Document:

Exhibit
      10.1

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT is entered into as of February 7, 2008 (the “Effective
      Date”)
      by and
      between JASON BROWN (“Executive”)
      and
      ORGANIC TO GO FOOD CORPORATION, a Delaware corporation (the “Company”).

     

    In
      consideration of the mutual covenants in this Agreement and for other good
      and
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

     

    1. Duties
      and Scope of Employment.

     

    (a) Position.
      The
      Company shall employ Executive as its Chairman, President and Chief Executive
      Officer and as the Chairman, President and Chief Executive Officer of Organic
      To
      Go, Inc. (the Company’s wholly-owned subsidiary) for the term of his employment
      under this Agreement (“Employment”).
      Executive shall report to the Board of Directors (the “Board”)
      of the
      Company. 

     

    (b) Obligations.
      Executive shall devote his full business efforts and time to the Company and
      shall not render services to any other person or entity without the express
      prior approval of the Board. Executive represents and warrants to the Company
      that he is under no contractual obligations or commitments inconsistent with
      his
      obligations under this Agreement.

     

    2. Cash
      and Incentive Compensation.

     

    (a) Salary.
      The
      Company shall pay Executive as compensation for his services a base salary
      at an
      annual rate of $250,000, subject to annual increases by the Board. Such salary
      shall be payable in accordance with the Company’s standard payroll procedures.
      The annual compensation specified in this subsection (a) is referred to in
      this
      Agreement as “Base
      Compensation.”

     

    (b) Incentive
      Bonuses.
      Executive shall be eligible for a cash bonus (the “Incentive
      Bonus”)
      of 35%
      of his Base Compensation per year. The Board may, in its discretion, pay
      additional bonuses. 25% of the Incentive Bonus will be based on achievement
      by
      Executive of performance goals which will be mutually agreed upon by Executive
      and the Board each year, 25% of the Incentive Bonus will be subject to the
      discretion of the Board, and 50% of the Incentive Bonus will be based on
      achievement of performance goals by the Company. All goals described in this
      paragraph shall be mutually agreed upon by Executive and the Board by February
      28, 2008 (with respect to 2008) and by December 31, 2008 and December 31 of
      each
      year thereafter (with respect to 2009 and each succeeding year).

     

    3. Executive
      Benefits.
      During
      his employment, (i) Executive shall be entitled to 15 working days of vacation
      for each 12 months of employment, to be scheduled in advance; (ii) the Company
      shall pay the full cost of health, dental and vis8ion coverage for Executive
      and
      his family (excluding any copayments), subject in each case to the generally
      applicable terms and conditions of the plan in question and to the
      determinations of any person or committee administering such plan (“Health
      Benefits”);
      and
      (iii) the Company will purchase and pay the premiums for an insurance policy
      or
      policies in an aggregate amount of not less than $4,000,000 insuring the life
      of
      Executive, the beneficiaries of which shall be selected by Executive. Executive
      shall be paid for any unused vacation. Executive shall be paid a car allowance
      of $750 per month.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    4. Business
      Expenses.
      Executive shall be authorized to incur necessary and reasonable travel,
      entertainment and other business expenses in connection with his duties. The
      Company shall reimburse Executive for all such expenses upon presentation of
      appropriate supporting documentation. 

     

    5. Term
      of Employment.

     

    (a) Basic
      Rule.
      The
      Company shall employ Executive during the period commencing on the Effective
      Date and ending on the third anniversary of the Effective Date (the
“Expiration
      Date”),
      provided that (i) Executive’s employment may be terminated at any time as
      described below; and (ii) after the Expiration Date, this Agreement shall
      automatically renew for successive one (1) year terms unless either party gives
      the other written notice of its election not to renew this Agreement not less
      than ninety (90) days before the Expiration Date or any anniversary of the
      Expiration Date. 

     

    (b) Involuntary
      Termination, Resignation or Death.
      The
      Company may terminate Executive with or without Cause (as defined below).
      Executive may resign at any time and for any reason (or no reason) effective
      upon delivery of written notice of termination. Executive’s Employment shall
      terminate automatically in the event of his death.

     

    (c) Rights
      Upon Termination.
      Except
      as expressly provided in Section 6, upon the termination of Executive’s
      Employment, he shall only be entitled to the compensation, benefits and
      reimbursements described in Sections 2, 3 and 4 for the period preceding the
      effective date of the termination. 

     

    (d) Termination
      of Agreement.
      This
      Agreement shall terminate when all obligations of the parties hereunder have
      been satisfied. The termination of this Agreement shall not limit or otherwise
      affect any of Executive’s obligations under Sections 7 and 8.

     

    6. Benefits
      Upon Resignation for Good Reason, Termination for Reasons Other than Cause,
      or
      Permanent Disability.

     

    (a) Eligibility
      for Termination Benefits.
      This
      Section 6 shall apply if, during the term of this Agreement, the Company
      terminates Executive’s Employment because of Executive’s Permanent Disability
      (as defined below), for any other reason other than Cause (as defined below),
      or
      if Executive terminates his Employment for Good Reason.

     

    (b) Severance
      Payments and Benefits.
      If this
      Section 6 applies, then the Company shall (i) continue to provide and pay for
      Health Benefits to Executive and his family for the Continuation Period (as
      defined below), (ii) immediately upon such termination, pay Executive a lump
      sum
      equal to his monthly compensation at the then-applicable monthly Base
      Compensation rate multiplied by the number of months in the Continuation Period,
      and (iii) except in the case of Executive’s Permanent Disability, during the
      Continuation Period, provide Executive with outplacement services and assistance
      customarily provided to former chief executive officers of corporations whose
      shares are publicly traded, provided that the cost of such outplacement services
      and assistance shall not exceed $20,000. The above described payments and
      actions shall be made or taken in exchange for a general release of all claims
      Executive and his successors may have against the Company in a form acceptable
      to the Company which Executive shall execute and deliver before any payment
      is
      made or benefit provided pursuant to this Section 6.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (c) Definition
      of “Cause.”
      For all
      purposes under this Agreement, “Cause”
shall
      mean:

     

    (i) An
      unauthorized use or disclosure by Executive of the Company’s confidential
      information or trade secrets, which use or disclosure causes material harm
      to
      the Company;

     

    (ii) Executive’s
      conviction of, or plea of “guilty” or “no contest” to, a felony under the laws
      of the United States or any state thereof; or

     

    (iii) A
      continued failure by Executive to perform assigned duties, comply with the
      Company’s written policies or rules, or comply with any written agreement
      between the Company and the Executive, which continues for more than thirty
      (30)
      days after receiving written notification of such failure from the
      Board.

     

    (d) Definition
      of “Permanent Disability.”
      For all
      purposes under this Agreement, “Permanent
      Disability”
shall
      mean that Executive, when notice of termination is given, has failed to perform
      his duties under this Agreement for not less than 120 days (whether or not
      consecutive) in any 365-day period as a result of his incapacity due to physical
      or mental illness or injury.

     

    (e) Definition
      of “Good Reason.”
      For all
      purposes under this Agreement, “Good
      Reason”
shall
      mean that Executive voluntarily terminates his Employment after any of the
      following occur:

     

    (i) The
      assignment to Executive of any duties or responsibilities which result in any
      diminution or adverse change in Executive's position, status or circumstances
      of
      employment; 

     

    (ii) Any
      failure by the Company to continue in effect any benefit plan or arrangement,
      including incentive plans or plans to receive securities of the Company, in
      which Executive is participating, or the taking of any action by the Company
      which would adversely affect Executive's participation in or reduce Executive's
      benefits under such plans or arrangements; 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (iii) a
      relocation of Executive or the Company's principal executive offices to a
      location more than 90 miles from the current location of the Company’s principal
      executive offices;

     

    (iv) any
      breach by the Company of any provision of this Agreement; or

     

    (v) any
      failure by the Company to obtain the assumption of this agreement by any
      successor or assign of the Company.

     

    (f) Definition
      of “Continuation Period.”
      For all
      purposes under this Agreement “Continuation
      Period”
shall
      mean a period commencing on the date of the termination of Employment and ending
      on the date which is twelve (12) months following the termination of
      Employment.

     

    7. Non-Competition
      and Non-Sollicitation.

     

    (a) Non-Competition.

     

    (i) While
      employed by the Company and for three (3) years after the termination of his
      Employment for any reason, Executive shall not, directly or indirectly,
      throughout the United States, (i) engage primarily in the business of selling
      prepared food either through cafes or corporate catering operations (the
“Business”);
      (ii)
      render any services to any person or entity engaged in activities which compete
      with the Business; or (iii) become interested in any entity which competes
      with
      the Business in any capacity, including, without limitation, as an individual,
      partner, shareholder, officer, director, member, principal, employee, agent,
      trustee, consultant, creditor or financier. 

     

    (ii) Executive
      shall not, directly or indirectly, assist or encourage any other person in
      carrying out, directly or indirectly, any activity that would be prohibited
      by
      the above provisions of this Section 7 if such activity were carried out by
      Executive, either directly or indirectly, and in particular Executive shall
      not,
      directly or indirectly, induce any employee of the Company to carry out,
      directly or indirectly, any such activity.

     

    (iii) Ownership
      by Executive, as a passive investment, of less than 1% of the outstanding shares
      of capital stock of any Company listed on a national securities exchange or
      publicly traded in the over-the-counter market shall not constitute a breach
      of
      this Section 7(a).

     

    (b) Non-Solicitation.
      While
      employed by the Company and for the Non-Solicitation Period (as defined below),
      Executive shall not, either directly or indirectly, on his own behalf or in
      the
      service or on behalf of others (i) solicit or divert, or attempt to solicit
      or
      divert (A) any person then employed by the Company or (B) any person then
      serving as a sales representative of, or a consultant to the Company, or (ii)
      solicit, divert or do business with, or attempt to solicit, divert or do
      business with, any customer of or supplier to the Company. For purposes of
      this
      Agreement, the “Non-Solicitation
      Period”
shall
      mean the three (3) year period immediately after the termination of Executive’s
      Employment by Executive or by the Company.

     

    
      
         

      

      
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    8. Nondisclosure.

     

    Executive
      has previously entered into an Employee Proprietary Information and Inventions
      Assignment Agreement with the Company (the “Proprietary
      Information Agreement”),
      which
      is incorporated herein by reference.

     

    9. Successors.

     

    (a) Company’s
      Successors.
      This
      Agreement shall be binding upon any successor (whether direct or indirect and
      whether by purchase, lease, merger, consolidation, liquidation or otherwise)
      to
      all or substantially all of the Company’s business and/or assets. For all
      purposes under this Agreement, the term “Company” shall include any successor to
      the Company’s business and/or assets which becomes bound by this
      Agreement.

     

    (b) Executive’s
      Successors.
      This
      Agreement and all rights of Executive hereunder shall inure to the benefit
      of,
      and be enforceable by, Executive’s personal or legal representatives, executors,
      administrators, successors, heirs, distributees, devisees and
      legatees.

     

    10. Miscellaneous
      Provisions.

     

    (a) Notice.
      Notices
      and all other communications contemplated by this Agreement shall be in writing
      and shall be deemed to have been duly given when personally delivered or when
      mailed by U.S. registered mail, return receipt requested and postage prepaid.
      In
      the case of Executive, mailed notices shall be addressed to him at the home
      address that he most recently communicated to the Company in writing. In the
      case of the Company, mailed notices shall be addressed to its corporate
      headquarters, and all notices shall be directed to the attention of its
      Secretary.

     

    (b) Modifications
      and Waivers.
      No
      provision of this Agreement shall be modified, waived or discharged unless
      the
      modification, waiver or discharge is agreed to in writing and signed by
      Executive and by an authorized officer of the Company or other person designated
      by the Board. No waiver by either party of any breach of, or of compliance
      with,
      any condition or provision of this Agreement by the other party shall be
      considered a waiver of any other condition or provision or of the same condition
      or provision at another time.

     

    (c) Whole
      Agreement.
      This
      Agreement supersedes any prior agreement between Executive and the Company
      in
      its entirety. No other agreements, representations or understandings (whether
      oral or written and whether express or implied) which are not expressly set
      forth in this Agreement have been made or entered into by either party with
      respect to the subject matter hereof. This Agreement and the Proprietary
      Information Agreement contain the entire understanding of the parties with
      respect to their subject matter.

     

    (d) Withholding
      Taxes.
      All
      payments made under this Agreement shall be subject to reduction to reflect
      taxes and other charges required to be withheld by law.

     

    
      
         

      

      
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    (e) Choice
      of Law.
      The
      validity, interpretation, construction and performance of this Agreement shall
      be governed by the laws of the State of Washington.

     

    (f) Severability.
      The
      invalidity or unenforceability of any provision or provisions of this Agreement
      shall not affect the validity or enforceability of any other provision hereof,
      which shall remain in full force and effect.

     

    (g) Arbitration.
      Any
      controversy or claim arising out of or relating to this Agreement, or the breach
      thereof, shall be settled in Seattle, Washington, by arbitration in accordance
      with the JAMS Employment Arbitration Rules and Procedures. The decision of
      the
      arbitrator shall be final and binding on the parties, and judgment on the award
      rendered by the arbitrator may be entered in any court having jurisdiction
      thereof. The arbitrator shall be empowered to enter an equitable decree
      mandating specific enforcement of the terms of this Agreement. The Company
      and
      Executive shall share equally all fees and expenses of the arbitrator; provided,
      however, that arbitrator shall award to the prevailing party all fees and
      expenses of the arbitrator and all of the legal fees and out-of-pocket expenses.
      

     

    (h) No
      Assignment.
      This
      Agreement and all rights and obligations of Executive hereunder are personal
      to
      Executive and may not be transferred or assigned by Executive at any time.
      The
      Company may assign its rights under this Agreement to any entity that assumes
      the Company’s obligations hereunder in connection with any sale or transfer of
      all or a substantial portion of the Company’s assets to such entity.

     

    (i) Counterparts.
      This
      Agreement may be executed in two or more counterparts each of which shall be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

     

    IN
      WITNESS WHEREOF, each of the parties has executed this Agreement, in the case
      of
      the Company by its duly authorized officer, as of the day and year first above
      written.

    
       

        
          	
                  ORGANIC
                    TO GO FOOD CORPORATION

                	 	 
	
                  a
                    Delaware corporation

                	 	 
	 	 	 
	
                  By:
                    /s/ Michael Gats

                	
                  /s/
                    Jason Brown

                	 
	
                  Michael
                    Gats, Chief Financial Officer

                	
                  JASON
                    BROWN

                	 
	 	 	
                  “Executive”

                
	
                  By:/s/
                    Douglass Lioon

                	 	 
	
                  Douglas
                    Lioon, Director

                	 	 

        

      

    

     

    
      
         

      

      
        6PURCHASE
        AND SALE AGREEMENT

      

      

      THIS
        AGREEMENT made as of the 21st day of December, 2007.

      

      BETWEEN:

      

      APACHE
        CORPORATION, a Delaware corporation (hereinafter referred to as
        "Seller")

      

      -
        and
        -

      

      VANGUARD
        PERMIAN, LLC, a Delaware limited liability company (hereinafter referred
        to as
        "Purchaser")

      

      WHEREAS
        Seller wishes to sell and Purchaser wishes to purchase the Assets, subject
        to
        and in accordance with the terms and conditions hereof;

      

      NOW
        THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
        and
        the mutual covenants and agreements hereinafter set forth, the Parties have
        agreed as follows:

      

      ARTICLE
        1

      INTERPRETATION

      

      
        	
                1.1

              	
                Definitions

              

      

       

      In
        this
        Agreement, unless the context otherwise requires:

      

      
        	 	
                (a)

              	
                "AFE's"
                  means the authorities for expenditure, operations notices, amounts
                  budgeted pursuant to any Contract and mail ballots, if any, set
                  out in
                  Schedule "M" under the heading
                  "AFE's";

              

      

       

      
        	 	
                (b)

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

              

      

       

      
        	 	
                (c)

              	
                “Allocated
                  Value”
                  means, with respect to a Property scheduled on Schedule “G”, that portion
                  of the Purchase Price allocated to such Property as set forth on
                  Schedule
                  “G”;

              

      

       

      
        	 	
                (d)

              	
                "Assets"
                  means all of Seller’s right, title and interest in and to the Leases,
                  Mineral Rights, Wells, Hydrocarbons, Real Property, Equipment,
                  Pipelines,
                  Easements, Contracts, Imbalances and Records, save and except the
                  Excluded
                  Assets;

              

      

       

      
        	 	
                (e)

              	
                “Breakage
                  Costs”
                  shall have the meaning ascribed thereto in Section
                  9.3;

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (f)

              	
                "Business
                  Day"
                  means a day other than a Saturday, a Sunday or a holiday on which
                  commercial banks in Houston, Texas are not open to the
                  public;

              

      

       

      
        	 	
                (g)

              	
                "Certificate"
                  means a written certification of a matter or matters of fact which,
                  if
                  required from a corporation, shall be made by an officer of the
                  corporation, on behalf of the corporation and not in any personal
                  capacity;

              

      

       

      
        	 	
                (h)

              	
                "Closing"
                  means the closing of the purchase and sale of the Assets herein
                  provided
                  for;

              

      

       

      
        	 	
                (i)

              	
                "Closing
                  Place"
                  means the offices of Seller, or such other place as may be agreed
                  upon in
                  writing by Seller and Purchaser;

              

      

       

      
        	 	
                (j)

              	
                "Closing
                  Time"
                  means the hour of 9:00 a.m. Central Time on the 31st day of January,
                  2008, unless extended by Purchaser upon not less than ten (10)
                  days’
                  prior, written notice to Seller (and except that Purchaser may
                  not extend
                  the Closing Time later than February 29, 2008); provided that,
                  if
                  Purchaser extends the Closing Time and if Closing does not occur
                  by
                  January 31, 2008, interest shall accrue on the Purchase Price at
                  the Prime
                  Interest Rate for the period between the Effective Time and the
                  Closing
                  Time, and provided further that if Closing does not occur on or
                  before
                  March 31, 2008, either Party may terminate this Agreement upon
                  written
                  notice to the other Party unless such failure to close shall be
                  due to a
                  breach of this Agreement by the party seeking to terminate this
                  Agreement;
                  

              

      

       

      
        	 	
                (k)

              	
                “Code”
                  means the Internal Revenue Code of 1986, as
                  amended;

              

      

       

      
        	 	
                (l)

