Document:

Agreement of Sale and Purchase

 Exhibit 10.5 
 AGREEMENT OF SALE AND PURCHASE 
 BY AND AMONG 
 PETROHAWK PROPERTIES, LP 
 PETROHAWK
ENERGY CORPORATION 
 KCS RESOURCES, INC. 
 AND 
 ONE TEC, LLC 
 COLLECTIVELY, AS SELLER 
 AND 
 MILAGRO DEVELOPMENT I, LP 
 AS
PURCHASER 
 OCTOBER 15, 2007 

 TABLE OF CONTENTS 
  

					
	 	 	 	  	Page
	 ARTICLE 1 PURCHASE AND SALE
	  	1
			
	Section 1.1	 	Purchase and Sale	  	1
			
	Section 1.2	 	Assets	  	1
			
	Section 1.3	 	Excluded Assets	  	3
			
	Section 1.4	 	Effective Time; Proration of Costs and Revenues	  	4
			
	Section 1.5	 	Delivery and Maintenance of Records	  	5
		
	 ARTICLE 2 PURCHASE PRICE
	  	5
			
	Section 2.1	 	Valuation of Assets	  	5
			
	Section 2.2	 	Adjustments to Purchase Price	  	6
			
	Section 2.3	 	Allocation of Purchase Price for Tax Purposes	  	7
			
	Section 2.4	 	Deposit	  	7
		
	 ARTICLE 3 TITLE MATTERS
	  	7
			
	Section 3.1	 	Seller’s Title	  	7
			
	Section 3.2	 	Definition of Defensible Title	  	8
			
	Section 3.3	 	Definition of Permitted Encumbrances	  	9
			
	Section 3.4	 	Notice of Title Defect Adjustments	  	11
			
	Section 3.5	 	Casualty or Condemnation Loss	  	15
			
	Section 3.6	 	Limitations on Applicability	  	15
			
	Section 3.7	 	Government Approvals Respecting Assets	  	16
		
	 ARTICLE 4 ENVIRONMENTAL MATTERS
	  	16
			
	Section 4.1	 	Assessment	  	16
			
	Section 4.2	 	NORM, Wastes and Other Substances	  	17
			
	Section 4.3	 	Environmental Defects	  	18
			
	Section 4.4	 	Inspection Indemnity	  	19
		
	 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER
	  	19
			
	Section 5.1	 	Generally	  	19
			
	Section 5.2	 	Existence and Qualification	  	20
			
	Section 5.3	 	Power	  	20
			
	Section 5.4	 	Authorization and Enforceability	  	20
			
	Section 5.5	 	No Conflicts	  	21

  

 i 

					
	Section 5.6	 	Liability for Brokers’ Fees	  	21
			
	Section 5.7	 	Litigation	  	21
			
	Section 5.8	 	Taxes and Assessments	  	21
			
	Section 5.9	 	Compliance with Laws	  	22
			
	Section 5.10	 	Contracts	  	22
			
	Section 5.11	 	Payments for Hydrocarbon Production	  	22
			
	Section 5.12	 	Governmental Authorizations	  	23
			
	Section 5.13	 	Preference Rights and Transfer Requirements	  	23
			
	Section 5.14	 	Payout Balances	  	23
			
	Section 5.15	 	Outstanding Capital Commitments	  	23
			
	Section 5.16	 	Imbalances	  	24
			
	Section 5.17	 	Condemnation	  	24
			
	Section 5.18	 	Bankruptcy	  	24
			
	Section 5.19	 	Production Allowables	  	24
			
	Section 5.20	 	Foreign Person	  	24
			
	Section 5.21	 	Collective Bargaining Agreements	  	24
			
	Section 5.22	 	Condition of Assets	  	25
		
	 ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER
	  	25
			
	Section 6.1	 	Existence and Qualification	  	25
			
	Section 6.2	 	Power	  	25
			
	Section 6.3	 	Authorization and Enforceability	  	25
			
	Section 6.4	 	No Conflicts	  	25
			
	Section 6.5	 	Liability for Brokers’ Fees	  	26
			
	Section 6.6	 	Litigation	  	26
			
	Section 6.7	 	Limitation and Independent Evaluation	  	26
			
	Section 6.8	 	SEC Disclosure	  	27
			
	Section 6.9	 	Bankruptcy	  	27
			
	Section 6.10	 	Qualification	  	27
		
	 ARTICLE 7 COVENANTS OF THE PARTIES
	  	27
			
	Section 7.1	 	Access	  	27
			
	Section 7.2	 	Government Reviews	  	27
			
	Section 7.3	 	Notification of Breaches	  	28
			
	Section 7.4	 	Letters-in-Lieu; Assignments; Operatorship	  	28

					
	Section 7.5	 	Public Announcements	  	29
			
	Section 7.6	 	Operation of Business	  	29
			
	Section 7.7	 	Preference Rights and Transfer Requirements	  	30
			
	Section 7.8	 	Tax Matters	  	32
			
	Section 7.9	 	Further Assurances	  	33
			
	Section 7.10	 	Operations Information	  	33
		
	ARTICLE 8 CONDITIONS TO CLOSING	  	33
			
	Section 8.1	 	Conditions of Seller to Closing	  	33
			
	Section 8.2	 	Conditions of Purchaser to Closing	  	34
		
	ARTICLE 9 CLOSING	  	35
			
	Section 9.1	 	Time and Place of Closing	  	35
			
	Section 9.2	 	Obligations of Seller at Closing	  	35
			
	Section 9.3	 	Obligations of Purchaser at Closing	  	36
			
	Section 9.4	 	Closing Adjustments	  	36
		
	ARTICLE 10 TERMINATION	  	38
			
	Section 10.1	 	Termination	  	38
			
	Section 10.2	 	Effect of Termination	  	38
			
	Section 10.3	 	Distribution of Deposit Upon Termination	  	39
		
	ARTICLE 11 POST-CLOSING OBLIGATIONS; INDEMNIFICATION; LIMITATIONS; DISCLAIMERS AND WAIVERS	  	39
			
	Section 11.1	 	Receipts	  	39
			
	Section 11.2	 	Expenses	  	40
			
	Section 11.3	 	Assumed Seller Obligations	  	40
			
	Section 11.4	 	Survival and Limitations	  	41
			
	Section 11.5	 	Indemnification by Seller	  	42
			
	Section 11.6	 	Indemnification by Purchaser	  	42
			
	Section 11.7	 	Indemnification Proceedings	  	43
			
	Section 11.8	 	Release	  	45
			
	Section 11.9	 	Disclaimers	  	45
			
	Section 11.10	 	Waiver of Trade Practices Acts	  	46
			
	Section 11.11	 	Redhibition Waiver	  	47
			
	Section 11.12	 	Recording	  	47
			
	Section 11.13	 	Further Assurances	  	48

					
	ARTICLE 12 MISCELLANEOUS	  	48
			
	Section 12.1	 	Counterparts	  	48
			
	Section 12.2	 	Notice	  	48
			
	Section 12.3	 	Sales or Use Tax Recording Fees and Similar Taxes and Fees	  	49
			
	Section 12.4	 	Expenses	  	50
			
	Section 12.5	 	Change of Name	  	50
			
	Section 12.6	 	Replacement of Bonds, Letters of Credit and Guarantees	  	50
			
	Section 12.7	 	Governing Law and Venue	  	50
			
	Section 12.8	 	Captions	  	50
			
	Section 12.9	 	Waivers	  	50
			
	Section 12.10	 	Assignment	  	51
			
	Section 12.11	 	Entire Agreement	  	51
			
	Section 12.12	 	Amendment	  	51
			
	Section 12.13	 	No Third-Party Beneficiaries	  	51
			
	Section 12.14	 	References	  	51
			
	Section 12.15	 	Construction	  	52
			
	Section 12.16	 	Conspicuousness	  	52
			
	Section 12.17	 	Severability	  	52
			
	Section 12.18	 	Time of Essence	  	52
			
	Section 12.19	 	Limitation on Damages	  	53
			
	Section 12.20	 	Cooperation with Future Financings, Registrations or Offerings	  	53
	
	EXHIBITS
			
	Exhibit A	 	Leases	  	
			
	Exhibit A-1	 	Wells, Future Wells, and Allocated Values	  	
			
	Exhibit A-2	 	Equipment	  	
			
	Exhibit B	 	Conveyance	  	
			
	Exhibit C	 	Indemnity Agreement	  	
			
	Exhibit D	 	Parent Senior Unsecured Note Term Sheet	  	

			
	SCHEDULES
		
	Schedule 1.2(d)	 	Contracts
		
	Schedule 1.2(e)	 	Surface Contracts
		
	Schedule 1.2(g)	 	Pipelines
		
	Schedule 1.2(j)	 	Proprietary Seismic Data
		
	Schedule 1.2(k)	 	Vehicles and Vessels
		
	Schedule 1.2(l)	 	Escrow Accounts for Plugging and Abandonment of Wells
		
	Schedule 1.3(d)	 	Excluded Items
		
	Schedule 1.4	 	Overhead Costs
		
	Schedule 5.1	 	Seller’s Employees Having Knowledge Regarding Certain Assets
		
	Schedule 5.7(a)	 	Party Proceedings
		
	Schedule 5.7(b)	 	Non-Party Proceedings
		
	Schedule 5.8	 	Taxes and Assessments
		
	Schedule 5.9	 	Compliance with Laws
		
	Schedule 5.10(a)	 	Contract Matters
		
	Schedule 5.11	 	Hydrocarbon Production Payments
		
	Schedule 5.12	 	Governmental Authorizations
		
	Schedule 5.13	 	Preference Rights and Transfer Requirements
		
	Schedule 5.14	 	Payout Balances
		
	Schedule 5.15	 	Outstanding Capital Commitments
		
	Schedule 5.16	 	Imbalances
		
	Schedule 5.22	 	Condition of Assets
		
	Schedule 7.6	 	Operation of Business
		
	Schedule 9.4(c)	 	Petrohawk Account Information

 DEFINITIONS 
 “1031 Assets” has the meaning set forth in Section 7.8(c). 
 “Actual
Knowledge” has the meaning set forth in Section 5.1(a). 
 “Adjusted Purchase Price” shall mean the Purchase Price
after calculating and applying the adjustments set forth in Section 2.2. 
 “Adjustment Period” has the meaning set
forth in Section 2.2(a). 
 “AFE” means authority for expenditure. 
 “Affiliates” with respect to any Person, means any Person that directly or indirectly controls, is controlled by or is under common control
with such Person. The concept of control, controlling or controlled as used in the aforesaid context means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of another, whether
through the ownership of voting securities, by contract or otherwise. No Person shall be deemed an Affiliate of any Person by reason of the exercise or existence of rights, interests or remedies under this Agreement. 
 “Aggregate Benefit Deductible” has the meaning set forth in Section 3.4(j). 
 “Aggregate Defect Deductible” has the meaning set forth in Section 3.4(j). 
 “Agreed Accounting Firm” has the meaning set forth in Section 9.4(b). 
 “Agreed Interest Rate” means the rate of interest published in the Wall Street Journal from time to time, as the one month London Interbank
Offered Rate (LIBOR) plus 200 basis points, with adjustments in that rate to be made on the same day as any change in that rate. 
 “Agreement” means this Agreement of Sale and Purchase. 
 “Aggregate Indemnity Deductible” has the meaning set
forth in Section 11.4(c). 
 “Allocated Value” has the meaning set forth in Section 3.4(a). 
 “Assessment” has the meaning set forth in Section 4.1. 
 “Assets” has the meaning set forth in Section 1.2. 
 “Assumed Seller Obligations” has the meaning set forth in Section 11.3. 
 “Business Day” means each calendar day except Saturdays, Sundays, and federal holidays. 
 “CERCLA” has the
meaning set forth in the definition of Environmental Laws. “Claim Notice” has the meaning set forth in Section 11.4(b). 

 “Closing” has the meaning set forth in Section 9.1(a). 
 “Closing Date” has the meaning set forth in Section 9.1(b). 
 “Closing Payment” has the meaning set forth in Section 9.4(a). 
 “Code” means the United States Internal Revenue Code of 1986, as amended. 
 “Confidentiality Agreement” has the meaning set forth in Section 7.1(a). 
 “Contracts” has the meaning set forth in Section 1.2(d). 
 “Conveyance” has the meaning set forth in Section 3.1(b). 
 “Cure Period” has the meaning set forth in Section 3.4(c). 
 “Defensible Title” has the meaning set forth in Section 3.2. 
 “Deposit” has the meaning set forth in Section 2.4. 
 “DTPA” has the meaning set forth in Section 11.10(a). 
 “Earned” has the
meaning set forth in Section 1.4(b). 
 “Effective Time” has the meaning set forth in Section 1.4(a).

 “Environmental Claim Date” has the meaning set forth in Section 4.3. 
 “Environmental Defect” has the meaning set forth in Section 4.3. 
 “Environmental Defect Amount” has the meaning set forth in Section 4.3. 
 “Environmental Defect Notice” has the meaning set forth in Section 4.3. 
 “Environmental Laws” means, as the same may have been amended, any federal, state or local statute, law, regulation, ordinance, rule, order or
decree including any rule of common law, relating to (i) the control of any potential pollutant or protection of the environment, including air, water or land, (ii) the generation, handling, treatment, storage, disposal or transportation
of waste materials, or (iii) the regulation of or exposure to hazardous, toxic or other substances alleged to be harmful, including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §
9601 et seq. (“CERCLA”); the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (“RCRA”); the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.
the Hazardous Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. § 11001 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300f through 300j; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. § 136 et seq.; the Occupational Safety and Health Act, 29
U.S.C. § 651 et seq.; the Atomic Energy Act, 42 U.S.C. § 2011 et seq. ; and all applicable related law, 

 
whether local, state, territorial, or national, of any Governmental Body having jurisdiction over the property in question addressing pollution or protection
of human health, safety, natural resources or the environment and all regulations implementing the foregoing. The term “Environmental Laws” includes all judicial and administrative decisions, orders, directives, and decrees issued by a
Governmental Body pursuant to the foregoing. 
 “Environmental Liabilities” shall mean any and all environmental response costs
(including costs of remediation), damages, natural resource damages, settlements, consulting fees, expenses, penalties, fines, orphan share, prejudgment and post-judgment interest, court costs, attorneys’ fees, and other liabilities incurred or
imposed (i) pursuant to any order, notice of responsibility, directive (including requirements embodied in Environmental Laws), injunction, judgment or similar act (including settlements) by any Governmental Body to the extent arising out of
any violation of, or remedial obligation under, any Environmental Laws which are attributable to the ownership or operation of the Assets prior to the Effective Time or (ii) pursuant to any claim or cause of action by a Governmental Body or
other Person for personal injury, property damage, damage to natural resources, remediation or response costs to the extent arising out of any violation of, or any remediation obligation under, any Environmental Laws which is attributable to the
ownership or operation of the Assets prior to the Closing. 
 “Equipment” has the meaning set forth in Section 1.2(f).

 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended. “Event” has the meaning set forth in
definition of Material Adverse Effect. 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the
rules and regulations of the SEC promulgated thereunder. 
 “Excluded Assets” has the meaning set forth in Section 1.3.

 “Excluded Seller Obligations” has the meaning set forth in Section 11.3. 
 “Final Purchase Price” has the meaning set forth in Section 9.4(b). 
 “Final Settlement Date” has the meaning set forth in Section 9.4(b). 
 “Fundamental Representations” has the meaning set forth in Section 11.4(a). 
 “Future Well” means a well that may be drilled in the future on a Future Well Location, which (for the purposes of determining Defensible Title
thereto and any Title Defects associated therewith pursuant to this Agreement) shall be treated as if such well had been drilled and completed and was in existence at or prior to the date of this Agreement. 
 “Future Well Location” means each drilling location identified on Exhibit A-1, subject to any depth restriction set forth in such
Exhibit A-1 with respect to such location. 
 “GAAP” means generally accepted accounting principles in effect in the United
States as amended from time to time. 

 “Governmental Authorizations” has the meaning set forth in Section 5.12.

 “Governmental Body” or “Governmental Bodies” means any federal, state, local, municipal, or other government; any
governmental, regulatory or administrative agency, commission, body, arbitrator or arbitration panel or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority
or power; and any court or governmental tribunal. 
 “Hazardous Material” means (i) any “hazardous substance,” as
defined by CERCLA, (ii) any “hazardous waste” or “solid waste,” in either case as defined by RCRA, and any analogous state statutes, and any regulations promulgated thereunder, (iii) any solid, hazardous, dangerous or
toxic chemical, material, waste or substance, within the meaning of and regulated by any applicable Environmental Laws, (iv) any radioactive material, including any naturally occurring radioactive material, and any source, special or byproduct
material as defined in 42 U.S.C. 2011 et seq. and any amendments or authorizations thereof, (v) any regulated asbestos-containing materials in any form or condition, (vi) any regulated polychlorinated biphenyls in any form or condition,
and (vii) petroleum, petroleum hydrocarbons or any fraction or byproducts thereof. 
 “HSR Act” means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended. 
 “Hydrocarbons” means oil, gas, casinghead gas, condensate, natural gas liquids,
and other gaseous and liquid hydrocarbons or any combination thereof and sulphur and other minerals extracted from or produced with the foregoing. 
 “Imbalance” or “Imbalances” means any over-production, under-production, over-delivery, under-delivery or similar imbalance of Hydrocarbons produced from or allocated to the Assets, regardless of whether such
over-production, under-production, over-delivery under-delivery or similar imbalance arises at the platform, wellhead, pipeline, gathering system, transportation system, processing plant or other location. 
 “incurred” has the meaning set forth in Section 1.4(b). 
 “Indemnified Party” has the meaning set forth in Section 11.7(a). 
 “Indemnifying Party” has the meaning set forth in Section 11.7(a). 
 “Indemnity Agreement” has the meaning set forth in Section 3.4(d)(ii). 
 “Independent Expert” has the meaning set forth in Section 4.3. 
 “Individual Indemnity Deductible” has the meaning set forth in Section 11.4(c). 
 “Individual Benefit Deductible” has the meaning set forth in Section 3.4(j). 
 “Individual Environmental Deductible” has the meaning set forth in Section 4.3. 
 “Individual Title Deductible” has the meaning set forth in Section 3.4(j). 

 “Invasive Activity” has the meaning set forth in Section 4.1. 
 “KCS” means KCS Resources, Inc., a Delaware corporation. 
 “Lands” has the meaning set forth in Section 1.2(a). 
 “Laws” means all
statutes, laws, rules, regulations, ordinances, orders, and codes of Governmental Bodies. 
 “Leases” has the meaning set forth in
Section 1.2(a). 
 “Like Kind Exchange” has the meaning set forth in Section 7.8(c) 
 “Losses” means any and all debts, obligations and other liabilities (whether absolute, accrued, contingent, fixed or otherwise, or whether
known or unknown, or due or to become due or otherwise), diminution in value, monetary damages, fines, fees, Taxes, penalties, interest obligations, deficiencies, losses and expenses (including amounts paid in settlement, interest, court costs,
costs of investigators, reasonable fees and expenses of attorneys, accountants, financial advisors and other experts, and other actual out of pocket expenses incurred in investigating and preparing for or in connection with any Proceeding; however,
excluding special, punitive, exemplary, consequential or indirect damages, except to the extent a party is required to pay such damages to a third party in connection with a matter for which such Party is entitled to indemnification under Article
11). 
 “Lowest Cost Response” means the response required or allowed under Environmental Laws that addresses the condition present
at the lowest cost (considered as a whole taking into consideration any material negative impact such response may have on the operations of the relevant assets and any potential material additional costs or liabilities that may likely arise as a
result of such response) as compared to any other response that is required or allowed under Environmental Laws. 
 “Material Adverse
Effect” means any change, inaccuracy, circumstance, effect, event, result, occurrence, condition or fact (each an “Event”) (whether or not (i) foreseeable or known as of the date of this Agreement or (ii) covered by
insurance) that has had, or could reasonably be expected to have, a material adverse effect on (i) the ownership, operation or value of the Assets, taken as a whole, or (ii) the ability of Seller to consummate the transactions contemplated
hereby. Excluded from such Events for the purposes of determining whether a “Material Adverse Affect” has occurred or could reasonably be expected to occur are (A) Events resulting from entering into this Agreement or the announcement
of the transactions contemplated by this Agreement, (B) Events resulting from changes in general market, economic, financial or political conditions or any outbreak of hostilities or war or terrorist events, (C) Events that affect the
Hydrocarbon exploration, production, development, processing, gathering and/or transportation industry generally (including changes in commodity prices or general market prices in the Hydrocarbon exploration, production, development, processing,
gathering and/or transportation industry generally), (D) any effect resulting from a change in Laws or regulatory policies, and (E) the consequences of drilling and production operations (including but not limited to depletion, the
watering out of any Well(s), collapsed casing or sand infiltration of any Well(s), sidetrack drilling operations on any Well(s), drilling results of any Well(s), and the depreciation of personal property due to ordinary wear and tear with respect to
the Assets). 

 “Material Contracts” has the meaning set forth in Section 5.10. 
 “Net Revenue Interest” has the meaning set forth in Section 3.2(a). 
 “NORM” means naturally occurring radioactive material. 
 “Notice Period” has the meaning set forth in Section 11.7(a). 
 “One TEC”
means One TEC, LLC, a Texas limited liability company. 
 “Parent” means Milagro Development I, LP. 
 “Parent Senior Unsecured Note” shall be a note of Parent in the principal amount of One Hundred Twenty-Five Million and No/100 Dollars
($125,000,000) having terms and conditions as set forth on the term sheet attached as Exhibit D. 
 “Permitted Encumbrances”
has the meaning set forth in Section 3.3. 
 “Person” means any individual, firm, corporation, partnership, limited liability
company, joint venture, association, trust, unincorporated organization, Governmental Body or any other entity. 
 “Petrohawk”
means Petrohawk Energy Corporation, a Delaware corporation. 
 “Petrohawk Properties” means Petrohawk Properties, LP, a Texas
limited partnership. 
 “Personal Property” has the meaning set forth in Section 1.2(g). 
 “Pipelines” has the meaning set forth in Section 1.2(g). 
 “Preference Property” has the meaning set forth in Section 7.7(b). 
 “Preference Right” means any right or agreement that enables any Person to purchase or acquire any Asset or any interest therein or portion
thereof as a result of or in connection with (i) the sale, assignment or other transfer of any Asset or any interest therein or portion thereof or (ii) the execution or delivery of this Agreement or the consummation or performance of the
terms and conditions contemplated by this Agreement. 
 “Proceeding” or “Proceedings” has the meaning set forth in
Section 5.7. 
 “Properties” has the meaning set forth in Section 1.2(c). 
 “Property Costs” has the meaning set forth in Section 1.4(b). 
 “Purchase Price” has the meaning set forth in Section 2.1. 

