Document:

exv10w1

 

Exhibit 10.1

EXECUTIVE SALARY CONTINUATION AGREEMENT

FOR

CHRISTINE M. HERB

This Executive Salary Continuation Agreement (the “Agreement”) is effective as of the
1st day of January, 2008, (“Effective Date”) by and between Columbia River Bank, a state
chartered commercial bank located in The Dalles, Oregon (the “Bank”), and Christine M. Herb (the
“Executive”).

RECITALS

     Whereas, the Executive is an employee of the Bank,

     Whereas, the Executive has contributed substantially to the success of the Bank and its parent
corporation, Columbia Bancorp, and the Bank desires that the Executive continue its employ with the
Bank acknowledging that the Executive’s experience and knowledge of the affairs of the Bank and the
banking industry are extensive and valuable,

     Whereas, the Bank desires to establish and maintain a deferred compensation program consisting
of salary continuation benefits for the Executive, to be paid from the Bank’s general assets,

     Whereas, the Bank acknowledges that this Agreement shall be terminated or amended only by a
written agreement signed by the Bank and the Executive except as specified in Section 6,

     Whereas, the Executive and the Bank wish to specify in writing the terms and conditions upon
which this additional compensatory incentive will be provided to the Executive;

     Now, Therefore, in consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Executive and the
Bank agree as follows:

SECTION 1

DEFINITIONS

     Whenever used in this Agreement, the following words and phrases shall have the meanings
specified:

     “Change of Control” means the acquisition during the Executive’s employment of twenty-five
percent (25%) or more of the voting securities of the Holding Company by any person, or persons
acting as a group within the meaning of Section 13(d) of the Securities Exchange Act of 1934, or to
such acquisition of a percentage between ten percent (10%) and twenty-five percent (25%) if the
Board or the Comptroller of the Currency, the FDIC, or the Federal Reserve Bank have made a
determination that such acquisition constitutes or will constitute control of the Holding Company.
The term “person” refers to an individual, corporation, bank, bank holding company, or other
entity, but excludes any Employee Stock Ownership Plan established for the benefit of employees of
the Holding Company or any of its subsidiaries or other affiliates.

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     “Change of Control Termination” means Termination of Employment prior to Normal Retirement Age
for reasons other than Disability Termination, and within thirty-six (36) months following a Change
of Control.

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

     “Disability” means the Executive: (i) is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less than twelve (12)
months; or (ii) is, by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous period of not less than
twelve (12) months, receiving income replacement benefits for a period of not less than three (3)
months under an accident and health plan covering employees of the Bank. Medical determination of
Disability may be made by either the Social Security Administration or by the provider of an
accident or health plan covering employees of the Bank. Upon the request of the plan
administrator, the Executive must submit proof to the plan administrator of the Social Security
Administration’s or the provider’s determination.

     “Disability Termination” means Termination of Employment prior to Normal Retirement Age as a
result of Disability.

     “Early Retirement” means Termination of Employment prior to Normal Retirement Age for reasons
other than Disability Termination or Change of Control Termination, and on a date on or after
December 23, 2018.

     “Early Termination” means Termination of Employment prior to December 23, 2018 for reasons
other than Disability Termination or Change of Control Termination.

     “Holding Company” shall mean Columbia Bancorp, the parent corporation of the Bank.

     “Normal Retirement Age” means age sixty-two (62).

     “Normal Retirement Date” means the date the Executive attains Normal Retirement Age, or if
later, the date of the Executive’s Termination of Employment.

     “Schedule A” means Schedule A attached to this Agreement that, along with Section 2,
establishes certain benefits payable to the Executive upon Termination of Employment prior to
Normal Retirement Age.

     “Specified Employee” means a specified employee within the meaning of Section 409A of the
Code.

     “Termination of Employment” means the termination of the Executive’s employment with the Bank
for reasons other than death. Whether a Termination of Employment takes place is determined based
on the facts and circumstances surrounding the termination of the Executive’s employment and
whether the Bank and the Executive intended for the Executive to provide significant services for
the Bank following such termination. A change in the Executive’s employment status will not be
considered a Termination of Employment if:

     (a) the Executive continues to provide services as an employee of the Bank at an annual rate
that is twenty percent (20%) or more of the services rendered, on average, during the immediately
preceding three full calendar years of employment (or, if employed less than three years, such
lesser period) and the annual remuneration for such services is twenty percent (20%) or more of the
average annual remuneration earned during the final three full calendar years of employment (or, if
less, such lesser period), or

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     (b) the Executive continues to provide services to the Bank in a capacity other than as an
employee of the Bank at an annual rate that is fifty percent (50%) or more of the services
rendered, on average, during the immediately preceding three full calendar years of employment (or
if employed less than three years, such lesser period) and the annual remuneration for such
services is fifty percent (50%) or more of the average annual remuneration earned during the final
three full calendar years of employment (or if less, such lesser period).

SECTION 2

BENEFITS

     2.1 Normal Retirement Benefit. Upon Termination of Employment on a Normal Retirement Date,
the Bank shall pay to the Executive the benefit described in this Section 2.1 in lieu of any other
benefit under this Agreement.

     (1) Annual Benefit. The initial annual benefit under this Section 2.1 is $35,000.

     (2) Payment of Benefit. The Bank shall pay the Annual Benefit to the Executive in twelve
(12) equal monthly installments commencing with the first of the month following the Executive’s
Normal Retirement Date, and shall continue payments to the Executive for a total period of twenty
(20) years. Commencing on the first anniversary of the first of the month following the Executive’s
Normal Retirement Date, and continuing on each subsequent anniversary, the Bank shall increase the
benefit by three percent (3%) from the previous anniversary date.

     2.2 Early Retirement Benefit. Upon Early Retirement, the Bank shall pay to the Executive the
benefit described in this Section 2.2 in lieu of any other benefit under this Agreement.

     (1) Annual Benefit. The initial annual benefit under this Section 2.2 is the amount shown in
the Early Retirement column of Schedule A for the month and year in which Termination of Employment
occurs.

     (2) Payment of Benefit. The Bank shall pay the Annual Benefit to the Executive in twelve
(12) equal monthly installments commencing with the first of the month following the date the
Executive attains Normal Retirement Age, and shall continue payments to the Executive for a total
period of twenty (20) years. Commencing on the first anniversary of the first of the month
following the date the Executive attains Normal Retirement Age and continuing on each subsequent
anniversary, the Bank shall increase the benefit by three percent (3%) from the previous
anniversary date.

     2.3 Early Termination Benefit. Upon Early Termination, the Bank shall pay to the Executive
the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement.

     (1) Annual Benefit. The annual benefit under this Section 2.3 is the amount shown in the
Early Termination column of Schedule A for the month and year in which Termination of Employment
occurs.

     (2) Payment of Benefit. The Bank shall pay the Annual Benefit to the Executive in twelve
(12) equal monthly installments commencing with the first of the month following the date the
Executive attains Normal Retirement Age, and shall continue payments to the Executive for a total
period of twenty (20) years.

     2.4 Disability Benefit. Upon Disability Termination, the Bank shall pay to the Executive the
benefit described in this Section 2.4 in lieu of any other benefit under this Agreement.

     (1) Annual Benefit. The annual benefit under this Section 2.4 is the amount shown in the
Disability column of Schedule A for the month and year in which Termination of Employment occurs.

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     (2) Payment of Benefit. The Bank shall pay the Annual Benefit to the Executive in twelve
(12) equal monthly installments commencing with the first of the month following Termination of
Employment, and shall continue payments to the Executive for a total period of twenty (20) years.

     2.5 Death Benefit.

     (1) Termination of employment due to death. If the Executive dies while in the active
service of the Bank, the Bank shall pay to the Executive’s beneficiary the benefit described in
this Section 2.5.1. This benefit shall be paid in lieu of any other benefit under this Agreement.

     (a) Annual Benefit. The initial annual benefit under this Section 2.5.1 is the
initial annual Normal Retirement Benefit described in Section 2.1.1.

     (b) Payment of Benefit. The Bank shall pay the Annual Benefit to the Executive’s
beneficiary in twelve (12) equal monthly installments commencing with the first of the
month following the Executive’s death, and shall continue payments to the Executive’s
beneficiary for a total period of twenty (20) years. Commencing on the first anniversary of
the first of the month following the Executive’s death, and continuing on each subsequent
anniversary, the Bank shall increase the benefit by three percent (3%) from the previous
anniversary date.

     (2) Death following Termination of Employment. If the Executive dies after Termination of
Employment, the Bank shall pay the same benefit payments to the Executive’s beneficiary that the
Executive was entitled to receive prior to death except that, if the payments have not yet
commenced, the benefit payments shall commence on the first of the month following the date of the
Executive’s death. This benefit shall be paid in lieu of any other benefit under this Agreement.

     2.6 Change of Control Benefit. Upon a Change of Control Termination, the Bank shall pay to
the Executive the benefit described in this Section 2.6 in lieu of any other benefit under this
Agreement.

     (1) Annual Benefit. The annual benefit under this Section 2.6 is the amount shown in the
Change of Control column of Schedule A for the month and year in which Change of Control occurs.

     (2) Payment of Benefit. The Bank shall pay the Annual Benefit to the Executive in twelve
(12) equal monthly installments commencing with the first of the month following the date the
Executive attains Normal Retirement Age, and shall continue payments to the Executive for a total
period of twenty (20) years.

     (3) Excess Parachute Payment. Notwithstanding any provision of this Section 2.6 to the
contrary, the Bank shall not pay any benefit under this Section 2.6 to the extent the benefit would
create an excise tax under the excess parachute rules of Section 280G of the Code. If the Bank
determines that any scheduled payment of the Change of Control Benefit would result in an excise
tax under the rules of Section 280G of the Code, then such payment shall be reduced only to the
extent necessary to avoid the excise tax.

     2.7 Delayed Payments. Any payment under this Section 2 shall be delayed if required by law,
including without limitation the requirements of Section 409A of the Code and any and all Treasury
regulations and guidance promulgated thereunder, or for reasons of administrative practicability.
Additionally, if upon the Executive’s Termination of Employment the Executive is a Specified
Employee, no benefit shall be paid earlier than the first day of the seventh month following the
month in which Termination of Employment occurs. Any delayed payment shall be accumulated with
interest at the annual rate of eight percent (8%) compounded monthly from the date the payment was
scheduled to be paid to the date actually paid. Delayed payments shall be paid no later than the
first of the month following the date when the payment is both allowed by law and administratively
practicable. The Bank shall not unreasonably delay payments under this Section 2.7 due to
administrative practicability.

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SECTION 3

BENEFICIARIES

     3.1 Beneficiary Designations. The Executive shall designate a beneficiary by filing a
written designation with the Bank. The Executive may revoke or modify the designation at any time
by filing a new designation. However, designations will only be effective if signed by the
Executive and received by the Bank during the Executive’s lifetime. The Executive’s beneficiary
designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or
if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the
Executive dies without a valid beneficiary designation, all payments shall be made to the
Executive’s estate.

     3.2 Facility of Payment. If a benefit is payable to a minor, to a person declared
incompetent, or to a person incapable of handling the disposition of his or her property, the Bank
may pay such benefit to the guardian, legal representative or person having the care or custody of
such minor, incompetent person or incapable person. The Bank may require proof of incompetence,
minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such
distribution shall completely discharge the Bank from all liability with respect to such benefit.

SECTION 4

CERTAIN LIMITATIONS

     4.1 Termination for Cause. Notwithstanding any provision of this Agreement to the contrary,
if Bank terminates the Executive’s employment for “cause,” which herein shall mean (i) Executive’s
gross negligence or willful misconduct as shall constitute, as a matter of law, a breach of the
covenants and obligations of Employee hereunder; (ii) failure or refusal of Executive to comply
with the provisions of the Agreement; (iii) Executive’s conviction by any duly constituted court
with competent jurisdiction of a crime (other than traffic offenses); (iv) Executive’s malfeasance
or incompetence, provided that in applying this criteria Bank shall not be unreasonable or
arbitrary, and provided further that prior to effecting a dismissal under this Section (iv) Bank
shall afford Executive with fair and reasonable warning and with a fair and reasonable opportunity
to cure any defects in Executive’s performance, then the Bank shall not pay any benefit under this
Agreement. The Bank, in its sole discretion and subject to good faith, fair dealing and
reasonableness, shall determine whether the criteria in (i), (ii), (iii), or (iv) have occurred.

     4.2 Suicide or Misstatement. The Bank shall not pay any benefit under this Agreement if the
Executive commits suicide within three years after the date of this Agreement. In addition, the
Bank shall not pay any benefit under this Agreement if the Executive has made any material
misstatement of fact on an employment application or resume provided to the Bank, or on any
application for any benefits or insurance that the Executive completes upon request by the Bank.

SECTION 5

CLAIMS AND REVIEW PROCEDURES

     5.1 Claims Procedure. A Participant or beneficiary (“claimant”) who has not received
benefits under the Plan that he or she believes should be paid shall make a claim for such benefits
as follows:

     (1) Initiation — Written Claim. The claimant initiates a claim by submitting to the Bank a
written claim for the benefits.

