Document:

exv4w2

EXHIBIT 4.2

FORM OF SUBORDINATED INDENTURE

 

BRISTOW GROUP INC.

as Issuer

and

THE POTENTIAL SUBSIDIARY GUARANTORS

LISTED ON THE SIGNATURE PAGES HERETO

as Potential Subsidiary Guarantors

and

U.S. BANK NATIONAL ASSOCIATION

as Trustee

 

Indenture

Dated as of                     ____, ____

 

Subordinated Debt Securities

 

 

 

BRISTOW GROUP INC.

Reconciliation and tie between Trust Indenture Act of 1939

and Indenture, dated as of                      ___, ___

 

	 	 	 	 	 
	Section of	 	 	 	 
	Trust Indenture	 	 	 	Section(s) of
	Act of 1939	 	 	 	Indenture
	§ 310
	 	(a)(1)	 	7.10
	 
	 	(a)(2)	 	7.10
	 
	 	(a)(3)	 	Not Applicable
	 
	 	(a)(4)	 	Not Applicable
	 
	 	(a)(5)	 	7.10
	 
	 	(b)	 	7.08, 7.10
	§ 311
	 	(a)	 	7.11
	 
	 	(b)	 	7.11
	 
	 	(c)	 	Not Applicable
	§ 312
	 	(a)	 	2.07
	 
	 	(b)	 	12.03
	 
	 	(c)	 	12.03
	§ 313
	 	(a)	 	7.06
	 
	 	(b)	 	7.06
	 
	 	(c)	 	7.06
	 
	 	(d)	 	7.06
	§ 314
	 	(a)	 	4.03, 4.04
	 
	 	(b)	 	Not Applicable
	 
	 	(c)(1)	 	12.04
	 
	 	(c)(2)	 	12.04
	 
	 	(c)(3)	 	Not Applicable
	 
	 	(d)	 	Not Applicable
	 
	 	(e)	 	12.05
	§ 315
	 	(a)	 	7.01(b)
	 
	 	(b)	 	7.05
	 
	 	(c)	 	7.01(a)
	 
	 	(d)	 	7.01(c)
	 
	 	(d)(1)	 	7.01(c)(1)
	 
	 	(d)(2)	 	7.01(c)(2)
	 
	 	(d)(3)	 	7.01(c)(3)
	 
	 	(e)	 	6.11
	§ 316
	 	(a)(1)(A)	 	6.05
	 
	 	(a)(1)(B)	 	6.04
	 
	 	(a)(2)	 	Not Applicable
	 
	 	(a)(last sentence)	 	2.11
	 
	 	(b)	 	6.07
	§ 317
	 	(a)(1)	 	6.08
	 
	 	(a)(2)	 	6.09
	 
	 	(b)	 	2.06
	§ 318
	 	(a)	 	12.01

 

			
	Note:	 	This reconciliation and tie shall not, for any purpose, be deemed to be a part of the
Indenture.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	1	 
	 
	 	 	 	 
	SECTION 1.01 Definitions
	 	 	1	 
	SECTION 1.02 Other Definitions
	 	 	6	 
	SECTION 1.03 Incorporation by Reference of Trust Indenture Act
	 	 	6	 
	SECTION 1.04 Rules of Construction
	 	 	7	 
	 
	 	 	 	 
	ARTICLE II THE SECURITIES
	 	 	7	 
	 
	 	 	 	 
	SECTION 2.01 Amount Unlimited; Issuable in Series
	 	 	7	 
	SECTION 2.02 Denominations
	 	 	10	 
	SECTION 2.03 Forms Generally
	 	 	11	 
	SECTION 2.04 Execution, Authentication, Delivery and Dating
	 	 	11	 
	SECTION 2.05 Registrar and Paying Agent
	 	 	13	 
	SECTION 2.06 Paying Agent to Hold Money in Trust
	 	 	13	 
	SECTION 2.07 Holder Lists
	 	 	14	 
	SECTION 2.08 Transfer and Exchange
	 	 	14	 
	SECTION 2.09 Replacement Securities
	 	 	15	 
	SECTION 2.10 Outstanding Securities
	 	 	15	 
	SECTION 2.11 Original Issue Discount, Foreign-Currency
Denominated and Treasury Securities
	 	 	15	 
	SECTION 2.12 Temporary Securities
	 	 	16	 
	SECTION 2.13 Cancellation
	 	 	16	 
	SECTION 2.14 Payments; Defaulted Interest
	 	 	16	 
	SECTION 2.15 Persons Deemed Owners
	 	 	17	 
	SECTION 2.16 Computation of Interest
	 	 	17	 
	SECTION 2.17 Global Securities; Book-Entry Provisions
	 	 	17	 
	 
	 	 	 	 
	ARTICLE III REDEMPTION
	 	 	19	 
	 
	 	 	 	 
	SECTION 3.01 Applicability of Article
	 	 	19	 
	SECTION 3.02 Notice to the Trustee
	 	 	19	 
	SECTION 3.03 Selection of Securities To Be Redeemed
	 	 	20	 
	SECTION 3.04 Notice of Redemption
	 	 	20	 
	SECTION 3.05 Effect of Notice of Redemption
	 	 	21	 
	SECTION 3.06 Deposit of Redemption Price
	 	 	21	 
	SECTION 3.07 Securities Redeemed or Purchased in Part
	 	 	22	 
	SECTION 3.08 Purchase of Securities
	 	 	22	 
	SECTION 3.09 Mandatory and Optional Sinking Funds
	 	 	22	 
	SECTION 3.10 Satisfaction of Sinking Fund Payments with Securities
	 	 	22	 
	SECTION 3.11 Redemption of Securities for Sinking Fund
	 	 	23	 
	 
	 	 	 	 
	ARTICLE IV COVENANTS
	 	 	23	 
	 
	 	 	 	 
	SECTION 4.01 Payment of Securities
	 	 	23	 

i 

 

	 	 	 	 	 
	 	 	Page	 
	SECTION 4.02 Maintenance of Office or Agency
	 	 	24	 
	SECTION 4.03 SEC Reports; Financial Statements
	 	 	24	 
	SECTION 4.04 Compliance Certificate
	 	 	25	 
	SECTION 4.05 Corporate Existence
	 	 	25	 
	SECTION 4.06 Waiver of Stay, Extension or Usury Laws
	 	 	25	 
	SECTION 4.07 Additional Amounts
	 	 	26	 
	 
	 	 	 	 
	ARTICLE V SUCCESSORS
	 	 	26	 
	 
	 	 	 	 
	SECTION 5.01 Limitations on Mergers and Consolidations
	 	 	26	 
	SECTION 5.02 Successor Person Substituted
	 	 	27	 
	 
	 	 	 	 
	ARTICLE VI DEFAULTS AND REMEDIES
	 	 	27	 
	 
	 	 	 	 
	SECTION 6.01 Events of Default
	 	 	27	 
	SECTION 6.02 Acceleration
	 	 	29	 
	SECTION 6.03 Other Remedies
	 	 	30	 
	SECTION 6.04 Waiver of Defaults
	 	 	30	 
	SECTION 6.05 Control by Majority
	 	 	30	 
	SECTION 6.06 Limitations on Suits
	 	 	31	 
	SECTION 6.07 Rights of Holders to Receive Payment
	 	 	31	 
	SECTION 6.08 Collection Suit by Trustee
	 	 	31	 
	SECTION 6.09 Trustee May File Proofs of Claim
	 	 	32	 
	SECTION 6.10 Priorities
	 	 	32	 
	SECTION 6.11 Undertaking for Costs
	 	 	33	 
	 
	 	 	 	 
	ARTICLE VII TRUSTEE
	 	 	33	 
	 
	 	 	 	 
	SECTION 7.01 Duties of Trustee
	 	 	33	 
	SECTION 7.02 Rights of Trustee
	 	 	34	 
	SECTION 7.03 May Hold Securities
	 	 	35	 
	SECTION 7.04 Trustee’s Disclaimer
	 	 	35	 
	SECTION 7.05 Notice of Defaults
	 	 	35	 
	SECTION 7.06 Reports by Trustee to Holders
	 	 	35	 
	SECTION 7.07 Compensation and Indemnity
	 	 	36	 
	SECTION 7.08 Replacement of Trustee
	 	 	36	 
	SECTION 7.09 Successor Trustee by Merger, etc.
	 	 	38	 
	SECTION 7.10 Eligibility; Disqualification
	 	 	38	 
	SECTION 7.11 Preferential Collection of Claims
Against the Company or a Subsidiary Guarantor
	 	 	39	 
	 
	 	 	 	 
	ARTICLE VIII DISCHARGE OF INDENTURE
	 	 	39	 
	 
	 	 	 	 
	SECTION 8.01 Termination of the Company’s and the Subsidiary
Guarantors’ Obligations
	 	 	39	 
	SECTION 8.02 Application of Trust Money
	 	 	43	 
	SECTION 8.03 Repayment to Company
	 	 	43	 
	SECTION 8.04 Reinstatement
	 	 	43	 
	 
	 	 	 	 
	ARTICLE IX SUPPLEMENTAL INDENTURES AND AMENDMENTS
	 	 	44	 
	 
	 	 	 	 
	SECTION 9.01 Without Consent of Holders
	 	 	44	 

ii 

 

	 	 	 	 	 
	 	 	Page	 
	SECTION 9.02 With Consent of Holders
	 	 	45	 
	SECTION 9.03 Compliance with Trust Indenture Act
	 	 	47	 
	SECTION 9.04 Revocation and Effect of Consents
	 	 	47	 
	SECTION 9.05 Notation on or Exchange of Securities
	 	 	48	 
	SECTION 9.06 Trustee to Sign Amendments, etc.
	 	 	48	 
	 
	 	 	 	 
	ARTICLE X SUBORDINATION OF SECURITIES AND GUARANTEES
	 	 	49	 
	 
	 	 	 	 
	SECTION 10.01 Securities and Guarantees Subordinated to Senior Debt
	 	 	49	 
	SECTION 10.02 No Payment on Securities in Certain Circumstances
	 	 	49	 
	SECTION 10.03 Securities and Guarantees Subordinated to Prior
Payment of All Senior Debt on Dissolution,
Liquidation or Reorganization
	 	 	50	 
	SECTION 10.04 Subrogation to Rights of Holders of Senior Debt
	 	 	51	 
	SECTION 10.05 Obligations of the Company and the Subsidiary Guarantors
Unconditional
	 	 	51	 
	SECTION 10.06 Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice
	 	 	52	 
	SECTION 10.07 Application by Trustee of Amounts Deposited with It
	 	 	52	 
	SECTION 10.08 Subordination Rights Not Impaired by Acts or Omissions of the
Company, the Subsidiary Guarantors or Holders of Senior Debt
	 	 	53	 
	SECTION 10.09 Trustee to Effectuate Subordination of Securities
	 	 	53	 
	SECTION 10.10 Right of Trustee to Hold Senior Debt
	 	 	54	 
	SECTION 10.11 Article X Not to Prevent Events of Default
	 	 	54	 
	SECTION 10.12 No Fiduciary Duty of Trustee to Holders of Senior Debt
	 	 	54	 
	SECTION 10.13 Article Applicable to Paying Agent
	 	 	55	 
	 
	 	 	 	 
	ARTICLE XI GUARANTEE
	 	 	55	 
	 
	 	 	 	 
	SECTION 11.01 Guarantee
	 	 	55	 
	SECTION 11.02 Execution and Delivery of Guarantees
	 	 	57	 
	SECTION 11.03 Limitation on Liability of the Subsidiary Guarantors
	 	 	57	 
	SECTION 11.04 Release of Subsidiary Guarantors from Guarantee
	 	 	58	 
	SECTION 11.05 Contribution
	 	 	58	 
	 
	 	 	 	 
	ARTICLE XII MISCELLANEOUS
	 	 	59	 
	 
	 	 	 	 
	SECTION 12.01 Trust Indenture Act Controls
	 	 	59	 
	SECTION 12.02 Notices
	 	 	59	 
	SECTION 12.03 Communication by Holders with Other Holders
	 	 	60	 
	SECTION 12.04 Certificate and Opinion as to Conditions Precedent
	 	 	60	 
	SECTION 12.05 Statements Required in Certificate or Opinion
	 	 	60	 
	SECTION 12.06 Rules by Trustee and Agents
	 	 	61	 
	SECTION 12.07 Legal Holidays
	 	 	61	 
	SECTION 12.08 No Recourse Against Others
	 	 	61	 
	SECTION 12.09 Governing Law
	 	 	61	 
	SECTION 12.10 No Adverse Interpretation of Other Agreements
	 	 	61	 
	SECTION 12.11 Successors
	 	 	62	 
	SECTION 12.12 Severability
	 	 	62	 
	SECTION 12.13 Counterpart Originals
	 	 	62	 
	SECTION 12.14 Table of Contents, Headings, etc.
	 	 	62	 

iii 

 

          INDENTURE dated as of                      ___, ___ between Bristow Group Inc., a Delaware corporation
(the “Company”), the potential subsidiary guarantors listed on the signature pages hereto (the
“Potential Subsidiary Guarantors”), and U.S. Bank National Association, as trustee (the “Trustee”).

          Each party agrees as follows for the benefit of the other party and for the equal and ratable
benefit of the Holders of the Company’s unsecured subordinated debentures, notes or other evidences
of indebtedness (the “Securities”), and the related Guarantees (as hereinafter defined), to be
issued from time to time in one or more series as provided in this Indenture:

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01 Definitions.

          “Additional Amounts” means any additional amounts required by the express terms of a Security
or by or pursuant to a Board Resolution, under circumstances specified therein or pursuant thereto,
to be paid by the Company with respect to certain taxes, assessments or other governmental charges
imposed on certain Holders and that are owing to such Holders.

          “Affiliate” of any specified Person means any other Person directly or indirectly controlling
or controlled by, or under direct or indirect common control with, such specified Person. For
purposes of this definition, “control” of a Person shall mean the power to direct the management
and policies of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms “controlling” and “controlled” shall have
meanings correlative to the foregoing.

          “Agent” means any Registrar or Paying Agent.

          “Bankruptcy Law” means Title 11 of the United States Code or any similar federal, state or
foreign law for the relief of debtors.

          “Board of Directors” means the Board of Directors of the Company or any committee thereof duly
authorized, with respect to any particular matter, to act by or on behalf of the Board of Directors
of the Company.

          “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and to be in full
force and effect on the date of such certification, and delivered to the Trustee.

          “Business Day” means any day that is not a Legal Holiday.

          “Capitalized Lease Obligation” of any Person means any obligation of such Person to pay rent
or other amounts under a lease of property, real or personal, that is required to be capitalized
for financial reporting purposes in accordance with GAAP; and the amount of such obligation shall
be the capitalized amount thereof determined in accordance with GAAP.

1

 

          “Company” means the Person named as the “Company” in the first paragraph of this instrument
until a successor Person shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter “Company” shall mean such successor Person; provided, however, that for
purposes of any provision contained herein which is required by the TIA, “Company” shall also mean
each other obligor (if any) on the Securities of a series.

          “Company Order” and “Company Request” mean, respectively, a written order or request signed in
the name of the Company by two Officers of the Company, and delivered to the Trustee.

          “Corporate Trust Office of the Trustee” means the office of the Trustee located at 225 Asylum
Street, Hartford, CT 06103, Attention: Corporate Trust Services, and as may be located at such
other address as the Trustee may give notice to the Company.

          “Debt” of any Person means, without duplication: (i) all indebtedness or obligations of such
Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof); (ii) all obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments; (iii) all obligations of such Person in
respect of letters of credit or other similar instruments (or reimbursement obligations with
respect thereto), other than standby letters of credit, bid or performance bonds and other
obligations issued by or for the account of such Person in the ordinary course of business, to the
extent not drawn or, to the extent drawn, if such drawing is reimbursed not later than the third
Business Day following demand for reimbursement; (iv) all obligations of such Person to pay the
deferred and unpaid purchase price of property or services, except trade payables and accrued
expenses incurred in the ordinary course of business; (v) all Capitalized Lease Obligations of such
Person; (vi) all Debt of others secured by a lien on any asset of such Person, whether or not such
Debt is assumed by such Person (provided that if the obligations so secured have not been assumed
in full by such Person or are not otherwise such Person’s legal liability in full, then such
obligations shall be deemed to be in an amount equal to the greater of (a) the lesser of (1) the
full amount of such obligations and (2) the fair market value of such assets, as determined in good
faith by the Board of Directors of such Person, which determination shall be evidenced by a Board
Resolution, and (b) the amount of obligations as have been assumed by such Person or which are
otherwise such Person’s legal liability); and (vii) all Debt of others (other than endorsements in
the ordinary course of business) guaranteed by such Person to the extent of such guarantee.

          “Default” means any event, act or condition that is, or after notice or the passage of time or
both would be, an Event of Default.

          “Depositary” means, with respect to the Securities of any series issuable or issued in whole
or in part in global form, the Person specified pursuant to Section 2.01 hereof as the initial
Depositary with respect to the Securities of such series, until a successor shall have been
appointed and become such pursuant to the applicable provision of this Indenture, and thereafter
“Depositary” shall mean or include such successor.

          “Dollar” or “$” means a dollar or other equivalent unit in such coin or currency of the United
States as at the time shall be legal tender for the payment of public and private debt.

2

 

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor
statute.

          “GAAP” means generally accepted accounting principles in the United States set forth in the
opinions and pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be approved by a
significant segment of the accounting profession of the United States, as in effect from time to
time.

          “Global Security” means a Security that is issued in global form in the name of the Depositary
with respect thereto or its nominee.

          “Government Obligations” means, with respect to a series of Securities, direct obligations of
the government that issues the currency in which the Securities of the series are payable for the
payment of which the full faith and credit of such government is pledged, or obligations of a
Person controlled or supervised by and acting as an agency or instrumentality of such government,
the payment of which is unconditionally guaranteed as a full faith and credit obligation by such
government.

          “Guarantee” means the guarantee of the Company’s obligations under the Securities of a series
by a Subsidiary Guarantor (specified with respect to such series as contemplated by Section
2.01(9)) as provided in Article XI.

          “Holder” means a Person in whose name a Security is registered.

          “Indenture” means this Indenture as amended or supplemented from time to time pursuant to the
provisions hereof, and includes the terms of a particular series of Securities established as
contemplated by Section 2.01.

          “interest” means, with respect to an Original Issue Discount Security that by its terms bears
interest only after Maturity, interest payable after Maturity.

          “Interest Payment Date,” when used with respect to any Security, shall have the meaning
assigned to such term in the Security as contemplated by Section 2.01.

          “Issue Date” means, with respect to Securities of a series, the date on which the Securities
of such series are originally issued under this Indenture.

          “Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in any of
The City of New York, New York; Houston, Texas or a Place of Payment are authorized or obligated by
law, regulation or executive order to remain closed.

          “Maturity” means, with respect to any Security, the date on which the principal of such
Security or an installment of principal becomes due and payable as therein or herein provided,
whether at the Stated Maturity thereof, or by declaration of acceleration, call for redemption or
otherwise.

3

 

          “Officer” means the Chairman of the Board, the President, any Vice Chairman of the Board, any
Vice President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, any Assistant Controller, the Secretary or any Assistant Secretary of a Person.

          “Officers’ Certificate” means a certificate signed by two Officers of a Person.

          “Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the
Trustee. Such counsel may be an employee of or counsel to the Company or the Trustee.

          “Original Issue Discount Security” means any Security that provides for an amount less than
the principal amount thereof to be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 6.02.

          “Person” means any individual, corporation, partnership, limited liability company, joint
venture, incorporated or unincorporated association, joint stock company, trust, unincorporated
organization or government or other agency, instrumentality or political subdivision thereof or
other entity of any kind.

          “Place of Payment” means, with respect to the Securities of any series, the place or places
where the principal of, premium (if any) and interest on and any Additional Amounts with respect to
the Securities of that series are payable as specified in accordance with Section 2.01 subject to
the provisions of Section 4.02.

          “principal” of a Security means the principal of the Security plus, when appropriate, the
premium, if any, on the Security.

          “Redemption Date” means, with respect to any Security to be redeemed, the date fixed for such
redemption by or pursuant to this Indenture.

          “Redemption Price” means, with respect to any Security to be redeemed, the price at which it
is to be redeemed pursuant to this Indenture.

          “Responsible Officer” means any officer within the corporate trust services division of the
Trustee, including any vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily performs functions
similar to those performed by the Persons who at the time shall be such officers, respectively, or
to whom any corporate trust matter is referred because of such person’s knowledge of and
familiarity with the particular subject and who shall have direct responsibility for the
administration of this Indenture.

          “Rule 144A Securities” means Securities of a series designated pursuant to Section 2.01 as
entitled to the benefits of Section 4.03(b).

          “SEC” means the Securities and Exchange Commission.

4

 

          “Securities” has the meaning stated in the preamble of this Indenture and more particularly
means any Securities authenticated and delivered under this Indenture.

          “Security Custodian” means, with respect to Securities of a series issued in global form, the
Trustee for Securities of such series, as custodian with respect to the Securities of such series,
or any successor entity thereto.

          “Senior Debt” of the Company, unless otherwise provided with respect to the Securities of a
series as contemplated by Section 2.01, means (i) all Debt of the Company, and, in the case of the
Guarantee, the Subsidiary Guarantor, whether currently outstanding or hereafter created, incurred
or assumed, unless, by the terms of the instrument creating or evidencing such Debt or pursuant to
which such Debt is outstanding, it is provided that such Debt is not superior in right of payment
to the Securities, in the case of the Company, or the Guarantee, in the case of the Subsidiary
Guarantor, or to other Debt which is pari passu with or subordinated to the Securities, and (ii)
any modifications, refunding, deferrals, renewals or extensions of any such Debt or any securities,
notes or other evidences of Debt issued in exchange for such Debt; provided that, unless otherwise
provided with respect to the Securities of a series as contemplated by Section 2.01, in no event
shall “Senior Debt” include (a) Debt evidenced by the Securities or any Guarantee, (b) Debt of the
Company or the Subsidiary Guarantor owed or owing to any other Subsidiary or any officer, director
or employee of the Company, the Subsidiary Guarantor or any Subsidiary, (c) Debt to trade creditors
or (d) any liability for taxes owed or owing by the Company.

          “Significant Subsidiary” means a Subsidiary of the Company that is a “significant subsidiary”
of the Company as such term is defined in Rule 1-02(w) of Regulation S-X as of the date hereof.

          “Stated Maturity” means, when used with respect to any Security or any installment of
principal thereof or interest thereon, the date specified in such Security as the fixed date on
which the principal of such Security or such installment of principal or interest is due and
payable.

          “Subsidiary” means a Person at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the
Company and one or more other Subsidiaries. For the purposes of this definition, “voting stock”
means stock having voting power for the election of directors, whether at all times or only so long
as no senior class of stock has such voting power by reason of any contingency.

          “Subsidiary Guarantors” means, with respect to any series of Securities, the Person or
Persons, if any, named in accordance with Section 2.01(9) as the “Subsidiary Guarantors” (i) in or
pursuant to a Board Resolution, and set forth, or determined in the manner provided, in an
Officers’ Certificate of the Company or in a Company Order, or (ii) in an indenture supplemental
hereto establishing the terms of such series of Securities until a successor Person or Persons
shall have become such pursuant to the applicable provisions of this Indenture, and thereafter
“Subsidiary Guarantor” with respect to such series of Securities shall mean such successor Person
or Persons, in any case until the Guarantee is released pursuant to the provisions of Article XI.
If a series of Securities does not have any Subsidiary Guarantors, all

5

 

references in this Indenture to the Subsidiary Guarantors shall be ignored with respect to
such series of Securities.

          “TIA” means the Trust Indenture Act of 1939, as amended, as in effect on the date hereof.

          “Trustee” means the Person named as such above until a successor replaces it in accordance
with the applicable provisions of this Indenture, and thereafter “Trustee” means each Person who is
then a Trustee hereunder, and if at any time there is more than one such Person, “Trustee” as used
with respect to the Securities of any series means the Trustee with respect to Securities of that
series.

          “United States” means the United States of America (including the States and the District of
Columbia) and its territories and possessions, which include Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, Wake Island and the Northern Mariana Islands.

          “U.S. Government Obligations” means Government Obligations with respect to Securities payable
in Dollars.

SECTION 1.02 Other Definitions.

	 	 	 
	 	 	Defined
	Term	 	in Section
	“Agent Members”
	 	2.17
	“Bankruptcy Custodian”
	 	6.01
	“Conversion Event”
	 	6.01
	“covenant defeasance”
	 	8.01
	“Event of Default”
	 	6.01
	“Exchange Rate”
	 	2.11
	“Judgment Currency”
	 	6.10
	“legal defeasance”
	 	8.01
	“mandatory sinking fund payment”
	 	3.09
	“optional sinking fund payment”
	 	3.09
	“Paying Agent”
	 	2.05
	“Payment Default”
	 	10.02  
	“Registrar”
	 	2.05
	“Required Currency”
	 	6.10
	“Successor”
	 	5.01

SECTION 1.03 Incorporation by Reference of Trust Indenture Act.

          Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture (and if the Indenture is not qualified under the TIA
at that time, as if it were so qualified unless otherwise provided). The following TIA terms used
in this Indenture have the following meanings:

          “Commission” means the SEC.

6

 

          “indenture securities” means the Securities.

          “indenture security holder” means a Holder.

          “indenture to be qualified” means this Indenture.

          “indenture trustee” or “institutional trustee” means the Trustee.

          “obligor” on the indenture securities means the Company, any Subsidiary Guarantor or any other
obligor on the Securities.

          All terms used in this Indenture that are defined by the TIA, defined by a TIA reference to
another statute or defined by an SEC rule under the TIA have the meanings so assigned to them.

SECTION 1.04 Rules of Construction.

          Unless the context otherwise requires:

	 	(1)	 	a term has the meaning assigned to it;
	 
	 	(2)	 	an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
	 
	 	(3)	 	“or” is not exclusive;
	 
	 	(4)	 	words in the singular include the plural, and in the plural
include the singular;
	 
	 	(5)	 	provisions apply to successive events and transactions; and
	 
	 	(6)	 	all references in this instrument to Articles and Sections are
references to the corresponding Articles and Sections in and of this
instrument.

ARTICLE II

THE SECURITIES

SECTION 2.01 Amount Unlimited; Issuable in Series.

          The aggregate principal amount of Securities that may be authenticated and delivered under
this Indenture is unlimited.

          The Securities may be issued in one or more series. There shall be established in or pursuant
to a Board Resolution, and set forth, or determined in the manner provided, in an Officers’
Certificate of the Company or in a Company Order, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:

7

 

     (1) the title of the Securities of the series (which shall distinguish the Securities
of the series from the Securities of all other series);

     (2) if there is to be a limit, the limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the series pursuant to Section 2.08, 2.09,
2.12, 2.17, 3.07 or 9.05 and except for any Securities which, pursuant to Section 2.04 or
2.17, are deemed never to have been authenticated and delivered hereunder); provided,
however, that unless otherwise provided in the terms of the series, the authorized aggregate
principal amount of such series may be increased before or after the issuance of any
Securities of the series by a Board Resolution (or action pursuant to a Board Resolution) to
such effect;

     (3) whether any Securities of the series are to be issuable initially in temporary
global form and whether any Securities of the series are to be issuable in permanent global
form, as Global Securities or otherwise, and, if so, whether beneficial owners of interests
in any such Global Security may exchange such interests for Securities of such series and of
like tenor of any authorized form and denomination and the circumstances under which any
such exchanges may occur, if other than in the manner provided in Section 2.17, and the
initial Depositary and Security Custodian, if any, for any Global Security or Securities of
such series;

     (4) the manner in which any interest payable on a temporary Global Security on any
Interest Payment Date will be paid if other than in the manner provided in Section 2.14;

     (5) the date or dates on which the principal of and premium (if any) on the Securities
of the series is payable or the method of determination thereof;

     (6) the rate or rates, or the method of determination thereof, at which the Securities
of the series shall bear interest, if any, whether and under what circumstances Additional
Amounts with respect to such Securities shall be payable, the date or dates from which such
interest shall accrue, the Interest Payment Dates on which such interest shall be payable
and the record date for the interest payable on any Securities on any Interest Payment Date,
or if other than provided herein, the Person to whom any interest on Securities of the
series shall be payable;

     (7) the place or places where, subject to the provisions of Section 4.02, the principal
of, premium (if any) and interest on and any Additional Amounts with respect to the
Securities of the series shall be payable;

     (8) the period or periods within which, the price or prices (whether denominated in
cash, securities or otherwise) at which and the terms and conditions upon which Securities
of the series may be redeemed, in whole or in part, at the option of the Company, if the
Company is to have that option, and the manner in which the Company must exercise any such
option, if different from those set forth herein;

8

 

     (9) whether Securities of the series are entitled to the benefits of any Guarantee of
any Subsidiary Guarantor pursuant to this Indenture, the identity of any such Subsidiary
Guarantors and any terms of such Guarantee with respect to the Securities of the series in
addition to those set forth in Article XI, or any exceptions to or changes to those set
forth in Article XI;

     (10) the obligation, if any, of the Company to redeem, purchase or repay Securities of
the series pursuant to any sinking fund or analogous provisions or at the option of a Holder
thereof and the period or periods within which, the price or prices (whether denominated in
cash, securities or otherwise) at which and the terms and conditions upon which Securities
of the series shall be redeemed, purchased or repaid in whole or in part pursuant to such
obligation;

     (11) if other than denominations of $1,000 and any integral multiple thereof, the
denomination in which any Securities of that series shall be issuable;

     (12) if other than Dollars, the currency or currencies (including composite currencies)
or the form, including equity securities, other debt securities (including Securities),
warrants or any other securities or property of the Company or any other Person, in which
payment of the principal of, premium (if any) and interest on and any Additional Amounts
with respect to the Securities of the series shall be payable;

     (13) if the principal of, premium (if any) or interest on or any Additional Amounts
with respect to the Securities of the series are to be payable, at the election of the
Company or a Holder thereof, in a currency or currencies (including composite currencies)
other than that in which the Securities are stated to be payable, the currency or currencies
(including composite currencies) in which payment of the principal of, premium (if any) and
interest on and any Additional Amounts with respect to Securities of such series as to which
such election is made shall be payable, and the periods within which and the terms and
conditions upon which such election is to be made;

     (14) if the amount of payments of principal of, premium (if any) and interest on and
any Additional Amounts with respect to the Securities of the series may be determined with
reference to any commodities, currencies or indices, values, rates or prices or any other
index or formula, the manner in which such amounts shall be determined;

     (15) if other than the entire principal amount thereof, the portion of the principal
amount of Securities of the series that shall be payable upon declaration of acceleration of
the Maturity thereof pursuant to Section 6.02;

     (16) any additional means of satisfaction and discharge of this Indenture and any
additional conditions or limitations to discharge with respect to Securities of the series
and the related Guarantees, if any, pursuant to Article VIII or any modifications of or
deletions from such conditions or limitations;

9

 

     (17) any deletions or modifications of or additions to the Events of Default set forth
in Section 6.01 or covenants of the Company or any Subsidiary Guarantor set forth in Article
IV pertaining to the Securities of the series;

     (18) any restrictions or other provisions with respect to the transfer or exchange of
Securities of the series, which may amend, supplement, modify or supersede those contained
in this Article II;

     (19) if the Securities of the series are to be convertible into or exchangeable for
capital stock, other debt securities (including Securities), warrants, other equity
securities or any other securities or property of the Company, any Subsidiary Guarantor or
any other Person, at the option of the Company or the Holder or upon the occurrence of any
condition or event, the terms and conditions for such conversion or exchange;

     (20) if the Securities of the series are to be entitled to the benefit of
Section 4.03(b) (and accordingly constitute Rule 144A Securities), that fact;

     (21) any modifications to the definition of “Senior Debt,” to Article X or to the other
provisions regarding subordination with respect to the Securities of the series; and

     (22) any other terms of the series (which terms shall not be prohibited by the
provisions of this Indenture).

          All Securities of any one series shall be substantially identical except as to denomination
and except as may otherwise be provided in or pursuant to the Board Resolution referred to above
and (subject to Section 2.03) set forth, or determined in the manner provided, in the Officers’
Certificate or Company Order referred to above or in any such indenture supplemental hereto.

          If any of the terms of the series are established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action, together with such Board Resolution,
shall be set forth in an Officers’ Certificate or certified by the Secretary or an Assistant
Secretary of the Company and delivered to the Trustee at or prior to the delivery of the Officers’
Certificate or Company Order setting forth the terms of the series.

          The Securities shall be subordinated in right of payment to Senior Debt as provided in Article
X and/or as specified as contemplated pursuant to this Section 2.01.

SECTION 2.02 Denominations.

          The Securities of each series shall be issuable in such denominations as shall be specified as
contemplated by Section 2.01. In the absence of any such provisions with respect to the Securities
of any series, the Securities of such series denominated in Dollars shall be issuable in
denominations of $1,000 and any integral multiples thereof.

10

 

SECTION 2.03 Forms Generally.

          The Securities of each series shall be in fully registered form and in substantially such form
or forms (including temporary or permanent global form) established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto. The Securities may have notations,
legends or endorsements required by law, securities exchange rule, the Company’s certificate of
incorporation, bylaws or other similar governing documents, agreements to which the Company is
subject, if any, or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). A copy of the Board Resolution establishing the form or forms of
Securities of any series shall be delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 2.04 for the authentication and delivery of such Securities.

          The definitive Securities of each series shall be printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner, all as determined by the Officers
executing such Securities, as evidenced by their execution thereof.

          The Trustee’s certificate of authentication shall be in substantially the following form:

          “This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.

	 	 	 
	 

	 	                                              , as Trustee
	 
	 	 	 	 
	 

	 	By:                                                             
	 

	 	Authorized Signatory”.              

SECTION 2.04 Execution, Authentication, Delivery and Dating.

          Two Officers of the Company shall sign the Securities on behalf of the Company and, with
respect to any related Guarantee, an Officer of each Subsidiary Guarantor shall sign the Notation
of Guarantee on behalf of such Subsidiary Guarantor, in each case by manual or facsimile signature.
If an Officer of the Company whose signature is on a Security no longer holds that office at the
time the Security is authenticated, the Security shall be valid nevertheless.

          A Security shall not be entitled to any benefit under this Indenture or the related
Guarantees, if any, or be valid or obligatory for any purpose until authenticated by the manual
signature of an authorized signatory of the Trustee, which signature shall be conclusive evidence
that the Security has been authenticated under this Indenture. Notwithstanding the foregoing, if
any Security has been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company delivers such Security to the Trustee for cancellation as provided in
Section 2.13, together with a written statement (which need not comply with Section 12.05 and need
not be accompanied by an Opinion of Counsel) stating that such Security has never been issued and
sold by the Company, for all purposes of this Indenture such Security shall be deemed never to have
been authenticated and delivered hereunder and shall never be entitled to the benefits of this
Indenture or the related Guarantees, if any.

11

 

          At any time and from time to time after the execution and delivery of this Indenture, the
Company may deliver Securities of any series executed by the Company to the Trustee for
authentication, and the Trustee shall authenticate and deliver such Securities for original issue
upon a Company Order for the authentication and delivery of such Securities or pursuant to such
procedures acceptable to the Trustee as may be specified from time to time by Company Order. Such
order shall specify the amount of the Securities to be authenticated, the date on which the
original issue of Securities is to be authenticated, the name or names of the initial Holder or
Holders and any other terms of the Securities of such series not otherwise determined. If provided
for in such procedures, such Company Order may authorize (1) authentication and delivery of
Securities of such series for original issue from time to time, with certain terms (including,
without limitation, the Maturity dates or dates, original issue date or dates and interest rate or
rates) that differ from Security to Security and (2) may authorize authentication and delivery
pursuant to oral or electronic instructions from the Company or its duly authorized agent, which
instructions shall be promptly confirmed in writing.

          If the form or terms of the Securities of the series have been established in or pursuant to
one or more Board Resolutions as permitted by Section 2.01, in authenticating such Securities, and
accepting the additional responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive (in addition to the Company Order referred to above and the
other documents required by Section 12.04), and (subject to Section 7.01) shall be fully protected
in relying upon:

     (a) an Officers’ Certificate setting forth the Board Resolution and, if applicable, an
appropriate record of any action taken pursuant thereto, as contemplated by the last
paragraph of Section 2.01; and

     (b) an Opinion of Counsel to the effect that:

     (i) the form of such Securities has been established in conformity with the
provisions of this Indenture;

     (ii) the terms of such Securities have been established in conformity with the
provisions of this Indenture; and

     (iii) that such Securities and the related Guarantees, if any, when
authenticated and delivered by the Trustee and issued by the Company in the manner
and subject to any conditions specified in such Opinion of Counsel, will constitute
valid and binding obligations of the Company and the Subsidiary Guarantors,
respectively, enforceable against the Company and the Subsidiary Guarantors,
respectively, in accordance with their respective terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws in effect
from time to time affecting the rights of creditors generally, and the application
of general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

12

 

          If all the Securities of any series are not to be issued at one time, it shall not be
necessary to deliver an Officers’ Certificate and Opinion of Counsel at the time of issuance of
each such Security, but such Officers’ Certificate and Opinion of Counsel shall be delivered at or
before the time of issuance of the first Security of the series to be issued.

          The Trustee shall not be required to authenticate such Securities if the issuance of such
Securities pursuant to this Indenture would affect the Trustee’s own rights, duties or immunities
under the Securities and this Indenture or otherwise in a manner not reasonably acceptable to the
Trustee.

          The Trustee may appoint an authenticating agent acceptable to the Company to authenticate
Securities. Unless limited by the terms of such appointment, an authenticating agent may
authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An authenticating agent has
the same rights as an Agent to deal with the Company, any Subsidiary Guarantor or any other
Affiliate of the Company.

          Each Security shall be dated the date of its authentication.

			
	SECTION 2.05	 	Registrar and Paying Agent.

          The Company shall maintain an office or agency for each series of Securities where Securities
of such series may be presented for registration of transfer or exchange (“Registrar”) and an
office or agency where Securities of such series may be presented for payment (“Paying Agent”).
The Registrar shall keep a register of the Securities of such series and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more additional paying
agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any
additional paying agent.

          The Company shall enter into an appropriate agency agreement with any Registrar or Paying
Agent not a party to this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address
of any Agent not a party to this Indenture. The Company may change any Paying Agent or Registrar
without notice to any Holder. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any Subsidiary may act as
Paying Agent or Registrar.

          The Company initially appoints the Trustee as Registrar and Paying Agent.

			
	SECTION 2.06	 	Paying Agent to Hold Money in Trust.

          The Company shall require each Paying Agent other than the Trustee to agree in writing that
the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the
Paying Agent for the payment of principal of, premium, if any, or interest on or any Additional
Amounts with respect to Securities and will notify the Trustee of any default by the Company in
making any such payment. While any such default continues, the Trustee may require a Paying Agent
to pay all money held by it to the Trustee and to account for any funds disbursed. The Company at
any time may require a Paying Agent to pay all money held

13

 

by it to the Trustee and to account for any funds disbursed. Upon payment over to the Trustee
and upon accounting for any funds disbursed, the Paying Agent (if other than the Company, a
Subsidiary Guarantor or another Subsidiary) shall have no further liability for the money. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund
for the benefit of the Holders all money held by it as Paying Agent. Each Paying Agent shall
otherwise comply with TIA § 317(b).

			
	SECTION 2.07	 	Holder Lists.

          The Trustee shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Holders and shall otherwise comply with TIA
§ 312(a). If the Trustee is not the Registrar with respect to a series of Securities, the Company
shall furnish to the Trustee at least five Business Days before each Interest Payment Date with
respect to such series of Securities, and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably require of the names
and addresses of Holders of such series, and the Company shall otherwise comply with TIA § 312(a).

			
	SECTION 2.08	 	Transfer and Exchange.

          Except as set forth in Section 2.17 or as may be provided pursuant to Section 2.01:

          When Securities of any series are presented to the Registrar with the request to register the
transfer of such Securities or to exchange such Securities for an equal principal amount of
Securities of the same series of like tenor and of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested if its requirements and the
requirements of this Indenture for such transactions are met; provided, however, that the
Securities presented or surrendered for registration of transfer or exchange shall be duly endorsed
or accompanied by a written instruction of transfer in form reasonably satisfactory to the
Registrar duly executed by the Holder thereof or by his attorney, duly authorized in writing, on
which instruction the Registrar can rely.

          To permit registrations of transfers and exchanges, the Company shall execute and the Trustee
shall authenticate Securities at the Registrar’s written request and submission of the Securities
or Global Securities. No service charge shall be made to a Holder for any registration of transfer
or exchange (except as otherwise expressly permitted herein), but the Company may require payment
of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection
therewith (other than such transfer tax or similar governmental charge payable upon exchanges
pursuant to Section 2.12, 3.07 or 9.05). The Trustee shall authenticate Securities in accordance
with the provisions of Section 2.04. Notwithstanding any other provisions of this Indenture to the
contrary, the Company shall not be required to register the transfer or exchange of (a) any
Security selected for redemption in whole or in part pursuant to Article III, except the unredeemed
portion of any Security being redeemed in part, or (b) any Security during the period beginning 15
Business Days prior to the mailing of notice of any offer to repurchase Securities of the series
required pursuant to the terms thereof or

14

 

of redemption of Securities of a series to be redeemed and ending at the close of business on
the day of mailing.

			
	SECTION 2.09	 	Replacement Securities.

          If any mutilated Security is surrendered to the Trustee, or if the Holder of a Security claims
that the Security has been destroyed, lost or stolen and the Company and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of such Security, the Company
shall issue and the Trustee shall authenticate a replacement Security of the same series if the
Trustee’s requirements are met. If any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may, instead of issuing
a new Security, pay such Security. If required by the Trustee, any Subsidiary Guarantor or the
Company, such Holder must furnish an indemnity bond that is sufficient in the judgment of the
Trustee and the Company to protect the Company, each Subsidiary Guarantor, the Trustee, any Agent
or any authenticating agent from any loss that any of them may suffer if a Security is replaced.
The Company and the Trustee may charge a Holder for their expenses in replacing a Security.

          Every replacement Security is an additional obligation of the Company.

			
	SECTION 2.10	 	Outstanding Securities.

          The Securities outstanding at any time are all the Securities authenticated by the Trustee
except for those canceled by it, those delivered to it for cancellation, those reductions in the
interest in a Global Security effected by the Trustee hereunder and those described in this
Section 2.10 as not outstanding.

          If a Security is replaced pursuant to Section 2.09, it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide
purchaser.

          If the principal amount of any Security is considered paid under Section 4.01, it ceases to be
outstanding and interest on it ceases to accrue.

          A Security does not cease to be outstanding because the Company, a Subsidiary Guarantor or
another Affiliate of the Company or an Affiliate of a Subsidiary Guarantor holds the Security.

			
	SECTION 2.11	 	Original Issue Discount, Foreign-Currency Denominated and Treasury Securities.

          In determining whether the Holders of the required principal amount of Securities have
concurred in any direction, amendment, supplement, waiver or consent, (a) the principal amount of
an Original Issue Discount Security shall be the principal amount thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity thereof pursuant to
Section 6.02, (b) the principal amount of a Security denominated in a foreign currency shall be the
Dollar equivalent, as determined by the Company by reference to the noon buying rate in The City of
New York for cable transfers for such currency, as such rate is

15

 

certified for customs purposes by the Federal Reserve Bank of New York (the “Exchange Rate”)
on the date of original issuance of such Security, of the principal amount (or, in the case of an
Original Issue Discount Security, the Dollar equivalent, as determined by the Company by reference
to the Exchange Rate on the date of original issuance of such Security, of the amount determined as
provided in (a) above), of such Security and (c) Securities owned by the Company, a Subsidiary
Guarantor or any other obligor upon the Securities or any Affiliate of the Company or a Subsidiary
Guarantor or of such other obligor shall be disregarded, except that, for the purpose of
determining whether the Trustee shall be protected in relying upon any such direction, amendment,
supplement, waiver or consent, only Securities that a Responsible Officer of the Trustee actually
knows are so owned shall be so disregarded.

			
	SECTION 2.12	 	Temporary Securities.

          Until definitive Securities of any series are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities, but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate definitive Securities in exchange for temporary Securities. Until
so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under
this Indenture as definitive Securities.

			
	SECTION 2.13	 	Cancellation.

          The Company or any Subsidiary Guarantor at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange, payment or redemption or for credit
against any sinking fund payment. The Trustee shall cancel all Securities surrendered for
registration of transfer, exchange, payment, redemption, replacement or cancellation or for credit
against any sinking fund. Unless the Company shall direct in writing that canceled Securities be
returned to it, after written notice to the Company all canceled Securities held by the Trustee
shall be disposed of in accordance with the usual disposal procedures of the Trustee, and the
Trustee shall maintain a record of their disposal. The Company may not issue new Securities to
replace Securities that have been paid or that have been delivered to the Trustee for cancellation.

			
	SECTION 2.14	 	Payments; Defaulted Interest.

          Unless otherwise provided as contemplated by Section 2.01, interest (except defaulted
interest) on any Security that is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Persons who are registered Holders of that Security at
the close of business on the record date next preceding such Interest Payment Date, even if such
Securities are canceled after such record date and on or before such Interest Payment Date. The
Holder must surrender a Security to a Paying Agent to collect principal payments. Unless otherwise
provided with respect to the Securities of any series, the Company will pay the principal of,
premium (if any) and interest on and any Additional Amounts with respect to the Securities in
Dollars. Such amounts shall be payable at the offices of the Trustee or any Paying Agent, provided
that at the option of the Company, the Company may pay such

16

 

amounts (1) by wire transfer with respect to Global Securities or (2) by check payable in such
money mailed to a Holder’s registered address with respect to any Securities.

          If the Company defaults in a payment of interest on the Securities of any series, the Company
shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest on the
defaulted interest, in each case at the rate provided in the Securities of such series and in
Section 4.01. The Company may pay the defaulted interest to the Persons who are Holders on a
subsequent special record date. At least 15 days before any special record date selected by the
Company, the Company (or the Trustee, in the name of and at the expense of the Company upon 20
days’ prior written notice from the Company setting forth such special record date and the interest
amount to be paid) shall mail to Holders a notice that states the special record date, the related
payment date and the amount of such interest to be paid.

			
	SECTION 2.15	 	Persons Deemed Owners.

          The Company, the Subsidiary Guarantors, the Trustee, any Agent and any authenticating agent
may treat the Person in whose name any Security is registered as the owner of such Security for the
purpose of receiving payments of principal of, premium (if any) or interest on or any Additional
Amounts with respect to such Security and for all other purposes. None of the Company, any
Subsidiary Guarantor, the Trustee, any Agent or any authenticating agent shall be affected by any
notice to the contrary.

			
	SECTION 2.16	 	Computation of Interest.

          Except as otherwise specified as contemplated by Section 2.01 for Securities of any series,
interest on the Securities of each series shall be computed on the basis of a year comprising
twelve 30-day months.

			
	SECTION 2.17	 	Global Securities; Book-Entry Provisions.

          If Securities of a series are issuable in global form as a Global Security, as contemplated by
Section 2.01, then, notwithstanding clause (10) of Section 2.01 and the provisions of Section 2.02,
any such Global Security shall represent such of the outstanding Securities of such series as shall
be specified therein and may provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of outstanding
Securities represented thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges, transfers or redemptions. Any endorsement of a Global Security to reflect the
amount, or any increase or decrease in the amount, of outstanding Securities represented thereby
shall be made by the Trustee (i) in such manner and upon instructions given by such Person or
Persons as shall be specified in such Security or in a Company Order to be delivered to the Trustee
pursuant to Section 2.04 or (ii) otherwise in accordance with written instructions or such other
written form of instructions as is customary for the Depositary for such Security, from such
Depositary or its nominee on behalf of any Person having a beneficial interest in such Global
Security. Subject to the provisions of Section 2.04 and, if applicable, Section 2.12, the Trustee
shall deliver and redeliver any Security in permanent global form in the manner and upon
instructions given by the Person or Persons specified in such Security or in the applicable Company
Order. With respect to the Securities of

17

 

any series that are represented by a Global Security, the Company and the Subsidiary
Guarantors authorize the execution and delivery by the Trustee of a letter of representations or
other similar agreement or instrument in the form customarily provided for by the Depositary
appointed with respect to such Global Security. Any Global Security may be deposited with the
Depositary or its nominee, or may remain in the custody of the Trustee or the Security Custodian
therefor pursuant to a FAST Balance Certificate Agreement or similar agreement between the Trustee
and the Depositary. If a Company Order has been, or simultaneously is, delivered, any instructions
by the Company with respect to endorsement or delivery or redelivery of a Security in global form
shall be in writing but need not comply with Section 12.05 and need not be accompanied by an
Opinion of Counsel.

          Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under
this Indenture with respect to any Global Security held on their behalf by the Depositary, or the
Trustee or the Security Custodian as its custodian, or under such Global Security, and the
Depositary may be treated by the Company, any Subsidiary Guarantor, the Trustee or the Security
Custodian and any agent of the Company, any Subsidiary Guarantor, the Trustee or the Security
Custodian as the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, (i) the registered holder of a Global Security of a series may grant
proxies and otherwise authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action that a Holder of Securities of such series is
entitled to take under this Indenture or the Securities of such series and (ii) nothing herein
shall prevent the Company, any Subsidiary Guarantor, the Trustee or the Security Custodian, or any
agent of the Company, any Subsidiary Guarantor, the Trustee or the Security Custodian, from giving
effect to any written certification, proxy or other authorization furnished by the Depositary or
shall impair, as between the Depositary and its Agent Members, the operation of customary practices
governing the exercise of the rights of a beneficial owner of any Security.

          Notwithstanding Section 2.08, and except as otherwise provided pursuant to Section 2.01:
Transfers of a Global Security shall be limited to transfers of such Global Security in whole, but
not in part, to the Depositary, its successors or their respective nominees. Interests of
beneficial owners in a Global Security may be transferred in accordance with the rules and
procedures of the Depositary. Securities shall be transferred to all beneficial owners in exchange
for their beneficial interests in a Global Security if, and only if, either (1) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary for the Global
Security and a successor Depositary is not appointed by the Company within 90 days of such notice,
(2) an Event of Default has occurred with respect to such series and is continuing and the
Registrar has received a request from the Depositary to issue Securities in lieu of all or a
portion of the Global Security (in which case the Company shall deliver Securities within 30 days
of such request) or (3) the Company determines not to have the Securities represented by a Global
Security.

          In connection with any transfer of a portion of the beneficial interests in a Global Security
to beneficial owners pursuant to this Section 2.17, the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of the Global Security in an amount equal
to the principal amount of the beneficial interests in the Global Security to be transferred, and
the Company shall execute, and the Trustee upon receipt of a Company Order

18

 

for the authentication and delivery of Securities shall authenticate and deliver, one or more
Securities of the same series of like tenor and amount.

          In connection with the transfer of all the beneficial interests in a Global Security to
beneficial owners pursuant to this Section 2.17, the Global Security shall be deemed to be
surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its
beneficial interests in the Global Security, an equal aggregate principal amount of Securities of
authorized denominations.

          None of the Company, any Subsidiary Guarantor, or the Trustee will have any responsibility or
liability for any aspect of the records relating to, or payments made on account of, Securities by
the Depositary, or for maintaining, supervising or reviewing any records of the Depositary relating
to such Securities. None of the Company, any Subsidiary Guarantor, or the Trustee shall be liable
for any delay by the related Global Security Holder or the Depositary in identifying the beneficial
owners, and each such Person may conclusively rely on, and shall be protected in relying on,
instructions from such Global Security Holder or the Depositary for all purposes (including with
respect to the registration and delivery, and the respective principal amounts, of the Securities
to be issued).

          The provisions of the last sentence of the third paragraph of Section 2.04 shall apply to any
Global Security if such Global Security was never issued and sold by the Company and the Company or
a Subsidiary Guarantor, delivers to the Trustee the Global Security together with written
instructions (which need not comply with Section 12.05 and need not be accompanied by an Opinion of
Counsel) with regard to the cancellation or reduction in the principal amount of Securities
represented thereby, together with the written statement contemplated by the last sentence of the
third paragraph of Section 2.04.

          Notwithstanding the provisions of Sections 2.03 and 2.14, unless otherwise specified as
contemplated by Section 2.01, payment of principal of, premium (if any) and interest on and any
Additional Amounts with respect to any Global Security shall be made to the Person or Persons
specified therein.

ARTICLE III

REDEMPTION

			
	SECTION 3.01	 	Applicability of Article.

          Securities of any series that are redeemable before their Stated Maturity shall be redeemable
in accordance with their terms and (except as otherwise specified as contemplated by Section 2.01
for Securities of any series) in accordance with this Article III.

			
	SECTION 3.02	 	Notice to the Trustee.

          If the Company elects to redeem Securities of any series pursuant to this Indenture, it shall
notify the Trustee of the Redemption Date and the principal amount of Securities of such series to
be redeemed. The Company shall so notify the Trustee at least 45

19

 

days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee)
by delivering to the Trustee an Officers’ Certificate stating that such redemption will comply with
the provisions of this Indenture and of the Securities of such series. Any such notice may be
canceled at any time prior to the mailing of such notice of such redemption to any Holder and shall
thereupon be void and of no effect. A redemption or notice thereof may be subject to one or more
conditions.

			
	SECTION 3.03	 	Selection of Securities To Be Redeemed.

          If less than all the Securities of any series are to be redeemed (unless all of the Securities
of such series of a specified tenor are to be redeemed), the particular Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the Trustee from the
outstanding Securities of such series (and tenor) not previously called for redemption, either at
random, by lot or by such other method as the Trustee shall deem fair and appropriate and that may
provide for the selection for redemption of portions (equal to the minimum authorized denomination
for Securities of that series or any integral multiple thereof) of the principal amount of
Securities of such series of a denomination larger than the minimum authorized denomination for
Securities of that series or of the principal amount of Global Securities of such series.

          The Trustee shall promptly notify the Company and the Registrar in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial redemption, the
principal amount thereof to be redeemed.

          For purposes of this Indenture, unless the context otherwise requires, all provisions relating
to redemption of Securities shall relate, in the case of any of the Securities redeemed or to be
redeemed only in part, to the portion of the principal amount thereof which has been or is to be
redeemed.

			
	SECTION 3.04	 	Notice of Redemption.

          Notice of redemption shall be given by first-class mail, postage prepaid, mailed not less than
30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed,
at the address of such Holder appearing in the register of Securities maintained by the Registrar.

