Document:

spp_Ex_10_1

		

			Exhibit 10.1

Execution Version

		

		
			PURCHASE AND SALE AGREEMENT
		

		
			 
		

		
			between
		

		
			 
		

		
			CEP MID-CONTINENT LLC,
		

		
			MID-CONTINENT OILFIELD SUPPLY, L.L.C.,
		

		
			and
		

		
			NORTHEAST SHELF ENERGY, L.L.C.,
		

		
			 
		

		
			as Sellers
		

		
			 
		

		
			and
		

		
			 
		

		
			GATEWAY RESOURCES U.S.A, INC.,
		

		
			 
		

		
			as Buyer
		

		
			 
		

		
			Dated as of June 15, 2016
		

		
			 
		

		
			

		 

		

			{00239086.2}

		

 

TABLE OF CONTENTS
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						ARTICLE I. DEFINITIONS AND RULES OF CONSTRUCTION

					
1 
				
	
					
						 

					
					
						 

				
	
					
						Section 1.1       Definitions

					
1 
				
	
					
						Section 1.2       Rules of Construction

					
11 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE II. PURCHASE AND SALE

					
11 
				
	
					
						 

					
					
						 

				
	
					
						Section 2.1       Purchase and Sale of Company Assets

					
11 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE III. CONSIDERATION

					
11 
				
	
					
						 

					
					
						 

				
	
					
						Section 3.1       Consideration

					
11 
				
	
					
						Section 3.2       Adjustments to the Base Purchase Price

					
12 
				
	
					
						Section 3.3       Closing Statement

					
12 
				
	
					
						Section 3.4       Closing Payment

					
12 
				
	
					
						Section 3.5       Post-Closing Adjustment

					
12 
				
	
					
						Section 3.6       Payments and Reimbursements

					
14 
				
	
					
						Section 3.7       Purchase Price Allocation

					
14 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE IV. REPRESENTATIONS AND WARRANTIES RELATING TO SELLERS

					
15 
				
	
					
						 

					
					
						 

				
	
					
						Section 4.1       Organization of Seller

					
15 
				
	
					
						Section 4.2       Authorization; Enforceability

					
15 
				
	
					
						Section 4.3       No Conflict; Consents

					
15 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE V. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY ASSETS

					
16 
				
	
					
						 

					
					
						 

				
	
					
						Section 5.1       No Conflict; Consents

					
16 
				
	
					
						Section 5.2       Litigation

					
16 
				
	
					
						Section 5.3       Taxes

					
16 
				
	
					
						Section 5.4       Material Contracts

					
17 
				
	
					
						Section 5.5       Compliance with Laws; Permits

					
17 
				
	
					
						Section 5.6       Preferential Purchase Rights

					
17 
				
	
					
						Section 5.7       Payment of Royalties

					
17 
				
	
					
						Section 5.8       Current Commitments

					
18 
				
	
					
						Section 5.9       Brokers’ Fees

					
18 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE VI. REPRESENTATIONS AND WARRANTIES RELATING TO BUYER

					
18 
				
	
					
						 

					
					
						 

				
	
					
						Section 6.1       Organization of Buyer

					
18 
				
	
					
						Section 6.2        Authorization; Enforceability

					
18 
				
	
					
						Section 6.3       No Conflict; Consents

					
18 
				
	
					
						Section 6.4       Litigation

					
19 
				
	
					
						Section 6.5       Brokers’ Fees

					
19 
				
	
					
						Section 6.6       Financing; Resources and Other Capabilities

					
19 
				
	
					
						Section 6.7       Buyer’s Independent Investigation

					
19 
				
	
					
						Section 6.8       Independent Evaluation

					
19 
				
	
					
						Section 6.9       Regulatory

					
19 
				

		
			
		

		

		 

		

			i

		

 

	
					
						ARTICLE VII. TITLE AND ENVIRONMENTAL EXAMINATION

					
20 
				
	
					
						 

					
					
						 

				
	
					
						Section 7.1       Access

					
20 
				
	
					
						Section 7.2       Environmental and Title Review

					
20 
				
	
					
						Section 7.3       Indemnity

					
20 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE VIII. INTERIM OPERATIONS

					
20 
				
	
					
						 

					
					
						 

				
	
					
						Section 8.1       Operations Prior to Closing

					
20 
				
	
					
						Section 8.2       Restricted Activities

					
21 
				
	
					
						Section 8.3       Casualty Loss

					
21 
				
	
					
						Section 8.4       Casualty Loss Limitation

					
22 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE IX. OTHER PRE-CLOSING COVENANTS

					
22 
				
	
					
						 

					
					
						 

				
	
					
						Section 9.1       Third-Party Approvals

					
22 
				
	
					
						Section 9.2       Insurance

					
22 
				
	
					
						Section 9.3       Replacement of Bonds, Letters of Credit and Guarantees

					
22 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE X. CONDITIONS TO CLOSING

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						Section 10.1     Conditions to Obligations of Buyer to Closing

					
23 
				
	
					
						Section 10.2     Conditions to the Obligations of Sellers to Closing

					
23 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE XI. CLOSING

					
24 
				
	
					
						 

					
					
						 

				
	
					
						Section 11.1     Closing Date

					
24 
				
	
					
						Section 11.2     Closing Deliverables

					
24 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE XII. TERMINATION

					
25 
				
	
					
						 

					
					
						 

				
	
					
						Section 12.1     Termination

					
25 
				
	
					
						Section 12.2     Effect of Termination

					
25 
				
	
					
						Section 12.3     Other Provisions

					
26 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE XIII. ASSUMPTION; INDEMNIFICATION AND WAIVERS

					
26 
				
	
					
						 

					
					
						 

				
	
					
						Section 13.1     Assumed Obligations

					
26 
				
	
					
						Section 13.2     Sellers’ Indemnity

					
26 
				
	
					
						Section 13.3     Buyer’s Indemnity

					
27 
				
	
					
						Section 13.4     Express Negligence Rule

					
27 
				
	
					
						Section 13.5     Limitations on Liability

					
27 
				
	
					
						Section 13.6     Procedures

					
30 
				
	
					
						Section 13.7     Waiver of Consequential Damages

					
31 
				
	
					
						Section 13.8     Waivers and Disclaimers

					
31 
				
	
					
						Section 13.9     Exclusive Remedy and Release

					
33 
				
	
					
						 

					
					
						 

				
	
					
						ARTICLE XIV. TAX MATTERS

					
33 
				
	
					
						 

					
					
						 

				
	
					
						Section 14.1     Responsibility for Filing Tax Returns and Paying Taxes

					
33 
				
	
					
						Section 14.2     Responsibility for Tax Audits

					
34 
				
	
					
						Section 14.3     Tax Refunds

					
35 
				
	
					
						Section 14.4     Transfer Taxes

					
35 
				
	
					
						Section 14.5     Tax Treatment of Indemnities

					
35 
				
	
					
						Section 14.6     Survival and Conflict

					
35 
				

		
			
		

		

		 

		

			ii

		

 

	
					
						ARTICLE XV. OTHER POST-CLOSING COVENANTS

					
35 
				
	
					
						 

					
					
						 

				
	
					
						Section 16.1     Notices

					
36 
				
	
					
						Section 16.2     Further Assurances

					
37 
				
	
					
						Section 16.3     Fees and Expenses

					
37 
				
	
					
						Section 16.4     Assignment

					
37 
				
	
					
						Section 16.5     Rights and Obligations of Third Parties

					
38 
				
	
					
						Section 16.6     Counterparts

					
38 
				
	
					
						Section 16.7     Entire Agreement

					
38 
				
	
					
						Section 16.8     Disclosure Schedules

					
38 
				
	
					
						Section 16.9     Amendments

					
39 
				
	
					
						Section 16.10   Publicity

					
39 
				
	
					
						Section 16.11   Severability

					
39 
				
	
					
						Section 16.12   Certain Remedies

					
39 
				
	
					
						Section 16.13   Governing Law; Jurisdiction

					
40 
				

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						EXHIBITS AND SCHEDULES

				
	
					
						Exhibits:

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Exhibit A        -     Title and Environmental Defects Procedures

					
					
						 

				
	
					
						Exhibit B        -     Form of Assignment and Assumption Agreement

					
					
						 

				
	
					
						Exhibit C        -     Leases

					
					
						 

				
	
					
						Exhibit D        -     Wells

					
					
						 

				
	
					
						Exhibit E        -     Surface Interests

					
					
						 

				
	
					
						Exhibit F        -     Gathering Systems

					
					
						 

				
	
					
						Exhibit G        -     Owned Real Property

					
					
						 

				
	
					
						Exhibit H        -     Allocated Values

					
					
						 

				
	
					
						Exhibit I          -     Form of Deed

					
					
						 

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Schedules:

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Schedule 1.1     -     Knowledge

					
					
						 

				
	
					
						Schedule 4.3     -     No Conflict; Consents -- Seller

					
					
						 

				
	
					
						Schedule 5.1     -     No Conflict; Consents -- Company Assets

					
					
						 

				
	
					
						Schedule 5.2     -     Litigation

					
					
						 

				
	
					
						Schedule 5.3     -     Taxes

					
					
						 

				
	
					
						Schedule 5.4     -     Material Contracts

					
					
						 

				
	
					
						Schedule 5.5(a) -    Compliance With Laws;

					
					
						 

				
	
					
						Schedule 5.5(b) -    Permits

					
					
						 

				
	
					
						Schedule 5.6     -     Preferential Purchase Rights

					
					
						 

				
	
					
						Schedule 5.7     -     Payment of Royalties

					
					
						 

				
	
					
						Schedule 5.8     -     Current Commitments

					
					
						 

				
	
					
						Schedule 9.2     -     Insurance

					
					
						 

				
	
					
						Schedule 9.3     -     Bonds, Letters of Credit and Guarantees

					
					
						 

				

		
			 
		

		
			 
		

		
			

		 

		

			iii

		

 

PURCHASE AND SALE AGREEMENT
		

		
			This PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of June 15, 2016, is by and between (i) CEP Mid-Continent LLC, a Delaware limited liability company (the “Company”), (ii) Mid-Continent Oilfield Supply, L.L.C., an Oklahoma limited liability company (“Midcon”), (iii) Northeast Shelf Energy, L.L.C., an Oklahoma limited liability company (“Northeast” and collectively with the Company and Midcon, the “Sellers”) and (iv) Gateway Resources U.S.A., Inc., an Oklahoma corporation (“Buyer”).  Each Seller and Buyer is sometimes referred to herein individually as a “Party” and they are sometimes collectively referred to herein as the “Parties.”
		

		
			Recitals:
		

		
			The Sellers own and/or operate, certain oil and gas wells, leases and other associated assets and interests in Washington County, Nowata County, Rogers County, Tulsa County and Craig County, Oklahoma (collectively, the “Oklahoma Counties”) and in Montgomery County and Labette County, Kansas (collectively, the “Kansas Counties”).
		

		
			Sellers desire to sell to Buyer, and Buyer desires to purchase from Sellers, the Company Assets (as defined below), on and subject to the terms and conditions of this Agreement.
		

		
			NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Parties agree as follows:
		

		
			ARTICLE I.
		

		
			DEFINITIONS AND RULES OF CONSTRUCTION
		

		
			Section 1.1Definitions.  Capitalized terms used throughout this Agreement and not defined in this Section 1.1 have the meanings ascribed to them elsewhere in this Agreement or in the Schedules or Exhibits, including Section 1 of Exhibit A.  As used herein, the following terms shall have the following meanings:
		

		
			 
		

		
			“Adjustment Amount” is defined in Section 3.2.
		

		
			“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, such specified Person through one or more intermediaries or otherwise.  For the purposes of this definition, “control” means, where used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings.
		

		
			“Agreement” is defined in the preamble to this Agreement.
		

		
			“Assignment and Assumption Agreement” means an Assignment and Assumption Agreement in the form attached hereto as Exhibit B.  
		

		
			

		 

		

			1

		

 

“Assumed Obligations” means (A) all obligations and liabilities of any kind whatsoever of Sellers arising from or relating to the Company Assets, whether known or unknown, liquidated or contingent, which are deemed to have arisen, accrued or are attributable to periods on or after the Effective Time, including obligations and liabilities concerning:  (i) the use, ownership or operation of the Company Assets; (ii) any obligations under or relating to any Contracts; (iii) paying all obligations owed to working interest, royalty, overriding royalty, net profits and other interest owners and operators relating to the Company Assets, including their share of any revenues or proceeds attributable to production or sales of Hydrocarbons; (iv) properly plugging, re-plugging and abandoning the Wells; (v) any obligation or liability for the dismantling, decommissioning, abandoning and removing of the Wells or Equipment; (vi) any obligation or liability for the cleaning up, restoration and/or remediation of the premises covered by or related to the Company Assets in accordance with applicable Contracts and Laws, including all Environmental Laws; (vii) furnishing makeup Hydrocarbons and/or settling and paying for Imbalances according to the terms of applicable operating agreements, gas balancing agreements, Hydrocarbons sales, processing, gathering or transportation Contracts; and (viii) any obligation or liability regarding Permits and (B) all obligations and liabilities of any kind whatsoever of Sellers arising from or relating to the Company Assets, whether known or unknown, liquidated or contingent, which are deemed to have arisen, accrued or are attributable to periods prior to the Effective Time concerning:  (y) properly plugging, re-plugging and abandoning the Wells; and (z) any obligation or liability for the dismantling, decommissioning, abandoning and removing of the Wells or Equipment.
		

		
			“Base Purchase Price” is defined in Section 3.1.
		

		
			“Burden” is defined in Section 5.7.
		

		
			“Business Day” means any day that is not a Saturday, Sunday, or legal holiday in the State of Texas and that is not otherwise a federal holiday in the United States.
		

		
			“Buyer” is defined in the preamble to this Agreement.
		

		
			“Buyer Indemnified Parties” is defined in Section 13.2.
		

		
			“Buyer’s Credits” means (without duplication) the sum of (i) proceeds received by the Sellers and distributed to the Sellers prior to Closing that are attributable to the sale of Hydrocarbons produced from the Company Assets on or after the Effective Time and less amounts payable as royalties, overriding royalties and other burdens measured by or payable out of such production, and less severance taxes applicable to such production; (ii) the Resolved Defect Amount; (iii) the amount of any reduction of the Base Purchase Price under Sections 3(e)(i)(C) and 3(e)(ii)(D) of Exhibit A; (iv) an amount equal to the Suspended Funds; and (v) except as expressly provided otherwise herein, any other amount provided for elsewhere in this Agreement or otherwise agreed in writing by the Parties. 
		

		
			“Casualty Loss” is defined in Section 8.3.
		

		
			“Central Time” means Central Standard Time or Central Daylight Saving Time, as applicable.
		

		
			

		 

		

			2

		

 

“Claim” means both Direct Claims and Third-Party Claims, collectively and individually.
		

		
			“Claim Notice” is defined in Section 13.6(a).
		

		
			“Closing” is defined in Section 11.1.
		

		
			“Closing Date” is defined in Section 11.1.
		

		
			“Closing Statement” is defined in Section 3.3.
		

		
			“Closing Statement Arbitrator” is defined in Section 3.5(b).
		

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

		
			“Company” is defined in the preamble to this Agreement.
		

		
			“Company Assets” means:
		

		
			(a)the oil and gas leases, oil, gas and mineral leases, fee mineral interests, royalty interests, non-working and carried interests, operating rights and other interests in land described or referred to in Exhibit C (collectively, the “Leases”), together with all oil and gas pooling and unitization agreements, declarations, designations and order relating to the Leases (such pooled or unitized areas being, collectively, the “Units”);
		

		
			(b)any and all oil and gas wells, salt water disposal wells, injection wells and other wells and wellbores, whether abandoned, not abandoned, plugged or unplugged, located on the Leases and in existence as of the Effective Date (collectively, the “Wells”), that are identified on Exhibit D;
		

		
			(c)all easements, rights-of-way, servitudes, surface and subsurface lease agreements, surface use agreements and other rights or agreements related to the use of the surface and subsurface, in each case to the extent used directly relating to the operation of the Leases, Wells, Units and Gathering Systems, including, without limitation, the interests described on Exhibit E (the “Surface Interests”);
		

		
			(d)the gathering systems described on Exhibit F (collectively, the “Gathering Systems”);
		

		
			(e)the owned real property described on Exhibit G (collectively, the “Owned Real Property”);
		

		
			(f)all Hydrocarbons produced and saved from, or allocable to, the Leases and the Wells from and after the Effective Time (collectively, the “Sale Hydrocarbons”);
		

		
			(g)all structures, facilities, wellheads, tanks, pumps, compressors, separators, equipment, machinery, fixtures, flowlines, gathering lines, materials, improvements, SCADA hardware and software, rolling stock and vehicles and any other personal property used solely in the operation of the Leases, Units, Wells, Gathering Systems or Surface Interests or otherwise 

		 

		

			3

		

 

located on the Owned Real Property (collectively, the “Personal Property”);
		

		
			(h)all licenses, permits, contracts, pooling, unitization and communitization agreements, operating agreements, processing agreements, division orders, farm-in and farm-out agreements, rental agreements, equipment lease agreements and all other agreements of any kind or nature, whether recorded or unrecorded, set forth on Schedule 5.4, but insofar and only insofar as the foregoing solely relate to the Leases, Units, Wells, Gathering Systems, Surface Interests or Personal Property, the ownership and operation thereof, or the production, treatment, sale, transportation, gathering, storage, sale or disposal of Sale Hydrocarbons, water or other substances produced therefrom or associated therewith (collectively, the “Specified Contracts”); and
		

		
			(i)records that solely relate to the Leases, Surface Interests, Wells, Gathering Systems, Sale Hydrocarbons, Contracts and Personal Property in the possession of the Sellers (the “Records”).
		

		
			“Confidentiality Agreement” means that certain confidentiality agreement, dated as of April 20, 2016, between Buyer and the Company.
		

		
			“Contracts” means any written and legally binding agreement, commitment, lease, license or other written and legally binding contractual undertaking.
		

		
			“Deed” means a Deed in the form attached hereto as Exhibit I.  
		

		
			“Defect Deductible” means an amount equal to three percent (3.0%) of the Base Purchase Price.
		

		
			“Direct Claim” is defined in Section 13.6(d).
		

		
			“Disclosure Schedules” means the schedules attached hereto.
		

		
			“Dollars” and “$” mean the lawful currency of the United States.
		

		
			“Effective Date” means August 1, 2016.
		

		
			“Effective Time” means 7:00 a.m. Central Time on August 1, 2016.
		

		
			“Environmental Laws” means all applicable Laws relating to health, safety, the protection of the environment, natural resources, or threatened or endangered species, pollution, or its impacts on human health, including those Laws relating to the storage, handling and use of chemicals and other Hazardous Substances and those relating to the generation, processing, treatment, storage, transportation, disposal or other management thereof.
		

		
			“Environmental Permits” means all Permits of Governmental Authorities required by Environmental Laws for the conduct of the business of the Sellers relating to the Company Assets.
		

		
			“Estimated Adjustment Amount” is defined in Section 3.3.
		

		
			“Estimated Purchase Price” is defined in Section 3.4.
		

		
			

		 

		

			4

		

 

“Excluded Assets” means (i) all trade credits and all accounts, accounts receivable, checks, funds, promissory notes, instruments and general intangibles attributable to the Company Assets with respect to any period of time prior to the Effective Time; (ii) all rights and interests of Sellers in respect of any deposits, bonds, letters of credit or other type of security or credit support posted by Sellers (including the right to request and receive any refunds thereof); (iii) all rights and interests in and to any hedges or other derivative contracts relating to Sellers; (iv) all of the Sellers’ and their respective Affiliates’ proprietary computer software, technology, patents, and trade secrets, proprietary or licensed copyrights, names, trademarks, logos and other intellectual property; (v) claims of the Sellers for refund of or loss carry forwards with respect to Taxes attributable to any period prior to the Effective Time or Taxes attributable to Excluded Assets; (vi) furniture, fixtures, computer equipment and other office furnishings owned by the Sellers and/or their Affiliates; (vii) all documents and instruments of Sellers that may be protected by an attorney-client privilege or that relate to any other Excluded Asset, the transactions contemplated by this Agreement or any transactions between any Seller or any of its Affiliates; (viii) data and other information that cannot be disclosed or assigned to Buyer as a result of confidentiality or similar arrangements; (ix) any and all research, valuation or pricing information prepared by the Sellers or their respective Representatives in connection with efforts to sell the Company Assets, including, but not limited to bids received and information and correspondence in connection therewith; and (x) any assets that are retained by Sellers pursuant to Sections 3(e)(i)(C) and 3(e)(ii)(B) of Exhibit A.  
		

		
			“Final Settlement” is defined in Section 3.5(c)
		

		
			“Fundamental Representations” means those representations and warranties of Sellers set forth in Article IV and in Section 5.1,  Section 5.3 and Section 5.9.
		

		
			“GAAP” means generally accepted accounting principles of the United States, consistently applied.
		

		
			“Gathering Systems” is defined in the definition of Company Assets.
		

		
			“Governmental Authority” means any federal, state, municipal, local or similar governmental authority, regulatory or administrative agency or court.
		

		
			“Hazardous Substances” means any chemicals, constituents, fractions, derivatives, compounds or other substances that are defined or regulated as pollutants, contaminants, wastes, toxic substances, hazardous substances, hazardous materials, radioactive materials or radioactive wastes or that may form the basis of liability or obligations under any Environmental Laws.  Hazardous Substances shall also expressly include petroleum substances (and any components, fractions or derivatives thereof) and exploration and production wastes.
		

		
			“Hydrocarbons” means oil, gas, natural gas liquids, casinghead gas, coal bed methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof.
		

		
			“Imbalance” means over-production or under-production or over-deliveries or under-deliveries on account of (a) any imbalance at the wellhead between the amount of Hydrocarbons produced from a Well constituting part of the Company Assets and allocable to the interests of the Sellers, and the shares of production from the relevant Well that are actually taken by or delivered 

		 

		

			5

		

 

to or for the account of the Sellers and (b) any marketing imbalance between the quantity of Hydrocarbons constituting part of the Company Assets and required to be delivered by or to the Sellers under any Contracts relating to the purchase and sale, gathering, transportation, storage, treating, processing, or marketing of Hydrocarbons and the quantity of Hydrocarbons actually delivered by or to the Sellers pursuant to the applicable Contracts.
		

		
			“Indebtedness for Borrowed Money” means all obligations, including the principal amount, plus any related accrued and unpaid interest, fees and prepayment premiums or penalties, to any Person for borrowed money.  In addition, for the avoidance of doubt, Indebtedness for Borrowed Money includes: (i) any obligations, contingent or otherwise, under banker’s acceptance credit or similar facilities (other than any letters of credit, performance bonds or similar obligations entered into in the ordinary course of business consistent with past practices); (ii) any obligations to pay the deferred purchase price of property or services, except trade accounts payable and other current liabilities arising in the ordinary course of business; (iii) any obligations with respect to hedging, swaps or similar arrangements; (iv) any obligations to pay rent or other payment amounts under leases that would be required to be classified as a capital lease on a balance sheet prepared in accordance with GAAP; and (v) any guaranty of any of the foregoing. 
		

		
			“Indemnified Party” is defined in Section 13.6(a).
		

		
			“Indemnifying Party” is defined in Section 13.6(a).
		

		
			“Indemnity Cap” means an amount equal to ten percent (10%) of the Base Purchase Price.
		

		
			“Indemnity Deductible” means an amount equal to three percent (3.0%) of the Base Purchase Price.
		

		
			“Individual Indemnity Threshold” is defined in Section 13.5(a).
		

		
			“IRS” means the Internal Revenue Service of the United States.
		

		
			“Kansas Counties” is defined in the recital of this Agreement.
		

		
			“Knowledge” means, as to Sellers, the actual knowledge of those Persons listed in Schedule 1.1 as of the date of this Agreement.
		

		
			“Law” means any applicable statute, writ, law, rule, regulation, ordinance, Order, judgment, injunction, award, determination or decree of a Governmental Authority, in each case as in effect on and as interpreted on the date of this Agreement.
		

		
			“Leases” is defined in the definition of Company Assets.
		

		
			“Legal Proceeding” means any and all proceedings, suits and causes of action by or before any Governmental Authority and all arbitration proceedings.
		

		
			“Liens” means liens, pledges, options, mortgages, deeds of trust and security interests.
		

		
			“Losses” is defined in Section 13.2.
		

		
			

		 

		

			6

		

 

“Material Adverse Effect” means, with respect to the Company Assets (as currently owned and operated), any circumstance, change, or effect that is materially adverse to the business, operations, assets or financial condition of the Company Assets, taken as a whole, but shall exclude any circumstance, change or effect resulting or arising from:  (i) any general change in conditions in the industries or markets where the Company Assets are located; (ii) seasonal reductions in revenues and/or earnings attributable to the Company Assets in the ordinary course of its business; (iii) any adverse change, event or effect on the global, national or regional energy industry as a whole, including those impacting energy prices or the value of oil and gas assets and properties or other commodities, goods or services, or the availability or costs of hedges; (iv) changes in the prices of oil, gas or other hydrocarbon products; (v) national or international political conditions, including any engagement in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack; (vi) changes in Law, GAAP or the interpretation thereof; (vii) the entry into or announcement of this Agreement, actions contemplated by this Agreement, or the consummation of the transactions contemplated hereby; (viii) any failure to meet internal or third-party projections or forecasts or revenue or earnings or reserve predictions; (ix) changes or developments in financial or securities markets or the economy in general; (x) effects of weather, meteorological events, natural disasters or other acts of God; (xi) natural declines in well performances; (xii) the existence of a preferred right as to any of the Company Assets; or (xiii) actions taken or omitted to be taken by or at the request of Buyer.
		

		
			“Material Contracts” means any of the following Contracts to which any of the Company Assets are bound or subject: 
		

		
			(a)Contracts that can reasonably be expected to involve obligations of, or payments with respect to the Company Assets after the date hereof, in excess of ten thousand Dollars ($10,000) in any given calendar year;
		

		
			(b)Contracts evidencing Indebtedness for Borrowed Money or the granting of a Lien securing any such indebtedness;
		

		
			(c)Contracts for the sale, gathering, processing, storage or transportation of production, or otherwise relating to the marketing of production from the Company Assets, other than Contracts which are subject to cancellation on not more than sixty (60) days’ notice without penalty or other detriment to the Sellers;
		

		
			(d)Contracts that contain calls upon or options to purchase production;
		

		
			(e)Contracts that constitute a partnership or joint venture agreement (excluding any tax partnership); and
		

		
			(f)Contracts that constitute a pending farmout agreement, exploration agreement, participation agreement or other similar Contract where the primary obligation thereunder has not fully been performed.
		