     (2) Timing of Bank Response. The Bank shall respond to such claimant within 90 days after
receiving the claim. If the Bank determines that special circumstances require additional time for
processing the claim, the Bank can extend the response period by an additional 90 days by notifying
the claimant in writing, prior to the end of the initial 90-day period, that an additional period
is required. The notice of
extension must set forth the special circumstances and the date by which the Bank expects to
render its decision.

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     (3) Notice of Decision. If the Bank denies part or all of the claim, the Bank shall notify
the claimant in writing of such denial. The Bank shall write the notification in a manner
calculated to be understood by the claimant. The notification shall set forth: (i) the specific
reasons for the denial; (ii) a reference to the specific provisions of the Plan on which the denial
is based; (iii) a description of any additional information or material necessary for the claimant
to perfect the claim and an explanation of why it is needed; (iv) an explanation of the Plan’s
review procedures and the time limits applicable to such procedures, and (v) a statement of the
claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit
determination on review.

     5.2 Review Procedure. If the Bank denies part or all of the claim, the claimant shall have
the opportunity for a full and fair review by the Bank of the denial, as follows:

     (1) Initiation — Written Request. To initiate the review, the claimant, within 60 days
after receiving the Bank’s notice of denial, must file with the Bank a written request for, review.

     (2) Additional Submissions — Information Access. The claimant shall then have the
opportunity to submit written comments, documents, records and other information relating to the
claim. The Bank shall also provide the claimant, upon request and free of charge, reasonable access
to, and copies of, all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.

     (3) Considerations on Review. In considering the review, the Bank shall take into account
all materials and information the claimant submits relating to the claim, without regard to whether
such information was submitted or considered in the initial benefit determination.

     (4) Timing of Bank Response. The Bank shall respond in writing to such claimant within 60
days after receiving the request for review. If the Bank determines that special circumstances
require additional time for processing the claim, the Bank can extend the response period by an
additional 60 days by notifying the claimant in writing, prior to the end of the initial 60-day
period, that an additional period is required. The notice of extension must set forth the special
circumstances and the date by which the Bank expects to render its decision.

     (5) Notice of Decision. The Bank shall notify the claimant in writing of its decision on
review. The Bank shall write the notification in a manner calculated to be understood by the
claimant. The notification shall set forth: (i) the specific reasons for the denial; (ii) a
reference to the specific provisions of the Plan on which the denial is based; (iii) a statement
that the claimant is entitled to receive, upon request and free of charge, reasonable access to,
and copies of, all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits, and (iv) a statement of the claimant’s
right to bring a civil action under ERISA Section 502(a).

SECTION 6

AMENDMENTS AND TERMINATION

     6.1 Amendments. This Agreement may be amended only by a written agreement signed by the Bank
and the Executive. However, the Bank may unilaterally amend this Agreement to conform with written
directives to the Bank from banking regulators or to comply with legislative changes or tax law,
including without limitation Section 409A of the Code and any and all Treasury regulations and
guidance promulgated thereunder. If the Bank unilaterally amends this Agreement in order to comply
with the requirements of banking regulators or changes in law, the Bank shall make every reasonable
effort to preserve benefits payable

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to the Executive as of the date the changes are made and to continue the accrual of benefits
during the employment of the Executive until such time as a written agreement is signed by the Bank
and the Executive.

     6.2 Plan Termination Generally. This Agreement may be terminated only by a written agreement
signed by the Bank and the Executive. However, the Bank may unilaterally terminate this Agreement
to conform with written directives from banking regulators or to comply with legislative changes or
tax law, including without limitation Section 409A of the Code and any and all Treasury regulations
and guidance promulgated thereunder. If the Bank unilaterally terminates this Agreement in order
to comply with the requirements of banking regulators or changes in law, the Bank shall make every
reasonable effort to preserve the value of benefits payable to the Executive as of the date of
termination and to continue the accrual of the value of benefits during the employment of the
Executive until such time as a written agreement is signed by the Bank and the Executive.

SECTION 7

STATUS AS AN UNSECURED GENERAL CREDITOR

     7.1 Notwithstanding anything contained herein to the contrary: (i) the Executive shall have no
legal or equitable rights, interests or claims in or to any specific property or assets of the Bank
as a result of this Agreement; (ii) none of the Bank’s assets shall be held in or under any trust
for the benefit of the Executive or held in any way as security for the fulfillment of the
obligations of the Bank under this Agreement; (iii) all of the Bank’s assets shall be and remain
the general unpledged and unrestricted assets of the Bank; (iv) the Bank’s obligation under this
Agreement shall be that of an unfunded and unsecured promise by the Bank to pay money in the
future; and (v) the Executive shall be an unsecured general creditor with respect to any benefits
which may be payable under the terms of this Agreement. Notwithstanding subparagraphs (i) through
(v) above, the Bank and the Executive acknowledge and agree that, in the event of a Change of
Control, upon request of the Executive, or in the Bank’s discretion if the Executive does not so
request and the Bank nonetheless deems it appropriate, the Bank shall establish, concurrent with
this agreement, a Rabbi Trust or multiple Rabbi Trusts (the “Trust” or “Trusts”) upon such terms
and conditions as the Bank, in its sole discretion, deems appropriate and in compliance with
applicable provisions of the Code, in order to permit the Bank to make contributions and/or
transfer assets to the Trust or Trusts to discharge its obligations pursuant to this Agreement. The
principal of the Trust or Trusts and any earnings thereon shall be held separate and apart from
other funds of the Bank to be used exclusively for discharge of the Bank’s obligations pursuant to
this Agreement and shall continue to be subject to the claims of the Bank’s general creditors until
paid to the Executive in such manner and at such times as specified in this Agreement.

     7.2 Bank reserves the right to determine, in its sole and absolute discretion, whether, to
what extent and by what method, if any, to provide for the payment of the amounts which may be
payable to the Executive, under the terms of this Agreement. In the event that the Bank elects to
fund this Agreement, in whole or in part, through the use of life insurance or annuities, or both,
the Bank shall determine the ownership and beneficial interests of any such policy of life
insurance or annuity. The Bank further reserves the right, in its sole and absolute discretion, to
terminate any such policy, and any other device used to fund its obligations under this Agreement,
at any time, in whole or in part. Consistent with Section 7.1 above, the Executive shall have no
right, title or interest in or to any funding source or amount utilized by the Bank pursuant to
this Agreement, and any such funding source or amount shall not constitute security for the
performance of the Bank’s obligations pursuant to this Agreement. In connection with the foregoing,
the Executive agrees to execute such documents and undergo such medical examinations or tests which
the Bank may request and which may be reasonably necessary to facilitate any funding for this
Agreement including, without limitation, the Bank’s acquisition of any policy of insurance or
annuity.

SECTION 8

MISCELLANEOUS

     8.1 Binding Effect. This Agreement shall bind the Executive and the Bank, and their
beneficiaries, survivors, executors, successors, administrators and transferees.

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     8.2 No Guarantee of Employment. This Agreement is not an employment policy or contract. It
does not give the Executive the right to remain an employee of the Bank, nor does it interfere with
the Bank’s right to discharge the Executive. It also does not require the Executive to remain an
employee nor interfere with the Executive’s right to terminate employment at any time.

     8.3 Non-Transferability. Benefits under this Agreement cannot be sold, transferred,
assigned, pledged, attached or encumbered in any manner. In particular, the Executive shall have no
power or right to transfer, assign, anticipate, hypothecate, modify or otherwise encumber any part
or all of the amounts payable hereunder, nor, prior to payment in accordance with the terms of this
Agreement, shall any portion of such amounts be: (i) subject to seizure by any creditor of the
Executive, by a proceeding at law or in equity, for the payment of any debts, judgments, alimony or
separate maintenance obligations which may be owed by the Executive; or (ii) transferable by
operation of law in the event of bankruptcy, insolvency or otherwise. Any such attempted assignment
or transfer shall be void.

     8.4 Reorganization. This Agreement shall be binding upon and inure to the benefit of the
Executive and the Bank. Accordingly, the Bank shall not merge or consolidate into or with another
corporation, or reorganize or sell substantially all of its assets to another corporation, firm or
person, unless and until such succeeding or continuing corporation, firm or person agrees to assume
and discharge the obligations of the Bank under this Agreement. In the alternative, the Holding
Company may agree to assume and discharge the obligation of the Bank under this Agreement. Upon the
occurrence of such event, the term “Bank” as used in this Agreement shall be deemed to refer to
such surviving or successor firm, person, entity or corporation, or the Holding Company, as the
case may be.

     8.5 Tax Withholding. The Bank shall withhold any taxes that are required to be withheld from
the benefits provided under this Agreement.

     8.6 Applicable Law. The laws of the State of Oregon, other than those laws denominated
choice of law rules, federal law in the case of preemption, and where applicable, the rules and
regulations of any regulatory agency or governmental authority having jurisdiction over the Bank or
the Holding Company, shall govern the validity, interpretation, construction and effect of this
Agreement.

     8.7 Unfunded Arrangement. The Executive and beneficiary are general unsecured creditors of
the Bank for the payment of benefits under this Agreement. The benefits represent the mere promise
by the Bank to pay such benefits. The rights to benefits are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors. Any insurance on the Executive’s life is a general asset of the Bank to
which the Executive and beneficiary have no preferred or secured claim.

     8.8 Entire Agreement. This Agreement supersedes any and all other agreements, either oral or
in writing, between the parties with respect to the subject matter of this Agreement and contains
all of the covenants and agreements between the parties with respect thereto. Each party to this
Agreement acknowledges that no other representations, inducements, promises, or agreements, oral or
otherwise, have been made by any party, or anyone acting on behalf of any party, which are not set
forth herein, and that no other agreement, statement, or promise not contained in this Agreement
shall be valid or binding on either party. No rights are granted to the Executive by virtue of this
Agreement other than those specifically set forth herein.

     8.9 Administration. The Bank shall have powers which are necessary to administer this
Agreement, including but not limited to: (i) maintaining a record of benefit payments; (ii)
establishing rules and prescribing any forms necessary or desirable to administer the Agreement;
and (iii) interpreting the provisions of the Agreement.

     8.10 Named Fiduciary. The Bank shall be the named fiduciary and plan administrator under this
Agreement. It may delegate to others certain aspects of the management and operational
responsibilities including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

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     8.11 Paragraph Headings. The paragraph headings used in this Agreement are for convenience
only, and shall not affect or be used in connection with the interpretation of this Agreement.

     8.12 No Strict Construction. The language used in this Agreement shall be deemed to be the
language chosen by the parties hereto to express their mutual intent, and no rule of strict
construction will be applied against any person.

     8.13 Opportunity To Consult With Independent Advisors. The Executive acknowledges that he or
she has been afforded the opportunity to consult with independent advisors of his choosing
including, without limitation, accountants or tax advisors and counsel regarding both the benefits
granted to him under the terms of this Agreement and the (i) terms and conditions which may affect
the Executive’s right to these benefits and (ii) personal tax effects of such benefits including,
without limitation, the effects of any federal or state taxes, Section 280G of the Code, and any
other taxes, costs, expenses or liabilities whatsoever related to such benefits, which in any of
the foregoing instances the Executive acknowledges and agrees shall be the sole responsibility of
the Executive notwithstanding any other term or provision of this Agreement. The Executive further
acknowledges and agrees that the Bank shall have no liability whatsoever related to any such
personal tax effects or other personal costs, expenses, or liabilities applicable to the Executive
and further specifically waives any right for himself or herself, and his or her heirs,
beneficiaries, legal representatives, agents, successor and assign to claim or assert liability on
the part of the Bank related to the matters described above in this Section 8.13. The Executive
further acknowledges that he or she has read, understands and consents to all of the terms and
conditions of this Agreement, and that he or she enters into this Agreement with a full
understanding of its terms and conditions.

     8.14 Arbitration of Disputes. All claims, disputes and other matters in question arising out
of or relating to this Agreement or the breach or interpretation thereof, other than those matters
which are to be determined by the Bank in its sole and absolute discretion, shall be resolved by
binding arbitration before a representative member, selected by the mutual agreement of the
parties, of the Judicial Arbitration and Mediation Services, Inc. (“JAMS”), located in Portland,
Oregon. In the event JAMS is unable or unwilling to conduct the arbitration provided for under the
terms of this Paragraph, or has discontinued its business, the parties agree that a representative
member, selected by the mutual agreement of the parties of the American Arbitration Association
(“AAA”) located in Portland, Oregon, shall conduct the binding arbitration referred to in this
Paragraph. Notice of the demand for arbitration shall be filed in writing with the other party to
this Agreement and with JAMS (or AAA, if necessary). In no event shall the demand for arbitration
be made after the date when institution of legal or equitable proceedings based on such claim,
dispute or other matter in question would be barred by the applicable statute of limitations. The
arbitration shall be subject to such rules of procedure used or established by JAMS, or if there
are none, the rules of procedure used or established by AAA. Any award rendered by JAMS or AAA
shall be final and binding upon the parties, and as applicable, their respective heirs,
beneficiaries, legal representatives, agents, successors and assigns, and may be entered in any
court having jurisdiction thereof. Any arbitration hereunder shall be conducted in The Dalles,
Oregon, unless otherwise agreed to by the parties.

