed on the
fair market value of the automobile and you will be receiving the appropriate 1099 or other form in
this regard. On the Resignation Date you will return all Company property, whether confidential or
not, without keeping copies or excerpts thereof, including, but not limited to, computers
(including any passwords associated therewith), cell phones, printers, customer lists, samples,
product information, financial information, price lists, marketing materials, keys, credit cards,
telephone calling cards, technical data, research, blueprints, trade secrets information, and all
confidential or proprietary information. Notwithstanding the foregoing, we will reasonably
accommodate you with respect to providing an orderly transition of cell phone service and email
service from the Company’s accounts to your personal accounts for a 30 day period from the
Resignation Date.

6. You understand and agree that you would not receive the money and benefits specified in
paragraphs 2, 3 and 5 above except for your execution of this Resignation Agreement and your
agreement to fulfill your agreements as described herein.

7. You and Rock of Ages agree that the payment and benefits specified in paragraph 2 above
includes any and all monies, including but not limited to wages, salary, severance and/or pay in
lieu of notice that may be due to you as a result of your employment with Rock of Ages and/or your
resignation.

8. (a) In consideration of the covenants and payments set forth above, you confirm your
resignation is voluntary and voluntarily release and discharge Rock of Ages, its parent,
affiliates, subsidiaries, divisions, officers, employees, agents, successors, and assigns, both
individually and in their official capacities (hereinafter in this Section 7 and Section 8 referred
to collectively as “Rock of Ages”) of and from any and all claims, charges, lawsuits, grievances or
causes of action whatsoever, in law or equity, which you, your heirs, executors, administrators,
successors, and assigns may have against Rock of Ages. This shall include any claim related to or
arising out of your employment by Rock of Ages, the terms and conditions of said employment and the
cessation of said employment, including but not limited to any alleged violation of any of the
following:

The National Labor Relations Act;

Title VII of the Civil Rights Act of 1964;

 

3

 

Sections 1981 through 1988 of Title 42 of United States Code;

The Employee Retirement Income Security Act of 1974;

The Immigration Reform Control Act;

The Americans with Disabilities Act of 1990;

The Age Discrimination in Employment Act of 1967;

The False Claims Act;

The Fair Labor Standards Act;

The Occupational Safety and Health Act;

The Family and Medical Leave Act;

The Vermont Employment Discrimination Law;

Vermont Wage Payment and Wage and Hour Laws;

Vermont whistleblower protection laws;

Any other federal, state or local civil or human rights law or any other alleged violation
of any local, state or federal law, regulation or ordinance;

Any public policy, contract, tort, or common law; or

Any allegation for costs, fees, or other expenses including attorneys’ fees incurred in
these matters.

(b) You acknowledge that the Company has advised you to consult with an attorney of your
choosing prior to signing this Resignation Agreement. You represent that you understand and agree
that you have the right and have been given the opportunity to review this Resignation Agreement
and, specifically, the release in paragraph 8(a) above, with an attorney of your choice should you
so desire. You further represent that you understand and agree that the Company is under no
obligation to offer you this Resignation Agreement, and that you are under no obligation to consent
to such release, and that you have entered into this Resignation Agreement knowingly, freely and
voluntarily in exchange for the Company’s agreement with respect to the discretionary severance
payments and benefits provided for in paragraphs 2, 3 and 5.

 

4

 

(c) You shall have twenty one (21) days to consider this Resignation Agreement and once you
have signed this Resignation Agreement, you shall have seven (7) additional days from the date of
execution to revoke your consent to the release in paragraph 8(a) above. Any such revocation shall
be made in writing to the Company at 369 North State Street, Concord, NH 03301, Attn: Michael B.
Tule, Senior Vice President and General Counsel, before the seven (7) day period expires. If no
such revocation occurs, such release and this Resignation Agreement shall become effective on the
eighth (8th) day following your execution of this Resignation Agreement. In the event that you
properly revoke such release, this Resignation Agreement shall become null and void and shall not
become effective.

(d) In consideration of the covenants contained herein, Rock of Ages represents that it does
not have actual knowledge of any claim, charge, lawsuit, grievance or cause of action whatsoever,
in law or equity, which it may have against you (a “Known Claim”) and Rock of Ages does voluntarily
release and discharge you of and from any and all Known Claims.

9. You represent that you have not filed, or permitted to be filed on your behalf, any claim,
lawsuit, grievance or cause of action against Rock of Ages, and that no claim, lawsuit, grievance
or cause of action exists relating to your employment by Rock of Ages or the voluntary resignation
from that employment. With the exception of any action the law precludes you from waiving by
agreement, you expressly covenant not to, and not to permit any party on your behalf to, sue Rock
of Ages in respect of any claim, matter, liability or damage released pursuant to Section 7 or seek
to be entitled to any equitable or monetary relief in any action or in connection with any charge
or complaint that may be commenced or brought on your behalf with respect thereto.

10. This Resignation Agreement shall be governed by and construed in accordance with the laws
of the State of Vermont. Should any provision of this Agreement be declared illegal or
unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, such
provision shall immediately become null and void, leaving the remainder of this Agreement in full
force and effect.

11. You understand and agree that notwithstanding your voluntary resignation, you remain
subject to the confidentiality obligations, non-solicitation obligations and covenant not to
compete obligations set forth in sections 8, 9 and 11 of your employment agreement dated June 13,
2005, as amended by Amendment dated April 10, 2006 (your “Employment Agreement”) and any other
obligations in your Employment Agreement extending beyond its term, and you agree to abide by those
agreements as set forth in your Employment Agreement notwithstanding your resignation. Except for
such continuing obligations under your Employment Agreement referred to above in this paragraph 11,
upon the Resignation Date, your Employment Agreement shall terminate and be of no further force or
effect. You further agree not to disclose, either directly or indirectly, any information
whatsoever regarding the existence or substance of this Resignation Agreement to anyone other than your
legal counsel or Executive Officers of the Company prior to its filing by the Company with the
Securities and Exchange Commission as required by law and regulation.

 

5

 

12. This Resignation Agreement, together with your Employment Agreement to the extent
expressly provided herein, the Option Grant and the Option Acceleration, set forth the entire
agreement, and supersedes all prior agreements, arrangements and understandings, written or oral,
between the parties, with respect to the subject matter hereof, and may not be modified, altered or
changed except upon express written consent by both parties.

	 	 	 	 	 
	 	 	Sincerely yours,
	 
	 	 	 	 
	 	 	ROCK OF AGES CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kurt M. Swenson
	 

	 	 	 	 
	 

	 	 	 	Kurt M. Swenson, Chairman/CEO
	 
	 	 	 	 
	AGREED AND ACCEPTED:
	 	 	 	 
	 
	 	 	 	 
	 	 	/s/ Nancy Rowden Brock
	 	 	 
	Dated: July 25, 2007	 	Nancy Rowden Brock

 

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