              	
                “Contracts”
                  means to the extent transferable, all contracts, agreements and
                  instruments by which any of the Leases, Mineral Rights, Real Property,
                  Wells, Hydrocarbons, Equipment, Pipelines or Easements are bound
                  or which
                  otherwise relate thereto, but only such portions thereof to the
                  extent
                  applicable to the Leases, Mineral Rights, Real Property, Wells,
                  Hydrocarbons, Equipment, Pipelines or Easements, including the
                  Material
                  Contracts and product purchase and sale contracts, gas gathering
                  contracts, salt water disposal agreements, processing agreements,
                  transportation agreements, surface use agreements, facilities sharing
                  agreements, compression agreements, production handling agreements,
                  equipment leases, farmouts and farmins, options, orders, unitization,
                  pooling, spacing or consolidation agreements and operating
                  agreements;

              

      

       

      
        	 	
                (m)

              	
                "Counsel"
                  means any Houston attorney or law firm thereof retained by Seller
                  or
                  Purchaser, as the case may be;

              

      

       

      
        	 	
                (n)

              	
                "Damages"
                  means any and all demands, actions, causes of action, suits, losses,
                  penalties, fines, forfeitures, costs, claims, damages, expenses
                  and
                  liabilities in respect of which a Party has a claim pursuant to
                  this
                  Agreement including without limitation reasonable cost of defense
                  and
                  settlement and court costs, reasonable attorneys’ fees and expert
                  witnesses’ fees;

              

      

       

      
        	 	
                (o)

              	
                "Deposit"
                  shall have the meaning ascribed thereto in Section 2.2(a);

              

      

       

      
        
          
          

        

        
          -
            2 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (p)

              	
                "Easements"
                  means to the extent transferable, all rights-of-way, easements,
                  servitudes, subsurface leases, permits and licenses appurtenant
                  to the
                  Leases, Mineral Rights, Wells, Equipment or Pipelines, including
                  those
                  described on Schedule "D", but only such portions thereof as are
                  applicable to the Leases, Mineral Rights, Real Property, Wells,
                  Equipment
                  or Pipelines;

              

      

       

      
        	 	
                (q)

              	
                "Effective
                  Time"
                  means the hour of 12:01 a.m., at the location of the Assets, on the
                  1st day of October, 2007;

              

      

       

      
        	 	
                (r)

              	
                "Environmental
                  Defect Adjustment"
                  shall have the meaning ascribed thereto in Section 11.2(c);

              

      

       

      
        	 	
                (s)

              	
                "Environmental
                  Law(s)"
                  means all federal, state and municipal statutes, regulations, common
                  law,
                  governmental orders and directives respecting the protection or
                  conservation of the environment, the control of or contamination
                  or
                  pollution or the investigation, remediation or restoration of soil,
                  air or
                  water (including, without limitation, ground water) applicable
                  to the
                  Assets in effect as of the date of this Agreement and as interpreted
                  by
                  court decisions or administrative orders as of the date of this
                  Agreement
                  in the jurisdiction in which such Asset is located. Environmental
                  Laws do
                  not include good or desirable operating practices or standards
                  that may be
                  employed or adopted by other oil or gas well operators or merely
                  recommended, but not required, by a governmental
                  authority;

              

      

       

      
        	 	
                (t)

              	
                "Environmental
                  Liabilities"
                  means any and all Damages in respect of the environment attributable
                  to
                  the Assets, including any such damage relating to any wells, facilities
                  or
                  pipelines ever located on or associated with the Assets, including
                  those
                  which have been abandoned, or which arise in connection with the
                  ownership
                  thereof or operations pertaining thereto, including, without limitation,
                  liabilities related to or arising
                  from:

              

      

       

      
        	 	
                (i)

              	
                transportation,
                  storage, use or disposal of toxic or hazardous
                  substances;

              

      

       

      
        	 	
                (ii)

              	
                release,
                  spill, escape or emission of toxic or hazardous
                  substances;

              

      

       

      
        	 	
                (iii)

              	
                pollution
                  or contamination of or damage to the
                  environment;

              

      

       

      
        	 	
                (iv)

              	
                violations
                  of Environmental Laws;

              

      

       

      
        	 	
                (v)

              	
                Third
                  Parties (including, without limitation, oil and gas operations,
                  damage to
                  property, personal injury and death);
                  or

              

      

       

      
        	 	
                (vi)

              	
                obligations
                  (other than the normal and ordinary, whether regulatory, contractual
                  or
                  otherwise, obligations for reclamation, remediation and abandonment
                  of
                  wellsites at the end of the life of such wells) to take action
                  to prevent
                  or rectify damage to or otherwise protect the
                  environment;

              

      

       

      and,
        for
        purposes of this Agreement, "the environment" includes, without limitation,
        the
        air, the surface and subsurface of the earth, bodies of water (including,
        without limitation, rivers, streams, lakes, aquifers and groundwater) and
        plant
        and animal life (including humans). For further clarity, Environmental
        Liabilities include any environmental pollution, contamination, damage or
        other
        environmental problem regardless of when such damage arose;

       

      
        
          
          

        

        
          -
            3 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (u)

              	
                "Equipment"
                  means all personal property, fixtures, improvements, and facilities
                  appurtenant to the Leases, Mineral Rights, Real Property or Wells
                  or used
                  exclusively in connection with the ownership or operation of the
                  Leases,
                  Mineral Rights, Real Property or Wells or the production, treatment,
                  sale
                  or disposal of Hydrocarbons;

              

      

       

      
        	 	
                (v)

              	
                "Excluded
                  Assets"
                  means:

              

      

       

      
        	 	
                (i)

              	
                other
                  than with respect to Imbalances, all accounts receivable arising
                  out of,
                  associated with, or relating to the Assets that, in accordance
                  with GAAP,
                  are attributable to the period prior to the Effective Time, regardless
                  of
                  when received, including all insurance proceeds and third party
                  recoveries
                  attributable to any event occurring prior to the Effective Time;
                  

              

      

       

      
        	 	
                (ii)

              	
                other
                  than with respect to Imbalances, all claims and rights relating
                  to
                  overpayments or refunds of costs and expenses (including Taxes
                  and
                  Royalties) arising out of, associated with, or relating to the
                  Assets
                  that, in accordance with GAAP, are attributable to the period prior
                  to the
                  Effective Time, including the right to initiate, prosecute or participate
                  in, at Seller’s sole cost and expense, all audits, audit claims and tax
                  claims or proceedings relating to or including periods prior to
                  the
                  Effective Time, regardless of when commenced or received, arising
                  out of
                  or under applicable law, contracts and agreements or otherwise,
                  and to
                  recover all revenues, proceeds, costs and expenses claimed or shown
                  by
                  such audits or proceedings as owing to the owner of the Assets
                  for periods
                  prior to the Effective Time; 

              

      

       

      
        	 	
                (iii)

              	
                (A)
                  with respect to any Pipeline, Contract or Easement that relates
                  in part to
                  the Assets and in part to other assets or interests of Seller that
                  can be
                  assigned in part to Purchaser, all portions of such Pipeline, Contract
                  or
                  Easement that do not relate solely to the Assets and (B) with respect
                  to
                  any Pipeline, Contract or Easement that relates in part to the
                  Assets and
                  in part to other assets or interests of Seller that cannot be assigned
                  in
                  part to Purchaser, the entirety of such Pipeline, Contract or
                  Easement;

              

      

       

      
        	 	
                (iv)

              	
                all
                  proprietary and licensed seismic data; provided, however, that
                  to the
                  extent Seller holds proprietary seismic data covering the Leases
                  which
                  Seller has the right to license without charge, Seller agrees to
                  license
                  such data to Purchaser without any licensing fee (provided that
                  Purchaser
                  shall pay any applicable charges, costs and fees that may be incurred
                  in
                  connection with such license), to the extent it covers the Leases,
                  pursuant to Seller’s standard form of seismic license agreement;
                  

              

      

       

      
        	 	
                (v)

              	
                all
                  Records that may be retained by Purchaser pursuant to Section
                  3.3;

              

      

       

      
        
          
          

        

        
          -
            4 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (vi)

              	
                all
                  computers, proprietary software, and communications equipment except
                  metering equipment that is integral to the production of Hydrocarbons
                  from
                  the Leases or that is located on the lands covered by the
                  Leases;

              

      

       

      
        	 	
                (vii)

              	
                all
                  tools, vehicles and other equipment and material temporarily located
                  on
                  the Real Property or on the Leases or lands pooled or unitized
                  therewith;
                  

              

      

       

      
        	 	
                (viii)

              	
                any
                  patent, patent application, logo, service mark, copyright, trade
                  name or
                  trademark of or associated with Seller or any affiliated or subsidiary
                  company or entity of Seller or any business of Seller or of any
                  its
                  affiliated or subsidiary companies or entities;
                  and

              

      

       

      
        	 	
                (ix)

              	
                the
                  items identified on Schedule ”F”;

              

      

       

      
        	 	
                (w)

              	
                 “Final
                  Settlement”
                  shall have the meaning ascribed thereto in Section
                  7.1(b);

              

      

       

      
        	 	
                (x)

              	
                “GAAP”
                  means generally accepted accounting principles in effect in the
                  United
                  States, as amended from time to time, using
                  the accrual method of accounting;

              

      

       

      
        	 	
                (y)

              	
                "General
                  Conveyance"
                  means the general assignment and conveyance in the form of
                  Schedule "H";

              

      

       

      
        	 	
                (z)

              	
                “Hedge”
                  shall have the meaning ascribed thereto in Section
                  9.3;

              

      

       

      
        	 	
                (aa)

              	
                “Hydrocarbons”
                  means all
                  natural gas, casinghead gas, drip gasoline, natural gas liquids,
                  condensate, products, crude oil and other hydrocarbons (including
                  produced
                  water and carbon dioxide), whether gaseous or liquid, produced
                  from or
                  attributable to the Leases, Mineral Rights or Wells after the Effective
                  Time;

              

      

       

      
        	 	
                (bb)

              	
                "Imbalances"
                  means all rights with respect to overproduction, underproduction,
                  overdelivery or underdelivery of Hydrocarbons produced from or
                  allocated
                  to the Leases, Mineral Rights or Wells or otherwise attributable
                  to any
                  Equipment, Pipeline or Contract, regardless of when such rights
                  arose or
                  whether attributable to any facility, wellhead, pipeline, plant,
                  gathering
                  system, transportation system or otherwise, including, without
                  limitation,
                  the Imbalances disclosed on Schedule
“T”;

              

      

       

      
        	 	
                (cc)

              	
                “Interim
                  Accounting of Adjustments”
                  shall have the meaning ascribed thereto in Section
                  7.1(a)(x);

              

      

       

      
        	 	
                (dd)

              	
                "Leases"
                  means the leasehold estates created by the oil and gas leases described
                  on
                  Schedule "A", together with all other interests of Seller in the
                  Leases including overriding royalty interests, production payments
                  and
                  other payments out of or measured by the value of oil and gas production
                  from or attributable to the Leases and/or Mineral
                  Rights;

              

      

       

      
        
          
          

        

        
          -
            5 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (ee)

              	
                “Losses”
                  means any and all claims, demands, suits, causes of action, proceedings,
                  judgments, losses, charges, fines, penalties, and fees, costs and
                  expenses
                  (including, without limitation, court costs, reasonable attorneys’ fees,
                  and expert witnesses’ fees) sustained, suffered or incurred in connection
                  with, or related to, any matter which is the subject of indemnification
                  under Article 6; provided, however, that in computing the amount
                  of any
                  Losses for purposes of determining the liability of a Party under
                  Article
                  6, (a) the amount of any insurance proceeds actually received by
                  the
                  indemnified person, less any deductibles, shall be deducted from
                  such
                  Losses; (b) the amount of any Tax benefit actually used to reduce
                  Taxes by
                  the indemnified person arising from the incurrence or payment of
                  any such
                  Losses shall be deducted from such Losses; and (c) the amount of
                  any
                  Losses in the form of consequential or punitive Losses and Losses
                  for lost
                  profits shall not be included in Losses that an indemnified person
                  may
                  seek indemnification under Article 6, other than consequential
                  and
                  punitive Losses and Losses for lost profits actually paid to a
                  Third Party
                  that is not an indemnified person pursuant to an Third Party Claim.
                  “Losses” shall not include any increased operational costs incurred as a
                  result of any compliance obligations agreed to in a
                  settlement;

              

      

       

      
        	 	
                (ff)

              	
                "Knowledge"
                  means, with respect to Seller, the actual knowledge of any of the
                  following officers and employees of Seller: John J. Christmann
                  IV, Vice
                  President - Business Development; Thomas E. Voytovich, Vice President
                  -
                  Central Region, Doug O’Neil, Operations Manager - Central Region, Timothy
                  Custer, Manager - Business Development, David Woolf, Manager EH&S -
                  Central Region, and Jeff Smith, Senior Technical Advisor - Business
                  Development;

              

      

       

      
        	 	
                (gg)

              	
                "Material
                  Contracts"
                  means contracts for the sale, processing, injection, disposal or
                  transportation of Hydrocarbons produced from the Leases, Mineral
                  Rights or
                  lands pooled or unitized therewith, including, without limitation,
                  the
                  contracts set out in Schedule "I" under the heading "Material
                  Contracts" which are the contracts that are not terminable on less
                  than
                  thirty-one (31) days' notice; 

              

      

       

      
        	 	
                (hh)

              	
                “Mineral
                  Rights”
                  means the fee mineral interests and mineral rights described on
                  Schedule
                  “B”;

              

      

       

      
        	 	
                (ii)

              	
                "Operator"
                  means, in respect of a particular Asset, the designation of Seller
                  as
                  operator thereof under the applicable Contracts and/or
                  Records;

              

      

       

      
        	 	
                (jj)

              	
                "Party"
                  means a party to this Agreement;

              

      

       

      
        	 	
                (kk)

              	
                "Permitted
                  Encumbrances"
                  means: 

              

      

       

      
        	 	
                (i)

              	
                lessors’
                  royalties, overriding royalties, production payments, net profits
                  interests, unitization and pooling designations and agreements,
                  reversionary interests and similar burdens that do not reduce the
                  net
                  revenue interest for any Property below that set forth on Schedule
“G” for
                  such Property or increase the working interest for any Property
                  above that
                  set forth on Schedule “G” for such Property without a proportionate
                  increase in the corresponding net revenue
                  interest;

              

      

       

      
        	 	
                (ii)

              	
                third
                  party consents required for the transfer of any of the Assets as
                  applicable following the consummation of the transactions contemplated
                  by
                  this Agreement;

              

      

       

      
        
          
          

        

        
          -
            6 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (iii)

              	
                preferential
                  rights to purchase all or any portion of the Assets as applicable
                  following the consummation of the transactions contemplated by
                  this
                  Agreement;

              

      

       

      
        	 	
                (iv)

              	
                easements,
                  rights-of-way, servitudes, licenses and permits on, over, across
                  or in
                  respect of any of the Assets;

              

      

       

      
        	 	
                (v)

              	
                rights
                  reserved to or vested in any governmental agency 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 agency
                  or under
                  any franchise, grant, license or permit issued by any such governmental
                  agency;

              

      

       

      
        	 	
                (vi)

              	
                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: (A) if they have not been filed pursuant to law; (B) if
                  filed,
                  that have not yet become due and payable and payment is being withheld
                  as
                  provided by law; or (C) if their validity is being contested in
                  good faith
                  in the ordinary course of business by appropriate
                  action;

              

      

       

      
        	 	
                (vii)

              	
                Imbalances;
                  and 

              

      

       

      
        	 	
                (viii)

              	
                any
                  other liens, charges, encumbrances, contracts, agreements, instruments,
                  obligations, defects or irregularities of any kind whatsoever affecting
                  the Assets that (i) do not materially reduce the value of or materially
                  interfere with the use or ownership of the Assets subject thereto
                  or
                  affected thereby (as currently used or owned), (ii) would be accepted
                  by a
                  reasonably prudent purchaser engaged in the business of owning
                  and
                  operating oil and gas properties, (iii) do not prevent Seller from
                  receiving the proceeds of production, and (iv) do not operate to:
                  (A)
                  reduce the net revenue interest for any Property below that set
                  forth on
                  Schedule “G” for such Property; or (B) increase the working interest for
                  any Property above that set forth on Schedule “G” for such Property
                  without a proportionate increase in the corresponding net revenue
                  interest;

              

      

       

      
        	 	
                (ll)

              	
                "Personal
                  Information"
                  means any information about an identifiable individual, other than
                  that
                  person's business title or business contact information (such as
                  business
                  phone and fax number, business address and business e-mail) when
                  used or
                  disclosed for the purpose of business
                  communications;

              

      

       

      
        	 	
                (mm)

              	
                "Pipelines"
                  means all flowlines, gathering lines, salt water disposal lines
                  and other
                  pipelines appurtenant to the Leases, Mineral Rights, Real Property
                  or
                  Wells or used exclusively in connection with the ownership or operation
                  of
                  the Leases, Mineral Rights, Real Property or Wells or the production,
                  treatment, gathering, transportation, sale or disposal of Hydrocarbons
                  or
                  water produced in association therewith, including those Pipelines
                  described on Schedule "E";

              

      

       

      
        
          
          

        

        
          -
            7 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (nn)

              	
                "Prime
                  Interest Rate"
                  means the lesser of (i) the Prime Rate published in the Wall Street
                  Journal plus 2% per annum or (ii) the maximum rate allowed by applicable
                  law;

              

      

       

      
        	 	
                (oo)

              	
                "Property"
                  means a specific line item identified on Schedule
                  “G”;

              

      

       

      
        	 	
                (pp)

              	
                "Purchase
                  Price"
                  means the sum of money first set out in
                  Section 2.2;

              

      

       

      
        	 	
                (qq)

              	
                "Purchaser's
                  Certificate"
                  means the certificate in the form of
                  Schedule "K”;

              

      

       

      
        	 	
                (rr)

              	
                “Real
                  Property”
                  means all surface fee interests, surface leases and surface use
                  agreements
                  described on Schedule "C", including all improvements, buildings
                  and other
                  structures located thereon;

              

      

       

      
        	 	
                (ss)

              	
                “Records”
                  means all records and files in the possession of Seller relating
                  to the
                  Leases, Mineral Rights, Wells, Real Property, Hydrocarbons, Equipment,
                  Pipelines, Easements, Contracts or Imbalances, save and except
                  for (A)
                  records that Seller is prohibited from disclosing or transferring
                  under
                  any third party agreement, (B) information entitled to legal privilege,
                  including attorney work product and attorney-client communications
                  (except
                  for title opinions, which shall be included in the Records), (C)
                  economic
                  projections and (D) records of offers from, or negotiations with,
                  Purchaser or third parties with respect to any proposed transfer
                  of any of
                  the Assets and economic analyses associated
                  therewith;