 “Purchaser” has the meaning set forth in the preamble hereto. 
 “Purchaser Indemnified Persons” has the meaning set forth in Section 11.5. 
 “Qualified Intermediary” has the meaning set forth in Section 7.8(c). 
 “RCRA” has the meaning set forth in the definition of Environmental Laws. 
 “Records” has the meaning set forth in Section 1.2(i). 
 “REGARDLESS OF FAULT” means WITHOUT REGARD TO THE CAUSE OR CAUSES OF ANY CLAIM, INCLUDING, WITHOUT LIMITATION, EVEN THOUGH A CLAIM IS CAUSED
IN WHOLE OR IN PART BY: 
 OTHER THAN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, THE NEGLIGENCE (WHETHER SOLE, JOINT, CONCURRENT,
COMPARATIVE, CONTRIBUTORY, ACTIVE OR PASSIVE), STRICT LIABILITY, OR OTHER FAULT OF THE SELLER INDEMNIFIED PERSONS; AND/OR 
 A
PRE-EXISTING DEFECT, WHETHER PATENT OR LATENT, OF THE PREMISES OF PURCHASER’S PROPERTY OR SELLER’S PROPERTY (INCLUDING WITHOUT LIMITATION THE ASSETS), INVITEES AND/OR THIRD PARTIES; AND/OR 
 THE UNSEAWORTHINESS OF ANY VESSEL OR UNAIRWORTHINESS OF ANY AIRCRAFT OF A PARTY WHETHER CHARTERED, OWNED, OR PROVIDED BY THE PURCHASER INDEMNIFIED
PERSONS, SELLER INDEMNIFIED PERSONS, INVITEES AND/OR THIRD PARTIES. 
 “Retained Asset” has the meaning set forth in
Section 7.7(c). 
 “Retained Employee Liabilities” shall mean any liabilities of Seller (i) to employees of Seller
arising under the Worker Adjustment Retraining Notification Act of 1988 as a result of actions taken by Seller prior to the Closing, (ii) arising out of claims by Seller employees with respect to events that occur prior to the Closing and that
relate to their employment with, or the terminations of their employment from, Seller, (iii) with respect to employees of Seller arising under any “employee benefit plan” (as defined in Section 3(3) of ERISA) that is sponsored
by, contributed to, or maintained by, Seller, or (iv) arising under ERISA for which Purchaser may have any liability under ERISA solely as a result of the consummation of the transaction contemplated by this Agreement. 
 “SEC” has the meaning set forth in Section 7.5. 
 “Securities Act” means the Securities Act of 1933, as amended, together with the rules and regulations of the SEC promulgated thereunder. 

 “Seller” has the meaning set forth in the preamble hereto. 
 “Seller Indemnified Persons” has the meaning set forth in Section 11.6. 
 “Seller Operated Assets” means Assets operated by Seller. 
 “Surface Contracts” has the meaning set forth in Section 1.2(e). 
 “Taxes”
means all federal, state, local, and foreign income, profits, franchise, sales, use, ad valorem, property, severance, production, excise, stamp, documentary, real property transfer or gain, gross receipts, goods and services, registration, capital,
transfer, or withholding taxes or other governmental fees or charges imposed by any Governmental Body, including any interest, penalties or additional amounts which may be imposed with respect thereto. 
 “Tax Returns” has the meaning set forth in Section 5.8(a). 
 “Termination Date” has the meaning set forth in Section 10.1(b)(i). 
 “Third Party Claim” has the meaning set forth in Section 11.7(a). 
 “Title Benefit” has the meaning set forth in Section 3.2(d). 
 “Title Benefit Amount” has the meaning set forth in Section 3.4(e). 
 “Title Benefit Notice” has the meaning set forth in Section 3.4(b). 
 “Title Claim Date” has the meaning set forth in Section 3.4(a). 
 “Title Defect” has the meaning set forth in Section 3.2(d). 
 “Title Defect Amount” has the meaning set forth in Section 3.4(d)(i). 
 “Title Defect Notice” has the meaning set forth in Section 3.4(a). 
 “Title Defect Property” has the meaning set forth in Section 3.4(a). 
 “Title Expert” has the meaning set forth in Section 3.4(i). 
 “Transfer Requirement” means any consent, approval, authorization or permit of, or filing with or notification to, any Person which is required
to be obtained, made or complied with for or in connection with any sale, assignment or transfer of any Asset or any interest therein; provided, however, that “Transfer Requirement” shall not include any consent of, notice to, filing with,
or other action by any Governmental Body in connection with the sale or conveyance of oil and/or gas leases or interests therein or Surface Contracts or interests therein, if they are not required prior to the assignment of such oil and/or gas
leases, Surface Contracts or interests or they are customarily obtained subsequent to the sale or conveyance (including consents from state agencies). 
 “Transfer Taxes” has the meaning set forth in Section 12.3. 

 “Units” has the meaning set forth in Section 1.2(c). 
 “UDTPA” has the meaning set forth in Section 11.10(a). 
 “UTPCPL” has the meaning set forth in Section 11.10(a). 
 “Warranty Well” means a Well or a Future Well, as the context requires. 
 “Wells” has the meaning set forth in Section 1.2(b). 

 AGREEMENT OF SALE AND PURCHASE 
 This Agreement of Sale and Purchase is executed on October 15, 2007, by and between Petrohawk Properties, LP, a Texas limited partnership, Petrohawk
Energy Corporation, a Delaware corporation, KCS Resources, Inc., a Delaware corporation, and One TEC, LLC, a Texas limited liability company (collectively “Seller”), and Milagro Development I, LP, a Delaware limited partnership
(“Purchaser”). 
 RECITALS 
 A. Seller owns the Assets as more fully described in Section 1.2 and the exhibits hereto. 
 B.
Seller desires to sell to Purchaser and Purchaser desires to purchase from Seller the properties and rights of Seller hereafter described, in the manner and upon the terms and conditions hereafter set forth. 
 NOW, THEREFORE, in consideration of the premises and of the mutual promises, representations, warranties, covenants, conditions and agreements contained
herein, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound by the terms hereof, agree as follows: 
 ARTICLE 1 
 PURCHASE AND SALE 

  

	Section 1.1	Purchase and Sale. 

 At the Closing,
and upon the terms and subject to the conditions of this Agreement, Seller agrees to sell, transfer and convey the Assets to Purchaser and Purchaser agrees to purchase, accept and pay for the Assets and to assume the Assumed Seller Obligations.

  

	Section 1.2	Assets. 

 As used herein, the term “Assets” means, subject to the terms and conditions of this Agreement, all of Seller’s right, title, interest and estate, in and to the following (but excluding the Excluded Assets): 
 (a) All of the oil and gas leases; subleases and other leaseholds; interests in fee; carried interests; reversionary interests; farmout rights; options;
and other properties and interests described on Exhibit A, subject to such depth limitations and other restrictions as may be set forth in the Oil and Gas Leases or other agreements of record (collectively, the “Leases”), together
with each and every kind and character of right, title, claim, and interest that Seller has in and to the lands covered by the Leases and the interests currently pooled, unitized, communitized or consolidated therewith (the “Lands”);

 (b) All oil, gas, water or injection wells located on the Lands, whether producing, shut-in, or temporarily abandoned, including the
interests in the wells shown on Exhibit A-1 attached hereto (collectively, the “Wells”); 
  

 1 

 (c) All leasehold interests of Seller in or to any currently existing pools or units which include any
Lands or all or a part of any Leases or include any Wells, including those pools or units related to the Properties and associated with the Wells shown on Exhibit A-1 (the “Units”; the Units, together with the Leases, Lands and
Wells, being hereinafter referred to as the “Properties”), and including all leasehold interests of Seller in production of Hydrocarbons from any such Unit, whether such Unit production of Hydrocarbons comes from Wells located on or off of
a Lease, and all tenements, hereditaments and appurtenances belonging to the Leases and Units; 
 (d) All contracts, agreements and
instruments by which the Properties are bound or subject, or that relate to or are otherwise applicable to the Properties, only to the extent applicable to the Properties rather than Seller’s or any of its Affiliates’ other properties,
including but not limited to, operating agreements, unitization, pooling and communitization agreements, declarations and orders, joint venture agreements, farmin and farmout agreements, exploration agreements, participation agreements, area of
mutual interest agreements, exchange agreements, transportation or gathering agreements, agreements for the sale and purchase of oil, gas or casinghead gas and processing agreements to the extent applicable to the Properties or the production of
Hydrocarbons produced in association therewith from the Properties, including those identified on Schedule 1.2(d) (hereinafter collectively referred to as “Contracts”), but excluding any contracts, agreements and instruments to the
extent transfer would result in a violation of applicable Law or is restricted by any Transfer Requirement that is not waived by Purchaser or satisfied pursuant to Section 7.7 (provided Seller agrees to reasonably cooperate in obtaining
such waiver) and provided that “Contracts” shall not include the instruments constituting the Leases; 
 (e) All easements,
permits, licenses, servitudes, rights-of-way, surface leases and other surface rights (“Surface Contracts”) appurtenant to, and used or held for use in connection with the Properties (including those identified on Schedule 1.2(e)),
but excluding any permits and other rights to the extent transfer would result in a violation of applicable Law or is restricted by any Transfer Requirement that is not waived by Purchaser or satisfied pursuant to Section 7.7 (provided
Seller agrees to reasonably cooperate in obtaining such waiver); 
 (f) All treatment and processing plants and equipment, machinery,
platforms, fixtures and other tangible personal property and improvements located on the Properties or used or held for use in connection with the operation of the Properties, including those identified on Exhibit A-2 (“Equipment”);

 (g) All flow lines, pipelines, gathering systems and appurtenances thereto located on the Properties or used, or held for use, in
connection with the operation of the Properties, including those identified on Schedule 1.2(g) (“Pipelines” and, together with the Equipment and Wells, “Personal Property”); 
 (h) All Hydrocarbons produced from or attributable to the Leases, Lands, and Wells from and after the Effective Time, together with Imbalances associated
with the Properties; 
  

 2 

 (i) All lease files; land files; well files; gas and oil sales contract files; gas processing and
transportation files; division order files; abstracts; title opinions; land surveys; logs; maps; engineering data and reports; interpretive data, technical evaluations and technical outputs; and other books, records, data, files, and accounting
records, in each case to the extent related to the Properties, or used or held for use in connection with the maintenance or operation thereof, but excluding (i) any books, records, data, files, logs, maps, evaluations, outputs, and accounting
records to the extent disclosure or transfer would result in a violation of applicable Law or is restricted by any Transfer Requirement that is not satisfied pursuant to Section 7.7 (provided Seller agrees to reasonably cooperate in satisfying
such Transfer Requirement), (ii) computer or communications software or intellectual property (including tapes, codes, data and program documentation and all tangible manifestations and technical information relating thereto),
(iii) attorney-client privileged communications and work product of Seller’s or any of its Affiliates’ legal counsel (other than title opinions), (iv) reserve studies and evaluations, and (v) records relating to the
marketing, negotiation, and consummation of the sale of the Assets (subject to such exclusions, the “Records”); provided, however, that Seller may retain the originals of such Records as Seller has reasonably determined may be required for
existing litigation, tax, accounting, and auditing purposes; 
 (j) To the extent transferable, and subject to payment by Purchaser of all
third party transfer and license fees, all geological and geophysical data (including all seismic data, as well as reprocessed data) related exclusively to the Properties, including those items identified in Schedule 1.2(j); 
 (k) All vehicles or vessels identified on Schedule 1.2(k); and 
 (l) All funds contained in the escrow accounts identified in Schedule 1.2(l), which are for plugging and abandonment of wells and dismantling platforms. 
  

	Section 1.3	Excluded Assets. 

 Notwithstanding the
foregoing, the Assets shall not include, and there is excepted, reserved and excluded from the transaction contemplated hereby (collectively, the “Excluded Assets”): 
 (a) except to the extent necessary to satisfy Seller’s obligations under Section 7.1, (i) all corporate, financial, income and
franchise tax and legal records of Seller that relate to Seller’s business generally (whether or not relating to the Assets), (ii) all books, records and files that relate to the Excluded Assets, (iii) those records retained by Seller
pursuant to Section 1.2(i) and (iv) copies of any other Records retained by Seller pursuant to Section 1.5; 
 (b) all rights to any refund related to the Excluded Seller Obligations or Taxes or other costs or expenses borne by Seller or Seller’s predecessors in interest and title attributable to periods prior to the Effective Time; 

(c) Seller’s area-wide bonds, permits and licenses or other permits, licenses or authorizations used in the conduct of Seller’s business
generally; 
 (d) those items listed in Schedule 1.3(d); 
  

 3 

 (e) all trade credits, accounts receivable, notes receivable, take-or-pay amounts receivable, pre-paid
expenses and deposits, and other receivables attributable to the Assets with respect to any period of time prior to the Effective Time; 
 (f) all right, title and interest of Seller in and to vehicles or vessels used in connection with the Assets, other than those identified on Schedule 1.2(k); 
 (g) all rights, titles, claims and interests of Seller or any Affiliate of Seller (i) to or under any policy or agreement of insurance or any
insurance proceeds; except to the extent provided in Section 3.5, and (ii) to or under any bond or bond proceeds; 
 (h)
subject to Section 12.5, any patent, patent application, logo, service mark, copyright, trade name or trademark of or associated with Seller or any Affiliate of Seller or any business of Seller or of any Affiliate of Seller; 

(i) all Retained Assets not conveyed to Purchaser pursuant to Section 7.7 and any Property excluded pursuant to
Section 3.4(d)(iii). 
  

	Section 1.4	Effective Time; Proration of Costs and Revenues. 

 (a) Subject to Section 1.5, possession of the Assets shall be transferred from Seller to Purchaser at the Closing, but certain financial benefits and burdens of the Assets shall be transferred effective as of 7:00 A.M., local
time, where the respective Assets are located, on July 1, 2007 (the “Effective Time”), as described below. 
 (b) Purchaser
shall be entitled to all Hydrocarbon production from or attributable to the Properties at and after the Effective Time (and all products and proceeds attributable thereto), and to all other income, proceeds, receipts and credits earned with respect
to the Assets at or after the Effective Time, and shall be responsible for (and entitled to any refunds with respect to) all Property Costs incurred at and after the Effective Time. Seller shall be entitled to all Hydrocarbon production from or
attributable to the Properties prior to the Effective Time (and all products and proceeds attributable thereto), and to all other income, proceeds, receipts and credits earned with respect to the Assets prior to the Effective Time, and shall be
responsible for (and entitled to any refunds with respect to) all Property Costs incurred prior to the Effective Time. “Earned” and “incurred”, as used in this Agreement, shall be interpreted in accordance with GAAP and Council
of Petroleum Accountants Society (COPAS) standards, as applicable. “Property Costs” means all costs attributable to the ownership and operation of the Assets (including without limitation costs of insurance relating specifically to the
Assets and ad valorem, property, severance, Hydrocarbon production and similar Taxes based upon or measured by the ownership or operation of the Assets or the production of Hydrocarbons therefrom, but excluding any other Taxes) and capital
expenditures incurred in the ownership and operation of the Assets and, where applicable, in accordance with the relevant operating or unit agreement, if any, and overhead costs charged to the Assets under the relevant operating agreement or unit
agreement, if any, or, if none, the amounts shown under Schedule 1.4 shall be the overhead amounts deemed charged to the Assets. For purposes of this Section 1.4, determination of whether Property Costs are attributable to the
period before or after the Effective Time shall be based on when services are rendered, when the goods are delivered, or 

  

 4 

 
when the work is performed. For clarification, the date an item or work is ordered is not the date of a pre-Effective Time transaction for settlement
purposes, but rather the date on which the item ordered is delivered to the job site, or the date on which the work ordered is performed, shall be the relevant date. For purposes of allocating Hydrocarbon production (and accounts receivable with
respect thereto), under this Section 1.4, (i) liquid Hydrocarbons shall be deemed to be “from or attributable to” the Properties when they are placed into the storage facilities and (ii) gaseous Hydrocarbons shall be
deemed to be “from or attributable to” the Properties when they pass through the delivery point sales meters on the pipelines through which they are transported. Seller shall utilize reasonable interpolative procedures to arrive at an
allocation of Hydrocarbon production when exact meter readings or gauging and strapping data is not available. Seller shall provide to Purchaser, no later than five (5) Business Days prior to Closing, all data necessary to support any estimated
allocation, for purposes of establishing the adjustment to the Purchase Price pursuant to Section 2.2 hereof that will be used to determine the Closing Payment. Property Costs that are paid periodically shall be prorated based on the
number of days in the applicable period falling before and the number of days in the applicable period falling at or after the Effective Time, except that Hydrocarbon production, severance and similar Taxes shall be prorated based on the number of
units actually produced, purchased or sold or proceeds of sale, as applicable, before, and at or after, the Effective Time. In each case, Purchaser shall be responsible for the portion allocated to the period at and after the Effective Time and
Seller shall be responsible for the portion allocated to the period before the Effective Time. 
  

	Section 1.5	Delivery and Maintenance of Records. 

 Seller
shall deliver the Records (FOB Seller’s office) to Purchaser within thirty (30) days following Closing. Other than any original Records retained by Seller pursuant to Section 1.2(i), Purchaser shall be entitled to all original Records
maintained by Seller. Seller shall be entitled to keep a copy or copies of all Records; provided, however, that Seller shall not sell or otherwise allow third parties to review, copy or otherwise use any Records retained by Seller. Purchaser shall
preserve the Records for a period of seven (7) years following the Closing and will allow Seller and its representatives, consultants and advisors reasonable access, during normal business hours and upon reasonable notice, to the Records for
any legitimate business reason of Seller, including in order for Seller to comply with a Tax or other legally required reporting obligation or Tax or legal dispute. Any such access shall be at the sole cost and expense of Seller. Unless otherwise
consented to in writing by Seller, for a period of seven (7) years following the Closing Date, Purchaser shall not and shall cause its Affiliates not to, destroy, alter or otherwise dispose of the Records, or any portions thereof, without first
giving at least thirty (30) days prior written notice to Seller and offering to surrender to Seller the Records or such portions thereof. 
 ARTICLE 2 
 PURCHASE PRICE 
  

	Section 2.1	Valuation of Assets. 

 The purchase price for
the Assets (the “Purchase Price”) shall be Eight Hundred Twenty-Five Million and No/100 Dollars ($825,000,000), adjusted as provided in Section 2.2. 
  

 5 

	Section 2.2	Adjustments to Purchase Price. 

 The
Purchase Price for the Assets shall be adjusted in the manner specified below (without duplication), with all such amounts being determined in accordance with GAAP and Council of Petroleum Accountants Society (COPAS) standards, as applicable, in
order to reach the Adjusted Purchase Price: 
 (a) Reduced by the aggregate amount of the following proceeds received by Seller between (and
including) the Effective Time and the Closing Date (with the period between the Effective Time and the Closing Date referred to as the “Adjustment Period”): (i) proceeds from the sale of Hydrocarbons (net of any royalties, overriding
royalties or other burdens on or payable out of production, gathering, processing and transportation costs and any production, severance, sales, excise or similar Taxes not reimbursed to Seller by the purchaser of production) produced from or
attributable to the Properties during the Adjustment Period, and (ii) other proceeds earned with respect to the Assets during the Adjustment Period; 
 (b) Reduced to the extent provided in Section 7.7 with respect to Preference Rights and Retained Assets; 
 (c) (i) If the parties make the election under Section 3.4(d)(i) with respect to a Title Defect, subject to the Individual Title Deductible and the Aggregate Defect Deductible, reduced by the Title
Defect Amount with respect to such Title Defect if the Title Defect Amount has been determined prior to Closing and (ii) subject to the Individual Benefit Deductible and the Aggregate Benefit Deductible, increased by the Title Benefit Amount
with respect to each Title Benefit for which the Title Benefit Amount has been determined prior to Closing; 
 (d) Increased by the amount of
all Property Costs and other costs attributable to the ownership and operation of the Assets which are paid by Seller and incurred during the Adjustment Period (including any overhead costs under Schedule 1.4 deemed charged to the Assets with
respect to the Adjustment Period even though not actually paid), except any Property Costs and other such costs already deducted in the determination of proceeds in Section 2.2(a); 
 (e) Reduced to the extent provided in Section 3.4(d)(iii) for any Properties excluded from the Assets pursuant to
Section 3.4(d)(iii) and reduced to the extent provided in Section 4.3 for Environmental Defects; 
 (f) Reduced by
the aggregate amounts payable to owners of working interests, royalties and overriding royalties and other interests in the Properties held in suspense by Seller as of the Closing Date, to the extent such amounts held in suspense are not transferred
to Purchaser at Closing; 
 (g) Increased or reduced as mutually agreed upon in writing prior to Closing by Seller and Purchaser; 

(h) Increased by the value of the amount of merchantable Hydrocarbons stored in tanks and pipelines attributable to the ownership and operation of the
Assets that belong to Seller as of the Effective Time (which value shall be computed at the applicable third-party contract prices for the month of June 2007 for such stored Hydrocarbons); 
  

 6 

 (i) Reduced or increased, as the case may be, by the actual net aggregate Imbalances, if any, owed by
Seller to third-parties, as of the Effective Time, multiplied by a price of $2.25 per MMBtu; 
 (j) Increased by the amount of the escrow
funds transferred pursuant to Section 1.2(l); and 
 (k) Each adjustment made pursuant to Section 2.2(a) shall serve
to satisfy, up to the amount of the adjustment, Purchaser’s entitlement under Section 1.4 to Hydrocarbon production from or attributable to the Properties during the Adjustment Period, and to the value of other income, proceeds,
receipts and credits earned with respect to the Assets during the Adjustment Period, and as such, Purchaser shall not have any separate rights to receive any Hydrocarbon production or income, proceeds, receipts and credits with respect to which an
adjustment has been made. Similarly, the adjustment described in Section 2.2(d) shall serve to satisfy, up to the amount of the adjustment, Purchaser’s obligation under Section 1.4 to pay Property Costs and other costs
attributable to the ownership and operation of the Assets which are incurred during the Adjustment Period, and as such, notwithstanding anything in this Agreement to the contrary, Purchaser shall not be separately obligated to pay for any Property
Costs or other such costs with respect to which an adjustment has been made. 
 The Purchase Price less the Deposit provided for in
Section 2.4, adjusted as set forth in (a) through (k), shall be increased by simple interest thereon from the Effective Time until Closing, computed at the Agreed Interest Rate, if Closing does not occur within forty-five (45) days of
the date this Agreement is executed by the last party thereto unless the failure to close within such period is due to the fault of Seller. 
  