		
			“Midcon” is defined in the preamble.
		

		
			 “NORM” means naturally occurring radioactive material, including technologically enhanced naturally occurring radioactive material.
		

		
			

		 

		

			7

		

 

“Northeast” is defined in the preamble.
		

		
			“Notice of Disagreement” is defined in Section 3.5(a).
		

		
			“Notices” is defined in Section 16.1.
		

		
			“Oil and Gas Properties” means, collectively, the Leases, Wells and Units.
		

		
			“Oklahoma Counties” is defined in the recital to this Agreement.
		

		
			“Order” means any order, judgment, injunction, ruling, decree, consent decree, sentence, charge, subpoena, plea agreement, diversion agreement, writ or award issued, made, entered, rendered or approved by any court, administrative agency, or other Governmental Authority or by any arbitrator.
		

		
			“Organizational Documents” means any charter, certificate of incorporation, certificate or articles of formation, articles of association, partnership agreements, limited liability company agreements, bylaws, operating agreement or similar formation or governing documents and instruments.
		

		
			“Overhead Rate” means the rate charged by an operator to the joint interest owners for one hundred percent (100%) of the interests under an operating agreement.
		

		
			“Party” and “Parties” are defined in the preamble of this Agreement.
		

		
			“Permits” means authorizations, licenses, permits or certificates issued by any Governmental Authority.
		

		
			“Permitted Encumbrances” is defined in Exhibit A.
		

		
			“Person” means any individual, firm, corporation, partnership, limited partnership, limited liability company, incorporated or unincorporated association, joint venture, joint-stock company, Governmental Authority or other entity of any kind.
		

		
			“Personal Property” is defined in the definition of Company Assets.
		

		
			“Pre-Closing Tax Period” means any Tax period ending on or before the Closing Date.  
		

		
			“Pre-Effective Date Tax Period” means any Tax period ending on or before the Effective Date.  
		

		
			“Proceeding” means any action, suit, litigation, arbitration, lawsuit, claim, proceeding, hearing, inquiry, investigation, or dispute commenced, brought, conducted or heard by or before or otherwise involving, any Governmental Authority or any arbitrator.
		

		
			“Property Costs” means the Sellers or any of their Affiliates’ obligation for any expenses or costs (including lease operating expense, drilling and completion costs, seismic costs, workover costs, capital expenditures, joint interest billings and overhead charges under applicable operating agreements) which relate to the Company Assets or are otherwise incurred by the Sellers or any of 

		 

		

			8

		

 

their Affiliates in connection with the ownership, operation, development or maintenance of the Company Assets, but excluding (in all cases) costs and expenses attributable to (i) obligations to pay an owner of any working interest, royalty, overriding royalty, net profits interests or other similar burdens on or measured by production any revenues or proceeds attributable to sales of Hydrocarbons relating to the Company Assets, including those held in suspense; (ii) Losses for personal injury or death, property damage or loss (other than damage to structures, fences, irrigation systems and other fixtures, crops, livestock and other personal property in the ordinary course of business), torts, breach of Contract (other than failure to make payments due under the terms of a Contract) or violation of any Lease or Law (or private rights of action under any Law); (iii) obligations to plug wells (including the Wells), dismantle or decommission facilities, close pits and restore the surface around such wells, facilities and pits; (iv) environmental liabilities, including obligations to remediate any contamination of groundwater, surface water, soil, sediments or personal property under applicable Environmental Laws; (v) obligations with respect to Imbalances; and (vi) claims for indemnification or reimbursement from any third party with respect to costs of the type described in preceding clauses (i) through (v), whether such claims are made pursuant to Contract or otherwise.
		

		
			“Purchase Price” is defined in Section 3.1.
		

		
			“Records” is defined in the definition of Company Assets.
		

		
			“Representatives” means a Person’s directors, officers, partners, members, managers, employees, agents or advisors (including attorneys, accountants, consultants, bankers, financial advisors, and any Representatives of those advisors).
		

		
			“Resolved Defect Amount” means the amount by which the sum of all Defect Amounts determined in accordance with the procedures in Exhibit A exceeds the Defect Deductible.  
		

		
			“Response Date” is defined in Section 3.5(a).
		

		
			“Restricted Period” is defined in Section 8.1.
		

		
			“Sale Hydrocarbons” is defined in the definition of Company Assets.
		

		
			“Seller” and “Sellers” is defined in the preamble to this Agreement.
		

		
			“Seller Indemnified Parties” is defined in Section 13.3.
		

		
			“Seller Marks” means all trademarks, service marks, and trade names owned by any Seller or its Affiliates, including, without limitation, the rights of each Seller and its Affiliates to the name “Sanchez Production Partners” or any trade names, trademarks, service marks, corporate names or logos, or any derivative or combination thereof, that are confusingly similar thereto.
		

		
			“Sellers’ Credits” means (without duplication) (i) proceeds received by Buyer that are attributable to the sale of Hydrocarbons produced from the Company Assets prior to the Effective Time and less amounts payable as royalties, overriding royalties and other burdens measured by or payable out of such production, and less severance taxes applicable to such production; (ii) any Property Costs payable by Sellers that are attributable to the ownership or operation of the 

		 

		

			9

		

 

Company Assets from and after the Effective Time; (iii) the value of all Hydrocarbons produced prior to the Effective Time but in tanks or upstream of the applicable sales meter as of the Effective Time; (iv) the amount of any increase to the Base Purchase Price with respect to Title Benefits pursuant to Section 3(g) of Exhibit A; (v) for each of the Oil and Gas Properties operated by Sellers and as to which there are one or more Non-Parties that is a joint interest owner in such property, a monthly amount for the period commencing as of the Effective Time through the Closing Date equal to the Overhead Rate (proportionately reduced to the percentage interest conveyed, and prorated for the month in which the Closing Date occurs based on the number of Days in such month through the Closing Date); and (vi) (vii) except as expressly provided otherwise herein, any other amount provided for elsewhere in this Agreement or otherwise agreed in writing by the Parties.
		

		
			“Settlement Date” is defined in Section 3.5(b).
		

		
			“Specified Contracts” is defined in the definition of Company Assets.
		

		
			“Straddle Period” means any Tax period that includes but does not end at the Effective Time.
		

		
			“Suspended Funds” is defined in Section 5.7.
		

		
			“Surface Interests” is defined in the definition of Company Assets.
		

		
			“Target Formation” is defined in Exhibit D with respect to each corresponding Well.
		

		
			“Tax Allocation” is defined in Section 3.7(b).
		

		
			“Tax Audit” means any audit, adjustment, claim, examination, assessment, contest or other Proceeding with respect to Taxes.
		

		
			“Tax Returns” means any report, return, election, document, estimated tax filing, declaration, claim for refund, information returns or other filing provided to any Governmental Authority with respect to Taxes, including any schedules or attachments thereto and any amendment thereof.
		

		
			“Taxes” means all taxes, assessments, charges, duties, fees, levies, imposts or other similar charges imposed by a Governmental Authority, including all income, franchise, profits, margins, capital gains, capital stock, transfer, gross receipts, sales, use, transfer, service, occupation, ad valorem, real or personal property, excise, severance, production, windfall profits, customs, premium, stamp, license, payroll, employment, social security, unemployment, disability, environmental, alternative minimum, add-on, value-added, withholding and other taxes, and assessments, charges, duties, fees, levies, imposts or other similar charges of any kind, and all estimated taxes, deficiency assessments, additions to tax, penalties and interest with respect to taxes, whether disputed or otherwise.
		

		
			“Third-Party Claim” is defined in Section 13.6(a).
		

		
			“United States” means United States of America.
		

		
			

		 

		

			10

		

 

“Units” is defined in the definition of Company Assets.
		

		
			“Wells” is defined in the definition of Company Assets.
		

		
			Section 1.2Rules of Construction.
		

		
			 
		

		
			(a)All article, section, schedule, and Exhibit references used in this Agreement are to articles and sections of, and schedules and exhibits to, this Agreement unless otherwise specified.  The schedules and exhibits attached to this Agreement constitute a part of this Agreement and are incorporated herein for all purposes.
		

		
			(b)If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb).  Terms defined in the singular have the corresponding meanings in the plural, and vice versa.  Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender shall include the feminine and neutral genders and vice versa.  The term “includes” or “including” shall mean “including without limitation.”  Unless the context of this Agreement clearly requires otherwise, the words “hereof,” “hereto,” “hereby,” “herein,” “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular Section or Article in which such words appear.
		

		
			(c)The Parties acknowledge that each Party and its attorney have reviewed this Agreement and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting Party, or any similar rule operating against the drafter of an agreement, shall not be applicable to the construction or interpretation of this Agreement.
		

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

		
			(e)All references to currency herein shall be to, and all payments required hereunder shall be paid in, Dollars.
		

		
			ARTICLE II.
		

		
			PURCHASE AND SALE
		

		
			Section 2.1Purchase and Sale of Company Assets.  Upon the terms and subject to the conditions set forth in this Agreement, Sellers shall sell, assign, transfer, and convey to Buyer, and Buyer shall purchase and acquire from Sellers, at the Closing, the Company Assets free and clear of all Liens (other than Permitted Encumbrances). Sellers shall transfer the Company Assets to Buyer by delivery of the Assignment and Assumption Agreement at Closing.
		

		
			 
		

		
			ARTICLE III.
		

		
			CONSIDERATION
		

		
			Section 3.1Consideration.  In consideration for the purchase of the Company Assets, Buyer agrees to pay to Sellers at Closing the sum of Seven Thousand One Hundred Twenty Dollars ($7,120.00) (the “Base Purchase Price”), as adjusted by the Adjustment Amount (the Base Purchase Price as so adjusted, the “Purchase Price”).  
		

		
			 
		

		 

		

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			Section 3.2Adjustments to the Base Purchase Price.  The Base Purchase Price shall be adjusted by an amount (which could be a positive or negative number) equal to the Sellers’ Credits minus the Buyer’s Credits (such amount being referred to herein as the “Adjustment Amount”).  For purposes of clarity, a positive Adjustment Amount will increase the Base Purchase Price and a negative Adjustment Amount will decrease the Base Purchase Price.  It is acknowledged that because of the negligible Allocated Value for Wells or Leases, any adjustments pursuant to Exhibit A will be similarly negligible.  An “adjustment” of any kind or nature that is equal to or is less than $100 is hereby waived by all Parties hereto.
		

		
			 
		

		
			Section 3.3Closing Statement.  Not later than five (5) Business Days prior to the Closing Date, Sellers shall prepare and deliver to Buyer a statement (the “Closing Statement”) showing the estimated Adjustment Amount (using actual numbers and amounts where available, and using Sellers’ good faith estimate of other amounts, where actual amounts are not available, in each case showing the associated calculations in reasonable detail) (the “Estimated Adjustment Amount”).  Within three (3) Business Days after receipt of the Closing Statement, Buyer will deliver to Sellers a written report containing all changes with the explanation therefor that Buyer proposes to be made to the Closing Statement.  The Closing Statement, as agreed upon by the Parties, will be used to determine the Estimated Adjustment Amount at Closing.  If the Parties are unable to reach agreement, the Closing Statement as prepared by Sellers will be used to determine the Estimated Adjustment Amount at Closing, absent manifest error. 
		

		
			 
		

		
			Section 3.4Closing Payment.  At Closing, Buyer shall pay to Sellers, in cash by wire transfer of immediately available Dollar funds to the account or accounts designated by Sellers, an amount equal to the Base Purchase Price, with such amount increased or decreased, as the case may be, by the Estimated Adjustment Amount (the “Estimated Purchase Price”).
		

		
			 
		

		
			Section 3.5Post-Closing Adjustment.
		

		
			 
		

		
			(a)Revised Closing Statement.  On or before the date that is ninety (90) days after the Closing Date, Sellers shall prepare and deliver to Buyer a revised Closing Statement setting forth the Adjustment Amount as of the Closing Date.  Sellers shall provide to Buyer such data and information as Buyer may reasonably request supporting the amounts reflected on the Closing Statement (and reasonable access to Sellers’ personnel, including internal accountants) to permit Buyer to perform or cause to be performed an audit of the Closing Statement, at Buyer’s expense.  The Closing Statement shall become final and binding upon the Parties on the date that is thirty (30) days following receipt thereof by Buyer (the “Response Date”) unless Buyer gives Notice of its disagreement (“Notice of Disagreement”) to Sellers on or before such Response Date.  Any Notice of Disagreement shall specify in reasonable detail the Dollar amount, nature and basis of any disagreement so asserted.  If a Notice of Disagreement is not received by Sellers on or before the Response Date, then the Response Date shall be deemed the “Settlement Date.”  If a Notice of Disagreement is received by Sellers by the Response Date, then the Closing Statement (as revised in accordance with paragraph (b) below) shall become final and binding on the Parties on the date upon which the Arbitrated Closing Statement (defined below) is delivered to the Parties, unless the Parties come to a mutual agreement in writing before the delivery of the Arbitrated Closing Statement, in which case the Settlement Date will be deemed to be the date on which such a mutual agreement is executed by the Parties.
		

		 

		

			12

		

 

		
			(b)Arbitrated Closing Statement.  During the sixty (60) days following the date upon which Sellers receive a Notice of Disagreement, Sellers and Buyer shall use commercially reasonable efforts to attempt to resolve in writing any differences that they may have with respect to all matters specified in the Notice of Disagreement.  If at the end of such sixty (60) day period (or earlier by mutual agreement), Buyer and Sellers have not reached agreement on such matters, the matters that remain in dispute (and only such matters) shall promptly be submitted to BDO USA, LLP (the “Closing Statement Arbitrator”) for review and final and binding resolution.  If BDO USA, LLP is unable or unwilling to serve as an arbitrator hereunder, then Sellers and Buyer shall, in good faith, mutually agree upon an independent national accounting firm that has not represented any Party at any time during the five (5) year period of time immediately preceding its designation hereunder, to serve as the Closing Statement Arbitrator.  Buyer and Sellers shall, not later than seven (7) days prior to the hearing date set by the Closing Statement Arbitrator, each submit a written brief to the Closing Statement Arbitrator (and a copy thereof to the other Party on the same day) with Dollar figures for settlement of the disputes as to the Adjustment Amount (together with a proposed Closing Statement that reflects such figures) consistent with their respective calculations delivered pursuant to Section 3.5(a).  The hearing shall be conducted on a confidential basis.  The Closing Statement Arbitrator shall consider only those items or amounts in the Closing Statement which were identified in the Notice of Disagreement and which remain in dispute and the Closing Statement Arbitrator’s decision resolving the matters in dispute shall be based upon and be consistent with the terms and conditions in this Agreement.  In deciding any matter, the Closing Statement Arbitrator (i) shall be bound by the provisions of this Section 3.5 and the related definitions and (ii) may not assign a value to any disputed item greater than the greatest value for such item claimed by either Sellers or Buyer or less than the smallest value for such item claimed by Sellers or Buyer in their respective calculations delivered pursuant to Section 3.5(a). The Closing Statement Arbitrator shall render a decision (the “Arbitrated Closing Statement”) resolving the matters in dispute (which decision shall include a written statement of findings and conclusions) promptly after the conclusion of the hearing, unless the Parties reach agreement prior thereto and withdraw the dispute from arbitration.  The Closing Statement Arbitrator shall provide to the Parties explanations in writing of the reasons for its decisions regarding the adjusted Adjustment Amount and shall issue a Closing Statement reflecting such decision.  The decision of the Closing Statement Arbitrator shall be (i) final and binding on the Parties and (ii) final and non-appealable for all purposes hereunder; provided, however, that such decision may be reviewed, corrected or set aside by a court of competent jurisdiction, but only if and to the extent that such court of competent jurisdiction finds that (A) the Closing Statement Arbitrator made mathematical errors with respect to its decision or (B) fraud was committed by any Party in connection with the matters in dispute.  The cost of any arbitration (including the fees and expenses of the Closing Statement Arbitrator) under this Section 3.5(b) shall be borne entirely by the Party awarded the smaller percentage of the disputed amount by the Closing Statement Arbitrator.  The fees and disbursements of Sellers’ independent auditors and other costs and expenses incurred in connection with the services performed with respect to the Closing Statement shall be borne by Sellers and the fees and disbursements of Buyer’s independent auditors and other costs and expenses incurred in connection with their preparation of the Notice of Disagreement shall be borne by Buyer.
		

		
			(c)Final Settlement.  If the amount of the Purchase Price as set forth on the Closing Statement (or Arbitrated Closing Statement) exceeds the amount of the Estimated Purchase Price paid at Closing, then, within five (5) days after the Settlement Date (or within five 

		 

		

			13

		

 

(5) days after the Closing Statement Arbitrator delivers the Arbitrated Closing Statement), Buyer shall pay to Sellers the amount of such difference.  If the amount of the Purchase Price as set forth on the Closing Statement (or Arbitrated Closing Statement) is less than the Estimated Purchase Price paid at Closing, then Sellers shall pay to Buyer, within five (5) days after the Settlement Date (or within five (5) days after the Closing Statement Arbitrator delivers the Arbitrated Closing Statement), the amount of such difference.  Any post-Closing payment made pursuant to this Section 3.5(c) shall be made by means of a wire transfer of immediately available Dollar funds to a bank account designated by the Party receiving the funds.
		

		
			Section 3.6Payments and Reimbursements.  Notwithstanding any other provision hereof, from the Closing Date until ninety (90) days following the Settlement Date, any proceeds, costs or expenses that would constitute a Buyer’s Credit or a Sellers’ Credit (and other proceeds, costs or expenses attributable to the Company Assets on or after the Closing Date) but that are not reflected in the Closing Statement shall be treated as follows: 
		

		
			 
		

		
			(a)Sellers will promptly forward, or cause to be forwarded, to Buyer any payments received by the Sellers or any Affiliates thereof after the Closing Date with respect to proceeds attributable to the sale of Hydrocarbons produced from the Company Assets on or after the Effective Time but that are not reflected in the Closing Statement;
		

		
			(b)Sellers will be responsible pursuant to the terms of this Agreement for Property Costs prior to the Effective Time that would constitute a Buyer’s Credit but that are not reflected in the Closing Statement and shall promptly pay, or, if paid by Buyer, promptly reimburse Buyer for such costs or expenses;
		

		
			(c)Buyer will promptly forward, or cause to be forwarded, to Sellers any payments received by Buyer or any Affiliates thereof with respect to proceeds attributable to the sale of Hydrocarbons produced from the Company Assets prior to the Effective Time but that are not reflected in the Closing Statement; and
		

		
			(d)Buyer will be responsible pursuant to the terms of this Agreement for Property Costs that would constitute a Sellers’ Credit (or that are attributable to the Company Assets on or after the Closing Date) but that are not reflected in the Closing Statement and shall promptly pay, or, if paid by Sellers, promptly reimburse Sellers for and hold Sellers harmless from and against, such costs or expenses.
		

		
			Section 3.7Purchase Price Allocation.
		

		
			 
		

		
			(a)Adjustment Allocation.  Pursuant to the terms of Exhibit A, Buyer and Sellers have allocated the Purchase Price among the Company Assets as set forth on Exhibit H and such values shall be used for purposes of calculating adjustments to the Base Purchase Price under the procedures set forth on Exhibit A.  Notwithstanding anything herein to the contrary, no Party shall be bound for Tax purposes by the Allocated Values (as defined in Exhibit A) set forth on Exhibit H to this Agreement.
		

		
			(b)Tax Allocation.  The Parties agree that the transactions contemplated hereby will be treated for U.S. federal income Tax purposes and applicable state income Tax purposes as a sale by Sellers and a purchase by Buyer of the Company Assets.  All Parties hereto agree to file 

		 

		

			14

		

 

all Tax Returns consistent with the foregoing and shall not take any position inconsistent with the foregoing for Tax purposes.  Within ninety (90) days after the Final Settlement the Parties shall allocate the Purchase Price for Tax purposes among the Company Assets affected thereby in accordance with Section 1060 of the Code and the U.S. Treasury Regulations promulgated thereunder (the “Tax Allocation”).
		

		
			(c)Adjustment.  If an adjustment is made to the Purchase Price pursuant to this Agreement, the Tax Allocation shall be adjusted accordingly in accordance with Section 1060 of the Code and as mutually agreed by Buyer and Sellers based solely on such adjustment.
		

		
			 
		

		
			(d)Reporting.  Sellers and Buyer shall report consistently with the Tax Allocation in all Tax Returns, including IRS Form 8594, and neither Sellers nor Buyer shall take any position in any Tax Return that is inconsistent with the Tax Allocation, as adjusted, in each case, unless required to do so by a final determination as defined in Section 1313 of the Code, or otherwise with the written consent of the other Party.
		

		
			ARTICLE IV.
		

		
			REPRESENTATIONS AND WARRANTIES RELATING TO SELLERS
		

		
			Each Seller, severally and not jointly, hereby represents and warrants to Buyer as follows:
		

		
			Section 4.1Organization of Seller.  Such Seller is duly formed, validly existing, and in good standing under the Laws of its state of formation and has the requisite organizational power and authority to own its assets and conduct its business as presently conducted.  Such Seller is duly qualified to do business, and in good standing, in each jurisdiction in which it is required to be so qualified, except where the failure to be so qualified and in good standing would not have a Material Adverse Effect.
		

		
			 
		

		
			Section 4.2Authorization; Enforceability.  Such Seller has full capacity, power, and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement, and the performance of the transactions contemplated hereby, have been duly and validly authorized on the part of such Seller, and no other proceeding on the part of such Seller is necessary to authorize this Agreement or performance of the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by such Seller (and all documents required hereunder to be executed and delivered by such Seller at the Closing will be duly executed and delivered by such Seller), and this Agreement constitutes, and at the Closing each such document will constitute, a valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.
		

		
			 
		

		
			Section 4.3No Conflict; Consents.  Except as set forth on Schedule 4.3, the execution and delivery of this Agreement by such Seller and the consummation of the transactions contemplated hereby do not and shall not: 
		

		
			 
		

		 

		

			15

		

 

		
			(a)violate any Law applicable to such Seller or, with respect to such Seller, require any material filing with, consent, approval, or authorization of or notice to, any Person;
		

		
			(b)violate any Organizational Document of such Seller; or
		

		
			(c)(i) breach any material contract to which such Seller is a party; (ii) result in the termination of any such Material Contract; or (iii) constitute an event that, after notice or lapse of time or both, would result in the creation or imposition of a Lien.
		

		
			ARTICLE V.
		

		
			REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY ASSETS
		

		
			Each Seller hereby represents and warrants to Buyer as follows:
		

		
			Section 5.1No Conflict; Consents.  Except as set forth on Schedule 5.1, the execution and delivery of this Agreement by Sellers and the consummation of the transactions contemplated hereby do not and shall not:
		

		
			 
		

		
			(a)violate any Law applicable to the Company Assets that are owned or leased by them or require any filing with or Permit, consent, approval, or authorization of or notice to, any Person, except where such violation or failure to make or obtain such filing, consent or approval would not have a Material Adverse Effect; or
		

		
			(b)(i) breach any Material Contract to which any Company Assets that are owned or leased by them may be bound; (ii) result in the termination of any such Material Contract; (iii) result in the creation of any Lien under any Material Contract; or (iv) constitute an event that, after notice or lapse of time or both, would result in any such breach, termination or creation of a Lien, except where such breach, termination, Lien or event would not have a Material Adverse Effect.
		

		
			Section 5.2Litigation.  Schedule 5.2 sets forth all material Legal Proceedings pending against Sellers or, to Sellers’ Knowledge, threatened in writing, against Sellers, in each case in respect of any of the Company Assets that are owned or leased by Sellers.
		

		
			 
		

		
			Section 5.3Taxes.  Except as set forth on Schedule 5.3, (i) all Tax Returns required to be filed prior to the date hereof with respect to the Company Assets have been timely filed and all of such Tax Returns are complete and correct in all material respects; (ii) all Taxes shown as due on such Tax Returns have been timely paid; (iii) there is no claim pending by any Governmental Authority in connection with any Tax or any Tax Return described in clause (i) or (ii); (iv) no Tax Returns described in clause (i) are under audit or examination by any Governmental Authority and Sellers know of no basis for any such audit or examination; (v) there are no agreements or waivers currently in effect or pending that provide for an extension of time with respect to the filing of any such Tax Return or the assessment or collection of any material Tax from or payment with respect to the Company Assets; (vi) no written claim has been made by any Governmental Authority in a jurisdiction where Sellers do not file a Tax Return that they are or may be subject to material taxation in that jurisdiction with respect to the Company Assets; and (vii) no Seller is a foreign person within the meaning of Section 1445 of the Code.
		

		
			 
		

		 

		

			16

		

 

		
			Section 5.4Material Contracts.  As of the date hereof, Schedule 5.4 lists each Material Contract.  Each Material Contract constitutes the legal, valid and binding obligation of Sellers that are a party thereto and, to Sellers’ Knowledge, the counterparties thereto, and is enforceable in accordance with its terms, except, in each case, as would not reasonably be expected to have a Material Adverse Effect.  Sellers are not in breach or default in any material respect of their obligations under any of the Material Contracts.  Except as set forth in Schedule 5.4, or as would not reasonably be expected to have a Material Adverse Effect, (i) to Sellers’ Knowledge, no breach or default by any third-party exists under any Material Contract and (ii) no counterparty to any Material Contract of Sellers has canceled, terminated, or modified, or, to Sellers’ Knowledge, threatened to cancel, terminate or modify, any Material Contract.  Except for any such Contract identified on Schedule 5.4 as confidential, true, correct and complete copies of all Material Contracts have been made available to Buyer.
		

		
			 
		

		
			Section 5.5Compliance with Laws; Permits.
		

		
			 
		

		
			(a)Laws.  Except as disclosed on Schedule 5.5(a), Sellers are in compliance in all material respects with, all applicable Laws relating to the ownership, use and operation of the Company Assets.  Notwithstanding any provision in this Section 5.5 (or any other provision of this Agreement) to the contrary, Section 5.3 and Exhibit A shall be the exclusive representations, warranties and covenants with respect to Tax and environmental issues (including Environmental Permits) and no other representations or warranties are made with respect to such matters, including under this Section 5.5.  Notwithstanding the foregoing, the representation and warranty contained in this Section 5.5(a) will not apply to (and will exclude) any liability arising out of or related to facts, events, transactions, or actions or inactions, the category of which is the subject of another representation or warranty set forth in this Article V, whether or not the existence of such liability would constitute a breach or inaccuracy of such representation or warranty.  
		

