Document:

Purchase and Sales Agreement made March 31, 2005

 Exhibit 10.1 
  
 PURCHASE AND SALE AGREEMENT 
  

PXP Texas Limited Partnership, 
 a
Texas limited partnership, 
  
 PXP Gulf Coast Inc.,

 a Delaware corporation 
  
 and 
  
 PXP Louisiana LLC, 
 a Delaware limited liability company 
  
 (collectively, the “Sellers”) 
  
 and 
  
 XTO Energy Inc., 
  
 a Delaware corporation 
  
 (the “Buyer”) 
  
 March 31, 2005 

 PURCHASE AND SALE AGREEMENT 
  
 TABLE OF CONTENTS 
  

					
	ARTICLE 1	  	DEFINITIONS	  	1
			
	ARTICLE 2	  	SALE AND PURCHASE OF PROPERTIES	  	6
			
	ARTICLE 3	  	PURCHASE PRICE	  	7
	            3.1.	  	Purchase Price	  	7
			
	ARTICLE 4	  	ADJUSTMENTS TO PURCHASE PRICE	  	8
	            4.1.	  	Increases in Purchase Price	  	8
	            4.2.	  	Decreases in Purchase Price	  	8
			
	ARTICLE 5	  	REPRESENTATIONS AND WARRANTIES OF SELLERS	  	9
	            5.1.	  	Organization	  	9
	            5.2.	  	Authority	  	9
	            5.3.	  	No Conflict	  	9
	            5.4.	  	Enforceability	  	9
	            5.5.	  	Contracts	  	9
	            5.6.	  	Litigation and Claims	  	10
	            5.7.	  	Finder’s Fees	  	10
	            5.8.	  	Sale Contracts	  	10
	            5.9.	  	Notices	  	10
	            5.10.	  	Imbalances	  	10
	            5.11.	  	Property Obligations	  	10
	            5.12.	  	Property Operation	  	10
	            5.13.	  	Take-or-Pay	  	10
	            5.14.	  	Taxes	  	11
	            5.15.	  	Timely Receipt	  	11
	            5.16.	  	Timely Payment	  	11
	            5.17.	  	Outstanding Obligations	  	11
	            5.18.	  	Material Differences	  	11
			
	ARTICLE 6	  	REPRESENTATIONS AND WARRANTIES OF BUYER	  	11
	            6.1.	  	Organization	  	11
	            6.2.	  	Authority	  	11
	            6.3.	  	No Conflicts	  	12
	            6.5.	  	Enforceability	  	12
	            6.6.	  	Basis of Buyer’s Decision; Property Review	  	12
	            6.7.	  	Buyer’s Experience and Counsel	  	12
	            6.8.	  	Closing Funds	  	12
	            6.9.	  	No Further Distribution	  	12
	            6.10.	  	Buyer’s Ability to Take Title	  	12
	            6.11.	  	Buyer’s Ability to Operate	  	13
	            6.12.	  	Finder’s Fees	  	13

  

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	ARTICLE 7	  	COVENANTS OF SELLER	  	13
	            7.1.	  	Conduct of Business Pending Closing	  	13
	            7.2.	  	Access	  	14
	            7.3.	  	Satisfaction of Conditions	  	14
			
	ARTICLE 8	  	COVENANTS OF BUYER	  	14
	            8.1.	  	Satisfaction of Conditions	  	14
			
	ARTICLE 9	  	CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER	  	14
	            9.1.	  	Representations and Warranties	  	14
	            9.2.	  	Covenants	  	14
	            9.3.	  	No Litigation	  	14
	            9.4.	  	Consents	  	15
			
	ARTICLE 10	  	CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER	  	15
	            10.1.	  	Representations and Warranties	  	15
	            10.2.	  	Covenants	  	15
	            10.3.	  	No Litigation	  	15
	            10.4.	  	Consents	  	15
	            10.5.	  	Release of Liens	  	15
			
	ARTICLE 11	  	TITLE MATTERS	  	15
	            11.1.	  	Title Defect Notice	  	15
	            11.2.	  	Determination of Title Defects and Defect Values	  	16
	            11.3.	  	Calculation of Defect Value	  	16
	            11.4.	  	Exclusion of Properties Subject to Title Defects	  	17
	            11.5.	  	Purchase Price Adjustment for Title Benefits	  	17
			
	ARTICLE 12	  	ENVIRONMENTAL MATTERS	  	17
	            12.1.	  	Presence of Wastes, NORM, Hazardous Substances and Asbestos	  	17
	            12.2.	  	Environmental Assessment	  	18
	            12.3.	  	Notice of Adverse Environment Conditions	  	18
	            12.4.	  	Determination of Adverse Environmental Conditions and Remediation Values	  	18
	            12.5.	  	Exclusion of Properties Subject to Adverse Environmental Conditions	  	20
			
	ARTICLE 13	  	SUSPENSE FUNDS HELD BY SELLER	  	20
	            13.1.	  	Suspense Funds Held By Seller	  	20
			
	ARTICLE 14	  	CLOSING	  	21
	            14.1.	  	The Closing	  	21
	            14.2.	  	Closing Statement	  	21
	            14.3.	  	Closing Deliveries	  	21
			
	ARTICLE 15	  	POST-CLOSING ADJUSTMENTS	  	22
	            15.1.	  	Final Settlement Statement	  	22
	            15.2.	  	Arbitration	  	22
	            15.3.	  	Payment of Final Purchase Price	  	22

  

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	ARTICLE 16	  	ALLOCATION OF RISK	  	23
	            16.1.	  	Sellers’ Indemnity	  	23
	            16.2.	  	Survival of Sellers’ Representations and Warranties	  	23
	            16.3.	  	Buyer’s Indemnity	  	23
	            16.4.	  	Assumption by Buyer	  	24
	            16.5.	  	Limitations of Warranties	  	24
	            16.6.	  	Gas Balancing	  	25
			
	ARTICLE 17	  	RISK OF LOSS	  	26
	            17.1.	  	Casualty Loss	  	26
	            17.2.	  	Buyer’s Risk of Loss	  	26
			
	ARTICLE 18	  	TERMINATION AND REMEDIES	  	26
	            18.1.	  	Termination	  	26
	            18.2.	  	Effect of Termination	  	27
	            18.3.	  	Remedies	  	27
			
	ARTICLE 19	  	ADDITIONAL COVENANTS	  	27
	            19.1.	  	Further Assurances	  	27
	            19.2.	  	Access to Records by Seller	  	28
	            19.3.	  	Use of Sellers’ Name	  	28
	            19.4.	  	Sellers’ Employees	  	28
			
	ARTICLE 20	  	ARBITRATION	  	28
	            20.1.	  	Determination	  	28
	            20.2.	  	Decision Binding	  	29
			
	ARTICLE 21	  	MISCELLANEOUS	  	29
	            21.1.	  	Notice	  	29
	            21.2.	  	Governing Law	  	30
	            21.3.	  	Assignment	  	30
	            21.4.	  	Entire Agreement	  	30
	            21.5.	  	Amendment; Waiver	  	30
	            21.6.	  	Severability	  	30
	            21.7.	  	Construction	  	30
	            21.8.	  	Confidentiality	  	31
	            21.9.	  	Headings	  	31
	            21.10.	  	Counterparts	  	31
	            21.11.	  	Expenses, Fees and Taxes	  	31
	            21.12.	  	Laws and Regulations	  	31
	            21.13.	  	Tax-Deferred Exchange Option	  	32
	            21.14.	  	Public Announcements	  	32

  
  

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 Exhibits and Schedules: 
  

			
	 Exhibit A:
	  	Leases
	 Exhibit B:
	  	Wells
	 Exhibit C:
	  	Form of Assignment

  

			
	 Schedule 5.3
	  	Consents; Preferential Purchase Rights
	 Schedule 5.5
	  	Material Contracts
	 Schedule 5.6
	  	Litigation
	 Schedule 5.10
	  	Gas Imbalances
	 Schedule 5.17
	  	Obligations

  

 iv 

 PURCHASE AND SALE AGREEMENT 
  
 This Purchase and Sale Agreement (“Agreement”) is made and entered into on March 31, 2005, by and
among PXP Texas Limited Partnership, a Texas limited partnership (“PXP Texas”), PXP Gulf Coast Inc., a Delaware corporation (“PXP Gulf Coast”), and PXP Louisiana LLC, a Louisiana limited liability
company (“PXP Louisiana,” and together with PXP Texas and PXP Gulf Coast, “Sellers”) and XTO Energy Inc., a Delaware corporation
(“Buyer,” and together with Sellers, the “Parties”). 
  
 ARTICLE 1 
 DEFINITIONS 
  
 “Adverse Environmental Condition” means any
contamination or condition exceeding regulatory limits and not otherwise authorized by permit or law, resulting from any discharge, release, production, storage, treatment, seepage, escape, leakage, emission, emptying, leaching or any other
activities on, in or from any Property, or the migration or transportation from other lands to any Property, of any wastes, pollutants, contaminants, hazardous materials or other materials or substances subject to regulation relating to the
protection of the environment that require remediation based upon the condition at the Effective Time pursuant to any current federal, state or local laws or statutes, including the Environmental Laws. 
  
 “Adverse Environmental Condition Notice” is defined
in Section 12.3. 
  
 “Adverse Environmental
Condition Removal” is defined in Section 12.5. 
  
 “Agreement” is defined in the preamble. 
  
 “Allocated Value” with respect to any Property means the value allocated to Sellers’ interest in such Property as set forth on Exhibit B. 
  
 “Assignment” is defined in Section 14.3.1.

  
 “Business Day” means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banks in Houston, Texas, are generally authorized or obligated, by law or executive order, to close. 
  
 “Buyer” is defined in the preamble. 
  
 “Buyer Group” means Buyer, its affiliates and their respective employees, officers, directors,
agents and representatives. 
  
 “Buyer’s Suspense
Account” is defined in Article 13. 
  
 “Casualty Loss” is defined in Section 17.1. 
  
 “Claim” means any loss, cost or expense (including reasonable attorneys’ fees, experts’ fees and court costs), damage, obligation, claim, liability or cause of action caused by,
relating to or arising out of any lawsuit, regulatory or administrative action whose basis is the violation of any law or regulation. 

  

 1 

 “Closing” is defined in Section 14.1. 
  
 “Closing Date” is defined in Section 14.1.

  
 “Confidentiality Agreement” is defined
in Section 21.4. 
  
 “Contract” is
defined in Section 2.1.3. 
  
 “Data” is defined in Section 7.2. 
  
 “Defect Notification Deadline” means 5:00 p.m., Houston, Texas time, on May 10, 2005. 
  
 “Defect Value” means, with respect to each Property that is agreed or determined to be subject to a Title Defect, the lesser of
(a) the Allocated Value of the Property subject to such Title Defect and (b) the amount determined in accordance with Section 11.2.2 with respect to such Title Defect. 
  
 “Easement” is defined in Section 2.1.4. 
  
 “Effective Time” is defined in Section 2.1.

  
 “Environment Defects Notice” is
defined in Section 12.3. 
  
 “Environmental
Laws” means all applicable laws and regulations concerning or relating to the pollution or protection of the environment, including the Clean Air Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980
(“CERCLA”), the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance Control Act, the Hazardous and Solid Waste Amendments Act of 1984, the Superfund Amendments and Reauthorization Act of
1986, the Hazardous Materials Transportation Act, the Clean Water Act, the National Environmental Policy Act, the Endangered Species Act, the Fish and Wildlife Coordination Act, the National Historic Preservation Act and the Oil Pollution Act of
1990, as such laws may be amended from time to time and all regulations, orders, rulings, directives, requirements and ordinances promulgated thereunder. 
  
 “Facilities” is defined in Section 2.1.2. 
  
 “Final Settlement Statement” is defined in Section 15.1. 
  
 “GAAP” means United States generally accepted
accounting principles. 
  
 “Good and Defensible
Title” means such title to the Properties that (a) entitles Sellers to receive not less than the Net Revenue Interests set forth in Exhibit B in all Hydrocarbons produced from the Wells, units or Leases described in Exhibit
B and (b) obligates Sellers to bear not more than the Working Interest set forth in Exhibit B in the Wells, units or Leases described in Exhibit B (unless there is a corresponding increase in the Net Revenue Interest) and (ii) is
free and clear of all liens and encumbrances, except for Permitted Encumbrances. 
  

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 “Hydrocarbons” means oil, gas, natural gas liquids, condensate and related
hydrocarbons. 
  
 “Lease” is defined in
Section 2.1. 
  
 “Liquidated Title Defect
Payment” is defined in Section 11.3.2. 
  
 “Land” is defined in Section 2.1.1. 
  
 “Loss” means all damages, losses, liabilities, obligations, payments, amounts paid in settlement, fines, penalties, costs (including reasonable fees and expenses of attorneys, accountants and
other professional advisors, as well as of expert witnesses, and other costs of investigation, preparation and litigation in connection with any pleading, claim, demand or other action) of any kind or nature whatsoever, whether known or unknown,
contingent or vested, or matured or unmatured. 
  
 “Material Adverse Effect” means a material adverse effect on the ownership, use or value of the Properties, taken as a whole. 
  

“Material Contract” is defined in Section 5.5. 
  
 “Minimal Defect” means any individual Title Defect with a Defect Value of less than the greater of
(a) 2% of the Allocated Value of the Property affected thereby or (b) $10,000, or any individual Adverse Environmental Condition with a Remediation Value of less than the greater of (x) 2% of the Allocated Value of the Property affected thereby or
(y) $10,000. 
  
 “Net Revenue Interest”
means Sellers’ interest in and to all production of Hydrocarbons saved, produced and sold from any Well, unit or Lease described in Exhibit B after giving effect to all valid lessor’s royalties, overriding royalties, production
payments, carried interests, liens and other encumbrances or charges against production therefrom. 
  
 “NORM” means naturally occurring radioactive material. 
  
 “Outside Date” is defined in Section 14.1. 
  
 “Party” is defined in the preamble. 
  
 “Permit” is defined in Section 2.1.6.

  
 “Permitted Encumbrances” means:

  
 (a) Lessors’ royalties, overriding royalties,
reversionary interests and similar burdens if the cumulative effect of the burdens does not operate to reduce Sellers’ Net Revenue Interest in a Well, unit or Lease described in Exhibit B below the Net Revenue Interest for such Well,
unit or Lease set forth in Exhibit B or operate to increase Sellers’ Working Interest in a Well, unit or Lease described in Exhibit B to more than the Working Interest for such Well, unit or Lease set forth in Exhibit B;

  

 3 

 (b) Division orders and sales contracts terminable without penalty upon no more than 30 days notice to
the purchaser; 
  
 (c) Required third-party consents to
assignment and similar agreements with respect to which waivers or consents (i) are obtained from the appropriate parties or (ii) are routinely obtained after Closing for transactions of this nature; 
  
 (d) Materialman’s, mechanic’s, repairman’s, employee’s,
contractor’s, operator’s, tax and other similar liens or charges arising in the ordinary course of business for obligations (i) that are not delinquent or that will be paid and discharged in the ordinary course of business or (ii) if
delinquent, that are being contested in good faith by appropriate action of which Buyer is notified in writing before Closing and for which Sellers indemnify Buyer subsequent to Closing; 
  
 (e) All rights to consent by, required notices to, filings with, or other actions by governmental entities in connection
with the sale or conveyance of oil and gas leases or interests therein if they are routinely obtained subsequent to the sale or conveyance; 
  
 (f) Easements, rights-of-way, servitudes, permits, surface leases and other rights in respect of surface operations that do not materially interfere with
oil and gas operations to be conducted on any Well or Lease; 
  
 (g) All (i) operating agreements, unit agreements, unit operating agreements, pooling agreements and pooling designations affecting the Properties that are contained in Sellers’ files or (ii) compulsory or commissioner’s pooling
or units; provided that the effect of any such documents will not reduce Sellers’ interest with respect to oil and gas produced from any Well, unit or Lease below the Net Revenue Interest set forth in Exhibit B, or increase such
Sellers’ Working Interest in such Well, unit or Lease to more than the Working Interest set forth in Exhibit B for such Well, unit or Lease (unless there is a corresponding increase in the Net Revenue Interest); 
  
 (h) Conventional rights of reassignment prior to release or surrender
requiring notice to the holders of the rights; 
  
 (i) All rights
reserved to or vested in any governmental, statutory or public authority to control or regulate any of the Properties in any manner, and all applicable laws, rules and orders of any governmental authority; 
  
 (j) The terms and conditions of the Leases, and of all agreements that are
contained in Sellers’ files or that are recorded in the public records of the appropriate jurisdiction and which do not reduce Sellers’ interest with respect to oil and gas produced from any Well, unit or Lease below the Net Revenue
Interest set forth in Exhibit B for such Well, unit or Lease, or increase Sellers’ Working Interest in such Well, unit or Lease to more than the Working Interest set forth in Exhibit B for such Well, unit or Lease (unless there is
a corresponding increase in the Net Revenue Interest); 
  

 4 

 (k) All other liens, charges, encumbrances, contracts, agreements, instruments, obligations, defects and
irregularities affecting the Properties which individually or in the aggregate are not such as to interfere materially with the operation, value or use of any of the Properties, could not reasonably be expected to prevent or delay Buyer from
receiving the proceeds of production from any of Well, unit or Lease and which do not reduce Sellers’ interest with respect to Hydrocarbons produced from any Well, unit or Lease below the Net Revenue Interest set forth in Exhibit B for
such Well, unit or Lease, or increase Sellers’ Working Interest in such Well, unit or Lease to more than the Working Interest set forth in Exhibit B for such Well, unit or Lease (unless there is a corresponding increase in the Net
Revenue Interest); 
  
 (l) Any Title Defects that constitute
Minimal Defects; and 
  
 (m) Any Title Defects Buyer has
expressly waived in writing or which are deemed to have become Permitted Encumbrances under Section 11.1. 
  
 “Preliminary Purchase Price” is defined in Section 14.2. 
  
 “Property” is defined in the last sentence of Section 2.1. 
  
 “Purchase Price” is defined in Section 3.1.

  
 “PXP Gulf Coast” is defined in the
preamble. 
  
 “PXP Louisiana” is defined
in the preamble. 
  
 “PXP Texas” is
defined in the preamble. 
  
 “Record” is
defined in Section 2.1.7. 
  
 “Remediation
Value” is defined in Section 12.3. 
  
 “Routine Government Approvals” is defined in Section 5.2. 
  
 “Sellers” is defined in the preamble. 
  
 “Seller Group” means Sellers, their affiliates and the respective employees, officers, directors, agents and representatives of
Sellers and their affiliates. 
  
 “Sellers’
Knowledge” means the actual knowledge of any of Thomas Gladney, Marc Hensel, Richard Pendleton, Jim Rumsey, John Stanford, Bud Simmons or Marc Ernest. 
  
 “Sellers’ Retained Liabilities” is defined in the last sentence of Section 16.1.

  
 “Tax Deferred Exchange” is defined in
Section 21.13. 
  
 “Title Benefit”
is defined in Section 11.5. 
  
 “Title
Defect” is defined in Section 11.1. 
  

 5 

 “Title Defect Notice” is defined in Section 11.1. 
  
 “Title Defect Removal” is defined in Section
11.4. 
  
 “Uncured Title Defect” means
any Title Defect, other than a Minimal Defect, neither removed pursuant to a Title Defect Removal, nor cured, not later than two Business Days prior to Closing. 
  

“Uncured Title Defects Value” means the Aggregate Defect Value for all Uncured Title Defects minus the aggregate value
of all Title Benefits. 
  
 “Unremedied Adverse
Environmental Condition” means any Adverse Environmental Condition, other than a Minimal Defect, that has not been removed pursuant to an Adverse Environmental Condition Removal, and for which Seller has not elected to remediate under
Section 12.4.3. 
  
 “Unremedied Adverse
Environmental Conditions Value” means the aggregate Remediation Value of all Unremedied Adverse Environmental Conditions. 
  
 “Well” is defined in Section 2.1.2. 
  
 “Working Interest” means, with respect to the Wells, units or Leases set forth in Exhibit B,
Sellers’ interest in and to the full and entire leasehold estate created under and by virtue of the Leases and all rights and obligations of every kind and character appurtenant thereto or arising therefrom, without regard to any valid
lessor’s royalty, overriding royalties, production payments, carried interests, liens, or other encumbrances or charges against production therefrom insofar as such interest in said leasehold estate is burdened with the obligation to bear and
pay costs of operations. 
  
 ARTICLE 2 
 SALE AND PURCHASE OF PROPERTIES 
  
 2.1. Subject to the terms and conditions herein set forth, Sellers agree to sell, assign, convey and deliver to Buyer, and Buyer agrees to purchase and
acquire from Sellers at the Closing, but effective as of 7:00 A.M. on January 1, 2005 (the “Effective Time”), all of Sellers’ right, title and interest in and to the following: 
  
 2.1.1. The oil, gas and mineral leases, and the leasehold
estates created thereby, described in Exhibit A (collectively, the “Leases”), and all of the lands covered by the Leases (“Lands”), together with corresponding interests in and to all the
property and rights incident thereto, including all rights in any pooled or unitized acreage by virtue of the Lands being a part thereof, all production from the pool or unit allocated to any such Lands; and all interests in any wells within the
pool or unit associated with the Lands; 
  
 2.1.2. All producing, non-producing, shut-in and abandoned oil and gas wells, salt water disposal wells, injection wells, and water wells located on the Leases or lands pooled or unitized therewith, including the wells described in
Exhibit B and the proration units associated therewith (“Wells”), the Leases, or portions thereof, associated with 

  

 6 

 
proved undeveloped reserves separately identified as individual Properties in Exhibit B and all pipelines, personal property, equipment, fixtures, and
improvements located on and appurtenant to the Leases and Lands or elsewhere insofar as they are used or obtained in connection with the operation of the Leases or relate to the production, treatment, sale, or disposal of Hydrocarbons or water
produced from the Leases or Lands or attributable thereto (the “Facilities”); 
  
 2.1.3. All farmout and farmin agreements, operating agreements, production sales and purchase contracts, saltwater disposal agreements,
surface leases, division and transfer orders, and (to the extent transferable by Sellers without material restrictions under third party agreements) all other contracts, contractual rights, interests and other agreements covering or affecting any or
all of the Leases, Lands, Wells and Facilities (the “Contracts”); 
  
 2.1.4. All easements, rights-of-way, licenses, authorizations, permits, and similar rights and interests applicable to, or used or useful
in connection with, any or all of the Leases, Lands, Wells and Facilities (the “Easements”); 
  
 2.1.5. All Hydrocarbons (or the proceeds from the sale of Hydrocarbons) produced after the Effective Time attributable to Sellers’
interest in the Leases, Lands, Wells, Facilities and Contracts; 
  
 2.1.6. All environmental and other governmental (whether federal, state or local) permits, licenses, orders, authorizations, franchises and related instruments or rights relating to the ownership, operation or use of
the Leases, Lands, Wells and Facilities (the “Permits”); and 
  
 2.1.7. To the extent transferable without material restriction or payment of a transfer or licensing fee under third party agreements, all
books, files, records, correspondence, studies, surveys, reports, geologic, proprietary geophysical and seismic data (including raw data and any interpretative data or information relating to such geologic, geophysical and seismic data) and other
data in the actual possession or control of Sellers and relating to the operation of the Leases, Lands, Wells and Facilities, including all title records, customer lists, supplier lists, sales materials, promotional materials, operational records,
technical records, production and processing records, division order and lease right-of-way files, accounting files and contract files (the “Records”). 
  
 All of the real and personal properties, rights, titles, and interests described in Sections 2.1.1 through 2.1.7, subject to the
limitations and terms expressly set forth herein and in Exhibits A and B, are hereinafter collectively called the “Properties” or, individually, a “Property.” 
  
 ARTICLE 3 
 PURCHASE PRICE 
  
 3.1. Purchase Price. The total purchase price for all of Sellers’ interest in the Properties shall be Three Hundred Fifty Million Dollars ($350,000,000) (the “Purchase
Price”), subject to any applicable adjustments as hereinafter provided. 
  

 7 

 ARTICLE 4 
 ADJUSTMENTS TO PURCHASE PRICE 
  
 The Purchase Price shall be adjusted as follows: 
  
 4.1. Increases in Purchase Price. The Purchase Price shall be increased by an amount equal to the sum of the following amounts: 
  
 4.1.1. The amount of costs and expenses actually paid or to be paid by Sellers and their affiliates related to owning, operating,
producing and maintaining the Properties from the Effective Time to the Closing Date, including capital expenditures, plus a fixed overhead charge of $325,000 per month, which shall be in lieu of any per-well COPAS administrative charges on wells
operated by any Seller or any affiliate of Sellers; 
  
 4.1.2. The amount of all prepaid expenses, including ad valorem, property and similar taxes and assessments based upon or measured by ownership, relating to the Properties, paid by Sellers and attributable to periods of time after the
Effective Time; 
  
 4.1.3. The amount of all
upward adjustments to the Purchase Price provided for in this Agreement; and 
  
 4.1.4. The value of (a) all oil and other Hydrocarbons in pipelines or in tanks above the pipeline sales connection, in each case at the Effective Time that is credited to the Properties and not sold by Sellers prior
to Closing, (b) all unsold inventory of gas plant products attributable to the Properties at the Effective Time and not sold by Sellers prior to Closing, each such value to be the market or, if applicable, the contract price in effect as of the
Effective Time, less any applicable severance taxes and royalties and (c) all gas imbalance volumes owed to a Seller by a third party as of the Effective Time as reflected on Schedule 5.10, multiplied by $3.50 per mmbtu. 
  
 4.2. Decreases in Purchase Price. The Purchase Price shall be
decreased by an amount equal to the sum of the following amounts: 
  
 4.2.1. The amount of all proceeds paid or to be paid to Sellers, including proceeds from the sale of production, net of all applicable taxes and royalties paid or to be paid by Sellers, attributable to the Properties
for periods of time after the Effective Time; 
  
 4.2.2. An amount equal to all ad valorem, property, and similar taxes and assessments based upon or measured by ownership, relating to the Properties that are unpaid as of the Closing Date and attributable to periods of time prior to the
Effective Time; 
  
 4.2.3. The amount, if any,
relating to Title Defect Removals under Section 11.4; 
  
 4.2.4. The amount, if any, by which the Uncured Title Defects Value exceeds $7,000,000; 
  

 8 

 4.2.5. The amount, if any, by which the Unremedied Adverse Environmental Conditions Value
exceeds $7,000,000; 
  
 4.2.6. All gas imbalance
volumes owed by a Seller to a third party as of the Effective Time as reflected on Schedule 5.10, multiplied by $3.50 per mmbtu; and 
  
 4.2.7. Any other amount provided for in this Agreement. 
  
 ARTICLE 5 
 REPRESENTATIONS AND WARRANTIES OF SELLERS 
  
 Sellers represent and warrant to Buyer that each of the statements made in this Article 5 are true and correct as of the date of this Agreement and will be true and correct as of the Closing Date. 
  
 5.1. Organization. PXP Texas is a Texas limited partnership validly
existing and in good standing under the laws of the state of Texas. PXP Gulf Coast is a Delaware corporation validly existing and in good standing under the laws of the State of Delaware. PXP Louisiana is a Delaware limited liability company validly
existing and in good standing under the laws of the State of Delaware. Each Seller is in good standing and duly qualified to do business in each other jurisdiction in which the conduct of its business or ownership or leasing of its properties makes
such qualification or registration necessary. 
  
 5.2.
Authority. Each Seller has full power to enter into and perform its obligations under this Agreement and has taken all proper limited partnership or limited liability company action to authorize entering into this Agreement and performing its
obligations hereunder. 
  
 5.3. No Conflict. To
Sellers’ Knowledge, neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with the terms hereof will result in any default under any material agreement or
instrument to which any Seller is a party (including its governing documents) or by which any of the Properties is bound, or violate any order, writ, injunction, decree, statute, rule or regulation applicable to any Seller or to any of the
Properties, other than requirements to obtain (a) those consents to assignment or waivers of preferential rights to purchase from third parties set forth in Schedule 5.3 and (b) approvals from governmental entities customarily obtained
post-closing. 
  
 5.4. Enforceability. This Agreement has
been duly executed and delivered on behalf of each Seller and constitutes (and the Assignment, when executed and delivered at Closing, will constitute) the legal, valid and binding obligation of such Seller, enforceable in accordance with its terms,
except as limited by bankruptcy or other similar laws applicable generally to creditors’ rights and as limited by general equitable principles. 
  
 5.5. Contracts. To Sellers’ Knowledge, Schedule 5.5 describes (a) all area of mutual interests agreements (other than area of mutual
provisions of customary joint operating agreements), all purchase or sale agreements (other than with respect to production of Hydrocarbons and the disposition of field equipment in the ordinary course), partnership (other than tax partnerships),
joint venture and/or exploration or development program agreements relating to Wells and Leases or otherwise included in the Properties, (b) all of the production 

  

 9 

 
sales, marketing and processing agreements relating to the Wells and Leases, other than such agreements which are terminable by Sellers without penalty on 30
or fewer days’ notice and (c) any contracts or agreements (other than contracts for utility services) burdening the Properties which could reasonably be expected to obligate Sellers to expend in excess of $250,000 in any calendar year ((a)
– (c) collectively, the “Material Contracts”). To Sellers’ Knowledge, (x) no Seller has received written notice of its default under any of the Material Contracts, (y) the Leases or the Easements; the Material
Contracts and the Leases are in full force and effect and have not been modified or amended in any material respect; and (z) no Seller is in default in any material respect thereunder or under any Easement. 
  
 5.6. Litigation and Claims. Except as set forth on Schedule
5.6, no suit, action, demand, proceeding, lawsuit or other litigation is pending or, to Sellers’ Knowledge, threatened with respect to any Seller that could reasonably be expected to materially and adversely affect the ownership, operation
or value of the Properties or any of the Wells or Leases. 
  