          All notices of redemption shall identify the Securities to be redeemed and shall state:

     (1) the Redemption Date;

     (2) the Redemption Price;

     (3) that, unless the Company and the Subsidiary Guarantors default in making the
redemption payment, interest on Securities called for redemption ceases to accrue on and
after the Redemption Date, and the only remaining right of the Holders of such Securities is
to receive payment of the Redemption Price upon surrender to the Paying Agent of the
Securities redeemed;

20

 

     (4) if any Security is to be redeemed in part, the portion of the principal amount
thereof to be redeemed and that on and after the Redemption Date, upon surrender for
cancellation of such Security to the Paying Agent, a new Security or Securities in the
aggregate principal amount equal to the unredeemed portion thereof will be issued without
charge to the Holder;

     (5) that Securities called for redemption must be surrendered to the Paying Agent to
collect the Redemption Price and the name and address of the Paying Agent;

     (6) that the redemption is for a sinking or analogous fund, if such is the case;

     (7) the CUSIP number, if any, relating to such Securities; and

     (8) if the redemption or notice thereof is subject to one or more conditions, a
statement to such effect and the condition or conditions precedent.

          Notice of redemption of Securities to be redeemed at the election of the Company shall be
given by the Company or, at the Company’s written request, by the Trustee in the name and at the
expense of the Company.

			
	SECTION 3.05	 	Effect of Notice of Redemption.

          Once notice of redemption is mailed, unless the redemption or notice thereof is subject to one
or more conditions as specified in the notice, Securities called for redemption become due and
payable on the Redemption Date and at the Redemption Price. Upon surrender to the Paying Agent,
such Securities called for redemption shall be paid at the Redemption Price, but interest
installments whose maturity is on or prior to such Redemption Date will be payable on the relevant
Interest Payment Dates to the Holders of record at the close of business on the relevant record
dates specified pursuant to Section 2.01.

			
	SECTION 3.06	 	Deposit of Redemption Price.

          On or prior to 11:00 a.m., New York City time, on any Redemption Date, the Company or a
Subsidiary Guarantor shall deposit with the Trustee or the Paying Agent (or, if the Company or a
Subsidiary Guarantor is acting as the Paying Agent, segregate and hold in trust as provided in
Section 2.06) an amount of money in same day funds sufficient to pay the Redemption Price of, and
(except if the Redemption Date shall be an Interest Payment Date) accrued interest on and any
Additional Amounts with respect to, the Securities or portions thereof which are to be redeemed on
that date, other than Securities or portions thereof called for redemption on that date which have
been delivered by the Company or a Subsidiary Guarantor to the Trustee for cancellation.

          If the Company or a Subsidiary Guarantor complies with the preceding paragraph, then, unless
the Company or the Subsidiary Guarantors default in the payment of such Redemption Price, interest
on the Securities to be redeemed will cease to accrue on and after the applicable Redemption Date,
whether or not such Securities are presented for payment, and the Holders of such Securities shall
have no further rights with respect to such Securities except for the right to receive the
Redemption Price upon surrender of such Securities. If any Security

21

 

called for redemption shall not be so paid upon surrender thereof for redemption, the
principal, premium, if any, any Additional Amounts, and, to the extent lawful, accrued interest
thereon shall, until paid, bear interest from the Redemption Date at the rate specified pursuant to
Section 2.01 or provided in the Securities or, in the case of Original Issue Discount Securities,
such Securities’ yield to maturity.

			
	SECTION 3.07	 	Securities Redeemed or Purchased in Part.

          Upon surrender to the Paying Agent of a Security to be redeemed in part, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder of such Security without
service charge a new Security or Securities, of the same series and of any authorized denomination
as requested by such Holder in aggregate principal amount equal to, and in exchange for, the
unredeemed portion of the principal of the Security so surrendered that is not redeemed.

			
	SECTION 3.08	 	Purchase of Securities.

          Unless otherwise specified as contemplated by Section 2.01, the Company, any Subsidiary
Guarantor or any Affiliate of the Company or any Subsidiary Guarantor may, subject to applicable
law, at any time purchase or otherwise acquire Securities in the open market or by private
agreement. Any such acquisition shall not operate as or be deemed for any purpose to be a
redemption of the indebtedness represented by such Securities. Any Securities purchased or
acquired by the Company or a Subsidiary Guarantor may be delivered to the Trustee and, upon such
delivery, the indebtedness represented thereby shall be deemed to be satisfied. Section 2.13 shall
apply to all Securities so delivered.

			
	SECTION 3.09	 	Mandatory and Optional Sinking Funds.

          The minimum amount of any sinking fund payment provided for by the terms of Securities of any
series is herein referred to as a “mandatory sinking fund payment,” and any payment in excess of
such minimum amount provided for by the terms of Securities of any series is herein referred to as
an “optional sinking fund payment.” Unless otherwise provided by the terms of Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction as provided in
Section 3.10. Each sinking fund payment shall be applied to the redemption of Securities of any
series as provided for by the terms of Securities of such series and by this Article III.

			
	SECTION 3.10	 	Satisfaction of Sinking Fund Payments with Securities.

          The Company or a Subsidiary Guarantor may deliver outstanding Securities of a series (other
than any previously called for redemption) and may apply as a credit Securities of a series that
have been redeemed either at the election of the Company pursuant to the terms of such Securities
or through the application of permitted optional sinking fund payments pursuant to the terms of
such Securities, in each case in satisfaction of all or any part of any sinking fund payment with
respect to the Securities of such series required to be made pursuant to the terms of such series
of Securities; provided that such Securities have not been previously so credited. Such Securities
shall be received and credited for such purpose by the Trustee at the Redemption

22

 

Price specified in such Securities for redemption through operation of the sinking fund and
the amount of such sinking fund payment shall be reduced accordingly.

			
	SECTION 3.11	 	Redemption of Securities for Sinking Fund.

          Not less than 45 days prior (unless a shorter period shall be satisfactory to the Trustee) to
each sinking fund payment date for any series of Securities, the Company will deliver to the
Trustee an Officers’ Certificate of the Company specifying the amount of the next ensuing sinking
fund payment for that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivery of or by crediting Securities of that series pursuant to Section 3.10 and
will also deliver or cause to be delivered to the Trustee any Securities to be so delivered.
Failure of the Company to timely deliver or cause to be delivered such Officers’ Certificate and
Securities specified in this paragraph, if any, shall not constitute a default but shall constitute
the election of the Company (i) that the mandatory sinking fund payment for such series due on the
next succeeding sinking fund payment date shall be paid entirely in cash without the option to
deliver or credit Securities of such series in respect thereof and (ii) that the Company will make
no optional sinking fund payment with respect to such series as provided in this Section.

          If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on
the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund
payments made in cash shall exceed $100,000 (or the Dollar equivalent thereof based on the
applicable Exchange Rate on the date of original issue of the applicable Securities) or a lesser
sum if the Company shall so request with respect to the Securities of any particular series, such
cash shall be applied on the next succeeding sinking fund payment date to the redemption of
Securities of such series at the sinking fund redemption price together with accrued interest to
the date fixed for redemption. If such amount shall be $100,000 (or the Dollar equivalent thereof
as aforesaid) or less and the Company makes no such request then it shall be carried over until a
sum in excess of $100,000 (or the Dollar equivalent thereof as aforesaid) is available. Not less
than 30 days before each such sinking fund payment date, the Trustee shall select the Securities to
be redeemed upon such sinking fund payment date in the manner specified in Section 3.03 and cause
notice of the redemption thereof to be given in the name of and at the expense of the Company in
the manner provided in Section 3.04. Such notice having been duly given, the redemption of such
Securities shall be made upon the terms and in the manner stated in Sections 3.05, 3.06 and 3.07.

ARTICLE IV

COVENANTS

			
	SECTION 4.01	 	Payment of Securities.

          The Company shall pay the principal of, premium (if any) and interest on and any Additional
Amounts with respect to the Securities of each series on the dates and in the manner provided in
the Securities of such series and in this Indenture. Principal, premium, interest and any
Additional Amounts shall be considered paid on the date due if the Paying Agent (other than the
Company, a Subsidiary Guarantor or other Subsidiary) holds as of 11:00 a.m. New York time

23

 

on that date money deposited by the Company or a Subsidiary Guarantor designated for and
sufficient to pay all principal, premium, interest and any Additional Amounts then due.

          The Company shall pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium (if any), at a rate equal to the then applicable
interest rate on the Securities to the extent lawful; and it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest and any Additional Amount (without regard to any applicable grace period) at the same rate
to the extent lawful.

			
	SECTION 4.02	 	Maintenance of Office or Agency.

          The Company will maintain in each Place of Payment for any series of Securities an office or
agency (which may be an office of the Trustee, the Registrar or the Paying Agent) where Securities
of that series may be presented for registration of transfer or exchange, where Securities of that
series may be presented for payment and where notices and demands to or upon the Company or a
Subsidiary Guarantor in respect of the Securities of that series and this Indenture may be served.
Unless otherwise designated by the Company by written notice to the Trustee and the Subsidiary
Guarantors, such office or agency shall be the office or agency of the Trustee in The City of New
York, which on the date hereof is located at U.S. Bank Trust, N.A., 100 Wall Street, 16th Floor,
New York, NY 10005. The Company will give prompt written notice to the Trustee and the Subsidiary
Guarantors of the location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or shall fail to furnish
the Trustee and the Subsidiary Guarantors with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the Trustee.

          The Company may also from time to time designate one or more other offices or agencies where
the Securities of one or more series may be presented or surrendered for any or all such purposes
and may from time to time rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain an office or
agency in each Place of Payment for Securities of any series for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.

			
	SECTION 4.03	 	SEC Reports; Financial Statements.

          (a) If the Company is subject to the requirements of Section 13 or 15(d) of the Exchange Act,
the Company shall file with the Trustee, within 15 days after it files the same with the SEC,
copies of the annual reports and the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations prescribe) that the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If
this Indenture is qualified under the TIA, but not otherwise, the Company shall also comply with
the provisions of TIA § 314(a). Delivery of such reports, information and documents to the Trustee
shall be for informational purposes only, and the Trustee’s receipt thereof shall not constitute
constructive notice of any information contained therein or determinable from information contained
therein, including the Company’s and the Subsidiary

24

 

Guarantors’ compliance with any of their covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers’ Certificates or certificates delivered pursuant to
Section 4.04).

          (b) If the Company is not subject to the requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall furnish to all Holders of Rule 144A Securities and prospective purchasers of
Rule 144A Securities designated by the Holders of Rule 144A Securities, promptly upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4) promulgated under the
Securities Act of 1933, as amended.

			
	SECTION 4.04	 	Compliance Certificate.

          (a) Each of the Company and the Subsidiary Guarantors shall deliver to the Trustee, within 120
days after the end of each fiscal year of the Company, a statement signed by an Officer of the
Company and each Subsidiary Guarantor, respectively, which need not constitute an Officers’
Certificate, complying with TIA § 314(a)(4) and stating that in the course of performance by the
signing Officer of his duties as such Officer of the Company or such Subsidiary Guarantor, as the
case may be, he would normally obtain knowledge of the keeping, observing, performing and
fulfilling by the Company or such Subsidiary Guarantor, as the case may be, of its obligations
under this Indenture, and further stating that to the best of his knowledge the Company or such
Subsidiary Guarantor, as the case may be, has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the performance or observance
of any of the terms, provisions and conditions hereof (or, if a Default or Event of Default shall
have occurred, describing all such Defaults or Events of Default of which such Officer may have
knowledge and what action the Company or such Subsidiary Guarantor, as the case may be, is taking
or proposes to take with respect thereto).

          (b) The Company or any Subsidiary Guarantor shall, so long as Securities of any series are
outstanding, deliver to the Trustee, forthwith upon any Officer of the Company or such Subsidiary
Guarantor, as the case may be, becoming aware of any Default or Event of Default under this
Indenture, an Officers’ Certificate specifying such Default or Event of Default and what action the
Company or such Subsidiary Guarantor, as the case may be, is taking or proposes to take with
respect thereto.

			
	SECTION 4.05	 	Corporate Existence.

          Subject to Article V, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its existence.

			
	SECTION 4.06	 	Waiver of Stay, Extension or Usury Laws.

          Each of the Company and the Subsidiary Guarantors covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any usury law or other law
that would prohibit or forgive it from paying all or any portion of the principal of or interest on
the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each of the Company and the Subsidiary Guarantors hereby

25

 

expressly waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been enacted.

			
	SECTION 4.07	 	Additional Amounts.

          If the Securities of a series expressly provide for the payment of Additional Amounts, the
Company will pay to the Holder of any Security of such series Additional Amounts as expressly
provided therein. Whenever in this Indenture there is mentioned, in any context, the payment of
the principal of or any premium or interest on, or in respect of, any Security of any series or the
net proceeds received from the sale or exchange of any Security of any series, such mention shall
be deemed to include mention of the payment of Additional Amounts provided for in this Section 4.07
to the extent that, in such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to the provisions of this Section 4.07 and express mention of the payment of
Additional Amounts (if applicable) in any provisions hereof shall not be construed as excluding
Additional Amounts in those provisions hereof where such express mention is not made. The Trustee
shall not be deemed to have knowledge of any Additional Amounts owing unless it receives written
notice thereof either from the Company or the holders of not less than 25% in principal amount of
the then outstanding Securities.

ARTICLE V

SUCCESSORS

			
	SECTION 5.01	 	Limitations on Mergers and Consolidations.

          Neither the Company nor any Subsidiary Guarantor shall, in any transaction or series of
transactions, consolidate with or merge into any Person, or sell, lease, convey, transfer or
otherwise dispose of all or substantially all of its assets to any Person (other than a
consolidation or merger of one or more Subsidiary Guarantors into the Company or a merger of
Subsidiary Guarantors, or a sale, lease, conveyance, transfer or other disposition of all or
substantially all of the assets of a Subsidiary Guarantor to the Company or of a Subsidiary
Guarantor to another Subsidiary Guarantor), unless:

     (1) either (a) the Company or such Subsidiary Guarantor, as the case may be, shall be
the continuing Person or (b) the Person (if other than the Company or such Subsidiary
Guarantor) formed by such consolidation or into which the Company or such Subsidiary
Guarantor is merged, or to which such sale, lease, conveyance, transfer or other disposition
shall be made (collectively, the “Successor”), expressly assumes by supplemental indenture
the due and punctual payment of the principal of, premium (if any) and interest on and any
Additional Amounts with respect to all the Securities and the performance of the Company’s
covenants and obligations under this Indenture and the Securities, or, in the case of such
Subsidiary Guarantor, the performance of the Guarantee and such Subsidiary Guarantor’s
covenants and obligations under this Indenture and the Securities;

26

 

     (2) immediately after giving effect to such transaction or series of transactions, no
Default or Event of Default shall have occurred and be continuing or would result therefrom;
and

     (3) the Company delivers to the Trustee an Officers’ Certificate and an Opinion of
Counsel, each stating that the transaction and such supplemental indenture comply with this
Indenture.

			
	SECTION 5.02	 	Successor Person Substituted.

          Upon any consolidation or merger of the Company or a Subsidiary Guarantor, as the case may be,
or any sale, lease, conveyance, transfer or other disposition of all or substantially all of the
assets of the Company or such Subsidiary Guarantor in accordance with Section 5.01, the Successor
formed by such consolidation or into or with which the Company or the Subsidiary Guarantor is
merged or to which such sale, lease, conveyance, transfer or other disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of the Company or such
Subsidiary Guarantor, as the case may be, under this Indenture and the Securities with the same
effect as if such Successor had been named as the Company or such Subsidiary Guarantor, as the case
may be, herein and the predecessor Company or Subsidiary Guarantor, in the case of a sale,
conveyance, transfer or other disposition, shall be released from all obligations under this
Indenture, the Securities and, in the case of a Subsidiary Guarantor, the Guarantee.

ARTICLE VI

DEFAULTS AND REMEDIES

			
	SECTION 6.01	 	Events of Default.

          Unless either inapplicable to a particular series or specifically deleted or modified in or
pursuant to the supplemental indenture or Board Resolution establishing such series of Securities
or in the form of Security for such series, an “Event of Default,” wherever used herein with
respect to Securities of any series, occurs if:

          (1) the Company defaults in the payment of interest on or any Additional Amounts with
respect to any Security of that series when the same becomes due and payable and such
default continues for a period of 30 days;

          (2) the Company defaults in the payment of (A) the principal of any Security of that
series at its Maturity or (B) premium (if any) on any Security of that series when the same
becomes due and payable;

          (3) the Company defaults in the deposit of any sinking fund payment, when and as due by
the terms of a Security of that series, and such default continues for a period of 30 days;

          (4) the Company, or if any series of Securities outstanding is entitled to the benefits
of a Guarantee, any Subsidiary Guarantor, fails to comply with any of its

27

 

other covenants or agreements in, or provisions of, the Securities of such series or
this Indenture (other than an agreement, covenant or provision that has expressly been
included in this Indenture solely for the benefit of one or more series of Securities other
than that series) which shall not have been remedied within the specified period after
written notice, as specified in the last paragraph of this Section 6.01;

          (5) the Company, or if that series of Securities is entitled to the benefits of a
Guarantee by any Subsidiary Guarantor, any Subsidiary Guarantor, if it is a Significant
Subsidiary, pursuant to or within the meaning of any Bankruptcy Law:

     (A) commences a voluntary case,

     (B) consents to the entry of an order for relief against it in an involuntary
case,

     (C) consents to the appointment of a Bankruptcy Custodian of it or for all or
substantially all of its property, or

     (D) makes a general assignment for the benefit of its creditors;

          (6) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that remains unstayed and in effect for 90 days and that:

     (A) is for relief against the Company or any Subsidiary Guarantor with respect
to such series, if it is a Significant Subsidiary, as debtor in an involuntary case,

     (B) appoints a Bankruptcy Custodian of the Company or any Subsidiary Guarantor,
if it is a Significant Subsidiary, or a Bankruptcy Custodian for all or
substantially all of the property of the Company, or any Subsidiary Guarantor with
respect to such series, if it is a Significant Subsidiary, or

     (C) orders the liquidation of the Company or any Subsidiary Guarantor with
respect to such series, if it is a Significant Subsidiary; or

          (7) any Guarantee of any Subsidiary Guarantor that is a Significant Subsidiary with
respect to such series ceases to be in full force and effect with respect to Securities of
that series (except as otherwise provided in this Indenture) or is declared null and void in
a judicial proceeding, or any such Subsidiary Guarantor denies or disaffirms its obligations
under this Indenture or such Guarantee; or

          (8) any other Event of Default provided with respect to Securities of that series
occurs.

          The term “Bankruptcy Custodian” means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.

28

 

          The Trustee shall not be deemed to know or have notice of any Default or Event of Default
unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice
of any event which is in fact such a Default or Event of Default is received by the Trustee at the
Corporate Trust Office of the Trustee, and such notice references the Securities and this
Indenture.

          When a Default is cured, it ceases.

          Notwithstanding the foregoing provisions of this Section 6.01, if the principal of, premium
(if any) or interest on or Additional Amounts with respect to any Security is payable in a currency
or currencies (including a composite currency) other than Dollars and such currency or currencies
are not available to the Company or a Subsidiary Guarantor for making payment thereof due to the
imposition of exchange controls or other circumstances beyond the control of the Company or such
Subsidiary Guarantor (a “Conversion Event”), the Company will be entitled to satisfy its
obligations to Holders of the Securities by making such payment in Dollars in an amount equal to
the Dollar equivalent of the amount payable in such other currency, as determined by the Company or
the Subsidiary Guarantor, as the case may be, by reference to the Exchange Rate on the date of such
payment, or, if such rate is not then available, on the basis of the most recently available
Exchange Rate. Notwithstanding the foregoing provisions of this Section 6.01, any payment made
under such circumstances in Dollars where the required payment is in a currency other than Dollars
will not constitute an Event of Default under this Indenture.

          Promptly after the occurrence of a Conversion Event, the Company or a Subsidiary Guarantor
shall give written notice thereof to the Trustee; and the Trustee, promptly after receipt of such
notice, shall give notice thereof in the manner provided in Section 12.02 to the Holders. Promptly
after the making of any payment in Dollars as a result of a Conversion Event, the Company or a
Subsidiary Guarantor, as the case may be, shall give notice in the manner provided in Section 12.02
to the Holders, setting forth the applicable Exchange Rate and describing the calculation of such
payments.

          A Default under clause (4) of this Section 6.01 is not an Event of Default until the Trustee
notifies the Company and the Subsidiary Guarantors, or the Holders of at least 25% in principal
amount of the then outstanding Securities of the series affected by such Default notify the
Company, the Subsidiary Guarantors and the Trustee, of the Default, and the Company or the
applicable Subsidiary Guarantor, as the case may be, fails to cure the Default within 60 days after
receipt of the notice. The notice must specify the Default, demand that it be remedied and state
that the notice is a “Notice of Default.”

SECTION 6.02 Acceleration.

          If an Event of Default with respect to any Securities of any series at the time outstanding
(other than an Event of Default specified in clause (5) or (6) of Section 6.01) occurs and is
continuing, the Trustee by notice to the Company and the Subsidiary Guarantors, or the Holders of
at least 25% in principal amount of the then outstanding Securities of the series affected by such
Event of Default by notice to the Company, the Subsidiary Guarantors and the Trustee, may declare
the principal of (or, if any such Securities are Original Issue Discount

29

 

Securities, such portion of the principal amount as may be specified in the terms of that
series) and all accrued and unpaid interest on all then outstanding Securities of such series to be
due and payable. Upon any such declaration, the amounts due and payable on the Securities shall be
due and payable immediately. If an Event of Default specified in clause (5) or (6) of Section 6.01
hereof occurs, such amounts shall ipso facto become and be immediately due and payable without any
declaration, notice or other act on the part of the Trustee or any Holder. The Holders of a
majority in principal amount of the then outstanding Securities of the series affected by such
Event of Default, by written notice to the Trustee, may rescind an acceleration and its
consequences (other than nonpayment of principal of or premium or interest on or any Additional
Amounts with respect to the Securities) if the rescission would not conflict with any judgment or
decree and if all existing Events of Default with respect to Securities of that series have been
cured or waived, except nonpayment of principal, premium, interest or any Additional Amounts that
has become due solely because of the acceleration.

SECTION 6.03 Other Remedies.

          If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of principal of, or premium, if any, or interest on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.

          The Trustee may maintain a proceeding even if it does not possess any of the Securities or
does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

SECTION 6.04 Waiver of Defaults.

          Subject to Sections 6.07 and 9.02, the Holders of a majority in principal amount of the then
outstanding Securities of any series by notice to the Trustee may waive an existing or past Default
or Event of Default with respect to such series and its consequences (including waivers obtained in
connection with a tender offer or exchange offer for Securities of such series or a solicitation of
consents in respect of Securities of such series, provided that in each case such offer or
solicitation is made to all Holders of then outstanding Securities of such series), except (1) a
continuing Default or Event of Default in the payment of the principal of, or premium, if any, or
interest on or any Additional Amounts with respect to any Security or (2) a continued Default in
respect of a provision that under Section 9.02 cannot be amended or supplemented without the
consent of each Holder affected. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.

SECTION 6.05 Control by Majority.

          With respect to Securities of any series, the Holders of a majority in principal amount of the
then outstanding Securities of such series may direct in writing the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising

30

 

any trust or power conferred on it relating to or arising under an Event of Default. However,
the Trustee may refuse to follow any direction that conflicts with applicable law or this
Indenture, that the Trustee determines may be unduly prejudicial to the rights of other Holders, or
that may involve the Trustee in personal liability; provided, however, that the Trustee may take
any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior
to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it
in its sole discretion from Holders directing the Trustee against all losses and expenses caused by
taking or not taking such action.

SECTION 6.06 Limitations on Suits.

          Subject to Section 6.07 hereof, a Holder of a Security of any series may pursue a remedy with
respect to this Indenture or the Securities of such series or any related Guarantees only if:

     (1) the Holder gives to the Trustee written notice of a continuing Event of Default
with respect to such series;

     (2) the Holders of at least 25% in principal amount of the then outstanding Securities
of such series make a written request to the Trustee to pursue the remedy;

     (3) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee
against any loss, liability or expense;

     (4) the Trustee does not comply with the request within 60 days after receipt of the
request and the offer of indemnity; and

     (5) during such 60-day period the Holders of a majority in principal amount of the
Securities of that series do not give the Trustee a direction inconsistent with the request.

          A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a
preference or priority over another Holder.

SECTION 6.07 Rights of Holders to Receive Payment.

          Notwithstanding any other provision of this Indenture, the right of any Holder of a Security
to receive payment of principal of and premium, if any, and interest on and any Additional Amounts
with respect to the Security, on or after the respective due dates expressed in the Security, or to
bring suit for the enforcement of any such payment on or after such respective dates, is absolute
and unconditional and shall not be impaired or affected without the consent of the Holder.

SECTION 6.08 Collection Suit by Trustee.

          If an Event of Default specified in clause (1) or (2) of Section 6.01 hereof occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an
express trust against the Company or a Subsidiary Guarantor for the amount of principal,

31

 

premium (if any), interest and any Additional Amounts remaining unpaid on the Securities of
the series affected by the Event of Default, and interest on overdue principal and premium, if any,
and, to the extent lawful, interest on overdue interest, and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.

SECTION 6.09 Trustee May File Proofs of Claim.

          The Trustee is authorized to file such proofs of claim and other papers or documents and to
take such actions, including participating as a member, voting or otherwise, of any committee of
creditors, as may be necessary or advisable to have the claims of the Trustee (including any claim
for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders allowed in any judicial proceedings relative to the Company or a
Subsidiary Guarantor or their respective creditors or properties and shall be entitled and
empowered to collect, receive and distribute any money or other property payable or deliverable on
any such claims and any Bankruptcy Custodian in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee, and in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07. To the extent that
the payment of any such compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.07 out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall be secured by a lien
on, and shall be paid out of, any and all distributions, dividends, money, securities and other
properties which the Holders of the Securities may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding.

SECTION 6.10 Priorities.

          If the Trustee collects any money pursuant to this Article VI, it shall, subject to Article X,
pay out the money in the following order:

     First: to the Trustee for amounts due under Section 7.07;

     Second: to Holders for amounts due and unpaid on the Securities in respect of which or
for the benefit of which such money has been collected, for principal, premium (if any),
interest and any Additional Amounts ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal, premium (if any),
interest and any Additional Amounts, respectively; and

     Third: to the Company.

32

 

          The Trustee, upon prior written notice to the Company, may fix record dates and payment dates
for any payment to Holders pursuant to this Article VI.

          To the fullest extent allowed under applicable law, if for the purpose of obtaining a judgment
against the Company or a Subsidiary Guarantor in any court it is necessary to convert the sum due
in respect of the principal of, premium (if any) or interest on or Additional Amounts with respect
to the Securities of any series (the “Required Currency”) into a currency in which a judgment will
be rendered (the “Judgment Currency”), the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the Business Day in The City of New York next
preceding that on which final judgment is given. None of the Company, any Subsidiary Guarantor or
the Trustee shall be liable for any shortfall nor shall it benefit from any windfall in payments to
Holders of Securities under this Section 6.10 caused by a change in exchange rates between the time
the amount of a judgment against it is calculated as above and the time the Trustee converts the
Judgment Currency into the Required Currency to make payments under this Section 6.10 to Holders of
Securities, but payment of such judgment shall discharge all amounts owed by the Company and the
Subsidiary Guarantors on the claim or claims underlying such judgment.

SECTION 6.11 Undertaking for Costs.

          In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as a trustee, a court in its discretion
may require the filing by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’
fees, against any party litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of more than
10% in principal amount of the then outstanding Securities of any series.

ARTICLE VII

TRUSTEE

SECTION 7.01 Duties of Trustee.

          (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of care and skill in
such exercise, as a prudent person would exercise or use under the circumstances in the conduct of
such person’s own affairs.

          (b) Except during the continuance of an Event of Default with respect to the Securities of any
series:

     (1) the Trustee need perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and

33

 

     (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine such certificates and opinions to determine
whether, on their face, they appear to conform to the requirements of this Indenture.

          (c) The Trustee may not be relieved from liabilities for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:

          (1) this paragraph does not limit the effect of Section 7.01(b);

          (2) the Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and

          (3) the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 6.05.

          (d) Whether or not therein expressly so provided, every provision of this Indenture that in
any way relates to the Trustee is subject to the provisions of this Section 7.01.

          (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or incur any liability. The Trustee may refuse to perform any duty or exercise any right or power
unless it receives indemnity satisfactory to it against any loss, liability or expense.

          (f) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company and the Subsidiary Guarantors. Money held in trust
by the Trustee need not be segregated from other funds except to the extent required by law. All
money received by the Trustee shall, until applied as herein provided, be held in trust for the
payment of the principal of, premium (if any) and interest on and Additional Amounts with respect
to the Securities.

SECTION 7.02 Rights of Trustee.

          (a) The Trustee may conclusively rely on any document believed by it to be genuine and to have
been signed or presented by the proper Person. The Trustee need not investigate any fact or matter
stated in the document.

          (b) Before the Trustee acts or refrains from acting, it may require instruction, an Officers’
Certificate or an Opinion of Counsel or both to be provided. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on such instruction, Officers’
Certificate or Opinion of Counsel. The Trustee may consult at the Company’s expense with counsel
of its selection and the written advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.

34

 

          (c) The Trustee may act through agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.

          (d) The Trustee shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers conferred upon it by this
Indenture.

          (e) Unless otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Company or any Subsidiary Guarantor shall be sufficient if signed by an Officer
of the Company.

SECTION 7.03 May Hold Securities.

          The Trustee in its individual or any other capacity may become the owner or pledgee of
Securities and may otherwise deal with the Company, any Subsidiary Guarantor or any of their
respective Affiliates with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights and duties. However, the Trustee is subject to Sections 7.10 and 7.11.

SECTION 7.04 Trustee’s Disclaimer.

          The Trustee makes no representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Company’s use of the proceeds from the Securities
or any money paid to the Company or any Subsidiary Guarantor or upon the Company’s or such
Subsidiary Guarantor’s direction under any provision hereof, it shall not be responsible for the
use or application of any money received by any Paying Agent other than the Trustee and it shall
not be responsible for any statement or recital herein or any statement in the Securities other
than its certificate of authentication.

SECTION 7.05 Notice of Defaults.

          If a Default or Event of Default with respect to the Securities of any series occurs and is
continuing and it is known to the Trustee, the Trustee shall mail to Holders of Securities of such
series a notice of the Default or Event of Default within 30 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium (if any) and interest on
and Additional Amounts or any sinking fund installment with respect to the Securities of such
series, the Trustee may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the interests of Holders of
Securities of such series.

SECTION 7.06 Reports by Trustee to Holders.

          Within 60 days after each May 15 of each year after the execution of this Indenture, the
Trustee shall mail to Holders of a series, the Subsidiary Guarantors and the Company a brief report
dated as of such reporting date that complies with TIA § 313(a); provided, however, that if no
event described in TIA § 313(a) has occurred within the twelve months preceding the reporting date
with respect to a series, no report need be transmitted to

35

 

Holders of such series. The Trustee also shall comply with TIA § 313(b). The Trustee shall
also transmit by mail all reports if and as required by TIA §§ 313(c) and 313(d).

          A copy of each report at the time of its mailing to Holders of a series of Securities shall be
filed by the Company or a Subsidiary Guarantor with the SEC and each securities exchange, if any,
on which the Securities of such series are listed. The Company shall notify the Trustee if and
when any series of Securities is listed on any securities exchange.

SECTION 7.07 Compensation and Indemnity.

          The Company agrees to pay to the Trustee for its acceptance of this Indenture and services
hereunder such compensation as the Company and the Trustee shall from time to time agree in
writing. The Trustee’s compensation shall not be limited by any law on compensation of a trustee
of an express trust. The Company agrees to reimburse the Trustee upon request for all reasonable
disbursements, advances and expenses incurred by it. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee’s agents and counsel.

          The Company hereby indemnifies the Trustee and any predecessor Trustee against any and all
loss, liability, damage, claim or expense, including taxes (other than taxes based upon, measured
by or determined by the income of the Trustee), incurred by it arising out of or in connection with
the acceptance or administration of its duties under this Indenture, except as set forth in the
next following paragraph. The Trustee shall notify the Company and the Subsidiary Guarantors
promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company or the Subsidiary Guarantors of their obligations hereunder.
The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent.

          The Company shall not be obligated to reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through the Trustee’s negligence or bad faith.

          To secure the payment obligations of the Company in this Section 7.07, the Trustee shall have
a lien prior to the Securities on all money or property held or collected by the Trustee, except
that held in trust to pay principal of, premium (if any) and interest on and any Additional Amounts
with respect to Securities of any series. Such lien and the Company’s obligations under this
Section 7.07 shall survive the satisfaction and discharge of this Indenture.

          When the Trustee incurs expenses or renders services after an Event of Default specified in
Section 6.01(5) or (6) occurs, the expenses and the compensation for the services (including the
fees and expenses of its agents and counsel) are intended to constitute expenses of administration
under any Bankruptcy Law.

SECTION 7.08 Replacement of Trustee.

          A resignation or removal of the Trustee and appointment of a successor Trustee shall become
effective only upon the successor Trustee’s acceptance of appointment as provided in this Section
7.08.

36

 

          The Trustee may resign and be discharged at any time with respect to the Securities of one or
more series by so notifying the Company and the Subsidiary Guarantors. The Holders of a majority
in principal amount of the then outstanding Securities of any series may remove the Trustee with
respect to the Securities of such series by so notifying the Trustee, the Company and the
Subsidiary Guarantors. The Company may remove the Trustee if:

     (1) the Trustee fails to comply with Section 7.10;

     (2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law;

     (3) a Bankruptcy Custodian or public officer takes charge of the Trustee or its
property; or

     (4) the Trustee otherwise becomes incapable of acting.

          If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, with respect to the Securities of one or more series, the Company shall promptly appoint a
successor Trustee or Trustees with respect to the Securities of that or those series (it being
understood that any such successor Trustee may be appointed with respect to the Securities of one
or more or all of such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series). Within one year after the successor Trustee with respect
to the Securities of any series takes office, the Holders of a majority in principal amount of the
Securities of such series then outstanding may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.

          If a successor Trustee with respect to the Securities of any series does not take office
within 30 days after the retiring or removed Trustee resigns or is removed, the retiring or removed
Trustee, the Company, any Subsidiary Guarantor or the Holders of at least 10% in principal amount
of the then outstanding Securities of such series may petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the Securities of such series.

          If the Trustee with respect to the Securities of a series fails to comply with Section 7.10,
any Holder of Securities of such series may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee with respect to the Securities of
such series.

          In case of the appointment of a successor Trustee with respect to all Securities, each such
successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee, to
the Company and to the Subsidiary Guarantors. Thereupon the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the rights, powers and
duties of the retiring Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.

37

 

          In case of the appointment of a successor Trustee with respect to the Securities of one or
more (but not all) series, the Company, the Subsidiary Guarantors, the retiring Trustee and each
successor Trustee with respect to the Securities of one or more (but not all) series shall execute
and deliver an indenture supplemental hereto in which each successor Trustee shall accept such
appointment and that (1) shall confer to each successor Trustee all the rights, powers and duties
of the retiring Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall confirm that all the rights, powers and duties of the retiring
Trustee with respect to the Securities of that or those series as to which the retiring Trustee is
not retiring shall continue to be vested in the retiring Trustee and (3) shall add to or change any
of the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee. Nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same trust, and each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee. Upon the execution and delivery of such
supplemental indenture, the resignation or removal of the retiring Trustee shall become effective
to the extent provided therein and each such successor Trustee shall have all the rights, powers
and duties of the retiring Trustee with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates. On request of the Company or any successor
Trustee, such retiring Trustee shall transfer to such successor Trustee all property held by such
retiring Trustee as Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.

          Notwithstanding replacement of the Trustee or Trustees pursuant to this Section 7.08, the
obligations of the Company under Section 7.07 shall continue for the benefit of the retiring
Trustee or Trustees.

SECTION 7.09 Successor Trustee by Merger, etc.

          Subject to Section 7.10, if the Trustee consolidates, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another corporation, the successor
corporation without any further act shall be the successor Trustee.

          In case any Securities shall have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such authenticating Trustee may
adopt such authentication and deliver the Securities so authenticated; and in case at that time any
of the Securities shall not have been authenticated, any successor to the Trustee may authenticate
such Securities either in the name of any predecessor hereunder or in the name of the successor to
the Trustee; and in all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the Trustee shall have.

SECTION 7.10 Eligibility; Disqualification.

          There shall at all times be a Trustee hereunder which shall be a corporation or banking or
trust company or association organized and doing business under the laws of the United States, any
State thereof or the District of Columbia and authorized under such laws to

38

 

exercise corporate trust power, shall be subject to supervision or examination by Federal or
State (or the District of Columbia) authority and shall have, or be a subsidiary of a bank or bank
holding company having, a combined capital and surplus of at least $50 million as set forth in its
most recent published annual report of condition.

          The Indenture shall always have a Trustee who satisfies the requirements of TIA §§ 310(a)(1),
310(a)(2) and 310(a)(5). The Trustee is subject to and shall comply with the provisions of TIA §
310(b) during the period of time required by this Indenture. Nothing in this Indenture shall
prevent the Trustee from filing with the SEC the application referred to in the penultimate
paragraph of TIA § 310(b).

			
	SECTION 7.11	 	Preferential Collection of Claims Against the Company or a Subsidiary Guarantor.

          The Trustee is subject to and shall comply with the provisions of TIA § 311(a), excluding any
creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be
subject to TIA § 311(a) to the extent indicated therein.

ARTICLE VIII

DISCHARGE OF INDENTURE

SECTION 8.01 Termination of the Company’s and the Subsidiary Guarantors’ Obligations.

          (a) This Indenture shall cease to be of further effect with respect to the Securities of a
series (except that the Company’s obligations under Section 7.07, the Trustee’s and Paying Agent’s
obligations under Section 8.03 and the rights, powers, protections and privileges accorded the
Trustee under Article VII shall survive), and the Trustee, on demand of the Company, shall execute
proper instruments acknowledging the satisfaction and discharge of this Indenture with respect to
the Securities of such series, when:

     (1) either:

     (A) all outstanding Securities of such series theretofore authenticated and
issued (other than destroyed, lost or stolen Securities that have been replaced or
paid) have been delivered to the Trustee for cancellation; or

     (B) all outstanding Securities of such series not theretofore delivered to the
Trustee for cancellation:

	 	(i)	 	have become due and payable, or
	 
	 	(ii)	 	will become due and payable at
their Stated Maturity within one year, or
	 
	 	(iii)	 	are to be called for redemption
within one year under arrangements satisfactory to the Trustee
for the giving of

39

 

	 	 	 	notice of redemption by the Trustee in the name, and at the
expense, of the Company,

and, in the case of clause (i), (ii) or (iii) above, the Company or a Subsidiary
Guarantor has irrevocably deposited or caused to be deposited with the Trustee as
funds (immediately available to the Holders in the case of clause (i)) in trust for
such purpose (x) cash in an amount, or (y) Government Obligations, maturing as to
principal and interest at such times and in such amounts as will ensure the
availability of cash in an amount or (z) a combination thereof, which will be
sufficient, in the opinion (in the case of clauses (y) and (z)) of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge the entire
indebtedness on the Securities of such series for principal and interest to the date
of such deposit (in the case of Securities which have become due and payable) or for
principal, premium, if any, and interest to the Stated Maturity or Redemption Date,
as the case may be; or

     (C) the Company and the Subsidiary Guarantors have properly fulfilled such
other means of satisfaction and discharge as is specified, as contemplated by
Section 2.01, to be applicable to the Securities of such series;

     (2) the Company or a Subsidiary Guarantor has paid or caused to be paid all other sums
payable by them hereunder with respect to the Securities of such series; and

     (3) the Company has delivered to the Trustee an Officers’ Certificate stating that all
conditions precedent to satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, together with an Opinion of Counsel to
the same effect.

          (b) Unless this Section 8.01(b) is specified as not being applicable to Securities of a series
as contemplated by Section 2.01, the Company may, at its option, terminate certain of its and the
Subsidiary Guarantors’ respective obligations under this Indenture (“covenant defeasance”) with
respect to the Securities of a series if:

     (1) the Company or a Subsidiary Guarantor has irrevocably deposited or caused to be
irrevocably deposited with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for and dedicated solely to the benefit
of the Holders of Securities of such series, (i) money in the currency in which payment of
the Securities of such series is to be made in an amount, or (ii) Government Obligations
with respect to such series, maturing as to principal and interest at such times and in such
amounts as will ensure the availability of money in the currency in which payment of the
Securities of such series is to be made in an amount or (iii) a combination thereof, that is
sufficient, in the opinion (in the case of clauses (ii) and (iii)) of a nationally
recognized firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay the principal of and premium (if any) and interest
on all Securities of such series on each date that such principal, premium (if any) or
interest is due and payable and (at the Stated Maturity thereof or

40

 

upon redemption as provided in Section 8.01(e)) to pay all other sums payable by it hereunder; provided
that the Trustee shall have been irrevocably instructed to apply such money and/or the
proceeds of such Government Obligations to the payment of said principal, premium (if any)
and interest with respect to the Securities of such series as the same shall become due;

     (2) the Company has delivered to the Trustee an Officers’ Certificate stating that all
conditions precedent to satisfaction and discharge of this Indenture with respect to the
Securities of such series have been complied with, and an Opinion of Counsel to the same
effect;

     (3) no Default or Event of Default with respect to the Securities of such series shall
have occurred and be continuing on the date of such deposit;

     (4) the Company shall have delivered to the Trustee an Opinion of Counsel from a
nationally recognized counsel acceptable to the Trustee or a tax ruling to the effect that
the Holders will not recognize income, gain or loss for U.S. Federal income tax purposes as
a result of the Company’s exercise of its option under this Section 8.01(b) and will be
subject to U.S. Federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such option had not been exercised;

     (5) the Company and the Subsidiary Guarantors have complied with any additional
conditions specified pursuant to Section 2.01 to be applicable to the discharge of
Securities of such series pursuant to this Section 8.01; and

     (6) such deposit and discharge shall not cause the Trustee to have a conflicting
interest as defined in TIA § 310(b).

          In such event, this Indenture shall cease to be of further effect (except as set forth in this
paragraph), and the Trustee, on demand of the Company, shall execute proper instruments
acknowledging satisfaction and discharge under this Indenture. However, the Company’s and the
Subsidiary Guarantors’ respective obligations in Sections 2.05, 2.06, 2.07, 2.08, 2.09, 4.01, 4.02,
7.07, 7.08 and 8.04, the Trustee’s and Paying Agent’s obligations in Section 8.03 and the rights,
powers, protections and privileges accorded the Trustee under Article VII shall survive until all
Securities of such series are no longer outstanding. Thereafter, only the Company’s obligations in
Section 7.07 and the Trustee’s and Paying Agent’s obligations in Section 8.03 shall survive with
respect to Securities of such series.

          After such irrevocable deposit made pursuant to this Section 8.01(b) and satisfaction of the
other conditions set forth herein, the Trustee upon request shall acknowledge in writing the
discharge of the Company’s and the Subsidiary Guarantors’ obligations under this Indenture with
respect to the Securities of such series except for those surviving obligations specified above.

          In order to have money available on a payment date to pay principal of or premium (if any) or
interest on the Securities, the Government Obligations shall be payable as to

41

 

principal or interest on or before such payment date in such amounts as will provide the
necessary money. Government Obligations shall not be callable at the issuer’s option.

          (c) If the Company and the Subsidiary Guarantors have previously complied or is concurrently
complying with Section 8.01(b) (other than any additional conditions specified pursuant to Section
2.01 that are expressly applicable only to covenant defeasance) with respect to Securities of a
series, then, unless this Section 8.01(c) is specified as not being applicable to Securities of
such series as contemplated by Section 2.01, the Company may elect that its and the Subsidiary
Guarantors’ respective obligations to make payments with respect to Securities of such series be
discharged (“legal defeasance”), if:

     (1) no Default or Event of Default under clauses (5) and (6) of Section 6.01 hereof
shall have occurred at any time during the period ending on the 91st day after the date of
deposit contemplated by Section 8.01(b) (it being understood that this condition shall not
be deemed satisfied until the expiration of such period);

     (2) unless otherwise specified with respect to Securities of such series as
contemplated by Section 2.01, the Company has delivered to the Trustee an Opinion of Counsel
from a nationally recognized counsel acceptable to the Trustee to the effect referred to in
Section 8.01(b)(4) with respect to such legal defeasance, which opinion is based on (i) a
private ruling of the Internal Revenue Service addressed to the Company, (ii) a published
ruling of the Internal Revenue Service pertaining to a comparable form of transaction or
(iii) a change in the applicable federal income tax law (including regulations) after the
date of this Indenture;

     (3) the Company and the Subsidiary Guarantors have complied with any other conditions
specified pursuant to Section 2.01 to be applicable to the legal defeasance of Securities of
such series pursuant to this Section 8.01(c); and

     (4) the Company has delivered to the Trustee a Company Request requesting such legal
defeasance of the Securities of such series and an Officers’ Certificate stating that all
conditions precedent with respect to such legal defeasance of the Securities of such series
have been complied with, together with an Opinion of Counsel to the same effect.

          In such event, the Company and the Subsidiary Guarantors will be discharged from its
obligations under this Indenture and the Securities of such series to pay principal of, premium (if
any) and interest on and any Additional Amounts with respect to Securities of such series, the
Company’s and the Subsidiary Guarantors’ respective obligations under Sections 4.01, 4.02 and 10.1
shall terminate with respect to such Securities, and the entire indebtedness of the Company
evidenced by such Securities and of the Subsidiary Guarantors evidenced by the related Guarantee
shall be deemed paid and discharged.

          (d) If and to the extent additional or alternative means of satisfaction, discharge or
defeasance of Securities of a series are specified to be applicable to such series as contemplated
by Section 2.01, each of the Company and the Subsidiary Guarantors may terminate any or all of its
obligations under this Indenture with respect to Securities of a series

42

 

and any or all of its obligations under the Securities of such series if it fulfills such
other means of satisfaction and discharge as may be so specified, as contemplated by Section 2.01,
to be applicable to the Securities of such series.

          (e) If Securities of any series subject to subsections (a), (b), (c) or (d) of this Section
8.01 are to be redeemed prior to their Stated Maturity, whether pursuant to any optional redemption
provisions or in accordance with any mandatory or optional sinking fund provisions, the terms of
the applicable trust arrangement shall provide for such redemption, and the Company shall make such
arrangements as are reasonably satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company.

SECTION 8.02 Application of Trust Money.

          The Trustee or a trustee satisfactory to the Trustee and the Company shall hold in trust money
or Government Obligations deposited with it pursuant to Section 8.01 hereof. It shall apply the
deposited money and the money from Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal of, premium (if any) and interest on and
any Additional Amounts with respect to the Securities of the series with respect to which the
deposit was made. Money and securities held in trust are not subject to Article X.

SECTION 8.03 Repayment to Company.

          The Trustee and the Paying Agent shall promptly pay to the Company or any Subsidiary Guarantor
any excess money or Government Obligations (or proceeds therefrom) held by them at any time upon
the written request of the Company.

          Subject to the requirements of any applicable abandoned property laws, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by them for the payment
of principal, premium (if any), interest or any Additional Amounts that remain unclaimed for two
years after the date upon which such payment shall have become due. After payment to the Company,
Holders entitled to the money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another Person, and all liability of the Trustee and
the Paying Agent with respect to such money shall cease.

SECTION 8.04 Reinstatement.

          If the Trustee or the Paying Agent is unable to apply any money or Government Obligations
deposited with respect to Securities of any series in accordance with Section 8.01 by reason of any
legal proceeding or by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the obligations of the Company
and the Subsidiary Guarantors under this Indenture with respect to the Securities of such series
and under the Securities of such series shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.01 until such time as the Trustee or the Paying Agent is permitted
to apply all such money or Government Obligations in accordance with Section 8.01; provided,
however, that if the Company or any Subsidiary Guarantor has made any payment of principal of,
premium (if any) or interest on or any

43

 

Additional Amounts with respect to any Securities because of the reinstatement of its
obligations, the Company or such Subsidiary Guarantor, as the case may be, shall be subrogated to
the rights of the Holders of such Securities to receive such payment from the money or Government
Obligations held by the Trustee or the Paying Agent.

ARTICLE IX

SUPPLEMENTAL INDENTURES AND AMENDMENTS

SECTION 9.01 Without Consent of Holders.

          The Company, the Subsidiary Guarantors and the Trustee may amend or supplement this Indenture
or the Securities or waive any provision hereof or thereof without the consent of any Holder:

     (1) to cure any ambiguity, omission, defect or inconsistency;

     (2) to comply with Section 5.01;

     (3) to provide for uncertificated Securities in addition to or in place of certificated
Securities, or to provide for the issuance of bearer Securities (with or without coupons);

     (4) to provide any security for, or to add any guarantees of or additional obligors on,
any series of Securities or the related Guarantees, if any;

     (5) to comply with any requirement in order to effect or maintain the qualification of
this Indenture under the TIA;

     (6) to add to the covenants of the Company or any Subsidiary Guarantor for the benefit
of the Holders of all or any series of Securities (and if such covenants are to be for the
benefit of less than all series of Securities, stating that such covenants are expressly
being included solely for the benefit of such series), or to surrender any right or power
herein conferred upon the Company or any Subsidiary Guarantor;

     (7) to add any additional Events of Default with respect to all or any series of the
Securities (and, if any Event of Default is applicable to less than all series of
Securities, specifying the series to which such Event of Default is applicable);

     (8) to change or eliminate any of the provisions of this Indenture; provided that any
such change or elimination shall become effective only when there is no outstanding Security
of any series created prior to the execution of such amendment or supplemental indenture
that is adversely affected in any material respect by such change in or elimination of such
provision; provided, further, that any change made solely to conform the provisions of this
Indenture to the description of any Security in a prospectus supplement pursuant to which
such Securities were offered and sold will not be deemed to adversely affect any Security of
that series in any material respect;

44

 

     (9) to establish the form or terms of Securities of any series as permitted by Section
2.01;

     (10) to supplement any of the provisions of this Indenture to such extent as shall be
necessary to permit or facilitate the defeasance and discharge of any series of
Securities pursuant to Section 8.01; provided, however, that any such action shall not
adversely affect the interest of the Holders of Securities of such series or any other
series of Securities in any material respect; or

     (11) to evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 7.08.

          Upon the request of the Company, accompanied by a Board Resolution, and upon receipt by the
Trustee of the documents described in Section 9.06, the Trustee shall, subject to Section 9.06,
join with the Company and the Subsidiary Guarantors in the execution of any supplemental indenture
authorized or permitted by the terms of this Indenture and make any further appropriate agreements
and stipulations that may be therein contained.

          Notwithstanding anything to the contrary in this Section 9.01, it shall not be necessary for
any Subsidiary Guarantor to join with the Company and the Trustee in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture unless such
supplemental indenture applies to a series of Securities entitled to the benefit of a Guarantee by
such Subsidiary Guarantor.

SECTION 9.02 With Consent of Holders.

          Except as provided below in this Section 9.02, the Company, the Subsidiary Guarantors and the
Trustee may amend or supplement this Indenture with the written consent (including consents
obtained in connection with a tender offer or exchange offer for Securities of any one or more
series or all series or a solicitation of consents in respect of Securities of any one or more
series or all series, provided that in each case such offer or solicitation is made to all Holders
of then outstanding Securities of each such series (but the terms of such offer or solicitation may
vary from series to series)) of the Holders of at least a majority in principal amount of the then
outstanding Securities of each series affected by such amendment or supplement.

          Upon the request of the Company, accompanied by a Board Resolution, and upon the filing with
the Trustee of evidence of the consent of the Holders as aforesaid, and upon receipt by the Trustee
of the documents described in Section 9.06, the Trustee shall, subject to Section 9.06, join with
the Company and the Subsidiary Guarantors in the execution of such amendment or supplemental
indenture.

          It shall not be necessary for the consent of the Holders under this Section 9.02 to approve
the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.

45

 

          The Holders of a majority in principal amount of the then outstanding Securities of one or
more series may waive compliance in a particular instance by the Company or any Subsidiary
Guarantor with any provision of this Indenture with respect to Securities of such series (including
waivers obtained in connection with a tender offer or exchange offer for
Securities of such series or a solicitation of consents in respect of Securities of such
series, provided that in each case such offer or solicitation is made to all Holders of then
outstanding Securities of such series (but the terms of such offer or solicitation may vary from
series to series)).

          However, without the consent of each Holder affected, an amendment, supplement or waiver under
this Section 9.02 may not:

     (1) reduce the amount of Securities whose Holders must consent to an amendment,
supplement or waiver;

     (2) reduce the rate of or change the time for payment of interest, including default
interest, on any Security;

     (3) reduce the principal of, any premium on or any mandatory sinking fund payment with
respect to, or change the Stated Maturity of, any Security or reduce the amount of the
principal of an Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 6.02;

     (4) reduce the premium, if any, payable upon the redemption of any Security or change
the time at which any Security may or shall be redeemed;

     (5) change any obligation of the Company or any Subsidiary Guarantor to pay Additional
Amounts with respect to any Security;

     (6) change the coin or currency or currencies (including composite currencies) in which
any Security or any premium, interest or Additional Amounts with respect thereto are
payable;

     (7) impair the right to institute suit for the enforcement of any payment of principal
of, premium (if any) or interest on or any Additional Amounts with respect to any Security
pursuant to Sections 6.07 and 6.08, except as limited by Section 6.06;

     (8) make any change in the percentage of principal amount of Securities necessary to
waive compliance with certain provisions of this Indenture pursuant to Section 6.04 or 6.07
or make any change in this sentence of Section 9.02;

     (9) modify the provisions of this Indenture with respect to the subordination of any
Security in a manner adverse to the Holder thereof;

     (10) except as provided in Section 11.04, release any Subsidiary Guarantor or modify
the related Guarantee in any manner materially adverse to the Holders; or

46

 

     (11) waive a continuing Default or Event of Default in the payment of principal of,
premium (if any) or interest on or Additional Amounts with respect to the Securities.

          An amendment under this Section 9.02 may not make any change that adversely affects the rights
under Article X of any holder of an issue of Senior Debt unless the holders of the issue pursuant
to its terms consent to the change.

          A supplemental indenture that changes or eliminates any covenant or other provision of this
Indenture which has expressly been included solely for the benefit of one or more particular series
of Securities, or which modifies the rights of the Holders of Securities of such series with
respect to such covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.

          The right of any Holder to participate in any consent required or sought pursuant to any
provision of this Indenture (and the obligation of the Company or any Subsidiary Guarantor to
obtain any such consent otherwise required from such Holder) may be subject to the requirement that
such Holder shall have been the Holder of record of any Securities with respect to which such
consent is required or sought as of a date identified by the Company or such Subsidiary Guarantor
in a notice furnished to Holders in accordance with the terms of this Indenture.

          After an amendment, supplement or waiver under this Section 9.02 becomes effective, the
Company shall mail to the Holders of each Security affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any such amendment,
supplement or waiver.

