Document:

sce4eixexecbonusprog407

                                                                                        Exhibit 10.2

                                             EDISON INTERNATIONAL
                                         2007 Executive Bonus Program

1.      PURPOSE

  The purpose of this Edison  International  2007  Executive  Bonus Program (this  "Program") is to promote the
  success  of  Edison  International,  a  California  corporation,  (the  "Corporation"),   by  motivating  the
  executives  selected  to  participate  in  this  Program  and  set  forth  in  Section  3.1  below  (each,  a
  "Participant")  to maximize the performance of the Corporation and rewarding them with cash bonuses  directly
  related to such  performance.  This Program is intended to provide bonuses that qualify as  performance-based
  compensation  within the meaning of Section 162(m)  ("Section  162(m)") of the United States Internal Revenue
  Code of 1986, as amended (the "Code").  This Program is adopted under Section 5.2 of the  Corporation's  2007
  Performance  Incentive  Plan (the "Plan") and, as set forth in Section 4.8 below,  is subject to  shareholder
  approval of the Plan.  Capitalized terms are defined in the Plan if not defined herein.

2.      ADMINISTRATION

  This Program shall be administered by the  Compensation and Executive  Personnel  Committee of the Board (the
  "Committee"),  which shall  consist  solely of two or more members of the Board who are  "outside  directors"
  within the meaning of Section  162(m).  Action of the Committee  with respect to the  administration  of this
  Program shall be taken pursuant to a majority vote or by the unanimous  written  consent of its members.  The
  Committee  shall have the  authority  to construe and  interpret  this  Program and any  agreements  or other
  document  relating  to  Awards  under  the  Program,   may  adopt  rules  and  regulations  relating  to  the
  administration  of this  Program,  and shall  exercise  all other  duties and powers  conferred on it by this
  Program.  Any decision or action of the Committee  within its  authority  hereunder  shall be conclusive  and
  binding  upon all  persons.  Neither  the Board nor the  Committee,  nor any person  acting at the  direction
  thereof,  shall be liable for any act, omission,  interpretation,  construction or determination made in good
  faith in connection with this Program (or any Award made under this Program).

3.      AWARDS

3.1     Award  Grants;  Maximum  Bonus  Amount.  Each  "Award"  granted to a  Participant  under  this  Program
        represents  the  opportunity  to receive a cash  payment  determined  under this Section 3 (a "Bonus"),
        subject to the terms and  conditions of this Program.  The maximum  amount of the Bonus payable to each
        Participant  (the "Maximum Bonus  Amount")  shall be determined by  multiplying  (i) the Bonus Pool (as
        defined in  Section  3.2  below),  by (ii) the  Participant's  "Bonus  Percentage"  as set forth in the
        following table:

--------------------------- -------------
                               Bonus
       Participant           Percentage
--------------------------- -------------
--------------------------- -------------
John E. Bryson                  36%
--------------------------- -------------
--------------------------- -------------
Theodore F. Craver, Jr.         12%
--------------------------- -------------
--------------------------- -------------
Alan J. Fohrer                  12%
--------------------------- -------------
--------------------------- -------------
Thomas R. McDaniel              12%
--------------------------- -------------
--------------------------- -------------
Lon Bouknight                   12%
--------------------------- -------------
--------------------------- -------------
Polly Gault                      8%
--------------------------- -------------
--------------------------- -------------
John R. Fielder                  8%
--------------------------- -------------

        In no case,  however,  shall the amount of any Bonus exceed the  applicable  limit set forth in Section
        5.2.3 of the Plan.

3.2     Bonus  Pool.  As soon  as  practicable  after  the  end of the  Corporation's  2007  fiscal  year  (the
        "Performance  Period"),  the Committee  shall determine the amount of the  Corporation's  earnings from
        continuing  operations  (after  interest,  taxes,  depreciation and  amortization,  and determined on a
        consolidated  basis) for the Performance  Period (the "Performance  Level").  The "Bonus Pool" shall be
        determined by multiplying  (i) the  Performance  Level,  by (ii) one and one-half  percent  (1.5%).  No
        Participant  shall receive any payment under this Program unless and until the Committee has certified,
        by resolution or other  appropriate  action in writing,  that the amount

Page 1

        of the  Performance  Level has
        been  accurately  determined in accordance  with the terms,  conditions  and limits of this Program and
        that any other  material  terms  previously  established  by the Committee or set forth in this Program
        applicable to the Award were in fact satisfied.

3.3     Committee Discretion.  Notwithstanding the foregoing provisions,  the Committee shall retain discretion
        to  reduce  (but  not  increase)  the  Maximum  Bonus  Amount  otherwise  payable  to any  one or  more
        Participants  pursuant to Sections  3.1 and 3.2. The  Committee  may exercise  such  discretion  on any
        basis it deems  appropriate  (including,  but not  limited  to,  its  assessment  of the  Corporation's
        performance  relative  to its  operating  or  strategic  goals for the  Performance  Period  and/or the
        Participant's  individual  performance  for such  period).  For purposes of clarity,  if the  Committee
        exercises its discretion to reduce the amount of any Bonus payable  hereunder,  it may not allocate the
        amount of such reduction to Bonuses payable to other Participants.

3.4     Payment of Bonuses.  Any Bonuses shall be paid (subject to tax withholding  pursuant to Section 4.6) as
        soon as practicable  following the certification of the Committee's  findings under Section 3.2 and its
        determination  of the final Bonus amount  (after  giving  effect to any exercise of its  discretion  to
        reduce Bonuses pursuant to Section 3.3).

3.5     Termination of Employment.

(a)     Except as provided in Sections  3.5(b) and 3.5(c),  in the event that a  Participant's  employment with
           the  Corporation and its  Subsidiaries  terminates at any time during the  Performance  Period,  the
           Participant's  Award  will  immediately  terminate  upon such  termination  of  employment,  and the
           Participant will not be entitled to any Bonus payment in respect of such Award.

(b)     Notwithstanding Section 3.5(a), in the event that a Participant's employment with the Corporation and
           its Subsidiaries terminates at any time during the Performance Period due to the Participant's
           Retirement, death or permanent and total disability, the Participant shall be entitled to a
           prorated Bonus payment with respect to his Award at the time set forth in Section 3.4.  The amount
           of such prorated Bonus shall be determined by multiplying (i) the amount of the Bonus determined
           under this Section 3 that would have been payable to the Participant but for such termination of
           employment, by (ii) a fraction (not greater than 1), the numerator of which is the number of
           weekdays in the Performance Period from January 1, 2007 through the Participant's last day of
           employment prior to such termination, and the denominator of which is the number of weekdays in
           the entire Performance Period.  For purposes of this Section 3.5, the term "Retirement" with
           respect to a Participant shall mean a termination of the Participant's employment on or after the
           first day of the month in which the Participant (A) attains age 65 or (B) attains age 61 with five
           "years of service," as that term is defined in the Edison 401(k) Savings Plan.

(c)     In the event that the Participant's employment terminates at any time during the Performance Period in
           circumstances not covered by Section 3.5(b) and, in connection with such termination, the
           Participant is entitled to severance benefits pursuant to the Corporation's Executive Severance
           Plan, the Participant's right to a Bonus with respect to the Performance Period shall be
           determined pursuant to the Corporation's Executive Severance Plan.

3.6     Adjustments.  The  Committee  shall  adjust the  Performance  Level,  Bonus  Pool and other  provisions
        applicable  to Awards  granted  under  this  Program  to the  extent  (if any) it  determines  that the
        adjustment  is necessary or advisable to preserve the intended  incentives  and benefits to reflect (1)
        any  material  change in  corporate  capitalization,  any  material  corporate  transaction  (such as a
        reorganization,  combination, separation, merger, acquisition, or any combination of the foregoing), or
        any  complete or partial  liquidation  of the  Corporation,  (2) any change in  accounting  policies or
        practices,  (3) the  effects of any special  charges to the  Corporation's  earnings,  or (4) any other
        similar special circumstances.

3.7     Change in  Control.  If a Change in Control of EIX occurs at any time  during the  Performance  Period,
        the  Performance  Period for all outstanding  Awards will be shortened so that the  Performance  Period
        will be deemed to have  ended on the last day prior to such  Change in  Control of EIX . The Bonus Pool
        and the Bonuses  payable with respect to each Award will be determined in accordance with the foregoing
        provisions of this Section 3 based on such  shortened  Performance  Period.  Such Bonuses shall be paid
        (subject to tax withholding  pursuant to Section 4.6) as soon as practicable  following the date of the
        Change in Control of EIX. For  purposes of this

Page 2

        Section 3.7,  "Change in Control of EIX" shall have the
        meaning ascribed to such term in the Corporation's 2007 Long-Term Incentives Terms and Conditions.

4.      GENERAL PROVISIONS

4.1     Rights of Participants.

(a)     No Right to Continued  Employment.  Nothing in this Program (or in any other  documents  evidencing any
           Award under this Program) will be deemed to confer on any  Participant  any right to continue in the
           employ  of the  Corporation  or any  Subsidiary  or  interfere  in any way  with  the  right  of the
           Corporation or any Subsidiary to terminate his or her employment at any time.

(b)     Program  Not  Funded.  No  Participant  or other  person  will have any right or claim to any  specific
           funds,  property or assets of the Corporation by reason of any Award  hereunder.  To the extent that
           a Participant or other person acquires a right to receive payment  pursuant to any Award  hereunder,
           such right shall be no greater than the right of any unsecured general creditor of the Corporation.

4.2     Non-Transferability  of Benefits  and  Interests.  Except as  expressly  provided by the  Committee  in
        accordance  with the  provisions of Section  162(m),  all Awards are  non-transferable,  and no benefit
        payable under this Program shall be subject in any manner to sale, transfer, anticipation,  alienation,
        assignment,  pledge,  encumbrance  or charge.  This Section 4.2 shall not apply to an  assignment  of a
        contingency  or payment due (a) after the death of a Participant  to the deceased  Participant's  legal
        representative  or  beneficiary  or  (b)  after  the  disability  of  a  Participant  to  the  disabled
        Participant's personal representative.

4.3     Force and Effect.  The various  provisions  herein are severable in their entirety.  Any  determination
        of invalidity or  unenforceability of any one provision will have no effect on the continuing force and
        effect of the remaining provisions.

4.4     Governing Law.  This Program will be construed under the laws of the State of California.

4.5     Construction.

(a)     Section  162(m).  It is the  intent of the  Corporation  that this  Program,  Awards and  Bonuses  paid
           hereunder  will  qualify  as  performance-based  compensation  or  will  otherwise  be  exempt  from
           deductibility  limitations  under Section 162(m).  Any provision,  application or  interpretation of
           this  Program  inconsistent  with this intent to satisfy the  standards  in Section  162(m) shall be
           disregarded.

(b)     Section  409A.  It is the intended  that Awards under this Program  qualify as  "short-term  deferrals"
           within the meaning of the guidance  provided by the Internal  Revenue  Service under Section 409A of
           the Code and this  Program  shall be  interpreted  consistent  with  that  intent.  Bonuses  payable
           pursuant  to this  Program  shall be paid by March 15, 2008 to the extent  required to qualify  such
           Bonuses as such short-term deferrals.

4.6     Tax  Withholding.  Upon the payment of any Bonus,  the  Corporation  shall have the right to deduct the
        amount of any federal,  state or local taxes that the  Corporation or any Subsidiary may be required to
        withhold with respect to such payment.

4.7     Amendment or  Termination  of Program.  The Board or the  Committee may at any time  terminate,  amend,
        modify or suspend this Program, in whole or in part.  Notwithstanding  the foregoing,  no amendment may
        be effective  without  Board and/or  shareholder  approval if such approval is necessary to comply with
        the applicable rules of Section 162(m).

4.8     Effective  Date.  Notwithstanding  anything  else  contained  herein  to the  contrary,  any right of a
        Participant  to receive  payment of a Bonus with respect to any Award  granted  hereunder is subject to
        approval of the Plan by the shareholders of the Corporation prior to December 14, 2007.

Page 3PURCHASE AND SALE AGREEMENT BETWEEN THE COMPANY AND VENOCO, INC.

    
      

      

    

    
      
        Confidential
          Portions Redacted and Filed with the Commission [***] Symbolizes Language
          Omitted Pursuant to an Application For Confidential
          Treatment.

      

       

       

       

      PURCHASE
        AND SALE AGREEMENT

      

      between

      

      BERRY
        PETROLEUM COMPANY,

      

      as
        Seller,

       

       

      and

       

       

      VENOCO,
        INC.,

      

      as
        Buyer,

       

       

      Ventura
        County, California

       

       

       

      Dated
        March 19, 2007

      

      Effective
        January 1, 2007

       

       

      CONFIDENTIAL

       

      
        

        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

         

        TABLE
          OF
          CONTENTS

         

        
          
            	 	 	
                    Page

                  
	 	
                    TABLE
                      OF CONTENTS

                  	 
	 	 	 
	
                    ARTICLE
                      1

                  	
                    PURCHASE
                      AND SALE

                  	
                    1

                  
	 	 	 
	
                    1.1

                  	
                    Purchase
                      and Sale

                  	
                    1

                  
	 	 	 
	
                    1.2

                  	
                    Assets

                  	
                    1

                  
	 	 	 
	
                    1.3

                  	
                    Effective
                      Time

                  	
                    2

                  
	 	 	 
	
                    ARTICLE
                      2

                  	
                    PURCHASE
                      PRICE

                  	
                    2

                  
	 	 	 
	
                    2.1

                  	
                    Purchase
                      Price

                  	
                    2

                  
	 	 	 
	
                    2.2

                  	
                    Deposit

                  	
                    2

                  
	 	 	 
	
                    2.3

                  	
                    Adjustments
                      to Purchase Price

                  	
                    3

                  
	 	 	 
	
                    2.4

                  	
                    Allocated
                      Values

                  	
                    4

                  
	 	 	 
	
                    ARTICLE
                      3

                  	
                    DUE
                      DILIGENCE INSPECTION

                  	
                    4

                  
	 	 	 
	
                    3.1

                  	
                    Access
                      to Records

                  	
                    4

                  
	 	 	 
	
                    3.2

                  	
                    No
                      Representation or Warranty

                  	
                    5

                  
	 	 	 
	
                    3.3

                  	
                    Access
                      to the Assets and Indemnity

                  	
                    5

                  
	 	 	 
	
                    3.4

                  	
                    PRC
                      3314.1 LEASE

                  	
                    5

                  
	 	 	 
	
                    ARTICLE
                      4

                  	
                    TITLE
                      MATTERS

                  	
                    5

                  
	 	 	 
	
                    4.1

                  	
                    Defensible
                      Title

                  	
                    5

                  
	 	 	 
	
                    4.2

                  	
                    Permitted
                      Encumbrances

                  	
                    6

                  
	 	 	 
	
                    4.3

                  	
                    Title
                      Defect

                  	
                    7

                  
	 	 	 
	
                    4.4

                  	
                    Notice
                      of Title Defects

                  	
                    7

                  
	 	 	 
	
                    4.5

                  	
                    Seller’s
                      Right to Cure

                  	
                    7

                  

          

           

          
            
              
              

            

            
              i

              
                

              

            

            
              
              

              Confidential
                Portions Redacted and Filed with the Commission [***] Symbolizes
                Language
                Omitted Pursuant to an Application For Confidential
                Treatment.

