PURCHASE AND SALE AGREEMENT

Purchase and Sale Agreement

You are currently viewing:

This Purchase and Sale Agreement involves

Edge Petroleum Corporation | EDGE PETROLEUM EXPLORATION COMPANY | Edge Petroleum Operating Company, Inc | Edge Petroleum Production Company | Miller Exploration Company | Miller Oil Corporation | PGP Gas Supply Pool No 3 LLC

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: PURCHASE AND SALE AGREEMENT
Governing Law: Texas Date: 10/2/2009
Industry: Oil and Gas Operations Law Firm: Akin Gump;Porter Hedges Sector: Energy

Exhibit 2.1

PURCHASE AND SALE AGREEMENT

By and Between

EDGE PETROLEUM CORPORATION

(the “ Seller ”),

EDGE PETROLEUM EXPLORATION COMPANY,

MILLER EXPLORATION COMPANY,

EDGE PETROLEUM OPERATING COMPANY, INC.,

EDGE PETROLEUM PRODUCTION COMPANY,

MILLER OIL CORPORATION,

and

PGP GAS SUPPLY POOL NO. 3 LLC

(the “ Buyer ”)

Dated Effective

September 30, 2009

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS		2

ARTICLE II SALE AND PURCHASE OF EQUITY INTERESTS		19
2.1	Sale and Purchase of Equity Interests	19
2.2	Seller’s Chapter 11 Bankruptcy Case	20

ARTICLE III PURCHASE PRICE		21
3.1	Purchase Price	21
3.2	Earnest Money Deposit	21

ARTICLE IV ADJUSTMENTS TO PURCHASE PRICE		21
4.1	Increases in Purchase Price	21
4.2	Decreases in Purchase Price	22
4.3	Tax Adjustments; Apportionment of Prepaid Items; Suspense Funds	23
4.4	Prepaid JOA Funds	24
4.5	Suspense Funds	24
4.6	Bankruptcy Expenses	24

ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SUBS		24
5.1	Organization	24
5.2	Authority	25
5.3	No Conflict	25
5.4	Enforceability	25
5.5	Material Contracts	25
5.6	Litigation and Claims	27
5.7	Finder’s Fees	28
5.8	Sale Contracts	28
5.9	Notices	28
5.10	Imbalances	28
5.11	Property Obligations	28
5.12	Property Operation	28
5.13	Take-or-Pay	28
5.14	Taxes	29
5.15	Timely Receipt	31
5.16	Timely Payment	31
5.17	Outstanding Obligations	31
5.18	Hedge Contracts	31
5.19	Status of Seller	31
5.20	Sufficient Rights to Operate	31
5.21	No Encumbrances	31

5.22	Materials Provided to Buyer	32
5.23	Environmental Matters	32
5.24	Wells	32
5.25	Equipment and Personal Property	32
5.26	Employee Benefits	32
5.27	Ownership and Issuance of Equity Interests	34
5.28	Subs	34
5.29	Financial Statements	35
5.30	No Undisclosed Liabilities	35
5.31	Title to Properties	35
5.32	Offices	36
5.33	No Implied Warranty of Seller or Subs	36

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER		36
6.1	Representations and Warranties of Pool No. 3	36

ARTICLE VII COVENANTS		38
7.1	Operation of Properties Pending Closing	38
7.2	Access to Information; Conduct of the Business Pending the Closing	41
7.3	Bankruptcy Filings, Auction Procedures and Break Up Fee	43
7.4	Notice of Sale	44
7.5	Consents and Approvals	44
7.6	Assumption and Rejection of Contracts and Leases	45
7.7	Certain Restructuring Transactions	45
7.8	Distribution to Seller	46
7.9	Notification of Certain Matters	46
7.10	Financial Information	47
7.11	Purchase of Calls	47
7.12	Buyer Representative	47

ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER		47
8.1	Representations and Warranties	47
8.2	Escrow Agreement	48
8.3	Covenants	48
8.4	No Litigation	48
8.5	Support Agreement	48
8.6	Bankruptcy Court Approval	48
8.7	Simultaneous Closing	48
8.8	Plan	48

ARTICLE IX CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER		48
9.1	Representations and Warranties	48
9.2	Covenants	49
9.3	No Litigation	49

9.4	Bankruptcy Court Approval	49
9.5	Consents	49
9.6	Release of Liens on the Common Stock of the Subs and the Properties	49
9.7	Plan	49
9.8	Conversion Transaction	49
9.9	Property Transfers	50
9.10	Escrow Agreement	50
9.11	Support Agreement	50

ARTICLE X TITLE MATTERS		50
10.1	Title Defect Notice	50
10.2	Determination of Title Defects and Defect Values	51
10.3	Calculation of Defect Value	52
10.4	Title Benefit Notice	53
10.5	Determination of Title Benefits and Benefit Values	54
10.6	Calculation of Benefit Value	55
10.7	Affected Seller Properties	55
10.8	Post-Closing Title Determination	55

ARTICLE XI ENVIRONMENTAL MATTERS		56
11.1	Presence of Wastes, NORM, Hazardous Substances and Asbestos	56
11.2	Environmental Assessment	56
11.3	Notice of Adverse Environmental Conditions	57
11.4	Determination of Adverse Environmental Conditions and Remediation Values	58

ARTICLE XII SUSPENSE FUNDS HELD BY SELLER OR SUBS		60
12.1	Suspense Funds	60

ARTICLE XIII CLOSING		60
13.1	The Closing	60
13.2	Closing Statement	61
13.3	Closing Deliveries	61
13.4	Preferential Purchase Rights	62

ARTICLE XIV POST-CLOSING ADJUSTMENTS		62
14.1	Final Settlement Statement	62
14.2	Disputes	63
14.3	Retention of Funds by Seller	63
14.4	Payment of Final Purchase Price	63
14.5	Receipts Not Reflected in Purchase Price	63
14.6	Receipt, Remittance and Assignment of Accounts Receivable	64
14.7	Expenses Not Reflected in Purchase Price	64
14.8	No Duplicative Effect; Methodologies	65

iii

14.9	Audit Rights	65

ARTICLE XV ASSUMPTION BY BUYER		65
15.1	Assumption by Buyer	65
15.2	Obligations Not Assumed	66
15.3	Limitation of Representations and Warranties	66
15.4	Natural Gas Balancing	67
15.5	No Survival	67

ARTICLE XVI RISK OF LOSS		68
16.1	Casualty Loss	68
16.2	Subs’ Risk of Loss	68

ARTICLE XVII TERMINATION AND REMEDIES		68
17.1	Termination	68
17.2	Procedure and Effect of Termination	69
17.3	Buyer’s Exclusive Remedy	70
17.4	Seller’s Exclusive Remedy	70

ARTICLE XVIII ADDITIONAL COVENANTS		71
18.1	Further Assurances	71
18.2	Access to Records by Seller	71
18.3	Severance Tax Abatement	71
18.4	New Mexico Withholding Tax	72
18.5	Other Properties	72

ARTICLE XIX MISCELLANEOUS		73
19.1	Notice	73
19.2	Governing Law	74
19.3	Assignment	75
19.4	Entire Agreement	75
19.5	Amendment; Waiver	75
19.6	Severability	76
19.7	Construction	76
19.8	Confidentiality	76
19.9	Headings	76
19.10	Counterparts	76
19.11	Expenses and Fees	77
19.12	Public Announcements	82
19.13	Limitation on Damages	82
19.14	Jurisdiction of the Bankruptcy Court; Dispute Resolution; No Jury	82
19.15	Releases	83

Exhibits and Schedules:

Exhibit A		Leases and Fee Interests
Exhibit B		Wells; Working Interests; Net Revenue Interests; Royalty Interests; Allocated Values of the Wells
Exhibit B-1		Payout by Well
Exhibit C		Form of Bill of Sale, Assignment and Assumption Agreement
Exhibit D		Non-Foreign Affidavit
Exhibit E		Bidding Procedures and Sale Motion
Exhibit F		Bidding Procedures Order
Exhibit G		Plan
Exhibit H		Sale Order
Exhibit I		Sample of Gas Pricing Adjustment Calculation
Exhibit J		Form of Escrow Agreement
Exhibit K		Surplus Equipment of the Subs
Exhibit L		Form of Support Agreement
Exhibit M		Representations of Intrepid and Sabco

Schedule 5.1(d)		Seller Property
Schedule 5.3		Consents; Preferential Purchase Rights
Schedule 5.5(a)		Material Contracts
Schedule 5.5(c)		Affiliate Contracts
Schedule 5.5(d)		Defaults
Schedule 5.6		Litigation
Schedule 5.9		Notices
Schedule 5.10		Gas Imbalances
Schedule 5.11		Suspense Accounts
Schedule 5.14		Taxes
Schedule 5.14(e)		Member of a Group
Schedule 5.14(f)		Section 7701(a)(1)
Schedule 5.14(o)		Partnerships
Schedule 5.15		Timely Receipts
Schedule 5.16		Timely Payment
Schedule 5.17		Outstanding Obligations
Schedule 5.18		Hedge Contracts
Schedule 5.21		No Encumbrances
Schedule 5.23		Environmental Matters
Schedule 5.25		Equipment and Personal Property
Schedule 5.26(a)		Material Employment Benefit Plans
Schedule 5.26(b)		Benefit Arrangements
Schedule 5.26(g)		Material Benefit
Schedule 5.28(a)		Names of Subs
Schedule 5.28(b)		Other Agreements
Schedule 10.7		List of Affected Seller Properties

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “ Agreement ”) dated effective as of September 30, 2009, is by and between Edge Petroleum Corporation, a corporation organized under the laws of the State of Delaware (“ Edge ” or “ Seller ”), Edge Petroleum Exploration Company, a corporation organized under the laws of the State of Delaware (“ EPEC ”), Miller Exploration Company, a corporation organized under the laws of the State of Delaware (“ Miller ”), Edge Petroleum Operating Company, Inc., a corporation organized under the laws of the State of Delaware (“ EPOC ”), Edge Petroleum Production Company, a corporation organized under the laws of the State of Delaware (“ EPPC ”), Miller Oil Corporation, a corporation organized under the laws of the State of Michigan (“ Miller Oil ”), and PGP Gas Supply Pool No. 3 LLC, a limited liability company organized under the laws of the State of Georgia (“ Pool No. 3 ” or the “ Buyer ”).

