Document:

EX-10.3

Exhibit 10.3

Execution Version

MORTGAGE PURCHASE AGREEMENT

     This MORTGAGE PURCHASE AGREEMENT (this “Agreement”), dated as of September 30, 2008, is made
and entered into by and between Care Investment Trust Inc., a Maryland Corporation (“Seller”) and
CIT Healthcare LLC, a Delaware limited liability company (the “Buyer”). Seller and Buyer may
hereinafter be referred to individually as a “Party” or collectively as the “Parties”.

W I T N E S S E T H:

     WHEREAS, Exhibit A attached hereto contains a list of all of the mortgage loans owned
by Seller as of the date hereof (each a “Mortgage Asset”); and

     WHEREAS, subject to the terms and conditions hereof, the Parties may from time-to-time enter
into transactions (each a “Transaction”) in which Seller agrees to sell and transfer to Buyer, and
Buyer agrees to purchase from Seller, certain Mortgage Assets.

     NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and
agreements contained herein and for other good and valuable consideration, the receipt an adequacy
of which is hereby acknowledged, the Parties hereto (intending to be legally bound) hereby agree as
follows:

ARTICLE 1.

DEFINITIONS

     1.1 Defined Terms. As used herein, the terms below have the following meanings:

          (a) “Affiliate” means, with respect to a Party, any individual or entity that controls, is
controlled by, or is under common control with, such Party.

          (b) “Agreement” has the meaning set forth in the preamble of this Agreement.

          (c) “Assignment Agreement” has the meaning set forth in Section 2.6.

          (d) “Business Day” means any day other than a Saturday, a Sunday or a day on which banks in
the City of New York are required, permitted or authorized, by applicable law or executive order,
to be closed for regular banking business.

          (e) “Buyer” has the meaning set forth in the preamble of this Agreement.

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          (f) “Engagement Date” has the meaning set forth in Section 2.2.

          (g) “Exercise Date” means the date upon which Seller provides written notice to Buyer
exercising its Sale Right in accordance with Section 2.1 hereof.

          (h) “Exercise Notice” has the meaning set forth in Section 2.1. 

          (i) “Fair Market Value” has the meaning set forth in Section 2.2.

          (j) “Fair Market Value Arbitrator” means an individual or entity selected, by written
agreement of the Parties within three (3) Business Day after an Objection Notice is delivered by a
Party, to review the Third Party Appraiser’s determination of Fair Market Value, which individual
or entity must be independent of both Parties (within the meaning of the director independence
rules of the New York Stock Exchange); provided however if the Parties have not
agreed to a Fair Market Value Arbitrator by 5 p.m. New York City time on the date that is three (3)
Business Day after an Objection Notice is delivered, the Third Party Appraiser shall promptly
appoint a Fair Market Value Arbitrator that is independent of both Parties (within the meaning of
the director independence rules of the New York Stock Exchange).

          (k) “Fair Market Value Arbitrator’s Determination” has the meaning set forth in Section
2.2.

          (l) “Mortgage Asset” has the meaning set forth in the Recitals.

          (m) “Objection Deadline” has the meaning set forth in Section 2.2.

          (n) Objection Notice” has the meaning set forth in Section 2.2.

          (o) “Objecting Party” has the meaning set forth in Section 2.2.

          (p) “Party” or “Parties” has the meaning set forth in the preamble of this Agreement.

          (q) “Par Value” means, with respect to any Mortgage Asset, the outstanding principal balance
of such Mortgage Asset as of the Transaction Closing Date with respect to such Mortgage Asset.

          (r) “Resignation Notice” has the meaning set forth in the definition of Third Party Appraiser.

          (s) “Revocation Notice” has the meaning set forth in Section 2.3.

          (t) “Sale Price” has the meaning set forth in Section 2.2.

          (u) “Sale Right” has the meaning set forth in Section 2.1.

          (v) “Seller” has the meaning set forth in the preamble of this Agreement.

          (w) “Termination Date” has the meaning set forth in Section 2.1.

          (x) “Third Party Appraiser” means Column Financial Inc.; provided, however, if Column
Financial Inc. shall have notified the Company that it is no longer willing to serve as Third Party
Appraiser under this Agreement (a “Resignation Notice”), “Third Party Appraiser” shall mean a
successor Third Party Appraiser that is independent of both Parties (within the meaning of the
director independence rules of the New York

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Stock Exchange) and agreed to in writing by the Parties in advance of the effective date of
the Resignation Notice; and provided further if the Parties have not agreed to a
successor Third Party Appraiser by the effective date of the Resignation Notice, the Third Party
Appraiser shall appoint a successor Third Party Appraiser that is independent of both Parties
(within the meaning of the director independence rules of the New York Stock Exchange) effective as
of the effective date of such Resignation Notice.

          (y) “Transaction” has the meaning set forth in the Recitals.

          (z) “Transaction Closing” means the consummation of the purchase of one or more Mortgage
Assets for the Sale Price pursuant to Seller’s exercise of the Sale Right in accordance with
Section 2.1 hereof.

          (aa) “Transaction Closing Date” means, with respect to any Mortgage Asset, the date on which
a Transaction Closing occurs with respect to such Mortgage Asset.

ARTICLE 2.

SALE RIGHT

     2.1 Obligation; Exercise. At any time and from time-to-time from the date of this
Agreement to 5:00 p.m., New York City time, on September 30, 2009 (the “Termination Date”), Seller
shall have the right, but not the obligation (the “Sale Right”), by providing written notice to
Buyer in accordance with this Section 2.1 (each an “Exercise Notice”), to cause Buyer to
purchase on the Transaction Closing Date any or all of the Mortgage Assets then owned by Seller for
the Sale Price of such Mortgage Assets; provided, however, that in no event shall
Buyer be required to purchase any Mortgage Asset after it has purchased Mortgage Assets with an
aggregate Sale Price of One Hundred Twenty Five Million Dollars ($125,000,000) pursuant to this
Agreement. Each Exercise Notice shall specify (a) Seller’s intention to exercise the Sale Right
granted hereunder, (b) the identity of the Mortgage Asset or Mortgage Assets to be sold, (c) the
Exercise Date, and (d) wire instructions for payment of the Sale Price on the Transaction Closing
Date.

     2.2 Calculation of Sale Price. Upon receipt of an Exercise Notice, Buyer shall
promptly, but in no event later than two (2) Business Day after receipt by Buyer of the Exercise
Notice, submit a request (the date on which such request is submitted the “Engagement Date”) to the
Third Party Appraiser to determine the fair market value, as of the Exercise Date, of the Mortgage
Assets identified in the Exercise Notice (the “Fair Market Value”) and Buyer shall instruct the
Third Party Appraiser to deliver its calculation of Fair Market Value simultaneously to each of
Seller and Buyer within five (5) Business Days after the Engagement Date. If, upon receipt of the
Third Party Appraiser’s determination of Fair Market Value, either Party disagrees with such
determination, such Party (the “Objecting Party”) may, by written notice (an “Objection Notice”) to
the other Party by 5:00 p.m. New York City time on the date that is two (2) Business Days following
receipt by the Objecting Party of the Third Party Appraiser’s determination (the “Objection
Deadline”), request that the Third Party Appraiser’s determination of Fair Market Value be appealed
to the Fair Market Value Arbitrator and

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the Objecting Party shall, upon appointment of the Fair Market Value Arbitrator, instruct the
Fair Market Value Arbitrator to render its determination of the Fair Market Value of the Mortgage
Assets identified in the applicable Exercise Notice to both Parties within five (5) Business Days
after such instruction. Each Objection Notice must contain the Objecting Party’s calculation of
the Fair Market Value of the Mortgage Assets identified in the applicable Exercise Notice and its
basis for calculating such Fair Market Value. If a Party fails to deliver an Objection Notice with
respect to the Third Party Appraiser’s determination of Fair Market Value of the Mortgage Assets
identified in any Exercise Notice by the Objection Deadline, such Party shall be deemed to agree
with, and have adopted, the Third Party Appraiser’s determination of Fair Market Value. If neither
Party delivers an Objection Notice with respect to the Third Party Appraiser’s determination of
Fair Market Value of the Mortgage Assets identified in any Exercise Notice by the Objection
Deadline, the Third Party Appraiser’s determination of Fair Market Value shall be final and binding
on the Parties as of the Objection Deadline. If one or more Objection Notices are delivered by the
Objection Deadline, the Fair Market Value Arbitrator’s determination of Fair Market Value shall be
final and binding on the Parties as of the date on which such determination (the “Fair Market Value
Arbitrator’s Determination”) is delivered to both Parties. For all purposes of this Agreement, the
“Sale Price” of any Mortgage Asset shall be equal to the Fair Market Value of such Mortgage Asset
as finally determined pursuant to this Section 2.2.

     2.3 Revocation of Exercise Notice; Maximum Fair Market Value. Notwithstanding anything to the
contrary in this Agreement, (a) Seller may, at any time up until the Transaction Closing Date with
respect to a Mortgage Asset, revoke its Notice of Exercise with respect to such Mortgage Asset by
providing written notice thereof to Buyer (a “Revocation Notice”) and, in the event of delivery of
such a Revocation Notice, Seller shall have no obligation to sell the Mortgage Asset that is the
subject of such Revocation Notice to Buyer pursuant to this Agreement on the Transaction Closing
Date set forth in the applicable Exercise Notice or at all; provided, however, that
delivery of a Revocation Notice with respect to any Mortgage Asset shall not prejudice Seller’s
right to include such Mortgage Asset in a subsequent Exercise Notice during the term of this
Agreement, and (b) in no event shall Buyer be obligated to purchase any Mortgage Asset pursuant to
this Agreement if the Fair Market Value of such Mortgage Asset, as finally determined in accordance
with Section 2.2, is greater than one hundred five percent (105%) of the Par Value of such
Mortgage Asset.

     2.4 Conditions to Closing.

          (a) The obligation of Seller to transfer the Assets to Buyer in exchange for the applicable
Sale Price pursuant to an Assignment Agreement shall be subject to the following additional
conditions (which conditions may be waived by Seller in Seller’s sole discretion):

               (1) that at the time of the Transaction Closing of such transfer, each of the representations
and warranties of Buyer made in the Assignment Agreement shall be true and correct; and

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               (2) all required approvals and consents to the transactions contemplated by the Assignment
Agreement relating to such transfer shall have been obtained from all necessary third parties.

          (b) The obligation of Buyer to pay the Sale Price to Seller in exchange for the transfer of
Assets pursuant to an Assignment Agreement shall be subject to the following additional conditions
(which conditions may be waived by Buyer in Buyer’s sole discretion):

               (1) that at the time of the Transaction Closing of such Transfer, each of the representations
and warranties of Seller made in the Assignment Agreement shall be true and correct;

               (2) Seller shall have executed and delivered to Buyer the Transfer Instruments required by the
Assignment Agreement, executed by Seller and all other required parties other than Buyer;

               (3) all required approvals and consents to the transactions contemplated by the Assignment
Agreement shall have been obtained from all necessary third parties; and

               (4) to the best of Seller’s knowledge, there shall be no material pending or threatened
litigation regarding the Mortgage Assets that are the subject of such transfer.

