Document:

Exhibit
10.1

 

SETTLEMENT AGREEMENT, RELEASE,

AND PURCHASE & SALE AGREEMENT

 

This
SETTLEMENT AGREEMENT, RELEASE, AND PURCHASE &
SALE AGREEMENT (the “Agreement”) is entered into and effective this
26th day August 2010, by, between, and among: (1)(A) 
GLOBAL RIG COMPANY ASA, a corporation
organized under the laws of Norway; (B)   GLOBAL RIG ACTIVE 2 AS, a corporation organized under the
laws of Norway, and (C) NORAM DRILLING
COMPANY a Texas corporation (collectively “Global/NorAm”); and (2) WARREN E&P, INC., a New Mexico
corporation, or its designated affiliate (“Warren”).  Global/NorAm and Warren may be referred to
herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS:

 

REFERENCE is here made for all purposes to: (A) that certain Drilling Bid Proposal and Daywork
Drilling Contract, dated December 6, 2007, between Warren and Voorhees
Thomas LLC (“Voorhees”); and (B) that
certain Drilling Bid Proposal and Daywork Drilling Contract, dated July 2,
2008, between Warren and NorAm (collectively the “Drilling Contracts”).

 

REFERENCE is also here made to that certain Rig Purchase
Agreement, dated July 10, 2008, between Voorhees Rig International, Inc.
and Global Rig Company ASA (the “Rig Purchase Agreement”), which provides for
the purchase and sale of an oil and gas well drilling rig (the “Rig”) more
particularly described therein and in various Exhibits and Schedules attached
thereto.  The specifications for,
description of and component parts on the Rig are described in EXHIBIT “A” attached hereto and certain documentation
concerning the Rig is described in EXHIBIT “B” attached
hereto.

 

WHEREAS, various disputes concerning the Rig have arisen
between and among Global/NorAm and Warren under the Drilling Contracts and the
Rig Purchase Agreement.

 

WHEREAS, NorAm filed that certain lawsuit against Warren
styled NorAm Drilling Company v. Warren E&P, Inc.,
Cause No. 4:09-cv-01070 in the United States District Court for the
Southern District of Texas, Houston Division (the “NorAm Case”).

 

WHEREAS, Global Rig Company ASA and Global Rig Active 2 AS
filed that certain lawsuit against Warren styled Global Rig
Company ASA and Global Rig Active 2 AS v.  Warren
E&P, Inc., Cause No. 4:10-Cv-01682 in the United
States District Court for the Southern District of Texas, Houston Division (the
“Global Case”).

 

WHEREAS, the Parties have agreed to settle and resolve
their disagreements and dismiss the NorAm Case and the Global Case.

 

WHEREAS, as part of such settlement, Global/NorAm has
agreed to sell and Warren has agreed to purchase the Rig on the terms,
conditions, and provisions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual promises and
undertakings contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and agreed, and in
accordance with the terms, conditions, and provisions set forth below, the
Parties agree as follows:

 

ARTICLE I

 

Purchase and Sale of Rig

 

Section 1.01.  Global/NorAm agrees to and shall sell,
transfer and convey good and marketable title to the Rig, as more particularly
described in the Rig Purchase Agreement and Exhibits “A” and “B” attached
thereto, together with all associated fixtures, equipment and personal
property, to Warren in return for payment of the purchase price of
$7,000,000.00.

 

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Section 1.02.  Warren will pay one-half ($3,500,000.00) of
the purchase price within five (5) business days after full and complete
execution of this Agreement (the “Closing”), and shall pay the remaining
$3,500,000.00 of the purchase price in fifteen (15) equal monthly payments
commencing thirty (30) days after the date of the initial payment.

 

Section 1.03.  Warren shall take delivery of the Rig in
California and shall be responsible for and pay the costs of mobilization and
transportation of the Rig from its current location in Houston, Texas, to a
location in California to be determined by Warren.

 

Section 1.04.  Warren shall be responsible for and pay the
storage or rental charges for the Rig at its current location commencing on August 1,
2010, in the amount of $5,000.00 per month, payable to Seatrax, Inc.,
whose address is 13223 F.M. 529, Houston, Texas 77041.

 

ARTICLE II

 

Dismissal of Cases

 

Section 2.01.  Global/NorAm, on behalf of NorAm Drilling
Company, and Warren will dismiss the NorAm Case with prejudice at the Closing.

 

Section 2.02.  Global/NorAm, on behalf of Global Rig Company
ASA and Global Rig Active 2 AS, will dismiss the Global Case with prejudice at
the Closing.

 

ARTICLE III

 

Release and Indemnification

 

Section 3.01.  Global/NorAm hereby releases and discharges,
and agrees to indemnify and hold Warren, including its parent, affiliates,
subsidiaries, officers, directors, employees, and agents, harmless from any and
all claims, causes of action, demands, rights or liabilities for damages in
contract, in tort, under any statute or regulation, and/or derived directly or
indirectly from any statute or claims under federal, state, local or other
laws, including but not limited to, claims for compensatory damages, statutory
damages, extra-contractual damages, exemplary damages, consequential losses or
damages, interest, known or unknown, fixed or contingent, relating in any way
to any agreements, negotiations, or representations (unless otherwise provided
for herein) regarding the Rig, the Rig Purchase Agreement, the Drilling
Contracts, the NorAm Case, and the Global Case.