     8.15 Attorneys’ Fees. In the event of any arbitration or litigation concerning any
controversy, claim or dispute between the parties hereto, arising out of or relating to this
Agreement or the breach hereof, or the interpretation hereof, the prevailing party shall be
entitled to recover from the losing party reasonable expenses, attorneys’ fees and costs incurred
in connection therewith or in the enforcement or collection of any judgment or award rendered
therein. The “prevailing party” means the party determined by the arbitrator(s) or court, as the
case may be, to have most nearly prevailed, even if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered.

     8.16 Notice. Any notice required or permitted of either the Executive or the Bank under this
Agreement shall be deemed to have been duly given, if by personal delivery, upon the date received
by the party or its authorized representative; if by facsimile, upon transmission to a telephone
number previously provided by the party to whom the facsimile is transmitted as reflected in the
records of the party transmitting the facsimile and upon reasonable confirmation of such
transmission; and if by mail, on the third day after mailing via U.S. first class mail, registered
or certified, postage prepaid and return receipt requested, and
addressed to the party at the address given below for the receipt of notices, or such changed
address as may be requested in writing by a party.

Page 9     EXECUTIVE SALARY CONTINUATION AGREEMENT — CMH 2008

 

 

	 	 	 	 	 
	 

	 	If to the Bank:
	 	Columbia River Bank

420 East Third Street

The Dalles, Oregon 97058
	 
	 	 	 	 
	 

	 	If to the Executive:
	 	c/o Columbia River Bank
	 

	 	 	 	P0 Box 1050

The Dalles, Oregon 97058

     8.17 Nonwaiver. The failure of either party to enforce at any time or for any period of time
any one or more of the terms or conditions of this Agreement shall not be a waiver of such term(s)
or condition(s) or of that party’s right thereafter to enforce each and every term and condition of
this Agreement.

     8.18 Partial Invalidity. If any terms, provision, covenant, or condition of this Agreement
is determined by an arbitrator or a court, as the case may be, to be invalid, void, or
unenforceable, such determination shall not render any other term, provision, covenant or condition
invalid, void or unenforceable, and the Agreement shall remain in full force and effect
notwithstanding such partial invalidity.

     8.19 Modifications. Any modification of this Agreement shall be effective only if it is in
writing and signed by each party or such party’s authorized representative.

     8.20 Compliance with Code Section 409A. Notwithstanding any other provision of this
Agreement, it is intended that any payment or benefit which is provided pursuant to or in
connection with this Agreement shall be provided and paid in a manner, and at such time and in such
form, as complies with the applicable requirements of Section 409A of the Code to avoid the
unfavorable tax consequences provided therein for non-compliance. Any provision in this Agreement
that is determined to violate the requirements of Section 409A shall be void and without effect. To
the extent permitted under Section 409A, the parties shall reform the provision, provided such
reformation shall not subject the Executive to additional tax or interest and the Bank shall not be
required to incur any additional compensation as a result of the reformation. In addition, any
provision that is required to appear in this Agreement that is not expressly set forth shall be
deemed to be set forth herein, and this Agreement shall be administered in all respects as if such
provision were expressly set forth. References in this Agreement to Section 409A of the Code
include rules, regulations, and guidance of general application issued by the Department of the
Treasury under Internal Revenue Code Section 409A.

     IN WITNESS OF THE ABOVE, the Bank and the Executive have signed this Agreement on this                     
day of                                         , 2008.

	 	 	 	 	 
	Executive:

	 	Columbia River Bank	 	 
	 
	 	 	 	 
	 

Christine M. Herb

	 	 

Roger L. Christensen
	 	 
	 

	 	Chief Executive Officer	 	 

Page 10     EXECUTIVE SALARY CONTINUATION AGREEMENT — CMH 2008exv10w1

 

Exhibit 10.1

CONVEYANCE OF NET PROFITS INTEREST

     This Conveyance of Net Profits Interest and Assignment of Pre-Effective Time Payment (this
“Conveyance”) is made, as of April 30, 2008, from Whiting Oil and Gas Corporation, a Delaware
corporation and Equity Oil Company, a Colorado corporation (collectively, the “Grantor”) to The
Bank of New York Trust Company, N.A., with offices at 919 Congress Avenue, Suite 500, Austin, Texas
78701, Attention: Mike J. Ulrich, as trustee (the “Trustee”), acting not in its individual
capacity but solely as trustee of the Whiting USA Trust I (the “Trust”), a statutory trust created
under the Delaware Statutory Trust Act as of October 18, 2007 (such Trustee acting as trustee of
the Trust and as such term is further defined below, the “Grantee”). Capitalized terms shall have
the meaning set forth in Article II below.

ARTICLE I

GRANT OF NET PROFITS INTEREST

     For and in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable
consideration (including the issuance by Grantee to Grantor of 13,863,889 Trust Units) to Grantor
paid by Grantee, the receipt and sufficiency of which are hereby acknowledged by Grantor, Grantor
has bargained, sold, granted, conveyed, transferred, assigned, set over, and delivered, and by
these presents does hereby bargain, sell, grant, convey, transfer, assign, set over, and deliver
unto Grantee, its successors and assigns, effective as of the Effective Time, a net profits
interest (the “Net Profits Interest”) in and to the Subject Leases and the Minerals in and under
and produced and saved from the Subject Interests during the Net Profits Period, calculated in
accordance with the provisions of Article III below and payable solely out of gross proceeds from
the sale of the Subject Minerals produced and saved through the Subject Wells, in an amount equal
to the product of the Proceeds Percentage times the Net Profits attributable to the Subject
Interests, all as more fully provided hereinbelow.

     TO HAVE AND TO HOLD the Net Profits Interest, together with all and singular the rights and
appurtenances thereto in anywise belonging, unto Grantee, its successors and assigns, subject,
however, to the following terms and provisions, to-wit:

ARTICLE II

DEFINITIONS

     As used herein, the following terms shall have the meaning ascribed to them below:

     “Administrative Hedge Costs” shall mean those costs paid by Grantor to counter-parties under
the Existing Hedges or to Persons that provide credit to maintain any Existing Hedge (in each case)
after the Effective Time, but excluding any Hedge Settlement Costs.

     “Affiliate” shall mean with respect to a specified Person, any Person that directly or
indirectly controls, is controlled by, or is under common control with, the specified Person. As
used in this definition, the term “control” (and the correlative terms “controlling,” “controlled
by,” and “under common control”) shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.

 

 

     “BOE” shall mean (a) for Oil included in the Subject Minerals, one barrel, (b) for Gas Liquids
included in the Subject Minerals, one barrel, and (c) for Gas included in the Subject Minerals, the
amount of such hydrocarbons equal to one barrel, determined using the ratio of six Mcf of Gas to
one barrel of Oil.

     “Business Day” shall mean any day that is not a Saturday, Sunday or any other day on which
national banking institutions in New York, New York, Denver, Colorado or Wilmington, Delaware are
closed as authorized or required by law.

     “Contingent Debt Regulations” shall have the meaning given such term in Section 8.9(b).

     “Code” shall mean the Internal Revenue Code of 1986, as amended.

     “Conveyance” shall mean this Conveyance of Net Profits Interest and Assignment of
Pre-Effective Time Payment, as the same may be amended or modified from time to time by one or more
instruments executed by both Grantor and Grantee.

     “Debit Balance” shall have the meaning given such term in Section 3.2(c).

     “Effective Time” shall mean 12:01 a.m., local time in effect where the Subject Interests are
located, on the date of this Conveyance.

     “Eligible Materials” shall mean Materials for which amounts in respect of the cost of such
Materials were properly debited to the Net Profits Account.

     “Existing Hedges” shall mean the Hedges entered into by Grantor with respect to the Subject
Minerals prior to the date hereof as described in Exhibit A to the Supplemental Agreement.

     “Fair Value” shall mean, with respect to any portion of the Net Profits Interest to be
released pursuant to Section 5.1 in connection with a sale or release of any Subject Interest, an
amount equal to the excess of (i) the proceeds which could reasonably be expected to be obtained
from the sale of such portion of the Net Profits Interest to a party which is not an Affiliate of
either Grantor or the Trust on an arms’-length negotiated basis, taking into account relevant
market conditions and factors existing at the time of any such proposed sale or release, over (ii)
Grantee’s proportionate share of any sales costs, commissions and brokerage fees.

     “Farmout Agreement” shall mean any farmout agreement, participation agreement, exploration
agreement, development agreement or any similar agreement.

     “Gas” shall mean natural gas and other gaseous hydrocarbons or minerals, including helium, but
excluding any Gas Liquids.

     “Gas Liquids” shall mean those natural gas liquids and other liquid hydrocarbons, including
ethane, propane, butane and natural gasoline, and mixtures thereof, that are removed from a Gas
stream by the liquids extraction process of any field facility or gas processing plant and
delivered by the facility or plant as natural gas liquids.

2

 

     “Grantee” shall mean Grantee as defined in the first paragraph of this Conveyance, and its
successors and assigns; and, unless the context in which used shall otherwise require, such term
shall include any successor owner at the time in question of any or all of the Net Profits
Interest.

     “Grantor” shall have the meaning given such term in the first paragraph of this Conveyance.

     “Hedge” shall mean any commodity hedging transaction pertaining to Minerals, whether in the
form of (i) forward sales and options to acquire or dispose of a futures contract solely on an
organized commodities exchange, (ii) derivative agreements for a swap, cap, collar or floor of the
commodity price, or (iii) similar types of financial transactions classified as “notional principal
contracts” pursuant to Treasury Regulation § 1.988-1(a)(2)(iii)(B)(2).

     “Hedge Settlement Costs” shall mean any and all payments required to be made by Grantor to the
counterparties in connection with the settlement or mark-to-market of trades made under any
Existing Hedge and all payments made by Grantor for any early termination of any Existing Hedge.

     “Hedge Settlement Revenues” shall mean any and all payments received by Grantor from the
counterparties in connection with the settlement or mark-to-market of trades made under any
Existing Hedge and all payments received by Grantor for any early termination of any Existing
Hedge.

     “Lease” shall mean (i) a lease of one or more Minerals described in Exhibit A attached hereto
as to all lands and depths described in such lease (or the applicable part or portion thereof, if
limited in depth and/or areal extent in Exhibit A) and any interest therein and any leasehold
interest in any other lease of Minerals derived from the pooling or unitization of such lease (or
portion thereof, if limited in depth and/or areal extent in Exhibit A) with other leases, together
with any interest acquired or maintained by Grantor in any and all extensions of such lease, (ii)
any replacement lease taken upon or in anticipation of termination of such lease (if executed and
delivered during the term of or within one year after the expiration of the predecessor lease), as
to all lands and depths described in the predecessor lease (unless the extended or predecessor
lease is specifically limited in depth or areal extent in Exhibit A, in which event only the
corresponding portion of such lease shall be considered a renewal or extension or a replacement
lease subject to this Conveyance), and (iii) any other Mineral leasehold, royalty, overriding
royalty or Mineral fee interest described in Exhibit A attached hereto; and “Leases” shall mean all
such Leases and all such renewal and extensions and replacement Leases.

     “Manufacturing Costs” shall mean the costs of Processing that generate Manufacturing Proceeds
received by Grantor.

     “Manufacturing Proceeds” shall mean the excess, if any, of (i) proceeds received by Grantor
from the sale of Subject Minerals that are the result of any Processing over (ii) the part of such
proceeds that represents the Payment Value of such Subject Minerals before any Processing.

3

 

     “Materials” shall mean materials, supplies, equipment and other personal property or fixtures
located on or used in connection with the Subject Interests.

     “Mcf” shall mean one thousand cubic feet.

     “Minerals” shall mean Oil, Gas and Gas Liquids.

     “MMBOE” shall mean one million BOE.

     “Money Market Interest Rate” shall mean the lesser of (a) the rate of interest per annum
publicly announced from time to time in the Midwest edition of the Wall Street Journal as the
“money market” interest rate on an annual yield basis, but if such rate is not available, then such
similar rate as reported by a nationally recognized financial news source or (b) the maximum rate
of interest permitted under applicable law.

     “Net Profits” shall have the meaning given such term in Section 3.2(b).

     “Net Profits Account” shall mean the account maintained in accordance with the provisions of
Section 3.1.

     “Net Profits Interest” shall have the meaning given such term in Article I.

     “Net Profits Period” shall mean the period from and after the Effective Time until and
including the Termination Date.

     “Oil” shall mean crude oil, condensate and other liquid hydrocarbons recovered by field
equipment or facilities, excluding Gas Liquids.