            

             

            TABLE
              OF CONTENTS

            (continued)

             

          

          
            	 	 	
                    Page

                  
	 	 	 
	
                    4.6

                  	
                    Remedies
                      for Title Defects

                  	
                    7

                  
	 	 	 
	
                    4.7

                  	
                    Title
                      Thresholds

                  	
                    8

                  
	 	 	 
	
                    4.8

                  	
                    Title
                      Dispute Resolution

                  	
                    8

                  
	 	 	 
	
                    4.9

                  	
                    Depletion
                      and Depreciation of Personal Property

                  	
                    8

                  
	 	 	 
	
                    4.10

                  	
                    Consents

                  	
                    9

                  
	 	 	 
	
                    4.11

                  	
                    Casualty
                      Loss

                  	
                    9

                  
	 	 	 
	
                    ARTICLE
                      5

                  	
                    ENVIRONMENTAL
                      MATTERS

                  	
                    9

                  
	 	 	 
	
                    5.1

                  	
                    Definitions

                  	
                    9

                  
	 	 	 
	
                    5.2

                  	
                    Spills
                      and NORM

                  	
                    10

                  
	 	 	 
	
                    5.3

                  	
                    Environmental
                      Assessment

                  	
                    10

                  
	 	 	 
	
                    5.4

                  	
                    Notice
                      of Environmental Defects

                  	
                    11

                  
	 	 	 
	
                    5.5

                  	
                    Remedies
                      for Environmental Defects

                  	
                    11

                  
	 	 	 
	
                    5.6

                  	
                    Environmental
                      Thresholds

                  	
                    12

                  
	 	 	 
	
                    5.7

                  	
                    Environmental
                      Dispute Resolution

                  	
                    12

                  
	 	 	 
	
                    5.8

                  	
                    “As
                      Is, Where Is” Purchase

                  	
                    12

                  
	 	 	 
	
                    5.9

                  	
                    Disposal
                      of Materials, Substances and Wastes

                  	
                    13

                  
	 	 	 
	
                    5.10

                  	
                    Buyer’s
                      Indemnity

                  	
                    13

                  
	 	 	 
	
                    5.11

                  	
                    Seller’s
                      Indemnity

                  	
                    14

                  
	 	 	 
	
                    ARTICLE
                      6

                  	
                    SELLER’S
                      REPRESENTATIONS AND WARRANTIES

                  	
                    14

                  
	 	 	 
	
                    6.1

                  	
                    Existence

                  	
                    14

                  
	 	 	 
	
                    6.2

                  	
                    Power

                  	
                    14

                  
	 	 	 
	
                    6.3

                  	
                    Authorization

                  	
                    15

                  

          

           

          
            
              
              

            

            
              ii

              
                

              

            

            
              
              

              Confidential
                Portions Redacted and Filed with the Commission [***] Symbolizes
                Language
                Omitted Pursuant to an Application For Confidential
                Treatment.

            

          

          
             

            TABLE
              OF CONTENTS

            (continued)

             

          

          
            	 	 	
                    Page

                  
	 	 	 
	
                    6.4

                  	
                    Execution
                      and Delivery

                  	
                    15

                  
	 	 	 
	
                    6.5

                  	
                    Liabilities
                      for Brokers’ Fees

                  	
                    15

                  
	 	 	 
	
                    6.6

                  	
                    Liens

                  	
                    15

                  
	 	 	 
	
                    6.7

                  	
                    Taxes

                  	
                    15

                  
	 	 	 
	
                    6.8

                  	
                    Litigation

                  	
                    15

                  
	 	 	 
	
                    6.9

                  	
                    COMPLIANCE
                      WITH LAWS

                  	
                    15

                  
	 	 	 
	
                    6.10

                  	
                    Contracts

                  	
                    15

                  
	 	 	 
	
                    6.11

                  	
                    Governmental
                      Authorizations

                  	
                    16

                  
	 	 	 
	
                    6.12

                  	
                    Consents
                      and Preference Rights

                  	
                    16

                  
	 	 	 
	
                    ARTICLE
                      7

                  	
                    BUYER’S
                      REPRESENTATIONS AND WARRANTIES

                  	
                    17

                  
	 	 	 
	
                    7.1

                  	
                    Existence

                  	
                    17

                  
	 	 	 
	
                    7.2

                  	
                    Power
                      and Authority

                  	
                    17

                  
	 	 	 
	
                    7.3

                  	
                    Authorization

                  	
                    17

                  
	 	 	 
	
                    7.4

                  	
                    Execution
                      and Delivery

                  	
                    17

                  
	 	 	 
	
                    7.5

                  	
                    Liabilities
                      for Brokers’ Fees

                  	
                    17

                  
	 	 	 
	
                    7.6

                  	
                    Litigation

                  	
                    17

                  
	 	 	 
	
                    7.7

                  	
                    Independent
                      Evaluation

                  	
                    17

                  
	 	 	 
	
                    7.8

                  	
                    Qualification

                  	
                    18

                  
	 	 	 
	
                    7.9

                  	
                    Funds

                  	
                    18

                  
	 	 	 
	
                    ARTICLE
                      8

                  	
                    COVENANTS
                      AND AGREEMENTS

                  	
                    18

                  
	 	 	 
	
                    8.1

                  	
                    Covenants
                      and Agreements

                  	
                    18

                  

          

           

          
            
              
              

            

            
              iii

              
                

              

            

            
              
              

              Confidential
                Portions Redacted and Filed with the Commission [***] Symbolizes
                Language
                Omitted Pursuant to an Application For Confidential
                Treatment.

            

          

          
             

            TABLE
              OF CONTENTS

            (continued)

             

          

          
            	 	 	
                    Page

                  
	 	 	 
	
                    8.2

                  	
                    Financial
                      Statements

                  	
                    19

                  
	 	 	 
	
                    ARTICLE
                      9

                  	
                    CONDITIONS
                      TO CLOSING

                  	
                    20

                  
	 	 	 
	
                    9.1

                  	
                    Seller’s
                      Conditions

                  	
                    20

                  
	 	 	 
	
                    9.2

                  	
                    Buyer’s
                      Conditions

                  	
                    20

                  
	 	 	 
	
                    ARTICLE
                      10

                  	
                    RIGHT
                      OF TERMINATION AND ABANDONMENT

                  	
                    21

                  
	 	 	 
	
                    10.1

                  	
                    Termination

                  	
                    21

                  
	 	 	 
	
                    10.2

                  	
                    Liabilities
                      Upon Termination

                  	
                    21

                  
	 	 	 
	
                    ARTICLE
                      11

                  	
                    CLOSING

                  	
                    22

                  
	 	 	 
	
                    11.1

                  	
                    Date
                      of Closing

                  	
                    22

                  
	 	 	 
	
                    11.2

                  	
                    Closing
                      Obligations

                  	
                    22

                  
	 	 	 
	
                    ARTICLE
                      12

                  	
                    POST-CLOSING
                      OBLIGATIONS

                  	
                    23

                  
	 	 	 
	
                    12.1

                  	
                    Post-Closing
                      Adjustments

                  	
                    23

                  
	 	 	 
	
                    12.2

                  	
                    Suspense
                      Accounts

                  	
                    23

                  
	 	 	 
	
                    12.3

                  	
                    Dispute
                      Resolution

                  	
                    24

                  
	 	 	 
	
                    12.4

                  	
                    Records

                  	
                    24

                  
	 	 	 
	
                    12.5

                  	
                    Further
                      Assurances

                  	
                    24

                  
	 	 	 
	
                    12.6

                  	
                    Disclaimers
                      of Representations and Warranties

                  	
                    24

                  
	 	 	 
	
                    ARTICLE
                      13

                  	
                    TAXES

                  	
                    25

                  
	 	 	 
	
                    13.1

                  	
                    Apportionment
                      of Ad Valorem and Property Taxes

                  	
                    25

                  
	 	 	 
	
                    13.2

                  	
                    Transfer
                      Taxes and Recording Fees

                  	
                    25

                  
	 	 	 
	
                    13.3

                  	
                    Other
                      Taxes

                  	
                    25

                  
	 	 	 
	
                    13.4

                  	
                    Tax
                      Reports and Returns

                  	
                    25

                  

          

           

          
            
              
              

            

            
              iv

              
                

              

            

            
              
              

              Confidential
                Portions Redacted and Filed with the Commission [***] Symbolizes
                Language
                Omitted Pursuant to an Application For Confidential
                Treatment.

            

          

          
             

            TABLE
              OF CONTENTS

            (continued)

             

          

          
            	 	 	
                    Page

                  
	 	 	 
	
                    ARTICLE
                      14

                  	
                    ASSUMPTION
                      AND RETENTION OF OBLIGATIONS; INDEMNIFICATION

                  	
                    26

                  
	 	 	 
	
                    14.1

                  	
                    Buyer’s
                      Assumption of Liabilities and Obligations

                  	
                    26

                  
	 	 	 
	
                    14.2

                  	
                    Seller’s
                      Retention of Liabilities and Obligations

                  	
                    26

                  
	 	 	 
	
                    14.3

                  	
                    Buyer’s
                      Plugging and Abandonment Obligations

                  	
                    26

                  
	 	 	 
	
                    14.4

                  	
                    Indemnification

                  	
                    27

                  
	 	 	 
	
                    14.5

                  	
                    Procedure

                  	
                    27

                  
	 	 	 
	
                    14.6

                  	
                    No
                      Insurance; Subrogation

                  	
                    29

                  
	 	 	 
	
                    14.7

                  	
                    Reservation
                      as to Non-Parties

                  	
                    29

                  
	 	 	 
	
                    ARTICLE
                      15

                  	
                    MISCELLANEOUS

                  	
                    29

                  
	 	 	 
	
                    15.1

                  	
                    Exhibits

                  	
                    29

                  
	 	 	 
	
                    15.2

                  	
                    Expenses

                  	
                    29

                  
	 	 	 
	
                    15.3

                  	
                    Notices

                  	
                    29

                  
	 	 	 
	
                    15.4

                  	
                    Amendments

                  	
                    30

                  
	 	 	 
	
                    15.5

                  	
                    Assignment

                  	
                    30

                  
	 	 	 
	
                    15.6

                  	
                    Confidentiality

                  	
                    30

                  
	 	 	 
	
                    15.7

                  	
                    Press
                      Releases

                  	
                    30

                  
	 	 	 
	
                    15.8

                  	
                    Headings

                  	
                    30

                  
	 	 	 
	
                    15.9

                  	
                    Counterparts

                  	
                    31

                  
	 	 	 
	
                    15.10

                  	
                    References

                  	
                    31

                  
	 	 	 
	
                    15.11

                  	
                    Governing
                      Law

                  	
                    31

                  
	 	 	 
	
                    15.12

                  	
                    Removal
                      of Signs

                  	
                    31

                  

          

           

          
            
              
              

            

            
              v

              
                

              

            

            
              
              

              Confidential
                Portions Redacted and Filed with the Commission [***] Symbolizes
                Language
                Omitted Pursuant to an Application For Confidential
                Treatment.

            

          

          
             

            TABLE
              OF CONTENTS

            (continued)

             

          

          
            	 	 	
                    Page

                  
	 	 	 
	
                    15.13

                  	
                    Binding
                      Effect

                  	
                    31

                  
	 	 	 
	
                    15.14

                  	
                    Survival

                  	
                    31

                  
	 	 	 
	
                    15.15

                  	
                    No
                      Third-Party Beneficiaries

                  	
                    31

                  
	 	 	 
	
                    15.16

                  	
                    Limitation
                      on Damages

                  	
                    31

                  
	 	 	 
	
                    15.17

                  	
                    Severability

                  	
                    31

                  
	 	 	 
	
                    15.18

                  	
                    Knowledge

                  	
                    31

                  
	 	 	 
	
                    ARTICLE
                      16

                  	
                    EXCHANGE
                      RIGHT

                  	
                    32

                  
	 	 	 
	
                    16.1

                  	
                    Exchange
                      Cooperation

                  	
                    32

                  

          

        

      

       

      
        
          
          

        

        
          vi

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      EXHIBITS

      

        
          	
                  Exhibit/Schedule

                	
                  Description

                	
                  Section
                    Where Defined

                
	 	 	 
	
                  A-1

                	
                  Leases
                    and Lands

                	
                  1.2.a

                
	 	 	 
	
                  A-2

                	
                  Wells

                	
                  1.2.b

                
	 	 	 
	
                  A-3

                	
                  Rights-of-Way
                    and Surface Leases

                	
                  1.2.e

                
	 	 	 
	
                  A-4

                	
                  Equipment
                    and Facilities

                	
                  1.2.e

                
	 	 	 
	
                  B

                	
                  Material
                    Agreements

                	
                  1.2.d

                
	 	 	 
	
                  C

                	
                  Allocated
                    Values

                	
                  2.4

                
	 	 	 
	
                  D

                	
                  Temporary
                    Access Agreement

                	
                  3.3

                
	 	 	 
	
                  E

                	
                  Form
                    of Assignment and Bill of Sale 

                	
                  11.2.a

                
	 	 	 
	
                  F

                	
                  Form
                    of Assumption Agreement

                	
                  11.2.a

                
	 	 	 
	
                  G

                	
                  Seller’s
                    Wire Instructions

                	
                  2.2

                
	 	 	 
	
                  H

                	
                  Seller’s
                    Officer’s Certificate

                	
                  11.2.e

                
	 	 	 
	
                  I

                	
                  Buyer’s
                    Officer’s Certificate

                	
                  11.2.f

                
	 	 	 
	
                  J

                	
                  Non-Foreign
                    Affidavit

                	
                  11.2.g

                
	 	 	 
	
                  K

                	
                  Suspense
                    Accounts

                	
                  12.2

                
	 	 	 
	
                  6.12

                	
                  Consents
                    and Preference Rights

                	
                  6.12

                

        

      

       

    

    
      
        
          
          

        

        
          -vii-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      PURCHASE AND SALE
        AGREEMENT

       

      This
        PURCHASE AND SALE AGREEMENT (“Agreement”),
        dated
        March 19, 2007, is by and between Berry Petroleum Company, a Delaware
        corporation, 5201 Truxtun Avenue, Suite 300, Bakersfield, California 93309-0640
        (“Seller”)
        and
        Venoco, Inc., a Delaware corporation, whose address is 370 17th
        Street,
        Suite 3900, Denver, Colorado 80202-1370 (“Buyer”).

       

      RECITALS

       

      A.    Seller
        owns and desires to sell certain real and personal property interests located
        in
        Ventura County, California, as more fully described in Section 1.2 below
        (the “Assets”).

       

      B.    Buyer
        desires to purchase the Assets upon the terms and conditions set forth in
        this
        Agreement.

       

      AGREEMENT

       

      In
        consideration of the mutual promises contained herein and other good and
        valuable consideration, the receipt and sufficiency of which are hereby
        acknowledged, Seller and Buyer agree as follows:

       

      ARTICLE
        1

      PURCHASE
        AND SALE

       

      1.1   Purchase
        and
        Sale. Seller
        agrees to sell and convey to Buyer, and Buyer agrees to purchase and receive
        from Seller, all of Seller’s right, title and interest in the Assets, pursuant
        to the terms and conditions of this Agreement.

       

      1.2   Assets.
        The
“Assets”
are
        all
        of Seller’s right, title, and interest in and to the following real and personal
        property interests located in Ventura County,
        California:

       

      a.   The
        oil
        and gas leases described on Exhibit A-1
        (the
“Leases”),
        insofar and only insofar as the Leases cover the lands described on Exhibit A-1
        (the
“Lands”);
        and
        the oil, gas and all other hydrocarbons (“Hydrocarbons”),
        in,
        on or under or that may be produced from the Lands. 

       

      b.   The
        oil
        and gas wells located on the Leases and Lands, or lands pooled or unitized
        therewith, including without limitation the oil and gas wells described on
        Exhibit A-2 (the
        “Wells”),
        all
        injection and disposal wells on the Leases and Lands, and all personal property
        and equipment associated with the Wells as of the Effective Date.

       

      c.   The
        rights, to the extent transferable, in and to all existing and effective
        unitization, pooling and communitization agreements, declarations and orders,
        to
        the extent that they relate to or affect any of the interests described in
        Sections 1.2.a. and 1.2.b. or the post-Effective Time production of
        Hydrocarbons from the Leases and Lands.