Recitals

WHEREAS, Seller owns (i) 100% of the issued and outstanding common stock, par value $0.01 per share, of EPEC, and (ii) 100% of the issued and outstanding common stock, par value $0.01 per share, of Miller; and

WHEREAS, EPEC owns (i) 100% of the issued and outstanding common stock par value $0.01 per share, of EPOC and (ii) 100% of the issued and outstanding common stock, par value $0.01 per share, of EPPC; and

WHEREAS, Miller owns 100% of the issued and outstanding common stock, par value $1.00 per share, of Miller Oil (and, collectively with EPEC, Miller, EPOC and EPPC the “ Subs ”, and each individually a “ Sub ”; and

WHEREAS, the Subs own certain interests in and to the Properties as hereinafter set forth; and

WHEREAS, Seller has concluded that, promptly after the date hereof, each of Seller and the Subs will file a case (individually, a “ Bankruptcy Case ” and collectively, the “ Bankruptcy Cases ”) in the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, (the “ Bankruptcy Court ”) pursuant to Chapter 11 of Title 11 of the United States Code (the “ Bankruptcy Code ”); and

WHEREAS, as part of the Bankruptcy Cases, Seller and the Subs intend to file the Plan (as defined herein), pursuant to which, among other things, each of the Subs shall be converted into a Delaware limited liability company and 100% of new equity interests in each of the reorganized EPEC, Miller, EPOC, EPPC and Miller Oil will be issued (collectively, the “ Equity Interests ”); and

WHEREAS, subject to the entry of the Confirmation Order (as defined herein), Seller desires to sell, and Buyer desires to buy, the Equity Interests; and

WHEREAS, Seller has been soliciting bids for the Properties and/or the Equity Interests, and has determined that the offer of Buyer for the Equity Interests set forth below is the highest

and best offer received for the Equity Interests or the Properties to date and constitutes a fair and adequate purchase price; and

WHEREAS, the parties hereto have agreed that subject to the entry of the Confirmation Order and subject to the terms and conditions of this Agreement, Seller will sell and Buyer will purchase and acquire the Equity Interests free and clear of all Liens and Claims (as defined herein) pursuant to the terms of this Agreement and the Confirmation Order.

WHEREAS, subject to the terms and conditions of this Agreement, Buyer may assign a portion of its rights and obligations under this Agreement to Intrepid Properties, LLC, a limited liability company organized under the laws of the State of Delaware (“ Intrepid ”), and/or Sabco Oil and Gas Corporation, a corporation organized under the laws of the State of Texas, or an Affiliate thereof (collectively, “ Sabco ”).

NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by all parties, the parties hereto have agreed as follows:

ARTICLE I
DEFINITIONS

In this Agreement, including the preamble and the recitals hereto, the following terms set forth in this Article I and elsewhere in this Agreement have the following meanings ascribed to them:

“ Accounting Referee ” means Deloitte LLP.

“ Accounts Receivable ” is defined in Section 14.6.1 .

“ Ad Valorem Taxes ” means any ad valorem, property or similar taxes or assessments based upon or measured by ownership or value, relating to the Properties (whether real or personal property).

“ Adverse Environmental Condition ” means (a) the violation of or liability or obligation under any Environmental Law or Environmental Permit, or (b) the presence, discharge, release, seepage, escape, leakage, emission, emptying or leaching, to or from any Property of any Hazardous Substance in a manner, quantity or condition that in either case create an affirmative obligation under Environmental Laws to investigate, delineate, remediate, monitor, remove or otherwise address through a responsive action.

“ Adverse Environmental Condition Notice ” is defined in Section 11.2(c) .

“ Affected Property ” is defined in Section 10.2.4 .

“ Affected Seller Properties ” means those certain Leases, Wells and Fee Interests, if any, that are, as of the date hereof, owned by Seller but that appropriately should, as of such date, be owned by and of record title in a Sub. A list of such Affected Seller Properties, together with the

appropriate Sub that should have record title to each such Lease, Well and Fee Interest comprising the same and the value assigned to each is set forth on Schedule 10.7 .

“ Affiliate ” means any Person which (a) controls either directly or indirectly a party, or (b) is controlled directly or indirectly by such party, or (c) is directly or indirectly controlled by a Person which directly or indirectly controls such party, for which purpose “control” shall mean the right to exercise twenty percent (20%) or more of the voting rights in the appointment of the directors or similar representation of a Person.

“ Affiliate Contracts ” is defined in Section 5.5(c) .

“ Agreed Remediation Amount ” is defined in Section 11.4.1 .

“ Agreement ” is defined in the preamble.

“ Aggregate Title Deductible ” is defined in Section 10.3.6.

“ Allocated Value ” with respect to any Well means the value allocated to the respective Sub’s interest in such Well as set forth on Exhibit B ; provided, however, that the value allocated to each Well set forth on Exhibit B shall be reduced proportionately in the event the Purchase Price is reduced by reason of the Gas Pricing Downward Adjustment pursuant to Section 4.2.7.

“ Alternative Agreement ” means one or more definitive agreements with respect to one or more Alternative Transactions.

“ Alternative Transaction ” is defined in Section 7.3(a) .

“ Ancillary Documents ” means all other documents, certificates, instruments or writings reasonably requested by Buyer in connection herewith, including all documents necessary to transfer the Equity Interests to Buyer.

“ Applicable Law ” means any Law to which a specified Person, the Equity Interests or a Property is subject.

“ Assignment ” is defined in Section 10.2.4 .

“ Assumed Liabilities ” means the Assumed Obligations, Ad Valorem Taxes on the Properties which are accounted for in the Purchase Price Adjustment of Article IV as well as the obligation to pay the Prepaid JOA Funds and the Suspense Funds.

“ Assumed Obligations ” is defined in Section 15.1 .

“ Auction ” is defined in Section 2.2(a) .

“ Balance Sheet ” means the consolidated balance sheet of Seller and the Subs.

“ Balance Sheet Date ” means December 31, 2008.

“ Bankruptcy Case(s) ” is defined in the recitals.

“ Bankruptcy Code ” is defined in the recitals.

“ Bankruptcy Court ” is defined in the recitals.

“ Bankruptcy Court Remediation Amount ” is defined in Section 11.4.2 .

“ Benefit Arrangements ” is defined in Section 5.26(b) .

“ Benefit Values ” is defined in Section 10.4 .

“ Bidding Procedures and Sale Motion ” means the motion in substantially the form attached hereto as Exhibit E to be filed by Seller with the Bankruptcy Court seeking, inter alia , entry of the Bidding Procedures Order and the Sale Order.

“ Bidding Procedures Order ” means an order of the Bankruptcy Court in substantially the form of Exhibit F hereto (unless otherwise jointly agreed to in writing by Seller and Buyer) that approves, inter alia , bidding and auction procedures to be followed by Seller and all potential bidders for the Equity Interests.

“ Bloomberg/Slick/Garcia Refund ” is defined in Section 18.3 .

“ Break Up Fee ” is defined in Section 7.3(d) .

“ British thermal unit ” or “ Btu ” means the amount of heat required to raise the temperature of one (1) avoirdupois pound of pure water one degree Fahrenheit from 58.5 degrees Fahrenheit to 59.5 degrees Fahrenheit at a constant pressure of 14.73 dry psia.

“ Business Day ” means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banks in Houston, Texas, are generally authorized or obligated, by Law or executive Order, to close.

“ Buyer ” is defined in the preamble.

“ Buyer Remediation Amount ” is defined in Section 11.3 .

“ Buyer Representative ” is defined in Section 7.12 .

“ Casualty Loss ” is defined in Section 16.1 .

“ Chapman Ranch Credit ” means the right to receive the benefit of all future insurance proceeds under the Subs’ Primary Well Control Policy with Lexington Insurance Company, policy #8756088, and under the Excess Well Control Underwriters Policy with London #MOET20061016OEE, attributable to the redrilling of the Chapman Ranch #19 Well in Nueces County, Texas if and when such Well is redrilled by the applicable insured Sub, and such proceeds are paid. The coverage window for redrilling expenses terminates on January 23, 2011 (three years from the date of the original blowout of the Chapman Ranch #19 Well).

“ Claim ” means a claim, as such term is defined in Section 101(5) of the Bankruptcy Code, against Seller, any of the Subs, or a Property (including, to the extent allowed by Applicable Law, reasonable attorneys’ fees, experts’ fees and court costs).

“ Closing ” is defined in Section 13.1 .

“ Closing Date ” is defined in Section 13.1 .

“ Closing Date Hedge Values ” means the sum of each monthly Closing Date Hedge Value for the period beginning on the Effective Time and ending on the Hedge Contract Termination Date for each Hedge Contract, calculated separately for each Hedge Contract on a month by month basis (determined separately for each calculation period of the related Hedge Contract), by multiplying the Monthly Hedge Volumes TIMES the positive difference, if any, between the Monthly Collar Floor Price and (i) for months settled prior to Closing and prior to the termination of the Hedge Contracts, the actual Commodity Reference Price used in the settlement, (ii) for months ending on or prior to the Closing and settled upon early termination of the Hedge Contract, the Commodity Reference Price which would have been used in the settlement but for such early termination, and (iii) for months ending after Closing, the Commodity Reference Price published as of the Business Day before Closing.

“ Closing Strip ” is defined in the definition of Gas Pricing Downward Adjustment.

“ Code ” is defined in Section 5.14 .

“ Commodity Reference Price ” is defined in each Hedge Contract.

“ Collection Report ” is defined in Section 14.5 .

“ Confidentiality Agreement ” is defined in Section 19.4 .

“ Confirmation Order ” means an Order of the Bankruptcy Court confirming the Plan, which shall include the provisions of the Sale Order, and which shall otherwise be in form and substance reasonably satisfactory to Buyer and Seller; provided, however, that such approval rights shall terminate upon termination of this Agreement.

“ Contracts ” is defined in subsection (c) of the definition of “ Property ”.

“ Conversion Transaction ” is defined in Section 7.7(a) .

“ Costs of Cure ” means the costs required of a Sub to Cure any and all defaults, pursuant to Section 365 of the Bankruptcy Code, of such Sub arising under any executory Contract to which such Sub is a party, or any unexpired Lease to which such Sub is a party (except for Title Defects which are governed by the provisions of Article X ).

“ Credit Agreement ” means the Fourth Amended and Restated Credit Agreement dated as of January 31, 2007, by and among Seller, the Lenders, and Union Bank, N.A. (f/k/a Union Bank of California, N.A.), as administrative agent for such Lenders and as issuing lender, as such agreement has been and may be amended from time to time.

“ Cure ” means all liabilities, including pre-petition monetary liabilities, of each Sub that must be paid or otherwise satisfied to cure, pursuant to Section 365 of the Bankruptcy Code, all of such Sub’s monetary and non-monetary defaults under each executory Contract and unexpired Lease to which such Sub is a party at the time of the assumption thereof, in each case as determined by the Bankruptcy Court.

“ Data ” is defined in Section 7.2 .

“ Debt Instrument ” means any indenture, mortgage, loan, creditor sale-leaseback or similar financial contract.

“ Defect Notification Deadline ” means the later of (x) 5:00 p.m., Houston, Texas time on the thirtieth day following the date hereof and (y) the tenth (10 th ) Business Day prior to the date of the Auction.

“ Defect Value ” means with respect to each Property that is agreed in writing by Seller and Buyer or determined pursuant to the terms hereof to be subject to a Title Defect, the amount determined in accordance with Sections 10.2 and 10.3 with respect to such Title Defect.

“ Deposit ” is defined in Section 3.2

“ Easement ” is defined in subsection (d) of the definition of “ Property ”.

“ Edge ” is defined in the preamble.

“ Effective Time ” means 12:00 midnight, Houston, Texas time on June 30, 2009.

“ El Sauz 3 D Agreement ” means that certain Participation Agreement between EPEC and Stephens dated effective April 23, 2008.

“ Employee Benefit Plans ” means any employment, compensation, pension, welfare, healthcare, bonus, incentive compensation, sick leave and other leave, vacation pay, expense, reimbursement, dependent care, retirement, savings, deferred compensation, supplemental pension, retention, workers compensation, life insurance, disability, dependent care, dependent healthcare, education, severance or other compensation or benefit plan, agreement or arrangement for the benefit of the current or former directors, offices or employees (whether salaries or hourly, active or retired) of a Sub.