     2.5 Costs of Fair Market Value Determinations. Each of Seller and Buyer shall be responsible
for paying fifty percent (50%) of the fees, costs and expenses associated with the Third Party
Appraiser’s determination of Fair Market Value. Any fees, costs and expenses associated with the
Fair Market Value Arbitrator’s determination of Fair Market Value shall be borne by the Party whose
calculation of Fair Market Value differed by the greatest amount from the Fair Market Value
Arbitrator’s Determination (it being understood that if a Party fails to deliver an Objection
Notice by the Objection Deadline, its calculation of Fair Market Value shall be deemed to be equal
to the Third Party Appraiser’s determination of Fair Market Value).

     2.6 Transaction Closing. Each Transaction Closing shall occur at 10:00 a.m., New York City
time, on the date that is three (3) Business Days after the applicable Sale Price has been finally
determined pursuant to Section 2.2 . On the Transaction Closing Date with respect to any
particular Mortgage Assets, the Parties shall consummate the sale of such Mortgage Assets pursuant
to an assignment agreement substantially in the form of Exhibit B attached hereto (each an
“Assignment Agreement”), against delivery by the Buyer of the Sale Price for such Mortgage Assets.
Delivery of the Sale Price by the Buyer shall be made in U.S. dollars by wire transfer in
immediately available funds to the account or accounts designated by Seller in the Exercise Notice.

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ARTICLE 3.

OBLIGATION ABSOLUTE AND UNCONDITIONAL

     3.1 Obligation Absolute and Unconditional. Subject to Sections 2.2 and
2.4(b), the obligation of Buyer, upon delivery of an Exercise Notice by Seller (which Exercise
Notice has not been revoked as of the applicable Transaction Closing Date by Seller’s delivery of a
Revocation Notice to Buyer), to pay the Sale Price for the Mortgage Assets that are the subject of
such Exercise Notice on the applicable Transaction Closing Date shall be absolute and unconditional
and shall not be subject to any right of set-off or defense whatsoever, whether in law or equity,
including force majeure.

ARTICLE 4.

MISCELLANEOUS

     4.1 Notices. All notices, requests and other communications to any Party hereunder
shall be in writing (including facsimile or similar writing) and shall be given,

     If to the Seller:

Care Investment Trust Inc.

c/o CIT Healthcare LLC

505 Fifth Avenue, 6th Floor

New York, New York 10017

Attention: Chief Financial Officer

Facsimile No.: (212) 771-9317

     If to Buyer:

CIT Healthcare LLC

505 Fifth Avenue, 6th Floor

New York, New York 10017

Attention: President

Facsimile No.: (212) 771-9317

     4.2 Entire Agreement: No Other Representations. This Agreement and the exhibits
attached hereto constitute the entire agreement between the Parties with respect to the subject
matter hereof, and supersede all other prior agreements and understandings, both written and oral,
between the Parties, with respect to the subject matter hereof.

     4.3 Severability. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof. If any provision of this Agreement, or the application thereof to any
person or entity or any circumstance, is invalid or unenforceable (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and

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purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and
the application of such provision to other persons or entities or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application thereof, in any other
jurisdiction.

     4.4 Interpretation. The section references and headings herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof.

     4.5 Successors and Assigns. No Party may assign any of its rights or delegate any of
its duties or obligations under this Agreement, except that Buyer may, upon notice to Seller,
delegate its duties or obligations hereunder to any Affiliate or Affiliates of Buyer. This
Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective
successors and permitted assigns.

     4.6 Counterparts; Facsimile Signatures. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which shall constitute one
instrument. The Parties may execute this Agreement by the facsimile exchange of executed signature
pages.

     4.7 No Joint Venture or Partnership; No Third Party Beneficiaries.

          (a) Seller and Buyer intend that the relationships created hereunder be solely that of
purchaser and seller. Nothing herein is intended to create a joint venture, partnership, tenancy in
common, or joint tenancy relationship between the Seller, on the one hand, and Buyer, on the other
hand.

          (b) This Agreement is solely for the benefit of Seller and Buyer and their respective
successors and permitted assigns and nothing contained in this Agreement shall be deemed to confer
upon anyone other than the Seller and the Buyer and their respective successors and permitted
assigns any right to insist upon or to enforce the performance or observance of any of the
obligations contained herein or therein.

     4.8 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE INTERNAL
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT FOR ANY DISTRICT WITHIN SUCH STATE
FOR THE PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN SUCH COURT.

     4.9 Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND

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UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY
MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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     IN WITNESS WHEREOF, each of the undersigned, intending to be legally bound hereby, has duly
executed this Agreement as of the date and year set forth above.

	 	 	 	 	 	 	 
	 	 	CARE INVESTMENT TRUST INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	F. Scott Kellman	 	 
	 

	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	CIT HEALTHCARE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Steven Warden	 	 
	 

	 	Title:
	 	President	 	 

 

 

EXHIBIT A

Mortgage Assets

Care
Investment Trust - Mortgage Portfolio 2Q ‘08 Balances

(dollars in thousands)

	 	 	 	 	 	 	 	 	 
	 	 	Carrying	 	 	Outstanding	 
	 	 	Amount @ 6/30/08	 	 	Balance @ 6/30/08	 
	SNF
	 	$	9,236	 	 	$	9,066	 
	SNF / ALF
	 	 	24,863	 	 	 	24,673	 
	SNF / ALF / IL
	 	 	26,510	 	 	 	25,822	 
	SNF
	 	 	23,992	 	 	 	23,896	 
	SNF
	 	 	27,614	 	 	 	27,229	 
	SNF
	 	 	6,642	 	 	 	6,569	 
	SNF
	 	 	4,676	 	 	 	4,647	 
	SNF / ICF
	 	 	29,690	 	 	 	29,392	 
	SNF
	 	 	8,552	 	 	 	8,476	 
	SNF / ALF
	 	 	9,802	 	 	 	9,547	 
	SNF / Sr. Appts / ALF
	 	 	16,311	 	 	 	16,160	 
	ALF
	 	 	3,705	 	 	 	3,718	 
	SNF / IL
	 	 	6,037	 	 	 	6,037	 
	SNF
	 	 	9,239	 	 	 	9,239	 
	SNF
	 	 	10,314	 	 	 	10,314	 
	 
	 	 	 	 	 	 
	Total
	 	$	217,183	 	 	$	214,785	 
	 
	 	 	 	 	 	 

 

 

EXHIBIT B

FORM OF

ASSIGNMENT AGREEMENT

     This ASSIGNMENT AGREEMENT (this “Agreement”), dated as of [___], 200_, is by and between Care
Investment Trust Inc., a Maryland corporation (the “Seller”) and CIT Healthcare LLC, a Delaware
Limited Liability Company (the “Buyer”). Capitalized terms used, but not otherwise defined herein,
shall have the meanings ascribed to such terms in the Mortgage Purchase Agreement entered into by
and between Seller and Buyer on September 30, 2008 (the “Mortgage Purchase Agreement”).

W I T N E S S E T H:

     WHEREAS, Seller desires to assign, convey and transfer all of its right, title and interest to
the assets set forth on Schedule 1 hereto (collectively, the “Assets”) to Buyer in exchange for a
cash payment of $                                        , which constitutes the Sale Price as finally determined pursuant
to the Mortgage Purchase Agreement;

     NOW, THEREFORE, in consideration for the foregoing and other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto (each a “Party” and collectively
the “Parties”) agree as follows:

     Section 1. Transfer of the Assets. On the terms and subject to the conditions of this
Agreement and in consideration of the receipt by Seller of the Sale Price for such Assets from
Buyer, Seller hereby transfers, assigns, conveys and delivers to Buyer all right, title and
interest in and to the Assets as of the date hereof (the “Closing Date”).

     Section 2. Payment for the Assets. On the terms and subject to the conditions of this
Agreement and in consideration for the transfer of the Assets, Buyer has paid the Sale Price to
Seller by wire transfer in immediately available funds to the account or accounts designated by
Seller in the Exercise Notice.

     Section 3. Closing Allocations.

          (a) Payments Belonging to Seller. Seller is entitled to (i) all payments of principal
on the Assets, as well as any prepayment penalty or premium associated therewith, that are due on
or before the Closing Date and that are collected on or before the Closing Date, (ii) all payments
of principal on the Assets, as well as any prepayment penalty or premium associated therewith, that
are due on or before the Closing Date and that are collected after that date, and (iii) all
payments of interest that represent interest accruing on the Assets through and including the day
prior to the Closing Date. If and to the extent any such payments are received by Buyer, Buyer will
remit such payments to Seller promptly upon receipt thereof. Notwithstanding its status as owner of
the Assets after the Closing, Buyer will not waive or forgive (or otherwise forbear from the
enforcement and collection of) such payments that enure to the benefit of Seller as provided
herein.

 

 

          (b) Payments Belonging to Buyer. Buyer is entitled to (i) all payments of principal on
the Assets, as well as any prepayment penalty or premium associated therewith, that are due after
the Closing Date and are collected by Seller on or prior to the Closing Date, (ii) all payments of
principal on the Assets, as well as any prepayment penalty or premium associated therewith, that
are due after the Closing Date and are collected after the Closing Date, and (iii) all payments of
interest that represent interest accruing on the Assets on and after the Closing Date and that are
collected after the Closing Date. If and to the extent any such payments are received by Seller,
Seller will remit such payments to Buyer promptly upon receipt thereof.

     Section 4. Deliveries at Closing.

          (a) Seller has delivered to Buyer as of the date hereof:

               (1) with respect to each of the Assets identified on Schedule 1 hereto, such endorsements,
assignment and assumption agreements and other instruments of transfer, all in the form
satisfactory to Buyer, as may be required to vest good title in and to the Assets in Buyer
(“Transfer Instruments”), executed by Seller and each other required party other than Buyer;

               (2) copies of any approvals or consents required under the underlying loan documents more
particularly described on Schedule 1 hereto in order to consummate the transfers herein
contemplated. Schedule 1 identifies each Asset that requires a consent in connection with the
transaction herein contemplated; and

               (3) any books and records with respect to each of the Assets identified on Schedule 1 hereto.

          (b) Buyer has delivered to Seller as of the date hereof:

               (1) the Sale Price by wire transfer of immediately available funds to an account designated by
Seller in accordance with the Exercise Notice; and

               (2) to the extent applicable, counterparts of the Transfer Instruments executed by Buyer.

     Section 5. Representations and Warranties of Seller. Seller hereby represents and
warrants to Buyer, as follows:

          (a) Seller is a corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland.

          (b) Seller has the full power and authority to enter into and consummate all transactions
contemplated by this Agreement, has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement.

 

 

          (c) This Agreement, assuming due authorization, execution and delivery by Buyer, constitutes a
valid, legal and binding obligation of Seller, enforceable against Seller in accordance with the
terms hereof, subject to (A) applicable bankruptcy insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors’ rights generally, (B) general principles of equity,
regardless of whether such enforcement is considered in a proceeding in equity or at law and (C)
public policy considerations underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of this Agreement that purport to provide
indemnification for securities laws liabilities.