       

      
        
          
          

        

        
          -1-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      d.   The
        rights, to the extent transferable, in and to Hydrocarbon, gathering and
        processing contracts, operating agreements, balancing agreements, joint venture
        agreements, partnership agreements, farmout agreements and other contracts,
        agreements and instruments relating to the interests described in
        Sections 1.2.a., 1.2.b. and 1.2.c, including without limitation the
        agreements described on Exhibit B
        (the
“Material
        Agreements”),
        but
        specifically excluding any marketing or production sales
        agreements.

       

      e.   All
        of
        the personal property, fixtures, improvements (including without limitation
        the
        equipment and facilities described on Exhibit
        A-4)
        (the
“Equipment
        and Facilities”)
        and
        permits, licenses, approvals, servitudes, rights-of-way, easements, surface
        leases (including without limitation the rights-of-way easements and surface
        leases described on Exhibit A-3)
        and
        other surface rights, tanks, boilers, buildings, improvements, injection
        facilities, saltwater disposal facilities, other appurtenances and facilities
        located on and used in connection with or otherwise related to the exploration
        for or production, gathering, treatment, processing, storing, or transporting
        of
        Hydrocarbons or water produced from the Assets described in Sections 1.2.a.
        through 1.2.d.

       

      f.   Seller’s
        Lease and well files;
        gas
        processing files; division order files; abstracts; title opinions; land surveys;
        well logs; maps; engineering data and reports; reserve studies and evaluations
        (insofar as they cover and exist within the boundaries of the Lands), geological
        and geophysical data (including seismic data) and all technical evaluations,
        interpretive data and technical data and
        information relating to the Assets; provided, however, the foregoing shall
        not
        include any files, records, data or information which is attorney work product
        or subject to attorney client privilege or any files, data or information
        which
        by agreement Seller is required to keep confidential except and to the extent
        a
        waiver in writing is obtained of any such confidential requirements or any
        files, data or information related to any events concerning or related to
        an oil
        spill that occurred on the Assets in December 1993 (the “1993
        Oil Spill”)
        (the
“Records”).

       

      1.3   Effective
        Time.
        The
        purchase and sale of the Assets shall be effective as of January 1, 2007
        at
        12:01 a.m., Pacific Time (the “Effective
        Time”).

       

      ARTICLE
        2

      PURCHASE
        PRICE

       

      2.1   Purchase
        Price.
        The
        purchase price for the Assets shall be SIXTY-THREE MILLION DOLLARS
        ($63,000,000.00) (the “Purchase
        Price”).
        At
        Closing, Buyer shall pay Seller the Purchase Price as adjusted pursuant to
        Sections 2.2 and 2.3 below by wire transfer of immediately available
        funds to
        Seller
        or as directed by Seller.

       

      2.2   Deposit.
        Concurrently with the execution of this Agreement, Buyer shall wire to Seller
        in
        immediately available funds the amount of Three Million Dollars ($3,000,000.00)
        (the “Deposit”)
        as
        directed on Exhibit
        G.
        The
        Deposit shall be held by Seller and, subject to the terms of Article 10 of
        this
        Agreement, either (i) applied against the Purchase Price (without interest)
        in the event the Closing is consummated, (ii) returned to Buyer with
        interest at the rate of the average of the daily commercial paper overnight
        repurchase rate as published in The
        Wall Street Journal
        for the
        period from the time the Deposit is paid to Seller until it is returned to
        Buyer
        (“Interest”)
        if (x)
        Seller refuses to close after all conditions specified in Section 9.1 have
        been
        satisfied (or waived by Seller) and Buyer certifies to Seller in writing
        that it
        is ready, willing and able to perform under Article 11 or (y) the conditions
        specified in Section 9.2 have not been satisfied (or waived by Buyer), or
        (iii)
        retained by Seller if all conditions specified in Section 9.2 have been
        satisfied and Seller certifies to Buyer in writing that Seller is ready,
        willing
        and able to perform under Article 11.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      2.3   Adjustments
        to Purchase Price.
        The
        Purchase Price shall be adjusted according to this Section without duplication.
        For all adjustments known as of Closing, the Purchase Price shall be adjusted
        at
        Closing pursuant to a “Preliminary
        Settlement Statement”
        approved by Seller and Buyer on or before Closing. A draft of the Preliminary
        Settlement Statement will be prepared by Seller and provided to Buyer two
        (2)
        business days prior to Closing. The Preliminary Settlement Statement shall
        set
        forth the Purchase Price as adjusted as provided in this Section using the
        best
        information available at the Closing Date which amount shall be paid at Closing
        and is referred to as the “Closing
        Amount.”
The
        Closing Amount shall be paid at Closing by wire transfer of immediately
        available funds in accordance with the wiring instructions set forth in
        Section 2.1. After Closing, final adjustments to the Purchase Price shall
        be made pursuant to the Final Settlement Statement to be delivered pursuant
        to
        Section 12.1. For the purposes of this Agreement, the term “Property
        Expenses”
shall
        mean all capital expenses, joint interest billings, lease operating expenses,
        lease rental and maintenance costs, royalties, overriding royalties, Taxes
        (as
        defined and apportioned as of the Effective Time pursuant to Article 13),
        drilling expenses, workover expenses, geological, geophysical and any other
        exploration or development expenditures chargeable under applicable operating
        agreements or other agreements consistent with the standards established
        by the
        Council of Petroleum Accountant Societies of North America that are attributable
        to the maintenance and operation of the Assets during the period in
        question.

       

      a.   Upward
        Adjustments.
        The
        Purchase Price shall be adjusted upward by the following:

       

      (i)   An
        amount
        equal to all Property Expenses, including prepaid expenses, attributable
        to the
        Assets after the Effective Time that were paid by Seller (all to be apportioned
        as of the Effective Time except as otherwise provided), including without
        limitation, prepaid utility charges, prepaid rentals and royalties, including
        lease rentals, and prepaid drilling and completion costs (to be apportioned
        as
        of the Effective Time based on drilling days).

       

      (ii)   The
        proceeds of production attributable to the Assets occurring before the Effective
        Time (including production from the Assets that occurred before the Effective
        Time but, because such production is in pipelines or in processing, had not
        been
        sold as of the Effective Time times the price for which production from the
        Assets was sold immediately prior to the Effective Time) and received by
        Buyer,
        net of royalties and taxes measured by production. 

       

      (iii)   To
        the
        extent that there are any pipeline imbalances, if the net of such imbalances
        is
        an overdelivery imbalance (that is, at the Effective Time, Seller has delivered
        more gas to the pipeline than the pipeline has redelivered for Seller), the
        Purchase Price shall be adjusted upward by the product of the price received
        by
        Seller times the net overdelivery imbalance in MMbtus.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      (iv)   An
        amount
        equal to Seller’s share of any oil or condensate in tanks or storage facilities
        produced from or credited to the Leases and Lands prior to the Effective
        Time
        based upon the quantities in oil or condensate tanks or storage facilities
        as
        measured by and reflected in Seller’s records multiplied by the price in effect
        for such inventory on the Closing Date; and

       

      (v)    Any
        other
        amount provided in this Agreement or agreed upon by Seller and Buyer.

       

      b.   Downward
        Adjustments.
        The
        Purchase Price shall be adjusted downward by the following:

       

      (i)
    An
        amount
        equal to the sum of all Title Purchase Price Adjustments as defined in Section
        4.7;

       

      (ii)
           An
        amount
        equal to Environmental Purchase Price Adjustment, as defined in Section
        5.6;

       

      (iii)   The
        proceeds of production attributable to the Assets occurring on or after the
        Effective Time and received by Seller, net of royalties and taxes measured
        by
        production;

       

      (iv)   To
        the
        extent that there are any pipelines imbalances, if the net of such imbalances
        is
        an underdelivery imbalance (that is, at the Effective Time, Seller has delivered
        less gas to the pipeline than the pipeline has redelivered for Seller), the
        Purchase Price shall be adjusted downward by the product of the price received
        by Seller times the net underdelivery balance in MMbtus.

       

      (v)    An
        amount
        equal to the Seller Property Tax, as defined in Section 13.1;

       

      (vi)   An
        amount
        equal to the Suspense Accounts, as defined in Section 12.2; and

       

      (vii) 
            Any
        other
        amount provided in this Agreement or agreed upon by Seller and Buyer.

       

      2.4   Allocated
        Values.
        Seller
        and Buyer agree to allocate the Purchase Price among the Assets as set forth
        in
Exhibit C.

      
         

        ARTICLE
          3 

        DUE
          DILIGENCE INSPECTION

         

        3.1   Access
          to Records.
          Subject
          to the provisions of the Confidentiality Agreement dated December 4, 2006
          between Seller and Buyer, Seller will disclose and make available to Buyer
          and
          its representatives at Seller’s offices and during Seller’s normal business
          hours, all Records in Seller’s possession or control relating to the Assets for
          the purpose of permitting Buyer to perform its due diligence review including,
          but not limited to, all well, leasehold, unit and title files and title
          opinions. Seller agrees to reasonably cooperate with Buyer in Buyer’s efforts to
          obtain, at Buyer’s sole expense, such additional information relating to the
          Assets as Buyer may reasonably desire. Buyer may inspect the Records only
          to the
          extent it may so do without violating any obligation, confidence or contractual
          commitment of Seller to a third party. Seller shall use reasonable efforts
          to
          obtain the necessary consents to allow Buyer’s examination of any confidential
          information that is material to this transaction, but shall not be required
          to
          incur any costs or additional liabilities to obtain any such
          consents.

         

      

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

       

      3.2   No
        Representation or Warranty.
        Seller
        makes no representation or warranty as to the accuracy, completeness, or
        content
        of the Records maintained by Seller and made available to Buyer, including,
        without limitation, any seismic, geological, or geophysical data or
        interpretations, as well as any engineering or reserve studies and evaluations.
         Buyer
        agrees that any conclusions drawn from the Records shall be the result of
        its
        own independent review and judgment.
        Seller
        further makes no representations or warranties, express or implied, as to
        the
        condition of the Assets, or their fitness for Buyer’s intended use or
        operations. 

       

      3.3   Access
        to the Assets and Indemnity.
        Prior to
        Closing, Seller shall permit Buyer, and the officers, employees, agents and
        advisors of Buyer access to the Assets upon Buyer’s execution of a Temporary
        Access Agreement dated March 19, 2007 between Seller and Buyer (the
“Temporary
        Access Agreement”)
        which is
        attached as Exhibit
        D. 

       

      3.4   PRC
        3314.1
        Lease.
        Buyer
        acknowledges that Seller has disclosed to Buyer that in connection with certain
        of the Leases (PRC 3314.1) comprising a portion of the Assets, Seller obtained
        drilling deferments from the California State Lands Commission. The last
        deferment was granted by the California State Lands Commission in 2001 and
        expired in 2002. Since that time, while outside of any formally approved
        period
        of drilling deferment, Seller has worked with California State Lands Commission
        staff to develop a drilling and production program, and on June 26, 2006,
        the
        California State Lands Commission approved Seller’s application to re-drill two
        idle onshore wells into the offshore lease. Buyer acknowledges that it has
        been
        provided a copy of the approved drilling and production program, together
        with
        related correspondence with the California State Lands Commission in connection
        therewith, and Buyer further acknowledges that operations must be undertaken
        on
        the lease in accordance with such drilling and production program (or other
        programs that may be approved by the California State Lands Commission) to
        ensure that operations are in compliance with the terms of the
        lease.

       

      ARTICLE
        4

      TITLE
        MATTERS

       

      4.1   Defensible
        Title.
        The term
“Defensible
        Title”
means
        such title of Seller in and to the Assets that, subject to and except for
        the
        Permitted Encumbrances: (i) entitles Seller to receive not less than the
        net revenue interest described on Exhibit A-2
        (“NRI”);
        (ii) obligates Seller to bear costs and expenses relating to the Assets in
        an amount not greater than the working interest described on Exhibit A-2
        (“WI”);
        and
        (iii) is free and clear of material liens, taxes, encumbrances, mortgages,
        claims and production payments and any defects that would create a material
        impairment of use and enjoyment of or loss of interest in the affected
        Asset.

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      4.2   Permitted
        Encumbrances.
        The term
“Permitted
        Encumbrances”
shall
        mean:

       

      a.   Lessors’
        royalties, overriding royalties, net profits interests, production payments,
        reversionary interests and similar burdens if the net cumulative effect of
        such
        burdens does not operate to reduce the NRIs below those set forth on
Exhibit A-2;

       

      b.   Any
        required governmental or third-party consents to assignment of the Assets
        and
        preferential purchase rights which are handled exclusively under
        Sections 4.10, 4.11 and 9.2d below;

       

      c.   Liens
        for
        taxes or assessments not yet due or not yet delinquent or, if delinquent,
        that
        are being contested in good faith in the normal course of business, provided,
        however, that Seller shall be responsible for the prompt payment of all taxes
        attributable to the Assets for all pre-Effective Time periods. This Section
        4.2c
        does not change the apportionment of taxes under Article 13 of this
        Agreement;

       

      d.   Rights
        of
        reassignment, to the extent any exist as of the date of this Agreement, prior
        to
        the surrender or expiration of any lease;

       

      e.   Easements,
        rights-of-way, servitudes, permits, surface leases and other rights with
        respect
        to surface operations, on, over or in respect of any of the properties or
        any
        restriction on access thereto which are of record or which do not materially
        interfere with the operation of the affected property;

       

      f.   Materialmen’s,
        mechanics’, repairmen’s, employees’, contractors’, operators’ or other similar
        liens or charges arising in the ordinary course of business incidental to
        construction, maintenance or operation of the Assets (i) if they have not
        been filed pursuant to law and the time for filing them has expired,
        (ii) if filed, they have not yet become due and payable or payment is being
        withheld as provided by law, or (iii) if their validity is being contested
        in good faith by appropriate action. Provided, however, that it shall be
        Seller’s responsibility to promptly discharge and remove all such liens or
        charges at Seller’s sole expense;

       

      g.   Rights
        reserved to or vested in any municipality or governmental, statutory, or
        public
        authority to control or regulate any of the Assets in any manner; and all
        applicable laws, rules, regulations and orders of general applicability in
        the
        area; 

       

      h.   Liens
        for
        post-Effective Time operations arising under operating agreements, unitization
        and pooling agreements securing amounts not yet accrued or due or; 

       

      i.    The
        terms
        of the Material Agreements and any and all other agreements that are ordinary
        and customary in the oil, gas, sulfur and other mineral exploration, development
        or extraction business, or in the business of processing of gas and gas
        condensate for the extraction of products therefrom.

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      j.   Any
        encumbrance, encroachment, irregularity, defect in or objection to real property
        title which would otherwise constitute a “Title Defect” under Section 4.3 below,
        but which is of record, or which is disclosed or reasonably discernible by
        a
        review of the Records or an inspection of the Assets.

       

      4.3   Title
        Defect.
        The term
“Title
        Defect”
means
        any encumbrance, encroachment, irregularity, defect in or objection to real
        property title, excluding Permitted Encumbrances, that alone or in combination
        with other defects:

       

      a.   Renders
        title to an Asset less than Defensible Title;

       

      b.   Reduces,
        impairs or prevents Buyer from receiving payment from the purchasers of
        production from an Asset; and/or

       

      c.   Restricts
        or extinguishes Buyer’s right to use an Asset as owner, lessee, licensee or
        permittee, as applicable.