     “Payment Period” shall mean a calendar quarter, provided that for purposes of the Net
Profits Interest the first Payment Period shall mean the period from and after the Effective Time
until June 30, 2008, and the last Payment Period shall mean any portion of the calendar quarter
during which the Termination Date occurs from the beginning of such calendar quarter until and
including the Termination Date, and provided further that for purposes of the Pre-Effective
Time Payment the first Payment Period shall mean the period from and after January 1, 2008 until
March 31, 2008 and the second Payment Period shall mean the period from and after April 1, 2008
through, but excluding, the Effective Time.

     “Payment Value” of any Subject Minerals shall mean:

     (a) With respect to Oil and Gas Liquids, (i) the highest price available to Grantor for such
Oil and Gas Liquids at the Lease on the date of delivery pursuant to a bona fide offer, posted
price or other generally available marketing arrangement from or with a non-Affiliate purchaser, or
(ii) if no such offer, posted price or arrangement is available, the fair market value of such Oil
and/or Gas Liquids, on the date of delivery at the Lease, determined in accordance with generally
accepted and usual industry practices;

     (b) With respect to Gas, (i) the price specified in any Production Sales Contract for the sale
of such Gas or (ii) if such Gas cannot be sold pursuant to a Production Sales Contract,

4

 

(A) the average of the three highest prices (adjusted for all material differences in quality)
being paid at the time of production for Gas produced from the same field in sales between
non-affiliated Persons (or, if there are not three such prices within such field, within a 50-mile
radius of such field) but, for any Gas subject to price restrictions established, prescribed or
otherwise imposed by any governmental authority having jurisdiction over the sale of such Gas, no
more than the highest price permitted for such category or type of Gas after all applicable
adjustments (including without limitation tax reimbursement, dehydration, compression and gathering
allowances, inflation and other permitted escalations), or (B) if subsection (b)(ii)(A) above is
not applicable, the fair market value of such Gas, on the date of delivery, at the Lease,
determined in accordance with generally accepted and usual industry practices.

     “Permitted Encumbrances” shall mean the following whether now existing or hereinafter created
but only insofar as they cover, describe or relate to the Subject Interests or the lands described
in any Lease:

     (a) the terms, conditions, restrictions, exceptions, reservations, limitations and other
matters contained in the agreements, instruments and documents that create or reserve to Grantor
its interests in any of the Leases, including any Prior Reversionary Interest; provided, however,
that none of the foregoing shall operate to reduce Grantor’s “Net Revenue Interest” for any well to
below the “Net Revenue Interest” set forth in Exhibit B to the Supplemental Agreement for such well
or increase the “Working Interest” of Grantor for any well above that “Working Interest” set forth
in Exhibit B to the Supplemental Agreement for such well (unless there is a proportionate increase
in Grantor’s corresponding “Net Revenue Interest” for such well);

     (b) any (i) undetermined or inchoate liens or charges constituting or securing the payment of
expenses that were incurred incidental to maintenance, development, production or operation of the
Leases or for the purpose of developing, producing or processing Minerals therefrom or therein, and
(ii) materialman’s, mechanics’, repairman’s, employees’, contractors’, operators’ or other similar
liens or charges for liquidated amounts, in each case arising in the ordinary course of business
that Grantor has agreed to pay or is contesting in good faith in the ordinary course of business;

     (c) any liens for taxes and assessments not yet delinquent or, if delinquent, that are being
contested in good faith by Grantor in the ordinary course of business;

     (d) any liens or security interests created by law or reserved in any Lease for the payment of
royalty, bonus or rental, or created to secure compliance with the terms of the agreements,
instruments and documents that create or reserve to Grantor its interests in the Leases;

     (e) any obligations or duties affecting the Leases to any municipality or public authority
with respect to any franchise, grant, license or permit, and all applicable laws, rules,
regulations and orders of any governmental authority;

     (f) any (i) easements, rights-of-way, servitudes, permits, surface leases and other rights in
respect of surface operations, pipelines, grazing, hunting, lodging, canals, ditches, reservoirs or
the like, and (ii) easements for streets, alleys, highways, pipelines, telephone lines,

5

 

power lines, railways and other similar rights-of-way, on, over or in respect of the lands
described in the Leases, provided that, in the case of clauses (i) and (ii), such
easements, rights-of-way, servitudes, permits, surface leases and other rights do not materially
impair the value of the Net Profits Interest;

     (g) all lessors’ royalties, overriding royalties, net profits interests, carried interests,
production payments, reversionary interests and other burdens on or deductions from the proceeds of
production created or in existence as of the Effective Time; provided, however, that none of the
foregoing shall operate to reduce Grantor’s “Net Revenue Interest” for any well to below the “Net
Revenue Interest” set forth in Exhibit B to the Supplemental Agreement for such well or increase
the “Working Interest” of Grantor for any well above that “Working Interest” set forth in Exhibit B
to the Supplemental Agreement for such well (unless there is a proportionate increase in Grantor’s
corresponding “Net Revenue Interest” for such well);

     (h) preferential rights to purchase or similar agreements and required third party consents to
assignments or similar agreements;

     (i) all rights to consent by, required notices to, filings with, or other actions by any
governmental authority in connection with the sale or conveyance of the Leases or interests
therein;

     (j) production sales contracts; division orders; contracts for sale, purchase, exchange,
refining or processing of Minerals; unitization and pooling designations, declarations, orders and
agreements; operating agreements; agreements for development; area of mutual interest agreements;
gas balancing or deferred production agreements; processing agreements; plant agreements; pipeline,
gathering and transportation agreements; injection, repressuring and recycling agreements; salt
water or other disposal agreements; seismic or geophysical permits or agreements; and any and all
other agreements entered into by Grantor or its Affiliates in connection with the exploration or
development of the Leases or the extraction, processing or marketing of production therefrom or to
which any of the Leases were subject when acquired by Grantor or its Affiliates; provided, however,
that none of the foregoing shall operate to reduce Grantor’s “Net Revenue Interest” for any well to
below the “Net Revenue Interest” set forth in Exhibit B to the Supplemental Agreement for such well
or increase the “Working Interest” of Grantor for any well above that “Working Interest” set forth
in Exhibit B to the Supplemental Agreement for such well (unless there is a proportionate increase
in Grantor’s corresponding “Net Revenue Interest” for such well); and

     (k) conventional rights of reassignment that obligate Grantor to reassign all or part of a
property to a third party if Grantor intends to release or abandon such property;

     “Person” shall mean any individual, partnership, limited liability company, corporation,
trust, unincorporated association, governmental agency, subdivision, instrumentality, or other
entity or association.

     “Possible Refundable Amounts” shall have the meaning set forth in Section 3.1(a)(v).

     “Pre-Effective Time Payment” shall have the meaning given such term in Article VIII.

6

 

     “Prior Reversionary Interest” shall mean any contract, agreement, Farmout Agreement, lease,
deed, conveyance or operating agreement that exists as of the Effective Time or that burdened the
Subject Interests at the time such Subject Interests were acquired by Grantor, that by the terms
thereof requires a Person to convey a part of the Subject Interests to another Person or to
permanently cease production of any Subject Well, including obligations arising pursuant to any
operating agreements, Leases, coal leases, and other similar agreements or instruments affecting
the Subject Interests.

     “Proceeds Percentage” shall mean ninety percent (90%).

     “Processing” or “Processed” shall mean to manufacture, fractionate or refine Subject Minerals,
but such terms do not mean or include activities involving the use of normal lease or well
equipment (such as dehydrators, gas treating facilities, mechanical separators, heater-treaters,
lease compression facilities, injection or recycling equipment, tank batteries, field gathering
systems, pipelines and equipment and so forth) to treat or condition Minerals or other normal
operations on any of the Subject Interests.

     “Production Period Prior to Effective Time” shall mean the period commencing on and including
January 1, 2008 through, but excluding, the day of the Effective Time.

     “Production Sales Contracts” shall mean all contracts, agreements and arrangements for the
sale or disposition of Minerals.

     “Quarterly Record Date” shall mean the 50th day following the close of each Payment
Period. The first Quarterly Record Date shall be May 20, 2008.

     “Subject Interests” shall mean each kind and character of right, title, claim, or interest
(collectively the “rights”), that Grantor has or owns in the Leases and the Subject Wells whether
such right be under or by virtue of a lease, a unitization or pooling order or agreement, an
operating agreement, a division order, or a transfer order or be under or by virtue of any other
type of claim or title, legal or equitable, recorded or unrecorded, all as such rights shall be (a)
enlarged or diminished by virtue of the provisions of Section 4.2, and (b) enlarged by the
discharge of any payments out of production or by the removal of any charges or encumbrances to
which any of such rights are subject at the Effective Time (provided that such removal is
pursuant to the express terms of the instrument that created such charge or encumbrance) and any
and all renewals and extensions of the right occurring within one year after the expiration of such
rights.

     “Subject Leases” shall mean each kind and character of right, title, claim, or interest
(collectively the “rights”), that Grantor has or owns in the Leases whether such right be under or
by virtue of a lease, a unitization or pooling order or agreement, an operating agreement, a
division order, or a transfer order or be under or by virtue of any other type of claim or title,
legal or equitable, recorded or unrecorded, all as such rights shall be (a) enlarged or diminished
by virtue of the provisions of Section 4.2, and (b) enlarged by the discharge of any payments out
of production or by the removal of any charges or encumbrances to which any of such rights are
subject at the Effective Time (provided that such removal is pursuant to the express terms
of the

7

 

instrument that created such charge or encumbrance) and any and all renewals and extensions of
the right occurring within one year after the expiration of such rights.

     “Subject Minerals” shall mean all Minerals in and under and that may be produced, saved, and
sold from, and are attributable to, the Subject Interests from and after the Effective Time, after
deducting the appropriate share of all royalties and any overriding royalties, production payments
and other similar charges (except the Net Profits Interest) burdening the Subject Interests at the
Effective Time, provided that, (a) there shall not be included in the Subject Minerals (i)
any Minerals attributable to non-consent operations conducted with respect to the Subject Interests
(or any portion thereof) as to which Grantor shall be a non-consenting party as of the Effective
Time that are dedicated to the recoupment or reimbursement of costs and expenses of the consenting
party or parties by the terms of the relevant operating agreement, unit agreement, contract for
development, or other instrument providing for such non-consent operations (including any interest,
penalty or other amounts related thereto), or (ii) any Minerals unavoidably lost in production or
used by Grantor for production operations (including without limitation, fuel, secondary or
tertiary recovery) conducted solely for the purpose of producing Subject Minerals from the Subject
Interests, and (b) there shall be included in the Subject Minerals any Minerals attributable to
non-consent operations conducted with respect to the Subject Interests (or any portion thereof) as
to which Grantor shall be a non-consenting party as of the Effective Time that are produced, saved,
and sold from, and are attributable to the Subject Interests after the Effective Time from and
after the recoupment or reimbursement of costs and expenses (including any interest, penalty or
other amounts related thereto) of the consenting party or parties by the terms of the relevant
operating agreement, unit agreement, contract agreement, contract development, or other instruments
providing for such non-consent operations.

     “Subject Well” shall mean each well (whether now existing or hereinafter drilled) on the
Leases in respect of which Grantor owns any interest or is entitled to any of the Minerals
production or the proceeds therefrom (whether directly or indirectly by virtue of the effect of any
farmout or farmin provisions or other provisions).

     “Supplemental Agreement” shall mean the Supplemental Agreement entered into between the
Grantor and Grantee on even date herewith.

     “Termination Date” shall mean the day on which the total volume of the Subject Minerals
produced, saved and sold from and after the Effective Time equals a volume of (a) 9.1147 MMBOE less
(b) the total volume of the Subject Minerals produced, saved and sold during the Production Period
Prior to the Effective Time and less (c) the aggregate volume of proved reserves attributable to
the Subject Interests that are Transferred by Grantor pursuant to Section 5.1 hereof (with the
volume of proved reserves attributable to any individual Subject Interest so Transferred determined
solely by reference to the quantity of reserves attributable to such Subject Interest that are
expected to be produced during the term of the Net Profits Interest in the most recent reserve
report prepared by an independent reserve engineer in accordance with the methodology specified in
the rules and regulations of the Securities and Exchange Commission, provided that, in the
event an independent reserve engineer has not prepared a reserve report satisfying the foregoing
requirements within twelve (12) months prior to the date

8

 

of the Transfer of such Subject Interest, no volume of proved reserves for such Subject
Interest shall be included in such aggregate volume pursuant to this clause (c)).

     “Transfer” including its syntactical variants, shall mean any assignment, sale, transfer,
conveyance, or disposition of any property; provided, however, “Transfer” as used herein
does not include the granting of a security interest, pledge, or mortgage in Grantor’s interest in
any property, including the Subject Interests or the Subject Minerals.

     “Trust Units” shall have the meaning ascribed to such term in the Trust Agreement.

     “Trust Agreement” shall mean the Amended and Restated Trust Agreement of Whiting USA Trust I,
dated of even date herewith, by and among Grantor, Grantee and Wilmington Trust Company, a banking
corporation organized under the laws of the State of Delaware.