 

Section 3.02.  Warren hereby releases and discharges, and
agrees to indemnify and hold Global/NorAm, including its parent, affiliates,
subsidiaries, officers, directors, employees, and agents, harmless from any and
all claims, causes of action, demands, rights or liabilities for damages in
contract, in tort, under any statute or regulation, and/or derived directly or
indirectly from any statute or claims under federal, state, local or other
laws, including but not limited to, claims for compensatory damages, statutory
damages, extra-contractual damages, exemplary damages, consequential losses or
damages, interest, known or unknown, fixed or contingent, relating in any way
to any agreements,  negotiations, or
representations (unless otherwise provided for herein) regarding the Rig, the
Rig Purchase Agreement, the Drilling Contracts, the NorAm Case, and the Global
Case.

 

ARTICLE IV

 

Title and Representations Concerning the Rig

 

Section 4.01.  Except as provided for herein, Global/NorAm
will convey the Rig, including all associated equipment, fixtures, personal
property and documentation, to Warren in its “as is” and “where is” condition
with no warranties, either express or implied, as to its operation or
functionality in general or its components and equipment in particular.  This provision notwithstanding, Global/NorAm
represents that it owns clear, marketable title to the Rig and its associated
equipment, and that it can and will convey title to the Rig to Warren free and
clear of any liens, security interests, encumbrances, or third-party claims of
any kind.  Such conveyance shall be in a
form substantially similar to the Bill of Sale, Transfer and Assignment
attached hereto as EXHIBIT “C”.

 

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Section 4.02.  Global/NorAm also represents to Warren that
during the pendency of the NorAm Case it: (i) reviewed
the documentation and reports regarding the American Petroleum Institute (“API”)
inspection that resulted in the API certification plate presently mounted on
the Rig; (ii) confirmed to its satisfaction
that the mast and substructure on and of the Rig were and are API certified
pursuant to a Category IV inspection; (iii) conducted
and/or witnessed function testing and component testing on the Rig in general
and its components and equipment in particular; and (iv) prior
to taking delivery of the Rig in January of 2010, confirmed to its
satisfaction that the Rig in general and each component and piece of equipment
in particular functioned as contemplated by the Rig Purchase Agreement.  Global/NorAm is presently unaware of: (i) any defect or condition in, on or of the Rig that
would impair or prevent the Rig from functioning as contemplated by the Rig
Purchase Agreement and in accordance with industry standards; and (ii) any changes made to or modifications of the Rig or its
associated components and equipment after Global/NorAm took delivery of the Rig
in January of 2010 that would impair or prevent the Rig from functioning
as contemplated by the Rig Purchase Agreement and in accordance with industry
standards.

 

Section 4.03.  On or before the Closing, Global/NorAm shall
transfer to and provide Warren with all of the documentation described in EXHIBIT “B” attached hereto and as described in the Rig
Purchase Agreement.

 

ARTICLE V

 

Closing

 

Section 5.01.  Closing of the transactions contemplated by
this Agreement shall take place at a mutually agreeable geographical location
on or before five (5) business days after the date of full and complete
execution of this Agreement, but no later than August 31, 2010 (the “Closing”).

 

Section 5.02.  At the Closing, Global/NorAm shall: (A) execute, acknowledge and deliver to Warren the Bill
of Sale, Transfer and Assignment attached hereto as EXHIBIT “C”;   (B) deliver
originals of all documentation, technical specifications, manuals, rig books,
third party warranties, API certifications, books, records, materials, third
party consents and other personal property associated with the Rig, including
the documentation described in EXHIBIT “B”
attached hereto; (C) deliver to Warren any and
all filed and recorded releases and terminations of liens, security interests
and encumbrances on or covering the Rig, or copies thereof; (D) deliver possession of the Rig to Warren; (E) prepare, execute and file with the court forms of
Joint Dismissals with prejudice of the NorAm Case and the Global Case; (F) execute and deliver any and all other documents,
instruments or agreements provided for herein or that are or may be necessary
or reasonably required to fully effectuate the intent hereof.

 

Section 5.03.  At the Closing, Warren shall: (A) pay Global/NorAm one-half (1/2) of the purchase
price, or $3,500,000.00, in immediately available funds or by wire transfer; (B) provide evidence that the monthly storage rent and
fees have been and are being paid; (C) execute a Promissory Note in the form
substantially similar to the Promissory Note attached hereto as EXHIBIT “D”, including applicable
financing statements and security interests, acknowledging Warren’s obligation
to pay the remaining $3,500,000.00 of the purchase price, without
interest, in fifteen (15) equal monthly installments commencing thirty (30)
days after the date of Closing; (D) take
possession of and assume responsibility for the Rig; and (E) execute
and deliver any and all other documents, instruments or agreements provided for
herein or that are or may be necessary or required to fully effectuate the
intent hereof.

