Document:

FY12 NPA 02/29/12

Execution Version

Meredith Corporation
$50,000,000 2.62% Senior Notes, Series N, due March 1, 2015
$150,000,000 3.04% Senior Notes, Series O, due March 1, 2018

______________
Note Purchase Agreement
Dated as of February 29, 2012

		
	Section 1.
	Authorization of Notes    6

		
	Section 2.
	Sale and Purchase of Notes    7

		
	Section 3.
	Closing    7

		
	Section 4.
	Conditions to Closing    7

		
	Section 4.1
	Representations and Warranties    7

		
	Section 4.2
	Performance; No Default    7

		
	Section 4.3
	Compliance Certificates    8

		
	Section 4.4
	Opinions of Counsel    8

		
	Section 4.5
	Purchase Permitted By Applicable Law, Etc    8

		
	Section 4.6
	Sale of Other Notes    8

		
	Section 4.7
	Payment of Special Counsel Fees    9

		
	Section 4.8
	Private Placement Number    9

		
	Section 4.9
	Changes in Corporate Structure    9

		
	Section 4.10
	Funding Instructions    9

		
	Section 4.11
	Proceedings and Documents    9

		
	Section 5.
	Representations and Warranties of the Company    9

		
	Section 5.1
	Organization; Power and Authority    9

		
	Section 5.2
	Authorization, Etc    10

		
	Section 5.3
	Disclosure    10

		
	Section 5.4
	Organization and Ownership of Shares of Subsidiaries; Affiliates   10

		
	Section 5.5
	Financial Statements    11

		
	Section 5.6
	Compliance with Laws, Other Instruments, Etc    11

		
	Section 5.7
	Governmental Authorizations, Etc    12

		
	Section 5.8
	Litigation; Observance of Agreements, Statutes and Orders    12

		
	Section 5.9
	Taxes    12

		
	Section 5.10
	Title to Property; Leases    12

		
	Section 5.11
	Licenses, Permits, Etc    13

		
	Section 5.12
	Compliance with ERISA    13

		
	Section 5.13
	Private Offering by the Company    14

		
	Section 5.14
	Use of Proceeds; Margin Regulations    15

		
	Section 5.15
	Existing Debt; Future Liens    15

		
	Section 5.16
	Foreign Assets Control Regulations, Etc    16

		
	Section 5.17
	Status under Certain Statutes    16

		
	Section 5.18
	Notes Rank Pari Passu    17

		
	Section 5.19
	Environmental Matters    17

		
	Section 6.
	Representations of the Purchaser    17

		
	Section 6.1
	Purchase for Investment    17

		
	Section 6.2
	Source of Funds    18

		
	Section 7.
	Information as to the Company      19

		
	Section 7.1
	Financial and Business Information    19

		
	Section 7.2
	Officer's Certificate    22

		
	Section 7.3
	Visitation    23

		
	Section 8.
	Payment and Prepayment of the Notes       23

		
	Section 8.1
	Required Payment    23

		
	Section 8.2
	Optional Prepayments with Make-Whole Amount    24

		
	Section 8.3
	Change in Control    24

		
	Section 8.4
	Allocation of Partial Prepayments    26

		
	Section 8.5
	Maturity; Surrender, Etc    27

		
	Section 8.6
	Purchase of Notes    27

		
	Section 8.7
	Make-Whole Amount    27

		
	Section 8.8
	Sale of Assets Prepayment    29

		
	Section 9.
	Affirmative Covenants    30

		
	Section 9.1
	Compliance with Law    30

		
	Section 9.2
	Insurance    30

		
	Section 9.3
	Maintenance of Properties    30

		
	Section 9.4
	Payment of Taxes and Claims    30

		
	Section 9.5
	Corporate Existence, Etc    31

		
	Section 9.6
	Notes to Rank Pari Passu    31

		
	Section 9.7
	Books and Records    31

		
	Section 9.8
	Guaranty by Subsidiaries; Liens    31

		
	Section 9.9
	Intercreditor Agreement    34

		
	Section 10.
	Negative Covenants    34

		
	Section 10.1
	Transactions with Affiliates    35

		
	Section 10.2
	Interest Coverage Ratio    35

		
	Section 10.3
	Limitations on Debt    35

		
	Section 10.4
	Liens    35

		
	Section 10.5
	Mergers, Consolidations and Sales of Assets    38

		
	Section 10.6
	Nature of Business    40

		
	Section 10.7
	Terrorism Sanctions Regulations    41

		
	Section 11.
	Events of Default       41

		
	Section 12.
	Remedies on Default, Etc    43

		
	Section 12.1
	Acceleration    43

		
	Section 12.2
	Other Remedies    44

		
	Section 12.3
	Rescission    44

		
	Section 12.4
	No Waivers or Election of Remedies, Expenses, Etc    45

		
	Section 13.
	Registration; Exchange; Substitution of Notes    45

		
	Section 13.1
	Registration of Notes    45

		
	Section 13.2
	Transfer and Exchange of Notes    45

		
	Section 13.3
	Replacement of Notes    46

		
	Section 14.
	Payments on Notes    46

		
	Section 14.1
	Place of Payment    46

		
	Section 14.2
	Home Office Payment    46

		
	Section 15.
	Expenses, Etc    47

		
	Section 15.1
	Transaction Expenses    47

		
	Section 15.2
	Survival    47

		
	Section 16.
	Survival of Representations and Warranties; Entire Agreement    47

		
	Section 17.
	Amendment and Waiver    48

		
	Section 17.1
	Requirements    48

		
	Section 17.2
	Solicitation of Holders of Notes    48

		
	Section 17.3
	Binding Effect, etc    49

		
	Section 17.4
	Notes Held by Company, etc    49

		
	Section 18.
	Notices    49

		
	Section 19.
	Reproduction of Documents    50

		
	Section 20.
	Confidential Information    50

		
	Section 21.
	Substitution of Purchaser    51

		
	Section 22.
	Miscellaneous    51

		
	Section 22.1
	Successors and Assigns    51

		
	Section 22.2
	Payments Due on Non-Business Days    52

		
	Section 22.3
	Accounting Terms    52

		
	Section 22.4
	Severability    53

		
	Section 22.5
	Construction, etc    53

		
	Section 22.6
	Counterparts    53

		
	Section 22.7
	Governing Law    53

		
	Section 22.8
	Jurisdiction and Process; Waiver of Jury Trial    53

SCHEDULES AND EXHIBITS
Schedule A    -    Information Relating to Purchasers
* Schedule B    -    Defined Terms
Schedule 5.3   -           Disclosure Materials
Schedule 5.4    -    Subsidiaries of the Company and Ownership of Subsidiary Stock
Schedule 5.5    -    Financial Statements
Schedule 5.14 -    Use of Proceeds
Schedule 5.15 -    Existing Debt
		
	    * Exhibit 1-A  
	-Form of 2.62% Senior Note, Series N, due March 1, 2015

		
	    * Exhibit 1-B
	-    Form of 3.04% Senior Note, Series O, due March 1, 2018

		
	    Exhibit 4.4(a)
	-    Form of Opinion of Special Counsel for the Company

		
	    Exhibit 4.4(b)
	-    Form of Opinion of General Counsel for the Company

		
	    Exhibit 4.4(c)
	-    Form of Opinion of Special Counsel for the Purchasers

Material Schedules and Exhibits (those marked with *) are included in this filing.

Meredith Corporation
1716 Locust Street
Des Moines, Iowa 50309

$50,000,000 2.62% Senior Notes, Series N, due March 1, 2015
$150,000,000 3.04% Senior Notes, Series O, due March 1, 2018
Dated as of February 29, 2012

To Each of the Purchasers listed in
Schedule A hereto:
Ladies and Gentlemen:
Meredith Corporation, an Iowa corporation (together with any successor thereto that becomes such in accordance with Section 10.5, the “Company”), agrees with each of the purchasers whose names appear at the end hereof (each, a “Purchaser” and, collectively, the “Purchasers”) as follows:
SECTION 1.    Authorization of Notes.
The Company will authorize the issue and sale of 
(a) $50,000,000 aggregate principal amount of its 2.62% Senior Notes, Series N, due March 1, 2015 (as amended, restated or otherwise modified from time to time, the “Series N Notes”, such term to include any such notes issued in substitution therefore pursuant to Section 13); and

(b) $150,000,000 aggregate principal amount of its 3.04% Senior Notes, Series O, due March 1, 2018 (as amended, restated or otherwise modified from time to time, the “Series O Notes”, such term to include any such notes issued in substitution therefore pursuant to Section 13).  The term “Notes” as used in this Agreement shall include, collectively, the Series N Notes and Series O Notes.  The Series N Notes and Series O Notes shall be substantially in the respective forms set forth in Exhibits 1-A and 1-B in each case with such changes therefrom, if any, as may be approved by the Purchasers and the Company.  Certain capitalized and other terms used in this Agreement are defined in Schedule B.  References to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement; references to a “Section” are, unless otherwise specified, to a Section of this Agreement.

SECTION 2.    Sale and Purchase of Notes.
Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for in Section 3, Notes in the principal amount and of the Series specified opposite such Purchaser's name in Schedule A at the purchase price of 100% of the principal amount and of the Series thereof.  The Purchasers' obligations hereunder are several and not joint obligations, and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

SECTION 3.    Closing.
The sale and purchase of the Notes to be purchased by each Purchaser shall occur at the offices of Bingham McCutchen LLP, 399 Park Avenue, New York, New York at 10:00 a.m. at a closing (the “Closing”) on February 29, 2012 or on such other Business Day thereafter on or prior to March 7, 2012 as may be agreed upon by the Company and the Purchasers.  At the Closing the Company will deliver to each Purchaser the Notes of each Series to be purchased by such Purchaser in the form of a single Note for each Series (or such greater number of Notes for each Series in denominations of at least $100,000 as such Purchaser may request) dated the date of the Closing and registered in such Purchaser's name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to account number 0289646226 at Wells Fargo Bank N.A., San Francisco, CA, USA ABA #121000248.  If at the Closing the Company shall fail to tender such Notes to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser's satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.
SECTION 4.    Conditions to Closing.
Each Purchaser's obligation to purchase and pay for the Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser's satisfaction, prior to or at the Closing, of the following conditions:
Section 4.1    Representations and Warranties.
The representations and warranties of the Company in this Agreement shall be correct when made and at the time of the Closing.
Section 4.2    Performance; No Default.
The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing, and after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be continuing.  Neither the Company nor any Subsidiary shall have entered into any transaction since the date of the Memorandum that would have been prohibited by Sections 10.1, 10.4 or 10.5 had such Sections applied since such date.
Section 4.3    Compliance Certificates.
(a)    Officer's Certificate.  The Company shall have delivered to such Purchaser an Officer's Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b)    Secretary's Certificate.  The Company shall have delivered to such Purchaser a certificate of its Secretary or Assistant Secretary, dated the date of Closing, certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Notes and this Agreement.

Section 4.4    Opinions of Counsel.
Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from Sidley Austin LLP, special counsel for the Company, covering the matters set forth in Exhibit 4.4(a) and (b) from John S. Zieser, Esq., Chief Development Officer, General Counsel and Secretary of the Company, covering the matters set forth in Exhibit 4.4(b) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby instructs its counsel to deliver such opinion to the Purchasers) and (c) from Bingham McCutchen LLP, the Purchasers' special counsel in connection with such transactions, substantially 

in the form set forth in Exhibit 4.4(c) and covering such other matters incident to such transactions as such Purchaser may reasonably request.
Section 4.5    Purchase Permitted By Applicable Law, Etc.
On the date of the Closing, such Purchaser's purchase of Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof.  If requested by such Purchaser, such Purchaser shall have received an Officer's Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.
Section 4.6    Sale of Other Notes.
Contemporaneously with the Closing, the Company shall sell to each other Purchaser, and each other Purchaser shall purchase, the Notes to be purchased by it at the Closing as specified in Schedule A.
Section 4.7    Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall have paid on or before the Closing the fees, charges and disbursements of the Purchasers' special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing.
Section 4.8    Private Placement Number.
A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for each Series of the Notes.
Section 4.9    Changes in Corporate Structure.
The Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation, or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5.
Section 4.10    Funding Instructions.
At least three Business Days prior to the date of the Closing, each Purchaser shall have received written instructions, signed by a Responsible Officer on letterhead of the Company confirming the information specified in the second sentence of Section 3 including (i) the name and address of the transferee bank, (ii) such transferee bank's ABA number, and (iii) the account name and number into which the purchase price for the Notes is to be deposited.
Section 4.11    Proceedings and Documents.
All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

SECTION 5.    Representations and Warranties of the Company.

The Company represents and warrants to each Purchaser that:
Section 5.1    Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof.
Section 5.2    Authorization, Etc.
This Agreement and the Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 5.3    Disclosure.
The Company, through its agents, U.S. Bancorp Investments, Inc. and Bank of America Merrill Lynch, has delivered to each Purchaser a copy of a Private Placement Memorandum, dated February 2012 (the “Memorandum”), relating to the transactions contemplated hereby.  The Memorandum fairly describes, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries.  This Agreement, the Memorandum and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby and identified in Schedule 5.3, and the financial statements listed in Schedule 5.5, in each case, delivered to the Purchasers on or prior to February 14, 2012 (this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements being referred to, collectively, as the “Disclosure Documents”), taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances under which they were made, it being understood that no representation or warranty is made with respect to the projections included therein other than that they are based on assumptions and calculated in a manner the Company believed and believes as of the date thereof and hereof to be reasonable.  Except as disclosed in the Disclosure Documents, since December 31, 2011, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any Subsidiary except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.  To the best knowledge and belief of senior management of the Company, there is no fact known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.
Section 5.4    Organization and Ownership of Shares of Subsidiaries; Affiliates.
(a)    Schedule 5.4 contains (except as noted therein) complete and correct lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary, (ii)  of the Company's 

Affiliates, other than Subsidiaries, and (iii) of the Company's directors and senior officers.
(b)    All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than the agreements listed on Schedule 5.4 and customary limitations imposed by corporate law or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

Section 5.5    Financial Statements.
The Company has delivered to each Purchaser copies of the financial statements of the Company and its Subsidiaries listed on Schedule 5.5.  All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such Schedule and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments).  The Company and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents.
Section 5.6    Compliance with Laws, Other Instruments, Etc.
The execution, delivery and performance by the Company of this Agreement and the Notes will not (i) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.
Section 5.7    Governmental Authorizations, Etc.
No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Notes.
Section 5.8    Litigation; Observance of Agreements, Statutes and Orders.
(a)    There are no actions, suits, investigations or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of 

the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(b)    Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including without limitation Environmental Laws, the USA PATRIOT Act and any of the other laws and regulations that are referred to in Section 5.16) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

Section 5.9    Taxes.
The Company and its Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) the amount of which is not individually or in the aggregate Material or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP.  The Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect.  The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of federal, state or other taxes for all fiscal periods are adequate.  The federal income tax liabilities of the Company and its Subsidiaries have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all fiscal years up to and including the fiscal year ended June 30, 2005.
Section 5.10    Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title to their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement.  All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.
Section 5.11    Licenses, Permits, Etc.
(a)    The Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others which could reasonably be expected to have a Material Adverse Effect.
(b)    To the best knowledge of the Company, no product or service of the Company or any of its Subsidiaries infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person which infringement could reasonably be expected to have a Material Adverse Effect.
(c)    To the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries which violation could reasonably be expected to have a Material Adverse Effect.

Section 5.12    Compliance with ERISA.
(a)    The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of non-compliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise tax provisions under the Code or Federal law or section 4068 of ERISA or by the granting of a security interest in connection with the amendment of a Plan, other than such liabilities or Liens as would not be individually or in the aggregate Material.
(b)    The present value of the aggregate benefit liabilities under each of the Plans subject to Title IV of ERISA (other than Multiemployer Plans), determined as of the end of such Plan's most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan's most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by more than $10,000,000 in the case of any single Plan and by more than $10,000,000 in the aggregate for all Plans.  The present value of the accrued benefit liabilities (whether or not vested) under each Non-U.S. Plan that is funded, determined as of the end of the Company's most recently ended fiscal year on the basis of reasonable actuarial assumptions, did not exceed the current value of the assets of such Non-U.S. Plan allocable to such benefit liabilities by more than $10,000,000.  The term “benefit liabilities” has the meaning specified in section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in section 3 of ERISA.
(c)    The Company and its ERISA Affiliates have not incurred (i) withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are Material or (ii) any obligation in connection with the termination of or withdrawal from any Non-U.S. Plan.
(d)    The expected postretirement benefit obligation (determined as of the last day of the Company's most recently ended fiscal year in accordance with Financial Accounting Standards Board Accounting Standards Codification Section 715-60, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company and its Subsidiaries is not Material or has otherwise been properly disclosed in the Company's most recent audited financial statements.
(e) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)‐(D) of the Code.  The representation by the Company to each Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser's representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Notes to be purchased by such Purchaser.
(f) All Non-U.S. Plans have been established, operated, administered and maintained in compliance with all laws, regulations and orders applicable thereto, except where failure so to comply could not be reasonably expected to have a Material Adverse Effect.  All premiums, contributions and any other amounts required by applicable Non-U.S. Plan documents or applicable laws to be paid or accrued by the Company and its Subsidiaries have been paid or accrued as required, except where failure so to pay or accrue could not be reasonably expected to have a Material Adverse Effect.

Section 5.13    Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the Notes or any similar Securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than 44 other Institutional Investors (as defined in clause (c) of the definition of such term), each of which has been offered the Notes at a private sale for investment.  Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Notes to the registration requirements of section 5 of the Securities Act or the registration requirements of any securities or blue sky laws of any applicable jurisdiction.
Section 5.14    Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes as set forth in Schedule 5.14.  No part of the proceeds from the sale of the  Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any Securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).  Margin stock does not constitute more than 5.0% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5.0% of the value of such assets.  As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.
Section 5.15    Existing Debt; Future Liens.
(a)    Except as described therein, Schedule 5.15 sets forth a complete and correct list of all outstanding Debt of the Company and its Subsidiaries as of December 31, 2011 (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and Guaranty therefor, if any), since which date there has been no material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Debt of the Company or its Subsidiaries, except to the extent described in such schedule.  Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary and no event or condition exists with respect to any such Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment.
(b)    Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.4.
(c)    Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in any instrument evidencing Debt of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Debt of the Company, except as specifically indicated in Schedule 5.15.

Section 5.16    Foreign Assets Control Regulations, Etc.
(a)    Neither the Company nor any Controlled Entity is (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, United States Department of Treasury (“OFAC”) (an “OFAC Listed Person”) or (ii) a department, agency or instrumentality of, or is otherwise controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) any Person, entity, organization, foreign 

country or regime that is subject to any OFAC Sanctions Program (each OFAC Listed Person and each other Person, entity, organization and government of a country described in clause (ii), a “Blocked Person”).  Neither the Company nor any Controlled Entity is engaged in any activities that could subject such Person or any Purchaser to sanctions under CISADA or under any applicable state law that imposes sanctions on Persons that do business with Iran or any other country that is subject to an OFAC Sanctions Program.
(b)    No part of the proceeds from the sale of the Notes hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used by the Company or any Controlled Entity, directly or indirectly, in connection with any investment in, or any transactions or dealings with, any Blocked Person.
(c)    To the Company's actual knowledge after making due inquiry, neither the Company nor any Controlled Entity (i) is under investigation by any Governmental Authority for, or has been charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under any applicable law (collectively, “Anti-Money Laundering Laws”), (ii) has been assessed civil penalties under any Anti-Money Laundering Laws or (iii) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws.  The Company has taken reasonable measures appropriate to the circumstances (in any event as required by applicable law), to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all Anti-Money Laundering Laws.
(d)    No part of the proceeds from the sale of the Notes hereunder will be used, directly or indirectly, for any improper payments to any governmental official or employee, political party, official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage.  The Company has taken reasonable measures appropriate to the circumstances (in any event as required by applicable law), to ensure that the Company and each Controlled Entity is and will continue to be in compliance with all anti-corruption laws and regulations applicable to it.

Section 5.17    Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.
Section 5.18    Notes Rank Pari Passu.
The obligations of the Company under this Agreement and the Notes rank at least pari passu in right of payment with all other senior unsecured Debt (actual or contingent) of the Company, including, without limitation, all senior unsecured Debt of the Company described in Schedule 5.15 hereto.
Section 5.19    Environmental Matters.
(a)    Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.
(b)    Neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such 

as could not reasonably be expected to result in a Material Adverse Effect.
(c)    Neither the Company nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect.
(d)    All buildings on all real properties now owned, leased or operated by the Company or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.

SECTION 6.    Representations of the Purchaser.

Section 6.1    Purchase for Investment.
Each Purchaser severally represents that it is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser's or their property shall at all times be within such Purchaser's or their control.  Each Purchaser understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes.
Section 6.2    Source of Funds.
Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:
(a)    the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor's Prohibited Transaction Exemption (as further defined in Schedule B, “PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the NAIC (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser's state of domicile; or
(b)    the Source is a separate account that is maintained solely in connection with such Purchaser's fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or
(c)    the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1, or (ii) a bank collective investment fund, within the meaning of PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or
(d)    the Source constitutes assets of an “investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or 

“QPAM” (within the meaning of Part VI of the QPAM Exemption), no employee benefit plan's assets that are managed by the QPAM in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, represent more than 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM maintains an ownership interest in the Company that would cause the QPAM and the Company to be “related” within the meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM and (ii) the names of any employee benefit plans whose assets in the investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same employee organization, represent 10% or more of the assets of such investment fund, have been disclosed to the Company in writing pursuant to this clause (d);or
(e)    the Source constitutes assets of a “plan(s)” (within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Part IV(d) of the INHAM Exemption) owns a 10% or more interest in the Company (as determined under Part IV(d) of the INHAM exemption, as amended effective April 1, 2011) and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or
(f)    the Source is a governmental plan; or
(g)    the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this clause (g); or
(h)    the Source does not include assets of any employee benefit plan (within the meaning of ERISA) or plan (within the meaning of section 4975 of the Code), other than an employee benefit plan or plan exempt from the coverage of ERISA and section 4975 of the Code.
As used in this Section 6.2, the terms “employee benefit plan,” “governmental plan,” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.
SECTION 7.    Information as to the Company.

Section 7.1    Financial and Business Information.
The Company shall deliver to each holder of Notes that is an Institutional Investor:
(a)    Quarterly Statements - within 60 days (or such shorter period as is 15 days greater than the period applicable to the filing of the Company's Quarterly Report of Form 10-Q (the “Form 10-Q”) with the SEC) after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of:
(1) a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and
(2) consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments, provided that delivery within the time period specified above of copies of the Company's Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a), provided, further, that the Company shall be deemed to have made such delivery of such Form 10-Q if it shall have timely made such Form 10-Q available on “EDGAR” and on its home page on the worldwide web (at the date of this Agreement located at:  http://www.meredith.com) and shall have given each holder of a Note prior notice of such availability on EDGAR and on its home page in connection with each delivery (such availability and notice thereof being referred to as “Electronic Delivery”);
(b)    Annual Statements - within 105 days (or such shorter period as is 15 days greater than the period applicable to the filing of the Company's Annual Report on Form 10-K (the “Form 10-K”) with the SEC) after the end of each fiscal year of the Company, duplicate copies of:
(1)    a consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and
(2)    consolidated statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by:
(A)    an opinion thereon of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances, and
(B)    a certificate of such accountants stating that they have reviewed this Agreement and stating further whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should have obtained knowledge thereof in making an audit in accordance with generally accepted auditing standards or did not make such an audit),
provided that the delivery within the time period specified above of the Company's Form 10-K for such fiscal year (together with the Company's annual report to shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC, together with the accountant's certificate described in clause (B) above (the “Accountants' Certificate”), shall be deemed to satisfy the requirements of this Section 7.1(b), provided, further, that the Company shall be deemed to have made such delivery of such Form 10-K if it shall have timely made Electronic Delivery thereof, in which event the Company shall separately 

deliver, concurrently with such Electronic Delivery, the Accountants' Certificate;
(c)    SEC and Other Reports - promptly upon their becoming available, one copy of (i) each financial statement, report, notice or proxy statement sent by the Company or any Subsidiary to its principal lending banks as a whole (excluding information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability) or to its public Securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the SEC and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material;
(d)    Notice of Default or Event of Default - promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in Section 11(f), a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;
(e)    ERISA Matters - promptly, and in any event within five days after a Responsible Officer becoming aware of any of the following, a written notice setting forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:
(1)    with respect to any Plan, any reportable event, as defined in section 4043(c) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or
(2)    the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or
(3)    any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, could reasonably be expected to have a Material Adverse Effect; or
(4)    receipt of notice of the imposition of a Material financial penalty (which for this purpose shall mean any tax, penalty or other liability, whether by way of indemnity or otherwise) with respect to one or more Non-U.S. Plans;

(f)    Notices from Governmental Authority - promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect; and
(g)    Requested Information - with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries (including, but without limitation, actual copies of the Company's Form 10-Q and Form 10-K) or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes.

Section  7.2    Officer's Certificate.
Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a Senior Financial Officer setting forth (which, in the case of Electronic Delivery of any such financial statements, shall be by separate concurrent delivery of such certificate to each holder of Notes):
(a)    Covenant Compliance - the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Section 10.2 through Section 10.5 hereof, inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and
(b)    Event of Default - a statement that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.

Section 7.3    Visitation.
The Company shall permit the representatives of each holder of Notes that is an Institutional Investor:
(a)    No Default - if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company's officers, and (with the consent of the Company, which consent will not be unreasonably withheld) its independent public accountants, and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times and as often as may be reasonably requested in writing, but not more frequently than twice in any twelve month period; and
(b)    Default - if a Default or Event of Default then exists, at the expense of the Company, to visit and inspect any of the offices or properties of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries), all at such times and as often as may be requested.

SECTION 8.     Payment and Prepayment of the Notes.

Section 8.1    Required Payment.
(a)    Series N Notes.  The Series N Notes shall not be subject to scheduled principal prepayments.  The entire unpaid principal amount of the Series N Notes shall be paid by the Company on March 1, 2015 at par, together with accrued interest thereon, but without payment of the Make-Whole Amount or any premium.

(b)    Series O Notes.  On each of March 1, 2016, March 1, 2017 and March 1, 2018 the Company will prepay $50,000,000 principal amount (or such lesser principal amount as shall then be outstanding) of the Series O Notes at par and without payment of the Make-Whole Amount or any premium, provided that upon any partial prepayment of the Series O Notes pursuant to Section 8.2, 8.3 or 8.8, the principal amount of each required prepayment of the Series O Notes becoming due under this Section 8.1 on and after the date of such prepayment shall be reduced in the same proportion as the aggregate unpaid principal amount of the Series O Notes is reduced as a result of such prepayment.

Section 8.2    Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, any Series of Notes (if no Event of Default then exists) or the Notes without regard to Series (if an Event of Default then exists), in an amount not less than 10% of the aggregate principal amount of the Notes then outstanding (or the entire outstanding amount of any Series being prepaid in full if such amount is less than 10% of the aggregate principal amount of the Notes then outstanding) in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount.  The Company will give each holder of Notes written notice of each optional prepayment under this Section 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment.  Each such notice shall specify such date, the aggregate principal amount and the Series of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.4), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation.  Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes of the Series to be prepaid a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.
Section 8.3    Change in Control.
(a)    Notice of Change in Control or Control Event.  The Company will, within five Business Days after any Responsible Officer has knowledge of the occurrence of any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each holder of Notes unless notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this Section 8.3.  If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay the Notes, on a pro rata basis in respect of all Notes of all Series outstanding at such time, as described in subparagraph (c) of this Section 8.3 and shall be accompanied by the certificate described in subparagraph (g) of this Section 8.3.
(b)    Condition to Company Action.  The Company will not take any action that consummates or finalizes a Change in Control unless (i) at least 30 days prior to such action it shall have given to each holder of Notes written notice containing and constituting an offer to prepay the Notes, on a pro rata basis in respect of all Notes of all Series outstanding at such time, as described in subparagraph (c) of this Section 8.3, accompanied by the certificate described in subparagraph (g) of this Section 8.3, and (ii) contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this Section 8.3.
(c)    Offer to Prepay Notes.  The offer to prepay Notes contemplated by subparagraphs (a) and (b) of this Section 8.3 shall be an offer to prepay, in accordance with and subject to this Section 8.3, all, but not less than all, of the Notes of each Series held by each holder (in this case only, “holder” 

in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment Date”).  If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this Section 8.3, such date shall be not less than 30 days and not more than 120 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the first Business Day after the 45th day after the date of such offer).
(d)    Acceptance.  A holder of Notes may accept the offer to prepay made pursuant to this Section 8.3 by causing a notice of such acceptance to be delivered to the Company not later than 15 days after receipt by such holder of the most recent offer of prepayment.  A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section shall be deemed to constitute a rejection of such offer by such holder.
(e)    Prepayment.  Prepayment of the Notes to be prepaid pursuant to this Section 8.3 shall be at 100% of the principal amount of such Notes, together with interest on such Notes accrued to the date of prepayment.  The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this Section 8.3.
(f)    Deferral Pending Change in Control.  The obligation of the Company to prepay Notes pursuant to the offers required by subparagraph (c) and accepted in accordance with subparagraph (d) of this Section 8.3 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made.  In the event that such Change in Control has not occurred on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until, and shall be made on, the date on which such Change in Control occurs.  The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this Section 8.3 in respect of such Change in Control shall be deemed rescinded).
(g)    Officer's Certificate.  Each offer to prepay the Notes pursuant to this Section 8.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this Section 8.3; (iii) the principal amount and Series of each Note offered to be prepaid; (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (v) that the conditions of this Section 8.3 have been fulfilled; and (vi) in reasonable detail, the nature and date or proposed date of the Change in Control.
(h)    Certain Definitions.  “Change in Control” shall be deemed to have occurred if any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act as in effect on the date of the Closing) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act as in effect on the date of the Closing), other than members of the Meredith Family,
(1)    become the “beneficial owners” (as such term is used in Rule 13d-3 under the Exchange Act as in effect on the date of the Closing), directly or indirectly, of more than 50% of the total voting power of all classes then outstanding of the Company's Voting Stock, or
(2)    acquire after the date of the Closing (x) the power to elect, appoint or cause the election or appointment of at least a majority of the members of the board of directors of the Company, through beneficial ownership of the capital stock of the Company or otherwise, or (y) all or substantially all of the properties and assets of the Company.