          Notwithstanding anything to the contrary in this Section 9.02, it shall not be necessary for
any Subsidiary Guarantor to join with the Company and the Trustee in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture unless such
supplemental indenture applies to a series of Securities entitled to the benefit of a Guarantee by
such Subsidiary Guarantor.

SECTION 9.03 Compliance with Trust Indenture Act.

          Every amendment or supplement to this Indenture or the Securities shall comply in form and
substance with the TIA as then in effect.

SECTION 9.04 Revocation and Effect of Consents.

          Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holder’s Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent
as to his or her Security or portion of a Security if the Trustee receives written notice of
revocation before a date and time therefor identified by the Company or any Subsidiary Guarantor in
a notice furnished to such Holder in accordance with the terms of this Indenture or, if no such
date and time shall be identified, the date the amendment,

47

 

supplement or waiver becomes effective.
An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter
binds every Holder.

          The Company or any Subsidiary Guarantor may, but shall not be obligated to, fix a record date
(which need not comply with TIA § 316(c)) for the purpose of determining the Holders entitled to
consent to any amendment, supplement or waiver or to take any other action under this Indenture.
If a record date is fixed, then notwithstanding the provisions of the immediately preceding
paragraph, those Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to consent to such amendment, supplement or waiver or to
revoke any consent previously given, whether or not such Persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after such record date
unless consents from Holders of the principal amount of Securities required hereunder for such
amendment or waiver to be effective shall have also been given and not revoked within such 90-day
period.

          After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless
it is of the type described in any of clauses (1) through (9) of Section 9.02 hereof. In such
case, the amendment, supplement or waiver shall bind each Holder who has consented to it and every
subsequent Holder that evidences the same debt as the consenting Holder’s Security.

SECTION 9.05 Notation on or Exchange of Securities.

          If an amendment or supplement changes the terms of an outstanding Security, the Company may
require the Holder of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security at the request of the Company regarding the changed terms and
return it to the Holder. Alternatively, if the Company so determines, the Company in exchange for
the Security shall issue and the Trustee shall authenticate a new Security that reflects the
changed terms. Failure to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment or supplement.

          Securities of any series authenticated and delivered after the execution of any amendment or
supplement may, and shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such amendment or supplement.

SECTION 9.06 Trustee to Sign Amendments, etc.

          The Trustee shall sign any amendment or supplement authorized pursuant to this Article if the
amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of
the Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign
such amendment or supplement, the Trustee shall be entitled to receive, and, shall be fully
protected in relying upon in good faith, an Officers’ Certificate and an Opinion of Counsel
provided at the expense of the Company or a Subsidiary Guarantor as conclusive evidence that such
amendment or supplement is authorized or permitted by this Indenture, that it is not inconsistent
herewith, and that it will be valid and binding upon the Company in accordance with its terms.

48

 

ARTICLE X

SUBORDINATION OF SECURITIES AND GUARANTEES

SECTION 10.01 Securities and Guarantees Subordinated to Senior Debt.

          The Company, the Subsidiary Guarantors and each Holder of a Security of a series, by his
acceptance thereof, agree that (a) the payment of the principal of, premium (if any) and interest
on and any Additional Amounts with respect to each and all the Securities of such series and any
related Guarantee and (b) any other payment in respect of the Securities and any related Guarantee
of such series, including on account of the acquisition or redemption of Securities of such series
by the Company or the Subsidiary Guarantor, as the case may be, is subordinated, to the extent and
in the manner provided in this Article X, to the prior payment in full of all Senior Debt of the
Company, whether outstanding at the date of this Indenture or thereafter created, incurred, assumed
or guaranteed, and that these subordination provisions are for the benefit of the holders of Senior
Debt.

          This Article X shall constitute a continuing offer to all Persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Debt, and such provisions are made for
the benefit of the holders of Senior Debt, and such holders are made obligees hereunder and any one
or more of them may enforce such provisions.

SECTION 10.02 No Payment on Securities in Certain Circumstances.

          (a) Unless otherwise provided with respect to the Securities of a series as contemplated by
Section 2.01, no payment shall be made by or on behalf of the Company or the Subsidiary Guarantor,
as the case may be, on account of the principal of, premium (if any) or interest on or any
Additional Amounts with respect to the Securities and any related Guarantees of any series or to
acquire any Securities of such series (including any repurchases of Securities of such series
pursuant to the provisions thereof at the option of the Holder thereof) for cash or property, or on
account of any redemption provisions of Securities of such series, in the event of default in
payment of any principal of, premium (if any) or interest on any Senior Debt of the Company when
the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by
acceleration of maturity or otherwise (a “Payment Default”), unless and until such Payment Default
has been cured or waived or otherwise has ceased to exist or such Senior Debt shall have been
discharged or paid in full.

          (b) In furtherance of the provisions of Section 10.01, in the event that, notwithstanding the
foregoing provisions of this Section 10.02, any payment or distribution of assets of the Company or
the Subsidiary Guarantors, as the case may be, shall be received by the Trustee, the Paying Agent
or the Holders of Securities of any series and any related Guarantees at a time when such payment
or distribution was prohibited by the provisions of this Section 10.02, then, unless such payment
or distribution is no longer prohibited by this Section 10.02, such payment or distribution
(subject to the provisions of Section 10.07) shall be received and held in trust by the Trustee,
the Paying Agent or such Holder for the benefit of the holders of Senior Debt of the Company, and
shall be paid or delivered by the Trustee, the Paying Agent or such Holders, as the case may be, to
the holders of Senior Debt of the Company remaining

49

 

unpaid or unprovided for or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing such Senior Debt of the
Company may have been issued, ratably, according to the aggregate amounts remaining unpaid on
account of such Senior Debt of the Company held or represented by each, for application to the
payment of all Senior Debt in full after giving effect to all concurrent payments and distributions
to or for the holders of such Senior Debt.

			
	SECTION 10.03	 	Securities and Guarantees Subordinated to Prior Payment of All Senior Debt on
Dissolution, Liquidation or Reorganization.

          Upon any distribution of assets of the Company or the Subsidiary Guarantors, as the case may
be, or upon any dissolution, winding up, total or partial liquidation or reorganization of the
Company or the Subsidiary Guarantors, as the case may be, whether voluntary or involuntary, in
bankruptcy, insolvency, receivership or similar proceeding or upon assignment for the benefit of
creditors:

     (1) the holders of all Senior Debt of the Company shall first be entitled to receive
payments in full before the Holders of Securities of any series and any related Guarantees
are entitled to receive any payment on account of the principal of, premium (if any) or
interest on or any Additional Amounts with respect to Securities of such series and any
related Guarantees;

     (2) any payment or distribution of assets of the Company or the Subsidiary Guarantors,
as the case may be, of any kind or character, whether in cash, property or securities, to
which the Holders of Securities of any series and any related Guarantees, or the Trustee on
behalf of such Holders would be entitled, except for the provisions of this Article X, shall
be paid by the liquidating trustee or agent or other Person making such a payment or
distribution directly to the holders of such Senior Debt or their representative, ratably
according to the respective amounts of Senior Debt held or represented by each, to the
extent necessary to make payment in full of all such Senior Debt remaining unpaid after
giving effect to all concurrent payments and distributions to the holders of such Senior
Debt; and

     (3) in the event that, notwithstanding the foregoing, any payment or distribution of
assets of the Company or the Subsidiary Guarantors, as the case may be, of any kind or
character, whether in cash, property or securities, shall be received by the Trustee or the
Holders of Securities of any series and any related Guarantees or any Paying Agent (or, if
the Company, the Subsidiary Guarantor or any other Subsidiary is acting as the Paying Agent,
money for any such payment or distribution shall be segregated or held in trust) on account
of the principal of, premium (if any) or interest on or any Additional Amounts with respect
to the Securities of such series and any related Guarantees before all Senior Debt of the
Company is paid in full, such payment or distribution (subject to the provisions of Section
10.07) shall be received and held in trust by the Trustee or such Holder or Paying Agent for
the benefit of the holders of such Senior Debt, or their respective representatives, ratably
according to the respective amounts of such Senior Debt held or represented by each, to the
extent necessary to make payment as provided herein of all such Senior Debt remaining unpaid
after giving effect

50

 

to all concurrent payments and distributions and all provisions therefor to or for the
holders of such Senior Debt, but only to the extent that as to any holder of such Senior
Debt, as promptly as practical following notice from the Trustee to the holders of such
Senior Debt or their representatives that such prohibited payment has been received by the
Trustee, Holder(s) or Paying Agent (or has been segregated as provided above), such holder
(or a representative therefor) notifies the Trustee of the amounts then due and owing on
such Senior Debt, if any, held by such holder and only the amounts specified in such notices
to the Trustee shall be paid to the holders of such Senior Debt.

SECTION 10.04 Subrogation to Rights of Holders of Senior Debt.

          Subject to the payment in full of all Senior Debt of the Company as provided herein, the
Holders of the Securities of any series and any related Guarantees shall be subrogated (to the
extent of the payments or distributions made to the holders of such Senior Debt pursuant to the
provisions of this Article X) to the rights of the holders of such Senior Debt to receive payments
or distributions of assets of the Company or the Subsidiary Guarantors, as the case may be,
applicable to the Senior Debt until all amounts owing on the Securities of such series and any
related Guarantees shall be paid in full. For the purpose of such subrogation, no such payments or
distributions to the holders of such Senior Debt by the Company or the Subsidiary Guarantors, as
the case may be, or by or on behalf of the Holders of the Securities of such series and any related
Guarantees by virtue of this Article X, which otherwise would have been made to such Holders shall,
as between the Company or the Subsidiary Guarantors, as the case may be, and such Holders, be
deemed to be payment by the Company or the Subsidiary Guarantors, as the case may be, or on account
of such Senior Debt, it being understood that the provisions of this Article X are and are intended
solely for the purpose of defining the relative rights of the Holders of the Securities of a series
and any related Guarantees, on the one hand, and the holders of such Senior Debt, on the other
hand.

          If any payment or distribution to which the Holders of the Securities and any related
Guarantees would otherwise have been entitled but for the provisions of this Article X shall have
been applied, pursuant to the provisions of this Article X, to the payment of amounts payable under
Senior Debt of the Company, then such Holders shall be entitled to receive from the holders of such
Senior Debt any payments or distributions received by such holders of Senior Debt in excess of the
amount sufficient to pay all amounts payable under or in respect of such Senior Debt in full.

SECTION 10.05     Obligations of the Company and the Subsidiary Guarantors Unconditional.

          Nothing contained in this Article X or elsewhere in this Indenture or in the Securities is
intended to or shall impair, as between the Company or the Subsidiary Guarantors, as the case may
be, and the Holders of the Securities of any series and any related Guarantees, the obligation of
the Company or the Subsidiary Guarantors, as the case may be, which is absolute and unconditional,
to pay to such Holders the principal of such series, premium (if any) and interest on and any
Additional Amounts with respect to the Securities of such series and any related Guarantees of such
series as and when the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of such Holders

51

 

and creditors of the Company or the Subsidiary Guarantors, as the case may be, other than the
holders of the Senior Debt, nor shall anything herein or therein prevent the Trustee or any Holder
from exercising all remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article X, of the holders of Senior Debt in
respect of cash, property or securities of the Company or the Subsidiary Guarantors, as the case
may be, received upon the exercise of any such remedy. Notwithstanding anything to the contrary in
this Article X or elsewhere in this Indenture or in the Securities, upon any distribution of assets
of the Company or the Subsidiary Guarantors, as the case may be, referred to in this Article X, the
Trustee, subject to the provisions of Sections 7.01 and 7.02, and the Holders of the Securities and
any related Guarantee shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which such dissolution, winding up, liquidation or reorganization
proceedings are pending, or a certificate of the liquidating trustee or agent or other Person
making any distribution to the Trustee or to such Holders for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior Debt and other Debt
of the Company or any Subsidiary Guarantors, as the case may be, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article X so long as such court has been apprised of the provisions of, or the order,
decree or certificate makes reference to, the provisions of this Article X.

SECTION 10.06 Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice.

          The Trustee shall not at any time be charged with knowledge of the existence of any facts that
would prohibit the making of any payment to or by the Trustee unless and until a Responsible
Officer of the Trustee or any Paying Agent shall have received, no later than two Business Days
prior to such payment, written notice thereof from the Company or the Subsidiary Guarantor, as the
case may be, or from one or more holders of Senior Debt or from any representative thereof and,
prior to the receipt of any such written notice, the Trustee, subject to the provisions of Sections
7.01 and 7.02, shall be entitled in all respects conclusively to assume that no such fact exists.

          Subject to the provisions of Sections 7.01 and 7.02, the Trustee shall be entitled to rely on
the delivery to it of a written notice by a Person representing himself to be a holder of Senior
Debt (or a representative thereof) to establish that such notice has been given by a holder of
Senior Debt (or a representative thereof). In the event that the Trustee determines in good faith
that further evidence is required with respect to the right of any Person as a holder of Senior
Debt to participate in any payment or distribution pursuant to this Article, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of the Senior Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of such Person to receive such
payment.

SECTION 10.07 Application by Trustee of Amounts Deposited with It.

          Amounts deposited in trust with the Trustee pursuant to and in accordance with Article VIII
shall be for the sole benefit of Holders of Securities of the series for the benefit of

52

 

which such amounts were deposited, and, to the extent allocated for the payment of Securities
and any related Guarantees of such series, shall not be subject to the subordination provisions of
this Article X. Otherwise, any deposit of assets with the Trustee or the Paying Agent (whether or
not in trust) for the payment of principal of, premium (if any) or interest on or any Additional
Amounts with respect to any Securities of such series and any related Guarantees shall be subject
to the provisions of Sections 10.01, 10.02, 10.03 and 10.04; provided that if prior to two Business
Days preceding the date on which by the terms of this Indenture any such assets may become
distributable for any purpose (including, without limitation, the payment of either principal of,
premium (if any) or interest on or any Additional Amounts with respect to any Security and any
related Guarantees), a Responsible Officer of the Trustee or such Paying Agent shall not have
received with respect to such assets the written notice provided for in Section 10.06, then the
Trustee or such Paying Agent shall have full power and authority to receive such assets and to
apply the same to the purpose for which they were received, and shall not be affected by any notice
to the contrary that may be received by it on or after such date; and provided further that nothing
contained in this Article X shall prevent the Company or the Subsidiary Guarantors, as the case may
be, from making, or the Trustee from receiving or applying, any payment in connection with the
redemption of Securities of a series if the first publication of notice of such redemption (whether
by mail or otherwise in accordance with this Indenture) has been made, and the Trustee has received
such payment from the Company or the Subsidiary Guarantors, as the case may be, prior to the
occurrence of any of the contingencies specified in Section 10.02 or 10.03.

			
	SECTION 10.08	 	Subordination Rights Not Impaired by Acts or Omissions of the Company, the Subsidiary
Guarantors or Holders of Senior Debt.

          No right of any present or future holders of any Senior Debt to enforce subordination
provisions contained in this Article X shall at any time in any way be prejudiced or impaired by
any act or failure to act on the part of the Company or the Subsidiary Guarantors, as the case may
be, or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by
the Company or the Subsidiary Guarantors, as the case may be, with the terms of this Indenture,
regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
The holders of Senior Debt may extend, renew, modify or amend the terms of the Senior Debt or any
security therefor and release, sell or exchange such security and otherwise deal freely with the
Company or the Subsidiary Guarantors, as the case may be, all without affecting the liabilities and
obligations of the parties to this Indenture or the Holders of the Securities of any series and any
related Guarantees.

SECTION 10.09 Trustee to Effectuate Subordination of Securities.

          Each Holder of a Security of any series and any related Guarantees by his acceptance thereof
authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary
or appropriate to effectuate the subordination provisions contained in this Article X and to
protect the rights of the Holders of the Securities and any related Guarantee of such series
pursuant to this Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or reorganization of the
Company or the Subsidiary Guarantors, as the case may be (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors of the

53

 

Company or the Subsidiary Guarantors, as the case may be), the filing of a claim for the
unpaid balance of his Securities and any related Guarantees in the form required in said
proceedings and cause said claim to be approved. If the Trustee does not file a proper claim or
proof of debt in the form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Debt or their representative is
hereby authorized to have the right to file and is hereby authorized to file an appropriate claim
for and on behalf of the Holders of Securities of such series and any related Guarantees. Nothing
contained herein shall be deemed to authorize the Trustee or the holders of Senior Debt or their
representative to authorize or consent to or accept or adopt on behalf of any Holder of Securities
of any series and any related Guarantees any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of such series and any related Guarantees or the rights of any
Holder thereof, or to authorize the Trustee or the holders of Senior Debt or their representative
to vote in respect of the claim of any Holder of the Securities of such series and any related
Guarantees in any such proceeding.

SECTION 10.10 Right of Trustee to Hold Senior Debt.

          The Trustee in its individual capacity shall be entitled to all of the rights set forth in
this Article X in respect of any Senior Debt at any time held by it to the same extent as any other
holder of Senior Debt, and nothing in this Indenture shall be construed to deprive the Trustee of
any of its rights as such holder.

          Nothing in this Article shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.

SECTION 10.11 Article X Not to Prevent Events of Default.

          The failure to make a payment on account of principal of or premium (if any) or interest on
the Securities of any series and any related Guarantees by reason of any provision of this Article
X shall not be construed as preventing the occurrence of a Default or an Event of Default under
Section 6.01 with respect to Securities of such series and any related Guarantees or in any way
prevent the Holders of the Securities of such series and any related Guarantees from exercising any
right hereunder other than the right to receive payment on the Securities of such series and any
related Guarantees.

SECTION 10.12 No Fiduciary Duty of Trustee to Holders of Senior Debt.

          With respect to the holders of Senior Debt, the Trustee undertakes to perform or to observe
only such of its covenants and obligations as are specifically set forth in this Article, and no
implied covenants or obligations with respect to the holders of such Senior Debt shall be read into
this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to
the holders of Senior Debt, and shall not be liable to any such holders (other than for its willful
misconduct or negligence) if it shall in good faith mistakenly pay over or distribute to the
Holders of the Securities of any series and any related Guarantees or the Company or the Subsidiary
Guarantors, as the case may be, or any other Person, cash, property or securities to which any
holders of Senior Debt shall be entitled by virtue of this Article X or otherwise. Nothing in this
Section 10.12 shall affect the obligation of any other such Person to

54

 

hold such payment for the benefit of, and to pay such payment over to, the holders of Senior
Debt or their representative.

SECTION 10.13 Article Applicable to Paying Agent.

          In case at any time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term “Trustee” as used in this Article X shall in such
case (unless the context shall otherwise require) be construed as extending to and including such
Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article X in addition to or in place of the Trustee; provided, however, that this
Section 10.13 shall not apply to the Company, any Subsidiary Guarantor or any other Subsidiary if
the Company, such Subsidiary Guarantor or such other Subsidiary acts as Paying Agent.

ARTICLE XI

GUARANTEE

SECTION 11.01 Guarantee.

          (a) Notwithstanding any provision of this Article XI to the contrary, the provisions of this
Article XI relating to the Subsidiary Guarantors shall be applicable only to, and inure solely to
the benefit of, the Securities of any series designated, pursuant to Section 2.01, as entitled to
the benefits of the related Guarantee of each of the Subsidiary Guarantors.

          (b) For value received, each of the Subsidiary Guarantors hereby fully, unconditionally and
absolutely guarantees (each, a “Guarantee”) to the Holders and to the Trustee the due and punctual
payment of the principal of, and premium, if any, and interest on the Securities and all other
amounts due and payable under this Indenture and the Securities by the Company, when and as such
principal, premium, if any, and interest shall become due and payable, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise, according to the
terms of the Securities and this Indenture, subject to the limitations set forth in Section 11.03
and the subordination provisions contained in Article X.

          (c) Failing payment when due of any amount guaranteed pursuant to the related Guarantee, for
whatever reason, each of the Subsidiary Guarantors will be jointly and severally obligated to pay
the same immediately, subject to the subordination provisions contained in Article X. Each of the
Guarantees hereunder is intended to be a general, unsecured, subordinated obligation of the related
Subsidiary Guarantor and will rank pari passu in right of payment with all Debt of such Subsidiary
Guarantor that is not, by its terms, expressly subordinated in right of payment to such Guarantee.
Each of the Subsidiary Guarantors hereby agrees that its obligations hereunder shall be full,
unconditional and absolute, irrespective of the validity, regularity or enforceability of the
Securities, its Guarantee, the Guarantee of any other Subsidiary Guarantor or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder of the Securities
with respect to any provisions hereof or thereof, the recovery of any judgment against the Company
or any Subsidiary Guarantor, or any
action to enforce the same or any other circumstances which might otherwise constitute a legal

55

 

or equitable discharge or defense of the Subsidiary Guarantors. Each of the Subsidiary Guarantors
hereby agrees that in the event of a default in payment of the principal of, or premium, if any, or
interest on the Securities of such series, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise, legal proceedings may be instituted by the Trustee
on behalf of the Holders or, subject to Section 6.06, by the Holders, on the terms and conditions
set forth in this Indenture, directly against such Subsidiary Guarantor to enforce such Guarantee
without first proceeding against the Company or any other Subsidiary Guarantor.

          (d) The obligations of each of the Subsidiary Guarantors under this Article XI shall be as
aforesaid full, unconditional and absolute and shall not be impaired, modified, released or limited
by any occurrence or condition whatsoever, including, without limitation, (i) any compromise,
settlement, release, waiver, renewal, extension, indulgence or modification of, or any change in,
any of the obligations and liabilities of the Company or any of the Subsidiary Guarantors contained
in the Securities or this Indenture, (ii) any impairment, modification, release or limitation of
the liability of the Company, any of the Subsidiary Guarantors or any of their estates in
bankruptcy, or any remedy for the enforcement thereof, resulting from the operation of any present
or future provision of any applicable Bankruptcy Law, as amended, or other statute or from the
decision of any court, (iii) the assertion or exercise by the Company, any of the Subsidiary
Guarantors or the Trustee of any rights or remedies under the Securities or this Indenture or their
delay in or failure to assert or exercise any such rights or remedies, (iv) the assignment or the
purported assignment of any property as security for the Securities, including all or any part of
the rights of the Company or any of the Subsidiary Guarantors under this Indenture, (v) the
extension of the time for payment by the Company or any of the Subsidiary Guarantors of any
payments or other sums or any part thereof owing or payable under any of the terms and provisions
of the Securities or this Indenture or of the time for performance by the Company or any of the
Subsidiary Guarantors of any other obligations under or arising out of any such terms and
provisions or the extension or the renewal of any thereof, (vi) the modification or amendment
(whether material or otherwise) of any duty, agreement or obligation of the Company or any of the
Subsidiary Guarantors set forth in this Indenture, (vii) the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the assets, marshaling of
assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or other similar proceeding
affecting, the Company or any of the Subsidiary Guarantors or any of their respective assets, or
the disaffirmance of the Securities, the Guarantees or this Indenture in any such proceeding,
(viii) the release or discharge of the Company or any of the Subsidiary Guarantors from the
performance or observance of any agreement, covenant, term or condition contained in any of such
instruments by operation of law, (ix) the unenforceability of the Securities of such series, the
related Guarantees or this Indenture or (x) any other circumstances (other than payment in full or
discharge of all amounts guaranteed pursuant to the related Guarantees) which might otherwise
constitute a legal or equitable discharge of a surety or guarantor.

          (e) Each of the Subsidiary Guarantors hereby (i) waives diligence, presentment, demand of
payment, filing of claims with a court in the event of the merger, insolvency or bankruptcy of the
Company or any of the Subsidiary Guarantors, and all demands whatsoever, (ii) acknowledges that any
agreement, instrument or document evidencing its
Guarantee may be transferred and that the benefit of its obligations hereunder shall extend to

56

 

each holder of any agreement, instrument or document evidencing its Guarantee without notice to it
and (iii) covenants that its Guarantee will not be discharged except by complete performance of
such Guarantee. Each of the Subsidiary Guarantors further agrees that if at any time all or any
part of any payment theretofore applied by any Person to its Guarantee is, or must be, rescinded or
returned for any reason whatsoever, including, without limitation, the insolvency, bankruptcy or
reorganization of the Company or any of the Subsidiary Guarantors, such Guarantee shall, to the
extent that such payment is or must be rescinded or returned, be deemed to have continued in
existence notwithstanding such application, and such Guarantee shall continue to be effective or be
reinstated, as the case may be, as though such application had not been made.

          (f) Each of the Subsidiary Guarantors shall be subrogated to all rights of the Holders and the
Trustee against the Company in respect of any amounts paid by such Subsidiary Guarantor pursuant to
the provisions of this Indenture; provided, however, that such Subsidiary Guarantor shall not be
entitled to enforce or to receive any payments arising out of, or based upon, such right of
subrogation until all of the Securities of such series and the related Guarantees shall have been
paid in full or discharged.

SECTION 11.02 Execution and Delivery of Guarantees.

          To further evidence its Guarantee set forth in Section 11.01, each of the Subsidiary
Guarantors hereby agrees that a notation relating to such Guarantee, substantially in the form
attached hereto as Annex A, shall be endorsed on each Security of the series entitled to the
benefits of such Guarantee authenticated and delivered by the Trustee, which notation of Guarantee
shall be executed by either manual or facsimile signature of an Officer of such Subsidiary
Guarantor. Each of the Subsidiary Guarantors hereby agrees that its Guarantee set forth in Section
11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Security
a notation relating to such Guarantee. If any Officer of such Subsidiary Guarantor whose signature
is on this Indenture or a notation of Guarantee no longer holds that office at the time the Trustee
authenticates such Security or at any time thereafter, the Guarantee of such Security shall be
valid nevertheless. The delivery of any Security of a series entitled to the benefits of a
Guarantee under this Article XI by the Trustee, after the authentication thereof hereunder, shall
constitute due delivery of the Guarantee set forth in this Indenture on behalf of each Subsidiary
Guarantor.

SECTION 11.03 Limitation on Liability of the Subsidiary Guarantors.

          Each Subsidiary Guarantor and by its acceptance hereof each Holder of a Security of a series
entitled to the benefits of a Guarantee under this Article XI hereby confirms that it is the
intention of all such parties that the guarantee by such Subsidiary Guarantor pursuant to its
Guarantee not constitute a fraudulent transfer or conveyance for purposes of any federal or state
law. To effectuate the foregoing intention, the Holders of a Security entitled to the benefits of
such Guarantee and the Subsidiary Guarantors hereby irrevocably agree that the obligations of
each Subsidiary Guarantor under its Guarantee shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and to any
collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Guarantee, result in the

57

 

obligations
of such Subsidiary Guarantor under its Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.

SECTION 11.04 Release of Subsidiary Guarantors from Guarantee.

          (a) Notwithstanding any other provisions of this Indenture, the Guarantee of any Subsidiary
Guarantor may be released upon the terms and subject to the conditions set forth in this Section
11.04. Provided that no Default shall have occurred and shall be continuing under this Indenture,
any Guarantee incurred by a Subsidiary Guarantor pursuant to this Article XI shall be
unconditionally released and discharged (i) automatically upon (A) any sale, exchange or transfer,
whether by way of merger or otherwise, to any Person that is not an Affiliate of the Company, of
all of the Company’s direct or indirect equity interests in such Subsidiary Guarantor (provided
such sale, exchange or transfer is not prohibited by this Indenture) or (B) the merger of such
Subsidiary Guarantor into the Company or any other Subsidiary Guarantor or the liquidation and
dissolution of such Subsidiary Guarantor (in each case to the extent not prohibited by this
Indenture) or (ii) following delivery of a written notice of such release or discharge by the
Company to the Trustee, upon the release or discharge of all guarantees by such Subsidiary
Guarantor of any Debt of the Company other than obligations arising under this Indenture and any
Securities issued hereunder, except a discharge or release by or as a result of payment under such
guarantees.

          (b) The Trustee shall deliver an appropriate instrument evidencing any release of a Subsidiary
Guarantor from its Guarantee upon receipt of a written request of the Company accompanied by an
Officers’ Certificate and an Opinion of Counsel that the Subsidiary Guarantor is entitled to such
release in accordance with the provisions of this Indenture. If the Subsidiary Guarantor is not so
released it shall remain liable for the full amount of principal of (and premium, if any, on) and
interest on the Securities entitled to the benefits of such Guarantee as provided in this
Indenture, subject to the limitations of Section 11.03.

SECTION 11.05 Contribution.

          In order to provide for just and equitable contribution among the Subsidiary Guarantors, the
Subsidiary Guarantors hereby agree, inter se, that in the event any payment or distribution is made
by any Subsidiary Guarantor (a “Funding Guarantor”) under its Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (as applicable) in a pro
rata amount based on the net assets of each Subsidiary Guarantor (including the Funding Guarantor)
for all payments, damages and expenses incurred by that Funding Guarantor in discharging the
Company’s obligations with respect to the Securities of a series entitled to the benefits of a
Guarantee under this Article XI or any other Subsidiary Guarantor’s obligations with respect to its
Guarantee of such series of Securities.

58

 

ARTICLE XII

MISCELLANEOUS

SECTION 12.01 Trust Indenture Act Controls.

          If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by
operation of TIA § 318(c), the imposed duties shall control.

SECTION 12.02 Notices.

          Any notice or communication by the Company, any Subsidiary Guarantor or the Trustee to the
other is duly given if in writing and delivered in person or mailed by first-class mail (registered
or certified, return receipt requested), telex, facsimile or overnight air courier guaranteeing
next day delivery, to the other’s address:

If to the Company or any Subsidiary Guarantor:

Bristow Group Inc.

2000 W. Sam Houston Pkwy. S.,

Suite 1700

Houston, Texas 77042

Attn: Randall A. Stafford

Telephone: (713) 267-7600

Facsimile: (713) ___-_____

If to the Trustee:

U.S. Bank National Association

Goodwin Square

225 Asylum Street

Hartford, CT 06103

Attn: Corporate Trust Services

Telephone: (860) 241-6815

Facsimile: (860) 241-6897

          The Company, any Subsidiary Guarantor or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.

          All notices and communications shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if by facsimile; and the next Business Day after
timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

59

 

          Any notice or communication to a Holder shall be mailed by first-class mail, postage prepaid,
to the Holder’s address shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency with respect to
other Holders.

          If a notice or communication is mailed in the manner provided above within the time
prescribed, it is duly given, whether or not the addressee receives it, except in the case of
notice to the Trustee, it is duly given only when received.

          If the Company or a Subsidiary Guarantor mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.

          All notices or communications, including without limitation notices to the Trustee, the
Company or a Subsidiary Guarantor by Holders, shall be in writing, except as otherwise set forth
herein.

          In case by reason of the suspension of regular mail service, or by reason of any other cause,
it shall be impossible to mail any notice required by this Indenture, then such method of
notification as shall be made with the approval of the Trustee shall constitute a sufficient
mailing of such notice.

SECTION 12.03 Communication by Holders with Other Holders.

          Holders may communicate pursuant to TIA § 312(b) with other Holders with respect to their
rights under this Indenture or the Securities. The Company, the Subsidiary Guarantors, the
Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

SECTION 12.04 Certificate and Opinion as to Conditions Precedent.

          Upon any request or application by the Company or a Subsidiary Guarantor to the Trustee to
take any action under this Indenture, the Company or such Subsidiary Guarantor shall, if requested
by the Trustee, furnish to the Trustee at the expense of the Company or such Subsidiary Guarantor,
as the case may be:

     (1) an Officers’ Certificate (which shall include the statements set forth in
Section 12.05) stating that, in the opinion of the signers, all conditions precedent and
covenants, if any, provided for in this Indenture relating to the proposed action have been
complied with; and

     (2) an Opinion of Counsel (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been complied with.

SECTION 12.05 Statements Required in Certificate or Opinion.

          Each certificate or opinion with respect to compliance with a condition or covenant provided
for in this Indenture (other than a certificate provided pursuant to TIA § 314(a)(4)) shall comply
with the provisions of TIA § 314(e) and shall include:

60

 

     (1) a statement that the Person making such certificate or opinion has read such
covenant or condition;

     (2) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;

     (3) a statement that, in the opinion of such Person, he or she has made such
examination or investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been complied with; and

     (4) a statement as to whether or not, in the opinion of such Person, such condition or
covenant has been complied with.

SECTION 12.06 Rules by Trustee and Agents.

          The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar
or the Paying Agent may make reasonable rules and set reasonable requirements for its functions.

SECTION 12.07 Legal Holidays.

          If a payment date is a Legal Holiday at a Place of Payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.

SECTION 12.08 No Recourse Against Others.

          A director, officer, employee, stockholder, partner or other owner of the Company, a
Subsidiary Guarantor or the Trustee, as such, shall not have any liability for any obligations of
the Company under the Securities, for the obligations of any Subsidiary Guarantor under any
Guarantee, or for any obligations of the Company, any Subsidiary Guarantor or the Trustee under
this Indenture or for any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Security waives and releases all such liability. The waiver
and release shall be part of the consideration for the issue of Securities.

SECTION 12.09 Governing Law.

          THIS INDENTURE, THE SECURITIES AND THE GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

SECTION 12.10 No Adverse Interpretation of Other Agreements.

          This Indenture may not be used to interpret another indenture, loan or debt agreement of the
Company, any Subsidiary Guarantor or any other Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.

61

 

SECTION 12.11 Successors.

          All agreements of the Company and each of the Subsidiary Guarantors in this Indenture and the
Securities shall bind their successors. All agreements of the Trustee in this Indenture shall bind
its successors.

SECTION 12.12 Severability.

          In case any provision in this Indenture or in the Securities or in any Guarantee shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining
provisions shall, to the fullest extent permitted by applicable law, not in any way be affected or
impaired thereby.

SECTION 12.13 Counterpart Originals.

          The parties may sign any number of copies of this Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement.

SECTION 12.14 Table of Contents, Headings, etc.

          The table of contents, cross-reference table and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions hereof.

62

 

          IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of
the day and year first above written.

	 	 	 	 	 
	 	 	BRISTOW GROUP INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	AIR LOGISTICS, L.L.C.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	AIR LOGISTICS OF ALASKA, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	AIRLOG INTERNATIONAL, LTD.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

	 	 	 	
, 	 
	 

	 	 

         as Trustee
	 

	 	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

63

 

ANNEX A

NOTATION OF GUARANTEE

          Each of the Subsidiary Guarantors (which term includes any successor Person under the
Indenture) has fully, unconditionally and absolutely guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture, the due and punctual payment of the
principal of, and premium, if any, and interest on the Securities and all other amounts due and
payable under the Indenture and the Securities by the Company.

          The obligations of the Subsidiary Guarantors to the Holders of Securities and to the Trustee
pursuant to the Guarantee and the Indenture are expressly set forth in Article XI of the Indenture
and reference is hereby made to the Indenture for the precise terms of the Guarantee.

	 	 	 	 	 
	 	 	[NAME OF SUBSIDIARY GUARANTOR]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

A-1exv10w1

Exhibit 10.1

Execution Copy

COMMON STOCK PURCHASE AGREEMENT

BY AND AMONG

CONCHO RESOURCES INC.

AND

THE PURCHASERS NAMED HEREIN

 

 

COMMON STOCK PURCHASE AGREEMENT

     COMMON STOCK PURCHASE AGREEMENT, dated as of June 5, 2008 (this “Agreement”), by and
among CONCHO RESOURCES INC., a Delaware corporation (“Concho”), and each of the purchasers
named in Schedule 2.01 to this Agreement (each such purchaser a “Purchaser” and,
collectively, the “Purchasers”).

     WHEREAS, simultaneously with the execution of this Agreement, Concho is entering into a
definitive purchase agreement to acquire indirectly all of Henry’s right, title and interest in and
to certain oil and gas properties and related assets described in the Henry Acquisition Agreement
upon the terms and conditions and for the consideration set forth in the Henry Acquisition
Agreement (the “Henry Acquisition”);

     WHEREAS, Concho desires to finance a portion of the Henry Acquisition through the sale of an
aggregate of $250,000,138.34 of Common Stock and the Purchasers desire to purchase severally an
aggregate of $250,000,138.34 of Common Stock from Concho, each in accordance with the provisions of
this Agreement;

     WHEREAS, it is a condition to the obligations of the Purchasers and Concho under this
Agreement that the Henry Acquisition be consummated; and

     WHEREAS, Concho has agreed to provide the Purchasers with certain registration rights with
respect to the Purchased Common Stock acquired pursuant to this Agreement.

     NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Concho and each of the Purchasers, severally and not jointly, hereby agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.01. Definitions. As used in this Agreement, and unless the context requires
a different meaning, the following terms have the meanings indicated:

     “8-K Filing” shall have the meaning specified in Section 5.03.

     “Action” against a Person means any lawsuit, action, proceeding, investigation or
complaint before any Governmental Authority, mediator or arbitrator.

     “Affiliate” means, with respect to a specified Person, any other Person, whether now
in existence or hereafter created, directly or indirectly controlling, controlled by or under
direct or indirect common control with such specified Person. For purposes of this definition,
“control” (including, with correlative meanings, “controlling”, “controlled by” and “under common
control with”) means the power to direct or cause the direction of the management and policies of
such Person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.

 

 

     “Agreement” shall have the meaning specified in the introductory paragraph.

     “Basic Documents” means, collectively, this Agreement, the Registration Rights
Agreement, the Henry Acquisition Agreement and any and all other agreements or instruments executed
and delivered by the Parties to evidence the execution, delivery and performance of this Agreement,
and any amendments, supplements, continuations or modifications thereto.

     “Board of Directors” means the board of directors of Concho.

     “Business Day” means any day other than a Saturday, a Sunday, or a legal holiday for
commercial banks in Houston, Texas or New York, New York.

     “Buy-In” shall have the meaning specified in Section 8.07.

     “Buy-In Price” shall have the meaning specified in Section 8.07.

     “Chase Registration Rights Agreement” shall have the meaning specified in Section
3.14.

     “Closing” shall have the meaning specified in Section 2.02.

     “Closing Date” shall have the meaning specified in Section 2.02.

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

     “Commission” means the United States Securities and Exchange Commission.

     “Commitment Amount” means the dollar amount set forth opposite each Purchaser’s name
on Schedule 2.01 to this Agreement under the heading “Gross Proceeds to Issuer”.

     “Common Stock Price” shall have the meaning specified in Section 2.01(b).

     “Common Stockholders” means the Common Stockholders of Concho.

     “Common Stock” means the Common Stock of Concho.

     “Concho” shall have the meaning specified in the introductory paragraph.

     “Concho Financial Statements” shall have the meaning specified in Section 3.03.

     “Concho Material Adverse Effect” means any material and adverse effect on (i) the
assets, liabilities, financial condition, business, prospects, operations, or affairs of Concho and
its Subsidiaries, taken as a whole, measured against those assets, liabilities, financial
condition, business, operations, or affairs reflected in the Concho SEC Documents, other than those
occurring as a result of general economic or financial conditions or other developments that are
not unique to and do not have a material disproportionate impact on Concho and its Subsidiaries but
also affect other Persons who participate in or are engaged in the lines of business of which
Concho and its Subsidiaries participate or are engaged, (ii) the ability of Concho and its
Subsidiaries, taken as a whole, to carry out their business as of the date of this Agreement or to

2

 

meet their obligations under the Basic Documents on a timely basis or (iii) the ability of
Concho to consummate the transactions under any Basic Document.

     “Concho Financial Statements” shall have the meaning specified in Section 3.03.

     “Concho Related Parties” shall have the meaning specified in Section 7.02.

     “Concho SEC Documents” shall have the meaning specified in Section 3.03.

     “DGCL” means Delaware General Corporation Law.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, and the rules and regulations of the Commission promulgated thereunder.

     “GAAP” means generally accepted accounting principles in the United States of America
in effect from time to time.

     “Governmental Authority” shall include the country, state, county, city and political
subdivisions in which any Person or such Person’s Property is located or that exercises valid
jurisdiction over any such Person or such Person’s Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them and any monetary authorities that
exercise valid jurisdiction over any such Person or such Person’s Property. Unless otherwise
specified, all references to Governmental Authority herein shall mean a Governmental Authority
having jurisdiction over, where applicable, Concho, its Subsidiaries or any of their Property or
any of the Purchasers.

     “Henry” means James C. Henry and his wife Paula Henry, Henry Securities Ltd., a Texas
limited partnership, and Henchild, LLC, a Texas limited liability company.

     “Henry Acquisition” shall have the meaning specified in the recitals.

     “Henry Acquisition Agreement” means that certain Purchase Agreement dated June 5,
2008, by and among Concho and Henry, which is attached hereto as Exhibit F.

     “Henry Closing Date” means the date on which the Henry Acquisition is consummated.

     “Indemnified Party” shall have the meaning specified in Section 7.03.

     “Indemnifying Party” shall have the meaning specified in Section 7.03.

     “Law” or “Laws” means any federal, state, local or foreign order, writ,
injunction, judgment, settlement, award, decree, statute, law, rule or regulation.

     “Lien” means any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed or contingent, and including the
lien or security interest arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for security purposes.

3

 

     “Lock-Up Date” means 45 days following the Closing Date.

     “Organizational Documents” means, the certificate or articles of incorporation and
bylaws of Concho.

     “Party” or “Parties” means Concho and the Purchasers, individually or
collectively, as the case may be.

     “Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, or any other form of
entity.

     “Placement Agent Fees” means the fees that Concho is obligated to pay to Banc of
America Securities LLC within one Business Day of the closing of the transactions contemplated by
this Agreement.

     “Property” means any interest in any kind of property or asset, whether real, personal
or mixed, or tangible or intangible.

     “Purchase Price” means the aggregate of each Purchaser’s Commitment Amount set forth
opposite the Purchaser’s name on Schedule 2.01 to this Agreement under the heading “Gross
Proceeds to Issuer”.

     “Purchased Common Stock” means the Common Stock to be issued and sold to the
Purchasers pursuant to this Agreement.

     “Purchaser” shall have the meaning specified in the introductory paragraph.

     “Purchaser Material Adverse Effect” means any material and adverse effect on (i) the
ability of a Purchaser to meet its obligations under the Basic Documents on a timely basis or (ii)
the ability of a Purchaser to consummate the transactions under any Basic Document.

     “Purchaser Related Parties” shall have the meaning specified in Section 7.01.

     “Purchasers” shall have the meaning specified in the introductory paragraph.

     “Registration Rights Agreement” means the Registration Rights Agreement, substantially
in the form attached to this Agreement as Exhibit B, to be entered into at the Closing,
among Concho and the Purchasers.

     “Representatives” of any Person means the officers, members, managers, directors,
employees, agents and other representatives of such Person.

     “Securities Act” means the Securities Act of 1933, as amended from time to time, and
the rules and regulations of the Commission promulgated thereunder.

4

 

     “Short Sales” means, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and
forward sale contracts, options, puts, calls, short sales, “put equivalent positions” (as defined
in Rule 16a-1(h) under the Exchange Act) and similar arrangements, and sales and other transactions
through non-U.S. broker dealers or foreign regulated brokers.

     “Subsidiary” means, as to any Person, any corporation or other entity of which a
majority of the outstanding equity interest having by the terms thereof ordinary voting power to
elect a majority of the board of directors of such corporation or other entity (irrespective of
whether or not at the time any equity interest of any other class or classes of such corporation or
other entity shall have or might have voting power by reason of the happening of any contingency)
is at the time directly or indirectly owned or controlled by such Person or one or more of its
Subsidiaries.

     “Terminating Breach” shall have the meaning specified in Section 8.11(a)(ii).

     “Transfer Agent” means American Stock Transfer & Trust Company in its capacity as
transfer agent for the Common Stock.

     Section 1.02. Accounting Procedures and Interpretation. Unless otherwise specified in
this Agreement, all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters under this Agreement shall be made, and all financial statements and
certificates and reports as to financial matters required to be furnished to the Purchasers under
this Agreement shall be prepared, in accordance with GAAP applied on a consistent basis during the
periods involved (except, in the case of unaudited statements, as permitted by Form 10-Q
promulgated by the Commission) and in compliance as to form in all material respects with
applicable accounting requirements and with the published rules and regulations of the Commission
with respect thereto.

ARTICLE II

SALE AND PURCHASE

     Section 2.01. Sale and Purchase. Contemporaneously with the consummation of the Henry
Acquisition and subject to the terms and conditions of this Agreement, at the Closing, Concho
hereby agrees to issue and sell to each Purchaser, and each Purchaser hereby agrees, severally and
not jointly, to purchase from Concho, the dollar amount of Purchased Common Stock set forth
opposite its name on Schedule 2.01 hereto. Each Purchaser agrees to pay Concho the Common
Stock Price for each share of Purchased Common Stock as set forth in Section 2.01(b). The
respective obligations of each Purchaser under this Agreement are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under this Agreement. The failure or waiver
of performance under this Agreement by any Purchaser, or on its behalf, does not excuse performance
by any other Purchaser. Nothing contained herein or in any other Basic Document, and no action
taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Purchasers are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by any Basic Document. Except as otherwise provided in this
Agreement or the other Basic Documents, each Purchaser shall be

5

 

entitled to independently protect and enforce its rights, including the rights arising out of
this Agreement or out of the other Basic Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such purpose.

     (a) Common Stock. The amount of Purchased Common Stock to be issued and sold to each
Purchaser shall be equal to the amount next to such Purchaser’s name under the column entitled
“Common Stock” on Schedule 2.01. The Purchased Common Stock shall have those rights,
preferences, privileges and restrictions governing the Common Stock as set forth in the
Organizational Documents.

     (b) Consideration. The amount per share of Common Stock each Purchaser will pay to
Concho to purchase the Purchased Common Stock (the “Common Stock Price”) shall be $30.11.

     Section 2.02. Closing. The execution and delivery of the Basic Documents (other than
this Agreement), the delivery of certificates representing the Purchased Common Stock, and the
execution and delivery of all other instruments, agreements and other documents required by this
Agreement (the “Closing”) shall take place on a date (the “Closing Date”)
concurrent with the Henry Closing Date, but on or prior to August 31, 2008, provided that Concho
shall have given each Purchaser five (5) Business Days (or such shorter period as shall be
agreeable to the Parties) prior notice of such designated Closing Date, at the offices of Vinson &
Elkins L.L.P., 1001 Fannin Street, Suite 2500, Houston, Texas 77002.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF CONCHO

     Concho represents and warrants to the Purchasers, on and as of the date of this Agreement and
on and as of the Closing Date, as follows:

     Section 3.01. Corporate Existence. Concho: (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware, has requisite power
and authority to carry on its business as now conducted, and to own and lease its properties and
other assets as now owned or leased, and has all material governmental licenses, authorizations,
consents and approvals, necessary to own its properties and carry on its business as its business
is now being conducted as described in the Concho SEC Documents, except where the failure to obtain
such licenses, authorizations, consents and approvals would not reasonably be expected to have a
Concho Material Adverse Effect; and (ii) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualifications necessary, except where
failure so to qualify would not reasonably be expected to have a Concho Material Adverse Effect.

     Section 3.02. Capitalization and Valid Issuance of Purchased Common Stock.

     (a) As of the date of this Agreement, and prior to the issuance and sale of the Purchased
Common Stock, the issued and outstanding shares of Common Stock of Concho consists of 75,984,526
shares. All of the outstanding shares of Common Stock have been duly authorized and validly issued
in accordance with applicable Law and the Organizational Documents and are fully paid and
non-assessable.

6

 

     (b) Other than Concho’s existing Long-Term Incentive Plan Concho has no equity compensation
plans that contemplate the issuance of Common Stock (or securities convertible into or exchangeable
for Common Stock). Concho has no outstanding indebtedness having the right to vote (or convertible
into or exchangeable for securities having the right to vote) on any matters on which the Common
Stockholders may vote. Except as set forth in the first sentence of this Section 3.02(b) or as
contemplated by this Agreement there are no outstanding or authorized (i) options, warrants,
preemptive rights, subscriptions, calls or other rights, convertible securities, agreements, claims
or commitments of any character obligating Concho or any of its Subsidiaries to issue, transfer or
sell any equity interests in Concho or any of its Subsidiaries or securities convertible into or
exchangeable for such equity interests, (ii) obligations of Concho or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any equity interests in Concho or any of its Subsidiaries
or any such securities or agreements listed in clause (i) of this sentence or (iii) voting trusts
or similar agreements to which Concho or any of its Subsidiaries is a party with respect to the
voting of the equity interests of Concho or any of its Subsidiaries.

     (c) (i) All of the issued and outstanding equity interests of each of Concho’s Subsidiaries
are owned, directly or indirectly, by Concho free and clear of any Liens (except for such
restrictions as may exist under applicable Law and except for such Liens as may be imposed under
Concho’s or Concho’s Subsidiaries’ credit facilities filed as exhibits to the Concho SEC
Documents), and all such ownership interests have been duly authorized and validly issued and are
fully paid (to the extent required by the organizational documents of Concho’s Subsidiaries, as
applicable) and non-assessable (except as non-assessability may be affected by the organizational
documents of Concho’s Subsidiaries) and free of preemptive rights, with no personal liability
attaching to the ownership thereof, and (ii) except as disclosed in the Concho SEC Documents,
neither Concho nor any of its Subsidiaries owns any shares of capital stock or other securities of,
or interest in, any other Person, or is obligated to make any capital contribution to or other
investment in any other Person.

     (d) The offer and sale of the Purchased Common Stock will be duly authorized by Concho
pursuant to the Organizational Documents and when issued and delivered to the Purchasers against
payment therefor in accordance with the terms of this Agreement, will be validly issued, fully paid
and non-assessable and will be free of any and all Liens and restrictions on transfer, other than
restrictions on transfer under the Registration Rights Agreement and applicable state and federal
securities Laws and other than such Liens as are created by the Purchasers.

     (e) The Purchased Common Stock will be issued in compliance with all applicable rules of The
New York Stock Exchange. Prior to the Closing Date, Concho will submit to The New York Stock
Exchange a Notification Form: Listing of Additional Common Stock with respect to the Purchased
Common Stock. Concho’s currently outstanding Common Stock is quoted on The New York Stock Exchange
and Concho has not received any notice of delisting.

     (f) The Purchased Common Stock shall have those rights, preferences, privileges and
restrictions governing the Common Stock as set forth in the Organizational Documents. A true and
correct copy of the Organizational Documents, as amended through the

7

 

date hereof, has been filed by Concho with the Commission on August 8, 2007 as Exhibit 3.1 and
Exhibit 3.2 to Concho’s Current Report on Form 8-K.

     Section 3.03. Concho SEC Documents. Concho has filed with the Commission all forms,
registration statements, reports, schedules and statements required to be filed by it under the
Exchange Act or the Securities Act (all such documents filed on or prior to the date of this
Agreement, collectively, the “Concho SEC Documents”). The Concho SEC Documents, including
any audited or unaudited financial statements and any notes thereto or schedules included therein
(the “Concho Financial Statements”), at the time filed (in the case of registration
statements, solely on the dates of effectiveness) (except to the extent corrected by a subsequently
filed Concho SEC Document filed prior to the date of this Agreement) (i) did not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading, (ii) complied in all material respects with the applicable requirements
of the Exchange Act and the Securities Act, as the case may be, (iii) complied as to form in all
material respects with applicable accounting requirements and with the published rules and
regulations of the Commission with respect thereto, (iv) were prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the Commission) and
(v) fairly present (subject in the case of unaudited statements to normal, recurring and year-end
audit adjustments) in all material respects the consolidated financial position and status of the
business of Concho as of the dates thereof and the consolidated results of its operations and cash
flows for the periods then ended. Grant Thornton LLP is an independent registered public accounting
firm with respect to Concho and has not resigned or been dismissed as independent registered public
accountants of Concho as a result of or in connection with any disagreement with Concho on any
matter of accounting principles or practices, financial statement disclosure or auditing scope or
procedures.

     Section 3.04. No Material Adverse Change. Except as set forth in or contemplated by
the Concho SEC Documents, and except for the proposed Henry Acquisition, which has been disclosed
to, and discussed with, each of the Purchasers, since December 31, 2007, Concho and its
Subsidiaries have conducted their business in the ordinary course, consistent with past practice,
and there has been no (i) change that has had or would reasonably be expected to have a Concho
Material Adverse Effect (ii) acquisition or disposition of any material asset by Concho or any of
its Subsidiaries or any contract or arrangement therefor, otherwise than for fair value in the
ordinary course of business, (iii) material change in Concho’s accounting principles, practices or
methods or (iv) incurrence of material indebtedness (other than the incurrence of such indebtedness
as is contemplated in connection with the Henry Acquisition).

     Section 3.05. Litigation. Except as set forth in the Concho SEC Documents, there is
no Action pending or, to the knowledge of Concho, contemplated or threatened against Concho or any
of its Subsidiaries or any of their respective officers, directors or Properties, which
(individually or in the aggregate) reasonably would be expected to have a Concho Material Adverse
Effect, or which challenges the validity of this Agreement.

     Section 3.06. No Breach. The execution, delivery and performance by Concho of the
Basic Documents to which it is a party and all other agreements and instruments in connection

8

 

with the transactions contemplated by the Basic Documents, and compliance by Concho with the
terms and provisions hereof and thereof, do not and will not (a) violate any provision of any Law,
governmental permit, determination or award having applicability to Concho or any of its
Subsidiaries or any of their respective Properties, (b) conflict with or result in a violation of
any provision of the Organizational Documents or any organizational documents of any of Concho’s
Subsidiaries, (c) require any consent, approval or notice under or result in a violation or breach
of or constitute (with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under (i) any note, bond, mortgage,
license, or loan or credit agreement to which Concho or any of its Subsidiaries is a party or by
which Concho or any of its Subsidiaries or any of their respective Properties may be bound or (ii)
any other agreement, instrument or obligation, or (d) result in or require the creation or
imposition of any Lien upon or with respect to any of the Properties now owned or hereafter
acquired by Concho or any of its Subsidiaries, except in the cases of clauses (a) and (c) where
such violation, default, breach, termination, cancellation, failure to receive consent or approval,
or acceleration with respect to the foregoing provisions of this Section 3.06 would not,
individually or in the aggregate, reasonably be expected to have a Concho Material Adverse Effect.

     Section 3.07. Authority. Concho has all necessary corporate power and authority to
execute, deliver and perform its obligations under the Basic Documents to which it is a party and
to consummate the transactions contemplated thereby; the execution, delivery and performance by
Concho of each of the Basic Documents to which it is a party, and the consummation of the
transactions contemplated thereby, have been duly authorized by all necessary action on its part;
and the Basic Documents constitute the legal, valid and binding obligations of Concho, enforceable
in accordance with their terms, except as such enforceability may be limited by bankruptcy,
insolvency, fraudulent transfer and similar Laws affecting creditors’ rights generally or by
general principles of equity. Except as contemplated by this Agreement, no approval by the Common
Stockholders is required as a result of Concho’s issuance and sale of the Purchased Common Stock.