       

      4.4   Notice
        of Title Defects.
        Buyer
        shall deliver to Seller a written “Notice
        of Title Defects”
on
        or
        before April 12, 2007, 5:00 p.m., Pacific Time. The Notice of Title Defects
        shall (i) describe the Title Defect, (ii) describe the basis of the
        Title Defect and (iii) describe Buyer’s good faith estimate of the
        reduction in the Asset’s Allocated Value caused by the Title Defect
        (“Title
        Defect Value”)
        and
        all calculations and documentation substantiating the existence of the Title
        Defect. Buyer will be deemed to have conclusively waived any Title Defect
        about
        which it fails to so notify Seller in writing prior to April 12, 2007 at
        5:00 p.m. Pacific Time. Seller may contest the Title Defect or the Title
        Defect Value by so notifying Buyer. The agreement of Seller and Buyer as
        to the
        Title Defect Value shall result in the “Actual
        Title Defect Value”.

       

      4.5   Seller’s
        Right to Cure.
        Seller
        shall have the option, but not the obligation, to attempt to cure any Title
        Defects. Seller shall notify Buyer prior to Closing of its election to cure
        any
        Title Defect, and shall thereafter provide to Buyer as soon as practicable
        prior
        to Closing evidence that any such Title Defect is cured.

       

      4.6   Remedies
        for Title Defects.
        In the
        event that any Title Defect is not cured on or before Closing, Seller shall,
        at
        its sole election, elect one of the following by so notifying Buyer not later
        than two (2) business days prior to Closing:

       

      a.   Subject
        to the specific limitations set forth in Section 4.7, indemnify Buyer against
        all liability, loss, cost and expense resulting from such Title Defect, but
        in
        an amount not to exceed the Allocated Value of the Asset that is subject
        to such
        Title Defect, in which event the parties shall proceed to Closing and the
        Asset
        that is subject to such Title Defect shall be conveyed by Seller to Buyer
        subject to such Title Defect, with no payment or settlement at Closing as
        a
        result of such Title Defect and no reduction or adjustment to the Purchase
        Price;

       

      b.   Subject
        to the specific limitations set forth in Section 4.7, credit Buyer with the
        amount of the Actual Title Defect Value for an Asset (the “Title
        Defect Adjustment”),
        in
        which event the parties shall proceed to Closing and the Asset that is subject
        to such Title Defect shall be conveyed by Seller to Buyer subject to such
        Title
        Defect and Buyer shall pay to Seller the Purchase Price as so adjusted;
        or

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      c.   Retain
        the Asset subject to such Title Defect and reduce the Purchase Price by an
        amount equal to the Allocated Value of such Asset, in which event the parties
        shall proceed to Closing and the Asset that is subject to such Title Defect
        shall be retained by Seller and Buyer shall pay to Seller the Purchase Price
        as
        so adjusted.

       

      4.7   Title
        Thresholds.
        Seller
        shall have no obligation under Section 4.6 and there shall be no
        indemnification by Seller of Buyer under Section 4.6.a or reduction to the
        Purchase Price under Sections 4.6.b or 4.6.c unless Seller’s share of
        a proposed indemnity amount or reduction to the Purchase Price as to any
        single
        incident exceeds *** (the “Single
        Title Incident Threshold Amount”).
        For
        the purposes of application of the foregoing threshold, “single incident” shall
        be on a lease-by-lease basis for all oil and gas leasehold interests. In
        addition, there shall be no indemnity obligation under Section 4.6.a or
        reduction to the Purchase Price under Sections 4.6.b or 4.6.c until such
        time as
        the total of these excess amounts *** of the Purchase Price (the “Title
        Threshold Amount”).
        If
        the
        Title Threshold Amount is exceeded, the Purchase Price reduction shall include
        the Single Title Incident Threshold Amount for those title Defects that exceed
        such threshold and are conveyed to Buyer under Section 4.6.b and shall include
        the Allocated Value of those Assets with an Allocated Value *** that are
        retained by Seller under Section 4.6.c. The total of the Purchase Price
        reductions under Sections 4.6.b and 4.6.c is the “Title
        Purchase Price Adjustment.”

       

      4.8   Title
        Dispute
        Resolution.
        Seller
        and Buyer agree to resolve disputes concerning the following matters pursuant
        to
        this Section: (i) the existence and scope of a Title Defect, (ii) the
        Defect Value of that portion of the Asset affected by a Title Defect,
        (iii) , the adequacy of Seller’s Title Defect curative materials (the
“Disputed
        Title Matters”).
        The
        parties agree to attempt to initially resolve all Disputed Title Matters
        through
        good faith negotiations. If the parties cannot resolve such disputes within
        fourteen (14) days prior to Closing, the Disputed Title Matters shall be
        finally
        determined by a mutually agreeable accounting, petroleum engineering, or
        law
        firm or consultant (the “Title
        Arbiter”),
        taking into account the factors set forth in this Agreement. On or before
        ten
        (10) days prior to Closing, Buyer and Seller shall present their respective
        positions in writing to the Title Arbiter, together with such evidence as
        each
        party deems appropriate. The Arbiter shall be instructed to resolve the dispute
        through a final decision within five (5) days after submission of the parties’
respective positions to the Title Arbiter. The costs incurred in employing
        the
        Arbiter shall be borne equally by Seller and Buyer. The Title Arbiter’s final
        decision may be filed with a court of competent jurisdiction and entered
        as a
        judgment which shall be binding on the parties.

       

      4.9   Depletion
        and Depreciation of Personal Property.
        Buyer
        shall assume all risk of loss with respect to, and any change in the condition
        of, the Assets from the Effective Time until Closing for production of oil,
        gas
        and/or other hydrocarbons through depletion (including 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.

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      4.10   Consents.
        Seller
        and Buyer shall jointly use reasonable efforts to obtain all required consents
        to assignment of leases and contracts. If Buyer discovers properties for
        which
        consents to assign are applicable during the course of Buyer’s due diligence
        activities, Buyer shall notify Seller immediately. Except for consents and
        approvals which are customarily obtained post-Closing (including without
        limitation certain federal or state or governmental approvals) and those
        consents which would not invalidate the conveyance of the Assets, if a necessary
        consent (with the exception of consents required from the California State
        Lands
        Commission (the “SLC”)
        which
        is handled as a condition to Closing under Section 9.2.c) to assign any Asset
        has not been obtained as of the Closing, then (i) the portion of the Assets
        for which such consent has not been obtained shall be included with the Assets
        at the Closing, and the Purchase Price for that Asset shall be included in
        the
        Preliminary Settlement Statement, (ii) Seller shall employ reasonable
        efforts to obtain such consent as promptly as possible following Closing
        and
        (iii) if such consent has not been obtained as of the Final Settlement Date
        (unless Seller and Buyer otherwise mutually agree in writing), the Allocated
        Value of the Asset shall be a downward adjustment to the Purchase Price on
        the
        Final Settlement Statement and Buyer shall reassign such Asset to Seller,
        effective as of the Effective Time. Buyer shall reasonably cooperate with
        Seller
        in obtaining any required consent including providing assurances of reasonable
        financial conditions, plans of development or any other information reasonably
        requested by the party whose consent is required.

       

      4.11   Casualty
        Loss.
        Prior to
        Closing, if any of the Assets is destroyed by fire or other casualty or any
        of
        the Assets is taken or threatened to be taken in condemnation or under the
        right
        of eminent domain (“Casualty
        Loss”),
        Seller shall promptly provide notice of the Casualty Loss to Buyer. Buyer
        shall
        not be obligated to purchase an Asset that is the subject of a Casualty Loss
        if
        Buyer provides written notice to Seller prior to Closing of Buyer’s election not
        to purchase such Asset. If Buyer so elects not to purchase such Asset, the
        Purchase Price shall be adjusted as agreed to by Buyer and Seller. If Buyer
        elects to purchase such Asset, the Purchase Price shall be reduced by the
        estimated cost to repair such Asset (with equipment of similar utility) as
        agreed to by Buyer and Seller (the reduction being the “Net
        Casualty Loss”).
        The
        Net Casualty Loss shall not, however, exceed the Allocated Value of such
        Asset.
        Seller, at its sole option, may elect to cure such Casualty Loss. If Seller
        elects to cure such Casualty Loss, Seller may replace any personal property
        that
        is the subject of a Casualty Loss with equipment of similar grade and utility,
        or replace any real property with real property of similar nature and kind
        if
        such property is acceptable to Buyer. If Seller elects to cure the Casualty
        Loss
        to the satisfaction of Buyer, the Asset subject to such Casualty Loss shall
        be
        purchased by Buyer and there shall be no adjustment to the Purchase
        Price.
        If
        Seller elects not to cure the Casualty Loss to the satisfaction of Buyer
        and the
        Net Casualty Loss exceeds the amount of the Deposit, Buyer may, by written
        notice to Seller, elect to terminate this Agreement and receive the
        Deposit.

       

      ARTICLE
        5

      ENVIRONMENTAL
        MATTERS

       

      5.1   Definitions.
        For the
        purposes of the Agreement, the following terms shall have the following
        meanings:

       

      “Environmental
        Defect”
means
        a
        condition in, on or under the Assets (including, without limitation, air,
        land,
        soil, surface and subsurface strata, surface water, ground water, or sediments)
        that causes an Asset to be in material violation of an Environmental Law
        or a
        condition that can reasonably be expected to give rise to costs or liability
        under applicable Environmental Laws. NORM (defined in Section 5.2)
        contaminated pipe, meters, tubing and wellheads shall not be an Environmental
        Defect.

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      “Environmental
        Defect Value”
means
        the cost to Remediate an Environmental Defect. The Environmental Defect Value
        shall be limited to the net present value before federal income taxes,
        calculated using a ten percent discount rate (PV10), of the most cost effective
        means to achieve the Remediation required by applicable federal, state or
        local
        law or other governmental or judicial directive and not for any other cost.
        

       

      “Environmental
        Law”
means
        any statute, rule, regulation, code or order, issued by any federal, state,
        or
        local governmental entity in effect on or before the Effective Time
        (collectively, “Laws”)
        relating to the protection of the environment or the release or disposal
        of
        waste materials.

       

      “Remediation”
or
        “Remediate”
means
        actions taken to correct an Environmental Defect and “Remediation
        Costs”
means
        the actual, or good faith estimates of the costs to conduct such Remediation.
        

       

      5.2   Spills
        and NORM.
        Buyer
        specifically acknowledges being advised of the 1993 Oil Spill. Buyer
        acknowledges that in the past there may have been other spills of wastes,
        crude
        oil, condensate, produced water, or other materials (including, without
        limitation, any toxic, hazardous or extremely hazardous substances) onto
        the
        Lands. In addition, some production equipment may contain asbestos and/or
        Naturally Occurring Radioactive Material (“NORM”). In this regard Buyer
        expressly understands that NORM may affix or attach itself to the inside
        of
        wells, materials and equipment as scale or in other forms, that said wells,
        materials and equipment located on the Lands or included in the Assets described
        herein may contain NORM and that NORM-containing material may have been buried
        or otherwise disposed of on the Lands. Buyer also expressly understands that
        special procedures may be required for the Remediation, removal, transportation
        and disposal of asbestos or NORM from the Assets and Lands where such material
        may be found and that Buyer assumes all liability for or in connection with
        the
        assessment, containment, removal, Remediation, transportation and disposal
        of
        any such materials, in accordance with all past, present or future applicable
        laws, rules, regulations and other requirements of any governmental or judicial
        entities having jurisdiction and also with the terms and conditions of all
        applicable leases and other contracts.

       

      5.3   Environmental
        Assessment.
        Prior
        to
        Closing, Buyer may conduct an on-site inspection, environmental assessment
        and
        compliance audit of the Assets (an “Environmental
        Assessment”)
        at
        Buyer’s cost and expense. Such Environmental Assessment shall be conducted in
        accordance with the Temporary Access Agreement. Seller shall provide Buyer
        with
        access to the Assets and to information in Seller’s possession or control
        pertaining to the environmental condition of the Assets, including, but not
        limited to, status or any environmental reports, permits, records and
        assessments in Seller’s possession or control, and shall make available to Buyer
        all present personnel who would reasonably be expected to have knowledge
        or
        information regarding the environmental status or condition of the Assets.
        Seller makes no representation or warranty as to the accuracy or completeness
        of
        the records maintained by Seller and made available to Buyer. Buyer shall
        provide Seller five (5) days prior written notice of any environmental
        inspections and tests, including the scope of same, and Buyer shall give
        Seller
        the opportunity to participate in all such inspections and tests. Buyer shall
        promptly provide Seller, at no cost to Seller, all reports of environmental
        inspections and tests, provided that all such reports shall be deemed to
        be
        confidential between the parties and subject to the Confidentiality Agreement
        dated December 4, 2006 between Seller and Buyer and the Temporary Access
        Agreement. Buyer agrees to release, indemnify, defend, and hold harmless
        Seller
        against all Losses (as defined in Section 14.4) arising from or related to
        the activities of Buyer, its employees, agents, contractors and other
        representatives in connection with Buyer’s Environmental Assessment regardless
        of the negligence or strict liability of Seller.

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      5.4   Notice
        of Environmental Defects.
        Buyer
        shall deliver to Seller a written “Notice
        of Environmental Defects”
on
        or
        before April 12, 2007, 5:00 p.m., Pacific Time. The Notice of Environmental
        Defects shall (i) describe the Environmental Defect, (ii) provide
        evidence of the Environmental Defect and the documentation in Buyer’s possession
        pertaining to such Environmental Defect, and, (iii) describe Buyer’s good
        faith estimate of the Remediation Costs associated with the Environmental
        Defect. Buyer will be deemed to have conclusively waived any Environmental
        Defect for which it fails to provide Seller a Notice of Environmental Defect
        prior to April 12, 2007 at 5:00 p.m., Pacific Time. Seller may contest the
        existence and scope of the Environmental Defect or Environmental Defect Value
        by
        so notifying Buyer. The agreement of Seller and Buyer as to the Environmental
        Defect Value shall result in the “Actual
        Environmental Defect Value”.

       

      5.5   Remedies
        for Environmental Defects.
        Upon
        the receipt by Seller of notice from Buyer pursuant to Section 5.4 of any
        Environmental Defect, Seller shall have the option, but not the obligation,
        to
        attempt to Remediate any Environmental Defect. In the event that any such
        Environmental Defect has not been Remediated by Seller such that the applicable
        Asset(s) will not be brought into compliance with the applicable Environmental
        Laws on or before Closing, Seller shall, at its sole election, elect one
        of the
        following by so notifying Buyer not later than two (2) business days prior
        to Closing.

       

      a.   Subject
        to the specific limitations set forth in Section 5.6, indemnify Buyer against
        all liability, loss, cost and expense resulting from such Environmental Defect
        in which event the parties shall proceed to Closing and the Asset that is
        subject to such Environmental Defect shall be conveyed by Seller to Buyer
        subject to such Environmental Defect, with no payment by Seller or other
        settlement at Closing as a result of such Environmental Defect and no reduction
        or adjustment to the Purchase Price;

       

      b.   Subject
        to the specific limitations set forth in Section 5.6, credit Buyer with the
        amount of the Actual Environmental Defect Value (the “Environmental
        Defect Adjustment”),
        in
        which event the parties shall proceed to Closing and the Asset that is subject
        to such Environmental Defect shall be conveyed by Seller to Buyer subject
        to
        such Environmental Defect and Buyer shall pay to Seller the Purchase Price
        as so
        adjusted; or

       

      c.   Retain
        the Asset subject to such Environmental Defect and reduce the Purchase Price
        by
        an amount equal to the Allocated Value of such Asset, in which event the
        parties
        shall proceed to Closing and the Asset that is subject to such Environmental
        Defect shall be retained by Seller and Buyer shall pay to Seller the Purchase
        Price as so adjusted. 