“ Environmental Laws ” means all Applicable Laws concerning or relating to the environment, human health and safety or pollution, including without limitation the Clean Air Act, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“ CERCLA ”), the Federal Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Hazardous and Solid Waste Amendments Act of 1984, the Superfund Amendments and Reauthorization Act of 1986, the Hazardous Materials Transportation Act, the Clean Water Act, the National Environmental Policy Act, the Endangered Species Act, the Fish and Wildlife Coordination Act, the National Historic Preservation Act and the Oil Pollution Act of 1990, as such laws may be amended from time to

time and all regulations, Orders, rulings, directives, requirements and ordinances promulgated thereunder.

“ Environmental Permits ” means all permits required by the Subs by Environmental Laws for the occupation of the Properties and the operation of the Leases, Lands, Wells, Facilities or Fee Interests.

“ EPEC ” is defined in the preamble

“ EPOC ” is defined in the preamble.

“ EPPC ” is defined in the preamble.

“ Equity Interests ” is defined in the recitals.

“ ERISA ” is defined in Section 5.26(a) .

“ Escrow Agent ” means Wells Fargo Bank, N.A.

“ Escrow Agreement ” means the escrow agreement of even date herewith among Seller, Buyer and the Escrow Agent, the form of which is attached hereto as Exhibit J .

“ Excluded Liabilities ” is defined in Section 15.2 .

“ Exhibit B ” means, collectively, Exhibit B and Exhibit B-1.

“ Expense Reimbursement ” is defined in Section 7.3(d) .

“ Facilities ” is defined in subsection (b) of the definition of “ Property ”.

“ Fee Interests ” is defined in subsection (h) of the definition of “ Property ”.

“ Final Order ” means (i) an Order of the Bankruptcy Court as to which the time to appeal, petition for certiorari or motion for re-argument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings or motion for re-argument or rehearing shall then be pending or (ii) if an appeal, writ of certiorari, motion for re-argument or rehearing thereof has been filed or sought, such order of the Bankruptcy Court shall not have been stayed.

“ Final Purchase Price ” is defined in Section 14.1 .

“ Financial Statements ” is defined in Section 5.29 .

“ Final Remediation Amount ” for any Property (other than Retained Properties) is defined in Section 11.4 .

“ Final Settlement Statement ” is defined in Section 14.1 .

“ GAAP ” means accounting principles generally accepted in the United States of America as in effect from time to time and applied on a basis consistent with the preparation of the consolidated financial statements of Seller and the Subs.

“ Gas Pricing Downward Adjustment ” means the downward adjustment to the Purchase Price for pricing risk, if any, calculated as follows: if the weighted average NYMEX price strip determined, for each year over the five (5) year period from January 1, 2010 through December 31, 2014 (the “ Pricing Period ”), by dividing the sum of the closing price of each monthly NYMEX futures contract for such year by twelve (12) in accordance with the Sample Gas Pricing Adjustment Calculation, the form of which is set forth on Exhibit I (the “ Strip ”) over the Pricing Period at the close of trading on the third Business Day following entry of the Confirmation Order (the “ Closing Strip ”) is less than the Strip at the close of trading on May 14, 2009 (the “ Term Sheet Strip ”), the Purchase Price shall be reduced by an amount calculated by multiplying the difference between the Term Sheet Strip and the Closing Strip by the production for PDP and PDNP reserves (in MMCFE) as set forth on Exhibit I for the years indentified in such Exhibit I (15,612.4 for 2010, 13,470.6 for 2011, 10,496.6 for 2012, 8,624.4 for 2013, and 6,882.4 for 2014, respectively), projected in the Reserve Reports for the Pricing Period, consistent in all respects with such Sample Gas Pricing Adjustment Calculation; provided, however, that the projected production volumes used to calculate the Gas Pricing Downward Adjustment shall consist exclusively of production volumes associated with Properties and shall exclude all production associated with all the Retained Properties, Affected Properties, and Affected Seller Properties to the extent retained by Seller; and provided further that in no event shall the Gas Pricing Downward Adjustment exceed twelve and one-half percent (12.5%) of the Purchase Price prior to any adjustments otherwise provided herein (the “ Unadjusted Purchase Price ”).

“ Good and Defensible Title ” means such title to the Properties that, (i) (A) entitles the respective Sub or Seller, as applicable, to receive not less than the Net Revenue Interest set forth in Exhibit B in all Hydrocarbons produced from the Wells, Leases or Fee Interests described in Exhibit A and Exhibit B , and (B) obligates the respective Sub or Seller, as applicable, to bear not more than the Working Interest set forth in Exhibit B in the Wells, Leases or Fee Interests described in Exhibit A and Exhibit B (unless there is a corresponding increase in the Net Revenue Interest) and (ii) is free and clear of all Liens, except for Permitted Encumbrances.

“ Governing Documents ” is defined in Section 5.3 .

“ Governmental Authority ” means any national, federal, state, provincial, local, territorial or foreign government, or any subdivision, agency, instrumentality, authority, department, commission, board or bureau thereof, or any federal, state, provincial, local or foreign court, tribunal, or arbitrator, including the Bankruptcy Court.

“ Hazardous Substances ” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive or otherwise hazardous substance, waste or material, or any substance, waste or material having any constituent elements displaying any of the foregoing characteristics, including without limitation Hydrocarbons, produced water, asbestos and asbestos-containing materials, lead-based paint and polychlorinated biphenyls, and any other substance, waste or material regulated under any Environmental Law.

“ Hedge Contract ” means any contract to which Seller is a party with respect to any swap, forward, future or derivative transaction or option or similar agreement, whether exchange traded, “over-the-counter” or otherwise, involving, or settled by reference to, one or more rates, currencies, commodities, equity instruments or Debt Instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

“ Hedge Contract Termination Date ” means the termination date specified in each Hedge Contract, without considering the impact of early termination.

“ Highest and Best Bid ” is defined in the Bidding Procedures Order.

“ Hydrocarbons ” means oil, gas, natural gas liquids, condensate and related hydrocarbons and carbon dioxide.

“ Individual Title Deductible ” is defined in Section 10.3.6 .

“ Intrepid ” is defined in the recitals.

“ Lands ” is defined in subsection (a) of the definition of “ Property ”.

“ Law ” or “ Laws ” means all national, federal, state, provincial, territorial, local or foreign laws, including common law, Orders, writs, injunctions, decrees, codes, ordinances, awards, stipulations, judgments, directions, requirements, statutes, judicial or administrative doctrines, rules or regulations enacted, promulgated, issued or entered by a Governmental Authority, including the Bankruptcy Code and the Internal Revenue Code of 1986, as amended (or the applicable provisions of any succeeding statute).

“ Lease ” is defined in clause (a) of the definition of “ Property ”.

“ Leased Real Property ” is defined in Section 5.31(b) .

“ Lenders ” has the meaning set forth in the Credit Agreement.

“ Lender Release ” is defined in Section 9.6 .

“ Lien ” means any (i) security interest, lien, mortgage, pledge, hypothecation, encumbrance, easement, charge, restriction on transfer, including any conditional sale or other title retention contract or lease in the nature thereof; (ii) any filing or agreement to file a financing statement as debtor under the applicable Uniform Commercial Code or any similar statute; and (iii) any subordination arrangement in favor of another Person.

“ Liquidated Title Defect Payment ” is defined in Section 10.3.3 .

“ Losses ” means all damages, losses, liabilities, obligations, payments, amounts paid or to be paid in settlement, fines, penalties, costs (including reasonable fees and expenses of attorneys, accountants, consultants and other professional advisors, as well as of expert witnesses and other costs of investigation preparation and litigation in connection with any pleading, claim, demand

or other action) of any kind or nature whatsoever, whether known or unknown, contingent or vested, matured or unmatured, determined, determinable or otherwise.

“ Material Adverse Effect ” means any change, effect, event, occurrence, state of facts or development occurring since the date of this Agreement which individually or in the aggregate (i) is materially adverse to the Subs and the Properties, taken as a whole, and that exceeds ten percent (10%) of the Purchase Price in value, or (ii) will prevent the consummation by Seller of the sale of the Equity Interests to Buyer; provided , however , that none of the following shall be deemed, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect:

(a) any change, effect, occurrence, condition, state of facts or development relating to the international, United States, regional, state or local economy or securities markets in general;

(b) any adverse change, effect, event, occurrence, state of facts or development reasonably attributable to conditions affecting the Hydrocarbon exploration, production, development, processing, gathering, marketing and/or transportation industries generally, including, without limitation, changes in the price of Hydrocarbons, related products or other commodities or markets, changes in general market prices in any retail or wholesale market, changes in the availability of Hydrocarbons or related products, decreases in sales prices for Seller’s products, increases in the cost of raw materials used in Seller’s business, increases in transportation costs, or any other change materially increasing Seller’s costs;

(c) any failure of Seller to meet its current and anticipated financial obligations on a timely basis, including any obligations under its senior secured credit facility;

(d) any failure, in and of itself, by Seller to meet any internal or published projections, forecasts or revenue or earnings predictions for any period since December 31, 2008;

(e) any adverse change, effect, event, occurrence, state of facts or development attributable to the announcement, pendency or consummation of this Agreement or the transactions contemplated by this Agreement, or resulting from or relating to compliance with the terms of, or the taking of any action required by, this Agreement (including any decrease in customer demand, any reduction in revenues, any disruption in supplier, partner or similar relationships, or any loss of employees);

(f) any adverse change, effect, event, occurrence, state of facts or development attributable to the announcement, pendency or filing of the Bankruptcy Cases (including any decrease in customer demand, any reduction in revenues, any disruption in supplier, partner or similar relationships, or any loss of employees);

(g) any change, effect, event, occurrence, state of facts or development arising from or relating to national or international political or social conditions, including the engagement by the United States in hostilities or the escalation thereof, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack anywhere in the world, and including general economic, capital market, regulatory or political conditions, natural disasters or other force majeure events;

(h) any change, effect, event, occurrence, state of facts or development relating to changes in laws, rules, regulations, orders or other binding directives issued by any Governmental Authority;

(i) any change or development in international, United States, regional, state or local transportation or distribution systems for Hydrocarbons;

(j) any adverse change, effect, event, occurrence, state of facts or development relating to changes in applicable accounting regulations or GAAP or principles or interpretations thereof;

(k) any existing change, effect, event, occurrence, state of facts or development with respect to which Buyer has actual knowledge as of the date of this Agreement;

(l) any Casualty Loss or damage to any Property or third parties, or injury to Persons, to the extent covered by condemnation award, insurance or within the self retention limits of Seller, that does not cause a material disruption over an extended period of time to the principal Properties of the Subs;

(m) any stockholder class action or other litigation arising in connection with this Agreement or any Bankruptcy Cases;

(n) any adjustment to the Purchase Price; and

(o) any of the items set forth in Section 17.1.5 .

Any determination as to whether any event or development has a Material Adverse Effect shall be made only after taking into account all effective insurance coverage.

“ Material Contracts ” is defined in Section 5.5(a) .

