Document:

Exhibit 10.14

 

NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION

 

DESCRIPTION
OF EXECUTIVE OFFICER

COMPENSATION
ARRANGEMENTS

 

The following is a description of oral compensation
arrangements between Northern Technologies International Corporation and each
of the executive officers of NTIC as of August 31, 2009:

 

	
  Name of

  Executive

  Officer

  	
   

  	
  Title

  	
   

  	
  Base

  Salary

  	
   

  	
  Bonus

  Arrangements

  	
   

  	
  Stock

  Options

  	
   

  	
  Other

  
	
  G. Patrick Lynch

  	
   

  	
  President and Chief
  Executive Officer

  	
   

  	
  $189,000 per
  year.  See
  footnote (1) below

  	
   

  	
  See footnote
  (2) below

  	
   

  	
  Stock options to
  purchase shares of NTIC common stock are granted from time to time in the
  sole discretion of the NTIC Board of Directors.

  	
   

  	
  Under NTIC’s 401(k) Plan, participants,
  including executive officers, may voluntarily request that NTIC reduce
  pre-tax compensation by up to 15% (subject to certain special limitations)
  and contribute such amounts to a trust. NTIC contributed an amount equal to
  3.5% of the amount that each participant contributed under this plan. (3)

   

  Executive officers receive
  other benefits received by other NTIC employees, including health, dental and
  life insurance benefits.

  
	
  Matthew C. Wolsfeld

  	
   

  	
  Chief Financial Officer
  and Secretary

  	
   

  	
  $139,500 per
  year.  See
  footnote (1) below

  	
   

  	
  See footnote
  (2) below

  	
   

  	
  See above

  	
   

  	
  See above

  

 

(1)           Annual base salaries for NTIC’s executive
officers are determined each year by NTIC’s Board of Directors, upon
recommendation of the Compensation Committee of the Board.  The salaries listed in the table are the base
salaries for as of August 31, 2009. 
In January 2009, both Mr. Lynch and Mr. Wolsfeld took
salary cuts of 15% to from $221,000 to $189,000 and $163,000 to $139,500,
respectively.

 

(2)           Annual performance bonuses for NTIC’s
executive officers are determined each year by NTIC’s Board of Directors, upon
recommendation of the Compensation Committee of the Board.   For fiscal 2010 as in past years, the total
amount available under the bonus plan will be up to 25% of NTIC’s earnings
before interest, taxes and other income (EBITOI) and will be $0 if EBITOI, as
adjusted to take into account amounts to be paid under the bonus plan, fall
below 70% of target EBITOI.  The payment
of bonuses under the plan are purely discretionary and will be paid to
executive officer participants in both cash and stock, the exact amount and
percentages of which will be determined by the Board of Directors, upon
recommendation of the Compensation Committee.

 

(3)           NTIC’s matching contributions were
suspended for all employees starting January 2009.

 

1Exhibit
10.1

 

 

AGREEMENT

FOR PURCHASE AND SALE

OF ASSETS

 

BY
AND BETWEEN

 

FOREST
OIL CORPORATION

 

As
Seller,

 

FOREST
OIL PERMIAN CORPORATION

 

As
Seller

 

AND

 

SANDRIDGE
EXPLORATION AND PRODUCTION, LLC

 

As
Purchaser,

 

Dated
as of November 25, 2009

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE I

  	
  PURCHASE AND SALE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Purchase and Sale

  	
   

  	
  1

  
	
  Section 1.2

  	
  Assets

  	
   

  	
  1

  
	
  Section 1.3

  	
  Excluded Assets

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  PURCHASE PRICE

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Purchase Price

  	
   

  	
  4

  
	
  Section 2.2

  	
  Performance Deposit

  	
   

  	
  5

  
	
  Section 2.3

  	
  Allocation of the
  Purchase Price

  	
   

  	
  5

  
	
  Section 2.4

  	
  Adjustment to Purchase
  Price

  	
   

  	
  5

  
	
  Section 2.5

  	
  Payment and Calculation
  of Estimated Final Purchase Price; Payment at Closing

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  ASSET INSPECTION AND TITLE
  EXAMINATION

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Access to Records and
  Properties of Seller

  	
   

  	
  7

  
	
  Section 3.2

  	
  On-Site Tests and
  Inspections

  	
   

  	
  7

  
	
  Section 3.3

  	
  Title Matters

  	
   

  	
  8

  
	
  Section 3.4

  	
  Defect Adjustments

  	
   

  	
  11

  
	
  Section 3.5

  	
  Casualty Loss

  	
   

  	
  13

  
	
  Section 3.6

  	
  Identification of
  Additional Defective Interests

  	
   

  	
  13

  
	
  Section 3.7

  	
  Termination Due to
  Title Matters and Conditions

  	
   

  	
  14

  
	
  Section 3.8

  	
  Title Benefits

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  SELLER’S REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Organization, Standing
  and Power

  	
   

  	
  15

  
	
  Section 4.2

  	
  Authority and
  Enforceability

  	
   

  	
  16

  
	
  Section 4.3

  	
  Claims Affecting the
  Assets

  	
   

  	
  16

  
	
  Section 4.4

  	
  Claims Affecting the
  Sale

  	
   

  	
  17

  
	
  Section 4.5

  	
  No Demands

  	
   

  	
  17

  
	
  Section 4.6

  	
  Taxes

  	
   

  	
  17

  
	
  Section 4.7

  	
  Leases

  	
   

  	
  17

  
	
  Section 4.8

  	
  Non-Foreign
  Representation

  	
   

  	
  18

  
	
  Section 4.9

  	
  Commitments for
  Expenditures

  	
   

  	
  18

  
	
  Section 4.10

  	
  Brokers Fees

  	
   

  	
  18

  
	
  Section 4.11

  	
  Gas Imbalances

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  PURCHASER’S REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Organization, Standing
  and Power

  	
   

  	
  18

  
	
  Section 5.2

  	
  Authority
  and Enforceability

  	
   

  	
  18

  

 

i

 

	
  Section 5.3

  	
  Independent Evaluation

  	
   

  	
  19

  
	
  Section 5.4

  	
  Suits Affecting the
  Sale

  	
   

  	
  19

  
	
  Section 5.5

  	
  Eligibility

  	
   

  	
  19

  
	
  Section 5.6

  	
  Financing

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  ASSUMPTION OF OBLIGATIONS AND
  INDEMNIFICATION

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Assumption and
  Retention of Certain Liabilities and Obligations by Purchaser

  	
   

  	
  20

  
	
  Section 6.2

  	
  Indemnification by
  Purchaser

  	
   

  	
  20

  
	
  Section 6.3

  	
  Indemnification by
  Seller

  	
   

  	
  20

  
	
  Section 6.4

  	
  Interpretation

  	
   

  	
  21

  
	
  Section 6.5

  	
  Notices

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  SELLER’S OBLIGATIONS PRIOR TO
  CLOSING

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Restrictions on
  Operations

  	
   

  	
  23

  
	
  Section 7.2

  	
  Operated Assets

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  ADDITIONAL AGREEMENTS OF THE
  PARTIES

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Government Reviews and
  Filings

  	
   

  	
  25

  
	
  Section 8.2

  	
  Confidentiality

  	
   

  	
  25

  
	
  Section 8.3

  	
  Taxes

  	
   

  	
  26

  
	
  Section 8.4

  	
  Receipts and Credits

  	
   

  	
  28

  
	
  Section 8.5

  	
  Suspense Accounts

  	
   

  	
  28

  
	
  Section 8.6

  	
  Hart-Scott-Rodino
  Filings

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  CONDITIONS TO CLOSING

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Seller’s Conditions

  	
   

  	
  29

  
	
  Section 9.2

  	
  Purchaser’s Conditions

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  RIGHT OF TERMINATION AND
  ABANDONMENT

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 10.1

  	
  Termination

  	
   

  	
  30

  
	
  Section 10.2

  	
  Liabilities Upon
  Termination

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  CLOSING MATTERS

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 11.1
  

  	
  Time and Place of
  Closing 

  	
   

  	
  31 

  
	
  Section 11.2

  	
  Closing Obligations

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  POST-CLOSING OBLIGATIONS

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 12.1

  	
  Post-Closing
  Adjustments

  	
   

  	
  33

  
	
  Section 12.2

  	
  Files and Records

  	
   

  	
  34

  
	
  Section 12.3

  	
  Further
  Assurances

  	
   

  	
  34

  

 

ii

 

	
  Section 12.4

  	
  Reviewed
  and Audited Financial Statements and Reserve Disclosures

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  	
  ENVIRONMENTAL MATTERS

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 13.1

  	
  Purchaser
  Acknowledgment Concerning Possible Contamination of the Assets

  	
   

  	
  34

  
	
  Section 13.2

  	
  Adverse Environmental
  Conditions

  	
   

  	
  35

  
	
  Section 13.3

  	
  Disposal of Materials,
  Substances, and Wastes; Compliance with Law

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  	
  MISCELLANEOUS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 14.1

  	
  Notices

  	
   

  	
  36

  
	
  Section 14.2

  	
  Binding Effect

  	
   

  	
  37

  
	
  Section 14.3

  	
  Counterparts

  	
   

  	
  37

  
	
  Section 14.4

  	
  Expenses

  	
   

  	
  37

  
	
  Section 14.5

  	
  Section Headings

  	
   

  	
  38

  
	
  Section 14.6

  	
  Entire Agreement

  	
   

  	
  38

  
	
  Section 14.7

  	
  Conditions

  	
   

  	
  38

  
	
  Section 14.8

  	
  Governing Law

  	
   

  	
  38

  
	
  Section 14.9

  	
  Assignment

  	
   

  	
  38

  
	
  Section 14.10

  	
  Public Announcements

  	
   

  	
  39

  
	
  Section 14.11

  	
  Notices After Closing

  	
   

  	
  39

  
	
  Section 14.12

  	
  Waiver of Compliance
  with Bulk Transfer Laws

  	
   

  	
  39

  
	
  Section 14.13

  	
  Waiver

  	
   

  	
  39

  
	
  Section 14.14

  	
  Like-Kind Exchange

  	
   

  	
  40

  

 

iii

 

SCHEDULES

 

	
  Schedule A-1

  	
   

  	
  Description of Leases
  and Land

  
	
   

  	
   

  	
   

  
	
  Schedule A-2

  	
   

  	
  Wells

  
	
   

  	
   

  	
   

  
	
  Schedule A-3

  	
   

  	
  Agreements

  
	
   

  	
   

  	
   

  
	
  Schedule B

  	
   

  	
  Value Allocation

  
	
   

  	
   

  	
   

  
	
  Schedule C

  	
   

  	
  Suits and Claims

  
	
   

  	
   

  	
   

  
	
  Schedule D

  	
   

  	
  Transition Services
  Agreement

  
	
   

  	
   

  	
   

  
	
  Schedule E

  	
   

  	
  Outstanding AFEs

  
	
   

  	
   

  	
   

  
	
  Schedule F-1

  	
   

  	
  General Assignment and
  Bill of Sale Form

  
	
   

  	
   

  	
   

  
	
  Schedule F-2

  	
   

  	
  Assignment Form

  
	
   

  	
   

  	
   

  
	
  Schedule G

  	
   

  	
  Environmental
  Conditions

  
	
   

  	
   

  	
   

  
	
  Schedule 1.3

  	
   

  	
  Excluded Assets

  
	
   

  	
   

  	
   

  
	
  Schedule 4.6

  	
   

  	
  Tax Partnerships

  
	
   

  	
   

  	
   

  
	
  Schedule 4.11

  	
   

  	
  Gas Imbalances

  

 

iv

 

AGREEMENT
FOR PURCHASE

AND SALE OF ASSETS

 

This Agreement for Purchase and Sale of Assets (the “Agreement”),
dated as of November 25, 2009, is made and entered into by and among
Forest Oil Corporation, a New York corporation, and Forest Oil Permian
Corporation, a Delaware corporation (collectively “Seller”), and SandRidge
Exploration and Production, LLC, a Delaware limited liability company (“Purchaser”).

