Document:

Exhibit

Exhibit 10.7

PURCHASE AND SALE AGREEMENT
BY AND AMONG
MID-CON ENERGY PROPERTIES, LLC
MID-CON ENERGY OPERATING, LLC
AS SELLER
AND
PO&G PANHANDLE, LP
AS PURCHASER
Executed on May 26, 2016

	
			
	 
	i
	 

TABLE OF CONTENTS
Page

SECTION 1.1   PURCHASE AND SALE..........................................................................9
		
	Section 1.2
	Assets.........................................................................................9

		
	Section 1.3
	Excluded Assets.......................................................................12

		
	Section 1.4
	Effective Time; Proration of Costs and Revenues...................13

		
	Section 1.5
	Delivery and Maintenance of Records....................................14

ARTICLE 2 PURCHASE PRICE.....................................................................................15
		
	Section 2.1
	Purchase Price.........................................................................15

		
	Section 2.2
	Adjustments to Purchase Price................................................15

		
	Section 2.3
	Deposit....................................................................................17

		
	Section 2.4
	Allocated Values.....................................................................17

ARTICLE 3 TITLE MATTERS.......................................................................................17
		
	Section 3.1
	Seller’s Title...........................................................................17

		
	Section 3.2
	Definition of Defensible Title................................................18

		
	Section 3.3
	Definition of Permitted Encumbrances..................................19

		
	Section 3.4
	Notice of Title Defect Adjustments........................................21

		
	Section 3.5
	Casualty or Condemnation Loss.............................................25

		
	Section 3.6
	Limitations on Applicability....................................................25

ARTICLE 4 ENVIRONMENTAL MATTERS.................................................................26
		
	Section 4.1
	Assessment..............................................................................26

		
	Section 4.2
	NORM, Wastes and Other Substances....................................27

		
	Section 4.3
	Environmental Defects............................................................27

		
	Section 4.4
	Inspection Indemnity...............................................................29

		
	Section 4.5
	Exclusive Remedy...................................................................29

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER........................29
		
	Section 5.1
	Generally.................................................................................30

		
	Section 5.2
	Existence and Qualification....................................................30

		
	Section 5.3
	Power......................................................................................30

		
	Section 5.4
	Authorization and Enforceability...........................................30

		
	Section 5.5
	No Conflicts...........................................................................30

		
	Section 5.6
	Liability for Brokers’ Fees.....................................................31

		
	Section 5.7
	Litigation................................................................................31

		
	Section 5.8
	Taxes and Assessments...........................................................31

		
	Section 5.9
	Compliance with Laws...........................................................31

		
	Section 5.10
	Outstanding Capital Commitments........................................32

		
	Section 5.11
	Imbalances..............................................................................32

		
	Section 5.12
	Bankruptcy..............................................................................32

	
			
	 
	ii
	 

TABLE OF CONTENTS
Page

		
	Section 5.13
	Transfer Requirements............................................................32

		
	Section 5.14
	Preference Rights....................................................................32

		
	Section 5.15
	Payment of Royalties..............................................................32

		
	Section 5.16
	Oil and Gas Operations...........................................................32

		
	Section 5.17
	Well Status; Plugging and Abandonment................................33

		
	Section 5.18
	Non-Consent Operations.........................................................33

		
	Section 5.19
	Permits.....................................................................................33

		
	Section 5.20
	Tax Partnership........................................................................33

		
	Section 5.21
	Suspense Accounts..................................................................34

		
	Section 5.22
	Insurance; Bonding.................................................................34

		
	Section 5.23
	Material Contracts...................................................................34

		
	Section 5.24
	Environmental Matters............................................................34

		
	Section 5.25
	Mortgages and Other Instruments...........................................35

		
	Section 5.26
	Payments for Hydrocarbon Production...................................36

		
	Section 5.27
	Payout Balances......................................................................36

		
	Section 5.28
	Hedging...................................................................................36

ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER...............36
		
	Section 6.1
	Existence and Qualification....................................................36

		
	Section 6.2
	Power.......................................................................................36

		
	Section 6.3
	Authorization and Enforceability............................................36

		
	Section 6.4
	No Conflicts............................................................................37

		
	Section 6.5
	Liability for Brokers’ Fees......................................................37

		
	Section 6.6
	Litigation................................................................................37

		
	Section 6.7
	Financing................................................................................37

		
	Section 6.8
	Limitation...............................................................................37

		
	Section 6.9
	SEC Disclosure......................................................................37

		
	Section 6.10
	Bankruptcy.............................................................................38

		
	Section 6.11
	Qualification..........................................................................38

		
	Section 6.12
	Consents................................................................................38

		
	Section 6.13
	Independent Evaluation.........................................................38

ARTICLE 7 COVENANTS OF THE PARTIES.............................................................39
		
	Section 7.1
	Government Reviews............................................................39

		
	Section 7.2
	Notification of Breaches.......................................................39

		
	Section 7.3
	Letters-in-Lieu; Assignments; Operatorship.........................40

		
	Section 7.4
	Public Announcements..........................................................40

		
	Section 7.5
	Operation of Business...........................................................40

		
	Section 7.6
	Transfer Requirements..........................................................41

		
	Section 7.7
	Tax Matters...........................................................................42

		
	Section 7.8
	Further Assurances...............................................................42

		
	Section 7.9
	Insurance..............................................................................43

		
	Section 7.10
	Record Retention.................................................................43

	
			
	 
	iii
	 

TABLE OF CONTENTS
Page

		
	Section 7.11
	Bonds, Letters of Credit and Guarantees.................................43

		
	Section 7.12
	Cure of Misrepresentations......................................................43

		
	Section 7.13
	Plugging, Abandonment, Decommissioning and Other Costs.44

		
	Section 7.14
	Employees................................................................................44

		
	Section 7.15
	Satisfaction of Conditions........................................................44

ARTICLE 8 CONDITIONS TO CLOSING......................................................................44
		
	Section 8.1
	Conditions of Seller to Closing................................................44

		
	Section 8.2
	Conditions of Purchaser to Closing.........................................46

ARTICLE 9 CLOSING......................................................................................................47
		
	Section 9.1
	Time and Place of Closing.......................................................47

		
	Section 9.2
	Obligations of Seller at Closing...............................................47

		
	Section 9.3
	Obligations of Purchaser at Closing........................................48

		
	Section 9.4
	Closing Adjustments and Closing Payment.............................49

ARTICLE 10 TERMINATION..........................................................................................51
		
	Section 10.1
	Termination..............................................................................51

		
	Section 10.2
	Effect of Termination...............................................................52

		
	Section 10.3
	Distribution of Deposit Upon Termination..............................52

ARTICLE 11 POST-CLOSING OBLIGATIONS; INDEMNIFICATION; 
LIMITATIONS; DISCLAIMERS AND WAIVERS..........................................................53
		
	Section 11.1
	Assumed Seller Obligations.....................................................53

		
	Section 11.2
	Survival....................................................................................54

		
	Section 11.3
	Indemnification by Seller.........................................................55

		
	Section 11.4
	Indemnification by Purchaser..................................................55

		
	Section 11.5
	Indemnification Proceedings...................................................56

		
	Section 11.6
	Release.....................................................................................58

		
	Section 11.7
	Disclaimers..............................................................................58

		
	Section 11.8
	Waiver of Trade Practices Acts................................................60

		
	Section 11.9
	Redhibition Waiver..................................................................60

		
	Section 11.10
	Recording.................................................................................61

		
	Section 11.11
	Non-Compensatory Damages..................................................61

		
	Section 11.12
	Disclaimer of Application of Anti-Indemnity Statutes............61

ARTICLE 12 MISCELLANEOUS....................................................................................61
		
	Section 12.1
	Counterparts.............................................................................61

		
	Section 12.2
	Notices.....................................................................................62

	
			
	 
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TABLE OF CONTENTS
Page

		
	Section 12.3
	Sales or Use Tax Recording Fees and Similar Taxes and Fees..62

		
	Section 12.4
	Exhibits and Schedules............................................................62

		
	Section 12.5
	Expenses..................................................................................63

		
	Section 12.6
	Change of Name......................................................................63

		
	Section 12.7
	Governing Law; Venue; and Waiver of Jury Trial...................63

		
	Section 12.8
	Captions...................................................................................64

		
	Section 12.9
	Waivers....................................................................................64

		
	Section 12.10
	Assignment..............................................................................64

		
	Section 12.11
	Entire Agreement.....................................................................64

		
	Section 12.12
	Amendment.............................................................................64

		
	Section 12.13
	No Third-Party Beneficiaries..................................................64

		
	Section 12.14
	References...............................................................................65

		
	Section 12.15
	Construction............................................................................65

		
	Section 12.16
	Conspicuousness.....................................................................65

		
	Section 12.17
	Severability.............................................................................66

		
	Section 12.18
	Time of Essence......................................................................66

	
			
	 
	v
	 

EXHIBITS
		
	Exhibit A
	Leases

		
	Exhibit A-1
	Wells and Units

		
	Exhibit A-2
	Working Interests and Net Revenue Interests

		
	Exhibit B
	Form of Assignment, Conveyance and Bill of Sale

		
	Exhibit C
	Form of Title Indemnity Agreement

SCHEDULES
		
	Schedule 1.2(d)
	Contracts

		
	Schedule 1.2(e)
	Easements

		
	Schedule 1.2(k)
	Vehicles and Vessels

		
	Schedule 1.3(e)
	Excluded Assets

		
	Schedule 3.3(l)
	Permitted Encumbrances

		
	Schedule 3.4(a)
	Allocated Values

		
	Schedule 5.7
	Litigation

		
	Schedule 5.8
	Taxes and Assessments

		
	Schedule 5.9
	Compliance with Laws

		
	Schedule 5.10
	Outstanding Capital Commitments

		
	Schedule 5.11
	Imbalances

		
	Schedule 5.13
	Transfer Requirements

		
	Schedule 5.16
	Oil and Gas Operations

		
	Schedule 5.17
	Plugging and Abandonment

		
	Schedule 5.21
	Suspense Accounts

		
	Schedule 5.22
	Insurance; Bonding

		
	Schedule 5.23
	Material Contracts

		
	Schedule 5.24
	Environmental Matters

		
	Schedule 7.5
	Operation of Business

		
	Schedule 7.14
	Employees 

	
			
	 
	vi
	 

DEFINITIONS
“Adjustment Period” means the period beginning at the Effective Time and ending on the Closing Date.
“Adjusted Purchase Price” shall mean the Purchase Price after calculating and applying the adjustments set forth in Section 2.2.
“AFE” means authority for expenditure.
“Affiliates” with respect to any Person, means any Person that directly or indirectly controls, is controlled by or is under common control with such Person.  The concept of control, controlling or controlled as used in the aforesaid context means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of another, whether through the ownership of voting securities, by contract or otherwise.  No Person shall be deemed an Affiliate of any Person by reason of the exercise or existence of rights, interests or remedies under this Agreement.
“Agreed Accounting Firm” has the meaning set forth in Section 9.4(c).
“Agreed Interest Rate” means the rate of interest published in the Wall Street Journal from time to time, as the one month London Interbank Offered Rate (LIBOR) plus 250 basis points, with adjustments in that rate to be made on the same day as any change in that rate.
“Agreement” has the meaning set forth in the preamble hereto.
“Allocated Value” has the meaning set forth in Section 3.4(a).
“Applicable Contracts” means all Contracts by which the Properties and other Assets are bound or that primarily relate to the Properties or other Assets and (in each case) that will be binding on the Assets or Purchaser after the Closing, including, without limitation; farmin and farmout agreements; bottomhole agreements; crude oil, condensate and natural gas purchase and sale, gathering, transportation and marketing agreements; hydrocarbon storage agreements; acreage contribution agreements; operating agreements; balancing agreements; pooling declarations or agreements; unitization agreements; processing agreements; saltwater disposal agreements; facilities or equipment leases; crossing agreements; letters of no objection; platform use agreements; production handling agreements; and other similar contracts and agreements, of Seller and primarily related to the Properties or other Assets, but exclusive of any master service agreements.
“Assessment” has the meaning set forth in Section 4.1(b).
“Assets” has the meaning set forth in Section 1.2.
“Assumed Seller Obligations” has the meaning set forth in Section 11.1.
“Business Day” means any calendar day except Saturdays, Sundays, and Federal holidays.

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“Claim” or “Claims” means any demand, claim or notice sent or given in writing by a Person to another Person in which the former asserts that it has suffered a Loss, has become a party to a Proceeding or subjected to a demand that is the responsibility of the latter Person.
“Claim Notice” has the meaning set forth in Section 11.2(c).
“Closing” has the meaning set forth in Section 9.1(a).
“Closing Date” has the meaning set forth in Section 9.1(b).
“Closing Payment” has the meaning set forth in Section 9.4(a).
“Closing Statements” means the Preliminary Closing Statement and the Final Closing Statement.
“Code” means the Internal Revenue Code of 1986, as amended.
“Confidentiality Agreement” has the meaning set forth in Section 4.1(g).
“Contracts” has the meaning set forth in Section 1.2(d).
“Conveyance” has the meaning set forth in Section 3.1(b).
“Cure Period” has the meaning set forth in Section 3.4(c).
“Customary Post-Closing Consents” means the consents, approvals, required notices, filing with or other actions for the assignment of the Assets to Purchaser that are customarily obtained after the assignment of properties similar to the Assets.
“Defensible Title” has the meaning set forth in Section 3.2(a).
“Deposit” has the meaning set forth in Section 2.3.
“DOJ” shall mean the Department of Justice.
“DTPA” has the meaning set forth in Section 11.8(a).
“Easements” has the meaning set forth in Section 1.2(e).
“Effective Time” has the meaning set forth in Section 1.4(a).
“Environmental Claim Date” has the meaning set forth in Section 4.3.
“Environmental Defect” has the meaning set forth in Section 4.3.
“Environmental Defect Amount” has the meaning set forth in Section 4.3.
“Environmental Defect Deductible” has the meaning set forth in Section 4.3.

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“Environmental Defect Notice” has the meaning set forth in Section 4.3.
“Environmental Laws” means, as the same may have been amended, superseded or replaced, any federal, state or local statute, law, regulation, ordinance, rule, order or decree including any rule of common law, relating to (i) the control of any potential pollutant or protection of the environment, including air, water, land or endangered, threatened, or protected species, (ii) the generation, use, handling, treatment, storage, disposal, production or transportation of waste materials, petroleum or natural gas, or (iii) the regulation of or exposure to Hazardous Materials, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”); the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”); the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq. the Hazardous Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency Planning and Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq.; the Endangered Species Act, 16 U.S.C. § 1531 et seq.; the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq.; the Atomic Energy Act, 42 U.S.C. § 2011 et seq.; and all applicable related law, whether local, state, territorial, or national, of any Governmental Body having jurisdiction over the property in question addressing pollution or protection of human health, safety, natural resources or the environment and all regulations implementing the foregoing.  The term “Environmental Laws” includes all judicial and administrative decisions, orders, directives, and decrees issued by a Governmental Body pursuant to the foregoing.
“Environmental Liabilities” shall mean any and all environmental response costs (including costs of remediation), damages, natural resource damages, settlements, consulting fees, expenses, penalties, fines, orphan share, prejudgment and post-judgment interest, court costs, attorneys’ fees, and other liabilities incurred or imposed (i) pursuant to any order, notice of responsibility, directive (including requirements embodied in Environmental Laws), injunction, judgment or similar act (including settlements) by any Governmental Body to the extent arising out of any violation of, or remedial obligation under, any Environmental Laws which are attributable to the ownership or operation of the Assets prior to, on or after the Effective Time or (ii) pursuant to any claim or cause of action by a Governmental Body or other Person for personal injury, property damage, damage to natural resources, remediation or response costs to the extent arising out of any exposure to Hazardous Materials, any violation of, or any remediation or obligation under, any Environmental Laws which is attributable to the ownership or operation of the Assets prior to, on or after the Effective Time; provided that “Environmental Liabilities” excludes any of the foregoing to the extent caused by or relating to NORM or disclosed in any Schedule.  Notwithstanding the foregoing, the phrases “violation of Environmental Laws” and “remedial obligation under any Environmental Laws” and words of similar import shall mean, as to any given Asset, the violation of or failure to meet specific objective requirements or standards that are clearly applicable to such Asset under applicable Environmental Laws where such requirements or standards are in effect as of the Effective Time.  The phrase does not include good or desirable operating practices or standards that may be employed or adopted by other oil or gas well operators or recommended by a Governmental Body. 

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“Environmental Permits” has the meaning set forth in Section 5.24(a)(ii).
“Equipment” has the meaning set forth in Section 1.2(f).
“Excluded Assets” has the meaning set forth in Section 1.3.
“Excluded Seller Obligations” has the meaning set forth in Section 11.1.
“Final Adjustment” has the meaning set forth in Section 9.4(b).
“Final Closing Statement” has the meaning set forth in Section 9.4(b).
“Final Purchase Price” has the meaning set forth in Section 9.4(b).
“Final Settlement Date” has the meaning set forth in Section 9.4(b).
“Form 8594” has the meaning set forth in Section 2.4.
“FTC” shall mean the Federal Trade Commission.
“Fundamental Representations” has the meaning set forth in Section 11.2(a).
“Geologic Data” means all seismic, geological, geochemical or geophysical data (including cores and other physical samples of materials from wells or tests) belonging to Seller or licensed from third parties relating to the Properties that can be transferred without additional consideration to such third parties other than tape copying costs and expenses (or including such licensed data in the event Purchaser agrees to pay such additional consideration).
“Governmental Body” or “Governmental Bodies” means any federal, state, local, municipal, or other government; any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power; and any court or governmental tribunal.
“Hazardous Material” means (i) any “hazardous substance,” as defined by CERCLA, (ii) any “hazardous waste” or “solid waste,” in either case as defined by RCRA, and any analogous state statutes, and any regulations promulgated thereunder, (iii) any solid,  hazardous, dangerous or toxic chemical, material, waste or substance, within the meaning of and regulated by any applicable Environmental Laws, (iv) any radioactive material, including any naturally occurring radioactive material, and any source, special or byproduct material as defined in 42 U.S.C. 2011 et seq. and any amendments or authorizations thereof, (v) any regulated asbestos-containing materials in any form or condition, (vi) any regulated polychlorinated biphenyls in any form or condition, and (vii) petroleum, petroleum hydrocarbons or any fraction, derivative or byproducts thereof.
“Hydrocarbons” means (i) oil, gas, casinghead gas, condensate and other gaseous and liquid hydrocarbons or any combination thereof and (ii) all other minerals (whether similar or dissimilar to the minerals listed in (i) above) of every kind and character which may be extracted from or 

4    

produced from the Properties and (iii) sulphur and other minerals extracted from or produced with the foregoing.
“Imbalance” or “Imbalances” means any over-production, under-production, over-delivery, under-delivery or similar imbalance of Hydrocarbons produced from or allocated to the Assets, regardless of whether such over-production, under-production, over-delivery under-delivery or similar imbalance arises at the platform, wellhead, pipeline, gathering system, transportation system, processing plant or other location.
“Indemnified Party” has the meaning set forth in Section 11.5(a).
“Indemnifying Party” has the meaning set forth in Section 11.5(a).
“Indemnity Agreement” has the meaning set forth in Section 3.4(d)(i).
“Indemnity Deductible” has the meaning set forth in Section 11.5(d)(ii).
“Independent Expert” has the meaning set forth in Section 4.3.
“Individual Benefit Threshold” has the meaning set forth in Section 3.4(j).
“Individual Environmental Threshold” has the meaning set forth in Section 4.3.
“Individual Title Threshold” has the meaning set forth in Section 3.4(j).
“Lands” has the meaning set forth in Section 1.2(a).
“Laws” means all statutes, laws, rules, regulations, ordinances, orders, and codes of or by any Governmental Bodies.
“Leases” has the meaning set forth in Section 1.2(a).
“Losses” means any and all debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become due or otherwise), diminution in value, monetary damages, fines, fees, Taxes, penalties, interest obligations, deficiencies, losses and expenses (including amounts paid in settlement, interest, court costs, costs of investigators, reasonable fees and expenses of attorneys, accountants, financial advisors and other experts, and other actual out of pocket expenses incurred in investigating and preparing for or in connection with any Proceeding).
“Lowest Cost Response” means the response or action required under Environmental Laws or Environmental Permits that addresses the condition present sufficient to bring the condition or the affected Asset into compliance with Environmental Laws or Environmental Permits or to address the liability created under Environmental Law,  at a reasonable  cost (considered as a whole taking into consideration the use of the Properties and in order to avoid any material negative impact such response or action may have on the operations of the relevant Assets and any potential material 

5    

additional costs or liabilities that may likely arise as a result of such response or action) as compared to any other response that is required or allowed under Environmental Laws.
“Material Adverse Effect” means any effect that is material and adverse to the ownership, operation or value of the Assets, taken as a whole, and as currently operated; provided, however, that “Material Adverse Effect” shall not include (i) any effect resulting from entering into this Agreement or the announcement of the transactions contemplated by this Agreement; (ii) any effect resulting from changes in general market, economic, financial or political conditions or any outbreak of hostilities or war unless such result in a disproportionate impact on the Assets, (iii) any effect that affects the Hydrocarbon exploration, production, development, processing, gathering and/or transportation industry generally (including changes in commodity prices or general market prices in the Hydrocarbon exploration, production, development, processing, gathering and/or transportation industry generally), and (iv) any effect resulting from a change in Laws or regulatory policies.
“Material Contracts” means those Contracts that are material to the ownership or current operation of the Assets, including (i) all of the unit agreements, farmout and farmin agreements, pooling agreements, pooling designations, unit operating agreements and operating agreements, exploration agreements, participation agreements, transportation and gathering agreements, rig contracts, pipe and other supply contracts and area of mutual interest agreements, (ii) all of the production sales, marketing and processing agreements, other than such agreements which are terminable by Seller without penalty on 90 or fewer days’ notice, (iii) any Contract that could reasonably be expected to obligate Seller to expend, or pursuant to which Seller may receive, in excess of $75,000 in any calendar year, (iv) any Contract that is with an Affiliate and (v) any Contract that evidences an obligation to pay the deferred purchase price of property or services.
“Material Environmental Defect” means an uncured Environmental Defect that exceeds the Individual Environmental Threshold.
“Material Title Benefit” means a Title Benefit that exceeds the Individual Benefit Threshold. 
“Material Title Defect” means an uncured Title Defect that exceeds the Individual Title Threshold.
“Net Revenue Interest” has the meaning set forth in Section 3.2(a)(i).
“NORM” means naturally occurring radioactive material.
“Notice Period” has the meaning set forth in Section 11.5(a).
“Permitted Encumbrances” has the meaning set forth in Section 3.3.
“Person” means any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Body or any other entity.
“Personal Property” has the meaning set forth in Section 1.2(g).
“Phase II” has the meaning set forth in Section 4.1(b).

6    

“Pipelines” has the meaning set forth in Section 1.2(g).
“Preference Right” means any right or agreement that enables any Person to purchase or acquire any Asset or any interest therein or portion thereof as a result of or in connection with (i) the sale, assignment or other transfer of any Asset or any interest therein or portion thereof or (ii) the execution or delivery of this Agreement or the consummation or performance of the terms and conditions contemplated by this Agreement.
“Preliminary Closing Statement” has the meaning set forth in Section 9.4(a).
“Proceeding” has the meaning set forth in Section 5.7.
“Properties” has the meaning set forth in Section 1.2(c).
“Property Costs” has the meaning set forth in Section 1.4(b).
“Purchase Price” has the meaning set forth in Section 2.1.
“Purchaser” has the meaning set forth in the preamble hereto.
“Purchaser Indemnified Persons” has the meaning set forth in Section 11.3.
“Purchaser’s Representatives” has the meaning set forth in Section 4.1(a).
“Records” has the meaning set forth in Section 1.2(j).
“REGARDLESS OF FAULT” means WITHOUT REGARD TO THE CAUSE OR CAUSES OF ANY CLAIM, INCLUDING, WITHOUT LIMITATION, EVEN THOUGH A CLAIM IS CAUSED IN WHOLE OR IN PART BY:
OTHER THAN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, THE NEGLIGENCE (WHETHER SOLE, JOINT, CONCURRENT, COMPARATIVE, CONTRIBUTORY, ACTIVE OR PASSIVE), STRICT LIABILITY, OR OTHER FAULT OF THE SELLER INDEMNIFIED PERSONS; AND/OR
A PRE-EXISTING DEFECT, WHETHER PATENT OR LATENT, OF THE PREMISES OF PURCHASER’S PROPERTY OR SELLER’S PROPERTY (INCLUDING WITHOUT LIMITATION THE ASSETS).
“Retained Asset” has the meaning set forth in Section 7.6(b).
“Retained Employee Liabilities” shall mean any liabilities of Seller or any of its Affiliates arising out of claims by or on behalf of employees of Seller or any of its Affiliates with respect to events that occur on or prior to the Closing and that relate to their employment with, or the terminations of their employment from, Seller.
“Seller” has the meaning set forth in the preamble hereto.

7    

“Seller Indemnified Persons” has the meaning set forth in Section 11.4.
“Seller Operated Assets” shall mean Assets operated by Seller.  
“Taxes” means all federal, state, local, and foreign income, profits, franchise, sales, use, ad valorem, property, severance, production, excise, stamp, documentary, real property transfer or gain, gross receipts, goods and services, registration, capital, transfer, or withholding taxes or other governmental fees or charges imposed by any taxing authority, including any interest, penalties or additional amounts which may be imposed with respect thereto.
“Termination Date” has the meaning set forth in Section 10.1(b)(i).
“Third Party Claim” has the meaning set forth in Section 11.5(a).
“Title Arbitrator” has the meaning set forth in Section 3.4(i).
“Title Benefit” has the meaning set forth in Section 3.2(b).
“Title Benefit Amount” has the meaning set forth in Section 3.4(e).
“Title Benefit Deductible” has the meaning set forth in Section 3.4(j).
“Title Benefit Notice” has the meaning set forth in Section 3.4(b).
“Title Claim Date” has the meaning set forth in Section 3.4(a).
“Title Defect” has the meaning set forth in Section 3.2(b).
“Title Defect Amount” has the meaning set forth in Section 3.4(d)(i).
“Title Defect Deductible” has the meaning set forth in Section 3.4(j).
“Title Defect Notice” has the meaning set forth in Section 3.4(a).
“Title Defect Property” has the meaning set forth in Section 3.4(a).
“Transfer Requirement” means any consent, approval, authorization or permit of, or filing with or notification to, any Person which is required to be obtained, made or complied with for or in connection with any sale, assignment or transfer of any Asset or any interest therein; provided, however, that “Transfer Requirement” shall not include any Customary Post-Closing Consents.
“Transfer Taxes” has the meaning set forth in Section 12.3.
“Units” has the meaning set forth in Section 1.2(c).
“UTPCPL” has the meaning set forth in Section 11.8(a).
“Wells” has the meaning set forth in Section 1.2(b).

8    

PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this “Agreement”) is executed on May 26, 2016, by and between MID-CON ENERGY PROPERTIES, LLC, a Delaware limited liability company, and MID-CON ENERGY OPERATING, LLC, an Oklahoma limited liability company (collectively, “Seller”), and PO&G PANHANDLE, LP, a Texas limited partnership (“Purchaser”).  
RECITALS
A.    Seller desires to sell to Purchaser and Purchaser desires to purchase from Seller the properties and rights of Seller hereafter described, in the manner and upon the terms and subject to the conditions hereafter set forth.
B.    Capitalized terms used herein shall have the meanings ascribed to them in this Agreement as such terms are identified and/or defined in the preceding Definitions Section hereof.
NOW, THEREFORE, in consideration of the premises and of the mutual promises, representations, warranties, covenants, conditions and agreements contained herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound by the terms hereof, agree as follows:
ARTICLE 1
 
PURCHASE AND SALE
Section 1.1   Purchase and Sale.
At the Closing, and upon the terms and subject to the conditions of this Agreement, Seller agrees to sell, assign, transfer and convey the Assets to Purchaser and Purchaser agrees to purchase, accept and pay for the Assets and to assume the Assumed Seller Obligations.
Section 1.2   Assets.
As used herein, the term “Assets” means, subject to the terms and conditions of this Agreement, all of Seller’s right, title, interest and estate, real or personal, recorded or unrecorded, movable or immovable, tangible or intangible, in and to the following (but excluding the Excluded Assets):  
(a)   All of the oil and gas leases; subleases and other leaseholds; net profits interests; carried interests; farmout rights; options; and other properties and interests described on Exhibit A (collectively, the “Leases”), together with each and every kind and character of right, title, claim, and interest that Seller has in and to the Leases and the lands covered by the Leases or the lands currently pooled, unitized, communitized or consolidated therewith (the “Lands”);

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(b)  All oil, gas, water, disposal or injection wells located on or associated with the Lands, whether producing, shut-in, or abandoned (even to the extent not located on the Lands provided that each such well is listed on Exhibit A-1), including the wells shown on Exhibit A-1 (collectively, the “Wells”);
(c)  All interest of Seller derived from the Leases in or to any currently existing pools or units which include any Lands or all or a part of any Leases or include any Wells, including those pools or units shown on Exhibit A-1 (the “Units”; the Units, together with the Leases, Lands and Wells, being hereinafter referred to as the “Properties”), and including all interest of Seller derived from or allocated to the Leases in production of Hydrocarbons from any such Unit, whether such Unit production of Hydrocarbons comes from wells located on or off of a Lease, and all tenements, hereditaments and appurtenances belonging to the Leases and Units;
(d)  All contracts, agreements and instruments by which the Properties are bound, or that relate to or are otherwise applicable to the Properties and will be binding on the Properties after Closing, but only to the extent applicable to the Properties rather than Seller’s other properties and only with respect to rights and obligations arising thereunder from and after the Effective Time unless such right or obligation is an Assumed Seller Obligation, including but not limited to, operating agreements, unitization, pooling and communitization agreements, declarations and orders, joint venture agreements, farmin and farmout agreements, exploration agreements, participation agreements, area of mutual interest agreements, disposal agreements, water use agreements, facilities or equipment leases, letters of no objection, production handling agreements, exchange agreements, transportation or gathering agreements, bottomhole agreements, balancing agreements, storage agreements, and agreements for the sale and purchase of oil, gas, casinghead gas or processing agreements to the extent applicable to the Properties or the production of Hydrocarbons produced in association therewith from the Properties, including those identified on Schedule 1.2(d) (hereinafter collectively referred to as “Contracts”), but excluding any master service agreements scheduled on Schedule 1.3(e) and any contracts, agreements and instruments to the extent transfer is restricted by third-party agreement to the extent scheduled on Schedule 5.13 or applicable Law and the necessary consents to transfer are not obtained pursuant to Section 7.6 and provided that “Contracts” shall not include the instruments constituting the Leases;  
(e)  All easements, permits, licenses, servitudes, rights-of-way, surface leases and other surface rights (“Easements”) appurtenant to, and used or held for use in connection with the Properties (including those identified on Schedule 1.2(e)), but excluding any permits and other rights to the extent transfer is restricted by third-party agreement to the extent scheduled on Schedule 5.13 or applicable Law and the necessary consents to transfer are not obtained pursuant to Section 7.6;
(f)  All equipment, machinery, fixtures and other tangible personal property and improvements located on or used, or held for use, in connection with the Properties (including well equipment, casing, rods, tanks, boilers, buildings, tubing, pumps, motors, and compression equipment) (other than vehicles or vessels listed on Schedule 1.3(e)) (collectively, “Equipment”);
(g)  All flow lines, pipelines, gathering systems, processing and separation facilities, and appurtenances thereto located on the Properties or used, or held for use, in connection with the 

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operation of the Properties (“Pipelines” and, together with the Equipment and Wells, “Personal Property”);
(h)  All Hydrocarbons produced from or attributable to the Properties from and after the Effective Time;
(i)  All Imbalances;
(j)  All of the files, records, information and data, whether written or electronically stored, relating solely to the Assets, including:  lease files; land files; well files; gas and oil sales contract files; gas processing files; division order files; abstracts; title opinions; land surveys; logs; maps; engineering data and reports; technical evaluations and technical outputs; evaluations; interpretive data or studies (including, without limitation, geological or geophysical interpretative data); and other books, records, data, files, and accounting records, in each case to the extent related to the Assets, or used or held for use in connection with the maintenance or operation thereof, but excluding (i) any books, records, data, files, logs, maps, evaluations, outputs, and accounting records to the extent disclosure or transfer would result in a violation of applicable Law or is restricted by any Transfer Requirement scheduled on Schedule 5.13 that is not satisfied pursuant to Section 7.6, (ii) computer or communications software or intellectual property (including tapes, codes, data and program documentation and all tangible manifestations and technical information relating thereto), (iii) attorney-client privileged communications and work product of Seller’s or any of its Affiliates’ legal counsel (other than title opinions and title reports), (iv) reserve studies, and (v) records relating to the negotiation and consummation of the sale of the Assets (subject to such exclusions, the “Records”); provided, however, that Seller may retain copies of such Records as Seller has reasonably determined may be required for existing litigation, tax, accounting, and auditing purposes;
(k)  All vehicles and vessels used, or held for use, in connection with the ownership and operation of the Assets, including those specifically listed on Schedule 1.2(k);
(l)  All Geological Data;  
(m)  Hydrocarbons stored in tanks and pipelines attributable to the ownership and operation of the Assets that belong to Seller as of the Effective Time;
(n)  Any claim against third parties relating to the Assumed Seller Obligations; and
(o)  Any claims and causes of action arising under or with respect to any Asset and all proceeds arising from such claims and causes of action, including any settlements thereof, to the extent such claims, causes of action and proceeds are attributable to the period after the Effective Time or that relate to an Assumed Seller Obligation.

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Section 1.3   Excluded Assets.
Notwithstanding the foregoing, the Assets shall not include, and there is excepted, reserved and excluded from the purchase and sale contemplated hereby (collectively, the “Excluded Assets”):
(a)  all limited liability company, financial, income and franchise tax and legal records of Seller that relate to Seller’s business generally (whether or not relating to the Assets), and all books, records and files that relate to the Excluded Assets and those records retained by Seller pursuant to Section 1.2(j) and copies of any other Records retained by Seller pursuant to Section 1.5;
(b)  All reserve estimates and economic estimates;
(c)  all rights to any refund of Taxes or other costs or expenses borne by Seller or Seller’s predecessors in interest and title attributable to periods prior to the Effective Time, except to the extent the same relate to Assumed Seller Obligations;
(d)  Seller’s area-wide bonds, permits and licenses or other permits, licenses or authorizations used in the conduct of Seller’s business generally;
(e)  those items listed in Schedule 1.3(e);
(f)  all trade credits, account receivables, note receivables, take-or-pay amounts receivable, and other receivables attributable to the Assets with respect to any period of time prior to the Effective Time (other than Hydrocarbons stored in tanks and pipelines attributable to the ownership and operation of the Assets that belong to Seller as of the Effective Time);
(g)  all claims and causes of action (including any claims for insurance proceeds) arising from acts, omissions or events or damage to or destruction of property with respect to all periods prior to the Effective Time, except to the extent the same relate to Assumed Seller Obligations;
(h)  all right, title and interest of Seller in and to vehicles or vessels listed on Schedule 1.3(e);
(i)  except to the extent the same relate to Assumed Seller Obligations, all rights, titles, claims and interests of Seller or any Affiliate of Seller (i) to or under any policy or agreement of insurance or any insurance proceeds; except to the extent provided in Section 3.5, and (ii) to or under any bond or bond proceeds;
(j)  any patent, patent application, logo, service mark, copyright, trade name, trademark or other intellectual property of or associated with Seller or any Affiliate of Seller or any business of Seller or of any Affiliate of Seller;
(k)  all personal computers and associated peripherals and all radio and telephone equipment;

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(l)   all proprietary and other computer software;
(m)  all documents and instruments of Seller that may be protected by an attorney-client privilege (other than title opinions and title reports);
(n)  all Geologic Data listed on Schedule 1.3(e);
(o)  any offices, office leases or personal property that are not directly related to the Assets; and
(p)  all Assets that are excluded and not conveyed to Purchaser under Sections 3.4(d)(ii), 3.5 or 7.6 (or any other provision) of this Agreement.
Section 1.4   Effective Time; Proration of Costs and Revenues.
(a)  Subject to Section 1.5, possession of the Assets shall be transferred from Seller to Purchaser at the Closing, but for purposes of the adjustments made to the Closing Statements certain financial benefits and burdens of the Assets shall be transferred effective as of 7:00 A.M., local time, on May 1, 2016 (the “Effective Time”), as described below.
(b)  “Earned” and “incurred”, as used in this Agreement, shall be interpreted in accordance with generally accepted accounting principles and Council of Petroleum Accountants Society (COPAS) standards, as applicable.  “Property Costs” means all costs attributable to the ownership and operation of the Assets (including without limitation costs of insurance relating specifically to the Assets, royalties and overriding royalties payable on account of production from the Assets, and ad valorem, property, severance, Hydrocarbon production and similar Taxes based upon or measured by the ownership or operation of the Assets or the production of Hydrocarbons therefrom, but excluding any other Taxes) and capital expenditures incurred in the ownership and operation of the Assets in the ordinary course of business and, where applicable, in accordance with the relevant operating or unit agreement, if any, and overhead costs charged to the Assets under the relevant operating agreement or unit agreement, if any, by unaffiliated third parties and, with respect to Assets operated by Seller, an amount equal to the amount Seller is entitled to receive under the applicable operating or unit agreement (pro-rated for any partial months as applicable), but excluding without limitation liabilities, losses, costs, and expenses attributable to (i) Claims for personal injury or death, property damage or violation of any Law, (ii) obligations to plug wells or dismantle, abandon and salvage facilities, (iii) obligations to remediate any contamination of groundwater, surface water, soil, Equipment or Pipelines under applicable Environmental Laws, (iv) obligations to furnish make-up gas according to the terms of applicable gas sales, gathering or transportation contracts, (v) gas balancing obligations and (vi) obligations to pay working interests, royalties, overriding royalties or other interests held in suspense by Seller that are reflected on Schedule 5.21, all of which are addressed in Article 11.  For purposes of this Section 1.4, determination of whether Property Costs are attributable to the period before or after the Effective Time for purposes of the adjustments in the Closing Statements shall be based on when services are rendered, when the goods are delivered, or when the work is performed.  For clarification, the date an item or work is ordered is not the date of a transaction for settlement purposes in the Closing Statements, but rather the date on which the item ordered is delivered to the job site, or the date on which the work ordered is 

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performed, shall be the relevant date.  For purposes of allocating Hydrocarbon production (and accounts receivable with respect thereto) under this Section 1.4, (i) liquid Hydrocarbons shall be deemed to be “from or attributable to” the Properties when they pass through the pipeline connecting into the storage facilities into which they are run and (ii) gaseous Hydrocarbons shall be deemed to be “from or attributable to” the Properties when they pass through the delivery point sales meters on the pipelines through which they are transported.  Seller shall utilize reasonable interpolative procedures to arrive at an allocation of Hydrocarbon production when exact meter readings or gauging and strapping data is not available.  Seller shall provide to Purchaser, no later than five (5) Business Days prior to Closing, all data necessary to support any estimated allocation, for purposes of establishing the adjustment to the Purchase Price pursuant to Section 2.2 hereof that will be used to determine the Closing Payment for purposes of the Preliminary Closing Statement (as defined in Section 9.4(a)).  Taxes (except income, franchise and similar taxes), right-of-way fees, insurance premiums and the Property Costs that are paid periodically (but not delay rentals, bonuses, minimum royalties, option payments, lease extension payments or shut-in royalties) shall be prorated based on the number of days in the applicable period falling before and the number of days in the applicable period falling at or after the Effective Time, except that Hydrocarbon production, severance and similar Taxes shall be prorated based on the number of units actually produced, purchased or sold or proceeds of sale, as applicable, before, and at or after, the Effective Time.
(c)  Purchaser shall be entitled to all Hydrocarbon production from or attributable to the Properties at and after the Effective Time (and all products and proceeds attributable thereto) and to all other income, proceeds, receipts and credits earned with respect to the Assets at or after the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Costs incurred at and after the Effective Time. Seller shall be entitled to all Hydrocarbon production from or attributable to the Properties prior to the Effective Time (and all products and proceeds attributable thereto) and to all other income, proceeds, receipts and credits earned with respect to the Assets prior to the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Costs incurred prior to the Effective Time.  In each case, Purchaser shall be responsible for the portion allocated to the period at and after the Effective Time and Seller shall be responsible for the portion allocated to the period before the Effective Time.
Section 1.5   Delivery and Maintenance of Records.
Seller, at Purchaser’s sole cost and expense, shall deliver the Records to Purchaser not later than ten (10) days following Closing.  Purchaser shall be entitled to all original Records maintained by Seller and to a copy of all electronic Records maintained by Seller.  Seller shall be entitled to keep a copy or copies of all Records; provided, however, that Seller shall keep confidential and not disclose and shall not sell or otherwise allow third parties to review, copy or otherwise use (for any purpose) any Records retained by Seller for their own account, except as required by law and for disclosures to Seller’s representatives, consultants and legal counsel bound by an obligation of confidentiality.  Purchaser shall preserve the Records for a period of seven (7) years following the Closing and will allow Seller and its representatives, consultants and advisors reasonable access, during normal business hours and upon reasonable notice, to the Records (at the location of such Records in Purchaser’s organization) for any legitimate business reason of Seller, including in order for Seller to comply with a Tax or other legally required reporting obligation or Tax or legal dispute; 

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provided, however, that Purchaser shall not be required to grant access to Seller or any of its representatives, consultants or advisors, to any Records that are subject to an attorney/client or attorney work product privilege, that would cause Purchaser to violate any obligation to any third party or breach any restriction legally binding on Purchaser or that are trade secrets of Purchaser.  Any such access shall be at the sole cost and expense of Seller.
ARTICLE 2
     
 
PURCHASE PRICE
Section 2.1   Purchase Price.
The purchase price for the Assets (the “Purchase Price”) shall be Eighteen Million Dollars ($18,000,000.00) payable in United States currency by wire transfer in same day funds as and when provided in this Agreement and as adjusted as provided in Section 2.2.
Section 2.2  Adjustments to Purchase Price.
For purposes of the Closing Statements, the Purchase Price for the Assets shall be adjusted as follows (with such adjustments being made so as not to give any duplicative effect) with all such amounts being determined in accordance with generally accepted accounting principles and Council of Petroleum Accountants Society (COPAS) standards:
(a)  Reduced by the aggregate amount of the following proceeds actually received by Seller: (i) proceeds from the sale of Hydrocarbons (net of any royalties, overriding royalties or other burdens paid by Seller to third parties on or payable out of Hydrocarbon production, gathering, processing and transportation costs and any Hydrocarbon production, severance, sales or excise Taxes not reimbursed to Seller by the purchaser of Hydrocarbon production) produced from or attributable to the Properties during the period between the Effective Time and the Final Settlement Date, and (ii) other proceeds earned with respect to the Assets during the period between the Effective Time and the Final Settlement Date;
(b)  Increased by the aggregate amount of the following proceeds actually received by Purchaser: (i) proceeds from the sale of Hydrocarbons (net of any royalties, overriding royalties or other burdens paid by Purchaser to third parties on or payable out of Hydrocarbon production, gathering, processing and transportation costs and any Hydrocarbon production, severance, sales or excise Taxes not reimbursed to Purchaser by the purchaser of Hydrocarbon production) produced from or attributable to the Properties for periods prior to the Effective Time except for Hydrocarbons described in Section 2.2(i), and (ii) other proceeds earned with respect to the Assets for periods prior to the Effective Time;
(c)  (i) If Seller makes the election under Section 3.4(d)(i) with respect to a Material Title Defect, subject to the Title Defect Deductible, reduced by the Title Defect Amount with respect to such Material Title Defect for which the Title Defect Amount has been determined and (ii) subject 

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to the Title Benefit Deductible, increased by the Title Benefit Amount with respect to each Material Title Benefit for which the Title Benefit Amount has been determined;
(d)  Subject to the Environmental Defect Deductible, reduced by the Environmental Defect Amount with respect to each Material Environmental Defect if the Environmental Defect Amount has been determined;
(e)  Increased by the amount of all Property Costs and other costs attributable to the ownership and operation of the Assets after the Effective Time which are actually paid by Seller and incurred by Seller (including any overhead costs under Section 1.4 with respect to the Seller Operated Assets deemed charged to the Assets with respect to the Adjustment Period even though not actually paid), except any Property Costs and other such costs already deducted in the determination of proceeds in Section 2.2(a);
(f)  Reduced to the extent provided in Section 3.4(d)(ii) for any Properties excluded from the Assets pursuant to Section 3.4(d);
(g)  Reduced to the extent provided in Section 4.3 for any Properties excluded from the Assets pursuant to Section 4.3;
(h)  Increased or reduced as provided elsewhere in this Agreement or as agreed upon in writing by Seller and Purchaser;
(i)  Increased by the value of the amount of merchantable Hydrocarbons stored in tanks and pipelines attributable to the ownership and operation of the Assets that belong to Seller as of the Effective Time (which value shall be computed at the applicable third-party contract prices for the month of March 2016 for such stored Hydrocarbons);
(j)  INTENTIONALLY OMITTED; 
(k)  Reduced to the extent provided in Section 7.6 with respect to Retained Assets;  
(l)  Reduced by the amount of funds held in suspense listed on Schedule 5.21; and  
(m)  Reduced by the amount of all Property Costs and other costs attributable to the ownership and operation of the Assets prior to the Effective Time which are actually paid by Purchaser and incurred by Purchaser, or which Purchaser is required to assume under this Agreement, except any Property Costs and other such costs already deducted in the determination of proceeds in Section 2.2(b).
For purposes of the Preliminary Closing Statement and Final Closing Statement, but subject to the indemnities provided in this Agreement, each adjustment made pursuant to Section 2.2(a) or Section 2.2(b) shall serve to satisfy, up to the amount of the adjustment, Purchaser’s or Seller’s, as applicable, entitlement to Hydrocarbon production from or attributable to the Properties during the Adjustment Period, and to the value of other income, proceeds, receipts and credits earned with respect to the Assets during the Adjustment Period, and as such, Purchaser shall not have any separate rights to receive any Hydrocarbon production or income, proceeds, receipts and credits with respect 

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to which an adjustment has been made.  Similarly, the adjustments described in Sections 2.2(e) or Section 2.2(m) shall serve to satisfy, up to the amount of the adjustment, Purchaser’s or Seller’s, as applicable, obligation to pay Property Costs and other costs attributable to the ownership and operation of the Assets which are incurred during the Adjustment Period, and as such, notwithstanding anything in this Agreement to the contrary, Purchaser or Seller, as applicable, shall not be separately obligated to pay for any Property Costs or other such costs with respect to which an adjustment has been made.
Where available, actual figures will be used to prepare the Preliminary Closing Statement.  To the extent actual figures are not available, estimates will be used subject to adjustment as provided in Section 9.4.
Section 2.3   Deposit.
Concurrently with the execution of this Agreement, Purchaser has paid to Seller an earnest money deposit in an amount equal to five percent (5%) of the Purchase Price (the “Deposit”).  The Deposit shall be non-interest bearing and applied against the Purchase Price if the Closing occurs or shall be otherwise distributed in accordance with the terms of this Agreement.
Section 2.4   Allocated Values.
Purchaser has determined the allocation of the Purchase Price among the Properties being acquired.  The Allocated Values are set forth in Schedule 3.4(a).  Prior to the Closing, Purchaser shall prepare Internal Revenue Service Form 8594, Asset Acquisition Statement Under Section 1060 (“Form 8594”), in conformity with the Allocated Values.  Purchaser and Seller shall attach such Form 8594 to their respective tax returns for the 2016 tax year, and to the extent that the Purchase Price is adjusted, consistently revise and amend the allocation schedule and Form 8594 as necessary.  The allocation derived pursuant to this Section shall be binding on Purchaser and Seller for all tax reporting purposes and neither Purchaser nor Seller (or any of their respective Affiliates) shall take any position (whether in tax returns, tax audits, or other administrative or court proceedings with respect to taxes) which is inconsistent with such allocation unless required to do so by applicable law.  
ARTICLE 3
     
 
TITLE MATTERS
Section 3.1   Seller’s Title.
(a)  Except for the special warranty of title referenced in Section 3.1(b) and contained in the Conveyance and without limiting the rights expressly provided in this Article 3,  Seller makes no warranty or representation, express, implied, statutory or otherwise, with respect to Seller’s title to any of the Assets, and Purchaser hereby acknowledges and agrees that the Purchaser’s sole remedy for any defect of title, including any Title Defect, with respect to any of the Assets (i) before Closing, shall be as set forth in Section 3.4(c), Section 3.4(d), Section 8.2 and Article 10 and (ii) after Closing, 

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shall be pursuant to the special warranty of title referenced in Section 3.1(b) and contained in the Conveyance or pursuant to Section 3.4(i) with respect to any Title Defects or Title Defect Amounts that are not agreed upon by Closing.
(b)   The conveyance covering the Assets to be delivered by Seller to Purchaser shall be substantially in the form of Exhibit B (the “Conveyance”).  The Conveyance shall contain a special warranty of Defensible Title by, through and under Seller and its Affiliates, but not otherwise, but shall otherwise be without warranty of title of any kind, express, implied or statutory or otherwise.
(c)   Purchaser shall not be entitled to protection under Seller’s special warranty of title in the Conveyance against any Title Defect reported by Purchaser under Section 3.4(a) prior to the Title Claim Date.
(d)  Notwithstanding anything herein provided to the contrary, if a Title Defect that may be asserted under this Article 3 results from any matter which could also result in the breach of any representation or warranty of Seller set forth in Article 5 (but excluding Section 5.18, Section 5.23, Section 5.26 (with respect to calls on production) and Section 5.27), then Purchaser shall only be entitled to assert such matter (i) before Closing, as a Title Defect to the extent permitted by this Article 3, or (ii) after Closing, as a breach of Seller’s special warranty of title referenced in Section 3.1(b) and contained in the Conveyance, and shall be precluded from also asserting such matter as the basis of the breach of any such representation or warranty.
Section 3.2   Definition of Defensible Title.
(a)  As used in this Agreement, the term “Defensible Title” means that record title of Seller with respect to the Units, Wells or other Assets shown in Exhibit A-1 that, except for and subject to Permitted Encumbrances:
(i)  Entitles Seller to receive a share of the Hydrocarbons produced, saved and marketed (and the proceeds therefrom) from any Unit, Well or other Asset shown in Exhibit A-1 throughout the duration of the productive life of such Unit, Well or other Asset and in all applicable depths and formations (after satisfaction of all royalties, overriding royalties, net profits interests or other similar burdens on or measured by production of Hydrocarbons) (a “Net Revenue Interest”), of not less than the Net Revenue Interest shown in Exhibit A-1 for such Unit, Well or other Asset, except (solely to the extent that such actions do not cause a breach of Seller’s covenants under Section 7.5) for decreases in connection with those operations in which Seller may, with Purchaser’s consent, from and after the date hereof become a non-consenting co-owner, decreases resulting from the election to ratify or the establishment or amendment of pools or units after the date hereof, in each case with Purchaser’s consent, and decreases required to allow other working interest owners to make up past underproduction or pipelines to make up past under deliveries as shown in each case on Schedule 5.11, and except as stated in such Exhibit A-1;
(ii)  Obligates Seller to bear a percentage of the costs and expenses for the maintenance and development of, and operations relating to, (i) any Unit, Well or other Asset shown in Exhibit A-1 not greater than the “working interest” shown in Exhibit A-1 for such Unit, Well or other Asset in all applicable depths and formations without increase throughout the productive 