“Control Event” means:
(i)    the execution by the Company or any of its Subsidiaries or Affiliates of any agreement or letter of intent with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, may reasonably be expected to result in a Change in Control,
(ii)    the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or
(iii)    the making of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act as in effect on the date of the Closing) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act as in effect on the date of the Closing) to the holders of the common stock of the Company, which offer, if accepted by the requisite number of holders, would result in a Change in Control.
All calculations contemplated in this Section 8.3 involving the capital stock of any Person shall be made with the assumption that all convertible Securities of such Person then outstanding and all convertible Securities issuable upon the exercise of any warrants, options and other rights outstanding at such time were converted at such time and that all options, warrants and similar rights to acquire shares of capital stock of such Person were exercised at such time.
Section 8.4    Allocation of Partial Prepayments.
In the case of each partial prepayment of the Series O Notes pursuant to Section 8.1, the principal amount of the Series O Notes to be prepaid shall be allocated among all such Series O Notes being prepaid at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.  In the case of each partial prepayment of the Notes of any Series pursuant to Section 8.2, the principal amount of the Notes to be prepaid shall be allocated among all such Notes being prepaid at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.  All partial prepayments made pursuant to Section 8.3 or 8.8 shall be applied only to the Notes of the holders who have elected to participate in such prepayment.
Section 8.5    Maturity; Surrender, Etc.
In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any.  From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue.  Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.
Section 8.6    Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except (a) upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes or (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to the holders of all Notes at the time outstanding upon the same terms and conditions.  Any such offer shall provide each holder with sufficient information to enable it to make an informed decision with respect to such offer, and shall remain open for at least 30 days.  If the holders of more than 50% of the principal amount of the Notes then outstanding accept such offer, the 

Company shall promptly notify the remaining holders of such fact and the expiration date for the acceptance by holders of Notes of such offer shall be extended by the number of days necessary to give each such remaining holder at least 15 days from its receipt of such notice to accept such offer.  The Company will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.
Section 8.7    Make-Whole Amount.
The term “Make-Whole Amount” means, with respect to any Note of any Series, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note of such Series over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero.  For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:
“Called Principal” means, with respect to any Note of any Series, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.
“Discounted Value” means, with respect to the Called Principal of any Note of any Series, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on such Series of the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.
“Reinvestment Yield” means, with respect to the Called Principal of any Note of any Series, the sum of (a) 0.50% per annum plus (b) the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “Page PX1” (or such other display as may replace Page PX1) on Bloomberg Financial Markets for the most recently issued actively traded on-the-run U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date.  Such implied yield will be determined, if necessary, by (1) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (2) interpolating linearly between (A) the most recently issued actively traded on-the-run U.S. Treasury security with the maturity closest to and greater than such Remaining Average Life and (B) the most recently issued actively traded on-the-run U.S. Treasury security with the maturity closest to and less than such Remaining Average Life.  The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.
“Remaining Average Life” means, with respect to any Called Principal of any Series of Notes, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Series of Notes, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes of such Series, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1.
“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1, as the context requires.
Section 8.8    Sale of Assets Prepayment.
(a)    In the event the Company makes an offer of prepayment of the Notes in accordance with Section 10.5(b), the Company shall give written notice thereof (a “Sale of Assets Notice”) to each holder of Notes.  Such Sale of Assets Notice shall contain, and shall constitute, an irrevocable offer to prepay, at the election of each holder, a portion of the Notes held by such holder equal to such holder's Ratable Portion of the Net Proceeds in respect of the relevant asset disposition on a date specified in such notice (the “Sale of Assets Prepayment Date”) that is not less than 30 days and not more than 60 days after the date of such notice, together with interest on the amount to be so prepaid accrued to the Sale of Assets Prepayment Date.  If the Sale of Assets Prepayment Date shall not be specified in such Sale of Assets Notice, the Sale of Assets Prepayment Date shall be the 60th day after the date of such notice.
(b)    To accept an offer of prepayment set forth in a Sale of Assets Notice, a holder of Notes shall cause a notice of such acceptance to be delivered to the Company not later than 20 days after the date of such Sale of Assets Notice, provided, that a holder's failure to accept such offer in writing within 20 days after the date of such Sale of Assets Notice shall be deemed to constitute its rejection of such prepayment offer.  If so accepted by any holder of a Note, such offered prepayment (equal to such holder's Ratable Portion of the Net Proceeds in respect of the relevant asset disposition) shall be due and payable on the Sale of Assets Prepayment Date.  Such offered prepayment shall be made at 100% of the principal amount of the Notes being so prepaid, together with interest on such principal amount then being prepaid accrued to the Sale of Assets Prepayment Date determined as of the date of such prepayment.  The prepayment shall be made on the Sale of Assets Prepayment Date.
(c)    Each offer to prepay the Notes pursuant to this Section 8.8 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying (i) the Sale of Assets Prepayment Date, (ii) the Net Proceeds in respect of the relevant asset disposition, (iii) that such offer is being made pursuant to this Section 8.8 and Section 10.5(b) of this Agreement, (iv) the principal amount of each Note offered to be prepaid, (v) the interest that would be due on each Note offered to be prepaid, accrued to the Sale of Assets Prepayment Date, and (vi) in reasonable detail, the nature of the relevant asset disposition and certifying that no Default or Event of Default exists or would exist after giving effect to the prepayment contemplated by such offer.

SECTION 9.    Affirmative Covenants.

The Company covenants that so long as any of the Notes are outstanding:
Section 9.1    Compliance with Law.
Without limiting Section 10.7, the Company will, and will cause each of its Subsidiaries to, comply 

with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, the USA PATRIOT Act and the other laws and regulations that are referred to in Section 5.16, applicable laws in respect of Non-U.S. Plans and all Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.2    Insurance.
The Company will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.
Section 9.3    Maintenance of Properties.
The Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times; provided that this Section shall not prevent the Company or any Subsidiary from discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.4    Payment of Taxes and Claims.
The Company will, and will cause each of its Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent the same have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company or any Subsidiary, provided that neither the Company nor any Subsidiary need pay any such tax, assessment, charge, levy or claim if (i) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes, assessments, charges, levies and claims in the aggregate could not reasonably be expected to have a Material Adverse Effect.
Section 9.5    Corporate Existence, Etc.
Subject to Section 10.5, the Company will at all times preserve and keep in full force and effect its corporate existence.  Subject to Section 10.5, the Company will at all times preserve and keep in full force and effect the corporate existence of each of its Subsidiaries (unless merged into the Company or a Wholly-Owned Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such corporate existence, right or franchise could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.6    Notes to Rank Pari Passu.

The Notes and all other obligations under this Agreement of the Company are and at all times shall remain direct and unsecured obligations of the Company ranking pari passu as against the assets of the Company with all other Notes from time to time issued and outstanding hereunder without any preference among themselves and pari passu with all other present and future unsecured Debt (actual or contingent) of the Company which is not expressed to be subordinate or junior in rank to any other unsecured Debt of the Company.
Section 9.7    Books and Records.
The Company will, and will cause each of its Subsidiaries to, maintain proper books of record and account in conformity with GAAP and all applicable requirements of any Governmental Authority having legal or regulatory jurisdiction over the Company or such Subsidiary, as the case may be.
Section 9.8    Guaranty by Subsidiaries; Liens.
(a)    If at any time, pursuant to the terms and conditions of any Major Credit Facility, any existing or newly acquired or formed Subsidiary of the Company becomes obligated as a guarantor or obligor under such Major Credit Facility, the Company will, at its sole cost and expense, cause such Subsidiary to, prior to or concurrently therewith, become a Guarantor in respect of this Agreement and the Notes and deliver to each of the holders of the Notes the following items:
(1)    an executed guaranty in form and substance reasonably satisfactory to the Required Holders (a “Subsidiary Guaranty Agreement”);
(2)    such documents and evidence with respect to such Subsidiary as the Required Holders may reasonably request in order to establish the existence and good standing of such Subsidiary and the authorization of the transactions contemplated by such Subsidiary Guaranty Agreement;
(3)    an opinion letter of counsel to such Subsidiary in form and substance reasonably satisfactory to the Required Holders which shall include, without limitation, opinions to the effect, subject to customary assumptions, qualifications and exceptions, that (x) such Subsidiary Guaranty Agreement has been duly authorized, executed and delivered by such Subsidiary, (y) such Subsidiary Guaranty Agreement constitutes the legal, valid and binding contract and agreement of such Subsidiary, enforceable in accordance with its terms (except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles) and (z) the execution, delivery and performance by such Subsidiary of such Subsidiary Guaranty Agreement do not (A) violate any law, rule or regulation applicable to such Subsidiary, or (B) (1) require the creation or imposition of any Lien not permitted by Section 10.4 or (2) conflict with or result in any breach of any of the provisions of or constitute a default under (I) the provisions of the charter, bylaws, certificate of formation, operating agreement or other constitutive documents of such Subsidiary, or (II) any material agreement or other instrument to which such Subsidiary is a party or by which such Subsidiary may be bound; and
(4)    such other certificates, resolutions, opinions, documents and instruments as may be reasonably requested by the Required Holders to give effect to the undertaking of such Subsidiary becoming a Guarantor.

(b)    If at any time, pursuant to the terms and conditions of any Major Credit Facility, any Guarantor is discharged and released from its Guaranty of Debt under such Major Credit Facility and (i) such Guarantor is not a co-obligor under such Major Credit Facility and (ii) the Company will have delivered to each holder of Notes an Officer's Certificate certifying that (x) the condition specified in clause (i) above has been satisfied and (y) immediately preceding the release of such Guarantor 

from its Subsidiary Guaranty Agreement and after giving effect thereto, no Default or Event of Default will have existed or would exist, then, upon receipt by the holders of Notes of such Officer's Certificate, such Guarantor will be discharged and released, automatically and without the need for any further action, from its obligations under its Subsidiary Guaranty Agreement; provided that, if in connection with any release of a Guarantor from its Guaranty of Debt under such Major Credit Facility any fee or other consideration (excluding, for the avoidance of doubt, any repayment of the principal or interest or payment of any pre-existing prepayment or similar repayment fee under such Major Credit Facility in connection with such release) is paid or given to any holder of Debt under such Major Credit Facility in connection with such release, each holder of a Note shall receive equivalent consideration on a pro rata basis (determined, in respect of revolving credit facilities, based upon the commitment in effect thereunder rather than amounts outstanding thereunder) in connection with such Guarantor's release from its Subsidiary Guaranty Agreement.  Without limiting the foregoing, for purposes of further assurance, each of the holders of the Notes agrees to provide to the Company and such Guarantor, if reasonably requested by the Company or such Guarantor and at the Company's expense, written evidence of such discharge and release signed by such holder.
(c)    If at any time, pursuant to the terms and conditions of any Major Credit Facility, the Company or any of its Subsidiaries are required to or elect to grant Liens on any of their assets to secure the Debt evidenced by such Major Credit Facility, the Company will, at its sole cost and expense, prior to or concurrently therewith, grant, or cause such Subsidiary to grant, Liens on such assets in favor of the holders of the Notes (or in favor of a collateral agent reasonably acceptable to the Required Holders for the benefit of the holders of the Notes) and deliver to each of the holders of the Notes the following items:
(1)    such security documents as the Required Holders deem necessary or advisable to grant to the holders of Notes (or such collateral agent for the benefit of the holders of Notes) a perfected security interest having priority on a pari passu basis with such Major Credit Facility to (or for the benefit of) the holders of Notes;
(2)    such documents and evidence with respect to such Liens as the Required Holders may reasonably request in order to establish the existence and priority of such Liens and the authorization of the transactions contemplated by such security documents;
(3)    an opinion letter of counsel to the Company or such Subsidiary in form and substance reasonably satisfactory to the Required Holders which shall include, without limitation, opinions to the effect, subject to customary assumptions, qualifications and exceptions, that (w) such security documents have been duly authorized, executed and delivered by the Company or such Subsidiary, (x) such security documents constitute the legal, valid and binding contract and agreement of the Company or such Subsidiary, enforceable in accordance with their terms (except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles), (y) the execution, delivery and performance by the Company or such Subsidiary of such security documents do not (A) violate any law, rule or regulation applicable to the Company or such Subsidiary, or (B)(1) require the creation or imposition of any Lien not permitted by Section 10.4 or (2) conflict with or result in any breach of any of the provisions of or constitute a default under (I) the provisions of the charter, bylaws, certificate of formation, operating agreement or other constitutive documents of the Company or such Subsidiary, or (II) any material agreement or other instrument to which the Company or such Subsidiary is a party or by which such Subsidiary may be bound, and (z) such security documents create a perfected security interest in such assets; and
(4)    such other certificates, resolutions, opinions, documents and instruments as may be reasonably requested by the Required Holders to give effect to the granting of such 

Liens by such Subsidiary.
(d)    If at any time, pursuant to the terms and conditions of any Major Credit Facility, Liens granted by the Company or any Subsidiary are released under such Major Credit Facility and the Company will have delivered to each holder of Notes an Officer's Certificate certifying that immediately preceding the release of such Liens and after giving effect thereto, no Default or Event of Default will have existed or would exist, then, upon receipt by the holders of Notes of such Officer's Certificate, such Liens in favor of the holders of Notes will be discharged and released, automatically and without the need for any further action; provided that, if in connection with any release of such Liens under such Major Credit Facility any fee or other consideration (excluding, for the avoidance of doubt, any repayment of the principal or interest or payment of any pre-existing prepayment or similar repayment fee under such Major Credit Facility in connection with such release) is paid or given to any holder of Debt under such Major Credit Facility in connection with such release, each holder of a Note shall receive equivalent consideration on a pro rata basis (determined, in respect of revolving credit facilities, based upon the commitment in effect thereunder rather than amounts outstanding thereunder) in connection with such release of Liens securing the Debt evidenced by this Agreement and the Notes.  Without limiting the foregoing, for purposes of further assurance, each of the holders of the Notes agrees to provide to the Company, if reasonably requested by the Company and at the Company's expense, written evidence of such discharge and release signed by such holder (or the collateral agent appointed by the holders of Notes).

Section 9.9    Intercreditor Agreement.
If at any time, pursuant to the terms and conditions of any Major Credit Facility, the Company or any of its Subsidiaries are required to grant Liens on any of their assets to secure the Debt evidenced by such Major Credit Facility, and the Company or such Subsidiaries are required to grant Liens to secure the Debt evidenced by this Agreement and the Notes, then the Company will, concurrently with the granting of such Liens, cause the lenders under such Major Credit Facility to enter into, and the holders of Notes hereby agree to enter into, an intercreditor agreement in form and substance (including, without limitation, as to the sharing of recoveries and set offs) reasonably satisfactory to the Required Holders (the “Intercreditor Agreement”) with the holders of Notes, or enter into a joinder agreement to such Intercreditor Agreement in form and substance reasonably satisfactory to the Required Holders.  Within ten (10) Business Days following the execution of any such Intercreditor Agreement (or any joinder thereto), the Company will deliver an executed copy thereof to each holder of Notes.
SECTION 10.    Negative Covenants.
The Company covenants that so long as any of the Notes are outstanding:
Section 10.1    Transactions with Affiliates.
The Company will not and will not permit any Subsidiary to enter into directly or indirectly any Material transaction or Material group of related transactions (including without limitation the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary), except in the ordinary course and pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm's-length transaction with a Person not an Affiliate.
Section 10.2    Interest Coverage Ratio.
The Company will not at any time permit the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense for each period of four consecutive fiscal quarters to be less than 2.75 to 1.0.
Section 10.3    Limitations on Debt.

(a)    The Company will not at any time permit the ratio of (i) Consolidated Total Debt at such time to (ii) Consolidated EBITDA for the period of the four consecutive fiscal quarters then most recently ended to exceed 3.75 to 1.0.  The maximum amount of Consolidated Total Debt permitted pursuant to the terms of this Section 10.3(a) is hereafter referred to as “Maximum Permitted Total Debt”.
(b)    The Company will not at any time permit Priority Debt to exceed an amount equal to 25% of Maximum Permitted Total Debt.

Section 10.4    Liens.
The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly create, incur, assume or permit to exist (upon the happening of a contingency or otherwise) any Lien on or with respect to any property or asset (including, without limitation, any document or instrument in respect of goods or accounts receivable) of the Company or any such Subsidiary, whether now owned or held or hereafter acquired, or any income or profits therefrom, or assign or otherwise convey any right to receive income or profits (unless it makes, or causes to be made, effective provision whereby the Notes will be equally and ratably secured with any and all other obligations thereby secured, such security to be pursuant to an agreement reasonably satisfactory to the Required Holders and, in any such case, (x) the Notes shall have the benefit, to the fullest extent that, and with such priority as, the holders of the Notes may be entitled under applicable law, of an equitable Lien on such property and (y) in respect of any Lien securing any Major Credit Facility, the Company or such Subsidiary has complied with Sections 9.8 and 9.9), except:
(a)    Liens for taxes, assessments or other governmental charges which are not yet due and payable or the payment of which is not at the time required by Section 9.4;
(b)    statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens, in each case, incurred in the ordinary course of business for sums not yet due and payable or the payment of which is not at the time required by Section 9.1 or Section 9.4;
(c)    Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business (i) in connection with workers' compensation, unemployment insurance and other types of social security or retirement benefits, or (ii) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety bonds, appeal bonds (not in excess of $25,000,000), bids, leases (other than Capital Leases), performance bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property;
(d)    any attachment or judgment Lien, unless (i) the judgment it secures shall not, within 60 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 60 days after the expiration of any such stay or (ii) the uninsured portion of the judgment such Lien secures, including any portion for which the insurer has not acknowledged responsibility, exceeds $25,000,000;
(e)    leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances, in each case incidental to, and not interfering with, the ordinary conduct of the business of the Company or any of its Subsidiaries, provided that such Liens do not, in the aggregate, materially detract from the value of such property;
(f)    Liens on property or assets of the Company or any of its Subsidiaries securing Debt owing to the Company or to any of its Wholly-Owned Subsidiaries;
(g)    Liens on all existing or hereafter acquired or arising Receivables of the Company or any Subsidiary, the Related Security with respect thereto, the collections and proceeds of such Receivables and Related Security, all lockboxes, lockbox accounts, collection accounts or other 

deposit accounts into which such collections are deposited and all other rights and payments relating to such Receivables (collectively, “Receivables Assets”), which are transferred to the Company, a Subsidiary or a Receivables Purchaser in connection with Receivables Facility Attributed Indebtedness; provided such Receivables Facility Attributed Indebtedness is permitted under Section 10.3(b);
(h)    any Lien created to secure all or any part of the purchase price, or to secure Debt incurred or assumed to pay all or any part of the purchase price or cost of construction, of property (or any improvement thereon) acquired or constructed by the Company or a Subsidiary after the date of the Closing, provided that:
(1)    any such Lien shall extend solely to the item or items of such property (or improvement thereon) so acquired or constructed and, if required by the terms of the instrument originally creating such Lien, other property (or improvement thereon) which is an improvement to or is acquired for specific use in connection with such acquired or constructed property (or improvement thereon) or which is real property being improved by such acquired or constructed property (or improvement thereon),
(2)    the principal amount of the Debt secured by any such Lien shall at no time exceed an amount equal to the lesser of (i) the cost to the Company or such Subsidiary of the property (or improvement thereon) so acquired or constructed and (ii) the fair market value (as determined in good faith by the board of directors of the Company) of such property (or improvement thereon) at the time of such acquisition or construction, and
(3)    any such Lien shall be created contemporaneously with, or within eighteen (18) months after, the acquisition or construction of such property;

(i)    any Lien existing on property of a Person immediately prior to its being consolidated with or merged into the Company or a Subsidiary or its becoming a Subsidiary, or any Lien existing on any property acquired by the Company or any Subsidiary at the time such property is so acquired (whether or not the Debt secured thereby shall have been assumed), provided that (i) no such Lien shall have been created or assumed in contemplation of such consolidation or merger or such Person's becoming a Subsidiary or such acquisition of property, and (ii) each such Lien shall extend solely to the item or items of property so acquired and, if required by the terms of the instrument originally creating such Lien, other property which is an improvement to or is acquired for specific use in connection with such acquired property;
(j)    any Lien renewing, extending or refunding any Lien permitted by paragraphs (h) or (i) of this Section 10.4, provided that (i) the principal amount of Debt secured by such Lien immediately prior to such extension, renewal or refunding is not increased or the maturity thereof reduced, (ii) such Lien is not extended to any other property, and (iii) immediately after such extension, renewal or refunding no Default or Event of Default would exist;
(k)    the security interest contemplated by Section 18.3 of the Trademark License Agreement among Meredith Corporation, as Licensor, Better Homes & Garden Real Estate Licensee LLC, as the successor to Project Five TM LLC, as Licensee, and Realogy Corporation, as Guarantor, dated as of October 3, 2007, as amended (so long as any such amendment does not provide for any change to the obligations secured thereby as in effect on the date of Closing);
(l)    Liens on Margin Stock;
(m)    Liens arising from precautionary UCC Financing Statements or similar filings;
(n)    licenses and sublicenses granted to others in the ordinary course of business of the Company or any of its Subsidiaries and not involving indebtedness for borrowed money; and
(o)    other Liens not otherwise permitted by subparagraphs (a) through (n) securing Debt, provided that (x) all Debt secured by such Liens shall have been incurred within the applicable limitations of Section 10.3, including, without limitation, that after giving effect thereto Priority Debt 

will not exceed 25% of Maximum Permitted Total Debt and (y) no such Liens under this clause (o) shall secure the obligations under any Major Credit Facility.

Section 10.5    Mergers, Consolidations and Sales of Assets.
(a)    The Company will not, and will not permit any of its Subsidiaries to, consolidate with or be a party to a merger with any other Person, or sell, lease or otherwise dispose of all or substantially all of its assets; provided that:
(1)    any Subsidiary may merge or consolidate with or into the Company or any Subsidiary so long as in (i) any merger or consolidation involving the Company, the Company shall be the surviving or continuing corporation, and (ii) any merger or consolidation involving a Wholly-Owned Subsidiary (and not the Company), the Wholly-Owned Subsidiary shall be the surviving or continuing Person;
(2)    the Company may consolidate or merge with or into any other corporation if (i) the corporation which results from such consolidation or merger (the “surviving corporation”) is organized under the laws of any state of the United States or the District of Columbia, (ii) the due and punctual payment of the principal of and premium, if any, and interest on all of the Notes, according to their tenor, and the due and punctual performance and observation of all of the covenants in the Notes and this Agreement to be performed or observed by the Company are expressly assumed in writing by the surviving corporation and the surviving corporation shall furnish to the holders of the Notes an opinion of counsel satisfactory to the Required Holders to the effect that the instrument of assumption has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of the surviving corporation enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles, (iii) at the time of such consolidation or merger and immediately after giving effect thereto, no Default or Event of Default would exist, and (iv) the Company or such surviving corporation shall have complied with all obligations under this Agreement with respect to any Change in Control resulting from such transaction;
(3)    the Company may sell or otherwise dispose of all or substantially all of its assets to any Person for consideration which represents the fair market value of such assets (as determined in good faith by the Board of Directors of the Company) at the time of such sale or other disposition if (i) the Person which is acquiring all or substantially all of the assets of the Company is a corporation organized under the laws of any state of the United States or the District of Columbia, (ii) the due and punctual payment of the principal of and premium, if any, and interest on all the Notes, according to their tenor, and the due and punctual performance and observance of all of the covenants in the Notes and in this Agreement to be performed or observed by the Company are expressly assumed in writing by the acquiring corporation and the acquiring corporation shall furnish to the holders of the Notes an opinion of counsel satisfactory to the Required Holders to the effect that the instrument of assumption has been duly authorized, executed and delivered and constitutes the legal, valid and binding contract and agreement of such acquiring corporation enforceable in accordance with its terms, except as enforcement of such terms may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors' rights generally and by general equitable principles, (iii) at the time of such sale or disposition and immediately after giving effect thereto, no Default or Event of Default would exist, and (iv) the Company or such acquiring corporation shall have complied with all obligations under this Agreement with respect to any Change in Control resulting from such transaction; and
(4)    the Company or any Subsidiary may sell or otherwise dispose of assets as part 

of any Permitted Receivables Transaction so long as, after giving effect thereto, the aggregate amount of Priority Debt (including Receivables Facility Attributed Indebtedness) does not exceed 25% of Maximum Permitted Total Debt.
(b)    The Company will not, and will not permit any of its Subsidiaries to, sell, lease, transfer, abandon or otherwise dispose of assets (except assets sold in the ordinary course of business for fair market value and except as provided in Section 10.5(a)(3)); provided that the foregoing restrictions do not apply to:
(1)    (i) the sale, lease, transfer or other disposition of assets of a Subsidiary to the Company or another Subsidiary or by the Company to a Wholly-Owned Subsidiary or (ii) the sale, lease, transfer or other disposition of assets (valued at net book value) of the Company to another Subsidiary not to exceed in any 12-month period 10% of Consolidated Total Assets as of the last day of the fiscal quarter immediately preceding such sale, lease, transfer or other disposition; or
(2)    the sale or other disposition of assets as part of any Permitted Receivables Transaction so long as, after giving effect thereto, the aggregate amount of Priority Debt (including Receivables Facility Attributed Indebtedness) does not exceed 25% of Maximum Permitted Total Debt; or
(3)    the sale of inventory in the ordinary course of business; or
(4)    the sale of assets for cash or other property to a Person or Persons other than an Affiliate if all of the following conditions are met:
(i)    such assets (valued at net book value) do not, together with all other assets of the Company and its Subsidiaries previously disposed of during the immediately preceding 36 calendar month period (other than in the ordinary course of business), exceed 30% of the average of Consolidated Total Assets as of the last day of each of the 12 consecutive fiscal quarters then most recently ended;
(ii)    in the opinion of the Board of Directors of the Company, the sale is for fair value and is in the best interests of the Company and its Subsidiaries; and
(iii)    immediately before the consummation of the transaction and after giving effect thereto, no Default or Event of Default would exist;
provided, however, that for purposes of the foregoing calculation, there shall not be included any assets the proceeds of which were or are applied either (A) within 12 months before or 12 months after the effective date of such asset disposition to the acquisition of assets useful and intended to be used in the operation of the business of the Company and its Subsidiaries as described in Section 10.6 and having a fair market value (as determined in good faith by the Board of Directors of the Company) at least equal to that of the assets so disposed of or (B) within 180 days after the effective date of such asset disposition to the prepayment at any applicable prepayment premium of Senior Debt of the Company on a pro rata basis (other than (x) Senior Debt owing to the Company, any of its Subsidiaries or any Affiliate and (y) Senior Debt in respect of any revolving credit or similar facility providing the Company or any such Subsidiary with the right to obtain loans or other extensions of credit from time to time, unless in connection with such payment of Senior Debt, the availability of credit under such credit facility is permanently reduced by an amount not less than the amount of such proceeds applied to the payment of such Senior Debt), based upon principal amount then outstanding, provided that, the Company offers to prepay (at par, without Make-Whole Amount or any premium) each outstanding Note, in accordance with Section 8.8, in a principal amount equal to the Ratable Portion of such Note in respect of such asset disposition.