          (d) The execution and delivery by Seller of this Agreement and its performance of, and
compliance with, the terms of this Agreement will not conflict with or constitute a breach,
violation, or default under (A) its certificate of incorporation or bylaws, (B) any law, any order
or decree of any court or arbiter, or any order, regulation or demand of any federal, state or
local government or regulatory authority, which violation is likely to affect materially and
adversely either the ability of Seller to perform its obligations under this Agreement or the
financial condition of Seller or (C) any indenture, loan or credit agreement, or any other
agreement, contract, instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction or decree to which Seller is a party or by which any Asset is bound or
affected; the consummation of the transactions contemplated by this Agreement will not result in
the cancellation, modification or termination of, or the acceleration of, or the creation of any
charges, claims, conditions, options, assignments, preemptive rights, rights of first refusal,
security interests, hypothecations, encumbrances, mortgages, liens or pledges (collectively,
“Liens”) on the Assets pursuant to any agreement, license, lease, understanding, contract,
indenture, mortgage, instrument, promise, undertaking or other commitment or obligation
(“Contracts”) under which Seller or any Asset is subject to or bound.

          (e) Seller has not dealt with any person that may be entitled to any commission or
compensation in connection with the transfer of the Assets. Seller or the obligor on the promissory
note or notes related to each Asset (the “Obligor”) has paid any and all amounts due to any such
person, and Buyer shall have no responsibility for any payments due any such person.

          (f) As of the date of this Agreement, all of the Assets as described on Schedule 1 are owned
by Seller and Seller has good title to all of the Assets, free and clear of all Liens.

          (g) There are no Contracts with any other person or entity to sell, transfer, assign or in any
manner create a Lien on, the Assets, or to not sell, transfer or assign the Assets to Buyer.

          (h) No consents or approvals, other than those that have been obtained, are required for the
transfer of the Assets in accordance with the terms of this Agreement.

 

 

          (i) The Transfer Instruments are sufficient to convey to Buyer all right, title and interest
in the Assets in all relevant jurisdictions, except to the extent that a recording or other filing
is required to transfer such Asset.

          (j) To the best of Seller’s knowledge, there is no material default, breach, violation or
event of acceleration existing under any Asset and no event that, with the passage of time, or with
notice and the expiration of any grace or cure period, would constitute a material default, breach,
violation or event of acceleration thereunder.

          (k) To Seller’s knowledge, each property related to an Asset is in all material respects in
compliance with, and lawfully used, operated and occupied under, applicable zoning and building
laws or regulations, and Seller has not received notification from any governmental authority that
any such property fails to comply with such laws or regulations, is being used, operated or
occupied unlawfully or has failed to obtain or maintain any inspection, license or certificates
material to the operation of such property.

          (l) To the best of Seller’s knowledge, there are no actions, suits or proceedings pending, or
known to be threatened, before any court, administrative agency or arbitrator concerning an Asset
or the applicable collateral securing the Asset (the “Collateral”) that might materially and
adversely affect (1) title to such Asset, (2) the validity or enforceability thereof, (3) the value
of the Collateral as security for the Asset or (4) the marketability of such Collateral.

          (m) The information set forth on Schedule 2 hereto is true and accurate in all material
respects.

     Section 6. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows:

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

          (b) Buyer has the full power and authority to enter into and consummate all transactions
contemplated by this Agreement, has duly authorized the execution, delivery and performance of this
Agreement and has duly executed and delivered this Agreement.

          (c) This Agreement, assuming due authorization, execution and delivery by Seller, constitutes
a valid, legal and binding obligation of Buyer, enforceable against Buyer in accordance with the
terms hereof, subject to (A) applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors’ rights generally, (B) general principles of
equity, regardless of whether such enforcement is considered in a proceeding in equity or at law
and (C) public policy considerations underlying the securities laws, to the extent that such public
policy considerations limit the enforceability of the provisions of this Agreement that purport to
provide indemnification for securities laws liabilities.

 

 

          (d) Buyer is not in violation of, and its execution and delivery of this Agreement and its
performance of, and compliance with, the terms of this Agreement will not constitute a violation
of, any law, any order or decree of any court or arbiter, or any order, regulation or demand of any
federal, state or local governmental or regulatory authority, which violation, in Buyer’s good
faith and reasonable judgment, is likely to affect materially and adversely either the ability of
Buyer to perform its obligations under this Agreement or the financial condition of Buyer.

     Section 7. Survival of Representations, Warranties and Covenants. All representations,
warranties and covenants contained in this Agreement shall survive the Closing for a period of
twelve (12) months after the Closing Date.

     Section 8. Remedies After Closing Upon Breach of Representations and Warranties Made by
Seller.

          (a) Opportunity to Cure. If, within twelve (12) months after the Closing, there is a
breach of any of the representations and warranties in Section 5 made by Seller regarding the
characteristics of any Asset, and such breach materially and adversely affects the value of such
Asset (a “Material Breach”), Buyer will promptly notify Seller in writing of the Material Breach
after Buyer first gains knowledge of such breach but in any event, no later than twelve (12) months
after the Closing; provided, however, that the failure to give such notice shall
not affect Buyer’s rights under this Section 8 except to the extent that Seller is actually
prejudiced thereby. Each such notice must describe the asserted Material Breach in reasonable
detail, and must also indicate the amount Buyer in good faith estimates the value of the affected
Asset has been diminished as a result of such asserted Material Breach (the “Diminution in Value”).
Seller may then elect in its sole and absolute discretion to either pay to Buyer the Diminution in
Value, or attempt to cure or correct such asserted Material Breach in all material respects within
the applicable Permitted Cure Period (as defined below).

     For purposes of the foregoing, and subject to the following paragraph, the “Permitted Cure
Period” applicable to any Material Breach in respect of an Asset will be the 90-day period
immediately following receipt by Seller of written notice of such Material Breach. If such Material
Breach cannot be corrected or cured in all material respects within such 90-day period, but it is
reasonably likely that such Material Breach can be corrected or cured and Seller is diligently
attempting to effect such correction or cure, then the applicable Permitted Cure Period will be
extended for an additional 90 days.

     Section 9. Indemnity.

          (a) Indemnification by Seller. Seller hereby agrees to indemnify and hold Buyer
harmless from and against any and all damage, expense, loss, cost, claim or liability (each a
“Claim”) suffered or incurred by Buyer as a result of any of the following:

 

 

               (1) any untruth or inaccuracy in, or any breach of, any of the representations or warranties
made by Seller in Section 5 of this Agreement; or

               (2) any breach of, or failure to perform, any agreement of Seller contained in this Agreement.

          (b) Indemnification by Buyer. Buyer hereby agrees to indemnify and hold Seller
harmless from and against any and all Claims suffered or incurred by Seller as a result of any of
the following:

               (1) any untruth or inaccuracy in, or any breach of, any of the representations or warranties
made by Buyer in Section 6 of this Agreement; or

               (2) any breach of, or failure to perform, any agreement of Buyer contained in this Agreement.

          (c) Scope of Indemnity. Notwithstanding anything to the contrary otherwise provided in
this Agreement:

               (1) except in the case of fraud, the indemnification set forth in Sections 9(a) and 9(b) shall
be limited to an amount equal to the value of the Sale Price received by Seller on the date hereof;
and

               (2) the indemnification set forth in Sections 9(a) and 9(b) shall only extend to any Claim
which arises within twelve (12) months following the Closing.

          (d) Notice. To the extent that a Claim is asserted by a third party, the party hereto
seeking indemnification pursuant to Section 9(a) or 9(b) (“Indemnitee”) shall give prompt written
notice to the party hereto from whom indemnification is sought (“Indemnitor”) as to the assertion
of any Claim, or the commencement of any Claim. Subject to Section 9(c)(2), the omission of
Indemnitee to notify Indemnitor of any such Claim shall not relieve Indemnitor from any liability
in respect of such Claim that it may have to Indemnitee on account of this Agreement,
provided, however, that Indemnitor shall be relieved of liability to the extent
that the failure so to notify (a) shall have caused prejudice to the defense of such Claim, or (b)
shall have materially increased the costs or liability of Indemnitor by reason of the inability or
failure of Indemnitor (because of the lack of prompt notice from Indemnitee) to be involved in any
investigations or negotiations regarding any such Claim. In case any such Claim shall be asserted
or commenced against Indemnitee and it shall notify Indemnitor thereof, Indemnitor shall be
entitled to participate in the negotiation or administration thereof and, to the extent it may
wish, to assume the defense thereof with counsel reasonably satisfactory to Indemnitee, and, after
notice from Indemnitor to Indemnitee of its election so to assume the defense thereof, which notice
shall be given within fifteen (15) calendar days of its receipt of such notice from Indemnitee,
Indemnitor will not be liable to Indemnitee hereunder for any legal or other expenses subsequently
incurred by Indemnitee in connection with the defense thereof other than reasonable costs of
investigation. Indemnitor shall not settle any Claim in any manner that does not completely relieve
Indemnitee of liability for such

 

 

Claim, without the written consent of Indemnitee, which consent shall not be unreasonably
withheld or delayed.

     Section 10.
Expenses. Except as otherwise provided in the Mortgage Purchase Agreement, all reasonable costs and expenses incurred in connection with this Agreement and the transactions
contemplated hereby (including reasonable attorneys fees and expenses) shall be paid by each of the
respective parties with respect to their own costs and expenses.

          Section 11 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile or similar writing) and shall be given,

          If to Seller:

Care Investment Trust Inc.

c/o CIT Healthcare LLC

505 Fifth Avenue, 6th Floor

New York, New York 10017

Attention: Chief Financial Officer

Facsimile No.: (212) 771-9317

          If to Buyer:

CIT Healthcare LLC

505 Fifth Avenue, 6th Floor

New York, New York 10017

Attention: President

Facsimile No.: (212) 771-9317

     Section 12. Further Assurances. From time to time following the Closing, Seller shall
execute and deliver, or cause to be executed and delivered, to Buyer such other documents or
instruments of conveyance and transfer as Buyer may reasonably request or as may be otherwise
necessary to more effectively convey and transfer to, and vest in Buyer the Assets, or in order to
fully effectuate and to implement the purposes, terms and provisions of this Agreement.

     Section 13 Entire Agreement: No Other Representations. This Agreement and the Mortgage
Purchase Agreement, along with all exhibits, schedules and annexes thereto, constitute the entire
agreement among the Parties with respect to the subject matter hereof, and supersede all other
prior agreements and understandings, both written and oral, between the Parties, with respect to
the subject matter hereof.

     Section 14 Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any provision of this Agreement, or the
application thereof to any person or entity or any circumstance, is invalid or unenforceable (a) a
suitable and equitable provision shall be substituted therefor in order to carry out, so far as may
be valid and enforceable, the intent and

 

 

purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons or entities or circumstances shall not be affected
by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any other
jurisdiction.

     Section 15 Interpretation. The section references and headings herein are for
convenience of reference only, do not constitute part of this Agreement and shall not be deemed to
limit or otherwise affect any of the provisions hereof.