 

RECITALS

 

A.                                   Seller desires to sell to Purchaser the
assets, properties and rights hereinafter described upon the terms and subject
to the conditions, exceptions and reservations hereinafter set forth;

 

B.                                     Purchaser desires to purchase from Seller
such assets, properties and rights as hereinafter set forth upon the terms and
subject to the conditions, exceptions and reservations hereinafter set forth;
and

 

C.                                     In consideration of the premises and of
the mutual promises, representations, warranties, covenants, conditions and
agreements contained herein, Seller and Purchaser, intending to be legally
bound by the terms hereof, agree as follows:

 

ARTICLE
I

PURCHASE AND SALE

 

Section 1.1                                      Purchase and Sale.

 

Subject to the provisions of this Agreement, Seller
agrees to sell and convey at the Closing (as defined in Section 11.1), and
Purchaser agrees to purchase and accept at the Closing, such conveyance to be
effective for all purposes as of 7:00 a.m. at the location of each of the
respective Assets on November 1, 2009 (the “Effective Time”), all of the
following, less and except the Excluded Assets (as hereinafter defined), which
shall be herein referred to collectively as the “Assets”.

 

Section 1.2                                      Assets.

 

The Assets shall mean the following:

 

(a)                                  All right, title and interest of Seller
and its affiliates (as used in this Section and Section 1.3, “affiliates”
means any person or entity which, directly or indirectly, controls, is
controlled by or is under common control with Seller) in and to all oil and gas
leases, other similar leases, mineral interests, royalties, and overriding
royalties, whether producing or non-producing, as described on Schedule A-1
attached

 

 

hereto (the “Leases”), and any other rights and
interests of any type in, on, or under or relating to the lands also described
on Schedules A-1 or A-2 or in any of the Leases (the “Land”), whether such
Asset is incorrectly described or inadvertently omitted, and including any and
all right, title and interest of Seller and its affiliates in and to the oil,
gas and other hydrocarbons and other products produced in association therewith
in, on, or under any of the foregoing, and all oil and gas wells, injection and
disposal wells, water wells, and abandoned wells located on any of the
foregoing, or used or useful in connection therewith, or on lands pooled or
unitized therewith, including, without limitation, the wells described in
Schedule A-2 attached hereto (the “Wells”);

 

(b)                                 All right, title and interest of Seller
and its affiliates in, to and under or derived from all presently existing or
proposed unitization, pooling and communitization agreements, declarations and
orders, and the properties covered and the units created or to be created
thereby (including, but not limited to, all units formed or to be formed under
orders, regulations, rules or other official actions of any federal, state
or other governmental agency having jurisdiction), including without limitation,
the agreements, declarations, orders, properties and units described in
Schedule A-3 attached hereto, to the extent that they relate to or affect all
or any part of the Leases, Land, or Wells (“Unit Agreements”);

 

(c)                                  Subject to any and all applicable
consents to assign and other limitations on Seller’s or its affiliates’ rights
to assign, all right, title and interest of Seller and its affiliates in, to
and under or derived from all contracts, agreements, and instruments to the
extent that they relate to or affect any of the Assets, including oil, gas
liquids, condensate, casinghead gas, and gas sales, purchase, exchange,
gathering, transportation and processing contracts, operating agreements, joint
venture agreements, farmout agreements, partnership agreements, settlement
agreements and all other agreements, contracts, and instruments, including
without limitation the agreements, contracts, and instruments described in
Schedule A-3 attached hereto;

 

(d)                                 All right, title and interest of Seller
and its affiliates in or to all personal property, fixtures, equipment leases,
improvements, and other personal property, whether real, personal, or mixed
(including, but not limited to, well equipment, casing, tubing, tanks, rods,
tank batteries, boilers, buildings, pumps, motors, machinery, injection
facilities, disposal facilities, field separators and liquid extractors,
compressors, pipelines, gathering systems, docking facilities, air service
facilities, helicopter facilities, power lines, telephone and telegraph lines,
roads, and field processing plants, field offices and office furnishings
related thereto, field office leases, equipment leases, trailers and all other
appurtenances thereunto belonging), (the “Equipment”) and in and to all
easements, permits, licenses, servitudes, rights-of-way, surface leases and
other surface rights, and all contract rights, to the extent used or useful in
connection with the exploration, development, operation or maintenance of the
Leases, Land, Wells, or Unit Agreements, or in connection with the producing,
treating, processing, storing, gathering, transporting or marketing of oil, gas
and other hydrocarbons and other

 

2

 

products produced in association with or attributable
to such, Leases, Land, Wells, or Unit Agreements;

 

(e)                                  All of Seller’s and its affiliates’
right, title and interest in and to any production imbalances or balancing
agreements relating to any of the Leases, Land, Wells or Unit Agreements, or
otherwise arising by virtue of the fact that Seller or its affiliates may not
have taken or marketed its full share of oil, gas and other hydrocarbons and
other products produced in association therewith attributable to its ownership
prior to the Effective Time; and

 

(f)                                    Copies of all accounting records related
to periods of time from and after the Effective Time, books and files relating
to any of the interests set forth in this Section 1.2 including, without
limitation, all production records, operating records, correspondence, lease
records, well records, and division order records; prospect files; title
records (including abstracts of title, title opinions and memoranda, and title
curative documents related to the Leases, Land, Wells, and Unit Agreements),
contracts, property tax records, including property tax returns specific to the
Assets for the preceding tax year, electric logs, core data, pressure data,
decline curves, graphical production curves, and a non-exclusive license to all
geophysical data owned by Seller or its affiliates (collectively, the “Records”);
provided, however, that the Records shall not include payroll and personnel
records nor any geophysical and interpretive data or reports and shall not
include any Records that Seller or its affiliates are not contractually
permitted to assign; and provided, further, that Seller and its affiliates
shall be entitled to retain copies of all records and other files that Seller
or its affiliates reasonably believes it will need access to for future audit,
tax, or reporting requirements.

 

Section 1.3                                      Excluded Assets.

 

Seller shall reserve and retain all of the Excluded
Assets. “Excluded Assets” shall mean:

 

(a)                                  all of Seller’s and its affiliates
corporate minute books, accounting and financial records, and other business
records that relate to Seller’s or its affiliates’ business generally
(including the ownership of the Assets);

 

(b)                                 all trade credits, all accounts,
suspended funds not otherwise specifically accounted for pursuant to Section 8.5,
below, receivables (including from the results of audits), and all other
proceeds, income or revenues attributable to the Assets with respect to any
period of time prior to the Effective Time;

 

(c)                                  all rights and interests of Seller and
its affiliates (A) under any policy or agreement of insurance or
indemnity, (B) under any bond or (C) to any insurance or condemnation
proceeds or awards arising, in each case, from acts, omissions or events, or
damage to or destruction of property occurring prior to the Effective Time;

 

3

 

(d)                                 all Hydrocarbons produced and sold from
the Assets with respect to all periods prior to the Effective Time;

 

(e)                                  all claims of Seller and its affiliates
for refunds of or loss carry forwards with respect to (A) production or
any other taxes attributable to any period prior to the Effective Time, (B) income
or franchise taxes or (C) any taxes attributable to the Excluded Assets;

 

(f)                                    all personal computers and associated
peripherals and all radio and telephone equipment;

 

(g)                                 all of Seller’s and its affiliates
computer software, patents, trade secrets, copyrights, names, trademarks, logos
and other intellectual property;

 

(h)                                 all documents and instruments of Seller
and its affiliates that may be protected by an attorney-client privilege;

 

(i)                                     all data that cannot be disclosed to
Purchaser as a result of confidentiality arrangements under agreements with
Third Parties and for which a waiver or consent has not been obtained from such
Third Parties;

 

(j)                                     all hedging transactions and gains or
losses attributable to any hedging activities, whether occurring before or
after the Effective Time;

 

(k)                                  all correspondence, reports, analyses and
other documents relating to the Assets or the transaction contemplated hereby
(including without limitation, environmental reports and analyses), whether
internal, with or produced by other prospective purchasers, produced by
consultants or other third parties or otherwise, and

 

(l)                                     the assets and liabilities listed on
Schedule 1.3.

 

ARTICLE
II

PURCHASE PRICE

 

Section 2.1                                      Purchase Price.

 

The aggregate
purchase price payable by Purchaser to Seller for the Assets shall be Eight
Hundred Million Dollars ($800,000,000.00) (the “Preliminary Purchase Price”),
subject to adjustment as set forth in Section 2.4 below.

 

4

 

Section 2.2                                      Performance Deposit.

 

Within one Business Day of execution of this
Agreement, Purchaser shall pay to Seller by wire transfer a deposit in the
amount of Forty Million Dollars ($40,000,000.00) (“Performance Deposit”) to be
held by Seller in accordance with this Agreement. In the event that the
transactions contemplated by this Agreement are consummated, the Performance
Deposit shall be applied to the Purchase Price as set forth in Section 2.5(b) below.
In the event this Agreement is terminated, the Performance Deposit plus any
interest earned thereon shall be applied in accordance with the provisions of Article X.

 

Section 2.3                                      Allocation of the Purchase Price.

 

The Preliminary Purchase Price shall be allocated
among the Assets in accordance with the allocations set forth on Schedule B.
Any adjustments to the purchase price under Section 2.4 shall
correspondingly (as appropriate) adjust the allocations set forth on Schedule
B. Seller and Purchaser agree such allocations have been established for use
where appropriate under this Agreement, including for Seller to provide any
required preferential purchase right notifications and in calculating
adjustments to the Purchase Price.

 

Section 2.4                                      Adjustment to Purchase Price.

 

The Preliminary Purchase Price shall be adjusted as
follows and the resulting amount shall be herein called the “Final Purchase
Price”:

 

(a)                                  The Preliminary Purchase Price shall be
adjusted upward by the following (on a cash basis and on a sales, not an
entitlement, method of accounting):

 

(i)                                     The amount of all capital expenditures
(net to Seller’s interest) incurred and paid by Seller during the period from
the Effective Time to the Closing Date (“Adjustment Period”) in respect of the
ownership and operation of the Assets;

 

(ii)                                  The amount of all operating costs
incurred and paid by Seller (excluding amounts paid in connection with the
transactions contemplated by this Agreement) in respect of the ownership and
operation of the Assets during the Adjustment Period;

 

(iii)                               The value (determined by the price most
recently paid prior to the Effective Time for such oil less all applicable
deductions) of all oil in storage above the wellhead as of the Effective Time
which is credited to the Assets, less applicable production taxes, royalty and
other burdens on the production payable on such oil and subsequently paid by
Seller, the amount of oil in storage

 

5

 

as of the Effective Time to be based on gauge reports
to the extent available or on alternative methods to be agreed by the parties.

 

(iv)                              The amount of underproduced volumes of
gas attributable to Seller as of the Effective Time, multiplied by a price of
$4.00/Mcf for such production (net of royalties and taxes) in each case to the
extent provided by existing balancing and other agreements affecting the
Assets.

 

(v)                                 Intentionally left blank

 

(vi)                              The amount of any Defect Adjustment which
is a net increase in the value of an Asset, as defined in Section 3.4(b).

 

(b)                                 The Preliminary Purchase Price shall be
adjusted downward by the following (on a cash basis and on a sales, not an
entitlement, method of accounting):

 

(i)                                     Amounts received by Seller for the sale
of oil, gas, liquids or other associated minerals produced during the
Adjustment Period (net of any production royalties, transportation costs and of
any production, severance or sales taxes paid or to be paid by Seller), and all
other amounts received or to be received by Seller relating to the ownership
and operation of the Assets during the Adjustment Period including but not
limited to amounts attributable to prepayments, cash calls, advance payments,
gas transportation, take or pay payments and similar payments;

 

(ii)                                  Amounts received by Seller for the sale,
salvage or other disposition during the Adjustment Period of any property,
equipment or rights included in the Assets without Purchaser having received
full payment therefor;

 

(iii)                               All amounts otherwise received by Seller
and attributable to the ownership of the Assets during the Adjustment Period;

 

(iv)                              An amount equal to the value of the
Assets set forth on Schedule B with respect to which preferential purchase
rights have been exercised in accordance with Section 3.6;

 

(v)                                 The amount of any Defect Adjustment which
is a net reduction in the value of an Asset, as defined in Section 3.4(b);

 

(vi)                              An amount equal to the value of any
Casualty Loss as defined in Section 3.5; and

 

(vii)                           The amount of overproduced volumes of gas
attributable to Seller as of the Effective Time, multiplied by a price of
$4.00/Mcf for such production

 

6

 

(net of royalties and taxes) in each case to the
extent provided by existing balancing and other agreements affecting the
Assets.