Section 10.6    Nature of Business.
The Company will not, and will not permit any Subsidiary to, engage in any business if, as a result, the general nature of the business, in which the Company and its Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Company and its Subsidiaries, taken as a whole, are engaged on the date of this Agreement as described in the Memorandum (it being understood that this covenant shall not require the Company to remain in any current business if it remains in one or more current businesses of the Company or its Subsidiaries).
Section 10.7    Terrorism Sanctions Regulations.
The Company will not and will not permit any Controlled Entity to (a) become a Blocked Person, (b) have any investments in, or engage in any dealings or transactions with, any Blocked Person if such investments, dealings or transactions would cause any holder of a Note to be in violation of any laws or regulations that are applicable to such holder or (c) engage in any activities that could subject such Person or any holder of a Note to sanctions under CISADA or under any applicable state law that imposes sanctions on Persons that do business with Iran or any other country that is subject to an OFAC Sanctions Program.
SECTION 11.        Events of Default.

An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:
(a)    the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b)    the Company defaults in the payment of any interest on any Note for more than five Business Days after the same becomes due and payable; or
(c)    the Company defaults in the performance of or compliance with any term contained in Sections 10.1 through 10.5 and such default is not remedied within 10 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this paragraph (c) of Section 11); or
(d)    the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in Sections 11(a), (b) and (c)) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 11(d)); or
(e)    any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or
(f)    (i) the Company or any Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest on any Debt that is outstanding in an aggregate principal amount of at least $35,000,000 (or the equivalent in other applicable currencies) beyond any period of grace provided with respect thereto, or (ii)  the Company or any Subsidiary is in default in the performance of or compliance with any term of any evidence of any Debt in an aggregate outstanding principal amount of at least $35,000,000 (or the equivalent in other applicable currencies) or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Debt has become, 

or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a consequence of the occurrence or continuation of any event or condition (other than the passage of time or the right of the holder of Debt to convert such Debt into equity interests), the Company or any Subsidiary has become obligated to purchase or repay Debt before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of at least $35,000,000, or (iv) the occurrence of any “Amortization Event” under any Permitted Receivables Transaction which event has not been cured, waived or rescinded, or (v) the Company shall be removed as the “Servicer” under any Permitted Receivables Transaction; or
(g)    the Company or any Material Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii)  makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or
(h)    a court or other Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Material Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to the Company or any Material Subsidiary or with respect to any substantial part of the property of the Company or any Material Subsidiary, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of the Company or any of its Material Subsidiaries, or any such petition shall be filed against the Company or any of its Material Subsidiaries and such petition shall not be dismissed within 60 days; or
(i)    a final judgment or judgments for the payment of money aggregating in excess of $35,000,000 (or the equivalent in other applicable currencies) are rendered against one or more of the Company and its Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or
(j)    if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the sum of (x) the aggregate “amount of unfunded benefit liabilities” (within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, plus (y) the amount (if any) by which the aggregate present value of accrued benefit liabilities under all funded Non-U.S. Plans exceeds the aggregate current value of the assets of such Non-U.S. Plans allocable to such liabilities, shall exceed $35,000,000, (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, (vi) the Company or any Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Subsidiary thereunder, (vii) the Company or any Subsidiary fails to administer or 

maintain a Non-U.S. Plan in compliance with the requirements of any and all applicable laws, statutes, rules, regulations or court orders or any Non-U.S. Plan is involuntarily terminated or wound up, or (viii) the Company or any Subsidiary becomes subject to the imposition of a financial penalty (which for this purpose shall mean any tax, penalty or other liability, whether by way of indemnity or otherwise) with respect to one or more Non-U.S. Plans; and any such event or events described in clauses (i) through (viii) above, either individually or together with any other such event or events, could reasonably be expected to have a Material Adverse Effect; or
(k)    (i) a default shall occur under any Subsidiary Guaranty Agreement by a Subsidiary of the Debt under this Agreement and the Notes granted pursuant to Section 9.8 and such default shall continue beyond the period of grace, if any, allowed with respect thereto or (ii) except as expressly permitted under Section 9.8(b), any Subsidiary Guaranty Agreement shall cease to be in full force and effect for any reason whatsoever with respect to one or more Guarantors, including, without limitation, a determination by any Governmental Authority or court that such agreement is invalid, void or unenforceable with respect to one or more Guarantors or any Guarantor shall contest or deny in writing the validity or enforceability of any of its obligations under any Subsidiary Guaranty Agreement.

As used in Section 11(j), the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in section 3 of ERISA.
SECTION 12.    Remedies on Default, Etc.

Section 12.1    Acceleration.
(a)    If an Event of Default with respect to the Company described in Section 11(g) or (h) (other than an Event of Default described in clause (i) of Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the fact that such clause encompasses clause (i) of Section 11(g)) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.
(b)    If any other Event of Default has occurred and is continuing, the Required Holders may at any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.
(c)    If any Event of Default described in Section 11(a) or (b) has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.

Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest thereon (including, but not limited to, any interest accrued thereon at the Default Rate) and (y) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived.  The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for), and that the provision for payment of a Make-Whole Amount by the Company, in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.
Section 12.2    Other Remedies.
If any Default or Event of Default has occurred and is continuing, and irrespective of whether any 

Notes have become or have been declared immediately due and payable under Section 12.1, the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.
Section 12.3    Rescission.
At any time after any Notes have been declared due and payable pursuant to clause Section 12.1(b) or (c), the Required Holders, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of each Series of the Notes, at the Default Rate for such Series, (b) neither the Company nor any other Person shall have paid any amounts which have become due solely by reason of such declaration, (c) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17, and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes.  No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.
Section 12.4    No Waivers or Election of Remedies, Expenses, Etc.
No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder's rights, powers or remedies.  No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise.  Without limiting the obligations of the Company under Section 15, the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12, including, without limitation, reasonable attorneys' fees, expenses and disbursements.
SECTION 13.    Registration; Exchange; Substitution of Notes.

Section 13.1    Registration of Notes.
The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes.  The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register.  Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary.  The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.
Section 13.2    Transfer and Exchange of Notes.
Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Section 18(c), for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder's attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within ten Business Days thereafter, the Company shall execute and deliver, at the Company's expense (except as provided below), one or more new Notes (as requested by the holder thereof) of the same 

Series in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note.  Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Notes for such Series set forth in Exhibits 1-A or 1-B, as the case may be.  Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon.  The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes.  Notes shall not be transferred in denominations of less than $100,000; provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes of a Series, one Note of such Series may be in a denomination of less than $100,000.  Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representation set forth in Section 6.2.
Section 13.3    Replacement of Notes.
Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 18(c)) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and
(a)    in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least $10,000,000 or a Qualified Institutional Buyer, such Person's own unsecured agreement of indemnity shall be deemed to be satisfactory), or
(b)    in the case of mutilation, upon surrender and cancellation thereof,
within ten Business Days thereafter, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note of the same Series, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.
SECTION 14.    Payments on Notes.

Section 14.1    Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in Des Moines, Iowa at the principal office of the Company in such jurisdiction.  The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction.
Section 14.2    Home Office Payment.
So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, interest and all other amounts becoming due hereunder by the method and at the address specified for such purpose below such Purchaser's name in Schedule A, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 14.1.  Prior to any sale or other disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its 

election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 13.2.  The Company will afford the benefits of this Section 14.2 to any Institutional Investor that is the direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Section 14.2.
SECTION 15.    Expenses, Etc.

Section 15.1    Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated, the Company will pay all costs and expenses (including reasonable attorneys' fees of a special counsel and, if reasonably required by the Required Holders, local or other counsel) incurred by the Purchasers and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement, any Subsidiary Guaranty Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement, any Subsidiary Guaranty Agreement or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement, any Subsidiary Guaranty Agreement or the Notes, or by reason of being a holder of any Note, (b) the costs and expenses, including financial advisors' fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes and (c) the costs and expenses incurred in connection with the initial filing of this Agreement and all related documents and financial information with the SVO, provided that such costs and expenses shall not exceed $2,500.00.  The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes).
Section 15.2    Survival.
The obligations of the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement, any Subsidiary Guaranty Agreement or the Notes, and the termination of this Agreement.
SECTION 16.    Survival of Representations and Warranties; Entire Agreement.

All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note.  All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement.  Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.
SECTION 17.    Amendment and Waiver.

Section 17.1    Requirements.
This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or prospectively), with (and only with) the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of 

Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, any Series of the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20, or (iv) release any Guarantor from its Subsidiary Guaranty Agreement (other than in compliance with Section 9.8(b)).
Section 17.2    Solicitation of Holders of Notes.
(a)    Solicitation.  The Company will provide each holder of the Notes (irrespective of the amount of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes.  The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.
(b)    Payment.  The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions of this Agreement, any Subsidiary Guaranty Agreement or any Note unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment.
(c)    Consent in Contemplation of Transfer.  Any consent made pursuant to this Section 17.2 by the holder of any Note that has transferred or has agreed to transfer such Note to the Company, any Subsidiary or any Affiliate of the Company and has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force or effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force or effect except solely as to such transferring holder.

Section 17.3    Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver.  No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon.  No course of dealing between the Company and the holder of any Note nor any delay in exercising any rights hereunder, under any Subsidiary Guaranty Agreement or under any Note shall operate as a waiver of any rights of any holder of such Note.  As used herein, the term “this Agreement” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.
Section 17.4    Notes Held by Company, etc.
Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate 

principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this Agreement, any Subsidiary Guaranty Agreement or the Notes, or have directed the taking of any action provided herein, in any Subsidiary Guaranty Agreement or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.
SECTION 18.    Notices.

All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid).  Any such notice must be sent:
(a)    if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other address as such Purchaser or nominee shall have specified to the Company in writing,
(b)    if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or
(c)    if to the Company, to the Company at its address set forth at the beginning hereof to the attention of the Chief Financial Officer with a copy to the General Counsel, or at such other address as the Company shall have specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.
SECTION 19.    Reproduction of Documents.

This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at the Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital or other similar process and such Purchaser may destroy any original document so reproduced.  The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.  This Section 19 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.
SECTION 20.    Confidential Information.

For the purposes of this Section 20, “Confidential Information” means information delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of the Company or such Subsidiary, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any Person acting on such Purchaser's behalf, (c) otherwise becomes known to such Purchaser other than through disclosure 

by the Company or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser under Section 7.1 that are otherwise publicly available.  Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser; provided that such Purchaser may deliver or disclose Confidential Information to (i) its directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), (ii) its financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (v) any Person from which it offers to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the NAIC or the SVO or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser's investment portfolio, or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser's Notes and this Agreement.  Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement.  On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 20.
SECTION 21.    Substitution of Purchaser.

Each Purchaser shall have the right to substitute any one of its affiliates as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such affiliate, shall contain such affiliate's agreement to be bound by this Agreement and shall contain a confirmation by such affiliate of the accuracy with respect to it of the representations set forth in Section 6.  Upon receipt of such notice, any reference to such Purchaser in this Agreement (other than in this Section 21), shall be deemed to refer to such affiliate in lieu of such original Purchaser.  In the event that such affiliate is so substituted as a Purchaser hereunder and such affiliate thereafter transfers to such original Purchaser all of the Notes then held by such affiliate, upon receipt by the Company of notice of such transfer, any reference to such affiliate as a “Purchaser” in this Agreement (other than in this Section 21), shall no longer be deemed to refer to such affiliate, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement.
SECTION 22.    Miscellaneous.

Section 22.1    Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not.

Section 22.2    Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting the requirement in Section 8.5 that the notice of any optional prepayment specify a Business Day as the date fixed for such prepayment), any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day, provided that if the maturity date of any Note is a date other than a Business Day, the payment otherwise due on such maturity date shall be made on the next succeeding Business Day and shall include the additional days elapsed in the computation of interest payable on such next succeeding Business Day.
Section 22.3    Accounting Terms.
(a)    All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP.  Except as otherwise specifically provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance with GAAP, and (ii) all financial statements shall be prepared in accordance with GAAP.  Notwithstanding the foregoing, if the Company notifies the holders of Notes that, in the Company's reasonable opinion, or if the Required Holders notify the Company that, in the Required Holders' reasonable opinion, as a result of changes in GAAP from time to time (“Subsequent Changes”), any of the covenants contained in Sections 10.2, 10.3, 10.4 or 10.5, or any of the defined terms used therein, no longer apply as intended such that such covenants are materially more or less restrictive to the Company than are such covenants immediately prior to giving effect to such Subsequent Changes, the Company and the holders of Notes shall negotiate in good faith to reset or amend such covenants or defined terms so as to negate such Subsequent Changes, or to establish alternative covenants or defined terms.  Until the Company and the Required Holders so agree to reset, amend or establish alternative covenants or defined terms, the covenants contained in Sections 10.2, 10.3, 10.4 and 10.5, together with the relevant defined terms, shall continue to apply and compliance therewith shall be determined assuming that the Subsequent Changes shall not have occurred (“Static GAAP”).  During any period that compliance with any covenants shall be determined pursuant to Static GAAP, the Company shall include relevant reconciliations in reasonable detail between GAAP and Static GAAP with respect to the applicable covenant compliance calculations contained in each certificate of a Senior Financial Officer delivered pursuant to Section 7.2 during such period.
(b)    For purposes of determining compliance with the financial covenants contained in this Agreement, any election by the Company or its Subsidiaries to measure an item of its Debt using fair value (as may be permitted by Accounting Standard Codification Topic No. 825-10-25 - Fair Value Option or any similar accounting standard) shall be disregarded and such determination shall be made as if such election had not been made.

Section 22.4    Severability.
Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.
Section 22.5    Construction, etc.
Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant.  Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof.
Section 22.6    Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument.  Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.  Delivery of an executed signature page by facsimile or e-mail transmission shall be effective as delivery of a manually signed counterpart of this Agreement.
Section 22.7    Governing Law.
This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.
Section 22.8    Jurisdiction and Process; Waiver of Jury Trial.
(a)    The Company irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement or the Notes.  To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
(b)    The Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 22.8(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 18 or at such other address of which such holder shall then have been notified pursuant to said Section.  The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.
(c)    Nothing in this Section 22.8 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.
(d)    THE PARTIES HERETO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR THEREWITH.

[Remainder of page intentionally left blank.  Next page is a signature page.]

If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company.
Very truly yours,
Meredith Corporation
		
	By:
	 /s/ Steven M. Cappaert                

Name:  Steven M. Cappaert
Title:  Corporate Controller
This Agreement is hereby accepted and
agreed to as of the date thereof.
AVIVA LIFE AND ANNUITY COMPANY
ROYAL NEIGHBORS OF AMERICA
By:    Aviva Investors North America, Inc., 
Its authorized attorney-in-fact

By:  /s/ Roger D. Fors
Name:  Roger D. Fors
Title:  VP-Private Fixed Income

NEW YORK LIFE INSURANCE COMPANY

By:  /s/ Loyd T. Henderson
Name:  Loyd T. Henderson
Title:  Corporate Vice President

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
By:    New York Life Investment Management LLC,
Its Investment Manager

By:  /s/ Loyd T. Henderson
Name:  Loyd T. Henderson
Title:  Director

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 30C)
By:    New York Life Investment Management LLC,
Its Investment Manager

By:  /s/ Loyd T. Henderson

Name:  Loyd T. Henderson
Title:  Director

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 3)
By:    New York Life Investment Management LLC,
Its Investment Manager

By:  /s/ Loyd T. Henderson
Name:  Loyd T. Henderson
Title:  Director

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 3-2)
By:    New York Life Investment Management LLC,
Its Investment Manager

By:  /s/ Loyd T. Henderson
Name:  Loyd T. Henderson
Title:  Director

NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 30E)
By:    New York Life Investment Management LLC,
Its Investment Manager

By:  /s/ Loyd T. Henderson
Name:  Loyd T. Henderson
Title:  Director

METROPOLITAN LIFE INSURANCE COMPANY

METLIFE INVESTORS INSURANCE COMPANY
By:    Metropolitan Life Insurance Company,
its Investment Manager

GENERAL AMERICAN LIFE INSURANCE COMPANY
By:    Metropolitan Life Insurance Company,
its Investment Manager

By:  /s/ Judith A. Gulotta
Name:  Judith A. Gulotta
Title:  Managing Director

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By:    Babson Capital Management LLC as Investment Adviser

C.M. LIFE INSURANCE COMPANY
By:    Babson Capital Management LLC as Investment Adviser

MASSMUTUAL ASIA LIMITED
By:    Babson Capital Management LLC as Investment Adviser

By:  /s/ John B. Wheeler
Name:  John B. Wheeler
Title:  Managing Director

HARTFORD LIFE INSURANCE COMPANY
By:    Hartford Investment Management Company
its Agent and Attorney-in-Fact

By:  /s/ Robert M. Mills
Name:  Robert M. Mills
Title:  Vice President

UNITED SERVICES AUTOMOBILE ASSOCIATION

By:  /s/ Donna Baggerly
Name:  Donna Baggerly
Title:  VP Insurance Company Portfolios

SCHEDULE B
Defined Terms

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:
“Accountants' Certificate” is defined in Section 7.1(b).
“Affiliate” means, at any time, and with respect to any Person, any other Person that at such time directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such first Person, and, with respect to the Company, shall include any Person beneficially owning or holding, directly or indirectly, 10% or more of voting or equity interests of the Company or any Subsidiary or any Person of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of voting or equity interests.  As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting Securities, by contract or otherwise.  Unless the context otherwise clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company.
“Agreement” is defined in Section 17.3.
“Anti-Money Laundering Laws” is defined in Section 5.16(c).
“Blocked Person” is defined in Section 5.16(a).
“Business Day” means (a) for the purposes of Section 8.7 only, any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed, and (b) for the purposes of any other provision of this Agreement, any day other than a Saturday, a Sunday or a day on which commercial banks in Des Moines, Iowa or New York, New York are required or authorized to be closed.
“Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.
“Change in Control” is defined in Section 8.3(h).
“CISADA” means the United States Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010.
“Closing” is defined in Section 3.
“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder from time to time.
“Company” is defined in the first paragraph of this Agreement.
“Confidential Information” is defined in Section 20.
“Consolidated EBITDA” for any period means the sum of (a) Consolidated Net Income during such period plus (to the extent deducted in determining Consolidated Net Income), (b) all provisions for any federal, state or other income taxes made by the Company and its Subsidiaries during such period, (c) all 

provisions for depreciation and amortization (other than amortization of debt discount) made by the Company and its Subsidiaries during such period, and (d) Consolidated Interest Expense during such period.
“Consolidated Interest Expense” means all Interest Expense of the Company and its Subsidiaries for any period after eliminating intercompany items.  For purposes of any determination of Consolidated Interest Expense pursuant to this Agreement, the Company shall include, on a pro forma basis, “interest expense” (calculated in a manner consistent with the computation of Interest Expense herein) of any business entity acquired by the Company or any Subsidiary during the four fiscal quarters immediately preceding any determination of Consolidated Interest Expense and, concurrently with such determination, the Company shall furnish to the holders of the Notes audited financial statements or other financial information with respect to such business entity demonstrating to the reasonable satisfaction of the Required Holders the basis for such computations; provided, that the Company may elect not to compute Consolidated Interest Expense on a pro forma basis for any period with respect to one or more business entities so acquired so long as (i) the Company has elected not to include the net income of such business entities on a pro forma basis for such period in the computation of Consolidated Net Income for such period and (ii) such election by the Company with respect to the computation of Consolidated Interest Expense for such period does not cause the Consolidated Interest Expense of the Company for such period to be less than 90% of what the Company's Consolidated Interest Expense would have been if such election had not been made.
“Consolidated Net Income” for any period means the gross revenues of the Company and its Subsidiaries for such period less all expenses and other proper charges (including taxes on income), determined on a consolidated basis after eliminating earnings or losses attributable to outstanding Minority Interests, but excluding in any event:
(g) any gains or losses on the sale or other disposition of investments or fixed or capital assets, and any taxes on such excluded gains and any tax deductions or credits on account of any such excluded losses;
(h) the proceeds of any life insurance policy;
(i) net earnings and losses of any Subsidiary accrued prior to the date it became a Subsidiary;
(j) net earnings and losses of any business entity (other than a Subsidiary), substantially all the assets of which have been acquired in any manner by the Company or any Subsidiary, realized by such business entity prior to the date of such acquisition;
(k) net earnings and losses of any business entity (other than a Subsidiary) with which the Company or a Subsidiary shall have consolidated or which shall have merged into or with the Company or a Subsidiary prior to the date of such consolidation or merger;
(l) net earnings of any business entity (other than a Subsidiary) in which the Company or any Subsidiary has an ownership interest unless such net earnings shall have actually been received by the Company or such Subsidiary in the form of cash distributions;
(m) any portion of the net earnings of any Subsidiary which for any reason is unavailable for payment of dividends to the Company or any other Subsidiary;
(n) (i) earnings resulting from any reappraisal, revaluation or write-up of assets or losses resulting from writedowns of goodwill or other intangibles under Statement of Financial Accounting Standards No. 142, Statement of Financial Accounting Standards No. 144, or any successor statement or principle, (ii) losses resulting from any exit or disposal activities under Statement of Financial Accounting Standards No. 146 or any successor statement or principle or (iii) non-cash expenses resulting from equity-based compensation;
(o) any deferred or other credit representing any excess of the equity in any Subsidiary at the date of acquisition thereof over the amount invested in such Subsidiary;

(p) any gain arising from the acquisition of any Securities of the Company or any Subsidiary;
(q) any reversal of any contingency reserve, except to the extent that provision for such contingency reserve shall have been made from income arising during such period; and
(r) any other extraordinary or nonrecurring gain or loss.
For purposes of any determination of Consolidated Net Income pursuant to this Agreement and notwithstanding clause (d) of this definition, the Company may include, on a pro forma basis, “net income” (calculated in a manner consistent with the computation of Consolidated Net Income herein) earned by any business entity acquired (or whose assets have been acquired) by the Company or any Subsidiary during the four fiscal quarters immediately preceding any determination of Consolidated Net Income, provided that there shall be a reasonable basis for the computation of such “net income” and, concurrently with such determination, the Company shall have furnished to the holders of the Notes audited financial statements or other financial information with respect to such business entity (or such acquired assets) demonstrating to the reasonable satisfaction of the Required Holders the basis for such computations.
“Consolidated Total Assets” means, as of the date of any determination thereof, total assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Consolidated Total Debt” means, as of the date of any determination thereof, all Debt of the Company and its Subsidiaries, determined on a consolidated basis eliminating intercompany items.
“Control Event” is defined in Section 8.3(h).
“Controlled Entity” means any of the Subsidiaries of the Company and any of their or the Company's respective Controlled Affiliates.  As used in this definition, “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and “Controlled” has a meaning correlative thereto.
“Debt” with respect to any Person means, at any time, without duplication,
(s) its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock;
(t) its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property);
(u) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases;
(v) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);
(w) all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money);
(x) Swaps of such Person;
(y) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (f) or (h) hereof; and
(z) Receivables Facility Attributed Indebtedness.
Debt of any Person shall include all obligations of such Person of the character described in clauses (a) through (h) to the extent such Person remains legally liable in respect thereof notwithstanding that any such 

obligation is deemed to be extinguished under GAAP.
“Default” means an event or condition the occurrence or existence of which would, with the lapse of time or the giving of notice or both, become an Event of Default.
“Default Rate” means the Series N Default Rate and the Series O Default Rate, as applicable.
“Disclosure Documents” is defined in Section 5.3.
“Electronic Delivery” is defined in Section 7.1(a).
“Environmental Laws” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including but not limited to those related to Hazardous Materials.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code.
“Event of Default” is defined in Section 11.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“Finsub” means any bankruptcy-remote corporation or other Person that is a Wholly-Owned Subsidiary organized solely for the purposes of engaging in a Permitted Receivables Transaction.
“Form 10-K” is defined in Section 7.1(b).
“Form 10-Q” is defined in Section 7.1(a).
“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.
“Governmental Authority” means
(aa) the government of
(1) the United States of America or any state or other political subdivision thereof, or
(2) any other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or
(ab) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government, including without limitation the Federal Communications Commission of the United States.
“Guarantor” means each Subsidiary required to guaranty the Notes pursuant to Section 9.8.
“Guaranty” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing 

or in effect guaranteeing any Debt, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person:
(ac) to purchase such indebtedness or obligation or any property constituting security therefor;
(ad) to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation;
(ae) to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or
(af) otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.
“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or any other substances that might pose a hazard to health and safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law including, but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.
“holder” means, with respect to any Note, the Person in whose name such Note is registered in the register maintained by the Company pursuant to Section 13.1.
“INHAM Exemption” is defined in Section 6.2(e).
“Institutional Investor” means (a) any Purchaser of a Note, (b) any holder of a Note holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the Notes then outstanding, (c) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company, any broker or dealer, or any other similar financial institution or entity, regardless of legal form, and (d) any Related Fund of any holder of any Note.
“Intercreditor Agreement” is defined in Section 9.9.
“Interest Expense” of the Company and its Subsidiaries for any period means all interest (including the interest component included in Rentals on Capital Leases) and all amortization of debt discount and expense on any particular Debt (including, without limitation, payment‐in‐kind, zero coupon and other like Securities) for which such calculations are being made.
“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other secured party to or of such Person under any conditional sale or other title retention agreement or Capital Lease, upon or with respect to any property or asset of such Person (including in the case of stock, stockholder agreements, voting trust agreements and all similar arrangements).