“ Material Employee Benefit Plans ” is defined in Section 5.26(a) .

“ MMCFE ” means one million (1,000,000) cubic feet of natural gas equivalent.

“ Miller ” is defined in the preamble.

“ Miller Oil ” is defined in the preamble.

“ MMBtu ” means one million (1,000,000) Btus.

“ Monthly Collar Floor Price ” means the collar floor price set forth in a Hedge Contract for a particular month.

“ Monthly Hedge Volumes ” means the notional volumes set forth in a Hedge Contract for a particular month.

“ Net Revenue Interest ” or “ NRI ” means a respective Sub’s (or, with respect to the Affected Seller Properties, Seller’s) net interest in and to all production of Hydrocarbons saved, produced and sold from any Well described in Exhibit B to which such Sub has an interest.

“ New Mexico Withholding Tax Amount ” means an amount equal to approximately US$1,900,000 and withheld from oil and gas proceeds due one or more of the Subs on behalf of the taxing authority of the State of New Mexico in connection with the production and sale of Hydrocarbons produced by a Sub in the State of New Mexico as a non-resident of such State.

“ Non-Transferred Properties ” is defined in Section 9.9 .

“ NORM ” means naturally occurring radioactive material.

“ No-Shop Provisions ” is defined in Section 7.3(a) .

“ NYMEX ” means the New York Mercantile Exchange Inc., and shall include any successor thereto.

“ Order ” means any writ, judgment, decree, injunction or similar order, writ, ruling directive or other requirement of any Governmental Authority (in each such case whether preliminary or final).

“ Ordinary Course of Business ” means the ordinary course of business of Seller and the Subs, consistent with their past practices and customs, including, with respect to any category, quantity or dollar amount, term and frequency of payment, delivery, accrual or expense.

“ PDP ” is defined in the Reserve Reports.

“ PDNP ” is defined in the Reserve Reports.

“ Permit ” is defined clause (f) of the definition of “ Property .”

“ Permitted Assignee ” means any party to which Pool No. 3 assigns any of its rights and obligations under this Agreement, provided such assignment is effected in compliance with Section 19.3 .

“ Permitted Encumbrances ” means:

(a) Royalties, overriding royalties, reversionary interests and similar burdens if the cumulative effect of the burdens does not operate to reduce a Sub’s Net Revenue Interest in a Well, Lease or Fee Interest described in Exhibit A or Exhibit B , below the Net Revenue Interest for such Well, Lease or Fee Interest set forth in Exhibit B or operate to increase such Sub’s Working Interest in a Well, Lease or Fee Interest described in Exhibit A or Exhibit B to more than the Working Interest for such Well, Lease or Fee Interest set forth in Exhibit B (unless there is a corresponding increase in the Net Revenue Interest);

(b) Division orders and sales contracts terminable without penalty upon no more than ninety (90) days notice to the purchaser;

(c) If required in connection with the sale and purchase of the Equity Interests as contemplated hereby, third-party consents with respect to which waivers or consents (i) are obtained from the appropriate parties in form and substance reasonably satisfactory to Buyer, or (ii) are routinely obtained from Governmental Authorities after Closing for transactions of this nature;

(d) Materialman’s, mechanic’s, repairman’s, employee’s, contractor’s, operator’s, Tax and other similar Liens, charges and assessments arising in the Ordinary Course of Business for obligations that are not delinquent or which are otherwise satisfied in full or discharged pursuant to the Confirmation Order;

(e) All rights to consent by, required notices to, filings with, or other actions by Governmental Authorities in connection with the direct or indirect sale or conveyance of oil and gas leases or interests therein if they are routinely obtained subsequent to the sale or conveyance;

(f) Easements, rights-of-way, servitudes, permits, surface leases and other rights in respect of surface operations that do not materially interfere with oil and gas operations to be conducted on any Well, Lease or Fee Interest described in Exhibit A or Exhibit B ;

(g) All of the (i) Material Contracts listed on Schedule 5.5(a) , (ii) other operating agreements, unit agreements, unit operating agreements and pooling agreements affecting the Properties which agreements are not listed on Schedule 5.5(a) , and (iii) compulsory or commissioner’s pooling or units or pooling designations; provided, however, that the effect of any such documents, pooling or units or pooling designations will not reduce the respective Sub’s (or, with respect to the Affected Seller Properties, Seller’s) interest with respect to oil and gas produced from any Well, Lease or Fee Interest described in Exhibit A or Exhibit B , below the Net Revenue Interest set forth in Exhibit B or increase the respective Sub’s or Seller’s Working Interest in such Well, Lease or Fee Interest to more than the Working Interest set forth in Exhibit B for such Well, Lease or Fee Interest (unless there is a corresponding increase in the Net Revenue Interest);

(h) Conventional rights of reassignment prior to release or surrender requiring notice to the holders of the rights;

(i) All rights reserved to or vested in any Governmental Authority to control or regulate any of the Wells, Leases, Lands, or Fee Interests in any manner, and all Applicable Laws, rules and orders of any Governmental Authority;

(j) The terms and conditions of the Leases, provided that the effect of such terms do not reduce the respective Sub’s (or, with respect to the Affected Seller Properties, Seller’s) interest with respect to oil and gas produced from any Well, Lease or Fee Interest below the Net Revenue Interest set forth in Exhibit B for such Well, Lease or Fee Interest or increase the respective Sub’s Working Interest in such Well, Lease or Fee Interest to more than the Working Interest set forth in Exhibit B for such Well, Lease or Fee Interest (unless there is a corresponding increase in the Net Revenue Interest);

(k) All other Liens, contracts (including the Contracts), agreements, instruments, obligations, defects and irregularities affecting the Properties, and not otherwise satisfied in full

or discharged pursuant to the Confirmation Order, which individually or in the aggregate are not such as to interfere materially with the operation, value or use of any of the Properties, could not reasonably be expected to prevent or delay the applicable Sub (or, with respect to the Affected Seller Properties, Seller’s) from receiving the proceeds of production from any Well, Lease or Fee Interest and which do not reduce the respective Sub’s or Seller’s interest with respect to Hydrocarbons produced from any Well, Lease or Fee Interest below the Net Revenue Interest set forth in Exhibit B or increase the respective Sub’s or Seller’s Working Interest in such Well, Lease or Fee Interest to more than the Working Interest set forth in Exhibit B for such Well, Lease or Fee Interest (unless there is a corresponding increase in the Net Revenue Interest);

(l) Any Title Defects Buyer has expressly waived in writing or which are deemed to have become Permitted Encumbrances under Section 10.1 ; and

(m) Any Lien released at or prior to Closing.

“ Person ” means and includes natural Persons, corporations, limited partnerships, limited liability companies, general partnerships, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and all Governmental Authorities.

“ Petition Date ” is defined in Section 2.2(a) .

“ Plan ” means a joint Chapter 11 plan of reorganization containing the material terms set forth in the form of the Plan attached as Exhibit G hereto for each of Seller and the Subs.

“ Plan Supplement ” shall have the meaning ascribed to it in the Plan.

“ Plan Supplement Filing Date ” shall have the meaning ascribed to it in the Plan.

“ Pool No. 3 ” is defined in the preamble.

“ Preliminary Purchase Price ” is defined in Section 13.2 .

“ Prepaid JOA Funds ” is defined in Section 4.4 .

“ Pricing Period ” is defined in the definition of Gas Pricing Downward Adjustment.

“ Property ” and “ Properties ” means, with respect to the Subs (and excluding Retained Properties, Affected Properties, Affected Seller Properties to the extent retained by Seller pursuant to Section 10.7 , and the Non-Transferred Properties):

(a) The oil, gas and mineral leases, including leases to be acquired by a Sub following the date hereof, and the leasehold estates created thereby, described in Exhibit A to which a Sub is a party (collectively, the “ Leases ”), and all of the lands covered by the Leases (collectively, the “ Lands ”), together with corresponding interests in and to all the property and rights incident thereto, including all rights in any pooled or unitized acreage by virtue of the Lands being a part thereof, all production from the pool or unit allocated to any such Lands; and all interests in any Wells within the pool or unit associated with the Lands; and all reversionary

interests, convertible interests, net profits interests and gas imbalance volumes owed to such Sub by a third party from and after the Effective Time.

(b) All producing, non-producing, shut-in and temporarily abandoned oil and gas Wells, salt water disposal wells, injection wells, observation wells, co-op wells and water wells located on the Leases, the Fee Interests or Lands pooled or unitized therewith as described in Exhibit B to which a Sub owns an interest and the proration units associated therewith (collectively, the “ Wells ”); and all pipelines, plants, gathering and processing systems, buildings, compressors, meters, tanks, machinery, tools, utility lines, other personal property, equipment, fixtures, and improvements located on and appurtenant to the Leases, the Lands, the Fee Interests or elsewhere insofar as they are used or have been obtained in connection with the ownership, operation, maintenance or repair of the Wells and Facilities in connection with the production of Hydrocarbons therefrom or relate to the production, treatment, sale, or disposal of Hydrocarbons or water produced from the Leases, the Lands or the Fee Interests or attributable thereto (collectively, the “ Facilities ”).

(c) All farmout and farmin agreements, operating agreements, production sales and purchase contracts, saltwater disposal agreements, surface leases, division and transfer orders, and all other written contracts, contractual rights, interests and other written agreements covering or affecting any or all of the Leases, Lands, Wells, Facilities or Fee Interests to which a Sub is a party, but excluding all Debt Instruments (collectively, the “ Contracts ”).

(d) All easements, rights-of-way, licenses, agreements, surface use permits, and similar surface and other rights and interests applicable to, or used by a Sub in connection with, any or all of the Leases, Lands, Wells, Facilities or Fee Interests (collectively, the “ Easements ”).

(e) All Hydrocarbons (or the proceeds from the sale of Hydrocarbons) produced from and after the Effective Time attributable to a Sub’s interest in the Leases, Lands, Wells, Facilities, Contracts and Fee Interests.

(f) To the extent transferable pursuant to Applicable Law, all governmental (whether federal, state or local) Permits, licenses, Orders, authorizations, franchises and related instruments or rights required of the Subs under applicable Law for the ownership, operation or use of the Leases, Lands, Wells, Facilities or Fee Interests (the “ Permits ”), including Environmental Permits.

(g) All books, files, records and correspondence, and to the extent transferable without material restriction (including a material restriction against assignment without prior consent), or payment of a transfer or licensing fee under third party agreements not advanced or reimbursed by Buyer, all studies, surveys, reports, proprietary geologic, geophysical and seismic data (with respect to seismic, whether now existing or acquired by a Sub following the date hereof) (including raw data and any interpretative data or information relating to such geologic, geophysical and seismic data) and other proprietary data (in each case whether in written or electronic format) in the actual possession or control of Seller or a Sub or which Seller or a Sub has the right to obtain (either without the payment of money or delivery of other consideration or unduly burdensome effort or, upon Buyer’s written election, at Buyer’s expense) and relating to the operation of the Leases, Lands, Wells, Facilities or Fee Interests, including all title records,

prospect information, title opinions, title insurance reports/policies, property ownership reports, customer lists, supplier lists, sales materials, promotional materials, operational records, technical records, production and processing records, division order, lease, land and right-of-way files, accounting files and contract files in each case of the foregoing with respect only to the Properties (the “ Records ”).