 

(viii)                        An amount equal to any adjustment set
forth in Section 13.2(b).

 

(c)                                  It is Seller’s and Purchaser’s intent
that the adjustments under this Agreement to the Preliminary Purchase Price,
and any components of such adjustments, shall not be applied or computed in a
manner that results in duplicative effect.

 

Section 2.5                                      Payment and Calculation of Estimated
Final Purchase Price; Payment at Closing.

 

(a)                                  Seller shall prepare and deliver to
Purchaser, at least five “Business Days” (which term shall mean any day except
a Saturday, Sunday or other day on which commercial banks in New York, New York
are required or authorized by law to be closed) prior to the Closing Date,
Seller’s estimate of the Final Purchase Price to be paid at Closing, (such
estimated Final Purchase Price being herein referred to as the “Estimated Final
Purchase Price”), together with a statement setting forth Seller’s estimate of
the amount of each adjustment to the Preliminary Purchase Price to be made
pursuant to Section 2.4. The parties shall negotiate in good faith and
attempt to agree on such estimated adjustments prior to Closing.

 

(b)                                 At Closing, Purchaser shall pay to Seller
the Estimated Final Purchase Price determined as set forth in Section 2.5(a) less
an amount equal to the Performance Deposit plus any interest earned thereon.

 

ARTICLE
III

ASSET INSPECTION AND TITLE EXAMINATION

 

Section 3.1                                      Access to Records and Properties of
Seller.

 

Between the date of this Agreement and Closing, Seller
agrees, subject to Section 8.2, to give Purchaser and its representatives
full access at all reasonable times to the Assets and to the Records for
inspection and copying at Purchaser’s expense at Seller’s office in Denver,
Colorado. To the extent records are kept or maintained by Seller in other
locations, Seller agrees to make same available at such other locations.

 

Section 3.2                                      On-Site Tests and Inspections.

 

Seller shall
permit or, in case of any third-party operated wells, use its commercially
reasonable efforts to cause the operator thereof to permit, Purchaser’s authorized
representatives to consult with Seller’s or third-party operator’s agents and
employees during reasonable business hours and to conduct, at Purchaser’s sole
risk and expense, on-site

 

7

 

inspections, tests and inventories of the Assets. Purchasers
environmental investigation of the Properties shall be limited to conducting a
Phase I Environmental Site Assessment in accordance with the American Society
for Testing and Materials (A.S.T.M.) Standard Practice Environmental Site
Assessments: Phase I Environmental Site Assessment Process (Publication
Designation: E1527-05) (“Site Assessment”), and at Seller’s discretion, shall
be accompanied by Seller’s representative. Purchaser shall furnish Seller, free
of cost to Seller, a copy of any written report prepared by or for Purchaser
related to any Site Assessment of the Properties as soon as reasonably possible
after it is prepared. All environmental reports prepared by or for Purchaser
shall be maintained in strict confidence by Purchaser and shall be used by
Purchaser solely in connection with the evaluation of the Properties or in any
dispute with Seller involving the Properties. If Closing does not occur, all
copies of such reports shall be promptly delivered to Seller.

 

Section 3.3                                      Title Matters.

 

(a)                                  For the sole purpose of determining the
existence of Title Defects prior to the Closing, Seller warrants that it owns
Defensible Title (as defined in Section 3.3(b)) to the Assets except to
the extent affected by the litigation described on Schedule C.

 

(b)                                 As used herein, the term “Defensible
Title” to the Assets shall mean such title of Seller that:

 

(i)                                     is deducible of record either from the
records of the applicable county or parish clerk and recorder or, in the case
of federal leases, from the records of the applicable office of the Bureau of
Land Management, or in the case of state leases, from the records of the
applicable state land office, or from some combination of the foregoing
official records;

 

(ii)                                  entitles Seller to receive not less than
the net revenue interest (indicated by the letters “NRI”) of Seller set forth
in Schedule B of all oil, gas and associated liquid and gaseous hydrocarbons
produced, saved and marketed from the Leases throughout the life of such
properties;

 

(iii)                               obligates Seller to bear costs and
expenses relating to the maintenance, development and operation of the Leases
in an amount not greater than the working interest (indicated by the letters “WI”)
set forth in Schedule B throughout the life of such properties except to the
extent such greater working interest is accompanied by a proportionate increase
in net revenue interest; and

 

(iv)                              is free and clear of encumbrances, liens
and defects other than the Permitted Encumbrances.

 

8

 

(c)                                  The term “Permitted Encumbrances”, as
used herein, shall mean:

 

(1)                                  lessors’ royalties, overriding royalties,
and division orders and sales contracts covering oil, gas or associated liquid
or gaseous hydrocarbons, reversionary interests and similar burdens if and to
the extent the net cumulative effect of such burdens does not operate to reduce
the net revenue interest at any time in any property to less than the net
revenue interest set forth in Schedule B:

 

(2)                                  preferential rights to purchase and
required third-party consents to assignments and similar agreements with
respect to which prior to Closing;

 

(i)                                     waivers or consents are obtained from the
appropriate parties,

 

(ii)                                  the appropriate time period for asserting
such rights has expired without an exercise of such rights, or

 

(iii)                               arrangements can be made by Seller which
are acceptable to Purchaser in order for Purchaser to receive the same economic
and operational benefits as if all such waivers and consents had been obtained;

 

(3)                                  liens for current period property, ad
valorem, severance, production and other similar taxes or assessments not yet
due or not yet delinquent or, if delinquent, that are not material and are
being contested in good faith in the normal course of business;

 

(4)                                  all rights to approve, required notices
to, filings with, or other actions by governmental or tribal entities in
connection with the sale or conveyance of the Assets if the same are
customarily obtained subsequent to such sale or conveyance;

 

(5)                                  rights of reassignment, to the extent any
exist as of the date of this Agreement, upon the surrender or expiration of any
lease;

 

(6)                                  easements, rights-of-way, servitudes,
permits, surface leases and other rights in respect of surface operations,
pipelines, or the like; conditions, covenants or other restrictions; and
easements for pipelines, railways and other easements and rights-of-way, on,
over or in respect of any of the Assets which individually, or in the
aggregate, do not materially adversely affect the ownership, operation, value
or use of the Assets, or any of them;

 

9

 

(7)                                  all other liens, charges, encumbrances,
contracts, agreements, instruments, obligations, defects and irregularities
affecting the Assets (including, without limitation, liens of operators
relating to obligations not yet due or pursuant to which Seller is not in
default) that do not reduce the net revenue interest set forth in Schedule B,
or do not prevent the receipt of proceeds of production therefrom, or do not
increase the share of costs above the working interest set forth in Schedule B,
or that are not such as materially interfere with or detract from the
operation, value or use of any of the properties included within the Assets;

 

(8)                                  liens, if any, to be released at Closing
in a form acceptable to Purchaser;

 

(9)                                  the terms and conditions of all Leases,
agreements, orders, pooling or unitization agreements or declarations included
in the Assets or to which the Assets are subject as long as same do not reduce
the net revenue interests for the Assets listed in Schedule B or do not
increase the working interests for the interests set forth in Schedule B; and

 

(10)                            rights reserved to or vested in any
municipality or governmental, statutory or public authority to control or
regulate any of the Assets in any manner, and all applicable laws, rules and
orders of governmental authority; and

 

(11)                            Materialmen’s, mechanics’, repairmen’s,
employees’, contractors’, operators’ or other similar liens or charges arising
in the ordinary course of business incidental to construction, maintenance or
operation of the Assets

 

(i)                                     if they have not been filed pursuant to
law,

 

(ii)                                  if filed, they have not yet become due
and payable or payment is being withheld as provided by law and Seller either
indemnifies Purchaser or agrees to reduce the Preliminary Purchase Price for
the amount claimed, or

 

(iii)                               if their validity is being contested in
good faith by appropriate action provided that Seller either indemnifies
Purchaser or agrees to reduce the Preliminary Purchase Price for the amount
claimed.

 

10

 

(d)           The term “Title
Defect” as used herein shall mean any encumbrance,  encroachment, irregularity, defect in or objection to
Seller’s title to the Assets (excluding Permitted Encumbrances) which would
result in Seller not having Defensible Title.

 

Section 3.4             Defect Adjustments.

 

(a)           “Defective Interest(s)” shall mean that
portion of the Assets (as determined in accordance with Section 3.4(c)) as
to which the warranty stated in Section 3.3(a) is breached or that
Purchaser is otherwise entitled under Sections 3.5 or 3.6 to treat as a
Defective Interest, and of which Seller has been given written notice by
Purchaser not later than 5:00 P.M., Denver time, on December 21, 2009
or any later date specified in Section 3.6 for Defective Interests
described in that Section (“Defective Interest Notice Date”). Such written
notice shall include

 

(i)            a description of the Defective Interest,

 

(ii)           the basis for the defect that Purchaser
believes causes such Asset to be a Defective Interest,

 

(iii)          the
Allocated Value of the affected Asset calculated in accordance with Section 3.4(c),
and

 

(iv)          the amount by which Purchaser believes
the Allocated Value of the affected Asset has been reduced by the Defective
Interest;

 

provided however, that
any Title Defect (or individual Title Benefit, as defined in Section 3.8)
for which the Defect Adjustment, as determined in Section 3.4(c), below,
is less than one hundred thousand dollars ($100,000) shall not be a Defective
Interest. For purposes of determining Defect Adjustments pursuant to this
Agreement, and without waiver of Purchaser’s rights under the conveyances of
the Assets to be delivered at Closing, Purchaser shall be deemed to have waived
all Title Defects of which Seller has not been given written notice by the
Defective Interest Notice Date. Prior to Closing, Seller shall have the option,
but not the obligation, to cure any Title Defect or other breach of title
warranty for which timely notice is given. If Purchaser desires to attempt to
cure any Title Defect, Seller shall cooperate with Purchaser, prior to the
Closing Date, in endeavoring to cure any such Title Defect.

 

(b)           Subject to Seller’s right to withdraw a
Defective Interest from this  transaction and adjust the Purchase Price accordingly,
Defective Interests and Title Benefits shall be conveyed to Purchaser
hereunder, and the Preliminary Purchase Price shall be reduced or increased, as
the case may be, in accordance with Section 2.4 by an amount determined in
accordance with Section 3.4(c) for such Defective Interests and Title
Benefits (which net reduction or increase, as applicable, shall be called a
“Defect Adjustment”) but only to the extent that the total amount of all Defect
Adjustments

 

11

 

exceeds one percent (1%)
of the Preliminary Purchase Price, unless prior to the Closing, the basis for
treating such Assets as Defective Interests has been removed in a manner
satisfactory to Purchaser. For avoidance of doubt, Seller and Purchaser agree
that the foregoing threshold amount is a deductible. If Seller and Purchaser
cannot agree to the amount of a Defect Adjustment for a specified Title Defect
or Title Benefit, all information relating to the Defective Interest or Title
Benefit shall be submitted to a title attorney chosen by mutual agreement of
the parties, who shall have a minimum of ten (10) years experience in
examining oil and gas titles, who shall, in good faith, determine the Defect
Adjustment or Title Benefit. If the amount of such adjustment is not determined
pursuant to this Agreement by the Closing, the undisputed portion of the
Purchase Price with respect to the Asset affected shall be paid by Purchaser at
the Closing and, subject to this Section 3.4(b), upon determination of the
amount of such adjustment, any unpaid portion thereof (if a Title Benefit)
shall be paid by Purchaser to Seller or shall be netted against the aggregate
amount of any disputed Title Defect Adjustments that also are determined after
Closing.