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life of such Unit, Well or other Asset, except as stated in Exhibit A-1 and except for increases resulting from contribution requirements with respect to non-consenting co-owners under applicable operating agreements and increases that are accompanied by at least a proportionate increase in Seller’s Net Revenue Interest as shown in Exhibit A-1; and
(iii)   Is free and clear of liens, encumbrances, obligations, security interests, irregularities, pledges, or other defects.
(b)  As used in this Agreement, the term “Title Defect” means any lien, charge, encumbrance, obligation (including contract obligation), defect, or other matter (including without limitation a discrepancy in Net Revenue Interest or working interest) that causes Seller not to have Defensible Title in and to the Units, Wells or other Assets shown on Exhibit A-1 as of the Effective Time and the Closing.  As used in this Agreement, the term “Title Benefit” shall mean any right, circumstance or condition that operates to increase the Net Revenue Interest of Seller in any Unit, Well or other Asset shown on Exhibit A-1 throughout the duration of the productive life of such Asset and in all depths and formations, without causing a greater than proportionate increase in Seller’s working interest above that shown in Exhibit A-1 as of the Effective Time and the Closing.  Notwithstanding the foregoing, the following shall not be considered Title Defects:
(i)     defects based solely on a lack of information in Seller’s files;
(ii)   defects arising out of lack of corporate or other entity authorization unless Purchaser provides affirmative evidence that the action was not authorized and results in another Person’s actual and superior claim of title to the relevant Asset;
(iii)  defects based on a gap in Seller’s chain of title in the county or parish records as to the oil and gas leases comprising the Leases, unless such gap is affirmatively shown to exist in such records by an abstract of title, title opinion or landman’s title chain (which documents shall be included in a Title Defect Notice);
(iv)  defects that have been cured by applicable Laws of limitation or prescription; and
(v)   defects arising out of a lack of survey, unless a survey is expressly required by applicable Laws.
Section 3.3   Definition of Permitted Encumbrances.
As used herein, the term “Permitted Encumbrances” means any or all of the following:
(a)       Royalties and any overriding royalties, reversionary interests and other burdens on production, to the extent that the net cumulative effect of such burdens does not reduce Seller’s Net Revenue Interest below that shown in Exhibit A-1 as to any applicable depth or formation or as to any period of time or increase Seller’s working interest above that shown in Exhibit A-1 as to any applicable depth or formation or as to any period of time without a corresponding increase in the Net Revenue Interest;

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(b)   All Leases to the extent that they do not, individually or in the aggregate, (i) reduce Seller’s Net Revenue Interest below that shown in Exhibit A-1 as to any depth or formation or as to any period of time, (ii) increase Seller’s working interest above that shown in Exhibit A-1 as to any depth or formation or as to any period of time without a proportionate increase in the Net Revenue Interest, or (iii) interfere in any material respect with the use, ownership or operation of, the Assets subject thereto or affected thereby;
(c)  Transfer Requirements applicable to this or any future transaction;
(d)  Liens for current Taxes or assessments not yet delinquent or, if delinquent, are being contested in good faith in the normal course of business;
(e)  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 amounts not yet delinquent (including any amounts being withheld as provided by Law), provided such amounts are paid prior to delinquency;
(f)  All rights to consent by, required notices to, filings with, or other actions by, Governmental Bodies in connection with the sale or conveyance of the Assets or interests therein pursuant to this or any future transaction if they are not required or customarily obtained prior to the sale or conveyance;
(g)  Excepting circumstances where such rights have already been triggered, rights of reassignment arising upon final intention to abandon or release the Assets, or any of them;
(h)  Easements listed on Schedule 1.2(e) and Contracts listed on Schedule 1.2(d) to the extent that the net cumulative effect of such Easements and Contracts do not (i) reduce Seller’s Net Revenue Interest below that shown in Exhibit A-1, (ii) increase Seller’s working interest above that shown in Exhibit A-1 without a corresponding increase in Net Revenue Interest, or (iii) detract in any material respect from the value of, or interfere in any material respect with the use, ownership, operation or development of the Assets;
(i)  Calls on Hydrocarbon production under existing Contracts that are listed on Schedule 1.2(d);
(j)  All rights reserved to or vested in any Governmental Body to control or regulate any of the Assets in any manner, and all obligations and duties under all applicable Laws or under any franchise, grant, license or permit issued by any such Governmental Body, provided there is no existing breach thereof or non-compliance therewith;
(k)  Any encumbrance on or affecting the Assets which is discharged by Seller at or prior to Closing;
(l)  Any matters shown on Schedule 3.3(l);
(m) Imbalances associated with the Assets;

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(n) Liens granted under applicable joint operating agreements for amounts not delinquent; and
(o)  Such Title Defects as Purchaser may have waived expressly in writing.
Section 3.4   Notice of Title Defect Adjustments.
(a)    To assert a claim of a Title Defect prior to Closing, Purchaser must deliver claim notices to Seller (each, a “Title Defect Notice”) on or before July 15, 2016 (the “Title Claim Date”); provided, however, that Purchaser agrees that it shall furnish Seller once every two (2) weeks, commencing on the fourteenth (14th) day following the date of this Agreement until the Title Claim Date with a Title Defect Notice if any officer of Purchaser or its Affiliates discover or learn of any Title Defect during such two (2) week period, which notice may be preliminary in nature and supplemented before the expiration of the Title Claim Date.  Each Title Defect Notice shall be in writing and shall include (i) a description of the alleged Title Defect(s), (ii) the Units, Wells or other Assets in Exhibit A-1 affected by the Title Defect (each, a “Title Defect Property”), (iii) the Allocated Value of each Title Defect Property, (iv) to the extent available and in Purchaser’s possession, supporting documents reasonably necessary for Seller (as well as any title attorney or examiner hired by Seller) to verify the existence of the alleged Title Defect(s), and (v) the amount by which Purchaser reasonably believes the Allocated Value of each Title Defect Property is reduced by the alleged Title Defect(s) and the computations and information upon which Purchaser’s belief is based.  Notwithstanding any other provision of this Agreement to the contrary, but subject to Section 3.1(d) and Purchaser’s rights in connection with the special warranty of title referenced in Section 3.1(b) and contained in the Conveyance, Purchaser shall be deemed to have waived its right to assert Title Defects of which Seller has not been given notice on or before the Title Claim Date.  For purposes hereof, the “Allocated Value” of an Asset shall mean the portion of the Purchase Price that has been allocated to a particular Unit or Well in Schedule 3.4(a).
(b)    Seller shall have the right, but not the obligation, to deliver to Purchaser on or before the Title Claim Date, with respect to each Title Benefit, a notice (a “Title Benefit Notice”) including (i) a description of the Title Benefit, (ii) the Units, Wells or other Assets in Exhibit A-1 affected, (iii) the Allocated Values of the Units, Wells or other Assets in Exhibit A-1 subject to such Title Benefit, (iv) supporting documents reasonably necessary for Purchaser (as well as any title attorney or examiner hired by Purchaser) to verify the existence of the alleged Title Benefit(s) and (v) the amount by which Seller reasonably believes the Allocated Value of those Units, Wells or other Assets is increased by the Title Benefit, and the computations and information upon which Seller’s belief is based.  Seller shall be deemed to have waived all Title Benefits of which it has not given notice to Purchaser on or before the Title Claim Date.
(c)    Seller shall have the right, but not the obligation, to attempt, at its sole cost, to cure to the reasonable satisfaction of Purchaser at any time on or prior to Closing (the “Cure Period”), unless the parties may otherwise agree, any Title Defects of which it has been advised in writing by Purchaser pursuant to the procedures hereof.
(d)    In the event that (A) any Title Defect is not waived by Purchaser and (B) Seller does not elect on or before Closing to cure any Title Defect or Seller has elected before Closing to 

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cure a Title Defect but such Title Defect has not been cured by the expiration of the Cure Period, then subject to the parties’ rights under Section 3.4(i), Article 8 and Article 10, Seller shall:
(i)   Convey the Property that is subject to such Title Defect, and subject to the Individual Title Threshold and the Title Defect Deductible, reduce the Purchase Price by an amount agreed upon (“Title Defect Amount”) pursuant to Section 3.4(g) by Purchaser and Seller as being the value of such Title Defect, taking into consideration the Allocated Value of the Property subject to such Title Defect, the portion of the Property subject to such Title Defect and the legal effect of such Title Defect on the Property affected thereby; provided, however, that the methodology, terms and conditions of Section 3.4(g) shall control any such determination;
However, Seller may alternatively elect, with Purchaser’s consent, to:
(i)   indemnify Purchaser against all liability, loss, cost and expense resulting from such Title Defect pursuant to an indemnity agreement (the “Indemnity Agreement”) in the form to be mutually agreed upon; or
(ii) retain the portion or percentage of the Property that is subject to such Title Defect, together with all associated Assets, in which event the Purchase Price shall be reduced by an amount equal to the Allocated Value associated therewith.
(e)   Subject to the Individual Benefit Threshold and the Title Benefit Deductible, with respect to each Unit, Well or other Asset in Exhibit A-1 affected by Title Benefits reported under Section 3.4(b), the Purchase Price shall be increased by an amount (the “Title Benefit Amount”) equal to the increase in the Allocated Value for such Unit, Well or other Asset in Exhibit A-1 caused by such Title Benefits, as determined pursuant to Section 3.4(h).
(f)  Except as provided in Section 8.2 and Article 10, Section 3.4(d) shall be the exclusive right and remedy of Purchaser with respect to Title Defects asserted by Purchaser pursuant to Section 3.4(a).  Section 3.4(e) shall be the exclusive right and remedy of Seller with respect to Title Benefits asserted by Seller pursuant to Section 3.4(b).
(g)  The Title Defect Amount resulting from a Title Defect shall be the amount by which the Allocated Value of the Title Defect Property affected by such Title Defect is reduced as a result of the existence of such Title Defect and shall be determined in accordance with the following methodology, terms and conditions:
(i) if Purchaser and Seller agree on the Title Defect Amount, that amount shall be the Title Defect Amount;
(ii) if the Title Defect is a lien, encumbrance or other charge which is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from the Title Defect Property;
(iii)  if the Title Defect represents a discrepancy between (A) the Net Revenue Interest for any Title Defect Property and (B) the Net Revenue Interest stated on Exhibit A-1 for 

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such Title Defect Property, then the Title Defect Amount shall be the product of the Allocated Value of such Title Defect Property multiplied by a fraction, the numerator of which is the Net Revenue Interest decrease and the denominator of which is the Net Revenue Interest stated on Exhibit A-1 for such Title Defect Property;
(iv) if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the Title Defect Property of a type not described in subsections (i), (ii) or (iii) above, then the Title Defect Amount shall be determined by taking into account the Allocated Value of the Title Defect Property, the portion of the Title Defect Property 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 Title Defect Property, the values placed upon the Title Defect by Purchaser and Seller and such other factors as are necessary to make a proper evaluation; and
(v)  the Title Defect Amount with respect to a Title Defect Property shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder; and
(vi) notwithstanding anything to the contrary in this Article 3, the aggregate Title Defect Amounts attributable to the effect of all Title Defects upon any Title Defect Property shall not exceed the Allocated Value of the Title Defect Property.
(h)   Title Benefit Amount.  The Title Benefit Amount resulting from a Title Benefit shall be determined in accordance with the following methodology, terms and conditions:
(i)  if Purchaser and Seller agree on the Title Benefit Amount, then that amount shall be the Title Benefit Amount; and
(ii) the Title Benefit Amount for any Title Benefit not determined pursuant to subsection (i) above shall be the product of  the Allocated Value of the affected Property multiplied by a fraction, the numerator of which is the Net Revenue Interest increase and the denominator of which is the Net Revenue Interest stated on Exhibit A-1 for such Property.
(i)   Seller and Purchaser shall attempt in good faith to agree on all Title Defects, Title Benefits, Title Defect Amounts and Title Benefit Amounts prior to Closing.  If Seller and Purchaser are unable to agree by Closing, then subject to each party’s rights under Article 8 and Article 10, the Title Defects, Title Benefits, Title Defect Amounts and Title Benefit Amounts in dispute shall be exclusively and finally resolved by arbitration pursuant to this Section 3.4(i).  There shall be a single arbitrator, who shall be a title attorney with at least ten (10) years’ experience in oil and gas titles involving properties in the regional area in which the Properties are located, as selected by mutual agreement of Purchaser and Seller within fifteen (15) Business Days after the end of the Cure Period, and absent such mutual agreement, by the Dallas office of the American Arbitration Association (the “Title Arbitrator”).  The arbitration proceeding shall be held in Fort Worth, Texas and shall be conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association, to the extent such rules do not conflict with the terms of this Section.  The Title Arbitrator’s determination shall be made within fifteen (15) Business Days after submission of the matters in dispute and shall be final and binding upon both parties, without right 

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of appeal.  In making his determination, the Title Arbitrator shall be bound by the rules set forth in Sections 3.4(a), 3.4(b), 3.4(c), 3.4(d), 3.4(e), 3.4(f), 3.4(g), 3.4(h), and 3.4(j) and may consider such other matters as in the opinion of the Title Arbitrator are necessary or helpful to make a proper determination.  Additionally, the Title Arbitrator may consult with and engage disinterested third parties to advise the Title Arbitrator, including without limitation petroleum engineers.  The Title Arbitrator shall act as an expert for the limited purpose of determining the specific disputed Title Defects, Title Benefits, Title Defect Amounts and Title Benefit Amounts submitted by either party and may not award damages, interest or penalties to either party with respect to any matter.  Seller and Purchaser shall each bear its own legal fees and other costs of presenting its case.  Each party shall bear one-half of the costs and expenses of the Title Arbitrator, including any costs incurred by the Title Arbitrator that are attributable to such third party consultation.  Within ten (10) days after the Title Arbitrator delivers written notice to Purchaser and Seller of his award with respect to a Title Defect Amount or a Title Benefit Amount, (i) Purchaser shall pay to Seller the amount, if any, so awarded by the Title Arbitrator to Seller, plus interest payable on such amount at the Agreed Interest Rate from (but not including) the Closing Date to (and including) the date on which such amount is paid to Seller and (ii) Seller shall pay to Purchaser the amount, if any, so awarded by the Title Arbitrator to Purchaser, plus interest payable on such amount at the Agreed Interest Rate from (but not including) the Closing Date to (and including) the date on which such amount is paid to Purchaser.
(j)   Notwithstanding anything to the contrary in this Agreement, (i) in no event shall there be any adjustments to the Purchase Price for any individual uncured Title Defect for which the Title Defect Amount therefor does not exceed $10,000 (“Individual Title Threshold”); and (ii) in no event shall there be any adjustments to the Purchase Price for uncured Title Defects unless the aggregate Title Defect Amounts attributable to all uncured Material Title Defects exceeds a deductible in an amount equal to one and five tenths Percent (1.5%) of the Purchase Price (the “Title Defect Deductible”), after which point adjustments to the Purchase Price shall be made or available to Purchaser only to the extent the aggregate Title Defect Amounts with respect to uncured Material Title Defects are in excess of such Title Defect Deductible.  Notwithstanding anything to the contrary in this Agreement, (A) in no event shall there be any increase in the Purchase Price for any individual Title Benefit for which the Title Benefit Amount therefor does not exceed $10,000 (“Individual Benefit Threshold”); and (B) in no event shall there be any increase in the Purchase Price for Title Benefits unless the aggregate Title Benefit Amounts attributable to all Material Title Benefits exceeds a deductible in an amount equal to one and five tenths (1.5%) of the Purchase Price (the “Title Benefit Deductible”), after which point adjustments to the Purchase Price shall be made only to the extent the aggregate Title Benefit Amounts with respect to Material Title Benefits are in excess of such Title Benefit Deductible.

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Section 3.5   Casualty or Condemnation Loss.
(a)   From and after the Effective Time, but subject to the provisions of Section 3.5(b), and below, Purchaser shall assume all risk of loss with respect to and any change in the condition of the Assets during the Adjustment Period for production of Hydrocarbons through normal depletion (including but not limited to the watering out of any Well, collapsed casing or sand infiltration of any Well) and the depreciation of personal property due to ordinary wear and tear.
(b)   If, during the Adjustment Period any portion of the Assets is destroyed by fire or other casualty or is taken in condemnation or under right of eminent domain or if proceedings for such purposes shall be pending or threatened, and the sum of all Losses from all such casualties and takings exceeds or is expected to exceed Twenty Percent (20%) of the total unadjusted Purchase Price, either party shall have the right to terminate this Agreement and Purchaser shall promptly receive back the Deposit.  If the sum of all Losses from all such casualties and takings is Twenty Percent (20%) or less of the total unadjusted Purchase Price, Purchaser shall be required to close notwithstanding any such destruction, taking or proceeding or the threat thereof, and Seller shall (i) at Closing pay to Purchaser all sums paid or payable to Seller by third parties by reason of any casualty or taking insofar as with respect to the Assets and shall assign, transfer and set over to Purchaser or subrogate Purchaser to all of Seller’s right, title and interest (if any) in insurance claims, unpaid awards and other rights against third parties (other than Affiliates of Seller and its directors, officer, employees and agents) arising out of the casualty or taking and (ii) indemnify Purchaser through a document reasonably acceptable to Seller and Purchaser against any costs or expenses that Purchaser reasonably incurs to repair the Assets subject to such casualty or taking that are, in the aggregate, in excess of the amount paid to Purchaser by Seller pursuant to subsection (i) above.
Section 3.6   Limitations on Applicability.
The right of Purchaser to assert a Title Defect under this Agreement and receive a remedy therefor under this Article 3 shall terminate as of the Title Claim Date, provided there shall be no termination of Purchaser’s or Seller’s rights under Section 3.4 with respect to any bona fide Title Defect properly reported in a Title Defect Notice or bona fide Title Benefit Claim properly reported in a Title Benefit Notice on or before the Title Claim Date.  From and after Closing, subject to Purchaser’s right to assert a breach of the representations and warranties set forth in Section 5.18, Section 5.23, Section 5.26 (with respect to calls on production) and Section 5.27 or Seller’s breach of its covenants under Section 7.5, Purchaser’s sole and exclusive rights and remedies with regard to title to the Assets shall be as set forth in, and shall arise under, the Conveyance transferring the Assets from Seller to Purchaser.

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ARTICLE 4
     
 
ENVIRONMENTAL MATTERS
Section 4.1   Assessment.
(a)   From and after the date hereof and up to and including the Closing Date (or earlier termination of this Agreement) but subject to (i) applicable Laws, (ii) the other provisions of this Section 4.1 and (iii) obtaining any required consents of third parties (with respect to which consents Seller shall use commercially reasonable efforts to obtain), Seller shall afford to Purchaser and its officers, employees, agents, accountants, attorneys, investment bankers consultants, and other authorized representatives (“Purchaser’s Representatives”) full access, during normal business hours and upon reasonable notice, to the Assets and all Records and other documents in Seller’s or any their respective Affiliates’ possession relating primarily to the Assets (provided, however, that Purchaser’s right to access all Records and such other documents shall not be subject to the limitation set forth in subsection (iii) of this Section 4.1(a)).  Seller shall also make available to Purchaser and Purchaser’s Representatives, upon reasonable notice during normal business hours, Seller’s personnel knowledgeable with respect to the Assets in order that Purchaser may make such diligence investigation as Purchaser considers necessary or appropriate, and shall provide Purchaser access to the complete environmental reports, audits, data, and other documents related to the environmental condition or compliance of the Assets in Seller’s possession or control .  All investigations and due diligence conducted by Purchaser or any Purchaser’s Representative shall be conducted at Purchaser’s sole cost, risk and expense and any conclusions made from any examination done by Purchaser or any Purchaser’s Representative shall result from Purchaser’s own independent review and judgment, provided Seller complies with this Section 4.1(a).  
(b)   Upon reasonable notice to Seller, Purchaser shall have the right to conduct a Phase 1 environmental site assessment, environmental compliance audit or other visual inspection of all or any portion of the Assets (the “Assessment”), to be conducted by a reputable environmental consulting or engineering firm.  In the event the Assessment identifies a “recognized environmental condition” as such term is defined in ASTM Standard 1527 13 or a compliance audit identifies a material non-compliance finding, Purchaser shall have the right to conduct a subsurface investigation, testing or other review as Purchaser reasonably determines (the “Phase II”). The Assessment and Phase II shall be conducted at the sole cost and expense of Purchaser, and shall be subject to the indemnity provisions of Section 4.4.  If any of the proposed activities unreasonably interfere with normal operation of the Properties, Seller may require an appropriate reasonable modification of the proposed activity.  Seller shall have the right to be present during any Assessment or Phase II of the Assets and shall have the right, at its option and expense, to split samples with Purchaser.
(c)   Purchaser shall coordinate its Assessments and Phase II of the Assets with Seller to minimize any unreasonable inconvenience to or interruption of the conduct of business by Seller.  Purchaser shall abide by Seller’s safety rules, regulations and operating policies while conducting its due diligence evaluation of the Assets including any environmental or other inspection or assessment of the Assets.

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(d)   Purchaser agrees to provide Seller promptly, but not later than the Environmental Claim Date, copies of all reports, test results, and other non-privileged documentation and data prepared or compiled by Purchaser and/or any of Purchaser’s Representatives to the extent related to an Environmental Defect and which contain information collected or generated from Purchaser’s due diligence with respect to the Assets.  Seller shall not be deemed by its receipt of said documents or otherwise to have made any representation or warranty, expressed, implied or statutory, as to the condition to the Assets or to the accuracy of said documents or the information contained therein, provided Seller notifies Purchaser of an material inaccuracies identified by Seller in its review of the documents or information.
(e)  Upon completion of Purchaser’s due diligence, Purchaser shall at its sole cost and expense and without any cost or expense to Seller or its Affiliates, (i) repair all damage done to the Assets to the extent caused by  Purchaser’s due diligence and complete such work in accordance with recognized industry standards, (ii) restore the Assets to the approximate same condition than existed prior to commencement of Purchaser’s due diligence, to the extent of any damage related to Purchaser’s due diligence, and (iii) remove all equipment, tools or other property brought onto the Assets in connection with Purchaser’s due diligence.  Any damage to the Assets (including, without limitation, any real property, platform or other fixtures associated with such Assets) to the extent caused by Purchaser’s due diligence will be promptly corrected by Purchaser.
(f)  During all periods that Purchaser, and/or any of Purchaser’s Representatives are on the Assets, Purchaser shall maintain, at its sole expense and with insurers reasonably satisfactory to Seller, policies of insurance of the types and in the amounts consistent with recognized industry practices.  Coverage under all insurance required to be carried by Purchaser hereunder will list Seller Indemnified Parties as additional named insureds.  Upon request by Seller, Purchaser shall provide evidence of such insurance to Seller prior to entering upon the Assets.
(g)  Seller shall not, and shall cause its representatives to not, disclose any information obtained by Purchaser and its representatives pursuant to this Section 4.1 without Purchaser’s express written consent.  Seller shall maintain such information in strict confidence in the same manner contemplated by the terms of that certain confidentiality agreement dated March 8, 2016, by and between Seller and Purchaser (the “Confidentiality Agreement”).  
Section 4.2   NORM, Wastes and Other Substances.
Purchaser acknowledges that the Assets have been used for the exploration, development, and production of Hydrocarbons and that Equipment and sites included in the Assets may contain NORM.  
Section 4.3   Environmental Defects.
If, as a result of its investigation pursuant to Section 4.1, Purchaser determines that with respect to any individual Asset, there exists a violation of an Environmental Law or Environmental Permit or a condition thereon that currently creates liability or requires investigation or remediation under applicable Environmental Laws (other than with respect to NORM ) (in each case, an “Environmental Defect”), then on or prior to July 15, 2016 (the “Environmental Claim Date”), 

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Purchaser may notify Seller in writing of such Environmental Defect (an “Environmental Defect Notice”).  Except for the indemnity for an Excluded Seller Obligation or breach of the environmental representation and warranty set forth in Section 5.24, for all purposes of this Agreement and applicable Law, Purchaser shall be deemed to have waived any Environmental Defect and any right or remedy arising as a result thereof which Purchaser fails to assert as an Environmental Defect by an Environmental Defect Notice received by Seller on or before the Environmental Claim Date.  To be effective, each such notice shall set forth (i) a description of the matter constituting the alleged Environmental Defect, (ii) the Units/Wells and associated Assets affected by the Environmental Defect, (iii) the estimated Lowest Cost Response to eliminate the Environmental Defect in question (the “Environmental Defect Amount”), and (iv) supporting documents reasonably necessary for Seller to verify the existence of the alleged Environmental Defect and the Environmental Defect Amount.  Purchaser shall furnish Seller once every two (2) weeks until the Environmental Claim Date with an Environmental Defect Notice if any officer of Purchaser or its Affiliates discover or become aware of an Environmental Defect during such two (2) week period, which notice may be preliminary in nature and supplemented before the expiration of the Environmental Claim Date.  Subject to the following sentence, with respect to each Environmental Defect asserted by Purchaser in an Environmental Defect Notice, Seller shall elect to have one of the following remedies apply: (i) reduce the Purchase Price by an amount agreed upon in writing by Purchaser and Seller as being a reasonable estimate of the cost of curing the Environmental Defect, provided that if an Environmental Defect is estimated to result in a cost higher than the Allocated Value of the Asset, Purchaser may elect to exclude the Asset and such Asset shall be retained by Seller, in which event the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Property, (ii) with Purchaser’s consent, retain the Property or part of the Asset that is associated with such Environmental Defect Notice and affected by such Environmental Defect, in which event the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Property or part of the Asset, (iii) with Purchaser’s consent, perform or cause to be performed such operations or actions as are necessary to cure any Environmental Defect to the reasonable satisfaction of Purchaser before Closing and provide Purchaser documents to demonstrate that each Environmental Defect has been cured or (iv) with Purchaser’s consent, enter into an agreement with Purchaser to be negotiated in good faith with Purchaser for a plan of investigation and remediation or compliance with respect to such Environmental Defect and the time period by which such remediation or compliance shall take place after Closing.  If Seller disagrees with any of Purchaser’s assertions with respect to the existence of an Environmental Defect or the Environmental Defect Amount, Purchaser and Seller will attempt to resolve the dispute prior to Closing.  If the dispute cannot be resolved within twenty (20) days of the first meeting of Purchaser and Seller, either party may submit the dispute to an environmental consultant approved in writing by Seller and Purchaser that is experienced in environmental corrective or compliance action at oil and gas properties in the relevant jurisdiction and that shall not have performed professional services for either party or any of their respective Affiliates during the previous five years (the “Independent Expert”).  The Independent Expert will  conduct the dispute resolution proceeding by written submissions from Purchaser and Seller with exhibits, including interrogatories, supplemented with appearances by Purchaser and Seller, if necessary, as the Independent Expert may deem necessary.  After the parties and Independent Expert have had the opportunity to review all such submissions, which in no event shall be later than thirty (30) days counted from and after such submissions are made, the Independent Expert shall call for a final, written offer of resolution from each party, which shall be provided 

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within five (5) Business Days.  The Independent Expert shall render its decision within twenty (20) Business Days of the deadline for receiving such offers by selecting one or the other of the offers it has received or some compromise based upon the two offers received.  The Independent Expert may not award damages, interest or penalties to either party with respect to any matter.  The decision of the Independent Expert shall be final and binding upon both parties, without right of appeal.  Seller and Purchaser shall each bear its own legal fees and other costs of presenting its case to the Independent Expert.  Each party shall bear one-half of the costs and expenses of the Independent Expert.  The parties shall adjust the Purchase Price to reflect the Environmental Defect Amounts, as agreed by the parties or as determined by the Independent Expert, for all uncured Environmental Defects (subject to the estimate delivered under Section 9.4(a) for then unresolved Environmental Defects); provided, that notwithstanding anything to the contrary, (a) in no event shall there be any adjustments to the Purchase Price for any individual uncured Environmental Defect for which the Environmental Defect Amount therefor does not exceed $50,000 (“Individual Environmental Threshold”); and (b) in no event shall there be any adjustments to the Purchase Price for any uncured Environmental Defect unless the aggregate Environmental Defect Amount attributable to all Material Environmental Defects exceeds one and five tenths Percent (1.5%) of the Purchase Price (the “Environmental Defect Deductible”), after which point Purchaser shall be entitled to adjustments to the Purchase Price only to the extent the aggregate Environmental Defect Amounts with respect to all uncured Material Environmental Defects are in excess of such Environmental Defect Deductible.  To the extent the Independent Expert fails to determine any disputed Environmental Defect Amounts prior to Closing, then, within ten (10) days after the Independent Expert delivers written notice to Purchaser and Seller of his award with respect to an Environmental Defect Amount, Seller shall pay to Purchaser the amount, if any, so awarded by the Independent Expert.
Section 4.4   Inspection Indemnity.
Purchaser hereby agrees to defend, indemnify and hold harmless owners of the Assets and Seller Indemnified Parties from and against any and all Losses to the extent resulting from the Assessment or any field visit, environmental property assessment, or other due diligence activity conducted by Purchaser or any Purchaser’s Representative with respect to the Assets.
Section 4.5   Exclusive Remedy.
Subject to the limitations contained therein and subject further to the indemnity for breach of the environmental representation and warranty contained in Section 5.24, Section 4.3 shall be the exclusive right and remedy of Purchaser with respect to any Environmental Defect, provided Seller has complied with its obligations under this Article 4.  Purchaser hereby waives any claims of cost recovery or contribution from Seller or its Affiliates related to the Assets under any Environmental Law or other cause of action, provided Seller has complied with its obligations under this Article 4.
ARTICLE 5
     
 
REPRESENTATIONS AND WARRANTIES OF SELLER

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Section 5.1   Generally.
(a)   Any representation or warranty qualified “to the knowledge of Seller” or “to Seller’s knowledge” or with any similar knowledge qualification is limited to matters within the actual knowledge of the officers of Seller.  “Actual knowledge” for purposes of this Agreement means information actually personally known by such Persons, without any further duty of inquiry or investigation.  
(b)  Inclusion of a matter on a Schedule to a representation or warranty which addresses matters having a Material Adverse Effect shall not be deemed an indication that such matter does, or may, have a Material Adverse Effect.  Likewise, the inclusion of a matter on a Schedule in relation to a representation or warranty shall not be deemed an indication that such matter necessarily would, or may, breach such representation or warranty absent its inclusion on such Schedule. 
(c)   Subject to the foregoing provisions of this Section 5.1, the disclaimers and waivers contained in Sections 11.7, 11.8, 11.9, 11.11 and 11.12 and the other terms and conditions of this Agreement, Seller represents and warrants to Purchaser the matters set out in the remainder of this Article 5.
Section 5.2   Existence and Qualification.
Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the States of Delaware and Oklahoma and is duly qualified to do business, and is in good standing, in each jurisdiction where the Assets are located.
Section 5.3   Power.
Seller has full limited liability company power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement.
Section 5.4   Authorization and Enforceability.
The execution, delivery and performance of this Agreement, and the performance of the transactions contemplated hereby, have been duly and validly authorized by all necessary limited liability company action on the part of Seller.  This Agreement has been duly executed and delivered by Seller (and all documents required hereunder to be executed and delivered by Seller at Closing will be duly executed and delivered by Seller) and this Agreement constitutes, and at the Closing such documents will constitute, the valid and binding obligations of Seller, enforceable against Seller in accordance with their terms except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally as well as to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 5.5   No Conflicts.

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Subject to the giving of all notices to third parties and the receipt of all consents, approvals and waivers from third parties set forth in Schedule 5.13, the execution, delivery and performance by Seller of this Agreement and the consummation of the transactions contemplated herein will not (a) conflict with or result in a breach of any provisions of the organizational documents of Seller, (b) result in a material default (with due notice or lapse of time or both) or the creation of any material lien or encumbrance or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license or agreement to which Seller is a party or which affect the Assets, (c) violate any judgment, order, ruling, or decree in any material respect applicable to Seller as a party in interest, or (d) violate any Laws in any material respect applicable to Seller or any of the Assets.
Section 5.6   Liability for Brokers’ Fees.
Purchaser shall not directly or indirectly have any responsibility, liability or expense, as a result of undertakings or agreements of Seller or its Affiliates for brokerage fees, finder’s fees, agent’s commissions or other similar forms of compensation in connection with this Agreement or any agreement or transaction contemplated hereby.
Section 5.7   Litigation.
With respect to the Assets, Seller’s ownership, operation, development, maintenance, or use of any of the Assets or the transactions contemplated herein, except to the extent the foregoing relate to Environmental Laws or Environmental Liabilities and except as set forth in Schedule 5.7, no proceeding, arbitration, action, claim, suit, pending settlement, or other legal proceeding of any kind or nature before or by any Governmental Body, arbitrator or panel (each, a “Proceeding,” and collectively “Proceedings”) (including any take-or-pay claims) to which Seller or any of its Affiliates is a party and which relates to the Assets or the transactions contemplated herein or which are reasonably likely to impair materially Seller’s ability to perform its obligations under this Agreement is pending or, to Seller’s knowledge, threatened against Seller or any of its Affiliates.
Section 5.8   Taxes and Assessments.
Except as disclosed in Schedule 5.8, during the period of Seller’s ownership of the Assets, to Seller’s knowledge all ad valorem, property, production, severance and similar taxes and assessments (including penalties and interest) based on or measured by the ownership of the Assets, the production of Hydrocarbons or the receipt of proceeds therefrom that have become due and payable before the Effective Time are being properly paid, other than taxes which are being contested in good faith.
Section 5.9   Compliance with Laws.
Except as disclosed on Schedule 5.9, the Assets are, and the ownership, operation, development, maintenance, and use of any of the Assets are, in material compliance with the provisions and requirements of all Laws of all Governmental Bodies having jurisdiction with respect to the Assets, or the ownership, operation, development, maintenance, or use of any of the Assets.  No notice in writing from any Governmental Body or other Person has been received by Seller 

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claiming any violation of or noncompliance with any Law with respect to the Assets in any material respect.  Notwithstanding the foregoing, Seller makes no representation or warranty, express or implied, under this Section 5.9 relating to any Environmental Liabilities or Environmental Law.
Section 5.10   Outstanding Capital Commitments.
As of the date hereof, there are no outstanding or proposed AFEs or other commitments to make capital expenditures which are binding on the Assets and which Seller reasonably anticipates will individually require expenditures by the owner of the Assets after the Effective Time in excess of $50,000 (net to Seller’s interest) other than those shown on Schedule 5.10.
Section 5.11   Imbalances.
Schedule 5.11 accurately sets forth in all material respects all of Seller’s Imbalances as of the respective dates set forth therein, arising with respect to the Assets.
Section 5.12   Bankruptcy.
There are no bankruptcy, reorganization, or receivership proceedings pending against, being contemplated by, or, to Seller’s knowledge, threatened against Seller.
Section 5.13   Transfer Requirements.
Except as shown on Schedule 5.13 the Assets and transactions contemplated by this Agreement are not subject to any applicable Transfer Requirements or Customary Post-Closing Consents.
Section 5.14   Preference Rights.
The Assets and transactions contemplated by this Agreement are not subject to any applicable Preference Rights. 
Section 5.15   Payment of Royalties.
All rentals, royalties, shut in royalties, overriding royalties, in-lieu royalties and other payments due with respect to the Assets which accrued or are attributable to the period prior to the date hereof have been properly and fully paid, or are included within the suspense accounts referenced in Schedule 5.21. 
Section 5.16   Oil and Gas Operations.
All Wells that have been drilled, completed, recompleted, worked-over, operated or produced by Seller as “operator” have been drilled, completed, recompleted, worked-over, operated and produced in accordance with generally accepted oil and gas field practices in compliance in all material respects with the applicable Leases, pooling and unit agreements, joint operating agreements and Laws.  To Seller’s knowledge, all Wells that have not been drilled, completed, recompleted, worked-over, operated or produced by Seller as “operator” have been drilled, 

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completed, recompleted, worked-over, operated and produced in accordance with generally accepted oil and gas field practices in compliance in all material respects with applicable leases, pooling and unit agreements, joint operating agreements and Laws.  Except as provided in Schedule 5.16, Seller operates all of the Assets and is the operator under each operating agreement listed on Schedule 5.23.
Section 5.17   Well Status; Plugging and Abandonment. 
Neither Seller, nor to Seller’s knowledge, any third party operator, has abandoned, or is in the process of plugging and abandoning, any Wells associated with the Properties.  Except as provided in Schedule 5.17, there are no wells associated with the Properties:
(a)   with respect to which Seller, or, to Seller’s knowledge, any other Person, has received a governmental order requiring that such well be plugged and abandoned that has not been plugged and abandoned; or
(b)   that have been plugged and abandoned by Seller, or, to Seller’s knowledge, any other Person, that have not been plugged in accordance with applicable requirements of each Governmental Body having jurisdiction over the well. 
All wells, pits, tanks, salt water disposal facilities, pipelines, compressor units and pits, and other facilities located on the Properties and no longer used in connection with the ownership, operation, development, maintenance, or use of any of the Assets have been filled, plugged, removed and/or abandoned in compliance with all Laws in all material respects.  Seller has not installed (and to Seller’s knowledge, no other Person has installed) underground storage tanks or unlined pits in, on or underlying any of the Assets.
Section 5.18   Non-Consent Operations. 
No operations are being conducted or have been conducted with respect to the Assets as to which Seller has elected to be a nonconsenting party under the terms of the applicable operating agreement and with respect to which Seller has not yet recovered its full participation.  
Section 5.19   Permits.
Seller possesses all material permits, licenses, orders, approvals, variances, waivers, franchises, rights, and other authorizations, required to be obtained from any Governmental Body for conducting its business with respect to the Assets as presently conducted, such authorizations are currently in full force and effect, there are no material uncured violations of the terms and provision of such authorizations, and no written notices of violation have been received by Seller and no proceedings are pending or, to Seller’s knowledge, threatened, that might result in any modification, revocation, termination or suspension of any such authorizations or which would require any corrective or remediation action by Seller. 
Section 5.20   Tax Partnership.

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To Seller’s knowledge, none of the Assets is held by or is subject to any contractual arrangement between Seller and any other Person, whether owning undivided interests therein or otherwise, that is treated as or constitutes a partnership for United States federal Tax purposes.
Section 5.21   Suspense Accounts. 
Schedule 5.21, lists (i) all funds held in suspense by Seller as of the date set forth on such Schedule 5.21 that are attributable to the Assets, (ii) a description from Seller’s existing records of the source of such funds and the reason they are being held in suspense and (iii) the names of the Persons claiming such funds or to whom such funds are owed.  Purchaser acknowledges that royalties and payments owed with respect to the Assets are primarily paid by the purchaser of the Hydrocarbons produced from such Assets.  Consequently, Schedule 5.21 has been compiled based on Seller’s actual knowledge based on representations from such purchasers.
Section 5.22   Insurance; Bonding. 
Schedule 5.22 contains a true and complete list of (a) all policies of insurance (other than officer’s and director’s liability policies) maintained by or for the benefit of Seller as of the date hereof with respect to the ownership or operation of the Assets and (b) all bonds, letters of credit and guarantees posted by Seller or its Affiliates with Governmental Bodies or third parties with respect to the ownership or operation of the Assets.
Section 5.23   Material Contracts. 
(a)   As of the date hereof, a true and complete copy of each Material Contract has been provided to Purchaser and each Material Contract is listed on Schedule 5.23;
(b)   Seller has not received or given written notice of default under any of the Material Contracts or Leases (which default has not been cured or otherwise resolved) and, to Seller’s knowledge, there is no event that, with the giving of notice or the lapse of time or both, would constitute a default under any of the Material Contracts or Leases;
(c)  The Material Contracts are in full force and effect as to (and binding upon) Seller and, to Seller’s knowledge, each counterparty thereto; 
(d)    Seller has not received written notices of (i) termination of any Lease or Material Contract or (ii) the exercise of any premature termination, price redetermination, market-out, or curtailment of any Material Contract; and
(e)  There are no fines or penalties currently due and owing with respect to any Material Contract.
Section 5.24   Environmental Matters. 
(a)   Except as set forth on Schedule 5.24:

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(i)   The Assets have been used by Seller solely for oil and gas and related operations.  The Assets have not been used by Seller, or to the knowledge of Seller, by anyone else, for the generation, treatment, storage, disposal, processing, remediation, transportation or transmission of any Hazardous Materials or as a landfill or other waste disposal site, other than for salt water disposal, in each case, in compliance with Environmental Laws.  There has not been any spill, discharge, release, disposal or other handling of Hazardous Materials on, in, through, from or under the Assets in violation of any Environmental Laws.
(ii)   The Seller has timely obtained, maintained in full force and effect, and currently maintains in full force and effect, all permits, licenses, authorizations, approvals, registrations, variances and certificates required under Environmental Laws for the operation of the Assets (“Environmental Permits”), and has made all notifications and filings required by, and otherwise complied with, and is in compliance with, in all material respects, all Environmental Laws applicable to the Assets and all Environmental Permits.
(iii)   There is no pending, or to Seller’s knowledge, threatened investigation, inquiry, hearing, administrative or other proceeding, order, notice, information request, consent decree, order, complaint, citation, litigation, claim, action, cause of action or suit, remedial obligation or settlement from, by or with any Governmental Body or other third party alleging any failure to comply with, violation of, or liability arising under Environmental Law or Environmental Permits with respect to the Assets.
(iv)   None of the Assets are currently listed on, or have ever been listed on, any list or database of a Governmental Authority concerning Environmental Defects, including, the National Priorities List.
(v)   There are no Environmental Liabilities to any Governmental Body or to any private person in connection with any release, discharge, spill, disposal, storage, treatment, processing, remediation, transportation, transmission or other handling of Hazardous Materials which would adversely affect the value of the Assets.
(vi)   Neither Seller nor any Affiliate of Seller (or third party operator of the Assets) has filed or given any notice or report to any Governmental Body or other third party indicating or reporting any past or present treatment, storage, disposal, processing, remediation, transportation, transmission or other handling, or any spill, discharge or release, of any Hazardous Materials with respect to the Assets in violation of, or in a manner that could reasonably be expected to result in liability under, Environmental Law or any Environmental Permit.
(b)   Set forth on Schedule 5.24 is a list of all environmental reports, investigations and audits possessed or controlled by Seller (whether conducted by or on behalf of Seller, a predecessor entity or a third party, and whether done at the initiative of Seller, a predecessor entity or directed by any Governmental Body or any other third party) relating to any matter addressed in this Section 5.24, true, correct and complete copies of which have been provided to Purchaser.

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Section 5.25   Mortgages and Other Instruments. 
Except for the mortgages filed pursuant to that certain Credit Agreement between Seller and Wells Fargo Bank, National Association, as Administrative Agent and Collateral Agent and the lenders party thereto, there is no lien or security interest in or on any Asset securing indebtedness for borrowed money has been created by, through or under Seller or any Affiliate of Seller that burden any of the Assets.
Section 5.26   Payments for Hydrocarbon Production. 
Seller is not obligated under any contract or agreement for the sale of gas from the Assets containing a take-or-pay, advance payment, prepayment or similar provision, or under any gathering, transmission or any other contract or agreement with respect to any of the Assets to gather, deliver, process or transport any gas without then or thereafter receiving full payment therefor.  Except as provided in the Material Contracts set forth on Schedule 5.23, no Person has any call upon, option to purchase, or similar rights with respect to the production of Hydrocarbons produced from the Assets.
Section 5.27   Payout Balances. 
None of the Wells and Units listed on Exhibit A-1 are subject to a reversion or other adjustment at some level of cost recovery or payout (or passage of time or other event other than termination of a Lease by its terms).
Section 5.28   Hedging. 
None of the Assets is subject to or is bound by any futures, hedge, swap, collar, put, call, option or other commodities contract or agreement that will be binding upon the Purchaser or the Assets after the Closing.
ARTICLE 6
     
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller the following:
Section 6.1   Existence and Qualification.
Purchaser is duly organized, validly existing and in good standing under the laws of the state of its formation; and Purchaser is duly qualified to do business, and is in good standing, in every jurisdiction in which it is required to qualify in order to conduct its business; and Purchaser is or will be as of Closing duly qualified to do business in each jurisdiction where the Assets are located.
Section 6.2   Power.

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Purchaser has full power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement.
Section 6.3   Authorization and Enforceability.
The execution, delivery and performance of this Agreement, and the performance of the transactions contemplated hereby, have been duly and validly authorized by all necessary management action on the part of Purchaser.  This Agreement has been duly executed and delivered by Purchaser (and all documents required hereunder to be executed and delivered by Purchaser at Closing will be duly executed and delivered by Purchaser) and this Agreement constitutes, and at the Closing such documents will constitute, the valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their terms except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally, as well as to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 6.4   No Conflicts.
The execution, delivery and performance by Purchaser of this Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach of any provisions of the organizational or other governing documents of Purchaser nor will it violate any Laws in any material respect applicable to Purchaser or any of its property.
Section 6.5   Liability for Brokers’ Fees.
Seller shall not directly or indirectly have any responsibility, liability or expense, as a result of undertakings or agreements of Purchaser or its Affiliates, for brokerage fees, finder’s fees, agent’s commissions or other similar forms of compensation in connection with this Agreement or any agreement or transaction contemplated hereby.
Section 6.6   Litigation.
There are no Proceedings pending, or, to the actual knowledge of Purchaser, threatened in writing before any Governmental Body against Purchaser or any Affiliate of Purchaser which are reasonably likely to impair materially Purchaser’s ability to perform its obligations under this Agreement.
Section 6.7   Financing.
On or prior to the Closing Date, Purchaser will have sufficient cash or other sources of immediately available funds (in each case, in United States dollars) to enable it to pay the Closing Payment to Seller at the Closing and to otherwise satisfy its obligations under this Agreement.
Section 6.8   Limitation.
Except for the representations and warranties expressly made by Seller in Article 5 of this Agreement, in the Conveyances or confirmed in any certificate furnished or to be furnished to 

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Purchaser pursuant to this Agreement, Purchaser represents and acknowledges that (i) there are no representations or warranties, express, statutory or implied, as to the Assets or prospects thereof, and (ii) Purchaser has not relied upon any oral or written information provided by Seller.  
Section 6.9   SEC Disclosure.
Purchaser is acquiring the Assets for its own account for use in its trade or business, and not with a view toward or for sale associated with any distribution thereof, nor with any present intention of making a distribution thereof within the meaning of the Securities Act of 1933, as amended, and applicable state securities laws.
Section 6.10   Bankruptcy.
There are no bankruptcy, reorganization or receivership proceedings pending against, being contemplated by, or, to Purchaser’s actual knowledge, threatened against Purchaser.
Section 6.11   Qualification.
Purchaser shall be qualified at Closing to own and assume operatorship of private, federal and state oil, gas and mineral leases in all jurisdictions where the Assets to be transferred to it are located, and the consummation of the transactions contemplated in this Agreement will not cause Purchaser to be disqualified as such an owner or operator.  To the extent required by the applicable Law, as of the Closing, Purchaser will have lease bonds, area-wide bonds or any other surety bonds as may be required by, and in accordance with, such state or federal regulations governing the ownership and operation of the Assets.  
Section 6.12   Consents.
Except for Customary Post-Closing Consents and any Transfer Requirements relating to the Assets, there are no consents or other restrictions on assignment that Purchaser is obligated to obtain or furnish, including, but not limited to, requirements for consents from third parties to any assignment (in each case) that would be applicable in connection with the consummation of the transactions contemplated by this Agreement by Purchaser.
Section 6.13   Independent Evaluation.
Purchaser is sophisticated in the evaluation, purchase, ownership and operation of oil and gas properties and related facilities.  In making its decision to enter into this Agreement and to consummate the transactions contemplated herein, Purchaser (a) has relied or shall rely solely on its own independent investigation and evaluation of the Assets and the advice of its own legal, tax, economic, insurance, environmental, engineering, geological and geophysical advisors and the express provisions of this Agreement and not on any comments, statements, projections or other materials made or given by any representatives or consultants or advisors engaged by Seller, and (b) has satisfied or shall satisfy itself through its own due diligence as to the environmental and physical condition and state of repair of and contractual arrangements and other matters affecting the Assets.

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Section 6.14 No Known Title or Environmental Defects
As of the execution date, Purchaser is not aware of any Title Defects or Environmental Defects against the Assets for which it will submit a Title Defect Notice or an Environmental Defect Notice.
ARTICLE 7
     
 
COVENANTS OF THE PARTIES
Section 7.1   Government Reviews.
Before and after the Closing, Seller and Purchaser shall in a timely manner (a) make all required filings, if any, with and prepare applications to and conduct negotiations with, each Governmental Body as to which such filings, applications or negotiations are necessary or appropriate in the consummation of the transactions contemplated hereby and (b) provide such information as each may reasonably request to make such filings, prepare such applications and conduct such negotiations.  Each party shall cooperate with and use all commercially reasonable efforts to assist the other with respect to such filings, applications and negotiations.
Section 7.2   Notification of Breaches.
Until the Closing,
(a)   Purchaser shall notify Seller promptly after Purchaser obtains actual knowledge that any representation or warranty of Seller contained in this Agreement is untrue in any material respect or will be untrue in any material respect as of the Closing Date, or that any covenant or agreement to be performed or observed by Seller prior to or on the Closing Date has not been so performed or observed in any material respect.
(b)   Seller shall notify Purchaser promptly after Seller obtains actual knowledge that any representation or warranty of Purchaser contained in this Agreement is untrue in any material respect or will be untrue in any material respect as of the Closing Date, or that any covenant or agreement to be performed or observed by Purchaser prior to or on the Closing Date has not been so performed or observed in any material respect.
(c)   Without limiting a party’s rights under Section 10.1(c) or Section 10.1(d), if any of Purchaser’s or Seller’s representations or warranties is untrue or shall become untrue in any material respect between the date of execution of this Agreement and the Closing Date, or if any of Purchaser’s or Seller’s covenants or agreements to be performed or observed prior to or on the Closing Date shall not have been so performed or observed in any material respect, but if such breach of representation, warranty, covenant or agreement shall (if curable) be cured by the Closing, then such breach shall be considered not to have occurred for all purposes of this Agreement.  No such notification under subsection (a) or (b) above shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder.

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(d)   There shall be no breach of the covenants in this Section as a result of a party’s failure to report a breach of any representation or warranty or a failure to perform or observe any covenant or agreement of which it had actual knowledge if the party subject to the breach or failure also had actual knowledge thereof prior to Closing.
Section 7.3   Letters-in-Lieu; Assignments; Operatorship.
(a)   Seller will execute on the Closing Date letters in lieu of division and transfer orders relating to the Assets, on forms prepared by Purchaser (with the cooperation of Seller) and reasonably satisfactory to Seller, directing all purchasers of production to make payment to Purchaser of proceeds attributable to production from the Assets from and after the Effective Time to reflect the transaction contemplated hereby.
(b)   Seller will prepare (with the cooperation of Purchaser) and execute, and Purchaser will execute, on the Closing Date, all assignments necessary to convey to Purchaser all federal and state Leases (if any) in the form as prescribed by the applicable Governmental Body and otherwise acceptable to Purchaser and Seller.
(c)   Seller will reasonably assist Purchaser in Purchaser’s efforts to succeed Seller as operator of any Wells and Units included in the Assets.  Purchaser shall, promptly following Closing, file all appropriate forms and declarations or bonds with federal and state agencies relative to its assumption of operatorship of the Assets.  At Closing, for all Seller Operated Assets, Seller shall execute and deliver to Purchaser, on forms to be supplied by Purchaser (with the cooperation of Seller), and Purchaser shall promptly file, the appropriate forms with the applicable regulatory agency transferring operatorship of such Assets to Purchaser.
Section 7.4   Public Announcements.
Until the Closing, neither Seller nor Purchaser shall make, or permit any agent or Affiliate to make, any press release or other public announcement regarding the existence of this Agreement, the contents hereof or the transactions contemplated hereby without the prior written consent of the other party; provided, however, the foregoing shall not restrict disclosures by Purchaser or Seller which are required by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the disclosing party or its Affiliates.  At or after Closing, the content of any press release or public announcement first announcing the consummation of this transaction shall be subject to the prior review and reasonable approval of Seller and Purchaser; provided, however, the foregoing shall not restrict disclosures by Purchaser or Seller which are required by applicable securities or other Laws or regulations or the applicable rules of any stock exchange having jurisdiction over the disclosing party or its Affiliates.
Section 7.5   Operation of Business.
Except as set forth on Schedule 7.5, until the Closing, Seller (a) will operate the Assets and the business thereof in the ordinary course, (b) will cause the Assets to be maintained and operated in a prudent, good and workmanlike manner and pay or cause to be paid all costs and expenses in connection therewith promptly when due (including, all rentals, royalties, shut in royalties, 

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overriding royalties and in-lieu royalties), (c) will maintain Seller's relationships with suppliers, customers and others having business relations with Seller with respect to the ownership or operation of the Assets so that they will be preserved for Purchaser on and after the Closing Date, (d) will not, without the prior written consent of Purchaser, which consent shall not be unreasonably withheld, (i) commit to any operation, or series of related operations, reasonably anticipated to require future capital expenditures by Purchaser as owner of the Assets in excess of $50,000, proportionate to Seller’s working interest, (ii) make any capital expenditures in respect of the Assets in excess of $50,000, proportionate to Seller’s working interest, (iii) agree not to participate in any operation, (iv) terminate, materially amend, or extend any Material Contracts, (v) grant or create any Preference Right or Transfer Requirement with respect to the Assets, (vi) enter into any contract or agreement which, if entered into prior to the date of this Agreement, would have been required to be listed as a Material Contract on Schedule 5.23, (vii) enter into any settlement of any pending or threatened Proceeding relating to the Assets or consent to the entry of any decree or order by a Governmental Body with respect to the Assets or (viii) voluntarily relinquish Seller's position as operator with respect to any of the Seller Operated Assets; (e) will maintain insurance coverage on the Assets presently furnished by nonaffiliated third parties in the amounts and of the types presently in force, (f) will use commercially reasonable efforts to maintain in full force and effect all Leases, (g) will maintain all governmental permits and approvals affecting the Assets, (h) will not transfer, farmout, sell, hypothecate, encumber or otherwise dispose of any Assets except for sales and dispositions of Hydrocarbon production and Equipment made in the ordinary course of business consistent with past practices, (i) will give prompt written notice to Purchaser of any notice of default (or threat of default, whether disputed or denied) received or given by Seller under any instrument or agreement affecting the Assets to which Seller is a party or by which Seller of any of the Assets are bound and (j) will not commit to do any of the foregoing. Purchaser’s approval of any action restricted by this Section 7.5 shall be considered granted within ten (10) days (unless a shorter time is reasonably required by the circumstances and such shorter time is specified in Seller’s written notice) of Seller’s written notice to Purchaser requesting such consent unless Purchaser notifies Seller to the contrary in writing during that period. In the event of an emergency, Seller may take such action as a reasonably prudent operator would take and shall notify Purchaser of such action promptly thereafter.
Purchaser acknowledges that Seller may own an undivided interest in certain of the Assets, and Purchaser agrees that the acts or omissions of the other working interest owners who are not affiliated with Seller shall not constitute a violation of the provisions of this Section 7.5 nor shall any action required by a vote of working interest owners constitute such a violation so long as Seller has voted its interest in a manner consistent with the provisions of this Section 7.5, provided that until the Closing Seller shall use commercially reasonable efforts to provide Purchaser with notice of any such actions, but shall have no liability to Purchaser for any failure to so notify.
Section 7.6   Transfer Requirements.
(a)   The transactions contemplated by this Agreement are expressly subject to all validly existing and applicable Transfer Requirements, including those that are listed on Schedule 5.13.  Promptly after the execution hereof, Seller shall initiate all procedures which are required to 

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comply with or obtain the waiver of all applicable Transfer Requirements with respect to the transactions contemplated by this Agreement.  
(b)   If a Transfer Requirement applicable to the transactions contemplated by this Agreement is not obtained, complied with or otherwise satisfied prior to the Closing Date, then, at Purchaser’s option, any Asset or portion thereof affected by such Transfer Requirement (a “Retained Asset”) shall be held back from the Assets to be transferred and conveyed to Purchaser at Closing and the Purchase Price to be paid at Closing shall be reduced by an amount equal to the Allocated Value of such Asset.  Any Retained Asset so held back at the initial Closing will be conveyed to Purchaser within ten (10) days following the date on which Seller obtains, complies with or otherwise satisfies all Transfer Requirements with respect to such Retained Asset for a purchase price equal to the amount by which the Purchase Price was reduced on account of the holding back of such Retained Asset; provided, however, that if all Transfer Requirements with respect to any Retained Assets so held back at the initial Closing are not obtained, complied with or otherwise satisfied within ninety (90) days following the Closing Date, then Purchaser shall have the right to elect in writing to (a) have such Retained Assets eliminated from the Assets and this Agreement or (b) waive the Transfer Requirements which have not been obtained, complied with or satisfied with respect to such Retained Assets, in which case Seller shall immediately convey such Retained Asset to Purchaser for the portion of the Purchase Price withheld with respect thereto.  Any subsequent conveyance of a Retained Asset will be subject to all Closing requirements and conditions applicable to the initial Closing hereunder and appropriate adjustments to Purchase Price in accordance with the provisions of Section 2.2 will be made to account for any delayed Closing with respect to a Retained Asset.
(c)   Seller shall use its commercially reasonable efforts to obtain all applicable consents; provided, however, Seller shall not be obligated to pay any consideration to (or incur any cost or expense for the benefit of) the holder of any Transfer Requirement in order to obtain compliance therewith.