(h) All fee interests to the surface and to the subsurface and in Hydrocarbons produced from such subsurface, including rights under grant deeds, mineral deeds, conveyances or assignments as set forth on Exhibit A to which a Sub is a party (“ Fee Interests ”).

(i) All royalties, overriding royalties, production payments, rights to royalties in kind, or other interests in production of Hydrocarbons (excluding Working Interests) as set forth on Exhibit B to which a Sub owns an interest (the “ Royalty Interests ”).

(j) All partnership interests of any Sub (tax, state law or otherwise) affecting any of the Properties.

(k) To the extent assignable, all insurance proceeds, payable from and after the Effective Time in connection with claims that arise from and after the Effective Time and with respect to the Chapman Ranch Credit, under existing policies of insurance, if any, maintained by Seller or a Sub and relating to the Properties; provided, however, that such insurance proceeds shall be retained by the Seller to the extent that the liabilities associated with such insurance proceeds remain with the Seller.

(l) Seller’s and the Subs’ interest in all of the surplus equipment, materials and inventory owned, leased or held for use by the Subs, including such surplus equipment, materials and inventory as are set forth on Exhibit K .

(m) All office furniture, computers, and other personal property located in Seller’s Houston office owned by Seller or the Subs as of the Effective Time.

All of the real and personal properties, rights, titles, and interests described in subsections (a) through (m), subject to the limitations and terms expressly set forth herein, in Exhibit A and Exhibit B and in the Schedules hereto, are hereinafter collectively called the “ Properties ” or, individually, a “ Property ”. The parties intend for the Affected Seller Properties that are transferred to Sub on or before the Closing to be included as “Properties” for all purposes of this Agreement. Until such Properties are actually conveyed to a Sub, the definition of “Property” shall be deemed to include the Affected Seller Properties title to which is vested in Seller, and all terms defined in this definition (e.g. “Lease”) and in other related terms (e.g. “Net Revenue Interest” and “Working Interest”) shall also be deemed to include those that derive from or relate to the Affected Seller Properties even though this definition refers only to a “Sub” or “Subs” rather than the Seller. Furthermore, all representations, warranties and covenants of Seller in this Agreement shall be deemed to cover the Affected Seller Properties that are ultimately transferred by Seller to a Sub on or before the Closing even if such representations, warranties or covenants refer only to a Sub or the Subs (rather than including Seller) or fail to refer to the Affected Seller Properties.

“ Prorated Expense Items ” is defined in Section 4.3.2 .

“ Purchase Price ” is defined in Section 3.1 .

“ Records ” is defined in subsection (g) of the definition of “ Property ”.

“ Remediation Amount ” is defined in Section 11.2 .

“ Representatives ” means, with respect to any Person, the officers, directors, managers, employees, attorneys, investment bankers, underwriters, lenders, accountants and other agents and representatives of such Person.

“ Reserve Reports ” means (i) that certain reserve report prepared for Seller by Ryder Scott & Co. as of December 31, 2008, and (ii) that certain reserve report prepared for Seller by W.D. Von Gonten & Co. as of January 1, 2009.

“ Retained Properties ” means the Hedge Contracts, together with Leases, Wells and Fee Interests retained by the Seller pursuant to Section 11.4.2 , and for which a Casualty Loss occurs pursuant to Section 16.1 , to the extent such Property is assigned to the Seller, all of which will not be Properties for purposes of this Agreement.

“ Royalty Interests ” or “ RI ” is defined in subsection (i) of the definition of “ Property ”.

“ Sabco ” is defined in the recitals.

“ Sale Hearing ” is defined in Section 2.2(a) .

“ Sale Order ” means an order of the Bankruptcy Court in substantially the form of Exhibit H hereto (unless otherwise jointly agreed to in writing by Seller and Buyer, which agreement shall not be unreasonably withheld).

“ Scheduled Closing Date ” is defined in Section 13.1 .

“ Seller Retained Funds ” is defined in Section 14.3 .

“ Seller ” is defined in the preamble.

“ Seller Group ” means Seller and its Affiliates, and the Representatives of Seller and its Affiliates, and the heirs, executors, successors and assigns of all of the foregoing.

“ Seller’s Knowledge ”, “ EPEC’s Knowledge ,” “ EPOC’s Knowledge ,” “ EPPC’s Knowledge ,” “ Miller Oil’s Knowledge ” and/or “ Miller’s Knowledge ” or the “Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil” means the actual knowledge of John Elias, Gary Pittman, and John Tugwell.

“ Severance Tax Abatement Amount ” means an amount equal to approximately US$4,000,000 associated with claims made or to be made by Seller or EPEC in connection with State of Texas severance tax refunds relating to tight gas production from the Properties located in the State of Texas produced prior to the Effective Time and claims made or to be made by

Seller or EPEC in connection with State of Texas sales tax refunds relating to purchases made by Seller or EPEC prior to the Effective Time, which in each case have not been collected or paid over to Seller or EPEC as of the Closing Date.

“ Stephens ” means Stephens Production Company.

“ Straddle Period ” is defined in Section 19.11.5(a)(iv) .

“ Strip ” is defined in the definition of Gas Pricing Downward Adjustment.

“ Subs ” is defined in the recitals.

“ Subs A/R ” means accounts receivable of the Subs that remain outstanding as of the Closing Date.

“ Supplemental Confidentiality Agreement ” means that certain agreement entitled “Confidentiality Agreement” dated August 11, 2009, by and between Seller and Buyer and the other parties thereto.

“ Support Agreement ” is defined in Section 8.5 .

“ Suspense Funds ” is defined in Section 4.5 .

“ Tax ” means, with respect to any Person, (a) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem , value added, transfer, franchise, margin, profits, license, withholding on amounts paid to or by such Person, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to tax or additional amount imposed by any Taxing Authority, (b) any liability of such Person for the payment, deposit, withholding or collection of any amounts of any of the foregoing types directly or indirectly, including as a result of being a member of an affiliated, consolidated, combined or unitary group, or being a party to any agreement or arrangement whereby liability of such Person for payment of such amounts was determined or taken into account with reference to the liability of any other Person, and (c) any liability of such Person for the payment of any amounts as a result of being a party to any Tax-Sharing Agreements or with respect to the payment of any amounts of any of the foregoing types as a result of any express or implied obligation to indemnify any other Person.

“ Tax Proceeding ” is defined in Section 19.11.7(a) .

“ Tax Returns ” means any report, return, rendition, declaration, claim for refund, information report or return or statement required to be supplied to a Taxing Authority in connection with Taxes, including any schedule or attachment thereto or amendment thereof.

“ Tax-Sharing Agreements ” means, with respect to any Person, all existing Tax-sharing agreements or arrangements (whether or not written) that are binding on such Person.

“ Taxing Authority ” means any Governmental Authority exercising any authority to impose, regulate, levy, assess or administer the imposition of any Tax.

“ Term Sheet Strip ” is defined in the definition of Gas Pricing Downward Adjustment.

“ Title Benefit ” is defined in Section 10.4 .

“ Title Benefit Notice ” is defined in Section 10.4 .

“ Title Defect ” is defined in Section 10.1 .

“ Title Defect Notice ” is defined in Section 10.1 .

“ Transfer Taxes ” is defined in Section 19.11.1 .

“ Transportation Contracts ” is defined in subsection (r) of Section 5.5(a) .

“ Unadjusted Purchase Price ” is defined in the definition of “ Gas Pricing Downward Adjustment ”.

“ Well ” is defined in subsection (b) of the definition of “ Property ”.

“ Winning Bidder ” has the meaning set forth in the Bidding Procedures Order.

“ Working Interest ” or “ WI ” means, with respect to the Wells, Leases or Fee Interests set forth in Exhibit A or Exhibit B , the respective Sub’s interest in and to the leasehold estate created under and by virtue of the Wells, Leases or Fee Interests as set forth in Exhibit A or Exhibit B , and all rights and obligations of every kind and character appurtenant thereto or arising therefrom, without regard to any valid Royalty, overriding royalties, production payments, carried interests, Liens against production therefrom insofar as such interest in said Lease is burdened with the obligation to bear and to pay costs of operations.

ARTICLE II
SALE AND PURCHASE OF EQUITY INTERESTS

2.1 Sale and Purchase of Equity Interests .

(a) Sale of Equity Interests . Subject to the entry of the Confirmation Order and subject to the terms and conditions set forth in this Agreement and in the Plan, at the Closing Seller shall cause the Subs to issue, sell and transfer the Equity Interests of the reorganized Subs to Buyer, free and clear of all Liens and Claims and Buyer shall purchase and acquire from the Subs at the Closing the Equity Interests. The liabilities to be assumed by the reorganized Seller shall be subject to the terms of the Plan and the Confirmation Order, and the reorganized Seller and each Sub shall have no liabilities other than those expressly set forth in this Agreement, the Sale Order, the Plan and the Confirmation Order.

(b) Assets & Liabilities of Each Sub at the Closing Date . As of the Closing, the Subs will own:

(i) cash equal to the amount of Prepaid JOA Funds and Suspense Funds; and

(ii) the Properties save and except the Retained Properties, the Affected Property, the Affected Seller Properties retained by Seller, and the Non-Transferred Properties.

The Properties, other than the Retained Properties, the Affected Property, the Affected Seller Properties retained by Seller, and the Non-Transferred Properties, shall be free and clear of all Claims and Liens, save and except the Assumed Liabilities and the Permitted Encumbrances, to the extent not otherwise satisfied in full or discharged pursuant to the Confirmation Order. All cash, other than the cash described in Section 2.1(b)(i) above, and receivables of each Sub shall be distributed to and retained by the Seller. Except for the Assumed Liabilities and the Permitted Encumbrances, at or before the Closing, all Claims, Liens and liabilities of each Sub shall have been satisfied in full or discharged pursuant to the Confirmation Order.

2.2 Seller’s Chapter 11 Bankruptcy Case .

(a) Notwithstanding any conflicting or inconsistent provision of this Agreement, Seller’s obligations under this Agreement and the transactions contemplated hereby are subject to and contingent upon the approval and authorization of the Bankruptcy Court. Within five (5) Business Days of the date hereof (the “ Petition Date ”), each of the Seller and the Subs shall commence the Bankruptcy Cases. Within two (2) Business Days following the Petition Date, Seller shall file the Bidding Procedures and Sale Motion pursuant to Sections 105, 363, 365 and 1123(b) of the Bankruptcy Code seeking entry of the Bidding Procedures Order containing, among other things, (i) the bidding procedures described therein, (ii) the Break Up Fee, the Expense Reimbursement, and the No-Shop Provisions, (iii) the scheduling of an auction (the “ Auction ”) and a hearing to consider the approval of the sale to Buyer or the Winning Bidder of (A) the Equity Interests or (B) substantially all of the assets (other than the Equity Interests) of Seller and the Subs (which in any event shall include all of Seller’s and Subs’ interest in the Lands, Leases, Wells, Facilities, Easements, Hydrocarbons, Permits, Records, Fee Interests, partnership interests of any Sub affecting any of the Properties and specifically including its proprietary 3D seismic, license agreements and operating systems that may be assigned without the payment of a fee, but which shall not be required to include Retained Properties, Affected Properties, or Affected Seller Properties, to the extent retained by the Seller in accordance with the terms of this Agreement, or the Non-Transferred Properties) (the “ Sale Hearing ”), and (iv) the form and manner of notice of the Sale Hearing.