	Section 2.3	Allocation of Purchase Price for Tax Purposes. 

 The Allocated Values contained in Exhibit A-1 shall be the values used for tax purposes. Purchaser shall be responsible for assigning the Allocated Values, subject to Seller’s right to review the Allocated Values for
reasonableness. 
  

	Section 2.4	Deposit. 

 Concurrently with the execution of
this Agreement, Purchaser has paid to Seller an earnest money deposit in an amount equal to $10,000,000 (the “Deposit”). The Deposit shall be non-interest bearing and applied against the Purchase Price if the Closing occurs or shall be
otherwise distributed in accordance with the terms of this Agreement. 
 ARTICLE 3 
 TITLE MATTERS 
  

	Section 3.1	Seller’s Title. 

 (a)
PURCHASER ACKNOWLEDGES THAT THE SOLE AND EXCLUSIVE REMEDY FOR TITLE DEFECTS SHALL BE AS SET FORTH IN SECTION 3.4. 
  

 7 

 (b) The conveyance to be delivered by Seller to Purchaser shall be substantially in the form of
Exhibit B hereto (the “Conveyance”). 
 (c) Notwithstanding anything herein provided to the contrary, if a Title Defect
under this Article 3 results from any matter which could also result in the breach of any representation or warranty of Seller set forth in Article 5, then Purchaser shall only be entitled to assert such matter as a Title Defect to the extent
permitted by this Article 3, and shall be precluded from also asserting such matter as the basis of the breach of any representation or warranty. 
  

	Section 3.2	Definition of Defensible Title. 

 As used in
this Agreement, the term “Defensible Title” means that title of Seller with respect to the Units, Warranty Wells or other Assets shown in Exhibit A-1 that, except for and subject to Permitted Encumbrances: 
 (a) Entitles Seller to receive a share of the Hydrocarbons produced, saved and marketed from any Unit, Warranty Well or other Asset shown in Exhibit
A-1 throughout the duration of the productive life of such Unit, Warranty Well or other Asset (after satisfaction of all royalties, overriding royalties, net profits interests or other similar burdens on or measured by production of
Hydrocarbons) (a “Net Revenue Interest”), of not less than the Net Revenue Interest shown in Exhibit A-1 for such Unit, Warranty Well or other Asset, except (solely to the extent that such actions do not cause a breach of
Seller’s covenants under Section 7.6) for decreases in connection with those operations in which Seller may from and after the Effective Time become a non-consenting 
co-owner, decreases resulting from the establishment or
amendment from and after the Effective Time of pools or units, and decreases required to allow other working interest owners to make up past underproduction of Hydrocarbons or pipelines to make up past under deliveries of Hydrocarbons, and except as
stated in such Exhibit A-1; 
 (b) Obligates Seller to bear a percentage of the costs and expenses for the maintenance and development
of, and operations relating to, any Unit, Warranty Well or other Asset shown in Exhibit A-1 not greater than the “working interest” shown in Exhibit 
A-1 for such Unit, Warranty Well or other Asset without increase throughout the
productive life of such Unit, Warranty Well or other Asset, except as stated in Exhibit A-1 and except for increases resulting from contribution requirements with respect to non-consenting or defaulting co-owners under applicable operating
agreements and increases that are accompanied by at least a proportionate increase in Seller’s Net Revenue Interest; and 
 (c) Is free
and clear of liens, encumbrances, obligations, security interests, irregularities, pledges, or other defects. 
 (d) As used in this
Agreement, the term “Title Defect” means any lien, charge, encumbrance, obligation (including contract obligation), defect, or other matter (including without limitation a discrepancy in Net Revenue Interest or working interest) that
causes Seller not to have Defensible Title in and to the Units, Warranty Wells or other Assets shown on Exhibit A-1 as of the Effective Time and the Closing. As used in this Agreement, the term “Title Benefit” shall mean any right,
circumstance or condition that operates to increase the 

  

 8 

 
Net Revenue Interest of Seller in any Unit, Warranty Well or other Asset shown on Exhibit A-1, without causing a greater than proportionate increase
in Seller’s working interest above that shown in Exhibit A-1 as of the Effective Time. Notwithstanding the foregoing, the following shall not be considered Title Defects: 
  

	 	(i)	defects based solely on (1) lack of information in Seller’s files, or (2) references to a document(s) if such document(s) is not in Seller’s files;

  

	 	(ii)	defects arising out of lack of corporate or other entity authorization unless Purchaser provides affirmative written evidence that the action was not authorized;

  

	 	(iii)	defects based on failure to record Leases issued by any state or federal Governmental Body, or any assignments of such Leases, in the real property, conveyance or other records of
the parish or county in which such Property is located; 

  

	 	(iv)	defects based on a gap in Seller’s chain of title in the parish or county records as to fee Leases, unless such gap is affirmatively shown to exist in such records by an
abstract of title, title opinion or landman’s title chain which documents shall be included in a Title Defect Notice; and 

  

	 	(v)	defects that have been cured by applicable Laws of limitation or prescription. 

  

	Section 3.3	Definition of Permitted Encumbrances. 

 As used herein, the term “Permitted Encumbrances” means any or all of the following: 
 (a) Royalties and any overriding
royalties, reversionary interests, net profit interests, production payments, carried interests, and other burdens, to the extent that any such burden does not reduce Seller’s Net Revenue Interest below that shown in Exhibit A-1 or
increase Seller’s working interest above that shown in Exhibit A-1 without a proportionate increase in the Net Revenue Interest; 
 (b) All Leases, unit agreements, pooling agreements, operating agreements, Hydrocarbon production sales contracts, division orders and other contracts, agreements and instruments applicable to the Assets, to the extent that they do not,
individually or in the aggregate, reduce Seller’s Net Revenue Interest below that shown in Exhibit A-1 or increase Seller’s working interest above that shown in Exhibit A-1 without a proportionate increase in the Net Revenue
Interest; 
 (c) Preference Rights applicable to this or any future transaction; 
 (d) Transfer Requirements applicable to this or any future transaction; 
 (e) Liens for current Taxes or assessments not yet delinquent or, if delinquent, being contested in good faith by appropriate actions; 
  

 9 

 (f) Materialman’s, mechanic’s, repairman’s, employee’s, contractor’s,
operator’s and other similar liens or charges arising in the ordinary course of business for amounts not yet delinquent (including any amounts being withheld as provided by Law) or, if delinquent, being contested in good faith by appropriate
actions; 
 (g) All rights to consent by, required notices to, filings with, or other actions by Governmental Bodies in connection with the
sale or conveyance of the Assets or interests therein pursuant to this or to any future transaction if they are not required or customarily obtained prior to the sale or conveyance; 
 (h) Rights of reassignment arising upon final intention to abandon or release the Assets, or any of them; 
 (i) Easements, rights-of-way, servitudes, permits, surface leases and other rights in respect of surface operations, to the extent that they do not
(i) reduce Seller’s Net Revenue Interest below that shown in Exhibit A-1, (ii) increase Seller’s working interest above that shown in Exhibit A-1 without a proportionate increase in Net Revenue Interest, or
(iii) detract in any material respect from the value of, or interfere in any material respect with the use, ownership or operation of, the Assets subject thereto or affected thereby (as currently used, owned and operated) and which would be
acceptable by a reasonably prudent purchaser engaged in the business of owning and operating oil and gas properties; 
 (j) Calls on
Hydrocarbon production under existing Contracts that are listed on Schedule 1.2(d); 
 (k) All rights reserved to or vested in any
Governmental Body to control or regulate any of the Assets in any manner, and all obligations and duties under all applicable Laws or under any franchise, grant, license or permit issued by any such Governmental Body; 
 (l) Any encumbrance on or affecting the Assets which is discharged by Seller at or prior to Closing; 
 (m) Any matters shown on Exhibit A-1; 
 (n) Any other liens, charges, encumbrances, defects or irregularities which do not, individually or in the aggregate, detract in any material respect from the value of, or interfere in any material respect with the use or ownership of, the
Assets subject thereto or affected thereby (as currently used or owned), which would be accepted by a reasonably prudent purchaser engaged in the business of owning and operating oil and gas properties, and which do not reduce Seller’s Net
Revenue Interest below that shown in Exhibit A-1, or increase Seller’s working interest above that shown in Exhibit A-1 without a proportionate increase in Net Revenue Interest; 
 (o) Matters that would otherwise be considered Title Defects but that do not in the aggregate for any one Property, Well or Unit meet the Individual
Title Deductible set forth in Section 3.4(j); 
 (p) Imbalances associated with the Assets; 
  

 10 

 (q) Liens granted under applicable joint operating agreements and similar agreements; 
 (r) The matters disclosed in Schedules 5.7(a) and 5.7(b); and 
 (s) Any lien or trust arising in connection with workers’ compensation, unemployment insurance, pension, employment, or child support laws or regulations. 
  

	Section 3.4	Notice of Title Defect Adjustments. 

 (a) To assert a claim of a Title Defect prior to Closing, Purchaser must deliver claim notices to Seller (each a “Title Defect Notice”) on or before November 15, 2007 (the “Title Claim Date”); provided, however,
that Purchaser agrees that it shall furnish Seller once every two (2) weeks until the Title Claim Date with a Title Defect Notice if any officer of Purchaser or its Affiliates discover or learn of any Title Defect during such two (2) week
period. Each Title Defect Notice shall be in writing and shall include (i) a description of the alleged Title Defect(s), (ii) the Units, Warranty Wells or other Assets in Exhibit A-1 affected by the Title Defect (each a “Title
Defect Property”), (iii) the Allocated Value of each Title Defect Property, (iv) supporting documents reasonably necessary for Seller (as well as any title attorney or examiner hired by Seller) to verify the existence of the alleged
Title Defect(s), and (v) the amount by which Purchaser reasonably believes the Allocated Value of each Title Defect Property is reduced by the alleged Title Defect(s) and the computations and information upon which Purchaser’s belief is
based. Notwithstanding any other provision of this Agreement to the contrary, Purchaser shall be deemed to have waived its right to assert Title Defects of which Seller has not been given notice on or before the Title Claim Date. For purposes
hereof, the “Allocated Value” of an Asset shall mean the portion of the Purchase Price that has been allocated to a particular Unit, Warranty Well or other Asset in Exhibit A-1 as prepared by Purchaser and reviewed for
reasonableness by Seller. 
 (b) Seller shall have the right, but not the obligation, to deliver to Purchaser on or before the Title Claim
Date, with respect to each Title Benefit, a notice (a “Title Benefit Notice”) including (i) a description of the Title Benefit, (ii) the Units, Warranty Wells or other Assets in Exhibit A-1 affected, (iii) the
Allocated Values of the Units, Warranty Wells or other Assets in Exhibit A-1 subject to such Title Benefit and (iv) the amount by which Seller reasonably believes the Allocated Value of those Units, Warranty Wells or other Assets is
increased by the Title Benefit, and the computations and information upon which Seller’s belief is based. Seller shall be deemed to have waived all Title Benefits of which it has not given notice to Purchaser on or before the Title Claim Date.

 (c) Seller shall have the right, but not the obligation, to attempt, at its sole cost, to cure or remove Title Defects at any time prior
to Closing (the “Cure Period”), unless the parties otherwise agree, any Title Defects of which it has been advised in writing by Purchaser. 
 (d) Remedies for Title Defects. 
 In the event that any Title Defect is not waived by
Purchaser or cured on or before Closing, Purchaser and Seller shall mutually elect to have one of the following remedies apply: 
  

	 	(i)	subject to the Individual Title Deductible and the Aggregate Defect Deductible, have the Purchase Price reduced by an amount agreed upon (“Title Defect Amount”) pursuant
to Section 3.4(g) or Section 3.4(i) by Purchaser and Seller as being the value of such Title Defect, taking into consideration the Allocated Value of the Property subject to such Title Defect, the portion of the Property
subject to such Title Defect and the legal effect of such Title Defect on the Property affected thereby; provided, however, that the methodology, terms and conditions of Section 3.4(g) shall control any such determination;

  

 11 

	 	(ii)	indemnify Purchaser against all liability, loss, cost and expense resulting from such Title Defect pursuant to an indemnity agreement (the “Indemnity Agreement”) in the
form attached hereto as Exhibit C; 

  

	 	(iii)	have Seller retain the entirety of the Property that is subject to such Title Defect, together with all associated Assets, in which event the Purchase Price shall be reduced by an
amount equal to the Allocated Value of such Property; or 

  

	 	(iv)	at Closing, have Purchaser deposit into escrow the full Allocated Value of the Property that is subject to such Title Defect. Seller shall then have 180 days after Closing in which
to cure the Title Defect. Any Property so held back from the initial Closing will be conveyed to Purchaser at a delayed Closing within ten (10) days following the date that the Title Defect is cured, at which time Seller shall be entitled to
withdraw the full Allocated Value of the Property from escrow, and provided further that if multiple delayed Closings are contemplated as a result of this provision and/or Section 7.7(c), the delayed Closings may be consolidated on dates
mutually agreeable to the parties. In the event that Seller is unable to cure the Title Defect within 180 days of the initial Closing, then Seller shall, at its sole election, select the remedy set forth in subsection (i), (ii), or (iii) above
as the remedy for such Title Defect. Should Seller’s choice ultimately lead to application of Section 3.4(i), the Title Expert shall be selected within fifteen (15) Business Days of the end of this 180 day cure period. All other
provisions of Section 3.4(i) shall apply as written. 

 In the event that Purchaser and Seller cannot mutually agree upon one of the
foregoing remedies with respect to a Title Defect asserted by Purchaser pursuant to Section 3.4(a) prior to Closing, then Seller shall, at its sole election, select the remedy set forth in subsection (i), (ii), (iii) or
(iv) above as the remedy for such Title Defect. 
 (e) With respect to each Unit, Warranty Well or other Asset in Exhibit A-1
affected by Title Benefits reported under Section 3.4(b), subject to the Individual Benefit Deductible and the Aggregate Defect Deductible, the Purchase Price shall be increased by an amount (the “Title Benefit Amount”) equal
to the increase in the Allocated Value for such Unit, Warranty Well or other Asset in Exhibit A-1 caused by such Title Benefits, as determined pursuant to Section 3.4(h). 
  

 12 

 (f) Section 3.4(d) shall be the exclusive right and remedy of Purchaser with respect
to Title Defects asserted by Purchaser pursuant to Section 3.4(a). Section 3.4 (e) shall be the exclusive right and remedy of Seller with respect to Title Benefits asserted by Seller pursuant to Section 3.4(b).

 (g) The Title Defect Amount resulting from a Title Defect shall be the amount by which the Allocated Value of the Title Defect
Property is reduced as a result of the existence of such Title Defect and shall be determined in accordance with the following methodology, terms and conditions: 
  

	 	(i)	if Purchaser and Seller agree on the Title Defect Amount, that amount shall be the Title Defect Amount; 

  

	 	(ii)	if the Title Defect is a lien, encumbrance or other charge which is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to
remove the Title Defect from the Title Defect Property; 

  

	 	(iii)	if the Title Defect represents a discrepancy between (A) the Net Revenue Interest for any Title Defect Property and (B) the Net Revenue Interest stated on Exhibit A-1,
then the Title Defect Amount shall be the product of the Allocated Value of such Title Defect Property multiplied by a fraction, the numerator of which is the Net Revenue Interest decrease and the denominator of which is the Net Revenue Interest
stated on Exhibit A-1; 

  

	 	(iv)	if the Title Defect represents an obligation, encumbrance, burden or charge upon or other defect in title to the Title Defect Property of a type not described in subsections (i),
(ii) or (iii) above, the Title Defect Amount shall be determined by taking into account the Allocated Value of the Title Defect Property, the portion of the Title Defect Property affected by the Title Defect, the legal effect of the Title
Defect, the potential economic effect of the Title Defect over the life of the Title Defect Property, the values placed upon the Title Defect by Purchaser and Seller and such other factors as are necessary to make a proper evaluation; and

  

	 	(v)	notwithstanding anything to the contrary in this Article 3, the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any Title Defect Property
shall not exceed the Allocated Value of the Title Defect Property. 

 (h) The Title Benefit Amount for any Title Benefit shall
be the product of the Allocated Value of the affected Unit, Warranty Well or other Asset in Exhibit A-1 multiplied by a fraction, the numerator of which is the Net Revenue Interest increase and the denominator of which is the Net Revenue
Interest stated on Exhibit A-1. 
 (i) Seller and Purchaser shall attempt in good faith to agree on all Title Defect Amounts and Title
Benefit Amounts prior to Closing. If Seller and Purchaser are unable to agree 

  

 13 

 
by Closing, the Title Defect Amounts and Title Benefit Amounts in dispute shall be exclusively and finally resolved pursuant to this
Section 3.4(i). There shall be a single arbitrator, who shall be a title attorney with at least ten (10) years experience in oil and gas titles involving properties in the regional area in which the Properties are located, as
selected by mutual agreement of Purchaser and Seller within fifteen (15) Business Days after the end of the Cure Period (the “Title Expert”). The Title Expert’s determination shall be made within fifteen (15) Business Days
after submission of the matters in dispute and shall be final and binding upon both parties, without right of appeal. In making his determination, the Title Expert shall be bound by the rules set forth in Section 3.4(g) and
Section 3.4(h) and may consider such other matters as in the opinion of the Title Expert are necessary or helpful to make a proper determination. The Title Expert may allow the parties to make written submissions of their positions in
the manner and to the extent the Title Expert deems appropriate, and the Title Expert may call on the parties to submit such other materials as the Title Expert deems helpful and appropriate to resolution of the dispute. Additionally, the Title
Expert may consult with and engage disinterested third parties to advise the arbitrator, including without limitation petroleum engineers. The Title Expert shall act as an expert for the limited purpose of determining the specific disputed Title
Defect Amounts and Title Benefit Amounts submitted by either party and may not award damages, interest or penalties to either party with respect to any matter. Seller and Purchaser shall each bear its own legal fees and other costs of presenting its
case. Each party shall bear one-half of the costs and expenses of the Title Expert, including any costs incurred by the Title Expert that are attributable to such third party consultation. Within ten (10) days after the Title Expert delivers
written notice to Purchaser and Seller of his award with respect to a Title Defect Amount or a Title Benefit Amount, (i) Purchaser shall pay to Seller the amount, if any, so awarded by the Title Expert to Seller, plus interest payable on such
amount at the Agreed Interest Rate from (but not including) the Closing Date to (and including) the date on which such amount is paid to Seller and (ii) Seller shall pay to Purchaser the amount, if any, so awarded by the Title Expert to
Purchaser, plus interest payable on such amount at the Agreed Interest Rate from (but not including) the Closing Date to (and including) the date on which such amount is paid to Purchaser. 
 (j) Notwithstanding anything to the contrary, (i) in no event shall there be any adjustments to the Purchase Price or other remedies provided by
Seller for any individual uncured Title Defect for which the Title Defect Amount therefor does not exceed $125,000 (“Individual Title Deductible”); and (ii) in no event shall there be any adjustments to the Purchase Price or other
remedies provided by Seller for uncured Title Defects unless the aggregate Title Defect Amounts attributable to all uncured Title Defects, taken together with the aggregate Environmental Defect Amounts attributable to all uncured Environmental
Defects, exceeds a deductible in an amount equal to $12,375,000 (“Aggregate Defect Deductible”), after which point adjustments to the Purchase Price or other remedies shall be made or available to Purchaser only with respect to uncured
Title Defects and uncured Environmental Defects where the aggregate Title Defect Amounts and Environmental Defect Amounts attributable are in excess of such Aggregate Defect Deductible. Notwithstanding anything to the contrary, (i) in no event
shall there be any adjustments to the Purchase Price for any individual Title Benefit for which the Title Benefit Amount does not exceed $125,000 (“Individual Benefit Deductible”); and (ii) in no event shall there be any adjustments
to the Purchase Price for any Title Benefit unless the aggregate Title Benefit Amounts attributable to all such Title Benefits, exceeds a deductible in an amount equal to $12,375,000 (“Aggregate Benefit Deductible”), after which point
adjustments to the Purchase Price shall be made only with respect to such Title Benefit Amounts in excess of such Aggregate Benefit Deductible. 
  

 14 

	Section 3.5	Casualty or Condemnation Loss. 

 (a)
From and after the Effective Time, but subject to the provisions of Section 3.5(b) and (c) below, Purchaser shall assume all risk of loss with respect to and any change in the condition of the Assets and for production of
Hydrocarbons through normal depletion (including but not limited to the watering out of any Well, collapsed casing or sand infiltration of any Well) and the depreciation of personal property due to ordinary wear and tear with respect to the Assets.

