Document:

ex10-7ethos.htm

    
      

      

    

    

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement
      (this “Agreement”) is made and entered into as of July __, 2007, between
      Ethos Environmental, Inc. a Nevada corporation (the “Company”) and each
      of the several purchasers signatory hereto (each such purchaser, a
“Purchaser” and, collectively, the “Purchasers”).

    

                   This
      Agreement is made pursuant to the Subscription Agreement, dated as of the date
      hereof, between the Company and each Purchaser (the “Purchase
      Agreement”).

    

                   The
      Company and each Purchaser hereby agrees as follows:

    

            1.                      Definitions

    

                   Capitalized
      terms used and not otherwise defined herein that are defined in the Purchase
      Agreement shall have the meanings given such terms in the Purchase
      Agreement. As used in this Agreement, the following terms shall have
      the following meanings:

    

                “Advice”
      shall have the meaning set forth in Section 6(d).

    

    “Current
      Registration
      Statement”  shall mean the registration statement filed by the
      Company on Form SB-2 on June 13, 2007 and which is currently in review, but
      which the Company agrees to use best-efforts to withdraw and refile within
      30
      days of the date hereof to include the Registrable Securities.

    

    “Effectiveness
      Date” means, with respect to the initial Registration Statement required to
      be filed hereunder: (i) January 15, 2008 in the event the Registrable Securities
      are included in the Current Registration Statement; or (ii), the 5th calendar
      day
      following the date the Current Registration Statement is declared effective
      (or,
      in the event of a “full review” by the Commission, the 30th calendar
      day
      following the date the Current Registration Statement is declared effective)
      and
      with respect to any additional Registration Statements which may be required
      pursuant to Section 3(c), the 45th calendar
      day
      following the date on which an additional Registration Statement is required
      to
      be filed hereunder; provided, however, that in the event the
      Company is notified by the Commission that one or more of the above Registration
      Statements will not be reviewed or is no longer subject to further review and
      comments, the Effectiveness Date as to such Registration Statement shall be
      the
      fifth Trading Day following the date on which the Company is so notified if
      such
      date precedes the dates otherwise required above.

    

    “Effectiveness
      Period” shall have the meaning set forth in Section 2(a).

    

    “Event”
      shall have the meaning set forth in Section 2(b).

    

    “Event
      Date” shall have the meaning set forth in Section 2(b).

    
      
         

      

      
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    “Filing
      Date” means, with respect to the initial Registration Statement in the event
      the Registrable Securities are not included in the Current Registration
      Statement, the 30th calendar
      day
      following the date on which the Current Registration Statement is declared
      effective by the SEC and, with respect to any additional Registration Statements
      which may be required pursuant to Section 3(c), the earliest practical date
      on
      which the Company is permitted by SEC Guidance to file such additional
      Registration Statement related to the Registrable Securities.

    

    “Holder”
      or “Holders” means the holder or holders, as the case may be, from time
      to time of Registrable Securities.

    

    “Indemnified
      Party” shall have the meaning set forth in Section 5(c).

    

    “Indemnifying
      Party” shall have the meaning set forth in Section 5(c).

    

    “Initial
      Registration Statement” means: (i) the Current Registration Statement, or in
      the event the Registered Securities are not included therein; (ii) the initial
      Registration Statement filed pursuant to this Agreement.

    

    “Losses”
      shall have the meaning set forth in Section 5(a).

    

    “Plan
      of Distribution” shall have the meaning set forth in Section
      2(a).

    

    “Prospectus”
      means the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

    

    “Registrable
      Securities” means all Shares and any securities issued or issuable upon any
      stock split, dividend or other distribution, recapitalization or similar event
      with respect to the foregoing.

    

    “Registration
      Statement” means the registration statement required to be filed hereunder
      and any additional registration statements contemplated by Section 3(c),
      including (in each case) the Prospectus, amendments and supplements to such
      registration statement or Prospectus, including pre- and post-effective
      amendments, all exhibits thereto, and all material incorporated by reference
      or
      deemed to be incorporated by reference in such registration
      statement.

    

     “Rule
      415” means Rule 415 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended or interpreted from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

    
      
         

      

      
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    “Rule
      424” means Rule 424 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended or interpreted from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

    

    “Selling
      Shareholder Questionnaire” shall have the meaning set forth in Section
      3(a).

    

    “SEC
      Guidance” means (i) any publicly-available written or oral guidance,
      comments, requirements or requests of the Commission staff and (ii) the
      Securities Act.

    

            2.                      Shelf
      Registration

    

    (a)  On
      or
      prior to each Filing Date, the Company either: (i) include the Registrable
      Securities in the Current Registration Statement; or (ii) shall prepare and
      file
      with the Commission a Registration Statement covering the resale of all or
      such
      portion of the Registrable Securities as permitted by SEC Guidance (provided
      that the Company shall use diligent efforts to advocate with the Commission
      for
      the registration of all of the Registrable Securities in accordance with the
      SEC
      Guidance, including without limitation, the Manual of Publicly Available
      Telephone Interpretations D.29) that are not then registered on an effective
      Registration Statement for an offering to be made on a continuous basis pursuant
      to Rule 415.  The Registration Statement shall be on Form S-3 (except
      if the Company is not then eligible to register for resale the Registrable
      Securities on Form S-3, in which case such registration shall be on another
      appropriate form in accordance herewith) and shall contain (unless otherwise
      directed by at least an 85% majority in interest of the Holders) a “Plan of
      Distribution” section similar to that attached hereto as Annex A, but
      which shall in any event include all sales methods detailed in Annex
      A.  Subject to the terms of this Agreement, the Company shall use its
      best efforts to cause a Registration Statement to be declared effective under
      the Securities Act as promptly as possible after the filing thereof, but in
      any
      event prior to the applicable Effectiveness Date, and shall use its best efforts
      to keep such Registration Statement continuously effective under the Securities
      Act until all Registrable Securities covered by such Registration Statement
      have
      been sold, or may be sold without volume restrictions pursuant to Rule 144(k),
      as determined by the counsel to the Company pursuant to a written opinion letter
      to such effect, addressed and acceptable to the Company’s transfer agent and the
      affected Holder (the “Effectiveness Period”).  The Company
      shall telephonically request effectiveness of a Registration Statement as of
      5:00 p.m. New York City time on a Trading Day.   The Company
      shall immediately notify the Holders via facsimile or by e-mail delivery of
      a
“.pdf” format data file of the effectiveness of a Registration Statement on the
      same Trading Day that the Company telephonically confirms effectiveness with
      the
      Commission, which shall be the date requested for effectiveness of a
      Registration Statement.  The Company shall, by 9:30 a.m. New York City
      time on the Trading Day after the Effective Date, file a final Prospectus with
      the Commission as required by Rule 424.  Failure to so notify the
      Holder within 1 Trading Day of such notification of effectiveness or failure
      to
      file a final Prospectus as foresaid shall be deemed an Event under Section
      2(b).  Notwithstanding any other provision of this Agreement and
      subject to the payment of liquidated damages in Section 2(b), if any SEC
      Guidance sets forth a limitation of the number of Registrable Securities
      permitted to be registered on a particular Registration Statement (and
      notwithstanding that the Company used diligent efforts to advocate with the
      Commission for the registration of all or a greater number of Registrable
      Securities), unless otherwise directed in writing by a Holder as to its
      Registrable Securities, the number of Registrable Securities to be registered
      on
      such Registration Statement will be reduced on a pro rata basis based on the
      total number of unregistered Shares held by such Holders).

    
      
         

      

      
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    (b)  If:
      (i)
      the Initial Registration Statement is not filed on or prior to its Filing Date
      and the Registrable Securities are not included in the Current Registration
      Statement (if the Company files the Initial Registration Statement without
      affording the Holders the opportunity to review and comment on the same as
      required by Section 3(a) herein, the Company shall be deemed to have not
      satisfied this clause (i)), or (ii) the Company fails to file with the
      Commission a request for acceleration of a Registration Statement in accordance
      with Rule 461 promulgated under the Securities Act, within five Trading Days
      of
      the date that the Company is notified (orally or in writing, whichever is
      earlier) by the Commission that such Registration Statement will not be
“reviewed” or not be subject to further review, or (iii) prior to the
      Effectiveness Date of a Registration Statement, the Company fails to use its
      “best-efforts” to file a pre-effective amendment and otherwise respond in
      writing to comments made by the Commission in respect of such Registration
      Statement within 10 Trading Days after the receipt of comments by or notice
      from
      the Commission that such amendment is required in order for such Registration
      Statement to be declared effective, or (iv) all of the Registrable Securities
      are not registered for resale pursuant to one or more effective Registration
      Statements on or before February 15, 2008, or (v) after the Effectiveness Date
      of a Registration Statement, such Registration Statement ceases for any reason
      to remain continuously effective as to all Registrable Securities included
      in
      such Registration Statement, or the Holders are otherwise not permitted to
      utilize the Prospectus therein to resell such Registrable Securities, for more
      than 10 consecutive calendar days or more than an aggregate of 15 calendar
      days
      during any 12-month period (which need not be consecutive calendar days) (any
      such failure or breach being referred to as an “Event”, and for purposes
      of clause (i), (iv) or (v) the date on which such Event occurs, or for purposes
      of clause (ii) the date on which such five Trading Day period is exceeded,
      or
      for purposes of clause (iii) the date which such 10 calendar day period is
      exceeded, or for purposes of clause (vi) the date on which such 10 or 15
      calendar day period, as applicable, is exceeded being referred to as “Event
      Date”), then, in addition to any other rights the Holder may have hereunder
      or under applicable law, on each such Event Date and on each monthly anniversary
      of each such Event Date (if the applicable Event shall not have been cured
      by
      such date) until the applicable Event is cured, the Company shall pay to the
      Holder an amount in common stock, as partial liquidated damages and not as
      a
      penalty, equal to 1% of the total issued and outstanding shares on each Event
      Date and on each monthly anniversary of each such Event Date until the
      applicable event is cured, with an increase from 1% to 3% of the total issued
      and outstanding shares commencing on the fourth monthly anniversary from each
      such Event Date.

    
      
         

      

      
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    3.           Registration
      Procedures.

    

                   In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

    

    (a)  Not
      less
      than 5 Trading Days prior to the filing of each Registration Statement and
      not
      less than one Trading Day prior to the filing of any related Prospectus or
      any
      amendment or supplement thereto (including any document that would be
      incorporated or deemed to be incorporated therein by reference), the Company
      shall (i) furnish to each Holder copies of all such documents proposed to be
      filed, which documents (other than those incorporated or deemed to be
      incorporated by reference) will be subject to the review of such Holders and
      (ii) cause its officers and directors, counsel and independent certified public
      accountants to respond to such inquiries as shall be necessary, in the
      reasonable opinion of respective counsel to each Holder, to conduct a reasonable
      investigation within the meaning of the Securities Act. The Company shall not
      file a Registration Statement or any such Prospectus or any amendments or
      supplements thereto to which the Holders of a majority of the Registrable
      Securities shall reasonably object in good faith, provided that the Company
      is
      notified of such objection in writing no later than 5 Trading Days after the
      Holders have been so furnished copies of a Registration Statement or 1 Trading
      Day after the Holders have been so furnished copies of any related Prospectus
      or
      amendments or supplements thereto. Each Holder agrees to furnish to the Company
      a completed questionnaire in the form attached to this Agreement as Annex
      B (a “Selling Shareholder Questionnaire”) not less than two Trading
      Days prior to the Filing Date or by the end of the fourth Trading Day following
      the date on which such Holder receives draft materials in accordance with this
      Section.

    

    (b)  (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the terms of
      this
      Agreement), and, as so supplemented or amended, to be filed pursuant to Rule
      424; (iii) respond as promptly as reasonably possible to any comments received
      from the Commission with respect to a Registration Statement or any amendment
      thereto and provide as promptly as reasonably possible to the Holders true
      and
      complete copies of all correspondence from and to the Commission relating to
      a
      Registration Statement (provided that the Company may excise any information
      contained therein which would constitute material non-public information as
      to
      any Holder which has not executed a confidentiality agreement with the Company);
      and (iv) comply in all material respects with the provisions of the Securities
      Act and the Exchange Act with respect to the disposition of all Registrable
      Securities covered by a Registration Statement during the applicable period
      in
      accordance (subject to the terms of this Agreement) with the intended methods
      of
      disposition by the Holders thereof set forth in such Registration Statement
      as
      so amended or in such Prospectus as so supplemented.

    
      
         

      

      
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    (c)  If
      during
      the Effectiveness Period, the number of Registrable Securities at any time
      exceeds 100% of the number of shares of Common Stock then registered in a
      Registration Statement, then the Company shall file as soon as reasonably
      practicable, but in any case prior to the applicable Filing Date, an additional
      Registration Statement covering the resale by the Holders of not less than
      the
      number of such Registrable Securities.

    

    (d)  Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (iii) through (vi) hereof, be accompanied by an instruction to
      suspend the use of the Prospectus until the requisite changes have been made)
      as
      promptly as reasonably possible (and, in the case of (i)(A) below, not less
      than
      one Trading Day prior to such filing) and (if requested by any such Person)
      confirm such notice in writing no later than one Trading Day following the
      day
      (i)(A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to a Registration Statement is proposed to be filed; (B) when the
      Commission notifies the Company whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement; and (C) with respect to a Registration Statement or
      any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other federal or state governmental authority
      for amendments or supplements to a Registration Statement or Prospectus or
      for
      additional information; (iii) of the issuance by the Commission or any other
      federal or state governmental authority of any stop order suspending the
      effectiveness of a Registration Statement covering any or all of the Registrable
      Securities or the initiation of any Proceedings for that purpose; (iv) of the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction, or the initiation or threatening of
      any
      Proceeding for such purpose; (v) of the occurrence of any event or passage
      of
      time that makes the financial statements included in a Registration Statement
      ineligible for inclusion therein or any statement made in a Registration
      Statement or Prospectus or any document incorporated or deemed to be
      incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading; and (vi) of the occurrence or existence of any pending
      corporate development with respect to the Company that the Company believes
      may
      be material and that, in the determination of the Company, makes it not in
      the
      best interest of the Company to allow continued availability of a Registration
      Statement or Prospectus, provided that any and all of such information shall
      remain confidential to each Holder until such information otherwise becomes
      public, unless disclosure by a Holder is required by law; provided,
further, that notwithstanding each Holder’s agreement to keep such
      information confidential, each such Holder makes no acknowledgement that any
      such information is material, non-public information.

    
      
         

      

      
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    (e)  Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order stopping or suspending the effectiveness of a Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

    

    (f)  [RESERVED]

    

    (g)  Subject
      to the terms of this Agreement, the Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto, except
      after
      the giving of any notice pursuant to Section 3(d).

    

    (h)   Prior
      to any resale of Registrable Securities by a Holder, use its commercially
      reasonable efforts to register or qualify or cooperate with the selling Holders
      in connection with the registration or qualification (or exemption from the
      Registration or qualification) of such Registrable Securities for the resale
      by
      the Holder under the securities or Blue Sky laws of such jurisdictions within
      the United States as any Holder reasonably requests in writing, to keep each
      registration or qualification (or exemption therefrom) effective during the
      Effectiveness Period and to do any and all other acts or things reasonably
      necessary to enable the disposition in such jurisdictions of the Registrable
      Securities covered by each Registration Statement; provided, that the Company
      shall not be required to qualify generally to do business in any jurisdiction
      where it is not then so qualified, subject the Company to any material tax
      in
      any such jurisdiction where it is not then so subject or file a general consent
      to service of process in any such jurisdiction.

    

    (i)  If
      requested by a Holder, cooperate with such Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to a Registration Statement, which
      certificates shall be free, to the extent permitted by the Purchase Agreement,
      of all restrictive legends, and to enable such Registrable Securities to be
      in
      such denominations and registered in such names as any such Holder may
      request.

    

    (j)  Upon
      the
      occurrence of any event contemplated by Section 3(d), as promptly as reasonably
      possible under the circumstances taking into account the Company’s good faith
      assessment of any adverse consequences to the Company and its stockholders
      of
      the premature disclosure of such event, prepare a supplement or amendment,
      including a post-effective amendment, to a Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither a Registration Statement nor such
      Prospectus will contain an untrue statement of a material fact or omit to state
      a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If the Company notifies the Holders in accordance with
      clauses (iii) through (vi) of Section 3(d) above to suspend the use of any
      Prospectus until the requisite changes to such Prospectus have been made, then
      the Holders shall suspend use of such Prospectus.  The Company will
      use its best efforts to ensure that the use of the Prospectus may be resumed
      as
      promptly as is practicable.  The Company shall be entitled to exercise
      its right under this Section 3(k) to suspend the availability of a Registration
      Statement and Prospectus, subject to the payment of partial liquidated damages
      otherwise required pursuant to Section 2(b), for a period not to exceed 60
      calendar days (which need not be consecutive days) in any 12 month
      period.

    
      
         

      

      
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    (k)  Comply
      with all applicable rules and regulations of the Commission.

    

    (l)  The
      Company may require each selling Holder to furnish to the Company a certified
      statement as to the number of shares of Common Stock beneficially owned by
      such
      Holder and, if required by the Commission, the natural persons thereof that
      have
      voting and dispositive control over the shares. During any periods that the
      Company is unable to meet its obligations hereunder with respect to the
      registration of the Registrable Securities solely because any Holder fails
      to
      furnish such information within three Trading Days of the Company’s request, any
      liquidated damages that are accruing at such time as to such Holder only shall
      be tolled and any Event that may otherwise occur solely because of such delay
      shall be suspended as to such Holder only, until such information is delivered
      to the Company.

    

    4.                      Registration
      Expenses. All fees and expenses incident to the performance of or compliance
      with this Agreement by the Company shall be borne by the Company whether or
      not
      any Registrable Securities are sold pursuant to a Registration Statement. The
      fees and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses of the Company’s counsel and auditors) (A) with respect to
      filings made with the Commission, (B) with respect to filings required to be
      made with any Trading Market on which the Common Stock is then listed for
      trading, (C) in compliance with applicable state securities or Blue Sky laws
      reasonably agreed to by the Company in writing (including, without limitation,
      fees and disbursements of counsel for the Company in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities) and (D) if not
      previously paid by the Company in connection with an Issuer Filing, with respect
      to any filing that may be required to be made by any broker through which a
      Holder intends to make sales of Registrable Securities with the NASD pursuant
      to
      NASD Rule 2710, so long as the broker is receiving no more than a customary
      brokerage commission in connection with such sale, (ii) printing expenses
      (including, without limitation, expenses of printing certificates for
      Registrable Securities), (iii) messenger, telephone and delivery expenses,
      (iv)
      fees and disbursements of counsel for the Company, (v) Securities Act liability
      insurance, if the Company so desires such insurance, and (vi) fees and expenses
      of all other Persons retained by the Company in connection with the consummation
      of the transactions contemplated by this Agreement.  In addition, the
      Company shall be responsible for all of its internal expenses incurred in
      connection with the consummation of the transactions contemplated by this
      Agreement (including, without limitation, all salaries and expenses of its
      officers and employees performing legal or accounting duties), the expense
      of
      any annual audit and the fees and expenses incurred in connection with the
      listing of the Registrable Securities on any securities exchange as required
      hereunder.  In no event shall the Company be responsible for any
      broker or similar commissions of any Holder or, except to the extent provided
      for in the Transaction Documents, any legal fees or other costs of the
      Holders.

    
      
         

      

      
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            5.                      Indemnification.