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Section 7.7   Tax Matters.
Subject to the provisions of Section 12.3, Purchaser shall be responsible for all Taxes related to the Assets (other than ad valorem, property, severance, Hydrocarbon production and similar Taxes based upon or measured by the ownership or operation of the Assets or the production of Hydrocarbons therefrom, which are addressed in Section 1.4, and income, franchise and similar Taxes).  Notwithstanding the foregoing, Seller shall handle payment to the appropriate Governmental Body of all Taxes with respect to the Assets which are required to be paid prior to Closing (and shall file all Tax Returns with respect to such Taxes).  If requested by Purchaser, Seller will assist Purchaser with preparation of all ad valorem and property Tax Returns for periods ending on or before the Closing Date (including any extensions requested).  Seller shall deliver to Purchaser within thirty (30) days of filing copies of all Tax Returns to be filed by Seller relating to the Assets and any supporting documentation to be provided by Seller to Governmental Bodies for Purchaser’s approval, which shall not be unreasonably withheld, excluding Tax Returns related to income tax, franchise tax, or other similar Taxes.  Purchaser shall file all Tax Returns covering Taxes treated as Property Costs that are required to be filed after the Closing Date unless covered above.
Section 7.8   Further Assurances.
After Closing, Seller and Purchaser each agrees to take such further actions (including using commercially reasonable efforts to obtain all applicable Customary Post-Closing Consents) and to execute, acknowledge and deliver all such further documents, including any further instruments of conveyance and transfer, as are reasonably requested by the other party for carrying out the purposes of this Agreement or of any document delivered pursuant to this Agreement.  Additionally, prior to Closing, Seller agrees to cooperate with Purchaser to negotiate a mutually agreeable contract related to the supply of water to the Midwell Unit from the Tepee Creek Unit on terms similar to those terms contained in the Appleby Water Supply Agreement dated January 2016.
Section 7.9   Insurance.
Effective as of the Closing Date, Purchaser shall cause the following insurance to be carried and maintained with respect to the Assets:  (i) general liability insurance with combined single limits per occurrence of not less than $1,000,000.00 for bodily injury and property damage, including property damage by completed operations, and contractual liability as respects any contract into which Purchaser may enter under the terms of this Agreement; and (ii) any other policies identified in Section 8.1(h).
Section 7.10   Record Retention.
Purchaser, for a period of seven (7) years following Closing, will (i) retain the Records, (ii) provide Seller, its Affiliates and its and their officers, employees and representatives with access to the Records (to the extent that Seller has not retained a copy) during normal business hours for review and copying at Seller’s expense and upon reasonable notice, and (iii) provide Seller, its Affiliates and its and their officers, employees and representatives with access, during normal business hours, to materials received or produced after Closing relating to any indemnity claims made under Sections 11.3 and 11.4 of this Agreement for review and copying at Seller’s expense.  

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If Purchaser shall desire to dispose of or transfer any such Records or other materials upon or after the expiration of such seven-year period, Purchaser shall, prior to any disposition, give Seller notice and a reasonable opportunity at Seller’s expense to segregate and remove or copy such Records or other materials as Seller may select.
Section 7.11   Bonds, Letters of Credit and Guarantees
Purchaser acknowledges that none of the bonds, letters of credit and guarantees set forth on Schedule 5.22 posted by Seller or its Affiliates with Governmental Bodies or third parties and relating to the Assets are transferable to Purchaser.  Except to the extent that Purchaser will, as of Closing, be covered by the bonds of the operators of the applicable Assets, then on or before the Closing Date, Purchaser shall obtain, or cause to be obtained in the name of Purchaser, and make available replacements for such bonds, letters of credit and guarantees.  After Closing, Purchaser shall reasonably cooperate with Seller to obtain cancellation of the bonds, letters of credit and guarantees posted by Seller and/or its Affiliates that are related solely to the Assets conveyed to Purchaser.
Section 7.12   Cure of Misrepresentations.
If any of the representations and warranties contained in Articles 5 or 6 hereof are determined (whether by notice from a party or otherwise) to have been untrue or incorrect as of the date of this Agreement, then any cure by the party making such representations and warranties shall be at such party’s own expense.

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Section 7.13   Plugging, Abandonment, Decommissioning and Other             Costs.
In addition to its other obligations under this Agreement, Purchaser shall comply with all Laws, Leases, Contracts (including all joint and unit operating agreements) and prevailing industry standards relating to (i) the plugging, abandonment and/or replugging of all Wells, including inactive Wells or temporarily abandoned Wells, included in the Assets, (ii) the dismantling or decommissioning and removal of any Equipment and other property of whatever kind related to or associated with operations and activities conducted by the owner or operator on the Properties, pursuant to the Leases or Applicable Contracts and (iii) the clean up, restoration and/or remediation of the property covered by the Leases or related to the Assets (collectively, “P&A Obligations”).
Section 7.14   Employees.
Schedule 7.14 sets forth a list of all current employees or contractors of Seller and its Affiliates involved in the current day-to-day operation, development, maintenance or use of any of the Assets and until the Closing, Seller shall use commercially reasonable efforts to facilitate discussions between Purchaser and each such employee or contractor regarding the possibility of Purchaser hiring such employees or contractors to continue their involvement in the day-to-day operation, development, maintenance or use of any of the Assets after Closing; provided, however, that Purchaser shall not be obligated to hire any such employees or contractors.  
Section 7.15   Satisfaction of Conditions.
Seller and Purchaser will each use commercially reasonable efforts to take all actions and to do all things necessary to consummate, make effective and comply with all of the terms of this Agreement (including satisfaction, but not waiver, of the conditions to Closing for which such party is responsible or otherwise in control).
ARTICLE 8
     
 
CONDITIONS TO CLOSING
Section 8.1   Conditions of Seller to Closing.
The obligations of Seller to consummate the transactions contemplated by this Agreement are subject, at the option of Seller, to the satisfaction or waiver by Seller on or prior to Closing of each of the following conditions:
(a)   Each of the representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects (other than those representations and warranties of Purchaser that are qualified by materiality, which shall be true and correct in all respects) as of the Closing Date as though made on and as of the Closing Date, except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects (other than those 

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representations and warranties of Purchaser that are qualified by materiality, which shall be true and correct in all respects) as of such specified date;
(b)   Purchaser shall have performed and observed, in all material respects, all covenants and agreements to be performed or observed by it under this Agreement prior to or on the Closing Date;
(c)    No Proceeding by a third party (including any Governmental Body) seeking to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement shall be pending or threatened before any Governmental Body and no order, writ, injunction or decree shall have been entered and be in effect by any court or any Governmental Body of competent jurisdiction, and no statute, rule, regulation or other requirement shall have been promulgated or enacted and be in effect, that on a temporary or permanent basis restrains, enjoins or invalidates the transactions contemplated hereby;
(d)   Purchaser shall have delivered (or be ready, willing and able to immediately deliver) to Seller duly executed counterparts of the Conveyances and all other documents and certificates to be delivered by Purchaser under Section 9.3 and shall have performed (or be ready, willing and able to immediately perform) the other obligations required to be performed by it under Section 9.3 (including, without limitation, delivery of the Closing Payment);
(e)   The sum of (i) all uncured Title Defect Amounts for Material Title Defects determined under Section 3.4(g) prior to Closing, plus (ii) the Allocated Value of all Properties retained by Seller pursuant to Section 3.4(d)(ii), plus (iii) all Title Defect Amounts asserted by Purchaser for all Title Defects and Title Defect Amounts that have not been agreed upon by the parties, less (iv) the sum of all Title Benefit Amounts for Material Title Benefits determined under Section 3.4(h) prior to the Closing, plus (v) Environmental Defects Amounts attributable to Material Environmental Defects, determined or asserted in accordance with this Agreement, plus (vi) all Environmental Defect Amounts asserted by Purchaser for all Environmental Defects and Environmental Defect Amounts that have not been agreed upon by the parties, plus (vii) the Allocated Value of all Properties retained by Seller pursuant to Section 4.3, plus (viii) the sum of the aggregate reductions in the Purchase Price determined under Section 7.6(b), shall be less than ten percent (10%) of the total unadjusted Purchase Price;
(f)   The sum of all Losses from casualties to and takings of the Assets, determined or asserted in accordance with this Agreement, shall be less than twenty percent (20%) of the unadjusted Purchase Price;
(g)   Purchaser shall have obtained, or caused to be obtained, in the name of Purchaser, and made available replacements for Seller’s and/or its Affiliates’ bonds, letters of credit and guaranties, if any, to the extent required by the second sentence of Section 7.11; and
(h)  Purchaser shall have furnished Seller with certificates of insurance on forms reasonably acceptable to Seller which list Purchaser’s insurance policies relating to the Assets, including (i) insurance which complies with all applicable workers’ compensation and occupational disease laws covering all of Purchaser’s employees performing any work or activities as to oil and 

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gas leasehold interests subject to this Agreement, (ii) commercial general liability insurance (including contractual liability coverage) and pollution liability insurance, (iii) excess liability insurance (including contractual liability coverage) of at least $4,000,000, and (iv) such other insurance and proof of financial responsibility as is required under the applicable Laws.
Section 8.2   Conditions of Purchaser to Closing.
The obligations of Purchaser to consummate the transactions contemplated by this Agreement are subject, at the option of Purchaser, to the satisfaction or waiver by Purchaser on or prior to Closing of each of the following conditions:
(a)   Each of the representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects (other than those representations and warranties of Seller that are qualified by materiality, which shall be true and correct in all respects) as of the Closing Date as though made on and as of the Closing Date, except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects (other than those representations and warranties of Seller that are qualified by materiality, which shall be true and correct in all respects) as of such specified date;
(b)   Seller shall have performed and observed, in all material respects, all covenants and agreements to be performed or observed by it under this Agreement prior to or on the Closing Date;
(c)   No Proceeding by a third party (including any Governmental Body) seeking to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement shall be pending or threatened before any Governmental Body and no order, writ, injunction or decree shall have been entered and be in effect by any court or any Governmental Body of competent jurisdiction, and no statute, rule, regulation or other requirement shall have been promulgated or enacted and be in effect, that on a temporary or permanent basis restrains, enjoins or invalidates the transactions contemplated hereby;
(d)   Seller shall have delivered (or be ready, willing and able to immediately deliver) to Purchaser duly executed counterparts of the Conveyances and all other documents and certificates to be delivered by Seller under Section 9.2 and shall have performed (or be ready, willing and able to immediately perform) the other obligations required to be performed by it under Section 9.2;
(e)  The sum of (i) all uncured Title Defect Amounts for Material Title Defects determined under Section 3.4(g) prior to Closing, plus (ii) the Allocated Value of all Properties retained by Seller pursuant to Section 3.4(d)(ii), plus (iii) all Title Defect Amounts asserted by Purchaser for all Title Defects and Title Defect Amounts that have not been agreed upon by the parties, less (iv) the sum of all Title Benefit Amounts for Material Title Benefits determined under Section 3.4(h) prior to the Closing, plus (v) Environmental Defects Amounts attributable to Material Environmental Defects, determined or asserted in accordance with this Agreement, plus (vi) all Environmental Defect Amounts asserted by Purchaser for all Environmental Defects and Environmental Defect Amounts that have not been agreed upon by the parties, plus (vii) the Allocated 

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Value of all Properties retained by Seller pursuant to Section 4.3, plus (viii) the sum of the aggregate reductions in the Purchase Price determined under Section 7.6(b), shall be less than ten percent (10%) of the total unadjusted Purchase Price; 
(f)    The sum of all Losses from casualties to and takings of the Assets, determined or asserted in accordance with this Agreement, shall be less than twenty percent (20%) of the unadjusted Purchase Price; and
(g)   Seller shall have delivered to Purchaser all consents, authorizations and approvals that are (i) required to be obtained under each of the operating agreements listed on Schedule 5.23 from any one or more parties to such agreements in order to appoint and elect Purchaser as successor operator thereunder as of the Closing and (ii) reasonably acceptable to Purchaser.
ARTICLE 9
     
 
CLOSING
Section 9.1   Time and Place of Closing.
(a)   Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Article 10, and subject to the satisfaction or waiver of the conditions set forth in Article 8 (other than conditions the fulfillment of which by their nature is to occur at the completion of the transactions contemplated by this Agreement (the “Closing”)), the Closing shall take place at 10:00 a.m., local time, on July 29, 2016, at Seller’s offices in Dallas, Texas, unless another date, time or place is mutually agreed to in writing by Purchaser and Seller.  If any of the conditions (other than conditions the fulfillment of which by their nature is to occur at the Closing) set forth in Article 8 are not satisfied or waived at the time the Closing is to occur pursuant to the foregoing sentence of this Section 9.1(a), then subject to Article 10 the Closing shall occur on a date thereafter that is the third Business Day after the satisfaction or waiver of all such conditions.
(b)   The date on which the Closing occurs is herein referred to as the “Closing Date.”
Section 9.2   Obligations of Seller at Closing.
At the Closing, upon the terms and subject to the conditions of this Agreement, Seller shall deliver or cause to be delivered to Purchaser, or perform or cause to be performed, the following:
(a)   the Conveyances in sufficient duplicate originals to allow recording in all appropriate jurisdictions and offices, and any other conveyances on official forms and related documentation necessary to transfer the Assets to Purchaser in accordance with the requirements of any Governmental Body, duly executed by Seller; 

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(b)   letters-in-lieu of transfer orders contemplated by Section 7.3, duly executed by Seller;
(c)   a certificate duly executed by an authorized corporate officer of Seller, dated as of Closing, certifying on behalf of Seller that the conditions set forth in Section 8.2(a) and Section 8.2(b) have been fulfilled;
(d)   a certificate duly executed by an authorized corporate officer of Seller, dated as of the Closing, (i) attaching and certifying on behalf of Seller complete and correct copies of (x) the certificate of formation and the operating agreement of Seller, each as in effect as of the Closing, and (y) the resolution of the [managers] of Seller authorizing the execution, delivery and performance by Seller of this Agreement and the transactions contemplated hereby, and (ii) certifying on behalf of Seller the incumbency of each authorized representative of Seller executing this Agreement or any document delivered in connection with the Closing;
(e)   the Preliminary Closing Statement;
(f)   an executed statement described in Treasury Regulation 1.1445-2(b)(2) certifying that Seller is not a foreign person within the meaning of the Code; 
(g)   any other agreements, instruments and documents which are required by other terms of this Agreement to be executed and/or delivered at Closing;
(h)   full releases, effective as of the Closing, of all liens and security interests securing indebtedness for borrowed money created by, through or under Seller or any of its Affiliates that burden any of the Assets; and
(i)   all written consents, authorizations and approvals required pursuant to Section 8.2(g).
Section 9.3   Obligations of Purchaser at Closing.
At the Closing, upon the terms and subject to the conditions of this Agreement, Purchaser shall deliver or cause to be delivered to Seller, or perform or cause to be performed, the following:
(a)   a wire transfer of the Closing Payment, in same-day funds to an account or accounts designated in writing by Seller at least three (3) Business Days before Closing;
(b)  the Conveyances and any other conveyances on official forms and related documentation necessary to transfer the Assets to Purchaser in accordance with the requirements of any Governmental Body, duly executed by Purchaser;
(c)   letters-in-lieu of transfer orders contemplated by Section 7.3, duly executed by Purchaser;
(d)   a certificate by an authorized officer of Purchaser, dated as of Closing, certifying on behalf of Purchaser that the conditions set forth in Sections 8.1(a) and 8.1(b) have been fulfilled;

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(e)   the Preliminary Closing Statement; and
(f)   any other agreements, instruments and documents which are required by other terms of this Agreement to be executed and/or delivered at Closing.
Section 9.4   Closing Adjustments and Closing Payment.
(a)   Not later than five (5) Business Days prior to the Closing Date, Seller shall prepare and deliver to Purchaser, based upon the information reasonably available to Seller, a preliminary settlement statement reasonably estimating the Adjusted Purchase Price after giving effect to all adjustments listed in Sections 2.2 and Section 2.3 (the “Preliminary Closing Statement”).  The estimate delivered in accordance with this Section 9.4(a) shall constitute the dollar amount to be paid by Purchaser to Seller at the Closing (the “Closing Payment”).  Within three (3) Business Days after receipt of the Preliminary Closing Statement, Purchaser may deliver to Seller a written report containing all changes with the explanation therefor that Purchaser proposes to be made to the Preliminary Closing Statement.  The Preliminary Closing Statement, as agreed upon by the parties hereto, will be used to determine the amount of the Closing Payment.  If the parties hereto are unable to reach agreement, the Preliminary Closing Statement as prepared by Seller will be used to determine the Closing Payment, absent manifest error.
(b)   As soon as reasonably practicable after the Closing but not later than ninety (90) days following the Closing Date, Seller shall prepare and deliver to Purchaser a statement (the “Final Closing Statement”) setting forth the final calculation of the Purchase Price and showing the calculation of each adjustment, based, to the extent possible, on actual credits, charges, receipts and other items before and after the Effective Time and taking into account all adjustments provided for in this Agreement (the “Final Purchase Price”).  Seller shall, at Purchaser’s request, supply reasonable documentation available to support any credit, charge, receipt or other item.  Seller shall afford Purchaser and its representatives the opportunity to review such statement and the supporting schedules, analyses, work papers, and other underlying records or documentation as are reasonably necessary and appropriate in Purchaser’s review of such statement.  Each party shall cooperate fully and promptly with the other and their respective representatives in such examination with respect to all reasonable requests related thereto.  As soon as reasonably practicable but not later than the 30th day following receipt of Seller’s statement hereunder, Purchaser shall deliver to Seller a written report containing any changes that Purchaser proposes be made to such statement.  Seller and Purchaser shall undertake to agree on the final statement of the Final Purchase Price on a date that is no later than October 31, 2016 (such date, the “Final Settlement Date”).  Unless the parties are unable to reach agreement on the Final Closing Statement on or before the Final Settlement Date, then on the Final Settlement Date, (x) Purchaser shall pay to Seller the amount by which the Final Purchase Price exceeds the Closing Payment or (y) Seller shall pay to Purchaser the amount by which the Closing Payment exceeds the Final Purchase Price, as applicable (in either case, the “Final Adjustment”).
(c)   In the event that Seller and Purchaser cannot reach agreement by the Final Settlement Date, either party may refer the remaining matters in dispute to a mutually agreed upon independent accounting firm, for review and final determination (the “Agreed Accounting Firm”).  If issues are submitted to the Agreed Accounting Firm for resolution, Seller and Purchaser shall 

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each enter into a customary engagement letter with the Agreed Accounting Firm at the time the issues remaining in dispute are submitted to the Agreed Accounting Firm.  The Agreed Accounting Firm will be directed to (i) review the statement setting forth Seller’s calculation of the Final Purchase Price and the records relating thereto only with respect to items identified by Purchaser in its written report containing changes to such statement that remain disputed immediately following the Final Settlement Date and (ii) determine the final adjustments in accordance with the terms of this Agreement.  Each party shall furnish the Agreed Accounting Firm such work papers and other records and information relating to the objections in dispute as the Agreed Accounting Firm may reasonably request and that are available to such party or its Affiliates (and such parties’ independent public accountants).  The parties will, and will cause their representatives to, cooperate and assist in the conduct of any review by the Agreed Accounting Firm, including, but not limited to, making available books, records and, as available, personnel as reasonably required.  The Agreed Accounting Firm shall conduct the arbitration proceedings in Fort Worth, Texas in accordance with the Commercial Arbitration Rules of the American Arbitration Association, to the extent such rules do not conflict with the terms of this Section 9.4.  The Agreed Accounting Firm’s determination shall be made within thirty (30) days after submission of the matters in dispute and shall be final and binding on both parties, without right of appeal and such decision shall constitute an arbitral award upon which a judgment may be entered by a court having jurisdiction thereof.  In determining the proper amount of any adjustment to the Final Purchase Price, the Agreed Accounting Firm shall not increase the Final Purchase Price more than the increase proposed by Seller nor decrease the Final Purchase Price more than the decrease proposed by Purchaser, as applicable, and may not award damages or penalties to either party with respect to any matter.  Seller and Purchaser shall each bear its own legal fees and other costs of presenting its case.  Each party shall bear one-half of the costs and expenses of the accounting firm.  Within ten (10) Business Days after the date on which the parties or the Agreed Accounting Firm, as applicable, finally determines the disputed matters, (x) Purchaser shall pay to Seller the amount by which the Final Purchase Price exceeds the Closing Payment or (y) Seller shall pay to Purchaser the amount by which the Closing Payment exceeds the Final Purchase Price, as applicable.  Any post-Closing payment pursuant to this Section 9.4(b) shall bear interest at the Agreed Interest Rate from (but not including) the Closing Date to (and including) the date both Purchaser and Seller have executed the final settlement statement.  The parties acknowledge that it is not the intent of this Agreement that either party be deprived of material amounts of revenue or be burdened by material amounts of expense until the final adjustment pursuant to Section 9.4(b).  If at any time after Closing either party believes it is owed material revenues or material expense reimbursement, which revenues and expense reimbursement owed shall be netted against revenues and expenses due the other party, it may request payment from the other party, not more frequently than monthly, and such party shall make payment of any undisputed amounts within a commercially reasonable period of time.  For purposes of the immediately preceding sentence, material shall mean an amount in excess of $500,000. 
(d)   All payments made or to be made hereunder to Seller shall be by electronic transfer of immediately available funds to the account of Seller as may be specified by Seller in writing.  All payments made or to be made hereunder to Purchaser shall be by electronic transfer of immediately available funds to a bank and account specified by Purchaser in writing to Seller.  Upon execution of the Final Closing Statement by the parties and the payment of the Final Adjustment by one party to the other, neither party shall have any further obligation for any additional 

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adjustments to the Purchase Price under Section 2.2.  Notwithstanding anything in this Agreement to the contrary, after the Final Settlement Date, (i) if a party receives revenues that belong to the other party under this Agreement, the party receiving the revenues agrees to promptly remit those revenues to the other party, and (ii) if a party pays Property Costs when the other party is required to pay pursuant to Section 1.2(c), the party on whose behalf the Property Costs were paid agrees to promptly reimburse the other party for the Property Costs paid on its behalf upon receiving satisfactory evidence of such payment; provided, however, that neither party will be obligated to reimburse the other party for any such Property Cost in excess of $10,000 unless it has been consulted about that Property Cost prior to payment.
ARTICLE 10
     
 
TERMINATION
Section 10.1   Termination.
This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:
(a)   by mutual written consent of Seller and Purchaser;
(b)   by either Seller or Purchaser, if:
(i)   the Closing shall not have occurred on or before August 12, 2016 (the “Termination Date”); provided, however, that no party shall have the right to terminate this Agreement under this Section 10.1(b)(i) if such party is at such time in material breach of any provision of this Agreement; or
(ii)  there shall be any Law that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited or a Governmental Body shall have issued an order, decree, or ruling or taken any other action permanently restraining, enjoining, or otherwise prohibiting the consummation of the transactions contemplated hereby, and such order, decree, ruling, or other action shall have become final and non-appealable;
(c)  by Seller, if (i) any of the representations and warranties of Purchaser contained in this Agreement shall not be true and correct in all material respects (provided that any such representation or warranty that is already qualified by a materiality standard or a material adverse effect qualification shall not be further qualified); or (ii) Purchaser shall have failed to fulfill in any material respect any of its obligations under this Agreement required to be performed prior to Closing; and, in the case of each of clauses (i) and (ii), such misrepresentation, or breach of warranty or failure, if curable, has not been cured within ten (10) days after written notice thereof from Seller to Purchaser; provided that any cure period shall not extend beyond the Termination Date and shall not extend the Termination Date; 
(d)  by Purchaser, if (i) any of the representations and warranties of Seller contained in this Agreement shall not be true and correct in all material respects (provided that any such 

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representation or warranty that is already qualified by a materiality or Material Adverse Effect qualification shall not be further qualified); or (ii) Seller shall have failed to fulfill in any material respect any of its obligations under this Agreement required to be performed prior to Closing, and, in the case of each of clauses (i) and (ii), such misrepresentation, breach of warranty or failure, if curable, has not been cured within ten (10) days after written notice thereof from Purchaser to Seller; provided that any cure period shall not extend beyond the Termination Date and shall not extend the Termination Date; or
(e)  by either Seller or Purchaser pursuant to Section 3.5(b).
Section 10.2   Effect of Termination.
If this Agreement is terminated pursuant to Section 10.1, this Agreement shall become void and of no further force or effect (except for the provisions of Section 4.4, Section 5.6, Section 6.5, Section 7.4, Section 11.7, Section 11.8, Section 11.9, Section 11.11 and Section 11.12 of this Agreement and this Article 10, the Section entitled “Definitions,” and Article 12, all of which shall continue in full force and effect).  Notwithstanding the foregoing, nothing contained in this Section 10.2 shall relieve any party from liability for Losses resulting from its breach of this Agreement.
Section 10.3   Distribution of Deposit Upon Termination.
(a)   If Seller terminates this Agreement solely (i) because any of the conditions to Closing set forth in Section 8.1(a) or Section 8.1(b) have not been satisfied or (ii) because of Purchaser’s refusal to close notwithstanding the satisfaction of the conditions precedent set forth in Section 8.2 , then Seller may retain the Deposit, as its sole and exclusive remedy as liquidated damages, free of any claims by Purchaser or any other Person with respect thereto.  It is expressly stipulated by the parties that the actual amount of damages resulting from such a termination would be difficult if not impossible to determine accurately because of the unique nature of this Agreement, the unique nature of the Assets, the uncertainties of applicable commodity markets and differences of opinion with respect to such matters, and that the liquidated damages provided for herein are a reasonable estimate by the parties of such damages.  Upon such termination by Seller, Seller shall be free immediately to enjoy all rights of ownership of the Assets and to sell, transfer, encumber or otherwise dispose of the Assets to any Person without any restriction under this Agreement.
(b)   If this Agreement is terminated for any reason other than the reasons set forth in Section 10.3(a), then Seller shall deliver within one (1) Business Day thereafter the Deposit to Purchaser by electronic transfer of immediately available funds to an account or accounts designated in writing by Purchaser, without interest thereon, free of any claims by Seller or any other Person with respect thereto, and Purchaser shall be entitled to all remedies available at Law or in equity.
(c)   Notwithstanding anything to the contrary in this Agreement, Purchaser shall not be entitled to receive interest on the Deposit, whether the Deposit is applied against the Purchase Price or returned to Purchaser pursuant to this Section 10.3.

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ARTICLE 11
     
 
POST-CLOSING OBLIGATIONS; INDEMNIFICATION; 
LIMITATIONS; DISCLAIMERS AND WAIVERS
Section 11.1   Assumed Seller Obligations.
Subject to the indemnification by Seller under Section 11.3, on the Closing Date, Purchaser shall assume and hereby agrees to fulfill, perform, pay and discharge (or cause to be fulfilled, performed, paid or discharged) all of the obligations and liabilities of Seller, known or unknown, with respect to the Assets, regardless of whether such obligations or liabilities arose prior to, on or after the Effective Time, including but not limited to obligations to (a) furnish makeup gas according to the terms of applicable gas sales, gathering or transportation contracts, and to satisfy all other gas balancing obligations, if any, (b) pay working interests, royalties, overriding royalties and similar burdens affecting the Assets, and all amounts attributable to any such interests held in suspense that are described on Schedule 5.21, (c) properly plug and abandon any and all wells (including, without limitation, the Wells), including inactive wells or temporarily abandoned wells, drilled on the Properties, as required by applicable Law, (d) replug any well, wellbore, or previously plugged well on the Properties to the extent required by a Governmental Body, (e) dismantle, salvage and remove any equipment, structures, materials, platforms, flow lines, and property of whatever kind related to or associated with operations and activities conducted on the Properties, (f) clean up, restore and/or remediate the premises covered by or related to the Assets in accordance with applicable agreements and Laws, (g) pay all Property Costs, and (h) perform all obligations applicable to or imposed on the lessee, owner, or operator under the Leases or attributable to the ownership or operation of the Assets and related Contracts, or as required by applicable Laws (all of said obligations and liabilities, subject to the exclusions below, herein being referred to as the “Assumed Seller Obligations”); provided, however, that notwithstanding any other provision of this Agreement to the contrary, the Assumed Seller Obligations shall not include, and Purchaser shall have no obligation to assume, any obligations or liabilities of Seller to the extent that they are (such excluded obligations and liabilities, the “Excluded Seller Obligations”):
(i)   attributable to or arise out of the Excluded Assets;
(ii)  except to the extent constituting Environmental Liabilities, all obligations and liabilities to the extent attributable to or arising out of the ownership, operation or use of any of the Assets on or before the Effective Time;
(iii)  attributable to or arising out of the actions, suits or proceedings, if any, set forth on Schedule 5.7 or Schedule 5.24;
(iv) Retained Employee Liabilities and any liability or obligation for compensation or reimbursement to any of Seller’s current or former employees for work performed, 

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including any liabilities or obligations related to or arising under any employee benefit plan, express or implied contract, wages, bonuses, commissions or severance benefits prior to Closing; 
(v)   Attributable to all Property Costs before the Effective Time; 
(vi)  the transport or disposal or the arrangement for transport or disposal of any Hazardous Material prior to the Closing Date from the Properties to any off-site location;
(vii)  any fines, penalties and sanctions asserted, imposed or levied by any Governmental Body resulting from any criminal investigation or proceedings arising out of or related to Seller’s ownership, use, maintenance or operation of the Assets; or
(viii)  any death, physical injury or illness to any employees or contractors of Seller related to or arising out of Seller’s ownership or operation of the Assets.
Section 11.2   Survival.
(a)   All representations and warranties of Seller and Purchaser contained herein shall survive Closing until the 15 month anniversary of the Closing Date; provided, however, that the representations and warranties contained in Section 5.2,  Section 5.3, Section 5.4, Section 5.6, Section 6.1, Section 6.2, Section 6.3, and Section 6.5 (collectively, the “Fundamental Representations”) shall survive until the expiration of the applicable statute of limitations period.  Upon the expiration of a representation or warranty in accordance with the foregoing, such representation or warranty shall be deemed terminated and have no further force or effect for any purpose under this Agreement, after which time no claim may be made under such expired representation or warranty.  The parties intend to shorten the applicable statute of limitations as provided herein.
(b)   Except as provided in the remainder of this paragraph, the covenants and other agreements of Seller and Purchaser set forth in this Agreement shall survive the Closing Date until fully performed.  Section 7.5 and all other covenants and agreements that are expressly required to be performed by Seller prior to Closing shall survive Closing until the 15 month anniversary of the Closing Date.  Section 7.9 shall survive the Closing until the 12 month anniversary of the Closing Date.  Seller’s indemnities under Section 11.3(a) and Section 11.3(b) and Purchaser’s indemnities under Section 11.4(a) and Section 11.4(b) shall terminate as of the termination date of each respective representation, warranty, covenant or agreement that is subject to indemnification, except in each case as to matters for which a Claim Notice has been delivered to the Indemnifying Party on or before such expiration date.  All other indemnity obligations shall survive until the expiration of the applicable statute of limitations period.
(c)   No party hereto shall have any indemnification obligation pursuant to this Article 11 or otherwise hereunder unless it shall have received from the party seeking indemnification a written notice (a “Claim Notice”) of the existence of the claim for or in respect of which indemnification is being sought hereunder on or before the expiration of the applicable survival period set forth in Section 11.2.  If an Indemnified Party delivers a Claim Notice with respect to a representation or warranty to an Indemnifying Party before the expiration of the applicable survival 

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period set forth in Section 11.2, then the applicable representation, warranty, covenant or agreement shall survive until, but only for purposes of, the resolution of the matter covered by such Claim Notice.  A Claim Notice shall set forth with reasonable specificity (1) the basis for such claim under this Agreement, and the facts that otherwise form the basis of such claim and (2) to the extent reasonably estimable, an estimate of the amount of such claim (which estimate shall not be conclusive of the final amount of such claim) and an explanation of the calculation of such estimate.
Section 11.3   Indemnification by Seller.
From and after the Closing, subject to the terms and conditions of this Article 11 (including, without limitation, the survival and the timing requirement in Section 11.2), Seller shall indemnify, defend and hold harmless, and shall pay on a current basis, Purchaser and its Affiliates and its and their respective directors, officers, employees, stockholders, managers, members, general partners, equity owners, agents, consultants, advisors and other representatives (including legal counsel, accountants and financial advisors) and the successors and permitted assigns of this Agreement of Purchaser (collectively, the “Purchaser Indemnified Persons”) from and against any and all Losses asserted against, resulting from, imposed upon, or incurred or suffered by any Purchaser Indemnified Person to the extent resulting from, arising out of or relating to:
(a)   any breach of any representation or warranty of Seller contained in this Agreement or confirmed in any certificate furnished by or on behalf of Seller to Purchaser in connection with this Agreement;
(b)      any breach or nonfulfillment of or failure to perform any covenant or agreement of Seller contained in this Agreement or confirmed in any certificate furnished by or on behalf of Seller in connection with this Agreement; 
(c)   any Excluded Seller Obligations; or
(d)   Any other indemnity obligations of Seller contained herein.
Section 11.4   Indemnification by Purchaser.
From and after the Closing, subject to the adjustments to the Purchase Price for purposes of the Closing Statements contained in Section 2.2 and Section 9.4 and the terms and conditions of this Article 11 (including, without limitation, the survival and timing requirements of Section 11.2), and except for Losses from which Seller is required to indemnify Purchaser Indemnified Persons (subject to all survival, timing, amount and other limitations hereunder) under this Agreement, Purchaser shall indemnify, defend and hold harmless, and pay on a current basis, Seller, Seller’s Affiliates, and each of their respective directors, officers, employees, stockholders, managers, members, general partners, equity owners, agents, consultants, advisors and other representatives (including legal counsel, accountants and financial advisors) (all such persons referred to collectively as the “Seller Indemnified Persons”) from and against any and all Losses, asserted against, resulting from, imposed upon, or incurred or suffered by any Seller Indemnified Person, directly or indirectly, to the extent resulting from, arising out of, or relating to:

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(a)   any breach of any representation or warranty of Purchaser contained in this Agreement or confirmed in any certificate furnished by or on behalf of Purchaser to Seller in connection with this Agreement REGARDLESS OF FAULT;
(b)   any breach or nonfulfillment of or failure to perform any covenant or agreement of Purchaser contained in this Agreement or confirmed in any certificate furnished by or on behalf of Purchaser to Seller in connection with this Agreement REGARDLESS OF FAULT;
(c)   any and all Property Costs from and after the Effective Time;
(d)   the Assumed Seller Obligations REGARDLESS OF FAULT;
(e)  to the extent applicable to the ownership, operation or use of the Assets, Environmental Laws, Environmental Liabilities, the release of materials into the environment or protection of human health, safety, natural resources or the environment, or any other environmental condition of the Assets, REGARDLESS OF FAULT; or
(f)    Any other indemnity obligations of Purchaser contained herein, including without limitation, Section 4.4.
Section 11.5   Indemnification Proceedings.
(a)    In the event that any claim or demand for which Seller or Purchaser (such Person, an “Indemnifying Party”) may be liable to a Purchaser Indemnified Person under Section 11.3 or to an Seller Indemnified Person under Section 11.4 (an “Indemnified Party”) is asserted against or sought to be collected from an Indemnified Party by a third party (a “Third Party Claim,”) the Indemnified Party shall with reasonable promptness notify the Indemnifying Party of such Third Party Claim by delivery of a Claim Notice, provided that the failure or delay to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations under this Article 11, except (and solely) to the extent that the Indemnifying Party demonstrates that its defense of such Third Party Claim is actually and materially prejudiced thereby.  The Indemnifying Party shall have thirty (30) days from receipt of the Claim Notice from the Indemnified Party (in this Section 11.5, the “Notice Period”) to notify the Indemnified Party whether or not the Indemnifying Party desires, at the Indemnifying Party’s sole cost and expense, to defend the Indemnified Party against such claim or demand; provided, that the Indemnified Party is hereby authorized prior to and during the Notice Period, and at the cost and expense of the Indemnifying Party, to file any motion, answer or other pleading that it shall reasonably deem necessary to protect its interests or those of the Indemnifying Party.  The Indemnifying Party shall have the right to assume the defense of such Third Party Claim only if and for so long as the Indemnifying Party (i) notifies the Indemnified Party during the Notice Period that the Indemnifying Party is assuming the defense of such Third Party Claim, (ii) uses counsel of its own choosing that is reasonably satisfactory to the Indemnified Party, and (iii) conducts the defense of such Third Party Claim in an active and diligent manner.  If the Indemnifying Party is entitled to, and does, assume the defense of any such Third Party Claim, the Indemnified Party shall have the right to employ separate counsel at its own expense and to participate in the defense thereof.  If the Indemnifying Party elects (and is entitled) to assume the defense of such Third Party Claim, (i) no compromise or settlement thereof or consent to any 

57    

admission or the entry of any judgment with respect to such Third Party Claim may be effected by the Indemnifying Party without the Indemnified Party’s written consent (which shall not be unreasonably withheld, conditioned or delayed) unless the sole relief provided is monetary damages that are paid in full by the Indemnifying Party (and no injunctive or other equitable relief is imposed upon the Indemnified Party) and there is an unconditional provision whereby each plaintiff or claimant in such Third Party Claim releases the Indemnified Party from all liability with respect thereto and (ii) the Indemnified Party shall have no liability with respect to any compromise or settlement thereof effected without its written consent (which shall not be unreasonably withheld).  If the Indemnifying Party elects not to assume the defense of such Third Party Claim (or fails to give notice to the Indemnified Party during the Notice Period or otherwise is not entitled to assume such defense), the Indemnified Party shall be entitled to assume the defense of such Third Party Claim with counsel of its own choice, at the expense and for the account of the Indemnifying Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of any Indemnifying Party without the prior written consent of such Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed.
(b)   Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party, shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any Third Party Claim (i) at the reasonable expense of the Indemnifying Party, as to which the Indemnifying Party fails to assume the defense during the Notice Period after the Indemnified Party gives notice thereof to the Indemnifying Party or (ii) at the reasonable expense of the Indemnifying Party, to the extent the Third Party Claim seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, could materially adversely affect the business, condition (financial or other), capitalization, assets, liabilities, results of operations or prospects of the Indemnified Party.  The Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of the Indemnifying Party without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).
(c)   In any case in which an Indemnified Party seeks indemnification hereunder and no Third Party Claim is involved, the Indemnified Party shall deliver a Claim Notice to the Indemnifying Party within a reasonably prompt period of time after an [officer] of such Indemnified Party or its Affiliates has obtained knowledge of the Loss giving rise to indemnification hereunder.  The failure or delay to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations under this Article 11 except to the extent such failure results in insufficient time being available to permit the Indemnifying Party to effectively mitigate the resulting Losses or otherwise prejudices the Indemnifying Party.
(d)   Notwithstanding any other provision of this Agreement to the contrary:
(i)   Subject to the following sentence, Seller shall not be required to indemnify any Person under Section 11.3(a) with respect to a breach of any representation and warranty that 

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is not a Fundamental Representation for any individual liability, loss, cost, expense, claim, award or judgment that does not exceed $50,000. 
(ii)   Seller shall not be required to indemnify any Person under Section 11.3(a) with respect to a breach of any representation and warranty that is not a Fundamental Representation until and unless the aggregate amount of liability for all Losses for which Claim Notices are delivered by Purchaser in accordance with this Agreement exceeds an amount equal to three percent (3%) of the Purchase Price (the “Indemnity Deductible”), after which point Purchaser shall be entitled to claim Losses only to the extent such Losses are in excess of the Indemnity Deductible.
(iii)   Seller shall not be required to indemnify any Person under Section 11.3 for aggregate Losses in excess of an amount equal to twenty five percent (25%) of the Purchase Price, except for claims made under the indemnity in Section 11.3(b) or Section 11.3(c) as it relates to the Excluded Seller Obligations.
(iv)   For purposes of determining whether there has been a breach of any representation or warranty of Seller for which Seller is required to indemnify any Person under Section 11.3(a), any dollar or materiality qualifiers in Seller’s representations or warranties shall be disregarded.
Section 11.6   Release.
EXCEPT FOR MATTERS FOR WHICH SELLER IS REQUIRED TO INDEMNIFY PURCHASER INDEMNIFIED PERSONS UNDER SECTION 11.3 OR PURSUANT TO SECTION 3.4(d)(i), OR WITH RESPECT TO POST-CLOSING REMEDIATION AGREED TO PURSUANT TO SECTION 4.3 (IF ANY) OR EXCLUDED SELLER OBLIGATIONS, AT THE CLOSING PURCHASER HEREBY RELEASES, REMISES AND FOREVER DISCHARGES THE SELLER INDEMNIFIED PERSONS FROM ANY AND ALL CLAIMS, KNOWN OR UNKNOWN, WHETHER NOW EXISTING OR ARISING IN THE FUTURE, CONTINGENT OR OTHERWISE, WHICH PURCHASER MIGHT NOW OR SUBSEQUENTLY MAY HAVE AGAINST THE SELLER INDEMNIFIED PERSONS, RELATING DIRECTLY OR INDIRECTLY TO THE CLAIMS ARISING OUT OF OR INCIDENT TO ENVIRONMENTAL LAWS, ENVIRONMENTAL LIABILITIES, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, INCLUDING, WITHOUT LIMITATION, RIGHTS TO CONTRIBUTION UNDER CERCLA, REGARDLESS OF FAULT.
Section 11.7   Disclaimers.
(a)   EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN ARTICLE 5 OF THIS AGREEMENT, OR CONFIRMED IN THE CERTIFICATE OF SELLER TO BE DELIVERED PURSUANT TO SECTION 9.2(c), OR IN THE CONVEYANCE, (I) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, (EXPRESS, STATUTORY OR IMPLIED) WITH RESPECT TO THE ASSETS OR THE 

59    

TRANSACTIONS CONTEMPLATED HEREBY AND (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO PURCHASER OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS, CONSULTANTS OR REPRESENTATIVES (INCLUDING, WITHOUT LIMITATION, ANY OPINION, INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO PURCHASER BY ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT, CONSULTANT, REPRESENTATIVE OR ADVISOR OF SELLER OR ANY OF ITS AFFILIATES).
(b)   EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 5 OF THIS AGREEMENT, OR CONFIRMED IN THE CERTIFICATE OF SELLER TO BE DELIVERED PURSUANT TO SECTION 9.2(c), OR IN THE CONVEYANCE, AND WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF THE ASSETS, (II) ANY MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, ENVIRONMENTAL LIABILITIES, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, OR ANY OTHER ENVIRONMENTAL CONDITION OF THE ASSETS, (III) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE ASSETS, (IV) THE QUANTITY, QUALITY OR  RECOVERABILITY OF PETROLEUM SUBSTANCES IN OR FROM THE ASSETS, (V) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (VI) THE PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (VII) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, (VIII) THE CONTENT, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, REPORTS, BROCHURES, CHARTS OR STATEMENTS PREPARED BY THIRD PARTIES, (IX) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF MERCHANTABILITY, FREEDOM FROM REDHIBITORY VICES OR DEFECTS (INCLUDING THOSE CONTEMPLATED IN LOUISIANA CIVIL CODE ARTICLES 2475, AND 2520 THROUGH 2548), FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT PURCHASER SHALL BE DEEMED TO BE OBTAINING THE ASSETS IN THEIR PRESENT STATUS, CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS (EXCEPT FOR EXCLUDED 

60    

SELLER OBLIGATIONS) AND THAT PURCHASER HAS MADE OR CAUSED TO BE  MADE SUCH INSPECTIONS AS PURCHASER DEEMS APPROPRIATE, OR (X) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT.
Section 11.8   Waiver of Trade Practices Acts.
(a)   It is the intention of the parties that Purchaser’s rights and remedies with respect to this transaction and with respect to all acts or practices of Seller, past, present or future, in connection with this transaction shall be governed by legal principles other than the Texas Deceptive Trade Practices--Consumer Protection Act, Tex. Bus. & Com. Code Ann. § 17.41 et seq. (the “DTPA”) or the Louisiana unfair trade practices and consumer protection law, La. R.S. 51:1402, et seq. (the “UTPCPL”).  As such, Purchaser hereby waives the applicability of the DTPA and the UTPCPL to this transaction and any and all duties, rights or remedies that might be imposed by the DTPA and/or the UTPCPL, whether such duties, rights and remedies are applied directly by the DTPA or the UTPCPL itself or indirectly in connection with other statutes; provided, however, Purchaser does not waive § 17.555 of the DTPA.  Purchaser acknowledges, represents and warrants that it is purchasing the goods and/or services covered by this Agreement for commercial or business use; that it has assets of $5,000,000.00 or more according to its most recent financial statement prepared in accordance with GAAP; that it has knowledge and experience in financial and business matters that enable it to evaluate the merits and risks of a transaction such as this; and that it is not in a significantly disparate bargaining position with Seller.  
(b)   Purchaser expressly recognizes that the price for which Seller has agreed to perform its obligations under this Agreement has been predicated upon the inapplicability of the DTPA and the UTPCPL and this waiver of the DTPA and the UTPCPL.  Purchaser further recognizes that Seller, in determining to proceed with the entering into of this Agreement, has expressly relied on this waiver and the inapplicability of the DTPA and the UTPCPL.
Section 11.9   INTENTIONALLY OMITTED.

Section 11.10   Recording.
As soon as practicable after Closing, Purchaser shall record the Conveyances in the appropriate counties and/or parishes and provide Seller with copies of all recorded or approved instruments.  The Conveyances are intended to convey all of the Properties being conveyed pursuant to this Agreement.  Certain Properties or specific portions of the Properties that are leased from, or require the approval to transfer by, a Governmental Body are conveyed under the Conveyances and also are described and covered by other separate assignments made by Seller to Purchaser on officially approved forms, or forms acceptable to such entity, in sufficient multiple originals to satisfy applicable statutory and regulatory requirements.  The interests conveyed by such separate assignments are the same, and not in addition to, the interests conveyed in the Conveyances attached as Exhibit B.  Further, such assignments shall be deemed to contain the special warranty of title of Seller and all of the exceptions, reservations, rights, titles, power and privileges set forth herein and 

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in the Conveyances as fully and only to the extent as though they were set forth in each such separate assignment.
Section 11.11   Non-Compensatory Damages
None of the Purchaser Indemnified Parties nor Seller Indemnified Parties shall be entitled to recover from Seller or Purchaser, or their respective Affiliates, any indirect, consequential, punitive or exemplary damages or damages for lost profits of any kind arising under or in connection with this Agreement or the transactions contemplated hereby, except to the extent any such party suffers such damages (including costs of defense and reasonable attorney’s fees incurred in connection with defending of such damages) to a third party, which damages (including costs of defense and reasonable attorney’s fees incurred in connection with defending against such damages) shall not be excluded by this provision as to recovery hereunder.  Subject to the preceding sentence, Purchaser, on behalf of each of the Purchaser Indemnified Parties, and Seller, on behalf of each of Seller Indemnified Parties, waive any right to recover punitive, special, exemplary and consequential damages, including damages for lost profits, arising in connection with or with respect to this Agreement or the transactions contemplated hereby.
Section 11.12   Disclaimer of Application of Anti-Indemnity Statutes
The parties acknowledge and agree that the provisions of any anti-indemnity statute relating to oilfield services and associated activities shall not be applicable to this Agreement and/or the transactions contemplated hereby.
ARTICLE 12
     
 
MISCELLANEOUS
Section 12.1   Counterparts.
This Agreement may be executed and delivered (including by facsimile transmission) in counterparts, each of which shall be deemed an original instrument, but all such counterparts together shall constitute but one agreement.
Section 12.2   Notices.
All notices which are required or may be given pursuant to this Agreement shall be sufficient in all respects if given in writing and delivered personally, by telecopy or by registered or certified mail, postage prepaid, or sent by electronic mail (provided any such electronic mail transmission is confirmed either orally or by written confirmation), as follows:
		
	If to Seller:
	Mid-Con Energy Properties, LLC

Attn: Charles L. McLawhorn, III
2431 E. 61st Street, Suite 850
Tulsa, Oklahoma  74136
Telephone: (918) 743-7575

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Telecopy: (918) 743-8859
Email: cmclawhorn@midcon-energy.com

		
	If to Purchaser:
	PO&G Resources, LP

Attn: George A. Oggero, General Counsel, Chief Compliance Officer, & Land Manager
5847 San Felipe, Suite 3200
Houston, Texas 77057
Telephone: 713-589-8138
Telecopy: 713-244-0650
Email: George_oggero@pogresources.com

Either party may change its address for notice by notice to the other in the manner set forth above.  All notices shall be deemed to have been duly given at the time of receipt by the party to which such notice is addressed.
Section 12.3    Sales or Use Tax Recording Fees and Similar Taxes and             Fees.
Purchaser shall bear any sales, use, excise, real property transfer, gross receipts, goods and services, registration, capital, documentary, stamp or transfer Taxes, recording fees and similar Taxes and fees (collectively “Transfer Taxes”) incurred and imposed upon, or with respect to, the transactions contemplated by this Agreement.  Seller will determine, and Purchaser will cooperate with Seller in determining the amount of any Transfer Taxes, if any, that is due in connection with the transactions contemplated by this Agreement and Purchaser agrees to pay any such Transfer Tax to Seller or to the appropriate Governmental Body.  If any of the transactions contemplated by this Agreement are exempt from any such Transfer Taxes upon the filing of an appropriate certificate or other evidence of exemption, Purchaser will timely furnish to Seller such certificate or evidence.
Section 12.4    Exhibits and Schedules.  
All of the Exhibits and Schedules referred to in this Agreement constitute a part of this Agreement.  Seller and Purchaser and their respective counsel have received a complete set of the Exhibits and Schedules prior to and as of the execution of this Agreement.  Purchaser agrees that, with respect to the representations and warranties of Seller contained in this Agreement, Seller shall have the continuing right until the Closing to add, supplement or amend the Schedules to its representations and warranties with respect to any matter first arising hereafter that does not result in a breach by Seller of any provision of Section 7.5 which, if existing at the date of this Agreement or thereafter, would have been required to be set forth or described in such Schedules.  For purposes of determining whether the conditions set forth in Section 8.2(a) have been fulfilled, the Schedules to Seller’s representations and warranties contained in this Agreement shall be deemed to include only that information contained therein on the date of this Agreement and shall be deemed to exclude all information contained in any addition, supplement or amendment thereto after the date of this Agreement; provided, however, that if the Closing shall occur, then all Claims with respect to all matters disclosed pursuant to any such addition, supplement or amendment at or prior to the Closing 

63    

shall be waived and Purchaser shall not be entitled to make a claim with respect thereto pursuant to Section 11.3(a) of this Agreement for a breach of the representations and warranty to which such matters relate.
Section 12.5   Expenses.
Except as otherwise expressly provided in Section 12.3, or elsewhere in this Agreement, (a) all expenses incurred by Seller in connection with or related to the authorization, preparation or execution of this Agreement, the Conveyance delivered hereunder and the Exhibits and Schedules hereto and thereto, and all other matters related to the Closing, including without limitation, all fees and expenses of counsel, accountants and financial advisers employed by Seller, shall be borne solely and entirely by Seller, and (b) all such expenses incurred by Purchaser shall be borne solely and entirely by Purchaser.
Section 12.6   Change of Name.
As promptly as practicable after Closing, but in any case within ninety (90) days after the Closing Date, Purchaser shall eliminate the names “Mid-Con Energy Properties, LLC”, “Mid-Con” and any variants thereof from the Assets acquired pursuant to this Agreement and, except with respect to such grace period for eliminating existing usage, shall have no right to use any logos, trademarks or trade names belonging to Seller.
Section 12.7   Governing Law; Venue; and Waiver of Jury Trial.
THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS OTHERWISE APPLICABLE TO SUCH DETERMINATIONS.  EXCEPT TO THE EXTENT PROVIDED IN SECTION 3.4(i) SECTION 4.3 OR SECTION 9.4(c), JURISDICTION AND VENUE WITH RESPECT TO ANY DISPUTES ARISING HEREUNDER SHALL BE PROPER ONLY IN HARRIS COUNTY, TEXAS, AND THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY BROUGHT IN SUCH COURTS OR ANY DEFENSE OF INCONVENIENT FORUM FOR THE MAINTENANCE OF SUCH DISPUTE. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.
Section 12.8   Captions.
The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.
Section 12.9   Waivers.