 (b) Subject to the provisions of Section 8.1(e) and Section 8.2(e) hereof, if, after the date of this Agreement
but prior to the Closing Date, any portion of the Assets is destroyed by fire or other casualty or is taken in condemnation or under right of eminent domain, and the loss as a result of such individual casualty or taking, taken together with all
other casualty losses and takings, exceeds $12,375,000, the transactions evidenced by this Agreement shall nevertheless be consummated and Seller shall elect by written notice to Purchaser prior to Closing either (i) to cause the Assets
affected by any casualty or taking to be repaired or restored to at least its condition prior to such casualty, at Seller’s sole cost, as promptly as reasonably practicable (which work may extend after the Closing Date), (ii) to indemnify
Purchaser through a document reasonably acceptable to Seller and Purchaser against any costs or expenses that Purchaser reasonably incurs to repair the Assets subject to any casualty or taking or (iii) to treat such casualty or taking as a
Title Defect with respect to the affected Property or Properties under Section 3.4 and adjust the Purchase Price accordingly (without respect to the Aggregate Defect Deductible. In each case, Seller shall retain all rights to insurance
and other claims against third parties with respect to the casualty or taking except to the extent the parties otherwise agree in writing. 
 (c) If, after the date of this Agreement but prior to the Closing Date, any portion of the Assets is destroyed by fire or other casualty or is taken in condemnation or under right of eminent domain, and the loss to the Assets as a result of
such individual casualty or taking, taken together with all other casualty losses and takings, is $12,375,000 or less, the transaction evidenced by this Agreement shall nevertheless be consummated and Seller shall, at Closing, pay to Purchaser all
sums paid to Seller by third parties by reason of such casualty or taking and shall assign, transfer and set over to Purchaser all of Seller’s right, title and interest (if any) in insurance claims, unpaid awards, and other rights against third
parties (other than Affiliates of Seller and its and their directors, officers, employees and agents) arising out of the casualty or taking. 
  

	Section 3.6	Limitations on Applicability. 

 The
right of Purchaser to assert a Title Defect under this Agreement and Seller’s right to assert a Title Benefit shall terminate as of the Title Claim Date, provided there shall be no termination of Purchaser’s or Seller’s rights under
Section 3.4 with respect to any bona fide Title Defect properly reported in a Title Defect Notice or bona fide Title Benefit Claim properly reported in a Title Benefit Notice on or before the Title Claim Date. 
  

 15 

	Section 3.7	Government Approvals Respecting Assets. 

 (a) Federal and State Approvals. Purchaser shall, within thirty (30) days after Closing and at Purchaser’s own expense, file for approval with the applicable Governmental Bodies all assignment documents and other state and
federal transfer documents required to effectuate the transfer of the Assets. Purchaser further agrees, promptly after Closing, to take all other actions reasonably required of it by federal or state agencies having jurisdiction to obtain all
requisite regulatory approvals with respect to this transaction, and to use its commercially reasonable efforts to obtain the approval by such federal or state agencies, as applicable, of Seller’s assignment documents requiring federal or state
approval in order for Purchaser to be recognized by the federal or state agencies as the owner of the Assets. Purchaser shall provide Seller with the resignation and designation of operator instruments, and approved copies of the assignment
documents and other state and federal transfer documents, as soon as they are available. 
 (b) Title Pending Governmental Approvals.
Until all of the governmental approvals provided for in Section 3.7(a) have been obtained, the following shall occur with respect to the affected portion of the Assets: 
  

	 	(i)	Seller shall continue to hold record title to the affected Leases and other affected portion of the Assets as nominee for Purchaser; 

  

	 	(ii)	Purchaser shall be responsible for all Assumed Seller Obligations with respect to the affected Leases and other affected portion of the Assets as if Purchaser was the record owner
of such Leases and other portion of the Assets as of the Effective Time; and 

  

	 	(iii)	Seller shall act as Purchaser’s nominee but shall be authorized to act only upon and in accordance with Purchaser’s instructions, and Seller shall have no authority,
responsibility or discretion to perform any tasks or functions with respect to the affected Leases and other affected portion of the Assets other than those which are purely administrative or ministerial in nature, unless otherwise specifically
requested and authorized by Purchaser in writing. 

 ARTICLE 4 
 ENVIRONMENTAL MATTERS 
  

	Section 4.1	Assessment. 

 From and after the date
of execution of this Agreement until the Closing Date, Seller shall afford to Purchaser and its officers, employees, agents and current and prospective lenders and each of their authorized representatives reasonable access to the Assets, including
the Records in accordance with Section 7.1. During such period, Seller shall also make available to Purchaser, upon reasonable notice during normal business hours, Seller’s personnel knowledgeable with respect to the Assets in order
that Purchaser may make such diligent investigation as Purchaser considers desirable. For those Properties that are not operated by Seller, Seller shall use commercially reasonable efforts to obtain permission from the operator 

  

 16 

 
for Purchaser to conduct such inspections but, provided Seller has exercised such commercially reasonable efforts, Seller shall have no liability to
Purchaser for failure to obtain any such operator’s permission. Upon reasonable notice to Seller, Purchaser shall have the right to conduct an environmental assessment of all or any portion of the Properties (the “Assessment”), to be
conducted by a reputable environmental consulting or engineering firm approved in advance in writing by Seller (such approval not to be unreasonably withheld), but only to the extent that Seller may grant such right without violating any obligations
to any third party (provided that Seller shall use its commercially reasonable efforts to obtain any necessary third party consents to any Assessment to be conducted by Purchaser). The Assessment shall be conducted at the sole cost and expense of
Purchaser, and shall be subject to the indemnity provisions of Section 4.4. Prior to conducting any sampling, boring, drilling or other invasive investigative activity with respect to the Properties (“Invasive Activity”),
Purchaser shall furnish for Seller’s review a proposed scope of such Invasive Activity, including a description of the activities to be conducted and a description of the approximate locations of such activities. If any of the proposed
activities may unreasonably interfere with normal operation of the Properties, Seller may require an appropriate modification of the proposed Invasive Activity. Seller shall have the right to be present during any Assessment of the Properties and
shall have the right, at its option and expense, to split samples with Purchaser. After completing any Assessment of the Properties, Purchaser shall, at its sole cost and expense, restore the Properties to their condition prior to the commencement
of such Assessment, unless Seller requests otherwise, and shall promptly dispose of all drill cuttings, corings, or other investigative-derived wastes generated in the course of the Assessment. Purchaser shall maintain, and shall cause its officers,
employees, representatives, consultants and advisors to maintain, all information obtained by Purchaser pursuant to any Assessment or other due diligence activity as strictly confidential until the Closing occurs, unless disclosure of any facts
discovered through such Assessment is required under any Laws. Upon Seller’s written request, Purchaser shall provide Seller with a copy of the final version of all environmental reports prepared by, or on behalf of, Purchaser with respect to
any Assessment or Invasive Activity conducted on the Properties. In the event that any necessary disclosures under applicable Laws are required with respect to matters discovered by any Assessment conducted by, for or on behalf of Purchaser,
Purchaser agrees that Seller shall be the responsible party for disclosing such matters to the appropriate Governmental Bodies; provided that, if Seller fails to promptly make such disclosure and Purchaser or any of its Affiliates is legally
obligated to make such disclosure, Purchaser or any of its Affiliates, as applicable, shall have the right to fully comply with such legal obligation. 
  

	Section 4.2	NORM, Wastes and Other Substances 

 Purchaser acknowledges that the Assets have been used for the exploration, development, and production of Hydrocarbons and that there may be petroleum, produced water, wastes, or other substances or materials located in, on or under the
Properties or associated with the Assets. Equipment and sites included in the Assets may contain Hazardous Materials, including NORM. NORM may affix or attach itself to the inside of wells, materials, and equipment as scale, or in other forms. The
wells, materials, and equipment located on the Properties or included in the Assets may contain Hazardous Materials, including NORM. Hazardous Materials, including NORM, may have come in contact with various environmental media, including without
limitation, water, soils or sediment. Special procedures may be required for the assessment, remediation, removal, transportation, or disposal of environmental media and Hazardous Materials, including NORM, from the Assets. 
  

 17 

	Section 4.3	Environmental Defects. 

 If, as
a result of its investigation pursuant to Section 4.1, Purchaser determines that with respect to the Assets, there exists a violation of an Environmental Law or an Environmental Liability, including without limitation, failure to
possess, maintain and comply with all material permits required under Environmental Laws, administrative or judicial orders or judgments, agreements or arbitration awards from any Governmental Authority under any Environmental Law requiring
remediation or the payment of a fine or penalty, and any action pending, whether judicial or administrative, alleging noncompliance with or potential liability under any Environmental Law (other than with respect to NORM) (in each case, an
“Environmental Defect”), then on or prior to November 15, 2007, with respect to all Environmental Defects arising prior to that date, and two weeks after Closing with respect to Environmental Defects arising after November 15,
2007, but prior to Closing (the “Environmental Claim Date”), Purchaser may notify Seller in writing of such Environmental Defect (an “Environmental Defect Notice”). FOR ALL PURPOSES OF THIS AGREEMENT, PURCHASER SHALL BE DEEMED
TO HAVE WAIVED ANY ENVIRONMENTAL DEFECT WHICH PURCHASER FAILS TO ASSERT AS AN ENVIRONMENTAL DEFECT BY AN ENVIRONMENTAL DEFECT NOTICE RECEIVED BY SELLER ON OR BEFORE THE ENVIRONMENTAL CLAIM DATE. To be effective, each such notice shall set forth
(i) a description of the matter constituting the alleged Environmental Defect, (ii) the Units/Warranty Wells and associated Assets affected by the Environmental Defect, (iii) the estimated Lowest Cost Response to eliminate the
Environmental Defect in question (the “Environmental Defect Amount”), and (iv) supporting documents reasonably necessary for Seller to verify the existence of the alleged Environmental Defect and the Environmental Defect Amount.
Purchaser shall furnish Seller once every two (2) weeks until the Environmental Claim Date with an Environmental Defect Notice if any officer of Purchaser or its Affiliates discover or become aware of an Environmental Defect during such two
(2) week period. Seller shall have the right, but not the obligation, to cure any Environmental Defect before Closing or, provided that the parties shall have agreed to the general plan of remediation with respect to such Environmental Defect
and the time period by which such remediation shall take place, after Closing. If Seller disagrees with any of Purchaser’s assertions with respect to the existence of an Environmental Defect or the Environmental Defect Amount, Purchaser and
Seller will attempt to resolve the dispute prior to Closing. If the dispute cannot be resolved within ten (10) days of the first meeting of Purchaser and Seller, either party may submit the dispute to an environmental consultant approved in
writing by Seller and Purchaser that is experienced in environmental corrective action at oil and gas properties in the relevant jurisdiction and that shall not have performed professional services for either party or any of their respective
Affiliates during the previous three years (the “Independent Expert”). The Independent Expert may elect to conduct the dispute resolution proceeding by written submissions from Purchaser and Seller with exhibits, including interrogatories,
supplemented with appearances by Purchaser and Seller, if necessary, as the Independent Expert may deem necessary. After the parties and Independent Expert have had the opportunity to review all such submissions, the Independent Expert shall call
for a final, written offer of resolution from each party. The Independent Expert shall render its decision within fifteen (15) Business Days of receiving such offers by selecting one or the 

  

 18 

 
other of the offers, or by crafting a decision that represents a compromise between the two offers. The Independent Expert may not award damages, interest or
penalties to either party with respect to any matter. The decision of the Independent Expert shall be final and binding upon both parties, without right of appeal. Seller and Purchaser shall each bear its own legal fees and other costs of presenting
its case to the Independent Expert. Each party shall bear one-half of the costs and expenses of the Independent Expert. The parties shall adjust the Purchase Price to reflect the Environmental Defect Amounts, as agreed by the parties or as
determined by the Independent Expert, for all uncured Environmental Defects; provided, that notwithstanding anything to the contrary, (a) in no event shall there be any adjustments to the Purchase Price for any individual uncured Environmental
Defect for which the Environmental Defect Amount therefor does not exceed $125,000 (“Individual Environmental Deductible”); and (b) in no event shall there be any adjustments to the Purchase Price for any uncured Environmental Defect
unless the aggregate Environmental Defect Amount attributable to all such Environmental Defects, taken together with the aggregate Title Defect Amounts attributable to all uncured Title Defects, exceeds the Aggregate Defect Deductible, after which
point Purchaser shall be entitled to adjustments to the Purchase Price or other remedies only with respect to uncured Title Defects and uncured Environmental Defects where the aggregate Title Defect Amounts and Environmental Defect Amounts
attributable thereto are in excess of such Aggregate Defect Deductible. To the extent the Independent Expert fails to determine any disputed Environmental Defect Amounts prior to Closing, then, within ten (10) days after the Independent Expert
delivers written notice to Purchaser and Seller of his award with respect to an Environmental Defect Amount, Seller shall pay to Purchaser the amount, if any, so awarded by the Independent Expert, plus interest payable on such amount at the Agreed
Interest Rate from (but not including) the Closing Date to (and including) the date on which such amount is paid to Purchaser. 
  

	Section 4.4	Inspection Indemnity. 

 PURCHASER HEREBY AGREES TO DEFEND, INDEMNIFY, RELEASE, PROTECT, SAVE AND HOLD HARMLESS THE SELLER INDEMNIFIED PERSONS FROM AND AGAINST ANY AND ALL LOSSES ARISING OUT OF OR RELATING TO ANY DUE DILIGENCE ACTIVITY CONDUCTED BY PURCHASER OR
ITS AGENTS, WHETHER BEFORE OR AFTER THE EXECUTION OF THIS AGREEMENT, REGARDLESS OF FAULT. The indemnity obligation set forth in this Section 4.4 shall survive the Closing or termination of this Agreement. 
 ARTICLE 5 
 REPRESENTATIONS AND
WARRANTIES OF SELLER 
  

	Section 5.1	Generally. 

 (a) Any
representation or warranty qualified “to the knowledge of Seller” or “to Seller’s knowledge” or with any similar knowledge qualification is limited to matters within the Actual Knowledge of the officers and employees of
Seller who have direct responsibility for the Assets and who have the titles specified on Schedule 5.1. “Actual Knowledge” for purposes of this Agreement means information actually personally known by such Persons. 
  

 19 

 (b) Inclusion of a matter on a Schedule to a representation or warranty which addresses matters possibly
having a Material Adverse Effect shall not be deemed an indication that such matter does, or may, have a Material Adverse Effect. Likewise, the inclusion of a matter on a Schedule in relation to a representation or warranty shall not be deemed an
indication that such matter necessarily would, or may, breach such representation or warranty absent its inclusion on such Schedule. Matters may be disclosed on a Schedule or Exhibit to this Agreement for purposes of information only. 
 (c) Subject to the foregoing provisions of this Section 5.1, the disclaimers and waivers contained in Sections 11.9, 11.10 and 11.11
and the other terms and conditions of this Agreement, Seller represents and warrants to Purchaser the matters set out in the remainder of this Article 5. 
  

	Section 5.2	Existence and Qualification. 

 Petrohawk Properties is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Texas and is duly qualified to do business as a foreign limited partnership where the Assets it owns are
located, except where the failure to so qualify would not have a Material Adverse Effect. KCS is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to do business as a
foreign corporation where the Assets it owns are located, except where the failure to so qualify would not have a Material Adverse Effect. Petrohawk is a corporation duly organized, validly existing and in good standing under the laws of the State
of Delaware and is duly qualified to do business as a foreign corporation where the Assets it owns are located, except where the failure to so qualify would not have a Material Adverse Effect. One TEC is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Texas and is duly qualified to do business as a foreign limited liability company where the Assets it owns are located, except where the failure to so qualify would not have a
Material Adverse Effect. 
  

	Section 5.3	Power. 

 Petrohawk Properties
has the limited partnership power to enter into and perform this Agreement and consummate the transactions contemplated by this Agreement. KCS has the corporate power to enter into and perform this Agreement and consummate the transactions
contemplated by this Agreement. Petrohawk has the corporate power to enter into and perform this Agreement and consummate the transactions contemplated by this Agreement. One TEC has the limited liability company power to enter into and perform this
Agreement and consummate the transactions contemplated by this Agreement. 
  

	Section 5.4	Authorization and Enforceability. 

 The execution, delivery and performance of this Agreement, and the performance of the transactions contemplated hereby, have been duly and validly authorized by all necessary corporate, limited partnership, or limited liability company (as
applicable) action on the part of Seller. This Agreement has been duly executed and delivered by Seller (and all documents required hereunder to be executed and delivered by Seller at Closing will be duly executed and 

  

 20 

 
delivered by Seller) and this Agreement constitutes, and at the Closing such documents will constitute, the valid and binding obligations of Seller,
enforceable against Seller in accordance with their terms except as such enforceability may be limited by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally as well as to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at Law). 
  

	Section 5.5	No Conflicts. 

 Subject to
compliance with the Preference Rights and Transfer Requirements set forth in Schedule 5.13 and the HSR Act, the execution, delivery and performance of this Agreement by Seller, and the transactions contemplated by this Agreement will not
(i) violate any provision of the certificate of incorporation, certificate of partnership, articles of organization, bylaws, partnership agreement, limited liability agreement of Petrohawk Properties, KCS, One TEC or Petrohawk, (ii) result
in default (with due notice or lapse of time or both) or the creation of any lien or encumbrance or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license or agreement to which Seller is a party or which affect the Assets, (iii) violate any judgment, order, ruling, or decree applicable to Seller as a party in interest, (iv) violate any Laws applicable to Seller or any of
the Assets, except for (a) rights to consent by, required notices to, filings with, approval or authorizations of, or other actions by any Governmental Body where the same are not required prior to the assignment of the related Asset or they
are customarily obtained subsequent to the sale or conveyance thereof and (b) any matters described in clauses (ii), (iii) or (iv) above which would not have a Material Adverse Effect. 
  

	Section 5.6	Liability for Brokers’ Fees. 

 Purchaser shall not directly or indirectly have any responsibility, liability or expense, as a result of undertakings or agreements of Seller or its Affiliates, for brokerage fees, finder’s fees, agent’s commissions or other
similar forms of compensation in connection with this Agreement or any agreement or transaction contemplated hereby. 
  

	Section 5.7	Litigation. 

 With respect to
the Assets and Seller’s or any of its Affiliates’ ownership, operation, development, maintenance, or use of any of the Assets, except as set forth in: (i) Schedule 5.7(a), no proceeding, arbitration, action, suit, pending
settlement, or other legal proceeding of any kind or nature before or by any Governmental Body (each, a “Proceeding,” and collectively “Proceedings”) (including any take-or-pay claims) to which Seller or any of its Affiliates is
a party and which relates to the Assets is pending or, to Seller’s knowledge, threatened against Seller or any of its Affiliates; (ii) Schedule 5.7(b), to Seller’s knowledge, no Proceeding or investigation to which Seller is
not a party which relates to the Assets is pending or threatened. 
  

	Section 5.8	Taxes and Assessments. 

 (a)
With respect to all Taxes related to the Assets, (i) all reports, returns, statements (including estimated reports, returns or statements), and other similar filings (the “Tax Returns”) relating to the Assets required to be filed by Seller
with respect to such Taxes have 

  

 21 

 
been timely filed with the appropriate Governmental Body in all jurisdictions in which such Tax Returns are required to be filed; and (ii) such Tax
Returns are true and correct in all material respects, and (iii) all Taxes due with respect to such Tax Returns have been paid, except those being contested in good faith. 
 (b) With respect to all Taxes related to the Assets, except as set forth on Schedule 5.8, (i) there are not currently in effect any
extensions or waivers of any statute of limitations of any jurisdiction regarding the assessment or collection of any such Tax; (ii) there are no Proceedings against the Assets or Seller by any Governmental Body; and (iii) there are no Tax
liens on any of the Assets except for liens for Taxes not yet due. 
  

	Section 5.9	Compliance with Laws. 

 Except
as disclosed on Schedule 5.9, the Assets are, and the ownership, operation, development, maintenance, and use of any of the Assets are, in material compliance with the provisions and requirements of all Laws of all Governmental Bodies having
jurisdiction with respect to the Assets, or the ownership, operation, development, maintenance, or use of any of the Assets, except where the failure to so comply would not have a Material Adverse Effect. Notwithstanding the foregoing, Seller makes
no representation or warranty, express or implied, under this Section 5.9 relating to any Environmental Liabilities or Environmental Law. 
  

	Section 5.10	Contracts. 

 To Seller’s
knowledge, all Material Contracts have been identified among the Contracts listed in Schedule 1.2(d). Seller is in compliance and, to Seller’s knowledge, all counterparties are in compliance under all Material Contracts, except as
disclosed on Schedule 5.10(a) and except for such non-compliance as would not, individually or in the aggregate, have a Material Adverse Effect. “Material Contracts” means any Contract (other than any joint operating agreement
included within the Contracts) (i) that could reasonably be expected to result in aggregate payments by Purchaser with respect to the Assets of more than $1,000,000 during the current or any subsequent year (based solely on the terms thereof
and without regard to any expected increase in volumes or revenues), (ii) which requires more than ninety (90) days notice by Purchaser in order to terminate the Contract or (iii) between Seller and an Affiliate of Seller relating to
the Assets. 
  

	Section 5.11	Payments for Hydrocarbon Production. 

 Except as set forth on Schedule 5.11, 
 (a) to the knowledge of Seller, all rentals, royalties, excess royalty, overriding
royalty interests, Hydrocarbon production payments, and other payments due and payable by Seller to overriding royalty interest holders and other interest owners under or with respect to the Assets and the Hydrocarbons produced therefrom or
attributable thereto, have been paid, or if not paid, (i) are being contested in good faith in the normal course of business; or (ii) Seller is otherwise entitled to withhold payment while resolving questions of title, obtaining division
orders, or resolving other matters in the ordinary course of business; and 
  

 22 

 (b) Seller is not obligated under any contract or agreement for the sale of gas from the Assets
containing a take-or-pay, advance payment, prepayment, or similar provision, or under any gathering, transmission, or any other contract or agreement with respect to any of the Assets to gather, deliver, process, or transport any gas without then or
thereafter receiving full payment therefor. 
  

	Section 5.12	Governmental Authorizations. 

 To Seller’s knowledge, except as disclosed on Schedule 5.12, Seller has obtained and is maintaining all material federal, state and local governmental licenses, permits, franchises, orders, exemptions, variances, waivers,
authorizations, certificates, consents, rights, privileges and applications therefor (the “Governmental Authorizations”) that are presently necessary or required for the ownership and operation of the Seller Operated Assets as currently
owned and operated (excluding Governmental Authorizations required by Environmental Law). To Seller’s knowledge, except as disclosed in Schedule 5.7(a), Schedule 5.7(b) or Schedule 5.12, (i) Seller has operated the
Seller Operated Assets in all material respects in accordance with the conditions and provisions of such Governmental Authorizations, and (ii) no written notices of material violation have been received by Seller, and no Proceedings are pending
or, to Seller’s knowledge, threatened in writing that might result in any material modification, revocation, termination or suspension of any such Governmental Authorizations or which would require any material corrective or remediation action
by Seller. 
  