(b) Seller shall use commercially reasonable efforts to obtain entry of the Bidding Procedures Order, but in no event shall the hearing on the Bidding Procedures Order be held later than thirty (30) days after the Petition Date. The Bidding Procedures Order shall be in substantially the form of Exhibit F (as may be amended or the date therein extended from time to time with the prior written consent of Seller and Buyer).

(c) Seller agrees to use commercially reasonable efforts to obtain entry of the Confirmation Order, to be entered within 90 days after the Petition Date.

(d) In the event the Final Order of the Bankruptcy Court with respect to the Bidding Procedures Order is appealed, Seller shall use its commercially reasonable efforts to defend such appeal.

ARTICLE III
PURCHASE PRICE

3.1 Purchase Price . The total purchase price for the Equity Interests shall be One Hundred Ninety-One Million Dollars (US$191,000,000) (the “ Purchase Price ”), subject to any applicable adjustments as hereinafter provided and subject further to the allocation of the Purchase Price among the Subs.

3.2 Earnest Money Deposit . As of the later of (i) the date hereof or (ii) the date the Support Agreement is executed and delivered in the form set forth in Exhibit L , Buyer shall tender to the Escrow Agent by wire transfer a deposit in the amount of Eight Million Dollars (US$8,000,000) (the “ Deposit ”). The Deposit shall be held by the Escrow Agent pursuant to the Escrow Agreement. The Deposit shall be paid over to Seller and credited against the Purchase Price if Closing occurs or, if Closing does not occur, will otherwise be distributed in accordance with the terms of this Agreement and those of the Escrow Agreement.

ARTICLE IV
ADJUSTMENTS TO PURCHASE PRICE

The Purchase Price shall be adjusted as follows:

4.1 Increases in Purchase Price . The Purchase Price shall be increased by an amount equal to the sum of the following amounts:

4.1.1 the amount of any direct costs and expenses incurred and actually paid or to be paid by Seller or the Subs (including, without duplication, charges properly payable under any applicable joint operating agreement or other agreement providing for joint interest billings) that are attributable to acquiring, owning, operating, producing and maintaining the Properties during the period of time from the Effective Time through the Closing Date (excluding any such costs and expenses to be paid which are excused, rejected or otherwise no longer payable by Seller or the Subs pursuant to an Order of the Bankruptcy Court), including capital expenditures (but excluding any capitalized (i) interest or (ii) general and administrative expenses) and general and

administrative costs reimbursements not to exceed Five Hundred Thousand Dollars (US$500,000) per month;

4.1.2 to the extent such proceeds were not received by Seller or Subs as of the Closing Date or were received by Subs before the Closing Date and were not distributed to Seller in accordance with Section 7.8 , the value of the following items, net of any applicable severance taxes and royalties which are the obligation of Buyer: (a) all oil and other Hydrocarbons in pipelines or in tanks above the pipelines or in tanks above the pipeline sales connection, which value shall be determined by multiplying $50/bbl times the volume, in each case at the Effective Time that is credited to the Properties, (b) all unsold inventory of gas plant products attributable to the Properties at the Effective Time, each such value to be the market value or, if applicable, the contract price in effect as of the Effective Time, and (c) all gas imbalance volumes related to the Properties owed to Seller or Subs by a third party as of the Effective Time multiplied by $3.00 MMBtu;

4.1.3 without duplication of 4.1.2, the amount of all proceeds (i) paid to Buyer, (ii) which are paid to Subs after the Closing Date, or (iii) which were paid to Subs prior to the Closing Date but which were not distributed to Seller pursuant to Section 7.8 , including proceeds from the sale of production, net of all applicable Ad Valorem Taxes and applicable severance taxes and royalties paid by Buyer, attributable to the Properties for periods of time prior to the Effective Time;

4.1.4 the amount of the Benefit Values for all Title Benefits as finally determined in accordance with the terms of Article X ; and

4.1.5 any other amount expressly denominated as an increase in the Purchase Price as provided for in this Agreement.

4.2 Decreases in Purchase Price . The Purchase Price shall be decreased by an amount equal to the sum of the following amounts:

4.2.1 the amount of all proceeds paid or to be paid to Seller or to the Subs and distributed to the Seller (excluding proceeds which relate to the items set forth in Section 4.1.2 and proceeds to which Section 4.2.8 relates), including proceeds from the sale of production, net of all applicable taxes and royalties paid by Seller or the Subs, attributable to the Properties for periods of time after the Effective Time through the Closing Date;

4.2.2 an amount equal to all Ad Valorem Taxes that are attributable to periods of time prior to the Effective Time and which have either (i) not been paid by Seller or a Sub prior to the Closing Date or (ii) which have not otherwise been taken into account as a downward adjustment to the Purchase Price (or as an offset to an upward adjustment to the Purchase Price);

4.2.3 the amounts, if any, relating to the aggregate of all the Allocated Values of all Retained Properties.

4.2.4 the amount of the Defect Values for all Title Defects;

4.2.5 with respect to each Adverse Environmental Condition (other than any Adverse Environmental Condition relating to any Retained Properties), the Final Remediation Amount;

4.2.6 all gas imbalance volumes related to the Properties owed by Seller or the Subs to a third party as of the Effective Time which are to be paid by Buyer pursuant to Sections 15.1 and 15.4 multiplied by $3.00 MMBtu;

4.2.7 the amount of the Gas Pricing Downward Adjustment, if applicable;

4.2.8 the amount of the Closing Date Hedge Values; and

4.2.9 any other amount expressly denominated as a decrease in the Purchase Price as provided for in this Agreement.

4.3 Tax Adjustments; Apportionment of Prepaid Items; Suspense Funds .

4.3.1 To adjust the Purchase Price for the apportionment of Taxes, the parties agree to adjust the Purchase Price, downward or upward, as appropriate, pursuant to the provisions of Section 19.11.5 to the extent not otherwise taken into account in Sections 4.1 or 4.2 .

4.3.2 For purposes of the making adjustments to the Purchase Price, to the extent not otherwise provided for under Article IV , those other items of expenses and accounts payable in relation to the Properties or that constitute Assumed Obligations and are paid or payable before and after the Effective Time on an annual, quarterly, monthly or other regular periodic basis (“ Prorated Expense Items ”) shall be prorated as of the Effective Time and apportioned, such that (i) Buyer, through its acquisition of the Subs, will receive the economic benefit or burden, as applicable, of all such items on and after the Effective Time and (ii) Seller shall receive the economic benefit or burden, as applicable, of all such items for the period prior to the Effective Time. After the Closing Date, (x) if Buyer receives any bills or accounts or any reimbursement for prepaid expenses in relation to Prorated Expense Items that are attributable in whole to the period prior to the Effective Time, then Buyer shall promptly forward the same to Seller (for payment, in the case of any such bills or accounts), (y) if Seller receives any bills or accounts or any reimbursement for prepaid expenses in relation to the Prorated Expense Items that are attributable in whole to the period on or after the Effective Time, then Seller shall promptly forward the same to Buyer (for payment, in the case of any such bills or accounts) and (z) if Buyer or Seller receive any bills or accounts or any reimbursements for prepaid expenses in relation to the Prorated Expense Items that are attributable in part to the period prior to the Effective Time, and in part to the period on and after the Effective Time, the amount thereof shall be apportioned between Seller, on the one hand, and Buyer, on the other hand, respectively, as of the Effective Time, based on the number of days in such period falling prior to the Effective Time, on the one hand, and on and after the Effective Time, on the other hand. In the case of bills or accounts referred to in clause (z), the party receiving the same shall be required to pay

only such portion of such bill or account for which it is responsible in accordance with this Section 4.3.2 .

4.3.3 Seller will include in the Preliminary Purchase Price Seller’s good faith calculation of the prorations provided for in Section 4.3.2 . If final bills or accounts in relation to any Prorated Expense Items or rent receivable referred to in Section 4.3.2 are not available or have not been issued prior to that date for any Prorated Expense Item, the Seller shall estimate the amount of each such item in good faith, and such estimate shall be reflected in the Preliminary Purchase Price. The amount payable by Buyer at the Closing will be increased or decreased to reflect the net amount owing between the parties as shown on such Preliminary Purchase Price, using such estimates where necessary. Final adjustment between the Parties as to any estimated item used in the preparation of the Closing Statement in accordance with this Section 4.3.3 shall be made pursuant to Article XIV .

4.4 Prepaid JOA Funds . To the extent that as of Closing Seller or any Sub was paid funds (in their capacity as operator with respect to operated properties) as prepayments for non-operators share of items under operating agreements that are assumed pursuant to the Plan and for which payment has not been made by Seller or any Sub as of the Closing Date (“ Prepaid JOA Funds ”) (i) no adjustment to the Purchase Price shall be made with respect to such Prepaid JOA Funds and (ii) if such funds are not in the Subs at Closing Seller shall deliver to Buyer an amount of money equal to such Prepaid JOA Funds and an accounting of each of such prepayments and Buyer shall from and after such time be responsible for the application of such Prepaid JOA Funds under the applicable operating agreement.

4.5 Suspense Funds . To the extent that as of Closing Seller holds funds received by Seller or any Sub (in its capacity as operator with respect to Properties operated by such Sub) in “suspense” (“ Suspense Funds ”) and such funds are not in the Subs at Closing (i) no adjustment to the Purchase Price shall be made with respect to such Suspense Funds and (ii) Seller shall deliver to a Sub designated by the Buyer the amount of Suspense Funds then held by Seller and such Sub shall from and after such time be responsible for the application of such Suspense Funds under the applicable operating agreement.

4.6 Bankruptcy Expenses . For the avoidance of doubt, all of Seller’s and each Sub’s costs and expenses relating to the filing, pendency or consummation of the Bankruptcy Cases shall be the responsibility of Seller and shall not be chargeable to Buyer nor be an upward adjustment to the Purchase Price.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SUBS

Seller and each of the Subs represent and warrant to Buyer as follows:

5.1 Organization . (a) Edge is a corporation validly existing and in good standing under the laws of the State of Delaware. As of the date hereof, EPEC, Miller, EPOC and EPPC are each corporations validly existing and in good standing under the laws of the state of Delaware. As of the date hereof, Miller Oil is a corporation validly existing and in good standing under the laws

of the State of Michigan. Seller and Subs are in good standing and duly qualified to do business in each other jurisdiction in which the conduct of their respective business or ownership or the leasing of their respective properties makes such qualification or registration necessary.

(b) EPEC owns 100% of the issued and outstanding equity of EPOC and EPPC, and Miller owns 100% of the issued and outstanding equity of Miller Oil.

(c) Seller is an Affiliate of each Sub. Each Sub is an Affiliate of Seller. Other than the other Subs and the Seller, no Sub has any Affiliate. Other than the Subs, the Seller has no Affiliate.

(d) Except as otherwise set forth on Schedule 5.1(d) , Seller does not own directly any interest in the Properties.

5.2 Authority . Subject to approval of the Bankruptcy Court, Seller and each of the Subs has full power to enter into and perform its obligations under this Agreement and has taken all proper corporate or limited liability company action, as applicable, to authorize entering into this Agreement and performing its obligations hereunder.