“Major Credit Facility” means (a) the Credit Agreement, dated as of June 16, 2010, among the Company, each lender from time to time party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer, JPMorgan Chase Bank, N.A., Wells Fargo Bank, N.A. and BBVA Compass Bank, each as a Co-Syndication Agent, and U.S. Bank National Association, as Documentation Agent, and (b) any one or more bank credit agreements or bond/note facilities (other than any Receivables Program Documents or Receivables Purchase Agreements) with an amount borrowed by, or providing credit availability to, any one or more of the Company and its Subsidiaries in an aggregate principal amount in excess of $75,000,000, in each case under clauses (a) and (b), as such agreement or facility may be amended, restated, supplemented or otherwise modified and together with increases, refinancings and replacements thereof.
“Make-Whole Amount” is defined in Section 8.7.
“Margin Stock” means “margin stock” as defined in Regulation T, U or X of the Board of Governors of the Federal Reserve System, as in effect from time to time, together with all official rulings and interpretations issued thereunder.
“Material” means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company and its Subsidiaries taken as a whole.
“Material Adverse Effect” means a material adverse effect on (a) the business, operations, affairs, financial condition, assets, properties or prospects of the Company and its Subsidiaries taken as a whole, or (b) the ability of the Company to perform its obligations under this Agreement and the Notes, or (c) the validity or enforceability of this Agreement or the Notes.
“Material Subsidiary” means, at any time, any Subsidiary if:  (i) the portion of Consolidated Net Income which was contributed by such Subsidiary during the immediately preceding fiscal year of the Company exceeds 10% of Consolidated Net Income or (ii) the portion of consolidated operating profit, as determined in accordance with GAAP, which was contributed by such Subsidiary during the immediately preceding fiscal year of the Company exceeds 10% of such consolidated operating profit or (iii) the assets of such Subsidiary as at the end of the immediately preceding fiscal year of the Company exceeds 10% of Consolidated Total Assets.
“Maximum Permitted Total Debt” is defined in Section 10.3(a).
“Memorandum” is defined in Section 5.3.
“Meredith Family” means (a) the lineal descendants by blood or adoption of E.T. Meredith (“descendants”) and the spouses and surviving spouses of such descendants; (b) any estate, trust, guardianship, custodianship or other fiduciary arrangement for the primary benefit of any one or more individuals described in (a) above; and (c) any corporation, partnership, limited liability company or other business organization so long as (i) one or more individuals or entities described in clauses (a) and (b) above possess, directly or indirectly, the power to direct or cause the direction of, the management and policies of such corporation, partnership, limited liability company or other business organization and (ii) substantially all of the ownership, beneficial or other equity interests in such corporation, partnership, limited liability company or other business organization are owned, directly or indirectly, by one or more individuals or entities described in clauses (a) and (b) above.
“Minority Interests” means any shares of stock of any class of a Subsidiary (other than directors' qualifying shares as required by law) that are not owned by the Company and/or one or more of its Subsidiaries.  Minority Interests shall be valued by valuing Minority Interests constituting Preferred Stock at the voluntary 

or involuntary liquidating value of such Preferred Stock, whichever is greater, and by valuing Minority Interests constituting common stock at the book value of capital and surplus applicable thereto adjusted, if necessary, to reflect any changes from the book value of such common stock required by the foregoing method of valuing Minority Interests in Preferred Stock.
“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).
“NAIC” means the National Association of Insurance Commissioners or any successor thereto.
“NAIC Annual Statement” is defined in Section 6.2(a).
“Net Proceeds” means, with respect to the disposition of any asset of the Company or a Subsidiary, the aggregate amount of the consideration (valued at the fair market value of such consideration at the time of such disposition) received in respect of such disposition, net of all reasonable fees and out-of-pocket expenses paid by the Company and its Subsidiaries to third parties (other than Affiliates) in connection with such disposition.
“Non-U.S. Plan” means any plan, fund or other similar program that (a) is established or maintained outside the United States of America by the Company or any Subsidiary primarily for the benefit of employees of the Company or one or more Subsidiaries residing outside the United States of America, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and (b) is not subject to ERISA or the Code.
“Notes” is defined in Section 1.
“OFAC” is defined in Section 5.16(a).
“OFAC Sanctions Program” means any economic or trade sanction that OFAC is responsible for administering and enforcing.  A list of OFAC Sanctions Programs may be found at http://www.ustreas.gov/offices/enforcement/ofac/programs.
“OFAC Listed Person” is defined in Section 5.16(a).
“Officer's Certificate” means a certificate of a Senior Financial Officer or of any other officer of the Company whose responsibilities extend to the subject matter of such certificate.
“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.
“Permitted Receivables Transaction” means each of (a) the sale or other transfer, or transfer of interest, by the Company or a Subsidiary of Receivables Assets to a Subsidiary (including, without limitation, Finsub) or the Company in exchange for consideration equal to the fair market value of the related Receivables, (b) the entry by the Company or one or more Subsidiaries into one or more Receivables Purchase Agreements, and (c) the entry by the Company and any such Subsidiaries into such ancillary agreements, guarantees, documents or instruments as are necessary or advisable in connection with Receivables Program Documents.
“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to Title I of ERISA that is or, within the preceding five years, has been established or maintained, or to which contributions are or, within the preceding five years, have been made or required to be made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.
“Preferred Stock” means any class of capital stock (or other equity interests) of a Person that is preferred over any other class of capital stock (or other similar equity interests) of such Person as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such Person.
“Priority Debt” means, without duplication, the sum of (i) all Debt of the Company secured by Liens permitted by Sections 10.4(h), (i), (j), (k), (l), (m) and (o) plus (ii) all Debt of Subsidiaries (excluding Debt held by the Company or a Wholly-Owned Subsidiary), plus (iii)  all Receivables Facility Attributed Indebtedness of the Company and its Subsidiaries.
“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.
“Proposed Prepayment Date” is defined in Section 8.3(c).
“PTE” means a Prohibited Transaction Exemption issued by the Department of Labor.
“Purchaser” is defined in the first paragraph of this Agreement.
“QPAM Exemption” is defined in Section 6.2(d).
“Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.
“Ratable Portion” means, in respect of any holder of any Note and any disposition of assets by the Company or a Subsidiary, an amount equal to the product of:
(ag) the Net Proceeds being offered to be applied to the payment of Senior Debt pursuant to Section 10.5(b), multiplied by
(ah) a fraction, the numerator of which is the outstanding principal amount of such Note, and the denominator of which is the aggregate outstanding principal amount of all Senior Debt being prepaid or offered to be prepaid pursuant to Section 10.5(b) at the time of such disposition.
“Receivable” means all indebtedness and other obligations owed by a Person to the Company or any Subsidiary or in which the Company or any Subsidiary has a security interest or other interest, including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible, arising in connection with the sale or lease of goods or the rendering of services by the Company or such Subsidiary, including the obligation to pay finance charges with respect thereto.
“Receivables Assets” means all the assets described in Section 10.4(g).
“Receivables Facility Attributed Indebtedness” means, on any date of determination, the amount of obligations outstanding as of such date under a Receivables Purchase Agreement that would be characterized as principal if such facility were structured as a secured lending transaction rather than as a purchase.
“Receivables Program Documents” means (i) the Receivables Sale Agreement, dated April 9, 2002, by and among Meredith Funding Corporation, the Company and the other originators party thereto from time 

to time, as amended, (ii) the Amended and Restated Receivables Purchase Agreement, dated April 25, 2011, by and among Meredith Funding Corporation, the Company, as servicer, Chariot Funding LLC (successor to Falcon Asset Securitization Company LLC), the financial institutions from time to time party thereto and JPMorgan Chase Bank, N.A., as agent, as amended, and (iii) all receivable sale agreements, receivable purchase agreements or other written agreements that may from time to time be entered into by the Company or any of its Subsidiaries, including Finsub, in connection with any receivables program, as such agreements may be amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof.
“Receivables Purchase Agreement” means a receivables purchase agreement or other receivables financing agreement with one or more Receivables Purchasers, pursuant to which some or all of such Receivables Purchasers will purchase undivided interests in, or otherwise finance, Receivables Assets.
“Receivables Purchaser” means any purchaser or investor which purchases undivided interests in or otherwise finances Receivables Assets, and includes any agent of any such purchaser or investor.
“Related Fund” means, with respect to any holder of any Note, any fund or entity that (i) invests in Securities or bank loans, and (ii) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.
“Related Security” means with respect to any Receivable (i) the inventory and goods, the sale, financing or lease of which gave rise to such Receivable and all insurance contracts with respect thereto, (ii) all security interests or Liens and the property subject thereto purporting to secure payment of such Receivable, together with all financing statements and security agreements describing any collateral securing such Receivable, (iii) all guaranties, letters of credit, insurance and other agreements or arrangements supporting or securing the payment of such Receivable, (iv) all invoices, agreements, contracts, records, books and other information relating to such Receivable or the Person obligated to pay such Receivable, (v) any rights of the Company or any Subsidiary under any agreement, document or guaranty executed or delivered in connection with a Permitted Receivables Transaction, and (vi) all proceeds of the foregoing.
“Rentals” means and includes as of the date of any determination thereof all fixed payments (including as such all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Subsidiary, as lessee or sublessee under a lease of real or personal property, but shall be exclusive of any amounts required to be paid by the Company or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes and similar charges.  Fixed rents under any so-called “percentage leases” shall be computed solely on the basis of the minimum rents, if any, required to be paid by the lessee regardless of sales volume or gross revenues.
“Required Holders” means, at any time, the holders of a majority in principal amount of the Notes (without regard to Series) at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates).
“Responsible Officer” means any Senior Financial Officer and any other officer of the Company with responsibility for the administration of the relevant portion of this Agreement.
“Sale of Assets Notice” is defined in Section 8.8(a).
“Sale of Assets Prepayment Date” is defined in Section 8.8(a).
“SEC” means the Securities and Exchange Commission of the United States, or any successor thereto.

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“Securities” or “Security” has the meaning specified in Section 2(1) of the Securities Act.
“Senior Debt” means any Debt of the Company that is not in any manner subordinated in right of payment to the Notes or to any other Debt of the Company.
“Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or controller of the Company.
“Series” means either the Series N Notes or the Series O Notes issued hereunder.
“Series N Default Rate” means the lesser of (a) the maximum rate of interest allowed by applicable law and (b) the greater of (i) 4.62% and (ii) 2.0% per annum over the rate of interest publicly announced from time to time by JPMorgan Chase Bank, N.A. (or its successors) in New York, New York as its “base” or “prime” rate.
“Series N Notes” is defined in Section 1.
“Series O Default Rate” means the lesser of (a) the maximum rate of interest allowed by applicable law and (b) the greater of (i) 5.04% and (ii) 2.0% per annum over the rate of interest publicly announced from time to time by JPMorgan Chase Bank, N.A. (or its successors) in New York, New York as its “base” or “prime” rate.
“Series O Notes” is defined in Section 1.
“Source” is defined in Section 6.2.
“Subsidiary” means, as to any Person, any Person in which such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries owns sufficient equity or voting interests to enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of the directors (or Persons performing similar functions) of such second Person, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such first Person or one or more of its Subsidiaries or such first Person and one or more of its Subsidiaries (unless such partnership or joint venture can and does ordinarily take major business actions without the prior approval of such first Person or one or more of its Subsidiaries).  Unless the context otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the Company.
“Subsidiary Guaranty Agreement” is defined in Section 9.8(a).
“surviving corporation” is defined in Section 10.5(a)(2).
“SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.
“Swaps” means, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps and similar obligations obligating such Person to make payments, whether periodically or upon the happening of a contingency.  For the purposes of this Agreement, the amount of the obligation under any Swap shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap had terminated at the end of such fiscal quarter, and in making such determination, if any agreement relating to such Swap provides for the 

netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined.
“USA PATRIOT Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.
“Voting Stock” means Securities of any class or classes, the holders of which are ordinarily, in the absence of contingencies, entitled to elect a majority of the corporate directors (or Persons performing similar functions).
“Wholly-Owned Subsidiary” means, at any time, any Subsidiary one hundred percent of all of the equity interests (except directors' qualifying shares) and voting interests of which are owned by any one or more of the Company and the Company's other Wholly-Owned Subsidiaries at such time.

Exhibit 1-A
[Form of Series N Note]
Meredith Corporation
2.62% Senior Note, Series N, due March 1, 2015
No. RN-[____]    [Date]
$[____________]    PPN:  589433 F@5
For Value Received, the undersigned, Meredith Corporation (herein called the “Company”), a corporation organized and existing under the laws of the State of Iowa, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] DOLLARS ($[_________]) (or so much thereof as shall not have been prepaid) on March 1, 2015, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 2.62% per annum from the date hereof, payable semiannually, on the 1st day of March and September in each year, commencing with the March or September next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the Series N Default Rate (as defined in the Note Purchase Agreement).
Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Des Moines, Iowa or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Series N Senior Notes (herein called the “Notes”) issued pursuant to a Note Purchase Agreement dated as of February 29, 2012 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof.  Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee.  Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the 

principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State which would permit application of the laws of a jurisdiction other than such State.
Meredith Corporation
By:________________________________
Name:  Steven M. Cappaert
Title:  Corporate Controller

Exhibit 1-B
[Form of Series O Note]
Meredith Corporation
3.04% Senior Note, Series O, due March 1, 2018
No. RO-[___]    [Date]
$[____________]    PPN:  589433 F#3
FOR VALUE RECEIVED, the undersigned, Meredith Corporation (herein called the “Company”), a corporation organized and existing under the laws of the State of Iowa, hereby promises to pay to [________________], or registered assigns, the principal sum of [________________] DOLLARS ($[___________]) (or so much thereof as shall not have been prepaid) on March 1, 2018, with interest (computed on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 3.04% per annum from the date hereof, payable semiannually, on the 1st day of March and September in each year, commencing with the March or September next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) to the extent permitted by law on any overdue payment (including any overdue prepayment) of principal, any overdue payment of interest and any overdue payment of any Make-Whole Amount (as defined in the Note Purchase Agreement referred to below), payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the Series O Default Rate (as defined in the Note Purchase Agreement).
Payments of principal of, interest on and any Make-Whole Amount with respect to this Note are to be made in lawful money of the United States of America at Des Moines, Iowa or at such other place as the Company shall have designated by written notice to the holder of this Note as provided in the Note Purchase Agreement referred to below.
This Note is one of a series of Series O Senior Notes (herein called the “Notes”) issued pursuant to a Note Purchase Agreement dated as of February 29, 2012 (as from time to time amended, the “Note Purchase Agreement”), between the Company and the respective Purchasers named therein and is entitled to the benefits thereof.  Each holder of this Note will be deemed, by its acceptance hereof, (i) to have agreed to the confidentiality provisions set forth in Section 20 of the Note Purchase Agreement and (ii) to have made the representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee.  Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the contrary.
The Company will make required prepayments of principal on the dates and in the amounts specified in the Note Purchase Agreement.  This Note is also subject to optional prepayment, in whole or from time to time in part, at the times and on the terms specified in the Note Purchase Agreement, but not otherwise.

If an Event of Default, as defined in the Note Purchase Agreement, occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price (including any applicable Make-Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note shall be construed and enforced in accordance with, and the rights of the Company and the holder of this Note shall be governed by, the law of the State of New York, excluding choice-of-law principles of the law of such State which would permit application of the laws of a jurisdiction other than such State.
Meredith Corporation
By:____________________________
Name:  Steven M. Cappaert
Title:  Corporate Controller2011K_EX_10.31

Exhibit No. 10.31

PURCHASE AND SALE AGREEMENT

BY AND BETWEEN

PETROLEUM DEVELOPMENT CORPORATION

(Seller)

AND

COG OPERATING LLC

(Buyer)

ANDREWS, MARTIN, ECTOR AND MIDLAND COUNTIES, TEXAS

Dated December 20, 2011

1

	
			
	TABLE OF CONTENTS
	 

	 
	Page
	

	DEFINED TERMS
	IV
	

	LIST OF EXHIBITS
	VI
	

	LIST OF SCHEDULES
	VI
	

	PURCHASE AND SALE AGREEMENT
	1
	

	Article 1 PURCHASE AND SALE
	1
	

	1.1            Purchase and Sale
	1
	

	1.2            Effective Time
	1
	

	1.3            Assets
	1
	

	1.4            Excluded Assets
	2
	

	Article 2 PURCHASE PRICE
	3
	

	2.1            Purchase Price
	3
	

	2.2            Allocation of the Purchase Price
	3
	

	2.3            Adjustments to Purchase Price and Preliminary Settlement
	3
	

	Article 3 BUYER'S INSPECTION
	5
	

	3.1            Due Diligence
	6
	

	3.2            Access to Records
	6
	

	3.3            On-Site Inspection
	6
	

	3.4            Indemnification
	6
	

	3.5            Insurance
	6
	

	Article 4 TITLE MATTERS
	6
	

	4.1            Seller's Title
	6
	

	4.2            Title Adjustment Procedures
	8
	

	4.3            Title Dispute Resolution
	11
	

	4.4            Consents and Preferential Purchase Rights
	11
	

	Article 5 ENVIRONMENTAL MATTERS
	12
	

	5.1            Definitions
	12
	

	5.2            Environmental Liabilities and Obligations
	13
	

	5.3            Environmental Representation and Warranty
	13
	

	5.4            Environmental Defect Notice
	14
	

	5.5            Seller's Right to Remediate
	14
	

	5.6            Environmental Defect Adjustments
	14
	

	5.7            Contested Environmental Defects
	15
	

	5.8            Exclusive Remedies
	15
	

	Article 6 SELLER'S REPRESENTATIONS AND WARRANTIES
	15
	

	6.1            Organization and Standing
	15
	

	6.2            Power
	15
	

	6.3            Authorization and Enforceability
	15
	

	6.4            Liability for Brokers' Fees
	15
	

	6.5            No Bankruptcy
	15
	

	6.6            Litigation
	15
	

	6.7            Compliance with Law
	16
	

	6.8            Status and Operation of Assets
	16
	

	6.9            Taxes
	16
	

	6.10          Imbalance Volumes
	16
	

i

	
			
	TABLE OF CONTENTS

	(continued)

	 
	Page
	

	6.11          Leases
	16
	

	6.12          Material Agreements
	16
	

	6.13          Hydrocarbon Sales Contracts
	17
	

	6.14          Areas of Mutual Interest
	17
	

	6.15          Production Payments
	17
	

	6.16          Surface Access
	17
	

	6.17          Insurance
	18
	

	6.18          No Other Representations or Warranties; Disclosed Materials
	18
	

	6.19          Oil and Gas Operations
	18
	

	6.20          Offsite Disposal
	18
	

	6.21          Affiliate Transactions
	19
	

	6.22          Material Consents
	19
	

	6.23          Unplugged Wells
	19
	

	6.24          Permits
	19
	

	6.25          Expenses
	19
	

	6.26          Bonds and Letters of Credit
	19
	

	6.27          Suspense Accounts
	19
	

	Article 7 BUYER'S REPRESENTATIONS AND WARRANTIES
	19
	

	7.1            Organization and Standing
	19
	

	7.2            Power
	19
	

	7.3            Authorization and Enforceability
	19
	

	7.4            Liability for Brokers' Fees
	19
	

	7.5            Litigation
	20
	

	7.6            Bankruptcy
	20
	

	7.7            Financial Resources
	20
	

	Article 8 COVENANTS AND AGREEMENTS
	20
	

	8.1            Covenants and Agreements of Seller
	20
	

	8.2            Covenants and Agreements of Buyer
	21
	

	8.3            Covenants and Agreements of the Parties
	22
	

	Article 9 TAX MATTERS
	23
	

	9.1            Definitions
	23
	

	9.2            Apportionment of Property Taxes
	24
	

	9.3            Apportionment of Severance Taxes
	24
	

	9.4            Transfer Taxes
	24
	

	9.5            Section 1031 Exchange
	24
	

	9.6            Post-Closing Tax Matters
	24
	

	9.7            No Account to be Given to Income Taxes.
	25
	

	Article 10 CONDITIONS PRECEDENT TO CLOSING
	25
	

	10.1          Seller's Conditions
	25
	

	10.2          Buyer's Conditions
	26
	

	Article 11 RIGHT OF TERMINATION
	26
	

	11.1          Termination
	26
	

	11.2          Remedies and Liabilities Upon Termination
	26
	

ii

	
			
	TABLE OF CONTENTS

	(continued)

	 
	Page
	

	Article 12 CLOSING
	27
	

	12.1          Date of Closing
	27
	

	12.2          Place of Closing
	27
	

	12.3          Closing Obligations
	27
	

	12.4          Non-Foreign Status
	28
	

	Article 13 POST-CLOSING OBLIGATIONS
	28
	

	13.1          Post-Closing Adjustments
	28
	

	13.2          Records
	28
	

	13.3          Further Assurances
	29
	

	Article 14 ASSUMPTION AND RETENTION OF OBLIGATIONS AND
	 

	INDEMNIFICATION; DISCLAIMERS
	29
	

	14.1          Buyer's Assumption of Liabilities and Obligations
	29
	

	14.2          Indemnification
	29
	

	14.3          Procedure
	30
	

	14.4          No Insurance; Subrogation
	31
	

	14.5          Reductions in Losses
	31
	

	14.6          Reservation as to Non-Parties
	31
	

	14.7          Disclaimers
	31
	

	14.8          Tax Treatment of Indemnity Payments.
	32
	

	Article 15 MISCELLANEOUS
	32
	

	15.1          Schedules
	32
	

	15.2          Expenses
	32
	

	15.3          Notices
	32
	

	15.4          Amendments
	32
	

	15.5          Assignment
	33
	

	15.6          Headings
	33
	

	15.7          Counterparts/Electronic and Fax Signatures
	33
	

	15.8          References
	33
	

	15.9          Governing Law; Venue; Jury Waiver
	33
	

	15.10        Waiver of Certain Damages
	33
	

	15.11        Entire Agreement
	33
	

	15.12        Severability
	33
	

	15.13        Knowledge
	34
	

	15.14        Binding Effect
	34
	

	15.15        Survival of Warranties, Representations and Covenants
	34
	

	15.16        No Third-Party Beneficiaries
	34
	

	15.17        Arbitration
	34
	

	15.18        Accounting
	35
	

iii

Defined Terms
		
	AAA Rules
	15.17

		
	Affected Asset
	4.4(a)

		
	Affiliate Contracts
	6.21

		
	Aggregate Deductible
	4.2(i)

		
	Agreement
	Opening paragraph

		
	Allocated Value
	2.2

		
	Arbitrator
	15.17

		
	Assets
	1.3

		
	Assumed Liabilities
	14.1

		
	Business Day
	2.1(a)

		
	Buyer's Environmental Liabilities
	5.2

		
	Buyer
	Opening paragraph

		
	Buyer's Auditor
	8.1(h)

		
	Buyer Indemnitees
	14.2(a)

		
	Capital Expenditures
	6.8

		
	Casualty Loss
	8.3(c)

		
	Claim
	14.3(b)

		
	Claim Notice
	14.3(a)

		
	Closing
	12.1

		
	Closing Amount
	2.3

		
	Closing Date
	12.1

		
	Code
	8.1(b)

		
	Condition
	5.1(a)

		
	Contracts
	1.3(h)

		
	Cooperating Party
	9.5

		
	Cure Period
	4.2(e)

		
	Defect Notice Date
	3.1

		
	Defensible Title
	4.1(c)

		
	Deposit
	2.1(a)

		
	Disagreements
	15.17

		
	Due Diligence Review
	3.1

		
	earned
	2.3(a)

		
	Effective Time
	1.2

		
	Electing Party
	9.5

		
	Election Notice
	15.17

		
	Environmental Assessment
	3.3

		
	Environmental Defect
	5.1(b)

		
	Environmental Defect Adjustment
	5.6(a)(1) 

		
	Environmental Defect Notice
	5.4

		
	Environmental Defect Property
	5.4

		
	Environmental Defect Value
	5.4

		
	Environmental Laws
	5.1(c)

		
	Equipment
	1.3(e)

		
	Escrow Agent
	2.1(a)

		
	Escrow Account
	2.1(a)

		
	Escrow Agreement
	2.1(a)

		
	Excluded Assets
	1.4

		
	Final Purchase Price
	13.1(a)

		
	Final Settlement Date
	13.1(a)

		
	Final Settlement Statement
	13.1(a)

		
	Governmental Entity
	5.1(d)

iv

		
	Hazardous Materials
	5.1(e)

		
	Hydrocarbons
	1.3(b)

		
	Income Taxes
	9.1(a)

		
	incurred
	2.3(a)

		
	Indemnified Party
	14.3(a)

		
	Indemnifying Party
	14.3(a)

		
	Individual Title Threshold
	4.2(i)

		
	Information
	8.2(b)

		
	Initial Purchase Price
	2.1

		
	Knowledge
	15.13

		
	Lands
	1.3(a)

		
	Leases
	1.3(a)

		
	Like-Kind Exchange
	9.5

		
	Losses
	14.2

		
	Material Agreements
	6.12

		
	Net Acres
	4.1(c)(3)

		
	Net Casualty Loss
	8.3(c)

		
	Net Revenue Interest
	4.1(c)(1)

		
	Notice of Defective Interest
	4.2(c)

		
	Obligations
	14.1

		
	Party, Parties
	Opening paragraph

		
	Permitted Encumbrances
	4.1(d)

		
	Post-Closing Cure Period
	4.2(f)

		
	Preliminary Settlement Statement
	2.3

		
	Production Taxes
	9.1(b)

		
	Property Expenses
	2.3(b)

		
	Property Taxes
	9.1(c)

		
	Purchase Price
	2.1

		
	Records
	1.3(i)

		
	Remediate; Remediation
	5.1(f)

		
	Required Consent
	4.4(a)

		
	Seller
	Opening paragraph

		
	Seller Indemnitees
	14.2(b)

		
	Severance Taxes
	9.1(d)

		
	Straddle Period
	9.1(e)

		
	Survival Period
	15.15

		
	Taxes
	9.1(f)

		
	Title Benefit
	4.2(b)

		
	Title Benefit Amount
	4.2(h)

		
	Title Benefit Notice
	4.2(d)

		
	Title Benefit Property
	4.2(d)

		
	Title Defect
	4.2(a)

		
	Title Defect Adjustment
	4.2(f)

		
	Title Defect Amount
	4.2(g)

		
	Title Defect Property
	4.2(c)

		
	Title Disputed Matters
	4.3

		
	Transaction
	Opening paragraph

		
	Transfer Taxes
	9.1(g)

		
	Wells
	1.3(c)

		
	Working Interest
	4.1(c)(2)

v

List of Exhibits
		
	Exhibit A
	Leases

		
	Exhibit B
	Wells

		
	Exhibit C
	Contracts and Easements

		
	Exhibit D
	Form of Assignment, Bill of Sale and Conveyance

		
	Exhibit E
	Form of Escrow Agreement

		
	Exhibit F
	Form of Affidavit of Non-Foreign Status 

List of Schedules
		
	Schedule 2.2
	Allocated Values

		
	Schedule 4.4(a)
	Consents

		
	Schedule 4.4(b)
	Preferential Rights

		
	Schedule 6.8
	Capital Expenditures

		
	Schedule 6.10
	Imbalances

		
	Schedule 6.11
	Lease Notices

		
	Schedule 6.13
	Hydrocarbon Sales Contracts

		
	Schedule 6.19
	Oil and Gas Operations

		
	Schedule 6.20
	Offsite Disposal

		
	Schedule 6.21
	Affiliate Transactions

		
	Schedule 6.22
	Material Consents

		
	Schedule 6.23
	Unplugged Wells

		
	Schedule 6.25
	Expenses

		
	Schedule 6.26
	Bonds and Letters of Credit

		
	Schedule 6.27
	Suspense Accounts

		
	Schedule 15.13
	Knowledge Representatives

vi

PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (the “Agreement”), is dated December 20, 2011, by and between and Petroleum Development Corporation (dba PDC Energy), a Nevada corporation, whose address is 1775 Sherman Street, Suite 3000, Denver, CO 80203 (“Seller”), and COG Operating LLC, a Delaware limited liability company (“Buyer”), whose address is 550 W. Texas, Suite 100, Midland, Texas 79701.  Seller and Buyer are individually referred to herein as a “Party” or collectively as the “Parties.”  The transaction contemplated by this Agreement may be referred to as the “Transaction.”
RECITALS
A.    Seller owns certain oil and gas leases, wells and associated assets located in Andrews, Martin, Ector and Midland Counties, Texas as more fully described in Section 1.3;
B.    Seller desires to sell and Buyer desires to purchase all of Seller's interest in the Assets, as defined in Section 1.3, upon the terms and conditions set forth in this Agreement;
AGREEMENT
In consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller agree as follows:
ARTICLE 1
PURCHASE AND SALE

1.1Purchase and Sale.  Subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Seller and Seller agrees to sell, assign and deliver to Buyer, all of Seller's right, title and interest in the Assets for the consideration specified in Article 2. 

1.2Effective Time.  The purchase and sale of the Assets shall be effective as of November 1, 2011, at 12:01 a.m. local time (the “Effective Time”).

1.3Assets.  “Assets” refers to all of Seller's right, title and interest, whether legal or equitable, in and to the following:

(a)The oil, gas and/or mineral leases specifically described in Exhibit A, together with all amendments, supplements, renewals, extensions or ratifications thereof (the “Leases”) and all of Seller's oil, gas and/or mineral leasehold, mineral, royalty, overriding royalty, net profits and other interests in the lands described on Exhibit A, in the lands covered by the Leases and/or in the lands pooled or unitized with the lands covered by the Leases (the “Lands”);

(b)The oil, gas, casinghead gas, coalbed methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof, sulphur extracted from hydrocarbons and all other lease substances under the Leases (“Hydrocarbons”) that may be produced under the Leases;

(c)The oil, gas, water or injection wells located on the Lands, whether producing, shut-in, or temporarily abandoned including, without limitation, those described in Exhibit B (such wells, together with the behind pipe, proved developed non-producing, proved undeveloped and unproved wells or well locations identified on Exhibit B, being collectively the “Wells”); 

(d)The unitization, pooling and communitization agreements, declarations, orders, and the units created thereby relating to the properties and interests described in Sections 1.3(a) through (c) and to the production of Hydrocarbons, if any, attributable to said properties and interests;

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(e)All equipment, machinery, fixtures and other tangible personal property and improvements located on and used or held for use  in connection with the ownership or operation of the interests described in Sections 1.3(a) through (d) including, without limitation, tanks, boilers, buildings, fixtures, injection facilities, saltwater disposal facilities, compression facilities, measurement facilities, pumping units, flow lines, pipelines, gathering systems, gas and oil treating facilities, machinery, power lines, roads, and other appurtenances, improvements and facilities (the “Equipment”); 

(f)All pipes, casing, tubing, tubulars, fittings, and other spare parts, supplies, tools, and materials held as inventory in connection with the interests described in Sections 1.3(a) through (e);

(g)All surface leases, surface fee estates, permits, rights-of-way, licenses, easements and other surface or subsurface rights or agreements used or held for use in connection with the interests described in Sections 1.3(a) through (e), including, without limitation, those used or held for use in connection with the production, gathering, treatment, processing, storing, sale or disposal of Hydrocarbons or produced water from the interests described in Sections 1.3(a) through (e), and further including those described on Exhibit C; 

(h)All existing and effective sales and purchase contracts, operating agreements, exploration agreements, development agreements, geologic, geophysical or seismic licenses, data and third-party interpretations that can be transferred without a fee or penalty, balancing agreements, farmout agreements, service agreements, transportation, processing, treatment and gathering agreements, equipment leases and other contracts, agreements and instruments, including, without limitation, the contracts described in Exhibit C, insofar as they relate to the properties and interests described in Sections 1.3(a) through (g) (the “Contracts”) and provided, however, that “Contracts” shall not include the instruments constituting the Leases;

(i)Originals (or copies if Seller does not possess originals) of all files and records relating to the items described in Sections 1.3(a) through (h) above (the “Records”), which Records shall include, without limitation:  lease records; well records; division order records; contract records; well files, logs and tests; title records (including abstracts of title, title opinions and memoranda, and title curative documents); correspondence; maps; production records; regulatory filing and records; environmental and safety records; Tax records; and accounting records; 

(j)All claims, rights and causes of action, including, without limitation, causes of action for breach of warranty, against third parties, asserted and unasserted, known and unknown, but only to the extent such claims, rights and causes of action affect the value of any of the items described in Sections 1.3 (a) through (i) after the Effective Time, and where necessary to give effect to the assignment of such rights, claims and causes of action, Seller grants to Buyer the right to be subrogated to such rights, claims and causes of action;

(k)All rights and benefits arising from or in connection with any wellhead Hydrocarbon imbalances or pipeline imbalances attributable to Hydrocarbons produced from the Wells as of the Effective Time; and
(l)All rights to any refunds of Taxes or other costs and expenses borne by Buyer and attributable to periods from and after the Effective Time.