    

    (a)  Indemnification
      by the Company. The Company shall, notwithstanding any termination of this
      Agreement, indemnify and hold harmless each Holder, the officers, directors,
      members, partners, agents, brokers (including brokers who offer and sell
      Registrable Securities as principal as a result of a pledge or any failure
      to
      perform under a margin call of Common Stock), investment advisors and employees
      (and any other Persons with a functionally equivalent role of a Person holding
      such titles, notwithstanding a lack of such title or any other title) of each
      of
      them, each Person who controls any such Holder (within the meaning of Section
      15
      of the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, members, shareholders, partners, agents and employees (and any other
      Persons with a functionally equivalent role of a Person holding such titles,
      notwithstanding a lack of such title or any other title) of each such
      controlling Person, to the fullest extent permitted by applicable law, from
      and
      against any and all losses, claims, damages, liabilities, costs (including,
      without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to (1) any untrue or
      alleged untrue statement of a material fact contained in a Registration
      Statement, any Prospectus or any form of prospectus or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required to
      be
      stated therein or necessary to make the statements therein (in the case of
      any
      Prospectus or supplement thereto, in light of the circumstances under which
      they
      were made) not misleading or (2) any violation or alleged violation by the
      Company of the Securities Act, the Exchange Act or any state securities law,
      or
      any rule or regulation thereunder, in connection with the performance of its
      obligations under this Agreement, except to the extent, but only to the extent,
      that (i) such untrue statements or omissions are based solely upon information
      regarding such Holder furnished in writing to the Company by such Holder
      expressly for use therein, or to the extent that such information relates to
      such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder
      expressly for use in a Registration Statement, such Prospectus or in any
      amendment or supplement thereto (it being understood that the Holder has
      approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
      of an event of the type specified in Section 3(d)(iii)-(vi), the use by such
      Holder of an outdated or defective Prospectus after the Company has notified
      such Holder in writing that the Prospectus is outdated or defective and prior
      to
      the receipt by such Holder of the Advice contemplated in Section
      6(d).  The Company shall notify the Holders promptly of the
      institution, threat or assertion of any Proceeding arising from or in connection
      with the transactions contemplated by this Agreement of which the Company is
      aware.

    
      
         

      

      
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    (b)  Indemnification
      by Holders. Each Holder shall, severally and not jointly, indemnify and hold
      harmless the Company, its directors, officers, agents and employees, each Person
      who controls the Company (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, agents or
      employees of such controlling Persons, to the fullest extent permitted by
      applicable law, from and against all Losses, as incurred, to the extent arising
      out of or based solely upon: (x) such Holder’s failure to comply with the
      prospectus delivery requirements of the Securities Act or (y) any untrue or
      alleged untrue statement of a material fact contained in any Registration
      Statement, any Prospectus, or in any amendment or supplement thereto or in
      any
      preliminary prospectus, or arising out of or relating to any omission or alleged
      omission of a material fact required to be stated therein or necessary to make
      the statements therein not misleading (i) to the extent, but only to the extent,
      that such untrue statement or omission is contained in any information so
      furnished in writing by such Holder to the Company specifically for inclusion
      in
      such Registration Statement or such Prospectus or (ii) to the extent that such
      information relates to such Holder’s proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved in writing by
      such Holder expressly for use in a Registration Statement (it being understood
      that the Holder has approved Annex A hereto for this purpose), such Prospectus
      or in any amendment or supplement thereto or (ii) in the case of an occurrence
      of an event of the type specified in Section 3(d)(iii)-(vi), the use by such
      Holder of an outdated or defective Prospectus after the Company has notified
      such Holder in writing that the Prospectus is outdated or defective and prior
      to
      the receipt by such Holder of the Advice contemplated in Section 6(d). In no
      event shall the liability of any selling Holder hereunder be greater in amount
      than the dollar amount of the net proceeds received by such Holder upon the
      sale
      of the Registrable Securities giving rise to such indemnification
      obligation.

    

    (c)  Conduct
      of Indemnification Proceedings. If any Proceeding shall be brought or
      asserted against any Person entitled to indemnity hereunder (an “Indemnified
      Party”), such Indemnified Party shall promptly notify the Person from whom
      indemnity is sought (the “Indemnifying Party”) in writing, and the
      Indemnifying Party shall have the right to assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that it shall be
      finally determined by a court of competent jurisdiction (which determination
      is
      not subject to appeal or further review) that such failure shall have prejudiced
      the Indemnifying Party.

    

                   An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless:  (1) the Indemnifying Party has agreed in writing to pay such
      fees and expenses; (2) the Indemnifying Party shall have failed promptly to
      assume the defense of such Proceeding and to employ counsel reasonably
      satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
      parties to any such Proceeding (including any impleaded parties) include both
      such Indemnified Party and the Indemnifying Party, and counsel to the
      Indemnified Party shall reasonably believe that a material conflict of interest
      is likely to exist if the same counsel were to represent such Indemnified Party
      and the Indemnifying Party (in which case, if such Indemnified Party notifies
      the Indemnifying Party in writing that it elects to employ separate counsel
      at
      the expense of the Indemnifying Party, the Indemnifying Party shall not have
      the
      right to assume the defense thereof and the reasonable fees and expenses of
      no
      more than one separate counsel shall be at the expense of the Indemnifying
      Party).  The Indemnifying Party shall not be liable for any settlement
      of any such Proceeding effected without its written consent, which consent
      shall
      not be unreasonably withheld or delayed.  No Indemnifying Party shall,
      without the prior written consent of the Indemnified Party, effect any
      settlement of any pending Proceeding in respect of which any Indemnified Party
      is a party, unless such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of
      such Proceeding.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

                   Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party (including reasonable fees and expenses to the extent incurred
      in connection with investigating or preparing to defend such Proceeding in
      a
      manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within ten Trading Days of written notice thereof to the
      Indemnifying Party; provided, that the Indemnified Party shall promptly
      reimburse the Indemnifying Party for that portion of such fees and expenses
      applicable to such actions for which such Indemnified Party is judicially
      determined to be not entitled to indemnification hereunder.

    

    (d)  Contribution.
      If the indemnification under Section 5(a) or 5(b) is unavailable to an
      Indemnified Party or insufficient to hold an Indemnified Party harmless for
      any
      Losses, then each Indemnifying Party shall contribute to the amount paid or
      payable by such Indemnified Party, in such proportion as is appropriate to
      reflect the relative fault of the Indemnifying Party and Indemnified Party
      in
      connection with the actions, statements or omissions that resulted in such
      Losses as well as any other relevant equitable considerations. The relative
      fault of such Indemnifying Party and Indemnified Party shall be determined
      by
      reference to, among other things, whether any action in question, including
      any
      untrue or alleged untrue statement of a material fact or omission or alleged
      omission of a material fact, has been taken or made by, or relates to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the
      parties’ relative intent, knowledge, access to information and opportunity to
      correct or prevent such action, statement or omission.  The amount
      paid or payable by a party as a result of any Losses shall be deemed to include,
      subject to the limitations set forth in this Agreement, any reasonable
      attorneys’ or other fees or expenses incurred by such party in connection with
      any Proceeding to the extent such party would have been indemnified for such
      fees or expenses if the indemnification provided for in this Section was
      available to such party in accordance with its terms.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

                   The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding
      paragraph.  Notwithstanding the provisions of this Section 5(d), no
      Holder shall be required to contribute, in the aggregate, any amount in excess
      of the amount by which the net proceeds actually received by such Holder from
      the sale of the Registrable Securities subject to the Proceeding exceeds the
      amount of any damages that such Holder has otherwise been required to pay by
      reason of such untrue or alleged untrue statement or omission or alleged
      omission.

    

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

    

            6.                      Miscellaneous.

    

    (a)  Remedies.  In
      the event of a breach by the Company or by a Holder of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, shall be entitled to
      specific performance of its rights under this Agreement.  The Company
      and each Holder agree that monetary damages would not provide adequate
      compensation for any losses incurred by reason of a breach by it of any of
      the
      provisions of this Agreement and hereby further agrees that, in the event of
      any
      action for specific performance in respect of such breach, it shall not assert
      or shall waive the defense that a remedy at law would be adequate.

    

    (b)  [RESERVED]

    

    (c)  Compliance.
      Each Holder covenants and agrees that it will comply with the prospectus
      delivery requirements of the Securities Act as applicable to it in connection
      with sales of Registrable Securities pursuant to a Registration
      Statement.

    

    (d)  Discontinued
      Disposition.  By its acquisition of Registrable Securities, each
      Holder agrees that, upon receipt of a notice from the Company of the occurrence
      of any event of the kind described in Section 3(d)(iii) through (vi), such
      Holder will forthwith discontinue disposition of such Registrable Securities
      under a Registration Statement until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus (as it
      may have been supplemented or amended) may be resumed.  The Company
      will use its best efforts to ensure that the use of the Prospectus may be
      resumed as promptly as it practicable.  The Company agrees and
      acknowledges that any periods during which the Holder is required to discontinue
      the disposition of the Registrable Securities hereunder shall be subject to
      the
      provisions of Section 2(b).

    

    (e)  Piggy-Back
      Registrations. If at any time during the Effectiveness Period there is not
      an effective Registration Statement covering all of the Registrable Securities
      and the Company shall determine to prepare and file with the Commission a
      registration statement relating to an offering for its own account or the
      account of others under the Securities Act of any of its equity securities,
      other than on Form S-4 or Form S-8 (each as promulgated under the Securities
      Act) or their then equivalents relating to equity securities to be issued solely
      in connection with any acquisition of any entity or business or equity
      securities issuable in connection with the Company’s stock option or other
      employee benefit plans, then the Company shall send to each Holder a written
      notice of such determination and, if within fifteen days after the date of
      such
      notice, any such Holder shall so request in writing, the Company shall include
      in such registration statement all or any part of such Registrable Securities
      such Holder requests to be registered; provided, however, that the
      Company shall not be required to register any Registrable Securities pursuant
      to
      this Section 6(e) that are eligible for resale pursuant to Rule 144(k)
      promulgated under the Securities Act or that are the subject of a then effective
      Registration Statement.

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (f)  Amendments
      and Waivers. The provisions of this Agreement, including the provisions of
      this sentence, may not be amended, modified or supplemented, and waivers or
      consents to departures from the provisions hereof may not be given, unless
      the
      same shall be in writing and signed by the Company and the Holders of a majority
      of the then outstanding Registrable Securities (including, for this purpose
      any
      Registrable Securities issuable upon exercise or conversion of any
      Security).  If a Registration Statement does not register all of the
      Registrable Securities pursuant to a waiver or amendment done in compliance
      with
      the previous sentence, then the number of Registrable Securities to be
      registered for each Holder shall be reduced pro rata among all Holders and
      each
      Holder shall have the right to designate which of its Registrable Securities
      shall be omitted from such Registration Statement. Notwithstanding the
      foregoing, a waiver or consent to depart from the provisions hereof with respect
      to a matter that relates exclusively to the rights of some Holders and that
      does
      not directly or indirectly affect the rights of other Holders may be given
      by
      Holders of all of the Registrable Securities to which such waiver or consent
      relates; provided, however, that the provisions of this sentence
      may not be amended, modified, or supplemented except in accordance with the
      provisions of the first  sentence of this Section 6(f).

    

    (g)  Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be delivered as set forth in the Purchase
      Agreement.

    

    (h)  Successors
      and Assigns. This Agreement shall inure to the benefit of and be binding
      upon the successors and permitted assigns of each of the parties and shall
      inure
      to the benefit of each Holder. The Company may not assign (except by merger)
      its
      rights or obligations hereunder without the prior written consent of all of
      the
      Holders of the then-outstanding Registrable Securities. Each Holder may assign
      their respective rights hereunder in the manner and to the Persons as permitted
      under the Purchase Agreement.

    

    (i)  No
      Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has
      entered, as of the date hereof, nor shall the Company or any of its
      Subsidiaries, on or after the date of this Agreement, enter into any agreement
      with respect to its securities, that would have the effect of impairing the
      rights granted to the Holders in this Agreement or otherwise conflicts with
      the
      provisions hereof.  Except as set forth on Schedule 6(i),
      neither the Company nor any of its subsidiaries has previously entered into
      any
      agreement granting any registration rights with respect to any of its securities
      to any Person that have not been satisfied in full.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (j)  Execution
      and Counterparts. This Agreement may be executed in two or more
      counterparts, all of which when taken together shall be considered one and
      the
      same agreement and shall become effective when counterparts have been signed
      by
      each party and delivered to the other party, it being understood that both
      parties need not sign the same counterpart.  In the event that any
      signature is delivered by facsimile transmission or by e-mail delivery of a
      “.pdf” format data file, such signature shall create a valid and binding
      obligation of the party executing (or on whose behalf such signature is
      executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

    

    (k)  Governing
      Law.  All questions concerning the construction, validity,
      enforcement and interpretation of this Agreement shall be determined in
      accordance with the provisions of the Purchase Agreement.

    

    (l)  Cumulative
      Remedies. The remedies provided herein are cumulative and not exclusive of
      any other remedies provided by law.

    

    (m)  Severability.
      If any term, provision, covenant or restriction of this Agreement is held by
      a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto shall use their commercially
      reasonable efforts to find and employ an alternative means to achieve the same
      or substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    (n)  Headings.
      The headings in this Agreement are for convenience only, do not constitute
      a
      part of the Agreement and shall not be deemed to limit or affect any of the
      provisions hereof.

    

    (o)  Independent
      Nature of Holders’ Obligations and Rights. The obligations of each Holder
      hereunder are several and not joint with the obligations of any other Holder
      hereunder, and no Holder shall be responsible in any way for the performance
      of
      the obligations of any other Holder hereunder. Nothing contained herein or
      in
      any other agreement or document delivered at any closing, and no action taken
      by
      any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders
      as a partnership, an association, a joint venture or any other kind of entity,
      or create a presumption that the Holders are in any way acting in concert with
      respect to such obligations or the transactions contemplated by this Agreement.
      Each Holder shall be entitled to protect and enforce its rights, including
      without limitation the rights arising out of this Agreement, and it shall not
      be
      necessary for any other Holder to be joined as an additional party in any
      proceeding for such purpose.

    

    ********************

    
      
         

      

      
        14

        
          

        

      

       

    

                   IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

    

    
      	
              [_______________]

               

               

            
	
              By:__________________________________________

                   Name:

                   Title:

               

            

    

    
 

    

    

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    

    
      
         

      

      
        15

        
          

        

      

       

    

    [SIGNATURE
      PAGE OF HOLDERS TO ETEV RRA]

    

    

    Name
      of
      Holder: __________________________

    

    Signature
      of Authorized Signatory of Holder: __________________________

    

    Name
      of
      Authorized Signatory: _________________________

    

    Title
      of
      Authorized Signatory: __________________________

    

    

    

    [SIGNATURE
      PAGES CONTINUE]

    

      
        
           

        

        
          16

          
            

          

        

         

      

    Annex
      A

    

    Plan
      of Distribution

    

    Each
      Selling Stockholder (the “Selling Stockholders”) of the common stock and
      any of their pledgees, assignees and successors-in-interest may, from time
      to
      time, sell any or all of their shares of common stock on the [principal Trading
      Market] or any other stock exchange, market or trading facility on which the
      shares are traded or in private transactions.  These sales may be at
      fixed or negotiated prices.  A Selling Stockholder may use any one or
      more of the following methods when selling shares:

     

    
      	
              ·  

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	
              ·  

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	
              ·  

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	
              ·  

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	
              ·  

            	
              privately
                negotiated transactions;

            

    

     

    
      	
              ·  

            	
              settlement
                of short sales entered into after the effective date of the registration
                statement of which this prospectus is a
                part;

            

    

     

    
      	
              ·  

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	
              ·  

            	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or
                otherwise;

            

    

     

    
      	
              ·  

            	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	
              ·  

            	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities Act”), if available, rather than
      under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales.  Broker-dealers may receive commissions or
      discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
      for the purchaser of shares, from the purchaser) in amounts to be negotiated,
      but, except as set forth in a supplement to this Prospectus, in the case of
      an
      agency transaction not in excess of a customary brokerage commission in
      compliance with NASDR Rule 2440; and in the case of a principal transaction
      a
      markup or markdown in compliance with NASDR IM-2440.

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume.  The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities.  The
      Selling Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales.  In such event, any
      commissions received by such broker-dealers or agents and any profit on the
      resale of the shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act.  Each Selling
      Stockholder has informed the Company that it does not have any written or oral
      agreement or understanding, directly or indirectly, with any person to
      distribute the Common Stock. In no event shall any broker-dealer receive fees,
      commissions and markups which, in the aggregate, would exceed eight percent
      (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares.  The Company has agreed to
      indemnify the Selling Stockholders against certain losses, claims, damages
      and
      liabilities, including liabilities under the Securities Act.

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder.  In addition, any
      securities covered by this prospectus which qualify for sale pursuant to Rule
      144 under the Securities Act may be sold under Rule 144 rather than under this
      prospectus.  There is no underwriter or coordinating broker acting in
      connection with the proposed sale of the resale shares by the Selling
      Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect.  The resale shares will be sold
      only through registered or licensed brokers or dealers if required under
      applicable state securities laws. In addition, in certain states, the resale
      shares may not be sold unless they have been registered or qualified for sale
      in
      the applicable state or an exemption from the registration or qualification
      requirement is available and is complied with.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution.  In addition, the Selling Stockholders will be subject
      to applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person.  We will make copies of this prospectus available to the
      Selling Stockholders and have informed them of the need to deliver a copy of
      this prospectus to each purchaser at or prior to the time of the sale (including
      by compliance with Rule 172 under the Securities Act).

      
        
           

        

        
          19

          
            

          

        

         

      

    Annex
      B

    ETHOS
      ENVIRONMENTAL, INC.

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock (the “Registrable
      Securities”) of Ethos Environmental, Inc., a Delaware corporation (the
“Company”), understands that the Company has filed or intends to file
      with the Securities and Exchange Commission (the “Commission”) a
      registration statement (the “Registration Statement”) for the
      registration and resale under Rule 415 of the Securities Act of 1933, as amended
      (the “Securities Act”), of the Registrable Securities, in accordance with
      the terms of the Registration Rights Agreement (the “Registration Rights
      Agreement”) to which this document is annexed.  A copy of the
      Registration Rights Agreement is available from the Company upon request at
      the
      address set forth below.  All capitalized terms not otherwise defined
      herein shall have the meanings ascribed thereto in the Registration Rights
      Agreement.

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus.  Accordingly,
      holders and beneficial owners of Registrable Securities are advised to consult
      their own securities law counsel regarding the consequences of being named
      or
      not being named as a selling securityholder in the Registration Statement and
      the related prospectus.

     

    NOTICE

     

    The
      undersigned beneficial owner (the “Selling Securityholder”) of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it in the Registration Statement.

      
        
           

        

        
          20

          
            

          

        

         

      

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    
      	
               

            	
              1.

            	
              Name.

            

    

     

    
      	
               

            	
              (a)

            	
              Full
                Legal Name of Selling
                Securityholder

            

    

     

    
      	 
	 

    

    

    
      	
               

            	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities are
                held:

            

    

     

    
      	 
	 

    

    

    
      	
               

            	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by the
                questionnaire):

            

    

     

    
      	 
	 

    

    

     

    
      	
               

            	
              2.  Address
                for Notices to Selling
                Securityholder:

            

    

     

    
      	 
	 
	 
	
              Telephone:

            
	
              Fax:

            
	
              Contact
                Person:

            

    

    

    
      	
               

            	
              3.  Broker-Dealer
                Status:

            

    

     

    
      	
               

            	
              (a)

            	
              Are
                you a broker-dealer?

            

    

     

    Yes                         No   

     

    
      	
               

            	
              (b)

            	
              If
                “yes” to Section 3(a), did you receive your Registrable Securities as
                compensation for investment banking services to the
                Company.

            

    

     

    Yes                         No   

     

    
      	
              Note:

            	
              If
                no, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    
      	
               

            	
              (c)

            	
              Are
                you an affiliate of a
                broker-dealer?

            

    

     

    Yes                         No   

     

    
      	
               

            	
              (d)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                bought
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            

    

     

    Yes                         No   

     

    
      	
              Note:

            	
              If
                no, the Commission’s staff has indicated that you should be identified as
                an underwriter in the Registration
                Statement.

            

    

     

    
      	
               

            	
              4.  Beneficial
                Ownership of Securities of the Company Owned by the Selling
                Securityholder.

            

    

     

    Except
      as set forth below in this Item 4, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the securities
      issuable pursuant to the Purchase Agreement.

     

    
      	
               

            	
              (a)

            	
              Type
                and Amount of other securities beneficially owned by the Selling
                Securityholder:

            

    

     

    
      
        

      

      
        

      

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

    

    
      	
               

            	
              5.  Relationships
                with the Company:

            

    

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    
      	
               

            	
              State
                any exceptions here:

            

    

     

    
      
        

      

      
        

      

    

     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 5 and the inclusion of such
      information in the Registration Statement and the related prospectus and any amendments or supplements
      thereto.  The undersigned understands that such information
      will be relied upon by the Company in connection with the preparation or
      amendment of the Registration Statement and the related prospectus.