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Any failure by any party to comply with any of its obligations, agreements or conditions herein contained may be waived in writing, but not in any other manner, by the party to whom such compliance is owed.  No waiver of, or consent to a change in, any of the provisions of this Agreement shall be deemed or shall constitute a waiver of, or consent to a change in, other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.  The rights of Seller and Purchaser under this Agreement shall be cumulative and the exercise or partial exercise of any such right shall not preclude the exercise of any other right.
Section 12.10   Assignment.
No party shall assign all or any part of this Agreement (other than by Purchaser to an Affiliate of Purchaser), nor shall any party assign or delegate any of its rights or duties hereunder (other than by Purchaser to an Affiliate of Purchaser), without the prior written consent of the other party.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
Section 12.11   Entire Agreement.
The Confidentiality Agreement, this Agreement and the Exhibits and Schedules attached hereto, and the documents to be executed hereunder constitute the entire agreement between the parties pertaining to the subject matter hereof, and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties pertaining to the subject matter hereof.
Section 12.12   Amendment.
(a)   This Agreement may be amended or modified only by an agreement in writing executed by the parties hereto.
(b)   No waiver of any right under this Agreement shall be binding unless executed in writing by the party to be bound thereby.
Section 12.13   No Third-Party Beneficiaries.
Nothing in this Agreement shall entitle any Person other than Purchaser or Seller to any claims, remedy or right of any kind, except as to those rights expressly provided to the Seller Indemnified Persons and Purchaser Indemnified Persons (provided, however, any claim for indemnity hereunder on behalf of a Seller Indemnified Person or a Purchaser Indemnified Person must be made and administered by a party to this Agreement).
Section 12.14   References.
In this Agreement:
(a)   References to any gender includes a reference to all other genders;

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(b)   References to the singular includes the plural, and vice versa;
(c)   Reference to any Article or Section means an Article or Section of this Agreement;
(d)   Reference to any Exhibit or Schedule means an Exhibit or Schedule to this Agreement, all of which are incorporated into and made a part of this Agreement;
(e)   Unless expressly provided to the contrary, “hereunder”, “hereof’, “herein” and words of similar import are references to this Agreement as a whole and not any particular Section or other provision of this Agreement;
(f)   “Include” and “including” shall mean include or including without limiting the generality of the description preceding such term; and
(g)   Capitalized terms used herein shall have the meanings ascribed to them in this Agreement as such terms are identified and/or defined in the Definitions section hereof.
Section 12.15   Construction.
Purchaser is a party capable of making such investigation, inspection, review and evaluation of the Assets as a prudent party would deem appropriate under the circumstances including with respect to all matters relating to the Assets, their value, operation and suitability. Each of Seller and Purchaser has had substantial input into the drafting and preparation of this Agreement and has had the opportunity to exercise business discretion in relation to the negotiation of the details of the transactions contemplated hereby.  This Agreement is the result of arm’s-length negotiations from equal bargaining positions.  In the event of a dispute over the meaning or application of this Agreement, it shall be construed fairly and reasonably and no consideration shall be given to the fact or presumption that one party had a greater or lesser hand in drafting this Agreement.
Section 12.16   Conspicuousness.
The parties agree that provisions in this Agreement in “bold” type satisfy any requirements of the “express negligence rule” and any other requirements at law or in equity that provisions be conspicuously marked or highlighted.
Section 12.17   Severability.
If any term or other provisions of this Agreement is held invalid, illegal or incapable of being enforced under any rule of law, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in a materially adverse manner with respect to either party; provided, however, that if any such term or provision may be made enforceable by limitation thereof, then such term or provision shall be deemed to be so limited and shall be enforceable to the maximum extent permitted by applicable Law.  Upon determining that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as 

66    

possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.
Section 12.18   Time of Essence.
Time is of the essence in this Agreement.  If the date specified in this Agreement for giving any notice or taking any action is not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date which is not a Business Day), then the date for giving such notice or taking such action (and the expiration date of such period during which notice is required to be given or action taken) shall be the next day which is a Business Day.

 [SIGNATURES BEGIN ON THE FOLLOWING PAGE]

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IN WITNESS WHEREOF, this Agreement has been signed by each of the parties hereto on the date first above written.
	
				
	SELLER:
MID-CON ENERGY PROPERTIES, LLC, 
a Delaware limited liability company

By:      Mid-Con Energy Partners, LP, a 
   Delaware limited partnership, its
   Sole Member

By:      Mid-Con Energy GP, LLC, a 
   Delaware limited liability company,
   Its General Partner

   By: Jeffrey R. Olmstead
      Chief Executive Officer
MID-CON ENERGY OPERATING, LLC, 
an Oklahoma limited liability company

By: Jeffrey R. Olmstead
   Chief Executive Officer

PURCHASER:
PO&G PANHANDLE, LP, 
a Texas limited partnership

By:      PO&G Panhandle Manager, LLC, a 
   Texas limited liability company, 
Its General Partner 

By:        TJK, LLC, a 
   Nevada limited liability company
   Its Sole Member

By: Steven A. Pfeifer
      Manager
	 
	 
	 

EXHIBIT A
Attached to and for all purposes made a part of that certain Purchase and Sale Agreement dated May 26, 2016, by and among MID-CON ENERGY PROPERTIES, LLC, as Seller, and PO&G PANHANDLE, LP, as Purchaser.

	
										
	Unit/Lease
	LESSOR
	LESSEE
	LEASE DATE
	BOOK
	PAGE
	ST
	COUNTY
	LEGAL
	LEGAL DESCRIPTION

	HRMU
	ANADARKO LAND CORP., A NEBRASKA CORPORATION
	MID-CON ENERGY CORPORATION
	12/19/2005
	2006
	224734
	CO
	CHEYENNE
	013S-043W-001, 013S-043W-13
	W/2 SE/4 of Sec 1-13S-43W and N/2 NW/4 of Sec 13-13S-43W

	HRMU
	ANADARKO E & P COMPANY LP, A DELAWARE LIMITED PARTNERSHIP
	MID-CON ENERGY CORPORATION
	12/192005
	2006
	224735
	CO
	CHEYENNE
	013S-043W-001, 013S-043W-14
	SW/4; E/2 SE/4 of Sec 1-13S-43W and NE/4 & S/2 NW/4 of Sec 13-13S-43W

	HRMU
	LAS ANIMAS MINERALS LTD
	WILBANKS & ASSOCIATES INC
	1/11/1988
	249
	533
	CO
	CHEYENNE
	013S-043W-012
	Lots 11 – 14 (aka SW/4) of Sec 12-13S-43W

	ONA
	ESTATE OF ZANE RAYMOND SMALTS, A MINOR, RAYMOND SMALTS, GUARDIAN
	THE ATLANTIC REFINING COMPANY
	7/1/1959
	84
	305
	OK
	CIMARRON
	004N-009E-025
	E/2 NE/4; Limited to Morrow formation

	ONA
	RAYMOND AND NADINE SMALTS - HUSBAND AND WIFE
	THE ATLANTIC REFINING COMPANY
	9/17/1959
	84
	319
	OK
	CIMARRON
	004N-009E-025
	NE/4 SE/4, N/2 SE/4 SE/4; Limited to Morrow formation - 25; S/2 SE/4 SE/4; Limited to Morrow formation

	ONA
	IVA ELIZA WILSON, JESSIE MAE WILSON, KALL AND REX E. WILSON
	THE ATLANTIC REFINING COMPANY
	4/1/1962
	100
	159
	OK
	CIMARRON
	004N-009E-025
	NE/4 SE/4, N/2 SE/4 SE/4; Limited to Morrow formation - 25; S/2 SE/4 SE/4; Limited to Morrow formation

	MIDWELL
	CLAUDYA JO SMITH AND CYRUS L. SMITH
	BURK ROYALTY CO.
	9/29/1992
	280
	722
	OK
	CIMARRON
	004N-009E-035
	NE/4

	MIDWELL
	ROSALIE LANDAU & DAVID LANDAU
	BURK ROYALTY CO.
	12/17/1992
	281
	881
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	BARBARA CRISS BENNETT ALEXANDER & JOHN ALEXANDER, WH
	BURK ROYALTY CO.
	12/20/1992
	281
	792
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	RAEANN ZAHN, HEIR OF ROSE BRYANT, AND THOMAS ZAHN, WH
	BURK ROYALTY CO.
	12/20/1992
	282
	135
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	MICHAEL BATTAGLIA, HEIR OF ROSE BRYANT, AND NIELA BATTAGLIA, HW
	BURK ROYALTY CO.
	12/20/1992
	283
	48
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	JILL L. ENNIS HOPKINS AND EARL D. HOPKINS, WH
	BURK ROYALTY CO.
	12/20/1992
	282
	596
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	
										
	MIDWELL
	TILFORD R. BAILEY & INEZROSE BAILEY
	BURK ROYALTY CO.
	12/20/1992
	281
	909
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	KIP DANIEL ENNIS
	BURK ROYALTY CO.
	12/20/1992
	282
	250
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	DICK AND DELMA M. WHITE, HW
	BURK ROYALTY CO.
	12/20/1992
	281
	684
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	JANE AND RONALD SHOUSE
	BURK ROYALTY CO.
	12/20/1992
	281
	883
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	RICHARD W. ENNIS AND MARY ANN ENNIS, HW
	BURK ROYALTY CO.
	12/20/1992
	282
	91
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	JERRY C. ENNIS AND ANITA A. ENNIS, HW
	BURK ROYALTY CO.
	12/20/1992
	 
	 
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	BECKY AND TONY WOODS
	BURK ROYALTY CO.
	12/20/1992
	282
	14
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	PEGGY AND JIM MUSAL
	BURK ROYALTY CO.
	12/20/1992
	281
	770
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	EMILY B. PEARCE
	BURK ROYALTY CO.
	12/20/1992
	281
	772
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	MODESTA BAILEY, A WIDOW
	BURK ROYALTY CO.
	12/20/1992
	281
	764
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	JANET S. HODGE
	BURK ROYALTY CO.
	12/20/1992
	281
	766
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	JAMES M. AND RITA ENNIS
	BURK ROYALTY CO.
	12/20/1992
	282
	12
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	JACK C. ENNIS
	BURK ROYALTY CO.
	12/20/1992
	281
	885
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	KIMBERLY A. ENNIS HARROUGH & RANDY HARROUGH
	BURK ROYALTY CO.
	12/20/1992
	 
	 
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	MADONNA AND JOSEPH BRYANT
	BURK ROYALTY CO.
	12/20/1992
	281
	790
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	CECIL G. & ANNA G. BAILEY
	BURK ROYALTY CO.
	12/20/1992
	281
	768
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	DAVID R. ENNIS & HELEN ENNIS
	BURK ROYALTY CO.
	12/20/1992
	281
	776
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	HERSHELL AND DEANN WALTZ
	BURK ROYALTY CO.
	12/20/1992
	281
	879
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	ANDREA LYNETTE WALTZ CLAYTON AND TODD CLAYTON
	BURK ROYALTY CO.
	12/20/1992
	 
	 
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	GREGORY AND TERESA WALTZ
	BURK ROYALTY CO.
	12/20/1992
	281
	877
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	RONALD FRANKLIN STILES
	BURK ROYALTY CO.
	12/20/1992
	281
	774
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	DAVID AND CAROLE BRIDGES
	BURK ROYALTY CO.
	12/20/1992
	 
	 
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	MICHAEL AND ALLISON WALTZ
	BURK ROYALTY CO.
	12/20/1992
	282
	52
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	SHEILA R. ENNIS CHITWOOD & JEFF CHITWOOD
	BURK ROYALTY CO.
	12/20/1992
	 
	 
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	MIDWELL
	WINONA KEIFFER AND DICK KIEFFER
	BURK ROYALTY CO.
	12/20/1992
	 
	 
	OK
	CIMARRON
	004N-009E-035
	NE/4 SW/4

	
										
	MIDWELL
	THE ROXIE M. HANKE TESTAMENTARY TRUST UNDER THE WILL OF ROXIE M. HANKE, EDWARD L. NEWLIN, TRUSTEE
	BURK ROYALTY CO.
	11/30/1992
	281
	463
	OK
	CIMARRON
	004N-009E-035
	NW/4

	MIDWELL
	THE PAUL HANKE TESTAMENTARY TRUST UNDER THE WILL OF PAUL HANKE  EDWARD L. NEWLIN, TRUSTEE
	BURK ROYALTY CO.
	11/30/1992
	281
	429
	OK
	CIMARRON
	004N-009E-035
	NW/4

	SMALTZ
	RETA NADINE SMALTS ESTATE, A MINOR, RAYMOND SMALTS, GUARDIAN
	THE ATLANTIC REFINING COMPANY
	7/1/1959
	84
	307
	OK
	CIMARRON
	004N-009E-025
	SW/4

	SMALTZ
	IVA ELIZA WILSON, JESSIE MAE WILSON, KALL AND REX E. WILSON
	THE ATLANTIC REFINING COMPANY
	4/4/1962
	100
	160
	OK
	CIMARRON
	004N-009E-025
	SE/4

	SMALTZ
	RAYMOND AND NADINE SMALTS - HUSBAND AND WIFE
	THE ATLANTIC REFINING COMPANY
	9/17/1959
	84
	319
	OK
	CIMARRON
	004N-009E-025
	SE/4

	SMALTZ
	ESTATE OF ZANE RAYMOND SMALTS, A MINOR, RAYMOND SMALTS, GUARDIAN
	THE ATLANTIC REFINING COMPANY
	7/1/1959
	84
	305
	OK
	CIMARRON
	004N-009E-025
	NE/4

	SMALTZ
	ESTATE OF JAMES CLYDE SMALTS, RAYMOND SMALTS, GUARDIAN
	THE ATLANTIC REFINING COMPANY
	10/1/1959
	84
	321
	OK
	CIMARRON
	004N-009E-025
	NW/4

	EVA
	WILLIAM C EGGERS ET AL
	HW LONG
	6/28/1954
	252
	398
	OK
	TEXAS
	003N-011E-005
	S/2 SE/4, NW/4 SE/4

	EVA
	C F WEBB AND GUYNETH V WEBB HIS WIFE
	F P HAMBRIGHT
	12/12/1959
	312
	69
	OK
	TEXAS
	003N-011E-005
	W/2

	EVA
	BERNICE MILES AND E E MILES HER HUSBAND
	F P HAMBRIGHT
	12/15/1959
	312
	78
	OK
	TEXAS
	003N-011E-005
	W/2

	EVA
	SYLVESTER N IVIE, A WIDOWER
	CARTER OIL COMPANY
	1/8/1955
	305
	487
	OK
	TEXAS
	003N-011E-006
	PORTION OF THE SE/4 SE/4 OF SEC. 6, LYING S AND E OF THE TEPEE CREEK FAULT WHICH IS A STRAIGHT LINE BEGINNING AT A POINT 1 ,320' FSL AND 300' FEL OF SEC. 6 AND ENDING AT A POINT ON THE SOUTH LINE OF SEC. 6 ,1 ,200' FEL

	EVA
	JAMES PETROLEUM CORPORATION
	WILLIAM N PRICE
	7/6/1961
	336
	290
	OK
	TEXAS
	003N-011E-006
	PORTION OF THE SE/4 SE/4 OF SEC. 6, LYING S AND E OF THE TEPEE CREEK FAULT WHICH IS A STRAIGHT LINE BEGINNING AT A POINT 1 ,320' FSL AND 300' FEL OF SEC. 6 AND ENDING AT A POINT ON THE SOUTH LINE OF SEC. 6, 1 ,200' FEL

	EVA
	F HINER DALE ADMIN. OF WILL OF ORLIA A WEEDE, DECEASED
	THE CARTER OIL COMPANY
	4/3/1954
	301
	187
	OK
	TEXAS
	003N-011E-007
	PORTION OF THE NE/4 LYING S AND E OF THE TEPEE CREEK FAULT, WHICH IS A STRAIGHT LINE BEGINNING AT A POINT ON THEN LINE OF SEC. 7, 1200' FEL, AND ENDING AT A POINT 2640' FEL AND 3190' FSL OF SEC. 7

	
										
	EVA
	W F DUNAWAY AND MADAL DUNAWAY HUSBAND AND WIFE
	THE CARTER OIL COMPANY
	9/3/1953
	302
	1
	OK
	TEXAS
	003N-011E-007
	PORTION OF THE NE/4 LYING S AND E OF THE TEPEE CREEK FAULT, WHICH IS A STRAIGHT LINE BEGINNING AT A POINT ON THEN LINE OF SEC. 7, 1200' FEL, AND ENDING AT A POINT 2640' FEL AND 3190' FSL OF SEC. 7

	EVA
	W F DUNAWAY
	THE CARTER OIL CO
	12/14/1954
	305
	473
	OK
	TEXAS
	003N-011E-008
	NW/4

	EVA
	COMMERCIAL NATIONAL BANK OF KANSAS CITY, TRUSTEE
	THE CARTER OIL CO
	12/14/1954
	305
	474
	OK
	TEXAS
	003N-011E-008
	NW/4

	EVA
	BERNICE V SHORES
	ENSIGN OPERATING CO
	8/17/1992
	867
	168
	OK
	TEXAS
	003N-011E-008
	NW/4 NE/4, N/2 NE/4 NE/4

	EVA
	LOYD V PETERSON AND NORLENE T. LOYD V PETERSON AND NORLENE T.
	ENSIGN OPERATING CO
	8/17/1992
	867
	171
	OK
	TEXAS
	003N-011E-008
	NW/4 NE/4, N/2 NE/4 NE/4

	EVA
	ALLEN JOE NORRIS
	ENSIGN OPERATING CO
	8/17/1992
	867
	174
	OK
	TEXAS
	003N-011E-008
	NW/4 NE/4, N/2 NE/4 NE/4

	EVA
	MARY LOU NORRIS KENNEY, DANIEL V. NORRIS & STEPHEN W. NORRIS
	ENSIGN OPERATING CO
	8/17/1992
	867
	489
	OK
	TEXAS
	003N-011E-008
	NW/4 NE/4, N/2 NE/4 NE/4

	ONA
	KENNETH BOWMAN & WILMA BOWMAN, HIS WIFE & CLIFFORD H. BOWMAN & ELSIA M. BOWMAN, HIS WIFE
	DAWSON OPERATING CO. INC.
	11/22/1973
	 
	 
	OK
	TEXAS
	004N-010E-017
	S/2 SW/4, NW/4 SW/4 - 17; NE/4 SW/4

	ONA
	J.D. VOILES & T.F. VOILES, TRUSTEES OF J.D. & T.F. VOILES CHILDREN TRUST
	BEARD OIL CO.
	3/21/1990
	 
	 
	OK
	TEXAS
	004N-010E-018
	E/2 SE/4, SW/4 SE/4, S/2 NW/4 SE/4

	ONA
	IMOGENE METCALF
	BEARD OIL CO.
	3/21/1990
	 
	 
	OK
	TEXAS
	004N-010E-018
	E/2 SE/4, SW/4 SE/4, S/2 NW/4 SE/4

	ONA
	CHARLOTTE BUTLER
	BEARD OIL CO.
	3/22/1990
	 
	 
	OK
	TEXAS
	004N-010E-018
	E/2 SE/4, SW/4 SE/4, S/2 NW/4 SE/4

	ONA
	ADRIENNE LEBLANC
	BEARD OIL CO.
	3/28/1990
	 
	 
	OK
	TEXAS
	004N-010E-018
	E/2 SE/4, SW/4 SE/4, S/2 NW/4 SE/4

	ONA
	VONCIELE W. GRAY, A SINGLE WOMAN
	BEARD OIL CO.
	5/10/1990
	 
	 
	OK
	TEXAS
	004N-010E-018
	E/2 SE/4, SW/4 SE/4, S/2 NW/4 SE/4

	ONA
	BILLY F. BRUNS & JANET E. BURNS, HUSBAND & WIFE
	HP O&G PROPERTIES INC.
	8/26/1992
	 
	 
	OK
	TEXAS
	004N-010E-018
	S/2 NE/4 SW/4, SE/4 SW/4

	ONA
	ETHEL BRUMLEY, DARREL C. BRUMLEY & ELISABETH JEAN BRUMLEY
	HP O&G PROPERTIES INC.
	10/30/1958
	 
	 
	OK
	TEXAS
	004N-010E-019
	Lots 1, 2, 3, 4; E/2 W/2, E/2 (being all of Section 19)

	ONA
	EDWARD KAAR AND DOROTHY KAAR, HIS WIFE
	RALPH H. GRAY
	3/2/1973
	 
	 
	OK
	TEXAS
	004N-010E-029
	NW/4

	ONA
	C.D. LONG & MARY A. LONG, HIS WIFE
	RALPH H. GRAY
	3/8/1973
	 
	 
	OK
	TEXAS
	004N-010E-029
	NW/4

	ONA
	HUBERT X. ELROD & HELEN L. ELROD, HIS WIFE
	RALPH H. GRAY
	3/9/1973
	 
	 
	OK
	TEXAS
	004N-010E-029
	NW/4

	ONA
	JOHN MARCHBANKS AND FRANCES B. MARCHBANKS, HIS WIFE
	RALPH M. REYNOLDS
	4/9/1973
	 
	 
	OK
	TEXAS
	004N-010E-029
	NW/4

	ONA
	JACK K. CREATE
	DAWSON OPERATING CO. INC.
	4/12/1973
	 
	 
	OK
	TEXAS
	004N-010E-029
	NW/4

	
										
	ONA
	WALLACE R. HOUSTON
	RJ SULLIVAN AND WE LEROUX DBA SULLIVAN & LEROUX
	6/22/1968
	 
	 
	OK
	TEXAS
	004N-010E-030
	E/2 NW/4, Ltd. from surface to 103' into Mississippi Chester - 30; W/2 NW/4, Ltd. from surface to 4750'

	ONA
	LEWIS W LONG, E UX
	J C SOWERS, JR.
	2/22/1972
	438
	387
	OK
	TEXAS
	004N-010E-030
	Lots 3 & 4 a/k/a W/2 SW/4 & E/2 SW/4

	ONA
	DARLENE S. FISKE, TRUSTEE
	HP O&G PROPERTIES INC.
	2/20/1992
	 
	 
	OK
	TEXAS
	004N-010E-030
	NE/4, Ltd. from surface to 100' below producing zone

	ONA
	MARTIN S. MILLER, TRUSTEE OF THOMAS S. MILLER 1975 TRUST
	HP O&G PROPERTIES INC.
	2/20/1992
	 
	 
	OK
	TEXAS
	004N-010E-030
	NE/4, Ltd. from surface to 100' below producing zone

	ONA
	DONALD E. SHARP
	HP O&G PROPERTIES INC.
	2/20/1992
	 
	 
	OK
	TEXAS
	004N-010E-030
	NE/4, Ltd. from surface to 100' below producing zone

	ONA
	CHAUNCEY HAMMOND PERSONAL REPRESENTATIVE FOR ESTATE OF HERBERT EUGENE HAMMOND, DECEASED
	BEARD OIL CO.
	3/6/1992
	 
	 
	OK
	TEXAS
	004N-010E-030
	NE/4, Ltd. from surface to 100' below producing zone

	WPWFU I
	AUGUSTA HENRICHS
	PANHANDLE EASTERN PIPE LINE COMPANY
	8/4/1941
	231
	223
	OK
	TEXAS
	002N-016E-005
	SW/4 SECTION 5-2N-16ECM

	WPWFU I
	AUGUSTA HENRICHS
	PANHANDLE EASTERN PIPE LINE COMPANY
	8/19/1941
	231
	224
	OK
	TEXAS
	002N-016E-005
	SE/4 SECTION 5-2N-16ECM

	WPWFU I
	H G WITT ETUX
	JOE E. DENHAM
	1/2/1937
	207
	300
	OK
	TEXAS
	002N-016E-007
	NE/4 SECTION 7-2N-16ECM

	WPWFU I
	ADELLE DAVIS ETAL
	THE TEXAS COMPANY
	9/1/1937
	211
	98
	OK
	TEXAS
	002N-016E-007
	S/2 SECTION 7-2N-16ECM

	WPWFU I
	DAVID THOMAS
	JOE E. DENHAM
	12/19/1936
	207
	15
	OK
	TEXAS
	002N-016E-008
	E/2 SECTION 8-2N-16ECM

	WPWFU I
	DAVID THOMAS
	JOE E. DENHAM
	12/19/1936
	207
	5
	OK
	TEXAS
	002N-016E-008
	NW/4 SECTION 8-2N-16ECM

	WPWFU I
	A J GROSS ETUX
	JOE E. DENHAM
	1/1/1937
	207
	282
	OK
	TEXAS
	002N-016E-008
	SW/4 SECTION 8-2N-16ECM

	WPWFU I
	ATHOL COCHRAN ETUX
	SKELLY OIL COMPANY
	2/11/1937
	207
	319
	OK
	TEXAS
	002N-016E-017
	E/2 AND SW/4 SECTION 17-2N-16ECM

	WPWFU I
	N H READ
	PHILLIPS PETROLEUM COMPANY
	8/23/1943
	243
	158
	OK
	TEXAS
	002N-016E-017
	NW/4 SECTION 17-2N-16ECM

	WPWFU I
	WILLIAM F DOTTS ETUX
	STANLEY MARSH, JR.
	1/5/1940
	217
	136
	OK
	TEXAS
	002N-016E-018
	ALL SECTION 18-2N-16ECM

	WPWFU II
	W L & ISABEL BUSTER
	JOE E. DENHAM
	1/13/1937
	207
	149
	OK
	TEXAS
	002N-015E-001
	NW/4 SECTION 1-2N-15ECM

	WPWFU II
	W L & ISABEL BUSTER
	JOE E. DENHAM
	1/13/1937
	207
	149
	OK
	TEXAS
	002N-015E-001
	NE/4 SECTION 1-2N-15ECM

	WPWFU II
	CHRISTIAN & CLIFFIE OLSON
	JOE E. DENHAM
	12/21/1936
	207
	210
	OK
	TEXAS
	002N-015E-001
	S/2 SECTION 1-2N-15ECM

	WPWFU II
	HENRY & HELEN MARTIN
	JOE E. DENHAM
	1/13/1937
	207
	140
	OK
	TEXAS
	002N-015E-012
	NE/4 SECTION 12-2N-15ECM

	WPWFU II
	NELLIE M WATSON
	PANHANDLE EASTERN PIPE LINE COMPANY
	8/28/1939
	217
	96
	OK
	TEXAS
	002N-016E-005
	NW/4 SECTION 5-2N-16ECM

	WPWFU II
	ALICE STROTHER ETAL
	SKELLY OIL COMPANY
	3/2/1937
	195
	209
	OK
	TEXAS
	002N-016E-006
	ALL SECTION 6-2N-16ECM

	WPWFU II
	H G WITT ETUX
	STANLEY MARSH, JR.
	3/8/1941
	210
	97
	OK
	TEXAS
	002N-016E-007
	NW/4 SECTION 7-2N-16ECM

	WPWFU II
	JACOB REWERTS
	R.G.KELLER & I.L. ENNIS
	6/14/1922
	114
	535
	OK
	TEXAS
	003N-015E-025
	SW/4 SECTION 25-3N-15ECM

	WPWFU II
	JACOB REWERTS
	R.G.KELLER & I.L. ENNIS
	6/14/1922
	114
	535
	OK
	TEXAS
	003N-015E-026
	SE/4 SECTION 26-3N-15ECM

	WPWFU II
	GAIL F KING ETUX
	H.W. LONG
	10/19/1937
	209
	545
	OK
	TEXAS
	003N-015E-035
	SE/4 SECTION 35-3N-15ECM

	WPWFU II
	ALLIANCE LIFE INSURANCE
	H.W. LONG
	3/10/1941
	210
	17
	OK
	TEXAS
	003N-015E-035
	E/2 SECTION 35-3N-15ECM

	WPWFU II
	CLAUDE LAIRD ETAL
	SKELLY OIL COMPANY
	5/5/1937
	206
	486
	OK
	TEXAS
	003N-015E-036
	ALL SECTION 36-3N-15ECM

	
										
	WPWFU II
	R D & CARRY M HALL
	STANLEY MARSH, JR.
	1/7/1941
	231
	302
	OK
	TEXAS
	003N-016E-031
	SW/4 SECTION 31-3N-16ECM

	Clawson
	Clawson, Carl H.,et al
	Landmark Exploration Company
	12122/1986
	770
	371
	OK
	TEXAS
	001N-016E-001
	Township 1 North, Range 16 ECM Section 1:   NW/4 NW/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	1212211986
	770
	338
	OK
	TEXAS
	001N-016E-001
	Township 1 North, Range 16 ECM Section 1:   SW/4SW/4

	Clawson
	Clawson,Carl H., et al
	Landmark Exploration Company
	12/2211986
	770
	335
	OK
	TEXAS
	001N-016E-001
	Township 1 North, Range 16 ECM Section 1:    NW/4 SW/4

	Clawson
	Clawson,Carl H., et al
	Landmark Exploration Company
	12122/1986
	770
	332
	OK
	TEXAS
	001N-016E-001
	Township 1 North, Range 16 ECM Section 1:   SE/4 SW/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	12/2211986
	770
	329
	OK
	TEXAS
	001N-016E-001
	Township 1 North, Range 16 ECM Section 1:   NE/4 SW/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	12122/1986
	770
	326
	OK
	TEXAS
	001N-016E-001
	Township 1 North, Range 16 ECM Section 1:   SW/4 NW/4

	Clawson
	Mathewson, C.L., et ux
	Skelly Oil Company
	03/03/1937
	206
	173
	OK
	TEXAS
	001N-016E-001
	Township 1 North, Range 16 ECM Section 1:  W/2 NE/4, E/2 NW/4

	Clawson
	Cabot Carbon Company
	Phillips Petroleum Company
	07/1211944
	255
	171
	OK
	TEXAS
	001N-016E-001
	INSOFAR AND ONLY INSOFAR as said lease covers Township 1 North, Range 16 ECM Section 1:   E/2 NE/4,W/2 NW/4, SW/4

	Clawson
	Clawson, Kirby, et al
	Samson Resources Company
	05/25/2000
	1012
	598
	OK
	TEXAS
	001N-016E-001
	Township 1 North, Range 16 ECM Section 1:   W/2 SE/4

	Clawson
	Clawson, Carl H.,et al
	Tidemark Exploration Company
	08/0211983
	614
	440
	OK
	TEXAS
	001N-016E-002
	Township 1 North. Range 16 ECM Section 2:   E/2 SW/4

	Clawson
	Clawson, Carl H., et al
	Tidemark Exploration Company
	08/02/1983
	614
	392
	OK
	TEXAS
	001N-016E-002
	Township 1 North, Range 16 ECM Section 2: E/2 SE/4

	Clawson
	Clawson, Carl H.,et al
	Landmark Exploration Company
	1212211986
	770
	347
	OK
	TEXAS
	001N-016E-002
	Township 1 North, Range 16 ECM Section 2:   SE/4 NW/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	12122/1986
	770
	344
	OK
	TEXAS
	001N-016E-002
	Township 1 North. Range 16 ECM Section 2:   NE/4 NW/4

	Clawson
	Clawson,Carl H., et al
	Landmark Exploration Company
	12122/1986
	770
	341
	OK
	TEXAS
	001N-016E-002
	Township 1 North, Range 16 ECM Section 2:   NW/4 NE/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	1212211986
	770
	323
	OK
	TEXAS
	001N-016E-002
	Township 1 North, Range 16 ECM Section 2:   SE/4 NE/4

	Clawson
	Clawson, Carl H.,et al
	Landmark Exploration Company
	1212211986
	770
	320
	OK
	TEXAS
	001N-016E-002
	Township 1 North, Range 16 ECM Section 2:   SW/4 NE/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	1212211986
	770
	317
	OK
	TEXAS
	001N-016E-002
	Township 1 North, Range 16 ECM Section 2:   NE/4 NE/4

	Clawson
	Cabot Carbon Company
	Phillips Petroleum Company
	07/1211944
	255
	170
	OK
	TEXAS
	001N-016E-002
	INSOFAR AND ONLY INSOFAR as said lease covers Township 1 North, Range 16 ECM Section 2:   E/2 W/2, E/2

	Clawson
	Clawson, Kirby,et al
	Samson Resources Company
	05/25/2000
	1012
	616
	OK
	TEXAS
	001N-016E-002
	Township 1 North. Range 16 ECM Section 2:   W/2 SE/4

	Clawson
	Clawson, Carl H., et ux
	Tidemark Exploration Company
	1/12/1982
	610
	1
	OK
	TEXAS
	001N-016E-011
	Township 1 North. Range 16 ECM Section 11:  E/2 NE/4

	Clawson
	Clawson, Carl H., et ux
	Tidemark Exploration Company
	1/12/1982
	610
	14
	OK
	TEXAS
	001N-016E-011
	Township 1 North. Range 16 ECM Section 11: W/2 SW/4

	
										
	Clawson
	Clawson,Carl H., et ux
	Tidemark Exploration Company
	1/12/1982
	610
	53
	OK
	TEXAS
	001N-016E-011
	Township 1 North, Range 16 ECM Section 11:  W/2 SE/4

	Clawson
	Clawson, Carl H., et ux
	Tidemark Exploration Company
	1/12/1982
	610
	66
	OK
	TEXAS
	001N-016E-011
	Township 1 North, Range 16 ECM Section 11: E/2 SE/4

	Clawson
	Clawson, Carl H.,et ux
	Tidemark Exploration Company
	1/12/1982
	610
	79
	OK
	TEXAS
	001N-016E-011
	Township 1 North, Range 16 ECM Section 11: E/2 NW/4

	Clawson
	Clawson,Carl H., et ux
	Tidemark Exploration Company
	1/12/1982
	610
	92
	OK
	TEXAS
	001N-016E-011
	Township 1 North, Range 16 ECM Section 11:  W/2 NE/4

	Clawson
	Cabot Carbon Company
	Phillips Petroleum Company
	7/12/1944
	255
	165
	OK
	TEXAS
	001N-016E-011
	Township 1 North, Range 16 ECM Section 11: N/2, SE/4,W/2 SW/4

	Clawson
	Clawson, Kirby, et al
	Samson Resources Company
	5/25/2000
	1012
	589
	OK
	TEXAS
	001N-016E-011
	Township 1 North, Range 16 ECM Section 11: W/2 NW/4

	Clawson
	Clawson, Kirby,et al
	Samson Resources Company
	5/25/2000
	1012
	607
	OK
	TEXAS
	001N-016E-011
	Township1 North, Range 16 ECM Section 11:  E/2 SW/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	12/22/1986
	770
	368
	OK
	TEXAS
	001N-016E-012
	Township 1 North, Range 16 ECM Section 12: NE/4 NW/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	12/22/1986
	770
	365
	OK
	TEXAS
	001N-016E-012
	Township 1 North, Range 16 ECM Section 12:  SW/4 NW/4

	Clawson
	Clawson, Carl H.,et al
	Landmark Exploration Company
	12/22/1986
	770
	296
	OK
	TEXAS
	001N-016E-012
	Township 1 North, Range 16 ECM Section 12:  NW/4 NW/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	12/22/1986
	770
	293
	OK
	TEXAS
	001N-016E-012
	Township1 North, Range 16 ECM Section 12:  SE/4 NW/4

	Clawson
	Cabot Carbon Company
	Phillips Petroleum Company
	7/12/1944
	255
	164
	OK
	TEXAS
	001N-016E-012
	Township 1 North, Range 16 ECM Section 12:  NW/4

	Clawson
	Miller, Charles A., et ux, et al
	Panhandle Eastern Pipe Line Company
	1/27/1943
	240
	36
	OK
	TEXAS
	002N-016E-025
	Township 2 North, Range 16 ECM Section 25: SW/4,W/2 SE/4

	Clawson
	Miller, Charles R., et ux
	THE TEXAS COMPANY
	9/13/1937
	211
	124
	OK
	TEXAS
	002N-016E-026
	INSOFAR AND ONLY INSOFAR as said lease covers Township North. Range 16 ECM   Section 26: E/2 SE/4

	Clawson
	Clawson,Carl H., et al
	Landmark Exploration Company
	12/22/1986
	770
	362
	OK
	TEXAS
	002N-016E-035
	Township 2 North. Range 16 ECM   Section 35: NE/4 SE/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	12/22/1986
	770
	359
	OK
	TEXAS
	002N-016E-035
	Township 2 North. Range 16 ECM   Section 35: NW/4 SE/4

	Clawson
	Clawson, Carl H., et al
	Landmark Exploration Company
	12/22/1986
	770
	356
	OK
	TEXAS
	002N-016E-035
	Township 2 North.Range 16 ECM   Section 35:  SE/4 SW/4

	Clawson
	Clawson,  Carl H., et al
	Landmark Exploration Company
	12/22/1986
	770
	308
	OK
	TEXAS
	002N-016E-035
	Township 2 North. Range 16 ECM   Section 35:  NE/4 SW/4

	Clawson
	Clawson, Carl H., et a
	Landmark Exploration Company
	12/22/1986
	770
	305
	OK
	TEXAS
	002N-016E-035
	Township 2 North. Range 16 ECM   Section 35:  SW/4 SE/4

	Clawson
	Clawson, CarlH., et al
	Landmark Exploration Company
	12/22/1986
	770
	302
	OK
	TEXAS
	002N-016E-035
	Township 2 North, Range 16 ECM    Section 35: SE/4 SE/4

	Clawson
	Cabot Carbon Company
	PETROLEUM COMPANY
	7/12/1944
	255
	173
	OK
	TEXAS
	002N-016E-035
	INSOFAR AND ONLY INSOFAR as said lease covers Township North. Range 16 ECM   Section 35: E/2 SW/4, SE/4

	Clawson
	Prudential Insurance Company of America
	FRANK PARKES
	9/9/1941
	231
	263
	OK
	TEXAS
	002N-016E-035
	INSOFAR AND ONLY INSOFAR as said lease covers Township North. Range 16 ECM   Section 35: E/2 NW/4, NE/4

	
										
	Clawson
	Miller C. A., et ux
	Panhandle Eastern Pipe Line Company
	1/27/1943
	240
	19
	OK
	TEXAS
	002N-016E-036
	Township 2 North. Range 16 ECM   Section 36: W/2

	Clawson
	Miller C. A., et ux, et al
	Panhandle Eastern Pipe Line Company
	8/19/1941
	231
	218
	OK
	TEXAS
	002N-016E-036
	Township 2 North. Range 16 ECM   Section 36:  E/2

	Bivins
	OLIVER W BIVINS ET AL
	BAKER & TAYLOR DRILLING CO
	4/9/1982
	1433
	285
	TX
	POTTER
	 
	ALL LANDS INCLUDED WITHIN THE BIVINS RANCH PENN UNIT, 40-ACRE PRORATION UNITS, BEING IN SECTIONS 2 AND 3, BLOCK 4, ACH&B SURVEY AND N /4 SECTION 209, BLOCK 2, AB&M SURVEY, FROM THE SURFACE TO THE STRATIGRAPHIC EQUIVALENT OF 5,849 FEET WHICH IS 100 FEET BELOW THE BASE OF THE PENN SAND AS IDENTIFIED ON THE HALLIBURTON SPECTRAL DENSITY DUAL SPACED NEUTRON II LOG RUN ON JANUARY 19, 2002 IN THE BIVINS RANCH #15-3 WELL LOCATED IN THE NW/4 OF SECTION 3, BLOCK 4, ACH&B SURVEY, POTTER COUNTY TX

	Bivins
	MARY E BIVINS TRUST
	BAKER & TAYLOR DRILLING CO
	4/9/1982
	1433
	279
	TX
	POTTER
	 
	ALL LANDS INCLUDED WITHIN THE BIVINS RANCH PENN UNIT, 40-ACRE PRORATION UNITS, BEING IN SECTIONS 2 AND 3, BLOCK 4, ACH&B SURVEY AND N/4 SECTION 209, BLOCK 2, AB&M SURVEY, FROM THE SURFACE TO THE STRATIGRAPHIC EQUIVALENT OF 5,849 FEET WHICH IS 100 FEET BELOW THE BASE OF THE PENN SAND AS IDENTIFIED ON THE HALLIBURTON SPECTRAL DENSITY DUAL SPACED NEUTRON II LOG RUN ON JANUARY 19, 2002 IN THE BIVINS RANCH #15-3 WELL LOCATED IN THE NW/4 OF SECTION 3, BLOCK 4, ACH&B SURVEY, POTTER COUNTY TEXAS

	Bivins
	STATE OF TEXAS, THROUGH AGENT LX CATTLE COMPANY
	QUESTAR EXPLORATION AND PRODUCTION COMPANY
	10/21/2000
	3013
	330
	TX
	POTTER
	 
	SECTION 1, BLOCK B, LEE BIVINS SURVEY, A-1540, POTTER COUNTY TX

	Bivins
	OLIVER W BIVINS ET AL
	JOE E WATKINS
	7/18/1995
	2512
	677
	TX
	POTTER
	 
	12 PARCELS OF LAND CONTAINING 40 ACRES AROUND EACH SHALLOW GAS WELL LOCATED IN SECTION 2 ACH&B SVY BLK 4 A-1355 AND IN SECTION 3 ACH&B BLK 4 A-81, SLIMITED FROM THE SURFACE TO 50' BELOW THE LOWEST PRODUCING ZONE, POTTER COUNTY TX

	Bivins
	OLIVER BIVINS ET AL TRUST
	SAND RIVER O&E LLC
	12/11/2003
	3573
	711
	TX
	POTTER
	 
	SECTION 3, ACH&B SVY BLK 4, 40 ACRES DESCRIBED AS 40 ACRE PRORATION UNIT COVERING THE BIVINS RANCH 3005 SURFACE TO 50' BELOW BOTTOM OF LOWEST PRODUCING ZONE IN THE BIVINS RANCH 3005, POTTER COUNTY TEXAS

	
										
	Bivins
	J M HUBER CORPORATION
	SAND RIVER O&E LLC
	12/11/2003
	3573
	728
	TX
	POTTER
	 
	SECTION 3, ACH&B SVY BLK 4, 40 ACRES DESCRIBED AS 40 ACRE PRORATION UNIT COVERING THE BIVINS RANCH 3005 SURFACE TO 50' BELOW BOTTOM OF LOWEST PRODUCING ZONE IN THE BIVINS RANCH 3005, POTTER COUNTY TEXAS

EXHIBIT A-1
Attached to and for all purposes made a part of that certain Purchase and Sale Agreement dated May 26, 2016, by and among MID-CON ENERGY PROPERTIES, LLC, as Seller, and PO&G PANHANDLE, LP, as Purchaser.