5.3 No Conflict . Except as set forth on Schedule 5.3 and subject to approval of the Bankruptcy Court, neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, nor the compliance with the terms hereof (a) will result in any default under any Material Contract to which Seller or a Sub is a party or by which any of the Properties is bound, (b) violate any provision of the certificate of incorporation or bylaws, limited liability company certificate of formation, agreement or regulations of Seller or any of the Subs (the “ Governing Documents ”), or (c) violate any Law applicable to Seller , to a Sub, or to any of the Properties. Schedule 5.3 sets forth the Support Agreement, the consents to assignment or waivers of consents from third parties that may be required by the Bankruptcy Court in connection with the consummation of the sale and purchase of the Equity Interests as contemplated hereby, other than any approvals, consents, filings and notifications of or with any Governmental Authority of the type customarily obtained, made or given after Closing in connection with the sale and purchase of common stock or membership interests. Except as set forth on Schedule 5.3 there are no preferential rights to purchase, rights of purchase, rights of first refusal, rights of first offer or similar rights affecting any of the Properties that could be invoked in connection with the sale and purchase of the Equity Interests.

5.4 Enforceability . Subject to approval of the Bankruptcy Court, this Agreement has been duly executed and delivered on behalf of Seller and each of the Subs and constitutes the legal, valid and binding obligation of Seller and the Subs enforceable in accordance with its terms.

5.5 Material Contracts .

(a) Schedule 5.5(a) describes, with respect to a Contract to which a Seller or Sub is a party, (a) all existing area of mutual interest agreements and agreements that include non-competition restrictions or other similar restrictions on doing business, all existing purchase or sale agreements (other than with

respect to production of Hydrocarbons and the disposition of field equipment in the ordinary course), partnership (other than tax partnerships), joint venture and/or exploration or development program Contracts relating to the Wells, Leases or Fee Interests included within the definition of the Properties, or by which the Properties are bound; (b) all of the existing production sales, transportation, marketing and processing agreements relating to the Wells, Leases or Fee Interests, other than such agreements which are terminable by the respective Sub without penalty on sixty (60) or fewer days’ notice without the payment of money or delivery of other consideration; (c) any existing contracts or agreements between any Sub and Seller that relate to the Properties or by which the Properties are bound; (d) any contracts or agreements burdening the Properties which could reasonably be expected to obligate a Sub to expend in excess of One Hundred Thousand Dollars (US$100,000) in any calendar year; (e) any contracts or agreements related to the Properties under which a Sub has received in excess of One Hundred Thousand Dollars (US$100,000) of revenues net of direct expenses within two (2) years prior to the date of this Agreement; (f) all contracts of insurance maintained by Seller or a Sub at any time within the two (2) year period prior to the execution date of this Agreement; (g) any Contract to sell, lease (other than the Leases) or otherwise dispose of any of a Sub’s interest in any of the Properties; (h) any existing tax partnership or joint venture Contract to which a Sub is a party; (i) any material operating agreement that is in effect as of the date hereof and to which any of the Sub’s interest in any of the Properties is subject; (j) any existing Contract to which a Sub is a party providing for forced or voluntary pooling, forced or voluntary unitization, a carry, a backin, earnout, reversionary Working Interests in favor of third parties, or other contingent payment or obligation; (k) any Contract to which a Sub is a party for drilling or well workover services or other well services that is in effect as of the date hereof or the Closing Date; (l) any Contract to which a Seller or Sub is a party for the providing, use, processing and/or analysis of seismic or geophysical data or similar Contract that is in effect as of the date hereof or the Closing Date; (m) any Contract to which a Sub is a party relating to indebtedness for borrowed money, letter of credit or guarantee of the indebtedness for borrowed money of Persons that is in effect as of the date hereof or the Closing Date; (n) any lease (other than a Lease) under which any Seller or Sub is the lessor or lessee of real or personal property, which lease (i) cannot be terminated by such Sub without penalty upon not more than one hundred and eighty (180) days notice, and (ii) involves an annual base rental in excess of US$100,000; (o) any Contract to which a Seller or Sub is a party that expressly limits in any material respect the ability of any Sub to (i) currently engage in any of its existing lines of business or to conduct currently any such business in any particular geographic area, or (ii) compete with any other Person in any such business; (p) any employment or consulting Contract for employees, officers, directors or consultants of a Sub whose guaranteed annual compensation thereunder is in excess of US$100,000 annually for either of the calendar years 2008 or 2009 and that cannot be terminated on sixty (60) days or less notice without penalty or other future obligation; (q) any Contract for the pending purchase by or sale of real or personal property of a Sub (other than sales

of Hydrocarbons or items of inventory in the Ordinary Course of Business) for an amount in excess of US$100,000; (r) any firm transportation Contract to which a Seller or Sub is a party that requires, in accordance with its terms, payments by such Seller or Sub in excess of US$100,000 within the twelve (12) month period ending December 31, 2009, and any interruptible transportation Contract that Seller reasonably anticipates will, in accordance with its terms, involve payments by a Seller or Sub in excess of US$100,000 within the twelve (12) month period ending December 31, 2009 (collectively, the “ Transportation Contracts ”); (s) any Contract not in the Ordinary Course of Business and requiring expenditures by a Sub in excess of $100,000 annually; (t) any partnership or joint venture Contract between a Sub and any other Person (other than Seller or another Sub) containing a commitment to fund, loan or pay amounts in excess of US$100,000; (u) any existing partnership or joint venture Contract to which a Seller or Sub is a party for the purchase or sale of any assets of such Sub for a consideration in excess of US$100,000; and (v) any Tax-Sharing Agreement ((a) — (v) collectively, the “ Material Contracts ”).

(b) Except as disclosed in Schedule 5.5(a) , (i) neither Seller nor Sub has received written notice of its default under any of the Material Contracts to which it is a party, and (ii) the Material Contracts have not been modified or amended in any material respect. To the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, each Sub has complied with the material terms of all Material Contracts to which it is a party and that apply to it.

(c) Set forth on Schedule 5.5(c) is a list of each Contract that a Sub has with the Seller or another Sub, as of the date hereof (collectively, the “ Affiliate Contracts ”).

(d) All of the Material Contracts are in full force and effect and are the legal, valid and binding obligations of the Seller or Sub thereto, and, to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, each of the other parties thereto, except (i) to the extent that such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws relating to creditors’ rights generally, subject to general principles of equity, and (ii) to the extent such Material Contract has expired by its terms. In addition, (x) neither Seller nor any of the Subs is in default under any Material Contract, which default has not been waived or which default is enforceable under the Bankruptcy Code and which default will be cured prior to and in connection with Closing as provided in Section 7.6 , and (y) except as disclosed in Schedule 5.5(d) , to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, no other party to any Material Contract is in default under any Material Contract.

5.6 Litigation and Claims . Except as set forth on Schedule 5.6 , no suit, action, demand, proceeding, lawsuit or other litigation is pending or, to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, threatened against Seller or any Sub with respect to the Properties.

5.7 Finder’s Fees . Neither Seller nor any Sub has incurred any liability, contingent or otherwise, for brokers’ or finders’ fees with respect to this transaction for which Buyer or any Sub shall have any responsibility whatsoever.

5.8 Sale Contracts . Except as set forth on Schedule 5.5(a) and for (a) contracts governing the sale of Hydrocarbons in the ordinary course which are terminable by a Sub without penalty on sixty (60) or fewer days’ notice, or (b) the disposition in the ordinary course of equipment no longer suitable for or used in oil and gas field operations, there are no contracts, agreements or options to which a Seller or Sub is a party outstanding for the sale, exchange or transfer of Seller’s or any Sub’s interest in the Properties or any portion thereof; provided that the above provisions shall not apply to the Retained Properties, the Affected Property, the Affected Seller Properties and the Non-Transferred Properties.

5.9 Notices . Except as set forth on Schedule 5.9, to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, neither Seller nor any Sub (with respect to the Properties) is the subject of any pending regulatory compliance or enforcement action or known investigation, and neither Seller nor any Sub has received any notice, notification, demand, request for information, citation, summons or Order with respect to the Properties alleging a material violation of any Applicable Law (including any Environmental Law) or Permit.

5.10 Imbalances . Except as set forth on Schedule 5.10 , there are no material gas or other Hydrocarbon production, pipeline, transportation or processing imbalances existing with respect to the Properties or any of the Subs as of May 31, 2009.

5.11 Property Obligations . To the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, all rentals, Royalties, shut-in royalties, overriding royalties and other payments due pursuant to or with respect to the Leases operated by any Sub have been properly or will on or prior to Closing Date be paid in all material respects. Schedule 5.11 provides detail on all amounts held in suspense by Seller and the Subs relating to the Properties.

5.12 Property Operation . (a) Each of the Wells operated by the Subs and the Wells not operated by the Subs to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, have been drilled, completed, operated, developed and produced in material compliance with all applicable judgments, Orders, Laws, rules and regulations (other than those relating to title matters, which are dealt with in Article X ), and (b) all necessary certificates, consents, Permits, licenses and other governmental authorizations (other than those relating to title matters, which are dealt with in Article X ), which are material to the ownership, use or operation of the Properties which any Sub operates, and the Properties not operated by any Sub to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, have been obtained and are in force except where such failure would not have a Material Adverse Effect.

5.13 Take-or-Pay . Except as set forth on Schedule 5.10 , no Sub is obligated, under a take-or-pay or similar arrangement, or by virtue of an election to non-consent or not participate in a past or current operation on the Properties (pursuant to the applicable operating agreement), to produce Hydrocarbons, or allow Hydrocarbons to be produced, without receiving full payment at the time of delivery in an amount that corresponds to the Net Revenue Interest in the Hydrocarbons attributable to any Well, Lease or Fee Interest described in Exhibit B .

5.14 Taxes . Except as otherwise disclosed in Schedule 5.14 :

(a) All Ad Valorem Taxes and Taxes on production or removal of Hydrocarbons from the Properties that the Subs operate have been timely paid. All renditions or other filings regarding the value of the Properties for Ad Valorem Taxes were true and correct. To Seller’s Knowledge, EPEC’s Knowledge, Miller’s Knowledge, EPOC’s Knowledge, EPPC’s Knowledge and Miller Oil’s Knowledge, there is no Lien for Taxes (other than Liens for Taxes not yet due and payable) on any Property, nor to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil is any Taxing Authority in the process of imposing, or threatening to impose, any Lien for Taxes on any Property, other than (in each instance) Permitted Encumbrances.

(b) All income and franchise Tax Returns, Ad Valorem Tax reports and renditions and all other material Tax Returns required to be filed by, or with respect to, Seller and the Subs (i) have been filed, (ii) were and continue to be true and correct in all material respects, and (iii) all Taxes that were shown to be due on such Tax Returns have been paid.

(c) Seller has given, or otherwise made available to Buyer, copies of those portions of all Tax Returns, examination reports and statements of deficiencies relating to the Subs for tax years 2006 and 2007, and has provided to Buyer a draft of the federal income tax return for 2008.