     Section 3.08. Approvals. Except as contemplated by this Agreement or as required by
the Commission in connection with Concho’s obligations under the Registration Rights Agreement, no
authorization, consent, approval, waiver, license, qualification or written exemption from, nor any
filing, declaration, qualification or registration with, any Governmental Authority or any other
Person is required in connection with the execution, delivery or performance by Concho of any of
the Basic Documents to which it is a party, except where the failure to receive such authorization,
consent, approval, waiver, license, qualification or written exemption or to make such filing,
declaration, qualification or registration would not, individually or in the aggregate, reasonably
be expected to have a Concho Material Adverse Effect.

     Section 3.09. Investment Company Status. Concho is not an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

     Section 3.10. Offering. Assuming the accuracy of the representations and warranties
of the Purchasers contained in this Agreement, the sale and issuance of the Purchased Common Stock
pursuant to this Agreement are exempt from the registration requirements of the Securities

9

 

Act, and neither Concho nor any authorized Representative acting on its behalf has taken or
will take any action hereafter that would cause the loss of such exemption.

     Section 3.11. Certain Fees. Except for the Placement Agent Fees, no fees or
commissions will be payable by Concho to brokers, finders or investment bankers with respect to the
sale of any of the Purchased Common Stock or the consummation of the transactions contemplated by
this Agreement. The Purchasers shall not be liable for any such fees or commissions. Concho
agrees that it will indemnify and hold harmless each of the Purchasers from and against any and all
claims, demands or liabilities for broker’s, finder’s, placement or other similar fees or
commissions incurred by Concho or alleged to have been incurred by Concho in connection with the
sale of Purchased Common Stock or the consummation of the transactions contemplated by this
Agreement.

     Section 3.12. No Side Agreements. Except for the confidentiality agreements entered
into by and between each of the Purchasers and Concho or BAS, there are no other agreements by,
among or between Concho or its Affiliates, on the one hand, and any of the Purchasers or their
Affiliates, on the other hand, with respect to the transactions contemplated hereby nor promises or
inducements for future transactions between or among any of such parties.

     Section 3.13. Internal Accounting Controls. Except as disclosed in the Concho SEC
Documents, Concho and its Subsidiaries maintain a system of internal accounting controls sufficient
to provide reasonable assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any differences.

     Section 3.14. Preemptive Rights or Registration Rights. Except (i) as set forth in
the Organizational Documents, (ii) as set forth in the other organizational documents of Concho’s
Subsidiaries, (iii) as provided in the Basic Documents (iv) for existing awards under Concho’s
Long-Term Incentive Plan or (v) for the Registration Rights Agreement dated February 27, 2006 and
filed with the Commission on April 24, 2007 as Exhibit 10.12 to Concho’s general form for
registration of securities on Form S-1 (“Chase Registration Rights Agreement”), there are
no preemptive rights or other rights to subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any capital stock of Concho or any of its Subsidiaries, in each case
pursuant to any other agreement or instrument to which any of such Persons is a party or by which
any one of them may be bound. Neither the execution of this Agreement nor the issuance of the
Purchased Common Stock as contemplated by this Agreement gives rise to any rights for or relating
to the registration of any securities of Concho, other than pursuant to the Registration Rights
Agreement.

     Section 3.15. Insurance. Concho and its Subsidiaries are insured against such losses
and risks and in such amounts as Concho believes in its sole discretion to be prudent for its
businesses. Concho does not have any reason to believe that it or any Subsidiary will not be able

10

 

to renew its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its business.

     Section 3.16. Acknowledgment Regarding Purchase of Purchased Common Stock. Concho
acknowledges and agrees that (i) each of the Purchasers is participating in the transactions
contemplated by this Agreement and the other Basic Documents at Concho’s request and Concho has
concluded that such participation is in Concho’s best interest and is consistent with Concho’s
objectives and (ii) each of the Purchasers is acting solely in the capacity of an arm’s length
purchaser. Concho further acknowledges that no Purchaser is acting or has acted as an advisor,
agent or fiduciary of Concho (or in any similar capacity) with respect to this Agreement or the
other Basic Documents and any advice given by any Purchaser or any of its respective
Representatives in connection with this Agreement or the other Basic Documents is merely incidental
to the Purchasers’ purchase of Purchased Common Stock. Concho further represents to each Purchaser
that Concho’s decision to enter into this Agreement has been based solely on the independent
evaluation of the transactions contemplated hereby by Concho and its Representatives.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

     Each Purchaser, severally and not jointly, represents and warrants to Concho with respect to
itself, on and as of the date of this Agreement and on and as of the Closing Date, as follows:

     Section 4.01. Valid Existence. Such Purchaser (i) is duly organized, validly existing
and in good standing under the Laws of its respective jurisdiction of organization and (ii) has all
requisite power, and has all material governmental licenses, authorizations, consents and
approvals, necessary to own its Properties and carry on its business as its business is now being
conducted, except where the failure to obtain such licenses, authorizations, consents and approvals
would not have and would not reasonably be expected to have a Purchaser Material Adverse Effect.

     Section 4.02. No Breach. The execution, delivery and performance by such Purchaser of
the Basic Documents to which it is a party and all other agreements and instruments in connection
with the transactions contemplated by the Basic Documents to which it is a party, and compliance by
such Purchaser with the terms and provisions hereof and thereof and the purchase of the Purchased
Common Stock by such Purchaser do not and will not (a) violate any provision of any Law,
governmental permit, determination or award having applicability to such Purchaser or any of its
Properties, (b) conflict with or result in a violation of any provision of the organizational
documents of such Purchaser or (c) require any consent (other than standard internal consents),
approval or notice under or result in a violation or breach of or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under (i) any note, bond, mortgage, license, or loan or credit agreement to which
such Purchaser is a party or by which such Purchaser or any of its Properties may be bound or (ii)
any other such agreement, instrument or obligation, except in the case of clauses (a) and (c) where
such violation, default, breach, termination, cancellation, failure to receive consent or approval,
or acceleration with respect to the foregoing provisions of this

11

 

Section 4.02 would not, individually or in the aggregate, reasonably be expected to have a
Purchaser Material Adverse Effect.

     Section 4.03. Investment. The Purchased Common Stock is being acquired for such
Purchaser’s own account, or the accounts of clients for whom such Purchaser exercises discretionary
investment authority (all of whom such Purchaser represents and warrants are “accredited investors”
within the meaning of Rule 501 of Regulation D promulgated by the Commission pursuant to the
Securities Act), not as a nominee or agent, and with no present intention of distributing the
Purchased Common Stock or any part thereof, and such Purchaser has no present intention of selling
or granting any participation in or otherwise distributing the same in any transaction in violation
of the securities Laws of the United States of America or any state, without prejudice, however, to
such Purchaser’s right at all times to sell or otherwise dispose of all or any part of the
Purchased Common Stock under a registration statement under the Securities Act and applicable state
securities Laws or under an exemption from such registration available thereunder (including, if
available, Rule 144 promulgated thereunder). If such Purchaser should in the future decide to
dispose of any of the Purchased Common Stock, such Purchaser understands and agrees (a) that it may
do so only (i) in compliance with the Securities Act and applicable state securities Law, as then
in effect, or pursuant to an exemption therefrom or (ii) in the manner contemplated by any
registration statement pursuant to which such securities are being offered, and (b) that
stop-transfer instructions to that effect will be in effect with respect to such securities.

     Section 4.04. Nature of Purchaser. Such Purchaser represents and warrants to, and
covenants and agrees with, Concho that (a) it is an “accredited investor” within the meaning of
Rule 501 of Regulation D promulgated by the Commission pursuant to the Securities Act and (b) by
reason of its business and financial experience it has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks
of the prospective investment in the Purchased Common Stock, is able to bear the economic risk of
such investment and, at the present time, would be able to afford a complete loss of such
investment.

     Section 4.05. Receipt of Information; Authorization. Such Purchaser acknowledges that
it has (a) had access to the Concho SEC Documents, (b) had access to information regarding the
Henry Acquisition and its potential effect on Concho’s operations and financial results and (c)
been provided a reasonable opportunity to ask questions of and receive answers from Representatives
of Concho regarding such matters. Such Purchaser also acknowledges that audited pro forma financial
statements regarding the Henry Acquisition are not currently publicly available and have not been
provided to such Purchaser. Such Purchaser understands that after the Henry Acquisition Closing
Date, pro forma financial statements will be required to be filed with the Commission by Concho
pursuant to the rules and regulations of the Commission. Such Purchaser believes it is still
capable of evaluating the risks and merits of the purchase of the Common Stock.

     Section 4.06. Restricted Securities. Such Purchaser understands that the shares of
Purchased Common Stock it is purchasing are characterized as “restricted securities” under the
federal securities Laws inasmuch as they are being acquired from Concho in a transaction not
involving a public offering and that under such Laws and applicable regulations such securities

12

 

may be resold without registration under the Securities Act only in certain limited
circumstances. In this connection, Purchaser represents that it is knowledgeable with respect to
Rule 144 of the Commission promulgated under the Securities Act.

     Section 4.07. Certain Fees. No fees or commissions will be payable by such Purchaser
to brokers, finders or investment bankers with respect to the sale of any of the Purchased Common
Stock or the consummation of the transactions contemplated by this Agreement. Concho will not be
liable for any such fees or commissions. Such Purchaser agrees, severally and not jointly with the
other Purchasers, that it will indemnify and hold harmless Concho from and against any and all
claims, demands or liabilities for broker’s, finder’s, placement or other similar fees or
commissions incurred by such Purchaser or alleged to have been incurred by such Purchaser in
connection with the purchase of Purchased Common Stock or the consummation of the transactions
contemplated by this Agreement.

     Section 4.08. Legend. It is understood that the certificates evidencing the Purchased
Common Stock initially will bear the following legend: “These securities have not been registered
under the Securities Act of 1933, as amended. These securities may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect with respect to the
securities under such Act or pursuant to an exemption from registration thereunder and, in the case
of a transaction exempt from registration, unless sold pursuant to Rule 144 under such Act or the
issuer has received documentation reasonably satisfactory to it that such transaction does not
require registration under such Act.”

     Section 4.09. No Side Agreements. Except for the confidentiality agreements entered
into by and between such Purchaser and Concho, there are no other agreements by, among or between
Concho or its Affiliates, on the one hand, and such Purchaser or its Affiliates, on the other hand,
with respect to the transactions contemplated hereby nor promises or inducements for future
transactions between or among any of such parties.

     Section 4.10. Short Selling. Such Purchaser represents that it has not entered into
any Short Sales of the Common Stock between the time it first began discussions with Concho or the
Placement Agents about the transactions contemplated by this Agreement and the date hereof (it
being understood that the entering into a total return swap that is exempt from registration under
the Securities Act should not be considered a Short Sale of Common Stock).

ARTICLE V

COVENANTS

     Section 5.01. Subsequent Public Offerings. Without the written consent of the holders
of a majority of the Purchased Common Stock, taken as a whole, from the date of this Agreement
until the Lock-Up Date, Concho shall not, and shall cause its directors, officers and Affiliates
that are under the control of Concho not to, grant, issue or sell any Common Stock or other equity
or voting securities of Concho other than officers entering into 10b5-1 trading plans, any
securities convertible into or exchangeable therefore or take any other action that may result in
the issuance of any of the foregoing, other than (i) the issuance of the Purchased Common Stock,
(ii) the issuance of Awards (as defined in Concho’s Long-Term Incentive Plan) or the issuance of
Common Stock upon the exercise of options to purchase Common Stock granted

13

 

pursuant to Concho’s existing Long-Term Incentive Plan or (iii) pursuant to the Chase
Registration Rights Agreement. Notwithstanding the foregoing, Concho shall not, and shall cause its
directors, officers and Affiliates not to, sell, offer for sale or solicit offers to buy any
security (as defined in the Securities Act) that would be integrated with the sale of the Purchased
Common Stock in a manner that would require the registration under the Securities Act of the sale
of the Purchased Common Stock to the Purchasers.

     Section 5.02. Taking of Necessary Action. Each of the Parties hereto shall use its
commercially reasonable efforts promptly to take or cause to be taken all action and promptly to do
or cause to be done all things necessary, proper or advisable under applicable Law and regulations
to consummate and make effective the transactions contemplated by this Agreement. Without limiting
the foregoing, Concho and each Purchaser will, and Concho shall cause each of its Subsidiaries to,
use its commercially reasonable efforts to make all filings and obtain all consents of Governmental
Authorities that may be necessary or, in the reasonable opinion of the Purchasers or Concho, as the
case may be, advisable for the consummation of the transactions contemplated by this Agreement and
the other Basic Documents.

     Section 5.03. Non-Disclosure; Interim Public Filings. Concho shall, on or before 8:30
a.m., New York time, on or before the second Business Day following execution of this Agreement,
issue a press release acceptable to the Purchasers disclosing all material terms of the
transactions contemplated hereby, but excluding the material terms of the Basic Documents. Before
8:30 a.m., New York time, on or before the second Business Day following the date of this
Agreement, Concho shall file a Current Report on Form 8-K with the Commission (the “8-K
Filing”) describing the terms of the transactions contemplated by this Agreement and the other
Basic Documents and including as exhibits to such 8-K Filing this Agreement and the other Basic
Documents, in the form required by the Exchange Act. Thereafter, Concho shall timely file any
filings and notices required by the Commission or applicable Law with respect to the transactions
contemplated hereby and provide copies thereof to the Purchasers promptly after filing. Except
with respect to the 8-K Filing and the press release referenced above (a copy of which will be
provided to the Purchasers for their review as early as practicable prior to its filing), Concho
shall, at least two (2) Business Days prior to the filing or dissemination of any disclosure
required by this Section 5.03, provide a copy thereof to the Purchasers for their review. Concho
and the Purchasers shall consult with each other in issuing any press releases or otherwise making
public statements or filings and other communications with the Commission or any regulatory agency
or The New York Stock Exchange (or other exchange on which securities of Concho are listed or
traded) with respect to the transactions contemplated hereby, and neither Party shall issue any
such press release or otherwise make any such public statement, filing or other communication
without the prior consent of the other, except if such disclosure is required by Law, in which case
the disclosing Party shall promptly provide the other Party with prior notice of such public
statement, filing or other communication. Notwithstanding the foregoing, Concho shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any press release,
without the prior written consent of such Purchaser except to the extent the names of the
Purchasers are included in this Agreement as filed as an exhibit to the 8-K Filing and the press
release referred to in the first sentence above. Concho shall not, and shall cause each of its
respective Representatives not to, provide any Purchaser with any material non-public information
regarding Concho from and after the issuance of the above-referenced press release without the
express written consent of such Purchaser.

14

 

     Section 5.04. Use of Proceeds. Concho shall use the collective proceeds from the sale
of the Purchased Common Stock to partially finance the Henry Acquisition.

     Section 5.05. Tax Information. Concho shall cooperate with the Purchasers and provide
the Purchasers with any reasonably requested tax information related to their ownership of the
Purchased Common Stock.

     Section 5.06. Short Selling Acknowledgement and Agreement. Each Purchaser understands
and acknowledges, severally and not jointly with any other Purchaser, that the Commission currently
takes the position that coverage of short sales of securities “against the box” prior to the
effective date of a registration statement is a violation of Section 5 of the Securities Act. Each
Purchaser agrees, severally and not jointly, that it will not engage in any Short Sales that result
in the disposition of the Common Stock acquired hereunder by the Purchaser until such time as the
Registration Statement (as defined in the Registration Rights Agreement) is declared effective. No
Purchaser makes any representation, warranty or covenant hereby that it will not engage in Short
Sales in the securities of Concho otherwise owned by such Purchaser or borrowed from a broker after
the date the press release contemplated by this Agreement is issued by Concho.

ARTICLE VI

CLOSING CONDITIONS

     Section 6.01. Conditions to the Closing.

          (a) Mutual Conditions. The respective obligation of each Party to consummate the
purchase and issuance and sale of the Purchased Common Stock shall be subject to the satisfaction
on or prior to the Closing Date of each of the following conditions (any or all of which may be
waived by a particular Party on behalf of itself in writing, in whole or in part, to the extent
permitted by applicable Law):

     (i) no Law shall have been enacted or promulgated, and no action shall have been taken,
by any Governmental Authority of competent jurisdiction which temporarily, preliminarily or
permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the
transactions contemplated by this Agreement or makes the transactions contemplated by this
Agreement illegal;

     (ii) there shall not be pending any Action by any Governmental Authority seeking to
restrain, preclude, enjoin or prohibit the transactions contemplated by this Agreement; and

     (iii) Concho shall have consummated the Henry Acquisition substantially on the terms
set forth or contemplated in the Henry Acquisition Agreement executed on the date hereof.

          (b) Each Purchaser’s Conditions. The respective obligation of each Purchaser to
consummate the purchase of its Purchased Common Stock shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions (any or all of which may be

15

 

waived by a particular Purchaser on behalf of itself in writing, in whole or in part, to the
extent permitted by applicable Law):

     (i) Concho shall have performed and complied with the covenants and agreements
contained in this Agreement in all material respects that are required to be performed and
complied with by Concho on or prior to the Closing Date;

     (ii) the representations and warranties of Concho contained in this Agreement that are
qualified by materiality or Concho Material Adverse Effect shall be true and correct when
made and as of the Closing Date and all other representations and warranties shall be true
and correct in all material respects when made and as of the Closing Date, in each case as
though made at and as of the Closing Date (except that representations made as of a specific
date shall be required to be true and correct as of such date only);

     (iii) since the date of this Agreement, no Concho Material Adverse Effect shall have
occurred and be continuing;

     (iv) the Purchased Common Stock shall have been approved for listing on The New York
Stock Exchange and no notice of delisting from The New York Stock Exchange shall have been
received by Concho with respect to the Common Stock; and

     (v) Concho shall have delivered, or caused to be delivered, to the Purchasers at the
Closing, Concho’s closing deliveries described in Section 6.02 of this Agreement.

          (c) Concho’s Conditions. The obligation of Concho to consummate the sale of the
Purchased Common Stock to each of the Purchasers shall be subject to the satisfaction on or prior
to the Closing Date of the following conditions with respect to each Purchaser individually and not
the Purchasers jointly (which may be waived by Concho in writing, in whole or in part, to the
extent permitted by applicable Law):

     (i) each Purchaser shall have performed and complied with the covenants and agreements
contained in this Agreement in all material respects that are required to be performed and
complied with by that Purchaser on or prior to the Closing Date;

     (ii) the representations and warranties of each Purchaser contained in this Agreement
that are qualified by materiality or Purchaser Material Adverse Effect shall be true and
correct when made and as of the Closing Date and all other representations and warranties
shall be true and correct in all material respects when made and as of the Closing Date, in
each case as though made at and as of the Closing Date (except that representations made as
of a specific date shall be required to be true and correct as of such date only);

     (iii) since the date of this Agreement, no Purchaser Material Adverse Effect shall have
occurred and be continuing; and

16

 

     (iv) each Purchaser shall have delivered, or caused to be delivered, to Concho at the
Closing, such Purchaser’s closing deliveries described in Section 6.03 of this Agreement.

     Section 6.02. Concho Deliveries. At the Closing, subject to the terms and conditions
of this Agreement, Concho will deliver, or cause to be delivered, to each Purchaser:

          (a) the Purchased Common Stock by delivering certificates (bearing the legend set forth in
Section 4.08) evidencing such Purchased Common Stock at the Closing, all free and clear of any
Liens, encumbrances or interests of any other party;

          (b) the Officer’s Certificate substantially in the form attached to this Agreement as
Exhibit C;

          (c) opinions addressed to the Purchasers from outside legal counsel to Concho and from the
General Counsel of Concho, each dated the Closing Date, substantially similar in substance to the
form of opinions attached to this Agreement as Exhibit A;

          (d) the Registration Rights Agreement in substantially the form attached to this Agreement as
Exhibit B, which shall have been duly executed by Concho;

          (e) a certificate of the Secretary of Concho dated as of the Closing Date substantially in the
form attached to this Agreement as Exhibit E;

          (f) a certificate dated as of a recent date of the Secretary of State of the State of Delaware
with respect to the due organization and good standing in the State of Delaware of Concho; and

          (g) a receipt, dated the Closing Date, executed by Concho and delivered to each Purchaser
certifying that Concho has received the Purchase Price with respect to the Purchased Common Stock
issued and sold to all Purchasers.

     Section 6.03. Purchaser Deliveries. At the Closing, subject to the terms and
conditions of this Agreement, each Purchaser will deliver, or cause to be delivered, to Concho:

          (a) the Registration Rights Agreement in substantially the form attached to this Agreement as
Exhibit B, which shall have been duly executed by such Purchaser; and

          (b) an Officer’s Certificate substantially in the form attached to this Agreement as
Exhibit D.

ARTICLE VII

INDEMNIFICATION, COSTS AND EXPENSES

     Section 7.01. Indemnification by Concho. Concho agrees to indemnify each Purchaser
and its Representatives (collectively, “Purchaser Related Parties”) from, and hold each of
them harmless against, any and all actions, suits, proceedings (including any investigations,
litigation or inquiries), demands and causes of action, and, in connection therewith, and promptly upon

17

 

demand, pay and reimburse each of them for all costs, losses, liabilities, damages or expenses
of any kind or nature whatsoever, including the reasonable fees and disbursements of counsel and
all other reasonable expenses incurred in connection with investigating, defending or preparing to
defend any such matter that may be incurred by them or asserted against or involve any of them as a
result of, arising out of or in any way related to (i) any actual or proposed use by Concho of the
proceeds of any sale of the Purchased Common Stock or (ii) the breach of any of the
representations, warranties or covenants of Concho contained herein; provided that such claim for
indemnification relating to a breach of a representation or warranty is made prior to the
expiration of such representation or warranty.

     Section 7.02. Indemnification by Purchasers. Each Purchaser agrees, severally and not
jointly, to indemnify Concho and its Representatives (collectively, “Concho Related
Parties”) from, and hold each of them harmless against, any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), demands and causes of action, and, in
connection therewith, and promptly upon demand, pay and reimburse each of them for all costs,
losses, liabilities, damages or expenses of any kind or nature whatsoever, including the reasonable
fees and disbursements of counsel and all other reasonable expenses incurred in connection with
investigating, defending or preparing to defend any such matter that may be incurred by them or
asserted against or involve any of them as a result of, arising out of or in any way related to the
breach of any of the covenants of such Purchaser contained herein.

     Section 7.03. Indemnification Procedure. Promptly after any Concho Related Party or
Purchaser Related Party (hereinafter, the “Indemnified Party”) has received notice of any
indemnifiable claim hereunder, or the commencement of any action or proceeding by a third party,
which the Indemnified Party believes in good faith is an indemnifiable claim under this Agreement,
the Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”)
written notice of such claim or the commencement of such action or proceeding, but failure to so
notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may
have to such Indemnified Party hereunder except to the extent that the Indemnifying Party is
materially prejudiced by such failure. Such notice shall state the nature and the basis of such
claim to the extent then known. The Indemnifying Party shall have the right to defend and settle,
at its own expense and by its own counsel who shall be reasonably acceptable to the Indemnified
Party, any such matter as long as the Indemnifying Party pursues the same diligently and in good
faith. If the Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall cooperate with the
Indemnifying Party and its counsel in all commercially reasonable respects in the defense thereof
and the settlement thereof. Such cooperation shall include furnishing the Indemnifying Party with
any books, records and other information reasonably requested by the Indemnifying Party and in the
Indemnified Party’s possession or control. Such cooperation of the Indemnified Party shall be at
the cost of the Indemnifying Party. After the Indemnifying Party has notified the Indemnified
Party of its intention to undertake to defend or settle any such asserted liability, and for so
long as the Indemnifying Party diligently pursues such defense, the Indemnifying Party shall not be
liable for any additional legal expenses incurred by the Indemnified Party in connection with any
defense or settlement of such asserted liability; provided, however, that the Indemnified Party
shall be entitled (i) at its expense, to participate in the defense of such asserted liability and
the negotiations of the settlement thereof and (ii) if (A) the Indemnifying Party has failed to
assume the defense or employ counsel

18

 

reasonably acceptable to the Indemnified Party or (B) if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and counsel to the Indemnified Party
shall have concluded that there may be reasonable defenses available to the Indemnified Party that
are different from or in addition to those available to the Indemnifying Party or if the interests
of the Indemnified Party reasonably may be deemed to conflict with the interests of the
Indemnifying Party, then the Indemnified Party shall have the right to select a separate counsel
and to assume such legal defense and otherwise to participate in the defense of such action, with
the expenses and fees of such separate counsel and other expenses related to such participation to
be reimbursed by the Indemnifying Party as incurred. Notwithstanding any other provision of this
Agreement, the Indemnifying Party shall not settle any indemnified claim without the consent of the
Indemnified Party, unless the settlement thereof imposes no liability or obligation on, involves no
admission of wrongdoing or malfeasance by, and includes a complete release from liability of, the
Indemnified Party.

ARTICLE VIII

MISCELLANEOUS

     Section 8.01. Interpretation. Article, Section, Schedule and Exhibit references are
to this Agreement, unless otherwise specified. All references to instruments, documents, contracts
and agreements are references to such instruments, documents, contracts and agreements as the same
may be amended, supplemented and otherwise modified from time to time, unless otherwise specified.
The word “including” shall mean “including but not limited to”. Whenever Concho has an obligation
under the Basic Documents, the expense of complying with such obligation shall be an expense of
Concho unless otherwise specified. Whenever any determination, consent or approval is to be made
or given by a Purchaser under this Agreement, such action shall be in such Purchaser’s sole
discretion unless otherwise specified. If any provision in the Basic Documents is held to be
illegal, invalid, not binding or unenforceable, such provision shall be fully severable and the
Basic Documents shall be construed and enforced as if such illegal, invalid, not binding or
unenforceable provision had never comprised a part of the Basic Documents, and the remaining
provisions shall remain in full force and effect. The Basic Documents have been reviewed and
negotiated by sophisticated parties with access to legal counsel and shall not be construed against
the drafter.

     Section 8.02. Survival of Provisions. The representations and warranties set forth in
this Agreement shall survive the execution and delivery of this Agreement indefinitely. The
covenants made in this Agreement or any other Basic Document shall survive the closing of the
transactions described herein and remain operative and in full force and effect regardless of
acceptance of any of the Purchased Common Stock and payment therefor and repayment, conversion,
exercise or repurchase thereof. All indemnification obligations of Concho and the Purchasers
pursuant to Section 3.11, Section 4.07 and Article VII of this Agreement shall remain operative and
in full force and effect unless such obligations are expressly terminated in a writing by the
Parties referencing the particular Article or Section, regardless of any purported general
termination of this Agreement.

19

 

     Section 8.03. No Waiver; Modifications in Writing.

          (a) Delay. No failure or delay on the part of any Party in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further exercise thereof or the
exercise of any right, power or remedy. The remedies provided for herein are cumulative and are
not exclusive of any remedies that may be available to a Party at Law or in equity or otherwise.

          (b) Specific Waiver. Except as otherwise provided in this Agreement or the
Registration Rights Agreement, no amendment, waiver, consent, modification or termination of any
provision of this Agreement or any other Basic Document shall be effective unless signed by each of
the Parties or each of the original signatories thereto affected by such amendment, waiver,
consent, modification or termination. Any amendment, supplement or modification of or to any
provision of this Agreement or any other Basic Document, any waiver of any provision of this
Agreement or any other Basic Document and any consent to any departure by Concho from the terms of
any provision of this Agreement or any other Basic Document shall be effective only in the specific
instance and for the specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on any Party in any case shall entitle any Party
to any other or further notice or demand in similar or other circumstances.

     Section 8.04. Binding Effect; Assignment.

          (a) Binding Effect. This Agreement shall be binding upon Concho, each Purchaser, and
their respective successors and permitted assigns. Except as expressly provided in this Agreement,
this Agreement shall not be construed so as to confer any right or benefit upon any Person other
than the Parties to this Agreement and as provided in Article VII, and their respective successors
and permitted assigns.

          (b) Assignment of Purchased Common Stock. All or any portion of a Purchaser’s
Purchased Common Stock purchased pursuant to this Agreement may be sold, assigned or pledged by
such Purchaser, subject to compliance with applicable securities Laws and the Registration Rights
Agreement.

          (c) Assignment of Rights. Each Purchaser may assign all or any portion of its rights
and obligations under this Agreement without the consent of Concho to any Affiliate of such
Purchaser, and the assignee shall be deemed to be a Purchaser hereunder with respect to such
assigned rights or obligations and shall agree to be bound by the provisions of this Agreement.
Except as expressly permitted by this Section 8.04(c), such rights and obligations may not
otherwise be transferred except with the prior written consent of Concho (which consent shall not
be unreasonably withheld), in which case the assignee shall be deemed to be a Purchaser hereunder
with respect to such assigned rights or obligations and shall agree to be bound by the provisions
of this Agreement.

     Section 8.05. Confidentiality and Non-Disclosure. Notwithstanding anything herein to
the contrary, each Purchaser that has executed a confidentiality agreement in favor of Concho shall
continue to be bound by such confidentiality agreement in accordance with the terms

20

 

thereof until Concho discloses on Form 8-K with the Commission the transactions contemplated hereby.

     Section 8.06. Communications. All notices and demands provided for hereunder shall be
in writing and shall be given by regular mail, registered or certified mail, return receipt
requested, facsimile, air courier guaranteeing overnight delivery, electronic mail or personal
delivery to the following addresses:

          (a) If to America Funds Insurance Series — Growth Fund

Capital World Investors

333 South Hope Street, 55th Floor

Los Angeles, CA 90071

Attention: Paul G. Haaga, Jr.

Telephone: 213-486-9200

          (b) If to Trafelet Cayman, Ltd:

Trafelet Capital Management, LP

590 Madison Avenue, 39th Floor

New York, NY 10022

Attention: Rick Muller

Telephone: 212-201-7849

Email: RMuller@trafelet.com

          (c) If to Delta Offshore Master, Ltd:

Trafelet Capital Management, LP

590 Madison Avenue, 39th Floor

New York, NY 10022

Attention: Rick Muller

Telephone: 212-201-7849

Email: RMuller@trafelet.com

          (d) If to Delta Pleiades, LP:

Trafelet Capital Management, LP

590 Madison Avenue, 39th Floor

New York, NY 10022

Attention: Rick Muller

Telephone: 212-201-7849

Email: RMuller@trafelet.com

          (e) If to Delta Institutional, LP:

Trafelet Capital Management, LP

21

 

590 Madison Avenue, 39th Floor

New York, NY 10022

Attention: Rick Muller

Telephone: 212-201-7849

Email: RMuller@trafelet.com

          (f) If to Delta Onshore, LP:

Trafelet Capital Management, LP

590 Madison Avenue, 39th Floor

New York, NY 10022

Attention: Rick Muller

Telephone: 212-201-7849

Email: RMuller@trafelet.com

          (g) If to Delta U.S. Partners, LP:

Trafelet Capital Management, LP

590 Madison Avenue, 39th Floor

New York, NY 10022

Attention: Rick Muller

Telephone: 212-201-7849

Email: RMuller@trafelet.com

          (h) If to Fred Alger Management, LP:

Fred Alger Management, LP

111 Fifth Avenue

New York, NY 10003

Attention: Hal Liebes

Telephone: 212-806-8810

Email: hliebes@alger.com

          (i) If to Highbridge International LLC:

Highbridge International, LLC

9 W 57th Street, 27th Floor

New York, NY 10019

Attention: Scott Wallace

Telephone: 212-287-4754

Email: scott.wallace@hcmny.com

          (j) If to Highbridge Global Natural Resources, L.P.:

Highbridge International, LLC

22

 

9 W 57th Street, 27th Floor

New York, NY 10019

Attention: Scott Wallace

Telephone: 212-287-4754

Email: scott.wallace@hcmny.com

          (k) If to Fidelity Advisor Series I: Fidelity Advisor Balanced Fund:

Suzanne Joyce

Legal Product Manager

Fidelity Investments

82 Devonshire Street V13H

Boston, MA 02109

P: 617-392-2537

F: 617-392-1605

          (l) If to Fidelity Puritan Trust: Fidelity Balanced Fund:

Suzanne Joyce

Legal Product Manager

Fidelity Investments

82 Devonshire Street V13H

Boston, MA 02109

P: 617-392-2537

F: 617-392-1605

          (m) If to Variable Insurance Product Fund III: Balanced Portfolio:

Suzanne Joyce

Legal Product Manager

Fidelity Investments

82 Devonshire Street V13H

Boston, MA 02109

P: 617-392-2537

F: 617-392-1605

          (n) If to TimesSquare Capital Management, LLC:

TimesSquare Capital Management, Inc.

1177 Avenue of the Americas, 39th Floor

New York, NY 10036

Attention: Mark Aaron

Telephone: 917-342-7950

Email: mark.aaron@tscmllc.com

23

 

          (o) If to Concho:

Concho Resources Inc.

550 West Texas Avenue, Suite 1300

Midland, Texas 79701

Attention: Steven L. Beal

Facsimile: (432) 683-7441

Email: SBeal@conchoresources.com

with a copy to:

Vinson & Elkins L.L.P.

2500 First City Tower

1001 Fannin Street, Suite 2500

Houston, Texas 77002

Attention: Jeffery K. Malonson, Esq.

Facsimile: (713) 615-5627

Email: jmalonson@velaw.com

or to such other address as Concho or such Purchaser may designate in writing. All notices and
communications shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; upon actual receipt if sent by registered or certified mail, return receipt
requested, or regular mail, if mailed; when receipt acknowledged, if sent via facsimile; and upon
actual receipt when delivered to an air courier guaranteeing overnight delivery or via electronic
mail.

     Section 8.07. Removal of Legend. Concho shall remove the legend described in Section
4.08 from the certificates evidencing the Purchased Common Stock at the request of a Purchaser
submitting to Concho such certificates, together with such other documentation as may be reasonably
requested by Concho or required by its transfer agent, unless Concho, with the advice of counsel,
reasonably determines that such removal is inappropriate; provided that no opinion of counsel shall
be required in the event a Purchaser is effecting a sale of such Purchased Common Stock pursuant to
Rule 144 under the Securities Act or an effective registration statement. Concho shall cooperate
with such Purchaser to effect removal of such legend. The legend described in Section 4.08 shall
be removed and Concho shall issue a certificate without such legend to the holder of Purchased
Common Stock upon which it is stamped, if, unless otherwise required by state securities Laws, (i)
such shares of Purchased Common Stock are sold pursuant to an effective Registration Statement,
(ii) in connection with a sale, assignment or other transfer, such holder provides Concho with an
opinion of a law firm reasonably acceptable to Concho (with any law firm set forth under Section
8.06 being deemed acceptable), in a generally acceptable form, to the effect that such sale,
assignment or transfer of such Purchased Common Stock may be made without registration under the
applicable requirements of the Securities Act, or (iii) such holder provides Concho with reasonable
assurance that such Purchased Common Stock can be sold, assigned or transferred pursuant to Rule
144 or Rule 144A under the Securities Act. If Concho shall fail for any reason or for no reason to
issue to the holder of such Purchased Common Stock within three trading days after the occurrence
of any of clause (i), clause (ii) or clause (iii) above a certificate without such legend to the
holder or if Concho fails

24

 

to deliver unlegended Purchased Common Stock within three trading days of the Purchaser’s
election to receive such unlegended Purchased Common Stock pursuant to clause (y) below, and if on
or after such trading day the holder purchases (in an open market transaction or otherwise) Common
Stock to deliver in satisfaction of a sale by the holder of such Purchased Common Stock that the
holder anticipated receiving without legend from Concho (a “Buy-In”), then Concho shall,
within three (3) Business Days after the holder’s request and in the holder’s discretion, either
(x) pay cash to the holder in an amount equal to the holder’s total purchase price (including
brokerage commissions, if any) for the Common Stock so purchased (the “Buy-In Price”), at
which point Concho’s obligation to deliver such unlegended Purchased Common Stock shall terminate,
or (y) promptly honor its obligation to deliver to the holder such unlegended Purchased Common
Stock as provided above and pay cash to the holder in an amount equal to the excess (if any) of the
Buy-In Price over the product of (A) such number of shares of Common Stock times (B) the closing
bid price on the date of exercise.

     Section 8.08. Entire Agreement. This Agreement and the other Basic Documents are
intended by the Parties as a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the Parties hereto and thereto in respect
of the subject matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or therein with
respect to the rights granted by Concho or a Purchaser set forth herein or therein. This Agreement
and the other Basic Documents supersede all prior agreements and understandings between the Parties
with respect to such subject matter.

     Section 8.09. Governing Law. This Agreement will be construed in accordance with and
governed by the Laws of the State of Delaware without regard to principles of conflicts of Laws.

     Section 8.10. Execution in Counterparts. This Agreement may be executed in any number
of counterparts and by different Parties hereto in separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.

     Section 8.11. Termination.

          (a) Notwithstanding anything herein to the contrary, this Agreement may be terminated on or
any time prior to the Closing:

     (i) by the mutual written consent of the Purchasers entitled to purchase a majority of
the Purchased Common Stock based on their Commitment Amounts and Concho; or

     (ii) by the written consent of the Purchasers entitled to purchase a majority of the
Purchased Common Stock based on their Commitment Amounts or by Concho, (i) if any
representation or warranty of the other Party set forth in this Agreement shall be untrue in
any material respect when made, or (ii) upon a breach in any material respect of any
covenant or agreement on the part of the other set forth in this Agreement (either (i) or
(ii) above being a “Terminating Breach”); provided, that, each Terminating Breach

25

 

would cause the conditions to the non-terminating Party’s obligations not to be
satisfied and such Terminating Breach is not cured within 20 days after written notice from
the non-breaching Party.

          (b) Notwithstanding anything herein to the contrary, this Agreement shall automatically
terminate on or any time prior to the Closing:

     (i) if the Closing shall not have occurred on or before August 31, 2008;

     (ii) if the Henry Acquisition Agreement shall have been terminated pursuant to its
terms; or

     (iii) if a Law shall have been enacted or promulgated, or if any Action shall have been
taken by any Governmental Authority of competent jurisdiction which permanently restrains,
precludes, enjoins or otherwise prohibits the consummation of the transactions contemplated
by this Agreement or makes the transactions contemplated by this Agreement illegal.

          (c) In the event of the termination of this Agreement as provided in Section 8.11(a) or
Section 8.11(b), this Agreement shall forthwith become null and void. In the event of such
termination, there shall be no liability on the part of any Party hereto, except as set forth in
Article VII of this Agreement and except with respect to the requirement to comply with any
confidentiality agreement in favor of Concho; provided that nothing herein shall relieve any Party
from any liability or obligation with respect to any willful breach of this Agreement.

     Section 8.12. Recapitalization, Exchanges, Etc. Affecting the Purchased Common Stock.
The provisions of this Agreement shall apply to the full extent set forth herein with respect to
any and all Common Stock of Concho or any successor or assign of Concho (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or
in substitution of, the Purchased Common Stock, and shall be appropriately adjusted for
combinations, stock splits, recapitalizations and the like occurring after the date of this
Agreement.

     Section 8.13. Obligations Limited to Parties to Agreement. Each of the parties hereto
covenants, agrees and acknowledges that no Person other than the Purchasers (and their permitted
assignees) and Concho shall have any obligation hereunder and that, notwithstanding that one or
more of the Purchasers may be a corporation, partnership or limited liability company, no recourse
under this Agreement or the other Basic Documents or under any documents or instruments delivered
in connection herewith or therewith shall be had against any former, current or future director,
officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of
any of the Purchasers or Concho or any former, current or future director, officer, employee,
agent, general or limited partner, manager, member, stockholder or Affiliate of any of the
foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or
by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current
or future director, officer, employee, agent, general or limited partner, manager, member,
stockholder or Affiliate of any of the Purchasers or Concho

26

 

or any former, current or future director, officer, employee, agent, general or limited
partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any
obligations of the Purchasers and Concho under this Agreement or the other Basic Documents or any
documents or instruments delivered in connection herewith or therewith or for any claim based on,
in respect of or by reason of such obligation or its creation.

[The remainder of this page is intentionally left blank.]

27

 

     IN WITNESS WHEREOF, the Parties hereto execute this Agreement, effective as of the date first
above written.

	 	 	 	 	 
	 	CONCHO RESOURCES INC.

 	 
	 	By:  	/s/ Steven L. Beal
 	 
	 	 	Steven L. Beal 	 
	 	 	President and
Chief Operating Officer 	 
	 
	 	AMERICAN FUNDS INSURANCE SERIES — GROWTH FUND

 	 
	 	By:  	/s/ Paul G. Hagga Jr.
 	 
	 	 	Paul G. Haaga, Jr 	 
	 	 	Vice Chairman, Capital Research
and Management Company 	 
	 
	 	TRAFELET CAYMAN, LTD

By: Trafelet Capital Management, LP

Its: Investment Manager

 	 
	 	By:  	/s/ Rick Muller
 	 
	 	 	Name:  	Rick Muller 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	DELTA OFFSHORE MASTER, LTD

By: Trafelet Capital Management, LP

Its: Investment Manager

 	 
	 	By:  	/s/ Rick Muller
 	 
	 	 	Name:  	Rick Muller 	 
	 	 	Title:  	Chief Financial Officer 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	DELTA PLEIADES, LP

By: Trafelet Capital Management, LP

Its: Investment Manager

 	 
	 	By:  	/s/ Rick Muller
 	 
	 	 	Name:  	Rick Muller 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	DELTA INSTITUTIONAL, LP

By: Trafelet Capital Management, LP

Its: Investment Manager

 	 
	 	By:  	/s/ Rick Muller
 	 
	 	 	Name:  	Rick Muller 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	DELTA ONSHORE, LP

By: Trafelet Capital Management, LP

Its: Investment Manager

 	 
	 	By:  	/s/ Rick Muller
 	 
	 	 	Name:  	Rick Muller 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	DELTA U.S. PARTNERS, LP

By: Trafelet Capital Management, LP

Its: Investment Manager

 	 
	 	By:  	/s/ Rick Muller
 	 
	 	 	Rick Muller 	 
	 	 	Chief Financial Officer 	 

2

 

	 	 	 	 	 

	 	 	 	 	 
	 	FRED ALGER MANAGEMENT, INC.

 	 
	 	By:  	/s/ Hal Liebes
 	 
	 	 	Hal Liebes 	 
	 	 	Executive Vice Chairman 	 
	 
	 	HIGHBRIDGE INTERNATIONAL LLC,

By: Highbridge Capital Management, LLC.

Its  Trading Manager

 	 
	 	By:  	/s/ Scott Wallace
 	 
	 	 	Scott Wallace 	 
	 	 	Managing Director 	 
	 
	 	HIGHBRIDGE GLOBAL

NATURAL RESOURCES, L.P.,

By: Highbridge Capital Management, LLC.

Its  Trading Manager

 	 
	 	By:  	/s/ Jim Glynn
 	 
	 	 	Jim Glynn 	 
	 	 	Managing Director 	 
	 
	 	FIDELITY ADVISOR SERIES I:
FIDELITY ADVISOR
BALANCED FUND

 	 
	 	By:  	/s/ Peter L. Lydecker
 	 
	 	 	 	 
	 	 	 	 

3

 

	 	 	 	 	 
	 	FIDELITY PURITAN TRUST:
FIDELITY BALANCED FUND

 	 
	 	By:  	/s/ Peter L. Lydecker
 	 
	 	 	 	 
	 	VARIABLE INSURANCE PRODUCT FUND III:
BALANCED
PORTFOLIO

 	 
	 	By:  	/s/ Peter L. Lydecker
 	 
	 
	 	TIMESSQUARE CAPITAL MANAGEMENT, LLC

 	 
	 	By:  	/s/ Grant R. Babyak
 	 
	 	 	Name:  	Grant R. Babyak 	 
	 	 	Title:  	Managing Director 	 

4

 

	 	 	 	 	 

Schedule 2.01

PURCHASERS AND COMMITMENT AMOUNTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Gross	 
	 	 	 	 	 	 	Proceeds	 
	Purchaser	 	Common Stock	 	 	to Issuer	 
	American Funds Insurance Series — Growth Fund
	 	 	3,321,156	 	 	$	100,000,007.16	 
	Trafelet Cayman, Ltd
	 	 	175,200	 	 	$	5,275,272.00	 
	Delta Offshore Master, Ltd.
	 	 	784,780	 	 	$	23,629,725.80	 
	Delta Pleiades, LP
	 	 	79,400	 	 	$	2,390,734.00	 
	Delta Institutional, LP
	 	 	437,000	 	 	$	13,158,070.00	 
	Delta Onshore, LP
	 	 	49,000	 	 	$	1,475,390.00	 
	Delta U.S. Partners, LP
	 	 	135,200	 	 	$	4,070,872.00	 
	Fred Alger Management, LP
	 	 	1,162,405	 	 	$	35,000,014.55	 
	Highbridge International LLC
	 	 	1,087,405	 	 	$	32,741,764.55	 
	Highbridge Global Natural Resources, L.P.
	 	 	75,000	 	 	$	2,258,250.00	 
	Fidelity Advisor Series I: Fidelity Advisor Balanced
Fund
	 	 	29,582	 	 	$	890,714.02	 
	Fidelity Puritan Trust: Fidelity Balanced Fund
	 	 	607,780	 	 	$	18,300,255.80	 
	Variable Insurance Product Fund III: Balanced Portfolio
	 	 	26,870	 	 	$	809,055.70	 
	TimesSquare Capital Management, LLC
	 	 	332,116	 	 	$	10,000,012.76	 
	 
	 	 	 	 	 	 
	Total
	 	 	8,302,894	 	 	$	250,000,138.34	 
	 
	 	 	 	 	 	 

Schedule 2.01

 

 

Exhibit A

     Capitalized terms used but not defined herein have the meaning assigned to such terms in the
Common Stock Purchase Agreement dated as of June 5, 2008 (the “Purchase Agreement”).
Concho shall furnish to the Purchasers at the Closing an opinion of Vinson & Elkins L.L.P., counsel
for Concho, addressed to the Purchasers and dated the Closing Date in form satisfactory to [•],
counsel for the Purchasers, stating that:

     (i) Concho: (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, has requisite power and authority
to carry on its business as now conducted, and to own and lease its properties and
other assets as now owned or leased, and has all material governmental licenses,
authorizations, consents and approvals, necessary to own its properties and carry on
its business as its business is now being conducted as described in the Concho SEC
Documents, except where the failure to obtain such licenses, authorizations,
consents and approvals would not reasonably be expected to have a Concho Material
Adverse Effect; and (ii) is duly qualified to do business in the jurisdictions
listed in Annex A hereto, except where failure so to qualify would not
reasonably be expected to have a Concho Material Adverse Effect.

     (ii) As of the open of business on the date hereof, and prior to the issuance
and sale of the Purchased Common Stock, the issued and outstanding shares of Common
Stock of Concho consists of 75,984,526 shares. All of the outstanding Common Stock
have been duly authorized and validly issued in accordance with applicable Law and
the Organizational Documents and are fully paid and non-assessable.

     (iii) To our knowledge, except as described in the Concho SEC Documents filed
prior to the date hereof, for options granted pursuant to Concho’s existing
Long-Term Incentive Plan or as contemplated by the Purchase Agreement, there are no
outstanding or authorized (i) options, warrants, preemptive rights, subscriptions,
calls or other rights, convertible securities, agreements, claims or commitments of
any character obligating Concho or any of its Subsidiaries to issue, transfer or
sell any equity interests in Concho or any of its Subsidiaries or securities
convertible into or exchangeable for such equity interests, (ii) obligations of
Concho or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
equity interests in Concho or any of its Subsidiaries or any such securities or
agreements listed in clause (i) of this sentence or (iii) voting trusts or similar
agreements to which Concho or any of its Subsidiaries is a party with respect to the
voting of the equity interests of Concho or any of its Subsidiaries.

     (iv) The Purchased Common Stock has been duly authorized by Concho pursuant to
the Organizational Documents and, when issued and delivered to the Purchasers
against payment therefor in accordance with the terms of the Purchase Agreement,
will be validly issued, fully paid and non-assessable.

Exhibit A-1

 

     (v) None of the offering, issuance and sale by Concho of the Purchased Common
Stock or the execution, delivery and performance of the Basic Documents by Concho
(A) constitutes or will constitute a violation of the Organizational Documents, (B)
without duplication of clause (A), constitutes or will constitute a breach or
violation of, or a default under (or an event which, with notice or lapse of time or
both, would constitute such an event), any agreement filed as an exhibit to the
Concho SEC Documents, or (C) results or will result in any violation of the DGCL,
the Laws of the State of New York or U.S. federal Law, which in the case of clause
(B) or (C) of this paragraph (v) would be reasonably expected to have a Concho
Material Adverse Effect; provided, however, that no opinion is expressed pursuant to
this paragraph (vi) with respect to federal or state securities or anti-fraud
statutes, rules or regulations.

     (vi) Each of the Basic Documents to which Concho is a party has been duly
authorized and validly executed and delivered on behalf of Concho, and is
enforceable against Concho in accordance with its respective terms, except as such
enforceability may be limited by (A) applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or similar Laws from time to time in effect
affecting creditors’ rights and remedies generally and by general principles of
equity (regardless of whether such principles are considered in a proceeding in
equity or at law) and (B) public policy, applicable Law relating to fiduciary duties
and indemnification and an implied covenant of good faith and fair dealing.

     (vii) Except for the approvals required by the Commission in connection with
Concho’s obligations under the Registration Rights Agreement (including the
registration statement referenced therein), no authorization, consent, approval,
waiver, license, qualification or written exemption from, nor any filing,
declaration, qualification or registration with, any Governmental Authority is
required in connection with the execution, delivery or performance by Concho of any
of the Basic Documents to which it is a party, except those that have been obtained
or may be required under the state securities or “blue sky” laws, as to which we do
not express any opinion.

     (vii) Concho is not an “investment company” within the meaning of the
Investment Company Act of 1940, as amended.

     (ix) Assuming the accuracy of the representations and warranties of each
Purchaser contained in the Purchase Agreement, the issuance and sale of the
Purchased Common Stock pursuant to the Purchase Agreement are exempt from
registration requirements of the Securities Act of 1933, as amended.

     Concho shall furnish to the Purchasers at the Closing an opinion of David W. Copeland, General
Counsel of Concho, addressed to the Purchasers and dated the Closing Date in form satisfactory to
[•], counsel for the Purchasers, stating that:

Exhibit A-2

 

     (i) None of the offering, issuance and sale by Concho of the Purchased Common
Stock or the execution, delivery and performance of the Basic Documents by Concho
(A) constitutes or will constitute a violation of any organizational documents of
any of Concho’s Subsidiaries or (B) will result in a breach or violation (and, to
such counsel’s knowledge, no event has occurred that, with notice or lapse of time
or otherwise, would constitute such an event) or imposition of any lien, charge or
encumbrance upon any Property of Concho or its Subsidiaries pursuant to (i) any
agreement, lease or other instrument known to such counsel (excluding any agreement
filed as an exhibit to the Concho SEC Documents) or (ii) to the knowledge of such
counsel, any order, judgment, decree or injunction of any federal or Delaware court
or government agency or body directed to any of Concho or its Subsidiaries or any of
its respective Properties in a proceeding to which any of them or such Property is a
party, which breaches, violations or liens would reasonably be expected to have a
Concho Material Adverse Effect; provided, however, that no opinion is expressed
pursuant hereto with respect to federal or state securities Laws or other anti-fraud
Laws.

     (ii) All of the issued and outstanding equity interests of each of Concho’s
Subsidiaries are owned, directly or indirectly, by Concho free and clear of any
Liens (A) in respect of which a financing statement under the Uniform Commercial
Code naming Concho or any of its Subsidiaries as debtors is on file in the office of
the Secretary of State of the State of Delaware, (B) otherwise known to such counsel
without independent investigation, other than those created under applicable Law and
(C) except for such Liens as may be imposed under Concho’s or its Subsidiaries’
credit facilities, and all such ownership interests have been duly authorized and
validly issued and are fully paid (to the extent required by the organizational
documents of Concho’s Subsidiaries, as applicable) and non-assessable (except as
non-assessability may be affected by the organizational documents of Concho’s
Subsidiaries) and free of preemptive rights, and, to our knowledge, except as
disclosed in the Concho SEC Documents, neither Concho nor any of its Subsidiaries
owns any shares of capital stock or other securities of, or interests in, any other
Person or is obligated to make any capital contribution to or other investment in
any other Person.

Exhibit A-3

 

Exhibit B

REGISTRATION RIGHTS AGREEMENT

BY AND AMONG

CONCHO RESOURCES INC.

AND

THE PURCHASERS NAMED HEREIN

Exhibit B

 

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of
[•], 2008 by and among Concho Resources Inc., a Delaware corporation (“Concho”), and the
purchasers named in Schedule [•] to this Agreement (each such purchaser a “Purchaser” and,
collectively, the “Purchasers”).

     WHEREAS, this Agreement is made in connection with the Closing of the issuance and sale of the
Purchased Common Stock pursuant to the Common Stock Purchase Agreement, dated as of June 5, 2008,
by and among Concho and the Purchasers (the “Purchase Agreement”);

     WHEREAS, Concho has agreed to provide the registration and other rights set forth in this
Agreement for the benefit of the Purchasers pursuant to the Purchase Agreement; and

     WHEREAS, it is a condition to the obligations of each Purchaser and Concho under the Purchase
Agreement that this Agreement be executed and delivered.

     NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged
by each party hereto, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.01 Definitions. Capitalized terms used herein without definition shall have the meanings
given to them in the Purchase Agreement. The terms set forth below are used herein as so defined:

     “Agreement” has the meaning specified therefor in the introductory paragraph.

     “Concho” has the meaning specified therefor in the introductory paragraph.

     “Effectiveness Period” has the meaning specified therefor in Section 2.01(a)(i) of
this Agreement.

     “File Date” has the meaning specified in Section 2.01(a)(1) of this Agreement.

     “Holder” means the record holder of any Registrable Securities.

     “Included Registrable Securities” has the meaning specified therefor in Section
2.02(a) of this Agreement.

     “Liquidated Damages” has the meaning specified therefor in Section 2.01(a)(ii) of this
Agreement.

     “Liquidated Damages Multiplier” means the product of $30.11 times the number of Common
Stock purchased by such Purchaser.

     “Losses” has the meaning specified therefor in Section 2.08(a) of this Agreement.

Exhibit B-1

 

     “Managing Underwriter” means, with respect to any Underwritten Offering, the
book-running lead manager of such Underwritten Offering.

     “Opt Out Notice” has the meaning specified therefor in Section 2.02(a) of this
Agreement.

     “Partners” has the meaning specified therefor in Section 2.02(b) of this Agreement.

     “Placement Agent” means Banc of America Securities LLC.

     “Purchase Agreement” has the meaning specified therefor in the Recitals of this
Agreement.

     “Purchaser” and “Purchasers” have the meanings specified therefor in the
introductory paragraph of this Agreement.

     “Purchaser Underwriter Registration Statement” has the meaning specified therefor in
Section 2.04(o) of this Agreement.