 5.7.
Finder’s Fees. Except as set forth in Section 14.3.6, no Seller has incurred any liability, contingent or otherwise, for brokers’ or finders’ fees with respect to this transaction for which Buyer shall have any
responsibility whatsoever. 
  
 5.8. Sale Contracts. Except
for (a) contracts governing the sale of Hydrocarbons in the ordinary course or (b) the disposition in the ordinary course of equipment no longer suitable for oil and gas field operations, there are no contracts or options outstanding for the sale,
exchange or transfer of any Seller’s interest in the Properties or any portion thereof. 
  
 5.9. Notices. To Sellers’ Knowledge, (a) Sellers’ operation of the Properties is not the subject of any pending regulatory compliance or enforcement actions and (b) no Seller has received written
notice, which has not heretofore been complied with, of any violation of laws, rules or regulations (federal, state and local) issued with respect to the Properties. 
  
 5.10. Imbalances. To Sellers’ Knowledge, except as set forth on Schedule 5.10, there are no gas or other
Hydrocarbon production, pipeline, transportation or processing imbalances existing as of the Effective Time with respect to any of the Properties. 
  
 5.11. Property Obligations. All rentals, royalties, shut-in royalties, overriding royalties and other payments due pursuant to or with respect to
the Leases have been properly paid, except for such failures to pay which could not reasonably be expected to have a Material Adverse Effect. 
  
 5.12. Property Operation. To Sellers’ Knowledge, the Wells have been drilled, completed, operated, developed and produced in material
compliance with all applicable judgments, orders, laws, rules and regulations (other than those relating to environmental or title matters, which are dealt with in Article 11 and Article 12) and all necessary certificates, consents,
permits, licenses and other governmental authorizations (other than those relating to environmental or title matters, which are dealt with in Article 11 and Article 12) which are material to the ownership, use or operation of the
Properties have been obtained and are in force. 
  
 5.13.
Take-or-Pay. To Sellers’ Knowledge, except as set forth on Exhibit B, neither Seller is obligated, under a take-or-pay or similar arrangement, or by virtue of an election to non- 
  

 10 

 
consent, or not participate in a past or current operation on the Properties pursuant to the applicable operating agreement, to produce Hydrocarbons, or
allow Hydrocarbons to be produced, without receiving full payments at the time of delivery in an amount that corresponds to the Net Revenue Interest in the Hydrocarbons attributable to any Well, unit or Lease described in Exhibit B.

  
 5.14. Taxes. All taxes that are due based on or
measured by the ownership of any Property, the production or removal of Hydrocarbons therefrom or the receipt of proceeds therefrom have been properly paid. 
  
 5.15. Timely Receipt. To Sellers’ Knowledge, each Seller is timely receiving, in all material respects, its share of proceeds from the sale of
Hydrocarbons produced from the Properties without suspense, counterclaim or set-off. There has been no production of Hydrocarbons from the Properties in excess of the allowable production established pursuant to applicable state or federal law or
regulation that would result in any material restriction on production from the Leases subsequent to the Effective Time. 
  
 5.16. Timely Payment. Each Seller has paid its share of all costs payable by it under the Leases and the Material Contracts, except those being
contested in good faith. 
  
 5.17. Outstanding Obligations.
Except as otherwise described in Schedule 5.17, to Sellers’ Knowledge, there are no outstanding authorizations for expenditures or other written commitments or proposals to conduct operations on the Properties. 
  
 5.18. Material Differences. To Sellers’ Knowledge, there exist no
material differences between the Lease Operating Expense and Revenue statements for the Properties provided by Sellers to Buyer as compared to the lease operating expenses incurred by Sellers and the revenues received by Sellers for the periods
covered in the statements. 
  
 ARTICLE 6 
 REPRESENTATIONS AND WARRANTIES OF BUYER 
  
 Buyer represents and warrants to Sellers that each of the statements made in this Article 6 are true and correct as of the date of this Agreement
and will be true and correct as of the Closing Date. 
  
 6.1.
Organization. Buyer is a corporation validly existing and in good standing under the laws of the State of its incorporation. Buyer is in good standing and duly qualified to do business in each other jurisdiction in which the conduct of its
business or ownership or leasing of its properties makes such qualification or registration necessary, and, as of Closing, will be qualified to do business and be in good standing under the laws of the States of Texas, Louisiana and Oklahoma.

  
 6.2. Authority. Buyer has full power to enter into and
perform its obligations under this Agreement and has taken all proper corporate action to authorize entering into this Agreement and performing its obligations hereunder. 
  

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 6.3. No Conflicts. Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, nor the compliance with the terms hereof will result in any default under any material agreement or instrument to which Buyer is a party (including its governing documents), or violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer or any of its properties. 
  
 6.5. Enforceability. This Agreement has been duly executed and delivered on behalf of Buyer and constitutes the legal, valid and binding obligation of Buyer, enforceable in accordance with its terms, except as
limited by bankruptcy or other similar laws applicable generally to creditor’s rights and as limited by general equitable principles. 
  
 6.6. Basis of Buyer’s Decision; Property Review. Buyer: 
  
 6.6.1. Has such knowledge and experience in financial and business matters that it is capable of evaluating
the merits and risks of its investment in the Properties contemplated hereby, and is able to bear the economic risk of such investment indefinitely; 
  
 6.6.2. Has (a) had the opportunity to meet with representative officers and other representatives of Sellers to discuss the Properties and
(b) received all materials, documents and other information that Buyer deems necessary or advisable to evaluate the Properties; 
  
 6.6.3. Has made its own independent examination, investigation, analysis and evaluation of the Properties, including its own estimate of
the value of the Properties; and 
  
 6.6.4. Has
undertaken such due diligence pertaining to the Properties as Buyer deems adequate, including that described above. 
  
 6.7. Buyer’s Experience and Counsel. Buyer is an experienced and knowledgeable investor and operator in the oil and gas business. Prior to
entering into this Agreement, Buyer was advised by and has relied solely on its own expertise and legal, tax, engineering, and other professional counsel concerning this Agreement, the Properties and the value thereof. 
  
 6.8. Closing Funds. Buyer has or will have at the Closing sufficient
funds to enable the payment to Sellers by wire transfer of the Purchase Price in accordance with Article 14 and otherwise to perform Buyer’s obligations under this Agreement. 
  
 6.9. No Further Distribution. Buyer is acquiring the Properties for its own account and not with a view to, or for
offer of resale in connection with, a distribution thereof, within the meaning of the Securities Act of 1933, 15 U.S.C. § 77a et seq., and any other rules, regulations, and laws pertaining to the distribution of securities. Buyer has not
sought or solicited, nor is Buyer participating with, investors, partners or other third parties in order to fund the Purchase Price and to close this transaction, and all funds used by Buyer in connection with this transaction are Buyer’s own
funds. 
  
 6.10. Buyer’s Ability to Take Title. Buyer
is unaware of any fact or circumstance which would preclude or inhibit unconditional approval of Sellers’ assignment of the Properties to Buyer by any governmental agency, including meeting existing or increased bonding requirements.

  

 12 

 6.11. Buyer’s Ability to Operate. Buyer is unaware of any fact or circumstance which would
preclude or inhibit Buyer’s qualification to operate any oil, gas and mineral leases and pipeline(s) previously operated by Sellers, including meeting existing or bonding or other security requirements of any lessee or governmental agency.

  
 6.12. Finder’s Fees. Except as set forth in
Section 14.3.6, Buyer has not incurred any liability, contingent or otherwise, for brokers’ or finders’ fees in respect to this transaction for which any Seller shall have any responsibility whatsoever. 
  
 ARTICLE 7 
 COVENANTS OF SELLER 
  
 7.1. Conduct of Business Pending Closing. From the date hereof to the Closing Date, except as provided herein, as required by any obligation, agreement, Lease, contract, or instrument referred to on any
Exhibit or Schedule or as otherwise consented to in writing by Buyer, each Seller will: 
  
 7.1.1. Not (a) act in any manner with respect to the Properties other than in the normal, usual and customary manner, consistent with
prior practice; (b) dispose of, encumber or relinquish any of the Properties (other than any relinquishment resulting from the expiration of any Lease or Material Contract in accordance with its terms); (c) waive, compromise or settle any material
right or claim with respect to any of the Properties; or (d) except with respect to those matters identified in Schedule 5.17, make capital or workover expenditures with respect to the Properties in excess of $75,000 (net to Sellers’
interest), except when required by an emergency when there shall have been insufficient time to obtain advance consent (provided, that Seller will promptly notify Buyer of any such emergency expenditures); 
  
 7.1.2. Use commercially reasonable efforts to preserve
relationships with all third parties having business dealings with respect to the Properties; 
  
 7.1.3. Cooperate with Buyer in the notification of all applicable governmental regulatory authorities of the transactions contemplated
hereby and cooperate with Buyer in obtaining the issuance by each such authority of such permits, licenses and authorizations as may be necessary for Buyer to own and operate the Properties following the Closing; 
  
 7.1.4. Use commercially reasonable efforts, when necessary
in Buyer’s opinion, to seek appointment of Buyer as the successor operator to Seller with respect to all Properties currently operated by Seller; 
  
 7.1.5. Until Closing maintain all insurance with respect to the Properties currently in force with the same coverages and limits as are in
effect at the date hereof; and 
  

 13 

 7.1.6. Use commercially reasonable efforts to obtain the consents or waivers listed on
Schedule 5.3. 
  
 7.2. Access. Each Seller shall
afford to Buyer and its authorized representatives reasonable access, at Buyer’s sole risk and expense, from the date hereof until the Closing Date during normal business hours, to (a) the Properties operated by such Seller (provided, however,
that Buyer shall indemnify and hold harmless Seller from and against any and all Claims arising from Buyer’s inspection of the Properties (including Claims for personal injuries, property damage and reasonable attorneys’ and experts’
fees, AND SPECIFICALLY FOR CLAIMS ARISING OUT OF OR PARTIALLY OR FULLY CAUSED BY THE NEGLIGENCE OF SELLERS OR THEIR AGENTS OR REPRESENTATIVES)), and (b) such Seller’s operating, accounting, contract, corporate and legal files, records,
materials, data and information regarding the Properties (“Data”); provided, however, that Data shall not include (x) any legal materials the disclosure of which such Seller determines would jeopardize the assertion of a
privilege in ongoing or anticipated litigation with third parties, or (y) information, the disclosure of which would violate any confidentiality agreement to which such Seller is bound. 
  
 7.3. Satisfaction of Conditions. Sellers will use commercially reasonable efforts to take all actions and to do all
things necessary to consummate, make effective and comply with all of the terms of this Agreement (including satisfaction, but not waiver, of the Closing conditions for which they are responsible or otherwise in control). 
  
 ARTICLE 8 
 COVENANTS OF BUYER 
  
 8.1. Satisfaction of Conditions. Buyer will use commercially reasonable efforts to take all actions and to do all things necessary to consummate, make effective and comply with all of the terms of this
Agreement (including satisfaction, but not waiver, of the Closing conditions for which it is responsible or otherwise in control). 
  
 ARTICLE 9 
 CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF SELLER 
  
 The obligations of Sellers to be
performed at the Closing are subject to the fulfillment (or waiver by Sellers in their sole discretion), before or at the Closing, of each of the following conditions: 
  
 9.1. Representations and Warranties. The representations and warranties by Buyer set forth in Article 6 shall
be true and correct in all material respects at and as of the Closing as though made at and as of the Closing. 
  
 9.2. Covenants. Buyer shall have performed and complied with in all material respects all covenants and agreements required to be performed and
satisfied by it at or prior to Closing. 
  
 9.3. No
Litigation. There shall be no suits, actions or other proceedings pending or threatened to restrain or prohibit the consummation of the transactions contemplated by this Agreement. 
  

 14 

 9.4. Consents. All consents and approvals required to be obtained before Closing shall have been
obtained or shall have expired without being exercised and have therefore been waived, except for those consents and approvals which are customarily obtained after closing of transactions similar to those contemplated hereby. 
  
 ARTICLE 10 
 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER 
  
 The obligations of Buyer to be performed at the Closing are subject to the fulfillment (or waiver by Buyer in its sole discretion), before or at the
Closing, of each of the following conditions: 
  
 10.1.
Representations and Warranties. The representations and warranties of the Sellers set forth in Article 5 shall be true and correct in all material respects at and as of the Closing as though made at and as of the Closing; provided,
however, that in no event shall the existence of a Title Defect or an Adverse Environmental Condition cause a representation or warranty to be untrue or incorrect. 
  
 10.2. Covenants. Sellers shall have performed and complied with in all material respects all covenants and agreements
required to be performed and satisfied by them at or prior to Closing. 
  
 10.3. No Litigation. There shall be no suits, actions or other proceedings pending or threatened to restrain or prohibit the consummation of the transactions contemplated by this Agreement. 
  
 10.4. Consents. All consents and approvals required to be obtained
before Closing shall have been obtained or shall have expired without being exercised and have therefore been waived, except for those consents and approvals which are customarily obtained after closing of transactions similar to those contemplated
hereby. 
  
 10.5. Release of Liens. All mortgages, deeds of
trust and other liens of record burdening the Properties, if any (other than Permitted Liens), which secure indebtedness of Sellers or any of their affiliates shall be released at or before Closing. 
  
 ARTICLE 11 
 TITLE MATTERS 
  
 11.1. Title Defect Notice. Buyer shall in good faith provide Sellers with written notice (a “Title Defect Notice”) at or before the Defect Notification Deadline of any fact that renders
Sellers’ title to any Property less than Good and Defensible Title (“Title Defect”), in each case together with, in reasonable detail, a description of (a) the Well, unit and/or Lease with respect to which the claimed
Title Defect(s) relate, (b) the nature of such claimed Title Defect(s) and (c) Buyer’s calculation of the value of each claimed Title Defect(s) in accordance with the guidelines set forth in Section 11.3. Any Title Defect that is not
identified in a properly and timely delivered Title Defect Notice shall thereafter be forever waived and expressly assumed by Buyer and shall be deemed to have become a Permitted Encumbrance. 
  

 15 

 11.2. Determination of Title Defects and Defect Values. 
  
 11.2.1. Within ten Business Days after Sellers’ receipt
of a Title Defect Notice, either Seller shall notify Buyer as to whether Sellers agree with the Title Defects claimed therein and/or the values proposed for such Title Defects therein. If Seller does not agree with any such claimed Title Defect
and/or any such proposed value, then the Parties shall promptly enter into good faith negotiations and shall attempt to agree on such matters. The value agreed by the Parties with respect to a Title Defect shall be the Defect Value for such Title
Defect. 
  
 11.2.2. If the Parties cannot reach
agreement concerning either the existence of a Title Defect or a value therefor with respect to any Property prior to Closing, then, upon any Party’s written request, the Parties shall submit such dispute to a mutually acceptable attorney or
other consultant experienced in title examination in the state in which such Property is located for prompt resolution; provided, however, that if at any time any consultant so chosen fails or refuses to perform hereunder, a new consultant shall be
chosen by the Parties. The cost of any such consultant shall be borne 50% by Sellers and 50% by Buyer. For any such dispute resolution process, Sellers and Buyer shall present a written statement of their respective positions on the dispute to the
consultant within three Business Days after the consultant is selected, and the consultant shall make a determination of all points of disagreement in accordance with the terms and conditions of this Agreement within ten Business Days of receipt of
such statements. The determination by the consultant shall be conclusive and binding on the Parties and shall be enforceable against any Party in any court of competent jurisdiction, and the value determined by the consultant with respect to a Title
Defect shall be the Defect Value for such Title Defect. If necessary to complete such determination, the Closing Date shall be deferred until the consultant has made a determination of the disputed issues with respect thereto and all subsequent
dates and required activities having reference to the Closing Date shall be correspondingly deferred; provided, however, that, unless the Parties mutually agree in writing to the contrary, the Closing Date shall not be deferred under this Section
11.2.2 in any event for more than ten Business Days. 
  
 11.2.3. Sellers shall have the right, but not the obligation, to cure any fact agreed or determined to be a Title Defect. 
  
 11.3. Calculation of Defect Value. 
  
 11.3.1. If a Title Defect exists because Sellers own a lesser Net Revenue Interest in a Property than that shown for such Property on
Exhibit B, then the Defect Value with respect to such Title Defect shall be the amount equal to the product of (a) the Allocated Value of such Property and (b) a fraction, the numerator of which is the interest agreed or determined to be
owned by Sellers and the denominator of which is the respective interest set forth on Exhibit B. 
  
 11.3.2. If a Title Defect is a lien, encumbrance or other charge upon a Property which is liquidated in amount, but such Title Defect is
not a Minimal Defect, then Sellers shall either (a) instruct Buyer to pay at Closing the sum necessary to be paid to the 
  

 16 

 obligee to remove the Title Defect from such Property (the aggregate of all such amounts, the
“Liquidated Title Defect Payment”) or (b) retain the obligation of such Title Defect and elect to challenge the validity thereof (or of any portion thereof), in which case Buyer shall extend reasonable cooperation to Sellers
in such efforts at no risk or expense to Buyer. 
  
 11.3.3. If a Title Defect represents an obligation or burden upon a Property for which the economic detriment to Buyer is not liquidated but can be estimated with reasonable certainty, the Defect Value with respect to such Title Defect
shall be the sum the Parties mutually agree upon in good faith as the present value of the adverse economic effect such Title Defect will have on such Property. If the Parties cannot reach an agreement as to such Defect Value, then such dispute
shall be resolved in the manner set forth in Section 11.2. 
  
 11.4. Exclusion of Properties Subject to Title Defects. With respect to any Property subject to a Title Defect, Sellers shall have the option (which must be exercised by written notice to Buyer at least five Business Days prior to
Closing) to remove such Property from this Agreement, in which case the Purchase Price shall be reduced by the Allocated Value of such Property. If a third party exercises an applicable preferential right of purchase with respect to any Property,
the Purchase Price shall be reduced by the Allocated Value of such Property or, if the preferential right affects less than 100% of such Property, a pro rata portion thereof calculated in accordance with Section 11.3.1, and such Property (or
portion thereof) shall be removed from this Agreement. The removal of a Property or portion thereof under this Section 11.4 is referred to as a “Title Defect Removal”. 
  
 11.5. Purchase Price Adjustment for Title Benefits. If it is agreed or
determined that Sellers own a greater Net Revenue Interest in a Property than is set forth in Exhibit B which exceeds an amount (calculated on the same basis as Defect Values) equal to the greater of (a) 2% of the Allocated Value of such
Property or (b) $10,000 (a “Title Benefit”), the aggregate amount thereof will be taken as an offset to the Uncured Title Defects Value, if any; otherwise, no adjustment to the Purchase Price shall be made therefor.

  
 ARTICLE 12 
 ENVIRONMENTAL MATTERS 
  
 12.1. Presence of Wastes, NORM, Hazardous Substances and Asbestos. BUYER ACKNOWLEDGES THAT THE PROPERTIES HAVE BEEN USED TO EXPLORE FOR, DEVELOP
AND PRODUCE HYDROCARBONS, AND THAT SPILLS OF WASTES, CRUDE OIL, PRODUCED WATER, HAZARDOUS SUBSTANCES AND OTHER MATERIALS MAY HAVE OCCURRED THEREON. ADDITIONALLY, THE PROPERTIES, INCLUDING PRODUCTION EQUIPMENT, MAY CONTAIN ASBESTOS, HAZARDOUS
SUBSTANCES OR NORM. NORM MAY AFFIX OR ATTACH ITSELF TO THE INSIDE OF WELLS, MATERIALS AND EQUIPMENT AS SCALE OR IN OTHER FORMS, AND NORM-CONTAINING MATERIAL MAY HAVE BEEN BURIED OR OTHERWISE DISPOSED OF ON THE PROPERTIES. A HEALTH HAZARD MAY
EXIST IN CONNECTION WITH THE PROPERTIES BY REASON THEREOF. SPECIAL PROCEDURES MAY BE REQUIRED FOR REMEDIATION, REMOVING, 
  

 17 

 TRANSPORTING AND DISPOSING OF ASBESTOS, NORM, HAZARDOUS SUBSTANCES AND OTHER MATERIALS FROM THE PROPERTY. With respect to
the Properties actually acquired by Buyer at Closing hereunder, Buyer assumes all liability for the assessment, remediation, removal, transportation and disposal of these materials and associated activities in accordance with the applicable rules,
regulations and requirements of governmental agencies, unless otherwise provided in this Article 12. 
  
 12.2. Environmental Assessment. Buyer shall have the opportunity to conduct at its sole risk and expense an environmental assessment of the
Properties; provided, however, that Buyer shall not conduct any Phase II audits without Sellers’ prior written consent. Seller will provide reasonable access for this purpose to Properties operated by Seller; for any Property not operated by
Seller, Seller will reasonably cooperate with Buyer in contacting the operators of any such non-operated Property directly to arrange for access for the purposes of environmental assessment. While performing any environmental assessment, Buyer or
any of its representatives and agents must comply with Seller’s environmental and safety rules and policies on Seller-operated Properties, and with the operator’s environmental and safety rules and policies on all other Properties. Prior
to Closing, Buyer will not disclose any information obtained in its environmental assessment to third parties unless agreed to in writing by Seller or unless such disclosure is expressly required by applicable law or regulation or is required
pursuant to legal process of any court or governmental authority. Buyer will notify Seller in advance of any such disclosure and will furnish Seller copies of all materials to be disclosed prior to any disclosure thereof. As soon as possible after
Buyer’s receipt thereof, Buyer shall forward to Seller copies of all reports, data, analysis, test results, remediation costs estimates and recommended remediation procedure or other information concerning or derived from Buyer’s
environmental assessment. 
  
 12.3. Notice of Adverse
Environment Conditions. Buyer shall in good faith provide Sellers with written notice (an “Adverse Environmental Condition Notice”) at or before the Defect Notification Deadline of any claimed Adverse Environmental
Condition, in each case together with, in reasonable detail, a description of (a) the Well, unit and/or Lease or Easement with respect to which such Adverse Environmental Condition(s) is claimed, (b) the nature of such claimed Adverse Environmental
Condition(s) and (c) Buyer’s proposed calculation of the cost to remediate such claimed Adverse Environmental Condition(s) (the “Remediation Value”). Any Adverse Environmental Condition that is not identified in a
properly and timely delivered Environmental Defects Notice shall thereafter be forever waived and expressly assumed by Buyer. 
  
 12.4. Determination of Adverse Environmental Conditions and Remediation Values. 
  
 12.4.1. Within ten Business Days after Sellers’ receipt of an Adverse Environmental Conditions Notice,
Sellers shall notify Buyer as to whether Sellers agree with the Adverse Environmental Condition claimed therein and/or the Remediation Value proposed to be required for remediation of such Adverse Environmental Condition. If Sellers do not agree
with any such claimed Adverse Environmental Condition and/or any such proposed Remediation Value, then the Parties shall promptly enter into good faith negotiations and shall attempt to agree on such matters. The value agreed by the Parties with
respect to an Adverse Environmental Condition shall be the Remediation Value for such Adverse Environmental Condition. 
  

 18 

 12.4.2. If the Parties cannot reach agreement concerning either the existence of an
Adverse Environmental Condition or a Remediation Value therefor with respect to any Property prior to Closing, then, upon any Party’s written request, the Parties shall submit such dispute to a mutually acceptable environmental consultant or
other consultant experienced in oil and gas producing property environmental remediation in the state in which such Property is located for prompt resolution; provided, however, that if at any time any consultant so chosen fails or refuses to
perform hereunder, a new consultant shall be chosen by the Parties. The cost of any such consultant shall be borne 50% by Sellers and 50% by Buyer. For any such dispute resolution process, Sellers and Buyer shall present a written statement of their
respective positions on the dispute to the consultant within three Business Days after the consultant is selected, and the consultant shall make a determination of all points of disagreement in accordance with the terms and conditions of this
Agreement within ten Business Days of receipt of such statements. The determination by the consultant shall be conclusive and binding on the Parties and shall be enforceable against any Party in any court of competent jurisdiction, and the value
determined by the consultant with respect to an Adverse Environmental Condition shall be the Remediation Value for such Adverse Environmental Condition. If necessary to complete such determination, the Closing Date shall be deferred until the
consultant has made a determination of the disputed issues with respect thereto and all subsequent dates and required activities having reference to the Closing Date shall be correspondingly deferred; provided, however, that, unless the Parties
mutually agree to the contrary, the Closing Date shall not be deferred under this Section 12.4.2 in any event for more than ten Business Days. 
  
 12.4.3. Sellers shall have the right, but not the obligation, to remediate any Adverse Environmental Condition at Sellers’ sole cost
in accordance with applicable Environmental Laws. If Sellers elect to remediate an Adverse Environmental Condition, and such remediation cannot be accomplished prior to the Closing Date, Sellers may notify Buyer of Sellers’ intention to
diligently pursue and complete such remediation and to exercise all reasonable efforts and diligence to complete remediation within 90 days of the Closing Date. In such event, the affected Property shall be withheld from the Closing on the Closing
Date and the Allocated Value associated therewith shall be withheld from the Preliminary Purchase Price otherwise payable by Buyer. On the date the final settlement of the Purchase Price adjustments is completed pursuant to Section 15.3,
Buyer will accept, pay for in accordance with this Agreement and receive an assignment of any such Properties as to which Sellers have remediated to Buyer’s reasonable satisfaction any Adverse Environmental Condition asserted prior to Closing.
As to any such Properties still then subject to Adverse Environmental Conditions, Buyer, at its option may (a) offer Sellers an extension of the remediation period on such terms and conditions as Buyer may, in its sole discretion, elect to impose
and Sellers may accept or reject such extension; (b) waive the unremediated Adverse Environmental Condition(s) and accept, pay for in accordance with this Agreement and receive an assignment of the affected Properties subject to such unremediated
Adverse Environmental Condition(s); or (c) eliminate the affected Properties from the purchase and sale transaction and retain the 
  

 19 

 previously withheld portion of the Preliminary Purchase Price related to such Properties, or portion
thereof, free and clear of any claim by Sellers, and thereupon any and all rights of Buyer in or to such Properties shall terminate. During the post-Closing remediation period specified above (as the same may be extended) and through the date the
affected Properties are purchased and sold hereunder, with respect to any such Properties subject to Adverse Environmental Conditions that Sellers are attempting to cure, a Seller shall remain the record owner thereof and shall continue to conduct
its operations thereof or with respect thereto pursuant to the provisions of Article 7 and any other applicable provisions of this Agreement. 
  
 12.5. Exclusion of Properties Subject to Adverse Environmental Conditions. With respect to any Property subject to an Adverse Environmental
Condition, Sellers shall have the option (which must be exercised by written notice to Buyer at least five Business Days prior to Closing) to remove such Property from this Agreement, in which case the Purchase Price shall be reduced by the
Allocated Value of such Property. The removal of a Property or portion thereof under this Section 12.5 is referred to as a “Adverse Environmental Condition Removal”. 
  
 ARTICLE 13 
 SUSPENSE FUNDS HELD BY SELLER 
  
 13.1. Suspense Funds Held By Seller. WITHIN 90 DAYS AFTER THE CLOSING, SELLERS SHALL PROVIDE TO BUYER A LISTING SHOWING ALL PROCEEDS FROM PRODUCTION ATTRIBUTABLE TO THE PROPERTIES THAT ARE CURRENTLY HELD IN
SUSPENSE WHICH ARE OWING TO THIRD PARTY OWNERS OF ROYALTY, OVERRIDING ROYALTY, WORKING OR OTHER INTERESTS IN RESPECT OF PAST PRODUCTION OF OIL, GAS OR OTHER HYDROCARBONS ATTRIBUTABLE TO THE PROPERTIES, AND SHALL TRANSFER TO BUYER ALL SUCH SUSPENDED
PROCEEDS (“BUYER’S SUSPENSE ACCOUNTS”). WITHIN 90 DAYS AFTER CLOSING, SELLERS WILL DELIVER TO BUYER, IN “EXCEL” FORMAT, THE OWNER NAME, OWNER NUMBER, SOCIAL SECURITY OR FEDERAL ID NUMBER, REASON FOR SUSPENSE, AND THE AMOUNT
OF SUSPENSE FUNDS PAYABLE FOR EACH ENTRY, TOGETHER WITH MONTHLY LINE ITEM PRODUCTION DETAIL INCLUDING GROSS AND NET VOLUMES AND DEDUCTIONS FOR ALL SUSPENSE ENTRIES. UPON RECEIPT OF SUCH INFORMATION, BUYER SHALL ADMINISTER ALL SUCH ACCOUNTS AND
ASSUME ALL PAYMENT OBLIGATIONS RELATING TO THE SUSPENSE FUNDS IN ACCORDANCE WITH ALL APPLICABLE LAWS, RULES AND REGULATIONS, AND SHALL BE LIABLE FOR THE PAYMENT THEREOF TO THE PROPER PARTIES; PROVIDED THAT, UNTIL THE FIRST ANNIVERSARY OF THE DATE
THAT SELLERS PROVIDE TO BUYER THE INFORMATION REFERRED TO ABOVE, SELLERS WILL RETAIN ALL RESPONSIBILITY AND LIABILITY FOR (I) STATUTORY PENALTIES AND INTEREST, IF ANY, OWING TO ANY INTEREST OWNER ATTRIBUTABLE TO THE SUSPENSE FUNDS ACCRUING PRIOR TO
THE EFFECTIVE TIME AND (II) PENALTIES AND INTEREST, IF ANY, ATTRIBUTABLE TO THE SUSPENSE FUNDS ACCRUING PRIOR TO THE EFFECTIVE TIME, PAYABLE TO ANY STATE UNDER EXISTING ESCHEAT OR UNCLAIMED PROPERTY STATUTES. IN THE EVENT BUYER DETERMINES PRIOR TO
THE  

  

 20 

 
FIRST ANNIVERSARY OF THE DATE THAT SELLERS PROVIDE TO BUYER THE INFORMATION REFERRED TO ABOVE THAT ANY SUCH PENALTIES OR INTEREST ARE DUE TO THE
RESPECTIVE SUSPENSE ACCOUNT OWNER OR ANY STATE UNDER SUCH STATUTES AND SELLERS FAIL TO PROMPTLY REIMBURSE SUCH SUMS TO BUYER, THEN BUYER SHALL RETURN TO SELLERS THE SUSPENSE FUNDS IN SUCH ACCOUNT THAT EXISTED AS OF THE EFFECTIVE TIME, AND SELLERS
SHALL THEREUPON ASSUME ALL OBLIGATIONS FOR THE FINAL PAYMENT AND SETTLEMENT OF ANY SUCH CLAIMS AND ACCOMPANYING SUSPENSE FUNDS. 
  