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    Dated:_____________________                    
      Beneficial
      Owner:____________________                                                                         

    

              
      By:____________________                                                                         

    Name:____________________   

    Title:____________________   

    

    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

     

    
      
         

      

      
        23ex_10-1.htm

    Exhibit
      10.1

     

     

     

    
      PURCHASE
        AND SALE AGREEMENT

      BY
        AND BETWEEN

       

      TERRY
        S. FIELDS

      AS
        SELLER

       

      AND

       

      LEGACY
        RESERVES OPERATING LP

      AS
        BUYER

       

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF
        CONTENTS

      
 

                                                                                                                                                                                                         
        PAGE

      
        
          
            
              	
                      1.

                    	
                      SALE
                        AND PURCHASE OF THE ASSETS.

                    	
                      1

                    
	
                      1.1

                    	
                      Acquired
                        Assets

                    	
                      1

                    
	
                      1.2

                    	
                      Assumed
                        Liabilities

                    	
                      2

                    
	
                      2.

                    	
                      PURCHASE
                        PRICE.

                    	
                      3

                    
	
                      2.1

                    	
                      Purchase
                        Price

                    	
                      3

                    
	
                      2.2

                    	
                      Deposit.

                    	
                      3

                    
	
                      2.3

                    	
                      Adjustments
                        to the Base Purchase Price

                    	
                      3

                    
	
                      2.4

                    	
                      Allocation

                    	
                      4

                    
	
                      3.

                    	
                      CLOSING.

                    	
                      5

                    
	
                      3.1

                    	
                      Closing

                    	
                      5

                    
	
                      3.2

                    	
                      Delivery
                        by Seller

                    	
                      5

                    
	
                      3.3

                    	
                      Delivery
                        by Buyer

                    	
                      6

                    
	
                      3.4

                    	
                      Further
                        Cooperation

                    	
                      6

                    
	
                      4.

                    	
                      ACCOUNTING
                        ADJUSTMENTS.

                    	
                      6

                    
	
                      4.1

                    	
                      Closing
                        Adjustments

                    	
                      6

                    
	
                      4.2

                    	
                      Strapping
                        and Gauging.

                    	
                      6

                    
	
                      4.3

                    	
                      Taxes

                    	
                      7

                    
	
                      4.4

                    	
                      Post-Closing
                        Adjustments

                    	
                      7

                    
	
                      4.5

                    	
                      Suspended
                        Funds

                    	
                      8

                    
	
                      4.6

                    	
                      Audit
                        Adjustments

                    	
                      8

                    
	
                      4.7

                    	
                      Cooperation

                    	
                      8

                    
	
                      5.

                    	
                      DUE
                        DILIGENCE: TITLE MATTERS.

                    	
                      8

                    
	
                      5.1

                    	
                      General
                        Access

                    	
                      8

                    
	
                      5.2

                    	
                      Defensible
                        Title

                    	
                      9

                    
	
                      5.3

                    	
                      Defect
                        Letters.

                    	
                      11

                    
	
                      5.4

                    	
                      Effect
                        of Title Defect

                    	
                      12

                    
	
                      5.5

                    	
                      Preferential
                        Rights and Consents.

                    	
                      13

                    
	
                      6.

                    	
                      ENVIRONMENTAL
                        ASSESSMENT.

                    	
                      15

                    
	
                      6.1

                    	
                      Physical
                        Condition of the Assets

                    	
                      15

                    
	
                      6.2

                    	
                      Inspection
                        and Testing.

                    	
                      16

                    
	
                      6.3

                    	
                      Notice
                        of Adverse Environmental Conditions

                    	
                      17

                    
	
                      6.4

                    	
                      Rights
                        and Remedies for Adverse Environmental Conditions.

                    	
                      18

                    
	
                      6.5

                    	
                      Remediation
                        by Seller

                    	
                      19

                    
	
                      7.

                    	
                      REPRESENTATIONS
                        AND WARRANTIES OF SELLER.

                    	
                      20

                    
	
                      7.1

                    	
                      Seller’s
                        Representations and Warranties

                    	
                      20

                    
	
                      7.2

                    	
                      Scope
                        of Representations of Seller.

                    	
                      22

                    
	
                      8.

                    	
                      REPRESENTATIONS
                        AND WARRANTIES OF BUYER.

                    	
                      23

                    
	
                      8.1

                    	
                      Buyer’s
                        Representations and Warranties

                    	
                      23

                    
	
                      9.

                    	
                      CERTAIN
                        AGREEMENTS OF SELLER

                    	
                      24

                    
	
                      9.1

                    	
                      Maintenance
                        of Assets

                    	
                      24

                    
	
                      9.2

                    	
                      Records

                    	
                      25

                    
	
                      9.3

                    	
                      Audit
                        Rights.

                    	
                      25

                    

            

             

            
              
                
                

              

              
                Page
                  i

                
                  

                

              

              
                
                

              

            

             

            
              	
                      10.

                    	
                      CERTAIN
                        AGREEMENTS OF BUYER

                    	
                      26

                    
	
                      10.1

                    	
                      Plugging
                        Obligation

                    	
                      26

                    
	
                      10.2

                    	
                      Plugging
                        Bond

                    	
                      26

                    
	
                      10.3

                    	
                      Seller’s
                        Logos

                    	
                      26

                    
	
                      10.4

                    	
                      Like-Kind
                        Exchanges

                    	
                      26

                    
	
                      11.

                    	
                      CONDITIONS
                        PRECEDENT TO OBLIGATIONS OF BUYER

                    	
                      26

                    
	
                      11.1

                    	
                      No
                        Litigation

                    	
                      26

                    
	
                      11.2

                    	
                      Representations
                        and Warranties

                    	
                      27

                    
	
                      12.

                    	
                      CONDITIONS
                        PRECEDENT TO THE OBLIGATIONS OF SELLER

                    	
                      27

                    
	
                      12.1

                    	
                      No
                        Litigation

                    	
                      27

                    
	
                      12.2

                    	
                      Representations
                        and Warranties

                    	
                      27

                    
	
                      13.

                    	
                      TERMINATION.

                    	
                      27

                    
	
                      13.1

                    	
                      Causes
                        of Termination

                    	
                      27

                    
	
                      13.2

                    	
                      Effect
                        of Termination.

                    	
                      28

                    
	
                      14.

                    	
                      INDEMNIFICATION.

                    	
                      29

                    
	
                      14.1

                    	
                      Indemnification
                        by Seller

                    	
                      29

                    
	
                      14.2

                    	
                      Indemnification
                        by Buyer

                    	
                      31

                    
	
                      14.3

                    	
                      Physical
                        Inspection

                    	
                      31

                    
	
                      14.4

                    	
                      Notification

                    	
                      32

                    
	
                      15.

                    	
                      MISCELLANEOUS.

                    	
                      32

                    
	
                      15.1

                    	
                      Casualty
                        Loss.

                    	
                      32

                    
	
                      15.2

                    	
                      Confidentiality.

                    	
                      33

                    
	
                      15.3

                    	
                      Notices

                    	
                      33

                    
	
                      15.4

                    	
                      Press
                        Releases and Public Announcements

                    	
                      34

                    
	
                      15.5

                    	
                      Compliance
                        with Express Negligence Test

                    	
                      34

                    
	
                      15.6

                    	
                      Governing
                        Law

                    	
                      34

                    
	
                      15.7

                    	
                      Exhibits

                    	
                      35

                    
	
                      15.8

                    	
                      Fees,
                        Expenses, Taxes and Recording.

                    	
                      35

                    
	
                      15.9

                    	
                      Assignment

                    	
                      35

                    
	
                      15.10

                    	
                      Entire
                        Agreement

                    	
                      35

                    
	
                      15.11

                    	
                      Severability

                    	
                      36

                    
	
                      15.12

                    	
                      Captions

                    	
                      36

                    
	
                      15.13

                    	
                      Time
                        of the Essence

                    	
                      36

                    

            

          

        

      

    

     

    
      
        
        

      

      
        Page
          ii

        
          

        

      

      
        
        

      

    

     

    
      EXHIBITS

       

    

    
      
        
          
            
              
                
                  	
                          1.1(A)

                        	
                          Oil
                            and Gas Leases and Land

                        
	
                          1.1(B)

                        	
                          Deeded
                            Land

                        
	
                          1.1(C)

                        	
                          Vehicles
                            and Other Personal Property

                        
	
                          2.4

                        	
                          Allocation

                        
	
                          3.2(A)

                        	
                          Form
                            of Assignment and Bill of Sale

                        
	
                          3.2(G)

                        	
                          Form
                            of Warranty Deed

                        
	
                          7.1(E)

                        	
                          AFE’s

                        
	
                          7.1(G)

                        	
                          Pending
                            Litigation

                        
	
                          7.1(K)

                        	
                          Material
                            Agreements

                        
	
                          7.1(L)

                        	
                          Consents
                            and Preferential Purchase Rights

                        
	
                          7.1(M)

                        	
                          Gas
                            Imbalances

                        

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        Page
          iii

        
          

        

      

      
        
        

      

    

     

    
      PURCHASE
        AND SALE AGREEMENT

       

      This
        Purchase and Sale Agreement (this “Agreement”) is entered into this 10th day of
        April, 2007, but effective as of 7:00 a.m. (Central Time) on March 1, 2007
        (the
“Effective Time”), by and between Terry S. Fields, a individual residing in
        Texas, (“Seller”) and Legacy Reserves Operating LP, a Delaware limited
        partnership (“Buyer”), a wholly-owned subsidiary of Legacy Reserves LP, a
        Delaware limited partnership. Buyer and Seller are collectively referred
        to
        herein as the “Parties” and sometimes individually referred to as a
“Party.”

       

      RECITALS:

       

      
        	
                A.

              	
                Seller
                  desires to sell to Buyer certain oil, gas and mineral properties
                  and other
                  assets on the terms and conditions set forth in this
                  Agreement.

              

      

       

      
        	
                B.

              	
                Buyer
                  desires to purchase from Seller such oil, gas and mineral properties
                  and
                  other assets on the terms and conditions set forth in this
                  Agreement.

              

      

       

      WITNESSETH:

       

      In
        consideration of the mutual agreements contained in this Agreement, Buyer
        and
        Seller agree as follows:

       

      1.           SALE
        AND PURCHASE OF THE ASSETS.

       

      1.1           Acquired
        Assets

       

      Subject
        to the terms and conditions of this Agreement, Seller agrees to sell, convey
        and
        deliver to Buyer and Buyer agrees to purchase, acquire and assume from Seller
        the following (collectively, the “Assets”):

       

      
        	
                (A)

              	
                All
                  of Seller’s right, title, interest and obligations in, to and under the
                  oil and gas leases described in Exhibit 1.1(A) attached hereto (the
                  “Leases”), covering the land described in Exhibit 1.1(A) (the
                  “Land”), whether or not such interests or land are accurately or
                  completely described on Exhibit 1.1(A),  together with
                  all the property and rights incident thereto, including without
                  limitation
                  Seller’s rights and obligations in, to and under all operating agreements;
                  pooling, communitization and unitization agreements; farmout agreements;
                  joint venture agreements; product purchase and sale contracts;
                  transportation, processing, treatment or gathering agreements;
                  leases;
                  permits (the “Permits”); rights-of-way (the “Rights-of-Way”); surface use
                  agreements; surface leases; easements (the “Easements”); licenses;
                  options; declarations; orders; contracts; and instruments in any
                  way
                  relating to the Leases;

              

      

       

      
        	
                (B)

              	
                All
                  of Seller’s right, title and interest in and to the wells (“Wells”)
                  situated on or used in conjunction with operations on the Leases
                  and Land
                  or on land pooled, communitized or unitized therewith (“Pooled Land”), and
                  the real property described in Exhibit 1.1(B) (the “Deeded Land”),
                  together with all of Seller’s interests in and to all of the personal
                  property, fixtures, improvements and other property, whether real,
                  personal or mixed, now or as of the Effective Time on, appurtenant
                  to or
                  used or obtained by Seller in connection with the Leases, Land,
                  Pooled
                  Land or Wells or with the production, injection, treatment, sale
                  or
                  disposal of hydrocarbons and all other substances produced therefrom
                  or
                  attributable thereto (collectively, the “Equipment”), including, without
                  limitation, producing and non-producing wells, injection wells,
                  disposal
                  wells, water supply wells, well equipment, casing, tubing, tanks,
                  generators, boilers, buildings, pumps, motors, machinery, pipelines,
                  gathering systems, power lines, telephone and telegraph lines,
                  roads,
                  field processing plants, field offices and other furnishings related
                  thereto, equipment leases, trailers, inventory in storage, storage
                  yards,
                  and all other improvements or appurtenances thereunto
                  belonging;

              

      

       

      
        
          
          

        

        
          Page
            1 of
            36

          
            

          

        

        
          
          

        

      

       

      
        	
                (C)

              	
                All
                  of Seller’s right, title and interest in and to the vehicles and other
                  personal property described in Exhibit 1.1(C) attached
                  hereto;

              

      

       

      
        	
                (D)

              	
                All
                  of the oil and gas and associated hydrocarbons (“Oil and Gas”) in and
                  under or otherwise attributable to the Leases, Land, and Pooled
                  Land or
                  produced from the Wells;

              

      

       

      
        	
                (E)

              	
                To
                  the extent assignable, all governmental permits, licenses and
                  authorizations, as well as any applications for the same, related
                  to the
                  Leases, Land, Pooled Land and Wells or the use thereof;
                  and

              

      

       

      
        	
                (F)

              	
                All
                  of the files, records, and data of Seller relating to the items
                  described
                  in subsections (A), (B), (C), (D) and (E) above (the “Records”),
                  including, without limitation, lease records, well records, and
                  division
                  order records; well files and prospect files; title records (including
                  abstracts of title, title opinions and memoranda, and title curative
                  documents related to the Leases and Wells); contracts and contract
                  files;
                  correspondence; computer data files; micro-fiche data files; geological,
                  geophysical and seismic records, interpretations, data, maps and
                  information, subject to the provisions of Section 1.3 regarding
                  the
                  licensing of proprietary seismic data; production records, electric
                  logs,
                  core data, pressure data, decline curves and graphical production
                  curves;
                  and accounting records, to the extent only that the Records can
                  be
                  transferred without violation of any third-party restriction and
                  are not
                  protected by Seller’s attorney-client privilege.  The Records do
                  not include any appraisals or other evaluation materials related
                  to
                  Seller’s preparation of the Assets for sale hereunder, any reservoir
                  and/or development studies prepared by or on behalf of
                  Seller,  nor any of Seller’s income tax returns or files related
                  thereto.

              

      

       

      1.2           Assumed
        Liabilities

       

      .  On
        the Closing Date, Buyer shall assume and agree to timely and fully pay, perform
        and otherwise discharge, without recourse to Seller or its affiliates, all
        of
        the liabilities and obligations of Seller and its affiliates, predecessors,
        successors, assigns or representatives, direct or indirect, known or unknown,
        asserted or unasserted, absolute or contingent, accrued or unaccrued, which
        relate, directly or indirectly, to the Assets (other than the Excluded
        Assets),

       

      
        
          
          

        

        
          Page
            2 of
            36

          
            

          

        

        
          
          

        

      

       

       whether
        such liabilities and obligations accrue before, on or after the Effective
        Time
        (collectively, the “Assumed Liabilities”).  Notwithstanding the
        foregoing, Assumed Liabilities shall not include, and there is excepted,
        reserved and excluded from such liabilities assumed by Buyer, the liabilities
        and obligations for which Seller indemnifies Buyer pursuant to Section
        14.1.

       

      2.           PURCHASE
        PRICE.

       

      2.1           Purchase
        Price

       

      .  The
        purchase price for the Assets is FIFTEEN MILLION DOLLARS ($15,000,000.00)
        (the
“Base Purchase Price”), subject to the adjustments provided for
        herein.

       

      2.2           Deposit.

       

      Within
        three (3) days of the execution of this Agreement, Buyer shall pay Seller,
        in
        cash by wire-transfer in immediately available funds, a Deposit in an amount
        equal to SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($750,000.00)  (five
        percent [5%] of the Base Purchase Price) (the “Deposit”).  If Closing
        (defined below) has not occurred on or before May 10, 2007, Buyer shall increase
        the Deposit by paying Seller, in cash by wire-transfer in immediately available
        funds, an amount equal to SEVEN HUNDRED FIFTY THOUSAND DOLLARS
        ($750,000.00)  (five percent [5%] of the Base Purchase Price). The
        Deposit shall be distributed to Seller and credited to the Base Purchase
        Price
        at Closing, or if this Agreement is terminated, shall be distributed or retained
        pursuant to Article 13, provided however that any interest on the Deposit
        shall be retained by Seller.  In the event the Deposit is not paid to
        Seller as prescribed, this Agreement shall be terminated.

      

      2.3           Adjustments
        to the Base Purchase Price

       

      .  At
        Closing, appropriate adjustments to the Base Purchase Price shall be made
        as
        follows in accordance with Section 4.1 (as adjusted, the “Purchase
        Price”):

       

      
        	
                (A)

              	
                The
                  Base Purchase Price shall be adjusted upward
                  by:

              

      

       

      
        	
                (i)

              	
                any
                  amount determined to be due Seller pursuant to Section
                  4.2;

              

      

       

      
        	
                (ii)

              	
                Property
                  Taxes and Severance Taxes related to the Assets paid by Seller
                  for the
                  period following the Effective Time as determined pursuant to Section
                  4.3;

              

      

       

      
        	
                (iii)

              	
                an
                  amount equal to the costs, expenses and other expenditures (whether
                  capitalized or expensed) paid by Seller in accordance with this
                  Agreement
                  that are attributable to the Assets for the period from and after
                  the
                  Effective Time;

              

      

       

      
        	
                (iv)

              	
                a
                  monthly rate of $400, prorated if necessary, per active Well, as
                  provided
                  in the applicable operating agreement, for operation and maintenance
                  expenses (excluding workover costs, plugging and abandoning costs,
                  and
                  major costs) incurred by Seller while operating the Assets from
                  and after
                  the Effective Time;

              

      

       

      
        
          
          

        

        
          Page
            3 of
            36

          
            

          

        

        
          
          

        

      

       

      
        	
                (v)

              	
                any
                  amount related to the Value of Interest Additions as determined
                  pursuant
                  to Section 5.5;

              

      

       

      
        	
                (vi)

              	
                an
                  amount equal to the amount of proceeds derived from the sale of
                  Oil and
                  Gas, net of royalties and severance taxes paid by Buyer, actually
                  received
                  by Buyer and directly attributable to the Wells which are, in accordance
                  with generally accepted accounting procedures, attributable to
                  the period
                  of time prior to the Effective
                  Time;

              

      

       

      
        	
                (vii)

              	
                an
                  amount equal to $2,200 per day for each day from May 10, 2007 until
                  Closing; and

              

      

       

      
        	
                (viii)

              	
                any
                  other amount agreed upon in writing by Seller and
                  Buyer.

              

      

       

      
        	
                (B)

              	
                The
                  Base Purchase Price shall be adjusted downward
                  by:

              

      

       

      
        	
                (i)

              	
                an
                  amount equal to the amount of proceeds derived from the sale of
                  Oil and
                  Gas, net of royalties and severance taxes paid by Seller, actually
                  received by Seller and directly attributable to the Wells which
                  are, in
                  accordance with generally accepted accounting procedures, attributable
                  to
                  the period of time from and after the Effective
                  Time;

              

      

       

      
        	
                (ii)

              	
                an
                  amount equal to all expenditures, liabilities and costs relating
                  to the
                  Assets (other than Taxes related to the Assets) that are unpaid
                  as of the
                  Closing Date and assessed for or attributable to periods of time
                  or the
                  ownership of production prior to the Effective Time regardless
                  how such
                  expenditures, liabilities and costs are calculated provided that
                  to the
                  extent the actual amounts cannot be determined prior to the agreement
                  of
                  Buyer and Seller with respect to the Closing Adjustment Statement,
                  a
                  reasonable estimate of such expenditures, liabilities and costs
                  shall be
                  used (and to such extent Buyer shall assume the liability and
                  responsibility for payment
                  therefor);

              

      

       

      
        	
                (iii)

              	
                all
                  amounts related to Title Defects as determined pursuant to Section
                  5.4,
                  consents and preferential rights as determined pursuant to Section
                  5.6,
                  Adverse Environmental Conditions as determined pursuant to Section
                  6.4,
                  Exclusion Adjustments as determined pursuant to Sections 5.6 or
                  6.4, and
                  Casualty Losses as determined pursuant to Section
                  15.1;

              

      

       

      
        	
                (iv)

              	
                Property
                  Taxes and Severance Taxes related to the Assets to be paid by Buyer
                  for
                  the period prior to the Effective Time as determined pursuant to
                  Section
                  4.3; and

              

      

       

      
        	
                (v)

              	
                any
                  other amount agreed upon in writing by Seller and
                  Buyer.