(d) There are no outstanding agreements extending or waiving the statutory period of limitation applicable to any claim for, or the period for the collection or assessment or reassessment of, Taxes due from the Subs for any taxable period that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) no power of attorney is currently in force with respect to any matter relating to the Taxes of any of the Subs. The period for assessment for federal income Taxes of Seller and the Subs is closed for Tax periods beginning before January 1, 2005.

(e) Except as set forth in Schedule 5.14(e) , none of the Subs has been a member of a group which files a consolidated federal income tax return other than a group in which Seller is the parent.

(f) Except as set forth in Schedule 5.14(f) , none of the Subs has elected to be a disregarded entity prior to the Conversion Transaction and none of the Subs has any liability for the Taxes of any Person as defined in Section 7701(a)(1) of the Code (other than the Seller or another Sub) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise.

(g) As of the effective time of any Conversion Transaction, each of the Subs is disregarded as an entity from Seller for U.S. federal income tax purposes under Treas. Reg § 301.7701-3(c)(iv).

(h) No Tax Return of the Seller and Subs is under audit or examination by any Tax authority, and no written notice of such an audit or examination has been received by the Seller and Subs. Each material assessed deficiency resulting from any audit or examination relating to Taxes by any Governmental Authority has been timely paid and there is no assessed deficiency, refund litigation, proposed adjustment or matter in controversy with respect to any Taxes due and owing by the Seller and Subs.

(i) Except for the election to capitalize certain intangible drilling and development costs, since December 31, 2005 , the Seller and Subs have not made or rescinded any material election relating to Taxes or settled or compromised any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to any Taxes, or, except as may be required by applicable Law, made any change to any of their methods of reporting income or deductions for federal income Tax purposes from those employed in the preparation of their most recently filed federal Tax Returns.

(j) Except for statutory Liens for Taxes not yet due, no Liens for Taxes exist with respect to any assets or properties of the Seller or any Sub.

(k) The Seller and Subs have complied with all applicable Laws relating to the collection, withholding, deposit and payment of Taxes and have, within the time and the manner prescribed by applicable Law, withheld or collected, and timely paid over to the proper Tax authorities, all amounts required to be so withheld and paid over under applicable Tax Law.

(l) None of the Seller nor any Sub shall be required to include in a Taxable period ending after the Closing Date any item of income that accrued in a prior Taxable period but was not recognized in any prior Taxable period as a result of the installment method of accounting, the long-term contract method of accounting, the cash method of accounting or Sections 108(i) or 481 of the Code or comparable provisions of any other Tax Law.

(m) None of the Seller nor any Sub has participated in any “reportable transaction” as defined in Section 6707A of the Internal Revenue Code and Treasury Regulation Section 1.6011-4.

(n) None of the Properties are subject to tax partnership reporting requirements under applicable provisions of the Internal Revenue Code of 1986, as amended (the “ Code ”) or any foreign, state or local Law. In the event any Property is the subject of tax partnership reporting requirements, Seller and Subs shall, at the request of the Buyer insofar as Seller or the applicable Sub is the tax matters partner for the tax partnership, effect a Section 754 election under the Code and any comparable elections under foreign, state or local tax Law with respect to any such tax partnerships and in those instances where Seller or the applicable Sub is not the tax matters partner for the tax partnership, Seller and the

applicable Sub shall use their commercially reasonable efforts to cause the elections to be made.

(o) Except as disclosed in Section 5.1 and Schedule 5.14(o) , to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, the Properties do not include any interest in any partnership, limited liability company, corporation or other entity formed under state Law.

5.15 Timely Receipt . Except as set forth on Schedule 5.15 , each Sub is timely receiving, in all material respects, its share of proceeds from the sale of Hydrocarbons produced from the Properties without suspense, counterclaim or set-off. To the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, there has been no production of Hydrocarbons from the Properties that the Subs operate in excess of the allowable production established pursuant to Applicable Law that would result in any material restriction on production applicable to the respective Sub from the Leases subsequent to the Effective Time.

5.16 Timely Payment . Except as otherwise disclosed in Schedule 5.16 , each Seller and Sub has paid its share of all costs required to be paid by it under the Leases (operated by Seller or any Sub) and, to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, the Material Contracts, except those being contested in good faith.

5.17 Outstanding Obligations . Except as otherwise described in Schedule 5.17 , there are no outstanding authorizations for expenditures or other written commitments or existing proposals to conduct operations on the Properties (in excess of US$100,000 net to the interest of any Sub). No third party has any right (retained or otherwise) granted by a Sub to production, cash bonus payments or profits or other rights in the Properties including, without limitation, rights retained by prior owners at the time of the acquisition of the Properties by such Sub to receive production, cash bonus payments or profits from the Properties if the price of oil exceeds a threshold amount.

5.18 Hedge Contracts . The Hedge Contracts set forth on Schedule 5.18 are all of the Hedge Contracts relating to the Properties and neither Seller nor the Subs are party to any other Hedge Contracts, forward sales contract or derivative contract relating to the Properties.

5.19 Status of Seller . Neither Seller nor any Sub is a “foreign person” within the meaning of Code Section 1445, and Seller will furnish Buyer with an affidavit that satisfies the requirements of Code Section 1445(b)(2), in the form attached as Exhibit D .

5.20 Sufficient Rights to Operate . The Properties that each Sub operates and to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, the Properties that are not operated by a Sub include all of the material assets (real, personal, tangible and intangible) employed by such Sub in their current ownership and operation of the Properties, and such assets are, taken as a whole, sufficient for the ownership and, if operated by a Sub, the operation of such Properties immediately following the Closing in substantially the same manner as conducted at Closing.

5.21 No Encumbrances . Except as set forth on Schedule 5.21 and other than the Permitted Encumbrances, as of the Closing there will be no Liens encumbering the Properties.

5.22 Materials Provided to Buyer . The historical production and financial data relating to the Properties operated by any of the Subs that has been provided by or on behalf of Seller or the Subs to Buyer and its Affiliates are true and correct in all material respects.

5.23 Environmental Matters . To the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, except as set forth on Schedule 5.23 , (a) the operations of the Subs with respect to the Properties are in compliance with Environmental Law and Environmental Permits, except where noncompliance would not be reasonably expected to give rise to Losses arising under or relating to any Environmental Law that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, and (b) there has been no material investigation, study, audit, test, review or other analysis conducted in the last three (3) years to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, regarding compliance with any Environmental Law or Environmental Permit in relation to any Property that a Sub operates, which has not been delivered to Buyer.

5.24 Wells . Except for any well that has been drilled on a Property, and then plugged and abandoned, there are no Wells drilled by any of the Subs, and no producing or shut-in Wells on the Properties operated by any of the Subs, and to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil, there are no Wells drilled and no producing or shut-in Wells on the Properties not operated by any of the Subs other than those identified on Exhibit B , and the status of each Well as identified on Exhibit B that is operated by a Sub is true and correct in all material respects.

5.25 Equipment and Personal Property .

(a) Except as set forth on Schedule 5.25 , all currently producing Wells and all Facilities operated by Seller or any of the Subs and to the Knowledge of Seller, EPEC, Miller, EPOC, EPPC and Miller Oil those Wells and Facilities not operated by Seller or any of the Subs, are in an operable state of repair adequate to maintain normal operations in accordance with past practices, ordinary wear and tear excepted. Seller or each of the Subs have all Easements and Permits necessary to access, construct, operate, maintain and repair the Wells and Facilities operated by Seller or any of the Subs.

(b) With respect to Facilities and inventory, Seller’s or Subs’ title to such Facilities and inventory as of the date hereof is, and as of the Closing Date shall be transferred to the Subs or retained by such Subs, as applicable, free and clear of Liens and Claims other than Permitted Encumbrances.

5.26 Employee Benefits.

(a) Schedule 5.26(a) sets forth a list of all “ material employee benefit plans ”, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), sponsored or maintained by Seller or Subs or to which Seller or Subs contribute or is obligated to contribute thereunder with respect to current or former officers, directors or employees of Seller or any of the

Subs or with respect to which Seller or Subs may have material liability (the “ Material Employee Benefit Plans ”).

(b) Except as already listed on Schedule 5.26(a) , Schedule 5.26(b) sets forth a list of all material bonus plans, employment, change in control, consulting or other compensation agreements, incentive, equity or equity-based compensation, deferred compensation arrangements, stock purchase, fringe benefit, severance pay, sabbatical or paid time off, sick leave, vacation pay, salary continuation, disability, hospitalization, medical insurance, life, dental, vision, accidental death and dismemberment or other insurance benefits, scholarship programs or any other employee benefit plan, program or arrangement sponsored or maintained by Seller or the Subs or to which Seller or the Subs contributes or is required to contribute thereunder with respect to current or former officers, directors or employees of Seller or current or former officers, directors, or employees of any of the Subs or with respect to which Seller or the Subs may have material liability (together with the Material Employee Benefit Plans, the “ Benefit Arrangements ”).

(c) True and correct copies of the following documents, to the extent applicable, with respect to each of the Benefit Arrangements, have been made available or delivered to Buyer: (i) any plans and related trust documents, and all amendments thereto and, with respect to any Benefit Arrangements sponsored or maintained by Seller or the Subs, all material contracts or material agreements related to such plans, (ii) the Forms 5500 for the most recent three (3) years and schedules thereto, (iii) financial statements and actuarial valuations for the current year, to the extent available, and for the most recent three (3) years, (iv) the most recent IRS determination letter, (v) the most recent summary plan descriptions and material modifications, and (vi) written descriptions of all non-written Benefit Arrangements.

(d) Each of the Benefit Arrangements has been maintained in accordance with its terms and all provisions of Applicable Law.

(e) No Benefit Arrangement (i) is a “ multiemployer plan ” as defined in Section 3(37) of ERISA, or (ii) is a “ multiple employer welfare arrangement ” as defined in Section 3(40)(A) of ERISA. During the six (6) years immediately prior to the Closing, neither Seller nor the Subs has incurred or experienced an event that has given rise, or could reasonably be expected to give rise, to a withdrawal liability under Section 4201, 4063 or 4064 of ERISA or any actual or contingent liability under Section 4201 of ERISA.

(f) No Benefit Arrangement is a foreign plan governed by the Laws of a foreign jurisdiction.

(g) Except as set forth on Schedule 5.26(g) , the consummation of the transactions contemplated by this Agreement (either alone or together with another event), will not entitle any Person to any material benefit under any

Benefit Arrangement or materially accelerate vesting, payment or materially increase the amount of compensation due to any Person.

(h) With respect to each Benefit Arrangement that is sponsored by Seller or the Subs or any such plan or arrangement or portion thereof which after the Closing Date will be sponsored or maintained by Seller or Subs, (i) there are no material claims pending (other than routine claims for benefits), (ii) no prohibited transaction involving the assets of any such plan or arrangement have occurred and (iii) all contributions required to have been made have been made or properly accrued.

5.27 Ownership and Issuance of Equity Interests .

(a) Seller is the record and beneficial owner, either directly or indirectly, of the common stock of the Subs as of the date hereof and as of Closing Date (until cancellation thereof in accordance with the Plan) the Equity Interests of the Subs as constituted after the Conversion Transaction will be owned by the Seller, either directly or indirectly. Such common stock constitutes one hundred percent (100%) of the outstanding common stock of the Subs and as of Closing the Equi

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates

PURCHASE AND SALE AGREEMENT