		
			(b)Permits.  Except as disclosed on Schedule 5.5(b), (i) Sellers possess all material Permits which are necessary to own the applicable Company Assets owned by them and to operate their business as currently conducted; (ii) all such material Permits of Sellers are in full force and effect; and (iii) there are no Proceedings pending against Sellers or, to Sellers’ Knowledge, threatened before any Governmental Authority that seeks the revocation, cancellation, suspension or adverse modification of any such material Permit.  True, correct and complete copies of all such material Permits have been made available to Buyer.  Notwithstanding any provision in this Section 5.5 (or any other provision of this Agreement) to the contrary, Section 5.3 and Exhibit A shall be the exclusive representations, warranties and covenants with respect to Tax and environmental issues (including Environmental Permits) and no other representations or warranties are made with respect to such matters, including under this Section 5.5.
		

		
			Section 5.6Preferential Purchase Rights.  Except as set forth in Schedule 5.6, with respect to Sellers, there are no (i) preferential purchase rights, rights of first refusal or similar rights and (ii) rights of first offer, tag-along rights, drag-along rights or other similar rights, in each case of clause (i) and (ii) above, that are applicable to the transactions contemplated by this Agreement.
		

		
			 
		

		
			Section 5.7Payment of Royalties.  Except as set forth on Schedule 5.7, with respect to Sellers, and except for such amounts that are being held in suspense as permitted pursuant to applicable Law (“Suspended Funds”), all royalties (including lessor’s royalties), overriding 

		 

		

			17

		

 

royalties and other burdens upon, measured by or payable out of production (each, a “Burden”) due by the Sellers with respect to the Company Assets have been paid in all material respects or, if not paid, is contesting such Burden in good faith in the ordinary course of business. 
		

		
			 
		

		
			Section 5.8Current Commitments.  Schedule 5.8 sets forth, as of the date of this Agreement, all authorizations for expenditures and other capital commitments approved by Sellers relating to the Company Assets that relate to activities that have not been completed by the date of this Agreement, and/or which could be considered Sellers’ Credits.
		

		
			 
		

		
			Section 5.9Brokers’ Fees.  Sellers have not entered into any Contract with any Person that would require the payment by Buyer or its Affiliates of any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement.
		

		
			 
		

		
			ARTICLE VI.
		

		
			REPRESENTATIONS AND WARRANTIES RELATING TO BUYER
		

		
			Buyer hereby represents and warrants to Sellers as follows:
		

		
			Section 6.1Organization of Buyer.  Buyer is an Oklahoma Corporation, validly existing and in good standing under the Laws of the State of Oklahoma.
		

		
			 
		

		
			Section 6.2Authorization; Enforceability.  Buyer has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement, and the performance of the transactions contemplated hereby have been duly and validly authorized and approved by Buyer, and no other proceeding on the part of Buyer is necessary to authorize this Agreement.  This Agreement has been duly and validly executed and delivered by Buyer (and all documents required hereunder to be executed and delivered by Buyer at the Closing will be duly executed and delivered by Buyer), and this Agreement constitutes, and at the Closing each such document will constitute, a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.
		

		
			 
		

		
			Section 6.3No Conflict; Consents.  Except as would not reasonably be expected to prevent, impede, or materially delay the ability of Buyer to enter into and perform its obligations under this Agreement, the execution and delivery of this Agreement by Buyer and the consummation of the transactions contemplated hereby by Buyer do not and shall not:
		

		
			 
		

		
			(a)violate any Law applicable to Buyer or require any filing with, consent, approval or authorization of, or, notice to, any Governmental Authority;
		

		
			(b)violate any Organizational Document of Buyer; or
		

		
			(c)require any filing with, or permit, consent or approval of, or the giving of any notice to, any Person.
		

		 

		

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			Section 6.4Litigation.  Except as would not reasonably be expected to prevent, impede, or materially delay the ability of Buyer to enter into and perform its obligations under this Agreement, Buyer (i) is not subject to any outstanding Order; (ii) is not a party to a Proceeding; and (iii) to the knowledge of Buyer, has not been threatened with any Proceeding.
		

		
			 
		

		
			Section 6.5Brokers’ Fees.  Buyer and its Affiliates have not entered into any Contract with any Person that would require the payment by Sellers or their Affiliates of any brokerage fee, finders’ fee or other commission in connection with the transactions contemplated by this Agreement.
		

		
			 
		

		
			Section 6.6Financing; Resources and Other Capabilities.  Buyer has, and shall have as of the Closing Date, sufficient funds with which to pay the Adjusted Purchase Price and consummate the transactions contemplated by this Agreement.  Buyer has the financial, technical and other capabilities to perform all of Buyer’s other obligations under this Agreement and all of the obligations assumed from Sellers with respect to the Company Assets.
		

		
			 
		

		
			Section 6.7Buyer’s Independent Investigation.  Buyer and its Representatives have undertaken an independent investigation and verification of the Company Assets.  Except for the representations and warranties made by Sellers in Article IV and Article V, Buyer acknowledges that there are no representations or warranties, express or implied, as to the Company Assets.
		

		
			 
		

		
			Section 6.8Independent Evaluation.  Buyer is sophisticated in the evaluation, purchase, ownership and operation of oil and gas properties and related facilities.  Buyer acknowledges and agrees that Sellers have not made any representations or warranties as to the Company Assets except as expressly and specifically provided in Article IV and Article V and that Buyer may not rely on any other representations or warranties made by Sellers or their representatives or on any of Sellers’ estimates with respect to reserves or the value of the Company Assets, or any projections as to future events or other analyses or forward looking statements.  In making its decision to enter into this Agreement and to consummate the transaction contemplated herein, subject to the express representations of Sellers set forth in this Agreement, Buyer (i) has relied or shall rely solely on its own independent investigation and evaluation of the Company Assets and the express provisions of this Agreement and (ii) has satisfied or shall satisfy itself as to the environmental and physical condition of and contractual arrangements affecting the Company Assets.  Buyer has no Knowledge of any fact that results in the breach of any representation, warranty or covenant of Sellers made hereunder.
		

		
			 
		

		
			Section 6.9Regulatory.  Buyer is now, and hereafter shall continue to be, qualified to own and assume operatorship of all Leases, Wells and Company Assets comprising of a part of the Oil and Gas Properties, including federal oil, gas and mineral leases and Leases with Governmental Authorities, and the consummation of the transaction contemplated in this Agreement will not cause Buyer to be disqualified as such an owner or operator.  To the extent required by any applicable Laws, Buyer currently has, and will hereafter continue to maintain, lease bonds, area-wide bonds or any other surety bonds as may be required by, and in accordance with, all applicable Laws governing the ownership and operation of such Leases, Wells and Company Assets and has filed any and all required reports necessary for such operations with all Governmental Authorities having jurisdiction over such operations.
		

		
			 
		

		 

		

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			ARTICLE VII.
		

		
			TITLE AND ENVIRONMENTAL EXAMINATION.
		

		
			Section 7.1Access.  From the date hereof through the Closing, Sellers shall afford Buyer and its Representatives reasonable access, during normal business hours and in such manner as not to unreasonably interfere with normal operation of Sellers’ business, to the properties, books, contracts and records of Sellers and to the appropriate officers and employees of Affiliates of Sellers and shall furnish such Representatives with all financial and operating data and employment data with respect to the employees of the Sellers who are located in the Oklahoma Counties and Kansas Counties and whose job responsibilities encompass the Company Assets and other information concerning the Company Assets as Buyer and such Representatives may reasonably request.  Sellers shall have the right to have a Representative present at all times during any such inspections, interviews and examinations.  Buyer shall hold in confidence all such information on the terms and subject to the conditions contained in the Confidentiality Agreement.  Notwithstanding the foregoing, Buyer shall have no right of access to, and Sellers shall have no obligation to provide to Buyer, information relating to: (i) bids received from others in connection with the transactions contemplated by this Agreement (or similar transactions) and information and analyses (including financial analyses) relating to such bids; (ii) any information the disclosure of which would jeopardize any privilege available to Sellers relating to such information or would cause Sellers to breach a confidentiality obligation; or (iii) any information the disclosure of which would result in a violation of Law.
		

		
			 
		

		
			Section 7.2Environmental and Title Review.  Buyer shall have the right to examine the environmental condition of and title to the Company Assets in accordance with the procedures in Exhibit A.  Sellers shall provide access to the Company Assets during regular business hours that Sellers operate, and Sellers shall use their commercially reasonable efforts to obtain permission for Buyer to gain access to the Company Assets operated by third parties.  Buyer shall have no right to perform or conduct any environmental sampling or other invasive environmental investigation on or about any of the Company Assets without the prior written consent of Sellers, which may be withheld for any reason.
		

		
			 
		

		
			Section 7.3Indemnity.  Buyer shall indemnify the Seller Indemnified Parties from and against Losses arising out of, or in connection with, any site visits or inspections of the Company Assets or any other properties of any Seller Indemnified Party by Buyer and its Representatives, EVEN IF CAUSED BY THE SOLE, JOINT AND/OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF THE SELLER INDEMNIFIED PARTIES, EXCEPTING ONLY LOSSES CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A MEMBER OF THE SELLER INDEMNIFIED PARTIES.
		

		
			 
		

		
			ARTICLE VIII.
		

		
			INTERIM OPERATIONS
		

		
			Section 8.1Operations Prior to Closing.  Except as provided in this Agreement, during the period from and including the date hereof until and including the Closing Date (the “Restricted Period”), without the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed, Sellers shall: 
		

		
			 
		

		 

		

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			(a)operate the Company Assets operated by Sellers in all material respects in (i) the ordinary course consistent with past practices and (ii) compliance with all applicable Laws;
		

		
			(b)pay all expenses incurred with respect to the Company Assets owned or operated by Sellers in the usual, regular and ordinary manner consistent with past practice;
		

		
			(c)collect the accounts receivable attributable to the Company Assets owned or operated by Sellers in the usual, regular and ordinary manner consistent with past practice;
		

		
			(d)maintain the books of account and records relating to the Company Assets owned or operated by Sellers in the usual, regular and ordinary manner, in accordance with the usual accounting practices of each such Person; and
		

		
			(e)give prompt Notice to Buyer of any written notice received by Sellers of any material claim asserting any breach of contract, tort or violation of Law or any investigation, suit, action or litigation by or before a Governmental Authority or otherwise, that (in each case) relates to the Company Assets.
		

		
			Section 8.2Restricted Activities.  Without the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned, or delayed, Sellers shall not take any action during the Restricted Period to:
		

		
			 
		

		
			(a)sell, transfer, abandon, lease (other than oil and gas leasehold interests acquired by Sellers in the Restricted Period), encumber (other than Permitted Encumbrances), exchange or otherwise dispose of any of the Company Assets except in the ordinary course of business;
		

		
			(b)merge or consolidate with any Person;
		

		
			(c)incur any Indebtedness for Borrowed Money to the extent secured by Company Assets, whether or not evidenced by a note, bond, debenture or similar instrument (nor enter into any guarantees with respect to any such indebtedness), except any such indebtedness that will be paid in full at or prior to the Closing;
		

		
			(d)enter into any Contract that would have been a Material Contract if it had been in effect on the date hereof;
		

		
			(e)amend, modify or terminate any Material Contract or otherwise waive, release or assign any material rights, Claims or benefits of Sellers under any Material Contract;
		

		
			(f)propose or agree to participate in or authorize enter into any authorization for expenditure or other approved capital expenditure in excess of ten thousand Dollars ($10,000) to the extent relating to the Company Assets; or
		

		
			(g)agree, whether in writing or otherwise, to do any of the foregoing.
		

		
			Section 8.3Casualty Loss.  If, between the Execution Date and the Closing, any substantial portion of the Company Assets are materially damaged or destroyed by fire or other 

		 

		

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casualty (not including normal wear and tear, downhole mechanical failure or reservoir changes) or if any substantial portion of the Company Assets are taken by condemnation or under the right of eminent domain (all of which are herein called “Casualty Loss” and are limited to property damage or taking only), Sellers shall notify Buyer promptly after Sellers learn of such event. Sellers shall have the right, but not the obligation, to cure a Casualty Loss that consists of property damage by repairing the affected Company Asset no later than the Closing Date. If any uncured Casualty Loss exists at the Closing, Buyer shall proceed to purchase the Company Asset affected thereby, and upon receipt of the Purchase Price, Sellers shall pay to Buyer all sums paid to Sellers by third Persons by reason of the damage or taking of such Company Asset, and to the extent Sellers are not contractually prohibited from doing so, Sellers shall assign, transfer and set over unto Buyer all of the right, title and interest of Sellers in and to any claims, unpaid proceeds or other payments or rights to receive payments from third Persons arising out of such damage or taking. EXCEPT AS SET FORTH IN SCHEDULE 9.2, EACH SELLER DISCLAIMS ANY REPRESENTATION OR WARRANTY AS TO THE EXISTENCE OF INSURANCE COVERING CASUALTY LOSS TO THE ASSETS, AND DISCLAIMS ANY OBLIGATION, COVENANT OR DUTY TO BUYER TO ASSERT OR PURSUE ANY CLAIM AGAINST ANY INSURER OR OTHER PERSON FOR CASUALTY LOSS TO THE COMPANY ASSETS.
		

		
			 
		

		
			Section 8.4Casualty Loss Limitation.  Anything in this Agreement to the contrary notwithstanding, Buyer’s recourse with respect to a Casualty Loss shall be limited to the proceeds of Sellers’ casualty insurance coverage actually recovered by Sellers in respect thereof or other sums paid to Sellers by third Persons (or an assignment of claims related thereto). If such sums are received by Sellers prior to Closing, such sums will be paid to Buyer at Closing, and if such sums are received after Closing, such sums will be paid to Buyer promptly after receipt thereof by the Sellers. Sellers shall have no other liability or responsibility to Buyer with respect to a Casualty Loss, EVEN IF SUCH CASUALTY LOSS SHALL HAVE RESULTED FROM OR SHALL HAVE ARISEN OUT OF THE SOLE OR CONCURRENT NEGLIGENCE, FAULT, BREACH OF STATUTE OR WILLFUL MISCONDUCT OF SELLERS.
		

		
			 
		

		
			ARTICLE IX.
		

		
			OTHER PRE-CLOSING COVENANTS
		

		
			Section 9.1Third-Party Approvals.  Buyer and Sellers shall (and shall each cause their respective Affiliates to) use reasonable efforts to obtain all material consents and approvals of third parties and releases of Liens that any of Buyer, Sellers, or their Affiliates are required to obtain to consummate the transactions contemplated hereby.
		

		
			 
		

		
			Section 9.2Insurance.  At or prior to the Closing, Sellers shall be entitled to terminate or modify the insurance policies described in Schedule 9.2 to exclude coverage of the Company Assets, and Buyer will obtain its own insurance coverage with respect to the Company Assets.
		

		
			 
		

		
			Section 9.3Replacement of Bonds, Letters of Credit and Guarantees.  The Parties understand that none of the bonds, letters of credit, and guarantees, posted by Sellers with any Governmental Authority or third Person and relating to the Company Assets will be transferred to Buyer.  On or before the Closing Date, Buyer shall obtain, or cause to be obtained in the name of Buyer, replacements for the bonds and guarantees listed on Schedule 9.3 to the extent such replacement are permitted under the terms thereof, and to the extent permitted under the terms 

		 

		

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thereof shall cause, effective as of the Closing Date, the cancellation or return to Sellers of such bonds and guarantees posted (or supported) by Sellers with respect to the Company Assets.
		

		
			 
		

		
			ARTICLE X.
		

		
			CONDITIONS TO CLOSING
		

		
			Section 10.1Conditions to Obligations of Buyer to Closing.  The obligation of Buyer to consummate the transactions contemplated by this Agreement at the Closing is subject to the satisfaction (or waiver by Buyer) of the following conditions:
		

		
			 
		

		
			(a)Representations, Warranties and Covenants.  (i) The representations and warranties of Sellers made in this Agreement (disregarding all materiality and Material Adverse Effect qualifications contained therein) will be true and correct as of the date of this Agreement and as of the Closing Date as if made on the Closing Date (except to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date) except where all such breaches taken collectively would not reasonably be expected to have a Material Adverse Effect; (ii) Sellers shall have performed or complied in all material respects with all of the covenants and agreements required by this Agreement to be performed or complied with by Sellers on or before the Closing; and (iii) Buyer shall have received a certificate of an executive officer of each Seller, dated the Closing Date, to such effect.
		

		
			(b)No Proceeding or Injunction.  No Proceeding instituted by a third-party shall be pending before any Governmental Authority or arbitral body seeking to restrain, prohibit, enjoin or declare illegal, or seeking substantial damages in connection with, the transactions contemplated by this Agreement.  No provision of any applicable Law and no Order shall be in effect that prohibits or makes illegal the consummation of the Closing.
		

		
			(c)Consents and Approvals.  All material consents and approvals, if any, required by applicable Law or otherwise necessary for the consummation of the transactions contemplated herein, shall have been obtained and shall not have been withdrawn or revoked, and all Liens on the Company Assets, other than Permitted Encumbrances, shall have been released.
		

		
			Section 10.2Conditions to the Obligations of Sellers to Closing.  The obligation of Sellers to consummate the transactions contemplated by this Agreement at the Closing is subject to the satisfaction (or waiver by Seller) of the following conditions:
		

		
			 
		

		
			(a)Representations, Warranties and Covenants.  (i) The representations and warranties of Buyer made in this Agreement (disregarding all materiality qualifications contained therein) will be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as if made on the Closing Date (except to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date), (ii) Buyer shall have performed or complied in all material respects with all of the covenants and agreements required by this Agreement to be performed or complied with by Buyer on or before the Closing and (iii) Sellers shall have received a certificate of an executive officer of Buyer, dated the Closing Date, to such effect.
		

		 

		

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			(b)No Proceeding or Injunction.  No Proceeding instituted by a Third-Party shall be pending before any Governmental Authority or arbitral body seeking to restrain, prohibit, enjoin or declare illegal or seeking substantial damages in connection with, the transactions contemplated by this Agreement.  No provision of any applicable Law and no Order shall be in effect that prohibits or makes illegal the consummation of the Closing.
		

		
			(c)Consents and Approvals.  All material consents and approvals, if any, required by applicable Law or otherwise necessary for the consummation of the transactions contemplated herein, shall have been obtained and shall not have been withdrawn or revoked, and all Liens on the Company Assets, other than Permitted Encumbrances, shall have been released.
		

		
			ARTICLE XI.
		

		
			CLOSING
		

		
			Section 11.1Closing Date.  Subject to the conditions set forth in Article X, the closing of the sale and transfer of the Company Assets to Buyer as contemplated by this Agreement (the “Closing”) shall take place at the offices of Andrews Kurth LLP at 600 Travis, Suite 4200, Houston, Texas 77002 on August 1, 2016, or such other date as Buyer and Sellers may mutually determine (the date on which the Closing occurs is referred to herein as the “Closing Date”), subject to Sellers’ right to extend the Closing Date under Section 3(d) of Exhibit A.
		

		
			 
		

		
			Section 11.2Closing Deliverables.  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)Closing Payment.  Buyer shall pay to Sellers the Closing Payment.
		

		
			(b)Assignment and Assumption Agreement.  Each Seller and Buyer shall execute and deliver the Assignment and Assumption Agreement.
		

		
			(c)Buyer’s Certificate.  Buyer shall deliver the certificate required pursuant to Section 10.2(a).
		

		
			(d)Sellers’ Certificate.  Sellers shall deliver the certificate required pursuant to Section 10.1(a).
		

		
			(e)Certification of Non-Foreign Status.  Sellers shall deliver a certification of non-foreign status in accordance with U.S. Treasury Regulation Section 1.1445-2(b)(2).
		

		
			(f)Deed.  Sellers shall execute and deliver the Deed with respect to the Owned Real Property.
		

		
			(g)Other Matters.  Sellers and Buyer shall execute and deliver any other appropriate assignments, bills of sale, or other instruments necessary to effect or support the transactions contemplated by this Agreement.
		

		 

		

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			ARTICLE XII.
		

		
			TERMINATION
		

		
			Section 12.1Termination.  At any time prior to the Closing, this Agreement may be terminated and the transactions contemplated hereby abandoned:
		

		
			 
		

		
			(a)by the mutual written consent of Buyer and Sellers;
		

		
			(b)by Buyer, (i) if any Seller shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform would give rise to the failure of a condition set forth in Section 10.1 or (ii) if all of the conditions set forth in Article X have been satisfied or waived, as applicable, and any Seller nevertheless refuses or fails to Close the transactions contemplated in this Agreement; provided, Sellers shall first be entitled to ten (10) days’ notice and the opportunity to cure and provided furthermore that Buyer shall not be in breach at such time;
		

		
			(c)by Sellers, (i) if Buyer shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform would give rise to the failure of a condition set forth in Section 10.2 or (ii) if all of the conditions set forth in Article X have been satisfied or waived, as applicable, and Buyer nevertheless refuses or fails to Close the transactions contemplated in this Agreement; provided, Buyer shall first be entitled to ten (10) days’ notice and the opportunity to cure and provided furthermore that Sellers shall not be in breach at such time;
		

		
			(d)by either Buyer or Sellers, upon Notice to the other Party, if any Governmental Authority having competent jurisdiction has issued a final, non-appealable Order, decree, ruling or injunction (other than a temporary restraining order) or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such injunction shall have become final and non-appealable;
		

		
			(e)by either Buyer or Sellers, upon Notice to the other Party, if the transactions contemplated at the Closing have not been consummated by August 10, 2016, provided that neither Buyer nor Sellers shall be entitled to terminate this Agreement pursuant to this Section 12.1(e) if such Person’s breach of this Agreement has prevented the consummation of the transactions contemplated by this Agreement; or
		

		
			(f)by either Buyer or Sellers, upon Notice to the other Party, if Buyer claims any Defect Amounts (as defined in Exhibit A) validly asserted in any Defect Notice (as defined in Exhibit A) that exceed by more than $250,000 the sum of all Title Benefit Amounts (as defined in Exhibit A) validly claimed by Sellers under Exhibit A.
		

		
			Section 12.2Effect of Termination(a).
		

		
			 
		

		
			(a)If Closing does not occur because Buyer wrongfully failed to tender performance at Closing, or otherwise breached this Agreement prior to Closing, and all of the conditions to Closing under Section 10.2 have been satisfied or waived (other than those conditions involving deliveries at Closing) and Sellers are ready to close, Sellers shall be entitled to pursue 

		 

		

			25

		

 

any and all rights and remedies to which Sellers may be entitled at law or in equity and shall be entitled to recover court costs and attorney’s fees in addition to any other relief to which Sellers may be entitled. In lieu of termination of this Agreement, Sellers shall be entitled to specific performance of this Agreement without a requirement to post a bond or other security, it being specifically agreed that monetary damages may not be sufficient to compensate Sellers.
		

		
			(b)If Closing does not occur because Sellers wrongfully failed to tender performance at Closing, or otherwise breached this Agreement prior to Closing, and all of the conditions to Closing under Section 10.1 have been satisfied or waived (other than those conditions involving deliveries at Closing) and Buyer is ready to close, Buyer shall be entitled to pursue any and all rights and remedies to which Buyer may be entitled at law or in equity and shall be entitled to recover court costs and attorney’s fees in addition to any other relief to which Buyer may be entitled.  In lieu of termination of this Agreement, Buyer shall be entitled to specific performance of this Agreement without a requirement to post a bond or other security, it being specifically agreed that monetary damages may not be sufficient to compensate Buyer.
		

		
			Section 12.3Other Provisions.  Except for Section 12.2, Section 7.3,  Section 13.7 and Article XVI (excluding Section 16.12) (and the definitions related to any of the foregoing), this Agreement shall, upon termination hereof pursuant to Section 12.1, become of no further force or effect.  Nothing in Section 12.2 will relieve any Party to this Agreement of liability for breach of this Agreement occurring prior to any termination, or for breach of any provision of this Agreement that specifically survives termination hereunder.  The Confidentiality Agreement shall not be affected by a termination of this Agreement.
		

		
			 
		

		
			ARTICLE XIII.
		

		
			ASSUMPTION; INDEMNIFICATION AND WAIVERS
		

		
			Section 13.1Assumed Obligations.  Without limiting Buyer’s rights to indemnity under this Agreement and Buyer’s rights under any Title Indemnity Agreement (as defined in Exhibit A), from and after the Closing Date, Buyer shall assume and hereby agrees to fulfill, perform, pay and discharge (or cause to be fulfilled, performed, paid or discharged) the Assumed Obligations.
		

		
			 
		

		
			Section 13.2Sellers’ Indemnity  From and after Closing, subject to the limitations set forth in this Agreement, Sellers shall indemnify, defend and hold harmless Buyer, its Affiliates and each of their respective officers, members, managers, partners, directors, employees and representatives (the “Buyer Indemnified Parties”) against any and all liabilities, obligations, damages, losses, costs, debts, penalties, fines, expenses (including reasonable attorneys’ and consultants’ fees and expenses), claims, causes of actions, payments, charges, judgments and  assessments (collectively “Losses”) incurred or suffered by the Buyer Indemnified Parties as a result of, relating to or arising out of:
		

		
			 
		

		
			(a)any breach of any representation or warranty contained in Article IV and Article V of this Agreement made by Sellers as though such representation or warranty were made as of the Closing Date (except to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been made as of such earlier date);
		

		 

		

			26

		

 

		
			(b)the breach of any covenant or agreement made or to be performed by Sellers under this Agreement; and
		

		
			(c)the Excluded Assets; and
		

		
			(d)obligations and liabilities of any kind whatsoever of Sellers arising from or relating to the Company Assets, whether known or unknown liquidated or contingent, which are not Assumed Obligations.
		

		
			In no event shall Sellers have any obligation to provide indemnification for any matters to the extent accounted for in the Closing Statement or any revised Closing Statement.  Notwithstanding anything herein to the contrary, Buyer acknowledges that it has had the opportunity to conduct due diligence and investigation with respect to the Company Assets, and in no event shall Sellers have any liability to the Buyer with respect to any breach of any representation, warranty or covenant under this Agreement to the extent that the Buyer was aware of such breach as of the Closing Date.
		