 

(c)           The value of each of the Leases and Wells
for purposes of determining Purchase Price adjustments under this Section 3.4
(the “Allocated Value”) shall be determined in accordance with Schedule B which
Schedule shall be mutually agreed upon by the parties. The amount of the Defect
Adjustment for a Defective Interest or Title Benefit shall be the Allocated
Value thereof if the Defective Interest or Title Benefit constitutes the entire
property given an Allocated Value. If the amount of a Defect Adjustment cannot
be determined directly because the Defective Interests or Title Benefit
constitute a property or interest included within, but not totally comprising,
the Assets to which an Allocated Value is given, Purchaser and Seller shall
proportionately reduce the Allocated Value to reflect the present or potential
impact of the Title Defect or Title Benefit. The amount of any Defect
Adjustment shall reflect the anticipated reduction or increase of the Allocated
Value for the affected property caused by the breach of title warranty or Title
Benefit, taking into account the method for arriving at such Allocated Value,
the legal and practical effect of the Title Defect or Title Benefit or other
breach, the probability of adverse impact of the Title Defect or breach of
title warranty on the use and enjoyment of the property interest affected, and
the potential economic effect of the Title Defect or breach of title warranty
or Title Benefit over the life of the property involved.

 

(d)           If any claimed Title Defect has not been
resolved on the date of Closing, Seller may elect to not convey the affected
Asset at Closing, the Allocated Value applicable to such Asset shall reduce the
total consideration (prior to adjustments) to be paid at Closing by Purchaser
to Seller, and the following provisions shall apply:

 

(i)            Seller shall continue to use its
commercially reasonable efforts to cure the claimed Title Defect applicable to
such Asset, and if so cured on or before March 31, 2010, the Asset shall
thereupon be conveyed to Purchaser by Purchaser’s paying cash in the amount of
the Allocated Value with respect to

 

12

 

such Asset and the
Closing shall thereupon be deemed to have occurred as to such Asset, with
effect from the original date of Closing, or

 

(ii)           If the claimed Title Defect is not cured
or waived on or before March 31, 2010, Seller and Purchaser shall
terminate this Agreement as to the Asset affected by the unwaived Title Defect.

 

If pursuant to the
foregoing provisions of this Section 3.4, any Asset is conveyed from
Seller to Purchaser hereunder after the date of initial Closing hereunder, all
of the remaining terms and provisions hereof shall apply thereto including
without limitation the purchase price adjustments pursuant to Section 2.4,
except that, other than the necessity for eliminating the claimed Title
Defects, all other conditions to Closing shall have been deemed satisfied as of
the date of Closing.

 

(e)           Notwithstanding any claimed Title Defect,
Purchaser shall have the right  at any time up to the Closing Date to waive any such
claim, and purchase the affected property without reduction of the Purchase
Price.

 

Section 3.5             Casualty Loss.

 

If, prior to the Closing,
any portion of the Wells or related equipment is destroyed or impaired by fire
or other casualty, Purchaser may elect:

 

(a)           to treat the Assets so affected by such
destruction as Defective Interests in accordance with Section 3.4, or

 

(b)           to purchase such Assets notwithstanding
any such destruction (without adjustment to the Preliminary Purchase Price
therefor), in which case, Seller shall, at the Closing, pay to Purchaser all
sums paid to Seller by third-parties (including insurance proceeds relating
thereto) and assign to Purchaser all sums to which Seller is entitled, as the
case may be, by reason of the destruction of such Wells and the underlying
Assets to be assigned to Purchaser and shall assign, transfer and set over unto
Purchaser all of the right, title and interest of Seller in and to any unpaid
awards or other payments from third-parties arising out of the destruction of
such Wells and the Assets to be assigned to Purchaser.

 

Prior to the Closing,
Seller shall not voluntarily compromise, settle or adjust any amounts payable
by reason of any destruction of such Wells and the underlying Assets without
first obtaining the written consent of Purchaser.

 

Section 3.6             Identification of Additional Defective Interests.

 

(a)           If any preferential purchase right is
exercised prior to or after the  Closing, Purchaser may elect to treat that portion of
the Assets affected by such

 

13

 

preferential right as a
Defective Interest. If Seller receives notice of such exercise prior to
Closing, Seller shall give Purchaser notice thereof in accordance with Section 3.4(a) prior
to the Closing, in which event the property affected by such preferential
purchase right shall be treated as a Defective Interest. If Seller or Purchaser
receives notice of such exercise after the Closing, the party receiving such
notice shall promptly give notice to the other party, and Purchaser shall
convey the affected property interest to the holder of the preferential
purchase right upon receipt of the Allocated Value attributable thereto from
such party.

 

(b)           If, prior to the Closing Date, Purchaser
or Seller become aware of any suit, action or other proceeding before any court
or government agency other than those listed in Schedule C that would result in
loss or impairment of Seller’s title to any portion of the Assets, or a portion
of the value thereof, Purchaser may elect to treat that portion of the Assets
affected thereby as a Defective Interest by giving Seller notice thereof in
accordance with Section 3.4(a) no later than the Closing Date, in
which event the procedures specified in Section 3.4 shall apply to the
property affected by such proceeding.

 

(c)           If with respect to any preferential purchase
rights and required third-party consents to assignment and similar agreements,
one or more of the conditions set forth in Section 3.3(c)(2) has not
been met prior to the Closing, Purchaser may elect to treat that portion of the
Assets affected thereby as a Defective Interest by giving Seller notice thereof
in accordance with Section 3.4(a) no later than the Closing Date, in
which event the procedures specified in Section 3.4 shall apply to the
property affected by such third-party right.

 

Section 3.7             Termination Due to Title Matters and Conditions.

 

If, prior to Closing, the
aggregate amount of the value of (a) all Defect Adjustments asserted in
good faith under this Article III and (b) all adjustments for
Conditions asserted in good faith pursuant to Section 13.2(a), equals or
exceeds twenty percent (20%) of the Preliminary Purchase Price, then either
party, at its option exercised by the giving of written notice to the other
party not later than the Closing, may elect to terminate this Agreement, in
which event Seller and Purchaser shall be under no obligation to each other
with regard to the purchase and sale of any of the Assets, such termination to
be without liability to either party. Failure of either party to give timely
notice to the other party of an election to terminate this Agreement pursuant
to this Section 3.7 shall be deemed an election not to terminate this
Agreement.

 

14

 

Section 3.8             Title Benefits.

 

(a)           If a Party discovers any Title Benefit
affecting the Assets, it shall promptly notify the other Party in writing
thereof on or before the expiration of the Defective Interest Notice Date.
Subject to Section 3.4(a), Sellers shall be entitled to an upward
adjustment to the Purchase Price pursuant to Section 2.4(a)(vi) with
respect to all Title Benefits, in an amount determined in accordance with Section 3.4(c).
For purposes of this Agreement, the term “Title Benefit” shall mean
Sellers’ Net Revenue Interest in any Asset is greater than that set forth in
Schedule B or Sellers’ Working Interest in any Asset less than that set forth
in Schedule B (without a corresponding decrease in the Net Revenue Interest).
Any matters that may constitute Title Benefits, but of which Purchaser has not
been specifically notified by Sellers in accordance with the foregoing, shall
be deemed to have been waived by Sellers for all purposes.

 

(b)           Subject to Section 3.4(a), the
aggregate amount of undisputed Title Benefits shall be netted against the
aggregate amount of undisputed Defect Adjustments prior to any adjustment of
the Purchase Price at Closing pursuant to Section 2.4.

 

(c)           If with respect to a Title Benefit the
Parties have not agreed on the amount of the upward Purchase Price adjustment
or have not otherwise agreed on such amount prior to the Closing Date, Seller
or Purchaser shall have the right to elect to have such Purchase Price adjustment
determined pursuant to Section 3.4(b). If the amount of such adjustment is
not determined pursuant to this Agreement by the Closing, the undisputed
portion of the Purchase Price with respect to the Asset affected by such Title
Benefit shall be paid by Purchaser at the Closing and, subject to Section 3.4(b),
upon determination of the amount of such adjustment, any unpaid portion thereof
shall be paid by Purchaser to Sellers or shall be netted against the aggregate
amount of any disputed Title Defect Adjustments that also are determined after
Closing.

 

ARTICLE IV

SELLER’S REPRESENTATIONS AND WARRANTIES

 

Seller represents
and warrants to Purchaser as follows:

 

Section 4.1             Organization, Standing and Power.

 

Forest Oil Corporation is
a corporation duly organized, validly existing and in good standing under the
laws of the state of New York and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Forest Oil Permian Corporation is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has all requisite corporate

 

15

 

power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. Seller is duly qualified to carry on its business in each state
identified in Schedule A-1 and Schedule A-2 where failure to so qualify would
have a materially adverse effect upon its business or properties in such state.

 

Section 4.2             Authority and Enforceability.

 

The execution and
delivery by Seller of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
corporate action, on the part of Seller. This Agreement is the valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability and to general equity
principles. Neither the execution and delivery by Seller of this Agreement nor
the consummation of the transactions contemplated hereby, nor compliance by
Seller with any of the provisions hereof, will

 

(a)           conflict with or result in a breach of
any provision of Seller’s certificate of incorporation or bylaws,

 

(b)           except with respect to third-party
consents or waivers required in connection with agreements and properties to be
assigned pursuant to this Agreement (it being understood that Seller will make
reasonable efforts to obtain such required consents or waivers) result in a
material default (with due notice or lapse of time or both) or give rise to any
right of termination, cancellation or acceleration under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license or
agreement to which Seller is a party or by which Seller or any of Seller’s
properties or assets may be bound or,

 

(c)           violate any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to any Seller, or
any Seller’s properties or assets, assuming receipt of all routine governmental
consents normally acquired after the consummation of transactions such as
transactions of the nature contemplated by this Agreement, except, in any of
(a)-(c), where any such foregoing effect would not be likely to affect
Purchaser’s ability to own, possess, control or enjoy the Assets.

 

Section 4.3             Claims Affecting the Assets.

 

Except as disclosed on
Schedule C, to Seller’s knowledge there is no suit, action, claim,
investigation or inquiry by any person or entity or by any administrative
agency or governmental body and no legal, administrative or arbitration
proceeding pending, or to Seller’s knowledge, threatened against or affecting
the Assets. Schedule C lists all actions, suits, claims, proceedings, agency
enforcement actions or investigations pending affecting the Assets or the
ownership or operation thereof to the knowledge of Seller.

 

16

 

Section 4.4             Claims Affecting the Sale.

 

Except as disclosed on
Schedule C, to Seller’s knowledge there is no suit, action, claim,
investigation or inquiry by any person or entity or by any administrative
agency or governmental body and no legal, administrative or arbitration
proceeding pending, or to Seller’s knowledge, threatened against Seller or any
Affiliate of Seller which has affected or could affect Seller’s ability to
consummate the transactions contemplated by this Agreement. In this Agreement,
“Affiliate” means any person or entity which controls, is controlled by or is
under common control with, the subject person or entity.

 

Section 4.5             No Demands.

 

Except as disclosed on
Schedule C, Seller has received no notice of any claimed defaults, offsets or
cancellations from any lessors with respect to the Leases, and Seller has no
knowledge of the existence of any default existing with respect to any of the
Leases or any express or implied term of any Lease.

 

Section 4.6             Taxes.

 

(a)          To Seller’s knowledge all ad valorem,
real property, personal property, production, severance, excise and other taxes
applicable to the ownership and operation of the Assets prior to the Effective
Time have been or will be duly and timely paid except as may be contested by
Seller in good faith.

 

(b)         Except
as set forth on Schedule 4.6, (i) none of the Assets is deemed to be held
by a “tax partnership” for federal (and any corresponding state or local)
income tax purposes, and (ii) with respect to any Assets excepted from
clause (i), such “tax partnership” has in effect an election under Section 754
of the Internal Revenue Code of 1986, as amended (and any corresponding state
or local income tax statue).

 

(c)          Seller is not engaged, and has not held
itself out as being engaged, in the business of selling the Assets or property
similar to the Assets.

 

Section 4.7             Leases.

 

To the knowledge of
Seller:

 

(a)           The Leases have been maintained according
to their terms, in compliance with the agreements to which the Leases are
subject; and

 

(b)           The Leases are presently in full force
and effect; and all other oil and gas leases covering the Lands have expired
and are no longer of any force or effect.

 

17

 

Section 4.8             Non-Foreign Representation.

 

Seller is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate (as those terms are defined in Internal Revenue Code and Income
Tax Regulations). If requested by Purchaser, a non-foreign affidavit or
certificate of non-foreign status confirming such representation will be
provided at Closing.

 

Section 4.9             Commitments for Expenditures.