 ARTICLE 14 
 CLOSING 

 
 14.1. The Closing. The closing of the purchase and sale of the
Properties pursuant to this Agreement (“Closing”) shall be held in Houston, Texas at the Sellers’ offices at 700 Milam, Suite 3100, Houston, Texas 77002 on May 31, 2005 or such earlier date mutually agreed by the Parties
(the “Closing Date”). 
  
 14.2. Closing
Statement. Seller shall provide Buyer with a closing statement reflecting its good faith estimation of the Purchase Price, as adjusted pursuant to Article 4, (the “Preliminary Purchase Price”) at least three
Business Days prior to the Closing. 
  
 14.3. Closing
Deliveries. At Closing the following events shall occur, each event under the control of one Party hereto being a condition precedent to the events under the control of the other Party, and each event being deemed to have occurred simultaneously
with the other events: 
  
 14.3.1. Sellers shall
execute and deliver to Buyer, and Buyer shall execute and receive, one or more instruments of assignment, in substantially the form of the Bill of Sale, Assignment and Assumption Agreement set forth as Exhibit C
(“Assignment”); 
  
 14.3.2. Buyer shall deliver via wire transfer to an account specified by Sellers, in immediately available funds, the Preliminary Purchase Price and, if applicable, less the Liquidated Title Defect Payment; 
  
 14.3.3. Buyer shall deliver via wire transfer to account(s)
specified by the applicable payee(s) the Liquidated Title Defect Payment; 
  
 14.3.4. Each Party shall execute, acknowledge and deliver division orders, transfer orders or letters in lieu thereof directing all purchasers of production from the Properties to make payment of proceeds attributable
to such production occurring on or after the Effective Time to Buyer; 
  
 14.3.5. As to those Properties operated by a Seller or an affiliate, such Seller and Buyer shall execute all appropriate state or local forms required to be executed to effect an assignment of operations and the
administrative change of operator of such Properties from such Seller or affiliate to Buyer; and 
  

 21 

 14.3.6. Sellers shall deliver via wire transfer $1,000,000, and Buyer shall deliver via
wire transfer $2,000,000, each to an account designated by Lehman Brothers, representing brokers’ fees incurred in connection with the transactions contemplated by this Agreement. 
  
 ARTICLE 15 
 POST-CLOSING ADJUSTMENTS 
  
 15.1. Final
Settlement Statement. After the Closing Date, Sellers shall prepare, in accordance with this Agreement and with GAAP, a statement (“Final Settlement Statement”), a copy of which shall be delivered by Sellers to Buyer no
later than 90 days after the Closing Date, setting forth each adjustment to the Purchase Price necessary to determine the Purchase Price and showing the calculation of such adjustments in accordance with GAAP and Article 4. Buyer shall have
60 days after receipt of the Final Settlement Statement to review such statement and to provide written notice to Sellers of Buyer’s objection to any item on the statement. Buyer’s notice shall clearly identify the item(s) objected to and
the reasons and support for the objection(s). If Buyer does not provide written objection(s) within the 60-day period, the Final Settlement Statement shall be deemed correct and shall not be subject to further adjustment. If Buyer provides written
objection(s) within the 60-day period, the Final Settlement Statement shall be deemed correct with respect to the items not objected to. Buyer and Sellers shall meet to negotiate and resolve the objections within 15 days of Sellers’ receipt of
Buyer’s objections. If the Parties agree on all objections the adjusted Final Settlement Statement shall be deemed correct and shall not be subject to further adjustment. Any items not agreed to at the end of the 15-day period may, upon any
Party’s written request, be resolved by arbitration in accordance with Section 15.2. 
  
 15.2. Arbitration. If the Parties cannot agree upon the Final Settlement Statement, the dispute shall be promptly submitted to a mutually agreeable
third-party accountant, which shall act as an arbitrator and promptly decide all points of disagreement with respect to the Final Settlement Statement. The decision of such arbitrator on all such points shall be final and binding upon the Parties
and shall be enforceable against any Party in any court of competent jurisdiction. The costs and expenses of the such arbitrator shall be borne 50% by Sellers and 50% by Buyer. 
  
 15.3. Payment of Final Purchase Price. If the Purchase Price shown on the Final Settlement Statement is more than the
Preliminary Purchase Price, Buyer shall pay such difference to Sellers in immediately available funds within five Business Days after the Final Settlement Statement has been agreed by the Parties or decided by the arbitrator, as applicable. If the
Purchase Price shown on the Final Settlement Statement is less than the Preliminary Purchase Price, Sellers shall pay such difference to Buyer in immediately available funds within five Business Days after the Final Settlement Statement has been
agreed by the Parties or decided by the arbitrator, as applicable. 
  

 22 

 ARTICLE 16 
 ALLOCATION OF RISK 
  
 16.1. Sellers’ Indemnity. After Closing, each Seller shall indemnify and hold harmless Buyer Group from and against any and all Losses suffered by Buyer Group arising from or relating to: 
  
 16.1.1. any breach of any obligation expressly undertaken by
such Seller in this Agreement which by its terms is required to be performed after the Closing, with respect to which breach Buyer has delivered written notice thereof to such Seller within two years after Closing; 
  
 16.1.2. the litigation identified in Schedule 5.6,
except for the litigation styled Ben E. Jarvis v. Wagner & Brown, Ltd. and the “Vacancy Claim” matter set forth on such schedule; 
  
 16.1.3. the offsite disposal, prior to the Closing and during such Seller’s ownership of the Properties, of hazardous materials
arising from the operation or use of the Properties; and 
  
 16.1.4. any Losses in excess of an aggregate amount of $500,000 related to (a) the payment of any taxes related to the Properties or production therefrom accruing prior to the Effective Time, (b) the proper payment or
accounting for royalties or other lease burdens related to production from the Properties prior to the Effective Time, (c) any personal injuries (including death) or property damages claims arising out of the ownership or operation of the Properties
prior to the Effective Time, and (d) disputes related to the proper billing or payment of Joint Interest Billing Accounts related to ownership or operation of the Properties prior to the Effective Time; provided that with respect to any such Losses
or claims, Buyer has delivered written notice thereof to Sellers within two years after the Closing. 
  
 The matters for which Sellers have the obligation to indemnify and hold harmless under this Section 16.1, to the extent of such obligation, are referred to herein as “Sellers’ Retained
Liabilities.” 
  
 16.2. Survival of Sellers’
Representations and Warranties. Notwithstanding anything to the contrary contained herein, the representations and warranties made by Sellers in this Agreement shall not survive Closing and shall not be actionable thereafter. 
  
 16.3. Buyer’s Indemnity. Except to the extent of Sellers’
Retained Liabilities, after Closing, Buyer shall indemnify and hold harmless Seller Group from and against any and all Losses suffered by Seller Group relating to the ownership or operation of the Properties, whenever arising, whether before or
after the Effective Time, including (a) accidents or injuries associated with the Wells, the casings, and all other leasehold equipment in and on the Wells, gathering lines, pipelines, tanks and all other personal property and fixtures used on or in
connection with the Properties, (b) the litigation styled Ben E. Jarvis v. Wagner & Brown, Ltd. and the “Vacancy Claim” matter identified on Schedule 5.6 and (c) all Adverse Environmental Conditions, including any such
conditions arising out of or relating to any discharge, release, 
  

 23 

 production, storage, treatment or any activities on or in the Properties, or the migration or transportation from any
other lands to the Properties (specifically excluding transportation and disposal by Sellers from the Properties to offsite locations prior to Closing), whether before or after the Effective Time, of materials or substances that are at present, or
become in the future, subject to regulation under federal, state or local laws or regulations, whether such laws or regulations now exist or are hereafter enacted INCLUDING ANY LOSSES ARISING IN WHOLE OR IN PART FROM THE SOLE OR CONCURRENT
NEGLIGENCE OR STRICT LIABILITY OF ANY MEMBER OF SELLER GROUP. BUYER HEREBY RELEASES SELLER GROUP FROM AND AGAINST ANY AND ALL CLAIMS FOR CONTRIBUTION UNDER CERCLA AND/OR ANY OTHER PRESENT OR FUTURE ENVIRONMENTAL LAW. 
  
 16.4. Assumption by Buyer. Except to the extent of Sellers’
Retained Liabilities, effective at Closing, Buyer hereby assumes and agrees to fully and timely pay, perform, and discharge in accordance with their terms, all duties, liabilities and obligations arising out of or otherwise related to the Properties
acquired by Buyer at Closing, whether vested, absolute or contingent, known or unknown, asserted or unasserted, accrued or unaccrued, liquidated or unliquidated, due or to become due, and whether contractual, statutory or otherwise. 
  
 16.5. Limitations of Warranties. Notwithstanding anything in this
Agreement to the contrary, the Properties are being sold by Sellers to Buyer without recourse, covenant, or warranty of any kind, express, implied, or statutory, except (i) to the extent of Sellers’ Retained Liabilities and (ii) that Sellers
will warrant title to the Net Revenue Interests and Working Interests in the Properties as set forth in Exhibit B, subject to the Permitted Encumbrances, against every person whomsoever lawfully claiming or to claim the same or any part
thereof by, through, or under Sellers, but not otherwise. WITHOUT LIMITATION OF THE GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, SELLERS CONVEY THE PROPERTIES AS-IS, WHERE-IS AND WITH ALL FAULTS AND EXPRESSLY DISCLAIM AND NEGATE ANY IMPLIED OR
EXPRESS WARRANTY OF (A) MERCHANTABILITY, (B) FITNESS FOR A PARTICULAR PURPOSE, (C) CONFORMITY TO MODELS OR SAMPLES OF MATERIALS AND (D) FREEDOM FROM REDHIBITORY VICES OR DEFECTS. SELLERS ALSO EXPRESSLY DISCLAIM AND NEGATE ANY IMPLIED OR EXPRESS
WARRANTY AT COMMON LAW, BY STATUTE OR OTHERWISE RELATING TO THE ACCURACY OF ANY OF THE INFORMATION FURNISHED WITH RESPECT TO THE EXISTENCE OR EXTENT OF RESERVES OR THE VALUE OF THE PROPERTIES BASED THEREON OR THE CONDITION OR STATE OF REPAIR OF ANY
OF THE PROPERTIES; THIS DISCLAIMER AND DENIAL OF WARRANTY ALSO EXTENDS TO THE EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY AS TO THE PRICES BUYER AND SELLERS ARE OR WILL BE ENTITLED TO RECEIVE FROM PRODUCTION OF HYDROCARBONS FROM THE PROPERTIES, IT
BEING UNDERSTOOD THAT ALL RESERVE, PRICE AND VALUE ESTIMATES UPON WHICH BUYER HAS RELIED OR IS RELYING HAVE BEEN DERIVED BY THE INDIVIDUAL EVALUATION OF BUYER. BUYER HEREBY WAIVES ANY WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO
THE ACCURACY, COMPLETENESS OR MATERIALITY OF THE INFORMATION, REPORTS, PROJECTIONS, MATERIALS, RECORDS, AND DATA NOW, HERETOFORE, OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER IN CONNECTION WITH 
  

 24 

 THE PROPERTIES OR THIS AGREEMENT (INCLUDING ANY DESCRIPTION OF THE PROPERTIES, WORKING INTERESTS OR NET REVENUE
INTERESTS, QUALITY OR QUANTITY OF HYDROCARBON RESERVES (IF ANY), PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES, PRICING ASSUMPTIONS, ABILITY OR POTENTIAL FOR PRODUCTION OF HYDROCARBONS FROM THE LEASES, ENVIRONMENTAL CONDITION OF THE
PROPERTIES, OR ANY OTHER MATTERS CONTAINED IN ANY OTHER MATERIAL FURNISHED OR MADE AVAILABLE TO BUYER BY SELLERS OR BY SELLERS’ AGENTS OR REPRESENTATIVES). ANY AND ALL SUCH INFORMATION, REPORTS, PROJECTIONS, MATERIALS, RECORDS, AND DATA NOW,
HERETOFORE OR HEREAFTER FURNISHED BY SELLERS IS PROVIDED AS A CONVENIENCE ONLY AND ANY RELIANCE ON OR USE OF SAME IS AT BUYER’S SOLE RISK. WITH RESPECT TO THE EASEMENTS, SELLERS EXPRESSLY DISCLAIM, AND BUYER HEREBY WAIVES (BUT WITHOUT PREJUDICE
TO BUYER’S RIGHTS TO ENFORCE SELLERS’ SPECIAL WARRANTY OF TITLE WITH RESPECT THERETO TO BE CONTAINED IN THE ASSIGNMENT), ANY WARRANTIES AND REPRESENTATIONS THAT SELLERS OWN THE EASEMENTS; AND EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5.5,
SELLERS DISCLAIM ALL WARRANTIES OR REPRESENTATIONS THAT SUCH EASEMENTS ARE IN FORCE AND EFFECT; THAT THEY MAY BE ASSIGNED; THAT THEY ARE CONTIGUOUS; THAT THE PIPELINES LIE WITHIN THE EASEMENTS, OR THAT THEY GRANT THE RIGHT TO LAY, MAINTAIN, REPAIR,
REPLACE, OPERATE, CONSTRUCT, OR REMOVE ANY PIPELINES. If necessary, Buyer shall secure its own rights and permits to operate and maintain any pipelines or Facilities comprising a portion of the Properties on the land of others at its own expense. If
any consents or approvals of third parties, including any governmental body, are required to assign the surface leases, easements, rights-of-way, permits, or other agreements with respect to the pipelines or facilities and are not secured prior to
Closing, Buyer shall secure any necessary consents to assign and approvals at its own expense; provided, however, that Sellers shall provide such assistance to Buyer to secure the consents and approvals as may reasonably be required. THERE ARE NO
WARRANTIES THAT EXTEND BEYOND THE FACE OF THIS AGREEMENT. BUYER ACKNOWLEDGES THAT THIS WAIVER IS CONSPICUOUS. 
  
 16.6. Gas Balancing. The Parties recognize that as of the Effective Time there are over and under imbalances with respect to gas production or
processing attributable to the Properties and hereby agree that the Properties acquired by Buyer at Closing will be conveyed at Closing specifically subject to such imbalances, with Buyer bearing and assuming all obligations with respect to any
overproduction account or liability associated with the Properties and receiving the benefit of and being credited with any unproduction account or credit existing as of the Effective Time with respect to the Properties. The Parties agree that such
overproduction accounts and liabilities are Permitted Encumbrances hereunder, and the existence of such overproduction accounts or liabilities shall not constitute grounds for Buyer to assert that the Properties affected thereby are subject to any
Title Defects. From and after the Closing, Buyer shall defend, save harmless and indemnify Sellers, their respective successors and assigns, and their respective affiliates, directors, officers, stockholders and partners, as appropriate, from all
Claims or Losses arising from such overproduction accounts and liabilities. 
  

 25 

 ARTICLE 17 
 RISK OF LOSS 
  
 17.1.
Casualty Loss. If, after the date hereof and prior to the Closing any substantial portion of the Properties shall be substantially damaged or destroyed by fire or other casualty, or if any substantial portion of the Properties shall be taken
by condemnation or the exercise of eminent domain (in either case, a “Casualty Loss”), Buyer shall be entitled to any applicable insurance proceeds or condemnation awards and an adjustment to the Purchase Price based upon the
Allocated Value of the Property destroyed or harmed, to the extent such loss is not covered by insurance or condemnation award; provided, however, that if prior to Closing an event occurs, whether fire, other casualty or eminent domain, causing a
loss (after taking into account insurance and indemnity proceeds) of more than $35,000,000, any Party shall have the right to terminate this Agreement by delivery of written notice to the other Parties. 
  
 17.2. Buyer’s Risk of Loss. Except as specifically provided in
Section 17.1 with respect to any Casualty Loss, Buyer shall assume all risk of loss with respect to any change in condition of the Properties from the Effective Time and no Seller shall have any liability, as operator of the Properties or
otherwise, for losses or damages sustained with respect to the condition of the Properties or their ability to produce Hydrocarbons. 
  
 ARTICLE 18 
 TERMINATION AND REMEDIES

  
 18.1. Termination. This Agreement may be terminated
as provided below. 
  
 18.1.1. The Parties may
terminate this Agreement by mutual written consent at any time prior to the Closing Date. 
  
 18.1.2. If the transactions contemplated hereby do not close on or before the Closing Date, any Party may terminate this Agreement by
delivery of written notice to the other Parties; provided, however, that no Party may terminate this Agreement pursuant to this Section 18.1.2 if such Party’s failure to comply with its obligations under this Agreement caused the Closing
not to occur on or before the Closing Date. 
  
 18.1.3. Buyer may terminate this Agreement by delivery of written notice to Sellers at any time prior to the Closing Date if, as of the Closing Date, any Seller has breached any representation, warranty or covenant in this Agreement in any
material respect and such Seller has failed to cure such breach within a reasonable time period after receiving written notice of such breach. 
  
 18.1.4. Sellers may terminate this Agreement by delivery of written notice to Buyer at any time prior to the Closing Date if Buyer has
breached any representation, warranty or covenant in this Agreement in any material respect and Buyer has failed to cure such breach within a reasonable time period after receiving written notice of such breach. 
  
 18.1.5. Either Party may terminate this Agreement in
accordance with Article 17. 
  

 26 

 18.1.6. Any Party may terminate this Agreement by delivery of written notice to the other
Parties if the aggregate of (a) the Uncured Title Defects Value plus (b) the Liquidated Title Defect Payment plus (c) the aggregate reduction in the Purchase Price pursuant to Title Defect Removals plus (d) the Unremedied Adverse Environmental
Conditions Value plus (e) the aggregate reduction in Purchase Price pursuant to Adverse Environmental Condition Removals exceeds $35,000,000. 
  
 18.2. Effect of Termination. Each Party’s right of termination under Section 18.1 is in addition to any other rights it may have under
this Agreement or otherwise, and the exercise of such right of termination will not be an election of remedies. If this Agreement is terminated pursuant to Section 18.1, all obligations of the Parties under this Agreement will terminate,
except that Buyer’s indemnity obligations under Section 7.2, and the obligations of the Parties in this Section 18.2 and Article 21, will survive; provided, however, that if this Agreement is terminated because of a breach
of this Agreement by the nonterminating Party or because the any Party’s condition to Closing is not satisfied as a result of the nonterminating Party’s failure to comply with its obligations under this Agreement, the terminating
Party’s or Parties’ rights to pursue all legal remedies will survive such termination unimpaired. 
  
 18.3. Remedies 
  
 18.3.2. Buyer and Sellers acknowledge and agree that Sellers or Buyer would be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that any breach of this Agreement by the other party could not be adequately compensated in all cases by monetary damages alone. Accordingly, in addition to any other right or remedy to which
Sellers and Buyer may be entitled, at law or in equity, they shall be entitled to enforce any provision of this Agreement by a decree of specific performance. 
  

18.3.3. The rights and remedies of the Parties are cumulative and not alternative. 
  
 ARTICLE 19 
 ADDITIONAL COVENANTS 
  
 19.1. Further
Assurances. After the Closing, each Seller and Buyer shall execute, acknowledge and deliver or cause to be executed, acknowledged and delivered such instruments and take such other action as may be necessary or advisable to carry out their
respective obligations under this Agreement and under any exhibit, document, certificate or other instrument delivered pursuant hereto. Each Seller shall use commercially reasonable efforts to cooperate with Buyer’s efforts to obtain all
approvals and consents required by or necessary for the transactions contemplated by this Agreement that are customarily obtained after Closing. Without limiting the foregoing, Buyer and Sellers shall use all reasonable good faith efforts to
cooperate with one another in the prosecution, defense and/or settlement of the litigation matters set forth on Schedule 5.6, including by the taking of the actions specified thereon under the heading “Litigation Protocols”.

  

 27 

 19.2. Access to Records by Seller. Within 30 days after Closing, each Seller shall deliver to
Buyer, at Sellers’ address, or at such other place as any of same may be kept, the originals of all Records and Data, except that each Seller may retain (a) the originals of all Data which are related to properties other than the Properties
being sold herein, in which case such Seller shall deliver duplicate copies of any such retained originals to Buyer, and (b) the originals of all accounting Data, in which case such Seller shall deliver duplicate copies of any such retained
originals which relate to the Properties to Buyer. For a period of four (4) years after the date of Closing, Buyer will retain the Data delivered to it pursuant hereto and will make such Data available to each Seller upon reasonable notice at
Buyer’s headquarters at reasonable times and during office hours. Buyer shall notify each Seller in writing within thirty (30) days of the sale to a third party of all or any part of the Properties which involves the transfer of any of the Data
of the name and address of the buyer(s) in any such sale. Buyer shall require as part of any such sales transaction that such third party assume the obligations imposed on Buyer in this Section 19.2. 
  
 19.3. Use of Sellers’ Name. Buyer agrees that, as soon as
practicable after the Closing, it will remove or cause to be removed the names and marks “Plains Exploration & Production Company,” “PXP,” “PXP Gulf Coast Inc.,” “PXP Louisiana LLC,” “PXP Texas
Limited Partnership” and all variations and derivatives thereof and logos relating thereto from the Properties of which it has assumed operations and will not thereafter make any use whatsoever of such names, marks and logos. 
  
 19.4. Sellers’ Employees. For a period of one year after the
Closing, neither Buyer nor any of its affiliates shall hire, retain or attempt to hire or retain any Houston-based employee or independent contractor of any Seller or in any way interfere with the relationship between any Seller and any of its
employees or independent contractors; provided that, this provision shall not apply in the event such employee or contractor contacts Buyer in response to an advertisement identifying employment opportunities published by Buyer in a newspaper of
general circulation or on its web site. Buyer shall be permitted, with Sellers’ prior written consent (which shall not be unreasonably withheld) to contact any of Sellers’ non-Houston-based employees relating to the Properties and offer
post-Closing employment to such employees. 
  
 ARTICLE 20

 ARBITRATION 
  
 Except as elsewhere provided in this Agreement, any controversy, dispute or claim between the Parties arising under this Agreement shall be determined by
binding arbitration, the conduct of which shall be governed by the Commercial Arbitration Rules of the American Arbitration Association. 
  
 20.1. Determination. The arbitrators selected to act hereunder under the Commercial Arbitration Rules of the American Arbitration Association shall
be qualified by education and experience to pass on the particular question in dispute. The arbitrators shall promptly hear and determine (after due notice of hearing and giving the parties a reasonable opportunity to be heard) the questions
submitted, and shall render their decision within 60 days after appointment of the third arbitrator. The arbitration shall be held in Houston, Texas. If within such period a decision is not rendered by the board, or majority thereof, new arbitrators
may be named and shall act hereunder at the election of either Buyer or Sellers in like manner as if none had been previously named. 
  

 28 

 20.2. Decision Binding. The decision of the arbitrators, or the majority thereof, made in writing
shall be final and binding upon the parties hereto as to the questions submitted, shall be enforceable against any Party in any court of competent jurisdiction, and Buyer and Sellers will abide by and comply with such decision. The expenses of
arbitration, including reasonable compensation to the arbitrators, shall be borne equally by the parties hereto. 
  
 ARTICLE 21 
 MISCELLANEOUS 
  
 21.1. Notice. All notices required or permitted under this Agreement
shall be in writing and shall be delivered personally or by certified mail, postage prepaid and return receipt requested or by telecopier as follows: 
  

							
	Sellers:	  	PXP Texas Limited Partnership	  	 
	 	  	PXP Gulf Coast Inc.	  	 
	 	  	PXP Louisiana LLC	  	 
	 	  	700 Milam, Suite 3100	  	 
	 	  	Houston, Texas 77002	  	 
	 	  	            Attention:	  	 Marc A. Hensel
 Vice President – Acquisitions and
Divestments
	  	 
	 	  	            Telephone:	  	(713) 579-6033	  	 
	 	  	            Telecopier:	  	(713) 579-6200	  	 
			
	 	  	with a copy to:	  	 
			
	 	  	Plains Exploration & Production Company	  	 
	 	  	700 Milam, Suite 3100	  	 
	 	  	Houston, Texas 77002	  	 	  	 
	 	  	            Attention:	  	 John F. Wombwell
 Executive Vice President, General
Counsel and Corporate Secretary
	  	 
	 	  	            Telephone:	  	(713) 579-6123	  	 
	 	  	            Telecopier:	  	(713) 579-6200	  	 
			
	Buyer:	  	XTO Energy Inc.	  	 
	 	  	810 Houston St.	  	 
	 	  	Fort Worth, Texas 76102	  	 
	 	  	            Attention:	  	 Vaughn O. Vennerberg, II
 Executive Vice
President-Administration
	  	 
	 	  	            Telephone:	  	(817) 885-2341	  	 
	 	  	            Telecopier:	  	(817) 885-2224	  	 

  

 29 

 or to such other place within the United State of America as either Party may designate as to itself by written notice to
the other. All notices given by personal delivery or mail shall be effective on the date of actual receipt at the appropriate address. Notices given by telecopier shall be effective upon actual receipt if received during recipient’s normal
business hours or at the beginning of the next Business Day after receipt if received after the recipient’s normal business hours. All notices by telecopier shall be confirmed in writing on the day of transmission by either mailing by postage
prepaid certified mail with return receipt requested, or by personal delivery. 
  
 21.2. Governing Law. This Agreement and the obligations of the Parties hereunder will be governed by and construed in accordance with the laws of the State of Texas, without giving effect to any choice of law
principles. 
  
 21.3. Assignment. This Agreement shall be
binding upon and shall inure to the benefit of the Parties hereto and their respective permitted successors and assigns. Notwithstanding the preceding sentence, neither party shall assign this Agreement or its rights hereunder without the other
party’s written consent, which shall not be unreasonably withheld. 
  
 21.4. Entire Agreement. This Agreement, together with the Exhibits and Schedules hereto and the certificates, documents, instruments and writings that are delivered pursuant hereto, constitutes the entire agreement and
understanding of the Parties in respect of its subject matters and supersedes all prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter hereof or the
Transactions, including the letter of intent dated March 17, 2005 between Sellers and Buyer and the non-disclosure/non-solicitation agreement between Sellers and Buyer dated March 17, 2005 (the “Confidentiality Agreement”).
There are no third party beneficiaries having rights under or with respect to this Agreement. 
  
 21.5. Amendment; Waiver. No amendment, modification, replacement, termination or cancellation of any provision of this Agreement will be valid, unless the same will be in writing and signed by Buyer and
Sellers. No waiver by any Party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence. 
  
 21.6. Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any provision will not
affect the validity or enforceability of the other provisions hereof; provided, however, that if any provision of this Agreement, as applied to any Party or to any circumstance, is adjudged by a court of competent jurisdiction, arbitrator, or
mediator not to be enforceable in accordance with its terms, the Parties agree that the court of competent jurisdiction, arbitrator, or mediator making such determination will have the power to modify the provision in a manner consistent with its
objectives such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision will then be enforceable and will be enforced. 
  
 21.7. Construction. The Parties have participated jointly in the negotiation and drafting of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement 

  

 30 

 will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or
disfavoring any Party because of the authorship of any provision of this Agreement. Any reference to any federal, state, local, or foreign law will be deemed also to refer to such law as amended and all rules and regulations promulgated thereunder,
unless the context requires otherwise. The words “include,” “includes” and “including” will be deemed to be followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be
construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,”
“hereby,” “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof. References herein to any Section or Article shall be references to a Section or Article of this Agreement unless the context clearly requires otherwise. 

 
 21.8. Confidentiality. All information made available to Buyer
pursuant to this Agreement shall be maintained as confidential by Buyer until Closing. Buyer shall remain subject, until the Closing, to the Confidentiality Agreement, at which time of Closing such Confidentiality Agreement shall terminate. Buyer
shall take all actions reasonably necessary to ensure that Buyer’s employees, consultants, representatives and agents comply with the provisions of this Section 21.8. 
  
 21.9. Headings. The article and section headings contained in this Agreement are inserted for convenience only and
will not affect in any way the meaning or interpretation of this Agreement. 
  
 21.10. Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. 
  
 21.11. Expenses, Fees and Taxes. Each of the Parties hereto shall pay
its own fees and expenses incident to the negotiation and preparation of this Agreement and consummation of the transactions contemplated hereby, including brokers’ fees. Buyer shall be responsible for the cost of all fees for the recording of
transfer documents. All other costs shall be borne by the party incurring them. Notwithstanding anything to the contrary herein, it is acknowledged and agreed by and between Sellers and Buyer that the Purchase Price excludes any sales taxes or other
taxes in connection with the sale of property pursuant to this Agreement. If a determination is ever made that a sales tax or other transfer tax applies, Buyer shall be liable for such tax as well as any applicable conveyance, transfer and recording
fees, and real estate transfer stamps or taxes imposed on any transfer of property pursuant to this Agreement. Buyer shall indemnify and hold Seller harmless with respect to the payment of any of such taxes, including any interest or penalties
assessed thereon. The indemnity and hold harmless obligation contained in the preceding sentence shall survive the Closing. 
  