ARTICLE III

ESTABLISHMENT OF NET PROFITS ACCOUNT

     3.1 Net Profits Account. Grantor shall establish and maintain true and correct books
and records in order to determine the credits and debits to a Net Profits Account to be maintained
by Grantor at all times during the Net Profits Period, in accordance with the terms of this
Conveyance and prudent and accepted accounting practices. For purposes of this Section 3.1:

     (a) The Net Profits Account shall be credited with an amount equal to the sum, from and after
the Effective Time with respect to each Payment Period, of the gross proceeds (determined before
calculating the Net Profits) received by Grantor from the sale of all Subject Minerals;
provided, however, that:

	 	(i)	 	Subject to the following provisions of this Section 3.1(a), gross proceeds
shall include all consideration received, directly or indirectly, for Transfers of
Subject Minerals as, if and when produced, including without limitation advance
payments and payments under take or pay and similar provisions of Production Sales
Contracts when credited against the price for delivery of production;
	 
	 	(ii)	 	if any proceeds are withheld from Grantor for any reason (other than at the
request of Grantor), such proceeds shall not be considered to be gross proceeds until
such proceeds are actually received by Grantor;
	 
	 	(iii)	 	if Grantor becomes an underproduced party under any Gas balancing or similar
arrangement affecting the Subject Interests, then the Net Profits Account shall not be
credited with any amounts for any Gas attributable to the Subject Interests that is
deemed to be stored for Grantor’s account under the terms of such Gas balancing
arrangement, and if Grantor becomes an overproduced party under any Gas balancing or
similar arrangement affecting the Subject Interests, then the Net Profits Account shall
not be credited with any amount for any Gas taken by an underproduced party as
“make-up” Gas that would otherwise be attributable to the Subject Interests. The Net
Profits Account shall be credited with amounts received by Grantor (1) for any “make
up” Gas taken by Grantor as a result of its position as an underproduced party under
any Gas balancing or similar

9

 

	 	 	 	arrangement affecting the Subject Interests, (2) as a balancing of accounts under a
Gas balancing or other similar arrangement affecting the Subject Interests either as
an interim balancing or at the depletion of the reservoir, and (3) for any Gas taken
by Grantor attributable to the Subject Interests in excess of its entitlement share
of such Gas;
	 
	 	(iv)	 	if Grantor shall be a party as to any non-consent operations conducted with
respect to all or any of the Subject Interests from and after the Effective Time, all
gross proceeds to be credited to the Net Profits Account with respect thereto shall be
governed by Section 4.3;
	 
	 	(v)	 	if a controversy or possible controversy exists (whether by reason of any
statute, order, decree, rule, regulation, contract, or otherwise) as to the correct or
lawful sales price of any Subject Minerals, or if any amounts received or to be
received by Grantor as “take-or-pay” or “ratable take” payments are subject to refund
to any purchasers of Subject Minerals (in each case, such amounts together with any
other gross proceeds withheld from, or repayable by, Grantor, “Possible Refundable
Amounts”), then:

	 	(A)	 	amounts withheld by such purchaser or deposited by it with an
escrow agent shall not be considered to have been received by Grantor and shall
not be credited to the Net Profits Account until actually collected by Grantor;
provided, however, that the Net Profits Account shall not be credited
with any interest, penalty, or other amount that is not derived from the sale
of Subject Minerals; and
	 
	 	(B)	 	amounts received or to be received by Grantor and promptly
deposited or to be deposited by it with a non-Affiliate escrow agent, to be
placed in interest bearing accounts under usual and customary terms, shall not
be considered to have been received by Grantor and shall not be credited to the
Net Profits Account until actually disbursed to Grantor by such escrow agent;
provided, however, that the Net Profits Account shall not be credited
with any interest, penalty, or other amount that is not derived from the sale
of Subject Minerals;

	 	(vi)	 	gross proceeds shall not include any amount received by Grantor in respect of
any production of Subject Minerals prior to the Effective Time;
	 
	 	(vii)	 	the Net Profits Account shall not be credited with any amount that Grantor
shall receive for any sale or other disposition of any of the Subject Interests or in
connection with any adjustment of any well or leasehold equipment upon unitization of
any of the Subject Interests;
	 
	 	(viii)	 	gross proceeds shall not include any Manufacturing Proceeds or other amounts that are
reductions of debits to the Net Profits Account under the proviso of Section 3.1(b);

10

 

	 	(ix)	 	in the event that Subject Minerals are Processed prior to sale, gross proceeds
shall include only the Payment Value of such Subject Minerals before any such
Processing;
	 
	 	(x)	 	the amount of gross proceeds credited to the Net Profits Account during any
Payment Period shall be reduced by overpayments pursuant to Section 3.4(a);
	 
	 	(xi)	 	gross proceeds shall not include any amount to which Grantor is entitled by
virtue of a judgment of a court of competent jurisdiction resolving a dispute hereunder
between Grantee and Grantor in favor of Grantor, or any amount paid to Grantor in
settlement of such dispute; and
	 
	 	(xii)	 	gross proceeds shall not include any additional proceeds from the sale of
Minerals related to any Subject Well with respect to which Grantor elects to be a
participating party (whether pursuant to an operating agreement or other agreement or
arrangement, including without limitation, non-consent rights and obligations imposed
by statute or regulatory agency) with respect to any operation with respect to such
Subject Well where another party or parties have elected not to participate in such
operation (or have elected to abandon such Subject Well) and Grantor elects to pay the
costs of such nonparticipating or abandoning party and as a result of which Grantor
becomes entitled to receive, either temporarily (i.e., through a period of recoupment)
or permanently any additional proceeds from the sale of Minerals related to such
Subject Well.

     (b) The Net Profits Account shall be debited with an amount equal to the sum of the following
(excluding in all events Manufacturing Costs), to the extent that the same relate to the Existing
Hedges or are properly allocable to the Subject Interests (and any related equipment or property
used in connection therewith) and the production and (subject to Section 4.4) marketing of Subject
Minerals therefrom and have been incurred or accrued (as described below) by Grantor from and after
the Effective Time and attributable to periods ending on or before the Termination Date:

	 	(i)	 	all direct costs paid by Grantor (A) for all direct labor (including fringe
benefits) and other services necessary for operating, producing and maintaining the
Subject Interests and workovers of any Subject Well on the Subject Interests, (B) for
dehydration, compression, separation and transportation of the Subject Minerals, and
(C) for all Materials purchased for use on, or in connection with, any of the Subject
Interests (including without limitation (1) all amounts charged Grantor for conformance
of investment if the Subject Interests or any part or parts thereof are hereafter from
time to time unitized or if any participating area in a federal divided-type unit is
changed, (2) subject to Section 3.1(c), the costs of workovers and plugging and
abandoning of any well on the Subject Interests and (3) subject to Section 3.1(c), the
cost of secondary recovery, pressure maintenance, repressuring, recycling and other
operations conducted for the purpose of enhancing production); provided,
however, that the debits made to the Net Profits Account pursuant to this subsection
(and, to the extent applicable, pursuant to the other applicable provisions of this
Conveyance) with respect to any Subject

11

 

	 	 	 	Interest shall be made on the same basis as such costs are charged under the
operating agreement (if any) applicable to such Subject Interest at the time the
transaction giving rise to such debit occurred (including any producing overhead in
such operating agreement), except that in the event a Subject Interest is operated
at such time by a non-Affiliate of Grantor but is not subject to an operating
agreement, such debit shall be made on the same basis as Grantor is charged by such
non-Affiliate of Grantor; provided, further, if Grantor elects to
pay the costs of a nonconsenting party or nonparticipating party with respect to
which the gross proceeds derived from such costs are not credited to the Net Profits
Account pursuant to Section 3.1(a), Grantor shall be solely responsible for such
costs;
	 
	 	(ii)	 	all costs (including without limitation outside legal, accounting and
engineering services) attributable to the Subject Interests of (A) handling,
investigating and/or settling litigation, administrative proceedings and claims
(including without limitation lien claims other than liens for borrowed funds) and (B)
payment of judgments, penalties and other liabilities (including interest thereon),
paid by Grantor (and not reimbursed under insurance maintained by Grantor or others)
and involving any of the Subject Interests, or incident to the operation or maintenance
of the Subject Interests, or requiring the payment or restitution of any proceeds of
Subject Minerals, or arising from tax or royalty audits, except that there shall not be
debited to the Net Profits Account any expenses incurred by Grantor in litigation of
any claim or dispute arising hereunder between Grantor and Grantee or amounts paid by
Grantor to Grantee pursuant to a final order entered by a court of competent
jurisdiction resolving any such claim or dispute or amounts paid by Grantor to Grantee
in connection with the settlement of any such claim or dispute;
	 
	 	(iii)	 	all taxes (except federal and state income, transfer, mortgage, inheritance,
estate, franchise and like taxes) incurred, accrued or paid by Grantor with respect to
the ownership of the Subject Interests or the extraction of the Subject Minerals,
including without limitation production, severance, and/or excise and other similar
taxes assessed against, and/or measured by, the production of (or the proceeds or value
of production of) Subject Minerals, occupation taxes, sales and use taxes, and ad
valorem taxes assessed against or attributable to the Subject Interests or any
equipment used in connection with production from any of the Subject Interests and any
extraordinary or windfall profits taxes that may be assessed in the future based upon
profits realized or prices received from the sale of Subject Minerals;
provided, however, that if Grantee is assessed any of such taxes individually
and Grantee pays such taxes, then the taxes which Grantee is assessed individually and
has paid shall not be debited to the Net Profits Account;
	 
	 	(iv)	 	insurance premiums attributable to the ownership or operation of the Subject
Interests paid by Grantor for insurance actually carried for periods after the
Effective Time with respect to the Subject Interests, or any equipment located on any
of the Subject Interests, or incident to the operation or maintenance of the Subject
Interests, it being recognized that where the coverage is general in nature,

12

 

	 	 	 	or relates to a group of properties (or more than one interest in the same
property), only that portion which is reasonably allocated to the Subject Interests
shall be debited hereunder;
	 
	 	(v)	 	all amounts paid by Grantor attributable to the Subject Interests and
consisting of (A) rent and other consideration paid for the use or damage to the
surface, (B) delay rentals, shut-in well payments, minimum royalties and similar
payments paid pursuant to the provisions of agreements in force and effect before the
Effective Time and (C) fees for renewals or extensions of the Leases included in the
Subject Interests;
	 
	 	(vi)	 	amounts attributable to the Subject Interests and charged by the relevant
operator as overhead charges specified in the applicable operating agreements or other
arrangements now or hereafter covering the Subject Interests or Grantor’s operations
with respect thereto;
	 
	 	(vii)	 	to the extent Grantor is the operator of a Subject Interest and there is no
operating agreement covering such Subject Interest now or hereafter, those overhead
charges that are allocated by Grantor to such Subject Interest, to the extent that such
charges are allocated in the same manner that Grantor allocates to other similarly
owned and operated properties;
	 
	 	(viii)	 	if as a result of the occurrence of the bankruptcy or insolvency or similar
occurrence of the purchaser of Subject Minerals any amounts previously credited to the
Net Profits Account are reclaimed from Grantor or its representative, then the amounts
reclaimed as promptly as practicable following Grantor’s payment thereof;
	 
	 	(ix)	 	if Grantor shall be a party to any non-consent operations conducted with
respect to all or any of the Subject Interests, costs related to such non-consent
operations to be debited to the Net Profits Account with respect thereto, if any, shall
be governed by Section 4.3;
	 
	 	(x)	 	the costs paid by Grantor in connection with the exercise of its rights
pursuant to Section 4.6;
	 
	 	(xi)	 	all costs paid by Grantor for recording this Conveyance and, immediately prior
to the last Payment Period, costs estimated in good faith to record the termination
and/or release of this Conveyance;
	 
	 	(xii)	 	all Administrative Hedge Costs paid by Grantor;
	 
	 	(xiii)	 	without duplication of the costs described above, all other direct costs paid by
Grantor for the necessary or proper hook up, production, operation, maintenance and
workovers of the Subject Wells and Subject Interests, and the plugging and abandoning
of any unplugged Subject Wells located on the Subject Interests, abandoning of any
facilities used in connection with the Subject Interests and, where applicable,
restoring of the surface of the Subject Interests;

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	 	(xiv)	 	any Debit Balance carried forward pursuant to Section 3.2(c); and
	 
	 	(xv)	 	the aggregate Hedge Settlement Costs paid by Grantor;

provided that the costs referred to in this Section 3.1(b) shall be reduced by the
following amounts received by Grantor from and after the Effective Time: (A) any amounts received
by Grantor as delay rentals, bonus, royalty or other similar payments in connection with any
Farmout Agreement or for dry hole, bottom hole or other similar contributions related to the
Subject Interests or otherwise, (B) upon salvage or other disposition, the applicable actual
salvage value (as determined in accordance with the applicable operating agreement then in effect
and binding upon Grantor) of any Eligible Materials, less, in each instance the actual costs of
salvage or other disposition, (C) any cash payments received by Grantor as a result of any pooling
or unitization of the Subject Interests if the costs giving rise to such payments were charged to
the Net Profits Account, directly or indirectly, (D) any insurance proceeds received by Grantor in
respect of the Subject Interests, Subject Minerals or Eligible Materials if the cost of such
insurance was charged to the Net Profits Account, directly or indirectly, (E) any amounts received
by Grantor from third parties as rental or use fees for Eligible Materials, (F) the gross proceeds
of any judgments or claims received by Grantor for damages occurring on or after the Effective Time
to the Subject Interests (or any part thereof or interest therein) or any Materials (or any part
thereof or interest therein) used in connection with the operation of the Subject Interests or any
Subject Minerals, (G) any proceeds from the sale of Eligible Materials, (H) any payments made to
Grantor in connection with the drilling or deferring of drilling of any Subject Well, (I) if, from
and after the Effective Time, any Subject Minerals shall be Processed before sale, the excess, if
any, of the Manufacturing Proceeds arising therefrom over the Manufacturing Costs of such
Processing, (J) any interest, penalty or other amount not derived from the sale of the Subject
Minerals that is paid to Grantor by the purchaser of production or escrow agent in connection with
Possible Refundable Amounts withheld or deposited with an escrow agent, (K) the Hedge Settlement
Revenues, and (L) the amount described in 5.1(b); provided further, that in any Payment
Period where the reduction in costs described in subparts (A) through (L) above exceed the amounts
described in Sections 3.1(b)(i) through (xv) above for such Payment Period, then such excess, plus
interest at the Money Market Interest Rate on such amount, commencing on the expiration date of
the preceding Payment Period to the date such amounts have been used to reduce the costs referred
to in this Section 3.1(b) shall not be applied to reduce the costs described in Sections 3.1(b)(i)
through (xv) below zero but instead shall be applied to reduce such costs in each succeeding
Payment Period, subject to this limitation, until exhausted.