 

Except as set forth on
Schedule E there are no outstanding authorities for expenditures (AFE’s) which
Seller has received from a third party operator, but has not responded to.

 

Section 4.10           Broker’s Fees.

 

Seller has not made any
agreement with respect to any broker’s or finder’s fees arising out of or in
any way related to the transactions contemplated by this Agreement for which
Purchaser will have any liability.

 

Section 4.11           Gas Imbalances.

 

Except as disclosed on
Schedule 4.11, to Seller’s knowledge there are no gas imbalances with co-owners
in any well, unit, field or contract area or with any gatherer, processor or
transporter.

 

ARTICLE V

PURCHASER’S REPRESENTATIONS AND WARRANTIES

 

Section 5.1             Organization, Standing and Power.

 

Purchaser is a Delaware
limited liability company duly organized, validly existing and in good standing
under the laws of the state of its organization and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Purchaser is duly qualified to carry on its business in
each state identified in Schedule A-1 and Schedule A-2 where the failure to so
qualify would have a materially adverse effect on Purchaser’s business or
properties in such state.

 

Section 5.2             Authority and Enforceability.

 

The execution and
delivery by Purchaser of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly and validly authorized by all
necessary corporate action on the part of Purchaser. This Agreement is the
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
and to general equity principles. Neither the execution and delivery by
Purchaser

 

18

 

of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by
Purchaser with any of the provisions hereof, will

 

(a)           conflict with or result in a breach of
any provision of its certificate of organization or operating agreement,

 

(b)           result in a material default (with due
notice or lapse of time or both) or give rise to any right of termination,
cancellation or acceleration under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license or agreement to which Purchaser
is a party or by which it or any of its properties or assets may be bound or

 

(c)           violate any order, writ, injunction,
judgment, decree, statute, rule or regulation applicable to Purchaser, or
any of its properties or assets, assuming receipt of all routine governmental
consents normally acquired after the consummation of transactions such as
transactions of the nature contemplated by this Agreement.

 

Section 5.3            Independent Evaluation.

 

Purchaser is knowledgeable
and experienced in the evaluation, acquisition and operation of oil and gas
properties. Except as set forth in this Agreement, Purchaser acknowledges that
Seller has made no representations or warranties as to the accuracy or
completeness of such information, and, in entering into and performing this
Agreement, Purchaser has relied and will rely solely upon its independent
investigation of, and upon its own knowledge and experience and that of its
advisors’ with respect to, the Assets and their value.

 

Section 5.4          Suits
Affecting the Sale.

 

To Purchaser’s knowledge
there is no suit, action, claim, investigation or inquiry by any person or
entity or by any administrative agency or governmental body and no legal,
administrative or arbitration proceeding pending or, to Purchaser’s -
knowledge, threatened against Purchaser or any Affiliate of Purchaser which has
affected or could materially affect Purchaser’s ability to consummate the
transactions contemplated by this Agreement.

 

Section 5.5          Eligibility.

 

The Purchaser is eligible
under all applicable laws and regulations to own the Assets, including, without
limitation, the Leases.

 

Section 5.6           Financing.

 

Purchaser has the
financial ability to purchase the Assets, and Closing of the transaction is not
contingent upon obtaining financing.

 

19

 

ARTICLE VI

ASSUMPTION OF OBLIGATIONS AND INDEMNIFICATION

 

Section 6.1            Assumption of Certain Liabilities and Obligations by
Purchaser.

 

If the Closing occurs, (a) Purchaser
assumes all obligations that are attributable to the Assets on or after the
Effective Time including, but not limited to, any obligation for make-up gas
according to the terms and conditions of the applicable gas contracts, and all
obligations to properly plug and abandon all wells, pipelines and other
facilities now or thereafter located on the Land or the Leases (regardless of
whether any such obligation to plug and abandon is attributable to periods of
time prior to or after the Effective Time, regardless of whether any such well
or facility was listed on any exhibit hereto, and regardless of whether any
such obligation arises from the failure of Seller to properly or timely plug
and abandon any such well or facility) and restore the surface of the Land and
the Leases in accordance with applicable lease or other agreements and governmental
(including environmental) laws, orders and regulations, and (b) Purchaser
agrees to execute and deliver any specific assumption agreements, bonds, or
other financial assurances, if any, required to effectuate the assumption of
such obligations.

 

Section 6.2            Indemnification by Purchaser.

 

If the Closing occurs
Purchaser agrees to release, indemnify, defend and hold harmless Seller, its
agents and representatives from and against any and all suits, judgments,
damages, claims, liabilities, losses, costs and expenses (including court costs
and reasonable attorney’s fees)

 

(a)           that are attributable to the use,
ownership and operation of the Assets arising and attributable to periods of
time after the Effective Time (but including, the obligation to properly plug
and abandon all wells now or hereafter located on the Leases), regardless of
whether Seller, its agents and representatives were wholly or partially
negligent or otherwise at fault,

 

(b)           that arise out of any breach by Purchaser
of any representation, warranty, covenant or agreement hereunder.

 

Section 6.3            Indemnification by Seller.

 

If the Closing occurs,
Seller agrees, for a period of six (6) months after the Effective Time, to
release, indemnify, defend and hold harmless Purchaser from and against any and
all suits, judgments, damages, claims, liabilities, losses, costs and expenses
(including, without limitation, court costs and reasonable attorneys’ fees)

 

(i)            that are attributable to use, ownership
or operation of the Assets attributable to periods of time prior to the
Effective Time (other than relating to the

 

20

 

obligation to properly
plug and abandon wells located on the Leases) regardless of whether Purchaser
was wholly or partially negligent or otherwise at fault, or

 

(ii)           that arise out of any breach by Seller of
any representation, warranty, covenant or agreement hereunder, including the
special warranty of title contained in the conveyances to be delivered at
closing;

 

provided, however, that
such release, indemnity, defense and hold harmless obligations shall not apply
to (A) any amount that was taken into account as an adjustment to the
Purchase Price pursuant to the provisions hereof, (B) any liability of
Purchaser to Seller under the provisions of this Agreement, and (C) any
amount in excess of ten percent (10%) of the Purchase Price. Provided,
notwithstanding the foregoing, such release, indemnity, defense and hold
harmless obligations shall remain effective indefinitely for suits, judgments,
damages, claims, liabilities, losses, costs and expenses (including, without
limitation, court costs and reasonable attorney’s fees) that (x) arise out
of any breach by Seller of any representation or warranty made under Section 4.1
or the first two sentences of subsection (a) of Section 4.2 or (y) relate
to the matters disclosed on Schedule C.

 

Section 6.4             Interpretation.

 

The provisions of each of
the foregoing Sections 6.2 and 6.3 shall be interpreted as follows:

 

(a)           The indemnity provided for by each of
such Sections shall extend to any loss, cost, expense, liability or damage (“Loss”)
incurred or suffered by the indemnified party, including reasonable fees and
expenses of attorneys, technical experts and expert witnesses reasonably
incident to matters indemnified against. The indemnity provided for in Section 6.3
with respect to a breach or failure of a special warranty of title of any
interest contained in the conveyance shall be limited in amount to the
Allocated Value for each interest, reduced by the value of production from the
interest actually received by Purchaser (to the extent such production received
is not subject to any repayment or offset), net of expenses incurred for the
interest by the Purchaser, for which a special warranty of title was breached
or failed, but only in proportion to and to the extent of such breach or
failure. After the Defective Interest Notice Date (prior to which the
adjustment provisions of Section 3.4 also shall be in effect) and subject
to the provisions of Section 3.6, the indemnity provided for herein shall
be the sole and exclusive remedy, as between the parties hereto, for a breach
or failure of a warranty or representation of title. The adjustment provisions
for breaches of title representations and warranties as set forth in Section 3.4
are applicable only as to breaches of title representations and warranties for
which notice has been given on or prior to the Defective Interest Notice Date
subject to the provisions of Section 3.6. Subject to Section 3.6,
after the Defective Interest Notice Date, the exclusive applicable
representations and warranties of title shall be the special warranty of title
by, through and under Seller, contained in the conveyances delivered pursuant
hereto, and not otherwise.

 

21

 

(b)           The amount of each payment claimed by an
indemnified party to be owing as described in each of such Sections, together
with a list identifying to the extent reasonably possible each separate item of
Loss for which payment is so claimed, shall be set forth by such party in a
statement delivered to the indemnifying party or parties, as the case may be,
setting forth the basis of such claim and shall be paid by such indemnifying
party or parties, as the case may be, as and to the extent required herein with
thirty (30) days after receipt of such statement.

 

(c)           Except as set forth in Section 3.5, Section 8.2,
Section 8.3, and Article X of this Agreement, and as may be permitted
under the conveyances delivered hereunder, the remedies set forth in this Article VI
shall be the sole and exclusive remedies of Seller and Purchaser for any breach
of a representation, warranty or covenant, or otherwise.

 

Section 6.5            Notices.

 

(a)           Within sixty (60) days after notification
to an indemnified party with respect to any claim or legal action or other
matter that may or could result in a Loss for which indemnification may be
sought under Article VI, but in any event in time sufficient for the
indemnifying party to contest any action, claim or proceeding that has become
the subject of proceedings before any court or tribunal, such indemnified party
shall give written notice of such claim, legal action or other matter to the
indemnifying party and, at the request of such indemnifying party, shall
furnish the indemnifying party or its counsel with copies of all pleadings and
other information with respect to such claim, legal action or other matter and
shall, at the election of the indemnifying party made within sixty (60) days after
receipt of such notice, permit the indemnifying party to assume control of such
claim, legal action or other matter (to the extent only that such claim, legal
action or other matter relates to a Loss for which the indemnifying party is
liable), including the determination of all appropriate actions, the
negotiation of settlements on behalf of the indemnified party, and the conduct,
of litigation, through attorneys of the indemnifying party’s choice. In the
event of such an election by the indemnifying party,

 

(i)            any expense incurred by the indemnified
party thereafter for investigation or defense of the matter shall be borne by
the indemnifying party, and

 

(ii)           the indemnified party shall give all
reasonable information and assistance, other than pecuniary, that the
indemnifying party shall deem reasonably necessary to the proper defense of
such claim, legal action, or other matter.

 

22

 

In the absence of such an
election, the indemnified party will use its commercially reasonable efforts to
defend any claim, legal action or other matter to which such other party’s
indemnifications under this Article VI applies.

 

(b)           Failure to provide timely notice pursuant
to subsection (a) of this Section 6.5 shall not deprive the party seeking
indemnification of its right to indemnifications pursuant to this Article VI,
although such party shall be liable for any damages occasioned by its delay in
affording the party entitled to notice with such notice and shall not be entitled
to indemnifications for any costs incurred during the period of such delay that
could reasonably have been avoided by the indemnifying party if timely notice
had been given.

 

ARTICLE VII

SELLER’S OBLIGATIONS PRIOR TO CLOSING

 

Section 7.1            Restrictions on Operations.

 

(a)           From the date hereof until the Closing
Date, Seller shall (or, with respect to non-operated Wells, shall use its
commercially reasonable efforts to cause the operator of all Wells in which it
owns working interests to):

 

(i)            not abandon any Well on any Lease capable
of commercial production, or release or abandon all or any part of the Assets
capable of commercial production, or release or abandon all or any portion of
the Leases without Purchaser’s written consent;

 

(ii)           not cause the Assets to be developed,
maintained or operated in a manner materially inconsistent with prior
operation;

 

(iii)          not
commence or agree to participate in any operation on the Assets anticipated to
cost in excess of one hundred thousand Dollars ($100,000.00) per operation net
to Seller’s interest without Purchaser’s written consent (except emergency
operations, operations required under presently existing contractual
obligations, and operations undertaken to avoid any penalty provision of any
applicable agreement or order);

 

(iv)          not create any lien, security interest or
other encumbrance with respect to the Assets (except for Permitted
Encumbrances), or, without Purchaser’s written consent, enter into any
agreement for the sale, disposition or encumbrance of any of the Assets, or
dedicate, sell, encumber or dispose of any oil and gas production, except in
the ordinary course of business on a contract which is terminable on not more
than thirty (30) days notice except production sold under a contract listed on Schedule
A-3;

 

23

 

(v)           not agree to any alterations in the
contracts included in or relating to a material portion of the Assets or enter
into any material new contracts relating to the Assets (other then contracts
terminable on not more than thirty (30) days notice) without Purchaser’s
written consent;

 

(vi)          maintain in force all insurance policies
covering the Assets;

 

(vii)         maintain
the Leases in full force and effect and comply with all express or implied covenants
contained therein (provided that this covenant shall not be deemed to expand
Seller’s title warranties beyond those expressly contained in this Agreement);

 

(viii)        furnish
Purchaser with copies of all AFE’s in excess of one hundred thousand dollars
($100,000.00) received or issued by Seller prior to the Closing.