1.4Excluded Assets.  Notwithstanding the foregoing, the Assets shall not include, and there is excepted, reserved and excluded from the Transaction the following (collectively, the “Excluded Assets”):

(a)(i) All corporate, financial, income, Tax and legal records of Seller that relate to Seller's business generally and (ii) all books, records and files that relate to the Excluded Assets; 

(b)All rights to any refunds for Taxes or other costs or expenses borne by Seller or Seller's predecessors in interest and title attributable to periods prior to the Effective Time;

(c)Seller's area wide bonds or authorizations used in the conduct of Seller's business generally;

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(d)All trade credits, accounts receivable, note receivables, take or pay amounts receivable, and other receivables attributable to the Assets with respect to any period of time prior to the Effective Time;

(e)(i) All vehicles and vehicle leases, (ii) equipment, inventory, machinery, fixtures and other tangible personal property and improvements located at or used solely in connection with any field office or yard of Seller or leased by Seller that is not used in connection with the Assets, (iii) any computers and related peripheral equipment that are not located on the Assets or not used solely in connection with the Assets, (iv) communications equipment that is not located on the Assets and not used solely in connection with the Assets, (v) communications licenses granted by the Federal Communications Commission or other governmental body, and (vi) all office leases and laptop computers; 

(f)Any refunds due Seller by a third party for any overpayment of rentals, royalties, excess royalty interests or production payments attributable to the Assets with respect to any period of time prior to the Effective Time; and 

(g)    All rights and obligations of Seller pursuant to (i) the Purchase and Sale Agreement, dated May 13, 2010, by and among Merit Management Partners I, L.P., Merit Management Partners II, L.P., Merit Energy Partners III, L.P., Merit Energy Partners D-III, L.P., Merit Energy Partners E-III, L.P. and Seller, and (ii) the Purchase and Sale Agreement, dated October 14, 2010, by and among Summit West Resources LP, Summit Petroleum Management Corporation, Summit Group, Summit Petroleum LLC and Seller.

ARTICLE 2
PURCHASE PRICE

2.1Purchase Price.  The purchase price for the Assets shall be $173,894,419.31 (the “Initial Purchase Price”), subject to adjustment in accordance with the terms and conditions set forth in this Agreement (as adjusted, the “Purchase Price”).  The Purchase Price shall be payable as follows:

(a)Upon execution hereof, Seller, Buyer and Wells Fargo Bank, National Association (the “Escrow Agent”) shall enter into the escrow agreement (the “Escrow Agreement”) in substantially the form attached hereto as Exhibit E, and Buyer shall deposit with Escrow Agent into an escrow account (“Escrow Account”), by wire transfer of immediately available funds, an amount equal to ten percent (10%) of the Initial Purchase Price (the “Deposit”).  The Deposit and accrued interest thereon shall be applied to the Closing Amount (as defined in Section 2.3 below) at Closing.  Upon any termination of this Agreement, the Deposit and accrued interest thereon shall be paid to Seller or returned to Buyer in accordance with Article 11.  Escrow fees charged by the Escrow Agent pursuant to the Escrow Agreement shall be paid one-half by Seller and one-half by Buyer.  As used herein, the term “Business Day” shall mean any day on which national banks are open for business in Midland, Texas.

(b)After Closing, final adjustments to the Initial Purchase Price shall be made pursuant to the Final Settlement Statement to be delivered pursuant to Section 13.1(a) and payments made by Buyer or Seller as provided in Section 13.1(a).

2.2Allocation of the Purchase Price.  The Initial Purchase Price is allocated among the Assets as set forth on Schedule 2.2, which amounts shall be referred to as the “Allocated Value.”

2.3Adjustments to Purchase Price and Preliminary Settlement.  The Initial Purchase Price shall be adjusted according to this Section 2.3 without duplication.  Seller shall deliver to Buyer at least five (5) Business Days prior to Closing a draft settlement statement (“Preliminary Settlement Statement”) that shall set forth the adjusted Initial Purchase Price reflecting each adjustment in accordance with this Agreement as of the date of preparation of such Preliminary Settlement Statement, together with all documents reasonably necessary to support Seller's estimated adjustments to the Initial Purchase Price as set forth in the Preliminary Settlement Statement.  If Buyer notifies Seller on or before the Closing Date that it disputes Seller's estimate of the adjustments to the Initial Purchase Price and the Parties cannot agree to the adjustments prior to Closing, then the Purchase Price paid at Closing shall be the amount 

3

that is midway between Seller's and Buyer's estimated amounts.  The Preliminary Settlement Statement will be used to adjust the Initial Purchase Price at Closing, which adjusted amount is referred to herein as the “Closing Amount.” 

(a)Proration of Costs and Revenues.  Buyer shall be entitled to all production of Hydrocarbons from or attributable to the Leases, Lands, and Wells at and after the Effective Time (and all products and proceeds attributable thereto), and to all other income, proceeds, receipts and credits earned with respect to the Assets at or after the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Expenses (as defined in Section 2.3(b) below) incurred at and after the Effective Time.  Seller shall be entitled to all proceeds from Hydrocarbon production from or attributable to the Leases, Lands, and Wells prior to the Effective Time, and to all other income, proceeds, receipts and credits earned with respect to the Assets prior to the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Expenses incurred prior to the Effective Time.  The terms “earned” and “incurred”, as used in this Agreement shall be interpreted in accordance with generally accepted accounting principles utilized by Seller, except as otherwise specified herein.  For purposes of allocating production (and accounts receivable with respect thereto), under this Section 2.3(a), (i) liquid Hydrocarbons, including natural gas liquids, shall be deemed to be “from or attributable to” the Leases, Lands, and Wells when they pass through the pipeline connecting into the storage facilities into which they are run or into tanks connected to the Wells and (ii) gaseous Hydrocarbons shall be deemed to be “from or attributable to” the Leases, Lands, and Wells when they pass through the royalty measurement meters, delivery point sales meters or custody transfer meters on the gathering lines or pipelines through which they are transported (whichever meter is closest to the well).  Seller shall utilize reasonable interpolative procedures, consistent with industry practice, to arrive at an allocation of production when exact meter readings or gauging and strapping data are not available.  As part of the Preliminary Settlement Statement, Seller shall provide to Buyer, all data necessary to support any estimated allocation, for purposes of establishing the Closing Amount.

(b)Property Expenses.  The term “Property Expenses” means all capital expenses (including all capital expenditures authorized by Section 8.1(a) and operating expenses incurred in the ownership, development and operation of the Assets in the ordinary course of business and, where applicable, in accordance with any relevant operating agreement, if any, and all Lease rental and maintenance costs, net profit payments, royalties, overriding royalties and other similar burdens incurred in connection with the Leases or the production and sale of Hydrocarbons therefrom, but excluding Production Taxes (which shall be apportioned as of the Effective Time in accordance with Article 9).  “Property Expenses” shall include overhead for the period between the Effective Time and the Closing Date based upon the applicable joint operating agreement; provided, however, that where no joint operating agreement is applicable, the overhead shall be eight hundred dollars ($800.00) per month for each producing Well, prorated for partial months.

(c)Upward Adjustments.  To calculate the Closing Amount, the Initial Purchase Price shall be adjusted upward by the following:

(1)The proceeds received by Buyer, net of royalties, overriding royalties, profit payments and similar burdens, from the sale of any Hydrocarbons that were produced from the Assets prior to the Effective Time;  

(2)An amount equal to all Property Expenses attributable to the Assets for the period from and after the Effective Time that were paid by Seller prior to Closing;

(3)An amount equal to the value of (i) all oil and other Hydrocarbons in pipelines or flowlines or in tanks above the pipeline sales connection (exclusive of any brine, sludge or water that may be present in the oil storage tanks), in each case that at the Effective Time, estimated based on run tickets as of the Effective Time, is credited to Seller's interest in the Leases, Lands or Wells and (ii) all unsold inventory of gas plant products attributable to Seller's interests in the Leases, Lands or Wells at the Effective Time, each such value to be the contract price in effect as of the Effective Time or, in the absence of an applicable contract price, the average price per unit for sales of production for the respective production period attributable to the Leases, Lands or Wells as of the Effective Time, less any applicable royalties;

4

(4)To the extent that there are any pipeline imbalances, if the net of such imbalances is an overdelivery imbalance (that is, at the Effective Time, Seller has delivered more gas to the pipeline than the pipeline has redelivered for Seller), the Purchase Price shall be adjusted upward by the first-of-the-month price of spot gas delivered to pipelines for El Paso Natural Gas Co. (Permian Basin) as reported in Inside F.E.R.C.'s Gas Market Report for the month in which the Effective Time occurs times the net overdelivery imbalance in MMbtus.  In the event such publication shall cease to be published, the Parties shall select a comparable publication; and

(5)Any other amount provided for in this Agreement or otherwise agreed to by Buyer and Seller.

(d)Downward Adjustments.  To calculate the Closing Amount, the Initial Purchase Price shall be adjusted downward by the following:

(1)An amount equal to the Title Defect Adjustment, if any, pursuant to Section 4.2(f);
(2)An amount equal to the Environmental Defect Adjustment, if any, pursuant to Section 5.6(a)(1);

(3)An amount equal to the Allocated Value of Assets not conveyed at Closing due to the exercise of any preferential rights to purchase in accordance with Section 4.4(b) or the failure to obtain a consent to assign in accordance with Section 4.4(a);

(4)Any proceeds on Hydrocarbons produced from and after the Effective Time, net of royalties, overriding royalties, net profit payments and similar burdens, received by Seller between the Effective Time and Closing relating to the Assets;
(5)An amount equal to all Property Expenses attributable to the Assets for the period prior to the Effective Time that are paid by Buyer; 

(6)To the extent that there are any pipeline imbalances, if the net of such imbalances is an underdelivery imbalance (that is, at the Effective Time, Seller has delivered less gas to the pipeline than the pipeline has redelivered for Seller), the Purchase Price shall be adjusted downward by the first-of-the-month price of spot gas delivered to pipelines for El Paso Natural Gas Co. (Permian Basin) as reported in Inside F.E.R.C.'s Gas Market Report for the month in which the Effective Time occurs times the net underdelivery imbalance in MMbtus.  In the event such publication shall cease to be published, the Parties shall select a comparable publication;

(7)The value of any Casualty Loss pursuant to Section 8.3(c);

(8)An amount equal to the revenue from the Wells held in suspense by Seller for third party leasehold interests and for royalties, overriding royalties and similar leasehold burdens, including, without limitation, the suspensed revenues identified in accordance with Section 8.1(i); and

(9)Any other amount provided in this Agreement or otherwise agreed to by Buyer and Seller.

(e)Well Imbalance Adjustments.  Seller and Buyer agree that the Purchase Price will be adjusted downward or upward, as appropriate, by an amount equal to the well imbalances existing as of the Effective Time multiplied by the average value on an MMbtu basis at the wellhead for sales of production during the month in which the Effective Time occurs.

ARTICLE 3
BUYER'S INSPECTION

5

3.1Due Diligence.  Upon execution of this Agreement, but subject to the other provisions of this Agreement (including this Section 3.1) and obtaining any required consents of third parties (with respect to which consents Seller shall use its commercially reasonable efforts to obtain), Seller will afford Buyer and its representatives reasonable access to the Assets during normal business hours for inspection, review and copying to permit Buyer to perform its due diligence (such due diligence, the “Due Diligence Review”) as hereinafter provided.  All notices pertaining to Title Defects and Environmental Defects based on the Due Diligence Review must be received by Seller no later than 5:00 p.m., Mountain Time, on February 20, 2012 (the “Defect Notice Date”).

3.2Access to Records.  From the date hereof and through the Closing Date, Seller shall provide Buyer, and its counsel, accountants and other representatives, reasonable access during normal business hours to the Records to enable Buyer to complete its Due Diligence Review.

3.3On-Site Inspection.  Seller hereby consents to Buyer and its representatives conducting, prior to Closing and upon advance notice to Seller, at Buyer's sole risk and expense, (i) on-site inspections; and (ii) an environmental assessment no more stringent than an ASTM Phase One Environmental Assessment (an “Environmental Assessment”) of the Assets.  In connection with any Environmental Assessment, Buyer agrees not to interfere with the normal operation of the Assets and agrees to comply with all written requirements and safety policies of the operator.  The Parties shall execute a “common undertaking” letter regarding the confidentiality of an Environmental Assessment in any case where Buyer is required pursuant hereto to provide Seller with a copy of any part of Buyer's Environmental Assessment.  In the event Buyer determines that more than an Environmental Assessment is required in order to properly determine the environmental condition of an Asset, including, without limitation, the conducting of invasive sampling or testing, then Buyer shall provide Seller with a copy of the Environmental Assessment prepared with respect to such Asset and a written request describing the proposed activities to be performed; provided, however, that no such activities shall be performed by Buyer without the prior written consent of Seller, which consent shall not be unreasonably withheld or delayed.  Any dispute between the Parties arising in connection with a request by Buyer to perform additional activities beyond an Environmental Assessment shall be finally determined by binding arbitration in accordance with the procedures set forth in Section 15.17.  Notwithstanding the foregoing or any other terms and provisions of this Agreement, in the event Buyer determines, in its reasonable discretion, that more than an Environmental Assessment is required in order to properly determine the environmental condition of an Asset and Seller refuses to consent to such activities, then Buyer shall have the right at any time prior to Closing to remove the affected Asset from the Transaction and reduce the Purchase Price by the Allocated Value of such Asset, in which case such Asset shall constitute an Excluded Asset.

3.4Indemnification.  Buyer agrees to defend, indemnify and hold harmless each of the operators of the Assets, Seller and the other Seller Indemnified Parties from and against any and all Losses caused by any field visit, on-site inspection, Environmental Assessment or other due diligence activity conducted by Buyer or any representative of Buyer with respect to the Assets, EVEN IF SUCH LIABILITIES ARISE OUT OF OR RESULT FROM THE ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW OF OR BY A SELLER INDEMNIFIED PARTY, EXCEPTING ONLY LIABILITIES RESULTING FROM OR ARISING OUT OF THE SOLE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A SELLER INDEMNIFIED PARTY.

3.5Insurance.  During all periods that Buyer and/or any of Buyer's representatives are present on the Assets, Buyer shall maintain, at its sole expense, policies of insurance covering Buyer's and its representatives' activities and presence on the Assets, which insurance shall be of the type and in the amounts consistent with sound business practices.  

ARTICLE 4
TITLE MATTERS
4.1Seller's Title.
  
(a)Limited Defensible Title Representation.  Seller represents and warrants to Buyer that, as of the Effective Time and as of the Defect Notice Date, its title to the Leases and Wells is Defensible 

6

Title as defined in Section 4.1(c).  Except as set forth in this Section 4.1(a) and the Assignment, Bill of Sale and Conveyance to be delivered at Closing, the form of which is attached hereto as Exhibit D, Seller makes no warranty or representation, express, implied, statutory or otherwise, with respect to Seller's title to the Leases and Wells and Buyer hereby acknowledges and agrees that Buyer's sole remedy for any defect of title, including any Title Defect, with respect to any of the Leases and Wells before Closing, shall be Buyer's right to adjust the Purchase Price to the extent provided in this Article 4, or terminate this Agreement pursuant to Section 11.1(f).

(b)Exclusive Remedy. With the exception of the special warranty of title in the Assignment, Bill of Sale and Conveyance, as described in Section 4.1(a), (i) the representation and warranty in Section 4.1(a) shall terminate as of the Defect Notice Date and shall have no further force and effect thereafter, and (ii) Section 4.2 shall be the exclusive right and remedy of Buyer with respect to Seller's failure to have Defensible Title with respect to the Leases and Wells.

(c)Defensible Title - Leases and Wells.  The term “Defensible Title” means such ownership of record deducible from the applicable county, state and federal records, such that a prudent person engaged in the business of the ownership, development and operation of oil and gas leasehold and properties and having knowledge of all of the facts and their legal bearing would be willing to accept the same, to the Leases, Lands and Wells, and that, subject to and except for Permitted Encumbrances as defined in Section 4.1(d):  

(1)Entitles Seller (and Buyer from and after the Effective Time) to receive a share of the Hydrocarbons produced, saved and marketed from any Lease or Well throughout the duration of the productive life of such Lease or Well or such specified zone(s) therein after satisfaction of all royalties, overriding royalties, nonparticipating royalties, net profits interests, production payments or other similar burdens on or measured by production of Hydrocarbons (a “Net Revenue Interest”), of not less than the Net Revenue Interest or NRI shown in Exhibit A and Exhibit B for such Lease or Well except for (i) decreases in connection with those operations in which Seller may, from and after the date of this Agreement, be a non-consenting co-owner (to the extent permitted pursuant to Section 8.1(a) or 8.1(b)), (ii) decreases resulting from the establishment or amendment from and after the date of this Agreement of pools or units (to the extent permitted pursuant to Section 8.1(a) or 8.1(b), and (iii) as otherwise stated in Exhibit A and Exhibit B;

(2)Obligates Seller (and Buyer from and after the Effective Time) to bear a percentage of the costs and expenses for the maintenance, development, operation and the production relating to any Lease or Well throughout the productive life of such Lease or Well (“Working Interest”) not greater than the Working Interest or WI shown in Exhibit A and Exhibit B for such Lease or Well without increase, except (i)  increases to the extent that they are accompanied by a proportionate increase in Seller's Net Revenue Interest, (ii) increases resulting from contribution requirements with respect to defaults by co-owners from and after the date of this Agreement under applicable joint operating agreements (to the extent permitted pursuant to Section 8.1(a) or 8.1(b), and (iii) as otherwise stated in Exhibit A and Exhibit B;

(3)Results in Seller owning at least the number of total net mineral acres set forth in Exhibit A (“Net Acres”), provided that there shall be no duplication of Title Defects asserted under this Section 4.1(c)(3) and under Sections 4.1(c)(1) or (2); and

(4)is free and clear of liens, encumbrances and defects.

(d)Permitted Encumbrances. The term “Permitted Encumbrances” shall mean:

(1)lessors' royalties, overriding royalties, net profits interests, production payments, reversionary interests and similar burdens if the net cumulative effect of such burdens does not operate to reduce the Net Revenue Interests of Seller (or Buyer from and after the Effective Time) below those set forth on Exhibit A and Exhibit B;

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(2)liens for Taxes or assessments not yet due or delinquent, provided in each case that Seller has agreed to pay the same pursuant to the terms of this Agreement;

(3)all rights to consent by, required notices to, filings with, or other actions by Governmental Entities, in connection with the conveyance of the applicable Asset if the same are customarily sought after such conveyance;

(4)conventional rights of reassignment contained in any Leases, or assignments thereof, providing for reassignment upon the surrender or expiration of any Leases;

(5)easements, rights-of-way, servitudes, permits, surface leases and other rights with respect to surface operations, on, over or in respect of any of the Assets that do not materially reduce or interfere with the operation, development, ownership or value of the affected Asset as currently conducted; 

(6)materialmen's, mechanics', operators' or other similar liens arising in the ordinary course of business if such liens and charges are for payments that have not yet become due or delinquent and Seller has agreed to make such payments pursuant to the terms of this Agreement;

(7)such Title Defects (as defined in Section 4.2(a)) as Buyer has waived;

(8)any defects, irregularities or deficiencies in title to easements, rights-of-way or surface use agreements that do not materially adversely affect the operation, development, use, ownership or value of any Asset;

(9)the Contracts set forth on Exhibit C, to the extent complete executed copies of such Contracts are included in the Records and the same do not operate to reduce the Net Revenue Interests of Seller, or Buyer from and after the Effective Time, below those set forth in Exhibit A and Exhibit B, increase the Working Interests of Seller, or Buyer from and after the Effective Time, above those set forth in Exhibit A and Exhibit B without a corresponding increase in the Net Revenue Interests, delay or prevent timely drilling and development of the Assets or receipt of proceeds of Hydrocarbon production therefrom, or materially interfere with, diminish or detract from the ownership, operation, development, value or use of the affected Assets;

(10)any liens burdening the Assets that are released at or before Closing, as contemplated by this Agreement; and

(11)all other liens, charges, encumbrances, contracts, agreements, instruments, obligations, defects and irregularities affecting the Assets that do not (or would not upon foreclosure or other enforcement) reduce the Net Revenue Interest set forth in Exhibit A and Exhibit B or prevent the receipt of proceeds of production therefrom, increase the share of costs above the Working Interest set forth in Exhibit A and Exhibit B (unless the Net Revenue Interest is greater than the Net Revenue Interest set forth on Exhibit A and Exhibit B, in the same proportion as any increase in such Working Interest) or materially interfere with or detract from the ownership, operation, development, value or use of the Assets burdened thereby.

4.2Title Adjustment Procedures

(a)Title Defect.  As used in this Agreement, the term “Title Defect” means any lien, charge, encumbrance, obligation (including contract obligation), defect, condition or other matter (including without limitation a discrepancy in Net Revenue Interest or Working Interest) that causes a breach of Seller's representation and warranty in Section 4.1(a).  Notwithstanding the foregoing, the following shall not be considered Title Defects:

(1)defects based solely on lack of information in Seller's files that is filed of record;

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(2)defects in the chain of title arising prior to the year 2001 and consisting of the mere failure to recite marital status in a document or omission of probate succession, heirship or estate proceedings, unless Buyer provides reasonable evidence that such failure or omission results in another person's actual and superior claim of title to the relevant Asset;

(3)defects asserting a change in Working Interest or Net Revenue Interest based on a change in drilling and spacing units, tract allocation or other changes in pool or unit participation occurring after the date of this Agreement (to the extent such changes are permitted by Section 8.1(a) or 8.1(b));

(4)defects arising prior to the year 2001 out of lack of corporate or other entity authorization unless Buyer provides a reasonable basis for the assertion that such corporate or other entity action was not authorized and results in another person's actual and superior claim of title to the relevant Asset; or

(5)defects that have been cured by applicable laws of limitations or prescription such that any claim against Seller's title is barred.

(b)Title Benefit.  As used in this Agreement, the term “Title Benefit” shall mean any right, circumstance or condition that operates to (a) increase the Net Revenue Interest being assigned to Buyer in any Lease or Well above that shown for such Lease or Well in Exhibit A and Exhibit B, to the extent the same does not cause a greater than proportionate increase in the Working Interest being assigned to Buyer therein above that shown in Exhibit A and Exhibit B, or (b) increase the Net Acres being assigned to Buyer in any Lease to greater than that shown therefor in Exhibit A.  

(c)Notice of Defective Interest.  On or before the Defect Notice Date, Buyer shall advise Seller in writing of any matters that in Buyer's reasonable opinion constitute a Title Defect with respect to Seller's title to all or any portion of the Leases and Wells (“Notice of Defective Interest”).  The Notice of Defective Interest shall be in writing and contain the following:  (i) a description of the alleged Title Defect(s), (ii) the Leases or Wells (and the applicable zone(s) therein) affected by the alleged Title Defect (each a “Title Defect Property”), (iii) the Allocated Value of each Title Defect Property, (iv) supporting documentation reasonably necessary for Seller (as well as any title attorney or examiner hired by Seller) to verify the existence of the alleged Title Defect(s), and (v) the amount by which Buyer reasonably believes the Allocated Value of each Title Defect Property is reduced by the alleged Title Defect(s) and the computations and information upon which Buyer's belief is based.  To give Seller an opportunity to commence reviewing and curing Title Defects, Buyer agrees to use reasonable efforts to give Seller, on or before the end of each calendar week prior to the Defect Notice Date, written notice of all Title Defects discovered by Buyer or any of its representatives, during the calendar week preceding the calendar week then ending, which may be preliminary in nature and supplemented prior to the Defect Notice Date; provided, however, that the failure of Buyer to give Seller any such preliminary notices shall not waive any Title Defects or constitute a breach of this Agreement.  Buyer shall also promptly furnish Seller with written notice of any Title Benefit which is discovered by Buyer or any of its representatives while conducting Buyer's title review, due diligence or investigation with respect to the Leases or Wells.

(d)Notice of Title Benefits.  On or before the Defect Notice Date, Seller shall have the right, but not the obligation, to advise Buyer in writing of any matters that in Seller's reasonable opinion constitute a Title Benefit with respect to Seller's title to all or any portion of the Leases and Wells (a “Title Benefit Notice”).  The Title Benefit Notice shall be in writing and contain the following:  (i) a description of the Title Benefit, (ii) the Leases or Wells (and the applicable zone(s) therein) affected by the Title Benefit (“Title Benefit Property”), (iii) the Allocated Values of the Leases or Wells (and the applicable zone(s) therein) subject to such Title Benefit, (iv) supporting documentation reasonably necessary for Buyer to verify the existence of the alleged Title Benefit, and (v) the amount by which the Seller reasonably believes the Allocated Value of those Leases or Wells (and the applicable zone(s) therein) is increased by the Title Benefit, and the computations and information upon which Seller's belief is based. Seller shall be deemed to have waived all Title Benefits of which it has not given notice on or before the Defect Notice Date.

(e)Seller's Right to Cure.  Seller shall have the right, but not the obligation, to attempt, at its sole 

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cost, to cure or remove at any time prior to Closing (the “Cure Period”), to Buyer's reasonable satisfaction, any Title Defects of which it has been advised by Buyer.

(f)Remedies for Title Defects.  Subject to Seller's continuing right to dispute the existence of a Title Defect or the Title Defect Amount asserted with respect thereto, in the event that any Title Defect timely asserted by Buyer in accordance with Section 4.2(c) actually exists and is not waived by Buyer or cured on or before Closing, Seller shall convey the Title Defect Property to Buyer at Closing with a reduction to the Purchase Price, provided, however, that Seller shall retain the right to cure such Title Defects after Closing as provided below.  The reduction to the Purchase Price contemplated by the foregoing sentence shall equal the amount of the aggregate Title Defect Amounts for all such Title Defects as determined pursuant to Section 4.2(g), subject to the Individual Title Threshold and the Aggregate Deductible set forth in Section 4.2(i), less an amount equal to the aggregate of all Title Benefit Amounts (as so calculated, the “Title Defect Adjustment”).  Seller shall have one hundred twenty (120) days after the Closing Date (the “Post-Closing Cure Period”) in which to attempt to cure any such Title Defects subject to the continuing application of the Individual Title Threshold and the Aggregate Deductible.  Buyer shall use reasonable efforts to cooperate with Seller's efforts to cure such Title Defects.  If Seller cures any such Title Defect to Buyer's reasonable satisfaction prior to the end of the Post-Closing Cure Period, then the Title Defect Amount with respect to the Title Defect that is so cured shall promptly be paid by Buyer to Seller.

(g)Title Defect Amount.  The “Title Defect Amount” means the amount by which the value of the Title Defect Property affected by such Title Defect is reduced as a result of the existence of such Title Defect and shall be determined in accordance with the following methodology, terms and conditions:

(1)if Buyer and Seller agree on the Title Defect Amount, that amount shall be the Title Defect Amount;

(2)if the Title Defect is a lien, encumbrance or other charge which is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount of the payment necessary to remove the Title Defect from the Title Defect Property;

(3)if the Title Defect represents a decrease between (A) the actual Net Acres for any Title Defect Property and (B) the Net Acres for such Title Defect Property stated in Exhibit A, then the Title Defect Amount shall be an amount equal to (x) a fraction, the numerator of which is the Allocated Value attributable to such Title Defect Property and the denominator of which is the number of Net Acres for such Title Defect Property stated in Exhibit A, multiplied by (y) the difference between (I) the Net Acres for such Title Defect Property stated in Exhibit A, and (II) the actual Net Acres for any Title Defect Property; and

(4)if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the Title Defect Property of a type not described in subsections (1) or (2) above, the Title Defect Amount shall be determined by taking into account the following factors:  (i) any discrepancy between (A) the Net Revenue Interest or Working Interest for any Title Defect Property and (B) the Net Revenue Interest or Working Interest stated in Exhibit A and Exhibit B; (ii) the Allocated Value of the Title Defect Property; (iii) the portion of the Title Defect Property affected by the Title Defect; (iv) the legal effect of the Title Defect; (v) the values placed upon the Title Defect by Buyer and Seller and (vi) such other reasonable factors as are necessary to make a proper evaluation.

Notwithstanding anything to the contrary in this Article 4, the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any Title Defect Property shall not exceed the Allocated Value of the Title Defect Property.
(h)Title Benefit Amount.  “Title Benefit Amount” means the amount by which the value of the Title Benefit Property affected by such Title Benefit is increased as a result of the existence of such Title Benefit and shall be determined in accordance with the following methodology, terms and conditions:

(1)if Buyer and Seller agree on the amount of the Title Benefit, that amount shall be the 

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Title Benefit Amount;

(2)if the Title Benefit represents an increase between (A) the actual Net Acres for any Title Benefit Property and (B) the Net Acres for such Title Benefit Property stated in Exhibit A, then the Title Benefit Amount shall be an amount equal to (x) a fraction, the numerator of which is the Allocated Value attributable to such Title Benefit Property and the denominator of which is the number of Net Acres for such Title Benefit Property stated in Exhibit A, multiplied by (y) the difference between (I) the actual Net Acres for any Title Benefit Property and (II) the Net Acres for such Title Benefit Property stated in Exhibit A;

(3)if the Title Benefit is of a type not described above, then the applicable Title Benefit Amount shall be determined by taking into account the following factors:  (i) any discrepancy between (A) the Net Revenue Interest or Working Interest for any Title Benefit Property and (B) the Net Revenue Interest or Working Interest stated in Exhibit A and Exhibit B; (ii) the Allocated Value of the Title Benefit Property; (iii) the portion of the Title Benefit Property affected by the Title Benefit; (iv) the legal effect of the Title Benefit; and (v) such other reasonable factors as are necessary to make a proper evaluation; and

(4)if a Title Benefit Property has no Allocated Value, then such Title Benefit Property shall have no Title Benefit Amount.