 

ARTICLE VI

 

Covenants and Agreements

 

Section 6.01.  Use,
Ownership, and Operation of the Rig. 
Until the Closing, as provided above, Global/NorAm: (i) shall use reasonable efforts to
maintain the Rig in a manner consistent with applicable industry standards and
its past practices, (ii) shall,
unless otherwise provided for herein, pay all costs, rental amounts, and
expenses attributable to the ownership or operation of the Rig relating to the
period prior to the transfer thereof to Warren,(iii) shall not, without Warren’s express written consent,
make or enter into any commitments reasonably anticipated to require future
capital expenditures by Warren in excess of $1,000.00 relating to the Rig, or
terminate, materially amend, or extend any contracts affecting the Rig, or
enter into or commit to enter into any new contract or agreement relating to
the Rig, or settle, compromise, or waive any material rights relating to the
Rig, (iv)shall

 

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maintain
insurance coverage on the Rig in the amounts and of the types presently in
force, (v) shall perform all
material obligations as the owner of the Rig promptly when due, (vi) shall maintain all applicable
permits, if any, related to the Rig, (vii)shall
not transfer, sell, hypothecate, encumber, or otherwise dispose of the Rig, (viii) shall not grant or create any
preferential right to purchase, right of first opportunity, or other transfer
restriction or requirement with respect to the Rig, and (ix) shall maintain the Rig in at least
as good a condition as it was on the date it acquired the Rig, subject to
normal wear, tear and obsolescence.

 

Section 6.02.  Public
Announcements.  Prior to the Closing,
neither Party shall make any press release or other public announcement
regarding the existence of this Agreement, the contents hereof or the
transactions contemplated hereby. 
Following the Closing, the Parties may make or issue a press please in form
and substance to be mutually agreed upon by the Parties.

 

ARTICLE VII

 

Representations and Warranties of Global/NorAm

 

Global/NorAm
represents and warrants to Warren as set forth below, and makes the same
representations and warranties again at the Closing.

 

Section 7.01.  Existence.  Global/NorAm is a corporation duly formed,
organized, validly existing, and in good standing under the laws of the State
of Texas or the country of Norway, as the case may be. Global/NorAm has full
legal power, right, and authority to conduct its business as such is now being
conducted.

 

Section 7.02.  Legal
Power.  Global/NorAm has the legal
power and right to enter into and perform this Agreement and the transactions
contemplated hereby. The consummation of the transactions contemplated by this
Agreement do not and will not violate, or be in conflict with any provision of
Global/NorAm’s formation documents or other governing documents.

 

Section 7.03.  Execution.  The execution, delivery, and performance of
this Agreement and the transactions contemplated hereby have been and are duly
and validly authorized by all requisite corporate, company, or other action on
the part of Global/NorAm. This Agreement constitutes the legal, valid, and
binding obligation of Global/NorAm enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, or other laws
relating to or affecting the rights of creditors generally, and by general
equitable principles.

 

Section 7.04.  Brokers.  No broker or finder is entitled to any
brokerage or finder’s fee, or to any commission, based in any way on
agreements, arrangements, or understandings made by or on behalf of
Global/NorAm or any affiliate of Global/NorAm for which Warren has, may or will
have any liabilities or obligations (contingent or otherwise).

 

Section 7.05.  Bankruptcy.  There are no bankruptcy, reorganization, or
arrangement proceedings pending, being contemplated by or, to the knowledge of
Global/NorAm, threatened against Global/NorAm. 
Global/NorAm is not “insolvent” as such term is defined under the
Federal Bankruptcy Code or any fraudulent transfer or fraudulent conveyance
statute applicable to the transactions contemplated by this Agreement.

 

Section 7.06.  Suits
and Claims.  There is no litigation,
lawsuit, or claim that have been filed by any person or entity or by any
administrative agency or governmental authority in any legal, administrative,
or arbitration proceeding or, to the knowledge of Global/NorAm, threatened
against Global/NorAm or the Rig that would impede Global/NorAm’s ability to
consummate the transactions contemplated herein or would have a material and
adverse effect on the Rig.

 

Section 7.07.  Taxes.  During the period of Global/NorAm’s ownership
of the Rig up to and including the Closing, Global/NorAm has caused to be
timely filed all material tax returns relating to the Rig.  Global/NorAm has paid or caused to be paid
all ad valorem, property, documentary, and similar taxes based upon or measured
by its ownership of the Rig.  Global/NorAm
has not received written notice of any pending claim against Global/NorAm from
any applicable taxing authority for assessment of taxes with respect to the
Rig.  There are no audits of

 

4

 

Global/NorAm
by any applicable taxing authority with respect to taxes attributable to the
Rig.  There are no tax liens on or with
respect to the Rig.

 

Section 7.08.  Contracts.  Global/NorAm is not in breach of any
contracts applicable to the Rig, and all contracts, if any, applicable to the
Rig, are in full force and effect in accordance with their terms.

 

Section 7.09.  Insurance.  Global/NorAm maintains and through the
Closing will maintain the insurance coverage currently in effect on or with
respect to the Rig.