		
			Section 13.3Buyer’s Indemnity.  From and after Closing, subject to the limitations set forth in this Agreement, Buyer shall indemnify, defend and hold harmless each Seller, its Affiliates, and each of their respective officers, members, managers, partners, directors, employees and representatives (the “Seller Indemnified Parties”) against any and all Losses incurred or suffered by the Seller Indemnified Parties as a result of, relating to or arising out of:
		

		
			 
		

		
			(a)any breach of any representation or warranty made by Buyer in this Agreement as though such representation or warranty were made as of the Closing Date (except to the extent that such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been made as of such earlier date);
		

		
			(b)the breach of any covenant or agreement made or to be performed by Buyer under this Agreement; and
		

		
			(c)the Assumed Obligations.
		

		
			Section 13.4Express Negligence Rule.  THE INDEMNIFICATION AND WAIVER PROVISIONS IN THIS AGREEMENT SHALL BE ENFORCEABLE REGARDLESS OF WHETHER ANY PERSON (INCLUDING THE PERSON FROM WHOM INDEMNIFICATION IS SOUGHT) ALLEGES OR PROVES THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OF THE PERSON SEEKING INDEMNIFICATION OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED UPON THE PERSON SEEKING INDEMNIFICATION, EXCEPT IN THE CASE OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT BY SUCH PERSON. 
		

		
			 
		

		
			Section 13.5Limitations on Liability.
		

		
			 
		

		
			(a)Except as set forth below, a Buyer Indemnified Party will not be entitled to indemnity under Section 13.2(b) of this Agreement for Losses with respect to any individual Claim that does not equal or exceed one hundred thousand Dollars ($100,000) (the “Individual Indemnity Threshold”) and all such Claims that equal or exceed the Individual Indemnity Threshold must collectively also exceed the Indemnity Deductible, and thereafter, the Buyer Indemnified Parties 

		 

		

			27

		

 

shall only be entitled to indemnity for the amount in excess of the Indemnity Deductible, subject to the limitations set forth in this Agreement.  Except as set forth below, the maximum aggregate liability of Sellers under Section 13.2(b) of this Agreement shall not exceed the Indemnity Cap.  The Indemnity Deductible and the Indemnity Cap shall not apply to any claim for indemnification under Section 13.2(a) with respect to any breach of the Fundamental Representations.
		

		
			(b)Survival.
		

		
			(i)Except as otherwise expressly provided herein, the representations, warranties and covenants of the Parties under this Agreement shall survive the Closing; provided, however, that:
		

		
			(a)except for the Fundamental Representations, all other representations and warranties of Sellers shall survive the Closing for a period of six (6) months;
		

		
			(b)the Fundamental Representations shall survive the Closing for the period of the applicable statute of limitations;
		

		
			(c)all covenants and agreements of Sellers in this Agreement shall survive the Closing for a period of six (6) months, except for (i) Sellers’ covenants in Section 3.7 and Article XIV, which shall survive for the applicable statute of limitations; and (ii) Sellers’ covenants in this Article XIII, which shall survive the Closing for the period specified in this Article XIII;  
		

		
			(d)Buyer’s representations and warranties set forth in this Agreement shall survive the Closing forever; and
		

		
			(e)all covenants and agreements of Buyer in this Agreement shall survive the Closing for a period of twelve (12) months, except for (i) Buyer’s covenants in Section 3.7,  Section 7.3 and Article XIV, which shall survive for the applicable statute of limitations plus ninety (90) days; (ii) Buyer’s covenants in Section 15.1, which shall survive for a period of seven (7) years; (iii) Buyer’s covenants in Section 15.2, which shall survive without limitation as to duration; and (iv) Buyer’s covenants in this Article XIII, which shall survive the Closing for the period specified in this Article XIII;
		

		
			(ii)Subject to Section 13.5(b)(iii) below, the Parties’ respective indemnity obligations under this Article XIII shall survive as follows:
		

		
			(a)Sellers’ indemnities in Section 13.2(a) and Buyer’s indemnities in Section 13.3(a) shall terminate as of the termination date of each respective representation or warranty that is subject to indemnification; provided that if there is no termination date for a representation or warranty, then the indemnities provided with respect thereto shall survive the Closing without time limit;
		

		
			(b)Sellers’ indemnities in Section 13.2(b) and Buyer’s indemnities in Section 13.3(b) shall terminate as of the termination date of each respective covenant that is subject to indemnification; provided that if there is no termination date for a 

		 

		

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covenant, then the indemnities provided with respect thereto shall survive the Closing without time limit;
		

		
			(c)Sellers’ indemnities in Section 13.2(c) shall survive the Closing for a period of twelve (12) months;
		

		
			(d)Buyer’s indemnities in Section 13.3(c) shall survive the Closing without time limit; and
		

		
			(e)Sellers’ indemnities in Section 13.2(d) shall survive the Closing for a period of six (6) months.
		

		
			(iii)Any assertion by any Indemnified Party of Losses under this Article XIII must be made in a Notice delivered to the Indemnifying Party (or not at all) on or prior to the end of the survival period applicable to such indemnity as provided above, and the Indemnified Parties’ right to indemnification under this Article XIII shall be deemed waived and released if not made on or prior to the end of such survival period.  Notwithstanding the foregoing, there shall be no termination of any bona fide claim asserted pursuant to the indemnities in this Article XIII if such bona fide claim is asserted prior to the date of termination for the applicable indemnity, and with respect to a timely asserted bona fide claim for indemnification, the Indemnifying Party’s indemnity covenants under this Article XIII shall survive until performed.
		

		
			(c)Reductions.  The amount of any Losses subject to indemnification under this Article XIII shall be reduced or reimbursed, as the case may be, by any third-party insurance proceeds and third-party recoveries actually received by the Indemnified Parties with respect to such Losses (net of any expenses or costs incurred in connection with the claim or collection relating thereto and any increase in premiums as a result thereof).  The Indemnified Parties shall use commercially reasonable efforts to collect any amounts available under such insurance coverage and from such other third-party alleged to have responsibility.  If an Indemnified Party receives an amount under insurance coverage or from such third-party with respect to Losses that were the subject of indemnification under this Article XIII at any time subsequent to indemnification provided thereunder, then such Indemnified Party shall promptly reimburse the Indemnifying Party for such amount (net of any expenses or costs incurred in connection with the claim or collection relating thereto and any increase in premiums as a result thereof).
		

		
			(d)Mitigation. Each Indemnified Party shall make reasonable efforts to mitigate or minimize Losses under this Agreement upon and after becoming aware of any event or condition which would reasonably be expected to give rise to any Losses that are indemnifiable under this Article XIII.  If an Indemnified Party fails to so mitigate an indemnifiable loss under the preceding sentence, the Indemnifying Party shall have no liability for any portion of such loss that reasonably could have been avoided had the Indemnified Party made such efforts.
		

		
			(e)Payment.  Subject to Section 13.5(a), all amounts for which indemnification is provided under Section 14.1(b) and this Article XIII will be paid in cash in immediately available Dollar funds upon (i) agreement of Buyer and Sellers with respect to the amount thereof or (ii) a final, binding and non-appealable judgment of a court of competent jurisdiction concerning same. 
		

		 

		

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			Section 13.6Procedures.  Claims for indemnification under this Agreement shall be asserted and resolved as follows:
		

		
			 
		

		
			(a)Third-Party Claim.  If any Person entitled to seek indemnification under Article XIII (an “Indemnified Party”) receives written notice of the assertion or commencement of any claim asserted against an Indemnified Party by a third-party (“Third-Party Claim”) in respect of any matter that is subject to indemnification under Article XIII, the Indemnified Party shall promptly (i) notify the Party obligated to the Indemnified Party pursuant to this Article XIII (the “Indemnifying Party”) of the Third-Party Claim and (ii) transmit to the Indemnifying Party a Notice (a “Claim Notice”) describing in reasonable detail the nature of the Third-Party Claim, a copy of all papers served with respect to the Third-Party Claim (if any), the Indemnified Party’s best estimate of the amount of Losses attributable to the Third-Party Claim and the basis of the Indemnified Party’s request for indemnification under this Agreement.  Failure to timely provide such Claim Notice shall not affect the right of the Indemnified Party’s indemnification hereunder, except to the extent the Indemnifying Party is prejudiced by such delay or omission.
		

		
			(b)Indemnifying Party.  Except with respect to Tax Audits described in Section 14.2, the Indemnifying Party shall have the right to defend the Indemnified Party against such Third-Party Claim.  If the Indemnifying Party notifies the Indemnified Party that the Indemnifying Party elects to assume the defense of the Third-Party Claim (such election to be without prejudice to the right of the Indemnifying Party to dispute whether such claim is an indemnifiable Loss under this Agreement), then the Indemnifying Party shall have the right to defend such Third-Party Claim with counsel selected by the Indemnifying Party (who shall be reasonably satisfactory to the Indemnified Party), by all appropriate proceedings, to a final conclusion or settlement at the discretion of the Indemnifying Party in accordance with this Section 13.6(b).  The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided that the Indemnifying Party shall not enter into any settlement agreement or consent to the entry of any judgment with respect thereto without the written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned, or delayed) that (i) does not result in a final resolution of the Indemnified Party’s liability to the third-party with respect to the Third-Party Claim (including, in the case of a settlement, an unconditional written release of the Indemnified Party from all further liability in respect of such Third-Party Claim) or (ii) may materially and adversely affect the Indemnified Party (other than as a result of money damages covered by the indemnity).  If requested by the Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense of the Indemnifying Party, to cooperate with the Indemnifying Party and its counsel in contesting any Third-Party Claim which the Indemnifying Party elects to contest pursuant to this Section 13.6(b), including the making of any related counterclaim against the Person asserting the Third-Party Claim or any cross complaint against any Person.  The Indemnified Party may participate in, but not control, any defense or settlement of any Third-Party Claim controlled by the Indemnifying Party pursuant to this Section 13.6(b), and the Indemnified Party shall bear its own costs and expenses with respect to such participation.
		

		
			(c)Indemnified Party.  Except with respect to Tax Audits described in Section 14.2, if the Indemnifying Party does not notify the Indemnified Party that the Indemnifying Party elects to defend the Indemnified Party pursuant to Section 13.6(b), then the Indemnified Party shall have the right to defend, and be reimbursed for its reasonable cost and expense (but only if the 

		 

		

			30

		

 

Indemnified Party is actually entitled to indemnification hereunder) in regard to the Third-Party Claim with counsel selected by the Indemnified Party (who shall be reasonably satisfactory to the Indemnifying Party), by all appropriate proceedings, which proceedings shall be prosecuted diligently by the Indemnified Party.  In such circumstances, the Indemnified Party shall defend any such Third-Party Claim in good faith and have full control of such defense and proceedings; provided, however, that the Indemnified Party may not enter into any compromise or settlement of such Third-Party Claim if indemnification is to be sought hereunder, without the Indemnifying Party’s consent (which consent shall not be unreasonably withheld, conditioned or delayed).  The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this Section 13.6(c), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation.
		

		
			(d)Direct Claim.  Any claim by the Indemnified Party on account of Losses that do not result from a Third-Party Claim (a “Direct Claim”) will be asserted by giving the Indemnifying Party reasonably prompt Notice thereof, but in any event not later than thirty (30) days after the Indemnified Party becomes aware of the events that gave rise to such Direct Claim.  Such Notice by the Indemnified Party will describe the Direct Claim in reasonable detail, will include copies of all available material written evidence thereof and will indicate the estimated amount, if reasonably practicable, of Losses that have been or may be sustained by the Indemnified Party.  The Indemnifying Party will have a period of ten (10) Business Days within which to respond in writing to such Direct Claim.  If the Indemnifying Party does not so respond within such ten (10) Business Day period, the Indemnifying Party will be deemed to have rejected such Direct Claim, in which event the Indemnified Party will be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this Agreement.
		

		
			Section 13.7Waiver of Consequential Damages.  WITH RESPECT TO ANY AND ALL LOSSES FOR WHICH INDEMNIFICATION MAY BE AVAILABLE HEREUNDER, NO INDEMNIFYING PARTY SHALL HAVE ANY LIABILITY FOR ANY CONSEQUENTIAL, INDIRECT, PUNITIVE, EXEMPLARY OR SPECIAL DAMAGES WITH RESPECT TO ANY CLAIM FOR WHICH SUCH INDEMNIFYING PARTY MAY HAVE LIABILITY PURSUANT TO THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS WAIVER SHALL NOT APPLY TO THE EXTENT SUCH CONSEQUENTIAL, INDIRECT, PUNITIVE, EXEMPLARY OR SPECIAL DAMAGES ARE AWARDED IN A PROCEEDING BROUGHT OR ASSERTED BY A THIRD-PARTY AGAINST AN INDEMNIFIED PARTY.
		

		
			 
		

		
			Section 13.8Waivers and Disclaimers.
		

		
			 
		

		
			(a)NO RELIANCE.  BUYER HAS REVIEWED AND HAS ACCESS TO ALL CONTRACTS, DOCUMENTS, RECORDS AND INFORMATION WHICH IT HAS DESIRED TO REVIEW IN CONNECTION WITH ITS DECISION TO ENTER INTO THIS AGREEMENT, AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.  BUYER HAS NOT RELIED UPON ANY REPRESENTATION, WARRANTY, STATEMENT, ADVICE, DOCUMENT, PROJECTION OR OTHER INFORMATION OF ANY TYPE PROVIDED BY ANY SELLER, OR ITS AFFILIATES, OR ANY OF THEIR REPRESENTATIVES, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLERS SET FORTH IN THIS AGREEMENT.  IN DECIDING TO ENTER INTO THIS AGREEMENT, AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED 

		 

		

			31

		

 

HEREBY, BUYER HAS RELIED SOLELY UPON ITS OWN KNOWLEDGE, INVESTIGATION AND ANALYSIS (AND THAT OF ITS REPRESENTATIVES) AND NOT ON ANY DISCLOSURE OR REPRESENTATION MADE BY, OR ANY DUTY TO DISCLOSE ON THE PART OF SELLERS OR THEIR AFFILIATES, OR ANY OF THEIR REPRESENTATIVES, OTHER THAN THE REPRESENTATIONS AND WARRANTIES OF SELLERS SET FORTH IN THIS AGREEMENT.  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT, NOTHING IN THIS AGREEMENT SHALL RESTRICT OR IN ANY WAY LIMIT CLAIMS BY THE PARTIES WITH RESPECT TO BREACHES OR CLAIMS BASED UPON FRAUD, AS TO WHICH THE PARTIES SHALL HAVE ALL OF THEIR RIGHTS OR REMEDIES AT LAW.
		

		
			(b)LIMITED DUTIES.  ANY AND ALL DUTIES AND OBLIGATIONS WHICH ANY PARTY MAY HAVE TO THE OTHER PARTY WITH RESPECT TO OR IN CONNECTION WITH THE COMPANY ASSETS, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY ARE LIMITED TO THOSE IN THIS AGREEMENT.  THE PARTIES DO NOT INTEND (i) THAT THE DUTIES OR OBLIGATIONS OF ANY PARTY, OR THE RIGHTS OF ANY PARTY, SHALL BE EXPANDED BEYOND THE TERMS OF THIS AGREEMENT ON THE BASIS OF ANY LEGAL OR EQUITABLE PRINCIPLE OR ON ANY OTHER BASIS WHATSOEVER OR (ii) THAT ANY EQUITABLE OR LEGAL PRINCIPLE OR ANY IMPLIED OBLIGATION OF GOOD FAITH OR FAIR DEALING OR ANY OTHER MATTER REQUIRES ANY PARTY TO INCUR, SUFFER, OR PERFORM ANY ACT, CONDITION, OR OBLIGATION CONTRARY TO THE TERMS OF THIS AGREEMENT AND THAT IT WOULD BE UNFAIR, AND THAT THEY DO NOT INTEND, TO INCREASE ANY OF THE OBLIGATIONS OF ANY PARTY UNDER THIS AGREEMENT ON THE BASIS OF ANY IMPLIED OBLIGATION OR OTHERWISE.
		

		
			(c)DISCLAIMER.  THE COMPANY ASSETS BEING TRANSFERRED TO BUYER ARE BEING ACCEPTED BY BUYER IN THEIR “AS IS, WHERE IS” CONDITION AND STATE OF REPAIR, AND WITH ALL FAULTS AND DEFECTS, WITHOUT, SUBJECT TO THE EXCEPTION BELOW, ANY REPRESENTATION, WARRANTY OR COVENANT OF ANY KIND OR NATURE, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MARKETABILITY, QUALITY, CONDITION, CONFORMITY TO SAMPLES, MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED BY SELLERS AND WAIVED BY BUYER, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLERS SET FORTH IN THIS AGREEMENT.  BUYER RECOGNIZES THAT THE COMPANY ASSETS HAVE BEEN USED FOR OIL AND GAS DRILLING, COMPLETING, FRACTURING, PRODUCTION, GATHERING, PIPELINE, TRANSPORTATION, STORAGE AND RELATED OPERATIONS.  PHYSICAL CHANGES IN THE COMPANY ASSETS AND IN THE LANDS INCLUDED THEREIN MAY HAVE OCCURRED AS A RESULT OF SUCH USES.  THE COMPANY ASSETS ALSO MAY INCLUDE BURIED PIPELINES AND OTHER EQUIPMENT, THE LOCATIONS OF WHICH MAY NOT BE KNOWN BY SELLERS OR READILY APPARENT BY A PHYSICAL INSPECTION OF THE COMPANY ASSETS.  IT IS UNDERSTOOD AND AGREED THAT BUYER SHALL HAVE INSPECTED PRIOR TO CLOSING (OR SHALL BE DEEMED TO HAVE WAIVED ITS RIGHT TO INSPECT) THE LEASES, EQUIPMENT, PIPELINES AND THE ASSOCIATED PREMISES INCLUDED IN THE COMPANY ASSETS AND SATISFIED ITSELF AS TO THEIR PHYSICAL AND 

		 

		

			32

		

 

ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, AND THAT BUYER SHALL ACCEPT ALL OF THE SAME IN THEIR “AS IS, WHERE IS” CONDITION AND STATE OF REPAIR, AND WITH ALL FAULTS AND DEFECTS, INCLUDING, BUT NOT LIMITED TO, THE PRESENCE OF NORM AND MAN-MADE MATERIAL FIBERS, SUBJECT TO THE REPRESENTATIONS AND WARRANTIES OF SELLERS SET FORTH IN THIS AGREEMENT.
		

		
			(d)ADDITIONAL DISCLAIMERS.  SELLERS MAKE NO REPRESENTATION, COVENANT OR WARRANTY, EXPRESS, IMPLIED OR STATUTORY, (i) AS TO THE ACCURACY OR COMPLETENESS OF ANY DATA OR RECORDS DELIVERED TO BUYER WITH RESPECT TO THE COMPANY ASSETS (INCLUDING, WITHOUT LIMITATION, ANY PROCESSING, REPROCESSING OR OTHER INTERPRETATION OR ANALYSIS BY SELLERS OR ANY OF THEIR AFFILIATES OF ANY SEISMIC DATA INCLUDED IN THE COMPANY ASSETS) OR (ii) CONCERNING THE QUALITY OR QUANTITY OF HYDROCARBON RESERVES, IF ANY, ATTRIBUTABLE TO THE COMPANY ASSETS, OR THE ABILITY OF THE COMPANY ASSETS TO PRODUCE HYDROCARBONS, OR THE PRODUCT PRICES WHICH ANY PERSON IS OR WILL BE ENTITLED TO RECEIVE FROM THE SALE OF ANY SUCH HYDROCARBONS.
		

		
			Section 13.9Exclusive Remedy and Release.  The indemnification and remedies set forth in Section 7.3,  Article XIV, this Article XIII,  Exhibit A and any Title Indemnity Agreement (as defined in Exhibit A) shall constitute the sole and exclusive post-Closing remedies of the Parties with respect to any breach of representation or warranty or non-performance of any covenant or agreement contained in this Agreement.  Except as provided in this Agreement or any Title Indemnity Agreement (as defined in Exhibit A), if the Closing occurs, each of Buyer and Sellers hereby waives, releases, acquits, and forever discharges the other, and all of the Buyer Indemnified Parties or Seller Indemnified Parties, as applicable, or any other Person acting on behalf of the other, of and from any and all Losses whatsoever, whether direct or indirect, known or unknown, foreseen or unforeseen, which such party, as applicable, may have or which may arise in the future directly or indirectly arising out of the transactions contemplated hereby, including any of the foregoing that is from or relating to the possession, use, handling, management, disposal, investigation, remediation, cleanup, or release of any Hazardous Substances or any Environmental Law applicable thereto. 
		

		
			 
		

		
			ARTICLE XIV.
		

		
			TAX MATTERS
		

		
			Section 14.1Responsibility for Filing Tax Returns and Paying Taxes.
		

		
			 
		

		
			(a)Filing.  Sellers shall, to the extent it has the legal right to, file all Tax Returns required to be filed by or with respect to the Company Assets for a Pre-Closing Tax Period that are required to be filed prior to or on the Closing Date and any Tax Returns that are required to be filed as a result of the sale of the Company Assets.  If Closing occurs, Buyer shall file all other Tax Returns required to be filed by or with respect to the Company Assets.
		

		
			(b)Payment.  Subject to the limitations of Section 14.4 and Section 14.6, Sellers shall pay Taxes owed and payable by Sellers and the assets and operations of Sellers at any 

		 

		

			33

		

 

time prior to or on the Closing Date.  Sellers shall indemnify and hold harmless Buyer and its Affiliates from and against all Taxes (except Taxes that are included in the calculation of the Buyer’s Credit) with respect to (i) the Company Assets attributable to any Pre-Effective Date Tax Period or portion of any Straddle Period prior to and including the Effective Date; (ii) the Excluded Assets; and (iii) the sale of the Company Assets.  If Closing occurs, Buyer shall pay all other Taxes owed with respect to any of Company Assets.  Buyer shall, with respect to any Tax Return for which the Buyer is responsible for preparing and filing, make the Tax work papers for such Tax Return available for review by Sellers if the Tax Return is with respect to Taxes for which Sellers may be liable (in whole or in part) hereunder or under applicable law.  Buyer shall make such work papers available for review sufficiently in advance of the due date for filing such Tax Returns to provide Sellers with a meaningful opportunity to analyze and comment on such Tax Returns and have such Tax Returns modified before filing.  Any Tax Return which includes or is based on the Company Assets for any taxable period beginning before and ending after the Closing Date, and any Tax Return in respect of any Taxes for which Sellers may be liable (in whole or in part) hereunder shall be prepared in accordance with past Tax accounting practices used with respect to the Tax Returns in question (unless such past practices are no longer permissible under the applicable law), and to the extent any items are not covered by past practices (or in the event such past practices are no longer permissible under the applicable tax law), in accordance with reasonable tax accounting practices selected by the filing party with respect to such Tax Return under this Agreement with the consent (not to be unreasonably withheld or delayed) of the non-filing party.
		

		
			(c)Straddle Period.  For purposes of this Agreement, liability for Taxes with respect to the Company Assets with respect to any Straddle Period shall be apportioned as follows:  property, ad valorem and similar Taxes assessed with respect to any Straddle Period shall be apportioned between the Sellers and the Buyer on a ratable daily basis, and Sellers shall pay any such Taxes for any Pre-Effective Date Tax Period or portion of the Straddle Period prior to and including the Effective Date.  All other Taxes shall be apportioned based on an interim closing of the books of the Company Assets as of the end of the Effective Time, provided that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions) shall be allocated between the period ending on and including the Effective Date and the period beginning after the Effective Date in proportion to the number of days in each period.  If Closing occurs, Buyer and Sellers shall each timely provide the other with all information and cooperation reasonably requested by the other to prepare any Tax Return relating to the Company Assets or the transactions contemplated by this Agreement.
		

		
			(d)Texas Franchise Taxes.   Notwithstanding any provision of this Agreement to the contrary, the responsibility for Texas franchise Taxes with respect to the operations of the Company Assets shall be prorated between Sellers and Buyer as of the Effective Date, with the Sellers responsible for such Texas franchise Taxes for all periods on or prior to the Effective Date, and such proration based on a closing of the books and the operational results of the Company Assets for the year of the Effective Date, notwithstanding that such Texas franchise Taxes are payable in a subsequent year.  Parties acknowledge this transaction is not subject to Texas Franchise Taxes.
		

		
			Section 14.2Responsibility for Tax Audits.  Sellers shall control any Tax Audit relating to Taxes for which Sellers are liable pursuant to Section 14.1, and if Closing occurs, Buyer shall 

		 

		

			34

		

 

control any other Tax Audit relating to Taxes for which Buyer is liable pursuant to Section 14.1; provided, however, that if a Tax Audit relates to Taxes for which both Parties could be liable under this Agreement, to the extent practicable, the Tax items with respect to such Tax Audit will be distinguished and each Party will have the option to control the defense and settlement of those Taxes for which it could be so liable, but if any Tax item cannot be identified as being a liability of only one Party or cannot be separated from a Tax item for which the other Party is liable, Buyer, at its expense, shall have the option to control the defense and settlement of the Tax Audit, provided that Buyer shall keep Sellers notified of any developments in such Tax Audit and Sellers shall have the right to participate in such Tax Audit at its own expense; and provided further that no such matter shall be settled without the written consent of Sellers, not to be unreasonably withheld, delayed or conditioned.  Buyer and Sellers shall each timely provide the other with all information and cooperation reasonably requested to defend a Tax Audit with respect to Taxes relating to the Company Assets or the transactions contemplated by this Agreement.  Each Party shall provide the other with notice of any pending or threatened Tax Audits that could adversely affect the other.
		

		
			 
		

		
			Section 14.3Tax Refunds.  The Parties shall be entitled to any refund, offset or credit with respect to Taxes for which the Party is responsible pursuant to Section 14.1 or Section 14.4.  If a Party receives a refund, offset or credit to which the other Party is entitled, the Party receiving the refund, offset or credit shall pay it to the Party entitled to the refund within ninety (90) Business Days after receipt and usage thereof.
		

		
			 
		

		
			Section 14.4Transfer Taxes.  Buyer shall be responsible for and indemnify Sellers against any state or local transfer, sales, use, stamp, registration or other similar Taxes resulting from the transactions contemplated by this Agreement.  The Parties shall reasonably cooperate in good faith to minimize, to the extent permissible under applicable Law, the amount of any such Taxes.
		