 21.12. Laws and Regulations. From and after the Closing, (a) Buyer shall comply with all applicable laws, ordinances, rules and regulations and
shall properly obtain and maintain all permits required by public authorities with regard to the Properties, and shall provide and maintain with the applicable regulatory agency(ies) all required bonds, and (b) Buyer shall 

  

 31 

 assume all of each Seller’s obligations with regard to abandonment of all existing unplugged wells, whether
producing or nonproducing, and abandonment of the leasehold property including, where applicable, the plugging of wells and the restoration of the surface as completely as practicable and/or in compliance with all applicable laws, rules, regulations
and in compliance with all leases and other agreements affecting the Properties, and shall indemnify and hold each Seller harmless with respect to any and all of those obligations. Such obligations shall survive the Closing and Buyer shall remain
liable therefor as regards Sellers even if Buyer shall assign, sell or transfer the Properties to a third party. 
  
 21.13. Tax-Deferred Exchange Option. Each Seller shall have the right to elect to effect a tax-deferred exchange under Internal Revenue Code
Section 1031 (a “Tax Deferred Exchange”) for the Properties at any time prior to the Closing Date. If such Seller elects to effect a Tax-Deferred Exchange, Buyer agrees to execute escrow instructions, documents, agreements or
instruments to effect the exchange; provided, however, that Buyer shall incur no additional costs, expenses, fees or liabilities as a result of or connected with the exchange. Each Seller may assign any of its rights and delegate performance of any
of their duties under this Agreement in whole or in part to a third party in order to effect such an exchange; provided, however, that each Seller shall remain responsible to Buyer for the full and prompt performance of their respective delegated
duties. Sellers shall indemnify and hold Buyer and its affiliates harmless from and against all claims, expenses (including reasonable attorneys’ fees), loss and liability resulting from its participation in any exchange undertaken pursuant to
this Section 21.13 pursuant to the request of Sellers. 
  
 21.14. Public Announcements. The Parties agree that prior to making any public announcement or statement with respect to the transactions contemplated by this Agreement, the Party desiring to make such public announcement or
statement shall consult with the other Parties hereto and endeavor in good faith to obtain approval of the other Parties hereto to the text of a public announcement or statement to be made solely by Sellers, on the one hand, or Buyer, on the other,
as the case may be; provided, however, if Sellers, on the one hand, or Buyer, on the other is required by law or the rules of the New York Stock Exchange to make such public announcement or statement, then the same may be made without the approval
of the other Parties. 
  
 [Remainder of page intentionally
left blank] 
  

 32 

 Executed as of the date set forth above. 
  

					
	SELLERS:
	
	PXP Texas Limited Partnership
		
	By:	 	 PXP Texas Inc.,
 its general
partner

			
	 	 	By:	 	 /s/ Thomas M. Gladney

	 	 	 	 	Thomas M. Gladney
	 	 	 	 	Vice President
	
	PXP Gulf Coast Inc.
			
	 	 	By:	 	 /s/ Thomas M. Gladney

	 	 	 	 	Thomas M. Gladney
	 	 	 	 	Vice President
	
	PXP Louisiana LLC
			
	 	 	By:	 	 /s/ Thomas M. Gladney

	 	 	 	 	Thomas M. Gladney
	 	 	 	 	Vice President
	
	BUYER:
	
	XTO Energy Inc.
		
	By:	 	 /s/ Vaughn O. Vennergerg, II

	 	 	Vaughn O. Vennerberg, II
	 	 	Executive Vice President - AdministrationPurchase and Sales Agreement dated as of March 11, 2005

 Exhibit 10.2 
  
 PURCHASE AND SALE AGREEMENT 
  

by and between 
  
 BENTLEY-SIMONSON, INC., 
  
 a Nevada corporation 
  
 AS SELLER 
  
 AND 
  
 PLAINS EXPLORATION & PRODUCTION COMPANY 
  
 a Delaware corporation 
  
 AS BUYER

  
 DATED 
  
 March 11, 2005 

 TABLE OF CONTENTS 
  

					
	ARTICLE 1. - SELECTED DEFINITIONS	  	1
		
	ARTICLE 2. - PURCHASE AND SALE	  	2
			
	            2.1.	  	The Properties	  	2
	            2.2.	  	Excluded Assets	  	4
		
	ARTICLE 3. - PURCHASE PRICE AND PAYMENT	  	5
			
	            3.1.	  	Purchase Price	  	5
	            3.2.	  	Performance Deposit	  	5
	            3.3.	  	Final Settlement/Purchase Price Adjustments	  	6
		
	ARTICLE 4. - REPRESENTATIONS OF SELLER	  	8
			
	            4.1.	  	Existence	  	8
	            4.2.	  	Authorization and Enforceability	  	8
	            4.3.	  	Power	  	8
	            4.4.	  	Brokers	  	9
	            4.5.	  	Foreign Person	  	9
	            4.6.	  	Conflicts	  	9
	            4.7.	  	Bankruptcy	  	9
	            4.8.	  	Litigation and Claims	  	9
	            4.9.	  	Approvals and Preferential Rights	  	9
	            4.10.	  	Seller’s Title	  	9
	            4.11.	  	Compliance with Law and Permits	  	9
	            4.12.	  	Environmental Compliance	  	10
	            4.13.	  	Knowledge	  	11
	            4.14.	  	Restating Reps and Warranties	  	11
		
	ARTICLE 5. - REPRESENTATIONS OF BUYER	  	12
			
	            5.1.	  	Existence	  	12
	            5.2.	  	Authorization and Enforceability	  	12
	            5.3.	  	Power	  	12
	            5.4.	  	Brokers	  	12
	            5.5.	  	Conflicts	  	12
	            5.6.	  	Bankruptcy	  	13
	            5.7.	  	Experienced And Knowledgeable Buyer	  	13
	            5.8.	  	Litigation and Claims	  	13
	            5.9.	  	Restated Reps and Warranties	  	13
		
	ARTICLE 6. - ACCESS TO INFORMATION AND INSPECTIONS	  	13
			
	            6.1.	  	Title Files	  	13
	            6.2.	  	Other Files	  	14
	            6.3.	  	Buyer’s Confidentiality Obligations	  	14
	            6.4.	  	Inspections	  	14

  

 i 

					
	ARTICLE 7. - DISCLAIMER OF WARRANTIES	  	14
			
	            7.1.	  	Information Provided	  	14
	            7.2.	  	Regulatory Status	  	15
	            7.3.	  	No Warranties	  	15
	            7.4.	  	Buyer Inspection	  	16
	            7.5.	  	Prior Operations	  	17
		
	ARTICLE 8. - TITLE MATTERS	  	17
			
	            8.1.	  	Selected Definitions Regarding Title Matters	  	17
	            8.2.	  	Notice of Title Defect	  	20
	            8.3.	  	Remedies for Title Defects	  	20
		
	ARTICLE 9. - PREFERENTIAL PURCHASE RIGHTS AND CONSENTS	  	21
			
	            9.1.	  	Actions and Consents	  	21
		
	ARTICLE 10. - ENVIRONMENTAL MATTERS AND OTHER ADJUSTMENTS	  	22
			
	            10.1.	  	Phase I Environmental Assessment	  	22
	            10.2.	  	Phase II Environmental Assessment	  	22
	            10.3.	  	Environmental Defect Notice	  	23
	            10.4.	  	Seller’s Right To Terminate	  	24
	            10.5.	  	Limitations	  	24
	            10.6.	  	Environmental Laws	  	24
		
	ARTICLE 11. - GENERAL COVENANTS OF SELLER	  	25
			
	            11.1.	  	Access to Records and Employees	  	25
	            11.2.	  	Covenants of Seller Pending Closing	  	25
	            11.3.	  	Limitations on Seller’s Covenants Pending Closing	  	26
		
	ARTICLE 12. - COVENANTS OF BUYER	  	27
			
	            12.1.	  	Return of Data	  	27
	            12.2.	  	Indemnity Regarding Access	  	27
		
	ARTICLE 13. - CLOSING CONDITIONS	  	27
			
	            13.1.	  	Seller’s Closing Conditions	  	27
	            13.2.	  	Buyer’s Closing Conditions	  	28
		
	ARTICLE 14. - CLOSING	  	28
			
	            14.1.	  	Closing	  	28
	            14.2.	  	Seller’s Closing Obligations	  	29
	            14.3.	  	Buyer’s Closing Obligations	  	29
	            14.4.	  	Joint Closing Obligations	  	30
		
	ARTICLE 15. - ADDITIONAL CLOSING OBLIGATIONS	  	30
			
	            15.1.	  	Suspended Funds	  	30
	            15.2.	  	Receipts and Credits	  	30
	            15.3.	  	Signs	  	30
	            15.4.	  	Records	  	31
	            15.5.	  	Letters-in-Lieu	  	31
	            15.6.	  	Bond	  	31
	            15.7.	  	Certain Post Closing Actions	  	32

  

 ii 

					
	ARTICLE 16. - CASUALTY LOSS AND CONDEMNATION	  	32
		
	ARTICLE 17. - DEFAULT AND REMEDIES	  	32
			
	            17.1.	  	Seller’s Remedies	  	32
	            17.2.	  	Buyer’s Remedies	  	33
	            17.3.	  	Effect of Termination	  	33
		
	ARTICLE 18. - ASSUMPTION OF OBLIGATIONS; INDEMNIFICATION; RELEASE; LIABILITY LIMITATIONS	  	34
			
	            18.1.	  	Selected Definitions Regarding Indemnification and Release	  	34
	            18.2.	  	Assumptions of Contracts	  	34
	            18.3.	  	Imbalances	  	34
	            18.4.	  	Seller’s Indemnity	  	35
	            18.5.	  	Buyer’s General Indemnity	  	36
	            18.6.	  	Buyer’s Environmental Indemnity; Environmental Release	  	36
	            18.7.	  	Application of Indemnity Obligations	  	38
	            18.8.	  	Buyer’s Plugging Liability	  	38
	            18.9.	  	Indemnification Procedures	  	39
	            18.10.	  	Assignment of Indemnity	  	39
	            18.11.	  	General Release of Seller	  	39
	            18.12.	  	Liability Limitations	  	40
		
	ARTICLE 19. - ARBITRATION	  	41
			
	            19.1.	  	Selection of Arbitrators	  	41
	            19.2.	  	Determination	  	42
	            19.3.	  	Decision Binding	  	42
		
	ARTICLE 20. - MISCELLANEOUS	  	43
			
	            20.1.	  	Amendment	  	43
	            20.2.	  	Interpretation; Construction	  	43
	            20.3.	  	Entire Agreement	  	43
	            20.4.	  	Survival	  	43
	            20.5.	  	Severability	  	43
	            20.6.	  	Public Announcements	  	44
	            20.7.	  	Filing and Recording of Assignments	  	44
	            20.8.	  	Further Assurances and Records	  	44
	            20.9.	  	Notices	  	44
	            20.10.	  	No Guarantee of Operations	  	46
	            20.11.	  	Incidental Expenses	  	46
	            20.12.	  	Antitrust Laws	  	46
	            20.13.	  	Waiver	  	46
	            20.14.	  	Binding Effect; Assignment	  	46
	            20.15.	  	Taxes	  	47
	            20.16.	  	Audits	  	47
	            20.17.	  	Governing Law	  	47

  

 iii 

					
	             20.18.
	  	Time is of Essence	  	48
	             20.19.
	  	Exhibits and Schedules	  	48
	             20.20.
	  	Counterparts; Fax Signatures	  	48
	             20.21.
	  	Limited Liability	  	48
	             20.22.
	  	Consents and Approvals	  	48
	             20.23.
	  	Cumulative Remedies	  	49
	             20.24.
	  	Mutual Cooperation	  	49
	             20.25.
	  	Back-Up Offers	  	49
	             20.26.
	  	Attorneys’ Fees, Costs and Expenses	  	49

  
  

 iv 

 EXHIBITS 
  

			
	 List of Leases and Servitudes Being Conveyed
	  	Exhibit “A”
		
	 List of Wells and Interests Being Conveyed
	  	Exhibit “A-1”
		
	 Assignment, Bill of Sale and Conveyance and Corporation Grant Deed
	  	Exhibit “B”
		
	 Certificate of Non-Foreign Status
	  	Exhibit “C”
		
	 Confidentiality and Non-Interference Agreement
	  	Exhibit “D”

  

 v 

 SCHEDULES 
  

			
	 Contracts
	  	Schedule 2.1(c)
		
	 Gas Access Agreements
	  	Schedule 2.1(d)
		
	 Excluded Assets
	  	Schedule 2.2
		
	 Allocated Values
	  	Schedule 3.1
		
	 Litigation
	  	Schedule 4.8
		
	 Preferential Rights
	  	Schedule 4.9
		
	 Liens
	  	Schedule 4.10
		
	 Environmental Compliance
	  	Schedule 4.12
		
	 Proposals
	  	Schedule 4.14
		
	 Drilling
	  	Schedule 4.14(a)
		
	 P&A Information
	  	Schedule 4.14(b)
		
	 Allocated Values Agreed After Signing
	  	Schedule 8.1(a)

  

 vi 

 PURCHASE AND SALE AGREEMENT 
  
 This Purchase and Sale Agreement dated as of March 11, 2005, is by and between BENTLEY-SIMONSON, INC., a Nevada corporation,
(“Seller”) and PLAINS EXPLORATION & PRODUCTION COMPANY, a Delaware corporation (“Buyer”). 
  
 In consideration of the mutual covenants and agreements contained herein, the benefits to be derived by each party hereunder (either Seller or Buyer, as
the case may be, are hereinafter referred to as “Party” and collectively as “Parties”), and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree
as follows: 
  
 ARTICLE 1. - SELECTED DEFINITIONS

  
 1.1 “Agreement” shall mean this
Purchase and Sale Agreement between Seller and Buyer. 
  
 1.2
“Property” or “Properties” shall be as defined in Article 2.1. 
  
 1.3 “Casualty Loss” shall mean any (a) destruction by fire or any other casualty of all or any portion of the Properties, (b)
taking in condemnation or under the right of eminent domain of all or any portion of the Properties (or the pending or threatening of any proceedings for such purposes), in each case between the date of this Agreement and Closing. 
  
 1.4 “Casualty Loss Amount” shall mean, with respect
to each Casualty Loss, the aggregate diminution in value of the Properties arising out of such Casualty Loss less all sums paid to Seller and its affiliates by third parties by reason of such Casualty Loss. 
  
 1.5 “Closing Date” shall be as defined in Article
14.1. 
  
 1.6 “Contracts” shall mean
all contracts and contractual rights, obligations, and interests, including all farmout and farmin agreements, operating agreements, operating rights, production sales and purchase contracts, asset purchase contracts with related indemnity
provisions, saltwater disposal agreements, gas gathering or transportation agreements, surface leases, equipment leases, division and transfer orders, and other contracts or agreements, in each case to which Buyer is party and covering or affecting
any or all of the Properties. 
  
 1.7 “date of this
Agreement” shall mean the date first written above. 
  
 1.8 “Effective Time” shall mean the time described in Article 2.1. 
  
 1.9 “Excluded Assets” shall be as defined in Article 2.2. 
  
 1.10 “Hydrocarbons” shall mean crude oil, natural gas, casinghead gas, condensate, sulphur, natural
gas liquids, drip liquids and other liquid or gaseous hydrocarbons (whether processed or not), and shall also refer to all other minerals of every kind and character which may be covered by or included in the Properties. 
  

 1 

 1.11 “Inventory Hydrocarbons” shall mean all merchantable oil and condensate
produced from or attributable to the Leases prior to the Effective Time which have not been sold by Seller and are in storage tanks at the Effective Time and also all crude oil and kobe oil produced from or attributable to the Leases that is in flow
lines, shipping lines or tanks at the Effective Time. 
  
 1.12
“Leases” shall mean the oil, gas and mineral leases described on Exhibit “A” attached hereto and the leasehold estates created thereby and mineral interests in the lands described on Exhibit “A”
attached hereto. 
  
 1.13 “Minimal Defect”
shall mean any Title Defect (or group of related Title Defects) or Environmental Defect (or group of related Environmental Defects) or Casualty Loss Amount (or group of related Casualty Loss Amounts) with a value (determined in accordance with this
Agreement) of less than $100,000. 
  
 1.14 “Oil and
Gas Properties” shall mean all leasehold interests, fee mineral interests, operating rights or surface ownership rights in the Leases. 
  
 1.15 “Performance Deposit” shall be as defined in Article 3.2. 
  
 1.16 “Purchase Price” shall be as defined in
Article 3.1. 
  
 1.17 “Well” or
“Wells” shall mean all wellbores and borings, both abandoned and unabandoned, located on the Oil and Gas Properties, whether producing, operating or shut-in, and whether known or unknown to Seller, including oil wells, gas wells,
injection wells, disposal wells and water wells. 
  
 ARTICLE
2. - PURCHASE AND SALE 
  
 2.1. The
Properties. 
  
 Subject to the terms and
conditions of this Agreement, Seller agrees to sell and convey to Buyer, and Buyer agrees to purchase from Seller, but effective as of 7:00 a.m. Pacific Time, March 1, 2005 (or at such earlier time mutually agreed to by the Parties) (the
“Effective Time”), all of Seller’s right, title, and interest in and to the following: 
  
 (a) The Leases and the lands covered thereby (collectively, the “Land”), together with corresponding interests in and to all the property
and rights incident thereto, including all rights in any pooled or unitized acreage by virtue of the Land being a part thereof, all production from the pool or unit allocated to any such Land, and all interests in any Wells within the pool or unit
associated with the Land; 
  
 (b) Each Well located on the Land;

  
 (c) To the extent transferable by Seller without material
restriction under applicable law or third-party agreements (and without Seller paying any funds or other consideration), all Contracts listed on Schedule 2.1(c); 
  

 2 

 (d) All gas access agreements as listed on Schedule 2.1(d); 
  
 (e) All Hydrocarbons produced on or after the Effective Time attributable to
Seller’s interest in the Properties, together with all proceeds from or of such Hydrocarbons; 
  
 (f) All of the following described real and personal property: 
  

(i) The rights, interests and estates created under those certain servitudes, easements, rights-of-way, privileges, franchises,
prescriptions, licenses, leases, permits or other rights described in Exhibit “A”, attached hereto and made a part hereof, together with any amendments, renewals, extensions, supplements, modifications or other agreements related
thereto, and further together with any other servitudes, easements, rights-of-way, privileges, prescriptions, franchises, licenses, permits or other rights (whether presently existing or hereafter created and whether now owned or hereafter acquired
by operation of law or otherwise) used, held for use in connection with, or in any way related to the Gathering Systems (as herein defined), or pipelines transporting gas or natural gas liquids to, from or between Gathering Systems (the rights,
interests and estates described in this Article 2.1(f)(i) are herein collectively called the “Servitudes”); 
  
 (ii) All pipes, valves, gauges, meters, metering stations, and other measuring equipment, regulators, extractors, tubing, pipelines, pipe
connectors, valves, fuel lines, flow lines, gathering lines, tanks, storage facilities, compressors, dehydration units, dehydrators, drips, absorbers, separators, buildings, improvements, fittings, materials, power lines, telephone and telegraph
lines, and other improvements, facilities, fixtures or personal property (whether now owned or hereafter acquired by operation of law or otherwise) located on or under the Servitudes, or in or otherwise related to the Lands (the properties, rights
and interests described in this Article 2.1(f)(ii) are herein collectively called the “Gathering Systems”); 
  
 (iii) All improvements, fixtures, and other real or personal property located on or under, or which in any way relate to, the Servitudes
or the Gathering Systems, whether now owned or hereafter acquired by operation of law or otherwise; 
  
 (g) The Records as defined in Article 15.4 hereof; 
  
 (h) (i) All trade credits, accounts receivable, notes receivable and other receivables attributable to the Property with respect to any period of time on
or after the Effective Time; (ii) all deposits, cash, checks in process of collection, cash equivalents and funds attributable to the Property with respect to any period of time on or after the Effective Time; and (iii) all proceeds, benefits,
income or revenues accruing (and any security or other deposits made) with respect to the Property on or after the Effective Time; 
  
 (i) Except to the extent the same were used to calculate any Casualty Loss Amount that caused a reduction in the Purchase Price, all claims and causes of
action of Seller arising from acts, omissions or events, or damage to or destruction of the Properties, occurring on or after the Effective Time; 
  

 3 

 (j) Except to the extent the same were used to calculate any Casualty Loss Amount that caused a reduction
in the Purchase Price, all rights, titles, claims and interests of Seller relating to the Properties on or after the Effective Time (i) under any policy or agreement of insurance or indemnity; (ii) under any bond; or (iii) to any insurance or
condemnation proceeds or awards; 
  
 (k) Claims of Seller for
refund of or loss carry forwards with respect to production, windfall profit, severance, ad valorem or any other taxes attributable to any period on or after the Effective Time; 
  
 (l) All amounts due or payable to Seller as adjustments or refunds under any contracts or agreements (including take-or-pay
claims) affecting the Properties, respecting any period on or after the Effective Time; and 
  
 (m) All Inventory Hydrocarbons. 
  
 All of the above real and personal properties, rights, titles and interests described in subparagraphs (a) through (m) above, as further described in Exhibit “A” attached hereto, but excluding the Excluded Assets, are
hereinafter collectively called the “Properties” or, individually, a “Property”. 
  
 2.2. Excluded Assets. 
  
 Seller specifically excludes from this transaction all reservations and exceptions listed as such in Exhibit “A” and the following (all
such reservations and exceptions listed on Exhibit “A”, all items listed on Schedule 2.2 and all of the exclusions listed in subsections 2.2(a) through 2.2(q) below are collectively referred to herein as the “Excluded
Assets”): 
  
 (a) all vehicles and other transportation
equipment, furniture, office supplies and equipment, telephones and radio or other telecommunications systems, tools, store stock, spare parts, and equipment, and any other assets not specifically used in connection with the operation of the
Properties; 
  
 (b) the pipelines, fixtures, equipment, and
interests in land listed on Schedule 2.2; 
  
 (c) vehicles,
boats, tools, pulling machines, and other equipment and material temporarily located on the Property and not specifically used in connection with the operation of the Properties; 
  
 (d) (i) all trade credits, accounts receivable, notes receivable and other receivables attributable to Seller’s
interest in the Properties with respect to any period of time prior to the Effective Time; (ii) all deposits, cash, checks in process of collection, cash equivalents and funds attributable to Seller’s interest in the Properties with respect to
any period of time prior to the Effective Time; and (iii) all proceeds, benefits, income or revenues accruing (and any security of other deposits made) with respect to the Properties prior to the Effective Time; 
  
 (e) all corporate, financial, and tax records of Seller not related to the
Properties; 
  

 4 

 (f) all claims and causes of action of Seller arising from acts, omissions or events, or damage to or
destruction of the Properties occurring (i) before the Effective Time or (ii) to the extent the same were used to calculate any Casualty Loss Amount that caused a reduction in the Purchase Price, on or after the Effective Time; 
  
 (g) all rights, titles, claims and interests of Seller relating to the
Properties (i) under any policy or agreement of insurance or indemnity; (ii) under any bond; or (iii) to any insurance or condemnation proceeds or awards, in any such case (x) before the Effective Time or (y) to the extent the same were used to
calculate any Casualty Loss Amount that caused a reduction in the Purchase Price, on or after the Effective Time, 
  
 (h) all Hydrocarbons produced from or attributable to the Properties with respect to all periods prior to the Effective Time, together with all proceeds
from or of such Hydrocarbons, except the Inventory Hydrocarbons; 
  
 (i) claims of Seller for refund of or loss carry forwards with respect to production, windfall profit, severance, ad valorem or any other taxes attributable to any period prior to the Effective Time, or income or franchise taxes;

  
 (j) all amounts due or payable to Seller as adjustments or
refunds under any contracts or agreements (including take-or-pay claims) affecting the Properties, respecting any period prior to the Effective Time; 
  
 (k) all amounts due or payable to Seller as adjustments to insurance premiums related to the Properties with respect to any period prior to the Effective
Time; 
  
 (l) all proceeds, benefits, income or revenues accruing
(and any security or other deposits made) with respect to the Properties, and all accounts receivable attributable to the Properties, prior to the Effective Time; 
  
 (m) all of Seller’s intellectual property, including proprietary computer software, patents, trade secrets, copyrights,
names, marks and logos; and 
  
 (n) any item listed on Schedule
2.2. 
  
 ARTICLE 3. - PURCHASE PRICE AND PAYMENT

  
 3.1. Purchase Price. 
  
 Subject to adjustment as set forth below, the “Purchase
Price” for the Properties shall be One Hundred Nineteen Million ($119,000,000) in U. S. dollars, allocated among the Properties as provided in Schedule 3.1. 
  
 3.2. Performance Deposit. 
  
 No later than 5:00 p.m. Central Time on Monday, March 14, Buyer shall deliver to a California branch of Wells Fargo Bank
(the “Escrow Agent”) pursuant to an escrow agreement reasonably agreed to by the parties, a “Performance Deposit” equal to $7,500,000. The 

  

 5 

 
Performance Deposit shall be applied to the Purchase Price to be paid at Closing or may be returned to Buyer or delivered to Seller in accordance with the
terms of this Agreement. If Buyer has not delivered the Performance Deposit in accordance with the first sentence of this Article 3.2, Seller may immediately terminate this Agreement. 
  
 3.3. Final Settlement/Purchase Price Adjustments.

  
 Within one hundred and twenty (120) days after Closing,
Seller shall prepare in good faith and in accordance with GAAP and provide to Buyer, for Buyer’s concurrence, an accounting, including all necessary calculations, (the “Final Settlement Statement”) of the actual amounts of
Seller’s and Buyer’s Credits for the adjustment set out in this Article 3.3. Within thirty (30) days after receipt of such statement from Seller, Buyer shall deliver to Seller a written report containing all changes with
explanations therefor that Buyer proposes be made to such statement, it being agreed that Buyer’s failure to deliver such report to Seller within such time period shall constitute acceptance by Buyer of Seller’s statement. Except for the
changes raised by Buyer in its written report, no additional changes to the statement provided by Seller shall be considered by the Parties. If Buyer has timely delivered such written report, the Parties shall then undertake to agree on the items in
dispute and the adjusted Purchase Price no later than thirty (30) days after the receipt by Seller of Buyer’s statement of proposed changes. The Parties shall attempt to resolve any disagreements on a commercially reasonable efforts basis. In
the event such disagreements cannot be resolved, the matter shall be submitted to arbitration by either Party pursuant to the provisions of Article 19 hereof. Following the determination of the adjusted Purchase Price pursuant to this
Article 3.3, Seller or Buyer, as the case may be, shall make payment required within five (5) business days after such final determination, together with interest on such amount from the Closing at the interest rate reported by the Wall
Street Journal on the Closing Date as the prime rate. Buyer will prepare any information reasonably requested by Seller in order for Seller to prepare such statement or verify Buyer’s written report. 
  
 The Purchase Price shall be adjusted as follows: 
  
 (a) The Purchase Price shall be adjusted upward by the following
(“Seller’s Credits”): 
  
 (1) the value of (i) all Seller’s share of Inventory Hydrocarbons, such value to be based upon the prevailing market value according to the STUSCO/Buena Vista posting for crude oil in effect as of the Effective Time adjusted for grade
and gravity, less taxes and transportation fees deducted by the purchaser of such oil, such oil to be measured at the Effective Time by the operators of the Properties; and (ii) all of Seller’s unsold inventory of gas plant products, if any,
attributable to the Leases at the Effective Time valued in the same manner as if such products had been sold under the contract then in existence between Seller and the purchaser of such products or, if there is no such contract, valued in the same
manner as if said products had been sold at the STUSCO/Buena Vista posted price for said products; 
  
 (2) the amount of all production expenses and operating expenses incurred by Seller on the Properties plus a sum of $100,000 for each
month to cover overhead fees, all from the Effective Time until Closing (prorated for any partial month); 
  

 6 

 (3) if the Closing occurs after May 1, 2005, the amount of interest accrued on the
Purchase Price (less the amount of the Performance Deposit) paid to Seller and after making any and all upward and downward adjustments to the Purchase Price that are to be made pursuant to this Agreement other than the adjustment for accrued
interest pursuant to this Article 3.3(a)(3)) from May 1, 2005 until the Closing at the interest rate equal to the Prime Rate (as such rate is published in the Wall Street Journal on the Closing Date) and with such interest compounded daily on
the basis of a 365 day year. 
  
 (4) an amount
equal to the sum of any upward adjustments expressly provided for elsewhere for in this Agreement; and 
  
 (5) any other amount agreed upon by Seller and Buyer in writing prior to Closing. 
  
 (b) The Purchase Price shall be adjusted downward by the following
(“Buyer’s Credits”): 
  
 (1) the total proceeds (net of royalties and other burdens) of all Hydrocarbons sold by the Seller after the Effective Time, all of which are attributable to the Properties, and any other amounts received by the Seller with respect to the
ownership or operation of the Properties after the Effective Time, but excepting interest income; 
  
 (2) the amount of all unpaid ad valorem, property, production, excise, severance and similar taxes and assessments (but not including
income taxes), which taxes and assessments become due and payable or accrue to the Properties prior to the Effective Time, which amount shall, where possible, be computed based upon the tax rate and values applicable to the tax period in question;
otherwise, the amount of the adjustment under this paragraph shall be computed based upon such taxes assessed against the applicable portion of the Properties for the immediately preceding tax period just ended; 
  
 (3) an amount equal to the sum of any downward adjustments
expressly provided for elsewhere in this Agreement; and 
  
 (4) any other amount agreed upon by Seller and Buyer in writing prior to Closing. 
  