              

      

       

      
        	
                (C)

              	
                Seller
                  shall have the right to collect any receivable, refund or other
                  amounts
                  associated with periods prior to the Effective Time.  To the
                  extent that Buyer collects any such receivable, refund or other
                  amounts,
                  then Buyer shall promptly remit any such amounts to
                  Seller.

              

      

       

      2.4           Allocation

       

      
        
          
          

        

        
          Page
            4 of
            36

          
            

          

        

        
          
          

        

      

       

      .  The
        Base Purchase Price shall be allocated to the Assets as set forth in Exhibit
        2.4.  The Parties agree that the values allocated to various portions
        of the Assets, which are set forth on Exhibit 2.4 (singularly with respect
        to
        each item, the “Allocated Value” and collectively, the “Allocated Values”),
        shall be binding on Seller and Buyer and shall be used only for the purposes
        of
        adjusting the Base Purchase Price pursuant to Sections 4.3 (relating to Taxes),
        5.4 (relating to Title Defects), 15.1 (relating to Casualty Losses), and
        6
        (relating to Adverse Environment Conditions), and are not intended as a measure
        of value for any other purpose.

       

      3.           CLOSING.

       

      3.1           Closing

       

      .  The
        sale and purchase of the Assets (“Closing”) shall be held on or before June 10,
        2007 (“Closing Date”).  The Closing will take place at the offices of
        Legacy Reserves LP, in Midland, Texas.

       

      3.2           Delivery
        by Seller

       

      .  At
        Closing, Seller shall deliver to Buyer:

       

      
        	
                (A)

              	
                An
                  Assignment and Bill of Sale, substantially in the form attached
                  hereto as
                  Exhibit 3.2(A), effecting the sale, transfer, conveyance and
                  assignment of the Assets, with (i) a special warranty of the real
                  property title by, through and under Seller but not otherwise,
                  and
                  (ii) with all personal property and fixtures conveyed “AS IS, WHERE
                  IS,” with no warranties whatsoever, express, implied or
                  statutory.

              

      

       

      
        	
                (B)

              	
                Any
                  governmental forms required to effect transfer in accordance with
                  applicable regulations;

              

      

       

      
        	
                (C)

              	
                Letters
                  in lieu of transfer orders instructing purchasers of production
                  to pay to
                  Buyer the proceeds of sales of Oil and Gas from the
                  Assets;

              

      

       

      
        	
                (D)

              	
                Executed
                  change of operator forms as required by applicable governmental
                  regulation;

              

      

       

      
        	
                (E)

              	
                Releases
                  of the mortgages in favor of any bank that may be currently encumbering
                  the Assets;

              

      

       

      
        	
                (F)

              	
                The
                  Closing Adjustment Statement;

              

      

       

      
        	
                (G)

              	
                A
                  Warranty Deed, substantially in the form attached hereto as Exhibit
                  3.2(G), effecting the sale, transfer and conveyance of the Deeded
                  Land;

              

      

       

      
        	
                (H)

              	
                Possession
                  of the Records and all other
                  Assets.

              

      

       

      
        	
                (I)

              	
                Letters
                  of resignation as operator of these Assets, as appropriate, along
                  with
                  ballot forms to the partners as directed by the operating
                  agreements.

              

      

       

      
        
          
          

        

        
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      3.3           Delivery
        by Buyer

       

      .  At
        Closing, Buyer shall deliver to Seller or Seller’s designee the Purchase Price
        set forth in the Closing Adjustment Statement by wire transfer in immediately
        available funds, less the Deposit and interest earned on the
        Deposit.  Buyer shall also deliver evidence that it has provided
        replacement instruments for each guaranty, bond, letter of credit or similar
        contingent obligation given by Seller as required by law or the provisions
        of
        any Lease or other agreement along with the appropriate instruments necessary
        to
        receive immediate approval as Operator of these Assets, as appropriate. Buyer
        shall execute and deliver the Assignment and Bill of Sale, Closing Adjustment
        Statement and other closing documents as necessary or appropriate.

       

      3.4           Further
        Cooperation

       

      .  At
        the Closing and thereafter as may be necessary, Seller and Buyer shall execute
        and deliver such other instruments and documents and take such other actions
        as
        may be reasonably necessary to evidence and effectuate the transactions
        contemplated by this Agreement.

       

      4.           ACCOUNTING
        ADJUSTMENTS.

       

      4.1           Closing
        Adjustments

       

      .  With
        respect to matters that can be determined as of the Closing, Seller shall
        prepare, in accordance with the provisions of this Article 4, a statement
        (the
“Closing Adjustment Statement”) with relevant supporting information setting
        forth each adjustment to the Base Purchase Price submitted by
        Seller.  Seller shall submit the Closing Adjustment Statement to
        Buyer, together with all records or data supporting the calculation of amounts
        presented on the Closing Adjustment Statement, no later than five (5) business
        days prior to the scheduled Closing Date.  Prior to the Closing, Buyer
        and Seller shall review the adjustments proposed by Seller in the Closing
        Adjustment Statement.  Agreed adjustments shall be taken into account
        in computing any adjustments to be made to the Base Purchase Price at the
        Closing.  When available, actual figures will be used for the
        adjustments at Closing.  To the extent actual figures are not
        available, estimates shall be used subject to final adjustments as described
        in
        Section 4.4 below.

       

      4.2           Strapping
        and Gauging.

       

      Seller
        will cause the Oil and Gas in the storage facilities located on, or utilized
        in
        connection with, the Leases to be measured, gauged or strapped as of the
        Effective Time.  Seller will cause the production meter charts (or if
        such do not exist, the sales meter charts) on the pipelines transporting
        Oil and
        Gas from the Leases to be read as of such time.  The Oil and Gas in
        such storage facilities above six inches or through the meters on the pipelines
        as of the Effective Time shall belong to Seller and shall be valued based
        on the
        price actually paid for Oil and Gas produced from the Assets for the month
        prior
        to the Effective Time, and the Oil and Gas placed in such storage facilities
        after the Effective Time and production upstream of the aforesaid meters
        shall
        belong to Buyer and become part of the Assets.  Buyer or Buyer’s
        representative shall have the option to witness the gauging by
        Seller.  In the event Buyer or Buyer’s representative exercising the
        option to witness the gauging by Seller, Buyer agrees that the waiver and
        release provisions set forth in Section 5.1(A) of this Agreement shall apply
        thereto.

       

      
        
          
          

        

        
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      4.3           Taxes

       

      
        	
                (A)

              	
                Property
                  Taxes.  All ad valorem taxes, real property taxes, personal
                  property taxes and similar obligations assessed on the Assets (“Property
                  Taxes”) shall be apportioned as of the Effective Time between Buyer and
                  Seller.  Buyer shall file or cause to be filed all required
                  reports and returns incident to Property Taxes which are due on
                  or after
                  the Closing, and shall pay or cause to be paid to the taxing authorities
                  all such taxes reflected on such reports and returns.  The
                  Post-Closing Adjustment Statement shall settle all liability for
                  Property
                  Taxes, using estimates based on previous assessments to the extent
                  current
                  assessments are not known.  For clarification purposes, the 2007
                  ad valorem tax bill that is based on 2006 production will be for
                  the
                  account of Seller.  The 2008 ad valorem tax bill that is based
                  on 2007 production will be for the account of Buyer, prorated to
                  the
                  Effective Date between the parties.

              

      

       

      
        	
                (B)

              	
                Sales
                  Taxes, Filing Fees, Etc. The Base Purchase Price is net of any sales
                  taxes or other transfer taxes.  Buyer shall be liable for any
                  sales tax or other transfer tax as well as any applicable conveyance,
                  transfer and recording fees, and real estate transfer stamp or
                  taxes
                  imposed upon the sale pursuant to this Agreement.  If Seller is
                  required by applicable state law to report and pay these taxes
                  or fees,
                  Buyer shall promptly reimburse Seller in full payment of the
                  invoice.

              

      

       

      
        	
                (C)

              	
                Severance
                  Taxes.  All production, severance or excise taxes,
                  conservation fees and other similar such taxes or fees (other than
                  income
                  taxes) payable on a current basis with respect to Oil and Gas produced
                  and
                  sold from the Assets (“Severance Taxes”) shall be borne by Seller to the
                  extent the production on which such taxes are based occurs during
                  Seller’s
                  ownership prior to the Effective Time and shall be borne by Buyer
                  to the
                  extent such production occurs after the Effective
                  Time.

              

      

       

      4.4           Post-Closing
        Adjustments

       

      
        	
                (A)

              	
                A
                  post-closing adjustment statement (the “Post-Closing Adjustment
                  Statement”) based on the actual income and expenses shall be prepared and
                  delivered by Seller to Buyer within ninety (90) days after the
                  Closing,
                  proposing further adjustments to the calculation of the Purchase
                  Price
                  based on the information then available.  Seller or Buyer, as
                  the case may be, shall be given access to and shall be entitled
                  to review
                  and audit the other Party’s records pertaining to the computation of
                  amounts claimed in such Post-Closing Adjustment
                  Statement.

              

      

       

      
        	
                (B)

              	
                Within
                  thirty (30) days after receipt of the Post-Closing Adjustment Statement,
                  Buyer shall deliver to Seller a written statement describing in
                  reasonable
                  detail its objections (if any) to any amounts or items set forth
                  on the
                  Post-Closing Adjustment Statement.  If Buyer does not raise
                  objections within such period, then the Post-Closing Adjustment
                  Statement
                  shall become final and binding upon the Parties at the end of such
                  period.

              

      

       

      
        
          
          

        

        
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                (C)

              	
                If
                  Buyer raises objections, the Parties shall negotiate in good faith
                  to
                  resolve any such objections.  If the Parties are unable to
                  resolve any disputed item within thirty (30) days after Buyer’s receipt of
                  the Post-Closing Adjustment Statement, any disputed accounting
                  item shall
                  be submitted to a nationally recognized independent accounting
                  firm
                  mutually agreeable to the Parties who shall be instructed to resolve
                  such
                  disputed item within thirty (30) days.  The resolution of
                  disputes by the accounting firm so selected shall be set forth
                  in writing
                  and shall be conclusive, binding and non-appealable upon the Parties
                  with
                  respect to the accounting matters submitted and the Post-Closing
                  Adjustment Statement shall become final and binding upon the Parties
                  on
                  the date of such resolution.  The fees and expenses of such
                  accounting firm shall be paid one-half by Buyer and one-half by
                  Seller.

              

      

       

      
        	
                (D)

              	
                After
                  the Post-Closing Adjustment Statement has become final and binding
                  on the
                  Parties, Seller or Buyer, as the case may be, shall pay to the
                  other such
                  sums as are due to settle accounts between the Parties due to differences
                  between the estimated Purchase Price paid pursuant to the Closing
                  Adjustment Statement and the actual Purchase Price set forth on
                  the
                  Post-Closing Adjustment Statement.

              

      

       

      4.5           Suspended
        Funds

       

      .  At
        the Closing, Seller shall provide to Buyer a listing showing all proceeds
        from
        production attributable to the Leases which are currently held in suspense
        and
        shall transfer to Buyer all of those suspended proceeds.  Buyer shall
        be responsible for proper distribution of all the suspended proceeds, to
        the
        extent turned over to it by Seller, to the parties lawfully entitled to them
        and
        any claims related thereto, and Buyer hereby agrees to indemnify, defend
        and
        hold harmless Seller from and against any and all claims, liabilities, losses,
        costs and expenses arising out of or relating to those suspended proceeds
        and
        any claims related thereto after the Effective Date.  Buyer shall
        remain responsible and liable for any claims, liabilities, losses, costs
        and
        expenses arising out of or relating to those suspended proceeds and any claims
        related thereto through the Closing Date.

       

      4.6           Audit
        Adjustments

       

      .  Seller
        retains all rights to adjustments resulting from any operating agreement
        and
        other audit claims asserted against third party operators on transactions
        occurring prior to the Effective Time (which includes Buyer, if
        applicable).  Any credit received by Buyer pertaining to such an audit
        claim shall be paid to Seller within thirty (30) days after
        receipt.

       

      4.7           Cooperation

       

      .  Each
        Party covenants and agrees to promptly inform the other with respect to amounts
        owing under Sections 4.4 and 4.6 hereof.

       

      5.           DUE
        DILIGENCE: TITLE MATTERS.

       

      5.1           General
        Access

       

      
        
          
          

        

        
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                (A)

              	
                During
                  reasonable business hours, Seller agrees to grant Buyer physical
                  access to
                  the Leases and Wells to allow Buyer to conduct, at Buyer’s sole risk and
                  expense, on-site inspections and environmental assessments of the
                  Leases
                  and Wells. Buyer agrees not to enter onto the Leases or contact
                  field
                  employees without Seller’s prior knowledge. In connection with any such
                  on-site inspections, Buyer agrees not to interfere with the normal
                  operation of the Leases and Wells and agrees to comply with all
                  requirements of the operators of the Wells.  If Buyer or its
                  agents prepares an environmental assessment of any Lease or Well,
                  Buyer
                  agrees to keep such assessment confidential and to furnish copies
                  thereof
                  to Seller.  In connection with granting such access, Buyer
                  represents that it is adequately insured and waives, releases and
                  agrees
                  to indemnify the Seller against all claims for injury to, or death
                  of,
                  persons or for damage to operations or property arising in any
                  way from
                  the access afforded to Buyer hereunder or the activities of
                  Buyer.  This waiver, release and indemnity by Buyer shall
                  survive termination of this
                  Agreement.

              

      

      

      
        	
                (B)

              	
                Upon
                  the execution of this Agreement, Seller shall give Buyer and its
                  representatives, employees, consultants, independent contractors,
                  attorneys and other advisors reasonable access to the Records during
                  regular office hours for any and all inspections and
                  copying.

              

      

      

      5.2           Defensible
        Title

       

      .  As
        used herein the term Defensible Title shall mean:

       

      
        	
                (A)

              	
                As
                  to the Assets, that record title or operating rights of Seller
                  which:

              

      

       

      
        	
                (i)

              	
                entitles
                  Seller to receive not less than the interests shown in Exhibit
                  2.4 as the
                  “Net Revenue Interest” of all Oil and Gas produced, saved and marketed
                  from or allocated to the formations in the associated Wells which
                  are
                  producing as of the date of this Agreement or which have otherwise
                  been
                  given Allocated Value, all without reduction, suspension or termination
                  except as stated in such Exhibit or otherwise permitted as Permitted
                  Encumbrances; and

              

      

       

      
        	
                (ii)

              	
                obligates
                  Seller to bear a percentage of the costs and expenses relating
                  to the
                  maintenance and development of, and operations relating to, the
                  producing
                  formations in each associated Well not greater than the “Working Interest”
                  shown in Exhibit 2.4 (without a proportionate increase in the Net
                  Revenue
                  Interest), all without increase except as stated in such Exhibit
                  or
                  otherwise permitted as Permitted Encumbrances;
                  and

              

      

       

      
        	
                (B)

              	
                That
                  title of Seller to the Assets is free and clear of liens, encumbrances
                  and
                  defects that materially and adversely affect the ownership, operation
                  or
                  use of the Assets, except for Permitted
                  Encumbrances.

              

      

       

      
        	
                (C)

              	
                As
                  used herein, the term “Permitted Encumbrances” shall mean any one or more
                  of the following:

              

      

       

      
        
          
          

        

        
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                (1)

              	
                The
                  provisions of the Leases and any lessors’ royalties, overriding royalties,
                  net profits interests, carried interests, production payments,
                  reversionary interests and similar burdens reflected in the public
                  records
                  or in the Records, if the net cumulative effect of the burdens
                  does not
                  operate to reduce the Net Revenue Interest of Seller below the
                  interests
                  described in Section 2.4;

              

      

       

      
        	
                (2)

              	
                Any
                  increase in lessor’s royalty occasioned by the repeal or suspension of any
                  governmental regulation providing for the reduction of royalty
                  for wells
                  producing below defined threshold
                  amounts;

              

      

       

      
        	
                (3)

              	
                Division
                  orders and production sales contracts terminable without penalty
                  upon no
                  more than ninety (90) days notice to the
                  purchaser;

              

      

       

      
        	
                (4)

              	
                Preferential
                  Rights and required third party consents to assignment and similar
                  agreements with respect to which 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;

              

      

       

      
        	
                (5)

              	
                Materialman’s,
                  mechanic’s, repairman’s, employee’s, contractor’s, operator’s and other
                  similar liens or charges arising in the ordinary course of business
                  for
                  obligations that are not delinquent or that will be paid and discharged
                  in
                  the ordinary course of business, or if delinquent, that are being
                  contested in good faith by appropriate action of which Buyer is
                  notified
                  in writing before Closing;

              

      

       

      
        	
                (6)

              	
                All
                  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;

              

      

       

      
        	
                (7)

              	
                Easements,
                  rights-of-way, servitudes, permits, surface leases and other rights
                  in
                  respect of surface operations that do not materially interfere
                  with the
                  oil and gas operations to be conducted on any Well or
                  Lease;

              

      

       

      
        	
                (8)

              	
                All
                  operating agreements, unit agreements, unit operating agreements,
                  pooling
                  agreements and pooling designations affecting the Assets that are
                  either
                  (i) of record in Seller’s chain of title or (ii) reflected or
                  referenced in the Records or (iii) included as Material Agreements on
                  Exhibit 7.1(K);

              

      

       

      
        	
                (9)

              	
                Conventional
                  rights of reassignment prior to release or surrender requiring
                  notice to
                  the holders of the rights;

              

      

       

      
        	
                (10)

              	
                All
                  rights reserved to or vested in any governmental, statutory or
                  public
                  authority to control or regulate any of the Assets in any manner,
                  and all
                  applicable laws, rules and orders of governmental
                  authority;

              

      

       

      
        	
                (11)

              	
                All
                  agreements affecting the Assets that are of record in Seller’s chain of
                  title, or are reflected or referenced in the
                  Records;

              

      

       

      
        
          
          

        

        
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                (12)

              	
                Defects
                  that are defensible by possession under applicable statutes of
                  limitation
                  for adverse possession or for prescription;
                  and

              

      

       

      
        	
                (13)

              	
                All
                  other liens, charges, encumbrances, contracts, agreements, instruments,
                  obligations, defects and irregularities affecting the Assets that
                  individually or in the aggregate are not such as to materially
                  interfere
                  with the operation, value or use of any of the Assets or have not
                  prevented, and cannot reasonably be expected to prevent, Buyer
                  from
                  receiving the proceeds of production from the affected
                  Assets.

              

      

       

      5.3           Defect
        Letters.

       

      
        	
                (A)

              	
                Buyer
                  may from time to time and no later than five (5) business days
                  prior to
                  Closing notify Seller in writing (a “Notice”) of any matter which would
                  cause title to all or part of the Assets not to be Defensible Title
                  (“Title Defect”), provided that no Title Defect shall be deemed to exist
                  unless the Title Defect Value thereof exceeds Ten Thousand Dollars
                  ($10,000.00). Further, there shall be no adjustment to the Base
                  Purchase
                  Price unless the aggregate Title Defect Values of all Title Defects
                  satisfying the condition in clause (i) exceed one percent (1%) of the
                  Base Purchase Price (the “Title Defect Threshold”) (such amount being a
                  threshold , not a deductible).  In order to provide Seller a
                  reasonable opportunity to cure any Title Defects prior to Closing,
                  Buyer
                  shall use reasonable efforts to provide the Notice as soon as reasonably
                  possible after becoming aware of or making its determination of
                  the Title
                  Defect.