		
			 
		

		
			Section 14.5Tax Treatment of Indemnities.  Any indemnity paid by a Party to another Party pursuant to this Article XIV or Article XIII shall be treated for federal, state and local income Tax purposes, as an adjustment to the Purchase Price, unless otherwise required by Law or as agreed by the Parties.
		

		
			 
		

		
			Section 14.6Survival and Conflict.  Notwithstanding any provision of this Agreement to the contrary, the obligations set forth in Article XIV shall survive Closing for the applicable statute of limitations plus 90 days.  Further, in the event of a conflict between the provisions of this Article XIV and any other provision of this Agreement, this Article XIV shall control. 
		

		
			 
		

		
			ARTICLE XV.
		

		
			OTHER POST-CLOSING COVENANTS
		

		
			Section 15.1Books and Records.
		

		
			 
		

		
			(a)Delivery of Records.  Sellers shall deliver the Records to Buyer at or as soon as practicable after the Closing.
		

		
			(b)Retention.  Sellers may retain copies of any or all of the Records.
		

		 

		

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			(c)Record Preservation.  Buyer shall preserve and keep a copy of all Records in Buyer’s possession for a period of at least seven (7) years after the Closing Date.  After such seven (7) years year period, before Buyer shall dispose of any such Records, Buyer shall give Sellers at least sixty (60) days’ Notice to such effect, and Sellers shall be given an opportunity during such period, at its cost and expense, to remove and retain all or any part of such Records as Sellers may select.  Buyer shall provide to Sellers, at no cost or expense to Sellers, full access to such Records as remain in Buyer’s possession and full access to the properties and employees of Buyer in connection with matters relating to the business or operations of the Company Assets on or before the Closing Date and any disputes relating to this Agreement.
		

		
			Section 15.2Use of Seller Marks.  Buyer acknowledges and agrees that it obtains no right, title, interest, license or any other right whatsoever to use the Seller Marks.  Buyer shall, within sixty (60) days after the Closing Date, remove the Seller Marks from the Company Assets, including signage, and provide written verification thereof to Sellers promptly after completing such removal.  Buyer agrees never to challenge Sellers’ (or their Affiliates’) ownership of the Seller Marks or any application for registration thereof or any registration thereof or any rights of Sellers or their Affiliates therein as a result, directly or indirectly, of its ownership of the Company Assets.  Buyer will not do any business or offer any goods or services under the Seller Marks.  Buyer will not send, or cause to be sent, any correspondence or other materials to any Person on any stationery that contains any Seller Marks or otherwise operate the Company Assets in any manner which would or might reasonably be expected to confuse any Person into believing that Buyer has any right, title, interest, or license to use the Seller Marks.
		

		
			 
		

		
			ARTICLE XVI.
		

		
			MISCELLANEOUS
		

		
			Section 16.1Notices.  Any notice, communication, request, instruction or other document by any party to another required or permitted hereunder shall be given in writing and addressed as set forth below.  Any such notice, communication, request, instruction or other document shall be deemed to have been duly made or given and the receiving Party charged with notice as follows:  (a) if personally delivered, when received; (b) if sent by facsimile, with electronic confirmation of delivery, if sent during normal business hours on a Business Day, and if not sent during normal business hours on a Business Day, on the next subsequent Business Day; (c) if mailed certified mail, return receipt requested, on the day such notice is received, and if such day is not a Business Day, on the next subsequent Business Day, or (d) if sent by overnight courier, the next Business Day after placement into the custody of the overnight courier.  All notices shall be addressed as follows:
		

		
			 
		

		
			If to Buyer, to:
		

		
			A. Blaine Hanks
		

		
			Gateway Resources U.S.A., Inc. 
		

		
			1821 Arbor Dr.
		

		
			Bartlesville, Oklahoma 74006
		

		
			Attention:  A. Blaine Hanks
		

		
			E-Mail:  gateres@aol.com
		

		
			

		 

		

			36

		

 

with a copy (which shall not constitute Notice) to:
		

		
			SEK Energy Operating, LLC.
		

		
			P.O. Box 55
		

		
			Benedict, Kansas 66714
		

		
			Attention:  Douglas L. Lamb
		

		
			Fax:  620-698-2180
		

		
			E-Mail:  doug@sekenergy.com
		

		
			If to Sellers, to:
		

		
			c/o Sanchez Production Partners LP
		

		
			1000 Main St., Suite 3000
		

		
			Houston, Texas  77002
		

		
			Attention:  Mr. Charles C. Ward, Chief Financial Officer and Secretary
		

		
			Fax:  (832) 308 - 3720
		

		
			E-Mail:  Chuck.Ward@sanchezpp.com
		

		
			with a copy (which shall not constitute Notice) to:
		

		
			Andrews Kurth LLP
		

		
			600 Travis, Suite 4200
		

		
			Houston, Texas  77002
		

		
			Attention:  Scott Olson
		

		
			Fax:  (713) 238-7410
		

		
			E-Mail:  solson@andrewskurth.com
		

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

		
			Section 16.2Further Assurances.  Subject to the terms and conditions of this Agreement, each Party will use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable, under applicable Law or otherwise, to consummate the transactions contemplated by this Agreement.  The Parties agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement in accordance with the terms hereof.
		

		
			 
		

		
			Section 16.3Fees and Expenses.  Except as otherwise provided in this Agreement, all fees and expenses, including fees and expenses of counsel, financial advisors, and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such fee or expense.
		

		
			 
		

		
			Section 16.4Assignment.  No Party shall assign this Agreement or any part hereof without the prior written consent of the other Party.  Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns. 
		

		
			 
		

		 

		

			37

		

 

		
			Section 16.5Rights and Obligations of Third Parties.  Except for the provisions of Article XIII, which are intended to be enforceable by the Indemnified Parties, nothing expressed or implied in this Agreement is intended or shall be construed to confer upon or give any Person, other than the Parties, any rights, remedies or obligations under or by reason of this Agreement.
		

		
			 
		

		
			Section 16.6Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any counterpart of this Agreement may be delivered by fax or an emailed PDF or other image of the executed signature page hereof.
		

		
			 
		

		
			Section 16.7Entire Agreement.  This Agreement (together with the Disclosure Schedules and exhibits to this Agreement), the Assignment and Assumption Agreement, and the Confidentiality Agreement constitute the entire agreement among the Parties with respect to the subject matter herein and therein and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the Parties or any of their respective Affiliates relating to the transactions contemplated hereby.
		

		
			 
		

		
			Section 16.8Disclosure Schedules.
		

		
			 
		

		
			(a)Prior to Closing, Sellers shall have the right to correct, supplement or amend the Disclosure Schedules with respect to any matter hereafter arising or discovered which, if existing or known at the date of this Agreement, would have been required to be set forth or described in the Disclosure Schedules.  Any such correction, supplement or amendment shall be delivered to Buyer as promptly as practicable after Sellers obtains Knowledge of such matter or makes such discovery and in any event no later than three (3) Business Days prior to the Closing Date.  For all purposes of this Agreement, including for purposes of determining whether the conditions set forth in Article X have been fulfilled, the Disclosure Schedules shall be deemed to include only that information contained therein on the date of this Agreement and shall be deemed to exclude all information contained in any such correction, supplement, or amendment thereto; provided, however, that if Closing shall occur, then all matters set forth on any such addition, supplement or amendment at or prior to Closing shall be waived and Buyer shall not be entitled to make a claim with respect thereto pursuant to the terms of this Agreement or otherwise.
		

		
			(b)Unless the context otherwise requires, all capitalized terms used in the Disclosure Schedules shall have the respective meanings assigned in this Agreement.  No reference to or disclosure of any item or other matter in the Disclosure Schedules shall be construed as an admission or indication that such item or other matter is material or that such item or other matter is required to be referred to or disclosed in the Disclosure Schedule.  No disclosure in the Disclosure Schedules relating to any possible breach or violation of any agreement or Law shall be construed as an admission or indication that any such breach or violation exists or has actually occurred. The inclusion of any information in the Disclosure Schedules shall not be deemed to be an admission or acknowledgment by Seller, in and of itself, that such information is material to or outside the ordinary course of the business of the Company or required to be disclosed on the Disclosure Schedules.
		

		 

		

			38

		

 

		
			Section 16.9Amendments.  This Agreement may be amended or modified in whole or in part, and terms and conditions may be waived, only by a duly authorized agreement in writing that makes reference to this Agreement and is executed by each Party.
		

		
			 
		

		
			Section 16.10Publicity.  Buyer and Sellers may make a press release or other public communication or announcement in connection with the execution of this Agreement, provided that the Person making such release, communication, or announcement provides the other Party reasonable opportunity to review and comment on any such release, communication, or announcement.  Except for the foregoing, all press releases or other public communications of any nature whatsoever relating to the transactions contemplated by this Agreement, and the method of the release for publication thereof, shall be subject to the prior written consent of Buyer and Sellers, which consent shall not be unreasonably withheld, conditioned, or delayed by such Party.  Nothing herein shall prevent a Party from publishing such press releases or other public communications as is necessary to satisfy such Party’s obligations at Law or under the rules of any stock or commodities exchange after consultation with the other Party.  If a Party believes it is required to issue or make any press release or announcement, such Party shall (i) give prompt notice thereof to the other Party; (ii) allow such other Party reasonable opportunity to review and provide comments with respect to the content of such press release or announcement; and (iii) use commercially reasonable efforts to incorporate any reasonable comment from any other Party prior to any release or announcement.
		

		
			 
		

		
			Section 16.11Severability.  If any court of competent jurisdiction holds any provision of this Agreement invalid or unenforceable, the other provisions of this Agreement shall remain in full force and effect.  The Parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the Parties to the greatest extent legally permissible.
		

		
			 
		

		
			Section 16.12Certain Remedies.  Sellers agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by Sellers prior to Closing or in connection with the consummation of Closing in accordance with their specific terms or were otherwise breached by Seller.  It is accordingly agreed that Buyer will be entitled to an injunction or injunctions to prevent breaches of this Agreement by Sellers prior to Closing or in connection with the consummation of Closing and to enforce specifically the terms and provisions hereof against Sellers in any court having jurisdiction, this being in addition to any other remedy to which Buyer is entitled at law or in equity, without posting any bond or other undertaking.  Prior to Closing, Sellers’ remedies for any breach by Buyer of this Agreement will be limited to those set forth in Section 12.1 and Section 12.2.  After Closing, the Parties will be entitled to any remedy available at law or in equity for breaches of this Agreement.
		

		
			 
		

		 

		

			39

		

 

		
			Section 16.13Governing Law; Jurisdiction.
		

		
			 
		

		
			(a)Law.  This Agreement shall be governed and construed in accordance with the Laws of the State of Oklahoma, without regard to the Laws that might be applicable under conflicts of laws principles.
		

		
			(b)Forum.  The Parties agree that the appropriate, exclusive and convenient forum for any disputes between any of the Parties hereto arising out of this Agreement or the transactions contemplated hereby shall be in any state or federal court in any of the Oklahoma Counties, and each of the Parties hereto irrevocably submits to the jurisdiction of such courts solely in respect of any legal proceeding arising out of or related to this Agreement.  The Parties further agree that the Parties shall not bring suit with respect to any disputes arising out of this Agreement or the transactions contemplated hereby in any court or jurisdiction other than the above specified courts.  The Parties further agree, to the extent permitted by Law, that a final and nonappealable judgment against a Party in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and amount of such judgment.  Except to the extent that a different determination or finding is mandated due to the applicable Law being that of a different jurisdiction, the Parties agree that all judicial determinations or findings by a state or federal court in Harris County, Texas, with respect to any matter under this Agreement shall be binding, subject to applicable appeal rights.
		

		
			(c)Jurisdiction.  To the extent that any Party has or hereafter may acquire any immunity from the jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, each such Party hereby irrevocably (i) waives such immunity in respect of its obligations with respect to this Agreement and (ii) submits to the personal jurisdiction of any court described in Section 16.13(b).
		

		
			(d)Waiver of Jury Trial.  The Parties hereto agree that they hereby irrevocably waive the right to trial by jury in any action to enforce or interpret the provisions of this Agreement.
		

		
			[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
		

		
			 
		

		
			

		 

		

			40

		

 

IN WITNESS WHEREOF this Agreement has been duly executed and delivered by each of the Parties as of the date first above written.
		

		
			 
		

			
					
						 

					
					
						SELLERS:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						CEP MID-CONTINENT LLC

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  Charles C. Ward

				
	
					
						 

					
					
						Name:

					
					
						Charles C. Ward

				
	
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						MID-CONTINENT OILFIELD SUPPLY, L.L.C.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  Charles C. Ward

				
	
					
						 

					
					
						Name:

					
					
						Charles C. Ward

				
	
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						NORTHEAST SHELF ENERGY, L.L.C.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  Charles C. Ward

				
	
					
						 

					
					
						Name:

					
					
						Charles C. Ward

				
	
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						BUYER:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Gateway Resources U.S.A., Inc.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  A. Blaine Hanks

				
	
					
						 

					
					
						Name:

					
					
						A. Blaine Hanks

				
	
					
						 

					
					
						Title:

					
					
						President

				

		
			 
		

		
			
		

		
			

		 

		

			Signature Page

		

 

AMENDMENT NO. 1 TO PURCHASE AND SALE AGREEMENT
		

		
			This AMENDMENT NO. 1 TO PURCHASE AND SALE AGREEMENT (this “Amendment”), effective as of June 15, 2016, is by and between (i) CEP Mid-Continent LLC, a Delaware limited liability company (the “Company”), (ii) Mid-Continent Oilfield Supply, L.L.C., an Oklahoma limited liability company (“Midcon”), (iii) Northeast Shelf Energy, L.L.C., an Oklahoma limited liability company (collectively with the Company and Midcon, the “Sellers”) and (iv) Gateway Resources U.S.A., Inc., an Oklahoma corporation (“Buyer”).  Each Seller and Buyer is sometimes referred to herein individually as a “Party” and they are sometimes collectively referred to herein as the “Parties.”
		

		
			Recitals:
		

		
			Sellers and Buyer entered into that certain Purchase and Sale Agreement, dated as of June 15, 2016 (the “Purchase Agreement”), pursuant to which the Parties agreed that Sellers would sell the Company Assets (as defined therein) to Buyer on the terms set forth therein.
		

		
			The Parties desire to amend the descriptions of the Company Assets contained in the Purchase Agreement to more accurately reflect the Company Assets being transferred by the Sellers to the Buyer at the Closing, as more fully set forth herein.
		

		
			NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Parties agree as follows:
		

		
			Section 16.14Definitions.  Capitalized terms used throughout this Amendment and not defined herein have the meanings ascribed to them in the Purchase Agreement.  
		

		
			 
		

		
			Section 16.15Amendments.  Exhibits C, D, E, F and G to the Purchase Agreement are hereby amended and replaced in their entirety with the corresponding exhibits included in Annex A attached hereto.
		

		
			Section 16.16Continuation.    Except as amended hereby, the Purchase Agreement shall remain in full force and effect.Section 16.17Governing Law.  This Amendment shall be governed and construed in accordance with the Laws of the State of Oklahoma, without regard to the Laws that might be applicable under conflicts of laws principles.
		

		
			 
		

		
			Section 16.18Severability.  If any court of competent jurisdiction holds any provision of this Amendment invalid or unenforceable, the other provisions of this Amendment shall remain in full force and effect.  The Parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Amendment, they shall take any actions necessary to render the remaining provisions of this Amendment valid and enforceable to the fullest extent permitted by Law and, to the extent necessary, shall amend or otherwise modify this Amendment to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the Parties to the greatest extent legally permissible.
		

		
			 
		

		
			

		 

		

			Signature Page

		

 

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by each of the Parties on July 15, 2016, effective as of the date first above written.
		

			
					
						 

					
					
						SELLERS:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						CEP MID-CONTINENT LLC

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  Charles C. Ward

				
	
					
						 

					
					
						Name:

					
					
						Charles C. Ward

				
	
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						MID-CONTINENT OILFIELD SUPPLY, L.L.C.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  Charles C. Ward

				
	
					
						 

					
					
						Name:

					
					
						Charles C. Ward

				
	
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						NORTHEAST SHELF ENERGY, L.L.C.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  Charles C. Ward

				
	
					
						 

					
					
						Name:

					
					
						Charles C. Ward

				
	
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						BUYER:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						Gateway Resources U.S.A., Inc.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  A. Blaine Hanks

				
	
					
						 

					
					
						Name:

					
					
						A. Blaine Hanks

				
	
					
						 

					
					
						Title:

					
					
						President

				

		
			 
		

		
			 
		

		 

		

			Signature Pagespp_Ex_10_2

		
			Exhibit 10.2
		

		
			 
		

		
			Execution Version
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			PURCHASE AND SALE AGREEMENT
		

		
			AMONG
		

		
			Sanchez energy corporation
		

		
			(“SN”),
		

		
			SN MIDSTREAM, LLC
		

		
			(“SELLER”)
		

		
			AND
		

		
			SANCHEZ PRODUCTION PARTNERS LP
		

		
			(“BUYER”)
		

		
			DATED AS OF JULY 5, 2016
		

		
			 
		

		
			 
		

		
			 
		

		
			

		 

 

TABLE OF CONTENTS
		

		
			 
		

			
					
						Article I . DEFINED TERMS 

					
1 
				
	
					
						 

					
					
						 

				
	
					
						Section 1.1      Defined Terms

					
1 
				
	
					
						 

					
					
						 

				
	
					
						Article II. PURCHASE AND SALE

					
9 
				
	
					
						 

					
					
						 

				
	
					
						Section 2.1      Purchase and Sale of Interests

					
9 
				
	
					
						Section 2.2      Consideration

					
9 
				
	
					
						Section 2.3      Earnout Payment

					
9 
				
	
					
						 

					
					
						 

				
	
					
						Article III. REPRESENTATIONS AND WARRANTIES RELATING TO THE SN PARTIES

					
10 
				
	
					
						 

					
					
						 

				
	
					
						Section 3.1      Organization of the SN Parties

					
10 
				
	
					
						Section 3.2      Authorization; Enforceability

					
10 
				
	
					
						Section 3.3      Ownership of Interests.

					
10 
				
	
					
						Section 3.4      No Conflict; Consents

					
11 
				
	
					
						 

					
					
						 

				
	
					
						Article IV. REPRESENTATIONS AND WARRANTIES RELATING TO THE Company and the interests

					
11 
				
	
					
						 

					
					
						 

				
	
					
						Section 4.1      Organization

					
11 
				
	
					
						Section 4.2      No Conflict; Consents

					
11 
				
	
					
						Section 4.3      Capitalization

					
12 
				
	
					
						Section 4.4      Absence of Litigation; Compliance with Law

					
12 
				
	
					
						Section 4.5      Bankruptcy

					
13 
				
	
					
						Section 4.6      Brokers and Finders

					
13 
				
	
					
						Section 4.7      Tax Matters

					
13 
				
	
					
						Section 4.8      Environmental Matters

					
13 
				
	
					
						Section 4.9      Material Contracts

					
14 
				
	
					
						Section 4.10    Employees

					
14 
				
	
					
						Section 4.11    Preferential Rights

					
14 
				
	
					
						Section 4.12    Permits

					
14 
				
	
					
						Section 4.13    Affiliate Transactions

					
14 
				
	
					
						Section 4.14    Projections and Budgets.

					
14 
				
	
					
						 

					
					
						 

				
	
					
						Article V. REPRESENTATIONS AND WARRANTIES OF BUYER

					
15 
				
	
					
						 

					
					
						 

				
	
					
						Section 5.1      Organization of Buyer

					
15 
				
	
					
						Section 5.2      Authorization; Enforceability

					
15 
				
	
					
						Section 5.3      No Conflict; Consents

					
15 
				
	
					
						Section 5.4      Absence of Litigation

					
15 
				
	
					
						Section 5.5      Brokers and Finders

					
15 
				
	
					
						Section 5.6      Buyer’s Independent Investigation

					
16 
				

		 

		

			i

		

		

			 

		

 

	
					
						Section 5.7      Independent Evaluation

					
16 
				
	
					
						Section 5.8      Acquisition as Investment

					
16 
				
	
					
						Section 5.9      Sufficiency of Funds

					
16 
				
	
					
						 

					
					
						 

				
	
					
						Article VI. PRE-CLOSING COVENANTS

					
16 
				
	
					
						 

					
					
						 

				
	
					
						Section 6.1      General

					
16 
				
	
					
						Section 6.2      Notices, Consents and Books and Records

					
17 
				
	
					
						Section 6.3      Operations of the Company

					
17 
				
	
					
						Section 6.4      Reasonable Access

					
17 
				
	
					
						Section 6.5      Insurance

					
18 
				
	
					
						Section 6.6      LLC Agreement; Securities; Subsidiaries

					
18 
				
	
					
						 

					
					
						 

				
	
					
						Article VII. POST-CLOSING COVENANTS

					
18 
				
	
					
						 

					
					
						 

				
	
					
						Section 7.1      Further Assurances

					
18 
				
	
					
						Section 7.2      Tax Matters

					
18 
				
	
					
						Section 7.3      Cooperation for Litigation and Other Actions

					
19 
				
	
					
						Section 7.4      Retention of and Access to Books and Records.

					
19 
				
	
					
						Section 7.5      Post-Closing Collection and Payment Matters

					
20 
				
	
					
						 

					
					
						 

				
	
					
						Article VIII. CONDITIONS TO CLOSE

					
20 
				
	
					
						 

					
					
						 

				
	
					
						Section 8.1      Condition to Close of Both Parties

					
20 
				
	
					
						Section 8.2      Conditions to Obligations of Buyer

					
20 
				
	
					
						Section 8.3      Conditions to Obligations of the SN Parties

					
21 
				
	
					
						 

					
					
						 

				
	
					
						Article IX. CLOSING

					
21 
				
	
					
						 

					
					
						 

				
	
					
						Section 9.1      Closing

					
21 
				
	
					
						Section 9.2      Deliveries by the SN Parties

					
21 
				
	
					
						Section 9.3      Deliveries by Buyer

					
22 
				
	
					
						Section 9.4      Deliveries to the Company

					
22 
				
	
					
						 

					
					
						 

				
	
					
						Article X. TERMINATION

					
22 
				
	
					
						 

					
					
						 

				
	
					
						Section 10.1    Termination of Agreement

					
22 
				
	
					
						Section 10.2    Effect of Termination.

					
23 
				
	
					
						 

					
					
						 

				
	
					
						Article XI. INDEMNIFICATION

					
23 
				
	
					
						 

					
					
						 

				
	
					
						Section 11.1    Indemnification

					
23 
				
	
					
						Section 11.2    Defense of Third-Party Claims

					
23 
				
	
					
						Section 11.3    Direct Claims

					
25 
				
	
					
						Section 11.4    Limitations

					
25 
				
	
					
						Section 11.5    Tax Treatment of Payment of Indemnity Costs

					
26 
				

		 

		

			ii

		

		

			 

		

 

	
					
						Section 11.6    Express Negligence Rule

					
26 
				
	
					
						 

					
					
						 

				
	
					
						Article XII. MISCELLANEOUS

					
26 
				
	
					
						 

					
					
						 

				
	
					
						Section 12.1    WAIVERS AND DISCLAIMERS

					
26 
				
	
					
						Section 12.2    Expenses

					
27 
				
	
					
						Section 12.3    Severability

					
27 
				
	
					
						Section 12.4    Notice

					
27 
				
	
					
						Section 12.5    Governing Law; Consent to Jurisdiction; Enforcement

					
28 
				
	
					
						Section 12.6    Confidentiality.

					
29 
				
	
					
						Section 12.7    Parties in Interest

					
30 
				
	
					
						Section 12.8    Assignment of Agreement

					
30 
				
	
					
						Section 12.9    Captions

					
30 
				
	
					
						Section 12.10  Counterparts

					
30 
				
	
					
						Section 12.11  Integration

					
30 
				
	
					
						Section 12.12  Amendment; Waiver

					
31 
				
	
					
						Section 12.13  Mitigation

					
31 
				
	
					
						Section 12.14  Privileged Information

					
31 
				
	
					
						 

					
					
						 

				
	
					
						Article XIII. INTERPRETATION

					
31 
				
	
					
						 

					
					
						 

				
	
					
						Section 13.1    Interpretation

					
31 
				
	
					
						Section 13.2    References, Gender, Number

					
32 
				

		
			 
		

		
			 
		

		
			 
		

		
			Schedules:
		

		
			Schedule 1.1 —  Knowledge
		

		
			Schedule 2.1 —  Capital Contributions; Earnout
		

		
			Schedule 3.4 —  No Conflicts; Consents - SN Parties
		

		
			Schedule 4.2 —  No Conflicts; Consents - the Company
		

		
			Schedule 4.9 —  Material Contracts
		

		
			Schedule 4.11—  Preferential Rights
		

		
			Schedule 6.3 —  Operations of the Company
		

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

			iii

		

		

			 

		

 

		

			

		

PURCHASE AND SALE AGREEMENT
		

		
			THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), is entered into on July 5, 2016 (the “Execution Date”), by and among Sanchez Energy Corporation, a Delaware corporation (“SN”), SN Midstream, LLC, a Delaware limited liability company (“Seller” and, together with SN, the “SN Parties”), and Sanchez Production Partners LP, a Delaware limited partnership (“Buyer”). The above-named entities are sometimes referred to in this Agreement each as a “Party” and collectively as the “Parties.” 
		

		
			WHEREAS, SN is the parent of Seller.
		

		
			WHEREAS, Seller owns 50% of the issued and outstanding membership interests (the “Interests”) in Carnero Gathering, LLC, a Delaware limited liability company (the “Company”).
		

		
			WHEREAS, the Company is developing and constructing a gas gathering pipeline (the “Gas Gathering Pipeline”) from an interconnection in Webb County, Texas to interconnection(s) with a gas processing facility being developed and constructed by Carnero Processing, LLC, a Delaware limited liability company (“CP”).
		

		
			WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the Interests, on and subject to the terms and conditions of this Agreement.
		

		
			NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Parties agree as follows:
		

		
			ARTICLE I.
DEFINED TERMS
		

		
			Section 1.1Defined Terms.  Unless the context expressly requires otherwise, the respective terms defined in this 0 shall, when used in this Agreement, have the respective meanings herein specified, with each such definition to be equally applicable both to the singular and the plural forms of the term so defined. 
		