              

      

       

      
        	 	
                (tt)

              	
                “Revenues”
                  shall have the meaning ascribed thereto in Section
                  7.1(a);

              

      

       

      
        	 	
                (uu)

              	
                "Rights
                  of First Refusal"
                  means any preferential, pre-emptive or first purchase right or
                  similar
                  right in respect of Seller's proposed sale of the Assets to Purchaser
                  herein;

              

      

       

      
        	 	
                (vv)

              	
                “Sales
                  Tax”
                  means any and all transfer, sales, gross receipts, compensating
                  use, use
                  or similar taxes, and any associated penalties and
                  interest;

              

      

       

      
        	 	
                (ww)

              	
                “Royalties”
                  means all royalties, overriding royalties, rentals and other burdens
                  based
                  upon or measured by the ownership of the Assets or production of
                  Hydrocarbons;

              

      

       

      
        	 	
                (xx)

              	
                "Specific
                  Conveyances"
                  means all conveyances, assignments, transfers, novations and other
                  documents or instruments that are reasonably required or desirable
                  to
                  convey, assign and transfer the Assets to Purchaser and to novate
                  Purchaser in the place and stead of Seller with respect to the
                  Assets;

              

      

       

      
        	 	
                (yy)

              	
                “Taxes”
                  means any and all ad valorem, property, production, excise, severance
                  and
                  similar taxes (other than income taxes) based upon or measured
                  by the
                  ownership of the Assets or production of Hydrocarbons (or the receipt
                  of
                  proceeds with respect thereto);

              

      

       

      
        	 	
                (zz)

              	
                "Third
                  Party"
                  means any individual or entity other than Seller and Purchaser,
                  or an
                  Affiliate of Seller or Purchaser, including without limitation
                  any
                  partnership, corporation, trust, unincorporated organization, union,
                  government and any department and agency thereof and any heir,
                  executor,
                  administrator or other legal representative of an
                  individual;

              

      

       

      
        
          
          

        

        
          -
            8 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (aaa)

              	
                "Third
                  Party Claim"
                  means any action, proceeding, demand, claim or investigation by
                  a Third
                  Party that may result in a Loss; 

              

      

       

      
        	 	
                (bbb)

              	
                "this
                  Agreement", "herein", "hereto", "hereof"
                  and similar expressions mean and refer to this Purchase and Sale
                  Agreement;

              

      

       

      
        	 	
                (ccc)

              	
                “Title
                  Defect”
                  means any defect or irregularity in Seller’s title to any of the Assets,
                  excluding Permitted Encumbrances and Rights of First Refusal and
                  excluding
                  any such defects or irregularities which do not or would not, if
                  known,
                  affect in a negative manner, any reasonable and bona
                  fide
                  economic evaluation of the affected Assets. Title Defects shall
                  not
                  include:

              

      

       

      
        	 	
                (i)

              	
                defects
                  based solely on lack of information in Seller’s
                  files;

              

      

       

      
        	 	
                (ii)

              	
                any
                  of the matters disclosed on the Schedules to this
                  Agreement;

              

      

       

      
        	 	
                (iii)

              	
                defects
                  in the chain of title consisting of the failure to recite marital
                  status
                  in a document or omissions of successors of heirship or estate
                  proceedings, unless Purchaser provides affirmative evidence that
                  such
                  failure or omission has resulted in another party's actual and
                  superior
                  claim of title to the relevant
                  Asset;

              

      

       

      
        	 	
                (iv)

              	
                defects
                  or irregularities arising out of prior oil and gas leases or assignments
                  which such defects or irregularities, on their face, expired more
                  than ten
                  (10) years prior to the Effective Time unless Purchaser provides
                  irrefutable evidence that such defects or irregularities have resulted
                  in
                  a Third Party's actual and superior claim of title to the relevant
                  Asset;

              

      

       

      
        	 	
                (v)

              	
                defects
                  arising out of lack of survey;

              

      

       

      
        	 	
                (vi)

              	
                defects
                  in the chain of title relating to periods prior to January 1,
                  1982;

              

      

       

      
        	 	
                (vii)

              	
                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 party's actual and superior claim of title
                  to the
                  relevant Asset;

              

      

       

      
        	 	
                (viii)

              	
                defects
                  that are barred by limitations or that are defensible due to the
                  fact that
                  possession under applicable statutes of limitation or adverse possession
                  has existed for the requisite time;

              

      

       

      
        	 	
                (ix)

              	
                rights
                  of reassignment arising upon final intention to abandon or release
                  the
                  Assets, or any of them;

              

      

       

      
        	 	
                (x)

              	
                defects
                  based on failure to record leases issued by any federal agency
                  or state,
                  or any assignments of record title or operating rights in such
                  leases, in
                  the real property or other county or parish records of the county
                  or
                  parish in which such Asset is
                  located;

              

      

       

      
        
          
          

        

        
          -
            9 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (xi)

              	
                defects
                  based on a gap in Seller's chain of title in the federal records
                  as to
                  federal leases, or in the state's records as to state leases or
                  in the
                  county records as to fee leases, unless such gap is affirmatively
                  shown to
                  exist in such records by an abstract of title or title opinion,
                  which
                  documents shall be included in a Purchaser’s notice delivered pursuant to
                  Section 10.1 below; 

              

      

       

      
        	 	
                (xii)

              	
                defects
                  based on failure to pool all acreage in a drilling and spacing
                  unit, if
                  the affected lands are in the process of being pooled by Seller
                  or failure
                  to amend pooling orders for infill wells, or failure to appropriately
                  file
                  such pooling orders in the county records;
                  and

              

      

       

      
        	 	
                (xiii)

              	
                defects
                  based solely on the inability to access any records of Seller or
                  any
                  inadequacy or gap in Seller’s
                  records;

              

      

       

      
        	 	
                (ddd)

              	
                "Title
                  Defects Adjustment"
                  shall have the meaning ascribed thereto in Section 10.2(c);

              

      

       

      
        	 	
                (eee)

              	
                "Title
                  Valuation Referee"
                  shall have the meaning ascribed thereto in
                  Section 10.3;

              

      

       

      
        	 	
                (fff)

              	
                "Transferred
                  Information"
                  means the Personal Information to be disclosed or conveyed to Purchaser
                  or
                  any of its representatives or agents by or on behalf of Seller
                  as a result
                  of or in conjunction with the transactions contemplated herein,
                  and
                  includes all such Personal Information disclosed to Purchaser during
                  the
                  period leading up to and including the completion of the transactions
                  contemplated herein;

              

      

       

      
        	 	
                (ggg)

              	
                "Seller's
                  Certificate"
                  means the certificate in the form of Schedule "J";
                  and

              

      

       

      
        	 	
                (hhh)

              	
                "Wells"
                  means any and all oil and gas wells, salt water disposal wells,
                  injection
                  wells, and other wells and wellbores located on the Leases and/or
                  Mineral
                  Rights or lands pooled or unitized therewith, whether producing,
                  plugged
                  or unplugged, shut in, or permanently or temporarily
                  abandoned.

              

      

       

      
        	
                1.2

              	
                Headings

              

      

       

      The
        expressions "Article", "Section", "subsection", "clause", "subclause",
        "paragraph" and "Schedule" followed by a number or letter or combination
        thereof
        mean and refer to the specified article, Section, subsection, clause, subclause,
        paragraph and schedule of or to this Agreement.

      

      
        	
                1.3

              	
                Interpretation
                  Not Affected by Headings

              

      

       

      The
        division of this Agreement into Articles, Sections, subsections, clauses,
        subclauses and paragraphs and the provision of headings for all or any thereof
        are for convenience and reference only and shall not affect the construction
        or
        interpretation of this Agreement.

       

      
        
          
          

        

        
          -
            10 -

          
            

          

        

        
          
          

        

      

       

      
        	
                1.4

              	
                Included
                  Words

              

      

       

      When
        the
        context reasonably permits, words suggesting the singular shall be construed
        as
        suggesting the plural and vice versa, and words suggesting gender or gender
        neutrality shall be construed as suggesting the masculine, feminine and neutral
        genders.

      

      
        	
                1.5

              	
                Schedules

              

      

       

      There
        are
        appended to this Agreement the following schedules pertaining to the following
        matters:

      

        
          	
                  Schedule
                    "A"

                	
                  -

                	
                  Leases

                
	
                  Schedule
                    "B"

                	
                  -

                	
                  Mineral
                    Rights

                
	
                  Schedule
                    "C"

                	
                  -

                	
                  Real
                    Property

                
	
                  Schedule
                    "D"

                	
                  -

                	
                  Easements

                
	
                  Schedule
                    "E"

                	
                  -

                	
                  Pipelines

                
	
                  Schedule
                    "F"

                	
                  -

                	
                  Excluded
                    Assets

                
	
                  Schedule
                    "G"

                	
                  -

                	
                  Allocated
                    Values

                
	
                  Schedule
                    "H"

                	
                  -

                	
                  Form
                    of General Conveyance

                
	
                  Schedule
                    "I"

                	
                  -

                	
                  Material
                    Contracts

                
	
                  Schedule
                    "J"

                	
                  -

                	
                  Seller's
                    Certificate

                
	
                  Schedule
                    "K”

                	
                  -

                	
                  Purchaser's
                    Certificate

                
	
                  Schedule
                    "L”

                	
                  -

                	
                  Form
                    of Novation Agreement

                
	
                  Schedule
                    "M"

                	
                  -

                	
                  AFE's

                
	
                  Schedule
                    "N"

                	
                  -

                	
                  Environmental
                    Orders

                
	
                  Schedule
                    "O"

                	
                  -

                	
                  Rights
                    of First Refusal

                
	
                  Schedule
                    “P”

                	
                  -

                	
                  Litigation

                
	
                  Schedule
                    “Q”

                	
                  -

                	
                  Taxes
                    and Royalties

                
	
                  Schedule
                    “R”

                	
                  -

                	
                  Financial
                    Commitments

                
	
                  Schedule
                    “S”

                	
                  -

                	
                  Compliance
                    with Laws

                
	
                  Schedule
                    “T”

                	
                  -

                	
                  Imbalances

                
	
                  Schedule
                    “U”

                	
                  -

                	
                  Compliance
                    Orders

                
	
                  Schedule
                    “V”

                	
                  -

                	
                  Unresolved
                    Audits

                
	
                  Schedule
                    “W”

                	
                  -

                	
                  Royalties
                    or Tax Claims

                
	
                  Schedule
                    “X”

                	
                  -

                	
                  Hedge
                    Schedule

                

        

      

       

      Such
        schedules are incorporated herein by reference as though contained in the
        body
        hereof. Wherever any term or condition of such schedules conflicts or is
        at
        variance with any term or condition in the body of this Agreement, such term
        or
        condition in the body of this Agreement shall prevail.

       

      ARTICLE
        2

      PURCHASE
        AND SALE

       

      
        	
                2.1

              	
                Purchase
                  and Sale

              

      

       

      Subject
        to and in accordance with the terms of this Agreement, Seller hereby agrees
        to
        sell and Purchaser hereby agrees to purchase from Seller the Assets, subject
        to
        the Permitted Encumbrances.

       

      
        
          
          

        

        
          -
            11 -

          
            

          

        

        
          
          

        

      

       

      
        	
                2.2

              	
                Purchase
                  Price

              

      

       

      The
        aggregate consideration to be paid by Purchaser to Seller for Seller's interest
        in and to the Assets shall be Seventy Eight Million Three Hundred Thousand
        Dollars ($78,300,000) (the "Purchase Price") payable as follows:

      

      
        	 	
                (a)

              	
                ten
                  percent (10%) of the Purchase Price representing an earnest money
                  deposit
                  and being payable by Purchaser to Seller upon execution of this
                  Agreement
                  (the "Deposit"); and

              

      

       

      
        	 	
                (b)

              	
                the
                  balance of the Purchase Price, as adjusted, payable at Closing,
                  subject to
                  any post-Closing adjustments in accordance with Article
                  7
                  hereof.

              

      

       

      
        	
                2.3

              	
                Deposit

              

      

       

      Seller
        acknowledges receipt from Purchaser of the Deposit. Seller will invest the
        Deposit in an interest bearing account. If Closing occurs at the Closing
        Time,
        the Deposit (plus accrued interest as described in the following paragraph)
        shall be retained by Seller and applied towards the Purchase Price. If Closing
        does not occur at the Closing Time, the Deposit (plus interest) shall be
        governed by Section 13.2.

      

      If
        Closing does not occur and the Deposit is returned to Purchaser pursuant
        to
        Section 4.1,
        Purchaser shall receive interest on the Deposit (and not compounded) from
        the
        date the Deposit was received up to and including the date the Deposit is
        returned to Purchaser. For purposes of this clause only, “interest” shall mean
        the interest which Seller actually receives on the Deposit less any fees
        which
        Seller actually incurred in maintaining the Deposit, including, without
        limitation, and escrow fees incurred in connection with Seller’s anticipated
        performance of a like-kind exchange as is contemplated under Section 2.6(c)
        below. Seller shall provide evidence of such interest to Purchaser upon
        request.

      

      
        	
                2.4

              	
                Form
                  of Payment

              

      

       

      All
        payments to be made pursuant to this Agreement shall be in U.S. funds. All
        payments to be made at Closing shall be made by wire transfer.

      

      
        	
                2.5

              	
                Allocation
                  of Purchase Price

              

      

       

      The
        allocation of the Purchase Price provided for on Schedule "G" is intended
        to
        comply with the allocation method required by Section 1060 of the Code.
        Purchaser and Seller shall cooperate to comply with all substantive and
        procedural requirements of Section 1060 and regulations thereunder, including
        the filing by Purchaser and Seller of an IRS Form 8594 with their federal
        income
        tax returns for the taxable year in which Closing occurs.  Purchaser and
        Seller agree that each will not take for income tax purposes, or permit any
        affiliated or subsidiary company to take, any position inconsistent with
        the
        allocation of Purchase Price set forth on Schedule "G". PURCHASER SHALL DEFEND,
        INDEMNIFY AND HOLD SELLER AND
        ITS
        DIRECTORS, OFFICERS, SERVANTS, AGENTS, EMPLOYEES, CONSULTANTS AND
        REPRESENTATIVES
        HARMLESS
        FROM AND AGAINST ANY AND ALL LOSSES FOR THIRD PARTY CLAIMS WHICH ARISE OUT
        OF,
        ARE ASSOCIATED WITH, OR RELATE TO THE ALLOCATION OF THE PURCHASE PRICE AS
        SET
        FORTH IN THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, ANY ASSERTION THAT
        SUCH
        ALLOCATION WAS NOT APPROPRIATE OR MADE IN GOOD FAITH) PROVIDED THAT SUCH
        INDEMNITY SHALL NOT APPLY TO ANY LIABILITY FOR TAXES ATTRIBUTABLE TO THE
        TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT FOR PENALTIES AND INTEREST
        ARISING OUT OF SUCH ALLOCATION OF THE PURCHASE PRICE.

       

      
        
          
          

        

        
          -
            12 -

          
            

          

        

        
          
          

        

      

       

      
        	
                2.6

              	
                Taxes

              

      

       

      
        	 	
                (a)

              	
                Seller
                  shall bear all Taxes and assessments, including any federal, state
                  or
                  local taxes or assessments attributable to ownership or operation
                  of the
                  Assets prior to the Effective Time; and all deductions, credits
                  or refunds
                  pertaining to the aforementioned Taxes and assessments, no matter
                  when
                  received, belong to Seller.  Provided that Closing has occurred,
                  Purchaser shall bear all Taxes and assessments, including any federal,
                  state or local taxes and assessments attributable to ownership
                  or
                  operation of the Assets on and after the Effective Time (excluding
                  Seller’s income taxes from the Effective Time through Closing); and all
                  deductions, credits and refunds pertaining to the aforementioned
                  Taxes and
                  assessments attributable to such period, no matter when received,
                  belong
                  to Purchaser.  Taxes which are based on revenue from the Assets shall
                  apply to the tax year for which the tax rendition is issued and
                  be
                  prorated based on the percentage of the assessment period occurring
                  before
                  and after the Effective Time.  Actual amounts shall be accounted for
                  in the Final Adjustment.  Purchaser shall bear all sales Taxes, if
                  any, on the transaction contemplated by this Agreement.  Each Party
                  is responsible for filing any tax returns and handling payment
                  of any Tax
                  due under the law during the period when it or its Affiliate holds
                  title
                  to the Assets. 

              

      

       

      
        	 	
                (b)

              	
                The
                  Parties agree that this sale is an occasional sale of assets by
                  Seller and
                  not a sale in the ordinary course of business.  The Parties will take
                  commercially reasonable actions to assert and establish the occasional
                  sale exemption from Sales Tax associated with the transactions
                  contemplated hereby. 
                  If Sales Tax is due and owing as a result of Seller’s transfer of the
                  Assets to Purchaser, Purchaser shall be solely responsible and
                  liable for
                  any and all such Sales Tax.  Before the Closing Time, Purchaser and
                  Seller shall agree on the value of the tangible personal property
                  being
                  transferred and Purchaser shall provide Seller with documentation
                  detailing the basis for Purchaser’s allocation of the Purchase Price to
                  any Assets that are subject to Sales Tax.  Purchaser shall provide
                  Seller with an exemption certificate for any tangible personal
                  property
                  included in the Assets for which it claims a Sales Tax exemption. 
                  Seller shall invoice, and Purchaser shall pay, any Sales Tax on
                  Purchaser’s acquisition of all nonexempt tangible personal property and
                  Seller shall remit the Sales Tax to the applicable governmental
                  entity.  NOTWITHSTANDING
                  ANYTHING CONTAINED IN THIS AGREEMENT TO THE CONTRARY, PURCHASER
                  RELEASES
                  SELLER FROM AND SHALL FULLY PROTECT, DEFEND, INDEMNIFY AND HOLD
                  SELLER
                  HARMLESS FROM AND AGAINST ANY AND ALL LOSSES (NO MATTER WHEN INCURRED
                  OR
                  ASSERTED) RELATING TO, ARISING OUT OF, OR CONNECTED WITH, DIRECTLY
                  OR
                  INDIRECTLY, SALES TAX RESULTING FROM OR ASSOCIATED WITH SELLER’S TRANSFER
                  OF ASSETS TO PURCHASER. 
                  THIS INDEMNITY AND DEFENSE OBLIGATION APPLIES REGARDLESS OF CAUSE
                  OR OF
                  ANY NEGLIGENT ACTS OR OMISSIONS (INCLUDING SOLE NEGLIGENCE, CONCURRENT
                  NEGLIGENCE OR STRICT LIABILITY), BREACH OF DUTY (STATUTORY OR OTHERWISE),
                  VIOLATION OF LAW, OR OTHER FAULT OF SELLER OR ANY PRE-EXISTING
                  DEFECT. If
                  Seller is later required to pay any additional Sales Tax, interest,
                  or
                  penalty thereon, Purchaser shall reimburse Seller within thirty
                  (30) days
                  after receipt of Seller’s written notice of the
                  payment.