     “Registrable Securities” means: (i) the Purchased Common Stock and (ii) any Common
Stock issued as Liquidated Damages pursuant to this Agreement, all of which Registrable Securities
are subject to the rights provided herein until such rights terminate pursuant to the provisions
hereof.

     “Registration Expenses” has the meaning specified therefor in Section 2.07(a) of this
Agreement.

     “Registration Statement” has the meaning specified therefor in Section 2.01(a)(i) of
this Agreement.

     “Selling Expenses” has the meaning specified therefor in Section 2.07(a) of this
Agreement.

     “Selling Holder” means a Holder who is selling Registrable Securities pursuant to a
registration statement.

     “Underwritten Offering” means an offering (including an offering pursuant to a
Registration Statement) in which Common Stock are sold to an underwriter on a firm commitment basis
for reoffering to the public or an offering that is a “bought deal” with one or more investment
banks.

     Section 1.02 Registrable Securities. Any Registrable Security will cease to be a Registrable Security
when: (a) a registration statement covering such Registrable Security has been declared effective
by the Commission and such Registrable Security has been sold or disposed of pursuant to such
effective registration statement; (b) such Registrable Security has been disposed of pursuant to any section of Rule 144
(or any similar provision then in force) under the Securities Act; (c) such Registrable Security
can be disposed of pursuant to Rule 144(b) (or any similar provision then in force) under the
Securities Act; (d) such Registrable

Exhibit B-2

 

Security is held by Concho or one of its Subsidiaries; or (e)
such Registrable Security has been sold in a private transaction in which the transferor’s rights
under this Agreement are not assigned to the transferee of such securities.

ARTICLE II

REGISTRATION RIGHTS

     Section 2.01 Registration.

     (a) Registration.

               (i) Deadline To Go Effective. Within sixty (60) days of Concho first becoming eligible to
file a registration statement on Form S-3; provided in no event shall such date be later than
November 1, 2008 (the “File Date”), Concho shall prepare and file a registration statement
under the Securities Act to permit the resale of the Registrable Securities from time to time,
including as permitted by Rule 415 under the Securities Act (or any similar provision then in
force) under the Act with respect to all of the Registrable Securities (the “Registration
Statement”). A Registration Statement filed pursuant to this Section 2.01 shall be on such
appropriate registration form of the Commission as shall be selected by Concho. Concho will use
its commercially reasonable efforts to cause the Registration Statement filed pursuant to this
Section 2.01 to be continuously effective under the Securities Act until the earlier of (i) the
date as of which all such Registrable Securities are sold by the Purchasers or (ii) the date when
such Registrable Securities become eligible for resale under Rule 144(b) (or any similar provision
then in force) under the Securities Act (the “Effectiveness Period”). The Registration
Statement when declared effective (including the documents incorporated therein by reference) shall
comply as to form with all applicable requirements of the Securities Act and the Exchange Act and
shall not 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 not misleading.

               (ii) Failure To Go Effective. If the Registration Statement required by Section 2.01 of this
Agreement is not declared effective within 30 days after the File Date, then each Purchaser shall
be entitled to a payment with respect to the Purchased Common Stock of each such Purchaser, as
liquidated damages and not as a penalty, of 0.25% of the Liquidated Damages Multiplier per 30-day
period for the first 30 days following the 30th day after the File Date, increasing by
an additional 0.25% of the Liquidated Damages Multiplier per 30-day period for each subsequent 30
days, up to a maximum of 1.00% of the Liquidated Damages Multiplier per 30-day period (the
“Liquidated Damages”). Initially there shall be no limitation on the aggregate amount of
the Liquidated Damages payable by Concho under this Agreement to each Purchaser; provided, however,
that if there is a change in the Law or accounting principles generally accepted in the United
States that would result in the Purchased Common Stock being treated as debt securities instead of
equity securities for purposes of Concho’s financial statements, then the aggregate amount of the
Liquidated Damages payable by Concho under this Agreement to each Purchaser shall not exceed the
maximum amount of the Liquidated Damages
Multiplier with respect to such Purchaser allowed for the Purchased Common Stock not to be
treated as debt securities for purposes of Concho’s financial statements. The Liquidated Damages
payable pursuant to the immediately preceding sentence, accrued on a daily basis, shall

Exhibit B-3

 

be payable
within ten Business Days of the end of each such 30-day period. Any Liquidated Damages shall be
paid to each Purchaser in cash or immediately available funds; provided, however, if Concho
certifies that it is unable to pay Liquidated Damages in cash or immediately available funds
because such payment would result in a breach under any of Concho’s or Concho’s Subsidiaries’
credit facilities or other indebtedness filed as exhibits to the Concho SEC Documents, then, to the
extent not payable in cash, Concho may pay the Liquidated Damages in kind in the form of the
issuance of additional shares of Common Stock. Upon any issuance of Common Stock as Liquidated
Damages, Concho shall promptly prepare and file an amendment to the Registration Statement prior to
its effectiveness adding such Common Stock to such Registration Statement as additional Registrable
Securities. The determination of the amount of Common Stock to be issued as Liquidated Damages
shall be equal to the amount of Liquidated Damages divided by the volume weighted average closing
price of the Common Stock (as reported by The New York Stock Exchange) for the ten (10) trading
days immediately preceding the date on which the Liquidated Damages payment is due. The payment of
Liquidated Damages to a Purchaser shall cease at such time as the Purchased Common Stock of such
Purchaser become eligible for resale under Rule 144(b) under the Securities Act. As soon as
practicable following the date that the Registration Statement becomes effective, but in any event
within two Business Days of such date, Concho shall provide the Purchasers with written notice of
the effectiveness of the Registration Statement.

               (iii) Waiver of Liquidated Damages. If Concho is unable to cause a Registration Statement to
go effective within 30 days following the File Date as a result of an acquisition, merger,
reorganization, disposition or other similar transaction, then Concho may request a waiver of the
Liquidated Damages, which may be granted or withheld by the consent of the Holders of a majority of
the Purchased Common Stock, taken as a whole, in their sole discretion. A Purchaser’s rights (and
any transferee’s rights pursuant to Section 2.10 of this Agreement) under this Section 2.01 other
than Liquidated Damages owing but not yet paid shall terminate upon the earlier of (i) when all
such Registrable Securities are sold by such Purchaser or transferee, as applicable, and (ii) when
such Registrable Securities become eligible for resale under Rule 144(b) (or any similar provision
then in force) under the Securities Act.

          (b) Delay Rights. Notwithstanding anything to the contrary contained herein, Concho
may, upon written notice to any Selling Holder whose Registrable Securities are included in the
Registration Statement, suspend such Selling Holder’s use of any prospectus which is a part of the
Registration Statement (in which event the Selling Holder shall discontinue sales of the
Registrable Securities pursuant to the Registration Statement, but such Selling Holder may settle
any such sales of Registrable Securities) if (i) Concho is pursuing an acquisition, merger,
reorganization, disposition or other similar transaction and Concho determines in good faith that
Concho’s ability to pursue or consummate such a transaction would be materially adversely affected
by any required disclosure of such transaction in the Registration Statement or (ii) Concho has
experienced some other material non-public event the disclosure of which at such time, in the good
faith judgment of Concho, would materially adversely affect Concho; provided, however, in no event
shall the Purchasers be suspended for a period that exceeds an aggregate of 60 days in any 180-day
period or 120 days in any 365-day
period. Upon disclosure of such information or the termination of the condition described
above, Concho shall provide prompt notice to the Selling Holders whose Registrable Securities are
included in the Registration Statement, shall promptly terminate any suspension of sales it has

Exhibit B-4

 

put into effect and shall take such other actions to permit registered sales of Registrable Securities
as contemplated in this Agreement.

          (c) Additional Rights to Liquidated Damages. If (i) the Holders shall be prohibited
from selling their Registrable Securities under the Registration Statement as a result of a
suspension pursuant to Section 2.01(b) of this Agreement in excess of the periods permitted therein
or (ii) the Registration Statement is filed and declared effective but, during the Effectiveness
Period, shall thereafter cease to be effective or fail to be usable for its intended purpose
without being succeeded by a post-effective amendment to the Registration Statement, a supplement
to the prospectus or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or
l5(d) of the Exchange Act, then, until the suspension is lifted or a post-effective amendment,
supplement or report is filed with the Commission, but not including any day on which a suspension
is lifted or such amendment, supplement or report is filed and declared effective, if applicable,
Concho shall owe the Holders an amount equal to the Liquidated Damages, following (x) the date on
which the suspension period exceeded the permitted period under 2.01(b) of this Agreement or (y)
the day after the Registration Statement ceased to be effective or failed to be useable for its
intended purposes, as liquidated damages and not as a penalty. For purposes of this Section
2.01(c), a suspension shall be deemed lifted on the date that notice that the suspension has been
lifted is delivered to the Holders pursuant to Section 3.01 of this Agreement.

     Section 2.02 Piggyback Rights.

          (a) Participation. If at any time Concho proposes to file (i) a prospectus supplement
to an effective shelf registration statement, other than the Registration Statement contemplated by
Section 2.01 of this Agreement, or (ii) a registration statement, other than a shelf registration
statement, in either case, for the sale of Common Stock in an Underwritten Offering for its own
account and/or another Person, then as soon as practicable but not less than three Business Days
prior to the filing of (x) any preliminary prospectus supplement relating to such Underwritten
Offering pursuant to Rule 424(b) under the Securities Act, (y) the prospectus supplement relating
to such Underwritten Offering pursuant to Rule 424(b) under the Securities Act (if no preliminary
prospectus supplement is used) or (z) such registration statement, as the case may be, then Concho
shall give notice (including, but not limited to, notification by electronic mail) of such proposed
Underwritten Offering to the Holders and such notice shall offer the Holders the opportunity to
include in such Underwritten Offering such number of Registrable Securities (the “Included
Registrable Securities”) as each such Holder may request in writing; provided, however, that if
Concho has been advised by the Managing Underwriter that the inclusion of Registrable Securities
for sale for the benefit of the Holders will have a material adverse effect on the price, timing or
distribution of the Common Stock in the Underwritten Offering, then the amount of Registrable
Securities to be offered for the accounts of Holders shall be determined based on the provisions of
Section 2.02(b) of this Agreement. The notice required to be provided in this Section 2.02(a) to
Holders shall be provided on a Business Day pursuant to Section 3.01 hereof and receipt of such
notice shall be confirmed by such Holder. Each such Holder shall then have three Business Days
after receiving such notice to request
inclusion of Registrable Securities in the Underwritten Offering, except that such Holder
shall have one Business Day after such Holder confirms receipt of the notice to request inclusion
of Registrable Securities in the Underwritten Offering in the case of a “bought deal” or “overnight

Exhibit B-5

 

transaction” where no preliminary prospectus is used. If no request for inclusion from a Holder is
received within the specified time, such Holder shall have no further right to participate in such
Underwritten Offering. If, at any time after giving written notice of its intention to undertake
an Underwritten Offering and prior to the closing of such Underwritten Offering, Concho shall
determine for any reason not to undertake or to delay such Underwritten Offering, Concho may, at
its election, give written notice of such determination to the Selling Holders and, (x) in the case
of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation
to sell any Included Registrable Securities in connection with such terminated Underwritten
Offering, and (y) in the case of a determination to delay such Underwritten Offering, shall be
permitted to delay offering any Included Registrable Securities for the same period as the delay in
the Underwritten Offering. Any Selling Holder shall have the right to withdraw such Selling
Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such offering by
giving written notice to Concho of such withdrawal up to and including the time of pricing of such
offering. Each Holder’s rights under this Section 2.02(a) shall terminate when such Holder
(together with any Affiliates of such Holder) holds less than $5 million of Purchased Common Stock,
based on the Commitment Amounts. Notwithstanding the foregoing, any Holder may deliver written
notice (an “Opt Out Notice”) to Concho requesting that such Holder not receive notice from
Concho of any proposed Underwritten Offering.

          (b) Priority of Rights. If the Managing Underwriter or Underwriters of any proposed
Underwritten Offering of Common Stock included in an Underwritten Offering involving Included
Registrable Securities advises Concho, or Concho reasonably determines, that the total amount of
Common Stock that the Selling Holders and any other Persons intend to include in such offering
exceeds the number that can be sold in such offering without being likely to have a material
adverse effect on the price, timing or distribution of the Common Stock offered or the market for
the Common Stock, then the Common Stock to be included in such Underwritten Offering shall include
the number of Registrable Securities that such Managing Underwriter or Underwriters advises Concho,
or Concho reasonably determines, can be sold without having such adverse effect, with such number
to be allocated (i) first, to Concho, and (ii) second, pro rata among the Selling Holders party to
this Agreement. The pro rata allocations for each such Selling Holder shall be the product of (a)
the aggregate amount of Common Stock proposed to be sold by all Selling Holders in such
Underwritten Offering multiplied by (b) the fraction derived by dividing (x) the amount of Common
Stock owned on the Closing Date by such Selling Holder by (y) the aggregate amount of Common Stock
owned on the Closing Date by all Selling Holders participating in the Underwritten Offering. All
participating Selling Holders shall have the opportunity to share pro rata that portion of such
priority allocable to any Selling Holder(s) not so participating. As of the date of execution of
this Agreement, there are no other Persons with Registration Rights relating to Common Stock other
than as described in this Section 2.02(b).

     Section 2.03 Underwritten Offering.

          (a) Request for Underwritten Offering. Any one or more Holders that collectively hold
greater than $50 million of Registrable Securities, based on the purchase price
per share of Common Stock under the Purchase Agreement, may deliver written notice to Concho
that such Holders wish to dispose of an aggregate of at least $50 million of Registrable
Securities, based on the purchase price per share of Common Stock under the Purchase

Exhibit B-6

 

Agreement, in
an Underwritten Offering. Upon receipt of any such written request, Concho shall retain
underwriters, effect such sale though an Underwritten Offering, including entering into an
underwriting agreement in customary form with the Managing Underwriter or Underwriters, which shall
include, among other provisions, indemnities to the effect and to the extent provided in Section
2.08, and take all reasonable actions as are requested by the Managing Underwriter or Underwriters
to expedite or facilitate the disposition of such Registrable Securities; provided, however, Concho
management will not be required to participate in any roadshow or similar marketing effort on
behalf of any such Holder.

          (b) General Procedures. In connection with any Underwritten Offering under this
Agreement, Concho shall be entitled to select the Managing Underwriter or Underwriters. In
connection with an Underwritten Offering contemplated by this Agreement in which a Selling Holder
participates, each Selling Holder and Concho shall be obligated to enter into an underwriting
agreement that contains such representations, covenants, indemnities and other rights and
obligations as are customary in underwriting agreements for firm commitment offerings of
securities. No Selling Holder may participate in such Underwritten Offering unless such Selling
Holder agrees to sell its Registrable Securities on the basis provided in such underwriting
agreement and completes and executes all questionnaires, powers of attorney, indemnities and other
documents reasonably required under the terms of such underwriting agreement. Each Selling Holder
may, at its option, require that any or all of the representations and warranties by, and the other
agreements on the part of, Concho to and for the benefit of such underwriters also be made to and
for such Selling Holder’s benefit and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement also be conditions precedent to
its obligations. No Selling Holder shall be required to make any representations or warranties to
or agreements with Concho or the underwriters other than representations, warranties or agreements
regarding such Selling Holder and its ownership of the securities being registered on its behalf,
its intended method of distribution and any other representation required by Law. If any Selling
Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw
therefrom by notice to Concho and the Managing Underwriter; provided, however, that such withdrawal
must be made up to and including the time of pricing of such Underwritten Offering. No such
withdrawal or abandonment shall affect Concho’s obligation to pay Registration Expenses.

     Section 2.04 Sale Procedures. In connection with its obligations under this Article II, Concho will, as
expeditiously as possible:

          (a) prepare and file with the Commission such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary to keep the
Registration Statement effective for the Effectiveness Period and as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of all securities covered
by the Registration Statement;

          (b) if a prospectus supplement will be used in connection with the marketing of an
Underwritten Offering from the Registration Statement and the Managing Underwriter at any time
shall notify Concho in writing that, in the sole judgment of such Managing Underwriter, inclusion
of detailed information to be used in such prospectus supplement is of material importance to the
success of the Underwritten Offering of such Registrable Securities,

Exhibit B-7

 

use its commercially
reasonable efforts to include such information in such prospectus supplement;

          (c) furnish to each Selling Holder (i) as far in advance as reasonably practicable before
filing the Registration Statement or any other registration statement contemplated by this
Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete
drafts of all such documents proposed to be filed (including exhibits and each document
incorporated by reference therein to the extent then required by the rules and regulations of the
Commission), and provide each such Selling Holder the opportunity to object to any information
pertaining to such Selling Holder and its plan of distribution that is contained therein and make
the corrections reasonably requested by such Selling Holder with respect to such information prior
to filing the Registration Statement or such other registration statement or supplement or
amendment thereto, and (ii) such number of copies of the Registration Statement or such other
registration statement and the prospectus included therein and any supplements and amendments
thereto as such Persons may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities covered by such Registration Statement or other
registration statement;

          (d) if applicable, use its commercially reasonable efforts to register or qualify the
Registrable Securities covered by the Registration Statement or any other registration statement
contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the
Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall
reasonably request; provided, however, that Concho will not be required to qualify generally to
transact business in any jurisdiction where it is not then required to so qualify or to take any
action which would subject it to general service of process in any such jurisdiction where it is
not then so subject;

          (e) promptly notify each Selling Holder and each underwriter of Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered by any of them under the
Securities Act, of (i) the filing of the Registration Statement or any other registration statement
contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection
therewith, or any amendment or supplement thereto, and, with respect to such Registration Statement
or any other registration statement or any post-effective amendment thereto, when the same has
become effective; and (ii) any written comments from the Commission with respect to any filing
referred to in clause (i) and any written request by the Commission for amendments or supplements
to the Registration Statement or any other registration statement or any prospectus or prospectus
supplement thereto;

          (f) immediately notify each Selling Holder and each underwriter of Registrable Securities, at
any time when a prospectus relating thereto is required to be delivered under the Securities Act,
of (i) the happening of any event as a result of which the prospectus or prospectus supplement
contained in the Registration Statement or any other registration
statement contemplated by this Agreement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances then existing; (ii)
the issuance or threat of issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or any other registration statement contemplated by this

Exhibit B-8

 

Agreement,
or the initiation of any proceedings for that purpose; or (iii) the receipt by Concho of any
notification with respect to the suspension of the qualification of any Registrable Securities for
sale under the applicable securities or blue sky laws of any jurisdiction. Following the provision
of such notice, Concho agrees to as promptly as practicable amend or supplement the prospectus or
prospectus supplement or take other appropriate action so that the prospectus or prospectus
supplement does not include 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 not misleading in the
light of the circumstances then existing and to take such other action as is necessary to remove a
stop order, suspension, threat thereof or proceedings related thereto;

          (g) upon request and subject to appropriate confidentiality obligations, furnish to each
Selling Holder copies of any and all transmittal letters or other correspondence with the
Commission or any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to such offering of
Registrable Securities;

          (h) in the case of an Underwritten Offering, furnish upon request, (i) an opinion of counsel
for Concho dated the effective date of the applicable registration statement or the date of any
amendment or supplement thereto, and a letter of like kind dated the date of the closing under the
underwriting agreement, and (ii) a “cold comfort” letter, dated the date of the applicable
registration statement or the date of any amendment or supplement thereto and a letter of like kind
dated the date of the closing under the underwriting agreement, in each case, signed by the
independent public accountants who have certified Concho’s financial statements included or
incorporated by reference into the applicable registration statement, and each of the opinion and
the “cold comfort” letter shall be in customary form and covering substantially the same matters
with respect to such registration statement (and the prospectus and any prospectus supplement
included therein) as are customarily covered in opinions of issuer’s counsel and in accountants’
letters delivered to the underwriters in Underwritten Offerings of securities and such other
matters as such underwriters or Selling Holders may reasonably request;

          (i) otherwise use its commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

          (j) make available to the appropriate representatives of the Managing Underwriter and Selling
Holders access to such information and Concho personnel as is reasonable and customary to enable
such parties to establish a due diligence defense under the Securities Act; provided, however, that
Concho need not disclose any such information to any such representative unless and until such
representative has entered into or is otherwise subject to a confidentiality agreement with Concho
satisfactory to Concho (including any confidentiality agreement referenced in Section 8.06 of the
Purchase Agreement);

          (k) cause all such Registrable Securities registered pursuant to this Agreement to be listed
on each securities exchange or nationally recognized quotation system on which similar securities
issued by Concho are then listed;

Exhibit B-9

 

          (l) use its commercially reasonable efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of Concho to enable the Selling Holders to consummate the
disposition of such Registrable Securities;

          (m) provide a transfer agent and registrar for all Registrable Securities covered by such
registration statement not later than the effective date of such registration statement; and

          (n) enter into customary agreements and take such other actions as are reasonably requested by
the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition
of such Registrable Securities.

          (o) Concho agrees that, if any Purchaser could reasonably be deemed to be an “underwriter”, as
defined in Section 2(a)(11) of the Securities Act, in connection with the registration statement in
respect of any registration of Concho’s securities of any Purchaser pursuant to this Agreement, and
any amendment or supplement thereof (any such registration statement or amendment or supplement a
“Purchaser Underwriter Registration Statement”), then Concho will cooperate with such
Purchaser in allowing such Purchaser to conduct customary “underwriter’s due diligence” with
respect to Concho and satisfy its obligations in respect thereof. In addition, at any Purchaser’s
request, Concho will furnish to such Purchaser, on the date of the effectiveness of any Purchaser
Underwriter Registration Statement and thereafter from time to time on such dates as such Purchaser
may reasonably request, (i) a letter, dated such date, from Concho’s independent certified public
accountants in form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to such Purchaser, and
(ii) an opinion, dated as of such date, of counsel representing Concho for purposes of such
Purchaser Underwriter Registration Statement, in form, scope and substance as is customarily given
in an underwritten public offering, including a standard “10b-5” opinion for such offering,
addressed to such Purchaser; provided, however, that with respect to any Placement Agent, Concho’s
obligations with respect to this Section 2.04(o) shall be limited to one time, with an additional
bring-down request within 30 days of the date of such documents. Concho will also permit legal
counsel to such Purchaser to review and comment upon any such Purchaser Underwriter Registration
Statement at least five Business Days prior to its filing with the Commission and all amendments
and supplements to any such Purchaser Underwriter Registration Statement within a reasonable number
of days prior to their filing with the Commission and not file any Purchaser Underwriter
Registration Statement or amendment or supplement thereto in a form to which such Purchaser’s legal
counsel reasonably objects.

     Each Selling Holder, upon receipt of notice from Concho of the happening of any event of the
kind described in Section 2.04(e) of this Agreement, shall forthwith discontinue disposition of the
Registrable Securities until such Selling Holder’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 2.04(e) of this Agreement or until it is advised in
writing by Concho that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings incorporated by reference in the
prospectus, and, if so directed by Concho, such Selling Holder will, or will request the managing
underwriter or underwriters, if any, to deliver to Concho (at Concho’s expense) all copies in their
possession or control, other than permanent file copies then in such Selling Holder’s possession,

Exhibit B-10

 

of the prospectus covering such Registrable Securities current at the time of receipt of such
notice.

     If requested by a Purchaser, Concho shall: (i) as soon as practicable incorporate in a
prospectus supplement or post-effective amendment such information as such Purchaser reasonably
requests to be included therein relating to the sale and distribution of Registrable Securities,
including information with respect to the number of Registrable Securities being offered or sold,
the purchase price being paid therefor and any other terms of the offering of the Registrable
Securities to be sold in such offering; (ii) as soon as practicable make all required filings of
such prospectus supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and (iii) as soon as
practicable, supplement or make amendments to any Registration Statement.

     Section 2.05 Cooperation by Holders. Concho shall have no obligation to include in the Registration
Statement Common Stock of a Holder, or in an Underwritten Offering pursuant to Section 2.02 of this
Agreement Common Stock of a Selling Holder, who has failed to timely furnish such information that,
in the opinion of counsel to Concho, is reasonably required in order for the registration statement
or prospectus supplement, as applicable, to comply with the Securities Act.

     Section 2.06 Restrictions on Public Sale by Holders of Registrable Securities. For a period of 365 days
from the Closing Date, each Holder of Registrable Securities who is included in the Registration
Statement agrees not to effect any public sale or distribution of the Registrable Securities during
the 30-day period following completion of an Underwritten Offering of equity securities by Concho
(except as provided in this Section 2.06); provided, however, that the duration of the foregoing
restrictions shall be no longer than the duration of the shortest restriction generally imposed by
the underwriters on the officers or directors or any other Common Stockholder of Concho on whom a
restriction is imposed in connection with such public offering. In addition, the provisions of
this Section 2.06 shall not apply with respect to a Holder that (A) owns less than $5 million of
Purchased Common Stock, based on the Commitment Amounts or (B) has submitted a notice requesting
the inclusion of Registrable Securities in an Underwritten Offering pursuant to Section 2.02 or
Section 2.03(a) hereof but is unable to do so as a result of the priority provisions contained in
Section 2.02(b) hereof.

     Section 2.07 Expenses.

          (a) Certain Definitions. “Registration Expenses” means all expenses incident
to Concho’s performance under or compliance with this Agreement to effect the registration of
Registrable Securities on the Registration Statement pursuant to Section 2.01 hereof or an
Underwritten Offering covered under this Agreement, and the disposition of such securities,
including, without limitation, all registration, filing, securities exchange listing and The New
York Stock Exchange fees, all registration, filing, qualification and other fees and expenses
of complying with securities or blue sky laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes and fees of transfer agents and registrars, all word processing,
duplicating and printing expenses and the fees and disbursements of counsel and independent public
accountants for Concho, including the expenses of any special audits or “cold comfort” letters
required by or incident to such performance and compliance. “Selling Expenses” means

Exhibit B-11

 

all underwriting fees, discounts and selling commissions allocable to the sale of the Registrable
Securities.

          (b) Expenses. Concho will pay all reasonable Registration Expenses as determined in
good faith, including, in the case of an Underwritten Offering, whether or not any sale is made
pursuant to such Underwritten Offering. In addition, except as otherwise provided in Section 2.08
hereof, Concho shall not be responsible for legal fees incurred by Holders in connection with the
exercise of such Holders’ rights hereunder. Each Selling Holder shall pay all Selling Expenses in
connection with any sale of its Registrable Securities hereunder.

     Section 2.08 Indemnification.

          (a) By Concho. In the event of an offering of any Registrable Securities under the
Securities Act pursuant to this Agreement, Concho will indemnify and hold harmless each Selling
Holder thereunder, its officers, members, managers, directors, employees, agents and other
representatives, and each underwriter, pursuant to the applicable underwriting agreement with such
underwriter, of Registrable Securities thereunder and each Person, if any, who controls such
Selling Holder or underwriter within the meaning of the Securities Act and the Exchange Act, and
its officers, members, managers, directors, employees, agents and other representatives, against
any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and
expenses) (collectively, “Losses”), joint or several, to which such Selling Holder,
officer, member, manager, director, employee, agent, other representative, underwriter or
controlling Person may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any other registration statement
contemplated by this Agreement, any preliminary prospectus, free writing prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein (in the case of a prospectus, in light of the
circumstances under which they were made) not misleading, and will reimburse each such Selling
Holder, its directors and officers, each such underwriter and each such controlling Person for any
legal or other expenses reasonably incurred by them in connection with investigating or defending
any such Loss or actions or proceedings; provided, however, that Concho will not be liable in any
such case if and to the extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made in strict conformity
with information furnished by such Selling Holder, its directors or officers or any underwriter or
controlling Person in writing specifically for use in the Registration Statement or such other
registration statement, or prospectus supplement, as applicable. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of such
Selling Holder or any such Selling Holder, its directors or officers or any underwriter or
controlling Person, and shall survive the transfer of such securities by such Selling Holder.

          (b) By Each Selling Holder. Each Selling Holder agrees severally and not jointly to
indemnify and hold harmless Concho, its directors and officers, and each Person, if any, who
controls Concho within the meaning of the Securities Act or of the Exchange Act, and its directors
and officers, to the same extent as the foregoing indemnity from Concho to the

Exhibit B-12

 

Selling Holders, but
only with respect to information regarding such Selling Holder furnished in writing by or on behalf
of such Selling Holder expressly for inclusion in the Registration Statement or any preliminary
prospectus or final prospectus included therein, or any amendment or supplement thereto; provided,
however, that the liability of each Selling Holder shall not be greater in amount than the dollar
amount of the net proceeds received by such Selling Holder from the sale of the Registrable
Securities giving rise to such indemnification.

          (c) Notice. Promptly after receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party other than under this Section 2.08. In any action brought
against any indemnified party, it shall notify the indemnifying party of the commencement thereof.
The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified
party and, after notice from the indemnifying party to such indemnified party of its election so to
assume and undertake the defense thereof, the indemnifying party shall not be liable to such
indemnified party under this Section 2.08 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; provided, however, that, (i) if the
indemnifying party has failed to assume the defense or employ counsel reasonably acceptable to the
indemnified party or (ii) if the defendants in any such action include both the indemnified party
and the indemnifying party and counsel to the indemnified party shall have concluded that there may
be reasonable defenses available to the indemnified party that are different from or additional to
those available to the indemnifying party, or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, then the indemnified party
shall have the right to select a separate counsel and to assume such legal defense and otherwise to
participate in the defense of such action, with the reasonable expenses and fees of such separate
counsel and other reasonable expenses related to such participation to be reimbursed by the
indemnifying party as incurred. Notwithstanding any other provision of this Agreement, no
indemnified party shall settle any action brought against it with respect to which it is entitled
to indemnification hereunder without the consent of the indemnifying party, unless the settlement
thereof imposes no liability or obligation on, and includes a complete and unconditional release
from all liability of, the indemnifying party.

          (d) Contribution. If the indemnification provided for in this Section 2.08 is held by
a court or government agency of competent jurisdiction to be unavailable to any indemnified party
or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Loss in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the one hand and of
such indemnified party on the other in connection with the statements or omissions which resulted
in such Losses, as well as any other relevant equitable considerations; provided, however, that in
no event shall such Selling Holder be required to contribute an aggregate amount in excess of the
dollar amount of net proceeds received by such Selling Holder from the sale of Registrable
Securities giving rise to such indemnification. The relative fault of the indemnifying party on
the one hand and the indemnified party on the other shall be determined by reference to, among

Exhibit B-13

 

other things, whether the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact has been made by, or relates to, information supplied by
such party, and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this paragraph were to be determined by pro rata
allocation or by any other method of allocation which does not take account of the equitable
considerations referred to herein. The amount paid by an indemnified party as a result of the
Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and
other expenses reasonably incurred by such indemnified party in connection with investigating or
defending any Loss which is the subject of this paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who is not guilty of such fraudulent misrepresentation.

          (e) Other Indemnification. The provisions of this Section 2.08 shall be in addition
to any other rights to indemnification or contribution which an indemnified party may have pursuant
to law, equity, contract or otherwise.

     Section 2.09 Rule 144 Reporting. With a view to making available the benefits of certain rules and
regulations of the Commission that may permit the sale of the Registrable Securities to the public
without registration, Concho agrees to use its commercially reasonable efforts to:

          (a) make and keep public information regarding Concho available, as those terms are understood
and defined in Rule 144 under the Securities Act, at all times from and after the date hereof;

          (b) file with the Commission in a timely manner all reports and other documents required of
Concho under the Securities Act and the Exchange Act at all times from and after the date hereof;
and

          (c) so long as a Holder owns any Registrable Securities, furnish, unless otherwise not
available at no charge by access electronically to the Commission’s EDGAR filing system, to such
Holder forthwith upon request a copy of the most recent annual or quarterly report of Concho, and
such other reports and documents so filed as such Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing such Holder to sell any such securities
without registration.

     Section 2.10 Transfer or Assignment of Registration Rights. The rights to cause Concho to register Registrable Securities granted to the Purchasers by
Concho under this Article II may be transferred or assigned by any Purchaser to one or more
transferee(s) or assignee(s) of such Registrable Securities; provided, however, that, (a) unless
such transferee is an Affiliate of such Purchaser, each such transferee or assignee holds
Registrable Securities representing at least $10 million of the Purchased Common Stock, based on
the Commitment Amounts, (b) Concho is given written notice prior to any said transfer or
assignment, stating the name and address of each such transferee and identifying the securities
with respect to which such registration rights are being transferred or assigned, and (c) each such
transferee assumes in writing responsibility for its portion of the obligations of such Purchaser
under this Agreement.

Exhibit B-14

 

     Section 2.11 Limitation on Subsequent Registration Rights. From and after the date hereof, Concho shall
not, without the prior written consent of the Holders of a majority of the outstanding Registrable
Securities, (i) enter into any agreement with any current or future holder of any securities of
Concho that would allow such current or future holder to require Concho to include securities in
any registration statement filed by Concho on a basis that is superior to the piggyback rights
granted to the Purchasers hereunder or (ii) grant registration rights to any other Person that
would be superior to the Purchasers’ registration rights hereunder.

ARTICLE III

MISCELLANEOUS

     Section 3.01 Communications. All notices and other communications provided for or permitted hereunder
shall be made in writing by facsimile, electronic mail, courier service or personal delivery:

          (a) if to Purchaser, to the address set forth under that Purchaser’s signature block in
accordance with the provisions of this Section 3.01;

          (b) if to a transferee of Purchaser, to such Holder at the address provided pursuant to
Section 2.10 hereof; and

          (c) if to Concho, at 550 West Texas Avenue, Suite 1300, Midland, Texas 79701 (facsimile:
432.683.7441), notice of which is given in accordance with the provisions of this Section 3.01.

     All such notices and communications shall be deemed to have been received: at the time
delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or
electronic mail; and when actually received, if sent by courier service or any other means.

     Section 3.02 Successor and Assigns This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties, including subsequent Holders of Registrable
Securities to the extent permitted herein.

     Section 3.03 Recapitalization, Exchanges, Etc. Affecting the Common Stock The provisions of this
Agreement shall apply to the full extent set forth herein with respect to any and all stock of
Concho or any successor or assign of Concho (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for or in substitution of, the
Registrable Securities, and shall be appropriately adjusted for combinations, stock splits,
recapitalizations and the like occurring after the date of this Agreement.

     Section 3.04 Specific Performance. Damages in the event of breach of this Agreement by a party hereto
may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such
Person, in addition to and without limiting any other remedy or right it may have, will have the
right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining
any such breach, and enforcing specifically the terms and provisions hereof, and each of the
parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction
or competence of the court to grant such an injunction or other equitable relief. The

Exhibit B-15

 

existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or
in equity which such Person may have.

     Section 3.05 Counterparts. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same Agreement.

     Section 3.06 Headings. The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

     Section 3.07 Governing Law. The Laws of the State of New York shall govern this Agreement without
regard to principles of conflict of Laws.

     Section 3.08 Severability of Provisions. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof or
affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

     Section 3.09 Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein with respect to the rights
granted by Concho set forth herein. This Agreement, the Purchase Agreement and the Confidentiality
Agreement pertaining to the sale of the Purchased Common Stock supersede all prior agreements and
understandings between the parties with respect to such subject matter.

     Section 3.10 Amendment. This Agreement may be amended only by means of a written amendment signed by
Concho and the Holders of a majority of the then outstanding Registrable Securities; provided,
however, that no such amendment shall materially and adversely affect the rights of any Holder
hereunder without the consent of such Holder.

     Section 3.11 No Presumption. If any claim is made by a party relating to any conflict, omission or
ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by
virtue of the fact that this Agreement was prepared by or at the request of a particular party or
its counsel.

     Section 3.12 Obligations Limited to Parties to Agreement. Each of the Parties hereto covenants, agrees
and acknowledges that no Person other than the Purchasers (and their permitted assignees) and
Concho shall have any obligation hereunder and that, notwithstanding that one or more of the
Purchasers may be a corporation, partnership or limited liability company, no recourse under this
Agreement or the Purchase Agreement or under any documents or instruments delivered in connection
herewith or therewith shall be had against any former, current or future director, officer,
employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of
the Purchasers or any former, current or future director, officer, employee, agent, general or
limited partner, manager, member, stockholder or Affiliate of any of

Exhibit B-16

 

the foregoing, whether by the
enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any
applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever
shall attach to, be imposed on or otherwise be incurred by any former, current or future director,
officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of
any of the Purchasers or any former, current or future director, officer, employee, agent, general
or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for
any obligations of the Purchasers under this Agreement or the Purchase Agreement or any documents
or instruments delivered in connection herewith or therewith or for any claim based on, in respect
of or by reason of such obligation or its creation.

[The remainder of this page is intentionally left blank]

Exhibit B-17

 

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

	 	 	 	 	 
	 	CONCHO RESOURCES INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[PURCHASERS]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Exhibit B-18

 

	 	 	 	 	 

[Signature Page to Registration Rights Agreement]

Exhibit B-19

 

Exhibit C

CONCHO RESOURCES INC

Officer’s Certificate

     Pursuant to Section 6.02(b) of the Common Stock Purchase Agreement, dated as of June 5, 2008
(the “Purchase Agreement”) by and among Concho Resources Inc., a Delaware corporation (the
“Company”), and each of the Purchasers named in Schedule 2.01 to the Purchase Agreement
relating to the issuance and sale by the Company to the Purchasers of an aggregate of [•] shares of
Common Stock, the undersigned hereby certifies on behalf of the Company as follows:

     (A) The Company has performed and complied with the covenants and agreements contained in the
Purchase Agreement that are required to be performed and complied with by the Company on or prior
to the date hereof.

     (B) The representations and warranties of the Company contained in the Purchase Agreement that
are qualified by materiality or Concho Material Adverse Effect (as defined in the Purchase
Agreement) are true and correct as of the date of the Purchase Agreement and as of the date hereof
and all other representations and warranties are true and correct in all material respects as of
the date of the Purchase Agreement and as of the date hereof, except that representations made as
of a specific date are true and correct as of such date only.

     (C) Since the date of the Purchase Agreement, no Concho Material Adverse Effect (as defined in
the Purchase Agreement) has occurred and is continuing.

     Dated: [•], 2008

	 	 	 	 	 
	 	CONCHO RESOURCES INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Steven L. Beal 	 
	 	 	Title:  	President and Chief Operating Officer 	 

Exhibit C

 

	 	 	 	 	 

Exhibit D

PURCHASERS’

Officer’s Certificate

     Pursuant to Section 6.03(c) of the Common Stock Purchase Agreement, dated as of June 5, 2008
(the “Purchase Agreement”), by and among Concho Resources Inc., a Delaware corporation (the
“Company”), and each of the Purchasers named in Schedule 2.01 to the Purchase Agreement
relating to the issuance and sale by the Company to the Purchasers of an aggregate of [•] shares of
Common Stock, each of the undersigned hereby certifies solely on behalf of itself as follows:

     (A) Such Purchaser has performed and complied with the covenants and agreements contained in
the Purchase Agreement that are required to be performed and complied with by such Purchaser on or
prior to the date hereof.

     (B) The representations and warranties of such Purchaser contained in the Purchase Agreement
that are qualified by materiality or Purchaser Material Adverse Effect (as defined in the Purchase
Agreement) are true and correct as of the date of the Purchase Agreement and as of the date hereof
and all other representations and warranties are true and correct in all material respects as of
the date of the Purchase Agreement and as of the date hereof, except that representations made as
of a specific date are true and correct as of such date only.

     (C) Since the date of the Purchase Agreement, no Purchaser Material Adverse Effect (as defined
in the Purchase Agreement) has occurred and is continuing.

     Dated: [•], 2008

	 	 	 	 	 
	 	[PURCHASER]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Exhibit D

 

	 	 	 	 	 

Exhibit E

CONCHO RESOURCES INC

SECRETARY’S CERTIFICATE

[•], 2008

     Reference is made to that certain Common Stock Purchase Agreement, dated as of June 5, 2008,
by and among Concho Resources Inc., a Delaware corporation (the “Company”) and the
Purchasers party thereto (the “Purchase Agreement”). Terms that are defined in the
Purchase Agreement and that are used but not defined herein have the respective meanings given to
them in the Purchase Agreement. I, David W. Copeland, hereby certify that I am the duly elected,
qualified and acting Vice President, General Counsel and Secretary of the Company; and that as such
I am familiar with the facts herein certified and am authorized to certify the same and do further
certify, in such capacity, that:

     1. Attached hereto as Exhibit 1 is a true, correct and complete copy of the
Certificate of Incorporation of the Company (including all amendments, if any, thereto), certified
by the Secretary of State of the State of Delaware, as in effect on August 3, 2007 and at all times
thereafter to and including the date hereof (the “Certification of Incorporation”). No other
amendments to such Certificate of Formation have been authorized by the members or Board of
Directors of the Company and such Certificate of Formation is in full force and effect as of the
date hereof.

     2. No proceedings have been instituted or are pending, or, to the best of my knowledge, are
contemplated, for the dissolution or liquidation of the Company or that would threaten its
corporate existence or forfeit its limited corporate rights or franchises.

     3. Attached hereto as Exhibit 2 is a true, correct and complete copy of resolutions
duly and validly adopted by the Board of Directors of the Company at a meeting on [•], 2008, a copy
of which has been duly filed with the minutes of the proceedings of such Board of Directors. Such
resolutions have not been modified, amended, rescinded or revoked, and the same are in full force
and effect on the date hereof and are within the power of the Board of Directors to pass as
provided in the Certification of Incorporation.

     4. The following persons are duly elected or appointed and acting officers of the Company,
holding the respective offices set forth opposite their names below, and the signatures set forth
opposite their names below are their true and genuine signatures:

Exhibit E-1

 

	 	 	 	 	 
	Name	 	Office	 	Specimen Signature
	 
	 	 	 	 
	Timothy A. Leach
	 	Chairman and Chief Executive Officer	 	 
	 
	 	 	 	 
	David W. Copeland
	 	Vice President, General Counsel and Corporate Secretary	 	 
	 
	 	 	 	 
	Steven L. Beal
	 	President and Chief Operating Officer	 	 

     6. Each of the foregoing officers and the undersigned is authorized pursuant to the
resolutions attached hereto, as officers of the Company, to execute and deliver, for and on behalf
of the Company, the Purchase Agreement, the Registration Rights Agreement and all certificates,
notices, communications and other documents required or permitted to be given by or on behalf of
the Company in connection with the transactions contemplated thereby.

     7. This certificate and the specimen signatures contained herein may be executed in one or
more counterparts, none of which need contain the signatures of all persons, each of which shall be
deemed an original, and all of which together shall constitute one and the same instrument.

Exhibit E-2

 

     IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date first set
forth above.

	 	 	 	 	 
	 	CONCHO RESOURCES INC.

 	 
	 	By:  	 	 
	 	 	David W. Copeland 	 
	 	 	Vice President, General Counsel
and Corporate Secretary 	 
	 

     I, Steven L. Beal, President and Chief Operating Officer of the Company, hereby certify that
the signature of David W. Copeland set forth above is a true, correct and genuine signature of such
person, and that such person is the duly elected or appointed, qualified and acting Vice President,
General Counsel and Corporate Secretary of the Company.

	 	 	 	 	 
	 	
 	 
	 	Steven L. Beal 	 
	 	President and

Chief Operating Officer 	 

[Signature Page to Concho Resources Inc. Secretary’s Certificate]

Exhibit E-3

 

EXHIBIT 1

CERTIFICATE OF INCORPORATION

Exhibit E-4

 

EXHIBIT 3

RESOLUTIONS

Exhibit E-5

 

Exhibit F

Henry Acquisition Agreement

Exhibit F

 

Execution Version

 

 

PURCHASE AGREEMENT

by and among

James C. Henry, Paula Henry, Henry Securities, Ltd., Henchild LLC

and Henry Family Investment Group

(“Sellers”)

and

Concho Resources Inc.

(“Purchaser”)

Concerning the Sale of All of the Limited Partner and Membership Interests of

Henry Holding LP, Henry Energy LP, HELP Investment LLC, Henry Capital LLC, 

Henry Operating LLC, Henry Petroleum LP, Quail Ranch LLC, 

Aguasal Management LLC and Aguasal LP

And Concerning the Sale of All of the General Partner Interests of AGUASAL HOLDING

June 5, 2008

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE I
CERTAIN TERMS DEFINED
	 	 	 	 	 
	 	 	 	 
	Section 1.1	 	Defined Terms
	 	 	1	 
	Section 1.2	 	References
	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE II
PURCHASE AND SALE
	 	 	 	 	 
	 	 	 	 
	Section 2.1	 	Purchase of Shares
	 	 	9	 
	Section 2.2	 	Purchase Price
	 	 	9	 
	Section 2.3	 	Bonus Payments
	 	 	10	 
	Section 2.4	 	Title Deficiency
	 	 	11	 
	Section 2.5	 	Property Condition Deficiency
	 	 	12	 
	Section 2.6	 	Termination Due to Deficiencies
	 	 	13	 
	Section 2.7	 	Along-side Interests
	 	 	14	 
	Section 2.8	 	Distribution of Excluded Companies
	 	 	15	 
	Section 2.9	 	Agreed Net Working Capital Distribution
	 	 	15	 
	Section 2.10	 	Withholding
	 	 	15	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE III
REPRESENTATIONS AND WARRANTIES
	 	 	 	 	 
	 	 	 	 
	Section 3.1	 	Representations and Warranties of the Sellers
	 	 	15	 
	Section 3.2	 	Representations and Warranties of Purchaser
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE IV
COVENANTS OF THE PARTIES
	 	 	 	 	 
	 	 	 	 
	Section 4.1	 	Conduct of Business of each Company
	 	 	32	 
	Section 4.2	 	HSR Filing
	 	 	35	 
	Section 4.3	 	Access to Information
	 	 	35	 
	Section 4.4	 	Cooperation in Connection with Regulatory Filings
	 	 	36	 
	Section 4.5	 	Consent from Third Parties
	 	 	36	 
	Section 4.6	 	Further Assurances
	 	 	37	 
	Section 4.7	 	Public Announcements
	 	 	37	 
	Section 4.8	 	Resignations; Releases
	 	 	37	 
	Section 4.9	 	Name Change
	 	 	37	 
	Section 4.10	 	Employment Matters
	 	 	38	 
	Section 4.11	 	Parachute Payments
	 	 	38	 
	Section 4.12	 	Non-Competition; Non-Solicitation
	 	 	39	 
	Section 4.13	 	Tax Matters
	 	 	39	 
	Section 4.14	 	No Solicitation of Transactions
	 	 	42	 
	Section 4.15	 	Notification of Certain Matters
	 	 	42	 
	Section 4.16	 	Confidentiality
	 	 	42	 
	Section 4.17	 	Releases and Termination
	 	 	43	 
	Section 4.18	 	Identity of Purchaser
	 	 	43	 
	Section 4.19	 	Representations and Warranties of Sellers
	 	 	43	 
	Section 4.20	 	Transition Agreement
	 	 	44	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE V
THE CLOSING
	 	 	 	 	 
	 	 	 	 
	Section 5.1	 	The Closing
	 	 	45	 
	Section 5.2	 	Purchaser’s Conditions to Closing
	 	 	45	 
	Section 5.3	 	Sellers’ Obligations to Closing
	 	 	46	 
	Section 5.4	 	Sellers’ Delivery at Closing
	 	 	47	 
	Section 5.5	 	Purchaser’s Delivery at Closing
	 	 	47	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VI
TERMINATION
	 	 	 	 	 
	 	 	 	 
	Section 6.1	 	Termination
	 	 	48	 
	Section 6.2	 	Effect of Termination
	 	 	49	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VII
SURVIVAL AND INDEMNIFICATION
	 	 	 	 	 
	 	 	 	 
	Section 7.1	 	Survival
	 	 	49	 
	Section 7.2	 	Indemnification
	 	 	49	 
	Section 7.3	 	Express Negligence
	 	 	53	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE VIII
MISCELLANEOUS
	 	 	 	 	 
	 	 	 	 
	Section 8.1	 	Headings
	 	 	53	 
	Section 8.2	 	Notices
	 	 	53	 
	Section 8.3	 	Assignment
	 	 	54	 
	Section 8.4	 	Entire Agreement
	 	 	54	 
	Section 8.5	 	Counterparts
	 	 	54	 
	Section 8.6	 	Governing Law
	 	 	54	 
	Section 8.7	 	Severability
	 	 	54	 
	Section 8.8	 	Specific Performance
	 	 	55	 
	Section 8.9	 	Legal Actions
	 	 	55	 
	Section 8.10	 	No Third Party Beneficiaries
	 	 	55	 
	Section 8.11	 	Appointment of Agent
	 	 	55	 
	Section 8.12	 	Neutral Construction
	 	 	55	 

Schedules:

	 	 	 
	Schedule 2.7

	 	Designated Sellers; Along-side Interest Holders
	Schedule 2.8(a)

	 	Henry Holding Distribution
	Schedule 2.8(b)

	 	Henry Energy Distribution
	Schedule 3.1(a)(i)

	 	Ownership Interests
	Schedule 3.1(a)(ii)

	 	Restrictions on Shares
	Schedule 3.1(c)

	 	Violations
	Schedule 3.1(d)(i)

	 	Consents from Governmental Authorities
	Schedule 3.1(d)(ii)

	 	Consents from Persons
	Schedule 3.1(f)

	 	Capitalization
	Schedule 3.1(f)(i)

	 	Rights Related to Shares
	Schedule 3.1(g)

	 	Other Equity Interests
	Schedule 3.1(j)

	 	Undisclosed Liabilities
	Schedule 3.1(l)

	 	Certain Investments
	Schedule 3.1(m)

	 	Taxes
	Schedule 3.1(n)

	 	Legal Proceedings

ii

 

	 	 	 
	Schedule 3.1(p)(i)

	 	List of Material Contracts
	Schedule 3.1(q)

	 	No Changes
	Schedule 3.1(r)

	 	Employee Benefit Plans
	Schedule 3.1(u)

	 	Insurance
	Schedule 3.1(z)

	 	Plugging and Abandonment
	Schedule 3.1(aa)

	 	Payout Balances
	Schedule 3.1(gg)

	 	Bonds and Convertible Credit
	Schedule 3.1(hh)

	 	Affiliate Transactions
	Schedule 3.1(jj)

	 	Suspense Funds
	Schedule 4.8

	 	Resignations
	Schedule 4.9

	 	Registration of Trademark
	Schedule 5.2(b)

	 	Specified Contracts

Exhibits:

	 	 	 
	Exhibit A

	 	Form of Employee Letter Agreement
	Exhibit B

	 	Form of Purchase Agreement for Along-side Interests

iii

 

PURCHASE AGREEMENT

     This PURCHASE AGREEMENT (“Agreement”) is entered into as of June 5, 2008 but effective as of
7:00 am on May 1, 2008, by and among CONCHO RESOURCES INC., a Delaware corporation (“Purchaser”),
and James C. Henry and Paula Henry (collectively, “Henry”), Henry Securities Ltd,
a Texas limited partnership (“Henry Ltd.”), Henchild, LLC, a Texas limited liability
company (“Henchild”), and Henry Family Investment Group, a Texas general partnership
(“FIG” and together with each of Henry, Henry Ltd. and Henchild, a “Seller” and collectively, the
“Sellers”), Henry Holding LP, Texas limited partnership, (“Holding”), Henry Energy
LP, a Texas limited partnership, (“Energy”), Aguasal Holding, a Texas general
partnership (“Aguasal”), HELP Investment LLC, a Texas limited liability company (“HELP”),
Henry Capital LLC, a Texas limited liability company (“Henry Capital”), Henry
Operating LLC, a Texas limited liability company (“Henry Operating”), Henry Petroleum
LP, a Texas limited partnership (“Henry Petroleum”), Quail Ranch LLC, a Texas limited
liability company (“Quail Ranch”), Aguasal Management LLC, a Texas limited liability
company (“Aguasal Management”) and Aguasal LP, a Texas limited partnership (“Aguasal LP”).
Holding, Energy, Aguasal, HELP, Henry Capital, Henry Operating, Henry Petroleum, Quail Ranch,
Aguasal Management and Aguasal LP are hereinafter referred to collectively as the “Companies” and
individually as a “Company.”

     WHEREAS, Sellers are the owners, directly or indirectly, of the general and limited
partnership interests and membership interests of each Company listed below such Sellers’ names on
Schedule 3.1(a)(i) hereto, which collectively constitute all of the outstanding general,
limited partnership and membership interests of the Companies (the “Shares”).

     WHEREAS, at or before the Closing Date, Purchaser will have conducted an independent
investigation of the Properties for the purposes of Section 2.6 hereof.

     WHEREAS, Sellers desire to sell and Purchaser desires to purchase all of the Shares from
Sellers upon the terms and conditions more fully set forth herein.

     NOW THEREFORE, for and in consideration of the covenants and agreements set forth herein and
intending to be legally bound, the parties hereto agree as follows:

ARTICLE I

CERTAIN TERMS DEFINED

     Section 1.1 Defined Terms. The following are definitions of certain terms capitalized and
used throughout this Agreement:

     “2006 Financial Statements.” 2006 Financial Statements has the meaning given in Section
3.1(j).

     “2007 Financial Statements.” 2007 Financial Statements has the meaning given in Section
3.1(j).

     “2008 Short Period Consolidated Tax Returns.” 2008 Short Period Consolidated Tax
Returns shall mean the U.S. federal and any applicable state consolidated tax returns of the
Holding Consolidated Group for the period from January 1, 2008 through the Closing Date.

     “Acquisition Proposal.” Acquisition Proposal shall mean any proposal or offer by a
third party for (i) any merger, consolidation, share exchange, business combination or other
similar

1

 

transaction or series of transactions (whether related or unrelated) in which any
Shares in any Company or all or a material portion of the Properties or assets of any of the
Companies would be acquired by any third party, (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of the Properties or other assets of the Companies, in
a single transaction or series of transactions (whether related or unrelated) other than in
the ordinary course of business, (iii) any exchange offer for outstanding Shares in any
Company by any third party, or the filing of a registration statement under the Securities
Act in connection therewith, or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the foregoing.

     “Affiliate.” Affiliate means with respect to any Person, any Person which, directly or
indirectly, controls, is controlled by, or is under a common control with, such Person. The
term “control” (including the terms “controlled by” and “under common control with”) as used
in this definition means the possession, directly or indirectly, of the power to direct or
cause the direction of management and policies of a Person, whether through the ownership of
voting securities, by contract, or otherwise. With respect to any natural person, the term
“Affiliate” shall also mean (1) the spouse or children (including those by adoption) and
siblings of such Person; and any trust whose primary beneficiary is such Person, such
Person’s spouse, such Person’s siblings and/or one or more of such Person’s lineal
descendants, (2) the legal representative or guardian of such Person acting in such capacity
only and (3) any Person controlled by or under the common control with any one or more of
such Person and the Persons described in clauses (1) or (2) preceding.

     “Agent.” Agent means Terry R. Creech acting as agent hereunder for the Sellers or if
Terry R. Creech notifies the Purchaser in writing that he refuses to act further as Agent,
then Agent shall be deemed to be each of the Sellers, or their respective representatives in
the case of their deaths.