              

      

       

      
        	
                (B)

              	
                In
                  the Notice, Buyer must describe with reasonable detail each alleged
                  Title
                  Defect it has discovered and the steps required to cure each Title
                  Defect,
                  include Buyer’s reasonable estimate of the Title Defect Value attributable
                  to each, and include all data and information in Buyer’s possession or
                  control bearing thereon.  Buyer shall be deemed to have
                  conclusively waived all Title Defects not disclosed to Seller in
                  a Notice
                  before five (5) business days prior to Closing.  Buyer waives
                  any remedy against Seller for Title Defects that do not exceed
                  the Title
                  Defect Threshold or for which timely notice is not given as provided
                  hereunder or for which adjustment is made as hereafter
                  provided.

              

      

       

      
        	
                (C)

              	
                Upon
                  timely delivery of a Notice by
                  Buyer:

              

      

       

      
        	
                (i)

              	
                within
                  three (3) business days after Seller’s receipt of the Title Defects
                  Notice, Seller shall notify Buyer whether Seller agrees with Buyer’s
                  claimed Title Defects and/or the proposed Title Defect Values therefore
                  (“Seller’s Response”).  If Seller does not agree with any
                  claimed Title Defect and/or the proposed Title Defect Value therefor,
                  then
                  the Parties shall enter into good faith negotiations and shall
                  attempt to
                  agree on such matters;

              

      

       

      
        	
                (ii)

              	
                within
                  one (1) business day after Seller’s notice of its cure of a Title Defect,
                  Buyer shall notify Seller whether Buyer agrees with Seller’s proposed cure
                  of a Title Defect (“Buyer’s Response”).  If Buyer does not agree
                  with any such cure, then the Parties shall enter into good faith
                  negotiations and shall attempt to agree on such
                  matters;

              

      

       

      
        
          
          

        

        
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                (iii)

              	
                if
                  the Parties cannot reach agreement concerning either the existence
                  of a
                  Title Defect, Seller’s proposed cure of a Title Defect, or a Title Defect
                  Value within ten (10) days after Buyer’s receipt of Seller’s Response or
                  Seller’s receipt of Buyer’s Response, as applicable, upon either Party’s
                  request, the Parties shall mutually agree on and employ an attorney
                  experienced in title examination in the state where the Assets
                  are located
                  (“Title Consultant”) to resolve all points of disagreement relating to
                  Title Defects and Title Defect Values; provided that Seller or
                  Buyer may
                  elect not to proceed to Closing with regard to such Assets and
                  adjust the
                  Base Purchase Price in the amount of the Allocated Value and not
                  submit
                  such matter to arbitration;

              

      

       

      
        	
                (iv)

              	
                if
                  at any time any Title Consultant so chosen fails or refuses to
                  perform
                  hereunder, a new Title Consultant shall be chosen by the
                  Parties.  The cost of any such Title Consultant shall be borne
                  fifty percent (50%) by Seller and fifty percent (50%) by
                  Buyer.  Each Party shall present a written statement of its
                  position on the Title Defect and/or Title Defect Value in question
                  to the
                  Title Consultant within five (5) days after the Title Consultant
                  is
                  selected, and the Title Consultant shall make a determination of
                  all
                  points of disagreement in accordance with the terms and conditions
                  of this
                  Agreement within ten (10) business days of receipt of such position
                  statements.  The determination by the Title Consultant shall be
                  conclusive and binding on the Parties, and shall be enforceable
                  against
                  any Party in any court of competent jurisdiction.  If necessary,
                  the Closing Date shall be deferred only as to those Assets affected
                  by any
                  unresolved disputes regarding the existence of a Title Defect and/or
                  the
                  Title Defect Value until the Title Consultant has made a determination
                  of
                  the disputed issues with respect thereto and all subsequent dates
                  and
                  required activities with respect to any such Assets having reference
                  to
                  the Closing Date shall be correspondingly deferred; provided, however,
                  that, unless Seller and Buyer mutually agree to the contrary, the
                  Closing
                  Date shall not be deferred in any event for more than thirty (30)
                  days
                  beyond the scheduled Closing Date in Section 3.1.  Once the
                  Title Consultant’s determination has been expressed to both Parties, if
                  applicable, Seller shall have five (5) days in which to advise
                  Buyer in
                  writing which of the options available to Seller under Section
                  5.4 that
                  Seller elects regarding each of the Assets as to which the Title
                  Consultant has made a determination.  In evaluating whether a
                  Title Defect exists, due consideration shall be given to the length
                  of
                  time that the particular Asset has been producing Oil and Gas and
                  whether
                  such fact, circumstance or condition is of the type expected to
                  be
                  encountered in the area involved and is usual and customarily acceptable
                  to reasonable and prudent operators, working interest owners and/or
                  purchasers engaged in the business of the exploration, development,
                  and
                  operation of oil and gas
                  properties.

              

      

       

      5.4           Effect
        of Title Defect

       

      
        	
                (A)

              	
                In
                  the event Buyer provides Seller with a timely Notice and the Title
                  Defects
                  are valid and exceed the Title Defect Threshold, for those Title
                  Defects
                  not cured by Closing, Seller may, at its sole
                  discretion:

              

      

       

      
        	
                (i)

              	
                adjust
                  the Base Purchase Price in the amount of the Title Defect Value
                  of the
                  Asset to which such Title Defect relates and proceed to Closing
                  on all
                  Assets; provided that Seller shall not be obligated to transfer
                  any Assets
                  for which the Title Defect Value equals or exceeds such Asset’s Allocated
                  Value; or

              

      

       

      
        
          
          

        

        
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                (ii)

              	
                proceed
                  with (a) Closing on those Assets not affected by the valid Title
                  Defects
                  and such Assets to which a Title Defect relates but for which Seller
                  has
                  elected to proceed to Closing with an adjustment of the Base Purchase
                  Price in the amount of the Title Defect Value of such Assets and
                  (b) defer Closing on those other Assets to which a Title Defect
                  relates and for which Seller has elected to attempt to cure such
                  Title
                  Defect and to not proceed to Closing, for which Buyer shall place
                  into
                  escrow an amount equal to the Allocated Values of the Assets affected
                  by
                  the valid Title Defects, which withheld amount shall be paid to
                  Seller
                  when the Asset affected by any valid Title Defect is cured or the
                  Title
                  Defect is waived by Buyer and the affected Asset is conveyed from
                  Seller
                  to Buyer.  If neither of the above occurs and if Seller later
                  determines it will not cure a Title Defect on or before six (6)
                  months
                  from the Closing Date, the amount in the escrow account attributable
                  to
                  such Title Defect will be returned to Buyer and Seller shall retain
                  such
                  Asset affected by such Title
                  Defect.

              

      

       

      
        	
                (B)

              	
                The
                  diminution in value of an Asset attributable to a valid Title Defect
                  (the
                  “Title Defect Value”) notified in a Notice shall be determined by the
                  following:

              

      

       

      
        	
                (i)

              	
                if
                  the valid Title Defect asserted is that the actual Net Revenue
                  Interest
                  attributable to the producing or valued formation in any Asset
                  is less
                  than that stated in the applicable Exhibit, then the Title Defect
                  Value is
                  the product of the Allocated Value attributed to the affected formation(s)
                  in such Asset, multiplied by a fraction, the numerator of which
                  is the
                  difference between the Net Revenue Interest set forth in the applicable
                  Exhibit and the actual Net Revenue Interest, and the denominator
                  of which
                  is the Net Revenue Interest stated in the applicable Exhibit;
                  or

              

      

       

      
        	
                (ii)

              	
                if
                  the valid Title Defect represents an obligation, encumbrance, burden
                  or
                  charge upon the affected Asset (including any increase in Working
                  Interest
                  for which there is not a proportionate increase in Net Revenue
                  Interest),
                  the amount of the Title Defect Value is to be determined by taking
                  into
                  account the Allocated Value of such Asset, the portion of the Asset
                  affected by the Title Defect, the legal effect of the Title Defect,
                  the
                  potential economic effect of the Title Defect over the life of
                  the
                  affected Asset, and the Title Defect Values placed upon the Title
                  Defect
                  by Buyer and Seller.

              

      

       

      
        	
                (iii)

              	
                Notwithstanding
                  the above, in no event shall the total of the Title Defect Values
                  related
                  to a particular Asset exceed the Allocated Value of such
                  Asset.

              

      

       

      
        	
                (C)

              	
                If
                  the aggregate value of (i) the Base Purchase Price adjustment for
                  Title Defect Values plus (ii) the Allocated Value of Assets which are
                  retained in lieu of cure or adjustment equals or exceeds ten percent
                  (10%)
                  of the Base Purchase Price, then by notice delivered prior to the
                  Closing
                  either Party may terminate this Agreement and neither Party shall
                  have any
                  further obligation to conclude the transfer of the Assets under
                  this
                  Agreement.

              

      

       

      5.5           Preferential
        Rights and Consents.

       

      Seller
        shall use its best efforts to obtain all required consents and to give notices
        required in connection with preferential purchase rights, so that the third
        party election date to exercise the 

       

      
        
          
          

        

        
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      preferential
        right will occur at least seven (7) business days prior to
        Closing.  If Buyer discovers other affected Assets during the course
        of Buyer’s due diligence activities, Buyer shall notify Seller immediately and
        Seller shall use its best efforts to obtain such consents and to give the
        notices required in connection with the preferential rights prior to
        Closing.

      

      
        	
                (A)

              	
                Consents.

              

      

       

      Except
        for consents and approvals which are customarily obtained post-Closing and
        those
        consents which would not invalidate the conveyance of the Assets, if a necessary
        consent to assign any Lease has not been obtained as of the Closing that
        would
        invalidate the conveyance of the Asset, then (i) the portion of the Assets
        for which such consent has not been obtained shall not be conveyed at the
        Closing, (ii) the Allocated Value for that Asset shall not be paid to
        Seller, and (iii) Seller shall use best efforts to obtain such consent as
        promptly as possible following Closing.  If such consent has been
        obtained as of the date on which the Post-Closing Adjustment Statement becomes
        final, Seller shall convey the affected Asset to Buyer effective as of the
        Effective Time and Buyer shall pay Seller the Allocated Value of the affected
        Asset, less any proceeds from the affected Asset received by Seller attributable
        to the period of time after the Effective Time (calculated in accordance
        with
        Section 2.3).  If such consent has not been obtained or has not been
        waived by Buyer as of the date on which the Post-Closing Adjustment Statement
        becomes final, Seller shall elect either to (i) challenge in court the
        enforceability of such consent right, in which event Seller shall retain
        the
        affected Asset until such legal challenge is finally resolved by settlement
        or
        unappealable court order, after which either Seller shall convey the affected
        Asset to Buyer under the terms of this Agreement and Buyer shall pay the
        Allocated Value of the Purchase Price for such Asset, less any proceeds received
        by Seller attributable to such Asset for the period from and after the Effective
        Time (calculated in accordance with Section 2.3) or (ii) retain the
        affected Asset and the Purchase Price shall be reduced by an amount equal
        to the
        Allocated Value of the retained Asset (with such adjustment being an “Exclusion
        Adjustment”).  Buyer shall reasonably cooperate with Seller in
        obtaining any required consent including providing assurances of reasonable
        financial conditions, but Buyer shall not be required to expend funds or
        make
        any other type of financial commitments a condition of obtaining such
        consent.

      
        	
                (B)

              	
                Preferential
                  Purchase Rights.

              

      

       

      
        	
                (i)

              	
                If
                  any preferential right to purchase any portion of the Assets is
                  exercised
                  prior to the Closing Date, or if the time frame for the exercise
                  of such
                  preferential purchase rights has not expired and Seller has not
                  received
                  notice of an intent not to exercise or waiver of the preferential
                  purchase
                  right, that portion of the Assets affected by such preferential
                  purchase
                  right shall be excluded from the Assets and the Purchase Price
                  shall be
                  adjusted downward by an amount equal to the Allocated Value of
                  such
                  affected Assets without the requirement for Buyer to give notice
                  (with
                  such adjustment being an “Exclusion Adjustment”). Notwithstanding any
                  other provision in this Agreement, if a preferential purchase right
                  subject to this Agreement is exercised, Buyer has the right, at
                  its sole
                  discretion, to terminate this Agreement, provided that the allocated
                  value
                  of all preferential rights exercised is equal to or exceeds ten
                  percent
                  (10%) of the Base Purchase Price.

              

      

       

      
        
          
          

        

        
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                (ii)

              	
                If
                  a third party exercises its preferential right to purchase, but
                  fails to
                  consummate the purchase prior to the Closing, Seller shall retain
                  the
                  affected Assets and the Purchase Price shall be adjusted downward
                  by an
                  amount equal to the Allocated Value of such affected Assets (with
                  such
                  adjustment being an “Exclusion
                  Adjustment”).

              

      

       

      
        	
                (iii)

              	
                If
                  a third party exercises its preferential right to purchase, but
                  does not
                  consummate the purchase within the time frame specified in the
                  preferential purchase right, Seller agrees to convey the affected
                  Asset to
                  Buyer effective as of the Effective Time, and Buyer agrees to pay
                  Seller
                  the Allocated Value of the Affected
                  Asset.

              

      

       

      
        	
                (iv)

              	
                If
                  a preferential purchase right is not discovered prior to Closing,
                  and the
                  affected Asset is conveyed to Buyer at Closing, and the preferential
                  purchase right is exercised and subsequently consummated after
                  Closing,
                  Buyer agrees to convey such affected Assets to the party exercising
                  such
                  right on the same terms and conditions under which Seller conveyed
                  such
                  Assets to Buyer and retain all amounts paid by the party exercising
                  such
                  preferential right to purchase.  In the event of such exercise,
                  Buyer shall prepare, execute and deliver a form of conveyance of
                  such
                  Asset to such exercising party, such conveyance to be in form and
                  substance as provided in this Agreement, and Seller agrees to hold
                  harmless and indemnify Buyer from any and all liabilities and obligations
                  associated with such conveyed Asset, and to reimburse Buyer for
                  reasonable
                  expenses incurred by Buyer relating to the conveyed
                  Asset.

              

      

       

      
        	
                (C)

              	
                Exclusive
                  Remedy.

              

      

       

        The
        remedies set forth in this Section 5.5 are the exclusive remedies under this
        Agreement for exercised preferential purchase rights and required consents
        to
        assign the Assets.

      

      6.           ENVIRONMENTAL
        ASSESSMENT.

       

      6.1           Physical
        Condition of the Assets

       

      
        	
                (A)

              	
                Buyer
                  acknowledges that the Assets have been used for oil and gas drilling
                  and
                  production operations and possibly for the storage and disposal
                  of waste
                  materials or hazardous substances related to standard oil field
                  operations.  Physical changes in or under the Assets or adjacent
                  lands may have occurred as a result of such uses.  The Assets
                  also may contain previously plugged and abandoned wells, buried
                  pipelines,
                  storage tanks and other equipment, whether or not of a similar
                  nature, the
                  locations of which may not now be known by Seller or be readily
                  apparent
                  by a physical inspection of the Assets.  Buyer understands that
                  Seller does not have the requisite information with which to determine
                  the
                  exact nature or condition of the Assets nor the effect any such
                  use has
                  had on the physical condition of the Assets.  Pursuant to the
                  Safe Water Drinking and Toxic Enforcement Act of 1986, Buyer is
                  hereby
                  notified and assumes the risk that detectable amounts of chemicals
                  known
                  to cause cancer, birth defects and other reproductive harm may
                  be found
                  in, on or around the Assets.  Upon consummation of the Closing
                  Buyer shall be deemed to have assumed the risk of expense, claim,
                  damage
                  or liability arising from any such matter referred to in this section,
                  including without limitation the risk that the Assets may contain
                  waste or
                  contaminants and that adverse physical conditions, including the
                  presence
                  of waste or contaminants, may not have been revealed by Buyer’s
                  investigation.  Consummation of the Closing shall transfer all
                  responsibility and liability related to disposal, spills, waste
                  or
                  contamination from, on or below the Assets from Seller to
                  Buyer.

              

      

       

      
        
          
          

        

        
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                (B)

              	
                In
                  addition, Buyer acknowledges that some oil field production equipment
                  located on the Assets may contain asbestos and/or naturally-occurring
                  radioactive material (“NORM”).  In this regard, Buyer expressly
                  understands that NORM may affix or attach itself to inside of wells,
                  materials and equipment as scale or in other forms, and that wells,
                  materials and equipment located on the Assets described herein
                  may contain
                  NORM and that NORM-containing materials may be buried or have been
                  otherwise disposed of on the Assets.  Buyer also expressly
                  understands that special procedures may be required for the removal
                  and
                  disposal of asbestos and NORM from the Assets where it may be found,
                  and
                  that upon consummation of the Closing Buyer shall be deemed to
                  have
                  assumed all liability when such activities are
                  performed.

              

      

       

      6.2           Inspection
        and Testing.

       

      
        	
                (A)

              	
                Prior
                  to Closing, Buyer shall have the right, at its sole cost and risk,
                  to
                  review Seller’s Phase I environmental assessments of the Assets and to
                  conduct any further environmental assessment of the Assets it deems
                  appropriate, to the extent that Seller has the authority to grant
                  such
                  right to Buyer; provided that Seller shall have the right to review
                  and
                  approve any plan to conduct such an environmental assessment, with
                  such
                  approval not to be unreasonably withheld, delayed or conditioned
                  by
                  Seller.  Buyer shall immediately provide to Seller any data
                  obtained from such assessments, including any reports and
                  conclusions.  Seller and Buyer shall keep all information
                  relating to such assessments strictly confidential whether or not
                  Closing
                  occurs, except as may be required pursuant to any Environmental
                  Laws.

              

      

       

      
        	
                (B)

              	
                Buyer
                  waives and releases all claims against Seller, its affiliates,
                  and each of
                  their respective directors, officers, employees, agents, and other
                  representatives and their successors and assigns (collectively,
                  the
                  “Seller’s Group”), for injury to or death of persons, or damage to
                  property, arising in any way from the exercise of rights granted
                  to Buyer
                  hereby or the activities of Buyer or its employees, agents or contractors
                  on the Assets.  BUYER SHALL INDEMNIFY THE SELLER’S GROUP AGAINST
                  AND HOLD THE MEMBERS OF THE SELLER’S GROUP HARMLESS FROM ANY AND ALL LOSS,
                  COST, DAMAGE, EXPENSE OR LIABILITY, INCLUDING REASONABLE ATTORNEY’S FEES,
                  WHATSOEVER ARISING OUT OF (I) ANY AND ALL STATUTORY OR COMMON LAW
                  LIENS OR
                  OTHER ENCUMBRANCES FOR LABOR OR MATERIALS FURNISHED IN CONNECTION
                  WITH
                  SUCH TESTS, SAMPLINGS, STUDIES OR SURVEYS AS BUYER MAY CONDUCT
                  WITH
                  RESPECT TO THE ASSETS; AND (II) ANY INJURY TO OR DEATH OF PERSONS OR
                  DAMAGE TO PROPERTY OCCURRING IN, ON OR ABOUT THE ASSETS AS A RESULT
                  OF
                  SUCH EXERCISE OR ACTIVITIES.

              

      

       

      
        
          
          

        

        
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                (C)

              	
                “Environmental
                  Laws” means all applicable local, state, and federal laws, rules,
                  regulations, and orders regulating or otherwise pertaining to:
                  (i) the use, generation, migration, storage, removal, treatment,
                  remedy, discharge, release, transportation, disposal, or cleanup
                  of
                  pollutants, contamination, hazardous wastes, hazardous substances,
                  hazardous materials, toxic substances or toxic pollutants;
                  (ii) surface waters, ground waters, ambient air and any other
                  environmental medium on or off any Lease; or (iii) the environment,
                  habitat protection or health and safety-related matters; including
                  the
                  following as from time to time amended and all others whether similar
                  or
                  dissimilar: the Comprehensive Environmental Response, Compensation,
                  and
                  Liability Act of 1980, as amended by the Superfund Amendments and
                  Reauthorization Act of 1986, the Resource Conservation and Recovery
                  Act of
                  1976, as amended by the Used Oil Recycling Act of 1980, the Solid
                  Waste
                  Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
                  Amendments of 1984, the Hazardous Materials Transportation Act,
                  the Toxic
                  Substance Control Act, the Clean Air Act, the Clean Water Act,
                  the Safe
                  Drinking Water Act, the National Environmental Policy Act, the
                  Endangered
                  Species Act, the Oil Pollution Act of 1990, and all regulations
                  promulgated pursuant thereto.