              

      

       

      
        
          
          

        

        
          -
            13 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (c)

              	
                Seller
                  reserves the right to structure the transaction contemplated hereby
                  as a
                  non-simultaneous like-kind exchange under section 1031 of the Code.
                  If
                  Seller so elects, Purchaser shall execute all documents reasonably
                  necessary to affect such non-simultaneous like-kind exchange but
                  shall not
                  be required to incur any expense or obligation in connection with
                  such
                  exchange.

              

      

       

      ARTICLE
        3

      CLOSING

       

      
        	
                3.1

              	
                Closing

              

      

       

      Closing
        shall take place at the Closing Place at the Closing Time if there has been
        satisfaction or waiver of the conditions of Closing herein contained. Subject
        to
        all other provisions of this Agreement, possession, risk and beneficial
        ownership of Seller's interest in and to the Assets shall pass from Seller
        to
        Purchaser at the Closing Time.

      

      
        	
                3.2

              	
                Deliveries
                  at Closing

              

      

       

      
        	 	
                (a)

              	
                At
                  Closing, Seller shall table the
                  following:

              

      

       

      
        	 	
                (i)

              	
                the
                  General Conveyance fully executed by
                  Seller;

              

      

       

      
        	 	
                (ii)

              	
                all
                  Specific Conveyances, if any are necessary, fully executed by
                  Seller;

              

      

       

      
        	 	
                (iii)

              	
                copies
                  of all consents to disposition and waivers of Rights of First Refusal
                  obtained by Seller with respect to the sale of the Assets to
                  Purchaser;

              

      

       

      
        	 	
                (iv)

              	
                Interim
                  Accounting of Adjustments;

              

      

       

      
        	 	
                (v)

              	
                the
                  Novation Agreement in substantially the form attached hereto as
                  Schedule
                  “L” assigning the Hedge to VGN (as such term is defined in Section
                  9.3);

              

      

       

      
        	 	
                (vi)

              	
                Seller's
                  Certificate;

              

      

       

      
        	 	
                (vii)

              	
                a
                  certificate, dated as of the Closing Time, duly executed by an
                  authorized
                  officer of Seller (a) attaching and certifying on behalf of Seller
                  those
                  instruments authorizing the execution, delivery and performance
                  by Seller
                  of this Agreement and the transactions contemplated hereby; and
                  (b)
                  certifying on behalf of Seller the incumbency of each officer of
                  Seller
                  executing this Agreement or any document delivered at Closing on
                  behalf of
                  Seller; and

              

      

       

      
        	 	
                (viii)

              	
                such
                  other items as may be specifically required
                  hereunder.

              

      

       

      
        
          
          

        

        
          -
            14 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (b)

              	
                At
                  Closing, Purchaser shall table the
                  following:

              

      

       

      
        	 	
                (i)

              	
                the
                  amounts payable at Closing on account of the Purchase
                  Price;

              

      

       

      
        	 	
                (ii)

              	
                Interim
                  Accounting of Adjustments;

              

      

       

      
        	 	
                (iii)

              	
                Purchaser's
                  Certificate;

              

      

       

      
        	 	
                (iv)

              	
                a
                  certificate, dated as of the Closing Time, duly executed by an
                  authorized
                  officer of Purchaser (a) attaching and certifying on behalf of
                  Purchaser
                  those instruments authorizing the execution, delivery and performance
                  by
                  Purchaser of this Agreement and the transactions contemplated hereby;
                  and
                  (b) certifying on behalf of Purchaser the incumbency of each officer
                  of
                  Purchaser executing this Agreement or any document delivered at
                  Closing on
                  behalf of Purchaser; and

              

      

       

      
        	 	
                (v)

              	
                such
                  other items as may be specifically required
                  hereunder.

              

      

       

      In
        addition, Purchaser will have previously executed the General Conveyance
        and the
        Specific Conveyances; and Purchaser shall have caused VGN and the counterparty
        to the Hedge to have executed the Novation Agreement tabled by Seller pursuant
        to Section 3.2(a)(v) above.

      

      
        	
                3.3

              	
                Delivery
                  of Records

              

      

       

      Seller
        shall deliver to Purchaser, at Purchaser's cost, within seven (7) days after
        Closing the original copies of all Records which are now in the possession
        of
        Seller or of which it gains possession prior to Closing. Notwithstanding
        the
        foregoing, if and to the extent such Records also pertain to interests other
        than the Assets or to such obligations as Seller may expressly retain under
        this
        Agreement, photocopies or other copies may be provided to Purchaser in lieu
        of
        original copies within thirty (30) days after Closing. 

      

      
        	
                3.4

              	
                Specific
                  Conveyances

              

      

       

      Purchaser
        shall bear all costs incurred in recording the General Conveyances and any
        Specific Conveyances and recording any further assurances required to convey
        the
        Assets to Purchaser. Purchaser shall record all such instruments promptly
        after
        Closing.

       

      ARTICLE
        4

      CONDITIONS
        OF CLOSING

       

      
        	
                4.1

              	
                Purchaser's
                  Conditions

              

      

       

      The
        obligation of Purchaser to purchase Seller's interest in and to the Assets
        is
        subject to the following conditions precedent, which are inserted herein
        and
        made a part hereof for the exclusive benefit of Purchaser and may be waived
        by
        Purchaser:

      

      
        	 	
                (a)

              	
                the
                  representations and warranties of Seller herein contained shall
                  be true in
                  all material respects when made and as of the Closing
                  Time;

              

      

       

      
        	 	
                (b)

              	
                all
                  obligations of Seller contained in this Agreement to be performed
                  prior to
                  or at Closing shall have been timely performed in all material
                  respects;
                  and

              

      

       

      
        
          
          

        

        
          -
            15 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (c)

              	
                from
                  the date of execution of this Agreement to the Closing Time, the
                  Assets
                  shall have suffered no material adverse physical damage that is
                  material
                  to the Assets in the aggregate.

              

      

       

      If
        any
        one or more of the foregoing conditions precedent has or have not been
        satisfied, complied with, or waived by Purchaser, at or before the Closing
        Time,
        Purchaser may rescind this Agreement as provided in Article 13. 

      

      
        	
                4.2

              	
                Seller's
                  Conditions

              

      

       

      The
        obligation of Seller to sell its interest in and to the Assets is subject
        to the
        following conditions precedent, which are inserted herein and made a part
        hereof
        for the exclusive benefit of Seller and may be waived by Seller:

      

      
        	 	
                (a)

              	
                the
                  representations and warranties of Purchaser herein contained shall
                  be true
                  in all material respects when made and as of the Closing
                  Time;

              

      

       

      
        	 	
                (b)

              	
                all
                  obligations of Purchaser contained in this Agreement to be performed
                  prior
                  to or at Closing shall have been timely performed in all material
                  respects;

              

      

       

      
        	 	
                (c)

              	
                all
                  amounts to be paid by Purchaser to Seller at Closing shall have
                  been paid
                  to Seller in the form stipulated in this Agreement;
                  and

              

      

       

      
        	 	
                (d)

              	
                Purchaser
                  shall have caused VGN to assume all of Seller's liabilities and
                  obligations under the Hedge.

              

      

       

      If
        any
        one or more of the foregoing conditions precedent has or have not been
        satisfied, complied with, or waived by Seller, at or before the Closing Time,
        Seller may rescind this Agreement as provided in Article13.

      

      
        	
                4.3

              	
                Efforts
                  to Fulfill Conditions Precedent

              

      

       

      Purchaser
        and Seller shall proceed diligently and in good faith and use all reasonable
        efforts to satisfy and comply with and assist in the satisfaction and compliance
        with the conditions precedent.

      

      ARTICLE
        5

      REPRESENTATIONS
        AND WARRANTIES

      

      
        	
                5.1

              	
                Representations
                  and Warranties of Seller

              

      

       

      Seller
        represents and warrants to Purchaser that:

      

      
        	 	
                (a)

              	
                Seller
                  is a corporation duly organized and validly existing under the
                  laws of the
                  jurisdiction of incorporation of Seller, is authorized to carry
                  on
                  business in the states in which the Assets are located, and now
                  has good
                  right, full power and absolute authority to sell, assign, transfer,
                  convey
                  and set over the Assets according to the true intent and meaning
                  of this
                  Agreement;

              

      

       

      
        
          
          

        

        
          -
            16 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (b)

              	
                Seller
                  is not a non-resident alien, foreign corporation, foreign partnership,
                  foreign trust or foreign estate (as those terms are defined in
                  the Code
                  and the regulations promulgated pursuant
                  thereto);

              

      

       

      
        	 	
                (c)

              	
                the
                  execution, delivery and performance of this Agreement has been
                  duly and
                  validly authorized by any and all requisite corporate, shareholders'
                  and
                  directors' actions and will not result in any violation of, be
                  in conflict
                  with or constitute a default under any articles, charter, bylaw
                  or other
                  governing document to which Seller is
                  bound;

              

      

       

      
        	 	
                (d)

              	
                the
                  execution, delivery and performance of this Agreement will not
                  result in
                  any violation of, be in conflict with or constitute a default under
                  any
                  judgment, decree, order, statute, regulation, rule or license applicable
                  to Seller;

              

      

       

      
        	 	
                (e)

              	
                this
                  Agreement and any other agreements delivered in connection herewith
                  constitute valid and binding obligations of Seller enforceable
                  against
                  Seller in accordance with their
                  terms;

              

      

       

      
        	 	
                (f)

              	
                Seller
                  has not incurred any obligation or liability, contingent or otherwise,
                  for
                  brokers' or finders' fees in respect of this Agreement or the transaction
                  to be effected by it for which Purchaser shall have any obligation
                  or
                  liability;

              

      

       

      
        	 	
                (g)

              	
                except
                  as expressly set forth in this Agreement, Seller does not warrant
                  title to
                  the Assets but Seller does warrant that except for Permitted Encumbrances
                  the Assets will be free and clear of all liens, mortgages, encumbrances
                  and adverse claims created by, through or under
                  Seller;

              

      

       

      
        	 	
                (h)

              	
                to
                  the Knowledge of Seller, Seller has not received notice of default
                  and is
                  not, to the Knowledge of Seller, in any default under any order,
                  writ,
                  injunction or decree of any court or of any commission or administrative
                  agency, which might result in impairment or loss of Seller's interest
                  in
                  and to the Assets or which might otherwise materially adversely
                  affect the
                  Assets;

              

      

       

      
        	 	
                (i)

              	
                except
                  as set forth on Schedule “P”, to the Knowledge of Seller, no suit, action
                  or other proceeding before any court or governmental agency has
                  been
                  commenced against Seller or, to the Knowledge of Seller, has been
                  threatened against Seller, which might result in impairment or
                  loss of
                  Seller's interest in and to the Assets or which might otherwise
                  materially
                  adversely affect the Assets;

              

      

       

      
        	 	
                (j)

              	
                except
                  as set forth on Schedule “Q”, in respect of those portions of the Assets
                  where Seller is the Operator and, in respect of the other portions
                  of the
                  Assets to the best of its Knowledge, and except for the Permitted
                  Encumbrances, all Taxes and assessments based on, or measured by,
                  the
                  ownership of the Assets or the production of Hydrocarbons from
                  the Assets,
                  or the receipt of proceeds from them, and all Royalties accruing
                  prior to
                  Closing Time, that are payable by it will be or will have been
                  properly
                  paid and discharged prior to the date they became
                  due;

              

      

       

      
        	 	
                (k)

              	
                except
                  as set forth on Schedule “R”, in respect of the Assets, except in
                  connection with the AFE's, to the Knowledge of Seller there are
                  no
                  financial commitments of Seller which are due as of the date hereof
                  or
                  which may become due by virtue of matters occurring or arising
                  prior to
                  the date hereof, other than usual operating expenses incurred in
                  the
                  normal conduct of operations or those to which Seller's share is
                  less than
                  $50,000;

              

      

       

      
        
          
          

        

        
          -
            17 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (l)

              	
                except
                  as set forth on Schedule “S”, to the Knowledge of Seller, all of the
                  Assets operated by Seller while Seller was the Operator thereof,
                  were
                  operated in accordance with generally accepted oil and gas oilfield
                  practices and in material compliance with all applicable statutes,
                  laws,
                  rules, regulations, orders and directions of governmental and other
                  competent authorities, provided that nothing in this representation
                  and
                  warranty shall be construed as a statement by it on any matter
                  pertaining
                  to the environmental status of the Assets, its compliance with
                  Environmental Law or to the presence or absence of environmental
                  damage or
                  contamination or other environmental concern, defect or Environmental
                  Liabilities;

              

      

       

      
        	 	
                (m)

              	
                except
                  as set forth in Schedule "N", Seller has no Knowledge of and has not
                  received:

              

      

       

      
        	 	
                (i)

              	
                any
                  orders or directives under the Environmental Laws which relate
                  to
                  environmental matters of a material nature and which require any
                  work,
                  repairs, construction or capital expenditures with respect to the
                  Assets,
                  where such orders or directives have not been complied with in
                  all
                  material respects; or

              

      

       

      
        	 	
                (ii)

              	
                any
                  demand or notice issued with respect to the breach of any Environmental
                  Law applicable to the Assets, including without limitation, respecting
                  the
                  use, storage, treatment, transportation or disposition of environmental
                  contaminants, which demand or notice remains outstanding on the
                  date
                  hereof;

              

      

       

      
        	 	
                (n)

              	
                the
                  Transferred Information does not contain any Personal Information
                  that
                  does not directly relate to the administration of the Assets by
                  Purchaser
                  or the completion of the transactions as contemplated herein;
                  

              

      

       

      
        	 	
                (o)

              	
                there
                  are no bankruptcy proceedings pending, being contemplated by, or
                  to the
                  Knowledge of Seller, threatened against
                  Seller;

              

      

       

      
        	 	
                (p)

              	
                except
                  as set forth on Schedule “P”, Seller has not received written notice of
                  any pending and has no Knowledge of any threatened, proceeding,
                  action,
                  suit, claim or investigation before any federal, state, provincial
                  or
                  other governmental court, or any arbitrator, board of arbitration
                  or
                  similar entity involving the Assets or Seller with respect to the
                  Assets;

              

      

       

      
        	 	
                (q)

              	
                except
                  as set forth on Schedule “T”, to the Knowledge of Seller, Seller has no
                  Imbalances as of the date of this
                  Agreement;

              

      

       

      
        	 	
                (r)

              	
                the
                  Assets (and the production therefrom) are not subject to any oil
                  and gas
                  purchase agreement or similar marketing arrangement not cancellable
                  on
                  thirty-one (31) days notice other than those listed on Schedule
“I”, nor
                  are any of the Assets subject to any agreements with any Affiliate
                  of
                  Seller that cannot be terminated immediately upon Closing without
                  penalty,
                  cost or liability to Purchaser;

              

      

       

      
        
          
          

        

        
          -
            18 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (s)

              	
                except
                  as set forth on Schedule “U”, to the Knowledge of Seller, the Assets are
                  not subject to any agreements, consent orders, administrative orders
                  or
                  similar obligations based on a violation or alleged violation of
                  laws;

              

      

       

      
        	 	
                (t)

              	
                except
                  as set forth on Schedule “V”, to the Knowledge of Seller, as of the date
                  of this Agreement, Seller is not currently undergoing (i) as operator,
                  any
                  unresolved audit of the joint account under the applicable joint
                  operating
                  agreement or (ii) any audits conducted by any governmental authority
                  for
                  the improper payment of or miscalculation of Royalties and
                  Taxes;

              

      

       

      
        	 	
                (u)

              	
                except
                  as set forth on Schedule “W”, to the Knowledge of Seller, there is no
                  pending or threatened claims for underpayments of any Royalty or
                  Taxes
                  attributable to the production of Hydrocarbons from the
                  Assets;

              

      

       

      
        	 	
                (v)

              	
                Seller
                  acknowledges that Purchaser has no obligation under this Agreement
                  to
                  employ any employee previously employed by Seller and Seller has
                  made no
                  representation to Seller’s employees concerning employment with Purchaser
                  or continued employment with Seller after the Closing
                  Time;

              

      

       

      
        	 	
                (w)

              	
                to
                  the Knowledge of Seller, except for the Rights of First Refusal
                  identified
                  in Schedule “O,” there are no Rights of First Refusal pertaining to the
                  Assets; and

              

      

       

      
        	 	
                (x)

              	
                except
                  for the Material Contracts identified in Schedule "I", Seller is not
                  a party to and Seller's interest in and to the Assets is not otherwise
                  bound or affected by any production sales contracts pertaining
                  to the
                  Hydrocarbons or any of them that cannot be terminated on notice
                  of
                  thirty-one (31) days or less (without an early termination penalty
                  or
                  other cost).

              

      

       

      
        	
                5.2

              	
                Limitation

              

      

       

      
        	 	
                (a)

              	
                
                  SELLER
                    MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ASSETS,
                    EXCEPT
                    AS CONTAINED IN SECTION 5.1. SELLER DISCLAIMS ANY LIABILITY OR
                    RESPONSIBILITY FOR ANY REPRESENTATION OR WARRANTY, WHETHER EXPRESS,
                    IMPLIED OR OTHERWISE, THAT MAY HAVE BEEN MADE OR ALLEGED TO HAVE
                    BEEN MADE
                    AND CONTAINED IN ANY DOCUMENT OR STATEMENT MADE OR COMMUNICATED
                    TO
                    PURCHASER INCLUDING, BUT NOT LIMITED TO, ANY INFORMATION MEMORANDUM
                    AND
                    ANY OPINION, INFORMATION OR ADVICE PROVIDED TO PURCHASER BY ANY
                    SHAREHOLDER, DIRECTOR, OFFICER, SERVANT, EMPLOYEE, AGENT, CONSULTANT
                    OR
                    REPRESENTATIVE OF SELLER IN RESPECT OF:

                

              

      

       

      
        	 	
                (i)

              	
                
                  THE
                    QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS FROM THE
                    ASSETS;

                

              

      

       

      
        	 	
                (ii)

              	
                
                  ESTIMATES
                    OF PRICES OR FUTURE CASH FLOWS ARISING FROM THE SALE OF HYDROCARBONS
                    PRODUCED FROM THE ASSETS OR ESTIMATES OF OTHER REVENUES ATTRIBUTABLE
                    TO
                    THE ASSETS OR THE AVAILABILITY OR CONTINUED AVAILABILITY OF TRANSPORTATION
                    TO SELL THOSE
                    HYDROCARBONS;

                

              

      

       

      
        
          
          

        

        
          -
            19 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (iii)

              	
                
                  ANY
                    ENGINEERING, GEOLOGICAL OR OTHER INTERPRETATIONS OR ECONOMIC
                    EVALUATIONS
                    RESPECTING THE ASSETS;
                    AND

                

              

      

       

      
        	 	
                (iv)

              	
                
                  THE
                    QUALITY, CONDITION, FREEDOM FROM DEFECTS, FITNESS OR SUITABILITY
                    FOR
                    PURPOSE OR MERCHANTABILITY OF ANY OF THE
                    ASSETS.