     (c) Notwithstanding anything herein to the contrary, the amounts debited to the Net Profits
Account shall not include any of the following: (A) any amount that has also been used to reduce
or offset the amount of the Subject Minerals (or proceeds of production thereof) or has otherwise
not been included therein (including, by way of example and without limitation, proceeds
attributable to royalties, overriding royalties, production payments and other charges burdening
the Subject Interests at the Effective Time); (B) any overriding royalty, production payment or
other charge burdening the Subject Interests which was created by Grantor after the Effective Time;
(C) any general, administrative or overhead costs paid or incurred by Grantor or its Affiliates,
except for those permitted under Sections 3.1(b)(vi) and (vii); (D) any amounts paid by Grantor
(initial or a successor) to such Grantor’s predecessor in interest with respect to part or all of
the Subject Interests (including without limitation any purchase price or other

14

 

consideration paid by Grantor to such predecessor in interest to acquire all or part of the
Subject Interests); (E) any interest, premiums, fees or similar charges arising out of borrowings
or purchases of any goods, equipment or other items on credit, whether or not used on or otherwise
related to the Subject Interests; and (F) except for workovers of Subject Wells, any costs
attributable or relating to (1) seismic, geological or geophysical operations on the Subject
Interests; (2) the testing, drilling, completion, equipping, plugging back or recompletion of any
Subject Well or other well on the Subject Interests; (3) any costs of constructing gathering
facilities, tanks, or other production or delivery facilities on the Subject Interests or (4)
plugging and abandoning any Subject Well drilled on or after the Effective Time that is a dry hole.

     (d) Nothing set forth in this Section 3.1 shall be interpreted or applied in any manner that
shall ever require or permit any duplication of all or any part of any credit or debit (or
reduction thereto) to the Net Profits Account with respect to the same transaction, item of expense
or charge, under this Conveyance, or that shall ever require or permit any inclusion of any charge
to the Net Profits Account that is reimbursed to Grantor by any Person.

     (e) GRANTEE, BY ITS ACCEPTANCE OF THE NET PROFITS INTEREST, CLEARLY AND UNEQUIVOCALLY
EXPRESSES ITS INTENT THAT THE DEBITS TO THE NET PROFITS ACCOUNT CONTAINED IN SECTION 3.1(b) SHALL
BE APPLICABLE REGARDLESS OF WHETHER OR NOT THE LOSSES, COSTS, EXPENSES AND DAMAGES THAT MAY BE
DEBITED IN ACCORDANCE WITH SUCH SECTION AROSE SOLELY OR IN PART FROM THE ACTIVE, PASSIVE OR
CONCURRENT NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OF GRANTOR OR ANY OF ITS AFFILIATES, OTHER
THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF GRANTOR OR ANY OF ITS AFFILIATES, EXCEPT TO THE
EXTENT THAT ANY SUCH LOSSES, COSTS, EXPENSES OR DAMAGES RESULT, DIRECTLY OR INDIRECTLY, FROM ANY
BREACH OR NONCOMPLIANCE WITH THE OPERATIONS STANDARD SET FORTH IN SECTION 4.1 HEREOF, AND NOTHING
CONTAINED HEREIN OR ELSEWHERE IN THIS CONVEYANCE SHALL BE CONSTRUED AS A WAIVER OR RELEASE OF
GRANTOR FROM ANY CLAIM, ACTION OR LIABILITY ARISING UNDER SECTION 4.1 HEREOF.

     3.2 Accounting.

     (a) After the end of each Payment Period, a calculation of net profits shall be made by
Grantor by deducting (i) the total debits (net of reductions thereof) properly made to the Net
Profits Account during such Payment Period pursuant to Section 3.1(b) from (ii) the total credits
properly made to such Net Profits Account during such Payment Period pursuant to Section 3.1(a).

     (b) If the computation made in accordance with Section 3.2(a) results in a positive amount
with respect to a Payment Period (the “Net Profits”), then (i) that positive amount shall be
subtracted from the balance of the Net Profits Account to cause the Net Profits Account to have a
zero balance immediately following the end of such Payment Period, (ii) that positive amount shall
be multiplied by the Proceeds Percentage to determine the Net Profits Interest and

15

 

(iii) the resulting product from the calculations in (ii) above shall be payable to Grantee as
specified in Section 3.3.

     (c) If the computation made in accordance with Section 3.2(a) results in a negative amount
with respect to a Payment Period, the negative sum shall be deemed the “Debit Balance.” Any Debit
Balance shall be carried forward as a debit to the Net Profits Account for the following Payment
Period. If there is a Debit Balance at the end of any Payment Period, no payments shall be made to
Grantee in respect of the Net Profits Interest nor shall Grantee ever be liable to make any payment
to Grantor in respect of the Debit Balance. In the event that any Debit Balance exists, then an
amount shall be computed equal to interest on such Debit Balance at the Money Market Interest Rate
for the period between the last day of the Payment Period that resulted in such Debit Balance and
the last day of the next Payment Period, which amount shall, on the last day of such next Payment
Period, be debited to the Net Profits Account in the same manner as other debits to the Net Profits
Account for such Payment Period.

     (d) All amounts received by Grantor from the sale of the Subject Minerals for any Payment
Period shall be held by Grantor in one of its general bank accounts and Grantor shall not be
required to maintain a segregated account for such funds.

     3.3 Payment of Proceeds Percentage of Net Profits. On or before the tenth day (or, if
such day is not a Business Day, the next Business Day) following the Quarterly Record Date for each
Payment Period, Grantor shall transfer or cause to be transferred to Grantee an amount in respect
of the Subject Interests equal to the product of the Proceeds Percentage times the Net Profits with
respect to the immediately preceding Payment Period in accordance with Section 3.2(b). All funds
delivered to Grantee on account of the Net Profits Interest shall be calculated and paid entirely
and exclusively out of the gross proceeds attributable to the Subject Minerals attributable to the
Subject Interests.

     3.4 Overpayment; Past Due Payments.

     (a) If Grantor ever pays Grantee more than the amount of money then due and payable to Grantee
under this Conveyance, Grantee shall not be obligated to return the overpayment, but Grantor may at
any time thereafter reduce the gross proceeds used to calculate the Net Profits and retain for its
own account an amount equal to the overpayment, plus interest at the Money Market Interest Rate on
such amount, commencing on the sixth (6th) day from the date of the overpayment to the date such
amount is recovered by Grantor from such proceeds.

     (b) Any amount not paid by Grantor to Grantee with respect to the Net Profits Interest when
due shall bear, and Grantor hereby agrees to pay, interest at the Money Market Interest Rate from
the due date until such amount has been paid.

     (c) Grantor shall give Grantee written notice with respect to any underpayment or overpayment
described in this Section 3.4, together with supporting worksheets and data.

     3.5 Statements.

     (a) On or before each Quarterly Record Date, Grantor shall deliver to Grantee a statement
showing the computation of the Net Profits and the Proceeds Percentage of the Net

16

 

Profits, including gross proceeds and debits therefrom (including any reductions to such gross
proceeds and/or debits), with respect to the preceding Payment Period.

     (b) On or before the first Quarterly Record Date after the end of each calendar year and on or
before the Quarterly Record Date after the Termination Date, such statement shall also show the
computation of the Net Profits and the Proceeds Percentage of the Net Profits, including gross
proceeds and debits therefrom (including any reductions to such gross proceeds and/or debits), for
the preceding calendar year (or portion thereof when the Net Profits Interest was in effect).

     (c) If Grantee takes exception to any item or items included in any quarterly statement
required by Section 3.5(a), Grantee must notify Grantor in writing within one hundred and twenty
(120) days after the end of the fiscal year with respect to which such statements relate. Such
notice must set forth in reasonable detail the specific debits complained of and to which exception
is taken or the specific credits which should have been made and allowed. Adjustments shall be
made for all complaints and exceptions that are agreed to by the parties; provided that if
the parties do not agree, such disputed matters shall be subject to the arbitration provisions set
forth in Article XI of the Trust Agreement.

     (d) Notwithstanding anything to the contrary herein, all matters reflected in Grantor’s
statements for the preceding calendar year (or portion thereof) that are not objected to by Grantee
in the manner provided by this Section 3.5(c) shall be deemed correct as rendered by Grantor to
Grantee.

     3.6 Information/Access.

     (a) Grantor shall maintain true and correct books, records, and accounts of (i) all
transactions required or permitted by this Conveyance and (ii) the financial information necessary
to reflect such transactions, including the financial information needed to calculate the Net
Profits with respect to any Payment Period.

     (b) Grantee or its representative, at the Trust’s expense, may inspect and copy such books,
records, and accounts in the offices of Grantor during normal business hours and upon reasonable
notice.

     (c) At Grantee’s request, subject to applicable restrictions on disclosure and transfer of
information, Grantor shall give Grantee and its designated representatives (on behalf of the Trust)
reasonable access in Grantor’s office during normal business hours to (i) all geological, Subject
Well and production data in Grantor’s possession or Grantor’s Affiliates’ possession, relating to
operations on the Subject Interests and (ii) all reserve reports and reserve studies in the
possession of Grantor or of Grantor’s Affiliates, relating to the Subject Interests, whether
prepared by Grantor, by Grantor’s Affiliates, or by consulting engineers.

     (d) Grantor makes no representations or warranties about the accuracy or completeness of any
such data, reports, or studies referred to in Section 3.6(c) and shall have no liability to
Grantee, the Trust or any other Person resulting from such data, studies, or reports.

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ARTICLE IV

OPERATION OF THE SUBJECT INTERESTS

     4.1 Operations Standard. To the extent that Grantor controls such matters and
notwithstanding anything to the contrary herein, with respect to each Subject Interest, Grantor
agrees that it will conduct and carry on, or use commercially reasonable efforts to cause the
operation thereof to conduct and carry on, the maintenance and operation of such Subject Interest
in the same manner as a reasonably prudent operator in the State in which such Subject Interest is
located would under the same or similar circumstances acting with respect to its own properties
(without regard to the existence of the Net Profits Interest). Grantee acknowledges that Grantor
is and shall be an undivided interest owner with respect to the Subject Interests. Grantee agrees
that the acts or omissions of Grantor’s co-owners shall not be deemed to constitute a violation of
the provisions of this Section 4.1, nor shall any action required by a vote of co-owners be deemed
to constitute such a violation so long as Grantor has voted its interest in a manner designed to
comply with this Section 4.1. Subject to the following sentence, nothing contained in this Section
4.1 shall be deemed to prevent or restrict Grantor from electing not to participate in any
operations that are to be conducted under the terms of any operating agreement, unit operating
agreement, contract for development, or similar instrument affecting or pertaining to the Subject
Interests (or any portion thereof) and permitting consenting parties to conduct non-consent
operations thereon if a reasonably prudent operator in the State in which the Subject Interest
affected thereby is located acting with respect to its own properties (without regard to the
existence of the Net Profits Interest) would make such elections.