     Section 16 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective successors and permitted assigns. No Party
may assign any of its rights or delegate any of its duties or obligations under this Agreement,
provided that Buyer may, upon written notice to Seller, delegate its duties or obligations
hereunder to any Affiliate or Affiliates of Buyer, and provided further that Buyer shall have the
right to assign its rights under this agreement with respect to any Asset to any purchaser of such
Asset from Buyer.

     Section 17 Counterparts; Facsimile Signatures. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original but all of which shall
constitute one instrument. The Parties may execute this Agreement by the facsimile exchange of
executed signature pages.

     Section 18 Enforcement; No Joint Venture or Partnership; No Third Party Beneficiaries.

          (a) If any suit, action or other legal proceeding is brought to enforce any provision of this
Agreement, the Party ultimately prevailing in such action or proceeding shall be entitled to
recover the reasonable costs (including legal fees and expenses) of bringing or defending such
action or proceeding.

          (b) Seller and Buyer intend that the relationships created hereunder be solely that of
purchaser and seller. Nothing herein or therein is intended to create a joint venture, partnership,
tenancy in common, or joint tenancy relationship between Buyer, on the one hand, and Seller, on the
other hand.

          (c) This Agreement is solely for the benefit of Seller and Buyer and their respective
successors and permitted assigns and nothing contained in this Agreement shall be deemed to confer
upon anyone other than the Seller and Buyer and their respective successors and permitted assigns
any right to insist upon or to enforce the performance or observance of any of the obligations
contained herein or therein.

     Section 19 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS
PRINCIPLES THEREOF. EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE

 

 

EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT
FOR ANY DISTRICT WITHIN SUCH STATE FOR THE PURPOSE OF ANY ACTION OR JUDGMENT RELATING TO OR ARISING
OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND TO THE LAYING OF VENUE IN
SUCH COURT.

     Section 20 Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

     IN WITNESS WHEREOF, each of the parties hereto have executed this Assignment Agreement as of
the date first written above.

	 	 	 	 	 
	 	 	CARE INVESTMENT TRUST INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	F. Scott Kellman
	 

	 	Title:
	 	Chief Executive Officer
	 
	 	 	 	 
	 	 	CIT HEALTHCARE LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Steven Warden
	 

	 	Title:
	 	Presidentexv10w1

Exhibit 10.1

PURCHASE AND SALE AGREEMENT

BETWEEN

ENCANA OIL & GAS (USA) INC.

AND

DELTA PETROLEUM CORPORATION

COLUMBIA RIVER BASIN AREA,

STATE OF WASHINGTON

 

 

TABLE OF CONTENTS

	 	 	 
	ARTICLE 1

	 	INTERPRETATION
	ARTICLE 2

	 	SALE
	ARTICLE 3

	 	PURCHASE PRICE
	ARTICLE 4

	 	ALLOCATIONS
	ARTICLE 5

	 	ADJUSTMENTS
	ARTICLE 6

	 	OPERATIONS AFTER EXECUTION OF AGREEMENT
	ARTICLE 7

	 	ACCOUNTING AND PRODUCTION INFORMATION
	ARTICLE 8

	 	PREFERENTIAL RIGHTS
	ARTICLE 9

	 	VALUE OF ASSETS
	ARTICLE 10

	 	TITLE REVIEW
	ARTICLE 11

	 	ENVIRONMENTAL REVIEW
	ARTICLE 12

	 	CONVEYANCES
	ARTICLE 13

	 	SELLER’S REPRESENTATIONS AND WARRANTIES
	ARTICLE 14

	 	PURCHASER’S REPRESENTATIONS AND WARRANTIES
	ARTICLE 15

	 	BREACH OF REPRESENTATIONS AND WARRANTIES AND LIABILITY LIMITED
	ARTICLE 16

	 	ASSUMPTION BY PURCHASER
	ARTICLE 17

	 	CLOSING CONDITIONS
	ARTICLE 18

	 	TERMINATION
	ARTICLE 19

	 	POST-CLOSING OBLIGATIONS
	ARTICLE 20

	 	GENERAL PROVISIONS

 

 

     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated September 15, 2008, is between
ENCANA OIL & GAS (USA) INC., a Delaware corporation (hereinafter referred to as the “Seller”), and
DELTA PETROLEUM CORPORATION, a Delaware corporation (hereinafter referred to as the “Purchaser”).

     WHEREAS Seller desires to sell and convey the Assets to Purchaser, and Purchaser desires to
purchase and receive the Assets from Seller;

     IN CONSIDERATION of the premises hereto and of the covenants, warranties, representations,
agreements and payments herein set forth and provided for, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:

ARTICLE 1

INTERPRETATION

	1.01	 	Definitions: In this Agreement, including the premises hereto, this clause and
each Schedule, the words and phrases set forth below shall have the meaning ascribed
thereto, namely:

	 	(a)	 	“Abandonment Costs” means the projected cost and expense for the
plugging and abandonment of the Wells and the restoration of the surface of the Lands
described in clause 5.01 below.
	 
	 	(b)	 	“Adjustment Procedure” means the provisions comprising Schedule “D”;
	 
	 	(c)	 	“Assets” means the following, excepting and excluding the Excluded
Properties:

	 	(i)	 	The undivided interests described in Schedule “A-1” hereto in
and to the Leases, insofar as the Leases cover and relate to the Lands
described in Schedule “A-1” hereto. It is the intent of the Parties that the
Lands and Leases include all of Seller’s right, title and interest in and to
the Leases and the Lands including, without limitation, fee, mineral, royalty,
leasehold, working, operating, carried working, contractual, overriding
royalty, net revenue, net profits, reversionary and any other rights and
interests of a similar nature, together with all other rights and interests
arising by operation of law or otherwise in connection with the pooling,
unitization or communitization of any of the Leases or any portion of the
Lands;
	 
	 	(ii)	 	The undivided interests in and to the Wells;
	 
	 	(iii)	 	All of Seller’s right, title and interest in, to and under the
Petroleum Substances;
	 
	 	(iv)	 	All of Seller’s right, title and interest in, to and under the
Material Agreements;
	 
	 	(v)	 	All of Seller’s right, title and interest in, to and under the
easements, rights-of-way, permits, licenses, servitudes, access agreements,
surface use

 

 

	 	 	 	agreements or other similar interests affecting the Leases, the Lands or the
Wells (collectively, the “Surface Rights”); and

	 	(vi)	 	All of Seller’s right, title and interest in and to the
Records;

	 	(d)	 	“Assignment” means the assignment, conveyance and bill of sale
attached hereto as Schedule “C.”
	 
	 	(e)	 	“Business Day” means a week day (other than a Saturday or Sunday),
excluding all statutory holidays in the City of Denver;
	 
	 	(f)	 	“Claims” means any and all claims, demands, complaints, causes of
action, suits, actions, appeals, accounts, debts, damages, awards, penalties, fines,
judgments, recoveries, settlements, duties, obligations, liabilities, losses,
indemnities, costs and expenses (including, without limitation, court costs, expert
witness fees and reasonable attorneys’ fees);
	 
	 	(g)	 	“Closing” means the transfer of the Assets by Seller to Purchaser and
the payment by Purchaser of the Purchase Price therefore, all as contemplated by this
Agreement;
	 
	 	(h)	 	“Closing Date” means on or before the later of the 30th day of
September, 2008, or the third Business Day following the day on which all ROFRs shall
have been exercised or waived by the holders thereof or all time periods within which
such rights may be exercised have expired, or such other date as agreed to by the
Parties, it being the intent of the Parties to close as soon as practical after the
execution of this Agreement;
	 
	 	(i)	 	“Closing Time” means 10:00 a.m. Mountain Daylight Time; or at a time
agreed upon by the Purchaser and the Seller.
	 
	 	(j)	 	“Dollars” and “$” means dollars of the lawful money of the
United States of America;
	 
	 	(k)	 	“Effective Date” means 12:01 a.m., Mountain Daylight Time, on the
Closing Date;
	 
	 	(l)	 	“Excluded Properties” means all of Seller’s right, title and interest
in and to: (i) intellectual property and trade secrets, and all information which
Seller cannot lawfully disclose or assign to Purchaser due to third party
restrictions; (ii) corporate, financial and tax records, except those tax records for
production, severance and property taxes allocable to the Assets; and (iii) all
documents, memoranda, correspondence and other communications that may be protected by
an attorney-client privilege or the attorney work-product privilege, excepting out any
and all title opinions or other curative documents related to the Assets;
	 
	 	(m)	 	“Lands” means the lands set forth and described in Schedule “A-1” and
the Petroleum Substances within, upon and under such lands, together with the right to
explore for and recover same, all insofar as such are granted by the Leases;

2

 

	 	(n)	 	“Leases” means collectively the leases, reservations, permits,
licenses or other documents of title set forth and described in Schedule “A-1” by
virtue of which the holder thereof is entitled to explore, drill, produce, take, own
and/or remove the Petroleum Substances;
	 
	 	(o)	 	“Material Agreements” means agreements, contracts, licenses, permits,
options, leases, franchises and other documents related to the ownership or operation
of the Lands, the Leases, the Wells, the Petroleum Substances or the Surface Rights
including, without limitation, joint operating, exploration, unit, farm-out, acreage
contribution, pooling, communitization, participation, bottom-hole, AMI, option,
gathering, processing, transportation, and other agreements and contracts, and orders,
rulings and decisions of state and federal regulatory authorities, all as described in
Schedule “B” hereto;
	 
	 	(p)	 	“Parties” means the parties to this Agreement and “Party” means any
one of them;
	 
	 	(q)	 	“Permitted Encumbrances” means:

	 	(i)	 	the terms and conditions of the Leases;
	 
	 	(ii)	 	the landowners’ royalty, overriding royalties and other burdens
described in Schedule “A-1”;
	 
	 	(iii)	 	agreements and plans relating to pooling or unitization set
forth and described in Schedule “A-1”;
	 
	 	(iv)	 	easements, rights of way, servitudes or other similar rights in
land including, without limiting the generality of the foregoing, rights of way
and servitudes for railways, sewers, drains, gas and oil pipelines, gas and
water mains, electric light, power, telephone, telegraph or cable television
conduits, poles, wires and cables;
	 
	 	(v)	 	the right reserved to or vested in any government or other
public authority by the terms of any statutory provision, to terminate any of
the Leases or to require annual or other periodic payments as a condition of
the continuance thereof;
	 
	 	(vi)	 	the right of any governmental authority to levy taxes on
Petroleum Substances or the income or revenue therefrom and governmental
requirements as to production rates on the operations of any property;
	 
	 	(vii)	 	rights reserved to or vested in any municipality or
governmental, statutory or public authority to control or regulate any of the
Assets in any manner, and all applicable laws, rules and orders of any
governmental authority;
	 
	 	(viii)	 	undetermined or inchoate liens incurred or created as security in favor of
the person conducting the operation of any of the Assets for Seller’s
proportionate share of the costs and expenses of such operations;

3

 

	 	(ix)	 	liens granted in the ordinary course of business to a public
utility, municipality or governmental authority in connection with operations
conducted with respect to the Assets;
	 
	 	(x)	 	the ROFRs shown in Schedule “A-1”;
	 
	 	(xi)	 	required third party consents to assignment, preferential
purchase rights and similar agreements where such waivers or consents are
obtained from the appropriate parties, or the appropriate time period for
asserting any such right has expired without an exercise of the right, and
such right has terminated;
	 
	 	(xii)	 	rights to consent by, required notices to, filings with, or
other actions by governmental entities in connection with the sale or
conveyance of oil and gas leases or interests therein if they are routinely
obtained subsequent to the sale or conveyance;
	 
	 	(xiii)	 	conventional rights of reassignment prior to release or surrender requiring
notice to the holders of the rights; and
	 
	 	(xiv)	 	mortgages, deeds of trust, security agreements and financing
statements burdening the lessor’s interest covered by any of the Leases;

	 	(r)	 	“Petroleum Substances” means petroleum, oil, gas, condensate and other
hydrocarbons produced from the Wells, or the Lands, or attributable thereto, or to
lands pooled or unitized therewith;
	 
	 	(s)	 	“Place of Closing” means the offices of Seller located at Suite 1700,
370 Seventeenth Street, Denver, Colorado 80202;
	 
	 	(t)	 	“Post-Closing Date” means that date, being the first business day, 90
days after the Closing Date, or sooner if agreed to by the Parties.
	 