                

              

      

       

      
        	 	
                (b)

              	
                Purchaser
                  acknowledges it has made, and will continue prior to Closing Time
                  to make,
                  its own independent examination, investigation, analysis, evaluation
                  and
                  verification of the Assets, including Purchaser’s own estimate and
                  appraisal of the extent and value of the Hydrocarbons attributable
                  to the
                  Assets and, except as set forth in the representations and warranties
                  in
                  Section 5.1, it has relied solely on same as to its assessment of the
                  condition (environmental or otherwise), quantum and value of the
                  Assets;

              

      

       

      
        	 	
                (c)

              	
                Except
                  with respect to the representations and warranties in Section 5.1,
                  Purchaser forever releases and discharges Seller and its directors,
                  officers, servants, agents, employees, consultants and representatives
                  from any claims and all Damages to Purchaser or Purchaser’s assigns and
                  successors, as a result of the use or reliance upon advice, information
                  or
                  materials pertaining to the Assets which was delivered or made
                  available
                  to Purchaser by Seller or its directors, officers, servants, agents,
                  employees, consultants or representatives prior to or pursuant
                  to this
                  Agreement, including, without limitation, any evaluations, projections,
                  reports and interpretive or non-factual materials prepared by or
                  for
                  Seller, or otherwise in Seller’s possession;
                  and

              

      

       

      
        	 	
                (d)

              	
                Purchaser
                  acknowledges that no information set out in the information memorandum
                  provided to Purchaser in connection with this transaction will
                  form the
                  basis of this Agreement or any contract. Purchaser further acknowledges
                  that it has not relied on or been induced to enter into this Agreement
                  by
                  any representation and warranty except as expressly set out in
                  this
                  Agreement. 

              

      

       

      
        	
                5.3

              	
                Representations
                  and Warranties of Purchaser

              

      

       

      Purchaser
        represents and warrants to Seller that:

      

      
        	 	
                (a)

              	
                Purchaser
                  is a limited liability company duly organized and validly existing
                  under
                  the laws of the jurisdiction of organization of Purchaser, is authorized
                  to carry on business in the states in which the Assets are located,
                  and
                  now has good right, full power and absolute authority to purchase
                  the
                  Assets according to the true intent and meaning of this
                  Agreement;

              

      

       

      
        	 	
                (b)

              	
                the
                  execution, delivery and performance of this Agreement has been
                  duly and
                  validly authorized by any and all requisite corporate, shareholders'
                  and
                  directors' actions and will not result in any violation of, be
                  in conflict
                  with or constitute a default under any articles, charter, bylaw
                  or other
                  governing document to which Purchaser is
                  bound;

              

      

       

      
        	 	
                (c)

              	
                the
                  execution, delivery and performance of this Agreement will not
                  result in
                  any violation of, be in conflict with or constitute a default under
                  any
                  judgment, decree, order, statute, regulation, rule or license applicable
                  to Purchaser;

              

      

       

      
        
          
          

        

        
          -
            20 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (d)

              	
                this
                  Agreement and any other agreements delivered in connection herewith
                  constitute valid and binding obligations of Purchaser enforceable
                  against
                  Purchaser in accordance with their
                  terms;

              

      

       

      
        	 	
                (e)

              	
                no
                  authorization or approval or other action by, and no notice to
                  or filing
                  with, any governmental authority or regulatory body exercising
                  jurisdiction over the Assets is required for the due execution,
                  delivery
                  and performance by Purchaser of this Agreement, other than authorizations,
                  approvals or exemptions from requirement therefor, previously obtained
                  and
                  currently in force;

              

      

       

      
        	 	
                (f)

              	
                Purchaser
                  is now, and hereafter shall continue to be, qualified to own and
                  assume
                  operatorship of oil, gas and mineral leases, including the Leases,
                  in all
                  jurisdictions where the Assets 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 state and federal governmental bodies or agencies, Purchaser
                  currently has, and will continue to maintain, 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
                  such leases;

              

      

       

      
        	 	
                (g)

              	
                Purchaser
                  has not incurred any obligation or liability, contingent or otherwise,
                  for
                  brokers' or finders' fees in respect of this Agreement or the transaction
                  to be effected by it for which Seller shall have any obligation
                  or
                  liability;

              

      

       

      
        	 	
                (h)

              	
                Purchaser
                  is an experienced and knowledgeable active participant in the petroleum
                  industry and is aware of all of the risks attendant thereto. Purchaser
                  acknowledges that, except as otherwise set forth herein, Seller
                  has made
                  no representations or warranties whatsoever, express or implied,
                  as to the
                  reserves attributable to the Assets or the value thereof, or as
                  to the
                  condition or state of repair of any of the Assets, or as to the
                  degree or
                  extent of environmental impairment, if any, or as to the value
                  thereof, or
                  as to the legal, tax or other consequences of the transaction contemplated
                  by this Agreement. In entering into this Agreement and except as
                  set forth
                  in this Agreement, Purchaser has relied solely upon its or its
                  advisor's
                  or agent's independent investigation of, and judgment with respect
                  to,
                  such matters; and

              

      

       

      
        	 	
                (i)

              	
                Purchaser
                  has currently available all funds necessary to pay the Purchase
                  Price and
                  any other amounts contemplated by this Agreement. Purchaser's ability
                  to
                  consummate the transactions contemplated hereby is not contingent
                  on its
                  ability to complete any public or private placement of securities
                  prior to
                  or upon Closing.

              

      

       

      
        	
                5.4

              	
                Limitation

              

      

       

      No
        claim
        under this Article
        5
        shall be
        made or be enforceable by a Party unless written notice of such claim, with
        reasonable particulars, is given by such Party to the Party against whom
        the
        claim is made within a period of twelve (12) months from the Closing Time.
        No
        claim shall be made by a Party in respect of the representations and warranties
        made by the other Party in this Agreement except pursuant to this Article
        5.

      

      
        
          
          

        

        
          -
            21 -

          
            

          

        

        
          
          

        

      

      

      ARTICLE
        6

      INDEMNITIES

      
         

        
          	
                  6.1

                	
                  
                    SELLER'S
                      INDEMNITY FOR REPRESENTATIONS AND
                      WARRANTIES

                  

                

        

        

        EXCEPT
          AS OTHERWISE PROVIDED IN THIS ARTICLE
          6
          OR IN ARTICLE
          7,
          SELLER SHALL:

        

        
          	 	
                  (a)

                	
                  REMAIN
                    LIABLE FOR ALL LOSSES WHICH PURCHASER OR ITS DIRECTORS, OFFICERS,
                    SERVANTS, EMPLOYEES, CONSULTANTS AND REPRESENTATIVES MAY SUFFER,
                    SUSTAIN,
                    PAY OR INCUR; AND, IN
                    ADDITION

                

        

        

        
          	 	
                  (b)

                	
                  INDEMNIFY
                    AND SAVE PURCHASER AND ITS DIRECTORS, OFFICERS, SERVANTS, AGENTS,
                    EMPLOYEES, CONSULTANTS AND REPRESENTATIVES HARMLESS FROM AND
                    AGAINST ALL
                    LOSSES WHICH MAY BE CLAIMED OR BROUGHT BY A THIRD PARTY AGAINST
                    PURCHASER
                    OR ITS DIRECTORS, OFFICERS, SERVANTS, AGENTS, EMPLOYEES, CONSULTANTS
                    OR
                    REPRESENTATIVES, OR WHICH IT MAY SUFFER, SUSTAIN, PAY OR
                    INCUR;

                

        

        

        AS
          A RESULT OF ANY REPRESENTATION AND WARRANTY OF SELLER CONTAINED IN
          SECTION 5.1
          (OTHER THAN SECTION 5.1(U) IN RESPECT OF ROYALTIES) BEING UNTRUE, PROVIDED
          HOWEVER THAT WRITTEN NOTICE OF A CLAIM HEREUNDER TOGETHER WITH REASONABLE
          PARTICULARS MUST HAVE BEEN PROVIDED TO SELLER WITHIN TWELVE (12) MONTHS
          OF THE
          CLOSING TIME, EXCEPT THAT WRITTEN NOTICE OF ANY CLAIM HEREUNDER FOR ANY
          BREACH
          OF THE REPRESENTATION AND WARRANTY CONTAINED IN SECTION 5.1(U) IN RESPECT
          OF
          ROYALTIES MUST BE PROVIDED TO SELLER WITHIN FIVE (5) YEARS OF THE CLOSING
          TIME.

        

        
          	
                  6.2

                	
                  PURCHASER'S
                    INDEMNITY FOR REPRESENTATIONS AND
                    WARRANTIES

                

        

        

        EXCEPT
          AS OTHERWISE PROVIDED IN THIS ARTICLE
          6
          OR IN ARTICLE
          7,
          PURCHASER SHALL:

        

        
          	 	
                  (a)

                	
                  REMAIN
                    LIABLE FOR ALL LOSSES WHICH SELLER OR ITS DIRECTORS, OFFICERS,
                    SERVANTS,
                    EMPLOYEES, CONSULTANTS AND REPRESENTATIVES MAY SUFFER, SUSTAIN,
                    PAY OR
                    INCUR; AND, IN ADDITION

                

        

        

        
          	 	
                  (b)

                	
                  INDEMNIFY
                    AND SAVE SELLER AND ITS DIRECTORS, OFFICERS, SERVANTS, AGENTS,
                    EMPLOYEES,
                    CONSULTANTS AND REPRESENTATIVES HARMLESS FROM AND AGAINST ALL
                    LOSSES WHICH
                    MAY BE CLAIMED OR BROUGHT BY A THIRD PARTY AGAINST SELLER OR
                    ITS
                    DIRECTORS, OFFICERS, SERVANTS, AGENTS, EMPLOYEES, CONSULTANTS
                    OR
                    REPRESENTATIVES, OR WHICH IT MAY SUFFER, SUSTAIN, PAY OR
                    INCUR;

                

        

        

        AS
          A RESULT OF ANY REPRESENTATION AND WARRANTY OF PURCHASER CONTAINED IN
          SECTION 5.3
          BEING UNTRUE, PROVIDED HOWEVER THAT WRITTEN NOTICE OF A CLAIM HEREUNDER
          TOGETHER
          WITH REASONABLE PARTICULARS MUST HAVE BEEN PROVIDED TO PURCHASER WITHIN
          TWELVE
          (12) MONTHS OF THE CLOSING TIME.

      

       

      
        
          
          

        

        
          -
            22 -

          
            

          

        

        
          
          

        

      

      

        
          	
                  6.3

                	
                  GENERAL
                    INDEMNITIES

                

        

        

        
          	 	
                  (a)

                	
                  PURCHASER'S
                    GENERAL INDEMNITY

                

        

        

        SUBJECT
          TO SELLER'S INDEMNIFICATION OBLIGATIONS UNDER SECTION 6.1
          AND IN ADDITION TO PURCHASER'S OTHER INDEMNITIES SET FORTH IN THIS
ARTICLE
          6,
          PURCHASER SHALL: 

        

        
          	 	
                  (I)

                	
                  BE
                    LIABLE TO SELLER FOR ALL LOSSES WHICH SELLER OR ITS DIRECTORS,
                    OFFICERS,
                    SERVANTS, EMPLOYEES, CONSULTANTS AND REPRESENTATIVES MAY SUFFER,
                    SUSTAIN,
                    PAY OR INCUR; AND, IN
                    ADDITION

                

        

        

        
          	 	
                  (II)

                	
                  INDEMNIFY
                    AND SAVE SELLER AND ITS DIRECTORS, OFFICERS, SERVANTS, AGENTS,
                    EMPLOYEES,
                    CONSULTANTS AND REPRESENTATIVES HARMLESS FROM AND AGAINST ALL
                    LOSSES WHICH
                    MAY BE CLAIMED OR BROUGHT BY A THIRD PARTY AGAINST SELLER OR
                    ITS
                    DIRECTORS, OFFICERS, SERVANTS, AGENTS, EMPLOYEES, CONSULTANTS
                    OR
                    REPRESENTATIVES, OR WHICH IT MAY SUFFER, SUSTAIN, PAY OR
                    INCUR;

                

        

        

        BY
          REASON OF ANY MATTER OR THING ARISING OUT OF, RESULTING FROM, ATTRIBUTABLE
          TO OR
          CONNECTED WITH THE ASSETS AND OCCURRING OR ACCRUING ON OR AFTER THE EFFECTIVE
          TIME, EXCEPT ANY CLAIMS, LIABILITIES, ACTIONS, PROCEEDINGS, DEMANDS, LOSSES,
          COSTS, DAMAGES (INCLUDING, WITHOUT LIMITATION, COURT COSTS, REASONABLE
          ATTORNEYS’ FEES, AND EXPERT WITNESSES’ FEES) AND EXPENSES, TO THE EXTENT THAT
          THE SAME ARE CAUSED BY THE GROSS NEGLIGENCE OR WILFUL OR WANTON MISCONDUCT
          OF
          SELLER.

        

        
          	 	
                  (b)

                	
                  SELLER'S
                    GENERAL INDEMNITY

                

        

        

        SUBJECT
          TO PURCHASER'S INDEMNIFICATION OBLIGATIONS UNDER SECTIONS 6.2, 6.4 AND
          6.5 AND
          IN ADDITION TO SELLER'S OTHER INDEMNITIES SET FORTH IN THIS ARTICLE 6,
          SELLER
          SHALL: 

        

        
          	 	
                  (I)

                	
                  BE
                    LIABLE TO PURCHASER FOR ALL LOSSES WHICH PURCHASER OR ITS DIRECTORS,
                    OFFICERS, SERVANTS, EMPLOYEES, CONSULTANTS AND REPRESENTATIVES
                    MAY SUFFER,
                    SUSTAIN, PAY OR INCUR; AND, IN
                    ADDITION

                

        

        

        
          	 	
                  (II)

                	
                  INDEMNIFY
                    AND SAVE PURCHASER AND ITS DIRECTORS, OFFICERS, SERVANTS, AGENTS,
                    EMPLOYEES, CONSULTANTS AND REPRESENTATIVES HARMLESS FROM AND
                    AGAINST ALL
                    LOSSES WHICH MAY BE CLAIMED OR BROUGHT BY A THIRD PARTY AGAINST
                    PURCHASER
                    OR ITS DIRECTORS, OFFICERS, SERVANTS, AGENTS, EMPLOYEES, CONSULTANTS
                    OR
                    REPRESENTATIVES, OR WHICH IT MAY SUFFER, SUSTAIN, PAY OR
                    INCUR;

                

        

        

        BY
          REASON OF ANY THIRD PARTY CLAIM ARISING OUT OF, RESULTING FROM, ATTRIBUTABLE
          TO
          OR CONNECTED WITH THE ASSETS AND OCCURRING OR ACCRUING BEFORE THE EFFECTIVE
          TIME, EXCEPT ANY CLAIMS, LIABILITIES, ACTIONS, PROCEEDINGS, DEMANDS, LOSSES,
          COSTS, DAMAGES (INCLUDING, WITHOUT LIMITATION, COURT COSTS, REASONABLE
          ATTORNEYS’ FEES, AND EXPERT WITNESSES’ FEES) AND EXPENSES, TO THE EXTENT THAT
          THE SAME ARE CAUSED BY THE GROSS NEGLIGENCE OR WILFUL OR WANTON MISCONDUCT
          OF
          PURCHASER, AND PROVIDED THAT PURCHASER HAS GIVEN TO SELLER WRITTEN NOTICE
          OF
          SUCH THIRD PARTY CLAIM TOGETHER WITH REASONABLE PARTICULARS WITHIN TWELVE
          (12)
          MONTHS OF THE DATE OF THIS AGREEMENT, EXCEPT THAT WRITTEN NOTICE OF ANY
          CLAIM
          HEREUNDER IN RESPECT OF THIRD PARTY CLAIMS FOR THE PAYMENT OF ROYALTIES
          MUST BE
          PROVIDED TO SELLER WITHIN FIVE (5) YEARS OF THE DATE OF THIS
          AGREEMENT.

         

        
          
            
            

          

          
            -
              23 -

            
              

            

          

          
            
            

          

        

         

        
          	
                  6.4

                	
                  ABANDONMENT
                    AND RECLAMATION

                

        

        

        PURCHASER
          SHALL BE RESPONSIBLE FOR THE TIMELY PERFORMANCE OF ALL DECOMMISSIONING,
          ABANDONMENT, REMEDIATION AND RECLAMATION OBLIGATIONS PERTAINING TO THE
          ASSETS.
          IN ADDITION, PURCHASER AGREES THAT IT SHALL:

        

        
          	 	
                  (a)

                	
                  BE
                    SOLELY LIABLE AND RESPONSIBLE FOR ANY AND ALL CLAIMS, LIABILITIES,
                    ACTIONS, PROCEEDINGS, DEMANDS, LOSSES, COSTS, DAMAGES (INCLUDING,
                    WITHOUT
                    LIMITATION, COURT COSTS, REASONABLE ATTORNEYS’ FEES, AND EXPERT WITNESSES’
                    FEES) AND EXPENSES WHICH SELLER OR ITS DIRECTORS, OFFICERS, SERVANTS,
                    AGENTS, EMPLOYEES, CONSULTANTS AND REPRESENTATIVES MAY SUFFER,
                    SUSTAIN,
                    PAY OR INCUR; AND, IN
                    ADDITION

                

        

        

        
          	 	
                  (b)

                	
                  INDEMNIFY
                    AND SAVE SELLER AND ITS DIRECTORS, OFFICERS, SERVANTS, AGENTS,
                    EMPLOYEES,
                    CONSULTANTS AND REPRESENTATIVES HARMLESS FROM AND AGAINST ANY
                    AND ALL
                    CLAIMS, LIABILITIES, ACTIONS, PROCEEDINGS, DEMANDS, LOSSES, COSTS,
                    DAMAGES
                    (INCLUDING, WITHOUT LIMITATION, COURT COSTS, REASONABLE ATTORNEYS’ FEES,
                    AND EXPERT WITNESSES’ FEES) AND EXPENSES WHATSOEVER WHICH MAY BE BROUGHT
                    AGAINST OR SUFFERED BY SELLER OR ITS DIRECTORS, OFFICERS, SERVANTS,
                    AGENTS, EMPLOYEES, CONSULTANTS OR REPRESENTATIVES OR WHICH IT
                    MAY SUFFER,
                    SUSTAIN, PAY OR INCUR;

                

        

        

        BY
          REASON OF ANY MATTER OR THING ARISING OUT OF, RESULTING FROM, ATTRIBUTABLE
          TO OR
          CONNECTED WITH PURCHASER'S FAILURE TO TIMELY PERFORM SUCH ABANDONMENT AND
          RECLAMATION OBLIGATIONS.