	Section 5.13	Preference Rights and Transfer Requirements. 

 To the knowledge of Seller, Schedule 5.13 sets forth all Preference Rights and Transfer Requirements applicable to the Assets, including Preference Rights and Transfer Requirements contained in easements,
rights-of-way or equipment leases included in the Assets. None of the other Assets, or any portion thereof, is subject to any Preference Right or Transfer Requirement which may be applicable to the transactions contemplated by this Agreement, except
for Preference Rights and Transfer Requirements as are set forth on Schedule 5.13. 
  

	Section 5.14	Payout Balances. 

 To
Seller’s knowledge, Schedule 5.14 contains a complete and accurate list of the status of any “payout” balance, as of July 1, 2007, for the Wells and Units listed on Exhibit A-1 that are subject to a reversion or
other adjustment at some level of cost recovery or payout (or passage of time or other event other than termination of a Lease by its terms). 
  

	Section 5.15	Outstanding Capital Commitments. 

 As of the date hereof, there are no outstanding AFEs or other commitments to make capital expenditures which are binding on the Assets and which Seller reasonably anticipates will individually require expenditures by the owner of the Assets
after the Effective Time in excess of $200,000 other than those shown on Schedule 5.15. 
  

 23 

	Section 5.16	Imbalances. 

 To Seller’s
knowledge, Schedule 5.16 accurately sets forth in all material respects all of Seller’s Imbalances as of July 1, 2007 arising with respect to the Assets and, except as disclosed in Schedule 5.16, (i) no Person is entitled to
receive any material portion of Seller’s Hydrocarbons produced from the Assets or to receive material cash or other payments to “balance” any disproportionate allocation of Hydrocarbons produced from the Assets under any operating
agreement, gas balancing or storage agreement, gas processing or dehydration agreement, gas transportation agreement, gas purchase agreement, or other agreements, whether similar or dissimilar, (ii) Seller is not obligated to deliver any
material quantities of gas or to pay any material penalties or other material amounts, in connection with the violation of any of the terms of any gas contract or other agreement with shippers with respect to the Assets, and (iii) Seller is not
obligated to pay any material penalties or other material payments under any gas transportation or other agreement as a result of the delivery of quantities of gas from the Wells in excess of the contract requirements. Except as set forth on
Schedule 5.16, Seller has not received, or is not obligated to receive, prepayments (including payments for gas not taken pursuant to “take or pay” arrangements) for any of Seller’s share of the Hydrocarbons produced from the
Properties, as a result of which the obligation exists to deliver Hydrocarbons produced from the Properties after the Effective Time without then or thereafter receiving payment therefor. 
  

	Section 5.17	Condemnation. 

 There is no
actual or to Seller’s knowledge, no threatened taking (whether permanent, temporary, whole or partial) of any part of the Properties by reason of condemnation or the threat of condemnation. 
  

	Section 5.18	Bankruptcy. 

 There are no
bankruptcy, reorganization, or receivership proceedings pending against, or, to Seller’s knowledge, being contemplated by or threatened against Seller. 
  

	Section 5.19	Production Allowables. 

 Seller
has not received written notice that there has been any change proposed in the production allowables for any Wells listed on Exhibit A-1. 
  

	Section 5.20	Foreign Person. 

 Seller is not
a “foreign person” within the meaning of Section 1445 of the Code. 
  

	Section 5.21	Collective Bargaining Agreements. 

 Neither Seller or any of its Affiliates has agreed to recognize any labor union or other collective bargaining representative of, nor has any labor union or other collective bargaining representative been certified as the exclusive
bargaining representative of, any individual employed or otherwise engaged by Seller (or an Affiliate thereof) who is primarily involved in the business associated with the Assets. 
  

 24 

	Section 5.22	Condition of Assets. 

 Except
as set forth on Schedule 5.22, all of the Wells, Equipment, Pipelines and other tangible assets owned, leased, used or held for use by Seller in the ordinary course of business are to the knowledge of Seller (i) structurally sound with
no known material defects; (ii) in good operating condition and repair, subject to ordinary wear and tear; and (iii) not in need of maintenance or repair except for ordinary, routine maintenance and repair. 
 ARTICLE 6 
 REPRESENTATIONS AND
WARRANTIES OF PURCHASER 
 Purchaser represents and warrants to Seller the following: 
  

	Section 6.1	Existence and Qualification. 

 Purchaser is a Delaware Limited Partnership duly formed, validly existing and in good standing under the laws of the state of its formation; and Purchaser is duly qualified to do business as a foreign entity in every jurisdiction in which
it is required to qualify in order to conduct its business, except where the failure to so qualify would not have a material adverse effect on Purchaser; and Purchaser is or will be as of Closing duly qualified to do business as a foreign entity in
the respective jurisdictions where the Assets are located. 
  

	Section 6.2	Power. 

 Purchaser has the
power to enter into and perform this Agreement and consummate the transactions contemplated by this Agreement. 
  

	Section 6.3	Authorization and Enforceability. 

 The execution, delivery and performance of this Agreement, and the performance of the transaction contemplated hereby, have been duly and validly authorized by all necessary partnership action on the part of Purchaser. This Agreement has
been duly executed and delivered by Purchaser (and all documents required hereunder to be executed and delivered by Purchaser at Closing, including but not limited to the Parent Senior Unsecured Note, will be duly executed and delivered by
Purchaser) and this Agreement constitutes, and at the Closing such documents will constitute, the valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with their terms except as such enforceability may be limited
by applicable bankruptcy or other similar laws affecting the rights and remedies of creditors generally as well as to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

  

	Section 6.4	No Conflicts. 

 Subject to
compliance with the HSR Act, the execution, delivery and performance of this Agreement by Purchaser, and the transactions contemplated by this Agreement will not (i) violate any provision of the organizational documents of Purchaser, (ii) result in
a default (with due notice or lapse of time or both) or the creation of any lien or encumbrance or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions 

  

 25 

 
of any note, bond, mortgage, indenture, license or agreement to which Purchaser is a party, (iii) violate any judgment, order, ruling, or regulation
applicable to Purchaser as a party in interest, or (iv) violate any Law applicable to Purchaser or any of its assets, or (v) require any filing with, notification of or consent, approval or authorization of any Governmental Body or
authority, except any matters described in clauses (ii), (iii), (iv) or (v) above which would not have a Material Adverse Effect on Purchaser or the transactions contemplated hereby. 
  

	Section 6.5	Liability for Brokers’ Fees. 

 Seller shall not directly or indirectly have any responsibility, liability or expense, as a result of undertakings or agreements of Purchaser or its Affiliates, for brokerage fees, finder’s fees, agent’s commissions or other
similar forms of compensation in connection with this Agreement or any agreement or transaction contemplated hereby. 
  

	Section 6.6	Litigation. 

 There are no
Proceedings pending, or to the Actual Knowledge of Purchaser, threatened in writing before any Governmental Body against Purchaser or any Affiliate of Purchaser which are reasonably likely to impair materially Purchaser’s ability to perform its
obligations under this Agreement. 
  

	Section 6.7	Limitation and Independent Evaluation. 

 Except for the representations and warranties expressly made by Seller in Article 5 of this Agreement, or in the Conveyance or in any certificate furnished or to be furnished to Purchaser pursuant to this Agreement, Purchaser
represents and acknowledges that (i) there are no representations or warranties, express, statutory or implied, as to the Assets or prospects thereof, and (ii) Purchaser has not relied upon any oral or written information provided by
Seller. Without limiting the generality of the foregoing, subject to Section 5.7, Purchaser represents and acknowledges that Seller has made and will make no representation or warranty regarding any matter or circumstance relating to
Environmental Laws, Environmental Liabilities, the release of materials into the environment or protection of human health, safety, natural resources or the environment or any other environmental condition of the Assets. Purchaser further represents
and acknowledges that it is knowledgeable of the oil and gas business and of the usual and customary practices of producers such as Seller, and that it has retained and taken advice concerning the Assets and transactions herein from advisors and
consultants which are knowledgeable about the oil and gas business, and that is is aware of the risks inherent in the oil and gas business. Purchaser represents that it has had access to the Assets, the officers and employees of Seller, and the
books, records and files made available by Seller relating to the Assets, and in making the decision to enter into this Agreement and consummate the transactions contemplated hereby, Purchaser has relied solely on the basis of its own independent
evaluation and due diligence investigation of the Assets, and its own independent evaluation of the business, economic, legal, tax, or other consequences of this transaction including its own estimate and appraisal of the extent and value of the
oil, natural gas, and other reserves attributable to the Properties. 
  

 26 

	Section 6.8	SEC Disclosure. 

 Purchaser is
acquiring the Assets for its own account for use in its trade or business, and not with a view toward or for sale associated with any distribution thereof, nor with any present intention of making a distribution thereof within the meaning of the
Securities Act and applicable state securities laws. 
  

	Section 6.9	Bankruptcy. 

 There are no
bankruptcy, reorganization or receivership proceedings pending against, or, to the knowledge of Purchaser, being contemplated by, or threatened against Purchaser. 
  

	Section 6.10	Qualification. 

 As of Closing,
Purchaser will be qualified to own and assume operatorship of federal and state oil, gas and mineral leases in all jurisdictions where the Assets to be transferred to it are located, and the consummation of the transactions contemplated in this
Agreement will not cause Purchaser to be disqualified as such an owner or operator. To the extent required by the applicable Law, as of the Closing, Purchaser will have lease bonds, area-wide bonds or any other surety bonds as may be required by,
and in accordance with, such state or federal regulations (or other requirements) governing the ownership and operation of the Assets. 
 ARTICLE 7 
 COVENANTS OF THE PARTIES 
  

	Section 7.1	Access. 

 (a) From the date of
this Agreement until the Closing, Seller shall cooperate with Purchaser and provide Purchaser and its representatives, consultants, and current and prospective lenders and advisors, and each of their authorized representatives, reasonable access to
the Assets and access to the Records, but only to the extent that Seller may do so without violating any obligations to any third party and to the extent that Seller has authority to grant such access without breaching any restriction legally
binding on Seller. Purchaser shall conduct all such inspections and other information gathering described above only (i) (x) during regular business hours and (y) during any weekends and after hours requested by Purchaser that can be
reasonably accommodated by Seller, and (ii) in a manner which will not unduly interfere with Seller’s operation of the Assets. All information obtained by Purchaser and its representatives pursuant to this Section 7.1 shall be
subject to the terms of that certain confidentiality agreement dated August 23, 2007 (the “Confidentiality Agreement”), by and between Seller and Purchaser. 
  

	Section 7.2	Government Reviews. 

 (a) Other
than with respect to filings, negotiations and applications with respect to the HSR Act, which are addressed in Section 7.2(b), Seller and Purchaser shall in a timely manner (x) make all required filings, if any, with and prepare applications
to and conduct negotiations with, each Governmental Body as to which such filings, applications or negotiations are necessary or appropriate in the consummation of the transactions contemplated hereby and (y) provide such information as each may
reasonably request to make such filings, 

  

 27 

 
prepare such applications and conduct such negotiations. Each party shall cooperate with and use all commercially reasonable efforts to assist the other with
respect to such filings, applications and negotiations. 
 (b) As promptly as practicable, and in any event not more than fifteen
(15) days following the date of this Agreement, Seller and Purchaser will file with the Federal Trade Commission and the Department of Justice, as applicable, the required notification and report forms and will as promptly as practicable
furnish any supplemental information which may be requested in connection therewith. Seller and Purchaser will request expedited treatment (i.e., early termination) of such filing. Seller and Purchaser shall use commercially reasonable efforts to
make all other filings and submissions on a prompt and timely basis in connection with the filings required by this Section 7.2(b) and cooperate with each other and use all commercially reasonable efforts to assist the other with respect
to such filings, applications and negotiations. Purchaser shall bear the cost of all filing or application fees payable to any Governmental Body with respect to the transactions contemplated by this Agreement, regardless of whether Purchaser,
Seller, or any Affiliate of any of them is required to make the payment. 
  

	Section 7.3	Notification of Breaches. 

 Until the Closing, 
 (a) If any of Purchaser’s or Seller’s representations or warranties is untrue or shall become untrue
in any material respect between the date of execution of this Agreement and the Closing Date, or if any of Purchaser’s or Seller’s covenants or agreements to be performed or observed prior to or on the Closing Date shall not have been so
performed or observed in any material respect, but if such breach of representation, warranty, covenant or agreement shall (if curable) be cured by the Closing, then such breach shall be considered not to have occurred for all purposes of this
Agreement. No such notification shall affect the representations or warranties of the parties or the conditions to their respective obligations hereunder. 
 (b) There shall be no breach of the covenants in this Section as a result of a party’s failure to report a breach of any representation or warranty or a failure to perform or observe any covenant or agreement of
which it had knowledge if the party subject to the breach or failure also had knowledge thereof prior to Closing. 
  

	Section 7.4	Letters-in-Lieu; Assignments; Operatorship. 

 (a) Seller will execute on the Closing Date letters in lieu of division and transfer orders relating to the Assets, on forms prepared by Seller and reasonably satisfactory to Purchaser, to reflect the transaction
contemplated hereby. 
 (b) Seller will prepare and execute, and Purchaser will execute, on the Closing Date, all assignments necessary to
convey to Purchaser all federal and state Leases in the form as prescribed by the applicable Governmental Body and otherwise acceptable to Purchaser and Seller. 
 (c) Seller makes no representations or warranties to Purchaser as to transferability or assignability of operatorship of any Seller Operated Assets. Rights and 

  

 28 

 
obligations associated with operatorship of such Properties are governed by operating and similar agreements covering the Properties and will be determined
in accordance with the terms of such agreements. However, Seller will assist Purchaser in Purchaser’s efforts to succeed Seller as operator of any Wells and Units included in the Assets. Purchaser shall, promptly following Closing, file all
appropriate forms and declarations or bonds with federal and state agencies relative to its assumption of operatorship. For all Seller Operated Assets, Seller shall execute and deliver to Purchaser on the Closing Date, and Purchaser shall promptly
file the appropriate forms with the applicable regulatory agency transferring operatorship of such Assets to Purchaser. 
  

	Section 7.5	Public Announcements. 

 Until
the Closing, neither Seller nor Purchaser shall make any press release or other public announcement regarding the existence of this Agreement, the contents hereof or the transactions contemplated hereby without the prior written consent of the
others; provided, however, the foregoing shall not restrict disclosures by Purchaser or Seller which are required by applicable securities or other laws or regulations or the applicable rules of any stock exchange having jurisdiction over the
disclosing party or its Affiliates; and provided, further, that, Purchaser may disclose the existence and contents of this Agreement, the transactions contemplated hereby and information regarding the Assets to the Standard & Poor’s
and Moody’s rating agencies and any actual or potential lenders or other financing sources of Purchaser. At or after Closing, the content of any press release or public announcement first announcing the consummation of this transaction shall be
subject to the prior review and reasonable approval of Seller and Purchaser; provided, however, the foregoing shall not restrict disclosures by Purchaser or Seller which are required by applicable securities or other laws or regulations or the
applicable rules of any stock exchange having jurisdiction over the disclosing party or its Affiliates. Purchaser acknowledges that certain securities of Petrohawk are publicly-traded, Petrohawk is required to disclose the existence of material
agreements through filings with the SEC, Petrohawk may be required to disclose and file this Agreement with the SEC and it may become public upon such disclosure and Petrohawk may issue a press release and make other disclosures immediately after
the execution of this Agreement and/or Closing which may contain details of the transactions contemplated herein, all without Purchaser’s consent. 
  

	Section 7.6	Operation of Business. 

 Except
as set forth on Schedule 7.6, until the Closing, Seller (i) will operate the Assets and the business thereof as a reasonably prudent operator and consistent with past practices, (ii) will not, without the prior written consent of Purchaser,
which consent shall not be unreasonably withheld, commit to any operation, or series of related operations thereon, reasonably anticipated to require future capital expenditures by Purchaser as owner of the Assets in excess of $200,000, or make any
capital expenditures (other than those described on Schedule 5.15) in respect of the Assets in excess of $200,000, or terminate, materially amend, execute or extend any material contracts affecting the Assets, (iii) will maintain insurance coverage
on the Assets presently furnished by nonaffiliated third parties in the amounts and of the types presently in force, (iv) will use commercially reasonable efforts to maintain in full force and effect all Leases, (v) will maintain all material
governmental permits and approvals affecting the Assets, (vi) will not transfer, farmout, sell, hypothecate, encumber or otherwise dispose of any Assets, except for (A) sales and dispositions of Hydrocarbon production in the ordinary course of
business consistent 

  

 29 

 
with past practices and/or (B) transfers, farmouts, hypothecations, encumbrances or other dispositions of Assets, in one or more transactions, not
exceeding $200,000 of consideration (in any form), in the aggregate, (vii) will not enter into any settlement or agreement with respect to Taxes, or make or change any election with respect to Taxes, relating to the Assets and (viii) will
not commit to do any of the foregoing. Purchaser’s approval of any action restricted by this Section 7.6 shall be considered granted within ten (10) days (unless a shorter time is reasonably required by the circumstances and
such shorter time is specified in Seller’s written notice) of Seller’s written notice to Purchaser requesting such consent unless Purchaser notifies Seller to the contrary in writing during that period. In the event of an emergency, Seller
may take such action as a prudent operator would take and shall notify Purchaser of such action promptly thereafter. 
 Purchaser
acknowledges that Seller may own an undivided interest in certain of the Assets, and Purchaser agrees that the acts or omissions of the other working interest owners who are not affiliated with Seller shall not constitute a violation of the
provisions of this Section 7.6 nor shall any action required by a vote of working interest owners constitute such a violation so long as Seller has voted its interest in a manner consistent with the provisions of this
Section 7.6. 
  

	Section 7.7	Preference Rights and Transfer Requirements. 

 (a) The transactions contemplated by this Agreement are expressly subject to all validly existing and applicable Preference Rights and Transfer Requirements. Prior to the Closing Date, Seller shall initiate all
procedures which are reasonably required to comply with or obtain the waiver of all Preference Rights and Transfer Requirements set forth in Schedule 5.13 with respect to the transactions contemplated by this Agreement. Seller shall use its
commercially reasonable efforts to obtain all applicable consents and to obtain waivers of applicable Preference Rights; provided, however, Seller shall not be obligated to pay any consideration to (or incur any cost or expense for the benefit of)
the holder of any Preference Right or Transfer Requirement in order to obtain the waiver thereof or compliance therewith. 
 (b) If the
holder of a Preference Right elects prior to Closing to purchase the Asset subject to a Preference Right (a “Preference Property”) in accordance with the terms of such Preference Right, and Seller receives written notice of such election
prior to the Closing, such Preference Property will be eliminated from the Assets and the Purchase Price shall be reduced by the Allocated Value of the Preference Property. 
 (c) If 
  

	 	(i)	a third party brings any suit, action or other proceeding prior to the Closing seeking to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated
hereby in connection with a claim to enforce a Preference Right; 

  

	 	(ii)	an Asset is subject to a Transfer Requirement that provides that transfer of such Asset without compliance with such Transfer Requirement will result in termination or other
material impairment of any rights in relation to such Asset, and such Transfer Requirement is not waived, complied with or otherwise satisfied prior to the Closing Date; or 

  

 30 

	 	(iii)	the holder of a Preference Right does not elect to purchase such Preference Property or waive such Preference Right with respect to the transactions contemplated by this Agreement
prior to the Closing Date and the time in which the Preference Right may be exercised has not expired; 

 then, unless otherwise agreed by
Seller and Purchaser, the Asset or portion thereof affected by such Preference Right or Transfer Requirement (a “Retained Asset”) shall be held back from the Assets to be transferred and conveyed to Purchaser at Closing and the Purchase
Price to be paid at Closing shall be reduced by the Allocated Value of such Retained Asset pursuant to Section 7.7(b). Any Retained Asset so held back at the initial Closing will be conveyed to Purchaser at a delayed Closing (which shall
become the new Closing Date with respect to such Retained Asset), within ten (10) days following the date on which the suit, action or other proceeding, if any, referenced in clause (i) above is settled or a judgment is rendered (and no
longer subject to appeal) permitting transfer of the Retained Asset to Purchaser pursuant to this Agreement and Seller obtains, complies with, obtains a waiver of or notice of election not to exercise or otherwise satisfies all remaining Preference
Rights and Transfer Requirements with respect to such Retained Asset as contemplated by this Section (or if multiple Assets are Retained Assets, on a date mutually agreed to by the parties in order to consolidate, to the extent reasonably possible,
the number of Closings). At the delayed Closing, Purchaser shall pay Seller a purchase price equal to the amount by which the Purchase Price was reduced on account of the holding back of such Retained Asset (as adjusted pursuant to
Section 2.2 through the new Closing Date therefor); provided, however, if all such Preference Rights and Transfer Requirements with respect to any Retained Asset so held back at the initial Closing are not obtained, complied with, waived
or otherwise satisfied as contemplated by this Section within one hundred eighty (180) days after the initial Closing has occurred with respect to any Asset, then such Retained Asset shall be eliminated from the Assets and shall become an
Excluded Asset, unless Seller and Purchaser agree to proceed with a closing on such Retained Asset, in which case Purchaser shall be deemed to have waived any objection (and shall be obligated to indemnify the Seller Indemnified Persons for all
Losses) with respect to non-compliance with such Preference Rights and Transfer Requirements with respect to such Retained Asset(s). 
 (d)
Purchaser acknowledges that Seller desires to sell all of the Assets to Purchaser and would not have entered into this Agreement but for Purchaser’s agreement to purchase all of the Assets as herein provided. Accordingly, it is expressly
understood and agreed that Seller does not desire to sell any Property affected by a Preference Right to Purchaser unless the sale of all of the Assets is consummated by the Closing Date in accordance with the terms of this Agreement. In furtherance
of the foregoing, Seller’s obligation hereunder to sell the Preference Properties to Purchaser is expressly conditioned upon the consummation by the Closing Date of the sale of all of the Assets (other than Retained Assets or other Assets
excluded pursuant to the express provisions of this Agreement) in accordance with the terms of this Agreement, either by conveyance to Purchaser or conveyance pursuant to an applicable Preference Right; provided that, nothing herein is intended or
shall operate to extend or apply any Preference Right to any portion of the Assets which is not otherwise burdened thereby. Time is of the essence with respect to the parties’ agreement to consummate the sale of the Assets by the Closing Date
(or by the delayed Closing Date pursuant to Section 7.7(c)). 
  