	 	(u)	 	“Prime Rate” means the annual rate of interest, based upon a year of
365 days, designated as the prime rate, by the Bank of Oklahoma, for U.S. dollar
commercial loans, in effect from time to time;
	 
	 	(v)	 	“Purchase Price” shall have the meaning ascribed to such term in
clause 3.01;
	 
	 	(w)	 	“Records” means all of Seller’s books and records related the Leases,
the Lands, the Wells, the Petroleum Substances, the Material Agreements or the Surface
Rights including, without limitation: (A) leases, assignments, contracts, rights of
way, surveys, maps, plats, correspondence, and other documents and instruments; (B)
division of interest, suspended funds data, and accounting records (excluding Seller’s
state and federal income tax information); (C) severance, production and property tax
records; (D) well files, logs, operations and maintenance records; (E) geological,
geophysical, seismic, gravity, magnetic, electro-magnetic, petrophysical, engineering
and reservoir data, tests, samples, surveys, studies, reports, maps, interpretations
and all other materials relating to the Lands;

4

 

	 	(x)	 	“ROFR” means a right of first refusal, pre-emptive right of purchase
or similar right whereby a third party has the right to acquire or purchase a portion
of the Assets as a consequence of Seller having agreed to sell the Assets to Purchaser
in accordance with the terms of this Agreement;
	 
	 	(y)	 	“Wells” means the Anderson, Anderville Farms and Brown wells described
in Schedule “A-1”, which are the subject of the adjustments to the Purchase Price
pursuant to clause 5.01.

	1.02	 	Schedules: Appended hereto are the following Schedules:

	 	 	 	 	 
	—

	 	Schedule “A-1” —
	 	The Leases, the Lands and the Wells
	—

	 	Schedule “B” —
	 	The Material Agreements
	—

	 	Schedule “C” —
	 	The Assignment
	—

	 	Schedule “D” —
	 	Adjustment Procedure

all of which are incorporated into and form part of this Agreement by this reference as
fully as though contained in the body of this Agreement.

	1.03	 	References and Certain Rules of Interpretation: Unless otherwise specified in
this Agreement:

	 	(a)	 	references to articles, clauses, subclauses and Schedules are to articles,
clauses, subclauses and Schedules in this Agreement;
	 
	 	(b)	 	the terms “Agreement”, “hereto”, “herein”, “hereby, “hereunder”, “hereof” and
similar expressions refer to this Agreement, including any Schedules hereto and
include any agreement or instrument which amends, modifies, or is supplementary to
this Agreement;
	 
	 	(c)	 	the singular includes the plural and vice versa;
	 
	 	(d)	 	gender references shall be read with such changes as may be required by the
context; and
	 
	 	(e)	 	“including” and “in particular” are used for illustration or emphasis only and
not to limit the generality of any preceding words, whether or not non-limiting
language (such as “without limitation”, “but not limited to” and similar expressions)
is used with reference thereto.

	1.04	 	Headings: The headings of articles, clauses and subclauses herein and in the
Schedules are inserted for convenience of reference only and shall not affect or be
considered to affect the construction of the provisions hereof.
	 
	1.05	 	Conflict: In the event of conflict or inconsistency between a provision in the
body of this Agreement and a provision in any of the Schedules, the provision in the body of
this Agreement shall prevail to the extent of the conflict or inconsistency.
	 
	1.06	 	Invalidity: If any provision of this Agreement is held to be invalid, illegal or
unenforceable, the invalidity, illegality or unenforceability will not affect any other

5

 

	 	 	provision of this Agreement and this Agreement will be construed as if the invalid,
illegal or unenforceable provision had never been contained herein, unless the deletion
would result in such a material change to cause the completion of the transactions
contemplated herein to be unreasonable.

	1.07	 	Construction: This Agreement has been prepared through the joint efforts of the
Parties and shall not be construed against a Party by reason of having been prepared by such
Party.
	 
	1.08	 	Knowledge: Where in this Agreement a representation or warranty is made on the
basis of the knowledge of Seller, such knowledge consists only of the actual knowledge of
those current officers and managers of Seller who are primarily responsible for the
management of the Assets, without any specific inquiry or investigation or any review of the
Records, and does not include knowledge of any other person or persons or constructive or
imputed knowledge.

ARTICLE 2

PURCHASE AND SALE

	2.01	 	Purchase and Sale: Seller agrees to sell, assign and convey to Purchaser the
Asset, and Purchaser agrees to purchase and acquire from Seller the Assets, all in
accordance with the terms and conditions set forth in this Agreement and subject to the
Permitted Encumbrances.
	 
	2.02	 	Closing: Closing shall take place at the Place of Closing, at the Closing Time
on the Closing Date or at such other place or at such other time as Seller and Purchaser may
agree.
	 
	2.03	 	Title and Risk of Loss: The Assets shall be in the possession and remain at the
risk of Seller until the Closing. Upon Closing, title and risk to the Assets will pass to
Purchaser.

ARTICLE 3

PURCHASE PRICE

	3.01	 	Price:

	 	(a)	 	The purchase price to be paid by Purchaser for the Assets shall be, subject to
adjustments as herein provided, U.S. Twenty-five Million Dollars ($25,000,000.00)(the
“Purchase Price”), which sum shall be paid by Purchaser to Seller on the Closing Date
at the Closing by way of wire transfer, to the account designated by Seller in writing
to Purchaser not later than three (3) Business Days prior to Closing.

	3.02	 	Taxes:

	 	(a)	 	Notwithstanding anything contained herein, it is expressly agreed that the
Purchase Price shall not include any taxes, assessments, fees and charges levied by
any

6

 

	 	 	 	governmental authority in respect of the within transaction or imposed upon any of
the Assets as a result of the transactions provided for in this Agreement;

	 	(b)	 	In the event that Seller is required to collect any taxes, assessments, fees
or charges on behalf of any governmental authority including, without limitation,
applicable goods and services taxes, from Purchaser in respect of the within
transaction or imposed upon any of the Assets, then Purchaser shall pay the amount of
such taxes, assessments, fees or charges to Seller, and Seller shall remit those
amounts to the relevant taxing authority as required by law.

	3.03	 	Other Considerations: The Parties have taken into account Purchaser’s assumption
of responsibility for the future abandonment and reclamation costs associated with the
Assets, as set forth in this Agreement, and Seller’s release of responsibility therefor when
they determined the Purchase Price, except as set forth in clause 5.01.

ARTICLE 4

ALLOCATIONS

	4.01	 	Allocations: The Purchase Price payable by Purchaser pursuant to clause 3.01
shall be allocated amongst the Assets in accordance with the mutual agreement of the Parties
based upon $63.45 per net mineral acre covered by the Leases.

ARTICLE 5

ADJUSTMENTS

	5.01	 	Wells: Purchaser hereby elects to include the Wells in the Assets assigned by
Seller and acquired by Purchaser hereunder. The adjustments to the Purchase Price shall
include a reduction of the Purchase Price equal to Seller’s proportionate share of the
Abandonment Costs for the Wells. On or before the Post Closing Date, the Parties shall use
commercially reasonable efforts to reach agreement upon the Abandonment Costs for the
plugging and abandonment of the Wells and the reclamation of the surface in compliance with
all applicable laws, rules, regulations and orders. The Abandonment Costs shall include
compliance with all terms and requirements imposed by the Washington State Division of
Natural Resources (“DNR”) which are within the DNR’s jurisdiction, including, as appropriate
and without limitation, those set forth in the letter dated September 17, 2008 from David
Norman to Gary Houghton, a copy of which has been provided to Purchaser.
	 
	5.02	 	Apportionment as of Effective Date: Subject to the Adjustment Procedure, all
benefits and obligations of every kind and nature accruing, payable or paid and received or
receivable in respect of the Assets, including maintenance, development, capital and
operating costs and the revenue (after tax) from the sale of production, shall be
apportioned between Seller and Purchaser as of the Effective Date, including, without
limitation:

	 	(a)	 	subject to clause 6.01, the amount of all costs and expenses arising in
connection with or attributable to the acquisition, drilling, exploration, development
and

7

 

	 	 	 	operation of the Assets after the Effective Date including, without limitation, all
joint interest billings, lease operating expenses, lease bonus, rentals and shut-in
payments (which shall be pro-rated over the number of days that the applicable
Lease is extended by such payments), drilling expenses, work-over expenses,
geological, geophysical and any other exploration or development expenditures,
together with the operator’s reimbursement of direct costs and applicable overhead
chargeable under applicable operating agreements, or other agreements consistent
with the standards established by the Council of Petroleum Accountant Societies of
North America;

	 	(b)	 	deposits made by Seller relative to operations on the Lands;
	 
	 	(c)	 	surface and mineral rentals and any similar payments made by Seller to
preserve any of the Leases or surface rights;
	 
	 	(d)	 	severance and ad valorem taxes, assessments and levies;
	 
	 	(e)	 	expenditures relating to the Assets which have been authorized prior to the
Closing Date shall be adjusted on the basis of the date upon which the work was
performed or the goods were supplied; and
	 
	 	(f)	 	all Petroleum Substances in inventory which have been produced from the Lands
at the Effective Date, do not comprise part of the Assets and remain the property of
Seller and the proceeds from the sale thereof shall accrue and belong to Seller.

	5.03	 	Title Failure — Post-Closing Adjustment: Subject to clause 18.01, it is the
intent of the Parties that, at Closing, Seller will assign to Purchaser the Leases covering
a minimum of 394,039 net acres, with no additional lease burdens reserved by Seller. On or
before thirty (30) days after the Closing, Purchaser shall deliver to EnCana written notice
of all asserted defects or objections (“Title Defects”), only if the cumulative asserted
value of all Title Defects is equal to or more than five percent (5%) of the Purchase Price.
Seller shall then have ten (10) business days following receipt of such notice to cure said
Title Defect(s) to the reasonable satisfaction of Purchaser. If at the end of the ten-day
period the value of the uncured asserted Title Defects still exceeds five percent (5%) of
the Purchase Price, Seller shall refund to Purchaser $63.45 per net acre covered by the
Leases affected by the uncured Title Defects in excess of five percent (5%) of the Purchase
Price, and Purchaser shall reassign to Seller the affected Leases.