        

        
          	
                  6.5

                	
                  ENVIRONMENTAL
                    MATTERS

                

        

        

        NOTWITHSTANDING
          THE FOREGOING PROVISIONS OF THIS ARTICLE
          6,
          IT IS UNDERSTOOD AND AGREED THAT PURCHASER IS ACQUIRING THE ASSETS ON AN
“AS IS,
          WHERE IS” BASIS AS OF THE EFFECTIVE TIME. PURCHASER AGREES THAT IT HAS BEEN OR
          WILL BE PROVIDED PRIOR TO THE CLOSING TIME WITH THE RIGHT AND OPPORTUNITY
          TO
          CONDUCT DUE DILIGENCE INVESTIGATIONS WITH RESPECT TO EXISTING OR POTENTIAL
          ENVIRONMENTAL CONCERNS OR DEFECTS PERTAINING TO THE ASSETS; IS FAMILIAR
          WITH THE
          CONDITION AND USE OF THE ASSETS; IT CAN DETERMINE FOR ITSELF WHETHER THE
          ASSETS
          ARE SATISFACTORY FROM AN ENVIRONMENTAL STANDPOINT; AND IT IS NOT RELYING
          UPON
          ANY REPRESENTATION OR WARRANTY FROM SELLER AS TO THE CONDITION, ENVIRONMENTAL
          OR
          OTHERWISE, OF THE ASSETS. PURCHASER FURTHER AGREES THAT ON AND AFTER THE
          EFFECTIVE TIME IT SHALL:

        

        
          	 	
                  (a)

                	
                  BE
                    SOLELY LIABLE AND RESPONSIBLE FOR ANY AND ALL CLAIMS, LIABILITIES,
                    ACTIONS, PROCEEDINGS, DEMANDS, LOSSES, COSTS, DAMAGES (INCLUDING,
                    WITHOUT
                    LIMITATION, COURT COSTS, REASONABLE ATTORNEYS’ FEES, AND EXPERT WITNESSES’
                    FEES) AND EXPENSES WHICH SELLER OR ITS DIRECTORS, OFFICERS, SERVANTS,
                    AGENTS, EMPLOYEES, CONSULTANTS AND REPRESENTATIVES MAY SUFFER,
                    SUSTAIN,
                    PAY OR INCUR; AND, IN
                    ADDITION

                

        

         

        
          
            
            

          

          
            -
              24 -

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  (b)

                	
                  INDEMNIFY
                    AND SAVE SELLER AND ITS DIRECTORS, OFFICERS, SERVANTS, AGENTS,
                    EMPLOYEES,
                    CONSULTANTS AND REPRESENTATIVES HARMLESS FROM AND AGAINST ANY
                    AND ALL
                    CLAIMS, LIABILITIES, ACTIONS, PROCEEDINGS, DEMANDS, LOSSES, COSTS,
                    DAMAGES
                    (INCLUDING, WITHOUT LIMITATION, COURT COSTS, REASONABLE ATTORNEYS’ FEES,
                    AND EXPERT WITNESSES’ FEES) AND EXPENSES WHATSOEVER WHICH MAY BE BROUGHT
                    AGAINST OR SUFFERED BY SELLER OR ITS DIRECTORS, OFFICERS, SERVANTS,
                    AGENTS, EMPLOYEES, CONSULTANTS OR REPRESENTATIVES OR WHICH IT
                    MAY SUFFER,
                    SUSTAIN, PAY OR INCUR;

                

        

        

        BY
          REASON OF ANY MATTER OR THING ARISING OUT OF, RESULTING FROM, ATTRIBUTABLE
          TO OR
          CONNECTED WITH ANY ENVIRONMENTAL LIABILITIES PERTAINING TO THE ASSETS,
          OR ANY OF
          THEM, WHETHER OCCURRING OR ACCRUING BEFORE, ON OR AFTER THE EFFECTIVE TIME.
          THIS
          LIABILITY AND INDEMNITY SHALL APPLY WITHOUT LIMIT AND WITHOUT REGARD TO
          CAUSE OR
          CAUSES, INCLUDING WITHOUT LIMITATION, THE NEGLIGENCE, WHETHER SOLE, CONCURRENT,
          GROSS, ACTIVE, PASSIVE, PRIMARY OR SECONDARY, OR THE WILFUL OR WANTON MISCONDUCT
          OF SELLER. PURCHASER HEREBY RELEASES SELLER FROM ANY CLAIMS PURCHASER MAY HAVE
          AGAINST SELLER. PURCHASER ACKNOWLEDGES AND AGREES THAT IT SHALL NOT BE
          ENTITLED
          TO ANY RIGHTS OR REMEDIES UNDER THE COMMON LAW OR STATUTE PERTAINING TO
          SUCH
          ENVIRONMENTAL LIABILITIES RELATIVE TO SELLER INCLUDING, WITHOUT LIMITATION,
          THE
          RIGHT TO NAME SELLER AS A THIRD PARTY TO ANY ACTION, INCLUDING ANY ACTION
          COMMENCED BY ANY PERSON AGAINST PURCHASER. NOTHING HEREIN CONTAINED SHALL
          PREJUDICE ANY CLAIMS OR REMEDIES THAT SELLER MAY HAVE AGAINST PURCHASER
          IN
          RELATION TO SUCH CLAIM OR REMEDY OUTSIDE THIS AGREEMENT INCLUDING RIGHTS
          AND
          REMEDIES UNDER THE COMMON LAW AND STATUTE.

         

      

      
        	
                6.6

              	
                Indemnity
                  Claims

              

      

       

      Other
        than claims made by Purchaser under Section 6.1 in respect of the representation
        and warranty of Seller contained in Section 5.1(u) and claims by Purchaser
        under
        Section 6.3(b) in respect of Third Party Claims for the payment of Royalties,
        no
        claim shall be made by a party pursuant to Section 6.1 or 6.3(b) unless and
        until the individual value of each unrelated claim pursuant to Section 6.1
        or
        6.3(b), as appropriate, shall exceed $100,000 and the aggregate value of
        all
        such claims exceeds two and one-half percent (2.5%) of the Purchase Price;
        and
        then only to the extent that the aggregate value exceeds two and one-half
        percent (2.5%) of the Purchase Price. Further, no claim for any Title Defect
        contained in a Title Defect notice, except for claims relating to any liens,
        mortgages, encumbrances and adverse claims created by, through or under Seller,
        shall be made by any party pursuant to Section 6.1.

      

      ARTICLE
        7

      ADJUSTMENTS

       

      
        	
                7.1

              	
                Adjustments

              

      

       

      
        	 	
                (a)

              	
                Except
                  as otherwise provided in this Agreement, all costs and expenses
                  relating
                  to the Assets (including, without limitation, rental payments,
                  Taxes,
                  maintenance, capital and operating costs and direct general and
                  administrative costs) and all revenues relating to the Assets (including,
                  without limitation, proceeds from the sale of used or surplus equipment
                  not required for operations, proceeds of insurance maintained with
                  respect
                  to the Assets, fees from processing, treating or transporting Hydrocarbons
                  on behalf of persons other than Seller, and amounts in respect
                  of overhead
                  paid to Seller) (“Revenues”) shall be apportioned as of the Effective Time
                  between Seller and Purchaser on an accrual basis in accordance
                  with GAAP,
                  provided that:

              

      

       

      
        	 	
                (i)

              	
                cash
                  call advances, operating fund advances and similar cash advances
                  made by
                  Seller in respect of the costs of operations relating to the Assets
                  which
                  are not applicable to costs incurred prior to the Effective Time
                  will be
                  transferred to Purchaser and an adjustment will be made in favor
                  of Seller
                  equal to the amount of the advance
                  transferred;

              

      

       

      
        
          
          

        

        
          -
            25 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (ii)

              	
                non-cash
                  deposits made by Seller relative to operations relating to the
                  Assets
                  shall be returned to Seller and replaced by
                  Purchaser;

              

      

       

      
        	 	
                (iii)

              	
                costs
                  and expenses of work done, services provided and goods supplied
                  shall be
                  deemed to accrue for the purposes of this Article
                  7
                  when the work is done or the goods or services are provided, regardless
                  of
                  when such costs and expenses become
                  payable;

              

      

       

      
        	 	
                (iv)

              	
                fees
                  or revenues from or relating to gathering or transmission of clean
                  oil
                  and/or emulsion in the pipelines for or on behalf of persons other
                  than
                  Seller shall be apportioned on the basis of the date of such gathering
                  or
                  transmission; 

              

      

       

      
        	 	
                (v)

              	
                adjustments
                  relating to Imbalances shall be made in favor of Seller where Seller
                  has
                  an underbalanced position and in favor of Buyer where Seller has
                  and
                  overbalanced position, by an amount equal to the aggregate value
                  as of the
                  Effective Time of all Imbalances, such value to be $6.50 per MMBTU,
                  less
                  all applicable Royalties and Taxes;

              

      

       

      
        	 	
                (vi)

              	
                adjustments
                  relating to production of Hydrocarbons, if any, shall be made in
                  favor of
                  Seller in respect of production beyond the wellhead at the Effective
                  Time
                  and in favor of Purchaser in respect of all other production;
                  

              

      

       

      
        	 	
                (vii)

              	
                with
                  respect to all Seller operated Wells and Equipment, adjustments
                  in favor
                  of Seller by an amount equal to overhead charges for the period
                  from the
                  Effective Time to the Closing Time which shall equal: (i) for Wells
                  owned
                  100% by Seller, an overhead rate calculated on a per month per
                  Well basis
                  using the most recently published COPAS rate applicable to the
                  Assets and
                  (ii) for Wells where Seller’s interest is less than 100%, the overhead
                  allocated to Seller’s interest under the applicable joint operating
                  agreement (or which would be allocated to Seller’s interest if Seller was
                  not the operator of such Well);

              

      

       

      
        	 	
                (viii)

              	
                adjustments
                  in favor of Purchaser or Seller, as appropriate, for any benefits,
                  liabilities and obligations with respect to payments or other obligations
                  made by/to or owed by/to Seller related to the Hedge prior to the
                  Novation
                  Date;

              

      

       

      
        	 	
                (ix)

              	
                adjustments
                  in favor of Purchaser by an amount equal to the sum of all adjustments
                  to
                  the Purchase Price (A) pursuant to Section 12.2(c) in respect of
                  Rights of
                  First Refusal, (B) pursuant to Section 10.2 in respect of Title
                  Defects
                  and (C) pursuant to Section 11.2 in respect of Environmental Liabilities;
                  and

              

      

       

      
        
          
          

        

        
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            26 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (x)

              	
                an
                  interim accounting of the adjustments under this Article
                  7
                  in
                  respect of revenues received and expenses paid on or before Closing
                  Time
                  will be made at Closing (the “Interim Accounting of Adjustments”). Seller
                  shall prepare a written interim accounting based on its good faith
                  estimate of all charges and credits to be adjusted at Closing and
                  deliver
                  it to Purchaser at least four (4) Business Days before Closing
                  Time and
                  make available to Purchaser all information reasonably necessary
                  for
                  Purchaser to understand and confirm the calculations contained
                  herein.
                  

              

      

       

      
        	 	
                (b)

              	
                Seller
                  shall prepare, with Purchaser's cooperation, a final accounting
                  and
                  adjustment of all charges and credits to be adjusted between the
                  parties
                  pursuant to this Article
                  7
                  within one hundred and twenty (120) days following the Closing
                  Time (the
                  "Final Adjustment"). Seller shall pay Purchaser or Purchaser shall
                  pay
                  Seller, as the case may be, the net cash amount owing as specified
                  in the
                  Final Adjustment. Payment shall be made within ten (10) days of
                  the Final
                  Adjustment being ascertained. If an adjustment payment is not made
                  as
                  provided herein, interest shall accrue on such payment at the Prime
                  Interest Rate.

              

      

       

      
        	 	
                (c)

              	
                No
                  subsequent adjustment shall be made pursuant to this Article
                  7
                  unless and only if written notice of a request for an adjustment
                  has been
                  given by one Party to the other within twelve (12) months of Closing
                  Time.

              

      

       

      
        	 	
                (d)

              	
                If
                  the Parties hereto are unable to agree on any matters arising under
                  Article
                  7,
                  the determination of such matters may be referred to arbitration
                  in
                  accordance with Article
                  15.

              

      

      

      ARTICLE
        8

      MAINTENANCE
        OF ASSETS

       

      
        	
                8.1

              	
                Maintenance
                  of Assets

              

      

       

      Until
        the
        Closing Time, Seller shall, to the extent that the nature of its interest
        permits, and subject to the Contracts and any other agreements and documents
        to
        which the Assets are subject:

      

      
        	 	
                (a)

              	
                maintain
                  the Assets in a proper and prudent manner in accordance with generally
                  accepted oil and gas industry practices, consistent with Seller's
                  past
                  practices and shall carry on its business in respect of the Assets
                  in
                  substantially the same manner as prior to the execution of this
                  Agreement
                  and in material compliance with all applicable laws, rules, regulations,
                  orders and directions of governmental and other competent
                  authorities;

              

      

       

      
        	 	
                (b)

              	
                pay
                  or cause to be paid all costs and expenses relating to the Assets
                  which
                  become due from the date hereof to the Closing Time;
                  and

              

      

       

      
        	 	
                (c)

              	
                perform
                  and comply with all covenants and conditions contained in the Contracts
                  and any other agreements and documents to which the Assets are
                  subject.

              

      

       

      
        
          
          

        

        
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            27 -

          
            

          

        

        
          
          

        

      

       

      
        	
                8.2

              	
                Consent
                  of Purchaser

              

      

       

      Notwithstanding
        Section 8.1,
        Seller
        shall not, without the written consent of Purchaser, which consent shall
        not be
        unreasonably withheld by Purchaser and which, if provided, shall be provided
        in
        a timely manner:

      

      
        	 	
                (a)

              	
                make
                  any commitment or propose, initiate or authorize any capital expenditure
                  with respect to the Assets of which Seller's share is in excess
                  of
                  $50,000.00, except in case of an emergency or in respect of amounts
                  which
                  Seller may be committed to expend or be deemed to authorize for
                  expenditure without its consent;

              

      

       

      
        	 	
                (b)

              	
                surrender
                  or abandon any of the Assets;

              

      

       

      
        	 	
                (c)

              	
                amend
                  or terminate any material Contract or Lease, or enter into any
                  new
                  material agreement or commitment relating to the Assets;
                  or

              

      

       

      
        	 	
                (d)

              	
                sell,
                  encumber or otherwise dispose of any of the Assets or any part
                  or portion
                  thereof excepting sales of the Hydrocarbons or any of them in the
                  normal
                  course of business.

              

      

      

      ARTICLE
        9

      PRE-CLOSING
        COVENANTS

      

      
        	
                9.1

              	
                Production
                  of Documents

              

      

       

      During
        normal business hours until the Closing Time, Seller shall make available
        to
        Purchaser and Purchaser's Counsel in Seller's offices in Houston the Leases,
        Records and Contracts and any other agreements and documents to which the
        Assets
        are subject to the extent they are in Seller's possession.

      

      
        	
                9.2

              	
                Inspection
                  of Assets

              

      

       

      Seller
        shall permit Purchaser's authorized representative to conduct, during normal
        business hours and at Purchaser's sole risk, cost and expense, reasonable
        on-site inspections of the Assets operated by Seller. PURCHASER
        SHALL INDEMNIFY AND DEFEND SELLER AND ITS AFFILIATES AND EACH OF THEIR
        RESPECTIVE DIRECTORS, OFFICERS, SERVANTS, AGENTS AND EMPLOYEES FROM AND AGAINST
        ANY AND ALL LOSSES ARISING FROM SUCH INSPECTIONS, NOTWITHSTANDING THE
        NEGLIGENCE, WHETHER SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE, STRICT
        LIABILITY, STATUTORY LIABILITY OR OTHER FAULT OF ANY SUCH INDEMNIFIED PARTY,
        OR
        THE EXISTENCE OF ANY DEFECT, WHETHER KNOWN OR UNKNOWN, PATENT, LATENT OR
        OTHERWISE.

       

      
        
          
          

        

        
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            28 -

          
            

          

        

        
          
          

        

      

       

      
        	
                9.3

              	
                Hedge

              

      

       

      Within
        one (1) Business Day after the execution of this Agreement, Purchaser shall
        (or
        shall cause its parent company, Vanguard Natural Gas, LLC (“VGN”) to) arrange a
        financial hedge in accordance with the schedule set forth on Schedule “X” of oil
        production from the Assets commencing on February 1, 2008 or March 1, 2008
        (as
        specified by Purchaser) (the “Hedge”). Upon Purchaser’s arrangement of the
        Hedge, Seller shall enter into the Hedge if, as determined by Seller, the
        counterparty to the Hedge consents without qualification to permit Seller's
        assignment of the Hedge to VGN at Closing, and the counterparty to the Hedge
        agrees, upon any such assignment, to release Seller fully from any and all
        liabilities and obligations under the Hedge. Purchaser agrees that, upon
        any
        such assignment, Purchaser shall cause VGN to assume fully any and all
        liabilities and obligations under the Hedge. At Closing, Seller shall assign,
        and Purchaser shall cause VGN to assume, the Hedge by having VGN execute
        a
        Novation Agreement in the form of such Novation Agreement attached hereto
        as
        Schedule “L”. The “Novation Date”, as such term is used herein (and as such term
        is used in the relevant documents comprising and governing the novation of
        the
        Hedge) shall be the date upon which Closing occurs. If Closing does not occur
        on
        or before March 31, 2008, then on or before April 3, 2008, Seller shall
        determine and Purchaser shall pay to Seller the Breakage Costs (as defined
        below). As used herein, “Breakage Costs” means all costs and losses, if any,
        which the Seller has incurred, incurs or would incur to terminate and liquidate
        the Hedge, including, without limitation, settlement payments made or due,
        valuation loss, reasonable attorney fees, loss of bargain, cost of funding,
        other costs and losses incurred in terminating related trade positions. Seller
        may determine its valuation loss by reference to an offer from the Hedge
        counterparty to terminate and liquidate the Hedge. The Parties hereby agree
        that
        Purchaser shall pay Seller the Breakage Costs regardless of whether or not
        Seller terminates and liquidates the Hedge. Further, the Parties agree that
        in
        the event that Seller is to receive any proceeds from the Hedge counterparty
        upon termination and liquidation of the Hedge (a “Valuation Gain”) or Seller has
        received any settlement payments, then Seller shall be entitled to retain
        such
        Valuation Gain and settlement payments; and, in the event that the Breakage
        Costs which Seller would incur should it terminate and liquidate the Hedge
        exceed the sum of such Valuation Gain and settlement payments, Purchaser
        shall
        pay to Seller the amount by which the Breakage Costs exceed the sum of such
        Valuation Gain and settlement payments. Notwithstanding the provisions of
        Section 13.2 below, Purchaser shall, within thirty (30) Business Days after
        termination of this Agreement in accordance with Section 13.1, pay Seller
        all
        amounts owed under this Section 9.3. This Section 9.3 shall survive the
        termination of this Agreement. 