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      5.6   Environmental
        Thresholds.
        Seller
        shall have no obligation under Section 5.5 and there shall be no
        indemnification by Seller of Buyer under Section 5.5.a or reduction to the
        Purchase Price under Sections 5.5.b or 5.5.c unless Seller’s share of a
        proposed indemnity amount or reduction to the Purchase Price as to any single
        incident *** (the “Single
        Environmental Incident Threshold Amount”).
        For
        the purposes of application of the foregoing threshold, “single incident” shall
        be applicable on a well by well or property by property basis. In addition,
        if
        Seller’s share of the proposed indemnity amount under Section 5.5.a or
        reduction to the Purchase Price under Sections 5.5.b or 5.5.c as to any single
        incident exceeds ***, there shall be no indemnification by Seller of Buyer
        under
        Section 5.5.a or reduction to the Purchase Price under Sections 5.5.b or
        5.5.c
        until such time as the total of these excess amounts *** of the Purchase
        Price
        (the “Environmental Threshold
        Amount”).
        If
        the Environmental Threshold Amount is exceeded, the Purchase Price reduction
        shall include the Single Environmental Incident Threshold Amount for those
        Environmental Defects that exceed such threshold and are conveyed to Buyer
        under
        Section 5.5.b and shall include the Allocated Value of those Assets with
        an
        Allocated Value in excess of *** that are retained by Seller under Section
        5.5.c. The total of the Purchase Price reductions under Sections 5.5.b and
        5.5.c
        is the “Environmental
        Purchase Price Adjustment”.

       

      5.7   Environmental
        Dispute Resolution.
        The
        parties agree to resolve disputes concerning the following matters pursuant
        to
        this Section: (i) the existence and scope of an Environmental Defect, (ii)
        Buyer’s estimate of Remediation Costs of an Environmental Defect and (iii) the
        effectiveness of Seller’s Remediation (the “Disputed
        Environmental Matters”).
        The
        parties agree to attempt to initially resolve all Disputed Environmental
        Matters
        through good faith negotiations. If the parties cannot resolve such disputes
        within fourteen (14) days prior to Closing, the Disputed Environmental Matters
        shall be finally determined by a mutually agreeable environmental consulting
        firm (the “Environmental
        Arbiter”),
        taking into account the factors set forth in this Agreement. On or before
        ten
        (10) days prior to Closing, Buyer and Seller shall present their respective
        positions in writing to the Environmental Arbiter, together with such evidence
        as each party deems appropriate. The Environmental Arbiter, shall be instructed
        to resolve the dispute through a final decision within five (5) days after
        submission of the parties’ respective positions to the Environmental Arbiter.
        The costs incurred in employing the Environmental Arbiter shall be borne
        equally
        by Seller and Buyer. The Environmental Arbiter’s final decision may be filed
        with a court of competent jurisdiction and entered as a judgment which shall
        be
        binding upon the parties.

       

      5.8   “As
        Is, Where Is” Purchase.
        Buyer
        shall acquire the Assets (including Assets for which a notice was given under
        Section 5.4 above) in an “AS IS, WHERE IS” condition and shall assume all risks
        that the Assets may contain waste materials (whether toxic, hazardous, extremely
        hazardous or otherwise) or other adverse physical conditions, including,
        but not
        limited to, the presence of unknown abandoned oil and gas wells, water wells,
        sumps, pits, pipelines or other waste or spill sites which may not have been
        revealed by Buyer’s investigation. With the exception of matters for which
        Seller indemnifies Buyer under Section 5.5.a and except for the 1993 Oil
        Spill,
        on and after the Effective Time, all responsibility and liability related
        to all
        such conditions, whether known or unknown, fixed or contingent, whenever
        arising, will be transferred from Seller to Buyer.

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      5.9   Disposal
        of Materials, Substances and Wastes.
        Buyer
        shall properly handle, remove, transport and dispose of any material, substance
        or waste (whether toxic, hazardous, extremely hazardous or otherwise) from
        the
        Assets or Lands (including, but not limited to, produced water, drilling
        fluids
        and other associated wastes), whether present before or after the Effective
        Time, in accordance with applicable local, state and federal laws and
        regulations. Buyer shall keep records of the types, amounts and location
        of
        materials, substances and wastes which are transported, handled, discharged,
        released or disposed onsite and offsite. When and if any Lease is terminated,
        Buyer shall take whatever additional testing, assessment, closure, reporting
        or
        remedial action with respect to the Assets or Lands as is necessary to meet
        any
        local, state or federal requirements directed at protecting human health
        or the
        environment in effect at that time.

       

      5.10 
  Buyer’s
        Indemnity.

       

      a.   With
        the
        exception of (i) matters for which Seller indemnifies Buyer under Section
        5.5.a,
        (ii) the 1993 Oil Spill, and (iii) offsite disposal of hazardous substances
        relating to the Assets prior to the Effective Time by Seller, its employees
        and
        contractors only and not any such disposal by Seller’s predecessors in title
        (“Seller’s Retained Environmental Obligations”), Buyer shall indemnify, hold
        harmless, release and defend Seller from and against all damages, losses,
        claims, demands, causes of action, judgments and other costs (including but
        not
        limited to any civil fines, penalties, costs of assessment, clean-up, removal
        and Remediation of pollution or contamination, and expenses for the
        modification, repair or replacement of facilities on the Lands) brought by
        any
        and all persons and any agency or other body of federal, state or local
        government, on account of any personal injury, illness or death, any damage
        to,
        destruction or loss of property, and any contamination or pollution of natural
        resources (including soil, air, surface water or groundwater) to the extent
        any
        of the foregoing directly or indirectly is caused by or otherwise involves
        any
        environmental condition of the Assets or Lands, whether created or existing
        before, on or after the Closing, including, but not limited to, the presence,
        disposal or release of any material (whether hazardous, extremely hazardous,
        toxic or otherwise) of any kind in, on or under the Assets or the
        Lands.

       

      b.   Buyer’s
        indemnification obligations for environmental matters for which it is
        responsible as described in Section 5.10.a., above, shall extend to and include,
        but not be limited to (i) the negligence or other fault of Seller, Buyer
        and third parties, whether such negligence is active or passive, gross, joint,
        sole or concurrent, (ii) Seller’s or Buyer’s strict liability, and
        (iii) Seller’s or Buyer’s liabilities or obligations under the
        Comprehensive Environmental Response, Compensation and Liability Act of 1980,
        as
        amended (42 U.S.C. §§ 9601 et seq.),
        the
        Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901
et seq.),
        the
        Clean Water Act (33 U.S.C. §§ 466 et seq.),
        the
        Safe Drinking Water Act (14 U.S.C. §§ 1401-1450), the Hazardous
        Materials Transportation Act (49 U.S.C. §§ 1801 et seq.),
        the
        Toxic Substances Control Act (15 U.S.C. §§ 2601-2629), the Clean Air
        Act (42 U.S.C. § 7401 et seq.)
        as
        amended, the Clean Air Act Amendments of 1990 and all state and local laws
        and
        any replacement or successor legislation or regulation thereto. Buyer’s
        indemnification obligations for environmental matters for which it is
        responsible as described in Section 5.10.a, above, however, shall not extend
        to
        and include offsite disposal of hazardous substances relating to the Assets
        prior to the Effective Time by Seller’s predecessors in title. This
        indemnification shall be in addition to any other indemnity provisions contained
        in this Agreement, and it is expressly understood and agreed that any terms
        of
        this Section shall control over any conflicting or contradicting terms or
        provisions contained in this Agreement.

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      
        
          5.11   Seller’s
            Indemnity.

        

      

       

      (a)   With
        respect to Seller’s Retained Environmental Obligations, Seller shall indemnify,
        hold harmless, release and defend Buyer from and against all damages, losses,
        claims, demands, causes of action, judgments and other costs (including but
        not
        limited to any civil fines, penalties, costs of assessment, clean-up, removal
        and Remediation of pollution or contamination, and expenses for the
        modification, repair or replacement of facilities on the Lands) brought by
        any
        and all persons and any agency or other body of federal, state or local
        government, on account of any personal injury, illness or death, any damage
        to,
        destruction or loss of property, and any contamination or pollution of natural
        resources (including soil, air, surface water or groundwater) associated
        with
        such retained obligations.

       

      (b)   Seller’s
        indemnification obligations for environmental matters for which it is
        responsible as described in Section 5.11.a., above, shall extend to and include,
        but not be limited to (i) the negligence or other fault of Seller and third
        parties, whether such negligence is active or passive, gross, joint, sole
        or
        concurrent, (ii) Seller’s strict liability, and (iii) Seller’s
        liabilities or obligations under the Comprehensive Environmental Response,
        Compensation and Liability Act of 1980, as amended (42 U.S.C. §§ 9601
et seq.),
        the
        Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901
et seq.),
        the
        Clean Water Act (33 U.S.C. §§ 466 et seq.),
        the
        Safe Drinking Water Act (14 U.S.C. §§ 1401-1450), the Hazardous
        Materials Transportation Act (49 U.S.C. §§ 1801 et seq.),
        the
        Toxic Substances Control Act (15 U.S.C. §§ 2601-2629), the Clean Air
        Act (42 U.S.C. § 7401 et seq.)
        as
        amended, the Clean Air Act Amendments of 1990 and all state and local laws
        and
        any replacement or successor legislation or regulation thereto. This
        indemnification shall be in addition to any other indemnity provisions contained
        in this Agreement, and it is expressly understood and agreed that any terms
        of
        this Section shall control over any conflicting or contradicting terms or
        provisions contained in this Agreement.

       

      ARTICLE
        6

      SELLER’S
        REPRESENTATIONS AND WARRANTIES

       

      Seller
        makes the following representations and warranties as of the date of this
        Agreement:

       

      6.1   Existence.
        Seller
        is
        a corporation duly organized and validly existing under the laws of the State
        of
        Delaware.

       

      6.2   Power.
        Seller
        has all requisite power and authority to carry on its business as presently
        conducted, to enter into this Agreement and each of the documents contemplated
        to be executed by Seller at Closing, and to perform its obligations under
        this
        Agreement and under such documents. To Seller’s knowledge, (except for any
        consents which are the subject of Section 4.10 or which are customarily obtained
        after Closing) the consummation of the transaction contemplated by this
        Agreement and each of the documents contemplated to be executed by Seller
        at
        Closing will not violate, nor be in conflict with, (i) any provision of
        Seller’s organizational or governing documents, (ii) any agreement or
        instrument to which Seller is a party or is bound, or (iii) any judgment,
        decree, order, statute, rule or regulation applicable to Seller.

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      6.3    Authorization.
        The
        execution, delivery and performance of this Agreement and each of the documents
        contemplated to be executed by Seller at Closing and the contemplated
        transaction has been duly and validly authorized by all requisite corporate
        and
        shareholder action on the part of Seller.

       

      6.4    Execution
        and Delivery.
        This
        Agreement has been duly executed and delivered on behalf of Seller, and at
        the
        Closing all documents and instruments required hereunder to be executed and
        delivered by Seller will be duly executed and delivered. This Agreement does,
        and such documents and instruments shall, constitute legal, valid and binding
        obligations of Seller enforceable in accordance with their terms, subject
        to
        (i) applicable bankruptcy, insolvency, reorganization, moratorium and other
        similar laws of general application with respect to creditors, (ii) general
        principles of equity and (iii) the power of a court to deny enforcement of
        remedies generally based upon public policy.

       

      6.5    Liabilities
        for Brokers’ Fees.
        Seller
        has incurred no liability, contingent or otherwise, for brokers’ or finders’
fees relating to the transaction contemplated by this Agreement for which
        Buyer
        shall have any responsibility whatsoever.

       

      6.6    Liens.
        To
        Seller’s knowledge, except for the liens created by or arising under joint
        operating agreements covering the Assets or applicable state statutes, or
        which
        are disclosed of record, the Assets are free and clear of all
        liens.

       

      6.7    Taxes.
        To
        Seller’s knowledge, all taxes and assessments pertaining to the Assets based on
        or measured by the ownership of property for all taxable periods prior to
        the
        taxable period in which this Agreement is executed have been properly paid.
        All
        income taxes and obligations relating thereto that could result in a lien
        or
        other claim against any of the Assets have been properly paid, unless contested
        in good-faith by appropriate proceeding. 

       

      6.8    Litigation.
        There is
        no action, suit, proceeding, claim or, to Seller’s knowledge, investigation by
        any person, entity, administrative agency or governmental body, pending or,
        to
        Seller’s knowledge, threatened, against Seller that (i) relates to the Assets,
        or (ii) impedes or is likely to impede Seller’s ability to consummate the
        transaction contemplated by this Agreement and to assume the abilities to
        be
        assumed by Seller under this Agreement.

       

      6.9    Compliance
        with Laws.
        To
        Seller’s knowledge, Seller’s operation of the Assets is in compliance in all
        material respects with the provisions and requirements of all material laws,
        rules and regulations applicable to the ownership, operation, development,
        maintenance, or use of the Assets.

      
         

        6.10   Contracts.
          To
          Seller’s knowledge, the Material Agreements, Leases, and instruments listed on
          Exhibit A-3 represent all of the following material contracts, agreements,
          and
          commitments which are included in the Assets or by which any of the Assets
          will
          be bound as of the Effective Time and/or following the Closing: (i) any
          agreement with any affiliate; (ii) any agreement or contract for the sale,
          exchange, or other disposition of hydrocarbons produced from or attributable
          to
          Seller’s interest in the Assets or for the purchase, processing or
          transportation of any hydrocarbons, in each case that is not cancelable
          without
          penalty or other material payment on not more than 90 days prior written
          notice,
          other than terms of operating agreements or gas balancing agreements which
          permit an operator or other co owner to take or market production of a
          non
          taking co owner; (iii) any agreement of or binding upon Seller to sell,
          lease, farmout, or otherwise dispose of any interest in any of the Assets
          after
          the date hereof, other than non consent penalties for nonparticipation
          in
          operations under operating agreements, conventional rights of reassignment
          arising in connection with Seller’s surrender or release of any of the Assets,
          or agreements under clause (ii) above, (iv) any tax partnership
          agreement of or binding upon Seller affecting any of the Assets (v) creates
          a
          purchase option, right of first refusal, call or preferential purchase
          right on
          any Hydrocarbons; (vi) creates any area of mutual interest or similar provision
          with respect to the acquisition by Seller or its assigns of any interest
          in any
          hydrocarbons, land or asset, or contains any restrictions on the ability
          of
          Seller or its assigns to compete with any other person; (vii) is a
          participation, partnership, joint venture, farmin or similar agreement;
          (viii)
          evidences an obligation in excess of $75,000 to pay a deferred purchase
          price of
          property, except accounts payable arising in the ordinary course of business;
          and (ix) any lease or rental of any land, building or other improvements,
          excluding Leases, or any other agreement that could reasonably be expected
          to
          result in aggregate payments by Buyer with respect to the Assets of more
          than
          $75,000 during the current or any subsequent year. To Seller’s knowledge, Seller
          is not in default under any Material Agreement, except as disclosed on
          Exhibit
          B.

      

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      6.11   Governmental
        Authorizations.
        To
        Seller’s knowledge, 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 Assets as currently
        owned and operated. To Seller’s knowledge (i) Seller is operating the Assets in
        material compliance with the conditions and provisions of all Governmental
        Authorizations that are presently necessary or required for the ownership
        and
        operation of the Assets as currently owned and operated, and (ii) no
        written notices of violation have been received by Seller from a governmental
        body, and no proceedings are pending (with service of process on Seller)
        or, to
        Seller’s knowledge, threatened (or pending without service of process on Seller)
        that might result in any material modification, revocation, termination or
        suspension of any such Governmental Authorizations or which would require
        any
        corrective or remediation action by Seller. 

       

      6.12   Consents
        and Preference Rights.  To
        Seller’s knowledge, except for preference rights and transfer requirements as
        are set forth on Schedule 6.12, none of the 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.

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

      
         

        ARTICLE
          7

        BUYER’S
          REPRESENTATIONS AND WARRANTIES

         

        Buyer
          makes the following representations and warranties as of the date of this
          Agreement:

         

      

      7.1    Existence.
        Buyer
        is
        a corporation, duly organized, validly existing and formed under the laws
        of the
        State of Delaware, and Buyer by Closing will be duly qualified and in good
        standing in the State of California.