ARTICLE 6

OPERATIONS AFTER EXECUTION OF AGREEMENT

	6.01	 	Activities After Execution: Seller agrees to inform, from time to time,
Purchaser of all material activities proposed with respect to the Assets by Seller and
others to take place between the execution of this Agreement and the Closing Date.
	 
	6.02	 	Insurance: Seller agrees to maintain any presently existing policies of
insurance covering the Assets from the date hereof to the Closing Date.

8

 

	6.03	 	Consents, Waivers and Approvals: Prior to Closing, Seller shall have obtained all
consents, waivers of preferential rights and approvals necessary to assign the Assets to
Purchaser from SWEPI LP, Exxel Energy (USA) Inc. and Netco Energy Inc. pursuant to the
Acquisition and Exploration Agreements effective as of August 1, 2007 (Block A and Block B).
	 
	6.04	 	Lease Administration. After the Closing, Seller will continue to administer the
Leases for a period not to exceed 12 months after the Closing Date and Purchaser shall pay
Seller for an administrative fee for maintaining the leases payments for an administrative
fee not to exceed $70,000. Seller shall use Seller’s reasonable efforts in good faith to
administer the Leases after Closing, but Seller shall have no liability except for Seller’s
willful misconduct. Seller will invoice Purchaser for all rentals, lease renewals or any
other costs related to the administration of the leases on a monthly basis, as well as the
costs to administer the Leases. Invoices will be due and payable within 30 days of receipt
by Purchaser. Seller shall deliver to Purchaser monthly lease rental reports at least 60
days before the rentals are due. Absent any notice from Purchaser, Seller shall pay all
rentals at least 21 days prior to the applicable rental due date. Seller shall deliver to
Purchaser written confirmation of rental payment within two weeks from the date the check is
issued.

ARTICLE 7

ACCOUNTING AND PRODUCTION INFORMATION

	7.01	 	Accounting and Production Information: Seller shall, up to and including the
Closing Date, subject to any and all contractual restrictions on it, make available to
Purchaser and its authorized representatives for inspection at a location in the City of
Denver the Records and provide, if requested by Purchaser, copies of same at Purchaser’s
expense.

ARTICLE 8

PREFERENTIAL RIGHTS

	8.01	 	Notices: If any of the Assets are subject to a ROFR, Seller shall promptly serve
all notices required under the ROFR. Each such notice shall include a request for a waiver
of the ROFR.
	 
	8.02	 	Exercise: In the event a third party exercises any such ROFR, the Assets that
are the subject of such ROFR shall be removed from and no longer be subject to the terms of
this Agreement, and the Schedules hereto shall be deemed to be amended accordingly. There
shall be deducted from the Purchase Price the amount so allocated by the Parties with
respect to such Assets pursuant to clause 9.01, provided that if such exercise by a third
party follows an arbitration binding on Seller or a final (non-appealable) determination of
a Court, which results in a change in the value of the Assets that are the subject of that
ROFR, then that changed value shall be deducted from the Purchase Price.

9

 

ARTICLE 9

VALUE OF ASSETS

	9.01	 	Value for ROFR: Purchaser shall upon execution of this Agreement, supply to
Seller the value placed by Purchaser (acting reasonably and in good faith) on any of the
Assets with respect to which Seller is required to give notice pursuant to clause 8.01.
	 
	9.02	 	Value of Balance: In addition to clause 9.01, Purchaser shall upon execution of
this Agreement, supply to Seller the value placed by Purchaser (acting reasonably and in
good faith) on the remaining Assets with respect to which Seller is not required to give
notice pursuant to clause 8.01. Should Purchaser not provide the values required pursuant
to this clause 9.02, Seller may (acting reasonably and in good faith) use its own valuations
for such purpose.
	 
	9.03	 	Value Indemnity: In addition to article 16, Purchaser shall indemnify Seller
harmless from and against all losses and liabilities, insofar as those losses and
liabilities pertain to ROFR values provided by Purchaser under this article that are
determined not to be a bona fide estimate of value.

ARTICLE 10

TITLE REVIEW

	10.01	 	Inspection: Seller will allow Purchaser, and Purchaser’s joint venturer, and
their respective employees, agents and representatives, access to all of the Records, data
and information in Seller’s possession and control related to the Assets including, without
limitation, land, title, contract, geological, geophysical, engineering, and production.
Purchaser’s obligations shall be subject to Purchaser’s reasonable satisfaction with
Purchaser’s due diligence review including, without limitation, the exploration agreement
between EnCana and SWEPI LP. Such agreements shall be acceptable to Purchaser, in
Purchaser’s sole and absolute discretion. Purchaser’s joint venturer will agree to a
confidentiality agreement prior to obtaining access to any Records.

ARTICLE 11

ENVIRONMENTAL REVIEW

	11.01	 	Inspection: Seller shall, up to and including the Closing Date, make the Assets
and the Records available for inspection by Purchaser.

ARTICLE 12

CONVEYANCES

	12.01	 	Assignment: Seller shall execute and deliver to Purchaser at the Closing Date
the Assignment covering the Assets with a special warranty of title from Seller agreeing to
warrant and defend title to the Assets against all liens, encumbrances and defects of title
arising by, through or under Seller, but not otherwise.

10

 

	12.02	 	General: Prior to or at Closing, Seller shall prepare and deliver (or cause to
be prepared and delivered) to Purchaser all such deeds, assignments, transfers, novations,
notices,
discharges of security and other documents and assurances as may be reasonably necessary
to convey the Assets to Purchaser in exchange for the Purchase Price. Any such Closing
documents and assurances shall be in such form and shall be of such content as to be
reasonably required by Purchaser. After Closing, Seller shall co-operate with Purchaser
to secure execution of such documents and assurances by the parties thereto other than
Seller and Purchaser.
	 
	12.03	 	Records: On or before thirty (30) days after Closing, Seller shall deliver to
Purchaser the Records.
	 
	12.04	 	Permit and License Transfers: To the extent any permits and/or licenses need to
be transferred in connection with the transfer of the Assets to Purchaser, Seller shall
cooperate in preparing any application and providing any necessary documentation to transfer
such permits and/or licenses. Any costs or fees required to transfer such permits and/or
licenses shall be paid by Purchaser. All costs of preparing, filing and/or recording any
discharges of security encumbering the Assets shall be borne by Seller.
	 
	12.05	 	Subordinate Documents: The Assignment, and all other such documents and
assurances executed and delivered pursuant to this Agreement shall be subject to and
burdened by the terms and conditions of this Agreement. All such assignments, documents and
assurances are subordinate to the provisions of this Agreement. The provisions of this
Agreement shall govern and control in the event of any conflict between the provisions of
this Agreement and any such assignment, document or assurance.

ARTICLE 13

SELLER’S REPRESENTATIONS AND WARRANTIES

	13.01	 	Seller’s Representations and Warranties: Seller hereby represents and warrants
to Purchaser at the date hereof, which representations and warranties will be true and
correct as at the Closing Date, that:

	 	(a)	 	Requisite Authority: Seller has all requisite power and authority to
enter into this Agreement and to sell and receive payment for the Assets on the terms
described herein and to perform the obligations of Seller under this Agreement;
	 
	 	(b)	 	No Conflict: The execution and delivery of this Agreement will not
violate, nor be in conflict with any provision of any material agreement or instrument
to which Seller is a party or is bound or any judgment, decree, order, statute, rule
or regulation applicable to Seller or the organizational documents of Seller;
	 
	 	(c)	 	Execution and Enforceability: this Agreement and all other documents
delivered hereunder have been duly executed and constitute legal, valid and binding
obligations of Seller enforceable in accordance with their respective terms, subject
to equitable limitations on the availability of remedies and applicable bankruptcy,
insolvency, winding up, liquidation, reorganization, moratorium, or other similar laws
affecting creditors’ rights generally;

11

 

	 	(d)	 	Title: Seller does not warrant its title to the Assets, but warrants
that the Assets are free and clear of all liens, encumbrances and defects of title
created by, through or
under Seller, but not otherwise, except as disclosed in Schedule “A,” and except
for the Permitted Encumbrances;
	 
	 	(e)	 	Notice of Default: Seller has not received notice of default relating
to the Assets or any of them which has not been remedied or waived and, to the
knowledge of Seller, there have been paid within applicable time limits all relevant
deposits, rentals and royalties and there have been performed and observed all
obligations and covenants required to keep the Leases in full force and effect;
	 
	 	(f)	 	No Lawsuits or Claims: to the knowledge of Seller, Seller is not a
party to any action, suit or other legal, administrative or arbitration proceeding or
government investigation, actual or threatened, which might reasonably be expected to
result in a material impairment or loss of Seller’s interest in the Assets or any part
thereof;
	 
	 	(g)	 	Taxes: to the knowledge of Seller, all ad valorem, property,
production, severance and similar taxes and assessments based on or measured by the
ownership of the Assets or the production of Petroleum Substances or the receipt of
proceeds therefrom payable by Seller have been properly and fully paid and discharged;
	 
	 	(h)	 	Finders’ Fees: Seller has not incurred any obligation or liability,
contingent or otherwise, for brokers’ or finders’ fees in respect of this transaction
for which Purchaser shall have any obligation or liability;
	 
	 	(i)	 	Prices: except as disclosed in Schedule “B” hereto, Seller is not
obligated to deliver Petroleum Substances to any party without receiving in due course
(and being entitled to retain) full payment at current market prices or contract
prices therefore;
	 
	 	(j)	 	Production Sales Contracts: except as disclosed in Schedule “B”
hereto, there are no contracts for the sale of Petroleum Substances produced from the
Lands to which Seller is a party or is bound;
	 
	 	(k)	 	Consent on Lease Assignments: except as disclosed on Schedule “A-1”
hereto, no written consents from any third parties are required to transfer the
Assets, except for consents by, required notices to, filings with, or other actions by
governmental entities in connection with the sale or conveyance of oil and gas leases
or interests therein which are routinely obtained subsequent to the sale or
conveyance;
	 
	 	(l)	 	Production Penalties: except as disclosed on Schedule “A-1” hereto,
none of the Wells are subject to any material production penalty or restriction
arising from the overproduction of Petroleum Substances from the Lands (other than
those imposed in the ordinary course of the oil and gas industry by a governmental
authority);
	 
	 	(m)	 	Environmental Notice: Seller has not received notice of any violation
of or investigation relating to any federal, provincial or local environmental or
pollution law, regulation or ordinance with respect to the Assets;

12

 

	 	(n)	 	Outstanding JIBs, LOEs or AFEs: except for the Abandonment Costs for
the Wells, to Seller’s knowledge, there are no outstanding or unpaid, joint interest
billings, lease operating expenses, cash calls, equalization payments or
authorizations
for expenditure which exceed Twenty-Five Thousand Dollars ($25,000.00) pursuant to
which expenditures have been, will or may be made in respect of the Assets; and
	 
	 	(o)	 	Penalties: except as disclosed on Schedule “A,” Seller has not
elected or refused to participate in any exploration, development or other operation
on the Lands, which has or may give rise to penalties or forfeitures.