       

      
        	
                9.4

              	
                Consents

              

      

       

      Seller
        will use commercially reasonable efforts to aid Purchaser in obtaining any
        necessary consents requested by Purchaser to assign and transfer any
        transferrable seismic data licenses relating to the Assets, at Purchaser’s sole
        cost and expense.

      

      
        	
                9.5

              	
                Audit

              

      

       

      Following
        the date hereof, Purchaser, at Purchaser’s expense, may engage an auditing firm
        to conduct an audit of the revenues and expenses attributable to the Assets
        for
        the period from January 1, 2005 through the Closing Time. Seller agrees that,
        for a period commencing with the date of this Agreement and ending ninety
        (90)
        days after the Closing Time, it will cooperate and assist such auditors
        including, without limitation, making available (at Purchaser’s sole cost and
        expense) books, records, and personnel reasonably requested by such auditing
        firm.

      

      
        
          
          

        

        
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            29 -

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        10

      TITLE
        DEFECTS

       

      
        	
                10.1

              	
                Notice
                  of Title Defects

              

      

       

      From
        time
        to time, as soon as reasonably practicable after determination, and in any
        event
        no later than ten (10) days prior to Closing, Purchaser shall notify Seller
        in
        writing of Title Defects in the Assets. Such notice shall include a description
        of each Title Defect and the Property affected thereby, the Allocated Value
        of
        such Property and the amount, in Purchaser's opinion acting reasonably, by
        which
        the Allocated Value of each affected Property has been reduced by the Title
        Defect. Failure to include a Title Defect in a written notice shall be deemed
        to
        be a waiver of such Title Defect for the purposes of this
        Section 10.1.
        

      

      
        	
                10.2

              	
                Rectification
                  by Seller

              

      

       

      
        	 	
                (a)

              	
                Prior
                  to the Closing Time, Seller shall use all reasonable efforts to
                  cure or
                  rectify the Title Defects of which Purchaser gives notice pursuant
                  to
                  Section 10.1.
                  If any such Title Defects are not cured or removed at or prior
                  to the
                  Closing Time:

              

      

       

      
        	 	
                (i)

              	
                Purchaser
                  may waive the uncured Title Defects, in which case all of Seller's
                  interest in and to the Assets shall be purchased by Purchaser without
                  an
                  adjustment to the Purchase Price;
                  or

              

      

       

      
        	 	
                (ii)

              	
                Purchaser
                  may purchase the Assets, in which case the Purchase Price shall,
                  subject
                  to Section 10.2(c),
                  be reduced by the amount by which the Allocated Value for each
                  affected
                  Property is reduced by the Title Defect; provided however, Seller
                  may, at
                  its sole option, elect to retain some or all of the Assets affected
                  by the
                  uncured Title Defects; or

              

      

       

      
        	 	
                (b)

              	
                where
                  the cumulative amount by which the value of the Assets has been
                  reduced by
                  Title Defects is, in Seller's opinion acting reasonably, twenty
                  percent
                  (20%) or more of the Purchase Price, Purchaser or Seller may terminate
                  this Agreement upon written notice to the other, in which case
                  the Parties
                  shall have no further obligation to each other, except for obligations
                  arising pursuant to Sections 13.2 and 16.13.

              

      

       

      
        	 	
                (c)

              	
                No
                  adjustment to the Purchase Price ("Title Defect Adjustment") for
                  Title
                  Defects shall be made unless and until the individual value of
                  each Title
                  Defect exceeds $25,000.00 and the aggregate value of all Title
                  Defects
                  exceeds two and one-half percent (2.5%) of the Purchase Price,
                  and then
                  the Title Defect Adjustment shall be made only to the extent the
                  aggregate
                  value of all Title Defects exceeds two and one-half percent (2.5%)
                  of the
                  Purchase Price.

              

      

       

      
        	
                10.3

              	
                Value
                  Disputes

              

      

       

      If
        Seller
        disagrees with the value of a Title Defect allocated by Purchaser to an affected
        interest, the Parties shall forthwith meet in good faith to discuss the issue.
        If after such a meeting the issue has not been resolved or if a Party does
        not
        forthwith meet to discuss the issue, the issue shall be referred to Netherland
        Sewell and Associates Inc. (the "Title Valuation Referee") for determination.
        The Parties shall direct the Title Valuation Referee to resolve any such
        dispute
        within three (3) days after its receipt of all relevant materials pertaining
        thereto, being in no event greater than five (5) days after referral of the
        matter to the Title Valuation Referee.  The Title Valuation Referee shall
        act as an expert for the limited purpose of determining the specific disputed
        matters submitted by either Party and may not award damages or penalties
        to
        either Party with respect to any matter.  Seller and Purchaser shall share
        equally the Title Valuation Referee’s costs, fees and expenses (including
        attorney’s fees).  The determination of the Title Valuation Referee shall
        be made in writing, shall be binding upon and non-appealable by the Parties
        and
        shall not be subject to further review, audit or arbitration. 

       

      
        
          
          

        

        
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            30 -

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        11

      ENVIRONMENTAL
        DEFECTS

       

      
        	
                11.1

              	
                Notice
                  of Environmental Defects

              

      

       

      From
        time
        to time, as soon as reasonably practicable after determination, and in any
        event
        no later than ten (10) days prior to Closing, Purchaser shall notify Seller
        in
        writing of any Environmental Liabilities affecting the Assets. Such notice
        shall
        include a description of each Environmental Liability and the Property affected
        thereby, the Allocated Value for each affected Property and the estimated
        cost
        to remediate for each affected Property. Failure to specify any Environmental
        Liability in a written notice shall be deemed to be a waiver of such
        Environmental Liability for the purposes of this Section 11.1.
        

      

      
        	
                11.2

              	
                Rectification
                  by Seller

              

      

       

      
        	 	
                (a)

              	
                Prior
                  to the Closing Time, Seller shall use all reasonable efforts to
                  cure or
                  rectify the Environmental Liabilities of which Purchaser gives
                  notice
                  pursuant to Section 11.1.
                  If such Environmental Liability is not cured or removed at or prior
                  to the
                  Closing Time:

              

      

       

      
        	 	
                (i)

              	
                Purchaser
                  may waive the uncured Environmental Liabilities, in which case
                  all of
                  Seller's interest in and to the Assets shall be purchased by Purchaser
                  without an adjustment to the Purchase Price;
                  or

              

      

       

      
        	 	
                (ii)

              	
                Purchaser
                  may purchase the Assets, in which case the Purchase Price shall,
                  subject
                  to Section 11.2(c),
                  be reduced by the estimated cost to remediate the affected Property
                  as
                  such cost is determined by Seller; provided however, Seller may,
                  at its
                  sole option, elect to retain some or all of the Assets affected
                  by the
                  uncured Environmental Liabilities;
                  or

              

      

       

      
        	 	
                (b)

              	
                where
                  the cumulative amount by which the value of the Assets has been
                  reduced by
                  Environmental Liabilities is, in Seller's opinion acting reasonably,
                  twenty percent (20%) or more of the Purchase Price, Purchaser or
                  Seller
                  may terminate this Agreement upon written notice to the other,
                  in which
                  case the Parties shall have no further obligation to each other
                  hereunder,
                  except for obligations arising pursuant to Sections 13.2
                  and 16.13.

              

      

       

      
        	 	
                (c)

              	
                No
                  adjustment to the Purchase Price ("Environmental Defect Adjustment")
                  for
                  Environmental Liabilities shall be made unless and until the individual
                  value of each unrelated Environmental Liability exceeds $100,000
                  and the
                  aggregate value of all Environmental Liabilities exceeds two and
                  one-half
                  percent (2.5%) of the Purchase Price; and then the Environmental
                  Defect
                  Adjustment shall be made only to the extent the aggregate value
                  of all
                  Environmental Liabilities equals or exceeds two and one-half percent
                  (2.5%) of the Purchase Price.

              

      

       

      
        
          
          

        

        
          -
            31 -

          
            

          

        

        
          
          

        

      

       

      
        	
                11.3

              	
                Value
                  Disputes

              

      

       

      If
        Seller
        disagrees with the value allocated by Purchaser to an Environmental Liability,
        the Parties shall forthwith meet in good faith to discuss the issue. If after
        such a meeting the issue has not been resolved or if a Party does not forthwith
        meet to discuss the issue, the issue shall be resolved by arbitration in
        accordance with the provisions of Article
        15.

       

      

      
        	
                11.4

              	
                Cumulative
                  Value Reduction

              

      

       

      Where
        the
        cumulative amount by which the value of the Assets has been reduced by Title
        Defects and Environmental Liabilities is 25% or more of the Purchase Price,
        Purchaser or Seller may terminate this Agreement upon written notice to the
        other, in which case the Parties shall have no further obligation to each
        other
        hereunder, except for obligations arising pursuant to Sections 13.2
        and 16.13.

      

      ARTICLE
        12

      THIRD
        PARTY RIGHTS AND CONSENTS

       

      
        	
                12.1

              	
                Consents

              

      

       

      Where
        an
        assignment of any of the Assets requires the consent of Third Parties, Seller
        shall use all reasonable efforts to obtain such consents prior to Closing.
        After
        Closing, Seller shall cooperate with Purchaser in Purchaser's attempts to
        secure
        such consents.

      

      
        	
                12.2

              	
                Rights
                  of First Refusal

              

      

       

      
        	 	
                (a)

              	
                If
                  all or any portion of the Assets is subject to a Right of First
                  Refusal,
                  then Seller shall promptly serve all notices as are required thereunder
                  and shall otherwise comply with the provisions thereof. Schedule "O"
                  of this Agreement sets forth all Rights of First Refusal pertaining
                  to the
                  Properties. The Allocated Values for such Properties shall be used
                  for the
                  purposes of Rights of First Refusal notices. Unless otherwise agreed
                  by
                  Purchaser, each such notice shall include a request for a waiver
                  of any
                  Right of First Refusal to purchase any of the
                  Properties.

              

      

       

      
        	 	
                (b)

              	
                Purchaser
                  may not waive the existence or operation of any Right of First
                  Refusal. If
                  a Right of First Refusal is exercised, the Properties which are
                  subject
                  thereto shall not be sold to Purchaser pursuant hereto but shall
                  be
                  deleted from and cease to be subject to this Agreement but Purchaser
                  shall
                  nevertheless purchase the Properties which are not subject to such
                  exercised Rights of First Refusal.
                  If
                  Closing shall not have occurred by January 31, 2008 because not
                  all Rights
                  of First Refusal have been exercised or waived by the holders thereof
                  or
                  the time periods within which such rights may be exercised shall
                  not have
                  expired, Seller shall have the right, at its sole discretion, to
                  exclude
                  any Property(ies) affected by such Right(s) of First Refusal from
                  this
                  Agreement, but, in such case, Purchaser shall nevertheless purchase
                  the
                  Properties which are not so excluded from this
                  Agreement.

              

      

       

      
        
          
          

        

        
          -
            32 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (c)

              	
                If
                  a particular Property is excluded from the Closing pursuant to
                  Section 12.2(b):

              

      

       

      
        	 	
                (i)

              	
                the
                  term "Assets", "Leases", "Mineral Rights", "Wells", “Hydrocarbons”, “Real
                  Property”, “Equipment”, “Pipelines”, “Easements”, “Contracts”,
                  “Imbalances” and "Records" shall be construed as meaning only that portion
                  of the subject matter of those terms with respect to which Closing
                  occurs
                  and the Schedules shall be deemed to be revised to reflect the
                  deletion of
                  such Assets therefrom; and

              

      

       

      
        	 	
                (ii)

              	
                the
                  Purchase Price of the Assets shall be reduced by the aggregate
                  Allocated
                  Value of all affected Properties with respect to which Closing
                  does not
                  occur.

              

      

      

      ARTICLE
        13

      TERMINATION
        OF AGREEMENT

       

      
        	
                13.1

              	
                Termination

              

      

       

      This
        Agreement and the transactions contemplated hereby may be terminated in the
        following instances:

      

      
        	 	
                (a)

              	
                By
                  Seller if any of the conditions set forth in Section 4.2
                  are not satisfied in all material respects or waived on or before
                  the
                  Closing Time.

              

      

       

      
        	 	
                (b)

              	
                By
                  Purchaser if any of the conditions set forth in Section 4.1
                  are not satisfied in all material respects or waived on or before
                  the
                  Closing Time.

              

      

       

      
        	 	
                (c)

              	
                At
                  any time by the mutual written agreement of Purchaser and
                  Seller.

              

      

       

      
        	 	
                (d)

              	
                By
                  either Party in accordance with the definition of “Closing Time” set forth
                  herein.

              

      

       

      
        	 	
                (e)

              	
                By
                  either Party pursuant to Sections 10.2(b), 11.2(b) or
                  11.4.

              

      

       

      
        	
                13.2

              	
                Liabilities
                  Upon Termination or Breach.

              

      

       

      
        	 	
                (a)

              	
                In
                  the event of the termination of this Agreement by Seller in accordance
                  with Sections 13.1(a)
                  or
                  13.1(d) above, Seller shall have no liability hereunder of any
                  nature
                  whatsoever to Purchaser, including any liability for Damages. If
                  Purchaser
                  terminates this Agreement in accordance with Section 13.1(b)
                  or
                  13.1(d) above, or either Party terminates this Agreement pursuant
                  to
                  Sections 13.1(c) and 13.1(e) above, Purchaser shall have no liability
                  hereunder of any nature whatsoever to Seller including any liability
                  for
                  Damages and Seller shall return the Deposit with all interest earned
                  thereon, and the return of the Deposit shall constitute the sole
                  and
                  exclusive remedy of Purchaser as a result of any breach of this
                  Agreement.
                  If Purchaser terminates this Agreement other than in accordance
                  with
                  Sections 13.1(b),
                  13.1(c), 13.1(d) or 13.1(e) or, if Seller terminates this Agreement
                  in
                  accordance with Section 13.1(a)
                  or
                  13.1(d), Seller shall retain the Deposit with all interest earned
                  thereon
                  and shall apply the Deposit against the amount of Seller’s Damages as
                  liquidated damages in respect of Seller’s Damages, and the retention of
                  such Deposit (together with such amounts as may be owed to Seller
                  under
                  Section 9.3. and such remedies as may be available to Seller under
                  the
                  Confidentiality Agreement) shall constitute the sole and exclusive
                  remedy
                  of Seller as a result of any breach of this
                  Agreement.

              

      

       

      
        
          
          

        

        
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            33 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (b)

              	
                The
                  remedies set forth in this Section 13.2 shall be the Parties’ sole and
                  exclusive remedies in respect of the actions contemplated under
                  this
                  Section 13.2.

              

      

      

      ARTICLE
        14

      OBLIGATIONS
        AFTER CLOSING

       

      
        	
                14.1

              	
                Transfer
                  of Operatorship

              

      

       

      Seller
        covenants with Purchaser that Seller shall reasonably cooperate with Purchaser
        in order to obtain the appropriate consents and approvals for the assignment
        and
        transfer to Purchaser of operatorship of those of the Assets of which Seller
        is
        currently the Operator.

      

      
        	
                14.2

              	
                Removal
                  of Signs

              

      

       

      At
        and
        after Closing, Seller may remove any signs which indicate its ownership or
        operation of the Assets. Purchaser will be responsible to erect or install
        signs
        required by governmental agencies to indicate where applicable that Purchaser
        is
        the operator of the Assets and to notify other working interest owners, gas
        purchasers, suppliers, contractors, governmental agencies and other Third
        Parties of Purchaser's interest in the Assets on and after Closing.

      

      ARTICLE
        15

      ARBITRATION

       

      
        	
                15.1

              	
                General
                  Arbitration Provisions

              

      

       

      If
        any
        matter upon which the Parties do not agree is required to be referred to
        arbitration pursuant to the terms of this Agreement or if the Parties agree
        to
        refer any matter arising hereunder to arbitration, the following procedures
        and
        principles shall govern such arbitration:

      

      
        	 	
                (a)

              	
                Appointment
                  of Arbitrator(s): Upon written demand of either Seller or Purchaser,
                  representatives of Purchaser and Seller shall meet and attempt
                  to appoint
                  a single arbitrator. In the event that such representatives are
                  unable to
                  agree on a single arbitrator, then upon written demand by either
                  Seller or
                  Purchaser, each shall, within ten (10) days of such demand, name
                  an
                  arbitrator. If either Seller or Purchaser shall fail to name an
                  arbitrator
                  within ten (10) days from such demand, the administrator of the
                  Houston
                  office of the AAA shall provide the Parties with a list of potential
                  arbitrators from the National Panel of Commercial Arbitrators maintained
                  by the AAA (subject to the qualification requirements of this Article
                  15)
                  and an arbitrator for the non-responsive Party shall be determined
                  in
                  accordance with the procedures set forth in Section R-13.b of the
                  Commercial Arbitration Rules of the AAA. The two arbitrators so
                  chosen
                  shall select a third arbitrator within ten (10) days after the
                  second
                  arbitrator has been selected. If the Party-appointed arbitrators
                  cannot
                  reach agreement upon the third arbitrator within the ten (10) day
                  period,
                  the third arbitrator shall be selected in accordance with the procedures
                  set forth in Section R-15.c of the Commercial Arbitration Rules
                  of AAA,
                  provided that, all potential arbitrators shall meet the qualification
                  requirements of this Article 15.