 (c) Seller shall prepare in good faith and deliver to Buyer, at least five (5) business days prior to Closing, Seller’s estimate of the adjusted
Purchase Price to be paid at Closing, together with a preliminary statement setting forth Seller’s estimate of the amount of each adjustment to the Purchase Price to be made pursuant to this Article 3.3. The Purchase Price to be paid by
Buyer at closing shall be the adjusted Purchase Price as shall be set forth on the aforementioned Seller’s estimate of the adjusted Purchase Price. 
  

 7 

 ARTICLE 4. - REPRESENTATIONS OF SELLER 
  
 4.1. Existence. 
  
 Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, and is duly qualified to do business and is in good standing in each State in which the Properties are located and in each other State in which its business requires it to be qualified. 
  
 4.2. Authorization and Enforceability. 
  
 Seller has all power and authority necessary to enter into this Agreement
and to perform all its obligations hereunder. This Agreement has been duly executed and delivered on its behalf, and at the Closing all documents and instruments required hereunder to be executed and delivered by Seller will have been duly executed
and delivered by Seller. The execution and delivery of this Agreement and all other documents and instruments required hereunder to be executed and delivered by Seller, and the consummation of the transactions contemplated hereby, as of the Closing
Date shall have been duly authorized by all necessary corporate action on the part of Seller. As of the Closing Date, Seller shall have obtained all third party consents and authorizations that Seller is required to obtain in order to consummate the
transactions contemplated hereby; provided, however, that types of third party consents or authorizations (including consents or authorizations from private parties, governmental authorities or regulatory authorities) that in the oil and gas
industry are normally or customarily obtained after the closing for the type of asset purchase transaction set forth in this Agreement may be obtained after the Closing and that Seller will (and, as applicable, will cause its affiliates to) use
commercially reasonable efforts and cooperate with Buyer to obtain such consents and authorizations after the Closing. This Agreement does, and all such other documents and instruments shall, constitute legal, valid, and binding obligations of
Seller enforceable in accordance with their respective terms, except to the extent enforceability may be affected by bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally and limitations on the
availability of equitable remedies. 
  
 4.3.
Power. 
  
 To Seller’s
knowledge and subject to preferential purchase rights and restrictions on assignment of the type typically found in the oil and gas industry, and to rights to consent by, required notices to, and filings with or actions by other governmental
entities, Seller’s execution, delivery, and performance of this Agreement and the transactions contemplated hereby will not: (i) violate or conflict with any provision of its certificate of incorporation, by-laws, or other governing documents;
(ii) result in the breach of any material term or material condition of, or constitute a default or cause the acceleration of any material obligation under any agreement or instrument to which it is a party or by which it is bound or constitute the
happening of an event or condition upon which any other party to such contract or agreement may exercise any right or option which will materially and adversely affect Seller’s ability to perform its obligations hereunder; (iii) result in a
violation of or conflict with any applicable judgment, decree, order, award, writ, injunction, permit, law, rule or regulation; or (iv) result in the creation or imposition of any lien, burden or other encumbrance of any kind on any of the
Properties. 
  

 8 

 4.4. Brokers. 
  
 Seller has incurred no liability, contingent or otherwise, for broker’s or finder’s fees in respect of this
transaction, for which Buyer shall have any responsibility whatsoever. 
  
 4.5. Foreign Person. 
  
 Seller is not a
“foreign person” within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”), Section 1445 and 7701 (i.e. Seller is not a nonresident alien, foreign corporation, foreign partnership, foreign trust, or
foreign estate as those terms are defined in the Code and any regulation promulgated thereunder). 
  
 4.6. Intentionally omitted. 
  
 4.7. Bankruptcy. 
  
 There are no bankruptcy, reorganization, or arrangement proceedings pending involving Seller as the debtor, being contemplated by Seller, or, to
Seller’s knowledge, threatened against Seller. 
  
 4.8.
Litigation and Claims. 
  
 Except as set forth on
Schedule 4.8, to Seller’s knowledge, there is neither any claim, dispute, suit, action, investigation nor other proceeding pending before any court or governmental agency against Seller or any of the Properties which might diminish the
value of or impede the operation of the Properties (other than proceedings relating to the oil and gas industry generally and as to which Seller is not a named party), or which challenges or pertains to the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby. 
  
 4.9. Approvals and Preferential Rights. 
  
 Except as identified on Schedule 4.9 for the respective Leases or Wells, there are no enforceable preferential rights of purchase or consents to assign in favor of third parties with respect to any of the Properties and no consents
to transfers thereof are required. 
  
 4.10. Seller’s
Title. 
  
 Seller has Marketable Title to all of the
Properties and Seller warrants Marketable Title to the Properties by, through, and under Seller, but not otherwise. Except as set forth on Schedule 4.10, none of the Property is subject to a lien, burden or other encumbrance of any kind
securing indebtedness (including obligations under sale-leaseback transactions). 
  
 4.11. Compliance with Law and Permits. 
  
 To Seller’s knowledge, the Properties currently are operated, and Seller and the Properties are, in compliance with the provisions and requirements of all laws, rules, regulations, ordinances, orders, decisions
and decrees of all governmental authorities having jurisdiction with respect to the Properties or the ownership and operation thereof. To Seller’s knowledge, all necessary governmental permits, licenses and other authorizations with regard to
the ownership or operation of the Properties have been obtained and maintained in effect. 
  

 9 

 4.12. Environmental Compliance. 
  
 To Seller’s knowledge, except as set forth on Schedule 4.12,
there is no Contamination in, under, upon or emanating from any of the Properties that would reasonably be expected to result in a violation of any Environmental Laws or in a remediation, removal, response, restoration, abatement, investigative or
monitoring obligation, other than violations or obligations that would not reasonably be expected to have a material adverse effect on the ownership or operation of the Properties. 
  
 4.13. The Contracts. 
  
 Schedule 2.1(c) lists all of the material Contracts. With respect to each Lease and each Contract, (1) such contract
is in full force and effect, and (2) no party thereto is in breach of, or has repudiated, such contract (and no event has occurred that, with notice or lapse of time, would constitute a breach of such contract). All payments, including all delay
rentals, royalties, shut-in royalties, payments and calls owing under the Leases and the Contracts have been and are being paid timely. Schedule 2.1(c) identifies each Lease and Contract to which an affiliate of Seller is party. No portion of
the Seller’s interest in any of the Properties is subject to any tax partnership. 
  
 4.14. Proposals. 
  
 Except as set forth in Schedule 4.14, no proposals are currently outstanding to drill additional wells, to deepen, plug back, or rework existing wells, to conduct other operations for which consent is required under the applicable
operating agreement, to abandon any wells on the Properties or to conduct any other operations other than the normal operation of existing wells on the Properties. With respect to the joint, unit or other operating agreements relating to the
Properties: (a) except as disclosed on Schedule 4.14, there are no outstanding calls or payments under authorities for expenditures; (b) Seller has listed on Schedule 4.14 the status of all material operations by less than all parties
to the extent that such has an effect upon Seller’s interests in the Properties; and (c) except as disclosed on Schedule 4.14, there are no operations under the operating agreements with respect to which Seller has become a
non-consenting party 
  
 4.15. Operator Matters.

  
 Except proceeds attributable to interests being held in
suspense in accordance with prudent industry practice, all proceeds of production which Seller is disbursing or is required to disburse to third parties have been and are being accounted for under appropriate division orders, transfer orders or
similar documents signed by or otherwise clearly binding on the parties receiving such proceeds and reflecting as to each party the decimal interest of such party. 
  
 4.16. Environmental Disclosure. 
  
 To Seller’s knowledge, Seller has disclosed all violations of Environmental Laws with respect to the Properties to
Buyer. 
  

 10 

 4.17. Taxes. 
  
 All ad valorem, property, production, excise, severance, windfall profit and similar taxes and assessments payable with
respect to the Properties and based on or measured by the ownership of property or the production or removal of Hydrocarbons or the receipt of proceeds therefrom have been timely paid in all respects. 
  
 4.18. Wells. 
  
 (a) Except as disclosed on Schedule 4.18(a), to Seller’s
knowledge, (i) all of the wells included in the Properties have been drilled, completed and operated within the boundaries of the Leases or the Properties or within the limits otherwise permitted by contract, pooling or unit agreement, and by law
and in compliance with all applicable rules, regulations, permits, judgments, orders and decrees of any court or the federal and state regulatory authorities having jurisdiction thereof. 
  
 (b) To Seller’s knowledge, Schedule 4.18(b) discloses all Wells that have not been plugged and abandoned. To
Seller’s knowledge, none of the Wells have AFEs outstanding with respect to, or otherwise require (pursuant to applicable law or regulations or good industry practices), plugging and abandoning. All wells located on the Properties that were
plugged and abandoned by Seller were plugged and abandoned in accordance with applicable law and regulations and good industry practices. To Seller’s knowledge, all wells located on the Properties that were not plugged and abandoned by Seller
were plugged and abandoned in accordance with applicable law and regulations and good industry practices. 
  
 4.19. Full Disclosure. 
  
 To Seller’s knowledge, no representation, statement or information contained in this Agreement (including the Schedules and Exhibits attached hereto)
contains any untrue statement of a material fact or omits or will omit any material fact necessary to make the information contained therein not misleading. 
  
 4.20. Knowledge. 
  
 As used in these representations and other provisions in this Agreement, the phrase “to Seller’s knowledge,” or other similar language
which qualifies a statement as to the knowledge of Seller, means the actual present knowledge of Clifton Simonson, Ted Bentley, Jim Bentley, Petter Romming, Randy Horne and Chuck Rodems, without any duty of investigation or inquiry. Buyer and Seller
expressly agree that in no event will any representation or other statement qualified, to Seller’s knowledge, give rise to any implication or presumption that a specific inquiry or any inquiry has been made by any director, officer, agent or
employee of Seller to confirm or negate the matter being represented; and Buyer acknowledges that any such representation will be based solely on the actual present knowledge of such persons. 
  
 4.21. Restating Reps and Warranties. 
  
 The representations and warranties of Seller set forth in this Agreement
shall be deemed to be remade and restated by Seller on and as of the Closing Date. 
  

 11 

 ARTICLE 5. - REPRESENTATIONS OF BUYER 
  
 5.1. Existence. 
  
 Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and is duly qualified to do business and is in good standing in each State in which the Properties are located and in each other State in which its business requires it to be qualified. 

 
 5.2. Authorization and Enforceability. 
  
 Buyer has all power and authority necessary to enter into this Agreement and
to perform all its obligations hereunder. This Agreement has been duly executed and delivered on its behalf, and at the Closing all documents and instruments required hereunder to be executed and delivered by Buyer will have been duly executed and
delivered by Buyer. The execution and delivery of this Agreement and all other documents and instruments required hereunder to be executed and delivered by Buyer, and the consummation of the transactions contemplated hereby, as of the Closing Date
shall have been duly authorized by all necessary corporate action on the part of Buyer and no further authorization is required by any law, statute, regulation, court order or judgment applicable to Buyer. This Agreement does, and all such other
documents and instruments shall, constitute legal, valid, and binding obligations of Buyer enforceable in accordance with their respective terms, except to the extent enforceability may be affected by bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors’ rights generally and limitations on the availability of equitable remedies. 
  
 5.3. Power. 
  
 Subject to rights to consents by, required notices to, and filings with or actions by other governmental entities, Buyer’s execution, delivery, and
performance of this Agreement and the transactions contemplated hereby will not: (i) violate or conflict with any provision of its certification of incorporation, by-laws or other governing documents; (ii) result in the breach of any term or
condition of, or constitute a default or cause the acceleration of any obligation under any material agreement or instrument to which it is a party or by which it is bound or constitute the happening of an event or condition upon which any other
party to such contract or agreement may exercise any right or option which will materially and adversely affect Buyer’s ability to perform its obligations hereunder; or (iii) result in a violation of or a conflict with any applicable judgment,
decree, order, award, writ, injunction, permit, law, rule or regulation. 
  
 5.4. Brokers. 
  
 Buyer has incurred no liability, contingent or otherwise, for broker’s or finder’s fees in respect of this transaction, for which Seller shall have any responsibility whatsoever. 
  
 5.5. Intentionally omitted. 
  
  

 12 

 5.6. Bankruptcy. 
  
 There are no bankruptcy, reorganization or receivership proceedings pending involving Buyer as the debtor, being
contemplated by Buyer, or, to Buyer’s knowledge, threatened against Buyer. 
  
 5.7. Experienced And Knowledgeable Buyer. 
  
 Buyer is a highly experienced and knowledgeable investor and operator in the oil and gas business. Prior to entering into this Agreement, Buyer was advised by and has relied solely on its own expertise and legal, tax,
reservoir engineering, and other professional counsel concerning this Agreement, the Properties and the value thereof. Buyer (i) has such knowledge and experience in business, financial, and oil and gas matters that it is capable of evaluating the
merits and risks of entering into and of carrying out its obligations in connection with the acquisition of the properties in the manner contemplated herein; (ii) has received to date all information concerning the Properties and such other
information relating to this Agreement which it requested; and (iii) is able to bear the economic risk of its investment in the Properties for an indefinite period of time. Further, Buyer acknowledges that Seller is relying upon the representations
contained in this Article 5.7 and that absent such representations that the proposed sale to Buyer would not be entered into and this Agreement would not be executed and delivered by Seller. 
  
 5.8. Litigation and Claims. 
  
 There is neither any claim, dispute, suit, action, investigation or other
proceeding pending before any court or governmental agency, nor to Buyer’s knowledge, threatened, against Buyer which challenges or pertains to the execution and delivery of this Agreement or the consummation of the transactions contemplated
hereby. 
  
 5.9. Restated Reps and Warranties.

  
 The representations and warranties of Buyer set forth in
this Agreement shall be deemed to be remade and restated by Buyer on and as of the Closing Date. 
  
 ARTICLE 6. - ACCESS TO INFORMATION AND INSPECTIONS 
  
 6.1. Title Files. 
  
 Promptly after the execution of this Agreement and until the Closing Date, Seller shall permit Buyer and its representatives at reasonable times during
normal business hours to examine, in Seller’s offices or one or more other locations designated by Seller, all abstracts of title, title opinions, title files, ownership maps, lease files, assignments, division orders, payout statements and
agreements pertaining to the Properties as requested by Buyer, insofar as the same may now be in existence and in the possession of Seller. Seller makes no warranty of any kind as to the information so supplied, and Buyer agrees that any conclusions
drawn therefrom are the result of its own independent review and judgment. Seller shall provide Buyer with access to true and complete copies (including all amendments, supplements and other modifications) of all of the Contracts and all of the
Leases. 
  
  

 13 

 6.2. Other Files. 
  
 Promptly after the execution of this Agreement and until the Closing Date, Seller shall permit Buyer and its representatives
at reasonable times during normal business hours to examine, in Seller’s offices or one or more other locations designated by Seller, all production, well, regulatory, engineering, seismic, geological, geophysical and geochemical information,
and accounting information relevant to the Properties (and Seller’s interest therein), insofar as the same may be in existence and in the possession of Seller, excepting, without limitation: (i) economic evaluations; (ii) reserve reports; (iii)
any such information that is subject to attorney/client, work product or other legal privilege; and (iv) any such information, the disclosure of which is restricted or prohibited by third party agreement(s) specifically identified to Buyer (which
Seller shall use commercially reasonable efforts to attempt to have waived for Buyer’s benefit). No warranty of any kind is made by Seller as to the information so supplied, and Buyer agrees that any conclusions drawn therefrom are the result
of its own independent review and judgment. 
  
 6.3.
Buyer’s Confidentiality Obligations. 
  
 All
information furnished or disclosed to Buyer pursuant hereto is subject to that certain Confidentiality and Non-Interference Agreement by and between Seller and Buyer, a copy of which is attached as Exhibit “D” hereto (the
“CNIA”). 
  
 6.4. Inspections.

  
 Promptly after the execution of this Agreement and until
Closing, Seller, subject to any necessary third-party operator approval, shall permit Buyer and its representatives at reasonable times and at their sole risk, cost and expense, to conduct reasonable inspections of the Properties, subject to
Article 10 hereof and the following notice and escort requirements. Buyer must provide Seller at least 24 hours prior notice before Buyer or any of its representatives may enter or inspect any of the Properties. Neither Buyer nor any of its
representatives may enter or inspect any of the Properties without an escort provided by Seller. Seller, in its sole discretion, may waive the advance notice or escort requirements. 
  
 ARTICLE 7. - DISCLAIMER OF WARRANTIES 
  
 7.1. Information Provided. 
  
 All of the information, documents, data, statistics, summaries, electronic transmissions and facsimiles furnished by or on
behalf of Seller herewith or hereunder are furnished or will be furnished for Buyer’s use at Buyer’s sole risk. All such information has been compiled or prepared by Seller based upon its files and records and Seller believes that such
information is correct, but EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ARTICLE 4, SELLER MAKES NO REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE ACCURACY, CORRECTNESS, COMPLETENESS, OR ADEQUACY OF SAME AND DOES NOT WARRANT OR GUARANTEE SUCH
INFORMATION IN ANY WAY. SELLER HAS MADE NO WARRANTIES OR REPRESENTATIONS CONCERNING THE CONDITION OF THE “PROPERTIES”, PRODUCTION RATES, RECOMPLETION OPPORTUNITIES, DECLINE RATES, GEOLOGICAL OR GEOPHYSICAL DATA OR INTERPRETATIONS, THE
QUALITY, QUANTITY OR RECOVERABILITY OF ANY HYDROCARBON 

  

 14 

 
RESERVES, ANY PRODUCT PRICING ASSUMPTIONS, THE ABILITY TO SELL OR MARKET ANY HYDROCARBONS AFTER CLOSING, OR THE PRESENT OR FUTURE VALUE OF THE ANTICIPATED
INCOME, EXPENSES, OR PROFITS, IF ANY, TO BE DERIVED FROM THE “PROPERTIES.” BUYER IS RESPONSIBLE FOR MAKING SUCH INDEPENDENT INVESTIGATION AND EVALUATION OF THE “PROPERTIES” AS BUYER SHALL DEEM APPROPRIATE, REALIZING THAT SELLER
DOES NOT ASSUME AND SHALL HAVE NO LIABILITY TO BUYER OR ANY OTHER PARTY FOR ANY RELIANCE WHICH MAY BE PLACED ON ANY OF THE INFORMATION, DOCUMENTS, DATA, STATISTICS, SUMMARIES, ELECTRONIC TRANSMISSIONS OR FACSIMILES FURNISHED TO BUYER. SPECIFICALLY,
BUT WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE DESCRIPTION OF “LEASES” INCLUDED IN THE “PROPERTIES”, THE ACREAGE PURPORTED TO BE COVERED THEREBY, DEPTH LIMITATIONS (IF ANY), ROYALTY AND OTHER BURDENS AFFECTING SAME,
AND QUANTUM OF INTEREST HAVE BEEN DERIVED STRICTLY FROM SELLER’S RECORDS AND SELLER HAS NOT UNDERTAKEN ANY EXAMINATION OF TITLE TO VERIFY SAME. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, SELLER DOES NOT WARRANT TITLE TO THE
“PROPERTIES” AND BUYER SHOULD THEREFORE UNDERTAKE SUCH TITLE EXAMINATION AS IT DEEMS APPROPRIATE PRIOR TO THE “NOTIFICATION DEADLINE” (AS DEFINED IN ARTICLE 8.2) AND THE END OF THE “EXAMINATION PERIOD” (AS DEFINED IN
ARTICLE 10.1). 
  
 7.2. Regulatory Status.

  
 OTHER THAN AS EXPRESSLY SET FORTH ELSEWHERE IN THIS
AGREEMENT, SELLER MAKES NO WARRANTY OR REPRESENTATION WHATSOEVER AS TO THE REGULATORY STATUS OF THE “PROPERTIES”, AND BUYER SHOULD SATISFY ITSELF AS TO SUCH MATTERS PRIOR TO THE END OF THE “EXAMINATION PERIOD” (AS DEFINED IN
ARTICLE 10.1). 
  
 7.3. No Warranties. 

 
 EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN AND AS TO THE SPECIAL
WARRANTY OF TITLE EXPRESSLY CONTAINED IN THE ASSIGNMENT, CONVEYANCE OF THE “PROPERTIES” WILL BE MADE WITHOUT WARRANTIES OR COVENANTS, EXPRESS OR IMPLIED IN FACT OR IN LAW, AS TO TITLE, MERCHANTABILITY, DURABILITY, USE, OPERATION, FITNESS
FOR ANY PARTICULAR PURPOSE, CONDITION, SAFETY OF THE PROPERTIES, COMPLIANCE WITH REGULATORY AND ENVIRONMENTAL REQUIREMENTS OR OTHERWISE. SELLER HEREBY DISCLAIMS ANY AND ALL, AND MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND
TO BUYER INCLUDING WARRANTIES RELATING TO THE PHYSICAL CONDITION OF ANY OF THE “PROPERTIES” OR (EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN) RELATING TO TITLE, MERCHANTIBILITY, DURABILITY, USE, OPERATION, FITNESS FOR ANY PARTICULAR
PURPOSE, SAFETY OR COMPLIANCE WITH REGULATORY OR ENVIRONMENTAL REQUIREMENTS. 
  

 15 

 7.4. Buyer Inspection. 
  
 EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, BUYER HEREBY ACCEPTS THE “PROPERTIES” ASSIGNED AND CONVEYED HEREIN
(INCLUDING ALL WELLS, PERSONAL PROPERTY AND EQUIPMENT) “AS IS, WHERE IS” AND “WITH ALL FAULTS”, INCLUDING THE ENVIRONMENTAL CONDITION OF THE PROPERTIES. 
  
 BUYER COVENANTS, REPRESENTS AND WARRANTS THAT (i) BUYER HAS INSPECTED OR WILL INSPECT THE “PROPERTIES”, AND
IMPROVEMENTS ON THE “PROPERTIES”, IF ANY, AND ALL MATTERS RELATING THERETO WHICH BUYER DESIRES; (ii) NEITHER SELLER NOR ANYONE ON SELLER’S BEHALF HAS MADE, OR IS MAKING, ANY WARRANTIES OR REPRESENTATIONS RESPECTING THE
“PROPERTIES” OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT; (iii) BUYER IS RELYING SOLELY ON (A) BUYER’S OWN INVESTIGATION OF THE “PROPERTIES” AND ALL MATTERS PERTAINING THERETO, INCLUDING THE ENVIRONMENTAL
CONDITION OF THE “PROPERTIES” AND (B) THOSE WARRANTIES AND REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN THIS AGREEMENT; AND (iv) EXCEPT AS EXPRESSLY SET FORTH HEREIN, BUYER IS PURCHASING THE “PROPERTIES” “AS IS.”

  
 BUYER REPRESENTS AND WARRANTS THAT IT IS HIGHLY EXPERIENCED IN
THE BUSINESS OF EVALUATING, PURCHASING AND OPERATING PROPERTIES AND EQUIPMENT OF THE TYPE TO BE SOLD TO BUYER PURSUANT TO THIS AGREEMENT AND THAT BUYER AND ITS REPRESENTATIVES HAVE SUFFICIENT KNOWLEDGE, ABILITIES AND EXPERIENCE TO FULLY INVESTIGATE
AND EVALUATE THE “PROPERTIES” (INCLUDING THEIR CONDITION AND ECONOMIC VALUE). 
  
 EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, BUYER ACKNOWLEDGES THAT SELLER MAKES NO, AND EXPRESSLY DISCLAIMS ANY, WARRANTIES OR REPRESENTATIONS CONCERNING THE ACCURACY, CORRECTNESS, COMPLETENESS OR ADEQUACY OF ANY
OF THE INFORMATION, DOCUMENTS, DATA, STATISTICS, SUMMARIES, ELECTRONIC TRANSMISSIONS AND FACSIMILES FURNISHED BY OR ON BEHALF OF SELLER TO BUYER OR ANY OF ITS REPRESENTATIVES. 
  
 FURTHER, BUYER ACKNOWLEDGES AND AGREES THAT, NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL
SELLER BE LIABLE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING CLAIMS FOR LOSS OF USE, RENTS, ANTICIPATED PROFIT OR BUSINESS OPPORTUNITY, OR BUSINESS INTERRUPTION, DIMINUTION IN VALUE, OR MENTAL OR EMOTIONAL DISTRESS OR FEAR OF
INJURY OR DISEASE. 
  

			
	 BUYER’S INITIALS: _______
	 	SELLER’S INITIALS: _______

  

 16 

 7.5. Prior Operations. 
  
 Some or all of the Properties may contain asbestos or naturally occurring radioactive material (hereinafter referred to as
“NORM”). In this regard, Buyer expressly understands that NORM may affix or attach itself to the inside of Wells, materials and equipment as scale, or in other forms, and that said Wells, materials and equipment located on the
Properties or included therein may contain NORM and that NORM-containing material may be buried or otherwise disposed of on the Properties. Buyer also expressly understands that special procedures may be required for the remediation, removal,
transportation and disposal of asbestos and NORM from the Properties where it may be found, and Buyer, after Closing, assumes all responsibility and liability for or in connection with assessment, remediation, removal, transportation, and disposal
of any asbestos and NORM and associated activities in accordance with all rules, regulations and requirements of governmental agencies. 
  
 ARTICLE 8. - TITLE MATTERS 
  
 8.1. Selected Definitions Regarding Title Matters. 
  

For purposes hereof, the terms set forth below shall have the meanings assigned thereto. 
  
 (a) “Allocated Value” shall mean the dollar amount allocated to each Property as set forth on Schedule
3.1; provided, however, that if the value of a particular Property is not set forth on Schedule 3.1, the Parties shall, within five (5) business days after the date of this Agreement, determine by mutual written agreement the Allocated
Value for any and all such Properties for which an Allocated Value is not set forth on Schedule 3.1 and such additional agreed upon Allocated Value(s) shall be attached hereto as Schedule 8.1(a) and incorporated herein by this
reference. The Allocated Value for each Property has been, or will be, reviewed and agreed to by the Parties and represents or will represent, as the case may be, the Parties’ good faith allocation of the value of the Properties. 
  
 (b) “Marketable Title” means, as to the Leases, such title
held of record by Seller that (a) entitles Seller and will entitle Buyer, after Closing, to own and receive and retain, without suspension, reduction or termination, payment of revenues for not less than the net revenue interest shown on Exhibit
“A-1” of all oil and gas produced, saved and marketed from or attributable to the Well(s) or unit indicated through the plugging, abandonment and salvage of such Wells; (b) obligates Seller, and will obligate Buyer after Closing, to
bear the costs and expenses relating to the maintenance, development and operation of such Well or unit through the plugging, abandonment and salvage of such Well(s) in an amount not greater than the working interest of Seller set forth in
Exhibit “A-1” (unless Seller’s net revenue interest therein is proportionately increased); and (c) renders the Properties free and clear of any liens, burdens or encumbrances of any kind or character other than Permitted
Encumbrances. 
  
 (c) “Title Defect” shall mean
any matter which causes Seller to not have Marketable Title to any of the Properties as of the Closing Date. Title Defect does not include (a) a lien or encumbrance in the form of a judgment secured by a supersedeas bond or other security approved
by the court issuing the order; (b) the expiration of a Lease or Leases between the Effective Time and the Closing Date in accordance with its terms and not due to any action or inaction by Seller (or any of its affiliates), or (c) Permitted
Encumbrances. 
  

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 (d) “Title Defect Property” shall mean any Lease or portion thereof burdened by a Title
Defect. 
  
 (e) “Permitted Encumbrances” shall
mean any of the following matters: 
  
 (i)
materialman’s, mechanic’s, repairman’s, employee’s, contractor’s, operator’s, tax, and other similar liens or charges arising in the ordinary course of business for obligations that are not delinquent and that will be
paid and discharged in the ordinary course of business or, if delinquent, that are being contested in good faith by appropriate action; 
  
 (ii) any liens or security interests created by law or reserved with respect to the Properties for royalty, bonus, rental, other payment
obligations under the Leases or created to secure compliance with the terms of the Leases; 
  
 (iii) rights reserved to or vested in any governmental, quasi-governmental or regulatory authority to in any way control or regulate any
of the Properties (including any units or Wells sold to Buyer pursuant to this Agreement) and all applicable laws, rules, regulations and orders of such authorities so long as the same do not (a) decrease Seller’s NRI below the NRI shown in
Exhibit “A-1” or increase Seller’s WI shown in Exhibit “A-1” without at least a proportionate increase in Seller’s NRI or (b) create any liens on any of such units or Wells; 
  
 (iv) to the extent any of the following do not materially
interfere with the operation of the portion of the Properties burdened thereby (as such operations are conducted by Seller in the ordinary course of its business as of the Effective Time): (a) easements, rights-of-way, servitudes, permits, surface
leases and other rights in respect of surface operations, pipelines, grazing, hunting, fishing, logging, canals, ditches, reservoirs or the like, and (b) easements for streets, alleys, highways, pipelines, telephone lines, power lines, railways and
other similar rights-of-way, on, over or in respect to property owned or leased by Seller or over which Seller owns rights-of-way, easements, permits or licenses; 
  
 (v) all lessors’ royalties, overriding royalties, carried interest, production payments, reversionary
interests and other burdens on or deductions from the proceeds of production if the net cumulative effect of such burdens or deductions does not reduce the net revenue interest (NRI) of Seller in any Well affected thereby as reflected in Exhibit
“A-1”; 
  
 (vi) any contingent
production payments owed or allegedly owed to Unocal Corporation; 
  
 (vii) to the extent the same (A) are listed on Schedule 2.1(c) and (B) do not operate to reduce the Net Revenue Interest, nor increase the expense interest (unless Seller’s Net Revenue Interest therein is
proportionately increased), of Seller as reflected 

  

 18 

 
in Exhibit “A-1”: production sales contracts; division orders; contracts for purchase, exchange, refining, or processing of oil, gas and
other hydrocarbons; unitization and pooling designations, declarations, orders and agreements; operating agreements; agreements of development; area of mutual interest agreements; gas balancing or deferred production agreements; processing
agreements; plant agreements; pipeline, gathering and transportation agreements; injection, repressuring and recycling agreements; carbon dioxide purchase or sale agreements; salt water or other disposal agreements; seismic or geophysical permits or
agreements; “pending agreements” described as such on Schedule 2.1(c); and any and all other agreements which are ordinary and customary in the oil, gas, sulphur and other mineral exploration, development or extraction business, or
in the business of processing of gas and gas condensate production for the extraction of products therefrom; 
  
 (viii) conventional rights of assignment normally actuated by an intent to abandon or release a Lease and requiring notice to the holder
of such rights; 
  
 (ix) division orders and
sales contracts terminable without penalty upon no more than sixty (60) days notice to the purchaser; 
  
 (x) calls on or preferential rights to purchase production at prices not less than market prices pursuant to Contracts listed on
Schedule 2.1(c); 
  
 (xi) preferential
rights to purchase and required third party consents to assignments and similar agreements with respect to which waivers or consents are obtained from the appropriate parties, or the appropriate time period for asserting the rights has expired
without an exercise of the rights prior to the Closing Date; 
  
 (xii) all rights to consent by, required notices to, filings with, or other actions by governmental entities and tribal authorities in connection with the sale or conveyance of oil and gas leases or interests if they
are customarily obtained subsequent to the sale or conveyance; 
  
 (xiii) defects or irregularities of title arising out of events or transactions which have been barred by limitations; 
  
 (xiv) all other liens, charges, encumbrances, defects, and irregularities of title affecting the Properties, which individually or in the
aggregate: 
  
 (a) are not such as to interfere
with the operation, value or use of the Properties (or portion thereof) affected thereby; 
  
 (b) do not presently delay the receipt or prevent Seller from receiving its share of the proceeds of production from any of the units or
Wells to which the Leases relate; 
  
 (c) do not
presently reduce the interest of Seller with respect to all oil and gas produced from any unit or Well to which the Leases relate below the “net revenue interest” or “NRI” set forth in Exhibit “A-1” for
such unit or Well; and 
  

 19 

 (d) do not presently increase Seller’s portion of the costs and expenses relating to
the operations on and the maintenance and development of the lands and depths included in any unit or Well to which the Leases relate above the “working interest” or “WI” set forth in Exhibit “A-1”
for such unit or Well; and 
  
 (xv) any
encumbrance or other matter (whether or not constituting a Title Defect) waived in writing by Buyer or deemed to be waived in writing by Buyer under Article 8.2. 
  