	
							
	UNIT/LEASE
	WELL NAME
	ALTERNATE WELL NAME
	LOCATION
	API/ALT WELL NAME
	ST
	COUNTY

	HRMU
	HRMU 1 INJ
	 
	NE NW 12-13S-43W
	05-017-07046
	CO
	CHEYENNE

	HRMU
	HRMU 11 INJ
	 
	NW NW 13-13S-43W
	05-017-07793
	CO
	CHEYENNE

	HRMU
	HRMU 2 INJ
	 
	SW NE 12-13S-43W
	05-017-07078
	CO
	CHEYENNE

	HRMU
	HRMU 4 INJ
	 
	NW SE 12-13S-43W
	05-017-07112
	CO
	CHEYENNE

	HRMU
	HRMU 14-1
	 
	SW SW 1-13S-43W
	05-017-07148
	CO
	CHEYENNE

	HRMU
	HRMU 3
	 
	SW NW 12-13S-43W
	05-017-07111
	CO
	CHEYENNE

	HRMU
	HRMU 5
	 
	SW SE 1-13S-43W
	05-017-07157
	CO
	CHEYENNE

	HRMU
	HRMU 6
	 
	SW SW 12-13S-43W
	05-017-07145
	CO
	CHEYENNE

	HRMU
	HRMU 7
	 
	NE SW 12-13S-43W
	05-017-07080
	CO
	CHEYENNE

	HRMU
	HRMU 8 WSW
	 
	NE NW 13-13S-43W
	05-017-07166
	CO
	CHEYENNE

	HRMU
	HRMU 9
	 
	Lot 14 12-13S043W
	05-017-07709
	CO
	CHEYENNE

	OMU
	OMU 2512
	 
	CSE4 NE4 of 25-T4N-R9E
	3502520885
	OK
	CIMARRON

	Midwell
	MIDWELL 2
	 
	SE4 SE4 of 26-T4N-R9E
	3502520007
	OK
	CIMARRON

	Midwell
	MIDWELL 103
	 
	SW4 SE4 of 26-T4N-R9E
	3502520072
	OK
	CIMARRON

	Midwell
	MIDWELL 206
	 
	S2 N2 SW4 SW4 of 25-T4N-R9E
	3502520390
	OK
	CIMARRON

	Midwell
	MIDWELL 7-35
	 
	NW4 NW4 NE4 NE4 of 35-T4N-R9E
	3502521017
	OK
	CIMARRON

	Midwell
	MIDWELL 8-35
	 
	NW NW SW NE of 35-T4N-R9E
	3502521018
	OK
	CIMARRON

	Midwell
	MIDWELL 9-35
	 
	SE NE SW NW of 35-T5N-R9E
	3502521058
	OK
	CIMARRON

	Midwell
	SMALTZ 1 WSW
	 
	C E2 E2 SE4 of 26-T4N-R9E
	 
	OK
	CIMARRON

	SMALTZ
	SMALTS UNIT 7
	 
	CSE4 SW4 of 25-T4N-R9E
	3502520460
	OK
	CIMARRON

	SMALTZ
	SMALTS UNIT 8-25
	 
	SW4 SW4 NE4 SW4 of 25-T4N-R9E
	3502521060
	OK
	CIMARRON

	EVA
	ESU 8
	 
	CSW4 NE4 of 7-T3N-R11E
	3513900289
	OK
	TEXAS

	EVA
	ESU 3
	 
	SW4 SW4 SW4 of 5-T3N-R11E
	3513922240
	OK
	TEXAS

	EVA
	ESU #4 WSW
	 
	SE4 SE4 SE4 of 6-T3N-R11E
	3513922481
	OK
	TEXAS

	EVA
	ESU 9
	 
	CNW4 SE4 SE4 of 5-T3N-R11E
	3513922556
	OK
	TEXAS

	EVA
	ESU 10
	 
	SE4 SE4 NW4 NE4 of 7-T3N-R11E
	3513922583
	OK
	TEXAS

	EVA
	ESU 11
	 
	S2 N2 SE4 NE4 of 7-T3N-R11E
	3513922664
	OK
	TEXAS

	EVA
	ESU 12
	 
	SE4 NE4 NW4 NW4 of 8-T3N-R11E
	3513922724
	OK
	TEXAS

	EVA
	ESU 13-H
	 
	SE4 SW4 SE4 SE4 of 6-T3N-R11E
	3513923072
	OK
	TEXAS

	EVA
	ESU 14
	 
	W2 NE4 NE4 NW4 of 8-T3N-R11E
	3513924036
	OK
	TEXAS

	EVA
	ESU 15
	 
	N2 SW4 NW4 NW4 of 8-T3N-R11E
	3513924150
	OK
	TEXAS

	EVA
	ESU 17
	 
	C SW SW SE of 5-T3N-R11E
	3513924549
	OK
	TEXAS

	EVA
	ESU 16
	 
	S2 NE SE SW of 5-T3N-R11E
	3513924550
	OK
	TEXAS

	EVA
	ESU 4
	 
	CSE4 SE4 of 6-T3N-R11E
	3513935647
	OK
	TEXAS

	EVA
	ESU 6
	 
	CN2 NW4 of 8-T3N-R11E
	3513936000
	OK
	TEXAS

	EVA
	ESU #1 WSW
	 
	N2 SW NW of 8-T3N-R11E
	3513921753
	OK
	TEXAS

	EVA
	ESU #2 WSW
	 
	C SE NW of 7-T3N-R11E
	3513935649
	OK
	TEXAS

	OMU
	OMU 1
	BRUMLEY 1
	NW4 of 19-T4N-R10E
	3513900217
	OK
	TEXAS

	OMU
	OMU 3-19
	BRUMLEY 3-19
	CSW4 NE4 of 19-T4N-R10E
	3513920537
	OK
	TEXAS

EXHIBIT B

	
							
	OMU
	OMU 3031
	 
	NE4 SW4 NW4 of 30-T4N-R10E
	3513920538
	OK
	TEXAS

	OMU
	OMU 3011X
	 
	NW4 NE4 of 30-T4N-R10E
	3513920541
	OK
	TEXAS

	OMU
	OMU 3042X
	 
	CN2 NW4 SW4 of 30-T4N-R10E
	3513920543
	OK
	TEXAS

	OMU
	OMU 1914X
	 
	CSE4 SE4 of 19-T4N-R10E
	3513920562
	OK
	TEXAS

	OMU
	OMU 2015
	 
	CSW4 SW4 of 20-T4N-R10E
	3513920578
	OK
	TEXAS

	OMU
	OMU 3012X
	 
	NE4 NE4 of 30-T4N-R10E
	3513920594
	OK
	TEXAS

	OMU
	OMU 2012
	 
	CNW4 SW4 of 20-T4N-R10E
	3513920609
	OK
	TEXAS

	OMU
	OMU 1915
	 
	SW4 SE4 of 19-T4N-R10E
	3513920626
	OK
	TEXAS

	OMU
	OMU 1821X
	 
	SE4 SE4 of 18-T4N-R10E
	3513920631
	OK
	TEXAS

	OMU
	OMU 2013
	 
	SW4 SE4 NW4 of 20-T4N-R10E
	3513920636
	OK
	TEXAS

	OMU
	OMU 1711
	 
	NW4 SW4 SW4 of 17-T4N-R10E
	3513920712
	OK
	TEXAS

	OMU
	OMU 6-19
	 
	S2 N2 NE4 SE4 of 19-T4N-R10E
	3513920713
	OK
	TEXAS

	OMU
	OMU 3041
	 
	CN2 NE4 SW4 of 30-T4N-R10E
	3513920728
	OK
	TEXAS

	OMU
	OMU 2911X
	 
	NW4 SW4 NW4 of 29-T4N-R10E
	3513922196
	OK
	TEXAS

	OMU
	OMU 2016
	 
	C N2 NW of 20-T4N-R10E
	3513922587
	OK
	TEXAS

	OMU
	OMU 2017
	 
	C NW SW NW of 20-T4N-R10E
	3513924592
	OK
	TEXAS

	OMU
	OMU 2912Y
	 
	W2 NW4 NW4 NW4 of 29-T4N-R10E
	3513922597
	OK
	TEXAS

	OMU
	OMU 3032
	 
	NE SW NW NW of 30-T4N-R10E
	3513923112
	OK
	TEXAS

	OMU
	OMU 1917
	 
	CNE4 SE4 NW4 of 19-T4N-R10E
	3513923150
	OK
	TEXAS

	OMU
	OMU 1918
	 
	SE4 SE4 NE4 SE4 of 19-T4N-R10E
	3513924192
	OK
	TEXAS

	OMU
	OMU 3043
	 
	SE4 SE4 SW4 NW4 of 30-T4N-R10E
	3513924193
	OK
	TEXAS

	OMU
	OMU 3044
	 
	E2 W2 NE NW of 30-T4N-R10E
	3513924566
	OK
	TEXAS

	OMU
	OMU 1919
	 
	W2 SE NE NE of 19-T4N-R10E
	3513924567
	OK
	TEXAS

	OMU
	OMU 1920
	 
	SE SE SE NE of 19-T4N-R10E
	35139245910001
	OK
	TEXAS

	OMU
	OMU 1
	 
	NE SE NW SE of 19-T4N-R10E
	3513924600
	OK
	TEXAS

	OMU
	OMU 2-19
	 
	NE4 NE4 NW4 of 19-T4N-R10E
	3513935646
	OK
	TEXAS

	WPWFU I
	WPWF 5#1
	HIGGINS 5-1
	SW/4 of 5-T2N-R16E
	3513922882
	OK
	TEXAS

	WPWFU I
	WPWF 5#2
	HIGGINS 5-2
	SW/4 of 5-T2N-R16E
	3513923290
	OK
	TEXAS

	WPWFU I
	WPWF HIGGINS 5-3
	HIGGINS 5-3
	SW/4 of 5-T2N-R16E
	3513924534
	OK
	TEXAS

	WPWFU I
	WPWF 5#3
	AUBREY 5-1
	SE/4 of 5-T2N-R16E
	3513923327
	OK
	TEXAS

	WPWFU I
	WPWF 5#4
	AUBREY 5-2
	SE/4 of 5-T2N-R16E
	3513923361
	OK
	TEXAS

	WPWFU I
	WPWF 7#2
	PETUNIA PIG 7-2
	NE/4 of 7-T2N-R16E
	3513923269
	OK
	TEXAS

	WPWFU I
	WPWF 7#5
	DAVIS HITCH 7-5
	NE/4 of 7-T2N-R16E
	3513923055
	OK
	TEXAS

	WPWFU I
	WPWF 7#1
	PETUNIA PIG 7-1
	SE/4 of 7-T2N-R16E
	3513923264
	OK
	TEXAS

	WPWFU I
	WPWF 7#3
	PETUNIA PIG 7-3
	SE/4 of 7-T2N-R16E
	3513923270
	OK
	TEXAS

	WPWFU I
	WPWF 7#4
	DAVIS HITCH 7-4
	SE/4 of 7-T2N-R16E
	3513922877
	OK
	TEXAS

	WPWFU I
	WPWF 8#11
	PORKY PIG 8-11
	NE/4 of 8-T2N-R16E
	3513923231
	OK
	TEXAS

	WPWFU I
	WPWF 8#13
	PORKY PIG 8-13
	NE/4 of 8-T2N-R16E
	3513923306
	OK
	TEXAS

	WPWFU I
	WPWF 8#15
	PORKY PIG 8-15
	NE/4 of 8-T2N-R16E
	3513923331
	OK
	TEXAS

	WPWFU I
	WPWF 8#12
	PORKY PIG 8-12
	NW/4 of 8-T2N-R16E
	3513923271
	OK
	TEXAS

	WPWFU I
	WPWF 8#17
	PORKY PIG 8-17
	NW/4 of 8-T2N-R16E
	3513923983
	OK
	TEXAS

	WPWFU I
	WPWF 8#8
	PORKY PIG 8-8
	NW/4 of 8-T2N-R16E
	3513923228
	OK
	TEXAS

	WPWFU I
	WPWF 8#9
	PORKY PIG 8-9
	NW/4 of 8-T2N-R16E
	3513923229
	OK
	TEXAS

	WPWFU I
	WPWF 8#2
	PORKY PIG 8-2
	SW/4 of 8-T2N-R16E
	3213923132
	OK
	TEXAS

	WPWFU I
	WPWF 8#3
	PORKY PIG 8-3
	SW/4 of 8-T2N-R16E
	3513923182
	OK
	TEXAS

	WPWFU I
	WPWF 8#6
	PORKY PIG 8-6
	SW/4 of 8-T2N-R16E
	3513923226
	OK
	TEXAS

	WPWFU I
	WPWF 8#7
	PORKY PIG 8-7
	SW/4 of 8-T2N-R16E
	3513923227
	OK
	TEXAS

	WPWFU I
	WPWF 8#10
	PORKY PIG 8-10
	SE/4 of 8-T2N-R16E
	3513923230
	OK
	TEXAS

	WPWFU I
	WPWF 8#16
	PORKY PIG 8-16
	SE/4 of 8-T2N-R16E
	3513923368
	OK
	TEXAS

	WPWFU I
	WPWF 8#4
	PORKY PIG 8-4
	SE/4 of 8-T2N-R16E
	3513923183
	OK
	TEXAS

	WPWFU I
	WPWF 8#5
	PORKY PIG 8-5
	SE/4 of 8-T2N-R16E
	3513923184
	OK
	TEXAS

	WPWFU I
	WPWF 17#3
	HITCH ENTERPRISES 17-3
	NE/4 of 17-T2N-R16E
	3513923185
	OK
	TEXAS

    

	
							
	WPWFU I
	WPWF 17#6
	HITCH ENTERPRISES 17-6
	NE/4 of 17-T2N-R16E
	3513923259
	OK
	TEXAS

	WPWFU I
	WPWF 17#7
	HITCH ENTERPRISES 17-7
	NE/4 of 17-T2N-R16E
	3513923277
	OK
	TEXAS

	WPWFU I
	WPWF 17#4
	HITCH ENTERPRISES 17-4
	NW/4 of 17-T2N-R16E
	3513923195
	OK
	TEXAS

	WPWFU I
	WPWF 17#5
	HITCH ENTERPRISES 17-5
	NW/4 of 17-T2N-R16E
	3513923233
	OK
	TEXAS

	WPWFU I
	WPWF 18#1
	HITCH ENTERPRISES 18-1
	NE/4 of 18-T2N-R16E
	3513923292
	OK
	TEXAS

	WPWFU II
	WP2 1 #1
	BUSTER, W.L. 1#1
	NE NE of 1-T2N-R15E
	3513923054
	OK
	TEXAS

	WPWFU II
	WP2 1 #3
	MINA 1#3
	NW NW of 1-T2N-R15E
	3513923972
	OK
	TEXAS

	WPWFU II
	WP2 MINA 1-4
	 
	SE NE of 1-T2N-R15E
	3513924535
	OK
	TEXAS

	WPWFU II
	MINA 1-4
	MINA 1#4
	SW NE of 1-T2N-R15E
	3513924553
	OK
	TEXAS

	WPWFU II
	MINA 1-5
	MINA 1#5
	NE SE of 1-T2N-R15E
	3513924613
	OK
	TEXAS

	WPWFU II
	WP2 12 #1
	MARTIN 12#1
	NE NE of 12-T2N-R15E
	3513923131
	OK
	TEXAS

	WPWFU II
	WP2 5 #1
	KAUFFMAN 5#1
	SW NW of 5-T2N-R16E
	3513922929
	OK
	TEXAS

	WPWFU II
	WP2 5 #2
	KAUFFMAN 5#2
	SW NW of 5-T2N-R16E
	3513923500
	OK
	TEXAS

	WPWFU II
	WP2 6 #1
	MISS PIGGIE 6#1
	SE NW of 6-T2N-R16E
	3513923266
	OK
	TEXAS

	WPWFU II
	WP2 6 #2H
	TRUESDELL 6#2H
	SW SW of 6-T2N-R16E
	3513922730
	OK
	TEXAS

	WPWFU II
	WP2 6 #3
	TRUESDELL 6#3
	SW NW of 6-T2N-R16E
	3513922800
	OK
	TEXAS

	WPWFU II
	WP2 6 #4
	TRUESDELL 6#4
	NE SW of 6-T2N-R16E
	3513922851
	OK
	TEXAS

	WPWFU II
	WP2 6 #5
	TRUESDELL 6#5
	SW SE of 6-T2N-R16E
	3513922866
	OK
	TEXAS

	WPWFU II
	WP2 6 #6
	TRUESDELL 6#6
	NE NW of 6-T2N-R16E
	3513922848
	OK
	TEXAS

	WPWFU II
	WP2 6 #7
	TRUESDELL 6#7
	SW NE of 6-T2N-R16E
	3513922875
	OK
	TEXAS

	WPWFU II
	WP2 6 #8
	TRUESDELL 6#8
	NE SE of 6-T2N-R16E
	3513922876
	OK
	TEXAS

	WPWFU II
	WP2 7 #2
	DAVIS-HITCH 7#2
	SE NW of 7-T2N-R16E
	3513922350
	OK
	TEXAS

	WPWFU II
	WP2 7 #3
	DAVIS-HITCH 7#3
	NW NW of 7-T2N-R16E
	3513922787
	OK
	TEXAS

	WPWFU II
	WP2 35 #6
	SCHLUCKENIER 35#6
	NE SE of 35-T3N-R15E
	3513922811
	OK
	TEXAS

	WPWFU II
	WP2 35 #7
	SCHLUCKENIER 35#7
	NE NE of 35-T3N-R15E
	3513922831
	OK
	TEXAS

	WPWFU II
	WP2 35 #8
	SCHLUCKENIER 35#8
	SE SE of 35-T3N-R15E
	3513923930
	OK
	TEXAS

	WPWFU II
	WP2 36 #1
	ARA 36#1
	SW SE of 36-T3N-R15E
	3513922795
	OK
	TEXAS

	WPWFU II
	WP2 36 #2 (ARA)
	ARA 36#2
	NE SE of 36-T3N-R15E
	3513922821
	OK
	TEXAS

	WPWFU II
	WP2 36 #2 (LAIRD)
	LAIRD 36#2
	NE NW of 36-T3N-R15E
	3513922792
	OK
	TEXAS

	WPWFU II
	WP2 36 #3 (ARA)
	ARA 36#3
	SW NE of 36-T3N-R15E
	3513922822
	OK
	TEXAS

	WPWFU II
	WP2 36 #3 (LAIRD)
	LAIRD 36#3
	NE SW of 36-T3N-R15E
	3513922793
	OK
	TEXAS

	WPWFU II
	WP2 36 #4
	LAIRD 36#4
	SW NW of 36-T3N-R15E
	3513922796
	OK
	TEXAS

	WPWFU II
	WP2 36 #5
	LAIRD 36#5
	SW SW of 36-T3N-R15E
	3513922819
	OK
	TEXAS

	WPWFU II
	WP2 36 #6
	LAIRD 36#6
	NW SW of 36-T3N-R15E
	3513923310
	OK
	TEXAS

	WPWFU II
	WP2 36 #7
	LAIRD 36#7
	NW NW of 36-T3N-R15E
	3513923569
	OK
	TEXAS

	WPWFU II
	WP2 31 #1
	AIRWAVES 31#1
	SW SW of 31-T3N-R16E
	3513922834
	OK
	TEXAS

	WPWFU II
	WP2 36 #8
	LAIRD 36#8
	C NW of 35-T3N-R15E
	3513924536
	OK
	TEXAS

	WPWFU II
	WP2 36 #9
	LAIRD 36#9
	SE SW of 36-T3N-R15E
	3513924541
	OK
	TEXAS

	Clawson
	STEPHENS #7-25
	 
	W/2 SW/4 of 25-T02N-R16ECM
	3513922920
	OK
	TEXAS

	Clawson
	STEPHENS #8-25
	 
	SW/4 NE/4 SW/4 of 25-T02N-R16ECM
	35-139-22962
	OK
	TEXAS

	Clawson
	STEPHENS #6-25
	 
	C SW/4 SE/4 of 25-T02N-R16ECM
	35-139-22756
	OK
	TEXAS

	Clawson
	MILLER Q #4
	 
	W/2 NW/4 of 36-T02N-R16ECM
	35-139-22727
	OK
	TEXAS

	Clawson
	MILLER Q #6
	 
	NW/4 SE/4 NW/4 NW/4 of 36-T02N-R16ECM
	35-139-24372
	OK
	TEXAS

	Clawson
	MILLER Q #2
	 
	E/2 NW/4 of 36-T02N-R16ECM
	35-139-22725
	OK
	TEXAS

	Clawson
	MILLER Q #5
	 
	NW/4 SE/4 SE/4 NW/4 of 36-T02N-R16ECM
	35-139-24367
	OK
	TEXAS

	Clawson
	STEPHENS #4-36
	 
	W/2 NE/4 of 36-T02N-R16ECM
	35-139-22751
	OK
	TEXAS

    

	
							
	Clawson
	STEPHENS #5-36
	 
	NE/4 NE/4 of 36-T2N-R16ECM
	35-139-24611
	OK
	TEXAS

	Clawson
	CLAWSON TRUST #3-35
	 
	E/2 SW/4 of 35-T02N-R16ECM
	35-139-22233
	OK
	TEXAS

	Clawson
	CLAWSON TRUST #1-35
	 
	W/2 SE/4 of 35-T02N-R16ECM
	35-139-22209
	OK
	TEXAS

	Clawson
	CLAWSON TRUST #2-35
	 
	E/2 SE/4 of 35-T02N-R16ECM
	35-139-22258
	OK
	TEXAS

	Clawson
	MILLER TRUST #1-36
	 
	W/2 SW/4 of 36-T02N-R16ECM
	35-139-22295
	OK
	TEXAS

	Clawson
	MILLER TRUST #2-36
	 
	SW/4 SE/4 NW/4 SW/4 of 36-T02N-R16ECM
	35-139-24378
	OK
	TEXAS

	Clawson
	MILLER TRUST #3-36
	 
	SE NW SE SW of 36-T2N-R16ECM
	35-139-24564
	OK
	TEXAS

	Clawson
	STEPHENS #1-36
	 
	E/2 SW/4 of 36-T02N-R16ECM
	35-139-22661
	OK
	TEXAS

	Clawson
	STEPHENS #2-36
	 
	W/2 SE/4 of 36-T02N-R16ECM
	35-139-22673
	OK
	TEXAS

	Clawson
	STEPHENS #3-36
	 
	C NE/4 SE/4 of 36-T02N-R16ECM
	35-139-22746
	OK
	TEXAS

	Clawson
	BERNICE #7-2
	 
	NE SE SE NE of 2-T1N-R16ECM
	35-139-24604
	OK
	TEXAS

	Clawson
	BERNICE #6-2
	 
	E/2 NW/4 of 2-T01N-R16ECM
	35-139-22235
	OK
	TEXAS

	Clawson
	BERNICE #4-2
	 
	W/2 NE/4 of 2-T01N-R16ECM
	35-139-22162
	OK
	TEXAS

	Clawson
	BERNICE #5-2
	 
	C NE/4 NE/4 of 2-T01N-R16ECM
	35-139-22208
	OK
	TEXAS

	Clawson
	CARL #2-1
	 
	SE/4 NE/4 SW/4 NW/4 of 1-T01N-R16ECM
	35-139-24275
	OK
	TEXAS

	Clawson
	KIRBY #1-1
	 
	E/2 NW/4 of 1-T01N-R16ECM
	35-139-22662
	OK
	TEXAS

	Clawson
	KIRBY #2-1
	 
	C SW/4 NE/4 of 1-T01N-R16ECM
	35-139-22683
	OK
	TEXAS

	Clawson
	KIRBY #3-1
	 
	E/2 NE/4 of 1-T01N-R16ECM
	35-139-22740
	OK
	TEXAS

	Clawson
	KIRBY #4-1
	 
	C NW NW of 1-T1N-R16ECM
	35-139-24562
	OK
	TEXAS

	Clawson
	BERNICE #2-2
	 
	E/2 SW/4 of 2-T01N-R16ECM
	35-139-21943
	OK
	TEXAS

	Clawson
	BERNICE #1-2
	 
	W/2 SE/4 of 2-T01N-R16ECM
	35-139-21829
	OK
	TEXAS

	Clawson
	BERNICE #3-2
	 
	W/2 NE/4 SE/4 of 2-T01N-R16ECM
	35-139-27946
	OK
	TEXAS

	Clawson
	LANDON #1
	 
	W/2 SW/4 of 1-T01N-R16ECM
	35-139-22163
	OK
	TEXAS

	Clawson
	LANDON #2-1
	 
	E/2 SW/4 of 1-T01N-R16ECM
	35-139-22217
	OK
	TEXAS

	Clawson
	CLAWSON #4-11
	 
	W/2 NE/4 of 11-T01N-R16ECM
	35-139-21690
	OK
	TEXAS

	Clawson
	CLAWSON #5-11
	 
	E/2 NE/4 of 11-T01N-R16ECM
	35-139-21745
	OK
	TEXAS

	Clawson
	LANDON #4
	 
	NW/4 NW/4 NW/4 of 12-T01N-R16ECM
	35-139-22232
	OK
	TEXAS

	Clawson
	LANDON #3
	 
	E/2 NW/4 of 12-T01N-R16ECM
	35-139-22231
	OK
	TEXAS

	Clawson
	PRUDENTIAL #2
	 
	E/2 NE/4 of 35-T02N-R16ECM
	35-139-22892
	OK
	TEXAS

	Clawson
	CLAWSON #8-11
	 
	W/2 NW/4 of 11-T01N-R16ECM
	35-139-21902
	OK
	TEXAS

	Clawson
	CLAWSON #6-11
	 
	E/2 NW/4 of 11-T01N-R16ECM
	35-139-21818
	OK
	TEXAS

	Clawson
	CLAWSON #2-11
	 
	W/2 SW/4 of 11-T01N-R16ECM
	35-139-21641
	OK
	TEXAS

	Clawson
	CLAWSON #1-11
	 
	E/2 SW/4 of 11-T01N-R16ECM
	35-139-20283-A
	OK
	TEXAS

	Clawson
	CLAWSON #3-11
	 
	W/2 SE/4 of 11-T01N-R16ECM
	35-139-21653
	OK
	TEXAS

	Clawson
	CLAWSON #7-11
	 
	E/2 SE/4 of 11-T01N-R16ECM
	35-139-21881
	OK
	TEXAS

	Bivins
	BIVINS RANCH 202
	 
	2800’ FSL & 1055’ FEL SEC 2
	42 375 31407
	TX
	POTTER

	Bivins
	BIVINS RANCH 302
	 
	2800’ FSL & 2255’ FEL SEC 2
	42 375 31421
	TX
	POTTER

	Bivins
	BIVINS RANCH 602
	 
	2876’ FEL & 1416’ FNL SEC 2
	42 375 31459
	TX
	POTTER

	Bivins
	BIVINS RANCH 702
	 
	1416’ FNL & 4126’ FEL SEC 2
	42 375 31465
	TX
	POTTER

	Bivins
	BIVINS RANCH 902
	 
	1625’ FWL & 2748’ FSL SEC 2
	42 375 31462
	TX
	POTTER

	Bivins
	BIVINS RANCH 1102
	 
	1500’ FEL & 2375’ FSL SEC 2
	42 375 31747
	TX
	POTTER

	Bivins
	BIVINS RANCH 1202
	 
	NE/4 NE/4 SW/4 FEL SEC 2
	42 375 31745
	TX
	POTTER

	Bivins
	BIVINS RANCH 1302
	 
	2800’ FSL & 2255’ FWL SEC 2
	42 375 31794
	TX
	POTTER

	Bivins
	BIVINS RANCH 1502
	 
	1840’ FWL & 1749’ FNL SEC 2
	42 375 31808
	TX
	POTTER

	Bivins
	BIVINS RANCH 103
	 
	1760’ FSL & 745’ FWL SEC 3
	42 375 31378
	TX
	POTTER

	Bivins
	BIVINS RANCH 303
	 
	SW/4 SW/4 NW/4 OF SEC 3
	42 375 31393
	TX
	POTTER

	Bivins
	BIVINS RANCH 503
	 
	SW/4 SE/4 NW/4 SEC 3
	42 375 31461
	TX
	POTTER

	Bivins
	BIVINS RANCH 803
	 
	2800’ FSL & 2850’ FWL SEC 3
	42 375 31463
	TX
	POTTER

	Bivins
	BIVINS RANCH 1103
	 
	1230’ FNL & 2500’ FWL SEC 3
	42 375 31538
	TX
	POTTER

	Bivins
	BIVINS RANCH 1303
	 
	1230’ FNL & 2500’ FWL SEC 3
	42 375 31614
	TX
	POTTER

	Bivins
	BIVINS RANCH 1703
	 
	SEC 3, BLK 4, ACH&B SVY
	42 375 31793
	TX
	POTTER

    

	
							
	Bivins
	BIVINS RANCH 1603
	 
	4687’ FEL & 3830’ FNL SEC 3
	42 375 31746
	TX
	POTTER

	Bivins
	BIVINS RANCH 2203
	 
	SEC 3, BLK 4, ACH&B SVY
	42 375 31807
	TX
	POTTER

	Bivins
	BIVINS RANCH 1003
	 
	1800’ FSL & 1756’ FEL SEC 3
	42 375 31467
	TX
	POTTER

	Bivins
	BIVINS RANCH 502
	 
	1416’ FNL & 476’ FEL SEC 2
	42 375 31460
	TX
	POTTER

	Bivins
	BIVINS RANCH 403
	 
	1615’ FSL & 2163’ FWL SEC 3
	42 375 31458
	TX
	POTTER

	Bivins
	BIVINS RANCH 1503
	 
	1700’ FNL & 800’ FWL SEC 3
	42 375 31641
	TX
	POTTER

	Bivins
	BIVINS RANCH 2001
	 
	900’ FWL & 1010’ FNL SEC 2
	42 375 31433
	TX
	POTTER

	Bivins
	BIVINS RANCH 102 (WOLFCAMP)
	 
	1320’ FSL & 2025’ FWL SEC 2
	42 375 31374
	TX
	POTTER

	Bivins
	BIVINS RANCH 1029 (WOLFCAMP)
	 
	SEC 29, BLK GM-05, G&M SVY
	42 375 31348
	TX
	POTTER

	Bivins
	BIVINS RANCH 203 (RED CAVE)
	 
	1328’ FSL & 967’ FEL SEC  2
	42 375 31366
	TX
	POTTER

	Bivins
	BIVINS RANCH 3002 (WOLFCAMP)
	 
	1640’ FWL & 950’ FSL SEC 3
	42 375 31472
	TX
	POTTER

	Bivins
	BIVINS RANCH 3003 (WOLFCAMP)
	 
	NW/4 SW/4 SE/4 SEC 3
	42 375 31473
	TX
	POTTER

	Bivins
	BIVINS RANCH C 3001 (RED CAVE)
	 
	SW/4 NW/4 SEC 3
	42 375 31471
	TX
	POTTER

	Bivins
	BIVINS RANCH B 2003 (RED CAVE)
	 
	SW/4 NE/4 SEC 3
	42 375 31474
	TX
	POTTER

	Bivins
	BIVINS RANCH 3004 (RED CAVE)
	 
	Sec 3, Blk 4, ACH&B Svy
	42 375 31599
	TX
	POTTER

	Bivins
	BIVINS RANCH 3005 (RED CAVE)
	 
	Sec 3, Blk 4, ACH&B Svy
	42 375 31615
	TX
	POTTER

It is the  intent for this  instrument to include all of Seller’s right, title and interest in and to the  above described leases, whether such interests are properly described herein or no, including, but not limited to the following: 

THIS EXHIBIT INCLUDES ALL RIGHT, TITLE AND INTEREST IN AND TO THE HARKER RANCH MORROW SAND UNIT ESTABLISHED UNDER THE OIL AND GAS CONSERVATION COMMISSION OF THE STATE OF COLORADO, ORDER #477-4, CAUSE #477, COVERING THE SOUTH HALF OF SECTION 1, TOWNSHIP 13, RANGE 43 WEST; ALL OF SECTION 12, TOWNSHIP 13 SOUTH, RANGE 43 WEST; AND THE NORTH HALF OF SECTION 13, TOWNSHIP 13 SOUTH, RANGE 43 WEST IN CHEYENNE COUNTY, COLORADO.

THIS EXHIBIT INCLUDES ALL RIGHT, TITLE AND INTEREST, IN THE MIDWELL WATERFLOOD UNIT, COVERING THE SW/4 SW/4 OF SECTION 25, E/2 OF SECTION 26, NE/4 SW/4 AND N/2 OF SECTION 35, ALL IN TOWNSHIP 4 NORTH, RANGE 9 EAST, CIMARRON COUNTY, OKLAHOMA AS UNITIZED UNDER ORDER NO. 375069, CD CAUSE NO. 93016774, CONTAINING 720 ACRES, MORE OR LESS

THIS EXHIBIT INCLUDES ALL RIGHT, TITLE AND INTEREST, IN THE ONA NORTHWEST MORROW SAND UNIT, COVERING THE W/2 SW/4 AND SE/4 SW/4 OF SECTION 17; THE E/2 SE/4 AND SW/4 SE/4 AND S/2 NW/4 SE/4 AND S/2 NE/4 SW/4 AND SE/4 SW/4 OF SECTION 18; ALL OF SECTION 19; THE W/2 OF SECTION 20; THE SW/4 OF SECTION 29; THE N/2 AND N/2 S/2 AND N/2 S/2 SW/4 OF SECTION 30, ALL IN TOWNSHIP 4 NORTH, RANGE 10 EAST, TEXAS COUNTY, OKLAHOM AND THE E/2 NE/4 AND NE/4 SE/4 AND 

    

N/2 SE/4 SE/4 OF SECTION 25, TOWNSHIP 4 NORTH, RANGE 9 EAST, CIMARRON COUNTY, OKLAHOMA AS UNITIZED UNDER ORDER NO. 371665 (CD CAUSE NO. 930166378), CONTAINING 2061.54 ACRES, MORE OR LESS

THIS EXHIBIT INCLUDES ALL RIGHT, TITLE AND INTEREST IN THE EVA SOUTH MORROW SAND UNIT, COVERING ALL OF SE/4 SE/4 OF SECTION 6 LYING SOUTH AND EAST OF THE TEPEE CREEK FAULT WHICH IS A STRAIGHT LINE BEGINNING AT A POINT 1320 FEET FROM THE SOUTH LINE AND 300 FEET FROM THE EAST LINE OF SECTION 6 AND ENDING AT A POINT ON THE SOUTH LINE OF SECTION 6, 1200 FEET FROM THE EAST LINE; AND ALL OF NE/4 OF SECTION 7 LYING SOUTH AND EAST OF THE TEPEE CREEK FAULT WHICH IS A STRAIGHT LINE BEGINNING AT A POINT ON THE NORTH LINE OF SECTION 7, 1200 FEET FROM THE EAST LINE, AND ENDING AT A POINT 2640 FEET FROM THE EAST LINE AND 3190 FEET FROM THE SOUTH LINE OF SECTION 7; AND S/2 SW/4 OF SECTION 5; AND NW/4 OF SECTION 8; AND S/2 SE/4 OF SECTION 5; AND NW/4 NE/4 AND N/2 NE/4 NE/4 OF SECTION 8, ALL IN TOWNSHIP 3 NORTH, RANGE 11 ECM, TEXAS COUNTY, OKLAHOMA, AS UNITIZED UNDER ORDER NO 376157 (CAUSE CD NO. 930166378)

THIS EXHIBIT INCLUDES ALL RIGHT, TITLE AND INTEREST, IN THE WAR PARTY WATERFLOOD UNIT I, COVERING THE S/2 OF SECTION 5, E/2 OF SECTION 7, ALL OF SECTION 8, N/2 OF SECTION 17 AND NE/4 OF SECTION 18, TOWNSHIP 2 NORTH, RANGE 16 ECM, TEXAS COUNTY, OKLAHOMA, AS UNITIZED UNDER ORDER 457185 (CAUSE CD NO. 200104363)

THIS EXHIBIT INCLUDES ALL RIGHT, TITLE AND INTEREST, IN THE WAR PARTY WATERFLOOD UNIT II, COVERING THE E/2 AND N/2 NW/4 OF SECTION 1 AND THE NE/4 OF SECTION 12, TOWNSHIP 2 NORTH, RANGE 15 EAST CM, THE NW/4 OF SECTION 5, ALL OF SECTION 6 AND THE NW/4 OF SECTION 7, TOWNSHIP 2 NORTH, RANGE 16 EAST CM, THE SW/4 OF SECTION 25, SE/4 OF SECTION 26, E/2 OF SECTION 35 AND ALL OF SECTION 36, TOWNSHIP 3 NORTH, RANGE 15 EAST CM, AND THE SW/4 OF SECTION 31, TOWNSHIP 3 NORTH, RANGE 16 EAST CM, TEXAS COUNTY, OKLAHOMA, AS UNITIZED UNDER ORDER 470777 (CAUSE CD NO. 200205514)

THIS EXHIBIT INCLUDES ALL RIGHT, TITLE AND INTEREST, IN THE CLAWSON RANCH WATERFLOOD UNIT, COVERING PARTS OF SECTIONS 25, 26, 35, ALL OF SECTION 36, TOWNSHIP 2 NORTH, RANGE 16 ECM AND PARTS OF SECTIONS 1,2,12, ALL OF SECTION 11, TOWNSHIP 1 NORTH, RANGE 16 ECM, TEXAS COUNTY, OKLAHOMA, AS UNITIZED UNDER ORDER 444359 (CAUSE CD NO. 990002444-T)

    

EXHIBIT A-2
Attached to and for all purposes made a part of that certain Purchase and Sale Agreement dated May 26, 2016, by and among MID-CON ENERGY PROPERTIES, LLC, as Seller, and PO&G PANHANDLE, LP, as Purchaser.

	
					
	WELL NAME
	WORKING INTEREST
	NET REVENUE INTEREST

	HARKER RANCH MORROW UNIT
	100.00
	%
	82.780876
	%

	MIDWELL WATERFLOOD UNIT
	100.00
	%
	80.00
	%

	ONA NORTHWEST MORROW UNIT
	100.00
	%
	81.31909
	%

	SMALTS LEASE
	100.00
	%
	80.00
	%

	EVA SOUTH MORROW SAND UNIT
	100.00
	%
	84.523118% WI 
0.885217% ORRI
	

	WAR PARTY WATERFLOOD UNIT I
	100.00
	%
	87.1923% WI
0.11215% ORRI
	

	WAR PARTY WATERFLOOD UNIT II
	99.00
	%
	86.198014% WI
0.109354% ORRI
	

	CLAWSON RANCH WATERFLOOD UNIT
	100.00
	%
	83.45325
	%

	BIVINS RANCH PENN UNIT
	84.582225
	%
	59.580163% WI
0.115334% ORRI
	

	BIVINS RANCH GAS WELLS
	85.00
	%
	63.75
	%

    

EXHIBIT B
Attached to and for all purposes made a part of that certain Purchase and Sale Agreement dated May 26, 2016, by and among MID-CON ENERGY PROPERTIES, LLC, and MID-CON ENERGY OPERATING, LLC, as Seller, and PO&G PANHANDLE, LP, as Purchaser.

PRIOR TO CLOSING, THE PARTIES AGREE TO NEGOTIATE A MUTUALLY AGREEABLE ASSIGNMENT FORM

    

EXHIBIT C
Attached to and for all purposes made a part of that certain Purchase and Sale Agreement dated May 26, 2016, by and among MID-CON ENERGY PROPERTIES, LLC, and MID-CON ENERGY OPERATING, LLC, as Seller, and PO&G PANHANDLE, LP, as Purchaser.

[Indemnity Agreement to follow]

EXHIBIT C

INDEMNITY AGREEMENT
This Indemnity Agreement is executed on _____________, 2016 (the “Effective Date”), by and among MID-CON ENERGY PROPERTIES, LLC, a          limited liability company (“Indemnifying Party”), and [________________], a ___________________ (“Indemnified Party”).
WHEREAS, Indemnifying Party, as seller, and Indemnified Party, as purchaser, entered into that certain Purchase and Sale Agreement, dated ________________, 2016 (the “PSA”); and
WHEREAS, pursuant to Section 3.4(d)(ii) of the PSA, Indemnifying Party desires to indemnify and hold Indemnified Party harmless with respect to certain losses associated with certain Title Defects (as defined in the PSA), as more fully set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises, covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.    Indemnification by Indemnifying Party.  Indemnifying Party hereby indemnifies and holds harmless the Indemnified Party from and against loss of property value, as well as reasonable outside counsel attorney fees and other actual and reasonable third-party costs and expenses of investigation and litigation (“Losses”) arising out of or attributable to Third Party Claims (as defined below) relating to the Title Defects identified on Exhibit A attached hereto and incorporated herein by reference (individually, a “Subject Title Defect”, collectively, the “Subject Title Defects”), up to the amount attributed to each Subject Title Defect, which amount is also identified on Exhibit A (with respect to each Subject Title Defect, the “Individual Defect Amount”, with respect to the aggregate amount for all Subject Title Defects identified on Exhibit A, the “Aggregate Defect Amount”).
2.    Limits on Indemnification, Dispute regarding Losses.
(a)    Notwithstanding anything in the PSA or this Agreement to the contrary, the Indemnified Party and the Indemnifying Party hereby agree and acknowledge that the Indemnified Party’s sole and exclusive remedy with relation to Losses suffered by the Indemnified Party relating to all Subject Title Defects shall be limited to the Aggregate Defect Amount and with relation to Losses suffered by the Indemnified Party regarding any individual Subject Title Defect shall be limited to the corresponding Individual Defect Amount.  Additionally, notwithstanding anything in the PSA or this Agreement to the contrary, the Indemnified Party’s sole and exclusive remedy with respect to any and all claims, liabilities, suits, controversies, losses, costs and expenses relating to the Subject Title Defects shall be limited to a claim for reimbursement of Losses pursuant to this Agreement.  Each of the parties to this Agreement expressly waives and agrees not to seek, and to cause its affiliates not to seek, indirect, consequential, punitive or exemplary damages or damages for lost profits of any kind with respect to any dispute arising under, related to, or in connection with this Agreement or the Subject Title Defects.

INDEMNITY AGREEMENT        PAGE 1

(b)    For purposes of calculating the amount of any Losses payable by the Indemnifying Party, the amount of such Losses shall be determined as agreed upon by the Indemnifying Party and the Indemnified Party with reference to the applicable Individual Defect Amount in accordance with the terms of, and subject to the limitations contained in, this Agreement and with regard to the portion of the Individual Defect Amount that is affected by a Third Party Claim.  In the event the parties to this Agreement are unable to agree upon the amount of any Losses, the dispute shall be exclusively and finally resolved pursuant to this Section 2(b). There shall be a single arbitrator, who shall be a title attorney with at least ten (10) years experience in oil and gas titles involving properties in the regional area in which the properties constituting the Subject Title Defect are located, as selected by mutual agreement of the parties hereto (the “Title Expert”).  The Title Expert’s determination shall be made within twenty (20) days after submission of the matters in dispute and shall be final and binding upon all parties to this Agreement, without right of appeal.  In making his determination, the Title Expert shall be bound by the rules and limitations set forth in this Agreement and may consider such other matters as in the opinion of the Title Expert are necessary or helpful to make a proper determination.  The Title Expert may allow the parties to make written submissions of their positions in the manner and to the extent the Title Expert deems appropriate, and the Title Expert may call on the parties to submit such other materials as the Title Expert deems helpful and appropriate to resolution of the dispute.  Additionally, the Title Expert may consult with and engage disinterested third parties to advise the Title Expert, including without limitation petroleum engineers.  The parties hereto shall each bear its own legal fees and other costs of presenting its case.  Each party shall bear one-half of the costs and expenses of the Title Expert, including any costs incurred by the Title Expert that are attributable to such third party consultation.  Within ten (10) days after the Title Expert delivers written notice to the parties to this Agreement of his award with respect to the disputed Losses, the Indemnifying Party shall pay to the Indemnified Party the amount, if any, so awarded by the Title Expert to the Indemnified Party.
(c)    Claims by the Indemnified Party for reimbursement for Losses pursuant to this Agreement shall be limited to claims made within the Claim Period (as defined below).  To the extent the Indemnified Party fails to notify the Indemnifying Party of any claims for reimbursement for Losses within the Claim Period, the Indemnified Party shall be deemed to have waived any right to reimbursement for any Losses or any other damages the Indemnified Party may have suffered or incurred with respect to any such Subject Title Defect.
3.    Indemnification Proceedings.
(a)    At any time prior to the date which is two (2) years following the Effective Date (the “Claim Period”), the Indemnified Party will have the right to notify the Indemnifying Party in writing that the Indemnified Party is making an indemnification claim for reimbursement for any Losses incurred or reasonably anticipated to be incurred with respect to any third party claim regarding title to or ownership of an interest in a property which is identified as a Subject Title Defect.  In the event that any third party makes a claim regarding title to or ownership of an interest in a property which is identified as a Subject Title Defect for which the Indemnifying Party may be liable to the Indemnified Party pursuant to Section 1 above (a “Third Party Claim”), the Indemnified Party shall with reasonable promptness notify the Indemnifying Party of such Third Party Claim by delivery of a written notice to the Indemnifying Party (a “Claim Notice”), provided 

INDEMNITY AGREEMENT        PAGE 2

that the failure or delay to so notify the Indemnifying Party shall not relieve the Indemnifying Party of their obligations under this Agreement, except to the extent that the Indemnifying Party demonstrates that its defense of such Third Party Claim is materially prejudiced thereby.  The Indemnifying Party shall have thirty (30) days from receipt of the Claim Notice from the Indemnified Party (the “Notice Period”) to notify the Indemnified Party whether or not the Indemnifying Party desires, at the Indemnifying Party’s sole cost and expense, to defend the Indemnified Party against such claim or demand; provided, that the Indemnified Party is hereby authorized prior to and during the Notice Period, and at the cost and expense of the Indemnifying Party, to file any motion, answer or other pleading that it shall reasonably deem necessary to protect its interests or those of the Indemnifying Party.  The Indemnifying Party shall have the right to assume the defense of such Third Party Claim only if and for so long as the Indemnifying Party (i) notifies the Indemnified Party during the Notice Period that the Indemnifying Party is assuming the defense of such Third Party Claim, (ii) uses counsel of its own choosing that is reasonably satisfactory to the Indemnified Party, and (iii) conducts the defense of such Third Party Claim in an active and diligent manner.  If the Indemnifying Party is entitled to, and does, assume the defense of any such Third Party Claim, the Indemnified Party shall have the right to employ separate counsel at its own expense and to participate in the defense thereof.  If the Indemnifying Party elects (and are entitled) to assume the defense of such Third Party Claim, (i) no compromise or settlement thereof or consent to any admission or the entry of any judgment with respect to such Third Party Claim may be effected by the Indemnifying Party without the Indemnified Party’s written consent (which shall not be unreasonably withheld, conditioned or delayed) unless the sole relief provided is monetary damages that are paid in full by the Indemnifying Party (and no injunctive or other equitable relief is imposed upon the Indemnified Party) and there is an unconditional provision whereby each plaintiff or claimant in such Third Party Claim releases the Indemnified Party from all liability with respect thereto and (ii) the Indemnified Party shall have no liability with respect to any compromise or settlement thereof effected without its written consent (which shall not be unreasonably withheld).  If the Indemnifying Party elects not to assume the defense of such Third Party Claim (or fails to give notice to the Indemnified Party during the Notice Period), the Indemnified Party shall be entitled to assume the defense of such Third Party Claim with counsel of its own choice, at the expense and for the account of the Indemnifying Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of  the Indemnifying Party without the prior written consent of such Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed.
(b)    Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any Third Party Claim (i) at the reasonable expense of the Indemnifying Party, as to which the Indemnifying Party fails to assume the defense during the Notice Period after the Indemnified Party gives notice thereof to the Indemnifying Party or (ii) at the reasonable expense of the Indemnifying Party, to the extent the Third Party Claim seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, could materially adversely affect the business, condition (financial or other), capitalization, assets, liabilities, results of operations or prospects of the Indemnified Party.  The Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of the Indemnifying Party 

INDEMNITY AGREEMENT        PAGE 3

without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).
4.    Tax Treatment of Indemnification Payments.  All indemnification payments pursuant to this Agreement shall be treated as adjustments to the Purchase Price (as defined in the PSA).
5.    Counterparts.  This Agreement may be executed and delivered (including by facsimile transmission) in counterparts, each of which shall be deemed an original instrument, but all such counterparts together shall constitute but one agreement.
6.    Notice.  All notices which are required or may be given pursuant to this Agreement shall be sufficient in all respects if given in writing and delivered personally, by telecopy or by registered or certified mail, postage prepaid, or sent by electronic mail (provided any such electronic mail transmission is confirmed either orally or by written confirmation), as follows:
	
			
	If to Indemnifying Party:

If to Indemnified Party:
	 
	Mid-Con Energy Properties, LLC
Attn: Charles L. McLawhorn, III
2431 E. 61st Street, Suite 850
Tulsa, Oklahoma  74136
Telephone: (918) 743-7575
Telecopy: (918) 743-8859
Email: cmclawhorn@midcon-energy.com

PO&G Panhandle, LP
Attn: George A. Oggero, General Counsel, Chief Compliance Officer, & Land Manager
5847 San Felipe, Suite 3200
Houston, Texas 77057
Telephone: 713-589-8138
Telecopy: 713-244-0650
Email: George_oggero@pogresources.com

INDEMNITY AGREEMENT        PAGE 4

Any party may change its address for notice by notice to the other in the manner set forth above.  All notices shall be deemed to have been duly given at the time of receipt by the party to which such notice is addressed.
7.    Governing Law and Venue.  THIS AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS OTHERWISE APPLICABLE TO SUCH DETERMINATIONS.  JURISDICTION AND VENUE WITH RESPECT TO ANY DISPUTES ARISING HEREUNDER SHALL BE PROPER ONLY IN TARRANT COUNTY, TEXAS.
8.    Captions.  The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.
9.    Waivers.  Any failure by any party or parties to comply with any of its or their obligations, agreements or conditions herein contained may be waived in writing, but not in any other manner, by the party or parties to whom such compliance is owed.  No waiver of, or consent to a change in, any of the provisions of this Agreement shall be deemed or shall constitute a waiver of, or consent to a change in, other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided.
10.    Assignment.  No party to this Agreement shall assign all or any part of this Agreement, nor shall any party assign or delegate any of its rights or duties hereunder, without the prior written consent of the other parties.  Notwithstanding the preceding, however, either of the Indemnifying Party may, without the Indemnified Party’s consent, assign its rights and duties hereunder to a successor to all or substantially all of the Indemnifying Party’s business or assets.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
11.    Amendment.
This Agreement may be amended or modified only by an agreement in writing executed by the parties hereto.
No waiver of any right under this Agreement shall be binding unless executed in writing by the party to be bound thereby.
12.    No Third-Party Beneficiaries.  Nothing in this Agreement shall entitle any Person (as defined in the PSA) other than the parties to this Agreement to any benefit, claims, remedy or right of any kind.
13.    Construction.  Each of the parties to this Agreement has had substantial input into the drafting and preparation of this Agreement and has had the opportunity to exercise business discretion in relation to the negotiation of the details of the transactions contemplated hereby.  This Agreement is the result of arm’s-length negotiations from equal bargaining positions.  In the event 

INDEMNITY AGREEMENT        PAGE 5

of a dispute over the meaning or application of this Agreement, it shall be construed fairly and reasonably and neither more strongly for nor against any party.
14.    Severability.  If any term or other provisions of this Agreement is held invalid, illegal or incapable of being enforced under any rule of law, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in a materially adverse manner with respect to any party; provided, however, that if any such term or provision may be made enforceable by limitation thereof, then such term or provision shall be deemed to be so limited and shall be enforceable to the maximum extent permitted by applicable Law (as defined in the PSA).
[SIGNATURE PAGE FOLLOWS.]

INDEMNITY AGREEMENT        PAGE 6

IN WITNESS WHEREOF, this Agreement has been signed by each of the parties hereto on the date first above written.
	
				
	INDEMNIFYING PARTY:
MID-CON ENERGY PROPERTIES, LLC, 
a Delaware limited liability company

By:      Mid-Con Energy Partners, LP, a 
   Delaware limited partnership, its
   Sole Member

By:      Mid-Con Energy GP, LLC, a 
   Delaware limited liability company,
   Its General Partner

   By:________________________                          Jeffrey R. Olmstead
      Chief Executive Officer
MID-CON ENERGY OPERATING, LLC, 
an Oklahoma limited liability company

By: ________________________
   Jeffrey R. Olmstead
   Chief Executive Officer

INDEMNIFIED PARTY:
PO&G PANHANDLE, LP, 
a Texas limited partnership

By:      PO&G Panhandle Manager, LLC, a 
   Texas limited liability company, 
Its General Partner 

By:        TJK, LLC, a 
   Nevada limited liability company
   Its Sole Member

   By:________________________                          Steven A. Pfeifer
      Manager
	 
	 
	 

INDEMNITY AGREEMENT        PAGE 7

SCHEDULE 1.2(d)
CONTRACTS
		
	•
	Gas Marketing Agreement with DCP Midstream, LP (Contract No. CRG022450A) dated September 1, 2014

		
	•
	Gas Marketing Agreement with DCP Midstream, LP (Contract No. CRG0229500) dated July 1, 2009

		
	•
	Gas Marketing Agreement with DCP Midstream, LP (Contract No. BOR1413503) dated August 31, 2012 

		
	•
	Gas Marketing Agreement with DCP Midstream, LP (Contract No. NHC029200) terminated February 1, 2016

		
	•
	Crude Marketing Agreement with Plains Marketing, LP (Contract No. 8220-1004) dated May 1, 2016

		
	•
	Crude Marketing Agreement with Plains Marketing, LP (Contract No. 8220-1003) dated May 1, 2016

		
	•
	Crude Marketing Agreement with CHS McPherson Refinery, Inc. (Contract No. 213692) dated May 1, 2016

		
	•
	Crude Marketing Agreement with Valero and Marketing Supply Company (Contract No. 11-0030) dated June 1, 2013

		
	•
	Crude Marketing Agreement with Valero and Marketing Supply Company (Contract No. 12-0015) dated March 1, 2012

		
	•
	Unit Agreement for Bivins Rach Penn Unit dated October 15, 2001

		
	•
	Unit Operating Agreement for Bivins Ranch Penn Unit dated October 15, 2001 

		
	•
	Line Well Agreement dated February 1, 2014.

		
	•
	Unit Agreement for Harker Ranch Morrow Sand Unit dated October 17, 2005

		
	•
	Unit Operating Agreement for Harker Ranch Morrow Sand Unit dated October 17, 2005

		
	•
	Plan of Unitization for Clawson Ranch Waterflood Unit dated July 1, 1999

		
	•
	Plan of Unitization for Eva South Morrow Sand Unit dated November 2, 1992 

		
	•
	Plan of Unitization for Midwell Waterflood Unit dated March 10, 1993 

		
	•
	Plan of Unitization for Ona Northwest Morrow Sand Unit dated September 23, 1992 

		
	•
	Plan of Unitization for War Party Waterflood Unit dated August 23, 2001 

		
	•
	Plan of Unitization for War Party II Waterflood Unit dated November 5, 2002 

SCHEDULE 1.2(e)
EASEMENTS/SURFACE AGREEMENTS
		
	•
	Surface Damage Agreement with LX Cattle Company and Mid-Con Energy Operating, LLC.

		
	•
	Surface Damage Agreement with LX Cattle Company and Mid-Con Energy Operating, LLC.

		
	•
	Surface Damage Agreement with LX Cattle Company and Mid-Con Energy Operating, LLC.

		
	•
	Surface Agreement with Stephens Land & Cattle dated January 24, 2001.

		
	•
	Agreement for Surface Damages with Carl & Bernice Clawson dated May 5, 2000.

		
	•
	Surface Damage Agreement between Kirby B. Clawson and Mid-Con Energy Operating, Inc. dated February 15, 2013.

		
	•
	Surface Damage Agreement between Carl & Bernice Clawson Trust and Mid-Con Energy Operating, LLC.

		
	•
	Surface Agreement with Mid-Con Energy Operating, LLC and Stephens Land & Cattle dated May 22, 2014.

		
	•
	Surface Agreement with Mid-Con Energy Operating, LLC and Stephens Land & Cattle dated January 1, 2013.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, Inc. and Douglas & Kay Horton Inter Vivos Trust dated October 30, 2012.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, Inc. and Webb Red Living Trust dated December 21, 2012.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, Inc. and Donna Campbell dated March 6, 2012.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, LLC and Donna Campbell dated April 29, 2014.

		
	•
	Surface Damage Agreement between RDT Properties and Donna Campbell and Campbell Family Trust dated May 20, 2006.

		
	•
	Surface Agreement and Right of Way Easement between Robert H. Campbell and Bass Enterprises Production Company dated March 23, 1990.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, LLC and Harker Family Registered, LLLP dated June 23, 2014.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, LLC and Barry J. & Carolyn L. Gerstner dated June 3, 2014.

		
	•
	Addendum to Surface Damage Agreement between Mid-Con Energy Operating, LLC and Hanke Properties, LLC dated July 19, 2014.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, LLC and Ada Phillips, LLC dated January 31, 2014.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, LLC and Ada Phillips, LLC dated September 4, 2013.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, LLC and Triple S. Land Company dated September 9, 2013.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, Inc. and JB & Carol J. Stewart dated March 22, 2013.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, LLC and N&R Dry Acres, LLC.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, Inc. and James B. & Kim R. Alleman dated June 5, 2012.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, Inc. and Steven C. Robin K. Laird dated April 26, 2012.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, Inc. and Steven C. Robin K. Laird dated April 26, 2012.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, Inc. and Neva Joyce Keesecker Revocable Trust dated September 20, 2013.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, Inc. and Loren J. & Anita C. Witt, Kathleen Fyffe and Eugene & Bonita Harke.

		
	•
	Surface Damage Agreement between & Mid-Con Energy Operating, Inc. and Ada Phillips, LLC dated November 12, 2013.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating Inc. and Triple S Land Company dated March 22, 2013.

		
	•
	Surface Damage Agreement between Mid-Con Energy Operating, LLC and Barry J. and Carolyn L. Gerstner dated November 15, 2014.

		
	•
	Surface Damage Agreement between RDT Properties, Inc. and Donna M. Campbell dated July 26, 2011. 

SCHEDULE 1.2(k)
VEHICLES AND VESSELS
None.

SCHEDULE 1.3(e)
EXCLUDED ASSETS
	
						
	VEHICLES

	 
	 
	 
	 
	 
	 

	Unit No.
	Year
	Make
	Model
	VIN
	OK-Tag

	14584
	2012
	Ford
	F-150
	1FTFW1EFXCFB14584
	696JGE

	80418
	2013
	Ford
	F-150
	1FTFX1EFXDKD80418
	820JPW

	15197
	2012
	Ford
	F-250
	1FT7X2B6XCEA15197
	I39706

	2454
	2011
	Ford
	F-250
	1FT7X2B66BED02454
	I39649

	7228
	2012
	Ford
	F-250
	1FT7X2B69CED07228
	490JPW

	56397
	2012
	Ford
	F-250
	1FT7X2B63CEA56397
	327JGG

	23240
	2013
	Ford
	F-250
	1FT7X2B68DEB23240
	928JPX

	53447
	2014
	Ford
	F-150
	1FTFW1EF0EKF53447
	838KSS

	2609
	2016
	Toyota
	Tacoma
	5TFSZ5AN7GX002609
	Z33695

	
						
	EQUIPMENT
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	FIELD
	Equipment Type
	MAKE
	SIZE
	SERIAL  NUMBER
	MOTOR HP

	Midwell
	Pumping Unit
	Unknown
	C-114-143-74
	20060701
	20

	Midwell
	Pumping Unit
	Lufkin
	C114D
	 
	20

	Midwell
	Pumping Unit
	American
	80-119-54
	T11F54-11-1322
	 

	
						
	CONTRACTS
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 

	•
    Water Supply Well Agreement dated January 2016;  between Mid-Con Energy Properties, LLC and

	Mid-Con Energy III, LLC

SCHEDULE 3.3(l)
PERMITTED ENCUMBRANCES
None.