 31 

	Section 7.8	Tax Matters. 

 (a) Subject to
the provisions of Section 12.3, Seller shall be responsible for all Taxes related to the Assets (other than ad valorem, property, severance, Hydrocarbon production and similar Taxes based upon or measured by the ownership or operation of
the Assets or the production of Hydrocarbons therefrom, which are addressed in Section 1.4) attributable to any period of time at or prior to the Closing Date, and Purchaser shall be responsible for all such Taxes related to the Assets
attributable to any period of time after the Closing Date. Notwithstanding the foregoing, Seller shall handle payment to the appropriate Governmental Body of all Taxes with respect to the Assets which are required to be paid prior to Closing (and
shall file all Tax Returns with respect to such Taxes). If requested by Purchaser, Seller will assist Purchaser with preparation of all ad valorem and property Tax Returns for periods ending on or before December 31, 2007 (including any
extensions requested). Seller shall deliver to Purchaser within thirty (30) days of filing copies of all Tax Returns to be filed by Seller relating to the Assets and any supporting documentation to be provided by Seller to Governmental Bodies
for Purchaser’s approval, which shall not be unreasonably withheld, excluding Tax Returns related to income tax, franchise tax, or other similar Taxes. Purchaser shall file all Tax Returns covering Taxes treated as Property Costs that are
required to be filed after the Closing Date unless covered above. With respect to such Tax Returns covering a taxable period which includes the Effective Date, Purchaser shall provide a copy of such Tax Return to Seller within 30 days of filing for
Seller’s approval, which shall not be unreasonably withheld. 
 (b) Purchaser and Seller shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of any Tax Returns and any audit, litigation or other Proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other party’s request) the
provision of records and information which are reasonably relevant to any such audit, litigation or other Proceeding and making employees reasonably available on a mutually convenient basis to provide additional information and explanation of any
material provided hereunder. Each of Purchaser and Seller agrees (i) to retain all books and records with respect to Tax matters pertinent to the acquired assets relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by Purchaser or Seller, any extensions thereof) of the respective taxable periods, and to abide by all record retention agreements entered into with any Governmental Body, and
(ii) to give the other party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other party so requests, each party shall allow the other party the option of taking possession of
such books and records prior to their disposal. Purchaser and Seller further agree, upon request, to use their commercially reasonable efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed with respect to the transactions contemplated. 
 (c) Seller reserves
the right, at or prior to Closing, to assign its rights under this Agreement with respect to all or a portion of the Purchase Price, and that portion of the Assets associated therewith (“1031 Assets”), to a “Qualified
Intermediary” (as that term is 

  

 32 

 
defined in Section 1.1031(k)-1(g)(4)(v) of the Treasury Regulations) to accomplish this transaction, in whole or in part, in a manner that is intended
to comply with the requirements of a like-kind exchange (“Like-Kind Exchange”) pursuant to Section 1031 of the Code. Purchaser and Seller each acknowledge and agree that a whole or partial assignment of this Agreement to a Qualified
Intermediary shall not release either party from any of its respective promises, liabilities and obligations to the other or expand any promises, liabilities or obligations of such party under this Agreement. Neither party represents to the other
that any particular tax treatment will be given to either party as a result of the Like-Kind Exchange. Purchaser shall not be obligated to pay any additional costs or incur any additional obligations in its purchase of the Assets if such costs are
the result of Seller’s Like-Kind Exchange, and Seller shall hold harmless and indemnify Purchaser from and against all claims, losses and liabilities (including reasonable attorneys’ fees, court costs and related expenses), if any,
resulting from such a Like-Kind Exchange. 
  

	Section 7.9	Further Assurances. 

 After
Closing, Seller and Purchaser each agrees to take such further actions and to execute, acknowledge and deliver all such further documents as are reasonably requested by the other party for carrying out the purposes of this Agreement or of any
document delivered pursuant to this Agreement. 
  

	Section 7.10	Operations Information. 

 Between the date of this Agreement and the Closing Date, Seller shall deliver to an officer designated by Purchaser copies of all production reports and daily drilling reports relating to Seller’s operation of the Assets promptly after
the preparation thereof in the ordinary course of business. 
 ARTICLE 8 
 CONDITIONS TO CLOSING 
  

	Section 8.1	Conditions of Seller to Closing. 

 The obligations of Seller to consummate the transactions contemplated by this Agreement are subject, at the option of Seller, to the satisfaction or waiver by Seller on or prior to Closing of each of the following conditions: 
 (a) Representations. Each of the representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material
respects (other than those representations and warranties of Purchaser that are qualified by materiality, which shall be true and correct in all respects) as of the Closing Date as though made on and as of the Closing Date, except to the extent that
any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects (other than those representations and warranties of Purchaser that are
qualified by materiality, which shall be true and correct in all respects) as of such specified date; 
  

 33 

 (b) Performance. Purchaser shall have performed and observed, in all material respects, all
covenants and agreements to be performed or observed by it under this Agreement prior to or on the Closing Date; 
 (c) Proceedings.
No Proceeding by a third party (including any Governmental Body) seeking to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement shall be pending before any Governmental Body and no order, writ,
injunction or decree shall have been entered and be in effect by any court or any Governmental Body of competent jurisdiction, and no statute, rule, regulation or other requirement shall have been promulgated or enacted and be in effect, that on a
temporary or permanent basis restrains, enjoins or invalidates the transactions contemplated hereby; provided, however, the Closing shall proceed notwithstanding any Proceedings seeking to restrain, enjoin or otherwise prohibit consummation
of the transactions contemplated hereby brought by holders of Preference Rights seeking to enforce such rights with respect to the Assets, and the Assets subject to such Proceedings shall be treated in accordance with Section 7.7;

 (d) Deliveries. Purchaser shall have delivered (or be ready, willing and able to immediately deliver) to Seller duly executed
counterparts of the Conveyance and all other documents and certificates to be delivered by Purchaser under Section 9.3 and shall have performed (or be ready, willing and able to immediately perform) the other obligations required to be
performed by it under Section 9.3; and 
 (e) HSR Act. Any waiting period applicable to the consummation of the
transaction contemplated by this Agreement under the HSR Act shall have lapsed or terminated (by early termination or otherwise). 
  

	Section 8.2	Conditions of Purchaser to Closing. 

 The obligations of Purchaser to consummate the transactions contemplated by this Agreement are subject, at the option of Purchaser, to the satisfaction or waiver by Purchaser on or prior to Closing of each of the following conditions:

 (a) Representations. Each of the representations and warranties of Seller contained in this Agreement shall be true and correct in
all material respects (other than those representations and warranties of Seller that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the Closing Date as though made on and as of the
Closing Date, except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct in all material respects (other than those representations and
warranties of Seller that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of such specified date; 
 (b) Performance. Seller shall have performed and observed, in all material respects, all covenants and agreements to be performed or observed by it under this Agreement prior to or on the Closing Date;

 (c) Proceedings. No Proceeding by a third party (including any Governmental Body) seeking to restrain, enjoin or otherwise prohibit
the consummation of the transactions 

  

 34 

 
contemplated by this Agreement shall be pending before any Governmental Body and no order, writ, injunction or decree shall have been entered and be in
effect by any court or any Governmental Body of competent jurisdiction, and no statute, rule, regulation or other requirement shall have been promulgated or enacted and be in effect, that on a temporary or permanent basis restrains, enjoins or
invalidates the transactions contemplated hereby; provided, however, the Closing shall proceed notwithstanding any Proceedings seeking to restrain, enjoin or otherwise prohibit consummation of the transactions contemplated hereby brought by
holders of Preference Rights seeking to enforce such rights with respect to the Assets, and the Assets subject to such Proceedings shall be treated in accordance with Section 7.7; 
 (d) Deliveries. Seller shall have delivered (or be ready, willing and able to immediately deliver) to Purchaser duly executed counterparts of the
Conveyance and all other documents and certificates to be delivered by Seller under Section 9.2; and 
 (e) HSR Act. Any
waiting period applicable to the consummation of the transaction contemplated by this Agreement under the HSR Act shall have lapsed or terminated (by early termination or otherwise). 
 ARTICLE 9 
 CLOSING 
  

	Section 9.1	Time and Place of Closing. 

 (a) Unless this Agreement shall have been terminated and the transactions herein contemplated shall have been abandoned pursuant to Article 10, and subject to the satisfaction or waiver of the conditions set forth in Article 8
(other than conditions the fulfillment of which by their nature is to occur at the completion of the transactions contemplated by this Agreement (the “Closing”)), the Closing shall take place at 10:00 a.m., local time, on November 30,
2007, at the offices of Seller, Houston, Texas, unless another date, time or place is mutually agreed to in writing by Purchaser and Seller. If any of the conditions (other than conditions the fulfillment of which by their nature is to occur at the
Closing) set forth in Article 8 are not satisfied or waived at the time the Closing is to occur pursuant to this Section 9.1(a), then the Closing shall occur on a date that is the third Business Day after the satisfaction or
waiver of all such conditions. 
 (b) The date on which the Closing occurs is herein referred to as the “Closing Date.” 

 

	Section 9.2	Obligations of Seller at Closing. 

 At the Closing, upon the terms and subject to the conditions of this Agreement, Seller shall deliver or cause to be delivered to Purchaser, or perform or cause to be performed, the following: 
 (a) the Conveyance, in sufficient duplicate originals to allow recording in all appropriate jurisdictions and offices, duly executed by Seller;

  

 35 

 (b) letters-in-lieu of transfer orders covering the Assets, duly executed by Seller; and 
 (c) a certificate duly executed by an authorized corporate officer of Seller, dated as of Closing, certifying on behalf of Seller that the conditions set
forth in Section 8.2(a) and Section 8.2(b) have been fulfilled. 
 (d) evidence that all liens or releases from
Seller’s lenders have been obtained relating to all mortgages and UCC filings regarding the Assets. 
  

	Section 9.3	Obligations of Purchaser at Closing. 

 At the Closing, upon the terms and subject to the conditions of this Agreement, Purchaser shall deliver or cause to be delivered to Seller, or perform or caused to be performed, the following: 
 (a) a wire transfer in an amount equal to the Closing Payment minus the face amount of the Parent Senior Unsecured Note, in same-day funds; 
 (b) the Parent Senior Unsecured Note, duly executed by Parent; 
 (b) the Conveyance, duly executed by Purchaser; 
 (c) letters-in-lieu of transfer orders covering the
Assets, duly executed by Purchaser; and 
 (d) a certificate by an authorized corporate officer of Purchaser, dated as of Closing, certifying
on behalf of Purchaser that the conditions set forth in Section 8.1(a) and Section 8.1(b) have been fulfilled. 
  

	Section 9.4	Closing Adjustments. 

 (a) Not
later than five (5) Business Days prior to the Closing Date, Seller shall prepare and deliver to Purchaser, based upon the best information available to Seller, a preliminary settlement statement estimating the Adjusted Purchase Price after
giving effect to all adjustments listed in Section 2.2. The estimate delivered in accordance with this Section 9.4(a) shall constitute the dollar amount to be paid by Purchaser to Seller at the Closing (the “Closing
Payment”). Until one (1) Business Day before the Closing Date, Purchaser shall have the opportunity to review and discuss the preliminary settlement statement with Seller; provided, however, Seller shall not be required to make any change
thereto to which Seller does not agree. 
 (b) As soon as reasonably practicable after the Closing but not later than one hundred twenty
(120) days following the Closing Date, Seller shall prepare and deliver to Purchaser a statement setting forth the final calculation of the Agreed Purchase Price and showing the calculation of each adjustment, based, to the extent possible, on
actual credits, charges, receipts and other items before and after the Effective Time and taking into account all adjustments provided for in this Agreement (the “Final Purchase Price”). Seller shall, at Purchaser’s request, supply
reasonable documentation available to support any credit, charge, 

  

 36 

 
receipt or other item. Seller shall afford Purchaser and its representatives the opportunity to review such statement and the supporting schedules, analyses,
workpapers, and other underlying records or documentation as are reasonably necessary and appropriate in Purchaser’s review of such statement. Each party shall cooperate fully and promptly with the other and their respective representatives in
such examination with respect to all reasonable requests related thereto. As soon as reasonably practicable but not later than the 30th day following receipt of Seller’s statement hereunder, Purchaser shall deliver to Seller a written report
containing any changes that Purchaser proposes be made to such statement. Seller and Purchaser shall undertake to agree on the final statement of the Final Purchase Price no later than one hundred eighty (180) days after the Closing Date (the
“Final Settlement Date”). In the event that Seller and Purchaser cannot reach agreement by the Final Settlement Date, either party may refer the remaining matters in dispute to UHY Mann Frankfort Stein & Lipp CPAs, LLP, or such
other nationally-recognized independent accounting firm as may be mutually accepted by Purchaser and Seller, for review and final determination (the “Agreed Accounting Firm”). Each party shall summarize its position with regard to the
remaining matters in dispute in a written document of twenty-five pages or less and submit such summaries to the Agreed Accounting Firm, together with any other documentation such party may desire to submit. Within fifteen (15) Business Days
after receiving the parties’ respective submissions, the Agreed Accounting Firm shall render in writing a decision choosing either Seller’s position or Purchaser’s position or a position in between those (but in no event higher or
lower than the amounts proposed in the post-Closing statements exchanged between the parties, as described earlier in this subsection) based on the materials described above. The Agreed Accounting Firm may not award damages or penalties to either
party. Any decision rendered by the Agreed Accounting Firm pursuant hereto shall be final, conclusive and binding on Seller and Purchaser and will be enforceable against any of the parties in any court of competent jurisdiction. The fees of the
Agreed Accounting Firm shall be borne and paid one-half by Sellers and one-half by Purchaser. Seller and Purchaser shall each bear its own legal fees and other costs of presenting its case. Within ten (10) Business Days after the date on which
the parties or the Agreed Accounting Firm, as applicable, finally determines the disputed matters, (x) Purchaser shall pay to Seller the amount by which the Final Purchase Price exceeds the Closing Payment or (y) Seller shall pay to
Purchaser the amount by which the Closing Payment exceeds the Final Purchase Price, as applicable. Any post-Closing payment pursuant to this Section 9.4(b) shall bear interest at the Agreed Interest Rate from (but not including) the
Closing Date to (and including) the date both Purchaser and Seller have executed the final settlement statement. 
 (c) All payments made or
to be made hereunder to Seller shall be by electronic transfer of immediately available funds to the account Seller as set forth on Schedule 9.4(c), for the credit of Seller or to such other bank and account as may be specified by Seller in
writing. All payments made or to be made hereunder to Purchaser shall be by electronic transfer of immediately available funds to a bank and account specified by Purchaser in writing to Seller. 
  

 37 

 ARTICLE 10 
 TERMINATION 
  

	Section 10.1	Termination. 

 This Agreement
may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing: 
 (a) by mutual written consent of
Seller and Purchaser; 
 (b) by either Seller or Purchaser, if: 
  

	 	(i)	the Closing shall not have occurred on or before December 31, 2007 (the “Termination Date”); provided, however, that the right to terminate this Agreement under this
Section 10.1(b)(i) shall not be available (A) to Seller, if any breach of this Agreement by Seller has been the principal cause of, or resulted in, the failure of the Closing to occur on or before the Termination Date or (B) to
Purchaser, if any breach of this Agreement by Purchaser has been the principal cause of, or resulted in, the failure of the Closing to occur on or before the Termination Date; or 

  

	 	(ii)	there shall be any Law that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited or a Governmental Body shall have issued an order, decree, or
ruling or taken any other action permanently restraining, enjoining, or otherwise prohibiting the consummation of the transactions contemplated hereby, and such order, decree, ruling, or other action shall have become final and non appealable;

 (c) by Seller, if (i) any of the representations and warranties of Purchaser contained in this Agreement shall not be
true and correct in all material respects (provided that any such representation or warranty that is already qualified by a materiality standard or a material adverse effect qualification shall not be further qualified); or (ii) Purchaser shall
have failed to fulfill in any material respect any of its obligations under this Agreement; and, in the case of each of clauses (i) and (ii), such misrepresentation, or breach of warranty, if curable, has not been cured within ten
(10) days after written notice thereof from Seller to Purchaser; provided that any cure period shall not extend beyond the Termination Date and shall not extend the Termination Date; or 
 (d) by Purchaser, if (i) any of the representations and warranties of Seller contained in this Agreement shall not be true and correct in all
material respects (provided that any such representation or warranty that is already qualified by a materiality or Material Adverse Effect qualification shall not be further qualified); or (ii) Seller shall have failed to fulfill in any
material respect any of its obligations under this Agreement, and, in the case of each of clauses (i) and (ii), such misrepresentation, breach of warranty or failure, if curable, has not been cured within ten (10) days after written notice
thereof from Purchaser to Seller; provided that any cure period shall not extend beyond the Termination Date and shall not extend the Termination Date. 
  

	Section 10.2	Effect of Termination. 

 If
this Agreement is terminated pursuant to Section 10.1, this Agreement shall become void and of no further force or effect (except for the provisions of Section 4.4, Section 5.6, Section 6.5, Section 7.5, Section
11.9, Section 11.10 and Section 11.11 of this Agreement and 

  

 38 

 
this Article 10, the Section entitled “Definitions,” and Article 12 (other than Section 12.6), all of which shall
continue in full force and effect). Notwithstanding the foregoing, nothing contained in this Section 10.2 shall relieve any party from liability for Losses resulting from its breach of this Agreement. 
  

	Section 10.3	Distribution of Deposit Upon Termination. 

 (a) If Seller terminates this Agreement (i) because Purchaser has failed to comply with any provision of Sections 8.1(a), 8.1(b) or 8.1(d); or (ii) pursuant to Section 10.1(a), as the
result of any default or breach by Purchaser of Purchaser’s obligations hereunder, then Seller may retain, as its sole and exclusive remedy, the Deposit as liquidated damages, free of any claims by Purchaser or any other Person with respect
thereto. It is expressly stipulated by the parties that the actual amount of damages resulting from such a termination would be difficult if not impossible to determine accurately because of the unique nature of this Agreement, the unique nature of
the Assets, the uncertainties of applicable commodity markets and differences of opinion with respect to such matters, and that the liquidated damages provided for herein are a reasonable estimate by the parties of such damages. 
 (b) If this Agreement is terminated for any reason other than the reasons set forth in Section 10.3(a), then Seller shall deliver the Deposit
to Purchaser without interest thereon, free of any claims by Seller or any other Person with respect thereto. 
 (c) Notwithstanding anything
to the contrary in this Agreement, Purchaser shall not be entitled to receive interest on the Deposit, whether the Deposit is applied against the Purchase Price or returned to Purchaser pursuant to this Section 10.3. 
 ARTICLE 11 
 POST-CLOSING
OBLIGATIONS; INDEMNIFICATION; LIMITATIONS; 
 DISCLAIMERS AND WAIVERS 
  

	Section 11.1	Receipts. 

 Except as otherwise
provided in this Agreement, any Hydrocarbons produced from or attributable to the Assets (and all products and proceeds attributable thereto) and any other income, proceeds, receipts and credits attributable to the Assets which are not reflected in
the adjustments to the Purchase Price following the final adjustment pursuant to Section 9.4(b) shall be treated as follows: (a) all Hydrocarbons produced from or attributable to the Assets (and all products and proceeds
attributable thereto) and all other income, proceeds, receipts and credits earned with respect to the Assets to which Purchaser is entitled under Section 1.4 shall be the sole property and entitlement of Purchaser, and, to the extent
received by Seller, Seller shall fully disclose, account for and remit the same promptly to Purchaser, and (b) all Hydrocarbons produced from or attributable to the Assets (and all products and proceeds attributable thereto) and all other
income, proceeds, receipts and credits earned with respect to the Assets to which Seller is entitled under Section 1.4 shall be the sole property and entitlement of Seller and, to the extent received by Purchaser, Purchaser shall fully
disclose, account for and remit the same promptly to Seller. 
  

 39 

	Section 11.2	Expenses. 

 Except as otherwise
provided in this Agreement, any Property Costs which are not reflected in the adjustments to the Purchase Price following the final adjustment pursuant to Section 9.4(b) shall be treated as follows: (a) all Property Costs for which
Seller is responsible under Section 1.4 shall be the sole obligation of Seller and Seller shall promptly pay, or if paid by Purchaser, promptly reimburse Purchaser for and hold Purchaser harmless from and against same; and (b) all
Property Costs for which Purchaser is responsible under Section 1.4 shall be the sole obligation of Purchaser, and Purchaser shall promptly pay, or if paid by Seller, promptly reimburse Seller for and hold Seller harmless from and
against same. Seller is entitled to resolve all joint interest audits and other audits of Property Costs covering periods for which Seller is wholly responsible and Purchaser is entitled to resolve all joint interest audits and other audits of
Property Costs covering periods for which Purchaser is in whole or in part responsible; provided that Purchaser shall not agree to any adjustments to previously assessed costs for which Seller is liable without the prior written consent of Seller,
such consent not to be unreasonably withheld. Purchaser shall provide Seller with a copy of all applicable audit reports and written audit agreements received by Purchaser and relating to periods for which Seller is partially responsible.

  

	Section 11.3	Assumed Seller Obligations. 