       

      7.2    Power
        and Authority.
        Buyer
        has
        all requisite power and authority to carry on its business as presently
        conducted, to enter into this Agreement and each of the documents contemplated
        to be executed by Buyer at Closing, and to perform its obligations under
        this
        Agreement and under such documents. The consummation of the transaction
        contemplated by this Agreement and each of the documents contemplated to
        be
        executed by Buyer at Closing will not violate, nor be in conflict with,
        (i) any provision of Buyer’s organizational or governing documents,
        (ii) any agreement or instrument to which Buyer is a party or is bound, or
        (iii) any judgment, decree, order, statute, rule or regulation applicable
        to Buyer.

       

      7.3    Authorization.
        The
        execution, delivery and performance of this Agreement and each of the documents
        contemplated to be executed by Buyer at Closing and the contemplated transaction
        has been duly and validly authorized by all requisite action on the part
        of
        Buyer.

       

      7.4    Execution
        and Delivery.
        This
        Agreement has been duly executed and delivered on behalf of Buyer, and at
        the
        Closing all documents and instruments required hereunder to be executed and
        delivered by Buyer will be duly executed and delivered. This Agreement does,
        and
        such documents and instruments shall, constitute legal, valid and binding
        obligations of Buyer enforceable in accordance with their terms, subject
        to
        (i) applicable bankruptcy, insolvency, reorganization, moratorium and other
        similar laws of general application with respect to creditors, (ii) general
        principles of equity and (iii) the power of a court to deny enforcement of
        remedies generally based upon public policy.

       

      7.5    Liabilities
        for Brokers’ Fees.
        Buyer
        has
        incurred no liability, contingent or otherwise, for brokers’ or finders’ fees
        relating to the transaction contemplated by this Agreement for which Seller
        shall have any responsibility whatsoever.

       

      7.6    Litigation.
        There
        is
        no action, suit, proceeding, claim or investigation by any person, entity,
        administrative agency or governmental body pending or, to Buyer’s knowledge,
        threatened in writing, against Buyer before any governmental authority that
        impedes or is likely to impede Buyer’s ability to consummate the transactions
        contemplated by this Agreement and to assume the liabilities to be assumed
        by
        Buyer under this Agreement.

       

      7.7    Independent
        Evaluation.
        Buyer
        is
        an experienced and knowledgeable investor in the oil and gas business. Buyer
        has
        been advised by and has relied solely upon its own expertise in legal, tax,
        reservoir engineering and other professional counsel concerning this
        transaction, the Assets and the value thereof.

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

      
         

        7.8    Qualification.
          Buyer
          is
          now or at closing will be and thereafter will continue to be qualified
          to own
          and operate any federal or state oil and gas lease that constitutes part
          of the
          Assets, including meeting all bonding requirements. Completing the transactions
          set out in this Agreement will not cause Buyer to be disqualified or to
          exceed
          any acreage limitation imposed by law, statute or regulation.

      

       

      7.9   Funds.
        Buyer
        has arranged to have available by the Closing Date sufficient funds to enable
        Buyer to pay in full the Purchase Price and otherwise perform its obligations
        under this Agreement.

       

      ARTICLE
        8

      COVENANTS
        AND AGREEMENTS

       

      8.1   Covenants
        and Agreements.
        As
        to the
        period of time from the execution hereof until Closing, Seller and Buyer
        agree
        as follows:

       

      a.   Operation
        Prior to Closing.
        Except
        as otherwise consented to in writing by Buyer or provided in this Agreement,
        from the date of execution hereof to the Closing, Seller shall use Seller’s
        commercially reasonable efforts to ensure that the Assets are maintained
        and
        operated in a good and workmanlike manner. Subject to the provisions of
        Section 2.3, Seller shall pay or cause to be paid its proportionate share
        of all costs and expenses incurred in connection with such operations. To
        the
        extent Seller receives written AFEs or actual notice of such, Seller shall
        notify Buyer of ongoing activities and major capital expenditures in excess
        of
        Twenty-five Thousand Dollars ($25,000.00) per activity net to Seller’s interest
        conducted on the Assets and shall consult with Buyer regarding all such matters
        and operations.

       

      b.   Restriction
        on Operations.
        Subject
        to Section 8.1.a., unless Seller obtains the prior written consent of Buyer
        to act otherwise, Seller will use good-faith efforts within the constraints
        of
        the applicable operating agreements and other applicable agreements not to
        (i) abandon any part of the Assets (except in the ordinary course of
        business or the abandonment of leases upon the expiration of their respective
        primary terms or if not capable of production in paying quantities),
        (ii) except for capital projects which are deemed to be approved, approve
        any operations on the Assets anticipated in any instance to cost the owner
        of
        the Assets more than Twenty-five Thousand Dollars ($25,000) per activity
        net to
        Seller’s interest (excepting emergency operations, operations required under
        presently existing contractual obligations, ongoing commitments under existing
        AFEs and operations undertaken to avoid a monetary penalty or forfeiture
        provision of any applicable agreement or order), (iii) convey or dispose of
        any material part of the Assets (other than replacement of equipment or sale
        of
        oil, gas, and other liquid products produced from the Assets in the regular
        course of business) or enter into any farmout, farmin or other similar contract
        affecting the Assets (iv) let lapse any insurance now in force with respect
        to the Assets, or (v) materially modify or terminate any contract material
        to the operation of the Assets. 

       

      c.   Legal
        Status.
        Seller
        and Buyer shall use all reasonable efforts to maintain their respective legal
        statuses from the date hereof until the Final Settlement Date and to assure
        that
        as of the Closing Date they will not be under any material corporate, legal
        or
        contractual restriction that would prohibit or delay the timely consummation
        of
        the transaction contemplated hereby.

       

      d.   Notices
        of Claims.
        Seller
        shall promptly notify Buyer and Buyer shall promptly notify Seller, if, between
        the date hereof and the Closing Date, Seller or Buyer, as the case may be,
        receives notice of any claim, suit, action or other proceeding of the type
        referred to in Sections 6.8 and 7.6.

       

      
        
          
          

        

        
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          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      e.    Compliance
        with Laws.
        During
        the period from the date of this Agreement to the Closing Date, Seller shall
        attempt in good faith to comply in all material respects with all applicable
        statutes, ordinances, rules, regulations and orders relating to the ownership
        and operation of the Assets.

       

      f.    Government
        Reviews and Filings.
        Before
        and after the Closing, Buyer and Seller shall cooperate to provide requested
        information, make required filings with, prepare applications to and conduct
        negotiations with each governmental agency as required to consummate the
        transaction contemplated hereby. Each party shall make any governmental filings
        occasioned by its ownership or structure. Buyer shall make all filings after
        the
        Closing at its expense with governmental agencies necessary to transfer title
        to
        the Assets or to comply with laws and shall indemnify and hold harmless Seller
        from and against all claims, costs, expenses, liabilities and actions arising
        out of Buyer’s holding of such title after the Closing and prior to the securing
        of any necessary governmental approvals of the transfer.

       

      g.    Confidentiality.
        Confidentiality is governed by the terms of the Confidentiality Agreement
        dated
        December 4, 2006 between Seller and Buyer and Section 15.6 of this Agreement.
        The terms of the Confidentiality Agreement dated December 4, 2006 between
        Seller
        and Buyer shall terminate at Closing or, if Closing does not occur, survive
        for
        the term set forth in the Confidentiality Agreement.

       

      8.2   Financial
        Statements.
        Seller
        shall use its commercially reasonable efforts to prepare, at the sole cost
        and
        expense of Buyer, either (i) if relief is granted by the SEC, statements
        of
        revenues and direct operating expenses and all notes thereto related to the
        Assets or (ii) if such relief is not granted by the SEC, the financial
        statements required by the SEC (such financial statements set forth in the
        foregoing clauses (i) and (ii), as applicable, the “Statements of Revenues and
        Expenses”) in each case of clauses (i) and (ii), that will be required of Buyer
        or any of its Affiliates in connection with reports, registration statements
        and
        other filings to be made by Buyer or any of its Affiliates related to the
        transactions contemplated by this Agreement with the SEC pursuant to the
        Securities Act, or the Exchange Act, in such form that such statements and
        the
        notes thereto can be audited. Seller (x) shall cooperate with and permit
        Buyer
        to reasonably participate in the preparation of the Statements of Revenues
        and
        Expenses and (y) shall provide Buyer and its representatives with reasonable
        access to the personnel of Seller and its Affiliates who engage in the
        preparation of the Statements of Revenues and Expenses. Promptly after the
        date
        of this Agreement, Seller shall engage PricewaterhouseCoopers to perform
        an
        audit of the Statements of Revenues and Expenses and shall use commercially
        reasonable efforts to cause PricewaterhouseCoopers to issue unqualified opinions
        with respect to Statements of Revenues and Expenses (the Statements of Revenues
        and Expenses and related audit opinions being hereinafter referred to as
        the
“Audited Financial Statements”) and provide its written consent for the use of
        its audit reports with respect to Statements of Revenues and Expenses in
        reports
        filed by Buyer or any of its Affiliates under the Exchange Act or the Securities
        Act, as needed. Buyer shall promptly reimburse Seller for all fees charged
        by
        PricewaterhouseCoopers pursuant to such engagement. Seller shall take all
        action
        as may be necessary to facilitate the completion of such audit and delivery
        of
        the Audited Financial Statements to Buyer or any of its Affiliates as soon
        as
        reasonably practicable, but no later than five (5) days prior to the date
        that
        such Audited Financial Statements would be required to be filed by Buyer
        or any
        of its Affiliates with a report on Form 8-K or an amendment thereto under
        the
        Exchange Act. Seller shall provide to Buyer a draft of the Audited Financial
        Statements no later than ten (10) days prior to the date that such Audited
        Financial Statements would be required to be filed by Buyer or any of its
        Affiliates with a report on Form 8-K or an amendment thereto under the Exchange
        Act. Seller shall use its commercially reasonable efforts to keep Buyer
        regularly informed regarding the progress of such audit and also shall
        periodically provide Buyer with copies of drafts of the Audited Financial
        Statements and related audit opinions.

       

      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      ARTICLE
        9

      CONDITIONS
        TO CLOSING

       

      9.1   Seller’s
        Conditions.
        The
        obligations of Seller at the Closing are subject, at the option of Seller,
        to
        the satisfaction at or prior to Closing of the following conditions
        precedent:

       

      a.    Representations,
        Warranties and Covenants.
        All
        representations and warranties of Buyer contained in Article 7 of this
        Agreement shall be true and correct in all material respects on and as of
        the
        Closing, and Buyer shall have performed and satisfied all covenants and
        agreements required by this Agreement to be performed and satisfied by Buyer
        at
        or prior to the Closing in all material respects;

       

      b.    Closing
        Documents.
        Buyer
        shall have executed and delivered the documents which are contemplated to
        be
        executed and delivered by it pursuant to Article 11 of this Agreement prior
        to or on the Closing Date;

       

      c.    No
        Action.
        No
        order shall have been entered by any court or governmental agency having
        jurisdiction over the parties or the subject matter of this Agreement that
        restrains or prohibits the purchase and sale contemplated by this Agreement
        and
        which remains in effect at the time of Closing or seeks to recover damages
        from
        Seller resulting therefrom.

       

      9.2   Buyer’s
        Conditions.
        The
        obligations of Buyer at the Closing are subject, at the option of Buyer,
        to the
        satisfaction on or prior to the Closing of the following conditions
        precedent:

       

      a.    Representations,
        Warranties and Covenants.
        The
        representations and warranties of Seller contained in Article 6 of this
        Agreement shall be true and correct in all material respects on and as of
        the
        Closing Date, and Seller shall have performed and satisfied all covenants
        and
        agreements required by this Agreement to be performed and satisfied by Buyer
        at
        or prior to the Closing in all material respects;

       

      b.    Closing
        Documents.
        Seller
        shall have executed and delivered the documents which are contemplated to
        be
        executed and delivered by it pursuant to Article 11 of this Agreement prior
        to or on the Closing Date;

       

      c.    SLC
        Consent.
        The SLC
        shall have given all consents necessary to transfer the Assets to
        Buyer.

       

      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      d.    No
        Action.
        No
        order shall have been entered by any court or governmental agency having
        jurisdiction over the parties or the subject matter of this Agreement that
        restrains or prohibits the purchase and sale contemplated by this Agreement
        and
        which remains in effect at the time of Closing or seeks to recover damages
        from
        Buyer resulting therefrom.

       

      ARTICLE
        10

      RIGHT
        OF TERMINATION AND ABANDONMENT

       

      10.1 
  Termination.
        This
        Agreement may be terminated in accordance with the following
        provisions:

       

      a.    by
        Seller
        if the conditions set forth in Section 9.1 are not satisfied, through no
        fault of Seller, or waived by Seller in writing, as of the Closing Date;
        or

       

      b.    by
        Buyer
        if the conditions set forth in Section 9.2 are not satisfied, through no
        fault of Buyer, or waived by Buyer in writing, as of the Closing
        Date.

       

      c.    by
        Seller
        or Buyer if the aggregate of Title Defect Adjustments and Environmental Defect
        Adjustments ***. 

       

      d.    by
        Seller
        or Buyer if Closing does not occur on or before May 16, 2007, or if the SLC
        consent necessary to transfer the Assets to Buyer has not been obtained by such
        date, a date which is three business days after the next scheduled meeting
        of
        the SLC. 

       

      10.2 
  Liabilities
        Upon Termination.

       

      a.    Buyer’s
        Default.
        If the
        transactions contemplated by this Agreement are not consummated on or before
        the
        date specified in Section 11.1 by reason of Buyer’s wrongful failure to
        tender performance at Closing, and if Seller is not in material default under
        the terms of this Agreement and is ready, willing and able to Close, and
        Seller
        terminates this Agreement, Seller shall be entitled, at Seller’s election, to
        (i) specific performance or (ii) retention of the Deposit, and any
        accrued interest, as liquidated damages. If Seller does not elect specific
        performance of this Agreement, Seller and Buyer agree that Seller’s damages in
        the event Buyer fails to close are difficult to measure and both Seller and
        Buyer agree that the amount of the Deposit bears a reasonable relationship
        to
        and is a reasonable estimation of such damages.

       

      b.    Seller’s
        Default.
        If the
        transactions contemplated by this Agreement are not consummated on or before
        the
        date specified in Section 11.1 by reason of Seller’s wrongful failure to
        tender performance at Closing and if Buyer is not in material default under
        this
        Agreement and is ready, willing and able to Close, and Buyer terminates this
        Agreement, Buyer shall be entitled, at Buyer’s election (i) specific
        performance, or (ii) to a prompt refund of the Deposit with interest accrued
        thereon.

       

      c.    Other
        Termination.
        If
        Seller and Buyer agree to terminate this Agreement, or if either party
        terminates the Agreement under Sections 10.1.c, then each party shall release
        the other party from any and all liability for termination of this Agreement,
        and Buyer shall be entitled to a refund of the Deposit with accrued
        Interest.

       

      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      ARTICLE
        11

      CLOSING

       

      11.1 
  Date
        of Closing.
        Subject
        to Seller’s and Buyer’s rights to terminate in Article 10, the closing of the
        transaction contemplated by this Agreement (“Closing”
or
        “Closing
        Date”)
        shall
        be held on or before the later of May 1, 2007 or five (5) business days after
        Buyer’s condition to Closing set forth in Section 9.2.c is satisfied or waived
        by Buyer, at Seller’s office in Bakersfield, California, at 8:30 a.m. or at
        such other time and place as the parties may agree in writing.