 8.2. Notice of Title Defect. 
  
 Buyer shall provide Seller written notice (“Title Defect Notice”), at or before 5:00 p.m. Pacific Time on
April 1, 2005 (the “Notification Deadline”), of any matter that would cause Seller’s title to any or all of the Properties not to be Marketable Title or any other matter which would constitute a breach or a representation or
warranty (without regard to any qualification therein by “Seller’s knowledge”) of Seller specific to, and materially and adversely affecting, any Property (“Title Defect”), in each case together with a detailed
explanation of (a) the nature of such title Defect, (b) the Leases (or portions thereof) affected thereby, and (c) Buyer’s proposed Defect Value (as hereinafter defined) for such Title Defect. Any matters that would otherwise constitute Title
Defects but which are not specifically raised in writing (with the detailed explanation as contemplated in the immediately preceding sentence) by Buyer prior to the Notification Deadline shall conclusively be deemed waived by Buyer (provided that
such waiver shall not affect the warranty of title given to Buyer in the Assignment). As used herein, the term “Defect Value” shall mean with respect to each Title Defect, the reduction in the Allocated Value of the affected Leases
as a result of such Title Defect as determined in Article 8.5. If Buyer determines that Seller’s NRI or WI for Properties is greater than that shown on Exhibit “A-1”, Buyer must notify Seller in writing of such
determination within three (3) business days. 
  
 8.3.
Remedies for and Valuation of Title Defects. 
  
 (a)
If Buyer provides a Title Defect Notice with respect to any Title Defect, the Parties will promptly meet and work in good faith to agree on the validity of the claim and, if applicable, the value of the Title Defect, using the following criteria:

  
 (1) If the Title Defect is based on
Seller’s owning a different NRI than that shown on Exhibit “A-1”, then the value will be the absolute value of the number determined by the following formula: 
  
 Adjustment = A x (1-[B/C]) 
  
 A = Allocated Value for the affected interest 
  
 B = Correct NRI for the affected interest 
  
 C = NRI for the affected interest as shown on Exhibit “A-1” 
  

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 For example purposes only, and not by way of limitation, if the Allocated Value for the affected interest
is $1,000,000, the correct NRI for the affected interest is 0.5 and the NRI for the affected interest as shown on Exhibit “A-1” is 0.6, then the value would be $166,666.70 ($1,000,000 x (1-(0.5/0.6)). 
  
 (2) If the Title Defect is based on an obligation or burden
that is liquidated, the value will be the sum necessary to remove the obligation or burden from the affected Property. 
  
 (3) If the Title Defect is based on an obligation or burden that is not liquidated, but can be estimated with reasonable certainty, the
value will be the sum necessary to compensate Buyer on the Closing Date for the adverse economic effect on the affected Property. 
  
 (b) If the value of any Title Defect cannot be determined based on the above criteria, and if the Parties cannot otherwise agree on such value or the
Parties are unable to agree upon whether a Title Defect exists, Seller may, at its sole option and upon written notice to Buyer, either: 
  
 (1) remove the affected Property from this Agreement and reduce the Purchase Price by the Allocated Value for that Property (a
“Title Defect Removal”); or 
  
 (2) elect to resolve the dispute under the arbitration provisions in this Agreement (a “Title Defect Arbitration”). 
  
 ARTICLE 9. - PREFERENTIAL PURCHASE RIGHTS AND CONSENTS 
  
 9.1. Actions and Consents. 
  
 (a) Seller and Buyer agree that each shall use commercially reasonable efforts to take or cause to be taken all such action
as may be necessary to consummate and make effective the transaction provided in this Agreement and to assure that it will not be under any material corporate, legal, or contractual restriction that could prohibit or delay the timely consummation of
such transaction. 
  
 (b) Certain preferential purchase rights or
rights of approval or consent may exist with respect to the Properties under the agreements and Leases shown on Exhibit “A”. Seller shall use reasonable efforts to notify all holders of (i) preferential rights, (ii) rights of
consent to the assignment, or (iii) rights of approval to the assignment of the Properties, and of such terms and conditions of this Agreement to which the holders of such rights are entitled. Seller shall cause any of its affiliates holding such
rights to waive such rights. Seller shall promptly notify Buyer if any preferential rights are exercised, any consents or approvals denied, or if the requisite period has elapsed without said rights having been exercised or consents or approvals
having been received. If prior to Closing, any such preferential rights are timely and properly exercised, the interest or part thereof so affected shall be excluded from the sale and purchase contemplated hereby and the Purchase Price shall be
reduced by the Allocated Value of such interest or part thereof as provided in Schedule 3.1. If any additional third party preferential rights are discovered after Closing, or if a third party preferential rights holder alleges improper

  

 21 

 
notice, then Buyer agrees to cooperate with Seller in giving effect to any such valid third party preferential purchase rights. In the event any such valid
third party preferential purchase rights are validly exercised after Closing, Buyer’s sole remedy against Seller with respect to such exercise shall be the return by Seller to Buyer of that portion of the Purchase Price allocated under
Schedule 3.1 to the portion of the Property or Properties on which such rights are exercised and lost by Buyer to such third person. 
  
 (c) In the event one or more Properties or any interest therein is excluded pursuant to Article 9.1(b) because the same is subject to preferential
purchase rights, Closing with respect to all other Properties will proceed as provided in this Agreement, but the Purchase Price delivered to Seller at Closing will be reduced by the Allocated Value of the excluded Properties or interest. In the
event that within ninety (90) days after Closing any such preferential purchase right is waived or the time for election to purchase passes (such that under the governing documents, Seller may sell the affected Property or interest to Buyer), then a
separate closing (after the Closing for the other Properties) will proceed promptly with respect to such Property or interest. If such waivers are not received by Seller within the applicable ninety (90) day period, Seller shall retain such
Properties or interests and the Parties shall have no further obligation with respect thereto. 
  
 ARTICLE 10. - ENVIRONMENTAL MATTERS AND OTHER ADJUSTMENTS 
  
 10.1. Phase I Environmental Assessment. 
  
 Buyer shall have the right to conduct an environmental assessment of the Properties during the period beginning on the date of this Agreement and ending
at 5:00 pm Pacific Time on April 1, 2005 (the “Examination Period”). The confidentiality obligations of the CNIA shall be applicable to all information acquired by Buyer in the course of its environmental assessment. During normal
business hours and after providing Seller reasonable prior notice of any such activities (and in no event with not less than 72 hours prior notice), Buyer and its representatives shall be permitted to enter upon the Properties and all buildings and
improvements thereon, inspect the same, review files and generally conduct such tests, examinations, and investigations as are consistent with the American Society for Testing and Materials standard Phase I environmental audit. Seller will have the
right to witness any and all such investigations. Buyer shall, within ten (10) days after receiving any of the following, provide Seller a complete copy of all such results, analyses and reviews received by Buyer. 
  
 10.2. Phase II Environmental Assessment. 
  
 If as a result of its Phase I audit, Buyer and its representatives
reasonably believe that a material environmental condition exists that warrants a Phase II investigation and Buyer desires to conduct such investigation with respect to each such circumstance, Buyer agrees to give Seller prompt written notice of
each specific environmental condition including the basis of its belief and estimated cost of remediation. During a period of five (5) business days following receipt of such notice, Seller in its reasonable discretion shall have the right to
authorize Buyer to proceed with the Phase II investigation or to decline to authorize such additional investigation. The Parties shall negotiate in good faith as to whether a Phase II investigation is warranted. In the event Seller elects to
authorize the Phase II investigation, the Examination Period and the 

  

 22 

 
Environmental Notice Deadline (as defined below), with respect to the specific Property or Properties subject to the Phase II investigation, shall be
extended for a period of seven (7) business days. If the Parties can not agree, then at Seller’s sole option, Seller can decline to authorize the Phase II investigation and no such investigation shall be permitted, the affected Property or
Properties shall be excluded from the sale and purchase contemplated hereby and the Purchase Price shall be reduced by the Allocated Value of such excluded Property or Properties (a “Phase II Removal”). Buyer shall furnish Seller
copies of all environmental reports prepared by Buyer or on Buyer’s behalf upon Buyer’s receipt from Seller of reimbursement of Buyer’s costs incurred in preparing such reports. The final draft of all such reports shall cover and
include only those Properties which have not been excluded pursuant to this Article 10.2; provided, however, that nothing contained herein shall be construed to prohibit the disclosure of any matter required to be reported or disclosed by
applicable Environmental Laws (as defined below). 
  
 10.3.
Environmental Defect Notice. 
  
 Buyer will provide
Seller written notice (“Environmental Defect Notice”) at or before 5:00 p.m. Pacific Time on April 1, 2005 (the “Environmental Notice Deadline”) of (a) the existence of any environmental condition discovered by
Buyer affecting any of the Properties that constitutes a violation of Environmental Laws or any other matter which would constitute a breach of a representation or warranty (without regard to any qualification therein by “Seller’s
knowledge”) of Seller set forth in Article 4.12 (“Environmental Defect”), and (b) the estimated cost to remediate or cure such condition on each individual Property, determined utilizing the most cost effective and
appropriate method of cure or remediation available under the circumstances. With respect to any Environmental Defect: 
  
 (a) If an Environmental Defect Notice has been provided with respect to any Environmental Defect, Buyer and Seller shall promptly meet and work in good
faith to agree on the validity of the claim and, if applicable, the value of (i.e., the cost to remediate) the Title Defect; and 
  
 (b) If Buyer and Seller cannot, within ten (10) days following the notice of an Environmental Defect as to any Property, reach mutual agreement as
contemplated above on whether a Environmental Defect exists or the value of such Environmental Defect, Seller may, at its sole option and upon written notice to Buyer: 
  
 (1) remove the affected Property from this Agreement and reduce the Purchase Price by the Allocated Value
for that Property (an “Environmental Defect Removal”); or 
  
 (2) elect to resolve the dispute under the arbitration provisions in this Agreement (a “Environmental Defect Arbitration”). 
  
 (c) Seller may elect to withhold initially from Closing any Property affected by a Title Defect or an Environmental Defect
if (i) such Title Defect or Environmental Defect is reasonably susceptible to cure or remediation, (ii) Seller, as of the Closing, is attempting in good faith to cure or remediate such Title Defect or Environmental Defect, and (iii) Seller notifies

  

 23 

 
Buyer in writing prior to Closing that Seller intends to continue such efforts post-Closing. Any Property so withheld (a “Cure/Remediation
Property”) shall not be considered removed from the transaction as a Property is removed pursuant to an Environmental Defect Removal or a Title Defect Removal, but rather such Property shall be treated under Article 19.4 as a Second
Closing Property. 
  
 10.4. Defect-Related Purchase Price
Adjustments. 
  
 (a) If the aggregate value (determined
in accordance with this Agreement) of all Title Defects, Environmental Defects and Casualty Loss Amounts (excluding all Minimal Defects) exceeds a deductible of One Million Dollars ($1,000,000), the Purchase Price shall be reduced by the aggregate
value of all Title Defects, Environmental Defects and Casualty Loss Amounts (excluding all Minimal Defects) in excess of One Million Dollars. 
  
 (b) If the Purchase Price has been reduced under Section 10.4(a) and Buyer’s title review shows that Seller’s NRI for one or more of the
Properties is greater than that shown on Exhibit “A-1”, Seller may by delivery of written notice to Buyer at least five (5) days prior to Closing request an appropriate corresponding increase in the Purchase Price, which increase
shall not exceed the total reduction in Purchase Price under Section 10.4(a). 
  
 10.5. Termination Relating to Defects. 
  
 If the aggregate value (determined in accordance with this Agreement) of all Title Defects, Environmental Defects and Casualty Loss Amounts (excluding all Minimal Defects) asserted by Buyer, together with (but without
duplication) the Allocated Value of all Properties removed pursuant to a Phase II Removal, Title Defect Removal or an Environmental Defect Removal, exceeds $11,900,000, then either Buyer or Seller shall have the option to terminate this Agreement by
delivery of written notice to the other Party prior to Closing. In such case, Seller shall immediately instruct the Escrow Agent to return the Performance Deposit to Buyer and this Agreement shall deemed to be of no further force or effect except
for the items specifically set forth or referenced in Article 17.3. 
  
 10.6. Environmental Laws. 
  
 As used herein, the term “Environmental Laws” shall mean any and all laws, statutes, regulations, rules, orders, ordinances, permits, or determinations of any governmental authority pertaining to
health or conservation or protection of the environment, wildlife, or natural resources in effect in any and all jurisdictions in which the Property is located otherwise having jurisdiction over the matter, including the Clean Air Act, as amended,
the Federal Water Pollution Control Act, as amended, the Safe Drinking Water Act, as amended, the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), as amended, the Superfund Amendments and
Reauthorization Act of 1986 (“SARA”), as amended, the Resource Conservation and Recovery Act (“RCRA”), as amended, the Hazardous and Solid Waste Amendments Acts of 1984, as amended, the Toxic Substances Control Act,
as amended, and the Occupational Safety and Health Act (“OSHA”), as amended. The terms “hazardous substance,” “release,” and “threatened release” shall have the meanings specified in CERCLA; provided,
however, that to the extent the laws of the state in which the Property is located are 

  

 24 

 
applicable and have established a meaning for “hazardous substance,” “release,” “threatened release,” “solid waste,”
“hazardous waste,” and “disposal” that is broader than that specified in CERCLA or RCRA and SARA or OSHA, such broader meaning shall apply with respect to the matters covered by such laws. 
  
 ARTICLE 11. - GENERAL COVENANTS OF SELLER 
  
 11.1. Access to Records and Employees. 
  
 During the Examination Period (as defined in Article 10.1), Seller
shall grant Buyer access to the Records as defined in Article 15.4 and all accounting and tax files relating to the Properties during Seller’s normal business hours upon reasonable prior notification, subject to the CNIA. The Records and
all accounting and tax files relating to the Properties shall be made available at their present location together with suitable office facilities for review purposes. Seller will use commercially reasonably efforts to make its employees available
for Buyer to interview as reasonably requested by Buyer, at or reasonably near the normal place of employment or residence for each such employee. Buyer agrees that it shall not contact any of Seller’s employees without first coordinating such
contact with Seller. 
  
 11.2. Covenants of Seller Pending
Closing. 
  
 (a) From and after the date of this
Agreement and until the Closing and subject to Article 11.3 and the constraints of applicable leases, operating agreements and other agreements, Seller shall operate, manage, and administer the Properties in a good and workmanlike manner
(subject to normal wear and tear in the ordinary course of business) consistent with its past practices and shall carry on its business with respect to the Properties in substantially the same manner as before execution of this Agreement. Buyer
acknowledges and agrees that Seller may perform its aforementioned obligations to operate, manage and administer the Properties prior to the Closing pursuant to Seller’s reasonable discretion in the ordinary course of Seller’s business.
Seller shall have no responsibility for and shall incur no liability for any Losses of any nature suffered or incurred by Buyer arising out of or in connection with the rendering of such unless such Losses result from the gross negligence or willful
misconduct of the Seller. Seller may charge Buyer an overhead fee of $100,000 per month prorated from the Effective Time until Closing as discussed herein. Seller shall also retain any third party administrative or operating overhead charges paid
with respect to the Properties during such period. Seller shall use commercially reasonable efforts to preserve in full force and effect all Leases, Contracts, operating agreements, easements, rights-of-way, permits, licenses, and agreements which
relate to the Properties in which Seller owns an interest, and shall perform all material obligations of Seller in or under all such agreements relating to the Properties; provided, however, that in no event shall Seller incur any liability for the
breach of its obligations under this Article 11.2(a) in excess of the Allocated Value of the Property or Properties subject to or affected by such breach. Seller shall also, except for emergency action (including emergency repairs) taken in
the face of serious risk of life, property, or the environment (i) submit to Buyer, for prior written approval, all requests for operating or capital expenditures and all proposed contracts and agreements (or groups of related agreements) relating
to the Properties which involve individual commitments of more than Fifty Thousand Dollars ($50,000.00); (ii) consult with, inform, and advise Buyer regarding all matters that may materially affect the operation, management, or administration of

  

 25 

 
the Properties; (iii) obtain Buyer’s written approval prior to voting under any operating, unit, joint venture, partnership or similar agreement (other
any such vote to effectuate any of the transactions contemplated by this Agreement); and (iv) not approve or elect to go non-consent as to any proposed well, or plug and abandon or agree to plug and abandon any well, without Buyer’s prior
written approval; (v) not transfer, sell, hypothecate, encumber, or otherwise dispose of any of the Properties, other than the sale of production in the ordinary course of business or as required in connection with the exercise by third parties of
preferential rights to purchase any of the Properties; (vi) not abandon any wells or surrender any Leases (other than as required by law or governmental order or regulation or in connection with an emergency); and (vii) not enter into any production
sale, processing, or treating agreements affecting the Properties unless it is terminable on no more than thirty (30) days notice. On any matter requiring Buyer’s approval under this Article 11.2(a), Buyer shall respond within three (3)
days to Seller’s written request for approval and failure of Buyer to respond to Seller’s request for approval within such time shall release Seller from the obligation to obtain Buyer’s approval before proceeding on such matter.

  
 (b) Seller shall promptly notify Buyer of any suit, lessor
demand action, or other proceeding pending or threatened in writing by or before any court, arbitrator, or governmental agency and any cause of action which relates to the Properties or which might result in impairment of loss of Seller’s
interest in any portion of the Properties or which might hinder or impede the operation of the Properties; provided, however, that the foregoing obligation applies only to any such suit, lessor demand action, proceeding or cause of action of which
Seller acquires actual knowledge prior to the Closing. Seller shall not (and shall cause its affiliates not to) voluntarily compromise, settle or adjust any material amounts payable by reason of any Casualty Loss without first obtaining the written
consent of Buyer. 
  
 11.3. Limitations on Seller’s
Covenants Pending Closing. 
  
 (a) To the extent Seller
(or any of its affiliates) is not the operator of any of the Properties, the obligations of Seller in Article 11.2 concerning operations or activities which normally or pursuant to existing contracts are carried out or performed by the
operator, shall be construed to require only that Seller use commercially reasonable efforts (without being obligated to incur any expense or institute any cause of action) to cause the operator of such Properties to take such actions or render such
performance within the constraints of the applicable operating agreements and other applicable agreements. 
  
 11.4. Satisfaction of Conditions. 
  
 Seller will (and will cause its affiliates to) use commercially reasonable efforts to take all actions and to do all things necessary to consummate, make
effective, and comply with all of the terms of this Agreement (including satisfaction, but not waiver, of the Closing conditions for which it is (or its affiliates are) responsible or otherwise in control). 
  

 26 

 ARTICLE 12. - COVENANTS OF BUYER 
  
 12.1. Return of Data. 
  
 Buyer agrees that if this Agreement is terminated for any reason whatsoever,
Buyer shall, at Seller’s request, within thirty (30) business days return to Seller all information and data furnished by or on behalf of Seller to Buyer, its officers, employees, and representatives in connection with this Agreement or
Buyer’s investigation of the Properties, and Buyer shall deliver to Seller or destroy all copies, extracts, or excerpts of such information and data and all documents generated by Buyer that contain any portion of such information or data.

  
 12.2. Indemnity Regarding Access. 
  
 Except to the extent of the gross negligence or willful misconduct of any
member of the Seller Group, Buyer agrees to protect, indemnify, defend, and hold harmless Seller Group from and against any and all Losses, as defined in Article 18.1, in connection with personal injuries, including death or property damage
arising out of or relating to the access of Buyer, its officers, employees or representatives to any of the Properties and any information relating thereto as permitted under this Agreement, REGARDLESS OF WHETHER SUCH INJURIES, DEATH, OR DAMAGES ARE
CAUSED IN WHOLE OR PART BY THE SOLE, PARTIAL, CONCURRENT, OR OTHER NEGLIGENCE, STRICT LIABILITY, OR OTHER FAULT OF SELLER GROUP. 
  
 12.3. Satisfaction of Conditions. 
  
 Buyer will (and will cause its affiliates to) use commercially reasonable efforts to take all actions and to do all things necessary to consummate, make
effective, and comply with all of the terms of this Agreement (including satisfaction, but not waiver, of the Closing conditions for which it is (or its affiliates are) responsible or otherwise in control). 
  
 ARTICLE 13. - CLOSING CONDITIONS 
  
 13.1. Seller’s Closing Conditions. 
  
 The obligations of Seller under this Agreement are subject, at the option of
Seller, to the satisfaction, at or prior to the Closing, of the following conditions: 
  
 (a) all representations and warranties of Buyer contained in this Agreement shall be true in all material respects at and as of the Closing as if such representations and warranties were made at and as of the Closing,
and Buyer shall have performed and satisfied all obligations required by this Agreement to be performed and satisfied by Buyer at or prior to the Closing; 
  
 (b) Buyer shall have performed and complied in all material respects with each of the covenants and conditions required by this Agreement of which
performance or compliance is required prior to or at the Closing; 
  
 (c) all necessary material consents of and filings with any state or federal governmental authority or agency relating to the consummation of the transactions contemplated by this Agreement shall have been obtained, accomplished or waived,
except to the extent that in the oil and gas industry such consents and filings are normally or customarily obtained, accomplished or waived after the closing for the type of asset purchase transaction set forth in this Agreement; and 
  

 27 

 (d) as of the Closing Date, no suit, action or other proceeding (excluding any such matter initiated by
Seller) shall be pending or threatened before any court or governmental agency seeking to restrain Seller or prohibit the Closing or seeking material damages against Seller as a result of the consummation of this Agreement. 
  
 13.2. Buyer’s Closing Conditions. 
  
 The obligations of Buyer under this Agreement are subject, at the option of
Buyer, to the satisfaction, at or prior to the Closing, of the following conditions: 
  
 (a) all representations and warranties of Seller contained in this Agreement shall be true in all material respects at and as of the Closing as if such representations and warranties were made at and as of the
Closing, and Seller shall have performed and satisfied all obligations required by this Agreement to be performed and satisfied by Seller at or prior to the Closing; 
  
 (b) Seller shall have performed and complied in all material respects with each of the covenants and conditions required by
this Agreement of which performance or compliance is required prior to or at the Closing; 
  
 (c) all necessary material consents of and material filings with any state or federal governmental authority or agency relating to the consummation of the transactions contemplated by this Agreement shall have been
obtained, accomplished or waived, except to the extent that in the oil and gas industry such consents and filings are normally or customarily obtained, accomplished or waived after the closing for the type of asset purchase transaction set forth in
this Agreement; 
  
 (d) as of the Closing Date, no suit, action or
other proceeding (excluding any such matter initiated by Buyer) shall be pending or threatened before any court or governmental agency seeking to restrain Buyer or prohibit the Closing or seeking material damages against Buyer as a result of the
consummation of this Agreement; 
  
 (e) Buyer shall have received
releases (in form reasonably satisfactory to Buyer) of all mortgages and (other than Permitted Encumbrances) other liens and encumbrances encumbering Seller’s (or any of its affiliates’) interest in any of the Properties; and 

 
 (f) Seller shall have provided to Buyer audited financial statements
regarding the Properties covering the assets and for the periods determined by Buyer to be necessary for Buyer’s SEC reporting obligations. 
  
 ARTICLE 14. - CLOSING 
  
 14.1. Closing. 
  
 The Closing of the assignment and purchase of the Properties pursuant to this Agreement (other than Properties subject to Title Defect Arbitration or
Environmental Defect Arbitration) (the “Closing”) shall be held at the offices of McQueen & Ashman LLP at 19900 MacArthur Blvd., Suite 1150, Irvine, CA 92612, at 8:00 a.m. Pacific Time on the date five business days after the
last condition to closing set forth in Article 13 has been satisfied or waived (other than 

  

 28 

 
those to be satisfied at Closing) but in no event later than May 15, 2005. The date the Closing occurs is herein called the “Closing Date”.
If the Closing has not occurred by May 15, 2005, either Buyer or Seller (provided that such Party shall not be in material breach of its obligations hereunder) shall have the option to terminate this Agreement by delivery of written notice to the
other Party. In such case, Seller shall immediately instruct the Escrow Agent to return the Performance Deposit to Buyer (unless Buyer shall at the time of such termination be in material breach of its obligations hereunder, in which case Buyer and
Seller shall immediately instruct the Escrow Agent to deliver the Performance Deposit to Seller as Seller’s sole remedy hereunder) and this Agreement shall deemed to be of no further force or effect except for the items specifically set forth
or referenced in Article 17.3. Notwithstanding anything to the contrary in this Agreement, risk of loss with respect to the Properties (and Seller’s interest therein) shall pass to Buyer at the Closing. 
  
 14.2. Seller’s Closing Obligations. 
  
 At Closing Seller shall deliver to Buyer the following: 
  
 (a) Signed counterparts of the Corporation Grant Deeds and the Assignment,
Bill of Sale and Conveyance substantially in the form attached hereto as Exhibit “B” (the “Assignment”) and such other documents as may be reasonably necessary to convey all of Seller’s interest in the
Properties to Buyer in accordance with the provisions hereof; 
  
 (b) A non-foreign affidavit executed by Seller in the form attached as Exhibit “C”; 
  
 (c) Appropriate regulatory forms obtained by Seller appointing Buyer as operator for those Properties which Seller operates; 
  
 (d) Copies of all third-party waivers, consents, approvals, permits and
actions obtained by Seller; 
  
 (e) A certificate of the corporate
secretary of Seller setting forth valid resolutions of its board of directors and shareholders with respect to the authorization of the Seller to execute and deliver this Agreement and to consummate the transactions contemplated hereby; 

 
 (f) Letter-in-lieu of transfer orders and divisions orders in form
acceptable to Seller and Buyer; and 
  
 (g) Execution and delivery
to Buyer of California’s Division of Oil and Gas Transfer Form OG-30A regarding the Wells. 
  
 14.3. Buyer’s Closing Obligations. 
  
 At Closing, (a) Buyer shall deliver to Seller, by wire transfer in immediately available funds to an account designated by Seller, the adjusted Purchase
Price (less the Performance Deposit) as such adjusted Purchase Price is set forth on Seller’s estimate of the adjusted Purchase Price that Seller delivers to Buyer pursuant to Article 3.3(c) and (b) Buyer and Seller shall instruct the
applicable Escrow Agent to deliver to Seller, by wire transfer in immediately available funds to an account designated by Seller, the Performance Deposit. 
  

 29 

 14.4. Joint Closing Obligations. 
  
 Both Parties at Closing shall execute a Settlement Statement evidencing the
amount actually wire transferred and all adjustments to the Purchase Price taken into account at Closing. All events of Closing shall each be deemed to have occurred simultaneously with the other, regardless of when actually occurring, and each
shall be a condition precedent to the other. 
  
 ARTICLE 15.
- ADDITIONAL CLOSING OBLIGATIONS 
  
 15.1. Suspended
Funds. 
  
 At Closing, Seller shall provide to Buyer a
listing showing all proceeds from production attributable to the Properties that are currently held in suspense and shall transfer to Buyer all such suspended proceeds existing as of December 31, 2004 (with the balance of such proceeds to be paid
over or otherwise accounted for pursuant to the final adjustment to the Purchase Price contemplated by Article 3.3; provided, however, that Buyer and Seller acknowledge that Crimson Resource Management Corp., a Colorado corporation
(“Crimson”) holds certain proceeds in suspense and Seller agrees that it will assign to Buyer all of Seller’s rights to receive such proceeds held by Crimson and to work with Buyer to obtain Crimson’s acknowledgement of
such proceeds and the procedure to release said proceeds to Buyer as required by third parties. After such transfer, Buyer shall be responsible for proper distribution of all the suspended proceeds to the parties lawfully entitled to them, and
hereby agrees to indemnify, defend, and hold harmless Seller from and against any and all Losses arising out of or relating to Buyer’s retention or distribution of such suspended proceeds. 
  