SCHEDULE 3.4(a)
ALLOCATED VALUES ($)
	
		
	Unit
	Allocation

	Bivins Ranch
	2,199,000

	Clawson Ranch Waterflood
	1,064,000

	Eva South Morrow Unit
	0

	Harker Ranch Morrow Unit
	2,525,000

	Midwell Unit
	1,882,000

	Ona Morrow Unit
	7,060,000

	Smaltz Unit
	270,000

	War Party Unit I
	0

	War Party Unit II
	3,000,000

	Total
	18,000,000

SCHEDULE 5.7
LITIGATION

None.

SCHEDULE 5.8
TAXES AND ASSESSMENTS
None.

SCHEDULE 5.9
COMPLIANCE WITH LAWS
None.

SCHEDULE 5.10
OUTSTANDING CAPITAL COMMITMENTS
		
	•
	May 15, 2016 AFE for Harker Ranch #9 well -- $61,890

SCHEDULE 5.11
IMBALANCES
None.

SCHEDULE 5.13
TRANSFER REQUIREMENTS
		
	•
	War Party II Waterflood Unit Plan of Unitization

		
	•
	Bivins Ranch leases 

SCHEDULE 5.16
OIL & GAS OPERATIONS
None.

SCHEDULE 5.17
PLUGGING & ABANDONMENT
None.

SCHEDULE 5.21
SUSPENSE ACCOUNTS
$3,969.67.

SCHEDULE 5.22
INSURANCE; BONDING
INSURANCE:
		
	•
	2015-07-01 Commercial Umbrella - Chubb #7988-64-97 - MCEO, Inc.

		
	•
	2015-07-01 Commercial Umbrella - Chubb #7988-64-97 - amendment to MCEO LLC

		
	•
	2015-07-01 Commercial Umbrella 2nd layer - AIG #047721714 - MCEO Inc.

		
	•
	2015-07-01 Commercial Umbrella 2nd layer - AIG #047721714 - amendment to MCEO LLC

		
	•
	2015-07-01 General Liability - Chubb #3600-37-89 - MCEO, Inc.

		
	•
	2015-07-01 General Liability - Chubb #3600-37-89 - amendment to MCEO, LLC

		
	•
	2015-07-01 General Liability - Chubb #3600-37-89 - WFB to additional insured

		
	•
	2015-07-01 General Liability Certificate of Insurance - Chubb #3600-37-89 - MCEO, LLC w WF

		
	•
	2015-10-02 General Liability - Chubb #3600-37-89 - 30-day cancellation notice to Harwood

		
	•
	2015-07-01 Pollution Liability - Chubb #3733-43-65 - MCEO, Inc.

		
	•
	2015-07-01 Pollution Liability - Chubb #3733-43-65 - amend to MCEO, LLC

		
	•
	2015-07-01 Property Equipment - Allianz #MXI93067888 - MCEO Inc.

		
	•
	2015-07-01 Property Equipment - Allianz #MXI93067888 - amend to MCEO LLC

		
	•
	2015-09-09 Worker's Compensation - Chubb-Federal Insurance Co. #16-7174-65-95 - MCEO LLC

		
	•
	2015-09-09 Worker's Compensation - Chubb-Federal Insurance Co. #16-7174-65-95 - final audit 2015-12-29

		
	•
	2015-07-01 Control of Well - Lloyd's #AMW146847 - MCEO Inc.

		
	•
	2015-10-15 Control of Well - Lloyd's #AMW146847 - amendment to MCEO, LLC

		
	•
	2015-12-31 Control of Well - Lloyd's #AMW146847 - terrorism exclusion

		
	•
	2016-01-05 Control of Well - Lloyd's #AMW156987 - MCEO, Inc.

BONDS:
		
	•
	Mid-Con Energy Operating, LLC – Colorado Oil & Gas Conservation;

		
	◦
	Surety ID 2016-0018 Cash Blanket Plugging Bond for $60,000.

		
	•
	Mid-Con Energy Operating, LLC – Oklahoma Corporation Commission;

		
	o

	Irrevocable Letter of Credit #320 - $25,000.

		
	•
	Mid-Con Energy Operating, LLC – Oklahoma Secretary of State;

		
	o

	Irrevocable Letter of Credit #321 - $25,000.

		
	•
	Mid-Con Energy Operating, LLC – Commissioners of the Land Office, State of Oklahoma;

		
	o

	Irrevocable Letter of Credit #322 - $10,000.

		
	•
	Mid-Con Energy Operating, LLC – Texas Railroad Commission;

		
	o

	Irrevocable Letter of Credit #323 - $250,000. 

		
	•
	Mid-Con Energy Operating, LLC – Anadarko E&P Company;

		
	o

	Irrevocable Letter of Credit #315 - $50,000.

SCHEDULE 5.23
MATERIAL CONTRACTS
		
	•
	Unit Agreement for Bivins Rach Penn Unit dated October 15, 2001

		
	•
	Unit Operating Agreement for Bivins Ranch Penn Unit dated October 15, 2001 

		
	•
	Line Well Agreement dated February 1, 2014

		
	•
	Unit Agreement for Harker Ranch Morrow Sand Unit dated October 17, 2005

		
	•
	Unit Operating Agreement for Harker Ranch Morrow Sand Unit dated October 17, 2005

		
	•
	Plan of Unitization for Clawson Ranch Waterflood Unit dated July 1, 1999

		
	•
	Plan of Unitization for Eva South Morrow Sand Unit dated November 2, 1992 

		
	•
	Plan of Unitization for Midwell Waterflood Unit dated March 10, 1993 

		
	•
	Plan of Unitization for Ona Northwest Morrow Sand Unit dated September 23, 1992 

		
	•
	Plan of Unitization for War Party Waterflood Unit dated August 23, 2001 

		
	•
	Plan of Unitization for War Party II Waterflood Unit dated November 5, 2002 

SCHEDULE 5.24
ENVIRONMENTAL MATTERS
None.

SCHEDULE 7.5
OPERATIONS OF BUSINESS
None.

SCHEDULE 7.14
Employees
		
	•
	Anthony Aton, Field Supervisor

		
	•
	Jeremy Lavielle, Fluid Tech

		
	•
	John Byrd, Jr., Pumper

		
	•
	Guy Dickerson, Pumper

		
	•
	Luis Gutierrez, Pumper

		
	•
	Jesus Nevarez, Pumper

		
	•
	Juan Carlos Rodriguez, Pumper

		
	•
	Will Berry, PumperExhibit

Exhibit  10.8

PURCHASE AND SALE AGREEMENT
AMONG
MID-CON ENERGY PROPERTIES, LLC
(“BUYER”)
AND
WALTER EXPLORATION COMPANY, JWMW LTD., and WILDCAT PROPERTIES L.P., 
(“SELLERS”)
EXECUTED AS OF
JULY 28, 2016

TABLE OF CONTENTS
		
	1.
	DEFINITIONS    7

		
	2.
	PURCHASE AND SALE    13

		
	2.1
	Assets    13

		
	2.2
	Retained Assets    15

		
	2.3
	Third Party Owners    16

		
	2.4
	Participation of Third Party Owners    17

		
	3.
	PURCHASE PRICE AND ALLOCATION    18

		
	3.1
	Base Purchase Price    18

		
	3.2
	Performance Deposit and Payment    18

		
	3.3
	Adjustments to the Base Purchase Price    19

		
	3.4
	Allocation of Base Purchase Price    21

		
	4.
	ACCESS TO ASSETS AND DATA; DISCLAIMERS; GOVERNMENTAL REVIEWS    21

		
	4.1
	Access    22

		
	4.2
	Confidentiality Obligations    22

		
	4.3
	Disclaimer    23

		
	4.4
	Governmental Reviews    24

		
	5.
	SELLERS’ REPRESENTATIONS    25

		
	5.1
	Existence    25

		
	5.2
	Authority    25

		
	5.3
	Compliance    25

		
	5.4
	Payment of Royalties    25

		
	5.5
	Taxes    25

		
	5.6
	Material Contracts    25

		
	5.7
	Permits    26

		
	5.8
	Litigation and Claims    26

		
	5.9
	Sale Contracts    26

		
	5.10
	Notices    26

		
	5.11
	Take-or-Pay    26

		
	5.12
	Timely Payment    26

		
	5.13
	Imbalances    26

		
	5.14
	Outstanding Obligations    26

		
	5.15
	Brokers    27

		
	5.16
	Bankruptcy    27

		
	5.17
	Consents    27

		
	5.18
	Preferential Purchase Rights    27

		
	5.19
	Mortgages and Other Instruments    27

		
	6.
	BUYER’S REPRESENTATIONS    27

		
	6.1
	Information    27

		
	6.2
	Knowledge and Experience    28

		
	6.3
	No Warranty    28

		
	6.4
	Existence    29

		
	6.5
	Authority    29

		
	6.6
	Liability for Broker’s Fees    29

		
	6.7
	Bankruptcy    29

		
	6.8
	Qualification to Assume Operatorship    29

		
	6.9
	Consents    30

		
	6.10
	Litigation    30

		
	7.
	TITLE    30

		
	7.1
	Title Defects    30

		
	7.2
	Additional Interests    32

		
	7.3
	Notices    32

		
	7.4
	Adjustments to Base Purchase Price    32

		
	7.5
	Deductible for Title, Environmental, or Casualty Defects    34

		
	7.6
	Termination Threshold for Defects    35

		
	8.
	ENVIRONMENTAL AND ENVIRONMENTAL INDEMNITY    35

		
	8.1
	Acceptance of Environmental Condition    35

		
	8.2
	Remedy for Environmental Defects    36

		
	8.3
	Acceptance of Environmental Condition    37

		
	8.4
	NORM    38

		
	8.5
	Environmental Indemnities    38

		
	9.
	THIRD-PARTY CONSENTS AND PREFERENTIAL PURCHASE RIGHTS    39

		
	9.1
	Third Party Notices    39

		
	9.2
	Third-Party Exercise    39

		
	9.3
	Third-Party Failure to Purchase    39

		
	9.4
	Consents    40

		
	10.
	CONDITIONS TO CLOSING; Settlement Statement; CLOSING    40

		
	10.1
	Sellers’ Conditions to Closing    40

		
	10.2
	Buyer’s Conditions to Closing    41

		
	10.3
	Closing Settlement Statement    42

		
	10.4
	Closing Date and Place    42

		
	10.5
	Closing Activities    42

		
	11.
	POST-CLOSING OBLIGATIONS    44

		
	11.1
	Recordation and Filing of Documents    44

		
	11.2
	Records    44

		
	11.3
	Final Settlement Statement    44

		
	11.4
	Cooperation with Sellers’ Retained Assets    45

		
	11.5
	Suspense Accounts    45

		
	11.6
	Further Assurances    46

		
	12.
	TAXES    46

		
	12.1
	Property Taxes    46

		
	12.2
	Production Taxes    46

		
	12.3
	Other Taxes    47

		
	13.
	OWNERSHIP OF ASSETS    47

		
	13.1
	Distribution of Production    47

		
	13.2
	Proration of Income and Expenses    47

		
	13.3
	Notice to Remitters of Proceeds    48

		
	13.4
	Notice to Third Party Users of Key Facilities    48

		
	13.5
	Production Imbalances    48

		
	13.6
	Pipeline and Other Non-Wellhead Imbalances    48

		
	14.
	INTERIM OPERATIONS    49

		
	14.1
	Standard of Care    49

		
	14.2
	Liability of Operator    49

		
	14.3
	Removal of Signs    49

		
	14.4
	Third-Party Notifications    50

		
	14.5
	Seller Credit Obligations    50

		
	14.6
	Notification of Breaches    50

		
	15.
	ASSUMPTION OF LIABILITY AND GENERAL INDEMNIFICATION    50

		
	15.1
	Buyer’s Assumption of Obligations    50

		
	15.2
	Definitions    51

		
	15.3
	Buyer’s General Indemnity    52

		
	15.4
	Sellers’ General Indemnity    52

		
	15.5
	Limitation on Indemnification    54

		
	15.6
	Further Limitation on Indemnification    54

		
	15.7
	Indemnification Procedures    54

		
	15.8
	Exclusive Remedy.    55

		
	16.
	CASUALTY LOSS    56

		
	17.
	NOTICES    56

		
	18.
	TERMINATION    57

		
	18.1
	Termination    57

		
	18.2
	Liabilities Upon Termination; Deposit Amount    58

		
	19.
	JOINDER OF ZEBRA INVESTMENTS, INC.  Zebra Investments, Inc. (herein “Zebra”), a Texas corporation, joins in this Agreement for the following limited purposes:    58

		
	19.1
	Pace 1-68 Well    58

		
	19.2
	Sisters Lease    59

		
	19.3
	Undeveloped Leases covering Tract 1 through Tract 5    59

		
	19.4
	Mineral Interest in leased premises of Joe Young Lease    59

		
	19.5
	Representations    60

		
	19.6
	Form of Conveyance    60

		
	19.7
	Breach of Covenant.    60

		
	20.
	MISCELLANEOUS    60

		
	20.1
	Entire Agreement    60

		
	20.2
	Survival    60

		
	20.3
	Arbitration    60

		
	20.4
	Memorandum of Understanding    61

		
	20.5
	Choice of Law    61

		
	20.6
	Assignment    61

		
	20.7
	No Admissions    61

		
	20.8
	Waivers and Amendments    62

		
	20.9
	Counterparts    62

		
	20.10
	Third-Party Beneficiaries    62

		
	20.11
	Specific Performance    62

		
	20.12
	Public Communications    62

		
	20.13
	Headings    63

		
	20.14
	Expenses    63

		
	20.15
	No Recourse    63

List of Exhibits:

Exhibit “A-1” - Schedule of Producing Leases
Exhibit “A-2” - Schedule of Undeveloped Leases
Exhibit “B” - Schedule of Wells
Exhibit “C-1” - Allocation Values for Wells
Exhibit “C-2” - Allocation Values for Undeveloped Leases
Exhibit “D” - Conveyance
Exhibit “E” - Certificate of Non-Foreign Status
Exhibit “F-1” - Third Party Owner Election to Participate
Exhibit “F-2” - Third Party Owner Election Not to Participate
Exhibit “G” -  Interests of Sellers and Third Party Participants

List of Schedules:
Schedule 2.1(d) - Key Facilities
Schedule 2.1(f)A - Easements and Surface Agreements
Schedule 2.1(f)B - Key Facilities Related Easements and Surface Agreements
Schedule 2.2(g) - Retained Equipment and Personal Property    
Schedule 5.3 - Compliance
Schedule 5.6 - Material Contracts
Schedule 5.7 - Permits
Schedule 5.8 - Litigation
Schedule 5.10 - Notices
Schedule 5.14 - Outstanding Obligations/AFEs
Schedule 5.17 - Third Party Consents
Schedule 5.18 - Preferential Purchase Rights
Schedule 11.5 - Suspense Accounts
Schedule 13.5 - Production Imbalances

PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (“Agreement”) is made and entered into as of July 28, 2016 (“Execution Date”) by and between MID-CON ENERGY PROPERTIES, LLC, a Delaware Limited Liability Company, whose address is 2431 E. 61st Street, Suite 850, Tulsa, Oklahoma 74136 (“Buyer”), and WALTER EXPLORATION COMPANY, JWMW LTD., and WILDCAT PROPERTIES L.P., whose address is 6116 N. Central Expressway, Suite 313, Dallas, Texas 75206 (collectively “Sellers”). Buyer and Sellers may sometimes be referred to in this Agreement individually as a “Party” or collectively as the “Parties”.
WHEREAS, Buyer desires to purchase the Assets (as defined below) from Sellers, and Sellers desire to sell the Assets to Buyer on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Sellers agree as follows:

ARTICLE 1

		
	.
	

		
	.
	DEFINITIONS

“Additional Interest” has the meaning set forth in Section 7.2.
“Agreement” has the meaning set forth in the Preamble.
“Allocated Values” has the meaning set forth in Section 3.4.
“Asset” or “Assets” has the meaning set forth in Article 2.
“Asset Group” has the meaning set forth in Section 7.4.
“Assumed Imbalance” or “Assumed Imbalances” has the meaning set forth in Section 13.5.
“Assumed Obligations” has the meaning set forth in Section 15.1.1.
 “Base Purchase Price” has the meaning set forth in Section 3.1.

“Business Day” means any day, other than Saturday or Sunday, on which commercial banks are open for commercial business with the public in Tulsa, Oklahoma.
“Buyer” has the meaning set forth in the Preamble.
“Buyer Group” has the meaning set forth in Section 15.2.
“Casualty Defect” has the meaning set forth in Article 16.
“Claim Notice” has the meaning set forth in Section 15.7.2.
“Claims” means any and all claims, rights, demands, causes of action, liabilities (including civil fines), damages, losses, fines, penalties, sanctions of every kind and character including reasonable fees and expenses of attorneys, technical experts and expert witnesses, judgments or proceedings of any kind or character whatsoever, whether arising or founded in law, equity, statute, contract, tort, strict liability or voluntary settlement and all reasonable expenses, costs and fees (including reasonable attorneys’ fees) in connection therewith.
“Cleanup” has the meaning set forth in Section 8.1(d).
“Closing” has the meaning set forth in Section 10.4.
“Closing Date” has the meaning set forth in Section 10.4.
“Closing Settlement Statement” has the meaning set forth in Section 10.3.
“Consents” has the meaning set forth in Section 9.1.
“Contracts” means all contract rights directly relating to the Assets, including, but not limited to, any operating agreements, joint venture agreements, unit agreements, orders and decisions of state, tribal and federal regulatory authorities establishing units, unit operating agreements, farm-in and/or farmout agreements, pooling or unitization or communitization agreements, processing agreements, transportation agreements, gathering and processing agreements, enhanced recovery and injection agreements, balancing agreements, options, drilling agreements, exploration agreements, area of mutual interest agreements, oil and/or gas production sales or marketing agreements, and assignments of operating rights, working interests, subleases and rights above or below certain footage depths or geological formations, to the extent the same are directly related to the Assets; provided, however, the term “Contract” shall not include any master service contract or any other contract or agreement which precludes assignment for which Sellers, using their reasonable efforts, cannot secure a waiver or consent to assignment prior to Closing by the other party(s) to such contract or agreement.
“Conveyances” means the one or more conveyances, assignments, deeds, and bills of sale, in form and substance mutually agreed to by Buyer and Sellers, conveying the Sale Interests to Buyer in accordance with the terms of this Agreement, to be executed and delivered in accordance with the provisions of Section 10.5.2.
“Current Tax Period” has the meaning set forth in Section 12.1.
“Deductible Amount” has the meaning set forth in Section 7.5.
“Deposit” has the meaning set forth in Section 3.2. 
“Due Diligence Period” has the meaning set forth in Section 7.1.
“Easements” means rights-of-way, easements, permits, licenses, approvals, servitudes and franchises specifically acquired for, or used in connection with, operations for the exploration and production of oil, gas or other minerals on or from the Interests or otherwise in connection with the Wells, Equipment, any gathering system(s) (whether used for the gathering of Hydrocarbons or non-Hydrocarbon substances produced in association therewith, including produced water and saltwater) or Surface Agreements, including, without limitation, the rights to permits and licenses of any nature owned, held or operated in connection with said operations.
“Effective Time” means 7:00 a.m. local time where the Assets are located on June 1, 2016.

“Election Agreements” has the meaning set forth in Section 2.4(a).
“Environmental Adjustment” has the meaning set forth in Section 8.2(a).
“Environmental Defect” has the meaning set forth in Section 8.1.
“Environmental Laws” means any and all present and future laws, statutes, regulations, rules, orders, ordinances, codes, plans, requirements, criteria, standards, decrees, judgments, injunctions, notices, demand letters, permits, licenses or determinations issued, or promulgated by any Governmental Authority now or hereafter in effect, and in each as amended or supplemented from time to time, and any applicable administrative or judicial interpretation thereof, pertaining to (a) use, storage, emission, discharge, clean-up, release, or threatened release of pollutants, contaminants, NORM, chemicals, or industrial, toxic or hazardous substances (collectively, “Pollutants”) on or into the environment or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of Pollutants, (b) health, (c) the environment, or (d) wildlife or natural resources applicable to the Assets and in effect in or for the jurisdiction in which the Assets are located, including, without limitation, the Clean Air Act (Air Pollution Control Act), the Clean Water Act (CWA), the Federal Water Pollution Act, the Rivers and Harbors Act, the Safe Drinking Water Act, the National Environmental Policy Act of 1969 (NEPA), the Endangered Species Act (ESA), the Fish and Wildlife Conservation Act of 1980, the Fish and Wildlife Coordination Act (FWCA), the Oil Pollution Act, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the Superfund Amendments and Reauthorization Act of 1986 (SARA), the Resources Conservation and Recovery Act (RCRA), the Toxic Substance Control Act, the Occupational, Safety and Health Act (OSHA), the Emergency Planning and Community Right-To-Know Act (EPCRA), the Hazardous Materials Transportation Act, the Hazardous and Solid Waste Amendments of 1984 (HSWA), and any and all other applicable present and future federal, state and local laws, statutes, regulations, rules, orders, ordinances, codes, plans, requirements, criteria, standards, decrees, judgments, injunctions, notices, demand letters, permits, licenses or determinations whose purpose is to regulate Pollutants or to conserve or protect health, the environment, wildlife or natural resources as any of the foregoing are now existing or may hereafter be amended or interpreted.
“Environmental Notice” has the meaning set forth in Section 8.1.
“Equipment” has the meaning set forth in Section 2.1(c).
“Excluded Third Party Owner Interests” has the meaning set forth in Section 2.4(c).
“Excluded Records” has the meaning set forth in Section 2.1(h).
“Excluded Assets” shall have the meaning set forth in Section 9.4.
“Exclusion Adjustment” shall have the meaning set forth in Section 9.4.
“Execution Date” has the meaning set forth in the Preamble.
“Final Settlement Statement” has the meaning set forth in Section 11.3.
“Final Suspense Account Statement” has the meaning set forth in Section 11.5.
“Governmental Authority” or “Governmental Authorities” means any court or tribunal (including an arbitrator or arbitral panel) in any jurisdiction (domestic or foreign) or any federal, tribal, state, county, municipal or other governmental or quasi-governmental body, agency, authority, department, board, commission, bureau, official or other authority or instrumentality.
“Hydrocarbons” has the meaning set forth in Section 2.1(e).
“Interests” has the meaning set forth in Section 2.1.
“Indemnified Party” has the meaning set forth in Section 15.7.1.
“Indemnifying Party” has the meaning set forth in Section 15.7.1.
“Key Facility” or “Key Facilities” has the meaning set forth in Section 2.1(d).  
“Leases” has the meaning set forth in Section 2.1(a).

“Loss” has the meaning set forth in Section 8.1(e).
“Material Contracts” means (a) all area of mutual interests agreements (other than customary area of mutual interest provisions in operating agreements), partnership (other than tax partnerships), joint venture and/or exploration or development program agreements relating to Wells and Leases or otherwise included in the Assets, (b) all of the oil and/or gas production sales, marketing and processing agreements relating to the Wells and Leases, other than such agreements which are terminable by Sellers without penalty on 90 or fewer days’ notice, and (c) certain agreements with third parties related to the Key Facilities.
“Non-Participating Third Party Owners” has the meaning set forth in Section 2.4(c).
“NORM” means naturally occurring radioactive material.
“Notice Period” has the meaning set forth in Section 15.7.3.
“Open Defect” has the meaning set forth in Section 7.4(c).
“Out-of-Pocket Costs” has the meaning set forth in Section 7.1(d).
“Party” or “Parties” has the meaning set forth in the Preamble.
“Party Affiliate” has the meaning set forth in Section 20.15.
“Participating Third Party Owners” has the meaning set forth in Section 2.4(c).
“Permits” has the meaning set forth in Section 2.1(g).
“Permitted Encumbrances” means (i) any third party consents to assignment and similar agreements with respect to which waivers or consents are obtained prior to Closing or which are typically obtained after Closing (including any applicable approval(s) from Governmental Authorities); (ii) easements, rights of way, servitudes, licenses and permits on, over, across or in respect of any of the Assets which do not materially interfere with the use, operation or development of the Assets; (iii) rights reserved to or vested in any Governmental Authority to control or regulate any of the Assets in any manner, and all obligations and duties under all applicable laws, rules and orders of any such Governmental Authority or under any franchise, grant, license or permit issued by any such Governmental Authority; (iv) materialmen’s, mechanics’, repairmen’s, employees’, contractors’, operators’, tax and other similar liens or charges arising in the ordinary course of business incidental to the construction, maintenance or operation of any of the Assets which have not yet become due and payable or payment is being withheld as provided by law or are being contested in good faith in the ordinary course of business by appropriate action; (v) any other liens, charges, encumbrances, contracts, agreements, instruments, obligations, defects or irregularities of any kind whatsoever affecting the Assets that do not operate to reduce the net revenue interest below that set forth on the applicable Exhibit(s) hereto for such Interest or increase the working interest above that set forth on the applicable Exhibit(s) hereto without a proportionate increase in the corresponding net revenue interest; (vi) defects and irregularities arising out of the lack of a survey; (vii) defects or irregularities arising out of the lack of recorded powers of attorney from any Person to execute and deliver documents on their behalf; (viii) defects arising out of a lack of evidence of corporate authorization; (ix) defects in the chain of title consisting of failure to recite marital status or the omission of succession of heirship or estate proceedings; (x) defects or irregularities arising out of improper or incomplete acknowledgement, witness, or attestation; (xi) defects or irregularities of title as to which the relevant statute(s) of limitations or prescription would bar any attack or claim against Sellers’ title (or, after the Closing, Buyer’s title); (xii) any of the matters disclosed on any Exhibit or any Schedule to this Agreement; (xiii) defects based on lack of information in Seller’s files; (xiv) defects or irregularities arising out of prior oil and gas leases which by their terms and on their face, expired more than ten (10) years prior to the Effective Time, and which have not been released of record; (xv) defects or irregularities arising out of liens, mortgages or deeds of trust which, by their terms and on their face, expired and terminated more than ten (10) years prior to the Effective Time but which remain unreleased of record; (xvi) defects and irregularities cured by possession under applicable statutes of limitation or statutes relating to prescription; (xvii) all approvals or rights to consent by, required notices to, filings with or other actions by Governmental Authorities in connection with the sale or conveyance of oil and gas leases or interests therein if they are customarily obtained subsequent to the sale or conveyance; (xviii) Preferential Purchase Rights which are subject to Article 9; (xix) nonexistent contracts, outside of the operator’s rights under the terms of any applicable operating agreement(s), for the purchase of production from third-party shippers or the gathering, transportation, treatment, injection or disposal of such third-party shippers proportionate share of production on any gathering system(s) (including the Key Facilities); (xx) conventional rights of reassignment triggered by Sellers’ (or, after the Closing, Buyer’s) express indication of its intention to release or abandon its interest prior to expiration of the primary term or other termination of such interest; (xxi) any maintenance of uniform interest provision in an operating agreement if waived by the party or parties having the right to enforce such provision or if the violation of such provision would 

not give rise to the unwinding of the sale of the affected Asset; and (xxii) such other defects or irregularities of title as Buyer may have waived in writing or by which Buyer shall be deemed to have waived pursuant to the provisions of Section 6.3 and Section 7.3.  
“Person” means any individual, partnership, joint venture, corporation, trust, limited liability company, unincorporated organization, government or department or agency thereof, or any other entity.
“Pipeline Imbalances” has the meaning set forth in Section 13.6.
“Pollutants” has the meaning set forth in the definition of Environmental Laws.
“Preferential Purchase Right” has the meaning set forth in Section 9.1.
“Property Taxes” has the meaning set forth in Section 12.1.
“Records” has the meaning set forth in Section 2.1(h).
“Represented Imbalance” has the meaning set forth in Section 13.5.
“Retained Assets” has the meaning set forth in Section 2.2.
“Sale Interests” has the meaning set forth in Section 2.4(f).
“Sellers” has the meaning set forth in the Preamble.
“Seller Credit Obligations” has the meaning set forth in Section 14.5.
“Seller Group” has the meaning set forth in Section 15.2.
“Seismic License” has the meaning set forth in Section 2.1(h).
“Surface Agreements” means any contracts, rights, permits, permissions or licenses to use of the surface estate as related to the Assets, including any surface leases, surface use rights or agreements or any similar surface rights, agreements or licenses relating to the Assets.
“Suspense Accounts” has the meaning set forth in Section 11.5.
“Third Party Owners” has the meaning set forth in Section 2.3.
“Third Party Notice Date” has the meaning set forth in Section 2.4(c).
“Termination Threshold” has the meaning set forth in Section 7.6.
“Title Defect” has the meaning set forth in Section 7.1.
“Undeveloped Leases” mean and refer to those oil, gas and mineral leases separately identified in Exhibit A-2, which are oil and gas leases or oil, gas and mineral leases which are currently within their respective primary terms, under which no exploration activity as yet has occurred.
“WEC” means and refers to Walter Exploration Company.
“Wells” has the meaning set forth in Section 2.1(b).
“Zebra” means and refers to Zebra Investments, Inc.

ARTICLE 2

		
	.
	

		
	.
	PURCHASE AND SALE

		
	1.
	Assets.  Subject to the terms and conditions of this Agreement, Sellers agree to sell to Buyer and Buyer agrees to buy from Sellers, effective as of the Effective Time for the consideration recited and subject to the terms and conditions set forth in this Agreement, all of Sellers’ right, title and interest in the following (each individually referred to as an “Asset” and all collectively referred to as the “Assets”):

		
	(a)
	Interests - All of those certain oil and gas leases and oil, gas and mineral leases described on the attached Exhibit “A-1” (describing those leases on which are located Wells, or that are pooled or communitized with Wells) and Exhibit “A-2” (describing the Undeveloped Leases) (collectively the “Leases”), and the mineral interest described on Exhibit “A-1,” together with all other rights, titles and interests of Sellers insofar as the same pertain to the right to explore for, develop, and/or produce oil and/or gas, in the Leases and the lands for which the Leases are now in force and effect, and the lands and leases pooled, unitized or communitized therewith, including all working interests, royalty interests, overriding royalty interests, net profits interests, production payments, forced pooled interests, and interests pertaining to the right to explore for, develop, and/or produce oil and/or gas acquired under contracts or otherwise in the lands covered by the Leases, to which the Leases are currently in force and effect, and any other lands or interests pooled, unitized or communitized therewith; provided, however, that all of the foregoing are subject to the limitations described in Exhibit “A-1” and Exhibit “A-2” (the Leases and the lands currently covered thereby and other interests therein are collectively referred to in this Agreement as the “Interests”).  

		
	(b)
	Wells - All of the oil and gas wells, salt water disposal wells, injection wells, monitoring wells and any other wells and wellbores located on or attributable to the Interests or on lands pooled, unitized or communitized with any portion thereof, or on lands located within any governmental drilling and/or spacing unit (if applicable) which includes any portion thereof, or on portions thereof associated with proved undeveloped reserves whether producing, plugged or unplugged, shut-in, or permanently or temporarily abandoned, including, but not limited to, the wells identified on the attached Exhibit “B” (the “Wells”).

		
	(c)
	Equipment

 - All personal property, fixtures and improvements and facilities  which are located on the Interests and are used in connection with the operations of the Assets or the production of Hydrocarbons therefrom, including  equipment, pipelines, pipeline laterals, well pads, tank batteries, well heads, treating equipment, compressors, power lines, casing, tubing, pumps, motors, gauges, meters, valves, heaters, treaters, and separators appurtenant to the Interests, Wells, or any Key Facility and used in connection with the ownership or operation of the Interests, Wells, or any Key Facility or the production, gathering, transportation, storage, treatment, sale or disposal of Hydrocarbons, including, but not limited to, facilities, plants, treating and processing systems, casing, pipelines and flow lines (collectively, the “Equipment”).  Equipment does not cover oil field equipment currently stored on the Leases which is not in use in connection with the ownership and operation of Interests, Wells, or any Key Facilities described in Schedule 2.2(g), which Sellers may remove within ninety (90) days following closing.
		
	(d)
	Key Facilities

 - Those certain facilities which are utilized to service all or a portion of the Assets, which facilities are more fully identified and described on Schedule 2.1(d) hereto (collectively, the “Key Facilities”), including all related (i) surface locations, Easements, Surface Agreements, access agreements, and rights of ingress and egress, and (ii) all related facilities, equipment, inventory, fixtures and structures used in the operation of the Key Facilities, including, but not limited to, all injection and/or disposal wells, compressors, separators, dehydration units, risers, skids, processing plants, pipelines, flow lines, meters, gauges, tanks, fittings, valves, and flares.  
		
	(e)
	Production 

- All of the oil, natural gas, condensate, casinghead gas, products or other minerals, attributable or allocable to the Interests or Wells (i) from and after the Effective Time or (ii) which are in storage above the pipeline connection as of the Effective Time and for which Sellers receive an upward adjustment to the Base Purchase Price, or (iii) with regard to any over-produced or under-produced volumes of Sellers attributable to the Assumed Imbalances and Pipeline Imbalances (“Hydrocarbons”).
		
	(f)
	Easements and Surface Agreements 

- All Easements and Surface Agreements, including those identified and described on the attached Schedule 2.1(f)A, as well as those Easements and Surface Agreements related to the Key Facilities as more particularly identified on the attached Schedule 2.1(f)B.

		
	(g)
	Contract Rights and Permits 

- All Contracts and all environmental and other governmental (whether federal, tribal, state or local) permits, permissions, licenses, orders, authorizations, franchises and related instruments or rights to the extent the aforementioned can be assigned and to the extent relating to the ownership, operation or use of the Interests, Wells, Equipment, Key Facilities, Hydrocarbons, Easements and Surface Agreements (“Permits”).
		
	(h)
	Files and Records  

 - All of the files, records and data directly relating to the items and interests described in Section 2.1(a) through Section 2.1(g) above including, without limitation, land and lease files, well files, title records including abstracts of title, title opinions, title insurance reports/policies, property ownership reports, division order and right-of-way files, contracts, production records, all logs including electric logs, core data, pressure data and decline curves and graphical production curves, operational records, technical records, production and processing records, and contract files, and all related materials in the possession of Sellers, less and except the following (the “Excluded Records”) (i) the general corporate files and records of Sellers insofar as they relate to Sellers’ business generally and are not required for the future ownership or operation of the Assets, (ii) all legal files and records (other than legal files and records included in, or are part of, the above-referenced files and records), (iii) Sellers’ federal or state income, franchise or margin tax files and records, (iv) employee files, (v) reserve evaluation information or economic projections (other than reserve evaluation or economic projection materials and files previously made available to Buyer), (vi) records relating to the sale of the Assets, including competing bids, (vii) proprietary data, information and data under contractual restrictions on assignment or disclosure, (viii) privileged information, (ix) intellectual property, (x) seismic, geophysical, geological or other similar information or data, or (xi) any files or records regarding interpretation of geological and/or geophysical data, and engineering analysis, or (xii), any other files or records to the extent constituting Retained Assets.  All of the above files, records and data, save and except the Excluded Records, are collectively referred to herein as the “Records”.
		
	(i)
	A license in respect of the seismic survey data owned by Seller, only to the extent covering any of the lands to which the Leases are currently in force and effect, together with a “halo” or extension of 1/4th of a mile beyond the boundaries of such lands (all to the extent existing), which shall be a non-exclusive license to hold and use the data, indefinite in term, with such license, as to data relating to a particular property, transferable to the successors in title to the interests acquired under this Agreement in the particular property, and otherwise containing mutually agreed terms (the “Seismic License”); 

		
	1.
	Retained Assets

		
	•
	 - Notwithstanding anything to the contrary in Section 2.1(a) through Section 2.1(h) or elsewhere herein, the Assets do not include the following (collectively, the “Retained Assets”):  

		
	(a)
	All rights and interests of Sellers (i) under any policy or agreement of insurance or indemnity, (ii) under any bond or (iii) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events related to, or damage to or destruction of, the Assets, or any part or portion thereof, occurring or accrued prior to the Effective Time;

		
	(b)
	All claims of Sellers for refunds or loss carry forwards with respect to (i) production, severance or any other taxes attributable to the Assets for any period prior to the Effective Time, (ii) income or franchise taxes or (iii) any taxes attributable to the Retained Assets;

		
	(c)
	All hydro-carbon production from or attributable to the Assets with respect to all periods prior to the Effective Time, and all proceeds, income, revenues, claims, refunds or other benefits (including any benefit attributable to any current or future laws or regulations in respect of “royalty relief” or other similar measures) not otherwise enumerated above, prior to the Effective Time as well as any security or other deposits made, attributable to (i) the Assets for any period prior to the Effective Time, or (ii) any Retained Assets;

		
	(d)
	All documents and instruments of Sellers relating to the Assets that may be protected by an attorney-client or attorney-work product privilege; 

		
	(e)
	All audit rights arising under any of the Contracts or otherwise with respect to any period prior to the Effective Time or to any Retained Assets; 

		
	(f)
	The Excluded Records; and

		
	(g)
	Those items more particularly identified and described on Schedule 2.2(g)hereto. 

		
	2.
	Third Party Owners

		
	(a)
	KAREN M. WALTER, JOHN V. WALTER, Individually and as Trustee of the trusts created under the last will and testament of ANGES MARIE WALTER, Deceased, CRAIG WALTER, KIMBERLY WALTER, J. BLAKE WALTER, Trustee of THE J. BLAKE WALTER TRUST, J. BRIAN WALTER, Trustee of THE J. BRIAN WALTER TRUST, J. CRAIG WALTER, Trustee of the J. CRAIG WALTER 

TRUST, and KENT FOURET are third parties, all of whom are identified in Exhibit “G” as owning interests in the Assets (the “Third Party Owners”). 
		
	(b)
	This Agreement contemplates, and the Purchase Price set forth in Section 3 below is based upon, all of the Third Party Owners electing to have all of their ownership interests in the Assets conveyed to Buyer under this Agreement; provided, however, and notwithstanding the foregoing, the overriding royalty interest of one-half of one percent (0.5%) to which Kent Fouret is entitles to the Undeveloped Leases covering Tracts 1 through Tract 5 in Exhibit “A-2” are not covered by this Agreement. Kent Fouret has no overriding royalty interest in the Undeveloped Leases covering Tract 6 in Exhibit “A-2”.

		
	3.
	Participation of Third Party Owners

		
	(a)
	The Third Party Owners shall utilize Exhibit “F-1” to elect to participate in the sale under this Agreement, or, alternatively, the Third Party Owners shall utilize Exhibit “F-2” to elect not to participate in the sale under this Agreement.  The elections to be made by the Third Party Owners are herein called the “Election Agreements”. 

		
	(b)
	Promptly after the execution of this Agreement WEC shall deliver a copy of this Agreement to each Third Party Owner informing such persons of the opportunity to elect to sell all of their respective interests in the Assets to Buyer under this Agreement, and providing such persons with the appropriate Election Agreements to allow such persons to make their respective elections. 

		
	(c)
	Not later than 5:00 p.m. CDT on Monday, August 1, 2016 (the “Third Party Notice Date”), WEC shall deliver to Buyer a copy of the Election Agreements having been executed by the Third Party Owners.  The Third Party Owners electing to participate in the sale are herein referred to as the “Participating Third Party Owners”.  The Third Party Owners who elect not to participate in the sale are herein referred to as the “Non-Participating Third Party Owners”.  The interests of the Non-Participating Third Party Owners shall be deemed excluded from this Agreement (“Excluded Third Party Owner Interests”).  Any Third Party Owner who fails to timely execute and deliver an Election Agreement on or before the Third Party Notice Date shall be deemed to be a Non-Participating Third Party Owner.  In addition to delivering to Buyer copies of the Election Agreements on or before the Third Party Notice Date, WEC shall also deliver to Buyer in writing a summary report of the Participating Third Party Owners, the Non-Participating Third Party Owners and the Excluded Third Party Owner Interests, if any, certifying to Buyer the Net Revenue Interest that comprise the Excluded Third Party Owner Interests.  

		
	(d)
	If not all Third Party Owners elect to participate in the sale, then Buyer, by written notice to Sellers, delivered not later than 5:00 p.m. CDT on Friday, August 5, 2016, may elect to terminate its obligation to purchase the Assets under this Agreement.  If Buyer does not elect to terminate its purchase under this Agreement, then the Excluded Third Party Owner Interests shall cause a direct and full reduction in the Purchase Price by the Purchase Price attributable to the Excluded Third Party Owners Interest as though the Excluded Third Party Owner Interests are Title Defects and a Title Defect Property, as set forth under the applicable provisions below; but, however, Sellers shall have no right to cure such deemed Title Defects.  The deemed Title Defect Amount caused by the Excluded Third Party Owner Interests shall not be subject or applicable to the Aggregate Defect Deductible.  

		
	(e)
	Per the terms of Section 10.5 below, the originally executed copies of the Election Agreements shall be delivered to Buyer at Closing.

		
	(f)
	All of right, title and interest of Sellers and the Participating Third Party Owners in the Assets, less and except the Retained Assets, and less and except the Excluded Third Party Owner Interests, shall be herein referred to as the “Sale Interests.”

		
	(g)
	Buyer is directed to rely upon the representation and covenants set forth in the Election Agreements, including the directive to deliver to WEC all payments to be made by Buyer under this Agreement. 

		
	(h)
	Buyer is directed to rely upon the Participating Third Party Owners designation of WEC as their respective agent and attorney in fact to act for them as to all matters under this Agreement, as expressed in the Election Agreements. 

		
	(i)
	Buyer’s duty to close with Sellers is a condition to Buyer’s duty to close under the Election Agreement of any Participating Third Party Owner.  Any Participating Third Party Owner’s duty to close under its Election Agreement is a conditioned upon Sellers’ duty to close under this Agreement.

		
	(j)
	In the event Kent Fouret executes and Election Agreement, and becomes a Participating Third Party Owner under this Agreement, such Election Agreement shall be deemed to cover only his interests in the Leases described in Exhibit A-1, and shall be deemed not to cover the overriding royalty interest to which he is entitled in the Undeveloped Leases covering Tract 1 through Tract 5 in Exhibit “A-2”.

ARTICLE 3

		
	.
	

		
	.
	PURCHASE PRICE AND ALLOCATION

		
	1.
	Base Purchase Price 

- Buyer agrees to pay, for the Sale Interests, the total sum of Nineteen Million Three Hundred Thousand Dollars ($19,300,000.00) (“Base Purchase Price”) to be paid by direct bank deposit or wire transfer in same day funds at Closing, payable to WEC, for and on behalf of the Sellers and the Participating Third Party Owners, subject only to the price adjustments set forth in this Agreement.  
		
	2.
	Performance Deposit and Payment 

- As evidence of good faith, Buyer has deposited or is depositing with WEC, at the time of the execution of this Agreement, a performance deposit equal to five percent (5%) of the Base Purchase Price  ($965,000.00) (the “Deposit”), which Deposit shall be non-interest bearing and non-refundable except as provided herein.  In the event Closing occurs, the Deposit shall be applied to the Base Purchase Price to be paid at Closing, subject to the other adjustments thereto as set forth in this Agreement.  If Closing does not occur and the Agreement is terminated, then the Deposit shall be retained by Sellers or paid to Buyer, as provided in Article 18 below.  
		
	3.
	Adjustments to the Base Purchase Price 

- The Base Purchase Price shall be adjusted as follows:
		
	(a)
	Adjustments for Out-of-Pocket Costs.  The Purchase Price is to be inclusive of the actual out-of-pocket costs incurred by Sellers in the acquisition of such leases (e.g. bonus fees paid to the mineral owners, landman fees, and attorney fees) for the Undeveloped Leases (the “Out-of-Pocket Costs”).  Exhibit C-2 contains a schedule of out the Out-of-Pocket Costs incurred (invoices received) by Sellers as of July 20, 2016.  The leasing activity of Sellers for Tract 1 through Tract 5 referenced in Exhibit “A-1” has been concluded by Sellers, and Seller’s confirm that the Out-of-Pockets Costs incurred are included in Exhibit “C-2.”  On the other hand, the leasing activity of Sellers for Tract 6 referenced in Exhibit “A-2” is ongoing, and Out-of-Pocket Costs have been incurred after the effective date of Exhibit “C-2,” and will hereafter be incurred by Sellers.  The Out-of-Pocket Costs incurred after the effective date of Exhibit “C-2” are to be to an upward adjustment to the Base Purchase Price.  Upon request Sellers shall advise Buyer of any additional Out-of-Pocket Costs not reflected in Exhibit “C-2.” The Out-of-Pocket Costs are subject to Buyer’s review.  In the event such costs are overstated, or understated, by Sellers, the Base Purchase Price shall be increased, or decreased, as the case may be, by any understatement or overstatement, which adjustments shall be made in the Closing Settlement Statement or the Final Settlement Statement, as the case may be.

		
	(b)
	Upward Adjustments - In addition to Section 3.3(a) above, the Base Purchase Price shall be adjusted upward for the following, without duplication:

		
	(i)
	all production expenses, operating expenses, operated and non-operated overhead charges and capital expenditures paid or incurred by Sellers in connection with the ownership and operation of the Assets, including, but not limited to, lease option or extension payments, attributable to the periods from and after the Effective Time (including, without limitation, royalties and taxes attributable to Hydrocarbons produced and saved from and after the Effective Time, and pre-paid charges) (the fixed overhead charges currently charged to the joint on the Wells by WEC as operator  shall continue to be so charged by WEC to the joint account for the adjustment period; in this respect WEC shall be entitled to receive the fixed overhead charges for the adjustment period, proportionally reduced for any period less than a full calendar month);  

		
	(ii)
	all proceeds attributable to the sale of Hydrocarbons from the Assets received by Buyer, and all other income and benefits received by Buyer, attributable to production, ownership and operation of the Assets prior to the Effective Time (net of royalties, overriding royalties and other burdens attributable to the Sale Interests’ share of production not otherwise accounted for hereunder);

		
	(iii)
	all positive adjustments, if any, regarding Additional Interests, as provided in Section 7.2;

		
	(iv)
	to the extent the Assumed Imbalances reflect an underbalanced (or under-produced or under-received balance) position of the Sellers as of the Effective Time, all adjustments regarding such underbalanced Assumed Imbalances in accordance with the provisions of Section 13.5;

		
	(v)
	all adjustments for oil in storage above the pipeline connection, as provided in Section 13.1; 

		
	(vi)
	adjustments for over-delivered Pipeline Imbalances (volumes owed to Sellers) as provided in Section 13.6;

		
	(vii)
	all royalty overpayment amounts and/or future deductions as royalty offsets associated with the Assets as of the Effective Time;

		
	(viii)
	all fees charged to third parties but for which payment has not been collected by Sellers for services provided on or related to any Key Facility from and after the Effective Time; and

		
	(ix)
	any other upward adjustments to the Base Purchase Price specified in this Agreement.

		
	(c)
	Downward Adjustments - In addition to Section 3.3(a) above, the Base Purchase Price shall be adjusted downward for the following, without duplication:

		
	(i)
	except as otherwise provided in this Agreement, all production expenses, operating expenses, operated and non-operated overhead charges and other costs under applicable operating agreements (or other contracts, pooling orders, or other similar agreements) and other expenses, costs and charges paid or incurred by Buyer in connection with the Assets attributable to periods prior to the Effective Time, including, without limitation, taxes, capital expenses and other costs;

		
	(ii)
	except as otherwise provided in this Agreement, all proceeds attributable to the sale of Hydrocarbons and all other income and benefits received by Sellers and attributable to the production, operation or ownership of the Assets on or after the Effective Time (net of royalties, overriding royalties (other than overriding royalties that are conveyed as part of the Assets) and other burdens on Buyer’s share of production not otherwise accounted for hereunder);

		
	(iii)
	all adjustments regarding Title Defects, in accordance with the provisions of Article 7;

		
	(iv)
	all adjustments regarding Environmental Defects, in accordance with the provisions of Article 8;

		
	(v)
	all adjustments regarding exercised Preferential Purchase Rights, as contemplated in Article 9;

		
	(vi)
	all adjustments regarding Casualty Defects, in accordance with the provisions of Article 16;

		
	(vii)
	to the extent the Assumed Imbalances reflect an overbalanced (or over-produced or over-received balance) position of Seller as of the Effective Time regarding the Assets, all adjustments regarding such overbalanced Assumed Imbalances, in accordance with the provisions of Sections 13.5;

		
	(viii)
	adjustments for under-delivered Pipeline Imbalances (volumes owed by Sellers), as provided in Section 13.6;

		
	(ix)
	an amount equal to the amounts held in the Suspense Accounts as of the Closing, as contemplated in Section 11.5; 

		
	(x)
	all fees charged to third parties and for which payment has been collected by Sellers for service provided on or related to any Key Facility from and after the Effective Time; and

		
	(xi)
	any other downward adjustments to the Base Purchase Price as specifically provided for under the terms of this Agreement.  

		
	4.
	Allocation of Base Purchase Price 

- Sellers and Buyer agree that the Base Purchase Price shall be allocated among the Assets as set forth on the attached Exhibit “C-1 - Wells” and Exhibit “C-2 - Undeveloped Leases” (the “Allocated Values”) for the purpose of (i) providing notices, or obtaining waivers, of any Preferential Purchase Rights affecting any Asset(s), (ii) determining the value of a Title Defect and (iii) handling those instances for which the Base Purchase Price is to be adjusted.  

ARTICLE 4

		
	.
	

		
	.
	ACCESS TO ASSETS AND DATA; DISCLAIMERS; GOVERNMENTAL REVIEWS

		
	1.
	Access 

- Pursuant and subject to the terms and provisions of that certain Memorandum of Understanding entered into by and between Buyer and Sellers dated June 27, 2016 (the “Memorandum”), Sellers shall provide Buyer and Buyer’s authorized representatives, at any reasonable time(s) before the Closing, (i) reasonable physical access, at Buyer’s sole risk, cost and expense, to the Assets that are operated by Sellers to allow Buyer to conduct on-site environmental site assessments of the Assets in the presence of Sellers’ representatives (which assessments shall not include sampling, boring, drilling or other invasive investigation activities, or any “Phase II” environmental assessment, without Sellers’ prior written consent), to the extent Sellers have the right to grant such access for such purpose; and (ii) access to the Records and other Assets, to the extent such data and records are in Sellers’ or their representatives’ possession and relate to the Assets, insofar as Sellers may do so without (i) violating any legal constraint or confidentiality obligation to a third person (provided that Sellers shall use all commercially reasonable efforts to obtain any necessary waivers of such obligations to allow disclosure of any Records, and Sellers shall advise Buyer of the type of Records held back pending such requested waivers) or (ii) waiving any attorney/client privilege; provided, however, Sellers shall not provide access to any Excluded Records, and Sellers shall have no obligation to provide Buyer access to any interpretive or predictive data or information which Sellers consider confidential or proprietary or which Sellers believe in good faith it cannot provide Buyer because of third-party restrictions.  
In connection with any on-site inspections, Buyer agrees to not unreasonably interfere with the normal operation of the Assets and further agrees that under no circumstances shall it perform any invasive tests of any nature on the Assets without the prior express written consent of Seller.  In connection with granting such access, and except to the extent that such claims are caused by the gross negligence of Sellers, Buyer waives and releases all claims against Seller Group (as defined in Section 15.2) for injury to, or death of persons, or damage to property INCURRED, HOWSOEVER CAUSED, in connection with the performance of this diligence and Buyer SHALL indemnify, defend and hold harmless Seller Group from and against all such claims.
		
	2.
	Confidentiality Obligations

		
	(a)
	Prior to the Closing, and thereafter, if Closing does not occur, Buyer shall maintain as confidential all information made available to it under Section 4.1 which is not otherwise currently in Buyer’s possession or control and which is not otherwise generally available to the public, and shall cause its officers, employees, representatives, consultants and advisors to maintain all such information confidential. 

		
	(b)
	For a period of one (1) year from and after the Closing and except as otherwise required by any requirements of law, Sellers shall maintain all information relating to and with respect to the Assets confidential and otherwise to comply in all respects with, and to cause its officers, employees, representatives, consultants and advisors to maintain all information relating to the Assets confidential; provided, however, that the information subject to such confidentiality restrictions shall not include information that is or becomes generally available to the public other than as a result of disclosure by Sellers or by any member of Seller Group.