 

Section 7.10.  Personal
Property and Equipment.  Subject to
the first sentence of Section 4.01, Global/NorAm is the owner of the Rig
and associated equipment and personal property free and clear of all liens and
encumbrances.  Global/NorAm has not
removed any personal property, equipment, or fixtures from the Rig, unless the
same have been replaced with personal property, equipment, or fixtures of
similar grade, quality and utility.

 

Section 7.11.  No
Alienation.  Prior to the Closing,
Global/NorAm has not voluntarily or involuntarily sold, assigned, conveyed or
transferred or contracted to sell, assign, convey or transfer any right or
title to, or interest in, the Rig.

 

Section 7.12.  Property
Expenses.  Unless otherwise provided
for herein, Global/NorAm has paid and will until the Closing pay all rental
amounts and miscellaneous expenses attributable to the Rig.

 

Section 7.13.  Governmental
Permits.  Unless otherwise provided
for herein, Global/NorAm has and will maintain all applicable permits
(including, without limitation, permits, licenses, approval registrations,
notifications, exemptions, and any other authorizations pursuant to applicable
law) that are or may be necessary, appropriate or related to the Rig.

 

Section 7.14.  No
Adverse Change.  Subject to the first
sentence of Section 4.01, the Rig has been maintained in the ordinary
course of business consistent with past practices and applicable industry
standards, and there has been no event or series of events that have either
individually or in combination had a material adverse effect on the Rig.

 

Section 7.15.  Representations
and Warranties Exclusive.  Subject to
the first sentence of Section 4.01, all representations and warranties
contained in this Agreement are exclusive, and are given in lieu of all other
representations and warranties, express, implied, or statutory.

 

ARTICLE VIII

 

Representations and Warranties of Warren

 

Warren represents and warrants to Global/NorAm as
set forth below, and makes the same representations and warranties again at the
Closing.

 

Section 8.01.  Existence.  Warren is a
corporation duly formed, organized, validly existing, and in good standing
under the laws of the state of New Mexico, and has full legal power, right, and
authority to carry on its business in the state of California as such is now
being conducted.

 

Section 8.02.  Legal Power.  Warren has
the legal power and right to enter into and perform this Agreement and the
transactions contemplated hereby. The consummation of the transactions
contemplated by this Agreement does not and will not violate, or be in conflict
with, any provision of Warren’s formation documents or other governing
documents.

 

Section 8.03.  Execution.  The execution, delivery, and performance of
this Agreement and the transactions contemplated hereby have been and are duly
and validly authorized by all corporate action on the part of Warren. This
Agreement constitutes the legal, valid, and binding obligation of Warren
enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency or other laws relating to or affecting the rights of
creditors generally, and by general equitable principles.

 

5

 

Section 8.04.  Brokers.  No broker or finder is entitled to any
brokerage or finder’s fee, or to any commission, based in any way on
agreements, arrangements, or understandings made by or on behalf of Warren or
any affiliate of Warren for which Global/NorAm has or will have any liabilities
or obligations (contingent or otherwise).

 

Section 8.05.  Bankruptcy. 
There are no bankruptcy, reorganization, or arrangement proceedings
pending, being contemplated by or, to the knowledge of Warren, threatened
against Warren.

 

Section 8.06.  Suits
and Claims.  There is no claim by any
person or entity or by any administrative agency or governmental authority and
no legal, administrative, or arbitration proceeding pending or, to Warren’s
knowledge, threatened against Warren that is reasonably likely to have a
material effect on Warren’s ability to consummate the transactions contemplated
herein.

 

Section 8.07.  Securities
Laws.  Warren is acquiring the Rig
for its own account or that of its affiliates and not with a view to, or for
offer of resale in connection with, a distribution thereof, within the meaning
of the Securities Act of 1933, 15 U.S.C. § 77a et
seq., and any other rules, regulations, and laws pertaining to the
distribution of securities. Warren has not sought or solicited, nor is Warren
participating with, investors, partners, or other third parties in order to
fund the purchase price and to close this transaction, and all funds to be used
by Warren in connection with this transaction are Warren’s own funds.

 

Section 8.08.  No
Investment Company.  Warren is not (a) an investment company or a company
controlled by an investment company within the meaning of the Investment
Company Act of 1940, as amended, or (b) subject
in any respect to the provisions of that Act.

 

Section 8.09.  Representations
and Warranties Exclusive.  All
representations and warranties contained in Article VIII are exclusive,
and are given in lieu of all other representations and warranties, express,
implied, or statutory.

 

ARTICLE IX

 

Conditions Precedent to the Obligations of Global/NorAm

 

The
obligations of Global/NorAm to consummate the transactions provided for herein
are subject, at the option of Global/NorAm, to the fulfillment on or prior to
the Closing of each of the following conditions:

 

Section 9.01.  Representations.  The representations and warranties of Warren
contained herein shall be true and correct in all material respects at the
Closing as though made on and as of such date.

 

Section 9.02.  Performance.  Warren shall have performed all material
obligations, covenants and agreements contained in this Agreement to be
performed or complied with by it at or prior to the closing.