	13.02	 	Independent Evaluation: Except and to the extent provided in clause 13.01,
Seller does not warrant or represent title to the Assets or make representations or
warranties with respect to: (i) the quantity, quality or recoverability of Petroleum
Substances respecting the Lands; (ii) any estimates of the value of the Assets or the
revenues applicable to future production from the Lands; (iii) any engineering, geological
or other interpretations or economic evaluations respecting the Assets; (iv) the rates of
production of Petroleum Substances from the Lands; (v) the quality, condition or
serviceability of the Assets; or (vi) the suitability of the use of the Assets for any
purpose. Purchaser acknowledges that it has made its own independent investigation,
analysis, evaluation and inspection of Seller’s interest in the Assets and the state and
condition thereof and that it has relied solely on such investigation, analysis, evaluation
and inspection as to its assessment of the condition and value of the Assets and that,
except as provided in clause 13.01, it is purchasing the Assets on an “as is, where is, with
all faults and without recourse” basis.
	 
	13.03	 	Disclaimers: Except for Seller’s express representations and warranties
contained in this Agreement, the Assets are being conveyed by Seller to Purchaser without
warranty of any kind, express, implied, statutory, common law or otherwise, and the Parties
hereby expressly disclaim, waive and release any express warranty of merchantability,
condition or safety and any expressed warranty of fitness for a particular purpose; and
Purchaser accepts the Assets “as is, where is, with all faults and without recourse.”
Except for the description of the Assets in the Schedules attached to this Agreement, all
descriptions of the Assets, heretofore or hereafter furnished to Purchaser by Seller have
been and shall be furnished solely for Purchaser’s convenience and have not constituted and
shall not constitute a representation or warranty of any kind by Seller. Seller shall have
no liability to Purchaser for any claims, loss or damage caused or alleged to be caused
directly or indirectly, incidentally or consequentially, by any such Assets by any
inadequacy thereof or therewith, arising in strict liability or otherwise, or in any way
arising out of Purchaser’s purchase thereof. The Parties hereby acknowledge and agree that,
to the extent required by applicable law, the disclaimers contained in this Agreement are
“conspicuous” for the purposes of such applicable law.
	 
	13.04	 	Consumer Statutes: The Parties hereby acknowledge and agree that they are not
“consumers” within the meaning of any applicable deceptive trade practices or consumer
protection act, or any similar statute. Purchaser hereby expressly disclaims, waives and
releases all of its rights and remedies under all such laws and any other law that gives
consumers special rights and protections. After consultation with an attorney of its own
selection, Purchaser voluntarily consents to this waiver and release. To evidence its
ability to grant such waiver, Purchaser represents to Seller that: (a) Purchaser is not in a
significantly disparate bargaining position; (b) Purchaser is represented by legal counsel
in 

13

 

	 	 	entering into this Agreement; and (c) such legal counsel was not directly or indirectly
identified, suggested, or selected by Seller or an agent of Seller.

ARTICLE 14

PURCHASER’S REPRESENTATIONS AND WARRANTIES

	14.01	 	Purchaser’s Representations and Warranties: Purchaser hereby represents and
warrants to and with Seller at the date hereof, which representations and warranties will be
true and correct as at the Closing Date, that:

	 	(a)	 	Requisite Authority: Purchaser has all requisite power and authority
to enter into this Agreement and to purchase and pay for the Assets on the terms
described herein and to perform the obligations of Purchaser under this Agreement;
	 
	 	(b)	 	No Conflict: the execution and delivery of this Agreement will not
violate, nor be in conflict with any provision of any material agreement or instrument
to which Purchaser is a party or is bound or any judgment, decree, order, statute,
rule or regulation applicable to Purchaser or the constating documents of Purchaser;
	 
	 	(c)	 	Execution and Enforceability: this Agreement and all other documents
delivered hereunder have been duly executed and constitute legal, valid and binding
obligations of Purchaser enforceable in accordance with their respective terms,
subject to equitable limitations on the availability of remedies and applicable
bankruptcy, insolvency, winding up, liquidation, reorganization, moratorium, or other
similar laws affecting creditors’ rights generally; and
	 
	 	(d)	 	Finders’ Fees: Purchaser has not incurred any obligation or
liability, contingent or otherwise, for brokers’ or finders’ fees in respect of this
transaction for which Seller shall have any obligation or liability.
	 
	 	(e)	 	Financial Ability: Purchaser has sufficient cash, available lines of
credit or other sources of immediately available funds to enable it to pay the
Purchase Price to Seller at the Closing. Purchaser has such knowledge and experience
in financial and business matters and in oil and gas exploration projects of the type
contemplated by this Agreement that Purchaser is capable of evaluating the merits and
risks of this Agreement and its investment in the Assets, and Purchaser is not in need
of the protection afforded investors by the securities laws. In addition, Purchaser is
an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
Purchaser recognizes that this investment is speculative and involves substantial risk
and that Seller has not made any guaranty upon which Purchaser has relied concerning
the possibility or probability of profit or loss as a result of Purchaser’s
acquisition of the Assets.
	 
	 	(f)	 	Investment Experience: by reason of Purchaser’s experience and
knowledge in the evaluation, acquisition and operation of similar properties,
Purchaser has evaluated the merits and risks of the proposed investment in the Assets,
and has formed an opinion based solely upon Purchaser’s experience and knowledge, and
not upon any

14

 

	 	 	 	representations or warranties by Seller, other than as expressly set
forth in this Agreement.

	 	(g)	 	Condition: Purchaser is provided the opportunity to conduct an
independent inspection of the Assets, the public records and the Records, including
without limitation for the purpose of detecting the presence of any environmentally
hazardous substance or contamination, including petroleum, and the presence and
concentration of naturally-occurring radioactive materials and satisfied itself as to
the physical condition and environmental condition of the Assets, both surface and
subsurface. Purchaser acknowledges that, except as set forth in this Agreement, no
representations have been made by Seller regarding environmental conditions or
physical conditions, past or present.

ARTICLE 15

BREACH OF REPRESENTATIONS AND WARRANTIES

AND LIABILITY LIMITED

	15.01	 	Notice: No claim may be made against Seller pursuant to or based in any way
upon any breach of the representations and warranties set forth in clauses 13.01 and 14.01
unless written notice thereof with reasonable particulars shall have been provided by
Purchaser or Seller within one (1) year from the Closing Date.
	 
	15.02	 	Liability Limited: Seller’s total liability for breach of any or all
representations or warranties set forth in clause 13.01 shall be limited twenty five percent
(25%) of the Purchase Price. The monetary limit in this clause shall not apply to any
misrepresentation of material fact contained in this Agreement, the exhibits and schedules
hereto or the Records which constitutes fraud pursuant to applicable law.
	 
	15.03	 	Knowledge: Neither Party shall have any liability for any breach of the
representations and warranties set forth in clauses 13.01 and 14.01, if: (a) such breach, or
misrepresentation shall have been waived by the other Party; or (b) such other Party had
knowledge of such breach or misrepresentation at or before the Closing.
	 
	15.04	 	Monetary Damages: The Parties acknowledge that the payment of money, as limited
by the terms of this Agreement, shall be adequate compensation for breach of any
representation or warranty contained herein or for any other claim arising in connection
with or with respect to the transactions contemplated by this Agreement. As the payment of
money shall be adequate compensation, the Parties hereby waive any right to rescind this
Agreement or any of the transactions contemplated hereby after the Closing.
	 
	15.05	 	No Consequential Damages: Notwithstanding anything to the contrary, neither
Party shall be entitled to seek or obtain any remedy or award for punitive, exemplary,
indirect or consequential damages including, without limitation, damages for lost sales,
profits or income.

15

 

ARTICLE 16

ASSUMPTION BY PURCHASER

	16.01	 	Assumption: Except as set forth in Clause 16.03 below, and in addition to
clauses 9.03 and 16.02, Purchaser shall both:

	 	(a)	 	assume, be liable for; and, in addition,
	 
	 	(b)	 	indemnify, defend and hold harmless Seller from and against,

those matters or things arising or accruing from and after the Effective Date, in respect
of any and all Claims of any nature or kind with respect to or pertaining to the Assets,
including without limitation, Seller’s interests and obligations arising or accruing
after the Effective Date in all agreements that are assigned to Purchaser respecting the
Assets, including without limitation the Material Agreements, and all debts pertaining to
the Assets which arise or accrue subsequent to the Effective Date; and

	 	(c)	 	Commencing one (1) year from the date of Closing, all Claims with respect to the
Assets, including without limitation those arising pre-Effective Date, without
limitation, but excluding Claims arising from Seller’s gross negligence or willful
misconduct.

	16.02	 	Environmental Obligations: Except as set forth in clause 16.03 below, Purchaser
shall both:

	 	(a)	 	assume, be liable for; and, in addition,
	 
	 	(b)	 	indemnify, defend and hold harmless Seller from and against,

any and all environmental liabilities and obligations respecting the Assets (whether
arising or accruing before, on or after the Effective Date), but excluding Claims arising
from Seller’s willful misconduct.

	16.03	 	Wells. Notwithstanding anything to the contrary herein, with respect to the
Wells:

	 	(a)	 	Until the Parties mutually agree upon the Abandonment Costs pursuant to clause
5.01 above, Seller shall indemnify, defend and hold harmless Purchaser from and
against any and all Claims of any nature or kind with respect to or pertaining to the
Wells including, without limitation, the Abandonment Costs.
	 
	 	(b)	 	If the Parties mutually agree upon the Abandonment Costs pursuant to clause
5.01 above on or before the Post Closing Date, Purchaser shall indemnify, defend and
hold harmless Seller from and against any and all Claims of any nature or kind with
respect to or pertaining to the Wells including, without limitation, the Abandonment
Costs.
	 
	 	(c)	 	If the Parties do not mutually agree upon the Abandonment Costs pursuant to
clause 5.01 above on or before the Post Closing Date, Purchaser shall promptly
execute, acknowledge and deliver to Seller an assignment of the Wells, and Seller
shall indemnify, defend and hold harmless Purchaser from and against any and all
Claims of any nature or kind with respect to or pertaining to the Wells including,
without limitation, the Abandonment Costs.