     “Agreed Net Working Capital Distribution” is defined in Section 2.9.

     “Agreement.” Agreement has the meaning given in the Preamble.

     “Aguasal.” Aguasal has the meaning given in the Preamble.

     “Aguasal LP.” Aguasal LP has the meaning given in the Preamble.

     “Aguasal Management.” Aguasal Management has the meaning given in the Preamble.

     “Along-side Interests.” Along-side Interests has the meaning given in Section 2.7.

     “Approval.” Any approval, authorization, grant of authority, consent, order,
qualification, permit, license, variance, exemption, franchise, concession, certificate,
filing or registration, or any waiver of the foregoing, or any notice, statement or other
communication required to be filed with or delivered to any Governmental Authority or any
other Person.

     “Business Employee” means any individual who is an employee of any Company other than
the officers and other Persons who will resign from employment with the Companies pursuant
to Section 4.8.

     “Cash Bonus.” Cash Bonus has the meaning given to such term in Section 2.3(a).

2

 

     “Cash Bonus Adjustment.” Cash Bonus Adjustment means the amount calculated under
Section 2.3(b).

     “Claims.” All (i) security interests, liens, pledges, interests arising in connection
with community property laws or other laws relating to the rights of spouses, claims,
charges, encumbrances, preferential purchase rights, options, rights of first refusal,
mortgages, indentures, security agreements or other similar agreements, production payments,
restriction, burdens, rights of purchase, rights of a vendor under any title retention or
conditional sale agreement, and (ii) arrangements, contracts, commitments, understandings
and obligations of any nature whatsoever which serve to restrict or impair the value of a
Property, a Company or a Share.

     “Claim Notice.” Claim Notice has the meaning given in Section 7.2(d).

     “Closing.” Closing has the meaning given in Section 5.1.

     “Closing Date.” Closing Date has the meaning given in Section 5.1.

     “Code.” The Internal Revenue Code of 1986, as amended.

     “Company” and “Companies.” Company and Companies have the meaning given in the
Preamble.

     “Company Financial Statements.” Company Financial Statements has the meaning given in
Section 3.1(j).

     “Company Group.” Collectively and separately, Holding, Energy, Aguasal, HELP, Henry
Capital, Henry Operating, Henry Petroleum, Quail Ranch, Aguasal Management and Aguasal LP
and any and all Subsidiaries of those entities other than the Excluded Companies.

     “Compensation Letter.” Compensation Letter shall mean the letter executed and
delivered by Sellers to Purchaser in connection with the execution and delivery of this
Agreement and dated the date hereof setting forth the amounts of the Prior Bonus, the Cash
Bonus, the Contractor Bonus and certain other information required by Section 3.1(s)(i) with
respect to certain employees of the Companies.

     “Confidentiality Agreement” shall mean that certain Confidentiality Agreement dated
March 14, 2008 among Holding, Henry Petroleum and Purchaser.

     “Contract.” Any mortgage, franchise, indenture, debenture, note, bond, loan, loan
arrangement, letter of credit, guaranty, surety, agreement, collective bargaining agreement,
contract, commitment, lease, option, right to acquire, preferential purchase right,
preemptive right, warrant, net profit interest, enhancement agreement, commitment, license,
permit, authorization or other instrument, document, arrangement or understanding, written
or unwritten.

     “Contractor Bonus.” Contractor Bonus has the meaning given in Section 2.3(a).

     “Designated Seller.” Designated Seller means those Persons identified as “Designated
Sellers” on Schedule 2.7.

     “Effective Time.” Shall mean 12:01 a.m. (Central Time) on May 1, 2008.

3

 

     “Employee Letter Agreement.” Employee Letter Agreement means the letter agreements
executed and delivered by the Retained Employees in substantially the form attached as
Exhibit A.

     “Energy.” Energy has the meaning given in the Preamble.

     “Environmental Law(s).” Environmental Laws means all applicable local, state, and
federal laws (including common law), rules, regulations, and orders regulating or otherwise
pertaining to: (i) the use, generation, migration, storage, removal, treatment,
remediation, discharge, emission, release, transportation, disposal, or cleanup of
pollutants, contamination, hazardous wastes, hazardous substances, hazardous materials,
toxic substances, solid wastes or any chemical or constituent regulated by a Governmental
Authority (collectively hereinafter “Hazardous Substances”); (ii) surface waters,
ground-water, ambient air, natural resources and any other environmental medium; or (iii)
the environment or health and safety-related matters; including the following as from time
to time amended: 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 Oil Pollution
Act, the Occupational Safety and Health Act, and all rules and regulations promulgated
pursuant to any of the foregoing.

     “ERISA.” ERISA means the Employee Retirement Income Security Act of 1974, as amended.

     “Exchange Act.” Exchange Act shall mean the Securities Exchange Act of 1934, as
amended.

     “Excluded Companies.” Excluded Companies means Henry Resources LLC, a Texas limited
liability company, and Henry Equity LLC, a Texas limited liability company.

     “FIG.” FIG has the meaning given in the Preamble.

     “GAAP.” GAAP means generally accepted accounting principals in the United States.

     “Governmental Authority.” Governmental Authority means any governmental, securities
exchange, federal, state, county, city or other political subdivision, agency, court or
instrumentality of the United States or any other country exercising executive, legislative,
judicial, regulatory or administrative jurisdiction over the applicable Person or its assets
or businesses.

     “HELP.” HELP has the meaning given in the Preamble.

     “Henchild.” Henchild has the meaning given in the Preamble.

     “Henry.” Henry has the meaning given in the Preamble.

     “Henry Capital.” Henry Capital has the meaning given in the Preamble.

4

 

     “Henry Disclosure Schedule.” Henry Disclosure Schedule means the Schedules delivered
by Sellers to Purchaser under this Agreement.

     “Henry Ltd.” Henry Ltd. has the meaning given in the Preamble.

     “Henry Operating.” Henry Operating has the meaning given in the Preamble.

     “Henry Petroleum.” Henry Petroleum has the meaning given in the Preamble.

     “Holding.” Holding has the meaning given in the Preamble.

     “Holding Consolidated Group.” Holding Consolidated Group means the affiliated group of
Persons of which Holding is the common parent corporation that files a consolidated federal
income tax return under Section 1502 of the Code.

     “HSR Act.” HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

     “Hydrocarbons.” Hydrocarbons mean oil, condensate, gas, casinghead gas and other
hydrocarbons produced or processed in association therewith.

     “Knowledge.” Knowledge means, in reference to the Companies or Company Group, the
actual knowledge of the following officers of the Companies: Chairman and Chief Executive
Officer, Executive Vice President, Vice President of Land, Vice President of Finance and
Chief Financial Officer, President and Chief Operating Officer, Vice President of Business
Development and Exploration and the Production Manager; and, in reference to the Sellers,
the actual knowledge of James C. Henry and Terry R. Creech.

     “Law.” Law has the meaning given in Section 3.1(c)

     “Lease(s).” The oil, gas and mineral leases, oil and gas leases, contracts, agreements
and other rights giving the Companies the right to own or acquire oil and gas interests and
to explore for and develop Hydrocarbons in the lands covered thereby or which give rise to
the interests described in the Property Letter.

     “Material Contract.” Material Contract has the meaning given in Section 3.1(p)(i).

     “Maximum Title Deficiency Amount.” Maximum Title Deficiency Amount has the meaning
given in the Property Letter.

     “Notice Period.” Notice Period has the meaning given in Section 7.2(e)(i).

     “Organizational Documents.” Organizational Documents means, with respect to a
particular Person (other than a natural person), the certificate or articles of
incorporation, bylaws, partnership agreement, limited liability company agreement, trust
agreement or similar organizational document or agreement, as applicable, of such Person.

     “Ownership Percentage.” Ownership Percentage shall mean each Seller’s relative
ownership of the Companies as set forth on Schedule 3.1(a)(i).

     “Permitted Encumbrances.” Permitted Encumbrances means: (i) Claims for Taxes which are
not yet due and payable; (ii) inchoate Claims arising by operation of law, including

5

 

materialman’s, mechanic’s, repairman’s, laborer’s, warehousemen’s, carrier’s,
employee’s, contractor’s and operator’s Claims arising in the ordinary course of business,
and incidental to construction, maintenance, or operation of the Properties to the extent
such Claims secure obligations that, as of the Closing Date, are not due and payable, or
with respect to (i) and (ii) if delinquent, that are being contested in good faith and a
reserve or other appropriate provision is made therefor in the Companies’ financial records;
(iii) lessor’s royalties overriding royalties, division orders, reversionary interests,
production payments, net profits interests and similar burdens; (iv) any and all federal and
state regulatory orders and rules to which a Property is currently subject; (v) sales
contracts covering oil, gas, or associated liquid or gaseous Hydrocarbons, which are
terminable without penalty or cost upon less than 90 days notice; (vi) easements,
rights-of-way, servitudes, permits, surface leases and other rights in respect of surface
operations, pipelines, grazing, canals, ditches, reservoirs or the like and easements for
streets, alleys, highways, pipelines, telephone lines, power lines, railways and other
easements and rights-of-way, on, over or in respect of surface operations in favor of a
third party on or over any Property; (vii) Claims that are or will be released prior to or
on the Closing Date without any cost or penalty imposed upon any of the Companies; (viii)
the terms and provisions of the Leases and the Material Contracts; and (ix) other
encumbrances, defects and irregularities affecting a Property, the enforcement of which is
barred under applicable statutes of limitation, or that do not require the payment of money
and are commonly waived by a reasonably prudent person engaged in the business of the
ownership, development and operation of oil and gas properties with knowledge of all the
facts and appreciation of their legal significance, including matters such as failure to
recite marital status in documents, omission of heirship or succession proceedings,
community property and homestead rights in a Property, and the failure to record releases of
liens, production payments or deeds of trust that have expired according to their own terms;
provided, however, that as to clauses (vi), (viii) and (ix), such
circumstance or matter, individually or in the aggregate has not had, and a reasonably
prudent person engaged in the ownership and operation of oil and gas properties would not
reasonably expect such to have, a material adverse effect on the value of a Property, a
Company or the ability of the Companies or their Affiliates to own, operate, develop or use
such Property in the manner owned, operated, developed or used by the Companies or their
Affiliates; and further provided, however, that as to clauses (iii), (viii) and (ix), such
circumstance or matter does not operate to reduce the Companies’ net revenue interest or
increase the Companies’ working interest in a Property below the level set forth with
respect to the applicable Property in the Property Letter (without a corresponding increase
in the Companies’ net revenue interest in that Property). Notwithstanding anything to the
contrary set forth above, with respect to Leases and Material Contracts, the following
circumstances shall not be deemed to have a material adverse effect on the value of a
Property, a Company or the ability of the Companies or their Affiliates to own, operate,
develop or use a Property: (i) expiration of the term of a Lease after August 31, 2008 if
such Lease can reasonably be expected to continue in effect as to the lands covered thereby
beyond such date as a result of continuous development thereunder or for as long as oil, gas
or other minerals are produced in commercial quantities from the lands covered thereby, (ii)
the remaining term or the expiration of the term of any applicable Material Contract (other
than Specified Contracts) after August 31, 2008, and (iii) promoted, carried and other
similar disproportionate sharing arrangements with respect to the Properties contained in
Material Contracts, including without limitation net profit and incremental net income
arrangements which are reflected in the Property Letter.

     “Person.” An individual, corporation, partnership, limited partnership, unincorporated
association, trust, estate, or other incorporated or unincorporated entity.

6

 

     “Plans.” Plans means each of the following that is currently sponsored, maintained or
contributed to by any Company or with respect to which any Company may have any liability:
(i) each “employee benefit plan,” as such term is defined in Section 3(3) of ERISA, (ii)
each plan that would be an employee benefit plan if it was subject to ERISA, such as foreign
plans and plans for directors, (iii) each equity bonus, equity ownership, equity option,
equity purchase, equity appreciation rights, phantom equity, or other equity plan (whether
qualified or nonqualified), (iv) each personnel policy, bonus plan or arrangement, incentive
award plan or arrangement, vacation policy, profit sharing, severance pay plan, policy, or
agreement, deferred compensation agreement or arrangement, and employment or consulting
agreement, and (v) each other employee benefit plan, agreement, arrangement or program.

     “Prior Bonus.” Prior Bonus has the meaning given to such term in Section 2.3(a).

     “Properties.” The undivided interests of the Companies (as of the date hereof and as
of the Closing Date), including working, royalty and overriding royalty interests, mineral
interests, leasehold interests, production payments, operating rights, net profits
interests, reversionary interests, after payout interests, participation rights or
interests, other non-working interests and non-operating interests in: (i) the Leases; (ii)
interests in and rights with respect to Hydrocarbons and other minerals or revenues
therefrom and Contracts in connection therewith and claims and rights thereto; (iii) all
presently existing (or hereafter created) oil, gas or mineral unitization, pooling, and
communitization agreements, declarations and orders (including all amendments or
modifications thereto) relating to the Leases (including all units formed under orders,
regulations, rules, or other official acts of any governmental agency having jurisdiction,
and including so-called “working interest units” created under operating or similar
agreements); (iv) all surface leases, farmout and farmin agreements, division orders,
transfer orders, gas sales or purchase contracts, operating agreements, contracts, and other
agreements and instruments (including all amendments thereto and any agreements settling
claims asserted hereunder); (v) all easements, rights of way, licenses, permits, saltwater
disposal facilities, fresh water facilities, injection facilities, inventory, yards and
field offices; (vi) all Wells; and (vii) interests in equipment and machinery (including
well equipment and machinery), oil and gas production, gathering, transmission, compression,
treating, processing and storage facilities (including tanks, tank batteries, pipelines and
gathering systems), pumps, water plants, electric facilities, gasoline and gas processing
plants, refineries and other tangible personal property and fixtures associated with,
appurtenant to, or necessary for the operation of any of the foregoing and all other
personal property, equipment and fixtures owned or leased in connection therewith.

     “Property Condition Deficiency.” Property Condition Deficiency shall have the meaning
given in Section 2.5.

     “Property Letter.” Property Letter shall mean the letter executed and delivered by
Purchaser, and acknowledged by Henry Petroleum, in connection with the execution and
delivery of this Agreement and dated the date hereof setting forth matters related to
certain Properties.

     “Purchase Price.” Purchase Price has the meaning given in Section 2.2.

     “Purchase Price Adjustment.” Purchase Price Adjustment has the meaning given in Section
2.3(b).

     “Purchaser.” Purchaser has the meaning given in the Preamble.

7

 

     “Purchaser Indemnified Party.” Purchaser Indemnified Party has the meaning given in
Section 7.2(a).

     “Quail Ranch.” Quail Ranch has the meaning given in the Preamble.

     “Retained Employee.” Retained Employee shall have the meaning given in Section 2.3(a).

     “Section 338(h)(10) Election Forms.” Section 338(h)(10) Election Forms shall mean IRS
Form 8023 and such state, local and other corresponding Tax forms (drafts of which shall be
delivered by Purchaser to Sellers prior to Closing) which may be necessary to effectuate an
election under Section 338(h)(10) of the Code and any corresponding provisions of state or
local law with respect to the Purchaser’s acquisition of Aguasal pursuant hereto.

     “Securities Act.” Securities Act shall mean the Securities Act of 1933, as amended.

     “Sellers.” Sellers has the meaning given in the Preamble.

     “Seller Indemnified Party.” Seller Indemnified Party has the meaning given in Section
7.2(b).

     “Shares.” Shares have the meaning given in the Preamble.

     “Specified Contracts.” Means the Contracts identified on Schedule 5.2(b).

     “Subsidiary.” Subsidiary means, with respect to any Person, any corporation or other
organization, whether incorporated or unincorporated, of which (a) such Person or any other
Subsidiary of such Person is a general partner, managing member or sole or controlling
member or (b) at least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the board of directors, managers or others
performing similar functions with respect to such corporation, partnership, limited
partnership, limited liability company or other organization is, directly or indirectly,
owned or controlled by such Person or by any one or more of its Subsidiaries, or by such
Person and any one or more of its Subsidiaries.

     “Tax.” Tax means (a) any taxes, assessments, fees, unclaimed property and escheat
obligations and other governmental charges imposed by any Governmental Authority, including
income, profits, gross receipts, net proceeds, alternative or add on minimum, ad valorem,
value added, turnover, sales, use, property, personal property (tangible and intangible),
environmental, stamp, leasing, lease, user, excise, duty, franchise, capital stock,
transfer, registration, license, withholding, social security (or similar), unemployment,
disability, payroll, employment, social contributions, fuel, excess profits, occupational,
premium, windfall profit, severance, estimated, or other charge of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not; and (b) any
liability for the payment of any amounts of the type described in clause (a) as a result of
being a member of a consolidated group for any period; and (c) any liability for the payment
of any amounts of the type described in clause (a) or (b) as a result of any express or
implied obligation to indemnify any other Person.

     “Tax Return.” Tax Return shall mean any declaration, report, statement, form, return or
other document or information required to be supplied to a taxing authority in connection
with Taxes including any schedule or attachment thereto, and including any amendment
thereof.

8

 

     “Termination Date.” Termination Date means 5:00 p.m. (Central Time) on July 31, 2008,
or such other date as provided in Section 2.6(b) or otherwise mutually agreed by Purchaser
and Agent.

     “Title Deficiency.” Title Deficiency has the meaning given in Section 2.4.

     “Title Deficiency Amount.” Title Deficiency Amount has the meaning given in Section
2.4.

     “Transactions.” Transactions means the sale and delivery of the Shares by Sellers to
Purchaser and the payment therefor by Purchaser to Sellers and the other transactions as
contemplated by this Agreement.

     “Transaction Documents.” Transaction Documents mean this Agreement and all agreements,
conveyances, documents, instruments and certificates delivered at the Closing pursuant to
this Agreement.

     “Transition Agreement.” Transition Agreement shall mean the Transition Agreement to be
negotiated by Purchaser and Sellers after the date of this Agreement and executed and
delivered by Purchaser and Sellers at the Closing pursuant to Section 4.20.

     “Wells.” The wells now and hereafter located on the Leases or on lands pooled or
unitized therewith.

     Certain other capitalized terms are defined throughout this Agreement.

     Section 1.2 References. All references in this Agreement to Annexes, Exhibits, Schedules,
Articles, Sections, subsections and other subdivisions refer to the corresponding Annexes,
Exhibits, Schedules, Articles, Sections, subsections and other subdivisions of or to this Agreement
unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections or other subdivisions of this Agreement are for convenience only, do not constitute any
part of this Agreement, and shall be disregarded in construing the language hereof. The words
“this Agreement,” “herein,” “hereby,” “hereunder” and “hereof” and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless expressly so limited. The
words “this Article,” “this Section” and “this subsection” and words of similar import refer only
to the Article, Section or subsection hereof in which such words occur. The word “or” is not
exclusive, the word “including” (in its various forms) means including without limitation and the
phrase “consisting of” means consisting of without limitation. Pronouns in masculine, feminine or
neuter genders shall be construed to state and include any other gender, and words, terms and
titles (including terms defined herein) in the singular form shall be construed to include the
plural and vice versa, unless the context otherwise requires.

ARTICLE II

PURCHASE AND SALE

     Section 2.1 Purchase of Shares. On the terms and subject to the conditions contained herein,
at the Closing, Sellers shall sell, assign and transfer to Purchaser and Purchaser shall purchase
from Sellers, free and clear of all Claims, all of the Shares in exchange for the payment by
Purchaser of the Purchase Price to the Sellers.

     Section 2.2 Purchase Price. The purchase price for the Shares shall be $565,000,000.00 less
the Cash Bonus Adjustment plus the Purchase Price Adjustment, if any (the “Purchase Price”),
payable on

9

 

the Closing Date in cash to the Sellers in accordance with the wire transfer instructions to
an account or accounts designated by the Sellers, in writing, not less than three business days
prior to the Closing. At the Closing, each Seller shall be entitled to receive an amount equal to
such Seller’s Ownership Percentage multiplied by the Purchase Price. Payment of the Purchase Price
to the Sellers in accordance with this Section 2.2 shall represent full and final payment to the
Sellers for the sale, assignment and transfer of the Shares, and each Seller acknowledges and
agrees that such Seller shall not be entitled to receive any consideration for the sale, transfer
and assignment of such Seller’s Shares other than the amount equal to such Seller’s Ownership
Percentage multiplied by the Purchase Price. Schedule 2.2 represents the Purchase Price
without any Purchase Price Adjustment.

     Section 2.3 Bonus Payments.

     (a) Immediately prior to Closing, Henry Petroleum will approve payment of (i) a cash
bonus to certain employees of Henry Petroleum in accordance with existing bonus commitments
to such employees as set forth under the heading “Prior Bonus” on the Compensation Letter
(the “Prior Bonus”); (ii) cash bonuses, pursuant to an Employee Letter Agreement, to
employees of Henry Petroleum identified on the Compensation Letter, subject to such
employees executing and delivering to Henry Petroleum prior to Closing an Employee Letter
Agreement and such employees continuing their employment with Henry Petroleum or Purchaser
(or any Affiliate of Purchaser) after the Closing Date (the “Retained Employees”), the
amount payable to each Retained Employee being set forth in the Compensation Letter under
the heading “Cash Bonus” (the “Cash Bonus”) and (iii) payment to certain independent
contractors of Henry Petroleum identified in the Compensation Letter, subject to such
independent contractors executing and delivering to Henry Petroleum prior to Closing a
release in a form reasonably acceptable to Purchaser, the amount payable to each such
independent contractor who executes a release being set forth in the Compensation Letter
under the heading “Contractor Bonus” (the “Contractor Bonus”). Payment by Henry Petroleum
of the Prior Bonus and the Cash Bonus shall all be subject to applicable withholding Taxes.

     (b) Notwithstanding anything to the contrary contained in this Agreement, the Purchase
Price shall be reduced by the Cash Bonus Adjustment, which is calculated as follows: the
product of (i) the sum of the Prior Bonus plus the Cash Bonus plus the Contractor Bonus and
(ii) 65%. With respect to any employee of Henry Petroleum identified in the Compensation
Letter who is intended to receive a Cash Bonus and who does not execute and deliver to Henry
Petroleum the Employee Letter Agreement prior to Closing and any independent contractor of
Henry Petroleum identified in the Compensation Letter who does not execute and deliver to
Henry Petroleum the release contemplated in Section 2.3(a) prior to Closing, such employee
or independent contractor shall not be entitled to receive the Cash Bonus or the Contractor
Bonus, as the case may be, and an amount equal to the product of (A) the amount of any such
Cash Bonus and Contractor Bonus not paid pursuant to the foregoing and (B) 65%, shall be
paid to Sellers at Closing as an adjustment to the Purchase Price (such amount being
referred to as the “Purchase Price Adjustment”).

     (c) The Prior Bonus shall be paid by Henry Petroleum immediately prior to the Closing
to the employees and in the amounts set forth in the Compensation Letter, provided that such
individuals are employed by Henry Petroleum at the time of such payment. The Contractor
Bonus shall be paid by Henry Petroleum immediately prior to Closing to the independent
contractors who execute and deliver a release in accordance with Section 2.3(a) in the
amounts set forth in the Compensation Letter, provided that such independent contractors are
then engaged by Henry Petroleum at the time of such payment. The Cash Bonus will be paid by
Henry Petroleum to each Retained Employee in installments pursuant to an Employee Letter
Agreement

10

 

executed by the Retained Employee that will be delivered to Henry Petroleum prior to
Closing as follows: (1) 50% to be paid by Henry Petroleum immediately prior to Closing,
provided that such individuals are employed by Henry Petroleum at the time of such payment
(the “First Bonus Installment”); (2) 25% to be paid by Henry Petroleum (or Concho or its
Affiliates) on the first anniversary of the Closing Date, assuming satisfaction of the terms
of the Employee Letter Agreement; and (3) 25% to be paid by Henry Petroleum (or Concho or
its Affiliates) on the second anniversary of the Closing Date, assuming satisfaction of the
terms of the Employee Letter Agreement. Under the terms of each Employee Letter Agreement,
each Retained Employee will agree to forfeit any unpaid portion of the Cash Bonus in the
event that such Retained Employee’s employment with Henry Petroleum (or its successor) or
Purchaser (or any Affiliate of Purchaser) is terminated for cause (as defined in the
Employee Letter Agreement) or such Retained Employee terminates his own employment for any
reason. In addition, under the terms of each Employee Letter Agreement, each Retained
Employee will be entitled to receive the full amount of the unpaid Cash Bonus allocated to
such Retained Employee in the event of the death or disability (as such term is defined in
the Employee Letter Agreement) of such Retained Employee or change in control of Purchaser
(as such term is defined in the Employee Letter Agreement) or in the event that such
Retained Employee’s employment with Henry Petroleum (or its successor) or Purchaser (or any
Affiliate of Purchaser) is terminated by Henry Petroleum (or its successor) or Purchaser (or
any Affiliate of Purchaser) for any reason other than for cause (as defined in the Employee
Letter Agreement); provided, however, that with respect to any portion of
the Cash Bonus payable to a Retained Employee in connection with any such termination of
employment, the payment of such amount shall be deferred to the extent required to satisfy
the requirements of Section 409A(a)(2)(B)(i) of the Code. Within ten business days
following the second anniversary of the Closing Date, Purchaser shall pay to the Sellers an
amount (the “Cash Bonus Return”) equal to the product of (i) any unpaid portion of the Cash
Bonus as a result of any forfeitures in accordance with the terms of the Employee Letter
Agreement and (ii) 65%; provided, however, that Purchaser shall not be
obligated to include in such calculation any unpaid portion of the Cash Bonus with respect
to a Retained Employee who was employed by any Seller or any Affiliate of any Seller after
the Closing Date in violation of Section 4.12(b). Each Seller shall be entitled to receive
an amount equal to such Seller’s Ownership Percentage multiplied by the Cash Bonus Return.
For federal income tax purposes, the parties shall treat the Cash Bonus Return as an
adjustment to the Purchase Price.

     (d) The Prior Bonus, the First Bonus Installment and the Contractor Bonus will be paid
by the distribution and delivery of checks payable to the Retained Employees and drawn on
accounts of Henry Petroleum. To the extent necessary, Purchaser shall advance sufficient
funds by wire transfer to enable Henry Petroleum to timely pay the Prior Bonus, the First
Bonus Installment and the Contractor Bonus and related employment Taxes.

     (e) For all applicable Tax purposes, the parties agree to treat (i) the Prior Bonus,
the First Bonus Installment and the Contractor Bonus as compensation paid by Henry Petroleum
for the Tax Period that includes the Closing Date, and (ii) any subsequent payments of
installments of the Cash Bonus as employee compensation paid by Henry Petroleum or any
successor thereto in future Tax Periods. The parties shall report and file all Tax Returns
consistent with this position and shall take no applicable Tax position contrary thereto or
inconsistent therewith prior to a final determination in court or by agreement with an
applicable Governmental Authority after consultation with the other parties.

     Section 2.4 Title Deficiency . Purchaser may make or cause to be made at its expense such
examination as it may desire of the title of a Company to the Properties. For such purposes,
Sellers shall or shall cause the Companies to (a) give to Purchaser and its representatives full
access, subject to consent

11

 

under applicable Contracts, at any reasonable time to all of the files, records, contracts,
correspondence, computer output and data files, maps, data, reports, plats, abstracts of title,
lease files, well files, unit files, division order files, production marketing files, title
opinions, title files and title records, title insurance policies, ownership maps, surveys, and any
other information, data, records, and files of each Company (or to which any Company has access)
relating in any way to the title to the Properties, the past or present operation thereof, and the
marketing of production therefrom; (b) furnish to Purchaser all other information in the possession
of, or available to, any Company with respect to the title to the Properties as Purchaser may from
time to time reasonably request; and (c) authorize Purchaser and its representatives to consult
with attorneys, abstract companies, and representatives of the Companies, whether utilized in the
past or presently, concerning title-related matters with respect to the Properties. A “Title
Deficiency” shall exist if (i) the Companies are obligated to bear and pay costs and expenses
associated with the exploration, maintenance, development and operation of any Property through the
plugging, abandonment, and salvage of such Property greater than the working interest for such
Property represented in the Property Letter without a corresponding increase in the applicable net
revenue interest in such Property represented in the Property Letter, (ii) the Companies are
entitled to receive and retain a share of the Hydrocarbons produced, saved, and marketed from any
Property without suspension, reduction or termination through the plugging, abandonment, and
salvage of such Property less than the net revenue interest for that Property represented in the
Property Letter, (iii) any Property is subject to a Claim (other than a Permitted Encumbrance),
(iv) any Property is subject to a preferential purchase right, right of first offer, right of first
refusal or consent, the absence of which would render the Transactions void or voidable or subject
any Company to potential loss of any Property or any interest therein or to damages or penalties
upon the occurrence of a change of control of the Person holding the interest in such Property or
any similar purchase or consent right, in each case that would be triggered or would otherwise
arise as a result of the consummation of the sale and delivery of the Shares by Sellers to
Purchaser pursuant to this Agreement, or (v) any combination of the foregoing exist. Purchase
shall have the right to notify Sellers in writing of any Title Deficiencies (a “Title Deficiency
Notice”) no later than 5:00 p.m. (Central time) on the fourth business day prior to the Closing
Date. Any Title Deficiency Notice shall include Purchaser’s good faith determination based on
customary industry standards of the dollar value of such Title Deficiency, which value shall be
determined based upon the relative change in the Maximum Title Deficiency Amount of such Property
(each, a “Title Deficiency Amount”). By way of illustration: (i) if a Company’s actual net
revenue interest in a Property is less than the net revenue interest set forth for such Property in
the Property Letter or if a Company’s actual working interest in a Property is greater than the
working interest set forth in the Property Letter (without a corresponding increase in a Company’s
net revenue interest), then value of the Title Deficiency would be that portion of the Maximum
Title Deficiency Amount represented by the relative difference between the actual net revenue
interest or working interest in the property and the net revenue interest or working interest for
such Property in the Property Letter; or (ii) if a Title Deficiency is a lien, then the value of
the Title Deficiency would be the cost of removing the lien. Furthermore, in the event of any
Title Deficiency described in clause (iv) above, the value of any such Title Deficiency shall be
the Maximum Title Deficiency Amount of the Property subject to such purchase or consent right. Any
reduction in the value of any Property due to a Title Deficiency shall be included in the
calculation for determining whether the Purchaser may terminate this Agreement pursuant to Section
2.6. No adjustment to the Purchase Price will be made for any Title Deficiency. Purchaser agrees
to notify the Agent as soon as reasonably practicable following its determination of a Title
Deficiency in order to provide Sellers the reasonable opportunity to provide Purchaser with
additional records or additional information that could resolve or reduce the value of such Title
Deficiency. Purchaser acknowledges that certain Properties are subject to certain liens for the
benefit of J.P.Morgan Chase Bank and Wells Fargo Bank, which liens shall not be considered Title
Deficiencies so long as such liens are released as of the Closing.

     Section 2.5 Property Condition Deficiency. Commencing upon execution of this Agreement and
ending at 5:00 p.m. (Central Time) on the fourth business day prior to the Closing Date, Purchaser

12

 

shall be entitled to inspect, review and evaluate all records, facilities, and Properties of
each Company, interview Company personnel, and perform such environmental sampling and testing as
may be appropriate to enable the Purchaser to assess the environmental and physical condition of
the Properties and the environmental liabilities of each Company. The purpose of the inspection of
the physical condition of the Properties shall be to confirm that they are maintained in accordance
with the legal and contractual obligations of the Companies. Purchaser shall use reasonable care
not to damage the Properties during the course of its inspections pursuant to this Section 2.5.
Based on its review and inspection, Purchaser shall in good faith determine whether the value of a
Property could reasonably be expected to be impaired because (i) of property condition issues
(including any pollution, contamination, remedial obligation, or liability under any Environmental
Law), (ii) any Property or Company is in violation of any Environmental Law, (iii) of any written
notice or record from a Governmental Authority or other Person of a violation of Environmental Laws
or a Contract with regard to any property condition the Companies are contractually or legally
obligated to remedy, or (iv) any combination of the foregoing (any, a “Property Condition
Deficiency”). The Purchaser shall determine in good faith based on customary industry standards the
dollar amount that a Property could reasonably be expected to be impaired based on the amount
reasonably necessary to remedy any violation(s) of Environmental Law, to bring the Property into
compliance with applicable Environmental Laws or to restore a Property to its contractually
required condition (each, a “Property Condition Deficiency Amount”). The Purchaser shall determine
the total dollar value reduction of all Property Condition Deficiencies. The dollar value of any
impairment of any Property due to a Property Condition Deficiency shall be included in the
calculation for determining whether the Purchaser may terminate this Agreement pursuant to Section
2.6. No adjustment to the Purchase Price will be made for any Property Condition Deficiency.

     Section 2.6 Termination Due to Deficiencies. If the aggregate Title Deficiency Amounts plus
the aggregate Property Condition Deficiency Amounts, as determined in Sections 2.4 and 2.5 above,
exceed $16,950,000.00, then Purchaser, at its election, may give written notice to Sellers not
later than 5:00 p.m. (Central Time) on the fourth business day prior to the Closing Date (the
“Deficiency Notice”).

     (a) The Deficiency Notice provided hereunder, if given, shall include (i) a description
of each Title Deficiency or Property Condition Deficiency, (ii) the basis for each Title
Deficiency or Property Condition Deficiency, (iii) each Property or the portion thereof
affected by the Title Deficiency or Property Condition Deficiency, (iv) each Title
Deficiency Amount or Property Condition Deficiency Amount and (v) with respect to each Title
Deficiency Amount, the applicable Company owning the Property subject to such Title
Deficiency Amount.

     (b) Sellers may accept Purchaser’s Deficiency Notice or object thereto. If the Sellers
object to certain Property Condition Deficiency Amounts set forth in the Deficiency Notice
that, if reduced, could reasonably be expected to reduce the aggregate Title Deficiency
Amounts and Property Condition Deficiency Amounts below $16,950,000.00, the Sellers shall
deliver a written notice of such objection (the “Dispute Notice”) to Purchaser no later than
5:00 p.m. on the third business day after the date of the Deficiency Notice. If the Dispute
Notice is not delivered by 5:00 p.m. on the third business day after the date of the
Deficiency Notice, Purchaser may terminate this Agreement pursuant to Section 6.1(g). Upon
delivery of a Dispute Notice to Purchaser, the Termination Date and the Closing Date shall
automatically be extended from July 31, 2008 to August 31, 2008. Within seven (7) business
days after the date of the Dispute Notice, Sellers shall deliver a more detailed written
notice (the “Dispute Explanation”), which shall specifically identify all disputed Property
Condition Deficiency Amounts (each, a “Disputed Item”) and shall include the Sellers’ good
faith estimate of the value of each Disputed Item (each, a “Sellers’ Estimate”);
provided, however, that no Disputed Item shall be permitted to be included
in the Dispute Explanation if the Sellers’ Estimate of such Disputed Item would be greater
than 90% of such Property Condition Deficiency Amount.

13

 

     (c) After delivery of the Dispute Explanation, the parties shall promptly refer the
Disputed Items to a person selected by mutual agreement of the parties who possesses the
requisite knowledge, skill and experience to determine the issue (the “Defect Expert”). The
Defect Expert may enlist the advice of any environmental consultant mutually agreed upon by
the parties.

     (d) Upon referral of the Disputed Items to the Defect Expert, the Purchaser and the
Sellers will be afforded an opportunity to present to the Defect Expert any materials
relating to the validity of, or their valuation of, the Disputed Items and to discuss the
determination, prior to any final determination, of the Disputed Items with the Defect
Expert. The Defect Expert shall be required to adopt a value (the “Determined Amount”) that
is equal to either the Property Condition Deficiency Amount or the Sellers’ Estimate for
each Disputed Item, and such decision, made in writing and signed by the Defect Expert,
shall determine such dispute.

     (e) If, after determination of the Determined Amount for each Disputed Item by the
Defect Expert, the sum of (i) all Title Deficiency Amounts, (ii) all Property Condition
Deficiency Amounts for Property Condition Deficiencies not included in the Dispute
Explanation and (iii) all Determined Amounts (such sum, the “Adjusted Defect Amount”)
exceeds $16,950,000.00, then Sellers shall bear all expenses of the Defect Expert and any
other expert retained by the Defect Expert. If the Adjusted Defect Amount is less than or
equal to $16,950,000.00, then Purchaser shall bear all expenses of the Defect Expert and any
other expert retained by the Defect Expert.

     (f) In the event that Purchaser does not deliver a timely Deficiency Notice pursuant to
this Section 2.6 or the aggregate of the Title Deficiency Amounts and the Property Condition
Deficiency Amounts is ultimately determined to be less than $16,950,000.00, then Purchaser
shall not be permitted to terminate this Agreement pursuant to Section 6.1(g). In the event
that Purchaser does deliver a timely Deficiency Notice pursuant to this Section 2.6 and
either Sellers do not deliver a timely Dispute Notice or Sellers do deliver a timely Dispute
Notice but the aggregate of the Title Deficiency Amounts and the Property Condition
Deficiency Amounts is ultimately determined to be equal to or greater than $16,950,000.00,
then Purchaser may terminate this Agreement pursuant to Section 6.1(g). After Purchaser
completes its due diligence under Sections 2.4 and 2.5, if Purchaser proceeds to the
Closing, Purchaser shall be deemed to have accepted the Properties and shall have no claim
for indemnification from the Sellers for defects, damages, costs or other liabilities for
items that would have been a Title Deficiency or a Property Condition Deficiency.

     Section 2.7 Along-side Interests. Within five (5) business days of the execution of this
Agreement, Purchaser will offer to purchase the rights and interests in the Properties (“Along-side
Interests”) owned by the Persons listed on Schedule 2.7 for the prices shown on such
Schedule pursuant to the form of purchase agreement attached hereto as Exhibit B. None of the
Persons listed on Schedule 2.7 will be obligated to sell their Along-side Interests.
Purchaser or its Affiliate and those Persons who accept Purchaser’s offer shall promptly sign
binding agreements for the purchase and sale of the Along-side Interests. If Purchaser’s offer is
accepted by a Designated Seller, Purchaser must close the purchase of the Along-side Interest
simultaneously with the Closing, with payment of the purchase price for the Along-side Interest
paid in cash by wire transfer to such Designated Seller as directed by such Designated Seller. If
the owner of the Along-side Interest is a Person other than a Designated Seller, Purchaser must
close the purchase of the Along-side Interests of such Person who accepts the Purchaser’s offer no
later than 90 days after Closing, by payment of the purchase price pursuant to the purchase
agreement for the Along-side Interests purchased in cash by wire transfer to the account designated
by the respective seller.

14

 

     Section 2.8 Distribution of Excluded Companies. At or prior to Closing, Holding and Energy
intend to make a direct or indirect distribution of the Excluded Companies to the Sellers
containing certain properties which are either presently owned by the Excluded Companies or which
will be contributed to the Excluded Companies immediately before the distribution of the Excluded
Companies. Schedule 2.8(a) lists the properties and assets that will be owned by Henry
Resources LLC with their respective values immediately prior to the distribution of Henry Resources
LLC by Holding (“Henry Holding Distribution”). Schedule 2.8(b) lists the properties and
assets that will be owned by Henry Equity LLC immediately prior to the distribution of Henry Equity
LLC by Energy (the “Henry Energy Distribution”) with their respective values. The Sellers shall
consult with Purchaser as to the structure, method and status of the Henry Holding Distribution and
the Henry Energy Distribution and related matters. The parties shall report and file all Tax
Returns consistent with such values.

     Section 2.9 Agreed Net Working Capital Distribution. At or prior to the Closing, Holding and
Energy intend to make a distribution of the amount of agreed net working capital on hand as of
April 30, 2008 (“Agreed Net Working Capital Distribution”). The parties agree that the amount of
the Agreed Net Working Capital Distribution is $34,096,384.00. The distribution of the Agreed Net
Working Capital Distribution shall not affect the Purchase Price. The Agreed Net Working Capital
Distribution may occur anytime before or at Closing.

     Section 2.10 Withholding. In the event Purchaser shall determine that it is required to
deduct and withhold from the consideration otherwise payable pursuant to this Agreement any amounts
under any provision of federal, state, local or foreign Tax law, it shall notify the Person who
otherwise would be entitled to such consideration and give such Person an opportunity to
demonstrate why such withholding is not required; provided that Purchaser, after consulting
with Tax counsel to it, shall make the final determination of any requirement to withhold. If
Purchaser or any Affiliate or agent thereof, as the case may be, so withholds amounts pursuant to
this Section 2.10, such amounts shall be promptly remitted to the appropriate Governmental
Authority as required by applicable law, and shall be treated for all purposes of this Agreement as
having been paid to Sellers in respect of which such deduction or withholding was made.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     Section 3.1 Representations and Warranties of the Sellers. In order to induce Purchaser to
enter into this Agreement, the Sellers hereby jointly and severally (except as to those items that
are personal to an individual Seller in which event the representation and warranty is several and
not joint) provide the following representations and warranties to Purchaser, as of the date of
this Agreement and as of the Closing Date. Except as set forth in the Henry Disclosure Schedule
delivered to Purchaser concurrently with the execution hereof (it being agreed that disclosure in
any Schedule that is part of the Henry Disclosure Schedule of any document, fact, circumstance or
situation relating to a representation, warranty or covenant shall also serve as a disclosure of
such document, fact, circumstance or situation for all representations, warranties and covenants to
the extent reasonably apparent on its face), the Sellers represent and warrant as follows:

     (a) Title to Shares. Each Seller is the sole legal and beneficial owner of the Shares
listed below such Seller’s name on Schedule 3.1(a)(i), has valid title to such
Shares, and has full right, power and authority to sell, assign, convey, transfer and
deliver such Shares to Purchaser pursuant to this Agreement and the Transaction Documents,
free and clear of all Claims. Upon Closing, Purchaser will have valid title to the Shares,
free and clear of all Claims. Except as set forth on Schedule 3.1(a)(ii), no Seller
is a party to or bound by, and there are no agreements, instruments, proxies, judgments or
decrees, whether written or oral, express or implied, other than

15

 

this Agreement, relating to the voting of, sale, assignment, conveyance, transfer,
delivery, right of first refusal, option or limitation on transfer of any of the Shares,
each of which item set forth on Schedule 3.1(a)(ii) will be waived or terminated by
all appropriate Persons on or prior to the Closing.

     (b) Authority; Enforceability. Each Company and Seller has full power, authority and
legal capacity to enter into this Agreement and the Transaction Documents to which it is a
party, as applicable, and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement and the Transaction Documents and the consummation of the
Transactions have been duly and validly authorized and approved by all required actions of
each Company and Seller and no other actions on the part of such Company or Seller are
necessary to authorize and approve this Agreement and the Transaction Documents and the
Transactions. This Agreement has been duly executed and delivered by each of the Companies
and the Sellers, and constitutes a valid and binding obligation of the Companies and the
Sellers, enforceable against the Companies and the Sellers in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally or by the
principles governing the availability of equitable remedies). At Closing, all Transaction
Documents to be executed and delivered by each Company and Seller shall have been duly
executed and delivered by such Company or Seller, as the case may be, and all Transaction
Documents executed and delivered by each Company and Seller constitute valid and binding
obligations of such Company or Seller, enforceable against each in accordance with their
terms (except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally or by the
principles governing the availability of equitable remedies).

     (c) No Violation. Except as set forth in Schedule 3.1(c), the execution and
delivery of this Agreement and the Transaction Documents by the Companies and the Sellers do
not, and the consummation of the Transactions and compliance with the provisions hereof will
not, conflict with, or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination, modification,
revocation, cancellation or acceleration of any obligation or to the loss of a benefit
under, give rise to a right of purchase as to the Shares, or result in the creation of any
Claim upon any of the Companies or the Shares under any provision of (A) the Organizational
Documents of any Seller or Company, (B) any Material Contract (excluding the portion of any
Material Contracts relating to preferential purchase rights or similar rights arising with
respect to the Properties) or Approval applicable to any Seller or Company or to which any
Seller or Company is a party or (C) assuming the consents, approvals, authorizations,
permits, filings and notifications referred to in Section 3.1(d) are duly and timely
obtained or made, any federal, state or local or other governmental law or ordinance, or any
order, writ, injunction, decree, rule or regulation of any court or other Governmental
Authority applicable to any Seller or any Company (collectively “Laws”), other than, in the
case of clause (C), any such conflicts, violations, defaults, rights or Claims that,
individually or in the aggregate, have not had and could not reasonably be expected to (x)
have a material adverse effect on any Property, Company or Seller, (y) impair the ability of
any Seller or Company to perform its obligations under this Agreement in any material
respect, or (z) delay in any material respect or prevent the consummation of any of the
Transactions.

     (d) Consents. Except as set forth in Schedule 3.1(d)(i), no Approval from any
Governmental Authority is required by or with respect to any Seller or any Company in
connection with the execution and delivery of this Agreement by the Sellers or the
consummation by the Sellers of the Transactions. Except as set forth in Schedule
3.1(d)(ii), no Approval of any Person is required by or with respect to any Seller or
any Company (excluding any preferential

16

 

purchase rights or similar rights arising with respect to the Properties) in connection
with the execution and delivery of this Agreement by the Sellers or the consummation by the
Sellers of the Transactions.

     (e) Organization, Corporate Power and Good Standing.

     (i) Henry Ltd. is a limited partnership duly organized, validly existing and in
good standing under the Laws of the State of Texas, and which has the requisite
power and authority to carry on its business as now conducted, and to own or lease
its properties and other assets as now owned or leased.

     (ii) Henchild is a limited liability company duly organized, validly existing
and in good standing under the Laws of the State of Texas, and which has the
requisite power and authority to carry on its business as now conducted, and to own
or lease its properties and other assets as now owned or leased.

     (iii) Holding is a limited partnership duly organized, validly existing and in
good standing under the Laws of the State of Texas, and which has the requisite
power and authority to carry on its business as now conducted, and to own or lease
its properties and other assets as now owned or leased.

     (iv) Energy is a limited partnership duly organized, validly existing and in
good standing under the Laws of the State of Texas, and which has the requisite
power and authority to carry on its business as now conducted, and to own or lease
its properties and other assets as now owned or leased.

     (v) Aguasal is a general partnership duly organized, validly existing and in
good standing under the Laws of the State of Texas, and which has the requisite
power and authority to carry on its business as now conducted, and to own or lease
its properties and other assets as now owned or leased.

     (vi) HELP is a limited liability company duly organized, validly existing and
in good standing under the Laws of the State of Texas, and which has the requisite
power and authority to carry on its business as now conducted, and to own or lease
its properties and other assets as now owned or leased.

     (vii) Henry Capital is a limited liability company duly organized, validly
existing and in good standing under the Laws of the State of Texas, and which has
the requisite power and authority to carry on its business as now conducted, and to
own or lease its properties and other assets as now owned or leased.

     (viii) FIG is a general partnership duly organized, validly existing and in
good standing under the Laws of the State of Texas, and which has the requisite
power and authority to carry on its business as now conducted, and to own its
properties and other assets as now owned or leased.

     (ix) Aguasal Management is a limited liability company duly organized, validly
existing and in good standing under the Laws of the State of Texas, and which has
the requisite power and authority to carry on its business as now conducted, and to
own its properties and other assets as now owned or leased.

17

 

     (x) Aguasal LP is a limited partnership duly organized, validly existing and in
good standing under the Laws of the State of Texas, and which has the requisite
power and authority to carry on its business as now conducted, and to own its
properties and other assets as now owned or leased.

     (f) Capitalization.

     (i) Schedule 3.1(f) sets forth a true and complete list of all of the
issued and outstanding Shares or other equity interests of each of the Companies.
The Shares or other equity interests of each of the Companies have been duly
authorized, are validly issued and are fully paid and non-assessable and were issued
in conformity with all applicable Contracts or Laws and were not issued in violation
of, and, except as identified on Schedule 3.1(f)(i), are not subject to, any
purchase option, call option, right of first refusal, preemptive right, subscription
right or any similar right under any provision of the Texas Business Organization
Code or other similar law, the Organizational Documents of the applicable Company or
any Contract to which any Company is or was a party or by which it is or was
otherwise bound.

     (ii) There are no rights or Contracts (including options, warrants, calls and
preemptive rights) obligating any Seller or Company (i) to issue, sell, pledge,
dispose of or encumber any Shares or other equity interests of any Company or any
securities convertible, exercisable or exchangeable into Shares or other equity
interests of any Company, (ii) to redeem, purchase or acquire in any manner any
Shares or other equity interests of any Company or any securities that are
convertible, exercisable or exchangeable into any Shares or other equity interests
of any Company or (iii) to make any dividend or distribution of any kind with
respect to the Shares or other equity interests of any Company (or to allow any
participation in the profits or appreciation in value of any Company) other than the
Henry Holding Distribution, the Henry Energy Distribution and the Agreed Net Working
Capital Distribution. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights affecting the Shares or other
equity interests of any Company or any securities that are convertible, exercisable
or exchangeable into any Shares or other equity interests of any Company. There are
no voting trusts, proxies, or other shareholder or similar agreements or
understandings with respect to the voting of the Shares or other equity interests of
any Company or any securities that are convertible, exercisable or exchangeable into
any Shares or other equity interests of any Company. There are no issued or
outstanding bonds, debentures, notes or other indebtedness having the right to vote
on any matters on which holders of the Shares may vote.

     (g) Other Equity Interests. Except as set forth in Schedule 3.1(g), no Company
owns any equity ownership rights in a business entity, whether a corporation, company, joint
stock company, limited liability company, general or limited partnership, joint venture,
bank, association, trust company, land trust, business trust, sole proprietorship or other
business entity or organization, and whether in the form of capital stock, ownership units,
limited liability company interest, limited or general partnership interest or any other
form of ownership.

     (h) Licenses and Authorizations. The Companies have all Approvals from Governmental
Authorities necessary to operate their businesses as currently conducted, except for any
such Approval the absence of which would not have a material adverse effect on their
respective businesses. The execution of this Agreement by the Sellers and the Companies and
the consummation of the Transactions, and the compliance by the Sellers and the Companies
with the

18

 

terms hereof, will not cause or permit the imposition of any restrictions of such a
nature as would limit any operations of the Companies as historically conducted. No event
has occurred which permits, or after the giving of notice or lapse of time or both would
permit, the revocation or termination of any Material Contract (excluding the portion of any
Material Contracts relating to preferential purchase rights or similar rights arising with
respect to the Properties) or Approval or the imposition of any restrictions of such a
nature as may limit any of the operations of the Companies as historically conducted.

     (i) Compliance with Law. Each Property and Company are in material compliance with,
and not in material violation of, and neither any Company nor any Seller has received any
written claim or notice that any Company is not in compliance with, or that it is in
violation of, any Laws to which any Company, or its businesses, operations, agents,
employees, assets or properties are subject (including, all material record keeping and
reporting requirements thereof), other than such matters as have been fully and finally
resolved prior to the date of this Agreement. No Company has engaged in any transaction,
maintained any bank account or used any corporate funds except for transactions, bank
accounts and funds which have been and are reflected in the normally maintained books and
records of such Company.

     (j) Financial Statements; No Undisclosed Liabilities. The Sellers have delivered to
Purchaser copies of (A) the audited consolidated statement of assets, liabilities and
stockholder’s equity, the consolidated statement of revenues and expenses, the consolidate
statement of stockholders’ equity, the consolidated statement of cash flows, and the notes
to consolidated financial statements of Holding, Henry Operating and Henry Petroleum as of
December 31, 2006, accompanied by the report thereon of Davis, Kinard & Co., P.C., Certified
Public Accountants (“Henry 2006 Financial Statements”), (B) the unaudited consolidated
balance sheet of Holding, Henry Operating and Henry Petroleum as of December 31, 2007,
together with the related unaudited consolidated statements of income for the year ended
December 31, 2007 (“Henry 2007 Financial Statements”), (C) the audited consolidated
statement of assets, liabilities and partners’ capital, the consolidated statement of
revenues and expenses, the consolidated statement of partners’ capital, the consolidated
statement of cash flows, and the notes to consolidated financial statements of Energy and
Quail Ranch as of December 31, 2006, accompanied by the report thereon of Davis, Kinard &
Co., P.C., Certified Public Accountants (“Other 2006 Financial Statements”), (D) the
unaudited balance sheets of Energy and Quail Ranch at December 31, 2007 together with the
unaudited statement of income for the year ended December 31, 2007 (the “Other 2007
Financial Statements”), (E) the unaudited balance sheets of Aguasal, Aguasal Management and
Aguasal LP as of December 31, 2006, together with the related statements of income for the
year ended December 31, 2006, the unaudited balance sheets of Aguasal, Aguasal Management
and Aguasal LP as of December 31, 2007, together with the unaudited statements of income for
the year ended December 31, 2007 (the “Aguasal Financial Statements”), and (F) the unaudited
cash basis consolidated balance sheets of Holding, Henry Operating and Henry Petroleum,
Energy, and Quail Ranch, and the unaudited consolidating balance sheets of Aguasal, Aguasal
Management and Aguasal LP as of April 30, 2008 (“Interim Balance Sheets”). Items (A) through
(F) in this Section 3.1(j) collectively are referred to herein as the “Company Financial
Statements.” The Company Financial Statements are all prepared on an income tax basis, not
GAAP. Except as set forth in Schedule 3.1(j), as of the date of this Agreement,
there is no liability or obligation of any kind, whether accrued, absolute, fixed,
contingent or otherwise, of any Company other than (W) liabilities adequately reflected or
reserved against in the Interim Balance Sheets, (X) liabilities incurred in the ordinary
course of business consistent with past practice since April 30, 2008, (Y) any such
liabilities which would not be required to be presented in financial statements or the notes
thereto prepared in conformity with financial statements prepared on an income tax basis, in
a manner consistent with past practice, in the preparation of

19

 

the Company Financial Statements and which, individually or in the aggregate would not
reasonably be expected to have a material adverse effect on the any Company, or (Z)
liabilities otherwise disclosed on Schedule 3.1(j) or expressly permitted by this
Agreement. The Company Financial Statements, including the notes thereto, were prepared on
an income tax basis, applied on a consistent basis throughout the periods covered thereby
and the Henry 2006 Financial Statements and the Other 2006 Financial Statements fairly
present the financial position of the Companies covered thereby at the dates thereof and the
results of the operations of the Companies covered thereby for the periods indicated in
accordance with income tax basis accounting.

     (k) Charter Documents, Regulations, Bylaws, etc. The copies of the Organizational
Documents, the minute books, stock certificate books, stock transfer books and equity
ledgers of each Company have been delivered to Purchaser and are true, complete and correct.