 

Section 9.03.  Pending
Matters.  No suit, action, or other
proceeding shall be pending or threatened that seeks to, or could reasonably
result in, a judicial order, judgment, or decree that would restrain, enjoin,
or otherwise prohibit the consummation of the transactions contemplated by this
Agreement.

 

Section 9.04.    Title Transfer.   Legal
title to the Rig will transfer from NorAm to Warren at the Closing, subject to
Warren’s full performance of its obligations under the Promissory Note attached
hereto as EXHIBIT “D”, and
applicable financing statements and security interests securing the payment and
performance of such Promissory Note. 
Until such payment and performance occurs, NorAm shall retain its lien
on the Rig and each and every other right, at law or in equity, with respect to
the Rig.

 

6

 

ARTICLE X

 

Conditions Precedent to the Obligations of Warren

 

The
obligations of Warren to consummate the transactions provided for herein are
subject, at the option of Warren, to the fulfillment at or prior to the Closing
of each of the following conditions:

 

Section 10.01.  Representations.  The representations and warranties of
Global/NorAm contained herein shall be true and correct in all material
respects at the Closing as though made on and as of such date.

 

Section 10.02.  Performance.  Global/NorAm shall have performed all
material obligations, covenants, and agreements contained in this Agreement to
be performed or complied with by it and them at or prior to the Closing.

 

Section 10.03.  Pending
Matters.  No suit, action, or other
proceeding shall be pending or threatened that seeks to, or could reasonably
result in, a judicial order, judgment, or decree that would restrain, enjoin,
or otherwise prohibit the consummation of the transactions contemplated by this
Agreement.

 

ARTICLE XI

 

Indemnification

 

Section 11.01.  Application
of Indemnities.  All indemnities and
indemnification obligations set forth in this Agreement extend to the Parties
and their respective officers, directors, partners, managers, members,
shareholders, agents, contractors, employees, and affiliates of the indemnified
Party (“Representatives”).

 

A.                                    UNLESS THIS AGREEMENT EXPRESSLY PROVIDES TO THE CONTRARY, THE INDEMNITY,
RELEASE, WAIVER AND ASSUMPTION PROVISIONS SET FORTH HEREIN APPLY, REGARDLESS OF
WHETHER THE INDEMNIFIED PARTY (OR ITS REPRESENTATIVES) CAUSES, IN WHOLE OR
PART, AN INDEMNIFIED CLAIM, INCLUDING INDEMNIFIED CLAIMS ARISING OUT OF OR
RESULTING, IN WHOLE OR IN PART, FROM, OUT OF, OR IN CONNECTION WITH THE
SOLE, JOINT, OR CONCURRENT NEGLIGENCE (BUT NOT SECURITIES FRAUD CLAIMS THAT
REQUIRE SCIENTER OR KNOWLEDGE AS ONE ELEMENT OF THE CAUSE OF ACTION, GROSS
NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD BY THE INDEMNIFIED PARTY),  STRICT LIABILITY, OR OTHER LEGAL FAULT OF THE
INDEMNIFIED PARTY OR ANY OF ITS REPRESENTATIVES.

 

B.                                    NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY, AND EACH
PARTY RELEASES THE OTHER PARTY FROM AND WAIVES ANY AND ALL LOSSES, COSTS,
EXPENSES, OR DAMAGES ARISING UNDER THIS AGREEMENT OR IN CONNECTION WITH OR WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT FOR ANY AMOUNT IN
EXCESS OF THE ACTUAL COMPENSATORY DAMAGES SUFFERED BY SUCH PARTY. THE PARTIES
WAIVE AND RELEASE EACH OTHER FROM ANY RIGHT TO RECOVER PUNITIVE, SPECIAL,
EXEMPLARY, AND CONSEQUENTIAL DAMAGES ARISING IN CONNECTION WITH OR WITH RESPECT
TO THE TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT; PROVIDED, HOWEVER, ANY SUCH
DAMAGES RECOVERED BY A THIRD PARTY (OTHER THAN SUBSIDIARIES, AFFILIATES, OR
PARENTS OF A PARTY) FOR WHICH A PARTY OWES THE OTHER PARTY AN INDEMNITY UNDER
THIS AGREEMENT SHALL NOT BE WAIVED. THE PARTIES ACKNOWLEDGE THAT THIS STATEMENT
IS CONSPICUOUS.

 

Section 11.02.  Warren’s
Indemnity.  Warren shall release,
indemnify, defend and hold Global/NorAm and its Representatives harmless from
and against any and all claims, demands, costs, charges, expenses, fees, causes
of action, suits, proceedings, damages, and attorney fees caused by, resulting
from, or attributable to (a) any
inaccuracy 

 

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of
any representation or warranty of Warren set forth in this Agreement, or (b) any breach of or failure to
perform or satisfy any of the covenants and obligations of Warren hereunder.

 

Section 11.03.  Global/NorAm’s
Indemnity.  Global/NorAm shall
release, indemnify, defend and hold Warren and its Representatives harmless
from and against any and all claims, demands, costs, charges, expenses, fees,
causes of action, suits, proceedings, damages, and attorney fees caused by,
resulting from, or attributable to (a) any
inaccuracy of any representation or warranty of Global/NorAm set forth in this Agreement,
subject to the terms hereof; or (b) any
breach of or failure to perform or satisfy any of the covenants and obligations
of Global/NorAm hereunder.