     4.2 Pooling and Unitization. Grantor shall have the right to pool or unitize all or
any of the Leases as to any one or more of the formations or horizons thereunder, and as to any of
the Subject Minerals, when, in the reasonable judgment of Grantor, it is necessary or advisable to
do so in order to form a drilling or proration unit to facilitate the orderly development of the
Subject Interests or to comply with the requirements of any law or governmental order or regulation
relating to the spacing of wells or proration of the production therefrom. For purposes of
computing the Net Profits, there shall be allocated to the Subject Interests included in such unit
a pro rata portion of the Minerals produced from the pooled unit on the same basis that production
from the pool or unit is allocated to other working interests in such pool or unit. The interest
in any such unit attributable to the Subject Interests (or any part thereof) included therein shall
become a part of the Subject Interests and shall be subject to the Net Profits Interest in the same
manner and with the same effect as if such unit and the interest of Grantor therein were
specifically described in Exhibit A to this Conveyance.

     4.3 Non-Consent. Subject to Section 4.1, if Grantor elects to be a non-participating
party (whether pursuant to an operating agreement or other agreement or arrangement, including
without limitation, non-consent rights and obligations imposed by statute or regulatory agency)
with respect to any operation on any Subject Interest or elects to be an abandoning party with
respect to a Subject Well located on any Subject Interest, the consequence of which election is
that Grantor’s interest in such Subject Interest or part thereof is temporarily (i.e., during a
recoupment period) or permanently forfeited to the parties participating in such operations, or
electing not to abandon such Subject Well, then the costs and proceeds attributable to such
forfeited interest shall not, for the period of such forfeiture (which may be a continuous and
permanent period), be debited or credited to the Net Profits Account and such forfeited interest

18

 

shall not, for the period of such forfeiture, be subject to the Net Profits Interest.
Notwithstanding anything to the contrary contained herein, Grantor shall not elect, as to any
Subject Interest, to be a non-participating party with respect to any operation contemplated in
this Section 4.3 in the event any Affiliate of Grantor will also be a participating party in such
operation.

     4.4 Marketing/Hedges. As between Grantor and Grantee, Grantor shall have exclusive
charge and control of the marketing of all Subject Minerals. Grantor shall market the Subject
Minerals allocable to the Net Profits Interest in the same manner that it markets its Subject
Minerals and Grantor shall not be entitled to deduct from the calculation of the Net Profits any
fee for marketing the Subject Minerals allocable to the Net Profits Interest other than fees for
marketing paid to non-Affiliates. Grantor shall not enter into any Hedges (other than the Existing
Hedges) with respect to the Subject Minerals from and after the Effective Time or modify or
terminate the Existing Hedges.

     4.5 Amendment of Leases. Grantor shall have the unrestricted right to renew, extend,
modify, amend, or supplement the Leases with respect to any of the lands covered thereby in any
particular without the consent of Grantee; provided, that the Net Profits Interest shall
apply to all renewals, extensions, modifications, amendment, supplements and other similar
arrangements (and/or interests therein) of the Leases, whether or not such renewals, extensions
modifications, amendment, supplements or arrangements have heretofore been obtained, or are
hereafter obtained, by Grantor and no renewal, extension, modification, amendment, or
supplementation shall adversely affect any of Grantee’s rights hereunder, including, without
limitation, the amount, computation, or method of payment of the Net Profits Interest;
provided further that any fees payable with respect to such renewal, extension,
modification, amendment or supplementation may be debited to the Net Profits Account pursuant to
Section 3.1(b). Grantor shall furnish Grantee with written notice of any renewal, extension,
modification, amendment, or supplementation, which materially affects the Net Profits Interest,
within 30 days after Grantor has entered into the same, which notice shall specify the date thereof
and the location and the acreage covered thereby.

     4.6 Abandonment. Grantor shall have the right without the joinder of Grantee to
release, surrender and/or abandon its interest in the Subject Interests, or any part thereof, or
interest therein even though the effect of such release, surrender or abandonment will be to
release, surrender or abandon the Net Profits Interest the same as though Grantee had joined
therein insofar as the Net Profits Interest covers the Subject Interests, or any part thereof or
interest therein, so released, surrendered or abandoned by Grantor; provided, however, that
Grantor shall not release, surrender or abandon any Subject Interest unless and until Grantor has
determined (acting like a reasonably prudent operator in the State in which such Subject Interests
are located with respect to its own properties, without regard to the existence of the Net Profits
Interest) that such Subject Interest will no longer produce Subject Minerals in paying quantities;
and provided further that Grantor will promptly after the release, surrender or abandonment
of any Subject Interest, or any part thereof or interest therein, notify Grantee in writing, giving
a description of such Subject Interest, or part thereof or interest therein, that has been
released, surrendered or abandoned, and the date on which such release, surrender or abandonment
has occurred. Grantor shall have an unequivocal right to abandon a Subject Interest, or any part
thereof if such abandonment is necessary for health, safety or environmental reasons, or the

19

 

Subject Minerals that would have been produced from the abandoned Subject Interest would
otherwise be produced from Subject Wells located on the remaining Subject Interests.

     4.7 Contracts with Affiliates. Grantor or its Affiliates may perform services and
furnish supplies and/or equipment with respect to the Subject Interests that are required to
operate the Subject Interests in accordance with the operations standard set forth in Section 4.1
hereof and debit the Net Profits Account for the costs of such services and/or furnishing of such
supplies and/or equipment, provided that the terms of the provision of such services or
furnishing of supplies and/or equipment shall not be less favorable than those terms available from
non-Affiliates in the same area as such Subject Interests that are engaged in the business of
rendering comparable services or furnishing comparable equipment and supplies, taking into
consideration all such terms, including the price, term, condition of supplies or equipment,
availability of supplies and/or equipment, and all other terms.

ARTICLE V

RELEASES AND TRANSFERS OF SUBJECT INTERESTS/SUBJECT WELLS

     5.1 Sale and Release of Properties.

     (a) Grantor may from time to time Transfer the Subject Interests, or any part thereof or
undivided interest therein, free of the Net Profits Interest and the Conveyance, provided
that:

	 	(i)	 	no Subject Interest or portion thereof may be Transferred pursuant to this
Section 5.1 where the production of Subject Minerals from such Subject Interest or part
thereof for the twelve (12) months immediately preceding the proposed sale date for
such Subject Interest or part thereof exceeds one quarter of one percent (0.25%) of the
total production of total Subject Minerals produced from all of the Subject Interests
for the twelve (12) months immediately preceding the proposed sale date for such
Subject Interest or part thereof;
	 
	 	(ii)	 	in connection with any such Transfer, Grantee shall receive as compensation for
the release of its Net Profits Interest in the Subject Interest (or portion thereof) so
Transferred the Fair Value of the portion of the Net Profits Interest so released; and
	 
	 	(iii)	 	the aggregate fair market value of all portions of the Net Profits Interest
released pursuant to Section 5.1(a) during any consecutive twelve (12) month period
shall not exceed $500,000.

     (b) In connection with any Transfer pursuant to this Section 5.1, Grantor shall reduce the
costs referred to in Section 3.1(b), subject to the limitations described in Section 3.1(b), by an
amount equal to the Fair Value of the portion of the Net Profits Interest being released. Such
reduction shall be taken into account in the Payment Period in which Grantor receives the payment
with respect to any such Transfer of the Subject Interest.

     (c) In connection with any Transfer provided for in this Section 5.1, Grantee shall, on
request, immediately prior to any such Transfer, execute, acknowledge, and deliver to Grantor a

20

 

recordable instrument (reasonably acceptable to Grantor) that reconveys the Net Profits
Interest with respect to the Subject Interests being Transferred to Grantor.

     (d) From and after the actual date of any such Transfer by Grantor, Grantor and any assignee,
purchaser, transferee or grantee of such Subject Interest shall be relieved of all obligations,
requirements, and responsibilities arising under the Net Profits Interest or this Conveyance with
respect to the Subject Interests Transferred, except for those that accrued prior to such date.

     5.2 Release of Other Properties.

     (a) Notwithstanding anything herein to the contrary, in the event that any Person notifies
Grantor that, pursuant to a Prior Reversionary Interest, Grantor is required to convey any of the
Subject Interests to such Person or cease production from any Subject Well, Grantor may provide
such conveyance with respect to such Subject Interest or permanently cease production from any such
Subject Well.

     (b) Notwithstanding anything herein to the contrary, in the event that Grantor receives
compensation pursuant to any Prior Reversionary Interest Grantee shall not be entitled to any share
of such compensation.

     (c) In connection with any conveyance or permanent cessation of production provided for in
Section 5.2(a) above, Grantee shall, on request, immediately prior to such event, execute,
acknowledge, and deliver to Grantor a recordable instrument (reasonably acceptable to Grantor) that
reconveys the Net Profits Interest with respect to any such Subject Well or Subject Interests to
Grantor.

     (d) From and after the actual date of any conveyance or permanent cessation of production
provided for in Section 5.2(a), Grantor and any assignee, purchaser, transferee or grantee of such
Subject Interest shall be relieved of all obligations, requirements, and responsibilities arising
under the Net Profits Interest or this Conveyance with respect to the Subject Interests Transferred
(and no credits or debits shall be made to the Net Profits Account therefor), except for those that
accrued prior to such date.

     5.3 Farmouts.

     (a) Grantor may from time to time enter into Farmout Agreements with Third Persons with
respect to a Subject Interest. In the event that Grantor enters into any Farmout Agreement with a
Third Person, the Net Profits Interest and this Conveyance shall burden only Grantor’s retained
interest in the Subject Interest after giving effect to any interest in the Subject Interest that a
counterparty to the Farmout Agreement may earn under such Farmout Agreement.

     (b) In connection with Grantor entering into any Farmout Agreement, Grantee shall, upon
request, execute, acknowledge, and deliver to Grantor a recordable instrument (reasonably
acceptable to Grantor) that releases the Net Profits Interest and this Conveyance with respect to
the Subject Interests being Transferred pursuant to such Farmout Agreement; provided, the
Net Profits Interest shall continue to burden the Subject Interest retained by Grantor.

21

 

ARTICLE VI

OWNERSHIP OF PROPERTY; LIABILITY OF GRANTEE; NO RIGHT OF OPERATIONS BY GRANTEE

     6.1 Ownership of Certain Property. The Net Profits Interest does not include any
right, title, or interest in and to any personal property, fixtures, or equipment and is
exclusively an interest in and to the Subject Leases and the Minerals in and under and produced and
saved from the Subject Interests, and Grantee shall look solely to the Subject Minerals and
payments in respect thereof (as provided herein) for the satisfaction and realization of the Net
Profits Interest.

     6.2 No Personal Liability. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
CONVEYANCE, GRANTEE SHALL NEVER PERSONALLY BE RESPONSIBLE FOR PAYMENT OF ANY PART OF THE COSTS,
EXPENSES OR LIABILITIES INCURRED IN CONNECTION WITH THE EXPLORING, DEVELOPING, OPERATING AND
MAINTAINING OF THE SUBJECT INTERESTS; PROVIDED, HOWEVER, ALL SUCH COSTS AND EXPENSES SHALL,
TO THE EXTENT THE SAME RELATE TO ACTS, OMISSIONS, EVENTS, CONDITIONS OR CIRCUMSTANCES OCCURRING
FROM AND AFTER THE EFFECTIVE TIME, NEVERTHELESS BE CHARGED AGAINST THE NET PROFITS ACCOUNT AS AND
TO THE EXTENT HEREIN PERMITTED.

     6.3 No In-Kind Rights. Grantee shall have no right to take in kind any Subject
Minerals allocable to the Net Profits Interest.

     6.4 No Operating Rights. IT IS THE EXPRESS INTENT OF GRANTOR AND GRANTEE THAT THE NET
PROFITS INTEREST SHALL CONSTITUTE (AND THIS CONVEYANCE SHALL CONCLUSIVELY BE CONSTRUED FOR ALL
PURPOSES AS CREATING) A SINGLE, SEPARATE NON-OPERATING NET PROFITS INTEREST IN AND TO THE SUBJECT
LEASES AND MINERALS IN AND UNDER AND PRODUCED AND SAVED FROM THE SUBJECT INTERESTS DURING THE NET
PROFITS PERIOD FOR ALL PURPOSES AND A FULLY VESTED AND FULLY CONVEYED INTEREST IN PROPERTY.
WITHOUT LIMITATION OF THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, GRANTOR AND GRANTEE
ACKNOWLEDGE THAT GRANTEE HAS NO RIGHT OR POWER TO PARTICIPATE IN THE SELECTION OF A DRILLING
CONTRACTOR, TO PROPOSE THE DRILLING OF A WELL, TO DETERMINE THE TIMING OR SEQUENCE OF DRILLING
OPERATIONS, TO COMMENCE OR SHUT DOWN PRODUCTION, TO TAKE OVER OPERATIONS, OR TO SHARE IN ANY
OPERATING DECISION WHATSOEVER OR IN ANY DECISION PERTAINING TO THE MARKETING AND SALE OF PRODUCTION
WHATSOEVER. GRANTOR AND GRANTEE HEREBY EXPRESSLY NEGATE ANY INTENT TO CREATE (AND THIS CONVEYANCE
SHALL NEVER BE CONSTRUED AS CREATING) A MINING OR OTHER PARTNERSHIP OR JOINT VENTURE OR OTHER
RELATIONSHIP SUBJECTING GRANTOR AND GRANTEE TO JOINT LIABILITY.