     (l) Investments in, and Payments to Certain Persons; Powers of Attorney. Except as set
forth on Schedule 3.1(l), neither any Company nor any Seller (or any Affiliate of
any Company or Seller on behalf of a Company), has made any exchanges, barter arrangements,
loans or advances or otherwise extended credit to any directors, officers, agents,
employees, consultants or shareholders of any Company, or any of their respective
Affiliates, since April 30, 2008, and any such exchanges, barter arrangements, loans,
advances or extensions of credit existing before April 30, 2008 will have been repaid as of
Closing or distributed to the Excluded Companies except as set forth in Schedule
3.1(l). Except as set forth in Schedule 3.1(l), there are no powers of attorney
outstanding by any Company in favor of any other Person. Except as set forth in
Schedule 3.1(l), since April 30, 2008, there has not been paid or been committed to
be paid to or for the benefit of any of the directors, officers, agents, employees,
consultants or representatives of any Company anything other than fees (including directors’
fees), wages, salaries, commissions, bonuses and expense reimbursements, in each case at the
rates (subject to normal raises) and in accordance with each Company’s past practices.

     (m) Taxes and Tax Returns. Except as set forth on Schedule 3.1(m) hereof:

     (i) Each member of the Company Group has duly filed all Tax Returns required to
be filed by it with the appropriate Governmental Authority, all of which properly
reflect the Taxes owed by such member of the Company Group for the periods covered
thereby, and each member of the Company Group has timely paid all Taxes owed by it,
whether or not shown to be due on a Tax Return, and including without limitation any
and all deposits required by law to be made by it with respect to employees’
withholding Taxes.

     (ii) Neither a Seller nor any member of the Company Group has received any
written notice of unresolved assessment or deficiency or proposed assessment by any
taxing authority and there is no pending tax examination of or tax claim asserted
against any member of the Company Group or any of their respective properties or
assets. To the Knowledge of Sellers and the Company Group, no claim has ever been
made by a Governmental Authority in a jurisdiction where any member of the Company
Group does not file Tax Returns that it is or may be subject to taxation in that
jurisdiction. There is no tax lien on any of the properties or assets of any member
of the Company Group, except for inchoate liens for Taxes not yet due and payable.
There are no outstanding contracts or waivers extending the statutory period of
limitation applicable to (A) the filing of any Tax Return by or with respect to, or
(B) any claim for, or the period for the

20

 

collection or assessment of, Taxes due from or with respect to, any member of
the Company Group for any taxable period.

     (iii) No member of the Company Group has agreed to make any material adjustment
pursuant to Section 481(a) of the Code (or any similar provision of foreign, state
or local law or any predecessor provision) by reason of any change in any accounting
method, and there is no application pending with any Governmental Authority
requesting permission for any changes in any accounting method of any member of the
Company Group.

     (iv) No member of the Company Group will be required to include in any period
ending after December 31, 2007, any income that accrued in a prior period but was
not recognized in any prior period or in calculating the Agreed Net Working Capital
Distribution as a result of the installment method of accounting, the completed
contract method of accounting, the long term contract method of accounting, the cash
method of accounting, an open transaction disposition made on or prior to April 30,
2008 or a prepaid amount received prior to April 30, 2008. No member of the Company
Group will be required to include an amount in income as a result of a prior
distribution otherwise qualifying for nonrecognition of gain or loss under Section
355 of the Code as a result of the transactions contemplated by this Agreement.

     (v) No member of the Company Group is a party to, is bound by, or has any
obligation under, any Tax sharing agreement, Tax allocation agreement, Tax indemnity
agreement or similar Contract (other than obligations resulting from the sharing of
profits and losses pursuant to tax partnerships under the agreements identified in
Schedule 3.1(g), and the transactions contemplated by this Agreement will
not give rise to any obligation to indemnify any other Person for Taxes (as a result
of a technical termination of a partnership pursuant to Section 708(b)(1)(B) or
otherwise).

     (vi) No member of the Company Group has executed or entered into with the IRS,
or any other Governmental Authority, a closing agreement pursuant to Section 7121 of
the Code or any similar provision of state, local, foreign or other income tax law,
that will require any increase in taxable income or alternative minimum taxable
income, or any reduction in Tax deductions or Tax credits for, any member of the
Company Group for any taxable period ending after the Tax Apportionment Date.

     (vii) Since 2001, no member of the Company Group is, or has ever been, a member
of an affiliated, consolidated, combined, unitary or similar group for federal,
state or local Tax purposes that includes any Person that is not a member of the
Company Group, and no member of the Company Group has any liability for the Taxes of
any Person that is not a member of the Company Group, except with respect to the
split off of Summit Petroleum Management Corporation, f/k/a/ Team Operating
Corporation pursuant to Code Section 355.

     (viii) From and at all times since their respective organization dates, (A)
each of HELP, Henry Operating, Henry Capital, Energy, Quail Ranch, Aguasal
Management and Aguasal LP have been classified as either a partnership or a
disregarded entity for U.S. federal income tax purposes under Treasury Regulation §
301.7701-3 and (B) Aguasal has been classified as an “S” corporation. Since January
1, 2000, Holding and Henry Petroleum have been classified as “C” corporations. All
Tax Returns have been prepared in a manner consistent with the foregoing.

21

 

     (ix) No member of the Company Group has ever (A) participated (within the
meaning of Treasury Regulations § 1.6011-4(c)(3)) in any “reportable transaction”
within the meaning of Treasury Regulations § 1.6011-4(b) (and all predecessor
regulations); (B) claimed any deduction, credit, or other tax benefit by reason of
participation in any “tax shelter” within the meaning of former Section 6111(c) of
the Code and the Treasury Regulations thereunder or any “confidential corporate tax
shelter” within the meaning of former Section 6111(d) of the Code and the Treasury
Regulations thereunder; or (C) purchased or otherwise acquired an interest in any
“potentially abusive tax shelter” within the meaning of Treasury Regulations §
301.6112-1.

     (x) No material property of any member of the Company Group, including uncashed
checks (including royalties), non-refunded overpayments, or unclaimed deposits, is
subject to escheat to any state or municipality under any applicable escheatment or
unclaimed property laws.

     (xi) As of the Closing, none of the Sellers nor any member of the Company Group
will have in force a power of attorney with respect to any matter relating to Taxes
that could affect a member of the Company Group.

     (n) Legal Proceedings, Etc. Except as shown on Schedule 3.1(n), there are no
actions, suits or proceedings, arbitrations or material disputes, claims, audits or
investigations, whether administrative, judicial or otherwise, (i) pending or, to the
Knowledge of any Company or Seller, threatened, by or against or affecting any Property
operated by a Company or a Company, or its business, or any of its assets or properties
(excluding any Properties not operated by a Company), or (ii) to the Knowledge of any
Company or Seller, pending or threatened by or against or affecting any Property not
operated by a Company, in each case at law or in equity or otherwise, whether or not covered
by insurance or the indemnity provisions of any Contract. None of the Companies or
Properties operated by a Company, or to the Knowledge of any Company or Seller, none of the
Properties not operated by a Company, is subject to or in default with respect to any
indictment, order, injunction, decree, ruling or award of any arbitrator or Governmental
Authority.

     (o) Properties.

     (i) The Property Letter includes substantially all Properties owned by the
Companies as of the Effective Date, and there are no material Properties not
included in the Property Letter.

     (ii) As of the Closing Date, the Companies will own the Properties set forth in
the Property Letter free and clear of all Claims, other than Permitted Encumbrances.
The execution and delivery of this Agreement and the Transaction Documents by the
Companies and the consummation of the Transactions and compliance with the
provisions hereof will not give rise to a right of termination, modification,
revocation, cancellation or acceleration of any obligation or to the loss of a
benefit under or result in the creation of any Claim upon any of the Properties. No
Approval from any Governmental Authority or Person is required with respect to any
Property as a result of the execution and delivery of this Agreement and the
Transaction Documents by the Sellers or the consummation by the Sellers of the
Transactions.

22

 

     (p) Material Contracts.

     (i) Schedule 3.1(p)(i) sets forth a true and complete list of the
following Contracts (each a “Material Contract” and collectively, the “Material
Contracts”):

     (A) all joint operating or development agreements or similar Contracts
that apply to Properties that, in the aggregate, represent not less than 95%
of the aggregate Maximum Title Deficiency Amount;

     (B) all Contracts that pertain to the provision of drilling services to
any Company;

     (C) all Contracts that concern the purchase and sale, gathering,
transportation, compression or processing of Hydrocarbons or similar
Contracts relating to or included in the Properties that are operated by a
Company and that are (x) not terminable without penalty on ninety or less
days notice or (y) can be reasonably expected to result in aggregate monthly
revenues to the Companies of more than $10,000 (based solely on the terms
thereof and without regard to any expected increase in volumes or revenues)
during the current or any subsequent calendar year;

     (D) any indenture, mortgage, loan, credit or sale leaseback or similar
financial Contract to which any Company is a party or to which any Property
is subject;

     (E) all leases (other than a Lease) under which any Company is the
lessor or the lessee of real or personal property which lease (x) cannot be
terminated by such Company without penalty or payment upon sixty or less
days notice or (y) involves an annual base rental of more than $100,000;

     (F) all hedging or swap Contracts to which any Company or Seller is a
party or by which any assets of any Company is bound;

     (G) all Contracts (other than the Organizational Documents of the
Companies) granting any Person registration, purchase or sale rights with
respect to any Shares or other equity securities of any of the Companies;

     (H) any employment, severance, retention, termination or consulting
Contract or Plan between any Company and any other Person other than any
consulting Contract that can be terminated by such Company without penalty
or payment upon sixty or less days notice; and

     (I) all material insurance policies or binders under which any Company
is insured.

     (ii) There exist no defaults by any Company under any Material Contract or, to
the Knowledge of the Companies and the Sellers, by any other Person that is a party
to such Material Contract, and no Company or Seller has received written notice of
(A) any default under any Material Contract or (B) any other Claim under any
Material Contract that would reasonably be expected to result in a material loss to
a Company or the

23

 

termination of such Material Contract. The Companies are in compliance with
the material terms of all Material Contracts.

     (iii) There are no Contracts included in or affecting the Properties that (A)
could materially restrict the ability of the Purchaser to use the Properties as
historically used by the Companies and the Sellers; or (B) that could result in
liability or cost to a Company (excluding liabilities or costs arising from actions
taken by the Purchaser in the ordinary course of business after the Closing) in
excess of $1,000,000.00 in the aggregate without providing to such Company an equal
and corresponding economic benefit.

     (iv) True and complete copies (including all amendments thereto) of each
Material Contract, other than the Specified Contracts, have been or will be made
available to the Purchaser prior to or promptly following the date of this
Agreement, and Seller will use commercially reasonable efforts to obtain the
necessary consents to be able to make true and complete copies (including all
amendments thereto) of each Specified Contract available to Purchaser prior to
Closing.

     (q) No Changes. Except as set forth in Schedule 3.1(q) or otherwise expressly
provided in this Agreement, since April 30, 2008, none of the Companies has done any of the
following:

     (i) incurred any liabilities other than liabilities incurred in the ordinary
course of business consistent with past practice (which shall be deemed to include
the liabilities referred to in Section 3.1(q)(xi) below), or discharged or satisfied
any lien or encumbrance, or paid any liabilities other than in the ordinary course
of business consistent with past practice, or failed to pay or discharge when due
any liabilities the failure to pay or discharge of which has caused or may cause any
material damage or risk of material loss;

     (ii) incurred, assumed or guaranteed any indebtedness for money borrowed, or
mortgaged, pledged or subjected to any lien, pledge, mortgage, security interest,
conditional sales contract or other encumbrance of any nature whatsoever any of the
Shares or a Company, other than the liens, if any, for current taxes not yet due and
payable and Permitted Encumbrances;

     (iii) amended its Organizational Documents or canceled, modified or waived any
debts or claims held by it, other than in the ordinary course of business consistent
with past practice, or waived any rights of substantial value outside the ordinary
course of business, provided that the Organizational Documents of Energy
have been or will be amended prior to Closing to provide that Henry is no longer
guaranteeing any of Energy’s debt pursuant to Section 5.02(a) of the partnership
agreement;

     (iv) to the Knowledge of the Companies, suffered any damage, destruction or
loss, not covered by insurance, that adversely affects its business, operations,
assets, properties or prospects, or suffered any repeated, recurring or prolonged
shortage, cessation or interruption of inventory shipments, supplies or utility
services required by the Companies to conduct its businesses and operations not
covered by alternate arrangements on substantially the same economic terms or
suffered any change in its financial condition or in the nature of its businesses or
operations which has had or might have a material adverse effect on its business,
operations, assets or properties;

24

 

     (v) increased the salaries or other compensation of, or made any advance
(excluding advances for ordinary and necessary business expenses) or loan to, any of
its officers or employees (excluding increases made to employees consistent with
past practice), or made any increase in, or any additions to, other benefits to
which any of its officers or employees may be entitled;

     (vi) changed any of the bookkeeping or accounting principles followed by it or
the methods of applying such principles; made or rescinded any express or deemed
election relating to taxes, settled or compromised any claim, action, suit,
litigation, audit or controversy relating to taxes, or changed any of its methods of
reporting income or deductions for federal or other income tax purposes from those
employed in the preparation of the federal or other income tax returns or other
returns for the taxable year ended December 31, 2007;

     (vii) merged or consolidated any of the Companies with any other Person, or
acquired or disposed of any equity interests or business of any other Person other
than the transfer of Shares from Securities to FIG and Henchild prior to the
Closing;

     (viii) entered into any transaction other than in the ordinary course of
business consistent with past practice;

     (ix) declared, set aside or paid any dividend on, or any other distribution
with respect to the Shares;

     (x) entered into any employment, consulting, severance or indemnification
agreement other than employment or consulting agreements in the ordinary course of
business, entered into any agreement with respect to a retention or change in
control bonus (nor amended any such agreement) with any of its employees or any
other Person, nor incurred or entered into any collective bargaining agreement or
other obligation to any labor organization or employee;

     (xi) made or committed to make any single (or series of related) capital
expenditures or capital additions or betterments in excess of $100,000.00 in the
aggregate other than capital expenditures made in the ordinary course of business,
including AFEs for well drilling operations, well reworking operatings, and
inventory purchases in connection with well drilling operations entered into in the
ordinary course of business;

     (xii) instituted or settled any material legal actions, suits or other legal
proceedings; or

     (xiii) entered into any Contract to do any of the foregoing.

     (r) Employee Benefit Plans.

     (i) Schedule 3.1(r) sets forth a true and complete list of all Plans
other than consulting agreements that have been entered into in the ordinary course
of business and that can be terminated by a Company without penalty or payment upon
sixty or less days notice. Each Plan is in writing, and, on or before the date
hereof, Sellers have furnished to Purchaser true and complete copies of each of the
following, to the extent applicable, with respect to each Plan: the most recent
annual or other report filed with each Governmental Authority, the plan document
(including all amendments thereto), the trust

25

 

agreement (including all amendments thereto), the most recent summary plan
description, the most recent financial statements, and the most recent determination
letter or opinion letter, if any, issued by the Internal Revenue Service.

     (ii) Except for the Companies, there is no other trade or business, whether or
not incorporated, that together with any Company would be a “single employer” within
the meaning of Section 4001(b) of ERISA or under common control with such Company
within the meaning of Section 414(b), (c), (m) or (o) of the Code.

     (iii) The Companies do not contribute to, and have no obligation to contribute
to, and no Plan is a multiemployer plan (within the meaning of Section 3(37) of
ERISA) or a plan subject to Title IV of ERISA, Section 302 of ERISA or Section 412
of the Code. No Plan is funded by a trust that is intended to be exempt from
federal income taxation pursuant to Section 501(c)(9) of the Code. Except as
required under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA),
no Plan provides or promises to provide retiree medical, dental or life insurance
benefits to any current or former employee of any Company. Other than COBRA
benefits, the Companies do not have any liability (whether direct or indirect) with
respect to any plan of the type described in the preceding sentences of this
paragraph.

     (iv) With respect to each Plan, the Companies have performed all obligations,
whether arising by operation of applicable Law or by contract, required to be
performed by them. Each Plan which constitutes an “employee benefit plan” within
the meaning of Section 3(3) of ERISA may be unilaterally terminated in its entirety
without liability except as to benefits accrued thereunder prior to such termination
and subject to any limitations imposed under Section 409A of the Code. All
contributions required to be made to the Plans pursuant to their terms and the
provisions of ERISA, the Code, or any other applicable Law have been timely made.
Each Plan has been established, documented, administered and operated in compliance
with applicable legal requirements and its governing documents. All Plans that
could be deemed “nonqualified deferred compensation” arrangements under Section 409A
of the Code are in good faith compliance with such section, and no service provider
is entitled to a tax gross-up or similar payment for any tax or interest that may be
due under such section.

     (v) Each Plan intended to be qualified under Section 401 of the Code (A)
satisfies in form the requirements of such section except to the extent amendments
are not required by applicable Law to be made until a date after the Closing Date,
(B) has received a favorable determination letter from the Internal Revenue Service
(or is entitled to rely on a favorable opinion letter issued by the Internal Revenue
Service) regarding such qualified status, and (C) has not been amended or operated
in a way that would adversely affect its qualified status. As to any Plan intended
to be qualified under Section 401 of the Code, there has been no termination or
partial termination of the Plan within the meaning of Section 411(d)(3) of the Code,
but consummation of the Transactions and the resignations under Section 4.8 may
constitute a partial termination.

     (vi) There are no actions, suits, or claims pending (other than routine claims
for benefits) or, to the Knowledge of the Companies and the Sellers, threatened
against, or with respect to, any Plan or its assets, and there is no matter pending
(other than routine qualification determination filings) with respect to any Plan
before any Governmental Authority.

26

 

     (vii) No act, omission or transaction has occurred which could result in
imposition on any Company of (A) breach of fiduciary duty liability damages under
Section 409 of ERISA, (B) a civil penalty assessed pursuant to subsections (c), (i)
or (l) of Section 502 of ERISA, or (C) a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code.

     (viii) Upon the consummation of the Transactions, no payments of money or other
property, acceleration of benefits, or provision of other rights have been or will
be made hereunder, under any agreement contemplated herein, or under any Plan or any
other agreement that would be reasonably likely to be nondeductible under Section
280G of the Code, whether or not some other subsequent action or event would be
required to cause such payment, acceleration, or provision to be triggered.

     (ix) Except as provided in Section 2.3, the amendment to the 401(k) Plan to
accelerate vesting and the accelerated vesting and payout of benefits under the
Henry Petroleum Employee Retention Plan, the execution and delivery of this
Agreement and the consummation of the Transactions will not (A) require any Company
to make a larger contribution to, or pay greater benefits or provide other rights
under, any Plan than it otherwise would, whether or not some other subsequent action
or event would be required to cause such payment or provision to be triggered, or
(B) create or give rise to any additional vested rights or service credits under any
Plan. Except as provided in Section 2.3, none of the Companies is a party to any
agreement, nor has any Company established any policy or practice, requiring it to
make a payment or provide any other form of compensation or benefit to any person
performing services for a Company upon termination of such services that would not
be payable or provided in the absence of the consummation of the transactions
contemplated by this Agreement.

     (x) From and after the Closing, each of the Companies shall have no liability
to any Person who is not a Retained Employee and who was a party as of the date of
termination of such Person’s employment to any arrangement providing for the
participation in any oil and gas property acquisition, ownership or development and
maintained by any Company for the benefit of any current or former employees of a
Company, except as to working interests conveyed to any such Person as of the date
of this Agreement; provided, that the foregoing shall not apply to any
working interest of a Person which is of record as of the date of this Agreement in
the real property records of the subject county.

     (s) Labor and Employment Matters.

     (i) The Compensation Letter sets forth a true and complete list of all Business
Employees as of the date hereof, and, for each such Business Employee, such schedule
sets forth such Business Employee’s full name, job title, base salary or base wages,
hire date, accrued vacation and location of employment. Each Business Employee is
an employee of Henry Petroleum. The Compensation Letter also indicates (A) whether
the Business Employee is actively employed or on a leave of absence, and, if the
Business Employee is on a leave of absence, then the Compensation Letter indicates
the nature of such leave, and (B) any commitment or agreement to increase after the
date of this Agreement the total compensation or rate of total compensation or
potential compensation (including, without limitation, bonus opportunities,
incentive compensation, profit-sharing, pension benefits and other compensation)
payable to each such Business Employee other than the Prior Bonus and the Cash
Bonus. The

27

 

Compensation Letter sets forth, for each Business Employee, the amount of such
Business Employee’s accrued vacation and sick leave as of January 1, 2008.

     (ii) No Company is a party to, or bound by, any collective bargaining agreement
or any other contract with any labor union or representative of employees. There
are no (A) strikes, work stoppages, work slowdowns, or lockouts pending or, to the
Knowledge of the Companies and the Sellers, threatened against or involving any of
the Companies, or (B) unfair labor practice charges, grievances or complaints
pending or, to the Knowledge of the Companies and the Sellers, threatened by or on
behalf of any current or former employee or group of current or former employees of
any of the Companies. To the Knowledge of the Companies, there has been no labor
union organizing activity within the last five years relating to any of the
employees of the Companies, and there is no union organizational campaign or
representation petition or certification application currently pending with respect
to any employee of the Companies or any of the Companies. To the Knowledge of the
Companies and the Sellers, no union has applied to have any Company declared a
related or successor employer pursuant to applicable Laws with respect to the
employees of the Companies.

     (iii) Each employee of the Companies has provided all necessary documentation
evidencing such employee’s authorization to legally work in the United States, and
each Company has maintained such documentation in accordance with applicable legal
requirements.

     (iv) The Companies are not subject to any settlement agreement, conciliation
agreement, letter of commitment, deficiency letter or consent decree with any
current or former employee or applicant for employment, labor union or other
employee representative, or any Governmental Authority or arbitrator and no
Governmental Authority or arbitrator has issued a judgment, order, decree,
injunction, decision, award or fine with respect to any current or former employee
or applicant for employment of a Company.

     (v) Since January 1, 2006, (A) the Companies have been and are in compliance
with and have not triggered any requirements under the Workers Adjustment Retraining
Notification Act with respect to the employees of the Companies and (B) the
Companies have been and are in material compliance with all applicable Laws
respecting employment and employment practices, terms and conditions of employment,
wages, hours of work, employment discrimination, equal opportunity, affirmative
action, workers’ compensation, pay equity, unemployment insurance, immigration and
occupational and workplace safety and health. There are no outstanding claims,
complaints, investigations or orders under any such applicable Laws that relate to
any Company or any of the current or former employees of any Company. All amounts
due or accrued for all salary, wages, bonuses, commissions, including any benefits
under the Plans, have either been paid or are accurately reflected in the Company
Financial Statements to the extent required to comply with financial statements
prepared on an income tax basis.

     (t) Full Disclosure. No Company or Seller in connection with this Agreement or
documents furnished hereunder has (i) knowingly employed any device, scheme or artifice to
mislead or defraud Purchaser, (ii) knowingly made any untrue statements of a material fact
or knowingly omitted any material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading, or (iii) knowingly
engaged in any

28

 

act, practice, or course of business which operates or would operate as a fraud or
deceit upon any Person.

     (u) Insurance. Schedule 3.1(u) contains a complete listing of each Company
insurance schedule of directors’ and officers’ liability insurance, primary and excess
casualty insurance policies providing coverage for bodily injury and property damage to
third parties, including any products liability and completed operations coverage, and
workers compensation, in effect as of the date hereof. None of such insurance coverage was
obtained through the use of false or misleading information or the failure to provide the
insurer with all information requested in order to evaluate the liabilities and risks
insured. There is no material default with respect to any provision contained in any such
policy or binder, and no Company has failed to give any notice or present any claim under
such policy or binder in due and timely fashion. There are no billed but unpaid premiums
past due under any such policy or binder. Except as shown in Schedule 3.1(u): (i)
there are no outstanding claims under any such policies or binders and, to the Knowledge of
the Sellers and the Companies, there has not occurred any event that might reasonably form
the basis of any claim against or relating to the Companies that is not covered by any such
policies or binders and (ii) no notice of cancellation or non-renewal of any such policies
or binders has been received.

     (v) Brokers. No broker, finder or other Person is entitled to any broker’s, finder’s
or similar fee, commission or expense to be paid by any Company or Purchaser in connection
with the Transactions by reason of any action taken by the Companies or the Sellers.

     (w) Imbalances. Except for normal immaterial pipeline imbalances that are adjusted by
the pipeline each month, there are no wellhead imbalances or other imbalances attributable
to the Properties as of the Effective Time or as of the Closing Date that require payment or
other consideration from any Company to a third party or for which any Company would
otherwise be responsible.

     (x) [Intentionally Omitted]

     (y) Condition of Personal Property. All fixtures, facilities and equipment owned,
leased or held for use by the Companies and that are reasonably necessary to conduct normal
operations on the Properties are in an operable state of repair adequate to maintain normal
operations in a manner consistent with the past practices of the Companies.

     (z) Plugging and Abandonment. Except as shown on Schedule 3.1(z), there are no
Wells located on the Leases (i) with respect to which, to the Knowledge of the Sellers and
the Companies, any Seller or any Company has received a written order from any Governmental
Authority requiring, or any written Claim from any other Person requesting or demanding
that, such Wells be plugged and abandoned, or (ii) that have been plugged and abandoned but
have not been plugged and abandoned in accordance with applicable Contracts and the
requirements of each Governmental Authority having jurisdiction over the subject Properties.

     (aa) Payout Balances. Schedule 3.1(aa) contains a complete and accurate
schedule of the status of any “payout” balance due as of April 30, 2008, for each Property
that is subject to a reversion or other adjustment at some level of cost recovery or payout.

     (bb) Royalties, Etc. (A) All royalties, overriding royalties and other burdens on
production due with respect to the Properties have been timely and properly paid in
accordance with the applicable Leases, will be timely and properly paid, or placed in
suspense pending

29

 

identification of the owners thereof or their location or the resolution of title
defects related thereto and (B) all expenses relating to the ownership or operations of the
Properties have been timely and properly paid or are pending payment and are within the
payment terms set forth in the applicable operating agreement or other agreement concerning
the Property. All revenue received by the Companies and the Sellers or their Affiliates, in
their capacity as operator of the Properties, for the sale of Hydrocarbons attributable to
any joint working interest owner’s interests in the Leases have been paid or is being held
in suspense or will be timely and properly paid.

     (cc) Wells. To the Knowledge of the Companies, all Wells have been drilled and
completed within the limits permitted by all applicable Leases or Contracts.

     (dd) Books and Records. All books, records and files of the Companies (including those
pertaining to the Properties and other assets of the Companies, those pertaining to the
production, gathering, transportation and sale of Hydrocarbons, and corporate, accounting,
financial and employee records): (i) have been prepared, assembled and maintained in
accordance with usual and customary policies and procedures; and (ii) fairly and accurately
reflect the ownership, use, enjoyment and operation by the Companies of the Properties and
other assets. The Companies maintain a system of internal accounting controls sufficient to
provide reasonable assurance that: (x) transactions are accurately and promptly recorded;
(y) transactions are executed in accordance with management’s specific or general
authorization; and (z) access to their books, records and assets is permitted only in
accordance with management’s general or specific authorization.

     (ee) No Written Notice of Adverse Environmental Conditions. None of the Sellers or the
Companies have received written notice from any Person or Governmental Authority of any
release, disposal, event, condition, circumstance, activity, practice or incident concerning
any land, facility, asset or property included in the Properties that constitutes a
violation of, interferes with or prevents compliance by Sellers, or after Closing, the
Companies or Purchaser, with any Environmental Law that has not been fully and finally
resolved consistent with applicable Laws and Contracts.

     (ff) Leases. The Leases are either (i) held by production or drilling or reworking
operations in accordance with their terms, or (ii) currently within their primary terms.
There is not any default in any obligation under any Lease that would reasonably be expected
to have a material adverse effect on the ownership, operation, value or use of any Property.
The Companies have not received any written notice of any breach or default of any Lease,
nor, to the Knowledge of the Companies, has any Person threatened in writing any action to
terminate, cancel, rescind or reform any Lease or any provision thereof.

     (gg) Bonds, Letters of Credit, etc. Schedule 3.1(gg) sets forth a true and
complete list of all bonds, letters of credit, guaranties and similar instruments issued by
any Company, Seller or their Affiliates and required by contract or applicable Law to be
posted or otherwise tendered in order to own/and or operate any of the Properties.

     (hh) Affiliate Transactions. Schedule 3.1(hh) sets forth all services and
assets owned, licensed to or otherwise held by any Seller or any Affiliate of such Seller
(other than the Companies), that are or were made available or provided to or used by the
Companies within the one-year period prior to the date of this Agreement or which may be
required to operate the business of the Companies from and after the Closing Date consistent
with past practices in the proceeding year. Except as set forth on Schedule
3.1(hh), (i) no Company is obligated to pay

30

 

currently or in the future any amounts to any Seller or Affiliate of any Seller for
services rendered to any of the Companies, and no Seller or any Affiliate of any Seller is
obligated to pay currently or in the future any amounts to any Company and (ii) since April
30, 2008, no Company has purchased, transferred or leased any real or personal property from
or for the benefit of, paid any commission, salary or bonus to or for the benefit of, any
Seller or any Affiliate of such Seller or any director, officer, shareholder, member or
partner thereof and no Company has sold, transferred or leased any real or personal property
to any Seller or any Affiliate of any Seller, other than the Henry Holding Distribution and
the Henry Energy Distribution.

     (ii) Intangible Property. There are no material trademarks, trade names, patents,
service marks, brand names, computer programs, databases, industrial designs, copyrights or
other intangible property that are necessary for the operation, or continued operation, of
the business of any Company, or for the ownership and operation, or continued ownership and
operation, of any assets of any Company, for which the Companies do not hold valid and
continuing authority in connection with the use thereof.

     (jj) Suspense Funds. Schedule 3.1(jj) sets forth a true and complete listing,
as of April 30, 2008, of all proceeds from production attributable to the Properties held in
suspense by any Company for any other Person.

     Section 3.2 Representations and Warranties of Purchaser. Purchaser hereby represents to the
Companies and the Sellers as follows:

     (a) Formation and Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has requisite power
and authority to carry on its business as now conducted, and to own and lease operate its
properties and other assets as now owned or leased.

     (b) Authority; Enforceability. Purchaser has full power and authority to enter into
this Agreement and the other Transaction Documents to which it is a party, and to perform
its obligations hereunder and thereunder. The execution, delivery and performance of this
Agreement and any other Transaction Documents and the consummation of the Transactions have
been duly and validly authorized and approved by all required actions of the Purchaser and
no other actions on the part of the Purchaser are necessary to authorize and approve this
Agreement, any other Transaction Documents and the Transactions. This Agreement has been
duly executed and delivered by the Purchaser, and constitutes a valid and binding obligation
of Purchaser, enforceable against Purchaser in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ rights generally or by the principles
governing the availability of equitable remedies). At Closing, all Transaction Documents to
be executed and delivered by the Purchaser shall have been duly executed and delivered by
the Purchaser, and all Transaction Documents executed and delivered by the Purchaser
constitute valid and binding obligations of the Purchaser, enforceable against the Purchaser
in accordance with their terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally or by the principles governing the availability of equitable remedies).

     (c) No Violation; Consents. The execution and delivery of this Agreement and the
Transaction Documents by Purchaser do not, and the consummation of the Transactions and
compliance with the provisions hereof by Purchaser will not conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both) under, or give
rise to a

31

 

right of termination, modification, cancellation or acceleration of any obligation or
to the loss of a benefit under, or result in the creation of any Claim upon any of the
properties or assets of the Purchaser or any of its Subsidiaries under any provision of (A)
the Organizational Documents of the Purchaser, (B) any material loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement applicable to Purchaser or any of
its subsidiaries or (C) assuming the consents, approvals, authorizations, permits, filings
and notifications are duly and timely obtained or made, any federal, state or local or other
governmental law or ordinance, or any order, writ, injunction, decree, rule or regulation of
any court or other Governmental Authority applicable to the Purchaser, other than, in the
case of clause (B) or (C), any such conflicts, violations, defaults, rights, Claims,
detriments, laws or orders that, individually or in the aggregate, have not had and could
not reasonably be expected to (x) impair the ability of the Purchaser to perform its
obligations under the Agreement in any material respect, or (y) delay in any material
respect or prevent the consummation of any of the Transactions. No approval from any
Governmental Authority is required by or with respect to the Purchaser or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by Purchaser or
the consummation by the Purchaser of the Transactions.

     (d) Brokers. No broker, finder or other person who is entitled to any broker’s,
finder’s or similar fee, commission or expense to be paid by any Seller in connection with
the Transactions by reason of any action taken by Purchaser.

     (e) Financial Capability. As of the Closing, Purchaser will have access to sufficient
cash to consummate the Transactions and pay the Purchase Price at Closing as well as to
consummate the purchase of the Along-side Interests as specified in Section 2.7, and
immediately before and after consummation of the Transactions and the purchase of the
Along-side Interests and payment of the First Bonus Installment, Purchaser will be solvent.

     (f) Investment Representation. Purchaser is acquiring the Shares from Sellers for its
own account, for investment purposes only and not with a view to or for resale in connection
with the distribution thereof except as permitted under the Securities Act and any other
applicable securities laws.

ARTICLE IV

COVENANTS OF THE PARTIES

     Section 4.1 Conduct of Business of each Company. On and after the date hereof and prior to
the Closing Date, and except as contemplated by this Agreement or as otherwise consented to by
Purchaser in writing, each Company and each Seller shall cause each Company to conduct its business
in the ordinary course consistent with past practice. With respect to any request from Sellers for
Purchaser to consent to an exception to the covenants in this Section 4.1 (which request must be in
writing and delivered to Purchaser in accordance with Section 8.2), Purchaser shall use
commercially reasonable efforts to respond as promptly as practicable, but in any event within five
(5) business days, to such request. If Purchaser does not respond to such request within such
period of time, Purchaser shall be deemed to have consented to such request. Without limiting the
generality of the foregoing, each Company will, and each Seller will cause each Company to:

     (a) not declare, set aside or pay any dividend or distribution, whether in cash, stock
or property (or any combination in respect of their capital stock thereof), issue, sell,
purchase, redeem or otherwise acquire or issue any rights to subscribe for, or warrants to
purchase any shares of its capital stock or any other security of a Company; nor adopt
resolutions authorizing a liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other

32

 

reorganization of such Company or enter into or adopt any plan or agreement with
respect to the foregoing, or make any other material change in the capitalization of such
Company; nor split, combine or reclassify any of its Shares or other outstanding equity
interests;

     (b) (i) not increase the rate or terms of compensation payable or to become payable by
such Company to its directors, officers or employees, except increases occurring in the
ordinary course of business in accordance with their customary practices (which shall
include normal periodic performance reviews and related compensation and benefit increases),
and (ii) not increase the rate or terms (including vesting status) of any bonus, insurance,
pension or other employee benefit plan or arrangement made to, for or with any such
directors, officers or employees, except increases occurring in the ordinary course of
business in accordance with their customary practices (which shall include normal periodic
performance reviews and related compensation and benefit increases); provided,
however, that the Companies shall be permitted to amend the Companies’ 401(k) plan
in order to cause the acceleration of vesting of the matching awards made by the Companies
effective immediately before the Closing;

     (c) not create, incur or assume any indebtedness for borrowed money or guarantee any
such indebtedness or create, incur or permit to exist any Claim on any Property or Company
other than Permitted Encumbrances or inter-company loans to which the only parties thereto
are the Companies;

     (d) operate, maintain and otherwise deal with the Properties in accordance with past
practices and in accordance with applicable oil and gas Leases and other Contracts and
applicable Laws and Approvals, and shall operate, maintain and otherwise deal with all
assets of the Companies other than the Properties in accordance with past practices and in
accordance with applicable Contracts, Laws and Approvals;

     (e) use commercially reasonable efforts to preserve intact its present business
organization, keep available the services of its current officers and employees until
Closing at their current rates of compensation, commissions and benefits and Retained
Employees thereafter and endeavor to preserve its relationships with customers, suppliers
and others having business dealings with it to the end that its goodwill and ongoing
business shall not be impaired in any material respect at the Closing;

     (f) (i) keep and maintain accurate books, records and accounts; (ii) maintain in full
force and effect existing insurance policies and binders of such Company subject only to
variations required by the ordinary operations of its business, or else will obtain, prior
to the lapse of any such policy or binder, substantially similar coverage with insurers of
recognized standing; (iii) pay all Taxes, assessments and other governmental charges imposed
upon any of its assets or with respect to its franchises, business, income or assets before
any penalty or interest accrues thereon; (iv) pay all claims and expenses (including claims
and expenses for labor, services, materials and supplies) when they become due and payable
in accordance with their terms; (v) pay all wages and other compensation accrued by all
employees of the Companies through the Closing Date when they become due and payable in
accordance with the obligations of the Companies under any labor or employment practices and
policies, or any collective bargaining agreement or other labor contract or individual
agreement to which a Company is a party, or by which the Companies may be bound; (vi) comply
in all material respects with the requirements of applicable laws, rules, regulations,
permits and orders of any Governmental Authority and comply with and enforce the provisions
of the Material Contracts, including paying when due all indebtedness, payables, rentals,
royalties, expenses and other liabilities relating to its business or assets; and (vii) at
all times preserve and keep in full force and effect its corporate or other legal

33

 

existence and rights and franchises material to the performance by such Company of its
obligations under this Agreement;

     (g) promptly advise Purchaser in writing of (i) the threat or commencement of any
dispute, claim, action, suit, proceeding, arbitration or investigation against or involving
such Company when the amount claimed is $25,000 or more in the aggregate; or (ii) the
occurrence of any development (exclusive of general economic factors affecting business in
general and the independent oil and gas business in general) of a nature that is or may be
adverse to any Company’s financial condition or results of operations in any material
respect;

     (h) use its commercially reasonable efforts to conduct its business in such a manner
that on the Closing Date the representations and warranties of each Seller contained in this
Agreement shall be true as though such representations and warranties were made on and as of
such date;

     (i) not (A) amend or assign its Organizational Documents except as referenced in
Section 3.1(q)(iii), (B) amend any Lease in any material respect or any Material Contract in
any material respect or (C) assign any Lease or Material Contract to any Person other than a
Company except pursuant to contractual obligations to assign Leases or Material Contracts or
portions thereof or rights thereunder in accordance with their terms as in existence as of
the date of this Agreement, in each case other than assignments that would reasonably be
expected to have a material adverse effect on a Company;

     (j) not make an equity investment in any other Person or acquire by merger or
consolidation or purchase of equity interests any corporation, partnership, association or
any other business organization or division thereof;

     (k) not make any change in any method of accounting or accounting principles;

     (l) not enter into any settlement of any material issue with respect to any assessment
or audit or other administrative or judicial proceeding with respect to Taxes for which any
Company or Purchaser may have liability;

     (m) not terminate or voluntarily relinquish any permit, license or other authorization
from any Governmental Authority or Person necessary for the conduct of the business of the
Company or any Property, except in the ordinary course of business;

     (n) not establish, amend or terminate a Plan or any other employee benefit plan; nor
enter into, amend or terminate any consulting, employment, severance, change of control,
bonus, termination or similar Contract with any Person, other than in the ordinary course of
business;

     (o) not make any loan to or enter into any transaction with any employee, officer or
director of a Company, except for the payment of salaries, commissions and benefits to which
all similarly situated employees are generally entitled or make any loan to any consultant
of a Company;

     (p) not terminate the employment of any Business Employee other than for cause or hire
any employee other than in the ordinary course of business;

     (q) not resign, transfer or otherwise voluntarily relinquish any control, possession of
or right it has as of the date of this Agreement as operator of any Property;

34

 

     (r) not acquire any corporation, partnership or other business entity or any equity
interest therein; nor sell, lease or sublease, transfer, farm out or otherwise dispose of or
mortgage, pledge or otherwise encumber any Property (except for Permitted Encumbrances and
sales of Hydrocarbons in the ordinary course of business); nor acquire any oil and gas
interests or any other assets that have a value at the time of such acquisition of
$50,000.00 or more in the aggregate (except that other assets with an aggregate purchase
price of no more than $50,000.00, in addition to the other acquisitions authorized by this
clause, may be acquired that are incidental to the business of the Companies and acquired in
the ordinary course of the business of the Companies consistent with past practices); nor
enter into any hedging or derivative Contracts (financial, commodity or otherwise); nor
sell, transfer or otherwise dispose of or mortgage, pledge or otherwise encumber any
securities of any other Person; nor make any loans, advances or capital contributions to, or
investments in, any Person other than another Company; nor enter into any Contract or series
of related agreements that would cause any Company to spend $50,000 or more or any other
Contract not terminable by such Company that is a party thereto upon notice of 30 days or
less and without penalty or other obligation; nor agree with any Person to limit or
otherwise restrict in any manner the ability of any Company to compete or otherwise conduct
its business; nor enter into any Contract with respect to any of the foregoing;

     (s) not incur any cost or expense for geophysical items including acquisition,
processing, reprocessing or interpretation; nor make a capital expenditure or series of
related capital expenditures of $100,000.00 or more, except in the ordinary course of
business, including as ordinary course AFEs for well drilling operations, well reworking
operations, and inventory purchases in connection with well drilling operations; nor assume,
endorse (other than endorsements of negotiable instruments in the ordinary course of
business), guarantee or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the liabilities or obligations of any other Person; nor enter
into any Contract with respect to any of the foregoing; or

     (t) not engage in any line of business in which it is not engaged as of the date
hereof; nor enter into, or otherwise be a party to, any Contract relating to the voting,
registration or transfer of any Shares or other securities of any Company.

     Section 4.2 HSR Filing. The Sellers and Purchaser shall file, if required, or cause to be
filed with the Federal Trade Commission and the United States Department of Justice any
notifications required to be filed under the HSR Act and the rules and regulations promulgated
thereunder with respect to the Transactions. The Sellers and Purchaser shall jointly consult as to
the appropriate time of filing such notifications and shall use their best efforts to make such
filings at the agreed upon time, to respond promptly to any requests for additional information
made by either of such agencies, and to cause the waiting periods under the HSR Act to terminate or
expire at the earliest possible date after the date of filing. All filing fees shall be shared
equally by Purchaser on the one hand, and Sellers, on the other hand.

     Section 4.3 Access to Information. Between the date of this Agreement and the Closing Date,
each Seller and Company will, during normal business hours, (i) give the Purchaser and its
authorized representatives reasonable access to the facilities and Properties and all books,
records, offices and other facilities and properties of such Company, (ii) permit Purchaser to make
such inspections thereof as Purchaser may reasonably request, including the performance of sampling
and testing of facilities, soils and other substances, (iii) give the Purchaser the opportunity to
discuss the business of the Companies with such officers, directors, accountants, consultants and
counsel of the Companies as the Purchaser deems reasonably necessary or appropriate for the purpose
of familiarizing itself with the Companies and Properties and (iv) cause its employees to furnish
Purchaser with such financial and operating data and other information with respect to the business
and properties of such Company as

35

 

Purchaser may from time to time reasonably request; provided, however, that
any such investigation shall be conducted in such a manner as not to interfere unreasonably with
the operation of the business of such Company. Except for the representations and warranties
contained in this Agreement, each Seller and each Company makes no warranty or representation of
any kind as to the books and records or any information contained therein or the completeness
thereof. Purchaser agrees that any conclusions drawn from the books and records shall be the
result of its own independent review and judgment. From the Closing Date for a period of three (3)
years thereafter, Purchaser will provide Sellers with reasonable access during regular business
hours to inspect and/or copy all books, records, operating data and other information generated or
obtained by the Companies prior to the Closing Date and pertaining to the operation of the
Companies, as may be reasonably necessary for the Sellers to conduct or tend to their business
affairs.

     Section 4.4 Cooperation in Connection with Regulatory Filings. From and after the date
hereof, Sellers shall, and shall cause the Companies and their respective Affiliates and advisors
and representatives to, provide reasonable cooperation, at Purchaser’s expense, to Purchaser, its
Affiliates and their representatives in connection with any regulatory filings, tax filings, other
filings with any Governmental Authority and filings that may be required by the Securities and
Exchange Commission (the “SEC”), including the filing by Purchaser with the SEC of one or more
registration statements to register any securities of Purchaser under the Securities Act of 1933
(the “Securities Act”) or of any report required to be filed by Purchaser under the Securities
Exchange Act of 1934 (the “Exchange Act”, and together with the Securities Act, the “Securities
Laws”) (collectively, the “Filings”). Further, from and after the date hereof, the Sellers agree
to make available to Purchaser and its Affiliates and their representatives any and all books,
records, information and documents that are related to the Companies and are in Sellers’ or their
Affiliates’ possession reasonably required by Purchaser, its Affiliates and their representatives
in order to prepare for Purchaser or its Affiliates, if required, in connection with such Filings,
financial statements of the Companies meeting the requirements of Regulation S-X under the
Securities Act, along with any documentation attributable to the Companies required to complete any
audit associated with such financial statements. Without limiting the generality of the foregoing,
Sellers shall, and shall cause their employees, consultants and Affiliates to, use their respective
commercially reasonable efforts to cooperate with the independent auditors chosen by Purchaser
(“Purchaser’s Auditor”) in connection with any audit by Purchaser’s Auditor of any financial
statements, balance sheet and statement of cash flows of the Companies that Purchaser requires to
comply with the requirements of the Securities Laws with respect to any Filings. Purchaser shall
reimburse Sellers and/or the Companies for all costs incurred by any of them in assisting
Purchaser, its representatives and Purchaser’s Auditor.

     Section 4.5 Consent from Third Parties. Each Seller and each Company will use their
respective commercially reasonable efforts to acquire the written consent from all third parties to
Contracts with respect to which the consummation of the Transactions or the compliance with this
Agreement, could reasonably be expected to result in, or cause a default, or constitute an event of
default (or an event which the giving of notice or the passage of time could cause a default or
event of default), or otherwise cause any Company to be in breach of, or unable to perform under,
such Contracts, or grant any other party thereto the right to modify or terminate such Contract or
the performance of any Company thereunder. Each Seller and each Company shall use commercially
reasonable efforts to obtain the consent from all relevant Persons to allow the Purchaser and its
representatives to review all Contracts with respect to which the consummation of the Transactions
or the compliance with this Agreement, could reasonably be expected to result in, or cause a
default, or constitute an event of default (or an event which the giving of notice or the passage
of time could cause a default or event of default), or otherwise cause such Company to be in breach
of, or unable to perform under, such Contracts, or grant any other party thereto the right to
modify or terminate such Contract, or alter the conduct of business thereunder by the parties prior
to the date of this Agreement. Each Seller and Company shall cooperate with the Purchaser, and
vice versa, in the execution and filing of all notices, forms and agreements as may be

36

 

necessary to obtain any consent or approvals of any Governmental Authority that may be
necessary or appropriate to effectuate the Transactions, including any consents or approvals
relating to any permits, licenses or registrations held by the Companies or required for the
operation of the Properties. Purchaser agrees to use commercially reasonable efforts to assist
Sellers to obtain any such consents to the extent reasonably requested by Sellers or Companies.

     Section 4.6 Further Assurances. Subject to the terms and conditions of this Agreement, each
of the parties hereto will use all commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things reasonably necessary, proper or advisable,
under applicable laws and regulations to fulfill its obligations under this Agreement and to
consummate and make effective the transactions.

     Section 4.7 Public Announcements. Prior to Closing, Sellers and Purchaser will consult with
each other before issuing any press release or otherwise making any written statements with respect
to this Agreement and the Transactions, and neither Sellers, the Companies nor Purchaser shall
issue any such press release or make any such written public statement without the prior consent of
the other parties, which consent shall not be unreasonably withheld; provided,
however, that Purchaser may make any public disclosure required by applicable law or stock
exchange rule (in which case Purchaser shall use reasonable efforts to advise Sellers and give
Sellers an opportunity to comment on the proposed disclosure prior to making the disclosure).

     Section 4.8 Resignations; Releases. Each of the Persons identified as officers of the
Companies on Schedule 4.8 shall tender to Henry Petroleum prior to the Closing Date written
resignations from such positions and their employment with the Companies as of the Closing Date,
together with a release of all claims against the Companies and the Purchaser in a form reasonably
satisfactory to Purchaser. In addition, the Sellers and the Companies shall use reasonable best
efforts to obtain from the Persons identified as employees of the Companies on Schedule 4.8
prior to the Closing Date written resignations of their employment with the Companies as of the
Closing Date, together with a release of all claims against the Companies and the Purchaser in a
form reasonably satisfactory to Purchaser. Sellers acknowledge that certain of their Affiliates
intend to employ the Persons identified on Schedule 4.8 and, in connection with their
employment by one or more of such Affiliates, to offer such Persons a bonus arrangement
substantially similar to the Cash Bonus described in Section 2.3. In the event that a Person
identified on Schedule 4.8 refuses to execute and deliver to Henry Petroleum the release
contemplated by this Section 4.8, Sellers agree not to offer such bonus arrangement to such
Persons. Sellers and the Companies also agree to use reasonable best efforts to obtain (i) from
each of the employees who is intended to receive a Cash Bonus, an executed and delivered Employee
Letter Agreement prior to the Closing Date and (ii) from each of the independent contractors
identified in the Compensation Letter, an executed and delivered release contemplated by Section
2.3 prior to the Closing Date. It is the intention of the parties that the resignation of the
employees pursuant to Section 4.8 will not adversely affect such employees with regard to obtaining
the benefits of vesting in Plans (including permitted actions under Section 4.1(b)) that would have
occurred if such employees had remained employed by the Companies immediately after Closing, and
the parties agree to take such actions as are reasonably necessary to cause such vesting to occur.

     Section 4.9 Name Change. Purchaser agrees to transfer and assign or permit Henry Petroleum to
transfer and assign the Henry Petroleum logo trademark to Sellers at Closing, including all
registrations listed on Schedule 4.9. Sellers agree to grant a limited license to use the
Henry logo and trademark to Purchaser until December 1, 2008; provided, however,
that such limited license shall continue beyond December 1, 2008 solely to allow Purchaser to use
the Henry logo and trademark on all signs in existence in field operations at the time of Closing
until March 31, 2009, by which time Purchaser shall have replaced all signs that use the “Henry”
name. Purchaser agrees to transfer all

37

 

operations and permits in the Companies to Purchaser’s name no later than December 1, 2008.
Purchaser agrees to change the legal name of Henry Petroleum LP by December 31, 2008 to another
name not including the name “Henry” and to coordinate that name change with Sellers so that they
may file a Certificate of Formation for an entity using that name. By March 31, 2009, Purchaser
will stop all use of the “Henry” name in any public form or fashion other than in the context of
reporting Purchaser’s historical results of operations or otherwise describing this Transaction.
All other Companies names will be changed to entity names that do not include the “Henry” name no
later than March 31, 2009.

     Section 4.10 Employment Matters. Purchaser agrees that, for a period of two years following
the Closing Date, it or one of its Affiliates (including the Companies) will offer to continue the
employment of each Retained Employee in the same city of their employment as of immediately prior
to the date of this Agreement at a position performing generally similar work activities and job
function. The parties acknowledge that the overall job responsibilities of a Retained Employee may
be adjusted from time to time during such two year period based upon the organizational and
operating structure of Purchaser and its Affiliates and based upon the overall job performance and
capabilities of the Retained Employee. Notwithstanding the foregoing, Purchaser or one of its
Affiliates shall have the right during such two-year period to terminate the employment of any
Retained Employee. In the event that Purchaser or one of its Affiliates terminates the employment
of a Retained Employee during the two-year period following the Closing Date for any reason other
than for cause (as such term is defined in the Employee Letter Agreement), Purchaser agrees (i) to
pay to such terminated Retained Employee, in a lump-sum payment (less applicable withholding taxes
and subject to any deferral of the time of payment necessary to satisfy the requirements of Section
409(a)(2)(B)(i) of the Code), (A) the amount of the base salary or wages, if any, that would have
otherwise been owed to such Retained Employee from the date of termination of employment until the
second anniversary of the Closing Date and (B) any portion of the Cash Bonus that has not yet been
paid and (ii) to provide, from the date of termination until the second anniversary of the Closing
Date, such terminated Retained Employee with medical benefits consistent with those provided to
similarly situated employees of Purchaser and its Affiliates who have not terminated employment.
In the event that the employment of a Retained Employee is terminated due to death or disability
(as such term is defined in the Employee Letter Agreement), Purchaser agrees to pay to such
Retained Employee, in a lump-sum payment (less applicable withholding taxes and subject to any
deferral of the time of payment necessary to satisfy the requirements of Section 409(a)(2)(B)(i) of
the Code) any portion of the Cash Bonus that has not yet been paid. Each Retained Employee shall
be provided with substantially similar benefits afforded to similarly situated employees of
Purchaser and its Affiliates; provided, however, that in no event shall the base
salary or base wage, as applicable, of a Retained Employee be less than the base salary or base
wage, as applicable, of such Retained Employee in effect immediately prior to the date of this
Agreement, except to the extent of any salary reduction generally applicable to all employees of
Purchaser. Accrued and unused vacation and sick leave of each Retained Employee shall be honored
by Purchaser and all seniority and vesting earned by such Retained Employee prior to the Closing
Date and recognized by the Companies shall be credited by Purchaser to the extent applicable under
Purchaser’s employee benefit plans for eligibility and vesting purposes and for benefit
determination purposes under any applicable vacation, sick leave, or severance benefit program, and
Purchaser shall approve any amendments necessary of Purchaser’s employee benefit plans to give
effect to the foregoing.

     Section 4.11 Parachute Payments. The parties to this Agreement acknowledge that a portion of
the payments and benefits to be provided to certain employees and directors of the Companies in
connection with the Transactions may constitute “parachute payments” under Section 280G of the Code
unless shareholder approval of such payments is obtained in a manner that satisfies the
requirements of Section 280G(b)(5) of the Code. Notwithstanding anything to the contrary in this
Agreement, subject to the prior review and approval of Purchaser, Sellers shall cause the Companies
to seek such shareholder approval in such manner and the Companies may take any and all actions
reasonably necessary to secure

38

 

such approval. At least five days prior to the Closing Date, Sellers shall provide to
Purchaser an original, fully executed copy of all shareholder consents obtained pursuant to the
provisions of this Section 4.11.

     Section 4.12 Non-Competition; Non-Solicitation. Each Seller expressly covenants and agrees
that:

     (a) for a period of two years from and after the Closing Date, each Seller will not,
and will cause its Affiliates not to, directly or indirectly, solicit, own, or participate
in any of the Properties, but this restriction does not prohibit a Seller from acquiring
oil, gas and/or mineral leases, oil and gas leases, contracts, agreements and/or other
interests to explore for and/or develop Hydrocarbons in lands where Purchaser has allowed
Leases covering those lands or interests in lands or Properties to expire according to their
terms for any reason; and

     (b) for a period of two years from and after the date of this Agreement, each Seller
will not, and will cause its Affiliates not to, directly or indirectly, solicit or contact
with a view to the engagement or employment of any Retained Employee, but this restriction
specifically does not include (i) a prohibition on a Seller hiring a Retained Employee who
independently responds to a general advertisement for employment without the Seller having
directly or indirectly solicited this response, (ii) a prohibition on a Seller directly
soliciting or hiring the Retained Employee who has a brother who is expected to be employed
by Seller or one of its Affiliates immediately after the Closing, or (iii) a prohibition on
a Seller from soliciting or hiring a Retained Employee who at the time he is solicited and
hired by Seller is employed by a Person other than Purchaser or its Affiliates.