 

ARTICLE XII

 

Resolution of Disputes

 

In
the event any dispute or disagreement between the Parties arising out of or
related to this Agreement, the Parties shall, in good faith, attempt to resolve
such dispute amicably.  In the event such
discussions and negotiations do not result in the resolution of the dispute
within a period of thirty (30) calendar days, then all disputes arising out of,
in connection with or in any way relating to this Agreement shall be resolved
by final and binding arbitration or alternative dispute resolution before a
single arbitrator.  The arbitration shall
be conducted by and before Judge David Hittner of the United States District
Court for the Southern District of Texas, Houston Division, or before a federal
magistrate judge or other party designated by Judge Hittner, according to
applicable court, dispute resolution or mediation rules designated or
adopted by Judge Hittner.

 

ARTICLE XIII

 

General Provisions

 

Section 13.01.  Further Assurances.  The Parties agree to and shall perform such
acts, take such actions and enter into, execute and perform any and all
additional or supplemental instruments, documents, contracts and agreements
that are or may be necessary, advisable or required to perform and carry out
that transactions contemplated by this Agreement, fully comply with and perform
the terms, conditions, and provisions contained herein, and fully effectuate
the intent hereof.

 

Section 13.02.  Expenses.  Each Party shall be solely responsible for
all expenses, including due diligence expenses, incurred by it in connection
with this transaction, and neither Party shall be entitled to any reimbursement
for any such expenses from the other Party.

 

Section 13.03.  Document
Retention.  As used in this Section 13.03,
the term “Documents” means all files, documents, books, records, and other data
delivered to Warren by Global/NorAm pursuant to the provisions of this
Agreement (other than those that Global/NorAm has retained a copy of),
including financial, tax and accounting records; title, specification,
warranty, and ownership files; contracts; engineering design and related files;
and books and records related to the use and ownership of the Rig on or prior
to the Closing date. Warren shall retain and preserve the Documents for a
period of no less than five (5) years following the Closing date (or for
such longer period as may be required by applicable laws of any governmental
authority), and shall allow Global/NorAm or its representatives to inspect the
Documents at reasonable times and upon reasonable notice during regular
business hours during such time period. Global/NorAm shall have the right
during such period to make copies of any of the Documents at its expense.

 

Section 13.04.  Entire
Agreement.  This Agreement, including
the documents to be executed and delivered hereunder, and the exhibits,
schedules, and appendices attached hereto, constitute the entire agreement
between the Parties pertaining to the subject matter hereof.  This Agreement supersedes all prior
agreements, understandings, negotiations, and discussions, whether oral or
written, of the Parties pertaining to the subject matter hereof.

 

Section 13.05.  Amendments.  No supplement, amendment, alteration,
modification, or waiver of this Agreement shall be binding unless and until
executed in writing by each of the Parties and specifically referencing this
Agreement.

 

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Section 13.06.  Waiver.  No waiver of any provision of this Agreement
shall be deemed to or shall constitute a waiver of any other term, condition or
provision hereof (whether or not similar), and any such waiver shall not
constitute a continuing waiver unless otherwise expressly provided for herein.

 

Section 13.07.  Construction.  The headings, titles, and 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.

 

Section 13.08.  No Third
Party Beneficiaries.  Nothing in this
Agreement shall provide any benefit to any third party or entitle any third
party to any claim, cause of action, remedy, or right of any kind, and the
Parties agree that this Agreement shall not be construed as a third party
beneficiary contract.

 

Section 13.09.  Assignment.  Neither Party may assign this Agreement in
whole or in part or delegate any of its rights or duties hereunder to any
individual or entity without first obtaining the prior written consent of the
other Party, and any assignment made without such consent shall be void.

 

Section 13.10.  Binding
Effect/Benefit.  This Agreement shall
be binding upon and inure to the benefit of the Parties and their respective
permitted successors, assignees, and legal representatives.

 

Section 13.11.  Governing
Law; Venue.  This Agreement, the
other documents delivered pursuant hereto, and the legal relationship between
the Parties shall be governed by and construed in accordance with the laws of
the State of Texas. Any arbitration proceeding, alternative dispute resolution,
proceeding, or litigation arising out of this Agreement shall be brought before
the federal court sitting in the City of Houston, Harris County, Texas, and the
Parties irrevocably waive any right to a jury trial or to choose or request any
other venue.

 

Section 13.12.  Notices.  Any notice, communication, request,
instruction, or other document required or permitted hereunder shall be given
in writing and delivered in person or sent by U.S. Mail postage prepaid, return
receipt requested, overnight delivery service, electronically, or by facsimile
to the addresses of the Parties set forth below. Any such notice shall be
effective and deemed given only upon receipt.