       

      11.2 
  Closing
        Obligations.
        At
        Closing, the following events shall occur, each being a condition precedent
        to
        the others and each being deemed to have occurred simultaneously with the
        others:

       

      a.    Assignment
        of Assets.
        Seller
        and Buyer shall execute, acknowledge and deliver to Buyer an Assignment and
        Bill
        of Sale of the Assets effective as of the Effective Time (in sufficient
        counterparts to facilitate filing and recording) (i) substantially in the
        form of Exhibit E
        with a
        special warranty of title by, through and under Seller but not otherwise;
        with
        no warranties, express or implied, as to the personal property, fixtures
        or
        condition of the Assets which are conveyed “as is, where is;” (ii) such
        other assignments, bills of sale, or deeds necessary to transfer the Assets
        to
        Buyer, including without limitation any conveyances on official forms and
        related documentation necessary to transfer the Assets to Buyer in accordance
        with requirements of state and federal governmental regulations; and
        (iii) an Assignment and Assumption Agreement in the form of Exhibit F
        under
        which Seller assigns various contractual interests included in the Assets
        and
        under which Buyer assumes the obligations thereunder in accordance with the
        terms of this Agreement.

       

      b.    Preliminary
        Settlement Statement.
        Seller
        shall deliver to Buyer and Seller and Buyer shall execute and deliver the
        Preliminary Settlement Statement.

       

      c.    Purchase
        Price.
        Buyer
        shall deliver to Seller the Closing Amount by wire transfer of immediately
        available funds to Seller or as directed by Seller. 

       

      d.    Letters
        in Lieu.
        Seller
        and Buyer shall execute and deliver all necessary letters in lieu of transfer
        orders directing all purchasers of production to pay Buyer the proceeds
        attributable to production from the Assets from and after the Effective
        Time.

       

      e.    Seller’s
        Officer’s Certificate.
        Seller
        shall execute and deliver to Buyer an officer’s certificate in form and
        substance similar to Exhibit H,
        stating
        that all conditions precedent to Closing have been satisfied.

       

      f.    Buyer’s
        Officer’s Certificate.
        Buyer
        shall execute and deliver to Seller an officer’s certificate in form and
        substance similar to Exhibit I,
        stating
        that all conditions precedent to Closing have been satisfied.

       

      g.    Non-Foreign
        Affidavit.
        In
        compliance with Section 1445 of the United States Internal Revenue Code,
        Seller
        shall execute and deliver to Buyer a Non-Foreign Affidavit in the form of
        Exhibit
        J.

       

      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      ARTICLE
        12

      POST-CLOSING
        OBLIGATIONS

       

      12.1   Post-Closing
        Adjustments.
        As soon
        as practicable after the Closing, but on or before one hundred twenty
        (120) days after Closing, Seller, with the assistance of Buyer’s staff and
        with access to such records as necessary, shall prepare and deliver to Buyer
        a
        final settlement statement (the “Final
        Settlement Statement”)
        setting forth each adjustment or payment that was not finally determined
        as of
        the Closing and showing the calculation of such adjustment and the resulting
        final purchase price (the “Final
        Purchase Price”).
        As
        soon as practicable after receipt of Seller’s proposed Final Settlement
        Statement, but on or before fifteen (15) days after receipt of Seller’s
        proposed Final Settlement Statement, Buyer shall deliver to Seller a written
        report containing any changes that Buyer proposes to make to the Final
        Settlement Statement. Buyer’s failure to deliver to Seller a written report
        detailing changes to the proposed Final Settlement Statement by that date
        shall
        be deemed an acceptance by Buyer of the Final Settlement Statement as submitted
        by Seller. The parties shall endeavor to agree with respect to the changes
        proposed by Buyer, if any, no later than fifteen (15) days after receipt
        by
        Seller of Buyer’s comments to the proposed Final Settlement Statement. The date
        upon which such agreement is reached or upon which the Final Purchase Price
        is
        established for the transaction shall be called the “Final
        Settlement Date.”
If
        the
        Final Purchase Price is more than the Closing Amount, Buyer shall pay Seller
        the
        amount of such difference. If the Final Purchase Price is less than the Closing
        Amount, Seller shall pay to Buyer the amount of such difference. Any payment
        by
        Buyer or Seller shall be by wire transfer in immediately available funds.
        Any
        such payment shall be within five (5) days of the Final Settlement
        Date.

       

      12.2   Suspense
        Accounts.
        Seller
        currently maintains suspense accounts pertaining to oil and gas heretofore
        produced comprising monies payable to royalty owners, mineral owners and
        other
        persons with an interest in production that Seller has been unable to pay
        because of title defects (the “Suspense
        Accounts”).
        A
        preliminary listing of the Suspense Accounts is set forth in Exhibit
        K.
        At
        Closing, a downward adjustment to the Purchase Price will be made to convey
        the
        Suspense Accounts to Buyer and the Suspense Accounts will be included in
        the
        Preliminary Settlement Statement, with an adjustment made in the Final
        Settlement Statement, if necessary. Buyer will assume full and complete
        responsibility and liability for proper payment of the funds comprising the
        Suspense Accounts as set forth on the “Final
        Suspense Account Statement,”
which
        shall be provided by Seller to Buyer with the Final Settlement Statement
        required in Section 12.1 (including any liability under any unclaimed property
        law or escheat statute). Buyer agrees to indemnify, defend and hold Seller,
        its
        parent, subsidiary and affiliated entities, together with their respective
        officers, directors, employees, agents and their respective successors and
        assigns, harmless from and against any and all liability, claims, demands,
        penalties and expenses (including attorneys’ fees) arising out of or pertaining
        to the proper payment and administration of the Suspense Accounts, limited,
        however to the total amount of the Suspense Accounts.

       

      
        
          
          

        

        
          -23-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

      
         

        12.3   Dispute
          Resolution.
          If the
          parties are unable to resolve disputes concerning the Final Settlement
          Statement
          or Final Purchase Price on or before thirty (30) days after the Final Settlement
          Statement is received by Buyer, such disputes shall be resolved in accordance
          with Section 14.5.d.

         

      

      12.4   Records.
        Seller
        shall make the Records available for pick up by Buyer at a mutually agreeable
        time within ten (10) days of Closing. At Seller’s request, Buyer shall make the
        Records available to Seller for review and copying during normal business
        hours.
        Buyer agrees not to destroy or otherwise dispose of the Records for a period
        of
        six years after the Closing without giving Seller reasonable notice and an
        opportunity to copy the Records.

       

      12.5   Further
        Assurances.
        From
        time to time after Closing, Seller and Buyer shall each execute, acknowledge
        and
        deliver to the other such further instruments and take such other action
        as may
        be reasonably requested in order more effectively to assure to the other
        the
        full beneficial use and enjoyment of the Assets in accordance with the
        provisions of this Agreement and otherwise to accomplish the purposes of
        the
        transaction contemplated by this Agreement.

       

      12.6   Disclaimers
        of Representations and Warranties.
        The
        express representations and warranties of Seller contained in this Agreement
        are
        exclusive, are in lieu of all other representations and warranties, express,
        implied or statutory, and the representations and warranties contained in
        Sections 6.9 through and including 6.12 shall terminate upon and shall not
        survive the Closing. BUYER
        ACKNOWLEDGES THAT SELLER HAS NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS
        AND
        NEGATES, AND BUYER HEREBY EXPRESSLY WAIVES, ANY REPRESENTATION OR WARRANTY,
        EXPRESS, IMPLIED, AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO
        (A) PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES, GAS
        BALANCING INFORMATION OR THE QUALITY, QUANTITY OR VOLUME OF THE RESERVES
        OF
        HYDROCARBONS, IF ANY, ATTRIBUTABLE TO THE ASSETS, (B) THE ACCURACY,
        COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER MATERIALS (WRITTEN
        OR ORAL) NOW, HERETOFORE OR HEREAFTER FURNISHED TO BUYER BY OR ON BEHALF
        OF
        SELLER, (C) THE ENVIRONMENTAL CONDITION OF THE ASSETS, THEIR COMPLIANCE
        WITH ENVIRONMENTAL LAWS, AND THE PRESENCE OR ABSENCE OF HAZARDOUS SUBSTANCES
        OR
        NATURALLY OCCURRING RADIOACTIVE MATERIALS, (D) ANY IMPLIED OR EXPRESS
        WARRANTY OF MERCHANTABILITY, (E) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS
        FOR A PARTICULAR PURPOSE, (F) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY
        TO MODELS OR SAMPLES OF MATERIALS, (G) ANY RIGHTS OF PURCHASERS UNDER
        APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, (H) ANY CLAIMS
        BY BUYER FOR DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN AS OF THE
        EFFECTIVE TIME OR THE CLOSING DATE, AND (I) ANY AND ALL IMPLIED WARRANTIES
        EXISTING UNDER APPLICABLE LAW, IT BEING THE EXPRESS INTENTION OF BOTH BUYER
        AND
        SELLER THAT THE ASSETS WILL BE CONVEYED TO BUYER IN THEIR PRESENT CONDITION
        AND
        STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS AND THAT BUYER HAS MADE
        OR CAUSED TO BE MADE SUCH INSPECTIONS AS BUYER DEEMS APPROPRIATE. THE PARTIES
        AGREE THAT THIS SECTION 12.5 CONSTITUTES A CONSPICUOUS
        LEGEND.

       

      
        
          
          

        

        
          -24-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      ARTICLE
        13

      TAXES

       

      13.1   Apportionment
        of Ad Valorem and Property Taxes.
        All ad
        valorem taxes, real property taxes, personal property taxes and similar
        obligations (the “Property
        Taxes”)
        attributable to the Assets with respect to the tax period in which the Effective
        Time occurs shall be apportioned as of the Effective Time between Seller
        and
        Buyer. Prior to Closing, Seller shall determine an estimate of the portion
        of
        the Property Taxes (based on the latest information then available), for
        the
        period in which the Effective Time occurs attributable to the period prior
        to
        the Effective Time (the “Seller
        Property Tax”).
        Seller shall credit to Buyer, through a downward adjustment to the Purchase
        Price, the amount of the Seller Property Tax. Buyer shall file or cause to
        be
        filed all required reports and returns incident to the Property Taxes and
        shall
        pay or cause to be paid to the taxing authorities all Property Taxes relating
        to
        the tax period in which the Effective Time occurs. If the Property Taxes
        used in
        determining the Seller Property Tax are not the actual Property Taxes for
        the
        tax period in which the Effective Time occurs, then upon the determination
        of
        the actual Property Taxes for such period, the Seller Property Tax shall
        be
        recalculated based upon such actual Property Taxes (the “Revised
        Seller Property Tax”)
        and
        (i) if the Revised Seller Property Tax is greater than the Seller Property
        Tax,
        Seller shall promptly pay the difference between such amounts or (ii) if
        the
        Revised Seller Property Tax is less than the Seller Property Tax, Buyer shall
        promptly pay Seller the difference between such amounts.

       

      13.2   Transfer
        Taxes and Recording Fees.
        The
        Purchase Price excludes, and Buyer shall be liable for any stamp, documentary,
        filing, licensing, processing, recording authorization and similar fees and
        charges. Seller and Buyer shall each bear one half of any sales or transfer
        taxes assessed in connection with the transaction. 

       

      13.3   Other
        Taxes.
        All
        severance, production, excise, conservation and similar taxes attributable
        to
        the Assets that are based upon or measured by the production of Hydrocarbons
        (excluding Property Taxes which are addressed in Section 13.1) shall be
        apportioned between the Seller and Buyer as of the Effective Time. All such
        taxes that have accrued with respect to the period prior to the Effective
        Time
        have been or will be properly paid or withheld by Seller, and all statements,
        returns, and documents pertinent thereto have been or will be properly filed.
        Buyer shall be responsible for paying or withholding or causing to be paid
        or
        withheld all such taxes that have accrued after the Effective Time and for
        filing all statements, returns, and documents incident thereto.

       

      13.4   Tax
        Reports and Returns.
        For tax
        periods in which the Effective Time occurs, Seller agrees to immediately
        forward
        to Buyer copies of any tax reports and returns received by Seller after Closing
        and provide Buyer with any information Seller has that is necessary for Buyer
        to
        file any required tax reports and returns related to the Assets. Buyer agrees
        to
        file all tax returns and reports applicable to the Assets that Buyer is required
        to file after the Closing.

       

      
        
          
          

        

        
          -25-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      ARTICLE
        14

      ASSUMPTION
        AND RETENTION OF

      OBLIGATIONS;
        INDEMNIFICATION

       

      14.1 
  Buyer’s
        Assumption of Liabilities and Obligations.
        Upon
        Closing, Buyer shall assume and pay, perform, fulfill and discharge all claims,
        costs, expenses, liabilities and obligations (“Obligations”)
        accruing or relating to (i) the owning, developing, exploring, operating or
        maintaining of the Assets or the producing, transporting and marketing of
        Hydrocarbons from the Assets from and after the Effective Time, including,
        without limitation, the payment of Property Expenses, the obligation to plug
        and
        abandon all wells located on the Lands and reclaim all well sites located
        on the
        Lands regardless of when the plugging, abandonment and reclamation obligations
        arose, the make-up and balancing obligations for overproduction of gas from
        the
        Wells, all liability for royalty and overriding royalty payments made and
        Taxes
        paid with respect to the Assets for periods after the Effective Time and
        (ii) the environmental condition of the Assets except for any condition for
        which Buyer is indemnified by Seller under Section 5.5.a, and (iii) all
        Obligations accruing or relating to the ownership or operation of the Assets
        before the Effective Time for which Seller is not liable pursuant to the
        provisions of Section 14.2 (collectively, the “Assumed Liabilities”).

       

      14.2 
  Seller’s
        Retention of Liabilities and Obligations.
        Upon
        Closing, Seller shall retain and pay (i) all Property Expenses of Seller
        relating to the ownership and operation of the Assets and the producing,
        transporting and marketing of Hydrocarbons from the Assets prior to the
        Effective Time, but only as to Claims asserted within two years after the
        Closing Date, (ii) all liability for personal injury and employment claims
        related to the ownership and operation of the Assets prior to the Effective
        Time
        (iii) all liability for royalty and overriding royalty payments due, owing
        or made and Taxes due, owing or paid prior to the Effective Time with respect
        to
        the Assets, (iv) any liability arising directly out of the 1993 Oil Spill,
        and
        (v) any liability for offsite disposal of hazardous substances relating to
        the
        Assets prior to the Effective Time by Seller, its employees and contractors
        only
        and not any such disposal by Seller’s predecessors in title (collectively, the
“Retained
        Liabilities”). 

       

      14.3 
  Buyer’s
        Plugging and Abandonment Obligations.
        In
        addition to the Assumed Liabilities, upon Closing Buyer assumes full
        responsibility and liability for the following plugging and abandonment
        obligations related to the Assets (“Buyer’s
        Plugging and Abandonment Obligations”),
        regardless of whether they are attributable to the ownership or operation
        of the
        Assets before or after the Effective Time. All operations by Buyer under
        this
        Section shall be conducted in a good and workmanlike manner and in compliance
        with all applicable laws and regulations.

       

      a.    The
        necessary and proper plugging, replugging and abandonment of all wells on
        the
        Assets;

       

      b.    The
        necessary and proper removal, abandonment and disposal of all structures,
        pipelines, equipment, abandoned property, trash, refuse and junk located
        on or
        comprising part of the Assets;

       

      
        
          
          

        

        
          -26-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      c.    The
        necessary and proper capping and burying of all associated flow lines located
        on
        or comprising part of the Assets;

       

      d.    The
        necessary and proper restoration of the surface used for operation of the
        Assets
        and subsurface to the condition required by applicable laws, regulations
        or
        contract;

       

      e.    All
        obligations relating to the items described in Section 14.3.a. through
        Section 14.3.d. arising from contractual requirements and demands made by
        courts, authorized regulatory bodies or parties claiming a vested interest
        in
        the Assets; and

       

      f.    Obtaining
        and maintaining all bonds, or supplemental or additional bonds, that may
        be
        required contractually or by governmental authorities.