 Subject to the indemnification by Seller under Section 11.5, on the Closing Date, Purchaser shall assume and hereby agrees to fulfill, perform, pay and discharge (or cause to be fulfilled, performed, paid or discharged) all of
the obligations and liabilities of Seller, known or unknown, with respect to the Assets, regardless of whether such obligations or liabilities arose prior to, on or after the Effective Time, including but not limited to obligations to
(a) furnish makeup gas according to the terms of applicable gas sales, gathering or transportation contracts, and to satisfy all other gas balancing obligations, if any, (b) pay working interests, royalties, overriding royalties and other
interests held in suspense, (c) properly plug and abandon any and all wells, including inactive wells or temporarily abandoned wells, drilled on the Properties, as required by Law, (d) replug any well, wellbore, or previously plugged well
on the Properties to the extent required by any Governmental Body, (e) dismantle, salvage and remove any equipment, structures, materials, platforms, flowlines, and property of whatever kind related to or associated with operations and
activities conducted on the Properties, (f) clean up, restore and/or remediate the premises covered by or related to the Assets in accordance with applicable agreements and Laws, (g) perform all obligations applicable to or imposed on the
lessee, owner, or operator under the Leases and related contracts, or as required by applicable Laws; and (h) obligations related to the matters set forth on Schedule 5.7(a) (all of said obligations and liabilities, subject to the exclusions
below, herein being referred to as the “Assumed Seller Obligations”); provided, however, that the Assumed Seller Obligations shall not include, and Purchaser shall have no obligation to assume, any obligations or liabilities of Seller to
the extent that they are (such excluded obligations and liabilities, the “Excluded Seller Obligations”): 
  

	 	(i)	attributable to or arise out of the Excluded Assets; 

  

	 	(ii)	the continuing responsibility of Seller under Section 11.1 or Section 11.2; 

  

 40 

	 	(iii)	Property Costs for which Seller is responsible pursuant to Section 1.4(b); or 

  

	 	(iv)	Retained Employee Liabilities 

  

	 	(v)	covered by Seller’s insurance, unless Purchaser gets credit via a reduction in the Purchase Price for insurance amounts received by Seller or the insurance is conveyed to
Purchaser. 

  

	Section 11.4	Survival and Limitations. 

 (a)
The representations and warranties contained in Section 5.7, Section 5.9, Section 5.10, Section 5.11, Section 5.15, Section 5.16, Section 5.17, Section 5.18, Section 5.19, Section 5.20, and
Section 5.21 shall terminate four (4) months after Closing. The representations and warranties contained in Section 5.3, Section 5.4, Section 5.6, Section 5.8, Section 6.2, Section 6.3, and
Section 6.5 (collectively, the “Fundamental Representations”) shall survive until the expiration of the applicable statute of limitations period. All other representations and warranties of Seller and Purchaser contained herein
shall terminate at Closing. Upon the termination of a representation or warranty in accordance with the foregoing, such representation or warranty shall have no further force or effect for any purpose under this Agreement. The covenants and other
agreements of Seller and Purchaser set forth in this Agreement shall survive the Closing Date until fully performed. 
 (b) No party hereto
shall have any indemnification obligation pursuant to this Article 11 or otherwise in respect of any representation, warranty, covenant or agreement unless it shall have received from the party seeking indemnification a written notice (a
“Claim Notice”) of the existence of the claim for or in respect of which indemnification in respect of such representation, warranty, covenant or agreement is being sought on or before the expiration of the applicable survival period set
forth in Section 11.4(a). If an Indemnified Party delivers a Claim Notice to an Indemnifying Party before the expiration of the applicable survival period set forth in Section 11.4(a), then the applicable representation,
warranty, covenant or agreement shall survive until, but only for purposes of, the resolution of the matter covered by such Claim Notice. A Claim Notice shall set forth with reasonable specificity (1) the basis for such claim under this
Agreement, and the facts that otherwise form the basis of such claim and (2) to the extent reasonably estimable, an estimate of the amount of such claim (which estimate shall not be conclusive of the final amount of such claim) and an
explanation of the calculation of such estimate. 
 (c) Neither Seller nor Purchaser shall have any liability for any indemnification under
this Agreement, nor any liability for breach of any representations, warranties, or covenants under this Agreement, until and unless (i) the amount of the liability for any individual claim or series of related claims arising out of the same or
similar set of facts, for which a Claim Notice is delivered by Purchaser or Seller, as applicable, exceeds $200,000, and then only to the extent such damage exceeds $200,000 (“Individual Indemnity Deductible”), and (ii) the aggregate
amount of the liabilities for all claims for which Claim Notices are delivered by 

  

 41 

 
Purchaser or Seller, as applicable, exceeds one and one-half percent (1.5%) of the Purchase Price, and then only to the extent such damages exceed one
and one-half percent (1.5%) of the Purchase Price (the “Aggregate Indemnity Deductible”). 
 (d) Notwithstanding anything to
the contrary contained elsewhere in this Agreement, neither party shall be required to indemnify the other party, or otherwise be liable for breaching any representations, warranties, or covenants under this Agreement, for aggregate damages in
excess of an amount equal to ten (10) percent of the Purchase Price. 
 (e) For purposes of this Article 11 only, the
“material”, “materiality”, “all material respects” or “Material Adverse Effect” qualifiers contained in the representations and warranties in Article 5 and Article 6 shall be considered for indemnity purposes,
and such qualifiers shall be deemed to have been met if any such claim, or series of claims arising out of the same or similar set of facts, for which the Claim Notice is delivered by Purchaser or Seller, as applicable, exceeds the Individual
Indemnity Deductible. 
  

	Section 11.5	Indemnification by Seller. 

 Subject to the terms, conditions, and limitations of this Article 11, from and after the Closing, each Seller shall jointly and severally indemnify, defend and hold harmless Purchaser and its directors, officers, employees,
stockholders, members, agents, consultants, advisors and other representatives (including legal counsel, accountants and financial advisors) and Affiliates and the successors and permitted assigns of this Agreement of Purchaser (collectively, the
“Purchaser Indemnified Persons”) from and against any and all Losses asserted against, resulting from, imposed upon, or incurred or suffered by any Purchaser Indemnified Person to the extent resulting from, arising out of or relating to:

 (a) any breach of any representation or warranty of Seller contained in this Agreement or in any certificate furnished by or on behalf of
Seller in connection with this Agreement; 
 (b) any breach or nonfulfillment of or failure to perform any covenant or agreement of Seller
contained in this Agreement or in any certificate furnished by or on behalf of Seller in connection with this Agreement; and 
 (c) any
Excluded Seller Obligations. 
  

	Section 11.6	Indemnification by Purchaser. 

 From and after the Closing, subject to the terms and conditions of this Article 11, Purchaser shall indemnify, defend and hold harmless Seller and its directors, officers, employees, agents, consultants, stockholders, advisors and other
representatives (including legal counsel, accountants and financial advisors), and Seller’s successors, permitted assigns of this Agreement and Affiliates (collectively, the “Seller Indemnified Persons”) from and against any and all
Losses, asserted against, resulting from, imposed upon, or incurred or suffered by any Seller Indemnified Person, directly or indirectly, other than Excluded Seller Obligations to the extent resulting from, arising out of, or relating to:

 (a) any breach of any representation or warranty of Purchaser contained in this Agreement or in any certificate furnished by or on behalf
of Purchaser to Seller in connection with this Agreement; 
  

 42 

 (b) any breach or nonfulfillment of or failure to perform any covenant or agreement of Purchaser
contained in this Agreement or any certificate furnished by or on behalf of Purchaser to Seller in connection with this Agreement; 
 (c) the
ownership, use or operation of the Assets after the Effective Time, REGARDLESS OF FAULT; 
 (d) the Assumed Seller Obligations
REGARDLESS OF FAULT; and 
 (e) Environmental Laws, Environmental Liabilities, the release of materials into the environment or
protection of human health, safety, natural resources or the environment, or any other environmental condition of the Assets, REGARDLESS OF THE TIME OF OCCURRENCE AND REGARDLESS OF FAULT, other than Section 4.3 post closing remediation.

  

	Section 11.7	Indemnification Proceedings. 

 (a) In the event that any claim or demand for which Seller or Purchaser (such Person, an “Indemnifying Party”) may be liable to a Purchaser Indemnified Person under Section 11.5 or to a Seller Indemnified Person under
Section 11.6 (an “Indemnified Party”) is asserted against or sought to be collected from an Indemnified Party by a third party (a “Third Party Claim,”) the Indemnified Party shall with reasonable promptness notify the
Indemnifying Party of such Third Party Claim by delivery of a Claim Notice, provided that the failure or delay to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations under this Article 11, except (and
solely) to the extent that the Indemnifying Party demonstrates that its defense of such Third Party Claim is actually and materially prejudiced thereby. The Indemnifying Party shall have thirty (30) days from receipt of the Claim Notice from
the Indemnified Party (in this Section 11.7, the “Notice Period”) to notify the Indemnified Party whether or not the Indemnifying Party desires, at the Indemnifying Party’s sole cost and expense, to defend the Indemnified
Party against such claim or demand; provided, that the Indemnified Party is hereby authorized prior to and during the Notice Period, and at the cost and expense of the Indemnifying Party, to file any motion, answer or other pleading that it shall
reasonably deem necessary to protect its interests or those of the Indemnifying Party. The Indemnifying Party shall have the right to assume the defense of such Third Party Claim only if and for so long as the Indemnifying Party (i) notifies
the Indemnified Party during the Notice Period that the Indemnifying Party is assuming the defense of such Third Party Claim, (ii) uses counsel of its own choosing that is reasonably satisfactory to the Indemnified Party, and
(iii) conducts the defense of such Third Party Claim in an active and diligent manner. If the Indemnifying Party is entitled to, and does, assume the defense of any such Third Party Claim, the Indemnified Party shall have the right to employ
separate counsel at its own expense and to participate in the defense thereof; provided, however, that notwithstanding the foregoing, the Indemnifying Party shall pay the reasonable attorneys’ fees of the Indemnified Party if the Indemnified
Party’s counsel shall have advised the Indemnified Party that there is a conflict of interest that could 

  

 43 

 
make it inappropriate under applicable standards of professional conduct to have common counsel for the Indemnifying Party and the Indemnified Party
(provided that the Indemnifying Party shall not be responsible for paying for more than one separate firm of attorneys and one local counsel to represent all of the Indemnified Parties subject to such Third Party Claim). If the Indemnifying Party
elects (and is entitled) to assume the defense of such Third Party Claim, (i) no compromise or settlement thereof or consent to any admission or the entry of any judgment with respect to such Third Party Claim may be effected by the
Indemnifying Party without the Indemnified Party’s written consent (which shall not be unreasonably withheld, conditioned or delayed) unless the sole relief provided is monetary damages that are paid in full by the Indemnifying Party (and no
injunctive or other equitable relief is imposed upon the Indemnified Party) and there is an unconditional provision whereby each plaintiff or claimant in such Third Party Claim releases the Indemnified Party from all liability with respect thereto
and (ii) the Indemnified Party shall have no liability with respect to any compromise or settlement thereof effected without its written consent (which shall not be unreasonably withheld). If the Indemnifying Party elects not to assume the
defense of such Third Party Claim (or fails to give notice to the Indemnified Party during the Notice Period or otherwise is not entitled to assume such defense), the Indemnified Party shall be entitled to assume the defense of such Third Party
Claim with counsel of its own choice, at the expense and for the account of the Indemnifying Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on
the part of any Indemnifying Party without the prior written consent of such Indemnifying Party, which consent shall not be unreasonably withheld, conditioned or delayed. 
 (b) Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party, shall be entitled to
have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any Third Party Claim (i) at the reasonable expense of the Indemnifying Party, as to which the Indemnifying Party fails to assume the defense during
the Notice Period after the Indemnified Party gives notice thereof to the Indemnifying Party or (ii) at the reasonable expense of the Indemnifying Party, to the extent the Third Party Claim seeks an order, injunction, or other equitable relief
against the Indemnified Party which, if successful, could materially adversely affect the business, condition (financial or other), capitalization, assets, liabilities, results of operations or prospects of the Indemnified Party. The Indemnified
Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of the Indemnifying Party without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably
withheld, conditioned or delayed). 
 (c) In any case in which an Indemnified Party seeks indemnification hereunder and no Third Party Claim
is involved, the Indemnified Party shall deliver a Claim Notice to the Indemnifying Party within a reasonably prompt period of time after an officer of such Indemnified Party or its Affiliates has obtained knowledge of the Loss giving rise to
indemnification hereunder. The failure or delay to so notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations under this Article 11 except to the extent such failure results in insufficient time being
available to permit the Indemnifying Party to effectively mitigate the resulting Losses or otherwise prejudices the Indemnifying Party. 
  

 44 

	Section 11.8	Release. 

 EXCEPT WITH
RESPECT TO POST-CLOSING REMEDIATION AGREED TO PURSUANT TO SECTION 4.3, PURCHASER HEREBY RELEASES, REMISES AND FOREVER DISCHARGES THE SELLER INDEMNIFIED PERSONS FROM ANY AND ALL CLAIMS, KNOWN OR UNKNOWN, WHETHER NOW EXISTING OR ARISING IN THE FUTURE,
CONTINGENT OR OTHERWISE, WHICH PURCHASER MIGHT NOW OR SUBSEQUENTLY MAY HAVE AGAINST THE SELLER INDEMNIFIED PERSONS, RELATING DIRECTLY OR INDIRECTLY TO THE CLAIMS ARISING OUT OF OR INCIDENT TO ENVIRONMENTAL LAWS, ENVIRONMENTAL LIABILITIES, THE
RELEASE OF MATERIALS INTO THE ENVIRONMENT OR PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, INCLUDING, WITHOUT LIMITATION, RIGHTS TO CONTRIBUTION UNDER CERCLA, REGARDLESS OF FAULT. 
  

	Section 11.9	Disclaimers. 

 (a)
EXCEPT AS AND TO THE EXTENT EXPRESSLY SET FORTH IN THIS AGREEMENT, OR IN THE CERTIFICATE OF SELLER TO BE DELIVERED PURSUANT TO SECTION 9.2(c), OR IN THE CONVEYANCE, (I) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY OR
IMPLIED, AND (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO PURCHASER OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS,
CONSULTANTS OR REPRESENTATIVES (INCLUDING, WITHOUT LIMITATION, ANY OPINION, INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO PURCHASER BY ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT, CONSULTANT, REPRESENTATIVE OR ADVISOR OF SELLER OR ANY
OF ITS AFFILIATES). 
 (b) EXCEPT AS EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE 5 OF THIS AGREEMENT, OR IN THE CERTIFICATE OF
SELLER TO BE DELIVERED PURSUANT TO SECTION 9.2(c), OR IN THE CONVEYANCE, AND WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF
THE ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, OR ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT, OR ANY GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE ASSETS, (III) THE QUANTITY, QUALITY OR
RECOVERABILITY OF HYDROCARBONS IN OR FROM THE ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (V) THE PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (VI) THE MAINTENANCE, REPAIR, CONDITION,
QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, (VII) THE CONTENT, CHARACTER OR NATURE OF ANY DESCRIPTIVE MEMORANDUM, REPORTS, BROCHURES, 

  

 45 

 
CHARTS OR STATEMENTS PREPARED BY SELLER OR ANY THIRD PARTIES, (VIII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE OR COMMUNICATED
TO PURCHASER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO, AND FURTHER DISCLAIMS
ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF MERCHANTABILITY, FREEDOM FROM REDHIBITORY VICES OR DEFECTS (INCLUDING THOSE CONTEMPLATED IN LOUISIANA CIVIL CODE ARTICLES 2475, AND 2520 THROUGH 2548), FITNESS FOR A PARTICULAR
PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY EQUIPMENT, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES HERETO THAT PURCHASER SHALL BE DEEMED TO BE OBTAINING THE ASSETS IN THEIR PRESENT STATUS, CONDITION AND STATE OF
REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS AND THAT PURCHASER HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS AS PURCHASER DEEMS APPROPRIATE, OR (IX) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK
INFRINGEMENT. 
 (c) EXCEPT AS REPRESENTED IN SECTION 5.7, SELLER HAS NOT AND WILL NOT MAKE ANY REPRESENTATION OR WARRANTY
REGARDING ANY MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, ENVIRONMENTAL LIABILITIES, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT OR THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, OR ANY OTHER ENVIRONMENTAL
CONDITION OF THE ASSETS, AND NOTHING IN THIS AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION OR WARRANTY, AND PURCHASER SHALL BE DEEMED TO BE TAKING THE ASSETS “AS IS” AND “WHERE IS” FOR PURPOSES OF THEIR
ENVIRONMENTAL CONDITION. 
  

	Section 11.10	Waiver of Trade Practices Acts. 

 (a) It is the intention of the parties that Purchaser’s rights and remedies with respect to this transaction and with respect to all acts or practices of Seller, past, present or future, in connection with this transaction shall be
governed by legal principles other than the Texas Deceptive Trade Practices—Consumer Protection Act, Tex. Bus. & Com. Code Ann. § 17.41 et seq. (the “DTPA”), the Louisiana unfair trade practices and consumer protection law,
La. R.S. 51:1402, et seq. (the “UTPCPL”), or the Mississippi Unfair and Deceptive Trade Practices Act, Miss. Code Ann. 75-24-1 et seq. (the “UDTPA”). As such, Purchaser hereby waives the applicability of the DTPA, UTPCPL, and the
UDTPA to this transaction and any and all duties, rights or remedies that might be imposed by the DTPA, the UTPCPL, and/or the UDTPA, whether such duties, rights and remedies are applied directly by the DTPA, the UTPCPL, or the UDTPA itself or
indirectly in connection with other statutes. Purchaser acknowledges, represents and warrants that it is purchasing the goods and/or services covered by this Agreement for commercial or business use; that it has assets of $25,000,000.00 or more
according to its most recent financial statement prepared in accordance with GAAP; that it has 

  

 46 

 
knowledge and experience in financial and business matters that enable it to evaluate the merits and risks of a transaction such as this; and that it is not
in a significantly disparate bargaining position with Seller. 
 (b) Purchaser expressly recognizes that the price for which Seller has
agreed to perform its obligations under this Agreement has been predicated upon the inapplicability of the DTPA, the UTPCPL, and the UDTPA and this waiver of the DTPA, the UTPCPL, and the UDTPA. Purchaser further recognizes that Seller, in
determining to proceed with the entering into this Agreement, has expressly relied on this waiver and the inapplicability of the DTPA, the UTPCPL, and the UDTPA. 
 (c) In addition to the foregoing, and in order to ensure compliance with Texas’ DTPA Section 17.42(c), Purchaser waives all rights it may possess, if any, under the DTPA with the following certification:

 WAIVER OF RIGHTS 
 PURCHASER WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES-CONSUMER PROTECTION ACT, SECTION 17.41 ET SEQ., BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER
CONSULTATION WITH AN ATTORNEY OF ITS OWN SELECTION, PURCHASER VOLUNTARILY CONSENTS TO THIS WAIVER. 
  

	Section 11.11	Redhibition Waiver. 

 Purchaser
waives all rights in redhibition pursuant to Louisiana Civil Code Articles 2475 and 2520 through 2548, and acknowledges that this express waiver shall be considered a material and integral part of this transaction and the consideration thereof.
Purchaser acknowledges that this waiver has been brought to its attention and has been explained in detail and that Purchaser has voluntarily and knowingly consented to this waiver of warranty of fitness and warranty against redhibitory vices and
defects for the Assets. 
  

	Section 11.12	Recording. 

 As soon as
practicable after Closing, Purchaser shall record the Conveyance in the appropriate counties and/or parishes where the Properties are located and provide Seller with copies of all recorded or approved instruments. The Conveyance in the form attached
as Exhibit B is intended to convey all of the Properties being conveyed pursuant to this Agreement. Certain Properties or specific portions of the Properties that are leased from, or require the approval to transfer by, a Governmental Body
are conveyed under the Conveyance and also are described and covered under separate assignments made by Seller to Purchaser on officially approved forms, or forms acceptable to such entity, in sufficient multiple originals to satisfy applicable
statutory and regulatory requirements. The interests conveyed by such separate assignments are the same, and not in addition to, the interests conveyed in the Conveyance attached as Exhibit B. Further, such assignments shall be deemed to contain all
of the exceptions, reservations, rights, titles, power and privileges set forth herein and in the Conveyance as fully and only to the extent as though they were set forth in each such separate assignment. 
  

 47 

	Section 11.13	Further Assurances. 

 After the
Closing, Seller and Purchaser shall, and shall cause their Affiliates to, execute, acknowledge and deliver all such further conveyances, transfer orders, division orders, notices assumptions, releases and acquittances, and such other instruments,
and shall take such further actions as may be necessary or appropriate to assure fully to Purchaser or Seller (including their successors and assigns) as the case may be, that the transactions described in this Agreement shall be completed and that
all of the Properties intended to be conveyed under the terms of this Agreement are so conveyed, including such Properties that are improperly described herein or inadvertently omitted form this Agreement and/or the Conveyance (including the
Exhibits attached to each) and to assure fully that Purchaser has assumed the liabilities and obligations intended to be assumed by Purchaser pursuant to this Agreement. The Parties agree that Purchaser is intending to purchase and Seller is
intending to sell those properties included in the engineering database provided to Purchaser in August 2007 by Seller’s financial advisor. 
 ARTICLE 12 
 MISCELLANEOUS 
  

	Section 12.1	Counterparts. 

 This Agreement
may be executed and delivered (including by facsimile transmission) in counterparts, each of which shall be deemed an original instrument, but all such counterparts together shall constitute but one agreement. 
  

	Section 12.2	Notice. 

 All notices which are
required or may be given pursuant to this Agreement shall be sufficient in all respects if given in writing and delivered personally, by telecopy or by registered or certified mail, postage prepaid, as follows: 
  

			
	If to Seller:	  	Petrohawk Properties, LP
		  	KCS Energy, Inc.
		  	Petrohawk Energy Corporation
		  	One TEC, LLC
		  	1000 Louisiana, Suite 5810
		  	Houston, Texas 77002
		  	Attention: Stephen W. Herod
		  	Telephone: 832-204-2701
		  	Facsimile: 832-204-2801
		  	and
		  	David S. Elkouri
		  	Telephone: 832-204-2772
		  	Facsimile: 832-204-2872

  

 48 

			
	 With a copy to
 (which
 shall not constitute
 Notice to Seller):
	  	
	  	
	  	
	  	Hinkle Elkouri Law Firm, LLC
		  	301 N. Main, Suite 2000
		  	Wichita Kansas, 67202
		  	Attention : Connie D. Tatum
		  	Telephone: 316-660-6117
		  	Facsimile: 316-660-6017
		
	If to Purchaser:	  	Milagro Development I, LP
		  	1401 McKinney, Suite 925
		  	Houston, Texas 77010
		  	Attn: Marshall L. Munsell
		
	 With a copy to
 (which
 shall not constitute
 Notice to Purchaser):
	  	
	  	
	  	
	  	Porter & Hedges
		  	1000 Main Street, 36th Floor
		  	Houston, Texas 77002
		  	Attn: Rob Reedy

 Either party may change its address for notice by notice to the other in the manner set forth above. All notices
shall be deemed to have been duly given at the time of receipt by the party to which such notice is addressed. 
 Reference to “Seller” shall mean
each Seller jointly and severally, provided that any election or notices to be made to Seller hereunder shall be the sole discretion of Petrohawk Properties, LP, which decision shall be binding on all Sellers. 
  