 

	
  Global/NorAm:

  	
   

  	
  Global
  Rig Company ASA

  Global
  Rig Active 2 AS

  NorAm
  Drilling Company

  Attn:  Bruce Seeley

  2000
  South Dairy Ashford, Suite 465

  Houston,
  Texas 77077

  Telephone:  (281) 598-9200

  Facsimile:  (281) 598-9220

  Email:bas@noramdrilling.com

  
	
   

  	
   

  	
   

  
	
  Warren:

  	
   

  	
  Warren
  E&P, Inc.

  100
  Oceangate, Suite 950

  Long
  Beach, CA 90802

  Attn:
  Bob Dowell, Drilling Manager

  Telephone:
  562.590.0909

  Facsimile:
  562.590.3546

  Email:
  bdowell@warrenresources.com

  

 

Either
Party may, by written notice delivered to the other Party, change its address
for notice purposes hereunder.

 

Section 13.13.  Severability.  If any term, condition or provision of this
Agreement is determined or held to be invalid, illegal, or incapable of being
enforced by any rule of law, court, tribunal or public policy, then all
other terms, conditions and provisions of this Agreement shall nevertheless
remain in full force and effect; such invalid provision shall be deleted
herefrom or reformed to the extent necessary to make the same valid; and the
Parties shall negotiate in good faith to modify this Agreement in order to
effect their original intent as closely as possible in an acceptable manner for
purposes of closing the transactions contemplated hereby.

 

9

 

Section 13.14.  Interpretation.  This Agreement shall be deemed and considered
for all purposes to have been jointly prepared by the Parties, and shall not be
construed against any one Party (nor shall any inference or presumption be
made) on the basis of who drafted this Agreement or any particular provision
hereof, who supplied the form of Agreement, or any other event of the
negotiation, drafting, or execution of this Agreement. Each Party agrees that
this Agreement has been purposefully written and correctly reflects its
understanding of the transaction that it contemplates. In construing this
Agreement, the following principles will apply:

 

A.            A defined term has its defined meaning throughout this Agreement and each
exhibit and schedule attached to this Agreement, regardless of whether it
appears before or after the place where it is defined.

 

B.            If there is any conflict or inconsistency between the provisions of the
main body of this Agreement and the provisions of any exhibit or schedule
attached hereto, the provisions of this Agreement shall take precedence. If
there is any conflict between the provisions of any transaction documents
attached to this Agreement as an exhibit and the provisions of any transaction
documents actually executed by the Parties, the provisions of the executed
transaction documents shall take precedence.

 

C.            Schedules and exhibits referred to herein are hereby incorporated and
made a part of this Agreement for all purposes by such reference.

 

D.            The articles, sections, exhibits, and schedules referenced in this
Agreement refer to the articles, sections, exhibits, and schedules of this
Agreement. The headings and titles in this Agreement are for convenience only
and shall have no significance in interpreting or otherwise affect the meaning
of this Agreement.

 

E.              The plural shall be deemed to include the singular, and vice versa, and
the masculine, feminine and neuter genders shall be deemed to include the
others.

 

Section 13.15.  Time of
the Essence.  Time shall be of the
essence with respect to all terms, conditions and provisions set forth in this
Agreement, the transactions contemplated hereby, and the performance by the
Parties hereunder.

 

Section 13.16.  Counterpart
Execution.  This Agreement may be
executed in any number of counterparts, and each counterpart hereof shall be
effective as to the Parties that execute the same whether or not all of the
Parties execute the same original or counterpart. If counterparts of this Agreement
are executed, the signature pages from various counterparts may be
combined into one composite instrument for all purposes. All counterparts
together shall constitute only one Agreement, but each counterpart shall be
considered an original.  In the event
this Agreement is delivered by facsimile transmission or by e-mail delivery,
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 email signature page were an original
thereof.

 

	
  Global/NorAm:

  	
   

  	
  Warren;

  
	
   

  	
   

  	
   

  
	
  GLOBAL
  RIG COMPANY ASA,

  	
   

  	
  WARREN
  E&P, INC.,

  
	
  a
  Norwegian corporation

  	
   

  	
  a
  New Mexico corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ JAN SKARA

  	
   

  	
  By:

  	
  /s/ ELLIS G. VICKERS

  
	
  JAN SKARA, President

  	
   

  	
  ELLIS G. VICKERS,

  
	
   

  	
   

  	
  Senior
  Vice President

  
	
   

  	
   

  	
   

  
	
  GLOBAL
  RIG ACTIVE 2 AS,

  	
   

  	
   

  
	
  a
  Norwegian corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ JAN SKARA

  	
   

  	
   

  
	
  JAN SKARA, President

  	
   

  	
   

  

 

10

 

	
  NORAM
  DRILLING COMPANY,

  	
   

  	
   

  
	
  a
  Texas corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ BRUCE SEELEY

  	
   

  	
   

  
	
  BRUCE SEELEY, President

  	
   

  	
   

  
				

 

11Exhibit
10.2

 

SECURED PROMISSORY NOTE

 

IN RETURN FOR valuable consideration received, WARREN
E&P, INC., a New Mexico corporation (the “Maker”), whose
address is 100 Oceangate, Suite 950, Long Beach, CA 90802, hereby promises
and agrees to pay to NORAM DRILLING COMPANY,
a Texas corporation, for the benefit of GLOBAL RIG COMPANY ASA, a
Norwegian corporation  (the “Payee”),
whose address is 2000 South Dairy Ashford, Suite 465 Houston, Texas 77077,
the principal sum of THREE MILLION FIVE HUNDRED
THOUSAND AND 00/100 DOLLARS ($3,500,000.00), with no, or zero (-0-)
percent, interest on the outstanding principal balance until this PROMISSORY NOTE (the “Note”) is paid in full, according to
the payment terms set forth below.