       

      14.4 
  Indemnification.
        “Losses”
shall
        mean any actual losses, costs, expenses (including court costs, reasonable
        fees
        and expenses of attorneys, technical experts and expert witnesses and the
        costs
        of investigation), liabilities, damages, demands, suits, claims, and sanctions
        of every kind and character (including civil fines) arising from, related
        to or
        reasonably incident to matters indemnified against; excluding however any
        special, consequential, punitive or exemplary damages, diminution of value
        of an
        Asset, loss of profits incurred by a party hereto or Loss incurred as a result
        of the indemnified party indemnifying a third party.

       

      After
        the
        Closing, Buyer and Seller shall indemnify each other as follows:

       

      a.    Seller’s
        Indemnification of Buyer.
        Seller
        assumes all risk, liability, obligation and Losses in connection with, and
        shall
        defend, indemnify, and save and hold harmless Buyer, its officers, directors,
        employees and agents, from and against all Losses which arise from or in
        connection with (i) the Retained Liabilities, (ii) any material breach
        of any representation or warranty made by Seller other than those contained
        in
        Sections 6.9 through and including 6.12, which shall terminate upon and not
        survive the Closing, (iii) matter for which Seller has agreed to indemnify
        Buyer
        under this Agreement, and (iv) any material breach by Seller of this
        Agreement.

       

      b.    Buyer’s
        Indemnification of Seller.
        Buyer
        assumes all risk, liability, obligation and Losses in connection with, and
        shall
        defend, indemnify, and save and hold harmless Seller, Seller’s officers,
        directors, employees and agents, from and against all Losses which arise
        from or
        in connection with (i) the Assumed Liabilities, (ii) any material
        breach of any representation or warranty made by Buyer, (iii) any matter
        for
        which Buyer has agreed to indemnify Seller under this Agreement, and
        (iv) any material breach by Buyer of this Agreement.

       

      14.5 
  Procedure.
        The
        indemnifications contained in Section 14.4 shall be implemented as
        follows:

       

      a.    Coverage.
        Such
        indemnity shall extend to all Losses suffered or incurred by the Indemnified
        Party, as defined below.

       

      
        
          
          

        

        
          -27-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      b.    Claim
        Notice.
        The
        party seeking indemnification under the terms of this Agreement (“Indemnified
        Party”)
        shall
        submit a written “Claim
        Notice”
to
        the
        other party (“Indemnifying
        Party”)
        which,
        to be effective, must state: (i) the amount of each payment claimed by an
        Indemnified Party to be owing, (ii) the basis for such claim, with
        supporting documentation, and (iii) a list identifying to the extent
        reasonably possible each separate item of Loss for which payment is so claimed.
        The amount claimed shall be paid by the Indemnifying Party to the extent
        required herein within ten (10) days after receipt of the Claim Notice, or
        after the amount of such payment has been finally established, whichever
        last
        occurs.

       

      c.    Information.
        Within
        twenty (20) days after the Indemnified Party receives notice of a claim or
        legal action that may result in a Loss for which indemnification may be sought
        under this Article 14 (“Claim”),
        the
        Indemnified Party shall give a Claim Notice to the Indemnifying Party. If
        the
        Indemnifying Party or its counsel so requests, the Indemnified Party shall
        furnish the Indemnifying Party with copies of all pleadings and other
        information with respect to such Claim. At the election of the Indemnifying
        Party made within sixty (60) days after receipt of the Claim Notice, the
        Indemnified Party shall permit the Indemnifying Party to assume control of
        such
        Claim (to the extent only that such Claim, legal action or other matter relates
        to a Loss for which the Indemnifying Party is liable), including the
        determination of all appropriate actions, the negotiation of settlements
        on
        behalf of the Indemnified Party, and the conduct of litigation through attorneys
        of the Indemnifying Party’s choice; provided, however, that no such settlement
        can result in any liability or cost to the Indemnified Party for which it
        is
        entitled to be indemnified hereunder without its consent. If the Indemnifying
        Party elects to assume control, (i) any expense incurred by the Indemnified
        Party thereafter for investigation or defense of the matter shall be borne
        by
        the Indemnified Party, and (ii) the Indemnified Party shall give all
        reasonable information and assistance, other than pecuniary, that the
        Indemnifying Party shall deem necessary to the proper defense of such Claim,
        legal action, or other matter. In the absence of such an election, the
        Indemnified Party will use its best efforts to defend, at the Indemnifying
        Party’s expense, any claim, legal action or other matter to which such other
        party’s indemnification under this Article 14 applies until the
        Indemnifying Party assumes such defense, and, if the Indemnifying Party fails
        to
        assume such defense within the time period provided above, settle the same
        in
        the Indemnified Party’s reasonable discretion at the Indemnifying Party’s
        expense. If such a Claim requires immediate action, both the Indemnified
        Party
        and the Indemnifying Party will cooperate in good faith to take appropriate
        action so as not to jeopardize defense of such Claim or either party’s position
        with respect to such Claim.

       

      d.    Dispute
        Resolution.
        If the
        existence of a valid Claim or amount to be paid by an Indemnifying Party
        is in
        dispute, the parties agree to submit determination of the existence of a
        valid
        Claim or the amount to be paid pursuant to the Claim Notice to binding
        arbitration. The arbitration shall be before a three person panel of neutral
        arbitrators, consisting of one person each to be selected by Seller and Buyer,
        and the third to be selected by the arbitrators selected by Seller and Buyer.
        The arbitrators shall conduct a hearing no later than sixty (60) days after
        submission of the matter to arbitration, and a written decision shall be
        rendered by the arbitrators within thirty (30) days of the hearing. Any
        payment due pursuant to the arbitration shall be made within fifteen
        (15) days of the arbitrators’ decision. This Section excludes those matters
        addressed in Sections 4.8 and 5.7 of this Agreement.

       

      
        
          
          

        

        
          -28-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

      
         

        14.6 
  No
          Insurance; Subrogation.
          The
          indemnifications provided in this Article 14 shall not be construed as a
          form of insurance. Seller and Buyer waive for themselves, their successors
          or
          assigns, including without limitation, any insurers, any rights to subrogation
          for Losses for which each of them is respectively liable or against which
          each
          respectively indemnifies the other, and, if required by applicable policies,
          Seller and Buyer shall obtain waiver of such subrogation from their respective
          insurers.

         

      

      14.7   Reservation
        as to Non-Parties.
        Nothing
        in this Agreement is intended to limit or otherwise waive any recourse Seller
        or
        Buyer may have against any non-party for any obligations or liabilities that
        may
        be incurred with respect to the Assets.

       

      ARTICLE
        15

      MISCELLANEOUS

       

      15.1   Exhibits.
        The
        Exhibits referred to in this Agreement are hereby incorporated in this Agreement
        by reference and constitute a part of this Agreement.

       

      15.2   Expenses.
        Except
        as otherwise specifically provided, all fees, costs and expenses incurred
        by
        Seller or Buyer in negotiating this Agreement or in consummating the transaction
        contemplated by this Agreement shall be paid by the party incurring same,
        including, without limitation, legal and accounting fees, costs and
        expenses.

       

      15.3   Notices.
        All
        notices and communications required or permitted under this Agreement shall
        be
        in writing and addressed as follows:

      

      
        	 	
                If
                  to Seller:

              	 	
                Berry
                  Petroleum Company

              	 
	 	 	 	
                5201
                  Truxtun Avenue, Suite 300

              	 
	 	 	 	
                Bakersfield,
                  California 93309

              	 
	 	 	 	
                Attention:

              	
                Manager
                  Land Department

              	 
	 	 	 	
                Telephone:  
                  

              	
                (661)
                  616-3900

              	 
	 	 	 	
                Facsimile:

              	
                (661)
                  616-3886

              	 
	 	 	 	 	 
	 	 	 	
                and

              	 
	 	 	 	 	 
	 	 	 	
                Laura
                  K. McAvoy, Esq.

              	 
	 	 	 	
                Musick,
                  Peeler & Garrett LLP

              	 
	 	 	 	
                2801
                  Townsgate Road, Suite 200

              	 
	 	 	 	
                Westlake
                  Village, California 91361

              	 
	 	 	 	
                Telephone:  
                  

              	
                (805)
                  418-3115

              	 
	 	 	 	
                Facsimile:

                 

              	
                (805)
                  418-3101

                 

              	 

      

       

      
        
          
          

        

        
          -29-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

      

      
        	 	
                If
                  to Buyer:

              	 	
                Venoco,
                  Inc.

              	 
	 	 	 	
                370
                  17th
                  Street, Suite 3900

              	 
	 	 	 	
                Denver,
                  Colorado 80202

              	 
	 	 	 	
                Attention:
                  

              	
                Terry
                  Sherban

              	 
	 	 	 	
                Telephone:   
                  

              	
                (303)
                  626-8303

              	 
	 	 	 	 	 
	 	 	 	
                and

              	 
	 	 	 	 	 
	 	 	 	
                Venoco,
                  Inc. 

              	 
	 	 	 	
                6267
                  Carpinteria Ave.

              	 
	 	 	 	
                Carpinteria,
                  CA 90313

              	 
	 	 	 	
                Attention:
                  

              	
                Terry
                  Anderson

              	 
	 	 	 	
                Telephone:   
                  

              	
                (805)
                  745-2253

              	 

      

       

      Any
        communication or delivery hereunder shall be deemed to have been duly made
        and
        the receiving party charged with notice (i) if personally delivered, when
        received, (ii) if faxed, when received if receipt is confirmed by telephone
        by the sender, (iii) if mailed, certified mail, return receipt requested,
        on the date set forth on the return receipt or (iv) if sent by overnight
        courier, one day after sending. Any party may, by written notice so delivered
        to
        the other party, change the address or individual to which delivery shall
        thereafter be made.

       

      15.4    Amendments.
        Except
        for waivers specifically provided for in this Agreement, this Agreement may
        not
        be amended nor any rights hereunder waived except by an instrument in writing
        signed by the party to be charged with such amendment or waiver and delivered
        by
        such party to the party claiming the benefit of such amendment or
        waiver.

       

      15.5    Assignment.
        Prior to
        Closing, neither party shall assign all or any portion of its respective
        rights
        or delegate all or any portion of its respective duties hereunder without
        the
        prior written consent of the other party. 

       

      15.6    Confidentiality.
        Seller
        and Buyer agree the provisions of this Agreement shall be kept confidential
        except as disclosure may be required by applicable law, rules and regulations
        of
        governmental agencies or stock exchanges. Buyer shall inform Seller of all
        such
        disclosures by Buyer.

       

      15.7    Press
        Releases. In
        the
        event that either party wishes or is required to make a press release or
        include
        such information in another document prior to Closing, such party will endeavor
        to provide the other with a draft of a press release or other document for
        review at least one business day before its release, filing or delivery.
        The
        parties will attempt in good faith to expeditiously reach agreement on such
        statement and the contents thereof. Failure to provide comments back to the
        other party within one business day of receipt of the press release or other
        document will be deemed consent to the public disclosure of the press release
        or
        other document and the content thereof. 

       

      
        15.8    Headings.
          The
          headings of the articles and sections of this Agreement are for guidance
          and
          convenience of reference only and shall not limit or otherwise affect any
          of the
          terms or provisions of this Agreement.

         

      

      
        
          
          

        

        
          -30-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      15.9    Counterparts.
        This
        Agreement may be executed by Seller and Buyer in any number of counterparts,
        each of which shall be deemed an original instrument, but all of which together
        shall constitute one and the same instrument. Execution can be evidenced
        by fax
        signatures with original signature pages to follow in due course.

       

      15.10   References.
        References made in this Agreement, including use of a pronoun, shall be deemed
        to include, where applicable, masculine, feminine, singular or plural,
        individuals, partnerships or corporations. As used in this Agreement, “person”
shall mean any natural person, corporation, partnership, court, agency,
        government, board, commission, trust, estate or other entity or
        authority.

       

      15.11   Governing
        Law.
        This
        Agreement and the transactions contemplated hereby shall be construed in
        accordance with, and governed by, the laws of the State of California without
        regard to principles of conflicts of law. The validity of the various
        conveyances affecting the title to real property Assets shall be governed
        by and
        construed in accordance with the laws of the State of California. 

       

      15.12   Removal
        of Signs.
        Buyer
        shall remove all of Seller’s well and lease signs within five (5) days of the
        Closing Date.

       

      15.13   Binding
        Effect.
        This
        Agreement shall be binding upon, and shall inure to the benefit of, the parties
        hereto, and their respective successors and assigns.

       

      15.14   Survival.
        The
        following shall survive Closing: (i) all post-closing obligations and
        indemnities of Seller and Buyer subject to the limitations set forth herein,
        (ii) Seller’s representations and warranties in Article 6 and,
        (iii) Buyer’s representations and warranties in
        Article 7.

       

      15.15   No
        Third-Party Beneficiaries.
        This
        Agreement is intended only to benefit the parties hereto and their respective
        permitted successors and assigns.

       

      15.16   Limitation
        on Damages.
        Consistent with Article 14, the parties hereto expressly waive any and all
        rights to consequential, special, incidental, punitive or exemplary damages,
        or
        loss of profits resulting from breach of this Agreement.

       

      15.17   Severability.
        It is
        the intent of the parties that the provisions contained in this Agreement
        shall
        be severable. Should any provisions, in whole or in part, be held invalid
        as a
        matter of law, such holding shall not affect the other portions of this
        Agreement, and such portions that are not invalid shall be given effect without
        the invalid portion.

       

      15.18   Knowledge.
        As
        used
        throughout this Agreement, the term “knowledge” or “best knowledge” or “best of
        Seller’s knowledge,” whether or not such term is written in lower or upper case,
        means the actual knowledge without investigation of those officers and employees
        of Seller as of the Closing Date which are involved at a supervisory or higher
        level of any fact, circumstance, or condition.

       

      
        
          
          

        

        
          -31-

          
            

          

        

        
          
          

          Confidential
            Portions Redacted and Filed with the Commission [***] Symbolizes Language
            Omitted Pursuant to an Application For Confidential
            Treatment.

        

      

       

      ARTICLE
        16

      EXCHANGE
        RIGHT

       

      16.1    Exchange
        Cooperation.
        Buyer
        shall cooperate (at no cost or liability to Buyer) with Seller so that Seller's
        transfer of the Assets to Buyer shall at Seller's election, be accomplished
        in a
        manner enabling the transfer to qualify as a part of a like-kind exchange
        of
        property by Seller within the meaning of Section 1031 of the Internal Revenue
        Code. If Seller so elects, Buyer shall reasonably cooperate with Seller to
        effect such like-kind exchange, which cooperation shall include, without
        limitation, taking such actions as Seller reasonably requests in order to
        pay
        the Deposit and the Purchase Price in a manner which enables such transfer
        to
        qualify as part of a like-kind exchange of property within the meaning of
        Section 1031 of the Code, and Buyer agrees that Seller may assign its rights
        (but not its obligations) under this Agreement to a qualified intermediary
        as
        defined in Treasury Regulations Section 1.1031(k)-1(g)(4)(iii) under United
        States Treasury Regulations, to qualify the transfer of the Purchase Price
        as a
        part of a like-kind exchange of property within the meaning of Sections 1031
        of
        the Code.

       

      Executed
        on the dates set forth in the acknowledgments below. 

       

      
        	 	
                Seller:

              
	 
	 	
                BERRY
                  PETROLEUM COMPANY

              
	 	
                a
                  Delaware corporation

              
	 
	 	 	 
	 	
                By: 

              	
                 

              
	 
	 
	 	
                Buyer:

              
	 
	 	
                VENOCO,
                  INC. 

              
	 	
                a
                  Delaware corporation

              
	 	 
	 	 
	 	
                By:
                  

              	
                 

              

      

       

       

      -32-

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