	Section 12.3	Sales or Use Tax Recording Fees and Similar Taxes and Fees. 

 Purchaser shall bear any sales, use, excise, real property transfer, gross receipts, goods and services, registration, capital, documentary, stamp or transfer Taxes, recording fees and similar Taxes and fees
(collectively “Transfer Taxes”) incurred and imposed upon, or with respect to, the transactions contemplated by this Agreement. Seller will determine, and Purchaser will cooperate with Seller in determining the amount of any Transfer
Taxes, if any, that is due in connection with the transactions contemplated by this Agreement and Purchaser agrees to pay any such Transfer Tax to Seller or to the appropriate Governmental Body. If any of the transactions contemplated by this
Agreement are exempt from any such Transfer Taxes upon the filing of an appropriate certificate or other evidence of exemption, Purchaser will timely furnish to Seller such certificate or evidence. 
  

 49 

	Section 12.4	Expenses. 

 Except as otherwise
expressly provided in Section 12.3 or elsewhere in this Agreement, (a) all expenses incurred by Seller in connection with or related to the authorization, preparation or execution of this Agreement, the Conveyance delivered
hereunder and the Exhibits and Schedules hereto and thereto, and all other matters related to the Closing, including without limitation, all fees and expenses of counsel, accountants and financial advisers employed by Seller, shall be borne solely
and entirely by Seller, and (b) all such expenses incurred by Purchaser shall be borne solely and entirely by Purchaser. 
  

	Section 12.5	Change of Name. 

 As promptly
as practicable, but in any case within thirty (30) days after the Closing Date, Purchaser shall eliminate the names “Petrohawk”, “Petrohawk Properties, LP”, “KCS Resources, Inc.”, “Petrohawk Energy
Corporation,” “One TEC, LLC” and any variants thereof from the Assets acquired pursuant to this Agreement and, except with respect to such grace period for eliminating existing usage, shall have no right to use any logos, trademarks
or trade names belonging to Seller or any of its Affiliates. 
  

	Section 12.6	Replacement of Bonds, Letters of Credit and Guarantees. 

 The parties understand that none of the bonds, letters of credit and guarantees, if any, posted by Seller or any of its Affiliates with Governmental Bodies and relating to the Assets may be transferable to Purchaser.
Prior to Closing, Purchaser shall have obtained, or caused to be obtained in the name of Purchaser, replacements for such bonds, letters of credit and guarantees, to the extent such replacements are necessary to permit the cancellation of the bonds,
letters of credit and guarantees posted by Seller or any of its Affiliates or to consummate the transactions contemplated by this Agreement. 
  

	Section 12.7	Governing Law and Venue. 

 THIS
AGREEMENT AND THE LEGAL RELATIONS BETWEEN THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS OTHERWISE APPLICABLE TO SUCH DETERMINATIONS. JURISDICTION
AND VENUE WITH RESPECT TO ANY DISPUTES ARISING HEREUNDER SHALL BE PROPER ONLY IN HARRIS COUNTY, TEXAS. 
  

	Section 12.8	Captions. 

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

	Section 12.9	Waivers. 

 Any failure by any
party or parties to comply with any of its or their obligations, agreements or conditions herein contained may be waived in writing, but not in any other manner, by the party or parties to whom such compliance is owed. No waiver of, or consent to a

  

 50 

 
change in, any of the provisions of this Agreement shall be deemed or shall constitute a waiver of, or consent to a change in, other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 
  

	Section 12.10	Assignment. 

 No party shall
assign all or any part of this Agreement, nor shall any party assign or delegate any of its rights or duties hereunder, without the prior written consent of the other party; provided, that Purchaser may, without the consent of Seller, assign this
Agreement to any Affiliate of Purchaser or Permitted Assignee or any of its rights under this agreement to its Affiliates or Permitted Assignee, but no such assignment by Purchaser shall relieve Purchaser of its obligations hereunder. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Permitted Assignee, for purposes of this Section 12.10, shall mean any newly formed special purpose entity formed by
Purchaser and its equity holders for the purpose of acquiring the Properties pursuant to this Agreement. 
  

	Section 12.11	Entire Agreement. 

 The
Confidentiality Agreement, this Agreement and the Exhibits and Schedules attached hereto, and the documents to be executed hereunder constitute the entire agreement between the parties pertaining to the subject matter hereof, and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or written, of the parties pertaining to the subject matter hereof. 
  

	Section 12.12	Amendment. 

 (a) This Agreement
may be amended or modified only by an agreement in writing executed by the parties hereto. 
 (b) No waiver of any right under this Agreement
shall be binding unless executed in writing by the party to be bound thereby. 
  

	Section 12.13	No Third-Party Beneficiaries. 

 Nothing in this Agreement shall entitle any Person other than Purchaser or Seller to any claims, remedy or right of any kind, except as to those rights expressly provided to the Seller Indemnified Persons and Purchaser Indemnified Persons
(provided, however, any claim for indemnity hereunder on behalf of an Seller Indemnified Person or an Purchaser Indemnified Person must be made and administered by a party to this Agreement). 
  

	Section 12.14	References. 

 In this
Agreement: 
 (a) References to any gender includes a reference to all other genders; 
 (b) References to the singular includes the plural, and vice versa; 
  

 51 

 (c) Reference to any Article or Section means an Article or Section of this Agreement; 
 (d) Reference to any Exhibit or Schedule means an Exhibit or Schedule to this Agreement, all of which are incorporated into and made a part of this
Agreement; 
 (e) Unless expressly provided to the contrary, “hereunder”, “hereof”, “herein” and words of
similar import are references to this Agreement as a whole and not any particular Section or other provision of this Agreement; 
 (f)
“Include” and “including” shall mean include or including without limiting the generality of the description preceding such term; and 
 (g) Capitalized terms used herein shall have the meanings ascribed to them in this Agreement as such terms are identified and/or defined in the Definitions section hereof. 
  

	Section 12.15	Construction. 

 Purchaser is a
party capable of making such investigation, inspection, review and evaluation of the Assets as a prudent party would deem appropriate under the circumstances including with respect to all matters relating to the Assets, their value, operation and
suitability. Each of Seller and Purchaser has had substantial input into the drafting and preparation of this Agreement and has had the opportunity to exercise business discretion in relation to the negotiation of the details of the transactions
contemplated hereby. This Agreement is the result of arm’s-length negotiations from equal bargaining positions. In the event of a dispute over the meaning or application of this Agreement, it shall be construed fairly and reasonably and neither
more strongly for nor against either party. 
  

	Section 12.16	Conspicuousness. 

 The parties
agree that provisions in this Agreement in “bold” type satisfy any requirements of the “express negligence rule” and any other requirements at law or in equity that provisions be conspicuously marked or highlighted. 

 

	Section 12.17	Severability. 

 If any term or
other provisions of this Agreement is held invalid, illegal or incapable of being enforced under any rule of law, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in a materially adverse manner with respect to either party; provided, however, that if any such term or provision may be made enforceable by limitation thereof, then such term
or provision shall be deemed to be so limited and shall be enforceable to the maximum extent permitted by applicable Law. 
  

	Section 12.18	Time of Essence. 

 Time is of
the essence in this Agreement. If the date specified in this Agreement for giving any notice or taking any action is not a Business Day (or if the period during which any 

  

 52 

 
notice is required to be given or any action taken expires on a date which is not a Business Day), then the date for giving such notice or taking such action
(and the expiration date of such period during which notice is required to be given or action taken) shall be the next day which is a Business Day. 
  

	Section 12.19	Limitation on Damages. 

 Notwithstanding any other provision contained elsewhere in this Agreement to the contrary, the parties acknowledge that this Agreement does not authorize one party to sue for or collect from the other party its own punitive damages, or its
own consequential or indirect damages in connection with this Agreement and the transactions contemplated hereby and each party expressly waives for itself and on behalf of its Affiliates, any and all Claims it may have against the other party for
its own such damages in connection with this Agreement and the transactions contemplated hereby. For the avoidance of doubt, the terms of this section do not apply to payments from one party to another party arising out of such party’s
indemnification obligations under Article 11. 
  

	Section 12.20	Cooperation with Future Financings, Registrations or Offerings. 

 Seller acknowledges that Purchaser, following Closing, may enter into debt of equity facilities requiring registration and the need for audited financials
relating to the Properties. Seller agrees to reasonably cooperate with Purchaser is assisting the preparation of the necessary financial statements and to make its records and personnel available to assist Purchaser at reasonable times and
durations, given other demands Seller’s personnel may have in performing their own duties for Seller. Purchase agrees to reasonably compensate Seller for such work which compensation shall include reasonable costs of personnel and overhead
associated with the work. 
 [SIGNATURES BEGIN ON THE FOLLOWING PAGE] 
  

 53 

 IN WITNESS WHEREOF, this Agreement has been signed by each of the parties hereto on the date first above
written. 
  

									
	SELLER:	 		 	
			
	PETROHAWK PROPERTIES, LP	 		 	PETROHAWK ENERGY CORPORATION
					
	By:	 	P-H Energy, LLC, its general partner	 		 	By:	 	
					
	By:	 	 /s/ Floyd C. Wilson
	 		 		 	 /s/ Floyd C. Wilson

		 	Floyd C. Wilson	 		 		 	Floyd C. Wilson
		 	President and Chief Executive Officer	 		 		 	President and Chief Executive Officer
			
	KCS RESOURCES, INC.	 		 	ONE TEC, LLC
					
	By:	 		 		 	By:	 	
					
		 	 /s/ Floyd C. Wilson
	 		 		 	 /s/ Floyd C. Wilson

		 	Floyd C. Wilson	 		 		 	Floyd C. Wilson
		 	President and Chief Executive Officer	 		 		 	President and Chief Executive Officer
				
	PURCHASER:	 		 		 	
				
	MILAGRO DEVELOPMENT I, LP	 		 		 	
					
	By:	 	Milagro Development GP, LLC, its General Partner	 		 		 	
					
	By:	 	 /s/ Robert L. Cavnar
	 		 		 	
		 	Robert L. Cavnar	 		 		 	
		 	President and Chief Executive Officer	 		 		 	

  

 54Exhibit 10.6.4

 Exhibit 10.6.4 
 FIFTH AMENDMENT TO 
 FINANCING AND SECURITY AGREEMENT 
 THIS FIFTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT (this “Agreement”) is made as of November 7, 2007 by and among TVI CORPORATION, a
Maryland corporation (“TVI”), CAPA MANUFACTURING CORP., a Maryland corporation (“Capa”), SAFETY TECH INTERNATIONAL, INC., a Maryland corporation (“Safety Tech”), and SIGNATURE SPECIAL EVENT SERVICES, INC. (formerly
named “TVI Holdings One, Inc.”) (“Signature TVI”) jointly and severally (each of TVI, Capa, Safety Tech, and Signature TVI, a “Borrower”; TVI, Capa, Safety Tech, and Signature TVI, collectively, the
“Borrowers”); and BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation (the “Lender”). 
 RECITALS

 A.    The Borrowers and the Lender entered into a Financing and Security Agreement dated October 31, 2006
(as amended by First Amendment to Financing and Security Agreement dated May 25, 2007, Second Amendment to Financing and Security Agreement dated June 21, 2007, Third Amendment to Financing and Security Agreement dated August 7, 2007,
Fourth Amendment to Financing and Security Agreement dated October 12, 2007, and as amended, restated, modified, substituted, extended, and renewed from time to time, the “Financing Agreement”). The Financing Agreement provides for
some of the agreements between the Borrowers and the Lender with respect to the “Loans” (as defined in the Financing Agreement), including (i) a revolving credit facility in the maximum principal amount of $25,000,000 and (ii) an
Acquisition Line under which an advance evidenced by an Acquisition Line Term Note is outstanding and no further advances are to be made. 
 B.    The Borrowers have requested that the Lender: (a) modify the definition of “Borrowing Base” to (1) extend the date of reduction from 65% of Eligible Fixed Assets (as such term is defined in the
Financing Agreement) to 55% of Eligible Fixed Assets under clause (iii) of such definition from October 31, 2007 to December 31, 2007 and (2) extend the termination date applicable to additional advances under clause (iv) of
such definition from November 10, 2007 to December 31, 2007; and (b) waive certain financial covenant defaults. 
 C.    The Lender is willing to agree to the Borrowers’ request on the condition, among others, that this Agreement be executed. 
 AGREEMENTS 
 NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, receipt of which is hereby acknowledged, the Borrowers, jointly and severally, and the Lender agree as follows: 
 1.    The Borrowers and the Lender agree that the Recitals above are a part of this Agreement. Unless otherwise expressly defined in this Agreement, terms defined in the Financing Agreement shall have the same meaning
under this Agreement. 

 2.    Each Borrower represents and warrants to the Lender as follows: 
 (a) Each Borrower (a) is a corporation duly organized, existing and in good standing under the laws of the jurisdiction of its incorporation stated
in the Perfection Certificate and is organized in no other jurisdiction, (b) has the corporate power to own its property and to carry on its business as now being conducted, and (c) is duly qualified to do business and is in good standing
in each jurisdiction in which the character of the properties owned by it therein or in which the transaction of its business makes such qualification necessary. 
 (b) Each Borrower has the power and authority to execute and deliver this Agreement and perform its obligations hereunder and has taken all necessary and appropriate corporate action to authorize the execution,
delivery and performance of this Agreement. 
 (c) The Financing Agreement, as amended by this Agreement, and each of the other Financing
Documents remain in full force and effect, and each constitutes the valid and legally binding obligation of the Borrower, enforceable in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting the rights and remedies of creditors and secured parties, and general principles of equity regardless of whether applied in a proceeding in equity or at law. 
 (d) No Event of Default and no event which, with notice, lapse of time or both would constitute an Event of Default, has occurred and is continuing under
the Financing Agreement or the other Financing Documents which has not been waived in writing by the Lender or which is not waived under the terms of this Agreement. 
 (e) The execution, delivery and performance of the terms of this Agreement will not conflict with, violate or be prevented by (i) the Borrower’s charter or bylaws, (ii) any existing mortgage, indenture,
contract or agreement binding on the Borrower or affecting its property, or (iii) any Laws. 
 3.    On the date of
this Agreement, the outstanding principal sum under the Acquisition Line Term Note is $2,500,004. 
 4.    Section 2.1.3(a) of the Financing Agreement is hereby amended in its entirety to read as follows: 
 (a) As used in this Agreement, the term “Borrowing Base” means at any time, an amount equal to the aggregate of (i) eighty-five percent (85%) of the amount of Eligible Receivables plus
(ii) the lesser of (A) fifty-five percent (55%) of the amount of Eligible Inventory or (B) Six Million Dollars ($6,000,000), subject to the adjustments provided in this Section 2.1, plus (iii) (A) sixty-five
percent (65%) of the amount of Eligible Fixed Assets through and including December 31, 2007, and (B) fifty-five percent (55%) of the amount of Eligible Fixed Assets, thereafter, plus (iv) only for period commencing
on May 25, 2007 through and including December 31, 2007, $3,600,000. 
  

 2 

 5.    At the time this Agreement is executed and delivered, (a) the Borrowers
shall deliver to the Lender incumbency certificates with respect to the Borrowers’ Responsible Officers, (b) the Borrowers shall pay to the Lender as part of the Obligations the fees of Lender’s counsel in the amount of $750 and
hereby agree that the Lender may debit TVI’s account for the same and (c) the Borrowers shall pay the Lender an amendment fee in the amount of $15,000, which fee is fully earned and non-refundable. 
 6.    On the condition that the Borrower shall have fully complied with the terms and conditions of this Agreement, the Lender hereby
waives defaults under the following provisions of the Financing Agreement which, prior to the execution of this Agreement or for the period stated, existed under the Obligations; provided, however that this Section 6 shall not be deemed to
waive any defaults under the following provisions after the date of this Agreement or after the period stated, or any other defaults arising out of non-compliance by the Borrower with the Financing Agreement, whether or not the events, facts or
circumstances giving rise to such non-compliance existed on or prior to the date hereof: 
  

			
	 Section
	  	Default
	 	 
	Section 6.1.14(b) (Fixed Charge Coverage Ratio) of the Financing Agreement	  	Failure of the Borrowers to maintain the ratio mandated by such Section for the September 30, 2007 test
date.
	 	 
	Section 6.1.14(c) (Funded Debt to EBITDA Ratio) of the Financing Agreement	  	Failure of the Borrowers to maintain the ratio mandated by such Section for the September 30, 2007 test
date.

 7.    The Borrowers hereby issue, ratify and confirm the representations,
warranties and covenants contained in the Financing Agreement, as amended hereby. The Borrowers agree that this Agreement is not intended to and shall not cause a novation with respect to any or all of the Obligations. 
 8.    The Borrowers acknowledge and warrant that the Lender has acted in good faith and has conducted in a commercially reasonable
manner its relationships with the Borrowers in connection with this Agreement and generally in connection with the Financing Agreement and the Obligations. Without implying any limitation on the foregoing, the Borrowers acknowledge and agree that
they have no defenses, affirmative or otherwise, rights of setoff, rights of recoupment, claims, damages, losses, counterclaims, actions, causes of action, defenses, or affirmative defenses, all of any kind or nature whatsoever, in law or in equity,
whether presently known or unknown (collectively, “Claims”) against the Lender or any past, present or future agent, attorney, legal representative, predecessor in interest, affiliate, successor, assign, employee, director or officer of
the Lender (collectively, the “Lender Group”), directly or indirectly, arising out of, based upon, or in any manner connected with, any transaction, event, circumstance, action, course of dealing, failure to act, or occurrence of any sort
or type, whether known or unknown, which occurred, existed, was taken, permitted, or begun prior to the execution of this Agreement and occurred, existed, was taken, permitted or begun in accordance 

  

 3 

 
with, pursuant to, or by virtue of the Obligations or any of the terms or conditions of the Financing Documents, or which directly or indirectly relate to or
arise out of or in any manner are connected with the Obligations or any of the Financing Documents; provided, however, to the extent any Claims exist or existed, each and all of the same are hereby forever waived, discharged and released, other than
Claims for matters described in the last sentence of Section 2.1.8 for which the applicable period for providing written objections have not expired and other than corrections to balances for the Loans and other Obligations due to clerical
errors. 
 9.    The Borrowers shall pay at the time this Agreement is executed and delivered all fees, commissions,
costs, charges, taxes and other expenses incurred by the Lender and its counsel in connection with this Agreement, including, but not limited to, reasonable fees and expenses of the Lender’s counsel and all recording fees, taxes and charges.

 10.    This Agreement and the rights and obligations of the parties hereunder shall be governed by and interpreted in
accordance with the Laws of Maryland. 
 11.    This Agreement is one of the Financing Documents. This Agreement may be
executed in any number of duplicate originals or counterparts, each of such duplicate originals or counterparts shall be deemed to be an original and taken together shall constitute but one and the same instrument. The parties agree that their
respective signatures may be delivered by fax or other electronic means acceptable to the Lender. Any party who chooses to deliver its signature by fax agrees or such other electronic means to provide a counterpart of this Agreement with its inked
signature promptly to each other party. 
 Signatures begin on the following page. The rest of this page is intentionally left blank. 

  

 4 

 BORROWERS’ SIGNATURE PAGE TO 
 FIFTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT 
 (Page 1 of 2 Signature Pages)

 IN WITNESS WHEREOF, each of the parties hereto have executed and delivered this Agreement under their respective seals as of the day and
year first written above. 
  

									
	ATTEST:	 		 	TVI CORPORATION	 	
					
	/s/ Sean R. Hunt	 		 	By:	 	/s/ Harley A. Hughes	 	(Seal)
	 Sean R. Hunt
 Secretary
	 		 		 	 Harley A. Hughes
 President and Chief Executive
Officer
	 	
				
	ATTEST:	 		 	CAPA MANUFACTURING CORP.	 	
					
	/s/ Sean R. Hunt	 		 	By:	 	/s/ Harley A. Hughes	 	(Seal)
	 Sean R. Hunt
 Secretary
	 		 		 	 Harley A. Hughes
 President
	 	
				
	ATTEST:	 		 	SAFETY TECH INTERNATIONAL, INC.	 	
					
	/s/ Sean R. Hunt	 		 	By:	 	/s/ Harley A. Hughes	 	(Seal)
	 Sean R. Hunt
 Secretary
	 		 		 	 Harley A. Hughes
 President
	 	
				
	ATTEST:	 		 	SIGNATURE SPECIAL EVENT SERVICES, INC	 	
					
	/s/ Sean R. Hunt	 		 	By:	 	/s/ Harley A. Hughes	 	(Seal)
	 Sean R. Hunt
 Secretary
	 		 		 	 Harley A. Hughes
 President
	 	

  

 5 

 LENDER’S SIGNATURE PAGE TO 
 FIFTH AMENDMENT TO FINANCING AND SECURITY AGREEMENT 
 (Page 2 of 2 Signature Pages)

 IN WITNESS WHEREOF, each of the parties hereto have executed and delivered this Agreement under their respective seals as of the day and
year first written above. 
  

									
	WITNESS:	 		 	BRANCH BANKING AND TRUST COMPANY	 	
					
	/s/ Stephen Horney	 		 	By:	 	/s/ Derek T. Whitwer	 	(Seal)
		 		 		 	 Derek T. Whitwer,
 Senior Vice
President
	 	

  

 6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}]]