		
			 
		

		
			“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with, such specified Person through one or more intermediaries or otherwise.  For the purposes of this definition, “control” means, where used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have correlative meanings; provided, however, that (i) the Company is not an Affiliate of either Buyer or the SN Parties or their subsidiaries and (ii) Buyer and its subsidiaries shall not be deemed to be Affiliates of the SN Parties or any of their subsidiaries.
		

		
			“Agreement” has the meaning set forth in the Preamble.
		

		
			“Applicable Law” means any applicable statute, law, regulation, ordinance, rule, judgment, rule of law, decree, Permit, requirement, or other governmental restriction or any similar form of decision of, or any provision or condition issued under any of the foregoing by, or any 

		 

		

			1

		

 

determination by any Governmental Authority having or asserting jurisdiction over the matter or matters in question, whether now or hereafter in effect and in each case as amended (including all of the terms and provisions of the common law of such Governmental Authority), as interpreted and enforced at the time in question, including Environmental Law.
		

		
			“Assignment Document” has the meaning set forth in 0.
		

		
			“Assumed Obligations” means all obligations and liabilities of any kind whatsoever arising from or relating to the Company, whether known or unknown, liquidated or contingent, but only to the extent such obligations and liabilities arise on or after the Effective Date or  relate to or are otherwise attributable to the period commencing on the Effective Date.  The Assumed Obligations shall not include the Retained Obligations.
		

		
			“Books and Records” means all of the records and files of the Company and other records and files in control of or maintained by the SN Parties prior to the Closing primarily related to the Company or the ownership of the Interests (that, in the case of the Company at or prior to the Closing, the SN Parties have the Legal Right to provide to Buyer), including the minute books and other limited liability company records of the Company and any plans, drawings, instruction manuals, operating and technical data and records, whether computerized or hard copy, Tax files, books, records, Tax Returns and Tax work papers, supplier lists, surveys, engineering records, maintenance records and studies, environmental records, environmental reporting information, emission data, testing and sampling data and procedures, construction, inspection and operating records, and any and all information necessary to meet compliance obligations with respect to Applicable Law.
		

		
			“Business Day” means any day that is not a Saturday, Sunday, or legal holiday in the State of Texas and that is not otherwise a federal holiday in the United States.
		

		
			“Buyer Indemnified Costs” means all Losses incurred or suffered by the Buyer Indemnified Parties as a result of, relating to or arising out of, (i) any breach of any representation or warranty contained in 0 or 0 made by the SN Parties as though such representation or warranty were made as of the Closing Date (except to the extent that such representation and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been made as of such earlier date); (ii) the breach of any covenant or agreement made or to be performed by the SN Parties under this Agreement and (iii) the Retained Obligations.
		

		
			“Buyer Indemnified Parties” means Buyer, its Affiliates and, from and after the Closing, the Company, and each of their respective officers, members, managers, partners, directors, employees and representatives.
		

		
			“Claim” means any existing or threatened future claim, demand, suit, action, investigation, proceeding, inquiry, condemnation, audit or cause of action of any kind or character (in each case, whether civil, criminal, investigative or administrative) before any court or other Governmental Authority or any arbitration proceeding, known or unknown, under any theory, including those based on theories of contract, tort, statutory liability, strict liability, employer liability, premises liability, products liability, breach of warranty or malpractice. 
		

		
			“Closing” has the meaning set forth in 0.  
		

		
			

		 

		

			2

		

		

			 

		

 

“Closing Date” has the meaning set forth in 0.
		

		
			“Company” has the meaning set forth in the Recitals.
		

		
			“Company Gathering Agreement” means that certain Amended and Restated Transportation Services Agreement, dated as of June 23, 2016, by and between the TPL Member and the Company, as amended, supplemented or modified from time to time.
		

		
			“Confidential Information” means any proprietary or confidential information that is competitively sensitive material or otherwise of value to a Party (including, with respect to the SN Parties prior to the Closing Date and Buyer after the Closing Date, the Company) or its Affiliates and not generally known to the public, including trade secrets, scientific or technical information, design, invention, process, procedure, formula, improvements, product planning information, marketing strategies, financial information, information regarding operations, consumer and/or customer relationships, consumer and/or customer identities and profiles, sales estimates, business plans, and internal performance results relating to the past, present or future business activities of a Party (including, with respect to the SN Parties prior to the Closing Date and Buyer after the Closing Date, the Company) or its Affiliates and the consumers, customers, clients and suppliers of any of the foregoing. Confidential Information includes such information as may be contained in or embodied by documents, substances, engineering and laboratory notebooks, reports, data, specifications, computer source code and object code, flow charts, databases, drawings, pilot plants or demonstration or operating facilities, diagrams, specifications, bills of material, equipment, prototypes and models, and any other tangible manifestation (including data in computer or other digital format) of the foregoing; provided,  however, that Confidential Information does not include information that a receiving Party can show (i) has been published or has otherwise become available to the general public as part of the public domain without breach of this Agreement; (ii) has been furnished or made known to the receiving Party without any obligation to keep it confidential by a third party under circumstances which are not known to the receiving Party to involve a breach of the third party’s obligations to a Party or its Affiliates; (iii) was developed independently of information furnished or made available to the receiving Party as contemplated under this Agreement; or (iv) has been published or otherwise disclosed as required by Applicable Law.  From and after the Closing Date, Confidential Information disclosed by the SN Parties to Buyer that relates to the Company shall become, and be treated as, Confidential Information of Buyer disclosed to the SN Parties (other than Books and Records to the extent utilized or intended to be utilized for purposes specified in clauses (i) through (v) of 0). 
		

		
			“Consents” means all notices to, authorizations, consents, orders or approvals of, or registrations, declarations or filings with, or expiration of waiting periods imposed by, any Governmental Authority, and any notices to, consents or approvals of any other third party. 
		

		
			“Contract” means any written contract, agreement, indenture, instrument, note, bond, loan, lease, easement, mortgage, franchise, license agreement, purchase order, binding bid or offer, binding term sheet or letter of intent or memorandum, commitment, letter of credit or any other legally binding arrangement, including any amendments or modifications thereof and waivers relating thereto.
		

		
			“CP” has the meaning set forth in the Recitals.
		

		
			

		 

		

			3

		

		

			 

		

 

“CP LLC Agreement” means that certain Limited Liability Company Agreement of CP, dated as of October 2, 2015, as amended, supplemented or modified from time to time.
		

		
			“CP Processing Agreement” means that certain Firm Gas Processing Agreement, dated as  of October 2, 2015, by and among the TPL Member and CP, as amended, supplemented or modified from time to time.
		

		
			“Earnout” means an amount, if positive, equal to (i) the Earnout Payment Amount, multiplied by (ii) (A) the aggregate quantity of Producer’s Gas, stated in Mcf, delivered to the Receipt Points for the immediately preceding month (as reflected in the invoice for such month used in the calculation of the Gathering Fee under Section 5.5(a)(iv) of the SN Catarina Gathering Agreement), plus (B) the aggregate quantity of Gas, stated in Mcf, delivered through the Gas Gathering Pipeline to the Raptor Plant and subsequently processed at the Raptor Plant for the immediately preceding month on behalf of Persons other than Producer or Buyer at a rate per MMBtu equal to or greater than the Gathering Fee in effect during such month, less (C) the number of days in the applicable month used to determine the quantity in clause (A) multiplied by 125,000.
		

		
			“Earnout Payment Amount” means $0.06.
		

		
			“Effective Date” means 12:01 a.m. Houston, Texas time on the Closing Date.
		

		
			“Encumbrance” means any mortgage, pledge, charge, hypothecation, easement, right of purchase, security interest, deed of trust, conditional sales agreement, encumbrance, interest, option, lien, right of first refusal, right of way, defect in title, encroachments or other restriction, whether or not imposed by operation of Applicable Law, any voting trust or voting agreement, stockholder agreement or proxy. 
		

		
			“Environmental Laws” means all Applicable Laws relating to health, safety, the protection of the environment, natural resources, or threatened or endangered species, pollution, or its impacts on human health, including those Laws relating to the storage, handling and use of chemicals and other Hazardous Substances and those relating to the generation, processing, treatment, storage, transportation, disposal or other management thereof.
		

		
			“Environmental Permit” means all Permits of Governmental Authorities required by Environmental Laws for the conduct of the business of the Company.
		

		
			“Exchange Act” means the Securities Exchange Act of 1934, as amended.
		

		
			“Execution Date” has the meaning set forth in the Preamble.
		

		
			“Force Majeure” has the meaning therefor set forth in the SN Catarina Gathering Agreement.
		

		
			“Fundamental Representations” has the meaning set forth in 0.
		

		
			“GAAP” means generally accepted accounting principles of the United States, consistently applied.
		

		
			

		 

		

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“Gas” has the meaning therefor set forth in the SN Catarina Gathering Agreement.
		

		
			“Gathering Fee” has the meaning therefor set forth in the SN Catarina Gathering Agreement.
		

		
			“Gas Gathering Pipeline” has the meaning set forth in the Recitals.
		

		
			“Gathering System” has the meaning therefor set forth in the SN Catarina Gathering Agreement.
		

		
			“General Partner” means Sanchez Production Partners GP LLC, a Delaware limited liability company.
		

		
			“Governmental Authority” means any federal, state, local, tribal, or foreign government, or any court of competent jurisdiction, regulatory or administrative agency, commission, or other governmental authority that exercises jurisdiction over Buyer, the SN Parties or the Company, as applicable.
		

		
			“Hazardous Substance” means any chemicals, constituents, fractions, derivatives, compounds or other substances that are defined or regulated as pollutants, contaminants, wastes, toxic substances, hazardous substances, hazardous materials, radioactive materials or radioactive wastes or that may form the basis of liability or obligations under any Environmental Laws.  Hazardous Substances shall also expressly include petroleum substances (and any components, fractions or derivatives thereof) and exploration and production wastes.
		

		
			“Hydrocarbons” means oil, gas, natural gas liquids, casinghead gas, coal bed methane, condensate and other gaseous and liquid hydrocarbons or any combination thereof.
		

		
			“In-Service Date” means the first day on which the Gathering System receives Producer’s Gas.
		

		
			“Indemnified Costs” means Buyer Indemnified Costs and Seller Indemnified Costs, as applicable. 
		

		
			“Indemnified Party” means Buyer Indemnified Parties and Seller Indemnified Parties. 
		

		
			“Indemnifying Party” has the meaning set forth in 0.
		

		
			“Indemnity Cap” means an amount equal to 20% of the Purchase Price.
		

		
			“Indemnity Deductible” means an amount equal to 1% of the Purchase Price.
		

		
			“Individual Indemnity Threshold” has the meaning set forth in 0.
		

		
			“Interests” has the meaning set forth in the Recitals.
		

		
			“Knowledge” means, (i) as to the SN Parties, the actual knowledge of those Persons listed in Schedule 1.1 as of the date of this Agreement and (ii) as to Buyer, the actual knowledge of Charles Ward, Patricio Sanchez and Gerald Willinger.
		

		
			

		 

		

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“Legal Right” means, to the extent arising from, or in any way related to the Company (including the assets and operations associated with the Company), the legal authority and right (without risk of liability, criminal, civil or otherwise), including through the exercise of voting, managerial or other similar authority or right, if any; provided, however, that the Legal Right shall be deemed not to exist with respect to any contemplated conduct unless the SN Parties reasonably determine that such conduct would not constitute a violation, termination or breach of, or require any payment under, or permit any termination under, any: contract or agreement; arrangement; Applicable Law; fiduciary, quasi-fiduciary or similar duty; or any other obligation.
		

		
			“LLC Agreement” means that certain Amended and Restated Limited Liability Company Agreement of the Company, dated as of June 23, 2016, as amended, supplemented or modified from time to time.
		

		
			“Losses” means any and all losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs and expenses (including court costs and reasonable attorneys’ and experts’ fees) of any and every kind or character.
		

		
			“Material Contracts”  means the following Contracts to which the SN Parties, the Company or any of their Affiliates is a party and which relate to the Interests or the “Company Business” (as defined in the LLC Agreement as in effect on the date hereof) but, for the avoidance of doubt, excluding any (i) Contracts relating to the Silver Oak II Gas processing facility located in Bee County, Texas, (ii) Contracts relating to CP, including the CP LLC Agreement and the CP Processing Agreement and (iii) any Contracts to which the TPL Group (as defined in the LLC Agreement) is a party that the SN Parties do not have Knowledge of:
		

		
			(a)the LLC Agreement;
		

		
			(b)the SN Catarina Gathering Agreement;
		

		
			(c)the Company Gathering Agreement;
		

		
			(d)a non-competition agreement or any agreement that purports to restrict, limit or prohibit the Company from engaging in any line of business or the manner in which, or the locations at which the Company conducts business; 
		

		
			(e)a Contract for the gathering, treatment, processing, storage, or transportation of Hydrocarbons which is not cancellable without penalty upon 30 or less days’ notice;
		

		
			(f)a Contract for the construction and installation or rental of equipment, fixtures, or facilities with guaranteed production throughput requirements or demand charges or which cannot be terminated without penalty on no more than 30 days’ notice;
		

		
			(g)an option, swap, hedge, collar or other derivative contract, including any master agreement and confirmation thereunder;
		

		
			

		 

		

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(h)a Contract that involves performance of services or delivery of goods or materials (other than Hydrocarbons) by or to Seller or the Company of an amount or value in excess of $1,000,000 determined on an annual basis;
		

		
			(i)a Contract that involves expenditures or receipts of Seller or the Company in excess of $1,000,000 determined on an annual basis; or
		

		
			(j)a material software license or other license agreement related to intellectual property involving expenditures of Seller or the Company in excess of $100,000 determined on an annual basis.
		

		
			“Mcf” has the meaning therefor set forth in the SN Catarina Gathering Agreement.
		

		
			“MMBtus” has the meaning therefor set forth in the SN Catarina Gathering Agreement.
		

		
			“New Seller Information” has the meaning set forth in 0.  
		

		
			“Organizational Documents” means any charter, certificate of incorporation, certificate or articles of formation, articles of association, partnership agreements, limited liability company agreements, bylaws, operating agreement or similar formation or governing documents and instruments.
		

		
			“Outside Date” has the meaning set forth in 0.
		

		
			“Party” and “Parties” have the meanings set forth in the Preamble. 
		

		
			“Permits” means all permits, licenses, approvals and Consents from appropriate Governmental Authorities necessary for the Company to construct, own and operate its assets and business.
		

		
			“Person” means an individual or a corporation, firm, limited liability company, partnership, joint venture, trust, unincorporated organization, association, Governmental Authority or other entity.
		

		
			“Preferential Rights” means any right or agreement that enables any Person to purchase or acquire any Interests or any interest therein or portion thereof as a result of or in connection with (i) the sale, assignment or other transfer of any Interest or any interest therein or portion thereof or (ii) the execution or delivery of this Agreement or the consummation or performance of the transactions contemplated by this Agreement.
		

		
			“Producer” has the meaning therefor set forth in the SN Catarina Gathering Agreement.
		

		
			“Producer’s Gas” has the meaning therefor set forth in the SN  Catarina Gathering Agreement.
		

		
			“Purchase Price” has the meaning set forth in 0.
		

		
			“Raptor Plant” has the meaning therefor set forth in the LLC Agreement.
		

		
			

		 

		

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“Receipt Point” has the meaning therefor set forth in the SN Catarina Gathering Agreement.
		

		
			“Receiving Party Personnel” has the meaning set forth in 0.
		

		
			“Retained Obligations” means all obligations and liabilities of any kind whatsoever arising from or relating to the Company, whether known or unknown, liquidated or contingent, but only to the extent such obligations and liabilities arose prior to the Effective Date or relate to or are otherwise attributable to the period prior to the Effective Date.  The Retained Obligations shall not include the Assumed Obligations.
		

		
			“Securities Act” mean the Securities Act of 1933, as amended.
		

		
			“Seller Indemnified Costs” means all Losses incurred or suffered by the Seller Indemnified Parties as a result of, relating to or arising out of, (i) any breach of any representation or warranty contained in 0 made by Buyer as though such representation or warranty was made as of the Closing Date (except to the extent that such representation and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been made as of such earlier date); (ii) the breach of any covenant or agreement made or to be performed by Buyer under this Agreement; and (iii) the Assumed Obligations.
		

		
			“Seller Indemnified Parties” means the SN Parties, each of their respective Affiliates and, prior to the Closing, the Company, and each of their respective officers, members, managers, partners, directors, employees and representatives. 
		

		
			“SN” has the meaning set forth in the Preamble.
		

		
			“SN Catarina Gathering Agreement” means that certain Firm Gas Gathering Agreement, dated as of October 2, 2015, by and among SN, SN Catarina, LLC and the TPL Member, as amended, supplemented or modified from time to time.
		

		
			“SN Credit Agreement” means that certain Second Amended and Restated Credit Agreement dated as of June 30, 2014 among SN, as borrower, SN Palmetto, LLC (f/k/a SEP Holdings III, LLC), SN Marquis LLC, SN Cotulla Assets, LLC, SN Operating, LLC, SN TMS, LLC and SN Catarina, LLC, as loan parties, Royal Bank of Canada, as administrative agent, Capital One, National Association, as syndication agent, Compass Bank and SunTrust Bank as co-documentation agents, RBC Capital Markets as sole lead arranger and sole book runner, and the lenders party thereto, as may be amended, supplemented, restated, refinanced, replaced or otherwise modified from time to time.
		

		
			“SN Indentures” means (i) that certain Indenture, dated as of June 13, 2013 (as amended or supplemented from time to time), among SN, the guarantors party thereto and U.S. Bank National Association, as trustee, and (ii) that certain Indenture, dated as of June 27, 2014 (as amended or supplemented from time to time), among SN, the guarantors party thereto and U.S. Bank National Association, as trustee.
		

		
			“SN Parties” has the meaning set forth in the Preamble.
		

		
			

		 

		

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“Tax” or “Taxes” means any federal, state, local or foreign income tax, ad valorem tax, excise tax, sales tax, use tax, franchise tax, real or personal property tax, transfer tax, gross receipts tax or other tax, assessment, duty, fee, levy or other governmental charge, together with and including, any and all interest, fines, penalties, assessments, and additions to Tax resulting from, relating to, or incurred in connection with any of those or any contest or dispute thereof.
		

		
			“Tax Authority” means any Governmental Authority having jurisdiction over the payment or reporting of any Tax.
		

		
			“Tax Return” means any report, statement, form, return or other document or information required to be supplied to a Tax Authority in connection with Taxes.
		

		
			“third-party action” has the meaning set forth in 0.
		

		
			“TPL Member” has the meaning therefor set forth in the LLC Agreement.
		

		
			“Transaction Taxes” has the meaning set forth in 0.
		

		
			ARTICLE II.
		

		
			PURCHASE AND SALE
		

		
			Section 2.1Purchase and Sale of Interests.  Upon the terms and subject to the conditions set forth in this Agreement, Seller shall sell, assign, transfer and convey to Buyer, and Buyer shall purchase and acquire from Seller, at the Closing, the Interests. Seller shall transfer the Interests to Buyer by delivery of the Assignment Document at Closing.
		

		
			 
		

		
			Section 2.2Consideration.  In consideration for the purchase of the Interests, Buyer agrees to pay to Seller at Closing the sum of (a) $11,000,000, plus (b) the amount of all “Capital Contributions” (as defined in the LLC Agreement as in effect on the date hereof) made by Seller to the Company on or prior to the Closing Date (or for which Seller is obligated to make as of the Closing Date to the extent not constituting an Assumed Obligation) (collectively, the “Purchase Price”). A schedule of such Capital Contributions through the date hereof, and an estimate of such additional Capital Contributions until the In-Service Date, is attached as Schedule 2.1.
		

		
			 
		

		
			Section 2.3Earnout Payment.  In consideration for the purchase of the Interests, commencing from and after the Effective Date, Buyer agrees to pay to Seller, within 30 days of the end of each calendar month thereafter until such time as either the SN Catarina Gathering Agreement is terminated or SN no longer retains (directly or indirectly through its subsidiaries) the Dedicated Acreage (as defined in the SN Catarina Gathering Agreement), the Earnout earned in the immediately preceding calendar month (or portion thereof following the Effective Date).  SN agrees to cause the Producer to provide Buyer sufficient invoice details to calculate the Earnout. An example of the Earnout payment is included in Schedule 2.1.
		

		
			 
		

		
			ARTICLE III.
		

		
			REPRESENTATIONS AND WARRANTIES RELATING TO THE SN PARTIES
		

		
			The SN Parties hereby jointly and severally represent and warrant to Buyer that, as of the date of this Agreement and as of the Closing:
		

		 

		

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			Section 3.1Organization of the SN Parties.  Seller is a limited liability company duly formed, validly existing and in good standing under the Laws of the State of Delaware and has the requisite organizational power and authority to own the Interests.  Seller is duly qualified to do business, and in good standing, in the State of Texas. SN is a corporation duly formed, validly existing and in good standing under the Laws of the State of Delaware and is duly qualified to do business, and in good standing, in each state where failure to be so qualified could reasonably be expected to adversely affect the consummation of the transactions contemplated by this Agreement.
		

		
			 
		

		
			Section 3.2Authorization; Enforceability.  Each of the SN Parties has full capacity, power, and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement, and the performance of the transactions contemplated hereby, have been duly and validly authorized on the part of each of the SN Parties, and no other proceeding on the part of either of the SN Parties is necessary to authorize this Agreement or performance of the transactions contemplated hereby.  This Agreement has been duly and validly executed and delivered by each of the SN Parties (and all documents required hereunder to be executed and delivered by the SN Parties at the Closing will be duly executed and delivered by the SN Parties), and this Agreement constitutes, and at the Closing each such document will constitute, a valid and binding obligation of each of the SN Parties, enforceable against each of the SN Parties in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.
		

		
			 
		

		
			Section 3.3Ownership of Interests. 
		

		
			 
		

		
			(a)Seller holds of record and owns beneficially the Interests, free and clear of all Encumbrances (other than restrictions under federal and state securities laws and in the Organizational Documents of the Company).
		

		
			(b)Neither of the SN Parties is a party to any option, warrant, purchase right or other contract or commitment (other than this Agreement or the Organizational Documents of the Company) that could require Seller to sell, transfer or otherwise dispose of the Interests, and other than this Agreement, the Interests are not subject to any voting agreement or other contract, agreement, arrangement, commitment or understanding (other than the Organizational Documents of the Company) restricting or otherwise relating to the voting, dividend rights, or disposition of the Interests.
		

		
			(c)Upon the occurrence of the Closing, the delivery of the Interests to Buyer in accordance with the terms of this Agreement will transfer good and marketable title to the Interests free and clear of any Encumbrance (but subject to applicable restrictions on transferability under federal and state securities laws and in the Organizational Documents of the Company).
		

		
			(d)Upon the occurrence of the Closing, none of the Interests will be subject in any respect to any indebtedness (other than customary bonds posted with Governmental Authorities), including the terms and conditions of the documents and instruments governing the 

		 

		

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indebtedness of the SN Parties or their Affiliates, including the SN Credit Agreement, the SN Indentures or any related security agreements, guarantees, documents and instruments.
		

		
			Section 3.4No Conflict; Consents.  Except as set forth on Schedule 0, the execution and delivery of this Agreement by the SN Parties and the consummation of the transactions contemplated hereby do not and shall not: 
		

		
			 
		

		
			(a)violate any Applicable Law applicable to either of the SN Parties or, to the Knowledge of the SN Parties with respect to either of the SN Parties or their Affiliates, require any material filing with, consent, approval, or authorization of or notice to, any Person except as required by the Organizational Documents of the Company; or
		

		
			(b)violate any Organizational Document of either of the SN Parties.
		

		
			ARTICLE IV.
		

		
			REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY AND THE INTERESTS
		

		
			The SN Parties hereby jointly and severally represent and warrant to Buyer that, as of the date of this Agreement and as of the Closing: 
		

		
			Section 4.1Organization.  The Company is a limited liability company, validly existing and in good standing under the laws of the State of Delaware and has the requisite organizational power and authority to own or lease its assets and conduct its business as currently conducted.  The Company is duly qualified to do business, and in good standing, in the State of Texas.
		

		
			 
		

		
			Section 4.2No Conflict; Consents.  Except as set forth on Schedule 0, the execution and delivery of this Agreement by the SN Parties and the consummation of the transactions contemplated hereby do not and shall not:
		

		
			 
		

		
			(a)violate any Applicable Law applicable to the Company or, to the Knowledge of the SN Parties with respect to the Company, require any material filing with, Permit, consent, approval, or authorization of or notice to, any Person except as required by the Organizational Documents of the Company;
		

		
			(b)upon the effectiveness of the LLC Agreement, violate any Organizational Document of the Company; or
		

		
			(c)to the Knowledge of the SN Parties (i) breach any Material Contract (other than any Organizational Documents of the Company); (ii) result in the termination of or the right of any party to terminate any Material Contract; (iii) result in the creation of any Encumbrance under any Material Contract; or (iv) constitute an event that, after notice or lapse of time or both, would result in any such breach, termination or creation of an Encumbrance.
		

		
			Section 4.3Capitalization.  
		

		
			 
		

		
			(a)Interests.  The Interests (i) are duly authorized, validly issued and, except as contemplated by the Organizational Documents of the Company, fully paid and nonassessable 

		 

		

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(except as such nonassessability may be affected by matters described in Sections 18-607 and 18-804 of the Delaware Limited Liability Company Act); (ii) are free of preemptive rights; (iii) were issued in accordance with the registration or qualification provisions of the Securities Act and any relevant state securities laws or pursuant to valid exemptions therefrom; and (iv) are uncertificated.  Seller has timely paid each Capital Call (as defined in the LLC Agreement) that it has received from the Company.
		

		
			(b)No Other Rights.  Except as set forth in the Organizational Documents of the Company (including with respect to the TPL Member), to the Knowledge of the SN Parties, as of the date hereof there are no (i) outstanding securities of the Company other than the Interests and the membership interests of the Company owned by the TPL Member, and no outstanding securities which are convertible into, or exchangeable or exercisable for, membership interests, equity interests or other securities of the Company; (ii) authorized or outstanding options, warrants, stock or other rights to purchase or acquire from the Company, or obligations of the Company to issue, any equity interests, stock or other securities, including securities convertible into or exchangeable for membership interests, stock or other securities of the Company; (iii) preemptive rights related to any membership interests, equity interests, stock or other securities of the Company; (iv) contractual arrangements giving any Person a right to receive any benefits or rights similar to the rights enjoyed by or accruing to the holders of any equity or other interest in the Company; or (v) authorized or outstanding bonds, debentures, notes or other indebtedness that entitles the holders to vote (or convertible or exercisable for or exchangeable into securities that entitle the holders to vote) with holders of units or interests of the Company on any matter.
		