 

(b)           From and after the date of this Agreement, until
Closing, Seller shall:

 

(i)            provide Purchaser with access (or, where
Seller is not an operator, use its commercially reasonable efforts to arrange
for access) to the Assets for inspection thereof at the sole cost, risk and
expense of Purchaser;

 

(ii)           use reasonable efforts to obtain any and
all necessary consents, waivers (including waiver of preferential purchase
rights), permissions and approvals of third parties or governmental authorities
in connection with the sale and transfer of the Assets other than approvals of
federal lease assignments to Purchaser;

 

(iii)          cause
to be filed all reports required to be filed by Seller with governmental
authorities relating to the Assets;

 

(iv)          provide prompt notice to Purchaser of any
notice received by Seller of a default, claim, obligation or suit which affects
any of the Assets;

 

(v)           notify Purchaser of any event, condition,
or occurrence which results in any of the representations and warranties made
herein to be untrue; and

 

(vi)          pay all costs and expenses in connection
with the operation of the Assets in a manner consistent with Seller’s historic
practice, including, without limitation, all property, ad valorem, severance,
production and other similar taxes except as such may be contested by Seller in
good faith.

 

24

 

Section 7.2            Operated Assets

 

Seller makes no
representations or warranties to Purchaser as to transferability or
assignability of operatorship of any Assets operated by Seller. Rights and
obligations associated with operatorship of such Assets are governed by
operating and similar agreements covering the Assets and will be decided in accordance
with the terms of such agreements. However, Seller will assist Purchaser in its
efforts to succeed Seller as operator of any Wells included in the Assets. For
all assets operated by Seller, Seller shall execute and deliver to Purchaser
and Purchaser shall promptly file the appropriate forms with the applicable
regulatory agency transferring operatorship of such Assets to Purchaser, to the
extent permitted or approved pursuant to the applicable operating agreement.
Seller agrees to provide Purchaser those services listed in the Transition
Services Agreement (“TSA”) attached hereto as Exhibit D for the term as
set forth in the TSA.

 

ARTICLE VIII

ADDITIONAL AGREEMENTS OF THE PARTIES

 

Section 8.1            Government Reviews and Filings.

 

Both prior to and after
the Closing, as appropriate, each of Seller and the Purchaser shall in a timely
manner

 

(a)           make required filings with, prepare
applications to and conduct negotiations with each governmental agency as to
which such filings, applications or negotiations are necessary or appropriate
for the consummation of the transactions contemplated hereby, and

 

(b)           provide such information as each may
reasonably request to make such filings, prepare such applications and conduct
such negotiations.

 

Seller shall cooperate
with and assist Purchaser in pursuing such filings, applications and
negotiations, and Purchasers shall cooperate with and assist Seller with
respect to such filings, applications and negotiations. Each party shall be
responsible for and shall make any governmental filings occasioned by the
ownership or structure of such party.

 

Section 8.2            Confidentiality.

 

Until completion of the
Closing (and without limitation in the event Closing should not occur for any
reason), except as required by law, Purchaser and its officers, agents and
representatives shall continue to be bound by the Confidentiality Agreement
between the parties dated November 10, 2009 (the “November Confidentiality
Agreement”); provided, however, that the parties agree the interviewing of, or
offer of employment to, employees of Seller by Purchaser shall not constitute a
breach of Purchaser’s or its affiliates’ obligations

 

25

 

under the November Confidentiality
Agreement or the Confidentiality Agreement between the parties dated August 12,
2009.

 

Section 8.3            Taxes.

 

(a)           Each party shall provide the other party
with reasonable information which may be required by the other party for the
purpose of preparing tax returns and responding to any audit by any taxing
jurisdiction. Each party shall cooperate with all reasonable requests of the
other party made in connection with contesting the imposition of taxes.
Notwithstanding anything to the contrary in this Agreement neither party shall
be required at any time to disclose to the other party any tax returns or other
confidential tax information other than property tax returns specific to the
Assets, as provided for in Section 1.2(f).

 

(b)           Seller and Purchaser shall report the
information required by Section 1060 of the Internal Revenue Code of 1986, as
amended (or any corresponding state or local income tax statute), in a manner
consistent with

 

(i)            the allocations set forth on Schedule B,
as adjusted pursuant to this Agreement and

 

(ii)           the requirements of such Section 1060.

 

(c)           All ad valorem taxes, real property
taxes, personal property taxes and similar obligations (“Property Taxes”)
attributable to the Assets with respect to the tax period in which the
Effective Time occurs shall be apportioned as of the Effective Time between
Seller and Purchaser based on the number of days in the calendar year the
Assets were owned by each party. The owner of record on the assessment date
shall file or cause to be filed all required reports and returns incident to
the Property Taxes and shall pay or cause to be paid to the taxing authorities
all Property Taxes relating to the tax period in which the Effective Time
occurs. If Seller is the owner of record on the assessment date, then Purchaser
shall pay to Seller Purchaser’s pro rata portion of Property Taxes within 30
days after receipt of Seller’s invoice therefor, except to the extent taken
into account as an adjustment to the Purchase Price pursuant to Section 2.4.
If Purchaser is the owner of record as of the assessment date then Seller shall
pay to Purchaser Seller’s pro rata portion of Property Taxes within 30 days
after receipt of Purchaser’s invoice therefor.

 

(d)           Subject to the provisions of Section 8.3(e),
Seller shall indemnify Purchaser for all liabilities that are assessed against
Purchaser for foreign, federal, state, local or Indian Tribal taxes (other than
income, franchise and similar taxes) in respect of the ownership or operation
of the Assets prior to the Effective Time, together with penalties and interest
thereon (provided such penalties and interest do not result from the
negligence, late filing, fraud or acts of misfeasance or malfeasance of
Purchaser), to

 

26

 

the extent such
liabilities exceed the amounts of such taxes paid by Seller; provided that
Seller shall be entitled to all refunds or rebates of taxes paid in respect of
the ownership or operation of the Assets prior to the Effective Time that may
be received by Seller or Purchaser. Subject to the provisions of Section 8.3(e),
Purchaser shall indemnify Seller for all liabilities which are assessed against
Seller for foreign, federal, state, local or Indian Tribal taxes (other than
income, franchise and similar taxes), together with penalties and interest
thereon (provided such penalties and interest do not result from the
negligence, late filing, fraud or acts of misfeasance or malfeasance of
Seller), to the extent such liabilities relate to the ownership or operation of
the Assets from and after the Effective Time; provided, however, that such
indemnity shall not apply to such taxes to the extent (but only to the extent)
such taxes are included in the determination of the Final Purchase Price, and
provided further, however, that Purchaser shall be entitled to all refunds or
rebates of taxes attributable to the Assets on or after the Effective Time that
may be received by Seller or Purchaser, except to the extent (but only to the
extent) such refunds or rebates are included in the determination of the Final
Purchase Price. For the avoidance of doubt, all income, franchise and similar
taxes attributable to the ownership, operation, or disposition of the Assets
for any period through the Closing Date shall remain the sole responsibility
and obligation of Seller.

 

(e)           In order for Seller or Purchaser (“Claimant”)
to make a claim against the other (“Indemnitor”) under this Section 8,
Claimant shall give prompt notice to Indemnitor of any liability for which
Claimant would claim indemnification under this Section 8.3, which notice
shall include the circumstances surrounding such liability. Indemnitor shall
then have the right but not the obligation, to contest such liability at its
sole cost and expense by giving written notice to Claimant of such election
within 30 days after Indemnitor receives Claimant’s notice. Should Indemnitor
fail to notify Claimant within such 30-day period, Indemnitor shall be deemed
to have elected not to contest such liability. Should Indemnitor elect (or be
deemed to have elected) not to contest such liability, Indemnitor shall pay the
full amount due under Section 8.3(d) in respect of such liability to
Claimant in cash within 30 days after Indemnitor elects (or is deemed to have
elected) not to contest such liability. Except as specifically provided in this
Section 8.3 with respect to certain tax issues which must be combined or
joined with other tax issues, if Indemnitor elects to contest any such
liability, Claimant shall give Indemnitor full authority to defend, adjust, compromise
or settle such liability and any action, suit, or proceeding in which
Indemnitor contests such liability, in the name of Claimant or otherwise as
Indemnitor shall elect. In any administrative or legal proceeding, Indemnitor
shall employ counsel selected by it and reasonably acceptable to Claimant. With
respect to tax issues incident to any such liability that must be combined or
joined with one or more other tax issues which Claimant desires to contest,
Claimant and Indemnitor shall cooperate fully, and control of any
administrative legal proceeding shall rest with the party having the greater
ultimate liability (including liability under Section 8.3(d) for the
taxes in dispute). The party in control may not adjust, compromise or settle
taxes which are contested by or on behalf of the other party without the
consent of the other party. With respect to any liability contested by

 

27

 

Indemnitor under the
terms of this Section 8.3(d), Indemnitor shall pay the full amount due
under Section 8.3(d) in respect of such liability to Claimant in cash
within 30 days after the liability is finally determined either by settlement
or pursuant to the final unappealable judgment of a court of competent
jurisdiction.

 

(f)            Purchaser shall pay and be liable for all
sales taxes occasioned by the sale of the Assets and all documentary, transfer,
filing, licensing, and recording fees required in connection with the
processing, filing, licensing or recording of any assignments, titles, or bills
of sale. Seller will assist Buyer in establishing the applicability of the
Texas and New Mexico isolated or occasional sale exemptions and any other
exemption that is applicable to the sale of the Assets.

 

Section 8.4            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 attributable to the ownership and operation of the Assets (a) for all
periods of time from and subsequent to the Effective Time, shall be the sole
property and entitlement of Purchaser, and to the extent received by Seller,
Seller shall within 10 Business Days after such receipt, fully disclose,
account for and transmit same to Purchaser and (b) for all periods of time
prior to the Effective Time, shall be the sole property and entitlement of
Seller and, to the extent received by Purchaser, Purchaser shall fully
disclose, account for and transmit same to Seller within 10 Business Days.
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 costs, expenses,
disbursements, obligations and liabilities attributable to the Assets (i) for
periods of time prior to the Effective Time, regardless of when due or payable,
shall be the sole obligation of Seller and Seller shall promptly pay, or if
paid by Purchaser, promptly reimburse Purchaser for and hold Purchaser harmless
from and against same and (ii) for periods of time from and subsequent to
the Effective Time, regardless of when due or payable, shall be the sole
obligation of Purchaser and Purchaser shall promptly pay, or if paid by Seller,
promptly reimburse Seller for and hold Seller harmless from and against same.

 

Section 8.5            Suspense Accounts.

 

At the Closing, Seller
agrees to transfer to Purchaser and provide information regarding all of Seller’s
payable accounts holding monies in suspense attributable to the Assets.
Purchaser agrees to take and apply such monies in a manner consistent with
prudent oil and gas business practices and to indemnify Seller against any
claim relating to the failure to pay such funds after the Closing.

 

28

 

Section 8.6                                      Hart-Scott-Rodino Filings.

 

The parties hereto
acknowledge that they are subject to the Hart-Scott-Rodino Act and the rules and
regulations of the Federal Trade Commission thereunder. Purchaser shall prepare
all necessary filings in connection with the transactions contemplated by this
Agreement under such act, rules and regulations.

 

ARTICLE IX

CONDITIONS TO CLOSING

 

Section 9.1                                      Seller’s Conditions.

 

The obligations of
Seller at the Closing are subject, at the option of Seller, to the satisfaction
at or prior to the Closing of the following conditions.

 

(a)           All representations and warranties of Purchaser
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 Purchaser shall have performed and satisfied all agreements in
all material respects required by this Agreement to be performed and satisfied
by Purchaser at or prior to the Closing.