(i)Title Deductibles.  Notwithstanding anything to the contrary contained in this Agreement, (i) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any individual Title Defect for which the Title Defect Amount does not exceed thirty-five thousand dollars ($35,000) (“Individual Title Threshold”); and (ii) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any Title Defect that exceeds the Individual Title Threshold unless the aggregate amount of the Title Defect Amounts for all Title Defects that exceed the Individual Title Threshold (excluding any Title Defects cured by Seller and less an amount equal to the aggregate of all Title Benefit Amounts) plus the Environmental Defect Value of all Environmental Defects, in the aggregate, exceeds three and one half percent (3.5%) of the Initial Purchase Price (“Aggregate Deductible”), after which point Buyer shall be entitled to adjustments to the Purchase Price or other remedies only with respect to such Title Defects in excess of the Aggregate Deductible.  Notwithstanding the foregoing, the Individual Title Threshold and the Aggregate Deductible shall not apply to Title Defects arising from Seller's failure to obtain any third party consents to assign any of the Assets to Buyer, such that Buyer shall receive an adjustment to the Purchase Price equal to the full Title Defect Amounts attributable to any such Title Defects.  

4.3Title Dispute Resolution.  The Parties agree to resolve disputes concerning the following matters pursuant to this Section 4.3:  (i) the existence and scope of a Title Defect or Title Benefit, (ii) the Title Defect Amount or Title Benefit Amount, as the case may be, relating to the portion of the Asset affected by a Title Defect or Title Benefit and (iii) the adequacy of Seller's Title Defect curative materials and Buyer's reasonable satisfaction thereof (the “Title Disputed Matters”).  The Parties agree to attempt to initially resolve all disputes through good faith negotiations.  If the Parties cannot resolve disputes regarding items (i), (ii) and (iii) on or before Closing, the affected Asset shall be conveyed to Buyer at Closing and Buyer shall pay an amount equal to the aggregate of all claimed Title Defect Amounts with respect to Title Disputed Matters into the Escrow Account.  The Escrow Agreement shall provide, with respect to the Title Disputed Matters, that funds will be released from the Escrow Account only upon the joint written instructions of the Parties (which instructions shall be given by the Parties so as to give effect to the decision of the Arbitrator within five (5) Business Days after the Arbitrator renders a decision pursuant to Section 15.17).  Further, the Title Disputed Matters will be finally determined by binding arbitration pursuant to Section 15.17. 

4.4Consents and Preferential Purchase Rights.  The remedies set forth in this Section 4.4 are the exclusive remedies under this Agreement for consents to assign and preferential rights to purchase.

(a)Consents.  All required consents to assignment that are necessary for Seller to execute, deliver and perform its obligations under this Agreement (each, a “Required Consent”) are set forth on Schedule 4.4(a). Seller shall use reasonable efforts to obtain all Required Consents prior to Closing.  Consents and approvals which are customarily obtained post-Closing shall not be considered Required Consents.  If prior to Closing, Seller fails to obtain 

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a Required Consent to assign that would invalidate the conveyance of the Asset affected by the consent to assign, that would materially affect the value or use of the Asset (“Affected Asset”) or that Buyer is unwilling to waive as a Title Defect (provided that Buyer shall have no right to waive Seller's failure to obtain any Material Consent), then Seller shall retain the Affected Asset and the Purchase Price shall be reduced by the Allocated Value of the Affected Asset.  Seller, with Buyer's assistance, shall use its reasonable efforts to obtain such Required Consent as promptly as possible following Closing.  If such Required Consent has been obtained as of the Final Settlement Date, Seller shall convey the Affected Asset to Buyer effective as of the Effective Time and Buyer shall pay Seller the Allocated Value of the Affected Asset, less any proceeds from the Affected Asset attributable to the period of time after the Effective Time received and retained by Seller (net of any Property Expenses paid by Seller attributable to such period) and otherwise subject to the Purchase Price adjustments provided for in this Agreement.  If such Required Consent has not been obtained as of the Final Settlement Date, the Affected Asset shall be excluded from the sale and the Purchase Price shall be deemed to be reduced by an amount equal to the Allocated Value of the Affected Asset.  Buyer shall reasonably cooperate with Seller in obtaining any Required Consent including providing assurances of reasonable financial conditions, but Buyer shall not be required to expend funds or make any other type of financial commitments in order to obtain such consent.

(b)Preferential Purchase Rights.  All preferential rights to purchase that are necessary for Seller to execute, deliver and perform its obligations under this Agreement are set forth on Schedule 4.4(b).  Prior to Closing, Seller shall use reasonable good faith efforts to give notices required in connection with such preferential purchase rights together with any other preferential rights to purchase discovered by Buyer prior to Closing.  If any preferential right to purchase any portion of the Assets is timely and properly exercised prior to Closing, then that portion of the Assets affected by such preferential purchase right shall be sold to the exercising party on the same terms and conditions provided in this Agreement and the Purchase Price shall be adjusted downward by an amount equal to the Allocated Value of such affected Assets.  Upon the consummation of any such sale of Assets to an exercising third party, the Assets sold shall be deemed to be Excluded Assets.  If by Closing, the time frame for the exercise of a preferential purchase right has not expired and Seller has not received written notice of an intent not to exercise or a written waiver of the preferential purchase right, then Seller shall retain the affected Assets and the Purchase Price shall be adjusted downward by an amount equal to the Allocated Value of such affected Assets.  As to any Assets retained by Seller hereunder, following Closing if a preferential right to purchase is not consummated within the time frame specified in the preferential purchase right, or if the time frame for exercise of the preferential purchase right expired without exercise after the Closing, Seller shall promptly convey the affected Asset to Buyer effective as of the Effective Time, and Buyer shall pay the Allocated Value thereof pursuant to the terms of this Agreement, subject to applicable Purchase Price adjustments provided in this Agreement.

ARTICLE 5
ENVIRONMENTAL MATTERS

5.1Definitions.  For the purposes of the Agreement, the following terms shall have the following meanings:  

(a)“Condition” means any circumstance, status or defect that requires Remediation to comply with Environmental Laws or any Lease or Contract.

(b)“Environmental Defect” means a Condition in, on, under or relating to a particular Asset (including, without limitation, air, land, soil, surface and subsurface strata, surface water, groundwater, or sediments) that causes a particular Asset to be in violation of an Environmental Law, Lease or Contract, if the estimated cost of Remediation of the Asset consistent with applicable Environmental Laws and the requirements of any applicable Lease or Contract exceeds thirty-five thousand dollars ($35,000) per Condition.

(c)“Environmental Law” or “Environmental Laws” shall mean, as of the date of this Agreement, any federal, tribal, state, local or foreign law (including common law), statute, rule, regulation, requirement, ordinance and any writ, decree, bond, authorization, approval, license, permit, registration, binding criteria, standard, consent decree, settlement agreement, judgment, order, directive or binding policy issued by or entered into with a Governmental Entity pertaining or relating to:  (a) pollution or pollution control, including, without limitation, storm water; 

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(b) protection of human health, wildlife, natural resources or the environment; (c) employee safety in the workplace; or (d) the management, presence, use, generation, processing, extraction, treatment, recycling, refining, reclamation, labeling, transport, storage, collection, distribution, disposal or release or threat of release of Hazardous Materials.  “Environmental Laws” shall include, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq., the Solid Waste Disposal Act (as amended by the Resource Conservation and Recovery Act), 42 U.S.C. § 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Federal Safe Drinking Water Act, 42 U.S.C. §§ 300f-300, the Federal Air Pollution Control Act, 42 U.S.C. § 7401 et seq., the Oil Pollution Act, 33 U.S.C. § 2701 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Endangered Species Act, and the regulations and orders respectively promulgated thereunder, each as amended, or any equivalent or analogous state or local statutes, laws or ordinances, any regulation promulgated thereunder and any amendments thereto.

(d)“Governmental Entity” means any national, state, local, native or tribal government or any subdivision, agency, court, commission, department, board, bureau, regulatory authority or other division or instrumentality thereof.

(e)“Hazardous Materials” shall mean, without limitation, any waste, substance, product, or other material (whether solid, liquid, gas or mixed), which is or becomes identified, listed, published, or defined as a hazardous substance, hazardous waste, hazardous material, toxic substance, radioactive material, oil, or petroleum waste, or which is otherwise regulated or restricted under any Environmental Law.

(f)“Remediation” or “Remediate” means investigation, assessment, characterization, delineation, monitoring, sampling, analysis, removal action, remedial action, response action, corrective action, mitigation, treatment or cleanup of Hazardous Materials or other similar actions as required by any applicable Environmental Laws, Lease or Contract from soil, land surface, groundwater, sediment, surface water, or subsurface strata or otherwise for the general protection of human health and the environment.

5.2Environmental Liabilities and Obligations.  Upon Closing, Buyer agrees to assume and pay, perform, fulfill and discharge all claims, costs, expenses, liabilities and obligations accruing or relating to and release Seller, its stockholders, directors, officers, employees, agents and representatives, and their respective successors and assigns (but no other third parties) from all Losses (including any civil fines, penalties, costs of assessment, clean-up, removal and Remediation) and expenses for the modification, repair or replacement of facilities on the Lands brought or assessed by any and all persons, including any Governmental Entity, as a result of any personal injury, illness or death, any damage to, destruction or loss of property, and any damage to natural resources (including soil, air, surface water or groundwater) to the extent any of the foregoing directly or indirectly is caused by or otherwise involves any Condition of the Assets whether created or attributable to periods either before or  after the Effective Time, including, but not limited to, the presence, disposal or release of any Hazardous Material of any kind in, on or under the Assets or the Lands (collectively, “Buyer's Environmental Liabilities”).  Notwithstanding anything contained in this Agreement, “Buyer's Environmental Liabilities” shall not include any claims, costs, expenses, liabilities or obligations arising from or related to any disposal prior to the Closing Date by Seller or any of its affiliates of any Hazardous Material or other material or substances generated or used on the Assets, at sites off of the Assets.

5.3Environmental Representation and Warranty.  With respect to the Assets, Seller has not entered into, and is not subject to, any agreement, consent, order, decree, judgment, license, permit condition or other directive of any Governmental Entity that (i) is in existence as of the date of this Agreement, (ii) is based on any Environmental Laws that relate to the future use of any of the Assets and (iii) requires any change in the present conditions of any of the Assets.  As of the date of this Agreement, Seller has not received written notice from any person, entity or Governmental Entity of any release, disposal, event, condition, circumstance, activity, practice or incident concerning any land, facility, asset or property included in the Assets that:  (i) interferes with or prevents compliance by Seller with any Environmental Law or the terms of any license or permit issued pursuant thereto or (ii) gives rise to or results in any common law or other liability of Seller to any person, entity or Governmental Entity.

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5.4Environmental Defect Notice.  On or before the Defect Notice Date, Buyer shall give Seller written notice of any Environmental Defects as to which Buyer has knowledge prior to the Defect Notice Date (an “Environmental Defect Notice”).  Buyer shall be deemed to have waived its right to assert an Environmental Defect if Buyer does not include such Environmental Defect in an Environmental Defect Notice delivered to Seller on or before the Defect Notice Date.  An Environmental Defect Notice shall contain the following: (i) a description of the Condition in, on, under or relating to the Asset that causes the alleged Environmental Defect; (ii) a description of the Asset affected by the alleged Environmental Defect (each an “Environmental Defect Property”); (iii) the Allocated Value of each Environmental Defect Property; (iv) supporting documentation reasonably necessary for Seller (as well as any consultant hired by Seller) to verify the existence of the alleged Environmental Defect(s), including, without limitation, that portion of any Environmental Assessment prepared by Buyer or its representatives to the extent and only to the extent the same relates to the Environmental Defect Property, and (v) Buyer's estimated cost to Remediate the alleged Environmental Defect (the “Environmental Defect Value”). 

5.5Seller's Right to Remediate.  Seller shall have the right, but not the obligation, to attempt, at its sole cost, to Remediate at any time prior to Closing any Environmental Defects of which it has been advised by Buyer prior to the Defect Notice Date.

5.6Environmental Defect Adjustments.  Upon delivery of a timely Environmental Defect Notice, the Parties shall proceed as follows:

(a)With respect to each Environmental Defect asserted by Buyer on or before the Defect Notice Date, Seller may elect, in its sole discretion, on or before the date that is two (2) days prior to Closing, to:

(1)reach agreement with Buyer on the existence and scope of the Environmental Defect and subject to Section 5.6(b), adjust the Purchase Price by the Environmental Defect Value of the Environmental Defect Property (the “Environmental Defect Adjustment”), whereupon Seller shall convey the Environmental Defect Property to Buyer at Closing and Buyer shall thereafter assume all liability for Remediation of the Environmental Defect Property;

(2)if the Environmental Defect Value exceeds the Allocated Value of the Environmental Defect Property, then Seller may elect to remove the Environmental Defect Property from the Transaction and reduce the Purchase Price by the Allocated Value of the Environmental Defect Property, in which event such Environmental Defect Property shall constitute an Excluded Asset; or 

(3)challenge the existence and/or scope of the Environmental Defect and/or Environmental Defect Value asserted by Buyer pursuant to Section 5.7.  If Seller elects to challenge the existence of an Environmental Defect and/or Environmental Defect Value and such dispute has not been resolved as of Closing, at Closing Buyer shall pay an amount equal to the claimed Environmental Defect Value into the Escrow Account, such amount to be released to Buyer or Seller based on the joint instructions of the Parties.  If the Environmental Defect Value of any Asset, as finally determined, exceeds the Allocated Value of such Asset, either Seller or Buyer may elect to remove the Asset from the Transaction and reduce the Purchase Price by the Allocated Value of such Asset, in which event such Environmental Defect Property shall constitute an Excluded Asset.

(b)There shall be no reduction to the Purchase Price or other remedies provided by Seller for any Environmental Defect unless the Environmental Defect Values of all Environmental Defects in the aggregate (excluding any Environmental Defects Remediated by Seller), plus the Title Defect Amounts of all Title Defects in the aggregate, exceed the Aggregate Deductible, after which point Buyer shall be entitled to adjustments to the Purchase Price and remedies only with respect to such Environmental Defects in excess of the Aggregate Deductible.

(c)Notwithstanding anything contained in this Agreement, if the Environmental Defect Value exceeds the Allocated Value of any Environmental Defect Property, then Buyer may at any time prior to Closing elect to remove such Environmental Defect Property from the Transaction and, subject to application of the Aggregate Deductible, 

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reduce the Purchase Price by the Allocated Value of such Environmental Defect Property, in which event such Environmental Defect Property shall constitute an Excluded Asset.

5.7Contested Environmental Defects.  If, pursuant to Section 5.6(a)(3), Seller elects to proceed under this Section 5.7 with respect to an Environmental Defect, the following matters shall be determined pursuant to this Section 5.7: (a) the existence and scope of an Environmental Defect, and (b) the Environmental Defect Value.  The Parties agree to attempt to initially resolve all disputes through good faith negotiations.  If the Parties cannot resolve disputes regarding items (a) or (b) within thirty (30) days after the Defect Notice Date, the disputed matters will be finally determined by binding arbitration in accordance with the procedures set forth in Section 15.17.

5.8Exclusive Remedies.  The right of Buyer to reduce the Purchase Price to reflect one or more Environmental Defect Adjustments pursuant to this Article 5, to remove the Environmental Defect Property from the Transaction pursuant to Section 3.3 or this Article 5 or to terminate this Agreement pursuant to Section 11.1(f), shall be the exclusive right and remedy of Buyer with respect to environmental matters with respect to the Assets, except with respect to environmental matters related to the offsite disposal of Hazardous Materials or other materials or substances.  Notwithstanding anything herein provided to the contrary, except as provided in the preceding sentence, if an Environmental Defect under this Article 5 results from any matter which could also result in the breach of any representation or warranty of Seller in this Agreement, then Buyer shall only be entitled to assert such matter before the Defect Notice Date as an Environmental Defect to the extent permitted by this Article 5.  Buyer shall be precluded from also asserting such matter as the basis of the breach of any such representation or warranty.

ARTICLE 6
SELLER'S REPRESENTATIONS AND WARRANTIES

Seller makes the following representations and warranties as of Closing and as of the Effective Time except where otherwise indicated.  The term “Knowledge” has the meaning set forth in Section 15.13.
6.1Organization and Standing.  Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and is qualified to carry on its business in the State of Texas.

6.2Power.  Seller has all requisite corporate power and authority to carry on its business as presently conducted.  The execution and delivery of this Agreement does not, and the fulfillment of and compliance with the terms and conditions hereof will not, as of Closing, violate, or be in conflict with, any provision of Seller's governing documents, or any material provision of any agreement or instrument to which Seller is a party or by which Seller or the Assets is bound, or any judgment, decree, order, statute, law, rule or regulation applicable to Seller or the Assets.

6.3Authorization and Enforceability.  The execution, delivery and performance of this Agreement and the transactions contemplated hereby are duly and validly authorized by all requisite corporate action on the part of Seller.  This Agreement constitutes, and the documents to be executed by Seller at Closing will constitute, Seller's legal, valid and binding obligations, enforceable in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws for the protection of creditors, as well as to general principles of equity.

6.4Liability for Brokers' Fees.  Seller has not incurred any liability, contingent or otherwise, for brokers' or finders' fees or any commission relating to the Transaction for which Buyer shall have any responsibility, liability or obligations whatsoever.

6.5No Bankruptcy.  There are no bankruptcy, reorganization, liquidation or receivership proceedings pending, being contemplated by or, to Seller's Knowledge, threatened against Seller.

6.6Litigation.
  
(a)There are no actions, suits, investigations, arbitration or other proceedings, notices of violation 

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or claims pending or, to the Knowledge of Seller, threatened, affecting the Assets or that would impair Seller's ability to consummate the Transaction or to assume the liabilities to be assumed by Seller under this Agreement.

(b)There are no actions, suits, investigations, arbitration or other proceedings, notices of violation or claims pending or, to the Knowledge of Seller, threatened, against the Seller or affecting any of the Assets, in any court or by or before any Governmental Entity involving the ownership or operation of the Assets; nor is Seller in default under any order, writ, injunction, or decree of any court or Governmental Entity, in each case that would be reasonably likely to have a material adverse effect on any of the Assets.  

(c)This Section 6.5 does not include any matters with respect to Environmental Laws, such matters being addressed exclusively in Article 5.  

6.7Compliance with Law.  The Assets have been operated in compliance in all material respects with all applicable federal, state and local laws, rules, regulations and orders.  Seller has not received any written notice of a material violation of any statute, law, ordinance, regulation, rule or order of any Governmental Entity, or any judgment, decree or order of any court, applicable to the Assets.  This Section 6.7 does not include any matters with respect to Environmental Laws, such matters being addressed exclusively in Article 5.

6.8Status and Operation of Assets.  Except as described on Schedule 6.8 (“Capital Expenditures”), (i) Seller has incurred no expenses, and has made no commitments to make expenditures in connection with the ownership or operation of the Assets after the Effective Time which expenditures are, individually, estimated to cost seventy-five thousand dollars ($75,000) or more, net to Seller's interest, and (ii) no contractual obligations, proposals or authorities for expenditures are currently outstanding (whether made by Seller or by any other party) to drill additional wells, or to deepen, plug back, rework any Well, or to conduct other operations on the Assets for which consent is required under the applicable operating agreement, to abandon any Well, or to conduct any other operation on the Assets for which the estimated cost exceeds seventy-five thousand dollars ($75,000), net to Seller's interest.

6.9Taxes.  All Taxes and assessments pertaining to the Assets that are due and payable have been properly paid by Seller.  There are no liens for Taxes with respect to the Assets other than Permitted Encumbrances.  There are no suits or proceedings pending, or to Seller's Knowledge, any claims, investigations, audits, inquiries pending or threatened against Seller in respect of Taxes which affect or may reasonably be expected to affect any of the Assets.  No Asset is subject to any partnership within the meaning of subchapter K of Chapter 1 of Subtitle A of the Code.  Seller has not granted any waiver of any statute of limitations with respect to, or any extension of a period for the assessment of, any Tax affecting the Assets.

6.10Imbalance Volumes.  There are no oil or gas well or pipeline imbalances other than those listed in Schedule 6.10 which are associated with the Assets.  

6.11Leases.  To Seller's Knowledge, all of the Leases are in full force and effect insofar as they cover the lands described on Exhibit A and Seller is not in default with respect to any of its material obligations under any of the Leases.  Except as set forth in Schedule 6.11, Seller has not received any written notice of default or breach under any of the Leases which default or breach has not been cured or remedied to the satisfaction of the applicable lessor.

6.12Material Agreements.
  
(a)Except for the Leases, Exhibit C sets forth all material Contracts related to the ownership and operation of the Assets that are of the type described below (collectively, the “Material Agreements”):  

(1)any Contract that can reasonably be expected to result in aggregate payments by Seller of more than fifty thousand dollars ($50,000) during the current or any subsequent fiscal year or two hundred fifty thousand dollars ($250,000) in the aggregate over the term of such Contract (in each case, based solely on the terms thereof and without regard to any expected increase in volumes or revenues) that cannot be terminated by the Seller on ninety (90) days or less notice;

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(2)any Contract that can reasonably be expected to result in aggregate revenues to Seller of more than fifty thousand dollars ($50,000) during the current or any subsequent fiscal year or two hundred fifty thousand dollars ($250,000) in the aggregate over the term of such Contract (in each case, based solely on the terms thereof and without regard to any expected increase in volumes or revenues);

(3)any Hydrocarbon purchase and sale, transportation, processing or similar Contract that is not terminable without penalty on sixty (60) days or less notice;

(4)any Contract that is an indenture, mortgage, loan, credit or sale-leaseback, guaranty of any obligation, bonds, letters of credit or similar financial Contract;

(5)any Contract that constitutes a lease under which Seller is the lessor or the lessee of real, immovable, personal or movable property which lease (A) cannot be terminated by Seller without penalty upon sixty (60) days or less notice and (B) involves an annual base rental of more than fifty thousand dollars ($50,000); and

(6)any Contract with any affiliate of Seller that will be binding on Buyer after Closing and will not be terminable by Buyer within thirty (30) days or less notice.

(b)There exist no defaults under the Material Agreements by Seller or, to Seller's Knowledge, by any other person that is a party to such Material Agreements.

6.13Hydrocarbon Sales Contracts.  Except for the Hydrocarbon sales contracts listed on Exhibit C, no Hydrocarbons produced from the Assets are subject to a sales contract and no person has any call upon, option to purchase or similar rights with respect to any material amounts of production from the Assets.  Except as set forth on Schedule 6.13, (i) there have been no written claims from any third party for any price reduction or increase or volume reduction or increase under any Hydrocarbon sales contract related to the Assets, and Seller has not made any claims for any price reduction or increase or volume reduction or increase under any Hydrocarbon sales contract related to the Assets, (ii) to the Knowledge of Seller, payments for Hydrocarbons sold pursuant to each Hydrocarbon sales contract related to the Assets have been made (subject to adjustment in accordance with such Hydrocarbon sales contract) in accordance with prices or price-setting mechanisms set forth in such Hydrocarbon sales contracts, and (iii) no purchaser under any Hydrocarbon sales contract related to the Assets has notified Seller in writing (or, to the Knowledge of Seller, the operator of any Asset) of its intent to cancel, terminate, or renegotiate any such Hydrocarbon sales contract or has otherwise failed or is currently refusing to take and pay for Hydrocarbons in the quantities and at the price set out in any such Hydrocarbon sales contract, whether such failure or refusal was pursuant to any force majeure, market out, or similar provisions contained in such Hydrocarbon sales contract or otherwise.

6.14Areas of Mutual Interest.  No Asset is subject to (or has related to it) any area of mutual interest agreement, or any farmout agreement, farmin agreement or similar agreement under which any party thereto is entitled to receive assignments not yet made, or could earn additional assignments after the Effective Time.

6.15Production Payments.  Except for the imbalance volumes and the contracts and arrangements listed in Schedule 6.10, Seller is not obligated, by virtue of a production payment, prepayment arrangement under any contract for the sale of Hydrocarbons and containing a “take or pay”, advance payment or similar provision, gas balancing agreement or any other arrangement to deliver any material amounts of Hydrocarbons without then or thereafter receiving full payment therefor, or to make payment for any material amounts of Hydrocarbons already produced and sold.

6.16Surface Access.  Other than the surface leases, permits, rights-of-way, licenses, easements, and other surface rights agreements described on Exhibit C, there are no surface use or access agreements currently in force and effect that would materially interfere with oil and gas operations on the Leases as currently conducted.  Seller has a legal right of access to all of the Leases and Wells.

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6.17Insurance.  As of the Effective Time, Seller has maintained, and through the Closing Date will maintain, with respect to the Assets, the insurance coverage in amounts and on terms Seller reasonably believes to be appropriate and customary in the circumstances.

6.18No Other Representations or Warranties; Disclosed Materials.
  
(a)Except for the representations and warranties contained in this Agreement or the documents assigning the Assets, Seller makes no other (and Buyer acknowledges that it is not relying upon any) express or implied representation or warranty with respect to Seller, the Assets or the Transaction, and Seller disclaims any other representations or warranties not contained in this Agreement or the documents assigning the Assets, whether made by Seller, any affiliate of Seller, or any of their respective officers, directors, managers, employees or agents.  Except for the representations and warranties contained in this Agreement, the disclosure of any matter or item in the Schedules shall not be deemed to constitute an acknowledgement that any such matter would or would reasonably be expected to have a material adverse effect on any of the Assets.

(b)The information relating to the Assets contained in this Agreement or the Schedules or Exhibits hereto is true and correct in all material respects.  In connection with this Agreement or the documents furnished to Buyer and Buyer's representatives hereunder, Seller has not (i) knowingly employed any device, scheme or artifice to mislead or defraud Buyer or (ii) knowingly engaged in any act, practice, or course of business which operates or would operate as a fraud or deceit upon Buyer or any third party.

6.19Oil and Gas Operations.  Except as set forth in Schedule 6.19:

(a)none of the Wells have been produced in excess of their allowable such that they are subject to being shut-in or to any overproduction penalty, and Seller has not received any payment for Hydrocarbon production from any Well which is subject to refund or recoupment out of future production;

(b)there have been no changes proposed to reduce the production allowables for any Well that are currently pending;

(c)all of the Wells have been (if drilled) drilled and (if completed) completed, operated, and produced in accordance with good oil and gas field practices and in compliance in all material respects with the applicable Leases and Contracts, and applicable laws, rules, regulations and permits;

(d)Seller has not abandoned any Well operated by it, except in accordance with the applicable Leases, Contracts, laws, rules, and regulations and good oil and gas industry practices;

(e)proceeds from the sale of Hydrocarbons produced from and attributable to the Assets are being received by Seller in a timely manner and are not being held in suspense for any reason; 

(f)all royalties, overriding royalties, compensatory royalties and other payments due from or in respect of Hydrocarbon production from the Assets, have been or will be, prior to the Closing Date, properly and correctly paid or provided for in all respects, except for those for which Seller has a legal right to suspend; 

(g)except as set forth on Exhibit B, none of the Wells have a payout balance which will result in a reduction in Seller's interest therein after payout occurs; and

(h)all of the Wells that have been drilled and completed have been drilled and completed on lands currently covered by the Leases or on lands properly pooled or unitized therewith.

6.20Offsite Disposal.  Except as set forth in Schedule 6.20 and except for de minimis quantities of waste materials generated in the ordinary course of Seller's business, Seller has not disposed of any produced water, hazardous 

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substances or solid waste materials generated on the Assets or used on the Assets, at sites off of the Assets.

6.21Affiliate Transactions.  Except as set forth in Schedule 6.21, there are no transactions or Contracts affecting any of the Assets between Seller and any affiliate of Seller (“Affiliate Contracts”) that will continue beyond the Closing.  All of the Affiliate Contracts can be terminated by Seller prior to the Closing or by Buyer after the Closing upon thirty (30) days or less notice.  As used in this Agreement, "affiliate" means, with respect to any person or entity, each other person or entity directly or indirectly controlling, controlled by or under common control with such person.  

6.22Material Consents.  Except as set forth in Schedule 6.22, there are no consents to assignment relating to the Assets where the consent provision provides that an assignment in violation thereof is void or voidable, triggers the payment of specified liquidated damages, or causes termination of the affected Lease or other Asset to be assigned (“Material Consents”).