		
			(c)Subsidiaries.  To the Knowledge of the SN Parties, as of the date hereof the Company does not own, directly or indirectly, any capital stock or equity interests of any other Person.
		

		
			Section 4.4Absence of Litigation; Compliance with Law.  Except with respect to any Claims under any Environmental Laws which are addressed exclusively in 0, to the Knowledge of the SN Parties, there is no material Claim pending or threatened against the Company or the Interests that, if adversely determined, would be material to the Interests.  To the Knowledge of the SN Parties, the operations and business of the Company have been conducted by the Company in substantial compliance in all material respects with all Applicable Laws except with respect to Environmental Laws, which are addressed exclusively in 0.
		

		
			 
		

		
			Section 4.5Bankruptcy.  To the Knowledge of the SN Parties, there are no bankruptcy, reorganization or rearrangement proceedings under any bankruptcy, insolvency, reorganization, moratorium or other similar Applicable Laws with respect to creditors pending against, being contemplated by, or threatened, against the Company.
		

		
			 
		

		
			Section 4.6Brokers and Finders.  Other than Johnson Rice & Company, L.L.C., the financial advisor to the audit committee of the board of directors of SN, no investment banker, broker, finder, financial advisor or other intermediary has been (directly or indirectly) retained by or is authorized to act on behalf of the SN Parties or their Affiliates who is entitled to receive from Buyer any fee or commission in connection with the transactions contemplated by this Agreement.
		

		
			 
		

		 

		

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			Section 4.7Tax Matters 
		

		
			(a)All Tax Returns required to be filed by or with respect to the Interests have been duly filed on a timely basis (taking into account all extensions of due dates), and such Tax Returns are true, correct and complete.
		

		
			(b)To the Knowledge of the SN Parties, all Taxes owed by the Company which are or have become due have been timely paid in full.
		

		
			(c)To the Knowledge of the SN Parties, there are no Encumbrances for Taxes on the Interests or the Company’s assets, other than Taxes not yet due and payable.
		

		
			(d)To the Knowledge of the SN Parties, there is not in force any extension of time with respect to the due date for the filing of any Tax Return of or with respect to the Company or the Company’s assets nor is there any outstanding agreement or waiver by or with respect to the Company or the Company’s assets extending the period for assessment or collection of any Tax.
		

		
			(e)To the Knowledge of the SN Parties, there is no pending or threatened action, audit, required for ruling, proceeding or investigation for assessment or collection of Tax and no Tax assessment, deficiency or adjustment has been asserted or proposed in writing with respect to the Company or the Company’s assets that has not been resolved.
		

		
			(f)To the Knowledge of the SN Parties, the Company is not a party to any Tax allocation or Tax sharing agreement that will be binding on such entity after Closing.
		

		
			(g)Since the date of its formation, for U.S. federal income tax purposes, the Company has been validly classified as a partnership and has in effect an election pursuant to Section 754 of the Internal Revenue Code of 1986, as amended.
		

		
			Section 4.8Environmental Matters.  To the Knowledge of the SN Parties, the Company (i) is in substantial compliance in all material respects with all applicable Environmental Laws and Environmental Permits; (ii) is not the subject of any outstanding administrative or judicial order, judgment, agreement or arbitration award from any Governmental Authority under any Environmental Law relating to the Company or its assets and requiring remediation or the payment of a fine or penalty; and (iii) is not subject to any material pending Claims under any Environmental Laws with respect to which the SN Parties or the Company have been notified in writing by or on behalf of a plaintiff or claimant.
		

		
			 
		

		
			Section 4.9Material Contracts.  To the Knowledge of the SN Parties, all Material Contracts in effect as of the date hereof are specified in the definition thereof or otherwise listed on Schedule 0.  To the Knowledge of the SN Parties, each Material Contract (except for the LLC Agreement, the Company Gathering Agreement, the Services Agreement (as defined in Schedule 4.9) and the Omnibus Amendment (as defined in Schedule 4.9), which will be effective (other than as specified in the Omnibus Amendment) upon satisfaction of the conditions in Section 8.3(d)) is in full force and effect and represents the legal, valid and binding obligation of the parties thereto, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and 

		 

		

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subject, as to enforceability, to general principles of equity.  Neither the SN Parties nor, to the Knowledge of the SN Parties, the Company and, to the Knowledge of the SN Parties, no other party, is in breach of any Material Contract.  Neither the SN Parties nor, to the Knowledge of the SN Parties,  the Company has received or delivered notice of a default or breach with respect to any Material Contract.  To the Knowledge of the SN Parties, the SN Parties have made available to Buyer or its representatives correct and complete copies of each Material Contract and all amendments and other modifications thereto.
		

		
			 
		

		
			Section 4.10Employees.  To the Knowledge of the SN Parties, except as contemplated by the Services and Secondment Agreement, dated as of June 23, 2016, between the TPL Member and the Company, the Company does not have any employees.
		

		
			 
		

		
			Section 4.11Preferential Rights.  Except as set forth on Schedule 0 or the Organizational Documents of the Company, to the Knowledge of the SN Parties, there are no Preferential Rights attributable to or with respect to any part of the Interests.
		

		
			 
		

		
			Section 4.12Permits.  To the Knowledge of the SN Parties, the Company has maintained all material Permits necessary for it to construct the facilities constructed or being constructed by it, as the case may be.  To the Knowledge of the SN Parties, no event has occurred (including the execution and delivery of this Agreement) which permits, or after the giving of notice or lapse of time or both would permit, the revocation or termination of any Permit or the imposition of any (i) restrictions of such a nature as may limit any of the operations of the Company as historically conducted by it or (ii) material fines, costs or penalties under any Permit.
		

		
			 
		

		
			Section 4.13Affiliate Transactions.  Other than any such Contracts identified as Material Contracts, there are no Contracts between Seller or an Affiliate of Seller, on the one hand, and the Company or an Affiliate of the Company, on the other hand, that will continue to be binding upon or directly affect the Company from and after the Closing.
		

		
			 
		

		
			Section 4.14Projections and Budgets.  The projections and budgets provided to Buyer (including those provided to Stifel, Nicolaus & Company, Incorporated, the financial advisor to the conflicts committee of the board of directors of the General Partner) by the SN Parties and their Affiliates as part of Buyer’s review of the Company in connection with this Agreement have a reasonable basis, were prepared in good faith and are consistent with the expectations of the management of the SN Parties and their Affiliates.
		

		
			 
		

		
			ARTICLE V.
		

		
			REPRESENTATIONS AND WARRANTIES OF BUYER
		

		
			Buyer hereby represents and warrants to the SN Parties that, as of the date of this Agreement and as of the Closing: 
		

		
			Section 5.1Organization of Buyer.  Buyer is a limited partnership, duly formed and validly existing and in good standing under the Applicable Laws of the State of Delaware.
		

		
			 
		

		
			Section 5.2Authorization; Enforceability.  Buyer has all requisite limited partnership power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery, and performance of this Agreement, and the performance of 

		 

		

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the transactions contemplated hereby have been duly and validly authorized and approved by Buyer, and no other limited partnership proceeding on the part of Buyer is necessary to authorize this Agreement.  This Agreement has been duly and validly executed and delivered by Buyer (and all documents required hereunder to be executed and delivered by Buyer at the Closing will be duly executed and delivered by Buyer), and this Agreement constitutes, and at the Closing each such document will constitute, a valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity. 
		

		
			 
		

		
			Section 5.3No Conflict; Consents.  Except as would not reasonably be expected to prevent, impede, or materially delay the ability of Buyer to enter into and perform its obligations under this Agreement, the execution and delivery of this Agreement by Buyer and the consummation of the transactions contemplated hereby by Buyer do not and shall not:
		

		
			 
		

		
			(a)violate any Applicable Law applicable to Buyer or, to the Knowledge of Buyer, require any filing with, consent, approval or authorization of, or, notice to, any Governmental Authority;
		

		
			(b)violate any Organizational Document of Buyer; or
		

		
			(c)to the Knowledge of Buyer, require any filing with, or permit, consent or approval of, or the giving of any notice to, any Person except as required by the Organizational Documents of the Company.
		

		
			Section 5.4Absence of Litigation.  There is no Claim pending or, to the Knowledge of Buyer, threatened against Buyer relating to the transactions contemplated by this Agreement which, if adversely determined, would reasonably be expected to materially impair the ability of Buyer to perform its obligations and agreements under this Agreement and to consummate the transactions contemplated hereby. 
		

		
			 
		

		
			Section 5.5Brokers and Finders.  Other than Stifel, Nicolaus & Company, Incorporated, the financial advisor to the conflicts committee of the board of directors of the General Partner, no investment banker, broker, finder, financial advisor or other intermediary has been (directly or indirectly) retained by or is authorized to act on behalf of Buyer or its Affiliates who is entitled to receive from Seller any fee or commission in connection with the transactions contemplated by this Agreement.
		

		
			 
		

		
			Section 5.6Buyer’s Independent Investigation.  Buyer has undertaken an independent investigation and verification of the business, operations and financial condition of the Company.  Except for the representations and warranties made by the SN Parties in 0 and 0, Buyer acknowledges that there are no representations or warranties, express or implied, as to the condition (financial or otherwise), assets, liabilities, operations, business or prospects of the Company.
		

		
			 
		

		
			Section 5.7Independent Evaluation.  Buyer is sophisticated in the evaluation, purchase, ownership and operation of midstream properties and related facilities.  Buyer acknowledges and agrees that the SN Parties have not made any representations or warranties as to the Company 

		 

		

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except as expressly and specifically provided in 0 and 0 and that Buyer may not rely on any other representations or warranties made by the SN Parties or their representatives or, except as expressly provided in 0 and 0, on any of the SN Parties’ estimates with respect to the value of the Company or any projections as to future events or other analyses or forward looking statements.  In making its decision to enter into this Agreement and to consummate the transactions contemplated herein, subject to the express representations of the SN Parties set forth in this Agreement, Buyer (i) has relied or shall rely solely on its own independent investigation and evaluation of the Company and the express provisions of this Agreement and (ii) has satisfied or shall satisfy itself as to the environmental and physical condition of and contractual arrangements affecting the Company.  
		

		
			 
		

		
			Section 5.8Acquisition as Investment.  Buyer (i) is acquiring the Interests for its own account and not with a view to distribution in violation of applicable securities laws; (ii) has sufficient knowledge and experience in financial and business matters so as to be able to evaluate the merits and risk of an investment in the Interests and is able financially to bear the risks thereof; (iii) understands that the Interests will, upon purchase, be characterized as “restricted securities” under state and federal securities Laws and that under such Laws the Interests may be resold without registration under such Laws only in certain limited circumstances; and (iv) is an “accredited investor” as defined under Rule 501 promulgated under the Securities Act.
		

		
			 
		

		
			Section 5.9Sufficiency of Funds.  On the Closing Date, Buyer will have sufficient funds to fund the payment of the Purchase Price. The Buyer’s obligation to consummate the transactions contemplated by this Agreement is not subject to any condition or contingency with respect to financing.
		

		
			 
		

		
			ARTICLE VI.
		

		
			PRE-CLOSING COVENANTS
		

		
			Section 6.1General.  Until the Closing, Buyer shall use commercially reasonable efforts to take all action and to do all things necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement, including satisfying Seller’s conditions to Closing in 0.  Until the Closing, the SN Parties shall (and, until the Closing, to the extent they have the Legal Right, shall cause the Company to) use commercially reasonable efforts to take all action and to do all things necessary, proper or advisable in order to consummate and make effective the transactions contemplated by this Agreement, including satisfying Buyer’s conditions to Closing in 0.
		

		
			 
		

		
			Section 6.2Notices, Consents and Books and Records.
		

		
			 
		

		
			(a)Until the Closing, the SN Parties shall (and, until the Closing, to the extent they have the Legal Right, shall cause the Company to) give any notices to, make any filings with, and use their commercially reasonable best efforts to obtain any authorizations, Consents and approvals of Governmental Authorities and third parties that are required in connection with the matters referred to in 0 and 0 including the corresponding Schedules.  Until the Closing, each of Buyer and the SN Parties shall give the other Party prompt notice of the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which would be reasonably likely to (i) cause a breach of any of the representations, warranties or covenants of such Party under this Agreement or (ii) cause any of the conditions of the other Party to consummate the 

		 

		

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transactions contemplated by this Agreement not to be satisfied.  If Buyer has a right to terminate this Agreement pursuant to 0, without taking into consideration any new information provided by the SN Parties pursuant to this 0 (the “New Seller Information”) for purposes of qualifying any of the representations and warranties of the SN Parties set forth in this Agreement, but Buyer elects to proceed with the Closing, then each of the applicable Schedules shall be deemed to have been amended to include the New Seller Information, the New Seller Information shall be deemed to be waived by Buyer and Buyer shall not be entitled to make a Claim thereon under this Agreement.    
		

		
			(b)Until the Closing, the SN Parties agree to (and, until the Closing, to the extent they have the Legal Right, shall cause the Company to) provide access to its Books and Records to allow Buyer and Buyer’s outside auditing firm to prepare (at Buyer’s expense) any information required to be filed with or furnished to the SEC by Buyer pursuant to applicable securities Laws.
		

		
			Section 6.3Operations of the Company.  Except as expressly contemplated by this Agreement or as contemplated by Schedule 0, until the Closing, to the extent they have the Legal Right, the SN Parties will cause the Company and (to the extent related to the Company) Affiliates of the SN Parties not to engage in any practice, take any action or enter into any transaction outside the ordinary course of business without the prior written consent of Buyer except in case of emergency or as may otherwise be required to prevent injury or damage to Persons, property or the environment.
		

		
			 
		

		
			Section 6.4Reasonable Access.  Unless prohibited by Applicable Law, to the extent the SN Parties have the Legal Right, the SN Parties shall use commercially reasonable efforts to cause, until the Closing, the Company to permit Buyer and representatives of Buyer to have reasonable access at reasonable times, and in a manner so as not to interfere with the normal business operations of the SN Parties or the Company and their Affiliates, to all premises, properties, personnel, books, records (including Tax records), contracts and documents of or pertaining to the Company, subject to 0 and 0.  Buyer shall abide by the SN Parties’ and any lessors’ safety rules, regulations and operating policies while conducting its due diligence evaluation of the Company including any environmental or other inspection or assessment of the Company.  Buyer does hereby RELEASE, DEFEND, INDEMNIFY and HOLD HARMLESS the Seller Indemnified Parties from and against any and all Claims arising out of, resulting from or relating to the acts or omissions of Buyer or any of the Buyer Indemnified Parties in connection with any field visit, environmental assessment or other due diligence activity conducted by Buyer or any of its representatives with respect to the Company conducted prior to Closing.  Such Obligations of Buyer shall apply even if such Claims arise out of or result from the sole, joint or concurrent negligence, strict liability or other fault of the Seller Indemnified Parties; provided, however, the aforementioned Obligations shall not apply to any Claim to the extent actually resulting on account of the willful misconduct or gross negligence of the Seller Indemnified Parties.
		

		
			 
		

		
			Section 6.5Insurance.  To the extent the SN Parties have the Legal Right, the SN Parties shall cause the Company’s insurance policies of the Company to remain in force and effect or to be renewed and maintained in full force and effect through (but not after) the Closing Date.
		

		
			 
		

		 

		

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			Section 6.6LLC Agreement; Securities; Subsidiaries. Except as expressly contemplated by this Agreement, until the Closing, the SN Parties, to the extent they have the Legal Right, will not cause, or allow to be caused, except with the prior written consent of  Buyer, (i) the amendment, amendment and restatement, modification or supplement of the LLC Agreement as in effect on the date hereof, (ii) the issuance or creation of any securities or other rights contemplated by Section 4.3(b) not set forth in the Organizational Documents of the Company as of the date hereof, and (iii) the acquisition of any capital stock or equity interest of any other Person by the Company after the date hereof.  
		

		
			 
		

		
			ARTICLE VII.
		

		
			POST-CLOSING COVENANTS 
		

		
			Section 7.1Further Assurances.  After the Closing, each Party shall use its commercially reasonable efforts to take such further actions, including obtaining or transferring to the other Party all necessary Permits, Consents, orders and Contracts and executing and causing its Affiliates to execute such further documents, as may be necessary or reasonably requested by another Party in order to effectuate the intent of this Agreement and to provide such other Party with the intended benefits of this Agreement.
		

		
			 
		

		
			Section 7.2Tax Matters.  
		

		
			 
		

		
			(a)Taxes.  The Parties agree that the income related to the Interests for the period up to and including the Closing Date will be reflected on the federal income Tax Return of Seller and that Seller shall bear the liability for any Taxes associated with such income.  The Parties further agree that the income related to the Interests for the period after the Closing Date will be reflected on the federal income Tax Return of Buyer and that the partners of Buyer shall bear the liability for any Taxes associated with such income.
		

		
			(b)Transaction Taxes.  All sales, use, transfer, filing, recordation, registration and similar Taxes arising from or associated with the transactions contemplated by this Agreement other than Taxes based on income (“Transaction Taxes”), shall be borne 50% by Seller and 50% by Buyer.  To the extent under Applicable Law the transferee is responsible for filing Tax Returns in respect of Transaction Taxes, Buyer shall prepare and file all such Tax Returns.  The Parties shall provide such certificates and other information and otherwise cooperate to the extent reasonably required to minimize Transaction Taxes.  The Party that is not responsible under Applicable Law for paying the Transaction Taxes shall pay its share of the Transaction Taxes to the responsible Party prior to the due date of such Taxes.
		

		
			(c)Cooperation on Tax Matters.  Following the Closing Date, the Parties shall cooperate fully with each other and shall make available to the other, as reasonably requested and at the expense of the requesting Party, and to any Governmental Authority responsible for the administration of any Tax, all information, records or documents relating to Tax liabilities or potential Tax liabilities of the Company for all periods at or prior to the Effective Date and any information which may be relevant to determining the amount payable hereunder, and shall preserve all such information, records and documents at least until the expiration of any applicable statute of limitations or extensions thereof.
		

		 

		

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			Section 7.3Cooperation for Litigation and Other Actions.  Each Party shall cooperate reasonably with each other Party, at the requesting Party’s expense (but including only out-of-pocket expenses to unaffiliated third parties, photocopying and delivery costs and not the costs incurred by any Party for the wages or other benefits paid to its officers, directors or employees), in furnishing reasonably available information, testimony and other assistance in connection with any Claims or other disputes involving any of the Parties hereto (other than in connection with Claims or disputes between the Parties).
		

		
			 
		

		
			Section 7.4Retention of and Access to Books and Records. 
		

		
			(a)Buyer agrees to afford the SN Parties and their Affiliates and their respective accountants, counsel and other designated individuals, during normal business hours, upon reasonable request, at a mutually agreeable time, full access to and the right to make copies of the Books and Records at no cost to the SN Parties or their Affiliates (other than for reasonable out-of-pocket expenses); provided that such access will not be construed to require the disclosure of Books and Records that would cause the waiver of any attorney-client, work product or like privilege; provided, further, that in the event of any litigation, nothing herein shall limit any Party’s rights of discovery under Applicable Law. Without limiting the generality of the preceding sentences, Buyer agrees to provide SN Parties and their Affiliates reasonable access to and the right to make copies of the Books and Records after the Closing for the purposes of assisting SN Parties and their Affiliates (i) in complying with the SN Parties’ obligations under this Agreement, Applicable Laws (including securities laws) or applicable stock exchange requirements; (ii) in preparing Tax Returns; (iii) in responding to or disputing any tax audit; (iv) in asserting, defending or otherwise dealing with any Claim or dispute, known or unknown, under this Agreement; and (v) in asserting, defending or otherwise dealing with any third-party Claim or dispute by or against SN Parties and their Affiliates relating to the Company.
		

		
			(b)Notwithstanding the foregoing provisions of this Section or anything else to the contrary in this Agreement, with respect to any Books and Records the transfer or other disclosure of which to Buyer would waive (or would reasonably risk the waiver of) any attorney/client, work product, tax practitioner, audit or other privilege relating to the Retained Obligations, the SN Parties shall not be required to transfer such Books and Records (or any copies thereof) to Buyer until the appropriate Parties enter into a mutually-agreed joint defense agreement to allow for the sharing of common defense privileged materials.
		

		
			Section 7.5Post-Closing Collection and Payment Matters.  
		

		
			 
		

		
			(a)If the transfer of any of the Interests pursuant hereto is not effective against the Company as of the Effective Date, then (i) the Parties shall nevertheless proceed to Closing and such effectiveness shall not be a condition to Closing, (ii) Seller, to the extent it has the Legal Right, shall provide Buyer with the economic benefits and risks thereof, and Buyer hereby assumes such risks at and after the Effective Date (including the Assumed Obligations and the Seller Indemnified Costs), and (iii) Seller shall, at the request and expense of Buyer, until the transfer of Interests is effective against the Company, enforce in a reasonable manner as directed by Buyer, any and all rights of Seller under the Interests.
		

		
			

		 

		

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(b)From time to time after the Closing, as promptly as practical (but not less than once each calendar month), the Parties shall settle any then outstanding obligations under this 0, including the first Party reimbursing the other Party for benefits received by the first Party that should accrue to the other Party (such as the first Party’s receipt of a distribution that the other Party was entitled to or the other Party’s payment of a capital contribution that was an obligation of the first Party).
		

		
			ARTICLE VIII.
		

		
			CONDITIONS TO CLOSE
		

		
			Section 8.1Condition to Close of Both Parties.  The respective obligations of Buyer and the SN Parties to consummate the transactions contemplated by this Agreement is subject to the satisfaction at or prior to the Closing of the following condition:
		

		
			 
		

		
			(a)that there must not be any pending or threatened injunction, judgment, order, decree, ruling or charge in effect preventing consummation of any of the transactions contemplated by this Agreement or any suit or action pending or threatened by a Governmental Authority to enjoin the consummation of any of the transactions contemplated by this Agreement,
		

		
			Section 8.2Conditions to Obligations of Buyer.  The obligation of Buyer to consummate the transactions contemplated by this Agreement is subject to satisfaction of the following conditions:
		

		
			 
		

		
			(a)the representations and warranties of the SN Parties contained in 0 and 0 must be true and correct in all material respects as of the date of this Agreement and as of the Closing (except for those which refer to another specific date, which must be true and correct as of such date);
		

		
			(b)the SN Parties must have performed and complied in all material respects with each of their covenants hereunder through the Closing; and
		

		
			(c)the SN Parties must have timely delivered all items required to be delivered at Closing pursuant to 0.
		

		
			Buyer may waive any condition specified in this 0 if it executes and delivers to the SN Parties a writing so stating at or before the Closing.
		

		
			Section 8.3Conditions to Obligations of the SN Parties.  The obligation of the SN Parties to consummate the transactions contemplated by this Agreement is subject to satisfaction of the following conditions:
		

		
			 
		

		
			(a)the representations and warranties of Buyer contained in 0 must be true and correct in all material respects as of the date of this Agreement and as of the Closing;
		

		
			(b)Buyer must have performed and complied in all material respects with each of its covenants hereunder through the Closing;
		

		 

		

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			(c)Buyer must have timely delivered all items required to be delivered at Closing pursuant to 0; and
		

		
			(d)Buyer shall have posted a letter of credit pursuant to Section 3.9(b) of the LLC Agreement so as to cause SN’s guaranty thereunder to be released pursuant to the terms thereof.
		

		
			The SN Parties may waive any condition specified in this 0 if either SN or Seller executes and delivers to Buyer a writing so stating at or before the Closing.
		

		
			ARTICLE IX.
		

		
			CLOSING
		

		
			Section 9.1Closing.  The closing of the transactions contemplated hereby (the “Closing”) shall take place at the offices of Seller, 1000 Main Street, Suite 3000, Houston, Texas 77002 within five days after the conditions set forth in 0 have been satisfied or waived, or such other date as may be mutually agreed to by the Parties (the “Closing Date”), and the Closing is deemed to be effective as of the Effective Date.
		

		
			 
		

		
			Section 9.2Deliveries by the SN Parties.  At the Closing, the SN Parties shall deliver, or cause to be delivered, to Buyer the following:
		

		
			 
		

		
			(a)a counterpart of the Assignment of Membership Interests and Adoption Agreement, substantially in the form attached as Exhibit D to the LLC Agreement (the “Assignment Document”), duly executed by Seller;
		

		
			(b)an executed statement described in Treasury Regulation § 1.1445-2(b)(2) certifying that Seller (or such affiliate of Seller as required under Treasury Regulations § 1.1445-2(c)(3) to the extent that Seller is disregarded for federal income tax purposes) is not a foreign person within the meaning of the Internal Revenue Code and the Treasury Regulations promulgated thereunder;  
		

		
			(c)the Books and Records that are in the possession or control of the SN Parties or their Affiliates, subject to 0 and 0; and
		

		
			(d)a certificate of an executive officer of SN, dated as of the Closing Date, stating that the SN Parties are in compliance with 0 and 0.  
		

		
			Section 9.3Deliveries by Buyer.  At the Closing, Buyer shall deliver, or cause to be delivered, to Seller the following:
		

		
			 
		

		
			(a)the Purchase Price by wire transfer to one or more accounts designated in writing by Seller no later than two Business Days prior to Closing;
		

		
			(b)a counterpart of the Assignment Document, duly executed by Buyer; and
		

		
			(c)a certificate of an executive officer of Buyer, dated as of the Closing Date, stating that Buyer is in compliance with 0 and 0.
		

		 

		

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			Section 9.4Deliveries to the Company.  On the day of Closing, Seller shall deliver, or cause to be delivered, to the Company the Assignment Document pursuant to Section 3.5 and Section 3.8 of the LLC Agreement.
		

		
			 
		

		
			ARTICLE X.
		