              

      

       

      6.3           Notice
        of Adverse Environmental Conditions

       

      .  No
        later than five (5) business days prior to Closing, Buyer shall notify Seller
        in
        writing of any Adverse Environmental Condition with respect to the
        Assets.  Such notice shall describe in reasonable detail the Adverse
        Environmental Condition and include the estimated Environmental Defect Value
        attributable thereto (the “Environmental Defect Notice”) based on a verifiable
        estimate of the cost to remediate the Adverse Environmental
        Condition.  No Adverse Environmental Condition shall be deemed to
        exist unless the Environmental Defect Value exceeds Ten Thousand Dollars
        ($10,000.00) in each individual case.  Further, there shall be no
        adjustment to the Base Purchase Price unless the aggregate Environmental
        Defect
        Values of all Adverse Environmental Conditions satisfying the condition in
        clause (i) exceeds one percent (1%) of the Base Purchase Price (the
“Environmental Defect Threshold”) (such amount being a threshold, not a
        deductible).  The “Environmental Defect Value” attributable to any
        Adverse Environmental Condition shall be the estimated amount (net to Seller’s
        interest) of all reasonable costs and claims necessary to Remediate the Adverse
        Environmental Conditions, as reasonably determined and estimated by
        Buyer.  The term “Adverse Environmental Condition” means (i) the
        failure of the Assets to be in material compliance with all applicable
        Environmental Laws; (ii) the Assets being subject to any agreements,
        consent orders, decrees or judgments currently in existence based on any
        Environmental Laws that negatively and materially impact the future use of
        any
        portion of the Assets or that require any material change in the present
        conditions of any of the Assets; or (iii) the Assets being subject to any
        material uncured notices of violations of or non-compliance with any applicable
        Environmental Laws or any claim of material violation of any Environmental
        Laws
        to the extent not disclosed to Buyer prior to execution of this
        Agreement.  Buyer shall be deemed to have conclusively waived
        (i) all Adverse Environmental Conditions not contained in an Environmental
        Defect Notice delivered to Seller at least five (5) business days prior to
        Closing and (ii) any remedy against Seller for Adverse Environmental
        Conditions that do not exceed the Environmental Defect Threshold.

       

      
        
          
          

        

        
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      6.4           Rights
        and Remedies for Adverse Environmental Conditions.

       

      
        	
                (A)

              	
                With
                  respect to any Adverse Environmental Conditions affecting one or
                  more of
                  the Assets which exceed the Environmental Defect Threshold, Seller
                  may on
                  an Asset-by-Asset basis (i) Remediate the Adverse Environmental
                  Conditions, but Seller shall have no obligation to do so, and proceed
                  to
                  Closing with no adjustment of the Base Purchase Price; (ii) proceed
                  to Closing and adjust the Base Purchase Price in an amount equal
                  to the
                  applicable Environmental Defect Value; provided that such adjustment
                  shall
                  not exceed the Allocated Value for such Asset; or (iii) retain the
                  affected Asset and reduce the Base Purchase Price by the Allocated
                  Value
                  of the affected Asset (“Exclusion
                  Adjustment”).

              

      

       

      
        	
                (B)

              	
                Buyer
                  waives any Adverse Environmental Condition for which Buyer has
                  received an
                  adjustment to the Base Purchase Price in accordance with Section
                  6.4(A).

              

      

       

      
        	
                (C)

              	
                If
                  Buyer delivers a valid Environmental Defect Notice to Seller and
                  if the
                  aggregate of the Environmental Defects claimed is less than or
                  equals the
                  Environmental Defect Threshold, Buyer will be deemed to have accepted
                  the
                  Assets “where-is, as-is” with respect to all Adverse Environmental
                  Conditions in, on or under the Assets and the Adverse Environmental
                  Condition(s) in, on and under the Assets will be deemed to be part
                  of the
                  Assumed  Liabilities.  The Environmental Defect
                  Threshold is a threshold and not a deductible.  The
                  Environmental Defect Threshold and the Title Defect Threshold are
                  separate
                  and distinct and operate
                  independently.

              

      

       

      
        	
                (D)

              	
                If
                  the aggregate value of (i) the Base Purchase Price adjustment for
                  Adverse Environmental Conditions plus (ii) any Exclusion Adjustments
                  in lieu of Remediating any Adverse Environmental Conditions equals
                  or
                  exceeds ten percent (10%) of the Base Purchase Price, either Party
                  may
                  terminate this Agreement and neither Party shall have any further
                  obligation to conclude the transfer of the Assets under this
                  Agreement.

              

      

       

      
        	
                (E)

              	
                The
                  term “Remediate” or “Remediation” means, with respect to any valid Adverse
                  Environmental Condition, the undertaking and completion of those
                  actions
                  and activities necessary to eliminate or correct such Adverse
                  Environmental Condition to the degree sufficient that such Adverse
                  Environmental Condition no longer constitutes an Adverse Environmental
                  Condition as defined above.  Seller shall promptly notify Buyer
                  at such time as it believes that it has Remediated an Adverse
                  Environmental Condition.  Buyer shall promptly notify Seller
                  whether it agrees such condition is Remediated.  If Buyer fails
                  to notify Seller of its determination with respect to such Remediation
                  within ten (10) business days following Seller’s notice, such Adverse
                  Environmental Condition shall be deemed
                  Remediated.

              

      

       

      
        	
                (F)

              	
                If
                  Seller and Buyer are unable to agree on the amount of the Environmental
                  Defect Value within ten (10) business days after Seller’s receipt of the
                  Environmental Defect Notice or that an Adverse Environmental Condition
                  exists, has been Remediated or is required to be Remediated, then
                  the
                  dispute will be submitted to a mutually acceptable company with
                  recognized
                  expertise in the oil and gas environmental remediation and regulation
                  field (the “Environmental Consultant”) whose determination shall be final
                  and binding upon the Parties.  Seller and Buyer shall each bear
                  their respective costs and expenses incurred in connection with
                  any such
                  dispute, and one-half (1/2) of the fees, costs and expenses charged
                  by the
                  Environmental Consultant.  Each Party shall present a written
                  statement of its position on the Adverse Environmental Condition
                  and/or
                  the Environmental Defect Value in question to the Environmental
                  Consultant
                  within five (5) business days after the Environmental Consultant
                  is
                  selected, and the Environmental Consultant shall make a determination
                  of
                  all points of disagreement in accordance with the terms and conditions
                  of
                  this Agreement within ten (10) business days of receipt of such
                  position
                  statements.  If necessary, the Closing Date shall be deferred
                  only as to those Assets affected by any unresolved disputes regarding
                  the
                  existence of an Adverse Environmental Condition and/or the Environmental
                  Defect Value until the Environmental Consultant has made a determination
                  of the disputed issues with respect thereto and all subsequent
                  dates and
                  required activities with respect to any such Assets having reference
                  to
                  the Closing Date shall be correspondingly deferred; provided, however,
                  that, unless Seller and Buyer mutually agree to the contrary, the
                  Closing
                  Date shall not be deferred in any event for more than thirty (30)
                  days
                  beyond the scheduled Closing Date in Section 3.1.  All Assets as
                  to which no such dispute(s) exist shall be conveyed to Buyer subject
                  to
                  the terms of this Agreement at Closing.  Once the Environmental
                  Consultant’s determination has been expressed to both Parties, if
                  applicable, Seller shall have five (5) business days in which to
                  advise
                  Buyer in writing which of the options available to Seller under
                  Section
                  6.4(A) Seller elects regarding each of the Assets as to which the
                  Environmental Consultant has made a
                  determination.

              

      

       

      
        
          
          

        

        
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      6.5           Remediation
        by Seller

       

      .  If
        Seller elects to Remediate an Adverse Environmental Condition or is required
        by
        a governmental or regulatory agency to Remediate an Adverse Environmental
        Condition, the following will govern the Remediation:

       

      
        	
                (A)

              	
                Seller
                  shall be responsible for all negotiations and contacts with federal,
                  state, and local agencies and authorities.  Buyer may not make
                  any independent contacts with any agency, authority, or other third
                  party
                  with respect to the Adverse Environmental Condition or Remediation
                  and
                  shall keep all information regarding the Adverse Environmental
                  Condition
                  and Remediation confidential, except in each instance to the extent
                  required by applicable law.

              

      

       

      
        	
                (B)

              	
                Seller
                  shall Remediate the Adverse Environmental Condition to the level
                  agreed
                  upon by Seller and Buyer (or failing such agreement to the level
                  determined by the Environmental Consultant), but in no event shall
                  Seller
                  be required to Remediate the Adverse Environmental Condition beyond
                  the
                  level required by the Environmental Laws in effect at the Effective
                  Time.

              

      

       

      
        	
                (C)

              	
                Buyer
                  shall grant and warrant access and entry to the Assets after Closing
                  to
                  Seller and third parties conducting assessments or Remediation,
                  to the
                  extent and as long as necessary to conduct and complete the assessment
                  or
                  Remediation work, to remove equipment and facilities, and to perform
                  any
                  other activities reasonably necessary in connection with assessment
                  or
                  Remediation.

              

      

       

      
        
          
          

        

        
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                (D)

              	
                Buyer
                  shall facilitate Seller’s ingress and egress or assessment or Remediation
                  activities after the Closing.  Seller shall make reasonable
                  efforts to perform the work so as to minimize disruption to Buyer’s
                  business activities.

              

      

       

      
        	
                (E)

              	
                Seller
                  shall continue Remediation of the Adverse Environmental Condition
                  until
                  the first of the following occurs:

              

      

       

      
        	
                (i)

              	
                the
                  appropriate governmental authorities provide notice to Seller or
                  Buyer
                  that no further Remediation of the Adverse Environmental Condition
                  is
                  required; or

              

      

       

      
        	
                (ii)

              	
                the
                  Adverse Environmental Condition has been Remediated to the level
                  required
                  by the Environmental Laws or as agreed by the
                  Parties.

              

      

       

      Upon
        the
        occurrence of either (i) or (ii) above, Seller shall notify Buyer that
        Remediation of the Adverse Environmental Condition is complete and provide
        a
        copy of the notification described in (i) above, if
        applicable.  Upon delivery of said notice, Seller shall be released
        from all liability and have no further obligations under any provisions of
        this
        Agreement in connection with an Adverse Environmental Condition.

       

      
        	
                (F)

              	
                Until
                  Seller completes Remediation of an Adverse Environmental Condition,
                  Seller
                  and Buyer shall each notify the other of any pending or threatened
                  claim,
                  action, or proceeding by any authority or private party that relates
                  to or
                  would affect the environmental condition, the assessment, or the
                  Remediation of the Assets.

              

      

       

      7.           REPRESENTATIONS
        AND WARRANTIES OF SELLER.

       

      7.1           Seller’s
        Representations and Warranties

       

      .  Except
        as set forth in the exhibits to this Agreement or as otherwise disclosed
        to
        Buyer by Seller in connection with preparation of Buyer’s offer to purchase the
        Assets, Seller represents and warrants the following as of the date of execution
        of this Agreement and the Closing:

       

      
        	
                (A)

              	
                Status
                  of Incorporation.  Seller is an individual residing in the
                  state of Texas.

              

      

       

      
        	
                (B)

              	
                Authority.  Seller
                  owns the Assets and has the requisite power and authority to enter
                  into
                  this Agreement, to carry out the transactions contemplated hereby,
                  to
                  transfer the Assets in the manner contemplated by this Agreement,
                  and to
                  undertake all of the obligations of Seller set forth in this
                  Agreement.

              

      

       

      
        	
                (C)

              	
                Validity
                  of Obligations.  This Agreement and any documents or
                  instruments delivered by Seller at the Closing shall constitute
                  legal,
                  valid and binding obligations of Seller enforceable in accordance
                  with
                  their terms subject, however, to the effects of bankruptcy, insolvency,
                  reorganization, moratorium and other laws for the protection of
                  creditors,
                  as well as to general principles of equity, regardless whether
                  such
                  enforceability is considered in a proceeding in equity or at
                  law.

              

      

       

      
        
          
          

        

        
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                (D)

              	
                No
                  Violation.  The execution and delivery of this Agreement
                  does not, and the fulfillment of and compliance with the terms
                  and
                  conditions hereof will not, as of Closing, violate, or be in conflict
                  with, any provision of Seller’s governing documents, or any statute, rule
                  or regulation applicable to Seller or any agreement or instrument
                  to which
                  Seller is a party or by which it is bound, or, to Seller’s knowledge,
                  violate, or be in conflict with any judgment, decree or order applicable
                  to Seller or require the approval or consent of any third party
                  (subject
                  to governmental consents and approvals customarily obtained after
                  the
                  Closing).

              

      

       

      
        	
                (E)

              	
                AFE’s.  With
                  respect to the joint, unit or other operating agreements relating
                  to the
                  Assets, except as set forth in Exhibit 7.1(E), there are no
                  material outstanding calls or payments under authorities for expenditures
                  for payments relating to the Assets which are due or which Seller
                  has
                  committed to make which have not been
                  made.

              

      

       

      
        	
                (F)

              	
                Contractual
                  Restrictions.  Except to the extent otherwise permitted by
                  this Agreement, Seller has not entered into any contracts for or
                  received
                  prepayments, take-or-pay arrangements, buydowns, buyouts for Oil
                  and Gas,
                  or storage of the same relating to the Assets which Buyer shall
                  be
                  obligated to honor and make deliveries of Oil and Gas or pay refunds
                  of
                  amounts previously paid under such contracts or
                  arrangements.

              

      

       

      
        	
                (G)

              	
                Litigation.  Except
                  as set forth in Exhibit 7.1(G), there is no suit or action pending,
                  arising out of, or to Seller’s knowledge threatened that would have a
                  material adverse affect upon the ownership, operation or value
                  of the
                  Assets.

              

      

       

      
        	
                (H)

              	
                Permits
                  and Consents.  To Seller’s knowledge, with respect to Assets
                  for which Seller is the operator, Seller has (i) acquired all
                  material permits, licenses, approvals and consents from appropriate
                  governmental bodies, authorities and agencies to conduct operations
                  on the
                  Assets in compliance with applicable laws, rules, regulations,
                  ordinances
                  and orders; and (ii) is in material compliance with all such permits,
                  licenses, approvals and consents.

              

      

       

      
        	
                (I)

              	
                Broker’s
                  Fees.  Buyer shall have the obligation or liability,
                  contingent or otherwise, for brokers’ or finders’ fees in respect of the
                  matters provided for in this Agreement and Seller shall have no
                  responsibility therefor.

              

      

       

      
        	
                (J)

              	
                Taxes.  (i) Seller
                  has filed (with respect to the Assets) all material returns for
                  Property
                  Taxes and Severance Taxes that are due, (ii) all payments (with
                  respect to the Assets) shown to be due on such returns have been
                  paid, and
                  (iii) there is no material dispute or claim concerning any Property
                  Tax or Severance Tax liability of the Seller (with respect to the
                  Assets)
                  claimed or raised by any tax authority in
                  writing.

              

      

       

      
        	
                (K)

              	
                Material
                  Agreements.  To the best of Seller’s knowledge, all
                  agreements material to the ownership, operation or value of the
                  Assets are
                  listed in Exhibit 7.1(K) (“Material
                  Agreements”).

              

      

       

      
        	
                (L)

              	
                Consents
                  and Preferential Purchase Rights.  To the best of Seller’s
                  knowledge, Exhibit 7.1(L) lists all consents and preferential
                  purchase rights contained in the Leases or Material
                  Agreements.

              

      

       

      
        
          
          

        

        
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                (M)

              	
                Gas
                  Imbalances.  To the best of Seller’s knowledge, Exhibit
                  7.1(M) lists all gas imbalances with respect to the Assets as of
                  the
                  Effective Time.

              

      

       

      7.2           Scope
        of Representations of Seller.

       

      
        	
                (A)

              	
                Information
                  About the Assets.  Except as expressly set forth in this
                  Agreement, Seller disclaims all liability and responsibility for
                  any
                  representation, warranty, statements or communications (orally
                  or in
                  writing) to Buyer, including any information contained in any opinion,
                  information or advice that may have been provided to Buyer by any
                  employee, officer, director, agent, consultant, engineer or engineering
                  firm, representative, partner, member, beneficiary, owner or contractor
                  of
                  Seller wherever and however made, including those made in any data
                  room or
                  internet site and any supplements or amendments thereto or during
                  any
                  negotiations with respect to this Agreement or any confidentiality
                  agreement previously executed by the Parties with respect to the
                  Asset.  EXCEPT AS SET FORTH IN ARTICLE 7 OF THIS AGREEMENT,
                  SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS, STATUTORY
                  OR IMPLIED,
                  AS TO (i) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY DATA,
                  INFORMATION OR RECORDS FURNISHED TO BUYER IN CONNECTION WITH THE
                  ASSETS OR
                  OTHERWISE CONSTITUTING A PORTION OF THE ASSETS; (ii) THE PRESENCE,
                  QUALITY
                  AND QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE
                  ASSETS,
                  INCLUDING WITHOUT LIMITATION SEISMIC DATA AND SELLER’S INTERPRETATION AND
                  OTHER ANALYSIS THEREOF; (iii) THE ABILITY OF THE ASSETS TO PRODUCE
                  HYDROCARBONS, INCLUDING WITHOUT LIMITATION PRODUCTION RATES, DECLINE
                  RATES
                  AND RECOMPLETION OPPORTUNITIES; (iv) IMBALANCE OR PAYOUT ACCOUNT
                  INFORMATION, ALLOWABLES, OR OTHER REGULATORY MATTERS; (v) THE PRESENT
                  OR FUTURE VALUE OF THE ANTICIPATED INCOME, COSTS OR PROFITS, IF
                  ANY, TO BE
                  DERIVED FROM THE ASSETS; (vi) THE ENVIRONMENTAL CONDITION OF THE
                  ASSETS; (vii) ANY PROJECTIONS AS TO EVENTS THAT COULD OR COULD NOT
                  OCCUR; (viii) THE TAX ATTRIBUTES OF ANY ASSET; (ix) ANY OTHER
                  MATTERS CONTAINED IN OR OMITTED FROM ANY INFORMATION OR MATERIAL
                  FURNISHED
                  TO BUYER BY SELLER OR OTHERWISE CONSTITUTING A PORTION OF THE ASSETS;
                  AND,
                  (x) THE COMPLETENESS OR ACCURACY OF THE INFORMATION CONTAINED IN
                  ANY
                  EXHIBIT HERETO.  ANY DATA, INFORMATION OR OTHER RECORDS
                  FURNISHED BY SELLER ARE PROVIDED TO BUYER AS A CONVENIENCE AND
                  BUYER’S
                  RELIANCE ON OR USE OF THE SAME IS AT BUYER’S SOLE
                  RISK.

              

      

       

      
        	
                (B)

              	
                Independent
                  Investigation.  Buyer agrees that it has, or by Closing will
                  have, made its own independent investigation, analysis and evaluation
                  of
                  the Assets and the transaction contemplated by this Agreement (including
                  Buyer’s own estimate and appraisal of the extent and value of Seller’s Oil
                  and Gas reserves attributable to the Assets and an independent
                  assessment
                  and appraisal of the environmental risks and liabilities associated
                  with
                  the acquisition of the Assets).  Buyer agrees that it has had,
                  or will have prior to Closing, access to all information necessary
                  to
                  perform its investigation and has not relied and will not rely
                  on any
                  representations by Seller other than those expressly set forth
                  in this
                  Agreement

              

      

       

      
        
          
          

        

        
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      8.           REPRESENTATIONS
        AND WARRANTIES OF BUYER.

       

      8.1           Buyer’s
        Representations and Warranties

       

      .  Buyer
        represents and warrants as follows as of the date hereof and the
        Closing:

       

      
        	
                (A)

              	
                Status
                  of Incorporation.  Buyer is a limited partnership duly
                  organized, validly existing and in good standing under the laws
                  of the
                  State of Delaware.