 15.2. Receipts and Credits. 
  
 Subject to the terms hereof and except to the extent same have already been
taken into account as an adjustment to the Purchase Price, all monies, proceeds, receipts, credits, and income accruing to the Properties (a) for the period subsequent to the Effective Time, shall be the sole property and entitlement of Buyer, and,
to the extent received by Seller, Seller shall fully disclose, account for, and transmit same to Buyer promptly, and (b) for the period prior to the Effective Time, shall be the sole property and entitlement of Seller and, to the extent received by
Buyer, Buyer shall fully disclose, account for, and transmit same to Seller promptly. 
  
 15.3. Signs. 
  
 Seller shall have the option to remove Seller’s name and signs from the operated Properties or to require Buyer to do so. Buyer hereby grants Seller a right of access to remove Seller’s signs and name from all wells and facilities
on the Properties or to confirm that Buyer has done so. If there are any remaining Seller signs and name on the Properties within thirty (30) days of Closing, Buyer shall promptly (and at its sole cost and expense), but no later than required by
applicable rules and regulations or forty-five (45) days thereafter, whichever is earlier, remove any remaining signs and references to Seller and shall erect or install all signs complying with all applicable governmental rules and regulations,
including those showing Buyer as operator of the Properties. 
  

 30 

 15.4. Records. 
  
 All files, permits, records, documentation, and data of Seller relating to (or evidencing) Seller’s ownership or
rights, in or operation of the Properties or other rights and interests described herein, including seismic or other geological information and data, lease files, land files, well files, contract files, production sales agreements files, division
order files, title opinions and abstracts, governmental filings, production reports, production logs, core sample reports, and land maps, as such data is assembled and maintained in the normal course of business (collectively, the
“Records”), excluding any such files, records, documentation or data that is proprietary, privileged, or that Seller is prohibited from conveying (the existence of which will be specifically disclosed to Buyer), will be, as soon as
is reasonably possible after, but not later than thirty (30) days after Closing, delivered to Buyer at Seller’s offices. Seller will be entitled to retain a copy of the Records. Buyer shall maintain the Records for five (5) years after Closing.
After the Closing, Buyer shall provide Seller and its representatives reasonable access to and the right to copy the Records (at Seller’s sole expense). If Buyer decides to destroy any Records after the expiration of said five (5) year period,
it will so notify Seller of the planned destruction of the Records at least thirty (30) days before any such Records are destroyed and Seller shall have the right to instead obtain such Records at its sole expense. To the extent not obtained or
satisfied as of Closing, Seller agrees to continue to use commercially reasonable efforts, but without any obligation to incur any cost or expense in connection therewith, and to cooperate with Buyer’s efforts to obtain for Buyer access to
files, records and data relating to the Property in the possession of third parties. 
  
 15.5. Letters-in-Lieu. 
  
 Seller shall prepare, execute and deliver, upon Closing, letters-in-lieu of transfer orders and division orders, directing that all proceeds of production from the Properties, which have heretofore been paid to Seller, shall be paid to the
account of Buyer effective as of and after the date of Closing. 
  
 15.6. Bond. 
  
 At Closing, Seller shall
provide to Buyer a list of all applicable plugging bonds, abandonment bonds and other assurances which Seller has in place concerning the Properties. Where applicable, Buyer shall, within sixty (60) days after Closing, obtain and furnish evidence
satisfactory to Seller that Buyer has obtained the plugging bonds, abandonment bonds and other assurances required by any governmental, quasi-governmental or regulatory authorities having jurisdiction (as well as any bond or other assurances to the
extent required by Crimson to be maintained by Seller), including, where applicable, qualification to assume operatorship, and Buyer shall maintain any and all such bonds and other assurances in full force and effect for the required or reasonably
requested time period. If Buyer does not obtain and maintain any bond or other assurance that it is requested or required to obtain pursuant to this Article 15.6, Seller may, in its sole and absolute discretion, obtain any such bond or other
assurance. If Seller obtains any such bond or other assurance, Buyer shall, within ten (10) days after receiving written notice from Seller stating that Seller has obtained any such bond or other assurance and the total price paid by Seller for such
bond or other assurance, pay Seller (i) the total price of any such bond or other assurance paid for by Seller and (ii) an additional amount equal to twenty-five percent (25%) of the cost of such bond or other assurance paid by Seller (in order to
compensate Seller for the effort and expense associated with obtaining any such bond or other assurance and the risks associated with any such bond or other assurance not being timely obtained and maintained by Buyer). 
  

 31 

 15.7. Certain Post Closing Actions. 
  
 Effective upon Closing, Seller shall resign as operator of any of the
Properties for which it has been designated or acts as operator. 
  
 ARTICLE 16. – INTENTIONALLY OMITTED 
  
 ARTICLE 17. - DEFAULT AND REMEDIES 
  
 17.1. Seller’s Remedies. 
  
 IF
THE CLOSING DOES NOT OCCUR SOLELY BECAUSE OF A BREACH OF THIS AGREEMENT BY BUYER (OTHER THAN A BREACH IN RESPONSE TO A MATERIAL BREACH BY SELLER), IMMEDIATELY UPON SELLER’S REQUEST (MADE IN ITS SOLE AND ABSOLUTE DISCRETION), SELLER AND BUYER
SHALL INSTRUCT THE ESCROW AGENT TO DELIVER TO SELLER THE PERFORMANCE DEPOSIT AS A LIQUIDATED DAMAGE AND NOT AS A PENALTY, AND TERMINATE THIS AGREEMENT, AS SELLER’S SOLE AND EXCLUSIVE REMEDIES UNDER THIS AGREEMENT, ALL OTHER REMEDIES (EXCEPT AS
EXPRESSLY RETAINED IN ARTICLE 17.3) BEING EXPRESSLY WAIVED BY SELLER. NOTWITHSTANDING ANY PROVISION HEREOF TO THE CONTRARY, SELLER MAY RECEIVE THE DEPOSIT AS A LIQUIDATED DAMAGE ONLY IN THE EVENT THIS AGREEMENT IS TERMINATED DUE SOLELY TO THE BREACH
HEREOF BY BUYER IN THE ABSENCE OF ANY MATERIAL BREACH HEREOF BY SELLER. BUYER AND SELLER AGREE THAT IN THE EVENT OF SUCH BREACH OF THIS AGREEMENT BY BUYER, THE PARTIES ACKNOWLEDGE THAT SELLER WILL BE DAMAGED (INCLUDING LOSS OF OTHER POTENTIAL
BUYERS, UNRECOVERABLE MARKETING, SALES AND PROCESSING COSTS AND COSTS OF HOLDING THE PROPERTIES BEYOND THE CLOSING DATE) AND WILL BE ENTITLED TO COMPENSATION FOR THESE DAMAGES, BUT THE PARTIES FURTHER ACKNOWLEDGE AND AGREE SUCH DAMAGES WOULD BE
EXTREMELY DIFFICULT AND IMPRACTICAL TO ASCERTAIN BECAUSE, AMONG OTHER REASONS, (i) THE DAMAGES TO WHICH SELLER WOULD BE ENTITLED IN A COURT OF LAW WOULD BE BASED ON THE DIFFERENCE BETWEEN THE ACTUAL VALUE OF THE PROPERTIES AT THE CLOSING DATE AND
THE PURCHASE PRICE FOR THE PROPERTIES AS SET FORTH IN THIS AGREEMENT, WHICH DIFFERENCE WOULD HAVE TO BE BASED ON OPINIONS OF VALUE OF THE PROPERTIES, WHICH CAN VARY IN SIGNIFICANT AMOUNTS AND WHICH WOULD SIGNIFICANTLY DEPEND ON UNCERTAIN AND VARYING
ESTIMATES AND PROJECTIONS REGARDING OIL AND GAS RESERVES AND ANTICIPATED FUTURE PRICES FOR OIL AND GAS; AND (ii) IT IS IMPOSSIBLE TO PREDICT, AS OF THE DATE OF THIS AGREEMENT, 

  

 32 

 
WHETHER THE VALUE OF THE PROPERTIES WILL INCREASE OR DECREASE AS OF CLOSING DATE, AND BUYER DESIRES TO LIMIT THE AMOUNT OF DAMAGES FOR WHICH BUYER MIGHT
BE LIABLE. MOREOVER, BUYER AND SELLER WISH TO AVOID THE COSTS, LENGTHY DELAYS AND SUBSTANTIAL UNCERTAINTIES THAT WOULD RESULT IF SELLER FILED A LAWSUIT TO COLLECT ITS DAMAGES FOR BUYER’S BREACH OF THIS AGREEMENT. 
  
 ACCORDINGLY, IN THE EVENT THIS AGREEMENT IS TERMINATED BY SELLER DUE
SOLELY TO THE BREACH HEREOF BY BUYER IN THE ABSENCE OF ANY MATERIAL BREACH HEREOF BY SELLER, BUYER AND SELLER AGREE THAT IT WOULD BE REASONABLE AT SUCH TIME TO AWARD SELLER “LIQUIDATED DAMAGES” EQUAL TO THE SEVEN MILLION FIVE HUNDRED
THOUSAND DOLLAR ($7,500,000) PERFORMANCE DEPOSIT PAID BY BUYER AND FOR SELLER TO RECEIVE SAID PERFORMANCE DEPOSIT FROM THE ESCROW AGENT AS “LIQUIDATED DAMAGES.” SELLER AND BUYER ACKNOWLEDGE AND AGREE THAT THE FOREGOING AMOUNT IS REASONABLE
AS LIQUIDATED DAMAGES AND SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY IF THIS AGREEMENT IS TERMINATED DUE SOLELY TO THE BREACH HEREOF BY BUYER. SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS ARTICLE 17.1
AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS. 
  

			
	________________________	 	________________________
	SELLER’S INITIALS	 	BUYER’S INITIALS

  
 17.2.
Buyer’s Remedies. 
  
 If the Closing fails to
occur due solely to a breach of this Agreement by Seller and in the absence of any material breach by Buyer, Buyer, at its sole option, may (i) enforce specific performance, or (ii) terminate this Agreement, as Buyer’s sole and exclusive
remedies for such default, all other remedies (except as expressly retained in Article 17.3) being expressly waived by Buyer. In the event Buyer elects to terminate this Agreement as set forth above, Seller and Buyer shall immediately
instruct the Escrow Agent to return the Performance Deposit to Buyer. 
  
 17.3. Effect of Termination. 
  
 In the
event of termination of this Agreement under this Article 17, Article 14.1 or Article 10.5, the transaction shall not close and neither Buyer nor Seller shall have any further obligations, remedies, liabilities, rights or duties
to the other hereunder, except as expressly provided in this Article 17, Article 14.1 or Article 10.5. Notwithstanding the foregoing, termination of this Agreement shall not release Buyer from it’s obligations under
Article 6.3 (and the CNIA referenced therein) and such other portions of this Agreement as are necessary to the enforcement and construction of Article 6.3. 
  

 33 

 ARTICLE 18. - ASSUMPTION OF OBLIGATIONS; INDEMNIFICATION; RELEASE; LIABILITY LIMITATIONS

  
 18.1. Selected Definitions Regarding Indemnification
and Release. 
  
 As used in this Agreement: 

 
 (a) “Losses” means any liabilities, losses, claims,
demands, causes of action, costs and expenses (including court costs and reasonable attorneys’ fees and other costs and expenses incident to proceedings or investigations respecting, or the prosecution or defense of a claim) of every kind and
character; provided, however, that an Indemnified Party’s internal expenses (salaries, general and administrative costs, allocated corporate overhead, etc.) incurred in processing, monitoring and assisting in the defense of an action, suit,
proceeding, claim, demand or assessment subject to indemnity hereunder shall not be considered Losses and shall be borne by the Indemnified Party. 
  
 (b) “Environmental Claims” shall mean all liabilities, obligations, expenses, (including all attorneys’ fees), fines, penalties,
costs, claims, suits or damages (including natural resource damages) of any nature, including personal injury, diminution in property value, illness, disease, or wrongful death, associated with the Properties, whether arising before or after the
Effective Time, and attributable or resulting from: (1) pollution or contamination of soil, surface water, groundwater or air, on the Properties and any other contamination of or adverse effect upon the environment, (ii) underground injection
activities and waste disposal, (iii) clean-up responses, remedial, control or compliance costs, including the required cleanup or remediation of spills, pits, ponds or lagoons, including any subsurface or surface pollution caused by such spills,
pits, ponds, or lagoons, (iv) noncompliance with applicable land use, permitting, surface disturbance, licensing or notification requirements, and (v) violation of any Environmental Law or any federal, state or local environmental land use law.

  
 (c) “Seller Group” means Seller,
Seller’s affiliates and the officers, directors, members, contractors, agents, and employees of Seller or any of Seller’s affiliates. 
  
 (d) “Buyer Group” means Buyer, Buyer’s affiliates and the officers, directors, members, contractors, agents and employees of Buyer
or any of Buyer’s affiliates. 
  
 18.2. Assumptions of
Contracts. 
  
 The sale of the Properties is and will be
made subject to the Leases and the Contracts listed on Schedule 2.1(c). At Closing Buyer shall assume and be responsible for all obligations arising under the Leases and all Contracts listed on Schedule 2.1(c), to the extent such
obligations relate to the period beginning on the Effective Time. Seller shall be responsible for all obligations arising under the Leases and the Contracts during the period of its ownership of the applicable Property or Properties. 
  
 18.3. Imbalances. 
  
 On or before the date that the Final Settlement Statement is due, Seller and
Buyer shall, based upon data available at that time, determine (a) the total amount of overproduction of gas 

  

 34 

 
attributable to Seller’s interest as of the Effective Time (e.g. volumes of gas taken from the Leases, or on lands unitized therewith, by Seller in
excess of those volumes which Seller’s interest would be entitled to receive) and (b) the total amount of underproduction of gas attributable to Seller’s interest as of the Effective Time (e.g. volumes of gas not taken from the Leases, or
on lands unitized therewith, by Seller despite Seller’s interest in and right to receive such volumes). If the total amount of overproduction (as so determined) exceeds the total amount of underproduction (as so determined) Buyer shall receive
a credit against the Purchase Price equal to the Southern California Gas Border Price less $0.04 per mmbtu times such excess. If the total amount of underproduction (as so determined) exceeds the total amount of overproduction (as so determined)
Buyer shall in addition to the amount of Purchase Price payable, pay to Seller an amount equal to the Southern California Gas Border Price less $0.04 per mmbtu times such excess. On the Final Settlement Statement date but effective as of the
Effective Time, Buyer shall assume any liability for gas production imbalances (whether over or under) attributable to the Properties and agrees to indemnify Seller Group from and against any Losses, by anyone, arising out of such gas imbalances
regardless of Seller’s negligence or fault. Notwithstanding the foregoing, Buyer shall receive, for its benefit, the Jefferson Pool imbalance without any adjustment to the Purchase Price. As used herein, “Jefferson Pool” means
all production associated with the Jefferson drill site located at 1371 West Jefferson Boulevard in Los Angeles, California. 
  
 18.4. Seller’s Indemnity. 
  
 (a) Pre-Effective Time Claims. Subject to Article 18.12, Seller agrees to indemnify and hold the Buyer Group harmless from and against any
and all Losses which (i) arise out of or otherwise relate to the possession, ownership, use or operation of the Properties prior to the Effective Time and during the time of Seller’s ownership of the Properties, including all fines and
penalties; (ii) arise out of claims made by third parties with respect to which Buyer gives notice to Seller (definitely identifying the applicable claim and referencing this Article 18.4) during a period of eighteen months following the
Closing Date; and (iii) do not constitute Environmental Claims. 
  
 (b) Environmental Claims; Offsite Disposal. Subject to Article 18.12, Seller shall indemnify and hold the Buyer Group harmless from and against any and all Losses which constitute Environmental Claims, including all fines and
penalties related thereto, if and to the extent any such Losses arise from any Contamination (i) that was within Seller’s knowledge on or prior to the Closing Date, (ii) that was not disclosed on Schedule 4.12, and (iii) with respect to
which Buyer gives notice to Seller (definitely identifying the applicable claim and referencing this Article 18.4) during a period of eighteen months following the Closing Date. Subject to Article 18.12, Seller agrees to indemnify and
hold the Buyer Group harmless from and against any and all Losses (A) suffered by the Buyer Group that arise out of or otherwise relate to the offsite disposal, prior to the Closing and during Seller’s (or its affiliate’s) ownership of the
Properties, of Hazardous Materials arising from the operation or use of the Properties (B) with respect to which Buyer gives notice to Seller (definitely identifying the applicable claim and referencing this Article 18.4) during a period of
eighteen months following the Closing Date. 
  
 (c)
Representations and Warranties. Subject to Article 18.12, Seller agrees to indemnify and hold the Buyer Group harmless from and against any and all Losses which arise 

  

 35 

 
out of or otherwise relate to the inaccuracy or breach of any representation of Seller in this Agreement with respect to which Buyer gives notice to Seller
(definitely identifying the applicable claim and referencing this Article 18.4) during a period of eighteen months following the Closing Date. 
  
 18.5. Buyer’s General Indemnity. 
  
 Except to the extent Seller has an indemnification obligation with respect thereto under Article 18.4, Buyer shall, on the Closing Date, agree (and
upon the delivery to Buyer of the Assignment shall be deemed to have agreed) (a) to assume, and to timely pay and perform, all duties, obligations and liabilities relating to the ownership and operation of the Properties, regardless whether the same
accrued or otherwise arose before or after the Effective Time, and (b) to indemnify and hold the Seller Group harmless from and against any and all Losses arising out of or otherwise relating to (i) the breach by Buyer of any representation,
warranty or covenant herein set forth, (ii) the possession, ownership, use or operation of the Properties, regardless whether the same accrued or otherwise arose before or after the Effective Time (iii) the performance or non-performance of any
action or obligation under this Agreement by Buyer or any of its officers, directors, agents, servants, employees, tenants, subtenants, lessees, invitees, or guests, or by any contractor or subcontractor employed by Buyer, or by the agents,
servants, employees, invitees or guests of any such tenant, subtenants, lessee, contractor or subcontractor, or (iv) any acts or omissions in, under, upon or around any of the Properties by Buyer or any of its officers, directors, agents, servants,
employees, tenants, subtenants, lessees, invitees, or guests, or by any contractor or subcontractor employed by Buyer, or by the agents, servants, employees, invitees or guests of any such tenant, subtenant, lessee, contractor or subcontractor,
regardless whether the same occurred or failed to occur before or after the Effective Time. Buyer’s obligations under this Article 18.5 shall apply in every event, regardless of whether Seller or any member of Seller Group is alleged or
proven to have been negligent, actively or passively, or to be strictly or absolutely liable, except to the extent that such matters with respect to claims made by any individual or entity are shown by a Final Judgment (“Final
Judgment” for purposes of this Article 18.5 shall be a judgment after all appeal periods have run and all filed appeals have been exhausted) to have been caused by the sole negligence or willful misconduct of Seller or any member of
the Seller Group. Buyer’s indemnity hereunder shall in no way be limited or restricted by the amounts or types of any insurance required to be provided by Buyer to Seller under this Agreement. In the event the indemnity provided for herein is
found in a Final Judgment entered by a court of competent jurisdiction to exceed that permitted by applicable law, such indemnity shall be construed so as to preserve the maximum indemnity permitted thereby. 
  
 18.6. Buyer’s Environmental Indemnity; Environmental Release.

  
 Except (a) to the extent Seller has an indemnification
obligation with respect thereto under Article 18.4, (b) with respect to any fines or penalties under Environmental Laws relating to any acts or omissions that occurred prior to the Closing Date, and (c) with respect to any obligations or
liabilities relating to offsite disposal of hazardous waste prior to the Closing Date, Buyer shall, on the Closing Date, agree (and upon the delivery to Buyer of the Assignment shall be deemed to have agreed) to release, indemnify, defend and hold
harmless the Seller Group from and against all Losses (including any civil fines, penalties, expenses, and costs of clean-up 

  

 36 

 
or remediation) brought by any and all persons, including Buyer’s and Seller’s employees, agents, or representatives and also any private citizens,
persons, or organizations and any agency, branch, or representative of federal, state, tribal, or local government, on account of any Environmental Claims. It is expressly understood and agreed that the terms of this Article 18.6 shall
control over any conflicting or contradicting terms or provisions contained in this Agreement, except as to the indemnities, if any, provided under Article 18.4. Notwithstanding anything to the contrary contained herein, the indemnity in this
Article 18.6 shall not apply to any Property excluded under any provision hereof; provided, however, such indemnities shall apply for the limited period of time, if any, Buyer has undertaken the operation of a Property and, in which case,
Buyer’s indemnity shall be applicable only to Losses arising solely from Buyer’s operations of any such excluded Property during such limited period of operation. Buyer further acknowledges that: (i) it has been advised by Seller that
Contamination may be present on some or all of the Properties as the result Seller’s past or current operations or any other past or current operations in, under, upon or about the Properties, and that some Contamination may remain in, under,
upon or about some or all of the Properties; and (ii) the Properties have been and continue to be utilized for oil and gas exploration and production activities, and that such activities include the placement and operation of a number of active and
inactive oil and gas wells, along with miscellaneous above-ground and underground pipelines (for oil or gas gathering or transportation), storage tanks, sumps and other oil and gas support facilities on the Properties. In full recognition of the
foregoing, Buyer agrees that it is the express intent of the Parties that, (a) to the extent Seller has an indemnification obligation with respect thereto under Article 18.4, (b) with respect to any fines or penalties under Environmental Laws
relating to any acts or omissions that occurred prior to the Closing Date, and (c) with respect to any obligations or liabilities relating to offsite disposal of hazardous waste prior to the Closing Date: (i) upon the Effective Time, the risk of any
Contamination in, under, upon or emanating from the Properties shall shift to Buyer, and (ii) Seller Group shall have no obligation for any Contamination in, under, upon or emanating from any of the Properties, including any remediation thereof.
Expressly, but without limiting the generality of the foregoing, and except to the extent Seller has an indemnification obligation with respect thereto under Article 18.4, Seller Group shall have no liability for remediation of any
Contamination in, under, upon or emanating from any of the Properties, for changes in any laws, regulations, guidelines or other criteria concerning appropriate levels of cleanup of such Contamination, or for any third-party claims resulting from
any such Contamination. Except to the extent Seller has an indemnification obligation with respect thereto under Article 18.4, Buyer hereby releases Seller Group from all claims, liability, damages, demands, costs, expenses, and causes of
action of all kinds, arising out of or in connection with the existence, assessment or remediation of Contamination in, under, upon or emanating from, the soils or groundwater of any of the Properties, including any claims for death, bodily injury,
illness, or property damage or for any claims for any special, indirect, or consequential damages (including claims for loss of use, rents, anticipated profit or business opportunity, or business interruption, diminution in value, or mental or
emotional distress or fear of injury or illness), trespass, nuisance or otherwise, for any response costs it may incur with respect to any of the Properties, under any existing or future federal, state or local law, statute, ordinance, regulation,
legal cause of action or theory of any kind, including any claim under CERCLA (42 USC 9601 et seq.), RCRA (42 USC 6901 et seq.) or similar or comparable state, federal, or local laws (individually and collectively, “Released Environmental
Claims”). Buyer further recognizes that there is a risk that, subsequent to the date of this Agreement, Buyer 
  

 37 

 will incur Released Environmental Claims or suffer loss, damage or injuries which are in some way caused by the matters
which are the subject of this release, and which may be unknown or unanticipated on the date of this Agreement, and, except to the extent Seller has an indemnification obligation with respect thereto under Article 18.4, Buyer assumes all such
risk and agrees that this release shall apply to all such unknown or unanticipated Released Environmental Claims, loss, damage or injury, and hereby waives any and all rights under California Civil Code §1542, which reads as follows:

  
 A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. 
  

			
	 BUYER INITIALS: _________
	 	SELLER’S INITIALS: _________

  
 The word
“Contamination”, as used herein, shall mean any hazardous or toxic material, substance, chemical or waste, contaminant, emission, discharge or pollutant or comparable material listed, identified or regulated pursuant to any federal,
state or local law, ordinance or regulation which has as a purpose the protection of health, safety or the environment, including Hydrocarbons and other minerals, petroleum or petroleum products, drilling wastes or any other wastes derived
therefrom. 
  
 Other than as set forth in Article 4.12, the
provisions of this Agreement are not a representation or warranty by Seller that there is no Contamination in, under, upon, around or emanating from any of the Properties. The provisions of this Agreement are not an admission by Seller as to the
existence of any Contamination in, under, upon, around or emanating from any of the Properties. 
  
 18.7. Application of Indemnity Obligations. 
  
 UNLESS AND ONLY TO THE EXTENT OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE RELEASE, INDEMNITY, DEFENSE AND HOLD HARMLESS OBLIGATIONS ASSUMED BY
SELLER AND BUYER UNDER THIS ARTICLE 18 SHALL APPLY WHETHER OR NOT THE LOSSES INVOLVED THEREWITH ARE ATTRIBUTABLE TO THE ACTIVE, PASSIVE, JOINT, SOLE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF THE INDEMNITEE. 
  
 18.8. Buyer’s Plugging Liability. 
  
 At Closing, Buyer shall assume (a) all obligations to (i) plug and abandon
or remove and dispose of all wells, structures, flow lines, pipelines and other equipment now or hereafter located on the Oil and Gas Properties or the Servitudes, including the Wells and the Gathering System, (ii) cap and bury all flow lines and
other pipelines now or hereafter located on the Oil and Gas Properties or the Servitudes or used in connection with the Gathering System, and (iii) dispose of naturally occurring radioactive material and all other pollutants, wastes, contaminants,
or hazardous or toxic materials, substances, chemicals or wastes now or hereafter located on the Oil and Gas Properties or the Servitudes; (b) all other costs, obligations and liabilities that arise under the Oil and Gas Properties, the Servitudes
or the Contracts or otherwise relate to the Properties and, in each case, arise from or relate to events occurring or conditions existing on or 

  

 38 

 
after the Effective Date or accrue after the Effective Date. All such plugging, replugging, abandonment, removal, disposal, and restoration operations shall
comply with all applicable laws, regulations and contracts, and shall be conducted in a good and workmanlike manner. Buyer shall indemnify, defend, and hold Seller Group harmless from and against all Losses as a result of Buyer’s failure to
comply with the provisions of this Article 18.8. 
  
 18.9. Indemnification Procedures. 
  
 When
a party seeking indemnification under this Agreement (the “Indemnified Party”) receives notice of any action, suit, proceeding, claim, demand or assessment which is likely to give rise to a claim for indemnification hereunder, the
Indemnified Party shall give prompt written notice thereof to the other party (the “Indemnifying Party”) reasonably describing (to the extent known) the nature of such claim and the basis therefor. If the Indemnified Party fails to
give such prompt written notice to the Indemnifying Party, the Indemnified Party shall not forfeit its indemnification claim, but such indemnification claim shall be reduced by the amount of any additional or increased liability, cost or expense
(including applicable interest and penalties) caused by the delay in giving notice. If the Indemnified Party is entitled to indemnification hereunder, the Indemnifying Party shall, at its sole cost and expense, assume the complete defense of the
action, suit, proceeding, claim, demand or assessment giving rise thereto, with full authority to conduct such defense and to settle or otherwise dispose of the same, except as set forth below. If the Indemnified Party desires to participate in, but
not control, any such defense or settlement, it may do so at its own cost and expense. The Indemnifying Party and the Indemnified Party will each fully cooperate with the other in the defense of any claim which is likely to give rise to a claim for
indemnification hereunder or does present such a claim. The Indemnifying Party will not, except with the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld), consent to the entry of any judgment or enter
into any settlement in connection with such defense which does not include a release of the Indemnified Party from all liability in respect thereof or does include any undertaking or agreement which causes the Indemnified Party to perform any act or
to refrain from performing any act. The Indemnifying Party will not, except with the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld), consent to the entry of any judgment or enter into any settlement
in connection with such defense. If the Indemnifying Party for any reason fails to fulfill any defense obligation hereunder, the Indemnified Party shall have the right but not the obligation to defend against such claim, and the amount of any
resulting Losses (including court costs and attorneys’ fees) incurred by the Indemnified Party in connection with such defense, shall be conclusively deemed to be the liability of the Indemnifying Party hereunder. 
  
 18.10. Intentionally omitted. 
  
 18.11. General Release of Seller. 
  
 Except to the extent Seller has an indemnification obligation with respect
thereto under Article 18.4, Buyer hereby releases Seller Group from all claims, liability, damages, demands, costs, expenses, and causes of action of all kinds, arising out of or in connection with any of the Properties or any acts or
omission of Seller or any member of Seller Group in any way related to any of the Properties, including any claims for death, bodily injury, illness, or property damage 

  

 39 

 
or for any claims for any special, indirect, or consequential damages (including claims for loss of use, rents, anticipated profit or business opportunity,
or business interruption, diminution in value, or mental or emotional distress or fear of injury or illness), trespass, nuisance or otherwise (individually and collectively, “Released Claims”). Buyer further recognizes that there is
a risk that, subsequent to the date of this Agreement, Buyer will incur Released Claims or suffer loss, damage or injuries which are in some way caused by the matters which are the subject of this release, and which may be unknown or unanticipated
on the date of this Agreement, and Buyer assumes all such risk and agrees that this release shall apply to all such unknown or unanticipated Released Claims, loss, damage or injury, and hereby waives any and all rights under California Civil Code
§1542, which reads as follows: 
  
 A general release does not
extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. 
  