 

(b)           Seller shall have received a certificate dated as of
the Closing, executed by the President or any Vice President of Purchaser, to
the effect that the statements in Section 9.1(a) are true in all
material respects at and as of the Closing, and

 

(c)           No order shall have been entered by any court or
governmental agency having jurisdiction over the parties or the subject matter
of this contract that restrains or prohibits the purchase and sale contemplated
by this Agreement and which remains in effect at the time of Closing, except

 

(i)            any order affecting a matter with respect to which
Seller has been adequately indemnified by Purchaser or

 

(ii)           any order affecting only a portion of the Assets,
which portion of the Assets could be treated as a Casualty Loss in accordance
with Section 3.5.

 

(d)           Seller shall have been provided with such
documentation or other assurance as Seller deems necessary that Purchaser has
obtained all bonds or approvals as may be required for assigning, owning or
operating the Assets and all obligations associated with the Assets; or as may
be necessary to comply with Purchaser’s assumption of obligations as described
in Section 6.1, hereof.

 

29

 

(e)           The transaction contemplated hereby shall have been
approved by all applicable governmental authorities under the Hart-Scott-Rodino
Act.

 

Section 9.2                                      Purchaser’s
Conditions.

 

The obligations of
Purchaser at the Closing are subject, at the option of Purchaser, 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 were made at and as of the Closing, and Seller shall have
performed and satisfied all agreements in all material respects required by
this Agreement to be performed and satisfied by Seller at or prior to the
Closing.

 

(b)           Purchaser shall have received a certificate dated as
of the Closing, executed by the President or any Vice President of Seller, to
the effect that

 

(i)            the statements in Section 9.2(a) are true in
all material respects at and as of the Closing, and

 

(ii)           the covenants and agreements contained in Article VII
have been performed in all material respects.

 

(c)           No order shall have been entered by any court or
governmental agency having jurisdiction over the parties or the subject matter
of this contract that restrains or prohibits the purchase and sale contemplated
by this Agreement and which remains in effect at the time of closing, except

 

(i)            any order affecting a matter with respect to which
Purchaser has been adequately indemnified by Seller or

 

(ii)           any order affecting only a portion of the Assets,
which portion of the Assets could be treated as Casualty Loss in accordance
with Section 3.5.

 

(d)           The transaction contemplated hereby shall have been
approved by all applicable governmental authorities under the Hart-Scott-Rodino
Act.

 

ARTICLE X

RIGHT OF TERMINATION AND ABANDONMENT

 

Section 10.1                                Termination.

 

This Agreement and
the transactions contemplated hereby may be terminated in the following
instances:

 

30

 

(a)             by Seller if the conditions set forth in Section 9.1
are not satisfied or waived as of the Closing Date;

 

(b)             by Purchaser if the conditions set forth in Section 9.2
are not satisfied or waived as of the Closing Date;

 

(c)             by Seller if, through no fault of Seller, the Closing
does not occur on or before January 31, 2010;

 

(d)             by Purchaser if, through no fault of Purchaser, the
Closing does not occur on or before January 31, 2010;

 

(e)             by either party as provided in Section 3.7; or

 

(f)              at any time by the mutual written agreement of
Purchaser and Seller and in accordance with any other express provisions of
this Agreement.

 

Section 10.2           Liabilities Upon Termination.

 

If this Agreement
is terminated pursuant to Section 10.1(a) or (c) above, or as a
result of the negligence, fault or willful failure of Purchaser to perform its
obligations hereunder, Seller shall be entitled to retain the Performance
Deposit, plus any interest earned thereon, as liquidated damages for lost
opportunities and not as a penalty. Upon termination of this Agreement by
Seller pursuant to an express right to do so set forth herein, Seller shall be free
to enjoy immediately all rights of ownership of the Assets and to sell,
transfer, encumber and otherwise dispose of the Assets to any party without any
restriction under this Agreement. If this Agreement is terminated pursuant to Section 10.1(b),
(d) or (e) above, or as a result of the negligence, fault or willful
failure of Seller to perform its obligations hereunder, Seller shall return the
Performance Deposit to Purchaser plus any interest earned thereon. In no event
shall either party ever be entitled to consequential or speculative damages
including, without limitation, lost profits.

 

ARTICLE XI

CLOSING MATTERS

 

Section 11.1           Time and Place of Closing.

 

(a)           The purchase by Purchaser and the sale by Seller of
the Assets, as contemplated by this Agreement (the “Closing”), shall, unless
otherwise agreed to in writing by Purchaser and Seller, take place at the
offices of Seller. The time of the Closing shall be at 10:00 a.m., local
time, on December 31, 2009, or at such other time as the parties may determine.

 

31

 

(b)           The date on which the Closing occurs is
referred to herein as the "Closing Date.”

 

Section 11.2           Closing Obligations.

 

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

 

(a)           Seller shall execute, acknowledge and deliver to
Purchaser

 

(i)            a General Assignment and Bill of Sale of the Assets in
the form of Schedule F-1 attached hereto,

 

(ii)           assignments, bills of sale and conveyances (in
sufficient counterparts to facilitate recording) substantially in the form of
Schedule F-2 (the “Conveyance”) together with any transfer forms to be filed
with governmental and tribal agencies conveying the Leases and Wells effective
as of the Effective Time to Purchaser,

 

(iii)          if requested by Purchaser, letters in lieu of transfer
orders in a form acceptable to both parties, and

 

(iv)          deeds, assignments, bills of sale and any other
specialized instruments of transfer necessary to convey to or perfect in
Purchaser the Assets other than the Leases and Wells;

 

(b)           Seller and Purchaser shall execute and deliver a
preliminary settlement statement (the “Preliminary Settlement Statement”)
prepared by Seller that shall set forth the Estimated Final Purchase Price
together with the calculations of all adjustments using for such adjustments
the best information available;

 

(c)           Purchaser shall deliver to Seller the Estimated Final
Purchase Price by wire transfer in immediately available funds;

 

(d)           Seller shall deliver to Purchaser possession of the
Assets;

 

(e)           Seller shall deliver to the Purchaser the certificate
referred to in Section 9.2(b).

 

(f)            Purchaser shall deliver to Seller the certificate
referred to in Section 9.1(b).

 

32

 

(g)           Purchaser shall assume the obligation to disburse all
royalty, overriding royalty and other payments due under or with respect to the
Leases to the extent Seller was responsible for such payments prior to the
Closing.

 

(h)           Seller and Purchaser shall execute and deliver all
other documents or agreements called for herein.

 

ARTICLE XII

POST-CLOSING OBLIGATIONS

 

Section 12.1           Post-Closing Adjustments.

 

As soon as
practicable after the Closing, but in no event later than one hundred eighty
(180) days thereafter, Seller shall prepare and deliver to Purchaser a final
settlement statement (the “Final Settlement Statement”) setting forth each
adjustment or payment that was not finally determined as of the Closing and
showing the calculation of such adjustments and the resulting Final Purchase
Price. Seller shall make its workpapers and other information available to
Purchaser to review in order to confirm the adjustments shown on Seller’s
draft. As soon as practicable after receipt of the Final Settlement Statement,
but in no event later than sixty (60) days thereafter, Purchaser shall deliver
to Seller a written report containing any changes that Purchaser proposes to
make to the Final Settlement Statement. Any failure by Purchaser to deliver to
Seller the written report detailing Purchaser’s proposed changes to the Final
Settlement Statement within sixty (60) days following Purchaser’s receipt of
the Final Settlement Statement shall be deemed an acceptance by Purchaser of
the Final Settlement Statement as submitted by Seller. The parties shall agree
with respect to the changes proposed by Purchaser, if any, no later than sixty
(60) days after Seller receives from Purchaser the written report described
above containing Purchaser’s proposed changes. If the Purchaser and the Seller
cannot then agree upon the Final Settlement Statement, the determination of the
amount of the Final Settlement Statement shall be submitted to a mutually
agreed firm of independent public accountants (the “Accounting Firm”). The
determination by the Accounting Firm shall be conclusive and binding on the
parties hereto and shall be enforceable against any party hereto in any court
of competent jurisdiction. Any costs and expenses incurred by the Accounting
Firm pursuant to this Section 12.1 shall be borne by the Seller and the
Purchaser equally. The date upon which such agreement is reached or upon which
the Final Purchase Price is established, shall be herein called the “Final
Settlement Date.” In the event

 

(a)           the Final Purchase Price is more than the Estimated
Final Purchase Price, Purchaser shall pay to Seller the amount of such
difference, or

 

(b)           the Final Purchase Price is less than the Estimated
Final Purchase Price, Seller shall pay to Purchaser the amount of such
difference,

 

33

 

in either event by wire
transfer in immediately available funds or, if the amount of such difference is
less than Twenty-Five Thousand Dollars ($25,000.00), by check. Payment by
Purchaser or Seller, as the case may be, shall be within five (5) days of
the Final Settlement Date.

 

Section 12.2           Files and Records.

 

Within thirty (30)
Business Days following the Closing Date, Seller shall deliver to Purchaser at
Purchaser’s expense the Records, to the extent not previously delivered. For a
period of seven (7) years after the Closing Date, Purchaser shall maintain
the Records, and Seller shall have access thereto during normal business hours
upon advance written notice to Purchaser to audit the same in connection with
federal, state or local regulatory or tax matters, resolution of existing
disputes or contract compliance matters affecting Seller.

 

Section 12.3           Further Assurances.

 

From time to time
after Closing, Seller and Purchaser shall execute, acknowledge and deliver to
the other such further instruments, and take such other action as may be
reasonably requested in order more effectively to assure to said party all of
the respective properties, rights, titles, interests and estates intended to be
assigned and delivered in consummation of the transactions contemplated by this
Agreement.

 

Section 12.4           Reviewed and Audited Financial Statements and Reserve
Disclosures.

 

From time to time
after Closing, Seller shall provide Purchaser such cooperation, information and
assistance as shall be requested by Purchaser to enable Purchaser and its
independent registered public accounting firm to produce (a) an audited
profit and loss statement and audited reserve disclosures, in each case for the
fiscal year ended December 31, 2008 as required by Rule 3-05 of
Regulation S-X promulgated by the Securities and Exchange Commission (“Rule 3-05”),
(b) reviewed profit and loss statements and reviewed reserve disclosures,
in each case for the nine-month periods ended September 30, 2008 and September 30,
2009 and the year-to-date period ending at the Effective Time as required by Rule 3-05,
and (c) such other financial statements as may be required by contract,
law, rule or regulation, including, without limitation, the provision of
management representation letters related to the operation of the Assets during
such periods.

 

ARTICLE XIII

ENVIRONMENTAL MATTERS

 

Section 13.1                                Purchaser Acknowledgment Concerning
Possible Contamination of the Assets.

 

Purchaser is aware
that the Assets have been used for exploration, development, and production of
oil and gas and that there may be petroleum, produced water, wastes, or other

 

34

 

materials located on or
under the Assets or associated with the Assets. Equipment and sites included in
the Assets may contain asbestos, hazardous substances, or naturally-occurring
radioactive materials (“NORM”). NORM may affix or attach itself to the inside
of wells, materials, and equipment as scale, or in other forms; the wells,
materials, and equipment located on the Assets or included in the Assets may
contain NORM and other wastes or hazardous substances; and NORM-containing
material and other wastes or hazardous substances may have been buried, come in
contact with the soil, or otherwise been disposed of on the Assets. Special
procedures may be required for the remediation, removal, transportation, or
disposal of wastes, asbestos, hazardous substances, and NORM from the Assets.

 

Purchaser will
assume liability for the assessment, remediation, removal, transportation, and
disposal of wastes, asbestos, hazardous substances, and NORM from the Assets
and associated activities and will conduct these activities in accordance with
applicable federal, state, and local laws, including statutes, regulations,
orders, ordinances, and common law, currently enacted or enacted in the future
and relating to protection of public health, welfare, and the environment, including
those laws relating to storage, handling, and use of chemicals and other
hazardous materials; those relating to the generation, processing, treatment,
storage, transport, disposal, cleanup, remediation, or other management of
waste materials or hazardous substances of any kind; and those relating to the
protection of environmentally sensitive or protected areas (“Environmental Laws”).

 

Section 13.2           Adverse Environmental Conditions.