     (c) Other than the specific restrictions contained in clauses (a) and (b) above, each
Seller shall have no other express or implied limitations as to competition with the
Purchaser from and after the date of this Agreement.

     (d) In the event any Seller breaches Section 4.12(a) of this Agreement, Purchaser shall
have the right, which right shall be exercisable for a period of 30 months from and after
the Closing Date, to cause Seller or its Affiliate to sell, transfer and assign to Purchaser
the interest in the Property that was acquired by Seller or its Affiliate in violation of
Section 4.12(a) at a price equal to (i) the price paid by such Seller or its Affiliate for
such interest in the Property, (ii) plus, any capital expenditures made by such Seller or
its Affiliate with respect to such interest in such Property, and (iii) minus, any revenues
(net of normal operating expenses) received by such Seller or its Affiliate from such
interest in such Property.

     Section 4.13 Tax Matters.

     (a) Other than the 2008 Short Period Consolidated Tax Returns, Sellers shall prepare or
cause to be prepared any and all Tax Returns for a member or members of the Company Group
covering a Tax period ending on or before the Closing Date. Not later than 30 days prior to
the due date (including extensions) or proposed date of filing (if earlier) of each such Tax
Return, Sellers shall deliver a copy of such Tax Return to Purchaser for its review and
comment. Sellers shall make any changes to each such Tax Return reasonably requested by
Purchaser, with any disputes resolved by a mutually acceptable, nationally recognized,
independent accounting firm, and shall deliver a final draft of such Tax Return to Purchaser
prior to the due date for filing such Tax Return. To the extent any member of the Company
Group is required to execute and/or file any such Tax Return after the Closing Date,
Purchaser shall cause such Tax Return (reflecting all agreed or finally determined changes)
to be filed upon receipt thereof. All such Tax Returns shall

39

 

be prepared on a basis consistent with past practice except to the extent otherwise
required by applicable law.

     (b) Purchaser shall prepare the 2008 Short Period Consolidated Tax Returns and any Tax
Returns due for or with respect to a member or members of the Company Group for a Tax period
that includes but does not end on the Closing Date. Not later than 30 days prior to the due
date (including extensions) or proposed date of filing (if earlier) of each such Tax Return,
Purchaser shall deliver a copy of such Tax Return to Sellers for its review and comment.
Purchaser shall make any changes to each such Tax Return reasonably requested by Sellers to
the extent such changes would affect the amount of Taxes for which Sellers are responsible
pursuant to Section 4.13(c), with any disputes resolved by a mutually acceptable, nationally
recognized, independent accounting firm, and shall deliver a final draft of such Tax Return
to Sellers prior to the due date for filing such Tax Return. All such Tax Returns shall be
prepared on a basis consistent with past practice except to the extent otherwise required by
applicable law.

     (c) With respect to any Taxes due from Purchaser or its Affiliates (including a member
or members of the Company Group after the Closing Date) (i) for a Tax period ending on or
before December 31, 2007 (including for this purpose any such period for which the income,
receipts or other base of Tax is measured even if the right to do business for a different
period is secured by reason of such payment of Taxes), or (ii) as a result of (A) the
transactions contemplated by Section 2.8 (to the extent the amount of such Taxes exceeds 36%
of the value of the properties and assets set forth on Schedule 2.8(a)), (B) the
transactions contemplated by Section 2.9, (C) any breach of the representations or
obligations set forth in Section 3.1(m), (D) any breach of the representations or
obligations set forth in Section 4.1 (including, solely for this purpose, Taxes resulting
from transactions occurring at any time from January 1, 2008 through the Closing Date that
would be in breach of such covenant but for the fact they occur prior to the date hereof) or
(E) any breach of the representations or obligations set forth in Section 4.11, Sellers
shall pay the amount of such Taxes (as set forth on the applicable agreed or finally
determined Tax Returns relating thereto or as otherwise agreed by the parties or finally
determined by a mutually acceptable, nationally recognized, independent accounting firm) to
Purchaser on or before 10 days prior to the due date therefor, and shall otherwise agree
promptly to reimburse Purchaser and its Affiliates for their costs to the extent they are
later obligated to pay such Taxes.

     (d) In the event the 2008 Short Period Consolidated Tax Return reflects a net operating
loss for U.S. federal income tax purposes, the parties acknowledge and agree that Purchaser
shall be entitled to prepare and cause to be filed an amended return for the Holding
Consolidated Group for a prior year or years claiming a refund of Taxes resulting from the
carryback of such net operating loss and, as between Purchaser and Sellers, Purchaser shall
be entitled to receive and retain any refund or other Tax benefit obtained as a result of
such carryback notwithstanding any subsequent adjustments pursuant to any audit of the Tax
Returns for such prior years. Purchaser shall not and shall cause its Affiliates not to
(in each case without the prior consent of Sellers and except as required by applicable Law)
amend any Tax Return, or waive or extend any statute of limitations for a Tax period ending
on or before or including the Closing Date, if such amendment, waiver, or extension would
increase the amount of Taxes payable by any Seller or any member or members of the Company
Group for which Sellers are obligated to reimburse Purchaser hereunder.

     (e) Sellers and Purchaser shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns, any audit,
litigation or other proceeding with respect to Taxes and Tax Returns. Such cooperation
shall include the

40

 

retention and (upon the other party’s request) the provision of records and information
that are reasonably relevant to any such audit or proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation of any
material provided hereunder; provided, however, the party requesting
assistance shall pay the reasonable out-of-pocket expenses incurred by the party providing
such assistance; provided, further, no party shall be required to provide
assistance at times or in amounts that would interfere unreasonably with the business and
operations of such party. Sellers and Purchaser further agree, upon request, to use
commercially reasonable efforts to obtain any certificate or other document from any
Governmental Authority or any other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed on any member of the Company Group (including with
respect to the Transactions). Sellers and Purchaser further agree, upon request, to provide
the other party with all information regarding the members of the Company Group that either
party is required to report to any Governmental Authority.

     (f) With respect to any Company Group member that is classified as a partnership for
U.S. federal income tax purposes, Sellers and Purchaser agree, for U.S. federal income tax
purposes, to treat Purchaser’s purchase of the Shares of such entity in a manner consistent
with the holding in Situation 2 of Revenue Ruling 99-6, 1999-1 C.B. 432. Specifically, such
acquisition will be treated (1) by Seller as if it had sold its Shares in such entity to
Purchaser and (2) by Purchaser as if it had purchased the assets of such entity.

     (g) Within 30 days after the Closing Date, Purchaser and Sellers shall use commercially
reasonable efforts to prepare a schedule (the “Allocation Schedule”) allocating the Purchase
Price and other consideration paid for the Shares, as adjusted pursuant to the terms of this
Agreement and taking into account such further adjustments as required for applicable Tax
purposes, among the Shares and further among the assets of any member of the Company Group
treated as a partnership for U.S. federal income tax purposes in accordance with Section 751
and the requirements of Treasury Regulation § 1.1060-1, as applicable. If the parties are
able to agree on such allocation within such time period, the parties shall report and file
all Tax Returns consistent with the Allocation Schedule and shall take no Tax position
contrary thereto or inconsistent therewith (including in any audits or examinations by any
Governmental Authority).

     (h) Within 90 days after the Closing Date, Sellers shall determine the amount of any
additional Taxes due from Sellers in the event of an election under Section 338(h)(10) of
the Code with respect to Purchaser’s acquisition of Aguasal and shall notify Purchaser of
such amount. Within 30 days thereafter, Purchaser shall notify Sellers whether it desires
for an election under Section 338(h)(10) of the Code to be made with respect to its
acquisition of Aguasal, and if so, shall pay to Sellers an amount equal to the amount of
such additional Taxes as determined pursuant to the preceding sentence. Failing such
notification by the 120th day after the Closing Date, no such election shall be made with
respect to such acquisition and Purchaser shall destroy the Section 338(h)(10) Election
Forms received from Sellers at Closing.

     (i) The parties agree that the Purchase Price is inclusive of all applicable sales or
use Taxes applicable to the purchase and sale of the Shares, and any other transfer gross
receipts, registration, and similar Taxes (including real estate transfer Taxes)
(collectively, “Transfer Taxes”), if any, that are payable by any party hereto or any member
of the Company Group arising out of or in connection with the consummation of the
transactions contemplated by this Agreement shall be borne 50% by Sellers and 50% by
Purchaser.

41

 

     Section 4.14 No Solicitation of Transactions.

     (a) At any time subsequent to the date of, and prior to termination of this Agreement
under Article VI, the Sellers and Companies shall not, directly or indirectly,
through any officer, director, agent or employee of, or any investment banker, financial
advisor, attorney, accountant or other representative retained by, the Sellers, Companies or
any of their respective Affiliates (each a “Seller Representative”) (i) solicit, initiate,
seek or encourage (including by way of furnishing information or assistance) or take other
action to facilitate any inquiries or the submission of any proposal which constitutes or
may reasonably be expected to lead to, an Acquisition Proposal from any Person other than
the Purchaser (a “Third Party”), or (ii) engage in any discussions or negotiations relating
thereto or in furtherance thereof or accept any Acquisition Proposal. Any Seller or Company
shall immediately communicate to the Purchaser the material terms of any written proposal
(and the identity of the Person making such proposal) which it may receive, and such Seller
or Company shall promptly deliver a copy of such proposal to the Purchaser. The Sellers and
Companies agree not to release any Third Party from, or waive any provision of, any
confidentiality agreement to which any Company is a party.

     (b) Upon execution by the Sellers and Companies of this Agreement, each Seller
Representative will terminate any solicitations, encouragement, activities, discussions and
negotiations with any Person other than the Purchaser conducted heretofore by the Sellers,
Companies or any Seller Representative with respect to any Acquisition Proposal until the
earlier of Closing or termination of this Agreement pursuant to Article VI.

     Section 4.15 Notification of Certain Matters. The Sellers, the Companies and the Purchaser
shall each give prompt written notice to the other of (a) the occurrence, or failure to occur, of
and shall provide accurate and complete copies of any and all information relating to, any event of
which it becomes aware that has caused or that would be likely to cause any representation or
warranty of such party contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing, and (b) the failure of such, or any
officer, director, employee, or agent of such party, to comply with or satisfy in any material
respect any covenant, condition, or agreement to be complied with or satisfied by it hereunder. A
notifying party under this Section 4.15 shall use all commercially reasonable efforts to cure,
before the Closing, any occurrence of (a) or (b) in the proceeding sentence. No such notification
shall affect the representations or warranties of the parties or the conditions to their respective
obligations hereunder.

     Section 4.16 Confidentiality. Sellers agree that until March 31, 2010, any facts,
information, know-how, processes, trade secrets, customer lists or confidential matters that relate
in any way to the Properties or the Companies shall be maintained in confidence and shall not be
divulged by the Sellers or their respective Affiliates to any party unless and until they shall
become public knowledge (other than by disclosure in breach of this Section 4.16) or as required by
applicable Laws, including applicable securities laws and regulations; provided, before any
Sellers or any of their respective Affiliates discloses any of the foregoing as may be required by
applicable Laws, such Person shall give the Purchaser reasonable advance notice to the extent
practicable and give Purchaser an opportunity to take such reasonable actions to minimize the
required disclosure. In the event this Agreement is terminated for any reason, the parties hereto
acknowledge and agree that the Confidentiality Agreement shall remain in full force and effect in
accordance with its terms. For purposes of clarity, Purchaser acknowledges that any environmental
reports or analysis conducted by Purchaser on the Properties between the date of this Agreement and
the Closing or termination of this Agreement shall constitute “Confidential Information” for
purposes of the Confidentiality Agreement and Purchaser shall convey any environmental reports to
Sellers promptly following termination, and shall convey any other due diligence materials that
constitute

42

 

Confidential Information to the Sellers upon request, in each case in the event that this
Agreement is terminated pursuant to Article VI.

     Section 4.17 Releases and Termination. At the Closing, each of the Sellers and the Companies
will execute mutual releases from any and all obligations (including indemnification obligations)
and Claims, known and unknown, that have accrued or may accrue and that relate to acts or omissions
prior to the Closing Date, including any and all damages, whether such obligations, Claims or
damages arise in tort, contract or statute, including obligations, Claims or damages (a) arising
under each Company’s Organizational Documents and (b) relating to actions or omissions of any
Company or any Seller, or any acts or omissions of the managers, directors, shareholders, officers
or members (former or present) including those committed while serving in their capacity as
managers, shareholders, directors, officers, members, employees or similar capacities of any
Company, and including in each case any and all Claims which such Seller does not know or suspect
to exist in his, her or its favor as of the date hereof or as of the Closing or any Claims that a
Company may have against a Seller. Notwithstanding anything herein to the contrary, nothing in
this Section 4.17 or the release contemplated herein shall limit in any way the right of Purchaser
or any Purchaser Indemnified Party to enforce this Agreement or seek damages permitted by this
Agreement, including the right to indemnification contemplated by Article VII or any right
of the Sellers to seek indemnification under Article VII. Effective upon the Closing, each
Seller waives any preemptive rights that he may have, or ever had, with respect to any interest in
the Companies and waives any right such Seller may have under the Companies’ Organizational
Documents or otherwise to acquire any interest in the Companies being transferred pursuant to, or
as contemplated by, this Agreement or any transfer that occurred prior to the date hereof. THE
RELEASES WILL APPLY TO ALL CLAIMS, AND THE SELLERS AND THE COMPANIES WILL AGREE TO WAIVE THE
BENEFITS OF ANY LAW (INCLUDING PRINCIPLES OF COMMON LAW) OF ANY STATE OR TERRITORY OR OTHER
JURISDICTION OF THE UNITED STATES OR OF ANY JURISDICTION OUTSIDE OF THE UNITED STATES THAT PROVIDES
THAT A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN SUCH PARTY’S FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY SUCH PARTY MUST
HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

     Section 4.18 Identity of Purchaser. Sellers are contracting for the sale of the Shares to
Purchaser, a Delaware corporation. Therefore, Purchaser covenants and agrees that it will not
assign this Agreement to any Affiliate or Subsidiary or permit any Affiliate or Subsidiary to pay
the Purchase Price to Sellers unless such Affiliate or Subsidiary is a corporation or limited
liability company not organized under the laws of the State of Texas.

     Section 4.19 Representations and Warranties of Sellers. Purchaser and the Sellers acknowledge
and agree that:

     (a) OTHER THAN THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN SECTION 3.1,
SELLERS EXPRESSLY DISCLAIM AND MAKE NO WARRANTY OR REPRESENTATION, EXPRESS, STATUTORY, OR
IMPLIED, AS TO (i) THE ACCURACY, COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION, OR
RECORDS FURNISHED TO PURCHASER IN CONNECTION WITH THE PROPERTIES OR THE COMPANIES; (ii) THE
PRESENCE, QUALITY, AND QUANTITY OF HYDROCARBON RESERVES (IF ANY) ATTRIBUTABLE TO THE
PROPERTIES; (iii) THE ABILITY OF THE PROPERTIES TO PRODUCE HYDROCARBONS, INCLUDING
PRODUCTION RATES, DECLINE RATES, AND RECOMPLETION OPPORTUNITIES; (iv) THE PRESENT OR FUTURE
VALUE OF THE ANTICIPATED INCOME, COSTS, OR PROFITS, IF ANY, TO BE DERIVED FROM THE

43

 

PROPERTIES, (v) UPON CLOSING, TITLE TO THE PROPERTIES; (vi) UPON CLOSING, THE
ENVIRONMENTAL CONDITION OF THE PROPERTIES; (vii) ANY PROJECTIONS AS TO EVENTS THAT COULD OR
COULD NOT OCCUR, AND (viii) ANY OTHER MATTERS CONTAINED IN OR OMITTED FROM ANY INFORMATION
OR MATERIAL FURNISHED TO PURCHASER BY SELLERS OR COMPANIES.

     (b) OTHER THAN THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN SECTION 3.1:
(i) SELLERS EXPRESSLY DISCLAIM ANY WARRANTY, WHETHER EXPRESS OR IMPLIED, AND WHETHER BY
COMMON LAW, STATUTE OR OTHERWISE, AS TO THE OPERATING CONDITION, MERCHANTABILITY, FITNESS
FOR ANY PURPOSE, CONDITION OR OTHERWISE OF THE PROPERTIES; (ii) ALL WELLS, MACHINERY,
EQUIPMENT AND FACILITIES ON THE PROPERTIES AND APPURTENANT THERETO, ARE BEING CONVEYED BY
SELLERS AND COMPANIES AND EXPRESSLY ACCEPTED BY PURCHASER UPON THE CLOSING “AS IS” “WHERE
IS” AND “WITH ALL FAULTS AND WITHOUT WARRANTY”; AND (iii) SELLER DOES NOT WARRANT THE
PROPERTIES TO BE FREE FROM DEFECTS, LATENT OR APPARENT, AND UPON THE CLOSING PURCHASER
EXPRESSLY AND SPECIFICALLY WAIVES ANY CLAIM FOR A REDUCTION OR ADJUSTMENT IN THE PURCHASE
PRICE BASED UPON CONDITION OR MERCHANTABILITY OF THE PROPERTIES. THE FOREGOING WAIVER OF
WARRANTY, SUBJECT TO THE LIMITATIONS DESCRIBED ABOVE, EXTENDS TO ALL DEFECTS, EVEN IF THE
DEFECT OR DEFECTS RENDER THE PROPERTIES ABSOLUTELY USELESS OR SO INCONVENIENT OR IMPERFECT
THAT PURCHASER WOULD NOT HAVE CONSUMMATED THIS TRANSACTION HAD PURCHASER KNOWN OF THE
DEFECT(S).

     (c) PURCHASER ACKNOWLEDGES THAT IN MAKING THE DECISION TO ENTER INTO THIS AGREEMENT AND
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY, PURCHASER HAS RELIED SOLELY ON (A) THE
EXPRESS REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS AND COMPANIES IN THIS
AGREEMENT, (B) PURCHASER’S OWN INDEPENDENT DUE DILIGENCE INVESTIGATION OF THE PROPERTIES AND
THE COMPANIES, (C) ITS OWN EXPERTISE AND JUDGMENT AND THE ADVICE AND COUNSEL OF ITS OWN
LEGAL, TAX, ECONOMIC, ENVIRONMENTAL, ENGINEERING, GEOLOGICAL AND GEOPHYSICAL AND OTHER
ADVISORS AND CONSULTANTS (AND NOT ON ANY COMMENTS OR STATEMENTS OF SELLERS OR COMPANIES OR
ANY REPRESENTATIVES OF, OR CONSULTANTS OR ADVISORS ENGAGED BY, SELLERS OR COMPANIES EXCEPT
WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES OF THE SELLERS SET FORTH IN THIS
AGREEMENT), AND (D) PURCHASER’S OWN DETERMINATION BASED ON ITS DUE DILIGENCE INVESTIGATION
OF THE PROPERTIES THAT, UPON THE CLOSING, IT WILL BE FULLY SATISFIED WITH THE CONDITION OF
THE PROPERTIES AS PROVIDED IN THIS AGREEMENT. SELLERS, COMPANIES AND PURCHASER ACKNOWLEDGE
AND AGREE THAT THE PURCHASE PRICE WAS NEGOTIATED AND AGREED UPON AFTER CONSIDERATION OF THIS
DISCLAIMER AND WAIVER OF WARRANTY.

     Section 4.20 Transition Agreement. From and after the date of this Agreement, Sellers and
Purchaser agree to negotiate in good faith with respect to a Transition Agreement. The Transition
Agreement shall allow the Companies to lease office space after the Closing in the building located
at 3525 Andrews Highway, Midland, Texas and shall also afford the Companies use of the furniture,
equipment, computers and telephone systems at such location until December 1, 2008, as well as the
use

44

 

of the Henry logo and trademark and related intellectual property rights, until March 31, 2009
in accordance with Section 4.9.

ARTICLE V

THE CLOSING

     Section 5.1 The Closing. The closing of the Transactions herein contemplated (“Closing”)
shall be held at the offices of Vinson & Elkins L.L.P. located at 1001 Fannin Street, Suite 2500,
Houston, Texas 77002, at 10:00 a.m. (Central Time) on July 30, 2008, subject to extension in
accordance with Section 2.6(b), or at such other time and place as the Purchaser and the Sellers
agree that the conditions to Closing have been satisfied or waived (“Closing Date”).

     Section 5.2 Purchaser’s Conditions to Closing. The obligations of Purchaser required to be
performed by it at the Closing shall be subject to the satisfaction, at or prior to the Closing, of
each of the following conditions, each of which may be waived by Purchaser, except as otherwise
provided by law:

     (a) Representations and Warranties, Agreements and Covenants.

     (i) (A) The representations and warranties of each Company and each Seller
contained in this Agreement or in any Schedule delivered pursuant to the provisions
of this Agreement (other than the representations and warranties set forth in
Sections 3.1(a), 3.1(b), 3.1(c), 3.1(d), 3.1(e), 3.1(f), 3.1(g), 3.1(o)(ii), 3.1(v)
and 3.1(ee), Section 3.1(i) (solely as it relates to compliance with Environmental
Laws) and Section 3.1(n) (solely as it relates to the relevant portion of any
actions, suits or proceedings, arbitrations or material disputes, claims or
investigations arising under Environmental Laws) shall be true and correct in all
material respects (provided that any representation or warranty of each
Seller and each Company that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the Closing, as
though made at and as of the Closing, except for representations or warranties made
as of a specific date, which shall be true and correct in all material respects as
of such date; (B) the representations and warranties set forth in Sections 3.1(a),
3.1(b), 3.1(c), 3.1(d), 3.1(e), 3.1(f), 3.1(g) and 3.1(v) shall be true and correct
in all respects as of the date of this Agreement and as of the Closing, as though
made at and as of the Closing, except for representations or warranties made as of a
specific date, which shall be true and correct in all respects as of such date; and
(C) the Purchaser shall have received at the Closing a certificate signed by an
authorized representative of each of the Sellers to the foregoing effect.

     (ii) Each of the obligations of each Company and each Seller required by this
Agreement to be performed by it at or prior to the Closing shall have been duly
performed and complied with in all material respects as of the Closing, and the
Purchaser shall have received a certificate signed by an authorized representative
of each of the Sellers to the foregoing effect. Each of the deliveries required to
be made by each Company and each Seller at the Closing shall have been made.

     (b) Consents and Approvals. (i) All authorizations, consents, orders, or Approvals of,
or declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Authority or other Person necessary for the consummation of the Transactions
shall have been filed, occurred, or been obtained and (ii) the Purchaser shall have been
furnished with evidence reasonably satisfactory to it of the consent or approval of each
Person that is a party to a Material Contract and whose consent or approval shall be
required in order to permit, or

45

 

prevent a breach of such Contract or the creation of a right to terminate such Contract
upon, the consummation of the Transactions and such consent or approval shall be in the form
and substance reasonably satisfactory to the Purchaser. In addition, the Sellers shall have
obtained all required consents to provide, and shall have provided or made available, to
Purchaser true and complete copies of the Specified Contracts no less than fifteen (15)
business days prior to the Closing.

     (c) Legal Matters. No injunction, order or award restraining, enjoining or otherwise
prohibiting the consummation of the Transactions or granting damages in connections
therewith, shall have been issued and remain in force, and no suit, action or other
proceeding (excluding any such matter initiated by the Purchaser) shall be pending before
any Governmental Authority seeking to enjoin or restrain or otherwise prohibit the
consummation of the Transactions or recover damages from the Purchaser or any Company
resulting therefrom.

     (d) Material Damage; No Material Adverse Change; Etc. The businesses, operations,
assets or properties of each Company shall not have been materially adversely damaged as a
result of fire, explosion, earthquake, disaster, accident, labor dispute, flood, drought,
embargo, riot, activity of armed forces or act of God; and there shall not have occurred any
other materially adverse change in the businesses, operations, assets or properties of the
Companies since the date of this Agreement. Notwithstanding the foregoing, in no event
shall the following events constitute a material adverse change or a material adverse damage
to the Companies for purposes of the preceding sentence: (A) any change or effect resulting
from changes in general economic conditions in the United States; or (B) any change in
commodity prices that affects the oil and gas exploration and development industry
generally.

     (e) Release of Liability. The Sellers and the Companies shall have executed and
delivered the releases contemplated by Section 4.17, in form and substance reasonably
satisfactory to Purchaser.

     (f) Closing Deliveries. All documents, instruments, reports, certificates or other
items required to be delivered by the Sellers and others pursuant to Section 5.4 shall have
been delivered.

     Section 5.3 Sellers’ Obligations to Closing. The obligations of the Sellers required to be
performed by them at the Closing shall be subject to the satisfaction, at or prior to the Closing,
of each of the following conditions, each of which may be waived by Sellers except as otherwise
provided by law:

     (a) Representations and Warranties, Agreements and Covenants. The representations and
warranties of Purchaser contained in this Agreement shall be true and correct as of the
Closing as though made at and as of the Closing except for representations or warranties
made as of a specific date, which shall be true and correct as of such date. Each of the
obligations of Purchaser required by this Agreement to be performed by it at or prior to the
Closing shall have been duly performed and complied with in all material respects as of the
Closing. Each of the deliveries required to be made by Purchaser at the Closing shall have
been made by Purchaser. At the Closing, the Sellers shall receive a certificate of an
officer of Purchaser, dated the Closing Date, to the effect that the conditions set forth in
this subsection (a) have been satisfied.

     (b) Legal Matters. No injunction, order or award restraining, enjoining or otherwise
prohibiting the consummation of the Transactions or granting damages in connections
therewith, shall have been issued and remain in force, and no suit, action or other
proceeding (excluding any

46

 

such matter initiated by any Seller) shall be pending before any Governmental Authority
seeking to enjoin or restrain or otherwise prohibit the consummation of the Transactions or
recover damages from the Sellers resulting therefrom.

     (c) Funding of Bonus Payments. Purchaser shall have sufficient funds available and, to
the extent necessary, shall be prepared to fund Henry Petroleum with the amounts necessary
to pay the Prior Bonus, the First Bonus Installment and the Contractor Bonus to the extent
required pursuant to Section 2.3(d).

     (d) Closing of Along-side Interests. Purchaser shall have executed and delivered all
documents required to be delivered in connection with the closing of the purchase of the
Along-side Interests from the Designated Sellers as contemplated by Section 2.7, subject to,
and in accordance with, the purchase agreements governing such purchases (which purchase
agreements shall have been previously executed and delivered by the Purchaser and the
applicable Designated Seller thereunder and shall not have been previously terminated in
accordance with their terms), and Purchaser shall be prepared to, and shall have sufficient
funds to, fund the purchase price of such Along-side Interests to the applicable Designated
Seller.

     (e) Closing Deliveries. All documents, instruments, reports, certificates or other
items required to be delivered by Purchaser pursuant to Section 5.5 shall have been
delivered.

     Section 5.4 Sellers’ Delivery at Closing. At the Closing, the Sellers shall deliver:

     (a) a certificate or certificates or other written evidence representing the Shares
being sold by Seller, duly endorsed for transfer to Purchaser, or accompanied by assignments
separate from the certificate appropriately completed and executed for transfer to Purchaser
or other assignments of the Shares in such form as is reasonably acceptable to Purchaser;

     (b) a certificate of non-foreign status for each of James C. Henry, Paula Henry, Henry
Ltd., Henchild and FIG meeting the requirements of Treasury Regulation § 1.1445-2(b)(2), and
a properly completed Internal Revenue Service Form W-9 by each of those Persons;

     (c) properly executed Section 338(h)(10) Election Forms;

     (d) the resignations discussed in Section 4.8;

     (e) the assignment of the Henry Petroleum logo and trademark as required by Section
4.9;

     (f) a copy of the Transition Agreement executed by Sellers;

     (g) all original books and records of the Companies and all copies thereof, which shall
be deemed delivered pursuant to this Section 5.4 by being delivered to the principal office
of the Companies; and

     (h) copies of all Employee Letter Agreements and releases from independent contractors,
Henry Heirs, Ltd., J&M Petroleum, LLC, Jamie Mitros, Davlin LLC, James David Henry, JUSDY
LLC, Beverly Curci and Persons identified on Schedule 4.8 that have been executed
and delivered to Henry Petroleum as of the Closing Date.

     Section 5.5 Purchaser’s Delivery at Closing. At Closing, Purchaser shall deliver:

47

 

     (a) the wire transfers provided for in Section 2.2;

     (b) a copy of the Transition Agreement executed by Purchaser;

     (c) the assignment of the Henry Petroleum logo and trademark as required by Section
4.9;

     (d) the advance to Henry Petroleum to fund the Prior Bonus, the First Bonus Installment
and the Contractor Bonus to the extent required pursuant to Section 2.3(d); and

     (e) all of the necessary closing documents, including wire transfer payments, for the
purchase of the Along-side Interests from the Designated Sellers pursuant to Section 2.7.

ARTICLE VI

TERMINATION

     Section 6.1 Termination. This Agreement may be terminated at any time prior to the Closing:

     (a) by mutual written agreement of Purchaser and the Sellers;

     (b) by Purchaser if there has been a material breach by any Seller or any Company of
any representation, warranty or covenant contained in this Agreement which cannot be, or has
not been, cured within fifteen (15) days after written notice of such breach is given to
such Seller, provided that the right to effect such cure shall not extend beyond the
Termination Date and provided further that such breach relates to a
representation or warranty that survives Closing pursuant to Section 7.1;

     (c) by the Sellers if there has been a material breach by Purchaser of any
representation, warranty, or covenant contained in this Agreement which cannot be, or has
not been, cured within fifteen (15) days after written notice of such breach is given to
Purchaser, provided that the right to effect such cure shall not extend beyond the
Termination Date;

     (d) by Purchaser, if all conditions of Closing set forth in Section 5.2 of this
Agreement have not been satisfied or waived by the Termination Date, provided,
however, that Purchaser shall not be entitled to terminate this Agreement pursuant
to this paragraph (d) if it is in material violation of any of its representations,
warranties or covenants contained in this Agreement or such failure shall be due to the
failure of Purchaser to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by it prior to the Closing;

     (e) by the Sellers, if all conditions of Closing set forth in Section 5.3 of this
Agreement have not been satisfied or waived by the Termination Date, provided,
however, that the Sellers shall not be entitled to terminate this Agreement pursuant
to this paragraph (e) if any of them is in material violation of any of its representations,
warranties, or covenants contained in this Agreement or such failure shall be due to the
failure of any Seller to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by it prior to the Closing;

     (f) by any party hereto if any Governmental Authority shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or otherwise

48

 

prohibiting the Transactions and such order, decree, ruling or other action shall have
become final and nonappealable; or

     (g) by the Purchaser without penalty, damages or liquidated damages as provided for in
Section 2.6.

     Section 6.2 Effect of Termination. Upon termination of this Agreement pursuant to this
Article VI, this Agreement shall be void and of no effect except as to Section 4.16, and
shall result in no obligation of or liability to any party or their respective directors, officers,
managers, employees, agents or stockholders for damages, penalties or liquidated damages;
provided that: (1) if this Agreement is terminated as a result of an intentional breach of
any representation, warranty or covenant in this Agreement, the party who breached the
representation, warranty or covenant shall be liable to the other parties for actual damages,
including all costs and expenses incurred in connection with the preparation, negotiation,
execution and performance of this Agreement, and (2) if on the Closing Date all conditions to
Closing set forth in Section 5.2 are satisfied and (A) Purchaser fails to complete the Transactions
in violation of this Agreement or (B) Sellers terminate this Agreement pursuant to Section 6.1(e)
because the conditions set forth in Sections 5.3(a), (c), (d) and (e) have not been satisfied,
Purchaser agrees to pay as liquidated damages to Sellers and not as a penalty the amount of
$20,000,000.00 as compensation to Sellers for their losses as a result of Purchaser’s breach of
this Agreement, as the amount of damages suffered by Sellers in such circumstance would be
impossible to calculate (the “Reverse Break Fee”). In the event of the occurrence of the forgoing
clause (2), Sellers and Purchaser agree that the payment of the Reverse Break Fee by Purchaser
shall be the sole and exclusive remedy of Sellers for such breach, and Sellers shall not be
entitled to seek actual damages from Purchaser or seek specific performance to enforce this
Agreement against Purchaser. If any party hereto shall terminate this Agreement pursuant to the
provisions hereof, such termination shall be effected by notice to the other party specifying the
provision hereof pursuant to which such termination is made. In no event shall any party be
entitled to consequential damages, lost profits or special or punitive damages as a result of the
termination of this Agreement.

ARTICLE VII

SURVIVAL AND INDEMNIFICATION

     Section 7.1 Survival. Except as otherwise provided below, all representations and warranties
contained in this Agreement or in any Schedule delivered pursuant hereto, shall survive (and not be
affected in any respect by) the Closing until March 31, 2010. Notwithstanding the foregoing, (i)
the representations and warranties in Section 3.1(a), Section 3.1(b), Section 3.1(f), Section
3.1(m), Section 3.2(a) and Section 3.2(b) and the covenants contained in Section 4.13 shall survive
the Closing until the expiration of the applicable statute of limitations; and (ii) the
representations and warranties in Section 3.1(o)(ii), Section 3.1(ee), Section 3.1(i) (solely as it
relates to compliance with Environmental Laws) and Section 3.1(n) (solely as it relates to the
relevant portion of any actions, suits or proceedings, arbitrations or material disputes, claims or
investigations arising under Environmental Laws) (collectively, the “Terminating Representations”)
shall terminate and be of no further force and effect immediately following the Closing. All
covenants (other than those contained in Section 4.13, which shall survive until the expiration of
the applicable statute of limitations), agreements and other obligations will survive the Closing
for the periods stated therein.

     Section 7.2 Indemnification.

     (a) Each Seller agrees to indemnify and hold harmless, on a joint and several basis,
(except as to those matters that are particular to each Seller, which matters shall be on a
several, not joint, basis) Purchaser and its officers, directors, agents, employees and
affiliates

49

 

(collectively, a “Purchaser Indemnified Party”) from and against any and all losses,
costs, damages, expenses and liabilities of whatever nature or kind (including attorney’s
fees, litigation and court costs and costs to mitigate any damages in accordance with
Section 7.2(g)) (collectively, “Losses”) incurred by a Purchaser Indemnified Party and
resulting from, arising out of, or relating to any of the following described matters
(herein collectively referred to as the “Seller Indemnified Liabilities,” and individually
as a “Seller Indemnified Liability”):

     (i) any of the representations or warranties, other than the Terminating
Representations, made by any Seller contained in this Agreement not having been true
and correct as of the Closing Date (or as of the specified date in the case of
representations and warranties being made only as of a certain date);

     (ii) a breach of any covenant or obligation of a Seller in this Agreement;

     (iii) the Henry Holding Distribution and the Henry Energy Distribution
(excluding any Taxes that are incurred as a result of such transactions for which
Sellers are liable pursuant to Section 4.13) and the ownership or operation of the
Excluded Companies or their assets, whether arising before or after the Closing; and

     (iv) any long-term debt (including the current portion thereof) of the
Companies in existence as of the Closing.

     The parties hereto acknowledge that no Company will be responsible in any manner for
the indemnification obligations of the Sellers hereunder.

     (b) Purchaser agrees to indemnify and hold harmless each Seller and their respective
trustees, administrators, heirs, personal representatives, successors and assigns
(collectively, the “Seller Indemnified Party”) from and against any and all Losses incurred
by such Seller Indemnified Party, resulting from, arising out of, or relating to (i) any of
the representations or warranties made by Purchaser contained in this Agreement not having
been true and correct as of the Closing Date, (ii) a breach of any covenant or obligation of
Purchaser in this Agreement or (iii) any liability or obligation arising out of the
ownership or operation of the Companies or their assets or the Properties after the Closing
Date.

     (c) Notwithstanding the foregoing, (i) no claim may be made for indemnification
pursuant to Section 7.2(a)(i), 7.2(a)(ii), 7.2(b)(i) or 7.2(b)(ii), unless and until the
aggregate of all Losses of the Purchaser Indemnified Party pursuant to Sections 7.2(a)(i)
and 7.2(a)(ii), on the one hand, or the Seller Indemnified Party pursuant to Sections
7.2(b)(i) and 7.2(b)(ii), on the other hand, as the case may be, exceed $3,000,000.00 (the
“Indemnification Threshold Amount”), in which event the Purchaser Indemnified Party or the
Seller Indemnified Party, as the case may be, shall be entitled to seek indemnity for the
amount by which such Losses for which indemnification is provided hereunder exceed the
Indemnification Threshold Amount, and (ii) in no event shall the aggregate amount of Losses
for which the Seller Indemnified Party pursuant to Sections 7.2(b)(i) and 7.2(b)(ii), on the
one hand, or the Purchaser Indemnified Party pursuant to Sections 7.2(a)(i) and 7.2(a)(ii),
on the other hand, be entitled to indemnification exceed the amount of $20,000,000.00 (the
“Maximum Liability”). Notwithstanding the foregoing, (A) any Losses suffered by a Purchaser
Indemnified Party arising under Section 7.2(a)(i) as a result of a breach of the
representations and warranties set forth in Sections 3.1(a), 3.1(b) or 3.1(f), or any Losses
suffered by a Seller Indemnified Party arising under Section 7.2(b)(i) as a result of a
breach of the representations and warranties set forth in Sections 3.2(a) or 3.2(b), in each
case shall not be subject to the limitations imposed by the Indemnification Threshold Amount
or the

50

 

Maximum Liability, but in each case the Purchaser Indemnified Party and the Seller
Indemnified Party shall not recover damages in excess of the sum of the Purchase Price, (B)
any Losses suffered by a Purchaser Indemnified Party arising under Section 7.2(a)(ii) as a
result of a breach of the covenant set forth in Section 4.4 shall not be subject to the
limitations imposed by the Indemnification Threshold Amount so long as such Claim for
indemnification is made on or before December 31, 2008 and (C) any Losses suffered by a
Purchaser Indemnified Party arising under Section 7.2(a)(ii) as a result of a breach of the
covenants set forth in Section 4.13(c)(ii)(A) shall not be subject to the limitations
imposed by the Indemnification Threshold Amount or the Maximum Liability. Notwithstanding
anything herein to the contrary, in no event shall the foregoing limitations limit any
claims for indemnification under Section 7.2(a)(i), 7.2(a)(ii), 7.2(b)(i) or 7.2(b)(ii) in
the event of fraud or criminal intent by the indemnifying party, but in no event shall an
indemnified party be entitled to recover damages in excess of the Purchase Price. In no
event shall “Loss” or “Losses” under this Article VII include lost profits,
consequential or special or punitive damages or penalties unless the indemnified party has
become liable for such damages as a result of a third-party claim, in which case such
indemnified party may recover such damages from the indemnifying party as actual damages.

     (d) The amount of Losses for which an Indemnified Party is entitled to indemnification
shall be reduced by any insurance recoveries or other indemnities, contributions or similar
payments actually recovered from any third party as a result of the incurrence of such
Losses or the facts or circumstances giving rise thereto (including with respect to Losses
resulting from the split off of Summit Petroleum Management Corporation, f/k/a Team
Operating Corporation, any recoveries or reimbursements of Taxes under the agreement
governing such split off transaction).

     (e) All claims for indemnification under this Article VII shall be asserted and
resolved as follows:

     (i) In the event that any claim or demand for which the Sellers could be liable
to a Purchaser Indemnified Party hereunder is asserted against or sought to be
collected from a Purchaser Indemnified Party by a third party, the Purchaser
Indemnified Party shall promptly notify Agent of such claim or demand, specifying
the nature of such claim or demand and the amount or the estimated amount thereof to
the extent then feasible (which estimate shall not be conclusive of the final amount
of such claim or demand) (the “Claim Notice”); provided, however,
that any failure or delay in sending a Claim Notice shall not relieve the Sellers
from liability hereunder except to the extent the Sellers are materially prejudiced
by such failure or delay. The Sellers shall have 10 days from their receipt of the
Claim Notice (the “Notice Period”) to notify the Purchaser Indemnified Party (i)
whether or not they dispute their liability to the Purchaser Indemnified Party
hereunder with respect to such claim or demand and (ii) whether or not they desire,
at their sole cost and expense, to defend the Purchaser Indemnified Party against
such claim or demand. In the event that the Sellers notify the Purchaser
Indemnified Party within the Notice Period that they do not dispute their liability
to the Purchaser Indemnified Party hereunder and that they desire to defend the
Purchaser Indemnified Party against such claim or demand, except as hereinafter
provided, the Sellers shall have the right to defend the Purchaser Indemnified Party
by appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by them to a final conclusion in such a manner as to avoid any risk of
the Purchaser Indemnified Party becoming subject to liability for any other matter.
If a Purchaser Indemnified Party desires to participate in, but not control, any
such defense or settlement, it may do so at its sole cost and expense. Sellers
shall not settle or compromise any third-party claim or

51

 

demand without the prior written consent of the Purchaser Indemnified Party if
such settlement or compromise would restrict Purchaser or otherwise adversely affect
Purchaser in any way, which consent shall not be unreasonably withheld or delayed.
If, in the reasonable opinion of the Purchaser Indemnified Party, any such claim or
demand involves an issue or matter which could have a material adverse effect on the
business, operations, properties, assets or prospects of the Purchaser Indemnified
Party, such claim or demand seeks injunctive or other non-monetary relief against
such Purchaser Indemnified Party or such claim or demand is reasonably likely to
result in Losses for which Sellers may not be obligated to indemnify under this
Agreement (including if the amount of such Loss is reasonably likely to exceed the
Maximum Liability), the Purchaser Indemnified Party shall have the right to control
the defense or settlement of any such claim or demand; however, its costs
and expenses in so doing shall not be included as part of the indemnification
obligations of the Sellers hereunder. If the Purchaser Indemnified Party should
elect to exercise such right, the Sellers shall have the right to participate in,
but not control, the defense or settlement of such claim or demand at the sole cost
and expense of the Sellers. If the Sellers elect not to defend the Purchaser
Indemnified Party against such claim or demand, whether by not giving the Purchaser
Indemnified Party timely notice as provided above or otherwise, then the amount of
any such claim or demand, or, if the same be contested by the Sellers or by the
Purchaser Indemnified Party (but the Purchaser Indemnified Party shall have no
obligation to contest any such claim or demand), then that portion thereof as to
which such defense is unsuccessful shall be conclusively deemed to be a liability of
the Sellers hereunder. If the Purchaser Indemnified Party controls the defense of
any claim or demand, the Purchaser Indemnified Party shall not settle or compromise
such third-party claim or demand without the prior written consent of the Agent,
which consent shall not be unreasonably withheld or delayed; provided,
however, the Purchaser Indemnified Party shall not be required to obtain the
consent of the Agent if the Sellers are not obligated to make any indemnification
payments under this Article VII as a result of such settlement or compromise
or such settlement or compromise does not restrict or otherwise adversely affect any
Seller in any way.

     (ii) In the event a Purchaser Indemnified Party should have a claim against the
Sellers hereunder which does not involve a claim or demand being asserted against or
sought to be collected from it by a third party, the Purchaser Indemnified Party
shall promptly send a Claim Notice with respect to such claim to the Agent. If the
Sellers do not notify the Purchaser Indemnified Party within the Notice Period that
they dispute such claim, it shall be conclusively deemed a liability of Sellers
hereunder.

     (iii) All claims for indemnification by a Seller under this Agreement shall be
asserted and resolved under the procedures set forth above, substituting in the
appropriate place “Seller Indemnified Party” for “Purchaser Indemnified Party” and
variations thereof and “Purchaser” for “Sellers” and “any Company” and variations
thereof.

     (f) For federal income tax purposes, the parties agree to treat (and shall cause each
of their respective affiliates to treat) any indemnity payment under this Agreement as an
adjustment to the consideration payable to the Sellers pursuant to Article II hereof
unless a final and nonappealable determination by an appropriate Governmental Authority
(which shall include the execution of an IRS Form 870-AD or successor form) provides
otherwise.

     (g) Each party hereto agrees to use, and to cause its Affiliates to use, commercially
reasonable efforts to mitigate any Losses incurred or to be incurred by such party or its
Affiliates

52

 

upon and after becoming aware of any event which could reasonably be expected to give
rise to any Loss. Any costs or expenses incurred as a result of the foregoing efforts to
mitigate any Losses shall be included as Losses for purposes of this Article VII.

     (h) After the Closing has occurred, subject to the purchase right afforded to Purchaser
in Section 4.12(d), the right to indemnification under this Article VII shall be the
sole remedy of each party hereto in connection with any breach by the other party of is
representations, warranties, covenants or agreements contained herein or in any agreement
delivered by any Seller or Purchaser pursuant to this Agreement.

     Section 7.3 Express Negligence. THE PARTIES HERETO INTEND THAT THE INDEMNITIES SET FORTH IN
THIS ARTICLE VII BE CONSTRUED AND APPLIED AS WRITTEN ABOVE, NOTWITHSTANDING ANY RULE OF
CONSTRUCTION TO THE CONTRARY. WITHOUT LIMITING THE FOREGOING, BUT LIMITED TO THE EXTENT PROVIDED
ABOVE, SUCH INDEMNITIES SHALL APPLY NOTWITHSTANDING ANY STATE’S “EXPRESS NEGLIGENCE” OR SIMILAR
RULE THAT WOULD DENY COVERAGE BASED ON AN INDEMNIFIED PARTY’S SOLE OR CONCURRENT, ACTIVE OR PASSIVE
NEGLIGENCE OR GROSS NEGLIGENCE. IT IS THE INTENT OF THE PARTIES THAT, TO THE EXTENT PROVIDED
ABOVE, THE INDEMNITIES SET FORTH IN THIS ARTICLE VII SHALL APPLY TO AN INDEMNIFIED PARTY’S
SOLE OR CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE OR GROSS NEGLIGENCE. THE PARTIES AGREE THAT THIS
PROVISION IS “CONSPICUOUS” FOR PURPOSES OF ALL STATE LAWS.

ARTICLE VIII

MISCELLANEOUS

     Section 8.1 Headings. The section headings herein are for convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof.

     Section 8.2 Notices. All notices or other communications required or permitted hereunder
shall be given in writing and shall be hand delivered, sent by registered or certified mail,
postage prepaid or sent by facsimile transmission with confirmation of transmission, as follows:

If to Agent, on behalf of Sellers:

Henry Resources, LLC

3525 Andrews Highway

Midland, Texas 79703

Attn: Terry Creech

Fax: (432) 694-2999

With a copy to:

Winstead PC

600 Travis, Suite 1100

Houston, Texas 77002

Attn: Frederick J. Tuthill

Fax: (713) 650-2400

53

 

If to Purchaser:

Concho Resources Inc.

550 West Texas Avenue, Suite 1300

Midland, Texas 79701

Attn: David W. Copeland

Fax: (432) 683-7441

Or such other address as shall be furnished in writing by such party in accordance with this
Section 8.2, and any such notice or communication shall be effective and be deemed to have been
given as of the date so delivered or received.

     Section 8.3 Assignment. This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and permitted
assigns, and the provisions of Article VII hereof shall inure to the benefit of the
indemnified parties referred to therein; provided however, that neither this
Agreement nor any of the rights, interests or obligations hereunder may be assigned by either party
hereto (except, subject to Section 4.18, to an Affiliate of such party so long as such assigning
party remains liable for the obligations of the assignor under this Agreement) without the prior
written consent of the other party; provided further, however, that prior
to Closing, Sellers may assign their Shares to certain Affiliates and charitable remainder trusts
established by a Seller so long as such assignee agrees to be bound by the terms of this Agreement
as a Seller, and any such assignment shall not relieve the assigning Seller of its obligations
under this Agreement. Sellers shall give notice to Purchaser of any such assignments prior to
undertaking any such assignment and Purchaser shall give notice to Sellers of any such assignments
prior to undertaking any such assignment.

     Section 8.4 Entire Agreement. This Agreement (including Schedules and Exhibits hereto)
embodies the entire agreement and understanding of the parties with respect to the Transactions
and, except as otherwise explicitly set forth herein, supersedes all prior written or oral
commitments, arrangements or understandings with respect thereto. There are no restrictions,
agreements, promises, warranties, covenants or undertakings with respect to the Transactions other
than those expressly set forth herein or therein. Each of the Schedules to this Agreement shall be
deemed to include and incorporate all disclosures made on the other schedules to this Agreement.

     Section 8.5 Counterparts. This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and each of which shall be deemed an original.
Facsimile signatures shall be considered binding.

     Section 8.6 Governing Law. This Agreement shall be governed by the laws of the State of Texas
regardless of the laws that might be applicable under principles of conflicts of law as to all
matters including, but not limited to, matters of validity, construction, effect and performance.

     Section 8.7 Severability. If any one or more of the provisions of this Agreement shall be
held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the
remaining provisions of this Agreement shall not be affected thereby. To the extent permitted by
applicable law, each party waives any provision of law which renders any provision of this
Agreement invalid, illegal or unenforceable in any respect.

54

 

     Section 8.8 Specific Performance. Purchaser and Sellers recognize that any breach of the
terms of this Agreement may give rise to irreparable harm for which money damages would not be an
adequate remedy, and accordingly agree that, in addition to other remedies, any non-breaching party
shall be entitled to enforce the terms of this Agreement by a decree of specific performance
without the necessity of proving the inadequacy as a remedy of money damages or posting any bond.
Notwithstanding the foregoing, the Sellers shall not be entitled to seek specific performance in
the event that Purchaser pays the Reverse Break Fee under the circumstances described in Section
6.2.

     Section 8.9 Legal Actions. Should legal actions be initiated by a party to enforce the terms
of this Agreement, the action shall be commenced in the State of Texas in Midland County. Each
party agrees to the waiver of a trial by jury and that the prevailing party’s legal costs,
including attorney’s fees, will be paid by the non-prevailing party; provided, the
determination of the prevailing party shall be made from the totality of all circumstances and is
not required to be the party in whose favor judgment has been rendered.

     Section 8.10 No Third Party Beneficiaries. This Agreement is solely for the benefit of the
parties hereto, the Purchaser Indemnified Parties, the Seller Indemnified Parties and their
successors and assigns permitted under this Agreement, and no provisions of this Agreement shall be
deemed to confer upon any other Person any remedy, Claim, liability, reimbursement, cause of action
or other right except as expressly provided herein.

     Section 8.11 Appointment of Agent. Each Seller hereby acknowledges that it has appointed
Terry R. Creech as his or its Agent for the purposes of (i) receiving notices under Sections 2.6,
4.15, 6.1(b) and 7.2, (ii) granting consent under Sections 7.2 and 8.3 and (iii) coordinating
public announcements under Section 4.7.

     Section 8.12 Neutral Construction. The parties to this Agreement agree that this Agreement
was negotiated fairly between them at arms’ length and that the final terms of this Agreement are
the product of the parties’ negotiations. Each party represents and warrants that it has sought
and received legal counsel of its own choosing with regard to the contents of this Agreement and
the rights and obligations affected hereby. The parties agree that this Agreement shall be deemed
to have been jointly and equally drafted by them, and that the provisions of this Agreement
therefore should not be construed against a party or parties on the grounds that any party or
parties drafted or was more responsible for drafting the provision(s).

55

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day
and year first above written.

PURCHASER:

	 	 	 	 	 
	CONCHO RESOURCES INC.

 	 	 
	By:  	 	 	 
	 	Name:  	Timothy A. Leach 	 	 
	 	Title:  	Chairman and Chief Executive Officer 	 	 
	 

SELLERS:

	 	 	 	 	 
	JAMES C. HENRY

 	 	 
	By:  	 	 	 
	 	James C. Henry 	 	 
	 	 	 	 
	 
	PAULA HENRY

 	 	 
	By:  	 	 	 
	 	Paula Henry 	 	 
	 	 	 	 

HENRY SECURITIES, LTD.

	 	 	 	 	 
	By:  	Henchild LLC, its
sole general partner
 	 	 
	 
	By:  	 	 	 
	 	James C. Henry, President 	 	 
	 	 	 	 
	 
	HENCHILD LLC

 	 	 
	By:  	 	 	 
	 	James C. Henry, President 	 	 
	 	 	 	 
	 

Signature Page to Purchase Agreement

 

 

	 	 	 	 	 
	HENRY FAMILY INVESTMENT GROUP

 	 	 
	By:  	 	 	 
	 	James C. Henry, Managing General Partner 	 	 

COMPANIES:

HENRY HOLDING LP

	 	 	 	 	 
	By:  	Henry Capital LLC,
its sole general partner
 	 	 
	 
	By:  	
 	 	 
	 	James C. Henry, Chairman 	 	 
	 	and Chief Executive Officer 	 	 	 
	 
	HENRY CAPITAL LLC

 	 	 
	By:  	 	 	 
	 	James C. Henry, Chairman 	 	 
	 	and Chief Executive Officer 	 	 

HENRY PETROLEUM LP

	 	 	 	 	 
	By:  	                      Henry Operating LLC, its
sole general partner
 	 	 
	 
	By:  	

 	 	 
	 	James C. Henry, Chairman 	 	 
	 	and Chief Executive Officer 	 	 
	 
	HENRY OPERATING LLC

 	 	 
	By:  	 	 	 
	 	James C. Henry, Chairman 	 	 
	 	and Chief Executive Officer 	 	 
	 

Signature Page to Purchase Agreement

 

 

	 	 	 	 	 
	HENRY ENERGY LP
 	 	 
	By:  	                      HELP Investment LLC, its
sole general partner
 	 	 
	 
	By:  	 	 	 
	 	James C. Henry, Chairman 	 	 
	 	and Chief Executive Officer 	 	 
	 
	HELP INVESTMENT LLC

 	 	 
	By:  	 	 	 
	 	James C. Henry, Chairman 	 	 
	 	and Chief Executive Officer 	 	 

	 	 	 	 	 
	QUAIL RANCH LLC

 	 	 
	By:  	 	 	 
	 	James C. Henry, Chairman 	 	 
	 	and Chief Executive Officer 	 	 
	 
	AGUASAL HOLDING

 	 	 
	By:  	 	 	 
	 	James C. Henry, General Partner 	 	 
	 
	By:  	 	 	 
	 	Paula Henry, General Partner 	 	 
	 	 	 	 
	 

Signature Page to Purchase Agreement

 

 

	 	 	 	 	 
	AGUASAL LP
 	 	 
	By:  	                    Aguasal Management LLC,
its sole general partner
 	 	 
	 
	By:  	 	 	 
	 	James C. Henry, Vice President 	 	 
	 

	 	 	 	 	 
	AGUASAL MANAGEMENT LLC

 	 	 
	By:  	 	 	 
	 	James C. Henry, Vice President 	 	 
	 	 	 	 
	 

Signature Page to Purchase Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}]]