			
	         BUYER INITIALS: _________
	 	SELLER’S INITIALS: _________

  
 18.12. Liability
Limitations. 
  
 Notwithstanding any other provision of
this Agreement to the contrary: 
  
 (a) Neither Buyer nor any
member of the Buyer Group shall be entitled to assert any right to indemnification, or to otherwise seek any damages or other remedies, under Article 18.4(a), 18.4(b) or 18.4(c) (i) for any individual claim (or group of related claims) that
causes Losses to the Buyer Group of less than $100,000 (a “Minimal Loss”) and (ii) until the aggregate amount of the Losses actually suffered by Buyer (excluding Minimal Losses) for claims under Articles 18.4(a), 18.4(b) and
18.4(c) exceeds $1,000,000 and then only to the extent of such excess. 
  
 (b) The amount of any Losses for which Seller or Buyer (or any other member of the Seller Group or Buyer Group) is entitled to indemnification or other compensation under this Agreement or in connection with or with
respect to the transactions contemplated in this Agreement shall be reduced by any corresponding (i) tax benefit created or generated or (ii) insurance proceeds realized by such party if a claim were properly pursued under the relevant insurance
arrangement. 
  
 (c) Seller shall not be required to indemnify
Buyer or any member of Buyer Group or pay any other amount in connection with or with respect to the transactions contemplated in this Agreement in any amount exceeding in the aggregate one hundred percent (100%) of the Purchase Price (as adjusted
pursuant to this Agreement) paid to Seller. 
  
 (d) Neither Buyer
nor Seller (nor any other member of Buyer Group or Seller Group) shall be entitled to recover from Seller or Buyer, respectively, for any Losses arising under this Agreement or in connection with or with respect to the transactions contemplated in
this Agreement, any amount in excess of the actual compensatory damages, court costs and reasonable attorney fees suffered by such party. Buyer on behalf of the Buyer Group and Seller on behalf of the Seller Group waive any right to recover
punitive, special, exemplary or consequential damages arising in connection with or with respect to the transactions 

  

 40 

 
contemplated in this Agreement. This Article 18.12(d) shall not limit or otherwise restrict Seller’s right to receive the Performance Deposit as
liquidated damages or Buyer’s right to specific performance (as such rights are set forth in this Agreement). 
  
 (e) Seller and Buyer acknowledge that the payment of money, as limited by the terms of this Agreement, shall be adequate compensation for breach of any
representation, warranty, covenant or agreement contained herein or for any other claim arising in connection with or with respect to the transactions contemplated in this Agreement. As the payment of the money shall be adequate compensation, Buyer
and Seller waive any right to rescind this Agreement or any of the transactions contemplated hereby. Provided, however, that nothing contained in this Article 18.12(e) shall limit Buyer’s right to seek specific performance pursuant to
Article 17.2. 
  
 (f) Each party entitled to
indemnification hereunder or otherwise to damages in connection with the transactions contemplated in this Agreement shall take all reasonable steps to mitigate all Losses after becoming aware of any event or circumstance that could reasonably be
expected to give rise to any losses, costs, expenses and damages that are identifiable or recoverable under or in connection with this Agreement. 
  
 (g) Seller shall not have any obligation or liability under this Agreement or in connection with or with respect to the transactions contemplated in this
Agreement for (i) any breach, misrepresentation or noncompliance with respect to any representation, warranty, covenant or obligation or (ii) any indemnity (a) if such breach, misrepresentation, noncompliance or indemnity rights have been waived by
Buyer or (b) if Buyer had knowledge of the relevant facts at or before the Closing. 
  
 ARTICLE 19. - ARBITRATION 
  
 19.1. Selection of Arbitrators. 
  
 If
arbitration is expressly required for any particular matter pursuant to this Agreement, such matter (except for the right of either Party to apply to a court of competent jurisdiction for a temporary restraining order, a preliminary injunction, or
other equitable relief to preserve the status quo or prevent irreparable harm), shall be resolved through mandatory and binding arbitration in accordance with the rules then in effect of the American Arbitration Association (“AAA”)
for commercial arbitration, notwithstanding any other choice of forum or venue provision in this Agreement All statutes of limitations or any waivers contained herein that would otherwise be applicable shall apply to any arbitration proceeding under
this Article 19. The Parties agree that related arbitration proceedings may be consolidated. The arbitrator shall prepare written reasons for the award. The location of the arbitration shall be in Los Angeles County, California. The
arbitrator or arbitrators shall be generally skilled in the legal and business aspects of the subject matter at issue. If the Parties so agree, a single arbitrator shall be selected jointly by Buyer and Seller to settle the dispute. If the Parties
cannot agree upon the selection of an arbitrator within fifteen (15) days after the receipt by one Party from the other of a notice of arbitration, then each Party shall within fifteen (15) days after the expiration of said fifteen (15) day period
select one arbitrator. If either Party fails to appoint an arbitrator within that fifteen (15) days period, the other Party may designate an arbitrator for the Party who failed to make such appointment. The two arbitrators shall select a third
arbitrator within fifteen (15) days after their appointment; if the two arbitrators selected by the Parties cannot agree upon a third arbitrator, the third arbitrator shall be appointed by the AAA. 
  

 41 

 19.2. Determination. 
  
 The arbitrator(s) shall promptly hear and determine (after due notice of hearing and giving the Parties a reasonable
opportunity to be heard) the questions submitted, and shall render its/their decision within sixty (60) days after appointment of the third arbitrator (or within sixty (60) days after the Parties agree upon a single arbitrator to hear the matter).
The arbitrator(s) shall render its/their decision in accordance with the internal laws of the State of California law, regardless of any laws on choice of law or conflicts of laws of any jurisdiction. The arbitrator(s) shall not be entitled to award
punitive damages. If within said sixty (60) day period a decision is not timely rendered by the arbitrator(s), new arbitrators may be named and shall act hereunder at the election of Buyer and Seller in like manner as if none has been previously
named. 
  
 19.3. Decision Binding. 
  
 The decision of the arbitrator(s), or the majority thereof, made in writing
shall be final, binding and non-appealable upon the Parties hereto as to the questions submitted, and Buyer and Seller will abide by and comply with such decision. Prior to a decision of the arbitrator(s), the expenses of arbitration, including
reasonable compensation of the arbitrators, shall be borne equally by the Parties hereto, except that each Party shall bear the compensation and expenses of its own counsel, witnesses, and employees. The decision of the arbitrator(s) shall award
attorneys’ fees, costs and expenses to the prevailing party pursuant to Article 20.25 of this Agreement. Judgment upon any arbitration award rendered may be entered in any court having jurisdiction. named. 
  
 19.4. Second Closing Properties. 
  
 To the extent that the Closing is set to occur and arbitration has not yet
been completed with respect to one or more Properties subject to Title Defect Arbitration or Environmental Defect Arbitration, or cure or remediation efforts are continuing with respect to any Cure/Remediation Properties, (collectively, the
“Second Closing Properties”), Closing (with respect to all other Properties) shall occur and closing with respect to the Second Closing Properties (the “Second Closing”) shall occur as soon as reasonably practicable
after all such arbitrations have been completed and all such cure and remediation efforts have been completed or abandoned (provided, that to the extent any such cure or remediation efforts are abandoned, the Second Closing Properties subject to
such abandonment shall be excluded from the Second Closing). The Purchase Price paid at the initial Closing shall be reduced by the Allocated Value of all Second Closing Properties, and at the Second Closing the Purchase Price shall be determined in
accordance with this Agreement, with the Allocated Value of the Second Closing Properties being reduced by the values of the Environmental Defects and Title Defects determined by the arbitration(s). The deliveries and procedures for the Second
Closing shall be substantially identical, mutatis mutandis, to those for the Closing. 
  
  

 42 

 ARTICLE 20. - MISCELLANEOUS 
  
 20.1. Amendment. 
  
 This Agreement may not be amended except by a written instrument signed by the Party to be charged with such amendment and delivered by such Party to the
Party claiming the benefit of such amendment. 
  
 20.2.
Interpretation; Construction. 
  
 References made in
this Agreement, including use of a pronoun, shall be deemed to include where applicable, masculine, feminine, singular or plural, individuals, partnerships, or corporations. As used in this Agreement, “person” shall mean any natural
person, corporation, partnership, trust, estate, or other entity. As used in this Agreement, the word “or” means “and/or” unless the context expressly indicates otherwise and the word “including” and variations on that
word mean “including without limitation” unless the context expressly indicates otherwise. Any captions to, or headings of, the paragraphs or subparagraphs of this Agreement are solely for the convenience of the Parties, are not a part of
this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. All references to articles, sections or paragraphs refer to articles, sections or paragraphs of this Agreement
unless the context expressly indicates otherwise. The Parties hereby acknowledge and agree that (i) each Party is of equal bargaining strength, (ii) each Party has actively participated in the drafting, preparation and negotiation of this Agreement,
(iii) each Party has consulted with such Party’s own independent counsel and such other professional advisors as such Party has deemed appropriate, relative to any and all matters contemplated under this Agreement, (iv) each Party and such
Party’s counsel and advisors have reviewed this Agreement, (v) each Party has agreed to enter into this Agreement following such review and the rendering of such advice, and (vi) any rule of construction to the effect that ambiguities are to be
resolved against the drafting parties shall not apply in the interpretation of this Agreement, any portions hereof or any amendments hereto. 
  
 20.3. Entire Agreement. 
  
 This Agreement, including all Exhibits and Schedules attached hereto, constitutes the entire understanding between the Parties with respect to the subject
matter hereof, superseding all negotiations, prior discussions, and prior agreements and understandings, oral or written, relating to such subject matter. 
  
 20.4. Survival. 
  
 Seller’s representations and warranties contained in this Agreement shall survive for 18 months after the Closing. Seller’s covenants shall
survive the Closing. Buyer’s representations, warranties and covenants shall survive the Closing. 
  
 20.5. Severability. 
  
 It is the intention of the Parties that the provisions of this Agreement shall be enforced to the maximum extent possible. Accordingly, if any of the
provisions of this Agreement shall be determined by an arbitration panel or a court of competent jurisdiction to be invalid or unenforceable, such provisions shall be reformed by the arbitration panel or court and enforced to the maximum extent
possible. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement. 
  

 43 

 20.6. Public Announcements. 
  
 Without the prior written consent of Seller, which may be granted or withheld at Seller’s sole election and discretion,
Buyer shall not make, prior to Closing, any public announcements or statements, make any statements to any trade publications or organizations, make any statements to the press, issue any press releases, or permit or authorize the making or release
of any announcements or statements to the public, to any trade publications or organizations, or to the press with respect to this Agreement, the transactions contemplated by this Agreement or the discussions or communications between Seller and
Buyer. Nothing contained in this paragraph shall be construed to require either Party to obtain approval of the other Party hereto to disclose information with respect to the transaction contemplated by this Agreement to any state or federal
governmental authority or agency to the extent (i) required by applicable law or by any applicable rules, regulations or orders of any governmental authority or agency having jurisdiction; or (ii) necessary to comply with disclosure requirements of
the New York Stock Exchange or other recognized securities exchange or over the counter securities market, and applicable securities laws. 
  
 20.7. Filing and Recording of Assignments. 
  
 Buyer shall be solely responsible for all filings and recording of assignments and other documents related to the Properties and for all fees and costs
connected therewith, and upon request Buyer shall advise Seller of the pertinent recording data. Seller shall not be responsible for any loss to Buyer because of Buyer’s failure to file or record documents correctly or promptly. Buyer shall
promptly file all appropriate forms, declarations or bonds with federal and state agencies relative to its assumption of operations and Seller shall cooperate with Buyer in connection with such filings. 
  
 20.8. Further Assurances and Records. 
  
 (a) After the Closing each of the Parties will execute, acknowledge and
deliver to the other such further instruments, and take such other action, as may be reasonably requested in order to more effectively assure to said Party all of the respective properties, rights, titles, interests, estates, and privileges intended
to be assigned, delivered or inuring to the benefit of such Party in consummation of the transactions contemplated hereby. 
  
 (b) Buyer shall comply with all current and subsequently amended applicable laws, ordinances, rules, and regulations applicable to the Properties and
shall promptly obtain and maintain all permits required by governmental authorities in connection with the Properties. 
  
 20.9. Notices. 
  
 All notices and other communications hereunder shall be in writing and shall be given by hand delivery, by fax, or by registered or certified mail
(postage prepaid and return receipt requested) to the Parties at the following addresses (or at such other address for a Party as shall be specified by it by like notice): 
  

 44 

					
	 	 	 To: Seller
	  	Bentley-Simonson, Inc.
			
	 	 	 	  	ATTN: Mr. Clifton Simonson
	 	 	 	  	1746-F South Victoria Avenue #382
	 	 	 	  	Ventura, CA 93003
	 	 	 	  	Fax: 805-650-2797
			
	 	 	 	  	With a copy to:
			
	 	 	 	  	Mack W. Borgen, Esq.
	 	 	 	  	1656 Spring Street
	 	 	 	  	Medford, OR 97504
	 	 	 	  	Fax: 541-608-8436
	 	 	 	  	AND
	 	 	 	  	Phillip Ashman, Esq.
	 	 	 	  	McQueen & Ashman LLP
	 	 	 	  	19900 MacArthur Blvd., Suite 1150
	 	 	 	  	Irvine, CA 92612
	 	 	 	  	Fax: 949-223-9611
			
	 	 	 To: Buyer
	  	Plains Exploration & Production Company
			
	 	 	 	  	Attn: John F. Wombwell
	 	 	 	  	700 Milam Street, Suite 3100
	 	 	 	  	Houston, Texas 77002
	 	 	 	  	Fax: 713-579-6210
			
	 	 	 	  	With a copy to:
			
	 	 	 	  	Plains Exploration & Production Company
	 	 	 	  	Attn: Marc A. Hensel
	 	 	 	  	700 Milam Street, Suite 3100
	 	 	 	  	Houston, Texas 77002
	 	 	 	  	Fax: 713-579-6200
			
	 	 	 	  	and
			
	 	 	 	  	Akin Gump Strauss Hauer & Feld LLP
	 	 	 	  	1111 Louisiana Street, 44th Floor
	 	 	 	  	Houston, Texas 77002
	 	 	 	  	Attn: James L. Rice, III
	 	 	 	  	Fax: 713-236-0822

  
 All such notices and
other communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; four (4) business days after being deposited in the mail, postage prepaid, if delivered by mail; and upon fax receipt of notification of
successful transmission, if sent by fax transmission. 
  

 45 

 20.10. No Guarantee of Operations. 
  
 Buyer understands that operation of all or part of the Properties may be
subject to operating agreements or other contracts governing the election or appointment of an operator. Seller does not warrant or represent that Buyer will become operator of any of the Properties. Seller will, and will cause its affiliates to,
use commercially reasonable efforts to cause Buyer to become operator of all Properties for which Seller or its affiliates are operator. 
  
 20.11. Incidental Expenses. 
  
 Although Buyer and Seller agree that the contemplated transactions constitute an “occasional sale” for sales tax purposes, Buyer shall bear and
pay (i) all state or local government sales, transfer, gross proceeds, or similar taxes incident to or caused by the transfer of the Properties to Buyer, (ii) all documentary, transfer and other state and local government taxes incident to the
transfer of the Properties to Buyer; and (iii) all filing, recording or registration fees for any assignment or conveyance delivered hereunder. Each Party shall bear its own respective expenses incurred in connection with the negotiation and Closing
of this transaction, including its own consultants’ fees, attorneys’ fees, accountants’ fees, and other similar costs and expenses. 
  
 20.12. Antitrust Laws. 
  
 If the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) is applicable to this transaction, then each Party shall have
the responsibility for filing with the Federal Trade Commission and the Department of Justice their respective notifications and reports and any supplemental information which may be reasonably requested in connection with the HSR Act, which reports
and notifications and supplemental information will comply in all material respects with the requirements of the HSR Act. 
  
 20.13. Waiver. 
  
 Any of the terms, provisions, covenants, representations, warranties or conditions hereof may be waived only by a written instrument executed by the Party
waiving compliance. Except as otherwise expressly provided in this Agreement, the failure of any Party at any time or times to require performance of and provision hereof shall in no manner affect such Party’s right to enforce the same. No
waiver by any Party or any condition, or of the breach of any term, provision, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other term, provision, covenant, representation or warranty. 
  
 20.14. Binding Effect; Assignment. 
  
 All the terms, provisions, covenants, obligations indemnities, representations, warranties and conditions of this Agreement
shall be enforceable by the Parties hereto and their respective successors and assigns. The rights of each Party under this Agreement are personal to that Party and may not be assigned or transferred to any other Party, firm, corporation or other
entity, without the prior, express and written consent of the other Party and such consent may be 

  

 46 

 
withheld for any reason, including convenience; provided, that Buyer may assign its rights under this Agreement to its affiliate, in which case Buyer would
remain primarily responsible for its obligations under this Agreement. Any attempt to assign this Agreement over the objection or without the express written consent of the other Party shall be absolutely void. Seller may condition its consent to
assign this Agreement on Buyer providing Seller with an appropriate guarantee of its assignee’s performance. In the event Buyer sells or assigns all or a portion of the Properties, this Agreement shall remain in effect between Buyer and Seller
as to all the Properties regardless of such assignment. 
  
 20.15. Taxes. 
  
 (a) In the event the
Parties agree that Section 1060 of the Internal Revenue Code of 1986, as amended, requires the filing of IRS Form 8594, the Parties will confer and cooperate in the preparation and filing of their respective forms to reflect a consistent reporting
of the agreed upon allocation. 
  
 (b) Seller shall be responsible
for and shall pay all taxes attributable to or arising from the ownership or operation of the Properties prior to the Effective Time. Buyer shall be responsible for and shall pay all taxes attributable to or arising from the ownership or operation
of the Properties after the Effective Time. Any Party which pays such taxes for the other Party shall be entitled to prompt reimbursement upon evidence of such payment. Each Party shall be responsible for its own federal income taxes, if any, as may
result from this transaction. 
  
 (c) If this transaction is
determined to result in state sales or transfer taxes, Buyer shall be solely responsible for any and all such taxes due on the Properties acquired by Buyer by virtue of this transaction. If Buyer is assessed such taxes, Buyer shall promptly remit
same to the taxing authority. If Seller is assessed such taxes, Seller shall immediately advise Buyer as to the nature of the assessment. Buyer shall, within ten (10) days after any such taxes are paid by Seller, reimburse Seller for any such taxes
paid by Seller to the taxing authority, or Buyer may require Seller to provide the assessment documentation, and at Buyer’s option Buyer may pay the assessment directly to the taxing authority. 
  
 20.16. Audits. 
  
 It is expressly understood and agreed that Seller retains its right to
receive its proportionate share of the proceeds from any audits relating to activities prior to the Effective Time. 
  
 20.17. Governing Law. 
  
 The provisions of this Agreement shall be governed by and construed in accordance with the internal laws of the State of California, without giving effect
to any principles of conflict of laws or choice of law of any jurisdiction. Any dispute arising under or related to this Agreement that is not otherwise expressly required by this Agreement to be resolved pursuant to the binding arbitration
provisions of Article 19, shall be resolved in Federal District Court or California Superior Court in Los Angeles County, California and such courts shall have shared exclusive jurisdiction and venue to adjudicate such disputes. The Parties
hereby consent to such shared exclusive jurisdiction and venue and waive any objections thereto. 
  

 47 

 20.18. Time is of Essence.  
  
 Time is of the essence with respect to performance of this Agreement. 
  
 20.19. Exhibits and Schedules. 
  
 All Exhibits and Schedules attached to this Agreement, and the terms of
those Exhibits and Schedules which are referred to in this Agreement, are made a part hereof and incorporated herein by reference. 
  
 20.20. Counterparts; Fax Signatures. 
  
 This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute but one
and the same instrument. This Agreement and any other document or instrument relating hereto may be executed by a Party’s signature transmitted by facsimile (“fax”), and copies of this Agreement and any such document or instrument
executed and delivered by means of faxed signatures shall have the same force and effect as copies hereof executed and delivered with original signatures. All Parties may rely upon faxed signatures as if such signatures were originals. Any Party
executing and delivering this Agreement and any such document or instrument by fax shall promptly thereafter deliver a counterpart signature page of this Agreement and the fully executed original or counterpart original of any such document or
instrument containing said Party’s original signature. All Parties agree that a faxed signature may be introduced into evidence in any proceeding arising out of or related to this Agreement or any such document or instrument as if it were an
original signature. 
  
 20.21. Limited Liability.

  
 Buyer on its own behalf and on behalf of its affiliates,
employees, representatives, officers, directors, agents, successors and assigns hereby agrees that in no event or circumstance shall any of Seller’s affiliates or any of the employees, representatives, officers, directors, agents, members or
shareholders of Seller or any of its affiliates have any personal liability under this Agreement, or to any of Buyer’s creditors, or to any other party in connection with this Agreement. Seller on its own behalf and on behalf of its affiliates,
employees, representatives, officers, directors, agents, successors and assigns hereby agrees that in no event or circumstance shall any of Buyer’s affiliates or any of the employees, representatives, officers, directors, agents, members or
shareholders of Buyer or any of its affiliates have any personal liability under this Agreement, or to any of Seller’s creditors, or to any other party in connection with this Agreement. 
  
 20.22. Consents and Approvals. 
  
 In the event that any Party’s consent or approval is required by this
Agreement, the Party that is to provide such consent or approval agrees that such consent or approval will not be unreasonably withheld, delayed or conditioned, unless it is expressly provided herein that a Party’s consent or approval is
subject to its sole and absolute discretion. 
  
  

 48 

 20.23. Cumulative Remedies. 
  
 The rights and remedies of the Parties as provided in this Agreement shall be cumulative and not alternative and are in
addition to any other rights or remedies available under applicable law or otherwise. 
  
 20.24. Mutual Cooperation.  
  
 The Parties shall cooperate with one another to accomplish the transactions anticipated in this Agreement. The Parties agree to execute such instruments and documents and to diligently undertake such actions as may
reasonably be required in order to complete the transactions contemplated in this Agreement. 
  
 20.25. Intentionally Omitted.  
  
 20.26. Attorneys’ Fees, Costs and Expenses.  
  
 In any action or proceeding brought to enforce any provision of this Agreement (whether or not a lawsuit or arbitration proceeding is instituted), or where any provision hereof is validly asserted as a defense, the
prevailing party (as “prevailing party” is defined in Section 1032(a)(4) of the California Code of Civil Procedure, interpreted to apply to arbitrations as well as judicial proceedings) shall be entitled to recover reasonable
attorneys’ fees in addition to its costs and expenses and any other available remedy. 
  
 20.27. Maintenance of Net Worth.  
  
 For 18 months after the Closing, Seller will maintain a tangible net worth of at least $10,000,000, where “tangible net worth” shall mean the excess of the consolidated total assets of Seller over the consolidated total
liabilities of Seller required to be classified as such under United States generally accepted accounting principles (“GAAP”), minus the total book value of all assets of Seller and its consolidated subsidiaries properly classified
as intangible assets under GAAP, including such items as good will, the purchase price of acquired assets in excess of the fair market value thereof, trademarks, trade names, service marks, brand names, copyrights, patents and licenses, and rights
with respect to the foregoing. Upon Buyer’s request, Seller will furnish copies of any unaudited and audited consolidated financial statements of Seller prepared during such 18-month period. . 
  
 20.28. Schedules and Exhibits.  
  
 From the date of this Agreement until the Closing, the Parties will work
together in good faith to revise any Schedules or Exhibits to this Agreement to accurately reflect the agreements and understandings between the Parties. 
  
 [The next page is the signature page.] 
  
  

 49 

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

  

							
	 SELLER:
	 	BUYER:
		
	 BENTLEY-SIMONSON, INC.,
 a Nevada corporation
	 	 PLAINS EXPLORATION & PRODUCTION COMPANY,
 a Delaware corporation

				
	 By:
	 	 /s/ Theodore C. Bentley

	 	By:	 	 /s/ Marc A. Hensel

	 Print Name:
	 	Theodore C. Bentley	 	Print Name:	 	Marc A. Hensel
	 Title:
	 	Chief Financial Officer	 	Title:	 	Vice President

  

 SIGNATURE PAGE 

 INDEX OF DEFINED TERMS 
  
 “AAA” is defined in Article 19.1 
  

“AGREEMENT” is defined in Article 1 
  
 “ALLOCATED VALUE” is defined in Article 8.1(a) 
  
 “ASSIGNMENT” is defined in Article 14.2(a) 
  
 “BUYER” is defined in first paragraph of the Agreement 
  
 “BUYER’S CREDITS” is defined in Article 3.3(b) 
  
 “BUYER GROUP” is defined in Article 18.1(d) 
  
 “CASUALTY LOSS” is defined in Article 1 
  
 “CASUALTY LOSS AMOUNT” is defined in Article 1 
  
 “CERCLA” is defined in Article 10.6 
  
 “CLOSING” is defined in Article 14.1 
  
 “CLOSING DATE” is defined in Article 14.1 
  
 “CNIA” is defined in Article 6.3 
  
 “CODE” is defined in Article 4.5 
  
 “CONTAMINATION” is defined in Article 18.6 
  
 “CONTRACTS” is defined in Article 1 
  
 “COMMERCE” is defined in 2.2(b) 
  
 “CRIMSON” is defined in Article 15.1 
  
 “CURE/REMEDIATION PROPERTY” is defined in Article 10.3 
  
 “DATE OF THIS AGREEMENT” is defined in Article 1 
  
 “DEFECT VALUE” is defined in Article 8.2 
  
 “EFFECTIVE TIME” is defined in Article 2.1 
  
 “ENVIRONMENTAL CLAIMS” is defined in Article 18.1(b) 
  
 “ENVIRONMENTAL DEFECT” is defined in Article 10.3 
  

 INDEX - 1 

 “ENVIRONMENTAL DEFECT ARBITRATION” is defined in Article 10.3 
  
 “ENVIRONMENTAL DEFECT NOTICE” is defined in Article 10.3 
  
 “ENVIRONMENTAL DEFECT REMOVAL” is defined in Article 10.3 
  
 “ENVIRONMENTAL LAWS” is defined in Article 10.6 
  
 “ENVIRONMENTAL NOTICE DEADLINE is defined in Article 10.3 
  
 “ESCROW AGENT” is defined in Article 3.2 
  
 “EXAMINATION PERIOD” is defined in Article 10.1 
  
 “EXCLUDED ASSETS” is defined in Article 2.2 
  
 “FINAL JUDGMENT” is defined in Article 18.5 
  
 “FINAL SETTLEMENT STATEMENT” is defined in Article 3.3 
  
 “GAAP” is defined in Article 20.27 
  
 “GATHERING SYSTEMS” is defined in Article 2.1(f)(ii) 
  
 “HSR ACT” is defined in Article 20.12 
  
 “HYDROCARBONS” is defined in Article 1 
  
 “INDEMNIFIED PARTY” is defined in Article 18.9 
  
 “INDEMNIFYING PARTY” is defined in Article 18.9 
  
 “INVENTORY HYDROCARBONS” is defined in Article 1 
  
 “JEFFERSON POOL” is defined in Article 18.3 
  
 “LAND” is defined in Article 2.1(a) 
  
 “LEASES” is defined in Article 1 
  
 “LOSSES” is defined in Article 18.1(a) 
  
 “MARKETABLE TITLE” is defined in Article 8.1(b) 
  
 “MINIMAL DEFECT” is defined in Article 1 
  
 “MINIMAL LOSS” is defined in Article 18.12 
  
 “NET REVENUE INTEREST” and “NRI” is defined in Article
8.1(e)(xiv)(c) 
  

 INDEX - 2 

 “NORM” is defined in Article 7.5 
  
 “NOTIFICATION DEADLINE” is defined in Article 8.2 
  
 “OIL AND GAS PROPERTIES” is defined in Article1 
  
 “OSHA” is defined in Article 10.6 
  

“PARTY” and “PARTIES” is defined in the second paragraph of this Agreement 
  
 “PERFORMANCE DEPOSIT” is defined in Article 3.2 
  
 “PERMITTED ENCUMBRANCES” is defined in Article 8.1(e) 
  
 “PHASE II REMOVAL” is defined in Article 10.2 
  
 “PROPERTY” and “PROPERTIES” is defined in Article 2.1 
  
 “PURCHASE PRICE” is defined in Article 3.1 
  
 “RCRA” is defined in Article 10.6 
  
 “RECORDS” is defined in Article 15.4 
  
 “RELEASED CLAIMS” is defined in Article 18.11 
  
 “RELEASED ENVIRONMENTAL CLAIMS” is defined in Article 18.6 
  
 “SARA” is defined in Article 10.6 
  
 “SECOND CLOSING” is defined in Article 19.4 
  
 “SECOND CLOSING PROPERTIES” is defined in Article 19.4 
  
 “SELLER” is defined in the first paragraph of this Agreement 
  
 “SELLER’S CREDITS” is defined in Article 3.3(a) 
  
 “SELLER GROUP” is defined in Article 18.1(c) 
  
 “SELLER’S KNOWLEDGE” is defined in Article 4.20 
  
 “SERVITUDES” is defined in Article 2.1(f)(i) 
  
 “TITLE DEFECT” is defined in Article 8.1(c) 
  
 “TITLE DEFECT ARBITRATION” is defined in Article 8.3(b) 
  
 “TITLE DEFECT NOTICE” is defined in Article 8.2 
  

 INDEX - 3 

 “TITLE DEFECT PROPERTY” is defined in Article 8.1(d) 
  
 “TITLE DEFECT REMOVAL” is defined in Article 8.3(b) 
  
 “WELL” and “WELLS” is defined in Article 1

  
 “WORKING INTEREST” and “WI” is defined in Article
8.1(e)(xiv)(d) 
  

 INDEX - 4

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