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ARTICLE VII

WARRANTY AND NEGATIVE COVENANT

     7.1 Warranty. Grantor agrees to warrant and forever defend, all and singular, the Net
Profits Interest unto Grantee, its successors and assigns, against all persons whomsoever claiming
or to claim the same, or any part thereof, by, through or under Grantor, but not otherwise, subject
to the Permitted Encumbrances. Subject to the Net Profits Interest and the Permitted Encumbrances,
Grantor further warrants to Grantee that with respect to claims made by, through or under Grantor
or its Affiliates, immediately prior to the transfer made pursuant to this Conveyance, with respect
to each well set forth in Exhibit B to the Supplemental Agreement, Grantor is (i) entitled to
receive not less than the percentage set forth in Exhibit B to the Supplemental Agreement hereto as
the “Net Revenue Interest” of all Minerals produced, saved and marketed from such well to which
such Net Revenue Interest corresponds without reduction of such interest throughout the duration of
the life of such well except as specifically set forth in Exhibit B to the Supplemental Agreement,
and (ii) obligated to bear the percentage of the costs and expenses relating to the maintenance,
development and operation of such well not greater than the “Working Interest” shown in Exhibit B
to the Supplemental Agreement with respect to such well, without increase throughout the duration
of the life of such well, as applicable, except as specifically set forth in Exhibit B to the
Supplemental Agreement. Grantor also hereby transfers to Grantee by way of substitution and
subrogation (to the fullest extent that same may be transferred), all rights or actions over and
against all predecessors (other than Affiliates of Grantor), covenantors or warrantors of title.

     7.2 Senior Obligation. Grantor agrees that it shall cause each agreement, indenture,
bond, deed of trust, filing, application or other instrument that creates or purports to create a
lien, mortgage, security interest or other charge secured by the Subject Interests, Subject
Minerals or the proceeds from the sale of the Subject Minerals or the Existing Hedges that is
entered into on or after the date hereof to include an express agreement and acknowledgement by the
parties thereto that the Net Profits Interest is senior in right of payment and collection to any
and all obligations created thereby in respect of the Subject Interests, Subject Minerals or the
proceeds from the sale of the Subject Minerals or the Existing Hedges; provided, however, that this
Section 7.2 shall not apply to any agreement, indenture, bond, deed of trust, filing, application
or other instrument that creates a lien, mortgage, security interest or other charge secured by not
more than Grantor’s residual interest in the Subject Interests, Subject Minerals or the proceeds
from the sale of the Subject Minerals, (in each case) subject and subordinate to the Net Profits
Interest (and the Net Profits Interest shall not be burdened or encumbered by any such lien,
mortgage, security interest or other charge).

ARTICLE VIII

ASSIGNMENT OF PRE-EFFECTIVE TIME PAYMENT

For and in consideration of Ten and No/100 Dollars ($10.00) and other good and valuable
consideration (including the issuance by Grantee to Grantor of the Trust Units identified in
Article I) to Grantor paid by Grantee, the receipt and sufficiency of which are hereby acknowledged
by Grantor, Grantor has bargained, sold, granted, conveyed, transferred, assigned, set over, and
delivered, and by these presents does hereby bargain, sell, grant, convey, transfer, assign, set
over, and deliver unto Grantee, its successors and assigns, effective as of the Effective

23

 

Time, an amount, payable by wire transfer of immediately available funds on or before the tenth day
(or, if such day is not a Business Day, the next Business Day) following the Quarterly Record Date
for the applicable Payment Period, equal to the product of the Proceeds Percentage times the Net
Profits that would have been payable by Grantor to Grantee pursuant to the terms of the Net Profits
Interest calculated by reference to the production of the Subject Interests for the Production
Period Prior to the Effective Time as if the Net Profits Interest had been in existence and this
Conveyance been dated and in effect as of January 1, 2008 (the “Pre-Effective Time Payment”). In
no event shall any item of gross proceeds, cost, revenue or other amount used in determining the
Pre-Effective Time Payment be duplicated with any such item of gross proceeds, cost, revenue or
other amount pursuant to the calculation of the Net Profits Interest.

ARTICLE IX

MISCELLANEOUS

     9.1 Notices. All notices and other communications required or permitted under this
Conveyance shall be in writing and, unless otherwise specifically provided, shall be delivered
personally, by electronic transmission, by registered or certified mail, postage prepaid, or by
delivery service for which a receipt is obtained (except for quarterly statements provided for
under Section 3.5 above which may be sent by regular mail), to the respective addresses of Grantor
and Grantee shown below, and shall be deemed delivered on the date of receipt. Either party may
specify his proper address or any other post office address within the continental limits of the
United States by giving notice to the other party, in the manner provided in this Section, at least
fifteen (15) days prior to the effective date of such change of address. For purposes of notice,
the addresses of Grantor and Grantee shall be as follows:

	 	 	 
	If to Grantor:

	 	c/o Whiting Petroleum Corporation
	 

	 	1700 Broadway, Suite 2300
	 

	 	Denver, Colorado 80290-2300
	 

	 	Attention: Chief Financial Officer
	 
	 	 
	If to Grantee:

	 	The Bank of New York Trust Company, N.A.
	 

	 	Global Corporate Trust
	 

	 	919 Congress Avenue, Suite 500
	 

	 	Austin, Texas 78701
	 

	 	Attention: Michael J. Ulrich

     9.2 Payments. Grantor shall transfer or cause to be transferred all monies to which
Grantee is entitled hereunder by Federal funds wire transfer not later than the date when due, to
Grantee at the bank account specified by Grantee in writing to Grantor.

     9.3 Amendments. This Conveyance may not be amended, altered, or modified except
pursuant to a written instrument executed by Grantor and Grantee.

     9.4 Further Assurances. Grantor and Grantee shall from time to time do and perform
such further acts and execute and deliver such further instruments, conveyances, and documents as
may be required or reasonably requested by the other party to establish, maintain, or protect the
respective rights and remedies of Grantor and Grantee and to carry out and

24

 

effectuate the intentions and purposes of this Conveyance, provided in each case the
same does not conflict with any provision of this Conveyance.

     9.5 Waivers. The failure of Grantor or Grantee to insist upon strict performance of
any provision hereof shall not constitute a waiver of or estoppel against asserting the right to
require such performance in the future, nor shall a waiver or estoppel in any one instance
constitute a waiver or estoppel with respect to a later breach of a similar nature or otherwise.

     9.6 No Partition. Grantor and Grantee acknowledge that Grantee has no right or
interest that would permit Grantee to partition any portion of the Subject Interests, and Grantee
hereby waives any such right.

     9.7 Governing Law. THIS CONVEYANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF COLORADO EXCEPT TO THE EXTENT THE PROPERTY LAWS OF THE STATE IN WHICH
THE SUBJECT INTERESTS ARE LOCATED ARE APPLICABLE.

     9.8 Rule Against Perpetuities. It is not the intent of Grantor or Grantee that any
provision herein violate any applicable law regarding the rule against perpetuities, the suspension
of the absolute power of alienation, or other rules regarding the vesting or duration of estates,
and this Conveyance shall be construed as not violating any such applicable law to the extent the
same can be so construed consistent with the intent of the parties. In the event, however, that
any provision hereof is determined to violate any such applicable law, then such provision shall
nevertheless be effective for the maximum period (but not longer than the maximum period) permitted
by any such applicable law that will result in no violation. To the extent such maximum period is
permitted to be determined by reference to “lives in being”, Grantor and Grantee agree that “lives
in being” shall refer to the lifetime of the last to die of the now living lineal descendants of
the late Joseph P. Kennedy (father of the late President of the United States of America).

     9.9 Tax Matters.

     (a) Nothing herein contained shall be construed to constitute a partnership or to cause either
party hereto (under state law or for tax purposes) to be treated as being the agent of, or in
partnership with, the other party. In addition, the parties hereto intend that the Net Profits
Interest conveyed hereby to Grantee shall at all times be treated as (i) an incorporeal (i.e., a
non-possessory) interest in real property or land under the laws of the state in which the Subject
Interests are located, and (ii) a production payment under Section 636 of the Code, and therefore,
for tax purposes, debt, payable out of net profits (rather than as a working or any other
interest). The parties hereto intend that the Pre-Effective Time Payment conveyed hereby to
Grantee shall at all times be treated for United States federal income tax purposes as a debt
obligation of Grantor.

     (b) Grantor and Grantee agree, and by acquisition of an interest in Grantee each holder of an
interest in Grantee shall be deemed to have agreed, for United States federal income tax purposes,
(1) to treat the Net Profits Interest as indebtedness that is subject to Treasury Regulations
Section 1.1275-4 (the “Contingent Debt Regulations”) and, for purposes of the

25

 

Contingent Debt Regulations, to treat payments received with respect to the Net Profits
Interest as contingent payments, and (2) to accrue interest with respect to the Net Profits
Interest according to the “noncontingent bond method” set forth in Treasury Regulations Section
1.1275-4(b), using the comparable yield of 9.0% per annum compounded semi-annually.

     (c) Grantor and Grantee acknowledge and agree, and by acquisition of an interest in Grantee
each holder of an interest in Grantee shall be deemed to have agreed, that (i) the comparable yield
and the schedule of projected payments are not determined for any purpose other than for the
determination of interest accruals and adjustments thereof in respect of the Net Profits Interest
for United States federal income tax purposes and (ii) the comparable yield and the schedule of
projected payments do not constitute a projection or representation regarding the amounts payable
on the Net Profits Interest.

     (d) Grantor may cause to be withheld from any payment hereunder any tax withholding required
by law or regulations, including, in the case of any withholding obligation arising from income
that does not give rise to any cash or property from which any applicable withholding tax could be
satisfied, by way of set off against any subsequent payment of cash or property hereunder.

     9.10 Counterparts; Termination.

     (a) Multiple counterparts of the Conveyance have been recorded in the counties of the States
of Oklahoma, Texas, North Dakota, Arkansas, Montana, Wyoming, Michigan, New Mexico, Louisiana,
Colorado, Alabama, Utah, Kansas, and Mississippi where the Subject Interests are located. The
counterparts are identical except that, to facilitate recordation, the counterpart recorded in each
county may contain property descriptions relating only to the Subject Interests located in that
county. A counterpart of the Conveyance containing all property descriptions of Subject Interests
will be maintained in the offices of the Grantor.

     (b) If any Subject Interests are located in more than one county, the description of such
Subject Interests may be included in any one or more counterparts prepared for recordation in
separate counties, but the inclusion of the same property description in more than one counterpart
of this Conveyance shall not be construed as having effected any cumulative, multiple, or
overlapping interest in the Subject Interests in question.

     (c) On the Termination Date, Grantee shall, on request, execute, acknowledge, and deliver to
Grantor a recordable instrument (reasonably acceptable to Grantor) that terminates and releases the
Net Profits Interest with respect to the Subject Interests.

     9.11 Binding Effect. All the covenants and agreements of Grantor herein contained
shall be deemed to be covenants running with Grantor’s interest in the Subject Interests and the
lands affected thereby. All of the provisions hereof shall inure to the benefit of Grantee and its
successors and assigns and shall be binding upon Grantor and its successors and assigns and all
other owners of the Subject Interests or any part thereof or any interest therein.

26

 

     EXECUTED effective for all purposes as of the Effective Time.

	 	 	 	 	 
	 

	 	GRANTOR:
	 	 
	 
	 	 	 	 
	ATTEST:

	 	WHITING OIL AND GAS CORPORATION	 	 
	 
	 	 	 	 
	By: /s/ Christy M. Evenden

	 	By: /s/ David M. Seery	 	 
	 

Name: Christy M. Evenden

	 	 

Name: David M. Seery
	 	 
	Title: Assistant Secretary

	 	Title: Vice President, Land	 	 
	 
	 	 	 	 
	ATTEST:

	 	EQUITY OIL COMPANY	 	 
	 
	 	 	 	 
	By: Christy M. Evenden

	 	By: /s/ David M. Seery	 	 
	 

Name: Christy M. Evenden

	 	 

Name: David M. Seery
	 	 
	Title: Assistant Secretary

	 	Title: Vice President, Land	 	 

	 	 	 	 	 
	 	GRANTEE:

WHITING USA TRUST I

By its Trustee, The Bank of New York

Trust Company, N.A.

 	 
	 	By:  	/s/ Michael J. Ulrich
 	 
	 	 	Name:  	Michael J. Ulrich 	 
	 	 	Title:  	Vice President 	 
	 

This Conveyance was drafted by John K. Wilson from the law firm of Foley & Lardner LLP, located at
777 E. Wisconsin Avenue, Milwaukee, WI 53202, phone number (414) 271-2400.

27

 

EXHIBIT A

Exhibit A
– Page 1

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