 

(a)           Purchaser will have until 5:00 P.M., Denver time,
on December 21, 2009 to notify Seller of any material adverse
environmental condition of the Assets that Purchaser finds unacceptable and
provide evidence of the condition to Seller. An environmental condition is a
material adverse environmental condition (“Condition”) only if all the
following criteria are met:

 

(i)            The environmental condition is required to be
remediated at the Effective Time under the Environmental Laws in effect at the
Effective Time.

 

(ii)           The total of the cost to remediate each environmental
condition identified by Purchaser to levels required by the Environmental Laws
in effect at the Effective Time is reasonably estimated to be more than one
hundred thousand dollars ($100,000) (net to Seller’s interest). Environmental
conditions may not be aggregated by type or category among more than one well
or facility for purposes of meeting this de minimis threshold of $100,000.

 

(iii)          The environmental condition was not disclosed on
Schedule G.

 

35

 

(b)           Seller will have
until 5:00 P.M., Denver Time, on December 29, 2009 if it determines
that a Condition may exist with respect to an Asset, to elect any of the
following:

 

(i)            adjust
the Allocated Value for an Asset by a mutually acceptable amount reflecting
Seller’s proportionate share, based on its working interest, of the cost
reasonably estimated to remediate a Condition affecting the Asset and adjust
the Purchase Price in accordance with Section 2.4 (b)(viii),

 

(ii)           remove
the affected Asset from this Agreement and adjust the Purchase Price by the
Allocated Value for the affected Asset in accordance with Section 2.4
(b)(viii);

 

(iii)          indemnify
the Purchaser for the Condition not to exceed the Allocated Value of the Asset;
or

 

(c)           If Seller and Purchaser
agree to an adjustment under subsection (b) (i), the adjustment will be
the cost to remediate the Condition, but only to the level required by the
Environmental Laws in effect at the Effective Time, not to exceed the Allocated
Value of the Asset, but only to the extent that the total value of all
Conditions exceeds one percent (1%) of the Preliminary Purchase Price. For
avoidance of doubt, Seller and Purchaser agree that the foregoing threshold
amount is a deductible.

 

Section 13.3           Disposal of Materials, Substances,
and Wastes; Compliance with Law.

 

Purchaser will store,
handle, transport, and dispose of or discharge all materials, substances, and
wastes from the Assets (including produced water, drilling fluids, NORM, and
other wastes), whether present before or after the Effective Time, in
accordance with applicable local, state, and federal laws and regulations.
Purchaser will keep records of the types, amounts, and location of materials,
substances, and wastes that are stored, transported, handled, discharged,
released, or disposed of onsite and offsite. When any lease terminates, an
interest in which has been assigned under this Agreement, Purchaser will
undertake additional testing, assessment, closure, reporting, or remedial
action with respect to the Assets affected by the termination as is necessary
to satisfy all local, state, or federal requirements in effect at that time and
necessary to restore the Assets.

 

ARTICLE XIV

MISCELLANEOUS

 

Section 14.1           Notices.

 

All communications
required or permitted under this Agreement shall be in writing and any
communication or delivery hereunder shall be deemed to have been duly made if
actually delivered or if mailed by registered or certified mail, postage
prepaid, or if sent by

 

36

 

overnight courier
service, charges prepaid, or if sent by telecopy or facsimile machine with
confirmation of a successful transmission, addressed to the party being
notified as set forth below. Any party may, by written notice so delivered to
the other, change the address to which delivery shall thereafter be made.
Notices to Seller and Purchaser shall be made at the addresses set forth below:

 

	
  (a)

  	
  If to Seller, to:

  	
  Forest Oil Corporation

  
	
   

  	
   

  	
  707 17th Street,
  Suite 3600 

  
	
   

  	
   

  	
  Denver, CO 80202

  
	
   

  	
   

  	
  FAX: (303) 812-1445

  
	
   

  	
   

  	
  ATTN: General Counsel

  
	
   

  	
   

  	
   

  
	
  (b)

  	
  If to Purchaser, to:

  	
  SandRidge Exploration
  and Production, LLC

  
	
   

  	
   

  	
  123 Robert S. Kerr
  Avenue

  
	
   

  	
   

  	
  Oklahoma City, OK 73102

  
	
   

  	
   

  	
  FAX: (405) 429-5983

  
	
   

  	
   

  	
  ATTN: General Counsel

  

 

All notices shall be
deemed given at the time of receipt by the party to which such notice is
addressed.

 

Section 14.2           Binding Effect.

 

This Agreement shall bind
and inure to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.

 

Section 14.3           Counterparts.

 

This Agreement may be
executed in any number of counterparts, which taken together shall constitute
one and the same instrument and each of which shall be considered an original
for all purposes.

 

Section 14.4           Expenses.

 

All expenses incurred by
Seller in connection with or related to the authorization, preparation or
execution of this Agreement, the conveyances and the Schedules hereto, and all
other matters related to the Closing, including without limitation, all fees
and expenses of counsel, engineers, accountants and financial advisors employed
by Seller shall be borne solely and entirely by Seller; and all such expenses
incurred by Purchaser shall be borne solely and entirely by Purchaser.

 

37

 

Section 14.5           Section Headings.

 

The Section headings
contained in this Agreement are for convenient reference only and shall not in
any way affect the meaning or interpretation of this Agreement.

 

Section 14.6           Entire Agreement.

 

This Agreement, the
documents to be executed hereunder, and the Schedules attached hereto
constitute the entire agreement between the parties hereto pertaining to the
subject matter hereof and supersede all prior agreements, understandings,
negotiations and discussions, whether oral or written of the parties pertaining
to the subject matter hereof, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as specifically set forth herein or in documents delivered
pursuant hereto. No supplement, amendment, alteration, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by
the parties hereto. All of the Schedules referred to in this Agreement are hereby
incorporated in this Agreement by reference and constitute a part of this
Agreement.

 

Section 14.7           Conditions.

 

The inclusion in this
Agreement of conditions to Seller’s and Purchaser’s obligations at Closing
shall not, in and of itself, constitute a covenant of either Seller or
Purchaser to satisfy the conditions to the other party’s obligations at
Closing.

 

Section 14.8           Governing Law.

 

THE VALIDITY OF THE
VARIOUS CONVEYANCES AFFECTING THE TITLE TO REAL PROPERTY SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE JURISDICTION IN WHICH SUCH
PROPERTY IS SITUATED. THIS AGREEMENT, THE OTHER DOCUMENTS DELIVERED PURSUANT
HERETO AND THE LEGAL RELATIONS AMONG THE PARTIES HERETO SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS AND
THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF TEXAS SHALL BE THE SOLE
VENUE FOR THE RESOLUTION OF ANY DISPUTES ARISING HEREUNDER.

 

Section 14.9           Assignment.

 

Neither Party may assign
all or any portion of its respective rights or delegate any portion of its
respective duties hereunder without the prior written consent of the other
Party.

 

38

 

Section 14.10         Public Announcements.

 

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 party hereto and attempt to obtain
approval of the other party or parties hereto to the text of a public
announcement or statement to be made solely by Seller or Purchaser, as the case
may be; provided, however, if Seller or Purchaser is required by law to make
such public announcement or statement, then the same may be made without the
approval of the other party; provided further, however, neither party may
identify the other party by name in any such announcement or statement or
filing with the Securities and Exchange Commission without the other party’s
prior written consent; provided further that, unless either party is otherwise
ordered by the Securities and Exchange Commission, the New York Stock Exchange
or other governmental or regulatory body having jurisdiction, no public
announcement of the transactions contemplated by this Agreement shall be made
prior to 2:05 pm (Denver time) on Monday, November 30.

 

Section 14.11         Notices After Closing.

 

Each of the parties
hereto shall notify the others of its receipt, after the Closing Date, of any
instrument, notification or other documents affecting the Assets while owned by
such other party or parties.

 

Section 14.12         Waiver of Compliance with Bulk
Transfer Laws.

 

Purchaser waives
compliance with any applicable bulk transfer laws relating to the transactions
contemplated by this Agreement.

 

Section 14.13         Waiver.

 

The parties agree that to
the extent required by applicable law, rule or order to be operative the
disclaimers of certain warranties contained in this Section and in the
conveyancing documents to be delivered pursuant to this Agreement are “conspicuous”
disclaimers for the purposes of any such applicable law, rule or order.
SELLER EXPRESSLY DISCLAIMS AND NEGATES ANY WARRANTY AS TO THE CONDITION OF ANY
PERSONAL PROPERTY, EQUIPMENT, FIXTURES AND ITEMS OF MOVABLE PROPERTY COMPRISING
ANY PART OF THE ASSETS, INCLUDING:

 

(a)           ANY IMPLIED OR
EXPRESS WARRANTY OF MERCHANTABILITY;

 

(b)           ANY IMPLIED OR
EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE;

 

39

 

(c)             ANY IMPLIED OR
EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,

 

(d)             ANY RIGHTS OF
PURCHASER UNDER APPLICABLE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, AND

 

(e)             ANY CLAIM BY
PURCHASER FOR DAMAGE BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, IT BEING
EXPRESSLY UNDERSTOOD BY PURCHASER THAT SAID PERSONAL PROPERTY, FIXTURES,
EQUIPMENT, AND ITEMS ARE BEING CONVEYED TO PURCHASER “AS IS”, “WHERE IS”, WITH
ALL FAULTS, AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR AND THAT
PURCHASER WILL MAKE, PRIOR TO CLOSING, SUCH INSPECTIONS THEREOF AS PURCHASER
DEEMS APPROPRIATE.

 

Except as otherwise
expressly set forth herein, Seller also expressly disclaims and negates any
implied or express warranty as to the accuracy of any of the information
furnished with respect to the existence or extent of reserves or the value of
the Assets based thereon or the condition or state of repair of any of the
Assets (it being understood that all estimates of quantities of oil and gas
reserves on which Purchaser has relied or is relying have been derived by individual
evaluation of Purchaser). Purchaser EXPRESSLY WAIVES THE PROVISIONS OF CHAPTER
XVII, SUBCHAPTER E, SECTION 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION 17.555,
WHICH IS NOT WAIVED), VERNON’S TEXAS CODE ANNOTATED, BUSINESS AND COMMERCE CODE
(the “Deceptive Trade Practices Act”).

 

Section 14.14         Like-Kind Exchange.

 

Seller and Purchaser
hereby agree that this transaction may be completed as a like-kind exchange and
that each party will assist in completing the sale as a like-kind exchange. As a
like-kind exchange, Seller and Purchaser agree that either party shall have the
right at any time prior to Closing to assign all or a portion of its rights
under this Agreement to a Qualified Intermediary (as that term is defined in Section 1.1031(k)-1(g)(4)(v) of
the Treasury Regulations) or an Exchange Accommodation Titleholder (as that
term is defined in Rev. Proc. 2000-37, 2000-2 C.B. 308) in order to accomplish
the transaction in a manner that will comply, either in whole or in part, with
the requirements of a like-kind exchange pursuant to Section 1031 of the
Internal Revenue Code of 1986. In the event either party assigns its rights
under this Agreement pursuant to this Section 14.14, such party agrees to
notify the other party in writing of such assignment at or before Closing.
Seller and Purchaser acknowledge and agree that any assignment of this
Agreement shall not increase the costs, expenses or liabilities of a party as a
result of the other party’s assignment of this Agreement to a Qualified Intermediary
or Exchange Accommodation Titleholder, shall not release either party from any
of their respective liabilities and obligations to each other under this
Agreement, and that neither party represents to the other that any particular
tax treatment will be given to either party as a result thereof.

 

The signature page follows

 

40

 

	
  SELLER:

  	
   

  	
  FOREST
  OIL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glen J. Mizenko

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Glen J. Mizenko

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Senior Vice President
  Business Development and Engineering

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SELLER:

  	
   

  	
  FOREST
  OIL PERMIAN CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Glen J. Mizenko

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Glen J. Mizenko

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Vice President Business
  Development

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PURCHASER:

  	
   

  	
  SANDRIDGE
  EXPLORATION AND PRODUCTION, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Tom L. Ward

  
	
   

  	
   

  	
   

  	
  Name: 

  	
  Tom L. Ward

  
	
   

  	
   

  	
   

  	
  Title: 

  	
  Chief Executive Officer

  

 

41

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