 

The principal amount of this Note
shall be due and payable in fifteen (15) equal monthly installments of
$233,333.33 each commencing on September 26, 2010, and continuing
regularly thereafter on the 26th day of each month until the entire principal
amount hereof is paid in full as provided for herein.

 

Time is of the essence in this
Note.  Upon any default in the payment of
the principal due under the terms hereof, the Payee, after giving twenty (20)
days written notice to the Maker within which to cure the default, may, at any
time after said twenty (20) day period and without notice, demand, presentment
or notice of dishonor, accelerate the maturity date of this indebtedness and
declare the entire principal balance hereof due and payable.

 

Maker expressly and severally waives
all notices, demands for payment, presentations for payment, notice of
acceleration of maturity, protest and notice of protest, as to this Note and as
to each, every and all installments hereof, and consents that Payee may at any
time, and from time to time, upon the request of or by agreement with Maker,
extend the date of maturity or change the time or method of payment without
notice to any endorsers, guarantors or sureties, who shall remain liable for
the payment of this Note.

 

Maker hereby binds itself, and its
successors and assignees, and agrees that if this Note is placed in the hands
of an attorney for collection or is collected by and through any character of
judicial proceeding (including probate or bankruptcy proceedings), then the
Maker shall pay, in addition to the other sums payable hereunder, reasonable
attorney’s fees and applicable court and collection costs.

 

This Note is
subject to and secured by those certain UCC-1 Form Financing Statements
executed by and from the Maker to in favor of the Payee of even date herewith,
covering a drilling rig, equipment, components and personal property more
particularly described therein, that will be filed in the California Secretary
of State’s Office and in the Los Angeles County California Recorder’s Office,
which secure the payment obligations contained herein.  The terms, conditions and provisions of such
UCC-1 Form Financing Statements are incorporated herein for all purposes
by this specific reference.

 

This Note is
subject to:

 

1.              That certain
SETTLEMENT AGREEMENT, RELEASE AND  PURCHASE AND SALE AGREEMENT dated
August 26, 2010 between Maker, as the Buyer, and Payee, as the Seller,
which governs the purchase and sale between the Maker to the Payee of a certain
drilling rig, equipment, components and personal property more particularly
described therein; and

 

2.              That certain
BILL OF SALE, TRANSFER AND ASSIGNMENT
dated August 26, 2010, from the Payee, as Seller, to the Maker, as Buyer,
which transfers from the Payee to the Maker a certain drilling rig, equipment,
components and personal property more particularly described therein.

 

The terms,
conditions and provisions of the above-described instruments are incorporated
herein for all purposes by this specific reference.

 

In the event the Payee fails or
refuses to comply with, perform under or in accordance with or defaults under
or pursuant to the SETTLEMENT AGREEMENT,
RELEASE AND PURCHASE AND SALE AGREEMENT or the BILL OF
SALE, TRANSFER AND ASSIGNMENT described above, then the Maker may

 

 

pay any and all amounts required thereby
for and on behalf of the Payee, and may offset, take credit against and reduce
the amount of, in whole or in part, any subsequent monthly installments due
under the terms of this Note until such time as the Maker has recovered the
value of any and all such payments made for and on behalf of the Payee; at
which time the Maker shall resume paying the monthly installments required
hereby.

 

Neither the Maker nor the Payee may
sell, transfer or assign this Note without first obtaining the prior written
consent of the other party, which shall not be unreasonably withheld.

 

Waiver of any default, or the remedy
of any default, in a reasonable manner by either party, shall not operate as a
waiver of the default as remedied or any prior or subsequent default.

 

This Note shall be construed,
governed, enforced and interpreted under, in accordance with and by the laws
and decisions of the State of Texas.

 

DATED, EXECUTED and EFFECTIVE this 26th day of August, 2010.

 

	
   

  	
   

  	
  Maker:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WARREN E&P, INC.,

  
	
   

  	
   

  	
  a New Mexico corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  ELLIS G. VICKERS

  
	
   

  	
   

  	
   

  	
  ELLIS G. VICKERS,

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED and AGREED TO

  	
   

  	
   

  
	
  on and as of August 26, 2010.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Payee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NORAM DRILLING COMPANY,

  	
   

  	
   

  
	
  a Texas corporation (for the
  benefit of

  	
   

  	
   

  
	
  GLOBAL RIG COMPANY ASA,

  	
   

  	
   

  
	
  a Norwegian corporation)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  BRUCE SEELEY

  	
   

  	
   

  
	
   

  	
  BRUCE SEELEY, President

  	
   

  	
   

  

 

2

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