              

      

       

      
        	
                (B)

              	
                Corporate
                  Authority.  Buyer has the corporate power and authority to
                  enter into this Agreement, to carry out the transactions contemplated
                  hereby and to undertake all of the obligations of Buyer set out
                  in this
                  Agreement.

              

      

       

      
        	
                (C)

              	
                Validity
                  of Obligations.  The consummation of the transactions
                  contemplated by this Agreement will not in any respect violate,
                  nor be in
                  conflict with, any provision of Buyer’s charter, by-laws or other
                  governing documents, or any agreement or instrument to which Buyer
                  is a
                  party or is bound, or any judgment, decree, order, statute, rule
                  or
                  regulation applicable to Buyer (subject to governmental consents
                  and
                  approvals customarily obtained after the Closing).  This
                  Agreement and the documents executed and delivered by Buyer in
                  connection
                  with the Closing constitute legal, valid and binding obligations
                  of Buyer,
                  enforceable in accordance with their
                  terms.

              

      

       

      
        	
                (D)

              	
                Qualification
                  and Bonding.  Buyer is in compliance with the bonding and
                  liability insurance requirements of all applicable state or federal
                  laws
                  or regulations that could affect Buyer’s ability or authority to own and
                  operate the Assets and is qualified to own any federal, Indian
                  or state
                  oil and gas leases that constitute part of the
                  Assets.

              

      

       

      
        	
                (E)

              	
                Non-Security
                  Acquisition.  Buyer intends to acquire the Assets for its
                  own benefit and account and is not acquiring the Assets with the
                  intent of
                  distributing fractional undivided interests thereof such as would
                  be
                  subject to regulation by federal or state securities laws, and
                  if, in the
                  future, it should sell, transfer or otherwise dispose of the Assets
                  or
                  fractional undivided interests therein, it will do so in compliance
                  with
                  any applicable federal and state securities
                  laws.

              

      

       

      
        	
                (F)

              	
                Evaluation.  By
                  reason of Buyer’s knowledge and experience in the evaluation, acquisition
                  and operation of oil and gas properties, Buyer has evaluated the
                  merits
                  and risks of purchasing the Assets from Seller and has formed an
                  opinion
                  based solely upon Buyer’s knowledge and experience and not upon any
                  representations or warranties by
                  Seller.

              

      

       

      
        	
                (G)

              	
                Financing.  Buyer
                  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.

              

      

       

      
        	
                (H)

              	
                Broker’s
                  Fees.  Buyer has incurred no obligation or liability,
                  contingent or otherwise, for brokers’ or finders’ fees in respect of the
                  matters provided for in this Agreement, and, if any such obligation
                  or
                  liability exists, it shall remain an obligation of Buyer, and Seller
                  shall
                  have no responsibility therefor.

              

      

       

      
        
          
          

        

        
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                (I)

              	
                No
                  Knowledge of Seller’s Breach.  As of the Closing Date, Buyer
                  has no knowledge of any breach by Seller of any representation
                  or warranty
                  of Seller, or of any other fact, event, condition or circumstance
                  that
                  would excuse Buyer from the timely performance of its obligations
                  hereunder.

              

      

       

      9.           CERTAIN
        AGREEMENTS OF SELLER

       

      .  Seller
        agrees and covenants that, unless Buyer shall have otherwise agreed in writing,
        the following provisions shall apply:

       

      9.1           Maintenance
        of Assets

       

      .  From
        the Effective Time until Closing, Seller agrees that, for those Assets which
        it
        operates, it shall:

       

      
        	
                (A)

              	
                Administer
                  and operate the Assets in accordance with the applicable operating
                  agreements.

              

      

       

      
        	
                (B)

              	
                Not
                  introduce any new methods of management, operation or accounting
                  with
                  respect to any or all of the
                  Assets.

              

      

       

      
        	
                (C)

              	
                Use
                  commercially reasonable efforts to maintain and keep the Assets
                  in full
                  force and effect; and fulfill all contractual or other covenants,
                  obligations and conditions imposed upon Seller with respect to
                  the Assets,
                  including, but not limited to, payment of royalties, delay rentals,
                  shut-in gas royalties and any and all other required
                  payments.

              

      

       

      
        	
                (D)

              	
                Except
                  to the extent necessary or advisable to avoid forfeiture or penalties,
                  not
                  enter into agreements to drill new wells or to rework, plug back,
                  deepen,
                  plug or abandon any Well, nor commence any drilling, reworking
                  or
                  completing or other operations on the Leases which requires estimated
                  expenditures exceeding Ten Thousand Dollars ($10,000.00), net to
                  the
                  working interest of Seller, for each operation (except for emergency
                  operations and operations required under presently existing contractual
                  obligations) without obtaining the prior written consent of Buyer
                  (which
                  consent shall not be unreasonably withheld, delayed or conditioned);
                  provided that the terms of this paragraph (D) shall not apply to
                  any
                  expenditures of Seller which will not be charged to
                  Buyer.

              

      

       

      
        	
                (E)

              	
                Not
                  voluntarily relinquish its position as operator to anyone other
                  than Buyer
                  with respect to any of the Assets or voluntarily abandon any of
                  the Wells
                  other than as required pursuant to the terms of a Lease or by
                  regulation.

              

      

       

      
        	
                (F)

              	
                Not,
                  without the prior written consent of Buyer (which consent shall
                  not be
                  unreasonably withheld, delayed or conditioned), (i) enter into any
                  agreement or arrangement (other than one constituting a Permitted
                  Encumbrance) transferring, selling or encumbering any of the Assets
                  (other
                  than in the ordinary course of business, including ordinary course
                  sales
                  of production, inventory or salvage or with respect to any Assets
                  with a
                  value less than $10,000 or pursuant to any agreements existing
                  on the date
                  hereof); (ii) grant any preferential or other right to purchase or
                  agree to require the consent of any party not otherwise required
                  to
                  consent to the transfer and assignment of the Assets to Buyer;
                  (iii) enter into any new sales contracts or supply contracts which
                  cannot be cancelled upon thirty (30) days prior notice; or (iv) incur
                  or agree to incur any contractual obligation  (absolute or
                  contingent) with respect to the Assets except as otherwise provided
                  herein
                  (including ordinary course sales of production, inventory or salvage
                  or
                  with respect to any Assets with a value less than $10,000 net to
                  Seller or
                  pursuant to any disclosed AFEs covering the
                  Assets).

              

      

       

      
        
          
          

        

        
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                (G)

              	
                To
                  the extent known to Seller, provide Buyer with written notice of
                  (i) any claims, demands, suits or actions made against Seller which
                  materially affect the Assets; or (ii) any proposal from a third party
                  to engage in any material transaction (e.g., a farmout) with respect
                  to
                  the Assets.

              

      

       

      9.2           Records

       

      .  Seller
        shall have the right to make and retain copies of the Records as Seller may
        desire prior to the delivery of the Records to Buyer.  Buyer, for a
        period of seven (7) years after the Closing Date, shall make available to
        Seller
        (at the location of such Records in Buyer’s organization) access to such Records
        as Buyer may have in its possession (or to which it may have access) upon
        written request of Seller, during normal business hours; provided, however,
        that
        Buyer shall not be liable to Seller for the loss of any Records by reason
        of
        clerical error or inadvertent loss or destruction of Records.

       

      9.3           Audit
        Rights.  Seller agrees make available to Buyer prior to and for a
        period of twelve months following Closing any and all existing information
        and
        documents in the possession of Seller that Buyer may reasonably require to
        comply with Buyer’s tax and financial reporting requirements and
        audits.  Without limiting the generality of the foregoing, Seller will
        use its commercially reasonable efforts after execution of this Agreement
        and
        for twelve months following Closing to cooperate with the independent auditors
        chosen by Buyer (“Buyer’s Auditor”) in connection with their audit of any annual
        revenue and expenses statements of the Assets that Buyer or any of its
        Affiliates requires to comply with their tax and financial reporting
        requirements, and their review of any interim quarterly revenue and expense
        statements of the Assets that Buyer requires to comply with such reporting
        requirements.  Buyer’s cooperation will include (i) such reasonable
        access to Seller’s employees who were responsible for preparing the revenue and
        expense statements and work papers and other supporting documents used in
        the
        preparation of such financial statements as may be required by Buyer’s Auditor
        to perform an audit in accordance with generally accepted auditing standards,
        and (ii) delivery of one or more customary representation letters (in
        substantially the form previously approved by Seller and Buyer) from Seller
        to
        Buyer’s Auditor that are requested by Buyer to allow such auditors to complete
        an audit (or review of any interim quarterly financials), and to issue an
        opinion that in Buyer’s experience is acceptable with respect to an audit or
        review of those revenue and expense statements required pursuant to this
        Section.  Buyer will reimburse Seller, within three (3) business days
        after demand therefore, for any reasonable out-of-pocket and overhead costs
        with
        respect to any costs incurred by Seller in complying with the provisions
        of this
        Section.

       

      
        
          
          

        

        
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      10.           CERTAIN
        AGREEMENTS OF BUYER

       

      .  Buyer
        agrees and covenants that unless Seller shall have consented otherwise in
        writing, the following provisions shall apply:

       

      10.1           Plugging
        Obligation

       

      .  Upon
        consummation of the Closing, Buyer shall perform and assume all liability
        for
        the necessary and proper plugging and abandonment of all Wells and all surface
        restoration and reclamation required by law or the Leases.

       

      10.2           Plugging
        Bond

       

      .  Buyer
        shall post, prior to Closing, the necessary bonds or letters of credit as
        required by the state in which the Leases are located for the plugging of
        all
        Wells, and provide Seller with a copy of same, and provide proof satisfactory
        to
        Seller that the applicable state has accepted such bonds or letters of credit
        as
        sufficient assurance to cover the plugging of all Wells and related
        matters.  Further, Buyer shall provide to Seller copies of the
        approval by any applicable regulatory agencies concerning change of operatorship
        of the Assets if Buyer is duly elected Operator.

       

      10.3           Seller’s
        Logos

       

      .  Commencing
        no later than thirty (30) days after Closing, Buyer shall promptly cover
        or
        cause to be covered by decals or new signage any names and marks used by
        Seller,
        and all variations and derivatives thereof and logos relating thereto, from
        the
        Assets and shall not thereafter make any use whatsoever of such names, marks
        and
        logos.

       

      10.4           Like-Kind
        Exchanges

       

      .  Each
        party consents to the other party’s assignment of its rights and obligations
        under this Agreement to its Qualified Intermediary (as that term is defined
        in
        Section 1.1031(k)-1(g)(4)(v) of the Treasury Regulations), or to its Qualified
        Exchange Accommodation Titleholder (as that term is defined in Rev. Proc.
        2000-37), in connection with effectuation of a like-kind
        exchange.  However, Seller and Buyer acknowledge and agree that any
        assignment of this Agreement to a Qualified Intermediary or to a Qualified
        Exchange Accommodation Titleholder does not release either party from any
        of
        their respective liabilities and obligations to each other under the
        Agreement.  Each party agrees to cooperate with the other to attempt
        to structure the transaction as a like-kind exchange.

       

      11.           CONDITIONS
        PRECEDENT TO OBLIGATIONS OF BUYER

       

      .  All
        obligations of Buyer under this Agreement are, at Buyer’s election, subject to
        the fulfillment, prior to or at the Closing, of each of the following
        conditions:

       

      11.1           No
        Litigation

       

      .  At
        the Closing, no suit, action or other proceeding shall be pending before
        any
        court or governmental agency which attempts to prevent the occurrence of
        the
        transactions contemplated by this Agreement.

       

      
        
          
          

        

        
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      11.2           Representations
        and Warranties

       

      .  All
        representations and warranties of Seller contained in this Agreement shall
        be
        true in all material aspects as of the Closing as if such representations
        and
        warranties were made as of the Closing Date (except for those representations
        or
        warranties that are expressly made only as of another specific date, which
        representations and warranties shall be true in all material respects as
        of such
        other date) and Seller shall have performed and satisfied in all material
        respects all covenants and fulfilled all conditions required by this Agreement
        to be performed and satisfied by Seller at or prior to the Closing.

       

      12.           CONDITIONS
        PRECEDENT TO THE OBLIGATIONS OF SELLER

       

      .  All
        obligations of Seller under this Agreement are, at Seller’s election, subject to
        the fulfillment, prior to or at the Closing, of each of the following
        conditions:

       

      12.1           No
        Litigation

       

      .  At
        the Closing, no suit, action or other proceeding shall be pending before
        any
        court or governmental agency which attempts to prevent the occurrence of
        the
        transactions contemplated by this Agreement.

       

      12.2           Representations
        and Warranties

       

      .  All
        representations and warranties of Buyer contained in this Agreement shall
        be
        true in all material aspects as of the Closing, as if such representations
        and
        warranties were made as of the Closing Date (except for those representations
        or
        warranties that are expressly made only as of another specific date, which
        representations and warranties shall be true in all material respects as
        of such
        other date) and Buyer shall have performed and satisfied in all material
        respects all covenants and fulfilled all conditions required by this Agreement
        to be performed and satisfied by Buyer at or prior to the Closing.

       

      13.           TERMINATION.

       

      13.1           Causes
        of Termination

       

      .  This
        Agreement and the transactions contemplated herein may be
        terminated:

       

      
        	
                (A)

              	
                At
                  any time by mutual consent of the
                  Parties.

              

      

       

      
        	
                (B)

              	
                By
                  either Party as provided in Sections 5.4(C) or 6.4(C) pertaining
                  to Title
                  Defects or Adverse Environmental Conditions,
                  respectively.

              

      

       

      
        	
                (C)

              	
                By
                  Buyer if, on the Closing Date, any of the conditions set forth
                  in Article
                  11 hereof shall not have been satisfied or waived; provided, however,
                  that
                  Seller shall have the right to satisfy such condition for a period
                  of
                  twenty (20) days following delivery of notice from Buyer regarding
                  such
                  failure or, if such condition cannot reasonably be satisfied within
                  such
                  20-day period, Seller shall have the right to commence the actions
                  necessary to satisfy such condition within such 20-day period and
                  thereafter to diligently continue such actions beyond such period
                  until
                  such satisfaction has been
                  effected.

              

      

       

      
        
          
          

        

        
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                (D)

              	
                By
                  Seller if, on the Closing Date, any of the conditions set forth
                  in Article
                  12 hereof shall not have been satisfied or waived; provided, however,
                  that
                  with respect to any condition other than a material failure of
                  Buyer to
                  perform its obligations under Section 3.2, as to which the granting
                  of any
                  cure period shall be entirely within Seller’s sole and absolute
                  discretion, Buyer shall have the right to satisfy such condition
                  for a
                  period of twenty (20) days following delivery of notice from Seller
                  regarding such failure or, if such condition cannot reasonably
                  be
                  satisfied within such 20-day period, Buyer shall have the right
                  to
                  commence the actions necessary to satisfy such condition within
                  such
                  20-day period and thereafter to diligently continue such actions
                  beyond
                  such period until such satisfaction has been
                  effected.

              

      

       

      

      

      

      13.2           Effect
        of Termination.

       

      
        	
                (A)

              	
                Buyer’s
                  Breach.  If Closing does not occur because Buyer wrongfully
                  fails to tender performance at Closing or otherwise breaches this
                  Agreement prior to Closing, and Seller is ready to close, Seller
                  shall
                  retain the Deposit, together with interest thereon, as liquidated
                  damages.  Buyer’s failure to close shall not be considered
                  wrongful if (i) conditions to Buyer’s obligation to close under
                  Article 11 are not satisfied through no fault of Buyer and are
                  not waived,
                  or (ii) Buyer has terminated this Agreement as of right under Section
                  13.1.  The remedy set forth herein shall be Seller’s sole and
                  exclusive remedy for Buyer’s wrongful failure to close hereunder and
                  Seller expressly waives any and all other remedies, legal and equitable,
                  that it otherwise may have for Buyer’s failure to
                  close.

              

      

       

      
        	
                (B)

              	
                Seller’s
                  Breach.

              

      

       

      If
        Closing does not occur because Seller wrongfully fails to tender performance
        at
        Closing or otherwise breaches this Agreement prior to Closing, and Buyer
        is
        ready to close, Seller will return the Deposit, together with interest thereon,
        to Buyer immediately after the determination that the Closing will not occur
        and
        Buyer shall retain all legal remedies for Seller’s breach of this Agreement;
        provided, however, that (i) Buyer’s total damages arising out of or related
        to Seller’s breach of any provision of this Agreement shall be limited to the
        amount of the Deposit, and (ii) Seller shall not have any liability to
        Buyer for consequential, special, punitive or exemplary damages arising out
        of
        or related to Seller’s breach of any provision of this Agreement Seller’s
        failure to close shall not be considered wrongful if (i) conditions to
        Seller’s conditions to close under Article 12 are not satisfied through no fault
        of Seller and are not waived; or (ii) Seller has terminated this Agreement
        as of right under Section 13.1.

       

      
        
          
          

        

        
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                (C)

              	
                Termination
                  Pursuant to Section 13.1.

              

      

       

      If
        Buyer
        or Seller terminates this Agreement pursuant to Section 13.1 in the absence
        of a
        breach by the other Party, Seller shall distribute the Deposit to Buyer and
        neither Buyer nor Seller shall have any liability to the other Party for
        termination of this Agreement.  If Buyer or Seller terminates this
        Agreement pursuant to Section 13.1 and asserts that a breach of this Agreement
        has occurred, the notice of termination shall include a statement describing
        the
        nature of the alleged breach together with supporting
        documentation.

       

      
        	
                (D)

              	
                Effect
                  of Termination.

              

      

       

      In
        the
        event of the termination of this Agreement pursuant to the provisions of
        this
        Article 13 or elsewhere in this Agreement, this Agreement shall become void
        and
        have no further force and effect and, except for the indemnities provided
        for in
        Sections 6.2(B) and 14.3, any breach of this Agreement prior to such termination
        and any continuing confidentiality requirement, neither Party shall have
        any
        further right, duty or liability to the other hereunder.  Upon
        termination, Buyer agrees to return to Seller or destroy all materials,
        documents and copies thereof provided, obtained or discovered in the course
        of
        any due diligence investigations of the Assets.

       

      14.           INDEMNIFICATION.

       

      14.1           Indemnification
        by Seller

       

      .  UPON
        CLOSING, SELLER SHALL TO THE FULLEST EXTENT PERMITTED BY LAW, RELEASE, DEFEND,
        INDEMNIFY, AND HOLD HARMLESS BUYER, ITS AFFILIATES, AND EACH OF THEIR RESPECTIVE
        DIRECTORS, OFFICERS, EMPLOYEES, AGENTS AND OTHER REPRESENTATIVES (COLLECTIVELY
        THE “BUYER GROUP”) FROM AND AGAINST THE FOLLOWING:

       

      
        	
                (A)

              	
                MISREPRESENTATIONS.  ALL
                  CLAIMS, DEMANDS, LIABILITIES, JUDGMENTS, LOSSES AND REASONABLE
                  COSTS,
                  EXPENSES AND ATTORNEYS’ FEES (INDIVIDUALLY A “LOSS” AND COLLECTIVELY, THE
                  “LOSSES”) ARISING FROM THE BREACH BY SELLER OF ANY REPRESENTATION OR
                  WARRANTY SET FORTH IN THIS AGREEMENT THAT SURVIVES
                  CLOSING;

              

      

       

      
        	
                (B)

              	
                BREACH
                  OF COVENANTS.  ALL LOSSES ARISING FROM THE BREACH BY SELLER
                  OF ANY COVENANT SET FORTH IN THIS AGREEMENT;
                  AND

              

      

       

      
        	
                (C)

              	
                OWNERSHIP
                  AND OPERATION.  ALL LOSSES ARISING FROM SELLER’S OWNERSHIP
                  AND OPERATION OF THE ASSETS PRIOR TO THE EFFECTIVE TIME DIRECTLY
                  ASSOCIATED WITH THE FOLLOWING
                  MATTERS:

              

      

       

      
        	
                (i)

              	
                DAMAGES
                  TO PERSONS OR PROPERTY FOR CLAIMS ASSERTED BY ANY THIRD PARTY PRIOR
                  TO THE
                  EFFECTIVE TIME;

              

      

       

      
        
          
          

        

        
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                (ii)

              	
                THE
                  VIOLATION BY SELLER OF THE TERMS OF ANY AGREEMENT BINDING UPON
                  SELLER;
                  AND

              

      

       

      
        	
                (iii)

              	
                CLAIMS
                  AGAINST SELLER BY CO-OWNERS, PARTNERS, JOINT VENTURERS AND OTHER
                  PARTICIPANTS IN THE WELLS.