6.23Unplugged Wells.  Except for wells listed in Schedule 6.23, there are no dry holes, or shut-in or otherwise inactive wells, located on the Lands, except for wells that have been plugged or abandoned in compliance with applicable laws and regulations, and except for wells drilled to depths not included within the Assets.

6.24Permits.  Seller possesses all material permits required to be obtained for conducting its business with respect of the Assets as presently conducted, and Seller has not received written notice of any violations of the permits that remain uncured or that any permit will not be renewed.

6.25Expenses.  To the Knowledge of Seller, in the ordinary course of business, Seller has paid all lease operating expenses, capital expenses, joint interest billings and other costs and expenses attributable to the ownership and operation of the Assets in a timely manner before becoming delinquent, except such costs and expenses as are disputed in good faith by Seller and set forth in Schedule 6.25.

6.26Bonds and Letters of Credit.  Except as set forth in Schedule 6.26, there are no bonds, letters of credit, guarantees or other similar commitments held by Seller that are required by third parties in order for Seller to own the Assets, and if operated by Seller or an affiliate of Seller, to operate the Assets.

6.27Suspense Accounts.  Schedule 6.27 sets forth a true and complete amount, as of November 1, 2011, of all third party proceeds of production from the Assets being held in suspense by Seller.

ARTICLE 7
BUYER'S REPRESENTATIONS AND WARRANTIES

Buyer makes the following representations and warranties as of Closing and as of the Effective Time: 
7.1Organization and Standing.  Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware and is duly qualified to carry on its business in the State of Texas.

7.2Power.  Buyer has all requisite power and authority to carry on its business as presently conducted.  The execution and delivery of this Agreement does not, and the fulfillment of and compliance with the terms and conditions hereof will not, as of Closing, violate, or be in conflict with, any material provision of Buyer's governing documents, or any material provision of any agreement or instrument to which Buyer is a party or by which it is bound, or, any judgment, decree, order, statute, rule or regulation applicable to Buyer.

7.3Authorization and Enforceability.  This Agreement constitutes Buyer's legal, valid and binding obligation, enforceable in accordance with its terms, subject, however, to the effects of bankruptcy, insolvency, reorganization, moratorium and other laws for the protection of creditors, as well as to general principles of equity, regardless whether such enforceability is considered in a proceeding in equity or at law.

7.4Liability for Brokers' Fees.  Buyer has not incurred any liability, contingent or otherwise, for brokers' 

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or finders' fees or any commission relating to the Transaction for which Seller shall have any responsibility, liability or obligations whatsoever.

7.5Litigation.  There is no action, suit, proceeding, claim or investigation by any person, entity, or Governmental Entity pending or, to Buyer's Knowledge, threatened against it before any Governmental Entity that impedes or is likely to impede its ability to consummate the Transaction.

7.6Bankruptcy.  There are no bankruptcy, reorganization or receivership proceedings pending, being contemplated by or, to Buyer's Knowledge, threatened against Buyer.

7.7Financial Resources.  Buyer has, and shall have as of Closing, sufficient funds with which to pay the Closing Amount and consummate the Transaction and, following Closing, Buyer will have sufficient funds to pay any adjustments to the Purchase Price and meet its other payment obligations under this Agreement.

ARTICLE 8
COVENANTS AND AGREEMENTS

8.1Covenants and Agreements of Seller.  Seller covenants and agrees with Buyer as follows:

(a)Operations Prior to Closing.  Except as otherwise consented to in writing by Buyer or provided in this Agreement, from the date of execution of this Agreement to the Closing, Seller will (i) use reasonable efforts to cause the Assets to be operated in a good and workmanlike manner consistent with past practices and in compliance in all material respects with all applicable Leases, Contracts, laws, rules regulations and permits, (ii) pay or cause to be paid its proportionate share of all costs and expenses incurred in connection with such operations, (iii) notify Buyer and obtain Buyer's consent (which shall not be unreasonably withheld or delayed) to capital expenditures anticipated to cost in excess of seventy-five thousand dollars ($75,000) per operation, net to Seller's interest, conducted on the Assets, exclusive of the Capital Expenditures listed on Schedule 6.8, (iv) give prompt written notice to Buyer of any notice of asserted default or violation received or given by Seller under any Lease, Contract, laws, rules, regulations or permits affecting any Asset, and (v) cause its employees to furnish Buyer with such financial and operating data and other information with respect to the Assets as Buyer may from time to time reasonably request.

(b)Restriction on Operations.  Subject to Section 8.1(a), unless Seller obtains the prior written consent of Buyer to act otherwise (which shall not be unreasonably withheld or delayed), from the date of execution of this Agreement until Closing, Seller will not (i) abandon any part of the Assets (except in the ordinary course of business or the abandonment of leases upon the expiration of their respective primary terms), (ii) except for the Capital Expenditures listed on Schedule 6.8, approve, propose to any third party or commence any operations on the Assets anticipated in any instance to cost more than seventy-five thousand dollars ($75,000) per operation, net to Seller's interest (excepting emergency operations required under presently existing contractual obligations, and operations undertaken to avoid a monetary penalty or forfeiture provision of any applicable agreement or order all of which shall be deemed to be approved, provided that Seller immediately notifies Buyer of any emergency operation or operation to avoid monetary penalty or forfeiture excepted herein), (iii) encumber, convey or dispose of, or remove from the Lands, any part of the Assets (other than sale or disposal of equipment replaced with items of comparable or superior quality or sale of Hydrocarbons produced from the Assets in the regular course of business), (iv) enter into any farmout or farmin affecting the Assets, (v) let lapse any insurance now in force with respect to the Assets, (vi) materially modify, or terminate prior to its stated expiration, any Material Agreement, (vii) make any non-consent elections with respect to operations affecting the Assets, (viii) relinquish any operating rights or other rights with respect to the Assets, (ix) enter into any agreements that would constitute a Material Agreement, provided that Seller will promptly notify Buyer of any agreements entered into affecting or related to any of the Assets (provided that any failure of Seller to provide notice to Buyer of any agreement entered into shall not constitute a breach of this Agreement); (x) subject any of the Assets to any partnership within the meaning of subchapter K of  Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, as amended (the “Code”), or (xi) settle or compromise any claim or proceeding, or waive or extend any period of limitations, relating to Taxes attributable to any of the Assets. 

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(c)Marketing.  Unless Seller obtains the prior written consent of Buyer (which shall not be unreasonably withheld or delayed) to act otherwise, Seller will not alter any existing marketing contracts currently in existence, or enter into any new marketing contracts or agreements providing for the sale of Hydrocarbons for a term in excess of one month. 

(d)Consents.  For the purposes of obtaining the written consents required in Sections 8.1(a) through (c), Buyer designates the following contact person:  Mr. Steve Guthrie, at the address for Buyer set forth in Section 15.3, sguthrie@concho.com or facsimile no. (432) 684-7137.  Such consents may be obtained in writing by overnight courier or given by .pdf or facsimile transmission.

(e)Status.  Seller shall use all reasonable efforts to assure that as of the Closing Date, Seller will not be under any material legal or contractual restriction that would prohibit or delay the timely consummation of the Transaction.

(f)Notices of Claims.  Seller shall promptly notify Buyer in writing, if, between the date of execution of this Agreement and the Closing Date, Seller receives notice (written or verbal) of any claim, suit, action or other proceeding affecting the Assets or notice (written or verbal) of any default under the Leases or any Material Agreement.

(g)Compliance with Laws.  During the period from the date of execution of this Agreement to the Closing Date, Seller shall use reasonable efforts to cause the Assets to be operated in compliance in all material respects with all applicable Leases, Contracts, permits, statutes, ordinances, rules, regulations and orders.

(h)Audit Rights.  Seller shall cooperate with Buyer and make available, during normal business hours, to Buyer and its representatives prior to and for a period of fifteen (15) months following the Closing any and all existing information and documents relating to revenues and expenses attributable to the Assets and in the possession of Seller (subject to the rights of third parties) that Buyer may reasonably require to comply with Buyer's tax and financial reporting requirements and audits, including any filings with any Governmental Entity and filings that may be required by the Securities and Exchange Commission under the Securities Act of 1933 and/or the Securities Exchange Act of 1934.  Without limiting the generality of the foregoing, Seller will use its commercially reasonable efforts after execution of this Agreement and following Closing to cooperate with the independent auditors chosen by Buyer (“Buyer's Auditor”) in connection with their audit or review of any revenue and expense records pertaining to the Assets that Buyer or any of its affiliates requires to comply with their tax, financial and other reporting requirements.  Seller's cooperation will include (i) reasonable access during normal business hours to Seller's employees and representatives designated by Seller who were responsible for preparing or maintaining the revenue and expense records and work papers and other supporting documents used in the preparation of such financial statements as may be required by Buyer's Auditor to perform an audit or conduct a review in accordance with generally accepted auditing standards or to otherwise verify such financial statements; and (ii) delivery of one or more customary representation letters from Seller to Buyer's Auditor that are reasonably requested by Buyer to allow such auditors to complete an audit (or review of any financial statements), and to allow Buyer's Auditor to issue an opinion with respect to its audit or review.  Buyer will pay or, if paid, reimburse Seller, within ten (10) Business Days after demand therefor, for any reasonable out-of-pocket and overhead costs incurred by Seller in complying with the provisions of this Section 8.1(h).

(i)Suspense Accounts.  Prior to Closing, Seller shall prepare a schedule setting forth the following information:  (i) all proceeds of production attributable to the Assets held by Seller in suspense, (ii) the reason such proceeds are being held in suspense, and (iii) if known, the name or names of the persons claiming such proceeds.  To the extent Buyer receives a reduction in the Purchase Price pursuant to this Agreement for such suspense funds, Buyer agrees to indemnify Seller against any claim relating to the failure to pay such fund after Closing. 

8.2Covenants and Agreements of Buyer.  Buyer covenants and agrees with Seller as follows:

(a)Status.  Buyer shall use reasonable efforts to assure that as of the Closing Date it will not be under any material legal or contractual restriction that would prohibit or delay the timely consummation of the 

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Transaction.

(b)Confidentiality.  Upon Closing, the Confidentiality Agreement dated November 17, 2011, between Seller and Buyer shall terminate.  All information obtained from Seller in connection with the Transaction whether before or after the execution of this Agreement (“Information”) is deemed by the Parties to be confidential and proprietary to Seller.  Buyer shall take reasonable steps to ensure that Buyer's employees, consultants and agents comply with the provisions of this Section 8.2(b).  Until completion of the Closing, except as required by law, Buyer and its officers, agents and representatives will hold in strict confidence the terms of this Agreement and all Information, subject to such exceptions as are contained in the Confidentiality Agreement.  Upon Closing, any obligation of confidentiality under this Section 8.2(b) shall terminate.

(c)Governmental Bonds.  Buyer acknowledges that none of the bonds, letters of credit and guarantees, if any, posted by Seller or its affiliates with Governmental Entities and relating to the Assets are transferable to Buyer.  At or prior to Closing upon reasonable written request from Seller, Buyer shall deliver to Seller evidence of the posting of bonds or other security with all applicable Governmental Entities meeting the requirements of such Governmental Entities to own the Assets.

(d)Successor Operator.  Seller is designated as operator of certain Assets pursuant to joint operating agreements with third parties and at Closing will tender operation of such Assets to Buyer.  Buyer acknowledges that such third parties may not agree to allow Buyer to succeed Seller as operator under such joint operating agreements or may otherwise exercise other rights they may have that would preclude Buyer from succeeding Seller as operator.  Buyer specifically acknowledges and agrees that Seller has made no representation or guarantee that Buyer will succeed Seller as operator under any joint operating agreement; provided that Seller shall use commercially reasonably efforts, if requested by Buyer, to support Buyer's succession of Seller as operator as to any of the Assets currently operated by Seller, subject to the provisions of any applicable joint operating agreement.

8.3Covenants and Agreements of the Parties.  

(a)Communication Between the Parties Regarding Breach.  If Buyer develops information during its Due Diligence Review that leads Buyer to believe that Seller has materially breached a representation or warranty under this Agreement, Buyer shall use reasonable efforts to inform Seller in writing of such material breach as soon as reasonably practicable, but in any event, at or prior to Closing.  If any Party believes the other Party has materially breached any term of this Agreement, the Party who believes the breach has occurred shall promptly give written notice to the breaching Party of the nature of the breach.

(b)Announcements.  For a period of three (3) months following the date of this Agreement, Seller and Buyer shall consult with each other with regard to all press releases and other announcements concerning this Agreement or the Transaction, allowing a reasonable period of time for comment by the other Party; provided, however, that the foregoing shall not prevent either Party from timely complying with any applicable securities laws or stock exchange rules.  Neither Party shall be named in any press release or announcement of the other Party without such Party's prior written consent, which shall not be unreasonably withheld or delayed. 

(c)Casualty Loss.  Prior to Closing, if a portion of the Assets is destroyed by fire or other casualty or if a portion of the Assets is taken or threatened to be taken in condemnation or under the right of eminent domain (“Casualty Loss”), and the resulting loss from such Casualty Loss exceeds two hundred thousand dollars ($200,000) based on the Allocated Value of the affected Assets, Buyer shall not be obligated to purchase such Asset.  If Buyer declines to purchase such Asset, the Purchase Price shall be reduced by the Allocated Value of such Asset.  If Buyer elects to purchase such Asset, the Purchase Price shall be reduced by the estimated cost to repair such Asset (with equipment of similar utility), less all insurance proceeds which shall be payable to Buyer, up to the Allocated Value thereof (the reduction being the “Net Casualty Loss”).  Seller, at its sole option, may elect to cure such Casualty Loss and, in such event, Seller shall be entitled to all insurance proceeds.  If Seller elects to cure such Casualty Loss, Seller may replace any personal property that is the subject of a Casualty Loss with equipment of similar grade and utility, or replace any real property with real property of similar nature and kind if such property is reasonably acceptable to 

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Buyer.  If Seller elects to cure the Casualty Loss, and the Casualty Loss is cured to Buyer's reasonable satisfaction, Buyer shall purchase the affected Asset at Closing for the Allocated Value thereof.

(d)Written Instructions.  Seller and Buyer covenant and agree that when a Party becomes entitled to any distribution from the Escrow Account, the Parties shall within five (5) Business Days execute and deliver to the Escrow Agent joint written instructions setting forth the amounts to be paid to such Party, if any, from the Escrow Account in accordance with this Agreement.  In the event the Parties do not submit joint written instructions when required by the terms of this Section 8.3(d), the Parties shall submit to binding arbitration, as provided in this Agreement upon the request of either Party to settle any dispute or unresolved issue.

ARTICLE 9
TAX MATTERS

9.1Definitions.  For the purposes of this Agreement: 

(a)“Income Taxes” means all Taxes based upon, measured by, or calculated with respect to (i) gross or net income or gross or net receipts or profits (including, but not limited to, Texas franchise Tax and any capital gains, alternative minimum Taxes, net worth and any Taxes on items of Tax preference, but not including sales, use, goods and services, real or personal property transfer or other similar Taxes), (ii) multiple bases (including, but not limited to, corporate franchise, doing business or occupation Taxes) if one or more of the bases upon which such Tax may be based upon, measured by, or calculated with respect to, is described in clause (i) above, or (iii) withholding Taxes measured with reference to or as a substitute for any Tax described in clauses (i) or (ii) above, and (iv) and any penalties, additions to Tax, and interest levied or assessed with respect to a Tax described in (i), (ii), or (iii) above;

(b)“Production Taxes” shall mean all Severance Taxes and Property Taxes;

(c)“Property Taxes” shall mean all ad valorem, real property, personal property, and all other Taxes and similar obligations, and any penalties, additions to Tax, and interest levied or assessed thereon, assessed against the Assets or based upon or measured by the ownership of the Assets, but not including Income Taxes, Severance Taxes and Transfer Taxes;

(d)“Severance Taxes” shall mean all extraction, production, excise, net proceeds, severance, windfall profit and all other Taxes and similar obligations, and any penalties, additions to Tax, and interest levied or assessed thereon, with respect to the Assets that are based upon or measured by the production of Hydrocarbons or the receipt of proceeds therefrom, but not including Property Taxes, Income Taxes, and Transfer Taxes;

(e)“Straddle Period” means any taxable period including, but not ending on, the date of the Effective Time;

(f)“Taxes” means (a) any taxes and assessments imposed by any Governmental Entity, including net income, gross income, profits, gross receipts, net receipts, capital gains, net worth, doing business, license, stamp, occupation, premium, alternative or add-on minimum, ad valorem, real property, personal property, transfer, real property transfer, value added, sales, use, environmental (including taxes under Code Section 59A), customs, duties, capital stock, stock, stamp, document, filing, recording, registration, authorization, franchise, excise, withholding, social security (or similar), fuel, excess profits, windfall profit, severance, extraction, production, net proceeds, estimated or other tax, including any interest, penalty or addition thereto, whether disputed or not, and any expenses incurred in connection with the determination, settlement or litigation of the Tax liability, (b) any obligations under any agreements or arrangements with respect to Taxes described in clause (a) above, and (c) any liability in respect of Taxes described in clauses (a) and (b) above payable by reason of assumption, transferee liability, operation of Law, Treasury Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision under Law) or otherwise; and

(g)“Transfer Taxes” means any sales, use, excise, stock, stamp, document, filing, recording, 

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registration, authorization and similar Taxes, fees and charges, and any penalties, additions to Tax, and interest levied or assessed thereon, but not including Production Taxes or Income Taxes. 

9.2Apportionment of Property Taxes.  Property Taxes shall be prorated as of the Effective Time based on the number of days in the tax period before and after the Effective Time, and liability therefor allocated to Seller for pre-Effective Time Property Taxes and to Buyer for post-Effective Time Property Taxes, without duplicating any adjustment to the Purchase Price required by Section 2.3.  For the purpose of calculating the Final Purchase Price under Section 13.1(a), Property Taxes shall be based on actual Property Taxes assessed for the year 2011.  After Closing, Buyer shall timely file or cause to be filed all required reports and returns for, related to, or incident to the Property Taxes, and shall timely pay or cause to be paid to the taxing authorities all Property Taxes for the Property Tax period during which the Closing Date occurs.  Any penalties, additions to Tax, or interest levied or assessed with respect to any failure of Buyer to comply with the previous sentence shall be allocated to, and shall be payable by, Buyer.

9.3Apportionment of Severance Taxes.  Severance Taxes shall be deemed attributable to the period during which the production of the Hydrocarbons with respect to such Severance Taxes occurred, and liability therefor shall be allocated to Seller for pre-Effective Time Severance Taxes and to Buyer for post-Effective Time Severance Taxes, without duplicating any adjustment to the Purchase Price required by Section 2.3.  For the purpose of calculating the Final Purchase Price under Section 13.1(a), Severance Taxes determined with respect to 2011 production shall be estimated based on current State of Texas Production Tax rates.  After Closing, Buyer shall timely file or cause to be filed all required reports and returns for, related to, or incident to Severance Taxes for any Straddle Period that are due after the Closing Date and shall timely pay or cause to be paid to the taxing authorities all Severance Taxes for all taxable periods including the Closing Date.  Any penalties, additions to Tax, or interest levied or assessed with respect to any failure of Buyer to comply with the previous sentence shall be allocated to, and shall be payable by, Buyer.

9.4Transfer Taxes.  Notwithstanding anything to the contrary herein, the Purchase Price excludes, and Buyer shall be liable for, any Transfer Taxes required to be paid in connection with the sale of the Assets pursuant to this Agreement.  Seller shall timely file or cause to be filed all required reports and returns for, related to, or incident to such Transfer Taxes and shall timely collect, remit and pay or cause to be paid to the taxing authorities all Transfer Taxes.  Any penalties, additions to Tax, or interest levied or assessed with respect to any failure of Seller to comply with the previous sentence shall be allocated to, and shall be payable by, Seller.

9.5Section 1031 Exchange.  If either Party hereto elects (the “Electing Party”) to accomplish the Transaction in a manner that will comply, either in whole or in part, with the requirements of a like-kind exchange pursuant to Section 1031 of the Code (a “Like-Kind Exchange”), the Electing Party shall so notify the other Party hereto in writing, and such other Party hereto (the “Cooperating Party”) agrees to cooperate, as set forth below, with the Electing Party in complying with the requirements under Section 1031 of the Code to effect a Like-Kind Exchange.  In the event of such an election, the Electing Party agrees to indemnify, defend and hold the Cooperating Party harmless from and against any and all claims, demands, causes of action, liabilities, costs and expenses, including reasonable attorneys' fees and costs of litigation, that the Cooperating Party may suffer or incur by reason of such cooperation or Like-Kind Exchange.  Buyer and Seller expressly reserve the right to assign their rights, but not their obligations, hereunder to a Qualified Intermediary as provided in IRC Reg. 1.1031(k)-1(g)(4) or an Exchange Accommodation Titleholder as provided in Rev. Proc. 2000-37, 2000-2 C.B. 308 on or before the Closing Date.  The Cooperating Party agrees to cooperate, but at no cost, expense or risk to the Cooperating Party, and take any actions reasonably requested by the Electing Party, to cause the Transaction, in whole or in part, to be consummated as and to qualify as a Like-Kind Exchange, including, but not limited to, (a) permitting this Agreement to be assigned to a Qualified Intermediary or Exchange Accommodation Titleholder and (b) conveying the Assets to, or at the direction of, the Qualified Intermediary or Exchange Accommodation Titleholder.  In no event, however, shall any Like-Kind Exchange extend, delay or otherwise adversely affect the Closing Date and in no event shall the Cooperating Party be required to take title to any other property in connection with such Like-Kind Exchange.

9.6Post-Closing Tax Matters.  

(a)The Parties shall estimate all Taxes (excluding Seller's Income Taxes) attributable to the 

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ownership or operation of the Assets to the extent they relate to the period on and after the Effective Time and through the Closing Date and all Transfer Taxes and, to the extent applicable, incorporate such estimates into the Preliminary Settlement Statement.  Any Production Taxes allocable under Sections 9.2 and 9.3 to periods after the Effective Time and paid by Seller on or prior to the Closing Date shall be for the account of Seller.  The actual amounts (to the extent applicable and to the extent the actual amounts differ from the estimates included in the Preliminary Settlement Statement and are known at the time of the Final Settlement Statement) shall be accounted for in the Final Settlement Statement.  If the actual amounts are not known at the time of the Final Settlement Statement, the amounts shall be re-estimated based on the best information available at the time of the Final Settlement Statement.  When the actual amounts are known, Buyer or Seller shall make such payments to the other (if any) as are necessary to effect the allocation of Taxes described in this Section 9.6.

(b)After the Closing Date, each of Buyer and Seller shall:

(1)reasonably assist the other in preparing any Tax returns with respect to any Tax incurred or imposed, or required to be filed, in connection with the Transaction, and in qualifying for any exemption or reduction in Tax that may be available; 

(2)reasonably cooperate in preparing for any audits or examinations by, or disputes with, taxing authorities regarding any Tax incurred or imposed in connection with the Transaction; 

(3)make available to the other, and to any taxing authority as reasonably requested, any information, records, and documents relating to a Tax incurred or imposed in connection with the Transactions; provided however, no Party shall be required to provide to the other Party any information, records or documents subject to attorney-client privilege or any information, records or documents related to Income Taxes; and

(4)provide timely notice to the other in writing of any pending or threatened Tax audit, examination, or assessment that could reasonably be expected to affect the other's Tax liability under applicable law or this Agreement, and to promptly furnish the other with copies of all correspondence with respect to any such Tax audit, examination, or assessment.

9.7No Account to be Given to Income Taxes.  Anything in this Agreement to the contrary notwithstanding, no account shall be given to any Party's Income Taxes for purposes of making any adjustment to the Purchase Price pursuant to this Agreement. 

ARTICLE 10
CONDITIONS PRECEDENT TO CLOSING

10.1Seller's Conditions.  The obligations of Seller at the Closing are subject, at the option of Seller, to the satisfaction or waiver at or prior to the Closing of the following conditions precedent:

(a)All representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects (provided, however, that any such representation or warranty of the Buyer that is qualified by a materiality standard shall not be further qualified by materiality for purposes of this Section 10.1(a) at and as of the Closing Date in accordance with their terms as if such representations and warranties were remade at and as of the Closing Date (except to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct as of the specified date); and Buyer shall have performed and satisfied all covenants and agreements required by this Agreement to be performed and satisfied by Buyer at or prior to the Closing in all material respects and Buyer shall deliver a certificate to Seller confirming the foregoing; and

(b)No order has been entered by any Governmental Entity having jurisdiction over the Parties or the subject matter of this Agreement that restrains or prohibits the purchase and sale contemplated by this Agreement and that remains in effect at Closing.

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10.2Buyer's Conditions.  The obligations of Buyer at the Closing are subject, at the option of Buyer, to the satisfaction or waiver at or prior to the Closing of the following conditions precedent:

(a)All representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects (provided, however, that any such representation or warranty of the Seller that is qualified by a materiality standard shall not be further qualified by materiality for purposes of this Section 10.2(a) at and as of the Closing Date in accordance with their terms as if such representations were remade at and as of the Closing Date (except to the extent such representations and warranties are made as of a specified date, in which case such representations and warranties shall be true and correct as of the specified date); and Seller shall have performed and satisfied all covenants and agreements required by this Agreement to be performed and satisfied by Seller or Seller at or prior to the Closing in all material respects and Seller shall deliver a certificate to Buyer confirming the foregoing; and
(b)No order has been entered by any Governmental Entity having jurisdiction over the Parties or the subject matter of this Agreement that restrains or prohibits the purchase and sale contemplated by this Agreement and that remains in effect at the time of Closing.

ARTICLE 11
RIGHT OF TERMINATION

11.1Termination. This Agreement may be terminated in accordance with the following provisions:

(a)by mutual consent of Seller and Buyer;

(b)by Seller, if Seller's conditions set forth in Section 10.1(a) are not satisfied or are not capable of satisfaction at such time through no fault of Seller, or are not waived by Seller, as of the Closing Date;

(c)by Buyer, if Buyer's conditions set forth in Section 10.2(a) are not satisfied or are not capable of satisfaction at such time through no fault of Buyer, or are not waived by Buyer, as of the Closing Date;

(d)by Seller, if, through no fault of Seller, the Closing does not occur on or before March 31, 2012;

(e)by Buyer, if, through no fault of Buyer, the Closing does not occur on or before March 31, 2012; or

(f)by Buyer or Seller, in the event that the aggregate reduction to the Purchase Price due to Title Defects, Environmental Defects, Net Casualty Losses, failures by Seller to obtain consents to assignment of any of the Assets where the party having the right to consent has affirmatively denied the request to consent to the assignment, failures by Seller to obtain any Material Consents, and any preferential rights exercised with respect to the Assets exceeds twenty percent (20%) of the Initial Purchase Price;

provided, however, that neither Party shall have the right to terminate this Agreement pursuant to clause (b), (c), (d) or (e) above if such Party is at such time in material breach of any provision of this Agreement.
If Buyer or Seller terminates this Agreement pursuant to this Section 11.1 and asserts that a breach of this Agreement has occurred, the notice of termination shall include a statement describing the nature of the alleged breach together with supporting documentation.
11.2Remedies and Liabilities Upon Termination.
  
(a)Buyer's Default.  If Buyer wrongfully fails to tender performance at Closing or otherwise materially breaches this Agreement prior to Closing and all of the conditions to Closing under Section 10.2(a) have been satisfied or waived, Seller shall be entitled to terminate this Agreement pursuant to Section 11.1(b) and retain the 

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Deposit and any interest accrued thereon as its sole and exclusive remedy for Buyer's breach of this Agreement and as full and final settlement of all liabilities associated with Buyer's breach of this Agreement or obligation to purchase the Assets.  Buyer and Seller acknowledge and agree that (i) Seller's actual damages upon such a termination would be difficult to ascertain with any certainty, (ii) that the Deposit and any interest accrued thereon is a reasonable estimate of such actual damages, and (iii) such liquidated damages do not constitute a penalty.  Buyer's failure to close shall not be considered wrongful if (1) Buyer's conditions under Section 10.2(a) are not satisfied through no fault of Buyer and are not waived, or (2) Buyer has the right to terminate or has terminated this Agreement as of right under Section 11.1.  

(b)Seller's Default.  If Seller wrongfully fails to tender performance at Closing or otherwise materially breaches this Agreement prior to Closing and all of the conditions to Closing under Section 10.1(a) have been satisfied or waived, then Buyer shall have the option, in its sole discretion, (i) to consummate the Transaction through the enforcement of specific performance, or (ii) to terminate this Agreement and have the Deposit and all accrued interest thereon returned to Buyer as Buyer's sole remedy.  The only circumstances by which Seller may make a claim for retention of the Deposit are set forth in Section 11.2(a) above and Buyer shall be entitled to receive the Deposit (and all earned interest, if any, thereon) immediately after the determination that the Closing will not occur for any other reason.  Seller's failure to close shall not be considered wrongful if (i) Seller's conditions under Section 10.1(a) are not satisfied through no fault of Seller and are not waived; or (ii) Seller has terminated this Agreement as of right under Section 11.1.