		
	3.
	Disclaimer 

- Buyer specifically understands and acknowledges the following:
		
	1.
	Title - Subject to the other provisions contained in this Agreement, title to the Sale Interests shall be transferred and conveyed from Sellers and the Participating Third Party Owners to Buyer at Closing with a “by, through and under” warranty of title through the Effective Time, and shall otherwise be conveyed in accordance with the terms of this Agreement and the Conveyances.  

		
	2.
	Disclaimer of Warranty - EXCEPT AS EXPRESSLY PROVIDED FOR OTHERWISE IN THIS AGREEMENT, OR IN THE CONVEYANCES, SELLERS AND THE PARTICIPATING THIRD PARTY OWNERS EXPRESSLY DISCLAIM AND NEGATE ANY REPRESENTATION, COVENANT OR WARRANTY, EXPRESS OR IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE, RELATING TO THE TITLE OR CONDITION OF THE ASSETS AND ANY PERSONAL PROPERTY, EQUIPMENT, FIXTURES AND ITEMS OF MOVABLE PROPERTY COMPRISING ANY PART OF THE ASSETS, INCLUDING (i) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR ANY PARTICULAR PURPOSE OR WARRANTY OF MERCHANTABILITY; (ii) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS; (iii) ANY RIGHTS OF BUYER UNDER APPLICABLE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE 

PRICE; (iv) ANY CLAIM BY BUYER FOR DAMAGES BECAUSE OF DEFECTS OR OTHER VICES, WHETHER KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, LATENT OR PATENT; (v) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT OR INFRINGEMENT OF ANY OTHER INTELLECTUAL PROPERTY RIGHT; (vi) ANY IMPLIED OR EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT INCLUDING, WITHOUT LIMITATION, NATURALLY OCCURRING RADIOACTIVE MATERIAL OR ASBESTOS, OR PROTECTION OF THE ENVIRONMENT OR HEALTH; OR (vii) ANY IMPLIED OR EXPRESS WARRANTY REGARDING TITLE TO ANY OF THE ASSETS.  UPON CLOSING, IT IS THE EXPRESS INTENTION OF BUYER, SELLERS AND THE PARTICIPATING THIRD PARTY OWNERS THAT, EXCEPT AS EXPRESSLY PROVIDED FOR OTHERWISE IN THIS AGREEMENT, OR IN THE CONVEYANCES, THE PERSONAL PROPERTY, EQUIPMENT, FIXTURES AND ITEMS AND THE CONDITION OF THE ASSETS ARE BEING CONVEYED TO BUYER “AS IS, WHERE IS,” WITH ALL FAULTS, AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR AND BUYER WAIVES ANY CLAIM(S) FOR BREACH OF WARRANTY UNDER THE CONVEYANCES, WHICH WERE NOT ASSERTED BY BUYER IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT.  AS ONE OF ITS CONDITIONS TO CLOSING, BUYER ACKNOWLEDGES, AGREES AND REPRESENTS TO SELLERS AND THE PARTICIPATING THIRD PARTY OWNERS THAT AS OF CLOSING BUYER WILL HAVE BEEN GIVEN THE OPPORTUNITY TO MAKE OR CAUSE TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE.  FURTHERMORE, SELLERS AND THE PARTICIPATING THIRD PARTY OWNERS EXPRESSLY DISCLAIM AND NEGATE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AND IN NO WAY GUARANTEE ANY RATES, FEES OR PRICING RECEIVED AND/OR BARGAINED FOR BY SELLERS WITH ANY THIRD-PARTY RELATED TO THE KEY FACILITIES.    
		
	3.
	Additional Disclaimer - EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN THIS AGREEMENT OR IN THE CONVEYANCES, SELLERS AND THE PARTICIPATING THIRD PARTY OWNERS HEREBY EXPRESSLY NEGATE AND DISCLAIM, AND BUYER HEREBY WAIVES AND ACKNOWLEDGES THAT SELLERS AND PARTICIPATING THIRD PARTY OWNERS HAVE NOT MADE AND BUYER HAS NOT RELIED UPON, ANY WARRANTY, REPRESENTATION OR COVENANT, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OR MATERIALITY OF ANY FILES, RECORDS, DATA, INFORMATION, OR MATERIALS (WHETHER WRITTEN, ORAL OR OTHERWISE) HERETOFORE OR HEREAFTER FURNISHED TO BUYER IN CONNECTION WITH THE ASSETS, OR AS TO THE QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE ASSETS OR THE ABILITY OF THE ASSETS TO PRODUCE HYDROCARBONS.  ANY AND ALL SUCH FILES, RECORDS, DATA, INFORMATION, AND OTHER MATERIALS FURNISHED TO BUYER, WHETHER MADE AVAILABLE PURSUANT TO THIS ARTICLE 4 OR OTHERWISE, ARE PROVIDED TO BUYER AS A CONVENIENCE AND ACCOMMODATION, AND ANY RELIANCE UPON OR USE OF THE SAME SHALL BE AT BUYER’S SOLE RISK.

		
	4.
	Governmental Reviews

		
	•
	 - Sellers and Buyer shall each in a timely manner make (or cause its applicable affiliate to make) (i) all required filings, including filings required under the Hart-Scott-Rodino Act, and prepare applications to and conduct negotiations with, each Governmental Authority as to which such filings, applications or negotiations are necessary or appropriate in the consummation of the transaction contemplated hereby, and (ii) provide such information as the other may reasonably request in order to make such filings, prepare such applications and conduct such negotiations.  Each Party shall cooperate with and use all reasonable efforts to assist the other with respect to such filings, applications and negotiations.  Buyer shall bear the cost of all filing or application fees payable to any Governmental Authority with respect to the transaction contemplated by this Agreement, regardless of whether Buyer, Seller, or any affiliate of any of them is required to make the payment.

		
	•
	

ARTICLE 5

		
	.
	

		
	.
	SELLERS’ REPRESENTATIONS

Each Seller, as to itself, represent the following to Buyer as of the Execution Date:
		
	1.
	Existence 

- Seller is an entity duly organized and validly existing and in good standing under the laws of its state of formation, and is duly qualified to carry on its business and to own and operate oil and gas properties in each jurisdiction in which the Assets owned by it are located.    
		
	2.
	Authority 

- Seller has all requisite power and authority to carry on its business as presently conducted, to enter into this Agreement and to perform its obligations under this Agreement.  Furthermore, as of the Execution Date, Seller has obtained all necessary board of directors and/or such other internal approvals as are required under its own corporate governance requirements to close this transaction.  This Agreement constitutes the legal, valid and binding obligation of Seller and is enforceable against Seller in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application with respect to creditors, (ii) general principles of equity, and (iii) the power of a court to deny enforcement of remedies generally based upon public policy.
		
	3.
	Compliance 

- To Seller’s knowledge and except as set forth on Schedule 5.4, all of the Assets, as owned and operated by Seller, are in material compliance with all applicable laws, rules, regulations, ordinances and orders of all Governmental Authorities having jurisdiction.  
		
	4.
	Payment of Royalties 

- To Seller’s knowledge, all royalties and in-lieu royalties with respect to the Assets which accrued or are attributable to the period prior to the Effective Time have been properly and fully paid, or are included within the Suspense Accounts being conveyed to Buyer pursuant to Section 11.5. 
		
	5.
	Taxes

 - To Seller’s knowledge, all ad valorem, property, production, severance and similar taxes with respect to the Assets that are due based upon or measured by the ownership of any Assets, the production or removal of Hydrocarbons therefrom or the receipt of proceeds therefrom have been properly and timely paid.
		
	6.
	Material Contracts

 - Except as set forth on Schedule 5.6, as of the Execution Date, (a) each Material Contract is in full force and effect, (b) Seller has not received written notice of its breach or default under any Material Contract, and (c) to Seller’s knowledge, no other party to any such Material Contract is in breach thereof or in default thereunder.
		
	7.
	Permits 

- To Seller’s knowledge and except as set forth on Schedule 5.7, as of the Execution Date, (a) Seller has not received written notice of a default under any Permit, and (b) each Permit is in full force and effect.
		
	8.
	Litigation and Claims

 - Except as set forth on Schedule 5.8, no suit, action, demand, proceeding, lawsuit or other litigation is pending or, to Seller’s knowledge, threatened with respect to Seller that could reasonably be expected to materially and adversely affect the ownership, operation or value of the Assets.
		
	9.
	Sale Contracts

 - Except for (a) contracts governing Seller’s sale of Hydrocarbons in the ordinary course, (b) the disposition in the ordinary course of equipment no longer suitable for oil and gas field operations or (c) this Agreement, there are no material contracts or options outstanding for the sale, exchange or transfer of Seller’s interest in the Assets or any portion thereof.
		
	10.
	Notices

 - Except as set forth on Schedule 5.10, to Seller’s knowledge, (a) operation of the Assets is not the subject of any pending material regulatory compliance or enforcement actions, and (b) Seller has not received written notice with respect to operation of the Assets, which (i) has not heretofore been complied with, in all material respects, regarding 

any material violation of applicable laws, rules or regulations of any Governmental Authority with jurisdiction therein, or (ii) that remains uncured, and that would, individually or in the aggregate, have a material adverse effect on the Assets (taken as a whole).
		
	11.
	Take-or-Pay

 - To Seller’s knowledge, Seller is not obligated, under a take-or-pay or similar arrangement, to allow its share of the Hydrocarbons to be sold, without receiving full payments at the time of delivery in an amount that corresponds to its  net revenue interest in the Hydrocarbons attributable to any Lease or Well described in Exhibits “A” or “B” (other than with regard to certain obligations relative to Assumed Imbalances or Pipeline Imbalances, as contemplated under Sections 13.5 and 13.6, respectively).
		
	12.
	Timely Payment

 - To Seller’s knowledge, Seller has paid its share of all costs payable by it under the Leases and the Material Contracts as of the Effective Time, except those included in the Suspense Accounts or being contested in good faith.
		
	13.
	Imbalances

 - To Seller’s knowledge, and except as set forth on Schedule 13.5, there are no gas or other Hydrocarbon production imbalances existing as of the Effective Time with respect to any of the Wells.
		
	14.
	Outstanding Obligations

 - Except as otherwise described in Schedule 5.14, to Seller’s knowledge, as of the Execution Date, there are no outstanding authorizations or other written commitments or proposals to conduct operations on the Assets for expenditures in excess of Twenty-Five Thousand and No/100 U.S. Dollars ($25,000.00), net to the interests of all Sellers .
		
	15.
	Brokers

 - Seller has incurred no liability, contingent or otherwise, for broker’s or finder’s fees in respect of this Agreement or the transaction contemplated hereby for which Buyer shall have any responsibility whatsoever.
		
	16.
	Bankruptcy

 - There are no bankruptcy, reorganization or arrangement proceedings pending, being contemplated by, or, to the knowledge of Seller, threatened against any of the Sellers.
		
	17.
	Consents

 - Except as set forth on Schedule 5.17 and other than Preferential Purchase Rights, to the knowledge of Seller, and with the exception of those waivers, consents to assign, approvals or other similar rights customarily obtained from Governmental Authorities after Closing, there are no waivers, consents to assign, approvals or similar rights required in connection with the conveyance of the Assets from Seller to Buyer under the terms of this Agreement.
		
	18.
	Preferential Purchase Rights

 - Except as set forth on Schedule 5.18, to the knowledge of Seller, there are no Preferential Purchase Rights to which the Assets are subject, which would be triggered by this Agreement, and to which a notice would be required under the terms thereof due to the Parties entering into this Agreement.
		
	19.
	Mortgages and Other Instruments - There is no lien or security interest in or on any Asset securing indebtedness for borrowed money that has been created by, through or under Seller or any of its affiliates that burden any of the Assets.

		
	5.20
	Seismic Data - Seller is a joint owner of the Seismic Data and has the right to grant the License, together with the other Sellers, without consent of any third parties.

ARTICLE 6

		
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	.
	BUYER’S REPRESENTATIONS

Buyer represents the following to Sellers as of the Execution Date:
		
	1.
	Information 

- Buyer represents that it is a sophisticated purchaser, knowledgeable in the evaluation of oil and gas properties of the nature being acquired by Buyer hereunder and has performed due diligence on the Assets and performed all necessary tasks involved in evaluating the Assets, to the Buyer’s complete satisfaction.  EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, BUYER REPRESENTS AND WARRANTS THAT 

IT HAS FULLY INSPECTED THE ASSETS AND UPON CLOSING, BUYER WILL ACCEPT THE SALE INTERESTS AT CLOSING IN THEIR PRESENT CONDITION, “AS IS AND WHERE IS AND WITH ALL FAULTS.”  BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT AND IN THE CONVEYANCES, SELLERS AND THE PARTICIPATING THIRD PARTY OWNERS HAVE MADE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WRITTEN, ORAL, OR OTHERWISE, AS TO THE ACCURACY OR COMPLETENESS OF THE BACKGROUND MATERIALS OR ANY OTHER INFORMATION RELATING TO THE ASSETS FURNISHED BY OR ON BEHALF OF SELLER OR ON BEHALF OF THE PARTICIPATING THIRD PARTY OWNERS OR TO BE FURNISHED TO BUYER OR ITS REPRESENTATIVES, INCLUDING, WITHOUT LIMITATION, SELLERS’ INTERNAL APPRAISALS AND/OR INTERPRETIVE DATA.  Buyer acknowledges and affirms that it has relied and will rely solely upon Sellers’ representations, warranties or covenants expressed in this Agreement and on its own independent analysis, evaluation and investigation of, and judgment with respect to, the business, economic, legal, tax or other consequences of this transaction, including its own estimate and appraisal of the extent and value of the oil, natural gas, natural gas liquids, and other reserves associated with the Assets.    
		
	2.
	Knowledge and Experience 

- Buyer (i) is engaged in the business of exploring for and/or producing oil and gas or other valuable minerals as an ongoing business and (ii) is purchasing the Sale Interests for its own account for investment purposes and not with the intent to resell the Sale Interests in violation of any federal or state securities laws.  Buyer is an experienced and knowledgeable investor in oil and gas properties, is knowledgeable with respect to the tax ramifications associated therewith and herewith, and has the financial and business expertise to fully evaluate the merits and risks of the transactions covered by this Agreement and has relied solely upon the basis of its own independent investigation of the Assets for all purposes (including the geologic and geophysical characteristics of the Assets, the estimated Hydrocarbon reserves recoverable therefrom, and the price and expense assumptions applicable thereto).  In acquiring the Sale Interests, Buyer is acting in the conduct of its own business and not under any specific contractual commitment to any third party, or any specific nominee agreement with any third party, to transfer to, or to hold title on behalf of, such third party, with respect to all or any part of the Sale Interests.  Buyer acknowledges that it has had the opportunity to seek the advice of persons it deemed appropriate concerning the consequences of the provisions of this Agreement and hereby waives any and all rights to claim that it is an unsophisticated investor in oil and gas properties.  The Sale Interests are being acquired for Buyer’s own account for the purpose of investment or consumption and not with a view to reselling or distributing the Sale Interests in violation of any securities registration or qualification requirements of any securities laws.
		
	3.
	No Warranty 

- Buyer acknowledges that, except as expressly provided for otherwise in this Agreement or in the Conveyances, Sellers and the Participating Third Party Owners have not made any representation, covenant or warranty, express or implied, at common law, by statute or otherwise, relating to the title or condition of the Assets, including, without limitation, any implied or express warranty of merchantability, of fitness for any particular purpose, or of conforming to models or samples of materials as to any personal property, fixtures or structures conveyed pursuant to this Agreement.  Buyer further acknowledges that no Claim(s) may be asserted nor may any proceeding be commenced by Buyer against Sellers arising out of or related to a breach of any warranty of Sellers pursuant to this Agreement (including any warranty of Sellers set forth in the Conveyances) for which Buyer failed to deliver a timely written notice to Sellers in accordance with the terms and conditions of this Agreement, and that any such Claim(s) shall be deemed to have been waived by Buyer under the terms of Section 7.3 below.
		
	4.
	Existence 

 - Buyer is a limited liability company duly formed, validly existing and in good standing under the laws of the state of Delaware, and is duly qualified to carry on its business in the State(s) where the Assets are located.  
		
	5.
	Authority 

- Buyer has all requisite power and authority to carry on its business as presently conducted, to enter into this Agreement and to perform its obligations under this Agreement.  Furthermore, as of the Execution Date, Buyer has obtained all necessary board of directors and/or such other internal approvals as may be required under its own corporate governance requirements to close this transaction.  This Agreement constitutes the legal, valid and binding obligation of Buyer and is enforceable against Buyer in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application with respect 

to creditors, (ii) general principles of equity, and (iii) the power of a court to deny enforcement of remedies generally based upon public policy.  The execution, delivery and performance of this Agreement (and such documents) and the consummation of the transactions contemplated hereby (and thereby) do not violate, or conflict with, any material provision of Buyer’s governing documents or any material provisions of any agreement or instrument to which it is a party or by which it is bound, or any judgment, decree, order, statute, rule or regulation applicable to Buyer.  
		
	6.
	Liability for Broker’s Fees 

- Buyer has not incurred any liability, contingent or otherwise, for broker’s or finder’s fees relating to the transactions contemplated by this Agreement for which Sellers shall have any responsibility whatsoever.
		
	7.
	Bankruptcy 

- There are no bankruptcy, reorganization or arrangement proceedings pending, being contemplated by, or, to the knowledge of Buyer, threatened against Buyer.
		
	8.
	Qualification to Assume Operatorship 

- At Closing, Buyer will be qualified to own and assume operatorship of oil, gas and mineral leases, including the Assets, in all jurisdictions where the Assets are located, and the consummation of the transactions contemplated in this Agreement will not cause Buyer to be disqualified as such an owner or operator.  To the extent required by the applicable state, tribal and federal governmental bodies or agencies, Buyer currently has, and will continue to maintain, lease bonds, area-wide bonds, or any other surety bonds or insurance policies as may be required by, and in accordance with, any Governmental Authorities with jurisdiction over the ownership and/or operation of such Assets or any operating agreement.
		
	9.
	Consents

.  No consent, approval, authorization or permit of, or filing with or notification to, any Person is required for or in connection with the execution and delivery of this Agreement by Buyer or for or in connection with the consummation of the transactions and performance of the terms and conditions contemplated hereby by Buyer.
		
	10.
	Litigation

.  There is no suit, action, demand, proceeding, lawsuit or other litigation by any person or Governmental Authority pending or, to Buyer’s knowledge, threatened against Buyer that impedes or is likely to impede Buyer’s ability to consummate the transactions contemplated by this Agreement and to assume the liabilities to be assumed by Buyer under this Agreement.
ARTICLE 7

		
	.
	

		
	.
	TITLE

		
	1.
	Title Defects 

- Buyer shall notify WEC in writing of any Title Defect relating to any Well promptly after discovering the Title Defect but in no event later than than 5:00 p.m. CDT on Friday, August 5, 2016 (the “Due Diligence Period”).  For the purpose of this Agreement, a “Title Defect” shall mean a material deficiency which individually per Well exceeds Twenty-Five Thousand and No/100 U.S. Dollars ($25,000.00) or individually per Lease exceeds Twenty-Five Thousand and No/100 U.S. Dollars ($25,000.00) in one (or more) of the following respects (other than Permitted Encumbrances):
		
	(a)
	Adverse Claims - The title of Sellers and the Participating Third Party Owners as to all or part of a Well or Lease is subject to (i) an outstanding mortgage which is not released on or before Closing; (ii) a deed of trust which is not released on or before Closing; (iii) a lien or encumbrance which is not released on or before Closing, save and except the contractual liens set forth in the governing operating agreement; or (iv) a pending claim or cause of action in which a competing ownership interest in a Well or Lease is claimed or implied;

		
	(b)
	Decreased Net Revenue Interest - Sellers and the Participating Third Party Owners, in the aggregate, own less than the net revenue interest shown on Exhibit “G” for a particular Well; and

		
	(c)
	Increased Working Interest - Sellers and the Participating Third Party Owners, in the aggregate, own more than the working interest shown on Exhibit “G” for a particular Well without a proportionate increase in the corresponding net revenue interest shown on Exhibit “G”; 

provided, however, that no Title Defect shall be deemed to exist and/or be asserted by Buyer with respect to (i) any Well operated by Buyer (or any of its affiliates), or (ii) any Lease in which Buyer (or any of its affiliates) owns an interest, in each case, as of the Execution Date or at any point during the Due Diligence Period.
Notwithstanding the foregoing, there shall no Title Defects in connection with the Undeveloped Leases.  If Closing should otherwise occur under this Agreement, Buyer is obligated to acquire the Undeveloped Leases, without title objection, paying Sellers for their Out-of-Pockets Costs in connection with such Leases.
The Raymond No. 1 Well, located on the Raymond Lease described in Exhibit “A-1” is now shut-in. The Raymond Lease remains within its primary term.  No value is allocated to the Raymond No. 1 Well in Exhibit “C-1”.  Notwithstanding the foregoing, there shall no Title Defects in connection with the Raymond Lease.  If Closing should otherwise occur under this Agreement, Buyer is obligated to acquire the Raymond Lease, and the Raymond Well, without title objection.
The McAdams Lambert Unit No. 1 Well, located on the McAdams Lambert Unit, which unit comprises lands out of the McAdams Leases described in Exhibit “A-1” and lands out of the Lambert Tract Leases described in Exhibit “A-1”, is now shut-in.  No value is allocated to this Well in Exhibit “C-1”.  It is the belief of Sellers that the McLambert Tract Leases may have expired according to their terms.  There shall be no Title Defects in connection with the Lambert Tract Leases.  If Closing should otherwise occur under this Agreement, and Buyer acquires any interest in the McAdams Leases, then Buyer shall be obligated to acquire the McAdams Lambert Unit No. 1 Well, without title objection regarding the McAdams Lambert Unit or the Lambert Tract Leases.
There are three Key Facilities servicing the Wells and Leases, described in the Schedules attached, and being the following:
(i)  Pipeline easement (921/90) servicing the Joe Young Lease and the various Joe Young Wells located on the leased premises of the Joe Young Lease, the Sisters Lease and the Sisters No. 2 Well located on the Sisters Lease; the Sims Lease and the Sims No. 1 and No. 2 Wells located on the Sims Lease; and the Young Boyd Oil Unit, and the Young Boyd Unit No. 1 Well located on this unit; 
(ii) Surface Use Agreement (1170/84) servicing the McAdams Lease and the McAdams Nos. 2, 3 and 4 wells located on this lease and the McAdams Lambert Unit 1 Well located on this lease, the Jimmy Fry Lease and the Fry No. 1 Well located on this lease, and Raymond Lease and the Raymond No. 1 Well located on this lease.
(iii) Pace 68-1 Well servicing the Pace Heirs Leases and the Pace Heirs Unit No. 1 Well located on such leases, and the 303X Well Leases and the Pace No. 303X Well located on such leases.
Title examination relating to any Well shall be inclusive of any easements servicing such Well and the Key Facilities servicing such Well.  In this regard, any Title Defects relating to any easements and/or Key Facility shall be reported to Sellers in connection with the particular Well or Wells serviced by the easement or Key Facility. 
		
	2.
	Additional Interests 

- During the Due Diligence Period, Buyer shall promptly notify WEC in writing if Buyer determines (or is made aware of the possibility) that Sellers and the Participating Third Party Owners have (i) a lesser working interest (without a proportionate decrease in the corresponding net revenue interest) with respect to all or any part of any Well than shown on Exhibit “B”, or (ii) a greater net revenue interest with respect to all or any part of any Well than that set forth in Exhibit “B”, or (iii) the Out-of-Pocket Costs exceed the Allocated Value to the Undeveloped Leases set forth in Schedule C-2 (collectively, such items shall be referred to as an “Additional Interest”).  At any point during the Due Diligence Period, Sellers may notify Buyer in writing of any Additional Interest.
		
	3.
	Notices 

- Any Title Defect notice pursuant to Section 7.1 or Additional Interest notice pursuant to Section 7.2 shall include appropriate documentation to substantiate the applicable position and the estimated value of the Title Defect or Additional Interest.  To be effective, Buyer’s Title Defect notice or Sellers’ Additional Interest notice must be asserted in good faith, delivered in writing, and include (i) a description of the alleged Title Defect or Additional Interest as to the affected Lease or Well, (ii) the Allocated Value of the affected Well or Undeveloped Lease as well as the alleged amount of the Title Defect or Additional Interest being claimed in good faith, (iii) a brief description of the matter constituting the asserted Title Defect or Additional Interest and the basis for such Title 

Defect or Additional Interest, (iv) the computations for such Title Defect amount or Additional Interest amount, (v) to the extent then known by the claiming Party, the necessary curative for each Title Defect or documentation or evidence verifying such Additional Interest, and (vi) supporting documentation reasonably necessary  for the Party to whom such notice has been delivered (as well as any title attorney or examiner hired thereby) to verify the existence of such asserted Title Defect or Additional Interest.  If any such notice is not timely delivered, the claimant shall thereafter be deemed to have forever waived and shall have no right to assert such Title Defect or Additional Interest as the basis for an adjustment to the Base Purchase Price or make a Claim for any indemnity hereunder or pursuant to the Conveyances.
		
	4.
	Adjustments to Base Purchase Price 

- Upon timely delivery of a notice pursuant to Section 7.1 or 7.2, either by Buyer or by Sellers, Buyer and Sellers shall meet on or before Wednesday, August 10, 2016 and use their reasonable commercial efforts to agree upon the validity of any claims for Title Defects or Additional Interests and the amount of any Base Purchase Price adjustment using the following criteria:
		
	(a)
	Liquidated Charges - If the adjustment is based upon a lien, encumbrance, or other charge upon a Well, or the Lease or Leases on which such Well is located, or the easement or Key Facilities servicing such Well, which is liquidated in amount or which can be estimated with reasonable certainty, then the adjustment shall be the sum necessary to be paid to the obligee to remove the encumbrance from the affected Well, Lease or Leases, easement or Key Facility, but in no event will such adjustment exceed fifty percent (50%) of the Allocated Value of the affected Sale Interest(s).  For purposes of the foregoing, if a Title Defect affects multiple Sale Interests, the adjustment amount shall be deemed allocated between the multiple Sale Interests.

		
	(b)
	Ownership Variance - If the adjustment is based upon Sellers and the Participating Third Party Owners owning in the aggregate a lesser or greater net revenue interest with a corresponding proportionate lesser or greater working interest in a Well than that shown on Exhibit “B”, then the adjustment shall be proportionate to the amount allocated to the affected Well on Exhibit “C-1”.  If the adjustment is based upon a lesser or greater net revenue interest without a corresponding proportionate lesser or greater working interest in a Well than that shown on Exhibit “B”, then the Parties shall use their best efforts to agree upon a mutually acceptable Base Purchase Price adjustment based upon the Allocated Value for such Well as set forth on Exhibit “C-1”.  

		
	(c)
	Valuation of Title Defects and Additional Interests - If the adjustment is for an item other than as set forth in (a) or (b) above, Buyer and Sellers shall endeavor to mutually agree on the amount of the Base Purchase Price adjustment.  If the Parties cannot agree to the existence of a Title Defect or Additional Interests or the applicable adjustment, the matter shall be resolved in accordance with the dispute resolution provisions in Section 20.3.  Any such item shall be referred to as an “Open Defect”.  Notwithstanding any of the preceding provisions of this Article 7, all adjustments applicable to Title Defects or Additional Interests shall be made prior to Closing which Closing shall be extended until resolution of any disputes relating to the Title Defects or Additional Interests; provided, however, that if adjustments for alleged Title Defects, Environmental Defects, Casualty Defects and Open Defects do not, in the aggregate, exceed five percent (5%) of the Base Purchase Price, then Closing shall occur as to the other Assets that are not subject to the dispute (with the portion of the Assets subject to the dispute being excluded, and the Base Purchase Price reduced for the entire Allocated Values thereof) and Closing shall subsequently occur with respect to the Assets made the subject of the dispute within thirty (30) days following the final resolution of the dispute unless Sellers elect exclusion of the affected Assets.  For purpose of the foregoing, if an Open Defect applies to a Key Facility, then the Assets serviced by such Key Facility shall be deemed subject to the dispute and shall be excluded from Closing, and subject to the subsequent Closing following final resolution of the dispute.

Notwithstanding anything to the contrary herein, the amount of any Base Purchase Price adjustment for any Title Defect shall be determined without duplication of any costs or losses included in any other adjustments for Title Defects hereunder, or for which Buyer otherwise receives a downward adjustment in the Base Purchase Price.  For all Title Defects and Additional Interests, subject to the proviso of Section 7.1, Sellers shall (i) in the case of Title Defects, elect to either: (1) sell to Buyer the entire Well(s) or Lease(s) affected by the Title Defect but reduce the Base Purchase Price by the agreed upon amount associated with such Title Defect, (2) exclude from this transaction any Well or Lease affected by the Title Defect and reduce the Base Purchase Price for the entire Allocated Value of the Well(s) or Lease(s) so excluded, or (3) if the Asset is excluded from this transaction pursuant to clause (2) above and Sellers cure the Title Defect to Buyer’s reasonable satisfaction prior to one hundred eighty (180) days after Closing, Buyer shall purchase the said excluded Asset for its Allocated Value 

as of the Effective Time; or (ii) in the case of an Additional Interest, sell to Buyer the entire Well(s) affected by the Additional Interest at the original Allocated Value set forth on either Exhibit “C-1” attributable to such Wells increased by the agreed upon amount associated with such Additional Interest.
In regard to Buyer’s election to exclude set forth above, common ownership is considered essential for the following groups of Assets (each an “Asset Group”) because of common facilities and common infrastructure, and operational efficiencies:
Asset Group 1:  Joe Young Lease and the various Joe Young Wells located on the leased premises of Joe Young Lease (including the mineral interest in the leased premises of the Joe Young Lease); the Sisters Lease and the Sisters No. 2 Well located on the Sisters Lease; the Sims Lease and the Sims No. 1 and No. 2 Wells located on the Sims Lease; and the Young Boyd Oil Unit, and the Young Boyd Unit No. 1 Well located on this unit.
Asset Group 2:  The Brown Lease and the various Brown Wells located on the Brown Lease.
Asset Group 3:  The McAdams Lease and the McAdams Nos. 2, 3 and 4 Wells located on this lease and the McAdams Lambert Unit 1 Well located on this lease, the Jimmy Fry Lease and the Fry No. 1 Well located on the Jimmy Fry Lease, and the Raymond Lease and the Raymond No. 1 Well located on the Raymond Lease.
Asset Group 4:  Pace Heirs Leases and the Pace Heirs Unit No. 1 Well located on such leases, and the 303X Well Leases and the Pace No. 303X Well located on such leases.
Notwithstanding any terms in this Agreement to the contrary, any Sale Interest in an Asset Group shall not be conveyed under this Agreement unless all Sale Interests in the particular Asset Group are conveyed under this Agreement.  If any Sale Interest in an Asset Group is excluded by Buyer’s election under this Agreement, then all Assets in the particular Asset Group shall be deemed to be also excluded.
		
	5.
	Deductible for Title, Environmental, or Casualty Defects 

- Notwithstanding the provisions set forth above, no individual Title Defect, Environmental Defect, or Casualty Defect shall result in an adjustment to the Base Purchase Price unless the aggregate net value of the sum (as a deductible and not a threshold) of (a) all Title Defects, (b) all Environmental Defects agreed to by the Parties, and (c) Casualty Defects are greater than three percent (3%) of the Base Purchase Price (the “Deductible Amount”).  In such event, the Base Purchase Price on the Closing shall be adjusted by the aggregate net value of the sum of (a) all Title Defects, (b) all Environmental Defects and (c) Casualty Defects, which collectively exceed the Deductible Amount.  
		
	6.
	Termination Threshold for Defects 

- If, because of Title Defects, Environmental Defects, Open Defects and Casualty Defects, in the aggregate, the Base Purchase Price is to be adjusted downward by an amount exceeding five percent (5%) of the Base Purchase Price (the “Termination Threshold”) either Party may, upon written notice to the other Party, cancel this Agreement.
ARTICLE 8

		
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	ENVIRONMENTAL AND ENVIRONMENTAL INDEMNITY

		
	1.
	Acceptance of Environmental Condition 

- Buyer shall give WEC notice (an “Environmental Notice”) of any fact or circumstance that (i) indicates a violation of a currently existing Environmental Law associated with a Well or any Key Facility and (ii) was not disclosed to Buyer by any Seller prior to the execution of this Agreement (“Environmental Defect”).  For the purpose of this Agreement, an Environmental Defect shall mean: (i) a material deficiency which individually per Well exceeds Twenty-Five Thousand and No/100 U.S. Dollars ($25,000.00); or (ii) a material deficiency which individually exceeds Twenty-Five Thousand and No/100 U.S. Dollars ($25,000.00) with respect to any Key Facility and, in each case, complies with all of the following conditions precedent:
		
	(a)
	The Environmental Notice must be received by WEC as soon as reasonably practical after discovery of the Environmental Defect by Buyer, but in any event on or before 5:00 p.m. CDT on Friday, August 5, 2016, and thereafter any such claim shall be deemed to have been waived;

		
	(b)
	The Environmental Notice must be based on credible and probative evidence substantiated in good faith by Buyer’s environmental experts (which may include internal employees or personnel of Buyer, 

its affiliates or third parties) that shows it is more likely than not that there exists an Environmental Defect;
		
	(c)
	The evidence referred to in Section 8.1(b) must be fully described, substantiated in good faith by Buyer’s environmental experts, and in the case of documentary evidence, enclosed;    

		
	(d)
	The Environmental Notice must reasonably describe the remediation and/or restoration required to remedy the Environmental Defect, or the potential damages claimed or likely to be claimed by a third party (the “Cleanup”), each as recommended or estimated in good faith by Buyer’s environmental experts; and

		
	(e)
	To the extent practicable, the Environmental Notice must state Buyer’s good faith estimate of the amount of potential Loss to be incurred by Buyer as a result of the Environmental Defect.  For purposes of this Agreement, the term “Loss” shall include any estimated Cleanup, costs, losses, expenses, liabilities (including civil fines), damages, demands, suits, sanctions, reasonable fees and expenses of attorneys, technical experts and expert witnesses.

If Buyer does not provide WEC with an Environmental Notice within the period set forth above, then at Closing, Buyer shall be deemed to have accepted such Well(s) and/or the Key Facility(ies) in their current condition and to have forever waived Buyer’s right to assert an Environmental Defect with respect thereto.
		
	2.
	Remedy for Environmental Defects 

- If Buyer gives a valid Environmental Notice in accordance with Section 8.1, Sellers may provide for one of the remedies in Section 8.2(a) with respect to the Environmental Defect that is subject to such Environmental Notice, but each such remedy, and the aggregate of all remedies, shall be limited in accordance with Section 7.5, and shall be subject to termination under Section 7.6.  
		
	(a)
	Remedy -  If Buyer delivers a valid Environmental Notice to Sellers, Sellers, at their election, shall have the option of (i) remediating the Environmental Defect and resolving the Losses arising from such Environmental Defect to the reasonable satisfaction of Buyer or the appropriate state and federal agencies having jurisdiction, (ii) contesting the existence of an Environmental Defect or Buyer’s estimate of the amount of all Losses associated with the Environmental Defect pursuant to Section 8.2(c), (iii) paying Buyer’s good faith estimate of the amount of all Losses associated with the Environmental Defect in the form of a reduction to the Purchase Price (an “Environmental Adjustment”), or (iv) excluding the Well or, in the event of a Key Facility, excluding the Key Facility and the Wells and Leases serviced by the particular Key Facility pursuant to Section 8.2(b).

		
	(b)
	Exclusion of Affected Well or any Key Facility - At Sellers’ option, an exclusion adjustment may be made in an amount equal to the Allocated Value of the Well which is the subject of a valid Environmental Notice (in the event of a Key Facility, the Wells serviced by the Key Facility).  In such event Sellers shall retain the Well or the Key Facility and the Wells serviced by the Key Facility, and the Base Purchase Price shall be reduced by the Allocated Value of such Wells, as applicable.

		
	(c)
	Contested Environmental Defects - If Sellers contest the existence of any Environmental Defect or Buyer’s estimate of the Loss associated with such Environmental Defect, Sellers shall notify Buyer no later than 5:00 p.m. CDT on Tuesday, August 9, 2016, after Sellers’ receipt of the Environmental Notice.  The notice shall state the basis for Sellers’ contest of the Environmental Defect or the estimate of the Cleanup cost.  By no later than Wednesday, August 10, 2016, representatives of Sellers and Buyer, knowledgeable in environmental matters, shall meet in person or otherwise, and, prior to Closing, either: (i) agree to reject the Environmental Defect, in which case Buyer shall waive the Environmental Defect, or (ii) agree on the validity of the Environmental Defect and the estimated Loss, in which case Sellers shall have the options described in Section 8.2(a) (except the right to contest) and Section 8.2(b).  If Sellers and Buyer cannot agree on either option (i) or (ii) in the preceding sentence, the Environmental Defect or the estimated Loss subject to the Environmental Notice shall be resolved in accordance with the dispute resolution provisions set forth in Section 20.3.  Notwithstanding any of the preceding provisions of this Section 8.2(c), all Environmental Adjustments shall be made prior to Closing, which Closing shall be extended until resolution of any disputes relating to the Environmental Defects; provided, however, that if adjustments for alleged Title Defects, Environmental Defects, Casualty Defects and Open Defects do not, in the aggregate, exceed the Termination Threshold, then Closing shall occur as to the other Assets that are not subject to the dispute (with the portion of the Assets subject to the dispute being excluded, and the Base Purchase Price reduced for the entire Allocated Values thereof) and Closing shall subsequently occur with respect to the Assets made the subject of the dispute within thirty (30) days following the final resolution of the dispute unless Sellers elect exclusion of the affected Assets.  IT IS SPECIFICALLY UNDERSTOOD AND AGREED THAT ONCE AN ENVIRONMENTAL DEFECT HAS BEEN REMEDIATED AND THE LOSSES RELATED TO 

SUCH ENVIRONMENTAL DEFECT HAVE BEEN RESOLVED OR AN ENVIRONMENTAL ADJUSTMENT HAS BEEN MADE, BUYER SHALL ASSUME ANY AND ALL FUTURE ENVIRONMENTAL OBLIGATIONS ASSOCIATED WITH SUCH ASSET.
		
	(d)
	Implementing Cleanup -  If Sellers elect to Cleanup an Environmental Defect pursuant to Section 8.2(a), Sellers shall select the means and methods of effecting the Cleanup in accordance with applicable Environmental Laws, applicable industry standards, and any applicable agreement, provided, however, that Sellers shall not be required to plug and abandon any currently unplugged wells if the cost thereof would be customary and normal site remediation costs assumed by Buyer in the transfer of the Sale Interests hereunder, including without limitation, plugging and abandonment of Wells.  Sellers’ responsibility for remediation under this Section 8.2 shall be limited to a standard appropriate for the use of an Asset for oil and gas activities and in accordance with all applicable laws.  

		
	3.
	Acceptance of Environmental Condition

 - SUBJECT TO THE OTHER TERMS AND PROVISIONS SET FORTH IN THIS AGREEMENT, UPON CLOSING, BUYER AGREES TO ACCEPT THE ENVIRONMENTAL CONDITION OF THE ASSETS, INCLUDING, BUT NOT LIMITED TO, COSTS TO CLEAN UP OR REMEDIATE; AND SUBJECT TO THE OTHER TERMS AND PROVISIONS SET FORTH IN THIS AGREEMENT, BUYER HEREBY AGREES TO RELEASE SELLERS FROM ANY AND ALL LIABILITY AND RESPONSIBILITY THEREFOR AND AGREES TO INDEMNIFY, DEFEND, AND HOLD SELLERS HARMLESS FROM ANY AND ALL CLAIMS, CAUSES OF ACTION, FINES, EXPENSES, COSTS, LOSSES, AND LIABILITIES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND COSTS) IN CONNECTION WITH THE ENVIRONMENTAL CONDITION OR BUYER’S FAILURE TO PROPERLY REMEDIATE THE CONDITION.  BUYER ACKNOWLEDGES AND AFFIRMS THAT THE ASSETS HAVE BEEN UTILIZED FOR THE PURPOSE OF EXPLORATION, PRODUCTION AND DEVELOPMENT OF OIL AND GAS, AND EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, AT CLOSING, THE SALE INTERESTS IN THE ASSETS WILL BE ACQUIRED IN THEIR “AS IS, WHERE IS” ENVIRONMENTAL CONDITION. BUYER HAS CONDUCTED AN INDEPENDENT INVESTIGATION OF THE PHYSICAL AND ENVIRONMENTAL CONDITION OF THE ASSETS, TO THE EXTENT BUYER DEEMS NECESSARY OR APPROPRIATE.
		
	4.
	NORM 

- Buyer acknowledges that the Assets have been used for exploration, development and production of oil, gas and water and that there may be petroleum, produced water, wastes or other materials located on, under or associated with the Interests.  Equipment and sites included in the Assets may contain NORM.  NORM may affix or attach itself to the inside of wells, materials and equipment as scale, or in other forms; the wells, materials and equipment located on or included in the Assets may contain NORM and other wastes or hazardous substances/materials; and NORM containing material and other wastes or hazardous substances/materials may have been buried, come in contact with the soil or otherwise been disposed of on or around the Assets.  Special procedures may be required for the remediation, removal, transportation or disposal of wastes, asbestos, hazardous substances/materials, including hydrogen sulfide gas and NORM from the Assets.  From and after the Closing, Buyer shall assume responsibility for the control, storage, handling, transporting and disposing of or discharge of all materials, substances and wastes from the Assets (including produced water, hydrogen sulfide gas, drilling fluids, NORM and other wastes), whether present before or after the Effective Time, in a safe and prudent manner and in accordance with all applicable Environmental Laws (as defined below).  
		
	5.
	Environmental Indemnities 

- EXCEPT AS OTHERWISE SET FORTH IN THIS ARTICLE 8, THIS SALE IS MADE ON AN “AS IS, WHERE IS” BASIS AND BUYER RELEASES SELLERS FROM ANY LIABILITY WITH RESPECT TO THE ENVIRONMENTAL CONDITION OF THE ASSETS, WHETHER OR NOT CAUSED BY OR ATTRIBUTABLE TO SELLERS’ NEGLIGENCE.  FROM AND AFTER CLOSING, SUBJECT TO THE OTHER TERMS AND PROVISIONS SET FORTH IN THIS AGREEMENT, BUYER SHALL BE LIABLE TO SELLERS FOR AND SHALL, IN ADDITION, INDEMNIFY, DEFEND, RELEASE AND HOLD SELLERS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, IN FAVOR OF ANY THIRD PARTY OR ENTITY FOR INJURY, ILLNESS OR DEATH OF ANY PERSON(S) OR FOR DAMAGE, LOSS, POLLUTION OR CONTAMINATION OF ANY REAL OR PERSONAL PROPERTY, GROUNDWATER OR THE ENVIRONMENT ATTRIBUTABLE TO THE ENVIRONMENTAL CONDITION OF THE ASSETS, INCLUDING, WITHOUT LIMITATION, CLAIMS ARISING UNDER ENVIRONMENTAL LAWS OR, FOR ANY OTHER CLAIMS ARISING DIRECTLY OR INDIRECTLY FROM, OR INCIDENT TO, THE USE, OCCUPATION, OWNERSHIP, OPERATION, CONDITION (WHETHER LATENT OR PATENT), 

MAINTENANCE OR ABANDONMENT OF ANY OF THE ASSETS AND WHETHER ARISING FROM OR CONTRIBUTED TO BY THE ACTIVE, PASSIVE, JOINT, SOLE OR CONCURRENT NEGLIGENCE, OR STRICT LIABILITY OF SELLERS, OR SELLERS’ CONTRACTORS OR SUBCONTRACTORS OR THE OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES OF SELLERS’ CONTRACTORS OR SUBCONTRACTORS, INCLUDING ANY STRICT LIABILITY UNDER ENVIRONMENTAL LAWS, REGARDLESS OF WHETHER ANY SUCH CLAIMS RESULT FROM ANY CONDITIONS, EVENTS, ACTIONS OR INACTIONS ARISING, OCCURRING OR ACCRUING PRIOR TO, ON OR AFTER THE EFFECTIVE TIME.  Buyer and Sellers shall treat all information regarding any environmental conditions as confidential and shall not make any contact with any Governmental Authority or third party regarding same without the prior express written consent from the other Party unless such contact is required by applicable law.
ARTICLE 9

		
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	.
	THIRD-PARTY CONSENTS AND PREFERENTIAL PURCHASE RIGHTS

		
	1.
	Third Party Notices

 - Sellers shall (i) request, from the appropriate parties (and in accordance with the Contract(s) and/or Material Contracts creating such rights and/or requirements), any consent or approval of any third party, person or Governmental Authority (“Consents”), and (ii) send notices to all persons or parties to whom such notices may be required for all options, rights of first refusal, or similar preferential purchase rights burdening any Asset(s) (each a “Preferential Purchase Right”), in compliance with the terms of the Contract(s) providing for or creating such Preferential Purchase Rights against the applicable Asset(s).  Sellers agree to use all commercially reasonable efforts, but without obligation to incur any unreasonable cost or expense, to obtain waivers of, or to comply with, any such Preferential Purchase Right prior to Closing.
		
	2.
	Third-Party Exercise 

- If a third-party exercises a Preferential Purchase Right on any Asset(s), the affected Asset(s) shall be removed from this Agreement and the Base Purchase Price shall be adjusted by the dollar amount allocated to the affected Asset(s) as set forth on Exhibits “C-1” and “C-2”.
		
	3.
	Third-Party Failure to Purchase 

- If a third-party exercises a Preferential Purchase Right for any Sale Interests in any Asset(s), but fails to close the purchase for any reason within sixty (60) days after Closing (or such longer period as may be provided for under the applicable Contract(s) creating such Preferential Purchase Right), Sellers shall give written notice to Buyer of such failure to close, and Buyer shall purchase such Sale Interests in the Asset(s) for the Allocated Value therefor as set forth on Exhibits “C-1” and “C-2”, and on the terms and conditions set forth in this Agreement (including the Effective Time as set forth in this Agreement).
		
	4.
	Consents

.  If any Sales Interests is subject to a Consent, then (i) the portion of the Sale Interests for which such Consent applies shall be conveyed at the Closing, (ii) the Allocated Value for that Sale Interests shall be paid to Sellers, and (iii) Sellers shall use its reasonable efforts to obtain such Consent as promptly as possible following Closing.  Buyer shall reasonably cooperate with Sellers in obtaining any 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.   If such Consent has not been obtained by the Settlement Date and if the failure to obtain such Consent would cause (1) the Assignment of the Sale Interests affected thereby to be void or the termination of a Lease or Contract under the express terms thereof, or (2) such Consent requested by Sellers is denied in writing, then the portion of the Sale Interests applicable to such Consent shall be deemed to be excluded from the Transaction and shall be reassigned to Sellers (the “Excluded Assets”), and the Final Purchase Price shall be reduced by the Allocated Value of such Excluded Assets (with such adjustment being an “Exclusion Adjustment”).
ARTICLE 10

		
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	.
	CONDITIONS TO CLOSING; Settlement Statement; CLOSING

		
	1.
	Sellers’ Conditions to Closing 

- The obligations of Sellers at the Closing are subject to the satisfaction at or prior to the Closing, or waiver in writing by Sellers, of the following conditions:
		
	(a)
	All representations and warranties of Buyer contained in this Agreement, to the extent qualified with respect to materiality, shall be true and correct in all respects, and to the extent not so qualified, shall be true and correct in all material respects, in each case as if such representations and warranties were 

made at and as of the Closing Date (except to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct as of the specified date); and Buyer shall have performed and satisfied in all material respects all covenants and agreements required to be performed and satisfied by it under this Agreement at or prior to the Closing.
		
	(b)
	On the Closing Date, no injunction, order or award enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement shall have been issued by a Governmental Authority and remain in force.

		
	(c)
	All material consents and approvals required of Governmental Authorities in order to sell and transfer the Assets to Buyer and otherwise close and consummate the transaction contemplated herein, except consents and approvals of assignments by Governmental Authorities that are customarily obtained after Closing, shall have been received or waived in writing, or the necessary waiting period shall have expired, or early termination of the waiting period shall have been granted.

		
	(d)
	Buyer shall have provided Sellers evidence satisfactory to Sellers that Buyer, as of Closing (i) is qualified to do business and to own and operate the Assets in all jurisdictions in which the Assets are located and (ii) has posted all bonds and obtained all insurance required by any Governmental Authority or other body to own and operate the Assets or by any applicable operating agreement.  

		
	(e)
	The aggregate adjustments to the Base Purchase Price attributable to Title Defects, Environmental Defects, Open Defects and Casualty Defects shall not have exceeded the Termination Threshold. 

		
	(f)
	Buyer shall have performed its obligations set forth in Section 10.5.

		
	(g)
	Sellers shall have executed the Closing Settlement Statement defined under Section 10.3.

		
	2.
	Buyer’s Conditions to Closing 

- The obligations of Buyer at the Closing are subject to the satisfaction at or prior to the Closing, or waiver in writing by Buyer, of the following conditions:
		
	(a)
	All representations and warranties of Sellers and Zebra contained in this Agreement, to the extent qualified with respect to materiality, shall be true and correct in all respects, and to the extent not so qualified, shall be true and correct in all material respects, in each case as if such representations and warranties were made at and as of the Closing Date (except to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct as of the specified date), and Sellers shall have performed and satisfied in all material respects all covenants and agreements required to be performed and satisfied by it under this Agreement at or prior to the Closing.

		
	(b)
	On the Closing Date, no injunction, order or award enjoining or otherwise prohibiting the consummation of the transactions contemplated by this Agreement shall have been issued by a Governmental Authority and remain in force.

		
	(c)
	All material consents and approvals required of Governmental Authorities in order to sell and transfer the Assets to Buyer and otherwise close and consummate the transaction contemplated herein, except consents and approvals of assignments by Governmental Authorities that are customarily obtained after Closing, shall have been received or waived in writing, or the necessary waiting period shall have expired, or early termination of the waiting period shall have been granted.

		
	(d)
	The aggregate adjustments to the Base Purchase Price attributable to Title Defects, Environmental Defects, Open Defects and Casualty Defects shall not have exceeded the Termination Threshold. 

		
	(e)
	Sellers shall have performed its obligations set forth in Section 10.5.

		
	(f)
	Zebra shall have performed its obligations set forth in Article 19.

		
	(g)
	Sellers shall have executed the Closing Settlement Statement defined under Section 10.3, including WEC executing the Closing Statement on behalf of the Participating Third Party Owners pursuant to the authority granted under the Election Agreements.

		
	(h)
	The execution and deliveries of the Participating Third Party Owners set forth in Section 10.5 shall have been performed.

		
	3.
	Closing Settlement Statement 

- By August 10, 2016, WEC, for itself and on behalf of the other Sellers and the Participating Third Party Owners, shall provide Buyer with a closing settlement statement covering the adjustments (including the Deposit), without duplication, to the Base Purchase Price to be made at Closing under this Agreement (the “Closing Settlement Statement”).  To the extent available, actual numbers shall be used.  If not available, WEC shall use reasonable and good faith estimates of the same, which estimates shall be adjusted to take into account actual numbers in connection with the Final Settlement Statement described in Section 11.3 below.  In preparing the Closing Settlement Statement, WEC shall have no obligation to make an accrual for revenues not received as of Closing.

		
	4.
	Closing Date and Place 

- The closing of the transaction contemplated by this Agreement shall be held on the first Business Day after the satisfaction or waiver of the latest to occur of the conditions set forth in Sections 10.1 and 10.2 (other than those conditions that by their nature are to be satisfied by actions taken at the Closing, but subject to their satisfaction) (the “Closing Date”), which the Parties intend to occur no later than Friday, August 12, 2016, at the office of Sellers at 6116 N. Central Expressway, Suite 313, Dallas, Texas  75206 or at such other time and place as the Parties mutually agree (the “Closing”).
		
	5.
	Closing Activities 

- The following actions shall take place at Closing:
		
	(a)
	Certificates - Each Party shall deliver to the other Party a certificate in a form reasonably satisfactory to the other Party, dated as of the Closing, and executed by a duly authorized officer, partner, attorney-in-fact or owner, as appropriate, of such Party, certifying that the conditions to Closing as set forth in Sections 10.1(a) or 10.2(a), as the case may be, have been met. 

		
	(b)
	Conveyances from Sellers - Sellers and Buyer shall execute, acknowledge and deliver two (2) counterpart copies of each of the Conveyances (substantially in the form set forth as Exhibit “D” attached hereto) to be filed in Nolan County, Texas, where the Assets are located, assigning and conveying the Sellers’ Sale Interests in the Assets to Buyer, as well as the requisite number of applicable governmental assignment forms.