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ARTICLE 17

CLOSING CONDITIONS

	17.01	 	Seller’s Closing Conditions: The obligation of Seller to complete the sale of
the Assets to Purchaser pursuant to this Agreement is subject to the satisfaction at or
prior to the Closing Date of the following conditions precedent:

	 	(a)	 	Representations and Warranties True: all representations and
warranties of Purchaser contained in this Agreement shall be true in all material
respects at and as of the date hereof and the Closing Date;
	 
	 	(b)	 	Payment: Purchaser shall have tendered to Seller in the form
stipulated herein the Purchase Price, as adjusted, pursuant hereto;
	 
	 	(c)	 	Compliance with Covenants: Purchaser shall have performed or complied
in all material respects with all of its obligations and covenants under this
Agreement to be performed or complied with by Purchaser at or prior to the Closing
Date;
	 
	 	(d)	 	Approvals: all necessary approvals, consents or clearances from such
government or regulatory agencies of appropriate jurisdiction necessary or essential
to permit this transaction have been obtained, other than consent by, required notices
to, filings with, or other actions by governmental entities in connection with the
sale or conveyance of oil and gas leases or interests therein, if they are routinely
obtained subsequent to the sale or conveyance;
	 
	 	(e)	 	No Action or Proceeding: no third party claim shall be pending before
any court or governmental agency or authority seeking to restrain or prohibit this
transaction which would materially and adversely affect the Assets; and

	17.02	 	Waiver: The foregoing conditions contained in clause 17.01 shall be for the
benefit of Seller and may, without prejudice to any rights of Seller hereunder, or at law or
equity, be waived by Seller in writing, in whole or in part, at any time. In case any of
the said conditions shall not be complied with through no act, default, or omission of
Seller, or waived by Seller, Seller may terminate this Agreement by written notice to
Purchaser.
	 
	17.03	 	Purchaser’s Closing Conditions: The obligation of Purchaser to complete the
purchase of the Assets from Seller pursuant to this Agreement is subject to the satisfaction
at or prior to the Closing Date of the following conditions precedent:

	 	(a)	 	Representations and Warranties True: all representations and
warranties of Seller contained in this Agreement shall be true in all material
respects at and as of the date hereof and the Closing Date;
	 
	 	(b)	 	Compliance with Covenants: Seller shall have performed or complied in
all material respects with each of its obligations and covenants under this Agreement
to be performed or complied with by Seller at or prior to the Closing Date;
	 
	 	(c)	 	Approvals: Except as otherwise provided herein, all necessary
approvals, consents or clearances from such government or regulatory agencies of
appropriate

17

 

	 	 	 	jurisdiction necessary or essential to permit this transaction have been
obtained,
other than consent by, required notices to, filings with, or other actions by
governmental entities in connection with the sale or conveyance of oil and gas
leases or interests therein if they are routinely obtained subsequent to the sale
or conveyance;

	 	(d)	 	No Action or Proceeding: no third party claim shall be pending before
any court or governmental agency or authority seeking to restrain or prohibit this
transaction which would materially and adversely affect the Assets;

	17.04	 	Waiver: The foregoing conditions contained in clause 17.03 shall be for the
benefit of Purchaser and may, without prejudice to any of the rights of Purchaser hereunder,
or at law or equity, be waived by Purchaser in writing, in whole or in part, at any time,
provided Purchaser may not waive the existence and operation of any ROFR. In case any of
the said conditions shall not be complied with through no act, default, or omission of
Purchaser, or waived by Purchaser, Purchaser may terminate this Agreement by written notice
to Seller.
	 
	17.05	 	Satisfaction of Conditions Precedent: Each Party will use reasonable efforts to
cause the conditions precedent set forth in clauses 17.01 and 17.03, which are for the
benefit of the other Party, to be fulfilled and satisfied as soon as practicable.

ARTICLE 18

TERMINATION

	18.01	 	Termination: In the event that this Agreement is terminated pursuant to either
of clauses 17.02 or 17.04, each Party shall be released from all obligations hereunder and
each Party shall take all reasonable action to return each of the other Parties to the
position relative to the Assets which such Party occupied prior to the execution hereof, it
being understood that Seller and Purchaser will each bear all costs incurred by it prior to
such termination. This Agreement may be terminated at any time prior to the Closing: (a) by
mutual written consent of the Parties; or (b) by either Party, if the Closing shall not have
occurred on or before October 1, 2008 (the “Expiration Date”); provided, however, that the
right to terminate this Agreement under this clause 18.01 shall not be available: (a) to
Seller, if any breach of this Agreement by Seller has been the cause of, or resulted in, the
failure of the Closing to occur on or before the Expiration Date; or (b) to Purchaser, if
any breach of this Agreement by Purchaser has been the cause of, or resulted in, the failure
of the Closing to occur on or before the Expiration Date; or (c) to either Party if on the
Expiration Date any ROFRs remain outstanding and the time periods within which the holders
thereof have the right to exercise or waive have not expired.

ARTICLE 19

POST-CLOSING OBLIGATIONS

	19.01	 	Post-Closing Obligations: In the event the purchase and sale contemplated
hereby is completed and if, for any reason, the Parties are unable on the Closing Date to
cause Purchaser to become the recognized holder of any of the Assets in the place and stead
of

18

 

	 	 	Seller, then, in conjunction with article 16 and subject to clauses 6.03, 19.02 and
19.03, Seller shall:

	 	(a)	 	Standard of Care: hold and stand possessed of such Assets fully on
behalf of Purchaser, as nominee, and receive and hold all proceeds, benefits and
advantages accruing in respect of the Assets fully for the benefit, use and ownership
of Purchaser. As nominee hereunder, Seller shall have no liability except for Seller’s
gross negligence or willful misconduct. Except to the extent they are set-off against
costs and expenses paid by Seller on Purchaser’s behalf as hereinafter permitted,
cause such proceeds to be delivered to Purchaser as soon as reasonably possible;
	 
	 	(b)	 	Notices from Third Parties: in a timely manner, deliver to Purchaser
all third party notices and communications received by it in respect of such Assets;
	 
	 	(c)	 	Notices to Third Parties: in a timely manner, deliver to third
parties all such notices and communications as Purchaser may reasonably request and
all such monies and other items as Purchaser may reasonably provide in respect of such
Assets; and
	 
	 	(d)	 	General: as agent of Purchaser, do and perform all such acts and
things and execute and deliver all such agreements, notices and other documents and
instruments, as Purchaser may reasonably request in writing for purposes of
facilitating the exercise of rights incidental to the ownership of such Assets or
required by any government or regulatory agency of appropriate authority having
jurisdiction.

	19.02	 	Payment of Invoices: Purchaser shall pay all invoices, cash calls and bills
forwarded to it by Seller which pertain to the Assets which Seller does not pay on behalf of
Purchaser.
	 
	19.03	 	Further Assurances: At Closing and thereafter, as may be necessary or desirable
and without further consideration, the Parties shall execute, acknowledge and deliver such
other instruments and shall take such other action as may be necessary to carry out their
respective obligations under this Agreement.

ARTICLE 20

GENERAL PROVISIONS

	20.01	 	Notices:

	 	(a)	 	All notices and other communications given in connection with this Agreement
shall be in writing and may be given by delivering them or by sending them by
facsimile to the Parties at the following addresses:

	 	 	 	 	 
	 

	 	To Seller: 

EnCana Oil & Gas (USA) Inc.

370 17th Street, Suite 1700

Denver, CO 80202

Attn: Kit Akers,

Land Lead, New Ventures

Phone: 720-876-5123

Fax: 720-876-6123
	 	To Purchaser:

Delta Petroleum Corporation

370 17th Street, Suite 4300

Denver, CO 80202

Attn: Lyell Coe,

Senior Vice President

Phone: 303-575-0319

Fax: 303-575-0419

19

 

	 	(b)	 	Receipt: Any notice shall:

	 	(i)	 	if delivered, be deemed to have been given or made at the time
of delivery;
	 
	 	(ii)	 	be deemed to have been received two (2) days after deposit with
an international overnight courier service, if sent via priority overnight; or
	 
	 	(iii)	 	if sent by facsimile, be deemed to have been given or made on
the Business Day following the day on which it was sent.

	 	(c)	 	Change of Address: Either of the Parties may from time to time change
its address for service herein by giving written notice to the other Party.

	20.02	 	Prior Agreements and Amendments: This Agreement, and the Schedules hereto,
shall supersede and replace any and all prior negotiations, discussions, agreements and
understandings between the Parties hereto, whether oral or written, relating to the
transactions contemplated hereby, and may be amended only by written instrument signed by
all the Parties.
	 
	20.03	 	Governing Law: Disputes between the Parties regarding the terms of this
Agreement shall be exclusively subject to and be interpreted, construed and enforced in
accordance with the laws in effect in the State of Colorado. With respect to such contract
disputes, each Party irrevocably submits to the exclusive jurisdiction of the district
courts of the City and County of Denver, State of Colorado and all courts of appeal
therefrom. All disputes with regard to real property matters shall be exclusively subject
to and be interpreted, construed and enforced in accordance with the laws in effect in the
State of Washington. With respect to such real property matters, each Party irrevocably
submits to the exclusive jurisdiction of the courts of the state and all courts of appeal of
the State of Washington. In the event of any disputes arising in connection with or related
to this Agreement, the prevailing Party shall recover court costs and reasonable attorney’s
fees from the opposing Party.
	 
	20.04	 	Entire Agreement: This Agreement, and the Schedules hereto, comprise the entire
agreement between the Parties. There is no representation, warranty or collateral agreement
relating to the sale and purchase of the Assets, except as expressly set forth herein, and
there are no implied terms hereunder, statutory or otherwise.
	 
	20.05	 	Time: Time shall in all respects be of the essence in this Agreement.
	 
	20.06	 	No Merger: The covenants, representations, warranties and indemnities set forth
in this Agreement shall not merge in any assignments, conveyances, transfers and other
documents conveying the Assets to Purchaser.
	 
	20.07	 	Binding Effect: This Agreement shall be binding upon and shall inure to the
benefit of the Parties, and their respective successors and assigns.
	 
	20.08	 	Public Announcements:

20

 

	 	(a)	 	The Parties shall cooperate with each other in relaying to third parties whom
need to know information concerning this Agreement and the transactions contemplated
herein, and shall discuss drafts of all press releases and other releases of
information for dissemination to the public pertaining hereto. However, nothing in
this clause shall prevent a Party from furnishing any information to any
governmental agency or regulatory authority or to the public, insofar only as is
required by regulation or securities laws applicable to such Party, provided that a
Party which proposes to make such a public disclosure shall, to the extent
reasonably possible, provide the other Party with a draft of such statement a
sufficient time prior to its release to enable such other Party to review such
draft and advise that Party of any comments it may have with respect thereto.
	 
	 	(b)	 	Notwithstanding subclause (a), Seller shall be permitted to disclose
information pertaining to this Agreement and the identity of Purchaser, to the extent
required to enable Seller to fulfill its obligations pertaining to ROFRs, in
accordance with clause 8.01.

	20.09	 	Counterpart Execution: This Agreement may be executed by facsimile and in
counterparts and all executed and delivered counterparts together shall constitute a fully
executed agreement.

     IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 	 	 	 
	Delta Petroleum Corporation	 	 	 	EnCana Oil & Gas (USA) Inc.
	 
	 	 	 	 	 	 	 	 
	Roger A. Parker, Chief Executive Officer

	 	 	 	By:	 	/s/ Douglas J. Tierney
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	Douglas J. Tierney
	 

	 	 	 	 	 	 	 	 
	/s/ Roger A. Parker

	 		 	 	 	Title:	 	V.P. Business Development
	 

	 	 	 	 	 	 	 	 

21

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