		
			TERMINATION
		

		
			Section 10.1Termination of Agreement.  The Parties may terminate this Agreement, as provided below:
		

		
			 
		

		
			(a)Buyer and the SN Parties may terminate this Agreement by mutual written consent at any time before the Closing;
		

		
			(b)by Buyer, (i) if the SN Parties shall have breached or failed to perform in any material respect any of their representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform would give rise to the failure of a condition set forth in 0 or (ii) if all of the conditions set forth in 0 have been satisfied or waived, as applicable, and the SN Parties nevertheless refuse or fail to Close the transactions contemplated in this Agreement; provided, the SN Parties shall first be entitled to 10 days’ notice and the opportunity to cure and provided furthermore that Buyer shall not be in breach at such time;
		

		
			(c)by the SN Parties, (i) if Buyer shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform would give rise to the failure of a condition set forth in 0 or (ii) if all of the conditions set forth in 0 have been satisfied or waived, as applicable, and Buyer nevertheless refuses or fails to Close the transactions contemplated in this Agreement; provided, Buyer shall first be entitled to 10 days’ notice and the opportunity to cure and provided furthermore that the SN Parties shall not be in breach at such time;
		

		
			(d)by either Buyer or the SN Parties, upon notice to the other Party, if the transactions contemplated at the Closing have not been consummated by July 31, 2016 (the “Outside Date”), provided that neither Buyer nor the SN Parties shall be entitled to terminate this Agreement pursuant to this 0 if such Person’s breach of this Agreement has prevented the consummation of the transactions contemplated by this Agreement; or
		

		
			(e)by either Buyer or the SN Parties, if any Governmental Authority shall have issued an order, decree or ruling or shall have taken any other action permanently enjoining, restraining or otherwise prohibiting the transactions contemplated hereby and such order, decree, ruling or other action shall have become final and nonappealable.
		

		
			Section 10.2Effect of Termination. 
		

		
			 
		

		
			(a)Except for the provisions of this 0,  0 and 0, if the Parties terminate this Agreement pursuant to 0, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to the other Party and except that termination of this Agreement will not affect any liability of either Party for any breach of this Agreement prior to termination, or any breach at any time of the provisions hereof surviving termination.  
		

		 

		

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			(b) If the SN Parties terminate this Agreement pursuant to 0 due to a material breach of this Agreement by Buyer, then the SN Parties shall be entitled to seek all rights and remedies at law or in equity against Buyer or its Affiliates. Each of Buyer and the SN Parties agree to waive any requirement for the posting of a bond in connection with any such equitable relief in favor of the other Party.    
		

		
			(c)If Buyer terminates this Agreement pursuant to 0 due to a material breach of this Agreement by the SN Parties, then Buyer shall be entitled to seek all rights and remedies at law or in equity against the SN Parties or their Affiliates. Each of Buyer and the SN Parties agree to waive any requirement for the posting of a bond in connection with any such equitable relief in favor of the other Party.  
		

		
			ARTICLE XI.
		

		
			INDEMNIFICATION 
		

		
			Section 11.1Indemnification.  From and after the Closing and subject to the provisions of this Article 0, (i) the SN Parties agree to indemnify and hold harmless Buyer Indemnified Parties from and against any and all Buyer Indemnified Costs and (ii) Buyer agrees to indemnify and hold harmless Seller Indemnified Parties from and against any and all Seller Indemnified Costs.
		

		
			 
		

		
			Section 11.2Defense of Third-Party Claims.  An Indemnified Party shall give prompt written notice to the SN Parties or Buyer, as applicable (the “Indemnifying Party”), of the commencement or assertion of any Claim by a third party (collectively, a “third-party action”) in respect of which such Indemnified Party seeks indemnification hereunder. Any failure so to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability that it, he, or she may have to such Indemnified Party under this Article 0 unless and to the extent the failure to give such notice materially and adversely prejudices the Indemnifying Party. The Indemnifying Party shall have the right to assume control of the defense of, settle, or otherwise dispose of such third-party action on such terms as it deems appropriate; provided, however, that: 
		

		
			 
		

		
			(a)The Indemnified Party shall be entitled, at its own expense, to participate in the defense of such third-party action (provided, however, that the Indemnifying Party shall pay the attorneys’ fees of the Indemnified Party if (i) the employment of separate counsel shall have been authorized in writing by the Indemnifying Party in connection with the defense of such third-party action; (ii) the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Party to have charge of such third-party action; (iii) the Indemnified Party shall have reasonably concluded that there may be defenses available to such Indemnified Party that are different from or additional to those available to the Indemnifying Party; or (iv) the Indemnified Party’s counsel shall have advised the Indemnified Party in writing, with a copy delivered to the Indemnifying Party, that there is a material conflict of interest that could violate applicable standards of professional conduct to have common counsel); 
		

		
			(b)The Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into or making any settlement, compromise, admission or acknowledgment of the validity of such third-party action or any liability in respect thereof if, pursuant to or as a result of such settlement, compromise, admission, or acknowledgment, injunctive or other equitable relief would be imposed against the Indemnified Party or if, in the 

		 

		

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opinion of the Indemnified Party, such settlement, compromise, admission or acknowledgment could have a material adverse effect with respect to the Indemnified Party; 
		

		
			(c)The Indemnifying Party shall not consent to the entry of any judgment or enter into any settlement without the consent of the Indemnified Party that does not include as an unconditional term thereof the giving by each claimant or plaintiff to the Indemnified Party of a release from all liability in respect of such third-party action; and 
		

		
			(d)The Indemnifying Party shall not be entitled to control (but shall be entitled to participate at its own expense in the defense of), and the Indemnified Party shall be entitled to have sole control over, the defense or settlement, compromise, admission, or acknowledgment of any third-party action (i) as to which the Indemnifying Party fails to assume the defense within a reasonable length of time (except to the extent (A) the Indemnifying Party shall have reasonably concluded that there may be defenses available to such Indemnifying Party that are different from or additional to those available to the Indemnified Party or (B) the Indemnifying Party’s counsel shall have advised the Indemnifying Party in writing, with a copy delivered to the Indemnified Party, that there is a material conflict of interest that could violate applicable standards of professional conduct to have common counsel) or (ii) to the extent the third-party action seeks an order, injunction, or other equitable relief against the Indemnified Party which, if successful, would materially adversely affect the business, operations, assets, or financial condition of the Indemnified Party; provided, however, that the Indemnified Party shall make no settlement, compromise, admission, or acknowledgment that would give rise to liability on the part of any Indemnifying Party without the prior written consent of such Indemnifying Party. 
		

		
			The Parties shall extend reasonable cooperation in connection with the defense of any third-party action pursuant to this Article 0 and, in connection therewith, shall furnish such records, information, and testimony and attend such conferences, discovery proceedings, hearings, trials, and appeals as may be reasonably requested. 
		

		
			Section 11.3Direct Claims.  In any case in which an Indemnified Party seeks indemnification hereunder which is not subject to 0 because no third-party action is involved, the Indemnified Party shall notify the Indemnifying Party in writing of any Indemnified Costs which such Indemnified Party claims are subject to indemnification under the terms hereof.  Subject to the limitations set forth in 0, the failure of the Indemnified Party to exercise promptness in such notification shall not amount to a waiver of such claim unless and to the extent the resulting delay materially prejudices the position of the Indemnifying Party with respect to such claim. 
		

		
			 
		

		
			Section 11.4Limitations.  The following provisions of this 0 shall limit the indemnification obligations hereunder: 
		

		
			 
		

		
			(a)The Indemnifying Party shall not be liable for any Indemnified Costs pursuant to this Article 0 unless a written claim for indemnification in accordance with 0 or 0 is given by the Indemnified Party to the Indemnifying Party with respect thereto on or before 5:00 p.m., Houston, Texas time, on or prior to the date that is eighteen (18) months after of the Closing Date; provided, however, that written claims for indemnification (i) for Indemnified Costs arising out of a breach of any representation or warranty contained in 0,  0,  0,  0,  0,  0,  0,  0 and 0 (the 

		 

		

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“Fundamental Representations”) may be made at any time and (ii) for Indemnified Costs arising out of a breach of any covenant may be made at any time. 
		

		
			(b)Except as set forth in this Agreement, an Indemnified Party will not be entitled to any Indemnified Costs with respect to any individual Claim that does not equal or exceed 0.05% of the Purchase Price (the “Individual Indemnity Threshold”), and all such Claims that equal or exceed the Individual Indemnity Threshold must collectively also exceed the Indemnity Deductible, and thereafter, the Indemnified Party shall only be entitled to indemnity for the amount in excess of the Indemnity Deductible, subject to the limitations set forth in this Agreement.  Except as set forth below, the maximum aggregate liability of the SN Parties under 0 shall not exceed the Indemnity Cap.  Except as set forth below, the maximum aggregate liability of Buyer under 0 shall not exceed the Indemnity Cap.
		

		
			(c)The limitations set forth above in this 0 shall not apply to any claim for indemnification under 0 with respect to any breach of (i) the Fundamental Representations or (ii) the indemnification obligations set forth in this 0.
		

		
			(d)With respect to Buyer Indemnified Costs incurred by the Company for which indemnification by the SN Parties is required hereunder, the SN Parties shall be obligated to indemnify the Buyer Indemnified Parties only for such Buyer Indemnified Costs only to the extent of Buyer’s 50% responsibility for such Buyer Indemnified Costs (with the other 50% of such Buyer Indemnified Costs being the obligation of the LLC Agreement’s counterparty).  With respect to Seller Indemnified Costs incurred by the Company for which indemnification by Buyer is required hereunder, Buyer shall be obligated to indemnify the Seller Indemnified Parties only for such Seller Indemnified Costs only to the extent of Seller’s 50% responsibility for such Seller Indemnified Costs (with the other 50% of such Seller Indemnified Costs being the obligation of LLC Agreement’s counterparty).
		

		
			(e)Each Party acknowledges and agrees that, after the Closing Date, except as otherwise set forth in 0 and 0, Buyer’s and the other Buyer Indemnified Parties’ and the SN Parties’ and the other Seller Indemnified Parties’ sole and exclusive remedy with respect to the Indemnified Costs shall be in accordance with, and limited by, the provisions set forth in this Article 0.  
		

		
			(f)For purposes of determining any Losses resulting from a breach of any of the SN Parties’ representations and warranties contained in 0 or 0 for which Buyer Indemnified Parties would be entitled to indemnification, any dollar or materiality qualifications in the SN Parties’ representations and warranties shall be disregarded.
		

		
			Section 11.5Tax Treatment of Payment of Indemnity Costs.  The SN Parties and Buyer agree that any payment of Indemnified Costs made hereunder will be treated by the Parties on their Tax Returns as an adjustment to the Purchase Price. 
		

		
			 
		

		
			Section 11.6Express Negligence Rule.  THE FOREGOING INDEMNITIES ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR 

		 

		

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OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SOLE, CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE, STRICT LIABILITY OR FAULT OF ANY OF THE INDEMNIFIED PARTIES.
		

		
			 
		

		
			ARTICLE XII.
		

		
			MISCELLANEOUS 
		

		
			Section 12.1WAIVERS AND DISCLAIMERS.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, EXCEPT FOR THE EXPRESS REPRESENTATIONS AND WARRANTIES AND OTHER COVENANTS AND AGREEMENTS MADE BY THE PARTIES IN THIS AGREEMENT, THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT NONE OF THE PARTIES HAVE MADE, DOES NOT MAKE, AND EACH SUCH PARTY SPECIFICALLY NEGATES AND DISCLAIMS, ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS, IMPLIED OR STATUTORY, ORAL OR WRITTEN, PAST OR PRESENT, REGARDING (A) THE VALUE, NATURE, QUALITY OR CONDITION OF THE COMPANY OR ITS ASSETS, INCLUDING THE WATER, SOIL, GEOLOGY OR ENVIRONMENTAL CONDITION OF THE ASSETS OF THE COMPANY GENERALLY, THE PRESENCE OR LACK OF HAZARDOUS SUBSTANCES OR OTHER MATTERS ON THE ASSETS OF THE COMPANY; (B) THE INCOME TO BE DERIVED FROM THE COMPANY OR ITS ASSETS; (C) THE SUITABILITY OF THE ASSETS OF THE COMPANY FOR ANY AND ALL ACTIVITIES AND USES THAT MAY BE CONDUCTED THEREON; (D) THE COMPLIANCE OF OR BY THE ASSETS OF THE COMPANY OR ITS OPERATION WITH ANY APPLICABLE LAWS (INCLUDING ANY ZONING, ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR REQUIREMENTS); OR (E) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE ASSETS OF THE COMPANY. EXCEPT TO THE EXTENT PROVIDED IN THIS AGREEMENT, NONE OF THE PARTIES IS LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE COMPANY OR ITS ASSETS FURNISHED BY ANY AGENT, EMPLOYEE, SERVANT OR THIRD PARTY. THIS SECTION 0 SHALL SURVIVE THE PURCHASE OF THE INTERESTS OR THE TERMINATION OF THIS AGREEMENT. THE PROVISIONS OF THIS SECTION 0 HAVE BEEN NEGOTIATED BY THE PARTIES AFTER DUE CONSIDERATION AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY REPRESENTATIONS OR WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT TO THE COMPANY OR ITS ASSETS THAT MAY ARISE PURSUANT TO APPLICABLE LAW NOW OR HEREAFTER IN EFFECT, OR OTHERWISE, EXCEPT AS SET FORTH IN THIS AGREEMENT.
		

		
			 
		

		
			Section 12.2Expenses.  Except as expressly provided in this Agreement, all costs and expenses incurred by the Parties in connection with the consummation of the transactions contemplated hereby shall be borne solely and entirely by the Party which has incurred such expense. For the avoidance of doubt, (i) Buyer shall be responsible for all costs and expenses (including attorneys’ fees and expenses) incurred by the conflicts committee of the board of directors of the General Partner in connection with this Agreement and the transactions contemplated herein and (ii) the SN Parties and their Affiliates shall be responsible for all costs 

		 

		

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and expenses (including attorneys’ fees and expenses) incurred by the audit committee of the board of directors of SN in connection with this Agreement and the transactions contemplated herein. 
		

		
			 
		

		
			Section 12.3Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be valid and effective under Applicable Law, but if any provision of this Agreement or the application of any such provision to any person or circumstance will be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision hereof, and the Parties will negotiate in good faith with a view to substitute for such provision a suitable and equitable solution in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid, illegal or unenforceable provision.
		

		
			 
		

		
			Section 12.4Notice.  Any notice, communication, request, instruction or other document by any party to another required or permitted hereunder shall be given in writing and addressed as set forth below.  Any such notice, communication, request, instruction or other document shall be deemed to have been duly made or given and the receiving Party charged with notice as follows: (i) if personally delivered, when received; (ii) if sent by facsimile, with electronic confirmation of delivery, if sent during normal business hours on a Business Day, and if not sent during normal business hours on a Business Day, on the next subsequent Business Day; (iii) if mailed certified mail, return receipt requested, on the day such notice is received, and if such day is not a Business Day, on the next subsequent Business Day; or (iv) if sent by overnight courier, the next Business Day after placement into the custody of the overnight courier.  All notices shall be addressed as follows: 
		

		
			 
		

		
			SN Parties:
		

		
			Sanchez Energy Corporation
		

		
			1000 Main Street, Suite 3000
		

		
			Houston, Texas 77002
		

		
			Attn:President
		

		
			Fax:(713) 756 - 2784
		

		
			 
		

		
			with a copy (which shall not constitute notice) to:
		

		
			Akin Gump Strauss Hauer & Feld LLP
		

		
			1111 Louisiana St., 44th Floor
		

		
			Houston, Texas  77002
		

		
			Attention:  David Elder
		

		
			Fax:  (713) 236 - 0822
		

		
			 
		

		
			Buyer:
		

		
			Sanchez Production Partners LP
		

		
			1000 Main Street, Suite 3000
		

		
			Houston, Texas 77002
		

		
			Attn:Chief Financial Officer
		

		
			Fax:(832) 308 - 3720
		

		
			

		 

		

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			with a copy (which shall not constitute notice) to:
		

		
			Andrews Kurth LLP
		

		
			600 Travis, Suite 4200
		

		
			Houston, Texas  77002
		

		
			Attention:  Scott Olson
		

		
			Fax:  (713) 238 - 7410
		

		
			 
		

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

		
			Section 12.5Governing Law; Consent to Jurisdiction; Enforcement.  
		

		
			 
		

		
			 
		

		
			(a)This Agreement shall be subject to and governed by the laws of the State of Texas, excluding any conflicts-of-law rule or principle that might refer the construction or interpretation of this Agreement to the laws of another state. 
		

		
			(b)The Parties hereby irrevocably submit to the exclusive jurisdiction of the state and federal courts located in the State of Texas over any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby, and each Party irrevocably agrees that all claims in respect of such dispute or proceeding shall be brought, heard and determined only in such courts. The Parties hereby irrevocably waive, to the fullest extent permitted by Applicable Law, any objection which they may now or hereafter have to the venue of any dispute arising out of or relating to this Agreement or any of the transactions contemplated hereby brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Each Party agrees that a judgment in any such dispute may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.
		

		
			(c)The Parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, each of the Parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any state or federal court located in the State of Texas, this being in addition to any other remedy to which they are entitled at law or in equity. Each of the Parties hereto further hereby waives (i) any defense in any action for specific performance that a remedy at law would be adequate and (ii) any requirement under any law to post security as a prerequisite to obtaining equitable relief.
		

		
			Section 12.6Confidentiality.
		

		
			(a)Obligations. Each Party shall use commercially reasonable efforts to retain the other Party’s Confidential Information in confidence and not disclose the same to any third party nor use the same, except as authorized by the disclosing Party in writing or as expressly permitted in this 0.  Each Party further agrees to take the same care with the other Party’s Confidential Information as it does with its own, but in no event less than a reasonable degree of care. 
		

		 

		

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			(b)Required Disclosure. Notwithstanding 0 above, if the receiving Party becomes legally compelled to disclose the Confidential Information by a court, Governmental Authority or Applicable Law, including the rules and regulations of the Securities and Exchange Commission, or is required to disclose pursuant to the rules and regulations of any national securities exchange upon which the receiving Party or its parent entity is listed, any of the disclosing Party’s Confidential Information, the receiving Party shall promptly advise the disclosing Party of such requirement to disclose Confidential Information as soon as the receiving Party becomes aware that such a requirement to disclose might become effective, in order that, where possible, the disclosing Party may seek a protective order or such other remedy as the disclosing Party may consider appropriate in the circumstances.  The receiving Party shall disclose only that portion of the disclosing Party’s Confidential Information that it is required to disclose and shall cooperate with the disclosing Party in allowing the disclosing Party to obtain such protective order or other relief.
		

		
			(c)Return of Information. Upon written request by the disclosing Party, all of the disclosing Party’s Confidential Information in whatever form shall be returned to the disclosing Party upon termination of this Agreement or destroyed with destruction certified by the receiving Party, without the receiving Party retaining copies thereof except that one copy of all such Confidential Information may be retained by a Party’s legal department for purposes of resolving any dispute that may arise hereunder or for complying with Applicable Law or the rules of any securities exchange applicable to the Party, and the receiving Party shall be entitled to retain any Confidential Information in electronic form stored on automatic computer back-up archiving systems during the period such backup or archived materials are retained under such Party’s customary procedures and policies; provided, however, that any Confidential Information retained by the receiving Party shall be maintained subject to confidentiality pursuant to the terms of this 0, and such archived or back-up Confidential Information shall not be accessed except as required by Applicable Law.
		

		
			(d)Receiving Party Personnel. The receiving Party will limit access to the Confidential Information of the disclosing Party to those of its employees, attorneys, representatives and contractors that have a need to know such information in order for the receiving Party to exercise or perform its rights and obligations under this Agreement (the “Receiving Party Personnel”).  The Receiving Party Personnel who have access to any Confidential Information of the disclosing Party will be made aware of the confidentiality provision of this Agreement, and will be required to abide by the terms thereof.    
		

		
			(e)Survival. The obligation of confidentiality under this 0 shall survive until the second anniversary the Closing Date.
		

		
			Section 12.7Parties in Interest.  This Agreement shall be binding upon and inure solely to the benefit of each Party hereto and their successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other Person (other than the Indemnified Parties with respect to Article 0) any rights or remedies of any nature whatsoever under or by reason of this Agreement. 
		

		
			 
		

		 

		

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			Section 12.8Assignment of Agreement.  Neither this Agreement nor any of the rights, interests, or obligations hereunder may be assigned by any Party without the prior written consent of the other Party hereto. 
		

		
			 
		

		
			Section 12.9Captions.  The captions in this Agreement are for purposes of reference only and shall not limit or otherwise affect the interpretation hereof. 
		

		
			 
		

		
			Section 12.10Counterparts.  This Agreement may be executed in one or more counterparts (including by facsimile or portable document format (pdf)) for the convenience of the Parties hereto, each of which counterparts will be deemed an original, but all of which counterparts together will constitute one and the same agreement. 
		

		
			 
		

		
			Section 12.11Integration.  This Agreement supersedes any previous understandings or agreements among the Parties, whether oral or written, with respect to their subject matter. This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof and thereof. No understanding, representation, promise or agreement, whether oral or written, is intended to be or shall be included in or form part of this Agreement unless it is contained in a written amendment hereto or thereto and executed by the Parties hereto or thereto after the date of this Agreement.
		

		
			 
		

		
			Section 12.12Amendment; Waiver.  This Agreement may be amended only in a writing signed by all Parties. Any waiver of rights hereunder must be set forth in writing. A waiver of any breach or failure to enforce any of the terms or conditions of this Agreement shall not in any way affect, limit or waive any Party’s rights at any time to enforce strict compliance thereafter with every term or condition of this Agreement. Any amendment or waiver executed by any of the Parties or their respective subsidiaries shall not be effective unless and until the execution of such amendment or waiver has been approved by, with respect to Buyer, the conflicts committee of the board of directors of the General Partner, and with respect to the SN Parties, the audit committee of the board of directors of SN.
		

		
			 
		

		
			Section 12.13Mitigation.  Each Party shall take all reasonable steps, and shall reasonably cooperate with the other Parties in good faith, to mitigate damages in respect of any Claim under Article 0 for which it or another Buyer Indemnified Party or Seller Indemnified Party, as applicable, is seeking indemnification and shall use reasonable efforts to avoid any costs or expenses associated with such Claim and, if such costs and expenses cannot be avoided, to minimize the amount thereof.  Further, no Party shall take nor fail to take any action, which action or inaction induces, incentivizes or otherwise is reasonably likely to lead a third party to make a Claim against a Buyer Indemnified Party or Seller Indemnified Party, for which it seeks indemnification under Article 0.
		

		
			 
		

		
			Section 12.14Privileged Information  The SN Parties and Buyer and its and their respective successors and assigns, hereby acknowledge and agree that all attorney-client privileged communications between or among the Company’s members (involving the SN Parties), the Company and their respective counsel, including, without limitation, Akin Gump Strauss Hauer & Feld, LLP, made in connection with the negotiation, preparation, execution, delivery and closing under, or any dispute or proceeding arising solely in connection with, this Agreement which, immediately prior to the Closing, would be deemed to be privileged communications of the 

		 

		

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Company, its members and/or their counsel and would not be subject to disclosure to Buyer in connection with any process relating to a dispute arising under or in connection with this Agreement, shall continue after the Closing to be privileged communications with such counsel, and neither Buyer, the Company, nor any Person purporting to act on behalf of or through Buyer or the Company, shall seek to obtain the same by any process on the grounds that the privilege attaching to such communications belongs to the Company, and not the Company members (it being understood that the foregoing shall not apply to any communications between the Company and its counsel not made in connection with the negotiation, preparation, execution, delivery and closing under, or any dispute or proceeding arising solely in connection with, this Agreement).  
		

		
			 
		

		
			ARTICLE XIII.
		

		
			INTERPRETATION 
		

		
			Section 13.1Interpretation.  It is expressly agreed that this Agreement shall not be construed against any Party, and no consideration shall be given or presumption made, on the basis of who drafted this Agreement or any particular provision hereof or who supplied the form of Agreement. Each Party agrees that this Agreement has been purposefully drawn and correctly reflects its understanding of the transaction that this Agreement contemplates. In construing this Agreement: 
		

		
			 
		

		
			(a)examples shall not be construed to limit, expressly or by implication, the matter they illustrate; 
		

		
			(b)the word “includes” and its derivatives means “includes, but is not limited to” and corresponding derivative expressions; 
		

		
			(c)a defined term has its defined meaning throughout this Agreement and each Exhibit to this Agreement, regardless of whether it appears before or after the place where it is defined; 
		

		
			(d)each Exhibit to this Agreement is a part of this Agreement, but if there is any conflict or inconsistency between the main body of this Agreement and any Exhibit, the provisions of the main body of this Agreement shall prevail; 
		

		
			(e)the term “cost” includes expense and the term “expense” includes cost; 
		

		
			(f)the headings and titles herein are for convenience only and shall have no significance in the interpretation hereof; 
		

		
			(g)currency amounts referenced herein, unless otherwise specified, are in U.S. Dollars; 
		

		
			(h)unless the context otherwise requires, all references to time shall mean time in Houston, Texas; 
		

		
			(i)whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified; and 
		

		 

		

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			(j)if a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb). 
		

		
			Section 13.2References, Gender, Number.  All references in this Agreement to an “Article,” “Section,” “subsection” or “Exhibit” shall be to an Article, Section, subsection or Exhibit of this Agreement, unless the context requires otherwise. Unless the context clearly requires otherwise, the words “this Agreement,” “hereof,” “hereunder,” “herein,” “hereby,” or words of similar import shall refer to this Agreement as a whole and not to a particular Article, Section, subsection, clause or other subdivision hereof. Cross references in this Agreement to a subsection or a clause within a Section may be made by reference to the number or other subdivision reference of such subsection or clause preceded by the word “Section.” Whenever the context requires, the words used herein shall include the masculine, feminine and neuter gender, and the singular and the plural. 
		

		
			 
		

		
			[Signature page follows.]
		

		
			 
		

		
			

		 

		

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above. 
		

			
					
						 

					
					
						SANCHEZ ENERGY CORPORATION

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/ Chris Heinson

				
	
					
						 

					
					
						Name:

					
					
						Chris Heinson

				
	
					
						 

					
					
						Title:

					
					
						Senior Vice President & Chief Operating Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						SN MIDSTREAM, LLC

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/ Chris Heinson

				
	
					
						 

					
					
						Name:

					
					
						Chris Heinson

				
	
					
						 

					
					
						Title:

					
					
						Senior Vice President & Chief Operating Officer

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						SANCHEZ PRODUCTION PARTNERS LP

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						Sanchez Production Partners GP LLC, as General Partner

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/ Chuck Ward

				
	
					
						 

					
					
						Name:

					
					
						Chuck Ward

				
	
					
						 

					
					
						Title:

					
					
						Chief Financial Officer

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