              

      

       

      
        	
                (D)

              	
                Notwithstanding
                  the above, the following limitations shall apply to Seller’s
                  indemnification obligations:

              

      

       

      
        	
                (i)

              	
                Seller
                  shall not be obligated to indemnify Buyer for any Loss unless Buyer
                  has
                  delivered a written notice of such Loss within the Survival Period
                  (as
                  defined below) applicable to such Loss.  Any Loss for which
                  Seller does not receive written notice before the end of the Survival
                  Period shall be deemed to be an Assumed Liability.  The
                  “Survival Period” applicable to Losses shall
                  mean:

              

      

       

      
        	
                 

              	
                (1)

              	
                With
                  regard to a breach of representations and warranties contained
                  in Sections
                  7.1(A), (B), (C) and (D), for a period of one (1) year following
                  the
                  Closing;

              

      

       

      
        	
                 

              	
                (2)

              	
                All
                  of the other representations and warranties by Seller in this Agreement
                  for a period of six (6) months following the
                  Closing;

              

      

       

      
        	
                 

              	
                (3)

              	
                With
                  regard to a breach of covenants, an indefinite period following
                  the
                  Closing;

              

      

       

      
        	
                 

              	
                (4)

              	
                With
                  regard to the matters covered by Section 14.1 (C), for a period
                  of six
                  months after the Closing.

              

      

       

      
        	
                (ii)

              	
                The
                  indemnification obligations of Seller pursuant to this Agreement
                  shall be
                  limited to actual Losses and shall not include incidental, consequential,
                  indirect, punitive, or exemplary Losses or
                  damages;

              

      

       

      
        	
                (iii)

              	
                Seller’s
                  aggregate liabilities and obligations under this Article 14 shall
                  not
                  exceed ten percent (10%) of the Base Purchase
                  Price;

              

      

       

      
        	
                (iv)

              	
                Seller
                  shall have no liability or obligation for any Losses, unless and
                  until and
                  only to the extent that the aggregate Losses for which Buyer is
                  entitled
                  to recover under this Agreement exceeds one percent (1%) of the
                  Base
                  Purchase Price (the “Indemnity Deductible”) (such amount being a
                  deductible and not a threshold).

              

      

       

      
        	
                (v)

              	
                Seller
                  shall have no liability in excess of the Allocated Value, less
                  any prior
                  adjustments to the Base Purchase Price, for any Losses associated
                  with the
                  claim that Seller does not have Defensible Title associated with
                  a
                  particular Asset;

              

      

       

      
        	
                (vi)

              	
                The
                  amount of Losses required to be paid by Seller to indemnify Buyer
                  pursuant
                  to this Agreement shall be reduced to the extent of any amounts
                  actually
                  received by Buyer pursuant to the terms of the insurance policies
                  (if any)
                  covering such claim and any tax benefits received by
                  Buyer.

              

      

       

      
        
          
          

        

        
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                (vii)

              	
                Seller’s
                  indemnification obligations shall not cover any liabilities, duties
                  and
                  obligations relating to properly plugging and abandoning wells,
                  restoring
                  and reclaiming the surface, removal of all pipelines, equipment,
                  and
                  related facilities now or hereafter located on the Assets, and
                  cleaning
                  up, restoring and Remediation of the Assets in accordance with
                  the
                  Environmental Laws and the relevant Leases, or any other violation
                  or
                  claimed violation of Environmental Laws (including but not limited
                  to the
                  payment of fines, penalties, monetary sanctions or other civil
                  liabilities) or the presence, disposal, release or threatened release
                  of
                  any hazardous substance or hazardous waste from the Assets into
                  the
                  atmosphere or into or upon land or any water course or body of
                  water,
                  including groundwater, whether or not attributable to Seller’s activities
                  or the activities of third parties.  All such matters are
                  covered exclusively by Article 6 of this
                  Agreement.

              

      

       

      
        	
                (viii)

              	
                Buyer
                  acknowledges and agrees that the indemnification provisions in
                  this
                  Article 14 and the termination rights in Article 13 shall be the
                  exclusive
                  remedies of Buyer with respect to the transactions contemplated
                  by this
                  Agreement.

              

      

       

      14.2           Indemnification
        by Buyer

       

      .  UPON
        CLOSING, BUYER SHALL TO THE FULLEST EXTENT PERMITTED BY LAW, RELEASE, DEFEND,
        INDEMNIFY, AND HOLD HARMLESS SELLER’S GROUP FROM AND AGAINST THE
        FOLLOWING:

       

      
        	
                (A)

              	
                MISREPRESENTATIONS.  ALL
                  LOSSES ARISING FROM THE BREACH BY BUYER OF ANY REPRESENTATION OR
                  WARRANTY
                  SET FORTH IN THIS AGREEMENT THAT SURVIVES
                  CLOSING;

              

      

       

      
        	
                (B)

              	
                BREACH
                  OF COVENANTS.  ALL LOSSES ARISING FROM THE BREACH BY BUYER
                  OF ANY COVENANT SET FORTH IN THIS
                  AGREEMENT;

              

      

       

      
        	
                (C)

              	
                ASSUMED
                  LIABILITIES.  ALL LOSSES ARISING FROM OR COMPRISING THE
                  ASSUMED LIABILITIES.

              

      

       

      14.3           Physical
        Inspection

       

      .  BUYER
        INDEMNIFIES AND AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS THE
        SELLER’S GROUP FROM AND AGAINST ANY AND ALL CLAIMS ARISING FROM BUYER’S
        INSPECTING AND OBSERVING THE ASSETS, INCLUDING (A) CLAIMS FOR PERSONAL
        INJURIES TO OR DEATH OF EMPLOYEES OF THE BUYER, ITS CONTRACTORS, AGENTS,
        CONSULTANTS AND REPRESENTATIVES, AND DAMAGE TO THE PROPERTY OF BUYER OR OTHERS
        ACTING ON BEHALF OF BUYER; AND (B) CLAIMS, DEMANDS, LOSSES, DAMAGES,
        LIABILITIES, JUDGMENTS, CAUSES OF ACTION, COSTS OR EXPENSES FOR PERSONAL
        INJURIES TO OR DEATH OF EMPLOYEES OF THE SELLER’S GROUP OR THIRD PARTIES, AND
        DAMAGE TO THE PROPERTY OF THE SELLER’S GROUP OR THIRD PARTIES.  THE
        FOREGOING INDEMNITY INCLUDES, AND THE PARTIES INTEND IT TO INCLUDE, AN
        INDEMNIFICATION OF THE SELLER’S GROUP FROM AND AGAINST CLAIMS ARISING OUT OF OR
        RESULTING, IN WHOLE OR PART, FROM THE CONDITION OF THE ASSETS OR THE SELLER’S
        GROUP’S SOLE, JOINT, COMPARATIVE, OR CONCURRENT NEGLIGENCE, STRICT LIABILITY OR
        FAULT.

       

      
        
          
          

        

        
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      14.4           Notification

       

      .  As
        soon as reasonably practical after obtaining knowledge thereof, the indemnified
        Party shall notify the indemnifying Party of any claim or demand which the
        indemnified Party has determined has given or could give rise to a claim
        for
        indemnification under this Article 14.  Such notice shall specify the
        agreement, representation or warranty with respect to which the claim is
        made,
        the facts giving rise to the claim and the alleged basis for the claim, and
        the
        amount (to the extent then determinable) of liability for which indemnity
        is
        asserted.  In the event any action, suit or proceeding is brought with
        respect to which a Party may be liable under this Article 14, the defense
        of the
        action, suit or proceeding (including all settlement negotiations and
        arbitration, trial, appeal, or other proceeding) shall be at the discretion
        of
        and conducted by the indemnifying Party.  If an indemnified Party
        shall settle any such action, suit or proceeding without the written consent
        of
        the indemnifying Party (which consent shall not be unreasonably withheld),
        the
        right of the indemnified Party to make any claim against the indemnifying
        Party
        on account of such settlement shall be deemed conclusively denied.  An
        indemnified Party shall have the right to be represented by its own counsel
        at
        its own expense in any such action, suit or proceeding, and if an indemnified
        Party is named as the defendant in any action, suit or proceeding, it shall
        be
        entitled to have its own counsel and defend such action, suit or proceeding
        with
        respect to itself at its own expense.  Subject to the foregoing
        provisions of this Article 14, neither Party shall, without the other Party’s
        written consent, settle, compromise, confess judgment or permit judgment
        by
        default in any action, suit or proceeding if such action would create or
        attach
        any liability or obligation to the other Party.  The Parties agree to
        make available to each other, and to their respective counsel and accountants,
        all information and documents reasonably available to them which relate to
        any
        action, suit or proceeding, and the Parties agree to render to each other
        such
        assistance as they may reasonably require of each other in order to ensure
        the
        proper and adequate defense of any such action, suit or proceeding.

       

      15.           MISCELLANEOUS.

       

      15.1           Casualty
        Loss.

       

      
        	
                (A)

              	
                An
                  event of casualty means volcanic eruptions, acts of God, fire,
                  explosion,
                  earthquake, wind storm, flood, drought, condemnation, the exercise
                  of any
                  right of eminent domain, confiscation and seizure (a
                  “Casualty”).  A Casualty does not include depletion due to
                  normal production and depreciation or failure of equipment or
                  casing.

              

      

       

      
        	
                (B)

              	
                If,
                  prior to the Closing, a Casualty occurs (or Casualties occur) which
                  results in a reduction in the value of any of the Assets in excess
                  of
                  twenty-five percent (25%) of the Allocated Value of the affected
                  Assets
                  (“Casualty Loss”), (i) Seller may retain such Asset and such Asset
                  shall be the subject of an adjustment to the Base Purchase Price
                  in the
                  same manner set forth in Section 5.4 hereof, or (ii) at the Closing,
                  Seller shall assign to Buyer the right to receive all insurance
                  proceeds
                  or other sums payable to Seller by reason of such Casualty Loss,
                  the Base
                  Purchase Price shall not be adjusted by reason of such payment,
                  and Seller
                  shall convey the affected Assets to
                  Buyer.

              

      

       

      
        
          
          

        

        
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                (C)

              	
                For
                  purposes of determining the diminution in value of an Asset as
                  a result of
                  a Casualty Loss, the Parties shall use the same methodology as
                  applied in
                  determining the diminution in value of an Asset as a result of
                  a Title
                  Defect as set forth in Section 5.5.

              

      

       

      15.2           Confidentiality.

       

      
        	
                (A)

              	
                Prior
                  to Closing, to the extent not already public, Buyer shall not disclose
                  to
                  any party that it is conducting negotiations with Seller or has
                  entered
                  into this Agreement other than as expressly permitted in the
                  confidentiality agreement executed by Buyer in Seller’s favor prior to the
                  execution of this Agreement, which shall continue to apply until
                  the
                  Closing and thereafter in the event of termination of this Agreement
                  prior
                  to the Closing. Buyer shall exercise all due diligence in safeguarding
                  and
                  maintaining secure all engineering, geological and geophysical
                  data,
                  seismic data, reports and maps, the results and findings of Buyer
                  with
                  regard to its due diligence associated with the Assets (including
                  without
                  limitation with regard to due diligence associated with environmental
                  and
                  title matters) and other data relating to the Assets (collectively,
                  the
                  “Confidential Information”).  Buyer acknowledges that, prior to
                  Closing, all Confidential Information shall be treated as confidential.
                  Notwithstanding the foregoing, Seller understands that Buyer has
                  public
                  reporting obligations that may require public announcement of certain
                  information relating to this Agreement.  Seller and Buyer shall
                  consult with each other with regard to all publicity and other
                  releases at
                  or prior to the Closing concerning this Agreement and the transaction
                  contemplated hereby and, except as required by applicable law or
                  other
                  applicable rules or regulations of any governmental body or stock
                  exchange, neither party shall issue any publicity or other release
                  without
                  the prior written consent of the other party, such consent not
                  to be
                  unreasonably withheld.

              

      

       

      
        	
                (B)

              	
                In
                  the event of termination of this Agreement for any reason, Buyer
                  shall not
                  use or knowingly permit others to use such Confidential Information
                  in a
                  manner detrimental to Seller, and will not disclose any such Confidential
                  Information to any person, firm, corporation, association or other
                  entity
                  for any reason or purpose whatsoever, except to Seller or to a
                  governmental agency pursuant to a valid subpoena or other order
                  or
                  pursuant to applicable governmental regulations, rules or
                  statutes.

              

      

       

      
        	
                (C)

              	
                The
                  undertaking of confidentiality shall not diminish or take precedence
                  over
                  any separate confidentiality agreement between the
                  Parties.  Should this Agreement terminate, such separate
                  confidentiality agreement shall remain in full force and
                  effect.

              

      

       

      15.3           Notices

       

      .  Any
        notice, request, demand, or consent required or permitted to be given hereunder
        shall be in writing and delivered in person or by certified letter, with
        return
        receipt requested, or by facsimile addressed to the Party for whom intended
        at
        the following addresses:

       

      
        
          
          

        

        
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      SELLER:

       

      Terry
        S.
        Fields

      P.O.
        Box
        222

      Midland,
        Texas 79702

      Tel.:
        (432) 689-2929

      

      BUYER:

       

      Legacy
        Reserves Operating
        LP

      303
        West Wall, Suite 1600

      Midland,
        Texas 79701

      Attn:                      Mr.
        Kyle A. McGraw

      Tel:
        (432) 682-2516

      Fax:
        (432) 684-3774

      

      
        	
                 

              	
                With
                  copy to:  Lynch, Chappell &
Alsup

              

      

      
        	
                 

              	
                300
                  N. Marienfeld, Suite 700

              

      

      
        	
                 

              	
                Midland,
                  Texas  79701

              

      

      Attention:
        Alan J. Brown

      

      or
        at
        such other address as any of the above shall specify by like notice to the
        other.

       

      15.4           Press
        Releases and Public Announcements

       

      .  No
        Party shall issue any press release or make any public announcement relating
        to
        the subject matter of this Agreement prior to the Closing without the prior
        written approval of the other Party; provided, however, that any Party may
        make
        any public disclosure it believes in good faith is required by applicable
        law or
        any listing or trading agreement concerning its or its affiliates’
publicly-traded securities (in which case the disclosing Party shall use
        all
        reasonable efforts to advise the other Party, and give the other Party an
        opportunity to comment on the proposed disclosure, prior to making the
        disclosure).  Notwithstanding the foregoing, no press release or any
        public announcement shall identify Seller or the principals of Seller without
        Seller’s prior written consent, which consent shall not be unreasonably
        withheld.

       

      15.5           Compliance
        with Express Negligence Test

       

      .  THE
        PARTIES AGREE THAT THE INDEMNIFICATION OBLIGATIONS OF THE INDEMNIFYING PARTY
        SHALL BE WITHOUT REGARD TO THE NEGLIGENCE OR STRICT LIABILITY OF THE INDEMNIFIED
        PERSON(S), WHETHER THE NEGLIGENCE OR STRICT LIABILITY IS ACTIVE, PASSIVE,
        JOINT,
        CONCURRENT OR SOLE.

       

      15.6           Governing
        Law

       

      .  This
        Agreement is governed by and must be construed according to the laws of the
        State of Texas, excluding any conflicts-of-law rule or principle that might
        apply the law of another jurisdiction.  All disputes related to this
        Agreement shall be submitted exclusively to the jurisdiction of the courts
        of
        the State of Texas and venue shall be in the civil district courts of Midland,
        Midland County, Texas.

       

      
        
          
          

        

        
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      15.7           Exhibits

       

      .  The
        Exhibits attached to this Agreement are incorporated into and made a part
        of
        this Agreement.

       

      15.8           Fees,
        Expenses, Taxes and Recording.

       

      
        	
                (A)

              	
                Each
                  Party shall be solely responsible for all costs and expenses incurred
                  by
                  it in connection with this transaction (including, but not limited
                  to fees
                  and expenses of its counsel and accountants) and shall not be entitled
                  to
                  any reimbursements from the other Party, except as otherwise provided
                  in
                  this Agreement.

              

      

       

      
        	
                (B)

              	
                Buyer
                  shall file all necessary Tax returns and other documentation with
                  respect
                  to all transfer, documentary, sales, use, stamp, registration and
                  other
                  similar Taxes and fees, and, if required by applicable law, Seller
                  shall
                  join in the execution of any such Tax returns and other
                  documentation.  Notwithstanding anything set forth in this
                  Agreement to the contrary, Buyer shall pay any transfer, documentary,
                  sales, use, stamp, registration and other similar Taxes and fees
                  incurred
                  in connection with this Agreement and the transactions contemplated
                  hereby.  Buyer shall also pay any equipment lease transfer fees
                  or other fees or expenses incurred in connection with transfer
                  of the
                  Assets to Buyer except as otherwise provided by this
                  Agreement.

              

      

       

      
        	
                (C)

              	
                Buyer
                  shall, at its own cost, immediately record all instruments of conveyance
                  and sale in the appropriate office of the state and county in which
                  the
                  lands covered by such instrument are located.  Buyer shall
                  immediately file for and obtain the necessary approval of all federal,
                  Indian, tribal or state government agencies to the assignment of
                  the
                  Assets.  The assignment of any state, federal or Indian tribal
                  oil and gas leases shall be filed in the appropriate governmental
                  offices
                  on a form required and in compliance with the applicable rules
                  of the
                  applicable government agencies.  Buyer shall supply Seller with
                  a true and accurate photocopy reflecting the recording information
                  of all
                  the recorded and filed assignments within a reasonable period of
                  time
                  after their recording and filing.  In the event that Seller
                  undertakes to record and/or file the conveyance instruments and
                  other
                  documents associated with this transfer of interest, Buyer shall
                  reimburse
                  Seller for all associated fees at Post
                  Closing.

              

      

       

      15.9           Assignment

       

      .  This
        Agreement or any part hereof may not be assigned by either Party without
        the
        prior written consent of the other Party; provided, however, upon notice
        to the
        other Party, either Party shall have the right to assign all or part of its
        rights (but none of its obligations) under this Agreement in order to qualify
        transfer of the Assets as a “like-kind” exchange for federal tax
        purposes.  Subject to the foregoing, this Agreement is binding upon
        the Parties hereto and their respective successors and assigns.

       

      15.10                      Entire
        Agreement

       

      
        
          
          

        

        
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      .  This
        Agreement constitutes the entire agreement reached by the Parties with respect
        to the subject matter hereof, superseding all prior negotiations, discussions,
        agreements and understandings, whether oral or written, relating to such
        subject
        matter.

       

      15.11                      Severability

       

      .  In
        the event that any one or more covenants, clauses or provisions of this
        Agreement shall be held invalid or illegal, such invalidity or unenforceability
        shall not affect any other provisions of this Agreement.

       

      15.12                      Captions

       

      .  The
        captions in this Agreement are for convenience only and shall not be considered
        a part of or affect the construction or interpretation of any provision of
        this
        Agreement.

       

      15.13                      Time
        of the Essence

       

      .  The
        parties recognize and agree that time is of the essence of this
        Agreement.

      

       

      Executed
        as of the day and year first above written.

      
        	 	
                SELLER:

                 

                Terry S. Fields

              	 
	 	 	 	 
	
                 

              	
                By:
                  

              	/s/ Terry
                S. Fields	 
	 	 	Terry
                S. Fields 	 
	 	 	 	 
	 	 	 	 

      

    

    
      	 	
              BUYER:

               

              LEGACY RESERVES OPERATING LP, by Legacy
                Reserves
                GP LLC, its general partner

            	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Cary
              D. Brown	 
	 	 	Cary
              D. Brown	 
	 	 	Chairman
              & Chief Executive Officer	 
	 	 	 	 

    

     

    
      
        
        

      

      
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