ARTICLE 12
CLOSING

12.1Date of Closing.  The “Closing” of the Transaction shall be held on February 29, 2012, or such other date as the Parties may agree (the “Closing Date”).  Subject to the rights of the Parties under Section 11.1, if Closing does not occur on February 29, 2012, the Parties shall make a good faith effort to determine a mutually acceptable alternative Closing Date.

12.2Place of Closing.  The Closing shall be held at the offices of Seller at 9:00 a.m. or at such other time and place as Buyer and Seller may agree in writing.

12.3Closing Obligations.  At Closing, the following events shall occur, each being a condition precedent to the others and each being deemed to have occurred simultaneously with the others:

(a)Seller and Buyer shall execute, acknowledge and deliver to Buyer (i) an Assignment, Bill of Sale and Conveyance of the Assets effective as of the Effective Time substantially in the form of Exhibit D with a special warranty of title by, through and under Seller but not otherwise and with no warranties, express or implied, as to the personal property, fixtures or condition of  the Assets which are conveyed “as is, where is”; and (ii) such other assignments, bills of sale, or deeds necessary to transfer the Assets to Buyer including without limitation federal and state forms of assignment;

(b)Seller and Buyer shall deliver the certificates required in Sections 10.2(a) and 10.1(a), respectively.

(c)Seller and Buyer shall execute the Preliminary Settlement Statement agreed to in accordance with Section 2.3;

(d)Buyer shall cause the Closing Amount to be paid by wire transfer of immediately available funds to the account(s) designated by Seller in writing and, if required by any provision of this Agreement, to the Escrow Account;

(e)Seller shall execute, acknowledge and deliver transfer orders or letters in lieu thereof, in form and substance reasonably satisfactory to Buyer, notifying all purchasers of production of the change in ownership of 

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the Assets and directing all purchasers of production to make payment to Buyer of proceeds attributable to production from the Assets;

(f)Seller shall execute and deliver to Buyer all required change of operator forms and notices;

(g)Seller shall execute and deliver to Buyer a certificate of non-foreign status in the form of Exhibit F and a Request for Taxpayer Identification and Certificate on Form W-9 certifying Seller's federal employer identification number;

(h)Seller shall deliver, or cause to be delivered, recordable forms of releases, in form and substance reasonably satisfactory to Buyer, for any pledge, mortgage, financing statement, fixture filing or security agreement filed in connection with Seller's senior credit facility or otherwise and affecting the Assets;

(i)Seller shall deliver possession of the Assets to Buyer; and

(j)Seller and Buyer shall take such other actions and deliver such other documents as are contemplated by this Agreement.

12.4Non-Foreign Status.  If on or prior to the Closing Date, Seller provides Buyer with the certificate of non-foreign status described in Section 12.3(g) and Buyer is otherwise permitted to rely on such certificate under Treasury Regulations § 1.1445-2, Buyer shall not withhold any amount under Section 1445 of the Code.

ARTICLE 13
POST-CLOSING OBLIGATIONS

13.1Post-Closing Adjustments.  

(a)Final Settlement Statements.  As soon as practicable after the Closing, but in no event later than one hundred twenty (120) days after Closing, Seller, with the assistance of Buyer's staff and with access to such records as necessary, will cause to be prepared and delivered to Buyer, in accordance with customary industry accounting practices, the final settlement statement (the “Final Settlement Statement”) setting forth each adjustment to the Purchase Price in final form in accordance with Section 2.3 and showing the calculation of such adjustments and the resulting final purchase price (the “Final Purchase Price”).  Seller shall provide Buyer with such data and information as Buyer may reasonably request supporting the amounts reflected on the Final Settlement Statement.  As soon as practicable after receipt of the Final Settlement Statement but in no event later than on or before thirty (30) days after receipt of such statement, Buyer shall deliver to Seller a written report containing any changes that Buyer proposes to make to the Final Settlement Statement.  Buyer's failure to deliver to Seller a written report detailing proposed changes to the Final Settlement Statement by that date shall be deemed an acceptance by Buyer of the Final Settlement Statement as submitted by Seller.  The Parties shall agree with respect to the changes proposed by Buyer, if any, no later than thirty (30) days after receipt of Buyer's proposed changes to the Final Settlement Statement.  The date upon which such agreement is reached or upon which the Final Purchase Price is established shall be herein called the “Final Settlement Date.”  If the Final Purchase Price is more than the Closing Amount, Buyer shall pay to Seller the amount of such difference by wire transfer in immediately available funds no later than five (5) days after the Final Settlement Date.  If the Final Purchase Price is less than the Closing Amount, Seller shall pay the amount of such difference to Buyer by wire transfer in immediately available funds no later than five (5) days after the Final Settlement Date.

(b)Dispute Resolution.  If the Parties are unable to resolve a dispute as to the Final Purchase Price within sixty (60) days after Buyer's receipt of Seller's proposed Final Settlement Statement, the Parties shall submit the dispute to binding arbitration to be conducted in accordance with the provisions of Section 15.17.

13.2Records.  Seller shall make the Records available at Seller's office for pick-up by Buyer at Closing to the extent possible, but in any event within five (5) days after Closing.  Seller may retain copies of the Records and Seller shall have the right to review and copy the Records during standard business hours upon reasonable notice for 

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so long as Buyer retains the Records.  Buyer agrees that the Records will be maintained in compliance with all applicable laws governing document retention.

13.3Further Assurances.  From time to time after Closing, Seller and Buyer shall each execute, acknowledge and deliver to the other such further instruments and take such other action as may be reasonably requested in order to accomplish more effectively the purposes of the Transaction, including assurances that Seller and Buyer are financially capable of performing any indemnification required hereunder.

ARTICLE 14
ASSUMPTION AND RETENTION OF OBLIGATIONS AND INDEMNIFICATION; DISCLAIMERS

14.1Buyer's Assumption of Liabilities and Obligations.  Upon Closing, Buyer shall assume and pay, perform, fulfill and discharge all claims, costs, expenses, liabilities and obligations (“Obligations”), relating to the (a) ownership and operation of the Assets after the Effective Time including the owning, developing, exploring, operating or maintaining the Assets or the producing, transporting and marketing of Hydrocarbons from the Assets including, without limitation, the payment of Property Expenses; (b) the obligation to plug and abandon all Wells located on the Lands and reclaim all well sites located on the Lands; (c) the Buyer's Environmental Liabilities; and (d) all Obligations (other than plugging and abandonment obligations and Buyer's Environmental Liabilities) accruing or relating to the ownership or operation of the Assets before the Effective Time for which claims have not been asserted pursuant to Section 14.3 before the date that is twelve (12) months following the Closing Date (collectively, the “Assumed Liabilities”); provided, however, Buyer does not assume any Obligations of Seller attributable to the Assets to the extent that such Obligations are:

(a)attributable to or arise out of the ownership, use or operation of the Excluded Assets;

(b)attributable to any Obligation of Seller or any of its affiliates attributable to any Income Tax measured by or imposed on the net income of Seller or any of its affiliates that was or is attributable to Seller's or any of its affiliates' ownership of an interest in or the operation of the Assets; or

(c)attributable to matters for which Seller indemnifies Buyer pursuant to Section 14.2(a).

14.2Indemnification.  “Losses” shall mean any actual losses, costs, expenses (including court costs, reasonable fees and expenses of attorneys, technical experts and expert witnesses and the cost of investigation), liabilities, damages, demands, suits, claims, and sanctions of every kind and character (including civil fines) arising from, related to or reasonably incident to matters indemnified against.

After the Closing, Buyer and Seller shall indemnify each other as follows:
(a)Seller's Indemnification of Buyer.  Seller assumes all risk, liability, obligation and Losses in connection with, and shall defend, indemnify, and save and hold harmless Buyer, its affiliates, and its and their respective owners, members, managers, partners, officers, directors, employees, representatives and agents (“Buyer Indemnitees”), from and against all Losses which arise directly or indirectly from or in connection with (i) all Obligations relating to the ownership or operation of the Assets prior to the Effective Time, other than the Buyer's Environmental Liabilities, for which claims have been asserted pursuant to Section 14.3 before the date that is twelve (12) months following the Closing Date, (ii) any act or omission by Seller involving or relating to the Excluded Assets, (iii) any breach by Seller of any of Seller's representations or warranties contained in this Agreement subject to the respective Survival Period set forth in Section 15.15, or (iv) any breach by Seller of its covenants and agreements contained in this Agreement, in each case, excluding any Buyer Indemnitee's gross negligence or willful misconduct.

(b)Buyer's Indemnification of Seller.  Buyer assumes all risk, liability, obligation and Losses in connection with, and shall defend, indemnify, and save and hold harmless Seller, its officers, directors, employees and agents (“Seller Indemnitees”), from and against all Losses which arise directly or indirectly from 

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or in connection with (i) the Assumed Liabilities, (ii)  any breach by Buyer of any of Buyer's representations or warranties contained in Article 7 that survive Closing for the respective Survival Period set forth in Section 15.15, or (iii) any breach by Buyer of its covenants and agreements contained in this Agreement, in each case, excluding any Seller Indemnitee's gross negligence or willful misconduct.

(c)Limitations on Seller's Indemnity.  Notwithstanding anything to the contrary set forth herein, Seller shall have no liability for indemnification hereunder in connection with the breach of any representation, warranty or covenant contained herein or for any Losses arising in connection with or with respect to the Transaction until (i) the individual amount of any Loss exceeds fifty thousand dollars ($50,000) and (ii) the total of all Losses with respect to such matters exceeds a threshold of three and one half percent (3.5%) of the Initial Purchase Price.  Seller shall not have any liability for indemnification with respect to Losses suffered by the Buyer in excess of thirty percent (30%) of the Initial Purchase Price.  From and after the Closing, indemnification under this Section 14.2 shall be the sole and exclusive remedy available to any Party hereto against any other Party hereto for any claims arising out of or based upon the matters set forth in this Agreement and the Transaction, and no Party shall seek relief against any other Party to this Agreement other than through indemnification provided in this Section 14.2, subject to the limitations provided for in this Section 14.2(c). 

14.3Procedure.  The indemnifications contained in Section 14.2 shall be implemented as follows:

(a)Claim Notice.  The Party seeking indemnification under the terms of this Agreement (“Indemnified Party”) shall submit a written “Claim Notice” to the other Party (“Indemnifying Party”) which, to be effective, must be delivered prior to the end of the Survival Period and must state:  (i) to the extent reasonably possible the amount of each payment claimed by an Indemnified Party to be owing, (ii) to the extent reasonably possible the basis for such claim, with supporting documentation, and (iii) a list identifying to the extent reasonably possible each separate item of Loss for which payment is so claimed.  The amount claimed shall be paid by the Indemnifying Party to the extent required herein within thirty (30) days after receipt of the Claim Notice, or after the amount of such payment has been finally established, whichever last occurs.

(b)Information.  Within thirty (30) days after the Indemnified Party receives notice of a claim or legal action by a third party that may result in a Loss for which indemnification may be sought under this Article 14 (a “Claim”), the Indemnified Party shall give written notice of such Claim to the Indemnifying Party; provided that the failure of the Indemnified Party to give written notice of a Claim as provided in this Section 14.3 shall not relieve the Indemnifying Party from its obligations under this Agreement except to the extent such failure results in insufficient time being available to permit the Indemnifying Party to effectively defend the Claim or otherwise materially prejudices the Indemnifying Party's ability to defend against the Claim.  If the Indemnifying Party or its counsel so requests, the Indemnified Party shall furnish the Indemnifying Party with copies of all pleadings and other information with respect to such Claim.  At the election of the Indemnifying Party, which must be made within sixty (60) days after receipt of such notice and not thereafter, the Indemnified Party shall permit the Indemnifying Party to assume control of such Claim (to the extent only that such Claim, legal action or other matter relates to a Loss for which the Indemnifying Party is liable), including the determination of all appropriate actions, the negotiation of settlements on behalf of the Indemnified Party, and the conduct of litigation through attorneys of the Indemnifying Party's choice; provided, however, that no such settlement can result in any liability or cost to the Indemnified Party for which it is entitled to be indemnified hereunder without its prior written consent.  If the Indemnifying Party elects to assume control, (i) all reasonable expenses incurred by the Indemnified Party in connection with the investigation or defense of the Claim, legal action or other matter prior to the time the Indemnifying Party assumes control shall be reimbursed and paid by the Indemnifying Party, (ii) any expenses incurred by the Indemnified Party thereafter for investigation or defense of the matter shall be borne by the Indemnified Party except for reasonable expenses incurred in connection with providing information or assistance to the Indemnifying Party as required by subsection (iii), and (iii) the Indemnified Party shall give all reasonable information and assistance, other than pecuniary, that the Indemnifying Party shall deem necessary to the proper defense of such Claim, legal action, or other matter but shall be reimbursed and paid for such expenses as provided for in subsection (ii).  Before such election is made or in the absence of such an election, the Indemnified Party shall use its reasonable best efforts to defend any Claim, legal action or other matter and shall be reimbursed and paid by the Indemnifying Party for all reasonable expenses incurred in such defense.  Before such election is made 

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or in the absence of such election, the Indemnified Party may settle any Claim, legal action or other matter for which notice has been provided as required by Section 14.3(a), but only with the consent of the Indemnifying Party, which consent may not be unreasonably withheld. If such a Claim requires immediate action, both the Indemnified Party and the Indemnifying Party will cooperate in good faith to take appropriate action so as not to jeopardize defense of such Claim or either Party's position with respect to such Claim.

14.4No Insurance; Subrogation.  The indemnifications provided in this Article 14 shall not be construed as a form of insurance.  Buyer and Seller hereby waive for themselves, their successors or assigns, including, without limitation, any insurers, any rights to subrogation for Losses for which each of them is respectively liable or against which each respectively indemnifies the other, and, if required by applicable policies, Buyer and Seller shall obtain waiver of such subrogation from its respective insurers.

14.5Reductions in Losses.  Each Indemnified Party shall use commercially reasonable efforts to mitigate any Losses, including by maintaining insurance coverage with respect to the Assets and making claims relating to the Assets thereunder.  The amount of any Losses for which an Indemnified Person is entitled to indemnity under this Article 14 shall be reduced by the amount of insurance proceeds realized by the Indemnified Person or its affiliates with respect to such Losses.

14.6Reservation as to Non-Parties.  Nothing herein is intended to limit or otherwise waive any recourse Buyer or Seller may have against any non-party for any obligations or liabilities that may be incurred with respect to the Assets.

14.7Disclaimers.
  
(a)EXCEPT FOR SELLER'S EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, AND SELLER'S SPECIAL WARRANTY OF TITLE IN THE ASSIGNMENT EXECUTED AND DELIVERED TO BUYER AT CLOSING, THE ASSETS ARE BEING CONVEYED BY SELLER TO BUYER WITHOUT WARRANTY OF ANY KIND, EXPRESS, IMPLIED, STATUTORY, COMMON LAW OR OTHERWISE, AND THE PARTIES HEREBY EXPRESSLY DISCLAIM, WAIVE AND RELEASE ANY EXPRESS WARRANTY OF MERCHANTABILITY, CONDITION OR SAFETY AND ANY EXPRESSED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE; AND BUYER ACCEPTS THE ASSETS, “AS IS, WHERE IS, WITH ALL FAULTS, WITHOUT RECOURSE.”  AS TO ALL PERSONAL PROPERTY BEING CONVEYED BY SELLER TO BUYER, BUYER EXPRESSLY WAIVES THE WARRANTY OF FITNESS AND THE WARRANTY AGAINST VICES AND DEFECTS, WHETHER APPARENT OR LATENT, IMPOSED BY ANY APPLICABLE STATE OR FEDERAL LAW. THE PARTIES HEREBY ACKNOWLEDGE AND AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW, THE DISCLAIMERS CONTAINED IN THIS AGREEMENT ARE “CONSPICUOUS” FOR THE PURPOSES OF SUCH APPLICABLE LAW.

(b)SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES ANY IMPLIED OR EXPRESS WARRANTY AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO THE ACCURACY OF ANY OF THE INFORMATION FURNISHED WITH RESPECT TO THE EXISTENCE OR EXTENT OF RESERVES OR THE VALUE OF THE ASSETS BASED THEREON OR THE CONDITION OR STATE OF REPAIR OF ANY OF THE ASSETS; THIS DISCLAIMER AND DENIAL OF WARRANTY ALSO EXTENDS TO ANY EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS TO THE PRICES BUYER AND SELLER ARE OR WILL BE ENTITLED TO RECEIVE FROM PRODUCTION OF OIL, GAS OR OTHER SUBSTANCES FROM THE ASSETS, IT BEING ACKNOWLEDGED, AGREED AND EXPRESSLY UNDERSTOOD THAT ALL RESERVE, PRICE AND VALUE ESTIMATES UPON WHICH BUYER HAS RELIED OR IS RELYING HAVE BEEN DERIVED BY THE INDIVIDUAL EVALUATION OF BUYER. BUYER ALSO STIPULATES, ACKNOWLEDGES AND AGREES THAT RESERVE REPORTS ARE ONLY ESTIMATES OF PROJECTED FUTURE OIL AND/OR GAS VOLUMES, FUTURE FINDING COSTS AND FUTURE OIL AND/OR GAS SALES PRICES, ALL OF WHICH FACTORS ARE INHERENTLY IMPOSSIBLE TO PREDICT ACCURATELY EVEN WITH ALL AVAILABLE DATA AND INFORMATION.  

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14.8Tax Treatment of Indemnity Payments.  Unless otherwise required by applicable law, the Parties each agree to treat any indemnity payment made pursuant to this Agreement as an adjustment to the Purchase Price for federal, state, local and foreign Income Tax purposes.

ARTICLE 15
MISCELLANEOUS

15.1Schedules.  The Schedules and Exhibits to in this Agreement are hereby incorporated in this Agreement by reference and constitute a part of this Agreement.

15.2Expenses.  Except as otherwise specifically provided, all fees, costs and expenses incurred by Buyer or Seller in negotiating this Agreement or in consummating the Transaction shall be paid by the Party incurring the same, including, without limitation, engineering, land, title, legal and accounting fees, costs and expenses.

15.3Notices.  All notices and communications required or permitted under this Agreement shall be in writing and addressed as set forth below.  Any communication or delivery hereunder shall be deemed to have been duly made and the receiving Party charged with notice, whether personally delivered, sent by facsimile transmission, mail or overnight courier, when received.  All notices shall be addressed as follows:

If to Seller:
Petroleum Development Corporation
1775 Sherman Street, Suite 3000
Denver, Colorado 80203
Attn:  Jim Schaff, Vice President - Land
Telephone:  (303) 860-5832
Facsimile:  (303) 860-5838
Email:  jschaff@petd.com

If to Buyer:
COG Operating LLC
550 West Texas, Suite 100
Midland, Texas  79701
Attn:  C. William Giraud
Telephone:  (432) 686-3094
Facsimile:  (432) 687-8020
Email:  wgiraud@conchoresources.com

With copy to:
Cotton, Bledsoe, Tighe & Dawson, P.C.
500 W. Illinois, Suite 300
Midland, Texas  79701
Attn:  Bill Howard
Telephone:  (432) 685-8551
Facsimile:   (432) 684-3132
Email:  bhoward@cbtd.com

Any Party may, by written notice so delivered to the other Party, change the address or individual to which delivery shall thereafter be made. 
15.4Amendments.  Except for waivers specifically provided for in this Agreement, this Agreement may not be amended nor any rights hereunder waived except by an instrument in writing signed by the Party to be charged 

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with such amendment or waiver and delivered by such Party to the Party claiming the benefit of such amendment or waiver.
15.5Assignment.  Neither Seller nor Buyer shall assign all or any portion of its respective rights or delegate all or any portion of its respective duties under this Agreement without the written consent of the other Party, which consent shall not be unreasonably withheld.

15.6Headings.  The headings of the Articles and Sections of this Agreement are for guidance and convenience of reference only and shall not limit or otherwise affect any of the terms or provisions of this Agreement.

15.7Counterparts/Electronic and Fax Signatures.  This Agreement may be executed by Buyer and Seller in any number of counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same instrument.  Electronic and fax signatures shall be considered binding.

15.8References.  References made in this Agreement, including use of a pronoun, shall be deemed to include where applicable, masculine, feminine, singular or plural, individuals or entities.  As used in this Agreement, “person” shall mean any natural person, corporation, partnership, trust, limited liability company, court, or Governmental Entity.

15.9Governing Law; Venue; Jury Waiver.  THIS AGREEMENT, THE OTHER DOCUMENTS DELIVERED PURSUANT HERETO AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW, RULE OR PRINCIPLE THAT MIGHT REFER CONSTRUCTION OF THIS AGREEMENT AND SUCH OTHER DOCUMENTS TO THE LAWS OF ANOTHER JURISDICTION.  THE PARTIES HERETO CONSENT TO THE EXERCISE OF JURISDICTION IN PERSONAM BY THE COURTS OF THE STATE OF TEXAS FOR ANY ACTION ARISING OUT OF THIS AGREEMENT OR THE OTHER DOCUMENTS EXECUTED PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT.  ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS AGREEMENT OR THE OTHER DOCUMENTS EXECUTED PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT SHALL BE EXCLUSIVELY LITIGATED IN COURTS HAVING SITES IN THE STATE OF TEXAS.  EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY A JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.  

15.10Waiver of Certain Damages.  NO PARTY SHALL BE LIABLE FOR ANY PUNITIVE, INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, ARISING IN CONNECTION WITH OR WITH RESPECT TO THIS AGREEMENT, PROVIDED, HOWEVER, THAT THIS WAIVER SHALL NOT APPLY TO THE EXTENT SUCH PUNITIVE, INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES ARE AWARDED IN A PROCEEDING BROUGHT OR ASSERTED BY A THIRD PARTY AGAINST AN INDEMNIFIED PARTY.

15.11Entire Agreement.  This Agreement constitutes the entire understanding among the Parties, with respect to the subject matter hereof, superseding all negotiations, prior discussions and prior agreements and understandings relating to such subject matter.  The Parties stipulate and agree that this Agreement shall be deemed and considered for all purposes, as prepared through the joint efforts of the Parties, and shall not be construed against one Party or the other as a result of the preparation, submittal or other event of negotiation, drafting or execution thereof.  

15.12Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transaction is not affected in any adverse manner to either Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the Transaction is fulfilled to the extent 

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possible.

15.13Knowledge.  “Knowledge,” with respect to Seller, means the actual knowledge of Seller's representatives listed on Schedule 15.13 hereto after due inquiry and with respect to Buyer, means the actual knowledge of Buyer's representatives listed on Schedule 15.13 hereto after due inquiry.

15.14Binding Effect.  This Agreement shall be binding upon, and shall inure to the benefit of, the Parties hereto, and their respective successors and assigns.

15.15Survival of Warranties, Representations and Covenants.  The representations and warranties contained in Sections 4.1(a) and 5.3 shall terminate on the Defect Notice Date; the representations and warranties contained in Sections 6.1 through 6.5, and Sections 7.1 through 7.7 shall survive the Closing indefinitely; and the representations and warranties contained in Sections 6.6 through 6.27 shall survive the Closing for the period of twelve (12) months.  Each applicable survival period may be referred to herein as a “Survival Period”.  Except as otherwise provided in this Section 15.15, all representations, covenants, indemnities and agreements contained in the Agreement shall survive the Closing and continue in accordance with their respective terms.

15.16No Third-Party Beneficiaries.  This Agreement is intended only to benefit the Parties hereto and their respective permitted successors and assigns.

15.17Arbitration.  Scope; Appointment of Arbitrator.  Notwithstanding the provisions of this Agreement (including, without limitation, Section 15.9), all disputes between the Parties regarding Title Defects, Title Benefits, Title Defect Amounts, Title Benefit Amounts, Environmental Defects or Environmental Defect Values, or calculations for the Final Settlement Statement or revisions thereto (“Disagreements”) shall be exclusively and finally resolved pursuant to this Section 15.17.  If the Parties are unable to reach resolution as to any such outstanding Disagreement within five (5) days following delivery of a written notice from either Buyer or Seller to the other Party that Buyer or Seller, as applicable, intends to submit such Disagreement to the Arbitrator for resolution pursuant to this Section 15.17, then either Party may, by written notice to the other Party (an “Election Notice”), elect to submit such Disagreement to a single arbitrator (the “Arbitrator”), who shall be selected by mutual agreement of Buyer and Seller within fifteen (15) days after the delivery of such Election Notice in accordance with the following:

(i)    in the case of any Disagreement regarding Title Defects, Title Benefits, Title Defect Amounts or Title Benefit Amounts, the Arbitrator shall be a title attorney with at least twenty (20) years experience in oil and gas titles involving properties in the regional area in which the Assets with respect to which such alleged Title Defects or Title Benefits are located and who is licensed to practice law in the state in which such Assets are located;

(ii)    in the case of any Disagreement regarding Environmental Defects or Environmental Defect Values, the Arbitrator shall be an environmental consultant with at least twenty (20) years experience involving properties in the regional area in which the Assets with respect to which such alleged Environmental Defects are located; 

(iii)    in the case of any Disagreement regarding the calculation of the Final Settlement Statement or revisions thereto, the Arbitrator shall be a senior partner of an independent accounting firm mutually acceptable to Buyer and Seller; and

(iv)    in the case of any Disagreement, the Arbitrator shall not have had a substantial relationship with either Party or any affiliate of either Party during the two (2) years prior to such selection;

provided that, in any case, in the absence of such agreement with respect to the selection of the Arbitrator within fifteen (15) days of the delivery of the Election Notice, the Arbitrator shall be selected as would a single arbitrator in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “AAA Rules”) notwithstanding the selection method and criteria set forth in clauses (i)-(iv) above.
 

34

(b)    Additional Procedures.  All proceedings under this Section 15.17 shall be held in Houston, Texas, and shall be conducted in accordance with the AAA Rules, to the extent such rules do not conflict with the terms of this Section 15.17.  The Arbitrator's final determination shall be made within twenty-one (21) days after submission of the matters in dispute to the Arbitrator, and the Arbitrator shall agree to comply with this schedule before accepting appointment.  In making its determination, the Arbitrator shall be bound by terms of this Agreement, to the extent applicable, and, subject to the foregoing, may consider such other matters as in the opinion of the Arbitrator are necessary to make a proper determination.  The Arbitrator, however, may not determine that a (a) Title Defect Amount is greater than the Title Defect Amount claimed by Buyer in its applicable Notice of Defective Interest or (b) Environmental Defect Value is greater than the Environmental Defect Value claimed by Buyer in its applicable Environmental Defect Notice.  The Arbitrator shall act as an expert for the limited purpose of determining the specific disputed Title Defects, Title Benefits, Title Defect Amounts, Title Benefit Amounts, Environmental Defects or Environmental Defect Values, or calculations for the Final Settlement Statement or revisions thereto submitted by either Party and may not award damages, interest or penalties to either Party with respect to any matter.  Seller and Buyer shall each bear their own legal fees and other costs of presenting its case.  Seller and Buyer shall each bear one-half of the costs and expenses of the Arbitrator.
 
(c)    Waiver.  Notwithstanding anything to the contrary in this Agreement, at any time Buyer may waive any Title Defect, Title Defect Value, Environmental Defect or Environmental Defect Value previously asserted by Buyer.

(d)    Binding Nature.  The decision and award of the Arbitrator with respect to any arbitration under this Section 15.17 shall be binding upon the Parties and final and nonappealable to the maximum extent permitted by law, and judgment thereon may be entered in a court of competent jurisdiction and enforced by either Party as a final judgment of such court.

(e)    Confidentiality.  Except to the extent necessary to enforce a decision and award of the Arbitrator, to enforce other rights of the Parties hereunder, or as required by applicable law or the rules of any stock exchange on which the securities of either Party or any of its affiliates are listed or are in the process of being listed, the Arbitrator and Parties, and their counsel, consultants and other representatives, shall maintain as confidential the fact any proceedings are ongoing, or have been completed, under this Section 15.17, any decision and award of the Arbitrator and all documents prepared and submitted by either Party, or its counsel, consultants and other agents and representatives, in connection with any proceedings under this Section 15.17.

15.18Accounting  During the period from the date of execution of this Agreement until the Closing, Seller will cooperate and assist Buyer in the transition of regulatory production reporting and revenue accounting for the Assets.  In addition, at the request of Buyer, Seller will continue, following the Closing, to provide regulatory production reporting and revenue disbursement accounting services for Buyer as they relate to the Assets and the production months through the month of Closing.  Buyer will promptly reimburse Seller for any out-of-pocket costs incurred by Seller in performing such services.

[Remainder of page intentionally left blank.  Signature page follows.]

35

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

PETROLEUM DEVELOPMENT CORPORATION

By:          
Name:
Title:

BUYER:

COG OPERATING LLC

By:        
Name:
Title:

36

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