              

      

       

      
        
          
          

        

        
          -
            34 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (b)

              	
                Qualification
                  of Arbitrator(s): All arbitrators must (i) be neutral persons who
                  have
                  never been officers, directors, employees, or consultants or had
                  other
                  business relationships with the Parties or any of their Affiliates,
                  officers, directors or employees, and (ii) have not less than seven
                  (7)
                  years recent experience in the U.S. oil and gas industry relevant
                  to the
                  matters in dispute. 

              

      

       

      
        	 	
                (c)

              	
                Proceedings:
                  Any hearings shall be conducted in Houston, Texas and shall commence
                  as
                  soon as practicable after the selection of the third arbitrator.
                  The
                  arbitrator or arbitrators chosen shall proceed immediately to hear
                  and
                  determine the question or questions in dispute. The decision of
                  the
                  arbitrators, or a majority of them, shall be made within forty-five
                  (45)
                  days after the appointment of the third arbitrator, subject to
                  any
                  reasonable delay due to unforeseen circumstances. In the event
                  the
                  arbitrators, or a majority of them, fail to make a decision within
                  the
                  period herein prescribed, then either Party thereto may elect to
                  have new
                  arbitrators chosen in the manner herein prescribed, as if none
                  had
                  previously been selected. The Parties and the arbitrators should
                  proceed
                  diligently and in good faith so that the award can be made as promptly
                  as
                  possible. The arbitrators shall have no right or authority to grant
                  or
                  award indirect, consequential, punitive or exemplary damages of
                  any
                  kind.

              

      

       

      
        	 	
                (d)

              	
                Decision:
                  The decision of the arbitrators, or a majority of them, shall be
                  drawn up
                  in writing and signed by the by the arbitrators, or a majority
                  of
                  them.

              

      

       

      
        	 	
                (e)

              	
                Compensation:
                  The compensation and expenses of the single arbitrator or the arbitrators
                  shall be borne equally by the
                  Parties.

              

      

       

      
        	 	
                (f)

              	
                Governing
                  Law: Arbitration pursuant hereto shall be governed in all respects
                  not
                  addressed herein by the provisions of the Commercial Arbitration
                  Rules of
                  the AAA as in effect on the date of this Agreement, as supplemented
                  to the
                  extent necessary to determine any procedural appeal questions by
                  the
                  Federal Arbitration Act (Title 9 of the United States Code) and
                  the
                  regulations thereunder.

              

      

      

      ARTICLE
        16

      GENERAL

      

      
        	
                16.1

              	
                Further
                  Assurances

              

      

       

      Each
        Party will, from time to time and at all times after Closing, without further
        consideration, do such further acts and deliver all such further assurances,
        deeds and documents as shall be reasonably required in order to fully perform
        and carry out the terms of this Agreement. Until Purchaser is novated, with
        respect to the Assets, into the Contracts and any other agreements and documents
        to which the Assets are subject, Seller shall act as Purchaser's agent
        (including without limitation to serve operation notices and authorizations
        for
        expenditure) as Purchaser reasonably and lawfully directs. Purchaser shall
        be
        liable to Seller and shall, in addition, indemnify Seller from and against,
        all
        losses, costs, claims, damages, expenses and liabilities suffered, sustained,
        paid or incurred by Seller arising in connection with all acts or omissions
        of
        Seller in its capacity as agent of Purchaser to the extent such acts and
        omissions were expressly or impliedly authorized by Purchaser.

       

      
        
          
          

        

        
          -
            35 -

          
            

          

        

        
          
          

        

      

       

      
        	
                16.2

              	
                No
                  Merger

              

      

       

      The
        covenants, representations, warranties and indemnities contained in this
        Agreement shall be deemed to be restated in any and all assignments,
        conveyances, transfers and other documents conveying the interests of Seller
        in
        and to the Assets to Purchaser, subject to any and all time and other
        limitations contained in this Agreement. There shall not be any merger of
        any
        covenant, representation, warranty or indemnity in such assignments,
        conveyances, transfers and other documents notwithstanding any rule of law,
        equity or statute to the contrary and such rules are hereby waived.

      

      
        	
                16.3

              	
                Entire
                  Agreement

              

      

       

      The
        provisions contained in any and all documents and agreements collateral hereto
        shall at all times be read subject to the provisions of this Agreement and,
        in
        the event of conflict, the provisions of this Agreement shall prevail. This
        Agreement and that certain letter agreement among Purchaser, and Apache
        Corporation, dated effective as of November 12, 2007 (the "Confidentiality
        Agreement") supersedes all other agreements (executed and unexecuted),
        documents, writings and verbal understandings among the Parties relating
        to the
        subject matter hereof and expresses the entire agreement of the Parties with
        respect to the subject matter hereof. Notwithstanding the foregoing, it is
        understood and agreed that the Confidentiality Agreement shall, with respect
        to
        the Assets, terminate as of the Closing Time, but, with respect to any other
        properties covered thereby not included within the Assets, shall remain in
        full
        force and effect in accordance with its terms and is not superseded or modified
        by this Agreement.

      

      
        	
                16.4

              	
                Subrogation

              

      

       

      The
        assignment and conveyance to be effected by this Agreement is made, to the
        extent permitted, with full right of substitution and subrogation of Purchaser
        in and to all covenants, representations, warranties and indemnities previously
        given or made by others in respect of the Assets or any part or portion
        thereof.

      

      
        	
                16.5

              	
                Governing
                  Law

              

      

       

      This
        Agreement shall, in all respects, be subject to, interpreted, construed and
        enforced in accordance with and under the laws of the State of Texas and
        shall,
        in all respects, be treated as a contract made in the State of Texas. The
        Parties irrevocably attorn and submit to the exclusive jurisdiction of the
        courts of the State of Texas and courts of appeal therefrom in respect of
        all
        matters arising out of or in connection with this Agreement.

      

      
        	
                16.6

              	
                Enurement

              

      

       

      Except
        for assignments to an affiliate, this Agreement may not be assigned prior
        to
        Closing by Purchaser without the prior written consent of Seller, which consent
        may be unreasonably and arbitrarily withheld. No assignment of this Agreement
        shall relieve the assigning Party of its obligations under this Agreement
        without the express written release of the other Party to this Agreement.
        This
        Agreement shall be binding upon and shall enure to the benefit of the Parties
        and their respective administrators, trustees, receivers, successors and
        permitted assigns.

       

      
        
          
          

        

        
          -
            36 -

          
            

          

        

        
          
          

        

      

       

      
        	
                16.7

              	
                Time
                  of Essence

              

      

       

      Time
        shall be of the essence in this Agreement.

      

      
        	
                16.8

              	
                Notices

              

      

       

      The
        addresses for service and the fax numbers of the Parties shall be as
        follows:

      

        
          	
                  Seller
                    -

                	
                  Apache
                    Corporation

                
	 	
                  2000
                    Post Oak Boulevard, Suite 100

                
	 	
                  Houston,
                    Texas 77056-4400

                
	 	 
	 	
                  Attention:
                    John J. Christmann, IV

                
	 	
                  Vice
                    President - Business Development

                
	 	
                  Fax:
                    (713) 296-6459

                
	 	 
	
                  copy
                    to:

                	
                  General
                    Counsel (at the same address above)

                
	 	
                  Fax:
                    (713) 296-6458

                
	 	 
	 	 
	 	 
	
                  Purchaser
                    -

                	
                  Vanguard
                    Permian, LLC 

                
	 	
                  7700
                    San Felipe, Suite 485

                
	 	
                  Houston,
                    Texas 77063

                
	 	 
	 	
                  Attention:
                    Scott W. Smith

                
	 	
                  Fax:
                    (832) 327-2260

                

        

         

      

      All
        notices, communications and statements required, permitted or contemplated
        hereunder shall be in writing, and shall be delivered as follows:

      

      
        	 	
                (a)

              	
                by
                  personal service on a Party at the address of such Party set out
                  above, in
                  which case the item so served shall be deemed to have been received
                  by
                  that Party when personally served;

              

      

       

      
        	 	
                (b)

              	
                by
                  confirmed facsimile transmission to a Party to the fax number of
                  such
                  Party set out above, in which case the item so transmitted shall
                  be deemed
                  to have been received by that Party when transmitted;
                  or

              

      

       

      
        	 	
                (c)

              	
                except
                  in the event of an actual or threatened postal strike or other
                  labor
                  disruption that may affect mail service, by mailing first class
                  registered
                  post, postage prepaid, to a Party at the address of such Party
                  set out
                  above, in which case the item so mailed shall be deemed to have
                  been
                  received by that Party on the third Business Day following the
                  date of
                  mailing.

              

      

       

      A
        Party
        may from time to time change its address for service or its fax number or
        both
        by giving written notice of such change to the other Party in accordance
        with
        the provisions hereof.

       

      
        
          
          

        

        
          -
            37 -

          
            

          

        

        
          
          

        

      

       

      
        	
                16.9

              	
                Invalidity
                  of Provisions

              

      

       

      In
        case
        any of the provisions of this Agreement should be invalid, illegal or
        unenforceable in any respect, the validity, legality or enforceability of
        the
        remaining provisions contained herein shall not in any way be affected or
        impaired thereby.

      

      
        	
                16.10

              	
                Waiver

              

      

       

      No
        failure on the part of any Party in exercising any right or remedy hereunder
        shall operate as a waiver thereof, nor shall any single or partial exercise
        of
        any such right or remedy preclude any other or further exercise thereof or
        the
        exercise of any right or remedy in law or in equity or by statute or otherwise
        conferred. No waiver of any provision of this Agreement, including without
        limitation, this Section, shall be effective otherwise than by an instrument
        in
        writing dated subsequent to the date hereof, executed by a duly authorized
        representative of the Party making such waiver.

      

      
        	
                16.11

              	
                Amendment

              

      

       

      This
        Agreement shall not be varied in its terms or amended by oral agreement or
        by
        representations or otherwise other than by an instrument in writing dated
        subsequent to the date hereof, executed by a duly authorized representative
        of
        each Party.

      

      
        	
                16.12

              	
                Agreement
                  not Severable

              

      

       

      This
        Agreement extends to the whole of the Assets and is not severable without
        Purchaser's express written consent or as otherwise herein
        provided.

      

      
        	
                16.13

              	
                Confidentiality 

              

      

       

      Until
        Closing has occurred, each Party shall keep confidential all information
        obtained from the other Party in connection with the Assets and shall not
        make
        any public announcements or release any information concerning this Agreement
        and the transactions herein provided for, without first consulting, and
        obtaining the prior written consent of, the other Party, which consent shall
        not
        be unreasonably withheld. Nothing contained herein shall prevent a Party
        at any
        time from furnishing information: (i) to any governmental agency or regulatory
        authority or to the public if required by applicable law, provided that the
        Parties shall advise each other in advance of any public statement which
        they
        propose to make; or (ii) to consultants or financial institutions engaged
        by
        Purchase to evaluate this transaction and approved in advance by Seller,
        such
        approval not to be unreasonably withheld; or (iii) in connection with obtaining
        consents or complying with preferential, pre-emptive or first purchase rights
        contained in Contract and any other agreements and documents to which the
        Assets
        are subject; or (iv) to procure the consent, if any, required of Seller's
        lenders.

      

      
        	
                16.14

              	
                Announcements

              

      

       

      Except
        as
        may be required by applicable laws or the applicable rules and regulations
        of
        any governmental agency or stock exchange, neither Purchaser nor Seller shall,
        prior to (or in connection with) Closing, issue any press release or other
        public disclosure concerning this Agreement or the transactions contemplated
        hereby without the prior written consent of the other Party, which consent
        shall
        not be unreasonably withheld.

       

      
        
          
          

        

        
          -
            38 -

          
            

          

        

        
          
          

        

      

       

      
        	
                16.15

              	
                Limit
                  of Liability

              

      

       

      In
        no
        event shall the liability of Seller to Purchaser in respect of any and all
        claims of Purchaser arising out of or in connection with this Agreement exceed,
        in the aggregate, fifty percent (50%) of the Purchase Price, taking into
        account
        any and all increases or decreases to the Purchase Price that occur by virtue
        of
        the terms of this Agreement. Nothing contained in this Agreement shall impose
        any liability on Seller or Purchaser for indirect or consequential damages,
        including without limitation, business loss, loss of profit or economic
        loss.

      

      
        	
                16.16

              	
                Suspense
                  Accounts

              

      

       

      The
        responsibility for payment of amounts held in suspense by Seller for periods
        prior to the Effective Time as to any of the Assets (such as suspended Royalties
        held in the ordinary course of business as a result of Title Defects or changes
        of ownership) and the funds so held shall be transferred to Purchaser at
        Closing. Any such items accruing to suspense on account of production from
        and
        after the Effective Time shall be the responsibility of Purchaser. At Closing,
        or, with respect to any Asset that Seller continues to operate or manage
        after
        Closing pursuant to any written transition arrangement with Purchaser, such
        later time as Seller ceases to operate or manage such Asset, Purchaser shall
        assume all responsibility for such accounts and shall indemnify and hold
        Seller
        and its directors, officers, servants, agents and employees harmless from
        any
        claim or liability with respect thereto.

      

      
        	
                16.17

              	
                Privacy
                  Covenants

              

      

       

      In
        addition to and notwithstanding its other obligations herein, the Purchaser
        covenants and agrees to:

      

      
        	 	
                (a)

              	
                prior
                  to the completion of the transactions contemplated herein, collect,
                  use
                  and disclose the Transferred Information solely for the purposes
                  of
                  reviewing, determining to proceed with and completing the transactions
                  contemplated herein, and only collect, use and disclose such information
                  to the extent necessary to meet such purpose and as authorized
                  or
                  permitted by law; 

              

      

       

      
        	 	
                (b)

              	
                after
                  the completion of the transactions contemplated
                  herein:

              

      

       

      
        	 	
                (i)

              	
                collect,
                  use and disclose the Transferred Information only for those purposes
                  for
                  which the Transferred Information was initially collected from
                  or in
                  respect of the individual to which such Transferred Information
                  relates,
                  unless:

              

      

       

      
        	 	
                (A)

              	
                the
                  Purchaser has first notified such individual of such additional
                  purpose,
                  and where required by law, obtained the consent of such individual
                  to such
                  additional purpose, or 

              

      

       

      
        	 	
                (B)

              	
                such
                  use or disclosure is permitted or authorized by law, without notice
                  to, or
                  consent from, such individual; and

              

      

       

      
        	 	
                (ii)

              	
                where
                  required by law, promptly notify the individuals to whom the Transferred
                  Information relates that the transactions contemplated herein have
                  taken
                  place and that the Transferred Information has been disclosed to
                  the
                  Purchaser;

              

      

       

      
        
          
          

        

        
          -
            39 -

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (c)

              	
                return
                  or destroy the Transferred Information, at the option of the Seller,
                  should the transactions contemplated herein not be completed;
                  and

              

      

       

      
        	 	
                (d)

              	
                where
                  the disclosure or transfer of Transferred Information to the Purchaser
                  requires the consent of, or the provision of notice to, the individual
                  to
                  which such Transferred Information relates, to:

              

      

       

      
        	 	
                (i)

              	
                not
                  require or accept the disclosure or transfer of such Transferred
                  Information until the Seller has first notified such individual
                  of such
                  disclosure or transfer and the purpose for same and, where required
                  by
                  law, obtained the individual’s consent to same; and
                  

              

      

       

      
        	 	
                (ii)

              	
                only
                  collect, use and disclose such information to the extent necessary
                  to
                  complete the transactions contemplated herein and as authorized
                  or
                  permitted by law.

              

      

       

      
        	
                16.18

              	
                Waiver
                  of Consumer Rights

              

      

       

      As
        partial consideration for the Parties entering into this Agreement, each
        Party
        can and does hereby waive the provisions of the Texas Deceptive Trade Practices
        Consumer Protection Act, Article 17.41 et seq., Texas Business and Commerce
        Code, a law that gives consumers special rights and protection, and all other
        consumer protection laws of the State of Texas, or of any other state that
        may
        be applicable to this transaction, that may be waived by such Party. It is
        not
        the intent of either Party to waive and neither Party does waive any law
        or
        provision thereof that is prohibited by law from being waived. Each Party
        represents that it has had an adequate opportunity to review the preceding
        waiver provision, including the opportunity to submit the same to legal counsel
        for review and advice and after consultation with an attorney of its own
        selection voluntarily consents to this waiver, and understands the rights
        being
        waived herein.

      

      
        	
                16.19

              	
                No
                  Partnership Created

              

      

       

      It
        is not
        the purpose or intention of this Agreement to create (and it shall not be
        construed as creating) a joint venture, partnership or any type of association,
        and neither Party is authorized to act as an agent or principal for the other
        Party with respect to any matter related hereto.

      

      
        	
                16.20

              	
                Counterpart
                  and Facsimile

              

      

       

      This
        Agreement may be executed in separate counterparts and delivered by facsimile
        and each counterpart when so executed and delivered, will be deemed to be
        an
        original all of which when taken together will constitute one and the same
        instrument, and production of an originally executed or facsimile copy of
        each
        counterpart execution page will be sufficient for purposes of proof of the
        execution and delivery of this Agreement. Any Party delivering this Agreement
        by
        facsimile undertakes to deliver, within a reasonable time, an executed
        original.

      

      [Signature
        Page Follows]

      

      
        
          
          

        

        
          -
            40 -

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF the Parties have executed this Agreement as of the day and
        year
        first above written.

       

      

        
          	
                  SELLER:

                	 	
                  PURCHASER:

                
	 	 	 	 	 
	
                  APACHE
                    CORPORATION

                	 	
                  VANGUARD
                    PERMIAN, LLC

                
	 	 	 	 	 
	
                  By:
                    

                	
                   /s/
                    John J. Christmann

                	 	
                  By:

                	
                  Vanguard
                    Natural Gas, LLC

                
	
                   

                	
                  John
                    J. Christmann, IV

                	 	 	
                  Its
                    Sole Member

                
	
                   

                	
                  Vice
                    President

                	 	 	 
	 	 	 	
                  By:

                	
                  Vanguard
                    Natural Resources, LLC

                
	 	 	 	 	
                  Its
                    Sole Member

                
	 	 	 	 	 
	 	 	 	
                  By:
                    

                	
                  /s/
                    Scott W. Smith

                
	 	 	 	 	
                  Scott
                    W. Smith

                
	 	 	 	 	
                  President
                    and Chief Executive Officer

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