		
	(c)
	Election Agreements - WEC shall deliver to Buyer the originally executed Election Agreements having been executed by the Participating Third Party Owners.

		
	(d)
	Conveyances from Participating Third Party Owners - WEC shall deliver to Buyer two (2) counterpart copies of an assignment and conveyance, in a mutually agreed form, executed and acknowledged by the Participating Third Party Owner, assigning and conveying the Participating Third Party Owner’s Sale Interests in the Assets to Buyer.

		
	(e)
	Payment - Buyer shall deliver to an account designated in writing by WEC by wire transfer of same day funds in the amount as set forth on the Closing Settlement Statement.

		
	(f)
	Resignation of Operator - WEC shall execute and deliver to Buyer resignation of operator letters with respect to all of the Wells in forms reasonably acceptable to Buyer;

		
	(g)
	Additional Documents - Buyer shall (i) furnish to Sellers such evidence (including evidence of satisfaction of all applicable bonding or insurance requirements) as Sellers may require demonstrating that Buyer is qualified with the applicable Governmental Authorities  or pursuant to any operating agreement to succeed Sellers as the owners and, where applicable, the operator of the Assets, (ii) with respect to Assets operated by Sellers where Buyer intends to succeed WEC as operator, execute and deliver to Sellers appropriate evidence reflecting change of operator as required by applicable Governmental Authorities, and (iii) execute and deliver to Sellers such forms as Sellers may reasonably request for filing with applicable Governmental Authorities to reflect Buyer’s assumption of plugging and abandonment liabilities with respect to all of the Assets.  As to any of the Wells and Leases in which Buyer does not acquire all of the leasehold interest governed by the applicable operating agreement, Buyer shall hold the designation of operatorship subject to the succession election under the governing operating agreement, and shall indemnify and hold Sellers harmless from any and all claims of third parties arising from the delivery by Sellers of the operator succession to Buyer.  

		
	(h)
	Possession -Sellers shall (subject to the terms of any applicable operating agreements and to the other provisions hereof) deliver to Buyer possession of the Assets to be conveyed at the Closing.

		
	(i)
	Letters-in-Lieu - Sellers and Buyer shall execute and deliver to Buyer the Letters-in-Lieu of Transfer Orders, all as provided for in Section 13.3.  WEC shall deliver to Buyer Letters-in-Lieu of Transfer Orders executed by the Participating Third Party Owners, all as provided in Section 13.3.

		
	(j)
	Release of Mortgages, Deeds of Trusts, Liens, Encumbrances and Financing Statements - Sellers shall deliver to Buyer duly executed releases of any mortgages, deeds of trust, liens, encumbrances and financing statements, if any, placed by Sellers upon and encumbering Sellers’ interest in the Assets, other than Permitted Encumbrances.  WEC shall deliver to Buyer duly executed releases of any mortgages, deeds of trust, liens, encumbrances and financing statements, if any, placed by the Participating Third Party Owners upon and encumbering any of their interest in the Assets, other than Permitted Encumbrances.

		
	(k)
	Seismic License - Sellers and Buyer shall execute and deliver the Seismic License.

ARTICLE 11

		
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	.
	POST-CLOSING OBLIGATIONS

Sellers and Buyer agree to the following post-Closing obligations:
		
	1.
	Recordation and Filing of Documents 

- After the Closing, Buyer shall file or record the Conveyances in the appropriate county and governmental records.  Buyer shall provide a copy of same, including recording date, to WEC, all at the sole cost of Buyer.
		
	2.
	Records 

- Within ten (10) Business Days after the Closing, WEC shall furnish Buyer the Records and the seismic data subject to the Seismic License.  All costs associated with delivering or copying the Records and the seismic data shall be borne solely by Buyer.  Insofar as Sellers reasonably believe the Records may be needed or useful in connection with federal, tribal, state or local regulatory or tax matters or resolution of disputes, litigation, or contract compliance issues, Buyer (for a period of seven (7) years after the Closing) shall further make available to Sellers or their affiliates (at the location of such Records in Buyer’s organization) access to the Records during normal business hours, upon not less than two (2)  Business Days prior written request by Sellers, and Sellers shall have the right to copy at their own expense and retain such copies of the Records as Sellers, in good faith, believes may be useful or needed in connection with the above-described matters.  If, however, Buyer elects to destroy any of the Records prior to the expiration of the seven (7) year period, Buyer shall give to Sellers written notice of such intent at least thirty (30) days prior to such destruction and Sellers shall have the option, at their expense, of having such Records delivered to it.
		
	3.
	Final Settlement Statement 

- WEC, for itself and on behalf of the other Sellers and the Participating Third Party Owners, shall issue a final settlement statement covering all adjustments, without duplication, to the Base Purchase Price that were not included in the Closing Settlement Statement (the “Final Settlement Statement”) within one hundred twenty (120) days after Closing.  Buyer shall respond to WEC with objections and proposed corrections within thirty (30) days of the issuance of the Final Settlement Statement.  If Buyer does not respond with objections and the support therefor to the Final Settlement Statement in writing within thirty (30) days of the issuance of the Final Settlement Statement, said Statement shall be deemed approved by Buyer.  In the event that Buyer does respond and objects within this time period, WEC, on behalf of itself, the other Sellers and the Participating Third Party Owners, and Buyer shall meet within fifteen (15) days following Sellers’ receipt of Buyer’s objections and attempt to resolve the disputed items.  If WEC and Buyer are unable to resolve the disputed items by the end of such fifteen-day period, the dispute shall be resolved in accordance with the dispute resolution provisions set forth in Section 20.3.  After approval by both Parties (or after final resolution of the same under Section 20.3), the net adjustment due pursuant to the Final Settlement Statement for the Sale Interests conveyed shall be summarized and a net check or invoice shall be sent to the Buyer or WEC, on behalf of Sellers and the Participating Third Party Owners, as the case may be.  Buyer or Sellers, as the case may be, agrees to promptly pay any such invoice within ten (10) days after their receipt thereof.  
		
	4.
	Cooperation with Sellers’ Retained Assets 

 - Buyer agrees to use reasonable efforts to cooperate in connection with Sellers’ removal of all personal property associated with the Retained Assets (to the extent applicable), including, but not limited to, the equipment and personal property identified on Schedule 2.2(g) (if any).  Sellers shall remove such retained personal property within one hundred twenty (120) days after Closing.
		
	5.
	Suspense Accounts 

- As set forth and itemized on Schedule 11.5 attached hereto, WEC currently maintains suspense accounts pertaining to oil and gas heretofore produced comprising monies payable to royalty owners, mineral owners and other persons with an interest in production associated with the Assets that Sellers has been unable to pay (the “Suspense Accounts”).  As identified in the Closing Settlement Statement, a downward adjustment to the Base Purchase Price will be made at Closing to reflect the Suspense Accounts as of the Closing Date and the Suspense Accounts shall be further adjusted, if necessary, in the Final Settlement Statement.  Subject to the other provisions hereof, Buyer shall assume full and complete responsibility and liability for proper payment of the funds comprising the Suspense Accounts as set forth on the “Final Suspense Account Statement,” which shall be provided by WEC to Buyer with the Final Settlement Statement required in Section 11.3, (including any liability under any unclaimed property law or escheat statute).  Buyer agrees to indemnify, defend and hold Sellers, their parent, subsidiary and affiliated entities, together with their respective officers, directors, employees, agents and their respective successors and assigns, harmless from and against any and all liabilities, claims, demands, penalties and expenses (including reasonable attorneys’ fees) arising out of or pertaining to the proper payment and 

administration of the Suspense Accounts in accordance with the Final Suspense Account Statement, limited, however to the total amount of the Suspense Accounts.
		
	6.
	Further Assurances 

- Buyer and Sellers further agree that each shall, from time to time and upon reasonable request, use reasonable efforts to execute, acknowledge, and deliver in proper form, any instrument of conveyance, assignment, transfer, or other instruments reasonably necessary for transferring title in the Sale Interests to Buyer or otherwise to implement the transactions contemplated herein.
ARTICLE 12

		
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	TAXES

		
	1.
	Property Taxes 

- All ad valorem taxes, property taxes, and similar obligations (“Property Taxes”) applicable to the Sale Interests with respect to the 2016 tax period in which the Effective Time occurs (the “Current Tax Period”) shall be apportioned between Sellers, Participating Third Party Owners, and Buyer as of the Effective Time based on the Current Tax Period’s assessment.  The apportionment method shall be an allocation based on the number of days the Sale Interests were owned.  The amount apportioned to the Sellers and the Participating Third Party Owners, as the case may be, shall be the number of days the Sale Interests were owned from January 1, 2016, to the day prior to the Effective Time.  The amount apportioned to the Buyer shall be the number of days the Sale Interests were owned from the Effective Time to December 31, 2016.  Each Seller shall reimburse Buyer for each Seller’s portion of the Current Tax Period at Closing or in connection with any post-closing settlement provided for herein.  Each Participating Third Party Owner shall reimburse Buyer for its portion of the Current Tax Period at Closing or in connection with any post-closing settlement provided herein. Buyer shall pay, and defend and hold Sellers and Participating Third Party Owners harmless, with respect to payment of all Property Taxes on the Sale Interests for the Current Tax Period and thereafter, regardless of the taxing agency’s basis for calculating such taxes, together with any interest or penalties assessed thereon.  If Sellers or Participating Third Party Owners, as the case may be, pay the Property Taxes assessed for the Current Tax Period, Buyer agrees to reimburse the paying parties for Buyer’s portion of said taxes at Closing or in connection with any post-closing settlement provided for herein.  
		
	2.
	Production Taxes 

- All taxes (other than Property Taxes, income, franchise, or similar taxes) imposed on or with respect to the production of oil, natural gas, or other hydrocarbons or minerals, or the receipt of proceeds therefrom (including, but not limited to, severance, production and excise taxes) shall be apportioned between the selling parties and Buyer based upon the respective shares of production taken by the parties.  Payment or withholding of all such taxes that have accrued prior to the Effective Time and filing of all statements, returns and documents pertinent thereto shall be the responsibility of each selling party, to the extent applicable to the interests of each selling party.  Payment or withholding of all such taxes that have accrued from and after the Effective Time and the filing of all statements, returns and documents incident thereto shall be the responsibility of Buyer.  In the event any such taxes attributable to the Sale Interests and to periods on or after the Effective Time become due and payable prior to Closing, Sellers and the Participating Third Party Owners, to the extent attributable to their respective interests, shall timely pay and satisfy the same and appropriate adjustments therefor shall be made to the Base Purchase Price under Section 3.3 above. 
		
	3.
	Other Taxes 

- As may be required by relevant taxing agencies, Sellers shall collect and Buyer shall pay at Closing all applicable state and local sales tax, use tax, gross receipts tax, business license tax, and other taxes attributable to the consummation of the transactions under this Agreement except taxes imposed by reason of income to (or capital of) Sellers.  The tax collected shall be based upon the Allocated Values as provided in Section 3.4 and reflected on Exhibits “C-1 and C-2” and shall be added to the Base Purchase Price at Closing.  Any state or local tax specified above, inclusive of any penalty and interest, assessed at a future date against Sellers with respect to the transaction covered herein shall be paid by Buyer or, if paid by Sellers and/or the Participating Third Party Owners, Buyer shall promptly reimburse WEC on behalf of the paying parties.  Any documentary stamp tax which may be due shall be paid by Buyer.
ARTICLE 13

		
	.
	

		
	.
	OWNERSHIP OF ASSETS

		
	1.
	Distribution of Production 

- All oil in storage above the pipeline connection or gas beyond the meters at the Effective Time, to the extent attributable to the Sale Interests, shall be credited to Sellers and the Participating Third Party Owners, as the case may be, less applicable royalties and severance taxes to which the interests of such parties are subject.  For Seller-operated Assets, Sellers have gauged the oil in storage and read all gas meter charts as of the Effective Time.  For Seller non-operated Assets, the quantity of such oil in storage or gas beyond the meters shall be determined on the same basis as that used for Seller-operated Assets based on operator reports or applicable state regulatory agency production reports or records.  As part of the Closing Settlement Statement, the price for such oil in storage shall be at the price that Sellers have contracted to sell the oil at the Effective Time.  If there is no such price, the price shall be the average of the two highest prices that are posted at the Effective Time (plus any premium) by other purchasing companies, as determined by Sellers in the field or locality where the Assets are located for oil of like grade and gravity.  Subject to the occurrence of the Closing, title to the oil in storage for both Seller-operated and Seller non-operated Assets, to the extent attributable to the Sale Interests, shall pass to Buyer as of the Effective Time, and an upward adjustment shall be made to the Base Purchase Price due at Closing, less applicable royalties and severance taxes.
		
	2.
	Proration of Income and Expenses 

- Except as otherwise provided in this Agreement, all proceeds (including proceeds held in suspense or escrow), receipts, credits, and income attributable to the Sale Interests for all periods of time prior to the Effective Time shall belong to Sellers and the Participating Third Party Owners, as the case may be, and all proceeds, receipts, credits, and income attributable to the Sale Interests for all periods of time from and after the Effective Time shall belong to Buyer.  Except as otherwise provided in this Agreement, all costs, expenses, disbursements, and obligations attributable to the Sale Interests for periods of time prior to the Effective Time shall be the obligation of Sellers, and Sellers shall promptly pay, or if paid by Buyer, promptly reimburse Buyer for and hold Buyer harmless from and against same.  Except as otherwise provided in this Agreement, all costs, expenses, disbursements and obligations attributable to the Sale Interests for periods of time from and after the Effective Time shall be the obligation of Buyer, and Buyer shall promptly pay, or if paid by Sellers, promptly reimburse Sellers for and hold Sellers harmless from and against same.  
		
	3.
	Notice to Remitters of Proceeds 

- Buyer shall be responsible for informing all purchasers of production or other remitters to pay Buyer and obtain from the remitter revenues accrued after the Effective Time.  The remitter shall be informed by Sellers, Participating Third Party Owners, and Buyer via Letters-in-Lieu of Transfer Order or such other reasonable documents which remitter may require.
		
	4.
	Notice to Third Party Users of Key Facilities

 - Buyer shall be responsible for informing all third-party users of the Key Facilities of the change in ownership of the Key Facilities, and Sellers agree to work in good faith with Buyer in providing information necessary to assist Buyer in its efforts to notify such third parties.
		
	5.
	Production Imbalances 

- Set forth on Schedule 13.5 is a listing of all gas imbalance volumes derived from the most recent imbalance statement from the Operator of each Well where a known imbalance exists measured in MCFs and the aggregate net volume of overproduction or underproduction, as applicable, with respect to the Assets (the “Represented Imbalance”).  As part of the Final Settlement Statement, the Base Purchase Price shall be adjusted, upward or downward as appropriate, to reflect the value of the difference between the aggregate net volume of overproduction or underproduction associated with the Sale Interests set forth on Schedule 13.5 and the aggregate net volume of overproduction or underproduction associated with the Sale Interests as of the Effective Time (the “Assumed Imbalances”).  The value of said difference between the aggregate net volume (less royalties) of overproduction or underproduction, as applicable, shall be the product obtained by multiplying $2.90 by the volume of such difference in MCFs.  Buyer shall be solely responsible for any liability and solely entitled to any benefit from such production imbalances relating to the Sale Interests, whether occurring on, before or after the Effective Time.
		
	6.
	Pipeline and Other Non-Wellhead Imbalances

 - To the extent there exists any imbalances attributable to the Sale Interests’ share of Hydrocarbons produced from the Assets as of the Effective Time with respect to any gas pipeline, storage or processing facility (the “Pipeline Imbalances”), at Closing the Base Purchase Price shall be adjusted upward or downward, as appropriate, to reflect the value of said Pipeline Imbalance.  The value of said Pipeline Imbalance shall be calculated by summing 

the product(s) obtained by multiplying the volume of each net over-position or under-position, as the case may be, measured in the same manner as it is measured by the pipeline, storage or processing facility, as applicable, by the value at which the Pipeline Imbalance was either cashed out, made up or sold, or if otherwise undeterminable then using existing fair market value of, or price for, said Hydrocarbons.  Buyer shall be solely responsible for any liability and solely entitled to any benefit from such pipeline imbalances relating to the Sale Interests from and after the Effective Time; provided, that Buyer shall not be liable for any penalties or surcharges payable to the pipeline transport for periods prior to the Effective Time.  If the Pipeline Imbalance cannot be determined by Closing or if the pipeline storage or processing facility makes any adjustments attributable to any period prior to the Effective Time after Closing but before the Final Settlement Statement, then the value adjustment associated with any imbalance will be made in connection with the Final Settlement Statement.
ARTICLE 14

		
	.
	

		
	.
	INTERIM OPERATIONS

		
	1.
	Standard of Care 

 -  - During the period from the Execution Date to Closing, (i) Sellers shall not, except for emergency action taken in the face of risk to life, property or the environment, without the prior written consent of Buyer (which shall not be unreasonably withheld, conditioned or delayed) approve or authorize any AFEs or capital expenditures over Twenty-Five Thousand and No/100 U.S. Dollars ($25,000.00) net to the interest of Sellers which is received by Sellers with respect to any Assets, incur costs for discretionary expenditures for operations in excess of Twenty-Five Thousand and No/100 U.S. Dollars ($25,000.00) net to the interest of Sellers for which AFEs are not prepared; (ii) Sellers shall not transfer, sell, hypothecate, encumber, abandon or otherwise dispose of any interests which they may have in portion of the Assets (other than the replacement or disposition of Equipment or the sale of Hydrocarbons, in each case, in the ordinary course of business or as required in connection with the exercise by third-parties of Preferential Purchase Rights); (iii) Sellers shall assist the Buyer (without incurring any third party expenses) in preserving the present relationships related to the Assets with Persons having significant business relations therewith, such as suppliers, customers, brokers, agents or otherwise; and (iv) Sellers shall not waive, compromise or settle any material right or claim if such waiver, compromise or settlement would adversely affect the use, ownership or operation of any of the Assets in any material respect.
		
	2.
	Liability of Operator

 - Notwithstanding Section 14.1, Sellers shall not be liable to Buyer for any claims, demands, causes of action, damages, or liabilities arising out of Sellers’ operation of the Assets after the Effective Time, insofar as Sellers continue to operate and maintain the Assets in accordance with the terms of this Agreement (including, without limitation, Section 14.1 above), and insofar as no such Claims, demands, causes of action, damages, or liabilities relating to such interim operation are not attributable to the gross negligence or willful misconduct of Sellers.
		
	3.
	Removal of Signs 

- Buyer shall promptly, but no later than required by applicable rules and regulations or thirty (30) days thereafter, whichever is earlier, remove any signs and references to Sellers and shall erect or install all signs complying with any applicable governmental rules and regulations, including, but not limited to, those showing the Buyer or its affiliates as operator of the Assets.
		
	4.
	Third-Party Notifications 

- Buyer shall make all notifications to all Governmental Authorities, “one call services” and similar groups associated with the operation of the Assets within ten (10) days of Closing.  A copy of all such notifications shall be provided to Sellers pursuant to the notice provisions contained in Article 17 hereof.
		
	5.
	Seller Credit Obligations

 - The Parties understand that none of the bonds, letters of credit, guarantees and insurance, if any, posted or owned by Sellers with any Governmental Authority or third party and relating to the Assets (“Seller Credit Obligations”) are to be transferred to Buyer.  On or before the Closing Date, Buyer shall obtain, or cause to be obtained in the name of Buyer or any of its affiliates, replacements for such Seller Credit Obligations.  If any such Seller Credit Obligation remains outstanding as of the Closing Date, (i) Buyer shall indemnify each member of the Seller Group and hold them harmless against any Losses that the Seller Group may incur under any such Seller Credit Obligations from and after the Effective Date, and (ii) Buyer shall promptly take all action reasonable and necessary to cause the removal or cancellation of such Seller Credit Obligations which remain outstanding as of the Closing Date.  

		
	6.
	Notification of Breaches

 - If after the Execution Date Buyer or any affiliate of Buyer obtains knowledge of any fact, circumstance or matter which could result in any representation or warranty of Sellers in Article 5 being breached, Buyer will promptly furnish Sellers written notice thereof.
ARTICLE 15

		
	.
	

		
	.
	ASSUMPTION OF LIABILITY AND GENERAL INDEMNIFICATION

		
	1.
	Buyer’s Assumption of Obligations.  Subject to the Closing occurring, and further subject to the Sellers’ indemnification provisions of Section 15.4, and unless expressly provided for otherwise hereunder, Buyer hereby assumes and agrees to fulfill, perform, pay and discharge (or cause to be fulfilled, performed, paid or discharged) all of the obligations and liabilities of the Sellers, known or unknown, with respect to the Assets, whether arising before, on or after the Effective Time, REGARDLESS OF WHETHER ANY OF SUCH OBLIGATIONS, LIABILITIES OR CLAIMS MAY BE ATTRIBUTABLE, IN WHOLE OR IN PART, TO THE STRICT LIABILITY OR NEGLIGENCE OF SELLER GROUP, BUYER OR THIRD PARTIES, WHETHER SUCH NEGLIGENCE IS ACTIVE OR PASSIVE, JOINT, CONCURRENT OR SOLE (collectively, the “Assumed Obligations”). The Assumed Obligations do not cover or include Sellers’ indemnity obligations as set forth in Section 15.4, prior to the expiration of such Sellers’ indemnity obligations, and any and all duties and obligations or claims which would fall under Sections 15.4(i) through (vi), inclusive.  Subject to the Sellers’ indemnification provisions of Section 15.4, the Assumed Obligations include, without limitation, the payment and/or performance of all taxes, leasehold and equipment rentals and release payments, royalties, excess royalties, in-lieu royalties, overriding royalty interests, production payments, net profit obligations, carried working interests, payments for the purchase of third party production from the Key Facilities or fees charged for services provided on the Key Facilities, and any other matters with which the Assets may be burdened, insofar as the same are attributable to the periods before, on or after the Effective Time.  Subject to the Sellers’ indemnification provisions of Section 15.4:

		
	(a)
	 THE ASSUMED OBLIGATIONS SHALL INCLUDE, AND BUYER, FROM AND AFTER THE CLOSING ACCEPTS SOLE RESPONSIBILITY FOR AND AGREES TO PAY, ALL COSTS AND EXPENSES INCURRED FROM AND AFTER THE EFFECTIVE TIME AND ASSOCIATED WITH PLUGGING AND ABANDONMENT OF ALL WELLS, DECOMMISSIONING OF ALL FACILITIES (INCLUDING THE KEY FACILITIES) AND PLATFORMS, AND CLEARING AND RESTORATION OF ALL SITES, IN EACH CASE INCLUDED IN, OR ASSOCIATED WITH, THE ASSETS, AND BUYER MAY NOT CLAIM THE FACT THAT PLUGGING AND ABANDONMENT, DECOMMISSIONING, SITE CLEARANCE OR RESTORATION OPERATIONS ARE NOT COMPLETE OR THAT ADDITIONAL COSTS AND EXPENSES ARE REQUIRED TO COMPLETE ANY SUCH OPERATIONS AS A BREACH OF SELLERS’ REPRESENTATIONS OR WARRANTIES MADE HEREUNDER OR THE BASIS FOR ANY OTHER REDRESS AGAINST SELLERS.  

		
	(b)
	SUBJECT TO ARTICLE 8, THE ASSUMED OBLIGATIONS SHALL INCLUDE, AND BUYER, FROM AND AFTER THE CLOSING ACCEPTS SOLE RESPONSIBILITY FOR AND AGREES TO PAY, ANY AND ALL COSTS AND EXPENSES ARISING OUT OF ENVIRONMENTAL LAWS (INCLUDING, WITHOUT LIMITATION, ANY COMPLIANCE OR NON-COMPLIANCE THEREWITH, ANY ADVERSE ENVIRONMENTAL CONDITIONS, AND THE DISPOSAL, RELEASE, DISCHARGE OR EMISSION OF HYDROCARBONS, HAZARDOUS SUBSTANCES, HAZARDOUS WASTES, HAZARDOUS MATERIALS, SOLID WASTES OR POLLUTANTS INTO THE ENVIRONMENT), KNOWN OR UNKNOWN, WITH RESPECT TO THE ASSETS, REGARDLESS OF WHETHER SUCH OBLIGATIONS OR LIABILITIES AROSE PRIOR TO, ON, OR AFTER THE EFFECTIVE TIME.  BUYER EXPRESSLY AGREES TO ASSUME THE RISK THAT THE ASSETS MAY CONTAIN WASTE MATERIALS, INCLUDING, WITHOUT LIMITATION, NORM, HAZARDOUS SUBSTANCES, HAZARDOUS WASTES, HAZARDOUS MATERIALS, SOLID WASTES, OR OTHER POLLUTANTS.  

		
	2.
	Definitions 

- For purposes of this Article 15 and all other provisions of this Agreement which contain an indemnification provision, the term “Buyer Group” shall be deemed to include Buyer and its affiliates, all successors, heirs and assigns of Buyer and its affiliates, and the officers, directors, shareholders, employees, representatives, co-owners, contractors, subcontractors, or agents of any of the foregoing.  For purposes of this Article 15 and all other provisions of this Agreement which contain an indemnification provision, the term “Seller Group” shall be deemed to include Sellers, their direct parent, and all subsidiaries thereof, all successors, heirs and assigns of 

any of the foregoing, and each of their respective officers, directors, shareholders, employees, representatives, co-owners, contractors, subcontractors, or agents of any of the foregoing.  
		
	3.
	Buyer’s General Indemnity 

- Buyer shall, upon Closing, defend, indemnify, release and hold Seller Group harmless from and against any and all Claims in favor of any person arising from or relating to:
		
	(i)
	Buyer’s breach of any of its representations and warranties in this Agreement; 

		
	(ii)
	Buyer’s breach of any of its covenants in and under this Agreement; and

		
	(iii)
	the Assumed Obligations.

		
	4.
	Sellers’ General Indemnity 

- Each Seller shall, upon Closing, defend, indemnify, release and hold Buyer Group harmless from and against any and all Claims in favor of any person arising from or related to:
		
	(i)
	Such Seller’s breach of any of its representations and warranties in this Agreement, excluding, any Claims relating to title or environmental matters; 

		
	(ii)
	Such Seller’s breach of any of their covenants in and under this Agreement; 

		
	(iii)
	except as otherwise provided in this Agreement, any and all duties and obligations of such Seller, express or implied with respect to the Assets, or the use, ownership, operation or disposition of the Assets arising before (or otherwise attributable to periods, or to actions, occurrences or operations conducted prior to) the Effective Time under any theory of liability, including, without limitation, by virtue of the Leases, Easements, Contracts and/or any permit, applicable statute, rule, regulation or order of any Governmental Authority; 

		
	(iv)
	subject to the provisions of Article 8, any Claims for damage to or property owned by a third party or for personal injury, illness, bodily injury, or death of any person arising before the Effective Time; 

		
	(v)
	except as otherwise provided in this Agreement, any other Claims arising directly or indirectly from, or incident to, the use, occupation, operation (including, but not limited to, royalty and accounting Claims) or maintenance of any of the Assets, and arising or accruing prior to the Effective Time; and

		
	(vi)
	the failure of Sellers to properly pay when due all taxes, royalties, overriding royalties, production payments, working interest payments, relating to the Assets and attributable to periods prior to the Effective Time, other than amounts included in Suspense Accounts;

REGARDLESS OF WHETHER ANY OF SUCH CLAIMS MAY BE ATTRIBUTABLE, IN WHOLE OR IN PART, TO THE STRICT LIABILITY OR negligence of BUYER GROUP, SELLERS or third parties, whether such negligence is active or passive, joint, concurrent or sole; provided, however, that Sellers’ obligation to indemnify buyer pursuant to SECTIONS 15.4(i) THROUGH (vi) above shall apply only for a period of SIX (6) Months following the closing date, AND tHEREAFTER, BUYER SHALL, PURSUANT TO SECTIONs 15.1 and 15.3, ASSUME RESPONSIBILITY FOR, AND SHALL ALSO AGREE TO PROTECT, DEFEND, INDEMNIFY AND HOLD SELLER GROUP HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS ARISING IN FAVOR OF ANY PERSON FOR PERSONAL INJURY, ILLNESS, BODILY INJURY, DEATH, DAMAGE TO PROPERTY OR FOR ANY OTHER CLAIMS ARISING DIRECTLY OR INDIRECTLY FROM, OR INCIDENT TO, THE USE, OCCUPATION, OPERATION OR MAINTENANCE OF ANY OF THE ASSETS OR ANY OTHER CLAIMS WHICH WOULD OTHERWISE BE SUBJECT TO SELLERS’ GENERAL INDEMNITY UNDER SECTIONS 15.4(i) THROUGH (vi).
EACH SELLER’S OBLIGATIONS UNDER SECTIONS 15.4(iv) through (vi) SHALL BE SEVERAL AND NOT JOINT, AND, IN THIS RESPECT, EACH SELLER’S OBLIGATIONS SHALL BE PROPORTIONAL TO ITS OWNERSHIP INTEREST, IN RELATION TO THE OWNERSHIP INTERESTS OF ALL OTHER SELLERS, IN THE INTERESTS RELATING TO THE PARTICULAR  INDEMNIFIED OBLIGATION.
NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS AMENDING OR ABRIDGING THE OPERATING AGREEMENTS GOVERNING THE ASSETS.  IN THIS RESPECT, IN THE EVENT WEC BECOMES LIABLE TO BUYER UNDER ANY INDEMNITY OBLIGATIONS OR OTHER OBLIGATIONS UNDER THIS AGREEMENT, ANY SUCH LIAIBLITY MAY BE 

CHARGED BY WEC TO OTHER SELLERS AS A COST AND EXPENSE UNDER THE GOVERNING OPERATING AGREEMENT, IF SUCH LIABILITY, ABSENCE THIS AGREEMENT, WOULD HAVE BEEN A PERMITTED EXPENSE CHARGEABLE TO THE NON-OPERATORS UNDER THE GOVERNING OPERATING AGREEMENT. 

		
	5.
	Limitation on Indemnification 

- Notwithstanding anything to the contrary contained herein, Sellers shall have no obligation to indemnify Buyer unless, and then only to the extent that, (i) any individual claim exceeds Twenty-Five Thousand and No/100 U.S. Dollars ($25,000.00) per item and (ii) the aggregate Losses to which Buyer would be entitled to indemnification (but for the provision of this Section 15.5) exceed a deductible (and not a threshold) equal to two percent (2%) of the Base Purchase Price. Notwithstanding anything to the contrary contained herein, Sellers’ aggregate liability for the indemnification under Sections 15.4(i) through (vi) above shall not exceed twenty-five percent (25%) of the Base Purchase Price.  
		
	6.
	Further Limitation on Indemnification 

- Neither Party shall have any obligation under Article 15 with respect to any amount which has already been taken into account and applied to or against the Base Purchase Price in the Closing Settlement Statement or the Final Settlement Statement, provided such Party has paid all amounts due pursuant to this Agreement.  
		
	7.
	Indemnification Procedures 

		
	1.
	General - All claims for indemnification under this Agreement shall be asserted and resolved pursuant to this Section 15.7.  Any person claiming indemnification hereunder is hereinafter referred to as the “Indemnified Party” and any person against whom such claims are asserted hereunder is hereinafter referred to as the “Indemnifying Party.”  

		
	2.
	Claim Notice - In the event that a Party wishes to assert a claim for indemnity hereunder, such Party shall with reasonable promptness provide to the Indemnifying Party a written notice of the indemnity claim it wishes to assert on behalf of itself or another Indemnified Party, including the specific details of and specific basis under this Agreement for its indemnity claim (a “Claim Notice”).  To the extent any Losses for which indemnification is sought are asserted against or sought to be collected from an Indemnified Party by a third party, such Claim Notice shall include a copy of all papers served on the applicable Indemnified Party with respect to such claim.  

		
	3.
	Notice Period -  The Indemnifying Party shall have thirty (30) days from the personal delivery or receipt of the Claim Notice (the “Notice Period”) to notify the Indemnified Party (i) whether or not it disputes its liability hereunder with respect to such Losses and/or (ii) with respect to any Losses arising out of, associated with, or relating to third party claims, whether or not it desires, at the sole cost and expense of the Indemnifying Party, to defend the Indemnified Party against any such Losses.  In the event that the Indemnifying Party notifies the Indemnified Party within the Notice Period that it desires to defend the Indemnified Party against such Losses, the Indemnifying Party shall have the right to defend all appropriate proceedings with counsel of its own choosing.  If the Indemnified Party desires to participate in, but not control, any such defense or settlement it may do so at its sole cost and expense.  

		
	4.
	Cooperation - If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel in contesting any Losses that the Indemnifying Party elects to contest or, if appropriate and related to the claim in question, in making any counterclaims against the third party asserting such Losses, or any cross-complaint against any third party (other than a Seller Indemnified Party, if the Indemnified Party is a Seller Indemnified Party; and other than a Buyer Indemnified Party, if the Indemnified Party is a Buyer Indemnified Party).  Such cooperation shall include the retention and provision to the Indemnifying Party of all records and other information that are reasonably relevant to the losses at issue.  

		
	5.
	Settlement - No third party claim that is the subject of indemnification hereunder may be settled or otherwise compromised without the prior written consent of the Indemnifying Party.  No such claim may be settled or compromised by the Indemnifying Party without the prior written consent of the Indemnified Party unless such settlement or compromise (i) entails a full and unconditional release of the Indemnified Party (and any other members of the Indemnified Party’s group, i.e., all Seller Indemnified Parties or all Buyer Indemnified Parties) without any admission or finding of fault or liability and (ii) does not impose on the Indemnified Party any material non-financial obligation or any financial obligation that is not fully paid by the Indemnifying Party.

		
	8.
	Exclusive Remedy.  Sellers and Buyer acknowledge and agree that from and after the Closing the indemnification provisions of this Article 15 are the sole and exclusive remedy of Sellers and Buyer for the breach of any representation or warranty or nonfulfillment of any covenant or agreement on the part of Sellers or Buyer under this Agreement or confirmed in any certificate delivered pursuant hereto, and Sellers do hereby release, acquit and forever discharge all Buyer Indemnified Parties and Buyer does hereby release, acquit, and forever discharge all Seller Indemnified Parties from any such other remedies; provided, however, that a Party shall be entitled to pursue all remedies available at law or in equity (including specific performance and injunctive relief without the necessity of posting bond) for any breach by another Party of the provisions of Section 4.2.

ARTICLE 16

		
	.
	

		
	.
	CASUALTY LOSS

If prior to Closing any of the Assets are substantially damaged or destroyed by fire or other casualty (“Casualty Defect”), Sellers shall notify Buyer promptly after Sellers learn of such event.  Sellers shall have the right, but not the obligation, to cure any such Casualty Defect by repairing such damage or, in the case of Equipment, replacing the damaged Equipment with equivalent items, no later than the Closing, insofar as the same are done to Buyer’s reasonable satisfaction.  Subject to Section 7.6, if any Casualty Defect exists at Closing, at Sellers’ option, Buyer shall proceed to purchase the damaged Assets, and the Base Purchase Price shall be reduced by the aggregate reduction in value of all affected Assets on account of such Casualty Defect.  In the event the Parties cannot agree on the value, the dispute shall be resolved in accordance with the dispute resolution provisions set forth in Section 20.3.  Notwithstanding any of the preceding provisions of this Article 16, all adjustments applicable to Casualty Defects shall be made prior to Closing, and Closing shall be extended until resolution of any disputes relating to the Casualty Defects; provided, however, that if adjustments for alleged Title Defects, Environmental Defects, Casualty Defects and Open Defects do not, in the aggregate, exceed the Termination Threshold, then Closing shall occur as to the other Assets that are not subject to the dispute (with the portion of the Assets subject to the dispute being excluded, and the Base Purchase Price reduced for the entire Allocated Values thereof) and Closing shall subsequently occur as to the Assets made the subject of the dispute within thirty (30) days following the final resolution of the dispute.  Notwithstanding anything to the contrary contained in this Article 16, Sellers shall be entitled to retain all insurance proceeds, if any, and claims against other parties relating to any such Casualty Defect.  For purposes of this provision, normal wear and tear shall not be considered a Casualty Defect.
ARTICLE 17

		
	.
	

		
	.
	NOTICES 

All communications between Buyer and Sellers required or permitted under this Agreement shall be in writing and addressed as set forth below.  Any communication or delivery hereunder must be given by personal delivery (if signed for receipt), by certified or registered United States mail (postage prepaid, return receipt requested), by a nationally recognized overnight delivery service for next day delivery, transmitted via electronic mail or by facsimile transmission shall be deemed to have been made and the receiving Party charged with notice, when received except that if received after 5:00 p.m. (in the recipient’s time zone) on a Business Day or if received on a day that is not a Business Day, such notice, request or communication will not be effective until the next succeeding Business Day.  All notices shall be addressed as follows: 

	
			
	SELLERS
	 

	 
	 

	WALTER EXPLORATION COMPANY
Attn:  J. Brian Walter
Suite 313
6116 North Central Expressway
Dallas, Texas 75206
Fax:  (214) 369-7679
Email: brian@walterx.com

and to

Kurt M. Daniel
Kurt M. Daniel, P.C.
4849 Greenville Avenue
Suite 1111
Dallas, Texas 75206
Fax:  214-890-7628
Email: kurt@kurtmdanielpc.com
	 

	 
	 

	 
	BUYER

	 
	 

	 
	MID-CON ENERGY PROPERTIES, LLC

	 
	2431 E. 61st Street, Suite 850

	 
	Tulsa, Oklahoma 74136

	 
	Attention:  Charles L. McLawhorn, III

	 
	Phone:  918-743-7575

	 
	Fax:  918-743-8859

	 
	Email: cmclawhorn@midcon-energy.com

ARTICLE 18

		
	.
	

		
	.
	TERMINATION

		
	1.
	Termination 

- This Agreement and the transactions contemplated hereby may be terminated at any time prior to the Closing:  
		
	(a)
	by the mutual written agreement of Buyer and Sellers;

		
	(b)
	by written notice from either Buyer or Sellers if Closing has not occurred on or before 5:00 p.m. CDT on August 12, 2016; provided, however, that no Party may terminate this Agreement pursuant to this Section 18.1(b) if such Party’s breach of its representations and warranties or its failure to comply with its obligations or covenants under this Agreement caused the Closing not to occur on or before the above date; or

		
	(c)
	by written notice from either Buyer or Sellers if the aggregate sum of (i) the Title Defect amounts for all Title Defects timely and properly asserted pursuant to Article 7, (ii) the Environmental Defect 

amounts for all Environmental Defects timely and properly asserted pursuant to Article 8, and (ii) the Casualty Defect amounts pursuant to Article 16, exceed the Termination Threshold.

		
	2.
	Liabilities Upon Termination; Deposit Amount 

- If this Agreement terminates, as described in Section 18.1 above, then the entire Deposit shall be returned and paid to Buyer and all obligations of the Parties under this Agreement shall thereafter terminate and be of no further force and effect, except that the provisions of Sections 4.2, 20.3, 20.4, 20.5 20.15 shall survive; provided, however, that if this Agreement is terminated because of either:
		
	(a)
	a willful or intentional breach of this Agreement by Sellers or because Buyer’s conditions to Closing are not satisfied as a result of Sellers’ willful or intentional failure to comply with its obligations under this Agreement (and, as a result, Buyer elects to terminate this Agreement under Section 18.1(b) above), then Buyer shall be entitled to the immediate return of the Deposit and shall also be entitled to pursue all remedies available at law for damages or other relief, in equity or otherwise; or 

		
	(b)
	a willful or intentional breach of this Agreement by Buyer or because Sellers’ conditions to Closing are not satisfied as a result of Buyer’s willful or intentional failure to comply with its obligations under this Agreement (and, as a result, Sellers elect to terminate this Agreement under Section 18.1(b) above), then Sellers shall be entitled to retain the Deposit as liquidated damages (and the parties hereby acknowledge that the extent of damages to Sellers occasioned by such breach or default or failure to proceed by Buyer would be impossible or extremely impractical to ascertain and that the Deposit is a fair and reasonable estimate of such damage; provided, however, that nothing in this Section 18.2(b) shall be deemed to limit Sellers’ right to seek and obtain specific performance.

ARTICLE 19

		
	.
	

		
	.
	JOINDER OF ZEBRA INVESTMENTS, INC.  Zebra Investments, Inc. (herein “Zebra”), a Texas corporation, joins in this Agreement for the following limited purposes:

		
	1.
	Pace 1-68 Well.  By special warranty of title only, Zebra represents that it holds title to an undivided 96.875% of the Pace 1-68 Well which is used for water disposal for salt water produced from the Pace Heirs Unit No. 1 Well and the Pace No. 303X Well.  If Closing shall occur, and the Sale Interests in the Pace Heirs Unit No. 1 Well and the Pace No. 303X Well are conveyed by Sellers to Buyer at Closing, then at Closing Zebra shall assign and convey to Buyer, effective as of the Effective Time, all of Zebra’s right, title and interest in the Pace 1-68 Well, and all Contracts and Equipment relating to such Well.

		
	2.
	Sisters Lease. Zebra represents that it holds title to the leasehold interest of the Sisters Lease as nominee for the Sellers and Third Party Owners having an interest in such Lease, as reflected in Exhibit “G”.  If Closing shall occur, and the Sale Interests of the Sellers and the Third Party Owners having an interest in the Sisters Lease are to be conveyed to Buyer at Closing, then at Closing Zebra shall assign and convey to Buyer, effective as of the Effective Time, all of the right, title and interest held by Zebra in the Sisters Lease.  On the other hand, if at Closing all of the interests of Sellers and the Third Party Owners having an interest in the Sisters Lease are to be conveyed to Buyer, save and except any Excluded Third Party Owner Interest, then, in such event, at Closing Zebra shall assign and convey to the Excluded Third Party Owner its Excluded Third Party Interest in the Sisters Lease,  in a form reasonably approved by the Excluded Third Party Owner and Buyer, and then Zebra shall assign and convey to Buyer all of the remaining right, title and interest held by Zebra in the Sisters Lease.

		
	3.
	Undeveloped Leases covering Tract 1 through Tract 5.  Title to the Undeveloped Leases covering Tract 1 through Tract 5, described in Exhibit “A-2” are held by Zebra as nominee for Sellers.  Such leases are subject to a one-half of one percent (0.5%) overriding royalty interest to Kent Fouret.  If Closing shall occur, and the Sale Interests of the Sellers in such Leases are to be conveyed to Buyer at Closing, then at Closing Zebra shall assign and convey to Buyer, effective as of the Effective Time, all of the right, title and interest held by Zebra in such Undeveloped Leases, less and except and subject to the overriding royalty interest of Kent Fouret, which overriding royalty interest shall be conveyed to Kent Fouret in a form reasonably approved by the Kent Fouret and Buyer.

		
	4.
	Mineral Interest in leased premises of Joe Young Lease.  By special warranty of title only, Zebra represents that it holds title to the mineral interest in the leased premises of the Joe Young Lease, identified in item 2 under the Joe Young Lease heading of Exhibit “A-2,” as nominee for Sellers.  If Closing shall occur, and the Sale Interests of Sellers in such mineral interest is to be conveyed to Buyer at Closing, then at Closing Zebra shall grant and convey to Buyer, effective as of the Effective Time, all of Zebra’s right, title and interest in such mineral interest, by form of mineral deed reasonably approved by Buyer. 

		
	5.
	Representations.  Zebra makes the same representations to Buyer as made by Sellers under Article 5 above, provided, however, such representations by Zebra are limited to the Assets described in this Article 19 in which title is owned or held by Zebra.

		
	6.
	Form of Conveyance.  Subject to this Article 19, and as otherwise set forth in this Article 19, the conveyances to be made by Zebra at Closing shall be in the form of Exhibit D.

		
	7.
	Breach of Covenant.  In the event of a breach by Zebra of any of its covenants herein, Zebra shall be subject to the same remedies set forth herein for Buyer in the event of a breach by Seller of a covenant herein of such Seller.

ARTICLE 20

		
	.
	

		
	.
	MISCELLANEOUS

		
	1.
	Entire Agreement 

- This Agreement and all Exhibits and Schedules attached hereto and incorporated herein constitute the entire agreement between the Parties.  Any previous negotiations or communications between the Parties are merged herein.
		
	2.
	Survival 

- This Agreement shall be binding upon and shall inure to the benefit of the undersigned, their successors, heirs, assigns and corporate successors and may be supplemented, altered, amended, modified, or revoked by writing only, signed by both Parties.  The representations made by Sellers and Buyer under Article 5 and Article 6 shall continue in full force and effect for a period of six (6) months from and after the Closing Date.  
		
	3.
	Arbitration 

		
	•
	- All disputes arising out of, or in connection with, this Agreement or any determination required to be made by Buyer and Sellers as to which the parties cannot reach an agreement shall be settled by arbitration in Dallas, Texas.  Any matter to be submitted to arbitration shall be determined by a panel of three (3) arbitrators, unless otherwise agreed by the Parties.  Each arbitrator shall be a person experienced in both the oil and gas industry and the subject matter of the dispute and shall be appointed:

		
	(a)
	by mutual agreement of Buyer and Sellers; or

		
	(b)
	failing such agreement, within sixty (60) days of the request for arbitration, each Party shall appoint one arbitrator, and the third arbitrator shall be appointed by the other two arbitrators, or, if they cannot agree, by a Judge of the United States District Court, Northern District of Texas.

In the event of the failure or refusal of the Parties to appoint the arbitrator(s) within one hundred twenty (120) days of the request for arbitration, the arbitrator remaining to be named shall be selected in accordance with the Rules of the American Arbitration Association.  The arbitration shall be conducted in accordance with reasonable rules established by the arbitrators.  Any award by the arbitrator shall be final, binding and non-appealable, and judgment may be entered thereon in any court of competent jurisdiction. The fees charged by the arbitrators for the arbitration shall be paid one-half by Buyer and one-half by Sellers.
		
	4.
	Memorandum of Understanding 

- The Parties understand and agree that the terms and provisions of that certain Memorandum shall remain in full force and effect until the Closing of this transaction and shall expire and be of no further force or effect thereafter, subject to the remaining provisions of this Section 20.4.  In the event of termination of this Agreement pursuant to Article 18, the Buyer agrees to keep all of the terms of this transaction confidential for a period equal to the later of the date of termination of the Memorandum or one (1) year following termination of this Agreement.  Furthermore, any additional information obtained as a result of Buyer’s access to the Assets which does not specifically relate to the Assets shall continue to be treated as confidential for a period of one (1) year following the Execution Date and shall not be disclosed by the Buyer without the prior written consent of the Sellers.  The above restrictions on disclosure and use of information obtained pursuant to this Agreement shall not apply to information to the extent it:
		
	(a)
	is or becomes publicly available through no act or omission of the Buyer or any of its consultants or advisors; 

		
	(b)
	is subsequently obtained lawfully from a third party, where the Buyer has made reasonable efforts to insure that such third party is not a party to or bound by any confidentiality agreement with the Sellers; or

		
	(c)
	is already in the Buyer’s possession at the time of disclosure, without restriction on disclosure.  

If the Buyer employs consultants, advisors or agents to assist in its review of the Assets, Buyer shall be responsible to Sellers for ensuring that such consultants, advisors and agents comply with the restrictions on the use and disclosure of information set forth in this Section 20.4.
		
	5.
	Choice of Law 

- THIS AGREEMENT AND ITS PERFORMANCE SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF TEXAS.
		
	6.
	Assignment 

- The rights and obligations under this Agreement may not be assigned by any Party without the prior written consent of the other Party; provided however, that Buyer may substitute one of its affiliates as the purchaser of the Assets.
		
	7.
	No Admissions 

-  Neither this Agreement, nor any part hereof, nor any performance under this Agreement shall constitute or be construed as a finding, evidence of, or an admission or acknowledgment of any liability, fault, or past or present wrongdoing, or violation of any law, rule, regulation, or policy, by either Sellers or Buyer or by their respective officers, directors, employees, or agents.
		
	8.
	Waivers and Amendments 

- Except for waivers specifically provided for in this Agreement, this Agreement may not be amended nor any rights hereunder waived except by an instrument in writing signed by the Party to be charged with such amendment or waiver and delivered by such Party to the other Party claiming the benefit of such amendment or waiver.
		
	9.
	Counterparts 

- This Agreement may be executed by Buyer and Sellers in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute one and the same instrument.  Execution can be evidenced by facsimile or email transmission of signature pages with original signature pages to promptly follow in due course. 
		
	10.
	Third-Party Beneficiaries 

		
	•
	- Neither this Agreement nor any performances hereunder by Sellers or Buyer shall create any right, claim, cause of action, or remedy on behalf of any person not a party hereto.

		
	11.
	Specific Performance

- Buyer and Sellers acknowledge and agree that Buyer would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms and that any breach of this Agreement by Sellers could not be adequately compensated in all cases by monetary damages alone.  Accordingly, in addition to any other right or remedy to which Buyer may be entitled, at law or in equity, Buyer shall be entitled to enforce any provision of this Agreement by a decree of specific performance.  Furthermore, the Parties acknowledge and agree that Sellers would be irreparably damaged if Buyer breaches any of the provisions of this Agreement and that any such breach of this Agreement by Buyer could not be adequately compensated in all cases by monetary damages alone.  Accordingly Sellers shall be entitled to enforce any provision of this Agreement by a decree of specific performance.  In either case, Buyer or Sellers, as the case may be, shall not be required to provide any bond or other security in connection with seeking an injunction or injunctions to enforce specifically the terms and provisions of this Agreement.  
		
	12.
	Public Communications

 - After the Execution Date, either Party may make a press release or public communication concerning this transaction with the exception that any such communication shall not include the name of the non-disclosing Party without their prior written consent; provided, however, any such press release or public communication is subject to the other Party’s prior review and approval (which shall not be unreasonably withheld, conditioned or delayed); provided, further, however, that, notwithstanding the foregoing, prior to or after Closing, if Buyer (including any of its parent entities), on the one hand, or Sellers (including any of its parent entities), on the other is required to make any statement, declaration, or public announcement regarding this Agreement or the transactions contemplated hereunder pursuant to (i) law, (ii) applicable rules or regulations of any national securities exchange, or (iii) the terms of such Party’s (including such Party’s respective parent entities) indentures, loan agreements, credit agreements or other similar debt agreements or financial instruments, then the same may be made without the approval of the other Party, but only to the extent the name of Sellers are omitted from such statement, declaration, or announcement if permitted by such law, rules, regulations or terms.
		
	13.
	Headings

 - The headings of the Articles and Sections of this Agreement are for guidance and convenience of reference only and shall not limit or otherwise affect any of the terms or provisions of this Agreement.  
		
	14.
	Expenses

 - Except as otherwise provided in this Agreement, each of the Parties hereto shall pay its own fees and expenses incident to the negotiation and preparation of this Agreement and consummation of the transaction contemplated hereby, including brokers’ fees.  Buyer shall be responsible for the cost of all fees for the recording of the Conveyances relating to the Assets.  All other costs shall be borne by the Party incurring them. 
		
	15.
	No Recourse

 - Notwithstanding anything that may be expressed or implied in this Agreement or any document, agreement, or instrument delivered contemporaneously herewith, and notwithstanding the fact that any Party may be a partnership or limited liability company, each Party, by its acceptance of the benefits of this Agreement, covenants, agrees and acknowledges that no Persons other than the Parties shall have any obligation hereunder and that it has no rights of recovery hereunder against, and no recourse hereunder or under any documents, agreements, or instruments delivered contemporaneously herewith or in respect of any oral representations made or alleged to be made in connection herewith or therewith shall be had against, any former, current or future director, officer, agent, affiliate, manager, assignee, incorporator, controlling Person, fiduciary, representative or employee of any Party (or any of their successors or permitted assignees), against any former, current, or future general or limited partner, manager, stockholder or member of any Party (or any of their successors or permitted assignees) or any affiliate thereof or against any former, current or future director, officer, agent, employee, affiliate, manager, assignee, incorporator, controlling Person, fiduciary, representative, general or limited partner, stockholder, manager or member of any of the foregoing, but in each case not including the Parties (each, but excluding for the avoidance of doubt, the Parties, a “Party Affiliate”), whether by or through attempted piercing of the corporate veil, by or through a claim (whether in tort, contract or otherwise) by or on behalf of such party against the Party Affiliates, by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, or otherwise; it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on, or otherwise be incurred by any Party Affiliate, as such, for any obligations of the applicable party under this Agreement or the transactions contemplated hereby, under any documents or instruments delivered contemporaneously herewith, in respect of any oral representations made or alleged to be made in connection herewith or therewith, or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, such obligations or their creation.
 [Signature page follows]

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